Powers of appointment

The assignment question primarily concerns Trusts, Powers of Appointment, the Three Certainties and the Beneficiary Principle. The following piece of work aims to advise Keith and Gordon on these various matters.

1) Firstly, Keith and Gordon need to be advised as to whether a valid Trust has been created with regards to the 500 shares in Pots and Pans Ltd.

For an Express Private Trust to exist here, all of the ‘Three Certainties' must be present. Lord Langdale classified these requirements in Knight v Knight (1840) as: ‘Certainty of Intention', ‘Certainty of Subject Matter' and ‘Certainty of Objects'.

‘Certainty of Intention' basically means it must be clear that the Settlor intended to create a Trust. The word ‘Trust' is usually conclusive of this, although the court did make an exception in Tito v Waddell (1977).

As the words ‘to hold on Trust' are used in this case, it is likely that Delia intended to create a Trust, which means Certainty of Intention is satisfied.

The next requirement, ‘Certainty of Subject Matter', means that the subject held on Trust must be specifically identified. Even though ‘500 shares' appears certain in this case, it is not possible to say which shares are being held for which Beneficiaries, as with the wine bottles in Re London Wine Co Ltd (1986).

This means there is uncertainty as to the allocation of the beneficial interests, as seen with the houses in Boyce v Boyce (1849).

However, where the Subject Matter is intangible (eg shares) the general rule does not apply, as held in Hunter v Moss (1994). Here, the Settlor declared a Trust of 50 out of his 950 shares in Moss Ltd, but did not say which shares were allocated to whom. The Court of Appeal held that because the shares were intangible and indistinguishable (unlike wine bottles) and were of the same class and company, this did not matter therefore the Trust was valid. This view was also followed in Re Lewis's of Leicester Ltd (1995) and in the Australian case White v Shortall (2006).

When comparing Hunter v Moss (1994) to Keith and Gordon's case, Certainty of Subject Matter is clearly satisfied.

Moreover, the final and key issue here is ‘Certainty of Objects', which essentially means there must be certainty as to the persons or ‘objects' who are to benefit from the Trust.

In OT Computers Ltd v First National Tricity Finance Ltd (2003)

Answer The Question Now:

E.A Martin & J Law Oxford Dictionary of Law (6th edition Oxford University Press Inc. New York 2006) pg 548.