Validity of trusts in regards to a will

John executes his will in 2005, which contains the following provisions:

£2,000,000 to build a Recreation Centre for the elderly in Cambridge

£300,000 to Cambridge University to provide scholarships to law students, in the hope that they will challenge the increasing attacks by successive governments on our civil liberties.

£600,000 to further the good work of the Mountcastle Cancer Hospice.

John dies in 2008. In December 2007, the Mountcastle Cancer Hospice closed.

Discuss the validity of these trusts.

The validity of these trusts as set out in John’s will require observing, as in order for a valid trust the three certainties must be met unless it can be perceived as a charitable trust. The principle of the three certainties was created by Lord Langdale in Knight v Knight, whereby it was stated there must be certainty of intention, subject matter, and objects. These requirements were necessary as there is a need for court enforceability.

Certainty of intention is important in a trust because it affords protection to the trustees as their position is very difficult. It also gives the court an indication of the powers of the trustees, as demonstrated by the statement made in Morice vs Bishop of Durham by William Grant “an uncontrollable power of disposition would be ownership not trust”.  It is also worth noting that equity looks to intent rather than form. This is significant because equity prioritizes what the testator’s intention is over the way in which the provision is disposed.

Alongside intention, certainty of subject matter must also be complied with in order for the trustees to identify what property is part of the trust. The property should be subject to some segregation in the will so it can be clear what forms part of the trust and to prevent the trust from failing. In Re London Wine Co (Shippers) Ltd, creditors of a bankrupt wine trading company argued they should be able to claim wine they had paid for, but the problem was they were not individually identifiable. As Oliver J pointed out that “must be possible to ascertain with certainty not only what the interest of the beneficiary is to be, but to what property it is to attach”.

The final requirement of the three certainties is the certainty of objects, which requires the beneficiaries of the trust, known as the objects to be certain. This requirement varies depending on whether the trust is an express trust, fixed trust, a discretionary trust or a mere power.

To begin with the first provision of ‘2 million to build a Centre for the elderly in Cambridge’ the testator wishes to build a Recreation Centre by giving 2 million in his will. The issue here is whether the testator has intended to create a trust, and to identify this the language used must be analyzed. In Wright v Atkyns the words used must be ‘imperative’, however in the case of Re Kayford, Megarry J stated that a trust can be created without using the word ‘trust’ or ‘confidence’; the question is whether in substance a sufficient intention to create a trust has been manifested. The intention of building a recreation centre can be seen in the statement as the sentence itself expresses the testator’s intent. Since Lambe v Eames the courts have instead taken the approach that the circumstances and the reading of the statement as a whole are the relevant factors, and words alone may not impose a trust. A particular case of relevance is Re Hamilton where Lindsey LJ set the rule “take the will you have to construe and see what it means, and if you come to the conclusion that no trust was intended then say so”.  From the disposition from John it is clear to identify that the intention is valid and a trust was intended, and therefore this requirement is met.

The requirement of subject matter will also need to be met and the property that is subject to the trust is the Recreation Centre. As the provision instructs the building of a Recreation Centre identifying the property is not difficult and the beneficial interests are clear enough to comply with certainty of subject matter.

The final requirement of certainty of objects requires an overview of the provision as the term “elderly” may be seen as broad. This is a fixed trust as the beneficial interest is fixed to the “elderly”, and identification of the elderly people in Cambridge and the trust maybe uncertain. Also, the case of R v District Auditor exp West Yorkshire MCC shows that administrative unworkability can void a trust, in this case a trust with a potential of 2.5 million beneficiaries was deemed “quite simply unworkable” by Lord Wilberforce. However, this principle may not apply as it is unlikely for there to be 2.5 million elderly people in Cambridge.

Given that this is a Centre for the elderly it may be perceived as a charitable trust, as per Section 5 of the Charities Act 2011, to provide recreational and leisure facilities for the elderly. This must be in the interests of a social welfare under Section 5 (1), and must also satisfy the conditions of Section 5(2): it must benefit a recognized group such as the elderly and it must be aimed at improving the condition of lives. Given that it is a Recreation Centre it will satisfy all of the requirement due to its positive nature and will most likely result in a public benefit therefore this trust will be valid under a charitable trust.

The second provision of £300,000 to Cambridge University to provide scholarships to law students, in the hope that they will challenge the increasing attacks by successive governments on our civil liberties will be discussed to see if it complies with the three certainties to become a valid trust. The provision satisfies the certainty of intention as the words used can be seen as definitive and imperative for creating a trust. The intention derives from this provision as it shows John wanting £300,000 to be given to Cambridge University to provide scholarships and intention is calculated on a substantive basis and therefore it may be seen as sufficient to create a trust. However, looking at the rest of the provision “in the hope that they will challenge the increasing attacks by successive governments on our civil liberties” shows the precatory words such as ‘hope’ used and that may be viewed as a gift to the university rather than a trust however the courts will look at the intention of the testator and whether there is intent for a creation of a trust. The disposition does intend for this creation in John’s will and will comply with the requirement of intention.

The next requirement of certainty of subject matter looks at the property which is to be benefitted from. In this provision it is the scholarships which the university are to provide from the amount of £300,000. The scholarships may induce problems for identity as it is not specifically mentioned what type of scholarship or how much of the £300,000 should be spent on each scholarship so it may be seen as uncertain. The courts have a strict view on subject matter as can be seen in Boyce v Boyce, however if it is a discretionary trust then the trustees are given the power to appoint people to benefit from the trust.

The final requirement of certainty of objects will analyze who are the beneficiaries and from this provision it can be seen that law students will be benefitting from the scholarships of Cambridge University. However, the test for certainty of objects is different for fixed trusts and discretionary trusts. The university has the power to appoint people as the beneficiaries of the trust and members of the class of potential beneficiaries do not hold any beneficial interest until trustees exercise their discretion to appoint in their favour. The test in McPhail v Doulton (Re Baden’s Trusts (No 1)), as delivered by Lord Wilberforce, asked if whether it could be said with certainty that any given individual is or is not a member of the class. When the executors of Baden’s will returned to the Court of Appeal for the second time the Court held that only if a class of beneficiaries is conceptually certain will it be possible to satisfy the test. The term “conceptually certain” asks for the group to be clearly defined by the description. In John’s provision it is possible to define members of the class. The term “conceptually certain” asks for the group to be clearly defined by the description  and in John’s provision it is possible to define members of the class. Although law students can be easily identified for the university, knowing which students will “challenge the increasing attacks by successive governments on our civil liberties” may not be determined by the description of the provision. Stamp LJ takes the strict approach in determining whether it is conceptually certain by stating in McPhail v Doulton “it must be possible to say of any given individual that they are or are not within the class”, and it is conceptually certain who the beneficiaries of the trust are by determining who is a Cambridge law student.

The final provision to discuss for validity in John’s will is £600,000 to further the good work of the Mountcastle Cancer Hospice, which importantly, closes down in 2007 a year prior to John’s death.  The provision itself shows the intention of funds to be provided by John upon his death to the Cancer Hospice however where these funds come from is significant to ascertain whether it was intended to be set up as a trust or gift. As John as made a self-declaration of trust by stating ‘£600,000 to further the good work of the...” there may be issues with creating an express trust. As in the case Jones v Lock where a father gave his baby a £900 cheque and stated he will “put it away” for the child did not amount to a trust, as all he did was say this and not follow through. Lord Cranworth noted that it would be dangerous ‘if loose conversations of this sort’ declared a trust. However the provision of John’s will is a legal document that shows the intention of the John. Accordingly, intention may be identified on a contextual basis by looking at the provision as a whole, and the courts may decide this is what the testator intended. The instruction itself does express a command and implies a duty to improve the hospital which may invoke a trust.

To decide the validity of this trust, alongside intention, certainty of subject matter also needs to be complied with and this provision shows that £600,000 is subject to the instruction of the trust. There is no issues with language used on how much is subject to the trust, however the case of Hemmens v Wilson Browne shows us that where money is involved it is necessary to stipulate where it is coming from. Judge Moseley QC stated that Mrs Hemmens had no enforceable rights as there was “no identifiable fund which could form the subject matter of such a trust”. Similar to John’s provision there is no identifiable trust fund to clarify where the £600,000 is coming from and therefore there is a lack of certainty as to the subject matter and the trust fails. However, this provision may be a charitable trust and therefore not subject to the three certainties as the money is given to a Cancer Hospice as per Morice v Bishop of Durham. For the trust to benefit from the advantages of charitable status, it must operate for exclusively charitable purposes and cannot be for ‘other purposes’ as was implied in Re Macduff. The trust should also have a recognized charitable purpose and be for the ‘public benefit’. This charitable purpose must also be exclusive in its disposal. The relevant legislation adopted by Parliament under these principles is the Charities Act 2011 which provides different categories that permit for a charitable trust to be created. Section 3 (1) (d): the advancement of health or saving of lives includes hospitals, medical research and the Cancer Hospice would most certainly suffice as it can be seen as a charitable purpose under Section 3(1) (d) of the Charities Act 2011. It has a clear public benefit as it may save lives and has a sole purpose, but things to consider are if the services are free and not profit making. However, as the hospital has closed in 2007 the money may still be applied to another related purpose under the Cy-pres rule. This is because the case is of initial failure as the hospital is closed before Oliver’s will came into effect and therefore the courts may allow for the money to be applied to the work of another cancer hospice.

Bibliography

Legislation

Section 3 Charities Act 2011

Section 5 Charities Act 2011

Case Law

Knight v Knight [1840] EWHC (Ch) 11, [1840] ER 58 (Lord Langdale MR)

Morice v Bishop of Durham [1805] EWHC (Ch) 1, [1805] J 80 (William Grant MR)

Re London Wine Co (Shippers) Ltd [1896] EWHC (Ch) 121, [1896] PCC 80 (Oliver J)

Wright v Atkyns (1823) Turn & R 143, [1823] EWHC (Ch) 143, [1823] Ac 8

Re Kayford Ltd [1975] EWHC (Ch) 143, [1975] WLR 279 (Megany J)

Lambe v Eames [1871] EWHC (Ch) 100, [1871] AC 21 (Lord Langdale MR)

Re Hamilton (1895) [1895] EWHC (Ch) 1, [1895] AC 11 (Lindley LJ

R v District Auditor No 3 Audit District of West Yorkshire MCC, ex parte West Yorkshire MCC [1986] RVR 24 [1986] EWHC (Ch) 1, [1986] Rvr 24 (Lord Wilberforce)

Boyce v Boyce [1849] EWHC (Ch) 1, [1849] ER 949

Mcphail v Doulton (Re Baden Trusts) No1 [UKHL [1970] UKHL 1, [1970] AC 424 (Stamp LJ, Lord Wilberforce)

Jones v Lock [1863] EWCA Civ 1, [1863] App 4 (Lord Cranworth)

Hemmens v Wilson Browne [1994] 2 A firm 1 (Ch)

Secondary Sources

Alaistair Hudson, Equity & Trusts (4th edn, CAVENDISH 2007) 229

Anne Street Iain McDonald, Concentrate 'Equity & Trusts' (3rd edn, OXFORD 2013) 45

John Duddington, Law Express: Equity and Trusts (5th edn, PEARSON 2009) 119

Graham Moffat and others, Trusts Law, Law in Context (5th edn, Oxford 2009) 119

Footnotes

Knight v Knight [1840] EWHC(Ch) 11, [1840] ER 58 (Lord Langdale MR)

Graham Moffat and others, Trusts Law, Law in Context (5th edn, Oxford 2009) 113

Graham Moffat and others, Trusts Law, Law in Context (5th edn, Oxford 2009) 112

Morice v Bishop of Durham [1805] EWHC(Ch) 1, [1805] J 80 (William Grant MR)

Graham Moffat and others, Trusts Law, Law in Context (5th edn, Oxford 2009) 114

Alaistair Hudson, Equity & Trusts (4th edn, CAVENDISH 2007) 229

Re London Wine Co (Shippers) Ltd [1896] EWHC(Ch) 121, [1896] PCC 80 (Oliver J)

AnneStreet Iain mcdoanald, Concentrate 'Equity & Trusts' (3rd edn, OXFORD 2013) 45

Wright v Atkyns (1823) Turn & R 143, [1823] EWHC(Ch) 143, [1823] Ac 8

Re Kayford Ltd [1975] EWHC(Ch) 143, [1975] WLR 279 (Megany J)

Lambe v Eames [1871] EWHC(Ch) 100, [1871] AC 21 (Lord Langdale MR)

Re Hamilton (1895) [1895] EWHC(Ch) 1, [1895] AC 11 (Lindley LJ

R v District Auditor No 3 Audit District of West Yorkshire MCC, ex parte West Yorkshire MCC [1986] RVR 24 [1986] EWHC(Ch) 1, [1986] Rvr 24 (Lord Wilberforce)

Section 5 Charities Act 2011

Section 5 Charities Act 2011

Boyce v Boyce [1849] EWHC(Ch) 1, [1849] ER 949

Alaistair Hudson, Equity & Trusts (4th edn, CAVENDISH 2007) 229

AnneStreet Iain mcdoanald, Concentrate 'Equity & Trusts' (3rd edn, OXFORD 2013) 45

John Duddington, Law Express: Equity and Trusts (5th edn, PEARSON 2009) 119

Mcphail v Doulton (Re Baden Trusts) No1 [UKHL [1970] UKHL 1, [1970] AC 424 (Stamp LJ, Lord Wilberforce)

Jones v Lock [1863] EWCA Civ 1, [1863] App 4 (Lord Cranworth)

Hemmens v Wilson Browne [1994] 2 A firm 1 (Ch)

Morice v Bishop of Durham [1805] EWHC(Ch) 1, [1805] J 80 (William Grant MR)

Section 3 Charities Act 2011