Sei sulla pagina 1di 7

Word Count: 1621

STUDENT NO 21808161

When the legal title to particular property is held by one person while another has the use and

benefit of it, a relationship known as a trust has been created. A Trust can be said to be

legally enforceable and carries an obligation or legal duty to do or not do a particular task.

However, it can be said that it creates a sort of legal title as well as an equitable title on the

trustee and beneficiary1, therefore, it is reasonable to presume the law must be more

accountable with regards to it.

It can thus be said that a trust creates a relationship between the Creator of the trust, the

Trustee and the Beneficiary and the term ‘Trust’ merely describes a sort of understanding

between those parties. Therefore it is presumable to think that the trust in itself is not one

with a legal personality thereby rendering it incapable of holding assets under its name,

entering contracts or undertaking any other legal formalities in its own name unlike that of a

Company. As commented in the case of Tenesheles Trust & ors v BDO Mann Judd 2 a trust

was said to be one of an arrangement between parties and not a body or entity.

In the creation of a Trust one must be mindful that the certainties are clearly established as

pointed out by Lord Langdale in the English Case of Knight v Knight.3 . The trust created

should show certain clarity in the intention, the subject matter and the beneficiaries . The

Certainty of intention is also known as the certainty of words thus this means that the settlor

must express clearly that he wishes to create a trust. In the case of Re Adams & Kensington v

Vestry 4the testator had stated, Although the words “in full confidence” were used, it was

held to have not given rise to a legal duty and there was no trust.

1
ibid
2
Supreme Court of the Bahamas, 16 November 2009
3
(1840) 49 ER 58
4
(1883)

1
Word Count: 1621
STUDENT NO 21808161

The assurance of subject matter indicates that the property subject to the trust must be clearly

identified. The two fold aspects to this requirement include the certainty as to what property

is to be held on trust and the certainty of the beneficial interest of the beneficiary.

In the case Palmer v. Simmons 5 the phrase “the bulk of my residuary estate” was not clear

enough for a trust relationship to subsist. However, in Contrast, the case of Hunter v. Moss 6

points out that although the assets were intangible, it did not bar the creation of a valid trust.

Finally there must be, a person or persons entitled to benefit from the trust and as such those

beneficiaries (objects) must be clearly identified.

On analysis of the above, and observation of the statutory law in Sri Lanka it is evident the

requirements established by the various case law of England have been codified to a certain

extent here. As the Ordinance states, Settlor can create the trust by any words or acts, (a)

there should be an intention to create the trust, (b) purpose of the Trust, (c) the beneficiary,

however, the beneficiary of the trust must be a person.7. Therefore it is reasonable to

consider that there must be undoubtedly an individual or entity to which the Trust property is

bequeathed to.

As the question depicts what must be focused upon is the third and final limb which suggests

the objects of the trust must be clearly established. The principle behind the final limb was

discussed at length in the landmark case of Morice v Bishop of Durham8 of the United

Kingdom. The facts entail that the will had stated "such objects of benevolence and liberality

as the trustee in his own discretion shall most approve of".

5
[1854]
6
[1993]
7
Section 3 (d) and 06 of the Trust Ordinance of the Domestic Socialist Republic of Sri Lanka.
8
[1805] EWHC Ch J80

2
Word Count: 1621
STUDENT NO 21808161

In the dissenting judgement, the Court of Chancery held that the will of General Cracherode,

indicated that his sister Ann who was issueless and had no next of kin, were to be left his land

and fortune. The Bishop of Durham ( who was the Generals son Clayton’s friend) after

exercising what supposedly seemed to be undue influence, persuaded Ann to make a will, in

which Clayton was to be named the sole executor, with power to dispose funds at his will. It

was held initially that this could not amount to a charity, and so the money had to be returned

to the original heirs. However, Lord Eldon LC of the High Court of Chancery on appeal

held the trust could not be valid as a private trust, as it lacked a certainty of the beneficiaries.

An abstract of the judgement reads;

“......the question is, whether, according to the ordinary sense, this testatrix meant

by these words to confine the Defendant to such acts of charity or charitable

purposes as this Court would have enforced by decree, and reference to a Master.”

....I do not think, that was the intention; But it was the intention to create a trust;

and the object being too indefinite, has failed.”

In the case of in Re Endacott9, where the testator tried to create a trust and leave his residuary

estate to the Parish Council “for the purpose of providing some useful memorial to myself”,

the courts were of the view that the trust must fail due to lack of a clear identification of the

beneficiaries. The English case of Re Astor’s Settlement Trusts 10 concerns the principle

however, that non-charitable trusts when created must be solely for beneficiaries and not for

abstract purposes.

Where there is a fixed trust created by the settlor, the trust is held for a fixed number of

beneficiaries. A fixed number indicates that there must be with some certainty who the

9
[1959] EWCA Civ 5
10
[1952] Ch 534

3
Word Count: 1621
STUDENT NO 21808161

beneficiaries are. If this is unclear and or incapable of being ascertained the trust would be

deemed void. 11

In the event the authors were to create a discretionary trust, a clear classification of

beneficiaries must have been established by the settlor. The words “my relatives and

dependants of staff” were stated to have a form of abstract certainty as depicted by the case of

McPhail v Doulton12. This view was also followed in the case of Re Baden’s Deed Trust (no

2) 13.

14
However; one may note that in the case of Paul v Constance the Court of Appeal pointed

out that it was necessary that a settlor's words and actions show a clear intention to dispose of

the property. Here the words and conduct demonstrated that he wished for the money to be

held on trust for Mr Constance and Ms Paul jointly.

On analysis of the view of other jurisdictions with regard to the above requirement, In re

Belcher15 Fullagar J who had before him a direction given to trustees to distribute income at

their discretion among “ Navy League Sea Cadets or any other youth welfare organization

male or female as in their wisdom they deem fit”. His Honour was of the opinion that the

words “any other youth welfare organization” went too far and did not further fall under the

provisions of a charitable purpose.

Where the beneficiaries were to include future members and where there was an uncertain

amount of people a trust would once again fail as highlighted by the court in the Sri Lankan

case of Anthony Gasper v. Bishop of Jaffna16. Further in the Indian case of

11
IRC v Broadway Cottages [1955] CH 20, UKHL 5,, AC 508
12
[1971] AC 424
13
[1972] EWCA Civ 10
14
[1976] EWCA Civ 2
15
[1950] V.L.R. 11.
16
NLR-Vol. 52 p 230

4
Word Count: 1621
STUDENT NO 21808161

Bonar Law Memorial Trust v. Commissioners of Inland Revenue17 the trustees were

directed to apply property "for such patriotic purposes or objects and such charitable object

or objects in the British Empire as they in their absolute discretion should select". The

bequest was considered void as a patriotic purpose could not have necessarily meant it was

charitable.

In addition it can be seen in the case of Bowman v Secular Society Ltd18 that a trust for the

attainment of political objects would be deemed invalid, because the court could not have the

means of judging whether a proposed change in the law would be for the public benefit.

In conclusion, as we go through the above cases it can be seen on the one hand that although

the beneficiary is vested with title of legal ownership, and is bound to maintain, use and

dispense with the trust, he cannot do so for his personal benefit (Trustee can’t benefit from

trust), but must do so for a clearly defined third party in a fiduciary position. On other aspect

it must be remembered that the discretion upon the trustee must be exercised carefully and

the beneficiaries/objects must be clearly identified at the very outset when creating a trust. the

benificieryys should be able to ascertain or ascertainable. in mal administration of trust only

benificieries could able to go to the court because they are the one who are getting detriment.

but in Re Tuck’s judgement Lord Denning emphasized that the Uncertainty can be sort out by

a third party delegation. However in both Re Coxen [1948] Ch.747 and in Re Wrights Will

Trust 1981 disagree with Lord Denning. Personally i am agreeing with Re coxen. Therefore

all the trust should have a certain beneficiaries except for the charitable trusts.

17
[1962] AIR 1589
18
[1917] AC 406, 442.

5
Word Count: 1621
STUDENT NO 21808161

Bibliography

Primary Sources

Legislation

 Trust ordinance No.09 of the Democratic Socialist Republic of Sri Lanka

 Trustee Act 1925 (United Kingdom)

 Trustee Act 2000 (United Kingdom)

Secondary Sources

Books

 Trusts Law (Palgrave Macmillan Law Masters); ISBN-10: 0230275990

 University of London, Undergraduate Programmes, Law of Trusts Subject Guide

 Reception in Ceylon of the English Trusts Law by L.J.M. Cooray (1971 Edition)

 Introduction to the Law of Property, Estate Planning, and Insurance by Don Mayer, Daniel

Warner, George Siedel, and Jethro K. Lieberman ISBN: 978-1-4533-2638-1

Journals

 http://www.austlii.edu.au/au/journals/QldJSchol/2011/54.html

 http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1958/1.html

6
Word Count: 1621
STUDENT NO 21808161

Web

 www.lawlanka.com

 https://www.lawnet.gov.lk/1977/12/31/anthony-gaspar-et-al-appellants-and-the-

bishop-of-jaffna-respondent/

 www.wikipedia.com

 https://indiankanoon.org/search/?formInput=trust%20cases

Valuta