study pack 1 + Hayton: certainty of beneficiaries

Re Baden (No.1) - HL, by a bare majority of 3:2,

Principle:
1) the objects of a trust must be defined with sufficient certainty to enable the trustees to execute the trust according to the settlor's intention.
The objects of a power of appointment must be defined with sufficient certainty to enable the donees of the power to exercise it according to the settlor's intention
2) Certainty:
- conceptual certainty - precision of language used by the settlor to define the classes of person whom he intends to benefit
- evidential certainty - extent to which the evidence available in a particular case enables specific persons to be identified as members of those classes
- ascertainability - extent to which "the whereabouts or continued existence" of persons identified as beneficiaries can be ascertained
- administrative workability - extent to which it is practicable for trustees to discharge the duties

This article argues that:
- same degree of conceptual certainty is required for all trusts and powers of appointment
-

Aspects of certainty: 4 notions:
1) conceptual: meaning of "ex-employee"
2) evidential: e.g. A alleged that he is an ex-employee, but the record is destroyed by fire.
3) ascertainability: not sure if Tom is dead or not
4) how extensively must we survey the class of potential beneficiaries?

Fixed trust:
Complete list rule:
conceptual uncertainty: e.g. friend, old friend, person who has a moral claim on X
what degree of conceptual uncertainty will the courts tolerate?
Re Gibbard - a concept was sufficiently certain if it could be said in principle of at least some persons that they were within the class
Re Gulbenkian: this is not the correct test fo power of appointment

Gift upon conditional precedent

Re Allen - "to the eldest of the sons of [A] who shall be a member of the Church of English and an adherent to the doctrine of that church"
Held: the appellant should be permitted to seek to establish as a matter of fact that R had been a member of the Church of England and an adherent to its doctrine.

Re Barlow's Will Trusts - Browne-Wilkinson said that the "Re Allen test" was that the gift is valid if it is possible to say of one or more persons that he qualify, even though it may be difficult to say of others whether or not they qualify.

Re Clarke - TOR directed that his residue should be divided among each of four named "legatees". The gift to the last legatee failed. Held: each of the first three charities was entitled to a quarter of the residue, the fourth quarter went as on intestacy.

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Hayton textbook
Re Baden no.2:
Stamp LJ: relatives = next of kin, the trust is valid
Megaw LJ: substantial number of objects it can be said with certainty that they fall within the trust. What is a substantial number may be a question of common sense and of some degree in relation to the particular trust
Sachs LJ:

Cure uncertainty:
No
But what if the settlor gave personal power to widow that she can decide in case of doubt?
It seems unreasonable for the court to claim it invalid
But if it is valid that it seems unreasonable for the court to claim that the trust with trustee with fiduciary power being invalid



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Penner: administrative unworkability
McPhail, Lord Wilberforce: all the residents of Greater London

ambiguity of "hopelessly wide": size of the class? If the problem is survey? class definition? vague?

Only reported case in which a trust has failed for administrative unworkability is R v District Auditor, es p West Yorkshire MCC: any inhabitants of West Yorkshire
Lloyd LJ: class is far too large. the class was an accidental conglomeration of persons who had no discernable link with the settlor. and it is a non-charitable purpose trust.

3 cases dealing not with discretionary trusts, but with "intermediate" powers: power to appoint to anyone in the world except for a specified class:
Clausten v IRC
Re Manisty's Settlement
Re Hay's ST

Blausten: Stamp LJ focus on duty to survey
Manisty: Templeman: validity of any particular appointment. Templeton was not perturbed, expectations of the settlor are often not difficulty to discern

Another candidate for meaning of administrative unworkability: the settlor's direction is so capricious that no trustee could discern a sensible way to carry it out

Bird v Luckie: a testaor is permitted to be capricious
Brown v Burdett: testator's instruction to trustees to block up the rooms of a house for 20 years was struck down

Re Hay's: the width of a power pe se could not invalidate it if it were given to a non-trustee. The difficulty arises when the power is given to a trustee, whose fiduciary position requires him to deal with the power responsibly.

Swadling suggests that the test of administrative workability requires there to be a "core class" of objects within the larger class.

recent developement 2013

Hunter v Moss - argument: similar to wills.
- Hayton's criticism: a will is different, the executor divest all of the legal and beneficial title. In a trust, the alleged settlor only creates an imperfect gift.
- Criticism 2: equity does not perfect an imperfect gift.
- Alternative approach: the court impose a constructive trust on M, M holds the trust for Hunter and himself, 50 of the shares are for Hunter and 900 shares for Moss himself, as tenants in common.
- This approach is approved by Pearson v Lehman Brothers Finance, White v Shortall

Grainage v Wilberforce
Nelson v Greening & Sykes - the trustee of the sub-trust never drops out of the picture. So 53(1)(c) should never apply in cases where a sub-trust is declared.

Standard of proof in the case of secret trust:
Re B (Children): there is only one civil standard of proof, and that is proof that the fact in issue more probably occurred than not.

Resulting trust -
s.199 Equality Act 2010 - the presumption of advancement is abolished
---------------------------------------------------------------------------
Glister, J. ‘Section 199 of the Equality Act 2010’ 2010 73 MLR 807.
Although the presumption of resulting trust assumes that the recipient was not meant to receive the property beneficially, the presumption of advancement does not just assume that beneficial title was indeed intended to
pass—in fact it goes further and presumes that an outright gift was intended. This
means that, for example, both presumptions are rebutted by evidence that the donor
actually intended to make a loan to the recipient.

Sub-rule model
Maitland described the presumption of advancement as a ‘sub-rule’ of the general
presumption of resulting trust, by which he meant that the advancement
presumption was just one way of rebutting the overarching presumption of
resulting trust.
- fall to the donor to rebut the presumption of advancement, to show that they formed no intention to make a
gift to the recipient

Absence model
For Ashburner there should be no presumption of resulting trust at all in cases where a presumption of advancement applies.

Dullow v Dullow, Hope JA called the presumption of resulting trust
completely anachronistic and said that reform was overdue
This abolitionist view commands much judicial and academic
support,48 but in practice judges have not felt able to overthrow the presumptions.
Instead those presumptions have been described as entrenched ‘landmarks’ in the
law of property.49 It is therefore argued that in Australia the presumptions are

here to stay,50 at least for the moment, and so are still worthy of comment.

Standard of proof
in Pettitt v Pettitt, Lord Upjohn
commented that either presumption could be rebutted by comparatively slight
evidence.Court of Appeal case of McGrath v
Wallis confirmed, Laskar v Laskar seems to confirm that a presumption of advancement

between parent and child may be rebutted with slight evidence.

The three English cases all involved shared homes, and it could be
that the slight evidence requirement is actually a reflection of the general English
judicial dislike for both presumptions in shared home cases

Stack v Dowden: ‘in a case about beneficial ownership of a matrimonial or
quasi-matrimonial home (whether registered in the name of one or two legal
owners) the resulting trust should not in my opinion operate as a legal
presumption’.

More recent cases:
Damberg v Damberg (australia case), Lohia v Lohia (UK), Pecore v Pecore (Canada) : civil standard needed to rebut presumptions

Exactly what must the transferor prove?

what kind of trust?
Sub-rule model -
Absence model - express trust

p.15
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Re Buckinghamshire Constabulary Fund - when only one member left, the property was held on trust for the Brown bona vacantia

Hanchett‐Stamford v A‐G- Lewison J:  dissolution occurs by death of the members makes no difference to the destination of rights on dissolution

------------------------------------------------------------------------
Briggs, A. ‘Co‐ownership and equitable non sequitur’ (2012) 128
LQR 183.------------------------------------------------------------------------
Mee, J. ‘Ambulation, Severance, and the Common Intention
Constructive Trust’ (2012) 128 LQR 500.<-----------------------------------------------------------------------
Sinclair Investments v Versailles Trade Finance -
Facts: D is director of VGP and TGL. VGP is a public company, it fabricated large business transactions. TGL is an investment company, it transfer client's investment to VGP. Share price of VGP rose enormously. D sold part of his shareholdings in VGP.
Held: the receipt of a bribe does not normally give rise to a constructive trust.
A beneficiary will only have a personal claim against the fiduciary in respect of property which neither belonged to the beneficiary nor was acquired by taking advantage of an opportunity that rightfully belonged to the beneficiary. Thus a beneficiary can only claim the original value of any bribes taken by the fiduciary and not any subsequent additional profit.

Category 1: where the benefit is or was an asset belonging beneficially to the principal
(most obviously where the fiduciary has gained the benefit by
misappropriating or misapplying the principal's property)
Category 2: where the benefit has been obtained by the fiduciary by taking an advantage of an
opportunity which was properly that of the principal.
Category 3: all other cases

Category 1 & 2: constructive trust. Category 3: does not

Lister & co v Stubbs: 

FHR European Ventures LLP v Mankarious (2013) - Lister & Sinclair are both correct. Held: a secret commission obtained by a purchasing agent was held on constructive trust for the
principal.
Etherton C: this case is borderline between category 2 and 3.

Tutorial Q1

After Kemp v Kemp, the court would not exercise discretion to distribute property unequally. Now, equity is equality.

McPhail v Doulton changed the test of certainty that applied to the objects of discretionary trusts.
Re Gestetner Settlement - a complete list is not needed in power of appointment. Thus was born the 'is or is not' test.
IRC v Broadway Cottages Trust - whether 'is or is not' test could be applied to discretionary trusts
argument for complete list test:
- if no complete list, t'ee cannot satisfy the duty - choosing the right b1b2 out of the whole set
- court unable to deal with failure
argument for is or is not test:
???
McPhail v Doulton - 3:2, held: 'is or is not' test was appropriate for discretionary trusts as well
Wilberforce: equal distribution is not possible, and is the last thing the settlor ever intended.

Trust tutorial Q1-4

"It seems to be as plain as can be that if all the objects are not ascertainable, then to distribute amongst the known objects is to take a narrower class than the settlor has directed and so to conflict with his intention' (Lord Guest (dissenting) in McPhail v Doulton (1970))


2. Explain the effect of the following separate transactions:

i. Alfred, the proprietor of a registered title to land, orally declares that he holds it on trust for Brian;

ii. Claudia, the proprietor of a registered title to land, completes a registered transfer form insructing the Chief Land Registrar to register David as proprietor. Before sending off the registration form, Claudia obtains David's agreement by telephone to hold the title on trust for Elizabeth. David is later registered as proprietor;

iii. Francis, the sold beneficiary of a bare trust of a title to a valuable painting, orally instructs his trustees to make a gift of the title to Graham, which they do by handing the painting to him;

iv. Harry, the sole beneficiary of a bare trust of shares, orally declares that he holds his rights on trust for James.


3. "It is high time the ghost of fraud was once and for all exercised from the doctrine of secret trusts".
Discuss

4. On the marriage of A to B in 2008, A's father, C, a widower, covenanted with D and E, that he (C) would transfer to them any rights valued at more than $10,000 he might receive to be held on the following trusts, namely, successive life interests to A and B, remainder in equal shares to the issue of the marriage, but, failing issue, to A's brother, F, absolutely.

In 2010, C acquired a painting under the will of a distant relative. The painting was valued at $250,000, but C failed to convey it to D and E. By his will drawn up in 2011, C left the painting to his cousin G absolutely.

Advise F as to his position regarding the painting. Would your answer differ if he could secure the co-operation of D and E in enforcing the covenant?

variation of trusts

sui juris beneficiary - full age and sound mind
Principle in Saunders v Vautier - a sui juris beneficiary can collapse the trust.
By the same token, they can vary the terms of a trust.

2 limitation:
1. Re Brockbank: they cannot ask the t'ee to make such and such decision. They can insist upon a variation
2. only sui juris beneficiary can (Variation of Trust Act 1958)

Chapman v Chapman - HL said that the court has no inherent jurisdiction to consent to a variation of the trust on behalf of sui juris beneficiary. The inherent jurisdiction of a trust is only limited to:
1. grand additional administrative power to t'ee in emergency situation
2. sanction maintenance payments to beneficiary

Trustee Act 192, s.57 extended the court's power over emergency situation.
Trustees of the British Museum v AG - the court extend the t'ee's power of investment, based on the factors including:
i) standing of t'ee, their admin plans
ii) size of the fund
iii) object of the fnd


Variation of beneficial interest: Variation of Trusts Act 1958
- the court might approve if the variation would be for their benefit

Goulding v James - the s'or's intention is only relevant if they help the court to determine the what is of benefit to the beneficiaries
Knocker v Youle - but this Act may give rise to substantial inconvenience

Promises to create trust

Only 3 types of promises that the court will enforce
- promises in deeds
- promises given for consideration
- promises detrimentally relied upon

Promises in Deeds

Basic rule: promise contained in a deed is called a covenant. CL will enforce it whether there is consideration or not, but equity will not because equity looks at intent not form
whether a third party can enforce a covenant at CL is a question. If covenant is a contract, C(Rights of Third Parties) Act 1999 will help. But we are not sure if a covenant is a contract or not.

Enforcement by the intended beneficiary
In general no, except:
i) C is a party made by statute
ii) C is within marriage consideration
iii) trust of the right to sue on the covenant - Re Cook's ST - problem: no declaration of such trust (some said such intention should be inferred from the mere fact that the promise to create a trust was contained in a deed). problem 2:
after-acquired property

*quid pro quo -a favour or advantage granted in return for something.
"the pardon was a quid pro quo for their help in releasing hostages"

Enforcement by the intended t'ee
- Re Pryce, re Cook's ST, Re Kay - please note these are decisions at first instance
- even if these cases are wrongly decided, what damages can t'ee claim? substantial or nominal?
- all B entitled is nominal damages because he is no worse off > Promises for consideration. 
But in the eyes of law, they are the owner of the property and therefore they have suffer lost.

Promises for detrimental reliance



Penner Chp.8-
The enforcement of covenants to settle by equity
-Covenants are promises formally expressed by being written in a deed
- covenants must be distinguished from contracts
-modern law of contract developed out of law of covenants. there is no formality requirement before (Now LP(MP) Act 1989 s.2. require contracts in land be made in writing though)
- a covenant is a formal means by which CL will enforce it, regardless of consideration
- equity will not enforce a gratuitous promise only because it is in a deed. Because equity will not assist a volunteer
- covenant to settle is a covenant to create a trust
- marriage settlement - a trust created by a man or woman in contemplation of marriage (because in 19th century a married woman's property become her husband's)
- these covenants are not made for any consideration
- AG v Jacobs-Smith - Equity regarded marriage as "the most valuable consideration imaginable"
- if they are already married, and they set up a trust for themselves, their children do not create a marriage settlement
- Pullan v Koe - wife transferred some after-acquired property to husband's bond. Husband dies. T'ee sue husband's executor to transfer the bond to them so that the t'ee can hold them on marriage settlement trusts. Held: yes, it is duty of t'ee to enforce the covenant
- Re Plumptre's marriage settlement - next of kin sue to enforce a covenant. Held: they cannot because they are volunteer, they are not within the marriage consideration. If it is a fully constituted trust, the volunteer beneficiary has the same right as beneficiaries who have given consideration

- Davenport v Bishop - once the c'or has transferred the properties to the t'ee, it is constituted for both non-volunteer and volunteer beneficiaries

The enforcement of covenants to settle at CL
- Re Pryce- said t'ee cannot sue c'or to transfer the property in favour of next of kin. Because if so, volunteer beneficiaries would be able to enforce the promise, which they could not through equity
- criticism of re Pryce - equity will not assist a volunteer, it does not mean that equity will stand in the way of a volunteer. Although the t'ee is asking if they have to sue or not, and the t'ee is not asking for help from equity, if they are to sue, they will sue at CL.

- 2 cases go in another way - Fletcher v Fletcher, Re Cavendish Browne's ST.
- 2 cases follow Re Pryce - Re Kay's ST, Re Cook's ST.
So now the authority is t'ee cannot sue for damages at CL
- Cannon v Hartley - father failed to settle the property. Daughter sues for damages. Held: yes
- if t'ee brings an acition at CL for breach of covenants. He may recover on 2 basis: certain sum, or c'ee's loss. Sometimes it is argued that c'ee lost nothing because it is the beneficiary who lost. So if the damages are paid on the basis of the latter criteria, the sum pay would be nominal. CL does not allow him to recover the damages for a third part (volunteer here): Woodar Investment Developemtn v Wimpey Construction UK
-

The trust of the benefit of a promise to settle
Until c'ee has the property constituted in him he holds his CL rights to enforce the covenant for himself absolutely

XXX

Fortuitous vesting of the trust property

-Re Brook's ST

Resulting trust

Penner Chp 5:
feofees - 公共不動產管理人
feoffments - transfer of land or property to the other given the other the total right to sell it as well as the right to pass it on to his heir feoffments to use were so common, equity assume that this was the normal basis upon which land is conveyed.
This is called the presume resulting trust.  This presumption is not abolished today yet, probably the court usually could find sufficient evidence to know what the actual intention of the parties, on balance of probability
RT: 2 kinds: Presumed RT and Automatic RT
PRT: 2 kinds: voluntary transfer PRT and purchase contribution PRT
Purchase contribution PRT: IF, A pays C to transfer property to B Presumes, B holds property on trust for A
Difference between these 2 types of RT:
Megarry J in Re Vandervell (No.2) - ART does not depend on any intentions or presumptions, but is the automatic consequence of A's failure to dispose of what is vested in him

PRT: s.60(3)1925 Act, a RT is not to be implied merely because there is no express statement saying that this is a gift, not a trust
Lohia v Lohia - it did abolished the presumption
Ali v Khan - agrees wiht L v L
(N.B. the section does not abolish the presumption in purchase contribution PRT cases)
Fowkes v Pascoe - the presumption is rebutted since there is no other conceivable reason for her to transfer the stocks to him (Mrs Baker treated Mr Pascoe as a grandson, there is evidence that she intended to give the stocks to Mr Pascoe as a gift)
Re Vinogradoff - woman buy loan stock into joint names of herself and her 4-year-old granddaughter.
Held - presumption not rebutted - infant hold the stock on resulting trust (L: W + baby, e: W)
contribution in purchase contribution PRT should be read as "purchase contribution in money or money's worth"
Springette v Defoe - sitting tenant (現任租戶)
Assume A and B buy a house which costs GBP50,000.
A pays GBP10,000. Mortgage provides GBP40,000, under which both A and B are liable.
A's equitable share: (10 + 40/2)/50 x 100% = 60%
B's equitable share: (40/2)50 x 100% = 40%
If the house doubles in value; GBP100,000.

Assuming after paying the mortgage loan, the profit is GBP40,000. A gets 24k, B gets 16k.
The presumption of RT: In order for A to get the benefit of presumption, he only has to provide evidence of the transfer itself. A does not have to prove that B provides no consideration. B will then give evidence. E.g. shows that he pays for the car, written contract of sale.
B is said to rebut the presumption of RT.

What is the content of presumption of RT? 4 theories:
i) the law presumes that the transferor declares an express trust over the property now in B's hands (Swadling)
ii) A intended B to hold the property for A on trust (Mee)
iii) A did not intend for B to take the title to the property beneficially (Penner)
iv) no legal basis to which B can point to show that A intended B to receive the property for his own benefit (Chamber & Birks)

Different theories will give different result. e.g. payment by mistake. If you use theory (i), A does not intend to declare an express so no RT. If you use theory (iii), A did not intend for B to take beneficially, so there is a RT.

 i) criticism: it cannot explain many cases. Re Vinogradoff - if using this model, this case is wrongly decided. Penner pointed out that this model is still wrong because in family home cases, it does not seem that the husband has expressly declares an express trust.(my question, is it still RT? L: H, e: H+W)

Midland Bank v Cooke. Swadling would say, these are actually constructive trust, rather than presumed resulting trust. Because the wife's contribution is simply a factor in finding a constructive trust. (my question: if wife contributes
purchase contribution)

ii)
iii) 5.20 -24 skip - please read later Presumption of advancement: only father to child, or husband to wife.

Court will infer that a man is making a gift

Sekhon v Alisa -No presumption of advancement from mother to child, unless the mother is a widow If man wants to show that the transfer is not a gift, he has to provide evidence. 2 ways to understand the relationship between the 2 presumptions >> it is a second step to presumption of RT: where father leads evidence to overcome the presumption of advancement, the presumption of RT falls back into place >>there is no presumption of RT in cases where presumption of advancement applies.

Laskar v Lasker - suggests that the presumption of advancement might apply between mother and daughter as well
Antoni v Antoni - pres. of advancement operates between parent and child
Pecore v Pecore (Canadian case) - pres of advancement operates between parent and minor child
McGrath v Wallis - the pres of advancement is rebutted because:
1) putting the property under the son's name would assist an application of a mortgage
2) declaration of trust is drawn up by a solicitor (although never executed)
3) father is 63 years old, good health, no obvious reason that he is making a gift to his son.
The court did not say there is a purchase contribution RT in this case, rather the court declare a trust and determine the equitable shares based on their intention objectively
ART: what the s'or fails to give away, he keeps. Swalding and Chambers does not agree, because in the beginning s'or has a title, but at the end of story he has an equitable title, so we cannot say that he "keeps". It really just fails, leaving him exactly as he was before. So, Swalding thinks there is no ART at all.

Disposition by a beneficiary of his interest

http://books.google.com/books?id=ga9gAQAAQBAJ&pg=PA149&lpg=PA149&dq=sub-trust+2+legal+title&source=bl&ots=4rjCZcE-tP&sig=t_zQsCk5qST3vV0hpwnJbnRU12c&hl=en&sa=X&ei=y73GUtbkBKquiQfRsoDYDA&ved=0CFwQ6AEwCQ#v=onepage&q=vandervell&f=false

s.53(1)(c) -

T - B1 (equitable interest)- B2 (beneficial interest)
Grainage v Wilberforce - if B1 creates a bare trust for B2, he simply drops out of picture(because you have nothing to do and so become superfluous. So in effect B1 is disposing his beneficial interest, so this "transaction" is caught by s.53 (1)(c)

Nelson v Greening & Sykes -
Lawrence Collins LJ - the creation of a bare trust might in practice make it more convenient for the t'ee to deal directly with the beneficiary, this was not the same thing as a matter of law.

Current position:  Declaration of sub-trust are not dispositions of the beneficiary's equitable interest

Vandervell - Vandervell directed the bank to transfer the shares to RCS, dividends were declared, shares were then bought back by VT.
IRC: V retained an interest in those shares so was liable for tax
2 arguments:
1. V's direction to the bank to make an outright transfer to RCS was an attempted disposition of V's equitable interest. Since it has not been made in writing it was ineffective and V retained his e interest.
2. the option to buy back the shares from the RCS, which had been granted to VT, was received by VT not beneficially but on trust, since VT's sole purpose was to be a trustee company. However, V had never declared the trusts on which VT was to hold the option, so in the absence of any effectively declared trust VT held the option on RT for V as settlor.

HL: rejects 1st argument but accepts the 2nd. So liable for tax on the dividends.
HL unanimously held that the direction to the bank, which was t'ee of the shares, to transfer them outright to the RCS was not a disposition of V's equitable interest so does not fall within 53(1)(c).
Lord Upjohn: the situation was analogous to an outright transfer by a shareholder with legal beneficial title to the shares, since transfer of legal title to the shares by the bank to the RCS itself required documentation, there was no reason to require an additional document to transfer the beneficial interest.
Lord Wilberforce: Re Rose principle


criticism to Lord Upjohn and Wilberforce:
1.
2. the rule in Re Rose applies once we know what steps the transferor needed to take to make the transfer effective. But the rule does not tell us what the necessary steps are, and this was the question which faced the court in Vandevell.



wiki:

The House of Lords, by three to two, found that Vandervell was indeed liable to pay tax on the £145,000 of dividends given to the Royal College of Surgeons. The House of Lords held that LPA 1925 s 53(1)(c) was not applicable to situations where a beneficiary directs his trustees, by way of his Saunders v Vautier right to do so, to transfer full legal and equitable^[5] ownership to someone else. As such, Vandervell had not successfully divested himself of ownership (legal and equitable) in the shares, since the Trust Company had an option to purchase the shares back from the RCS. The case is a proposition that an oral declaration to a bare trustee to transfer the trust property to a third party absolutely for his own benefit is a valid disposition. If the settlor does not divest himself adequately as in Vanderwell v IRC an ART would operate.The option to purchase a substantial fraction of the company for only £5000 was extremely valuable. As such, Vandervell was liable to pay surtax on the option.

Lord Wilberforce said that there was,

“

no need, or room to invoke a presumption. The conclusion, on the facts found, is simply that the option was vested in the trustee company as a trustee on trusts, not defined at the time, possibly to be defined later. But the equitable, or beneficial interest, cannot remain in the air: the consequence in law must be that it remains in the settlor.

Vandervell No.2:
Shares bought back by VT with money from the children's trusts.
VT wrote to IRC and said the shares were now held on trust for the children
IRC: you still have an interest in the shares
4 years later, V executed a deed by which he transferred all rights he might still have had in the option or shares to VT to hold on the children's trusts.
question before the court: whether V retain interest in the shares in the period between VT's purchase of the shares and V's execution of the final deed?


IRC:

Proving declaration of trust

In general, oral testimony is admissable in civil cases. Same rule applies to prove the right-holder has made a declaration of trust. Except: 1) Land: the admissibility rule s.7, 1677 Act> s53(b) 1925 Act: declaration of trust of land must be manifested and proved by some writing s.7 1677 Act is qualified by s.8 1677 Act. s.8 1677 Act> s53(2)1925 Act Purpose is to prevent perjury (偽證罪) long time ago Writing does not have to be pre-dated. It could be post-dated. Gisseng v Gisseng - wrong - the declaration itself does not need to be "in" writing ***s.53(b) is only a rule of evidence. It is not concerned with enforceability, but with proof, a logical prior question Sometimes court allow the evidence to come in. Rochefoucauld v Boustead. CA: the statute designed to prevent fraud could not be used to effect a fraud R v B criteria: i) must be express trust 2) Testamentary trust controverted fact - 反駁 misnomer - 人名誤載 Burden of proof: General rule is he who asserts must prove (e.g.the husband, because he wants to say that wife holds it for him, and it's not a gift). 2 exceptions: i)Not husband or father (e.g. third person, wants to show that husband did not say it's a trust and therefore the transfer is a gift) ii)

constitutions

Constitution - transfer of the rights from settlor to t'ee e.g. transfer of e benefit, s.53(1)(c) 1925 Act The effect of perfect constitution - B can enforce the trust against the t'ee. It does not matter even if B gives nothing in return Milroy v Lord - equity will not assist a volunteer to perfect an imperfect trust. imperfect constition cannot be interpreted as a declaration by the settlor of himself as trustee Richards v Delbridge - same argument for gifts EXCEPT 6 situations: 1) detrimental reliance - Pascoe v Turner, Dillwyn v Llewelyn 2) Re Rose - while the settlor has done everything in his power to perfect the gift/trust (3rd party's assistance is needed), court will perfect the gift criticism: no detrimental reliance, no base, and maxim "equity looks upon that as done which ought to be done" does not actually apply here. 3) Strong v Bird testatrix (留有遺囑的死者)intend to release the debt, i.e., promise not to sue. Re Stewart extend the rule from releaseing debt only to all kind of rights. 4) The rule in Ralli details: pls see covenants to settle 5) Donatio mortis causa If I die, this watch is yours. Normally such gift would be subject to Wills Act 1837, which prohibit oral wills. But court render valid. Conditions for the operation: Cain v Moon. 6) unconscionability. Pennington v Waine - same facts, but result hard to reconcile with M v L.

Breach of trust

Court order: specific performance, or appoint a new t'ee. personal liability proprietary liability A third part may be personally liable as well by assisting the breach of trust trust account: records of the rights coming into and going out of the trust fund taking of/calling for an account: B sues t'ee for breach of trust falsify an account: when the t'ee has entered into a transaction which is not authorised, or he has paid to a person who is not a beneficiary of the trust, B can failsy the account in respect of that particular transaction Remedy - t'ee restore the breach (e.g. buy back the property, any difference comes out from his own pocket). If he cannot restore it, he has to pay from his own pocket Surchaging - the trust fund has less value than it should have had, due to negligence of t'ee strict liability, can escape when: 1) B consent to the breach 2) exemption clause 3) s.61, 1925, court relieve

Constructive trust

Real trust:
1) enforceable contract
2) imperfect gift

Fake trust: 2 types: institutional (arise by rules) and remedial (court's discretion)

Reasons of why remedial trust arise: Professor Birks: events which give rise to right:
1)manifestation of consent 2)wrong 3)unjust enrichment 4)others
Wrong-doing: CL: damages e: liability to account as a constructive trustee, or, equitable compensation
Lister v Stubbs Dubai Aluminium, Lord Millett suggested to jettison the language of constructive trust
AG for HK v Reid, Lord Templeton: there is a C trust because "equity considers as done that which ought to have been done"
Unjust enrichment
Chase Mangattan v Isarel-British Bank, mistaken payment: equitable property in the transferor, the legal property in transferee, so there is a trust arisen by operation of law.
Criticism: this is wrong, because there is no pre-existing interest.
This case is disapproved in Westdeutsche Landesbank v Islington LBC

secret trust

s.9 Formality of wills:
a) in writing
b) intend the signature to be effective
c)  K+A
d) i) witness signs, or
ii) witness acknowledge

These are not merely evidential requirements.
s.15 1837 Act - to ensure the impartiality of the witnesses, gift to witness or spouse would be avoided
s.20 - any alteration must be in the same form as the will

3 types of secret trust:
1. Fully secret trust: Has will
but it does not mention there's a trust
- Will says: to Fred
- I said: Fred I left money to you, please hold it on trust for Fifi
- Fred accepted
- a constructive trust is imposed on Fred to prevent him from unconscionably denying Fifi's right
ReBoyes - the names of other persons are not communicated to the executor, therefore no certainty of object, trust fails. It would be enough if I pass to Fred a sealed envelope and told him there are names inside the envelope

2. Full secret trust: No will
- rule of intestacy: my rights will go to my bro
- I said: Brother, when you get $, please hold a certain amount on trust for Fifi


3. Halfly secret trust: has will
- Will says: to Fred on trust for the purpose I have communicated to him
- a half secret trust needs to be created before the will, and can be regarded as incorporated into the will. (Blackwell v Blackwell)
- Blackwell v Blackwell -




-  please mention s.9 of the Wills Act - no will shall be valid unless
a) it is in writing
b) it is signed
c) it is witnessed
s.9 renacts Fraud Act 1677, it is an anti-fraud statute

Fifi wants money, Fred denies, Fifi goes to court, burden of proof on her.
Fred said you cannot bring evidence to court because of s.9: admissibility of evidence that is not in a form of signed writing  evidential provision
- substantive provision
- difference
All cases treat s.9 as evidential provision

Solutions

Solution 1: Fraud theory
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Gary Watt - Trusts and Equity textbook
- secret trusts are not subject to the Wills Act Testamentary transactions:
mutual will & secret trust testamentary disposition needs to be within the formalities laid down by Wills Act 1837

Mutual wills - when a husband and wife enters into a binding contract, that ensures when one of them dies earlier, the property would be left to the surviving person - the surviving spouse is bound in equity under a constructive trust to dispose the property in accordance with the agreement to create mutual wills
Re Dale- H and W agreed that they would draw up wills leaving the property to their son and daughter equally. H died, left the property to S and D. W later drew up a new will leaving all property to S.
Held: S must hold W's estate on trust for himself and his sis equally  PE giving rise to Constructive trust? fault lines
1) Gillet v Holt: PE usually is concerned with the benefits of the primary parties, while mutual wills & secret trusts are about the benefits of a third party
2) a mutual will depends upon a contractual agreement whereas PE does not
3) PE is not a remedy itself, but only a cause of action. Secret trust  Floating or suspensory theory  

Criticism of Fraud Theory:
- circular argument
- in half secret trust, if court does not let evidence in, there will be a automatic RT back to the s'or's estate. The trustee gain nothing - there is no fraud to prevent

Response to the criticism:
Blackwell v Blackwell - redefine what Fraud means. Lord Buckmaster & Lord Hailsham said defeating the expectation of the secret beneficiaries is also a fraud

Response:
But this response does not solve the problem that the argument is circular

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Solution 2: Cullen v AG for Ireland
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Solution 3: outside (dehors) the will theory

1. secret trust are inter-vivos declaration of trust by the t'or (questionable. Re Gardner No.2 said it is inter-vivos trust, but actually dehors the will theory's basis is that the trust arise when the subject matter is constituted into the trustee, there is no inter-vivos trust <
2. Mattew's theory:

criticism: narrow interpretation of "will". "Will" mentioned in the 1677 statute is the "totality of the t'or's wishes" (s.1)
it could not work because I cannot declare a trust on future property, I might lose the property before my death. Moreover, if it is cash, I have to identify the very coins and note, otherwise the trust will fail because of uncertainty of objects.


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Solution 4: incorporation by reference

criticism: it only applies to documents, whereas in secret trust cases the court is admitting oral testimony
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*legatee - a person who receive a legacy

Some specific issues:
- non-conforming evidence

Timing of acceptance:
Fully ST - before t'or's death(re Boyes): he has to know that t'or intended him to be a t'ee
Half ST - before execution of the will (obiter in re Keen). because otherwise t'or can change the will without a codicil
problem:
1) change of mind =/= change of will because it is outside the will
2) post-execution communication is accepted in fully ST, but not halfly ST cases. This is not fair.

2 or more t'ee - is the t'ee who are not told bound by it?
- Re Stead - TIC: only those who know are bound. JT: before or after execution of will? If before, all bound. If after, only those who are told are bound by the trust (re Stead does not explain why there is such rules, they just said here are the rules let's apply them)
- Halfly ST: no case law yet

Predecease of the secret beneficiary
- doctrine of lapse -gift will fall into residue
- re Gardner (No2) - there is inter vivos trust which, when benificiary has died, it passed to the estate <
Predecease of the secret t'ee
- equity will not allow a trust to fail for want of a t'ee: a substitute t'ee will be appointed.
- but if FST, it will lapse

Witnessing by secret beneficiary

Witnessing by secret t'ee

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what type of trust is secret trust?

- express - t'or intention
- constructive - t'or's detrimental reliance
Smith v Wheeler -
Siggers v Evans
Sen v Hedley -
*donatio mortis causa

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Penner: Chp 6
(Swadling's warning: Penner said dehors the will theory base on the assumption that it is inter-vivos trust, and it is wrong)
Non-testamentary gifts: my personal representative will hold it for you from my death. This is a inter vivos trust immediately vest in you a future interest
Testamentary gift: the gift must be revocable and ambulatory (流動的, 可修改的)
*ambulatory: a will just walks along without immediate effect, only operating when t'or dies
A specific gift adeems: if t'or sells his car, his specific gift of the car fails
A gift abates when t'or's property is reduced.
Secret trusts are testamentary trusts

-McCormick v Grogan - what counts as fraud? Re Gardner (No 2): the fraud is that the legatee fails to comply