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2014 QUESTION 1
As a trust involve the holding of right on behalf of another, it must be
possible to identify what rights are to form the subject matter.
The statement borders on subject matter in the declaration of trust
specifically in relation to identification of specified property out of a larger
bulk Palmer v Simmonds. In this essay, the focus will be on the discussion
on strictness of the rules that property cannot pass in unascertained goods
S. 16 of Sale of Goods Act 1979, and whether equity has introduced some
amount of flexibility in the application of this strict rule. The statement by
Lord Mustil in Re Gold Corp Exchange which states that A right of
property, whether legal or equitable cannot exist in the air hovering over
undifferentiated mass of property which is ascertained affirms the principle
in Re London Wine.
In Palmer v Simmonds, the phrase the bulk of my said residuary estate
was held to indicate too uncertain a portion of the residuary estate to
establish a trust. The judge did assume that bulk meant mere than half but
that was too imprecise. By contrast, in Re Golay, a gift of a reasonable
income to go along with a life interest in a flat did not fail for uncertainty
Ungoed-Thomas.
Oliver J stated in Re London wine that, where customers had paid and
obtain title certificates of bottles of wine which remained in a warehouse of a
company, the courts held that since nothing has been done to appropriate
the wine to individual customers and the existence of the certificates proved
little, the goods could not be ascertained and the subject matter was
uncertain and therefore a trust of wine had not been established. This was
the strict application of the rule in S. 16 of SGA 1979.
However, where there is a trust of part of intangible property such as shares,
the courts have held there is no need to identify the specific shares to be
held on trust.
In Hunter v Moss which concerns tangible property, Dillion J distinguished
Re London wine on the basis that unlike cases of wine or other tangible
property these shares were indistinguishable from one another, therefore no
segregation was required as holding any 50 of 950 shares on trust will
achieve the same thing. The courts decision distinguished tangible assets
such as wine and intangible assets such as shares. The courts after Hunter
son in order for him to complete the transfer of the legal title into his name.
The court was still applying the Re Rose principle.
The ambit was widened in the court of appeal decision in Pennington and
waine where the shareholder properly completed a share transfer form for
her nephew but instead of passing this to the company for registration
delivered it to one of the companys auditors. She also informed her nephew
of her intention to transfer the shares. However, unlike Re Rose the
transferor haw not done everything in his power to secure the share
transfer. The court of appeal held that the shares were held on trust for the
nephew and it would be unconscionable for the transferor to renege on the
transaction.
Notwithstanding the above discussion Arden LJ held that it would be
unconscionable for the settlor to change his mind and go back on the
transfer. The settlor has given the transfer form to Pennington so that he
could do the registration. She told the beneficiary about the gift and no
action on his part was necessary. Moreover the beneficiary (Harold) had
agreed to be a director for which a shareholding was needed.
Clarke LJ held that equitable title could transfer without registration.
Completion of forms and delivery to a company was enough in Re Rose but
be recognized that delivery to the company was not a further essential step.
It was enough that the transfer was intended to have immediate effect. The
focus is on the intention.
I agree that the principle in Pennington v Waine is an extension of Re Rose
since the courts applied unconscionability depending on the fact of the case,
i.e when the settlor has declared adequate intention but has not done
everything within his power to divest his interest.
ii)
iii)
The intention of the testator to subject the primary donee (i.e the
intended trustee) E, to an obligation in favour of the secondary
donee (i.e intended beneficiary) Judy (J). I n Kasperbauer v
Griffith, Peter Gibson emphasized that all three certainties must
satisfied. From the fact it can be inferred that D gave the cottage to
E not for his benefit but for onward transfer to J establishing the
certainty of intention, the object relates to J and the subject matter
is the cottage.
For HST communication must take place before or upon execution of
the will (Backwell v Blackwell), while for the FST, communication
can be made any time before the testators demise Wellgrave v
Tebb . In the fact the issue of J being the beneficiary of the trust
was communicated to E before executing the will. The
communication must also be in accordance with the terms of the
trust (Re Keen).
The final requirement is acceptance. The secret trustee is required
to accept or at least acquiesce in the obligation bestowed on him by
the testator. After the testator communicating his intention, Es
silence could be inferred that he has acquiesced in the obligation
bestowed on him by the testator Moss v Cooper.