Class Notes (837,698)
Australia (1,845)
Law (441)
JSB171 (400)
All (349)
Lecture

2. Capacity and Certainty

6 Pages
47 Views
Unlock Document

Department
Law
Course
JSB171
Professor
All Professors
Semester
Spring

Description
EXPRESS TRUSTS —C APACITY AND THE THREE C ERTAINTIES 1. All parties to the trust must have capacity 2. trust must have the 3 certainties: Clay v Clay [2001] HCA; Knight v Knight o Certainty of intention; o Certainty of subject matter; o Certainty of object 3. Title 4. No Vitiating Factor I Capacity 1. Creating the trust • Trust in a will—person must have capacity to make a will: Succession Act 1981, s8 • Trust inter vivos—must have the capacity to contract • Infants—trusts set up by infants will be binding unless they repudiate it shortly after attaining full legal capacity: Edwards v Carter [1893] o Person has full legal capacity upon reaching 18: Age of Majority Act 1974, s5 • Insane persons—same as contract: Wright v Gibbons (No 2) (1954) • Corporations can also create trusts 2. Beneficiaries • Anyone who can hold an interest in property is able to be a beneficiary 3. Trustee • Individuals—can be a trustee is they are capable of holding property o BUT where under a ‘disability’ which makes them unable to discharge their duties properly they won’t be able to be: Trusts Act, s12(1) o Disabilities include—s (s12(1)) a) Death; b) Out of state for more than 1 year; c) Seeks to be discharged d) Refuses to act as trustee e) Unfit to act as trustee f) Incapable of being a trustee g) Infant h) Corporation, ceasing to carry on business o These people may be replaced • Corporation can be a trustee: Attorney-General v Landerfield (1744) o Trust corporation = public trustee or any corporation authorised by the Trustee Companies Act 1968 to administer a trust/estate: s5 Trusts Act • Crown may be a trustee if it chooses: Civilian War Claimants Association Ltd v R [1932]; o but can’t be compelled to accept: Re Mason [1929] Andrew Trotter LWB241 Trusts II Certainty 1. Certainty of Intention Settlor must exhibit an expressed or implied intention to create a trust • Court are no longer reluctant to find a trust has been created where it is consistent with parties’ intention: Bahr v Nicolay [No 2]; Trident v McNiece Intention that transferee hold money on trust • Nomenclature not conclusive—Equity looks to the substance, not the form o Where form and intention all indicate a trust, money held on trust: Kauter v Hilton (objective—“Frank as trustee for Hilton”  | subjective—told niece about account, gave her the passbook   Trust ) o Trust may exist even where terminology not used: Re Armstrong [1960] VR 202 (Father creating trust account for sons— died before trust matured | objective—not referred to as a trust account  | subjective—post mortem gift to sons   funds on trust → not part of general estate)  the language of a trust ← an intention that the trustee is under an obligation to hold property for the beneficiary (“George re William” etc—revenue from funds for sons—principal also to sons on death of father  father holding on trust (for life) for sons)  Drafted by lay person → not construed in a strict, technical way (between father and bank manager) o Fund may not be a trust even though it is referred to as a trust if there is no intention to create one: Commissioner of Stamp Duties (Qld) v Joliffe (1920) 28 CLR 178 (law against having 2 bank accounts—so man held one account on trust for his wife | wife didn’t know—wife dies  expressly created trust but without intention to do so → no trust → account not part of wife’s estate)  Alternative view—trust expressly created is beyond the recall of the settler: Commissioner of Stamp Duties (Qld) v Joliffe per Isaacs J (in dissent) (actions of settler objectively sufficient to create a trust—no subjective evidence to rebut (parole evidence rule)—public policy: settlor’s actions to evade legislative policy  trust upheld) • Precatory words will not suffice— o Understanding: Hayes v National Heart Foundation of Australia, NSW Division [1976] o Request: Re Pike [1932] o Recommendation: Stuart v Clemmons [1951] o Hope: Re Lord [1910] o Belief: Will of Warren [1907] o Desire: Re Mayne (1928) o Confidence: Mussoorie Bank, Ltd v Raynor (1882) (in a will—"feeling confident that she will act justly to our children in dividing the same when no longer required by her"  no trust || also no certainty of subject matter—no provision for quantum to be distributed to children); Re Williams (“Absolutely in the fullest trust and confidence that she will carry out my wishes”  no trust) o Wish: Re Elies [1939] • Where left to someone ‘absolutely’—they are not a trustee holding it for the benefit of others: Re Williams (“Absolutely in the fullest trust and confidence that she will carry out my wishes”  no language sufficient to import an obligation to act ← “absolutely” inconsistent with a trust—would mean the wife was to hold for the benefit of others → no trust) Andrew Trotter LWB241 Trusts Lack of intention → no trust → person who holds the property takes it absolutely Intention to create trust relationship (as distinct from others) ← Important in bankruptcy cases Revocable mandate ↔ trust Comptroller of Stamps (Vic) v Howard-Smith (1936) (beneficiary of will sends letter to executors— allowing to pay monies to creditors listed in letter—creditors not aware  letter merely amounted to giving a power to pass property under power of attorney, not conferring interest → no trust, merely revocable mandate (→ no stamp duty)) • Indicative of revocable mandate— o Language of request (“I hereby request you”) o Recipients of money not aware o Allocator of money a residuary beneficiary (= amount uncertain) Effect— o power to pass property under a power of attorney o does not give title to the property to trustee o can pass property if acted upon before revoked o revoked at will or by death or bankruptcy • ↔ Trust: immediate movement of a beneficial interest upon creation Debt ↔ trust • Agents holding money (as debt / on trust) o Money held separately, in an isolated sale → trust: Cohen v Cohen (1929) 42 CLR 91 (Man selling furniture, collecting insurance proceeds, bringing back money from Germany for wife  money collected from furniture proceeds, insurance = kept on trust ← should have been kept separate || money collected from Germany brought back to UK as goods—not kept separate → not held on trust) o Commercial relationship | no requirement of separation → debtor-creditor relationship: Walker v Corboy (1990) 19 NSWLR 382 (fruit growers selling to agent for sale at market—statutory scheme did not require separation of proceeds (would have been easy to do so) | industry practice = no separation | frequent daily trading— agent goes into liquidation  not held on trust) • Money lent for a specific purpose—Quistclose Trust (specific purpose not enough by itself) Where money is lent with a mutual intention that— o not part of the general assets o to be used for a specific purpose o to be returned where the purpose is not fulfilled then whatever portion of the money which is not used towards that purpose is held on trust for the lender: Barclays Bank v Quistclose Investments Ltd [1970] AC 567 (R in debt to B—Q lent money to R to pay shareholders dividends—B has notice—R goes into liquidation—B uses money held in account from Q to offset debts  money held on primary trust by R for shareholders (bank constructive trustee with notice) → purpose fails (insolvency) → money held on secondary (resulting) trust by R (B) for Q) adopted
More Less

Related notes for JSB171

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit