Tutorial 3

1. Ping Ping, Ping Pong and Ping Pang are the children the late Mr. Ding. They have come to you for
your advice on the matter of their father’s will. He had willed all his property to his second wife,
Mdm. Angelica, stating that he “trusts her to use the property for her enjoyment and the
maintenance of my three children”. You are informed that Mdm. Angelica has put the house she
inherited from their late father in Jalan Sukan for sale. The three children claim that this is a
breach of trust on her part.

Advise.

Whether there is a trust between Madam Angelica and Mr Ding?

Knight v Knight: 3 certainties must be acquired in order to ascertain the validity of the trust
created, which is the certainty of intention, certainty of subject matter and certainty of object.

Certainty of intention

Dean v Cole: The case involved a gift by will to the wife “trusting her that she will divide in fair,
just and equal shares between my children, all such part and portion of my estate as she may be
in the use and enjoyment of”. The court construed the words “trusting to her” as an expression
of the testator’s confidence that the wife would act in that manner and not as imposing her on a
binding trust.

Re Adams and Kensington Vestry: The testator bequeathed property to his wife by will “in full
confidence that she would do what was right for his children.” It was held that the property was
passed to the wife and no trust is created. It was interpreted by the court that the statement
only added a moral obligation on the wife to use the money in a way that will benefit the
children and not to place her under an obligation to hold that money as trustee for the children.

In this situation, based on the statement in Mr Ding’s will, “trusts her” is merely an expression of
his confidence that Mrs Angelica will do as he says instead of an actual binding trust. Despite the
property has been passed on to Mrs Angelica, she only has moral obligation to utilize the
property for her enjoyment and maintainence of her children and doesn’t have any obligation
imposed on her to hold that property as trustee for the children.

Certainty of intention not fulfilled.

Certainty of Subject matter

Yeong Ah Chee v Lee Chong Hai: Trustee must be able to identify the trust property he is to hold
on trust.
 Boyce v Boyce: The testator devised “ALL MY HOUSE” on trust to convey one to the eldest
daughter Marua and the other house will go the another daughter Charlotte. Maria died without
making a choice as to which house she wanted. The court held that the bequest to Charlotte
failed since there could be no certainty as to which house should be held on trust for her.

In this situation, the property can’t be identified clearly as it was mentioned that all of the
property was willed to Mrs Angelica but it was not mentioned that which one of the property is
to be used by Mrs Angelica for the sake of the children.

Certainty of Subject Matter is not fulfilled.

Certainty of Object

Morice v Bishop of Durham: Every trust must have a definite object. Thus there must be
somebody, in whose favour the court can decree performance.

List Test: a trust is void unless it is possible to ascertain every beneficiary or all possible subjects

IRC v Broadway Cottages: The trust in this case failed because the list of beneficiaries cannot be
identified.

List of beneficiaries is identified as it was mentioned under the will of Mr Ding that the property
shall be used for Mrs Angelica’s enjoyment and the maintainence of his 3 children. Therefore all
of the beneficiaries can be clearly identified.

Certainty of object is fulfilled.

Not a valid trust as only 2 out of 3 certainties is fulfilled. Therefore there is no breach of trust on
the part of Mrs Angelica.

2. Barbara’s Bananas Sdn. Bhd. is a successful company selling banana deserts in Malaysia. Its’
founder Mdm. Barbara has recently passed away. In her will she bequeathed her majority shares
in the company to her partner and best friend, Mr. Barney, “to manage and advance the
company in my stead, knowing that when my son, Benjamin, is of age will receive them. In the
event my dear friend Barney passes away, the value of this inheritance is to maintained until
Benjamin is of age, upon which it is given to him to use”.

Mr. Barney is utterly confused by the statements made by Mdm. Barbara. Advise him as to his
duties under the will.

Whether there is a trust between Madam Barbara and Mr Barney.

Knight v Knight: 3 certainties must be acquired in order to ascertain the validity of the trust
created, which is the certainty of intention, certainty of subject matter and certainty of object.
Certainty of intention

Comiskey v Bowring Hanbury: The property was transferred by will to the wife “In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one or more of my nieces as she may think fit and in default of any
disposition by her thereof by her will” The court held that a trust has been created because it
had expressed that the property would be dealt with in full confidence, the settlor went on to
say that he directs that the property should be held on trust. This showed that there was not
just a moral obligation.

Barbara in this case had made it perfectly clear that the property is to be held on trust as
evidenced by how the property is to be maintained until it can be given for him to use in the
event Mr Barney died, therefore this is clearly not just a moral obligation

Certainty of intention fulfilled.

Certainty of subject matter

Yeong Ah Chee v Lee Chong Hai: Trustee must be able to identify the trust property he is to hold
on trust.

Hunter v Moss: An employer agreed to give 50 of his 950 shares to the finance director but did
not transfer the shares nor were any attempts made to identify the shares that were subjected
to the arrangement. An issue arose as to whether or not the finance director could assert a
proprietary right over the 50 shares. The court held that a valid trust over the shares has been
formed. It was not necessary to segregate the property comprising the trust fund of the
property if the property is intangible with each unit being indistinguishable from the other unit.

In this case the property that was instructed to hold on trust can be identified by the Mr Barney
the trustee, which is clearly stated in the facts that it is the majority shares of the company held
by Madam Barbara.

Certainty of subject matter fulfilled.

Certainty of object

Morice v Bishop of Durham: Every trust must have a definite object. Thus there must be
somebody, in whose favour the court can decree performance.

List Test: a trust is void unless it is possible to ascertain every beneficiary or all possible subjects
IRC v Broadway Cottages: The trust in this case failed because the list of beneficiaries cannot be
identified.

It was clearly stated in the facts that Benjamin, Madam Barbara’s son is the beneficiary of the
property that was being held on trust by Mr Barney.

Certainty of object fulfilled.

Therefore there is a valid trust between Madam Barbara and Mr Barney and therefore Mr
Barney is the trustee and shall be liable for all the duties imposed upon a trustee.

4. Certainty of Subject Matter

-necessary to be defined objectively rather than subjectively so as to not be a matter on which
opinions may reasonably differ.

- If defined subjectively, the judge may arrive to a different conclusion than that of the testator
which in turn contradicted the intention of the settlor

-2 key aspects:
(a) must be sufficiently certain/identifiable/determinable by the trustee
Fusing Construction Sdn Bhd v EON Finance Bhd (COA)
Fusing Construction Sdn Bhd was the registered proprietor of two pieces of property. EON
Finance Bhd occupied one of the properties (in Tawau) and EON Bank Bhd occupied the other
property (in Limbang). The trial judge found that these properties were acquired for the purpose
of portraying to Bank Negara an impression that EON Finance and EON Bank were engaged in a
genuine loan transaction. The true picture was that they were buying the respective properties.
However, the judge came to the conclusion that there was nothing wrong with the transaction.
The properties were registered in the name of Fusing and were leased to EON Finance and EON
Bank respectively for a period of ten years. After the expiry of the leases, Fusing brought an
action for vacant possession and also for a declaration that it was not only the registered
proprietor but also the beneficial owner of both properties. After a trial at which the witnesses
were called, the judge found for Fusing with regard to the property in Limbang on the sole
ground that there had been a declaration of trust which had not been evidenced in writing and
was therefore unenforceable by reason of the Statute of Frauds which the judge accepted
applied to Sarawak. However, the judge found against Fusing with respect to the property in
Tawau.

Held: The finding by the trial judge of the existence of an express trust was a finding of pure fact
based on the credibility of witnesses. Having regard to the opposing lines of evidence led before
the judge, he was entirely correct in preferring the evidence of one set of witnesses to another.
Also, it was being held that the trust formulated in this case was having sufficient certainty in
respect of the subject matter.
(b) interest of beneficiaries must be sufficiently certain (trustees need to be aware of this to
carry out their duties)

Boyce v Boyce: The testator devised “all my houses” on trust to convey one to the eldest
daughter Maria and the other house will go to the other daughter Charlotte. Maria dies before
her mother without making a choice as to which house she wanted. The court held that the
bequest to Charlotte failed since there is no certainty as to which house is to be held on trust for
her.

*NOTE:
a. Sprange v Barnard
The Testatrix provided in her will “for my husband Thomas Sprange, to bewill to him the sum of
300 euros for his sole use and at his death, the remaining part that he does not want for his own
wants and use, to be divided between my brothers and sisters equally”. This was held as a gift
and Thomas Sprange was entitled absolutely to the whole sum as there was no certainty as to
what part of the property would be left at his death.

b. Palmer v Simonds
A transfer by will to Thomas Harrison declared that, subject to a number of stipulations, he
should leave the bulk of this property by will equally to four named persons. The court decided
that no trust was intended and Thomas Harrison acquired the property beneficially.

‘What is the meaning then of bulk? When a person is said to have given the bulk of his property,
what is meant is not the whole but the greater part, and that is in fact consistent with its
classical meaning. I am bound to say she has not designated the subject as to which she
expresses her confidence; and I am therefore of the opinion that there is no trust created; that
Harrison took absolutely, and those claiming under him now take.’
Kindersley VC

5. Certainty of Object

-Beneficiary Principle: A trust must be in favour of human beneficiaries or be charitable in law.

- If certainty of object is not fulfilled, 3 uncertainties arises, which is semantic, conceptual,

linguistic uncertainty; evidential uncertainty; Administrative uncertainty

Morice v Bishop of Durham: As a general rule, trusts are valid only if they have beneficiaries who
can go to court to enforce them; if there are no beneficiaries, there are no enforcers, meaning
the trustees are not then subject to a duty and so there’s no valid trust

-difference between:
i. Fixed Trust:
A trust that requires property be held for a fixed number of beneficiaries.
Fixed trust means the trust in which the beneficiary is determined by the settlor.
The Halsbury’s Laws of Malaysia clearly states that a trust must provide a complete list of the
beneficiaries and description of the beneficiaries. The beneficiaries must be certain to know who
will be entitled to the trust for the trustee to execute his duty. Otherwise, a trust will be void for
uncertainty

ii. Discretionary Trust:

A trust which accords trustees discretion to elect among a class of beneficiaries.
A trust which accords trustees discretion to elect among a class of beneficiaries.
Discretionary trust will depend on the discretion of the trustee on the quantity or the amount of
benefit that the beneficiary can get.

a. Inland Revenue Commissioners v Broadway Cottage Trust

Facts:
Settlor makes a trust for £80k to benefit all/any of a class of beneficiaries specified in the
schedule to the deed in shares, proportions and manner as the trustees in their absolute
discretion think fit.
Held:
void trust. Hard to determine with certainty if an individual is/is not a member of a class that
could fall within the trust

b. McPhail v Doulton
trust deed provided that trustees can use their absolute discretion to ‘any of the officers, and
employees, or ex-officers and ex-employees of the company, and any relatives or dependents of
any such persons in such amounts that the trustees thought fit’
Held:
court applied the ‘in or out test’, bc the trust clearly allowed trustees to have absolute discretion
to benefit those persons

c. Re Gulbenkian’s Settlements Trusts

A trust was made for a following class of persons: ‘for all or anyone or more to the exclusion of
the other or others of the following persons, namely, the said Nubar Sarkis Gulbenkian, and his
wife, and his children, or remoter issue for the time being in existence, whether minors or
adults, and any person/persons, in whose house or apartments or in whose company [presence]
or under whose care or control or by, or with, whom the said NSG may from time to time be
employed or residing’
Held:
it is not necessary for trustee to have a list of all possible beneficiaries in the class.
All that is needed is that it is possible for the trustee to ascertain its certainty, whether any given
individual/claimant can be a member of that specified class.