[Forum User]

(Original post by jacketpotato)
Remember that you need certainty of intention. You'd have to intend there to be a trust - i.e. retain an equitable interest - or the necessary intent isn't present. There is a difference between a situation where I give you £10 and merely hope you will use it to buy books (gift) and give you £10 while intending that you can only spend the money on boks (trust).

Now I'm confused.

I don't see how the second part can be a trust. Who is the trustee and who the beneficiary if that is a trust? And if Jilly is the beneficiary, even if there was a trust, wouldn't she be able to use the rule in Saunders v Vautier to get the legal title to the £10, at which point she could do what she liked?

Is it that there is a valid gift until Jilly misapplies the £10, at which point there is a resulting trust in your favour? I had thought that only applied to loans.

[jacketpotato]

(Original post by Forum User)
Now I'm confused.

I don't see how the second part can be a trust. Who is the trustee and who the beneficiary if that is a trust? And if Jilly is the beneficiary, even if there was a trust, wouldn't she be able to use the rule in Saunders v Vautier to get the legal title to the £10, at which point she could do what she liked?

Is it that there is a valid gift until Jilly misapplies the £10, at which point there is a resulting trust in your favour? I had thought that only applied to loans.

I am thinking of a Quistclose trust situation. In my example, A gives B £10 to buy books. Assuming the requirements for the existence of a trust are met, B would hold the £10 on trust for A. The trust would cease to exist once the donee used the money to buy books.

This would really be a trust rather than a gift, so we have to think about the three certainties. There is likely to be a significant certainty of intention problem; we would normally expect a donee to be able to do whatever he wants with the money regardless of the settlor's original intentions.

This is where it gets a bit complicated. Your question "Is it that there is a valid gift until Jilly misapplies the £10, at which point there is a resulting trust in your favour?" goes to the controversial nature of a Quistclose trust.

If a QT is conceptualised as two separate trusts, with a secondary trust for return of the money coming into existence when the purpose of the QT fails; then you may well be correct that a resulting trust arises when Jilly misapplies the £10. This is the view taken by Lord Wilberforce in the Quistclose case itself. However, there are very serious problems with this view, I think you are absolutely right about Saunters v Vauntier.

If we take Lord Millett's approach in Twinsectra v Yardley, where we only have a single (express) trust, then A would retain a beneficial interest the entire time subject only to B's ability to apply the money to buy books. The doctrinal debate is a bit more complicated than this, but that's the jist of it. In my view our example is really an express trust.

Quistclose trusts are not limited to loans, although lenders are the people most likely to want to use them. I would point you towards the case of Re Kayford, where a mail order company put customers' money into a separate bank account pending delivery of the goods they ordered without being required to do so by the customers. It was held that this was an enforceable (Quistclose) trust.

[Forum User]

(Original post by jacketpotato)
I am thinking of a Quistclose trust situation. In my example, A gives B £10 to buy books. Assuming the requirements for the existence of a trust are met, B would hold the £10 on trust for A. The trust would cease to exist once the donee used the money to buy books.

This would really be a trust rather than a gift, so we have to think about the three certainties. There is likely to be a significant certainty of intention problem; we would normally expect a donee to be able to do whatever he wants with the money regardless of the settlor's original intentions.

This is where it gets a bit complicated. Your question "Is it that there is a valid gift until Jilly misapplies the £10, at which point there is a resulting trust in your favour?" goes to the controversial nature of a Quistclose trust.

If a QT is conceptualised as two separate trusts, with a secondary trust for return of the money coming into existence when the purpose of the QT fails; then you may well be correct that a resulting trust arises when Jilly misapplies the £10. This is the view taken by Lord Wilberforce in the Quistclose case itself. However, there are very serious problems with this view, I think you are absolutely right about Saunters v Vauntier.

If we take Lord Millett's approach in Twinsectra v Yardley, where we only have a single (express) trust, then A would retain a beneficial interest the entire time subject only to B's ability to apply the money to buy books. The doctrinal debate is a bit more complicated than this, but that's the jist of it. In my view our example is really an express trust.

Quistclose trusts are not limited to loans, although lenders are the people most likely to want to use them. I would point you towards the case of Re Kayford, where a mail order company put customers' money into a separate bank account pending delivery of the goods they ordered without being required to do so by the customers. It was held that this was an enforceable (Quistclose) trust.

Thanks, I think I get it now. To check:

In the 'Quistclose gift', all interest that the donee had in the £10 disappears entirely when Jilly buys books with it, right? So would there be anything to stop Jilly buying a book with the £10, then immediately turning round and getting a refund for the book on some pretext, then spending the £10 on beer instead? If so then even though a gift with a condition subsequent is effectively a quistclose trust, it might be of little use in enforcing what the donee wanted the money to be spent on?

[jacketpotato]

(Original post by Forum User)
Thanks, I think I get it now. To check:

In the 'Quistclose gift', all interest that the donee had in the £10 disappears entirely when Jilly buys books with it, right? So would there be anything to stop Jilly buying a book with the £10, then immediately turning round and getting a refund for the book on some pretext, then spending the £10 on beer instead? If so then even though a gift with a condition subsequent is effectively a quistclose trust, it might be of little use in enforcing what the donee wanted the money to be spent on?

I think you meant "all interest that the DONOR had in the £10". Other than that I agree.

That's a great point about the refund. I think you are right. A Quistclose trust has a specified purpose and the money reverts back to the donor if that is breached; how you conceptualise that is a matter of debate. If the specified purpose is simply that Jilly buys a book, then I guess the condition has been met even if she later gets a refund.

You could have a QT where the condition was "Jilly buys a book and keeps the book until her death" or something of the sort.

[Festina lente]

(Original post by Forum User)
If I give a £10 note to McDonalds (the company) then it will be a valid gift. However, I cannot leave £10 on trust for the benefit of McDonalds, because there are no objects.

So clearly the three certainties cannot apply to gifts since in particular, certainty of objects doesn't apply. Indeed speaking of 'objects' doesn't make sense in terms of gifts. The objects of a trust are the people with an equitable interest in the subject matter. If I gift McDonalds £10 there is no equitable interest in that £10.

Are you saying that a company cannot be a beneficiary of a trust, even though it has legal personality? If so, I do not think that is right from the cases I recall - what is your authority?

[Forum User]

(Original post by Festina lente)
Are you saying that a company cannot be a beneficiary of a trust, even though it has legal personality? If so, I do not think that is right from the cases I recall - what is your authority?

I was clearly wrong, Quistclose trusts are a good example of a trust that will almost without exception have a company as beneficiary !

[Jilly.0]

(Original post by Forum User)
Yes, but you said that gifts required the 3 certainties.

I didn't say anything about giving McDonalds £10 to polish their windows, I said that I was giving McDonalds £10. What they do with it is their business. That is the definition of a gift, and it requires no certainty of objects!

I'm not even entirely convinced that gifts require certainty of intention either. Consider the situation where a company sends an unsolicited product to your house, asking you to either return it or pay the price. In English law, that is a gift, you can just keep it and not pay the price - but it also seems certain that the intention of the company was not to make a gift.

There is certainty of object becos there will be someone from mcdonalds in charge of dealing with that money. So no it will not fail for the beneficiary principle. That is what Re Denley etc is trying to argue for unincorporated association.

[Jilly.0]

Can I just confirm then that we all agree that even in gifts we will require the three certainties and if you give a gift with a purpose it cause a quistclose trust scenario to arise?

(Original post by Festina lente)
Are you saying that a company cannot be a beneficiary of a trust, even though it has legal personality? If so, I do not think that is right from the cases I recall - what is your authority?

(Original post by Forum User)
I was clearly wrong, Quistclose trusts are a good example of a trust that will almost without exception have a company as beneficiary !

Can I just confirm then that we all agree that even in gifts we will require the three certainties and if you give a gift with a purpose it cause a quistclose trust scenario to arise?

[Jilly.0]

(Original post by jacketpotato)
Remember that you need certainty of intention. You'd have to intend there to be a trust - i.e. retain an equitable interest - or the necessary intent isn't present. There is a difference between a situation where I give you £10 and merely hope you will use it to buy books (gift) and give you £10 while intending that you can only spend the money on boks (trust).

See http://en.wikipedia.org/wiki/Quistcl...in_English_law. This area will make more sense once you have studied resulting trusts and quistclose trusts.

Yes of course, a necessary intention will have to be able to be found in such cases to imply a trust.

So quistclose trusts are not limited to loan situations?

[jacketpotato]

(Original post by Jilly.0)
Can I just confirm then that we all agree that even in gifts we will require the three certainties and if you give a gift with a purpose it cause a quistclose trust scenario to arise?

The requirements for a gift are (1) intent and (2) delivery; (1) is very similar to certainty of intention and (2) requires both certainty of subject matter and constitution. It is not conventional to refer to the certainties when talking about gifts, so it would be a bad idea to state that "gifts require certainties" in the exam. Stick to intent and delivery.

Also remember that in an equity exam you will probably be analysing something from the perspective of whether there is a trust, so it may be better to restrict your discussion of gifts to certainty of intention. The key issue for certainty of intention problem questions is to decide whether the settlor/donor intended to create a trust or intended to make a gift.

There is nothing akin to certainty of objects for gifts.

Can I just confirm then that we all agree that even in gifts we will require the three certainties and if you give a gift with a purpose it cause a quistclose trust scenario to arise?

I don't agree. The intention to make a gift and the intention to create a trust are two separate things, you can't intend both. The point of a gift is that the other person becomes owner of the property, in law and equity. The donee can do what he wants with the property, the reasons why the donor made the gift are irrelevant. If the donor intends to retain an equitable interest such that you can dictate how the gift is used, its no longer a gift.

If there is to be a trust, you must intend that there should be a trust. You must intend to retain an equitable interest - i.e. you must intend to be able to get the property back should a certain conditions be breached. Its not a straight gift.

Its important to appreciate the difference between the donor's reasons for making a gift (irrelevant) and a settlor who actually intends to retain an interest in the property (trust intended). Let's imagine I give £100 to my brother and I tell him that I would like him to use the money on books. "I would like" is not a condition: I did not intend to retain an equitable interest, so I would have no right to trace into the car. This is a straight gift, it is not a trust and my reasons for making the gift are irrelevant. If I wanted to create a trust, I would have to be much more specific - for example, by demanding that he keep the money in a separate bank account and words to the effect that he would not become equitable owner of the money unless and until he used it to buy books.

(Original post by Jilly.0)
So quistclose trusts are not limited to loan situations?

I agree.

[Jilly.0]

(Original post by jacketpotato)
The requirements for a gift are (1) intent and (2) delivery; (1) is very similar to certainty of intention and (2) requires both certainty of subject matter and constitution. It is not conventional to refer to the certainties when talking about gifts, so it would be a bad idea to state that "gifts require certainties" in the exam. Stick to intent and delivery.

Also remember that in an equity exam you will probably be analysing something from the perspective of whether there is a trust, so it may be better to restrict your discussion of gifts to certainty of intention. The key issue for certainty of intention problem questions is to decide whether the settlor/donor intended to create a trust or intended to make a gift.

There is nothing akin to certainty of objects for gifts.


I don't agree. The intention to make a gift and the intention to create a trust are two separate things, you can't intend both. The point of a gift is that the other person becomes owner of the property, in law and equity. The donee can do what he wants with the property, the reasons why the donor made the gift are irrelevant. If the donor intends to retain an equitable interest such that you can dictate how the gift is used, its no longer a gift.

If there is to be a trust, you must intend that there should be a trust. You must intend to retain an equitable interest - i.e. you must intend to be able to get the property back should a certain conditions be breached. Its not a straight gift.

Its important to appreciate the difference between the donor's reasons for making a gift (irrelevant) and a settlor who actually intends to retain an interest in the property (trust intended). Let's imagine I give £100 to my brother and I tell him that I would like him to use the money on books. "I would like" is not a condition: I did not intend to retain an equitable interest, so I would have no right to trace into the car. This is a straight gift, it is not a trust and my reasons for making the gift are irrelevant. If I wanted to create a trust, I would have to be much more specific - for example, by demanding that he keep the money in a separate bank account and words to the effect that he would not become equitable owner of the money unless and until he used it to buy books.



I agree.

I think for exam purposes we shld just keep in mind that if the words are unclear e.g. "in full confidence that u will spend it on books" the law is more likely to imply a trust since they will not perfect imperfect gifts.

For quistclose trust...can the law ever imply a quistclose trust? If u say u would like to give me ten pounds for my books, and that purpose is not fufilled, what will happen? Will the law imply a quistclose trust and if the purpose is not fufilled u hold it on resulting trust for me?

[jacketpotato]

(Original post by Jilly.0)
I think for exam purposes we shld just keep in mind that if the words are unclear e.g. "in full confidence that u will spend it on books" the law is more likely to imply a trust since they will not perfect imperfect gifts.

Yes. If you have an imperfect gift - i.e. a gift where legal title does not pass due to insufficient formalities - then the donor retains equitable title under a resulting trust; so the property remains with the donor.

For quistclose trust...can the law ever imply a quistclose trust? If u say u would like to give me ten pounds for my books, and that purpose is not fufilled, what will happen? Will the law imply a quistclose trust and if the purpose is not fufilled u hold it on resulting trust for me?

I think this is unlikely. From reading the cases one gets the impression that a Quistclose trust will not be implied lightly, a key factor is whether the money is kept in a separate bank acccount.

[Festina lente]

(Original post by jacketpotato)
Yes. If you have an imperfect gift - i.e. a gift where legal title does not pass due to insufficient formalities - then the donor retains equitable title under a resulting trust; so the property remains with the donor.

If legal title does not pass, how can there be a resulting trust? who is the trustee?

[jacketpotato]

(Original post by Festina lente)
If legal title does not pass, how can there be a resulting trust? who is the trustee?

Sorry, I expressed myself badly. You have an imperfect gift where there is no transfer of legal title. There is no trust. You have a presumption of a resulting trust where A transfers property to B, and A and B are not in one of a number of recognised special relationships. They are two different ways of defeating what, on the face of it, appears to be a gift: (1) a failure to transfer legal title (i.e. no constitution) and (2) presumed intention to retain an equitable interest.

[Jilly.0]

(Original post by jacketpotato)
Sorry, I expressed myself badly. You have an imperfect gift where there is no transfer of legal title. There is no trust. You have a presumption of a resulting trust where A transfers property to B, and A and B are not in one of a number of recognised special relationships. They are two different ways of defeating what, on the face of it, appears to be a gift: (1) a failure to transfer legal title (i.e. no constitution) and (2) presumed intention to retain an equitable interest.

So a gift can fail as a purpose trust if A gives to B £1000 and say he has to use it for polishing B's windows, as B will be holding it on purpose trust ( implied by court) which will fail as it is neither charitable nor within the Endacott exceptions, and the £1000 goes on resulting trust back to A. If B has spent it on something else, relevant tracing rules etc applies?

[cheekyminxx]

(Original post by jacketpotato)
The requirements for a gift are (1) intent and (2) delivery; (1) is very similar to certainty of intention and (2) requires both certainty of subject matter and constitution. It is not conventional to refer to the certainties when talking about gifts, so it would be a bad idea to state that "gifts require certainties" in the exam. Stick to intent and delivery.

Also remember that in an equity exam you will probably be analysing something from the perspective of whether there is a trust, so it may be better to restrict your discussion of gifts to certainty of intention. The key issue for certainty of intention problem questions is to decide whether the settlor/donor intended to create a trust or intended to make a gift.

There is nothing akin to certainty of objects for gifts.



I don't agree. The intention to make a gift and the intention to create a trust are two separate things, you can't intend both. The point of a gift is that the other person becomes owner of the property, in law and equity. The donee can do what he wants with the property, the reasons why the donor made the gift are irrelevant. If the donor intends to retain an equitable interest such that you can dictate how the gift is used, its no longer a gift.

If there is to be a trust, you must intend that there should be a trust. You must intend to retain an equitable interest - i.e. you must intend to be able to get the property back should a certain conditions be breached. Its not a straight gift.

Its important to appreciate the difference between the donor's reasons for making a gift (irrelevant) and a settlor who actually intends to retain an interest in the property (trust intended). Let's imagine I give £100 to my brother and I tell him that I would like him to use the money on books. "I would like" is not a condition: I did not intend to retain an equitable interest, so I would have no right to trace into the car. This is a straight gift, it is not a trust and my reasons for making the gift are irrelevant. If I wanted to create a trust, I would have to be much more specific - for example, by demanding that he keep the money in a separate bank account and words to the effect that he would not become equitable owner of the money unless and until he used it to buy books.



I agree.

Hi jacketpotato,

I just wanted to ask you what do you think this disposition is, based on the three certainties?

I give the best of my wine to such of my cousins as Cagney can reasonably locate, and the remainder of my cellar to such graduates residing in Woolton village who are graduates of Liverpool University as Cagney shall select.
(All of Bogart's cousins, apart from Robinson are now living in Australia or New Zealand)

Thanks!