Creation & the three certainties

TR.01 — Creation of Express Trusts & the Three Certainties

An express private trust is validly created only if the settlor has the capacity and intention to create it, the three certainties are satisfied, the trust is constituted (legal title vested in trustees), and any formality requirements are met. The three certainties (per Knight v Knight (1840)) are the analytical core.

1. Certainty of intention

• The settlor must intend to impose a binding trust obligation, not merely express a hope, wish or moral request. Look at substance, not labels — the word "trust" is neither necessary nor sufficient.
• Precatory words ("in full confidence", "feeling confident", "desire") do NOT create a trust: Lambe v Eames; Re Adams and the Kensington Vestry. Contrast Comiskey v Bowring-Hanbury (whole will showed a trust).
• Conduct can suffice — no special form: Paul v Constance ("the money is as much yours as mine").

2. Certainty of subject matter

• (a) The trust property must be identifiable. A share of intangible, fungible property can be certain (Hunter v Moss — 50 of 950 identical shares), but a quantity of tangible goods not yet segregated fails (Re London Wine; Re Goldcorp).
• (b) The beneficial interest must be ascertainable ("the bulk" / "reasonable income" fails — Palmer v Simmonds). If only this fails, property results back to settlor/estate.

3. Certainty of objects (who benefits) — the test depends on trust type:

• Fixed trust: the complete list test — you must be able to list every beneficiary (IRC v Broadway Cottages).
• Discretionary trust: the "is or is not" / given postulant test — can it be said with certainty whether any given individual is or is not a member of the class (McPhail v Doulton; Re Baden (No 2)).
• Beware conceptual uncertainty (vague class definition — fatal) vs evidential uncertainty (proof difficulty — not fatal for discretionary trusts). Also watch administrative unworkability (class too wide — R v District Auditor, ex p West Yorkshire) and capriciousness.

Common SQE1 traps

• A gift subject to a condition is not a trust — test for an obligation.
• Mere segregation language; "bulk"/"most"; precatory phrasing.
• Applying the complete-list test to a discretionary trust (wrong — use given-postulant).
• Confusing conceptual with evidential uncertainty.
• Failure of objects → resulting trust back to settlor; uncertain intention → outright gift to recipient.