Equity & Trusts - Three Certainties: Subject Matter

The three certainties in forming an express trust are intention, subject matter and objects. This week we look at subject matter.

In Re. London Wine Co. [1986] it was decided that the subject matter must be separately identifiable and this approach was supported in Re. Goldcorp [1995]. A more purposive interpretation was given to this strict rule in Re Lehman Brothers International (Europe) [2012].

Furthermore the rule does not apply to intangible property as held by Dillon LJ in Hunter v Moss [1994]. This reasoning has been widely considered as somewhat spurious and has been challenged in White v Shortall [2006] though this Australian case achieved the same result.

Re Golay's Will Trusts [1965] examined the wording 'reasonable income' and held that this was separately identifiable but it is unlikely that this case would be decided in the same way today. It is more likely that the case of Re. Kolb’s Will Trusts [1962] would be followed where the phrase 'blue chip securities' was held to be insufficiently certain.

Other intangible property such as non-transferable assets can also be subject to a trust; Don King v Warren [1998].

Where a trust is found to be uncertain and does not meet the certainties. One of three outcome is possible:
The trust is completely void and held for the settlor on a resulting trust
The rule in Hancock v Watson [1902] applies so that property left to someone via a Will but subject to a failed trust goes to that person absolutely
A floating charge is created instead where reference is made to, for example, the remainder.