Equity & Trusts - Three Certainties: Intention

The three certainties for creating an express trust are intention, subject matter and objects. There has to be certainty of intention to create a trust and not some other type of instrument. For example a trust cannot be used to perfect an imperfect gift (Milroy v Lord [1862]). Secondly although a charge is quite similar to a trust they are distinct (Clough Mill v Martin [1984]). Bank accounts are not a trust relationship but instead a transfer of money to the bank (Foley v Hill [1848]). A person is also not allowed to set up a trust in order to avoid a liability. This is known as a sham device and a classic example was seen in Midland Bank v Wyatt [1995]. To distinguish between a trust and a sham device we have to "examine external evidence" and also look at the context as per Arden L.J. in Hitch v Stone [2001]. Courts can also infer the intention to create a trust by the words used or the actions of those involved. In Paul v Constance [1977] the phrase “the money is as much mine as it is yours” was sufficient while in Re. Kayford [1975] establishing a separate bank account was enough although this was disputed in Re. Farepak [2006]; a case that reached a different conclusion. The courts will not always readily infer a trust and in Tito v Waddell (No. 2) [1977] the word 'trust' was not sufficient. It is also necessary to distinguish between trusts and mere moral obligations. The phrase "in full confidence only imposed a moral obligation in Re. Adams & Kensington Vestry [1884] but in Comiskey v. Bowring-Hanbury [1905] the same phrase did create a trust because it created rights for other people. This question of rights is key and in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] the question 'Would it be unconscionable of the legal owner to deny others rights in the property?' was found to be useful. Finally in relation to wills and probate, certainty of intention is based on two factors: The wording of the Will (Re. Denley [1969]) The context of the trust’s creation