Equity and Trusts: The Three Certainties

In the sophisticated world of Equity, the "Trust" is the ultimate mechanism for wealth management. However, for a trust to be valid and enforceable, it must be "certain." If a trust is too vague, it will fail, and the property will usually revert to the settlor or their estate. Lord Langdale in Knight v Knight [1840] established the definitive "Three Certainties" test. This article provides a comprehensive deep dive into the Certainty of Intention, the Certainty of Subject Matter, and the complex evolution of the Certainty of Objects from the "List Test" to the "Is/Is Not Test."

1. Certainty of Intention

The settlor must manifest an intention to create a legal obligation, not just a moral one. The court looks at the substance of the words, not just the labels.

Precatory vs Imperative Words

Historically, "precatory words" (words of hope or desire, like "I hope" or "I wish") were enough to create a trust. However, the modern law (Lambe v Eames) requires imperative language. In Re Adams and the Kensington Vestry [1884], the words "in full confidence that she will do what is right" were held to be precatory and failed to create a trust. Conversely, in Paul v Constance [1977], the oral statement "the money is as much yours as mine" was sufficient to create a trust, showing that the word "trust" is not strictly required.

2. Certainty of Subject Matter

It must be clear exactly what property is being held in trust and what share each beneficiary gets.

The Identifiable Property Problem

In Palmer v Simmonds [1854], the phrase "the bulk of my estate" failed for uncertainty—how much is a "bulk"? In Re London Wine Co [1986], a trust over 50 cases of wine failed because the specific bottles were not segregated from the general stock. However, for intangible property (like shares), segregation is not required if the shares are of the same class (Hunter v Moss [1994]).

3. Certainty of Objects (The Beneficiaries)

The "Objects" of a trust are the people who will benefit. The test for certainty depends on the type of trust:

• Fixed Trusts: The "Complete List" test (IRC v Broadway Cottages). The trustees must be able to make a 100% accurate list of every beneficiary.
• Discretionary Trusts: The "Is/Is Not" test (McPhail v Doulton [1971]). The trust is valid if it can be said with certainty that any given individual is or is not a member of the class.

4. Key Cases — Detailed Analysis

5. Critical Analysis & Academic Debate

The decision in Hunter v Moss is heavily criticized. Professor David Hayton argues it is "unprincipled" because if the settlor sells some shares, we cannot know which ones belonged to the trust. Conversely, some academics argue that McPhail v Doulton has made the "Certainty of Objects" rule too loose, potentially leading to "administrative unworkability" if the class of beneficiaries is too large (e.g. "all the residents of London," as in R v District Auditor ex p West Yorkshire CC).

6. Worked Example — Problem Scenario

ISSUE: Is this a valid trust?

INTENTION: "In the hope" is a precatory word. Under Re Adams, this likely fails to create a legal obligation.

SUBJECT MATTER: "The majority" is uncertain. Under Palmer v Simmonds, it is impossible to define exactly how much this is.

OBJECTS: "Hard-working friends" is conceptually uncertain. Who counts as "hard-working"? Under McPhail, this fails the "is/is not" test.

CONCLUSION: The trust fails on all three certainties. Brian takes the £10,000 as an absolute gift.

7. Examiner Insights — How to Score Top Marks

Conclusion

The Three Certainties are the "locking mechanism" of a trust. They ensure that the settlor’s wishes are clear, the property is defined, and the beneficiaries are identifiable. Without them, the trust remains a mere moral wish, floating in the ether of intention without the weight of the law to anchor it.