A valid express trust must satisfy the “three certainties” classically formulated in Knight v Knight (1840): certainty of intention, subject matter, and objects. It must also comply with the beneficiary principle and the perpetuity rules.

Certainty of Intention

The settlor must have intended a trust (not a gift or loan), assessed objectively. Modern law requires imperative, not merely precatory, language: in Re Adams and the Kensington Vestry (1884), “in full confidence” created an absolute gift, not a trust; whereas in Paul v Constance (1977), “the money is as much yours as mine” sufficed. A document intended to deceive may be a sham, requiring a common dishonest intention (A v A, 2007).

Certainty of Subject Matter

There must be identifiable property, and each beneficial share must be defined. Vague descriptions fail — the “bulk” of an estate in Palmer v Simmonds (1854) — but a “reasonable income” was upheld in Re Golay’s Will Trusts (1965) as an objective yardstick. For part of a larger bulk: in Re London Wine Co (1986) a trust over unsegregated wine failed, whereas Hunter v Moss (1994) held that intangible identical shares need no segregation — a distinction some prefer to analyse as beneficial co-ownership of the fund.

Certainty of Objects

The beneficiary principle requires identifiable objects the court can enforce in favour of. Objects are analysed through conceptual certainty, evidential certainty, ascertainability, and administrative workability. The test varies:

  • Fixed trusts: the “complete list” test — a comprehensive list of beneficiaries.
  • Fixed trusts with conditions precedent: relaxed — in Re Barlow’s Will Trusts (1979), a gift to “friends” was a series of individual gifts, valid if one or more could clearly qualify.
  • Discretionary trusts: since McPhail v Doulton (1971), the “is or is not” test.

Applying that test split the court in Re Baden’s Deed Trusts (No. 2) (1973): Sachs LJ (postulant must prove they are in), Megaw LJ (a substantial number must qualify), Stamp LJ (the court must say of every individual whether in or out). A conceptually certain trust may still fail for administrative unworkability (the “inhabitants of West Yorkshire”, 2.5 million people, in R v District Auditor ex p West Yorkshire MCC) or for capriciousness.

Perpetuity Rules

Under the Perpetuities and Accumulations Act 2009, the mandatory period for trusts after April 2010 is 125 years, with a “wait and see” rule.

Consequences of Failure

  • No certainty of intention → the recipient takes absolutely as a gift.
  • Certain intention but uncertain subject matter or objects → a resulting trust for the settlor.
  • A trust “engrafted” on an absolute gift (Hancock v Watson) → the recipient may keep the property if the trust fails.

Other Important Cases

Worth reading alongside this topic: Re Kayford and OT Computers v First National Tricity Finance.