CILEx L3 Equity & Trusts Introduction 2 — Questions and Answers
Question 1: What are the 'three certainties' required for a valid express trust?
- Certainty of intention, certainty of subject matter, and certainty of objects (Correct answer)
- Certainty of purpose, certainty of trustees, and certainty of duration
- Certainty of writing, certainty of consideration, and certainty of objects
- Certainty of capacity, certainty of formality, and certainty of intention
Correct answer: Certainty of intention, certainty of subject matter, and certainty of objects
For a valid express trust, the three certainties are required (Knight v Knight [1840]): (1) certainty of intention — clear intention to create a trust; (2) certainty of subject matter — the trust property must be identifiable; (3) certainty of objects — the beneficiaries must be ascertainable.
Question 2: What formalities are required for the creation of an express trust of land?
- The trust must be evidenced in signed writing under s.53(1)(b) Law of Property Act 1925 (Correct answer)
- The trust must be created by deed
- The trust must be registered at the Land Registry
- No formality is required for trusts of land
Correct answer: The trust must be evidenced in signed writing under s.53(1)(b) Law of Property Act 1925
Under s.53(1)(b) LPA 1925, a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by the person able to declare the trust. Writing is required as evidence, not necessarily for creation.
Question 3: What is a 'resulting trust'?
- A trust that arises by operation of law, returning the beneficial interest to the settlor where the express trust fails or the property is gratuitously transferred (Correct answer)
- A trust expressly created by the settlor
- A trust arising from the common intention of parties in a domestic relationship
- A trust created by statute for the benefit of creditors
Correct answer: A trust that arises by operation of law, returning the beneficial interest to the settlor where the express trust fails or the property is gratuitously transferred
A resulting trust arises by operation of law, returning the beneficial interest to the person who provided the property. This occurs where an express trust fails (automatic resulting trust) or where there is a gratuitous transfer or purchase in another's name (presumed resulting trust).
Question 4: What is a 'constructive trust'?
- A trust imposed by law in circumstances where it would be unconscionable for the legal owner to deny another's beneficial interest (Correct answer)
- A trust created by a written declaration of the settlor
- A trust arising from the presumption of advancement
- A trust imposed by statute to protect creditors
Correct answer: A trust imposed by law in circumstances where it would be unconscionable for the legal owner to deny another's beneficial interest
A constructive trust is imposed by equity as a matter of law where the legal owner of property cannot in conscience deny another's beneficial interest, such as where there has been a common intention to share beneficial ownership and the claimant has acted to their detriment.
Question 5: What is the 'rule in Strong v Bird [1874]'?
- An imperfect gift is completed if the donor appoints the donee as executor and intended to make an immediate gift (Correct answer)
- A gift requires delivery of the subject matter to be effective
- An incomplete trust cannot be completed by equity
- An inter vivos gift cannot be made to a person who later becomes executor
Correct answer: An imperfect gift is completed if the donor appoints the donee as executor and intended to make an immediate gift
The rule in Strong v Bird provides that an incomplete gift (one not properly perfected inter vivos) is completed where the donor later appoints the donee as executor and the intention to make an immediate gift continued until death.
Question 6: What is the 'unconscionability' principle in equity?
- Equity intervenes to prevent a party from unconscionably asserting strict legal rights to the detriment of another who has relied on a different state of affairs (Correct answer)
- Unconscionability means acting against good conscience in any context
- Any unfair conduct gives rise to equitable relief
- Unconscionability is a synonym for bad faith in contract law
Correct answer: Equity intervenes to prevent a party from unconscionably asserting strict legal rights to the detriment of another who has relied on a different state of affairs
Unconscionability is a core equitable concept — equity intervenes where it would be unconscionable (against good conscience) for a party to assert strict legal rights. It underpins doctrines such as promissory estoppel, constructive trusts, and proprietary estoppel.
CILEx L3 Equity & Trusts Introduction 2
What are the 'three certainties' required for a valid express trust?