Equity and trust

Question Until her retirement 25 years ago, Adela Arletti was a highly successful concert-guitarist. Much to her regret, her marriage did not produce any children and her husband predeceased her. Once she was no longer touring the world and giving musical performances, she offered her services to her Local Authority as a foster-parent, in which capacity she was able to provide loving care to over 50 children. Some of these children were very young and Adela looked after them whilst the Local Authority was making arrangements for their permanent adoption. Adela enjoyed a close relationship with her three nieces (the daughters of her only sister) but less so, on a personal basis, with her brother’s son Denzel, who acted as her business advisor for many years and whom she paid generously during the entire period he worked for her. Denzel was annoyed by her decision to retire at a fairly young age to look after children with whom she had no connection but he never shared these feelings to Adela. [TP: these two paragraphs are IRRELEVANT and bear no relation to the question.] In addition to a collection of very valuable guitars which she amassed during her career, Adela established Rainbow Limited, an extremely successful recording-company in which she held 800 shares worth over £8 million. She also owned many original orchestral music-scores dating from the early days of the music industry. Last year, Adela made a Will [TP: so what follows are testamentary trusts, having the same formalities as wills generally under s.9 Wills Act 1837] in which she appointed her solicitor, Russell Rance, as executor and trustee. The Will contains the following provisions: (a) To my nephew, Denzel, 500 of my shares in Rainbow Limited in the definite conviction that he will sell them and divide the proceeds equally between all those whom I have ever fostered; (b) My six most highly-valued guitars on trust for my nieces, Fern, Summer and Pansy, Fern and Summer to have those guitars which Pansy does not want (Pansy is to have a maximum of 2 guitars); (c) To Russell Rance, the remainder of my estate to be divided as he considers appropriate amongst those who attended every televised concert where I performed during the final year of my career and recorded the event on their mobile device to remind them how well I played. If Russell does not think this is a good idea, then the bulk of it is go to his daughter, Flavia, with the rest to the Disabled Musicians Foundation (DMF). (d) To my nephew, Denzel, 500 of my shares in Rainbow Limited [TP: certainty of subject matter; shares are intangible property; these are shares in one company (not many); no need to segregate shares; are there sufficient shares remaining: there seem to be; Hunter v. Moss (1994); compare with Re London Wine Co (Shippers) Ltd [1986]] in the definite conviction [TP: certainty of intention; Re Kayford [1975], Megarry J; Wright v. Atkyns [1823] [Lord Eldon]; the two words definite and conviction both appear to be sufficiently imperative] that he will sell them and divide the proceeds equally between all those whom I have ever fostered [TP: certainty of objects: fixed trust (divide proceeds equally between all); as it is a fixed trust, Denzel must know who all the beneficiaries are; both conceptual and evidential certainty are therefore required; the complete list test in IRC v. Broadway Cottages Trust [1955]; Re Gulbenkian [1970] ‘class ascertainability rule’; those whom I have ever fostered is conceptually certain; evidential certainty: discuss the cases of Re Eden [1957] and Re Benjamin [1902]] ; (e) [TP: Russell appears to be trustee here; certainty of intention, clearly, appears to have been satisfied] My six most highly-valued guitars [TP: clearly more than six guitars constitute the collection; s.21(1)(b) AJA 1982, what did Adela mean by “highly-valued”, in terms of monetary value or non-monetary value (e.g. the six guitars she had, from her personal perspective, ‘most highly valued’; s.21(2) AJA 1982, admission of extrinsic evidence: the use of the hyphen appears to indicate in terms of monetary value and expert evidence may be able to be relied on here; problems of segregation appear not to arise as the six guitars would be determined in terms of their value, assuming the type of value anticipated can be established] on trust for my nieces, Fern, Summer and Pansy, Fern and Summer to have those guitars which Pansy does not want (Pansy is to have a maximum of 2 guitars) [TP: Pansy has died before apparently making her selection, Boyce v. Boyce, automatic resulting trust; however, what is this “something important” Pansy has told her sisters they need to find among her personal possessions (?), we know that Pansy had seen Adela’s will because Adela told Fern that she had, this might suggest that the “something important” indicated Pansy’s selection; therefore, Pansy’s selection will devolve to her estate under her own will, if she has left one, or under the intestacy rules to her own next of kin] [TP: if we assume that Pansy has made her choice, we can then apply the equitable maxim ‘equity is equality’ and the rule in Re Knapton; thus, Fern and Summer (in accordance with the maxim) could each take two of the four remaining most highly-valued guitars, Fern (Re Knapton) being able to select her two on account of being named first in the will (Summer taking the two remaining).] [TP: certainty of objects: yep! The beneficiaries are clearly defined.] ; (f) [Adela is the donor of a power, Russell the donee of a fiduciary power (Russell is both executor and trustee under the will) (Russell, therefore, is under a fiduciary duty to consider whether to distribute or not: Re Hay’s ST [1982]; this is a power and not a trust because there is a gift over in default of appointment. It does not matter that the gift over may be invalid, Miley v. Cape (Re Sprague) (1880), it is still a power; this is because such a gift over is inconsistent with the imperative nature of a trust: Re Mills [1930]. This being a power, Russell only has to consider whether or not to make a distribution – he is not compelled to make any distribution at all] To Russell Rance, the remainder of my estate [i.e. minus the 500 shares and the six most highly-valued guitars; this would appear to satisfy the requirement of certainty of subject matter; segregation does not apply (in respect of a trust / power made by will)] to be divided as he considers appropriate amongst those who attended every televised concert where I performed during the final year of my career and recorded the event on their mobile device to remind them how well I played [lack of certainty of objects?: it might be impossible to establish (conceptual uncertainty) where Adela performed during the final year of her career (what constitutes the final year of her career?), although it may be possible to establish every televised concert, and recording the event on their mobile device (is conceptually certain). Capriciousness: is there any sensible link between the settlor and the potential appointees to whom the done of the power may choose to make a distribution? Re Manisty’s Settlement [1974]. Note, though, that the power would not fail (on the basis of administrative unworkability) because the class of objects is too wide (again, Re Manisty’s). In the event, that we conclude that there exists both conceptual certainty (personally, I have my doubts) and that capriciousness has not arisen (similarly, I regard this as capricious), we would still need to satisfy evidential certainty. That is, satisfaction of the limited need for evidential certainty: there must be at least one potential appointee within the class of beneficiaries who is able to supply factual proof (evidence) that he/she is within the class of persons specified by the donor of the power. No indication has been made as to whether such a person exists. “Any given postulant” test: Re Gestetner’s (1953), Re Gulbenkian [1970] and Public Trustee v. Butler (in respect of powers) total evidential certainty is not needed: although it will still be necessary for the actual claimant(s) to whom a distribution is made (if any) to prove that he or she is within the class specified by the donor. The key point here is that the power will not now be invalidated for a claimant who can successfully establish that he/she is within the class, just because it cannot be said of any other potential person whether or not he/she is or is not factually (evidentially) within the class. (Tracing the physical whereabouts of appointees is unlikely to arise in the context of a power because the donee is under no obligation to make a distribution at all and even if he decides to make a distribution, he has no obligation to do so to every beneficiary/appointee within the class described by the settlor/donor. He will probably make a selection, in practical terms, amongst only those persons whom he can readily trace in a physical sense.) Therefore, the property is likely to pass under the gift over in default]. If Russell does not think this is a good idea, then the bulk of it [uncertainty of subject matter, because the word ‘bulk’ is incapable of one single objective meaning: see Palmer v. Simmonds (1854). Therefore, with the subject matter of the gift over being uncertain, the gift will be invalid due to linguistic uncertainty of subject matter. Here a resulting trust will arise because the property which was supposed to pass to Flavia cannot be calculated such that it becomes impossible to calculate the property which is supposed to pass to the DMF. Thus, all the property which would otherwise have been distributed under the gift over in default of appointment will instead revert to the settlor’s estate.] is go to his daughter, Flavia, with the rest to the Disabled Musicians Foundation (DMF). The Will also states: ‘All my old friends may each select an orchestral music-score from my collection of original scores. All such items left at the end of one year are to go to Russell Rance as above.’ Flavia is Adela’s goddaughter, Adela having known Russell Rance well from their student days. Last month, Adela was killed by a shark whilst scuba-diving in the Caribbean and, on receiving this news, Pansy sadly suffered a massive heart attack from which she died a few days later. Pansy had previously told her sisters that there was, “something important”, they needed to find amongst her personal possessions and read should Adela predecease her. Before Adela left for the Caribbean, she mentioned to Fern that Pansy had seen a draft copy of Adela’s Will. Advise Russell Rance upon the validity and effect of clauses (a), (b), (c) and the supplemental clause contained in Adela’s Will.