Certainty of Subject Matter
Certainty of subject matter is one of the three certainties that needed to be satisfied in
order to create a valid express private trust. Lord Langdale MR in Knight v Knight held that “…
it is important to comply because the party must know if any obligation has been imposed and if
he is aware of that, he must also know what property is to be distributed and the named
beneficiaries…” In essence, the recipient of property has to know what obligations attached to it
and to whom they are owed. Besides, the court ought to have sufficient guidance on settlors’
intention to be able to determine whether such obligation has been exercised and, if otherwise, to
enforce it.
That being said, the focus of this essay is concerning issues pertaining to certainty of
subject matter by assessing different case laws surrounding this area. It is to be noted that
certainty of subject matter is significant for judges and trustees to appreciate what properties are
held and how to execute the trust. It also allows beneficiaries to trace the particular properties in
the event trustees act in breach of trust. Furthermore, it helps to create ownership rights for the
beneficiaries in the form of an equitable interest.
One problem in this area is where the subject matter of the trust forms parts of a larger
mass. In Re London Wine, a company stored its stocks of wine in various warehouses which it
had sold to its customers. The wine in the warehouses formed part of a general bulk, without
being allocated to particular sales contract. The question is whether the wine was held on trust
for the customers. Oliver J held that the company did not held any wine on trust as it failed for
uncertainty of subject matter. There was no segregation or appropriation of the wine, thus the
legal title of goods did not pass under sale of goods. Buyers might find this decision to be harsh
as they would have believed that the wine belonged to them and the sellers would ensure that this
was the case.
The following case of Re Goldcorp Exchange by the Privy Council affirmed Re London
Wine decision. In this case, customers who could prove their order of bullion was in fact held
separately from the general bulk of bullion would be entitled to claim as secured creditor. Those
customers who could not demonstrate that their orders were segregated failed to be regarded as
beneficiaries under a trust due to uncertainty of subject matter. L Mustill stated that “A right of
property, whether legal or equitable cannot exist in air, hovering over an unidentified mass of
property; it can only exist in relation to property which is specifically ascertained.” J.E Penner in
The Law of Trusts, 2012 also expresses that it is a right decision in upholding this set of certainty
of subject matter that applies to both transfer of legal title and creation of equitable title. He also
emphasises that common law and equity shall not diverge in this area and equity must not
develop its own “flexible” notion. Moreover, question may arise on whether Re London Wine
will be decided differently today due to the introduction of s20A into the Sales of Goods Act
1979. It is arguably no because it is a statutory reform in context of sale as opposed to
declaration of trust. The general principle in trust for the property in question to be certain should
not be clouded.
Certainty of subject matter is one of the three certainties that needed to be satisfied in
order to create a valid express private trust. Lord Langdale MR in Knight v Knight held that “…
it is important to comply because the party must know if any obligation has been imposed and if
he is aware of that, he must also know what property is to be distributed and the named
beneficiaries…” In essence, the recipient of property has to know what obligations attached to it
and to whom they are owed. Besides, the court ought to have sufficient guidance on settlors’
intention to be able to determine whether such obligation has been exercised and, if otherwise, to
enforce it.
That being said, the focus of this essay is concerning issues pertaining to certainty of
subject matter by assessing different case laws surrounding this area. It is to be noted that
certainty of subject matter is significant for judges and trustees to appreciate what properties are
held and how to execute the trust. It also allows beneficiaries to trace the particular properties in
the event trustees act in breach of trust. Furthermore, it helps to create ownership rights for the
beneficiaries in the form of an equitable interest.
One problem in this area is where the subject matter of the trust forms parts of a larger
mass. In Re London Wine, a company stored its stocks of wine in various warehouses which it
had sold to its customers. The wine in the warehouses formed part of a general bulk, without
being allocated to particular sales contract. The question is whether the wine was held on trust
for the customers. Oliver J held that the company did not held any wine on trust as it failed for
uncertainty of subject matter. There was no segregation or appropriation of the wine, thus the
legal title of goods did not pass under sale of goods. Buyers might find this decision to be harsh
as they would have believed that the wine belonged to them and the sellers would ensure that this
was the case.
The following case of Re Goldcorp Exchange by the Privy Council affirmed Re London
Wine decision. In this case, customers who could prove their order of bullion was in fact held
separately from the general bulk of bullion would be entitled to claim as secured creditor. Those
customers who could not demonstrate that their orders were segregated failed to be regarded as
beneficiaries under a trust due to uncertainty of subject matter. L Mustill stated that “A right of
property, whether legal or equitable cannot exist in air, hovering over an unidentified mass of
property; it can only exist in relation to property which is specifically ascertained.” J.E Penner in
The Law of Trusts, 2012 also expresses that it is a right decision in upholding this set of certainty
of subject matter that applies to both transfer of legal title and creation of equitable title. He also
emphasises that common law and equity shall not diverge in this area and equity must not
develop its own “flexible” notion. Moreover, question may arise on whether Re London Wine
will be decided differently today due to the introduction of s20A into the Sales of Goods Act
1979. It is arguably no because it is a statutory reform in context of sale as opposed to
declaration of trust. The general principle in trust for the property in question to be certain should
not be clouded.
