Re Baden’s Deed Trust
(No.2) (Individual ascertainability test – discretionary trust)
•
Individual ascertainability test was satisfied if “as regards a
substantial number
of
objects it can be
said with certainty
that they fall within the trust” even though it cannot be
proved that whether others fall within it or not.
Power – mere gift not trust
2.
Rules of Formalities
a.
Rule against perpetuities
Settlor appointing beneficiaries, the contingent benefit of beneficiaries going on, the settlor
party cannot be alienated.
Time period is X + 21
Re Lee Moey Chee
, Decd.
Facts: The clause in the testator’s will read: “The remaining fifteen shares and the money in
cash under my name shall be reserved as the
ancestral property in China
”.
Held: Since the trust was to be carried out in a foreign country objection that the trust in this
case was invalid according to the law in Singapore as
infringing the rules against
perpetuities
was immaterial and it must therefore fail.
A trust failed because impractical to perform the trust in China from Singapore.
b.
Rules against public policy – declared void
A trust which infringe
public policy
is void. Void objectives are those where property is
directed to be kept unused, or where the purposes of the trust either encourage a breach of
law or weaken the family unit, or introduce unlawful conditions that interfere with parental
duties, between married couples or which deter a separated married couple from living
together.
Choo Yee Wah v Choo Ah Pat
Facts:
Deceased had prior to his death drawn a cheque to the joint account of him and his common
law wife.
•
Issue was whether the deceased had in full possession of his mental faculties when his
thumbprints were affixed to the said cheque. Whether the trust was
tainted with forgery
,
thus invalid.
•
Evidence disclosed an intention on the part of deceased, which was sufficiently clear
and precise to impress the money with a trust for the benefit of his common law wife. Valid
trust.
Palaniappa Chettiar v Arunasalam Chettiar
[1962] 1 MLJ 143
•
Trust illegal as it was a deceit to
avoid taxation.
•
No court will lend its aid to a man who founds his cause of action upon an immoral or
an illegal act.
c.
Principle of drafting
Principles of Drafting
Consider various factors such as objectives and intentions of settlor, capacity of settlor, nature
of trust property, type of trust, tax position, class of beneficiaries, choice of trustees and
executors.
Correct procedure
for transfer of trust property must be followed, every clause of trust
instrument must be explained to settlor which clause may give rise to breach of trust.
Every precedent must examined and trust instrument must be sufficiently flexible to cater
future developments.
d.
Rules against inalienability
Man is free or at least ought to be free to alienate his property where he so desires.
Mohamed Ghouse v Hajee Mohamed Saiboo
•
A clause restraining alienation of land was void because everyone should be given the
freedom to dispose of his land.
