Knowledge

The Court of Appeal of Guernsey (the "Court") has confirmed that an informal handwritten declaration of trust can be valid even where it does not expressly specify the proportions in which beneficiaries are to share trust property.

In Mark Victor Ashdown v Jane Deborah Fraser and APIC Trustees Limited [2026] GCA 043 the Court held that an informal handwritten note declaring that shares in a family company were to be held in "Marks and Janes Trust" created a valid present declaration of trust over the shares and did not fail for uncertainty of subject matter.

The decision provides insight into the application of the rule of the "three certainties" under English (and Guernsey) law where, to be valid, a trust instrument must show certainty of intention, subject matter and object. The Court held that:

• where a declaration of trust identifies two beneficiaries (or trusts) but is silent as to their respective interests, ordinary principles of construction apply; and
• if necessary, the equitable maxim that "equality is equity" may be used to conclude that they take in equal shares.

Background

A valid trust must satisfy the three certainties established in Knight v Knight (1840) 3 Beav 148: certainty of intention, certainty of subject matter, and certainty of objects. Certainty of intention requires clear evidence that the settlor intended to create a trust; certainty of subject matter requires the trust property to be identifiable; and certainty of objects requires the beneficiaries to be sufficiently certain so that it is clear who is entitled to benefit from the trust. If any one of these certainties is missing, the trust may fail for uncertainty.

The Ashdown case concerned the estate of Victor William Ashdown, who beneficially owned all 100 shares in Sylvan Holdings Limited. Victor had established separate trusts for each of his children:

• a trust for his son, Mark Victor Ashdown, in 1989; and
• a trust for his daughter, Jane Deborah Fraser, in 1994.

On 9 August 1994, Victor wrote a short-handwritten note stating:

"To whom it may concern the shares in Sylvan Holdings Ltd are now to be held in Marks and Janes Trust"

A contemporaneous trustees' minute also recorded the settlement of the shares into trust. However, neither document specified how the shares were to be divided between the two trusts.

Following Victor's death in 2022, a dispute arose between Mark and Jane regarding the legal effect of the 1994 document. Mark argued that the note either failed to create a valid trust or was void for uncertainty because it did not identify what shares were to be held for each trust. Jane contended that the document constituted a valid declaration of trust in favour of both trusts equally. The Royal Court of Guernsey (the "Royal Court") found in Jane's favour and held that the shares were held equally between the two trusts. Mark appealed.

The Court of Appeal's decision

The appeal focused on three principal issues:

• whether the Royal Court had adopted the correct approach to construction;
• whether the trust failed for uncertainty of subject matter; and
• whether the document could properly be construed as a present declaration of trust in favour of the two trusts equally.

The Court dismissed the appeal on all three grounds.

Objective construction remains the governing approach

The appellant criticised the Royal Court's statement that "a reasonable person would infer" an equal division, arguing that the Royal Court had effectively rewritten the instrument. The Court of Appeal rejected that criticism. It held that the Royal Court had simply applied orthodox principles of objective construction, consistent with the approach adopted in Re K Trust [2020] GLR 312 and the well-known principles in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896. The reference to a "reasonable person" was merely shorthand for the exercise of determining the objective meaning of the document in its factual context.

Silence as to shares does not necessarily create uncertainty of subject matter

Of wider significance is the Court's treatment of certainty of subject matter. The Court emphasised that the trust property was perfectly identifiable, being all 100 shares in Sylvan Holdings Limited. The issue was not uncertainty as to the property settled on trust, but uncertainty as to the respective interests of the two trusts in that property. Those are distinct questions. The Court distinguished authorities such as Re Lehman Brothers International (Europe) [2010] EWHC 2914 (Ch), where trusts failed because an uncertain portion of a larger fund had been identified. By contrast, the entirety of the relevant property had been identified in the present case. The Court therefore concluded that the trust did not fail for uncertainty of subject matter merely because the proportions between the two trusts were not expressly stated.

Equality remains equity

The Court further confirmed that, where property is settled on two or more beneficiaries and the instrument does not specify shares, equity will ordinarily presume equality. Looking at the circumstances as a whole, the Court considered that the most natural interpretation was that Victor intended an equal division between the trusts established for his two children. However, even if construction alone could not produce a definitive answer, the longstanding equitable presumption that "equality is equity" would result in a 50/50 allocation.

Accordingly, the Court affirmed the declaration that 50% of the shares were held on the terms of Jane's Trust, with the remaining 50% held on the terms of Mark's Trust.

Why does this matter?

The decision is a useful reminder that courts will generally seek to uphold, rather than defeat, trust arrangements where a settlor's intention can reasonably be discerned. Informality of drafting is not necessarily fatal, particularly where the language used demonstrates a present intention to create a trust and the trust property can be identified with certainty. 

The judgment also reinforces the distinction between uncertainty of trust property and uncertainty as to the extent of beneficial interests. Where the trust property itself is clearly identified, silence as to proportions will not automatically invalidate the trust. Instead, courts may resolve the issue through ordinary principles of construction or, where appropriate, by applying the equitable presumption of equal division. For trustees, beneficiaries and advisers involved in family trust structures, the case demonstrates the continued willingness of the Guernsey courts to adopt a commercially and practically sensible approach to trust interpretation, particularly where doing so gives effect to an objectively identifiable intention of the settlor.