I recently watched a quirky video on YouTube discussing the stash of approximately £197 billion in gold bars stored within the Bank of England’s vault beneath central London.  Although the pictures of the vault suggest that it should be the perfect setting for an action-packed-bank-robber-style movie, it also reminded me of one of the most basic principles in Trust law.

While discussing the size and quality of the gold bars, the documenter notes that not all the bars held within the vault are actually the property of the Bank of England.  It seems that other countries, such as Australia, have entrusted the Bank of England to guard their precious bullion.  In order to differentiate which bars were owned by which countries, efforts were made to brand the bars.  Therefore, there is certainty in determining which bars belong to which countries.

Although it does not seem that the Bank of England is holding the gold bars in trust, the branding of the gold bars nonetheless provides a great example of how certainty of subject matter can fail.  The seminal 1840 English decision of Knight v. Knight asserts that in order for a trust to be considered valid, the three certainties must be present, being: (i) the certainty of intention; (ii) the certainty of subject matter; and (iii) the certainty of objects.  For an explanation of the three certainties, please refer to our prior blog, Trust Basics – The Three Certainties.

Focusing specifically on the certainty of subject matter, in the 1994 Privy Council case of Re Goldcorp Exchange Ltd., at issue was an insolvent gold trading company whose clients were trying to obtain their already purchased bullion, stored by Goldcorp.  One of the arguments put forth by the claimants was that Goldcorp held their client’s gold in trust. 

Much to the dissatisfaction of some of their clients, Goldcorp did not keep each of the client’s bullion separately, but stored it as part of the company’s overall stock.  As a result, the trust argument failed since the claimants could not define with certainty, which property was theirs.

Closer to home, the requirement to be certain as to which property is subject to the trust, is very real.  In the case of Green v. Ontario [1973] 2 OR 396, s. 2 of the Provincial Parks Act (now repealed) provided that “…the provincial parks shall be maintained for the benefit of future generations”.  Arguing that a statutory trust was imposed upon the Province of Ontario, Lerner J. held that no such trust was ever created.  This decision was based, in part, on the fact that since s. 3(2) allowed the province to “…increase or decrease the area of any provincial park…”, it would be impossible to identify the property which is to be the subject of the trust and therefore there could be no certainty of subject-matter.

Noah Weisberg