## Facts

- The case involved a dispute regarding the creation and operation of sub-trusts and equitable assignments in the context of English trust law.
- The parties contested whether a sub-trust had been validly established or if there was merely an equitable assignment of an interest.
- The focus was on the nature of equitable interests, the division between legal and equitable ownership, and the requisite formalities for their transfer.
- The Court of Appeal examined the parties’ intentions, communications, and conduct, evaluating whether these supported the existence of a sub-trust or an equitable assignment.
- The situation gave rise to practical considerations for trustees and beneficiaries regarding their respective rights, duties, and the legal effects of their actions.

## Issues

1. Whether a valid sub-trust had been created, or if the parties had instead effected an equitable assignment.
2. What legal requirements and formalities are necessary for the creation of a sub-trust versus an equitable assignment.
3. How the intention of the parties should be determined in disputes involving trust and assignment arrangements.
4. What are the practical legal consequences for trustees and beneficiaries arising from these distinctions.

## Decision

- The Court of Appeal held that the declaration of a sub-trust must be clear and unequivocal, distinguishing it from an equitable assignment.
- A sub-trust imposes fiduciary duties on the original beneficiary as trustee for the new beneficiary, while an equitable assignment transfers only the beneficial interest without a trust relationship.
- The court found that intention is critical; the absence of formal documentation does not preclude a valid equitable assignment if the conduct and communications demonstrate clear intent.
- Certainty in identifying the subject matter and the object of the trust or assignment is essential; ambiguity may render such arrangements ineffective.
- The judgment clarified the legal consequences and obligations for parties involved in such trust arrangements.

## Legal Principles

- Creation of a sub-trust requires all three certainties: intention, subject matter, and objects, along with statutory formalities.
- An equitable assignment may be effective without formal documentation if the intention to transfer the beneficial interest is sufficiently clear.
- Sub-trusts and equitable assignments are distinct: a sub-trust imposes fiduciary duties, whereas an equitable assignment only transfers beneficial rights.
- Intention to create a trust or to assign an interest is ascertained objectively from conduct and communications.
- Certainty is fundamental for the validity of trusts and assignments; lack of clarity may invalidate the arrangement.

## Conclusion

Nelson v Greening & Sykes [2007] EWCA Civ 1358 clarified the distinction between sub-trusts and equitable assignments, underscoring the necessity for clear intention, certainty, and formalities in trust law and detailing the respective legal effects and duties arising from these arrangements.
