Re London Wine Co Ltd (1986)

Key Notes

• Oliver J's remarks: In this case, Oliver J drew an analogy between a farmer who declares himself trustee of two sheep and the creation of a complete trust. He argued that such a declaration is inadequate to create a valid trust because the specific items (in this case, the sheep) must be identifiable for a trust to be properly constituted. Simply having a general mass of property, like a flock of sheep, would not suffice. The farmer would have to take additional steps to identify which particular sheep he intended to hold on trust.

• Specific Identification: Oliver J highlighted the necessity of identifying specific items within a mass of property, like bottles of wine in a stock, for the creation of a valid trust. The rule known as the "London Wine" rule stemmed from this case, emphasizing that without identifying specific items (such as particular bottles of wine), no valid trust can be established. This means that, for example, if a person intended to leave bottles of wine to a customer, it would be essential to identify which specific bottles were being held in trust, as simply saying "a bottle of wine" would be too vague.

• Relaxation of the Rule: Over time, the strictness of the London Wine rule has been relaxed, particularly in cases where the property is fungible or interchangeable, such as money. In such instances, it’s not necessary to identify each individual unit of the property (e.g., a specific coin or note) because the property is understood to be part of a homogenous mass, and the identity of each individual item may not hold significant importance.

• Oliver J on Intangible Property: In relation to intangible property (like money), Oliver J clarified that the same principles apply, even though money is often considered a "homogenous mass" where individual units may be indistinguishable. Despite this, the court would still expect clarity and identification of the specific funds that are intended to be held on trust. The key point here is that while the nature of money or intangible property might make individual identification seem less critical, the same basic rule of specific identification applies to ensure that the trust is legally valid and enforceable.

This case establishes critical principles about the necessity of identifying specific property within a trust, whether tangible or intangible, to ensure the trust is effective. The development of this rule over time has played an important role in how courts view the administration of both tangible and intangible assets in trusts.