It does not fit neatly into the category of obligations of proprietary rights but it shares some characteristic of obligations and some characteristic of proprietary rights.(Robert Pearce at 108) Basically there are three essential elements: A trust can only exist in relation to specific property Property must be held by trustees who have been the trust to whom the trustee owe their obligations There must be objects of the trust to whom the trust owe their obligations.( pg 108)
Introduction to Trusts
14/06/13 LAW OF TRUST (LAW 3711) 1INTRODUCTIONEQUITY & TRUST IILAW 3711
14/06/13 LAW OF TRUST (LAW 3711) 2Maitland :• “If we were asked what is the greatest andmost distinctive achievements performed byEnglishmen in the field of jurisdiction, Icannot think that we should have any betteranswer to give than this, namely thedevelopment from century to century of thetrust idea.”
• It was said that the development of trust inEngland is actually derived from nesting allkinds of general ideas in particularinstitution.
• So it was said that the development of trust inEngland is actually derived from Romanfideicommissum, Germanic Salmann and theislamic waqf (the Crusades again, reinforcedby St Francis’s visit to Egypt prior to thegrowth of gifts for pious purposes.(H.PatrickGlenn,Legal Traditions of the WorldSustainable Diversity in Law, OxfordUniversity, 200, at 236)
14/06/13 LAW OF TRUST (LAW 3711) 5History• Originally : the word trust was not used.• The word ‘use’/’uses’ to denote the concept oftrust.• Example : Land is given to A with an undertakingthat A will use the land for the use and benefit ofB.• A cannot keep the land for his own benefit.
• As far as the trust is concerned the personin which the property is vested is calledtrustee. Trustee is obliged to hold theproperty for the benefit of other person :cestui que trust or beneficiaries• Land might be given to another person dueto many reasons. This has no connectionwith sale and purchase. It has no valuableconsideration.
• Reasons;1)The owner is going on a war2)Escape from Creditor.3)Baron and Knight tried to hold titlewithout the need to transfer it tothe descendants
14/06/13 LAW OF TRUST (LAW 3711) 8• Land being conveyed to one man to beheld by him on behalf of or ‘to the use of’another for considerable time.• Land owner (feoffer) conveyed land to(feoffees to uses) directing them to holdthe land for the benefit of other person/cestui que trust of feoffor himself
14/06/13 LAW OF TRUST (LAW 3711) 9• From end of fourteenth or earlyfifteenth century – interferencefrom Chancellor.• Compel the feoffees to uses tocarry out directions given to them- use it for the benefit of theCestui que trust.
14/06/13 LAW OF TRUST (LAW 3711) 10• •Feoffees to uses (trustee)is the legalowner.• •Under common law, Cestui que trusthas no title to the land and noprotection to guide his interest in theland.• •Chancellor interfered to compel B tohold the land for the exclusive use andbenefit of C.
14/06/13 LAW OF TRUST (LAW 3711) 11• •Duty was imposed as a moral obligation• •Enforced by the Court of Chancery• •1536, English Parliament enacted the Statute ofUse – put an end to the separation of legal andequitable estates.• •Statute of Use was never repealed but the usesgave way to trust.• •Middle of 17th Century : started to enforce thesecond news and the it is called ‘trust’.
14/06/13 LAW OF TRUST (LAW 3711) 12Concept• A legal relationship created under the laws ofequity whereby property (the corpus) is heldby one party (the trustee), for the benefit ofothers (cestui que trust or beneficiaries)• Owner transfers propertytrustee•• beneficiary
• It does not fit neatly into the category ofobligations of proprietary rights but it sharessome characteristic of obligations and somecharacteristic of proprietary rights.(RobertPearce at 108)• Basically there are three essential elements:1)A trust can only exist in relation to specificproperty2)Property must be held by trustees who havebeen the trust to whom the trustee owe theirobligations3)There must be objects of the trust to whomthe trust owe their obligations.( pg 108)
14/06/13 LAW OF TRUST (LAW 3711) 14Definition.• No exact definition of trust.• Trust expresses : HonourRelianceJusticeFriendshipUniquely British institution
14/06/13 LAW OF TRUST (LAW 3711) 15• Underhill : A trust is an equitable obligation,binding a person (who is called a trustee) to dealwith property over which he has control (which iscalled the trust property) either for the benefit ofpersons (who are called the beneficiaries or cestuique trust) or whom he may be one and any onewhom may enforce the obligation or for acharitable purpose which may be enforced at theinstance of the Attorney General or for some otherpurpose permitted by law though unenforceable.
14/06/13 LAW OF TRUST (LAW 3711) 16Prof Keaton: Keaton’sLaw of Trust• The relationship which arises whenever, aperson called a trustee is compelled inequity, to hold property whetherreal/personal and whether by legal orequitable title for the benefit of somepersons (of whom he may be one and whoare termed beneficiaries or for some objectpermitted by law, in such a way that the realbenefit of the property accrues, not to thetrust but to the beneficiaries or other objectof trust.
14/06/13 LAW OF TRUST (LAW 3711) 17• No exact definition.• Covers all kind of situation including socialcircumstances.• Reasons:a) Compare the legal consequences of a trust andthe related conceptb) Identify the circumstances in which the oneconcept must exist at the exclusion of othersc) To identify the ctcs in which trust may co-existwith the related concept, eg- contract and debts.
14/06/13 LAW OF TRUST (LAW 3711) 18Development of Trust• Trust has become a more highly developedinstitution which has until now is used for awide variety of purposes.• All kind of trust;- Unit trust- pension scheme trust- Shares - trust out of cohabitation- Charities - unincorporated associatation
14/06/13 LAW OF TRUST (LAW 3711) 19Terminology• Trust instrument• Settlor• Testator• Beneficiary• Trust property.• Inter vivos• Real & Personal Property