1. 1
S. Selvakkunapalan LL.B., LL.M.
Attorney-at-Law, Additional Draftsman
Visiting Lecturer – Sri Lanka Law College.
https://selvakunapalan.blogspot.com/2019/
LAW OF TRUSTS
CHAPTER III
EXPRESS TRUSTS
2. Definition for trust
• The modern concept of ‘trust’ has come to Sri Lanka
via English law.
• The English law of trust stipulates dual ownership of
the trust property; Legal title vests with the trustee
while equitable title vests with beneficiary.
• Justice Story:- A trust in the most enlarged sense may
be defined to be an equitable right, title or interest in
property distinct from the legal ownership thereof.
2
3. • Lord Lindley :- A trust as equitable obligation to deal
with the property in a particular way.
• A trust formally known as nothing except a
confidence repose by one person in another, and
enforceable in a Court of Law.
3
4. Keeton states that a trust may be said to be the
relationship which arises, wherever a person called the
trustee is compelled in equity to hold the property
whether real or personal and whether by legal or
equitable title, for the benefit of some persons or for
some objects permitted by law in such a way that the
real benefit of the property accrues not to the trustee
but to the beneficiaries or other objects of the trust.
4
5. Trust is an obligation whereby the trust is bound
to perform or forbear some acts for the
beneficiary. But this obligation has peculiar
features.
First: the obligation must relate exclusively to
property. The ownership of which vests in the
trustees. An obligation not so related cannot be
a trust.
Moreover, like English Law, the definition of the
term of expression “trust” recognizes duplicate
ownership.
5
6. Himangshu Kumar Roy v. Maulavi Ali Khan [AIR 1938
Cal 818]
Trustee is not merely a nominal owner but a full owner.
Second: Their obligation must arise out of confidence
which the author of the trust reposes in the trustee or
out of own declaration. This obligation is different from
contractual or delictual obligation.
6
7. Bhaia Ramanui v. Lalu maheshunuj [AIR 1968 Pat 463]
It is a fiduciary obligation voluntarily accepted by the
trustee.
The definition of the term of “trust” in its legal sense
has technical and legal meaning which is very much
different from the sense we use the word in daily
parlance. In its legal sense, it involves what is usually
known as three certainties namely -
7
8. (a) A person who is a trustee;
(b) The property which may be chattel or land or
money or any property tangible or intangible which
is called trust property.
(c) A person for whose benefit the property is held.
Dooby v. Watson [1883 39 Ch D 178]
It is the combination of three elements which must
exist before we get a relationship of trust and
beneficiary.
8
9. Rajagopala Chetti v. Official Assignee [1932 MWN 289]
Mere intention to create a trust without any gift of
property for that purpose or object would not
constitute a trust.
In order to create a trust, the owner has to divest
himself of his rights to the property and transfer it to
the trustee.
9
10. Chandan v. Longa Bai [AIR 1998 MP 1]
When person executes a deed expressing his desire to
construct a Dharmasala to perpetuate the memory of
his family members without divesting himself of the
right in such property to the trustee, no trust is
created.
10
11. When the security deposits made by the agents,
employees, and lorry-owners with a transport company
had intended that the deposits so made were to be held
by the company in their hands for the benefits of the
depositors and there was segregation of the deposit
amount and no payment of interest was made and
commission account were kept separately, it was held
by the Madras High Court that the company must be
held to be treated as trust said deposits- Madras
Bangalore Transport Co. (Fast), Insolvents, in the
matter of [AIR 1974 Mad 21]
11
12. A debtor constituted in writing a committee for paying
off his creditors but did not vest any property to the
committee nor was any power of management or
disposition of property or collection of money was
given it was held that there was no trust in favour of
the creditors- Kishangopal Nathulal [AIR 1956 MB
236].
12
13. The court is to look into the intention of the author of
the document whether a trust is created or not.
A trust is created when an obligation annexed to the
ownership of the property for the benefit of a third
person is brought into existence- Indian I & S Co v.
Dalhousie Holding Ltd. [AIR 1957 Cal 293]
13
14. For the creation of a fiduciary relationship, it is not
necessary that the concerned document must use the
word “trust”, because a person may become a trustee
by his own acts or conducts- Fazalbhhai Mills Ltd., in
re [AIR 1936 Bom 296] and section 6 of the Trusts
Ordinance.
When a bank employee had made a security deposit
with the employer bank, such deposit was held by the
bank as trustee- Hindusthan Commercial Bank Ltd, in
re [AIR 1938 Mad 651]
14
15. Sec 3 of the Trusts Ordinance
Trust" is
(i) an obligation annexed to the ownership of the
property; and
(ii) arising out of a confidence reposed in and accepted by
the owner, or declared and accepted by him,
(iii) for the benefit of another person,
15
16. (iv) while the ownership is nominally vested in the owner,
the right to the beneficial enjoyment of the property is
vested in such other person, or in such other person
concurrently with the owner.
The above definition emphasizes the ideas of confidence,
the legal ownership of the trustee and the beneficial
ownership of the beneficiary cestui qui trust.
16
17. The person who reposes or declares the confidence is
called the "author of the trust“;
The person who accepts the confidence is called the
"trustee";
“beneficiary” means a person, or a defined or definitely
ascertainable class of persons, for whose benefit the
confidence is accepted; (Amended by Act, No. 6 of 2018)
The subject-matter of the trust is called "trust property "
or " trust money ";
"The beneficial interest" or "interest" of the beneficiary
is his right against the trustee as owner of the trust
property ; and
The instrument, if any, by which the trust is declared is
called the "instrument of trust" ;
17
18. The words ‘confidence reposed in’ are the keywords for the
formation of a trust. Trust is a gift property or an interest
in the property, to an individual or group of individuals or
an institution through the instrumentality of ‘trustee’, in
whom the owner of the property reposes confidence.
The trustee is bound to hold the property for the
beneficiary and he can’t use the property for his own
benefit.
18
19. It is good to know the use of interpretation clause of a
statute.
In the case of Indian Immigration Board of Natal v.
Govindaswamy (AIR 1920PC 114), it was stated that
when the word is defined in the interpretation clause,
prima facie, the definition governs wherever the word
is used in the body of the statute.
19
20. However, when the context makes the definition given
in the interpretation clause inapplicable a defined word
when used in the body of the statute has to be given
meaning different from that contained in the
interpretation clause.
Therefore, all the definitions given in the interpretation
clause are enacted subject to the qualification “unless
the context otherwise requires” or “unless the context
or the subject matter otherwise implies”.
20
21. Although it is presumed that the legislature will be
precise and careful in its choice of language in the
definition section, sometimes, the language used in a
section itself requires interpretation – Walker v. Leeds
City Council (1976 3 All ER 709).
In these circumstances, a definition in the
interpretation section may itself ambiguous and may
have to be interpreted in the light of the other
provisions of the Act and having regard to the ordinary
connotation of the word defined.
21
22. The definition in the interpretation section is not to be
read in isolation but it must be read in the context of
the phrase which it defines realizing that the function
of an interpretation section in a statute is to give
precision and certainly to a word or phrase which
would otherwise be vague and uncertain but not to
contradict it or to supplant it altogether – Hotel and
Catering Board v. Automobile Proprietary Ltd. (1968 3
All ER399).
22
24. Trust and contract
A contract is agreement enforceable by law, entails an
obligation or legal duty to do or abstain from doing
something what one has promised to do or abstain
from doing. A trust results from the act of the parties
though some of the characteristics of a contract, but
it differs from a contract with respect to beneficial
interest in and legal ownership of the trust property.
24
25. Trust is an obligation to use one’s property for the
benefit of another in whom it is concurrently vested.
The beneficiary has more than the personal right against
the trustee for the performance of the obligations of
the trust, he has the beneficial interest in the property
though the legal ownership vests in the person holding
the property for his benefits.
25
26. In a trust, the trustee must hold the property for the
benefit of the beneficiary. The trustee may be one the
beneficiaries. Similar result may be obtained where A
promises to B to pay money to C.
But when A does not perform the contract. B will be
entitled to nominal damages only because he has
suffered no loss. C can not sue because no
consideration has moved from him or in other words
he is not a party to the contract.
26
27. But the situation will be different if A promises to B
that A will pay money to B on condition that the money
will be paid by B to C. Here, B will be entitled to
substantial damages for the breach by A. But C is
without any remedy. However if C is a joint promisee,
he would be able to sue.
It is sometimes difficult to distinguish between a trust
from a contract because the law of trust and law of
contract are at places overlapping.-Mailand, Equity, 2nd
Edition.p54.
27
28. In trust, there is a fiduciary relationship between
trustee and beneficiary. The beneficiary has a right to
sue the trustee for the benefit, or proper maintenance
of trust property. In a contract as specified earlier, C can
not sue against either A or B.
In a trust, there is a particular separate fund which the
trustee has to preserve intact. In the case of a contract,
there is no necessity to have a separate fund.
28
29. In a trust, the trustee can not use the trust property for
his own benefit and if he does, he commits breach of
trust.
A trust is exclusively for the benefit of the beneficiary
who is third person to the contract between the author
of trust and trustee. Otherwise no trust is created.-
Rama Rao v. Chandra Gopal [1969 2 MLJ460]
29
30. In the case of Indian Iron and Steel Company v.
Dalhousie Holdings [AIR 1957 Cal 293] it was observed
“Trust in its origin was a form of contract distinctly
enforced in equity. A contract creates a trust when it
has brought into existence an obligation annexed to the
ownership of the property for the benefit of a person
other than owner. No technical words are required to
create trust. The question is fundamentally a question
of the parties to the contract.”
30
31. When a fiduciary relationship is created in a family
arrangement in favour of strangers, then the strangers
upon whom the benefit is conferred can enforce it as
the said family arrangement creates a trust in favour of
those strangers.- Veeramma v. Appyya [AIR 1957 AP
465].
31
32. Trust and gift
A trust differs from gift in the sense that a gift requires a
delivery of the property and complete transfer of title. While
in a trust the legal ownership vests with the trustee, though
for the benefit of beneficiary.
The role of the "declaration" also comes into focus when self-
declarations are compared with gifts.
32
33. In Shah v Shah[2011] W.T.L.R. 519
‘D’ signed a letter which purported to dispose of shares in
favour of his brother, ‘M’. He delivered the letter to M,
together with the executed share transfer forms but
without a share certificate (which was held by the
company). The letter stated: "I am as from today holding
4,000 shares in the above company for you … from this
declaration and letter."
33
34. D argued that the letter merely contained an
expression of an intention to make a gift, which was
never completely constituted, and therefore was
ineffective to vest title in M. The Court of Appeal held
that in fact the letter contained a valid self-declaration
of trust in M’s favour.
It would take effect immediately, and as a matter of law
this could only involve a disposition of the beneficial
interest in the shares, as legal title could not pass
before the share transfer forms had been registered.
34
35. D had executed and delivered a stock transfer form, he
clearly intended registration to occur in due course.
The idea that D would hold the shares for M pending
registration could be made effective only by the
imposition of a trust and this was what D had to be
taken in law to have intended.
A mere intention to make a gift is insufficient for this
purpose.
35
36. • The principal distinction between gifts and self-
declarations of trust is that in the former the donor
transfers rights to another, whereas in the latter the
settlor holds rights for another.
36
37. Trust and Agency
A trustee has full title to the trust property. An agent to
whom property has been transferred does not have title.
When a money is handed over with a direction to pay it
to another person, there is no vesting of ownership and
there is no trust only agency.-Mukta Prosad v.
GajrajSingh [1904 1 All LJ 422]
37
38. When a person by an agreement entrusted the
management of his property for ten years with a duty to
keep an account and subject to payment of
remuneration, it was held that such appointee was
merely an agent and not a trustee.- Rai Beharilar v.
Bhaiyalal [AIR 1920 PC 8]
When a person has been given the management and
control of the provident fund of the employees of a
firm, such a person is not a trustee but a manager.-
Gopal Das v. Abdul Jalwar [AIR 1946 Pat 430]
38
39. A person has been appointed as agent by a person to
purchase a property for him. After such purchase, the
agent fraudulently sold the property to a third party.
The principal could get the recovery of possession of
the property from the transferee of the agent, because
the agent not being trustee could not convey valid title
of the property to the transferee.- Cove v. Mackenzie
[1877 46 LJ Ch 564]
39
40. A trustee is not subject to the general control of the
beneficiary, whereas an agent is subject to the control
of his principal.
Agents of trustee are not trustees and beneficiary can
not take action against the agents of the trustee.
However, an agent of the trustee has fraudulently
involved in the breach of trust, he may be constructive
trustee and shall be accountable to the beneficiary.-
Ramanathan Chettiar v. Annamalai Chettiar [57 Mad
1031]
40
41. Agency is based an agreement between principal and
agent but there is not necessarily any agreement
between trustee and beneficiary.
The agent can involve his principal in liability towards
third person, whereas a trustee cannot so involve his
beneficiary.
Agent arises by consent, whereas a trust can arise
without consent.
41
42. Trust and fideicommissum
• Section 3(b) of the Trusts Ordinance declares that a trust
does not include a fideicommissum. Fideicommissum has
been received into the law of Sri Lanka through Roman
Dutch Law.
42
43. The distinction between the legal and equitable
ownership is of the essence of the trust; the idea is
foreign to the fideicommissum.
In trust, the legal ownership of the trustee and
equitable ownership of the beneficiary are concurrent,
and often coexistence. In Fideicommissum, the
ownership of the fideicommissary begins when the
ownership of the fiduciary ends.
43
44. Fideicommissum arises where property is given to a
person called the fideicommissary who has the absolute
control over it, and on his death or on the happening of a
condition, the property passes to another person called
the fideicommissary, and may likewise devolve on
successive fodeicommissaries.
Differences between two concepts-
(1) In the trust, the legal ownership of the trustee and the
equitable ownership of the beneficiary are concurrent and
coexistence;
44
45. In the fideicommissum, the ownership of the
fideicommissary begins when the ownership of the
fiduciary ends;
(2) In the trust, the interest of the beneficiary, though
not described as equitable ownership is against bona
fide alienation of the legal estate it is ineffectual; in the
fideicommissum, the fideicommissary once his interest
has vested, has a right which he can make good against
the world.
(Abolition of Fideicommissa and Entails Act, No.13 of
1972)
45
46. Private trust and public trust
When the beneficial interest is limited to specified individuals
or definitely ascertainable individuals, it is private trust.
In a private trust, a person creates a trust by deed or will
providing for the enjoyment of the property by the members of
his family and descendants.
46
47. When the beneficial interest is for public as a whole or
section of the public, it is public trust.
In public trust, the beneficial interest is vested on
uncertain and fluctuating body of persons.
Public trust is constituted for the benefit of either of
the public at large or of some considerable portion of it
answering a particular description.
47
48. The duration of private trust cannot be extended
beyond the period allowed by the rules of perpetuities.
A public trust may be permanent and indefinite
character and is not confined within the limits of the
rule against perpetuities.
48
50. Classification of Trusts
1. Private trust and public Trust
2. Executed Trust and executory trust
3. Fixed trust and discretionary trust
4. Bare (simple) trust and special trust
5. Express Trusts
6. Informal/ implied Trusts
7. Resulting Trusts
8. Constructive Trusts
50
51. Express Trusts
“express trust” means a trust that is created by the author of
the trust generally in the form of an instrument in writing with
certainty indicating the intention of the trust, but does not
include a constructive trust or a de facto trust, whether
charitable or not. (Act, No. 6 of 2018)
51
52. • An express trust is one which is deliberately established
and which the trustee deliberately accepts.
• For example:- Trusts created under section 5(1) and (2) of
the Trusts Ordinance.
52
53. Creation of Express Trust
• Subject to the provisions of section 107, no trust in relation to
immovable property is valid unless declared by the last will of
the author of the trust or of the trustee, or by a non-
testamentary instrument in writing signed by the author of
the trust or the trustee, and notarially executed. (Sec 5 (1))
53
54. • The term “notarially executed” is defined in section 3(o) of the Trusts
Ordinance to mean that the instrument should be executed in the
manner prescribed by section 2 of the PFO.
No sale, purchase, transfer… of land… shall be of force e or avail in law
unless –
(a) the relevant deed or instrument shall be in writing, signed by every
executant and attested by a notary public before two witnesses
present at the same time; and
54
55. (b) the left or right thumb impression of every such executant or where
both thumbs of such executant are missing, the impression of any
other finger or the toe impression as the case may be, is affixed
above or beside the signature to the original, duplicate and the
protocol of the relevant deed or instrument:
Provided however, in the event the signature or the thumb
impression of any such executant cannot be obtained due to any
reason, the notary public shall state such reason in the attestation,
and such executant shall affix any other finger impression or toe
impression, as the case may be.” (sec 2 of PFO as amended by Act,
No. 30 of 2022)
55
56. • No trust in relation to movable property is valid unless -
(1) declared by the last will of the author of the trust or of
the trustee, or by a non-testamentary instrument in
writing signed by the author of the trust or the trustee, or
(2) the ownership of the property is transferred to the
trustee by delivery. Sec 5(2)
56
57. Milroy v Lord [1862] 4 De G.F. & J. 264; 45 E.R. 1185
• Express trusts may be constituted in one of two ways.
• The trust will be effectual, if the settlor transfers the property
to a trustee for the purposes of the settlement, or declares
that he himself holds it in trust for those purposes.
57
58. Bernedette valangenberg Vs. Hapuarachchige Anthony
([1990] 1 SLR 190)
• Court stated that section 5(1) of the Trusts Ordinance
specially enacts that a trust created under Chapter II of that
Ordinance must be notarially executed in the manner
prescribed by s.2 of the Prevention of Frauds Ordinance.
58
59. Wijewardena v. Gomes (70 NLR 97)
A executed for the benefit mainly of his youngest son, B, what Lord
Wilberforce called a “voluntary settlement” which included 6000
ordinary shares in a company of which shares he was the registered
owner, and 1000 further ordinary shares “which had been issued but
not yet allotted into the names of the trustees. On the same day, A
executed in favour of the trustees of the settlement a transfer of the
6000 shares of which he was the registered owner, but died before any
allotment of the 1000 shares of the new issue had been made. In due
course, the 1000 shares were allotted to the executors of the A’s estate
on the payment by them of a balance sum of money due in respect of
those shares. The question at issue was whether the 1000 newly …
59
60. Allotted shares either devolved under the will of A or formed part of
the trust fund and the settlement trustees were therefore, entitled to
call upon the executors of A for a transfer to them of these shares.
Privy Council said that under section 6 of the Trusts Ordinance of Sri
Lanka for an effective trust to be created, there must be either a
testamentary disposition or a transfer of the property to the trustees.
60
61. Informal/ Implied Trusts
• A implied trust may be said to arise where the intention of the
settlor to set up a trust is inferred from his words or actions, e.g.
precatory words.
• Implied trust in that sense are probably best regarded as express
trusts, in that, the trust is expressed, albeit in ambiguous and
uncertain language.
• Section 5(3) “These rules do not apply where they would
operate so as to effectuate a fraud.”
61
62. Resulting Trusts
• The term resulting trust seems to be limited to three well
defined categories.
• First, where a man purchases property and has it conveyed or
transferred into the name of another or the joint names of
himself and another when the beneficial interest will
normally, as it is said, result to the man who put the purchase
money.
62
63. • Secondly, where there is a voluntary conveyance or
transfer into the name of the another or into the joint
names of the grantor and another where likewise
there is prima facie a resulting trust for the grantor.
• Where there is a transfer of property to another on
trusts which leave some or all of the equitable
interest undisposed of.
63
64. Constructive Trusts
• The trust arises by operation of law as from the date of the
circumstances which give rise to it.
• The function of the court is merely to declare that such a trust
having arisen in the past.
64
65. Essential elements to create a trust
1. Author or settlor of the trust;
2. Trustee;
3. Beneficiary;
4. Trust property or subject matter of the trust;
5. Objects of the property.
65
66. 1. The three persons must have the capacity to enter
into the transaction;
2. There must be certainty as to intention to create
trust, beneficiary and subject-matter;
3. Trust must not violate the rule of perpetuity;
4. It must be lawful purpose;
5. Trust property must be transferred to the trustee.
66
68. Three parties
There should be person to repose or declare confidence,
known as ‘author of the trust’. Another person should
accept the confidence as reposed in him by the author,
called the ‘trustee’. When the author declares and
accepts the confidence himself he becomes a trustee also.
There should be a third person for whose benefit the
confidence is reposed by the author and accepted by the
trustee. The author of the trust may himself be the
beneficiary or one of the several beneficiaries under trust
property
68
69. Capacity of settlor
• A trust may be created by every person competent to contract
– (sec 7(a).
• A group or community of persons can create a trust by
contributing towards the value of the trust property.
• Every person is " competent to contract " who is of the age of
majority, or has otherwise acquired the status of majority
according to the law to which he is subject, and who is of sound
mind, and is not disqualified by law from contracting – Sec
3(l).
69
70. all persons when they shall attain, or who have already attained, the
full age of eighteen years shall be deemed to have attained the legal
age of majority, and, except as is hereinafter excepted, no person
shall be deemed to have attained his majority at an earlier period,
any law or custom to the contrary notwithstanding:
Provided that, nothing in this Act shall be read and constructed as
affecting the right of any person under twenty-one years of age to
receive any benefit he is entitled to under any other law. -Section 2 of
the Age of Majority Ordinance(AMO).
Nothing herein contained shall extend or be construed to prevent any
person under the age of eighteen years from attaining his majority at
an earlier period by operation of law.- section 3 of the AMO
70
71. • Section 2 and 3 of the Age of Majority Ordinance
provides that legal age of majority is 18 years.
• A trust may be created with the permission of the
court by or on behalf of a minor – (sec 7(b)). The
permission should have been obtained prior to the
creation of trust.
• Trust by a lunatic;
• Trust by an insolvent;
• Trust by corporation.
71
72. Capacity to be trustee
• Every person capable of holding property may be a trustee;
but, where the trust involves the exercise of discretion, he
cannot execute it unless he is competent to contract. – (sec
10(1))
• The term “capable of holding property” is not defined; but it
includes all living persons, corporation and company.
72
73. • It is said that a settlor has the liberty to appoint a
beneficiary or an insolvent as trustee in an instrument of
trust, but a court when appointing had shown reluctance
such persons as trustees.
• In Sesma Lebbe Marrikar Vs. Manatchy Umma
(11NLR237) the Court held that an undischarged bankrupt
is not ipso jure disqualified for the office of administrator
of a deceased person's estate under the Civil
Procedure Code. In Ceylon, an application for a grant of
administration of an intestate's estate is made under
section 544 of the Civil Procedure Code, which places no
restriction on the power of the Court to appoint any
person interested in having the estate administered.
73
74. Capacity to be beneficiary
• “beneficiary” means a person, or a defined or definitely
ascertainable class of persons, for whose benefit the
confidence is accepted;. -3(e) as amended by Trust
(Amendment ) Act, No 6 of 2018.
• Every person capable of holding property may be a
beneficiary. – sec 9(1).
74
75. • Every written law whether made before or after the
commencement of this Ordinance, unless there be
something repugnant in the subject or context " person
" includes any body of persons corporate or
unincorporate.- (sec 2(s) of the Interpretation
Ordinance).
• A trust for the maintain animals is invalid.
75
76. Trusts Created by Action
Section 6 states that the trust must be declared by words or
acts of the settlor.
76
77. • The formalities laid down in section 5(1) of the Trusts
Ordinance will have to be adhered to in creating a
valid trust in respect of the immovable property.
• Therefore, any trust alleged to have been created
without complying with the above-said formalities is
invalid and will no force in law.
• However section 5(3) of the Trusts Ordinance
presents an exception. It states that the rules
specified in sections 5(1) and (2) do not apply where
they would operate so as to effectuate fraud.
77
78. Re keyford[1975] 1WLR 279
Kayford Ltd were a mail order company. They received
pre-payments from customers and was concerned that
they may be facing insolvency. On taking legal advice,
they opened a separate bank account to deposit the
customer's pre-payments. The account was named
'Customer Trust Deposit Account'. Kayford Ltd
subsequently did become insolvent and the creditors
sought to claim the money in the separate account as
part of the company assets.
78
79. It was held the money in the account on trust for its
clients. Megarry J: There is no doubt about the so-
called “three certainties” of a trust. The subject matter
to be held on trust is clear, and so are the beneficial
interests therein, as well as the beneficiaries. As for the
requisite certainty of words, it is well settled that a
trust can be created without using the words “trust” or
“confidence” or the like: the question is whether in
substance a sufficient intention to create a trust has
been manifested.
79
80. Paul v. Constance [1977] 1 W.L.R. 527]
• Mr. Constance was married to the defendant. He left his wife in
1965 and later met the claimant and moved in with her in 1967.
He never divorced his first wife. In 1973 Mr. Constance received
£950 in relation to a personal injury claim from his employer. He
discussed what to do with the money with the claimant and
decided to open a bank account.
80
81. As they were not married, the bank advised him to
open the account in his own name but assured him
that the claimant would be able to draw on the account
if she had a signed note from him. Constance had told
the claimant that the money was as much hers as it
was his. There were three further deposits into the
account which came from the couple's bingo winnings
which they played as a joint venture.
81
82. Constance died intestate in 1974 and his wife as
administratrix of his estate closed the account and
claimed the sums contained in the account formed part
of his estate. The claimant argued that the sums
contained in the account were held on trust for the
benefit of her and Constance jointly.
There was an express declaration of trust and the
claimant was entitled to the money in the account.
82
83. Lord Justice Scarman:"When one bears in mind the
unsophisticated character of the deceased and his
relationship with the plaintiff during the last few years
or his life, the words that he did use on more than one
occasion, "This money is as much yours as mine,"
convey clearly a present declaration that the existing
fund was as much the plaintiff's as his own.“
In the case of Paul v Constance, the deceased partner
of the defendant had frequently said to the defendant,
in respect of a sum of money: "This money is as much
yours as mine". In finding that this amounted to a self-
declaration of trust.
83
85. Declaration of Trust consists of the following:-
(i) Name and address of the settlor and the name and
address of the trustee;
(ii) Name of the trust;
(iii) Definitions which shall include the definition of the
trustees and trust property;
(iv) Objects of the trust;
(v) General powers of the trustees;
(vi) Special powers of the trustees;
(v) Meetings and proceedings of the board of trustees;
85
86. (vi) Appointment and removal of trustees;
(vii) Bank accounts and audit of accounts;
(viii) Application of trust property and income; and
(ix) Amendment s and declaration.
86
87. Self-declarations and transfers on trust
• A self-declaration of trust is a comparatively recent mode of
constituting a trust. Traditionally a settlor would create a
trust by transferring rights to another, a trustee, to be held
for a beneficiary.
87
88. Ex parte Pye (1811)
• The settlor had instructed his agent to purchase an annuity
in his mistress’ name. The agent ignored the instruction, and
purchased the annuity in the settlor’s name. Lord Eldon held
that trusts could be created in one of two ways: the
traditional method of transfer of the legal title, in a manner
that would be effective at law, to a trustee, and by self-
declaration.
88
89. • In Lord Eldon’s words: “he has committed to writing
what seems to me a sufficient declaration, that he
held this part of the estate in trust for the annuitant".
• Charity Commission for England and Wales v
Framjee [2015] 1 W.L.R. 16. where donors made
donations to particular charities through the
defendant’s website. The issue was whether the
defendant held the donations upon trust for the
intended charities before the money was paid over to
them.
89
90. Henderson J. in finding that there was a trust, was not
troubled by the absence of a specific declaration by the
donors. Instead of a clear oral or written statement
declaring a trust, we find contextual evidence of the
purpose of the transfer, from which Henderson J. could
infer an unexpressed intention to create a trust.
In the case of trusts by transfer, the declaration is
relevant only because it reveals something about the
settlor’s intentions, and not as a specific act that
constitutes the trust.
90
91. • When one turns to self-declarations because legal title
remains with the settlor, there is no legally relevant act or
transaction other than the declaration itself. This alone is
effective to change the settlor’s status from absolute
owner to trustee and give the beneficiary equitable title.
• Choithram International SA v Pagarani [2001] 2 All E.R. 492
The difference between transfers on trust and self-
declarations lies in the role played by the declaration. In the
latter case, because the declaration is the only legally
relevant event, courts will require evidence of a specific act
of declaration in order to find a trust.
91
93. 114. The Minister may, in his discretion, by Order, on the
application of the trustees of any charitable trust or of any
public or private association (not being an association for
the purposes of gain), authorize the incorporation of the
said trustees, and upon the publication of the said Order,
the said trustees of the charity or association and their
successors for the time being shall be constituted a
corporation under such style and subject to such
conditions as may be specified in the Order.
93
95. 79. A trust is extinguished-
(a) when its purpose is completely fulfilled;
(b) when its purpose becomes unlawful;
(c) subject to the powers of the court under Chapter X and to
section 110 (4), when the fulfillment of its purpose becomes
Impossible by destruction of the trust property or otherwise;
(d) when the trust, being revocable, isexpressly revoked.
95
96. • Darshan Lal v. Dalliwall [AIR 1952 All 825]
• Jugal Kishore Roopchand v. Ambala Commercial Bank [AIR 1953 Punj
98]
• Amritlal Kohri v. Harbans Lal Kohri [AIR 2001 Del 24]
96
97. 80.(1) A trust created by will may be revoked at the
pleasure of the testator.
(2) A trust created otherwise than by will can be revoked
only-
(a) where all the beneficiaries are competent to
contract, by their consent;
(b) where the trust has been declared by a non-
testamentary instrument or by word of mouth, in
exercise of a power of revocation expressly reserved to
the author of the trust;
(c) where the trust is for the payment of the debts of
the author of the trust, and has not been
communicated to the creditors, at the pleasure of the
author of the trust.
97
98. • In re, Bowden, Hulbert v. Bouden [1936 1 Ch. 71]
• Re, Doughles Powell’s contract [1902] 2 Ch. 296]
98
99. Public Trustee
• There is an officer appointed as the Public Trustee of Sri Lanka
under the provisions of Public Trustees Ordinance (Chapter
88).
99
100. General Powers and Duties of Public Trustee-
(a) as an ordinary trustee;
(b) as collector of estates under an order to collect;
(c) as a custodian trustee;
(d) as curator of the estate of a minor;
(e) as manager of the estate of a person of unsound
mind;
(f) as attorney for persons absent from Sri Lanka for
the purpose of receiving and paying money;
(g) as the next friend or guardian for the action under
Chapter XXXV of the Civil Procedure Code of any
minor or person of unsound mind.
100
101. Public Trustee shall have the same powers, duties, and
liabilities, and be entitled to the same rights and
privileges, and be subject to the same control and
orders of the court as any other trustee acting in the
same capacity.
“Any other trustee” means a trustee appointed under
Trusts Ordinance.
The powers, duties, and liabilities specified in the Public
Trustees Ordinance are in addition to the powers,
duties, and liabilities specified in the Trusts Ordinance.
101
102. GENERAL POWERS OF THE PUBLIC TRUSTEE
1. The Public Trustee may decline, either absolutely or
except on conditions which he may lay down to
accept any trust.
2. The Public Trustee shall not accept any trust which
involves the management or carrying on of any
business.
102
103. 3. All sums required to discharge any liability which
the Public Trustee, if he were a private trustee,
would be personally liable to discharge shall be a
charge on the Consolidated Fund.
4. The Public Trustee may accept for the purpose of
winding up an estate, or any trust under a deed of
arrangement for the benefit of creditors, or any
trust which involves any religious observance or
ceremony.
103
104. 5. The Public Trustee shall, except where he is
appointed a custodian trustee, always be sole
trustee, and it shall not be lawful to appoint the
Public Trustee to be trustee along with any other
person.
6. If any minor or person of unsound mind is entitled
to any gift, legacy, or share of the assets of a
deceased person, it shall be lawful for the Public
Trustee to retain the same in his hands as trustee
for such minor or person of unsound mind pending
the order of court, or until claimed by a duly
appointed trustee.
104
105. 7. If any minor or person of unsound mind is entitled
to any gift, legacy, or share of the assets of a
deceased person, it shall be lawful for the person by
whom such gift is made, or for the executor or
administrator by whom such legacy or share is
payable or transferable, or for any trustee of such
gift, legacy, or share, to transfer the same by an
instrument in writing to the Public Trustee, if he
consents thereto.
8. The Public Trustee may be appointed as the next
friend or guardian for the action, if he consents.
105
106. 9. Whenever a person has been sentenced by any
court to a term of imprisonment of not less than
three years, such court may, on the application of
the person sentenced and with the consent of the
Public Trustee and subject to the payment of the
prescribed fees, order that the property of such
person shall be vested in the Public Trustee for the
purpose of its custody and management during the
period of the imprisonment.
106
107. 10. Notwithstanding anything to the contrary in the
Buddhist Temporalities Ordinance, the Public
Trustee may hold movable property in trust for the
benefit of a temple and may manage any
immovable property vested in the trustee or
Controlling Viharadhipathi of a temple, being
immovable property which is twenty acres or over
in extent on contract containing such terms and
conditions as may be agreed upon by the Public
Trustee and such trustee or Controlling
Viharadhipathi.
107
108. THE PUBIC TRUSTEE AS ORDINARY TRUSTEE
1. The Public Trustee may be appointed to be trustee of any will
or settlement or other instrument creating a trust or to
perform any trust or duty involving management of
agricultural property.
108
109. 2. Where the Public Trustee has been appointed a
trustee of any trust, all existing trustees under the
trust shall upon such appointment cease to be
trustees.
3. When it is proved to the satisfaction of the court
that any private trustee has been guilty of such
misconduct or mismanagement of the trust
property as to render his continuance in office
undesirable, the court may remove him from office
and appoint the Public Trustee or some other fit
and competent person in his place.
109
110. However, Public Trustee shall not be appointed if
it appears to the court that there is some other
fit and competent person willing to carry out the
terms of the trust who is entitled to be
appointed by reason of the terms of a will or
other instrument creating a trust.
4. The Public Trustee may accept the custody of the
will of any living person, subject to the
payment of the prescribed fees.
110
111. 5. Any trustee or any beneficiary under any trust may
apply to the court that the condition and accounts
of such trust be investigated by the Public Trustee
or by some other person appointed by him, and the
court may, with the consent of the Public Trustee
and after notice to such parties as it considers
entitled to the same, make order accordingly.
6. Where the Public Trustee makes an application for
probate or letters of administration in respect of the
estate of the deceased person, he may at the same
time make an application for an order authorizing
him to take provisional possession of the movable
and immovable property of the estate.
111
112. THE PUBLIC TRUSTEE AS COLLECTOR UNDER AN
ORDER TO COLLECT
1. Whenever it is made to appear to the court that there
is reasonable ground to suppose that any person who
usually resided within the jurisdiction of such court
has died intestate leaving property in Sri Lanka, the
court may order and empower the Public Trustee to
collect the estate of such person.
112
113. 2. Every such order shall empower the Public Trustee
to collect, manage, and administer the movable
property of such supposed deceased person, enter
upon and receive the rents and profits and
otherwise manage the immovable property, and
pay and discharge the debts and liabilities of such
person in like manner as if he were certainly dead,
and the Public Trustee had obtained letters of
administration to his estate.
113
114. THE PUBLIC TRUSTEE AS CUSTODIAN TRUSTEE
1. The Public Trustee may, with his consent be appointed to
be custodian trustee of any trust by order of the court
made on the application of any person. The court may
order the appointment of a new trustee or by the
testator, settlor, or other creator of any trust, or by the
person having power to appoint new trustees.
114
115. 2. Where the Public Trustee is appointed to be
custodian trustee of any trust, the trust property
shall be transferred to the custodian trustee as if he
were sole trustee.
3. The management of the trust property and the
exercise of any power or discretion exercisable by
the trustees under the trust shall remain vested in
the trustees other than the custodian trustee.
115
116. 4. All sums payable to or out of the income or capital
of the trust property shall be paid to or by the
custodian trustee.
5. Where the Public Trustee has reason to believe that
the managing trustee of any trust of which he has
been appointed custodian trustee has committed a
breach of such trust, he may institute an action in
the District Court to obtain a decree-
116
117. (a) directing the removal of any trustee;
(b) directing accounts and inquiries;
(c) declaring what proportion of the trust property or
of the interest therein, shall be allocated to any
particular object of the trust;
(d) authorizing the whole or any part of the trust
property to be let, sold, mortgaged or exchanged;
(e) settling a scheme for the management ' of the trust;
117
118. (f) directing the specific performance of any act by any
trustee;
(g) appointing the Public Trustee as the sole trustee.
118
