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Express Trust - Coggle Diagram

- - - - The beneficiary principle says that objects of a trust must be people (including companies – legal person). What the beneficiary principle rules out are purpose trusts (where the settlers identify an objective rather than a person)
        
        Purpose trusts are invalid, but purpose power is fine (Unlike a purpose trusts, where the purpose is obligatory, a purpose power is optional)
    - - Orthodox: Enforceability argument (Morice v Bishop of Durham)
        
        Argument: Trusts must be enforceable and beneficiaries are needed to do the enforcing.
        
        We want beneficiaries to do the enforcing, because beneficiaries have an interest in the trust fund (to ensure that trustees aren't ignoring their duties)
        
        Counterargument: we can just appoint a independent enforcer - In other jurisdictions, if you want to set up a trust without beneficiaries, you can but you have to appoint an enforcer. This allows purpose trust.
        
        Counter Counter argument: naming an independent enforcer just isn’t as good as having a beneficiary do that job because beneficiaries have an inherent motivation to do the job. They will want to enforce the trust because their interest are at stake.
        
        Counter Counter Counter agurment: The concern is that ideally we want all trustees to be compelled to do their job, but if we have something that might work for purpose trusts why isn’t that good enough. It is better than nothing. The cost of not doing this, the settlor’s intentions are defeated.
      - Duties and Rights
        
        Under this view, trustees are under a duty to perform their obligations, and because there is a duty there must be a rights holder, but in purpose trust there is no rights holder- appointing an independent enforcer isn’t good enough, you need someone who actually has a right to the performance - you need someone that says that this belongs to me.
      - Nature of trusts
        
        This argument is that it is just the nature of trusts that there is a beneficiary. A trust is just a certain package of features, and one of the feature is the beneficiary on the receiving end of it. It is a conceptual necessity. Trusts are analogous to gifts. Someone has to be on the receiving end of a trust, just like someone has to be on the receiving end of a gift. o The best counter augment to the view is the fact that we have exceptions to the beneficiary principle
  - - - However, in Re Bowen when the settlor left some money to be used for planting tress on an estate, the court said that the planting of the tree was just a suggestion, and so the primary obligation is to use the money for the benefit of the estate owner, and planting a tree is just an option. o By treating it as not a purpose trust, the trust would succeed.
  - - - These are random cases in which courts have recorgnises non-charitable purpose trusts as valid, and because they have done it before, they continue doing it. This is just a list you need to learn List:
        Animal/pets of the settlor Trust for settlor’s animal is fine
        Funeral monument If you want a fancy gravestone, you can do that
        Private masses: If you want to fund a mass, it is ok
        These examples are random. They are not to be expanded or extended. You can’t for example, extend the funeral monument to a monument in a city to commemorate him.
    - - Goff says that what makes the beneficiary principle rule out purpose trusts is the fact that it doesn’t benefit anyone or the benefit is too remote, but that this case is different because it can be construe as being ultimately for the benefit of people.
        
        Interpretation
        
        The courts have had the tendency to downplay Denley, saying that it is a further case like re bowen. However, the other reading is that, unlike bowen, the trust was upheld as a genuine purpose trust. The court said that there is no beneficiary but we are going to uphold it anyways. Re Bowen identified a beneficiary, while Denley didn’t.
        
        Using Denley in PQ
        
        When you use Denley, make sure you state its dodgy status, and the proper interpretation of that decision is contested. Denley has to be fought for.
  - - - If you are an unincorporated association the group as no distinct legal personality of its own.
    - - Solution: Contract Holding Theory
        
        Fund held by association is beneficially held by members of the group. There is no beneficiary problem. The courts say that although the property is owed by the members of the group, there also exists between all members a contract which limits use of and access to the property. A promise to not take a bit of your money and use it, but used for the group’s own purposes. Contract away members from use it for their own personal use. Contract holding theory is a good way of limiting the members of groups like this spending the money how they like unless and until they all agree to this.
    - - Traditional responses
        
        Resulting trust to contributors: Fund is sent back to settlors. Members hold property on trust for contributors.
        
        However, it is hard to see why dissolution of the group should give rise to a resulting trust unless we have adopted a purpose trust solution, which we have already ruled out, since resulting trusts arise when another trust fails.
        
        Bona vacantia: The property becomes ownerless. It becomes the crown’s. It becomes the queen’s. (random)
      - contract holding theory suggest a different answer (what the court now does)
        
        When this kind of group comes to an end, the property is to be distributed equally between those people who were members at the date of dissolution. If you are no longer a member, no claim.
        
        When group is dissolved, the legal effect is to tear up the contract that previously bound all of the members to use that money only for the purpose of the group. What you are left with is the other part of the theory. Once you get rid of the contract, you are left with beneficial ownership of the funds by the members.
    - - The court says that the theory can only apply where there has really been a contract between the members. However, members cannot be bound by someone else’s sayso under the contract holding.
    - - It would be so much easier if purpose trusts were allowed. When a group is wound up, the money goes back to the contributors because the Trust they have tried to create have failed.
        
        Using Denley
        
        If Denley is right, as long as we find people who benefit from the purposes, it will sort out all this mess including the unincorporated association and the political issues, problems which the court hasn’t really dealt with.
- - - - Jones v Lock (cheque to baby case)
        
        You will only get a trust if you picked a trust, you can't treat failed attempts to make outright transfers as effective declarations of trust. Must intend a trust rather than some other form of beneficial disposition.
      - Paul v Constance (unmarried couple have bank account case)
        
        Court was more charitable on their interpretation of what the parties intended. Paul and Constance didn’t know the difference between trusts and gifts and so it seems harsher to say tough luck, you picked a gift rather than a trust when people weren’t aware of it in the first place.
    - - Standard approach
        
        To declare a trust we need to know not only where the property is going to come from ( for example, my collection of law books or sheep), not only how many of those, but which exact ones. Per dictum by Mr Justice Oliver in Re London Wine Co (wine company goes bust fails to deliver bottles case)
      - Hunter v Moss
        (doesn't specify which exact shares are held on trust)
        
        Court of Appeal says fine, subject matter is sufficiently certain here even though Moss hasn’t specifically said which shares he hold on trust. This is in contrast to the dictum in Re London Wine Co, that doesn’t require this further information.
        
        Why?
        
        The answer we get in a couple of cases (including Re Lehman Bros) is that it seems to be about intangible/ tangible. The reason why we have a different rule for shares isn’t the fact they are identical, but the fact that they are intangible, they can’t be segregated. So physical assets both those that are heterogenous (differ from each other), as well as homogenous (identical, like portions of a barrel of oil, and gold bars) require segregation.
    - - Fixed trust
        
        What is it
        
        A trust is fixed where the trustee has no choice over who gets what, over the shares each beneficiary gets. The settlor says from the outset exactly what each beneficiary is going to get. No discretion
        
        type 1 fixed trust - equally divided between
        
        X (£1000/50 shares in XYZ Ltd…) is to be divided equally between my children
        
        • The law says that you need list certainty. The beneficiaries of the trust are sufficiently certain only if there is list certainty. List certainty you can come up with a complete list of all the people who are beneficiaries, and only if you have a complete list will that trust be valid.
        
        To come up with the list we need two sorts of information: we need conceptual certainty and evidential certainty.
        
        Conceptually certainty whether the words used by the settlor are clear in principle, create a clear black and white division, is there a clear dividing line in principle between people who fall within this definition and people who don’t. The courts have said that employee is a conceptually certain category.
        
        Evidential certainty is about whether we have the facts at hand to be able to apply that definition to real world people. For example, employees. We need to know what satisfy the status of employee. As for evidential certainty, in certain cases all the employee records have been lost etc so it would be evidentially uncertain whether they were employees or not. This would depend on the facts of the case.
        
        Type 2 fixed trust - £X to each ..
        
        X (£1000/50 shares in XYZ Ltd…) is to be divided to each of my friends/children
        
        Type 2 fixed trusts (eg £100 to each of my employees) are sufficiently certain so long as at least one beneficiary can be identified.
      - Discretionary trusts
        
        What is it
        
        These are trusts where the settlor gives the trustee some choice as to who benefits from the trust. The trustee is given a group, and picks within them.
        
        McPhail v Doulton : ‘is or is not’ or ‘any given postulant’ test
        
        You need to be able to say with certainty whether any individual (anyone who comes your way) is a beneficiary.
        
        Different interpretation by different judges
        
        Sachs LJ: says that conceptual certainty is needed, but evidential certainty is irrelevant and doesn’t matter.
        
        Stamps LJ: says that both conceptual and evidentially certainty are needed.
        
        What Megaw LJ is willing to accept is that there are some people who would come forward as potential beneficiaries and the trustee isn’t sure whether those people are beneficiaries (unlike Stamps LJ). Megaw LJ is fine with some “don’t knows” but not too many “don’t knows”. Suggests that conceptual certainty is needed. However, it is possible to read Megaw as saying he is willing to tolerate some conceptual uncertainty, as long as there are enough people we are sure about I am not going to be too fussed about people we aren’t sure about. There are different ways we are read Megaw, Different views on what his position really is.
        
        All three judges agree on the need for conceptual certainty [can be contested fro Megaw LJ], where they disagree is how much if at all it matters that there is evidential uncertainty. Sachs says you need conceptual but not evidential certainty, Stamps saying you need both and Megaw somewhere in the middle (you need enough evidential certainty).
        
        1 more item...
        
        Administrative unworkability (doesn't necessarily have to be discretionary trust, as long as it is unworkable)
        
        This comes from the McPhail v Doulton case. • Lord Wilberforce says ‘There may be a third case [besides cases of conceptual and evidential uncertainty] where the meaning of the words used is clear but the definition of beneficiaries is so hopelessly wide as not to form ‘anything like a class’ so that the trust is administratively unworkable or … one that cannot be executed … I hesitate to give examples for they may prejudice future cases, but perhaps ‘all the residents of Greater London’ will service’.
        
        A case which applies this is a case called R v District Auditor, ex p West Yorkshire MCC, where there is a trust set up for residents of West Yorkshire. The question for the court is whether this trust is valid. One reason the court gives for striking out the trust is that they are administratively unworkable.
        
        The courts have applied Wilberforce as if it is about size when it isn’t clear that it is about size. . Even if the problem is one of numbers why do we need to fail the trust, because none of the beneficiaries in this case would get the asset. It denies any beneficiaries to the asset.
        
        Capriciousness (not necessarily discretionary trust
        
        Comes from a case called Re Manisty’s Settlement:
        
        Sometimes trusts will fail on account of the objects, not because those objects are uncertain but a problem of having a good reason for picking this people, or are they arbitrary or an ‘accidental conglomeration of person…’
        
        Resolving uncertainty
        
        In Re Tuck there was uncertainty of objects, but there is also a mechanism that the settlor has created to resolve that uncertainty.
        
        Evidential uncertainty can be resolved in this way (appoint a fact finder), but not conceptual uncertainty - you can’t appoint some third party to solve an unclear definition.
    - - I am trustee: I remain beneficial owner
      - No certainty of intention (to create trust): trustee reciieves property
      - No certainty of subject matter or object: resulting trust - trustee holds property on trust for me