Reconceptualising the express trust

Cambridge Law Journal

Volumn 61, Issue 3, 2002, Pages 657-683

  Parkinson, Patrick ^a  

^a UNIVERSITY OF SYDNEY   (Australia)

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EID: 85010152022     PISSN: 00081973     EISSN: 14692139     Source Type: Journal    
DOI: 10.1017/S0008197302001769     Document Type: Article

References (139)

1. F. Maitland, Equity-A Course of Lectures (Brunyate ed., 1936), p. 44.
2. R.P. Meagher and W.M.C. Gummow, Jacobs' Law on Trusts in Australia (6th edn., Butterworths, 1997), p. 3.
3. See e.g. P. Birks, “Equity in the Modern Law: An Exercise in Taxonomy” (1996) 26 U.W.A.L.R. 1, 19–20.
4. The Privy Council has stated that “the distinction between the legal and equitable estate is of the essence of the trust”: Abdul Hameed Sitti Kadija v. De Saram [1946] A.C. 208, 217, quoting with approval Lee, Introduction to Roman-Dutch Law (3rd edn. 1931).
5. See for example the debate between Austin Scott and Harlan Stone in two essays both entitled “The Nature of the Rights of the Cestui Que Trust” at (1917) 17 Col. L.R. 269 (Scott) and 467 (Stone).
6. D.W.M. Waters, “The Nature of the Trust Beneficiary's Interest” (1967) 45 Can. B.R. 219, 221.
7. The landmark decisions were perhaps Baker v. Archer-Shee [1927] A.C. 844
8. Commissioner of Stamp Duties v. Livingston [1965] A.C. 694.
9. The issue arises still in the interpretation of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. See Webb v. Webb [1994] 3 W.L.R. 801
10. Re Hayward (deceased) [1996] 3 W.L.R. 674.
11. Maitland, 3 W.L.R. p. 28.
12. D.W.M. Waters, “The Role of the Trust Treatise in the 1990s” (1994) 59 Missouri L.R. 121
13. J. Langhein, “The Contractarian Basis of the Law of Trusts” (1995) 105 Yale L.J. 625, 632ff
14. A.W.B. Simpson, “The Rise and Fall of the Legal Treatise: Legal Principles and the Forms of Legal Literature” (1981) 48 Univ. of Chicago L.R. 632.
15. T. Lewin, A Practical Treatise on the Law of Trusts and Trustees (1837) p. 17.
16. A Practical Treatise on the Law of Trusts and Trustees, at p. 5.
17. Westdeutsche Landesbank Girozentrale v. Islington London Borough Council [1996] A.C. 669, 705.
18. [2002] 2 W.L.R. 802, 825ff.
19. Re Thompson [1934] Ch. 342.
20. Re Endacott [1960] Ch. 232, 250.
21. Roxburgh J. in Re Astor's Settlement Trusts [1952] Ch. 534, 547 described these cases as “concessions to human weakness or sentiment”.
22. Gartside v. IRC [1968] A.C. 653.
23. (1841) 4 Beav. 115
24. 49 E.R. 282.
25. Sir Moses Montefiore Jewish Home v. Howell & Co. (No. 7) Pty. Ltd. [1984] 2 N.S.W.L.R. 406.
26. See also Re Beckett's Settlement [1940] Ch. 279, 285, per Simonds J.
27. [1971] A.C. 424.
28. McPhail v. Doulton has not been accepted in Ireland: O'Byrne v. Davoren [1994] 3 I.R. 373.
29. [1973] Ch. 9.
30. There is ample authority for the proposition that if the class of beneficiaries is too wide, then the trust will be void because it is administratively unworkable. Lord Wilberforce, in his speech in McPhail v. Doulton [1971] A.C. 424, gave as an example a trust for the residents of Greater London.
31. In R. v. District Auditor ex p. West Yorkshire Metropolitan County Council [1986] R.V.R. 24, a trust for the benefit of the inhabitants of West Yorkshire (about 2.5 million) people, was held invalid on this reasoning. While some trusts for a large number of potential beneficiaries may be struck down because of administrative unworkability, it is clear from the Baden litigation itself that it is possible to have a very broad and indeterminate class without infringing the administrative workability requirement.
32. Re Smith, Public Trustee v. Aspinall [1928] Ch. 915.
33. [1969] 1 Ch. 373.
34. R.V.R., at pp. 382–384.
35. [1979] 3 All E.R. 359, 368.
36. This distinction is well criticised by Moffat. He writes: “One form of discretion is of an administrative nature-‘making rules for the use and enjoyment of land by all those employees able to benefit’-whereas the other-‘discretion to distribute income among a class’-is plainly dispositive.” G. Moffat, Trusts Law: Text and Materials (3rd edn., 1999, with G. Bean, J. Dewar. and M. Milner), p. 201.
37. This was explained by Goff J. in Re Denley [1969] 1 Ch. 373 as a power in partial defeasance of a trust. I am indebted to John Mee for raising the question whether trustees can have powers which partially defeat the trust which they should be upholding.
38. [1985] 1 All E.R. 155.
39. [2002] 2 W.L.R. 802.
40. 2 W.L.R., at p. 827.
41. [1965] A.C. 694.
42. A.C., at p. 712.
43. K. Gray, “Equitable Property” [1994] C.L.P. 157, 165.
44. As Isaacs J. said in Hoysted v. Federal Commissioner of Taxation (1920) 27 C.L.R. 400, 425, a person's “interest in the trust estate at any given moment is measured by the relief which equity is then prepared to give him, that is, by the rights which the due execution of the trusts as framed by the creator of the trusts will at that moment give him.”
45. The rule was well expressed in Gough v. Satterlee 52 N.Y.S. 492, 496
46. 32 N.Y. App. Div. 33, 40 (1898): “A subject or corpus of a trust is absolutely essential, not merely to the validity of a trust but also to its existence. Courts will supply a trustee; in England at times under the cy pres power, they will select beneficiaries, but in no country will they furnish a trust estate.”
47. For other US authorities see Begier v. Internal Revenue Service 496 U.S. 53, 62 (1990)
48. Salisbury Inv. Co. v. Irving Trust Co. (In re United Cigar Stores Co.) 70 F. 2d. 313, 315 (2nd Cir. 1934); 1 Scott on Trusts 4th edn. (A. Scott and W. Fratcher) s. 3.1
49. J. Baron, “The Trust Res and Donative Intent” (1986) 61 Tulane L. R. 45.
50. 647 S.W. 2d 79 (1983) (Texas Ct. App.).
51. (1854) 2 Drew. 221.
52. See also Smullin v. Wharton 103 N.W. 288 (1905) (Supreme Court of Nebraska) (alleged oral trust of property bequeathed absolutely in the will; the term “bulk of my estate” was too uncertain).
53. (1849) 16 Sim. 476.
54. In this case, the testator devised all his houses in trust to convey one of them to his daughter Maria and the remainder to his daughter Charlotte. Maria was given the choice of her house. She died in the testator's lifetime and consequently did not choose a house. It followed, according to the court, that the beneficial interest of Charlotte failed for uncertainty also, since without Maria making a choice, the court could not determine which houses should be owned by Charlotte. Glanville Williams has pointed out that this was a harsh application of the uncertainty doctrine. The court might have held that the gift was to Charlotte of all the houses save such one, if any, that Maria might choose. See G. Williams, “The Three Certainties” (1940) 4 M.L.R. 20, 24.
55. [1994] 1 W.L.R. 452.
56. This decision was followed in respect of English, hut not Australian law, in Be Harvard Securities Ltd. (in liq.) [1997] 2 B.C.L.C. 369.
57. In Australia, the position was left open by Gummow J. in Herdegen v. Federal Commissioner of Taxation (1988) 84 A.L.R. 271, 279.
58. United States Trust Company of NY, Trustee v. Commissioner of Internal Revenue 296 US 481 (1936). “An undivided interest in property may constitute the corpus of a trust” (per Hughes C.J., 487).
59. See also Rollestone v. National Bank of Commerce in St. Louis 252 S.W. 394 (1923)
60. Matter of Estate of Berryman 226 Kan. 116, 595 P. 2d. 1120 (1979).
61. D. Hayton, “Uncertainty of Subject-Matter of Trusts” (1994) 110 L.Q.R. 335.
62. See for example, P. Birks, “Proprietary Restitution: An Intelligible Approach” (1995) 9 Trust Law International 43
63. P.J. Clarke, “Land Law and Trusts” [1994] All E.R. Rev. 241, 249–251
64. M. Ockelton, “Share and Share Alike?” [1994] C.L.J. 448.
65. E.g. Walker v. Carboy (1990) 19 N.S.W.L.R. 382
66. Be Australian Elizabethan Theatre Trust (1991) 102A.L.R. 681.
67. [1913] 2 K.B. 515, 521
68. See also in Re Bond Worth Ltd. [1980] Ch. 228, 260–261.
69. (2000) 202 C.L.R. 588.
70. (1988) 13 N.S.W.L.R. 331.
71. N.S.W.L.R., at pp. 341–342.
72. N.S.W.L.R., at p. 349.
73. As Hope J.A. pointed out, any uncertainty could only arise from the inadequacy of the records kept by the travel agency, not from anything provided for or envisaged by the agreement: N.S.W.L.R., at p. 342.
74. See e.g. Hayton N.S.W.L.R.
75. Clarke, N.S.W.L.R.
76. and Ockelton, N.S.W.L.R.
77. J. Martin, “Certainty of Subject-Matter: A Defence of Hunter v. Moss” [1996] Conv. 223.
78. Re Hallett's Estate (1880) 13 Ch. D. 696
79. Re Oatway [1903] 2 Ch. 356.
80. Brady v. Stapleton (1952) 88 C.L.R. 322.
81. [1975] N.S.W.L.R. 279.
82. N.S.W.L.R., at p. 282.
83. S. Worthington, “Sorting Out Ownership Interests in a Bulk: Gifts, Sales and Trusts” [1999] Journal of Business Law 1.
84. [1986] P.C.C. 121.
85. See R. Goode, “Ownership and Obligation in Commercial Transactions” (1987) 103 L.Q.R. 433.
86. [1995] 1 A.C. 74.
87. Re Harvard Securities Ltd. (in liq.) [1997] 2 B.C.L.C. 369.
88. This was an argument utilised at first instance by Colin Rimer Q.C., as he then was, in Hunter v. Moss [1993] 1 W.L.R. 934. 69
89. 496 U.S. 53 (1990).
90. 26 U.S.C. sec. 7501.
91. 496 U.S. 53, 70 (1990).
92. [1948] Ch. 465, 551–552.
93. (1988) 13 N.S.W.L.R. 331.
94. 59 D.L.R. 4th 726 (1989) (Sup. Ct. Canada).
95. Another ground for decision was that a provincial legislature cannot change the order of priorities in the federal bankruptcy law by defining certain obligations as giving rise to a trust. For discussion of this and subsequent cases see A. Grenon, “Common Law and Statutory Trusts: In Search of Missing Links” (1995) 15 Estates and Trusts Journal 109.
96. 496 U.S. 53, 71 (1990).
97. [1992] B.C.L.C. 350.
98. [1998] 3 N.Z.L.R. 171.
99. Countess of Bective v. Federal Commissioner of Taxation (1932) 47 C.L.R. 417.
100. See, e.g., Re Andrew's Trust [1905] 2 Ch. 326
101. Re Osoba [1979] 1 W.L.R. 247.
102. See, e.g., Curtis v. Rippon 5 Madd. 434 (1820)
103. Mussoorie Bank v. Raynor (1882) 7 App. Cas. 321 (P.C., on appeal from India).
104. [1965] 1 W.L.R. 969.
105. (1843) 2 Hare 607, 610. For an application of this by the Supreme Court of the United States
106. see Colton v. Colton 127 U.S. 300 (1888).
107. J. Heydon and P. Loughlan, Cases and Materials on Equity and Trusts (6th edn., Butterworths 2002), pp. 449–450
108. P. Parkinson, “Chaos in the Law of Trusts” (1991) 13 Sydney Law Review 227.
109. C. Rickett, “The Classification of Trusts” (1999) 18 N.Z. Universities L.R. 305, 309.
110. Mr. Paul Matthews has offered a spirited defence of “a truth about trust law, which is that fundamentally it is based on there being an equitable owner of the property or interest given” (P. Matthews, “The New Trust: Obligations Without Rights?” in A. Oakley, (ed.) Trends in Contemporary Trust Law (1996) 1, at p. 18). This analysis relies on criticising a number of cases of high authority as wrongly decided or to be construed in a way which is reconcilable with the proposition being defended but which is inconsistent with the reasoning adopted in the case.
111. See, e.g., the explanation for the Quistclose trust given by Gummow J. in Re Australian Elizabethan Theatre Trust (1991) 102 A.L.R. 681.
112. See also the analysis of Lord Millett in Twinsectra Ltd. v. Yardley [2002] 2 W.L.R. 802.
113. (1988) 165 C.L.R. 107.
114. The difficulty of working out who is the “settlor” has also arisen in relation to payments into pension plans for defined benefits. See Hockin v. Bank of British Columbia 71 D.L.R. (4th) 11 (1992) at p. 20.
115. [1970] A.C. 567.
116. N. McBride, “On the Classification of Trusts” in P. Birks and F. Rose (eds.) Restitution and Equity, Vol. 1: Resulting Trusts and Equitable Compensation (2000), 23 at p. 24.
117. R. Chambers, Resulting Trusts (1997) especially at pp. 220ff.
118. G. Elias, Explaining Constructive Trusts (1990).
119. McBride, Explaining Constructive Trusts at p. 38.
120. This is consistent with the approach taken by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v. Islington London Borough Council [1996] A.C. 669, 705. He stated that the guiding principle in the law of trusts is that “equity operates on the conscience of the owner of the legal interest.”
121. This is the basis of certain constructive trusts, e.g., Grant v. Edwards [1986] Ch. 638
122. Green v. Green (1989) 17 N.S.W.L.R. 343. While such trusts are sometimes said to be based on the parties' common intentions, it is the intention of the legal owner which is relevant and, as these two cases show, the representation made to the plaintiff does not necessarily correspond to the subjective intention of the legal owner. Such cases are best understood as applications of the doctrine of estoppel
123. P Parkinson, “Estoppel” in P Parkinson (ed.), Principles of Equity (1996) 201, at pp. 263–264.
124. A constructive trust may of course be imposed even where an enrichment is not made at the expense of the plaintiff, for example where an employee submits a tender in competition with the employer, and the employer would in any event not have gained the contract: Green & Clara Pty. Ltd. v. Bestobell Industries [1982] W.A.R. 1.
125. Timber Engineering Co. Pty. Ltd. v. Anderson
126. [1980] 2 N.S.W.L.R. 488, 504. 103
127. Ottaway v. Norman [1972] Ch. 698.
128. (1921) 21 S.R. (NSW) 400.
129. For a similar kind of case, interpreted as a trust, see Gordon v. Gordon 124 N.E. 2d 226 (1955) (Sup. Ct. of Massachusetts).
130. [1998] Ch. 241, 253.
131. P. Matthews, “The New Trust: Obligations Without Rights?” in A. Oakley (ed.), Trends in Contemporary Trust Law (1996) 1, at pp. 18–28.
132. Hague Convention on the Law Applicable to Trusts and Their Recognition, 1984.
133. See D. Hayton, “The Irreducible Core Content of Trusteeship” in A. Oakley (ed.), Trends in Contemporary Trust Law (1996) p. 47.
134. Trends in Contemporary Trust Law, at p. 26.
135. For discussion of the notion of the trust as a form of contract, see Langhein Trends in Contemporary Trust Law.
136. Armitage v. Nurse [1998] Ch. 241.
137. M. Bryan, “Reflections on Some Commercial Applications of the Trust” in I. Ramsey (ed.), Key Developments in Corporate Law and Trusts Law: Essays in Honour of Professor Harold Ford (Lexis Nexis, Sydney, 2002), 205 at 208.
138. D. Hayton, “Developing the Obligation Characteristic of the Trust” (2001) 117 L.Q.R. 96.
139. This requirement deals with one of the objections to the trust in Re Astor's Settlement Trusts [1952] Ch. 534 that it was too vague.