16. The Variation of Trusts

This chapter considers issues concerning the process of changing the terms of a trust. It explains that a trustee cannot make any changes in the terms of a trust but the court can confer on the trustees a statutory power to vary the terms of the trust upon application of the trustee or a person beneficially entitled under the trust. This statutory power may not be used to alter any of the beneficial interests under the trust. This chapter also discusses the provisions of the Variation of Trusts Act 1958 which gives the court the power to approve by order any arrangement that revokes or varies a trust or enlarges the powers of the trustees to manage or administer the trust property.

13. The Administration of Trusts

This chapter examines the natures of trustees’ duties and power related to the administration of trusts. It considers the sources of these duties and powers, the function of the trust instrument in the interpretation of these duties and powers, and the issue of breach of trust. It describes the trustees’ power to compound liabilities, to settle claims and accumulate income. This chapter also discusses some of the main duties of trustees which include the duty of care, the duty to safeguard the trust property, and the duty to maintain a fair balance between the beneficiaries. The duty to invest property is considered in some detail, with particular reference to the need to manage risk through a diverse portfolio and consideration of whether ethical considerations can be taken into account when selecting investments.

10. Informal Arrangements Relating to Property

This chapter considers the situations where the parties have entered into informal arrangements relating to property. It examines three different scenarios where the trust may be applicable. The first concerns the so-called common intention constructive trust, which is especially significant where the relationship of a cohabiting couple breaks down. This raises difficult issues of property ownership where the couple’s home is registered in the name of one party or of both. The rights of the parties may be modified by virtue of their common intention, whether implied or imputed. Secondly, the chapter considers the so-called joint venture constructive trust and also the relevance of the constructive trust where the doctrine of proprietary estoppel is engaged.

9. Constructive Trusts

This chapter examines the nature of the constructive trust. It explains that a trust is considered constructive when it arises by operation of law, typically as a result of the defendant’s unconscionable conduct. The chapter discusses the theoretical foundations of constructive trusts and describes different interpretations of the constructive trust, which include institutional and remedial constructive trusts. This chapter also considers the conditions under which institutional constructive trusts will be recognized and explains that, though a constructive trust is a real trust, it does not follow that a constructive trustee is under the same obligations as any other type of trustee. The chapter also examines whether the remedial constructive trust should be recognized in English law or whether a different interpretation of the trust should be recognized involving a modified institutional constructive trust.

5. Formalities

This chapter examines the processes for creating an express trust, which involves two processes. The first involves possible formality requirements relating to the creation of the trust itself, particularly involving trusts of land and testamentary trusts. It also considers how a trust may be valid despite failure to satisfy these requirements, notably where a statute is being used as an instrument of fraud or where a secret trust is recognized. The second process involves the formality requirements which need to be satisfied to ensure that title to property is vested in the trustees, so that the trust is constituted. Constitution of the trust is considered where a settlor declares themself as a trustee and where another party is declared as a trustee. The chapter also examines when Equity may intervene where a trust has not been properly constituted or where a gift has not been validly transferred to a donee.

4. The Requirements of an Express Trust

This chapter examines some of the requirements for the creation of an express trust. These include certainty of intention to create a trust, certainty of identifiable subject matter, certainty of objects, the beneficiary principle, and the perpetuity rule. This chapter explains that the creator of the trust, whether an inter vivos or testamentary trust, is given a great deal of flexibility as to the terms and operation of the trust. The chapter examines when a trust may be invalid, particularly for failure to comply with the certainty requirements, why the certainty requirements have been recognized, and how the operation of these requirements may be satisfied through careful construction of the trust instrument. The chapter also considers when the creation of the trust can be considered to be an abuse of trust.

20. Personal Liability of Third Parties

This chapter examines the personal liability of third parties when there is a breach of trust or breach of fiduciary duty. It explains that there are two types of personal liability of third parties. One is receipt-based liability when a third party has received property in which the beneficiary or principal has an equitable proprietary interest and the other is accessorial liability when the third party has encouraged or assisted a breach of a trust or fiduciary duty. The elements of different causes of action relevant to receipt-based liability and accessorial liability are examined, notably the action for unconscionable receipt and the action of dishonest assistance. The controversial question of whether liability should be strict or fault-based is considered and, if the latter, the nature of the fault requirement.

8. Resulting Trusts

This chapter examines the nature of the resulting trust. It explains that a trust is called resulting when the beneficial interest in the property returns to the person who transferred the property in the first place. It discusses the theoretical foundation of the resulting trust and its categories, which include presumed and automatic resulting trusts. This chapter examines the consequences of a total or partial failure of express trust and the Quistclose trust which arises where property is transferred for a purpose which has failed, and suggests that there is no need to expand the resulting trust to encompass claims in unjust enrichment and following the rescission of a contract.

6. Charitable Trusts

This chapter examines charitable trusts in England. It discusses the advantages and disadvantages of being a charitable trust and explains the conditions that must be met in order for a trust to be considered charitable. The chapter considers the different meaning of a charitable purpose as it has been defined in cases and by statute, such as for the advancement of education or religion and the relief of poverty. It examines the meaning of the public benefit requirement and also considers the requirements that purposes must be exclusively charitable. This chapter also considers the cy-près doctrine which applies where a charitable purpose has failed initially or subsequently.

3. An Introduction to the Trust

This chapter introduces the concept of the trust in England. It explains that the trust is a core element of Equity and its nature and function has developed over time. It discusses the fundamental principles relating to the trust, the classification of different types of trust, and identifies the rights and interests associated with them. This chapter suggests that, while many of the essential components of the modern commercial trust can be traced back to the medieval use, the context in which the trust arises today is completely different, and this has had a significant impact on the development of the contemporary law of trusts.