19. Proprietary Claims and Remedies

This chapter examines the proprietary claims and remedies relevant to a breach of trust or fiduciary duty by a trustee or fiduciary. It explains that a proprietary claim in Equity requires the claimant to show that the defendant has received an asset in which the claimant has an equitable proprietary interest while a proprietary remedy enables the claimant to assert proprietary rights against property that is in the defendant's possession. This chapter also proposes a framework for understanding the law relating to proprietary claims and describes different types of remedy that are available with respect to equitable proprietary claims, specifically the recognition that property is held on constructive trust, the equitable lien, and the remedy of subrogation.

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.

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.

15. Fiduciary duties

This chapter examines the nature of fiduciary duties and how a fiduciary relationship can be identified. It emphasizes that trustees are fiduciaries, and so are subject to fiduciary duties, but also considers other fiduciary relationships. The chapter analyses the nature and function of fiduciary obligations. It examines in detail the two core fiduciary duties of ensuring that there is no conflict between a fiduciary’s personal interest and their duty to the principal and also that a fiduciary should not profit from his or her fiduciary position. The chapter discusses the consequences of a breach of fiduciary duty and the available remedies for such a breach. In particular, the chapter considers when and why profits obtained by a fiduciary in breach of a fiduciary duty should be held on constructive trust for the principal, with particular reference to the receipt of bribes and secret commissions.

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.

7. Non-Charitable purpose trusts

This chapter examines the concept of the non-charitable purpose trust. It explains that non-charitable purpose trusts are generally considered void by virtue of failing to comply with the beneficiary principle. It describes exceptional conditions under which non-charitable purpose trusts are considered valid, such as trusts of an imperfect obligation, and discusses mechanisms for the implementation of non-charitable purposes. This chapter also considers the peculiar problems arising where property is transferred for the benefit of unincorporated associations and how Equity has provided solutions for property-holding by such associations and why the nature of property-holding for unincorporated associations has proved to be significant where the association is dissolved.

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.

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.

1. An introduction to equity

This chapter introduces the nature of Equity. It provides a legal definition of Equity and offers a background of its history from the Middle Ages. It discusses the contemporary contribution of Equity to English law in a variety of different contexts, particularly in the commercial sphere. The chapter also examines fundamental feature of Equity, which is the division between the recognition and protection of property rights and personal rights. This chapter explains that Equity is not an independent system of law, but it has a distinct identity and function to modify the rigours of the Common Law and to create rights.

17. Liability for Breach of Trust and Fiduciary Duty

This chapter examines the nature of the liabilities of trustees for a breach of trust and fiduciary duty. The chapter particularly focuses on the operation of particular doctrines which may be engaged when a trustee or fiduciary may have breached their duty. The extent to which the liability of a trustee or fiduciary can be excluded is considered. The extent to which the court may, in the exercise of judicial discretion, determine that it is not appropriate to hold a trustee liable is also examined. The law on the limitation of liability is also examined as regards different claims relating to breach of trust and breach of fiduciary duty. This chapter also explores issues concerning liabilities between trustees, liability of trustees to creditors, and their liabilities for breach of trust before appointment and after retirement.