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Overview of English Equity and Trusts Law

May 4, 2025

English Law of Equity and Trusts

Introduction

  • Focus on undergraduate law students and SQE (Solicitors Qualifying Examination).
  • Equity is a system designed to address common law shortcomings.
  • Trusts are integral to equity, which complements common law.

Equity

  • Historical Context: Developed to offer remedies where common law was inadequate.
  • Judicature Act 1873: Fused equity and common law.
  • Conflicts: In cases of conflict, equity prevails (Earl of Oxford's case, 1616).
  • Role: Applies in trust law, contract law, and land law (e.g., doctrine of proprietary estoppel).
  • Nature: Not just fairness; involves structured rules governed by precedent.
  • Maxims: Guiding principles like "he who comes into equity must come with clean hands."

Trusts

Basics

  • Definition: Legal relationship where a trustee holds property for beneficiaries.
  • Components: Settlor, trustee, beneficiary.
  • Types: Express (intentionally created) and implied (by law).

Purposes

  • Manage property for those unable (e.g., minors).
  • Distribute assets over time for specific needs.
  • Pool resources (e.g., pension funds).
  • Protect assets from creditors (pre-established protections).

Juridical Effect

  • Division of Ownership: Legal title vs. equitable interest.
  • Arising by Law: Constructive trusts (response to unconscionable conduct) and resulting trusts (arise without clear intent).

Comparing Legal Concepts

  • Agency vs. Trusts: Agents act on behalf of principals; trustees act for beneficiaries.
  • Contracts: Consensual agreements; trusts can exist without mutual consent.
  • Debts vs. Trusts: Debts are obligations to repay; trusts involve fiduciary duties.

Types of Trusts

Express Trusts

  • Most Common: Created deliberately by a settlor.
  • Formalities: Sometimes require written instruments.

Discretionary and Fixed Trusts

  • Fixed: Predetermined distribution.
  • Discretionary: Trustees decide distribution based on circumstances.

Other Types

  • Bare Trusts: Minimal, administrative role.
  • Testamentary Trusts: Created via will, effective after death.
  • Inter Vivos Trusts: Established during settlor's lifetime.
  • Purpose Trusts: Exist to achieve objectives; non-charitable often invalid.

Creating a Trust: The Three Certainties

Certainty of Intention

  • Clear evidence of the intent to create a trust.

Certainty of Subject Matter

  • Trust property must be clearly defined.

Certainty of Objects

  • Beneficiaries must be identifiable.

The Beneficiary Principle and Non-Charitable Purpose Trusts

  • Trusts must have identifiable human beneficiaries, except charitable trusts.
  • Exceptions: Limited cases, e.g., tombs, specific animals.

Formalities in Trust Law

Declarations of Trusts

  • Trusts involving land require signed writing.
  • Testamentary Trusts: Governed by wills act; require written, witnessed wills.

Transfer of Interests

  • Equitable interests require written, signed documentation.

Constitution of Trusts

  • Importance: Proper transfer of property to trustees.
  • Defective Constitution: Equity typically will not perfect imperfect trusts or gifts.

Promises to Create Trusts

  • Enforceable when made in deeds, supported by consideration, or relied upon detrimentally.

Charitable Purpose Trusts

  • Must serve charitable purposes exclusively.
  • Public Benefit Requirement: Must benefit the public.

Unincorporated Associations

  • Lack legal personality; challenges in property holding and distribution.

Resulting Trusts

  • Arise when intent is unclear or trust purpose fails.

Constructive Trusts

  • Imposed by law to address fairness, wrongdoing, or unjust enrichment.

Secret Trusts

  • Deviate from wills act formalities; justified by fraud prevention or separate obligation theory.

Appointment, Retirement, and Removal of Trustees

  • Governed by trust instruments, statutory provisions, or court intervention.

Express Trust Relationship

  • Rights and duties balance; trustees manage property, beneficiaries enforce rights.

Breach of Trust

  • Trustee liability, remedies, and third-party responsibilities.

Breach of Fiduciary Duty

  • Fiduciary duties emphasize prioritizing principal’s interests.

Tracing

  • Process of following or tracking misappropriated trust property.

This summary captures the core elements of the English law of equity and trusts as discussed in the lecture podcast.

Full transcript