TRUSTS

Development of Trust - historical context

Trust developed from the concept of Uses. Use is a derivative of the Latin phrase ‘ad opus’
meaning ‘on behalf of’. Therefore, in ancient/medieval days it was common place for lands
to be held on behalf of others. It was also noticed that the sheriff could seize lands ‘ad opus
domini Regis’ (on behalf of the Lord King). The notion of the Uses was attributed to the
Franciscan Friars who settled in England. By the rules of the Franciscan Order, friars were
barred from owning any property on earth, including land. Nonetheless, the situation they
found themselves required that friars had to find a place to lay their heads. Therefore, the
ecclesiastical interpretation held the view that it was not wrong for some land to be
conveyed to town for the use of the friars. As a result, property/land was conveyed to some
persons, e.g. parish to the benefit or use of the friars; the latter did not own the property
but enjoyed the benefits of it. It is said, the Use became accepted means of creating agency
and bailment.

For instance, if A transferred his land to B for the future benefit of C, a situation of a Use
was created. B becomes the feofee (i.e. the person to whom the land is conveyed) to Uses
while C became the cestui que use (i.e. the person on whose behalf or for whose benefit the
land was being held). The common law only recognised the feofee (B) as the legal owner of
the land and did not recognise the legal right of the cest qui use (C) and therefore the
common law courts could not provide legal remedy for C.

The development of trust is traceable to early medieval landowners who travelled abroad
on religious crusades and pilgrimages where they left behind their families and lands. As a
result, these crusaders were compelled to look for a trusted ‘friend’ or ‘trustee’ to take
charge of their lands for ‘temporary uses’ only. This led to the transfer of legal rights
pertaining to the affected lands to the ‘trustees’ as the legal owners. The ‘trustees’ were
under legal obligation to re-convey the lands to the crusaders on their return. Until their
return, the trustees were required to hold the lands for the benefit of the crusaders’ family.

The trustees were also required to account for any rents received in respect of the lands
being held and, where they exercised their stewardship or acted in bad faith (without
conscience), the crusaders’ family (beneficiaries of the trust) could not assert their legal
rights, but had to petition the King for justice to be done, depending upon the merits of
each case/petition, the King could invoke his royal prerogative and order a recalcitrant
trustee to account or perform his/her duty. In all instances the King operated ‘in personam’
(i.e. against the personal conscience of the trustee or the third party).
Nature of a Trust

Under a trust, a person holds the nominal title in property not for his own beneficial
enjoyment but for the enjoyment of some other person (B.J. da Rocha & CHK Lodoh, 1999).

The legal title in trust relationship is held by the trustee on behalf of the person entitled to
benefit from the property, the beneficiary. The beneficiary therefore has equitable right to
the property being held by the trustee.

Every trust has duality of ownership – i.e. legal ownership of property is held by the trustee
while the beneficiary becomes the equitable owner. Hitherto, under the English common
law, there was no distinction or separation between the owner of the legal title and
beneficial ownership of property until the advent of equity and the development of the
concept of trusts.

Trust deals with both movable and immovable property.

Definition of trust

Trust is defined by G.W. Keeton trust as:

‘ ... the relationship which arises wherever a person called a trustee is compelled in Equity to
hold property, whether real or personal, and whether by legal or equitable title, for the
benefit of some persons (of whom he may be one and who are termed cestuis que trust) or
for some object permitted by law, in such a way that the real benefit of the property
accrues, not to the trustee, but to the beneficiaries or other objects of the trust’ (G.W.
Keeton, The Law of Trusts).

See also the definition of trust as per Romer, L. J. in the case of Green v Russell (1959) 2 Q.B
226.

Purposes of Trust

 To enable property to be held for persons who cannot hold the legal title themselves
in situations where the settlor’s interest or title in the property concerned is legal

 To enable property to be used to benefit persons in succession

 To enable two or more persons to own land

 To further a charitable purpose

 To avoid or minimise liability for various forms of taxation (See da Rocha & Lodoh,
1999, p 105)

Distinction between trust and other legal relationships

Contract – in principle, contract are agreements based on valuable consideration, but in
trust transaction there a contractual relationship does not arise between the trustee and
the beneficiary and no consideration passes from one to another. A contract can only arise
between the settler (one creating the trust) and the trustee, but not between the trustee
and the beneficiary. It is possible that a contract and a trust can co-exist based on the terms
upon express terms stated in a contract. In principle it has been argued that a fiduciary duty
‘cannot be prayed in aid to enlarge the scope of contractual duties’ (Clarke Boyce v Mouat
(1994) 1 AC 428). Also t is important to note that it is ‘not legitimate to import into the
contract the idea of a contract the idea of a trust when the parties have given no indication
that such was their intention.’ (Re Schebsman, decd. (1944) Ch 83 at 89)

Bailment – this means the process by which a person (the bailor) transfers posseesion of
goods to another person (the bailee) usually for a specific purpose and with a power to use,
but without the bailee acquiring legal title to them (goods) (Gary Watt, 2008). Bailment is
contractual and can be gratuitous – e.g. possession of a hired car (Karflex Ltd v. Poole
(1933) 2 KB 251), possession of goods deposited with a pawn broker as security for money
borrowed or ‘pledging’ of goods.

Debt - a debt is defined as ‘a monetary obligation owed by one to another which is an item
of value because it can be transferred to a third party’. The distinction between trust and a
debt is seen in the words ‘owning’ and ‘owing’.

Agency - it is said that agency sometimes resembles a trust in so far as the agent exercise
some level of control over the principal’s property and owes a fiduciary duty to his principal,
particularly not to engage in activity leading to unauthorised profit/gain by reason of the
agency. Agency arises under the common law, but a trust arises in equity. Agency usually is
based on contract between the principal and the agent. An agent acquires possession not
ownership of the property or goods. A trustee has legal title to the property and is
accountable for its proceeds.

Administration of estates – administration of estates is similar to trusts in that the

administrator acts as a trustee holding the property on behalf of the legatee or device – this
intrinsically connotes a trust relationship (i.e. holding the property in trust for the
beneficiary. In fact, the estate of a deceased person is held on behalf of his/her beneficiaries
by personal representative as fiduciaries (executors or administrators) – see Marshall v Kerr
(1995) 1 AC 148. Nevertheless, administration of estates is traceable to the ecclesiastical
courts while trusts emanated from the Chancery. In essence, personal representatives
become absolute owners of the estates in relation to administration of a deceased person
and trustee in terms of distribution of the estates. Personal representatives’ mandate
basically is to wind up the estate after paying all just debts and distribute the the properties
accordingly while a trustee holds the property in trust for the benefit of the objects of the
trust.

Powers of appointment – a power connotes an authority vested in a person to deal with or

dispose of property which he does not own. A trust arrangement requires an obligation to
hold the property for the designated object (i.e. beneficiary or for the stated purpose) and
therefore it becomes ‘imperative’ – it is an obligation to be performed and, where
necessary, a court will order the trustee to discharge his trust. On the hand, a power
imputes ‘discretionary’ exercise of the power legally given to the attorney. Beneficiaries of a
trust have equitable proprietary interest in the property. However, a person holding a
power is not obliged to exercise it at all and will not be compelled by a court to do so. There
is, however, a distinction between a fiduciary power based on pension fund trustee where
the court may intervene to give effect to the object of the fund if the trustees are unable to
do so; if the power is conferred in a fiduciary capacity, he is obliged to act accordingly else
the court step in to direct him to act accordingly – see Mettoy pension Trustees v Evans
(1990) 1 WLR 1587; Re Abrahams’ Will Trusts (1969) 1 Ch 463. The word of a power must
clear devoid of any ambiguity (Re Hay’s Settlement Trusts (1982) 1 WLR 202).

Crime – equitable jurisdiction of the courts does not extend to criminal matters. In other
words, equity does not lead to criminal sanction or punishment. In effect, the courts do not
countenance trust established for criminal or other illegal purposes – e.g. the ‘forfeiture
rule’ which frowns upon a killer and his successors in title benefitting from property
inherited from a killer’s victim – see Re Sigsworth (1935) Ch 89. Nevertheless, it must be
stated that criminal law takes into account the equitable concepts of conscience and
fiduciary obligations and therefore will sanction for breach of trust arising from
theft/stealing of trust property – see R v Clark, The Times, 4 December 1997 where it was
reported that the defendant, a bursar of the Royal Academy and treasurer of his local
church stole money entrusted to him and extravagantly spent it on himself – see also the
case of Tony Neary, a solicitor and former captain of England’ Rugby Team, who stole
£288,000 from trust funds entrusted to him for the benefit of the family of a senior partner
of his law firm; he was jailed for 5 years. His counsel was quoted as describing the situation
as ‘a tragedy of Greek proportions’.

Capacity to create a Trust

A settlor must have legal competency to enable the creation of a trust. In this context, poor
mental health or a person of unsound mind as well as an infant are incapable of creating a
trust. The presumption of lack of mental capacity can be rebutted as per the case of
Simpson v Simpson (1992) 1 FLR 601. Regarding artificial persons such as limited liability
companies and public corporations they might lack legal capacity to create a trust if the
‘objects clause’ in the memorandum bars or restricts their power to create a trust.

It must be noted that the capacity to create a trust is predicated upon the principle/maxim
‘nemo dat quod non habet’ (meaning ‘a recipient cannot acquire good title from a person
who was incapable of granting good title’ or ‘no one can transfer title he does not have’ –
Gary Watt, pp 480, 536).

A person capable of holding an interest in land can be appointed a trustee. In Ghana,

although an infant is capable of holding an interest in land, nonetheless, an infant does not
have the necessary capacity to be a party to a trust property - see s. 12(2) of Conveyancing
Act, 1973 (NRCD 175) (repealed by Land Act, 2020).

A trustee, in principle, cannot delegate his power/duty to others (see Re Lucking’s Will
Trusts (1968) 1 WLR 866). However, in case of legal necessity or moral imperative, a trustee
may engage the service of an agent (a lawyer/solicitor) who may be paid from the trust fund
– see Field v Field (1894) 1 Ch 425; Speight v Gaunt (1883) 9 App Cas 1.

In Ghana, an executor to a will can also be appointed as a trustee. There is no limit as to the
number of trustees that can be appointed to administer a trust. But only four persons can
be appointed as trustees or executors – see s. 77(1) of Administration of Estates Act, 1961
(Act 63). A trust property must be vested in the beneficiary through execution of a vesting
assent by the executor – see s. 96(1), Act 63.

Formalities/requirements for creation of a Trust

Creation of a trust in equity arises where a court is faced with the issue of determining or
interpreting the intention behind a disposition due to inadequate or insufficient information
which may give rise to a presumption of construing the settlor’s or a testator’s intention as a
trust. In Knight v Knight (1840) 3 Beav 148 in which the rule of construction ‘certum est
quod certum redid potest’ (‘that is certain which can be made certain’). This rule of
construction is applicable to construction and execution of wills to give effect to the
intention of the testator (ibid).

In Knight v Knight, Lord Langdale MR espoused the ‘three certainties’ that should be
present before a trust, especially private express trust can deemed to have been created.
These are:
1. Certainty of intention – this seeks to protect transferors and transferees of property
by ensuring that affected property is transferred in accordance with the expressed
intention of the transferors. Intention is based on substance without recourse to the
technical language used to create a trust – i.e. a trust can be created without using
the word ‘trust’ and where the word ‘trust’ is omitted the settlor:

‘... must do something which is equivalent to it, and use expressions which have
that meaning, for, however anxious the court may be to carry out a man’s
intentions, it is not at liberty to construe words otherwise than according to their
proper meaning’ (Richards v Delbridge LR 18 Eq 11).

Use of precatory words (derived from the Latin ‘precari’ meaning ‘to beg’ – a
trust will however not be created where precatory words are used, for instance,
where the donor appealing to the donee to use the property in a particular way
instead of obliging him to use it a particular way – e.g. ‘I give my property to
Kwesi hoping that Kwesi will look after my sister’; ‘I give my property to Mansa
desiring that Mansa should allow Akweley an annuity of GHC 500’ (Re Diggles
(1888) 39 Ch D 253); ‘I leave all my personal and real property to my son, Ahmed,
feeling confident that he will act justly to his siblings in sharing same when no
longer required by him’ (Mussoorie Bank Ltd v Raynor (1882) LR 7 App Cas 321,
PC); ‘I leave my real property to Elorm requesting that Elorm will leave what
remains of it on his death to Yayra’ (Re Johnson (1939) 2 All ER 458).

See also these cases: Mamavi v West African Building Ltd (1965) GLR 216; Gyasi
v Quagraine (1963) 2 GLR 161; Sey v Sey (1963) 2 GLR 220; Re Adams and
Kensington Vestry (1884) 27 Ch D 394; Jones v Lock (1865) LR 1 Ch App 25; Payl
v Constance (1977) 1 WLR 521; Lambe v Evans (1871) LR 6 Ch App 597.

2. Certainty of the subject of the trust (i.e. property) – this means the subject matter
of the trust must be capable of being ascertained or located. This is based on the
principle ‘certum est quod certum reddi potest’ (‘that is certain which can be made
certain’). For instance, if Kwame left his gold wrist watch to be given to his wife on
trust for his brother, Nana, a trust cannot fail if the wrist watch cannot be found
among his personal effects upon his demise/death. However, a trust will fail if no
evidence can be led to identify the subject matter of the trust – e.g. ‘I give my special
bow ties’ to my son, in that, it will be difficult to identify which ‘special’ bow tie the
settlor had in mind; or using phrases like ‘the bulk of my jewellery’ will fail as a trust
on grounds of ‘conceptual’ or ‘linguistic’ uncertainty - see Palmer v Simmonds
(1854) 2 Drew 221 as distinguished in Re Kolb’s Will Trusts (1962) Ch 531. On the
other hand, trusts granting ‘reasonable’ income to a beneficiary will be deemed valid
- see Re Golay (1965) 1 WLR 969.
 See also these cases: Re Jones (1898) 1 Ch 438; In the Estate of Last (1958) P 137;
Boyce v Boyce (1849) 16 Sim 676; Re Clarke (1923) 2 Ch 407.

3. Certainty of the object (i.e. the beneficiaries or purposes of the trust) – simply put,
beneficiaries or objects (e.g. trusts created for religious or educational purposes) of a
trust must be unambiguously defined and capable of being ascertained – see In Re
Vandervell’s Trust (No. 2) (1974) Ch 269 at 319; McPhail v Doulton (1971) AC 424;
(1970) 2 All ER 228. If the beneficiary or object of a trust is not capable of being
ascertained or uncertain, a trust becomes void and, as a result, a resulting trust is
created - see Re Biss (1903) 2 Ch 40; Re Carville (1937) 4 All ER 464.

Classification of trusts

Trusts are generally classified into: (a) express private trust; and (b) public or charitable
trust.

(a) Express private trust – private trusts are created for the benefit of individuals or
group of individuals. Private trusts are commonly created by a trust instrument or by
will (testamentary disposition). A will creating a trust must comply with the Wills Act,
1971 (Act 360). Express trust looks at substance rather than form. Nevertheless, it is
it is important to indicate that the settlor clearly states the intention for creating the
trust, which depending on the context and the nature of the property, is statutorily
provided – e.g. in the case of land, the law requires that a trust shall be in writing to
make it valid (see ss. 1 & 10 of Conveyancing Act, 1973 (NRCD 175); s. 108 of Land
Title Registration Act, 1986 (PNDCL 152).

Furthermore, a trust created for private purposes must have a beneficiary and can
be rendered void for lack of a beneficiary. This is called the ‘beneficiary principle’
based on the ‘benefactor principle’, which requires that a non-charitable disposition
by a benefactor must always be made by way of outright gift to a donee or on trust
for ascertainable beneficiaries (Gary Watt, p. 102). In other words, ‘a gift on trust
must have a cestui que trust and there must be somebody, in whose favour the court
can decree performance’ (see Re Wood (1949) Ch 498; Morice v Bishop of Durham
(1804) 9 Ves 399).

The ‘beneficiary principle’ was further espoused in the case of Leahy v AG for New
South Wales (1959) AC 457 at 478, per Viscount Simmonds thus:

‘A gift can be made to persons (including a corporation) but it cannot be made to a

purpose or to an object; so, also, a trust may be created for the benefit of persons as
cestuis que trustent, but not for a purpose or object unless the purpose be charitable.
 For a purpose or object cannot sue, but, if it be charitable, the Attorney-General can
sue to enforce it’.

(b) Public or charitable trust – this is a trust created to promote public welfare or
promote charitable courses. Public or charitable trusts are set up for public
purposes, but individuals may benefit from such trusts. These trusts are enforced by
the Attorney-General on behalf of the state. In Commissioners of Income Tax v
Pemsel (1891) AC 531, Lord Macnaughten characterised charitable trusts as follows:

‘Charity’ in its legal sense comprises four principal divisions: trust for the relief of
poverty; trust for the advancement of education; trust for the advancement of
religion; and trust for other purposes beneficial to the community, not falling under
any of the preceding heads. The trusts last referred to are not the less charitable in
the eye of the law, because incidentally they benefit the rich as well as the poor, as
indeed, every charity that deserves the name must do either directly or indirectly’.

Hence, public/charitable trust must satisfy the following purposes:

1. Poverty eradication – see Re Drummond (1914) 2 Ch 90; Gibson v South America

Stores Ltd (1950) Ch 177

2. Education – see Re Shaw’s Will Trusts (1952) Ch 163; Royal Choral Society v IRC
(1943) 2 All ER 101; Bowman v Secular Society (1971) AC 406 & Re Hopkinson
(1949) 1 All ER 346 – a trust for political purposes cannot be charitable and a
trust intended to promote political objectives is not charitable even if made
under the guise of educating the public. Also, a private school which operates for
profit cannot be charitable. Conversely, if it non-profit making it can be
charitable – see Re Girls’ Public Day School Trust (1951) Ch 400; Abbey Malvern
Wells Ltd v Minister of Local Government and Housing (1951) Ch 728.

3. Religion – see Bowman v Secular Society (supra); Gilmour v Coats (1949) 1 All ER
848; Neville Estates Ltd v Madden (1962) Ch 832.

4. Benefit to the community

Public/charitable trusts are regulated by the Trustee (Incorporation) Act, 1962

specifying the establishment of voluntary associations and bodies for advancing
religious, educational, literary, scientific, sports, social or charitable purposes. These
charitable purposes have not been defined by the Act.

In addition, the Public Trustee Ordinance, 1952 (No. 4) provides for the appointment
and functions of a Public Trustee.

Exemption from taxation: by its nature, public/charitable trusts are exempted from
taxation. This exemption is based on s. 3(1) (d) of the Income Tax Decree, 1975
 (SMCD 5), but refer to current Income Tax legislation on tax exemption applicable to
public/charitable trusts).

Doctrine of Cy-pres

This doctrine applies where it becomes impossible to carry out the purposes for which a
public/charitable trust is created. In circumstances where a charitable trust becomes
obsolete, impracticable or uncertain, this doctrine is invoked to satisfy ‘as near as’ possible
or resembling the purpose or original intendment or intention underlying the trust in order
to save it from failing – see Re Lysaght, Hill v Royal College of Surgeons (1966) Ch 191.

Cy-pres is ‘an equitable doctrine under which a court reforms a written instrument with a
gift to charity as closely to the donor’s intention as possible, so that the gift does not fail’
(Black’s Law Dictionary).

Specifically, the following situations may give credence to the cy-pres doctrine:

(a) Where ab initio, it is impossible to carry out the trust; or

(b) Where initially it is possible, but with the passage of time, it is no longer practicable
to carry it out (see da Rocha & Lodoh, 1999, p. 134); and also In Re Dominion
Students’ Hall Trust (1947) Ch 183; Re University of London Medical Sciences
Institute Fund (1909) 2 Ch 1).

Completely and incompletely created trusts

A trust can only be effectively construed if it is completely constituted – i.e. the trust
property must be vested in the trustees for the benefit of the beneficiaries. Therefore, if the
trust property is not vested in the trustees, it becomes incomplete.

A trust is completely constituted in the following manner:

 By the settlor conveying the property to the trustees - e.g. if the subject matter is an
unregistered land, there must be a conveyance, and if it is a registered land, there
must be a transfer in accordance with s. 58 of the Land Title Registration Act, 1986
(PNDCL 152), if it is a movable property, it must be delivered physically to the
trustee, if it is a trust created by a will, it must comply with the Wills Act, 1971 (Act
360) (da Rocha & Lodoh, 1999, p.112).

 By the settlor declaring himself to be a trustee

See generally: Milroy v Lord (1862) 4 De GF & J 264; Richards v Delbridge (1874) LR 18 Eq
11; Antrobus v Smith (1806) 12 Ves 39; Re Rose (1949) Ch 78.
Trust created for capricious purposes

A trust, be it for private or public/charitable purposes, in principle, cannot be created for

capricious purposes else such a trust will fail. Capriciousness, in this context, which is
derived from the Latin word ‘caper’ (meaning ‘goat’) is defined as whimsical, playful, or
unpredictable; illustration of this principle can be found in the cases of Brown v Burdett
(1882) 21 Ch D 667 – concerns a trust created for blocking up the windows of a house for 20
years; Re Shaw (1957) 1 WLR 729 – concerns income from the residuary estate of George
Bernard Shaw arising from a trust established for the purpose of ascertaining, amongst
other things, the number of persons currently using the 26-letter English alphabet and how
it could saved by replacing it with a 40-letter phonetic ‘British Alphabet’; this trust failed in
that, it infringed the ‘beneficiary principle’ as well as being seen as capricious; M’Craig v
University of Glasgow (1907) SC 231.

Vesting of Trust Property

In order to completely constitute a trust, the trust property must be vested in the trustee.
Mere appointment of a trustee does not result in automatic vesting of the trust property in
the beneficiary (Warburton v Sandys (1845) 14 Sim. 622; E.R. 499, 503). However, in case
the trust arises out of a will and executor appointed as a trustee, then the vesting of the
property takes effect automatically. Where the executor and the trustee are different
persons, then vesting assent must be executed to vest the property in the trustee (s. 96(1)
of Administration of Estates Act, 1961 (Act 63)). Regarding movable property, vesting is
done on delivery of the property to the trustee. On the other hand, if the trustee happens to
be the owner of the property, he only has to declare the trust and does not need to convey
it to himself (see further clarification per s. 19(2) of Conveyancing Act, 1973 (NRCD 175). In
case there are two or more trustees, the trust property must be conveyed to them as joint
tenants (s. 14(3), Conveyancing Act, 1973).

Termination of Trusteeship

A trusteeship can be terminated through:

(a) Disclaimer - nobody can be compelled to accept a trusteeship; refusal to accept the
position of trustee is known as a disclaimer, which is usually done through a deed
(Stacey v Elph 39 E.R. 657).

(b) Retirement - nobody can be compelled to remain a trustee; a trustee may opt to
retire or be relieved of his office; this may entail discharge of the trustee from
further responsibility and liability under the trust. A trustee may retire if there is an
express power to that effect in the trust instrument or by consent or where there is a
 valid appointment of another trustee in his stead (Wilkinson v Parry (1828), E.R.
808/809; Forshaw v Higginson, 52 E.R. 690).

(c) Removal - s. 11 of the Public Trustee Ordinance provides for the removal of a
trustee. In addition, the courts have inherent jurisdiction to remove a trustee and to
appoint a new trustee in the interest of the beneficiaries (Re Wrighton (1908) Ch
789).

Implied Trust

Trusts are expressly created. However, depending upon the circumstances, the law may
imply a trust, which essentially is called Implied Trust.

Implied trust is described as:

(a) Resulting trust - this arises out of the presumed unexpressed interest of the settlor.

(b) Constructive trust - created by operation of equity and does not depend upon the
intention of the parties.

(a) Resulting Trust

For a resulting trust to arise the following scenarios must be present: (a) e.g. where a
settlor (A) conveys property to a trustee (B) to hold in trust for C for life; if there is no
clear indication as to who the beneficiary in case of C’s death, then the property the
trustee (B) will be holding will be on resulting trust for A (the settlor); (b) where
Kwesi breaches a trust and conveys a trust property to Ama, Yayra, having
knowledge of the breach, but accepts the trust property - i.e. Yayra - will be deemed
a constructive trustee holding the property in trust for the intended beneficiaries
regardless of whether Yayra consented to the transaction or not.

Resulting trust arises from the following circumstances (See da Rocha & Lodoh,
1999, p. 113):

(i) Where one person purchases property in the name of another (i.e. purchase price
was paid by another person) a resulting trust arises regarding the person who paid
the purchase price unless a gift is intended by the one who paid the purchase price –
see Dyer v Dyer (1788) 3 Cox Eq 93; Standing v Bowring (1885) 31 Ch D 282.

This scenario brings to the fore a presumption of a gift or a loan or an intention of

advancement (e.g. between husband and wife, father and child, or a person to
whom the purchaser stands in loco parentis) by the person who is paying for the
purchase price - Thornley v Thornley (1893) 2 Ch 229.

The presumption does not arise when a wife buys property in the name of her
husband because it is presumed the husband is holding such property in trust for the
wife – see Mercier v Mercier (1903) 2 Ch 98; Heseltine v Heseltine (1971) 1 WLR
342.

Distinguish the above cases from the following: Soar v Foster (1858) 4 K & J 152;
Diwell v Farness (1959) 1 WLR 624 – a presumption cannot hold in favour of a
woman co-habiting with a man without marriage; Re Roberts (1946) Ch 1; Shepard v
Cartwright (1955) AC 431; Bennet v Bennet (1868) LR 5 Eq 376) – a mother has no
moral obligation in equity to provide for her child or presumption of advancement
between a mother and her child unless the mother stands in loco parentis to the
child – see Sayre v Hughes (1868) LR 5 Eq 376; Warren v Gurney (1944) 2 All ER 472;
Pettitt v Pettitt (1970) AC 777; Sese v Sese (1984-86) 2 GLR 166 as distinguished.

The presumption of resulting trust can only hold if there is no evidence to contradict
or rebut the presumption – see Fowkes v Pascoe (1875) LR 10 Ch App 343.

(ii) Where a settlement is made for a specific purpose which wholly fails (i.e. failure
of settlement for specified purpose). In this regard, if a settlement is made for a
specified purpose, but that purpose cannot be carried out, a resulting trust is implied
in favour of the person who paid the purchase price or provided the money for the
intended settlement – see Cleaver v Mutual Reserve Fund Life Association (1892) 1
QB 147; Re K (1985) Ch 85; Bankers v Salisbury Diocesan Council of Education Inc
(1960) All ER 372

(iii) Where an express trust is created, but it cannot take effect because the trusts
have not been properly declared or because the beneficiaries are uncertain (failure
of express trust) – see Boyce v Boyce (1849) 16 Sim 476; Kendall v Grainger (1842) 5
Beav 300; Taylor’s Co v Attorney-General (1871) 6 Ch App 512.

(iv) Where one person is induced by agreement to expend money on the property of
another without intending a loan or a gift – see Hussey v Palmer (1972) 3 All ER 744.

(v) Property of spouses and couples – this relates to spouses and unmarried couples
who jointly own property in one or both names with the intention of sharing the
ownership – see Burgess v Rawnsley (1975) Ch 429; Gissing v Gissing (1971) AC
886.; Heseltine v Heseltine (1971) 1 WLR 342.
(b) Constructive Trust

Constructive trust arises independently of the intention of the parties and, as a

result, it is imposed by equity where a person, including trustees, personal
representatives, agents, partners, company directors, mortgagees, etc, who find
themselves in a fiduciary relationship; such relationship requires utmost good faith
making it unconscionable for such persons to profit from their positions. In case of a
breach of fiduciary relationship, the trustee will be deemed to hold the property on
constructive trust for the beneficiaries – see Re Biss (1903) 2 Ch 40; Keech v
Sandford (1726) Sel Cas King 61.

A constructive trust can also be imposed in equity where a person who is a stranger
to the trust, received trust property – e.g. a person cannot take advantage of…….

Duties of a Trustee

1. Act with utmost diligence - act in strict compliance with the dictates of the trust;
honesty; prudence especially in relation to investments.

2. Duty to invest trust property in proper and safe securities - e.g. Speight v Gaunt
(1883) App Cas (harzadous).

3. Duty to keep account and account to beneficiaries - Re Dartnall (1895) 1 Ch 474.

4. Active participation in the administration of the trust - Bahin v Hughes (1886) 31

ChD 390.

5. Trustees must act with unanimity – Luke v South Kensington Hotel Co Ltd (1879)
11 ChD 121.

Control by beneficiaries

As long as the trust exists the beneficiaries cannot control or direct the trust or act in
a particular way to the benefit of the beneficiaries. However, if the beneficiaries are
of full capacity, acting together, they can terminate the trust and ask for handing-
over of the trust property – this known as the rule in Saunders v Vautier (1841) 4
Beav 115; Anson v Potter (1879) 13 Ch D 141.

Remedies for breach of trust

 Injunction.
  Personal action against trustee.

 Actions against the trust property – involves tracing the trust property.

Defences to breach of trust

 Relief by court - trust can argue that he acted honestly, prudently and
reasonably.

 Limitation - statute barred (after 6 years no action according to SMC Decree)

(NRCD 54).