Chapter 1

Equity comprised a distinct and separate body of rules that owed its origin to the intransigence of the Common Law. The rigidity and practice of the common law created enormous injustice to subjects that were mainly alleviated by principles of equity. The institution of the trust was created exclusively by equity.  

The Chancellor (later referred to as Lord Chancellor) was the King’s leading minister. He headed the ‘Chancery’ (which was responsible for the issue of writs) and was an important member of the King’s Council whose duties included consideration and adjudication of petitions addressed to the Council by aggrieved subjects who sought justice.

The Court of Chancery, headed by the Lord Chancellor, was set up to deal with the surfeit of petitions by aggrieved litigants. These petitions were originally dealt with by the Chancellor, but by the fifteenth century the petitions became so numerous that the Chancellor adapted the Chancery to constitute a special court to adjudicate on the petitions. This court remained distinct from the Courts of Common Law (King’s Courts) until the Judicature Acts 1873/75, when the administration of law and equity was fused. The principles laid down by the Court of Chancery were referred to as ‘equity’. 

The Legal title is ownership of property that is recognised by the world at large. The acquisition of the legal title to property varies with the nature of that property and the particular mode of transfer.

Cestui que trust is the person for whose benefit a trust was created. This is the technical expression for a beneficiary under a trust.

Equitable interest is the interest enjoyed by a beneficiary under a trust. This interest was enforceable against third parties with the exception of a bona fide transferee of the legal estate for value without notice.   

The use was the forerunner to the trust institution and was introduced into English jurisprudence by the Normans in the eleventh century. Its development was promoted as a device to avoid certain laws in feudal England.

Income: May be identified as the recurring profits derived from property, for example, dividends payable in relation to the ownership of shares in a company. Likewise, interest earned on sums paid in to a building society account. 

Capital: involves the corpus of funds originally paid by the settlor to the trustees and from which income may be derived. An analogy that has been drawn by the courts is to treat capital as a tree and its fruits as equivalent to income.

The Three Certainties test
The essential elements of a trust are well settled. An express trust is required to be validly declared and this will be achieved if the settlor satisfies the three certainties test namely certainty of intention, subject matter and objects. Certainty of intention will be manifested if the words and conduct of the settlor are construed as imposing a trust obligation on the trustees in respect of a transfer of property to them, for example  a transfer of £50,000 to Terry ‘on trust for Barry absolutely’. The subject matter or trust property is required to be sufficiently certain so that the court may identify the relevant property that will be subject to the trust. In the above example this is £50,000. In addition, the courts are required to be able to ascertain the beneficiaries in order to prevent strangers to the trust unlawfully enjoying benefits. In the example above Barry is the sole beneficiary. This subject will be considered in Chapter 4.

Constitution and formal requirements of a trust
In Chapter 5 we will examine the methods and consequences of creating an express trust. This overlaps with the declaration of trust or three certainties test as stated above. An express trust is created where either a transfer of the property is made to the trustees subject to a declaration of trust, or by way of a self declaration of trust. The first method requires the settlor to ensure that the appropriate property has been conveyed to the nominated trustee and also that a trust had been validly declared or the terms of the trust specified. The second method of creation involves the settlor declaring that he holds the relevant property on trust for the beneficiary, for example, Sam declares that he holds 5,000 shares in BP plc upon trust for Brenda absolutely. In this event the settlor makes himself a trustee. Occasionally, Parliament imposes a formal requirement of writing concerning the declaration of trust or transfer of the property. This is also included in Chapter 5.    

Private purpose trusts
A private purpose trust is void for lack of a beneficiary to enforce the intended trust. Accordingly, an intended trust to board up the windows of a designated house in private ownership may be void for the beneficiary (purpose) is incapable of ensuring that the trust will be validly administered. This principle is subject to a number of exceptions that will be examined in chapter 6.

Charitable trusts
An express trust may be created for the benefit of the public and will be treated as promoting charitable objects. The law of charities has been developed ever since the sixteenth century and the main principles were consolidated in the Charities Act 2006, the forerunner to the Charities Act 2011. There are a number of privileges that have been accorded to charities because of their public nature. Examples of charities include trusts that relieve poverty such as Oxfam, trusts that advance education such as Universities, entities that advance religion such as churches, the promotion of the arts such the Royal Shakespeare Society etc. The Charities Act 2011 lays down 13 purposes that are recognised as charitable. These will be considered in Chapter 7.

Implied trusts
Resulting and constructive trusts will be considered in Chapters 8 and 9 respectively. These are implied trusts that are created by the courts in pursuance of distinct objectives. A resulting trust arises when the transferor is treated as having impliedly retained an interest in the property in the event of the transfer failing for any reason. The resulting trust is distinct from an express trust because the transferor did not expressly state who would be entitled to the property in the event of a failure of the trust. In these circumstances the court will return the property to the transferor by implication. For example, Sunil transfers 50,000 shares in BP plc to Terry to hold ‘upon trust for Brendon for life’ but fails to make provision for what will happen when Brendon dies. In this event, the property will be held on trust but the beneficial interest will result to Sunil, or his estate after his death. 

Unconscionable. This is a technical expression used in equity to mean unfairness or an abuse of position

A fiduciary relationship is one of confidence or good faith imposed on a party, such as a trustee. The fiduciary is not entitled to act in a way that allows his personal interest to conflict with his duties. Thus, he is not entitled to obtain an unauthorised profit for himself.

An account is an equitable remedy requiring a fiduciary or trustee to re-instate to the trust the original capital and make full disclosure of all the profits derived from it.

Chapter 2

Common law in this context means the legal rules that were common to all the subjects of England and Wales and administered in the Common Law Courts

Writ - this expression was used to describe the means of commencing an action in a court of law. An action was required to fit a specific writ and until the 17th century there were a limited number of writs.

Forms of action - these were means of bringing claims in the common law courts. Actions were divided into real, personal and mixed. Real actions were those for the specific recovery of land or other realty. Personal actions existed for the recovery of debts, chattels or damages. Mixed actions are those for the recovery of real property together with damages for wrongs connected therewith.

Damages means monetary compensation payable by a defendant for loss suffered by the claimant. This was the only common law remedy that was available

Equity - the body of rules created originally by the Chancellor and subsequently by the Court of Chancery.

Natural justice - these are principles of fairness and justice that may be interpreted and applied by judges.

Common injunction - this was an order issued by the office of the Chancery preventing a litigant from pursuing a judgment issued by the court of  Common Law.

Personalty - an expression that refers to personal property such as tangible moveable property (books, cars, furniture) and intangible personal property known as choses in action (shares, royalties, debts).

Trustee - a person to whom the legal title to property has been transferred subject to trust obligations in favour of another called a beneficiary (or cestui que trust)

Beneficiary is a person who enjoys an equitable interest in property under the control of a trustee
Injunction is a court order requiring a defendant to refrain from pursuing a course of conduct. 

Rectification is an equitable remedy that seeks to amend a document so that  it reflects the true intentions of the parties

Rescission involves the termination of a contract and restoring the parties to the position they would have been, had there not been a breach of contract

Account is an order of disclosure to explain how funds received have been dealt with and requiring him to make good any loss to the trust
Exclusive jurisdiction of equity this contribution of equity in the development of the law refers to institutions and concepts that were created solely by equity, such as the trust

Concurrent jurisdiction of equity this refers to occasions when equity supplemented the law by affirming the relevant legal principles but creating new remedies
Proprietary remedy this is a remedy that attaches to the relevant property and may require the defendant to hold the property upon trust for the claimant
Covenant this is an agreement in writing where originally a seal was attached to the document and was treated as notional consideration. Today, the requirement of a seal has been dispensed with and the document may be referred to as a deed. 

Chapter 3

Testator is a person who makes a valid will that disposes of his property after his death

Will is a formal document executed under the Wills Act 1837 (as amended) that distributes property on the death of the testator or testatrix

Executor is a person appointed by will and acts as the living representative of the deceased. He has fiduciary duties imposed on him akin to a trustee.

Legacy is personal property that has been distributed under a will. Real property (land) distributed under a will is referred to as a ‘devise’

Bona fide transferee of the legal estate for value without notice is an innocent party who acquires the legal title to property without notice of the existence of a trust. This person’s estate defeats the interest of the beneficiary under a trust.

Chapter 4

None

Chapter 5

None

Chapter 6

Locus standi (a place to stand). The expression signifies a person with an interest in the subject matter of the dispute to such an extent that he may have a right to bring or defend a claim

Attorney General. The Government’s legal advisor. This officer of the Crown has the responsibility for supervising charities

Joint tenants. This is a form of co-ownership or multiple ownership of property, such as property or an estate being owned by Alfred and Bernard jointly. The key feature of a joint tenancy is the right of survivorship. On the death of one joint tenant, say Alfred, the surviving joint tenant (Bernard) acquires the deceased’s interest in the property. If a joint tenancy is severed then another form of co-ownership may be created.

Tenancy in common. In this latter form of co-ownership each party acquires a separate, quantifiable interest in the property, for example Charles and David each enjoy an interest in land in equal shares. Each is regarded as owning 50% interest in the property.

Chapter 7

Cy-Pres: As nearly as possible to the original charitable purpose

Preamble: The recital at the beginning of some Acts of Parliament to explain the aims of the statute.

Chapter 8

Parol: evidence of oral statements and conduct.

Voluntary: without consideration

Chapter 9

Unconscionable: a broad concept in equity which seeks to maintain a balance between parties of unequal standing. The overriding requirement here is fairness between the parties.

Fiduciary: a person who has contracted a relationship of confidence with another, such as a trustee or an agent. The relationship gives rise to an overriding duty of loyalty in favour of the innocent party, see the definition laid down by Millett LJ in Bristol and West Building Society v Mothew [1996] 4 All ER 698.

Voidable: a transaction that is valid until it is avoided by the innocent party

Inferred intention: An inferred intention is one which is objectively deduced to be the subjective actual intention of the parties in the light of their actions and statements.

Imputed intention: An imputed intention is one that is attributed to the parties even though no such actual intention can be deduced from the parties’ actions and statements. The imputed intention involves deciding what the parties would have intended and is based on fairness.

Will: A will is a formal document created by a testator under the Wills Act 1837 (as amended) that represents his wishes as to the distribution of his property after his death

Probate: A formal document in which an executor appointed under the testator’s will becomes empowered to deal with the estate of the deceased.

Legatee: A person who inherits personal property under a will.

Devisee: A person who inherits real property under a will.

Next of kin: The nearest blood relation of the deceased. The next of kin inherits property on an intestacy

Chapter 10

Delegable functions: These are defined in s 11(2) of the Trustee Act 2000 as any function of the trustees. Excluded are dispositive discretions and powers to allocate fees and other payments to capital or income.

Sui Juris – a phrase that denotes that a person has the mental and legal capacity to transfer property

Chapter 11

Contempt of court unlawful conduct which amounts to a disregard of the authority of the court punishable with imprisonment.

Affidavit – a statement made in writing and on oath, sworn before someone who has the authority to administer the oath