Creating a trust

Question 1

Sivewright v Sivewright

Answer 1

1. A person must have capacity generally to create a trust
2. “A testator must be able to exercise a rational appreciation of what he is doing. He must understand the nature of his act. But, if he does, he is not required to be highly intelligent. He may be stupid, or he may even be improperly, so far as ethics go, actuated by ill-feeling. He may, again, make his will only in the lucid interval between two periods of insanity. The question is simply whether he understands what he is about. On the other hand, if his act is the outcome of a delusion so irrational that it is not to be taken as that of one having appreciated what he was doing sufficiently to make his action in the particular case that of a mind sane upon the question, the will cannot stand. But, in that case, if the testator is not generally insane, the will must be shown to have been the outcome of the special delusion. It is not sufficient that the man who disposes of his property should be occasionally the subject of a delusion. The delusion must be shown to have been an actual and impelling influence”

Question 2

Joint Administrators of Rangers Football Club plc

Answer 2

1. The administrators of the football club had asked the court for advice
2. They wanted to know whether a particular arrangement that had been made could constitute a trust
3. The football club had agreed with a financing operation that, in exchange for being paid money, the club would sell season tickets and they would keep the money in a separate bank account in trust
4. They would hold it as trustees for the benefit of the finance company
5. The arrangement was about tickets for future seasons
6. The court held that this could not be a trust
7. In order for there to be a trust, there must be existing property which can be transferred to the trustee
8. The trust must be constituted by property which is amenable to transfer, which means that it must be existing property capable of being the object of ownership

Question 3

Macpherson v Macpherson’s CB

Answer 3

1. “Our law requires no special or technical words in order to constitute a trust. If there is an appointment of a beneficiary, and if some person is charged with the administration of the funds beneficially destined, we have the essentials of a trust. If there is a clear indication of a trust to be constituted it is immaterial whether the words “in trust for”, or “for the benefit of”, or “for behoof of”, or other similar words be used” (per Lord McLaren)

Question 4

Balfour Beatty Ltd v Britannia Life Ltd

Answer 4

1. “However it is abundantly clear on the authorities down to and including Tay Valley that Scots law does not recognise the validity of a trust simply on the basis that those responsible for the constituent documents use the language of trust as a matter of drafting” (per the Lord Ordinary (Penrose))

Question 5

Allan’s Trs v Lord Advocate

Answer 5

1. “I think that we can now accept the position, as a reasonable development of the law, that a person can make himself a trustee of his own property, provided that he also does something equivalent to delivery or transfer of the trust fund. I reject the argument for the appellants that mere proved intention to make a trust coupled with the execution of a declaration of trust can suffice. If that were so, it would be easy to execute such a declaration, keep it in reserve, use it in case of bankruptcy to defeat the claims of creditors, but, if all went well and the trustee desired to regain control of the fund, simply suppress the declaration of trust” (per Lord Reid)

Question 6

Clark Taylor & Co Ltd v Quality Site Development (Edinburgh) Ltd

Answer 6

1. “In order to complete the successful constitution of a trust recognised as such by our law, where the truster and trustee are the same persons, there must be in existence an asset, be it corporeal or incorporeal or even a right relating to future acquirenda; there must be a dedication of the asset or right to defined trust purposes; there must be a beneficiary or beneficiaries with defined rights in the trust estate; and there must also be delivery of the trust deed or subject of the trust or a sufficient and satisfactory equivalent to delivery, so as to achieve irrevocable divestiture of the truster and investiture of the trustee in the trust estate” (per the Lord President (Emslie))

Question 7

University of Edinburgh v The Torrie Trs

Answer 7

1. The question was who the ex officio trustees were
2. The trust deed referred to the sheriff of Edinburgh and another, which no longer existed
3. The court held that the Lord Provost of Edinburgh and the Sheriff Principal of Lothian and Borders took their place