Nature of trusts - essay elements Flashcards
Nature of B’s rights - short answer (3)
More than merely personal but not fully proprietary either
= What McFarlane & Stevens call ‘persistent’ rights
=> indirectly proprietary : attach to / dependant on T’s proprietary right to the trust SM & his duty to enforce it for B’s sake
If Q abt O (2)
T technically not full O bcs can’t abuse / destroy (holds for B)
B or collection of Bs absolutely entitled (S v V) ± do have that right, albeit indirectly
=> entitlement to O ≠actual O : as long as right under trust, B’s right dep on T’s :
- B can’t recover from / bring claims against Equity’s darling
- B has to rely on T to bring claims ag 3P for interference
B’s right more than merely personal (2)
- trust shall not fail for want of a trustee
- trust has 3P effect
Trust shall not fail for want of trustee
= Equitable maxim
+ s41 Trustee Act 1925: gives the court power to appoint a trustee ‘where expedient’ to do so – ntb where current trustee is incapacitated or bankrupt
trust has 3P effects
= B can bring a claim against (some) 3Ps in whose hands misappropriated trust property is or has passed
=> eg. Royal Brunei Airlines Ltd v Tan (KR) , Re Diplock (tracing into hands of innocent volunteer)
B’s right is not fully proprietary (3)
- def proprietary right
- only binds 3P whose conscience is affected (KR & tracing)
- must rely on T to sue 3P who interfere w/ trust property
Defining a proprietary right
= one which has 3P effect, binding beyond relº btw grantor and recipient of right – McFarlane : right to exclude the world from a thing
B’s interest will only bind 3P whose conscience is affected - KR
= requirement of knowledge of breach of trust / facts which amount to a breach of trust (El Anjou v Dollar Land Holdings)
=> BCCI v Akindele : D’s knowledge must be such as to render his retaining the trust property / profit he made from it unconscionable
B’s interest will only bind 3P whose conscience is affected - tracing
Possible to trace into the hands of innocent volunteers = Re Diplock : bcs conscience becomes affected once court proceedings are brought
no tracing against equity’s darling = Akers v Samba Financial Group
B can’t sue strangers that interfere w/ trust property
= The Aliakmon : where a person X interferes w/ property, only someone w/ legal O or possessory title can sue, contractual title not enough
MCC Proceeds v Lehman Brothers : only a person w/ legal or possessory title can sue for tort of conversion, equitable title not enough
B can’t sue strangers that interfere w/ trust property - doubt created by …
decision in Shell v Total
Shell v Total - the decision
CA allowed Shell, who only had BI, to bring claim in negligence and recover for consequential economic loss against stranger (Total)
Shell v Total - the reasoning
Reason for limiting recovery to ppl w/ legal and possessory title = floodgates
=> floodgates doesn’t apply where claimant = B under a trust rather than party w/ contractual right to the property
=> Having beneficial interest in the property = sufficiently close relationship to justify making an exception to exclusion rule (no one other than O / holder of possessory title can sue)
Shell v Total - flaws in reasoning (3)
- Could have worked if justification for Shell having a claim = have a proprietary title to the thing held on trust => don’t fall within exclusionary principle
- BUT CA tried to justify decision as an exception to exclusionary rule : as HMM point out, this means that it prima facie applies
=> Misinterpretation of exclusionary rule : ‘proximity’ necessary to allow recovery = btw B and X, but trust only creates proximity btw B and T
=> Arguably wrongly decided
