ContentsWEEK 1/2: NATURE AND CLASSIFICATION3What is a trust?3Essential Elements of a Trust3Classification4Trust v Agency5Trust v Debt6WEEK 3: CREATION OF EXPRESS TRUSTS AND CERTAINTY7Creation of Express Trusts7The Three Certainties Look out for what raises an issue7WEEK 4/5/6: THE CREATION OF EXPRESS TRUSTS11Transfer of Title to the Trustee11Assignments: The Requirements of Writing13Cases16Assignments: The Requirements of Form17Answering a Requirements Question21Constitution of Express Trusts23WEEK 7: DISCRETIONARY TRUSTS AND POWERS27Discretionary Trusts27Powers of Appointment27STEPS FOR POWER OF APPOINTMENT QUESTION29WEEK 8/9: TRUSTS FOR PURPOSES31Beneficiary Principle31ANOMALOUS Purpose Trusts31Gifts to Unincorporated Associations31Charitable Purposes33Public Benefit34Administration and Control34WEEK 10: RESULTING TRUSTS/VOID AND ILLEGAL TRUSTS37Resulting Trusts37Void and Illegal Trusts39WEEK 11/12: TRUSTEESHIP411.NUMBER AND CAPACITY412.Appointment & Removal433.Duties of the Trustee454.POWERS of the Trustee48

WEEK 13: RIGHTS OF TRUSTEES/BENS; ACTIONS FOR BREACH49TRUSTEES RIGHTS49BENEFICIARIES RIGHTS51BENEFICIARIES REMEDIES53Liability of Trustees57

STARTING EXAM:

All legislative provisions refer to Trusts Act 1973 (Qld) unless otherwise stated

SA = Succession Act (Qld)

PLA = Property Law Act 1974 (Qld)

WEEK 1/2: NATURE AND CLASSIFICATIONWhat is a trust?

A trust is an equitable obligation binding a person (the trustee) as owner of specific property (the trust property) to deal with that property for the benefit of another person (the beneficiary) or for the advancement of certain purposes.

Fixed Trust: I hold my house on trust for Catherine

Trust Property: house

Beneficiary: sister Catherin

Settlor: creator a trust

Trustee: you holding house for Catherine

Discretionary Trust: I give my house to my husband to hold on trust for our 4 children, he can allow whosoever of those children to live in the house from time to time

He has power as to which children has what right at what time

Purpose Trust: for a charitable purpose

Trust inter vivos vs trust post mortem:

Trust inter vivos: a trust where the settlor intends trust will start during settlors life

Trust post mortem: trust comes into effect after death (usually in a will)

Essential Elements of a Trust

A trustee in whom legal or equitable title to property is vested

Minimum of 1 trustee (s 11)

Private trust trustees must act unanimously, public trust trustees can be majority agreement

There may be more than one trustee

Trustee must have capacity (over 18, capable of holding property)

Trust property

Vests in the trustee separation of legal and equitable interest

Must be present property

A beneficiary for whose benefit the property is held or an object (if valid charitable purpose)

Beneficiary principle: to be a valid trust there must be a beneficiary/beneficiaries

Trustee can be a beneficiary, but not a sole beneficiary (CSD v Livingstone)

Beneficiaries have an equitable interest in the trust property

An equitable obligation binding the trustee to deal with the trust property for the benefit of the beneficiary

Obligation is personal AND proprietary

Personal: binds the conscience of the trustee personal liable for breaching obligation

Proprietary: where breach, ben can seek personal AND proprietary remedy

Classification

Express trust

Settlor intends to create a trust

Intention of settlor may be express OR inferred

Trusts arising by operation of law

Resulting trusts

Constructive trusts

Trusts can be:

Private or public

Bare (trustees have no active duties) or active

Fixed or discretionary

Inter vivos or post mortem

How to create an express trust

What if the settlor changes his/her mind?

Trusts are essentially irrevocable disposition of property.

There are exceptions; unless the settlor comes within an exception, the trust is irrevocable:

The trust deed can stipulate a power to revoke the trust

The beneficiaries can call for the trust to be ended (Saunders v Vautier)

The trustee completes disposition of the trust property to the beneficiaries

By order of the court (statutory power)

Trust v Agency

Both are fiduciary relationships

Difference trustee has title to the trust property; Agent only has authority to deal with the trust property (does NOT have title)

Holding money:

Ownership of money is determined by possession

Does agent have full ownership of money (and simply owes a debt to the principal) OR is the agent holding the funds as trustee for the principal?

Factors relevant to intention:

Obligation to keep separate (Cohen v Cohen; Walker v Corboy)

Isolated transactions (Cohen v Cohen)

Ongoing dealings (Walker v Corboy)

Walker v Corboy:

Fruit and vegetable grower sold through an agent who sold on behalf of a number of growers. There was no attempt to keep the funds in a separate account.

ISSUE: Who was entitled to the funds in the agents account? If trust, grower could claim funds not available to creditors of the agent. If debt, grower would be unsecured creditor

HELD: No trust. No indication of intention to create a trust. No suggestion that there was an obligation on the agent to keep the funds separate; industry practice was to mix funds.

Cohen v Cohen:

Mr C held $ on behalf of Ms C from proceeds from sale of furniture and insurance claim

ISSUE: were the funds held on trust? If a debt, action would be time-barred

HELD: trust critical consideration was obligation to keep funds separate

Trust v Debt

Trust involves both a personal and proprietary claim

Action to recover a debt is a personal claim

Intention

Separate account

Not mutually exclusive (Barclays v Quistclose)

Where money is provided for a particular purpose and that purpose doesnt eventuate, is money held on trust for the provider?

Where money is advanced by A to B, with the mutual intention that it should not become the assets of B, but should be used exclusively for a specific purpose, there will be implied a stipulation that if the purpose fails the money will be repaid, and the arrangement will give rise to a relationship of a fiduciary character, or trust (ACA v Mainline Constructions)

Quistclose:

The following were considered determinative (Quistclose)

Mutual intention of parties

Language used by parties (was very clear that had to be used EXCLUSIVELY for purpose of paying dividend)

When they failed to use it for that purpose, trust AROSE over those funds (Aus position)

Circumstances of r/ship between the parties

Nature of the transaction

Mere request to put money in different account will not constitute notice

When looking at factors to determine intention:

Where provider of the funds intended they be held on trust (Ed Resources v Hennesey)

Obligation to keep funds in a separate account (Thiess Watkins v Equiticorp)

Language used by parties to describe the arrangement (Re Aus Elizabethan Theatre Trust)

WEEK 3: CREATION OF EXPRESS TRUSTS AND CERTAINTYCreation of Express Trusts

To create an express trust there must be:

Capacity

Three certainties

Title

No vitiating factor (eg. illegality)

The Three Certainties Look out for what raises an issue

CERTAINTY OF INTENTION

Intention to create a trust is essential

Intention can be express OR inferred

Equity looks to intent NOT form

Intention can be gleaned from the surrounding circumstances, even if the language of the instrument is not that of a trust (Re Armstrong)

Precatory words: NO trust

absolutely in the fullest trust and confidence she will carry out my wishes = INSUFFICIENT (Re Williams)

feeling confident that she will act justly in dividing the same = INSUFFICIENT (Mussoorie Bank)

Express trust CANNOT be created contrary to the intention of the settlor

WAS subjective intention (CSD v Joliffe) NOW NOTE: Byrnes v Kendle: extrinsic evidence was not accepted by court and party denying the existence of the trust was held to the objective manifestation of intention as evidenced in the deed of acknowledgement of the trust (Byrnes v Kendle; dissent in CSD v Joliffe)

But NOTE: parole evidence rule oral evidence cant override a written document, may be found differently in present times

Kauter v Hilton: looked like a trust objectively and subjectively = intention

Revokable mandate: NOT a trust but a direction to someone to act on your behalf which can be revoked any time before acted upon (CSD v Howard Smith)

Re Armstrong:

When Mr A died, did bank accounts form part of estate or were they trusts created for sons, no use of the language of a trust but had discussion with the bank manager that he didnt want to make immediate gift to boys but intention to create fund for them

HELD: intention manifested in conversation with bank manager his intention could be gleaned from the surrounding circumstances

CERTAINTY OF OBJECT[look at in later weeks]

Beneficiary principle:

an express trust must be for persons (named beneficiaries a private trust) OR purposes (charitable purposes a charitable trust)

Conceptual certainty:

deserving journa