This is an extract of our Nature Of Beneficiary Interest Essat document, which we sell as part of our Trusts and Equity Notes collection written by the top tier of Oxford students.
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Beneficiary principle - in every other than a charitable trust there must be a B in whose favour court can decree performance, otherwise the trust can't be enforced (Morice v Bishop of Durham)
Accordingly, the orthodox position is as follows: i.In order for a trust to be valid, there must be an identifiable B who is a beneficial owner of the of the property under trust ii.Property must be held on trust for some B who has a proprietary interest in the trust fund Main Body
1. Interest Thesis - the trust gives a proprietary interest in the trust property to B, so that T has a correlative duty to effectuate that interest 1) Law is concerned w/allocation & protection of entitlements to things so that proprietary interest = entitlement to exclusively determine how some things are used or enjoyed 2) LordsBW (Westdeusche) & Millett (Twinsectra) - whenever T holds legal title as trustee, B must have a symmetrical proprietary equitable interest
? Wrong per sebut (exceptions apart) consider how courts approached it - structuringmostly takes place so to find a B by way of ascertainable person/group who have some interest in enforcement/stand to benefit in some way. 3) B's interest attaches to property = proprietary nature; e.g. S&V rule ? law prioritises B's interests: i. Enforcement of trust is left up to B , not settlor ii. T has fiduciary duty to act in B's best interests
= NB: not a right to micromanage T (ReBrockbank) + settlor can provide for T to have the benefit of exclusion clause w/regards to certain types of breach
? But, although B can't demand that T exercises his duties in certain way, can achieve same result by S&V, i.e. dissolving the trust & reconstituting it. 4) B in a bare trust has a claim to the income from property under trust & is taxed as an absolute owner (Commissioner of Stamp Duties v Livingstone) 5) Nolan: proprietary interest is a negative one - B has a right to exclude others, priority over creditors in insolvency & benefit from accrue in value to property under trust, which are indicative of ownership 6) Penner- B has an indirect right in rem which he can assert through A 7) Argument against? where is the proprietary interest in DT & mere powers of appointment?
i. Collectively, Bs can theoretically enforce but separately don't have an interest in the property under trust until T exercises his discretion/power of appointment to allocate the property - ii. Lord Reid in Gartside v IRC: 2 or more people can't have the same interest in the property unless they hold it jointly & in common + they're in competition w/each other
+ what each gets is his own.
= Re DT: b/f T allocates the property to various objects, at which point they acquire individual interest, they could be viewed as a group holding beneficial title
? Rejected by Lord Reid in Gartside but could still be supported by S&V rule. 8) Traditionally, main features of proprietary interests are these: i. Capable of being asserted against TPs ii. Gives priority in insolvency Previously, B could claim only against T for breach of duty but gradually acquired additional rights: a. can claim against TP who received trust property knowing or w/reason to know it was derived from breach of trust b. where T is declared bankrupt, B has priority interest It's true that B can't have a claim directly against TP who interferes w/property held under trust - commentators have used this to argue B's interest isn't proprietary ? see 2.
2. Duty View: a trust can be defined as a duty to B owed in relation to specific rights
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