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Nature Of Beneficiary Interest Essat Notes

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Introduction

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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)

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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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