A more recent version of these Nature Of A Beneficial Interest notes – written by Oxford students – is available here.
The following is a more accessble plain text extract of the PDF sample above, taken from our Trusts and Equity Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
THE NATURE OF TRUSTS There is significant debate as to the nature of rights under a trust, primarily, whether those rights held by a beneficiary are personal or proprietary.
? If personal, interest is related to the individual and only exercisable against the parties of the trust.
? If proprietary, the interest is related to the property / subject matter of the trust, and therefore exercisable against all but the legal owner (trustee). A beneficiary definitely holds personal rights (illustrated by rights against the trustee), the question is whether there is more than this. The ultimate test of the nature of a right is exigibility against third parties
?????B's rights have some exigibility against third parties --- can sue if trust property is transferred to a third party, but not if it's damaged by one (although B can join with T to sue: Shell). B's interest also seems proprietary in that it defeats the interest of D's unsecured creditors in insolvency proceedings
?????The obligation stays attached to the property where it is transferred (suggesting a proprietary nature) to a third party, except where: (i) T is authorised to make the transfer; (ii) the recipient is a bona fide purchaser for value without notice. o The bona fide purchaser exception is interesting: here B has no claim against a TP, only a personal claim against T for breach of trust. Ultimately this rule operates to strike a balance between security of receipt and security of title. Given that trusts are private and can't tell by looking at property that it is subject to trust, it is perhaps appropriate that the risk falls on B rather than an innocent bona fide purchaser.
?????B's right seems more than a personal right but not a complete property right. SUPPORT FOR A PERSONAL RIGHT APPROACH: B has no equitable interest under a will until the estate is administered: Before the estate is administered B under the will has a mere expectation of the property being distributed to them --- a personal right to ensure the estate is administered correctly, and not a proprietary right in the estate (a chose in action/ right to sue). If a third party misappropriates the property, B can sue on behalf of the estate, if the property is recovered, it is returned to the estate. Commissioner of Stamp Duties v Livingston :
? Facts: Testator left his estate to his wife. Following his death and while the estate was still being administered, his wife died intestate. Her estate was liable to pay tax if she had a beneficial interest in the property left to her by her husband.
? PC (Viscount Radcliffe): She did not have an interest because administration was not complete. On H's death full ownership passed to the executors and the wife acquired no proprietary interest. o "Whatever property came to the executor... came to him in full ownership without distinction between legal and equitable interests. The whole property was his. He held it
for the purpose of carrying out the functions and duties of administration, not for his own benefit... Certainly he was in a fiduciary position with regard to the assets ... and for certain purposes and in some aspects he was treated by the court as a trustee." o "At the date of W's death, therefore, there was no trust fund consisting of H's residuary estate in which she could be said to have any beneficial interest, because no such trust has as yet come into existence to affect the assets of his estate." My thoughts: although this might be authority for the proposition that it is possible to be a beneficiary without having a proprietary interest, Viscount Radcliffe states "no such trust has yet come into existence," until the administration is complete --- it might be better to see such a legatee as not having a beneficial interest at all because there is no trust to be a beneficiary of. Action for the declaration of the existence of a trust is personal In Webb the ECJ held an action by a beneficiary for the court to declare the existence of a trust in their favour is personal, not proprietary: Webb v Webb 
? Facts: Father gave son money to purchase a home in France. The home was conveyed into S's sole name. F used the home and bore incidental financial burdens of ownership. S denied F's beneficial entitlement, claiming the purchase money had been a gift. F began proceedings against S --- main issue was over jurisdiction (if F was seeking to assert a right in rem, the French courts would have exclusive jurisdiction under EU law).
? ECJ: "The father does not claim that he already enjoys rights directly relating to the property which are enforceable against the whole world, but seeks only to assert rights as against the son. Consequently, his action is not an action in rem within the meaning of article 16(1) of the Convention but an action in personam." Birks:
? What appears to have been decided is that every attempt by a beneficiary to compel a trustee to recognise a trust is to be regarded as an action in personam [because it's just trying to assert against a person]. However, he thinks the court should have declared it an action in rem, albeit outside the meaning of the EU Article (so as to give UK courts' jurisdiction).
? "A declaration does not create an interest. It states what is already the case," everything turned on whether F was a beneficiary under a trust, as such "can it in any way be said, in English law, that his claim was not principally an assertion of a proprietary interest?
No proprietary interest in discretionary trusts A discretionary trust contains a duty to distribution subject to a power of selection exercisable by the trustees amongst the objects. The object, therefore, has no proprietary interest --- he does not know if he will benefit until Ts have exercised their discretion. Gartside v IRC 
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