An Application of the Law on Trusts

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A trust is an equitable obligation, binding a person (called a trustee) to deal with property owned by him (called trust property, being distinguished from his private property) for the benefit of persons (called beneficiaries or, in old cases, cestuis que trust), of whom he may himself be one, and any one of whom may enforce the obligation [or for a charitable purpose, which may be enforced at the instance of the Attorney-General, or for some other purpose permitted by law though unenforceable (Hayton, Matthews & Mitchell , 2010, p. 2). In determining the claims of the parties, some time-tested principles of Equity and Trust will be examined.

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  1. ISSUE 1

Was there an intention to create trusts for the benefits of George and Jayne on the part of Barry? Intention to create a trust is crucial for the validity of any trust. The court said in Twinsectra Ltd v Yardley (2002): A settlor must, of course, possess the necessary intention to create a trust, but his subjective intentions are irrelevant. If he enters into arrangements which have the effect of creating a trust, it is not necessary that he should appreciate that they do so; it is sufficient that he intends to enter into them(p. 71) Furthermore, an express trust is invalid until it is completely constituted. There are two ways by which a valid express trust may be completely constituted: by an effective declaration of oneself as trustee or by transfer of properties to trustees (Davies & Virgo, 2013). In effect, Turner LJ in Milroy v Lord (1862) stated that: Settlor must have done everything which according to the nature of the property comprised in the settlement was necessary to be done in order to render the settlement binding upon him. He may do this by: • Actually transferring the property to the persons for whom he intends to provide • If he transfers it to a trustee for the purposes of a settlement • Declares that he holds it on trust (p. 264). Either of the two methods of constituting trust must be completely satisfied for the trust to be effective. According to Davies & Virgo (2013), where the settlor declares himself a trustee of the property, the issue of transfer becomes irrelevant, as the legal title already vests in him. The only issue which would be left to the courts to clarify is if there was a valid declaration of trust. They further opined that for a declaration of trust to be valid, there must be certainty of the settlor’s intention to create a trust. Indeed, this is also true for an express trust constituted by transfer to trustees. Lord Eldon in Wright v.

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