LLB270 Lecture Notes - Lecture 10: Andrew Flintoff, Specific Performance, Fiduciary
LECTURE 10 – INTRODUCTION TO EXPRESS TRUSTS & CHARITABLE TRUSTS:
What is a Trust?
DKLR Holding Co (No 2) Pty Ltd v Commissioners of Stamp Duties (NSW) [1980]:
‘The trustee … has at law all the rights of the absolute owner in fee simple, but
he is not free to use those rights for his own benefit in the way he could if no
trust existed. Equitable obligations require him to use them in some particular
way for the benefit of other persons.’
TYPES of trust?
EXPRESS TRUST – created intentionally by the settlor
Fixed v discretionary trusts:
Fixed – beneficiaries and their entitlements are known
Discretionary – trustees have discretion in regard to how to distribute trust
income/capital
oCreates a ‘class of beneficiaries’ (e.g all grandchildren)
Charitable trust – property is held by the trustee for a charitable trust – not for
a beneficiary
RESULTING TRUST – may arise where there is CLEAR INTENTION to create an express
trust (indicated by transfer of property) but the trust has NOT BEEN PROPERLY
CREATED
Trustee hold the property on trust for the settlor
CONSTRUCTIVE TRUST – imposed by a court where it would be unjust in equity for
the legal owner to retain beneficial ownership
‘BARE’ TRUST – trustee has no obligation other than holding a legal title
May convey title to the beneficiary on demand
ELEMENTS OF A TRUST:
DUAL OWNERSHIP of trust property
Trustee – holder of the legal interest
Beneficiary – equitable (beneficial) interest
CREATOR must be the SETTLOR (trust created in life) or TESTATOR (trust created by
will)
Creator and trustee may be the same person – ie where trust is created by
declaration
Creator and beneficiary may also be the same person, where there is multiple
beneficiaries – where a person creates a trust for their own benefit
TRUSTEE CANNOT BE THE BENEFICIARY if they are the SOLE BENEFICIARY
find more resources at oneclass.com
find more resources at oneclass.com
CREATION OF AN EXPRESS TRUST:
THREE CERTAINTIES:
Certainty of Intention:
Must be IMPERATIVE that the property is to be held on TRUST, cannot just
be a wish or hope that property is used in a certain way
oCannot be created with precatory words
No particular form of words is necessary
Doesn’t require an understand of trust law to create a trust – Re Armstrong
(dec’d) [1960]
Courts may INFER INTENTION – Korda v Australian Executor Trustees (SA)
Ltd (2015)
oLooking at language used in documents
oOral dealings
oCircumstances surrounding the relationship between the parties
Paul v Constance [1997]
oFacts –
Unsophisticated de facto couple
Deposited money and put it into his own account
She had authority to withdraw – he said ‘this money is as much
mine as it is yours’
oFinding – declaration of trust
Extrinsic evidence:
oDuring life – courts can consider extrinsic evidence in interpreting the
words creating the trust – Boranga v Flintoff (1997)
oWhether settlor can introduce evidence of their subjective intention:
Commissioner of Stamp Duties (Qld) v Jolliffe (1920) – opened a
bank account on trust, but later denied that it was on trust
Successful in matter
Suggest evidence can be considered
BUT High Court revisited the issue – Byrnes v Kendle (2011)
If language creating a trust is OBJECTIVELY CLEAR the settlor
CANNOT BRING EVIDENCE suggesting their own lack of
intention
Certainty of Subject Matter:
Must be CLEARLY IDENTIFIABLE:
oCan relate to the nature and the amount of property
oWords creating a trust for ‘the bulk of my estate’ are NOT
SUFFICIENTLY CLEAR – Palmer v Simmunds (1854)
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Lecture 10 introduction to express trusts & charitable trusts: Dklr holding co (no 2) pty ltd v commissioners of stamp duties (nsw) [1980]: The trustee has at law all the rights of the absolute owner in fee simple, but he is not free to use those rights for his own benefit in the way he could if no trust existed. Equitable obligations require him to use them in some particular way for the benefit of other persons. ". Express trust created intentionally by the settlor. Fixed beneficiaries and their entitlements are known. Discretionary trustees have discretion in regard to how to distribute trust income/capital: creates a class of beneficiaries" (e. g all grandchildren) Charitable trust property is held by the trustee for a charitable trust not for a beneficiary. Resulting trust may arise where there is clear intention to create an express trust (indicated by transfer of property) but the trust has not been properly.
