CLASSIFICATION

OF TRUST
UEQ3612 EQUITY & TRUST I
Relationship between Trust and
Equity
The concept of use of land;

At Common Law and Equity, ownership of property including

land:

Legal ownership;
Equitable ownership;

Trust method of transferring property for the welfare of one

@ more beneficiaries;

Based on concept of a settlor entrusting property to a

trustee for the benefit of the beneficiary;
The Trust
Settlor
TRANSFERS PROPERTY TO

The Trustee
WHO BECOMES THE LEGAL OWNER OF THE
TRUST PROPERTY FOR THE BENEFIT OF

The Beneficiary
WHO IS THE EQUITABLE OWNER
How a trust may be created I
Intentionally
Will
Charity
Inter vivos trust
How a trust may be created II
By implication
Where A contributes money towards the purchase of
something and does not intend that contribution to be a gift,
when the item is sold, A expects to get a proportionate share
of the proceeds. This is called a resulting trust.
Where A leaves an asset to B in a will, but B dies before A.
The asset results back to As estate. This is also an example
of a resulting trust.
Where A has put him/herself in the position of being a
trustee, the courts will construe him/her as being a trustee.
This is called a constructive trust.
A specific type of constructive trust arises in the context of
the family home where a person will be construed as a
trustee if there is a common intention between the couple
that the house is to be shared and the beneficiary has relied
on that intention to their detriment.
How a trust may be created III
By operation of law
Co-owners of land are trustees Law of Property Act
1925 s34
The person who administers a deceased persons estate
is a trustee Administration of Estates Act 1925 s33.
The relationship of the parties
Settlor-Trustee A person may declare
themselves to be a trustee
Trustee-Beneficiary A person may be a trustee
e.g. of land for the benefit of themselves and
another person
Settlor Beneficiary e.g. a person who transfers
land from sole ownership to joint ownership
Cont.
Formalities:

The requirement of certainty:

Certainty of intention;
Certainty of subject matter;
Certainty of object;
Cont.
Certainty of intention:

Equity looks to intent rather than form, the law thus

demands no particular words to create a trust;

Trust can be created by any language which is clear

enough to show an intention to create it;

A mere appearance of wanting to benefit another is in

sufficient;
Cont.
Quah Eng Hock v Ang Hooi Kiam [2002] AMR
2300;
Re Adams and Kensington Vestry (1884) 27 Ch D
394;
Comiskey v Bowring-Hanbury [1905] AC 84;
Twinsectra Ltd v Yardley [2002] 2 All ER 377;
Cont.
Certainty of subject matter;

A trustee must be able to identify precisely the trust

property he is to hold on trust;

Re Kolbs Will Trust [1926] Ch 531;

Re Golay [1965} 2 All ER 660;
Cont.
Certainty of object;
A trust must be in favour of human beneficiaries or be
charitable in law;
Non-charitable purpose trusts are invalid unless they fall
into the limited exceptions:

A) discretionary trust;

The trustee ought to be able to determine with certainty

whether any given claimant is or is not within the description
of the relevant class;

McPhall v Doulton [1971] AC 42;4

Cont.
B) Fixed trust;
Halsburys Law of Malaysia explain:

If a trust requires division between all the members of a

class, for example in equal shares, it will be void for
uncertainty if it is not possible to provide a complete list of
the beneficiaries, as the size of each equal share cannot be
ascertained unless the precise number of the beneficiaries
is known. Where the equal division is of capital and is to
take place at some future date, it will be necessary at the
date of commencement of the trust to determine whether
the description of beneficiaries is void for uncertainty;
Mutual wills
The basis of mutual wills is two persons agree to make
wills on identical terms in favour each other with the
remainder to the same ultimate beneficiary;

The question is whether the said arrangement gives

rise to an implied or a resulting trust;

One option is to conclude that from the moment A dies

B holds all the combined properties on a constructive
trust basis and B consequently will not be permitted to
revoke his will or execute a codicil so as to interfere
with the terms of the trust;
Cont.
It is necessary to prove that there was an
agreement that none of the parties would revoke
the mutual will;

Re Oldham [1925] Ch 75;

Re Cleaver [1981] 1 WLR 939;
Islamic Law and Trust
Jual janji transaction:
A owns a land and borrows money from B. As part of the
arrangement, A transfers the land to B, and also as part of
the arrangement, A undertakes to pay B and B in turn
undertakes to return the land upon complete payment of
the amount taken. A who is commonly a farmer, continues
occupy and work the land in return for paying rent to B.
The arrangement thus involves no element of interest
since riba, as opposed to profit based calculations, is
forbidden under Islamic Law.
Cont.
There are some similarities between a jual janji
and the English Law pertaining to mortgage,
being a disposition of property to another as
security for a debt;

There is no provision in the NLC 1965 resembling

the English equity of redemption;
Cont.
Under this principle, the mortgagor has an
equitable interest or estate on the property
mortgaged, one feature of that being his or her
right to redeem the property even if the time
specified in the contract has passed;

In local context, jual janji cannot be regarded as a

security transaction and it falls to be considered
as a contractual arrangement;
Cont.
The right of mortgagor to have the land
transferred to him or her is a right in contract and
can be denied him or her account of a failure to
comply with the time for payment as may be
stipulated in the agreement;

Haji Abdul Rahman v Mohamed Hassan [1917]

AC 209;