Equity and Trusts –
Introduction & Historical
Origins (1)
Introduction
What is distinctive about trusts law that
makes study of its history more than
usually valuable?
Introduction
• aim here is to provide a sense of the
history rather than overview of it
• to suggest ways that equity and trusts
can be appreciated as part of the history
of ideas
Introduction
We are not considering the whole
history only parts of it – aim is to give a
sense of why thinking about the history
of the subject is important and
illuminating
Consider
What is distinctive about trusts law that
makes study of its history more than
usually valuable?
One answer
Equity and trusts is pre-eminently to do
with wealth – thus we might ask what
wealth is and what are the social
relationships that wealth entails relationships of power and influence for
example.
Click on link: Mr and Mrs Andrews
Mr and Mrs Andrews
The portrait was painted around 1750
soon after the marriage of Robert
Andrews of the Auberies and Frances
Carter of Ballingdon House, near
Sudbury
Mr and Mrs Andrews
The painting encapsulates a number of
themes in the law of trusts – themes
that will help us to situate trusts in a
social context
Mr and Mrs Andrews
What can we tell from the painting?
Let’s suppose that the land Mr Andrews
owned was subject to what was called a
strict settlement
Strict settlement
• Strict settlements allowed land to remain in
one family by descending through the eldest
male line (‘primogeniture’).
• Each time the eldest son inherited his interest
was reduced to a life interest and the land
was carried over for the next generation when
the process would then be repeated
Strict settlements
This allowed wealth to be held by
families such as the Andrews in the
same land in the same houses for many
centuries
Benefits
Settled land benefits:
First: intergenerational planning (really better
thought of as the control of their land).
Secondly: tax avoidance on transfers made at
death.
Also - provision made for family dependants
could be assured without breaking up the
estate (provision for income, fixed term
benefits or residency etc)
Law as a cultural artifact
Law can be seen as a cultural product
not merely made up of rules but also of
ideas –an aspect of what is called the
history of ideas.
Trusts Literature
Trusts are the subject of a considerable
literature - discussion of rules and
ideas has taken place not only in legal
literature but in imaginative literature
Such texts will help you to understand
the origins, development and possible
future forms of the subject
Sense and Sensibility
See extract from Sense and Sensibility
(1811) the novel by Jane Austen
Sense and Sensibility
Consider what the book tells you: – for
example – about the socio-economic
place of women in this society, why
they were not provided for within the
settlement, the impact of the settlement
on the estate, and broader questions
such as whether one generation should
be able to impose its wishes through
many generations?
A note of caution
Beware the character of trusts - the
study of trusts should really be some
other institutional setting than the family
Although the trust did not become the
central device in the development of the
market economy it has played and still
plays a fundamentally important role
The practical value of
history
A historical sense will help discourage
an unhelpful approach to study – that of
reading cases as if they are “out of time”
The practical value of
history
It will help you to situate key cases in policy
terms with changes in other areas of law –
despite appearances law is interconnected
Making connections by recognising dates and
names is also helpful in remembering and
making sense of what is going on in law
generally
History undervalued
Highly structured treatments can mask
that the law as we have it now is made
up of an uneven historical accretion
Statute and case law
Numbers and types of cases can create
a misleading impression
Litigation and social factors
Litigation is limited by social and
economic restraints - the will and the
means to go to court also by problems
of locus standi.
Patterns of litigation
Note: some questions that are important
remain unclear other questions that are
less important have been heavily
litigated.
Thus - thinking about trusts without
some sense of its history and of social
factors can lead to a distorted view
Historicism
“The belief that an adequate
understanding of the nature of any
phenomenon and an adequate
assessment of its value are to be
gained through considering it in terms of
the place which it occupied and the role
that it played within a process of
development.”
What does this mean?
Much law has been explained as if it
has followed a path of development or
change in a simple linear fashion constantly moving forwards towards
some ultimate objective and that the
stages of its development have each
brought it closer to that objective
Historicism
A problem - because the history of law as with any history – is demonstrably
nothing like this
Evolution
Law shares evolutionary characteristics
with nature:
historical periods of equilibrium with little
change punctuated by spasms and
jumps that led to wider change and also
“random mutations”
A “legal environment”
Law can be seen occupy a legal
“environment” – e.g. other jurisdictions
can be a stimulus to such change
An example in trusts law is/was the
debate over the “remedial trust”
A “legal environment”
Look for examples to cases like Barlow
Clowes International v Vaughan and the
approach of the judges in that case to
the issue of tracing among innocents
Some basics
The basic model
First trusts resulted from Crusades.
Crusaders transferred property to
someone they trusted to be managed
for the benefit of their families.
Aim was to protect property from the
rules of succession on death and from
taxation.
But a problem …
At common law the property had been
transferred and all rights now resided
with another.
If the crusader died his family had no
legal right to the property – there was
no contractual arrangement between
them and the friend holding the property
But a problem …
With no remedy at common law to
recover property given to a trusted
friend for safe keeping, how as the
problem resolved?
Common law
Added to this - the common law writ
system was chiefly only able to offer the
remedy of damages and became
restrictive and directs petitions to the
King unworkable – the Chancellor took
over this work
A solution
By 13th C the chancellor was offering
remedies to the type of situation
depicted above by enforcing obligations
undertaken by – for example – the
trusted family friend
A solution
The friend (the trustee) was deemed to
have an obligation to the family (the
beneficiaries) who now had personal
rights (personal because they were held
against the trustee) that could be
enforced according to the terms of the
agreement reached between the dead
man (the settlor) and the trustee
Character of the trust
emerges
From the very beginning the history of
the trusts is about protection
protection against family members
protection against outsiders to the
family protection against the state in the
form of taxation
protection against creditors
The basic model
A settlor creates a trust then appoints trustees
to administer the trust on the terms which the
settlor has determined on behalf of the
beneficiaries
Note though – variations to this basic scheme
although three entities in law: settlor /trustee/
beneficiary – the beneficiaries can include the
trustee(s) and the settlor for example
Maitland - Equity
“Of all the exploits of equity the largest and
most important is the invention and
development of the trust it is an institute of
great elasticity and generality as elastic, as
general as contract. This is perhaps the most
distinctive achievement of English lawyers it
seems to us almost essential to civilisation
and yet there is nothing like it in foreign law.”