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.”