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LAW OF TRUSTS

English TrustJapanese TrustChina’s Trust

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English Trust Pierre Le Paulle ; “The trust is the guardian angel of

Anglo-Saxon, accompanying him everywhere, impassively, from cradle to grave.

(Gerweyn Ll Griffiths The Guardian Angel Spreads Its Wings? Trusts and What They Bring to Legal Systems.)

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Developed from the concept of use to a more stable and established institution.

Used for variety of reasons. Uniquely British institution.

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4 Essential Elements of A trust

1) Trust property : the corpus or body 2) The trustee – the person or entity in

whom the corpus is entrusted. 3) Beneficiaries – the persons on whose

behalf the property is managed 4) The Deed or instructions the documents

which outlines the manner in which the trust property is to be dealt with on behalf of the beneficiaries

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1) Trust property : The corpus or body Specific property – land or personal property Lord Browne- Wilkinson In Westdeutche v

Islington London Borough Council [1996] 2 All ER 961 at 988

“In order to establish a trust there must be identifiable trust property”

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2) The trustee The person or entity in whom the

corpus is entrusted Trustees become owners at common

law and are given control of the property

Trust property need to be constituted in the hand of trustee

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3) Beneficiaries The person who is entitled to the trust

property. The settlor / trustee may be the

beneficiary or one of the beneficiaries.

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4) The Deed When a person created a trust through

trust instruments, he is known as settlor.

Sometimes, trust can be created verbally.

It can also be created in a will – the person who created the trust is known as testator

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Article 2 of the Hague Convention on the Law Applicable to Trusts On Their Recognition

(English Recognition of Trust Act 1987)

For the purpose of this Convention, the term ‘trust’ refers to the legal relationship created

–intervivos or on death- by a person, the settlor, when assets have been placed under the control

of a trustee for The benefit of a beneficiary or for specified purpose.

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A trust has the following characteristic;a) The assets constitute a separate fund and

are not part of the trustee’s own estateb) Title to the trust assets stands in the name of the

trustee or in the name of another person on behalf of the trustee;

c) The trustee has the power and the duty, in respect of which he is accountable, to manage, employ

or dispose of the assets in accordance with the terms of the trust and the special duties

imposed upon him by law

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Classification of Trust Many ways to categorize trust. Broadly classified into: Depends on the objectives of the trust.

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From the point of view of intent to create trust

a) Express or declaredb) Presumed or implied; or

c) Constructive trust

From point of view if the objects of the trust;

a) Private orb) Public or charitable

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From the point of view of thenature of the duties imposed

upon trustee a) Simple orb) Special

From the point of view of the form of declaration

of trusta) Executed or b) Executory

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TYPES OF TRUST

Private Trust Public Trust

Express Trust

Constructive

Resulting

Charitable

Non charitable

Offshore

Executed & ExecutoryCompletely Constituted & Incompletely Constituted

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Trust and other concept. Trust and Bailment Trust and Agency Trust and Contract Trust and Debt Trust and Power.

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TRUST AND BAILMENT

Limited to personal chattel All property

Bailee : no fiduciary duties Trustee : fiduciary duties

Bailor : Legal ownershipBailee: special property

Trustee: Legal ownershipBeneficiary : Legal Ownership

Unauthorised sale by bailee: no good title

Unauthorised sale by trustee: to bona fide purchaser : good title

Bailment: Goods are delivered to a bailee to he held for a particular purpose upon an express/implied conditionthat it will be redelivered to the bailor when the purpose

has been carried out

Bailment Trust

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TRUST AND AGENCY

Agency Trust

Personal right Proprietary right

Based on contractual relationship

Based on fiduciary relationship

Act according to business agency

Act according to the trust deed

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TRUST AND CONTRACT

Doctrine of Privity Can be enforced by beneficiary

Personal Remedy Proprietary RemedyTerms of contract can be varied

Terms can only be varied under certain ctc

Limitation Period for BOC Limitation Period for BOT

Contract TrustBased on agreement Consideration

Based on intention

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Japanese Trust Very different from UK : trust is a legal

medium for property management. In Japan : all property belongs to the

family : family estate. Properties were also donated for

religious purposes No clear and defined systematic type

of trust in Japan

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Property management Civil Code of Japan : based on the principles

of German private law It satisfied every needs for property

administration : from family law – to will implementation

No need for introduction of trust Concept of act of trust and ‘trust –like act

were referred to in some court rulings and discourse

Eg : mortgage-like contract ,a pension entitlement.

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Modern trust system First introduced from the middle of the Meiji

period Can be found in article 9 paragraph 4 of

Industrial Bank of Japan Act 1900 Later in Secured Bond Trust Act 1905 :

concept of trust was put to use for the first time

Introduced Trust Act 1922 in the Parliament

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China’s Trust Law Trust business has been in existence

for over 20 years. One of the weakest and least

regulated industries. In 2001, government took steps in

introducing new trust law

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China’s Trust Law Law of People’s Republic of China on

Trusts (“Trust Law”) Adopted on 28th April 2001 In force on 1st October 2001 8 years of hard work by various

government committees. Extensive survey was conducted on

trust law in many jurisdictions.

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Impact. Enhance China’s further economic

development with respect of many matters.Eg

Corporate Organization Preservation of overseas state assets Individual estate planning NGO –charitable trust.

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The trust Law closely follows the trust laws in Taiwan, Japan and Korea- Anglo-American law of trusts.

Embodied many principles found in the common law countries.

Certain unique principles which are inconsistent with Anglo- American law of trusts,

.

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Trust law has assimilated many principles in Anglo- American trust law

New principles to China Well drafted but China faces difficult

task in implementing it. It is a borrowed statute.