Topic 1 - Trust, Definition and Classification Flashcards
(12 cards)
Tomlinson v Gill
Lord Hardwicke decided that a third person is entitled to sue if there can be spelt out of the contract an intention by one of the parties to contract as trustee for him, even though nothing was said about any trust in the contract, and there was no trust fund to be administered.
Adeniji v Probate Registrar
The applicant is an executor of the estate of Adefisayo Famoriyo. He applied to the Probate Registrar to have his executorship discharged being that he can no longer manage the said property in the Will. The Probate Registrar informed him that the procedure he has adopted is defective, and that the proper procedure is to revoke the probate grant. The applicant opined that the Trustee Law by virtue of sections 2 and 26(1) allows him to be discharged from the executorship. ⦿ ISSUE(S) & RESOLUTION [CASE: STRUCK-OUT] 1. Whether the Applicant can be discharged from the executorship? RULING: i. The court ruled that the proper procedure for the applicant is via the revocation of the grant of probate. That is: he should apply for the revocation of the grant of probate. The court further held that: the position (with duties) of an executor is not on all fours with a trustee, and so sections 2 (which defines that an executor could be referred to as a trustee where the context admits) & 26(1) (which is of the effect that a trustee could be discharged from his trust object) is not applicable to the applicant and hence the applicant cannot seek a remedy under it.
Lister v Stubbs
Lister & Co, a silk-spinning, dyeing, and manufacturing company, employed Stubbs as a foreman dyer.
Stubbs was entrusted with purchasing materials for the company and, unbeknownst to Lister & Co, received significant commissions from Varley & Co, a supplier.
Between September 1881 and March 1890, Stubbs received £5541 5s. 1d in commissions, which he partially invested in real estate and other ventures.
Lister v Stubbs - secret profits - fiduciary duty - lister v stubbs overruled - law of agency
Upon discovering these secret profits, Lister & Co sought to recover the funds, claiming that the money paid to Stubbs rightfully belonged to them.
They moved for an interlocutory injunction to restrain Stubbs from dealing with the invested real estate and for an order directing him to bring the other investments and cash into court.
Judgment in Lister v Stubbs
The Court of Appeal affirmed the judgment of Stirling J., ruling against Lister & Co.
The court held that the relationship between Stubbs and Lister & Co was that of debtor and creditor, not trustee and cestui que trust. Therefore, the plaintiffs were not entitled to the order they sought.
The court concluded that the secret profits received by Stubbs could not be treated as the property of Lister & Co until a judgment or decree established such a claim.
The court also rejected the notion that Stubbs was under an obligation to provide security for the alleged debt until it was established by judgment or decree.
Reason for the Decision in Lister v Stubbs
The decision was predicated on the legal distinction between funds held in a fiduciary capacity and those obtained as a result of a corrupt bargain.
The court noted that if Stubbs had received the funds directly from Lister & Co to be applied for a specific purpose, he would have received them in a fiduciary capacity.
However, since the funds came from a third party (Varley & Co) as a result of a corrupt bargain and not from Lister & Co, they were not considered to be held in trust for Lister & Co.
The court’s reasoning was influenced by previous cases, notably Morison v Thompson and Metropolitan Bank v Heiron, which dealt with similar issues of secret profits and fiduciary relationships.
The court maintained that while Stubbs was liable to account for the profits made in the course of his employment, this did not automatically make the funds Lister & Co’s property.
It was emphasised that the secret profits became a debt owed by Stubbs to Lister & Co due to the corrupt nature of the transactions, but not property belonging to Lister & Co.
The court was wary of setting a precedent that would allow employers to claim ownership of all profits made by employees in the course of their employment, regardless of whether those profits were obtained legally or through corrupt practices.
Burrough v Philcox
🧵 Facts (TL;DR version):
A guy named George Burrough made a will. He said, “I want my property to go to my two kids (a son and a daughter).” But then he added: if they die without children, then the survivor (whichever of the two kids lives longer) should choose who gets the rest of the estate from among their relatives.
Turns out, both kids died without kids, and the surviving one didn’t actually name anyone to inherit. Oops.
🧠 Legal Issue:
Was this just a power to distribute the estate (totally optional), or was it actually a trust (a legal duty to do it)?
🧑⚖️ Decision:
The court said, “This ain’t just a power. It’s a trust.”
Even though the wording made it look discretionary, the intention of the will-maker was clear: he wanted the estate to be distributed, just not how exactly. So the court enforced the trust and stepped in to divide the property among eligible family members.
🧩 Why it matters:
This case sets a MAJOR precedent in equity — showing that if someone gives a ‘discretion’ but clearly wants something to be done, equity will treat it as a trust, not just a power.
It’s one of those situations where the court reads between the lines — not just what the person said, but what they meant. Intent matters!
M’Faddens v. Jenkyns (1863) 1 De GJ & S 497
🧵 FACT SUMMARY (the short, sharp, exam-ready version):
A man (let’s call him Mr. Jenkyns) wrote a letter to his daughter saying something like:
“I’ve set aside money for you in the hands of my banker. Consider it yours.”
The question was: Did this letter create a trust, or was it just some vague promise or future intention?
Importantly:
He didn’t complete a formal trust deed, or transfer the property formally.
🧠 The Legal Issue:
Can a letter like that — without a formal deed or transfer — create a valid trust?
⚖️ The Court Said:
Yes, this can be a valid trust.
Even though it wasn’t done with full formalities, the wording in the letter showed a clear intention to create an immediate trust — not just a future promise. And remember, in trust law, intention is everything.
So the daughter won. 🎉
Barclay Bank v Willowbrook International
A creditor charged to the bank a debt which was eue to be reapid and the court of appeal held that any repayment made by the debtor were held by the creditor on constructive trust for trhe bank.
Scruttons Ltd v Midland Silicones Ltd [1962] AC 446
Contract law – Shipping contracts – Damages
Facts
A drum filled with chemicals was shipped from the United States to the United Kingdom, as agreed by a bill of lading which included a clause which referenced the United States Carriage of Goods by Sea Act 1936. This clause limited the liability of the carrier to $500 for any damage that was caused to the goods. The carrier engaged stevedores to deal with the unloading of the cargo on arrival and unfortunately, while lowering the chemical drum onto a lorry, they negligently dropped the drum, causing almost $600 worth of damage. The respondents sued for the loss but the stevedores counter-claimed that their liability should be limited as per the clause stated in the contract.
Issue
The overriding issue for the court to consider, in this case, was whether the clause in the contract, which was inserted by the United States Carriage of Goods by Sea Act 1936, could be relied upon by the stevedores who had damaged the bottle. It was particularly important for the court to consider whether the stevedores were party to the contract between the buyer and seller.
Held
The court held that the clause could not be relied upon by the plaintiffs as the United States Carriage of Goods by Sea Act 1936 did not apply to stevedores. Moreover, the stevedores were not a party to the contract, by either express or implied terms, between the parties. They were, therefore, a stranger to the contract and the court relied upon the fundamental principle that a stranger cannot rely upon a contract they are not a party to.
Beswick v Beswick
Facts
PB was in poor health and agreed with the defendant, his nephew, that he would transfer the trade and good will of his coal business to him on the basis that the nephew employed him as a consultant for the rest of his life and paid him for this. The nephew also agreed to pay PBs wife after PB died for the rest of her life. She was not a party to the agreement. Upon the death of PB, the nephew paid PB’s wife once but then not again. PBs widow brought an action as administrator of PB’s estate and also in her personal capacity claiming for specific performance.
Issue
PB’s widow raised two interesting questions for the court to consider. The first was whether the widow, as an administrator to PB’s estate, could claim for an order of specific performance for PB’s nephew to honour his agreement. It was also important to see how the court weighed this claim alongside her claim on a personal level, which that she could claim as a party to the contract between her late husband and nephew.
Held
The court granted the widow an order of specific performance for the payment owed by PB’s nephew as an administrator to her husband’s estate. The court held that the damages would also not be limited due to the loss that had been caused to PB’s estate. However, the court found that PB’s widow could not claim under her personal capacity as she was a third party to the contract and was not a party to the original agreement.
Gregory & Parker v Williams
Pursuant to an equitable right, an exception to the doctrine of privity of contract is that a beneficiary can sue in lieu of the trustee even when the beneficiary is not a party to the agreement between the trustee and another party.
Case Summary
Parker who owed rent to Williams and owed Gregory some money, transferred his property to Williams on the understanding that the transfer would discharge his debt to Williams, and also that Williams would pay Parker’s debt to Gregory. Williams failed to pay Gregory, and both Gregory and Parker sued Williams.
Held:
Parker must be regarded as trustee for Gregory and that Gregory even though not privy to the contract derived equitable right to sue through the mediation of Parker’s agreement
Barclay Bank v Quistclose Investment
Quistclose advanced loan to a company for the specific purpose of paying out dividends on the company share. The loan was deposited with Barclays bank. Barclay bank being the major creditor of the company attempted to set up the money against the companies debt. The court held that since the loan was advanced for a specific purpose, it created a trust in favour of the Quistclose whose proprietary interest in the fund takes priority over Barclays bank interest.
Twinsectra v Yardley
The claimant advanced a loan to a borrower for the specific purpose of purchasing certain properties. The money was paid into the borrower’s solicitors account who used part of the money as directed for the purchase of some properties and the remaining part in breach of the loan agreement to use the money to purchase certain property. The court held that the advancement of the loan created a trust in favour of the creditor who may therefore, trace and recover the property the trust fund was used for in breach of the trust.
Re Sharpe
Part A who was B’s aunt, advanced loan to B for the purchase of a building. It was agreed that A would be entitled to live in the building for the rest of her life. B however became bankrupt. The court held that A does not have any beneficial interest in the building purchased since the loan did not create a trust in her benefit. The loan was advanced merely as a loan and was not advanced to be used for any specific purpose.
