TRUSTS

07/12/23 1
 TRUSTS
A trust only arises where there is a
separation of the legal and beneficial
ownership of property, in other words
where a trustee holds property on trust for
beneficiaries or recognised purposes.
This trust relationship can be brought
about in two ways:

07/12/23 2
 TRUSTS
• Declaration of self as trustee:
• A trust will be created if the person who
holds the legal title to property effectively
declares himself trustee of it in favour of
specified beneficiaries. From the moment
of the declaration he will hold the property
on trust, and although he retains the legal
title, the beneficiaries will enjoy the
equitable interest in the property.
07/12/23 3
• Transfer of the property on trust to trustees:
• If the legal owner of property wishes to
subject it to a trust in favour of
beneficiaries, but does not wish to serve as
trustee himself, he can create a trust by
transferring it to someone else, requiring
them to hold it as trustee for the intended
beneficiaries.

07/12/23 4
 TRUSTS
• In such circumstances the original owner
ceases to have any interest in the property
and the transferee of the property receives
it as trustee subject to the trust obligations.
After the transfer has occurred, the
beneficiaries enjoy the equitable interest in
the property.

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 TRUSTS
One person holds the nominal title in the
property for the benefit of another person.
The holder of the legal title is the TRUSTEE
and the one who benefits is the
BENEFICIARY.
A trustee may himself be a beneficiary. The
creator of the trust is the SETTLOR.
The trust devise is used for many different
purposes, notably:
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 TRUSTS

(a) To enable people / persons who cannot

hold the legal title themselves in situations
where the settlor’s interest or the title
of property concerned is legal.

(b) To enable property to be used to benefit

persons in succession. That is called
settlement.

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 TRUSTS
(c) To enable two ( 2) or more persons to own
land as co-owners and they are trustees
to each other.

(d) To further charitable purposes.

(e) To avoid or minimise tax liability.

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 TRUSTS
The distinctive nature of a trust is the
duality of ownership, viz legal ownership
and equitable ownership.

Thus if land was conveyed by S to X in

trust for Y, X was the legal owner but
because of the trust created by S, Y was in
equity the beneficial owner entitled to enjoy
the property according to the terms of the
trust.

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 TRUSTS

Equitable rights or interests may be

classified into those, which arise under a
trust, and those which do not derive
under a trust. (e.g. easements, equitable
leases, mortgage)

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 Classifications of Trusts
Express Private Trusts

Created either by a trust instrument or by

will.

The SETTLOR creates the trust by

appointing a TRUSTEE who holds the
property for the benefit of the
BENEFICIARY.
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 Classifications of Trusts

Express Private Trusts Requirements –

the 3 certainties
(i) Certainty of intention
(ii) Certainty of subject-matter
(iii) Certainty of objects

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 TRUSTS
• Certainty of intention
• The essence of the requirement is that an
express trust will only arise if the owner of
the property can be shown to have
intended to subject it to a trust obligation.
• Precatory words – Although there is no
need for the settlor to use the technical
term “trust” to create a valid trust,

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 TRUSTS
• in earlier cases the question arose
whether the use of certain words would
automatically give rise to a trust. In older
authorities it was held that if a settlor or
testator used certain key words or
phrases, called ‘precatory words’ this
would create a trust.

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 TRUSTS
• For example, if a testator had expressed
his ‘confidence’, ‘desire’, ‘wish’, or ‘hope’
that a gift in his will be used in a particular
way this would be held to impose a trust on
the recipient of the gift.
• The difficulty with this approach is that such
words do not seem to impose any
obligation on the recipient of the property,
but merely express the wish of the
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 TRUSTS
• transferor or testator as to how he would
like to see the property used. They imply a
purely moral obligation and not the legally
enforceable mandatory obligation which is
the essential characteristic of a trust.
• Subsequently, this approach was rejected
and it was held that a trust would not be
created merely by the use of such

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 TRUSTS
• ‘precatory words’.
• Re Adams and Kensington Vestry (1884)
27 Ch D 394
• Gyasi v Quaigraine [1963] 2 GLR 161
• Sey v Sey [1963] 2 GLR 220

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 TRUSTS
• Certainty of subject matter
• A trust only exists if a separation of the
legal and equitable ownership of property
was brought about. Specific property must
therefore be identified which is intended to
be subject to the obligation. An imprecise
definition of the intended trust property will
render the trust invalid for uncertainty of
subject matter.
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 TRUSTS
• This could occur where:
• i. No specific property has been indicated;
• ii. The trust property has not been clearly
defined;
• iii. It is impossible to identify the trust
property;
• iv. The trust property is unascertained
property;
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 TRUSTS
• v. Future property
• Certainty of Objects
• With the exception of charitable trusts, a
trust will only be valid if it exists for the
benefit of identified legal persons who
possess the locus standi to enforce the
trust obligations, and for whom the
property is held.

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 TRUSTS
• The beneficiaries must be defined in such
a way that it is possible for the trustees, or
in the event of their default the court, to
know who they are.

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 Classifications of Trusts
cases
Cofie v Forson [1992] 1 GLR 312

Asante v University of Ghana [1972] 2

GLR 86
Sey v Sey [1963] 2 GLR 220

Gyasi v Quaigraine [1963] 2 GLR 161

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 Classifications of Trusts
Form of an Express Private Trust

Equity looks at the substance rather than

the form, and therefore does not prescribe
the substance.

Equity however requires a clear

expression of an interest to create a trust.
This can be expressed depending on the
nature of the interest subject to the trust
and the law required.
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 Classifications of Trusts
Form of an Express Private Trust

Where the subject matter is land however,

the law requires that the trust shall be in
writing, without this, no interest in the land
can be transferred.

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 Classifications of Trusts
Form of an Express Private Trust

A will containing a trust must comply with the

provisions of the Wills Act, 1971 (Act 360).

A trust created in a will must satisfy the three

certainties.

A trust created in respect of land must be

stamped and registered according to the
existing law.
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 Appointment of Trustees

The first trustees are appointed by the

settlor or there should be a provision in
the trust instrument as to how they
should be appointed. Otherwise, a court
will appoint trustees.
After a trust has been completely
constituted a settlor has no power to
appoint a trustee unless he expressly
reserves that power in a trust instrument.
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 Appointment of Trustees
In a will the same persons may be named
as executors and trustees, however
executors are different from trustees.
Any person capable of holding an interest
in land in Ghana is capable of being
appointed a trustee. However even
though an infant can hold land, he is not
capable of becoming a trustee.
Trustees hold the property as joint tenants
S. 14(3) NRCD 175.
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 Appointment of Trustees
Where one of several trustees dies, the
survivors continue as trustees and they and
their successors retain the same powers
and duties as the original trustees.

A trustee as a general rule cannot delegate

his duties to others. He may employ agents
– accountants, solicitors etc., who are paid
out of the trust fund.

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 Appointment of Trustees
However, he must continue to exercise
supervisory authority over them. They
must report to him in respect of their
assignments.

Quartey v Attorney-General [1968] 1

GLR 279. Can a public trustee be
appointed as the guardian of an infant
under a private trust?

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 POWERS OF A TRUSTEE
Eboe v Eboe [1961] 2 GLR 324

Number of Trustees
In Ghana there is no restriction on the
number of trustees. However, in practical
terms, a large number of trustees may find
it difficult to work together.

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 POWERS OF A TRUSTEE
Number of Trustees
Where a trust is created inter-vivos, a
maximum of 4 trustees is normally
recommended but a sole trustee is also not
desirable because of the opportunity it
offers for mal-administration and fraud.
If the trust is created in a will and the same
persons are executors and trustees, the
maximum number of such persons is 4.
See Sect. 77(1) of Administration of
Estates Act, 1961, Act 63.
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 Vesting of Trust Property
To completely constitute a trust, the trust
property must be vested in the trustee. The
vesting of the trust property however depends
on the nature of the trust property.

In the case of movable property this is done

by the delivery of the property to the trustee.
Where trust arises under a will and the
trustee is also executor, property becomes
vested in him automatically as soon as he
proves the will.

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 Vesting of Trust Property
Where the executor is different from the
trustee however, the executor after
successfully proving the Will must vest the
property subject to the trust in the trustee by
way of a VESTING ASSENT.
Where there are two or more trustees, the
settlor must convey the property to them as
joint tenants.
Quaye v Quarcoo [1991] 2 GLR 437

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 A TRUST FOR SALE

A trust for sale is a trust which directs the

trustees to sell the trust property, invest
the proceeds and hold the resulting fund
upon trusts declared by the settler. A trust
for sale treats the trust property as
potential money.
A trust is still a trust for sale even if the
trustees are required not to sell without
obtaining certain consents.

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 A TRUST FOR SALE

Re Herklots’ Will Trusts [1964] 2 AER 66

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 A TRUST FOR SALE

Thus the rights of the beneficiaries under

a trust for sale are considered as rights in
movable property as opposed to rights in
immovable property, therefore if the
beneficiaries have to transfer their
equitable interest under a trust for sale,
the transferee can only get an interest in
the proceeds of sale not in the trust
property.
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 Implied Trusts

i. Resulting trusts
ii. Constructive trusts
Resulting trusts arise from the presumed
unexpressed intentions of the settlor.
Constructive trusts arise by operation of
equity without regard to the intentions of
the parties.

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 Implied Trusts Resulting trusts
Resulting trusts may arise in any of the
following situations:
1. Where one person purchases property in
the name of another.
2. Where a settlement is made for a specific
purpose, which wholly fails.
3. Where an express trust is created but it
cannot take effect because the trust is not
properly declared or the beneficiaries are
unsettled.
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 Implied Trusts
4. Where one person is induced by agreement
to expend money on the property of
another without intending a loan or a gift.

5. Where spouses or unmarried couples

have jointly contributed to acquire property
in the name of one or both, with the
intention that they should co-own the
property.

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 Implied Trusts
Resulting trust Cases
Reindorf alias Sacker v Reindorf
[1974] 2 GLR 38
Harrison v Gray [1979] 1 GLR 330
Quist v George [1974] 1 GLR 1
Quartey v Armar [1971] 2 GLR 231
In re Wiredu (decd); Osei v Addai
[1982-83] 2 GLR 501

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 Implied Trusts
Resulting trust Cases
Cowcher v Cowcher [1972] 1 All ER 943;
[1972] 1 WLR 425
Re Gorman [1990] 1 All ER 717; [1990] 1
WLR 616
Akufo-Addo v Cathline [1992] 1 GLR 377
Sonboon Seo v Gateway Worship Centre
[2009] SCGLR 278

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 Implied Trusts
Cases
Resulting trust Cases
Kwantreng v Amassah [1962] 1 GLR
241
Ethelburga [W.A.] Ltd. v Lutterodt
[1962] 1 GLR 23
Westdeutsche Landesbank
Girozentrale v Council of the London
Borough of Islington [1996] 2 AER 961
Re Abbott [1900] 2 Ch 326

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 Implied Trusts
Presumption of Advancement
Cases
 Ussher v Darko [1977] 1 GLR 476
 Berchie-Badu v Berchie-Badu
[1987-88] 2 GLR 260
 Bennet v Bennet (1879) 10 Ch D 474
– no advancement between a mother and
child, but see Crown Prosecution Service v
Malik [2003] All ER 33

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 Implied Trusts
Presumption of Advancement
Cases
 Pilkington v IRC [1964] AC 612
 In re Fianko Akotuah (Decd); Fianko v
Djan [2007-2008] SCGLR 165

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 Constructive Trusts
A constructive trust is a trust which arises
independently of the intention of the parties
but it is imposed by equity because the
circumstances demand that the person
holding the title to the property should be
considered as a trustee. This trust usually
arises by operation of equity where a
fiduciary relationship exists.

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 Constructive Trusts

 A fiduciary or a person in a fiduciary

relationship is not permitted to profit from
his position. Therefore if such a person
obtains any valuable interest in the
property he is holding on trust, equity
decrees that he holds such an interest on
a constructive trust for the beneficiaries.
Re Biss [1903] 2 Ch 40

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 Constructive Trusts

In Carl-Zeiss Stiftung v Herbert Smith (No.

2) [1969] 2 Ch 276 at 300, it was stated by
Edmund Davies L.J. that:

“English law provides no clear and all-

embracing definition of a constructive trust.
Its boundaries have been left perhaps
deliberately vague, so as not to restrict the
court by technicalities in deciding what the
justice of a particular case may demand.”

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 Constructive Trusts
Cases
Saaka v Dahali [1984-86] 2 GLR 774
Dzidzienyo v Dzidzienyo [1962] 1 GLR
301
Ansah-Addo v Addo and Ansah-Addo
v Asante (Consolidated) [1972] 2 GLR
400
Yalley Jnr v Kell [1995-96] 1 GLR 91
Pettitt v Pettitt [1970] AC 777

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 Constructive Trusts
Cases
Gissing v Gissing [1971] AC 886
Cooke v Head [1972] 1 WLR 518
Eves v Eves [1975] 1 WLR 1338
Grant v Edwards [1986] Ch 638
Lloyds Bank v Rosset [1991] 1 AC 107
In re Koranteng (Decd); Addo v
Koranteng[2005-2006] SCGLR 1039

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 Constructive Trusts

A. Undue Influence
It is a rule of equity that a person who
obtains a manifest and unfair advantage as
a result of undue influence will be unable to
retain the benefit of the transaction in
question.

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 Constructive Trusts
This depends on whether there was a
relationship of trust and confidence
between the complainant and the
wrongdoer of such a nature that it is fair
to presume that the wrongdoer abused
that relationship in procuring the
complainant into entering into the
transaction, which he now seeks to have
set aside by the court.
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 Constructive Trusts
 Examples of such relationships are
solicitor and client, medical doctor and
patient, parent-child, trustee-beneficiary
and spiritual advisor-religious devotee.
As was said in Allcard v Skinner (1887)
36 Ch.D. 145 at page 183:
“the influence of one mind over
another is very subtle, and of all
influences religious influence is the most
dangerous and the most powerful”.
07/12/23 52
 Constructive Trusts

 The relationship between a husband

and wife does not fall into the category
above. However, it appears the same
principles are applicable to this type of
relationship as well as to all others where
there is an emotional relationship between
the parties involved.

07/12/23 53
 Constructive Trusts

B. The Principle that no Criminal may

benefit from his crime
It is a principle of public policy that a
criminal should not benefit from his
crime. Thus where the person acquires
property by theft or some other related
offence, the State can intervene and
prevent him from benefiting from his
crime.
07/12/23 54
 Constructive Trusts

Also if he acquired the property as the

result of an unlawful killing, he would not
be allowed to benefit. Any such
property would be deemed to be held in
trust and would not pass to the
wrongdoer or his successors.

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 Constructive Trusts
Cases
Re Sigsworth [1935] 1 Ch 89
Re Callaway [1956] Ch 559
Cleaver v Mutual Reserve Fund Life
Association [1892] 1 QB 147
Re K. (deceased) [1985] Ch 85. This case
considered the effect of one of two joint
tenants unlawfully killing the other. It was
held that the survivor acquired the entire
legal title to the property by virtue of the jus
accrescendi, but held that legal title as
constructive trustee for himself and the
representatives of his victim in equal shares.
07/12/23 56
 Constructive Trusts
• Mutual Wills (spouses etc make wills in
which they leave the same property to
each other or to the same beneficiaries).

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 DUTIES OF A TRUSTEE
i. To carry out the directions of the trust as
contained in the trust instrument.
ii. The trustees have a duty to invest the
trust property in proper securities.
Sometimes the trust instrument will
specify the securities in which the trust
property should be invested. In the
absence of such direction, the trustee
must invest in safe securities.
Speight v Gaunt (1883) App. Cas 1

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 DUTIES OF A TRUSTEE

iii. Trustees have a duty to keep account

and produce them to any beneficiary
when required.
iv. The beneficiaries under a trust are
entitled to inspect all title deeds and
documents relating to the trust and the
trustees must allow them to do so.

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 DUTIES OF A TRUSTEE

v. A trustee is obliged to make payments

of income and capital as they become
due and to make them to the proper
persons.

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 DUTIES OF A TRUSTEE

vi. Every trustee is expected to take an

active part in the administration of the
trust. A trustee who relaxes and
allows other trustees to run the trust,
may find himself equally liable, with
the active trustees, if the latter commit
a breach of trust.
Bahin v Hughes (1886) 31 Ch.D 390

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 DUTIES OF A TRUSTEE

vii. Trustees must act with unanimity.

They cannot act by majority when it
comes to the performance of a duty. If
a duty is imposed on the trustees, it
must be performed even if the majority
of them would prefer to do something
else. Trustees can act by majority only
if the trust instrument says so.

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 DUTIES OF A TRUSTEE
Re Butlin’s Settlement Trusts [1976] Ch
251.
A majority cannot bind a minority or the
trust estate, unless the trust instrument
empowers them to do so.
Luke v South Kensington Hotel Co. Ltd.
(1879) 11 ChD 121;
Re Mayo [1943] Ch 302
Larbi v Kuma [1987-88] 1 GLR 414
Kuma v Koi-Larbi [1991] 1 GLR 537

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 BREACH OF TRUST
Lord Herschell stated in Bray v Ford
[1896] AC 44 that a fiduciary cannot be
permitted to profit from his fiduciary
position (the “Profit Rule”) and a fiduciary
must not allow his personal interest to
prevail over his duty of loyalty to his
principal (the “Conflict Rule”). It is these
rules, which normally give rise to the
imposition of a constructive trust.

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 BREACH OF TRUST

 If a trustee fails to carry out the duties

imposed on him by the trust instrument,
by the rules of equity, he has committed a
breach of trust and is liable to make good
to the beneficiaries any loss to the trust
estate occasioned by the breach. The
liability of a trustee is personal and not
vicarious.

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 BREACH OF TRUST

However, a trustee cannot be made liable

for a breach committed before his
appointment. Similarly, after he has
retired from the trusteeship, a trustee is
nevertheless liable afterwards for
breaches committed during his term of
office, and his estate is liable after his
death. If he retired in order to facilitate a
breach, he is equally liable.

07/12/23 66
 BREACH OF TRUST
CASES
Head v Gould [1989] 2 Ch 250
Abotsi; [An Infant] In re; Kwao v
Nortey [1984-86] 1 GLR 144
Target Holdings Ltd. v Redferns [1996]
1 AC 421
Nestlé v National Westminster Bank
[1992] 1 WLR 1260
Swindle v Harrison [1997] 4 AER 705

07/12/23 67
 DEFENCES TO AN ACTION FOR
BREACH OF TRUST

i. Relief by court
ii. Limitation – under section 15 of the
Limitation Act, 1972 (NRCD 54)
iii. Acquiescence of a beneficiary
iv. Bankruptcy on the part of the trustee
v. Release or confirmation by beneficiary

07/12/23 68
 POSSIBLE REMEDIES TO AN
ACTION FOR BREACH OF
TRUST
i. The Imposition of a constructive trust
ii. An account of profits
iii. Equitable compensation
iv. An injunction
v. Damages in addition to or in substitution
for an injunction

07/12/23 69
 REMOVAL OF TRUSTEES
CASES

Re Armah-Kwantreng (decd);

Armah-Kwantreng v Armah-Kwantreng
[1968] 1 GLR 311

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 DEATH OF EXECUTOR

Re Yena (decd) [1960] 1 GLR 195

07/12/23 71
 GIFTS
A gift is a grant in which the grantor (donor)
expects no payment to be made by the
grantee (donee) and therefore asks for none.
Grant is similar to a sale. Therefore as in a
sale, the vendor-donor must be the owner of
the property, he must have the competence
to transfer it, and he must intend to do so.
A gift may be either perfect or imperfect.

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 Perfect Gifts

(i) Donor is the Owner of the property to `

be given
(ii) Donor expresses the intention to
make the gift
Kwantreng v Amassah [1962] 1 GLR 241
Sese v Sese [1984-86] 2 GLR 166
Boakye v Broni (1958) 3 WALR 475

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 Perfect Gifts

(iii) The subject matter of the gift must be

delivered to the donee during the life
time of the donor.
 Birch v Treasury Solicitor [1951] Ch 298;
[1950] 2 AER 1198

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 Perfect Gifts

In a gift, there are no covenants implied by

law. (Sec. 2 Explanation of implied
covenants) P. 508 of Green Book; Form 17
on a grant by one co-owner to the other.
Any covenants must be stated expressly in
the document.
(iv) Donee must accept the gift during the
lifetime of the donor by exercising right of
ownership of the subject matter of the gift.
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 Imperfect Gifts

A gift is imperfect if any of the conditions

stated above is lacking. Equity will not
perfect an imperfect gift except under the
following circumstances.
(i) Under the rule in Strong v Bird (1874)
LR 18 Eq 315
(ii) Under the doctrine of donatio mortis
causa
(iii) Proprietary estoppel
07/12/23 76
 Imperfect Gifts
The Rule in Strong v Bird
Where a donor makes an incomplete gift
inter vivos and appoints the donee as the
executor of his will, or in case of intestacy
the donee is appointed as administrator of
the donor’s estate, then the vesting of the
property,

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 Imperfect Gifts
The Rule in Strong v Bird
the subject matter of the purported gift in
the putative donee in his capacity as
executor or administrator will perfect the
gift, so long as the intentions to make the
gift continues until the death of the putative
donor.
Re Pink [1912] 1 Ch 498
Ralli’s Will Trust [1964] Ch 288; [1963] 3 All
ER 940
07/12/23 78
 Donatio Mortis Causa

A gift is made by the donor during his

lifetime to take effect after his death.
There are three main conditions, which
must be satisfied before a Donatio Mortis
Causa can be perfect.
(a) The gift must be made in
contemplation of death, and not
necessarily in expectation

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 Donatio Mortis Causa

(b) The subject matter of the gift must be

delivered to the donee;
(c) The circumstances of the gift must be
such as to indicate that the donor
intended to have his property back if he
desires to revoke the gift / survives.

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 Donatio Mortis Causa

The gift must be made when the donor is

suffering from a severe illness or is going on
a hazardous journey. It does not matter if
the death occurred from a cause different
from that contemplated.
• Wilkes v Allington [1931] 2 Ch 104.

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 Donatio Mortis Causa

The gift takes effect only when the donor

dies without having revoked it or having
recovered from the particular illness in
contemplation of which he makes the gift.
The donor perfects the gift.

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 Donatio Mortis Causa
Intention of the Donor
Donatio Mortis Causa must be made on
condition that it becomes complete only on
the donor’s death. It can therefore be
revoked at any time during the donor’s
lifetime.
In a Donatio Mortis Causa a present gift is
intended to take effect in the future on the
contemplated death of the donor. Until the
death of the donor, the donee’s title is
incomplete

07/12/23 83
 Donatio Mortis Causa
Intention of the Donor

A Donatio Mortis Causa is however not a

future gift. A gift under Donatio Mortis
Causa cannot be revoked by will (because
the property is already vested in the
donee). A will takes effect only after death
of testator.

07/12/23 84
 Donatio Mortis Causa
Delivery of the Subject Matter

In a Donatio Mortis Causa it is essential

that the property should be delivered to the
donee. The donor must hand over the
property itself or the means of giving
possession to the donee.
Re Cole [1964] Ch 175

07/12/23 85
 Donatio Mortis Causa
Delivery of the Subject Matter
Land can be the subject matter of a donatio
mortis causa.
Sen v Headley [1991] 2 AER 636

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 Delegation of Trusts

Delegation of Trusts
As a general rule, trustees cannot delegate
their duties, except in certain
circumstances e.g. purely administrative
duties, which they are not qualified to
perform.

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 PROPRIETARY ESTOPPEL
Where a donee has changed his position
for the worst and the donor or settlor tries
to put up the imperfection of the gift as an
excuse the donor will be estopped from
doing so.
Pascoe v Turner [1979] 1WLR 421
Quagraine v Adams [1981] GLR 599

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 CHARITABLE TRUSTS
It is not admitted by any
administration that it is meant to act as
a replacement for the welfare state.
Because of the many concessions
that are granted to charities, the tax
authorities strictly scrutinise each
application for acceptance as a charity
before granting the application.

07/12/23 89
 CHARITABLE TRUSTS
In addition, there are issues of public law
(or administrative law) which centre on the
equivocal nature of charities as institutions
aimed at providing good public works by
entities, which are not publicly accountable
in the way that the central or local
government are.

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 CHARITABLE TRUSTS
The problem is how should these bodies be
controlled? Somehow there is a perception
of widespread mismanagement and
possibly corruption in the charitable sector.

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 CHARITABLE TRUSTS

In the UK, the Charities Act of 1993

established the Charities Commission to
scrutinize and regulate the affairs of
charities more closely than before. Some
of the shortcomings which have been
identified include irregular keeping of
accounts and a lack of control in ensuring
that money was being applied as required
by the charities’ own purposes.
07/12/23 92
 CHARITABLE TRUSTS
The Law of Charities has its roots in the
Poor Law of 1530. The effect was to
regularize the provision of alms to the
poor. The penalties for unlicensed
begging and homelessness were
criminal punishments. In the 19th
century the new Poor Law continued to
deal with the issue of homelessness as
primarily a criminal matter.
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 CHARITABLE TRUSTS

Workhouses
Debtors’ prisons
Charles Dickens’ ‘Oliver Twist’ showed
the reality of the treatment of the poor by
the law.
Statute of Elizabeth 1601 (Charitable
Uses Act, 1601).

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 CHARITABLE TRUSTS

In order to constitute a valid express

private trust there must be certainty of
intention, subject matter and certainty of
objects. Where any of these 3 elements
are not present, the trust will fail and any
funds or property affected by the failure will
result back to the settlor.

07/12/23 95
 CHARITABLE TRUSTS

Charitable trusts, on the other hand are

normally referred to as valid purpose
trusts. This means that it is perfectly
possible to establish a trust for the
achievement of a purpose, provided that
the purpose in law is regarded as
charitable.

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 CHARITABLE TRUSTS

Unlike a private express trust where it is

necessary to have a beneficiary who
would enforce the terms of the trust, as
far as charities are concerned, it is not
important that there is no human
beneficiary capable of enforcing the trust
because the Attorney-General may take
action in respect of all charitable trusts on
behalf of the State.
07/12/23 97
 CHARITABLE TRUSTS

However, see Owusu v Agyei [1991] 2

GLR 493, on whether the beneficiaries
have capacity to bring an action in a case
of fraudulent appropriation of public trust
fund.
HELD – The appelants were competent
to bring the action.

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 CHARITABLE TRUSTS

When a trust is established or identified as

a valid charitable trusts, they are not
subject to certain aspects of the perpetuity
rule and may be of unlimited duration.
Charitable trusts also have a few additional
advantages over private express trust. For
example, charitable trusts are exempt from
taxes.

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 CHARITABLE TRUSTS

 Also, there are special rules applicable to the

failure of charitable trusts. This is referred to
as the cy-prés doctrine.
When the cy-prés doctrine is applied, it may
oust the normal rules of resulting trusts.
There is also a separate body of rules dealing
with the administration of charities and the
conduct of business by charitable trustees.

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 CHARITABLE TRUSTS
Because of the differences in legal status
and its attendant consequences, it is of
importance to be able to distinguish
between charitable purposes and non-
charitable purposes. The former will be
valid and enforceable even if the
beneficiaries are not certain or any of the
provisions of the trusts instrument cannot
be implemented.

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 CHARITABLE TRUSTS

If it is a private express trust, it will fail if

any of the 3 certainties are not present.
Although it is true to say that charitable
trusts are trusts for a purpose, the
common law provides a definition of
charitable trusts, which is designed to
ensure that there is some measure of
certainty of objects.

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 CHARITABLE TRUSTS

Subsequently, not every apparently

“beneficial purpose” is accorded
charitable trusts. Before a purpose trust
can be regarded as charitable it too must
fulfil a test of certainty of object.
Blair v Duncan [1902] AC 37
Commissioner of Income Tax v Pemsel
[1891] AC 531
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 CHARITABLE TRUSTS
The trusts, which have been recognized as
being for the benefit of the public are:
a) trust for the relief of poverty;
b) trust for the advancement of education;
c) trust for the advancement of religion; and
d) trust for other purposes beneficial to the
community.

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 CHARITABLE TRUSTS
Scottish Burial Reform and Cremation
Society Ltd v Glasgow City Corp [1968]
AC 138
This case establishes that for a trust to be
considered as charitable, it is not enough
simply that a purpose is beneficial to the
community; it must be one, which is
beneficial and which the law regards as
charitable.
07/12/23 105
 CHARITABLE TRUSTS
This is particularly important when
considering the 4th category of charity
referred to in Pemsel’s case because not
every purpose trust, which confers a
benefit on the community, will be
charitable.
Peggs v Lamb (1994) 2 WLR 1
Barralet v Attorney General [1980] 3
AER 918
07/12/23 106
 CHARITABLE TRUSTS
Incorporated Council of Law Reporting for
England and Wales v A-G [1972] Ch 73;
[1971] 3 AER 1029.
Neville Estates Ltd. v Madden [1962] Ch
832; [1961] 3 AER 769
IRC v Baddeley [1955] AC 572; [1955] 1
AER 525
Re Pinion [1965] Ch 85; [1964] 1 AER
890
07/12/23 107
 CHARITABLE TRUSTS

When it is said that the trust must be for

charitable purposes, it must be for the
public benefit. In other words, it must be
inherent in the purpose that it is beneficial
to the community. If it will be harmful to the
community at large or to the public interest,
it will not be allowed to operate as a charity.

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 CHARITABLE TRUSTS

 Also, most potential charitable purposes

must have a sufficient element of public
benefit in order to attain charitable status.
That is, the purpose, which is regarded as
beneficial, must not normally be confined to
such a small section of the population, or be
so limited by the stipulations of the testator,
as to deny an element of public participation
in the purpose.
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 CY-PRĖS DOCTRINE
 The cy-prés doctrine may become
applicable under the following situations:

1) Where it can be demonstrated that there

is a general charitable intention.
2) Where the purposes have been fulfilled
to a large extent.
3) Where the purposes cannot be carried
out as directed or within the spirit of the
gift.
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 CY-PRĖS DOCTRINE

4) Where the purpose provides a use for

only part of the gift.
5) Where the property can become usefully
applied for similar purposes.
6) Where the area of the original purpose is
no more.

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 CY-PRĖS DOCTRINE

7) Where the original purposes are

adequately provided for purposes of such
statutory services, or are harmful to the
community or useless to the community
or are no longer an effective use of the
property.
8) Where ab initio, it is impossible to carry
out the trust.
07/12/23 112
 CY-PRĖS DOCTRINE

9) Where initially it is possible, but with

the passage of time, it is no longer
practicable to carry it out.

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 DIFFERENCES BETWEEN
PRIVATE TRUSTS AND PUBLIC
CHARITABLE TRUSTS

1) Charitable trustees need not act

unanimously and the minority are bound
by the majority view.
Re Whiteley [1910] 1 Ch 600

07/12/23 114
 DIFFERENCES BETWEEN
PRIVATE TRUSTS AND PUBLIC
CHARITABLE TRUSTS

2) The number of charitable trustees who

may be vested with title to land is not
limited to four if the land is to be used for
charitable purposes.

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 DIFFERENCES BETWEEN
PRIVATE TRUSTS AND PUBLIC
CHARITABLE TRUSTS
3) The public nature of charities means that
charitable trustees may have a more
extensive duty to safeguard the trust
property than private trustees. However,
this will depend on the facts of each case.

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 DIFFERENCES BETWEEN
PRIVATE TRUSTS AND PUBLIC
CHARITABLE TRUSTS

4) Charitable trusts enjoy important fiscal

advantages, in that they are exempt from
certain forms of taxation, and donations
made to them attract tax advantages for
the donor and the charity. For example
in the UK, an amount of approximately
£600 million is waived each year by the
State in respect of charities.
07/12/23 117
 DIFFERENCES BETWEEN
PRIVATE TRUSTS AND PUBLIC
CHARITABLE TRUSTS

IRC v Guild [1992] 2 AC 310

IRC v McMullen [1981] AC 1
Re Macduff [1981] 2 Ch 451 – Any
purpose that excludes the poor cannot be
regarded as a charity.

07/12/23 118
 SUMMARY
• A trust is created by the transfer of
property to a trustee to hold for the benefit
of a beneficiary, or by a person who holds
property declaring himself trustee of
property for another person.
• The interests of beneficiaries came to be
enforceable against trustees through
applications to the Court of Chancery
during the 15th century.

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 SUMMARY
• Under the rule in Saunders v Vautier
(1841) 4 Beav 115, where trustees hold
property on trust for a beneficiary who is of
full age and absolutely entitled, the
beneficiary can call on the trustees to
transfer the legal estate to him, thus
ending the trust.

07/12/23 120
 SUMMARY
• A beneficiary is one who holds under a
trust.
• Equity acts in personam.
• Equity’s remedies are discretionary.
• An implied trust is one that arises from
what is inferred to have been the parties’
intention.
• A constructive trust is one imposed by the
court.
07/12/23 121
 TRUSTS

• QUESTIONS

• Discuss why in Ghana, an infant can

create a trust, but she/he cannot be a
trustee?
• What are some examples of constructive
trusts? Do they have any common
features?

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 BREACH OF TRUST

A trustee must not place herself/himself

in a position where her/his interest and
duty conflict. Discuss.
In what circumstances, if any, should a
fiduciary hold any unauthorised profit on
constructive trust for his or her principal?

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 BREACH OF TRUST

Discuss the scope and rationale for the

conflict of interest rules as it governs a
fiduciary’s personal profits, and the
remedies available to a principal or
beneficiary where the trustee is liable
under the rule.

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 CHARITABLE TRUSTS

With the aid of decided cases, state and

discuss the circumstances in which a
charitable gift may be applied cy-prés.

07/12/23 125
 END OF LECTURE ON
TRUSTS

07/12/23 126