Equity and Law of Trusts

Equity
And
Law of Trusts

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
The first category of a charitable purpose is the relief of poverty..........................................3
The case law Royal Brunei Airlines v Tan [1995] and the term Dishonest Assistance.........5
Secret Trust and its Necessary Elements................................................................................8
CONCLUSION................................................................................................................................9
REFERNCES.................................................................................................................................10

INTRODUCTION
The English Legal System formulates the rules on the basis of quit which essentially means
fairness. Whereas, Trust Law is established in order to regulate the situations where a person
place its trusts on other with an aim to look after their matters. The law of trusts act as
supplementary to the law of property, to regulate the situations where a person holds legal title to
a property and the courts decides whether it is fair, just and equitable1.
The trust is considered as legal relationship which is created by the settlor when the assets
are placed under the control of a trustee, who is required to manage the trust in benefit of a
beneficiary or for specified purpose formed. The key characteristics is that it permits the
separation of ownership and beneficial interest of the property. Under the law the trustee
becomes the owner of the property and it is expected by the beneficiaries that, the trustees must
manage the trust property for their benefit. The report examines the charity in England and
Wales which aims for public benefit including the relief of poverty. The report also examines the
term ‘dishonest assistance’ and the elements necessary for a secret trust.
MAIN BODY
The first category of a charitable purpose is the relief of poverty
The organisation in order to be a charity in England and Wales, must have charitable aims
which are for the public benefit. The Charities Act 2006 came into effect on 1st April 2008with
the requirement of public benefit. In accordance with the law the Charity Commission has
published statutory guidance and further analysis of the law on the requirement of public
benefit2. The law focuses on the following points which has introduced from the new legislation.
 The requirement of trust who aims to have objectives for the relief of poverty,
advancement of education, religion in order to show that there exists a public benefit, as
per Section 3 (2) of the Act
 Cases related to poor relations and poor employees.
 The effect of new legislation on fee- charging charities.
1Steve Evans, 'Graham Virgo,The Principles Of Equity And Trustsphilip H. Pettit,Equity And The Law Of Trusts
Steve Evans' (2020) 47 The Law Teacher.
2 Michael A Haley and Angela Sydenham, Nutshells Equity & Trusts (2020).

As stated that in the act that charitable purpose is the relief of poverty, according to the
Lord McNaughten the requirements which discussed above are prima facie charitable. There
are no particular definition for poverty as problems arising from it are multi- dimensional and
cumulative. The problem of poverty not only affects individuals but also to the communities.
The effect might be for short term or long term. The courts in the past has defined the
poverty by referring it as financial hardship or lack of material things. For a charity in
England and Wakes people in poverty is meant as households living on 60 percent of income
which has shorten in unacceptable way. It also includes people who after working hard still
fall under this category and qualified for assistance from a poverty charity irrespective of
their eligibility for state benefits.
Providing financial assistance to people who lack money is not only relief from poverty
but is a complex issue which is dependent on the socio- economic factors3. The Charity
Commission determines that the charities aims to prevent or relief poverty by addressing
both the causes i.e. prevention of poverty as well as the consequences of poverty. The term
‘people in poverty’ does not mean people lacking basic needs or extremely poor, but also
includes who are unable to satisfy basic need without assistance. The courts have avoided in
setting the criteria for poverty though it may have stated in some cases. Thus, the term in
short refers to as the people who lack basic necessity or quasi- necessity, which by majority
of population is regarded as modest.
The term financial hardship is sometimes used interchangeably with the term ‘poverty’
and thus, it also provides same requirement as poverty to charities concerned. The charity is
qualified with an aim to provide relief of those who are needy by the reason of financial
hardship. Further not everyone who is in need due to financial hardship is termed as poor but
it still be charitable in order to relieve financial hardship. In most cases the Charity
Commission treat the relief of poverty and relief of financial hardship in similar way. Thus, it
is likely to be charitable to relieve when a person is unable to provide with the resources and
basic needs either for short term or long term. For example: a person who owns house may
be rich from its assets but his sufficient income might led him experience temporary financial
hardship.
3 Katharine Davies, Susan Farran and Susan Farran, Equity & Trusts (2020).