Law and Trust: Role of Equity and Principles of Equity in English Legal Systems

This essay explores the creation of trust, the role of equity, and principles of equity in English legal systems. It discusses the concept of trust and its implications in contracts, focusing on the role of equity in securing rights and interests of parties involved. The essay also examines different types of remedies provided by equity, such as rescission, specific performance, and contract reformation. Additionally, it discusses the creation of trust through express and implied terms, as well as the rules governing charitable and discretionary trusts.

LAW AND TRUST

Table of Contents
INTRODUCTION...........................................................................................................................3
CREATION OF TRUST..................................................................................................................3
CONCLUSION................................................................................................................................9

INTRODUCTION
Trust refer to legal relationship which is carried by the both the partiers during entering
into any relationship. In respect of contract, this is implied in relation to transferring any property
depending upon certain condition and also the other party to whom the activity of the transfer is
committed is obliged to perform such duty in right manner1. Thus, trust is imposed by the settlor
who refers to the owner of the property transfer the right to the settler to maintain trust in the
contract. Present essay is based upon the topic related to the trust and also the role of equity and
principles of equity as per the English legal systems.
CREATION OF TRUST
Equity concept come from the 13th century in which the remedies which is given to
parties are to be suggested by the king regarding getting fair decisions. Thus, after few decades
the equity is developed by the court of chancery which is relevant to the common law
administration. As before parties not agree to adopt any new laws to get fair decision, they prefer
the judgment through common law. This states that by referring cases and decision from the
previous cases. Thus, from such perspective the equity name is given which makes it differ from
the common law. Trust was first invented in 12th century under the jurisdiction raised by the
kings of the England. The express trust are created in perspective of four elements such as
capacity, certainty, formative and constitution. Capacity is to be carried by the settlor regarding
maintaining trust in respect of presenting the dealing at first place. Certainty is determined as the
chances or intention of creating the trust. It can be in terms of beneficiaries as well. In respect of
constitution, it refers to valid dealing of property. In relation to the formality, it refers to using
different languages to make the dealing valid. Through these four aspects, the trust are expressly
created.
It is necessary that the trust must be developed between the parties, individual or any
other person such as beneficiaries to whom the business are expanding in longer way. Thus, in
such aspects trust mainly carries different perspective and also taxes imposed on trust are also
different.
1 Graham, Toby, and Thomas Beasley. "Trust the State: the relevance of principles of
public law in trust law and practice." Trusts & Trustees 25, no. 8 (2019): 841-848.

In context of examining the elasticity in trust, it mainly fluctuates depending upon the
nature of the task or activity in which the trust is required. Thus, in respect of institute of great
elasticity of trust, resulting in bringing usefulness regarding choosing the best method to build
trust among them. As the decision are equitable only if the parties build trust among each other.
In respect of the development of trust in equity, it is defined as the rights, interest and other types
of remedies which is given by the courts to the parties in relation to securing their rights
regarding dealing in any transaction.
It is clear that although equity started life as mere supplement to the common law it
developed into a separate system. Equity was administered by the Court of Chancery, which
were separate from the common law courts. Judicature Act refers to the series of the act of the
parliament which is mainly imposed in relation to reorganizing the English court system and also
managing the judicial function in respect of providing fair decision. The supreme court of
Judicature Act 1873 s 25 (11) provided that in case of conflict between the rules of equity and
the rules of the common law, equity shall prevail. (Now the senior court Act 1981 s 49). The
solution which is provided regarding carrying the supreme court is that they administer the case
of both law and equity. The main role of undertaking this act is to make the pleading activities
easier.
Thus, in simple terms, equity refers to the principles of fairness or equality which is maintained
by the courts regarding dealing in any matters or providing justice to parties. This concept is
mainly undertaken in relation to the conflict arise between any of the parties and the matters are
refereed to under the common law or statute law2. Generally the matters in which the issues of
trust are undertaken is relating to the civil law. Thus, it is examined that trust and equity are
focusing on bringing balancing between the parties in respect of legal system. As trust is to be
maintained between the settlor and settlee regarding transferring the title to the property but in
respect of equity, it is undertaken in respect of taking fair and equitable decision regarding
securing the rights and interest of the person.
The main principles of equity is relating to carrying the rights and liabilities of the parties
to be treated equally. As in relation to the tile in property, both the parties carry the equal right
2 Henderson, J., H. Ciesielczuk, S. Nelson, and M. Wilks. "Point prevalence study
determining the inpatient rate of carbapenemase-producing organisms at a large NHS trust in the
UK." (2020).

and thus, the decision is to be given according to the said norms whether the matter is of express
or implied contract. The transfers of property or any rights refers to giving liability to other
parties to avail the benefits which arises through using such title3. As both the parties carry the
equivalent right on the property but in respect of breach committed from any side resulting in
using the equitable remedy. This is such remedy which is granted by the courts if the parties are
not satisfied with getting any type of monetary values or compensation for the losses incurred. In
these aspects, it carries various types of remedies such as in case of rescission, in this the
disputes are resoled through re-writing the contract so that both the parties enter into the new
contract to maintain the equity in title of property.
This is mainly undertaken in relation to facing breach in exiting contract. The another
remedy which is applied by the court is relating to the specific performances in this the other
party who commit breach are forced to complete the contract with the said terms. As this is
mainly demanded by the parties in respect of securing their rights in contract4. The remedy
relating to contract reformation is stated as reforming the exiting contract in clear terms. This is
mainly initiated in relation to undertaking the matters related to mistaken or misrepresentation in
any terms of contract. In context of restitution remedy, this is mainly assigned in relation to
award which is given by defendant to plaintiff regarding occurring any damages which affects
the right of the plaintiff.
In respect of supporting the case study with the rescission remedy, this is explains
through the case study of the Leaf V International Galleries [1950] 2 KB 86, as the issues is
raised regarding selling the painting by the name of the artist Constable. The facts which the
claimant came across after 5 years, and he filed the suit regarding facing misrepresentation or
mistake during recognizing the facts of painting5. As the claimant suit is accepted but the facts is
that the contract is entered for the particular time period and during filling the claims the time is
3 Mante, Joseph. "Mutual trust and co-operation under NEC 3&4: a fresh
perspective." Construction law journal 34, no. 4 (2018).
4 Shah, Rupesh, David Murphy, and Malcolm McIntosh, eds. Something to believe in:
creating trust and hope in organisations: stories of transparency, accountability and
governance. Routledge, 2017.
5 Leaf v International Galleries – 1950. 2020. Online. Available through:
<https://www.lawteacher.net/cases/leaf-v-international-galleries.php>.

lapsed for the contract. Thus, the right for compensation is not incurred to the claimant in respect
of not representing the matters of mistaken.
The another case study which reflects the remedy of specific performances as in case of
Walters V Morgan [1861) 3DF & J 718, stated that before dealing in any property related to
providing lease to the land, claimant forced the defendant to sign the paper of lease before
mining the property. But after getting familiar with the actual value, defendant refuse to deal in
such property through which claimant files the suit under performing the specific performances.
But in this case, the judgement is given in favour of defendant as the claim relating to
misrepresentation not occur in silences.
In context of undertaking the matters related to trusts, it is created by the settlor who
carry the rights to transfer or deal in any property with the settler or to any beneficences which is
not necessary to be appointed by the courts. Thus, development of trust is needed in express term
regarding following the terms which is mentioned in written form. In terms of express, it refers
to the written contract which is made between the parties regarding taking ownership on
particular property6. Thus, in such manner trust are expressly created in respect of writing
agreement which is made between the parties on the bases of transferring the title of the property
for the benefits of the third person known as beneficiaries. Trust is necessary if one person
making contract with another person and thus if the condition are in written form i.e. in
expressed way, then it is legally bound upon the parties to follow it7. It explains with relevant
case study as Paul v Constance, there was an express trust found where it was clear that Mrs
Paul was intended to have rights against the money in the bank account at the same time as Mr
Constance8.
In implied trust, it is mainly related to the situation or any suggestion which is given by
parties but it is not necessary to be mentioned in contract or applied by parties to follow it. It
6 Rathbun, Brian Christopher. "Trust in International Relations." In The Oxford Handbook
of Social and Political Trust. 2018.
7 Rott, Peter, ed. Certification--Trust, Accountability, Liability. Vol. 16. Springer, 2019.
8 Paul v Constance. 2020. Online. Available through:
<https://www.studocu.com/en-nz/document/victoria-university-of-wellington/equity-trusts-and-
succession/summaries/paul-v-constance-detailed-case-brief-including-pageparagraph-
referencestopic-trusts/1739240/view>.

mainly carries two parts such as resulting trust, in this the property is transferred to another
person who not pay anything to enjoy the right on property9. But in case of constructive trust it is
relating to holding some property for another to secure the right of the property. In implied trust,
this is supported with the case of the Westdeutsche Landesbank Girozentrale v Islington
LBC [1996] UKHL 12, this case mainly reflects the matters related to the resulting trust in which
the property is transferred to another person who not pays anything. Thus, in this case the
agreement is made regarding the interest rate swap which indicates they are void under the terms
of law10.
In such manner the rule relating to charitable and discretionary trust are relating to the
securing the property through appointing the trustees. In respect of discretionary trust, this is
related to the giving the power to the trustees but the share is not fixed by the settlor regarding
enjoying the right on which proportionate ratio11. As trust deed is to be maintained regarding
dealing in manner and also adequate information is to be mentioned in the trust deed. This trust
is mainly adapted in respect of securing the assets of the person or also use as a tax evasion. In
these aspects, the rights is carried by the individual regarding choosing their beneficiary and also
the beneficiaries can be more than one12. The major rules which is imposed in these aspects is
relating to securing the money of the trustee in relation to facing financial issues or also dealing
in any such matters regarding safeguarding money when the beneficiary are undergoing through
divorce procedure. This is suggested with the case study of Mc Phail v Doulton [1970], in this
the issues is raised regarding not getting proper share of the money in respect of leasing the
9 Demetriades, George. "The creation of express, resulting and constructive trust in
banking transactions." Journal of Financial Crime 25, no. 2 (2018): 277-286.
10 . W E S T D E U T S C H E L A N D E S B A N K G I R O Z E N T R A L E V I S L I N G T O N
L O N D O N B O R O U G H C O U N C I L : H L 2 2 M A Y 1 9 9 6 . 2 0 2 0 . O n l i n e .
A v a i l a b l e t h r o u g h : < h t t p s : / / s w a r b . c o . u k / w e s t d e u t s c h e - l a n d e s b a n k -
g i r o z e n t r a l e - v - i s l i n g t o n - l o n d o n - b o r o u g h - c o u n c i l - h l - 2 2 - m a y - 1 9 9 6 / > .
11 Mathews, M., and K. Illes. "Leadership and Trust-How to Build a Trustworthy
Company." Kogan Page, 2016.
12 MacPherson, Alisdair DJ. "Floating Charges and Trust Property in Scots Law: A Tale of
Two Patrimonies?." Edinburgh Law Review 22, no. 1 (2018): 1-28.

property13. As the claimant which carries to be beneficiary in the property is not determined, the
trusts is valid and also effective to invest the funds in particular aspects.
In context of matter related to the charitable trust, this is examined as the part of the
discretionary trust. This trust is mainly imposed in respect of giving some amount of money in
the charity. Usually the parties mention these aspects in their will also, that after their death some
amount of money is to be distributed in the Charity or give to any charitable organization14. The
rule of applying this trust is that, it helps in getting more tax benefits as tax are less of the person
are dealing in any such activity relating to helping others15. This is supported with the case study
of the DINGLE V Turner and others: HL 16 FEB 1972, in this case the property of the Dingle &
co. is given on charity to manage the needs of their employees working in their company16. Thus,
it the judgement of court also stated that the property which is gifted refers to the charity and also
liability is given to person to hold such property in respect of maintaining the charitable trust.
Thus, it is concluded that trust law mainly carries the fiduciary relationship between the
parties regarding undertaking the matter relating to secure dealing of property or any rights. As
law is imposed in respect of providing security to parties regarding facing any breach in respect
of mistaken or misrepresentation in dealing in any such matters. In respect of argumentation and
structure of the trust is examined it mainly related to tracking the data and origin regarding
undertaking or building the trust in dealing with any property. Thus, trust refers to formal
transfers of any property who majorly enjoys the benefits of carrying the trust in better
perspective.
13 . M c P h a i l v D o u l t o n . 2 0 2 0 . O n l i n e . A v a i l a b l e t h r o u g h :
< h t t p s : / / w w w . l a w t e a c h e r . n e t / f r e e - l a w - e s s a y s / e q u i t y - l a w / m c p h a i l - v -
d o u l t o n . p h p > .
14 Mulgan, Geoff. "A machine intelligence commission for the UK: how to grow informed
public trust and maximise the positive impact of smart machines." Nesta, February (2016).
15 Kroeger, Frens. "Facework: creating trust in systems, institutions and
organisations." Cambridge Journal of Economics 41, no. 2 (2017): 487-514.
16 . D I N G L E V T U R N E R A N D O T H E R S : H L 1 6 F E B 1 9 7 2 . 2 0 2 0 . O n l i n e .
A v a i l a b l e t h r o u g h : < h t t p s : / / s w a r b . c o . u k / d i n g l e - v - t u r n e r - a n d - o t h e r s - h l - 1 6 -
f e b - 1 9 7 2 / > .

CONCLUSION
From the above study, it is concluded that trust and law are interlinked with each other as
law is mainly designed to protect the right of the parties and trust build the fiduciary relationship
between them. Thus, in such manner it helps the settlor and settee to transfer and enjoy the right
on the property, and they are legally bound to follow it. It is necessary that trust is to be
maintained between the parties regarding entering into any contract. This refers to bringing
equity in respect of getting fair decisions in respect of facing issues regarding committing breach
or infringing any of the right between any of the parties.