7 December 2017
Callum Shields graduated with a first class LLB Law degree in July 2017. He is currently working in the IT Industry. His dissertation was supervised by Phil Lawton.

A settlor has a buffet when it comes to choosing the jurisdiction which governs the property he has placed in a purpose trust. Our courts will readily decide upon matters of law relating to these trusts. Unless of course, a settlor has the misfortune to have drafted his trust under domestic law. So why do our courts enforce foreign purpose trusts and not domestic ones? Why must a testator have to go through the pains of using foreign legal instruments, even if that merely means hopping over to Guernsey or even Scotland? The answer is surprisingly simple as any textbook would reveal, the beneficiary principle. However, very little is then provided to explain this principle or even the reasoning behind it. In one breath numerous commentators will state the beneficiary principle as sacrosanct to trust law, but then in another they will produce an innumerable number of exceptions. In regards to this there are three distinct positions in the literature all rooted in the justification that for a trust to be valid there must be some mechanism to enforce it. Baxendale-Walker holds the most radical view; that anyone can enforce as it is the courts prerogative. In this sense the litigator is merely bringing the misfeasance to the courts attention. David Hayton propagates the modern view that there needs to be an enforcer to enforce the trust, it is not solely the courts prerogative. Matthews on the other hand has argued for many years that only a beneficiary can enforce the trust as only a beneficiary has proprietary rights.

The orthodox view can be readily dispensed with on the basis of McPhail v Doulton, as in that case proprietary rights could never be contingent to enforcement as no proprietary rights existed. Matthews has argued that the rule in Saunders v Vautier is sacrosanct in assessing whether a trust complies with the beneficiary principle, but on a re-visitation of the authority of Saunders that argument is never truly made out as Saunders is predominantly a question of the settlors’ intention.

The radical position of Baxendale-Walker can also be disposed of as a fallacious misreading of the way in which our legal system works. Baxendale-Walker completely ignores the issue of locus standi as a mere formality, but the courts are wary of busybodies, and cannot grant anyone the right to enforce, despite its inherent jurisdiction to administer trusts. Only one case since the 19th century might be cited in support of this position, but this case itself was silent on the issue as the enforcer was absent during litigation. Prior to the 16th century no enforcer was explicitly required, however this position lead to rampant abuse and is therefore untenable.

Therefore in my dissertation I concluded that David Hayton, provided the most realistic view of our law, and there is ample authority to support his points. Hayton’s reading is not without its fault as Morice v The Bishop of Durham was not the progenitor of the beneficiary principle as he and others have claimed. Morice is a standard case of certainty and Re Macduff confirms this. Unfortunately, Hayton’s position is undermined by Re Endacott, where Lord Evershed proclaimed the primacy of the beneficiary principle.

However, Lord Evershed proclamation was concluded without authority, and in direct opposition to his previous judgement In Re Aberconway’s ST where he upheld a trust for the maintenance of gardens. His audacious judgement in Re Endacott rejected all contrary authority with the label of anomaly. This labelling is merely a poor method for evading meaningful debate on the issue and can only result in poor law making. The only case that Lord Evershed cites, Leahy v Attorney General of New South, is silent on the matter and merely rules that “purposes or objects cannot sue”. Other cases provide equally meagre authority. Bowman v Secular Society provides obiter premised on misreading Morice. Harmon J in Re Wood, misread Viscount Haldane’s earlier judgements too widely, as confirmed in Re Park, and his comments of regret in Re Shaw. Moreover, most of the scope of Re Endacott, has been reversed by Re Denley’s TD. The law is currently a complete mess, with the validity of a purpose trust being premised on the most semantic of reasoning, as is apparent in Re Osoba. Lord Evershed has also failed to stem the creation of new anomalies, as apparent with the use of Quistclose Trusts. Nonetheless, the judiciary have failed to tackle this problem for the past fifty years, despite the only unifying call among commentators being the dire need for reform. I therefore surveyed several other jurisdictions in an attempt to draft a practical proposal for legislative reform. The two models of focus were that of the Cayman Islands and Bermuda. The Scottish Law Commission has also produced some useful proposals in this area.

The Bermudan system is problematic, because if there are no immediately identifiable enforcers it places the burden of enforcement upon the state through the Attorney General, and this may not properly scale up to a country the size of the UK. STAR trusts are more preferable as they operate independently of the ordinary trust system, and therefore are the least disruptive method of reform. My reform proposal therefore mirrored the Cayman Island legislative structure, with the mandatory appointment of enforcers. When it came to who could enforce, I tried to draw the list of people as broadly as possible, such as to include any person who is deemed to have sufficient interest, with the settlor, enforcer and state as default. This wide solution creates multiple enforcers and this removes the problem of sham arrangements where the enforcer is purposefully negligent. My proposal only tackles one of the many problems with our current trust law, and a complete reassessment is needed. Political considerations are currently far from the topic of trusts, but it is hoped that the recent Scottish Law Commission’s proposals might spur some very much needed movement in this area, if we wish to maintain our world class status in trusts.