World of Trusts

Lusina Ho, ‘Trusts: the essentials’ in Lionel Smith (ed), The Worlds of the Trust (Cambridge University Press 2013). — https://doi.org/10.1017/CBO9781139505994.003

Back to Trusts

T connects to TA (Management), and TA connects to 3P (Immunity). T points to 3P (Claim), BFP directly above T and Non-BFP farther to its left via a dashed arrow. B also points to Non-BFP along a curved arrow labelled Claim. TA connects to DA (tracing). Separate arrows connect T to B on the left (Duty) and B to T on the right (Claim). B points to 3P (Claim). 3P branches to Personal creditors, Heirs/Spouses and Purchasers/donees.
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\node (TA) at (6,4) {TA};
\node (B) at (0,0) {B};
\node (P) at (6,0) {3P};
\node (BFP) at (0,6) {BFP};
\node (NBFP) at (-3.5,4) {Non-BFP};
\node (DA) at (9,6) {DA};
\node[align=center] (C) at (6,-2.5) {Personal\\creditors};
\node (H) at (10,0) {Heirs/Spouses};
\node (D) at (10,-1.7) {Purchasers/donees};
\node[label,anchor=east] (Check) at (-.55,2) {Duty};
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\draw[->] ([xshift=5pt]B.north) -- node[label,right=8pt] {Claim} ([xshift=5pt]T.south);
\draw (TA) -- node[label,right=8pt] {Immunity} (P);
\draw[->] (B) -- node[label,below=8pt] {Claim} (P);
\draw[->] (T) -- node[label,sloped,above=5pt] {Claim} (P);
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\draw[->,dashed] (T) -- (NBFP);
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\draw (TA) -- node[label,sloped,above=5pt] {tracing} (DA);
\draw (P) -- (H);
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Trustee and trust asset

T, TA, B and 3P form a square in the lower-right of the diagram, with T at its upper-left corner. TA connects to 3P (Immunity), and B points to 3P (Claim). T connects to TA: Incidents of ownership. T points to 3P: Claim against interference; to B: In personam duties; and diagonally to S/P farther to the left of B, leaving room for In personam duties to the left of the T–B arrow, with small text e.g. in China below S/P. Three outer branches connect T to D (Lawful) by an arrow labelled Valid transfer, and to two D (Non-lawful) nodes by plain lines. These point to BFP and NBFP (Invalid transfer), respectively. The NBFP branch is vertically aligned directly above T; the BFP branch forms a straight 45-degree diagonal to the upper left. The transfer labels are horizontal. The T–D (Non-lawful)–NBFP branch is dashed.
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\node (TA) at (6,0) {TA};
\node (B) at (0,-6) {B};
\node (P) at (6,-6) {3P};
\node (SP) at (-5.5,-5.4) {S/P};
\node[font=\normalsize,scale=.8,anchor=north] at ([yshift=-3pt]SP.south) {e.g. in China};
\node (DL) at (-6,0) {D (Lawful)};
\node (DN1) at (-3,3) {D (Non-lawful)};
\node (DN2) at (0,3) {D (Non-lawful)};
\node (BFP) at (-6,6) {BFP};
\node (NBFP) at (0,6) {NBFP};
\draw (T) -- node[label,above=8pt] {Incidents of ownership} (TA);
\draw (TA) -- node[label,right=8pt] {Immunity} (P);
\draw[->] (B) -- node[label,below=8pt] {Claim} (P);
\draw[->] (T) -- node[label,sloped,above=5pt] {Claim against interference} (P);
\draw[->] (T) -- node[label,left=8pt] {In personam\\duties} (B);
\draw[->] (T) -- (SP);
\draw[->] (T) -- node[label,above=8pt] {Valid transfer} (DL);
\draw (T) -- (DN1);
\draw[dashed] (T) -- (DN2);
\draw[->] (DN1) -- (BFP);
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On only trustees having rights against 3P interference in the common law of torts:

Third parties and trust assets

A dashed oval containing assets and labelled trust sits within a larger solid oval labelled Trustee assets, touching at their leftmost point. Only trustee assets outside the trust oval are shaded. C points left to the outer oval; a dashed arrow labelled disability continues to the right boundary of the trust oval. A dashed line connects the trust oval to B directly below its centre. B points diagonally to C, labelled immunity. U3P is directly to the right of B, joined by a horizontal arrow from B labelled claim. Two separate dotted diagonal arrows connect the trust-assets oval and U3P in opposite directions. Beneath claim, smaller text reads unjust enrichment/contract/tort.
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\node (assets) at (0,0) {assets};
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\node[font=\normalsize,scale=.8,above,inner sep=2.1665pt] at (0,.81) {trust};
\node (C) at (5.5,0) {C};
\draw[->] (C.west) -- (3.5,0);
\node (B) at (0,-5.5) {B};
\draw[dashed] (0,-.75) -- (B.north);
\draw[->,dashed] (3.5,0) -- node[font=\normalsize,above=5pt] {disability} (1.5,0);
\draw[->] (B) -- node[font=\normalsize,sloped,below=5pt,pos=.75] {immunity} (C);
\node (U) at (5.5,-5.5) {U3P};
\draw[->] (B) -- node[font=\normalsize,below=5pt] (claim) {claim} (U);
\node[font=\normalsize,scale=.7,anchor=north] at ([yshift=-2pt]claim.south) {unjust enrichment/contract/tort};
\draw[->,dotted] (.55,-.698) -- ([xshift=-5pt]U.north west);
\draw[->,dotted] ([xshift=5pt]U.north west) -- (.8,-.635);
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Fiduciary duties

A rounded rectangle labelled Fiduciary duties contains a Paradigmatic subset and, outside that subset, Saunders rule. Within Paradigmatic, the Essential subset contains Honesty and good faith, Financial accounting and reporting, and Providing B information. Care, Loyalty, and Compliance with trust terms are inside Paradigmatic but outside Essential.
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\node at (4.4,3.3) {Financial accounting\\and reporting};
\node at (4.4,1.9) {Providing B information};
\node at (10.25,5.1) {Care};
\node at (10.25,3.8) {Loyalty};
\node at (10.25,2.3) {Compliance with\\trust terms};
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Honesty and good faith

Accounting and information

Nurfadzilah Yahaya, ‘British colonial law and the establishment of family waqfs by Arabs in the Straits Settlements, 1860–1941’ in Lionel Smith (ed), The Worlds of the Trust (Cambridge University Press 2013) 167–202 (ch 8)

Chapter link

FeaturesTrustsWaqf
Beneficiary principle A trust must be for an identifiable beneficiary or a charitable purpose. English and Welsh law distinguishes between 'public and private endowments' (Yahaya, p 169). A Waqf can be for one's family, a specific charitable institution, or a charitable purpose. Syariah law does not maintain the same distinction as regards private and public endowments that the English law of trusts does (Yahaya, pp 169–171). '[W]aqf deeds... did not differentiate between public and private charity throughout the colonial period' (Yahaya, p 189).
Definition of charity Per F W Maitland, Equity: Also the Forms of Action at Common Law (CUP 1909), lecture IV, pp 51–52, doctrinally unclear. Maitland discusses a number of cases: Citing Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531, he notes that the scope of charity 'nearly equals any purpose conceived to be directly beneficial to the public or to some class of the public'. The inquiry appears highly fact-specific. Looking at two more cases Maitland cites: Re Scowcroft [1898] 2 Ch 638 and Re Nottage [1895] 2 Ch 649, we might conclude that whereas 'the furtherance of conservative principles and religious and mental improvement' will often give rise to a valid charitable trust, as in the former case, a fund constituted such that the interest be spent 'in providing a cup to be given for the encouragement of yacht racing' may not be acceptable for the purposes of charity, as in the latter case. There are, further, certainty requirements. Per Re Macduff [1896] 2 Ch 451, it would appear that a declaration for 'philanthropic purposes' may not be the same as one for charitable ones; per Blair v Duncan [1902] AC 37, a gift for charitable or public purposes, to be selected by the trustee, is void for uncertainty; and per Hunter v Attorney-General [1899] AC 309, 323, a charitable trust that is 'mixed up' with other indefinite or non-charitable purposes is void where the court cannot execute them. Hunter also stands for the proposition that a declaration for a purpose that may be broader than mere charity (e.g. for 'public utility'; see also Re Macduff, above) may be void where the trustees have discretion (see also Blair v Duncan, above, and Attorney-General v National Provincial and Union Bank of England [1924] AC 262). Much broader conception of charity (Yahaya, pp 170–171). See, for example, Syed Abbas bin Mohamed Alsagoff and Another v Islamic Religious Council of Singapore (Majlis Ugama Islam Singapura) [2009] SGHC 281, [3], where a will was made establishing 'a khairat in my name' involving, firstly, a gift 'to the mosque of my mother... [of] $10 per month to be spen[t] on any useful thing in that mosque'; secondly, an annual remit to mosques in the cities of Mecca, Medina, and Taif 'to be spent on food for those who break their fast in the mosques there or give as charity amongst the poor'; thirdly, a 'remit to Hadramaut $20 per annum to be distributed as charity amongst the poor Sharifahs [female descendants of the Prophet Muhammad]'; and, lastly, with 'the balance thereof my executors shall distribute amongst my poor relatives in Singapore or elsewhere or on other charitable deeds which my executors shall think will be beneficial to me' (see also, Yahaya, p 199). See also Yahaya, p 191 n 81: 'Public waqfs have various uses. They have been used to supply weapons to warriors fighting in God’s service; provide funds for the establishment of mosques, schools and hospitals; and pay the salaries of scholars, religious functionaries and students.' The waqf is viewed as a kind of bequest to Allah, with the management of the asset being delegated to the so-called mutawalli (rather than 'trustee' per se; p 194).
Perpetuities Barred except for charitable trusts (Yahaya, p 171 n 12; supra Maitland 52). Essential to the Waqf (Yahaya, p 171). A non-perpetual Waqf is invalid in Syariah (id, p 172 n 19).
'Legal ownership'/'legal title'/'first order right' Trustee (see Alsagoff at [39]. Allah is regarded as the true owner of the trust property; in the case of a family Waqf where heirs live on the trust land, the heirs are regarded as usufructuaries (Yahaya, p 171–2).
Trust assets Generally alienable and to be managed by trustees. Further, the rule in Saunders v Vautier (1841) 4 Beav 115, 49 ER 282; affirmed (1841) Cr & Ph 240, 41 ER 482 holds that (provided the beneficiaries are of age and legally competent) beneficiaries may instruct the trustee to dissolve a trust and distribute all the assets amongst the beneficiaries, even where the trustee is to otherwise act 'for the accomplishment of some purpose' (in Maitland's words; lecture IV, pp 50–51) such as to hold the property, sell it, and thereafter distribute the proceeds amongst the beneficiaries. In contemporary Singapore law, following the Administration of Muslim Law Act, trusts and trustees are distinct from waqfs and mutawallis (Alsagoff at [40]–[41]). Being owned by Allah, inalienable and immune from all third-party claims (Yahaya, p 171). Hence, the two forms of actions brought in colonial courts comprised, for the most part, non-beneficiaries who wanted to be included within the class, and beneficiaries who wanted to dissolve the waqf altogether (Yahaya, pp 172–173). As the Saunders rule does not apply, the major route by which beneficiaries sought to procure the trust assets immediately was by 'questioning trustees’ competence and good faith or disputing their fellow beneficiaries’ shares in the settlement' in order to argue that the waqf had failed (Yahaya, p 173). Another means of invalidating a waqf was by arguing that its 'list of clauses deemed charitable according to Islamic law' did not satisfy the charitability requirement in colonial law (p 192).
Formalities See Maitland Lecture V. The acquisition and disposition of land and interests in land (whether by conveyance or trust) must be in writing (ss 7–9, Statute of Frauds; repealed and reenacted in LPA 1925, in particular s 53). A mere oral declaration of trust is invalid, although, as a matter of evidence, an ex post written statement will suffice to prove the existence of a trust, with the court recognising the existence of the trust from the time of oral declaration (p 59; cf Rochefoucauld). Syariah 'often privileges spoken testimony' (Yahaya, p 182 n 53), recognising the validity of verbal wills, for example (p 184). At p 185 n 64: 'Muslim jurists tended to view written documents with a generous measure of suspicion as the written word can be manipulated in a manner that the oral testimony of trustworthy persons cannot.'

Further reading

According to s 3(r) of the Waqf Act 1995 (as originally enacted), a Waqf is:

“the permanent dedication by a person professing Islam, of any movable or immovable property for any purpose recognised by the Muslim law as pious, religious or charitable”

Per Joel Mokyr (ed), The Oxford Encyclopedia of Economic History (Oxford University Press 2003; published online 2005; current online version 2005; print ISBN-13: 9780195105070; eISBN: 9780195187625):

A property endowed to individuals or institutions for benevolent purposes is a charitable trust. In Arabic... the root waqf... means to stop the ownership of property owned by the founder (waqif) from circulation and to discontinue the endowed property (mawquf) from becoming the property of a third person. The waqf is therefore inalienable and irrevocable property. The endowed property, mawquf, consequently becomes the property of God, according to the majority of Muslim jurists, although the Maliki school holds the opinion that the property in waqf remains the possession of the founder and his heirs... According to Islamic law, the waqf may be property endowed to individuals or institutions for religious benevolence or assigned for charitable purposes that are of a social or personal nature.

[...] Although Muslim jurists have grouped the various kinds of waqf into two main categories, in practice, this division has been impractical. Traditionally, the waqf may be for the benefit of the donor's family (waqf ahli) or for the benefit of a public institution (waqf khayry) with the intention of prohibiting any use or disposition of the property outside the specific purpose it is determined to have.