LECTURE 1, 6 FEB 2018

Main Points:
I. Historical Evolution Of The Trust Concept
 The trust concept was used during the crusades where the crusader, (owner) who
transferred land to a transferee not for the latter’s own benefit but for the benefit of the
crusader’s family till he returned, a short while later.
 The modern trust originated from the term “the use” (Latin) (which developed as a
response of equity to the shortcomings of the common law). The crusader was the settlor
and the transferee was called trustee or feofee to uses and the family, the people for
whom he held the property was called the beneficiaries or cestuis que use.
 The trust concept was used by the Franciscan friars.
 The trust concept was used to sidestep the common law prohibition on disposing of land
by will.
 The trust concept was used to avoid feudal dues as all land was vested in the Crown since
the Norman Conquest.
 Use upon a use or the double use and the Statute of Uses 1535. What the Statute did: If,
for example, land was held by Arthur to the use of Ben, the Statute of Uses caused the
use to be executed or ignored, and the feofee to uses disappeared and the legal estate was
considered to be vested in the cestuis que trust. The end result was that the legal estate
was vested in Ben, the cestui que use. When Ben died, feudal dues would become
payable. In this way, the Statute of Uses prevented the avoidance of taxes on the death of
Ben.
This situation remained until about 1650 when a device known as a use upon a use was
found to be an effective way around the statute. This solution involved a double use.
Land would be transferred to Arthur to the use of Ben to the use of Charles. The first use
would be executed under the Statute of Uses but the second use was left intact.
The phraseology altered and the second use was referred to as trust and the common form
was to transfer land ‘unto and to the use of Ben in trust for Charles.’ The effect was that
the legal estate vested in Ben and Charles owned the land in equity.
Terminology at this point was further refined: Land would simply be conveyed to Ben on
trust for Charles.

II. Modern Uses Of The Trust Concept In The UK And Malaysia:

i. Occupational pension funds
ii. Investment trusts
iii. Unit trusts
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iv. To provide security for lenders of money, see Barclays Bank v Quistclose Investment Ltd.
[1968] 3 AllER 651. (loan and trust exist side by side; however, this concept of co-existence
must be re-evaluated from a commercial standpoint)
v. Voluntary arrangements with creditors
vi. To provide security for buyers where goods are paid for in advance. Re Kayford [1975] 1
AllER 604 limited to non-trade purchasers
viii. National Health Service Trusts
vii. Trade Union Funds
viii. Clubs and Unincorporated Associations
ix. Charities
x. Non-charitable purposes trusts
xi. For minors
xii. Bodies not able to hold property
xiii. Protective trusts/ discretionary trusts
xiv. Secret trusts
xv. Provision for family or dependants
xvi. To preserve or control wealth
xvii. Tax saving** see different position in Malaysia and others.

III. Sources Of Trust Law In Malaysia

The primary sources of Malaysian trust law are the Federal Constitution, local legislation, local
cases and local customs and to the extent that the law is in pari materia cases from Singapore
and other common law jurisdictions.

There is no TRUST Act in Malaysia.

We have the Civil Law Act 1956, the Trustee Act 1949 and the Public Trust Corporation Act
1995 and Case law, Trust deed,
see pages 9- 26 UUA.

Federal Constitution:
Under the Federal Constitution, equity and trusts are governed by s. 4 (e) (i), Schedule 9, List 1
of the Federal List.

Charities, charitable institutions and trustees excluding wakafs and Hindu endowments are dealt
with by s. 15 (c ), Schedule 9, List 1 of the Federal List.

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Hindu endowments are covered by s. IX, 1-15(c ).

Wakafs are dealt with under List II of the State list.

Charitable trusts in Sabah and Sarawak are governed by s. 15, Schedule 9, List IIIA of the
Supplement to the Concurrent List.

Civil Law Act 1956:

The applicability of English common law and equitable principles in Malaysia is subject to
section 3 of the Civil Law Act 1956 which provides for a cut-off date for West Malaysia/
Peninsular Malaysia, Sabah and Sarawak.
PART II
GENERAL
Application of U.K. common law, rules of equity and certain statutes
3. (1) Save so far as other provision has been made or may hereafter be made by any written law
in force in Malaysia, the Court shall—
(a) in Peninsular Malaysia or any part thereof, apply the common law of England and the rules of
equity as administered in England on the 7 April 1956;
(b) in Sabah, apply the common law of England and the rules of equity, together with statutes of
general application, as administered or in force in England on 1 December 1951;
(c) in Sarawak, apply the common law of England and the rules of equity, together with statutes of
general application, as administered or in force in England on 12 December 1949, subject however
to subparagraph (3)(ii):
Provided always that the said common law, rules of equity and statutes of general application shall
be applied so far only as the circumstances of the States of Malaysia and their respective
inhabitants permit and subject to such qualifications as local circumstances render necessary.
(2) Subject to the express provisions of this Act or any other written law in force in Malaysia or
any part thereof, in the event of conflict or variance between the common law and the rules of
equity with reference to the same matter, the rules of equity shall prevail.

Note: however, the Courts in Malaysia do apply the relevant contemporaneous English cases
irrespective of these cut-off dates but subject to local legislation and circumstances.

Many principles of English land law and related equity are not applied here, as the NLC 1965
ousts the application of equitable estates and doctrine of equity of redemption.

Section 6 of the Civil Law Act categorically excludes the application of land law, statutory or
otherwise, including English equitable principles relating to the incidents of land tenure in
Malaysia.

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Trustee Act 1949:

The Trustee Act 1949 is a principal statute which relates to trustees which came into force in
West Malaysia on 31 December 1949.

There are also several statutes where the word “trust” or “fund” or “trust fund” appear. See for
eg: Malaysian Trust Law, pp. 25-33. They may be charitable trusts or instruments that use the
trust concept.

There is also the Trustee (Incorporation) Act 1952 for constitution of a Board of Trustees
(revised 1981)
Distribution Act 1958, Statutory trusts
Sections 6 (1) and 7 of the Distribution Act 1958 are examples of statutory trusts.

It arose for consideration in the unreported case Lee Ngan Fong & Ors v Gan Bo Tan & Ors
[2011] MLJU 1493 decided by the Court Of Appeal (Putrajaya) comprising Abdul Malik Bin
Ishak, Kang Hwee Gee And Azhar Hj Maah JJCA where the Court of Appeal had to consider
the issue of locus standi to challenge the validity of a will by persons who the Court felt had no
locus standi to sue.

If the will was invalid, statutory trusts under the Distribution Act 1958 would govern the
various properties of the deceased. The Court Appeal found that the High Court did not err in
law or in fact.
Section 6(1)(g) of the Distribution Act 1958(Act 300), reads as follows:

Succession to intestate estates

6. (1) After the commencement of this Act, if any person shall die intestate as to any
property to which he is beneficially entitled for an interest which does not cease on his
death, such property or the proceeds thereof after payment thereout of the expenses of
due administration shall, subject to the provisions of section 4, be distributed in the
manner or be held on the trusts mentioned in this section, namely -

(g) if an intestate dies leaving a spouse, issue and parent or parents, the surviving spouse
shall be entitled to onequarter of the estate, the issue shall be entitled to one-half of the
estate and the parent or parents the remaining onequarter.

Section 6(1)(i) of the Distribution Act 1958(Act 300) reads as follows:

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 (i) if an intestate dies leaving no spouse, issue, parent or parents, the whole of the estate
of the intestate shall be held on trusts for the following persons living at the death of the
intestate and in the following order and manner, namely:
Firstly, on the trusts set out in section 7 for the brothers and sisters of the intestate in
equal shares; but if no person takes an absolutely vested interest under such trusts, then
Secondly, for the grandparents of the intestate, and if more than one survive the intestate
in equal shares absolutely; but if there are no grandparents surviving, then
Thirdly, on the trusts set out in section 7 for the uncles and aunts of the intestate in
equal shares; but if no person takes an absolutely vested interest under such trusts, then
Fourthly, for the great grandparents of the intestate and if more than one survive the
intestate in equal shares absolutely; but if there are no such great grandparents surviving,
then
Fifthly, on the trusts set out in section 7 for the great grand uncles and great grand aunts
of the intestate in equal shares.

There are also state enactments which contain these words and these are not necessarily
charitable trusts. Following Iskandar Gayo v Datuk Joseph Pairin Kittingan [1996] 3 CLJ 713,
they may be trusts in the “higher sense,” following Tito v Waddell.

Privy Council decisions up to 1984 are binding on the local courts.

English law in text books

Trustee Act 1925 and 2000,
Law of Property Act 1925,
Settled Land Act 1925,
Variation of Trusts Act 1958,
Trustee Investments Act 1961,
Perpetuities and Accumulations Act 1964 and 2009,
Recognition of Trusts Act 1987,
Charitable Trusts (Validation ) Act 1954,
Charitable Uses Act 1601, Charities Act 1960, 1985, 1992, 1993, 2006,
Trustee Delegation Act 1999,
Trustee Investments Act 1961,
Trusts (Concealment of Interests) Bill, Trusts of Land and Appointment of Trustees Act 1996 to
name a few.

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IV. Definition And Comparison With Other Legal Concepts

Bailment: In bailment there is deposit of a chattel. The person who deposits the chattel is the
bailor and the receiver is the bailee.

Common law recognizes that the bailee has duties towards the bailor.

Bailee only has possessory interest in the chattel and general ownership remains in the bailor.

A bailee cannot confer a good title of the bailed property to a third party in an unauthorized sale
even if the third party is a bona fide purchaser for value without notice.

Agency:
Agents are similar to trustees as both are subject to fiduciary obligations.

But there are differences.

Agency is recognized at common law.

Generally there is a contractual agreement between principal and agent.

Agent does not own property for him to dispose of.

Agent acts on behalf of principal and so long as he acts within the scope of his duties, he binds
the principal.

Principal is vicariously liable for such acts of the agent.

Contracts and Trusts:

Contracts are creatures of the common law.
Note that a trust was developed by Courts of Equity and involves the enforcement of personal
obligations by the trustee and third parties in respect of a specific fund of assets.
In Malaysia, we take note of the role of the privity of contract.
Sometimes, a same transaction may involve a contract and a trust.
Example, the Quistclose Trust (Barclays Bank v Quistclose). Here a lender advanced money on
the understanding that it must only be applied for certain purposes or to pay certain persons. As
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a matter of contract at common law, the borrower is a debtor to the lender. In equity he is a
trustee to the lender who retains a beneficial interest in the money
(Twinsectra v Yardley [2002] 2 AC 1640)
In ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd, [2005] 2 MLJ 422, the Court of
Appeal (Kuala Lumpur) comprised Judges Gopal Sri Ram, Abdul Kadir Sulaiman And Mohd
Ghazali JJCA.
Gopal Sri Ram JCA held:
… the device of a trust is an exception to the privity doctrine. That there can be a trust of the
benefit of a contract is too well settled. See Fletcher v Fletcher (1844) 67 ER 594. In Lewin on
Trusts (17 th Edition), p 74, paras 4-12, the learned authors express the following view,
supported by high authority:
...(the party should establish that/MG) the promisee entered into the contract as
trustee for him. If this can be established, the trustee can sue on the contract and will
be able to recover damages in full, even though he personally has suffered no
damage; 'or, if the trustee is recalcitrant, the beneficiary can sue in his own name,
joining the trustee as a defendant. It makes no difference that the contract is under
seal'. Even the benefit of a contract which is personal in nature, and which is
expressed to be non-assignable, can be held on trust, unless the contract specifically
prohibits such a trust from arising in addition to prohibiting any assignment.

The Court of Appeal held that the beneficial ownership in the trust property, here it is the
benefit of cl 27.1 -- vests in the cestui que trust and, in accordance with ancient principle, the
owner of property may sue to enforce his rights in respect of his property.

V. An Overview
Trusts are equitable contributions to the legal concepts of property and land laws, initially
homegrown in England and now transnational in character with common law and non-common
law countries around the world adopting the concept.

A transnational trust of property may be subject to conflict of laws rules of a country as there
are national rules and foreign law to contend with. There are some important preconditions to
be observed in setting up a trust.

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Conceptually, a trust is a device for transferring the beneficial interest in a piece of property for
a certain period of time, whether movable or immovable property, to a person called the
beneficiary or several beneficiaries.

In a trust, the owner of the property or a property right transfers the ownership in the property
or in the property right.

As there are different types of property, so there are different methods for the transfer of the
property.

Regardless the nature of the property, the ownership of a piece of property or property right is at
law, divisible into two types, namely the legal and equitable ownership.

Once a trust is created by the owner of the property, the equitable ownership in the property is
transferred to the beneficiary while the legal ownership which hitherto remained vested in the
owner is now transferred to and vested in another person called the trustee for the duration of
the trust.

The owner of the property who sets up the trust is called a settlor. The capacity of the settlor to
dispose of his property is essential to setting up a trust. The trust property should be vested in
the trustee and the trustee, as the legal owner, now administers the property in favour of the
beneficiary for the duration of the trust.
The legal instrument by which a trust is established may take the form of a trust deed or a will
also called a testamentary trust or a trust may be established by an inter-vivos transaction.

The trust instrument is important because it governs the administration of the trust, the trust
property, the trustee, and the relationship between the trustee and the beneficiary.

If the proper legal requirements are unfulfilled, the property will remain with the settlor, and
will not vest in the would-be trustee or would-be beneficiary. The property remains or reverts
back to the settlor, which gives rise to a trust called a resulting trust as the failed transaction
only results the property back in the legal owner. Sometimes, a resulting trust is referred to as
an implied trust.

Therefore, in a trust there is the separation of the legal title which is held by the trustee
and the equitable interest that is held either by the beneficiary or object or for their
benefit.
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It is also possible to hold an equitable interest in property on trust.
The trustee is obliged to deal with the legal title that is vested in him for the benefit of
another, the beneficiary.
The essential elements of a trust are; settlor, trustee, trust property, a beneficiary or
object, and an equitable obligation binding the trustee to deal with the trust property for
the benefit of the beneficiary or for the advancement of certain purposes.
In addition the parties, (settlor, trustee, and beneficiary) must have capacity, fulfill the
three certainties (intention, subject-matter and object), the trustee must have title to the
trust property and there must be no vitiating factor such as illegality.

As an equitable interest in property may be held on trust, the equitable beneficiary may in turn
create a sub-trust of his equitable ownership in favour of another beneficiary or beneficiaries for
a certain period of time. This is called a sub-trust.

Once a trust is created, the first owner/settlor is generally out of the picture as the trustee is the
new legal owner of the property during the duration of the trust.
The national laws of a country should be clear in the establishment, monitoring and
enforcement of a trust.
In Malaysia, the common law rules of the UK and Malaysian legal system govern the law of
trusts and trustees. This law will determine whether a trust has come into existence, the
structure and type of the trust and whether the equitable title has been duly vested in the
beneficiary. Trust law in Malaysia is governed by Malaysian law, for example, the land,
contract, family and inheritance laws that may concern a trust transaction are all Malaysian
laws. Where the trust fails, a resulting trust will arise for the settlor.

In an inter-vivos trust, which is an oral communication between the settlor and the trustee, it is
vital that the settlor should have the capacity to transfer the legal ownership of the property to
the trustee and the equitable ownership of the property to the beneficiary.
Milroy v Lord (1862) 4 De GF & J 264
A settlor executed a legal document called a ‘deed poll’ to transfer 50 Louisiana Bank shares to the
trustee named Samuel Lord for the benefit of certain beneficiaries. The deed poll was not the
correct method of transferring legal title from one person to another. Consequently no trust had
been constituted and Samuel Lord never became the trustee of the shares. Turner LJ: to render a
voluntary settlement valid and effectual, the settlor must have done everything, which according
to the nature of the property comprised in the settlement, was necessary to be done in order to
transfer the property, and render the settlement binding upon him…. There is no equity in this
Court to perfect an imperfect gift.

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 Note: In Milroy v Lord, the wrong transfer form was used by the settlor. So nothing can be done.
Usually, the last act of the settlor may be thwarted by formalities outside his control. That is ok as
seen in Re Rose {1952} Ch 499.. Equity regards the trust as constituted by the last act of the
settlor. However, there will be no transfer of legal title if anything remains or may remain to be
done by the settlor to transfer legal title.

VI. Definition/ Description Of The Trust

Very difficult to define but elements can be described and easily understood.

A trust has been described as:

… an equitable obligation, binding a person (called a trustee) to deal with property owned by
him (called trust property, being distinguished from his private property) for the benefit of
person (called beneficiaries or, in old cases, cestuis que trust) of whom he may himself be one,
and any one of whom may enforce the obligation.

Example: Settlor transferring property to trustees:

Example 1:
A settlor Sam transfers property to Trustee 1 (T1) and Trustee 2 (T2) to hold on trust for Ben,
then the legal ownership is vested in T1 and T2 and the equitable or beneficial ownership is
vested in Ben. This division of ownership is the intervention of equity and is the basis of the
trust. T1 and T2 hold the property for the benefit of Ben and not for their personal benefit. T1
and T2’s ownership only brings them technical, legal burdens and responsibilities which make
their position very onerous.
T1 and T2’s burdens and obligations are imposed by the settlor, the statute (Malaysia: Trustee
Act 1949) and the general law of trusts (common law Malaysia: CLA 1956 and case law of the
Federal Court interpreting this legislation). Ben gets the positive advantages of ownership. Any
income the trust property generates will belong to Ben. Any profit made will accrue for the
advantage of Ben.

Example 2:
S the absolute owner (before the trust is created he controls and manages the property and
enjoys the income and other benefits
> transfers property Y to trustees T1 and T2
> T1and T2 (legal ownership) (They control and manage the property)
> B (equitable ownership) (Enjoys the income and other benefits)

Example 3:
Settlor declares he holds on trust.
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S - Settlor (Before the trust is declared he is the absolute owner) (Before the trust is created ho
controls and manages the property and enjoys the income and other benefits)
 S (Legal owner) (He controls and manages the property)
 B (equitable ownership)

Example: Creating a sub-trust:

S-settlor is the absolute owner. (Before the trust is created he controls and manages the property
and enjoys the income and other benefits.
 Transfers property Y to trustees T1 and T2
 T1 and T2 (legal ownership) (They control and manage the property)
 B – (equitable ownership) (enjoys the income and other benefits until the sub-trust is
created)
 B acts as trustee himself for the next beneficiary X or appoints two other trustees, for
example T3 and T4 who only have an equitable interest,
 X the next beneficiary also has equitable interest.

Human benefits generally: Trusts are generally created for human benefits. Exception to the
general rule is the law of purpose trusts namely the charitable trusts. In charitable trusts there
are no named specific beneficiaries as such and is enforceable by the Attorney-General. But
valid express private trusts for a specific community was recognized in Re Denley’s [1968] 3
ALL ER 65 where a sports field was given for the benefit of employees of a specified company.

Settlor creates a trust: In most trusts, the settlor creates the specific trust by transferring the
property to others to hold as trustees for the benefit of certain beneficiaries. Sometimes, the
settlor can also be the trustee or at other times the beneficiary. But a settlor cannot be the trustee
and the beneficiary. What is the point? Eg. In case of shares, settlor might decide that the
benefits go to himself for life and then to his son/daughter.

Subject-matter of trust: Any property may be the subject-matter of trust. The nature of the
property will tell the formal requirements for the complete execution and running of the trust.
Real, personal, tangible, intangible, choses in action, all may be trust property.

Breach of trust by trustees who administer the trust: Where trustees deal with the trust property
in a way that is contrary to the terms of their trust this will constitute breach of trust.

If a breach of trust occurs, the beneficiary will be able to seek various remedies through the
courts, including damages.
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Where trust property has been improperly transferred to a third party it may be possible for the
beneficiary to ‘follow’ or trace the trust property into the hands of third parties and recover it.
VII. Conscience of the Settlor and Conscience of the Trustee in Creating Trusts:
Westdeutsche Landesbank Girozentrale v Islington Borough Council [1996] 2 All ER 96
Lord Browne Wilkinson made a number of points that refer to the nature of the trust and of
equitable interests:
1. Equity operates on the conscience of the owner of the legal interest. In the case of a trust, the
conscience of a legal owner requires him to carry out the purposes for which the property was
vested in him [express or implied trust] or which the law imposes on him by reason of his
unconscionable conduct [constructive trust].

2. Since the equitable jurisdiction to enforce trusts depends upon the conscience of the holder of
the legal interest being affected, he cannot be a trustee of the property if and so long as he is
ignorant of the facts alleged to affect his conscience, i.e, until he is aware that he is intended to
hold the property for the benefit of others in the case of an express or implied trust, or, in the
case of a constructive trust, of the factors which are alleged to affect his conscience. (cf
resulting trusts).

3. In order to establish a trust, there must be identifiable trust property. The exception is the
constructive trust which is imposed on a person who dishonestly assists in a breach of trust who
may come under fiduciary duties even if he does not receive identifiable trust property.

4. Once a trust is established, as from the date of its establishment the beneficiary has, in equity,
a proprietary interest in the trust property, which proprietary interest will be enforceable in
equity against any subsequent holder of the property [whether the original property or
substituted property into which it can be traced] other than a purchaser for value of the legal
interest without notice.

Conscience of the trustee:

The Conscience of the Trustee is bound to give effect to the entitlements of the beneficiary or to
carry out the purposes for which the property was vested on him. Question arises: what happens
if the trustee is ignorant of the facts alleged to affect his conscience? This may be questioned in
the case of resulting trusts, which depend for their creation on presumptions about the settlor’s
intentions not the trustee’s (Westdeutsche Landes Bank v Islington LBC, [1996] AC 669, at 705,
7009; Guardian Ocean v Banco do Brasil [1994] 2 Lloyds LR 152. See LJ Millet (1998) 114
LQR 399 at 412.
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VIII. Beneficiary’s Proprietary Right:
1. Beneficiary’s equitable rights are enforceable against the trustee and trust property.
2. Content of equitable title consists in the totality of the beneficiary’s equitable rights
against the trustee and generally against third party in respect of the trust property. That is
why beneficiary’s title to trust property is regarded as proprietary interest.
2.1 Against the trustee, the beneficiary’s most important right is to hold the trustee
accountable for his management of the trust fund and to require him to administer it
according to the terms of the trust (Target Holdings Ltd v Redferns (a firm) [1996]
AC 421 at 434.
2.2 The beneficiary can compel the trustee to distribute the economic benefits derived
from the trust assets according to the terms of the trust.
2.3 The beneficiary has a limited right to control the reasons or purpose that inform the
trustee’s discretions in dealing with the property.
2.4 Against a third party generally the beneficiary’s right consists in a power to make him
reinstate the trust property to the trustee if the trustee has transferred it without proper
authority under the trust.
3. Source of beneficiary’s equitable rights is defined in the trust instrument and the general
law of trusts. Though the trustee has legal ownership of the trust property, there are
equitable limitations on the trustee’s legal ownership in the form of powers and duties. If
a trustee acted in breach of his equitable powers, the transaction would be void in equity
and possibly a breach of trust too. The beneficiary would then have an equitable action to
recover the property or a claim against the trustee to make good any losses arising from
his breach. That is, to reconstitute the original fund. But the invalidity of the transaction
in equity should not affect its validity at law. This is because as the legal owner of the
trust property, he has the legal power to enter into a transaction. The trustee’s powers and
duties come from the trust instrument. The general law of trusts is relevant where the
trust instrument is silent and where it provides mandatory rules that override the
provisions of the trust instrument.
4. There is an irreducible core of duties under general law that an express private trustee
owes. Settlor cannot change that in the trust instrument and if he does so, the term will be
void or Court will not give effect to the instrument as a trust. The core duties of the
trustee are to not act fraudulently towards the beneficiaries; to be legally accountable to
the beneficiaries in the management of the trust property and to preserve the integrity of
the trust assets as a separate fund from the trustee’s own assets.
5. There must be trust property as property may also be found with an agent. Note here the
distinction between an ordinary trustee and a “constructive trustee.”
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Nature of equitable rights:
Right in personam against the trustee and right in rem against the property.
The beneficiary’s proprietary right against the trust property is not identical to the proprietary
right of the owner of a legal interest.

Bona fide purchaser for value without notice

What are the rights of a beneficiary when a trustee transfers trust property to a third party in
breach of trust?
Equity looks at the conscience of the third party: a third party acting in good faith, who gave
value for the property, and who had no notice of the equitable interests existing in the property,
equity will not treat him as acting unconscionably and the claim of the beneficiary will not be
allowed to prevail. So beneficiary better register his interest and shift the burden to the third
party to check a register of entries for all equitable interests in that property.

IX. Classification of trusts:

1. By their method of creation: we can classify trusts by method of their creation: Express trusts
and Trusts arising by operation of law namely, Resulting trusts, Constructive trusts, Statutory
Trusts.
Express private trusts can be classified according to
 degree of detail (executed or executory);
 when they come into operation (inter vivos or testamentary);
 the nature of beneficiaries /objects (public charitable/private);
 the nature of a trustee’s duties (simple or special); and
 the nature of a beneficiary’s interests ( fixed or discretionary).

OR there is a Level One breakdown: Public and Private trusts

Public trusts are charitable trusts [can also include statutory trusts when drafted by State
Legislatures under the State Legislatures Competency Act 1949];

Private trusts are non-charitable purpose trusts, express trusts, [resulting trust, constructive
trusts] and statutory trusts are classified by some Australian authors as private trusts.

Or there is a Level Two breakdown: Express trusts are Fixed and Discretionary trusts incl.
Protective trusts

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2. Trusts may be classified by type of beneficiary: Private trusts and Public trusts/ purposes

3. Trusts may be classified by nature of beneficiaries’ interest: Fixed trusts and Discretionary
trusts.

4. Trusts may be classified according to trustees’ duties: Simple / Bare trusts (trustee is mere
nominee for the real owner) and Special trusts such as ministerial trusts where trustees have
some specific administrative duty like rent collection AND discretionary trusts where trustees
have to exercise their discretion in fulfilling their duties as to whether trust property must be
sold or not or power to accumulate the income is specified in the trust or not giving rise to
exhaustible and non-exhaustible discretionary trusts.

5. Trusts may be classified by whether the trust property is vested in the trustees. Completely
constituted trusts (CCT) and incompletely constituted trusts (ICT).

In a CCT beneficiary has enforceable rights against the trustee and trust property.
In an ICT, no trust, only a promise by settlor to set up trust. Such promise may be a contractual
promise or in a covenant. Beneficiaries need to give consideration to enforce this promise. Very
few beneficiaries do this, so in ICT cases, settlor can ignore the promise and refuse to set up the
trust.

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