The Unbearable Lightness of Property - alastairhudson.com

trust arises in circumstances in which the settlor does not understand that she is
creating a trust but a court of Equity subsequently orders that the thing which the
settlor intended to do ought to bear the legal label ‘trust’. 68 The complex commercial
trust arises in situations in which (usually) commercial people decide to build a trust
structure into their relations generally to cater for the stewardship of some property
perhaps while an underlying commercial transaction is completed. Escrow and other
arrangements fall into this category. These trusts do not require the existence of a
traditional, single settlor expressing a donative intention to take effect as trusts.
Rather, the trust is part of a contract or similar arrangement whereby a number of
parties create the trust – that trust becomes properly constituted once the property is
vested with the person who is to act as trustee.
The question which arises is then the extent to which the trustee of a complex
commercial trust ought to be subject to identical investment and other obligations of
the trustee under a simple institutional trust – there is an argument to suggest that in
the complex commercial trust the trustee ought to be governed in the first place by the
terms of any contract giving effect to the trust in the first place and only in the
absence of such agreement to any general rules of the law of trusts. However, that
does not make the complex commercial trust any less a trust. Rather, the question
which governs whether or not there will be found to be a trust is whether or not the
conscience of the trustee is so affected as to impress that person with the office of
trustee. 69
For Sin’s assertion that the unit trust is not a trust because it lacks a settlor is simply to
say that it is not a simple institutional trust. It does not follow that it does not fall to be
construed to be some other form of trust. Were that argument correct, no complex
commercial trust would be a trust at all. Similarly, no pension fund would be a trust. 70
Whether or not the scheme manager is a trustee
Sin’s argument rests on the notion that the scheme manager is not to be considered to
be a trustee and that it is only the contractual relationship which is of significance.
The Financial Services and Markets Act 2000 provides that:
‘The participants must be entitled to have their units redeemed in
accordance with the scheme at a price related to the net value of the
property to which the units relate and determined in accordance with the
scheme.’ 71
Therefore, the central right of the participant is that of redemption. Without
redemption of the unit, and payment out of the value of the unit, the unit trust would
68 As in Paul v. Constance where the ‘unsophisticated’ settlor did not understand the legal effect of his
actions although the court was prepared to consider them to be a trust.
69 Westdeutsche Landesbank v. Islington [1996] AC 669.
70 Pensions funds are treated as trusts albeit with particular rules as to equitable title in the surplus and a
particular regulatory regime. That they are at root to be described as trusts is not at issue. Therefore, it
is suggested that the unit trust is a trust albeit of a particular type and with its own rules of construction
and so forth, in the same vein as a pension fund trust.
71 Financial Services and Markets Act 2000, s.243(10)
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