Historical Development of Trust Modern Property

In order to understand modern property law, one needs to have a basic knowledge of the law of trusts and an outline of the events in the past. The aim of this essay is to show the historical development of English property law, and how Equity in particular, helps us to understand modern law. The trust is considered to be an innovation in the English legal system. The historical development of the trust and how it is used in modern property law will also be discussed in this essay.

Consideration of the development of equity in general:

Equity is the set of legal principles, which assists strict rules of common law to reach a solution to the disputes which would otherwise be unsolved. The term equity, in a wide sense, refers to what is fair, just, moral and ethical. It is the branch of law which was formed before the Judicature Act of 1873 and it was applied and ministered by the Court of Chancery. The field of equity was formed by a series of historical events and not by a pre-conceived theory. The formation of equity can be characterized as innovative since it changed the field of law and social science in general. It developed new remedies and recognized new rights where common law failed to act. “Equity looks upon that as done which ought to be done”.

Equity is innovative since it offers new solutions for dispute settlements. The recognition of restrictive covenants, the expansion of remedies, the development of doctrines such as the doctrine of proprietary estoppel, the new model of constructive trusts are all illustrations of the developments in equity. Equity developed the remedies of the injunction, specific performance, rectification and rescission. However, the element of discretion remains in the hands of the judges who retain some flexibility in the determination of disputes. Where there is a conflict, equity prevails. This rule is now enshrined in the Supreme Court Act 1981section 49. Therefore, Equity remains a separate system of rules operating independently of the common law. Until the 19th century it operated in a separate set of courts. This caused delays and expenses. The Judicature Acts 1873 and 1875 resolved this issue by establishing a system of courts in which both the rules of equity and common law could be administered. Section 25(11) of the Judicature Act 1873 provides that where there is a conflict between the rules of common law and the rules of equity regarding the same matter, the rules of equity will prevail.

The case of Walsh v Lonsdale, highlights the importance of equity. It is the case of a 7-year lease which actually did not existed in law because there was no executed deed to enforce it. One of the requirements in this lease was that the landlord could demand one year’s rent in advance. When he indeed demanded it and the tenant refused, there was a contrast between law and equity. At law, because there was no deed, there could not be a seven year lease. However, since “equity looks on that as done which ought to be done”, a lease already existed in equity even if no formal lease had been executed.

Like every notion in the field of social science, equity has been criticised. The main historical criticism of equity was that it had no fixed rules of its own, leaving the Lord Chancellor deciding on its own for several matters. As a result, the rules of equity lost much of their flexibility. Despite this, equity has influenced modern law largely, and this can be seen by firstly explaining the nature and legal structure of a trust.

Explanation of the nature and legal structure of a trust:

The definition of the trust is given by section 1(1) of the Trusts of Land and Appointment of Trustees Act 1996. A trust is defined as “being any trust of property which consists of or includes land, and trustees of land means the trustees of a trust of landModern Land Law, M. Thompson. “ In addition, section 1(2) of the Act, underlines that the reference to a trust includes all trusts.

The practice behind the doctrine was that land was conveyed to a person A for the use of another person B. The effect of this rule might seem straight forward, however common law argued that only A was the legal owner of the property disregarding the B’s rights. Equity on the other hand suggests that A undertook to hold the land for the use of B, therefore it would be unconscionable for A to go back on his promise. In this way, equity ensured that B enjoyed the benefit of the land.

In order for a trust in land to be created, section 53(1) of the LPA 1925 provides that: “ a declaration of trust respecting any land or interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will”. The declaration need not be in writing. Trusts were divided under titles such as resulting trusts, constructive trusts.

Historical development of the use or trust:

The doctrine of the use or trust emerged in the year 1400 by the Lord Chancellor, since it would have been unconscionable to permit the strict enforcement of the common law to avoid feudal incidents and it would be unconscionable for A to renege that obligation. Therefore equity ensured that B enjoyed the benefit of the land.

At the end of the 13th century, the complex structure (complicated and hyper-technical structure, formality of the legal proceedings) of the Royal Courts of Justice and the Royal Courts, led the creation of several problems. This resulted in denying justice to deserving plaintiffs. “Equity does not destroy the law, nor create it, but assists it(1705) Pr Ch 241

Historically, there are numerous reasons for the existence of this device. One of the main reasons was that land was conveyed when the owner had to go away to fight in the crusades. Another reason is religion. Due to religious beliefs, the church did not allow to a person to hold land on his name because of the vows of poverty he had taken. The most important reason though for employing the “use”, was tax.

Under feudalism, the rights in land were linked with a complex hierarchical system of social and political authority and agricultural wealth distribution. This hierarchy was maintained through a system of “tenures” of land, under which different “tenants” had rights in the same land. It was a system where the King was at the top of the hierarchy, the person actually in possession of the land at the bottom, and in between there might be a number of mesne lords. It was basically a system of taxation.

There were several kinds of rights and duties which defined the different kinds of tenure by which land could be held and possessed. Gradually the courts of law, diminished the types of claims they would hear, and the procedure that governed the hearing of those claims. Despite this though, one could obtain remedies by filling a petition with the king, who held residiual judicial power: these filings were usually phrased in terms of throwing oneself upon the king’s mercy or conscience. Eventually the Chancellor started assisting the King, in a quest to resolve such petitions differently. The Chancellor was an important member of the King’s council. At the time, the Chancellor was usually a clergyman and the King’s confessor, so he was literally the keeper of the King’s conscience. As a result, he was well versed in canon law, which heavily influenced equity. Soon the Chancery, the Crown’s secretarial department, began to resemble a judicial body and became known as the “Court of Chancery”.

The judicial power of the Chancery was recognized in the 15th century. Equity, as a body of rules, differed from Chancellor to Chancellor, until the end of the 16th century. One area in which the Court of Chancery held a vital role was the enforcement of uses, (also considered as the precursor of the trust) a role which the rigid framework of land law could not accommodate. This role gave rise to the basic distinction between legal and equitable interests.

Illustration of the use of trust in modern English Property Law:

Before, under the old Law, the trust was a trust for sale; the duty of the trustees was, subject to their power to postpone the sale, to sell the property. Nowadays the new law states that there is no such duty imposed upon the trustees. Instead, section 6 of the Act operates to vest in the trustees all the powers of an absolute owner and, of course, one of the powers of an absolute owner is to sell the property.

The normal practice is that land would be conveyed to a person (A) named as the legal owner, to hold for the use of another person (B) to be named the beneficial owner. In this case, Equity is of the view that it would be unconscionable for that person A to renege on that obligation. Equity forces the legal owner to comply with the use to ensure that B – the beneficial owner would enjoy the benefit of the said land.

In a more practical sense, nowadays, the doctrine of uses (or trusts) is used to enable the creation of life estates. As it is defined by the Law of Property Act 1925, “to enable land to be held by co-owners as joint tenants or as tenants in common; and by executors, administrators and trustees-in-bankruptcy in order to allow the winding up and distribution of the estates of persons who are deceased or who have been made bankrupt”.

nomizo kapia sxesi exei to lta 1996 act alla enime siouri epd enemporesa na ta sindeso! please koitakse to dame!!!

Conclusion:

Equity has innovated in special ways leading to a simplified structure of modern property law. The strict rules of common law have now been supplemented by what equity came to add. In this way solutions were given to disputes that would otherwise be left unsolved leaving plaintiffs with no remedy to their claims. Modern property law is now well structured and understandable. Once someone goes through the historical structure and development of equity and the creation of trusts, can certainly have a clear view of modern property law.