THE LAW OF TRUST:GPR 3208.

GROUP 2 Assignment. REGULAR CLASS

Date of Submission: 20th May, 2024.

Name Registration Number

1. Elizabeth Nairochin Leado G34/3452/2022

2. Juma Musima Kelvin G34/3324/2022

3. Glory Sharon mwende G34/3393/2022

4. Mulwa Erick Mutunga G34/3453/2022

5. Karani Collins Smith G34/3448/2022

6. Kioko Patrick Muema G34/3442/2022

7. Karina Stacy Wangui G34/3415/2022

8. Nganga Nelius Wairimu G34/3411/2022

9. Tipape Jacinta Nairesiae G34/3318/2022

10. Felix Onyoni Tom G34/3359/2022

11. Edoket Jackline Looru G34/3431/2022

Part 1: Trust: The greatest creation of equity.

Introduction
The law of trust is a creation of equity to manage and execute trusts. Keeton defines a trust
as the relationship that arises whenever a person called a trustee is compelled in equity to
hold property for the benefit of some persons or for some object in such a way that the real
benefit of the property accrues to beneficiary or the objects of the trust1.To determine
whether this branch of equity is its greatest creation, it is necessary to understand the
origins of the law of equity and successively the law on trusts, the evolution on trusts use,
the problems it was envisioned to resolve and its impact to both law and society.
Historical background of Equity and Trusts
Equity is defined as, “those principles of natural justice administered at first by the King-in
Council, and later by the Chancellor, first as a member of that Council and afterwards as
an independent judge, to correct and supplement the common law2.”It derives its origin
from the King’s bench, and later on the Chancery’s attempt to mitigate the harshness of
the common law following petitions to the King by aggrieved citizens. The landmark case of
Lord Dudley v Lady Dudley (1705) further highlighted that the goal behind the creation of
the law of equity was to mitigate the rigor of the common law and give it a moral virtue.
Trusts, on the other hand, date back to even the era of Roman and Greek law. However, the
history of its application within legal frameworks dates back to English law.In the early 15 th
century, trusts developed as a concept referred to as ‘uses’. In this concept, land was
conveyed to a party that could hold land for the use of another party, mostly one that could
not hold or use the land.
However, a problem arose in that the common law only recognized legal title, which in this
case, accrued to the common day trustee. It is here that the law of equity adopted trusts as
a concept by enforcing its execution. In this case, the executor, called the ‘feoffee to uses’
would hold property on behalf of and for the benefit of the beneficiary, referred to as
‘cestui que use’ and in the case of the breach of the ‘use’, it was enforced as a breach of a
contract by the court of chancery. The court also developed a new form of holding
property, equitable ownership. The beneficiary thus had an equitable interest in the
property.

A major point of evolution of the law of trusts was the enactment of the statute of uses of
1535. The act effectively rendered the main use of ‘uses’, which was tax evasion,
ineffective unless one was in active service as a knight to the king. However, a loophole
was found in the statute, which was to employ a second use called a trust. Since this
second use was unaffected by the law, it was adopted, together with its terminologies
such as trustee in place of feoffee. The uses thus successfully evolved into modern day
concepts of the term.

Problems that Trust envisioned to resolve.

1
Keeton Law of Trusts (11th ed.). p 2.
2
Hanbury and Maudsley, Modern Equity (16thEdition, Sweet & Maxwell), page 3
Trusts were envisioned to resolve the problem of inheritance, especially to minors or other
parties that were unable to hold land. In this regard, the owner of the property would assign
a trustee to hold it until the successor could acquire legal title for the land.
Other scholars also hold other views on how and why trusts developed for modern day
usage. In one journal, Maitland1 says:
“The Trust is an effort to escape from the ever-deepening and ever-recurrent
crisis in Capitalism. It is the confession of the upper middle class- the class
that has most used the trust – that the contradictions in Capitalism cannot be
resolved. The tricks of capitalism must, therefore, be minimized… this device
(trusts) employed to protect the only class that benefits from capitalism has
failed pathetically.”
It is plausible that Maitland’s tone in the second quote betrays the political and economic
views surrounding the development of the law of Trusts after the great depression.
A Fundamental understanding of the greatness of Trusts.
While applauding the merits of Trusts, Maitland once said that,
“Of all the exploits of Equity the largest and the most important is the
invention and development of the Trust. It is an ‘institute’ of great elasticity
and generality; as elastic, as general as contract. This perhaps forms the
most distinctive achievement of English.”
In Maitland’s praise for trust as the greatest invention, he attributes it’s greatness and
importance to it’s elasticity(versatility) which makes trusts the most distinctive
achievement of English lawyers.
The elasticity of Trusts.
Moffat observes some main aspects behind the great elasticity of Trusts.
1. The founder or a court (in the case of imputed trusts), can play with particulars of
property ownership like nominal title, benefit and control.
2. Rights and obligations created expressly are fortified by effective equitable
remedies and supplemented, by so far as is necessary, by a substratum of detailed
legal remedies.
1.Manipulation of the particulars of property ownership2.
(a) Nominal ownership of property can be separated from benefit and the right
of control. Simply put, the beneficiary can be the owner in all ways but in
name. The beneficiary can conceal their ‘beneficial ownership’.
(b) Benefits may be split amongst two or more beneficiaries, who may be
entitled to shares, or successively, or contingently according to the wishes

1
M Franklin ( [1933] 19 Tur LR 473 at 475
 of the founder of the trusts (as set out in the trust). To have a ‘contingent
entitlement’ means simply that the beneficiary must satisfy some
requirement such as reaching a specified age before his or her interest will
accrue to or ‘vests’ in him or her.
(c) Allocation of benefit may be put in suspense according to the wishes of the
founder, or any person (s) designated by him.
(d) Some or all aspects of control and management of the trust property may be
divorced from entitlements to benefit and reserved to the founder of the trust
it conferred by him or her on the trust or her on the trustees or nay other
person.
(e) When trust property is ‘converted’ (e.g. land is sold, it money subject to the
trust is invested in lands or shares), the new property which is so acquired by
the trustees is held by them subject to the trust.
(f) Where, for legal or practical reasons, the group of persons intended to
benefit, directly or indirectly, from a disposition of property is too large to
enable them to be constituted as co-owners holding a legal title, the title
can instead be transferred to a smaller number, to be held in trusts for the
benefit of the intended parties, who still retain control. E.g. the Mazrui Land
Trusts, where the board holds the legal title for the benefit of the Mazrui’s
and their descendants.
The most significant feature of a trust Is the manner in which it separates legal ownership
of trust from its equitable or beneficial ownership. Historically, common law recognised
the trustee as the legal owner of the trust property while equity sought to ensure that any
benefits derived from the trust went to the beneficiary. Initially, this meant that the
beneficiary had a right in personam enforceable against the trustee. In due course,
however, the beneficiary came to be recognised as the equitable owner of the property
with his equitable ownership subsiding with the legal ownership of the trustee. Therefore,
the effect of this was that the beneficiary acquired a proprietary interest in the trust
property which he was entitled to enforce in rem against the whole world except a bona
fide purchaser of value without notice.
Trusts also aid in succession. An outright gift may be made to a parent, in the hope that on
the parent’s death that property will go to his child, but there is no guarantee that it will do
so. A gift to trustees to hold on trust for the parent for life with remainder to the child will
ensure that the child derives a benefit. It is important for the intentions of the settlor to
create a trust to be expressly stated or the language adopted to be clear to easily infer that
from the will. In Comiskey vs Bowring – Hanbury (1905) AC 84 the testator gave all his
property to his wife “absolutely in full confidence” that she will make such use of it as I
would have made myself and that at her death, she will devise it to such one or more of my
nieces as she may think fit”. The House of Lords held that on a true construction of the
whole will, the words “in full confidence” created a trust.
 2. Effective equitable remedies.
Under common law, the trustee was the legal owner of the property, and he/she was under
no legal Obligation to pay back. Under the law of Trusts; the ownership is not taken from
the trustee but is rendered nominal by entitling the beneficiaries to invoke remedies
granted by Equity in order to secure the benefit and control of the property as far as the
trust confers on them.

The weakness of Trusts.

Complexity
Some authors describe trusts as the greatest creation of equity due to their ability to
manage and protect assets across generations. However, the complexity and potential for
disputes in Kenyan trust law challenge this view. The criticism lies in the fact that the
complexities can detract from the equitable principles of fairness and justice that trusts
are meant to uphold. Instead of serving as a straightforward tool for asset management,
trusts can become entangled in legal proceedings that may not always result in equitable
outcomes

Conclusion
In view of the historical development of trusts, the prior and later achievements and
failures, it is possible to conclude that Trusts can indeed be termed as one of the greatest
creations of equity. Its maneuver of previously rigid form of ownership and its success in
addressing the problems it was supposed to address in regard to property, and going even
beyond due to its flexible nature, to the extent that it remains relevant to this date makes it
unique among all branches of equity. While it is not without flaws, such flaws are
outweighted by the weight of its necessity and merits. Therefore, we agree with scholars
that term the law of trusts as the greatest creation of equity.

PART B: VARIOUS FORMS OF TRUST.

INTRODUCTION.
Trusts manifest themselves in different forms. However, they can be categorized into two
main categories; Express trusts and implied trusts, Express trusts are those that are
created intentionally by the settlor while implied trusts are those ones that arise from
presumed as opposed to the expressed.
1. EXPRESS TRUSTS.
An express trusts are created deliberately by the settlor and as a general rule may be
created by will, writing or orally in this trustee obtains legal title of the trust property as
appropriate, an intervivos, transfer or by will.
In regard to formation of express trusts they are three certainties that the settlor has to
demonstrate in Order for the trust to be considered valid, they are discussed as follows.
a). Certainty of terms
The settlor must have had an intention to create a trust as opposed to something else,
there is no requirement to use a specific form of words, when creating a trust over property
other than land, the court will be prepared to infer an intention to create a trust from
circumstances. In the case of Re Diggles (1888) 39 Ch.D253,a testatrix gave all her
property to her daughter, her heirs and assigns and said, “and it is my desire that she
allows to A.G an annuity of £25 during her life". The Court of Appeal held that no trust to
pay this money had been imposed on her daughter.
Certainty of Subject Matter.
The trust fund must be separately identifiable from other property. A purpoted trust in
which the trust property is mixed with other property, so that it is impossible to identify
precisely which property to be held on trust then it is invalid. C.Certainity of objects.
In this context the beneficiaries or the objects of the trust must be identifiable and capable
of being rendered certain. In the case of I.R.C vs Broadway Cottages Trust(1955) Ch 678 it
was held that the trustees are required at any given time be able to make a full list of
beneficiaries and if the class was uncertainable at any time the trust would fail for
uncertainty.
2. IMPLIED TRUSTS.
This is a trust that arises from the presumed as opposed to the expressed, They are called
resulting trust as most of the time they are implied by law., this trusts consists of
constructive trust and resulting trusts
Resulting trusts
A resulting trust is a form of trust which is imposed by operation of law that is to say a
resulting trust is imposed automatically by equity and recognized by the courts without the
need for the parties to have intended to create a trust.,in the case of Westdeutche
Landesbank vs Islington, this case establishes resulting trust in two ways., Firstly in
circumstances in which two or more people acquire property with the intention that they
are all intended to be equitable owners of that property, Secondly a resulting trusts are
established where an owner of Property has attempted to transfer property outright or has
attempted to create a trust over it ,but that intention had failed for some reason,then the
equitable interest in that property is held on resulting trust for the original owner of the
property.
Constructive trusts.
A constructive trust is imposed by equity without the presumed or expressed intention of
the owner. They are not created by the parties which are subject to them but are implied by
the facts of a case and ordered by the court
Equity will impose such a trust when it would be an abuse of confidence for the holder of
the property to hold it for his own benefit. An example is in the case of Keech v Sandford
(1726) where the Trustee of leasehold property used his position to induce the landlord to
renew the lease to him on determination of the lease. It was held that this was an attempt
to obtain a personal advantage for himself which was antagonistic to the Beneficiary’s
interest and in bad faith. He was directed to hold the new lease on the same trusts he held
the old lease.
Constructive trusts are often imposed by courts to prevent unjust enrichment by a person
or persons who have wrongfully obtained an interest in another person’s property.
3. SECRET TRUSTS
This is an equitable obligation communicated to an intended trustee during the testator’s
lifetime. Secret trusts arise when a testator wishes to make provisions for someone but
does not intend for it to become public knowledge as is the case in a will.
The doctrine of secret trusts was originally based on the maxim that ‘equity will not allow a
statute to be used as a cloak or engine for fraud’.
If a testator makes a gift of property in his will on the strength of a promise by the recipient,
that he will hold that property on trust for a third party, equity will prevent any attempt by
the recipient of the gift to rely on the absence of any mention of this trust in the will.
In enforcing such a trust it would seem that equity directly contradicts the terms of section
9 of the Wills Act. However, this is not the case. The basis of the doctrine of secret trusts is
that the trust operates outside the will, the Act is not concerned with the trust at all. This is
supported by Viscount Sumner in the leading case of Blackwell v. Blackwell (1929).
The basis of a secret trust is the existence of a validly executed will which passes the title
of property to the intended trustee and the acceptance by the latter of an equitable
obligation during the testator’s lifetime
In the case of Ottaway v. Norman (1972) Brightman J. stated that the following as the
essential requirements of a secret trust:
1.The intention of the testator to subject the primary donee to an obligation in favour of the
secondary donee
2.Communication of that intention to the primary donee
3.The acceptance of that obligation by the primary donee either expressly or by
acquiescence.
Primary donee refers to the person on whom such a trust was imposed while secondary
donee refers to the beneficiary under that trust.
Fully Secret Trusts
These are trusts that are fully concealed by the testator. On the face of the will, the alleged
trustee takes absolutely and beneficially
Half Secret Trusts
This will arise where the trustee takes as trustee on the face of the will but the terms of the
trust are not specified.

4. PUBLIC TRUSTS

A public trust is that a trust which is designed to promote a purpose which is beneficial in
some way to society (e.g the relief of poverty), this trust may also be regarded as public even
if it incidentally confers a benefit on an individual or a class of individuals and they are
normally enforced by the attorney General or any other public officer empowered by law to
do so .

5. CHARITABLE TRUSTS

Charitable trusts are trusts that tend to do charity work in the society as they aim to benefit
the society at large or appreciate portion of it ,for a charitable trust to be termed as valid for
the purpose it must meet the following:

• Be of charitable nature in order to carry out the charity work effectively.

• The trust should benefit the public.
• It should exclusively carry out the charity work.

What is quite clear is that for a trust to be termed as charitable it must benefit the public at
large.So in Re Hobourn Air Raid Distress Fund (1946).194 an emergency fund which had
been built up during the war had used party for comforts for ex-employers serving in the
forces and later for employees who had suffered distress from air raids .It was held that
because of the absence of a public element no charitable trust had been Created and the
surplus funds over which the application had been made to the court, should be returned
to the contributions .