ABSTRACT
117A valid declaration of trust over personal property will not require any formality, provided that it can be demonstrated that the settlor intended to create an immediate trust over the property. In relation to property to be made subject to a trust on death, in relation to trusts of land, and in relation to certain other property, there will be statutory formalities to be satisfied before a valid trust will be created.
The settlor must have had proprietary rights in the trust property at the time of purporting to create the trust; it will not be sufficient that the settlor acquires those property rights at some subsequent time. For the effective constitution of the trust, the legal title in the trust fund must be transferred to the trustee.
In cases of fraud, equity will not permit common law or statute to be used as an engine of fraud such that it may impose a trust even though there was no valid declaration of that trust.
The trust will not be used to perfect an imperfect gift, on the basis that equity will not assist a volunteer. Where the intention was to make a gift, whether or not a gift was validly made will be decisive of the matter.
Where a promise is made under covenant to the effect that the settlor will settle property which is to be acquired in the future, there will not be a valid trust. A valid trust will only be created if the settlor owned property rights in the trust property at the time of purporting to declare the trust. Otherwise, only the parties to that covenant will be entitled to enforce the covenant at common law for damages, or in equity by specific performance if they have given consideration for the promise. Trustees who are parties to a covenant may not enforce that covenant in trusts law, unless the benefit of the covenant itself has been settled on trust.
A disposition of an equitable interest must be effected by signed writing, unless both legal and equitable title pass together from the trust. Where a sub-trust is created, so that the beneficiary retains some office as sub-trustee, there is no disposition of the equitable interest – unless there is an outright assignment of that equitable interest. An agreement to transfer the equitable interest has been held to transfer the equitable interest automatically on the specific performance principle, without the need for signed writing.
