Statements of equitable principle stretch back to the Ancient Greeks in the work of Aristotle, while examples of rules analogous to trusts were found in the Roman law testamentary institution of the fideicommissum, and the Islamic proprietary institution of the Waqf. However, English trusts law is a largely indigenous development that began in the Middle Ages, from the time of the 11th and 12th century crusades.
After William the Conqueror became King in 1066, one “common law” of England was created. Common law courts regarded property as an indivisible entity, as it had been under Roman law and continental versions of civil law. During the crusades, landowners who went to fight would transfer title to their land to a person they trusted so that feudal services could be performed and received. But many who returned found that the people they entrusted refused to transfer their title deed back.
Sometimes, common law courts would not acknowledge that anybody had rights in the property except the holder of the legal title deeds. So claimants petitioned the King to sidestep the common law courts. The King delegated hearing of petitions to his Lord Chancellor, who established the Court of Chancery as more cases were heard. Where it appeared “inequitable” (i.e. unfair) to let someone with legal title hold onto land, the Lord Chancellor could declare that the real owner “in equity” (i.e. in all fairness) was another person, if this is what good conscience dictated. The Court of Chancery determined that the true “use” or “benefit” of property did not belong to the person on the title (or the feoffee who held seisin). The cestui que use, the owner in equity, could be a different person. So English law recognised a split between legal and equitable owner, between someone who controlled title and another for whose benefit the land would be used. It was the beginning of trust law.
During the 15th century and 16th century, “uses” or “trusts” were also employed to avoid the payment of feudal taxation. If a person died, the law stated a landlord was entitled to money before the land passed to an heir, and the landlord got all of the property under the doctrine of escheat if there were no heirs. Transferring title to a group of people for common use could ensure this never happened, because if one person died he could be replaced, and it was unlikely for all to die at the same time. King Henry VIII saw that this deprived the Crown of revenue, and so in the Statute of Uses 1535 he attempted to prohibit uses, stipulating all land belonged in fact to the cestui que use. Henry VIII also increased the role of the Court of Star Chamber, a court with criminal jurisdiction that invented new rules as it thought fit, and often this was employed against political dissidents. However, when Henry VIII was gone, the Court of Chancery held that the Statute of Uses 1535 had no application where land was leased. People started entrusting property again for family legacies. Moreover, the primacy of equity over the common law soon was reasserted, and this time supported by King James I in 1615, in the Earl of Oxford’s case. Due to its deep unpopularity the “criminal equity” jurisdiction was abolished by the Habeas Corpus Act 1640. Trusts grew more popular, and were tolerated by the Crown, as new sources of revenue from the mercantile exploits in the New World decreased the Crown’s reliance on feudal dues. By the early 18th century, the use had formalised into a trust: where land was settled to be held by a trustee, for the benefit of another, the Courts of Chancery recognised the beneficiary as the true owner in equity.
In his book Bleak House (1853), Charles Dickens pilloried the Court of Chancery‘s arcane and tedious practices, exemplified in his fictional case of Jarndyce v Jarndyce. Within two decades, Parliament abolished the court, and merged equity with the common law through the Supreme Court of Judicature Act 1873, and its successor Judicature Acts.
By the late 17th century, it had become an ever more widely held view that equitable rules and the law of trusts varied unpredictably, as the jurist John Selden remarked, according to the size of the “Chancellor’s foot”. Over the 18th century English property law, and trusts with it, mostly came to a standstill in legislation, but the Court of Chancery continued to develop equitable principles notably under Lord Nottingham (from 1673–1682), Lord King (1725–1733), Lord Hardwicke(1737–1756), and Lord Henley (1757–1766). In 1765, the first Professor of English law, William Blackstone wrote in his Commentaries on the Laws of England that equity should not be seen as a distinct body of rules, separate from the other laws of England. For example, although it was “said that a court of equity determines according to the spirit of the rule and not according to the strictness of the letter,” wrote Blackstone, “so also does a court of law” and the result was that each system of courts was attempting to reach “the same principles of justice and positive law”. Blackstone’s influence reached far. Chancellors became more concerned to standardise and harmonise equitable principles. At the start of the 19th century in Gee v Pritchard, referring to John Selden‘s quip, Lord Eldon (1801–1827) said ‘Nothing would inflict upon me greater pain in quitting this place than the recollection that I had done anything to justify the reproach that the equity of this court varies like the Chancellor’s foot.’ The Court of Chancery was meant to have mitigated the petty strictnesses of the common law of property. But instead, came to be seen as cumbersome and arcane. This was partly because until 1813, there was only the Lord Chancellor and the Master of the Rolls working as judges. Work was slow. In 1813, a Vice-Chancellor was appointed, in 1841 two more, and in 1851 two Lord Justices of Appeal in Chancery (making seven). But this did not save it from ridicule. In particular, Charles Dickens (1812–1870), who himself worked as a clerk near Chancery Lane, wrote Bleak House in 1853, depicting a fictional case of Jarndyce v Jarndyce, a Chancery matter about wills that nobody understood and dragged on for years and years. Within twenty years, separate courts of equity were abolished. Parliament merged the common law and equity courts into one system with the Supreme Court of Judicature Act 1873. Equitable principles would prevail over common law rules in case of conflict, but the separate identity of equity had ended. The separate identity of the trust, however, continued as strongly as before. In other parts of the Commonwealth (or the British Empire at the time) trust law principles, as then understood, were codified for the purpose of easy administration. The best example is the Indian Trusts Act 1882, which described a trust as meaning “an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the bearer”.
In its essence the word “trust” applies to any situation where one person holds property on behalf of another, and the law recognises obligations to use the property for the other’s benefit. The primary situation in which a trust is formed is through the express intentions of a person who “settles” property. The “settlor” will give property to someone he trusts (a “trustee”) to use it for someone he cares about (a “beneficiary”). The law’s basic requirement is that a trust was truly “intended”, and that a gift, bailment or agency relationship was not. In addition to requiring certainty about the settlor’s intention, the courts suggest the terms of the trust should be sufficiently certain particularly regarding the property and who is to benefit. The courts also have a rule that a trust must ultimately be for people, and not for a purpose, so that if all beneficiaries are in agreement and of full age they may decide how to use the property themselves. The historical trend of construction of trusts is to find a way to enforce them. If, however, the trust is construed as being for a charitable purpose, then public policy is to ensure it is always enforced. Charitable trusts are one of a number of specific trust types, which are regulated by the Charities Act 2006. Very detailed rules also exist for pension trusts, for instance under the Pensions Act 1995, particularly to set out the legal duties of pension trustees, and to require a minimum level of funding.
People’s wills and testaments, like William Shakespeare‘s will here, often present difficulties in trust law where the meaning of what is intended is not completely clear. The House of Lords, however, has said a trust should only fail if its meaning is “utterly impossible” to deduce.