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there are other analogous situations where the law cannot or will not allow a property holder to continue to enjoy the benefit of the property. The most obvious circumstances in which such situations arise is where a property holder dies or is made bankrupt. However, although these situations are analogous to each other and to the trust, there are important differences between them. There has been a tendency to overlook these differences and assume that all such managerial property holding mechanisms must conform analytically to the trust model – in particular, to assume that, since the property holder is no longer entitled to benefit from the property, there must be someone else who is entitled to the benefit in precisely the same way as a beneficiary under a trust is entitled to benefit. However, as we see below, the courts have rejected such attempts to force all types of managerial property holding into the trusts straitjacket, and now accept that different allocations of management, control and benefit are appropriate in these very different circumstances.

8.4.2.1. Trust

In a trust, title to property is held by one or more trustees who are required to use it not for their own benefit but for the specific purpose of the trust. This might be to carry out a specified, usually charitable, purpose, or it might be to administer the property for the benefit of specified people – the beneficiaries. For example, I might transfer £10,000 to you on terms that you will hold it on trust for my two children until they have reached the age of eighteen. This would usually (subject to the precise terms I impose) mean that you will have to invest the £10,000 so that it produces an income, and then you will have to make sure that that income is spent on the children while they are under eighteen, and then hand over half the capital representing the original £10,000 to each child on her eighteenth birthday.

This is not the only way in which a trust can come into existence. Instead of transferring the £10,000 to you to hold on trust for my children, I might have made myself trustee of it, by declaring that I hold it on trust for them. These are both examples of an express creation of a trust. But a trust might also be imposed on me by the law (historically, by equity) whether I intend it to happen or not, either via a resulting trust in the circumstances Lord Browne-Wilkinson describes in the extract from Westdeutsche Landesbank v. Islington London Borough Council given above, or via a constructive trust. A constructive trust is imposed in circumstances where the court regards it as unconscionable for the legal title holder to use the property for his own benefit. So, for example, if you and I buy a house together in my name, but on the common understanding that it is to be ours jointly, and on the strength of this you pay half the mortgage payments, equity will impose a constructive trust on me so that I am required to hold the title to the house on trust for us jointly (Lloyds Bank plc v. Rosset [1990] 1 AC 107).

Here we are not concerned with how a trust comes into existence. What we are interested in is how ownership is fragmented once property is subjected to a trust, however that came about. So, to go back to the first example, if I give you £10,000