Sample Answer
Is the Express Trust Better Understood as Property or Contract for the Benefit of a Third Party?
Introduction
The express trust occupies a central position in English private law, yet its conceptual foundation remains contested. At the heart of the debate lies a fundamental question: should the express trust be characterised primarily as a property institution, or can it be more accurately explained as a contractual arrangement for the benefit of a third party? This issue is not merely theoretical. The answer shapes how trusts interact with insolvency, remedies, enforceability and the wider structure of private law. This essay critically assesses both characterisations and argues that, while contractual analogies can be helpful in limited contexts, the express trust is more appropriately and coherently understood as a proprietary institution.
The Property-Based Characterisation of the Express Trust
Traditionally, English law has treated the express trust as a division of property rights. Legal title vests in the trustee, while equitable title vests in the beneficiary. This dual ownership structure has long been recognised as a defining feature of the trust and underpins much of trust doctrine. The beneficiary’s interest is not merely personal but proprietary in nature, enforceable against third parties and capable of surviving the trustee’s insolvency.
This proprietary analysis is strongly supported by case law. In Westdeutsche Landesbank v Islington LBC, the House of Lords confirmed that a beneficiary under an express trust holds a proprietary equitable interest in the trust property. That interest arises once the trust is properly constituted and is enforceable independently of any personal obligations owed by the trustee. This reflects the core idea that the trust operates on property, not merely on promises.
The proprietary character of the trust is also evident in remedies. Beneficiaries can assert proprietary claims such as tracing and following, which are unavailable in purely contractual relationships. If a trustee misapplies trust assets, beneficiaries may recover the property or its substitutes even from third parties, provided the relevant conditions are met. This level of protection goes far beyond what contract law offers to third-party beneficiaries.
Furthermore, the trust’s ability to withstand the trustee’s insolvency is a powerful indicator of its proprietary nature. Trust property does not form part of the trustee’s personal estate and is therefore shielded from the trustee’s creditors. If the express trust were merely a contract for the benefit of a third party, beneficiaries would rank alongside unsecured creditors, which is clearly not the case.
