Master’s Thesis
Patrimony: Solving the Trust Puzzle in the Civil Law?
Can the common law trust be explained in terms that does not uproot the conceptual foundations of
the civil legal tradition?
Name: Rebecca Georgia O’Donnell
Master Track: European Private Law
Supervisor: mw. mr. Selma de Groot
Word Count: 12, 880
Date of Submission: 5th July 2018
CONTENTS
ACKNOWLEDGEMENTS
3
ABSTRACT
4
INTRODUCTION
5
CHAPTER I
9
CHAPTER II
14
CHAPTER III
20
CONCLUSION
29
BIBLIOGRAPHY
31
ACKNOWLEDGEMENTS
I would like to extend the sincerest of thank you’s to Ms. Selma de Groot at the University of
Ams-terdam for her help and insight during the writing of this master’s thesis, our discussions have truly
been invaluable and I am hugely appreciative of the assistance that has been offered. I must also
extend my acknowledgements to Dr. Frankie McCarthy and Mr. John Macleod for igniting my
in-terest in Scots property law, as a mixed legal jurisdiction, at the University of Glasgow during my
undergraduate degree.
ABSTRACT
From civilian lawyers’ eyes the trust is often regarded as “a special child of the English common law” and 1
as such it does not fit within the principled confines of the civil law tradition. The problem that the trust pos-es to the civil law is the situation of ownership. It is not automatically clear who owns the trust property and in what capacity they do so. In the traditional common law explanation of the trust, on the basis of the prin-ciples of equity the trust assets are owned both by the trustee and the beneficiary, in some sense ownership is divided. This contravenes the fundamental civilian notion that ownership is absolute and indivisible.
This discussion seeks to question both our understanding of ownership and, critically, its relationship with the trust. The method for doing so begins with an enquiry into theories arising from various jurisdictions about that relationship. The question advanced herein is whether that adoption takes place within the con2
-fines of the already formed legal space or, whether it must be considered as an anomaly: something that does not exactly fit the mould but we accept it, just because. The research method adopted consists of a literature study with a legal-comparative background. The main focus of this discussion will be on theories proffered by George Gretton and Kenneth Reid, both of which are Scottish legal scholars, as it is their theory of dual patrimony that sets the stage for the introduction of trust into the civil law. Or, at least, as it is so contended. It is submitted that Scots law provides an interesting example of a middle-ground between the common law and the civil law. By way of contrast the work of Lionel Smith provides the basis for the understanding of the common law trust.
Chapter I asks: what is the history of the trust in the common law — that is, English law — and in Scots law as the two main points of reference for a juxtaposition of grounded theoretical understandings of the trust? Chapter II will then delve deeper into the concepts of ownership, patrimony, rights, and the question is whether one can unpick from a theoretical analysis where the law stands insofar as a theory of the status of rights is concerned. The question posed is whether a convincing theory of the trust can slot into the box that the two legal systems have created to characterise rights and right-holding. Chapter III will look, in detail, at the various conceptual understandings — as posited by the leading scholars — for the trust. The focus will be on the English common law, Scots law and Quebecois law, as mixed jurisdictions that have adopted the trust yet quite differently. This chapter’s analysis will culminate in an attempt to expose the most convincing theory of the trust, the question posited: is there such a thing as a convincing theory from a system-neutral perspective? It becomes clear that the dual patrimony theory does indeed convicingly explain a Scottish ver-sion of the trust but not the trust in its original common law form; it is submitted that such an explanation could only be couched in terms of entitlements and persistent rights and thus requires us to take an innova-tive approach to the concept of ownership and patrimony.
R. Helmholz & R. Zimmermann 'Views of trust and Treuhand: An introduction' in Helmholz & Zimmermann (ed) Itinera Fiduci
1
-ae:Trust and Treuhand in Historical Perspective(1998) 507, p.27.
It is noted that French jurists have provided a rich literature exploring the status of ‘ownership’.
INTRODUCTION
From civilian lawyers’ eyes the trust is often regarded as “a special child of the English common law” and 3
as such it does not fit within the principled confines of the civil law tradition. The trust is a device that fits neither within, nor wholly outwith, the law of property, the law of obligations and the law of persons and so 4
many civil law jurisdictions remain defiant that they will not welcome the trust into their legal system. How-ever, the trust is somewhat of a vital commercial device, it is considered to be indispensable in commercial relations, certainly in common law jurisdictions, and it is one of the common law concepts that has been adopted in all mixed jurisdictions, despite the fact that all of those jurisdictions adopt a civil law conception of ownership. The fact that the common law can claim parentage of the trust does not necessitate that the trust is specially reserved to that legal system, an abundance of recent legal literature questions this very idea. It appears that legal theorists are increasingly closer to identifying a convincing explanation for the trust without reference to concepts that are alien to the civilian lawyers understanding of the legal system, in particular its property law, and — crucially — without mystifying the conceptual understanding of the trust on the basis that it is a simply necessary institution whether or not it slots into the broader legal regime. This could have the effect that not only can a civil lawyer begin to understand the trust mechanism, but also per-haps welcome its introduction into their own legal system.
It is suggested that civilian lawyers “fret and puzzle about the trust” because they regard it as “an arcanum, 5
to be understood only in terms of the mysteries of equity”. The authors experience conveys that lawyers ed6
-ucated in the civil law become tied up in the understanding of the trust, before indicating that it is something they cannot wrap their head around. An interesting example of the biases of our mind when taught that some-thing — the concept of ownership — works a certain way. Contrary to this the author did not become mud-dled when trying to pin down the essence of the trust. In one breath Scots law students are told that owner-ship is absolute and indivisible and in another they are taught the trust; its explanation being grounded in the “dual patrimony theory”. In light of the “trust pandemic” that is spreading across the world, particularly af7
-ter the coming into force of the Hague Convention on the Recognition of Trusts, it seems that the trust is 8
indeed a vital device in not only the legal system, but more essentially, the commercial world. The resistance to the trust in the civilian world is, however, not unfounded. It is suggested that it cannot simply be trans-planted from the common law to the civil law; there must be some conceptual framework that nestles the trust comfortably within the system. The idea that coherence in theory “is not a necessary condition of
R. Helmholz & R. Zimmermann 'Views of trust and Treuhand: An introduction' in Helmholz & Zimmermann (ed) Itinera Fiduci
3
-ae:Trust and Treuhand in Historical Perspective(1998) 507, p.27.
M. Milo & J. Smits, Trusts in Mixed Legal Systems: A Challenge to Comparative Trust Law (2000) 3, European Review of Private
4
Law, 421-426, at 422.
G. L. Gretton, Trusts without Equity (2000) 49 International & Competition Law Quarterly 599, at 610.
5
Ibid.
6
D. Clarry, Fiduciary Ownership and Trusts in a Comparative Perspective (2014) 63 International & Comparative Law Quarterly
7
901-933, at 902.
Hague Convention on the Law Applicable to Trusts and on Their Recognition, The Hague, 1 July 1985, in force 1 July 1992.
tiveness in law” cannot be accepted where the law prides itself in being principled and well reasoned. 9
Therefore a convincing explanation of the trust in the civil law is necessary.
The trust is a tripartite relationship. Broadly the idea is that the ‘truster’ transfers property into a trust 10
which the ‘trustee’ holds and administers for the benefit of a third party, the ‘beneficiary(ies)’. Macdonald states that “the defining feature of the trust is not the character of the juridical act by which it is constituted, but rather the three roles that it envisions — settlor, beneficiary and trustee”. Thus, the functional utility of 11
the trust is more important than the specific modes of its creation; for this reason this discussion will not delve into the intricate specificities of the creation of particular types of trust. Rather, the most relevant point is that the trusts are:
“legal relationships created – inter vivos or on death – by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.”. 12
The problem lies with the situation of ownership, the question is: who owns the trust property? On one hand, the trustee has all the powers of administration and control, but this does not resemble our traditional under-standing of ownership as usus, fructus and abusus of the fund. On the other hand, the beneficiary is eventu13 -ally entitled to the fructus and, indeed, perhaps the usus and abusus of the fund, but this is qualified in time,
and the trust property is not stagnant: its contents might look very different by the time that the beneficiary(ies) become entitled to it. In addition to this, like the trust property, the beneficiaries might also be fluctuating, or at least unascertained at the time of the creation of the trust; can a non-identified person
own a non-identified thing?
There are three classical objections to the transplantation of the trust into the civil law. These are eloquently put forth by Bolgár as being “first, a unitary conception of ownership, inconsistent with duplication or divi-sion of rights in rem in the same thing; second, the supplementary notion, elaborated in the German doctrine, that public registration of rights in rem involves taxative codification of such rights, a numerus clausus; and, third, the appearance of a variety of devices, serving in a degree the same purposes as trusts and calculated for practical reasons to escape the procrustean bed prepared for the evolution of property law by the
D. Howarth, Law as Engineering (Cheltenham: Edward Elgar, 2013), p.163.
9
In English law the “settlor”. The author will refer to the Scottish terminology: “the truster”, but if the word “settlor” is quoted it
10
should be noted that it means the same.
R. A. Macdonald, Reconceiving the Symbols of Property: Universalities, Interests and Other Heresies, (1994) 39 McGill Law
11
Journal 761, at 803.
Hague Convention, Supra n.6, Article 2.
12
B. Akkermans Concurrence of Ownership and Limited Property Rights (2010) 2 European Review of Private Law 259-284 at
265-13
266 in reference to the French Code civil, this contrasts to the German conception that “the right of ownership is seen as the para-mount entitlement to a corporeal object, ownership was seen as an indivisible power over an object” (at 267).
ous logic of these conceptions. These three factors are the main obstacles to the reception of the trust in modern civil law”.14
This discussion seeks to question both our understanding of ownership and, critically, its relationship with the trust. The method for doing so begins with an enquiry into theories arising from various jurisdictions about that relationship. The aim is not to identify a way in which the trust-concept can practically be trans15
-planted into civil law systems — it is submitted that any legal system can legislate a specific caveat to the general principles of the law, as anyone who has ever read the law will know it is abundant with general principles, exceptions and exceptions to those exceptions — however, as identified it is the conceptual un-derstanding of the trust in the civil law that is the crucial point. The aim is neither a comparative analysis of black letter law: how legal systems have actually taken the concept and moulded it into something that ap-pears to fit, but rather an exposition of the theoretical underpinnings of the trust in its common law form and further afield, with the aim of demystifying the elusive nature of trust in its theoretical form. The question advanced herein is whether that adoption takes place within the confines of the already formed legal space or, whether it must be considered as an anomaly: something that does not exactly fit the mould but we accept it, just because. The research method adopted consists of a literature study with a legal-comparative back16
-ground. The main focus of this discussion will be on theories proffered by George Gretton and Kenneth Reid, both of which are Scottish legal scholars, as it is their theory of dual patrimony that sets the stage for the introduction of trust into the civil law. Or, at least, as it is so contended. It is submitted that Scots law provides an interesting example of a middle-ground between the common law and the civil law. By way of contrast the work of Lionel Smith provides the basis for the understanding of the common law trust. More-over, a vast breadth of authors have contributed meaningfully to the wider discussion about the trust in the civil law and those theories and perspectives will be explored further.
Chapter I asks: what is the history of the trust in the common law — that is, English law — and in Scots law as the two main points of reference for a juxtaposition of grounded theoretical understandings of the trust? Chapter II will then delve deeper into the concepts of ownership, patrimony, rights, and the question is whether one can unpick from a theoretical analysis where the law stands insofar as a theory of the status of rights is concerned. The question posed is whether a convincing theory of the trust can slot into the box that the two legal systems have created to characterise rights and right-holding. Chapter III will look, in detail, at the various conceptual understandings — as posited by the leading scholars — for the trust. The focus will be on the English common law, Scots law and Quebecois law, as mixed jurisdictions that have adopted the trust yet quite differently. This chapter’s analysis will culminate in an attempt to expose the most convincing theory of the trust, the question posited: is there such a thing as a convincing theory from a system-neutral perspective?
V. Bolgár, Why No Trusts in the Civil Law (1953) 2(2) The American Journal of Comparative Law, 204- 219, at 210.
14
It is noted that French jurists have provided a rich literature exploring the status of ‘ownership’.
15
Of course it is significant that the transplantation of the trust mechanism, or devices akin to it, are seemingly accepted — or there
16
is pressure for it to be accepted — because there is a perception that it is too commercially expedient to perpetuate a system whereby obstacles to the trust creates a continuation of “cases where inequitable results occur” (R. Wibier, ‘Can a modern legal system do without the trust?’ in L.D. Smith (ed) Worlds of Trust (Cambridge University Press, 2013), at p.86).
CHAPTER I
Zooming-in on the History of the English and Scots Trust
From the perspective of legal history, it is said that the English common law trust was born out of the fusion of the common law and the courts of equity: “the history of the English trust is the history of equity”. 17
However, whether this is an accurate statement of the present law is debatable. Since the historical account of the trust is so connected with the widespread understanding of it, it is necessary to set out exactly how the common law trust came into being.
Essentially, the rigidity of the common law writ system at the close of the thirteenth century grew unten18
-able where there was a lack of an existing writ for a grievance one did not have a cause of action in the common law courts and therefore was left wanting of a remedy. The only route for relief was to refer the case to the King and his Council, who would pass them along to the Chancellor. The Chancellor provided remedies on an case-by-case basis. Essentially, the question was whether the lack of a remedy could be deemed inequitable if refused. This gave rise to a new body of law, called “equity” which served to “mitigate the rigour of the common law”. The fusion of the common law and equity came through the Judicature 19
Acts 1873 and 1875, allowing courts to apply both “thus attenuating the rigidity of the division”. The 20
mechanism of “use” was created as a means to convey land for use by impoverished Franciscan friars; or in order to maintain land whilst one leaves to fight in the Crusades, or for the circumvention of restrictions on will-making or payment of feudal dues. The problem was that in the common law the “feoffee” (predeces21
-sor to the trustee) became legal owner but this left the “cestui que use” for want of a remedy against the
feof-fee. This lead to, in the interests of equity, the Chancellor being bound to recognise that the cestui que use
had an interest against the feoffee. This began as a obligational claim against him but soon morphed into a “proprietary interest, as a form of ownership”. Thus the notion of “duplex dominium” came into being: 22
there are two rights of ‘ownership’ in the property at one time. Later this form was abolished, but soon 23
morphed into the trust, as we currently understand it: “the greatest and most distinctive achievement per-formed by Englishmen in the field of jurisprudence”. It has been proffered by the courts that “the distinc24
-tion between the legal and equitable estate is the essence of the trust”. In this sense therefore, the history of 25
F. Sonneveldt 'The trust-an introduction’ in F. Sonneveldt and H. L van Mens (eds) The Trust-Bridge or Abyss between Common
17
and Civil LawJurisdictions? (1992) 1 at 2.
M. J. de Waal, The Core Elements of the Trust: Aspects of the English, Scottish and South African Trusts Compared, 117 (2000)
18
South African Law Journal 548, at 552. Ibid. 19 Ibid. at p.553. 20 Ibid. 21 Ibid. 22 Statute of Uses 1536. 23
F. W. Maitland, Selected Historical Essays (1936) p.129.
24
Abdul Hameed Sitti Kadija v. De Saram (Privy Council) [1946] 208 (Ceylon) at 217.
the common law courts and the courts of equity has a lot to answer for in the creation of the trust device, so characteristic to commercial relations today.
Some authors have been induced to ask whether “the trust is not as ‘English’ as some […] would like us to believe”. This is exemplified by the historical rise of the device of use in the courts of equity as compared 26
to the Roman law concept of usus, what we might now consider as one third of the right of ownership, and used at the time to “den[y] the occupant the enjoyment of the (civil and natural) fruits of the object of the
usus; he was only entitled to use the object”. In addition to this, parallels can be drawn between the com27
-mon law trust on one hand and the Roman devices of fiducia, fideicommissum, ususfructus and depositum on the other. In any case, even if it is true that these mechanisms developed separately and unknown to the 28
common law it is clear that the Roman law was not unfamiliar, and certainly not hostile to the notion that 29
the benefit of the thing could be removed from its holding. In fact, as Bolgár points out, a vast amount of 30
Roman jurists recognised such a thing as divided ownership, including Gaius, yet this observation has 31
seemingly been overlooked by civilian legal systems, in particular the Napoleonic Code of 1804 which was a direct reaction to the injustices of the feudal system, derived from the Roman law and the focus has been concentrated upon Celsus' statement that ‘uorum quidem in solidum dominium vel possessionem esse non
posse’. 32
The trust is, additionally, an accepted legal institution in Scotland; it is what we regard as “a mixed system 33
whose property law is a remarkably pure ius commune.” It is unusual in this sense because it is dissimilar 34
to its mixed jurisdiction sisters in that it did not evolve in the face of failed colonialism but rather it is “a mixed jurisdiction left behind, unaccountably at home”. It is also, and crucially, a legal system where the 35
civil law is spoken in the English tongue. Furthermore, it is wondered whether the contribution of the com-mon law to Scotland’s legal culture is little more than a political necessity and that the civilian elements of Scots law are “the most rational, equitable, universal and potentially creative”. Despite this it is accepted 36
that the recognition of the trust in Scots law is a welcome influence on the Scots legal system. However,
C. H. van Rhee, Trusts, Trust-like Concepts and Ius Commune, (2000) 3 European Review of Private Law 453-462, at 454.
26 Ibid. at 456. 27 Ibid. 28 Ibid. at 459. 29 Bolgár, Supra n.12 , at 205-206. 30 Gaius, II.4. 31 D.13.6.5.15. 32
However, some commentators argued that the Scots trust is “so-called” since it does not adopt the form of the ‘original’ common
33
law trust and therefore is not a true trust (D.J. Hayton 'Trusts' in D.J., Hayton, et al (eds.) Vertrouwd met de Trust: Trust and Trust-like Arrangements (1996) 3, p.3).
Gretton, Supra n. 3, at 605. See also K. G. C. Reid, Law of Property in Scotland (1996).
34
K. G. C. Reid, The Idea of Mixed Legal Systems, (2003) 78 Tulane Law Review 5, 7.
35
T. B. Smith, Studies Critical and Comparative (1962), 78.
gardless of its resonance with its English counterpart it does not seem correct to state that it was a simply transplanted from the common law world; rather it evolved in its own right “although in modern times it 37
has been strongly influenced by English law, generally to its benefit”. 38
In contrast to the duplex dominium of the use in the courts of equity south of the border, it is clear that the Scots law always envisioned that ownership — absolute and indivisible — of the trust lies with the trustee, 39
and the beneficiary holds a personal right enforceable against the trustee, in his capacity as trustee. It is ar-gued that
“There is nothing mysterious or puzzling about an owner who undertakes by way of obligations, to hold the whole benefit for someone else: to call that “divided ownership” is a mystification”. 40
The trust in Scotland became a known legal institution in the seventeenth century , but it is deliberated 41
whether the Scots trust, or at least trust-like devices, is traceable even further into legal history, to a contrac-tual mechanism combining depositum and mandatum. It is pointed out that the Scots trust evolved and per42
-petuated as an institution within a civilian context with no adoption of the principles of equity. Despite this, 43
it is notable that the courts have not been immune to some “wobbling”, resulting in some confusion about 44
the location of ownership in the Scots trust. This confusion is exemplified by Heritable Reversionary Co v
Millar where it was stated by Lord Watson that “there can […] be no doubt that according to the law of 45
Scotland the one, though possessed of the legal title, and being the apparent owner, is in reality a bare trustee; and that the other, to whom the whole beneficial interest belongs, is the true owner”. This is gener46
-ally considered to be a hiccup in the case law and has never been adopted seriously as a true representation of the legal organisation of the trust. However, it is worth noting that this profoundly English notion of a 47
“beneficial interest” has been toyed with in much more recent case law relating to insolvency and the float-ing charge. The difficulties that the juxtaposition of the common law and the civil law in Scotland is well-48
D. M. Walker, A Legal History of Scotland Vol IV The Seventeenth Century (1996) 819ff.
37
Reid, Supra n.33, at 29.
38
Stair, Institutions of the Law of Scotland, 1681, I.13.7.
39 Gretton, supra n.3 at 607. 40 de Waal, Supra n.16, at 554. 41 Ibid. at note 27. 42 Ibid. 43
G. L. Gretton, ‘Scotland: The evolution of the trust in a semi-civilian system’ in R. Helmholz & R. Zimmermann (eds.) Itinera
44
Fiduciae:Trust and Treuhand in Historical Perspective (1998) 507 at 532. (1892) 19 R (HL) 43.
45
Ibid. paras. [46]-[47].
46
de Waal Supra n.16 at note 37.
47
Sharp v Thomson 1997 SC (HL) 66, per Lord Jauncey of Tullichettle.
documented and does not require to be restated here, but it is worth noting in light of the fact that it has 49
been indicated by scholars that Scots law does face a real risk of assimilating with the English common law entirely. Hence, a coherent conceptual understanding of devices, that have arisen out of a juxtaposition of 50
the common law and the civil law, are absolutely necessary.
Both the English and Scots trust have the effect that the fund held in trust is shielded from the personal in-solvency of the trustee, and equally the trustee is shielded from the inin-solvency of the trust. Not only is this a crucial element of these trusts but it is essentially this that makes the trust so necessary as a legal device and is the crux of the reason it is deemed to be commercially expedient to adopt such a mechanism in legal sys-tems across the world. It is a crucial rule of both legal orders that the personal creditors of the trustee do not have access to the trust assets for which he holds as (legal) owner for the benefit of another under the terms of the trust. This rule can be explained in the common law by virtue of the principle of divided ownership: 51
the trustee is but a mere “bare owner” and it is the beneficiary that holds title to the beneficial interest in the trust assets thus conferring on him a preferential claim to the trust property. Whether this formulation of the trust in theory persists will be discussed below. However, since the beneficiary in Scotland only has a mere personal right against the trustee, rather than a real right in the trust assets, it has consistently been ques52
-tioned how the beneficiary’s “preference” can be explained in civilian terms.
Until recently, the explanation of this phenomena was unclear and it appears that the question was simply fudged over in legal practice. Simultaneously, and in the context of an upsurge in interest in how a trust could work in a civilian legal system , George Gretton and Kenneth Reid published a theory that draws 53 54 55
together the common law trust and the unitary nature of ownership. The theory builds upon the work of French scholar Pierre Lepaulle and proffers that the explanation for the civil law trust is embedded in the concept of patrimony.
In sum, it is clear that the common law trust and the Scots law trust evolved simultaneously, and it is likely that the law in Scotland was heavily influenced by its neighbour. However, it is submitted that the historical account indicates that their development occurred in parallel and, whilst the common law trust finds its histo-ry in the union of the common law courts and the courts of equity this was never the case in Scotland.
See Scottish Law Commission, Report on Sharp v Thomson (Scot Law Com No 208, 2007).
49
T.B. Smith, Legal Imperialism and Legal Parochialism, (1965) 10 Juridical Review (n.s.) 39, at 50.
50
M. Raczynska, ‘Parallels between the civilian separate patrimony, real subrogation and the idea of property in a trust fund’ in L. D.
51
Smith (ed.), The Worlds of Trust (2013, Cambridge University Press), p.454.
Inland Revenue v Clark’s Trs 1939 SC 11, 22 (Lord President Normand); Sharp v Thomson 1995 SC 455, 475 (Lord President
52
Hope) (reversed on another point of law, 1997 SC(HL) 66). Hague Convention, Supra n.6.
53
See Gretton Supra n.3.
54
See K. G. C. Reid, Patrimony not Equity: the trust in Scotland (2000) 3 European Review of Private Law 427-437.
land did not ever need equity to introduce a trust concept and so it is wondered whether there is any true and necessary connection between the history of the trust and its evolution in contemporary law.
CHAPTER II
A Snapshot of Patrimony, Ownership and Rights
The preceding chapter sought to map the historical background of the common law trust and the Scots trust. It became clear that this concept of equity is actually dispensable to the trust, or at least this is what the Scot-tish experience tends to conclude. Before delving further into the conceptual understandings and theoretical analysis of the trust it is necessary to first understand the crux of the problem and the proposed solution, the former being the meaning of ownership and rights, and the latter being patrimony. It is only with a detailed dissection of the modes of right-holding within the common law and the civil law that we can fully deter-mine whether a theory of trust could straddle the lacuna between the legal systems.
Firstly, we might juxtapose the notion of ownership that exists in the civil law in comparison to its ‘equiva-lent’ in the common law. In the civilian tradition the right of ownership is characterised by its nature of being absolute, indivisible and subject to a numerus clausus, that is “[i]f a limited property right can only contain rights or powers taken from the right from which is is derived […] the boundaries of ownership limit the content of property rights”. However, it might be wondered whether “ownership is far from being the per56
-fectly absolute right that the civilian jurist is often tempted to describe”. In contrast to this, the common 57
law conception of ‘ownership’ — and one struggles to use this word in connection with the common law — is much more flexible, it has the potential, significantly, to be fragmented and dismembered. The dominant theory is that one holds not one right of ownership, but rather a ‘bundle of rights’. However, it should be 58
brought to the readers attention that the common law does, similarly, standardise property rights to the extent that those cannot be created out of thin air. In this connection Merrill and Smith state that "[e]very common-law common-lawyer is schooled in the understanding that property rights exist in a fixed number of forms". 59
The ‘division’ of ownership that is has become a prominent theory for the relationship between the trust par-ties alluded to in Chapter I becomes unsurprising when placed against the contextual background of the common law property regime. One hesitates to speak of ‘ownership’ in this context since it is not what we understand in the classically civilian sense — usus, fructus and abusus — but instead a monopoly over cer-tain rights that are associated with property. The common law, it is said, has evolved in a setting of pragma60
-tism and practicality; giving rise to solutions for commercially expedient problems. The trust is an example of this as “an institution having a legal existence that is driven by pragmatic praxis”. If the civil law, 61
Akkermans Supra n.11 at 279.
56
Y. Emerich, ‘The civil law trust: a modality of ownership or an interlude in ownership?’ in L. D. Smith (ed.) Worlds of Trust (2013,
57
Cambridge University Press), p.24. Clarry, Supra n.5, at 904.
58
T. W. Merrill and H. E. Smith, Optimal Standardization in the Law of Property: The Numerus Clausus Principle (2000) 110(1)
59
Yale Law Journal 1-70, at 3.
T Honoré, ‘Trusts: The Inessentials’ in J Getzler (ed), Rationalizing Property, Equity and Trusts (LexisNexis 2003), p.10.
60
Clarry, Supra n.5, at 901
propped up by Roman law as it is, and its corresponding civil codes can be seen as a principled map tracing the path of the law, the common law can be seen as the exact opposite: a logical yet unplanned quest through a maze; principles are secondary to logic and pragmatism for the wanderers. 62
An early statement seemed to indicate that ownership in the common law equated to “sole and despotic do-minion”. However, this appears to have been short-lived in light of the development of the ‘bundle of 63 64
rights’ theory, a “hangover from the medieval feudal system”. It is said that rather than a physical approach 65
— identifying ownership as a relationship between a person and a thing — the common law assumes a metaphysical approach — owning rights in things and therefore identifying ownership according to the 66
“intersubjective relationships in relation to the thing that provides the analytical and conceptual framework of property in the common law tradition”. The bundle of rights theory was further articulated by Honoré 67
who posited that there are eleven instances of ownership. Holding all of which gives rise to the monopoly 68
mentioned above, and seems to be reminiscent of what one might consider characteristic of civilian owner-ship. However, unlike in the civil law, it is possible to divide these incidents up so that separate persons hold ownership-like rights in one thing. Thus giving rise to the idea that when we talk of the trust we consider it 69
to be a “legal device developed in England whereby ownership of property is split”. However, this use of 70
the word ‘ownership’ seems to be conflating two separate concepts of right-holding in relation to property, and indeed two separate legal traditions. One might, therefore, be inclined to recognise an intrinsic failure in the notion of ‘split ownership’.
A significant element of the civil law that makes theoretical comparison difficult is the concept of patrimony, since it does not explicitly exist in the common law. Trust, or trust-like concepts in civilian systems turn on 71
the idea of ‘patrimony’ it appears, a concept most fully articulated in French legal scholarship. Put simply 72
See Wibier, Supra n.14, p. 68: “common law solutions are often practical and business-friendly, whereas having a civil code which
62
purports to solve all (potential) legal issues may often lead to solutions that seem a bit off or even downright contrary to common sense”.
W. Blackstone, Commentaries on the Laws of England Book II.
63
D. R. Johnson, Reflections on the Bundle of Rights, (2007) 32 Vermont Law Review 247, at 250.
64
P. Matthews, ‘The compatibility of the trust with the civil law notion of property’ in L. D. Smith (ed.) Worlds of Trust (Cambridge
65 University Press, 2013), p. 315. Clarry Supra n.5, at 904. 66 Ibid. 67
These are: (i) the right to possess; (ii) the right to use; (iii) the right to manage; (iv) the right to receive income; (v) the right to
68
capital; (vi) the right to security; (vii) the incident of transmissibility; (viii) the incident of absence of term; (ix) the prohibition of harmful use; (x) the liability of execution; and (xi) residuary character (T Honoré, Making Law Bind (Clarendon Press 1987) 166– 79).
Ibid. 187-9.
69
W.F. Fratcher, International Encyclopaedia of Comparative Law (JCB Mohr 1973) vol 6, [11].
70
L. D. Smith, Scottish Trusts in the Common Law (2013) 17 Edinburgh Law Review 283, 295.
71
See N. Kasiser, Translating Part of France's Legal Heritage: Aubry and Rau on the Patrimoine (2008) 38(2) Revue générale de
72
“[t]he concept of patrimony is that of the totality of a person’s assets, and, in its broader sense, his liabilities also”. In addition to this it is stressed that “the patrimony is an abstraction which is to be conceived inde73
-pendently of the assets and liabilities of which it may be composed at any given time: it is the container rather than the contents”. The idea of this container is intrinsically tied to the concept of personality, and 74 75
in its most classical sense it is understood that each person has a patrimony, each person has only one patri-mony, but this is arguably a result of a particular reading by some French authors of the Code civil. This 76 77
should not be misunderstood to mean that notion of patrimony is an innovation of French jurisprudence, in-deed it can be traced back to the Roman law where the word and its corresponding conception of
patrimoni-um is used frequently. 78
The patrimony, to a civil lawyer, is not difficult to understand, more contentious is the notion of ownership in relation to the patrimony and our collective understanding of ‘rights’ and ‘things’ within the patrimony: what are the contents of this so-called container? Gretton asks, “[d]o we own physical things? Or rights? Or both”? Just as the civilian lawyer will be familiar with the concept of patrimony so too will they be familiar 79
with the classification of rights and things within the patrimony as incorporeals and corporeals, respectively. Additionally, there is a sharp division between rights that are real and rights that are personal. This under-standing of the division between rights and things is neatly set forth in the Institutes of Justinian, stating that “Corporeals are things that are by their nature tangible, such as human beings. gold, silver and countless oth-ers. Incorporeals are those things that are intangible. Those things who existence is juridical, such as an es-tate of inheritance, a usufruct, a right of use and obligations however constituted…”. This familiar under80
-standing of rights and things derives from the Institutes of Gaius. McAuley refers to this view of patrimony as the “materialist theory” and recognises that it “has been the predominant foundation of civil law property”. 81
In this classical understanding of what we might now refer to as the patrimony, there is no mention of the word ‘ownership’ and this induces us to question where ownership fits into the conceptual picture. As noted by Gretton, however, the importance of ownership — at the time — was not crucial as it is today: “the idea of ownership as a real right had not really developed. The sources do not describe ownership as a ‘ius’. To
Gretton Supra n.3 at 608 73 Macdonald Supra n.9, at 770-771. 74 Ibid. at 771. 75
Aubry and Rau, Cours de droit civil franqais d'apras la method de Zachaeriae 5e 6d. (1917), t. IX,
76
(at p. 336): "Que la m~me personne ne peut avoir qu'un seul patrimoine, dans le sens propre du mot”; see Kasiser, Supra n.64, at 465.
M. Grimaldi and F. Barriere ‘Trust and Fiducie’ in A. Hartkamp (ed.), Towards a European Civil Code (2nd edn, 1998), at p.578.
77
See Dig. 31.77.19.
78
G. L. Gretton, Ownership and its Objects, 71 (2007) Rabels Zeitschrift für ausländisches und internationales Privatrecht / The
79
Rabel Journal of Comparative and International Private Law, 802-851, 804. Inst. 2.2. Translated by Gretton Supra n.76, at 805.
80
M. McAuley, The Architecture of Entitlements (1996) 3(1) Trusts & Trustees, 4–7, at 5.
have a thing and to have the ownership of the thing were the same”. Similarly, and interestingly, there is an 82
English tendency to fuse the idea of having a thing itself and having rights in a thing. 83
Where does this leave our understanding of ownership? On one hand, we might take an Occam’s Razor-type approach: the object of the sale, gift or acquisition of some other kind is both the thing and the ownership of the thing. Surely this is the simplest resolution. If one is selling their car then one transfers both the car and the right of ownership to the car, it is the same thing. This results in the logical conclusion that rights are in-deed things but for Gretton this is unsatisfactory since “[i]f rights are things, the awkward implication is that a right is a thing in a thing in a thing”. 84
On the other theoretical hand, we might disregard the notion of ownership as being a right at all, just as French scholar Ginossar suggested. In this sense ownership is the same as title, or having. Therefore one ‘owns’ both rights and things. Ownership becomes “nothing other than the relation by which a thing belongs to a person” and thus describes the relationship between a person and his patrimony. Central to the Ginos85
-sarian system is the idea that real rights must necessarily have a correlative obligation. Therefore rights 86
exist as a subset of relative rights, just as personal rights. One logically concludes, therefore, that ownership cannot be a real right because there exists no reciprocal obligation. This results in a reductive analysis of the concept of ownership; just like any other real right ownership is valid erga omnes and therefore the rest of the world is ‘bound’ by a ‘duty’ of non-interference. Therefore it might be considered incomplete to sug87
-gest that ownership is not a real right at all; especially given that ‘ownership’ is generally considered in everyday life and language to be the ultimate real right. Reid, similarly adopts the view that ownership is the relation between person and patrimony, however, he also indicates that ownership is a real right also. In order to detangle oneself from the implication that this leads to the idea that ownership can be owned, Reid argues that this is explained by the caveat that everything except ownership can be owned. On this analysis owner-ship holds true to its special status as the ultimate real rights with both duality of role and a character differ-ent from other ‘limited’ rights.
Could it be possible to imagine a system based neither on the ordering of rights and things as proffered by Gaius nor Ginossar? Gretton proffers that there is such an alternative. His system incorporates twelve theses on the nature of ownership, rights, patrimony and titularity. Most crucially he indicates that “[t]he relation-ship between a person and a right — titularity — is a relationrelation-ship of having, not owning”, and that 88
Gretton, Supra n.77, at 806.
82
Matthews, Supra n.63, p.315.
83
S. Ginossar, Rights in rem: a new approach, 14 (1979) Israel Law Review 286.
84
"La propriété n'est donc autre chose que la relation par laquelle une chose appartient à une personne." Ginossar, Droit réel, pro
85
-priété et créance (1960);, 33. Translation by Gretton, Supra n.76 at 810. Gretton, Supra n.77, at 811. 86 Ibid. at 812. 87 Ibid. at 831. 88
“[t]hings are not elements of the patrimony. The objects of acquisition and transfer are rights, not things”. 89
In this theses it should be noted that it is still the case that there is a sharp divide between the real and the personal, or the absolute and the relative, respectively. In this sense, therefore, the trustee has title to the trust assets — that is to say rights — and its liabilities also. He holds these rights and liabilities within his trust patrimony, a concept that will be explained later in the discussion. To bolster the submission that the materi-alist approach cannot be claimed to be a foolproof reality, the example of the Quebecois Civil Code perfectly illuminates the internal struggle that the law has with defining the nature of rights. The general definition of 90
ownership seemingly collapses rights and things as subject to it, whilst Articles 953 and 921 contemplate 91
that the patrimony contains only rights and not things
In all of the explanations, however, the distinction between real and personal rights persists, and as such it is said that the civil law conception of rights does not facilitate anything like an ‘in-between’ right such as that that might explain the beneficiary’s right in relation to the trust fund. However, certain efforts have been made to reconceptualise and, perhaps, disassociate the patrimony from this dichotomy between real and per-sonal. In one line of scholarship it is posited that all rights are essentially real rights; in another, that all rights are — at their core — personal rights. Salieilles collapses the notion of personal rights into real rights by in-dicating that the distinction is a false construction: all rights are rights against things because they are rights against a person’s patrimony and the only difference is that personal rights are indeterminate. Otherwise 92
both categories can exist under the umbrella of real rights. Indeed, this resonates with Ginossar’s notion that all rights are relative. As Macdonald notes this reinforces the fundamentally economic connotations that all rights have, yet the theory has been lost in the puddle of academic literature because it has the tendency to remove the personal element of rights.
From the other side of the spectrum, Planiol argues that all rights are actually personal rights. His argument 93
is essentially that all real rights are plainly a relationship between the right-holder (for example, the owner) and all other persons in the world. Thus real rights are simply personal rights credited with a “universal pas-sive obligation.” However, it might be argued that this theory collapses into itself because the entire distinc-tion between real and personal is based upon the premise that real rights are valid erga omnes and so Planiol merely restates the current notion of rights in the language of relationships and personal rights. Furthermore the “theory rests on a confusion of the notions of opposability and obligation in the strict sense”, and this is 94
Ibid.
89
Macdonald, Supra n.9, at 796-797.
90
Civil Code of Quebec, 1991, c. 64 (English version). Available at: http://legisquebec.gouv.qc.ca/en/showdoc/cs/CCQ-1991 (offi
91
-cial document), article 947.
Macdonald Supra n.9. at 794 referring to R. Saleilles, Etude sur la thgorieginiralede l'obligationd'aprsle premierprojet de Code
92
civil pour l'Empire allemand (Paris: F. Pichon, 1901).
MacDonald Supra n.9, at 794, referring to M. Planiol, Traité élémentaire du droit civil, vol 1 (Librairie générale de droit et de
93
jurisprudence, 1897), para 2159. Ibid. 794.
the essence of what distinguishes a real right from a personal right. Indeed, Akkermans argues that the dis-tinction between personal rights and property rights is necessary for the functioning of the legal system.95
Returning to the common law, whilst it has been said that there is no such thing as patrimony in the common law. It might be argued, however, that there exists functional equivalents of patrimony. For example, the no-tion of estate, in particular the decedent’s, which holds both the assets and liabilities of that person, for the benefit of his heirs and creditors is akin to the civilian concept of patrimony. Furthermore, the Anglo-Ameri-can idea of “property” corresponds to the idea of a patrimonial right: “‘Property’ comprises (1) ownership and quasi-ownership interests in things (tangible and ideational); (2) other rights over such things which are enforceable against all-comers (non-ownership proprietary interests); (3) money; and (4) cashable rights. That is what property is”. Thus, whilst it might be the case that the common law equivalent is not reached 96
the level of sophistication as the civil law patrimony, it must be admitted that there still exists something like it.
It is not the intention of this discussion to provide a comprehensive critique of the classical or the revisionist theories of ownership and patrimony. It suffices to say, however, that the materialist theory so characteristic of the civilian tradition has not been without questioning, and the notion that there is an impenetrable strict dichotomy between real and personal rights is still an open question. Further, in light of the contemporary understanding of rights it might be considered that such a strict division no longer exists in practice. As Ka-siser points out:
“Ownership does indeed organize the law of real rights into a perfect architecture of dismember-ments and modalities, but however important it is as an organizing construct for the law, it hardly speaks meaningfully to a world of wealth held in mutual funds and commercial paper”. 97
In essence, one might wonder whether the rejection of the trust as an unwelcome institution straddling the law of obligations, persons and property as it does is so repugnant where the very conception of ownership, 98
rights and patrimony is not entirely coherent in theory.
B. Akkermans, Standardisation of Property Rights in European Property Law, Maastricht European Private Law Institute Working
95
Paper No.2013/9, p.3.
James W. Harris, Property and Justice (1996) p.139.
96
Kasiser, Supra n.70, at 463.
97
By way of explanation Gretton, Supra n.3, indicates that "Trusts do, indeed, impinge deeply upon both the law of obligations and
98
the law of property, but they do not belong essentially to either. They belong to the doctrine of patrimony, and the doctrine of patri-mony belongs to the law of persons” (at 614).
CHAPTER III
Trust Theory in Focus
“The legal realist will be impatient with all this agonising about whether a right is real or not. Con-cepts should be our servants and not our masters. But we cannot escape formalism. Those who claim to reject formalism are fellow formalists with a rival theory of their own” 99
The civilian notion of ‘ownership is characterised by its absolutist nature. Thus, common law explanations for ‘dividing’ or parceling up parts of ownership are not within the contemplation of the system: “[t]he frag-mentation (or dismemberment) of property into different estates or interests of different values, each belong-ing to a different person, so characteristic of property law in the common law world (and especially in rela-tion to land) finds no place in this system”. This gives rise to the perceprela-tion that the trust simply cannot fit 100
into a civilian legal system because the idea of ‘duplex dominium’, the fragmentation of ownership between the legal owner — the trustee — and the beneficial owner — the beneficiary — directly contravenes the ab-solute nature of ownership. There comes the question: but how then has Scots law recognised the trust mech-anism since the seventeenth century? 101
It is clear that the central problem that the beneficiary’s right as a personal right poses is the insolvency ef-fect. There are cogent reasons that the beneficiary’s right cannot be real, beyond the fact that the numerus
clausus negates the creation of real rights unknown to the legal system, including the fact that a good faith
acquirer for value takes the assets free from the beneficiary’s burden; that the beneficiary’s right need not be registered as real rights are generally required to be; the indeterminacy of the beneficiary’s rights and the lack of specificity that the beneficiary’s “right” relates to in a particular thing: the fund is necessarily fluctu-ating constantly. Additionally, Gretton notes that it is “senseless” to attribute some kind of — equitable 102 103
— ownership to the beneficiary given that sometimes a beneficiary cannot be ascertained. For example, in a charitable trust or a discretionary trust: how might there be an ownership right if an owner cannot be identi-fied? The insolvency effect functions in these trusts and yet it is not explained why it works in favour of unascertained persons who logically cannot hold a real right. 104
Moreover, it is questioned how it might be the case that the rights that the trustee might hold in the fund could be personal; if the beneficiary’s right is characterised as real then this would have the effect of having a real right in a personal right, the question is whether the law permits this? One might look back to the re105
Gretton, Supra n.3 at 608.
99
Matthews, Supra n.63, p.320.
100
G. L. Gretton, ‘Scotland: The Evolution of the Trust in a Semi-Civilian System’ In R. Helmholz & R. Zimmermann (eds.), Itinera
101
Fiduciae:Trust and Treuhand in Historical Perspective (1998, Duncker & Humblot cop). Gretton, Supra n.3, at 605-607. 102 Ibid. at 606. 103 Ibid. 104 Ibid. 105
visionist theories of rights, in particular the argument that all rights are essentially real, and from that per-spective it could be argued that the right of the beneficiary is a right against the trust patrimony, which also holds only real rights; both determinate and indeterminate. If we accept the immaterial conception of the pat-rimony and the fact that one might hold rights in rights — encumbrances — then we might be induced to accept the notion that the right held by the beneficiary is relative to the right held by the trustee, that is: “[r]ights in rights have the same structure as the right they relate to. They have a personal nature if they en-cumber a personal right. They have a real nature if they enen-cumber a real right”, yet on the new construc106
-tion of rights the division is not between real and personal but rather, determinate and indeterminate. This option will be further discussed below.
It is further posited by Gretton and Reid that the functioning of the trust is not something that is explained by a right held by the beneficiary but, rather, the way that the right is held by the trustee. This is summarised concisely by Reid by simply indicating that “the fundamental characteristic of the trust is not dual owner-ship, but dual patrimony”. Generally, it has been stated that every (legal) person has a patrimony, one 107 108
patrimony. However, it is not obtuse to suggest that a person might have more than one patrimony, and in 109
civilian systems the concept of one person having a special patrimony is longstanding. Indeed the idea has 110
been known since Roman law. Where there does exist a special patrimony the principle of real subrogation 111
operates, separating the special patrimony from the assets in the general patrimony. Put simply, the trust is 112
a special patrimony.
Therefore, according to Gretton and Reid, “[w]ith the explanation of trust as patrimony everything falls into place”. Since the trust assets, and indeed liabilities, are held segregated from the trustee’s personal patri113
-mony the right of the beneficiary no longer needs to be classified as obtaining a preference in ranking before the trustee’s personal creditors nor does the right need to be characterised as real, in rem or of a proprietary nature, since it is not the character of his right that causes the insolvency effect but rather the character of the way in which the ownership right is held by the trustee. It is worth noting that no comprehensive doctrine 114
of ‘tracing’ exists in the Scots law of trusts. Whilst it is the case that real subrogation operates to place assets
"Daraus ergibt sich, dass die Rechte an Rechten jeweils von derselben Struktur sind wie das Recht, an dem sie bestehen. Sie
106
haben forderungsuhnlichen Charakter, wenn das belastete Recht eine Forderung, dinglichen, wenn es ein dingliches Recht ist." Karl Larenz/Manfred Wolf Allgemeiner Teil des bürgerlichen Rechts (2004) 372. Translation by Gretton, Supra n.77, at 841.
Reid, Supra n.53, at 427. At this point it is worth referencing the illustrations provided in Gretton’s article, Supra n.2, at 611-612
107
which illustrates the idea in the most simply, but effective terms.
Note that it is entirely possible to create, for example by incorporation, a new legal person for the purpose of shielding assets.
108
However, this — crucially — involves the necessity of publicity, an attribute that the creation of the trust does not necessarily have. Grimaldi and Barriere, Supra n.75.
109
For example, in Polish law there exists matrimonial separate patrimonies (See Raczynska, Supra n.43, p.488).
110 Ibid. p.465. 111 Reid, Supra n.53, at 432. 112 Gretton, Supra n.3, at 612. 113 Ibid. at 613. 114
or funds exchanged for transfer of trust assets in the trust patrimony, the right of the beneficiary does not ex-tend to furnishing him with the ability to claim against third party transferees on the basis of a right in the trust property. This is a significant distinguishing factor between the common law and the Scots civil law trust.
In essence, Gretton states with conviction:
“There is thus no need to seek to classify the right of beneficiaries as being in some way privileged
or quasi-real or as in some way "trumping" the rights of the creditors of a trustee in his personal capacity”. 115
It is worth noting at this juncture that it is stated that the nature of the beneficiary’s rights in Scots law is in
personam as against the trustee, rather than the trust itself. The latter view is part of the theory posited by
Lepaulle and essentially turns on the fact that in Scots law the trust is not a legal person in itself. It is noted that — had the authors indicated that the personal right was enforceable against the trust patrimony then — this would fall foul not only of aligning the trust with a legal person in itself, but also the notion that one cannot hold a right against another’s obligation. Further, it is necessary to draw reference to the nature of 116
the trustee’s relationship with the patrimony. It is posited that, if the Ginossarian notion of ownership, as the relation between person and patrimony, is adhered to then the theory collapses into itself. It is submitted that, according to that theory the beneficiary must then have a personal right against the trustee’s right of owner-ship and the trustee owns the obligations to which the trust patrimony is subject. Not only is this excessively convoluted but it makes little sense in terms of the our preconeptions about the scope of ones ownership of rights in rights and rights in things.
It seems that this theory adequately explains a mode by which the civil law trust can keep itself within the 117
confines of the rule of the unitary conception of ownership. By doing so, however, it breaks another rule: that “a patrimony is a unitary and indivisible concept”. This concept of patrimony as the economic expression 118
of the individual bolsters the principle that all assets of the person should be available to meet the debts of that person. In this way the patrimony functions as if it is the balance sheet of the persons affairs. Despite this, it is argued by common lawyers that “[t]he notion of patrimony allows the civil lawyer to explain the trust to himself. He sees the trustee as owning two patrimonies”. This idea has become the dominant theo119
-ry in Scots law scholarship and variations of 'splitting' patrimony explains the operation of the trust in other mixed systems.
Ibid.
115
Smith, Supra n.69, at 288.
116
Significantly this form of trust is different from the common law trust by virtue of the fact that it does not furnish the beneciary
117
with the ability to 'trace' trust property.
V. Saegert, 'The Trust Book in the DCFR: A civil lawyer's perspective" in S. van Erp, et al. (eds) The Future of European Proper
118
-ty Law (Sellier European Law Publishers, 2012), p.39.
F. Sonneveldt and H. L. van Mens (eds.), The Trust: Bridge or Abyss Between Common and Civil Law Jurisdictions? (Kluwer
119
Both with similar reasoning and yet entirely differently, the Quebec’s legislature has codified the theory prof-fered by Pierre Lepaulle almost verbatim: thus the trust — or rather, the fiducie — is a patrimony by ap120
-propriation or, a “patrimoine d’affection”. In Quebecois law the trust is seemingly ownerless; Article 1261 121
of the Civil Code of Quebec thus reads: “[t]he trust patrimony, consisting of the property transferred in 122
trust, constitutes a patrimony by appropriation, autonomous and distinct from that of the settlor, trustee or beneficiary and in which none of them has any real right”. Rather than having an ownership right “[a] 123
trustee acts as the administrator of the property of others charged with full administration”. This repre124 125
-sents the theory posed by Lepaulle that neither the truster, the trustee, nor the beneficiary is absolutely essen-tial to the trust; the only truly essenessen-tial piece of the puzzle is the patrimony affected to a purpose.
In some sense, therefore, the fiducie has “sever[ed] all its ties to ownership”. This means that the trust in 126
Quebec is not an instance of fiduciary ownership and this renders the question of real rights a non-issue. In 127
an interesting innovation the Quebecois fiducie no longer is inextricably linked to personality since there is no such person that holds it. As Emerich notes this notion was introduced by Brinz and Becker in direct 128
contravention of the classical conception of patrimony as introduced by Aubry and Rau; morphing the 129
conception of patrimony from the subjective to the objective, whilst still holding to the subjectivist notion 130
as a general rule, in the law of property as a whole. In this type of patrimony there is “a set of assets im131
-pressed with a purpose, and a set of liabilities that arise in pursuit of this purpose”. Therefore the connec132
-tion between those assets and liabilities exists by virtue of the appropria-tion, the purpose, rather than the
L. D. Smith, Trust and Patrimony (2008) 38 Revue genérale de droit 379-403, at 382.
120
Macdonald, Supra n.9 at 783.
121
Supra n.89.
122
Note that it has been confirmed by the Supreme Court of Canada has confirmed that the English version of the text is of the same
123
authority as the French version: Doré v. Verdun (City), [1997] S.C.R. 862.
“it does not seem satisfactory or even coherent to explain that the trustee is a manager into whose hands is placed a power, in the
124
strict sense of the term, namely that he would be exercising a prerogative based on a right held by another, and to assert at the same time that the property belongs to no one” (B. Kan-Balivet, ‘Les clés du contrat de fiducie-gestion’ (2009) 185 Droit et patrimoine 70, 161, translated by Emerich, Supra n.55, p.37).
1991, c. 64, a. 1278., para.2.
125
Y, Emerich, Supra n.55, p.21.
126
Ibid. p. 30, note 41, referencing J. E. C. Brierley, Regards sur le droit des biens dans le nouveau Code civil du Québec (1995) 47
127
Revue internationale de droit comparé 33, 45, para. 42. Ibid. p. 31.
128
See Kasiser, Supra n.70.
129 Ibid. p.31. 130 Macdonald, Supra n.9, at 783. 131 Kasiser, Supra n.70, p.32. 132
son that holds them. Whilst it is widely accepted in Quebecois legal scholarship that the fiducie does in133
-deed disconnect itself from ownership this should not be taken as an article of faith without further inquiry. In fact, Emerich alludes to the fact that ownership might not actually be a real right, “or at least not a real right as traditionally understood”. This is an interesting proposition and returns us to the discussion of: 134
what is ownership? How does ownership fit into the patrimony? And perhaps most significantly, what is real and personal?
It is observed that the trust assets are not ownerless perpetually. In fact, the assets used to be owned by the truster, and of course will, one day, be owned again by those entitled, the beneficiary(ies). Therefore, it is 135
pondered whether the patrimony by appropriation, in this instance, represents an “interlude in ownership”. 136
Ownership is thus suspended in time, stopped in its tracks until it is picked back up again when the purpose is fulfilled.
Cutting the ties to ownership has proven a difficult concept to come to terms with. Emerich puts forward a number of reasons why it seems almost impossible to accept the idea that a patrimony could exist without a person attached to it. The first reason is quite simply that the Code itself refers to the fact that the trustee holds the property of another. This is of course a doctrinal issue, but it is reflective of the fact that we al137
-most intuitively regard patrimonies as having some tie to personality. More theoretically, the second argu-ment proffered derives from the principle of ‘nemo plus juris alium transferre potest quam ipse habet’; how can a third party derive rights from the trustee when he does not have a right of ownership? Whilst it 138
might be the case that he does hold title, since he does not have ownership, how is it possible for a grantee to acquire that right? Furthermore, is it possible for one person to be titleholder but lack ownership?
The problem with the trust that adopts, fully, the patrimoine d’affection form is that there will always be some strive to connect it with entitlement. The idea has been posited that the Quebecois trust is a ‘sujet de
droit’ in itself but falling short of a legal person in the whole, this is also alluded to by Gretton who states 139
that “[t]he trust is itself not a person. A special patrimony never is. But a special patrimony operates very like a person, as an autonomous, quasi-personal, fund”. The logical conclusion of such an assertion is that the 140
trust becomes another category in the law of persons, together with legal and natural persons. This in itself 141
Emerich, Supra n.55, p.34 referencing J. E. C. Brierley, ‘De la fiducie’, in Barreau du Québec and Chambre des notaires du
133
Québec (eds.), La réforme du Code civil (Presses de l’Université Laval, 1993), para. 14. Ibid. at note 60. 134 Ibid. p.36. 135 Ibid. p.39. 136 Ibid. p.36-37. 137
Ibid. p.37 referencing the argument put forward by F. Frenette, ‘La propriété fiduciaire’ (1985) 26 Cahiers de droit 727, 736.
138
Ibid. p.37 referencing M. Cantin Cumyn, ‘La fiducie nouveau sujet de droit?’, in J. Beaulne, Mélanges E. Caparros (Montreal:
139
Wilson and Lafleur, 2002), p. 142. Gretton, Supra n.3, at 614.
140
Cumyn, Supra n.137, p.143.
