THE CONCEPT AND EVOLUTION OF TRUST IN THE NIGERIAN LEGAL SYSTEM

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ABSTRACT

According to some authors, the meaning of trust as a legal concept is traceable to the moral connotation of the term which eventually informed its jurisprudential basis. Literally, trust means confidence reposed in others. It was this moral obligation that was eventually developed into a legal concept by the English chancery court and it became part of the Nigerian legal jurisprudence through statutory enactments, its administration regulated by established principles of equity and statutes. In medieval times, trust was widely employed as a means of transferring estates from one person to another for the benefit of a third party. The transfer or is variously known as settlor, feoffor or testator, while the person (or persons) for whom the trust is created is called feofee or beneficiary. In the same vein, the person in whose care the settl or entrusts the estate is known as the trustee.

It is instructive to note that the office of the trustee is very vital for the smooth administration of the trust.This is so because the estate is vested in the trustee who holds such property in accordance with the terms of the trust for the benefit of the beneficiary. A person may be expressly appointed trustee by an instrument or through some other means recognized by law. The equitable principle that “equity does not want for a trustee” is to the effect that considerable importance is attached to the office of a trustee in the trust administration. Even in situations where the instrument fails to appoint one, a trustee can be appointed by the court or through statutory powers.This long essay seeks to examine the powers of a trustee vis-a-vis its operational regime under the Nigerian legal system. As a general rule a trustee must be capable of holding and disposing of property in his capacity. He must be competent to deal with the estate as required by the trust instrument for the beneficiary’s benefit. He must not be under any disability by nature or by law. He must be amenable to the jurisdiction of the court and be capable of the business. He must disclose any situation which might result in a conflict between his personal interest and his job as a trustee. A trustee must ascertain the validity of his appointment and understand the terms and nature of the trust.In our clime, experience has shown that in the course of carrying out their assignments, trustees have come up against a lot of challenges and limitations despite statutory provisions relating to the exercise of their powers. Some of these challenges have to do with our customary and religious beliefs which result many a time in unending litigations. Essentially, this essay will discourse trust holistically. In pursuance of this objective, this work will be divided into five chapters. Chapter one will deal with the general introduction to the topic which will include the historical evolution of trust and its reception into the Nigerian legal jurisprudence.Aims and objectives, importance of study, scope of study, research methodology, and literature review as well as meaning of trust and parties to a trust will be discoursed in this chapter. Chapter two will examine the relationship between trusts and other legal concepts, classification, capacity, and the essentials of trust will be discoursed. Chapter three will focus on the seemingly simple but complex duties and powers of trustees.Chapter four will deal with remedies for breach of trust and liabilities. In closing, chapter five of this long essay will make recommendations, suggestions and propositions on how to improve the administration of trust in Nigeria.

CHAPTER ONE

INTRODUCTION

The origin of the legal concept of trust in Nigeria cannot be fully discoursed without anenquiry into the antiquity and evolution of its history. Trust is a product of equity. Equitywas a rule created to ameliorate the harshness and rigidity of the common law. InEngland equity developed separately from the common law and was administered inseparate courts where the chancellors were judges. In view of this historical relationship,equity was held to be an appendage of the common law and was used to fill up the gapswherethe remedy available at common law was not sufficient to meet the justice of aparticular situation. The chancellor who is the judge in the court of equity [also known aschancery court[1] decided each case on its merit and in accordance with conscience. Hisjudgments were based not on precedent but on his individual sense of right and wrong. Itwas due to this peculiar nature of equity, that Johnseldana notable jurist made his famedremark:

‘…equity is a roguish thing. For law (common law) we have a measure…equity isaccording to the conscience of him that is chancellor and as that is longer and narrower, so is equity. It is also one as if they should make the standard for themeasure, a chancellor’s foot.’[2]

1.1.0: Background to Study

The reception of the English law of trust in Nigeria was not a voluntary act. It was in a manner of speaking practically forced down our throat through the received English laws which came into force on the 1st of January 1900. It is instructive to note at this stage that prior to when the British imposed their legal regime on us, the idea of trust was not unknown to us, it had been in existence under our native and customary system. The notion of individual ownership of land for example, was foreign to our native ideas. Land was viewed as a communal property, never to the individual. All members of the community have equal rights and access to the communal land but in every case, the chief or head of the community, village or family has charge over such land and he is sometimes loosely referred to as the owner. He is in essence in the position of a trustee and as such holds the land for the common benefit of all members of the community. The implication of the foregoing is that the community or family head can validly alienate land to any person or group on their behalf. He is merely an agent through whom such transaction is to take place and he must deal with it in such a way that not only is his interest affected but those of the others. In the celebrated case of AMADU TIJANI V. THESECRETARY OF SOUTHERN NIGERIA, [3]Viscount Haldane was of the opinionthat the family head does not own the family land but administers it on behalf of thefamily members.

1.2.0: Objectives of Study

Since trust is foreign to Nigeria, most of the English ideas about it have not yielded muchto us. To this end, this essay is aimed at shedding more light on the concept of  and evolution trust in theNigerian setting, duties and powers of trustees and the ways by which theseresponsibilities can be carried out without impeding the interests of the beneficiaries inthe estate. As a result of the research work done in this project, it was discovered thatsome trustees exceed the limit s of their normal powers and sometimes fail to carry outthe necessary duty of care that is expected of them which in effect leads to a breach of thetrust. Solutions would be proffered to this problem in this work.

In addition, experience has shown that trustees in the course of carrying out their dutieshave been faced with a lot of challenges and limitations. This is inspite of the statutoryprovisions relating to the exercise of their powers. Some of these challenges have to dowith religious beliefs, customs and disagreements between beneficiaries. This essay willalso examine whether the statutory powers of trustees are sufficient to surmount thesechallenges.

1.3.0: Focus of Study

The reasons for the examination of this topic are not far-fetched. This work will helpmake an illumination on the enormity of the oversight those settlers or property ownersneed to exercise on the trustees. More so, beneficiaries would be better educated thatdecisions of trustees are not absolute; they can exert influence on the trustees especiallyafter the attainment of the age of majority. In similar manner, a trustee is expected to actin good faith and exercise independent judgment, taking into consideration the intentionof the testator and the interests of the beneficiary, he is not a puppet that is pulled at theend of a wire.

1.4.0: Scope of Study

As the heading connotes, an enquiry into the idea of trust will be made, its historicalevolution, its application in Nigeria Vis a Vis its legal system basis as well as theonerous responsibility of trustees in the administration of the trust estate.

1.5.0: Methodology

The method of approach that would be employed in this write-up will be based mainly onthe use of secondary data. The secondary data will include textbooks written byrenowned authors and scholars who by their wide knowledge and grasp of the subject andother ancillary legal precepts are experts in the field. Local statutes as well as judicialdecisions of Nigerian courts on the subject of trust will be examined so as to give it aNigerian perspective notwithstanding its foreign origin.

1.6.0: Literature Review

J.O Fabunmiin his work Equity and trust in Nigeria, 1986, 1st Edition, O.A.U PressLtd. Ile Ife Nigeria, page 137 opined that many authors[4] have attempted what a trust iswith little success. Perhaps the most successful definition was that given by professorKeeton. He defined trust as follows: “a trust is a relationship which arises where a personcalled the trustee is compelled in equity to hold property, whether real or personal, andwhether by legal or equitable title, for the benefit of some persons (of whom he may beone and who are termed cestuique trust) or for some objects permitted by law, in such away that the real benefits of the property accrues not to the trustee but to the beneficiariesor other objects of the trust.”[5]

There are certain important points arising from this definition. Firstly, it shows that there can be a trust of equitable interest. For example, a trust is created when A’s right in a trust fund is given to T1 and T2 on trust for B. Secondly, it is possible for both the legal and equitable titles to be vested in one person as when he, as a trustee holds a legal interest in trust for himself. Thirdly, some trusts may be valid even though they are for the benefit of purposes.[6] Finally, a trust is not necessarily created whenever legal andequitable interests are separated.

According to D.J Bakinbingain his book Law of Trusts in Nigeria, 1989, 1st Edition,Unilorin Press Ilorin, page 18, a trust is defined[7]as a relationship which is recognized byequity. It arises where property is vested in a person or persons known as trustees andthese trustees are under a duty to hold for the benefit of other persons known ascestuiquetrust(pronounced setikii trust) or beneficiaries.

The interests of the beneficiaries are normally described in the instrument creating thetrust. However, this may be implied or imposed by law. It is also worthy of note tomention that the beneficiary’s interest is proprietary in the sense that it can be bought orsold, given away or disposed by will. It ceases to exist where the legal estate passes to abona fide purchaser for value of the legal estate without notice of the trust.[8]

It is important to note that the subject matter of the trust must be some form of property.Normally, this takes the form of legal ownership of land or of invested funds.[9] However,it may be any sort of property such as land, money, chattels, equitable interests or chosesin action.

In the view of Olayide Adigun in his work Cases and Texts on Equity Trust and

Administration of Estates, 1987, 1st Edition, Ayo Sodimu Publishers Ltd. Abeokuta,Ogun state Nigeria, page 246, he posited that in conventional English legal treatise, atrust is “an equitable obligation binding a person (who is called the trustee) to deal withproperty over which he has control (which is called trust property) for the benefit ofpersons (who are called beneficiaries or cetuique trust), of whom he may himself beone…”[10] the beneficiaries may be charity, human or a definite non charitable purpose.

This apparent neutral definition of trust does not tell much about the device called “trust”which Maitland described as “the greatest and most distinctive achievement performedby English men in the field of jurisprudence…an institute of great elasticity and generallyas elastic, as general contract.”[11]

The trust system is a very flexible device. It permits multiplicity of trustees and functions.The trustees could be successive or concurrent. In a single trust instrument, there can behuman beneficiaries and benefits for other purposes which are charitable. Also propertiesof all types – money, choses in action, shares and real property can be the subject matterof a trust.

The trust splits ownership of property between the trustee and the cestuique trust orbeneficiary. The trustee holds the legal interest while the beneficiary holds the equitableinterest. The nature of the trustee’s interest is a right in rem, that is, the rights of an owner of property. The trustee can validly confer title over trust property free of the trust to athird party. However, the third party must be a bona fide purchaser for value withoutnotice.On the other hand, the interest of the beneficiary is described as an interest inpersonam. The beneficiary of a trust has a right of personal action against the person ofthe trustee who has breached his trust. In the event of a transfer in breach of trust to abona fide purchaser, the purchaser’s interest in the trust property supercedes that of thebeneficiary.[12] But any other transfer in breach of trust gives the beneficiary a right to tracetrust property into the hands of the volunteers and creditors of the trustee in his personalcapacity.[13]

MuizBanirein his book The Nigerian Law of Trusts, 2002, 1st Edition, Excel

Publishers, page 25 brought to the fore a definition given byLewinwhoin turn adopted adefinition given by Mayo J. in RESCOTT.[14]It was averred that “trusts refers to the dutyor aggregate accumulation of obligations that rests upon a person described as the trustee.

The responsibilities are in relation to property held by him, or under his control. He willbe compelled by a court in its equitable jurisdiction to administer that property in themanner lawfully prescribed in the trust instrument or where there is no specific provisionswritten or oral, or to the extent that such provision is invalid or lacking, in accordancewith the equitable principles. As a consequence, the administration will be in such amanner that the consequential benefits and advantages accrue, not to the trustee but to the person called cestuique trust, or beneficiaries, if there be any; if not for some purposewhich the law will recognize and enforce. A trustee may be a beneficiary, in which casethe advantages will accrue in his favor to the extent of his beneficial interest”

1.7.0: Meaning Of Trust

Under the English law, trust is placed on a prominent pedestal, it is an institutionconsidered unique and it has been held to be vital to human civilization. But as it is thecase with many important legal concepts, attempts by various authors at arriving at acogent and concise definition has recorded little success. Black Law’s Dictionarydefines trust as a right of property, real or personal held by one party for the benefit ofanother. It also went further to add that trust can be defined as an arrangement wherebyproperty is transferred with the intention that it shall be administered by the trustee foranother’s benefit.

Coke’s attempt at defining trust was summed up as the confidence reposed in some othernot issuing out of the land but a thing collateral thereto, annexed in privities to the estateof the land and to persons touching on the land for which the cestuique trust has noremedy by subpoena in chancery.

Maitland on his own part described trust as the greatest and most distinctive developmentperformed by English men in the field of jurisprudence. He also said it is an institution ofgreat elasticity and generally as elastic as general contract[15]. In the view of SirFredrick Underhill, it is an equitable obligation imposed upon a person who is called the trusteethe duty of dealing with property over which he has control which is called the trustproperty for the benefit of persons called beneficiaries or cestuique trust of whom he mayhimself be one and of anyone of whom may enforce the obligation.[16]

However, the most popular definition was the one given by professor keetonwhere heposited that trust is the relationship which arises whenever a person called the trustee iscompelled in equity to hold property whether real or personal and whether by legal orequitable title for the benefit of some persons of whom he may be one and who aretermed cestuique trust or for some object permitted by law in such a way that the realbenefit of the property accrues not to the trustee but to the beneficiary or other objects ofthe trust.[17]

The importance of trust cannot be overemphasized. The system of trust is a very flexiblecontrivance which permits the multiplicity of trustees and functions. In one single trustinstrument, there may be human beneficiaries and benefits for other purposes which arehumanitarian or charitable. In addition, all kinds of properties whether real or personal,movable or immovable can be subjects of trust. Cash, debts, shares in joint-stockcompanies, debentures or other choses in action can be subject-matters of trust. Thetrustees have the legal interest while the beneficiary has the equitable interest. The natureof the trustee’s interest is a right in rem (right of an owner of the property). In other words the trustee can validly transfer title over the trust property to a third party. But thethird party must be a purchaser for value without notice. Conversely, the beneficiary’sinterest is a right inpersonam. The beneficiary of a trust has a right to personally sue thetrustee who has breached his trust.

1.8.0: Parties To A Trust

A trust arrangement involves three principal parties namely; the settlor, the trustee andthe beneficiary.

SETTLOR; A trust can be created generally by any person who has thecapacity to dispose of an equitable interest or legal interest in an estate.The person with the capacity to dispose is called the settlor. However, notevery person has the requisite capacity or qualification to be called asettlor. This restriction includes infants and minors i.e persons that havenot attained the age of 18 years cannot create a trust on land or realty asprovided for by section 1(1) FAMILY LAW REFORM ACT, 1969. But inthe case of personal property, [other properties not related to land] asettlement made by him after he attains the age of majority [18 years] isbinding unless repudiated within reasonable time of that date.[18]

Also the class of persons covered under the MEDICAL ACT, 1959 cannot make a validdisposition. Section 103(1)of the Act grants the court the jurisdiction to direct settlement of the property of a mentally unsound person of full age.[19] Hitherto, married women wererestricted by the rules of common law. Under the law a married woman’s chattel belongsto her husband. But with the enactment of the MARRIED WOMEN’S PROPERTY ACT,1882 as amended by theMARRIED WOMENTORTFEASOR ACT, 1935, any marriedwoman can now create a trust as if she was femesole.

TRUSTEE; a very vital party to the trust arrangement is the trustee. This isbecause it is the trustee that defines how the estate would be dealt with. It is thetrustee that is required by law to administer the estate for the beneficiary’s benefit.As earlier held in the introduction to this essay, the legal title to the res i.e.subject-matter of the trust is vested in the trustee, but he is to deal with it inaccordance with the intention of the testator as directed by the trust instrument. Aperson with the requisite capacity can be appointed trustee. One condition forsuch appointment is that such person must be of full age. Under the law the age ofcapacity otherwise known as age of majority is 21 years. Where the appointmentis made by the court, then a beneficiary under the trust who has attained full agecan be so appointed. However a beneficiary’s solicitor or spouse or a personresident outside the court’s jurisdiction cannot be appointed.[20]

By virtue of section 18 of the PROPERTY AND CONVEYANCING LAW, 1959 aninfant is not eligible to be appointed trustee in relation to any settlement. The sectionfurther provides that such appointment will be void but without prejudice to the power toappoint new trustees to fill the vacancy. However, the same statute makes provision tothe effect that an infant can hold property other than a legal estate in land resulting froman implied or constructive trust[21]. By section 17(3) of the above law, the conveyance oflegal estate to an infant or two or more persons jointly both or all of whom are infants onany trust operates as a declaration of trust and does not pass any estate. A married womancan be appointed trustee to any property. This was made possible courtesy MARRIEDWOMEN’S PROPERTY ACT,1882 which removed the restriction placed on marriedwomen, as amended by the MARRIED WOMEN’S PROPERTY ACT, 1893.

Beneficiaries can be appointed trustees but such appointment is not desirable as there isthe possibility of conflict between the former’s interest and the latter’s duty.

Corporations can also be appointed. Such corporations must however be corporate bodiesempowered by the CAC or the court to carry on the business of trusteeship such as thetrustee department of a bank or the public trustees as empowered by the PUBLICTRUSTEES ACT, 1958 section 9.[22]

BENEFICIARIES; the persons in whose favor the testator or doneeof the powerapply the property are known as the beneficiaries[23]. They include those enjoyingthe benefits of the property created in their favor. It is worthy of note to state thatany person capable of holding interest in the trust property can be a beneficiary.

By way of analogy, an infant who has an equitable interest in land can be abeneficiary of a trust involving real or personal property. Incorporated companiesunder the COMPANY’S ACT, 1948 can be beneficiaries. Foreigners may also bebeneficiaries under a trust with the exception of one involving a British shipaccording to the ALIEN’S ACT, 1914 and the BRITISH NATIONALITY ACT,

1948. Married women are also qualified to be beneficiaries.[24]

1.9.0: Appointment of Trustees

A person cannot just by his whim assume the role of a trustee. For him to qualify as one,he must first be appointed. The issue of appointment is very crucial in a trust settlement.

However, the following are the ways a trustee can be appointed;

by settlor

by statutes, and

by the court

Appointment by Settlor; originally, trustees are normally appointed by the settler or testator. However if all trustees appointed in the settlement disclaim or if all thetrustees die, the testator if still alive will hold the property as trustee. But where the testator is no more and either all the trustees disclaim or die, the personalrepresentative of the last surviving trustee will hold the property in trust. This isthe whole essence of the maxim ‘equity never wants for a trustee’. Where trust iscreated by a will, the same persons appointed executors may as well be appointedtrustees. But where this is not the case, the executor may still be the onenominated by the trust instrument [will] to appoint trustees. In this instance, theexecutor will be empowered to appoint not as testator but as the personnominated.

Moreso, in a trustintervivos[trust created by a will] the testator may appoint himself inthe first instance[25]. In the case of ADEMOLA V. SODIPO,[26] it was held that a trustee isgenerally appointed by the settlor or the person who erects the trust.

Appointment Made Under Statute; this is governed by theENGLISHTRUSTEESACT, 1893 which is a Statute of General Application operational inall the states of the federation except the defunct old Western States of Ogun,Oyo, Ondo and Bendel which apply the TRUSTEES LAW. Section 21 of theTRUSTEES LAW provides that new trustees may be appointed in writing bydeed:

i} by person or persons nominated in the trust instrument,

ii} by continuing trustees but if they are dead,

iii} by the personal representative of the last surviving trustee or

iv} by the court.

The appointment of a new trustee or trustees may be made whenever a trustee is dead,remains outside of the country for a period exceeding twelve months or desires to bedischarged, refused to act; is unfit to act or is incapable of acting or has been removedunder the power conferred in the trust instrument. In all of these cases, in the old WesternStates where the TRUSTEE’S LAW is applicable, a person making the appointment mayappoint himself. Whereas under the TRUSTEES ACT of 1893, the person exercising thepower cannot appoint himself. Although, section 10 of the Act of 1893 and section 24 ofthe Trustee’s Law, 1959 requires that the appointment of trustees be made by deedbecause in this case the trust property is automatically vested in the new trustee and thismakes a separate vesting instrument unnecessary.[27]

Appointment by the Court; the court may make an appointment by virtue of itsjurisdiction. This power of appointment is conferred by section 25 of theTRUSTEES ACT, 1893and section 38 TRUSTEES LAW (laws of WesternNigeria, 1959). Such powers may be exercised by the court whenever it deems itexpedient to do so. Such powers may be for the appointment to or in addition toexisting trustees.[28]

In any such situation, there is discretion exercisable by the court except whereexceptional circumstances justify this, the court will not be bound to consider the wishesof the testator or the beneficiary. Particularly and without prejudice to the generality ofthe provision, the court may make an order for the appointment of a new trustee whereone of the trustees has been convicted of a felony or is declared insolvent. It appears thaton the proper construction or interpretation of the above provision, the powers conferredbysection 10(1) TRUSTEES ACT, 1893 and section 24 TRUSTEESLAW must first beexhausted before applying to the court for it to appoint new trustees. However, anapplication to the court can be made for the appointment of new trustees where forexample, the last surviving trustee dies intestate without leaving any estate so that nogrant of administration is made in respect of his property and no one else is given powerto appoint new trustees. In situations like this, the court is to exercise its discretionjudiciously within the ambit of established rules and general principles as laid down by

TURNER L. J. in RE-TEMPEST[29], which is summarized as follows:

‘1) The court will respect a settlor’s wish where these have been madeknown expressly or by implication.

2) It is unlikely that an appointment will be made if the person soappointed would have conflicting interest with those of thebeneficiaries.

3) The court will take into consideration whether the proposedappointment will result in the promotion of the execution of the trustor whether it may impede it.’

1.0.1: Conclusion

Since there is no provision in the statute to guide the court in the exercise of its powers ofappointment, the above rules as enunciated by Turner L.J. are sufficiently broad to beapplicable to the Nigerian situation. It is therefore submitted that Nigerian judges whenfaced with similar problems of appointing trustees, may well adopt the above principles.


[1] 1 MuizBanire, The Nigerian law of trust, 2002, 1st edition, pg.2

[2]Kodilinye, An Introduction to equity in Nigeria, 1975, 35th Ed, pg. 2.

[3] (1921)3 N.L.R 21

[4]Hanbury’s Modern equity; 1969 p.85: Underhill, Laws of Trusts and Trustees 12 Ed. P.3

[5] Keeton, Law of Trusts, 1963, p.3

[6] For example, charitable trusts and private trusts of imperfect obligations.

[7] Keeton, Law of trusts (10th Ed.), for definitional problems see pp. 4-6

[8] PILCHER V. RAWLINS (1872)L.R .7Ch. App. 259

[9] The governors of states in Nigeria have been described as trustees in relation to the land the hold by virtue

of the Land Use Act, 1978, s.1. It is submitted that it is not the normal trust as the beneficiaries (Nigerians)

can not sue the governors to enforce the trust.

[10]SeeUnderhill’s Law of Trust and Trustees, 13th Ed. P1

[11] Maitland, Equity, p. 43

[12] Cave v. Cave (1880) 15 Ch. D. 639

[13] Sinclair V. Brougham (1914) A.C. 389

[14] (1948) S.A.S.R 193 at 196

[15] Oakley, Modern law of trust, 1994, 6th edition, pg.9

[16] Oakley ibid

[17]Fabunmi ibid pg.137

[18] Oakley, ibid pg.33

[19] Keeton and Sheridan, 10th Edition, pg.47

[20] Oakley, ibid

[21] Ibid.

[22]Kodilinye, ibid

[23]Akinyelure, Executoip, trusteeship, bankruptcy law and accounts. 1994, 1st Edition, pg.92

[24] S.M Abdulrazaq, Notes on trust, 1998. Pg.12

[25]Kodiliye, (supra) pg.2

[26] (1989)5 NWLR pt 121, pg.329 C.A.S

[27]Fabunmi (supra), pg. 182

[28]Fabunmi (supra), pg. 183

[29] (1886) ICH, APP, 485.

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