“My Lords, there are two issues in this appeal. The first is concerned with the nature of the so-called “Quistclose trust” and the requirements for its creation. The second arises only if the first is answered adversely to the appellant. It is whether his conduct renders him liable for having assisted in a breach of trust. ” Lord Millett in Twinsectra Ltd v Yardley and Others  2 AC 164 at paragraph 52. Critically analyse Lord Millett’s views on the two issues referred to above indicating the extent to which you agree with him.
Introduction Lord Millet recognised two key issues within this case that offers a complete purpose of authority in the area of Quistclose trust and dishonest assistance. The court recognised Mr Paul Leach was a lawyer in Godalming, that was acting as solicitor on behalf the defendant Mr Yardley whom was purchasing a property for which funding was required. Barclays Bank had initially agreed to provide Mr Yardley with the funding he required for purchasing the property through his bank loan application.
However there were delays in the process of obtaining the loan via the bank, therefore as a result of this alternative means of requiring funding where obtained from Twinsectra Ltd. Mr Leach refused to accept the terms and conditions of the loan with Twinsectra as they required him to provide a commitment that he would guarantee the repayment of the loan. But in fact it was decided later that the loan would be paid to Mr Sims another solicitor associated with Mr Yardley, however Mr Sims was not acting as the solicitor to Mr Yardly in acquiring the purchase of the property.
This in fact was the role that fell to Mr Lech, ultimately both Mr Sims and Mr Yardly agreed to the terms of the loan and that Mr Sims would take primary liability of the loan. This was unknown to the parties of Twinsectra and Mr Lech , later on in due course the Barclays Bank loan finally came through, and it was recognised that the Twinsectra loan was no long required. Mr Leach had been made aware of a draft of the proposed undertakings, which also required the money to be applied exclusively for the purchase of the property and for no other purpose. Mr.
Sims handed the money over to Mr Leach, who released the funds on Yardley’s immediate instructions. Significant monies that had been advanced were diverted to other uses. When Yardley defaulted on the loan and Sims went bankrupt, Twinsectra Ltd resulted in sueing everyone in plain hindsight the primarily target being Mr. Leach on the bases for dishonest assistance in a breach of trust by Mr Sims . Lord Millet’s View Lord Millet concluded his speech in the case of Twinsectra Ltd v Yard  by quoting: “As Sherlock Homes reminded……when you have eliminated the impossible, whatever remains, however improbable, must be the truth.
I would reject all the alternative analyses….. and hold the Quistclose trust to be an entirely orthodox example of the kind of default trust known as a resulting trust. The lender pays the money to the borrower by way of loan, but he does not part with the entire beneficial interest in the money and insofar as he does not it is held on resulting trust for the lender from the outset” . Lord Millet delivered the leading judgement in this case, his judicial analysis closely replicated what he had previously suggested twenty Years ago in an article in the Law Quarterly Review.
It is here that Millett made his famous observation on the essence of a trust arrangement being one that a settlor who retains no beneficial interest in the trust he creates is not able to enforce the arrangement. It is also where Millett considers the circumstances where trusts are deemed to have failed on account of being impossible to carry out, or on grounds of falling foul of public policy or even law . Lord Millet clearly stated that the criteria for a Quistclose Trust to exist must consist of four possible answers the lender, the borrower, the ultimate urpose, and no-one, in the sense that the beneficial interest remains ‘in suspense’. Millet used this to determine that the lender shall retain the beneficial interest in moneys advanced and the moneys advanced shall constitute a fund separate from the assets of the borrower until the purpose has been fulfilled.
Quistclose Trust When a person holds fiduciary duty it is a sensible exercise for the benefit of another person to achieve a particular purpose, that he holds those rights in Trust for giving / recipient, and is Trustee so called. In practice, therefore, that constitutes a Trust ‘gives’ a fiduciary management mandate, all or part of its own property as a Trustee, so that the latter holds in the administer for the benefit of or more beneficiaries, who may be the rightful heirs, other heirs, or, for special measures and delicate, the giving itself, if the Trust would have only have a temporary function of guardianship and Heritage Preservation (the Trust guarantees complete anonymity property)” . The Trust is not a company, it has the recipients and not shareholders, and the difference is not just a question of terminology.
Indeed the Trust, in its original English perspective, is not a contract, for reasons both historical and practical. Above all, the Trust is subject to the Tribunal Special Registry, said the ‘Court of Equity’, while the contract is a concept associated with the Courts ‘Common Law’. A difference in the common law, the Registrar, having hosted the canonical principle of respect for the trust granted (Pacta sunt), still protects the interest of giving and or beneficiaries through the admonitions addressed to the Trustee, which impose to keep its promise, on pain of imprisonment.
The latter can never grasp them, even if claim bankruptcy . Similarly, the property will not return either in the Heritage managing trustee, and; therefore, the same rule fully implemented by compared to its creditors, even in cases of personal bankruptcy or companies which are connected. Moreover, according to a bound duty of ‘continuation’, the giving and beneficiaries will maintain the right tangible compared to third party purchasers, even free of charge, the assets of the Trust.
In fact, in the worst case, if the Trustee Heritage is in violation of its obligations, the new owner automatically becomes a Trustee himself at the service of giving from, and shall hold the assets in accordance with the terms of reference originally (Principle of ‘overreach’). Dishonest Assistance The court came to the decision that Mr Leach was not dishonest as the ruling judge believed that the undertaking did not run with money. He deliberately closed his eyes to the implications of the undertakings and the money being misapplied .
Lord Millet delivered a strong dissenting judgement with support taken from the principle of the Royal Brunei Airlines v Tan  case, where it was decided that the test of dishonesty is an objective, and that an explanation must be taken of the subjective considerations, such as the experience of the defendant and intelligence as well as the defendants actual state of knowledge at the relevant time . However, it is important that he should be appreciated that he was acting honestly.
The question is whether a ‘Reasonable Man’ will appreciate the fact of what he was doing was improper not whether the defendant actually appreciated this; His lordship provides three reasons for this in his speech of the Twinsectra Ltd v Yardly case . The main issue with the Quistclose trusts is their categorisation within the accepted types of trust. The structure of trust exempted by Millet does not appear elsewhere in English trust law, and the type of trust used as an impact on the rights available to people.
Trust has been considered resulting express of constructive in nature, an alternate explanation is that given by Millet which is, that trust is an illusionary trust where the apparent takes no active role. The trust is established by the intention of either party which is revocable at any time. The issue with those ideas is that in the fact of Quistclose it is not of a normal illusory trust and Millet failed to consider the mutual intention of the underlying contracts and parties. According to Lord Millet, the contract provides the moneylender an equitable interest in the loan with the borrower holding it on trust for him.
Under this two staged trust, the interest in the money goes from lender to the borrower and the when the purpose of trust fails, it reverses. In the case of Twinsectra, Lord Millet explains that the Quistclose trust is a resulting trust, but it is important that the lender retains the interest throughout the transaction with no need for the interest to reveres if the purpose of the loan fails. The issue with the analysis as explained by Alastair Hudson is that because the resulting rust comes after the misuse of loan, it may come too late if money is not available when the claim is brought forward.
The borrower may have already spent the money or already be insolvent and the subject of claims by creditors . The Trust has no real legal status that is irrelevant to the legal Anglo-Saxon, but sometimes this disrupts Cartesian minds. However, we can solve this problem quite easily, with the creation of an intermediary company (‘Under lying Company’) between the properties and granted the Trustee so, for third parties, the company particular, with legal personality, which owns the property, concluding the operation under conditions of anonymity even stricter.
It is therefore possible, in addition to all that we have observed above, to transfer with ease of use rights on Trust or to avoid splitting a family, by merely the income distribution rather than distributing the basic capital, rather than prevent the opening of the succession during the transition or mortis causa subtract all the matrimonial assets, and much more In another context, an unauthorised investment is a breach of trust and a breach of fiduciary duty. The most important duty of the trustee is to obey the terms of the trust and to keep within the terms of its authority.
Where a trustee has made an unauthorised investment, the beneficiary has an investment by investment right of election; the nicest ones she will keep for the trust and she will complain about the defiant ones. A beneficiary’s complaint will result in the ‘falsifying’ of the account . This means that any untoward investment removed from the trust’s accounts (the investment will in effect have been made by the trustee on his own behalf, and not on behalf of the trust) and the trustee will in the ordinary course be ordered to make the trust whole by reimbursing it for the amount of the entire investment .
Conclusion Keeping in sight Millet’s point of view, The Trust may make modern involvements in different areas of law: property, inheritance, contracts, commercial law and tax law, just to name a few. These words, which were selected for standardization and those you can still find in the lexicon, are mostly technical terms the Law of the trust that the common law formerly called the ‘use’. Even this law has evolved; it retained its characteristics original.
It is important to remember that the names presented may occur in other areas including civil law. But the concepts covered are specific to the common law trust. The process of normalisation the terminology of the law trusts is the same as that applies in other areas, anxious to reconcile constitutional legitimacy and linguistic legitimacy; it is the development of a terminology that will be understandable to lawyers trained in common law.
The meaning of this word is ‘holding’ characterizes the action to possess, to hold, shares through a company (i. e. the holding company). But if we turn back on the track, short or long, various intermediary companies, we arrive at the ordinary shareholders are individuals, our potential customers. However, it is possible to structure so “different” the last stitch of the chain of shareholders of a holding company, by the insertion of Trust Anglo-Saxon law, and this is precisely the theme of this fact sheet.
Of course, normally until the beginning of this century, the instrument of Trust was used primarily outside of England, to the tutelage of the dominant heritages. In England, as we shall see later in the law in this area is consolidated for centuries and the Trust is a tool for planning always been normal. Therefore I would agree with Lord Millets issues in the judgement he made of there being a Quistclose and Dishonest Assistance in the form a breach of trust.