Black Magic Trusts
Date: March 26, 2024
Time: 6pm – 7pm
Venue: Room 824, 8/F Cheng Yu Tung Tower, The University of Hong Kong
Speaker: Lionel Smith (Downing Professor of the Laws of England, University of Cambridge)
This paper is part of a project on two mysterious kinds of trust: trusts in which the original trust property has been borrowed by the trustees rather than settled by a settlor, and trusts in which the trustees are authorized to borrow, for their own benefit, the trust property. This paper addresses the second of these “strange” trusts. One is the so-called “Quistclose trust”; this is a trust that can lawfully be converted into a loan by the former settlor to the former trustee. Similar is a trust in which the trustee is authorized to “invest” the trust property in a loan to itself; in other words, to borrow the trust property for its own use. This also turns the trust into a loan, leaving the beneficiaries, who in this case may never have wished to be lenders, with nothing but a claim in debt. In a traditional trust, any such conversion of trust property to the benefit of the trustee would be a clear breach of trust. In a number of commercial contexts, including certain principal-agent relationships and so-called ‘stock lending’, the courts have (more or less clearly) validated trusts in which the trustee can borrow the trust property for its own benefit. The question is whether any of these trusts are actually compatible with the nature of the trust as an obligation relating to the benefit of particular rights.
Professor Lionel Smith was Cheng Yu Tung Distinguished Visiting Professor at HKU in September 2023. He is Downing Professor of the Laws of England at the University of Cambridge and a fellow of Gonville and Caius College. He previously taught at the Universities of Alberta and Oxford before joining McGill University in 2000, where he was Sir William C Macdonald Professor of Law at McGill University from 2013-2022. Previously he was Director of the Paul-André Crépeau Centre for Private and Comparative Law and James McGill Professor. He is a Titular Member of the International Academy of Comparative Law and member of the American Law Institute, the European Law Institute, and the International Academy of Estate and Trust Law, and is a non-practising member of the Bar of Alberta.
Chair: Mr. Eugene Fung SC, Temple Chambers
Please register at https://hkuems1.hku.hk/hkuems/ec_regform.aspx?guest=Y&UEID=93088.