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Category: Trusts

Kinghorn v Wood and the origins of trusts in Scotland

by León Carmona Fontaine, PhD Student at Edinburgh Law School*

If there was a Scottish case from the 1620s in which a Scottish court had decided that there was a sham trust, it would be surprising and significant for both historical and comparative reasons. For a start, Scots lawyers usually consider that a distinct institution known as a trust appeared in Scotland in the late 17th century, and more decisively in the 18th century.[1] Second, sham trusts are usually seen as a recent English legal development. The term ‘sham’ gained a defined legal meaning in England between the late 19th century and the second half of the 20th century (Snook v London and West Riding Investments Ltd [1967] 2 QB 786, 802),[2] and the first case in which an English court found a declaration of trust to be a sham dates from the last decade of the 20th century (Midland Bank plc v Wyatt [1997] 1 BCLC 242). Finally, Scottish courts have occasionally applied the doctrine of sham transactions, but usually by reference to modern English authorities rather than Scottish ones.

Yet, Kinghorn v Wood (1626) Mor. 5072 seems to suggest that both trusts and sham trusts existed in Scotland as early as the early 17th century. Naturally, the trust in question did not go by the name of ‘trust’, and the ‘sham’ was not yet named ‘sham’.  The word ‘trust’ started to be used in Scotland only in the course of the 17th century,[3] and the word ‘sham’ had not yet originated in the English-speaking world.[4] In substance, however, the court found an arrangement that we would nowadays call a trust to be a sham as that term has come to be understood.

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Scottish Trust Law Reform and the Role for the Courts

by Daniel J. Carr, Senior Lecturer in Private Law, Edinburgh Law School

A.  INTRODUCTION

Change is coming to trusts law in Scotland. November 2022 saw the introduction of the Trusts and Succession (Bill) (“the Bill”) in the Scottish Parliament, and on 15th September 2023 the Delegated Powers and Reform Committee (“the Committee”) published its broadly supportive Stage 1 Report on the Trusts and Succession (Scotland) Bill (“the S1 Report”). The Parliament is scheduled to hold the Stage 1 Debate on the Bill on 28th September 2023. It is, therefore, a good time to build upon several of the Committee’s recommendations to illustrate the potentially significant change in the role of the courts heralded by the Bill’s current form.[1] The cumulative effect of the Bill’s provisions[2] is to increase the scope for the courts’ involvement, potentially significantly altering the culture and approach to Scottish trusts by changing the courts’ terms of engagement with trusts and trustees. What happens in the evolution of that engagement will determine much of the substantive doctrine and practical content of trust law, and therefore the very nature of the Scottish trust as a legal institution.

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