Of trusts and patrimonies

Patrimony and trust are paradoxical private law concepts. Fundamental in civil law and, respectively, common law traditions, they are shrouded in a dense fog of controversy. Combine them, and you get the perfect comparative private law symposium. The experiment, "a first in the history of the world" as our colleague Ken put it, took place last Friday, 3 May, under the auspices of the Edinburgh Centre for Private Law. It brought together a lively assortment of academics, practitioners and doctoral students, from Aberdeen, to Brisbane, to Montreal. The workshop explored the various ways in which the concept of patrimony has been used, or could be used, to create a civilian trust that is the functional equivalent of the common law trust.

The workshop featured five papers and a presentation, with a commentator assigned for each two-paper panel. Dr Peter Turner of St Catharine's College, Cambridge, started the day with a sobering question: what are we trying to achieve with a comparative trust analysis? Peter drew attention to the potential limits to the understanding of the trust that one may derive from a comparative analysis. Two important limitations stand out. First, different scholars may have different purposes when comparing trusts, and they may hold different views of what matters about comparative trust analysis. Second, trust is necessarily examined and discussed on different levels of abstraction, ranging from particular effects to their irreducible core. These are, indeed, potential obstacles in a meaningful dialogue between comparative lawyers, but they are just that: obstacles that could be avoided, rather than inherent limitations.

The next speaker, Professor Paul Matthews of King's College, London, flagged up another potential problem in associating the trust and patrimony concepts: how useful is it for the common lawyer to explain and understand the trust idea using the concept of patrimony? In other words, why adopt a patrimonial approach to trusts? Professor Matthews explained why a patrimonial approach to the common law trust would not work. First, the belief that the patrimony concept is necessary to explain the segregation of the trust fund from the trustee's own assets and liabilities is a mistake. Regarding the assets side, a trustee has no prima facie duty to segregate trust assets from his personal assets, or the assets of another trust of which he is trustee. On the liabilities side, there is no clear segregation either: in dealing with third parties, the trustee assumes liability personally. Many consequences flow from this, which cast doubt on the utility of patrimony as an explanatory tool for the common law trust, as it currently exists. Nevertheless, Professor Matthews conceded, patrimony may be brought into discussion as an organising concept de lege ferenda, if it could be used to bring about desirable changes to the existing rules.

Next, the discussion shifted north of the border. Dr Dan Carr of Edinburgh Law School, investigated the aims of the patrimonial theory in Scots law: is it a silver bullet, capable of explaining all the facets of the Scottish trust, or is it simply "the law of the instrument", i.e. a theory likely to be adopted by courts or the Scottish Law Commission because it is the established, dominant view? Dan made a startling revelation in his talk: there is no general theory of patrimony in the Scots private law. Therefore, even if the patrimonial theory is thought to be best available approach, more work must be done to explain this concept at general and specific levels. The underlying message of Dan's paper is that the patrimonial theory is only one of the potential explanations of the Scottish trust, and the nature of the trust in Scotland is far from being a closed matter.

The next paper brought about a change of tone. Ms Magdalena Raczynska from Anglia Ruskin University argued that the common law bare trust could be translated into a civilian special patrimony. Several similarities exist between the two concepts. Beneficiary's potential liability for trust debts is one of them. A key feature of the bare trust is that the trustee has no active duties to perform, except that of transferring the trust property at the beneficiary's direction. Since the beneficiary has the right to direct the bare trustee, the former may become liable towards the latter or a third party, based on a principal-agent relationship. In other words, the beneficial owner of trust property held in a bare trust could be liable with all his assets for claims incurred in relation to the trust property. This resembles the civil law scenario where the creditor of a person holding a special patrimony may be paid not only with the assets from the special patrimony but also with assets from that person's general patrimony (e.g. the general and special patrimonies that spouses hold). The civilian concept of special patrimony, however, is heterogeneous, and this may raise obstacles for a comparative lawyer.

Related to the notion of special patrimony, the concept of patrimony by appropriation is another example of a trust-patrimony overlap. Ms Alexandra Popovici, from McGill University and Université Laval, explained how the Quebec trust has been reconceptualised from a sui generis form of ownership, under the reign of the Civil Code of Lower Canada (1866) to a patrimony by appropriation, under the Civil Code of Quebec (1994). Under the latter code, the Quebec trust is conceived as an ownerless patrimony, in which the rights are appropriated to a purpose rather than held by a person. Rights, in other words, are now understood in two different manners: either they are subjective, that is exercised in their holders' own interest, or they are without holder and exercised by a person assigned for that purpose, the trustee. De-coupling rights from holders may have wide-ranging effects. Obligations, for instance, could be understood not as personal relationships but as patrimonial relationships in which the persons involved are just administrators. More importantly, by depersonalising rights and obligations the Civil Code may have stripped the traditional French notion of patrimony from its very essence, turning it into a mere legal universality.

The final presentation of the workshop showed that, despite its difficulties, patrimony may be the future of civilian trusts. Mr Emile Schmieman of the Ministry of Security and Justice of Netherlands discussed the legal, practical and political challenges of introducing a trust in the Netherlands. On the legal side, Emile argued that a trust could be fitted into the existing Dutch legal system by using the model of multiple patrimonies. This model may be the solution for a smooth integration of the trust, since Dutch law already recognizes instances of multiple patrimonies (e.g. in bankruptcy, partnerships or statutory administration of assets).

The workshop raised more questions than it answered. Patrimony may not be the silver bullet after all, and we may be mistaken in trusting patrimonies. But the day was a success for other, more important reasons. First, it showed that there is a vast scholarly appetite for discussing comparative trusts. Second, it drew attention to the fact that more debate is needed to fine-tune the civilian trusts conceptualized as patrimonies. And perhaps more importantly, it brought together lawyers from various walks of life, sharing a passion for the trust.