A. Offshore: The Race to the Bottom

It is clear to anyone who reads the findings of investigative journalism into the shady financial affairs of the ultra-rich and the corrupt that much of the trust’s PR problem lies with offshore legislation and practices.Footnote ⁷ In these tiny jurisdictions, a large chunk of the economy is based on a financial services industry that caters to the needs and desires of individuals and companies who have reasons to divert their capital away from the country where their economic activity takes place. These reasons can be benign, but are many times of the wrong kind: tax evasion, money laundering and asset shielding are chief among them.Footnote ⁸ Barely disturbed by this normative deficit, “the offshore jurisdictions of the world have made a business of responding to what people want” without asking too many questions.Footnote ⁹

The various ways in which legislation in offshore jurisdictions has revolutionised the modern trust are well documented.Footnote ¹⁰ The traditional role of each participant in the trust relationship, as well as the interaction between them, have been subjected to aggressive treatment with the aim of reshaping the trust to fit the goal(s) for which settlors choose the offshore jurisdiction as its locus (in spite of the high management fees that this choice entails). While some features, like extensive discretion or a depleted set of beneficiary’s rights, are known to, and indeed started life in, onshore jurisdictions, the concentration and intensity of such restructuring is mostly unique to offshore trusts.^{Footnote 11} Thus, much of the recent bout of legal creativity in offshore trust law features clever permutations of the familiar building blocks of the trust, in combination with targeted innovations that are designed to make it easier for owners to create a private authority over a resource, free of the burdens of ownership.Footnote ¹²

When a settlor successfully uses structures of this kind to create orphan property, he can “live in debt and luxury at the same time” or provide this corrupt luxury to a beneficiary.Footnote ¹³ The creation of orphan property undermines a fundamental principle of the right to private property, namely that owners must pull all the economic levers available to them to address legitimate claims on their resources (with some limited public-policy exceptions, like bankruptcy laws). The grave injustice of allowing people to enjoy the economic and psychological advantages of assured financial support without the duty to pay debts from the source of such benefits is particularly conspicuous with regard to non-voluntary creditors.Footnote ¹⁴ In the notorious US case of Scheffel v Krueger,Footnote ¹⁵ for example, the horrendous sexual assault of a child went uncompensated even though the offender had a spectacular amount of money settled on him by his mother in a “spendthrift trust”.Footnote ¹⁶

The spendthrift trust is a good example of a trust format that explicitly facilitates the creation of orphan property. The settlor of a spendthrift trust prohibits a trust beneficiary from voluntarily transferring their interest in the trust to a third party (voluntary alienation), and prevents creditors of a beneficiary from reaching the beneficiary’s interest through garnishment or attachment (involuntary alienation).Footnote ¹⁷ The trustee is typically allowed to make direct payments to third parties who have supplied the beneficiary’s needs, while avoiding any direct payments that can be used to pay debts.Footnote ¹⁸ In a bid to compete with the offshore business model, many states in the US have now adopted some form of spendthrift trust, including its greasly offshoot, the self-settled spendthrift trust.Footnote ¹⁹ It is no wonder that “most … academics [who] consider the subject find [the laws that facilitate such trusts morally] offensive”.Footnote ²⁰ The case of spendthrift trusts, and the pressures that allowed them to mutate from an offshore curiosity to a widely-recognised instrument for shielding assets in the US, has much to teach us about the danger posed by a drive to attract trust-related business regardless of the price in the moral legitimacy of trusts.

One trust structure that brings the threat closer to home for English lawyers goes by the menacing name “black hole” or “massively discretionary” trust (MDT). In an MDT, trustees have the power to appoint property to members of a very large group of people/entities, which can be subject to a further power of variation. The only beneficiary named at the outset is typically a charity, which is not informed of this fact;Footnote ²¹ there is no point in doing so, for the chance that it will ever benefit from the trust is nil.Footnote ²² The trustee’s extensive power is also on paper only. The reality behind the trust is that the settlor, who has a clear idea about who should in effect benefit from the trust, reveals this intention to the trustee by recourse to instruments such as “letter of wishes”.Footnote ²³ The absence of a beneficiary with the ability and interest to enforce the trust is compensated for by installing a trust “protector” who is granted the power “to direct the trustees, or refuse consent to the trustees, in the latter’s exercise of one or more of their administrative powers (or discretions)”.Footnote ²⁴ The trustee, whose business is dependent on her “reputation for probity, efficiency and discretion in executing such trusts in accordance with the confidential wishes of clients”, is very likely to follow the settlor’s wishes as long as it is legal to do so.Footnote ²⁵ The economic reality behind the arrangement is that the settled property is used to benefit a class of “ghost beneficiaries”, namely people who enjoy the comfort of being cared for by a trust fund, while their creditors have no recourse to it.^{Footnote 26}

There are, of course, variations on the theme and other formats that have been (or will be) developed to achieve the same morally reprehensible aim. But these two examples already make abundantly clear that it is wrong to claim that OSITs are merely a natural development of a legal instrument that has since time immemorial been used to dodge legal rules and avoid taxes. Indeed, soon after people realised that they could rely on the Chancellor’s willingness to enforce obligations of conscience on legal owners, they started to settle property in order to circumvent the severe limitations on the power of ownership that were typical in medieval property law.Footnote ²⁷ However, with OSITs, the rule-circumventing use of the trust has moved to a different and much more dangerous phase. OSITs constitute an attack on the very foundations of property as private control over assets that comes with duties of relational justice.Footnote ²⁸ As such, OSITs cannot be conceptualised as expanding the boundaries of the autonomous use of ownership, but should rather be understood as breaching the boundaries of legitimate control over resources. This is in stark contrast to trusts that facilitated transfers of property where the limitations on doing so were too restrictive of owners’ autonomy or were downright unjust, like the notorious coverture rule.Footnote ²⁹

B. Onshore: At the Crossroads

A. Bedrock

In important ways, the trust – widely considered the golden child of equity – no longer behaves like a typical equitable doctrine.Footnote ⁴⁹ Many norms of trust law do not feature the characteristics we tend to associate with the law of equity, namely, flexibility, particularity and open-endedness.Footnote ⁵⁰ Instead, we find an abundance of clear-cut, general and (often) technical rules that are very different from the morality-infused principles of, say, proprietary estoppel or undue influence.Footnote ⁵¹ I have explained elsewhere why in other more fundamental respects trust law is still faithful to its heritage as the brainchild of the courts of Chancery.Footnote ⁵² One of the most important ways in which the trust is still very much a part of the equity family is the way in which it is founded on duties of conscience. Indeed, in the routine life of the trust, and in the greater part of trust litigation – which naturally revolves around the intricate rules that regulate the day-to-day business of managing trusts – the concept of conscience is not explicitly invoked. But conscience does come to the fore in decisive junctions in the development of the law of trust; on those rare, but critical, occasions when the role of the court goes beyond applying rules to facts, and judges must venture into the terrain of creative lawmaking, conscience emerges from behind the scenes to occupy centre stage. As is (and should be) the case with established doctrines, these moments are uncommon, but momentous.Footnote ⁵³ Let us look briefly at three such junctions.

In Burgess v Wheate (1759),Footnote ⁵⁴ which took 20 years to roll through the courts of Chancery, the judges had to decide whether the beneficial interest under a trust of land was to go to the Crown (through escheat) when the beneficiary died intestate and (as it was decided) heirless. The very unusual facts propelled the law of trusts to emerge “from the grip of the medieval land law system, [and] make its own way forward”.Footnote ⁵⁵ The old rules of medieval tenures, the court concluded, do not apply to the right of the beneficiaries, and the Crown therefore could not take by escheat. Being in possession, and there being no one to whom he owed an obligation of conscience, the trustee therefore had the strongest claim in equity and law to the land. The fundamental reason given for this surprising result was that “the trust is an institution based on the conscience of the trustee being affected” and, in the circumstances, it was not so engaged.Footnote ⁵⁶

In modern times, the case of Westdeutsche Landesbank Girozentrale v Islington LBC Footnote ⁵⁷ is another turning point for the law of trusts: a novel question (whether compound interest – an equitable remedy – is due in the aftermath of a void transaction) which resulted from a retrospective decision that an action of the defendant was ultra vires. Lord Browne-Wilkinson justified his decision that no such interest is due by explaining that “(ii) Since the equitable jurisdiction to enforce trusts depends upon the conscience of the holder of the legal interest being affected, he cannot be a trustee of the property if and so long as he is ignorant of the facts alleged to affect his conscience”.Footnote ⁵⁸ His Lordship’s observation that the legal owner does not come under any obligation in equity – either proprietary or personal – unless her conscience is affected has been justifiably criticised.Footnote ⁵⁹ But the criticism does not affect his claim that the personal duty of legal owners to hold their property for the benefit of someone else is dependent on unconscionability, namely on knowledge (constructive or actual) of the facts that establish such a duty. As Sinéad Agnew shows, the ultimate duty of express trustees – to account for the property – is rooted in conscience, today as in the early days of the trust.Footnote ⁶⁰ The move away from a privity-based commitment towards a mixed proprietary/personal obligation did not change this essential connection between conscience and the trustee’s duty.Footnote ⁶¹

The more recent Supreme Court decision in Akers and Others v Samba Financial Group Footnote ⁶² further demonstrates this point. In this case, doubts about two important aspects of the trust – the effect of the trust property’s locus situs, and the interface between the rules on bona fide purchasers of trust property and section 127 of the Insolvency Act 1986 – were resolved with direct reference to conscience. On the first point, the opinion of Lord Selborne L.C. in Ewing v Orr Ewing Footnote ⁶³ was cited with approval:Footnote ⁶⁴ “the courts of equity in England are, and have always been, courts of conscience … accustomed to compel the performance of [these obligations]” regardless of the owners’ domicile.^{Footnote 65} On the Insolvency Act issue, the point of departure was the rule that, “[w]hen the asset is transferred to a third party, the question becomes whether the conscience of the transferee is affected”.^{Footnote 66} Conscience plays out differently in response to the facts in each of these contexts. But the point of principle remains intact: when arguments on technical/formal legal norms do not yield a clear answer, the normative core of the trust is exposed; if a claim is based on the defendant’s alleged duties as a trustee, the claimant necessarily relies on and invokes the defendant’s duty of conscience.Footnote ⁶⁷

But what exactly do we mean when we say that the obligations of trustees are rooted in conscience? What in the concept of conscience makes it of such “immediate appeal to an equity lawyer”?^{Footnote 68} As I show elsewhere, the concept of conscience is not intended to introduce an element of subjectivity into courts’ discretion; nor is it a mere nod to the history of Chancery as a court ran by clerics.^{Footnote 69} The element of “conscience” invites the court to engage in moral judgment. But the modern category of conscionability shares with its medieval ancestor a commitment to an objective moral judgment that is accessible to the conscience of every reasonable person. According to this view, the legal category of conscience is not just borrowing a terminology from moral theory. Rather, in referring to conscience, equity incorporates an important element of moral discourse in order to communicate its message to the law’s addressees and justify its authority.Footnote ⁷⁰ Then, as today, “equity is the creature and the enforcer of good conscience, of which the unconscionable businessman should, like anyone else, tread in fear, in particular when entrusted with someone else’s property or affairs as a fiduciary”.Footnote ⁷¹

But in contrast with other familiar appeals to moral concepts in the law – like respect, freedom, promise or duress – when “conscience” is invoked, it does not serve as a proxy for a set of moral principles or duties. As Agnew explains, the language of conscience “cannot help us to identify the principles or values which underpin an equitable obligation … [nor] give detailed content to the relevant obligation”.Footnote ⁷² In that sense, it is empty of substantive content. But that does not mean that it is bereft of explanatory power. On the contrary, our conscience helps us to come to know the morally right course of action, and to be motivated to act accordingly. The concept of conscience is therefore a versatile tool that can help us to understand what justifies equity’s intervention in the parties’ common law rights, and when it should do so.

The moral duties that inform the norms of equity are of the kind to which a clear answer is most likely to be available and accessible.Footnote ⁷³ Unlike the case of contested issues in ethics, such as assisted dying and restrictions on freedom of speech, people are likely to converge on the solution to the moral quandaries that equity invites us to engage with even in multicultural societies: should I keep an informal promise or representation? Would Φing amount to an exploitation of weakness? Should a dependent defendant have been offered independent advice?Footnote ⁷⁴ The law of equity employs the concept of conscience in order to signal to people who contemplate a legal transaction that involves this kind of question that they must consult their conscience before making a move; even in market transactions, a cold cost-benefit calculation is not enough. In that way, as Lord Sales explains extrajudicially, equity “serves to narrow the gap between law and morality and thus to legitimise the law and secure loyalty to it”.Footnote ⁷⁵

Given the kind of ethical questions which are of interest to equity, the moral duty should have been clear to the defendant, and the law can legitimately expect that she acts on it.Footnote ⁷⁶ The concept of conscience thus has a dual role to play: in the transaction stage, it communicates to players in the market that the law expects them to follow the morally right course of action; in the post-claim stage, it establishes the authority of the courts of equity over defendants who are responsible for their actions when (and only when) they possessed all the knowledge and skills that are necessary for recognising that the actions they took are morally wrong.

Such understanding of the element of conscience in trusts jurisprudence can help us to tackle the threat posed by OSITs despite the fact that these duties of conscience are owed only to the beneficiary. In summary, a trust that is designed to exclude legitimate creditors from property which de facto belongs to the debtor is an instrument of glaring injustice. Stakeholders who nevertheless hope to benefit from the orphan property it creates, and have any reservations about the way in which the trust fund is managed (or just want information about it), can take the trustee to court. In the next section, I argue that the unconscionability that lies at the heart of OSITs can undermine their moral right to sue the trustee, and should therefore have adverse effects on our willingness to grant them legal standing to do so. But in order to see that, we need to shift our attention from the trustee’s duties of conscience towards the beneficiary: and, more specifically, to the moral standing of beneficiaries (and other stakeholders) to enforce these duties.

B. Compasses, Beams and Standing to Blame

In this section, I wish to argue that claimants do not have the moral authority to make a claim on the basis of trust obligations if the arrangement which created the trust is itself afflicted with unconscionability. To support this argument, I start with a detour into the morality of blaming which will take us to moral standing to sue in law and in equity.

Max Scheler was a prominent German philosopher in the early twentieth century, a founding member of the school of phenomenology and a public intellectual. As a convert to the Catholic religion, this highly charismatic orator and teacher did the church a great service as he brought many of his followers under the wings of the faith. But to his great dismay, the local bishop found out that Scheler intended (yet again) to divorce his wife. When he came to call, the bishop rebuked him for the hiatus between the values he preached and the life he led. Scheler’s quick response was remarkable: “I am the compass not the north.” For him, assertions about the right course of action draw their legitimacy from the truth value of their content – like instructions from a reliable GPS which you ought to heed regardless of whose voice happens to read them out. The moral virtue of the speaker is, or at least should be, irrelevant for determining the value and authority of directions on how to arrive at your destination – on the road or in life more generally. Sure enough, if the audience disregards the speaker due to a perceived lack of virtue, the assertion will not produce the intended result. But assertions can be rejected for many irrelevant reasons, like the speaker’s pitch or accent; a dismissal on the basis of the speaker’s virtue does not reflect a problem with the moral authority of the assertion, but rather a misconception on the part of the audience. This all makes sense, especially in the moral realist framework I adopt here (in which the truth value of moral assertions is independent of circumstances).

And yet, many of us feel unease when we read Scheler’s response. Indeed, you need not be a triangle to teach geometry, but many of us would feel that the viability of instructions in matters of morality is somehow dependent on the speaker, not only on the truth value of the assertion. The question “who can say what to whom?” has now become a fairly popular topic in moral philosophy.Footnote ⁷⁷ After millennia-long discussions of the question “who can be blamed?”, philosophers started to ask the complementary question, namely: “[i]f the recipient of blame must meet certain criteria to be blameworthy, does not the blamer have to meet certain criteria to be blamer-worthy?”Footnote ⁷⁸ The act of blaming may have serious consequences for the accused that require careful thought about who should be allowed to engage in it.Footnote ⁷⁹ It therefore makes sense that not just anyone who notices a wrong can make accusation against the wrongdoer, or at least not with equal credibility. Beyond the obvious epistemic conditions, namely that the accuser has her facts right, there are conditions that are attached to the psychological or moral makeup of the accuser.

One such condition underlies the proverb, “the pot should not call the kettle black”, which has parallels in many cultures.Footnote ⁸⁰ Thus, as G.A. Cohen explains, an employee who has been reproached for minor pilfering by a well-heeled boss who routinely evades paying his taxes can legitimately be left unimpressed.Footnote ⁸¹ The employee does not dispute the truth value of the judgment made by her superior, “[s]he challenges, instead, her critic’s right to sit in judgment, and to pass judgment”.Footnote ⁸² It is now widely agreed by philosophers who write on the subject that the right to blame is subject to a “non-hypocrisy” condition.Footnote ⁸³ But the precise contours of the condition are hard to draw, and the reasoning behind it is not readily explicable.

Starting from the contours of the non-hypocrisy condition, it is clear that Jesus’s recommendation “[l]et he who is without sin cast the first stone” sets the bar too high.Footnote ⁸⁴ If any trifling immorality would stand in its way, the right to blame would be de facto unexercisable. Just how serious the breach of moral norms must be if it is to disqualify an act of blaming is hard to determine ex ante. But for my purposes here, it is enough if the reader concedes that a fairly serious transgression would do the job. More difficult is the question of the relation between the moral lapse, which is the subject of the blame, and the stain on the conscience of the accuser. If the reproach in Matthew 7:4, “how wilt thou say to thy brother, let me cast out the mote out of thine eye; and lo, the beam is in thine own eye?”, is interpreted as requiring that the accuser’s transgression must be more serious than that of the accused, the condition would be too narrow. A different kind of relationship between the actions of accused and accuser is suggested by Gerald Dworkin: it is “crucial … that the fault one is criticizing is the very same fault one has”.Footnote ⁸⁵ This constraint on the non-hypocrisy condition, as Cohen points out, is very difficult to implement, since it very much depends on the level of generality at which the respective transgressions are described:Footnote ⁸⁶ Would sexual harassment and raiding the petty cash box be in the same category if taking place in the office? Are littering and picking roses in the park in the same category of (minor) offences against the aesthetics of public spaces? I say more on the similarity constraint below.

Moving on to the question of justification, we need to explain why blaming acts which expose the accuser as mean, stingy, petty or arrogant do not thereby lose their authority qua accusations, whereas hypocrisy is enough to undermine the accuser’s right of standing.Footnote ⁸⁷ Clearly, it is not merely the lack of virtue that stands in the way of the blaming act. It is also not only a matter of reliability. The reliability of the accuser is of course essential to the legitimacy of blaming. We allow, even encourage, acts of blaming, in spite of the pain they cause, in order to secure the positive results we expect them to have; but these will not follow if the blame is misguided. It is therefore important to ensure that only those who are able to reliably detect blameworthy transgressions will engage in finger-pointing. Can a person who is guilty of a vice or a transgression be relied upon to detect it in others? Not necessarily: one way in which conscience-silencing mechanisms work is by obscuring the immoral nature of one’s chosen course of action.Footnote ⁸⁸ And since a mechanism of this type tends to take over the psyche of wrongdoers, their ability to detect the immoral nature of their behaviour may be greatly reduced. In other cases, however, we may be highly sensitive precisely to the faults that we ourselves are guilty of.Footnote ⁸⁹ Powerful psychological mechanisms of projection, in which unwanted emotions or traits are unconsciously attributed to other people, can explain this common phenomenon. As a result, it is impossible to predict what epistemic effect being guilty of a similar sin would have on the agent. Lack of reliability in the matter, therefore, cannot be the basis for the unique power of hypocrisy to undo the right to blame.

As of late, writers on the subject seem to converge on an account that explains the non-hypocrisy condition with reference to reciprocity in moral communities. R. Jay Wallace offers an attractive version of this argument. A person who is guilty of a transgression or a vice, he says, is still entitled to feel resentment or indignation towards other people when he recognises similar violations of the moral good. He can, of course, also be angry with himself for not managing to rise to his own standards. But what he cannot legitimately do is apply forms of blame discriminately to some agents and not others – including to others and not to himself. Blame, Wallace explains, “tacitly generates a commitment; the moral objection to hypocritical blame can accordingly be understood to be that hypocrites have failed to live up to the commitment that they have undertaken through the attitudes that constitute their blame”.Footnote ⁹⁰

Moral standing must be distributed across the community on an equal basis as it is an expression of our shared humanity. One cannot therefore be willing to grant oneself a moral standing about X and, at the same time, deny it to other members of the community, as this would undermine a condition which is “fundamental to moral thought”.Footnote ⁹¹ This insight can also be put in terms of self-contradiction: the hypocrite, as Kyle G. Fritz and Daniel J. Miller explain, “(implicitly) rejects the impartiality of morality and, consequently, the equality of persons with respect to blaming for violations of N, which is what grounds the right to blame for violations of N in the first place”.^{Footnote 92} As a member of a moral community of equals, the hypocrite cannot “culpably fail[] to observe, criticize, and scrutinize his own moral faults while demanding that others do”.^{Footnote 93}

This insight also sheds light on one question we left open, namely the degree of similarity between the transgressions beyond which the would-be blamer is barred from acting on his indignation. We can now see that too much emphasis on “having done similar things” is misplaced, since what matters to the legitimacy of blaming is what the hypocrisy points to, namely non-commitment to relevant shared values.Footnote ⁹⁴ We can combine this argument with the individuation problem we noted and say the following: the lower the level of generality we need to employ in order to describe the offences of blamer and blamed as similar, the greater the non-commitment to shared values that a hypocritical blaming displays. Thus, when the offences are relatively alike, even if not identical, we see the hypocrite’s readiness to blame as a more serious rejection of the equality between herself and the (other) transgressor. If so, we have a sliding scale of “authority to blame”: the closer the offences, the deeper the rejection of reciprocity value it expresses, and the right of standing to accuse diminishes in tandem.

C. From Blaming to Suing Trustees

This paper is about the right to make a claim in a court of law, which is, of course, different from blaming another person for violating a moral norm. But the practices are closely related, and the right to accuse or make a claim in court is intertwined with the right to blame in interesting ways. An overlap between moral and legal rights seems most intuitive in criminal law. As Anthony Duff explains, a criminal trial “can be seen as a formal, legal analogue of the informal, moral process of calling another to answer for an alleged wrong, and blaming her for it if she cannot offer a suitably exculpatory answer”.Footnote ⁹⁵ The state engages in the ultimate act of blaming when it accuses the defendant of committing a criminal offence.Footnote ⁹⁶ The moral standing of the state to sue criminals is therefore subject to the general conditions on the right to blame, including the non-hypocrisy condition.Footnote ⁹⁷

However, given the nature of the state, its standing to blame can hardly ever be undermined by its involvement in similar-looking wrongdoing.Footnote ⁹⁸ Thus, if a citizen stands trial for financial sleaze, highlighting the way in which the Minister of Health threw Covid contracts at his friends from the pub will not be a very good defence. This is because the right response to these grave accusations is to see the Minister as acting ultra vires and thus to detach his actions from the state. Similarly misguided is a hypocrisy-based complaint about the content of legal rules, such as that they allow the consumption of alcohol and therefore cannot authorise actions against sellers of marijuana (a much less harmful substance). At least in a democracy, even strongly held moral reservations about legal rules ought to be pursued through political means like elections and civil protest; they cannot normally affect legal processes in which the state functions as the guardian of public peace.

These arguments against the activation of the hypocrisy bar will only succeed where the state (acting as a public entity) stands to blame. When we get to private law, the parties’ actions can indeed be assessed against each other in a hypocrisy metric. But when moving from prosecuting for a criminal offence to filing suits in private law, we lose the clarity about the nature of the action as “blaming”. For, whereas if the state accuses X of committing a criminal offence, it is widely believed that a moral blame game is taking place, it is highly controversial whether claims in private law imply moral transgression on the part of the defendant.

Some excellent scholarly work aims to show that claims in tort and for breach of contract are indeed based on an alleged wrongdoing.Footnote ⁹⁹ But the question whether this is indeed so remains contentious.Footnote ¹⁰⁰ It is a fundamental tenet of legal economics, for example, that the state is justified in intervening in a contractual relationship if, and only if, this is necessary to correct efficiency-reducing market failures. Wrongdoing (like breaking one’s promise) may play an incidental role in explaining and justifying the various claims one can make in courts of law about contractual relationships, but it is far from a necessary element of any legal rules in this area: the law is geared to ensure the efficiency of contractual relationships, not to address wrongdoing.Footnote ¹⁰¹ This controversy is deep and interesting, but it goes way beyond the boundaries of this paper. I explain below why, in my view, it has much more limited effect (if any) on the move suggested here in the context of trusts.

In the previous section, I argued that claims based in trust law, even those which invoke the more technical aspects of it, take root from the duty of conscience to hold the trust property in accordance with the terms of the trust. And this reference to conscience invokes the moral norms that bind trustees. When beneficiaries (or anyone with legal standing) invoke the trust relationship to make a claim against trustees, they thereby rely on their duty to abide by their conscience and perform their duties. As we saw earlier, while the courts of equity do not concern themselves anymore with the afterlife of trustees, the state still draws its moral authority to enforce the obligations of trusteeship from the commitment they freely took upon themselves to abide by the terms of trust and hold the property for the benefit of other people.Footnote ¹⁰² Even conscience sceptics – who doubt the wisdom of allowing it to become a conduit for extralegal reasoning in equity doctrines – can still be on board with the idea that claims against trustees point to a moral wrong of disregarding the call of conscience (to hold a property one legally owns for the benefit of another). As we saw, the notion of conscience helps us to locate the root of moral responsibility in the trustee’s free choice to either ignore the verdict of his conscience on a course of action he contemplates, or to wilfully naturalise the voice of conscience in the context of his trusteeship.

It is important to note, however, that claims against trustees do not necessarily include an argument that they engaged in wrongdoing. As Charles Mitchell shows, in claims that are based on the duty to account, the beneficiary invokes the primary duty of trustees to manage the trust property according to the trust terms and account for their actions to the beneficiary. As such, the claimant need not argue for any wrongdoing on the part of the trustee.Footnote ¹⁰³ In that respect, claims which are based on the duty to account are materially different from claims for breach of trust in which the secondary duty to pay compensation for breach is relied upon. On its face, the most basic claim against trustees therefore does not involve any act of blaming. But even in claims for a breach of trust, the claimant need not necessarily argue that any wrongdoing took place. This is because the trustee’s responsibility to follow the trust obligation is strict. If the trustee’s state of mind when committing the breach does not matter, that arguably cuts off any necessary connection between legal accountability for a breach of trust and moral responsibility for it. Making a claim against trustees need not, and indeed many times does not, involve blaming them for wrongdoing. Nevertheless, I wish to argue that the non-hypocrisy condition for blaming applies to claims against trustees.

As noted earlier, every claim that is based on a trustee’s duty in effect says to him, “you must abide by your duty of conscience to provide information/restore the trust account to its pre-unauthorised-investment state/appoint property to me now” etc. Even if the claim does not directly accuse the trustee of past wrongdoing, it insinuates that a trustee who does not comply with the request is wrong in doing so now as he repudiates a moral obligation to which he is subject. An act of blame, or at least an attempt to show the trustee the morally right way to act (e.g. put the trust’s account in order), therefore underlies every lawsuit against trustees, regardless of the question whether wrongdoing needs to be proven. If so, people who expect to benefit from an OSIT do not have the moral standing to blame the trustees for behaving in an unconscionable manner; since they seek to benefit from a patently unjust form of property-holding that is created by these trusts, they lose the moral standing to make conscience-based claims for mismanaging property.

In that respect, claims in trust law are different from claims in contract or tort. With regard to the latter, we saw that there is a serious challenge to the argument that they subsist on moral wrongdoing. Advocates of a strong link between legal and moral responsibility in contract and tort need to show that the connection between the relevant moral wrongdoing and the legal cause of action runs deeper than a superficial resemblance. Trust lawyers have a much easier job in that respect since the obligation of trustees is widely acknowledged to be founded upon a requirement of conscionability that lies at the heart of trust law. It is therefore much more difficult to deny that trustees’ legal obligations are rooted in their moral duties. Indeed, analyses of the trust from a law and economics perspective – whether they see it as a type of contract with many default rules or highlight its proprietary nature – tend to ignore the role of conscience in trust law.Footnote ¹⁰⁴ Perhaps due to this inability to account for a central feature of the trust, the law and economics perspective on trusts – in sharp contrast with other areas of private law – remains fairly marginal.

It is therefore safe to say that, in suing a trustee, the claimant states her expectation that the trustee fulfils his duty of conscience to abide by the trust terms (as his conscience called, or should have called, on him to do). Indeed, trustees are not typically under any moral duty to abide by the terms of an arrangement like the OSIT that is intended to create injustice (even if the trustee took on the commitment to do so freely, in the full knowledge that this was the case).Footnote ¹⁰⁵ That does not mean, of course, that the trustee has the right to enjoy the property, manage or appoint from it to others as she sees fit. But the point I am making here is about the claimant’s standing to make a conscience-based claim against the trustee of an OSIT.

Who should be affected by this loss of moral standing? The legal standing to sue a trustee for failing to abide by the requirements of the law or the terms of the trust is closely linked to the beneficiary principle (namely, anyone who stands to benefit from a trust can ask to enforce it).Footnote ¹⁰⁶ However, as the Supreme Court makes abundantly clear: “[t]he right to seek the court’s intervention does not depend on entitlement to a fixed and transmissible beneficial interest. The object of a discretion (including a mere power) may also be entitled to protection from a court of equity.”Footnote ¹⁰⁷ Following a careful analysis of recent case law, Richard Nolan concludes that objects of a fiduciary dispositive power have standing to invoke the jurisdiction of the court to remedy a breach of trust.Footnote ¹⁰⁸ Thus, everyone who can potentially benefit from an arrangement that is designed to create orphan property – be they “ghost” or proper beneficiaries – has a legal standing to bring claims against a trustee when they believe that he has not fulfilled his duties properly. The question whether they have a moral standing to do so, and the negative answer that question attracts, is therefore relevant to all of them.

It is important to emphasise that the unconscionability in which these potential claimants are embroiled is their wish to gain an advantage from a manifestly unjust private control over property. The fact that they did not instigate the arrangement does not matter for the sake of the moral standing to enforce it. Their position is akin to that of heirs who seek to inherit a fortune that was made by iniquitous means; no one has a moral standing to ask for an unjust private control over resources to persist, regardless of the question whether they are responsible for the way in which it was attained to start with. The fact that the law routinely allows such inheritance does not matter at all for this normative fact. It may well be the case that seeking to create orphan property is but one purpose of a bigger complex arrangement. In such a case, a careful work of fact-finding is required in order to separate the OSIT element – for which there is no moral standing to sue – from other elements that do give rise to a right (moral and legal) to pursue the due administration of the trust.