LEGAL PRINCIPLE: EQUITY AND TRUSTS — Trustee and Beneficiary — Distinction Between Legal Title and Beneficial Interest in Bank Shares
PRINCIPLE STATEMENT
If a defendant is pronounced a trustee of shares, he remains the registered legal owner while the plaintiffs become the beneficial owners only. That is what the law of trust is all about. It is not the function of any court to change the law, and Decree 25 of 1991 has not changed it.
RATIO DECIDENDI (SOURCE)
Per Kutigi, JSC, in Kotoye v. Saraki & Anor (1994) NLC-1471993(SC) at pp. 8–9; Paras E–A.
"I think that if as a result of the plaintiffs' claims, the defendant is successfully pronounced to be a trustee of any of the shares thereof, he the defendant will still remain the registered legal owner of the shares while the plaintiffs will become the beneficial owners only, a trust relationship being equitable generally. It is of no consequence whatsoever that the defendant though a registered holder is a mere notional or nominal owner of the shares while the plaintiffs are the real beneficial owners. That is exactly what the law of trust is all about. It is not the function of any court to change the law and Decree 25 of 1991 has not changed it."
EXPLANATION / SCOPE
A trustee remains legal owner while the beneficiary holds equitable beneficial interest. This distinction is fundamental to trust law. The principle applies to shares and all trust property. The rule preserves the distinction even where the trustee is only nominal owner. Courts cannot abolish this distinction. The registered holder’s legal title remains intact despite beneficial ownership elsewhere.
