EQUITY AND TRUSTS REVISION
Introduction to Equity and Trusts ........................................................................................................................3
Equitable Maxims ................................................................................................................................................3
Equitable Remedies..............................................................................................................................................3
Outright gifts ........................................................................................................................................................4
Express Trusts ........................................................................................................................................................5
Types ....................................................................................................................................................................5
Beneficial interest ................................................................................................................................................5
Context affecting Creation (lifetime/on death) ....................................................................................................5
Declaration of express trusts ................................................................................................................................6
Constitution of Express Trusts .............................................................................................................................7
Purpose Trusts ........................................................................................................................................................9
Charitable trusts ...................................................................................................................................................9
Trusts for Imperfect Obligation..........................................................................................................................10
Re Denley Trust ..................................................................................................................................................10
Trusts on Company Insolvency ........................................................................................................................... 11
Express ............................................................................................................................................................... 11
(Not express) Quisclose ..................................................................................................................................... 11
Supply of Goods on Credit – Romalpa Trusts ...................................................................................................12
Implied Trusts.......................................................................................................................................................13
Resulting Trusts..................................................................................................................................................13
Common Intention Constructive Trusts .............................................................................................................13
Proprietary estoppel ...........................................................................................................................................14
Trustee Duties and Powers ..................................................................................................................................16
Duties .................................................................................................................................................................16
Powers ................................................................................................................................................................17
Beneficiary control of trustees ...........................................................................................................................20
Fiduciaries Duties .................................................................................................................................................21
DO FIRST! Fundamental duties ........................................................................................................................21
Situations for duties to arise for trustees ............................................................................................................21
(General fiduciary duty, not just trustee) Use of information and opportunities ...............................................22
Express authorisation .........................................................................................................................................22
Remedies ............................................................................................................................................................22
Remedies against Trustees ...................................................................................................................................24
Breach ................................................................................................................................................................24
Liability ..............................................................................................................................................................24
Direct consequence test ......................................................................................................................................24
Extent of liability ...............................................................................................................................................24
Defences .............................................................................................................................................................24
Indemnity/contribution.......................................................................................................................................25
Proprietary claims against a trustee (tracing) .....................................................................................................25
Proprietary claim against those with fiduciary duties ........................................................................................26
1
,Remedies against Third Parties ..........................................................................................................................27
Third Party HAS received Trust Property ..........................................................................................................27
Third Party HAS NOT received Trust Property .................................................................................................27
2
, Introduction to Equity and Trusts
Equitable Maxims
‘Equity will not suffer a wrong to be without a remedy’
o Foundational, equity developed to address the inflexibility of common law and its failure to
recognise rights of some claimants where something more than monetary compensation was
effective remedy
‘Whoever comes to equity must come with clean hands’
o ‘Does not demand that its suitors shall have led blameless lives’
o Demands fairness from claimant and defendant, legally not morally, Argyll v Argyll
‘Equity will not assist a volunteer’/ ‘Equity will not perfect an imperfect gift’
o Volunteer = someone who has not provided consideration for particular transaction
§ E.g., donor purports gift to done, gift not effective, donor retains legal title
‘Delay defeats equity’
o Undue delay in bringing a claim will cause claimant to lose legal rights
o Unreasonable delay is decided on in the circumstances
‘Equity is equality’
o Parties are treated on an equal basis – rights and responsibilities
‘Equity looks at intent rather than form’
o Substance of the transaction rather than the form – spirit of the agreement and desired outcome
rather than enforcement of technical rules
‘Equity never wants for a trustee’
‘Equity looks to intent rather than form’
Equity fastens on the conscience of the person who received from another property transferred for a specific
purpose only’, Carreras v Freeman
Equitable Remedies
Injunction
• Granted at court’s discretion
• Mandatory – compels to do certain act
• Prohibitory – restrains from doing certain act
AND
• Interim – before/during proceedings, maintain the status quo
• Final – remedy after final decision
Specific performance
• Compel to comply with something
o E.g., terms of contract
• Court supervises the performance
• Common to use for land
• Uncommon for services – trust broken
o Possible to obtain order preventing defendant working for someone else, Lumley v Wagner
Rectification
• Court orders
• Mandate correction of executed written document – to better reflect intentions of parties
• Mistake can be common to both parties or unilateral
• Need evidence, for actual intention and that executed document does not accurately reflect
Recission
3
Introduction to Equity and Trusts ........................................................................................................................3
Equitable Maxims ................................................................................................................................................3
Equitable Remedies..............................................................................................................................................3
Outright gifts ........................................................................................................................................................4
Express Trusts ........................................................................................................................................................5
Types ....................................................................................................................................................................5
Beneficial interest ................................................................................................................................................5
Context affecting Creation (lifetime/on death) ....................................................................................................5
Declaration of express trusts ................................................................................................................................6
Constitution of Express Trusts .............................................................................................................................7
Purpose Trusts ........................................................................................................................................................9
Charitable trusts ...................................................................................................................................................9
Trusts for Imperfect Obligation..........................................................................................................................10
Re Denley Trust ..................................................................................................................................................10
Trusts on Company Insolvency ........................................................................................................................... 11
Express ............................................................................................................................................................... 11
(Not express) Quisclose ..................................................................................................................................... 11
Supply of Goods on Credit – Romalpa Trusts ...................................................................................................12
Implied Trusts.......................................................................................................................................................13
Resulting Trusts..................................................................................................................................................13
Common Intention Constructive Trusts .............................................................................................................13
Proprietary estoppel ...........................................................................................................................................14
Trustee Duties and Powers ..................................................................................................................................16
Duties .................................................................................................................................................................16
Powers ................................................................................................................................................................17
Beneficiary control of trustees ...........................................................................................................................20
Fiduciaries Duties .................................................................................................................................................21
DO FIRST! Fundamental duties ........................................................................................................................21
Situations for duties to arise for trustees ............................................................................................................21
(General fiduciary duty, not just trustee) Use of information and opportunities ...............................................22
Express authorisation .........................................................................................................................................22
Remedies ............................................................................................................................................................22
Remedies against Trustees ...................................................................................................................................24
Breach ................................................................................................................................................................24
Liability ..............................................................................................................................................................24
Direct consequence test ......................................................................................................................................24
Extent of liability ...............................................................................................................................................24
Defences .............................................................................................................................................................24
Indemnity/contribution.......................................................................................................................................25
Proprietary claims against a trustee (tracing) .....................................................................................................25
Proprietary claim against those with fiduciary duties ........................................................................................26
1
,Remedies against Third Parties ..........................................................................................................................27
Third Party HAS received Trust Property ..........................................................................................................27
Third Party HAS NOT received Trust Property .................................................................................................27
2
, Introduction to Equity and Trusts
Equitable Maxims
‘Equity will not suffer a wrong to be without a remedy’
o Foundational, equity developed to address the inflexibility of common law and its failure to
recognise rights of some claimants where something more than monetary compensation was
effective remedy
‘Whoever comes to equity must come with clean hands’
o ‘Does not demand that its suitors shall have led blameless lives’
o Demands fairness from claimant and defendant, legally not morally, Argyll v Argyll
‘Equity will not assist a volunteer’/ ‘Equity will not perfect an imperfect gift’
o Volunteer = someone who has not provided consideration for particular transaction
§ E.g., donor purports gift to done, gift not effective, donor retains legal title
‘Delay defeats equity’
o Undue delay in bringing a claim will cause claimant to lose legal rights
o Unreasonable delay is decided on in the circumstances
‘Equity is equality’
o Parties are treated on an equal basis – rights and responsibilities
‘Equity looks at intent rather than form’
o Substance of the transaction rather than the form – spirit of the agreement and desired outcome
rather than enforcement of technical rules
‘Equity never wants for a trustee’
‘Equity looks to intent rather than form’
Equity fastens on the conscience of the person who received from another property transferred for a specific
purpose only’, Carreras v Freeman
Equitable Remedies
Injunction
• Granted at court’s discretion
• Mandatory – compels to do certain act
• Prohibitory – restrains from doing certain act
AND
• Interim – before/during proceedings, maintain the status quo
• Final – remedy after final decision
Specific performance
• Compel to comply with something
o E.g., terms of contract
• Court supervises the performance
• Common to use for land
• Uncommon for services – trust broken
o Possible to obtain order preventing defendant working for someone else, Lumley v Wagner
Rectification
• Court orders
• Mandate correction of executed written document – to better reflect intentions of parties
• Mistake can be common to both parties or unilateral
• Need evidence, for actual intention and that executed document does not accurately reflect
Recission
3
