Course outline ; Equity and Trust PDF

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INTERNATIONALISLAMIC UNIVERSITYMALAYSIASenate endorsement ref.: Senate endorsement date: Version no: Version effective date:COURSE OUTLINE Course Title: Equity & Trusts II Course Code: LAW 3711 Credit Value: 3 hours MQF Level : Level 3, Semester 1 Affected Batch: Semester I & II, 201...

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INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

Senate endorsement ref.: Senate endorsement date: Version no: Version effective date:

COURSE OUTLINE 1. Course Title :

Equity & Trusts II

2. Course Code:

LAW 3711

3. Credit Value:

3 hours

4. MQF Level :

Level 3, Semester 1

5. Affected Batch:

Semester I & II, 2019/2020

6. Centre of Studies:

Ahmad Ibrahim Kulliyyah of Laws

7. Department/Unit:

Civil Law Department

8. Course Synopsis:

This course aims to concentrate on the analysis of the law governing trusts in Malaysia. Basically Malaysian law of trust is a product of English law of trust. The course will therefore incorporate principles and examine how these legal principles have been imported or modified to form the corpus of the law relating to the creation of trusts, various types of trust, namely express trust, resulting trust, constructive trust and charitable trust; the appointment, retirement and removal of trustees, their duties, breach of trust and remedies. The Islamic input will focus on the concept of waqf as compared to the charitable trust.

9. Course Classification within the Curriculum: Core Course 10. Prerequisite(s) (if any):

LAW 3711

11. Course Learning Outcomes

No. 1. 2. 3. 4.

Outcomes Understand the principles of trust law as applicable in Malaysia Identify trust law issues and the relevant principles applicable to such issues Analyze the concept of wakaf and compare it with civil law charities. Apply relevant laws to resolve trust disputes or

Bloom’s Taxonomy C A P 2 2

2

3

3

3

3

Soft skills (KI)

Programme Outcomes (PO)

LL1, CT1

1,6,7

EM1, CS1, CT1, LL1 CS3, CT3, LL1 CT3, CS3,

1,2,4,5,6,7 1,2,5,6,7 1,2,3,6,7

provide answers to trust law problems

TS1, LL2

12. LO - Instruction Method - Assessment Alignment: Outcomes LO1 LO2

Teaching-Learning Methods Lectures Discussion

LO3

Tutorials

Assessment Methods Co-operative Learning Combination of coursework evaluation and final written examination Problem solving through group work and submission of a legal opinion to solve the legal problem

13. Assessment Methods Weightage: Methods Common Test Quiz/Oral Test Presentation and Written assignment Final Examination TOTAL

Percentage 15 15 10 60 100

14. Student Learning Time: 1. Instruction Component 1.1. Teacher-oriented methods

Total Allocated Hours

Lectures

28

1.2. Student-oriented methods Tutorials

12

Total Instructor Contact Hours: 40 2. Independent Learning Component Total Estimated Hours 2.1. Reading and revision Learning how to grasp topic 41 2.2. Estimated hours for preparation toward assessments Assignment/presentation 20 Oral Exam 5 Final Examination 10 3. Assessment Outside Instruction Hours Total Allocated Hours Final Examination 2.15 TOTAL SLT 120.15

15. Course Contents and Related SLT: Topics (elaborate the sub-topic)

Weeks

Learning Hours Face to Face

SLT

4

4

Task/Reading (author/page/cases)

1 1.1

Introduction

1.1.1 History 1.1.2 Relationship between 1.1.3 Equity and Trusts 1.1.4 Concept of Trusts 1.1.5 Development & Terminology of Trusts 1.1.6 Distinction between Legal and Equitable Title 1.2

Types and Definition of Trust

1.2.1 Definition 1.2.2 Nature of Trust 1.2.3 Types of Trusts; Express and Implied, Private and Public, Offshore and Onshore, Family Trust and Commercial Trust

MHWA, 3-20, Chap I Martin, J.E.(2001), 3-10, Chap 2 Pettit, P. ( 2001), 12-23, Chap 4 Nyee Fan & Sons Sdn Bhd. V. Kim Guan & Co. Sdn. Bhd. [1979] 1 MLJ 182

2

2.0 Creation of an Express Trust. 2.1 Conditions 2.3 Capacity 2.3 Certainties : certainty of intention, certainty of subject- matter and certainty of object 2.4 Fixed Trust & Discretionary Trusts

3

3

MHWA, 21-40, Chap II Martin, J. E. (2001), Chap 3 Pettit, P.(2001) Chap 3 Knight v Knight (1840) 3 Beav 148 Chow Yee Wah v. Choo Ah Pat [1978] 2 MLJ 41 De Fonseka v. De Fonseka [1971] 2 MLJ 155 Lee Phek Choo v Ang Guan Yau & Anor [1975] 2 MLJ 146 Hameeda Bee v. Seenivasagam [1950] MLJ 267 Parmeshiri Devi & Anor v Pure Life Society [1971] 1 MLJ 142 Wan Naimah v Wan Mohamad Nawawai [1974] 1 MLJ 41 Lee Nellie v Wong Lai Kay [1990] 2 MLJ 399

Kishabai v Jaikishan [1981] 2 MLJ 289 Yeong Ah Chee v Lee Chong Hai [1994] 2 MLJ SC 614 Re Kayford [1975] 1 All ER 604 Yap Joyce V Tee Molly [2000] 3 MLJ 599 Estate and Trust Agencies Ltd v Tungku Meriam bte Al-Marhoum Sultan Ahmad of Pekan & Anor [1949] IRC v. Broadway Cottages [1955] Ch 20 McPhail v. Doulton [1971] AC 429

3

3.1 Enforcement of Trust: Completely and Incompletely Constituted Trust

3

3

MHWA, 41-59, Chap III Martin, J. E. (2001), Ch 4 Pettit, P.(2001), Ch 6 Milroy v Lord[1862]4 De GF & J 264 Re Rose, Rose v IRC [1952] Ch 499. Paul v Paul (1882) 20 Ch 742 Richards v Delbridge (1874) LR Eq 11

3.2 Completely Constituted Trust. 3.2.1 Effectual transfer 3.2.2 Effectual declaration and appointing oneself as trustee.

Comiskey v Bowring (1905) AC 84 Paul v Constance [1977] 1 WLR 54 Pullan v Koe [1913] 1 Ch 9 Cannon v Hartley [1949 Ch 213. Strong v Bird(1874) LR 18 Eq 315 Re Gonin [1979] Ch 16 Cain v Moon [1896] 2 QB 283.

3.3 Incompletely Constituted Trusts 3.3.1 Volunteers 3.4 Exceptions to the maxim“Equity will not assist volunteer” 3.4.1

Rule in Strong v Bird

3.4.2

Donatio Mortis Causa

3.4.3

Proprietary Estoppel

Re Syed Hassan bin Abdullah AlJofri [1953] MLJ 190 Lee Hun Kee & Ors v Yeoh Seng Huat [1965] 2 MLJ 231 Lee Eng Teh & Ors v Teh Thiang Seng & Anor [1967] 1 MLJ 42 Seck Mun Foo & Ors v. Datuk Harris bin Mohd Salleh [1993] 1 AMR 13.515 Public Finance Bhd v Scotch Leasing Sdn Bhd, Pewira Habib Bank [1993] 3 CLJ 635 Yeong Ah Chee v Lee Chong Hai [1994] 2 MLJ SC 614

Koperasi Kasuma (M) v Pengarah Tanah dan Galian Selangor & Ors [1991] 2 CLJ 11371 Robert Sim Teck Hock [2005] 4 MLJ 493

4 4.0 Resulting Trusts 4.1

2

2

Westdeutsche Landesbank Girozentrale [1996] 2 All ER 961 Re Vandervell’s Trusts [1974] 1 Ch 269 Tnue Beh v Tanjong Kelapa Sawit Sdn Bhd & Ors [1995] 1 MLJ 741 Chua Cheow Tien v Chua Geok Eng [1968] 2 MLJ Yew Phaik Hoon v Quah Ooi Keat and Anor [1969] 1 MLJ 32 Goh Kuan Suan v Heng Gek Kiau [1999] 8 CLJ 218

Failure of An Express Trust 4.1.1

Resulting Trust

4.1.2

Public Trust : Cy-Pres & Resulting Trust

4.2

Liew Choy Hung v Fork Kain Seng [2000] 1 CLJ 369 Loo Hon Kong v. Loo Kim Lim[2004] 4 CLJ 1 Abdul Manap Ahmad v Wersuah Amoon [2006] 2 CLJ 349 Lew Pa Leong v. Chi Shen Lan [2007] 1 CLJ 2003

Classification of Resulting Trust 4.2.1 Automatic Resulting Trust 4.2.2

MHWA, 109-131, Chap V Martin, J. E. (2001), Ch 10 Pettit, P.(2001), Ch 9

Presumed Resulting Trust.

5 5.0 Constructive Trusts 5.1 Characteristics of a Constructive Trust 5.2 Areas where Constructive Trusts will be imposed 5.2.1 Fiduciary Relationship 5.2.2 Mutual Will 5.2.3 Vendors of Land

2

2

MHWA, 61-108, Chap IV Martin, J. E. (2001), Ch 12 Pettit, P.(2001), Ch 8 Khor Kuek Jin v Haji Yasin & Ors [ 1976] 2 MLJ 70 Lister v Stubbs (1890) 45 Ch.D 1 Reading v A.G (1951) A.C 507 Boardman V Phipps (1967) 2 A.C 67 Re Goldcorp Exchange Ltd [1994] 2 All ER 806.

5.2.4 Conveyance By Fraud. 5.2.5 Acquisition of Property By Killing 5.2.6 New Model: Justice and Good Conscience

5.3 Strangers as Constructive Trustee 5.3.1

Accessory Liability: Knowing assistance

5.3.2

Recipient Liability: Knowing Receipt and Dealing

2

2

Re Oldham [1925] Ch 75 Re Cleaver [1981] 1 Wlr 939 Shaw v Foster (1872) LR 321 Lysaght v Edwards [1876] 3 Ch 499 at 507 RE DWS (Deceased) [2000] 3 WLR 1910 Martin, J. E. (2001), Ch 12 Pettit, P.(2001), Ch 8 Mara v Browne [1896] 1 Ch 199 Selangor United Rubber Estates v Cradock (No 3) [1968] 2 All ER 1073 Barnes v Addy [1874] LR 9 CH App 244. Karak Rubber Co Ltd v Burden [1972] 1 WLR 603 at 632 Baden Delvux And Lecuit v Societe Generale pour Favoriser le Developpement du Commerce et de l’Industrie en France SA [1983] BCLC 325 Eagle Trust plc v SBC Securities Ltd [1993] 1 WLR 484 Re Montagu’s Settlement [1987] Ch 264 Cowan De Groot Properties Ltd v Eagle Trust Plc [1992] 4 All ER 700. Lipkin Gorman v Knarpnale [1992] 4 All ER 331. Soar v Ashwell (1893) 2 QB 390 Belmont Finance Corporation Ltd v Williams Furniture Ltd (1979) 1 All ER 118 Tan Kok Ming Philip v Royal Brunei Airlines Sdn Bhd[1994] 3 MLJ 51 Royal Brunei Airlines Sdn Bhd v Tan [1995] 3 WLR 64 Bank of Credit and Commerce International (Oversea) v Akindele [2001] Ch 437.

6

6.1 Secret Trusts 6.1.1 6.1.2

2

2

Fully- Secret Trust Half Secret Trusts

Blackwell v. Blackwell [1929] AC 318 Re Gardner [1920] 2 Ch 523 Re Cooper [1939] Ch 811. Ottaway v Norman [1972] Ch 698 Re Keen [1937] Ch 236. Re Snowden [1979] 2 All ER 172 Re Boyes (1884) 26 Ch D 531 Wills Act 1959 Martin, J. E. (2001), Ch 7 Wan Azlan & Paul Linus. (2005), 17 -19 Burroughs v Fowler[1916] 2 Ch. 251 Re Oppenheim’s Will Trusts [1950]Ch 633

6.2 Protective Trust

5

7 7.0

Charities

7.1 Classification of Charitable Trust 7.2 Preamble to the English Statute of Charitable Uses 1601 7.3 Charitable purposes 7.3.1 Relief of poverty 7.3.2 Advancement of education 7.3.3 Advancement of religion 7.3.4 Other purposes beneficial to the community 7.4

Setting Up A Charitable Trust/Organisation.

MHWA, 213-221, Chap IX Martin, J. E. (2001), Ch 5 Pettit, P.(2001), Ch 7

5

MHWA, 133-166, Chap VI Martin, J. E. (2001), Ch 15 Pettit, P.(2001), Ch 13 Wan Azlan & Paul Linus. (2005), 104 –137 Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531. Re Coulthurst [1951] Ch 661 Re Sander’s WT [1954] Ch 265. Joseph Rowntree Memorial Trust Housing Association Ltd v AttorneyGeneral [193] Ch 159. Re Shaw [1957] 1 WLR 729. Neville Estates v Madden [1962] Ch 832 Re South Place Ethical Society [1980] 1 WLR 1565. Scottish Burial Reform & Cremation Society Ltd Glasgow Corporation [1968] AC 138 Attorney General of the Cayman Islands and others v Wahr-Hansen PRIVY COUNCIL [2000] 3 All ER 642, [2000] 3 WLR 869

Re Alsagoff Trust [1956] MLJ 244 Iskandar Gayo v. Datuk Joseph Pairin Kittingan [1996] 3 CLJ 713 Lee Chick Yet v Chen Siew Kee [1977] 2 MLJ 218 Re Low Kim Pong’s Trust Settlements [1938] MLJ 119 Phan Kin Thin v Phan Kuon Yung [1940] MLJ 8

8.1

1

Cy-pres

1 MHWA,166-171, Chap VI Martin, J. E. (2001), Ch 15 Pettit, P.(2001), Ch 13 Wan Azlan & Paul Linus. (2005), 104 –137

8.1.1 Initial Failure 8.1.2 Subsequent Failure

8.2 Non-Charitable PurposeTrusts

9

Islamic Endownment : Waqf

1

MHWA, 173-185, Chap VII Re Rymer[1895] 1 Ch 19 Re Harwood [1936] Ch 285 Re Moon [1948] 1 All ER 300 Re Wright [1954] Ch 347 Attorney General v Lim Poh Neo (W)& Ors[1976] 2 MLJ 233 Re Chionh Ke Hu (decd) [1964] 30 MLJ 270 Re Valibhoy Charitable Trust [1975] 1 MLJ 187.

1

1

1

Federal Constitution Administration of Muslim Law Enactment 1959 Malay Reservation Enactment Shahibuddin Laming, Knowledge Khilafah And Amanah In Islam, Kuala Lumpur :Aras Mega (M) Sdn. Bhd. 71-111 Syed Khalid Rashid (ed.) Awqaf Experiences in South Asia, New Delhi, Institute of Objective Studies. Syed Khalid Rashid,(2003), Current Waqf Experiences and The Future of Waqf Institution, Awqaf, 5, 5-25 Noor Jahan bte Abdul Wahab v Md. Yusoff bin Amanshah and Anor [1994] 1 MLJ 156

Wan Naimah v Wan Mohammed Nawawi [1974] 1 MLJ 41 Zalani Bongsu bin Dato’ Hj. Othman v Ban dan Zaiton bte Dato’ Othman & 2 Lagi Pencelah [1993] 4 CLJ 37 Amanullah bin Haji Ali Hassan v Hajjah Jamilah [1975] 1 MLJ 30

10

9.0 Commercial Trust 9.1 Offshore Trust 9.2 Unit Trust 9.3 Real Estate Investment Trust

3

3

Labuan Offshore Trust Act 2000 National Land Code 1965 Matthews,P.(1997), Shooting STAR: the new special trusts regime from the Cayman Islands, Trusts Law International, 11(3),67-71. How Do Offshore Trust Work? An Introduction to the Benefits and Terms, http://www.can-offshore.com/trustintroduction.htm April 6th 2004 Who should go Offshore? Retrieved April 6th 2004. http://www.can-offshore.com/whoshould-go-offshore.htm Offshore Trusts. Retrieved April 2004. http://www.can-offshore.com/trusttypes-offshore.htm Why go Offshore? What Are The Offshore Benefits of Going Offshore? Retrieved April 2004 http://www.canoffshore.com/why-go-offshore.htm Mowbray, J. (1994), Offshore Trusts: illusion and reality, Trust Law International, 8(3), 68-73 Offshore Trust and Trusts Companies, Retrieved April 2004 http://www.slogold.net/trusts.html Day, M.J & Harris, P.J.(1997) Unit Trusts, London:Oyez Publishing. Kam, F.S.(1997), The Legal Nature of the Unit Trust, Oxford: Clarendon Press. Sakal, P & Day,M. (1994) Unit Trust: trustees’ liabilities, Trust Law International, 8(3).

2 11

11.0 Trustee 11.1 Appointment, Retirement and Removal of Trustees 11.2 Types of Trustee 11.3 Appointment of Trustees 11.4 Number of Trustees Required 11.5 Acceptance or Disclaimer of Trust 11.6 Retirement of Trustees 11.7 Removal of Trustees

11.8 Powers of a Trustee 11.8.1 Variation of the trust provision is possible only if all the beneficiaries are of full age and capacity and with the consent of the court 11.9 Duties of Trustees 11.9.1

Acquainting themselves with the trust 11.9.2 Adhering to the trust provisions 11.9.3 Duty to act in best interests of the beneficiaries 11.10 Beneficiary Rights and Obligations 11.10.1 Right to control trustees actions 11.10.2 Right to compel due administration of the trust 11.10.2 Right to follow trust property Right to terminate the trust

2 MHWA, 226-238, Chap X Martin, J. E. (2001), Ch 17 Pettit, P.(2001), Ch 15 & 16 Trustee Act 1949, ss40,42, 44, 45, 48 Bhikku Daeng v Maung Shwe Tye [1980] 2 MLJ 184 Yusof bin Ahmad & Ors v Hong Kong Bank (Singapore) Ltd & Ors [1990] 2 MLJ 326 Phua Chui Har v Amanah Raya Bhd [2002] 4 AMR 4735 Ligar Fernandez v Eric Claude Cooke [2002] 6 CLJ 152 MHWA, 254-291, Chap XI

12

12.0 Trustees (Contd.) 3

12.1 Duty to Invest 12.1.1 Trustees and the investment of trust funds in 12.1.2 Failure to invest amount to breach of trust 12.1.3

Discretion in investment

matters

of

12.1.4 Trustee’s personal views and investment

12.2 Duties of trustee as a fiduciary. 12.2.1 Not to take remuneration as trustee 12.2.2 Not to purchase trust property. 12.2.3 Not to complete with trust.

12.3 Duty to maintain equality between beneficiaries

12.4

Duty to render information

account

and

12.4.1 To render accounts information

and

12.4.2 How much to disclose?

12.5 Duty to distribute 12.5.1 Benjamin Orders 12.5.2 Advertisements

3 Tan Soo Lock v Tan Juak Choo [1930] SSLR 109 Re Tan Tye Dec’d (1963) 29 MLJ 373 Speight v Gaunt (1883) 9 AC 1 Bartlett v Barclays Bank Trust [1980] Ch. 515 Re Whitely (1886) 33 Ch. D. 347 Khoo Tek Keong v Cheng Joo Tuan Neo [1934] 3 MLJ 255 [1934] AC 528 Cowan v Scargill [1985] Ch. 270 Howe v Earl of Darmouth (1802) 7 Ves. Jr. 137 Ministery of Health v Simpson [1951] A.C. 251 Re Londonderry’s Settlement [1965] Ch. 918 Dr Chan Chin Cheung v Chan Chak Cheung and other [2005] 2 CLJ 405 In re Benjamin [1902] 1 Ch. 723

3 13

13.0 Breach of Trust

3

MHWA, 382-395, Chap XV

13.1 Personal Liability of Trustees to Beneficiaries

Martin, J. E. (2001), Ch 23 Pettit, P. (2001), Chap 24 & 25

13.2 Nature of Liability 13.2.1 Compensatory 13.2.2 Personal, not vicarious 13.2.3 Breaches before appointment 13.2.4 Breaches after retirement (p. 633) 13.2.5 Breach by Trustee – beneficiary His “beneficial interest” bears the loss first

Bahin v Hughes (1886) 31 Ch.D. 390 Re Strahan (1856) 8 De G.M. & G. 291 Head of Gould [1898] 2 Ch. 250 Chillingworth v Chambers [1896] 1 Ch. 685 Re Massingberd (1890) 63 LT 296 Fry v Fry [1959] 27 Beav. 144 Re Davis [1902] 2 Ch. 314 Re Jarvis [1958]1W.L.R 815 Belmont Finance Corp V Williams [1980]1 All. E.R. 39

13.3

Dimes v Scott (1828) 4 Russ. 195 Fletcher v Green (1864) 33 Beav. 426 Bartlett v Barclays Bank Trust Co. Ltd. (No. 1) [1980] Ch. 515 Re Pauling’s settlement Trusts [1964] Ch. 303 Re Ena Jainal Abdeen [1930] SSLR 212 Armitage V Nurse and others (1997) 2 ALL.E.R 24

Measure of liability Trustee liable for the restitution of the money or thing, or value of the thing, and to account for profit made or loss caused.

13.3.1 Payment to wrong 13.3.2 13.3.3 13.3.4 13.3.5

person or misapplication of Trust funds. Increased rate of interest plus principal amount payable Sale of authorised and purchase of unauthorised investment Failure to invest within time Trust fund used for personal purposes (Principal plus interest plus profit)

13.4 Profit in one, loss in another transaction. The doctrine of “set off” Exception to the doctrine 13.5.1 Joint and Several liabilities of two or more trustees.

13.5

The principle of “Contribution”.

13.5.1 Criminal liability of Trustees

13.5.2 S.5, Theft Act, 1968 (English) brings criminal liability to Trustees 13.6

MHWA, 397-409, Chap XV

Defences

13.6.1 Consent or participation in the breach

13.6.2 Release” or 13.6.3 13.6.4 13.6.5 13.6.6 13.6.7 13.6.8

14

14.1 14.2 14.3 14.4 14.5

“Acquiescence” Expiration of six years Relief under S.63 of the Trustee Act 1949: Advice of Solicitor – Trustee Breach by a single Trustee alone Any exemption clause in the trust document Statutory Indemnities

Proprietary Remedies Tracing Who can trace? Tracing of Un-Mixed funds Tracing of Mixed Funds

3

3

MHWA, 409-422, Chap XV Martin, J. E. (2001), Ch 23 Pettit, P. (2001), Chap 25 De Ribeyre (1857) 23 Beav. 107 Fry v Fry [1959] 27 Beav. 144 Re Pauling’s settlement Trusts [1964] Ch. 303 Re Hallett’s Estate (1880) 13 Ch. D. 696

14.5.1 The whole blended property is liable 14.5.2 Position when funds of two trusts are mixed, or that of Trust and third Party: Pari Passu (retable) Rule 14.5.3 Mixing of money in bank account 14.6

Increase in value

14.7 Loss of Right to Trace

Space Investment Ltd v Canadian Imperial Bank of Commerce Trust [1986] 1 WLR 1072 Re Tilley’s W.T. [1967] Ch. 1179 Sinclair v Brougham [1914] A.C. 398 Re Diplock [1948] Ch. 465 Re Hallet’s Estate (1880) 13 Ch. D. 696 Geh Cheng Hooi & Ors v Equipment Dynamics Sdn. Bhd [1991] 1 MLJ 293 Clayton’s Case (1817) 1 Mer. 572 (First in first out) A.G. for Hongkong v Reid [1994] 1 ALL ER 1 Foskett v Mckeown [2001] AC 102

14.7.1 Property no more identifiable 14.7.2 Bonafide pur...