E q u I t y - Equity & Trusts NOTES CSU law NSW PDF

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Equity & Trusts NOTES CSU law NSW...

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EquIty & Trusts Wily v St George Partnership Banking Ltd (1999) Finkelstein J at 433: "For an equitable interest in property to subsist it would not be sufficient if the holder of the interest is only able to protect his right, whether by specific performance, injunction or otherwise, against the grantor. The right must also be enforceable against third parties before it could be described as proprietary although the protection that is available against third parties may not be absolute: for example, an equitable interest is liable to be defeated by a purchaser for value without notice. No doubt it is also generally correct to say that the interest must be capable of disposition before it will be classified as proprietary." ^The existence of an equitable interest rests on a corresponding legal interest in the relevant property, & is given substance according to the rights that vest in the person in whom that equitable interest is vested. Where a person holds both the legal and equitable interests in the one property there is no need to differentiate between those interests. DKLR Holding Co (No 2) Pty Ltd v commissioner of Stamp Duties [1980] 1 NSWLR 510 - Hope JA at 519: "An absolute owner in fee simple does not hold two estates. He only holds the legal estate, with all rights and incidents that attach to that estate. If he were to execute a declaration that he held the land in trust for himself absolutely, the declaration would be of no effect; it would give him no separate equitable rights; he would remain the legal owner with all the rights that a legal owner has. At least where the coextensive and commensurate legal and equitable interests a concerned, "a man cannot be a trustee for himself : Goodright v Wells (1781) at 495 per Lord Mansfield." Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 HCA Notes/ case summary go here  Creation of Equitable Interests

Equitable interests in property can be created in one of three main ways: 1. Pursuant to intention 2. By implication of law 3. By operation of law An express trust is created pursuant to the express or inferred intention of the person alleged to create the trust. A resulting or presumed trust arises by implication of law. EQUITY AND THE OBLIGATION OF CONFIDENCE Equity imposes an obligation of confidence upon the receiver of information inf the following conditions are satisfied:  The information is specific o It needs to be specifically identified - not just generally. o O'Brien v Komesaroff (1982) 150 CLR 310 the solicitor sought to protect provisions of a trust deed given to his accountant, the HC found the description of information too general to allow a distinction between what was confidential and what was common knowledge.  The information is confidential o Confidentiality may be determined by examining the nature of the subject matter or amount of time or capital invested in acquiring the information. o Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 the respondent was given drawings of leather punches to manufacture for the appellant but manufactured numerous punches for itself. Duty of confidence arose because the drawings had been given for a limited purpose. By using the appellants drawings the respondent avoided the labour, cost and time involved in developing them.  Communicated in circumstances indicating confidentiality o An objective test is applied to determine whether the circumstances of communication are confidential. o Franklin v Giddins [1978] Qd R 72 the defendant stole horticultural cuttings from the plaintiffs orchard, knowing that the plaintiff would not have sold the cuttings due to their commercial value.  Use is unauthorised by the confider

o Use of even threatened use of confidential information is sufficient to establish a breach of confidence, even if it is unintentional or subconscious. Where information is conveyed for a limited purpose, use beyond that purpose may be restrained.

The action does not generally require that P needs to demonstrate that it will suffer detriment from unauthorised use of the information (though it may be taken into account re: remedies). It may be necessary to demonstrate detriment in the case of governmental info - Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CKR 39 ( at 50-51) Confidence arises in 3 types of relationships: 1. Private confidences 2. Confidences relating to government secrets 3. Commercial confidences Equitable origin of confidentiality arises from the notion of conscience Moorgate Tobacco Co Ltd v Phillip Morris Ltd [No 2] (1984) 156 CLR 414 (at 437-438) BREACH OF CONFIDENCE If D is proved to have used confidential info from P, he will be quilty of an infringement of Ps rights - Saltman Enginerring Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 (at213) If a breach of confidence is established these 3 elements must then be met: 1. QUALITY of the confidence needs to be assessed. Time could limit the quality of the confidence - Coco v AN Clark (Engineers) [1969] RPC 41 2. OBJECT TEST must be applied. If a REASONABLE PERSON would consider that an obligation of confidence has arisen, then the info is confidential. Smith Kline and French Laboratories (Australia) Ltd v Secretary Dept of Community Services and Health (1991) 99 ALR 679

3. RESULT IN LOSS OR HARM. The purported unauthorised use must result in loss or harm. In equity the level of loss need not be high Duchess of Argyll v Duke of Argyll [1967] 1 ch 302. If all 3 elements are not satisfied there is no breach and no remedies are available. REMEDIES: The same types of relief that are available for a breach of fiduciary relationship are available for a breach of confidential information. They include injunctions, equitable compensation, account of profits and constructive trusts. EQUITABLE ESTOPPEL IN AUSTRALIA : http://www.austlii.edu.au/au/journals/NSWJSchol/2007/4.pdf TYPES OF ESTOPPEL:  Common law – by deed, by judgment or by conduct. Required a representation of an existing fact which led another to alter their position  Promissory estoppel – based in contract, originally required a preexisting legal relationship, but Waltons Stores extended this to situations outside a pre-existing legal relationship (shield)  Proprietary estoppel – based on unconscionability, prevents an owner of an interest in property from asserting rights against another party whom they have allowed or encouraged to deal with that interest, as if they had rights to the property (sword)  Recent HCA cases such as Foran v Wight (1989) and Cth v Verwayen (1990) have lent towards a single doctrine (fusion of common law and equitable estoppel) without distinguishing proprietary from promissory estoppel

A fiduciary relationship implies a duty of trust: it is usually a one way relationship - a trustee owes a beneficiary a fiduciary duty, but not vice versa "A fiduciary must act in good faith; he must not make a profit out of his trust; he must place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to incidcate the nature of fiduciary obligations. They are the definining characterstic of the fiduciary" Bristol and West Building Society v Mothew [199] Ch 1 (Millet J) Categories of a fiduciary relationship:  Presumed fiduciaries - These are established circumstances in which fiduciary obligations are deemed to be owed or where it is established by the Court that a fiduciary relationship is presumed to arise.  This include some of the below, with the fiduciary relationship is underlined: o Trustee and beneficiary Boardman v Phipps [1967] 2 AC 46 o Agent and principal McKenzie v McDonald [1927] VLR 134 o Solicitor and client Bolkiah v KPMG [1999] 2 AC 222 o Employee and employer Harris v Digital Pulse Pty Ltd [2003] 56 NSWLR 298 o Director and Company Hospital Products Ltd v United States Surgical Corp [1984] 156 CLR 41 (Mason J at 96-97) o Partner and partner (Business) Chan v Zacharia [1984] 154 CLR 178 o Court appointed receiver & creditors o Guardian and Ward.  Factual fiduciaries- These are ??

KEY CASE: KEECH V SANDFORD [1726] EWHC J76 

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Facts: A lease had been held upon trust. The beneficiaries were infants. The lessor refused to renew the lease to the trust because he had concerns that the children would be unable to comply with the terms of the lease. The trustee sought and was granted a renewal of the lease in his own name. Issue: Was the trustee entitled to hold the lease personally, or was his renewal of the lease a breach of the conflicts rule? Decision: The trustee held the new lease upon trust for his beneficiary. Despite the rigour of the rule, Lord Chancellor King said that it was better that the lease be allowed to run out than to allow a trustee to have the lease on refusal to renew to the cestuis que trust ("ones who trust").

It follows that fiduciary obligations only arise in relationships that are based upon economic interests. It is not sufficient that one party trust the other in the general sense, or that one party is generally in a position of power over the other. Therefore, relationships such as parent-child are not automatically presumed to be fiduciary. The doctor-patient relationship is also not essentially fiduciary ( Breen v Williams (1996) 186 CLR 71)....