Equity and trust lecture notes all PDF

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Week 16: 15th JanuaryEquity and Trust ExamProperty Law statute bookThe equitable Maxims - Equity follows the law Equity will permit no wrong without a remedy He who seeks equity must do equity Where equities are equal the law the law prevails He who comes to equity must come with clean hands Delay d...

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Lecture 1 : Equity and Trust Introduction Week 16: 15th January! " Equity and Trust Exam!

Property Law statute book ! The equitable Maxims! • Equity follows the law! " •

Equity will permit no wrong without a remedy! "

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He who seeks equity must do equity! "

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Where equities are equal the law the law prevails ! ! "

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He who comes to equity must come with clean hands "

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Delay defeats equity! "

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Equity abhors a vacuum! "

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Equity looks to substance not form! "

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Equity will not permit a statute to be used as an instrument of fraud! "

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Equity to be used as an instrument of fraud! "

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Equity regards as done that which ought to be done "

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Equity acts in personam! "

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Equality is equity! "

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Equity will not allow a trust to fail for want of a trustee! "

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Equity will not assist a volunteer! "

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Equity will not perfect an imperfect gift "

Recognition of Trusts Act 1987 The term “trust” refers to the legal relationship - created inter vivid or on death (testamentary by a person the settlor) - by a person the settlor (or testator) when assets

have been placed under the control of a trusteee for the benefit of a beneficiary or for a specified purpose. !! “The legal relationship”! • Created by a person : the settlor/testator! " •

When assets have been placed under the control of a trustee for the benefit of a beneficiary "

For Example! • Person A buys house! " •

Person A owns the house! "

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Person A (Legal Owner) declares that s/he is now holding the house on trust for the benefit of Person B and Person C in equal shares (beneficial owners).! "

The beneficiary principle!

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Morice V Bishop of Durham (1805) 10 Ves 522 “..such object’s of benevolence as the Bishop of Durham would approve of …" "

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There must be somebody in whose favour the court can decree performance.! "

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Re Astor’s Settlement Trusts (1952) … for maintenance of good understanding between nations.! "

So, no “purpose” trusts BUT there are exceptions • Charitable trusts! " •

Trusts of imperfect obligation! "

Trusts of imperfect obligation (anomalous exceptions)! • Specific animals " •

Monuments, graves, tombs! "

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Public masses! "

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Promotion of fox hunting! "

The problems with purpose trusts:! • Contravene the beneficiary principle! " •

Lack of certainty! "

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Public policy "

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Perpetuity (Perpetuities and Accumulations Act 2009)! "

Public Policy! • !Brown V Burdett! "

Lecture 2 : Certainity Week 17 : 22nd January!

Certainty! • Knight V Knight " •

“The words were so used that upon the whole, they ought to be construed as imperative" "

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“The subject of the reccomonendation or wish be certain." "

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“The objects or persons intended to have the benefit … be also certain"! "

The three certainties! • Settlor/testator! " •

Trustee "

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!Beneficiary! "

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Courts! "

’The three Certainties’!

1.

Certainty of intention "

2.

Certainty of subject matter "

3.

Certainty of objects! "

Certainty of intention! Cases • Paul V Constance " •

Jones V Lock! "

-“I think it would be very dangerous example if loose conversations of this sort in important transactions of this kind should have the effect of declaration of trust.! •

! !Duggan V Full Sutton Prison Governor - Duggan claimed that a trust was imposed by the prison governor. Cash is meant to be given to the prison governor when going in. Court looked at the prison rule and considered the circumstance and practicalities.! "

Precatory words :! • Re Adams and Kensington Vestry “In full confidence that she will do what is right as to the disposal thereof between my children" " •

Words were not sufficient court said no as precatory words are not accepted.! "

Certainty of subject matter (trust property)

A) The trust property! B) The beneficial interest(s)

Why •

Beneficiary: May not need to know the details of the entire trust.! "

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Trustee: The trustee must know what property they should be using to benefit the benificiary.! "

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Court: Court has to resolve the dispute. "

A) The trust property! •

Sprange V Barnard - Women left property to husband for sole use. “At his death the remaining part of what is left that he does not want for his own wants.”! "

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The court said no trust! "

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Plamer V Simmonds - Women left her residuary estate to her husband. “ I have full confidence…that..he will…leave the bulk of my … residuary estate”. "

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Re Thompson’s Estate - left property to widowed wife. But "any property” remained at her death had to be distributed. "

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Re Last - women left all her property to her brother “anything remaining” should go to specified person. When he dies we can calculate what is left so the phrase is sufficient. "

B) Certianity of beneficial interest • !Boyce V Bocye - left 2 houses on trust according to the terms of the trust Maria got to choose which house she wanted and the other one goes to Charlotte. Maria dies and the gentlemen didn’t change his will Maria had to make a choice. She didn’t make the choice so the court held that he can’t be certain of Charlottes beneficial interest so Charlotte gets nothing.! " •

Re Knapton- Women provided that number of houses should be distributed the Will was silent as to how It was decided. Court stepped in and said we can step forward and say the property is divided according to the order of the will. "

Issues in relation to certainty of subject matter:!

Property :! Tangible: Physical, !: • Re London Wine Company - Wine dealers had acquired various stocks of wine kept all over England. The wine was then sold to customers who handed over the money and received a certificate title which said they were sole beneficial owners. But the company didnt separate the wine or do anything with it. The certificate didnt link to any wine. Court said there was so trust, because the wine had not been separated or linked to an individual customer there could be no trust. No

certainty of subject matter! " •

Re Goldcorp Exchange! "

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If a part of tangible property is part of a trust it has to be separated. "

Intangible : Cannot be touched such as shares or money in bank account.! •

It is interchangeable fungible - eg one type of share in one company. "

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Hunter V Moss - held 950 shares out of 1000 and promised Hunter a 5 % holding (50 shares) dispute rose and it was said that Moss held those shares for hunter. There was no separation of the 50 shares and what they said was all 950 shares are identical and because of this you only needed to quantify it not separate it. "

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Shah V Shah - family dispute declaration of trust.! "

Certainty of Objects • !To advance public-!(charitable purposes)! " •

To advance private purpose trusts -(trusts of imperfect obligation0 our anomalous exceptions "

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To benefit a person or persons i.e to benefit the BENEFICIARIES.!"

The “Type” of trust determines which test to use:

1.

Fixed trust "

2.

Discretionary trust! "

Whichever type of trust we have determines the test.! Trust Powers

Fixed trust:

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Example of a fixed trust power - he must distribute the money equally between my nieces; he has no discretion to decide how much of the 1000 each niece will receive.! "

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1000 to my son to distribute amount my nieces in equal shares.! "

Discretionary Trust • Discretionary trust power - he must distribute the money between my nieces but has the discretion to decide how much each will receive.! " •

Example - 1000 to my son to be distributed among my nieces as he thinks fit.! "

Mere Powers • Mere power - he many exercise the power but there is no compulsion to do so.! " •

1000 to my son to be distributed amount my nieces if he thinks fit.! "

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Re Hays! "

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Here the court WILL NOT step in however he has to at least consider whether or not to exercise the power. "

In a fixedtrust the trustee has no discretion if they don’t do what they are told to do they are liable for breach of trust.! • Fixed list test for fixed trust! " •

If we can’t draw up a fixed list then the trust fails we do not then move to another test. Thats it no trust.! "

Discretionarytrust includes an element of choice as to who benefits as to how much they benefit.! • Is/is not test for discretionary trust "

Resolving Uncertainty! • !Recourse ot an expert:! " •

Re Tuck’s ST!"

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Confers wide powers(give them more power to decide)…. But there must be sufficient!certainty."

Forms of!uncertainty! • Administrative unworkability.! "

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Conceptual uncertainty (meaning of words must be clear otherwise trust fails)! "

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Evidential uncertainty (can the beneficiary prove that they fall within defined class of beneficiaries)! "

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Ascertainability (where beneficiary has died, moved changed their name as long as most obligations can be made then the trust will be fine, its being aware that if we can’t find a beneficiary the trustee has to make every effort to try to find them)! "

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See also : Re Baden’s Deed Trust! "

Lecture 3: Formalities + Problem Questions Week 18 : 29th January! Formalities!

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Law of Property Act 1925! "

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Section 53(1) : section 53(2)! "

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Will Act 1837 "

Section 53 (LPA 1925)! • 1 b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.! " •

1c) a disposition of an equitable interest or trust subsisting at the time of the dispotion, must be in writing signed by the person disposing of the same or by his agent thereunto lawfully authorised in writing or by will.! "

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(2) This section does not affect the creation or operation of resulting, implied or constructive trusts. (This means whenever we have constructive trust or resulting trust no formality is required. The constructive and resulting trust are except from formalities it means that in a lot of cases we have parties claiming its an constructive trust and the other party saying its not because it hasn’t complied by the formalities. !NO FORMALITY REQUIRED.! "

As long as we have a valid will we have a valid declaration of trust.!

To have a valid will it must comply with the Wills Act.! Section 9 Wills Act 1837 • A) It is in writing and signed by the testator or by some other person in his presence and by his discretion.! " •

B)It appears that the testator intended by his signature to give effect to the will and! "

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C) the signature is made or awknowlegde by the testator in the presence of two or more witness!(present at the same time and)! "

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D) Each witness either- "

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i) attests and sign the will or! "

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ii) acknowledges his signature in the presence of the testator (but not neccisarly in the presence of any other witness), but no form of attention shall be necessary. ! "

Barett v Bem!

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s.9(a) Wills Act 1837 "

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It is in writing and signed by the testator or by some other person in his!presence and by his direction. "

Exception! • s.11 Wills Act 1837 - privileged wills! " •

This means people can make a will orally such as someone being injured or dying. Very limited restricted but possible circumstances like military people in war zones. "

Be aware:! • S.15 Wills Act! " •

Says if you are a witness to a will you cannot benefit from that will.! "

The testator / testatrix must..! • A) be 18 years or over (except in certain circumstances) " •

B)Have testamentary intention "

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C)Mentally capable "

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Gill v Woodall 2010 Lord Neuberger:”the law in this country permits people to leave their assets as they see fit and experience of human nature generally and of wills in particular demonstrates that people’s wishes can be unexpected inexplicable unfair and even improper. "

In relation to mental capacity! • “Of sound mind, memory and understanding" " •

Banks v Goodfellow:"

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I )needs to understand the nature of the act.! "

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ii) understand and recollect the extent of his property (not every single item but needs to understand how much property 1 house or 2.) "

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iii) understand and recollect the people who may have moral claims on his/her estate.! "

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iv) not be suffering from an “insane delusion” "

The testator /testatrix must..!

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A) be 18 years or over (except in certain circumstances)! "

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B) Have testamentary intention! "

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C) be mentally capable "

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D) Not make the will as a result of undue influence or fraud. "

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E) Know and approve the contents of the will.! "

As long as we have a valid will we have met the requirements of section 53.! !Declarations of trust! • Personality (i.e everything except land)! " •

Land - “manifested!and proved”by some writing.! "

Section 53 (LPA 1925)! • 1a) no interest in land can be created disposed or except by writing signed by the person creating or conveying the same or by his agent signed by the person creating or conveying the same or by his agent thereunto lawfully authorised in writing or by will or by operation of law;! " •

B) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;! "

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C) a disposition of an equitable interest or trust subsisting at the same time of the disposition must be in! writing signed by the person disposing of the same or by his agent thereunto lawfully authorised in writing or by will.! "

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2. This section does not affect the creation or operation of resulting, implied or constructive trusts.! "

Disposition of an equitable interest! • S53(1) (c) LPA 1925 - relates to a beneficiary’s disposition of his/her interest. " •

“Disposition” - not defined but taken to mean: an act by which someone ceases to be the owner…! "

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See also : s205 (1)(ii) LPA 1925 "

Timpson’s Executors v Yerbury 1936!

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Romer LJ “The equitable interest in property in the hands of the trustee can be disposed of by the person entitled to it in favour of third party in any one of four different ways: "

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The person entitled to it:! 1. Can assign it to the third party directly;! "

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Can direct the trustee to hold the property in trust for the third party;! "

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Can contact for valuable consideration to assign the equitable interest to him; or! "

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Can declare himself to be a trustee for him of such interest.! "

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Can assign it to the third party directly:! "

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Re Danish Bacon Co Ltd. Staff Pension Fund Trusts 1971.!"

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Can!rice the trustee to hold that property in trust for a third party "

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Grey v IRC 1960 "

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Vandervell v IRC 1967 "

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Re Vandervell’s Trust (No2) 1974 "

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Cases are about people trying to minimise their tax liabilities. Had he just declared the shares he held he would have been fine.! "

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Can contract for valuable consideration to assign the equitable interest to him:! "

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Oughtred v IRC 1960 : Mother under a trust agreed with her son to exchange shares the reason for this was to!minimise! inheritance tax liability. Here there was an oral agreement however the tax man didn’t agree. The women said that they had an oral agreement. However due to constructive trust you dont always need to meet the requirements of an agreement. Though in this case it wasn’t enough.! You can have an oral agreement without having the need to be in writing. However she was unsuccessful.! "

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Neville v Wilson 1997 : If you have something in writing produced at a later date its not valid.! "

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Can declare himself to be a trustee for him of such interest:! "

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Grainge v Wilberforce !1889"

Disclaimers:! • If someone said they would benefit from a!trust but say they want nothing to do with it this is a disclaimer. NOT a disposition.! " •

Re Paradise Motor Co. Ltd 1968"

Ways for a !disposition! 1st way: You assign your interest to someone else.! Beneficiary passes interest to someone else.! 2nd Way: Beneficiary under a trust can direct the !trustee to pass trust to someone else.! 3rd Way: You give something to someone else and in return they give you something. Basically means they have your interest.! 4th Way: The idea that you effectively create a subtract for someone else.! In order for it to be valid needs to be in!writing.

*Personality = anything other than land (wine/property)! If dealing with a problem question mention LPA Act!

Looking at problem questions:!

There is a lot of information that is not relevant so its important to understand what is relevant.!

Important words :! • i) In full confidence that she will distribute this fairly - an issue with this is that the court will use the ! Adams approach as she will take that property absolutely. She does not need to share it due to the word !used(Fairly).! " •

ii) If Stevie dies before making the choice therefore the surviving person gets nothing. Boyce and Boyce. Here Lakaku gets nothing.! "

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iii) Here we are dealing with the issue of certainty of subject matter. We are dealing with tangible property. We know that when we deal with tangible properties like half of it needs to be separated off. Part of a whole needs to be separated and if that doesn’t happen we don’t have certainty of subject matter. Are we talking about the most expensive cars? We dont know which half therefore the trust is invalid.! "

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iv)Here w...