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Doctrine of Accession Accession occurs when a principle and minor good concur to become one good. McKeown v Cavalier Yachts (McKeown) established the existence of an accession if chattel cannot be removed without the destruction or serious injury to whole so formed. 1. Was there physical unification? 2. Would the removal be injurious? McKeown: The owner of the principal chattel will gain title to the combined goods, and the minor chattel will be destroyed. - Accession, because the improvements couldn’t be separated without damaging the yacht. British Motors: Distinguished from McKeown, as although special equipment was required to separate the tyres it wasn’t considered accession as there was no damage.

Trespass of Chattel Trespass to goods is a wrongful interference of a direct and physical kind by the defendant with the plaintiff’s possession of goods. Trespass requires actual possession, as opposed to immediate right to possession. Trespass establishes common laws protection of possession rather than ownership, highlighting property as a relationship concept. 1. Was it an intentional act? Voluntary, conscious act, not accidental. Wilson v New Brighton Panel Beaters: Doesn’t require moral fault, trespass is available even if the defendant acted innocently 2. Was there unlawful interference? Bracewell v Appleby: Trespass is ‘actionable per se’ (doesn’t require loss or damage, just can interference with your rights) Slater v Swann: Touching of goods, including animals amounts to trespass - However, it is unclear whether touching amounts to trespass 3. Was the plaintiff in possession? Penfolds: Relates to the person in actual possession rather than one entitled to possession, against whom trespass can be committed. Being an owner of chattel doesn’t automatically make you entitled to trespass. - Upholds the common law view of protecting possession 4. Remedies: Vindicatory Damages: Vindicate the rights, no loss needed Compensatory Damages: Directly compensating for what was lost Consequential Damages: Damages coming from trespass e.g loss of rent Exemplary Damages: Money to punish the wrong Injunction

Conversion of Chattel Conversion is manifesting an assertion of rights or dominion over goods in a way inconsistent with the rights of the plaintiff, protecting the immediate right to possession.

1. Plaintiff has right to immediate possession 2. Dealing with an intentional act Kuwait Airplanes: conversion is an act of deliberate dealing with a chattel in a manner that is inconsistent with the plaintiff’s rights Hollins v Fowler: Knowledge of breach not required, just have to act consciously. Hollins v Fowler: No conversion if you return the property with a bonda fide belief they were someone else’s o Otherwise this would produce absurdities, every person caught in a single slight transaction could be liable for conversion. Hollins v Fowler: Hollins was liable for his innocent sale and delivery, if he had just done one, he wouldn’t be liable. 3. Encroachment on plaintiff’s possessory interest in the goods Higher-threshold than trespass, unauthorized possession is not enough. Has to be adverse to the owner. This can commonly be tested through demand and refusal. Kuwait: conduct was such an extensive encroachment it excluded the use and possession of the chattel from the owner - Conversion as the planes were repainted and used by others. - Found conversion requires an intent to exercise dominion 4. Remedies Fictional Sale: The damages to the value of the chattel at the date of conversion

Detinue and Recovery Detinue is a continuing wrong with the intention of keeping property in defiance of the rights of the person entitled to possession. In contrast to other possessory interests of goods, detinue allows in certain circumstances the restoration of chattel. Detinue is considered more applicable if there has been an appreciation in the value of the good. 1. 2. 3. 4.

Plaintiff has the right to immediate possession Plaintiff in demanded return of chattel Defendant unlawfully refused this return Remedies (a) Damages (b) Restoration of chattel McKeown: Found the chattel must have special value of interest or is sufficiently unique, so that damages wouldn’t compensate. - If the plaintiff can easily replace the goods, then damages will be ordered instead - In this case, the yacht was considered of special value Compensation: Silsbury v McCoon: If a thief takes an item and improves it, they are not entitled to compensation McKeown: Court ordered compensation for Cavalier as they had made improvements to the hull

Breach of Bailment and Sub-Bailment Bailment is voluntarily with knowledge taking into possession the goods of another, without affecting the location of legal title. - Bailment can be for a fixed period or an unspecified period, this would give the bailor the right to immediate possession 1. What was the bailment relationship? - Onus on bailor Bailment: Morris v Martin: Bailment is applicable if goods of another were voluntarily and knowingly taking into possession. SHB v Perkins: Constructive knowledge found as sufficient as well as actual knowledge - SHB constructively knew as they knew of her death and that they were the only ones in the position to secure her possessions. Sub-Bailment: Morris v Martin: The sub-bailee only owes a duty of care to the head-bailor if they have knowledge, it is not the sub-bailor. - Labels on the mink suggest it belonged to someone else, establishing a bailment relationship without necessarily knowing who that person was. Pioneer Container: Terms of the sub-bailment are only part of the direct bailment terms if the head-bailor knows about them - In this case, the owner gave permission of ‘any terms’ therefore, the clause applied. 2. Was the property damaged or lost? Bailment relationships impose a duty of care on the bailee. If that duty of care is breached, the bailor is entitled to sue for damages. Conway v Cockram: outlines the following requirements to claim a breach of bailment. - This is a fact-based assessment - Onus on bailor 3. Did the bailee take reasonable care? - Onus on bailee Barton Ginger: Reasonable care amounts to care and diligence which a man would exercise in the custody of their own chattel. Skyway: Affirmed this standard can vary, as it can be expressed or implied through knowledge or conduct - Imposed high standard, reasonable to ensure the chattel is delivered in the same condition as previous - A bailor’s awareness of the conditions doesn’t automatically mean they are assuming risk. o In this case the plaintiff hadn’t seen all the carpark, would have then assumed the risk. Conway: Duty to protect against all harms that could occur - Obiter: Long relationship without objection might be evidence of agreement to nature of duty of care 4. Was there a lack of causation? Onus on bailee to prove

It is not clear whether the defendant has to prove that the damage would have happened anyway on the balance of probabilities, or if it is beyond reasonable doubt Conway: Doesn’t explicitly state which one they agree without, however, If the alarm was installed, theft might not have occurred. 5. Is excluded liability applicable? Ask: Was it part of the relationship? What was the effect? SHB v Perkins: If the clause is not sufficiently clear that it applies to the circumstances, then it will be read against the bailee. 6. Reversionary Injury Reversionary injury is a course of action available to a claimant with a property interest, but no right to immediate possession. HSBC Rail: Third parties can also be sued under damage to reversionary interest without the right to immediate possession. However, there must be permanent injury that won’t be fixed by the time they take possession. (a) Damage to the goods (b) Damage is permanent: will continue unless repaired or remedies, or bailor will not HSBC: Obligation to repair, didn’t last beyond the terms of the bailment. (c) Damage would be claimable by bailor but lack of title to sue

Acquiring Ownership of Goods (Original Title) Original title occurs where title is no derived from another. 1. Res nullius: Never owned 2. Res derelict: abandoned 3. Accession: McKeown

Acquiring Ownership of Goods (Derivative Title) Acquiring ownership via transfer from someone with ownership. In this case, title is only as good as your predecessors, through the continuation of the nemo dat rule. 1. For Value (sale and purchase). 2. Voluntarily (gift or inheritance).

Gift A gift is a transaction in which nothing is passed back to the person transferring the property, by which legal title is transferred completely. Established in Williams v Williams 1. Present intention of donor to make a gift Williams: Expressed intention by language. 2. Acceptance of the gift 3. Delivery of the chattel

Williams: Court held delivery can be actual or constructive. However, there must be evidence of this act. - In this case, there wasn’t constructive delivery, if the father had given the key or placed his hand on the pianola expressing intention, this would have been sufficient. Rawlinson v Mort: Delivery was sufficient as donor placed his hand on the organ and said “it is yours now” Rowland v Stevenson: Delivery doesn’t need to be contemporaneous

Sale of Goods: When does title pass? CCLA (Contract and Commercial Law Act) 123 (1): Sale = Contract and Immediate transfer of property 123 (2): Agreement to sell = Only contract, as no property rights are received. Transfer to take place in the future or be conditional upon something else. S123 (3): Agreement to sell becomes a sale when conditions of transfer are met or there is a transfer. 1. Were the goods ascertained as per section 143? - Identified in accordance with agreement, a specific good 2. Once these goods are ascertained, did property intend the moment it was intended to? - Payment is not essential for an intention to transfer title 144 (2): To ascertain intention, the court will look at the terms, the conduct or the parties, and the circumstances of the case. - The intention can be written in the contract, yet if the contract is silent, the court will apply the default rules. Default Rules: 1. Property passes if… - There is an unconditional contract, with specified goods in a deliverable state. 2. If there is a contract for… - Specific goods and the seller is bound to do something so the goods are in a deliverable state. - Property doesn’t pass if the goods are in a deliverable state and the buyer has notice this has been done 3. If there is a contract for specific goods… - The seller has to do something to ascertain price (weigh, measure) - Property doesn’t pass if this has been done and the buyer has notice 4. If goods are deliverable on approval, property doesn’t pass until… - The buyer indicates acceptance, or implies acceptance - The buyer retains goods without giving notice of rejection for either o Longer than is fixed for the return of goods; or o When a reasonable time expires (given there is no fixed time). 5. If there is a contract of sale for either; - Unascertained goods; or - Future goods Property passes when

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Goods are in a deliverable state and the goods are unconditionally appropriated to the contract

Trusts A trust is an equitable arrangement that vests legal ownership to a trustee and beneficiary within a fiduciary relationship. 1. Was there a trust? Express Trust (a) Certainty of intention Examine the words and conduct to find if a relationship was intended. Paul v Constance: The word trust is not necessary, “what’s yours is mine” was sufficient. - Treated as a borderline case Jones v Lock: Intended to be a gift as he intended to be gifted immediately (b) Certainty of Subject Matter There must be property that is held on trust, a trust will be invalid if it is too ambiguous. (c) Certainty of Objects There must be a certainty of who the beneficiaries are, and how they will benefit. Concurrent Interests: When beneficiaries share an interest (i) Joint tenancy: Each person owns a whole - When one dies, the other continues to own the whole (ii) Tenancy in common: Each person owns a share - Upon death, their share goes into the estate of the owner Successive Interests/Life Interests: Interests can be limited for a period of time - A trust with a life tenant and interest would be incomplete as it doesn’t specify what happens after that interest ends, there goes into a resulting trust. - If there is succession, then all those beneficiaries have an interest, or a vested interest. The first life interest is in possession. Contingent interest: An interest contingent upon something happening - Cannot have a vested interest and contingent interest at the same time Discretionary Interest: Arises when a beneficiary is subject to discretionary powers regarding the distribution of the trust property - This is not a property interest, no equitable interest

Constructive Trust The creation of a constructive trust is imposed on conscience grounds, providing property or equitable interest for the beneficiary. This ability to claim the property ahead of any creditors may occur if the requirements established in Lankow v Rose are met. (a) Was there a contribution to the property? - Can be direct or indirect - Contributions are anything of itself that assists in the acquisition, improvement or maintenance of the property or the value; OR - Anything by which its provision helps the other party acquire….

Lankow v Rose: there was joint efforts as Rose did a lot of work at the firm, constructive trust was applied. (b) Was there an expectation to receive interest, that the defendant should reasonably expected to yield? - Just because the defendant is not willing to yield or expected to do so is not enough. It must also be reasonable for them to think like this. Gillies v Keogh: It had been made very clear that the property was hers alone through the language of “my house.” Resulting Trust Created out of a presumed intention, a resulting trust is where the beneficial interest reverts to the settlor. This specific trust will only arise if it is not clear who is to receive the beneficial interest. Secondly, if an individual contributes to a property owned by someone else. However, these presumptions are rebuttable. 2. Was there a breach of trust? (a) Duties of obedience to the trust S23: Trustee must know the terms (Mandatory). S24: Trustee must do things as directed (Mandatory). S35: Duty to be impartial Lee v Torrey: Breach of trust, had distributed to non-beneficiaries Re Mulligan: Prioritized one beneficiary over another, breach. (b) Duties of prudent management S58: Trustee has power to invest subject to S29 S29: General duty of care - Court will consider any special knowledge would have a different reasonable standard of care S30: Duty to invest prudently Re Mulligan: Prudent is a matter of conduct not outcome, no loss in capital income yet loss in value through inflation. (c) Fiduciary Duties S25: Act in good faith (Default Rule). S26: Act in the benefit of the beneficiaries (Default Rule). S36: Duty not to profit (Default Rule). S34: Duty to avoid conflict of interest (Default Rule). Thomson v Allen: The competing business was a conflict of interest Phipps v Boardman: Although it was beneficial for the trust, the trustee was in breach as person profit was acquired. The rules of equity are strict, agents cannot profit from their actions. Patchett v Williams: The trust didn’t profit as there was no attempt to secure the best reasonably possible price. 3. Personal Remedies

(a) Termination of the trust A termination of a trust can be achieved at any time, following the requirements established in Saunders v Vautier. All beneficiaries must be considered adult and competent, must agree on the termination of the trust, as equity regards the beneficiaries acting together as the real owners of the property. (b) Account for profits An account for profits is the balance of owing after the trustees’ expenses have been deducted from the profits received by the trustee. Phipps v Boardman: Because he was honest and acted in good faith, a generous allowance was granted for the hard work in creating the profit. Chirnside v Fay: Court can exercise discretion to allow the errant fiduciary measure of allowance for effort, skill and enterprise in making profits, it found unjust to not. (c) Compensation for loss Compensation for loss is the act of rewarding the injured party the appropriate benefit. Spencer v Spencer: A trustee may exonerate themselves by proving that any attempt to claim money was fruitless, the onus is on the trustee. (d) Limitations on Trustee Liability Spencer v Spencer: A trustee may exonerate themselves by proving that any attempt to claim money was fruitless, the onus is on the trustee. The trust may include an exclusion clause - Spencer v Spencer: ‘The trustee shall not be liable for any loss’. An exclusion clause will be interpreted contra preforentum (interpreted against the trustee) 1. Did the trustee know the terms of the trust and the conduct that amounted to breach (subjective) 2. Give the knowledge, would a reasonable person have acted this way (Objective). S131: Courts power to relieve if ought to be fairly excused. 4. Property Interests To identify what has happened to the breach property, the process of tracing is used to identify an interest in the property. Once this has been achieved a claim in the property can be made. (a) Claims against a 3rdparty - A bona fide purchaser without notice may take good title. Pilcher v Rawlins: An available defence if they purchased the property and had no knowledge (actual or constructive) of the property being sold in breach of the trust. - If successful, this beneficiary may take a share in property or put a charge on property to recover loss

(b) Simple Mixed Claims Re Hallett asks can an individual make a proprietary claim against a bank account even though money was mixed with their own money in it? These circumstances would be considered a simple mixed claim.

Re Hallett: The beneficiary can either take a proportionate share of the asset or take a charge over the asset for the value of the trust money. Tracing Solutions (i) Claytons’ Case (FIFO) The first money deposited in the bank account is the first withdrawn. (ii) Oatway Variation Re Hallett: Presumption of honesty, the trustee will be presumed to be withdrawing their own money before withdrawing trust money. Oatway: Modifies this, suggesting that the order of withdrawals is immaterial, relating to the no-profit rule - Finds the tracing is done against the errant trustee in order to protect the trust as much as possible (iii) Lowest Intermediate Balance Rule Bolton v Winder: Tracing is limited to the lowest immediate balance, any additional money will not be presumed to be the trustee filling up the trust fund, as this is clearly the trustees’ money. Criticism: This suggest the misappropriated funds cannot be traced further if they have been paid to discharge a debt. This principle has weakened. Federal Republic of Brazil: The court is not limited by this criticized rule if there is a ‘close casual and transactional link between the incurring of a debt and trust fund’ - This rule is designed to prevent money laundering

(c) Complex Mixed Claims This type of claim will arise in circumstances where multiple trust funds property has been mixed together. As there are multiple innocent parties involved, the court provides this solution to distribute the remaining funds fairly. Barlow Clowes International identifies the three different tracing methods available. Believing as a common misfortune, the funds of the beneficiaries should be distributed in accordance with how they entered. Tracing Solutions (i) Claytons Case (FIFO) The money first deposited in a bank account is the first withdrawn Re International Investment Unit Trust (IIUT): Established FIFO in NZ can interfere with intention of investors Barlow Cloves: FIFO is the starting presumption unless contrary to the presumed intention - Not applicable in this case (ii) Pari Passu Barlow Cloves: As there was a ‘common misfortune’ PP was applicable as investors expe...