LAWS301 Exam Notes PDF

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- **LAWS** TRUSTS............................................................................................................................................. THREE CERTAINTIES – L3 ................................................................................................................... Ce...

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LAWS301 TRUSTS.............................................................................................................................................3 THREE CERTAINTIES – L3...................................................................................................................3 Certainty of Intention....................................................................................................................3 Consequences of Uncertain Intention...........................................................................................4 Certainty of Subject Matter...........................................................................................................4 Consequences of Uncertain Subject Matter..................................................................................4 Certainty of Objects.......................................................................................................................4 Consequences of Uncertain Objects..............................................................................................6 RESULTING TRUSTS – L8....................................................................................................................6 Type A – ‘Apparent Gifts’...............................................................................................................7 Type B – ‘Failed Trusts’...................................................................................................................7 Consequences of Uncertainty........................................................................................................9 Rebuttal of Presumption (of Type A Trust by Evidence of Gift / Loan)...........................................9 CONSTRUCTIVE TRUSTS – L9...........................................................................................................10 Examples of institutional constructive trusts:..............................................................................11 WILLS AND SUCCESSION.................................................................................................................15 INTESTACY.......................................................................................................................................15 Key items to be distributed..........................................................................................................15 Intestate succession under Administration Act 1969...................................................................16 Partial intestacy...........................................................................................................................17 Defining those entitled................................................................................................................17 Exceptions to general intestacy rules...........................................................................................18 EXECUTION OF WILLS......................................................................................................................18 Introduction.................................................................................................................................18 Nature of a will............................................................................................................................19 Formal requirements for a valid will............................................................................................19 Incorporation by reference..........................................................................................................21 Validation by the High Court........................................................................................................22 Mental requirements for valid will...............................................................................................24 MATTERS FOLLOWING EXECUTION................................................................................................28 Changes....................................................................................................................................... 28 Alteration..................................................................................................................................... 29 Revocation...................................................................................................................................29

Revival.........................................................................................................................................31 Republication...............................................................................................................................31 Construction................................................................................................................................32 Correction / Rectification.............................................................................................................32 Some exceptions to general wills rules........................................................................................33 FAILURE OF TESTAMENTARY GIFTS.................................................................................................33 Types of gifts................................................................................................................................33 Effect of failure of gifts.................................................................................................................33 Abatement...................................................................................................................................34 Ademption...................................................................................................................................34 Brief overview of some other reasons for failure.........................................................................35 CHALLENGES TO THE ESTATE...........................................................................................................36 PROPERTY (RELATIONSHIPS) ACT 1976..........................................................................................36 Scheme of the Act........................................................................................................................37 Who can apply:............................................................................................................................37 Time Limits..................................................................................................................................37 Survivor’s Election – Options A & B.............................................................................................37 Claim by a Personal Representative.............................................................................................38 Effect of Option A election...........................................................................................................39 Contracting out agreements........................................................................................................41 FAMILY PROTECTION ACT 1955.......................................................................................................41 Persons entitled to claim.............................................................................................................41 Jurisdiction...................................................................................................................................41 Scope...........................................................................................................................................41 History.........................................................................................................................................42 Importance of social thinking......................................................................................................42 Claims by adult children...............................................................................................................42 Percentages of the estate............................................................................................................44 Claims by surviving partner.........................................................................................................45 Grandchildren..............................................................................................................................45 Stepchildren / stepparents..........................................................................................................46 Maori land & tikanga...................................................................................................................46 LAW REFORM (TESTEMENTARY PROMISES) ACT 1949...................................................................46 Work or Services..........................................................................................................................47 Promise........................................................................................................................................48 Nexus........................................................................................................................................... 48

Quantum......................................................................................................................................48 RELATIONSHIP BETWEEN ACTS.......................................................................................................49 Time limits...................................................................................................................................49 LAW COM PAPER............................................................................................................................49

TRUSTS Question on resulting trusts AND EITHER constructive trusts OR certainty of trust (& consequences for lack). Other material will not be assessed.

THREE CERTAINTIES – L3 A valid express Trust requires certainty of intention, beneficiaries, property (s 15 Trusts Act). Go through EACH certainty and assess whether the trust (this could be testamentary - a clause in a will) is sufficiently certain. Even if you find lack of one certainty (for example, subject matter), make sure you cover all the certainties before you decide what the consequence will be. Where you find there is lack of certainty make sure you understand the consequences and what happens and if the property remains or forms part of the estate then say who gets it - you will need to see who is to receive the residue of the estate in that instance.

Certainty of Intention 

Indicates an intention to create a trust (s15 Trusts Act). o Paul v Constance  Can be inferred from conduct – treating money as joint was considered.  Word trust not used but ‘this money is as much yours as mine.’  Dennis died without will, said money was held in trust for Doreen (de facto partner), but ex-wife said left to her. Court found intention to hold money on trust – so trust existed. o Page v Page FC Wellington  Precatory words not sufficient anymore e.g. ’in the hope that’, ‘I believe that’ and ‘I feel confident that’ o Re Kayford Ltd [1975]  Language must indicate intent to create a trust but need not use the word ‘trust’;  Payment into separate bank account is useful (though not conclusive) indication of intention to create a trust  Intention was to create trust as account opened to hold money for beneficiaries  Kayford sets up separate bank acc for customer money as supplier in financial trouble. Used diff account, but look at intention - money held on trust despite wrong account w diff label being used - meant to be held for customers.

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“I leave on trust” – certain.

Consequences of Uncertain Intention  

If no certainty of intention (not certain that settlor intended to create a trust) = no valid express trust If so, court can either: o If a valid gift -> Person to whom property gifted will own it outright (not on trust) o If no valid gift (no gift intended or intended but failed gift) -> Settlor still owns property.  If settlor dead, property goes to their estate - usually distributed as estate residue:  Settlor must do all this.

Certainty of Subject Matter 

Identifies the trust property s 15 Trusts Act o Don King Productions Inc v Warren (and affirmed in the CA): Can be trust of a chattel, chose in action, right of obligation under a legal contract, or land (assignment capable of becoming trust) o Westdeutsche Landesbank Girozentrale v Islington London Borough Council (HL): Property must be identifiable trust property. o Vague terms will make trust fail eg:  White v White- “A small portion of what is left” - no certainty, no trust.  Sprange v Barnard – ‘The remaining part of what is left.’  Palmer v Simmonds : The bulk of my estate. o Shares were of one class on one company so indistinguishable and any shares of the entirety could create valid trust – did not need to specify exactly which shares – any 50 of the 1000 total would suffice Hunter v Moss o Identical (Hunter v Moss v variation (In Re London Wine Co (Shippers) Ltd wine diff (year, type etc)) o Priest v Ross Asset Management Ltd : authority for: Electronically registered shares are fungible so indistinguishable (my 50% is the same as someone else’s in the same company).

Consequences of Uncertain Subject Matter  

If no certainty of subject matter (recall 2 main issues) o = no valid express trust If so  Settlor still owns property. (reverts back to settlor). o If settlor dead, forms part of estate, usually distributed as estate residue

Certainty of Objects  

Identifies the beneficiaries (or classes of beneficiaries) OR the permitted purpose of the trust - s 15 Trusts Act Beneficiaries don’t need to be ascertained or in existence at inception of trust as long as the instrument shows how they are to be ascertained within 125 years or less (Re Flavel’s Will Trusts).

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Beneficiaries need not be named, but the terms of the trust must provide a method of ascertaining who the beneficiaries are. Can be a class of beneficiaries. o E.g. “my children”. o But a trust for “those of my friends I like the most” would not be sufficiently certain. Different rule for charitable trust and other purpose trusts as need to show the permitted purpose. Different rule for fixed trusts and discretionary trusts. o Fixed trust: must be possible to draw up list of all beneficiaries (Re Beckbessinger)  E.g. “I’m settlor, and I want to leave 50% of my shares in coke to my three children to be distributed evenly.”  Must comply with what settlor said. o Discretionary trusts: one in which the trustees can exercise their discretion regarding how much of the trust property, if anything, each beneficiary is to receive.  E.g. “my trustees may have discretion to divide $1m among my grandchildren in such shares as they may in their discretion determine.”

Certainty of Objects: Discretionary Trusts  For example: $1,000,000 to be divided among such of my grandchildren, and in such shares, as my trustees shall, in their discretion, determine.  Leading case is McPhail v Doulton o In Doulton the trust deed stated: “The trustees shall apply the net income of the fund in making at their absolute discretion grants to or for the benefit of any of the officers and employees or ex-officers or ex-employees of the company or to any relatives or dependants of any such persons in such amounts at such times and on such conditions (if any) as they think fit…” o Lord Wilberforce: “As a matter of reason, to hold that a principle of equal division applies to trusts such as the present is certainly paradoxical. Equal division is surely the last thing that the settlor ever intended: equal division among all may, probably would, produce a result beneficial to none.” (at 451) o Lord Wilberforce: NEW TEST for certainty of objects in relation to a discretionary trust is: “the trust is valid if it can be said with certainty that any given individual is or is not a member of the class.” (at pg 246) (different to fixed trust). o Is object sufficiently certain? o Wilbeforce – sometimes you can satisfy this test, but it is administratively unworkable (eg greater London) o Case went back to lower court to be determined under the new test. (now called Re Baden’s Deed Trusts)  Prior to Doulton the test for certainty of objects in discretionary trusts was the same as for fixed trusts. Courts could apply ‘equity is equality’ maxim  Now “a complete list of potential beneficiaries is not necessary; all that is required is conceptual certainty in the definition of the class” (Equity and Trusts in NZ, Butler, 2003 p 88).  Re Baden’s Deed Trusts No 2 Court of Appeal applying new test o “Officers”, “employees”, “ex-officers”, “ex-employees” = sufficiently certain o “Dependants” = also certain o “Relatives” = more problematic; e.g.:  Stamp LJ: thought this meant next of kin.  Sachs LJ: thought it could be anyone with a common ancestor

But overall, conceptually certain Need conceptual certainty (bucket is clear) before evidential uncertainty (who is in that bucket, falls in classes). Re Beckbessinger o Will - residue on trust to:  “Myra Curley and DDB absolutely and they are to apply the residue to benefit interests which ICB has particularly in Christchurch”  NEED CONCEPTUAL CERTAINTY – benefit interests ICB has – uncertain. o Test: trust is valid if it “can it be said with certainty of any possible claimant that such claimant is or is not a member of the class?” o Held: A discretionary trust that was conceptually uncertain. The word ‘interests’ here did not establish a sufficiently certain class. o Conceptual v. evidential uncertainty (see p. 370): “[C]onceptual certainty has to do with the precision or accuracy of the language used to define the class. It must be possible to determine with certainty the limits of the class, ie whether a particular person or body is or is not within the class. The expression “evidential certainty” refers to the extent to which the evidence available in a particular case enables specific persons or bodies to be identified as members of the class and so as beneficiaries or potential beneficiaries.” Administrative unworkability o Even if a trust is sufficiently certain, it may still be void if it is administratively unworkable (Doulton). o E.g. class of people so wide that impossible to administer the trust o Doulton example: “all the residents of Greater London” o 2021 UC Laws301 students - quite certain bucket, but 'laws301 students' not - which uni/year. o Evidential uncertainty - would need to see a roll or something. o Conceptual uncertainty - which laws 301 is it? o o

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Consequences of Uncertain Objects 

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If no certainty of objects o = no valid express trust  If so  Settlor still owns property. o If settlor dead, belongs to estate, usually distributed as estate residue. Other certainties satisfied – property is held on resulting trust (Re Beckbessinger [1993] 2 NZLR 362 (HC)) for the original owner/settlor (or the estate if deceased)

RESULTING TRUSTS – L8  

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Resulting trusts arise because the law presumes from the circumstances that a trust was intended. Resulting trusts are not subject to the Trusts Act 2019 but court can apply sections where appropriate. o Trusts Act 2019 s 5(2)(b): a court may, where necessary or appropriate, apply the provisions of this Act to any of the following that are governed by New Zealand law: (i) A resulting trust. Resulting trust arises in two sets of circumstances: (Westdeutsche)

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A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone of in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money is hel...