LAWS317 Equity and Trusts PDF

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Notes from the textbook and case material...

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Chapter(1:(History(of(Equity(

1(

Equity'Textbook'Notes'' (

Table&of&Contents& Equity'Textbook'Notes'.................................................................................................................................................................'1' Chapter'1:'History'of'Equity'......................................................................................................................................................................'2' Chapter'2:'Nature'of'Equity'.......................................................................................................................................................................'2' Chapter'3:'The'relationship'of'Law'and'Equity'................................................................................................................................'4' Chapter'4:'Nature'of'Equitable'Estates'and'Interests'....................................................................................................................'4' Chapter'5:'The'Law'of'Assignment'.........................................................................................................................................................'6' Chapter'6:'Dispositions'of'equitable'interests'and'the'requirement'of'writing'...............................................................'14' Chapter'8:'Confidential'Information'....................................................................................................................................................'16' Chapter'12:'Equitable'Estoppel'.............................................................................................................................................................'23' Chapter'9:'Fiduciary'obligations'...........................................................................................................................................................'26' Chapter'15:'Introduction'to'trusts'........................................................................................................................................................'32' Chapter'16:'Creation'of'Express'Trusts'..............................................................................................................................................'36' Chapter'17:'Variation'and'Termination'of'Trusts'.........................................................................................................................'46' Chapter'18:'Charitable'Trusts'................................................................................................................................................................'50' Chapter'19:'Resulting'Trusts'..................................................................................................................................................................'61' Chapter'28:'Constructive'Trusts'............................................................................................................................................................'68' Chapter'20:'Trustees'..................................................................................................................................................................................'85' Chapter'21:'Beneficiaries'..........................................................................................................................................................................'95' Chapter'29:'Tracing'..................................................................................................................................................................................'102' Casebook'Notes'..........................................................................................................................................................................'105' Chapter'2:'The'Nature'of'Equity'.........................................................................................................................................105' ' 2.2'Parkinson,'‘The'Conscience'of'Equity’'......................................................................................................................................'105' Chapter'3:'The'Relationship'of'Law'and'Equity'...........................................................................................................'106' 3.2'Mason,'‘Substantive'Fusion'and'the'Judicature'Act’'...........................................................................................................'106' Chapter'4'Nature'of'Equitable'Estates'and'Interests'.................................................................................................'106' 4.2'Commissioner'of'Stamp'Duties'(Qld)'v'Livingston'[1965]AC'694'...............................................................................'106' 4.3'Horton'v'Jones'(1935)'53'CLR'475'............................................................................................................................................'106' Chapter'5:'Law'of'Assignment'.............................................................................................................................................'107' 5.3'Trendtex'Trading'Corporation'v'Credit'Suisse'[1982]'AC'679'......................................................................................'107' 5.5'Norman'v'Federal'Commissioner'of'Taxation'(1962)'109'CLR'9'................................................................................'107' Chapter'6:'Disposition'of'Equitable'Interests'...............................................................................................................'108' 6.2'Grey'v'Inland'Revenue'Commissioners'[1960]'AC'1:'........................................................................................................'108' 6.3'Vandervell'v'Inland'Revenue'Commissioners'[1967]'2'AC'291:'..................................................................................'108' 6.4'Oughtred'v'Inland'Revenue'Commissioners'[1960]'AC'206:'.........................................................................................'108' Chapter'9:'Fiduciary'Obligations'........................................................................................................................................'109' 9.2'Hospital'Products'Ltd'v'United'States'Surgical'Corporation'(1984)'156'CLR'41:'................................................'109' 9.3'Boardman'v'Phipps'[1967]'2'AC'46'..........................................................................................................................................'110' Chapter'15:'Introduction'to'Trusts'....................................................................................................................................'110' 15.6'Barclays'Bank'Ltd'v'Quistclose'Investments'Ltd'[1970]'AC'567'...............................................................................'110' 15.7'Hammond'v'Hammond'[2007]'NSWSC'106'........................................................................................................................'110' Chapter'16:'Express'Trusts'...................................................................................................................................................'111' 16.2'Shorthall'v'White'[2007]'NSWCA'372:'..................................................................................................................................'111' 16.5'McPhail'v'Doulton'[1971]:'..........................................................................................................................................................'111' Chapter'17:'Variation'and'Termination'of'Trusts'.......................................................................................................'111' 17.2'Stein'v'Sybmore'Holdings'Pty'Ltd'[2006]'NSWSC'1004'................................................................................................'111' 17.3'Nelson'v'Nelson'(1995)'184'CLR'538'....................................................................................................................................'112' 17.4'Ellaway'v'Lawson'[2006]'QSC'170'..........................................................................................................................................'112'

Chapter(1:(History(of(Equity(

2(

17.5'Nemesis'Australia'Ltd'v'Commissioner'of'Taxation'(2005)'........................................................................................'112'

Chapter'18:'Charitable'Trusts'..............................................................................................................................................'112' 18.2'Commissioner'for'Special'Purposes'of'the'Income'Tax'v!Pemsel'[1891]'AC'531'..............................................'112' 18.3'Ballarat'Trustees'Executors'&'Agency'Co'v'Federal'Commissioner'of'Taxation'(1950)'80'CLR'350'.......'113' 18.4'Oppenheim'v'Tobacco'Securities'Co'Ltd![1951]'AC'297'...............................................................................................'113' 18.'5'Commissioner'of'Taxation'v'Word'Investments!(2008)'236'CLR'204'..................................................................114 ' ' 18.6'The'Incorporated'Council'of'Law'Reporting'of'the'State'of'Queensland'v'Federal'Commissioner'of' Taxation!(1971)'125'CLR'659'.............................................................................................................................................................'114' 18.7'Attorney-General'(NSW)'v'Perpetual'Trustee'Co'Ltd'(1940)'63'CLR'209'............................................................'114'

Chapter'19:'Resulting'Trusts'................................................................................................................................................'115' 19.2'Re'Gillingham'Bus'Disaster'fund'[1958]'Ch'300'...............................................................................................................'115' 19.3'Calverly'v'Green'(1984)'155'CLR'244'...................................................................................................................................'115' 19.4'Trustees'of'the'Property'of'Cummins'(a'bankrupt)'v'Cummins'(2006)'227'CLR'278'.....................................'116' Chapter'28:'Constructive'Trusts'.........................................................................................................................................'117' 28.2'Muschinski'v'Dodds'(1985)'160'CLR'583'............................................................................................................................'117' Chapter'8:'Confidential'Information'.................................................................................................................................'118' 8.4'Moorgate'Tobacco'Co'Ltd'v'Philip'Morris'Ltd'(No'2)'(1984)'156'CLR'414'.............................................................'118' 8.5'Coco'v'A'N'Clark'(Engineers)'Ltd'(1968)'1a'IPR'587'........................................................................................................'118' 8.6'Australian'Football'League'v'Age'Company'Ltd'(2006)'15'VR'19'...............................................................................'119' 8.7'Del'Casale'v'Artedomus'(Aust)'Pty'Limited'[2007]'NSWCA'172'.................................................................................'119' (

Chapter'1:'History'of'Equity' In(law,(the(term(equity(refers(to(a(particular(set(of(remedies(and(associated(procedures.(These(equitable(doctrines(and( procedures(are(distinguished(from("legal"(ones.(Equitable(relief(is(generally(available(only(when(a(legal(remedy(is(insufficient( or(inadequate(in(some(way.(( • The(distinction(arose(in(England(where(there(were(separate(courts(of(law(and(of(equity.( ( • Equity(as(a(rectification(of(law(because(law(can(be(defective(due(to(its(generality.((Aristotle)( • In(the(past,(common(law(courts(retained(their(discretionary(powers(to(grant(remedies,(and(relief(was(granted(on(the(basis(of( principles(of(abstract(justice(rather(than(following(earlier(decisions(involving(similar(circumstances.(( • Based(on(the(idea(that(law(should(be(administered(fairly.(( • Court'of'Chancery(emerged,(which(administered(principles(of(equity.( • The(Chancery(always(presupposed(the(existence(of(common(law(principles(and(rights.(( • System'of'uses:(related(to(transfers(of(land(for(the(benefit(of(others.(à(eventually(transformed(into(the(modern(trust.(( • Trusts(were(a(device(to(preserve(and(protect(the(property.(( • Common'injunction:(To(order(a(plaintiff(at(common(law(to(discontinue(proceedings(or(to(prevent(a(verdict(from(being( enforced.((( • Could(get(this(remedy(if(it(could(be(established(that(the(pl’s(enforcement(of(common(law(rights(would(be(unconscientious.(( o Remedy(was(characterized(as(in#personam(in(that(it(attached(to(the(person(of(the(common(law(plaintiff.(( o The(common(injunction(was(discretionary.(Unless(the(petitioner(could(establish(unconscientious(behavior,(the( common(injunction(was(not(ordered.(( • This(presented(conflict(sometimes(because(the(could(challenge(the(authority(of(common(law(courts.(( Equity(in(Australia( • Phase'1:(the(first(Charter(of(Justice(and(the(Court(of(Civil(Jurisdiction( • Phase'2:(Second(Charter(and(the(first(SC(of(NSW( • Phase'3:(The(Act(of(1823,(the(Third(Charter,(and(the(Australian(Courts(Act(1828.( • Phase'4:(Judicature(system(reforms( ( •

Chapter'2:'Nature'of'Equity' •

Equity(has(a(role(in(supplementing(the(general(law(by(intervening(in(circumstances(where(the(common(law(was(either( deficient(or(provided(no(remedy.(

Chapter(2:(Nature(of(Equity(

Equity’s(scope(can(only(be(defined(by(compiling(an(inventory(of(its(contents.(( Parkinson(suggested(that(equitable(principles(fall(under(5(categories:( o Exploitation(of(vulnerability(or(weakness.( o Abuse(of(positions(of(trust(or(confidence.( o Insistence(upon(rights(in(circumstances(which(make(such(insistence(harsh(or(oppressive.( o Unjust(retention(of(property.1( Equitable(Jurisdictions( • Exclusive'jurisdiction:(refers(to(matters(in(which(equity(has(‘an(exclusive(cognizance’(because(no(relief(can(be(obtained(at( common(law.((Obligations(arising(under(a(trust)(( • Concurrent'jurisdiction:(refers(to(matters(in(which(both(equity(and(common(law(courts(have(jurisdiction(to(make(orders.(( • Auxiliary'jurisdiction:'Exercised(when(a(person(goes(to(equity(merely(in(order(to(obtain(assistance(in(proceedings(which(they( are(taking(or(about(to(take(in(courts(of(law.(( Maxims(of(Equity( • Basic(principles(upon(which(rules(of(equity(are(established.(( • Equity(will(not(suffer(a(wrong(to(be(without(a(remedy:(Eg(specific(performance.(( • Equity(follows(the(law:(it(recognises(common(law(rights,(estates,(interests(and(titles(and(does(not(say(that(these(are(not(valid.(( o Time(stipulations:(equity(regards(them(as(being(not(essential(unless(expressly(or(impliedly(of(the(essence(of(the( contract.(( o Consideration:(equitable(remedies(not(available(in(enforcement(of(a(contract(unless(valuable(consideration(is(given( (even(though(at(common(law,(it(needn’t(be(adequate).(( • Where(the(equities(are(equal,(the(first(in(time(shall(prevail(and(where(the(is(equal(equity,(the(law(shall(prevail.( • One(who(seeks(equity(must(do(equity:(pls(in(equity(must(fulfill(their(legal(and(equitable(obligations(before(seeking(a(remedy.(( • One(who(comes(to(equity(must(come(with(clean(hands:(mustn’t(be(guilty(of(improper(conduct.(( • •

• • •

•

Delay(defeats(equity:(pl(must(act(promptly(and(diligently.2( Equality(is(equity:(equity(has(the(aim(of(distributing(profits(and(losses(in(proportion(to(the(claims(and(liabilities(of(the(parties( concerned.(( Equity(will(not(assist(a(volunteer:(pl(must(have(a(valuable(or(at(least(meritorious(consideration.(( o Consideration(doesn’t(need(to(be(paid(or(executed.3( o Specific(performance(won’t(be(ordered(in(relation(to(a(promise(unsupported(by(any(consideration(at(al,(but( contained(in(a(deed.(( o Nor(will(it(be(granted(in(relation(to(a(contract(to(purchase(land(for(nominal(consideration(of($1( o However(in(both(case,(the(promisor’s(promise(is(enforceable(at(common(law(by(an(award(of(damages.(4( o Valuable'consideration:(consideration(that(has(real(and(substantial(value,(and(not(one(which(is(merely(nominal(or( trivial.5( o On(the(other(hand,(it(doesn’t(need(to(be(adequate(in(the(sense(that(it(is(reasonably(equivalent(to(the(value(of(what( was(promised.(( o Exception:'Maxim(will(not(frustrate(one(or(strive(officiously(to(defeat(a(gift.(( o Eg(beneficiary(of(a(trust(who(can(bring(action(against(trustee(to(enforce(the(trust(even(though(the(beneficiary(gave( no(consideration(for(the(beneficial(interest.(( o Eg(donation(mortis(causa:(where(property(passes(from(donor(to(done(upon(death(of(donor(where(the(gift(is(made:( § (in(contemplation(of(death( § Property(must(be(delivered(to(the(donee( § Gift(must(be(made(under(such(circumstances(as(show(that(the(thing(is(to(revert(to(the(donor(in(case(the( donor(should(recover:(Cain#v#Moon([1896](2(QB(283(at(286.( o Strong#v#Bird(rule:(if(a(donor(has(attempted(to(make(an(immediate(inter(vivos(gift(of(property(to(a(donee,(or(a( purported(immediate(voluntary(release(of(a(debt(owed(by(the(donee,(but(the(gift(fails(because(of(a(failure(to(comply( with(necessary(legal(formalitis,(then(if(the(donee(subsequently(becomes(the(executor(fo(the(donor’s(estate,(the(gift( is(considered(to(have(been(perfected(by(the(vesting(of(the(legal(title(in(the(donee.( § Must(have(intention(continuing(up(to(the(donor’s(death(to(make(immediate(gift:(Rutledge#v#Sheridan# [2010]#QSC#257#at#[24]-[31].( Equity(looks(to(the(intent(rather(than(the(form( o Equity(will(look(at(reasonable(time(rather(than(stipulated(date(for(example.((

(((((((((((((((((((((((((((((((((((((((( (((((((((((((((((((((((((((((((((((((((( ((((((( 1 (P(Parkinson,(‘The(Conscience(of(Equity’(in(P(Parkinson((ed)( (Smith#v#Clay#(1767)(27(ER(419(at(420.(( 3 (Reef#&#Rainforest#Travel#Pty#Ltd#v#Commissioner#of#Stamp#Duties#[2001]( 4 (Cannon#v#Hartley.# 5 (In#re#Abbott;#Ex#parte#Trustee#of#the#Property#of#the#Bankruptcy#v#Abbott# 2

3(

Chapter(3:(The(relationship(of(Law(and(Equity(

• • • • • •

Equity(looks(on(that(as(done(which(ought(to(be(done.(( Equity(imputes(an(intention(to(fulfill(an(obligation( Equity(acts(in(personam:(Equity(attaches(to(the(person,(rather(than(the(property.(Personal(rights(and(obligations((but(this( maxim(is(probably(not(really(correct).(( Equity(prevents(unconscionable(conduct(–(if(someone(uses(the(common(law(to(screw(you(over,(equity(will(intervene.(( Equity(will(only(interfere(with(the(rights(of(third(parties(in(limited(situations.(( Equity(acts(according(to(principle,(not(on(individual(notions(of(fairness(–(it(doesn’t(matter(what(you(personally(think,(its(about( the(principles.((

Chapter'3:'The'relationship'of'Law'and'Equity' ' Judicature(System( • In(1870-72,(the(English(Judicature(Act(reformed(the(law(so(that(both(law(and(equity(could(be(done(in(the(same(court(-(NSW( was(the(latest(to(adopt(this(in(1972(with(the(Supreme(Court(Act(1970((NSW).( • System(of(separate(courts(of(common(law(and(equity(was(abolished(with(the(introduction(of(the(judicature(system.(à(Fused( into(1(court(which(recognised(and(applied(principles(of(common(law(and(equity.(( • The(common(injunction(became(obsolete(and(was(therefore(abolished.(( • Judicature#Act#1873((UK)(à(intended(to(serve(as(an(administrative(reform.(Certain(specific(conflicts(between(the(rules(of( equity(and(common(law(were(expressly(resolved.(( • S(25(of(the(Act(stipulated(that(in(any(other(cases(of(such(conflict,(the(equitable(rule(was(to(apply.(( • Salt#v#Cooper#(1880)(16(Ch(D(545:( o Main(objective(of(the(Act(was(to(assimilate(the(transaction(of(Equity(business(and(Common(Law(business.(( o It(simply(transferred(the(old(jurisdictions(of(the(Courts(of(Law(and(Equity(to(the(new(tribunal,(and(then(gave( directions(to(the(new(tribunal(as(to(the(mode(in(which(it(should(administer(the(combined(jurisdictions.(( • In(Australia,(a(similar(approach(was(taken(in(Felton#v#Mulligan.( • Equity(has(two(main(domains:( o Firstly,(the(domain(wh...