Lecture note of topic 4 assignment of interests PDF

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This is a lecture note of topic 4 assignment of interests that provides the case summaries and steps you should take while dealing with a problem question....

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Lecture 4 –Disposition of Property Rights and Liabilities that can’t be assigned: 1) Public Pay – an assignment of this by a holder of public office is not allowed on the basis that the pay is made in order for the holder to maintain office with decorum and propriety. Exception: Arbuthnot v Norton (1846) – Pay wasn’t payable until N’s death when he no longer held office. 2) Bare right to litigate – not related to property - include rights to sue in tort, rights to sue for unliquidated damages (compensation, defamation – up to tort to decide) in contract and bare rights to sue in equity. These are proprietary choses in action and can’t be assigned for public policy considerations. - You can assign a verdict of the bare right to litigate. Distinct from the BRTL itself.

Exceptions: where there is a genuine commercial interest, property with an incidental right to litigate and an assignment to an insurer. Genuine Commercial interest: If the assignee has a GCI in taking the assignment of a bare right to litigate, this is valid. Must be beyond a mere personal interest in profiting from the outcome of the proceedings: Project 28 Pty Ltd v Barr [2005]. Trendtex Trading Corporation v Credit Suisse: established that these rights can be assigned if there is a genuine or commercial interest. Property with an incidental right to litigate: Assignment of this type is valid: Ellis v Torrington [1920]. This is because there is no assignment of a bare right to litigate, the right being incidental to a right of property. The right to rescind for undue influence in Dickinson v Burrell (1866) was assignable bcos it was incidental to the real property assigned to the assignor. Assignment to an insurer: Valid if made in consideration of a payment made by the insurer to the insured in satisfaction of a claim pursuant to an insurance policy between them. Stems from the principle of subrogation (the insurer stands in the insured’s shoes). 3) Contractual Rights – these are choses in action. The benefit (the right to receive performance) can be assigned but the burden (the obligation to render performance) generally cannot. If the contract is not pf a personal nature, one can procure somebody else to perform their contractual rights for them: Qld Insurance Co Ltd v Australian Mutual Fire Insurance Society Ltd (1941). - Assignable at law or in equity. -

The assignment allows the assignee to sue the other party of the contract (the obligor) for damages for breach of contract even if the breach occurred before the assignment.

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If the breach occurs after the assignment, the damages recoverable should reflect the assignee’s loss, subject to the limitation that the damages can’t exceed what the assignor would have recovered had there been no assignment (the obligor’s position can’t be made worse as a result of an assignment of contract).

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Do the damages reflect the assignee’s loss or the assignor’s loss?

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Tolhurst argues that it should reflect the assignor’s loss because he/she assigns his cause of action and thus the damages should reflect his loss. Case law suggests the contrary: Renold Australia Pty Ltd v Fletcher Insulation (Vic) Pty Ltd [2007].

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Not all contractual rights are assignable: C’s for personal services are generally not: Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993). The obligor ought not to be prejudiced by the substitution of the assignor by the assignee e.g. employer can’t assign to another person the right of services from an employee (employee has the right to choose who they work for).

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Is the c right of a personal nature? Question of construction of the contract. If it makes no difference to the obligor who performs the obligations, the assignment for the benefit of the contract will not be seen as one of personal services.

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If the right to assign the benefit of the contract has been expressly prohibited in the contract, can get around this by means of a declaration of trust of the benefit. Declaring self trustee for 3rd person, instead of assigning it to X…you hold it on trust for them. DonKing Productions v Warren.

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Can have express prohibition on naming self as trustee however.

Disposition of Equitable Interests and the Requirement of Writing -

A disposition of property = any acts taken by the owner of property that result in the owner ceasing to be the owner of property.

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Why is there a requirement of writing?

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Evidence of the movement of equitable interests – often this is the only indicator of their existence. There is no deed of conveyance or at times no physical possession.

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Pascoe v Boensch (2008) – purpose of s 23C(1)(c) is to prevent hidden oral transactions of equitable interests and to enable a trustee to ascertain who the beneficiaries of a trust are.

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Equitable interest sin property can be disposed of by 4 different methods (Timson’s Executors v Yerbury [1936]:

1) Assignments 2) Directions by beneficiaries to trustees 3) Agreements to assign 4) Declarations of trust Section 23 -

Writing requirement can be satisfied by more than one document if they are interconnected.

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(1)(b) does not require the trust of land to be created in writing, just evidence in writing in relation to a declaration of trust of land.

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(1)(a) (legal and equitable interests in land) and (1)b – the creation or disposition of interests. (only land)

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(1)(c) – subsisting equitable interests. (land and personalty).

Disposition by way of assignment -

S 23C(1)(c) requires assignments of equitable interests to be in writing.

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Only applies in cases of subsisting equitable interests. If the assignor has both the legal and equitable interest in property, this section does not apply.

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Consequence of Com of Stamp Duties (Qld) v Livingstone – person owning prop legally and beneficially = no distinction btw legal and equitable interests.

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Consequence of THIS is that where an absolute owner grants an equitable interest, there is no disposition of a subsisting equitable interest to that person (because the owner doesn’t have one to assign). This leads to the creation of an equitable interest which is different from the disposition of a subsisting equitable interest and as a result s 23C(1)(c) does NOT apply.

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If the grant of an equitable interest in property or the equitable assignment of property involved land, writing requirement arises under either (1)(a) or (1)(b).

Disposition by way of a direction by a beneficiary to a trustee -

Can take various forms

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Two include: a direction to hold trust prop for a 3rd party and a direction to transfer trust prop in its entirety to a 3rd party.

Directions to hold prop on trust for a 3rd party -

To hold the equitable interest the subject of the trust for a 3rd party and no longer for the beneficiary.

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Is an oral direction effective to dispose of the property? Gray v Inland Revenue Commissioners [1960] ruled this was ineffective in the face of the requirement of writing set out in s 23C(1)(c).

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Case dealt with personal prop (shares) but even if it had been real prop, would have been subject to requirement of writing as (1)(c) deals with equitable interests in both real and personal prop and (1)(a) which deals with interests in land.

Directions to transfer trust prop to a 3rd party -

Directions to transfer both the legal and equitable interests in the trust prop to a 3rd party so the 3rd party becomes the absolute owner.

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If oral direction, nothing in (1) that requires writing in relation to the legal title if the trust prop is personal.

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(1)(c) does not apply when the direction relates to BOTH the legal and equitable interests. Relates only to the equitable interest alone.

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No need for (1)(c) where the beneficial owner wants to dispose of legal and equitable estate. Only transfer of the legal estate is required.

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Diagram: B (beneficiary) directs A (trustee) to transfer both the legal title (held by A) and the equitable interest (held by B) to C (will have both).

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Vandervell v IRC – Was the oral direction effective? Or did the later documentation attract a tax? – HOL held that the oral direction was effective to dispose of B’s equitable interest....