Wk 3 Assignments in Equity PDF

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Topic 3: Assignments in Equity  

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Transfer of an equitable interest Windeyer J in Norman v Federal Commissioner of Taxation [1963] HCA21; 109 CLR 9: ‘ Assignment means the immediate transfer of an existing proprietary right, vested or contingent, from the assignor to the assignee anything that in the eye of the law can be regarded as an existing subject of ownership, whether it be a chose in possession or a chose in action, can today be assigned, unless it be expected from the general rule on some ground of public policy or by statute. But a mere expectancy or possibility of becoming entitled in the future to a proprietary right is not an existing chose in action. It is not assignable, except in the inexact sense into which, …. Lwyers slipped when it is sais to be assignable in equity for value. ’. (at 26). A chose in action is “An intangible personal property right recognized and protected by law, which has no existence apart from the recognition given by law, or which confers no present possession of a tangible object…”: Butterworth’s Concise Australian legal Dictionary. It was explained in Torkington v Magee [1920] 2 KB 427 “all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession”: Chose in action are often sufficiently proprietary that they can be assigned, however not all chose in action can be assigned

Real Property 

Torens Title – section 46 of the Real Property Act – must be in writing in prescribed form

46. Transfers (1) Where land under the provisions of this Act is intended to be transferred, or any easement or profit à prendre affecting land under the provisions of this Act is intended to be created, the proprietor shall execute a transfer in the approved form. (2) This section does not apply to the creation of an easement or profit à prendre that burdens and benefits separate parcels of land if the same person is the proprietor of the separate parcels of land.

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Section 23B of the Conveyancong Act NSW 1919

23B Assurances of land to be by deed (1) No assurance of land shall be valid to pass an interest at law unless made by deed. (3) This section does not apply to land under the provisions of the Real Property Act 1900.

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Common Law assignments in equity did not recognise assignments in chose in actions Lampet’s case (1612) 10 Rep 46b (77ER 994): “The great wisdom and policy of the sages and founders of our law, who have provided that no possibility, right, title nor thing in action, shall be granted or assigned to strangers, for that would be the occasion of multiplying of contentions and suits”.

Maxims    

Equity regards as done that which ought to be done; Equity look to the intent rather than the form; Equity will not assist a volunteer; and Equity will not perfect an imperfect gift.

Check List  a) b)    

Identify the nature of the property to be assigned, that is: is it capable of being assigned at all? is it property recognized at law or only in equity? is it presently existing or future property? Is the assignment for value or is the donee a volunteer? Does the assignment meet the statutory requirements, and if not, Can it still be assigned with the assistance of equity?

Identify the nature of the property to be assigned  Property that is unassignable are personal rights these incluse Rights under a contract for personal services; Bare rights to litigate  Glegg v Bromley [1912]  Said that the rights to assigne the proceeds from a court action may be assigned is it presently existing or future property?  Future property is also sometimes referred to as a “mere expectancy”. It includes: Property that exists but is not yet the property of the assignor; or Property that has yet to come into existence.  Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 the taxpayer assigned to his wife interest due from a loan repayable at will, and dividends which might be declared on shares he owned. Both were held to be ‘mere expectancies’ This doesn’t deny that a legal right to be paid money in the future is a present chose in action – Windeyer in dissent Cant assign an undecalrd divedend A legal right to be paid money at a future date is, I consider, a present chose in action … “a dividend is not a debt until it is declared … When it is declared it becomes a debt for which a shareholder who is on the register at the date of the declaration may sue” “but a mere expectance or possibility of becoming entitled in the future to a proprietary right is not an existing chose in action. It is not assignable ….” in Norman's Case… it was held that an assignment of the assignor's right to future interest and future dividends was an assignment of a mere expectancy, there being no certainty that interest would be earned or dividends declared.  Shepherd v Federal Commissioner of Taxation (1965) 113 CLR 385 it was held that it was possible to assign a present right to future income

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Here the taxpayer was the holder of what is known as ‘letters patent’. He was to receive royalty payments for a certain time. He assigned by deed ‘absolutely and unconditionally…all my right, title and interest in…” 90 % of his future royalties. Had he assigned presently existing property (being the contractual right to future income) or the income itself (which would be a future chose in action and therefore unassignable without consideration). Barwick C.J stated “its use rather suggests, to my mind, that he was intending to place the persons he wished to benefit in the position of being able themselves to assert a right to receive the appropriate amount …” Tree analogy - The tree, though not the fruit, existed at the date of the assignment as a proprietary right of the appellant of which he was competent to dispose; and he assigned ninety per centum of the tree. At 396 in Shepherd's Case… an assignment of the taxpayer's right, title and interest under a licence agreement to 90 per cent of the income which might accrue for three years by way of royalties proportioned to the number of products manufactured was held by majority. to be an assignment of an existing chose in action and not of a mere expectancy… Federal Commissioner of Taxation v Everett [1980] HCA 6; (1980) 143 CLR 440 “because the respondent assigned present property… being a share of his interest in the partnership which carried with it the right to a proportionate share of future income attributable to his interest, the assignment became effective at once and conferred on his wife an immediate equitable entitlement … to such income … this case is to be distinguished from … other cases in which … assignments of future income dissociated from the property or proprietary right to which that income is attributable.” Per Barwick CJ, Stephen, Mason and Wilson JJ: “ It is, of course, well established that an equitable assignment of… future property or a mere expectancy for valuable consideration will operate to transfer the beneficial interest to the purchaser immediately upon the property being acquired, but not before… On the other hand, an equitable assignment of, or a contract to assign, present property for value takes effect immediately and passes the beneficial interest to the assignee…” The distinction between present property and future property or mere expectancy gives rise to some borderline cases…an equitable assignment of present property for value, carrying with it a right to income generated in the future, takes effect at once whereas a like assignment of mere future income, dissociated from the proprietary interest with which it is ordinarily associated, takes effect when the entitlement to that income crystallizes or when it is received, and not before… The consequence in the present case is that because the respondent assigned present property, a chose in action, being a share of his interest in the partnership which carried with it the right to a proportionate share of future income attributable to his interest, the assignment became effective at once and conferred on his wife an immediate equitable entitlement as against the respondent and the other partners to such income referable to the share assigned as might subsequently be derived. This case is to be distinguished from Kelly's Case and other cases in which there have been assignments of future income dissociated from the property or proprietary right to which that income is attributable.

Is the assignment for value or is the donee a volunteer?  Whether or not there is consideration or not in return for the assignment  If there is no consideration then it is a gift Does the assignment meet the statutory requirements  Section 12 Conveyancing Act NSW 1919 12 Assignments of debts and choses in action Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor: Provided always that if the debtor, trustee, or other person liable in respect of such debt or chose in action has had notice that such assignment is disputed by the assignor or anyone claiming under the assignor, or of any other opposing or conflicting claims to such debt or chose in action, the debtor, trustee or other person liable shall be entitled, if he or she thinks fit, to call upon the several persons making claim thereto to interplead concerning the same, or he or she may, if he or she thinks fit, pay the same into court under and in conformity with the provisions of the Acts for the relief of trustees.

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The requirements of s 12: the assignment must be absolute; - cant assign part of a debt at law the assignment must be in writing and signed by the assignor; express notice in writing must be given to the debtor; despite the terminology “debts or other legal chose in action” it includes equitable proprietary interests. In Federal Commissioner of Taxation v Everett [1980] HCA 6; (1980) 143 CLR 440 the High Court (per Barwick CJ, Stephen, Mason and Wilson JJ) held that the phrase necessarily includes equitable proprietary interests: “the expression “legal chose in action” may be read as “lawfully assignable chose in action.” If it fails this it must then go to equity to see if it can be assigned

Can it still be assigned with the assistance of equity  Need to find area of the statute that it will fail at and see if equity will fix this up  This can mean one of two things:  the assignment of an interest that is by its nature only recognized in equity such as the beneficial interest under a trust: or  the assignment of legal property that fails the statutory regime and therefore can only be assigned with the assistance of equity. In this case the property retains its legal nature, but is assigned in equity. Intention  In order for it to succeed in equity there must be an intention  Smith v Perpetual Trustee (1910) HCA

This intention to assign is sometimes referred to as “the three Is”: an Immediate, Irrevocable Intention to assign. As per Higgins J in Smith v Perpetual Trustee (1910) HCA: “This is mainly a question of fact…no particular for of words is necessary for an assignment, but there must be some distinct indication of intention to make over, to part with control over, the thing to be assigned”. “its use rather suggests, to my mind, that he was intending to place the persons he wished to benefit in the position of being able themselves to assert a right to receive the appropriate amount …” If it cannot be clearly stated that there was an intention to be bound such as a statement or action as stated above there are other ways in which the the conscience of the assignor can be bound Conscience  The conscience of the assignor must be proven to be bound  If the assignment is supported by consideration. - Smith v Perpetual Trustee (1910) HCA  If the assignor, though failing to comply with the statutory requirements, has done all that is necessary to be done, according to the nature of the property. the two limbs of Milroy v Lord’: › in order to render the voluntary assignment valid and effectual the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him; and › if a settlement is intended to be effected by a particular mode or form (for example, direct assignment or declaration of trust) then the court will not give effect to it by applying another form. › done everything which, … was necessary to be done Anning v Anning (1907) 4 CLR 1049. › CJ Griffith took the view that the expression meant that it was necessary for the donor to do all that was required of him; › Justice Higgins held that it was necessary that the donor took every step that was within his power, regardless of whether it was actually obligatory or not. › Justice Isaacs held that is the property was assignable at law then it be done at law and any failure to comply with the statutory regime meant it failed. Corin v Patton (1990) 169 CLR 540; 92 ALR 1 › Accordingly, we conclude it is desirable to state that the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to affect a transfer of legal title, then equity will recognize the gift. › So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. › "Necessary" used in this sense means necessary to affect a transfer. › From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part.

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In Corin v Patton the deceased had not gained a certificate of title for the property, however she was the only one who could do this for her son. The assignment failed as she had not done everything that was necessary for her to do. If the conduct of the assignor gives rise to an estoppell.

Notice in Equity  Notice is not required in equity  Notice does not need to be given by the assignor Corin v Patton 169 CLR 540; 92 ALR 1 (Mason C.J. and McHugh J)  However notice should be given for these two reasons: The debtor is not bound by the assignment until notified; and With successive dealings with the same chose in action, priority between assignees is governed not by date of creation of the equitable interest but by date of notice given to the debtor: the rule in Dearle v Hall (1828).  Section 23C Conveyancing Act 1919 NSW 23C Instruments required to be in writing (1) Subject to the provisions of this Act with respect to the creation of interests in land by parol: (a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s 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 the person’s will, (c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing. (2) This section does not affect the creation or operation of resulting, implied, or constructive trusts

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Adamson v Hayes (1973) 130 CLR 276 held that the WA equivalent of our s 23C(1) was not confined to only legal interests in land. Hagan v Waterhouse (1991) 34 NSWLR 308: Par (a) refers to the creation and disposition of legal and equitable interests in land arising otherwise than by declaration of a trust; and Par (b) covers the same interests created or disposed of by trust. PT v Maradona (No 2) (1992) 27 NSWLR 241 held that the section applies to both interests in land and in personalty....