Equity Checklist

EQUITY CHECKLIST Where are the legal titles? How is the property held beneficially?  Tried contract, outright gift, resulting trust or express trust? Assignment Rules What is the property? Present/Future, Legal/Equitable? Future property = contingent, mere expectancy, not "come in" yet.  Milroy v Lord : If an assignment intended to take one form fails, equity will not save the assignment by construing it as another form.  But - on a proper construction , the settlor might have actually intended another form ( Bahr v Nicolay ). Voluntary  Property assigned at law?  Interest in land : Execute Memo + Lodge for registration with CT (ss 56 & 67 RPA).  Chattel : Delivery (incl symbolic) + Intention to give.  OR Moment of sale, unless contrary agreement (ss 17 & 18 Rule 1 SGA).  Shares : Execution of share transfer form + registration in company's books.  Whole Debts & other legal choses-in-action : Intent to immediately assign, in writing signed by assignor + Written notice to the debtor or other party of the chose- in-action (s 15 LPAct).  Re Steel Wing : s 15 applies to whole choses only.  Cheques : Endorsement by payee's signature on the back, or Delivery if made payable to cash.  Property assigned in equity?  Existing equitable rights : Clear intention to immediately assign ( Smith v Perpetual Trustee ), in writing signed by the assignor (s 29(1)(c)).  FCT v Everett : Since equitable rights are choses-in- action, s 15 also applies  need notice to other party.  Part Debts or choses-in-action : Clear intent to immediately assign ( Shepherd v Comm of Tax ), in writing signed by the assignor (s 29(1)(c)).  Corin v Patton : If the legal owner (donor) has done everything necessary for him alone to have done to effectuate a transfer, equity will recognise the transfer.  Re Rose : Transferor holds on CT for transferee. Contract  If there is a contract for sale of: land or interest in land ( Chang v Registrar of Titles ), shares or special chattels ( Holroyd v Marshall ), or existing debts ( Tailby v Official Receiver ), the property is assigned in equity at the time of contract - subject to formality rules:  If land : evidenced in writing (s 26(1)) or part performed (s 26(2))?  If equitable property : evidenced in writing (s 29(1)(c))? Future Property  Norman v FCT : Future property cannot be assigned to a volunteer .  However, on a proper construction of what the transferor stated, the property being assigned could be a present contractual right to the future property [a chose-in- action] (eg. Shepherd v Comm of Tax ).  s 15 applies.  Tailby v Official Receiver : If there is a contract to assign future property, equitable title to the future property passes as it is acquired. Contract  Intention to create legal relations?  Consideration?  Vague?  Formality? (if land: s 26(1))  Part Performance? (s 26(2))  Regent v Millett : There is part performance if:  1) The party alleging part performance did substantial acts in detrimental reliance on the contract, to the knowledge of the other party; and  2) The acts, of their own nature, are unequivocally referable to some contract concerning land ( Maddison v Alderson ).  Breach?  Prima facie damages.  Damages inadequate?  What equitable remedy? SP? Rescission? Account of profits? Outright Gift / Resulting Trust  Assignment of property? (Re Vandervell)  If assign on basis of a contract , the contractual terms reveal whether beneficial rights are transferred.  *Re Sick & Funeral Society : When contributors (ie. members) give money to an unincorporated association , they give it according to the association's contractual rules  if the association fails, its funds are distributed according to the rules.  *Re Bucks Constabulary : There is an implied term that the funds are held for existing members equally (absent contrary express terms), not on RT for contributors.  Automatic RT?  If transfer with trust attached , and that trust is invalid [or there is a gap in the beneficial holding] ( Re Vandervell ).  Presumption against gift & of RT?  Voluntarily transfer property. ( Calverley )  Purchase property in the name of the transferee. ( Calverley )  Property is transferred to 2 purchasers , who contributed unequally to the purchase price  presumed to hold the property on RT for themselves in shares proportionate to their contributions. ( Calverley )  *Re Abbott; Re Gillingham : Contributors are presumed to have intended to benefit the fund's objects only  when those objects disappear, there is a presumption of RT pro-rata the remaining money.  Presumption of advancement?  Husband  Wife, Parent  Child. ( Calverley v Green )  Calverley v Green : To determine which presumptions are rebutted/affirmed, examine the evidence of actual intent at the time of the transaction [on the full matrix of facts].  Actually intend to give , abandon or keep/retain the beneficial rights?  *Re West Sussex : If the contributor receives a benefit for their contribution, they have abandoned their contribution for the benefit (eg. raffle ticket: sold the $ for a chance at winning a prize)  no RT, bona vacentia.  Calverley v Green : There is a RT to the extent that the presumption against gift is affirmed. Express Trust  3 methods of creating an ET:

 (1) transfer property with trust attached ( Milroy v Lord );  (2) declare self as trustee of property ( Milroy v Lord );  (3) direct existing trustee to hold for another ( Grey v IRC ). There is a disposition of equitable right  s 29(1) (c) applies. Certainty of intent [to create a trust]  Paul v Constance : A trust may be created without trust language .  Modern Approach: Even if the settlor used precatory words , the court will construe the evidence as a whole to ascertain the settlor's true intention.  Ask: Is it a Moral obligation, Duty, or Power?  Intended the property to be held for the benefit of another?  Duty to consider distribution/appointment? ["on trust"]  Duty to distribute/appoint ? ["to", gift over, small class]  Discretion to decide the objects' proportionate shares ? [Power of Appointment] ["discretion"] Certainty of subject matter  Core certainty: What is the trust property?  Certainty of beneficiaries' shares? [consider life interest]  Re Golay's Will Trusts : If the trustee has discretion to determine the beneficiaries' shares, then the shares are rendered certain. Certainty of objects  Morice v Bishop of Durham ("Beneficiary Principle"): A non- charitable trust must be for identifiable persons {at the time of declaration} in whose favour the court can decree performance. If objects are purposes:  Charitable trust? (a) a gift for a section of the community, (b) for religious, education, poverty relief & other analogous benefits.  Non-charitable purpose trusts breach the beneficiary principle ( Morice v Bishop of Durham ) and are invalid ( Re Astor's Settlement Trust ).  However, there are exceptions to the Beneficiary Principle:  Trusts for animals, graves and masses.  Re Denley : The beneficiary principle does not apply to a purpose trust that is indirectly/directly for the benefit of identifiable individuals, who have standing to enforce the trust . The BP is confined to purpose trusts which are abstract/impersonal.  A gift to unincorporated associations will prima facie be reclassified as a gift to the existing members. But it will not be reclassified if:  the association's objects are paramount as the basis of the gift (Bacon v Pianta) ;  the gift's subject matter cannot permit it ( Leahy v AG); or  the association's articles do not allow distribution of its property to its members upon dissolution. If objects are persons:  Test for Certainty of Objects for TP, FP and BP is the Given Postulant Test ( McPhail; Re Gulbenkian ): Can it be said with certainty that any given person is or is not a member of the class of objects?  Re Gulbenkian : Assess certainty of objects at the date of the gift .  McPhail : There are 3 types of uncertainty:  Semantic uncertainty : Are the terms (1) so obscure that the courts cannot give them a meaning, or (2) so ambiguous that the court cannot tell what is meant?  Evidentiary uncertainty : There may be problems with evidence as to whether a person is in the class.  McPhail : This problem can be cured by inviting persons to prove that they are in the class.  Administrative uncertainty : Is the class so hopelessly wide as to render the trust administratively unworkable?  Test for certainty of objects for FT is the List Certainty Test ( IRC v Broadway Cottages ): Are all the beneficiaries ascertained/ascertainable? [ie. can make a complete list?]  Courts can overcome any evidentiary uncertainty  only semantic uncertainty can be a problem. Formality  s 29(1)(b) LPA: A declaration of express trust concerning an interest in land must be evidenced (1) in writing signed by the settlor, or (2) by will.  Davies v Otty; Bannister : Equity will not allow statute to be used as a cloak for fraud. Consequences of Discretionary Trust  Remedy for breach of duty to consider distribution is an order to consider, by injunction  make a survey of the range of objects/beneficiaries.  McPhail v Doulton : If the trustee breaches the duty to distribute , the court will execute the trust in a way that best gives effect to the settlor's intention. Possible remedies include:  Replace the trustee;  Let representative persons of the beneficiary class prepare a scheme of distribution; or  Court prepares its own scheme of distribution (if the proper basis for distribution appears). [ not automatically distribute equally, as in IRC v Broadway ] Re Locker's Settlement Trust: A better remedy is to order the trustee (if available & alive) to distribute.  McPhail v Doulton : Court will not interfere with discretions .  Re Londonderry's Settlement : Not obliged to give reasons .  Unless it is exercised capriciously, is beyond power (eg. distribute to persons outside class: fraud on the power), or breaches trust/fiduciary duty. Termination of Express Trust  Saunders v Vautier : Once the beneficiaries are entitled to the whole beneficial interest (ie. over 18), they can agree to terminate the trust and get their shares of the trust property.  Trustees can terminate the trust by:  Following trust deed; or  Distributing all trust property.

Trustee Duties  Duty to exercise reasonable care & diligence in managing the trust ( Re Whiteley ).  Duty not to forgo reasonable opportunities ( Elder's Trustee v Higgins ).  Duty of loyalty , to place the beneficiaries' interests ahead of extraneous objectives which only appeal to the trustees personally ( Cowan v Scargill ).  Duty to act personally & not delegate , unless:  The trust deed specifically permits it;  s 24 Trustee Act permits it (limited to delegation to solicitors for certain tasks);  The delegation is absolutely necessary . Speight v Gaunt : Trustees may appoint agents to carry out decisions made about the execution of the trust.  Duty to consider exercise of discretions carefully ( Re Gulbenkian ).  Duty to act unanimously , absent something contrary in trust deed ( Tempest v Lord Camoys ).  Duty to act gratuitously ( Ayliffe v Murray ), because they have undertaken a fiduciary duty. BUT remuneration is permitted where:  1) Remuneration is expressly covered in the trust deed, or otherwise inherent from the nature of the deed (eg. size of trust);  2) The beneficiaries agree to remuneration (ie. consent to breach of fid. duty).  3) The court orders reasonable remuneration ( Trustee Act ).  Duty not to distribute to people outside the designated class of beneficiaries (otherwise fraud).  Duty not to buy trust assets , absent anything contrary in the trust deed ( Keech v Sandford ) - [otherwise breach fiduciary duty]. Mutual Wills  Birmingham v Renfrew : When 2 people make mutual wills, and one dies without revoking the agreed will, a CT arises over property within the terms of that agreed will . Mortgagee's exercise of power of sale  Banner v Berridge : When mortgagees exercise a power of sale, and are left with an excess (after paying expenses of sale and all mortgages & debts), a CT arises on the excess in favour of the mortgagor. Deserted Wife's Equity  NPB v Ainsworth : If the husband deserts the wife without providing alternative accommodation , a deserted wife's equity arises  court will injunct the husband to allow wife to stay.  But since it is a mere personal right, it cannot bind 3 rd parties who have property rights in the house (regardless of behaviour/knowledge). Remedies  For legal causes of action, common law remedies must be proved inadequate before equitable remedies can be ordered ( LICA v Bonner ).  Inadequacy is determined by precedent .  Damages may be inadequate if:  There is a lack of substitute ;  Damages are hard to calculate ;  Defendant cannot pay damages;  Defendant breached deliberately (perhaps);  Detriment is much larger than damages;  Damages are merely nominal (eg. Beswick ).  Cases where specific performance have been awarded for breach of contract:  Contract concerns rare/unique goods ( Dougan v Ley, Doulton Potteries v Bronotte );  Contract concerns land rights ( Loan Investment Corp v Bonner );  Contract is to pay money to a 3 rd party ( Beswick v Beswick );  Series of ongoing breaches ( Beswick v Beswick ).  Account of profits has been awarded for breach of contract, on public policy grounds (despite Pl suffering no loss) ( AG v Blake ).  Rescission may be awarded if:  There is a vitiation factor : innocent/fraudulent misrepresentation, mistake, duress, cheating, undue influence or unconscionability;  The aggrieved party has elected to rescind the contract; and  The parties can be restored to their original positions substantially ( Alati v Kruger ).  Even if damages are inadequate, an equitable remedy is discretionary and may not be awarded if:  Plaintiff caused prejudicial delay ;  Plaintiff does not do equity;  It causes great hardship to defendant;  Enforcement of the equitable remedy requires maintenance of a personal relationship ( CH Giles v Morris );  Enforcement of the equitable remedy requires constant supervision by the courts ( J C Williamson v Lukey ) eg. contract over a period of time, complex terms.