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.
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