BASIC CONCEPTS
BASIC CONCEPTS • • • • • • •
No one can be trustee of property solely for his own benefit DKLR Holding Express Trust = created by express intention à creature of Disposive intention Muschinski v Dodds Resulting Trust = trust created by implied intention Constructive Trust = trust imposed on someone to prevent him from succeeding in making an unconscionable assertion of Oship of property If conflict btn equity & CL à equity will prevail!!! s5(11) Judicature Act 1876; s249 Sup Crt Act o HOWEVER Equity cannot override a statutory DUTY Personal property given under a will = “legacy” or “request” Real property given under a will = “devise”
CATEGORIES OF EQUITABLE JURISDICTION (1) Exclusive Juris = Equity will award remedies in respect of infringement of right/obli known/recognised by equity ONLY eg. trust (2) Concurrent Juris = where known/recognised by BOTH equity & CL – eg. breach of contract for sale of land (3) Auxiliary Juris = the wrong in question is recognised by CL only – but equity will assist the CL – eg. trespass/nuisance, equity will assist & issue injunction
RIGHT OF CRT TO AWARD DAMAGES IN EQUITY Crt = pwr to award damages in equity = s62 Equity Act 1867 (Qld) & s2(4) Statute Law Div Act 1908 s244 Sup Crt Act 1995 (Qld) – empowers every judge to exercise bth equitable & CL jurisdictions, TF can deal with equitable/CL claims • • • •
Equitable comp = $ award made to compensate breach of equitable duty; breach of fid duty; Nocton v Lord Ashburton Injunction Quia Timet = granted before any wrong has occurred, in anticipation of wrongdoing, because he/she feels Leeds Industrial Cooperative Society Ltd v Slack – allowed damages in substitution of Quia Timet Injunction o Barbagallo v Catelan Pty Ltd – reaffirmed Leeds Seager v Copydex – awarded CL damages for breach of equitable duty
NATURE OF EQUITABLE INTERESTS In terms of strength: (1) Equitable proprietary interest in specific property – Eg. interest of beneficiary under trust, equity of redemption, equitable charge/lien (2) A mere equity in specific property – Eg. right to set aside a transaction for fraud/mistake (3) An Equitable proprietary interest in respect of specific property – Eg. right of beneficiary under unadministered estate (4) Personal Equity – Eg. a personal right to sue partic person (not important tho) a. National Provincial Bank v Ainsworth b. R v Toohey; ex parte Meneling Station
Timing & Which Interest Prevails Latec Investments v Hotel Terrigal – Person with ‘stronger’ interest will prevail; (Here – mere equity to set aside fraudulent transfer is defeated by EPI – thru bona fide sale); Swanston Mtge v Trepan Investments – Once TP’s interest is reg’d, it defeats M’or’s equity of redemption (is mere equity)
Phillips v Phillips – If purchaser = bona fide w/o earlier notice of mere equity, earlier interest will be extinguished
*** Rice v Rice – where equities are equal (in all respects), then first in time prevails *** Re McKean’s Caveat – Even if fraudulent sale to BF TP, favours M’or cos still got equity of redemption (when TP’s interest is unreg’d) – applied Rice Statute • • • •
s122(1)(c) LTA – Reg’d owr of property can lodge caveat at any time; not required to show that have continuing equitable interest; simply claim an equitable interest s78(2)(c)(ii) LTA – Where M’or defaults, M’ees obli is to foreclose M’or’s right to redeem property; I.e. to deny his right of redemption s85(1) PLA – M’ee = duty of reas care when selling property; ensure that sold at mkt value s85(3) PLA – Remedy for breach of (1) is damages; title of purchaser (inc equitable oship) cannot be impeached
Torrens System Conveyancing: (1) Formation of contract; (2) completion (no legal title obtained) only get indefeasible (as against vendor – not against ppl with earlier equitable interests) equitable title, cannot override ppl with earlier equitable interests; (3) Registration (get title)
EQUITABLE CHARGE Where title to property is vested in some person & is accompanied by some qualification – result: (a) Trust – result: person will receive it in capacity of trustee only & will have no beneficial interest Hardoon v Belilios (b) Equitable charge – result: transferee takes property beneficially, altho is subject to a charge Pearce v Wright; Will enjoy property absolutely once charge has been satisfied; Chargee has rights against beneficially entitled trustee but does not own any part of prop a. Interest created is held by way of security – to enforce payment (c) Equitable personal obli – result: transferee takes property absolutely; If breaches his personal obli towards transferor, transferor will only have right to claim equitable compensation Gill v Gill (d) Condition subsequent – result: Transferee takes property absolutely, subject to liability to forfeiture à I.e. breach by transferee results in forfeiture of property In re Sandbrook; If ‘condition’ is unclear, then will be void ab initio, TF transferee will take property absolutely & indefeasibly Sifton v Sifton
CONCEPT OF A TRUST Trust = property vested in person (trustee) for beneficial enjoyment of anor (beneficiary); division of legal & equitable title Hardoon • If legal title is vested in trustee à a trust of relevant property is created & equitable title vests ŵ beneficiary Hardoon v Belilois o Beneficiary has equitable Oship of property, TF has right to sue Baker v Archer-Shee • Where beneficial interest under a trust is vested in trustee à a sub-trust of that beneficial interest is created Howard-Smith • Where equitable in vested trust of that equitable property will be created Livingston NB: Settlor can also reserve himself pwr of revocation Created by: (a) vesting of title to property in trustee; Called “transfer in trust” (b) Absolute owr declaring a trust over property for benefit of anor Adamson v Hayes; OR if dec of trust made by equitable owr (not by absolute owr) a sub-trust is created Adamson v Hayes CANNOT declare trust over property solely for benefit of self DKLR Holdings à purported dec will be a NULLITY CANNOT enforce trust AGAINST TRUSTEE’S WILL à any attempt will be defeated by disclaimer; If beneficiary disclaims his beneficial interest then… (a) IF SETTLOR = TRUSTEE it revests in settlor & he becomes absolute owr In re Cook (b) IF SETTLOR ≠ TRUSTEE disclaimer will make initially express trustee into a resulting trustee for the settlor Islington London Borough Council s209 PLA – auth’s a settlor to specify any period of
No one can be trustee of property solely for his own benefit DKLR Holding Express Trust = created by express intention à creature of Disposive intention Muschinski v Dodds Resulting Trust = trust created by implied intention Constructive Trust = trust imposed on someone to prevent him from succeeding in making an unconscionable assertion of Oship of property If conflict btn equity & CL à equity will prevail!!! s5(11) Judicature Act 1876; s249 Sup Crt Act o HOWEVER Equity cannot override a statutory DUTY Personal property given under a will = “legacy” or “request” Real property given under a will = “devise”
CATEGORIES OF EQUITABLE JURISDICTION (1) Exclusive Juris = Equity will award remedies in respect of infringement of right/obli known/recognised by equity ONLY eg. trust (2) Concurrent Juris = where known/recognised by BOTH equity & CL – eg. breach of contract for sale of land (3) Auxiliary Juris = the wrong in question is recognised by CL only – but equity will assist the CL – eg. trespass/nuisance, equity will assist & issue injunction
RIGHT OF CRT TO AWARD DAMAGES IN EQUITY Crt = pwr to award damages in equity = s62 Equity Act 1867 (Qld) & s2(4) Statute Law Div Act 1908 s244 Sup Crt Act 1995 (Qld) – empowers every judge to exercise bth equitable & CL jurisdictions, TF can deal with equitable/CL claims • • • •
Equitable comp = $ award made to compensate breach of equitable duty; breach of fid duty; Nocton v Lord Ashburton Injunction Quia Timet = granted before any wrong has occurred, in anticipation of wrongdoing, because he/she feels Leeds Industrial Cooperative Society Ltd v Slack – allowed damages in substitution of Quia Timet Injunction o Barbagallo v Catelan Pty Ltd – reaffirmed Leeds Seager v Copydex – awarded CL damages for breach of equitable duty
NATURE OF EQUITABLE INTERESTS In terms of strength: (1) Equitable proprietary interest in specific property – Eg. interest of beneficiary under trust, equity of redemption, equitable charge/lien (2) A mere equity in specific property – Eg. right to set aside a transaction for fraud/mistake (3) An Equitable proprietary interest in respect of specific property – Eg. right of beneficiary under unadministered estate (4) Personal Equity – Eg. a personal right to sue partic person (not important tho) a. National Provincial Bank v Ainsworth b. R v Toohey; ex parte Meneling Station
Timing & Which Interest Prevails Latec Investments v Hotel Terrigal – Person with ‘stronger’ interest will prevail; (Here – mere equity to set aside fraudulent transfer is defeated by EPI – thru bona fide sale); Swanston Mtge v Trepan Investments – Once TP’s interest is reg’d, it defeats M’or’s equity of redemption (is mere equity)
Phillips v Phillips – If purchaser = bona fide w/o earlier notice of mere equity, earlier interest will be extinguished
*** Rice v Rice – where equities are equal (in all respects), then first in time prevails *** Re McKean’s Caveat – Even if fraudulent sale to BF TP, favours M’or cos still got equity of redemption (when TP’s interest is unreg’d) – applied Rice Statute • • • •
s122(1)(c) LTA – Reg’d owr of property can lodge caveat at any time; not required to show that have continuing equitable interest; simply claim an equitable interest s78(2)(c)(ii) LTA – Where M’or defaults, M’ees obli is to foreclose M’or’s right to redeem property; I.e. to deny his right of redemption s85(1) PLA – M’ee = duty of reas care when selling property; ensure that sold at mkt value s85(3) PLA – Remedy for breach of (1) is damages; title of purchaser (inc equitable oship) cannot be impeached
Torrens System Conveyancing: (1) Formation of contract; (2) completion (no legal title obtained) only get indefeasible (as against vendor – not against ppl with earlier equitable interests) equitable title, cannot override ppl with earlier equitable interests; (3) Registration (get title)
EQUITABLE CHARGE Where title to property is vested in some person & is accompanied by some qualification – result: (a) Trust – result: person will receive it in capacity of trustee only & will have no beneficial interest Hardoon v Belilios (b) Equitable charge – result: transferee takes property beneficially, altho is subject to a charge Pearce v Wright; Will enjoy property absolutely once charge has been satisfied; Chargee has rights against beneficially entitled trustee but does not own any part of prop a. Interest created is held by way of security – to enforce payment (c) Equitable personal obli – result: transferee takes property absolutely; If breaches his personal obli towards transferor, transferor will only have right to claim equitable compensation Gill v Gill (d) Condition subsequent – result: Transferee takes property absolutely, subject to liability to forfeiture à I.e. breach by transferee results in forfeiture of property In re Sandbrook; If ‘condition’ is unclear, then will be void ab initio, TF transferee will take property absolutely & indefeasibly Sifton v Sifton
CONCEPT OF A TRUST Trust = property vested in person (trustee) for beneficial enjoyment of anor (beneficiary); division of legal & equitable title Hardoon • If legal title is vested in trustee à a trust of relevant property is created & equitable title vests ŵ beneficiary Hardoon v Belilois o Beneficiary has equitable Oship of property, TF has right to sue Baker v Archer-Shee • Where beneficial interest under a trust is vested in trustee à a sub-trust of that beneficial interest is created Howard-Smith • Where equitable in vested trust of that equitable property will be created Livingston NB: Settlor can also reserve himself pwr of revocation Created by: (a) vesting of title to property in trustee; Called “transfer in trust” (b) Absolute owr declaring a trust over property for benefit of anor Adamson v Hayes; OR if dec of trust made by equitable owr (not by absolute owr) a sub-trust is created Adamson v Hayes CANNOT declare trust over property solely for benefit of self DKLR Holdings à purported dec will be a NULLITY CANNOT enforce trust AGAINST TRUSTEE’S WILL à any attempt will be defeated by disclaimer; If beneficiary disclaims his beneficial interest then… (a) IF SETTLOR = TRUSTEE it revests in settlor & he becomes absolute owr In re Cook (b) IF SETTLOR ≠ TRUSTEE disclaimer will make initially express trustee into a resulting trustee for the settlor Islington London Borough Council s209 PLA – auth’s a settlor to specify any period of
