KEY FACTS KEY CASES Equity & Trusts 25726.indb i 18/11/2013 10:40 KEY FACTS KEY CASES The Key Facts Key Cases revision series is designed to give you a clear understanding and concise overview of the fundamental principles of your law course. The books’ chapters refl ect the most commonly taught topics, breaking the law down into bite- size sections with descriptive headings. Diagrams, tables and bullet points are used throughout to make the law easy to understand and memorise, and comprehensive case checklists are provided that show the principles and application of case law for your subject. Titles in the series: Contract Law Criminal Law English Legal System Equity & Trusts EU Law Family Law Human Rights Land Law Tort Law For a full listing of the Routledge Revision range of titles, visit www.routledge.com/law 25726.indb ii 18/11/2013 10:40 KEY FACTS KEY CASES Equity & Trusts Chris Turner and Judith Bray Routledge Taylor & Francis Group LONDON AND NEW YORK 25726.indb iii 18/11/2013 10:40 First edition published 2014 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2014 Chris Turner and Judith Bray The right of Chris Turner and Judith Bray to be identifi ed as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice : Product or corporate names may be trademarks or registered trademarks, and are used only for identifi cation and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN: 978–0–415–83327–1 (pbk) ISBN: 978–1–315–85784–8 (ebk) Typeset in Helvetica by Refi neCatch Limited, Bungay, Suffolk 25726.indb iv 18/11/2013 10:40 Contents PREFACE ix TABLE OF CASES xii Chapter 1 INTRODUCTION TO EQUITY & TRUSTS 1 1.1 A brief history of equity 2 1.2 The basic character of a trust 8 Key Cases Checklist 12 Chapter 2 THE CREATION OF EXPRESS PRIVATE TRUSTS 15 2.1 Capacity and the creation of trusts 16 2.2 Formalities – general 16 2.3 Trusts of land 16 2.4 Dispositions of existing equitable interests 17 2.5 Formality and fraud 18 2.6 The three certainties 18 Key Cases Checklist 22 Chapter 3 PURPOSE TRUSTS 40 3.1 Non- charitable purpose trusts 41 3.2 The rules on unincorporated associations 44 Key Cases Checklist 47 Chapter 4 CONSTITUTION OF TRUSTS 56 4.1 General 57 4.2 Formalities 57 4.3 Declaration of self as trustee 58 4.4 Enforcement of trusts – volunteers and non- volunteers 58 25726.indb v 18/11/2013 10:40 vi Contents 4.5 Exceptions to the rule that equity will not assist a volunteer 59 Key Cases Checklist 60 Chapter 5 SECRET TRUSTS 71 5.1 The background to secret trusts 72 5.2 The rules governing fully secret trusts 72 5.3 The rules governing half secret trusts 73 5.4 The theoretical basis of secret trusts 74 Key Cases Checklist 76 Chapter 6 PROTECTIVE AND DISCRETIONARY TRUSTS 82 6.1 Protective trusts 82 6.2 Discretionary trusts 82 Key Cases Checklist 84 Chapter 7 RESULTING TRUSTS AND CONSTRUCTIVE TRUSTS 86 7.1 Introduction 87 7.2 Resulting trusts 87 7.3 Constructive trusts 93 7.4 Trusts of the family home 98 Key Cases Checklist 103 Chapter 8 CHARITABLE TRUSTS 126 8.1 The history of the charitable trust 127 8.2 The difference between charitable trusts and other trusts 128 8.3 Essential requirements of charitable trusts 128 8.4 Charitable objects 129 8.5 The political element 135 8.6 The public benefi t element 135 8.7 Exclusivity of charitable objects 136 8.8 The basis of the cy- près doctrine at common law 137 8.9 Initial failure 137 8.10 Subsequent failure 138 8.11 Non- charitable alternatives 139 25726.indb vi 18/11/2013 10:40 Contents vii 8.12 Statutory cy- près 140 Key Cases Checklist 142 Chapter 9 THE NATURE OF TRUSTEESHIP 157 9.1 Who can be a trustee? 158 9.2 The number of trustees 159 9.3 Appointment of trustees 159 9.4 Selection of trustees 160 9.5 The vesting of the trust property 160 9.6 Termination of trusteeship 160 9.7 Standard of conduct expected of trustees 161 Key Cases Checklist 163 Chapter 10 THE DUTIES OF THE TRUSTEES 165 10.1 The trustees’ duties to the trust property 166 10.2 The duty to invest 167 10.3 The trustees’ duties to the benefi ciaries 172 10.4 The fi duciary nature of trusteeship 174 Key Cases Checklist 177 Chapter 11 THE POWERS OF TRUSTEES 187 11.1 Introduction 188 11.2 Trustees of land under the Trusts of Land and Appointment of Trustees Act 1996 189 11.3 General powers 189 11.4 The power to delegate 191 11.5 Powers of maintenance and advancement 192 Key Cases Checklist 197 Chapter 12 VARIATION OF TRUSTS 198 12.1 The need for variation 199 12.2 Variation under the inherent jurisdiction of the courts 199 12.3 Variation under statutory provisions 199 12.4 Variation under the Variation of Trusts Act 1958 200 Key Cases Checklist 202 25726.indb vii 18/11/2013 10:40 viii Contents Chapter 13 BREACH OF TRUST AND REMEDIES 208 13.1 Breach of trust and liability 209 13.2 Personal remedies and proprietary remedies 209 13.3 Equitable remedies – injunctions 213 13.4 Equitable remedies – specifi c performance 216 13.5 Equitable remedies – rescission 218 13.6 Equitable remedies – rectifi cation 218 Key Cases Checklist 219 INDEX 231 25726.indb viii 18/11/2013 10:40 Preface This new series of Key Facts Key Cases is built on the two well- known series, Key Facts and Key Cases. Each title in the Key Facts series now incor- porates a Key Cases section at the end of most chapters which is designed to give a clear understanding of important cases. This is useful when studying a new topic and invaluable as a revision aid. Each case is broken down into fact and law. In addition many cases are extended by the use of important extracts from the judgment, by a commentary or by highlighting problems. In some instances students are reminded that there is a link to other cases or material. If the link case is in another part of the book, the reference will be clearly shown. Some links will be to additional cases or materials that do not feature in the book. The basic Key Facts sections are a practical and complete revision aid that can be used by students of law courses at all levels from A Level to degree and beyond, and in professional and vocational courses. They are designed to give a clear view of each subject. This will be useful to students when tack- ling new topics and is invaluable as a revision aid. Most chapters open with an outline in diagram form of the points covered in that chapter. The points are then developed in a structured list form to make learning easier. Supporting cases are given throughout by name, and for some complex areas facts are given to reinforce the point being made. The most important cases are then given in more detail. The Key Facts Key Cases series aims to accommodate the syllabus content of most qualifi cations in a subject area, using many visual learning aids. The topics covered for Equity and Trusts include all of those contained in mainstream syllabuses. Equity and Trusts is often seen as a fairly dry and dull area. In fact it is actually more relevant to most people’s lives than, for example, Criminal Law, which is a very popular area of study. Anyone who jointly owns a domestic home or who wants to leave property in a will to underage children, who has anything to do with charity work or who has a private pension, for instance, would be able to identify what a very practical and useful subject it is. 25726.indb ix 18/11/2013 10:40 x Preface In the Key Cases sections, in order to give a clear layout, symbols have been used at the start of each component of the case. The symbols are: Key Facts – These are the basic facts of the case. Key Law – This is the major principle of law in the case. Key Judgment – This is an actual extract from a judgment made on the case. Key Comment – Infl uential or appropriate comments made on the case. Key Problem – Apparent inconsistencies or diffi culties in the law. Key Link – This indicates other cases which should be considered with this case. The Key Link symbol alerts readers to links within the book and also to cases and other material, especially statutory provisions that are not included. The court abbreviations used in the key case sections of this book are shown below.