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Equity and Trust Law John Duddington essentials of essentials of equity and trust law John DuDDington “It will give students a complete introduction to the subject, and therefore a valuable foundation, as well as provide crucial background reading and an invaluable knowledge of the fundamental principles of the law of equity and trusts.” equity Christine Ocran, LLB, LLM, Barrister at Law (non-practising), Associate Lecturer – University of East London “A mistake that many law textbooks make… is that they are written in too literary a style. Sentences are too long and complex and a vocabularly is used that many modern students essentials of do not understand. This book does not make that mistake. It is easy to read and can be read swiftly.” Richard Clements LLB, LLM – Deputy Head of the School of Law, University of the West of England equity and trust law and This new textbook on Equity and Trusts Law has been specifically designed to cover all the main topics on undergraduate courses comprehensively but concisely. It offers a clear and accurate explanation of the law, presented in a systematic and logical order for learning and revision. The trust law book is exceptionally accessible to students new to the subject. John DuDDington Key features of this book include: ✣ A clear and accessible introduction to this often difficult-to-grasp subject, which maps well onto course syllabi. ✣ Coverage of key contemporary cases and issues in the media to engage students’ interest. ✣ Critical discussion and analysis to expose students to the key issues and debates in the subject. ✣ Comparative approach examining developments from US and Commonwealth jurisdictions which allows students to reflect on UK perspectives within a global context. ✣ Coverage of the Law Commission’s Consultation Paper 179: Cohabitation: The Financial Consequences of Relationship Breakdown (2006). ✣ Flow charts, diagrams, chapter summaries and guidelines on answering typical examination questions aid student understanding of complex topics. ✣ Specimen documents on trusts allows students to see real examples of how trusts law is implemented in practice. Du ✣ Companion Website, at www.pearsoned.co.uk/duddington, containing exam and seminar activity sample questions, an online glossary, and annotated web links to sites of interest. Bi- DD annual updates are also provided to ensure that students can keep completely up to date with any major developments in this area of the law. ington John Duddington is Head of the Law School at Worcester College of Technology, and has extensive teaching experience. Also by the author Employment Law (ISBN 0 582 42376 7) Law Express, Land Law (ISBN 1 40584021 8) Law Express, Equity and Trusts (ISBN 1 40582192 2) ISBN 0-582-89406-9 9 780582 894068 www.pearson-books.com Cover image © graficart.net/Alamy 0582894069_COVER(Duddington).ind1 1 26/6/06 09:28:15 EOEA01.qxd 6/20/06 8:52 AM Page i ESSENTIALS OF EQUITY AND TRUSTS LAW . EOEA01.qxd 6/20/06 8:52 AM Page ii We work with leading authors to develop the strongest educational materials in law, bringing cutting-edge thinking and best learning practice to a global market. Under a range of well-known imprints, including Longman, we craft high quality print and electronic publications which help readers to understand and apply their content, whether studying or at work. To find out more about the complete range of our publishing, please visit us on the World Wide Web at: www.pearsoned.co.uk Visit the Equity and Trusts Companion Website at www.pearsoned.co.uk/duddington to find valuable student learning material including: • Sample examination questions to aid examination preparation • Seminar activity questions to check your understanding • An online glossary to explain key terms • Annotated links to relevant sites on the web • Regular updates in the field of equity and trusts . EOEA01.qxd 6/20/06 8:52 AM Page iii ESSENTIALS OF EQUITY AND TRUSTS LAW John Duddington Worcester College of Technology . EOEA01.qxd 6/20/06 8:52 AM Page iv Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk © Pearson Education Limited 2006 The right of John Duddington to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP. ISBN-10 0-582-89406-9 ISBN-13 978-0-582-89406-8 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 is available from the Library of Congress 10987654321 10 09 08 07 06 Typeset in 9.5/12.5 pt Stone Serif by 35 Printed and bound by Henry Ling Ltd., at the Dorset Press, Dorchester, Dorset The publisher’s policy is to use paper manufactured from sustainable forests. EOEA01.qxd 6/20/06 8:52 AM Page v Brief contents Full contents vii Guided tour xiv Preface xvi Table of cases xviii Table of statutes xxxv Abbreviations used when referring to judges xxxix Glossary of terms xl Part One EQUITY: GENERAL PRINCIPLES 1 Chapter 1: Nature of equity 3 Chapter 2: Equitable remedies 21 Chapter 3: Equitable doctrines 41 Part Two TRUSTS: NATURE OF A TRUST AND CREATION OF EXPRESS TRUSTS 61 Chapter 4: The concept of a trust 63 Chapter 5: Creating the trust: the three certainties 75 Chapter 6: Formalities 93 Chapter 7: Completely and incompletely constituted trusts 101 Chapter 8: Secret and half-secret trusts: mutual wills 125 Chapter 9: Void and voidable trusts 143 Part Three RESULTING AND CONSTRUCTIVE TRUSTS: TRUSTS OF THE HOME 155 Chapter 10: Resulting trusts 157 Chapter 11: Constructive trusts, proprietary estoppel and protective trusts 169 Chapter 12: Trusts and the home 185 Chapter 13: Charitable trusts 207 Chapter 14: Failure of charitable gifts: administration of charities 229 Chapter 15: Non-charitable purpose trusts 241 v . EOEA01.qxd 6/20/06 8:52 AM Page vi Brief contents Part Four TRUSTEESHIP AND BREACH OF TRUST 253 Chapter 16: Trusteeship: appointment, retirement, removal and control. Fiduciary nature of trusteeship 255 Chapter 17: Duties of trustees 271 Chapter 18: Powers of trustees 283 Chapter 19: Variation of trusts 293 Chapter 20: Breach of trust 305 Part Five THE FLAVOUR OF EQUITY 323 Chapter 21: The equitable maxims 325 Chapter 22: The future of equity 329 APPENDICES 335 Appendix 1: Answering examination questions in Equity and Trusts 337 Appendix 2: Suggested points for inclusion in answers at the end of chapters 339 Appendix 3: Hints on answering exam questions on particular topics 343 Bibliography 347 Index 351 vi . EOEA01.qxd 6/20/06 8:52 AM Page vii Full contents Guided tour xiv Preface xvi Table of cases xviii Table of statutes xxxv Abbreviations used when referring to judges xxxix Glossary of terms xl Part One EQUITY: GENERAL PRINCIPLES 1 Nature of equity 3 Introduction 3 An introduction to equity today – a case study 3 Equity and discretion 5 A definition of equity? 5 Early development of equity 8 Later development of equity 11 Equity into the modern era 12 Equity today 14 Conclusion 18 Further reading 18 Chapter summary 19 Question 19 2 Equitable remedies 21 Introduction 21 Injunctions 21 Equitable damages 35 Rescission 37 Rectification 38 Further reading 39 Chapter summary 39 Question 40 vii . EOEA01.qxd 6/20/06 8:52 AM Page viii Contents 3 Equitable doctrines 41 Introduction 41 Undue influence 41 Confidence 48 The equitable doctrines of conversion, reconversion, election, satisfaction and performance 52 Conversion 52 Election 54 Satisfaction 57 Performance 58 Further reading 59 Chapter summary 60 Question 60 Part Two TRUSTS: NATURE OF A TRUST AND CREATION OF EXPRESS TRUSTS 4 The concept of a trust 63 Introduction: definition of a trust 63 Essential features of a trust 63 Origin of the trust 64 Development of the trust 66 Later development of the trust 66 Main uses to which trusts are put today 67 The concept of equitable ownership 68 The main types of trust 72 Further reading 74 Chapter summary 74 Question 74 5 Creating the trust: the three certainties 75 Introduction 75 Reasons for these requirements 75 Certainty of intention 75 Certainty of subject matter 79 Certainty of objects (beneficiaries) 83 Further reading 91 Chapter summary 91 Question 92 6 Formalities 93 Introduction 93 Reasons for requiring formalities 93 viii . EOEA01.qxd 6/20/06 8:52 AM Page ix Contents Further reading 100 Chapter summary 100 Question 100 7 Completely and incompletely constituted trusts 101 Introduction 101 What does the term ‘completely constituted’ mean? 101 When is a trust completely constituted? 101 Incompletely constituted trusts: what is an incompletely constituted trust? 109 Exceptions to the rule that equity will not perfect an imperfect gift 115 Further reading 123 Chapter summary 124 Question 124 8 Secret and half-secret trusts: mutual wills 125 Introduction: secret and half-secret trusts 125 Requirements for the validity of a secret trust 126 Requirements for the validity of a half-secret trust 129 Basis on which equity enforces secret and half-secret trusts 132 Why are secret and half-secret
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