Equity & Trusts Law Notes

https://www.uninote.co.uk/vendor/kings-llb-student/ All rights reserved to the author. Equity & Trusts Law Notes Part 1 out of 2 [126 pages] Contents: Equity: Equitable Remedies, Breach of Confidence Intro to Trusts: Distinctions, Trusts and Powers The Three Certainties: Certainty of Intention, Certainty of Subject Matter, Certainty of Objects + Sample tutorial answers Trusts for a Purpose: Charitable Purpose Trusts, Private Purpose Trusts, Modern Discretionary Trusts The Beneficiary’s Interest Express Trusts: Formalities, Constitution, Express Trustees Termination and Variation Resulting Trusts + essay preparation 1 https://www.uninote.co.uk/vendor/kings-llb-student/ All rights reserved to the author. Equity Maitland (1909): Equity is the body of law that used to be administered by the court of Chancery but is now administered by courts that administer both common law and equity. Equity is defined in its historical terms. The Judicature Acts 1873 and 1875 fundamentally changed the structure of courts in England. Before the 19th century, there were many different courts, which then became reduced to only the High Court of Justice (one courts with jurisdiction over everything but had difference divisions to specialise in different things) and the Court of Appeal. The Supreme Court of Judicature Act 1873 said that the court can administer both law and equity, rather than split between the Queen’s Bench division and the courts of Chancery. This was copied throughout the common law world. The Senior Courts Act 1981 s 49 provided that wherever there is any conflict between common law and equity, “the rules of equity shall prevail”. This is what allowed equity to survive as a body of law. The meaning of common law: • After unifying England and, judges from London travelled around the country to administer common law, rather than leaving it to local courts who had variations in the rules. This produced a higher quality of law, more justice through circuit court. • What was administered by QB as opposed to Chancery. Both judge-made law, today decided by the same judge. • Judge-made law (common law + equity) as opposed to enacted law made by Parliament. • When dealing with inter-jurisdictional disputes, common law system = primarily judge- made with overlay of statutes; civil law system = based on civil code and influenced by Roman Law, e.g. Germany, France, Mexico, Quebec, Japan. Common law can do two things for C when they make a judgment against D: 1) Order to pay you money, e.g. damages, pay debts 2) Order for possession of something e.g. land, goods Equity is important today mainly because of the large range of attractive remedies available. Many people view equity as a supplement to common law. Common law does all the basic work to protect fundamental values. However, equity later developed its own substantive rights. Breach of confidence is a freestanding equitable right. Equitable maxim: come with clean hands, cannot have bad behaviour yourself. It would inform the way the discretion is exercised, which is different from common law. Equity generally tries not to conflict with common law, and respects common law decisions. Ex: A is entitled to possession at law, B is entitled to possession in equity. Equity does not overturn common law. A is still entitled to possession at law but is compelled by equity to use that legal right of possession for B’s interests and benefit. 2 https://www.uninote.co.uk/vendor/kings-llb-student/ All rights reserved to the author. Special features of equity - Conscience: You have your legal rights, but it would be unconscionable for you to use them in a certain way, we insist you obey your conscience. Chancellor was ecclesiastic and learned in Roman law, so brought the notion of conscience right at the inception of this body of law → people acting consistently in good conscience. However, the modern pluralistic society has multiple opinions on conscionability. - Discretion: This is primarily an exercise of judicial discretion. There is no automatic entitlement to awards in equity. This is where the discretion on whether to award or not comes in. But the law has settled down and become more certain; a systemic body of rules now exists. Not absolute discretion because that would be unreliable, court must take into account various factors → very structured discretion. - Acting in personam: Equity acts against the person, takes control of D and tells them they must do something. Fusion Do courts administer common law and equity as separate bodies of law or as a single body of law? Does it matter whether a claim or right etc. is legal or equitable? - Remedies available: The extent of the remedies available. Selling land means can get damages in common law, but also enforce rights. - Formality requirements: Often if you want to make a transaction, there are hoops that need to be jumped through to make it valid. Creating an equitable interest can be done with less formality, equity allows for rights to exist without the formality. - Durability of rights: In priority disputes, legal property rights are much more durable and protected than equitable property rights. The idea is that if you can create rights informally, it is not a bad thing if they are less likely to bind people who are unaware of their existence. Classification of rights: • Personal + legal right = Owed £100 in debt, can sue against a particular person in common law court. • Proprietary + legal right = Right to possession of house can be enforced generally against others in law. • Personal + equitable right = Duties of confidence only exist in equity; right to enforce against trustees → only enforceable in courts of equity. • Proprietary + equitable rights = Rights in rem relating to things which are only enforceable in equity, e.g. freehold covenants; third party recipients of trust property. 3 https://www.uninote.co.uk/vendor/kings-llb-student/ All rights reserved to the author. Equitable Remedies Rights vs remedies Breach = legal right to damages Remedies solve problems that may not be wrongs, e.g. accidentally pay money by mistake; there is no wrong, but law gives a remedy to solve the problem. Primary vs secondary rights: Primary rights = e.g. to get salary paid in your job, rights that are created other than by wrongs such as created by consent or by statute. Secondary rights are generated by wrongs and arise on the breach of a primary right, e.g. contract to have fence painted, breach of the primary right to have your fence painted gives rise to a secondary right to damages. Notion of unjust enrichment like mistaken payment lie outside this. Court orders (judicial remedy): court giving effect to a right, e.g. What can you do about a debt you are owed? Go to court, sue, get judgment. Before judgment, the relationship was of creditor and debtor. After getting judgment, C becomes a judgment creditor and can enforce the judgment. How the debt arose e.g. from contract, statute etc. is replaced by the judgment and no one in any court or jurisdiction can look behind the judgment unless the judgment is overturned. After judgment, civil enforcement officers enforce judgment. Court orders are mostly coercive orders making you do something. Non-coercive = just court telling them what they should be doing, declare an existence of rights rather than dictate what exactly must be done, e.g. a declaration is common in trusts. Self-help remedies: As long as you can cure the problem without breaching the peace, can give yourself a remedy. The main thing that the common law can do is order people to pay money. Usual remedy in breach of contract = payment of debt, not damages → Contractual debt compels you to perform the contract. - Most orders to pay money are just enforcing debts. - Law can order people to give up possessions. - Can also declare existence or non-existence or rights and duties. Equity can do a wider, different range of things, this is why it is attractive to people. Equitable remedies are not available in common law. Account → One of equity’s most powerful remedies. Account for what D has done with the stuff, render the account, then we adjust the account and make D personally liable for the difference. D is often a trustee, partner or company officer. Equitable compensation → For a long time, equity could not award damages, but awarded this sometimes. 4 https://www.uninote.co.uk/vendor/kings-llb-student/ All rights reserved to the author. Injunctions Powerful remedy to compel D to do/stop doing something, e.g. upholding a freehold covenant. Can either be prohibitive (D must stop doing something, most common form) or mandatory (order telling D to do something). Perpetual injunction = cannot do X ever. Interim/interlocutory = granted pending resolution of the dispute. C says, “This is going to go on for years, I will probably win in the end, but I will still be the loser unless you stop them.” An interim injunction can be made without notice if doing so would enable D to take steps to defeat the purpose of the injunction, e.g. taking assets out of the jurisdiction, or if no time before the threatened wrongful act. Quia timet injunction prevents infringements of C’s rights which are threatened but have not yet occurred. C must show a very strong probability of future infringement + ensuing damage will be of a most serious nature. American Cyanamid v Ethicon IP case about patent for stitches. AC alleged E violated AC’s patent to an “absorbable surgical suture”. They said if they are right and the others are wrong, it will take years and will lose market share as D continues.

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