Text, Cases and Materials on Equity and Trusts
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TEXT, CASES AND MATERIALS ON EQUITY AND TRUSTS Fourth Edition Text, Cases and Materials on Equity and Trusts has been considerably revised to broaden the focus of the text in line with most LLB core courses to encompass equity, remedies and injunctions and to take account of recent major statutory and case law developments. The new edition features increased pedagogical support to outline key points and principles and improve navigation; ‘notes’ to encourage students to reflect on areas of complexity or controversy; and self-test questions to consolidate learning at the end of each chapter. New to this edition: • Detailed examination of The Civil Partnership Act 2004 and the Charities Act 2006. • Important case law developments such as Stack v Dowden (constructive trusts and family assets), Oxley v Hiscock (quantification of family assets), Barlow Clowes v Eurotrust (review of the test for dishonesty), Abou-Ramah v Abacha (dishonest assistance and change of position defence), AG for Zambia v Meer Care & Desai (review of the test for dishonesty), Re Horley Town Football Club (gifts to unincorporated association), Re Loftus (defences of limitation, estoppel and laches), Templeton Insurance v Penningtons Solicitors (Quistclose trust and damages), Sempra Metals Ltd v HM Comm of Inland Revenue (compound interest on restitution claims) and many more. • New chapters on the equitable remedies of specific performance, injunctions, rectification, rescission and account. • Now incorporates extracts from the Law Commission’s Reports and consultation papers on ‘Sharing Homes’ and ‘Trustee Exemption Clauses’ as well as key academic literature and debates. The structure and style of previous editions have been retained, with an emphasis on introduc- tory text and case extracts of sufficient length to allow students to develop analytical and critical skills in reading legal judgments. Substantial author commentary helps the text give the flow, coherence and direction of a textbook while providing the reader with a wide range of primary and secondary material from a variety of sources. A supporting companion website provides biannual updates to the cases and legislation discussed within the text; answers to the questions contained within the text; and sample essay questions. Mr Mohamed Ramjohn LLB, LLM, CIOT, JP is a Principal Lecturer in Law at Thames Valley University and a Justice of the Peace at Brent Magistrates’ Court. He has served as external examiner for the Bar Council and Coventry University. He is the author of nine student books on The Law of Trusts and Revenue Law and has published a wide selection of articles on Equity and Evidence. TEXT, CASES AND MATERIALS ON EQUITY AND TRUSTS Fourth Edition Mohamed Ramjohn First published in Great Britain in 1995 by Cavendish Publishing Limited, The Glass House, Wharton Street, London WC1X 9PX Fourth edition published 2008 by Routledge-Cavendish 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2008. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” © 1995, 1998, 2004, 2008 Mohamed Ramjohn All rights reserved. No part of this book may be reprinted or reproduced or utilized 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. 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 Ramjohn, Mohamed. Cases and materials on equity and trusts / Mohamed Ramjohn.—4th ed. p. cm. Simultaneously published in the USA and Canada. Includes bibliographical references and index. 1. Equity—England—Cases. 2. Trusts and trustees—England—Cases. 3. Equity—Wales—Cases. 4. Trusts and trustees—Wales—Cases. I. Title. II. Title: Equity and trusts. KD1480.A7R36 2008 346.4205′9—dc22 2007047166 ISBN 0-203-88590-2 Master e-book ISBN ISBN13: 978–0–415–44293–0 (hbk) ISBN10: 0–415–44293–1 ISBN13: 978–0–415–44294–7 (pbk) ISBN10: 0–415–44294–X CONTENTS Preface to fourth edition xi Acknowledgments xiii Table of Cases xv Table of Statutes xxxvii Table of Statutory Instruments xlii Table of European Legislation xlii 1 HISTORICAL OUTLINES OF EQUITY 1 Introduction 1 Contributions of equity 1 Further reading 4 2 TRUST CONCEPT 5 Introduction 5 Definition 5 Characteristics of a trust 6 Classification of trusts 8 Reasons for the creation of express trusts 11 Further reading 13 3 EXPRESS PRIVATE TRUSTS AND FORMALITIES 15 Introduction 15 Modes of creating an express trust 15 Formalities and s 53(1)(c) of the Law of Property Act 1925 20 The declaration of trusts and formalities 35 The three certainties test 39 Further reading 56 4 CONSTITUTION AND EFFECT OF AN EXPRESS TRUST 57 Introduction 57 Constitution of a trust 57 Effect of a perfect trust 65 Effect of an imperfect trust 66 Imperfect trusts by deeds 69 Further reading 75 5 EXCEPTIONS TO THE RULE THAT EQUITY WILL NOT PERFECT AN IMPERFECT GIFT 77 Introduction 77 The rule in Strong v Bird 77 vi Text, Cases and Materials on Equity and Trusts Donatio mortis causa (deathbed gifts) 80 Proprietary estoppel 86 Further reading 90 6 DISCRETIONARY TRUSTS 91 Introduction 91 Discretionary trusts and mere powers 91 The given postulant test 105 Interests of objects under discretionary trusts 122 Further reading 125 7 PROTECTIVE TRUSTS 127 Introduction 127 Discretionary trusts 127 Determinable interests 127 Protective trusts under s 33 of the Trustee Act 1925 129 Voidable trusts 133 Further reading 135 8 RESULTING TRUSTS 137 Introduction 137 Axiomatic 137 Automatic resulting trusts 138 Dissolution of unincorporated associations 150 Presumed resulting trust 161 Further reading 179 9 CONSTRUCTIVE TRUSTS: CONFLICT OF DUTY AND INTEREST 181 Introduction 181 Categories of constructive trusts 181 Conflict of duty and interest 185 Contracts for the sale of land 221 Equity will not allow a statute to be used as an engine for fraud 222 Further reading 223 10 CONSTRUCTIVE TRUSTS: THE FAMILY HOME 225 Introduction 225 Proprietary rights in the family home 225 Date of valuation 261 Realisation of the asset 262 Bankruptcy 265 Further reading 266 Contents vii 11 CONSTRUCTIVE TRUSTS: STRANGERS AS CONSTRUCTIVE TRUSTEES 269 Introduction 269 Liability of strangers 269 Knowingly receiving trust property 273 Accessory liability (dishonest assistance) 281 Further reading 307 12 SECRET TRUSTS AND MUTUAL WILLS 309 Introduction 309 Secret trusts 309 Fully secret trusts 312 Half secret trusts 318 Additions to secret trusts 322 Controversial issues involving secret trusts 323 Mutual wills 331 Further reading 338 13 PRIVATE PURPOSE TRUSTS 339 Introduction 339 Private purpose trusts 339 Reasons for failure 340 Exceptions to the Astor principle 344 The Denley approach 346 Gifts to unincorporated associations 347 The mandate or agency principle 356 Further reading 357 14 CHARITABLE TRUSTS: PRIVILEGES 359 Introduction 359 Charitable privileges 359 Certainty of objects 360 Rule against perpetuities 365 The cy-près doctrine 367 Fiscal privileges 368 Varieties of forms of charitable institutions 370 Further reading 371 15 CHARITABLE TRUSTS: DEFINITION AND PUBLIC BENEFIT 373 Introduction 373 Registration 373 Definition 373 viii Text, Cases and Materials on Equity and Trusts Public benefit requirement 377 Further reading 388 16 CHARITABLE TRUSTS: CLASSIFICATION OF CHARITABLE PURPOSES 389 Introduction 389 Charities Act 2006 389 The relief of poverty 391 The advancement of education 394 The advancement of religion 398 Other purposes beneficial to the community 402 Charitable activities outside the United Kingdom 416 Further reading 418 17 CHARITABLE TRUSTS: CY-PRÈS DOCTRINE 419 Introduction 419 The cy-près doctrine 419 Impossibility 419 General charitable intention 427 The Charity Commission 446 Further reading 448 18 APPOINTMENT, RETIREMENT AND REMOVAL OF TRUSTEES 449 Introduction 449 Appointment 449 Retirement 458 Removal of trustees 459 Further reading 461 19 DUTIES AND POWERS OF TRUSTEES 463 Introduction 463 Trustees’ duties 463 Exclusion clauses 477 Powers of investment 492 Powers of maintenance and advancement 496 Powers of maintenance 497 Powers of advancement 503 Powers of sale 508 Powers to partition land under a trust of land 510 Power to insure the trust property 511 Power to give receipts 511 Power to claim reimbursement 511 Further reading 517 Contents ix 20 VARIATION OF TRUSTS 519 Introduction 519 Variation of trusts 519 Management and administration 520 Variation of beneficial interests 523 The Variation of Trusts Act 1958 528 Further reading 537 21 BREACH OF TRUST 539 Introduction 539 Breach of trust 539 Contribution and indemnity between trustees 554 Defences to a claim for breach of trust 559 Proprietary remedies (tracing or claims in rem) 575 Further reading 612 22 INJUNCTIONS 613 Introduction 613 Procedure 613 Established principles 614 Types of injunctions 618 Further reading 647 23 SPECIFIC PERFORMANCE 649 Introduction 649 Validity of the contract 649 Principles underpinning specific performance 650 Discretionary nature of the remedy 653 Contracts requiring supervision 656 Damages in lieu of specific performance 660 Further reading 662 24 RECTIFICATION 663 Introduction 663 Jurisdiction 663 Further reading 667 25 RESCISSION 669 Introduction 669 Grounds for rescission 669 Bars to rescission 677 Further reading 677 x Text, Cases and Materials on Equity and Trusts 26 ACCOUNT 679 Introduction 679 Account on the basis of wilful default 679 Defences to an action for account 680 Further reading 680 Index 681 PREFACE TO FOURTH EDITION The three years that have elapsed since the publication of the last edition of this book have been a period of rapid development in the law of trusts.