BPP GDL Study Notes: Ch 4 - Formalities Flashcards

1
Q

Do trusts of pure personalty need to be declared formally or informally? What does this mean on a practical level?

A

Informally. This means they can be declared orally or by conduct.

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2
Q

What case makes clear that there are no formalities for declaring a trust of pure personalty?

A

Paul v Constance

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3
Q

What are the four functions of formalities?

A

1) cautionary function
2) protective function
3) evidentiary function (ie evidence of creation of trust and its details)
4) channelling function (ie standardising functions effectively)

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4
Q

What constituted the declaration of trust in Paul v Constance?

A
  • numerous discussion between Mrs. Paul and Mr. Constance

- Mr. Constance’s repeated declarations that the money in his sole account was intended to be shared betweeen them.

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5
Q

What governs the formalities for creating a trust of land?

A

s53 (1)(b) LPA 1925

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6
Q

What are the formalities for creating a trust of land?

A
  • needs to be evidenced in writing

- needs to be signed by the settlor

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7
Q

What happens if the formalities for creating a trust of land are not met?

A

the declaration of trust is “unenforceable”.

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8
Q

What controls the formalities around implied, resulting and constructing trusts? What are those formalities?

A
  • s53 (2) LPA 1925.

- requirements of s53 (1) do not affect the creation of these trusts

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9
Q

Give a case that evidences the formalities surrounding implied, resulting and constructive trusts.

A

Hidgson v Marks. No formalities required for their creation

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10
Q

What governs the disposition of pre-existing (subsisting) equitable interests?

A

S 53 (1) (c) LPA 1925

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11
Q

To what types of property does s53(1)(c) LPA 1925 apply?

A

All property

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12
Q

What are the formality requirements for a disposition of a subsisting equitable interest?

A
  • in writing
  • signed by person disposing of the interest
  • OR signed by his agent who has been authorised in writing.
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13
Q

What does “disposition” mean? Give some examples.

A
  • any act by which a person ceases to own the item of property in question
  • eg:
  • sale
  • gift
  • assignment
  • declaration of trust
    etc
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14
Q

What is the key case where a beneficiary directed trustees to hold property on trust for another? What was the intended purpose?

A
  • Grey v IRC
  • attempting to avoid stamp duty (which is leviable upon documents transferring property, and was levied on a percentage of the value transferred)
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15
Q

What was the conclusion in Grey v IRC?

A
  • an oral direction was an attempted disposition of subsisting equitable interests
  • oral directions do not comply with s 53 (1) (c) and therefore are invalid dispositions.
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16
Q

What rule arises from the Vandervell v IRC case?

A
  • where absolutely entitled beneficiary instructs the trustee to transfer legal title to a third party,
  • if B intends to also pass equitable title then equitable and legal titles pass together
  • this is not a disposition and s 53 (1) (c) does not apply
17
Q

What rule came from Neville v Wilson?

A
  • contracts for the sale of unique items give the buyer the right to exercise specific performance and force the sale
  • this creates a constructive trust in favour of the transferee
  • therefore governed by s52 (2) not requirements of s53 (1) (c)
18
Q

How can a beneficiary create a sub trust that is not subject to s 53 (1) (c)?

A
  • if the B maintains some active duties in the sub trust (eg if the sub trust is discretionary)
  • or if B declares a sub trust of only part of his interest (eg to c for life, remainder to D)
  • in this circumstances B is creating a new trust and therefore is not bound.