Equity Flashcards
Paul v Constance
EXPRESS TRUST
Mr. Constance got an ACC payout from a work related injury. The money was put into a new bank account he set up with his de facto partner (Mrs Paul) in which further transactions of “their bingo winnings” were also put in. The account was solely under Mr. Constance’s name and upon his death the money was accumulated into his estate which went to his wife. Mrs Paul claims that the money in the account was in trust and should be hers.
Judge held there was an express trust with-out being able to pin-point a specific moment of declaration.
Morrison Kent v Commerce Commission
Company was promoting an airshow and sells $491,000 worth of tickets to the public, but the airshow never happens and it goes bankrupt.
Held that the ticket sale profits were held in trust despite there being no expressly depicted trust. Court founded trust based on intention, as money was put aside from companies general expenses in a separate account.
Upholding rule that money held by a trustee is not accessible to their creditors.
Therefore the customers could not be refunded.
Jones v Lock
A failed gift cannot be inferred to be a trust as the intention was that of making a gift, not a trust.
Crampton Smith v Crampton Smith
RESULTING TRUST
Sisters puts brother’s land in her name.
Held that a resulting trust can be presumed because but for the brother paying for the land she would not have made any profit and had to property been registered in his name he would have got the profits.
When someone else is buying a property with your money in their name, and is cannot be proven to be a loan or gift, then you can get the benefits.
Buffery v Buffery
RESULTING TRUST
Mr Buffery’s wife stole money from employer and court made orders against the property they jointly owned. To ensure he was not left homeless for the wrongful act of his wife, Mr Buffery sought to claim for a resulting trust (he provided all the money for the house and wives only contribution was signing on the mortgage giving her just 12% interest).
Held that resulting trust can be created.
Mr. B has to prove it was not an absolute gift because if it was then she gets to keep it. Evidence showed that he intended to have ownership of his interests in the property because they had independent superannuation funds.
Presumption that where there is unequal contribution to a joint purchase property the person who made the larger contribution would have a larger proportional of beneficial interest.
Gillies v Keogh
CONSTRUCTIVE TRUST
De facto relationship breakdown who were tenants in common in a property. Mr. K claimed full ownership of the property arguing he had contributed more money towards it purchase. Mrs. G claimed she was entitled to a share of the property and a constructive trust should be imposed over property due to her contribution to its purchase and contributing to its upkeep.
Held that constructive trust can be imposed because Mrs G made significant contributions to the purchase and upkeep of the property.
BUT **Constructive Trusts now do not apply to marital relationships in NZ!!
Lankow v Rose
CONSTRUCTIVE TRUST
Claimant seeks a beneficial interest in return for her contributions in and to the former de facto relationship.
Held that constructive trust can be imposed. Set out constructive trust can be imposed where:
(1) Contributions, direct or indirect, to the property in question
(2) The expectation of an interest therein,
(3) That such expectation is reasonable
(4) focus on the reasonableness of requiring the owner to yield an interest
If the claimant can prove each of these points, equity will regard it unconscionable for the defendant to deny the claimants interest and a constructive trust will be imposed.
Contributions need not to be money, they may be services or in any other respect.
Thomson v Allen
BREACH OF TRUSTEE DUTIES
Thomson left a Will which allowed Allen as executors and trustees to take over his yacht business for time see fit, all profits going to the trust. Allen wanted out to set up a competing yacht business.
Question of law was if Mr. Allen could set up a competing business now that he was a trustee and even though he was one of the beneficiaries? Held no.
Court finds that a competing yacht agency would be in direct conflict of interest with the original business, which would not be acting in the best interests of the trust.
Bray v Ford = As a trustee your not allowed to put yourself in a position where duty’s and interest conflict.
Patchett v Williams
BREACH OF TRUSTEE DUTIES
P who is a trustee wants to purchase a trust asset (farm). Two beneficiaries opposed because they say what P is willing to pay is an undervalue of the true worth of the farm and the sale is in conflict of interest with P as trustee. Clause 6(b) of the trust deed authorized the trustees to sell land at such a price as they in their absolute discretion think fit.
Held P cannot purchase the farm because sale at that price is not in interest of the beneficiaries.
Chirnside v Fay
PERSONAL REMEDIES
C had owned F fiduciary duties, which he had broken by secretly leaving the joint venture and developing the site by himself, making a substantial profit for himself.
Held that it would be unreasonable not to compensate for C exceptional efforts put in otherwise F would be getting a lot more money that he ever would have had the breach not occurred.
Held that a trustee can be paid for his efforts and skill but sparing approach to make sure not encouraging bad behavior, but doesn’t always mean trustee will end up with nothing.
Spencer v Spence
PERSONAL REMEDIES
Family trust included children as discretionary beneficiaries, but in additional there was a specific clause for a payment of $200 per week for Roberts disability maintenance. The trust had “no net income” and weekly payments stopped being made to Robert.
There was many things the trustee could have done to ensure there was money in the trust fund and thus allow payments to continue: never chased up debts, paid excess money for management fees, and failed to collect rent.
Held the trustees breached duty to act honesty and in good faith and beneficiaries had successful claim in award for damages (the sum of money lost due to breaches).
Foskett v McKeown
TRACING
M used trust money used to pay premiums on life insurance policy. M then committed suicide and insurance company paid out over 1 million pounds to his children. F argued they should have a share in the insurance pay out.
held that F can trace their fund through the pay out.
held that mixed funds belong proportionately to those who contributed.
Re Hallett’s approach:
TRACING
Presumption of honestly that trustee will use own money first.
Royal Brunei Airlines v Tan
DISHONEST ASSISTANCE
Travel agency (trustee) was to hold customers money on trust and then pay the airline company (beneficiary). Mr. Tan (third party) was the managing director of the travel agency. The money that was supposed to be held on trust for the airline company was paid into an ordinary account. Mr. Tan used the money for business expenses and did not pay the airline.
Held that Mr Tan is personally liable for dishonest assistance.
There was a breach of trust by travel agency which was permitted by the company director Mr. Tan In an act of dishonest conduct.
Dishonesty is an objective standard.
It is the state of mind of the third party that matters, not the state of mind of the trustee. The trustee will be liable for any breach even if acted innocently, unless excused by an exemption clause in the trust deed.
Westpac NZ Ltd v Map & Associates Ltd
Equity equates wilful blindness with actual knowledge.
