EQUITY AND TRUSTS

Question 1

EQUITY RECAP

Answer 1

Tackles injustice caused by strict application of common law rules or unconscionable behaviour

‘King’s conscience’ Lord Chancellor Court of Chancery

Earl of Oxford’s Case (1615) the King (James I/VI) held that equity prevailed over common law

Judicature Acts 1873-75, judges could apply both common law and equity and equity prevails in case of conflict with common law.

Question 2

MAXIMS OF EQUITY

Answer 2

Guiding principles, not authorities
Examples (see Oxford Dictionary of Law):
* equity acts in personam;
* equity will not suffer a wrong without a remedy (i.e. equity will not allow a person whom it
considers as having a good claim to be denied the right to sue);
* equity follows the law (i.e. equity follows the rules of common law unless there is a good
reason to the contrary);
* equity looks at the intent not at the form (i.e. equity looks to the reality of what was
intended rather than the way in which it is expressed);
* he who seeks equity must do equity;
* he who comes to equity must come with clean hands;
* equality is equity;

Question 3

EQUITABLE REMEDIES

Answer 3

Equitable remedies are types of remedies granted by courts based on principles of fairness and justice, as opposed to remedies available in the legal system, which are usually monetary compensation or damages. Equitable remedies are discretionary and are typically sought when legal remedies are inadequate to address a particular situation. Some common equitable remedies include:

Injunctions: A court order that restrains a party from engaging in a certain act or compels them to perform a specific action. There are two main types: prohibitory injunctions (to stop someone from doing something) and mandatory injunctions (to compel someone to do something).

Specific Performance: An order requiring a party to fulfill its contractual obligations. This is often used in contracts involving unique items, real estate, or where monetary compensation would not be sufficient.

Rescission: The cancellation of a contract, restoring the parties to their pre-contractual positions. This is often granted in cases of fraud, misrepresentation, or undue influence.

Reformation: The modification or rewriting of a contract to accurately reflect the parties’ true intentions. This remedy is typically used when there is a mistake in the contract.

Accounting: An equitable remedy used to determine and enforce the true financial position between parties, especially in cases involving partnerships or trusts.

Declaratory Judgment: A court declaration of the rights and obligations of the parties involved in a dispute, without ordering any specific remedies. This is more about clarifying legal relationships.

Equitable remedies are discretionary, and their application depends on the unique circumstances of each case. Courts use these remedies to ensure fairness and justice when monetary compensation alone may not be sufficient to address the harm or breach of rights.

Question 4

TRUSTS: THE EPITOME OF AN EQUITABLE REMEDY

Answer 4

a trust refers to a legal arrangement where one party, known as the “settlor” or “grantor,” transfers assets to another party, known as the “trustee.” The trustee holds and manages these assets for the benefit of a third party, known as the “beneficiary” or “cestui que trust.” The trust is created through a legal document called a trust deed or agreement.
Two types of trust:
Express
Implied

Question 5

EXPRESS TRUSTS

Answer 5

The settlor expressly transfers legal title of the asset to the
trustee who manages it for the benefit of the beneficiary.
Can be public or private.
They can be inter vivos (made during lifetime of settlor) or
testamentary (through settlor’s will, taking effect upon death).
They can be fixed or discretionary, bare or protective.

Question 6

IMPLIED TRUSTS

Answer 6

Trusts which are not expressly created.
Statutory trusts: ex under the Administration of Estates Act 1925
Resulting trusts: where there has been a failure to validly create a trust or
property is voluntary transferred to another or purchased in the name of
another.
Constructive trusts: based on the presumed intention of the parties.
For
example where it would be unconscionable for one person to deny that another
person has an interest in the property

Question 7

CERTAINTIES

Answer 7

Every trust must have:
Certainty of intention
Certainty of subject matter – property and beneficial
interests
Certainty of objects - beneficiaries (except charitable trusts)