Types of Trusts and Property Flashcards
[ESSAY] Equity: Did the Judicature Act 1873 result in substantive fusion between law and equity?
YES:
• High Trees (Denning J)
• United Scientific Holdings v Burnley BC: ‘Conducive to erroneous conclusions’ wrt UK’s law development if rules of equity and common law are seen as separate
NO:
• Meagher, Gummow and Lehane: Substantive fusion is a fallacy
- Bank of Boston Connecticut v EU Grain and Shipping (Brandon LJ): Acts ‘did not alter and were not intended to alter the rights of parties’
- MCC Proceeds v Lehman Bros Int’l (Mummery LJ): Acts intended to effect ‘procedural improvements in the administration of law and equity in all courts’, not to change rights/rules
[ESSAY] If Equity were to clash with law, which would prevail?
Salt v Cooper (Sir George Jessel MR):
•Clashes are rare
• Equity will prevail
Re Hallett’s Estate (Sir George Jessel MR):
• Equity will prevail over common law
• Common law presumed to have been established from time immemorial
• Equity ‘established from time to time – altered, improved, and refined from time to time’
What types of trusts are we focussed on?
- Express Trust
- Resulting Trust
- Constructive Trust
Subgroups:
• Quistclose Trust
• Secret/Half-secret Trust
Express: Definition
- Created by settlor intentionally, irrelevant if he later changes mind
- Creation can be testamentary or inter vivos; for land, s53(1)(b) LPA 1925
- Beneficial interests can be fixed or discretionary
- Is overarching category of ‘person trusts’
RT: Definition
- Cannot be created by settlor with intent to benefit self [Air Jamaica]
- May be automatic or presumed RT
- Beneficial interests determined by settlor
- Usually for commercial purposes? [Stack v Dowden]
CT: Definition
- Settlor’s intention does not matter; CT is created by operation of law by courts
- Usually created where there is unconscionability, or common intention trusts
- Beneficial interests determined by the law
- Typically for personal affairs? [Stack v Dowden]
RT: Automatic RT
Trust was made for a specified beneficiary, but beneficiary has died/was not adequately specified
= Property ‘results’ back to settlor
RT: Presumed RT
Intention to make a RT is presumed, unless beneficiary is settlor’s spouse/child (where a gift will be presumed)
If beneficiary is separated wife/child, settlor expected to pay (‘man’s duty to maintain family’)
[ESSAY] What is the difference between trusts, contracts, and agencies?
Contract:
•Based on black letter law (except equitable remedies)
• 3rd party laws are restrictive
Agency:
• Based on fiduciary interest
• Not really about property-holding, more about acting on another’s behalf (e.g. Bank, agent, carries out financial instructions from client, principal)
Trust:
• Can be based on fiduciary interest
• Beneficiary can get proprietary interest in trusts [Re Kayford]
•About property-holding
Re Kayford
[TRUST = BENEFICIARY HAS PROPRIETARY INTEREST IN PROPERTY IF INTENTION TO CREATE TRUST IS FOUND]
Facts:
•Company set up bank account to pre-pay for ordered customers’ goods
• Before going into liquidation, attempted to take money from the bank account
Held:
• Money held on trust for customers: Customers had proprietary interest in the money
How is a trust created?
- S declares self to be T of property
(Needs valid declaration of trust) - S transfers property to T to hold on trust
(Needs valid declaration of trust + valid constitution of trust) - S appoints Ts for property in will
What happens when company goes insolvent while holding money/goods for customers?
1. Quistclose principle to test for trusts for loans [Barclays v Quistclose] [Twinsectra v Yardley] [Re EVTR] and for payment in exchange for goods [Cooper v PRG Powerhouse]
- CoSM for trusts of property
[e.g., OT Computers v First National Tricity Finance]
[Re London Wine]
Barclays Bank v Quistclose [1970]
[UNUSED LOAN MONEY FOR CERTAIN PURPOSE = HELD ON TRUST FOR CREDITOR]
Facts:
• Q lent R money to pay dividends to shareholders
•R went into liquidation without paying dividends
Held:
• Unused money returned to Q: Q never intended loan money to be at ‘free disposal’ of R, implicit that unused money to return to Q through a trust
Twinsectra v Yardley [2002]
[UNUSED LOAN MONEY FOR CERTAIN PURPOSE = HELD ON TRUST FOR CREDITOR BANK]
Facts:
• Money to acquire property
Re EVTR [1987]
[UNUSED LOAN MONEY FOR CERTAIN PURPOSE = HELD ON TRUST FOR CREDITOR BANK]
Facts:
•Money to buy new equipment
