Essential text for students on Equity and trusts courses as part of LLB and joint honours law degrees, and CPE/Grad Dip (postgraduate conversion to law course).
Table of Contents
Guided Tour Preface Acknowledgements Table of cases Table of statutes PART 1 1 Introduction to equity Learning objectives Setting the scene: Equity and role of unconscionability 1. Introduction 2. The common law i. The inadequacy of the writ system ii. The inadequacy of an appropriate remedy 3. The origins and development of equity i. The nature of equity in the early days ii. The Lord Chancellor iii. Disputes in the early Court of Chancery 4. Equity and the role of conscience 5. Unconscionability, fairness and the role of context 6. The Judicature Acts 1873 and the relationship between law and equity 7. Fusion fallacy 8. Equitable maxims i. Equity will not suffer a wrong without a remedy ii. Equity follows the law iii. Equity acts in personam iv. He who comes to equity must come with clean hands v. Equity looks to substance as opposed to form vi. Equity regards that as done which ought to be done vii. He who seeks equity must do equity viii. Equity imputes an intention to fulfil an obligation ix. Delay defeats equity x. Where equities are equal the first in time prevails xi. Where the equities are equal the law prevails xii. Where there is a conflict between law and equity -- equity prevails 9. Nature of proprietary rights in law and in equity i. Legal proprietary rights: rights in rem ii. Equitable property rights: rights in personam or rights in rem? iii. Equitable rights and the doctrine of notice 10. Equity and social reform i. The property rights of married women ii. Freedom of testation 11. Conclusions Further reading Moot points 2. The trust concept Learning objectives Setting the scene: Hambro and Others v The Duke of Marlborough and Others  3 WLR 341 1. Introduction 2. Definition 3. The key features of the trust i. The settler ii. The trustee(s) iii. The beneficiary iv. The trust property v. The trust instrument vi. The legal and equitable interest vii. A judicial assessment of the nature of a trust 4. Trust as a product of fragmentation of ownership 5. Historical foundations of the trust 6. Trusts and law reform 7. Classification of trusts i. Express trusts ii. Fixed and discretionary trusts iii. Bare and active trusts iv. Protective trusts v. Secret trusts vi. Implied trusts 8. The contemporary significance of trusts 9. Some key players and concepts in the trust relationship 10. Conclusion Further reading Moot points 3. The trust distinguished from other legal concepts Learning objectives Setting the scene: Re Mills  1 Ch. 654 1. Introduction 2. Contract i. The element of a bargain ii. A personal relationship iii. A promise to create a trust or settle property for the benefit of another 3. Agency 4. Bailment 5. Interests under wills and administrations i. Personal representatives ii. The interest of a legatee or devisee 6. Debts 7. Powers: general observations i. Powers in general ii. Powers of appointment iii. Reasons for creating powers of appointment 8. Different types of powers of appointment i. General, special and hybrid powers ii. Bare powers and fiduciary powers iii. Trust powers and mere powers 9. Exercising a power of appointment 10. Excessive or fraudulent exercise of a power 11. Consequences of note exercising a power of appointment i. Resulting trust for the donor or his estate ii. Gift over in default of appointment iii. Gift in favour of all of the objects or the class 12. Conclusion Further reading Case study Moot points 4. The three certainties Learning objectives Setting the scene: Mcphail v Doulton  AC 424 1. Introduction 2. The effect of uncertainty 3. The rationale for certainty 4. Certainty of intention i. Equity's concern is with substance not form ii. Precatory words iii. The effect of reliance on precedent iv. Curing uncertainty with extrinsic evidence v. Sham intentions 5. Certainty of subject matter i. What is the subject matter of the trust? ii. What is the precise beneficial interest of the beneficiary? iii. Unascertained property 6. Certainty of objects: general observations 7. The constituent elements of certainty of objects i. Conceptual certainty ii. Evidential certainty 8. The test of certainty of objects for a fixed trust i. Conceptual certainty ii. Evidential certainty iii. Ascertainability iv. Administrative workability 9. The test of certainty of objects for a discretionary trust i. The position pre-Mcphail v Doulton ii. The position post-Mcphail v Doulton 10. [A-head missing?] i. Conceptual certainty ii. Evidential uncertainty iii. Ascertainability iv. Administrative workability v. Gifts subject to condition precedent vi. Curing conceptual uncertainty 11. Conclusion Further reading Case studies Moot points 5. Formalities Learning objectives Setting the scene: The Vandervell Saga 1958--1965 1. Introduction 2. Testamentary trusts 3. Inter-vivos wills 4. Declarations of trust i. Trusts of pure personality ii. Trusts of land and interests therein iii. The effect of non-compliance with s.53(1)(b) iv. What trust is being enforced if s.53 is not complied with? v. Declaration of sub-trust 5. Dispositions of equitable interests i. The ambit of section 53(1)(c) Law of Property Act 1925 ii. The context of the s.53(a)(c) case law iii. Assignment of an equitable interest iv. Direction by equitable owner to trustee to hold for another v. Direction by equitable owner to trustee to transfer the legal title to a third party vi. Declaration of new trusts with the consent of equitable owner vii. Specifically enforceable contract for the assignment of an equitable interest viii. Disclaimer 6. Conclusion Further reading Case studies Moot points 6. Constitution of trusts Learning objectives Setting the scene: Pennington v Waine  1 WLR 2075 1. Introduction i. Completely constituted and incompletely constituted trusts 2. The Milroy v Lord principles of conferring a benefit on a donee 3. Declaration of trust 4. Transfer to trustees i. There must be an actual transfer of the property to the trustee ii. It matters not that the intended trust property arrives in the hands of the trustee in some other capacity iii. What is the legal position where it is an act of a third party which is required to perfect the transfer? 5. Equity will not strive officiously to defeat a gift i. Settlor declares a trust being one of a number of trustees ii. Where it would be unconscionable to recall the gift 6. Enforcing a incompletely constituted trust i. Has the beneficiary given consideration at common law? ii. Marriage consideration iii. Contract (Rights of Third Parties) Act 1999 iv. Consideration by use of a deed v. Settlor covenants with the trustee to settle property on trust vi. Completely constituted trust of a covenant (promise) in favour of a beneficiary vii. Specific performance of a covenant using the principle of Beswick v Beswick 7. Exceptions to the rule that equity will not assist a volunteer i. The rule in Strong v Bird ii. Donatio mortis causa 8. Proprietary estoppel 9. Conclusion Further reading Case study Moot points 7. Secret trusts and mutual wills Learning objectives Setting the scene: Re Boyes (1884) 26 Ch D 531 1. Introduction 2. Succession i. Intestate succession ii. Testate succession iii. Vesting the deceased property in the personal representatives 3. Definition of a secret trust 4. The theoretical justification of secret trusts i. Fron for the enforcement of secret trusts ii. Secret trusts dehor the will 5. Requirements of a fully secret trust i. Intention to create a trust ii. Communication of the secret trust iii. Acceptance of the secret trust 6. Requirements for a half-secret trust 7. Predecease of the secret beneficiary 8. Predecease of the secret trustee 9. Can a secret trustee derive a benefit from the secret trust? 10. How are secret trusts classified? 11. Mutual wills i. There must an agreement not to revoke ii. It is not a pre-requisite that the surviving testator should take a benefit from the first testator's will iii. The imposition of a constructive trust in favour of a beneficiary iv. The extent of a beneficial interest 12. Conclusion Further reading Case study Moot points 8. The beneficiary principle Learning objectives Setting the scene: Re Astor's Settlement Trusts  Ch 534 1. Introduction 2. Non-charitable purpose trusts and charitable trusts 3. Is the trust a purpose trust? 4. The beneficiary principle stated 5. Rationale behind the principle i. Uncertainty ii. Purpose trusts conflict with the perpetuity rules iii. Excessive delegation of testamentary power 6. The Re Denley Principle: A situation outside the beneficiary principle i. The principle stated ii. Conceptual problems with the principle iii. The principle endorsed 7. The anomalous cases i. Trusts for the erection and maintenance of graves and monuments ii. Trusts for saying masses iii. Trusts for care and maintenance of specific animals iv. Miscellaneous cases 8. The construction of gifts to unincorporated associations i. Definition and problems of ownership of property ii. Gift to present members as co-owners iii. Trust for present members iv. Trust for present and future members applying Re Denley v. Contract holding theory 9. Reform 10. Conclusion Further reading Case study Moot points 9. Illegality and public policy Learning objectives Setting the scene: Blathwayt v Baron Cawley  AC 397 1. Introduction 2. Freedom of disposition and public policy 3. Trusts contrary to public policy i. Conditions precedent, conditions subsequent and determinable interests ii. Trust interfering with parental duties iii. Trusts in restraint of marriage iv. Capricious trusts 4. Illegality 5. Trusts which contravene the perpetuity rules 6. Trusts to safeguard property from creditors i. Transactions defrauding creditors ii. Bankruptcy provisions 7. Trusts defeating the rights of the family and dependants 8. Trusts defeating the rights of a spouse 9. The Law Commission's consultation paper 10. Conclusion Further reading Case study Moot points 10. Resulting trusts, part I: Nature of resulting trusts Learning objectives Setting the scene: When does a resulting trust arise? 1. Introduction 2. Theories explaining the imposition of a resulting trust 3. The 'beneficial vacuum theory' 4. Resulting trusts and a restitutionary justification 5. Resulting trusts and the role of intentions 6. Automatic and presumed resulting trusts 7. Westdeutsche: the prevailing view 8. Conclusion Further reading Moot points 11. Resulting trusts, part II: Imposing resulting trusts Learning objectives Setting the scene: Problems requiring a resulting trust solution 1. Introduction 2. Failure of the trust i. Failure to declare the beneficial interest ii. Subsequent failure of a trust iii. Failure due to non-compliance with a substantive or formal requirement 3. Resulting trusts and quistclose trusts 4. Unexhausted funds i. The maintenance of individuals ii. Disaster funds iii. The surplus funds of unincorporated associations iv. Pension fund surpluses 5. Voluntary conveyance in the name of another i. A voluntary conveyance of land in the name of another ii. A voluntary conveyance in the context of personal property 6. Purchase in the name of another 7. Rebutting the presumption of a resulting trust i. Evidence of a gift ii. The presumption of advancement 8. Rebutting the presumptions and evidential matters i. Evidence of illegality ii. Illegality giving rise to the presumption but not to its rebuttal iii. Illegality not carried out iv. Reform v. Resulting trusts in the family home 9. [A-head missing?] i. Purchase money resulting trusts ii. What contributions count? iii. Mortgage contributions iv. Indirect contributions v. Quantification vi. Differences between resulting and constructive trusts in the family context vii. Reform 10. Conclusion Further reading Case studies Moot points 12. Constructive trusts, part I: The nature of constructive trusts Learning objectives Setting the scene: Why do we impose constructive trusts? 1. Introduction 2. When will a constructive trust be imposed? 3. Institutional and remedial constructive trusts? 4. Institutional constructive trust 5. A remedial constructive trust 6. Does English law recognise a remedial constructive trust? 7. Consequences of the imposition of a constructive trust i. Proprietary and personal claims ii. Only a personal claim iii. The effect on third parties iv. The duties of the constructive trustee 8. Conclusion Further reading Moot points 13. Constructive trusts, part II: Imposing constructive trusts Learning objectives Setting the scene: Problems requiring a constructive trust solution 1. Introduction 2. Acquisition of property as a result of unlawful conduct i. Acquisition of property by killing ii. The Forfeiture Act 1982 iii. Law Commission reform iv. Theft v. Bribes vi. Fraud 3. Unauthorised profits gained by a fiduciary i. The principle stated ii. Examples of unauthorised profits iii. Proprietary or personal remedies? 4. Constructive trusts and the family home i. The common intention constructive trust ii. Requisites for the imposition of a common intention constructive trust iii. Express common intention iv. Implied common intention v. Detriment or change of position vi. Quantifying the beneficial interest under a common intention constructive trust vii. Constructive trusts, proprietary estoppel and resulting trusts viii. Criticism of the present law and law reform in the context of co-habitation 5. Miscellaneous situations giving rise to a constructive trust i. Specifically enforceable contract for the sale of property ii. Undertaking by purchaser to recognise the right of another iii. Failure to comply with formality requirements for interests in land iv. Secret trusts and mutual wills 6. Conclusion Further reading Case studies Moot points 14. Constructive trusts, part III: Imposing constructive trusts -- intermeddling with trust property Learning objectives Setting the scene: Royal Brunei v Tan  2 AC 378 1. Introduction 2. Nature of liability for knowing assistance 3. Requisites for liability for knowing assistance i. A breach of trust or fiduciary duty by someone other than the defendant ii. Assistance by the defendant iii. Dishonesty on the part of the stranger iv. The test of dishonesty in Royal Brunei v Tan v. The test of dishonesty in Twinsectra v Yardley vi. The test of dishonesty after Twinsectra v Yardley 4. Receipt of trust property in breach of trust 5. Significance of knowing receipt liability and requisites for liability i. Disposal of assets in breach of trust or fiduciary duty ii. Receipt of assets transferred in breach of trust or fiduciary duty iii. Knowledge iv. Strict liability? 6. Conclusion Further reading Case study 15. Introment, removal and retirement Learning objectives Setting the scene: Klug v Klug  2 Ch 67 1. Introduction 2. Capacity and numbers 3. Appointment of initial trustees 4. Appointment of new trustees i. Express power to appoint a new trustee ii. The statutory power in s.36 Trustee Act 1925 iii. The statutory power in s.41 Trustee Act 1925 iv. Appointment under the Trusts of Land and Appointment of Trustees Act 1996 5. The retirement of trustees 6. Removal of a trustee 7. Special types of trustees i. Public trustee ii. Judicial trustee iii. Trust corporations 8. Vesting of the trust property in trustees 9. Conducting the office of trusteeship 10. Control of trustees discretions i. Dispositive discretions ii. Administrative discretions 11. Do trustees need to give reasons? i. The right to inspect trust documents ii. Disclosure of the reasons for acting in a particular way 12. Conclusion Further reading Case study 16. Investment of trust funds Learning objectives Setting the scene: Nestle v National Westminster Bank plc  1 WLR 1260 1. Introduction 2. The duty of investment and the power of investment 3. The objectives of trust investment 4. Historical note and contemporary trends in trustee investment 5. Common law and statutory duties when investing i. The general duty of care in the Trustee Act 2000 ii. Balance the financial interests of all the beneficiaries iii. The duty not to have regard to non-financial considerations iv. Review of the trust investments 6. Express powers of investment i. The nature of an express power of investment ii. Interpreting express investment clauses iii. The meaning of investment 7. Statutory power of investment i. Background to the investment power in the Trustee Act 2000 ii. The general power of investment iii. Standard investment criteria iv. The need for advice v. Delegation of investment powers and asset management 8. Purchase of land as an investment 9. Mortgages of land as an investment 10. Enlargement of investment powers: the return of the Re Kolb Principle 11. The duty to act fairly between the beneficiaries i. The rule in Howe v Earl of Dartmouth: the duty to convert ii. The rule in Re Earl of Chesterfield's Trust: the duty to apportion iii. The contemporary application of the rules of conversion and apportionment and law reform 12. Conclusion Further reading Case studies Moot points 17. Fiduciary nature of trusteeship Learning objectives Setting the scene: Keech v sandford (1726) Sel.Cas. Ch 61 1. Introduction 2. Defining fiduciary relationships i. Problems of definition ii. When will a fiduciary relationship arise? iii. Fiduciary relationships in a commercial sense iv. The nature and standard of fiduciary liability v. The rationale for the strict approach vi. Is the strict liability approach in fiduciary law justified in the modern law? 3. The purchase of trust property i. The self-dealing rule ii. The fair-dealing rule 4. Trustee remuneration 5. Sources of trustee remuneration i. The trust investment ii. The court's inherent jurisdiction iii. Statute iv. Solicitor-trustees 6. Incidental profits i. Renewal of a lease ii. Directors' fees iii. Competing and doing business with the trust business 7. Remedies for breach of fiduciary duty i. Account for profits ii. A constructive trust imposed on the profits iii. Equitable compensation 8. Conclusion Further reading Case study Moot points 18. Powers of trustees Learning objectives Setting the scene: Re Pauling's Settlement Trusts  1 WLR 955 1. Introduction 2. The power to delegate i. Principles of delegation pre-1925 ii. Principles of delegation under the Trustee Act 1925 iii. Principles of delegation under the Trustee Act 2000 iv. Individual delegation under s.25 of the Trustee Act 1925 3. The power of maintenance i. Express powers of maintenance ii. The statutory power of maintenance in s.31 Trustee Act 1925 iii. Exercising the statutory power of maintenance iv. Accumulations of income and attaining majority 4. The power of advancement i. The nature of s.32 Trustee Act 1925 ii. The meaning of advancement iii. The provisos in s.32 Trustee Act 1925 5. Miscellaneous powers of trustees i. The power of sale ii. The power to insure iii. The power to give receipts iv. Compound liabilities and compromise 6. Conclusion Further reading Case studies Moot points 19. Variation of trusts Learning objectives Setting the scene: Re Weston's Settlements  1 Ch 233 1. Introduction 2. The rule in Saunders v Vautier i. The nature of the rule ii. Justifications for the rule iii. Application to different types of trust iv. Limits to the rule inSaunders v Vautier 2. The court's inherent jurisdiction to order variation i. Conversion ii. Emergency iii. Maintenance iv. Compromise 3. Statutory provisions i. Section 53 of the Trustee Act 1925 ii. Section 57 of the Trustee Act 1925 iii. Section 64 of the Settled Land Act 1925 iv. Section 24 of the Matrimonial Causes Act 1973 4. The Variation of Trusts Act 1958 i. The background to the Act ii. The wide discretion in s.1 of the Variation of Trust Act 1958 iii. The persons on whose behalf an arrangement can be made iv. The requirement of benefit v. The wishes of the settler vi. Variation or resettlement vii. The effect of a variation 5. Conclusion Further reading Moot points 20. Breach of trust and personal remedies Learning objectives Setting the scene: Target Holdings v Redferns  AC 421 1. Introduction 2. The personal liability of the trustee 3. Liability for co-trustees 4. Joint liability, contribution and indemnity 5. Established principles when assessing liability i. Making an unauthorised investment ii. Improperly retaining an investment iii. Improperly selling an authorised investment iv. A trustee who simply fails to invest the trust fund v. Assessment of compensation and investment vi. Setting off profits and losses in two or more breaches 6. Defences in a personal claim i. Trustee exemption clauses ii. Consent from the beneficiaries iii. Section 61 Trustee Act 1925 7. Limitation of actions i. The general limitation period ii. Exceptions to the limitation period iii. The equitable doctrine of laches 8. Conclusion Further reading Case study Moot points 21. Tracing and a proprietary claim Learning objectives Setting the scene: Re Diplock's Estate  Ch 465 1. Introduction 2. Proprietary claims and tracing 3. Tracing and proprietary claims at common law i. Unmixed property ii. Unmixed property and profits iii. Mixed property 4. Tracing and proprietary claims in equity i. The right to trace in equity ii. Tracing original property and clean substitutions iii. Tracing trust property which has been mixed with the trustee's property iv. Tracing trust money which has been mixed with the trustee's money in a bank account v. Tracing trust property which has been mixed with other trust property or that of an innocent volunteer vi. Loss of the right to trace 5. Conclusion Further reading Case studies Moot points 22. Charities and charitable trusts Learning objectives Setting the scene: IRC v McMullen  AC 1 House of Lords 1. Introduction 2. A historical note i. Developments in charitable giving ii. Developments in the law relating to charity 3. The structure of charity 4. The Charities Act 2006 5. Differences between charitable trusts and private trusts
Sukhninder Panesar is Associate Head of Department of the Law School, Coventry University. He has been passionately teaching and writing about Equity and Trusts for over eighteen years.