Equity and Trusts

Equity and Trusts

Equity and Trusts is a cornerstone of legal study, dealing with fairness, justice, and the legal mechanisms for managing property in a way that protects the interests of beneficiaries. Below is a structured overview of the subject, covering key principles, cases, and practical applications:

Equity: Foundations and Principles

Nature of Equity

  • Developed to address rigidity and gaps in common law.

  • Based on principles of fairness, conscience, and justice.

Maxims of Equity:

  1. Equity will not suffer a wrong without a remedy.

  2. He who comes to equity must come with clean hands.

  3. Equity follows the law.

  4. Where the equities are equal, the first in time prevails.

  5. Equity acts in personam.

Equitable Remedies:

  • Injunctions: Prevent certain actions.

  • Specific Performance: Orders the performance of contractual obligations.

  • Rescission: Cancels a contract to restore parties to their original position.

  • Rectification: Corrects documents to reflect true intentions.

The Concept of Trusts

A trust is an equitable obligation imposed on a person (trustee) to hold property for the benefit of another (beneficiary).

Key Elements of a Trust:

  1. The Settlor:

    • Creates the trust and transfers property.

  2. The Trustee:

    • Holds legal title to the property and manages it.

  3. The Beneficiary:

    • Holds equitable interest in the trust property.

Creation of Trusts

Express Trusts:

  • Must comply with the three certainties (Knight v Knight):

    1. Certainty of Intention: Clear intent to create a trust.

    2. Certainty of Subject Matter: Trust property must be identifiable.

    3. Certainty of Objects: Beneficiaries must be clearly defined.

  • Formalities:

    • Trusts involving land must comply with the Statute of Frauds 1677 and Section 53(1)(b) of the Law of Property Act 1925.

Resulting Trusts:

  • Arise when property is transferred without clear intention (e.g., Vandervell v IRC).

Constructive Trusts:

  • Imposed by courts to prevent unjust enrichment (e.g., Stack v Dowden).

Charitable Trusts:

  • Governed by the Charities Act 2011.

  • Must meet the public benefit requirement.

Fiduciary Duties

Trustees owe fiduciary duties to beneficiaries:

  1. Duty of Loyalty:

    • Avoid conflicts of interest.

  2. Duty to Act Prudently:

    • Exercise reasonable care in managing trust property.

  3. Duty of Impartiality:

    • Treat all beneficiaries fairly.

Breach of Trust

  • Trustees are liable for losses caused by breaches.

  • Remedies include:

    • Restitution of the trust property.

    • Compensation for loss.

Equitable Doctrines and Concepts

  • Proprietary Estoppel:

    • Protects expectations where someone relies on another’s promise to their detriment (Thorner v Major).

  • Tracing:

    • Allows beneficiaries to follow misappropriated property into new forms (Re Hallett’s Estate).

  • Secret Trusts:

    • Trusts created outside a will but enforced by courts (Ottaway v Norman).

Practical Applications

Drafting Trusts:

  • Clarity in defining the settlor's intentions, trust property, and beneficiaries.

  • Compliance with legal formalities.

Advising on Breach of Trust:

  • Identifying breaches and pursuing remedies for beneficiaries.

  • Defending trustees accused of breaches.

Resolving Co-Ownership Disputes:

  • Application of resulting and constructive trusts in property ownership cases (e.g., Stack v Dowden).

Tutoring Focus Areas

  1. Understanding Key Concepts:

    • Deep dive into equitable remedies and the nature of trusts.

  2. Problem Scenarios:

    • Hypothetical situations involving breaches of trust, tracing, or secret trusts.

  3. Exam Preparation:

    • Structured answers for essay and problem questions.

  4. Case Law Analysis:

    • Examining the evolution of equity through landmark cases.

Would you like to explore a specific area, such as equitable remedies, the three certainties, or constructive trusts? Or do you have a case study or problem question you would like to analyze?

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