Summary GDL equity and trusts distinction level full exam notes
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Course
GDL
Institution
GDL
These are the revision notes which I produced to sit the GDL equity and trusts paper (in 2021/22 at Oxford Brookes). I achieved a distinction both in this paper and overall. I previously achieved a First in PPE at Oxford.
The notes run to 62 pages and 22k words, covering in full detail the follo...
Intro
Background
Equity: the body of rules historically developed and applied by the Court of Chancery, presided over
by the Chancellor and today applied by the courts.
Hudson: equity rectifies unfairness that would occur if the common law were followed strictly.
Equity developed as the right of the monarch to intervene with the common law by the means of
direct petition. This role in time transferred to the Lord Chancellor, who on the basis of his
‘conscience’ could do the same.
But it has become far more rule-based since the 17 th century, with identifiable doctrines emerging
from cases.
Gee v Pritchard (1818)
The characteristics of equity
Equity is discretionary – no right to equitable remedies
Equity acts in personam (as opposed to in rem)
Equity seeks to complement the law, rather than go against it, where possible
Equity is creative and dynamic – ‘equity is not past the age of child-bearing’ (Lord Denning).
Conflicts between law and equity
Where equity applies, there is necessarily some intention to go against the legal solution, but this is
in order to strengthen it, and defend it from ‘crafty evasions, delusions and new subtleties, invented
and contrived to evade and delude the common law’ (Lord Cooper LC in Lord Dudley & Ward v Lady
Dudley (1705)).
The Judicature Acts of 1873-5 fused the jurisdictions of equity and law (both in the courts), so there
is only one source of judgements, simplifying the legal system in procedural terms. The Judicature
Act 1873 clearly settled the matter; equity prevails.
Walsh v Lonsdale (1882): equity prevails.
Equitable maxims
The maxims of equity describe some of the main principles and doctrines which guide equitable
intervention and relief. They are broad and general, and are guidelines, not absolute rules.
More than one can apply, they may have to be weighed against each other since they can conflict,
they are flexible, and can change in relative importance over time.
Clean hands doctrine: one who seeks equity must do so with clean hands
A claimant cannot claim equitable relief where they themselves have not acted
conscionably. The claimant must act fairly to the defendant (and so if they have defrauded
them will not benefit from equity).
Overton v Banister (1844)
o A father wrote to the trustees falsely claiming his daughter had come of age,
resulting in funds being paid to that daughter. He did the same with a second
, daughter. When the daughters came of age, they brought proceedings against the
trustees for breach of trust, demanding to be paid the money again.
o The court held that the sum had already been discharged, and the false
representation discharged the trustees’ liability.
Tinsley v Milligan (1993)
o They jointly purchased a house, but listed it only in the name of Tinsley. They agreed
they would have joint beneficial ownership. This was done to allow them to defraud
the DWP. This fraudulent income went towards paying for the house. They fell out,
and Tinsley tries to evict Milligan.
o The court held that the clean hands doctrine was one of reliance; only if a party had
to rely on their fraud to claim their equitable interest would they not be allowed to
benefit from equity.
o This was heavily criticised, but constituted the law for 23 years.
Patel v Mirza (2016)
o Patel and Mirza conspired to commit insider trading. Patel paid Mirza for inside
information. But Mirza never provided the information. Patel sought to regain the
money via breach of contract, with an equitable remedy of unjust enrichment.
o The Supreme Court established an overriding principle of unconscionability. It is a
question of whether a party has behaved unconscionably, so that it would be
unconscionable for them to benefit from equity.
Equity is equality
Where two people have equal claims to property and there is no other way to achieve
justice, equity will order equal division.
Jones v Maynard (1951)
o An effectively joint account was only in the husband’s name. The husband used
some of this money to buy shares, which appreciated. The marriage broke down,
and the question was whether the wife had a claim to some of this capital gain.
o The court held that the assets should be divided equally. The judge in this case
stated that ‘equality is the best rule in these situations.’
Bower’s Trust (1942)
o The instructions for a trust directed that property should be split equally between 8
people. Some of the 8 had died, so could not take the property, and the trustees
divided the available property unequally between the 8.
o The court held that since there was no evidence of any other agreement, the
property should be divided equally.
Substance over form: equity looks on that as done that ought to have been done
Walsh v Lonsdale (1882)
o A lease was agreed but void due to procedural failings.
o The court held that since the parties had agreed the terms, they would be imposed
as though the procedural requirements had been met.
Equity is not concerned or limited with the form of a document/transaction
o Parkin v Thorold (1852)
, o "If [a court of equity] finds that, by insisting on the form the substance will be
defeated, it holds it inequitable to allow a person to insist on such form and thereby
defeat the substance"
Delays defeat equity: laches and acquiescence
The law supports the waking, not the sleeping; the law will not aid those who sleep on their
rights.
Smith v Clay (1767): A court of equity has always refused it's aid to stale demands where a
party has slept upon his rights and acquiesced for a great length of time. (Lord Camden)
Laches: complaining about something but not actually doing anything.
Acquiescence: not saying or doing anything about something which is later disputed.
Leaf v International Galleries (1950): whether delay defeats equity in a particular situation
depends on the circumstances and whether the delay is unconscionable.
Equity acts in personam
Hence they operate against the individual, wherever they are.
But equity also creates some quasi-proprietary rights, which are always vulnerable to defeat
by a bona fide purchaser for value without notice.
Equity follows the law
Equitable rules will override the common law, but it will generally follow the law unless
there is good reason to deviate.
Jones v Kernott (2011)
Equity will not assist a volunteer
Where a person has given no consideration, or relied on an assurance, then equity will not
assist an individual (since there is no detriment to them).
However there is a huge exception to this, which is the beneficiary of a trust.
The trigger for equitable intervention is conscience; the disappointment of my expectations
is insufficient, but a detriment suffered as a result on reliance on an assurance would be
sufficient. Again the doctrine operates on the principle of unconscionability.
Grant v Edwards (1986):
o The parties enter into a casual relationship, have a child, and then buy a house. The
defendant told the plaintiff her name would not go on the title of the house,
because it would damage his position in divorce proceedings, even though she was
paying towards the house.
o The court held that she was entitled to part ownership of the house, as she had
relied on the assurance to her detriment.
Westdeutsche Landesbank v Islington (1996)
o Only once your conscience is affected can equity bring about assistance.
Equity will not complete an imperfect gift
This would usually merely be a case of the disappointment of expectations
But if someone were to rely on it, and then suffer a detriment, then equity would intervene
and assist.
, Equity will not permit a statute to be used as an instrument of fraud
Rochefoucauld v Boustead (1897)
Bannister v Bannister (1948)
Reinforces equity as a conscience-based jurisdiction; where reliance on the statute would be
unconscionable, and produce injustice, the statute will not be relied on.
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