This is a thorough and extensive notes bundle regarding the law of trusts covering topics such as the beneficiary principle, the three certainties, an introduction to trusts, third party liability, proprietary remedies and claims, constitution and formalities etc. It makes the topics very clear and...
TRUSTS LONG SUMMARY
Table of Contents
1. Equity and the Trust.......................................................................................................5
1. The Concept of Equity...............................................................................................................5
2. The Common Law and Equity Divide.........................................................................................6
3. Equitable Maxims.....................................................................................................................7
4. Fusion of (Administration of) Law and Equity:..........................................................................8
5. The Trust as a Creation of Equity..............................................................................................9
2. Introduction to Trusts...................................................................................................10
I. THE CONCEPT OF THE TRUST...................................................................................................10
1.1 What is a trust?.......................................................................................................................................10
1.2 The express trust: its constituent parts..................................................................................................10
1.3. Separation of legal and equitable ownership........................................................................................11
1.4. Separation of control and benefit.........................................................................................................11
1.5. Fundamental Essence of a Trust............................................................................................................12
1.6. Consequences of creation of a private express trust............................................................................13
II. CLASSIFYING TRUSTS..............................................................................................................13
2.1 The traditional classification...................................................................................................................13
2.2 The trust as a response to an event.......................................................................................................15
2.3 The trust as a species of obligation........................................................................................................16
2.4 Classification by context (i.e. reasons we create trusts)........................................................................17
III. DISTINGUISHING TRUSTS FROM OTHER LEGAL FORMS.........................................................17
3. The Trusts Powers Spectrum.........................................................................................18
1. THE GIFT - POWER – TRUST SPECTRUM..................................................................................18
1.1 Example instruments............................................................................................................19
1.2 Gifts......................................................................................................................................20
1.3 Powers of appointment........................................................................................................20
1.4. Discretionary trusts..............................................................................................................26
1.4A Trusts and Powers – are they clearly distinguishable?........................................................33
1.5. Failure to exercise a power..................................................................................................34
1.6 Fixed trust.............................................................................................................................35
1.7 Example Situation from the Textbook...................................................................................36
Trust/Powers Exercise................................................................................................................37
4. Certainty of Intention...................................................................................................41
Creation of express trusts: Overview of requirements................................................................41
Capacity......................................................................................................................................41
1
, The Three Certainties.................................................................................................................41
1. Certainty of intention...............................................................................................................................42
5. Certainty of Subject Matter..........................................................................................50
4.1. Nature of subject matter......................................................................................................50
4.2. Description/definition of the subject matter.......................................................................50
4.2.1. ‘bulk of my residuary estate’..............................................................................................................51
4.2.2. ‘Whatever is left’.................................................................................................................................51
4.2.3 ‘Anything that is left’............................................................................................................................52
4.2.4 Trust of the ‘residue’............................................................................................................................52
4.2.5 The ‘reasonable income’ trust.............................................................................................................53
4.2.6 Other examples....................................................................................................................................53
4.3 Identity of the subject matter...............................................................................................53
4.3.1 Trusts of part of a larger bulk of property...........................................................................................53
4.4 Certainty of division of beneficial share................................................................................59
4.5 Absence of certainty of subject-matter.................................................................................59
6. Certainty of Objects......................................................................................................60
5.1 Introduction..........................................................................................................................60
5.1.1 The most hallowed or ‘cardinal principle’: Emery...............................................................................60
5.1.2 Aspects of certainty.............................................................................................................................61
5.1.3 How to approach analysis of certainty of objects...............................................................................61
5.1.4 Key requirements summary................................................................................................................61
5.2 Fixed Trusts...........................................................................................................................62
5.2.1 Essential test: “complete list”..............................................................................................................62
5.2.2 Conceptual certainty............................................................................................................................62
5.2.3 Evidential certainty..............................................................................................................................63
5.2.4 Ascertainability....................................................................................................................................64
5.2.5 Administrative workability...................................................................................................................64
5.2.6 Capriciousness.....................................................................................................................................64
5.3 Discretionary trusts of Burrough type...................................................................................64
5.4 Discretionary trusts of Baden type........................................................................................65
5.4.1 Essential test: “is or is not”..................................................................................................................65
5.4.2 Conceptual certainty............................................................................................................................66
5.4.3 Evidential certainty..............................................................................................................................66
5.4.4. Ascertainability...................................................................................................................................67
5.4.5 Administrative workability...................................................................................................................67
5.4.6 Capriciousness.....................................................................................................................................68
5.5 Powers of appointment........................................................................................................68
5.5.1. Essential test: “is or is not” test..........................................................................................................68
5.5.2. Conceptual certainty...........................................................................................................................69
5.5.3. Evidential certainty.............................................................................................................................69
5.5.4. Ascertainability...................................................................................................................................69
5.5.5. Administrative Workability.................................................................................................................69
5.5.6. Capriciousness....................................................................................................................................70
5.6 Curing uncertainty................................................................................................................70
5.6.1. Series of conditional gifts....................................................................................................................70
5.6.2. Trustee as arbiter................................................................................................................................71
2
, 5.6.3 Third party arbiter...............................................................................................................................72
5.7 Effect of absence of three certainties....................................................................................72
5.8 Topics of debate (Textbook Critique)....................................................................................72
1) Should there be a single test for certainty of objects?............................................................................72
2) An alternative test for powers..................................................................................................................72
7. Beneficiary Principle.....................................................................................................73
1. Introduction............................................................................................................................73
2. Rationale for the Beneficiary Principle....................................................................................74
3. Legitimacy of the Beneficiary Principle...................................................................................75
4. Trusts of Imperfect Obligation................................................................................................77
4.1 Trusts for the care and maintenance of specific animals.......................................................................78
4.2 Trusts to erect and maintain monuments and graves...........................................................................79
4.3 Trusts for the saying of private masses..................................................................................................79
How to reconcile trusts of imperfect obligation with the beneficiary principle?........................................80
5. Purpose (in)directly benefits ascertained individuals..............................................................81
6. Trust for persons where purpose is a motive for the gift........................................................83
8. Formalities...................................................................................................................85
Introduction...............................................................................................................................85
S53 (1) Law of Property Act 1925:...............................................................................................88
i) Property other than land/Trusts of pure personalty.................................................................................89
ii) Trusts of Land............................................................................................................................................90
iii) Disposition of Subsisting Equitable Interests...........................................................................................93
9. Constitution................................................................................................................109
A. INTRODUCTION....................................................................................................................109
B. FORMALITIES FOR THE TRANSFER OF TITLE..........................................................................112
C. MUTUALLY EXCLUSIVE METHODS OF MAKING A GIFT..........................................................113
D. EXCEPTIONAL CASES WHERE THE COURT FOUND A FULLY CONSTITUTED TRUST.................113
1. Re Rose [1952] Ch 499, CA......................................................................................................................114
2. T. Choithram International SA v Pagarani [2001] 1 WLR 1, PC...............................................................116
3. Pennington v Waine [2002] EWCA Civ 227 [2002] 1 WLR 2075.............................................................119
4. Fortuitous vesting of legal title...............................................................................................................123
5. The rule in Strong v Bird (1874) LR 18 Eq 315........................................................................................124
E. EXCEPTIONS TO THE RULE THAT EQUITY WILL NOT ASSIST A VOLUNTEER............................127
The rule in Strong v Bird.............................................................................................................................127
Donatio mortis causa..................................................................................................................................127
Proprietary estoppel...................................................................................................................................128
OVERALL SUMMARY.................................................................................................................129
10. TRUSTEES’ DUTIES AND REMEDIES FOR BREACH.......................................................130
A. Introduction.........................................................................................................................130
B. Duty of Investment...............................................................................................................131
3
, 1. The duty to invest...................................................................................................................................131
2. Powers of investment.............................................................................................................................132
3. Duties of trustees in making investments..............................................................................................135
4. Introducing Breach of Trust: Proving a breach of trust and what happens if something goes wrong? 141
C. Personal Liability of a Trustee for Breach of Trust or Duty....................................................142
1. Election between remedies....................................................................................................................143
2. What breaches may have occurred?......................................................................................................143
3. Equitable compensation.........................................................................................................................144
4. Liability between trustees – how is it shared?.......................................................................................149
5. Defences.................................................................................................................................................151
D. Fiduciary Duty of Loyalty and Unauthorised Profits..............................................................163
1. Introduction; the existence of a fiduciary relationship..........................................................................164
2. Duty of loyalty: introduction...................................................................................................................164
3. Duty of loyalty: specific examples..........................................................................................................167
4. Allowance for skill and work done..........................................................................................................176
5. Authorised profits...................................................................................................................................176
6. Duties of a fiduciary: how strict should the law be?..............................................................................176
E. Remedies where there is an Unauthorised Profit..................................................................177
(i) T’s duty to account for profit..................................................................................................................177
(ii) Proprietary remedy: A constructive trust imposed on the profits........................................................178
11. PROPRIETARY CLAIMS AND REMEDIES......................................................................179
1. Introduction..........................................................................................................................179
2. Remedies for Equitable proprietary claims...........................................................................180
2.1 Types of remedy...................................................................................................................................180
2.2 Nature of proprietary remedies...........................................................................................................181
2.3. Nature of liability.................................................................................................................................181
3. Process for establishing a claim and remedy.........................................................................185
4. The proprietary base.............................................................................................................186
4.1 Creation of equitable property interests..............................................................................................186
4.2. Retention of equitable property interest............................................................................................187
5. Following and tracing............................................................................................................187
5.1. Fundamental principles of tracing.......................................................................................................188
5.2. Tracing rules in Equity..........................................................................................................................189
5.3. Restrictions on equitable tracing.........................................................................................................195
5.4. Backward tracing.................................................................................................................................196
Should backward tracing be a doctrine?....................................................................................................198
5.5. Inequitable to trace.............................................................................................................................199
6. Claiming................................................................................................................................199
6.1. Claims...................................................................................................................................................199
6.2 Subrogation...........................................................................................................................................201
7. Defences...............................................................................................................................203
12. PERSONAL LIABILITY OF STRANGERS.........................................................................203
1. Introduction..........................................................................................................................203
1.1 The nature of the remedy: personal liability to account in equity.......................................................204
2. Unconscionable Receipt........................................................................................................205
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