Equitable Interests Research Articles

Trustees’ Indemnities and Fiduciary Duties: The High Court Appeal in Naaman v Jaken Properties Australia Pty Ltd

The High Court of Australia appeal in Naaman v Jaken Properties raises the question whether a successor trustee owes a ‘fiduciary duty’ to the former trustee to not destroy, jeopardise or diminish the former trustee’s right of indemnity over trust assets. That question arises to determine whether third parties are liable to account in equity as knowing recipients of property dissipated to frustrate the former trustee’s indemnity. It is argued in the appeal that the successor trustee holds the trust assets on express trust for the former trustee to the extent of the former trustee’s indemnity. That conclusion does not account for the variety of equitable interests. Three main points emerge. First, a current trustee has a ‘beneficial interest’ in trust assets only in a superficial sense. Second, upon transfer, that ‘beneficial interest’ is not ‘retained’ by the former trustee; the entitlement of a former trustee over the trust fund changes, and becomes analogous to a charge over a fund. The language of ‘beneficial interest’ in each case is misleading and should be eschewed. Third, it is unnecessary to ask, for the purposes of Barnes v Addy liability, whether any ‘duty’ owed by a successor to a former trustee is a ‘fiduciary duty’.

THE CONSIDERATION OF ZONING COMPLIANCE ON THE IMPLEMENTATION OF THE FASTRACK NIL IN JOHOR

Under Section 53 of National Land Code 1965, there were lands alienated before the commencement of NLC whereby the titles do not indicate any particular category of land use and express conditions, but instead are stated as ‘Nil’. Therefore, this paper aims to describe the procedure of Fastrack NIL implementation in Johor and its consideration of zoning compliance upon the imposition of land categories and express conditions for land stated as ‘Nil’. Using content analysis and interview with selected respondent using purposive sampling, it is confirmed that the imposition of conditions or land conversion does not need to be in accordance with the zoning compliance. However, this practice is becoming a norm due to the equitable interests held by landowners and taking into account the interest of the state government, thus zoning must be considered in the Fastrack NIL application.

WHAT WERE LORD WESTBURY'S INTENTIONS IN PHILLIPS V PHILLIPS? BONA FIDE PURCHASE OF AN EQUITABLE INTEREST

AbstractIn Phillips v Phillips, Lord Westbury stated that, against a bona fide purchaser faced with an “equity” to rescind, “the Court will not interfere”. This has been interpreted to mean that purchasers of even an equitable interest shall take free of prior equities. Yet the distinction between “equities” and equitable interests has been, and remains, uncertain; some have therefore questioned the intent behind Phillips. This paper shall elucidate Lord Westbury's intentions within their historical context and argues that Phillips offers a coherent, functional explanation of both: (1) the protection given to equity's darling; and (2) how that protection was effected.

Equitable Interests, Actual Occupation, Land Registration and a Slice of Feudalism

Equitable Interests, Actual Occupation, Land Registration and a Slice of Feudalism

(Re-defining) the trust of the specifically enforceable contract of sale—the vendor purchaser constructive trust

This article provides a comprehensive outline and consequential redefinition of the oldest form of constructive trust occurring in English law,1 the vendor–purchaser constructive trust (VPCT). This species of constructive trust arises by operation of law, once primarily in the context of sales of land, but now in the context of any specifically enforceable contract of sale (eg shares in a private company).2 The VPCT primarily protects the interest and equities each party to the contract has in its performance,3 and exists only as an equitable consequence of the contract, embodying both proprietary interests and a mutuality of obligations between vendor and purchaser, constructive trustee and beneficiary. This trust springs from Equity’s (an attempt has been made to use Equity in capital when emphasising the Chancery jurisdiction in contrast to its Common Law counterpart, otherwise lowercase equity indicates its usage in practice, ie a mere equity) doctrinal foundations, and so far, suffers from a paucity of generalized analysis. This article clarifies, and identifies the key elements of the VPCT, rejecting the current orthodoxy, and restating the trusts’ principle by isolating Equity’s techniques; contract formation, through to equitable-conversion of title, equitable interests, lien, enforcement, to final conveyance, until this doctrine is manifestly unambiguous.

Testing the orthodoxy of Akers v Samba

In Akers v Samba, a trustee, in breach of trust, transferred legal title to shares forming the subject matter of the trust fund to a bona fide purchaser for value without notice, thereby clearing the title. The Supreme Court held that the corporate beneficiary of the trust, which was the subject of winding-up proceedings, could not claim that the loss of its equitable interest in the shares was a void disposition for the purposes of section 127 of the Insolvency Act 1986. The effect in equity, the court reasoned, was that the original equitable interest was defeated, or overridden, and therefore there was no transfer, or disposal. Such an outcome, re-affirming the primacy of equity’s darling is, at least for the original beneficiary, hard to digest. The Supreme Court judgments also contain dicta validating the principle (and long-standing assumption held by the commercial community) that a trust is not defeated simply by the lex situs of the trust property, where such law does not recognize separate and distinct legal and equitable interests. This article examines the core policies and principles that underpin the decision, and assesses whether the decision has more limited application than first might appear to be the case and as has been argued elsewhere.

Trusts in disguise—accurately identifying equitable interests

This article examines common mistakes in practice when dealing with trusts, in particular: In deceased estates where a testamentary trust has not been created under an will; Where a family discretionary trust is, in reality, a bare trust. That is, where the entitlement of a beneficiary to income, corpus or both is determined by the trustee exercising a power to make that selection from time to time; and Where the trust is a sham.

Constitutional Law and the Limits of Discretion in Family Property Law

The argument of this Article is that the width of discretion that trial judges have to alter property rights under the Family Law Act 1975 (Cth) (‘the Act’) has been overstated. The property aspects of the Act can only be valid to the extent to which the law is an appropriate application of the marriage and divorce powers in the Constitution or is within the boundaries of the States’ reference of powers about de facto relationships. These constitutional provisions place significant constraints upon judicial discretion. In relation to marriages, the need to adjust property rights must result from the circumstances of the marital relationship or be justified as a consequence of the financial impact upon a party of its breakdown. The authority of Parliament to make laws concerning the alteration of the property rights of de facto partners is limited to cases of relationship breakdown. Furthermore, the Family Court of Australia and the Federal Circuit Court of Australia are both Chapter III courts. That has implications for the kind of discretion that Parliament can lawfully confer upon the trial judge, and the limits of that discretion. Some recent dicta and decisions of the Full Court of the Court suggest a view of judicial discretion which, it is argued, is inconsistent with the nature of judicial power in a Chapter III court. The discretion of trial judges is fettered by three duties: The duty to follow the interpretation of the Act as established authoritatively by appellate decisions, taking account of guidelines in appellate judgments; the duty to give reasons that explain the outcome of the case, and in particular, to justify the alteration of legal and equitable interests in specific items of property; and the duty to avoid arbitrary and capricious decision-making. The current jurisprudence on family property law is not necessarily consistent with these constitutional limitations.

The (True) Nature of a Beneficiary’s Equitable Proprietary Interest under a Trust

In recent years Chambers, Smith, McFarlane and Stevens have all sought to explain the nature of equitable proprietary rights by way of the concept of a ‘right to (or ‘in’, or ‘against’) a right’. In this paper I argue that there is a sense in which this conceptualisation of the beneficiary’s equitable proprietary under a trust is illuminating, but that, rather than a right to the trustee’s possessory interest in tangible property, the ‘rights’ of the trustee in which the beneficiary is interested are the trustee’s powers of title. I also contend, in a ‘fusionist’ spirit, that equitable property interests should not be treated as a particular ‘legal kind’, but rather that only interests under trusts should be regarded as a distinct sort of property interest within the numerus clausas. I go on to show how the proposed analysis best explains (1) our notion of ‘beneficial interest’ under a trust; (2) why a trustee is not a residual claimant to the trust assets; (3) the interest of a discretionary object of a trust; (4) the rules of and rationale for tracing; and (5) the ‘automatic’ resulting trust.

Research on Interests Distribution Model of Industrial Technology Innovation Strategic Alliances

Industrial technology innovation strategic alliances are cooperative R&D organizations of benefit sharing and risk sharing, composed of enterprise, university and research institutions. Interests distribution mechanism of industrial technology innovation strategic alliances is one of the key factors affect its stable operation. This paper presents an interests distribution model based on the member's inputs of resources and risk compensation. Alliance members of greater contribution will get more revenue, while the higher risk-sharing members will get more compensation. Alliances will establish a more equitable interests distribution mechanism by taking into account both resource inputs and risk compensation of members. Based on the theoretical research, the paper also gives the results of empirical analysis.

Third Time's the Charm: The Coming Impact of the Restatement (Third) Restitution and Unjust Enrichment in Bankruptcy

Bankruptcy courts have frequently been characterized as courts of equity. Often this characterization has accompanied unusually relaxed interpretation or application of a provision of the Bankruptcy Code. However, this understanding does not exhaust the meaning of equity in bankruptcy.Historically, equity covered a large range of topics – trusts and estates, injunction, contracts, specific performance, unjust enrichment, restitution, and disgorgement. In addition, equity was not limited to particular remedies. Equity’s remedies certainly included money damages but recognized many more. The law of equity was substantive as well as remedial; it recognized primary rights as well as secondary rights of rectification. Among equity's primary rights were equitable interests in property. And section 541(a) of Bankruptcy Code includes such equitable interests in its definition of property of the estate.If equity once boasted a substantial substantive content, what was it? The answer is found in the title of the Restatement Third, Restitution and Unjust Enrichment (R3RUE). Unjust (or unjustifiable) enrichment provides the conceptual core of this body of law. As the converse of tort law, which identifies unjustified harms to another, unjust enrichment recognizes unjustified benefits to another, at least to the extent they come at the claimant’s expense. Notwithstanding the merger of law and equity, in the mid-1990’s the American Law Institute appointed Andrew Kull as the reporter for the R3RUE. With final approval in 2010, we can expect to see the R3RUE affect the legal landscape in the near future. It is that impending impact in bankruptcy that constitutes the burden of this article.Part I briefly summarizes the substantive law of equity as expressed in the R3RUE. It addresses the substantive core of law of equity. Distinct categories of operative facts such as benefits conferred by mistake or without request, pursuant to a voidable contract, or as a result of wrongful interference with the rights of a claimant ground unjust enrichment.Part II surveys the remedial aspects of the R3RUE comprising the four so-called proprietary remedies–constructive trust, equitable lien, subrogation, and the paired set of rescission and restitution. These proprietary remedies are the equitable interests in property that are part of the property of the estate.Finally, Parts III–VI focus on these four remedies in greater depth and examine how courts operating under the Bankruptcy Code have (mis)applied them. I conclude with specific observations about how the R3RUE can and indeed should affect the development of equitable interests by firmly recognizing their place as property of the estate.

Trust in the Bank: The Importance of Overreaching in English Land Law

This essays seeks to prove that the revolutionary and often controversial principle of overreaching, which has been the subject of much academic criticism since its inception in 1925, is both a necessary and justifiable means of providing protection to parties in property transactions. Within the context of Parliament's original social aims, the origins of overreaching are delineated and its three most popular criticisms are critically examined. This leads to the conclusion that the purpose of English land law, and therefore the purpose of overreaching, is to protect interests in land - and not the equitable interests of occupiers who find themselves let down by their overreached trustees.

Contract as Equitable Instrument - Sensibility in Indian Contract Act

Equity, which means equalization or levelling down any arbitrary preferences or denial of justice, is derived from a Roman term ‘aequitas’. According to Sir Henry Mane, equity is fresh body of rules by the side of the original founded on distinct principles and claiming to supersede the law by virtue of a superior sanctity inherent in those principles. Inadequacy of the remedies at law and the elastic willingness of equity to use its discretion directly with reference to the conscience of the individual were two main foundations of equitable belief. Equity is aimed at preventing a defendant from acting unconscionably (literally, contrary to conscience) in circumstances otherwise where the common law would have allowed to do so. In layman’s language it can be said to interfering to protect some underlying right of the victim either because of a contract with the shyster, or because the shyster has control over some property which is rightfully theirs or because one may feel that the actions of the shyster may affect the victim in the future in some way or the other. Most of the equitable principles and rules have, in India, been embodied in the statute law and has been made applicable to the extent of the provisions made therein. That, the provisions of equity in Indian statute books might have their source in common law or in equity or in an adjustment between the two, is immaterial.The equitable doctrines featuring in the Indian Contract Act are mainly, the doctrine of penalties and forfeiture, stipulations as to time in a contract, equitable relief on the ground of misrepresentation, fraud and undue influence.The statutory recognition of the principles of equity in the Specific Relief Act is regarding injunction, specific performance, cancellation, rectification and recession etc. Incorporation of the maxim in Indian Laws Aequitas sequitur legem i.e. equity follows the law – Equity does not claim to override the law. Equity generally operates by recognising the legal rule and adding some further rule, remedy or the other machinery of its own. The Court of Chancery, which developed equitable law never wanted to give the equity an overriding effect to the common law. The jurisdiction of equity is debarred from overreaching the boundaries established by the prior course of adjudication.Another maxim which needs a mention in this discussion is 'Aeguitas nunquam contravenit leges' i.e., equity never counteracts law. In India, since there is no distinction between a legal interest and equitable interest, therefore, in all matters relating to legal as well as equitable interests, the statutory provisions shall apply if there are any.Section 38 of the Specific Relief Act provides that on adjudging recession of a contract, the Court may require the party to whom such relief in granted, to make any compensation to the other which justice may require. Section 30 and 38 also provide that on adjudging the cancellation of an instrument, the Court may require the party to whom such relief is granted, to make compensation to the other which justice may require.Though equity was faced with conflict with the laws in England in the earlier stages, it has always played a major role in the Law of Contracts. The Indian Contract Act lays that consent to an agreement is caused by undue influence, the argument is a contract voidable at the option of the party whose consent was so caused. Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it, has received any benefit there under, upon such terms and conditions as the court may deem first. (Section 19A) Further section 64 and 65 of the Indian Contract Act are also based on the doctrine ‘he who seeks equity must do equity’. The maxim, however, does not apply when relief sought by the plaintiff and equitable right or relief secured to or sought by the defendant belongs to or originates from two entirely separate and distinct matters. Further, it is not applicable where the plaintiff seeks to enforce purely legal rights. Other provisions giving effect to the maxim Equity delights in equality are section 42 of the Indian Contract Act that applies the principle of tenancy-in-common, section 43, 63-70,146-147 of the Indian Contract Act.

Saving Seaborn: Ownership as the Basis of Family Taxation

This Article examines the historical and jurisprudential development of the principle that determines federal taxation of families. It traces the ownership equals principle from the late nineteenth century to 1930; that is, from the decades leading up to ratification of the Sixteenth Amendment to the U.S. Supreme Court's landmark decisions in Poe v. Seaborn and Lucas v. Earl. It is a story of the early federal income tax and its administration; of tax avoidance opportunities for families; of the nature of spouses' legal interests as defined by state property laws; and of early tax enforcement efforts by the Treasury Department and Congress. It is also a story of how the Supreme Court sought to protect Congress' taxing power by articulating an expansive definition of for purposes of determining taxability that relied on indicia of such as control, management, dominion, beneficial interests, equitable interests, enjoyment, and even a flow of satisfactions concept that tracked consumption tax principles more closely than income tax principles. In the end, the Article lays the groundwork for removing the modern-day false barometer of marriage between a man and a woman as the basis of family taxation. In place of marriage, it reestablishes principles grounded in longstanding Supreme Court jurisprudence as the historically and legally accurate gauge for family taxation. In so doing, the Article presages an argument that will be articulated in a subsequent Article for taxing members of all state-recognized civil partnerships - marriage, domestic partnerships, civil unions, reciprocal beneficiary relationships - according to interests as determined by state law.

Anguilla: foundations and trusts--a comparison

The concept of the common law trust can be traced back at least to the Middle Ages; some would say it originated in Roman law. The development of foundations in civil law jurisdictions represented a rejection of feudalism and of the concept of the division of ownership between legal and equitable interests. The type of foundation discussed in the article—the private foundation—was originally introduced in Monaco in 1922, followed closely by Liechtenstein in 1926, based largely on concepts of Swiss Civil Law. Other civil law jurisdictions have embraced the concept, including Panama in 1995. The concept has spread in recent years to several common law jurisdictions. Anguilla is in the process of enacting its own private foundations law—The Anguilla Foundation Act—which offers everything that other private foundations laws offer, plus several unique and highly advantageous features. There will be many applications for Anguilla foundations where importance will be attached to their legal personality; the ability behind the protection of a corporate veil, to engage in business; the familiarity of foundations in civil law jurisdictions; and the unique ability to choose the form of dispute resolution applicable.

Immobiliarsicherheiten in England, Schottland und Deutschland, oder: Mortgage, charge und standard security versus Hypothek, Grundschuld und Sicherungsübereignung.

Abstract: The following paper deals with the national law in England, Scotland and Germany governing real securities over land. After an introduction (under I) a short outline over the generally possible interests in land and their protection within the three considered legal systems follows (under II) to allow a better understanding of some special terms. A brief comparison concludes this overview. In the main part (under III) the different types and contents of real securities over land are shown, compared and discussed. Especially their technical construction (under 1), the English equitable mortgages and charges over legal interests in land (under 2), other rights in land, such as the English equitable interests in land, as security (under 3) and the possibility of a conveyance of land as security (under 4) are examined. Here it is focused especially on the law?s consideration of the arising practical needs and interests of mortgagor/chargor and mortgagee/chargee as well as on the systematical clearness of the law. In the final conclusion (under IV) it is pointed out that within the rules governing real securities over land there are similarities as well as differences between the three legal systems. However the differences partly result from general phenomena which are sometimes deeply rooted in the legal system. Since their harmonisation does not seem probable in the near future the creation of a special international ?land charge or mortgage? is finally recommended.

Water Rights Subject to Condemnation Proceedings

Maxie Coffey contracted with Ulysses, Kansas, for the sale of her property's water rights. The contract treated the water as personal property. The city applied with the state Division of Water Resources to change the place of use, point of diversion, and use from irrigation to municipal. The city was told it could not drill a well without a permit; nevertheless, it built a well and started pumping water. Later Coffey and her husband sold the property by warranty deed to David C. Sullivan, Jr. without expressly excepting the water rights, believing they still owned them. The Coffeys later sued Sullivan, seeking to reform the deed so they could retain the water rights. In the meantime, Sullivan told the city it was illegally converting the water right. The Coffeys lost their suit against Sullivan. The city then condemned surface and water rights relating to the property, alleging it was necessary to provide a reliable public water supply and a place to dispose of wastewater. Sullivan sought to enjoin the condemnation of his property. The trial court denied Sullivan an injunction against the condemnation. On appeal, Sullivan argued that state law did not permit the condemnation of water rights. But the court said state says “land” includes all legal and equitable interests in real property. According to the court, the legislature has deemed water rights to be real property rights. The court held that a water right is included within the definition of “land” and thus was subject to condemnation.

The Changing Face of Trusts: The Trusts of Land and Appointment of Trustees Act 1996

Since 1925, the conveyancing device of the trust for sale has become a central part of English land law. One of the main policies of the 1925 legislation had been to promote free alienability of land by making conveyancing easier. The trust for sale was intended as one mechanism to achieve this by separating the legal title from the equitable interests and, by the doctrines of conversion and overreaching, to transfer the equitable interests to the proceeds of sale. It has, however, become increasingly recognised that the mechanism of the trust for sale is both complex and not well suited to contemporary society in which matrimonial and cohabitation co-ownership are becoming increasingly common and where sale is not the primary objective. Equally, the device of the strict settlement of land belongs to a time long gone, when there was a dynastic impulse in aristocratic families to maintain the land in the family for generations to come. Today, the settlement has outlived its purpose and inheritance tax has made it less attractive. The Trusts of Land and Appointment of Trustees Act 1996 (TLATA) has introduced significant reforms in relation to both concurrent co-ownership and successive interests under a settlement of land. It replaces a large part of the 1925 legislative provisions concerning joint ownership of land. It was introduced by the Lord Chancellor as a 'useful measure of law reform', and it has made changes to the law which were long overdue. Although expressed in somewhat technical language, the Act has important implications in the familiar matrimonial and quasi-matrimonial co-ownership situation. This note outlines the changes which have been made by this legislation and addresses some of the issues which it raises.2 Why is the new legislation so important? This question can only be adequately answered by reference to the problems which existed under the 1925 law. First of all, as already indicated, the 1925 legislation relevant to co-ownership was very complicated, even though it was a vast improvement upon pre-1925 law, which was still based on the feudal structure of land law. Second, because of the strictures of the Settled Land Act 1925 (SLA) it was relatively easy to trigger its provisions accidentally, causing unnecessary complications and unintentionally giving to a person the powers of sale of a tenant for life. Third, the trust for sale was appropriate to a time when land was treated as an investment, with the emphasis on its exchange value rather than its use value; hence the nomenclature trust for sale. Today, when we are living in a property owning democracy with a large number of matrimonial and co-habitation homes in co-ownership, such a conveyancing device

Formalities of Trust Formation and Dealings in Equitable Interests

Formalities of Trust Formation and Dealings in Equitable Interests Get access John Goldsworth John Goldsworth The Mill OfficeWendens Ambo, Saffron Walden, Nr Cambridge, Essex CB11 4JX, Tel: +44(0)1799 541152, Fax: +44(0)1799 541972 E-mail: trusts@dial.pipex.com, Internet: http://www.trusts-and-trustees.com Search for other works by this author on: Oxford Academic Google Scholar Trusts & Trustees, Volume 3, Issue 6, May 1997, Pages 15–19, https://doi.org/10.1093/tandt/3.6.15 Published: 01 May 1997

Equitable Security Interests: Their Creation and Priority

Fraud, so it seems, never goes out of fashion. The United Bank of Kuwait plc advanced monies to Mr Sahib, and when the monies were not duly repaid, the Bank took proceedings to recover the debt due to it; it obtained judgment against Mr Sahib, and sought to enforce that judgment by obtaining a charging order over Mr Sahib's beneficial interests in two freehold properties in Hampstead. The beneficial interests existed behind statutory trusts for sale, and the trustees for sale of both properties were Mr Sahib and his wife, Mrs Hashim. In due course, charging orders were obtained and then made absolute. At this point, there arose a dispute between the United Bank of Kuwait and the Société Générate Alsacienne de Banque SA (‘Sogenal’). Sogenal claimed that it held an equitable mortgage over the interests which were the subject of the charging order, that its mortgages were created before the charging orders obtained by the United Bank of Kuwait, and that its mortgages consequently ranked in priority to the Bank's charging orders. This dispute as to priorities formed the subject of Chadwick J's decision in United Bank of Kuwait plc v Sahib.