LAW EXTENSION COMMITTEE UNIVERSITY OF SYDNEY

07 EQUITY SUMMER SESSION 2005-06

Course Description and Objectives 1Teacher 1Assessment 1March 2006 Examination 1Lecture Program 2Weekend Schools 1 and 2 3Texts and Materials 5Assignments 6Assignment Questions 6Prescribed Topics and Course Outline 7Course Problems 34Topic Notes 43

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LAW EXTENSION COMMITTEE SUMMER 2005-0607 EQUITY COURSE DESCRIPTION AND OBJECTIVES Equity, which includes the law of trusts, begins with a study of the historical origins and development of the equitable jurisdiction and then moves on to consider equitable doctrines concerning property, including the recognition of assignments of legal and equitable interests in property in equity; estoppel in equity; fiduciary obligations; the nature and creation of trusts, including trusts arising by operation of law as resulting or constructive trusts; charitable trusts; the duties, powers, rights and liabilities of trustees, the rights of beneficiaries, including the right to trace trust property; and, to conclude, equitable remedies including injunctions, specific performance, monetary remedies in equity and the equitable jurisdiction to set aside transactions procured by undue influence and unconscionable conduct. The emphasis in the course will be on developing in the students an understanding of the principles of equity and their practical application. In this respect cases will be discussed and studied, but primarily as examples of the application of principle, and as a means of understanding particular principles, rather than as an end in themselves. Students will be expected to identify and grasp the equitable issues arising in a given set of facts and, also, how a court exercising and equitable jurisdiction would deal with those issues in applying the principles discussed in the course to grant or refuse relief. The course will also address some of the underlying doctrines of equity, particularly that of unconscionable conduct, and the links between those underlying doctrines and particular principles found in the spectrum of the equitable jurisdiction. TEACHER Mr M Evans BA (Hons) (Syd), LLM (Syd), LLM (Hons) (Cantab) Michael Evans is a Barrister. He has lectured in equity and trusts at the University of Technology, Sydney and is the author of Equity and Trusts published by LexisNexis Butterworths. The current edition of this text, was published by Lexis Nexis Butterworths in April 2003. ASSESSMENT To be eligible to sit for the Board’s examinations, all students must complete the LEC teaching and learning program, the first step of which is to ensure that you have registered online with the LEC in each subject for which you have enrolled with the Board. This gives you access to the full range of learning resources offered by the LEC. Then, students must achieve a satisfactory result (at least 50%) in each subject where a compulsory component is prescribed. To register with the LEC, go to www.usyd.edu.au/lec and click on the WEBCAMPUS link and follow the instructions. Detailed guides to the Webcampus are contained in the material distributed by the LEC, in the Course Information Handbook, and on the Webcampus. MARCH 2006 EXAMINATION Candidates will be expected to have a detailed knowledge of the prescribed topics: The History and Nature of Equity; Equity and Property; Assignments of Property in Equity; Fiduciary Obligations; Estoppel in Equity; Confidential Information; The Nature of Trusts; The Creation of Express Trusts; Charitable Trusts; Resulting or Implied Trusts; Constructive Trusts; The Duties of Trustees; The Powers of a Trustee; The Rights of Trustees; The Liability of a Trustee; Beneficiaries; Remedial Equity and Review – The Notions of Conscience and Unconscionability.

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Candidates will be expected to have made a study of the prescribed materials in relation to those topics, and to have analysed cases contained in the Law Extension Committee's course outline. The examination in Equity will be a closed book examination. All enquiries concerning the March 2006 examination should be directed to the Legal Profession Admission Board. LECTURE PROGRAM Equity lectures will be held on Thursday nights in the Law School Lecture Theatre 7 (LSLT 7) commencing at 6.00pm. Please note that this program is a general guide and may be varied according to need. Readings are suggested to introduce you to the material to be covered in the lecture, to enhance your understanding of the topic, and to encourage further reading. You should not rely on them alone. WEEK TOPIC KEY READING

1 (17.11.05)

The History and Nature of Equity Equity and Property

Equity and Trusts, Chapters 1 and 2

2 (24.11.05)

Assignments of Property in Equity

Equity snd Trusts, Chapter 3

3 (1.12.05)

Assignments of Property in Equity (cont.)

Equity and Trusts, Chapter 3

4 (8.12.05)

Fiduciary Obligations

Equity and Trusts, Chapter 5

5 (15.12.05)

Estoppel in Equity Confidential Information

Equity and Trusts, Chapter 4 Equity and Trusts, Chapter 8

6 (22.12.05)

The Nature of Trusts The Creation of Trusts

Equity and Trusts, Chapter 12 Equity and Trusts, Chapter 13

Study Break: 24.12.05 – 8.1.06

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(12.1.06) Charitable Trusts

Equity and Trusts, Chapter 15

8 (19.1.06)

Resulting Trusts Constructive Trusts

Equity and Trusts, Chapter 16 Equity and Trusts, Chapter 17

9 (26.1.06)

NO LECTURE – PUBLIC HOLIDAY

10 (2.2.06)

Duties of Trustees and Powers

Equity and Trusts, Chapter 18

11 (9.2.06)

Rights and Liabilities of Trustees Rights of Beneficiaries, Remedial Equity (including Tracing)

Equity and Trusts, Chapter 19 Equity and Trusts, Chapter 20

12 (16.2.06)

Remedial Equity a) Relief from Unconscionable Conductb) Injunctions

Equity and Trusts, Chapter 6 Equity and Trusts, Chapter 23

13 (23.2.06)

c) Specific Performance d) Monetary Remedies in Equity

Equity and Trusts, Chapter 22 Equity and Trusts, Chapter 26

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WEEKEND SCHOOL PROGRAMS

There are two weekend schools primarily for external students. Lecture students may attend on the understanding that weekend schools are primarily for the assistance of external students.

Please note that It may not be possible to cover the entire course at the weekend schools. These programs are a general guide and may be varied according to need. Readings are suggested to introduce you to the material to be covered in the lecture, to enhance your understanding of the topic and to encourage further reading. You should not rely on them alone. Weekend School 1 TIME MAJOR TOPICS KEY READING Friday 2 December 2005 – Carslaw Lecture Theatre 159 (CLT 159) 5.10pm-6.20pm

The History and Nature of Equity • The effects of the Judicature Acts • Fusion Fallacy • The Maxims of Equity

Equity and Property Dealings with property in equity

Outline, chapters 1 and 2

6.30pm-7.35pm

Assignments of property in equity (cont.) • Voluntary assignments • Agreements to assign • Declarations of trust

Future property

Outline, chapter 3

7.45pm-9.00pm

Assignments of property in equity (cont.) • Future property • Property incapable of assignment

Dealings with equitable interests

Outline, chapter 3

Saturday 3 December 2005 – Carslaw Lecture Theatre 275 (CLT 275) 8.00am-9.20am

Assignments of property in equity (cont.) • Assignments of equitable interests • Contracts for value to assign • Direction to trustee • Equitable interests and section 12

Outline, chapter 3

9.30am-10.40am

Fiduciary Obligations Estoppel in Equity Confidential Information

Outline, chapter 5 Outline, chapter 4 Outline, chapter 8

10.45am-11.45am

The Nature of Trusts • Nature and classification of trusts • The 3 certainties

The Creation of Trusts

Outline, chapter 12 Outline, chapter 13

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Weekend School 2 TIME MAJOR TOPICS KEY READING Friday 3 February 2006 – Carslaw Lecture Theatre 157 (CLT 157) 5.10pm-6.20pm

Charitable trusts • Charitable purposes • Public benefit • Political trusts • Poverty • Education • Religion • Fourth Class • Schemes • Mixed Purposes

Outline, chapter 15

6.30pm-7.35pm

Resulting Trusts

Outline, chapter 16

7.45pm-9.00pm

Constructive Trusts

Outline, chapter 17

Saturday 4 February 2006 – Carslaw Lecture Theatre 157 (CLT 157) 8.00am-9.20am

Duties and Powers of Trustees

Outline, chapter 18

9.30am-10.40am

Rights and Liabilities of Trustees Rights of Beneficiaries (including Tracing)

Outline, chapter 19 Outline, chapter 20

10.45am-11.45am

Remedial Equity a) Relief from Unconscionable Conduct b) Injunctions c) Specific Performance d) Monetary Remedies in Equity

Outline, chapter 6 Outline, chapter 23 Outline, chapter 22 Outline, chapter 26

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TEXTS AND MATERIALS Course Materials • Guide to the Presentation and Submission of Assignments (available on the LEC Webcampus) Prescribed Text • M.B Evans, Equity and Trusts, LexisNexis Butterworths, Sydney 2003 Recommended Materials • G Dal Pont & D Chalmers, Equity and Trusts in Australia and New Zealand, 3rd ed. Thomson

Lawbook, 2004 • R.P. Meagher, J D Heydon & M Leeming, Meagher, Gummow & Lehane's Equity - Doctrines and

Remedies, 4th ed. LexisNexis Butterworths, Sydney, 2002 • R.P. Meagher & W.M.C. Gummow, Jacobs' Law of Trusts in Australia, 6th ed. LexisNexis

Butterworths, Sydney, 1997 • J.D. Heydon, & P Loughlan, Cases and Materials on Equity and Trusts, 6th ed. LexisNexis

Butterworths, Sydney, 2001 • H.A.J. Ford & W.A.Lee, Principles of the Law of Trusts, 3rd ed. Thomson Lawbook, 1995 LEC Webcampus Once you have registered onlilne with the LEC, you will have full access to the Webcampus. Regularly check the Course Materials section on the LEC Webcampus for additional materials, notes, assignments questions and for links to the Law Library and other relevant research sites.

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ASSIGNMENTS In Equity, Assignment 1 is compulsory. Students must submit the assignment by the due date, and achieve a grade of at least 50%. The maximum word limit for each assignment is 2000 words (inclusive of all footnotes but not bibliography). The rules regarding the presentation of assignments and instructions how to submit an assignment are set out in the LEC Guide to the Presentation and Submission of Assignments which can be accessed on the LEC Webcampus. Please read this guide carefully before completing and submitting an assignment. If you do not achieve 50% or more in the compulsory assignment, you must complete a second assignment and attain a mark of 50% or more for the second assignment to be eligible to sit the examination. Completed assignments should be lodged through the LEC Webcampus by 9.00am on the following dates:

Compulsory Assignment Tuesday 6 December 2005 (Week 4)

Assignment 2 Tuesday 17 January 2006 (Week 8) Markers will attempt to mark the assignments as quickly as possible. However, please note that many of the markers are busy practitioners or academics. Do not wait for the return of one assignment before commencing the next assignment, even if it is not compulsory. ASSIGNMENT QUESTIONS To obtain copies of the Equity assignment questions for the Summer Session 2005-06, please follow the instructions below:

1. Register online with the LEC (see page 27 of the Course Information Handbook for detailed instructions). Once you have registered, you will have full access to all the facilities on the LEC Webcampus.

2. Then go into the Webcampus, select the Course Materials section and click on the link to

the Assignment questions for this subject.

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PRESCRIBED TOPICS AND COURSE OUTLINE 1. THE HISTORY AND NATURE OF EQUITY [Equity and Trusts Ch 1] 1.1 The History of Equity The development of the “English” jurisdiction of the Chancellor, and thus the Court of Chancery in the period from, about 1300 to about 1500, including procedure by way of petition or bill. The recognition in the Court of Chancery of feoffments to uses in late medieval England, especially the equitable obligation owed by feoffees to uses to their cestuis que use and the fiscal or revenue consequences of uses, particularly in terms of the avoidance of feudal revenue incidents of;

(a) Aids (financial aid a feudal lord could demand from his tenant – much reduced by the Magna Carta of 1215)

(b) Relief (the sum payable by the heir of a feudal tenant upon the death of the tenant in order for the heir to be able to enter into his or her inheritance)

(c) Wardship (the right of a feudal lord to administer the tenant’s lands after the death of the tenant during the infancy of the heir)

(d) Marriage (the right of the feudal lord to effectively sell the marriage of the heir of the tenant where the heir is an infant)

(e) Escheat (forfeiture of the tenant’s lands to the feudal lord in the event of the failure of inheritance, there being no heirs at law, or to the crown if the tenant is convicted of a felony)

The devlopment of equitable jurisprudence, including the recognition and discussion of concepts such as conscience and equity through works such as Doctor and Student dialogue of Christopher St Germain and by judicial consideration. The Earl of Oxford’s Case in Chancery (1615) Mich 13 Jac 1; 21 ER 485 Cook v Fountain (1672) 3 Swanst 600; 26 ER 984 1.2 The Relationship between the Common Law and Equity “ ... it must not be forgotten that the rules of Courts of Equity are not, like the rules of the Common Law, supposed to have been established from time immemorial. It is perfectly well known that they have been established from time to time - altered, improved, and refined from time to time. In many cases we know the names of the Chancellors who invented them. No doubt they were invented for the purpose of securing the better administration of justice, but still they were invented.” In re Hallett's Estate; Knatchbull v Hallett (1880) 13 Ch D 696, per Jessel MR at 710 Law Reform (Law and Equity) Act 1972 (NSW)

(a) Common law courts would not recognise equitable rights, titles and interests Castlereagh Motels v Davies-Roe (1967) 67 SR (NSW) 279 Robertson v Wait (1853) 8 Exch 299; 155 ER 1360

(b) Equity had no power to decide disputed legal rights and titles Equity Act 1880, s 4 (Equity Act 1901 s 8)

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(c) Equity had no power to award damages Goldsborough Mort v Quinn (1910) 11 CLR 674 King v Poggioli (1923) 32 CLR 222

(d) The common law courts lacked power to give interlocutory relief (e) The courts of common law had no power to award specific performance, or

injunctions (f) The common law courts lacked power to make declarations

Rooke v Lord Kensington (1856) 2 K & J 753; 69 ER 986

(g) No power existed to transfer cases from one jurisdiction to the other Mines Royal Societies v Magnay (1854) 10 Ex 489; 156 ER 531 Carter v Smith (1952) 52 SR (NSW) 290 1.3 The Judicature System • Fusion fallacies Seager v Copydex [1967] 2 All ER 415; [1967] RPC 349 Re Pryce (1917] 1 Ch 234 Walsh v Lonsdale (1882) 21 Ch D 9 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 Chan v Cresdon (1989) 89 ALR 522 Cricklewood Ppty & Investment Trust v Leighton [1945] AC 221, at 240 1.4 The Maxims of Equity

(a) Equity will not suffer a wrong without a remedy (b) Equity follows the law

Delehunt v Carmody (1986) 161 CLR 464 Tasita Pty Ltd v Papua New Guinea (1991) 34 NSWLR 691

(c) When the equities are equal, the first in time prevails (d) He who seeks equity must do equity (e) He who comes to equity must do so with clean hands

Kettles & Gas Appliances v Anthony Horderns (1934) 35 SR (NSW) 108

(f) Equity assists the diligent and not the tardy (g) Equity is equality (h) Equity looks to the intent rather than the form (i) Equity regards as done that which ought to be done (j) Equity imputes an intention to fulfil an obligation (k) Equity will not assist a volunteer

Corin v Patton (1990) 169 CLR 540 at 557

(l) Equity will not perfect an imperfect gift (m) Equity acts in personam

Penn v Lord Baltimore (1750) 1 Ves Sen 444; 27 ER 1132 Baker v Archer-Shee [1927] AC 844 Commissioner Stamp Duties v Livingston (1965) AC 694; (1960) 107 CLR 411 N Z Insurance Co Ltd v Commissioner Probate Duties (Vic) [1973] VR 659

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2. EQUITY AND PROPERTY[Equity and Trusts Ch 2]

2.1 The Nature of Equitable Interests Commissioner of Stamp Duties (Qld) v Livingston (1965) AC 694; (1960) 107 CLR 411 Re Leigh’s Will Trusts [1970] Ch 277 Perpetual Trustee v Commissioner Stamp Duties (Shallard’s Case) [1977] 2 NSWLR 472 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; 96 ALR 327 Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 Silovi v Barbaro (1988) 13 NSWLR 466 Goldsborough Mort v Quinn (1910) 11 CLR 674 Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409 • The “Deserted Wife's Equity” National Provincial Bank Ltd v Ainsworth [1956] AC 1175 • Confidential Information Wheatley v Bell [1982] 2 NSWLR 544 • Equitable Security Interests Swiss Bank Corp v Lloyds Bank Ltd [1982] AC 584 2.2 Equitable Interests and Torrens Title Barry v Heider (1914) 19 CLR 197 Breskvar v Wall (1971) 126 CLR 376 Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Mercantile Mutual Life Assurance v Gosper (1991) 25 NSWLR 32 Bogdanovic v Koteff (1988) 12 NSWLR 472 3. ASSIGNMENTS OF PROPERTY IN EQUITY [Equity and Trusts Ch 3] 3. 1 Introduction This section of the course deals with the issues concerning the recognition in equity of assignments of property or interests in property, both legal and equitable. In assessing whether a court of equity will uphold or recognise any purported assignment it is essential to correctly identify the components of the assignment, both as to form and content, in order to identify the rules which determine the validity of that particular transaction. Satisfy yourself on the following points: (a) Who is the assignor? (b) Who is the assignee? (c) What exactly is being assigned? (d) What is the nature of the property or interest being assigned? (e) What is the intended form of the assignment? (f) What is the test for assignments in that form? (g) Is writing required? (h) Is the assignment intended to take effect immediately? (i) Is it voluntary or for consideration? (j) If the assignment is voluntary, can the assignor (the “donor”) recall the gift?

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Smith v Perpetual Trustee Co Ltd (1910) 11 CLR 148 Comptroller of Stamps (Vic) v Howard Smith (1936) 54 CLR 614 3.2 Voluntary Assignment of Legal Property • Assignment of Property Assignable at Law Conveyancing Act 1919 (NSW), s 12 (Choses in Action) William Brandt’s & Sons v Dunlop Rubber Co. [1905] AC 454 Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185 • The First “Leg” of Milroy v Lord Anning v Anning (1907) 4 CLR 1049 Corin v Patton (1990) 169 CLR 540; 92 ALR 1 Noonan v Martin (1987) 10 NSWLR 402 • Voluntary Assignments of Torrens Title Land Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555 Norman’s Case per Windeyer J at 28-9 Cope v Keene (1968) 118 CLR 1 Taylor v FCT (1969) 123 CLR 206 Olsson v Dyson (1969) 120 CLR 365 Grey v Australian Motorists & General Ins. Co. P/L [1976] 1 NSWLR 669 Bogdanovic v Koteff (1988) 12 NSWLR 472 Corin v Patton (1990) 169 CLR 540; 92 ALR 1 Costin v Costin (1997) 7 BPR 15,167 • The Second “Leg” of Milroy v Lord Re Rose; Rose v IRC [1952] Ch 499 Re Rose [1949] Ch 78 • Assignments of Property Not Assignable at Law Fortescue v Barnett (1834) 3 My & K 36; 40 ER 14 Re Patrick; Bills v Tatham [1891] 1 Ch 82 Norman’s Case per Windeyer J, at 31-34 Shepherd v FCT (1965) 113 CLR 385, per Kitto J, at 397 3.3 Voluntary Assignments of Equitable Property Smith v Perpetual Trustee Co. Ltd (1910) 11 CLR 148 at 163 Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614 Timpson’s Executors v Yerbury [1936] 1 KB 645 at 664 • Dealings in the Form of Direct Assignments Norman’s Case per Windeyer J, at 30 FCT v Everett (1979) 143 CLR 440 at 446-7 Comptroller of Stamps v Howard-Smith per Dixon J at 622 Ward v Duncombe [1893] AC 369, per Lord McNaghten at 392 Timpson’s Executors v Yerbury [1936] 1 KB 645 at 658 PT Ltd v Maradona Pty Ltd (No 2) (1992) 27 NSWLR 241 Hagan v Waterhouse (1992) 34 NSWLR 308 at 382G to 387A •

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Dealings in the Form of Declarations of Trust Grey v IRC [1958] Ch 690 at 715 Comptroller of Stamps v Howard-Smith, per Dixon J at 621-2 Paul v Constance [1977] 1 All ER 195 • Dealings in the Form of Directions to the Trustee

(a) to deal with the equitable estate Howard-Smith per Dixon J, at 622 Grey v IRC [1960] AC 1 Parker & Parker v Ledsham [1988] WAR 32

(b) to deal with the legal estate Vandervell v IRC [1967] 2 AC 291 DKLR Holding Co (No. 2) P/L v Comm'r of Stamp Duties (NSW) (1982) 56 ALJR 287 • Dealings in the Form of a Release Crichton v Crichton (1930) 43 CLR 536 The Requirement of Writing Conveyancing Act 1919 (NSW), s 23C Secretary Department of Social Security v James (1990) 95 ALR 615 Hagan v Waterhouse (1991) 34 NSWLR 308 at 385–6 Hunter v Moss [1994] 3 All ER 215 3.4 The Rule in Strong v Bird Strong v Bird (1874) LR 18 Eq 315 Re Mulholland (1916) 33 WN (NSW) 89 Benjamin v Leicher (1998) 45 NSWLR 389 3.5 Donationes Mortis Causa Smith v Casen (1718) 1 P Wms 406 Duffield v Elwes (1827) 1 Bligh (NS) 497 at 534; 4 ER 959 at 972 Bayliss v Public Trustee (1988) 12 NSWLR 540 Sen v Headley [1991] 2 All ER 636 • Assignments for Value Holroyd v Marshall (1862) 10 HLC 191; 11 ER 999 Tailby v Official Receiver (1888) 13 App Cas 523 Chang v Registrar of Titles (1976) 137 CLR 177, per Mason J at 184. 3.6 Assignment of Legal Property for Valuable Consideration Last v Rosenfeld [1972] 2 NSWLR 923 Rochefoucauld v Boustead [1897] 1 Ch 196 Bannister v Bannister [1948] 2 All ER 133 Allen v Snyder [1977] 2 NSWLR 685

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3.7 Assignment of Equitable Property for Value Comptroller of Stamps (Victoria) v Howard-Smith (1936) 54 CLR 614 Conveyancing Act 1919 (NSW) s 23C Adamson v Hayes (1973) 130 CLR 276 Oughtred v IRC [1960] AC 206 3.8 Assignments of Future Property • The Definition of Future Property Re Lind [1915] 2 Ch 345 Tailby v Official Receiver (1888) 13 App Cas 523 Norman v FCT (1963) 109 CLR 9 Shepherd v FCT (1965) 113 CLR 385 Williams v IRC [1965] NZLR 395 McLeay v IRC (1963) 9 AITR 265 • The Basis for the Enforcement of Assignments of Future Property Holroyd v Marshall (1862) 10 HLC 191; 11 ER 999 Tailby v Official Receiver (1888) 13 App Cas 523 Palette Shoes Pty Limited v Krohn (1937) 58 CLR 1, at 27, by Dixon J McIntyre v Gye (1994) 122 ALR 289 3.9 Property which cannot be Assigned • Personal Contracts Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 Peters v General Accident and Life Assurance Co [1937] 4 All ER 628 • Bare rights to Sue Glegg v Bromley [1912] 3 KB 474 Trendtex Trading v Credit Suisse [1980] 3 All ER 721; [1981] 3 WLR 766 Monk v ANZ Banking Group Ltd (1994) 34 NSWLR 148 4. FIDUCIARY OBLIGATIONS [Equity and Trusts Ch 5] 4.1 The Source of Fiduciary Duties Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 97 Re Coomber; Coomber v Coomber [1911] 1 Ch 723, per Fletcher-Moulton LJ at 728-9 Aberdeen Railway Co v Blaikie Bros (1854) [1843-60] All ER Rep 249, at 252 Chan v Zacharia (1984) 154 CLR 178, esp per Deane J at 198-9 Lac Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR (4th) 14 • The Scope of the Fiduciary Relationship N Z Netherlands Society ‘Oranje’ v Kuys [1973] 2 All ER 1222 Noranda Resources Ltd v Lachlan Resources NL (1988) 14 NSWLR 1

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4.2 The Recognised categories of fiduciary relationships • Solicitor and Client Boardman v Phipps [1967] 2 AC 46 Queensland Mines Ltd v Hudson (1978) 52 ALJR 399 Maguire v Makaronis (1997) 188 CLR 449 • Director and Company Bell v Lever Brothers [1932] AC 161 Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 Peso Siver Mines Ltd (NPL) v Cropper (1966) 58 DLR (2d) 1 Canadian Aero Services Ltd v O’Malley (1973) 40 DLR (3rd) 371 Queensland Mines Ltd v Hudson (1978) 18 ALR 1 Mordecai v Mordecai (1988) 12 NSWLR 58 • Trustee and Beneficiary • Partners Birtchnell v Equity Trustees (1929) 42 CLR 384 Chan v Zacharia (1984) 154 CLR 178 United Dominions Corp Ltd v Brian Pty Limited (1985) 157 CLR 1 Ravinder Rohini Pty Ltd v Krizaic (1991) 105 ALR 593 • Employee and Employer DPC Estates Pty Ltd v Grey & Anor [1974] 1 NSWLR 443 Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] Ch 169 Printers & Finishers v Holloway [1965] RPC 239 Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443 British Reinforced Concrete v Lind (1917) 86 LJ Ch 486 Sterling Engineering Co v Patchett [1955] 1 All ER 369 • Agent and Principal Haywood v Roadknight [1927] VLR 512 4.3 Other relationships not recognised as fiduciary • Broker and Client Hewson v Sydney Stock Exchange [1968] 2 NSWR 224; 87 WN (NSW) Pt 1 422 Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 • Commercial Transactions Keith Henry & Co v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 4 LAC Minerals v International Corona Resources Ltd (1989) 61 DLR (4th) 14 Moorgate Tobacco Co Ltd v Phillip Morris Ltd (No 2) (1984) 156 CLR 414 News Limited v Australian Rugby Football League Ltd (1996) 139 ALR 193 • Banker and Customer Commonwealth Bank v Smith (1991) 102 ALR 453

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• Other and Special Relationships Breen v Williams (1996) 70 ALJR 772 4.4 Breach of Duty: “Conflict of Interest” and “Improper Gain” • The Doctrine in Keech v Sandford Keech v Sandford (1726) Sel Cas T King 61; 25 ER 223 Chan v Zacharia (1984) 154 CLR 178 4.5 Defences: The Duty of Disclosure and Informed Consent Boardman v Phipps [1967] 2 AC 46 BLB Corporation of Australia v Jacobsen (1974) 48 ALJR 372 NZ Netherlands Society v Kuys [1973] 2 All ER 1222 Gemstone Corporation of Australia Ltd v Grasso (1994) 13 ACSR 695 4.6 Remedies for Breaches of Fiduciary Duty Nocton v Lord Ashburton [1914] AC 932 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 Chan v Zacharia (1984) 154 CLR 178 Maguire v Makaronis (1997) 188 CLR 449 Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 Re Dawson [1966] 2 NSWR 211 Peter Pan Corp Ltd v Corsets Silhouette Ltd [1963] RPC 45; [1964] 1 WLR 96 Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 Hagan v Waterhouse (1992) 34 NSWLR 308 at 360-365F Boardman v Phipps [1967] 2 AC 46 Mordecai v Mordecai (1988) 12 NSWLR 58 Warman International Ltd v Dwyer (1995) 128 ALR 201 Gemstone Corporation v Grasso (1994) 13 ACSR 695 4.7 Secret Commissions and Equitable Debt Metropolitan Bank v Heiron (1880) 5 Ex D 319 Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 389 Lister v Stubbs (1890) 45 Ch D 1 DPC Estates Pty Ltd v Grey [1974] 1 NSWLR 443 Re Stephenson Nominees (1987) 76 ALR 485 Reading v AG [1951] AC 507 Jirna Ltd v Mister Donut of Canada Ltd (1973) 40 DLR (3d) 303 P.D. Finn, “Contract and the Fiduciary Principle” 12 UNSWLR 76 D.S.K. Ong, “Fiduciaries: Identification and Remedies”, Uni of Tas LR 311 I.E. Davidson, “The Equitable Remedy of Compensation”, 13 Melb Uni L Rev 349 5. ESTOPPEL IN EQUITY [Equity and Trusts Ch 4] 5.1 Waltons v Maher Estoppel Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Commonwealth v Verwayen (1990) 170 CLR 394 (at 434-436) Austotel Pty Ltd v Franklins Selfserve Stores Pty Ltd (1989) 16 NSWLR 582 W v G (1996) 20 Fam LR 49 S & E Promotions Pty Ltd v Tobin Bros Pty Ltd (1994) 122 ALR 637

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Giumelli v Giumelli (1999) 161 ALR 473 Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628 5.2 Proprietary Estoppel Dillwyn v Llewelyn (1862) 4 De G F & J 517; 45 ER 1285 Ramsden v Dyson (1866) LR 1 HL 129 Plimmer v Mayor of Wellington (1884) 9 App Cas 699 Willmott v Barber (1880) 15 Ch D 96 Olsson v Dyson (1969) 120 CLR 365, per Kitto J at 376 Cameron v Murdoch (1986) 63 ALR 575 Riches v Hogben [1986] 1 Qd R 315 Jackson v Crosby (1979) 21 SASR 280 A Leopold, “The Elements of Estoppel”, (1991) Building & Construction Law, 248, at 253 6. CONFIDENTIAL INFORMATION [Equity and Trusts Ch 8] Coco v A N Clark (Engineers) Ltd [1969] RPC 41 Saltman Eng. Co v Campbell Eng. Co (1948) 65 RPC 203, at 215 Herbert Morris Ltd v Saxelby [1916] AC 688 Potters-Ballotini Ltd v Weston-Baker Ltd [1977] RPC 202 LAC Minerals v International Corona Resources Ltd (1989) 61 DLR (4th) 14 Faccenda Chicken v Fowler [1985] 1 Ch 724; [1986] 1 Ch 617 (CA) Wright v Gasweld (1991) 22 NSWLR 317 7. THE NATURE OF TRUSTS [Equity and Trusts Ch 12] 7.1 The Classification of Trusts

1. Express trusts

2. Trusts arising by operation of law

(a) Resulting trusts (b) Constructive trusts

• The Origins of Trusts Feoffments to Uses in the 14th and 15th centuries • Discretionary Trusts Gartside v IRC [1968] AC 553 Lutheran Church v Farmers' Co-op. (1970) 121 CLR 628 Neill v Public Trustee [1978] 2 NSWLR 65 Spellson v George (1987) 11 NSWLR 300 Re Londonderry’s Settlement [1965] Ch 918 Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406 • Unit Trusts • Trading Trusts • Family Trusts

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• Superannuation Trusts • Protective Trusts Permanent Trustee Co Ltd v University of Sydney [1983] 1 NSWLR 578 7.2 The Distinction between Trusts and other Institutions • Trusts and Fiduciary Obligations Chan v Zacharia (1984) 154 CLR 178 • Trust and Agency Re Brockbank [1948] Ch 206 Re Jones, Ex parte Mayne (1953) 16 ABC 169 • Trust and Bailment • Trust and Contract Re Pryce [1917] 1 Ch 234 Wilson v Darling Island Stevedoring (1956) 91 CLR 43 Coulls v Bagot's Executor and Trustee Co Ltd (1966-67) 119 CLR 460 Trident General Ins. Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; 80 ALR 574 • Trust and Debt Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Australasian Conference Association v Mainline (1979) 141 CLR 335 Re Kayford Ltd [1975] 1 WLR 279 Carreras Rothmans Ltd v Freeman Matthews Treasure Ltd [1985] Ch 207 Re Australian Elizabethan Theatre Trust (1991) 102 ALR 681 • Trust and Body Corporate • Trustee and Personal Representative Commissioner of Stamp Duties v Livingston (1960) 107 CLR 411; [1965] AC 694 • Trusts and Powers

(a) Powers of appointment

General powers Special powers Hybrid or intermediate powers

Re Baden’s Deed Trusts; McPhail v Doulton [1971] AC 424 Tatham v Huxtable (1950) 81 CLR 639 Horan v James [1982] 2 NSWLR 376 In re Park [1932] 1 Ch 580 Re Abrahams’ Will Trusts [1969] 1 Ch 465, esp. at 474 ff Gregory v Hudson (1998) 45 NSWLR 573 National Trustees Executors & Agency Co v Trainor (1974) VR 49 at 56-57

17

(b) Trustee holding Mere or Bare powers Re Gulbenkian’s Settlement Trusts [1970] AC 508, per Lord Reid at 518

(c) Trustee holding a Trust Power IRC v Broadway Cottages Trust [1955] Ch 20 Re Baden’s Deed Trusts; McPhail v Doulton [1971] AC 424

(d) Criterion Certainty and Administrative Workability Re Manisty’s Settlement [1974] 1 Ch 17 Horan v James [1982] 2 NSWLR 376 In re Hay’s Settlement Trusts [1982] 1 WLR 202 Re Baden’s Deed Trusts (No. 2) [1973] Ch 9

(e) Powers and Testamentary Dispositions Houston v Burns [1918] AC 337 Chichester Diocesan Fund v Simpson [1944] AC 341 In re Park [1932] 1 Ch 580 Tatham v Huxtable (1950) 81 CLR 639 Lutheran Church v Farmers’ Co-op. (1970) 121 CLR 628 Re Manisty’s Settlement [1974] Ch 17 Horan v James [1982] 2 NSWLR 376 Horan v Borthwick (unrep) NSW Sup Ct, Helsham CJ in Eq 12 Dec. 1980 Gregory v Hudson (1998) 45 NSWLR 573 In re Beatty (Deceased) [1990] 3 All ER 844; [1990] 1 WLR 1503 FC Hutley, “The Rule against Delegation of Will-Making Power”, (1956-58) Syd Law Rev 93 RA Sundberg, “The Status (etc) of ... Tatham v Huxtable”, (1974) 48 ALJ IJ Hardingham, “The Rule against Delegation ...”, (1974) Melb Uni LR 650 8. THE CREATION OF EXPRESS TRUSTS [Equity and Trusts Ch 13] 8.1 The Three Certainties

(a) Certainty of Intention to Create a Trust Commissioner of Stamp Duties (Qld) v Joliffe (1920) 28 CLR 178 Kauter v Hilton (1953) 90 CLR 86 Re Kayford Ltd [1975] 1 WLR 279 Walker v Corboy (1990) 19 NSWLR 382 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Australasian Conference Association v Mainline (1979) 141 CLR 335 Re Kayford Ltd [1975] 1 WLR 279 Carreras Rothmans Ltd v Freeman Matthews Treasure Ltd [1985] Ch 207 Re Australian Elizabethan Theatre Trust (1991) 102 ALR 681 Re Fada (Australia) Ltd [1927] SASR 590 Lyell v Kennedy (1889) 14 App Cas 437 • Precatory Trusts West v FCT (1949) 79 CLR 319 Re Alston [1955] VLR 281 Dean v Coles (1921) 30 CLR 1

18

(b) Certainty of Subject Matter Mussoorie Bank v Raynor (1882) 7 App Cas 321

(c) Certainty of Object Morice v The Bishop of Durham (1804) 9 Ves 399; 32 ER 656 Bowman v Secular Society Ltd [1917] AC 406, at 441 Re Astor's Settlement Trusts [1952] Ch 534 Public Trustee v Nolan (1943) 43 SR (NSW) 169 • Certainty of Description of Objects IRC v Broadway Cottages Trust [1955] Ch 20 Re Gulbenkian’s Settlement Trusts [1970] AC 508 Re Baden’s Deed Trusts; McPhail v Doulton [1971] AC 424 Lutheran Church v Farmers’ Co-op (1970) 121 CLR 628, at 652 Re Baden’s Deed Trusts (No. 2) [1973] Ch 9 8.2 Trusts for Unincorporated Associations Leahy v A-G (NSW) [1959] AC 457; (1959) 101 CLR 611 Re Drummond [1914] 2 Ch 90 Re Price [1943] Ch 422 Bacon v Pianta (1966) 114 CLR 634 Neville Estates Limited v Madden [1962] Ch 832 Re Goodson [1971] VR 801 In re Recher's Will Trusts [1972] 1 Ch 526 Re Grant’s Will Trusts [1979] 3 All ER 359 Wise v Perpetual Trustee Co Ltd [1903] AC 139, per Lindley LJ at 149 Cameron v Hogan (1934) 51 CLR 358 Re Baden, McPhail v Doulton [1971] AC 424 Harrison v Hearn [1972] 2 NSWLR 428 Perpetuities Act 1984 (NSW), s 16 Property Law Act 1969 (WA), s 106 Succession Act 1981 (Qld), s 63 8.3 The Constitution of a Voluntary Trust • Transfer to a Trustee Paul v Paul (1882) 20 Ch D 742 Milroy v Lord (1862) 4 De GF & J 264 at 274; 45 ER 1185 at 1189 • Declaration of Trust • Direction to a Trustee Grey v IRC [1960] AC 1. Re Pryce [1917] 1 Ch 234 Fletcher v Fletcher (1844) 4 Hare 67; 67 ER 564 Re Kay’s Settlement [1939] Ch 329 Re Cook’s Settlement Trust [1965] Ch 902 Perpetual Trustee Co Ltd v Willers (1955) 72 WN (NSW) 244

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8.4 The Requirement of Writing for Express Trusts • Secret Trusts Voges v Monaghan (1955) 94 CLR 231 Ottaway v Norman [1972] Ch 698 Re Boyes, Boyes v Carritt (1884) 26 Ch D 531 Re Fleetwood, Sidgreaves v Brewer (1880) 15 Ch D 594 Blackwell v Blackwell [1929] AC 318 Re Cooper, Le Neve Foster v National Provincial Bank [1939] Ch 811 • Mutual Wills Birmingham v Renfrew (1937) 57 CLR 666 8.5 Trusts Arising from Agreement or Common Intention Pettitt v Pettitt [1970] AC 777 Gissing v Gissing [1971] AC 886 Allen v Snyder [1977] 2 NSWLR 685 Zaborskis v Zabnorskis (1982) 8 Fam LR 622 Burns v Burns [1984] 1 Ch 317 Delehunt v Carmody (1986) 161 CLR 464 Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363 9. CHARITABLE TRUSTS [Equity and Trusts Ch 15] 9.1 General Principles A-G (SA) v Bray (1964) 111 CLR 402 Re Tyler [1891] 3 Ch 252 A-G (NSW) v Perpetual Trustee Co Ltd (McDonell’s Case) (1940) 63 CLR 209 Stratton v Simpson (1970) 125 CLR 139 Perpetuities Act 1984 9.2 The Meaning of “Charitable” at Law Statute of Charitable Uses of 1601, 43 Eliz I c 4: “... for relief of aged, impotent and poor people,... the maintenance of sick and maimed soldiers and mariners, schools of learning, free schools, and scholars in universities: ... for repair of bridges, ports, havens, causeways, churches, seabanks and highways; ... for the education and preferment of orphans; ... the relief, stock or maintenance of houses of correction, ... for marriages of poor maids; ... for supportation, aid, and help of young tradesmen, handicraftsmen, and persons decayed; ... for relief or payment of fifteens, setting out of soldiers, and other taxes; ...” Morice v The Bishop of Durham (1804) 9 Ves 399; 32 ER 656 Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 Incorporated Council of Law Reporting v FCT (1971) 125 CLR 659 Royal Nat Ag and Ind Ass’n v Chester (1974) 48 ALJR 304 Re Bushnell [1975] 1 All ER 721 9.3 Public Benefit in Charitable Trusts Gilmour v Coats [1946] AC 426 National Anti-Vivisection Society v IRC [1948] AC 31

20

Re Compton, Powell v Compton [1945] Ch 123 Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 Davies v Perpetual Trustee Co Ltd [1959] AC 439 Re Tree [1945] Ch 325 Re Income Tax Acts (No 1) [1930] VLR 211 Thompson v FCT (1959) 102 CLR 315 IRC v Baddeley [1955] AC 572 Dingle v Turner [1972] AC 601 • Foreign Charitable Trusts Re Lowin [1967] 2 NSWR 140 Kytherian Association of Queensland v Sklavos (1958) 101 CLR 56 Re Stone (1970) 91 WN (NSW) 704 Lander v Whitbread [1982] 2 NSWLR 530 9.4 Trusts for the Relief of Poverty Dingle v Turner [1972] AC 601 Re Glyn’s Will Trusts [1950] 2 All ER 1150 Trustees of Church Ppty of Newcastle v Lake Macquarie SC [1975] 1 NSWLR 521 Le Cras v Perpetual Trustee Co Ltd [1969] 1 AC 514 Re Coulthurst’s Will Trusts [1951] Ch 661 Re Glyn’s Will Trusts [1950] 2 All ER 1150 Re Sanders Will Trusts [1954] Ch 265 Downing v FC of T (1971) 125 CLR 185 9.5 Trusts for the Advancement of Education A-G v Lady Downing (1766) Amb 550; 27 ER 353 Wilkinson v Malin (1832) 2 Cr & J 636 College of Law (Properties) Pty Ltd v Willoughby MC (1978) 38 LGRA 81 Re Dupree’s Deed Trusts [1945] Ch 16 Perpetual Trustee v Groth (1985) 2 NSWLR 278 Royal Society of London v Thompson (1881) 17 Ch D 407 Re Lowin [1967] 2 NSWR 140 Re Travis [1947] NZLR 382 Re Hopkins Will Trusts [1965] Ch 669 Re Compton [1945] Ch 123 Caffoor Trustees v Commissioner of Income Tax [1961] AC 584 Re Mariette [1915] 2 Ch 284 Kearins v Kearins (1956) 57 SR (NSW) 286 IRC v McMullen [1981] AC 9.6 Trusts for the Advancement of Religion Church of New Faith v Commissioner Payroll Tax (Vic) (1983) 154 CLR 120 Keren Kayemeth Le Jisroel Ltd v IRC [1931] 2 KB 465, per Rowlatt J at 469 United Grand Lodge Freemasons v Holborn BC [1957] 1 WLR 1080, at 1090 Re Vaughan (1886) 33 Ch D 187 Nelan v Downes (1917) 23 CLR 546 Re Joy (1888) [1886-90] All ER 1110 Re Simpson [1946] Ch 299 Neville Estates Ltd v Madden [1962] Ch 832 Joyce v Ashfield MC [1975] 1 NSWLR 744

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9.7 Trusts for Purposes Beneficial to the Community Royal Nat. Ag. and Ind. Ass’n v Chester (1974) 48 ALJR 304 Scottish Burial Reform and Cremation Soc. v Glasgow Corp [1968] AC 138 Schellenberger v Trustees Executors Agency Co Ltd (1952) 86 CLR 454 Brisbane City Council v A-G (Qld) (1978) 52 ALJR 599 CSD (NSW) v Way (1951) 83 CLR 570 Re Mathew [1951] VLR 226 Verge v Somerville [1924] AC 496 Re Darwin Cyclone Tracy Relief Trust Fund (1979) 39 FLR 260 Re Grove-Grady [1929] 1 Ch 557 Re Green [1970] VR 442 A-G (NSW) v Sawtell [1978] 2 NSWLR 200 In re Verrall [1916] 1 Ch 100 McGovern v A-G [1981] 3 All ER 493 Southwood v Attorney-General (UK) [2000] EWCA Civ 204 Re Koeppler's Will Trusts [1984] 2 All ER 111 Royal North Shore Hospital v A-G (NSW) (1938) 60 CLR 396 Re Patten [1929] 2 Ch 276 Public Trustee v Attorney-General (NSW) (1997) 42 NSWLR 600 (Binns’ case) 9.8 Mixed Charitable and Non-Charitable Gifts • Compendious Gifts Charitable Trusts Act 1993 (NSW) s 23 • Gifts which can be Apportioned Re Clarke, Bracey v National Lifeboat Association [1923] 2 Ch 407 • General gifts to Charity Congregational Union of NSW v Thistlewayte (1952) 87 CLR 375 Re Hollole [1945] VLR 295 Re Griffiths [1926] VLR 212 Union Trustee Co of Australia Ltd v C of E Ppty Trust (1946) 46 SR (NSW) 298 Leahy v A-G (NSW) [1959] AC 457 9.9 The Enforcement and Effectuation of Charitable Trusts • Enforcement Ware v Cumberlege (1855) 20 Beav 503, per Romilly MR at 510; 52 ER 697 at 700-1 Sir Moses Montefiore Jewish Home v Howell & Co [1984] 2 NSWLR 406 Smith v Kerr [1902] 1 Ch 774 Re Pyne [1903] 1 Ch 83 Imperial Acts Application Act 1969 (NSW), s 17 • Effectuation A-G (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209, at 225 Re Lysaght [1965] 2 All ER 888 • General Schemes Sir Samuel Romilly's Act 53 Geo III c 101

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Imperial Acts Application Act 1969 (NSW), s 17 • Cy-pres Schemes Da Costa v De Pas (1754) Amb 228; 27 ER 150 A-G v Ironmongers' Co (1841) Cr & Ph 208; 41 ER 469 Phillips v Roberts [1975] 2 NSWLR 207 Varsani v Jesani [1999] Ch 219 Charitable Trusts Act 1993 (NSW) s 9 9.10 The Lapsing or Failure of Charitable Trusts Re Coopers' Conveyance Trusts [1956] 1 WLR 1096 Re Vernon's Will Trusts [1972] Ch 300 Re Finger's Will Trusts [1972] Ch 286 Sir Moses Montefiore Jewish Home v Howell & Co [1984] 2 NSWLR 406 Re Songest [1956] 2 All ER 765 Re Wright [1954] 2 All ER 98 Dormant Funds Act 1942 (NSW) 10. RESULTING OR IMPLIED TRUSTS [Equity and Trusts Ch 16] 10.1 Incomplete Dispositions • Failure of an Express Trust Hancock v Watson [1902] AC 14 • Surplus after Fulfilment of Original Purpose Smith v Cooke [1891] AC 297 In re Abbott Fund Trusts [1900] 2 Ch 326 In re British Red Cross Balkan Fund [1914] 2 Ch 419 In re Gillingham Bus Disaster Fund [1958] 1 Ch 300 Cunnack v Edwards [1896] 2 Ch 679 Re West Sussex Constabulary's Widows Fund [1971] Ch 1 • Loans upon Conditions Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Thiess Watkins White Ltd v Equiticorp Australia Ltd [1991] 1 Qd R 82 Re Miles; NAB v Official Receiver (1988) 85 ALR 216 10.2 Purchase in the Name of Another Dyer v Dyer (1788) 2 Cox 92, at 93; 30 ER 42, at 43 Napier v Public Trustee (WA) (1980) 32 ALR 153; 55 ALJR 1 Delehunt v Carmody (1986) 161 CLR 464 • Contributions to the Purchase Price or Cost of Acquisition Ingram v Ingram [1941] VLR 95 Currie v Hamilton [1984] 1 NSWLR 687, at 691 Pettitt v Pettitt [1970] AC 777 Muschinski v Dodds (1985) 160 CLR 583

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Calverley v Green (1984) 155 CLR 242 • Rebutting the Presumption Bloch v Bloch (1981) 37 ALR 55 Allen v Snyder [1977] 2 NSWLR 685 • The Presumption of Advancement Wirth v Wirth (1956) 98 CLR 228 Dullow v Dullow (1985) 3 NSWLR 531 Re Bulankoff [1986] 1 Qd R 366 Martin v Martin (1959) 110 CLR 297 Brown v Brown (1993) 31 NSWLR 582 • De Jure and De Facto Spouses Family Law Act 1975 (Cth) Property (Relationships) Act 1984 (NSW), esp ss 3, 17, 18 and 20 Hibberson v George (1989) 12 Fam LR 723 Evans v Marmont (1997) 42 NSWLR 70 Wallace v Stanford (1995) 37 NSWLR 1 • Joint Bank Accounts Russell v Scott (1936) 55 CLR 440 • Gratuitous Dispositions House v Caffyn [1922] VLR 67 Wirth v Wirth (1956) 98 CLR 228, per Dixon CJ at 236-7 Newcastle City Council v Kern Land Pty Limited (1997) 42 NSWLR 273 Conveyancing Act 1919 (NSW), s 44 Imperial Acts Application Act 1969 (NSW), s 8 11. CONSTRUCTIVE TRUSTS [Equity and Trusts Ch 17] Muschinski v Dodds (1985) 160 CLR 583 Pettkus v Becker (1980) 117 DLR (3d) 257 Re Stephenson Nominees Pty Ltd (1987) 76 ALR 485 (esp Gummow J at 501 to 506) Lonhro v Fayed (No 2) [1991] 4 All ER 961 11.1 Breach of Fiduciary Duty Chan v Zacharia (1984) 154 CLR 178, per Deane J at 198-9 Birtchnell v Equity Trustees Executors & Agency (1929) 42 CLR 384 Industrial Development Consultants v Cooley [1972] 1 WLR 443 Timber Engineering Co Pty Ltd v Anderson & Ors [1980] 2 NSWLR 488 Hospital Products Ltd v USSC (1984) 156 CLR 41 Boardman v Phipps [1967] 2 AC 46 Lister v Stubbs (1890) 45 Ch D 1 Hagan v Waterhouse (1992) 34 NSWLR 308 at 360-365F •

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The Keech v Sandford principle Keech v Sandford (1726) Sel Cas T King 61; 25 ER 223 Chan v Zacharia (1984) 154 CLR 178 11.2 Other Sources of Principal Liability • Unconscionable conduct or undue influence Cameron v Murdoch (1986) 63 ALR 575 • Breach of Confidence • Equitable Estoppel • Frustration of an express trust Malsbury v Malsbury [1982] 1 NSWLR 226 • Common Intention Constructive Trust Allen v Snyder [1977] 2 NSWLR 685 Pettitt v Pettitt [1970] AC 777 Gissing v Gissing [1971] AC 886 Hohol v Hohol [1981] VR 221 Hurt v Freeman [2002] NSWSC 264 Secretary Department of Social Security v Agnew [2000] FCA 59 • Unconscionable retention of benefit Muschinski v Dodds (1985) 160 CLR 583, at 615 Baumgartner v Baumgartner (1987) 164 CLR 137 Bryson v Bryant (1992) 29 NSWLR 188 Carson v Wood (1994) 34 NSWLR 9 • Capital accounts and revenue accounting in domestic property disputes Bernard v Josephs [1982] Ch 391 Brickwood v Young (1905) 2 CLR 387 Breen v Plumb (unrep NSW CA 3 March 1992) Ryan v Dries [2002] NSWCA 3 11.3 Equitable Charges Chalmers v Pardoe [1963] 1 WLR 677 Morris v Morris [1982] 1 NSWLR 61 Hibberson v George (1989) 12 Fam LR 723 Cooke v Cooke [1987] VR 625 Higgins v Wingfield [1987] VR 689 Henderson v Miles (No 2) [2005] NSWSC 867 11.4 Third Parties as Constructive Trustees - The Rule in Barnes v Addy Barnes v Addy (1874) 9 Ch App 244 • Trustees de son tort Taylor v Davies [1920] AC 636

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• Third parties who receive and become chargeable Soar v Ashwell [1893] 2 QB 390 Marshall Futures v Marshall [1992] 1 NZLR 316 Nimmo v Westpac Banking Corporation [1993] 3 NZLR 218 Lankshear v ANZ Banking Group (NZ) Ltd [1993] 1 NZLR 481 Re Montagu’s Settlement Trusts [1987] Ch 264; [1992] 4 All ER 308 Agip (Africa) Ltd v Jackson [1990] Ch 265; [1991] Ch 547; [1992] 4 All ER 451 (CA) • Those who assist with knowledge in a dishonest and fraudulent design Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Baden Delvaux etc v Societe Generale pour Favorisier le Development [1983] BCLC 325 Selangor United Rubber Estates Ltd v Cradock (No 3) [1968] 1 WLR 1555 Karak Rubber Co Ltd v Burden [1972] 1 All ER 1210 Carl Zeiss Stiftung v Herbert Smith & Co (No 2) [1969] 2 Ch 276 Re Montagu's Settlement Trusts [1987] Ch 264 Lankshear v ANZ Banking Group (NZ) Ltd [1993] 1 NZLR 481 Polly Peck International plc v Nadir & ors (No 2) [1992] 4 All ER 769 Royal Brunei Airlines Sdn Bhd v Tan [1995] 3 WLR 64 Bank of Credit and Commerce Int'l (Overseas) Ltd (in liq) v Akindele [2001] Ch 437 Aequitas v AEFC [2001] NSWSC 14 Gertsch v Atsas [1999] NSWSC 898 Twinsectra Limited v Yardley [2002] 2 AC 164; UKHL 12 (21 March 2002) Maher & Ors v Millennium Markets Pty Ltd & Ors [2004] VSC 174 (20 May 2004) 12. THE DUTIES OF TRUSTEES [Equity and Trusts Ch 18] 12.1 Appointment and Removal of Trustees • Capacity to be a Trustee • Appointment of Trustees Mallot v Wilson [1903] 2 Ch 494 • Disclaimer by a Trustee Thompson v Leach (1690) 86 ER 391 Re Clout and Frewer's Contract [1924] Ch 230 Standing v Bowring (1885) 31 Ch D 282 • Retirement of Trustees Head v Gould [1898] 2 Ch 250. • Removal of Trustees Letterstedt v Broers (1884) 9 App Cas 371 Re Henderson [1940] Ch 764 Guazzini v Patterson (1918) 18 SR (NSW) 275 Re Brockbank [1948] Ch 206 Hobkirk v Ritchie (1933) 29 Tas LR 14 Princess Anne of Hesse v Field [1963] NSWR 998

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12.2 Vesting of Trust Property Andco Nominees Pty Ltd v Lestato Pty Ltd (1995) 17 ACSR 239 12.3 Duties of a Trustee Hallows v Lloyd (1888) 39 Ch D 686, per Kekewich J at 691 Low v Bouverie [1891] 3 Ch 82, per Lindley LJ at 99 12.4 Duty to Preserve Trust Property Partridge v Equity Trustees Executors and Agency Co Ltd (1947) 75 CLR 149 Re Speight, Speight v Gaunt (1883) 22 Ch D 727 Cowan v Scargill [1985] Ch 270 Re Whiteley, Whiteley v Learoyd (1886) 33 Ch D 347 Elder's Trustee and Executor Co Ltd v Higgins (1963) 113 CLR 426 Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980] Ch 515 Nestle v Nat Westminster Bk PLC (unrep) Hoffman J 29 June 1988; [1994] 1 All ER 118 (CA) Re Mulligan (dec’d) [1998] 1 NZLR 481 Re Lucking's Will Trusts [1968] 1 WLR 866 Pateman v Heyen (1993) 33 NSWLR 188 (trustee's duty to insure) Re Duke of Norfolk's Settlement Trusts [1982] Ch 61 Cradock v Piper (1850) 1 Mac & G 664; 41 ER 1422 Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461; [1843-60] All ER Rep 249 Holder v Holder [1968] Ch 353 Trustee Act 1925 (NSW), s 14B; ss 90 & 90A 12.5 Duty of Loyalty Nat. Trustees v General Finance Co [1905] AC 373, per Lindley LJ at 375-6 Chapman v Chapman [1954] AC 429 Tickle v Tickle (1987) 10 NSWLR 581 Ku-ring-gai Municipal Council v A-G (1953) 19 LGR 105 Merriman v Perpetual Trustee Co Ltd (1895) 17 LR (NSW) Eq 325 Re Estate of Wilson (1987) 11 NSWLR 493 12.6 Duty to Keep Accounts and Supply Information Hawkesley v May [1956] 1 QB 304 Re Londonderry's Settlement [1965] Ch 918 12.7 Duty to Act Personally Ex parte Belchier (1754) Amb 218; 27 ER 144 Speight v Gaunt (1883) 22 Ch D 727 Wyman v Paterson [1900] AC 271 Trustee Act 1925 (NSW), s 53 12.8 Duty to Consider McPhail v Doulton [1971] AC 424, per Lord Wilberforce at 449 and 455 Neill v Public Trustee [1978] 2 NSWLR 65 Marley v Mutual Security Merchant Bank [1991] 3 All ER 198 In re Hay's Settlement Trusts [1982] 1 WLR 202, per Megarry V-C at 210 Duke of Portland v Lady Topham (1864) XI HLC 54, at 55

27

Vatcher v Paull [1915] AC 372, per Lord Parker at 378 Gisborne v Gisborne (1877) 2 App Cas 300 Re Burton's Settlements [1955] 1 Ch 82, per Upjohn J at 100 Re Nicholson [1939] Ch 11 Gordon v Aust & NZ Theatres Ltd (1940) 40 SR (NSW) 512, at 517 13. THE POWERS OF A TRUSTEE

[Outline Ch 18] Riddle v Riddle (1952) 85 CLR 202 IRC v Bernstein [1961] Ch 399 13.1 Powers of Sale Altson v Equity Trustees, Executors and Agency Ltd (1912) 14 CLR 341 Pagels v MacDonald (1936) 54 CLR 519 13.2 Powers of Management Amos v Fraser (1906) 4 CLR 78, per Griffith CJ at 84 Harkness v Harkness (1903) 20 WN (NSW) 216 13.3 Powers of Maintenance and Advancement Pilkington v IRC [1964] AC 612 14. THE RIGHTS OF TRUSTEES [Equity and Trusts Ch 19] 14.1 The Right of Reimbursement and Indemnity

(a) Right to reimbursement or indemnity from the trust fund Re Raybould [1900] 1 Ch 199 National Trustees Executors and Agency v Barnes (1941) 64 CLR 268 Ex parte Garland (1803) 10 Ves 110; 32 ER 786 Re Anderson (1927) SR (NSW) 296 at 380 Re Staff Benefits Pty Ltd [1979] 1 NSWLR 207 Gatsios Hldgs Pty Ltd v N K Hldgs P/L (in liq) [2002] NSWCA 29 Nolan v Collie & Merlaw Nominees Pty Ltd (in liq) [2003] VSCA 39 (24 April 2003). Re Beddoe, Downes v Cottam [1893] Ch 547 Re Jones; Christmas v Jones [1897] 2 Ch 190 Pope v DRP Nominees Pty Ltd [2000] SASC 65 Re Estate of Wilson (1987) 11 NSWLR 493 Wise v Perpetual Trustee Co Ltd [1903] AC 139, per Lord Lindley at 149 Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 Owen v Delamere (1872) LR 15 Eq 134, at 139-140 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360, at 367 Re Pheon Pty Ltd (1988) SASR

(b) Right to reimbursement or indemnity from beneficiaries Hardoon v Belilios [1901] AC 118 JW Broomhead (Vic) P/L (in liq) v JW Broomhead P/L [1985] VR 891 McLean v Burns Philp Trustee Co Pty Ltd (1985) 9 ACLR 926

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Countryside (No 3) Pty Ltd v Bayside Brunswick Pty Ltd (unrep) NSW Supreme Court, Brownie J 20 April 1994 and 13 May 1994 14.2 Winding up a Trading Trust Bankruptcy Act 1966 (Cth), s 5 Companies Code, s 229A Re Byrne Australia Pty Ltd [1981] 1 NSWLR 394 Re Enhill Pty Ltd (1982) 7 ACLR 8 Re Suco Gold Pty Ltd (1983) 7 ACLR 873 Grime Carter & Co P/L v Whytes Furniture [1983] 1 NSWLR 158 Ramsay v National Australia Bank [1989] VR 59 at 67-8 Matheson; Ex parte Worrell v Matheson (1994) 121 ALR 605 HAJ Ford, “Trading Trusts and Creditors’ Rights”, (1981) 13 Melb ULR 1 AM Millhouse, “Trading Trusts”, (1988) Qld Law Soc J, Dec '88, 443 14.3 The Right of Contribution Bahin v Hughes (1886) 31 Ch D 390 Chillingworth v Chambers [1896] 1 Ch 685 Powlet v Herbert (1791) 1 Ves Jun 297; 30 ER 352 Bacon v Camphausen (1888) 58 LT 851 Lockhart v Reilly (1856) 25 LJ Ch 697 Head v Gould [1898] 2 Ch 250 14.4 Right to Impound a Beneficiary's Interest Fletcher v Collis [1905] 2 Ch 24 Re Somerset [1894] 1 Ch 231 14.5 Right to obtain the Opinion, Advice and Direction of the Court Trustee Act 1925 (NSW), s 63 Re Grose [1949] SASR 55 Re Permanent Trustee Australia Ltd (1994) 33 NSWLR 547* Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653 at 656 * 15. THE LIABILITY OF A TRUSTEE [Equity and Trusts Ch 19] 15.1 Liability of a Trustee Generally Grayburn v Clarkson (1868) 3 Ch App 605 Knott v Cotte (1852) 16 Beav 77; 51 ER 588 Wiles v Gresham (1854) 2 Drew 258 at 271; 61 ER 718 at 723 Fletcher v Green (1864) 33 Beav 426; 55 ER 433 Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980] Ch 515 Re Dawson (dec'd) [1966] 2 NSWR 211 Hagan v Waterhouse (1992) 34 NSWLR 308 at 341-7, 391F-393F Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 196 ALR 482 (HCA) 15.2 The Liability of Directors of Corporate Trustees Wilson v Lord Bury (1880) 5 QBD 518 Bath v Standard Land Co Ltd [1911] 1 Ch 618

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Scott & Scott v Riehl & Schumak (1958) 15 DLR (2d) 67 Brenes & Co v Downie & M'Dougall [1914] SC 97 Mulkana Corp NL (in liq) v Bank of NSW (1983) 8 ACLR 278 Hurley v BGH Nominees Pty Ltd (1984) 37 SASR 499 Air Canada v M & L Travel Ltd (1991) 77 DLR (4th) 536 Young v Murphy [1994] VLR 279; 12 ACLC 558 Corporations Act 2001, s 197 15.3 Relief of Trustees from Liability Trustee Act 1925 (NSW), s 85 National Trustee Co v General Finance Co [1905] AC 373 Holland v Administrator of German Ppty [1937] 1 All ER 807 16. BENEFICIARIES [Equity and Trusts Ch 20] 16.1 Rights of the Beneficiary • Right to Extinguish the Trust Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 • Right to Compel Performance of the Trust Miller v Cameron (1936) 54 CLR 572 Re Henderson [1940] Ch 764 Letterstedt v Broers (1884) 9 App Cas 371 • Right to Restrain a Breach of Trust or to sue for Breach of Trust Howden v Yorkshire Miners Association [1905] AC 256 Wylde v A-G (1948) 78 CLR 224 Heavener v Loomes (1923) 34 CLR 306 Permanent Trustee v Perpetual Trustee Co (Australiawide case) (1994) 15 ACSR 722 • Right to Possession of the Trust Property • Right to Approach the Court on questions of construction Trustee Act 1925 (NSW), s 63 • Right to Information about the Trust Spellson v George (1987) 11 NSWLR 300 Tierney v King [1983] 2 Qd R 580 Re Londonderry's Settlement [1965] Ch 918 Re Simersall (1992) 108 ALR 375 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 * 16.2 Rights of Discretionary Beneficiaries Gartside v IRC [1968] AC 553 Sainsbury v IRC [1970] 1 Ch 712 In re Weir's Settlement Trusts [1971] 1 Ch 145 Sir Moses Montefiore Jewish Home v Howell & Co [1984] 2 NSWLR 406 Nicholls v Louisville Investments Pty Ltd (1991) 10 ACSR 723

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16.3 Remedies for Breach of Trust

(a) Tracing Frith v Cartland (1865) 2 H & M 417; 71 ER 525, per Page-Wood VC at 526 Chase Manhattan Bank NA v Israel-British Bank [1979] 3 All ER 1025 Re Diplock's Estate [1948] 1 Ch 465 Barclays Bank v Quistclose Investments [1970] AC 567 Black v Freedman (1910) 12 CLR 105 Hagan v Waterhouse (1992) 34 NSWLR 308 at 348D-359D

(b) Tracing into a Mixed Fund Re Hallett's Estate (1880) 13 Ch D 696 Clayton's case (1816) 1 Mer 572; 35 ER 781 Brady v Stapleton (1952) 88 CLR 322 Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25 Aluminium Industries Vaassen v Romalpa Aluminium [1976] 1 WLR 676 James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62 Re Oatway [1903] 2 Ch 356 Re Tilley's Will Trusts [1967] 1 Ch 1179 Scott v Scott (1962) 109 CLR 649 Paul A Davies (Australia) Pty Ltd v Davies [1983] 1 NSWLR 440 Re Stenning [1895] 2 Ch 433 Stephens Travel Service Int. Pty Ltd v Qantas Airways Ltd [1988] 13 NSWLR 331 Re French Caledonia Travel Service P/L (in liq) (2003) 59 NSWLR 361 Barlow Clowes Int Ltd (in liq) v Vaughan [1992] 4 All ER 22 (CA) El Ajou v Land Holdings plc (No 2) [1995] 2 All ER 213

(c) Tracing property into the hands of Third Parties Re Diplock's Estate [1948] 1 Ch 465 Hagan v Waterhouse (1992) 34 NSWLR 308 at 348D-359D

(d) Personal remedy against a trustee in breach Re Dawson (dec'd) [1966] 2 NSWR 211 Hagan v Waterhouse (1992) 34 NSWLR 308 at 341-7, 391F-393F

(e) Personal remedy against third party who has received trust property Re Diplock [1948] 1 Ch 465 Ministry of Health v Simpson [1951] AC 251 17. REMEDIAL EQUITY 17.1 Relief from Undue Influence [Equity and Trusts Ch 6.4] Allcard v Skinner (1887) 36 Ch D 145 Johnson v Buttress (1936) 56 CLR 113 West v Public Trustee [1942] SASR 109 Bullock v Lloyds Bank Ltd [1955] 1 Ch 317 Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 Bank of NSW v Rogers (1941) 65 CLR 42 Barclays Bank v O'Brien [1994] 1 AC 180

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17.2 Relief from Unconscionable Conduct [Equity and Trusts Ch 6.5] Wilton v Farnworth (1948) 76 CLR 646 Blomley v Ryan (1956) 99 CLR 362 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Louth v Diprose (1992) 175 CLR 621 Bridgewater v Leahy (1998) 158 ALR 66 Garcia v National Australia Bank Ltd (1998) 155 ALR 614 Contracts Review Act 1980 (NSW) Trade Practices Act 1974 (Cth), s 51AA, s 51AB 17.3 Injunctions [Equity and Trusts Ch 23] Duchess of Argyll v Duke of Argyll [1967] Ch 302 Buckley v Tutty (1971) 125 CLR 353 JC Williamson v Lukey & Mulholland (1931) 45 CLR 282 Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581 Associated Newspapers Group v Insert Media Ltd [1988] 2 All ER 420 Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337

(a) Injunctions to Enforce Negative Stipulations Doherty v Allman (1878) 3 Ap Cas 709 Ampol Petroleum Ltd v Mutton (1952) 53 SR (NSW) 1 Dalgety Wine Estates Pty Ltd v Rizzon (1979) 53 ALJR 647 at 655 per Mason J Sky Petroleum Ltd v VIP Petroleum Ltd [1974] 1 All ER 954 Lumley v Wagner (1852) 1 De GM & G 604; 42 ER 687; [1843-60] All ER Rep 368 Page One Records Ltd v Britton [1967] 3 All ER 822 Warner Bros Pictures Inc v Nelson [1937] KB 209

(b) Injunctions to Protect Licences Wood v Leadbitter (1845) 13 M & W 838; 153 ER 351 Hurst v Picture Theatres Ltd [1915] 1 KB 1 Hounslow London Borough Council v Twickenham Garden Developments [1971] Ch 233 Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605 Graham H Roberts v Maurbeth Investments Pty Ltd [1974] 1 NSWLR 93

(c) Injunctions against Unincorporated Associations Cameron v Hogan (1934) 51 CLR 358

(d) Injunctions to enforce statutory rights Cooney v Ku-ring-gai Council (1963) 114 CLR 582 Australian Conservation Found’n Inc v Commonwealth (1980) 28 ALR 257; 54 ALJR 176 Wentworth v Woollahra Municipal Council (1982) 42 ALR 69 King v Goussetis [1986] 5 NSWLR 89

(e) Mandatory Injunctions Redland Bricks Ltd v Morris [1970] AC 652

(f) Interlocutory Injunctions Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 American Cyanamid Co v Ethicon Ltd [1975] AC 396

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Murphy v Lush (1986) 65 ALR 651 Businessworld Computers v Australian Telecommunications Comm’n (1988) 82 ALR 499 Ansett Transport Industries v Halton (1979) 25 ALR 639 at 649-50, per Aickin J Australian Broadcasting Corp v Lenah Game Meats Pty Ltd (2001) 185 ALR 1

(g) Mareva Injunctions Mareva Compania Naviera SA v International Bulk Carriers SA [1975] 2 Lloyd's Rep 509 Australian Iron & Steel v Buck [1982] 2 NSWLR 889 Riley McKay Ltd v McKay [1982] 1 NSWLR 264 Jackson v Sterling Industries Ltd (1987) 71 ALR 457 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 Hayden v Teplitzky (1997) 154 ALR 497 Winter v Marac Australia Ltd (1986) 7 NSWLR 11

(h) Anton Piller Orders Anton Piller KG v Manufacturing Processes Ltd [1976] 1 Ch 55 Chrysalis Records v Vere (1982) 43 ALR 440 Columbia Picture Industries Inc v Robinson [1986] 3 WLR 542 Thermax Ltd v Shott Industrial Glass Ltd [1981] FSR 289 Long v Specifier Publications Pty Ltd (1998) 44 NSWLR 545 17.4 Specific Performance [Equity and Trusts Ch 22]

(a) Inadequacy of Damages Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591 Aristoc Industries Pty Ltd v RA Wenham (Builders) Pty Ltd [1965] NSWR 581 Borg v Howlett (SC) (NSW), Young J, 24 May 1996 Slee v Warke (1949) 86 CLR 271

(b) Mutuality Turner v Bladin (1951) 82 CLR 463

(c) Contracts for Personal Services and Contracts requiring constant supervision JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282

(d) Defences to a suit for Specific Performance Dowsett v Reid (1912) 15 CLR 695 Colyton Investments Pty Ltd v McSorley (1962) 107 CLR1 77 (e) The Doctrine of Part Performance Caton v Caton (1865) LR 1 Ch App 137 Maddison v Alderson (1883) 8 App Cas 467 McBride v Sandiland (1918) 25 CLR 69 Cooney v Burns (1922) 30 CLR 216 Regent v Millett (1976) 50 ALJR 799 Steadman v Steadman [1976] AC 536 White v Neaylon (1886) 11 LR App Cas 171 Millett v Regent [1975] 1 NSWLR 62

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17.5 Monetary Remedies in Equity [Equity and Trusts Ch 26] Nocton v Lord Ashburton [1919] AC 49 Re Dawson (dec'd) [1966] 2 NSWR 211 Warman International Ltd v Dwyer (1995) 182 CLR 544 Harris v Digital Pulse Pty Ltd [2003] NSWCA 10 Wroth v Tyler [1974] Ch 30 Johnson v Agnew [1980] AC 367 Grant v Dawkins [1973] 3 AllER 897 McKenzie v McDonald [1927] VLR 134 Seager v Copydex [1967] 2 All ER 415 Canson Enterprises v Boughton (1991) 85 DLR (4th) 129 Target Holdings Ltd v Redferns [1996] 1 AC 421 Maguire v Makaronis (1997) 188 CLR 449 Equitable Compensation: Towards a Blueprint, CEF Rickett, (2003) 25 Syd Law Rev 31 18 REVIEW- THE NOTIONS OF CONSCIENCE AND UNCONSCIONABILITY Muschinski v Dodds (1985) 160 CLR 583, esp. per Deane J at 614-5 Waltons (Stores) Interstate v Maher (1988) 164 CLR 387; 76 ALR 513 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Franklin's Self Serve Stores P/L v Austotel P/L (unrep) Needham J Austotel P/L v Franklin's Self Serve Stores P/L (1989) 16 NSWLR 582 (CA) Nelson v Nelson (1994) 33 NSWLR 740 Federal Airports Corporation v Makucha Developments Pty Ltd (1993) 115 ALR 679

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COURSE PROBLEMS A. The basic concepts of Equity The Judicature system 1. Commenting in 1906 on s 25(11) of the Judicature Act 1873 (UK) (equivalent to s 5 of the Law

Reform (Law and Equity) Act 1972 (NSW)), Professor Maitland said in Equity (rev by Brunyate, 1936) at 16: [I]f you will look at any good commentary upon it you will find that it has done very little - it has been practically without effect. Consider whether this is an accurate account of the effect of the legislation. Illustrate your answer with reference to three areas of law.

2. In Meagher Gummow & Lehane's Equity: Doctrines and Remedies, 4th ed, Meagher, Heydon

and Leeming say at para [2-090]:

There was nothing in the Judicature Act which attempted to codify law and equity as one subject matter or which severed the roots of the conceptual distinctions between law and equity. The term "fusion" used frequently in discussion at the time, referred to the establshment of the new court with, by virtue of s 26, the jurisdiction of the old courts, and the single procedure which by virtue of s 24 was to obtain therein. It did not describe some new body of law which was neither law nor equity, and it was not susceptible of a construction that in any given case the new court had jurisdiction to produce a result which could never have been reached in any one or more of the old courts. Discuss.

3. Discuss the rule in Walsh v Lonsdale (1882) 21 Ch D 9. Nature of equitable estates and interests and equitable priorities 4. In CSD (Q) v Livingston [1965] AC 694, Viscount Radcliffe stated for the Privy Council at 712:

Equity in fact calls into existence and protects equitable rights and interests in property only when their recognition has been found to be required in order to give effect to its doctrines.

Analyze this quotation, with special reference to unadministered estates, discretionary trusts and mere equities.

5. A borrows from B, handing over as security a number of share certificates and a blank but executed transfer form. B fraudulently completes the transfer form and becomes the registered owner of the shares. He then charges the shares to C. As soon as A discovers the fraud, he brings proceedings to have the transfer set aside.

What (if any) are C's rights against A?

6. Explain the rule in Dearle v Hall (1828) 38 ER 475.

Are there any exceptions to the rule? Assignment of future property 7. Consider the validity of each of the following voluntary assignments:

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(a) Half of my contractual right to receive royalties for castors (but at the time of assignment the licensee has been forced by prevailing economic conditions to stop manufacturing castors, and it is unlikely that he will resume).

(b) Half of my right to interest on a loan repayable by the borrower at will (but the borrower is a family

company controlled by the assignor, who intends to continue the loan for 10 years). (c) Half of my right to interest on a loan repayable by the borrower on his giving one day's notice, but

repayable immediately on a demand by the lender with interest to the date of demand. (d) Half of my right to interest on a loan for a term of five years, subject to a right of early repayment

by the borrower without notice. (e) Half of my life estate, or a share of it valued at $500, whichever is less. (f) The first $500 of the yearly net income to accrue to me for the rest of my life from the trust in

which I have a life estate. Situations involving a variety of dealings 8. X wrote the following letter to Y:

I give you my land at 12 Smith Street, Blacktown. Here is the Certificate of Title. I also give you half the money which Z owes me, and I declare myself trustee for you of the contents of my savings account with the Bank of New South Wales.

What is the effect of these statements? Would the position be different if X had also handed over a duly executed memorandum of transfer of the land in registrable form?

9. X executed a deed with trustees whereby he purported to make a voluntary transfer on trust for Y

of:

(a) his 10,000 BHP shares, and (b) 50 percent of the royalties to be derived during the succeeding five years from the

manufacturer under royalty agreement of his patented castors.

In addition, X covenanted without consideration to transfer the fruit of his pending defamation suit against Claria Newspapers Ltd to the same trustees. Two weeks later, X obtained a verdict of $100,000 against Claria Newspapers Ltd. He then repudiated the deed. Advise Y on his rights with respect to the shares, the royalties and X's breach of the covenant.

10. Mark, managing director of Markings Pty Ltd, agrees under seal with trustees to pay to them one

quarter of the dividends declared during the next three years on the shareholding he holds in the company. The trustees are directed by the trust instrument to make payments of capital from the fund so established to such of Mark's dependants and relatives with whom Mark has at any time lived ('the class of objects') as they shall in their absolute discretion select. The trustees are also empowered to add to the class of objects any person or persons other than Mark's first wife. There is no gift over. Mark makes a few payments, but not to the extent promised. Mark's brother wishes to institute proceedings against Mark for breach of covenant.

Advise him.

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11. Alan wrote the following letter to Brian:

I give you my 1,000 B H P shares. Here are the share certificates. I also give you half the money which Charles owes me, and I declare myself trustee for you on the contents of my savings account with the ANZ Banking Group.

What is the effect of Alan's statements? Would the position be different if Alan had also handed over a duly executed share transfer in proper form?

12. Harry made the following statement to John:

I hereby give you all the dividends I may receive on my shares in Goldrush Ltd, and half of all the debentures I hold in Silverfield Ltd.

Discuss the legal effect of Harry's statement.

13. John was the registered proprietor of Blackacre under the Torrens System . He was also the

sole beneficial owner of shares which were held on trust by the Permanent Trustee Company. John executed a memorandum of transfer of Blackacre in favour of his daughter Rebecca, and forwarded the transfer and the certificate of title to his solicitor, with instructions to pay the stamp duty and register the memorandum of transfer. John then orally directed the Permanent Trustee Company to give his solicitor the share certificates and a transfer in blank. The Permanent Trustee Company obeyed John's direction. The solicitor on John's instructions forwarded the transfer and share certificates to Rebecca, who then had the shares registered in her name. John died of a heart attack before the memorandum of transfer in respect of Blackacre had been registered.

Advise Rebecca.

14. T devises Blackacre to S “provided S pays $10,000 to R within two years of my death”. S fails to

pay R. Advise R. C. Fiduciary relationships 15. Critically discuss the way in which the House of Lords in Boardman v Phipps [1967] 2 AC 46

interpreted and applied the rule that a fiduciary must not place himself in a position where his duty and his personal interest may conflict.

D. Trusts The nature, classification and constitution of trusts 16. In Morice v Bishop of Durham (1805) 9 Ves 399, Sir William Grant said:

There can be no trust, over the exercise of which this court will not assume a control; for an uncontrollable power of disposition would be ownership, and not trust ... There must be somebody in whose favour the court can decree performance.

Discuss.

17. Discuss the following pecuniary legacies of $10,000, explaining the legal effect of each:

(a) to X, hoping that he will use it to buy himself a safer car; (b) to X in the fullest confidence and trust that he will use as much of this sum as is necessary

to provide a good education for his ward W;

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(c) to X, charged with the payment of $5,000 to Y; (d) to X, on condition that he pays $5,000 to Y within two years from the date of my death; (e) to X, on condition that he provide a home for my aged sister Y for the rest of her life, and

that he pay for her food and clothing and all her medical bills. The intention to create a trust 18. A contracts with B to transfer a vintage car to C for $30,000, to be paid by B. Discuss the

remedies available to C if A refuses to perform the contract. Trusts, powers and discretionary trusts 19. What is the effect of a bequest “To X and Y on trust for such of the testator's friends as A shall

select”? Explain the relevant principles. 20. Alfred and Burt enter into a deed under which they are the beneficiaries of a discretionary trust.

The instrument gives Alfred and Burt the power to appoint the trustee. It also empowers the trustee “to carry on any business which the trustee may in his absolute discretion think fit”. Alfred and Burt incorporate Safety Pty Ltd, giving it nominal assets. They then appoint it as trustee over trust assets valued at $50,000. Safety Pty Ltd goes into business selling refrigerators which are supplied solely by a company controlled by Albert. Safety Pty Ltd also agrees to pay $60,000 for an allotment of shares in Speculative Projects Ltd, a company established to make fast profits out of speculative high technology projects. After one year's trading Safety Pty Ltd has made $10,000 for the trust selling refrigerators. However Speculative Projects Ltd has become insolvent and its shares are now worthless. The liquidator of Speculative Projects Ltd now seeks to recover $60,000 from Safety Pty Ltd.

Advise the liquidator.

Trust of voluntary covenants 21. Gerald agreed with trustees under seal to transfer any interest he might receive under his Uncle

Tom's will to the trustees. The trustees were empowered to distribute any property that they might receive “amongst the descendants of those who died on the battlefields of Gallipoli, in such a manner as the trustees think fit”. Uncle Tom died leaving Gerald $1 million. Before Gerald could transfer the $1 million to the trustees he died intestate. Gerald's next-of-kin claim the $1 million. Walter, whose grandfather was killed in action at Gallipoli, seeks your advice. Advise him.

Charitable trusts 22. Discuss the following gifts left to trustees by T in his will:

(a) $50,000 upon trust for the poor families of striking British coal miners; (b) $50,000 upon trust for the prevention of religious persecution in the Soviet Union; (c) $50,000 upon trust to provide recreational and sporting facilities for the members of the

Central Methodist Mission.

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23. A testator made the following bequests: (a) $10,000 upon trust to persuade the Australian Taxation Office to use plain English; (b) $10,000 upon trust to ameliorate the condition of the dependants of South Australian

steelworkers; (c) $10,000 upon trust to provide clubhouse facilities for the Lakemba Bowling Club (an

unincorporated association).

Discuss the validity of the bequests. Certainty of object and trusts for non-charitable purposes 24. Bill, a humanitarian man and lover of peace, made the following provisions in his home-made will:

(a) $60,000 to my friend Rose on trust for such of the victims of the Hiroshima bomb, if any, as

the President for the time being of the New South Wales Returned Servicemen's League might choose;

(b) $50,000 to my next door neighbour John on trust for such of the relatives and kind

neighbours of Australian Vietnam veterans as he shall in his absolute discretion determine; (c) my sensory deprivation chamber on trust to my friend Harriet to be maintained for 20 years

primarily, but not exclusively, for the benefit of the regular patrons of the Concord Cafe in Balmain;

(d) $40,000 to my friend Anna on trust for the Students' Collective for the Cause of Peace and

for the fostering of its activities. The Students' Collective for the Cause of Peace ('SCCP') is a group of young people who aim to promote world peace. To this end and on the philosophy that 'peace begins at home', they conduct weekly meetings at which students sit in a room and silently think. The group has no religious affiliations or purpose and this is its only activity. Because of the shifting nature of student populations and the tendency of members of the group to become bored with its meetings, the number who claim to be part of the SCCP is constantly changing. Nevertheless, there is an inner circle of about 20 students who founded the collective and have been in regular attendance at its meetings for over six years. Bill dies. The President of the New South Wales Returned Servicemen's League, Rose, John, Anna and Harriet issue a joint press statement that Bill was misguided, and that they are taking legal advice as to the validity of the trusts and their duty to exercise any powers under them. Fumiko, a woman injured at Hiroshima, and Susie, a regular patron of the Concord Cafe, a founding member of SCCP and the second cousin of a Vietnam veteran, want to compel them to administer the trusts. Advise Fumiko and Susie.

Resulting and constructive trusts 25. C is employed by D to discover old cars suitable for purchase, repair and resale at a profit. C

agrees with E to share the profits made from cars which C brings to E's attention and which E resells. E knows C is employed by D.

In what circumstances could D compel E to pay him the share of profits received by E?

26. In 1985, Bill made a will leaving all his property to his sister Sarah “knowing that she will regard

herself as obliged to carry out my wishes in respect thereof; she knows what they are”. Sarah witnessed the will, and, after doing so, asked Bill what his wishes were in regard to the property.

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Bill said: “I won't tell you now, but in a few days I will give you a sealed envelope which you are not to open until after my death.” Sarah said nothing in response to this, but accepted the envelope when he gave it to her the following week.

Bill has now died, and Sarah, on opening the envelope, finds that Bill has asked Sarah to hold one half of the property on trust for his ex-nuptial child Penelope, and the other half on trust for his cousin, Henry, who was a missionary in Pakistan. Two days before Bill's death, Henry died of a fever. Who is entitled to the property?

27. John and Jill meet and form an attachment. They begin living together in a rented house with

Jane, Jill's sister, a would-be novelist. John pays the rent from his income as a taxi driver. Jill does most of the housework and gardening and also paints the house. After a year John buys the house from the landlord for $17,000, and Jane provides $2,000 towards the cost of constructing a small studio in the garden so that she can write in peace. Jill carries out a number of repairs, and installs some built-in cupboards. John then tires of Jill and goes off with another woman. He wishes to sell the house and finds a buyer who is willing to pay $20,000. He then receives solicitors' letters, claiming that Jane and Jill have beneficial interests which can be satisfied by the payment of $4,000 and $2,000 respectively.

Advise John.

28. In 1988, Alice, wishing to provide adequately in her will for her children, held a family conference.

She had three children. The youngest, Matilda, was a successful businesswoman, but the other two, George and Mildred, were not so well off. Therefore, it was agreed that Alice's house would be left in her will to George, but George undertook to leave it in his will to Matilda. It was also agreed that the money in Alice's bank accounts would be left in her will to Mildred, but that when she died, she would leave what remained in the accounts to Matilda's children.

Subsequently, Alice drew up the will, in which she bequeathed her house to George, and her bank accounts to Mildred “in the knowledge that they will dispose of this property in accordance with my wishes”. Neither Matilda nor her children received anything in the will.

In 1990, Alice died. At the time of her death the bank accounts contained $50,000. In 2004, George and Mildred died in a road accident while travelling together to visit Matilda. In his will, George left the house to a charity. Mildred died intestate. There is only $1500 left in her account.

Discuss the claims of Matilda and her children against the estates of George and Mildred.

29. In United States Surgical Corp v Hospital Products International (1984) 156 CLR 41, Deane J

said at 125:

[A] constructive trust may be imposed as the appropriate form of relief in circumstances where a person could not in good conscience retain for himself a benefit ... which he had appropriated to himself in breach of his contractual or other legal or equitable obligations to another.

Discuss.

Tracing 30. A solicitor withdraws $10,000 of a trust fund belonging to his client, A, and dissipates it at the

races. He then withdraws $10,000 from a trust fund which he holds for his client, B, and dissipates $5,000 of that fund. He then withdraws $10,000 of trust moneys belonging to a client, C. To the $15,000 he now has he adds $15,000 of his own money, and purchases a block of land for $30,000. The land is now worth $40,000. Discuss the rights of A, B and C.

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The in personam action: Re Diplock 31. What must be established to maintain an action in personam of the type considered in Re Diplock

[1948] Ch 465? 32. Mr Jones, a resident of New South Wales, married. There were three children of the marriage.

Mr Jones then divorced his wife, went overseas (where he remained) and married again. There was one child of that marriage, a daughter named Blossom. Mr Jones then died, leaving a will, the administration of which you may assume to be governed by the law of New South Wales.

By his will, executed before he left New South Wales, but drawn so as to remain effective notwithstanding his second marriage, Mr Jones left all his property “to my children”. On the advice of their solicitor that “my children” means the children of Mr Jones' first marriage, his executors distribute to them all the assets of his estate. Blossom institutes legal proceedings and, after protracted litigation, the High Court holds that by “my children” Mr Jones meant all his children of both marriages. For various reasons, none of the assets distributed to the children of the first marriage can be followed by virtue of the equitable doctrine of tracing. What (if any) are Blossom's rights against: (a) the executors; and (b) the children of the first marriage?

Rights and liabilities of trustees and beneficiaries generally 33. T holds $6,000 on trust for A for life, remainder to B.

T, with the consent of A, and without the knowledge of B, commits a breach of trust, causing a loss to the fund of $2,000.

Discuss the rights and obligations of A, B and T.

34. Ronald was the trustee of Harold's estate. The beneficiaries under the trust were Harolds's ex-

wife, Maude, and his two sons, Abraham, aged 31, and Justin, aged 17. Maude and Abraham agreed that Justin needed more income from the trust to pay enrolment fees and to buy textbooks for his education at university, and Maude therefore wrote a letter to Ronald, directing him to increase Justin's income from the trust by 30 percent. The letter was co-signed by Abraham. Ronald replied that he was not prepared to accede to Maude's request. Maude then demanded that Ronald give her access to Harold's will, but Ronald refused to do so.

Advise Maude.

35. Scott is a solicitor employed by Steady Trustee Co. His duties involve the administration of

various trust funds over which Steady has been appointed as trustee.

Scott agrees with Eric that they should go into the real estate business. To this end, Scott and Eric establish a company, Real Estate Sales Pty Ltd, and purchase certain properties at prices specified on a list supplied by Scott. The unrealised values of the properties rapidly appreciate. Scott is soon dismissed by Steady Trustee Co for unauthorised photostating and removing of valuation documents. Both Scott and Eric then sell all their shares in Real Estate Sales Pty Ltd to Specialist Properties Ltd at a profit.

Advise Steady Trustee Co.

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E. Unconscionable transactions 36. Miss Smith was the private secretary of Mr Hawkins Snr of Hawkins and Co, a firm of Sydney

solicitors. The week before Mr Hawkins Snr retired, Miss Smith won $50,000 in a lottery. She decided to retire also. Mr Hawkins Snr invited her to share his large house in Bellevue Hill and to keep him company, rent free. He lived there with his son, Henry, who was rarely at home. Miss Smith accepted Mr Hawkins Snr's invitation. He made no other promise to benefit her at that time. Mr Hawkins Snr, who had given Miss Smith legal advice in the past, made some suggestions as to how she might invest her lottery winnings. Her investments were very successful, and she quickly doubled her money. She was so pleased that she made a gift to him of $25,000 out of her gain. Mr Hawkins Snr told Miss Smith that he wanted to spend the gift she had made him in renovating the house extensively, but that the desired renovations would cost $50,000. Miss Smith said: “I shall be delighted to provide the rest.” Mr Hawkins Snr said: “I suppose I can accept that. After all, the house is for you to live in for as long as you wish.” The renovations were subsequently carried out, with Mr Hawkins Snr and Miss Smith each contributing $25,000. Mr Hawkins Snr subsequently died, leaving a will in which his son, Henry, was named as his sole executor and beneficiary. Miss Smith told Henry the facts, of which he had been previously unaware. Nevertheless, he told her she would have to leave the house. Miss Smith wishes to know whether she has any rights in respect of the house or against the estate of Mr Hawkins Snr, and the nature of the remedies which she might seek. Advise her.

F. Equitable remedies General 37. Discuss the following statement:

Many equitable doctrines and remedies are closely identified with contractual rights. Some cut across freedom of contract, while others accept contractual rights and take them as a starting point for a development of equitable rights.

Specific performance and injunctions 38. B agrees to pay A $250,000 in consideration of A transferring to C the Velasquez portrait of King

Philip IV of Spain which A owns.

Discuss the remedies at law and in equity open to B if A refuses to perform the contract. 39. An agreement between Gurney and Zaibatsu Corporation, whereby Gurney was appointed sole

New South Wales distributor of the artificial cherry blossom made in Japan by Zaibatsu Corporation, expressly provided that Zaibatsu Corporation would appoint no other distributor.

Gurney believes the Zaibatsu Corporation proposes to appoint three other distributors. What injunctive relief is available to him?

40. At 3.30 pm on Thursday 13 April 1995, the day before Good Friday, Mr Short of counsel made an

ex parte application to the duty Judge in the Equity division of the Supreme Court of New South Wales. Short announced his appearance for Belgian Congo Bank, and stated that he was seeking injunctions against Highly Geared Holdings Ltd. Short led evidence to the effect that his client had lent $50 million to the defendant under unsecured “negative pledge” facility agreements; that the defendant had committed an act of default under the agreements on 1 April

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1995, and that the whole of the moneys owing had thereupon become immediately due and payable; that the agreements contained covenants, which had come into operation upon default, against paying out moneys except to limited classes of trade creditors; and that the defendant had made a payment on 2 April 1995 in breach of the covenants. After closing his evidence, Short submitted that unless injunctions were granted “freezing” the defendant's assets, any judgment obtained by his client for the moneys owing would be rendered valueless. The Judge asked what steps had been taken to notify the defendant of the application, and Short replied that his instructing solicitors had informed the defendant's solicitors by telephone at 2.00 pm that day. At 4.15 pm, without giving reasons, the Judge made orders restraining the defendant from disposing of any assets until the trial of the action or until further order, and directed that the defendant be notified of the orders by 6.00 pm that day. At 10.00 am on Tuesday 18 April 1995, counsel for Highly Geared Holdings, Mr Long, sought orders discharging the injunctions on the ground that they had been made without jurisdiction, or alternatively that the Judge's discretion had miscarried. He also sought damages for loss which had been suffered by the defendant as a result of the injunctions having been made.

(a) Were the injunctions outside the Judge's jurisdiction? (b) Did the Judge exercise his discretion correctly?

Assuming that loss is proved, is the defendant entitled to damages?

“Damages” in Equity 41. In Re Diplock [1948] 1 Ch 465, the Court of Appeal had occasion to contrast legal and equitable

remedies. Equity, it was said, “dealt only in specific relief and not in damages”. Was it ever true to say that equity did not “deal” in damages? Is it true today? Does “damages” have the same meaning at law and in equity?

Rescission 42. In Alati v Kruger (1955) 94 CLR 216 the High Court said of the matter before it at 223:

If the case had to be decided according to the principles of the common law, it might have been argued that at the date when the respondent issued his writ he was not entitled to rescind the purchase. ... But it is necessary here to apply the doctrines of equity ... . How do equitable “doctrines” and common law “principles” in respect of rescission differ?

43. In Equity: Doctrines and Remedies Meagher, Gummow and Lehane 3rd ed, 1992, state in para 1314: The common law right of “rescission” by acceptance of repudiation of a fundamental contractual term [and] the equitable remedy of rescission ... are quite distinct and operate at opposite ends of the scale. Elaborate on this distinction. In particular, why is reference made to a common law “right” and an equitable “remedy”? What sort of “scale” is referred to? What consequences flow from the distinction? Has failure to draw this distinction led to error in decided cases?

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TOPIC NOTES THE HISTORY AND NATURE OF EQUITY HISTORY Judicature Act section 5

“Equity now is that body of rules administered by our English courts of justice which, were it not for the operation of the Judicature Acts, would be known as the Courts of Equity … for if we were to inquire what it is that the rules have in common and what it is that marks them off from all other rules administered by our courts we should by way of answer find nothing but this, that these rules were lately administered and administered only by our courts of equity.”

Brunyate (ed) Maitland’s Equity (2nd rev’d ed. 1936)

THE EFFECTS OF THE JUDICATURE ACT THE FUSION FALLACY A. The rule in Walsh v Lonsdale

Chan v Cresdon

“If there is an agreement to lease and the tenant on the basis of that agreement has gone into possession and paid rent and the court in which the later proceedings are brought has the jurisdiction to award specific performance and at the time of hearing the agreement to lease is still susceptible of an award of specific performance, then the plaintiff will be treated as having and as having had under the agreement for lease all the rights, duties and obligations that she or he would have if the lease had been executed”.

B. The wider significance of the case and the rule

Forms of fusion fallacy:- 1. Administration of a remedy not previously available either at law or in equity. 2. Modification of principles in one jurisdiction by concepts imported from the other.

Is there a fusion fallacy in Walsh v Lonsdale? 1. The result at law. 2. The result in equity. 3. Jessel MR’s remarks.

“..every branch of the court must give him the same rights … there are not two estates as there were formerly, one estate at common law … and an estate in equity under the agreement. There is only one court and equity rules prevail in it”.

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THE MAXIMS OF EQUITY • Equity looks to substance not form • Equity looks on that as done which ought to be done • He who comes into a court of equity must do so with clean hands • He who seeks equity must do equity • Equity will not suffer a wrong without a remedy • Where the equities are equal the first in time prevails • Equity does not act in vain EQUITY AND PROPERTY “Property”: “it must be definable, identifiable by third parties, capable in its nature of assumption by third parties and have some degree of permanence or stability: National Provincial Bank v Ainsworth. Equity acts in personam which means equity acts against the person. Equity cannot overrule a common law judgement but it may order a judgement is not applicable to a certain person. Equity ensures the common law rights are administered equitably.

A. Baker v Archer-Shee – equitable rights are not merely personal in character; “her right under the will

is “property” from which income is derived.” B. Livingstone’s Case – equitable rights can be personal in character C. Latec Investments Limited v Hotel Terrigal – equitable rights changeable in character

Kitto J (applying Stump v Gaby) Taylor J (applying Phillips v Phillips) Menzie J: the characterisation of equitable rights depends upon the purpose of the classification. Equity will yield in priority to subsequently created interests where that interest was created for value and without notice.

D. Breskvar v Wall

Heid v Reliance Finance – the negligence of the first party has lead to a later party assuming there was no competing earlier interest.

PROBLEMS:- Alice is the sole beneficiary of her late husband Ben’s partly administered estate. She bequeaths all her bank accounts to Clancy and her residuary estate to Doris. At the date of Alice’s death, a large part of Ben’s estate is in the form of bank accounts.

Discuss the claims of Clancy and Doris to the residue of Ben’s estate.

1. Doris: Livingston’s Case 2. Clancy: Re Leigh’s Case and Official Receiver v Schultz

T owns shares in a public company which is listed on the stock exchange. He borrows $20,000 from R on the security of the shares. The mortgages to R are effected by depositing with R the share certificates together with a share transfer signed by I. Although T is not in default under the mortgage, R registers the transfer with the company. Then R, purporting to be the absolute owner of the shares, borrows $10,000 from M on the security of the shares. M has no notice of any irregular behaviour on the part of R. The mortgage is effected by depositing the share certificates with M. What rights does T have against M?

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DEALINGS WITH PROPERTY IN EQUITY A. THE ASSIGNMENT OF CHOSES IN ACTION Section 12 Conveyancing Act: an absolute assignment in writing of a legal chose in action with notice to the debtor shall be effective in law. Norman v FCT 1. Is the assignment effective at law? 2. If not, is the assignment effective in equity? Examples:- A owes money to B. B rings C and says “I give you half of the money A owes me”. A owes money to B. B rings up C and says “I give you the money A owes me”. Milroy v Lord Anning v Anning Corin v Patton PROBLEM

Jenny, the registered proprietor of a parcel of land under the RPA wishing to make a gift of the land handed to the intended donee, Michael a properly executed memorandum of transfer and a letter requesting the bank to deliver the certificate to the bearer. Jenny died before Michael reached the bank. Will the land form part of the donor’s estate? B. AGREEMENTS TO ASSIGN – it is not an immediate transfer but a transfer in the future; with valuable consideration present, equity will treat it as a valid assignment and enforce the assignment. Chang v Registrar of Titles C. DECLARATIONS OF TRUST Paul v Constance D. FUTURE PROPERTY – a right or title which has not yet been acquired, there is no right to acquire but it may be acquired in the future. At law future property cannot be assigned. Equity allows the assignment of future property as long as there is valuable consideration present. When the property comes into existence, the equitable interest will be invested in the assignee. Re Lind Norman’s case Shepherd’s case PROBLEM In a contract dated 1 January 1990 A agreed to pay to B for valuable consideration, royalties equal to 10% of the value of all sales of goods by A to the public during 1990. The royalties were to be paid on or before 30 June 1991. On February 1990 B executed a deed with C. The deed purported to transfer to C as a gift all B’s royalties under the contract of 1 January 1990. Has there been a valid assignment? Would it make any difference if C had given valuable consideration? E. PROPERTY INCAPABLE OF ASSIGNMENT

Maintenance and Champerty Trentex Glegg v Bromley

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F. DEALINGS WITH EQUITABLE INTERESTS

Section 23C(1)(a) – cannot create or dispose of an interest in land except by writing Section 23C(1)(b) – a declaration of trust in respect of land must be in writing Section 23C(1)(c) – “a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same or by his agent thereunto lawfully authorised in writing” Section 23C(2) – “This section does not affect the creation or operation of resulting, implied or constructive trusts” PT Limited v Maradona G. DIRECTIONS TO THE TRUSTEE 1. Beneficiary directs the trustee to hold property in trust for a third party.

Grey’s Case 2. The beneficiary directs the trustee to transfer the trust property to a third party.

Vandervell’s Case H. CONTRACTS FOR VALUE TO ASSIGN Chang v Registrar of Titles: a contract for valuable consideration gives rise to a constructive trust until the legal title passes to the purchaser who has the beneficial interest already. Howard Smith: it is possible to have a trust for the equitable interest in which the trustee has title to the beneficial interest but decides to hold that on trust for someone else, creating a subtrust. Oughtred v IRC DHN Food Distributors I. THE APPLICATION OF SECTION 12 OF THE CONVEYANCING ACT

Section 12 requires that an assignment must be signed by the agent himself and requires notice to be given to the debtor/trustee.

Everett’s Case PROBLEM R, the absolute owner of 500 shares in ABC Limited declared himself, by way of gift, trustee of the shares for S. S, who was in poor health, signed a letter addressed to his friend A authorising A to transfer S’s interest in the shares to U as a gift. Pursuant to this authority, A signed a letter addressed to U which stated that S’s interest in the shares was thereby transferred to U. This letter was never received by U. S has now died. No notice of the purported transfer to U of S’s interest in the shares has been given to R. Is U beneficially entitled to the shares?

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FIDUCIARIES “The word `fiduciary' is flung around now as if it applied to all breaches of duty by solicitors, directors of companies, and so forth ...” per Southin J in Girardet v. Crease (1987) 11 BCLR 361. THE FIDUCIARY RELATIONSHIP

Status based categories Fact based fiduciary relationships

THE FIDUCIARY OBLIGATION 1. The unifying principle behind the fiduciary obligation is “to secure observance of ... fundamental duties

[of honesty, care and diligence and loyalty] in relationships in which it is the role of one party to act in the service and interests of the other who is especially vulnerable to harm if that party does not conform to such duties”: per Kirby P in Breen v. Williams (1994) 35 NSWLR 522 at 543.

2. The paradigm example of a fiduciary relationship is the trustee-beneficiary: Keech v. Sandford (1726)

25 ER 223. Other examples include partners, principal and agent, director and company, solicitor and client. In order to keep the fiduciary to the highest standards of conduct the fiduciary must not allow any conflict of interest between his or her interest and that of the weaker party and will be required to make good any loss which the latter suffers or account for any benefit which the fiduciary receives from breach of duty.

Boardman v. Phipps [1967] 2 AC 46

3. Nevertheless, the possible categories of relationship which will attract a “fiduciary” label are not

closed. This means that the criteria which demarcate the fiduciary obligation and the rights and liabilities which it attracts remain difficult to define. Brian v. UDC (1985) 157 CLR 1 Chan v. Zacharia 154 CLR 178

4. A fiduciary relationship may exist side by side with a contractual or other relationship:

Kelly v. Cooper [1993] AC 205, 213 Hospital Products Pty Ltd v. United States Surgical Corporation (1984) 156 CLR 41, 97.

In such a situation it will often be a very difficult question for the court whether or not fiduciary obligations are owed in the circumstances:

Kelly v. Bell Commodities (1989) 18 NSWLR 248

Consider (a) whether the relationship is such as to give rise to fiduciary obligations (b) the circumstances of the relationship. No fiduciary obligation or obligation of confidence arose from a joint venture agreement.

State Bank v. Beck (unreported NSWCA)

THE REMEDIES: EQUITABLE COMPENSATION See, generally, Aitken, “Equitable Compensation: Opportunity or Danger?” (1994) 68 ALJ 596; Rickett and Gardner, “Compensating for loss in equity” (1994) 24 U Vic Well 19. 5. For a breach of fiduciary duty the court may award equitable compensation:

Nocton v. Lord Ashburton [1914] AC 492. McKenzie v. McDonald [1927] VLR 134 Day v. Mead [1987] 2 NZLR 443

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Equitable compensation is not quantified or assessed on the same basis as common law damages for negligence or deceit.

Note the possibility of a remedial constructive trust being imposed on the party in default: LAC Minerals v. International Corona (1989) 61 DLR (4th) 14

6. The party in default is liable for all the loss: “causation, foreseeability and remoteness do not readily

enter into the matter”: Re Dawson (deceased) [1966] 2 NSWR at 215. “... the inquiry in each instance would appear to be whether the loss would have happened if there had been no breach”.

“I have little doubt that ... it would be entirely appropriate to make a declaration accommodating liability in respect of a future finding of financial detriment flowing from the breach of fiduciary duty”: per Rolfe J in Provan v. HCL Real Estate Ltd (unreported).

7. But some limit on the amount to be recovered must exist:

Brickenden v. London Loan & Savings Co [1934] 3 DLR 465, 469 Canson v. Boughton (1991) 85 DLR (4th) 129 Target Holdings Ltd v. Redferns [1994] 2 All ER 337; [1996] 1 AC 421

Heydon, “Causal Relationships between a Fiduciary's Default and the Principal's Loss” (1994) 110 LQR 328

THE “PROBLEM” OF LIMITATION 8. Does any limitation period apply to a breach of fiduciary obligation? How is that limitation to be defined?

Williams v. Minister, Aboriginal Land Rights Act (1994) 35 NSWLR 497, 509 - 510. PROTECTION FOR THE FIDUCIARY - FULLY INFORMED CONSENT 9. Queensland Mines v. Hudson (1978) 18 ALR 1 10. Clark Boyce v. Mouat [1994] 1 AC 428, 437. 11. “He is of full age and sui iuris and fully understands not only what he is doing but also what his legal

rights are and that he is in part surrendering them”: Boulting [1963] 2 QB 606, 636. ACCOUNT OR COMPENSATION IN THE HIGH COURT 12. Warman International Limited v. Dwyer (1995) 128 ALR 201.

Possible remedies: account, replacement of the property improperly acquired, and compensation in equity

Estate Realties v. Wignall [1992] 2 NZLR 615, 620 - 633.

THE ALLOWANCE TO BE PAID TO THE DEFAULTING FIDUCIARY See, generally, Aitken, “Reconciling `irreconcilable principles' - a revisionist view of the defaulting fiduciary's `generous equitable allowance'” (1993) 5 Bond LR 49. RECOVERY IN PERSONAM FROM THE FIDUCIARY 13. Lister v. Stubbs (1890) 45 Ch D 1

Is a fiduciary relationship necessary before the plaintiff is entitled to trace property? Is there an equitable proprietary interest? Smith, “Lister v. Stubbs and the Criminal Law” (1994) 110 LQR 180

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Sinclair v. Brougham [1914] AC 398 Birks, “No Consideration: Restitution after Void Contracts” (1993) 23 Uni WALR 195

Chase Manhattan Bank v. Israel British Bank [1979] 3 All ER 1025 Attorney-General v. Reid [1994] 1 AC 428.

PROBLEM Rex is an accountant and acts for the trustees of a property trust. Information which he has obtained while making enquiries on behalf of the trust indicates that a profit could be made if a bidder were to acquire a controlling shareholding in Target Limited and then strip Target of its liquid assets. Knowing that the trustees do not, as a matter of policy, engage in asset-stripping, Rex implements the plan for his own benefit without discussing it with the trustees. After a great deal of effort he makes a substantial profit. The trustees now claim a profit. Advise Rex. ISSUE ONE: Was Rex a fiduciary? • What is a fiduciary? • Tests for determining whether the relationship exists • Hospital Products ISSUE TWO: Did Rex breach a fiduciary duty? • Which duty? • Phipps v Boardman • Chan v Zacharia

THE NATURE AND CLASSIFICATION AND CONSTITUTION OF TRUSTS A. NATURE AND CLASSIFICATION OF TRUSTS

There are various types of trusts:- (a) Bare trust (b) Family trust (c) Unit trust (d) Trust post-mortem (e) Trust inter vivos

The trust property must be vested in the trustee. Once the trust is created there are three basic requirements (the three certainties).

B. THE THREE CERTAINTIES

1. Certainty of intention Re Williams [1897] 2 Ch 12 C.S.D. v Jolliffe (1920) 28 CLR 178

2. Certainty of subject matter

Re Golay’s Will Trusts [1965] 2 AllER 660

3. Certainty in object C. FIXED TRUSTS OR

DISCRETIONARY TRUST

A fixed trust is a trust where the trustee has no discretion and must be able to compile a list of all the beneficiaries. A discretionary trust is a trust where the trustee has a discretion as to the range of people who will benefit depending upon:-

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(a) a bare power: trustee has the power to decide who, if any, benefits; a mere power with a gift over in default; or

(b) a trust/mere power where the trustee decides who benefits, but someone must benefit.

Re Gulbenkian’s Settlement [1970] AC 508 The criterion certainty test: the donee of the power must be able to determine with certainty whether any given person is or is not in the class. The donee does not have to identify all the possible potential objects before deciding to distribute.

Re Baden (No 1) [1971] AC 424 Re Baden (No 2) [1973] Ch 9 Re Leek Deceased [1968] 1 All ER 660 Re Manisty’s Settlement [1974] Ch 17 Horan v James [1982] 2 NSWLR 376

EXPRESS TRUSTS 1. In the classic modern case, the settlor will by deed of trust settle property valued at a nominal amount

upon trust to be held by the trustee on behalf of the beneficiaries (or cestuis que trust). If a discretionary trust, the deed will permit other property to be received and held on trust subject to the deed. Note that a modern discretionary trust may have a protector who is able to appoint a new trustee under the deed of trust; the settlor may also by a letter of wishes have indicated the way in which he or she would like the trust deed to be effectuated without purporting to bind the trustee: Hartigan Nominees v. Rydge (1992) 29 NSWLR 405.

“[The fraudster] will cheerfully swear a disclosure listing his sole assets within and without the jurisdiction as a building society account in Lewisham which is 10 pounds in credit and a bank account in Guernsey which is modestly in overdraft. He does not disclose the Liechtenstein trust of which the named settlor is an accountant in Hong Kong who contributed HK$10 and the sole named beneficiary is Cancer Research, but the trustees have power to nominate additional beneficiaries and hold in their safe a letter from the defendant expressing his wishes as to how they should act. Asked to explain his continuing affluent lifestyle, he says that he “is living on the charity of friends”: Hoffmann, “Changing perspectives on Civil Litigation” (1993) 56 Modern LR 297, 302 - 303.

And see Aitken, “Transnational Bank Fraud” (1994) 68 ALJ 790.

2. (a) There must be an intention to create a trust. There must be certainty of the words used to

create the trust.

Have mere “precatory” words been used? Do they express a mere motive, without imposing an equitable obligation?

(b) is a charge over property created?

If so, the beneficiary has a proprietary interest in the property. The chargee's obligation is limited to the value of the property and he cannot be required to make up a shortfall. But to enforce, the beneficiary would need to obtain an order for sale in equity of the property; it could not be enforced against the chargee specifically.

(c) is the property subject to a strict condition precedent, or a condition subsequent?

See the discussion at casebook page 274; very different consequences may follow depending on the type of condition and the reason that it fails.

(d) is there an equitable personal obligation imposed on the recipient?

See casebook page 475: Countess of Bective v. FCT (1932) 47 CLR 417.

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CHARITABLE TRUSTS A charitable purpose is defined in the preamble to the Charitable Uses Act 1601 (The Statute of Elizabeth) as:-

“The relief of aged, impotent and poor people and the maintenance of sick and maimed soldiers and mariners, schools of learning, free schools and scholars in universities, the repair of bridges, ports, havens, causeways, churches, seabanks …..”

A. Commissioner for Special Purposes of Income Tax v Pemsel [1891] AC 531

Pemsel’s Case sets out four classifications of charitable trusts: advancement of education; relief of poverty; advancement of religion; purposes beneficial to the community.

B. PUBLIC BENEFIT TEST

Oppenheim v Tobacco Securities Trust Co Limited [1951] AC 287: not every person within the public needs to benefit so long as the class of persons constitutes a section of the public. Common employment has the same effect as members of the same family. To be “public” means it does not depend upon the relationship to a particular individual.

“The words “section of the community” have no special sanctity but they conveniently indicate first that the possible (I emphasise the word possible) beneficiaries must not be numerically negligible and secondly that the quality which distinguishes them from other members of the community, so that they form by themselves a section of it, must be a quality which does not depend on their relationship to a particular individual … A group of persons may be numerous but if the nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community not a section of the community for a charitable purpose.”

Adopted in Australia by Davies v Perpetual Trustee [1959] AC 439. Re Crompton [1945] Ch 123: “A gift under which the beneficiaries are defined by reference to a purely personal relationship to a named propositus cannot in principle be a valid charitable gift.” Re Koettgen’s Will Trusts [1954] Ch 252: directing preference to be given to certain people.

1. ADVANCEMENT OF EDUCATION

IRC v Baddley more than “all experience is educational”

Re Hopkins [1965] Ch 669: -

“In order to be charitable, research must either be of educational value to the researcher or must be so directed as to lead to something which will pass into the store of educational material or so as to improve the sum of communicable knowledge in an area which education may cover - education in this last context extending to the formation of literary taste and appreciation.”

Re Shaw (Decd) [1957] 1 AllER 745

2. RELIEF OF POVERTY

Downing v FCT (1971) 125 CLR 185

Public Benefit Dingle v Turner [1972] AC 601 Re Scarsbrick:-

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“I think the true question in each case has really been whether the gift was for the relief of poverty amongst persons , or … a particular description of poor persons or was merely a gift to individuals, albeit with relief of poverty amongst those individuals as the motive of the gift …”

3. ADVANCEMENT OF RELIGION

Church of the New Faith v Commissioner of Payroll Tax (1983) 154 CLR 120:-

“…. first belief in a supernatural Being, Thing or Principle; and second, the acceptance of canons of conduct in order to give effect to that belief.”

Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1: purposes must be direct and immediately religious.

Public Benefit Gilmour v Coates [1949] AC 426 Neville Estates v Madden Re Income Tax Acts No 1 [1930] VLR 211

4. PURPOSES BENEFICIAL TO THE COMMUNITY

Incorporated Council of Law Reporting v FCT: (1971) 125 CLR 659:- categories include:- • promotion of health • protection of human life and property • relief of distress from disasters • mental and moral improvement • various patriotic purposes • animal welfare

William’s Trustees v IRC [1947] AC 447: does not include purely social and recreational

Public Benefit IRC v Baddley [1955] AC 572: must be extended to the whole community and not just a class within a class.

C. POLITICAL TRUSTS

Bowman v Secular Society: trusts for the attainment of political belief or object are invalid. National Anti-Vivisection Society

D. ADMINISTRATION AND ENFORCEMENT

1. Cy-pres Schemes

Requirements:- (a) a failure of the original purpose (b) a paramount charitable intention

Re Lysaght Deed [1966] Ch 191 Phillips v Roberts [1975] 2 NSWLR 207

2. Mixed Purpose Trust

Section 23 Charitable Trusts Act 1993 (NSW) Leahy v AG for NSW (1959) 101 CLR 611

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NON-CHARITABLE PURPOSE TRUSTS As a basic rule non-charitable purpose trusts are void. Morice v the Bishop of Durham (1805) 9 Ves 399: it must be a trust which the courts are able to exercise control over if necessary. Re Astor’s Settlement Trusts [1952] Ch 534: no one able to bring an action if the fund is not administered correctly. Exceptions:- (a) trusts for the care and maintenance of animals (b) construction/maintenance of the settlor’s grave (c) religious services for the dead (d) promotion and furtherance of fox hunting Re Denley’s Trust Deed [1969] 1 Ch 373:- able to clearly identify the people who would directly benefit and be able to enforce the administration of the trust Re Endacott [1960] Ch 232 Leahy v AG for NSW (1959) 101 CLR 611 Bacon v Pintara (1966) 114 CLR 634 TRUSTEE’S POWERS AND DUTIES AND THE RIGHTS OF BENEFICIARIES 1. THE DUTIES, POWERS AND RIGHTS OF THE TRUSTEES

Any person(s), including a corporation, capable of holding property in their own name can act as a trustee. A person may be appointed as a trustee either in the instrument creating the trust, by exercise of the power of appointment contained in the instrument or by the court (or statutory body). It is usual to include a power of appointment in an express trust so that any vacancy in the office of trustee can be made easily. At the creation of any trust, the trust property must be vested in the trustee.

DUTIES:- (i) Upon accepting the trust ascertaining everything is in order; (ii) to preserve the trust property; (iii) to insure the trust property; (iv) to properly invest the trust property; (v) loyalty: Cowan v Scargill [1985] Ch 270: the duty of loyalty also extends to a duty to place the

interests of the beneficiaries ahead of any other concerns which might appeal to the personal views of the trustees;

(vi) to keep accounts and supply information; (vii) to act personally - cannot delegate unless specified in the instrument (or statute) or as a matter of

necessity; (viii) to consider how best to use the powers invested; and (ix) to act impartially between the beneficiaries.

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POWERS:- These are what the trustee may do in the administration of the trust. While it is discretionary, the power is held as a fiduciary and the trustee must consider the exercise of the powers. (i) power of sale: only if the power expressly or impliedly conferred by the trust instrument, statute or

court order.

(ii) power of management: the intention of the settlor will be to provide the trustee with adequate powers to manage the business of the trust as a flexible source of continuing benefit; and,

(iii) power of maintenance and advancement: Pilkington v Inland Revenue Commissioners [1964] AC 612 - while such a power may result in the shrinkage of the fund, it was necessary to the administration of the fund.

RIGHTS:- (i) Right of reimbursement and indemnity from the assets of the trust. Vacuum Oil Co v Wiltshire

(1945) 72 CLR 319 sets out the principles governing the rights of a trustee in the case of a deceased estate and the claims of creditors to the estate such as, the executor is entitled to carry on a business for the purposes of realising that business and for that purpose only;

(ii) right of reimbursement from the assets of the trust, see Hardoon v Belilios [1901] AC 118, JW

Broomhead (Vic) P/L (in liq) v JW Broomhead P/L [1985] VR 891; (iii) right of contribution: all trustees will be jointly and severally liable to the beneficiaries for any loss

arising from a breach of trust; (iv) right to impound a beneficiary’s interest; and (v) right to obtain the opinion, advice and direction of the court. Trustee Act, s 63. LIABILITIES:- A trustee in breach of a trust will be liable to make good any loss suffered by the trust regardless of the cause of the breach.

Re Dawson (Deceased) [1966] 2 NSWR 211: the obligation of a trustee in breach is to put the trust estate into the same position it would have enjoyed had the breach not occurred.

Where a trustee has acted honestly and reasonably, and ought fairly to be excused for some breach of trust, the court has statutory power to relieve the trustee in the whole or part from personal liability for the breach. 2. THE RIGHTS OF BENEFICIARIES

1. Right to extinguish the trust

Saunders v Vautier (1841) 4 Beav 115: a beneficiary who is sui juris and absolutely entitled to a vested interest can direct the trustee to transfer the legal title and thereby extinguish the trust.

2. Right to restrain a breach of trust (ie obtain an injunction) 3. Right to possession of the trust property 4. Right to approach the court on questions of construction 5. Right to information

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RESULTING TRUSTS Resulting trusts come into existence through operation of law. There are two categories of resulting trusts, automatic resulting trusts and presumed resulting trusts. 1. AUTOMATIC RESULTING TRUSTS

When the right circumstances exist, a resulting trust will come into existence:-

(a) where an express trust is created or intended by a transfer of property; (b) where the settlor has not fully or effectively disposed of the whole beneficial interest in the

property A. THE PROBLEM WITH SURPLUS:- where a trust is established for a certain purpose but there is

excess money left over. • Re Gillingham Bus Disaster Fund [1958] Ch 300: money donated for disaster relief so the court

found an intention to hand the money over. If it can be shown the donors intended to part with the money it will revert to the Crown.

• Re West Sussex Constabulary’s Widows, Children & Benevolent [1971] Ch 1: the money easily

traced was returned to the owners, the other reverted to the Crown. • Re British Red Cross Balkan Fund [1914] 2 Ch 419 • The rule in Clayton’s Case B. THE QUISTCLOSE TRUST (where the primary purpose has failed) Barclays Bank Limited v Quistclose Investments [1970] AC 567 Australian Conference Association v Mainline Construction (1978) 141 CLR 335:-

“The case [Quistclose] is authority for the proposition that where money is advanced by A to B with the mutual intention that it should not become part of the assets of B but should be used exclusively for a specific purpose, there will be implied (at least in the absence of contrary intention), a stipulation that if the purpose fails, the money will be repaid and the arrangement will give rise to a relationship of a fiduciary character or trust.”

Carreras Rothmans Limited v Freeman Matthews Treasure Limited [1985] 1 AllER 155: equity fastens on the conscience of a person who receives property from another transferred for a particular purpose. 2. PRESUMED RESULTING TRUSTS If X purchases property held in the name of Y, Y will be presumed to be holding the property on trust for X. This is rebuttable if it can be shown that it was not the actual intention. Dyer v Dyer (1788) 30 ER 42:-

“The clear result of all the cases without a single exception, is that the trust of a legal estate …. whether taken in the name of the purchasers and others jointly or in the names of others without that of the purchaser … results to the man who advanced the purchase money.”

A. PRESUMPTIONS:- 1. Presumption of a RESULTING TRUST:- a person who purchases property which is put into

another’s name for no valuable consideration, intends that property shall be held on trust for the purchaser.

2. Presumption of ADVANCEMENT:- a person who paid for the property intented to make a gift. This

only applies in certain circumstances:-

• mother/child

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• husband/wife • father/child • man/fiancee

B. PURCHASE MONEY TRUSTS These occur when A buys property but never gets the legal title because it is placed in B’s name at A’s direction. Calverly v Green (1984) 155 CLR 242:- his defacto was jointly and severally liable for the mortgage and also paid money for the deposit on the property. Even though she did not contribute to the repayments, a resulting trust arose at the time of purchase for her interest. C. JOINT BANK ACCOUNTS Russell v Scott (1936) 55 CLR 440:- presumption of a resulting trust and advancement though there must be evidence of actual intention. 3. PRESUMED RESULTING TRUSTS AND ILLEGALITY Nelson v Nelson (1995) 132 ALR 133: mother purchased property for her children with no intention to make a gift of it but actually to get a subsidised loan. Held that one cannot rely on illegal purposes to show any actual intention.

CONSTRUCTIVE TRUSTS A constructive trust must be imposed by operation of law regardless of the intention of the parties concerned. 1. CONSTRUCTIVE TRUSTS IMPOSED ON THE BASIS OF UNCONSCIONABLE CONTRACTS

Muschinski v Dodds (1985) 160 CLR 583 Baumgartner v Baumgartner (1987) 164 CLR 134: where it is unconscionable to deprive one party, who has pooled resources, from a beneficial interest, the court will impose a constructive trust.

“In this situation [Mr Baumgartner’s] assertion, after the relationship had failed, that the Leumeah property, which was financed in part through the pooled funds, is his sole property beneficially to the exclusion of any interest at all on the part of [Mrs Baumgartner] amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of [Mrs Baumgartner].”

Consider the value of non-financial contribution as home maker, see Bryson v Bryant (1992) 29 NSWLR 188 Green v Green (1989) 17 NSWLR 343:- the courts imposed a constructive trust because it would otherwise result in unconscionable conduct due to:- (a) common intention that both hold a beneficial interest (b) detrimental reliance on the basis of the common intention (by making financial contributions

there would be detriment)

“Nevertheless, it is now well settled that there are circumstances in which a court of equity will intervene to declare the existence of a proprietary interest in a family home on the part of a spouse or de facto partner, and the unifying principle underlying the cases where such intervention is regarded as appropriate is that in the circumstances of the case and in accordance with equitable doctrines, it would be unconscionable on the part of the person against whom the claim is set up to refuse to recognise the existence of the equitable interest.”

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2. CONSTRUCTIVE TRUST IMPOSED IN CONSEQUENCE OF A BREACH OF FIDUCIARY DUTY.

Requirements:-

(a) fiduciary relationship (b) breach of that duty

Keech v Sandford (1726) Sel Cast King 61

(c) imposed on third parties who:-

(i) make self trustee (ii) take charge of the trust property (iii) assist with knowledge in a dishonest or fraudulent design (knowing assistance)

Barnes v Addy (1874) LR 9:-

“Now in this case we have to deal with certain persons who are trustees and with certain other persons who are not trustees. This is a distinction to be borne in mind throughout the case. Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility. That responsibility may no doubt be extended in equity to others who are not properly trustees, if they are found either making themselves trustees de son tort or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust. But on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps, of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustee.”

KNOWING RECEIPT: where there is knowledge that the property has been transferred in breach of the trust. Extent of the knowledge:- Nelson v Larholt [1948] 1 KB 339: cheques used at the races “From the Estate of…”. It was held a reasonable person would have known it was trust property being misused. Consul Development Pty Limited v D.P.C. Estates Pty Limited (1975) 132 CLR 373: actual knowledge is knowledge of the facts that would indicate to a reasonable person that a breach of trust has occurred. A simple failure to inquire is not sufficient to establish liability. KNOWING ASSISTANCE: must have assistance, knowledge and a dishonest breach of the fiduciary duty. Baden Delvaux & Lecuit v Societe General [1983] BCLC 325: categories of knowledge:-

1. actual knowledge 2. deliberate ignorance 3. wilfully and recklessly failing to make such inquiries as an honest and reasonable person

would make 4. knowledge of circumstances which would indicate the facts to an honest and reasonable

person 5. knowledge of circumstances which would put an honest and reasonable person on inquiry

Royal Brunei Airlines v Tan [1995] 2 AC 378:-

“Drawing the threads together, their Lordship’s overall conclusion is that dishonesty is a necessary ingredient of accessory to liability. It is also a sufficient ingredient. A liability in equity to make good

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resulting loss attaches to a person who dishonestly procures or assists in a breach of trust or fiduciary obligation. It is not necessary that, in addition, the trustee or fiduciary was acting dishonestly, although this will usually be so where the third person who is assisting him is acting dishonestly. “Knowingly” is better avoided as a defining ingredient of the principle and in the context of this principle the Baden scale of knowledge is best forgotten.”

SECRET TRUSTS Secret trusts are trusts not disclosed on the face of a will but which, in certain circumstances, are upheld. There are two categories. 1. WHOLLY SECRET TRUSTS These occur where the testator makes an apparently absolute gift where:-

(i) intention of the testator to subject the primary donee (named in the will) to an obligation in favour of the secondary donee (the party actually intended to benefit);

(ii) communication of that intention to the primary donee; (iii) acceptance of that obligation by the primary donee either expressly or by acquiescence:

Ottaway v Norman [1972] Ch 689 2. PARTIALLY SECRET TRUSTS These occur where the will shows that a trust is intended but the precise object of the trust is not indicated. Re Young [1951] Ch 344: a beneficiary’s interest under a secret trust is not forfeited because it is derived independently of the will.

TRACING AND THE IN PERSONAM ACTION A proprietary remedy available to a wronged beneficiary is to trace the specific property back. When the property is traced back, the court may order the property be conveyed back or otherwise a declaration of charge over the property be made. Re Hallet’s Estate (1880) 13 ChD 696:-

“The beneficial owner has a right to elect to take the property purchased, or to uphold it as a security for the amount of the trust money laid out in the purchase; or, as we generally express it, he is entitled at his election either to take the property, or to have a charge on the property for the amount of the trust money.”

Re Diplock (Court of Appeal) [1948] 1 Ch 465: the money had been distributed under a trust which was later declared invalid. The money was traced into the hands of charities. LIMITS ON TRACING 1. Once transferred to a purchaser for value and without notice, the tracing ceases. 2. There must be a continued existence of the property in either its original form or as part of a mixed

fund (ie lost if the money is gambled etc). 3. Money used to repay debts, secured or unsecured, is lost 4. The right to trace is dependent upon a finding of an initial fiduciary relationship which is breached.

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Black v Freedman (1910) 12 CLR 105 Chase-Manhattan Bank v Israel British Bank [1981] 1 Ch 105 Westdeutche Landesbank v Islington London Borough Council [1996] AC 669. IDENTIFYING THE TRUST PROPERTY WHEN THE PROPERTY IS MIXED Brady v Stapleton (1952) 88 CLR 322: when the trustee mixes the property, the entire property would be held as belonging to the beneficiary unless the trustee can prove which money is to be separated.

“It makes no difference in reason or law into what form, different from the original, the change may have been made … for the product of or substitute for the original thing, still follows the nature of the thing itself, as long as it can be ascertained to be such and the right only ceases when the means of ascertainment fails. The view that impossibility of precise identification of trusts’ shares precludes the making of an order for a transfer of shares seems really to amount to something like an aversion of the true position. In the present case its practical effect seems to be to place the burden of identification upon the wrong shoulders.”

WHERE THE TRUSTEE HAS MIXED THE TRUST PROPERTY WITH HIS OWN Clayton’s Case Re Hallet’s Estate: the rule in Clayton’s Case does not apply where the trustee has mixed the money with his own. The trustee’s funds are the first to come out and the remainder according to Clayton’s Case. Re Stenning (1895) 2 Ch 433 Re Oatway [1903] 2 Ch 356: the courts read it as that which benefits the beneficiary the most is assumed to be the trust property and against the breaching trustee.

“It is in my opinion, equally clear that when any of the money drawn out has been invested and the investment remains in the name or under the control of the trustee, the rest of the balance having been afterwards dissipated by him, he cannot maintain that the investment which remains represents his money alone, and what has been spent and can no longer be traced and recovered was the money belonging to the trust.”

TRUST PROPERTY MIXED WITH THE TRUSTEE’S OWN MONEY WITH WHICH THE TRUSTEE PURCHASES PROPERTY The beneficiary is entitled to share the property or a charge over the property which includes a share in any increase of the property. Scott v Scott (1962) 109 CLR 649: the trustee used the trust money to purchase a home and then replaced the money years later. It was held the beneficiaries were entitled to a share in the capital gain - the wrong doer should not be able to benefit from his wrong. WHERE THERE IS A MIXTURE BY THE TRUSTEE OF MONEY FROM ONE FUND WITH MONEY FROM ANOTHER The beneficiary is entitled to share in the trust property in accordance with their contributions. This does not apply in the case of bank accounts. The rule in Clayton’s Case applies in those circumstances: Re Stenning (1895) 2 Ch 433. WHERE THERE IS A MIXTURE BY THE TRUSTEE OF HIS OWN MONEY WITH FUNDS FROM MORE THAN ONE TRUST

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1. The rule in Hallet’s Case applies first - trust money treated as one and the trustee’s money is the first to come out.

2. Remainder apportioned according to contributions, except in the case of bank accounts when

Clayton’s Case applies. THE IN PERSONAM CLAIM The wronged beneficiary has three actions available to it:- 1. Personal actions against the trustee 2. Proprietary tracing action against the trustee or a third person 3. A personal action against the third person. Re Diplock (HL) [1951] AC 251: a personal action against the third person is used where the first two are unavailable (ie because the trustee is insolvent etc). It allows for a third party to be sued directly for compensation. PROBLEM X is the manufacturer of children’s toys. Y is his agent who is employed to purchase non-poisonous paint for the toys. Y accepts a secret commission of $4,000 from Z, a paint manufacturer and gives Z contracts in preference to other suppliers. Y places the $4,000 into a bank account which contains $1,000 of his own money and $2,000 from a trust of which Y is the trustee. The amount in the fund altogether is $7,000. Y then withdraws from the account sequentially: (a) $1,000 which he spends on shares in a diamond mining company; (b) $3,000 which he spends on a piece of land; (c) $3,000 which he spends on a holiday in Bali. The shares are now worth $10,000 and the land is worth $3,500. Advise X and the beneficiaries under the trust.

REMEDIAL EQUITY A. RELIEF FROM UNDUE INFLUENCE Where one person is in a position of influence over another equity will presume a transfer from the weaker party to the dominant party as brought about by the exercise of undue influence and will strike down the transfer unless the dominant party can show it was a product of the free and independent will of the other. Presumptive relationship - where equity presumes that one party has influence over the other (the onus is on the dominant party to justify the dealing):-

• parent/child • solicitor/client • trustee/beneficiary • man/fiancee • doctor/patient • spiritual adviser/flock • (the categories cannot be closed)

Johnson v Buttress (1936) 56 CLR 113: the doctrine applies whenever one party occupies a position naturally involving influence over another with a dependence.

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Bank of NSW v Rogers (1941) 65 CLR 42: in non-presumptive relationships the weaker party must demonstrate a relationship of reliance upon the dominant party who must demonstrate undue influence was not exerted. Rebutting the presumption:-

1. adequacy of consideration 2. independent advice

B. RELIEF FROM UNCONSCIONABLE TRANSACTIONS Whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis a vis another and an unfair or unconscionable advantage is then taken of the opportunity thereby created, equity will interfere to set aside the contract: Commercial Bank of Australia v Amardio (1983) 151 CLR 447. The dominant party must exploit some special advantage over another placing them in some special situation of disadvantage by that exploitation. Contracts Review Act 1980 (NSW) Trade Practices Act 1974 (Cth) C. ESTOPPEL Waltons Store (Interstate) v Maher (1988) 164 CLR 87:- (a) plaintiff assumes a particular legal relationship exists or will come into existence; (b) assumption is induced by the defendant; (c) plaintiff acted on the assumption; (d) defendant knew the plaintiff acted in that way; (e) plaintiff suffered detriment; and (f) defendant fails to avoid detriment by fulfilling the expectation. Commonwealth v Verwayen (1990) 170 CLR 394:- there must be proportion between the remedy and the detriment suffered. D. SPECIFIC PERFORMANCE An order of the court directing a party to perform obligations due under a contract. Must be an inadequacy of damages at common law. Part performed contract - the parties seeking specific performance must show that they are ready, willing and able to perform their obligations under the contract. Specific performance will be decreed under the doctrine of part performance in cases where no relief is available at law because the contract is unenforceable for want of some compliance with statutory form, on the equities which have arisen in the circumstances from acts of past performance: Maddison v Alderson (1883) 8 AC 467; Steadman v Steadman [1976] AC 536 E. INJUNCTIONS An order of the court compelling a party to refrain from doing something (prohibitory) or to perform some positive act (mandatory). An injunction may be decreed as a final remedy, either alone or as an ancillary order, or as interlocutory relief to protect the rights of a party pending the final outcome of litigation.

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Curro v Beyond Productions (1993) 30 NSWLR 337 • Interlocutory injunctions:

American Cynamid Co v Ethican Limited [1975] AV 396: plaintiff must show:- (a) damages not adequate (b) serious question to be tried (c) interim relief is justified on the balance of convenience

• Mandatory injunctions

Redlands Brick Limited v Morris [1970] AC 652: any conduct which infringes the plaintiff’s rights ought to be proper for injunctive relief subject only to the defendant’s conduct and any undue hardship.

• Mareva injunction: restrain the defendant from dealing with the assets pending the outcome of

proceedings • Anton Piller Order F. MONETARY REMEDIES IN EQUITY

Target Holdings v Redferns [1995] 3 WLR 352