ASSIGNMENTS 1) Is There Any Present Property or Future Property Capable of

Assignment? (if no go to future property) a) If future property – do you have consideration? If no consideration = fails b) If present property – is it a legal chose in action or an equitable chose in action?

2) If legal chose in action - (s199) by statute OR not by statute. a) If have not complied with s 199 – go to 1A b) If conditional or part of legal chose in action and does not comply with s199 – 1B

3) If equitable chose in action – By statute (not mandatory) 1 OR go to 2 must comply with that – s 11(1)(c) + intention

4) Has the Assignor Purported to Assign Rights in the Property or the Property Itself? (if property go to future property 3 )

5) What Rights Are We Purporting to Assign? (legal or equitable?) 6) Effective at Law? 7) Effective at Equity? NB: rights can be assigned but not obligations. NB: Say when not effective in law or equity. NB: wording: “hereby” = intention, manifested, immediate.

IS IT ASSIGNABLE?

Tree: equitable chose in action Fruit: future property requiring consideration

Contractual right or repayable at will?

Norman Facts N wrote & signed deed which sought to assign right, title and interest to dividends on shares and Interest on a loan from partnership. Issue: right or future property? • Dividends: not effective assignment because of lack of certainty. Once a

dividend is declared it becomes a debt (chose in action), up until that point it is merely future property (a possibility). (Unanimous)

• Interest: Not assignable property because lack of set dates of repayment. It was at debtee’s will and “at any stage may cease to exist”. [Joachim and dissenting judges argue it was a contractual right that should be assignable. ‘Repayable at will’ element shot this opinion down.

Shepherd Facts Assigned by deed right, title & interest to an amount equal of 90% of income from royalties on the sale/manufacture of certain castors. Voluntary. Issue: right or future property? Commissioner argued As the manufacturer was no obliged to produce any castors at all, it could not be said with certainty that any royalties would be earned under the agreement Held Valid assignment because assigned the contractual right right to receive income from royalties. This income was fixed, no uncertainty. 1. Language deconstruction ! Shepherd per Barwick: The task in

construing the deed is to find the meaning intended by the taxpayer as expressed. No form of words is required for an equitable assignment but it is necessary to find the expression of an intention to assign.

2. Part of the royalties: NO (Norman) - Part of the right to royalties: YES (Shepherd)

IS IT AN EQUITABLE OR LEGAL CHOSE?

LEGAL CHOSE designated by CL/Statute (ie, Rights under K, cmpy shares, etc) EQUITABLE CHOSE beneficiaries interest under trust, mortgagor equity of redemption under legal mtg, legatee’s right in unadministered estate, partner’s interest in ptnship assets on winding up, etc)

1. UNABLE TO BE ASSIGNED

BARE RIGHT TO SUE: not assignable because of public policy reasons.

Distinguishable from future property arising out of court case Glegg v Bromley wife assigned by deed, for consideration, future winnings from lawsuit to husband (the fruit) ‘all that interest, sum of money, or premises to which she is or may become entitled under or by virtue of any verdict, compromise, or agreement which she may obtain’ Issue could she assign possible future winnings? Held it was a valid assignment. This was not a presently existing chose in action but future property identified by reference to an existing chose in action (the right to litigate). Equity will regard the assignment of future property as valid so long as there is consideration. Note: Deloitte Touche [2007] seems to support the idea that the assignment of bare rights of action is now, in light of the Fostif decision, less forbidden than in the past (seemingly casting some doubt on Glegg and Credit Suisse on this point). However, the High Court declined leave to appeal in this case which suggests unwillingness to open the floodgates.

RIGHT TO RESCIND FOR MISREPRESENTATION:

Gross v Lewis Hillman Principle the right to rescind for misrepresentation is purely a personal right. There is no property-characteristics (similar to bare rights) (contrast with undue influence)

2. ABLE TO BE ASSIGNED RIGHT TO HAVE THE WILL ADMINISTERED:

Schultz Facts S bequeathed with remainder interest in house. At time of testatrix’s death, S was an Undischarged bankrupt. After becoming discharged, the will was administered and S argued the property was theirs. Issue What right arose at the time of death? Held At the time of death, S received a chose in action: the right to have the will administered properly. When the remainder interest in the house took effect it vested in the Receiver, not Schultz, even though S had by then been discharged from bankruptcy. This was so because what vested in the Receiver at the date of the testatrix’s death was the chose in action and ‘the expected fruits of that chose in action’ (Receiver got the ‘right to have the will administered’ which resulted in getting the property) Don’t forget: are they assigning the fruit or the tree? The right to have the will administered is the tree, the right to the car under the will is the fruit (and thus unassignable)

RIGHT TO RESCIND FOR UNDUE INFLUENCE IS TRANSFERRABLE IF:

Incidental to property Dickinson Principle assignable because it was incidental to the real property assigned to the assignee. Facts son sued for undue influence on father which resulted in him receiving less property.

Legal Chose in Action

“This is a legal chose in action because [insert why]}

Assignable under Statute [law] 1 SECTION 199 PLA. 1. Absolute & not conditional or apportionments

a. If it is conditional then it is merely a promise: Hazard Systems PTY LTD v Car Tech Services 2013 NSWCA Must say “Hereby assign” not “will assign

2. in writing 3. signed by the assignor 4. with express notice to the debtor

a. Notice: must categorically lay out clearly how an assignment is to take place “The notice must do so expressly, by a direct and definite statement of that fact rather than by supplying materials from which the existence of [that fact] was to be inferred” (Showa Shoji Australia Pty Ltd v Oceanic Life Ltd (1994))

SECTIONS 1070C; S 1071B (2); S 1072F CORPORATIONS ACT. 1. SHARE certificate 2. Signed transfer in the relevant form (most important) 3. Registration which creates the title.

→ no consideration needed → effective at law if elements satisfied

NON-COMPLIANCE WITH STATUTORY REQUIREMENTS: 1. Cannot be assignable under statute or; 2. Unable to comply with statutory requirements

Assignable in Equity [equity] 1A FAILURE TO COMPLY WITH STATUTE: 1. CONSIDERATION + CLEAR INTENTION

Holroyd v Marshall: Deemed to be holding chose in action on CT for assignee because the consideration essentially binds your conscience.

2. VOLUNTARY/GIFT:

s200 & Milroy: has the assignor done everything according to the nature of the property to complete the legal transfer? No? then the only other option is consideration and that is not present. Corrin: From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part.

1B CANNOT BE ASSIGNED UNDER STATUTE 1. CONSIDERATION + CLEAR INTENTION As above. Consideration bind’s conscience. 2. VOLUNTARY

Rule: If assignment is not assignable under statute then Milroy will not apply because the question to be asked is whether equity will recognize the assignment and not have you sufficiently completed the legal requirements. Clear intention to assign: Is [X] making an immediate and irrevocable transfer of present property: Norman.

• If unsigned letter: Obiter in Shepherd indicates formalities are not necessary. [valid]

• If the letter was not signed but sought to apply all of the rights: Could then apply Milroy, have they done everything possible? The donee is not in a position to complete the assignment because the letter is not signed. [invalid]

• Signed and all rights assigned: still does not satisfy notifying the bank, but Milroy is satisfied because the assignee can notify the bank. [valid]

Equitable Chose in Action [equity]

Equitable property means property recognised only in, or rights only enforceable in equity, such as the interest of a beneficiary under a trust, the rights of a partner

in the assets of a partnership or any other equitable chose in action, that is, a ‘thing’ provable in an action in equity.

“This is an equitable chose in action because [insert why]}

either LAW S199 optional (see 1) or; EQUITY S11(1)(C) 2 1. Formalities: either S199 or s11(1)(c) language “manifested and

proved by writing” a. S11(1)(c):

i. Must be manifested and approved by some writing and signed by person disposing of it, or by the person’s agent lawfully authorised in writing or by will Security DSS v James

ii. If not in writing any documents that might support/evidence the intention (ask: is there any document signed that proves intention?)

b. As opposed to s199 “assignment by writing” (Meaning the paper clearly sets it out)

2. Notice not required but recommended because of prioritees and the trustee needs to know who to pay: Dearle v Hall (the claimant who first notifies the trustee or legal owner of the asset shall have a first priority claim)

3. Clear intention to assign: Is [X] making an immediate and irrevocable transfer of present property: Norman.

Future property – expectancy [equity] 3

“Because this property is not yet in existence it comes within the realms of future

property which carries other requirements” Rules: • equity will recognise an assignment of such ‘future property’ provided it is

made for value. Any such bargain will be construed as an agreement to assign the thing when it is acquired: Norman v FCT per Windeyer J.

• FCT v Everett: “a purported assignment of a mere expectancy (in the sense of the chance of becoming entitled under the will or intestacy of a person who is still living) or of property to be acquired in the future, is inoperative as an assignment, and has no effect unless made for valuable consideration.”

Effect of consideration: • assignment takes effect as agreement to assign property when it vests. It is a

higher right than K because it attaches instantly: Palette Shoes Precedent: • In Everitt the husband assigned part of his share in the partnership

which then produced the income. Allowed. • distinguishable with Kelly where two partners just assigned the income

from the their partnership. Not allowed.

Legal effects of failed assignment WILLS INTESTACY ! Partial intestacy is where they have a will but some part of their property (specifically residual property) and it must be administered by a statute. Subject to statutory division of property.

THEORY of ASSIGNMENTS

RULE/DEFINITION: “An assignment is ‘the immediate transfer of an existing proprietary right, vested or contingent, from the assignor to the assignee’: Norman v FCT (1963) at 26, per Windeyer J. An equitable assignment simply means the recognition in equity of the transfer of property — a recognition that may be granted even though some prescribed method of assignment at law, such as registration, has not been completed. In this sense, a court of equity will overlook a failure to comply with statutory requirements, provided the equitable rules are satisfied. The principles governing the recognition of assignments in equity illustrate the operation of some of the maxims of equity; in particular, that equity regards as done that which ought to be done; that equity will not perfect an imperfect gift; and, that equity will not assist a volunteer.” KEY PRINCIPLES in MILROY v LORD: 1. In order to render a voluntary settlement valid and effectual, the settlor

must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him; and

2. If a settlement is intended to be effected by a particular mode or form (ie, direct assignment, declaration of trust, direction to trustee and so forth), the Court will not give effect to it by applying another form. An imperfect assignment will not, for example, be held to be a declaration of trust.

ANALYSIS OF NORMAN & SHEPHERD Considering the results of these two cases, the issue may simply turn on the drafting of any document in question, although the wording of the assignments in Shepherd and Norman was very similar. Kitto J distinguished the situation in Norman’s case from that in Shepherd’s, pointing out that, in Norman, the contractual relationship of borrower and lender could be terminated at any time during the relevant year by the borrower, thus making it an expectancy. In Shepherd, on the other hand, the contractual licence to manufacture castors would continue for three years, whether any castors were produced or not. With respect, that enquiry seems misconceived and the reasoning of Windeyer J in Norman must be preferred as a matter of logic as much as of law. The fact that a present right might be terminated at any time does not make it any less a present right. By the same token, the possibility that a present right might not produce any ‘fruit’ does not make it an expectancy either. What can it matter that some present right, such as the right to be paid interest on money loaned, may not prove fruitful? That cannot make the present right, or some fraction of it, unassignable. This must be distinguished from a true expectancy, such as an “interest” in the deceased estate of a person still living. In that case there is no present right. There may never be any right. The purported assignoe may predecease the nominated testator. But that is entirely different from a situation in which there is an identifiable present right. If A gives a lottery ticket to B it is not an assignment of an expectancy, and thus void if not made for value, just because the ticket might not win. These two cases are often presented as examples of the difficulties that exist in distinguishing between present and future property. However, the degree of uncertainty which surrounds the probable acquisition of some property or income by the assignor cannot decide whether it is an expectancy or not, just as the degree of probability that some present right will bear fruit is also not the appropriate test to determine whether the interest concerned is present or future property. The possibility that a present right might be terminated at any time does not magically convert it into future property. The prospect of such a sudden end may affect the value of the interest, but it cannot convert a present right into after acquired property. Three main ways in which an equitable interest in property can be disposed of or transferred: Howard-Smith 1. (declaration of trust) It may consist of an expression or indication of intention

on the part of the donor that he shall hold the equitable interest vested in

him upon trust for the persons intended to benefit. In that case he retains the title to the equitable interest, but constitutes himself trustee, and, by his declaration imposes upon himself an obligation to hold it for the benefit of others, namely, the donees.

2. (assignment) The disposition may consist of a sufficient expression of an immediate intention to make over to the persons intended to benefit the equitable interest vested in the donor, or some lesser interest carved out of it. In that case communication to the trustee or person in whom the legal title to the property is vested is not required in order effectually to assign the equitable property. Notice to the trustee may be important to bind him to respect the assignment and in order to preserve priorities. But it is not a condition precedent to the operation of the expression of intention as an assignment. Nor does it appear necessary that the intention to pass the equitable property shall be communicated to the assignee. What is necessary is that there shall be an expression of intention then and there to set over the equitable interest, and, perhaps, it should be communicated to someone who does not receive the communication under confidence or in the capacity only of an agent for the donor.

3. (“settlement” trust) The intending donor for whom property is held upon trust may give to his trustee a direction requiring him thenceforth to hold the property upon trust for the intended donee.

TRUSTS

TYPES OF TRUSTS

1. Fixed Trust - EXPRESS a. Each beneficiary has a specific right to the property

2. Discretionary Trust - EXPRESS a. Where the T has discretion to how much or what the

beneficiary gets in the property 3. Trusts for a purpose

a. Charitable Trusts (ie.) 4. Resulting Trust

a. Negative intention: a presumption that in certain situations the legal title holder is NOT to benefit from the trust

5. Constructive trust a. Is the result irrespective of intention and imposed by the

law

FORMALITIES INTER VIVOS TRUSTS! LIVING: S11(1) PLA LEGAL PERSONAL PROPERTY (funds in bank) No need to comply with s11(1)(c) per Paul v Constance and Re Armstrong because a declaration of trust down not require the formalities. EQUITABLE PERSONAL PROPERTY Need to comply with s11(1)(c): 1. Disposition Maradona (a disposition ‘points to a wide concept, extending to any

form of assurance, disclaimer or release of property’. A disposition of property can thus be broadly defined as including any acts taken by an owner of property that result in that owner ceasing to be the owner of the property. According to Giles J, a critical aspect of such a definition is ‘the intention and the result, not the mechanism by which the intention is fulfilled’)

2. Chose in action (existing right) 3. Manifested and proved by writing 4. Signed by person with authority. LAND S11(1)(b) 1. Manifested and proved by writing 2. Signed by person with authority.

3. James - the view is declaring trusts of land you only have to comply with 11(b). Requirements of 11(b) satisfies requirements of being read together. ! date of writing irrelevant, it can be done after oral declaration of trust.

NOT BY TRUST (EQUITABLE MORTGAGE)

S11(1)(a) Proved with writing and signed by person with authority. WILL (TRUSTS) S 6 PLA DEEMS FORMAILITIES TO HAVE BEEN MET WHEN A TRUST WILL NOT BE ENFORCED Def: where a trust is created as part of an illegal scheme to defraud it will affect the right holder. Ask: are the terms of the trust either 1. Illegal? 2. Contrary to public policy (on trust to such bikie members…) Illegality Perpetual Executors and Trustees Association of Australia Ltd v Wright (1917) 23 CLR 185 Facts Husband transferred property to his wife on trust for himself. This was because he started a business and was worried he would lose everything. The wife died and he said it was all his. They argued that it was part of an illegal scheme to defraud his creditors Held whilst that is the general rule, you have to give effect to the illegal scheme. Issue: Did you carry it out? ! He had no creditors, therefore he was not defrauding any creditors. They said in order to defraud he would have had to be insolvent (i.e. he could have even had creditors and it still would not have been illegal activity). Nelson v Nelson Facts Husband Principle Proportionate to the offence. Equity won’t punish Public Policy Ebbeck (1960) 104 CLR 394; Facts Man left property to wife then: to each of my sons on the condition that he and his wife shall at the death of my wife protest the protestant faith. Wives were catholic Issue. Held (maj) this was contrary to public policy because it effectively threatened the institution of marriage and encouraged divorce. ! The wife must decide whether she will renounce her faith or not renounce her faith and plant seeds of discord within marriage. Arguable that after Kay which allowed racism, this case would be decided differently. Kay v South East Sydney Health Authority (2003) Facts woman tried to leave hospital only to white babies. Held racial discrimination act cannot apply to wills. Disposition valid.

ê Can we identify the beneficiaries?

Yes: go to express trusts

No: go to purpose trust

EXPRESS TRUSTS: 3 CERTAINTIES

Certainty of: intention, subject matter, objects & formalities.

Settlement (you hold for X) or Declaration (I hold for X)

Fixed Trust: fixed amount goes to each beneficiary Discretionary Trust: amount to be determined by an ‘agent’ (not necessarily the

trustee) 1. CERTAINTY OF INTENTION

Two mechanisms to transfer property: Gift: now Trust: later Milroy Not every failed gift will become a declaration of trust.

ASK: did they intend to gift or did then intend to create a trust?

1. A trust occurs where we split the ownership from benefit: Re Armstrong 2. Language: mandatory or precatory?

Business: 1. Was their intention to lend the money for a purpose? Unconditionally (Re

Elizabethan) or Expressly (Quistclose) 2. Was it money paid into a partnership? (Raulf Fishy Bites). 3. Was it a bailment/trust clause? 4. Can the property be identified?

IMPORTANT 1. Just as the absence of the words “On Trust” do not prevent a

trust from arising: • “The use of the words ‘in trust for’ in a deed do not necessarily

create a trust, since the circumstances may displace the inference that a trust was intended: Walsh Bay Developments Pty Ltd v FCT (1995)

• The test is one of construction of the relevant instrument as a whole to determine the settlor’s intention: Dean v Cole; Stephens Travel

2. For a trust to be intended, the words so construed must bear an imperative or mandatory, not a permissive, meaning:

• A disposition expressing the “hope, confidence, wish or belief” is unlikely, in the absence of contrary intention derived from the trust instrument, to bear an imperative meaning: Hayes v National Heart Foundation

3. A court can infer the existence of a trust where this reflects the relationship the parties are likely to have intended: Bahr v Nicolay

WORDING: TRUST WORDING NOT NECESSARY. IT IS A QUESTION OF INTENTION.

Split the titile ! Re Armstrong Facts father invested 2 x 1500pounds with bank (2 choses in action). Said he was to receive the benefit whilst alive, when dead sons would receive. “I am declaring myself trustee for my choses in action, to be transferred upon my death to my sons absolutely.” Issue 1: who did the term deposit belong to, estate or sons? Held the sons, no need to use trust wording. Just split the beneficial ownership from the legal title. Issue 2: can trustee be the beneficiary? i.e. could sons get the investment returns? Held A T can be a B, BUT they cannot be a sole beneficiary. Therefore the trust arose immediately and the father was merely a trustee the whole time. ‘mine as yours’ !Paul v Constance Facts Husband said “money is as much yours as mine” to mistress. Issue on his death, because there was no will did wife get the money in the account or was it a trust for the mistress? Held valid. No writing needed b/c personal property. Q was: did he have the intention to separate out the beneficial interest from the legal title?

Do all that can be done !Jones v Locke Facts Father waived 900 pound cheque in baby’s face stating “looky here I give this to baby”. Then he died, right up until his death he was trying to arrange for provision for the child. Issue: Was the cheque belonging to the child or was it part of his estate? Held not the child’s because the cheque hadn’t been endorsed towards the child (not named and signed. Whilst he intended to make a gift to the baby, he didn’t satisfy the requirements of Milroy, so the court could not enforce a Trust. ! YOU CAN ENDORSE A CHEQUE ADDRESSED TO YOU OVER TO SOMEONE ELSE.

PRECATORY OR MANDATORY?

‘absolute disposal’ & ‘trusting to her’ !Dean v Cole Facts: Testator left his property to his wife. Earlier on in the will he had left about 1300pounds to her “absolute disposal”, but this provision in relation to the children expressed himself as “trusting to her” that she will divide such part and portion of his estate, which included the 1300pounds. Held: The true effect is to make the precatory words apply to such property as the widow has

chosen to retain, and is actually in the use and enjoyment of at the time when she proceeds to make the division. Such a trust would not be enforceable. I.E: She had a lot of discretion, there was no mandatory wording used. Dissent: thought the words trusting her to divide meant in trust to divide. Really a question of language: What did the testator mean? Objectively “what did those words mean to the ordinary objective person?” (did not specify how to use money) ‘used as’ & ‘to be sold and divided equally’ !Hayes v National Heart Foundation Facts: Testator left shares to daughter. Wording was: “retained by her as a source of income on the understanding that she write into her Will, that, at her death, these shares are to be sold and the capital received and divided into equal parts” between 3 named charities. Held: “In the understanding that” is a restrictive direction. The testator spoke in words of legal restriction. (specified how the money would be used until trust carried out)

TRUST RELATIONSHIP V DEBTOR CREDITOR RELATIONSHIP

Beneficiary?: Quistclose

Mandate purpose?: Elizabethan.

If [X] can successfully argue a Quistclose trust instead of a debtor relationship, [X] will take priority over unsecured creditors because the chose in action will be seen

to have resulted back to [X].

“ISSUE: whether the debtor-creditor relationship is additionally intended to create a Quistclose trust?”

1. Was the money given for a specific purpose? Was it conditional?

(beneficiary or mandate) 2. Is it no longer possible, in the ordinary course of business, to fulfill that

condition? 3. Once the condition is no longer possible it reverts back (Quistclose/)

Quistclose Facts Q leant $ to R so that R could pay its declared dividends. Before paying shareholders, RR went bankrupt. Q stipulated that it had to be: 1. In a separate account. 2. Expressly for the purpose of paying the dividends Issue: was the money to go to the Receiver? If it was a trust relationship then the money resulted back to Q. Argument: Q said that because it was not possible anymore to pay the shareholders, it was not being used for it’s purpose. Held It was a resulting trust. It was no longer possible in the ordinary course of business to do so. WHO IS THE BENEFICIARY? 1. Trust 1 (express): money given for purpose. 2. Trust 2 (resulting): Once purpose no longer possible to be satisfied, resulting

trust back to donor. Successful implementation of Quistclose Twinsectra Facts Y wanted to borrow money from T, T only agreed to do so if S took it on and would only discharge the money for the purposes of investing in property. S secured it but Y ended up spending the money elsewhere. T argued he lent it for a purpose. Issue: Did S hold the money on Q trust for T? Held yes, T had expressly said it was for investing in a certain property. Principle A borrower is usually able to freely use the money however ! (Lord Millett) “it is well established that a loan to a borrower for a specific purpose where the borrower is not free to apply the money for any other purpose gives rise to fiduciary obligations on the part of the borrower which a court of equity will enforce… Such arrangements are commonly described as creating “a Quistclose trust”” ‘Unconditional’ and ‘it would be appreciated’ Re Elizabethan Facts Scheme where gifts made to AETT, expressed to be “unconditional” as a prereq to attract tax deductability. AETT would then pass it on to an arts organisation that they essentially were deciding on. AETT went broke and the ISSUE was whether they could argue a Quistclose trust in order to get tax deductability, or whether the creditors would get it. Gummow: “In Quistclose, Lord Wilberforce emphasized that the form of words used to indicated that the loan moneys were to be used “exclusively” or “only” in a particular way. Here, the word “unconditionally” as used