mll 405 exam notes - amazon s3...mll 405 exam notes 2 contents page topic one: history of equity ......

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MLL405EXAMNOTES

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ContentsPage

TopicOne:HistoryofEquity

• Areequalityandproportionalityentirelydifferentvarietiesofjustice?• FourReadingsofAristotleonEpieikeia:• Historycontinued:• CourtofChancery:• ExampleofEquity:• TheDoctrineoftheUse:• Theuse:• Marriagesettlement:• CommonInjunction:• HistoryofEquity:• One:Inpersonam(remedies)• Two:Discretionary• Case:EarlyofOxford(1615)• Case:CookvFountain(1676)LordHardwicke• Case:DavisvDukeofMarlborough(1818)LordEldon• Case:ReDiplock’sEstate[1948]• 1873JudicatureAct:• Thenatureofequity:• Preventionofunconscionableconduct:• Case:LegionevHateley(1983)• Categoriesofunconscionableconduct:• Maximsofequity:• Whatismaxim?• Case:RiggsvPalmer115N.Y.506,22N.E.188(1889)• Fusion:1873

TopicTwo:UnconscionableInfluenceandUnconscientiousDealing

• UndueInfluence:• Case:RoyalBankofScotlandvEtridge(No2)• Case:BarclaysBankplcvO’Brien[1994]AC180• ActualUndueInfluence:• PresumedUndueInfluence:• Case:JohnsonvButtressperDixonJ• ContractsofGuarantee:• Laches:• Case:AllcardvSkinner[1887]36ChD145• UndueInfluenceofThirdParties:• THELAWINAUSTRALIA:• THELAWINENGLAND:• Case:BarclaysBankvO’Brien[1994]1AC180• Case:YerkeyvJones(1939)63CLR649

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• Case:GarciavNationalAustraliaBank(1998)194CLR395• TheSecondLimbofYerkeyvJones:• UnconscientiousDealing:• IMPORTANTDISTINCTIONBETWEENUNDUEINFLUENCE&

UNCONSCIOENTIOUSDEALING:• Essentialelements:• Test:• SpecialDisability:• Case:CommercialBankofAustraliavAmadio• Case:LouthvDiprose• Knowledge:• ActualORconstructiveknowledge:• UnconscionableExploitation:• Defences:• Remedies:• StatutoryUnconscionability:• Case:ACCCvBerbatis• Case:ACCCvAllphonesRetailPtyLtd(No2)• Case:BridgewatervLeahy

TopicThree:FiduciaryRelationships

• FiduciaryandtheFiduciaryRelationship:• Threequestionsfordeterminingrelief:• Whenwillafiduciaryrelationshiparise?• HospitalProductsLtdvUnitedStatesSurgicalCorp:• RelevanceofConfidentialRelationship:• RelevanceofExistenceofaContract:• Case:PilmervDukeGroup• Case:C-ShirtPtyLtdvBarnettMarketingandManagementPtyLtd• RelevanceofCommercialContract:• Case:HospitalProductsLtdvUSSC• HospitalproductsLtdvUSSC:• CommercialityoftheTransaction:JohnAlexander’sClubsPtyLtdvWhite

CityTennisClubLtd• Arelationshipmaybefiduciaryastosomebutnotallofitsaspects:• Identifyingarelationshipasfiduciarydoesnotprovideacomplete

descriptionofthelegalnatureoftherelationship:• Thefiduciarywillnotbreachtheirdutyifthefiduciarypositionhadno

operativepartinthegainingofthebenefit:• Presumedfiduciaryrelationships:• FiduciaryDuties:• FiduciaryDuties:Directors• Case:BrunninghausenvGlavanics(1999)46NSWLR538• Case:Regal(Hastings)LtdvGulliver• FiduciaryDuties:Partners,JVs

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• FiduciaryDuties:Stockbrokers;PrincipalandAgent• FiduciaryDuties:Stockbrokers;PrincipalandAgent• Case:ChanvZacharia,(1984)154CLR178• Otherfiduciaryrelationships:Commercialrelationships• Case:UnitedDominionsCorporationltdvBrianPtyLtd(1985)• Case:HospitalProducts• FiduciaryObligation:• Scopeoffiduciaryduty:BreenvWilliams• Case:FarahConstructionsPtyLtdvSay-DeePtyLtd• IMPORTANTCASE***:BoardmanvPhipps• Whoshouldgiveconsent?• Solicitor:• Director:• DutyandInterest:• Unauthorisedremuneration:• AssumingaDoubleCharacter:• Benefitsderivedbyafiduciarytotheexclusionofanother:• BreachofUndertaking+MisuseofPosition:• BreachofUndertaking:• Case:PhippsvBoardman[1967]• MisuseofPosition:• Defencestoabreachofafiduciaryobligation:• Consent:• Authorisation:• Proof:

TopicFour:FiduciaryRemedies

• EquitableRemedies:• EquitableCompensation:• EquitableCompensationandRestitution:• EquitableCompensationandCommonLawDamages:• DIFFERENCE:• Plaintiff’sContributiontoLoss:• Case:PilmervDukeGroupLtd(inliq)(2001)207CLR165• ChanceryAmendmentAct1858((UK):• SupremeCourtAct1986(Vic)Section38:• EquitableDamages:• DamagesbeforeInjury:• ‘Wrongfulacts’ofEquity:LordCairnsAct• LordCairnsActdoesNOTcreateprivaterights:• AccountofProfits:• QuantifyingtheProfit:• JustAllowances:• ConstructiveTrust:• SecretBribes:

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• ThirdPartiesasConstructiveTrustees:• Positionwithrespecttothirdpartiesmaybesummariesasfollows:• RecipinetLiability:KnowingReceipt• Priorities,proprietaryclaim,tracing:• Personalliabilityforreceiptoftrustproperty: • Constructivetrusteeshipforreceiptoftrustproperty:• Thirdpartyknowledge:• Typesofknowledge:• Trusteedesontort:• ThirdPartiesLiability:• Thirdpartyrecipients:• Claimantmustshowthat:• KnowledgeRequirement:Australia• AccessoryLiability:KnowingAssistance• LiabilityRequirementsforBreachofTrust:• FollowingandTracingTrustProperty:• ThirdPartyRecipients:• Mixedsubstitutions:• MixedAccounts:

TopicFive:Injunctions

• Interiminjunctions:• SupremeCourtAct1986:SECTION37• ApplicanttoProve:• JurisdictiontoGrantInjunctions:• EXCLUSIVEJURISDICTION:• AUXILLARYJURISDICTIONOFEQUITY:• StatutoryPublicRights:• Discretionarymatters:• InjunctiontoEnforceNegativeCovenant:• AdministrativeandClericalOfficersAssociationvCommonwealth:• ContractsofPersonalServiceandtheNeedforSupervision:• MandatoryInjunction:• ExParte/InterPartes/QuiaTimetInjunction:• InterlocutoryInjunction:• SeriousQuestiontobetried:• BalanceofConvenience:• Undertakingasto• Damages:• ABCvO’Neil:• IMPORTANT:• MarevaInjunction:AssetPreservationOrder• RequirementsforPlaintiff:• OtherCriteriaandDiscretionaryFactorsInclude:

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TopicFive:SpecificPerformance

• SpecificPerformance:• ProperSense:• JurisdictiontoMaketheOrder:• MUSTSATISFY:• One:ALegallyEnforceableAgreement• Doctrineofpartperformance:• Demonstrating‘referrabletosomesuchagreementasthatalleged’:• Equitableestoppel:• Two:TheinadequacyofCommonLawDamages• Whenwilldamagesbeinadequate?• LoanInvestmentCorpofAustralasiavBonner[1970]NZLR724at745:• DouganvLey:• DoctrineofMutuality:• ContractstoPayaThirdParty:• CoullsvBagotsExecutor&TrusteeCoLtd(1967)119CLR460:• BeswickvBeswick:• DiscretionaryConsiderations:• Mutuality:• PlaintiffinSubstantialBreachand/orReady,WillingandAble(RWA)to

Perform:• Impossibility:• Futility:• Uncertainty:• Illegality:• Plaintiffsconduct:• HardshiptotheDefendant:• ContractsofPersonalServiceandOngoingPerformance:• JCWilliamsonLtdvLukeyandMulholland(1931)45CLR282:• Laches:• TheEffectoftheOrderforSpecificPerformance:

TopicSix:TheNatureofaTrust

• ElementsofaTrust:• HistoryoftheTrust:• StatuteofUses(1535):• WhatisaTrust?• ExpressTrust:• FurtherExpressTrustRequirements:• SocialandCommercialContextofTrusts:• DiscretionaryTrusts:• RecurringThemesintheEvolutionoftheTrust:• DistinctionbetweenTrustandOtherSimilarLegalRelationships:• TrustandContract:

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• TrustandFiduciaryRelationship:• DeceasedEstateandTrust:• BailmentandAgency:• DebtsandTrusts:• TrustandSecurities:• ConditionalDispositionandTrust:• RetentionofTitleClausesandTrusts:• AssociatedAlloysPtyLtdvCAN001542106PtyLtd(inliq)(2000)171ALR

568:• PowersofAppointmentandTrusts:• ClassificationofTrusts:• ExpressTrust:• ResultingTrust:• ClassificationofResultingTrusts:• AutomaticResultingTrust:• PresumedResultingTrusts:• QuistcloseTrust:• ConstructiveTrust:

TopicSeven:DutiesofTrustees

• StrictFiduciaryDuties:• DutytoCarryoutTermsoftheTrust:• ExecutorsandTrusteesUnderWills:• ManagementofTrustAffairs:• EstablishingTrustee’sDutyofCare:• DutytoActwithReasonablePrudence:• StandardofCareinAustralia:• DutiestoInvestinAuthorisedSecurities:• PowersofInvestment:• DutyofCareofProfessionalTrustees:• TrusteeinBankruptcy:• Investment:StatutoryDutiesofCare• DutiesofTrusteeinRespectofPowerofInvestment:• TrusteeAct(1958)Section6:• LawandEquityPreserved• DutytoAdministerTrustAffairsImpartially:• TheRuleinHowevLordDartmouth(1802)• Apportionment• DutytoAdministerTrustsAffairsImpartially:• VariationofDuty:• DutytoConsidertheExerciseofTrustsPowers:• DutytoPerformHonestlyandinGoodFaith:• FiduciaryDutyofTustees:• BreachofFiduciaryDuty:• Dutytoobeytermsofthetrust:

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• DutytoActintheInterestsoftheBeneficiaries:• DutiestoInquire:• DutytoKeepAccountsandGiveInformationtoBeneficiaries:• DutytoKeepAccountsSeparate:• DutytoInformBeneficiariesabouttheirRightsandEntitlements:• Beneficiaries’RighttoInformation:• DutytoActGratuitously:• DutyNottoProfitFromtheTrust:• DutytoPayBeneficiaries:• DutynottoPurchaseTrustProperty:• DutytoSellTrustProperty:• DutytoActPersonally,UnfetteredandUnanimously:• StatutroyDefence:WhereTrusteehasactedhonestlyandreasonably

TopicEight:TrusteesandBeneficiaries–RightsandPowers

• FiduciaryPowers:• RealandGenuineConsiderationandImproperPurpose:• AppointingandRemovingTrustees:• Appointing:• Removing:• WhereTrustee:• Trusteescanberemovedonthebasis:• RighttoExtinguishtheTrust:SaundersvVautierPrinciple• Solebeneficiary:• Morethanonebeneficiary,andtheyare:• Twoprovisionstothisrule:• SummarytoSaundersvVautier:• RightswheretheTrusteeisinBreach:• RighttoCompelPerformanceofTrust:• RighttoRestrainaBreachofTrust:• StatutoryRightofRemoval:• RightofReimbursementorIndemnity:• Trustee’sPersonalLiabilityforDebtsIncurredinCarryingouttheTrust:• NatureoftheTrustee’sRightofIndemnity:• ExcludingTrusteesRightofIndemnity:• LossoftheRightofIndemnity:Breach• ProperExpensesoftheTrust:• WhenisaParticularExpenseProper?• IndemnificationGenerally:• TrusteesindemnityagainsttheBeneficiarypersonally:• HardoonvBelilios[1901]:• OthersituationsinwhichtheBeneficiaryisPersonallyLiable:• PersonalLiabilitywherethereareseveralBeneficiaries:• AssigningaBeneficialInterest:• CreditorsRightofSubrogationintheeventofInsolvency:

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• TrusteesPersonalLiability:• LimitsontheRule:• RighttoIndemnityforCostsIncurredinLitigation:• RightofContributionfromCo-Trustees:• RighttoSeekDirectionsfromaCourt:• Trusteesrighttocommission:• Exceptionstothegeneralrule:STUDYGUIDE

TopicNine:CreationofExpressTrusts

• CertaintyRequirements:• CreationofTrustsDeclaration:• CreationofTrustsTransfer:• SecretTrust:• One:Intention• Two:Communication• Three:Acceptance• SecretTrust:• CreationofTrustsDirection:• Threecertaintiesexplained:• CertaintyofIntention:• Multipleintentionsofcreatorandtrustee:• Soleintention:• Animperfectgiftisnotavalidtrust:• Otherlegalrelationships:STUDYGUIDE• Certaintyofsubjectmatter:• 3:Certaintyofobjects:• CertaintyofObjects:• Howmuchbeneficiarycertaintyisrequired?• Fixed-interestTrusts:• DiscretionaryTrusts:• A:Exhaustivediscretionarytrusts• B:Non-exhaustivediscretionarytrusts• GiftOverinDefault(ofexecution):• Listcertaintyindiscretionarytrusts:• Certainityinnon-exhaustivediscretionarytrusts:• Certaintyinexhaustivediscretionarytrusts:• Unincorporatedassociations:• Theruleagainstthedelegationoftestamentarypower:• Completeconstitutionofanexpresstrust:

TopicTen:StatutoryFormalities

• Introduction:• Applicationofthestatutoryprovisiondependson:• Assignments:

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• LegalAssignmentsofThingsinAction:• EquitableAssignments:• StatutoryAssignment:• StatutoryFormalities:• PropertyLawAct1958Section53:• AdvantagesoftheRequirementofWriting:• Differencebetweensub-sections(a),(b)and(c):• LegalInterestorSubsistingEquitableInterest:• WhatisaSubsistingEquitableInterest?STUDYGUIDE• RealorPersonalProperty:• DeclarationorDisposition:• Disposition:• Declaration:• SummaryoftheDifferencesbetweenDispositionandDeclaration:STUDY

GUIDE• StatutoryFormalities:• Secretary,DepartmentofSocialSecurityvJames(1990):• ExceptionstotheApplicationofsection53:• DispositionsofEquitableInterestinPersonalty:• HuntervMoss[1994]3AllER215:• DealingsintheFormofaDeclarationofTrust:• DealingsintheFormofDirectionstotheTrustee:• DirectionstotheTrusteetoDealwiththeLegalEstate:• AssignmentsofEquitablePropertyforValuableConsideration:• AdamsonvHayes(1973):• StatuteofFraudsCannotbeusedasanInstrumentofFraud:• INSTRUMENTSACT1958–SECTION126• Summary:

TopicEleven:CharitableTrusts

• CharitableTrusts:• ModernTimes:• Inorderforatrusttobecharitableitmusthavea“CharitablePurpose”:• ‘Spiritandintendment’ofthePreamble:• ReasonbyAnalogy:• LordMacnaughtenCollatedtheTypesofCharitablePurposes:• CommissionerforSpecialPurposesofIncomeTaxvPensel[1891]:• PublicBenefit:REFERSTUDYGUIDE• TrustMayFailIf:• 1:ConfersNoPublicBenefit:• 2:ExcludesontheBasisofInherentPersonalCharacteristics:TheCompton

Test• PublicBenefit:• QualificationsonComptonTest:• PoliticalPurposes:

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• Poverty1:ThePoor• Poverty2:TheAged• Poverty3:TheImpotent• Education:REFERSTUDYGUIDEfortheTHREEPRIMARYREQUIREMENTS• Religion:• Thecriteriaofreligionaretwofold:ChurchoftheNewFaithv

CommissionerofPayRollTax(Vic)(1983)• ReligionGenerally:• Buildings,Grounds,Cemeteries:• Prayers,Masses,Ceremonies:• GiftstoReligiousOfficeBearers:• PurposeBeneficialtotheCommunity:• TwoCategories:• GiftstotheCommunity:• Publicworksandbeautification:• AnimalsandWildlife:• ProtectionfromWarandDisaster:• ReliefofTaxes:• PublicRecreationandSport:• PublicSafetyandDefence:• MixedCharitableandNon-CharitablePurposes• GiftstoAssociations:• StatutoryReform:• OtherMeansforOvercomingCompendiousGifts:• EnforcementandAdministration• GeneralSchemeofAdministration:• Cy-presSchemes:REFERSTUDYGUIDE• InitialImpossibility:• SatisfactionofOriginalPurpose:• StatutoryPowerstoCreateSchemes:• ValidNon-CharitablePurposeTrusts:• UnincorporatedAssociations:REFERTOSTUDYGUIDE

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TopicOne:HistoryofEquity

- ARISTOTLE- Equityandsocialjustice- Equaljusticeanddistributive(i.e.,proportional)justice.- “Foritmakesnodifferencewhetheragoodmanhasdefraudedabadmanor

abadmanagoodone,norwhetheritisagoodorabadmanthathascommittedadultery;thelaw...treatsthepartiesasequal.”

- Distributivejustice- Merit:Simple"humanity"isnotenough- “Awardsshouldbe"accordingtomerit";forallmenagreethatwhatisjustin

distributionmustbeaccordingtomeritinsomesense,thoughtheydonotallspecifythesamesortofmerit....Theproblemofdistributivejusticeistodividethedistributablehonororrewardintoparts,whicharetooneanotherasarethemeritsofthepersonswhoaretoparticipate.IfA(firstperson):B(secondperson):C(firstportion):D(secondportion),...this,theniswhatthejustis—theproportional;theunjustiswhatviolatestheproportion.”

Areequalityandproportionalityentirelydifferentvarietiesofjustice?

- Epieikeia=“equity”- IliadBook23concerningtheproperburialforPatroclos- Supplementalprizetoariderwhocameinlastinthechariotcontestbecause

itwasunderstoodbyallthatthiswasnottheplaceforhim- Atheniandemocracy- ThomasHobbesreadingAristotle’sRhetoric- “Thoseactionswhichthoughthewrittenlawcommandnot,yet,being

interpretedreasonablyandsupplied,seemstorequireourhands.”- TensionbetweenLaw(Dike)andEquity- Acritiqueofepieikeiawithrespecttolenitytodebtors- Athenianpoliticalarrangement–democracyoveroligarchy

FourReadingsofAristotleonEpieikeia:

1. AnethosthatactualAthenianlitigantsadopt2. Pathosappeal3. Logicalpointabouttheconnectionbetweenthegenerallawandspecific

casestothepersonalvirtueofmakingthisconnection4. Startingfromtheactualnormsofsociety,butismovingbeyondthem

Historycontinued:

- Rhetoricisamerehandbookforcopingwithadeficientlegalregime- Revivaloflegalformalismandthegapbetweenthepeopleandtheirlaw- Thatallisnotpositivelaw- AffirmativeAction;dejureanddefactodiscrimination

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CourtofChancery:

- LordChancellorwasknownasthe‘keeperoftheKing’sconscience’- EquityandtheCharacteroftheChancellor- Ecclesiastics- Conscience- 1557:FirstChanceryreportspublished

ExampleofEquity:

TheDoctrineoftheUse:

- Franciscanmonksinabilitytoownlandduetotheirvowofpoverty- Foefeetouseownslandforthebenefitofcestuiqueuse- Equity:Rightofthecestuitoenforcetheuseagainstthefoefee(compare

commonlaw)

Theuse:

- Decreasedrevenue- 1535StatuteofUses(HenryVIII)passed- UseupontheUse- Frommid17C:UseknownasTrust

Marriagesettlement:

- Commonlawtransferofwomen’sassets- MarriedWoman’sPropertyAct1882

CommonInjunction:

- Usedtodiscontinueproceedingsortopreventenforcement- Wheretheplaintiff’senforcementofcommonlawrightsamountedtoacting

unconscionably

HistoryofEquity:

One:Inpersonam(remedies)

- Remediesareattachedtotheperson;focusonconscience

Two:Discretionary

- Requiredtoestablishunconscionablebehaviour

Note:

- Conflictsbetweencourtsofequityandcommonlawcourts–distinctionisstillentrenchedinAustraliabetweenthesetwoCourts

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- Fusionfallacy- Commonlawcourtschallengedcourtsofequity

Case:EarlyofOxford(1615)

- ‘TheOfficeoftheChancelloristocorrectMen’sconscienceforFrauds,BreachofTrusts,Wrongsandoppression,ofwhatNaturesoevertheybe,andtosoftenandmollifytheExtremityoftheLaw…[w]henajudgmentisobtainedbyOppression,WrongandahardConscience,theChancellorshallfrustrateandsetitaside,notforanyerrororDefectintheJudgment,butforthehardConscienceoftheParty.’

- EstablishesthesupremacyofequityovertheCL- AsCourtsofChanceryandEquitydevelopeditbegantoresemblecourtsof

law

Case:CookvFountain(1676)LordHardwicke

- Rejectedsubjectivemotionsofconscienceasthebasisforestablishinganequitablejurisdiction

- Consciencehadsettledprinciples- Equitywasnotconcernedwithcertaintyinlaw- Thedoctrineofprecedenthadsupplantedtheflexiblesearchforjustice

Case:DavisvDukeofMarlborough(1818)LordEldon

- ‘Itisnotthedutyofajudgeinequitytovaryrules,ortosaythatrulesarenottobeconsideredasfullysettledhereasinacourtoflaw.’

Case:ReDiplock’sEstate[1948]

- ‘[I]ftheclaiminequityexistsitmustbeshowntohaveanancestryfoundedinhistoryandinpracticeandprecedentsofthecourtsadministeringequityjurisdiction.Itisnotsufficientthatbecausewemaythinkthatthejusticeofthepresentcaserequiresitweshouldinventsuchajurisdictionforthefirsttime.’

1873JudicatureAct:

- HighCourtofJudicaturereplacedthepreviousCLandEquityCourts- Dividedbetween:- Queen’s(King’s)Bench- Chancery–inchargeofEquity

Thenatureofequity:

- Dudley&Dudley- Nowequityisnopartofthelawbutamoralvirtue,whichqualifies,

moderates,andreformstherigour,hardness,andedgeofthelaw,andisanuniversaltruth;itdoesalsoassistthelawwhereitisdefectiveandweakin

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theconstitution(whichisthelifeofthelaw)anddefendsthelawfromcraftyevasions,delusions,andnewsubtleties,inventedandcontrivedtoevadeanddeludethecommonlaw,wherebysuchashaveundoubtedrightsaremaderemediless;andthisistheofficeofequity,tosupportandprotectthecommonlawfromshiftsandcraftycontrivancesagainstthejusticeofthelaw.

- Equitythereforedoesnotdestroythelaw,norcreateit,butassistit.

Preventionofunconscionableconduct:

Case:LegionevHateley(1983)

- Penaltiesandforfeituresinacontract- ‘Conformstothefundamentalprincipleaccordingtowhichequityacts,

namelythatapartyhavingalegalrightshallnotbepermittedtoexerciseitinsuchawaythattheexerciseamountstounconscionableconduct.’

Categoriesofunconscionableconduct:

- Theexploitationofvulnerabilityorweakness:Unconscionabledealing,undueinfluence

- Theabuseofpositionsoftrustandconfidence:Lawoftrusts,fiduciaryobligations

- Theinsistenceuponrightsincircumstances,whichmakesuchinsistenceharshoroppressive:Relieffrompenaltiesandforfeiture,equitablesetoff,specificperformance,onthediscretionarygroundofhardship

- Theinequitabledenialofobligations,doctrineofpartperformance,principleofequitableestoppel

- Theunjustretentionofproperty,constructivetrusts,principlesofsubrogation

Maximsofequity:

Whatismaxim?

- "Thegreatestsentence,proposition,oraxiom,ie.,ofthegreatestweightorauthority...-Asayingofaproverbialnatureembodyingamoralorpracticalprecept”

- "Anestablishedprincipleorproposition.Aprincipleoflawuniversallyadmittedasbeingjustandconsonantwithreason.“

- LordCoke:"asurefoundationorgroundofart,andaconclusionofreason,...sosureanduncontrollableasthattheyoughtnottobequestioned“

- LordEsher:"IneedhardlyrepeatthatIdetesttheattempttofetterthelawbymaxims.Theyarealmostinvariablymisleading:theyareforthemostpartsolargeandgeneralintheirlanguagethattheyalwaysincludesomethingwhichreallyisnotintendedtobeincludedinthem."

MaximsofEquity:

- Tosupportalegalviewpointratherthandetermineacase

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- Courtshaveturnedtoamaximonthebasisofwhichtorestadecision(rare)- Maximsoftentakenasalastresort

One:

- Someso-calledmaximsarenotmaximsatall,butbeingconciseandskilfullyformulatedphraseshavegainedpopularrecognitionandhavecomemistakenlytobesoregarded;

Two:

- Othersareofdefinitevalueandifproperlyusedserveabeneficialpurpose;and

Three:

- Eventhose,whichareuseful,aredangerousandshouldnotasarulebeemployedasthevertebraeofanargumentorjudicialdetermination,butratherasanaidorsupportforotherlegalreasoning.

Case:RiggsvPalmer115N.Y.506,22N.E.188(1889)

- Agrandson,knowingthathewasabeneficiaryunderhisgrandfather'swill,murderedhim

- Thestatutesregulatingthemaking,proofandeffectofwills,andthedevolutionofpropertyunderthem,madenoexceptioninthecaseofabeneficiarywhokilledthetestatortogainthebequest

- Lawwasclearandunambiguousinentitlingbenefit- Toavoidincongruousresultthecourtssaidthatstatutoryinterpretation

should“bestanswertheintentionwhichthemakershadinview,forquihoeretinlitera,hoeretincortice.”

- Lit:Hewhoadherestotheletteradherestothebark- Ifyousticktotheliteralmeaningofthelawyouwillnotbeabletoreachthe

substance- Thecourtappliedanequitableconstructionofstatute:Aequitasest

correctiolegisgeneraliterlatoquapartideficit- Lit:Equityisthecorrectionofthelaw,whenitistoogeneral,inthepartin

whichitisdefective

Maximsofequity:

- Thereasonceasing,thelawitselfceases- Noonecantakeadvantageofhisownwrong.Nooneshouldsufferbytheact

ofanother- Aninjurycannotbedonetoawillingperson- Thelawcompelsnoonetodoanything,whichisuselessorimpossible- Thelawdoesnotrecognizetrifles- Athingsimilarisnotexactlythesame- Thatiscertainwhichcanbemadecertain

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- Equitydelightstodojusticeandnotbyhalves- Betweenrightsotherwiseequal,theearliestispreferred- Equityaidsthevigilant,notthosewhoslumberontheirrights- Equityabhorsaforfeiture- Equitydoesnotsufferawrongwithoutaremedy/Wherethereisaright

thereisaremedy–Ubijus,ibiremedium- Equityregardssubstanceratherthanform- Equityregardsasdonethatwhichoughttobedone- Equalityisequity–Equitydelightsinequality- Wheretheequitiesareequal,thefirstintimewillprevail- Wheretheequitiesareequal,thelawwillprevail- Equityfollowsthelaw- Onewhocomesintoequitymustcomewithcleanhands- Onewhoseeksequitymustdoequity- Equityaidsthevigilantnotthosewhosleepontheirrights–Vigilantibuset

nondormientibusaequitassubvenit- Delaydefeatsequity- Equitableremediesaregivenasamatterofgraceordiscretion,notright- Equityactsinpersonam,notinrem- Equityimputesanintentiontofulfilanobligation- Equityactsspecifically

MinorMaxims:

- Equitydoesnotstooptopickuppins- Equitywillnotdecreeavainthing- Equitywillnotbeoustedbecauselawcourtshaveadoptedanequitable

remedy

Maximsofequity:

- Equityabhorsanudnik- Equitydelightsinagoodpracticaljoke- Hewhoseeksequitymustdosowithfullpockets.- Equityisnotforthesqueamish.- Equity,schmequity.- Equitycanbegrumpybeforeitsfirstcupofcoffee.- Equityiscrunchyontheoutside,softandchewyontheinside.- Equityisameandrunk.- Equity,likeallofus,preferstherichandgood-looking.- “Inequity,goodguysshouldwinandbadguysshouldlose"

Equitydoesnotsufferawrongwithoutaremedy:

- Wherethereisacivil,legalrightthereisalegalremedy- Equityfollowsthelaw:aequitassequiturlegem- Equityfillsgapsinlaw- But,itdoesnotapply:- Tocrime–althoughitmaytopartcrime

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- EG:Criminalnuisance- Tomoralrights- Simplybecausethereisnoexistinglegalremedy

Equityregardssubstanceratherthanform:

- True,inherentnatureofthematter- ComparetheCL–mortgagedeed,gratuitouspromiseunderseal- Thenatureofacorporation

Equityregards,asdonethatwhichoughttobedone:

- “…Equitywilltreatthesubjectmatterastocollateralconsequencesandincidentsinthesamemannerasifthefinalactscontemplatedbythepartieshadbeenexecutedexactlyastheyoughttohavebeen,notasthepartiesmighthaveexecutedthem.Butequitywillnotthusconsiderthingsinfavourofallpersons,butonlyinfavourofsuchashavearighttopraythattheactsmightbedone”JosephStory,CommentariesonEquityJurisprudence,para64(g)(13thed.1886)

- Equitableestoppel:Forexampleconstructivetrustonpropertygivenbymothertodaughterfordisabledsonbutclaimedbydaughter

- Equitableconversion:Moneypaidforthepurchaseoflandistreatedasrealtyforpurposesofdescent;landtohavebeentransferredformoneyistreatedasmoney

- Equitablelien:Mortgagoragreestoinsurepropertyformortgageebutnameshimselfasbeneficiaryunderpolicy

Equalityisequity:

- Intheabsenceofaclearfirmapplicableruleoflaw- Proratadistribution- Thoseinsimilarcircumstancesshouldbetreatedequallyandnon-

preferentially- EG:Unsecuredcreditorsofaninsolventcorporation- EG:Securitiescontributionfromcosureities

Whereequitiesareequalthefirsttimewillprevail:

- Maybereferredtoasaminormaxim- Quiprioresttemporepotiorestjure- ‘Tie-breakerrule’- Simply,asbetweentwoequallyinnocentpersonactingingoodfaiththe

remedygoestothefirsttime- Trumpedbynextmaxim- Negativeandimpartialprinciple- Wheremoralrightsarebalancedlawcanbedogmatic- Bonafidepurchaserforvaluewithoutnoticeoflegaltitlesubjecttoequitable

right- EG:Trust- BFP>TrustholderbecauseBFPhaslegaltitle

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- Trumpspreviousmaxim

Equityfollowsthelaw:MOSTIMPORTANTMAXIM

- Significantbarriertoequitablerelief- EG:Equitycannotimposeanewcontractorsupplydeliberateomissions- Preventsequitycourtsfromstrayingintoplain,unambiguouslanguageof

statutes

Onewhocomesintoequitymustcomewithcleanhands:

- Actoromissionofapersonbarsthemfromreceivingequity’sassistance- CarmenvFoxFilmCorp269Fed928(2dCir1920)- Theplaintiffamotionpictureactresssoughttohavecontractsmadewiththe

defendantsduringherminoritydeclaredvoid,havingdisaffirmedthemwithreasonablediligenceonceshehadreachedmajority

- Alsosoughtaninjunctionrestrainingdefendantsfromassertingcontracts’validity,andfrominterferingwithhercontractualrelationswithothercompaniesorindividuals

- Actresshadenteredseveralcontractsandsoughttonullifyallbutmostlucrativeofthemusingherminorityasthebasis

- TheCourtsaid:- “Theconductoftheplaintiffhasbeensuchasentitleshertonorelief…asa

minorshemisled[Keeney]byrepresentingthatshewasfreetomake[thecontract]…shewasunderaoralobligationtoabidebythem,andgoodfaithrequiredhertocontinuetorendertheservicesshehadagreedtogive…heractioninrepudiatingherpledgedwordwasmisconductofwhichnopersonofhonourandconsciencewouldhavebeenguilty.Thatnoactioncouldbebroughtagainstheratlawbecauseofwhatshediddoesnotalterthemoralcharacterofheract.Andwhenshecomesintoacourtofconscienceandasksforitsaffirmativeaidtoassistherincarryingintoeffecttheinequitablearrangementsintowhichsheunfaithfullyentered,theappealfallsondeafears.Onewhocomesintoequitymustcomewithcleanhands,andherhandsarenotclean.”

Therefore:

- Cleanhandsmaximnottriggeredbymerenegligence- Courtsmayapplyitontheirownmotionbecausethemaximisdesignedto

protectthecourtfromspendingtimeandpublicresourcesoninequitabletransactions

- Theprimaryfactoriswhethertheplaintiffsoughttomisleadordeceivetheotherpartynotwhetherthedefendantreliedonthemisrepresentation.

- Asaconditionofreceivingequityapartymustdoorrefrainfromdoingsomeactwhichotherwisehecouldnotbeconstrainedtodooromit,toassurefairandjusttreatmenttotheotherparty

- EG:Toreturnthedefendanttothestatusquoante

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- Preventsunjustenrichmentorunfairadvantage- Atenantseekingtoavoidevictionfornon-paymentofrentmustpayback

rentbeforeequitywillaidhim- Plaintiffdelayedseekingrescissionformineralleasesuntilafterlandproved

tohavenooil,andcouldnotthereforerestoretothedefendantsleasesofthesamevalue

Onewhocomesintoequitymustcomewithcleanhands:

Example:

- Aplaintiffwhowasdeniedahighschooldiplomaforexcessiveabsenceswasawardedbyinjunctivereliefthediplomaonthebasisthattheschoolsattendancepolicywasunreasonable

- Reversedonappealbecausetheplaintiffhaduncleanhands(shehadforgedexcusenotes)regardlessoftheunreasonablenessofthepolicy

- Plaintiff’sdeceitnotdefendant’sreliancedisqualifiedherfromreceivingrelief

- Cleanhandsnotrequiredforbigamyannulment- Reasonableness,notsaintliness

Onewhoseeksequitymustdoequity:

- Asaconditionofreceivingequityapartymustdoorrefrainfromdoingsomeactwhichotherwisehecouldnotbeconstrainedtodooromit,toassurefairandjusttreatmenttotheotherparty

- EG:Thereturnthedefendanttothestatusquoante

Equityaidsthevigilantnotthosewhosleepontheirrights:

- Vigilantibusetnondormientibusaequitassubvenit- Yousnooze,youlose- Laches–not‘limitations’:theeffectofdelay(prejudice),notthefactofdelay- Althoughequitywillgenerallyfollowstatutorylimitationperiodsunlessreal

equitablelachesoccurs- Limitationsbecomeslachesifthedelaychangesthesituationssuchthatthe

enforcementofrightisunfair- Witnesshavediedormemorieshavefaded- Marketfluctuationscausechangesinpriceormarketvalueespeciallyif

plaintiffisabletobenefitbythedelay

Equityactsinpersonam,notinrem:

- Otherwiseitwouldinterferewithcommonlawcourts- BUT- Equitydecreesaffectthings(jurisdictioninrem)- Interpleader- Courttodeterminewhichofseveralpartiesisrightlytherecipientofone

party’sobligationorproperty- BillofPeace

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- Tosettleanissuecommontoseveralsuits- Writofassistance- Givesplaintiffactualpossessionofland- Writofsequestration- Sequestrator(EGsheriff)canseizechattels,rents,profitsetc- Writofprohibition- Superiorcourtordersinferiorcourttodesistfromprosecutionofasuit,

matternotbelonginginthatjurisdiction

Equityimputesanintentiontofulfilanobligation:

- Doinganact,whichcanbeconsideredtheintentiontoperformanobligationmaybedeemedperformanceoftheobligation

- EG:Personcontractedtoobtainpropertyforanotherbutobtainsfortheirownusepropertyisdeemedfulfilmentofcontract

- Contract,trust,agency,partnership,corporateofficer,fiduciary,executor,guardian,administratoretc

Equityactsspecifically:

- Not(usually)compensationordamagesbutspecificrelief- Restorative- Examples:- Specificperformance–EG:Contractofsaleofland- Injunction–Orderapartytoortonotdosomethinginparticular(mandatory

andprohibitory)- Receiverships- Interpleader

MinorMaxims:

- Equitydoesnotstooptopickuppins- Disproportionate- Equitywillnotdecreeavainthing- EG:Toaccomplishnothinginfact–specificperformanceofcontracts

requiringsupervision- Equitywillnotbeoustedbecauselawcourtshaveadoptedanequitable

remedy- Concurrentjurisdiction

HypotheticalExercise1:

- MrsBmovestothetownofBonchance.Sheintendstopurchaseandoperateabusinessmakingsellinghatsthere.Shelocateswhatshebelievesisanappropriatepropertyandmakesallnecessaryenquiriesregardingtheproperty.Bonchanceofficialsinaccuratelyinformherthatthepropertyiszonedforbusiness,andonthisbasisshepurchasesitandmakespreparationforopeningherbusiness,includingsubmittingthenecessaryapplicationforms.However,whenthetownsubsequentlymergeswiththetownofAllezit

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emergesthatthepropertywaszonedresidential,andherapplicationisrejected.

- Whatshouldthecourtdo?- Equityregardsasdonethatwhichoughttobedone- TheCourtcouldtreatthepropertyasiftheownerhadappliedforthe

businesszoningbeforethetownsmergedandtheapplicationhadbeengrantedcitingthemaximthattheCourtwillregardasdonethatwhichoughttohavebeendone

Equitywillnotsufferawrongtobewithoutaremedy:

- DearSir,ofyouwhoareputintheplaceofourLordtheKingtodorighttopoorandtorich,Icrymercy.IJohnFesrekynmakemycomplainttoGodandtoyou,SirJustice,thatRichardthecarpenterthatisclerkofthebailiffofShrewsburydetainsfrommesixmarkswhichIpaidhimuponreceivingfromhimanundertakinginwritingbywhichheboundhimselftofindmeinboardandlodginginreturnforthemoneyhehadfromme;andhekeepsnotwhatwasagreedbetweenus,butassoonashehadgottenholdofthemoneyheabandonedmeandconstrainedmypersonandgavemeascrapofbreadasthoughIhadbeenbutapauperbegginghisbreadforGod'ssake,andthroughhimIallbutdiedfromhunger.AndforallthisIcryyoumercy,dearSir,andpray,forGod'ssake,thatyouwillseethatIgetmymoneybackbeforeyouleavethistown,orelsenevershallIhaveitbackagain,forItellyouthattherichfolkallbackeachotheruptokeepthepoorfolkinthistownfromgettingtheirrights.Assoon,mylord,asIgetmymoneyIshallgototheHolyLand,andthereIwillprayfortheKingofEnglandandforyou,byyourname,SirJohndeBerewick;forItellyouthatnotafarthingIhavetospendonapleader;andsoforthisdearSir,begracioustomethatImaygetmemymoneyback.


- Undertheimmediateanddirectthreatofcondemnation,privatelandownersreluctantlyagreedtoselltheirpropertytotheCityofGoodgov.However,withinsixmonthsofthisforcedandhighlyreluctantsale,theCitydetermineditnowlongerhadapublicpurpose,ortherequisitepublicfundsrequired,fortherecentlycondemnedproperty.Whentheprivatelandownerslearnedofthecity’sdecisiontoreselltheproperty,thelandownersrequestedtherighttorepurchasethepropertyattheformersaleprice,since,after,thiswasthepriceagreeduponjustsixmonthsprior.TheCity,however,refusedtoreselltothepreviousownersandclaimedtherighttosellthepropertytowhomeveritdesired.Atfirstinstanceitwasdeterminedthattheformerpropertyownershadbeentreated‘unfairly’andenteredanorderpermittingtheoriginalownerstoreacquirethepropertyatthepricepaidsixmonthspreviously.

- Themattergoesonappeal.- Whatshouldthecourtdo?- Equityfollowsthelaw

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- Onappeal,theSupremeCourtmayreversetheinferiorcourt’sdecision.Thecourtmayholdthatthecityhadnolegalobligationtoresellthepropertytotheoriginalowners.Whileagreeingthattheresultmightverywellbeunfair,theSCneverthelesswillconcludethattheinferiorcourt’suseofequitytosolvetheproblemunderminedthelegalruleandexceededthecourt’sequitypowers.Thecourtwouldnotethatastatutorymethodofcondemnationwasatalltimesinplace,thatthestatutehadbeenstrictlyfollowed,andthatthestatutefailedtocontainanydutyonthepartofthecondemningauthoritytoresellthelandbacktotheoriginalowners.


- CarCzarP/l,aleadingsecondhandautomotiveretailer,leasedpropertywithanoptiontopurchase,butinformedtheownerthattheyhadnointentionofexercisingtheoption.Theownerreliedonthisrepresentationtoenterintoanewleasewithanothertenant,andspent$250,000purchasingadjacentlandinordertoexpandtheleaseholdestate.CarCzartheinformedtheownerthattheywereinfactgoingtoexercisethepurchaseoption.CarCzarsuedforspecificperformance(anequitableremedy)ofthecontract.

- Whatshouldthecourtdo?- Hewhoseeksequitymustdoequity- Thecourtcouldalsocitetheuncleanhanddoctrine,andconcludethatCar

Czar’smisrepresentationprecludedthemfrominvokingequitableremedies


- MrTistheholderofalifeinsurancepolicyandwishestochangethebeneficiaryunderitfromhisex-wifetohismother.Theinternalruleoftheinsurancecompanyrequiresthattheactualinsurancepolicybeattachedtoanyrequesttochangeatermunderaninsurancepolicy.MrTsentawrittenrequestforthechangeofbeneficiarytothecompanybutcouldnotattachthepolicybecausehisex-wife,whowasthenamedbeneficiaryunderthepolicy,hadphysicalpossessionofthepolicyandrefusedtosurrenderittohim.

- Whatshouldthecourtdo?- Equitywillnotsufferawrongtobewithoutaremedy- AfterMrT’sdeath,hismother,thenewlyintendedbeneficiary,maysueto

reformthepolicy.Thecourtmayemploythelegalfictionofleavingthelegaltitleintheformerbeneficiary(MrT’sex-wife),butconcludingthattheequitableownerofthepolicywasthenewlyintendedbeneficiary(MrT’smother).Thisapproachwouldpermitthecourttoconcludethattheequitabletitleshouldprevailoverthelegaltitleunderthespecialcircumstancesofthecase.


- ThismatterisonappealfromtheFamilyCourt.TheFChadorderedthetransferofpropertyfromonespousetoanotherassecurityforfamilymaintenancepayments,includingchildsupport.Muchofthelandthesubjectoftheorderwasinanotherstate.

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- Whatshouldthecourtdo?- Equityactsinpersonam,notinrem- TheappellatecourtcouldfindthattheFChadexceededitsauthoritysinceit

lackedinrempowertoorderthehusbandtotransfertitletolandlocatedinanotherstate.Itcouldalsoemployamoreindirectmethod.Byapplyingthemaxim‘equityactsinpersonam’thecourtcouldfindthattheFClackedinremauthoritytotransferdirectlypropertyfromonespousetoanotherassecurityforfamilymaintenance.Asacourtofequitythecourtcouldalsofindthatauthoritydidexisttoactuponthepersonandthusindirectlyactuponrealestatebyplacinganequitablelienupontheproperty,accomplishingthesamepurpose.


- Adebtorowingsubstantialsumsofmoneyfleesfromthejurisdictionbutisfoundfifteenyearslaterbyacreditorwhohashimarrested.Thecreditorwhilstthedebtorisinprisonagreestodropthechargesifthedebtorreturnsamortgagedtitleheldintheoriginalstate.Thecreditorthentriestoforeclosethemortgage.

- Whatshouldthecourtdo?- Hewhocomesintoequitymustcomewithcleanhands- Thecourtcouldcitethecleanhandsmaximandrefusetoallowthe

foreclosure.Acontractmadeinprisonalwaysrunsafoulofthesuspicionthatitistheproductofoppressionorimposition.


- Anexecutorasksthecourttoapportiontaxesbetweentheprobateandthetrustestates.Neitherthewillnoranystatuteprovidesguidanceastohowtodothis.

- Whatshouldthecourtdo?- EquityisEquality- Intheabsenceofcontrollinglawthecourtcoulduseequityandapplythe

doctrineofequitableapportionmentasanaspectofthemaximthatequalityisequity.Thecourtcouldjustifyitsdecisionbynotingthatitwasfairtoapportionthetaxburdenbetweenthepartiesbecausethosewhohaveacommoninterestinasubjectmattershouldbearincommonanyburdenaffectingit.


- Twowastedisposalcompaniescompetedtowinacontracttobuildadesperatelyneededlandfill.Thecountyawardedthecontractbutsixmonthslaterthewinnerhadstillnotcommencedconstruction,eventhoughithadmovedequipmentonsite.Thelosingtendererclaimedthewinningcontractwasvoidbecauseitfailedtofollowthegovernmentprocurementcodesettingoutastricttimetableforcommencementwithin2monthsofannouncement,andcompletion,withintenpercentofthetimeagreedto,whichatthisstagelookedimpossibletomeet.

mll 405 exam notes - amazon s3...mll 405 exam notes 2 contents page topic one: history of equity ......

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