Equity And Trusts Flashcards
(39 cards)
What 4 differences does Worthington identify between common law and equity
1) substantive difference ie equity looks at individual circumstances where as common law looks at facts
2) difference in remedial strategies ie common law = in rem and equity = in personam
3) difference in enforcement techniques
Equity = in contempt of court ie prison
Common law= damages can strip of assets to pay debts ect
4) difference in procedure - common law relied on writs etc
Equity relied on written statements etc
Maitland said
Equity had come not to destroy the law but to fulfil it
Worthington equity contributed to property law by
Allowing transfer of property rights that were not transferable under the common law thus creating new forms of property
Thinks trust is property holding device
Trust about property not obligations
Roger cotterrel
Trusts reflect property power , tool for property power
Concept makes it possible for the law to accommodate and guarantee inequalities of property power whilst maintaining the ideology of equality
All have right to own things but some own more than others
Trust hides property power as disguises that trustees have power but it’s actually the beneficiaries according to coterrel
The 3 different conceptions of the trust cotterrell identifies
1) property holding device
2) capital management
3) moralistic ur typical family trust
Cotterrell thinks trust law should develop how?
Trust obligations , fiduciary duties , trustee duty of care and skill
Trustee act 2002 introduced what ?
General power of investment applying to all trust subject to express clause restricting or excluding but trustee must have regard to standard investment criteria
Trustee must obtain and consider proper advice before investing ie from someone believed to be qualified
General power of delegation
Eg asset management ie investment of assets or management of trust property
Trustee must keep these arrangements under review
Statutory duty of care = trustee must exercise such care and skill as is reasonable in the circumstances, having regard to actual skill, manifested skill and any reasonable expectation of professional skill if professional
Both statutory duty of care and common law prudent man investing on behalf of another duty of care can be excluded
Remuneration adaptions eg if remuneration clause present trust corporations and trustees now entitled to payment for services that could have been provided by lay trustee
Different to before as used to be interpreted narrowly ie could not charge for services that could have been provided by inferior
Trustee act 2000 a transformation of trust law
- recognition of what was already happening in practice
- shift in default law - trust instrument now to limit powers and duties rather than extend them
Fiduciary obligations corrects
Scope for abuse in someone else’s affairs
Fiduciaries personal gain with the possibility of the principals expense
Self interest
Status based fiduciary relationships
Trustee - beneficiary
Director- company
Solicitor - client
Employer - employee
Agent- principal
Can find fiduciary relationship on facts
Fiduciary obligations not extended to doctor - patient in England , Australia
England- Doctor cannot abuse position to make profit
Australia - governed by negligence and contract - fiduciary obligations not needed
Canada - power- dependency approach
Relationships in which a fiduciary obligation have been imposed seem to possess three characteristics
1) the fiduciary has scope for the exercise of some discretion or power
2) the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests
3) the beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion of power
Central fiduciary obligations
Loyalty and good faith
No possible conflict of duty and interest
No secret profits
Regal Hastings case
Essentially , even if profiteer honest , can still be expected to account for profits
Power/discretion and undertaking in Australia and England
Critical feature of fiduciary relationships is that fiduciary undertakes or agrees to act on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that person in a legal or practical sense
Relationship between parties is therefore one which gives fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person
Canada : conceptual differences between contract / tort and fiduciary obligations
In negligence and Contract , parties are taken to be independent and equal actors concerned with primarily self interest
Fiduciary = one party exercises power on behalf of another
Has trust not self interest at core
Worthington ‘fiduciary fudge”
Fiduciary obligation should not be extended to doctor patient
No prospect of profits so no hook to bring in fiduciary obligations
Go to parliament if want to extend
Remedies for breach of fiduciary duties
Personal = injunctions, equitable compensation , account for profits (disgorges fiduciaries profits and gives to principal )
Propitiatory= constructive trust (not discretionary , get through law)
Account for profits
Treats fiduciary as if had obtained the profits for principal so strips profit and gives to principle
Not same as equitable compensation
Strict liability to account for all secret profits
Falsifying the account
Loss from trust fund has to be put back
Surcharge the account
Lack of care and skill leads to insufficient gain
Importance of Constructive trust and it’s consequences
Ability to trace the proceeds of the trust eg if invested
Priority on insolvency unlike personal remedies
Consequences
May affect third party creditors as they may no longer have priority
May result in windfall for principal
