Equity and Trust Law - Essay Example

Equity and trust law al Affiliation) According to Aristotle, equity is just even though it remains superior to justice. Equity and justice coincides with each other. Equity is believed to provide a form of justice that is considered better compared to the common law1. Equity rectifies any mistake committed by the common law in judgment as either wrong or right basing on the individual cases. Equity therefore prevents errors in common law applications toward situations that are considered factual especially in cases when where the legislators or the judge passed statutes that were unintended. According to the trust laws principles, equity works on the legal interest owners’ principles2. In a trust case, the legal owner’s conscience requires them to carry out the implied trust. Equitable jurisdiction of the trust enforcement depends on the holders’ legal interest being affected. Enforcement of the trust depends on the conscience of the holder3. The law does not permit the holder to be the property’s trust especially if he ignorant on issues affecting his consciousness. A trust property must be identified before the order is established4. In the case of Hunter V Dillon LJ, various reasons emerge on Mr. Moss’s failure to segregate the fifty shares he promised to Mr. Hunter. The situation did not hinder a trust from being declared over them. I agree that on careful assessment, none of such reasons are considered plausible and the decision obtained was not consistent with the previous5Principle and authority. Trust is one of the property laws. It therefore means that trust property should be separated from the other properties. Lord Langdale referred to three certainties in Knight V knight (1840) 3 Beav. 148. one of the issues is that there should exist in subject matter certainty. The shares happen to be identical in a certain way6. The defendant in the case held more than fifty shares. Personality trust can be created in an oral manner as it is well understood. According to Turners judgment based on Milroy V Lord De G. F, he said that in order to render effectual and valid voluntary settlement, the settler was to act effectively on property transfer to the other person in the trust7. The court of appeal’s approach targeting hunter v moss arrived at a conclusion that was different in relation to trust creation of trust over intangible and fungible property. In the case a company employee was entitled to fifty shares out of nine hundred and fifty shares held by the company and the workers employment contract. The employee’s share were not transferred to by the company to the rightful person, no attempts pertaining to it had been made8. The issues were based on whether the employee was able to defend his proprietary rights over the fifty shares. There could be no valid trust if the rule was applied in Goldcorp, since it was impossible to determine the shares held on trust. Dillon LJ’s approach on Hunter was quite different from the way it was set up in the Goldcorp. He help that a valid trust existed in the shares. The decision was based a number of motivations such as, the trust finding could enforce employment contract terms among the two parties involved9. In addition there were no differences practically in which the fifty shares were subjected to the trust yet there was no difference qualitatively among the ordinary shares. the court of appeal’s approach adviced that segregation of the property was not in order in cases involving the properties that were considered intangible. Among the notable features that appeared in case is the manner in which Dillon LJ created the possibility of trust rights development over identical property collection10. The rights of the client were cross referred with the executor’s position on the death of the testator. A section of the English law stipulates that a trustee is entitled implementing a trust over properties that are segmented. The executor in the situation was holding properties as a trustee of a trust will. According to his lordship’s explanation concerning the death of the testator, the properties are to be distributed to the legatees by the executor, even if the person had not directed on the beneficiary of the interest. The properties’ general fund was to be divided among the legatees11. Oliver J’s explanation on the case of Re London Wine Co limited in 1986 reveals that in order for trust to be created, the property to attach and the beneficiary’s interest is to be ascertained. He could not understand how a farmer a trustee of two sheep could create a trust that is considered perfect without identifying them12. In the Re-London case the issue raised was to uncover if wine was accessible for the creditors of the company or consumers trust. Oliver J believed that since the sold property was not identified in any way from the remaining stock of the company, a consumer could not recognize the bottle that they had purchased. No trust was therefore created in support of the consumers. The property to be attached and the beneficiary interest were to be ascertained in the trust development according to Oliver J. The decision raised was followed in the exchange of Re-Goldcorp exchange13. Lord Mustill in the case stated that an equitable or legal property can only occur in specific property and not in the air14. In the hunter v Moss’s case however, the degree of certainty of the matter in context various between the trust of tangible and intangible assets. Mr. Moss in the case was not able to identify the shares subject to the arrangement even though the contract showed an intention to develop a trust. If the case was based on the orthodox approach, the outcome could be negative toward Mr. Hunter15. It was difficult to identify which fifty shares was to be the trust’s subject matter. Tangible properties are easily separated physically and therefore easier to distinguish unlike the intangible trusts. No property segregation and certainty of the subject matter was identified. The COA supported that a valid trust existed16. The reasoning applied was, since the shares were indistinguishable and identical, any employers’ fifty shares could form the subject matter of the trust. An alternative solution to non segregation problem emerged in the Pearson v learman brothers in the year 2010. Prof. Roy Goode’s approach was applied in the case17. The professor asserted that segregation problem could be dealt with by treating the trust as if it has been declared to the trust fund proportionate share. If the settler in the process decides to trade all or some of his shares then the beneficiary can retrieve a proportion of the remaining share of the sale produce shares18. The approach is however seen to uphold the true intention of the settler as stated by Brigg J. when compared to matrimonial law; there is no trouble with gap filling through implications left by the parties. Hayton on the contrary argued that the intention of the settler was affected in situations where 1/19th of the shareholders trust is declared than the amount of the fifty shares that is fixed in value19. Hayton rejected Briggs J’s contention and Pearson v Lehman brothers approach. The professor’s approach was also rejected in Hunter’s case. An express private trust is created intentionally through the settler’s express declaration by will, deed, orally or in writing for group of individual or an individual benefit20. It can be developed by the settler by declaring himself a trustee’s beneficiary or through transfer of the properties of trust to the trustee21. Mixed reception has continued to target Hunter v Moss. Dillon LJ’s analogy on the declaration of bequest and trust under a will has continued to receive criticism. His contribution toward Re London wine co basing on property being taken through chattels and not trust declaration appears to contradict Oliver J’s opinion. The law has a way of tracing the assets22. The critics of Hunter V Moss missed the point when they were against the application of such rules aimed at tracing the properties or the shares of the individuals. They failed to provide good reasons on why the settler’s intentions should be defeated23. The tracing rules provide the best solutions to situations that could lead to trust failure. The settler has to provide the identity of the relevant property source in the existing stock number24. The court of appeal ruled that there should include an asset collections that are homogeneous to the property in trust. Dillon J affirms that Hunter v Moss reasoning is limited to intangible property trusts25. The Hunter v moss case has been subjected to heavy criticism by Hayton in the year 1994. The case is said to have given rise to some circumstances which were said to be problematic. The case was said to be inconsistent with the council’s privy decisions applied in Goldcorp exchange. The case involved a seller becoming undivided share’s trustee26. Uncertainty arises due to failure in trust property segregation from the settler’s property ownership. The general rule which apply is that there is no trust due to lack of determination of subjects’ goods27. Another approach is through determination of whether the property is intangible or tangible. The property presented as the trust subject has to be described in a manner that is becomes ascertainable and certain28. The situation may end up creating problems in a number of ways, first when the words used are not precise or in situations where the property in trust is not differentiated by the settler from his own goods or not segregated29. The verdict of the judiciary on properties that are considered tangible is presented in the Re- London wine Co. as explained by Oliver J; a trust is created after certainty is ascertained in property attachment and the beneficiary’s interests. A trust should only be created when the property is identified by the owner30. The case in context was to assess whether the wine was available to the creditors of the company or held by trust. The lack of property being singled out from the company’s remaining stock made it difficult for the customer to claim the identity of the bottle of the wine consumed. It is in order to ascertain with certainty on the beneficiary interest and the attached property when creating a trust31. The decision raised in this case was followed by the Re- Goldcorp exchange32. Lord Mustill in the case stated that a legal or equitable right in a property can only exist in specific properties and not in the air33. In Hunter v Moss’s case, the certainty degree required for the tangible assets trust varies with the intangible asset trust. In the case presented Mr. Moss failed to identify the shares that were subject of his arrangement34. The three certainties are usually needed, objects, subject matter and intention or word. Provided the three are to be present the court can end up enforcing trust in situations that the trustee is unable to do so35. In the re- London wine case, the buyers failed to a bottle’s trust in their favor due to lack of segregation or identification. The consumers were unable to claim creditor’s priorities after the consumer went on liquidation by claiming that certain wine bottles were contained in the trust for them36. Pertaining to the Gold corp exchange, on the insolvency of the company purchasers of bullion who had not yet taken the delivery but paid for it claimed its rights. Their claims were however rejected, apart from the other partners whose bullions were segregated37. The lack of identifiable property to attach the property made it difficult for the trust to be considered38. No bullion had been segregated and therefore no trust for the consumers. In the case of Hunter v Moss, A trust based on intangible property’s unidentified section was considered valid. The subject matter was considered certain in cases of interchangeable properties. Neuberger J in the Re Harvard Securities concluded that it was not in order to apply different rules toward intangible and tangible properties39. However, the authority directed him toward making the distinction. He ended up applying Hunter v Moss that was also associated with intangible properties. He claimed that a valid trust existed due to absence of certainty of subject matter and the shares were unsegregated and identical40. Works Cited Ames, James Barr. "Law and morals." Harv. L. Rev. 22 (1908): 97. Angus and Robertson, 1906. Pettit, Philip H. Equity and the Law of Trusts. Oxford University Press, 2012. Atherton, Rosalind. The International Academy of Estate and Trust Law: Selected Papers 1997-1999. London: Kluwer Law International, 2001. Atherton, Rosalind. Papers of the International Academy of Estate and Trust Law - 2001. London: Kluwer Law International, 2002. Bailey, S. J. "Equity—Fiduciary Powers—Breach of Trust—Impounding—Beneficiarys Interest—Undue Influence—Equitable Defences." The Cambridge Law Journal, 2004, 209. Charles Potter, 1896.Penner, James. The law of trusts. Oxford University Press, 2012. Ellickson, Robert C. Perspectives on Property Law. 3rd ed. New York: Aspen Law & Business, 2002. Equity and trusts. Routledge, 2012. Legge, J. Gordon. A Selection of Supreme Court Cases in New South Wales, from 1825 to 1862. Vol. 1. Gardner, Simon. An introduction to the law of trusts. Oxford University Press, 2011. Gary, Susan N. "Regulating the Management of Charities: Trust Law, Corporate Law, and Tax Law." U. Haw. L. Rev. 21 (1999): 593. Graham, T. "International Trust Laws." Trusts & Trustees, 2011, 441-43. Gravells, N. P. Landmark Cases in Land Law. Halbach, Edward C. "Trust investment law in the third restatement." Real Property, Probate and Trust Journal (1992): 407-465. H., C. P. "Trust—Constructive Trust—Oral Undertaking—Equitable Fraud—Law of Property Act, 1925, Ss. 53, 54." The Cambridge Law Journal, 2010, 278. Hayton, David J. Principles of European Trust Law. The Hague: Kluwer Law International ;, 1999. Hansmann, Henry, and Ugo Mattei. "Functions of Trust Law: A Comparative Legal and Economic Analysis, The." NYUL Rev. 73 (1998): 434. Hepburn, Samantha. Principles of Equity & Trusts (Aus) 2/e. Routledge, 2013. Hildebrand, Ira P. "Liability of the Trustees Property and Shareholders of Massachusetts Trust." Tex. L. Rev. 2 (1923): 139. Hunter, I. A. "Proving Foreign and International Law in the Courts of England and Wales." Va. J. Intl L. 18 (1977): 665.Cases, Australian. " Lawson, F. H. Property and Trust. Tübingen: J.C.B. Mohr (Paul Siebeck) ;, 1973. Luther J. "Significant Current Trends Affecting Malpractice Liability of Lawyers in the Fields of Real Property, Probate and Trust Law." Real Property, Probate and Trust Journal (1978): 574-580. McDonald, Iain, and Anne Street. Equity & Trusts. Oxford: Oxford University Press, 2009. Moffat, Graham. Trusts law: text and materials. Cambridge University Press, 2005. Paul, Jackson. Trust Law. Sellier European Law Pub, 2009. Peloso, Jennifer. Intellectual Property. Bronx, N.Y.: H.W. Wilson, 2003. Penner, J. E. The Law of Trusts. 5th ed. Oxford: Oxford University Press, 2006. Pettit, Philip Henry. Equity and the Law of Trusts. 6th ed. Lsondon: Butterworths, 1989. Scott, Austin Wakeman, ed. Select cases and other authorities on the law of trusts. The editor, 1919. Scott, Austin W. "Liabilities Incurred in the Administration of Trusts." Harvard Law Review (1915): 725-741. Shields, John A. Federal Courts and Practice All Sherman Law Trust Prosecutions and Syllabus of Equity, Jurisdiction, Pleading and Practice : An Original and Historical Compilation from Court and Departmental Records and Other Authoritative Sources. New York: Banks, 1912. Sitkoff, Robert. "Agency Costs Theory of Trust Law, An." Cornell L. Rev. 89 (2003): 621. Smith, Marcus. The Law of Assignment: The Creation and Transfer of Choses in Action. Oxford: Oxford University Press, 2007. Stone, Harlan F. "A Theory of Liability of Trust Estates for the Contracts and Torts of the Trustee." Columbia Law Review (1922): 527-545. Tettenborn, Andrew. "Trust Property and Conversion: An Equitable Confusion." The Cambridge Law Journal, 2012, 36. Turner, Chris, and Judith Bray. Key Facts Key Cases: Equity and Trusts. Routledge, 2013. Verbeke, Alain. Property and Trust Law. The Hague: Kluwer Law International, 2000. W, James,. Issues in Construction Law: New Perspectives on Liability and Contracts Real Property, Probate and Trust Law Section, American Bar Association. Chicago, Ill.: Association, 1988. Walker, Julian. Towards 1992--the Development of International Anti-trust. Oxford: ESC Publ., 1989. Watt, Gary, and Paul Todd. Todd & Watts Cases and Materials on Equity and Trusts. Oxford University Press, 2013. Watt, Gary. Equity & Trusts Law. 3rd ed. Oxford, U.K.: Oxford University Press, 2012. Read More