Thursday, April 4, 2019

Analysis of Doctrine of Equity

Analysis of Doctrine of EquityThe doctrine of integrity was shitd to fill in the gaps of common law by providing to a greater extent flexible remedies, unlike common law which only grant damages such as injunction, specific performance, equitable estoppel etc. Equity only governed by the maxims where it is ground on the principles of fairness and conscience and argon non as strict as common law.Hence, as the doctrine of paleness developed and became more and more flexible in the past centuries, it has now been argued by many academics that equity is now too conceptually messy to be useful. It has been argued that equity is a run low of strict rules and arbitrary principles which attributes to English Law with its flexibility. He further explained that equity comprised of firm rules as headspring as discretional principles which will be applicable in different circumstances.1 In deciding this, the flexibility of equity would be discussed, especially in the areas of such as t he three certainties, Quistclose put and doctrine of fiduciaries.In the case of dub v nickname2, Lord Langdale MR had laid polish the three certainties examine to create a valid private express consecrate. Certainty is an important element in send as without validation, the excogitation, goal and subject of the trust could not be readd by the salutes which would then lead to an invalid trust. on a lower floor certainty of intention, the settlor must use very clear words and expression to impose a sub judice obligation for the trustee to hold the property on trust. Generally, imperative words are more promote to be use in a will as compared to precatory words. In the case of Re Adams3, the phrase in full confidence was used in the clause and it was held that thither was no trust created as on that point is no imperative words used in the will. However, in Comiskey v Bowring4, however the same phrase was used as in Re Adams case, but it was held that the wording creat ed a trust. It could be submitted that the courts now no longer only look at a single word to determine whether there is a trust but look at the whole of the will.In more thickening situations where there are no documents available, the courts might infer intention from spiels or the words of the parties. In capital of Minnesota v Constance5, it was held that the words the money is as much yours as it is mine is sufficient to make a valid trust as there was repeated conduct and has a clear intention. It was suggested that the courts are world too generous in the decisions.However, in Jones v Lock6, it was held that it was insufficient to manifest a clear intention for the father to create a trust for the son. The problem is that both cases were lack of specific intention to create a trust, there were only general intention to benefit. However, both cases were held differently. It could be argued that the actions were louder than the words in Pauls case. Gardner suggested that the oddment of both cases was merely the reflection of changing judicial attitudes.7Next, under the certainty of subject matter, the test used by the courts would be whether the property could be certainly identified. However, the courts have recently created an artificial distinction between tangible and intangible property. In Re London Wine Co8, it was held that no both bottles of wine are alike and therefore it could be identified for their customers.However, in Re Goldcorp Exchange Ltd9, it was held that the claimants whose atomic number 79 bullion had been segregated were successful in the claim but not those whose bullion had not been segregated. The argument was that the stock of the gold has been constantly changing and it was hard to say which particular piece of gold belongs to any particular customer. It could be submitted that the courts were trying to uphold the principle of fairness by having a different decision from Re Londonscase as the tangible property items he re could not be segregated properly.On the other hand, in hunting watch v Moss10 where the property is intangible, a different set out was taken by the courts. In the case, it was held in party favor of the claimant and stated that the segregation as in tangible property is not necessary where a trust is made over an intangible property. The reasoning for this is that since the shares is indistinguishable from one another, they will be treated as equal. Based on all three cases above, it could be seen that this area is messy as this certainty has not been applied consistently and the judges have too much discretion changing the judicial attitudes.Lastly, the certainty of object matter required that there must be ascertainable beneficiaries in a trust. Re Baden (No.2)11 had shown that there are different approaches to deal with when there is a class of objects in a discretionary trust. The test used in the case was originated from McPhail v Doulton12 where the application of a comp lete list test was impossible and borrowed the is or is not test from Re Gulbenkians Settlements13 to determine the beneficiaries.However, there are 3 interpretations on the applicability of the test. Firstly, Sachs LJ upheld the literal application of the original test, but reversed the burden of proof on the claimant to proof that he falls within the class of beneficiaries. Sachs LJ further noted that this does not apply to all discretionary trust situations as a lot of trust with uncertainty would be validated. Secondly, Megaw LJ suggested the approach used in Re Allen14which was overruled by Re Gulbenkians case where it held that a trust should be valid if a solid number of people can show that they are in the class. Finally, Stamp LJ suggested a strict approach where he stated that it is necessary for both conceptual and evidential certainty to exist without any unacknowledged of the certainties. Any unknown of the certainties would lead to an invalid trust. It could be submi tted that this area would be too messy for the next cases to refer as there are too many different views.The flexibility of equity could in any case be found in Quistclose trust which created by Lord Wilberforce in Barclays depository financial institution Ltd v Quistclose Investments Ltd15. The Quistclose trust arises when a company borrows money with a particular purpose in mind for that money. Lord Wilberforce suggested there are unproblematic trust to pay dividend and secondary trust arose in favour of the lender if primary trust failed. However, this was heavily criticised as it failed to meet the three certainties to be a valid trust. Later, Lord Millet in Twinsectra v Yardley suggested that there is only one resulting trust instead of two trusts while mass of the court held that it was an express trust. In Re EVTR16, Dillon LJ suggested that it was a constructive trust for the purpose of the loan.Moreover, academics like Alastair Hudson had suggested that the better syn opsis for this should be an express trust.17 Furthermore, in Re Farepak fodder18, Mann J held that there was no trust and described this is as a contractual relationship as opposed to trustee-beneficiary.19Furthermore, equity also shown its flexibility in fiducial area. A fiduciary is a person who holds a position of trust and confidence. Fiduciary has the duty to act in the best interest of the principal in a fiduciary relationship. A fiduciary is hold back by the no conflict rule where he must make sure that his duties to the principal do not conflict with his own interest and not allowed to make a profit. The leading case would be Boardman v Phibbs20 which involves trust where it applied the strict rule which originally from cases such as Keech v Sandford21 and squash v Ford22.The decision was a made in majority of the judges while the other two judges gave dissenting judgments. Lord Upjohn in dissenting suggested that the case should be approached in a more equitable angle a nd should be decided on its own individual facts instead of laying down a strict rule to be followed like the common law courts.However, in Murad v Al-Saraj23, the majority of courts again decided by following the rules. Arden LJ from the majority suggested that the court should revisit the inflexibility of rule of equity in harsh circumstances. Furthermore, Jonathan Parker LJ from majority also suggested that it is the time for the court to relax the severity of the rule. In minority, Clarke LJ suggested that the fiduciary could argue for a share in profits pull down though they breached their duty by reasoning with Warman International v Dwyer24. In Foster Bryant Surveying v Bryant25, it was held that the defendant was not required to narrative his subsequent profit as the facts were different from the traditional cases. It was suggested that this case law would only be followed when there are same facts in the future.Based on the above, equity has been flexible to evolve to sui t the needs of the society. Hence, it is tremendously complex as it was built centuries of laws, but the courts are free to generate new principles and to align or apply the old ones depending on the situation. As suggested by Alastair Hudson, equity forces us to consider the salute of the individual in this complex world and to save that individual from being caught up in the legal machine or exposed to irremediable suffering.26 In conclusion, it could be submitted that equity is still useful even though it might be conceptually messy as shown above. However, this would be inevitable as equity has to be flexible but it would be also required to maintain some consistencies across the cases to disallow the law from being vague.(1650 words)BibliographyBooksGardner S, An introduction to the Law of Trusts (3rd edn OUP 2011)Hudson A, Equity and Trust, (8th edn, Routledge, Oxon, 2015)Hudson A, Great Debates in Equity and Trusts,(1st edn, Palgrave Macmillan 2014)Electronic SourcesAlast air Hudson, The basics of Quistclose Trusts, http//www.alastairhudson.com/trustslaw/Quistclose.pdf accessed on 13rd February 2017Table of CasesBarclays Bank Ltd v Quistclose Investments Ltd 1970 AC 567Boardman v Phibbs 1967 2 AC 46 squelch v Ford 1896 A.C. 44Comiskey v Bowring-Hanbury 1905 A.C. 84Foster Bryant Surveying Ltd v Bryant 2007 EWCA Civ 200 huntsman v Moss 1993 1 WLR 934Jones v Lock 1865 1 Ch App 25Keech v Sandford 1726 Sel. Cas.Ch.61Knight v Knight 1840 3 Beav 148McPhail v Doulton 1971 AC 424Murad v Al-Saraj 2005 EWCA Civ 959Paul v Constance 1977 1 All ER 195Re Adams Kensington Vestry 1884 LR 27 ChD 394Re Allen 1953 1 All ER 308Re Badens Trusts (No.2) 1973 Ch 9Re EVTR 1987 BCLC 646Re Farepak Food and Gifts Ltd (In Administration) 2008 BCC 22Re Farepak Food and Gifts Ltd (In Administration) 2008 BCC 22, 34Re Goldcorp Exchange Ltd (In Receivership) 1994 3 WLR 199Re Gulbenkians Settlements Trusts 1968 UKHL 5Re London Wine Co (Shippers) Ltd 1986 PCC 121Warman International v Dwyer 1994-5 182 CLR 5441 Alastair Hudson, Great Debates in Equity and Trusts,(1st edn, Palgrave Macmillan 2014)2 Knight v Knight 1840 3 Beav 1483 Re Adams Kensington Vestry 1884 LR 27 ChD 3944 Comiskey v Bowring-Hanbury 1905 A.C. 845 Paul v Constance 1977 1 All ER 1956 Jones v Lock 1865 1 Ch App 257 Simon Gardner, An introduction to the Law of Trusts (3rd edn OUP 2011) 52-38 Re London Wine Co (Shippers) Ltd 1986 PCC 1219 Re Goldcorp Exchange Ltd (In Receivership) 1994 3 WLR 19910 Hunter v Moss 1993 1 WLR 93411 Re Badens Trusts (No.2) 1973 Ch 912 McPhail v Doulton 1971 AC 42413 Re Gulbenkians Settlements Trusts 1968 UKHL 514 Re Allen 1953 1 All ER 30815 Barclays Bank Ltd v Quistclose Investments Ltd 1970 AC 56716 Re EVTR 1987 BCLC 64617 http//www.alastairhudson.com/trustslaw/Quistclose.pdf, The Fundamentals of Quistclose Trusts, accessed on 13rd February 201718 Re Farepak Food and Gifts Ltd (In Administration) 2008 BCC 2219 Re Farepak Food and Gifts Ltd (In Administration) 2008 BC C 22, 3420 Boardman v Phibbs 1967 2 AC 4621 Keech v Sandford 1726 Sel. Cas.Ch.6122 Bray v Ford 1896 A.C. 4423 Murad v Al-Saraj 2005 EWCA Civ 95924 Warman International v Dwyer 1994-5 182 CLR 54425 Foster Bryant Surveying Ltd v Bryant 2007 EWCA Civ 20026 Alastair Hudson, Equity and Trust, (8th edn, Routledge, Oxon, 2015)

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