The Principles of Equity and Trust and the Property Ownership and Tenancy
Summative Assessment
*** LAWS111010 & 20110 Property Law I*** |
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Assessment Type: Online Examination |
Open-Book Exam |
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Students must answer TWO questions, ONE question from Part A and ONE question from Part B. Part A 1. “In older cases, the courts tended to adopt a much stricter approach to the construction of trusts, so that virtually any uncertainty relating to a trust’s administration would result in its invalidity. More recently, the courts have tended to strive to uphold a trust if they possibly can.” (Virgo, The Principles of Equity and Trusts, 2020, p 73) Critically discuss this statement in relation to the requirements for certainty set out in Knight v Knight (1840) 3 Beav 148. 2. “[A] trust is an office necessary in the concerns between man and man and which, if faithfully discharged, is attended with no small degree of trouble and anxiety, it is an act of great kindness in any one to accept it.” Lord Hardwicke LC, Knight v Earl of Plymouth (1747) 3 Atk 480. To what extent did the Trustee Act 2000 introduce a new model of trusteeship fit for the 21st century? 3. Should Parliament adopt the proposals made by the Law Commission in 1985 to limit severance to the statutory method of written notice set out in s.36(2) Law of Property Act 1925? |
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Part B
4. Jeb, a farmer, owned a farm in the Tineswell valley. In 2000, he wrote a will containing the following clauses:
a) The field I used as a paddock is to be sold and the proceeds given to my family for the purpose of continuing the re-wilding project started on our farm in 2019.
b) I leave £50,000 to be held on trust, the income for my loyal sheepdog, Bess, so that she can live out her days in comfort. The capital is to be used to build and maintain a bird hide by the river to be used by the children of Tineswell primary school but available for all the inhabitants of Tineswell village for as long as the law allows.
c) I leave £10,000 for a bench to be erected in my memory overlooking my favourite view of Tineswell valley.
d) I leave £10,000 to promote our local custom of decorating the village with knitted garlands.
e) My remaining estate is to go to my children.
Unfortunately Jeb died earlier this year. Advise his executors on the validity of these clauses.
5. On Monday Captain Mark wrote a will including the following clauses:
a) My flat in Plymouth and my sailing boat, Destiny, to my sister, Agatha.
b) £500,000 to Brenda.
c) My 500 shares in BlueMarine to Charles on trust for the purpose that I will communicate to him.
He then called Agatha and left a message on her voicemail instructing her to give the sailing boat she would receive under his will to her daughter when she turned 14.
On Tuesday, Captain Mark met with Brenda and asked her whether she would be willing to act as his trustee after his death. She agreed and he passed her an envelope telling her that all the information about the trust was inside but that he would rather she didn’t open it now.
On Wednesday, Captain Mark met with Charles and asked him whether he would be willing to hold the 500 shares that he would receive on Captain Mark’s death on trust for Greta. Charles agreed.
On Thursday, Captain Mark changed his mind and decided to transfer the BlueMarine shares directly to Greta that day. He signed the share transfer form to transfer 500 BlueMarine shares to Greta and put it in the post to the company with the share certificate. He did not mention anything about this to Charles or Greta.
On Friday, Captain Mark died.
On Saturday, the share transfer form and certificate were received by BlueMarine.On Sunday Captain Mark’s will was found by his family. Brenda then opened the envelope she had been given on Tuesday and discovered that she was to give
£500,000 to Captain Mark’s son whom he had never acknowledged during his lifetime. Brenda is dismayed by this and does not want Captain Mark’s son to benefit from his will.
Advise Agatha, Brenda and Charles on their entitlement to the property in Captain Mark’s will.
6. Anja and Baz, an unmarried couple, purchased a house together in 2001. The property was registered in their joint names. Anja is a wealthy lecturer and paid the deposit on the house from her savings. The balance was paid from a mortgage taken in their joint names although the mortgage repayments came directly from Anja’s bank account, as did all of the household bills and expenses. The couple did not hold a joint bank account. Baz earned relatively little as a circus performer and kept his earnings in his own separate bank account.
Baz used his spare time to make changes to the house. These included the construction of a circus ring in the garden for him to practice in and the modification of the garage to allow him to practise his trapeze act. In 2008, they had a child, Cam.
Anja managed the childcare and continued to work and pay the mortgage. Baz occasionally helped with the childcare but spent most of his time practising his circus act. In 2012, the couple separated, and Baz moved out.
Baz then decided to purchase a flat with Dom, an old school friend. They purchased a small flat in 2013 and moved in together. Dom paid almost the entire purchase price from his savings and the property was registered in Dom’s name only. Baz made a very small contribution to the purchase price. When Baz asked why the property was not registered in their joint names, Dom told him that it was cheaper that way, but that he should treat the flat as his own. Baz made a small contribution to the household expenses each month, but Dom paid most of them. Baz decorated the whole flat to make it resemble the inside of a circus tent. In 2020, Dom and Baz decided to sell the property.
Advise Baz whether he has any claim to an interest in the house or flat.
All questions carry equal weighting. All questions have a maximum word count of 1500 words. Students must show the word-count of each individual answer alongside that answer.
The recommended time for this assessment is no more than 6 hours.
Instructions
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Questions
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Timing
We suggest that you spend no more than 6 hours on this assignment. This is three times the duration of the planned examination. Please note that you will NOT be timed.
Referencing
Direct and indirect quotations must be acknowledged by means of a simple in-text reference, in line with what we would expect in a conventional open-book exam. At the minimum, this will name the author of books or articles being quoted (for example “As Smith argues…”); the short title of the case or statute in question should be used when providing support for a point of law (for example, Jones v Brown, or Law of Property Act 1925). Precise references to statutory provisions (for example, “Law of Property Act 1925, s 53(1)(b)” rather than simply “Law of Property Act”) should be given. Full case citations and full bibliographies are NOT required.
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Word limit
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Submission Deadlines
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Extensions
No extensions will be permitted except to students who have been specifically informed to the contrary by DASS.
English Property Law
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Question one Part A
Question one: “In older cases, the courts tended to adopt a much stricter approach to the construction of trusts, so that virtually any uncertainty relating to a trust’s administration would result in its invalidity. More recently, the courts have tended to strive to uphold a trust if they possibly can.” (Virgo, The Principles of Equity and Trusts, 2020, p 73) Critically discuss this statement in relation to the requirements for certainty set out in Knight v Knight (1840) 3 Beav 148.
Introduction
A trust is an approach to managing assets, including finances, investments, land, or buildings for on behalf of others. The Principles of Equity and Trusts have consistently remained elusive, controversial, and divisive. How are the courts upholding thrust? Do stringent requirements need to for the court to uphold thrust? According to Virgo, the courts were inclined to embrace a much stricter approach while executing the construction of trusts, leading to increased cases being rendered void and invalid when there is an element of uncertainties regarding trust administration. Whether to agree with Virgin or not is quite a debate. However, there is more substantial evidence that courts subject to less restriction when deciding to uphold trust than invalidating it.
English Trust law
The principles of equity and trust in the U.K are primarily borrowed from the Trust law. U.K trust law focuses on creating and protecting asset funds and properties preserved of others interests. However, the history of trust laws permeates countries across the other countries including the U.S. Trusts were responses to increasing property disputes where most claimants. Some felt uncomfortable with the common law courts, leading to an increase in the push for equitable outcomes in trust outcomes.
Equitable principles took precedence after the Judicature Act 1873. In contemporary U.K Today, trusts constitute financial investments. For instance, people invest in unit trusts and pension trusts. The trustees and fund administrators invest assets and takes necessary measures to protect such trusts. Despite individuals’ freedom to create, develop, document, and write trusts, statutes exist that protect beneficiaries or regulate the relationships between trustees and settlors. The statutes include the Trustee Act 1925, Trustee Investments Act 1961, Recognition of Trusts Act 1987, Financial Services and Markets Act 2000, Trustee Act 2000, Pensions Act 2004, and the Charities Act 2011, Pensions Act 1995 (Virgo,2018). No formalities are deemed necessary when crafting trust as per contract law. The exception cases involve when given statues demands so such as transfer of share wills or land.
English law created a ground to deter uncertainty that trust has been created by the settlor, leading to increased protection of trusts. The Charity Commission regulated the management of charity trustees when performing their duties and to ensure that charities are aligned to the public interest. Pension schemes and investment trusts are by sustaining reasonable accountability by the trustees or fund managers. It is a critical principle of English law that the courts, with their judicial officials, will not be inclined to generally assist the plaintiff in getting a remedy when his or her action is considered an illegal transaction (Virgo & O’Sullivan, 2020). The rationale is underpinning dismissal of this restitution inequity breeds controversy. The common-law rule on the concept of the ex turpi causa principle is based on a strict principle of public policy, which involves denial of restitution regardless of the justice of the case. Ex turpi causa non oritur action is a legal doctrine that refers to situations where the plaintiff is not empowered to seek legal relief and damages when their tortious act. What constitutes illegality remains lacking. Illegality is not only confined to unlawfulness but also encompasses transactions contrarian to public policy. Thus, from this background, the extend of courts' discretionary practice regarding handling trust cases can be understood and examined.
Has the threshold for establishing the validity of thrust changed?
To answer this question, there is a need to establish the ground that satisfies the courts to uphold the trust. To create private trust by a settler or fooling death, some requirements ought to be met. More importantly, the creator of trust enjoys broader flexibility in creating terms and operation of the trust. The aspiration of the trust creator is captured and modified by crafted tools and instruments that trustees can use to resolve any existing uncertainties regarding trusts.
More often, the courts, as represented by judges, would most likely express the decision of upholding trust if they can, where the settlor and testator's intention to nurture trust should be respected (Virgo,2018). This observation could be understood better by relating it to McPhail V Doulton by Lord Wilberforce, where it was observed that thrust could be better upheld if there is adequate practical certainty, to be administered by the court, according to interests expressed by the settlor. The courts can construe sense into instruments. McPhail v Doulton also called Re Baden's Deed Trusts (No 1), raises critical questions on the certainty of beneficiaries. This case pronounced that claimant can clearly be determined to be a beneficiary or not (Virgo,2018). Trust is valid. Lord Wilberforce, after noting that the settlor had left his property on trust, with directions detailing distribution of property or trust in line with to the trustees' choices, and, therefore, not equally among the potential beneficiaries, upheld the settlor’s intent. Why would wound property under trust be subjected to equal distribution when the creator of the trust did not know intent so? Lord Wilberforce opined that equal division of the trust could be the last thing that the settlor could have thought about. Lord Wilberforce calls for less rigidity in upholding trusts, and thus, little should be done to cause any alteration to original trust as ordained by the settlor. McPhail v Doulton case fundamentally raises the certainty of objects for discretionary trusts (Virgo,2018). It expounds on one of the three certainties required to create trust. For a trust to gain validity, a trust except for charitable trust should have certainty about beneficiaries as expressed by the settlor. The court could only execute the trust when the trustee failed to implement its expectations, and the trust fund division shall follow.
According to McPhail v Doulton, courts should be less strict and rigid. Thus, they should be more prone to uphold the settlor’s intention. The need for trusts to be upheld often arises from the aspiration of the settlor when he or she was creating such trust. Why do settlors decide to set up trusts? First, settlors create trusts to protect assets from people, including beneficiaries and other relatives. Second, settlors would like to ensure that assets are kept safe and should not be subjected to abuse nor poor management. Third, the creation of trust ensures the protection of property against the adversity of taxations and related costs, and thereby, trust can act as means of minimizing liabilities. Finally, a trust allows a settlor to secure their assets for a beneficiary but retain control over it. Finally, trusts guarantee flexibility in allowing the settlor to respond to changing circumstances and needs within their family. Why then should the court come into disrepute with the settlor? Even when there is absolute certainty regarding beneficiaries or trustees?
Knight v Knight (1840 is an English trust law case. It embodies a simple statement of the "three certainties" principle in trusts and equities. The three principles include certainty of intention, and certainty of subject matter, the certainty of objects (Virgo,2018). It attempts to determine whether assets can be disposed of in wills or whether the will's wording is too vague to allow beneficiaries to take over the trust. There are increasing discretionary powers awarded to courts to lessen the threshold of upholding trusts. Virgo (2018) cites conceptual certainty, evidential certainty, ascertainability, and capriciousness. The conceptual uncertainty and evidential uncertainty may not render the precedent invalid or void. The fact the object cannot be ascertained and still be validated demonstrates the extent to which it is easy for courts to contemporarily upheld trust than before.
Question 2 Part B
Anja and Baz, an unmarried couple, purchased a house together in 2001. The property or estate was registered in their joint names. Anja is a wealthy lecturer and paid the deposit on the house from her...