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Example of equity law and trusts response

Before being able to answer this question, one must first assess and consider the law relating to equity and trusts. This will require a particular analysis of the rules relating to trust gifts and the benefits of a will. Therefore, Nancy will require advice over whether she can keep the £500,000 and the Rolls Royce. This will require an in-depth view of the certainties regarded to make a gift and also the equitable maxim of ‘Equity will not assist a volunteer’. Further, Jeremiah’s grandchild will require advice over the legality of share certificates and how they can be transferred from one individual to another.

It is important to note though that equity is an invention that was designed to be, in effect, the conscience of the common law. It is also important to note that equity was designed at an instance to act as a softener to the regular harsh remedies of the common law. This was due to the fact that the only remedy available under the common law was that of damages. This principally was seen as an inadequate remedy for certain transgressions of the legal principles. The notion of equity and equitable rights was often associated with the ideas of true, fairness, justice, ethics and morality. In times past the idea of equity was administered by the Court of Chancery[1]. However, it is important to state at this point that equity does not automatically guarantee a just outcome, as any litigant must demonstrate that their claim has ‘an ancestry founded in history and in the practice and precedents of the court administering equity jurisdiction. It is not sufficient that because we may think that the ‘justice’ of the present case requires it, we should invent such a jurisdiction for the first time[2]’. This is done to try to preserve the principles of fairness, which are done in order to strive to find a just outcome rather than giving a successful litigant an outcome as a matter of course. Equity can therefore be seen to a device that follows the law in application and substance, hence its statutory basis[3] whilst allowing the equitable principles to be enhanced. These sections state that where the rules of equity clash with the rules of the common law, equity shall prevail. It is arguably the case that this was done to achieve a system of fairness rather than an over reliance on the, sometimes, harsh common law and remedy of damages.

In terms of the application and advice that Nancy will require, the rules of strict trusts law will apply. The creation of trusts must be seen to contain what the law regards as certainties[4]. These certainties are contain within three different spheres of foresight. The first certainty is that of the intention of the testator. It is clear from the wording of the scenario that Jeremiah wishes for his niece Nancy to be included in his will. This can be evidenced by the words ‘I’ve recently been reconciled with my niece Nancy. She’s not mentioned in the will but I don’t want her to go short’. Equally, the fact that Jeremiah has handed Nancy an envelope containing a cheque for £500,000 and keys to his Rolls Royce, with the expressed instructions of it not be opened until his death. This would indicate the fact that Jeremiah’s intention is for Nancy to be included in his will. However, it is worth noting that this was all conducted by Jeremiah’s bedside in hospital when he was seriously ill. This would indicate a potential problem for Nancy, as the executors could claim that Jeremiah was not in a fit state of health to declare a new will. The second certainty is that of the subject-matter mentioned in the will. It is clear from the scenario that the subject-matter is both clear and concise. The third and final certainty is that of the certainty of the objects. The test for which is based upon conceptual and evidential certainty. Thus, if a trustee can be named and identified then the objects are certain. Therefore, the fact that Nancy can be identified is sufficient to uphold the trust.

The most important area in this particular case is the equitable maxim of ‘equity will not assist a volunteer’. This was the ruling from the case of Milroy v Lord[5]. However, this original maxim is the subject of certain exceptions that are contained within case law. This maxim means that equity will not assist someone that has not provided consideration when a gift is given. However, this has been refined in certain cases that demonstrate a willingness to move away from this sometime harsh principle. According to Lord Brown-Wilkinson in the case of Choithram (T) International SA v Pagarani[6], ‘although equity will not assist a volunteer it will not strive officiously to defeat a gift’. Equally, according to Lady Justice Arden in the case of Pennington v Waine[7], ‘the principle against imperfectly constituted gifts led to harsh and seemingly paradoxical results’. Thus, if Nancy can demonstrate that Jeremiah wanted her to have the gifts, although she has not provided any consideration, then equity will not necessary assist her. However, equity will not strive to defeat a properly constituted gift.

The next area of consideration is that of the grandchildren and the share certificates. The share certificates can be transferred by execution of the relevant forms and registration under the company’s articles of association[8]. However, this has not been done and according to the case of Mascall v Mascall[9], legal title can not be obtained for a badly constituted transferred. However, according to the case of Re Rose[10], if a settlor had done everything within his power to transfer the property and the only thing missing was the actions of a third party, then the property was held on trust from the original relevant date of the will. Thus, in following this line the grandchildren are entitled to keep hold of the shares. However, it is worth noting that the rule in Milroy v Lord[11] asserted that ‘equity will not assist a volunteer’. Thus, if the grandchildren have not provided consideration then the gift may fail. However, as pointed above, this principle will not try to defeat a true gift.

In conclusion, the gifts bestowed to Nancy are certain under the three rules of certainty. However, Nancy may not have provided consideration for the gifts and they may therefore fail on the grounds that ‘equity will not assist a volunteer’. However, this harsh rule attempts not to defeat a properly constituted gift. In terms of the grandchildren, the transfer of the share certificates can be done by a simple transfer. In this case the transfer has not been properly constituted and therefore the grandchildren will have to rely upon the intervention of case law. The authorities show that if the intention is clear and concise for the gift to be transferred but for the want of the actions of a third party, then the property can be classed as being held on trust for the beneficiaries.

Bibliography

  • Remedies, 2005/2006 Edition, by the staff of the Inns of Court School of Law, City University, published by Oxford University Press in 2005.
  • Civil Remedies, 1st Edition, by Benjamin Andoh and Stephen Marsh, published by Dartmouth Publishing Company in 1997.
  • An Introduction to English Legal History, 4th Edition, by J. H. Baker, published by Butterworths LexisNexis in 2002.
  • The Law of Trusts and Equitable Obligations, 3rd Edition, by Robert Pearce & John Stevens, published Butterworths LexisNexis in 2002.
  • Hanbury and Martin Modern Equity, 16th Edition, by Jill E. Martin, published by Thomson an imprint of Sweet & Maxwell in 2001.
  • Equity and Trusts, by Haley and McMurtry, published by Sweet and Maxwell in 2006.

Footnotes

[1] This was before the Judicature Act of 1873 was enacted.

[2] Re Diplock [1948] Ch 465 at 481 and 482

[3] Sections 36-44 of the Judicature Act of 1925.

[4] Per Lord Langdale in Knight v Knight [1840] 3 Beav 148 at 173.

[5] [1862] 4 De G. F & J 264.

[6] [2001] 145 SJLB 8.

[7] [2002] EWCA Civ 227.

[8] Sections 182 and 183 of the Companies Act of 1985.

[9] [1985] 49 P & C R 119.

[10] [1952] Ch 499.

[11] [1862] 4 De G. F & J 264.


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