Transcript Document 7171605

Equity
Winter Session 2009
Alysia Debowski
[email protected]
Subject outline
Course description
 Teaching arrangements
 Assessment
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 Examination
 Assignment
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Texts and resources
Today’s class
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The History and Nature of Equity
 What is equity?
 History of equity
 The relationship between Law and Equity
 The maxims of Equity
 The nature of equitable interests
 Equitable interests and Torrens title
Dealings with Property in Equity
 Assignments of Property in Equity
 Voluntary Assignments
 Agreements to Assign
 Declarations of Trust
 Future Property
Fiduciary Obligations
History and Nature
of Equity
What is equity?
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“the body of principles developed by the
Court of Chancery prior to 1873 as since
modified by courts administering that
jurisdiction”
History of equity
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Development of the common law
Development of the “English” jurisdiction of the
Chancellor
Recognition of feoffments to uses
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Fiscal consequences
Doctor and Student dialogue of Christopher St Germain
The Earl of Oxford’s Case in Chancery (1615) Mich 13
Jac 1; 21 ER 485
Cook v Fountain (1672) 3 Swanst 600; 26 ER 984
The relationship between Law and
Equity
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Common law courts would not recognise equitable
rights, titles and interests
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Equity had no power to decide disputed legal rights and
titles
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Castlereagh Motels v Davies-Roe (1967) 67 SR (NSW) 279
Robertson v Wait (1853) 8 Exch 299; 155 ER 1360
Equity Act 1880, s 4 (Equity Act 1901 s 8)
Equity had no power to award damages
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Goldsborough Mort v Quinn (1910) 11 CLR 674
King v Poggioli (1923) 32 CLR 222
The relationship between Law and
Equity (cont.)
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The common law courts lacked power to give
interlocutory relief
The courts of common law had no power to award
specific performance, or injunctions
The common law courts lacked power to make
declarations
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Rooke v Lord Kensington (1856) 2 K & J 753; 69 ER 986
No power existed to transfer cases from one jurisdiction
to the other
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Mines Royal Societies v Magnay (1854) 10 Ex 489; 156 ER 531
Carter v Smith (1952) 52 SR (NSW) 290
The judicature system
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Judicature Act (Imp) 1873 s 25(11)
Law Reform (Law and Equity) Act 1972 (NSW)
Key features
Fusion fallacies
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Seager v Copydex [1967] 2 All ER 415; [1967] RPC 349
Re Pryce (1917] 1 Ch 234
Walsh v Lonsdale (1882) 21 Ch D 9
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Cricklewood Ppty & Invest. Trust v Leighton [1945] AC 221, at 240
Chan v Cresdon (1989) 89 ALR 522
Harris v Digital Pulse Pty Ltd [2003] NSWCA 10
The maxims of Equity
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Equity will not suffer a wrong without a remedy
Equity follows the law
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Delehunt v Carmody (1986) 161 CLR 464
 Tasita Pty Ltd v Papua New Guinea (1991) 34 NSWLR 691
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When the equities are equal, the first in time prevails
He who seeks equity must do equity
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He who comes to equity must do so with clean hands
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Ryan v Dries [2002] NSWCA 3
Maguire v Makaronis (1997) 188 CLR 449
Kettles & Gas Appliances v Anthony Horderns (1934) 35 SR (NSW) 108
Equity assists the diligent and not the tardy
Equity is equality
The maxims of Equity (cont.)
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Equity looks to the intent rather than the form
Equity regards as done that which ought to be done
Equity imputes an intention to fulfil an obligation
Equity will not assist a volunteer
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Corin v Patton (1990) 169 CLR 540 at 557
Equity will not perfect an imperfect gift
Equity acts in personam
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Penn v Lord Baltimore (1750) 1 Ves Sen 444; 27 ER 1132
Potter v Broken Hill Pty Ltd (1905) 3 CLR 479
Baker v Archer-Shee [1927] AC 844
Commissioner Stamp Duties v Livingston (1965) AC 694; (1960) 107 CLR 411
N Z Insurance Co Ltd v Commissioner Probate Duties (Vic) [1973] VR 659
The nature of equitable interests
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Proprietary – rights that can be exercised directly against property
Equities – right to obtain certain remedies
Mere equity – right to apply to the court for a remedy
Commissioner of Stamp Duties (Qld) v Livingston (1965) AC 694; (1960) 107 CLR
411
Re Leigh’s Will Trusts [1970] Ch 277
Perpetual Trustee v Commissioner Stamp Duties (Shallard’s Case) [1977] 2 NSWLR
472
Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; 96 ALR 327
Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265
Silovi v Barbaro (1988) 13 NSWLR 466
Goldsborough Mort v Quinn (1910) 11 CLR 674
Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409
Commissioner of Stamp Duties (Qld) v Livingston
(1965) AC 694; (1960) 107 CLR 411
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High Court:
Dixon CJ – widow had beneficial interest in Queensland property;
beneficial interest must be somewhere while estate is administered
 Windeyer J - widow had interest in Queensland property
 Fullagar J (Menzies J agreeing) – widow had equitable interest in assets
which gave right to enforce proper administration; location of the right is
where it would be exercised ie NSW
 Kitto J – widow had interest in assets, but not any particular assets; that
interest had the most substantial connection with the forum for enforcing
due administration of the estate ie NSW
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Privy Council:
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Widow had chose in action to ensure proper administration of the
estate; location was the proper forum for enforcing those rights ie NSW
– where the executors were
Latec Investments Ltd v Hotel Terrigal Pty
Ltd (1965) 113 CLR 265
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Mortgagee exercised power of sale
Sold property to wholly owned subsidiary – later held to
be fraudulent
Subsidiary granted floating charge over hotel to third
party without notice
Subsidiary defaulted under charge – the charge
crystallised and a receiver was appointed
Mortgagor sought to have the sale set aside
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Whose interest should take priority?
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The nature of equitable interests
(cont.)
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The “Deserted Wife's Equity”
 National
Provincial Bank Ltd v Ainsworth
[1956] AC 1175
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Confidential Information
 Wheatley
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v Bell [1982] 2 NSWLR 544
Equitable Security Interests
 Swiss
584
Bank Corp v Lloyds Bank Ltd [1982] AC
Equitable interests and Torrens title
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Barry v Heider (1914) 19 CLR 197
Breskvar v Wall (1971) 126 CLR 376
Bahr v Nicolay (No 2) (1988) 164 CLR 604
Bogdanovic v Koteff (1988) 12 NSWLR 472
Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202
Mercantile Mutual Life Assurance v Gosper (1991) 25
NSWLR 32
Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR
326
Davis v Williams [2003] NSWCA 371
Dealings with
Property in Equity
Introduction
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Who is the assignor?
Who is the assignee?
What exactly is being assigned?
What is the nature of the property or interest being assigned?
What is the intended form of the assignment?
What is the test for assignments in that form?
Is writing required?
Is the assignment intended to take effect immediately?
Is it voluntary or for consideration?
If the assignment is voluntary, can the assign or (the “donor”) recall the gift?
Smith v Perpetual Trustee Co Ltd (1910) 11 CLR 148
Comptroller of Stamps (Vic) v Howard Smith (1936) 54 CLR 614
Voluntary Assignment of Legal
Property
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Assignment of Property Assignable at Law
Conveyancing Act 1919 (NSW), s 12 (Choses in Action)
William Brandt’s & Sons v Dunlop Rubber Co. [1905] AC
454
Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185
The First “Leg” of Milroy v Lord
Anning v Anning (1907) 4 CLR 1049
Corin v Patton (1990) 169 CLR 540; 92 ALR 1
Noonan v Martin (1987) 10 NSWLR 402
Conveyancing Act 1919 (NSW),
s 12
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Any absolute assignment by writing under the hand of the assignor (not purporting to
be by way of charge only) of any debt or other legal chose in action, of which express
notice in writing has been given to the debtor, trustee, or other person from whom the
assignor would have been entitled to receive or claim such debt or chose in action,
shall be, and be deemed to have been effectual in law (subject to all equities which
would have been entitled to priority over the right of the assignee if this Act had not
passed) to pass and transfer the legal right to such debt or chose in action from the
date of such notice, and all legal and other remedies for the same, and the power to
give a good discharge for the same without the concurrence of the assignor: Provided
always that if the debtor, trustee, or other person liable in respect of such debt or
chose in action has had notice that such assignment is disputed by the assignor or
anyone claiming under the assignor, or of any other opposing or conflicting claims to
such debt or chose in action, the debtor, trustee or other person liable shall be
entitled, if he or she thinks fit, to call upon the several persons making claim thereto to
interplead concerning the same, or he or she may, if he or she thinks fit, pay the same
into court under and in conformity with the provisions of the Acts for the relief of
trustees
.
Voluntary assignments (cont.)
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Voluntary Assignments of Torrens Title Land
Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555
Norman’s Case per Windeyer J at 28-9
Cope v Keene (1968) 118 CLR 1
Taylor v FCT (1969) 123 CLR 206
Olsson v Dyson (1969) 120 CLR 365
Grey v Australian Motorists & General Ins. Co. P/L [1976] 1 NSWLR
669
Bogdanovic v Koteff (1988) 12 NSWLR 472
Corin v Patton (1990) 169 CLR 540; 92 ALR 1
Costin v Costin (1997) 7 BPR 15,167
Voluntary assignments (cont.)
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The Second “Leg” of Milroy v Lord
Re Rose; Rose v IRC [1952] Ch 499
Re Rose [1949] Ch 78
Assignments of Property Not Assignable at Law
Fortescue v Barnett (1834) 3 My & K 36; 40 ER 14
Re Patrick; Bills v Tatham [1891] 1 Ch 82
Norman’s Case per Windeyer J, at 31-34
Shepherd v FCT (1965) 113 CLR 385, per Kitto J, at 397
Voluntary assignments of equitable
property
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Smith v Perpetual Trustee Co. Ltd (1910) 11 CLR 148 at
163
Comptroller of Stamps (Vic) v Howard-Smith (1936) 54
CLR 614
Timpson’s Executors v Yerbury [1936] 1 KB 645 at 664
Voluntary assignments of equitable
property (cont.)
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Dealings in the Form of Direct Assignments
Norman’s Case per Windeyer J, at 30
FCT v Everett (1979) 143 CLR 440 at 446-7
Comptroller of Stamps v Howard-Smith per Dixon J at
622
Ward v Duncombe [1893] AC 369, per Lord McNaghten
at 392
Timpson’s Executors v Yerbury [1936] 1 KB 645 at 658
PT Ltd v Maradona Pty Ltd (No 2) (1992) 27 NSWLR
241
Hagan v Waterhouse (1992) 34 NSWLR 308 at 382G to
387A
Voluntary assignments of equitable
property (cont.)
Dealings in the Form of Declarations of Trust
 Grey v IRC [1958] Ch 690 at 715
 Comptroller of Stamps v Howard-Smith, per Dixon J at
621-2
 Paul v Constance [1977] 1 All ER 195
Voluntary assignments of equitable
property (cont.)
Dealings in the Form of Directions to the Trustee
(a) to deal with the equitable estate
 Howard-Smith per Dixon J, at 622
 Grey v IRC [1960] AC 1
 Parker & Parker v Ledsham [1988] WAR 32
(b) to deal with the legal estate
 Vandervell v IRC [1967] 2 AC 291
 DKLR Holding Co (No. 2) P/L v Commissioner of
Stamp Duties (NSW) (1982) 56 ALJR 287
Voluntary assignments of equitable
property (cont.)
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Dealings in the Form of a Release
Crichton v Crichton (1930) 43 CLR 536
The Requirement of Writing
Conveyancing Act 1919 (NSW), s 23C
Secretary Department of Social Security v James (1990)
95 ALR 615
Hagan v Waterhouse (1991) 34 NSWLR 308 at 385–6
Hunter v Moss [1994] 3 All ER 215
Conveyancing Act 1919 (NSW),
s 23C
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(1) Subject to the provisions of this Act with respect to the creation of
interests in land by parol:
(a) no interest in land can be created or disposed of except by writing
signed by the person creating or conveying the same, or by the
person’s agent thereunto lawfully authorised in writing, or by will, or by
operation of law,
(b) a declaration of trust respecting any land or any interest therein
must be manifested and proved by some writing signed by some
person who is able to declare such trust or by the person’s will,
(c) a disposition of an equitable interest or trust subsisting at the time of
the disposition, must be in writing signed by the person disposing of the
same or by the person’s will, or by the person’s agent thereunto lawfully
authorised in writing.
(2) This section does not affect the creation or operation of resulting,
implied, or constructive trusts.
The Rule in Strong v Bird
Strong v Bird (1874) LR 18 Eq 315
 Re Mulholland (1916) 33 WN (NSW) 89
 Benjamin v Leicher (1998) 45 NSWLR 389
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Donationes Mortis Causa
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Smith v Casen (1718) 1 P Wms 406
Duffield v Elwes (1827) 1 Bligh (NS) 497 at 534; 4 ER
959 at 972
Bayliss v Public Trustee (1988) 12 NSWLR 540
Sen v Headley [1991] 2 All ER 636
Assignments for Value
Holroyd v Marshall (1862) 10 HLC 191; 11 ER 999
Tailby v Official Receiver (1888) 13 App Cas 523
Chang v Registrar of Titles (1976) 137 CLR 177, per
Mason J at 184.
Assignment of Legal Property for
Valuable Consideration
Last v Rosenfeld [1972] 2 NSWLR 923
 Rochefoucauld v Boustead [1897] 1 Ch
196
 Bannister v Bannister [1948] 2 All ER 133
 Allen v Snyder [1977] 2 NSWLR 685
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Assignment of Equitable Property
for Value
Comptroller of Stamps (Victoria) v
Howard-Smith (1936) 54 CLR 614
 Conveyancing Act 1919 (NSW) s 23C
 Adamson v Hayes (1973) 130 CLR 276
 Oughtred v IRC [1960] AC 206
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Assignments of Future Property
The Definition of Future Property
 Re Lind [1915] 2 Ch 345
 Tailby v Official Receiver (1888) 13 App
Cas 523
 Norman v FCT (1963) 109 CLR 9
 Shepherd v FCT (1965) 113 CLR 385
 Williams v IRC [1965] NZLR 395
 McLeay v IRC (1963) 9 AITR 265
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Assignments of Future Property
(cont.)
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The Basis for the Enforcement of Assignments
of Future Property
Holroyd v Marshall (1862) 10 HLC 191; 11 ER
999
Tailby v Official Receiver (1888) 13 App Cas 523
Palette Shoes Pty Limited v Krohn (1937) 58
CLR 1, at 27, by Dixon J
McIntyre v Gye (1994) 122 ALR 289
Property which cannot be Assigned
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Personal Contracts
Nokes v Doncaster Amalgamated Collieries Ltd [1940]
AC 1014
Peters v General Accident and Life Assurance Co [1937]
4 All ER 628
Bare rights to Sue
Glegg v Bromley [1912] 3 KB 474
Trendtex Trading v Credit Suisse [1980] 3 All ER 721;
[1981] 3 WLR 766
Monk v ANZ Banking Group Ltd (1994) 34 NSWLR 148
Fiduciary
Obligations
Overview
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1. Is there a fiduciary relationship?
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2. What is the scope of the fiduciary relationship?
3. Were the fiduciary’s obligations breached?
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No conflict
No profit
4. Is there a relevant defence?
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Established category?
On the facts?
Disclosure and informed consent
5. What remedy is available for the breach?
The Source of Fiduciary Duties
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Hospital Products Ltd v United States Surgical
Corp (1984) 156 CLR 41 at 97
Re Coomber; Coomber v Coomber [1911] 1 Ch
723, per Fletcher-Moulton LJ at 728-9
Aberdeen Railway Co v Blaikie Bros (1854)
[1843-60] All ER Rep 249, at 252
Chan v Zacharia (1984) 154 CLR 178, esp per
Deane J at 198-9
Lac Minerals Ltd v International Corona
Resources Ltd (1989) 61 DLR (4th) 14
The Scope of the Fiduciary
Relationship
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N Z Netherlands Society ‘Oranje’ v Kuys [1973]
2 All ER 1222
Noranda Resources Ltd v Lachlan Resources
NL (1988) 14 NSWLR 1
Blythe v Northwood (2005) 63 NSWLR 531
Farah Constructions P/L v Say-Dee P/L (2007)
236 ALR 209; [2007] HCA 22 (24 May 2007)
The Recognised Categories of
Fiduciary Relationships
Solicitor and Client
 Boardman v Phipps [1967] 2 AC 46
 Queensland Mines Ltd v Hudson (1978)
52 ALJR 399
 Farrington v Rowe McBride and Partners
[1985] 1 NZLR 83
 Maguire v Makaronis (1997) 188 CLR 449
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The Recognised Categories of
Fiduciary Relationships (cont.)
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Director and Company
Bell v Lever Brothers [1932] AC 161
Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134
Peso Siver Mines Ltd (NPL) v Cropper (1966) 58 DLR
(2d) 1
Canadian Aero Services Ltd v O’Malley (1973) 40 DLR
(3rd) 371
Queensland Mines Ltd v Hudson (1978) 18 ALR 1
Mordecai v Mordecai (1988) 12 NSWLR 58
The Recognised Categories of
Fiduciary Relationships (cont.)
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Trustee and Beneficiary
Partners
Birtchnell v Equity Trustees (1929) 42 CLR 384
Chan v Zacharia (1984) 154 CLR 178
United Dominions Corp Ltd v Brian Pty Limited
(1985) 157 CLR 1
Ravinder Rohini Pty Ltd v Krizaic (1991) 105
ALR 593
The Recognised Categories of
Fiduciary Relationships (cont.)
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Employee and Employer
DPC Estates Pty Ltd v Grey & Anor [1974] 1 NSWLR
443
Hivac Ltd v Park Royal Scientific Instruments Ltd [1946]
Ch 169
Printers & Finishers v Holloway [1965] RPC 239
Industrial Development Consultants Ltd v Cooley [1972]
1 WLR 443
British Reinforced Concrete v Lind (1917) 86 LJ Ch 486
Sterling Engineering Co v Patchett [1955] 1 All ER 369
The Recognised Categories of
Fiduciary Relationships (cont.)
Agent and Principal
 Haywood v Roadknight [1927] VLR 512
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Other Relationships
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Broker and Client
Hewson v Sydney Stock Exchange [1968] 2 NSWR 224; 87 WN (NSW) Pt 1
422
Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371
Commercial Transactions
Keith Henry & Co v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342
Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 4
LAC Minerals v International Corona Resources Ltd (1989) 61 DLR (4th) 14
Moorgate Tobacco Co Ltd v Phillip Morris Ltd (No 2) (1984) 156 CLR 414
News Limited v Australian Rugby Football League Ltd (1996) 139 ALR 193
Other Relationships (cont.)
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Banker and Customer
Commonwealth Bank v Smith (1991) 102 ALR
453
Standard Investments Ltd v Canadian Imperial
Bank of Commerce (1985) 22 DLR (4th) 411
Other and Special Relationships
Breen v Williams (1996) 70 ALJR 772
Breach of Duty: “Conflict of
Interest” and “Improper Gain”
Prince Jefri Bolkiah v KPMG [1999] 2 AC
222
 The Doctrine in Keech v Sandford
 Keech v Sandford (1726) Sel Cas T King
61; 25 ER 223
 Chan v Zacharia (1984) 154 CLR 178
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Defences: The Duty of Disclosure
and Informed Consent
Boardman v Phipps [1967] 2 AC 46
 BLB Corporation of Australia v Jacobsen
(1974) 48 ALJR 372
 NZ Netherlands Society v Kuys [1973] 2
All ER 1222
 Gemstone Corporation of Australia Ltd v
Grasso (1994) 13 ACSR 695
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Remedies for Breaches of
Fiduciary Duty
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Nocton v Lord Ashburton [1914] AC 932
Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41
Chan v Zacharia (1984) 154 CLR 178
Maguire v Makaronis (1997) 188 CLR 449
Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371
Re Dawson [1966] 2 NSWR 211
Peter Pan Corp Ltd v Corsets Silhouette Ltd [1963] RPC 45; [1964] 1 WLR
96
Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488
Hagan v Waterhouse (1992) 34 NSWLR 308 at 360-365F
Boardman v Phipps [1967] 2 AC 46
Mordecai v Mordecai (1988) 12 NSWLR 58
Warman International Ltd v Dwyer (1995) 128 ALR 201
Gemstone Corporation v Grasso (1994) 13 ACSR 695
Secret Commissions and Equitable
Debt
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Metropolitan Bank v Heiron (1880) 5 Ex D 319
Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39
Ch D 389
Lister v Stubbs (1890) 45 Ch D 1
A-G (Hong Kong) v Reid [1994] 1 AC 324
DPC Estates Pty Ltd v Grey [1974] 1 NSWLR 443
Re Stephenson Nominees (1987) 76 ALR 485
Reading v AG [1951] AC 507
Jirna Ltd v Mister Donut of Canada Ltd (1973) 40 DLR
(3d) 303
Applying the theory…
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Mary and Martha agree to develop a property in Sydney
owned by Mary. Martha will provide her technical
expertise and supervise the project. They agree to split
the profits.
Mary and Martha successfully obtain development
consent from the Council.
Before a formal agreement can be entered into, Mary
and Martha have a falling out. Mary sells the land and
makes a substantial profit, as the land already has
development approval.
Does Martha have a claim against Mary for breach of
fiduciary duty? If so, what remedy should Martha seek?