Equity and the Law of Trusts

Transcription

1 Equity and the Law of Trusts Eighth edition Philip H Pettit MA ofthe Middle Temple, Barrister Emeritus Professor of Equity, Universities of Bristol and Buckingham Butterworths London, Edinburgh, Dublin 1997

2 Contents Preface v Table of Statutes xxvii Listofcases xxxix Abbreviations xcix Chapter 1 History of the Court of Chancery and introduction to equity 1 1 History of the Court of Chancery 1 2 Jurisdiction of the Court of Chancery 4 3 Fusion of the administration of law and equity 7 A THE EFFECT OF SS 24 AND 25 8 B FUSION OF LAW AND EQUITY OR MERELY FUSION OF THEIR ADMINISTRATION 9 4 Uses and trusts 11 A HISTORY OF THE TRUST 1 1 B PURPOSE FOR WHICH A TRUST IS SET UP 14 (a) Unit trusts 14 (b) Pension scheme trusts 15 C CONCLUSION 17 5 Equitable interests and equities 17 A DEFINITION AND DISTINCTION 17 B EQUITABLE RULES AS TO PRIORITIES Trusts and taxation 21 7 Trusts and the conflict of laws 22 Chapter 2 The trust concept 24 1 Definition ofa trust 24 2 Comparison with other legal concepts 25 A TRUST AND BAILMENT 25 B TRUST AND CONTRACT 26

3 viii Contents C TRUST AND AGENCY 26 D TRUSTS AND POWERS 2 7 i Basic distinction 27 ii Special power of appointment - mere power or trust power 29 iii Trust in default of appointment or discretionary trust 32 iv Mere powers and discretionary trusts 33 v Unenforceable trusts or trusts of imperfect Obligation 34 E TRUSTS AND THE ADMINISTRATION OF ESTATES OF DECEASED PERSONS 3 4 F TRUST AND RESTITUTION 3 8 Chapter 3 The essentials of a trust 39 1 Capacity of settlor and beneficiaries 39 A CAPACITY OF SETTLOR 39 B CAPACITY OF BENEFICIARY 41 2 The three certainties 41 A CERTAINTY OF WORDS 4 1 B CERTAINTY OF SUBJECT 44 i Certainty ofsubject matter 44 ii Certainty ofbeneficial interests 45 C CERTAINTY OF OBJECTS 46 i Need for ascertainable beneficiaries 46 ii Test for a mere power 46 iii Test for a fixed trust 48 iv Test for a discretionary trust 49 v Trusts for purposes 51 vi Consequences offailure of trust for uncertainty 51 3 The beneficiary principle 51 A SITUATIONS OUTSIDE THE SCOPE OF THE BENEFICIARY PRINCIPLE 52 i Re Denley's Trust Deed 52 ii Contractual situations 53 B EXCEPTIONS TO THE BENEFICIARY PRINCIPLE Trusts for the benefitof unincorporated associations 55 Chapter 4 Classification and juristic nature of trusts 59 1 Classification 59 A EXPRESS, RESULTING, IMPLIED AND CONSTRUCTIVE TRUSTS 59 i Express trust 59 ii Implied trust 59 iii Resulting trust 60 iv Constructive trust 60 B NEW MODEL CONSTRUCTIVE TRUSTS 61 C TRUSTS OF LAND 64 D STATUTORY TRUSTS 65 E EXECUTORY AND EXECUTED TRUSTS 66 F PRIVATE AND CHARITABLE TRUSTS 67 G COMPLETELY AND INCOMPLETELY CONSTITUTED TRUSTS 67

4 Contents ix H SIMPLE AND SPECIAL TRUSTS 6 7 I FIXED AND DISCRETIONARY TRUSTS 6 8 J TRUSTS IN THE HIGHER SENSE AND TRUSTS IN THE LOWER SENSE 69 Discretionary and protective trusts 69 A LIMITATIONS UPON CONDITION AND DETERMINABLE INTERESTS 6 9 B DISCRETIONARY TRUSTS 7 0 C PROTECTIVE TRUSTS 7 3 Natureofa trust 75 Chapter 5 Formal requirements of express trusts 79 1 Inter vivos transactions 79 A CONTRACTS TO CREATE A TRUST OR DISPOSE OF A SUBSISTING EQUITABLE INTEREST 79 i Land 79 ii Pure personalty 80 iii Equitable interests in pure personalty and, semble, land 80 B DECLARATIONS OF TRUST INTER VIVOS 80 i Land 81 ii Pure personalty 82 iii Equitable interests in real or personal property 82 C DISPOSITIONS OF EQUITABLE INTERESTS INTER VIVOS 83 i Direct assignment 84 ii Direction to trustee 84 iii Disposition to fiduciary 84 iv Declaration of trust by equitable owner 85 v Contract to assign an equitable interest 85 vi Disclaimer 85 vii Transfer by bare trustee ofthe legal estate 86 viii Declaration ofnew trusts by trustee with assent ofbeneficiary 86 ix Surrender up of equitable interest 87 x Nominations under Staff pension fund 87 xi Variation of Trusts Act D xii Statutory definition of'disposition' and 'equitable interest' 87 EQUITY WILL NOT PERMIT A STATUTE TO BE USED AS AN INSTRUMENT OFFRAUD 88 2 The creation of trusts and the disposition of equitable interests bywill 90 Chapter 6 Completely and incompletely constituted trusts 92 1 The perfect creation ofa trust 92 A THE EFFECTIVE TRANSFER OF THE TRUST PROPERTY TO TRUSTEES 9 3 i Settlor the owner ofthe property bothat law and in equity 93 ii Settlor possessing merely an equitable interest in the property 95 B A DECLARATION OF TRUST The position ofa volunteer 97 A MEANING OF THE TERM VOLUNTEER 9 7

5 x Contents B EQUITY WILL NOT ASSIST A VOLUNTEER 98 i Beneficiary not a volunteer 98 ii Beneficiary a volunteer 99 iii Beneficiary a covenantee 101 iv Performance of unenforceable covenant 101 v ReRalli's Will Trusts Trusts ofachose in action 102 A THIRD PARTY CONTRACT - ACTION FOR DAMAGES BY CONTRACTING PARTY 102 B EQUITABLE REMEDIES FOR CONTRACTING PARTY 103 C OTHER RELEVANT COMMON LAW PRINCIPLES 104 D INTERVENTION BY EQUITY Trusts ofthe benefit of a contract and volunteers Trusts offuture property Exceptions to the maxim that equity will not assist a volunteer 111 A THE RULE IN STRONG V BIRD 111 B DONATIO MORTIS CAUSA 112 C STATUTORY PROVISIONS 117 D PROPRIETARY ESTOPPEL 118 Chapter 7 Secret trusts and mutual wills Fully-secret and half-secret trusts 119 A THE PRINCIPLE UPON WHICH SECRET TRUSTS ARE ENFORCED B EVIDENCE 122 C FULLY-SECRET TRUSTS 122 D HALF-SECRET TRUSTS Mutual wills 126 Chapter 8 Constructive trusts The rule in Keechv Sandford Obligation to account as a constructive trustee for profits received by virtueof bis position as trustee 133 A FEES PAID TO TRUSTEE DIRECTORS 134 B OTHER CASES IN WHICH TRUSTEES ACCOUNTABLE FOR PAYMENTS RECERTED 135 C COURT ACTING TO PREVENT TRUSTEE PROFITING 135 D CASES INVOLVING OTHER FIDUCIARY RELATIONSHIPS 136 E BRIBES Strangers to the trust 139 A INTRODUCnON 139 B TRUSTEE DE SON TORT 140 C KNOWING RECEIPT OR DEALING 141 D THE ACCESSORY LIABILITY PRINCIPLE - KNOWING ASSISTANCE 145 E POSSESSION BY AN AGENT OF TRUSTEES The vendorundera contract for the sale ofland Undertaking by purchaser 150

6 Chapter 9 Resulting trusts 152 Contents xi 1 Failure to dispose ofthe equitable interest 152 A THE PRINCIPLE INVOLVED 152 B THE PRELJMINARY QUESTION OF CONSTRUCTION 155 i Donor Isettlor parts with his money out and out without any intention ofretaining any interest therein 155 ii Defunct voluntary associations 156 iii Gift subject to carrying out a particular trust 157 iv Trust for assistance ofcertain persons by stated means v The rule in Lassence v Tierney C PENSION FUND SURPLUSES Transfer into and purchase in the name of another and related cases 159 A PURCHASE IN THE NAME OF ANOTHER OR IN THE JOINT NAMES OF THE PURCHASER AND ANOTHER 159 B VOLUNTARY CONVEYANCE OR TRANSFER INTO THE NAME OF ANOTHER OR INTO THE JOINT NAMES OF THE GRANTOR AND ANOTHER 160 C REBUTTING THE PRESUMPTION OF A RESULTING TRUST 162 D THE PRESUMPTION OF ADVANCEMENT 163 i Father and child 164 ii Husband and wife 165 Chapter 10 Common intention constructive trusts; proprietary estoppel; licences Common intention constructive trust 173 A THE CORRECT APPROACH TO DETERMINATION OF BENEFICIAL INTERESTS 173 B FAMILY HOME TAKEN IN JOINT NAMES 175 C HOME TAKEN IN THE NAME OF ONE ONLY OF THE TWO PARTIES 175 D DETRIMENTAL RELIANCE 178 E QUANTUM OF THE CLAIMANT'S BENEFICIAL INTEREST F TIME OF ASCERTAINMENT OF SHARES 180 G DATE OF VALUATION OF SHARES 180 H IMPROVEMENTS 181 I SECTION 17 OF THE MARRIED WOMEN'S PROPERTY ACT Proprietary estoppel 182 A THE PRINCIPLES INVOLVED 182 B HOW THE EQUITY MAY BE SATISFIED 186 C FLEXIBILITY 188 D RELATIONSHIP WITH CONSTRUCTIVE TRUST Licences 189 A AT COMMON LAW 189 B EQUITABLE INTERVENTION 190 i Hurst v Picture Theatres Ltd 190 ii Proprietary estoppel 191 iii Constructive trust 191

7 xii Contents iv Reason andjustice 191 THE LICENSEE'S RIGHTS AGAINST THIRD PARTIES 192 i Contractual licences 192 ii Estoppel licences 193 iii Contractual licence giving rise to constructive trust 193 Chapter 11 Unlawful trusts Trusts which offend against the rule against perpetuities Trusts which offend against the rule against perpetual trusts Trusts for illegitimate children 195 A THE LAW RELATING TO DISPOSITIONS MADE BEFORE B 1 JANUARY THE LAW RELATING TO DISPOSITIONS MADE AFTER 31 DECEMBER The effect of declaring a trust void as offending against the policy of thelaw Trusts tending to prevent the carrying out of parental duties Trusts designed or tending to induce a future Separation of husband and wife, or to encourage an invasion ofthe sanctity ofthe marnage bond Trusts in restraint of marriage Trusts which are not merely unlawful but also fraudulent 202 A WHERE THERE IS NO PRESUMPTION OF ADVANCEMENT 204 B WHERE THERE IS A PRESUMPTION OF ADVANCEMENT 205 C REIMBURSEMENT OF BENEFITS 205 Chapter 12 Voidable trusts Transactions at an undervalue 207 A GENERAL 207 B MEANING OF UNDERVALUE 207 C THE RELEVANT TIME D THE ORDER OF THE COURT 209 Transactions defrauding creditors 209 A GENERAL 209 B WHO MAY APPLY FOR AN ORDER 210 C THE ORDER OF THE COURT Voluntary disposition followed by conveyance for valuable consideration 211 A LAW OF PROPERTY ACT 1925, S 173(1) 211 B LAW OF PROPERTY ACT 1925, S 173(2) Section 37 of the Matrimonial Causes Act Hlusory trusts 213 A TRUSTS FOR THE BENEFIT OF CREDITORS 213 B WHERE THE TRUST BECOMES IRREVOCABLE 213 C DEEDS OF ARRANGEMENT ACT

8 Chapter 13 Charitable trusts 216 Contents xiii 1 Difference between charitable and non-charitable trusts 216 A CERTAINTY 216 i Basic position 216 ii Charitable Trusts (Validation) Act iii Primary trust for non-charitable purposes, residue to charity 218 iv Non-charitable trusts ancillary to charitable trusts 218 v Apportionment 220 vi Liverpool City Council v A-G 222 B PERPETUITIES 222 C THE RULE AGAINST PERPETUAL TRUSTS D EXEMPTIONS FROM RATES AND TAXES 223 Definition of charity 225 A GENERAL 225 B TRUSTS FOR THE RELIEF OF POVERTY 229 C TRUSTS FOR THE ADVANCEMENT OF EDUCATION 231 D TRUSTS FOR THE ADVANCEMENT OF RELIGION 234 E TRUSTS FOR OTHER PURPOSES BENEFICIAL TO THE COMMUNITY 240 F RECREATIONAL CHARITIES 249 G THE REQUIREMENT OF PUBLIC BENEFIT 252 H EXCEPTIONS TO THE REQUIREMENT OF PUBLIC BENEFIT 258 I 'CHARITY 5 FOR THE PURPOSES OF THE CHARITIES ACT Chapter 14 The administration of charities Legal frameworkof charity 262 A CHARITABLE TRUST 262 B CHARITY FORMED UNDER THE COMPANIES ACTS 1985 TO C UNINCORPORATED ASSOCIATIONS 263 Charity trustees and persons and bodies having powers and duties in connection with charities 264 A TRUSTEES OF A CHARITABLE TRUST: CHARITY TRUSTEES: TRUSTEES FOR A CHARITY 264 i ii Kinds of trustees 264 Qualifications for trusteeship 265 iii Application ofstatutory powers relating to trustees generally iv Advice ofthe Charity Commissioners v Incorporation of charity trustees 267 B CHARITABLE COMPANIES 267 i Alteration ofobjects clause 267 ii Ultra vires transactions 268 iii Certain acts by a charitable Company 268 iv Name and Status ofa charitable Company 268 v Winding up 268 vi Offences committed by a body corporate 269 C THE CHARITY COMMISSIONERS 269 i General function and object ofthe Commissioners 269 ii Concurrentjurisdiction with the High Court 270

9 xiv Contents iii General power to institute inquiries 270 iv Power to act for protection of charities 271 v Publicity for proceedings under ss 16 and vi Power to authorise dealings with charity property 273 vii Power to give directions about dormant bank accounts 274 D THE OFFICIAL CUSTODIAN FOR CHARITIES 274 E THE ATTORNEY GENERAL 275 F LOCAL AUTHORITIES 275 G THE COURT 277 H VISITORS 279 i Position apart from Statute 279 ii The Education Reform Act I THE DIRECTOR OF PUBLIC PROSECUTIONS 285 Registration of charities 286 A THE REGISTER OF CHARITIES 286 B EXCEPTIONS FROM REQUIREMENT OF REGISTRATION 286 C EFFECT OF REGISTRATION 287 D CHANGEOFNAME 288 E STATUS TO APPEAR ON OFFICIAL PUBLICATIONS ETC 289 Charity accounts, audit, annual reports and annual returns 289 A GENERAL PROVISIONS 289 i Duties in relation to accounts 289 ii Annual audit or examination of accounts 289 iii Annual reports 290 B SPECIAL PROVISIONS RELATING TO PARTICULAR KINDS OF CHARITIES 290 i Exempt charities 290 ii Unregistered charities within s 3(5)(c) 290 iii A charity which is a Company 291 C PUBLIC RIGHT TO A COPY OF CHARITY'S ACCOUNTS 291 D ANNUAL RETURNS 291 Schemes 291 A GENERAL 291 B STATUTORY EXTENSIONS OF THE JURISDIKTION 293 C COMMON INVESTMENT SCHEMES AND COMMON DEPOSIT SCHEMES 294 The cy-pres doctrine 295 A GENERAL POSITION 295 B IMPOSSIBILTTY OR IMPRACTICABILITY 296 C GENERAL CHARITABLE INTENTION 299 i Initial impossibility or impracticability 299 ii Anonymous donors eg contributors to a collecting box on a flagday 300 iii Supervening impossibility 302 iv Cy-pres application on occasions introduced by s 13(1) 302 D GIFT TO A SPECIFIED CHARITABLE INSTITUTION WHICH ONCE EXISTED, BUT CEASED TO EXIST BEFORE THE DEATH OF THE TESTATOR 302 i No lapse on the ground that although the specified Institution may apparently have disappeared the charity has not ceased to exist 303 ii Gift construed as a gift for the purposes of the specified institution 304 iii The approaches in (i) and (ii) above in the light ofthe general Statement made by Buckley J in Re Vernon's Trusts 304 iv Cy-pres application 306 E SPECIFIED INSTITUTION CEASING TO EXIST BEFORE THE GIFT BECOMES PAYABLE OR IS IN FACT PAID OVER 307

10 F Contents xv GIFT TO WHAT APPEARS TO BE A SPECIFIED CHARITABLE INSTITUTION, BUT WHICH IT TURNS OUT HAS NEVER EXISTED Small charities: power to transfer property or modify objects Very small charities: power to spend capital Discrimination 310 A RACE RELATIONS ACT B SEX DISCRIMINATION ACT Dispositions of charity land 312 A A LEASE FOR SEVEN YEARS OR LESS (OTHER THAN ONE GRANTED WHOLLY OR PARTLY IN CONSIDERATION OF A FINE) 312 B ANY OTHER DISPOSITION OF LAND Control of fund raising for charitable institutions Public charitable collections 315 Chapter 15 Trustees. Appointment and determination of appointment Appointment of trustees 317 A APPOINTMENT BY THE SETTLOR B APPOINTMENT UNDER AN EXPRESS POWER 318 C APPOINTMENT UNDER THE PROVISIONS OF S 36 OF THE TRUSTEE ACT D i The circumstances in which the statutory power may be exercised 320 ii The persons who can exercise the statutory power 323 iii Mode of appointment 324 iv Appointment ofadditional trustees 325 v Effect of appointment 326 APPOINTMENT BY BENEFICIARIES UNDER THE TRUSTS OF LAND AND APPOINTMENT OF TRUSTEES ACT E APPOINTMENT BY THE COURT 327 i Under the statutory power contained in the Trustee Act ii Under its inherent jurisdiction 329 iii Under the Trustee Act 1925, s iv Under the Judicial Trustees Act 1896 and the Public Trustee Act v Effect of appointment by the court 330 F THE PERSONS WHO MAY BE APPOINTED TRUSTEE 330 G THE NUMBER OF TRUSTEES 332 i Maximum number of trustees 333 ii Minimum number of trustees 333 iii Appointment by the court 335 H SEPARATE SETS OF TRUSTEES FOR DISTINCT TRUSTS 336 I LIABILTTY OF THE ORIGINAL TRUSTEES AND THE PURPORTED NEW TRUSTEES UNDER AN INVALID APPOINTMENT Vesting ofthe trust property 337 A NEW TRUSTEES 337 B VESTING ORDERS Tennination of trusteeship 339 A DISCLAIMER 339 B DEATH 341 C RETCREMENT AND REMOVAL 343

11 xvi Contents i Under an express power in the trust instrument 343 ii Under the provisions of s 36 ofthe Trustee Act iii Under the provisions ofs 39 ofthe Trustee Act iv Under the provisions ofs 41 ofthe Trustee Act v By the court under its inherent Jurisdiktion 344 vi At instance of beneficiaries under the Trusts ofland and Appointment of Trustees Act vii By consent ofthe beneficiaries 346 viii By payment into court 346 Chapter 16 Special kinds of trustees Judicial trustees The Public Trustee 349 A GENERAL POWERS AND DUTIES 349 B MODE OF APPOINTMENT 350 C POSITION OF PUBLIC TRUSTEE AFTER APPOINTMENT 351 D VESTING OF THE ESTATE OF AN INTESTATE IN THE PUBLIC TRUSTEE E PUBLIC TRUSTEE AND ADMINISTRATION OF FUNDS ACT Custodian trustees Trust corporations 354 Chapter 17 Powers and duties of trustees Duties on the acceptance ofthe trust Dutyof trustees to act unanimously Duties in relation to information, accounts and audit 361 A DUTY TO ACCOUNT 361 B AUDIT Duty of trustees to hand over the trust funds to the right persons 365 A THE EXTENT OF THE DUTY 365 B SECTION 27 OF THE TRUSTEE ACT C RIGHT TO A DISCHARGE ON TERMINATION OF TRUSTS Duties where beneficiary is solely and beneficially entitled 368 A B C ENTD1E EQUITABLE INTEREST PRESENTLY VESTED IN A BENEFICIARY OF FÜLL AGE AND CAPACITY 368 ENTIRE EQUITABLE INTEREST VESTED IN TWO OR MORE BENEFICIARIES, EACH OF FÜLL AGE AND CAPACITY 370 WHERE ONE OF SEVERAL BENEFICIARIES, BEING SUIIURIS, IS ABSOLUTELY ENTITLED IN POSSESSION TO A SHARE IN THE TRUST PROPERTY Right of beneficiaries to occupy trust land Applications to the court 374 A PROCEEDINGS FOR ADMINISTRATION, OR DETERMINATION OF QUESTION 374 B SURRENDER OF DISCRETION 376 C APPEAL BY THE TRUSTEES 376 D PAYMENT INTO COURT 376

12 Contents xvii E APPLICATIONS UNDER THE TRUSTS OF LAND AND APPOINTMENT OF TRUSTEES ACT Controloftrustee's powers 378 A CONTROL BY BENEFICIARIES B CONTROL BY THE COURT 380 C PROVISIONS OF THE TRUST INSTRUMENT Chapter 18 The investment of trust funds Introduction 383 A HISTORICAL BACKGROUND 383 B NON-FINANCIAL CONSIDERATIONS 384 C TYPES OF INVESTMENT Express power of investment The statutory power under the Trustee Investments Act A BACKGROUND 390 B SCHEME OF THE ACT 392 C TRUSTEE INVESTMENTS 393 i PartI narrower-range Investments not requiring advice 393 ii Part II narrower-range Investments requiring advice 393 iii Part III wider-range investments 394 iv Part IV 394 D RELATIONSHIP BETWEEN THE STATUTORY POWER AND OTHER POWERS OF INVESTMENT 394 E GENERAL PRINCIPLES TO BE APPLIED F OBTAINING ADVICE Investments on amortgage ofland 398 A DIFFERENT KINDS OF MORTGAGE B AMOUNT TO BE LENT 399 C TRUSTEES OUTSIDE PROTECTION OF S Trustees holding a Controlling interest in a Company Settled land and land held upona trust ofland Retaining investments Miscellaneous statutory provisions incidental to powers of investment Alteration of power of investment Claims by beneficiaries in relation to the investment of trust funds 404B 11 Occupational pension schemes established under a trust 404B Chapter 19 Evenhandedness as between the beneficiaries The duty to convert The duty to apportion 408 i Authorised investments 409 ii Unauthorised pure personalty 409 iii Unauthorised pure personalty the effect ofa power to postpone conversion 411

13 xviii Contents iv Reversionary interests - the rule in Re Earl of Chesterfield's Trusts 412 v Reversionary interests the effect ofa power to postpone conversion 413 vi Rate of interest 413 vii Unauthorised investment by trustees Where stock or shares are sold or purchased by trustees cum dividend The 'windfall' principle Allocation of expenditure 417 Chapter 20 The fiduciary and personal nature of trusteeship Duty not to profit from his trust 419 A DUTY TO ACT WITHOUT REMUNERATION 420 i The provisions ofthe trust Instrument 421 ii Contract with the cestuis que trust 421 iii Order ofthe court 422 iv The rule in Cradock v Piper 423 v Statutory provisions 423 vi Custom 424 vii Foreign remuneration 424 B DISABILITIES OF TRUSTEE RELATING TO PURCHASE OF TRUST PROPERTY OR EQUITABLE INTEREST 424 i Purchase by a trustee ofthe trust property 'the self-dealing rule' 425 ii Purchase by the trustee from the beneficiary ofhis equitable interest - 'the fair-dealing rule' Duty not to delegate the trust 428 A THE EQUITABLE RULES, APART FROM STATUTE 428 B SECTION 23 OF THE TRUSTEE ACT C LJABILITY OF A TRUSTEE FOR THE DEFAULTS OF AN AGENT 431 D LIABILITY OF TRUSTEE FOR HIS OWN BREACH OF TRUST 434 E DELEGATION BY POWER OF ATTORNEY UNDER S 25 OF THE TRUSTEE ACT 1925 AS AMENDED BY S 9 OF THE POWERS OF ATTORNEY ACT F ENDURING POWERS OF ATTORNEY ACT G DELEGATION UNDER THE TRUSTS OF LAND AND APPOINTMENT OF TRUSTEES ACT H MISCELLANEOUS PROVISIONS 438 I BENEFIT OF CONTRACT WITH AGENT A TRUST ASSET? 439 Chapter 21 Powers of trustees Trustees ofland Power ofsale 441 A EXISTENCE OF A POWER OF SÄLE 441 (i) Land 441 (ii) Property other than land 441 B STATUTORY PROVISIONS RELATING TO SALES 441

14 Contents xix 3 Power to give receipts Power to insure Power to compound liabilities Powers in relation to reversionary interests Power of maintenance of infants or minors 446 A EXPRESS POWERS 446 B STATUTORY POWER 447 i History 447 ii The present law 448 iii Destination ofany balance ofthe income not applied under sub-s(l) 450 iv Interests arising under Instruments made before 1 January C POWER OF THE COURT Power of advancement 453 A EXPRESS POWERS 453 B THE STATUTORY POWER CONTAINED IN S 32 OF THE TRUSTEE ACT C POWER OF THE COURT Right to reimbursement for costs and expenses 457 A REIMBURSEMENT OUT OF THE TRUST ESTATE 457 B PERSONAL LIABILITY OF CESTUI QUE TRUST TO INDEMNIFY TRUSTEES 460 C COSTS OF LEGAL PROCEEDINGS 461 D COSTS OF BENEFICIARIES 462 Chapter 22 Variation of trusts Duty not to deviate from the terms of the trust Statutory exceptions to duty not to deviatefrom the terms of the trust 467 A SECTION 53 OF THE TRUSTEE ACT B SECTION 57(1) OF THE TRUSTEE ACT C SECTION 64 OF THE SETTLED LAND ACT D SETTLED LAND AND TRUSTEE ACTS (COURT'S GENERAL POWERS) ACT The Variation of Trusts Act A PERSONS ON WHOSE BEHALF THE COURT MAY ACT 473 B MEANING OF BENEFIT IN THE PROVISO 475 C PRINCIPLES TO BE APPLIED 477 D RELATIONSHIP TO OTHER STATUTORY PROVISIONS 479 Chapter 23 Breach of trust Personal liability of trustees to beneficiaries 480 A GENERAL POSITION B MEASURE OF DAMAGE i Equitable compensation for breach of trust 481

15 xx Contents ii Equitable compensation for breach ofthe duty ofskill and care 485 c TAX 485 D INTEREST 486 E JOINT AND SEVERAL LIABILITY TO BENEFICIARIES 487 F TRUSTEE-BENEFICIARY 488 G INJUNCTION 488 H PROCEDURE Liability of trustees inter se 489 A TOWNLEY V SHERBORNE B CONTRIBUTION BETWEEN TRUSTEES 490 Defences of a trustee to proceedings for breach of trust 491 A EXEMPTION CLAUSES 491 B CONSENT OR CONCURRENCE OF THE CESTUI QUE TRUST 491 C IMPOUNDING THE BENEFICIAL INTEREST OF THE BENEFICIARY 494 D LIMITATION AND LACHES 496 i Section ii Section iii General points relating to the Limitation Act iv Lackes 500 E SECTION 61 OF THE TRUSTEE ACT F DISCHARGE IN BANKRUPTCY Criminal liability of trustees 503 Chapter 24 Tracing: proprietary remedies of the beneficiary Tracing at common law Tracing in equity 509 A GENERAL POSITION B MDONG OF TRUST PROPERTY WITH THE TRUSTEE'S OWN PROPERTY 512 C MIXING OF TWO TRUST FUNDS, OR OF TRUST MONEYS WITH MONEYS OF AN INNOCENT VOLUNTEER 515 D IDENTIFICATION 517 E CLAIM INEQUITABLE F INTEREST The claims in personam 518 Chapter 25 Injunctions I - nature, damages in lieu, enforcement Meaning and nature of an injunction 521 A MEANING AND JURISDICTION B REMEDY IN PERSONAM 526 C WHERE A PARTICULAR REMEDY IS PROVIDED BY STATUTE D INJUNCTIONS AGAINST PERSONS UNDER DISABILITY Classification of injunctions 527 A PROHIBITORY AND MANDATORY B PERPETUAL AND INTERLOCUTORY C QUIA TIMET INJUNCTION 531

16 Damages in Heu of aninjunction 534 A JURISDIKTION 534 B PRINCIPLES TO BE APPLIED 536 C MEASURE OF DAMAGE 540 Enforcement of an injunction 541 A POWERS OF THE COURT 541 B SERVICE OF THE INJUNCTION 544 C COMMITTAL TO PRISON 544 D FAMILY LAW ACT Contents xxi Chapter 26 Injunctions II - principles governing grant of injunctions Interlocutory injunctions 547 A INTRODUCTORY CONSIDERATIONS 547 B UNDERTAKINGS 549 C THE APPROACH OF THE COURTS 552 D THE PRINCIPLES LAID DOWN IN THE AMERICAN CYANAMID CASE 553 E DECISIONS ON SPECIAL FACTORS 557 F INTERLOCUTORY MANDATORY INJUNCTIONS 561 G DELAY AND ACQUIESCENCE 562 H CLEAN HANDS 563 I MOTION AS TRIAL OF ACTION J TRADE DISPUTES 564 Perpetual injunctions 564 A GENERAL PRINCIPLES 564 i Injunctions to restrain legal wrongs 564 ii Injunctions in aid ofan equitable right or title 565 B SMALL DAMAGE 565 C DELAY AND ACQUIESCENCE 566 D CLEAN HANDS 567 E THIRD PARTIES 568 F DECLARATIONS AND SUSPENSION OF INJUNCTION 569 Chapter 27 Injunctions III - injunctions in particular types of cases Torestrain a breach of contract 571 A PURELY NEGATIVE TERMS 572 B CONTRACT CONTAINING BOTH AFFIRMATIVE AND NEGATIVE STIPULATIONS 574 C NO EXPRESS NEGATIVE STIPULATION D DE MATTOS V GIBSON E DEFENCES To restrain legal proceedings To protect membership of clubs, trade unions and other unincorporated bodies To restrain the commission or repetition of a tort To protect Copyright, patent rights and trade marks 581

17 xxii Contents 6 To restrain a breach of confidence To protect public rights To restrain a breach of trust In matrimonial and other family matters In Company matters Mareva injunctions and Anton Piller Orders 589 A THE 'MAREVA' INJUNCTION 590 i Origins 590 ii Extent of'the Jurisdiktion 591 iii Guidelines 593 iv Thirdparties 596 v Whereabouts ofdefendant 596 vi Whereabouts ofassets 597 vii Disclosure ofassets 599 viii Privilege against self-incrimination 600 ix Other Orders in support of Mareva relief 600 B THE ANTON PILLER ORDER i Origins 601 ii Pre-conditions to making order 602 iii Safeguards to defendant 603 iv Privilege against self-incrimination 604 v Exceptional or routine? 605 vi Guidelines 606 C EXTENSION OF MAREVA AND ANTON PILLER ORDERS 607 Chapter 28 Specific Performance Nature ofremedy 610 A MEANTNG 610 B REMEDY IN PERSONAM C DISCRETIONARY CHARACTER 613 D DAMAGES IN ADDITION TO OR IN SUBSTITUTION FOR SPECIFIC PERFORMANCE 613 E SPECIFIC PERFORMANCE WITH COMPENSATION F SPECIFIC PERFORMANCE AND MAREVA INJUNCTION Grounds on which specific Performance may be refused 614 A CONTRACT RELATING TO PURE PERSONALTY B VOLUNTARY CONTRACTS 616 C CONTRACTS TO CARRY ON A BUSINESS OR ANY COMPARABLE SERIES OFAcnvrriES 616 D CONTRACTS FOR PERSONAL WORK OR SERVICE 619 E CONTRACTS WANTING IN MUTUALITY 622 F CONTRACTS CAPABLE OF PARTIAL PERFORMANCE ONLY 625 G WHERE A DECREE OF SPECIFIC PERFORMANCE WOULD BE USELESS 626 H CONTRACTS TO LEND OR ADVANCE MONEY 627 I A CONTRACT TO REFER TO ARBITRATION 628 J PARTNERSHIP AGREEMENTS 628 K CONTRACTS TO LEAVE PROPERTY AT WILL 628 L MISREPRESENTATION AND MISTAKE 629 M HARDSHIP AND WANT OF FAIRNESS 630

18 Contents xxiii N RIGHTS OF THIRD PARTIES 633 O CONDUCT OF THE PLAINTIFF 634 P LACHES 636 Q ABSENCE OF WRITING Chapter 29 Other equitable remedies The appointment of a receiver, or receiver and manager 638 A RECEIVERS 638 B MANAGERS 639 C WHO MAY BE APPOINTED AS RECEIVER, OR RECEIVER AND MANAGER 640 D SALARYANDALLOWANCE 641 E POSITION OF RECEIVER 642 F CASES IN WHICH A RECEIVER MAY BE APPOINTED BY THE COURT 643 i Pending the grant ofprobate or letters ofadministration 643 ii As against executors and trustees 643 iii In partnership cases 644 iv Companies 644 v Mortgages 645 vi Creditors 645 vii Between vendor and purchaser 646 viii Other instances 646 ix A receiver for a mental patient 646 x Equitable execution 646 G APPOINTMENT OUT OF COURT Account 651 A ACTIONS OF ACCOUNT 651 B WILFUL DEFAULT 652 C SETTLED ACCOUNTS Rescission 654 A MEANING OF 'RESCISSION' 654 B RESCISSION IN ITS STRICT SENSE 655 C GROUNDS UPON WHICH RESCISSION MAY BE GRANTED 657 i Fraudulent misrepresentation 657 ii Innocent misrepresentation 657 iii Mere silence 658 iv Executed contracts entered into as a result of misrepresentation 658 v Mistake 658 vi Constructive fraud 659 D LOSS OF THE RIGHT TO RESCISSION 659 i Affirmation ofthe contract 659 ii Restitutio in integrum 660 iii Rights ofthird parties 661 iv Misrepresentation Act Rectification of documents 661 A GENERAL 661 B COMMON MISTAKE 663 C UNILATERAL MISTAKE 666 D VOLUNTARY SETTLEMENTS 668 E EVIDENCE 669

19 xxiv Contents 5 Delivery up and cancellation of documents Perpetuationoftestimony Ne exeat regno 673 Chapter 30 Conversion and reconversion The doctrine of conversion Circumstances in which the doctrine of conversion continues to apply 676 A UNDER AN ORDER OF THE COURT 676 B UNDER A CONTRACT FOR THE SÄLE OF LAND 676 C UNDER AN OPTION TO PURCHASE 678 D PARTNERSHIP PROPERTY 679 Chapter 31 Satisfaction, ademption and Performance Satisfaction of ordinary debts by legacies 682 A THE GENERAL RULE B DIFFERENCE BETWEEN THE LEGACY AND THE DEBT 683 C DEBTS TO WHICH THE PRESUMPTION APPLIES 685 D DIRECTION TO PÄY DEBTS, OR TO PAY DEBTS AND LEGACIES 686 E DEBT DUE TO A CHILD OF THE TESTATOR 686 F ADMISSIBILTTY OF EXTRINSIC EVIDENCE Satisfaction of a debt by an inter vivos payment 687 A DEBT DUE TO A CHILD FROM ITS PARENT 687 B OTHER CASES Satisfaction of a portions debt by a legacy or by a subsequent portion: ademption of a legacy by a portion 688 A DOUBLE PORTIONS B MEANING OF A PORTION 689 C DONOR MUST BE FATHER OR IN LOCO PARENTIS D SATISFACTION AND ADEMPTION PRO TANTO 695 E BOTH PORTIONS MUST BE PROVIDED BY, AND FOR, THE SAME PERSONS 695 F APPLICATION OF THE DOCTRINES TO BENEFIT STRANGERS 696 G THE OPERATION OF THE PRESUMPTIONS 697 H REBUTTING THE PRESUMPTIONS 698 i Differences in the limitations 699 ii Gifts must be eiusdem generis 700 iii Differences between the times of payment 701 iv Direction for the payment of debts prior to ascertainment ofresidue contained in the will 701 I ADEMPTION - SUBSEQUENT ADVANCEMENT FOLLOWED BY A CODICIL 702 J THE ADMISSION OF EXTRINSIC EVIDENCE Ademption of legacies given for a particular purpose Performance 704 A GENERALLY 704

20 Contents xxv B COVENANT TO PURCHASE AND SETTLE LAND C COVENANT TO LEAVE MONEY 705 Chapter The equitable doctrine of election Election under a will 707 A APPLICATION OF THE DOCTRINE TO WILLS 707 B LEGAL BASIS OF THE DOCTRINE 708 C COMPENSATION NOT FORFEITURE 709 D ELECTION UNDER A POWER OF APPOINTMENT 710 E THE ESSENTIALS OF ELECTION 711 F GIFTS OF THE TESTATOR'S OWN PROPERTY 713 G ALIENABILITY OF THE PROPERTY WRONGFULLY PURPORTED TO BE DISPOSED OF 713 H THE RULE AGAINST PERPETUITIES 714 I CLAIM DEHORS THE WILL 715 J ELECTION BY THE HEIR 716 K DERIVATIVE INTERESTS 717 L MODE AND TIME OF ELECTION Election under a deed 719 Index 721