EQUITY AND THE LAW OF SUCCESSION SUMMARY 2011

Transcription

1 EQUITY AND THE LAW OF SUCCESSION SUMMARY 2011 LAWSKOOL NEW ZEALAND

2 TABLE OF CONTENTS TABLE OF CASES 7 1. INTRODUCTION 13 What is equity? 13 Development 13 Main fields of application 15 Equitable Remedies 15 Injunctions 15 Rectification 17 Equitable Lien 17 Account of Profits 17 Equitable Compensation and Equitable Damages 18 Damages for Equitable Wrongs Generally 18 Exemplary Damages 18 Damages for Emotional Stress 19 Maxims of Equity 19 The Fusion of Law and Equity EQUITY AND CONTRACTS 22 The Requirement for Consideration 22 The Nature of Specific Performance EQUITABLE ESTATES IN LAND 24 What is an Equitable Estate 24 Equitable Estoppels 25 Oral Contracts and the Doctrine of part performance 27 Equitable Estates and Indefeasibility of Title ORIGINS OF THE TRUST 30 Page 2

3 Uses 30 From Uses to Trusts FORMAL REQUIREMENTS FOR A TRUST 32 Definitions 32 Trusts over Estimates in Land 33 The Three Certainties 33 Certainty of Intention 33 Certainty of Subject-Matter 35 Certainty of Object 37 Trusts and Mere Powers 39 Certainty of Administration 40 Supervisory Power of the Court 40 Successive Trustees 41 Early Termination of a Trust THE BENEFICIARY PRINCIPLE 44 Exceptions to the Beneficiary Principle 44 Miscellaneous Exceptions CHARITABLE TRUSTS 47 What is a Charitable Purpose? 47 Relief of Poverty 50 Advancement of Education 51 Advancement of Religion 52 Other Purposes Beneficial to the Community 52 Administration Schemes RESULTING TRUSTS 57 Resulting Trusts 57 Quistclose Trusts 59

4 9. CONSTRUCTIVE TRUSTS 61 Property Acquired by Dishonesty 62 Knowing Abetting the Breach of an Existing Trust 63 Property acquired subject to an Existing Trust 63 Institutional and Remedial Constructive Trusts DOMESTIC PROPERTY 67 The Bundle o Rights Doctrine BREACHES OF TRUST 71 Duties of Trustees 74 Tracing DEFENCE TRUSTS 80 Imperfect Gifts 80 After Ego and Sham Trusts 81 The Rule against Perpetuities WILLS 85 What is a Will? 85 Testators, Beneficiaries, Estates, Executors, Trustees and Administrators 86 Who can make a Will? 87 Formal Requirements 88 Witnesses 91 Other Requirements 92 Mutual Wills 93 Wills and Marriage THE CONSTRUCTION OF WILLS 95 General Principles 95 Specific Rules of Construction 95 Contradictions 97 Admission of Extrinsic Evidence 98

5 Time of Construction 99 Doctrine of Incorporation by Reference ADMINISRATION OF DECEASED ESTATES 102 Probate and Letters of Administration 102 Effect of Grant of Administration 103 Failure of Gifts 104 Distribution of Intestate Estates FAMILY PROTECTION ACT Grounds for Making a Claim 110 Proper Maintenance and Support LAW REFORM (TESTAMENTARY PROMISES) ACT Conflicting Claims TE TURE WHENUA MAORI ACT 1993/MAORI LAND ACT Trusts 116 Administration of Deceased Estates in Maori Freehold Land 118 Restrictions on Operation of Statutes 119 Restrictions on Disposition by Will 119 Succession on Intestacy 120

6 TABLE OF CASES Adams v Kensington Vestry (1884) 27 Ch D Andrews v Partington (1791) 3 Bro CC Aquaculture Corp v NZ Green Mussel Ltd [1990] 3 NZLR Armitage v Nurse [1998] Ch Assets Co Ltd v Mere Roihi [1905] AC Attorney-General for Hong Kong v Reid [1992] 2 NZLR Auckland Medical Aid Trust v CIR [1979] 1 NZLR Bank of New Zealand v New Zealand Guardian Trust Company Ltd [1999] 1 NZLR Banks v Goodfellow (1870) LR 5 QB Barclays Bank Ltd v Quistclose Investments Ltd [1963] 3 All ER Boardman v Phipps [1967] 2 AC 46 64, 72 Boyce v Boyce (1849) 16 Sim Boyce v Cook (1880) 14 Ch Div Cadell v Palmer (1833) 6 ER 956 (HL) 81 Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd [1985] 1 All ER Carrigan v Redwood (1910) 30 NZLR Casson v Dade (1781) 28 ER Centrepoint Community Growth Trust v CIR [1985] 1 NZLR CIR v Medical Council of New Zealand [1997] 2 NZLR Cunnack v Edwards [1896] 2 Ch Dilicar v West [1921] NZLR Elders Pastoral Ltd v BNZ [1989] 2 NZLR , 59, 61 Foreman v Kingstone [2004] 1 NZLR Fortex Group (in receivership and liquidation) v MacIntosh [1998] 3 NZLR Fox v Harvey [1968] NZLR Frith v Cartland (1865) 2 H & M General Communications Ltd v DFC New Zealand Ltd [1990] 3 NZLR Gillies v Keogh [1989] 2 NZLR , 66 Hall v Hall (1868) LR 1 P&D Harrison v Harrison [2009] NZFLR Hawkins v Public Trustee [1960] NZLR Hayward v Giordani [1983] NZLR Hunter v Hunter [1938] NZLR In bonis Truro (1866) LR 1 P&D , 97 Incorporated Council of Law Reporting v Attorney-General [1972] Ch 73 49

7 IRC v Pemsel [1891] AC Jones v Lock (1865) 1 Ch App Kain v Hutton [2008] 3 NZLR Keelan v Peach [2003] 1 NZLR Lankow v Rose [1995] 1 NZLR , 78 Latimer v CIR [2004] 3 NZLR Letterstedt v Broers [1881-5] All ER Rep Lewis v Cotton [2001] 2 NZLR Little v Angus [1981] 1 NZLR Matarangi Beach Estates Ltd v Dawson & Dawson (2008) 6 NZ ConvC McLaren v McLaren [1919] GLR McPhail v Doulton [1971] AC , 36, 38 Milroy v Lord (1862) 4 De G F & J , 78 Morice v Bishop of Durham (1804) 9 Ves Jr , 45 National Anti-Vivisection Society v IRC [1948] AC Neagle v Rimmington [2002] 3 NZLR Neste Oy v Lloyds Bank PLC [1983] 2 Lloyd s Rep New Zealand Dairy Board v New Zealand Co-operative Dairy Co Ltd [1999] 2 NZLR New Zealand Society of Accountants v CIR [1986] 1 NZLR Official Assignee v Wilson [2008] 3 NZLR Parker v Felgate (1883) 8 PD Paul v Constance [1977] 1 WLR Perrin v Morgan [1943] AC Prime v Hardie [2003] NZFLR , 80 R v District Auditor, ex parte West Yorkshire Metropolitan County Council [1986] RVP Ramsden v Dyson (1865) LR 1 HL Re Amelia Bullock-Webster [1936] NZLR Re Baden s Trust Deed (No 2) [1973] Ch 9 36 Re Beckbessinger [1993] 2 NZLR Re Bravda [1968] 2 All ER Re Burke [1991] 2 NZLR Re Centrepoint Community Trust [2000] 2 NZLR Re Cook [1948] Ch Re Cook s Estate [1960] 1 All ER Re Daniels (1918) 87 LJ Ch Re Denley s Trust Deed [1969] 1 Ch

8 Re Diplock [1948] 2 All ER Re Dupree s Will Trust [1944] 2 All ER Re Endacott [1959] 3 All ER Re Everett (1944) 14 Ch Re Gibson (1866) LJ Ch Re Gillingham Bus Disaster Fund [1958] Ch Re Golay s Will Trusts [1965] 1 WLR Re Gook [1957] 1 WLR Re Gulbenkian s Settlement Trusts [1970] AC Re Hayward [1989] NZLR Re Helliwell [1916] 2 Ch Re Horrocks [1939] P Re Karsten [1950] NZLR Re Kayford [1975] 1 WLR Re Leonard [1985] 2 NZLR Re McAnnalley [1935] NZLR Re McIntosh [1976] 1 NZLR Re Mitchell [1963] NZLR Re Mulligan (deceased) [1998] 1 NZLR Re Nottage [1895] 2 Ch Re Oatway [1903] 2 Ch Re Palmerston North Halls Trust Board [1976] 2 NZLR Re Peacock [1958] NZLR Re Rose, Rose v Inland Revenue Commissioners [1952] 1 All ER Re Shaw, Public Trustee v Day [1957] 1 WLR Re Shaw s Will Trusts, National Provincial Bank Ltd v National City Bank Ltd [1952] 1 Ch Re Slater [1907] 1 Ch Re Smith [1948] Ch Re Smith, Public Trustee v Smith [1932] 1 Ch Re Taylor [1927] NZLR Re Thurlow [1972] Ch Re Whyte [1969] NZLR Re Whorword (1878) 34 Ch D Re Young [1969] NZLR , 86 Re Twigger [1989] 3 NZLR Re Villar, Public Trustee v Villar [1929] 1 Ch Re Welch [1990] 3 NZLR 1 113

9 Rochefoucauld v Bousted [1897] 1 Ch Royal Brunei Airlines v Tan [1995] 3 All ER 97 61, 63 Saunders v Vautier (1841) 49 ER , 41 Shore v Wilson (1842) 9 Cl & Fin Snook v London & West Riding Investments Ltd [1967] 1 All ER Sprange v Barnard (1789) 2 Bro CC Stern v McArthur (1988) 165 CLR Stevens v King [1904] 2 Ch Sutton v O Kane [1973] 2 NZLR Thexton v Thexton [2001] 1 NZLR Thorn v Dickens [1906] WN Twinsectra Ltd v Yardley [2002] 2 All ER Waimihia Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC Walker v Walker [2007] NZFLR , 68 West Sussex Constabulary s Widows, Children and Benevolent (1930) Fund Trusts [1971] 1 Ch 1 56 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] 2 All ER Westpac Banking Corporation Ltd v Savin [1985] 2 NZLR White v White (1909) 28 NZLR Williams v Aucutt [2000] 2 NZLR Williams v CIR [1964] NZLR

10 CHAPTER 1 INTRODUCTION WHAT IS EQUITY? In ordinary language, the word carries ideas of fairness, equality and even-handedness. As a technical term of the law, it means the body of law developed by the English Court of Chancery before After the Judicature Acts of 1873 and 1875 the Court of Chancery was replaced by the Chancery Division of the new High Court and the same procedures were applied to actions at both equity and the common law. New Zealand has never had a separate court of equity, and actions for equitable relief are heard by the High Court following the same procedures as for common law actions. DEVELOPMENT Equity as a branch of the law developed from the medieval practice of petitioning the king for relief in cases where the common law provided no effective remedy or where the strict application of the law led to injustice. Kings increasingly delegated this jurisdiction to the Lord Chancellor (the head of the administration) whose office was the Chancery. As clerics, the late medieval chancellors applied the moral principles that In general, people would not be allowed to exercise their legal powers and rights against the principles of good conscience, and People claiming relief under that principle must themselves come to equity with clean hands. The fundamental relationship that gives rise to remedies in equity is that of confidence and dependence. The relationship is classified as a fiduciary relationship, and the person on whom the burden of confidence and dependence rests is a fiduciary. From 1474 onwards petitions for relief were addressed directly to the Lord Chancellor. From the 16th Century the chancellors were also lawyers, and a system of precedents and particular rules of law analogous to those of the common law were developed, as well as a Court of Chancery with its own judges, separate from the Chancellor s administrative functions.

11 One thing that remained was the principle, arising out of the original purpose of the jurisdiction, that equitable remedies could counteract the operation of common law rules in particular cases. The principal instrument by which this power was exercised was the injunction, an order preventing a party from exercising some right. The power was formalized in the Earl of Oxford s case (1615), in which the Lord Chancellor issued an injunction against enforcement of an order by the great common law judge, Sir Edward Coke CJ. The Attorney-General, Sir Francis Bacon, with the authority of King James I, ruled that that in the event of any conflict between the common law and equity, equity would prevail. MAIN FIELDS OF APPLICATION The Court of Chancery was concerned with: fraud (at common law this meant actual deceit. In equity it included innocent misrepresentation); accident (equity would not allow the enforcement of legal rights if it was gained by luck it was against windfalls); things of confidence (mainly the laws governing trusts and wills where the settler or testator replies on the executor or trustee to carry out his or her wishes). EQUITABLE REMEDIES Remedies that were developed in the Court of Chancery were: injunctions (orders to refrain from doing something). orders for specific performance (that terms of a contract are to be complied with) and rectification, and orders for an account of profits. INJUNCTIONS: Injunctions are powerful weapons because failure to obey them is a contempt of court which is punishable by the courts as if it were a criminal offence. They can be classified into prohibitory injunctions which require a person to refrain from doing something; and mandatory injunctions which require a person to do something for example, remove trees on a boundary, or remove protesters from property.

12 Another classification is into interim or interlocutory injunctions which are usually issued as part of proceedings to maintain a status quo or safeguard property pending a full hearing. permanent/ final/ perpetual injunctions which are issued at the end of proceedings. Two important types of interim injunction are Mareva injunctions issued where there is a danger that the defendant may dispose of his or her assets so as to frustrate any attempt to enforce a judgment against him or her. The court can grant an interlocutory judgment preventing the disposal (usually out of the jurisdiction) of assets of the defendant. The plaintiff has to show four things: 1. a good arguable case against the defendant; 2. that the defendant has assets within the jurisdiction; 3. a real danger the assets may be removed; and 4. that the overall justice of case requires the making of an order. Anton Piller orders (mandatory injunctions) usually issued ex parte (an urgent hearing without the defendant present) entitling a defendant to demand entry to a business/ residential premises to search and remove documents or items that may be used by a plaintiff in proceedings against him or her. They are commonly used in actions for fraud and actions for breaches of patents and copyright where the defendant s accounts, plans, technical data and items of manufacture can provide the plaintiff with a vital means of proving his or her case. Where questions of criminal liability arise (as in some fraud and copyright actions), the orders will usually contain exemptions for incriminatory material. RECTIFICATION Where there is an obvious mistake, the court can order for it to be corrected. The aim is to bring a faulty document into accord with a prior agreement. It is the document being rectified, not the agreement or matter. It usually applies to contract but can apply to leases, easements, insurance policies, and even wills. EQUITABLE LIEN Not really a remedy. At common law a lien describes a right to hold property belonging to another person as security for the performance of an obligation or payment of debt.

13 The holder of a lien (creditor) has the right to hold property belonging to debtor. In equity this is defined as right against property implied by equity to secure discharge of actual/ potential indebtedness. Although called a lien, it is a charge against property and is often based on a contract. To order the complete version of the lawskool Equity and the Law of Succession summary please visit