Week 3
Equitable Estates and Interests
EQUITY ACTS IN PERSONAM
(against the person)
Although the maxim that ‘equity acts in personam’ stands as a general principle, equity does recognise interests that are proprietary in nature.
As Radan and Stewart explain ‘the strength of one equitable right as compared to another will depend on the availability of equitable remedies to those asserting a claim to the subject property’. Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694.
Equitable Interests
‘right in equity that is proprietary in nature’
Mere Equity
‘an ancillary right to a right to property’
used interchangeably with
‘beneficial interest’ and ‘equitable estate’
presumes a split in property between the legal interest and equitable interest.
equitable interests include:
• The rights of a beneficiary under a fixed express trust;
• A restrictive covenant over land;
• The holder of equitable mortgage; and
• The interest of a partner in partnership property.
stepping stone to gaining an equitable interest
a mere equity is a ‘procedural right’ Westpac Banking Corporation v Ollis [2008] NSWSC 824 [77] (Einstein J)
Examples of a mere equity
• Right in equity to claim an interest in property based on the principles of equitable estoppel;
• The right to set aside a fraudulent mortgagee sale: Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265; and
• The right to a constructive trust according to the principles set out in Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1987) 164 CLR 137.
Personal Equity
gives a person the right to make an application against another person
not proprietary in nature it cannot be assigned to another party. In this case we can see the maxim equity acts in personam at play.
ASSIGNING PROPERTY IN EQUITY
An assignment is the immediate transfer of a proprietary right from the assignor to the assignee: Norman v FTC (1963) 109 CLR 9, 26 (Windeyer J)
intention on the part of the assignor as crucial to the law of assignment, stating that ‘[f]or a transaction to be an assignment, the intention of the assignor must be that he or she is to have no interest in the property once the assignment is complete’
Assignment of legal property in equity can occur in several circumstances. Radan and Stewart identify three:
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- Equitable assignment for presently existing legal property for consideration
- Voluntary equitable assignment for presently existing legal property that is assignable at law; and
- Voluntary equitable assignment for presently existing legal property that is not assignable at law.
The assignment occurs when consideration passes: Everett v Commissioner of Taxation (1980) 143 CLR 440.
No consideration has been given; it is voluntary.
An equitable assignment of legal property may be valid, despite the maxim.
Milroy v Lord (1862) 45 ER 1185, 1189 (Turner LJ) (Milroy v Lord)
Two limbs
The assignor has done everything necessary to transfer the property
The assignor has done everything necessary to render the transfer binding on the assignor.
The meaning of ‘everything necessary’ was considered in Anning v Anning (1907) 4 CLR 709 and clarified in Corin v Patton (1990) 169 CLR 540 (Corin v Patton). In short, the ‘assignor must have done everything he or she could personally do to comply with the legal requirements for a valid transfer of the property’ In Corin v Patton, the High Court of Australia found that the property had not been assigned at law. In addition, the property had not been assigned in equity.
Costin v Costin (1997) NSW Conv R 55-811 (Costin v Costin), in which the court found where there was a direction to a third party to produce a certificate of title to an assignee, the assignment in equity was ‘not binding on the donor’ a gift is therefore ‘incomplete unless the duplicate certificate of title is in fact produced to the donee/transferee’
A part of a debt or part of another type of chose in action is probably the only example of this form of assignment. This type of property cannot be assigned at law; it only assignable in equity.
The assignor needs to have manifested an intention to make an immediate an irrevocable transfer: Shepherd v Commissioner of Taxation of the Commonwealth of Australia (1965) 113 CLR 385, 391.
In these circumstances the rule in Milroy v Lord does not apply. Furthermore, consideration is not required.
Assignments in of Equitable Interests in Equity
For assignments in equity to be found valid there must be evidence of intention on the part of the assignor.
three situations in which assignments take place in equity
• The assignment of future property;
• A failure to comply with the requirements of a legal assignment of legal interests in property; and
• Where the assignment is of equitable property.
Examples of future property include dividends that are yet to be declared, and a beneficiary’s expectancy under a discretionary trust
In equity where there is valuable consideration, an agreement to assign future property will be treated as a contract to assign the property. Again, intention is important: Ansett Australia Ltd v Travel Software Solutions and Pty LTD (2007) 214 FLR 203, 215.
that '[w]hen the future property comes into existence, the assignor automatically becomes a bare trustee for the assignee'. Where there is consideration the assignor is bound by conscience
Holroyd v Marshall (1862) 11 ER 999, 1007 is an important case which clarifies that the requirement is for valuable consideration. In addition, the consideration must be paid or executed by the assignee: See JT Nominees Pty Ltd v Macks (2007) 97 SASR 471, 500.