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TRUSTS ARISING BY OPERTATION OF LAW (IMPLIED) - Coggle Diagram
TRUSTS ARISING BY OPERTATION OF LAW (IMPLIED)
Arise by operation of law and imposed by courts - correct the fact that the legal ownership of the property does not reflect what equity recognises to be the true beneficial ownership of that property.
1. STATUTORY TRUSTS
Trust arises as a result of a legislative provision
trusts of land arising under TLATA 1996 whenever land is acquired by legal co-owners
statutory trusts that arise under the Intestacy Rules when a person dies without leaving a valid will
2. RESULTING TRUSTS
Property is held on trust for the person who transferred it or contributed to its acquisition. The equitable interest ‘results’ back to the transferor or contributor.
Presumed resulting trusts
3. Where a person pays all or part of the purchase price for an asset
2. Where a person gratuitously transfers property to another person + no evidence that the transferor intended the recipient to receive the property as a gift
(= full legal owner)/
that recipient provided consideration
(sale)
Presumed resulting trusts
arise by way of a presumption that the transferor or contributor intended to create a trust
> presumption can be rebutted by evidence that the transferor actual intention is inconsistent with the creation of a trust
Automatic resulting trusts
1. Where a transfer on trust wholly or partially fails but the property has been transferred to the trustee
They are effectively a
default position which returns the beneficial interest to the settlor, giving them Saunders v Vautier rights
= ability to collapse the trust + either retain the property or re-attempt the express trust
Not all failed attempts to create an express trust will produce a resulting trust
:
If the trust fails to
due lack of constitution
(i.e. legal title has not passed to the trustee) nothing to result back to settlor > constructive trust arises
Problem with one of the three certainties does not = resulting trust
:
Self-declaration of trust which fails for uncertainty of objects or subject
= no effect > settlor remains full legal owner
Testamentary trust which fails for uncertainty of objects or subject
= void > property treated as part of the testator’s residue
If property is left to an
individual in a will + insufficient certainty as to whether they to be a trustee
= gift to that individual
3. CONSTRUCTIVE TRUSTS
Institutional constructive trusts
Imposed automatically in response to a trigger event.
Constructive trusts imposed to
prevent fraud
Constructive trusts imposed to
perfect an imperfect gift or trust
Constructive trusts imposed to
compel parties to perform a specifically-enforceable contract
Constructive trusts imposed
over profits made in breach of fiduciary duty
Constructive trusts as remedy
Constructive trusts as a remedy can be awarded by a court following
claimant's claim to beneficial ownership of property due to:
misapplication of property
, or
property representing the traceable proceeds of a breach of trust or fiduciary duty
Common intention constructive trusts
Used to
resolve disputes on beneficial ownership of land if there is no express trust declared over the property > reflect the common intention
(express / implied) of the parties
Legal title to property can be held
as sole / joint owners
in following ways:
As
full legal and beneficial
owner
On trust for a
sole beneficiary
On trust for more than
one beneficiary as joint tenants
On trust for more than
one beneficiary as tenants in common in equal shares
On trust for more than
one beneficiary as tenants in common in unequal shares
JOINT LEGAL OWNERS
Cohabitees who purchase a family home in joint names do not specify their respective equitable and beneficial entitlements
The starting point is that equitable title reflects legal title
(if no express trust)
Joint legal owner = Joint beneficial owner
Step 1: Rebutting the presumption that equity follows law = equitable title should be held differently
By party seeking to rebut it
using evidence of the parties’ common intention, determined by the whole course of conduct - which may CHANGE over time
Including discussions of
beneficial ownership /
finances
relationship
purpose of sale
Once common intention is established =
claimant will have to show they acted to their detriment in reliance on that common intention
Step 2: If claimant rebuts presumption = necessary to quantify the interests of the parties considering the whole course of conduct
(same factors as above) to establish what
proportion their shares are being held as tenants in common
If an
express intention as to quantification can be established
= court will give effect to it
If an
express intention cannot be established
= court will attempt to infer an intention based on the conduct of the parties
Otherwise, the
court will impute an intention
for ‘fair shares’ based on the whole course of conduct
Very rare that presumption is rebutted
SOLE LEGAL OWNERS
Cohabitees live in a family home which is only registered in the name of one of the parties
The starting point is that equitable title reflects legal title
(if no express trust)
Sole legal owner = Sole beneficial owner
Step 1: Establishing an interest
Evidence of an express common intention as to the non-legal owner's beneficial interest
Including discussions of:
shared ownership NOT shared occupation OR legal owner providing an excuse as to why their partner may not be jointly registered as the legal owner /
finances
relationship /
purpose of sale
OR
common intention is inferred by the whole course of conduct
( finances / relationship / purpose of property)
Once common intention is established =
claimant will have to show they acted to their detriment in reliance on that common intention
Sufficient for detrimental reliance: heavy DIY / substantial expenses
Not sufficient for detrimental reliance: decorating / looking after children
Step 2: If non-legal owner can establish common intention + reliance = necessary to quantify the size of the non-legal owner's interest
, using the following framework:
If there is
evidence of express common intention
as to the shares = conclusive
In the
absence of such an intention
= court attempts to infer the common intention
Otherwise, the
court will impute an intention for ‘fair shares’ based on the whole course of conduct
PROPRIETARY ESTOPPEL
Equitable doctrine which
enables a person to informally acquire property (or personal) rights and have a cause of action
.
Prevents unconscionable conduct by modifying the parties’ strict legal rights. It is a very flexible doctrine
Can arise in:
Acquiescence cases
= where A
mistakenly believes that they have a right in B's land and, in reliance on that belief, act to their detriment
+ B is aware of their mistake but
does not prevent them acting to their detriment
Assurance cases
= B
assures A that they have / will acquire a right in relation to B’s property and, in reliance on that assurance, A acts to their detriment
Elements of a proprietary estoppel claim
1. An assurance made to the claimant
Assurance (a promise) by
defendant that the claimant has or will acquire a right in their property
(e.g. easement) - Requirements:
The assurance
need not be explicit
> can be inferred from indirect statements
The relevant assurance must be
‘clear enough
’ -dependent on context.
The court must ascertain how the
defendant’s words would have been reasonably understood
by the claimant in the context
2. Reliance by the claimant on the assurance
Sufficient link (causation) between the defendant’s assurance and the claimant’s detrimental conduct
Mixed case law if assurance should be the sole cause of the detrimental conduct
If the defendant makes an
assurance to the + claimant acts detrimental way
=
presumed that the claimant relied on the assurance > defendant has burden of proof to rebut presumption
3. Detriment to the claimant in consequence of their reliance.
Detriment is
not narrow
Countervailing benefits
can be considered when assessing whether the reliance was detrimental
Examples:
expenditure and provision of services without payment or for less than their market value
Unconscionability
If claimant establishes assurance, reliance and detriment =
their claim will not succeed if the court considers that it would not be unconscionable for the defendant to dishonour the assurance
This involves an ‘
objective value judgment
’ of the defendant’s behaviour by the court > very few cases have failed on this basis
Remedy
If claimant establishes a proprietary estoppel = the court will provide remedy
Remedies include:
Transfer ownership of property to the claimant
Hold property on trust for the claimant
Grant the claimant a property right over their property
(eg an easement)
Grant the claimant a personal right over their property
(eg a licence)
Pay a sum of money to the claimant
The
remedy should never exceed the claimant’s expectation
(or be one that does just for both parties)
If
there is < one appropriate remedy = court should allow the defendant to choose which one should be awarded to the claimant