Legal Profession Admission Board
Equity
Winter 2014
Examiner’s Comments
Question 1
(a)
Manly Property
This part raises two issues.
The first is whether the property has been assigned inter vivos to Teresa. There has
been no registration so there is no legal assignment. For it to be assigned in equity
the rule in Milroy v Lord as clarified in Corin v Paton and Costin v Costin must be
satisfied. It is highly unlikely that the second limb of Milroy be Lord was satisfied
which meant no equitable assignment of the property.
This then raised the question of whether there was a secret trust of the property in
favour of Regina. The elements of such trusts are set out in Ledgerwood v Perpetual
Trustee Co Ltd and have probably been satisfied, which would result in a trust in
Regina’s favour.
(b)
The funds in the Eastpac Banking Corporation
Note in exam it was to Gillian on trust for …
In Re Compton [1945] Ch 123, in a case involving essentially the same facts, the gift
failed as a charitable trust because it did not benefit a section of the public. Lord
Greene MR, said that the group, to be a section of the public, must not be
numerically negligible and the quality that distinguishes them from other members
of the community cannot depend upon a personal relationship with a single
propositus or several propositi, eg the descendants of X, Y and Z.
Question 2
As to the Parramatta land, Jennifer’s oral declaration of trust is ineffective. Writing is
required by s. 23C(1)(b) of the Conveyancing Act 1919. Thus, Evelyn has nothing to
give to Maralyn. At the date of Evelyn’s death, Jennifer remains the absolute owner
of Greenacre. Filipe inherits the property, although on death the executor of
Jennifer’s will holds the property absolutely pending administration of the estate
with Filipe having the rights of a beneficiary in an unadministered estate as detailed
in Livingstone v Commissioner of Stamp Duties.
As to the shares, Jennifer’s oral declaration of trust in favour of Evelyn is effective.
Section 23C(1)(b) does not apply because that section is confined to land. Nor does
s23C(1)(c) apply because there is no disposition of a subsisting equitable interest.
Thus, Evelyn gained an equitable interest in the shares upon the making of the
declaration by Jennifer, with Jennifer becoming the trustee.
In relation to Evelyn’s direction to Jennifer in relation to the shares, the question
arises as to whether it is caught by the writing requirement in 23C(1)(c), given that
Evelyn’s interest is a subsisting equitable interest in property (the section applies to
both real and personal property). According to Vandervell v IRC, Evelyn’s direction is
not caught by s 23C(1)(c) and Evelyn’s oral direction is effective to pass the equitable
interest to Maralyn, with the result that, at her death, Evelyn has no interest in the
shares and therefore Filipe does not inherit any interest in them upon her death.
However, Parker & Parker v Ledsham, suggests that, as nothing had been done by
Jennifer in relation to the shares at the time of Evelyn’s death, her death would
revoke the direction and thus there would be no disposition to Maralyn, with the
result that the equitable interest Evelyn gained pursuant to Jennifer’s declaration of
trust would pass to Frank as the sole beneficiary under Evelyn’s will.
Question 3
This question is about resulting trusts.
As to the Richmond house, the presumption of resulting trust would mean that Jack
had the entire beneficial interest at his death. However, the presumption of
resulting trust can be rebutted, either on the facts or by operation of the
presumption of advancement. The presumption of advancement applies in favour of
a child, so Zac owns a one third share in the property. The presumption of
advancement does not apply in favour of de facto couples (Calverley v Green), so the
one-third interest registered in Jill’s name would be held on trust for Jack. This would
mean that at his death Jack had a two-thirds beneficial interest in the house, and Jill
had no beneficial interest. Thus, Lucy gets a two-thirds interest in the house and
Zac’s interest in the house remains unchanged.
In relation to the joint bank account the key case is that of Russell v Scott that deals
with resulting trusts in the context of joint bank accounts. On the facts of the
problem the presumption of resulting trust in favour of Jack at the time the account
was opened would be rebutted by the presumption of advancement, given that Zac
is his son. However, the presumption of advancement can also be rebutted, thereby
restoring the presumption of a resulting trust. This appears to have partially
happened here, ie the presumption of advancement was rebutted for the term of
Jack’s life only, with the result that, on Jack’s death, the balance of the account
belongs to Zac, and Lucy, as Jack’s beneficiary under his will, does not gain any
interest in it.
Question 4
(a) This part of the question is based upon the facts of Re Gardiner (dec’d). The court
in that case held that this was a conditional gift and because the condition had not
been complied with the gift to James failed, in which case, the personal estate would
pass to the residuary beneficiary or next-of-kin as the case may be.
(b) This part of the question raises the issue of whether the provision gives rise to a
personal equitable obligation. If it does then that obligation is enforceable by
appropriate remedies such as, depending upon the circumstances of the case,
specific performance, injunction or equitable compensation. However, it may well be
that the provision, when properly construed does not give rise to a personal
equitable obligation and that the words are merely precatory and thus of no legal
effect.
(c) This question is based on the decision in Re Salvana; State Trustees Ltd v
Attorney-General (Vic) [2013] VSC 117. In that case it was held that the gift was for a
charitable purpose within either the second or fourth categories of Pemsel.
Question 5
Part (a)
This problem is based upon the facts of Commissioner of Stamp Duties (Queensland)
v Jolliffe, where the High Court held that because George had no intention to hold
the acount as trustee there was trust intended and therefore the account does not
fall part of Nancy’s estate. However, Joliffe’s case has now been overruled by the
High Court in Byrnes v Kendle.
Part (b)
Both contracts raise the issue of whether specific performance would be refused on
the jurisdiction ground that adequacy of at common law are an adequate remedy. In
relation to the guitar contract, although contracts for personal property are usually
ones where damages are adequate, in cases of rare or unique goods, damages are
not adequate because there is not a market for such goods: Falcke v Gray is an
example. However, the inadequacy of consideration may be, of itself a reason, to
deny specific performance on discretionary grounds of hardship: Falcke v Gray.
In relation to the painting contract, contracts where the defendant’s obligation is to
confer a benefit upon a third party are usually one where damages are inadequate
because the plaintiff’s damages are usually nominal: Beswick v Beswick. Thus there is
probably no jurisdictional bar to ordering specific performance. However, contracts
for personal services will usually not be specifically enforced: Giles v Morris.