Unit Schedule 2008 - The University of Western Australia
Unit Outline
Law School
TRUSTS
LAWS2203
Semester Two 2008
Unit Co-ordinator:
Dr Antonio (Tony) Buti
Unit Outline – Trusts LAWS2203
Contents
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Charter of student rights and responsibilities ............................................... 6
U NIT R ESERVE AND C OURSE M ATERIALS O NLINE .............................................. 9
RULES, POLICIES AND PROCEDURES FOR ALL LAW UNITS ............ 10
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Unit Outline – Trusts LAWS2203
Introduction
This unit examines the basic principles of the law of express and implied trusts, trustees’ powers and duties and remedies for breach of trust. An understanding of trusts is important for many areas of legal practice, including property law, wills and estate planning, taxation, family law, company law, insolvency, and financial services (e.g. investment, superannuation and banking). Accordingly, knowledge of trusts law is a prerequisite for admission to practice in all jurisdictions in
Australia.
Learning Outcomes
At the end of this course students should be able to:
(a) identify and explain:
(i) the basic elements of a trust;
(ii) the formal and substantive requirements for the creation of a trust;
(iii) the circumstances in which resulting and constructive trusts arise;
(iv) principal features of trustee’s powers and duties; and
(v) the remedies for breach of trust;
(b) critically analyse basic principles of trusts law;
(c) solve problems by applying these principles;
(d) work collaboratively in a team to develop an understanding of a particular area of the law relating to the administration of a trust and explain this area in a clear and concise manner in an oral class presentation; and
(e) write clear, concise answers to problems in the law of trusts.
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Unit Outline – Trusts LAWS2203
Contact details
Name: e-mail: phone: fax :
Consultation times:
Name: e-mail: phone: fax :
Office and Consultation times:
Dr Antonio (Tony) Buti antonio.buti@uwa.edu.au
6488 2957
6488 1045
Room 1.10
By Appointment
Rebecca Faugno rebecca.faugno@uwa.edu.au
6488 7096
6488 1045
Room No: 2.06
By Appointment
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Unit Outline – Trusts LAWS2203
Prerequisites: Expected Fundamental Skills
This unit assumes that students have already developed certain basic skills. It is expected that students have an adequate command of:
1.
English and related communication skills – students are expected to have very high English language skills and to be able to understand and follow the principles of accepted expression and style;
2.
Library research skills – research is an important aspect of studying law and students will be expected to utilise the facilities of the Law Library on a regular basis.
If you are not well prepared in any of the above areas you should make every effort to remedy the situation through undertaking additional reading and/or practice. Do not hesitate to ask for advice.
The University’s Student Learning, Research and Language Skills Service offers assistance in a variety of areas, including writing skills, study skills, examination preparation skills and stress management. The service is located on the second floor of the Guild Village, south entrance/exit and can be contacted by telephoning 6488 2423 or 6488 2258. The Law Library offers regular classes to improve legal research skills.
Unit-specific prerequisites
Prerequisites : Legal Process (LAWS1130)
Property 1 (LAWS2204)
Property 2 (LAWS2205) Co-requisite :
Unit structure
Seminars/Lectures
All teaching is in the form of seminar/lecture classes; there are no tutorials. You should sign up through the online class registration for one group and remain in that group for all classes. Each group meets for three hours of seminars each week. To achieve the advantages offered by (relatively) small group work, and to fit into allocated rooms, limits on class size will be strictly enforced. After the second online allocation, changes from one group to another may only be made in exceptional cases, and must be approved by the course coordinator (Tony Buti).
Attendance at and participation in classes is not compulsory and is not assessed.
However, students who do not regularly attend and participate in class tend not to do well in this unit.
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Unit Outline – Trusts LAWS2203
The Unit is divided into three parts:
Part One: Weeks 1 to 4
Introduction and Overview of Trust Law (The aim of this part is to provide a concise but abbreviated account of the general principles of trusts law.)
Part Two: Weeks 5 to 8
Group Presentations: Administration of Trusts (See under assessment.)
Part Three: Weeks 9 to 12
Special Topics (The aim here is to build on Part One by looking in depth on a number of selected special topics.)
Week 13 will be devoted to revision.
Charter of student rights and responsibilities
This Charter of Student Rights upholds the fundamental rights of students who undertake their education at the University of Western Australia.
It recognises that excellence in teaching and learning requires students to be active participants in their educational experience. It upholds the ethos that in addition to the University's role of awarding formal academic qualifications to students, the
University must strive to instil in all students independent scholarly learning, critical judgement, academic integrity and ethical sensitivity. The Charter also recognises that students are central to a dynamic University community. In doing so, the University recognises the importance of student rights, responsibilities and opinion and encourages diversity within the student body,
For the full text of the charter, please refer to http://www.secretariat.uwa.edu.au/home/policies/charter
Student Guild contact details
The University of Western Australia Student Guild
35 Stirling Highway
Crawley WA 6009
Phone: (+61 8) 6488 2295
Facsimile: (+61 8) 6488 1041
E-mail: enquiries@guild.uwa.edu.au
Website: http://www.guild.uwa.edu.au
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Unit Outline – Trusts LAWS2203
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Unit Schedule 2008
Week
1
2
3
Topic
Introduction; The Nature of a Trust;
Trusts and other legal relationships
Essentials of Express Trusts
Formalities for Establishing an Express
Trust; Legality of Trusts; Completely and
Incompletely Constituted Trusts
Charitable Trusts; Resulting Trusts;
Constructive Trusts; Discretionary Trusts
Group Presentations
Group Presentations
Group Presentations
Group Presentations
Remedies for Breach of Trusts
Personal Remedies against Third Parties
Resulting Trusts
Constructive Trusts
Revision
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Unit Outline – Trusts LAWS2203
Unit Website
This unit information and other handouts are/will be available online on the Trusts unit website at: http://www.lawstudents.law.uwa.edu.au/undergrad/units/laws2203
Students should click on the link to "Unit materials" on the right hand side, shaded column and login by entering their Person ID and Password.
Other useful resources include a discussion board and announcement page and links to further internet resources. We encourage you to visit this site regularly to access course related materials, the discussion and announcements page.
If you experience login problems please refer to the "Login Trouble Shooting Guide" at http://www.lawstudents.law.uwa.edu.au/undergrad/units for further assistance.
Textbooks
There is no single required text. In addition to the Trustees Act 1962 (WA), you may find the following of some use:
(a) Heydon and Loughlan, Cases and Materials on Equity and Trusts, 6 th ed,
2002 . It contains extracts of many of the cases to be discussed in the course.
Alternatively, students can access the full case reports through the library.
(b) All students have free access to Ford and Lee, Principles of the Law of
Trusts . This excellent, detailed work can be accessed online through the library
(go to SuperSearch, click on “Find Resource”, then type in “LawBook Online”, then look under Equity/Trusts.)
(c) Students may have purchased Dal Pont and Chalmers, Equity and Trusts in
Australia, 4th ed, 2006 for the Equity course . This book can be used as a text for the Trusts course.
(d) Alternatively, students might use Douglas and Knowler, Trusts in Principle,
Lawbook Co, 2006. This slim book provides a useful introduction to most of the issues covered in the course and could be used effectively in conjunction with
Ford and Lee. Douglas and Knowler would be a good starting point in preparing for each topic, provided students supplement it by reading the assigned cases and, where greater detail is needed, by referring to Ford and Lee.
(e) Heydon and Leeming,
Jacobs’ Law of Trusts in Australia
, 7 th
ed, 2006 is another more detailed reference work, which will be of use primarily in relation to preparing for the presentations.
It is recommended that students read selected cases as referred to rather than extracts in casebooks. Trusts is a course where students can benefit immensely from reading the cases.
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Unit Outline – Trusts LAWS2203
Unit Reserve and Course Materials Online
Copies of all texts are in Closed Reserve.
During the duration of the unit, additional course materials (such as relevant journal articles, book chapters and law reform reports) may be referred to which will be made available through ‘Course Materials Online’. Course Materials
Online (CMO) can be accessed through the Library’s website at http://www.library.uwa.edu.au/find_information/find_course_materials
Additional reading material may be placed in Closed Reserve from time to time.
Assessment
Marks will be allocated as follows:
25% for a class presentation on an assigned topic.
The presentations will take place in classes in weeks 5 to 8 of the semester.
(Further details of the requirements for the presentation will be provided in the first class (Monday or Tuesday of week 2 of semester); and
75% for the final examination at the end of the semester.
The exam will be of two hours duration (plus 10 minutes reading time) and will be open book.
In this unit, supplementary assessment will only be available to a student who is in the final semester of the Bachelor of Laws course and who receives a final mark of 45 to 49 per cent inclusive, provided that Trusts is the one remaining unit that the student must pass to complete the course.
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Unit Outline – Trusts LAWS2203
GENERAL RULES, POLICIES AND PROCEDURES FOR ALL LAW
UNITS
The Law School has a range of rules, policies and procedures that apply to all units unless expressly varied by the unit coordinator. They should be read in conjunction with this unit outline. A summary of the general rules, policies and procedures can be found at http://www.lawstudents.law.uwa.edu.au/ or in hard copy available from the Law School office, ground floor, Law Link Building.
As the rules, policies and procedures are updated from time to time, students should ensure that they consult the latest version. The version applicable to this unit is the January 2008 edition.
The summary of the general rules covers the following:
Ethical Scholarship, Academic Literacy and Academic Misconduct
Academic Conduct Essentials (ACE)
Equity and Diversity in the Law School
Use of Inclusive Language
Students with Special Needs
Lectopia
Where to Direct your Enquiries
Contacting Staff in the Law School
Assignments:
How to submit your Assignment
Obtaining an Assignment Cover Page – the Assignment Cover Page
Generator
Extensions
Late Submission of Assignments
Exceeding Word or Page limit
Handing back and collecting assignments
Assessment:
Deferred Exams
Requests for Special Consideration
Supplementary Exams
Appeals Against Academic Assessment
Scaling
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Unit Outline – Trusts LAWS2203
READING GUIDE
Part One: Introduction and Overview of Trust Law
Week One
Introduction and the Nature of Trusts
Generally an introduction to an area of law includes a definition. This is difficult with trusts law but there is no one definition of trusts which is comprehensive and unexceptional. But many have made attempts at descriptions of trusts. Such descriptions of included the following: a trustee; equitable obligations of the trustee; trust property; and a beneficiary.
Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482
Hardoon v Belilios [1901] AC 118 at 123
Trust compared with some other concepts and relationships
In examining the main features of other legal relationships, such as agency, bailment, debt, and contract, one can better understand the trust by contrasting it with other concepts.
Quistclose Investments Ltd v Rolls Razor Ltd (In Liq) [1968] 1 Ch 540
Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676
Week Two
Essentials of Express Trusts
When a trust is created either by transfer or by ownership or declaration of trust, certain elements are required for a valid trust: the three certainties of intentions, subject matter and object; completely constituted; and formalities. Also there must be no illegality.
Certainty of intention
The primary question must be whether the person disposing of the property (the
‘settlor’) intended any legally binding obligation to attach to the transfer at all.
Commissioner of Stamp Duties v Jolliffe (1920) 28 CLR 178
Re Armstrong [1960] VR 202
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Unit Outline – Trusts LAWS2203
Certainty of subject matter
The requirement is that the property, or the extent of each beneficiary’s share, should be ascertainable ; it need not be ascertained.
Palmer v Simmonds (1854) 61 ER 704
Re Golay (decd) [1965] 2 All ER 660
Certainty of object
In this area it is necessary to consider the requirements not only for trusts (fixed and discretionary), but also for powers of appointment. To be able to apply the appropriate test for certainty, one must first be able to characterise the provision in question; is it a fixed trust, a discretionary trust of a power of appointment?
Once the provision has been characterised, one must apply the relevant test for certainty of objects.
In addition to the requirements of certainty, discretionary trusts must also be
‘ administratively workable
’.
Morice v Bishop of Durham (1804) 9 Ves Jun; 32 ER 656
McPhail v Doulton [1971] AC 424
Purpose Trusts
Generally trusts for particular purposes are void. If, however, the purposed is one recognised by law as charitable, the trust is valid. But there are exceptions to the general rule, such as the anomalous group (animal and tomb cases) and Re Denley type trusts.
Re Astor’s Settlement Trusts [1952] Ch 534
Re Dean 91889) 41 Ch D 552
Re Denley’s Trust Deed
[1969] 1 Ch. 373
Dispositions to Unincorporated Associations
The crucial issue here is whether the disposition is to the present members of the unincorporated association at the time the instrument takes effect. If the answer is yes, the disposition is valid.
Leahy v A.-G (NSW) [1959] AC 457
Bacon v Pianta (1966) 114 CLR 634
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Unit Outline – Trusts LAWS2203
Week Three
Formalities for Establishing an Express Trust
Inter vivos dispositions of equitable interests
A beneficial interest under a trust is a property right in itself and may be disposed of by the beneficiary as he or she thinks fit. However, because of s.34(1)(c)
Property Law Act 1969 (WA), any disposition of an equitable interest must be in writing signed by the person disposing of the interest. Other parts of s.34(1) deal specifically with writing requirements in respect to real property. Section 34(1)(a) relates to any interest in land and s.34(1)(b) relates to declarations of trust concerning land.
Law Reform (Statute of Frauds) Act 1962 (WA), s2
Property Law Act 1969 (WA), ss 34, 36, 37
Adamson v Hayes (1973) 130 CLR 276
Testamentary transactions
In general, a person wishing to leave his/her property, whether legal or equitable, to another on his/her death may do so by either making in his will an outright gift or by creating a trust. To do so, he/she must set out the terms of the outright gift or of the trust in writing signed by him/her and witnessed (attested) by two other people.
Wills Act 1970 (WA), s8
Secret Trusts
Apart from the creation of express trusts within a will according to the formalities of the relevant legislation, trusts may arise in wills in a way that is known as a secret trust (fully-secret or half secret).
Blackwell v Blackwell [1929] AC 318
Legality of Trusts
A trust, which arises in circumstances involving an illegality, or is contrary to public policy, will be unenforceable in equity.
Nelson v Nelson (1995) 132 ALR 133
Completely and Incompletely Constituted Trusts
Apart from satisfying the requisite tests of certainty, formality and legality, a trust will only be valid if properly constituted. Essentially, this will mean that the subject matter of the intended trust must have vested in the intended trustee.
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Unit Outline – Trusts LAWS2203
To create a trust by transfer of property to a trustee, it is necessary to do everything to effect the transfer. A mere voluntary promise to transfer property is not sufficient. Where, however, something remains to be done to completely constitute the trust but the transferor (settlor) has done everything, which it was necessary for her or him to do, equity may treat the trust as enforceable.
Failure to comply with the relevant constitutive requirements will, subject to some exceptions, render the intended gift void. The general rule is that ‘equity will not assist a volunteer to perfect an imperfect gift’. There are, however, a number of exceptions to the rule that equity will not assist a volunteer to perfect an imperfect gift. These exceptions are: the rule in Strong v Bird; and Donatio mortis causa.
Milroy v Lord (1862) 45 ER 1185
Corin v Patton (1990) 169 CLR 540
Week Four
Charitable Trusts
A charitable trust is a trust to promote one or more charitable purposes. Such a trust does not in terms vest beneficial estates or interests in property in any person, since it is a trust that is devoted to the promotion of a purpose, or of purposes, and not a trust for the direct benefit of persons as individuals or as members of a class of individuals.
Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531
National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31
Church of the New Faith v Commissioner for Payroll Tax for Victoria (1983) 154
CLR 120
Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297
Resulting Trusts (more detail provided in Part Three)
An express trust arises from the affirmative intention of the settlor to create a trust; a resulting trust, in contrast, arises by implications. Resulting trusts are usually classified as presumed or automatic resulting trusts.
Re Vandervell’s Trusts (No 2)
[1974] Ch 260
Constructive Trusts (more detail provided in Part Three)
A constructive trust is a trust judicially imposed on the owner of property, with respect to either a part or the whole of that property, to the extent that it would be unconscionable, notwithstanding the absence of any relevant express or resulting trust of that property, for that owner to enjoy that property beneficially in relation to the person or persons for whose benefit the trust is imposed.
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Unit Outline – Trusts LAWS2203
Muschinski v Dodds [1986] 160 CLR 583
Barnes v Addy [1874] LR 9 Ch 244
Baumgartner v Baumgartner (1987) 76 ALR 75
Discretionary Trusts
Under a discretionary trust, the trustees enjoy discretion (i) to select who, in the designated class of potential beneficiaries, is to receive any benefit, (ii) to decide the amount of any benefit to be paid; and may even have a discretion (iii) to add or exclude other persons to the class of beneficiaries.
Certainty of Beneficiaries under a Discretionary Trust
Under discretionary trusts, the rules of certainty of objects have been reassessed in cases in the last 30 years or so. The effect of these cases has been to assimilate the rules of certainty relating to powers and discretionary trusts (often referred to as trust powers).
Re Gulbenkian’s Settlements
[1970] AC 508
Re Baden’s Deed Trusts (No 1)
[1969] All ER 1016
McPhail v Doulton [1971] AC 424
Re Baden’s Deed Trusts (No 2) [1973] Ch 9
Horan v James [1982] 2 NSWLR 379
The Rule against Delegation of Testamentary Power
Under this rule the testator cannot leave it to another person to make the disposition decision unless the testator has passed the beneficial interest to that person to dispose of as their own. However, there is come conjecture over the status of this rule.
Houston v Burns [1918] AC 337
Tatham v Huxtable (1950) 81 CLR 639
Lutheran Church of Australia v Farmers’ Co-op, Executors & Trustees Ltd
(1970) 121 CLR 628
Part Two: Group Presentations: Administration of Trusts
No required reading list (further details provided in first class, week 2)
Part Three: Special Topics (TBA)
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