Equity and Trust Coursework
Unlike the common law, which has a set boundary of rules and regulations, equity does not have a concrete structure due to its complex historical background[1]. Trust, governed by the laws of equity, is a unique creation of common law and is often dealt with challenging and versatile series of events. This problem involves complex areas from topics of formalities, constitution of trusts, and covenants to settle. In this essay, I will fully concentrate on whether each section of the trust is enforceable, and the effects that the 2006 will could have brought about towards the trust.
Covenant – Constitution of Trust
a) On our first issue, we would have to consider the written covenant by Angelina in 2005. Her first intention was to make a discretionary trust for her children, but would the trust be enforceable just because it was written in a deed? The basic meaning of a covenant is a formal way in which the common law allows a person to make binding promises. Unlike contract, a covenant can be enforced in the common law regardless of consideration. But in equity, the trust would be held insufficient unless all formalities have been administered, which in our current situation, the trust was incompletely constituted. The main issue arose when none of the personal possessions listed on the covenant was transferred to Brad, the trustee. To add on the problem, there was no evidence that the children have provided consideration for Angelina’s promise, therefore they were merely volunteers under equity where it should completely render the trust unenforceable. This was shown in the famous axiom in Milroy v Lord[2], Turner J denotes: ‘Equity will not assist a volunteer to perfect an imperfect gift.’ What this means is, equity simply will not assist a person to become a beneficiary under a trust, unless the trust is fully constituted or if the person is already a beneficiary, then it would not matter if the person provided consideration. Equity will not
Covenant – Constitution of Trust
a) On our first issue, we would have to consider the written covenant by Angelina in 2005. Her first intention was to make a discretionary trust for her children, but would the trust be enforceable just because it was written in a deed? The basic meaning of a covenant is a formal way in which the common law allows a person to make binding promises. Unlike contract, a covenant can be enforced in the common law regardless of consideration. But in equity, the trust would be held insufficient unless all formalities have been administered, which in our current situation, the trust was incompletely constituted. The main issue arose when none of the personal possessions listed on the covenant was transferred to Brad, the trustee. To add on the problem, there was no evidence that the children have provided consideration for Angelina’s promise, therefore they were merely volunteers under equity where it should completely render the trust unenforceable. This was shown in the famous axiom in Milroy v Lord[2], Turner J denotes: ‘Equity will not assist a volunteer to perfect an imperfect gift.’ What this means is, equity simply will not assist a person to become a beneficiary under a trust, unless the trust is fully constituted or if the person is already a beneficiary, then it would not matter if the person provided consideration. Equity will not
Bibliography: Cases • Brooks Settlement Trust, Re (1939) 3 ALL ER 920 • Cannon v Hartley (1949) 1 All ER 50 • Cavendish Browne’s Settlement Trust, Re (1916) WN 341 • Ellenborough, Re (1903) 1 Ch 697 • Fletcher v Fletcher (1844) 14 LJ Ch 66 • London Wine Co., Re (Shippers) Ltd (1986) PCC 121 • Milroy v Lord (1862) 31 LJ Ch 798 • Pennington v Waine (2002) EWCA Civ 227 • Pink, Re (1912) 1 Ch 498 • Pryce, Re (1917) 1 Ch 234 • Ralli’s Will Trust, Re (1963) Ch 288 • Rose, Re (1952) 1 All ER 1217 • Steward, Re (1908) 2 Ch 251 • Strong v Bird (1876) LR 18 Eq 315 Books • A.J. Oakley, The Modern Law of Trusts (London Sweet & Maxwell 2003) 8th edition • Hackney, Understanding Equity and Trusts (London, Fontana Press, 1987) • J.E. Penner, The Law of Trusts (Oxford University Press, 2006) 5th edition • Philip H Journals • Elliot, ‘The power of trustees to enforce covenants in favour of volunteers’ (1960) 76 LQR 100 • Garton, ‘The role of the trust mechanism in the rule in Re Rose’ (2003) Conveyancer 364 • Hayton, ‘Hayton and Marshall: Commentary on the Law of Trusts and Equitable Remedies’ (2001b)‘ 110 LQR 335 [2] Milroy v Lord 31 LJ Ch 798 [3] Hackney (1987) Understanding Equity and Trusts [4] Re Pryce (1917) 1 Ch 234 [5] Eve J’s reasoning in Re Pryce [7] Wigram VC in Fletcher v Fletcher (1844) 14 LJ Ch 66 [8] C E F Rickett [1979] CLP 1, Modern Equity, 16th edn, pp136,137 criticized the decision to be not workable [9] Cannon v Hartley (1949) 1 All ER 50 [10] ReCavendish Browne’s Settlement Trust (1916) [11] Elliot (1960) ‘The power of trustees to enforce covenants in favour of volunteers’ 76 LQR 100 [12] Hayton ((2001b), ‘Hayton and Marshall: Commentary and Cases on the Law of Trusts and Equitable Remedies’ 11edn, 254 et seq (London: Sweet & Maxwell) [13] Re Rose (1952) 1 All ER 1217 [14] Pennington v Waine (2002) EWCA Civ 227 [15] Garton (2003) ‘The role of the trust mechanism in the rule in Re Rose’ Conveyancer 364 [16] Re Ellenborough (1903) 1 Ch 697 [17] Re London Wine Co. (Shippers) Ltd (1986) PCC 121 [18] From academics: J E PENNER, Robert Pearce, John Stevens, AJ Oakley [19] Wills Act 1837 [20] Strong v Bird (1876) LR 18 Eq 315 [21] Emphasized on Philip H Pettit “Equity and the Law of Trusts” [22] Re Pink (1912) 1 Ch 498 [23] Re Stewart (1908) 2 Ch 251 [24] Ibid 10 [25] Re Ralli’s Will Trust (1963) Ch 288 [26] Ibid 21