Property law

Express trust

• Settlor-trustee-beneficiary (beneficiary has property rights/can sue trustee, equitable owner).
• Inter vivos: settlor takes property + gives it to trustees who hold legal title and give it to beneficiaries or declaration of self as trustee.
• Testamentary: testator gives property to trustee whom gives it to beneficiary via will.
• Valid with 3 certainties and is validly constituted and complies with formalities. 
• Fixed (beneficial share determined by settlor) OR discretionary (trustee has discretion).

Gifts, trusts and power of appointment 

• Gift: gratuitous/voluntary transfer of legal + equitable title from donor to donee.
• Trust: transfer of property from settlor to trustee on behalf of beneficiary (fixed/discretionary).
• Power of appointment: to X with power to distribute to Y (no obligation, Y receives in default)
• Objects of a power: general (anyone's favour), special (any member of specific class), intermediate of hybrid power (anyone but a class).
• Fiduciary power: obligation to consider exercising the power from time to time 

KNIGHT v KNIGHT 1840: Trust can only be created where there is certainty of: intention to create a trust, subject matter and objects, per Lord Langdale.

Certainty of intention

• 'If the words are so used, that upon the whole, they ought to be construed as imperative'- K v K
• Look at substance, don't need words 'trust' 'confidence'.
• Precatory words can confuse e.g. Lambe v Eaves (1871) 'to be at her disposal'- held as a power not obligation.
• Presence of a gift-over is conclusive of power e.g. To X to distribute to Y and Z, default to A.
• FAILED gifts: either intend to make a trust OR gift, cannot claim trust if there's no intent.

Certainty of subject matter

• Trust property must be defined with reasonable certainty: Palmer v Simmonds 1854.
• Testamentary gift of residue will be certain. Re Last 1958
• BUT trust doesn't fail if this is uncertain: "If terms of the trust are sufficient to identify its subject matter in the future" Pearson v Lehman Brothers Finance 2010.
• Share: fixed OR discretionary, if it's for 2 people but no share courts of equity can step in and distribute according to intention.

Certainty of objects

• "Every trust must have a definite object"- Sir William Grant, Morice v Bishop of Durham 1804
• Conceptual certainty (semantic of linguistic), evidential certainty (practical, enables proof of entitlement- fact).
• For fixed/discretionary there's unlikely issues w/conceptual if individual beneficiaries are named but if defined by a class there may be e.g. employees, students.
• Test for FIXED: 'Complete list' + 'Class ascertainability' 
• Test for DISCRETIONARY: 'Is or Is Not' + 'Any Given Postulant'- Lord Wilberforce: trust is valid if it can be said with certainty that any given individual is or is not a member of the class"
• Test for POWERS OF APPOINTMENT: 'Is or Is Not' + 'Any Given Postulant'
• Administrative workabilty/capriciousness: A discretionary trust will be void if 'the meaning of the words used is clear, but the definition of the beneficiaries is so wide as to not form a class.

Result of a failure of any certainty= reflex action= doubts intention of testator.

• If testator declares himself as trustee + it fails, NO TRUST. If it's been transferred and there's lack of intention, taken as absloute gift. 
• If its been transferred to trustee and theres no certainty of SM= NO TRUST.
• If its been transfered to trustree and theres no certainty of objects= RESULTING TRUST.
• If any FAIL in a testamentary disposition, there's NO TRUST.

The Beneficiary Principle

• "Every trust must have a definite object. There must be someone, in whose favour the court can decree specific performance" (Sir William Grant, Morice v Bishop of Durham 1804).
• Trusts in favour of non-human beneficaries/purposes should be void= trusts of imperfect obligation.
• Perpetuity rules are designed to prevent property being tied up for long periods of time.
• Excessive delegation of testamentary power: testator shouldn't delegate their power to another in a manner that cannot be enforced.

Trusts for charitable purposes= VALID

• Charities Act 2011: charitable purpose trusts must be for a charitable purpose, for public benefit and exclusively charitable.
• Re Denley's Trust Deed 1969: Goff J sees them as "outside the mischief of the benficiary principle".
• Reform of purpose trusts? construed as powers OR have enforcer/protector or settlor/testator appointed by the state.

Testamentary trusts

• WILLS ACT 1837, s.9: signing and attestation of wills, not valid unless in writing and signed by testator who gave intention to signature, acknowledged by witnesses who attest/sign it.

Inter vivos trusts

• NO FORMALITIES required: Rowe v Prance 1999- ownership of house boat via unwritten agreement to be shared was sufficient itself to create the trust.
• Trusts of land= Law of Property Act 1925 s.53 instruments required in writing so oral declaration of a trust is valid but UNENFORCEABLE.
• Law of Property (Miscellaneous Provisions) Act 1989, s.2: Contracts for sale of land to be made in writing and only by incorporating all the terms the parties expressly agreed to in 1 document.
• A contract to create a trust of land which doesn't comply with ^^ is void.
• "EQUITY WILL NOT PERMIT A STATUTE TO BE USED AS AN INSTRUMENT OF FRAUD"- Rochefoucauld v Boustead 1897: court held that it's fraud to trustee who knows it was so conveyed, to deny the trust/claim land himself.

Testamentary

• Automatically constituted by a valid will, trust property vested in trustees.

Inter vivos

• Requirements vary whether it's declaration of self as trustee or others; valid declaration or transfer of property to trsutees will be constituted providing formalities are satisfied= trustees have legal title, beneficiary acquires equitable property right.
• Failure to declare settlor as trustee/transfer property to trustee= incompletely constituted= NO trust.
• EQUITY WILL NOT PERFECT AN IMPERFECT GIFT, WON'T ASSIST A VOLUNTEER

Constitution

• Declaration: no need for certain words provided there's evidence of intention: Shah v Shah 2012 "One of the ways of making an immediate gift is for the donor to create a trust".
• Land: conveyances to be by deed (Law of Property Act 1925 s.52)
• Personal property requires a deed/delivery. 
• Where transferor has done all in their power to transfer legal title: Re Rose 1952- LAST ACT DOCTRINE. settlor must've done all in their power to transfer the property.
• Unconscionable for promisor to recall gift (Pennington v Waine 2002).

• Exception to formality principles: equity won't allow statute to be used as an instrument of fraud (deny existence of trust for lack of formality/writing).
• Exception to formality rules in s.9 Wills Act.
• 2 ways they operate: testator leaves property as a gift in will, secret trustee agrees to give it to secret beneficiary inter vivos OR property left to secret trustee on condition they leave it to secret beneficiary upon their death. 
• FULLY SECRET (left to legatee as outright gift) or HALF SECRET (existence in will of trust)

Fully-secret trusts validty requirements 

• Ottaway v Norman 1972 est. 3 requirements: intention, communication, acceptance/reliance. (Kasperbauer v Griffith 2000 used these requirements).
• Intention: intend a legally binding obligation, if this fails= legatee takes it as outright gift.
• Communication: content, timing (before testator's death), method (oral/conduct/envelope). 
• Acceptance of trusteeship: express/implied promise, silence may be sufficient (Moss v Cooper)
• Lack of any requirement= absloute gift. Lack of communication of terms to trustee= holds on resulting trust for testator's estate. 

Half-secret trusts validty requirements 

• Blackwell v Blackwell 1929: est. half-secret trust could be valid. K v G est. structure.
• Intention: will itself is evidence.
• Communication: content (trustee, beneficiary, subject matter), timing (before/with execution of will), method same as fully-secret trusts.
• Consequences of failure= testator-secret trustee-testator (estate/next of kin).

ISSUES with secret trusts

• Contradiction between communication + terms of will.
• Secret trustee/beneficiary witnesses will: Wills Act 1837 s15 Gifts to an attesting will to be boid (must act impartial, no benefit), in a fully-secret trust the trustee cannot witness (FAILS) but it won't in half-secret as long as they don't benefit from it.
• Secret beneficiary/trustee predeceases testator? s.25 Wills Act 1837- Gift lapses, goes back into residuary estate. 
• Secret trustee revokes acceptance: if it's before trustee dies but testator doesn't change their will, in a fully-secret trust the trustee keeps the gift. 
• Trustee revokes acceptance= half-seret trust is held for beneficiary of estate.

Fraud theory 

• "Equity will not allow a statute to be used as an instrument of fraud" s.9 Wills Act.
• Prevents secret trustee perpetuating a fraud, relying on s.9 to keep it as a gift even though they promised to hold on trust. HALF-SECRET= can't have fraud- if it fails- RESULTING TRUST
• Helps prevent fraud on testator and beneficiaries: if trust isn't enforced, beneficiary loses out.
• INEFFECTIVE THEORY.

Dehors the will theory

• Will act is just the instrument that transfers the property to trustee (declaration followed by statement in will).
• Blackwell v Blackwell 1929: secret trusts operate outside the will, not subject to Wills Act.
• Re Snowden 1979: used as a justification- basis of them is that they operate outside of the will so don't need to comply with formalities.
• Possible issues= trust property (gap between declaration of trust + constitution- subject matter may change/uncertain) AND wording for half-secret trust= clearly set out on will so hard to say it operates outside of the will.

Is a secret trust an express OR constructive trust?

• Express: expressly created by settlor/testator, set out intentionally (S-T-B)
• Constructive: arises via operation of law, where it would be unconscionable for a legal owner to deny someone else a benefit in the property (T-B)
• Distinction important due to s.53 (1b) Law of Property Act: declaration of trust of land must be evidenced in WRITING.
• Ottaway v Norman 1972: fully-secret trust of land, courts enforced it despite oral declaration of trust, didn't consider 1b, acceptation suggests it was constructive.
• Argument that fully-secret trusts are constructive and half-secret trusts are express.

Implied trusts: resulting + constructive

• Trusts implied by court where they presume S intended to create trust but didn't express clearly: constructive or resulting arises in relation to family home being purchased.

Resulting 

• When property's transferred to someone then results back (beneficial interest jumps back).
• Presumed resulting trust: voluntary transfer/full payment towards property without more leads to presumption no gift was intended (rebuttable by evidence/counter-presumption).
• Automatic resulting trust: transfer not exhausting the beneficiary as objects lack certainty, absence of intention to pass beneficial interest to recipient.

Constructive

• Agreement between 2 parteis to share ownership but hasn't been formalised at law/equity as an express trust of land. Imposed where it'd be unconscionable for legal owner to deny beneficial interest.
• Arises by operation of law rather than discretion of court.
• Factual scenarious: failure to comply w/formal requirements for interest in land.

Trustee: office dominated by obligation

• Obliged to give effect to dispositions in trust instrument (Equity operates on the conscience of the owner of the legal interest), overriding duty to act in beneficaries' interest.
• Trustee Act s1: have regard to: special knowledge he has/holds himself to have, if he acts as trustee in the course of business to any special knowledge that's reasonable in that profession, 'duty of care'.

Duty and power of appointment 

• Trustee's duty to invest (Byrnes v Kendle 2011- "Even if there's no direction in the trust instrument")
• Trustee's must do the best they can for beneficaries despite personal views: Cowan v Scargrill

Investment powers: statutory framework

• If trust instrument confers investment powers/limits, trustees obliged to give effect otherwise their investment powers are governed by Trustee Act 2000 S.3. 
• Trustees cannot delegate their powers of disposition, but power of investment can.

Power of maintenance 

• Discretionary power: discretion disappears when person w/vested or contingent interest is an adult. (Re Jones' Will Trusts 1947).
• Section 31 Trustee Act 1925: can apply to their education/parent/benefit, any other fund applicable to same purpose or provide for his maintenance and education.
• E.g. Tom to be given £100 when he's 18, if not trustee is in breach, money must generate income or they'd be in BREACH of duty to do so.

Power of advancement 

• S.32 (1) Trustee Act 1925: Trustees may apply/pay capital money subject to a trust, or transfer property forming part of capital money for advancement or benefit of any person entitled to the capital of the trust property.
• If trust instrument contains provisions inconsistent w/statutory power, trust instrument prevails.
• If payments made for a certain purpose, then advancee is under duty to carry out that purpose and trustees are under a corresponding duty to see he did so.

Trustee's power and control

• Courts won't compel trustees to exercise power but if exercised improperly/occasion loss= remedy can be sought (interfere if there's evidence).
• Trustee's aren't obliged to provide beneficiaries w/reasons explaining their decisions in exercising their discretionary powers, their discretion whether execution of trust is confided.
• Beneficiary is entitled to see all trust documents relating to administration of the trrust.
• Any right to see documents depends on est. a beneficial interest= doesn't serve potential beneficiaries under discretionary trusts or mere powers.

Liability for breach

• If there's a breach, trustee's obligation to make good the loss to the trust estate. RULE: trustee in breach of trust must restore/pay to the trust estate either assets which have been lost or compensation.
• s.61 Trustee Act 1925: courts may excuse trustees from consequences of breach of trust if they've acted reasonably/honestly and ought to be excused.
• Courts approach: trustee must satisfy court they've acted reasonbly AND court decides whether they ought fairly to be excused/whether to relieve them wholly or partly from liability

• Resulting trust can arise as equity presumes AGAINST a gift, if a sum of money is given outside certain relations it's assumed you attain an interest in it and resulting trust arises with person who gifted it.
• Statutory schemes for issues on securing propert interest family home: Matrimonial Causes Act 1973, The Inheritance Act 1975, Civil Partnership Act 2004.

Legal titles in both parties

• Hale in Stack v Dowden 2007: onus on person seeking to show the beneficial ownership is different from legal. 
• Sole-ownership case: non-owner must show interest. Joint-ownership: upon joint owner who claims they have other than beneficial interest.
• Jointly held legal title= shared home usually jointly held in equity in equal shares= presumption based on implied intention.
• Not just financial contributions are relevant to divining parties true intentions= advice, discussions at time of trasnfer, reasons why it was acquired in joint names, nature of relations.
• S v D: if the only evidence is party's contribution to purchase price=  beneficial ownershop at time of acquisiton to be held in same proportions as contributions to purchase price.
• If a court cannot deduce intended shares- reasonable persons intention at the time.

Conveyance to one party only

• Prior to Stack v Dowden, most cases were of beneficial ownership claims where legal title was in 1 name only (Lloyds Bank v Rossett 1991): courts focused on parties express discussions + conduct to find intention as to shared beneficial ownership. 
• Party asserting interest claim must show they acted to their detrimed/altered position in reliance on agreement to give rise to a constructive trust OR proprietary estoppel.
• NO EVIDENCE?= direct contributions to purchase price by partner who's not legal owner will justify the inference needed to create a constructive trust.

Express discussions between parties 

• Oral declaration of trust in land is sufficient to create an enforceable beneficial entitlement (s.53 (1) of LPA 1925.
• Constructive trust= experss declaration + person claiming beneficial interest must show they've acted in relaince on declaration.
• Eves v Eves: female led by male to beleive they'd own home jointly. Subsequent conduct led court to give rise to a constructive trust/proprietary estoppel supporting her interest claim.
• Lloyd's Bank v Rosst: female didn't have detrimental reliance- motives not linked to ownership.

Conveyance to one party only 

Implied common intention: financial contributions

• Rely on conduct- evidence of shared understanding of shared beneficial share/detrimental reliance. 
• e.g. decorating doesn't count= Pettitt v Pettitt "no effect on existing proprietary rights' 
• Gissing v Gissing 1971: no intention of beneficial interest if no contributions to mortgage instalments, cash deposit or legal charges.
• Contributions need to be reasonable to acquisition of property to ground a claim to a beneficial interest under a constuctive trust.
• Domestic duties can never be taken to be a common intention for beneficial shared interest.

Quantifying the interests arising 

• Where legal title's in both parties names this is the only question to be answered.
• Where legal title is in ONE name= 2 stage analysis: 1) Court est. whether property is shared beneficially and assuming it is 2) what are the respective interests?
• Role of court in quantifying= ascertain the parties' shared intentions, actual, inferred or imputed with respect to the property' Baroness Hale.

How do trusts of land arise?

• Express trust: s.53 (1) LPA 1925- land/property. Declaration must be manifested + in writing.
• Implied s.53 (2) LPA 1925- resulting or constructive. Don't need to be evidenced in writing.
• Statutory: s34 (2) + 36 (1) LPA 1925- where legal title is conveyed in 2 names. Trust of land is conveyed by statute- imposes a trust (legal + equitable owners).

Co-ownership

• Can be concurrent/successive: arises where property's transferred into joint names via will/intestacy OR when you buy land for another and have impliedly been given an interest in it.
• Successive: one holds life interest + other holds a remainder interest.
• Concurrent co-ownership in equity= sole owner at law but 2 owners at equity.
• Concurrent co-ownership in law= only 1 equitable owner but 2 legal owners. Can arise expressly. 
• Concurrent co-ownership at law+equity= property transferred into joint names, trust is imposed.

Concurrent ownership (two forms)

• Joint tenancy (A+B), (A+B+C+D): Each tenant is wholly entitled to whole of legal/equitable estate. Where these 2 people own property as joint tenants, seen as one owner.
• Tenancy in common, A+B or A+B+C+D: viewed as having shares, treated individually.

Four unities

• Must be present for joint tenacy to exist: must have all 4 to be joint holders. 
• POSSESSION: each tenant is entitled to possession of property, rents/profits divided equally.
• INTEREST: interest held by each joint tenant must be of same extent/nature/duration.
• TITLE: each joint tenant must derive title from same act/documents.
• TIME: each joint tenant's interest must vest at the same time.

Right of survivorship

• On death of a joint-tenant, entire co-owned estate survives to remaining joint tenant (s).
• Avoids probate issues, acts as informal will. If both die simultaneously, eldest 'died first'.

Only joint tenancy at law

• S.1 (6) LPA 1925: 'A legal estate isn't capable of subsisting or of being created in an undivided share of land'. So (A+B)= B rather than (A+B) = B + A's next of kin.
• Facilitates purchase of legal estate as title cannot be fragmented.
• Max number of co-owners of land is FOUR: doctrine of survivorship ensures this reduces.

Joint tenancy available in equity

• Can choose to hold in equity (must be joint tenants as co-owners in law) e.g. 2 co owners at law but they;ve chosen to be the joint tenant beneficiaries. 

Tenancy in common 

• Parties own undivided shares in land. Co-owners in property, can be unequal shares.
• Only unity of POSSESSION needed and NO SURVIVORSHIP. Can pass on/sell share.
• ONLY available in equity: 'A legal estate isn't capable of subsiting or of being created in an undivided share of land' S.1 (6) LPA 1925.

Forms of co-ownership

• LAW: legal owners must hold as joint-tenants + statutory trust of land's imposed.
• EQUITY: equitable co-owners may hold as joint tenants OR tenants-in-common.
• Lack of unity of interest/time/title= TENANCY IN COMMON, NOT joint-tenancy.
• Words of severance: language from which it can be inferred that co-owners are intended to hold shares in land: 'equally' 'divided between' 'equal/unequal shares'.

Presumption of joint tenancy

• Stack v Dowden 2007: a conveyance comes into joint names indicates both legal and beneficial joint tenancy, unless and until the contrary is provided'
• Jones v Kernott 2011: 'presumption can be rebutted by evidence of a contrary intention, which may more readily be shown where the parties didn't share their financial resources'

Presumption of tenancy-in-common

• Contributions in unequal proportions where property's purchased in joint names (undomestic) or finding of a resulting/constructive trust where property was purchased in sole name.
• 'exceptional circumstances'- domestic cases- evidence of common intention that equitable interest shouldn't be held as joint tenants= NO SURVIVORSHIP

Severance

• Process of separating off the share of a joint tenant so concurrent ownership continues but right of survivorship no longer applies= Parties hold separate shares as tenants in common.
• No severance of joint tenancy in a legal estate (can only hold as joint tenants AT LAW)
• Can sever equitable ownership to make tenancy in common in equity.

Effect of severance 

• Mutual severance: joint tenants= tenants in comon (A+B+C) = A+B+C each own a third.
• Unilateral severance: (A+B+C)= (A+B) +C, A and B are joint tenants, C is tenant in common.
• Doesn't affect A+B as they're joint tenants through survivorship, unilateral only affects party severing.

METHODS of severance 

Must be inter vivos 

• Survivorship takes effect upon death of joint-tenant: Gould v Kemp 1834: CANNOT sever by will, must be inter vivos. 

METHODS of severance 

Unilateral severance by statutory notice in writing

• NO prescribed form but must EXPRESS desire to sever with immediate effect.
• Burgess v Rawnsley 1975: suggests simple act of serving the documents is enough.

Law of Property Act requirments for serving written notice

• Must be left at last known place of abode of business in UK of person to be served.
• Can be served via post of registered letter addressed to person.
• Posting is the requirement; act constituing serverance SO anything done with it after doesnt matter.

Act operating on joint-tenants share

• Joint tenancy can be severed in 3 ways: each tenant is at liberty to dispose of his own interest in such a manner as to sever it from joint fund- losing right of survivorship. Voluntary/involuntary act.
• MUTUAL AGREEMENT: must relate to co-ownership, need conclusive negotiations.
• MUTUAL CONDUCT: by any course of dealings is sufficient to indicate interests of all were mutually treated as constituting a tenancy in common.
• CONDUCT short of AGREEMENT but indicates COMMON INTENTION: long-term assumptions regarding co-ownership, mutual wills, physical conversion of property.

Trusts of Land

• Governed by LPA 1925: immediate duty to sell the land held on trust, subject to a power to postpone sale.
• Trusts of Land and Appointment of Trustees Act: 'trust of land' is ANY property. Trust can be express, implied, resulting, constructive, bare.
• Abolition of doctrine of conversion: where land's held by trustees subject to a trust for sale, land isn't to be regarded as personal property.
• Express trusts for sale as trusts of land: power of trustees to postpone sale, aren't liable for doing so, in their discretion.

Powers + duties of trustees: general powers

• Powers of an absloute owner BUT w/regards to beneficaries rights, have a 'duty of care' Trustee Act s.1.
• Consult w/beneficiaries: consult them of when they're beneficially entitled to possession.

Beneficiaries rights

• Right to occupy if: trusts' purposes include making land available for their occupation.
• BUT subject to s.13 whereby trustees' discretion to exclude/restrict/make conditional the right to occupy for individual beneficaries but cannot prevent a beneficiary currently occupying from doing so.

Judicial resolution of disputes

• CHHOKAR V CHHOKAR 1983: lived in house in husband's sole name, both contributed to purchase price. Separated and he arranged sale without her knowing.
  
• She was excluded from property and new owner. Wife claimed overriding interest in property.
• ISSUE: Land Registration Act 2002: registered disposition of property can be overridden by the interest of a person who was in actual ocupation at time of disposition...
• Wife contended she'd been in occupation the whole time despite temporary absence. 
• HELD: she was in actual occupation (furniture still there) and occupation wasn't lost by her temporary absence.
• BUT purchaser was given credit for having paid mortgage, + Court declared wife + Purchaser to be tenants in common in equity (equal shares subject to this credit).