Case Name Facts of the case / Court
‘The Three Certainties’
Knight v Knight The three certainties required:
1. Certainty of Cases below
words or
intention
Distinction:
Imperative words
vs Precatory words
Lambe v Eames property left by testator to his widow
‘to be at her disposal in any way she
may think is best, for the benefit of
herself and her family’ ->> widow
gave part of the assets by will to
someone who was not a member of
the family ->>
The importance of construction of
the particular words and
circumstances shown by comparing
the cases ->
Re Adams ‘in full confidence’ -> was in the
context of an outright gift
Point of law Cross Reference / Additional Notes
1. Words or intention (to create a trust)
2. Subject matter (the property subject to the
trust)
3. Objects (beneficiaries)
‘Equity looks to the intent (‘substance’) rather than the
form’ -> a matter of construction for each case.
Imperative words: showing an intention to create a Turning point case below
legally binding obligation, which will create a trust; and
Precatory words: merely expressing a hope or wish,
rather than imposing an obligation, which will not
generally create a trust. -> How certain is certain when
Precatory words are used? -> older cases tend to find a
trust, whilst modern cases lean against finding a trust
held the widow was absolutely entitled to the property
and could make a valid gift of it to anyone -> James LJ -
> testator made an outright gift and not a trust, hence
valid
Re Adams and the Kensington Vestry and Comiskey v Phrases -> ‘in full confidence’ may or may
Bowring-Hanbury ->> cases below ->> from these not impose a trust ->> crucial factor is
cases it can be seen ->> where the words are held not whether the context of the will as a whole
to impose a trust on the donee, she/he takes indicates that this was the testator’s
absolutely ->>>> intention.
The testator left his property to his wife absolutely “‘in
full confidence’ that she will do what is right as to the
disposal thereof between” his children in her lifetime
1

Comiskey v ‘in full confidence’ -> was in the
Bowring-Hanbury context created a trust
Evidence of Cases below
Intention
Paul v Constance An intention to create a trust was
found where a man had told his
cohabitant that the money in his
bank account was as much hers as his
and ordered half the money to be
paid to her after his death, rather
than pass to his wife ->>
Azam v Iqbal
Re Kayford Mail-order company feared going
into liquidation -> may pay
customers’’ money into separate
or by her will ->> held she took property free from any
trust in favour of the children
T left his estate and property to his wife ‘absolutely, in
full confidence that she will make such use of it as I
should have made myself, and that at her death she
will devise it to such one or more of my nieces as she
may think fit. And in default of any disposition by her
thereof by her will or testament I hereby direct that all
my estate and property acquired by her under this my
will shall at her death be divided among the surviving
said nieces.
Where there is no ‘document’ creating a trust -> the
court must look at the words and/or conduct of the
parties to see if there was an intention to create a
trust
Bridge LJ -> question was whether in the circumstance Problem from this ->> how does one know
‘Mr C had done something which was equivalent to if there is a trust if there is no clear point
declaring himself a trustee of the moneys in the of declaration? Where are the clear words
account for himself and Mrs P in equal shares’ giving an unequivocal demonstration of
the settler’s intentions? Why was she not
Scarman LJ -> this was a borderline case because one a JT and so entitled to the whole under
could not pinpoint a specific moment of declaration the right of survivorship, as the conduct
but in all the circumstances the discussion on would seem to imply a JT?
numerous occasions between Mr C and Mrs P
constituted an express declaration of trust ->>
A trust cannot arise if the relevant language reveals
that the payer of money to a payee only intended
debtor-creditor relationship to arises, and the payee
being free to mix the money with his own and deal
with it as he pleases
This will amount to a trust of the moneys for the See case below
customers ->>
2
 bank account opened for purpose of
protecting them from merely being
debtors of the company if not
receiving their ordered good ->>>>
Moriarty v Various
customers of BA
Peters plc
2. Certainty of
Subject Matter
Palmer v Testatrix...‘for his own use and
Simmonds benefit...and..Leave the bulk of my
said residuary estate’ to specified
persons.
Cases below
Re London Wine Wine supplier went into liquidation ->
the C could not claim priority over
other creditors by saying that
particular bottles of wine were held
on trust for them.
Re Goldcorp Purchasers of bullion, who had paid
Exchange for it but not taken delivery, claimed
rights to it on the insolvency of the
company ->>
Hunter v Moss Moss owned 950 shares of a private
company -> orally declared himself
Where money/cheque paid into overdrawn account of More cases on lecture slide regarding
the company -> the money disappears in discharging commercial context ->> see very
the company’s debts -> and no trust fund is ever important!!
constituted.
Certainty of subject matter comprises certainty of: Importance of words used in their
1. Property -> certain what property is subject to particular context.
the trusts
2. Beneficial entitlements -> certain what part or
share of the property each beneficiary is
entitled to where there is a fixed trust as
opposed to a discretionary trust.
‘The bulk of my estate’ -> not sufficiently certain for a
trust, so done took the property absolutely.
A trust of an unidentified section of chattels (tangible
property) will fail, whereas a trust of an unidentified
section of intangible property, such as shares, is valid.
Buyers of wine stored in various warehouses could not
establish a trust of particular bottles as the bottles had
not been segregated or identified in any way.
Claims rejected, apart from a group whose bullion had In contrast see case below
been segregated -> no trust for the others as there was
no identifiable property on which any trust could
attach.
Collin Rimer QC (judge at first instance) -> thought it Intangible property
significant that the subject-matter of the trust was
3
 trustee of 5% of the issued shares ->
5% amount to 50 shares -> this was
held -> to be sufficiently certain even
though no particular 50 shares had
been identified as subject to the trust
->>>
Pearson v Lehman At 232 and 239
Brothers
Boyce v Boyce Testator his houses to trustees on
trust for his widow for life -> after her
death in trust to convey to his
daughter Maria one of the houses,
whichever Maria should choose, and
the convey ‘all my other houses’ to
his daughter Charlotte ->>>
Re Golay’s Wills Testator directed his executors to
Trusts allow the beneficiary to ‘enjoy one of
my flats during her lifetime and to
receive a reasonable income from my
other properties’ ->>
intangible, since tangible assets, although apparently
similar, may have distinguishing characteristics -> e.g.
some bottles of wine might have deteriorated. ->
Intangible property however is all the same, provided
the shares are of the same class, so there is no need to
identify which 50 shares are being held on trust.
Dillon LJ (CA judge) -> accepted, but added -> all
shares have to identical
After all, paid up shares are issued without any
distinguishing numbers, so that the issue is an
indivisible bulk of intangible fungibles, all share owners
being co-owners of the bulk -> if one of them purports
to transfer 50 or declare a trust of 50, he is not dealing
with 50 identifiable units of the bulk but with a fraction
of the bulk corresponding to the proportion between
the 50 and the total number of shares -> it is
convenient and natural to refer to the numbers of
shares rather than to fractions of share capital -> the
conversion of numbers into fractions creates the
necessary certainty.
Maria dies in the testator’s lifetime and so could not Beneficial interest? Who gets what?
choose any particular house -> therefore impossible to
ascertain share ->>
Consequently the trust in favour of Charlotte was void
as it was uncertain what property the trust applied to.
Held -> trustees could select flat but the question
arose as to whether the direction for a ‘a reasonable
income’ was void for uncertainty -> held -> gift valid
4
3. Certainty of
Objects
Morice v Bishop of
Durham
Test for certainty The test of certainty of objects
of object depends on the type of trust ->>
McPhail v Doulton HL relaxed the test for discretionary
trusts, adopting the less strict test
which applies to mere powers of
appointment ->>
Re Gulbenkian’s Test for powers of appointment
Settlement Trusts
IRC v Broadway Test for fixed interest trust ->>>
Cottages Trust
McPhail v Doulton Prior to McPhail v Doulton it was
thought that the ‘list test’ applied to
discretionary trusts ->>> however
McPhail (Lord Wilberforce) held that
the test for certainty of objects in a
discretionary trust is the ‘is/is not
test’, not the ‘list test’
Sir William Grant MR -> a trust must be for
ascertainable beneficiaries -> the objects of a trust
need to be certain so that the trust can be enforced in
their favour by the court, if necessary.
A greater degree of certainty is required for a fixed Cases below
interest trust than for a discretionary trust or for
powers of appointment
Lord Wilberforce -> deliberately characterised the Cases analysed in detail below
powers of trustees of a discretionary trust as ‘trust
powers’ because the trustees were under a duty to
exercise those powers -> while the trustees were
under no such duty in respect of mere powers of
appointment
Lord Upjohn -> valid if it can be said with certainty
whether any given individual ‘is or is not’ a member of
the class and does not fail because it is impossible to
ascertain every member of the class
‘list test’ -> it must be possible to draw a complete list
of all the beneficiaries
Lord Wilberforce -> reasons for adopting the ‘is/is not test for discretionary trusts
test:
1. The court should try to give effect to the
settlor’s intentions
2. Equal division would often not be the most
appropriate method for this type of trust
3. Although the trustees have a duty to consider
the range of possible beneficiaries and select
from the class -> this does not mean that ‘they
must have before them, or be able to get, a
5
 complete list of all possible objects.
Lord Wilberforce distinguished between conceptual
certainty and evidential certainty

Conceptual certainty -> refers to the precision of

language used by the settlor to define the class of
persons whom he intends to benefit

Evidential certainty -> refers to the extent to which

the evidence in a particular case enable specific
persons to be identified as members of the class

Fixed trust ->requires both conceptual and evidential

certainty in order to draw up a complete list of all
beneficiaries

Discretionary trust -> the is/is not test requires only

conceptual certainty and not evidential certainty.

Lord Wilberforce further said that even if the class is

conceptually certain, making the discretionary trust
valid -> it may be void for administrative
unworkability -> considered in detail below after
analysing how the is/is not test was applied. (very
imp.)
Analysis of is/is not Analysis/interpretation was varied in The current standing test is McPhail-Lord test for discretionary trusts
test the case of Re Baden’s where there Wilberforce but in the exam, in order to get a
were three different first, you have to go through all the Judges Case below
judgements/interpretations ->>> approach in Re Baden showing you have the
knowledge and then restate the current
approach of McPhail-Lord Wilberforce and
then apply to the facts!!!!!! Very important!!!

6
Re Baden’s Deed The three Lords Justices gave three Sachs LJ -> accepted that the term ‘relative’ is test for discretionary trusts
Trusts (No.2) different judgments, none free of conceptually certain -> ‘a person is a relative of an
problems ->> employee if both trace legal decent from a common
ancestor’ -> (too wide? How wide?)
After one has established that the class is conceptually
certain/(sufficiently clear), then it is for each claimant
to prove that he is within the class. -> this is a question
of evidence (evidential certainty)
The class of relatives is ‘capable of almost infinite
expansion, but proof of relationship soon becomes
extremely difficult in fact -> that factor automatically
narrows the field within which the trustees select -> in
other words, conceptual certainty difficulties may be
resolved by evidence.

Megaw LJ -> adopted a test suggesting that a

discretionary power would be valid if it could be shown
that one or a few persons clearly fell within the
beneficial class even though it was uncertain whether
or not others fell within such class -> (problem ->
should he not first have to find the class of objects
conceptually certain first before considering which
individual, as a matter of evidence, are within it?)

Stamp LJ -> seems to accord with the test set out by

Lord Wilberforce -> Stamp LJ makes it clear that the
test is being applied at the conceptual level and makes
explicit the need for a test for certainty of objects by
saying -> unless one knew the size of the class, he
knew of ‘no principle upon which (a survey of the range
of objects or possible beneficiaries) could be conducted
or where it should start or finish -> if the test is merely
satisfied by substituting a dictionary definition or

7

Administrative Case below
Unworkability
R v District Auditor
ex p WYMCC
Re Manistry’s The above does not seem to apply to
Settlement powers on the basis that while the
courts cannot positively compel
trustees to exercise powers of
appointment -> it can positively
compel trustees to exercise their
discretionary trust powers -> so the
court must be in a position to carry
out its positive function ->>
something similar for a troublesome term e.g.
relatives-> that only puts back the problem further ->
therefore he considered the wider meaning of the
term ‘relatives’ as descendants of common ancestors
to be conceptually uncertain for it to be considered as
is/is not -> this was accepted by Sachs and Megaw
Further -> he held for it to be certain adopting a
narrow meaning -> ‘next of kin’ (instead of relatives)
to enable one to say whether a given individual is/is
not within that narrow category ->> therefore where
the term ‘relative’ is used, it should be construed as
‘next of kin’
This is the third point considered by Lord Wilberforce test for discretionary trusts
in McPhail -> he said that even if the class` is
conceptually certain, making the discretionary trust
valid -> it may be void for administrative unworkability
->> this applies for discretionary trusts but this does
not apply for powers of appointment ->>> see
contrasting cases below
‘the inhabitants of West Yorkshire’ -> being 2.5million Discretionary trust
people -> was conceptually certain but was considered
by Lloyd LJ that the trust was ‘quite simply
unworkable’
Templeman J ->> ‘a power cannot be uncertain merely Powers of appointment
because it wide in ambit’ -> thus a discretionary trust
for everyone in the world except the Excepted Class is
void, but the trustees’ powers of appointment in
favour of everyone in the world but the Excepted Class
is valid. ->> since a trustee’s powers of appointment is
a fiduciary one -> can be challenged in court if it is
alleged that it was not exercised in good faith for the
purposes for which it was conferred by the settlor but
8
 perversely to any sensible expectation of his -> one (a
fiduciary e.g trustee) would have thought that this
required some administrative workability for the court
to be able to have proper ground for negatively
interfering to declare the exercise void or grant an
injunction to restrain an intended exercise of the
power. ->>> in other words ->> the trustee/(fiduciary)
would have to obtain an order from the court or the
he/she will be in breach of fiduciary duty even though
it is common sense that such is too wide and void.
Gift subject to a Very Important!! ->>>> It is important to decide whether a particular gift is a
condition discretionary trust or a gift subject to a condition
precedent precedent Case below

A case of gift subject to a condition precedent is not a

Re Barlow’s WT The testatrix dies owning a large
collection of valuable pictures ->
some were given to her executor to
hold on trust for sale subject to a
direction that ->>
discretionary trust ->> hence, the test of certainty in
the case of a gift is less strict and is not the ‘is/is not
test’ ->> as demonstrated in Re Barlow WT and Re
Allen.
‘all or any member of my family and any friends of
mine who wish to do so may purchase any of such
pictures’ at the lower of probate value or 1970
catalogue price ->>> held to be a gift subject to a
condition precedent , not a discretionary trust ->>>>
Argument -> what did friends mean?
Whether direction void for uncertainty of
objects? ->>>
Re Allen -> a similar case for gift subject
to condition precedent ->> held that such
a gift for ‘friends’ is valid if it is possible to
say one or more persons qualify even
though it may be difficult to say whether
others qualify or not ->>> as this case had
not been overruled by McPhail, Browne-
Wilkinson J was happily followed by in Re
Barlow’s WT ->>>> NOTE ->>>>
A discretionary trust or power for friends
is void for uncertainty because on cannot

9

Re Allen A direction conferred a series of
options to purchase -> each
conditional on the claimant being a
friend ->> the direction was valid -
>>>
lay down precise requirements for a
friend ->>>NOTE ->>>fixed trusts,
discretionary trust, power of
appointment and gift ->> ARE DIFFERENT
hence have different tests and vary
regarding strictness
Browne-Wilkinson J ->> Valid as anyone could prove
that ‘by any reasonable test he or she must have been
friend of the testatrix’ was entitled to exercise the
option -> further if it had been a discretionary trust,
the word friends would have been too uncertain ->>
therefore the test for certainty of object in a gift
subject to a condition precedent is a objective one ->
the onus is one the claimant to reasonably prove
he/she is a friend (certain minimum requirements for
friendship where provided, which you may or may not
agree)
10
 Feltham [1987] Conv 246 at 248-249
Formalities Such requirements have been analysed to
have (a) a ritual or cautionary function,
requiring a donor to pause and give due
consideration to the transfer, (b) a
protective function, safeguarding against
undue influence and impositions, (c) an
evidentiary function, providing reliable
evidence of the creation of the trust as a
guard against false claims, a guide to the
location of beneficial ownership which
constitutes a link in the chain of beneficial
entitlement and a source of knowledge of
the details of the trust, and (d) a
channeling function, standardising
transactions in an effective way
Declarations in See below
general
Wills Act 1837 s.9 ->> If a person wishes to create a trust on death -> he must
comply with s.9 -> all testamentary dispositions,
including trusts -> must be in writing, signed by the
testator -> in the presence of two witnesses present
at the same time who must attest their witnessing of
the signature of the testator
Paul v Constance Lifetime (or inter vivos) trusts may be declared
informally (orally or even by conduct) -> unless there is
a specific requirement for them to declare in writing.
Rochefoucauld v Lindley LJ at 206 -> Court will not allow a statute to be
Boustead used as an instrument of fraud

11
s.53(1)(b) and (c) Require writing for certain trust NOTE ->
LPA 1925 dealings S.53(1)(c) -> does not apply to the creation of new
trusts
s.53(1)(b) -> only applies if the trust relates to land
Declarations of
trust of LAND
s.53(1)(b) ‘a declaration of trust respecting any Failure to comply with s.53(1)(b) will render the s.53(1)(b) applies to express trusts.
land or any interest therein must be declaration of trust unenforceable, rather than void ->
manifested and proved by some therefore a trust is still valid, but due to lack of writing
writing signed by some person who and signed, the B cannot enforce it, hence
is able to declare such a trust or by unenforceable in law rather than void -> as a result, if
his will’ the settlor orally declares a trust in land, then
subsequently evidenced it in writing, the date of the
declaration would be the date of the original oral
declaration.

s.53(2) Provides that the requirement of s.53(2) -> exempts these trusts from the need for
s.53(1) do not affect the creation or writing.
operation of implied, resulting or
constructive trusts -> e.g ->
Hodgson v Marks -> resulting trust
Bannister v Bannister ->constructive trust
Dispositions of s.53(1)(c) sets out the formalities for
the disposition of a subsisting (pre-
SUBSISTING existing) equitable interest, whether
EQUITABLE in land or pure personalty
INTERESTS in
any property
s.53(1)(c) ‘a disposition of an equitable interest Unlike s.53(1)(b), s53(1)(c) requires the disposition to
subsisting at the time of the be in writing, not merely evidenced in writing -> also
disposition must be in writing signed allows the signature by an agent -> but only if he has
by the person disposing of the same been given written authorisation for this.

12
 or by his agent lawfully authorised in
writing or by will’ -> failure to
comply with s.53(1)(c) makes the
disposition void. ->>
Grey v IRC S (who is also B) gives oral
instructions to his T, he also writes up
a deed confirming the T was
instructed orally. The order was to
transfer his shares that were under
the trust to his grandchildren (S
wanted to avoid tax payment). HELD,
it was a failed attempt to transfer
equitable title to new Bs. (see fact in
more detail in your c.w)
Vandervell v IRC S had equitable interest in shares
held on trust with T. T is instructed
orally to transfer the legal title to RCS
absolutely. Tax people argued that it
was invalid because it did not follow
the s.53(1)(c). HL said where the B
intends to give the new B, legal and
equitable title it can be done orally.
Yet there was a option that the RCS
would sell it to the Ss family trust for
a nominal value at a future time.
However when the shares were
purchased the S family trust did not
specify the Bs and therefore failed for
uncertainty. The shares had to go
back to S on resulting trust, and he
paid the tax
‘Disposition’ -> includes a sale, a gift, an assignment,
and a declaration of trust.
It was submitted that the word ‘disposition’ should be
perceived narrowly based from the Statute of Frauds.
However, Viscount Simonds referring to the ‘plain
question’ arising on the facts, asserted that if the word
‘disposition’ was ‘given its natural meaning, it
cannot...be denied that a direction given by Mr Hunter,
whereby the beneficial interest...theretofore vested in
him became vested in another...is a disposition’.
In other words, were the equitable interest moves,
then it has been subject to a disposition.
A transfer of an equitable interest together with the
legal title is held not to amount a disposition within
s.53(1)(c), and thus is seen as an exception.
Vandervell v IRC ->> provided where a beneficiary
directs a trustee to move the entire absolute interest
in property to new trusts, there does not need to be a
separate disposition of the equitable interest under
s.53(1)(c), neither can the beneficiary be held to have
retained any of the beneficial interest. It was the
court’s unanimous view that s.53(1)(c) was not
intended to cover dealings with the transfer of the
absolute title in property; rather, it was intended to
cover dispositions of the equitable interest alone.
Lord Donovan asserted that if one had satisfied the
formalities required transferring the legal title, and the
two titles pass together, then no further formality is
13

Neville v Wilson Contract to assign an existing
equitable interest to another
Sub-trusts -> s.53(1)(c) applicability
uncertain in this area -> based on
academic arguments as case
outdated
Grainge v Note both cases are separate -> these
Wilberforce (1889) are the outdated authorities, as
mentioned above ->
Re Lashmar (1891)
required necessary to transfer the equitable interest.
Lord Wilberforce agreed with Lord Donovan and
justified his reasons by reference to Re Rose stating
that because Mr Vandervell had done everything
necessary to transfer the legal and equitable title.
His Lordship further considered that the purpose of
s.53(1)(c) was merely to establish who held the
equitable interest; whereas Viscount Simonds in Grey
seemed to regard that the compliance with s.53(1)( c)
in itself was required effectively to carry out the
disposition of that equitable interest.
Neville v Wilson provided that a contract to make a
disposition is not a disposition in itself, and expressly
approved the transfer of an equitable interest
automatically upon creation of a contract, on the basis
that a specifically enforceable contract gives rise to a
constructive trust (subject to price being paid) which
requires the transfer of that equitable interest without
the need for further formality.
Nourse LJ held that this was in line with the speech of
Lord Radcliffe and Upjohn J in the House of Lords in
Oughtred v IRC.
Where a B under an existing trust declares himself as Cases below
trustee of his equitable interest for X -> B is in effect
creating a sub-trust but the position on the application
of s.53(1)(c) is uncertain
As mentioned above, s.53(1)(c) does not apply to the
creation of new trust (s.53(1)(c) only applies if the trust
relates to land) -> therefore in this analogy, a sub-trust
was effectively seen as a creation of a ‘new trust’, and
14
 not a disposition ->> however as held in Grainge and
Lashmar, this is subject to the B (sub-trustee) having an
‘active role’ as trust within the sub-trust -> in other
words -> if the sub-trust is a ‘bare’ trust, where B has
no active duties, B would effectively ‘drop out’ of the
picture and the original trustee would hold on trust
directly for X ->>> if, on the other hand, B has active
duties (e.g. the sub-trust is a discretionary trust) or B
declares a trust of only part of his interest (e.g.
declares that he holds his equitable interest on trust
for himself for life, remainder for X), it would appear
that s.53(1)(c) would not apply as this would be the
creation of a new trust ->> it should be noted that this
is derived from outdated cases, and hence has been
subject to strong academic interpretations ->>>
Academic interpretations show below
Green Green argue that s.53(1)(c) draws no distinction
between dealing with equitable interest carrying
beneficial rights on the one hand, and on the other
hand, dealing with equitable interest shorn of
beneficial rights.

Green contends that both types of interests fall within

the ambit of s.53(1)(c).
Professor Hayton Professor Hayton argues that in deciding whether a
‘declaration of trust’ over a subsisting equitable
interest falls within s.53(1)(c), it is vital to distinguish
between (a) a declaration under which the declarant
reserves an active role as a trustee of the derivative
equitable interest established by him and (b) a
declaration whereby the declarant renders himself a
bare trustee for others. He further expresses that the
former is said to fall outside s.53(1)(c), whilst the latter

15
 should fall within s.53(1)(c) on the basis that the
declarant having no further role to play simply ‘drops
out of the picture’ from the movement of declaration
onwards, in other words it is a direct assignment of the
equitable interest to the third party.

Haytons’ distinction provides for a requirement of an

‘active role’ within the sub-trust in order to elude
s.53(1)(c)
Penner Penner a sub-trust will remain a sub-trust and not an
outright assignment, on the basis that where the sub-
beneficiary may attempt to deal with the trustee from
the original trust, this would constitute a breach in two
ways -> firstly it can be seen as a breach of contract
between the sub-beneficiary and sub-trustee on the
basis that the sub-beneficiary can only derive his/her
benefits up until the sub-trustee and not beyond that
sub-trust as the sub-beneficiary would be acting in
ultra-vires if he/she does so; and secondly the trustee
of the original trust, who holds the legal title, would be
intermeddling in a trust which he/she was not
appointed in, an act which he/she would be personally
liable as a ‘trustee de son tort’ if he/she directly deals
with the sub-beneficiary, as the trustee’s obligations
are only within the original trust and its beneficiary,
not beyond it.

Penner further suggest that the arrangement of a sub-

trust is essentially a creation brand new trust which
nevertheless is clung onto the original trust and is in
existence only due to the original trust.

16
Nelson v Greening Recent case -> which unfortunately Lawrence Collins LJ (obiter) -> opined that declarations
and Sykes did not give this ‘sub-trust’ issue full of sub-trusts fell outside s.53(1)(c)
consideration ->>
Kaye v Zeital Recent case -> which unfortunately The court assumed that this was the case.
did not give this ‘sub-trust’ issue full
consideration ->>
Disapplication of Reg.38(5) Uncertificated Securities Regulations 2001 -
s.53(1)(c) for > disapplies s.53(1)(c) for the transfer of equitable
shares in CREST interests in shares in public companies the title to
which is held by custodians under an electronic trading
system owned and operated by CREST Co Ltd. -> this is
vital for the efficient share trading of shares in public
companies.

17
 Listen to the Problem Question lecture!!!
Constitutions
Milroy v Lord Turner LJ -> in order to render a voluntary settlement
valid and effectual -> three important issues need to
be satisfied:
1. The methods appropriate to transferring
different types of property
2. The different methods of conferring a benefit
on another; and
3. That equity will not perfect an imperfect gift;
(and additionally)
4. Exceptions to the principle that equity will not
perfect an imperfect gift
1. methods of In order to vest the trust property in the trustees -> it
must be transferred using the correct method
transferring according to the nature of the property in question.
different types
of property
(i) Land The transfer of the legal estate in land must satisfy the If the title to the land is unregistered
requirements of s.53(1)(b) -> the transfer must be in a freehold -> the deed is called a
deed -> conveyance.
A deed is defined in s.1 LP(MP)A 1989 -> must be
a) written; b) signed; c) witnessed by at least one If it is registered at Land Registry, a deed
independent witness; d) describe itself as a deed; and called a transfer is used.
e) be delivered. Legal title to registered land does not pass
until registration of the transfer at the
In order to transfer a subsisting equitable interest in Land Registry.
land, the settlor must comply with s.53(1)(c).
A deed must be used to grant a lease
unless it is a short lease not exceeding 3
years -> a deed called an assignment is
used to transfer (assign) an existing lease.

18
(ii) Shares in a UK The Stock Transfer Act 1963 requires The transfer must be registered in the share register of
incorporated shares to be transferred by the the company
Company transferor signing a stock transfer
form in favour of the transferee -> To do this, the existing share certificate together with
(Electronic transfers are now used to the stock transfer form must be sent to the company’s
transfer shares in public companies registrar
under the CREST system) ->
Title only passes on registration
(iii) Chattels Re Cole -> Chattels may be transferred either by a
deed of gift or by actual delivery accompanied by the
transferor intending to transfer them.
(iv) Bills of Bills of Exchange Act 1882 -> cheques and other bills
exchange of exchange may be transferred to a third party (i.e.
someone other than the named payee) by the
transferor endorsing the cheque (i.e. signing his name
on the back of the cheque).
(v) Money This is transferred by delivery -> Merely writing a cheque in someone’s favour and
handing it over to the payee does not transfer the
money to him until the cheque has been cleared.
(vi) Choses in Debts and other choses in action (including rights
action under bank accounts) are transferred by writing, ->
complying with s.136 LPA 1925 -> notice in writing
must be given to the debtor/other party.
(vii) Equitable s.53(1)(c) -> transferred by signed
interests writing
2. Methods of Legal interests and equitable interests
benefiting
another
(i) Legal interests NOTE -> for gifts and trust taking There are three ways in which a settlor/donor (s) man,
effect on death, the testator must during his lifetime, confer the benefit of his property to
comply with s.9 Wills Act 1837 another, the beneficiary/donee (b) :
1. S may make an absolute gift to B -> if made

19
 effectually, legal title will vest in the done, who
will also enjoy the property beneficially
2. S may transfer the property to the trustee to
hold on trust for B -> S parts with legal title to
the property and the beneficial interest; this
method may be called settlement by transfer
3. S may retain legal title in the property but
declare that henceforth he hold it on trust for
B -> S has ceased to be the beneficial owner of
the property, but remains the legal owner; this
method is called a declaration of trust

Declaration of trust requirements of s.53(1)(b) apply to

settlements by transfer under 2 as well as 3.
(ii) Equitable Timpson’s Executors v Yerbury -> Romer LJ provided
interests for four ways in which equitable interest could be
disposed
3. Ineffectual If a settlor intends to use one method to confer a
benefit on a person, but fails to do so effectually,
transfer – equity will not save the gift -> it will not construe the
Equity will not intended ineffectual method as being another method.
perfect
Milroy v Lord The settlor intends to create a settlement by transfer -
> but fails to vest the legal estate in the trustees,
equity will not interpret that transaction as a
declaration of trust -> the settlor will not be treated as
a trustee -> a failed method 2 will not be construed as
an effectual method 3

Jones v Lock S produced a Cheque £900 payable to If the donor intended an absolute gift, but failed to He had intended an absolute gift, which
himself and said -> I give this to baby effectively transfer the property, equity will not entails giving away all the benefit to,
(his son); it is for himself -> as he had construe the failed absolute gift (method 1) as a control of, and obligation for the property
not endorsed the cheque to his son, declaration of trust (method 3) -> the donor will not be -> this is distinct from the intentions to

20
 the property had not transferred and
the court rejected that he had
declared himself a trustee of the
cheque
Richards v A grandfather endorsed on his lease,
Delbridge a memorandum saying ‘this deed and
all thereto belonging I give to Edward
(a minor) from this time forth’ -> the
grandfather later died ->>
Paul v Constance In contrast to above ->>
4. EXCEPTIONS Cases below
to the
principle:
‘equity will not
perfect an
imperfect gift’
Re Rose R executed two transfers of shares on
20 march -> one by gift and other to
trustees -> the transfer and share
certificate were delivered to the
transferees but the directors did not
register the transfer until 30 june -> it
was necessary for duty purposes to
know when transfers became
effective ->>
treated as a trustee for the intended done.
Held -> the lease had not been legally assigned ->
endorsement on the deed is ineffective, a separate
deed should have been used -> nor could the
attempted transfer be construed as a declaration of
trust because he had not intended to declare a trust
but to make an outright gift.
An effective declaration of trust was found because the
court found sufficient intention on the part of S to
make himself trustee of the money in the account
CA held -> even though legal title did not pass until
registration, the transfers were effective in equity once
R had done everything in his power to vest the shares
in the transferees ->
1. Used correct method
2. Does all he can
3. Puts beyond his control i.e. send to 3rd party
e.g. registrar
declare oneself a trustee, where the
settlor retains controls of the property
and assumes the onerous obligation of a
trustee.
See above, case in detail mentioned
Note -> pending registration, the settlor
held the legal title to the shares on
constructive trust for the transferees (as
he had put the transfer beyond his
control, as to call back the shares) -. The
legal title would remain with the settlor
but would have to pay the dividend
income to the transferees and vote as
directed by them.
21
Mascall v Mascall Re Rose principle was applied to
transfer of registered title to land ->
Zeital v Kaye (2010)
Pennington v Aunt agreed to transfer 400 shares to
Waine nephew -> she signed the transfer
form but did not deliver it therefore
not effective -> Aunt also agrees to
appoint nephew as director
(condition of ‘must own at least 1
share’) of company, both signed a
form agreeing to the appointment,
therefore bared the benefit and
burden of being the director
immediately -> Held that gift is
effective in equity and Aunt can’t
change her mind. (fact very vague,
see book for detail, as more to it)
Once all the relevant documents had been executed
and the transfer stamped and handed to the
transferee (by handing over -> put beyond Donor’s
control, past point of no return) the gift was viewed as
complete in equity, even though lack of registration at
the Land registry.
CA -> deceased owner of an absolute equitable Compare below -> Pennington v Waine
interest in a shareholding -> had not done everything
in his power to transfer the shareholding when he had
not handed over the share certificate although he
handed over a share transfer form signed by the
registered shareholder.
Principle: Re Rose and Mascall -> the transfer and It was said in Zeital v Kaye -> Pennington
other documents must either have been sent off for will only apply where the
registration or delivered to the done or his agent, so as facts/circumstances are similar
to put it out of the donor’s power to change his mind->
Unconscionable
however -> Pennington suggests that this not
necessarily essential -> it was held gift was effective in
equity and that there was no legal requirement for the
form to be delivered to the done or the company ->>
Arden LJ -> it does not follow that delivery cannot in
some circumstances be dispensed with. Here, there
was a clear finding that Ada intended to make an
immediate gift. Harold was informed of it.
Moreover,...a stage was reached when it would have
been unconscionable for Ada to recall the gift...in those
circumstances...delivery of the share transfer before
her death was unnecessary...
New factors besides beyond point of control added:
1. Intention
22

Curtis v Pulbrook Pennington is best explained on an
estoppel resulting from detrimental
reliance upon a representation ->>
Choithram v Lalibai
Strong v Bird Bird borrowed £1100 from
stepmother -> stepmother lived with
him and paid £212 rent per quarter
to him -> loan was to be paid over 11 the donee -> because the donee becomes personal
quarters by stepmother deducting
£100 per quarter -> stepmother
made the deductions for two
quarters but then expressly forgave
the debt -> and insisted on paying full Jessel MR -> held the debt was released at common
rent per quarter till her death -> bird law by Bird’s appointment as executor as he could not
was appointed executor and proved
2. Immediate
3. Unconscionable to recall
Most important factor -> Unconscionable -> a donor
will not be permitted to change his mind if it would be
unconscionable in the eyes of equity, vis a vis the done
to do so
Factors to determine whether unconscionable or not
will depend on each per case.
Proprietary Estoppel ->
promise/assurance/representation + reliance +
detriment = unconscionable -> It would be
unconscionable to go back on the assurance.
The award is based on the ‘minimum equity required to
do justice’ -> so the C does not necessarily receive
what he had been led to expect.
Where the S is one of a number of Ts -> and fails to
transfer trust property to the other Ts, -> he may still
be a T if he has declared himself to be one –> it would
be just as unconscionable to go back on his declaration
whether he declares himself T or others
Where the donor intends to make a gift during his Fortuitous Vesting in Intended Transferee
lifetime but fails to vest the legal estate in the donee - -> the rule in Strong v Bird
> the gift may still be perfected -> if legal title vests in
representative to the donor (now deceased) ->
provided the donor had continuing intention to make
the gift up until death.
sue himself -> although in equity he would have been
23
 by her will liable to account -> this was displaced by proof of
stepmother’s unchanged intention to forgive the debt
followed by Bird becoming her executor -> so by her
act of making him executor was not able to sue himself
at common law

Therefore 3 requirements under Strong v Bird:

1. Intend to make Immediate gift

Re Freeland NOTE: Strong v Bird does not apply
to an intention to make a gift in the
future -> which is in effect merely a
promise to make a gift at some later
date -> not enforceable in the eyes of
the law
2. Unchanged Intention and Continuity till death
3. Donee acquires legal title as administrator or
legal executor
CA made it clear that there must have been an
intention to make an immediate gift
Evershed MR -> rejected the P’s claim and pointed out
that the headnote to Re Stewart (see below) was liable
to mislead -> an intention of giving (present tense) is
required as opposed to an intention to give (future) ->
whereas in this case Re Freeland, the testatrix had only
intended to give the P the car in the future after it had
been put in running order and lent to a third party ->
so there was no intention to an immediate gift.

It follows that -> for the rule to apply -> the gift must
relate to existing property, not future (or after
acquired) property.
Re Stewart The rule applies to whether the donee is the sole
executor or one of several executors
Re James The rule also applies where the donee becomes an
administrator on the intestacy of the donor
Re Gonin Walton J (obiter) ->doubted Re James because the
donor has no responsibility for making the donee

24

Re Ralli Buckley J argued by analogy with the
rule in Strong v Bird and applied a
similar principle to constituting a
trust ->>
Re Ralli went further and suggested
that the trust would become
constituted if the trust property
came into the trustee’s hand in any
legitimate way -> further it was
proposed that the capacity in which
title is obtained is irrelevant ->>
Testator left property on trust for
wife and remainder for two daughter
equally -> his daughter, Helen
covenanted in her marriage
settlement to settle property
including after-acquired property
from father’s will -> she dies childless,
while her interest in father’s will was
still in remainder -> on her mother’s
death, Helen’s interest fell into
possession ->
X was the sole surviving trustee of
the father’s will trust and
consequently also of Helen’s
marriage settlement -> X asked court
whether Helen’s interest under the
becoming administrator of his estate and therefore
Strong v Bird may have been decided differently had
the defendant been an administrator and not the
executor appointed by the testator
Held -> X held the property on the trust of Helen’s Fortuitous Vesting in Intended Transferee
marriage settlement -> firstly because Buckley J -> the rule in Re Ralli
construed a clause in the settlement (Helen’s marriage
settlement) as declaring a trust of Helen’s subsisting
interest in remainder pending an assignment to the
trustees. Secondly, when X acquired the title to the
property, the marriage settlement became completely
constituted.
Buckley J -> he (X) is at law the owner of the fund and
the means by which he became so have no effect on
the quality of his legal ownership
This outcome was only possible because X happened
to be trustee of both trusts
This case has been much criticised as an unjustifiable
extension of the rule in Strong v Bird -> further,
although Buckley J regards this as an development of
that rule -> he made no reference to the requirements
regarding intention which normally apply.
Furthermore -> Re Brooks’ ST was not referred to (see
below)
25
 father’s wills trust formed part of her
estate or should it be held on the
trusts of Helen’s marriage settlement
->>
Re Brooks’ ST Re Brooks’ ST shows that Re Ralli may The fact are completely identical to Re Ralli -> the only
be decided in ignorance may be justification of Re Ralli I could think of is -> in
Re Brooks’ ST there was no continuity of intention by
the settlor and neither did he die (see Strong v Birds
requirements) -> NOTE -> although the judge in Re
Ralli did not refer to intention in his judgement, there
was no need to as in Re Ralli there was no sign of
break of continuing intention by the settlor and also
carried even after death -> which was not the case in
Re Brooks’ ST (the settlor was still alive and therefore
free to break intention) -> >

Farwell J -> held that it was impossible for A to make

a gift future property to anyone
Cain v Moon Donatio mortis causa (‘dmc’) Effective only if: Donatio mortis causa (‘dmc’)
1. The gift us made in contemplation of death,
which the donor believes to be imminent
2. The gift is conditional on death (i.e. it is not
intended to be fully effective until then and can
be revoked before death)
3. There is delivery of the property -> the donor
must part with ‘dominion’ (control) of the
property by handing it, or something which
represents title to the donee

in case of chattel -> delivery coupled with requisite

intention is sufficient

However, other forms of property, delivery may not be

26

Sen v Headley Man terminally ill -> told friend house
was hers and that the deeds were in a
steal box -> he slipped keys to the box
in her bag ->
enough to perfect the donee’s title e.g. merely handing
the title deeds to a house would not suffice to actually
transfer title -> if all other requirements of a dmc are
present -> donee may seek equity to perfect.
CA held -> there was a valid dmc of the house -> by
constructive delivery of the title deeds
27

CUCO v Burrell Definition of UA
Gifts to Viscount Simonds in Leahy v AG for
NSW said -> an UA is nothing more
unincorporate than an ‘artificial and anomalous
d associations conception’ -> such an association is
regarded as a continuing entity and
something other than ‘an aggregate
of its members’ ->>
Listen to London Lecture!!! And also the
Unincorporated Associations Problem Question Lecture!!!
Lawton LJ -> ‘two or more persons bound together for
one or more common purposes, not being business
purposes, by mutual undertakings each having
mutual duties and obligations, in an organisation
which has rules which identify in whom control of it
and its funds rests and on what terms and which can
be joined or left at will’
The problem is that, unlike a company, a UA has no
separate legal personality -> an UA does not have the
same status and is little more than a group of
individuals who share a common interest -> a UA
cannot enter into contracts or hold property in its own
name, though particular members can conclude or
hold property as trustees for the members.
How does a gift take effect? Is it a gift to the members
of the association as individuals (since those
individuals effectively are ‘the club’) or is it a gift for
the purpose of the association?
Such gifts, especially if they are construed as ordinary
purpose trusts -> run risk of being found void for want
of beneficiary, for perpetuity in the form of the rule
against inalienability, for uncertainty or any
combination -> if construed as gifts on trust for present
and future members, the rule against remoteness of
vesting will apply.
In order to uphold gifts to UA -> courts developed a
number of ways of interpreting them ->> which
interpretation depends on the wording and the
28
 subject matter of the gift -> courts will try and decide
which interpretation presumably best reflect the
testators intentions ->

Therefore -> important to know which interpretation

applies -> and whether the interpretation complies
with the beneficiary principle and to avoid offending
the rule against perpetuities ->>>

Interpretations shown below ->>

1. Gifts for
present
members
beneficially
Members each Cases below Under this construction, the gift to a named UA is
‘pocket a share’ treated as being a gift to the individual members of the
association -> this satisfies the beneficiary principle
and avoids the perpetuity rules, on the basis that the
gift vests immediately in ascertainable individuals.
Cocks v Manners Held -> gift to an association, with no direction or
qualification about how that gift is to be used, can
take effect in this way

Was this the Cases below

testator’s
intention?
Leahy v AG for Testator left his farm on trust for the Viscount Simonds identified three reasons why the
NSW nuns and brothers of various non- testator was unlikely to have intended a gift to the
charitable religious orders -> individual members of those orders:

1. The wording of the gift -> it was express to be

29
 Where the legacy/gift is big e.g. land, held ‘on trust’ for the selected orders -> the
and where the members are at large capital apparently intended to be kept intact so
and difficult to divide -> the gift will that the income or use of the property would
most likely fail ->> always be available for the benefit of members
of the order
2. The nature of the beneficiaries -> the
members were numerous and spread all over
the world -> this suggests a legacy to each one
was not intended
3. The subject matter of the gift -> a 730 acre
farm -> presumably each member was not
intended to have their own small plot of land
on his farm
Re Recher’s WT Brightman J -> declined to apply Brightman J -> simply said that the testatrix would not
Leahy interpretation as a means of have intended the members of the society to divide the
upholding a legacy to an anti- ‘bounty’ amongst themselves
vivisection society which had ceased
to exist ->>
Using the clubs Cases below Cases in this category are ‘relatively uncommon’
name as a
convenient label
Re Grant’s WT Vinelott J -> suggested that this construction may This is where the club name is effectively
apply where the name of the association is used as a used as a form of shorthand for the
convenient label or a definition to describe a class or individual beneficiaries, instead of spelling
common group of persons out member’s in full -> normally seen
where a small number of beneficiaries
2. The Contractual analysis is the modern Contractual analysis takes effect as a gift to the
way of upholding gifts to UA ->> present members of the association -> thus satisfying
contractual the beneficiary principle and avoiding any need to
analysis comply with the perpetuity rule because the capital
and income can freely consumed without distinguishing
between them -> however, rather each member
pocketing a share -> the members hold that gift

30
 subject to the member’s contract -> the contract
comprises the member mutual duties and obligations,
as evidenced in the club rules -> therefore gift
effectively treated as an addition to clubs funds and
held in accordance to the club rules -> when a
member dies or retires -> other members acquire his
share e.g. like JT

Further -> members must have control over the club’s

assets under the club rules

the gift should be for the MEMBERS’ benefit -> NOT

purpose!
Re Recher’s WT The contractual approach can be used regardless of
whether the club is ‘inward looking’ (for the personal
benefit of its own members) or ‘outward looking’ (for
the benefit of others).

The only factor preventing the contractual approach

is the dissolution of the society before the gift could
take effect
Re Horley Town FC Collins J -> the football ground left for ‘purposes of the
club’ took effect as a gift to the members subject to
the club rules
Further the trust deed made it clear that if the ground
was sold, as happened, the proceeds could be spent as
if income, no capital having to be set aside to be kept
intact.
The need for Cases below The requirement for internal control prevents any
‘internal control’ infringement of the rules against perpetuities, as the
gift is not tied up, and therefore it also prevents
infringement of the rule against inalienability ->>
The contractual approach will not be
available if the association ceased to exist
(Re Recher) or if it lack identifiable rules ->
Leahy -> intended a trust rather than a
gift, further contractual analysis not
available as the nuns and brothers could
not claim property for themselves on
dissolution.
However, this means that the members,
subject to the clubs rules, may use the
money for different purpose or even
distribute amongst themselves.

31
Re Grant Testator left estate to local labour
party branch -> under the rule of the
branch -> property dealing and rule
alteration were subject to approval
by the main labour party committee -
> therefore local branch didn’t have
control over its own assets ->
therefore contractual analysis could
not be used ->>
3. Trust for
present and
future
members
Leahy v AG for Ascertained or Ascertainable
NSW beneficiaries
Local branch was subject to external control -> didn’t Political Parties -> see also Mandate
have internal control essential for contractual analysis theory -> CUCO v Burrell (also political
based on property being the members to deal with as parties case )-> below
they please without distinction between capital and
income.
Viscount Simonds -> if a gift was made to individuals,
in their name or in the society’s name, but they weren’t
intended to take beneficially, they must take as
trustees -> provided the class of beneficiaries is
‘ascertained or ascertainable’ at the date of the
testator’s death -> he indicated that it would be
permissible to have a valid gift or trust for the present
and future members of the association to the extent
it complied with the rule against remoteness of
vesting
It seems clear intention will be needed -> either by use
of express words to this effect or by making a gift in
the form of an endowment.
If the gift had simply been for the use of present and
future members of the club without more, then it may
be upon all the members being ascertained at the
date of dissolution, the class would close so that all
32

Rule against Difficulties -> membership of an
remoteness of association is likely to fluctuate over
vesting time -> potentially infringing the rule
against perpetuities ->>
the then members between them became absolutely
entitled to the property under the application of s.7
Perpetuities and Accumulations Act 2009 (below) -> if
the club had not been dissolved after ‘wait and seeing’
for 125 years then the property could be regarded as
belonging to all the members at the end of the 125
years period, possible future members being excluded
by s.8 of the 2009 Act (below)
the relevant perpetuity rule is called the rule against
remoteness of vesting -> this rule is designed to
ensure that future interests cannot vest in person at
too remote a date in the future.
s.5 Perpetuities and Accumulations Act 2009 -> for
wills and trust executed on or after 6 April 2010, a fixed
perpetuity period of 125 years will be applied
regardless of whether a different perpetuity period id
specified
s.1 Perpetuities and Accumulations Act 1964 -> for
wills and trusts executed before this date, the
perpetuity period will either be a specified fixed period
of up to 80 years, if not period is specified, 21 years
after the date of death of the last life in being
s.7 Perpetuities and Accumulations Act 2009 -> you
may be able to ‘wait and see’ if the members of the
club can in fact be ascertained within the perpetuity
period (e.g. if the club closes to new member before
the end of the perpetuity period) -> if this does not
work, then trust may still be saved by virtue of s.8
(below)
33

4. Ordinary In some of the older cases, the
courts, in considering a gift to an UA,
Purpose Trust tended to focus only on the question
of whether the gift was void for
perpetuity -> if they considered that
the present members could do what
they wanted with the property then
the gift was valid -> if not because the
capital had to be kept intact for the
income to further the relevant
purpose, it was void ->>
5. Re Denley
Purpose Trust
s.8 Perpetuities and Accumulations Act 2009 -> under
this rule, the trust will vest in those members who are
ascertained within the perpetuity period (i.e. those
people who are club member within that time) and
those who are not ascertained within the period are
excluded from benefiting.
However, in Leahy Viscount Simonds drew a
distinction between gifts to UA which are gifts to the
individual members, which are valid, and gifts for non-
charitable purposes, which are void.
His view was that the testator had intended the capital
to be kept intact to be used for the general religious
purposes of the various orders of nuns and brother,
rather than as a gift to the individual nuns and brother
themselves.
The trust in question therefore had no ascertainable
beneficiary and didn’t comply with either the
beneficiary principle or the rule against perpetual
duration.
Re Denley’s Trust Deed suggests that, as long as the
rule against remoteness is complied with, the court
may be prepared to uphold private purpose trusts
which confer a benefit on ascertainable individuals ->
Conditions:
1. Ascertainable beneficiaries
2. Non-abstract purpose -> must not be too
34

Re Lipinski’s WT Testator left one half of his residuary
estate on trust for a jewish sports and
social club -> he stated the gift was in
memory of his late wife and was to
be used by the club in constructing
and/or improving new buildings for
the use of the club ->
vague, must be clear
3. Comply with perpetuity rule
This rule was applied in Re Lipinski’s Will Trusts (below
– very problematic case)
Oliver J upheld as a valid trust for ascertainable
individuals -> namely rhe members of the association
having held half the residuary estate did not need to
be kept intact as an endowment fund of capital whose
income was to be used indefinitely -> the money could
be spent without distinguishing between capital and
income
Oliver J messed up the perpetuity rule here -> he made
a new requirement for the rule -> adopted the
contractual analysis -> said as long as the member can
spend freely as wished, therefore internal control
According to Oliver J -> by imposing a specific
direction or limitation on the way in which the gift
was to be used (i.e. constructing or improving
buildings) even though it was not legally binding as
the member could under the club rules could decide to
prefer to benefit themselves in a different way -> this
could not be interpreted as an ordinary gift to the
member of the association as JT -> in his view, the
legacy was more like the trust in Re Denley -> Oliver J
construed this into the club rules (use for other
purpose but not take beneficially as JT like in
contractual analysis) and formulated a new
interpretation that seems to be a fusion of contractual
analysis and Re Denley
35
OVERLAP From the above judgment and other
cases -> it seems that the intention to
create a trust is likely to be inferred if
any of the following apply:
1. The testator imposes a
specific direction or limitation
on how the property is to be
used -> as in Lipinski
2. The legacy refers to the
property being held ‘on trust’
->as in Leahy
3. A donation is made to the
‘trustees’ of the association -
> as in Re Grant
One of the difficulties with Lipinski is that Oliver J
relied on the contractual analysis from Re Recher, as
well as Re Denley -> although the testator had
specified a particular purpose for the legacy in Re
Lipinski, Oliver J view was that this purpose had no
legal force -> according to him, the rules permitted the
members to vary that purpose and spend the money in
other ways.
Despite Oliver J’s confused judgment in Re Lipinski ->
the better view is that Re Denley principle and the
contractual approach (Re Recher) should be treated as
separate interpretations ->>>
The important distinction -> Re Denley
must comply with the rules of remoteness,
for instance having a limited duration ->
and -> perpetuity is not an issue under the
contractual approach (Re Recher) since
the gift vests in the present members to be
used without distinction between capital
and income.

In the absence of this kind of wording

-> the legacy will probably take effect
as a gift instead of a trust -> Re
Recher
6. Mandate This theory is implemented because
political parties lack internal control
Theory (e.g. Re Grant) ->>
Here the funds are given on an AGENCY AGREEMENT Cases below
by the contributor (principal) to the party treasurer
(agent) on a MANDATE, which is NOT a mandate over
the funds the treasurer takes on trust, but a PURELY
PERSONAL OBLIGATION on the treasurer to deal with
the funds as requested by the donor.

If the treasurer doesn’t do so, then the donor can use

his/her PERSONAL rights under this mandate to
enforce the money being spent in a particular way.
But this mandate DOESN’T give PROPERTY rights to
donor, since once the gift has been mixed with the
other party funds, the mandate is IRREVOCABLE.

36
 Academic views ->

Penner thinks this cannot be done for TESTAMENTARY

GIFTS since it’s impossible to create an agency
agreement between Deceased and Treasurer.

H&M suggests it can, since agency agreements will

rest between Treasurer and Personal Representatives
of the Testator.

This could be supportable, but maybe better to say

that if Treasurer does not use money as planned, the
estate should claim it back under the law of
Restitution rather than use the Mandate Theory.

If this is the case, the Mandate theory should not be

used for UAs -> The Contract Holding theory is still the
main way UAs hold property!
CUCO v Burrell Political party It may be possible to view a donation as being made to
an officer of the association (i.e. the treasurer) with a
mandate to use that donation to further the
association’s purpose -> a drawback to the ‘mandate’
or ‘agency’ theory is that it only works for lifetime
gifts -> it is not available for gifts by will since the
donor’s death revokes the mandate -> therefore donor
cannot be an agent/mandate to the treasurer.
DISSOLUTION When a UA is dissolved -> a decision must be made as
to how any surplus assets will be distributed -> these
of a UA assets will generally be held by trustees or a treasurer
on a bare trust for the members to be dealt with,
without distinction between capital and income, as
provided for in the club rules. -> they will need to be
distributed on dissolution of the club as provided for in

37

Re West Sussex Goff J made it clear that persons who
Constabulary’s paid money to the club for a
Widows Children & contractual quid pro quo such as
Benevolent Fund entertainments and raffle tickets had
no rights to surplus assets, nor had
persons who had made outright
donations to the club in collecting
boxes. He also excluded members
who had paid subscriptions for a
contractual quid prop quo,
overlooking that their rights
extended to the assets held as funds
for them under the club rules ->
those assets passed as bona vacantia
to the Crown
In Westdeutsche case, Lord Browne-
Wilkinson supported West Sussex
and said ‘if the settlor has expressly,
or by necessary implication,
abandoned any beneficial interest in
the trust property, there is in my view,
no resulting trust: the undisposed of
equitable interest vests in the Crown
as bona vacantia.
the rules according to the members’ contractual rights.
The surplus money consisted of money from : (1)
donations and legacies; (2) collecting boxes; (3) profits
of entertainments, raffles, sweepstakes, etc; (4)
contributions from members
Goff J Held -> the donations and legacies (1) were held
on resulting trust, but the persons who put money
into (2) collecting boxes should be taken to have
intended to part with the money out and out and so
there was no resulting trust; the money belonged to
the crown as bona vacantia
Here, the (3) profits of entertainments, raffles,
sweepstakes, etc, were not held on resulting trust for
two reasons:
First, the relationship between the payer and
recipient is one of contract, not trust -> the
payer/purchaser pays his money as an out and out
payment in return for to a contractual right to receive
the benefit paid for;
Second, there is, in such cases, no direct contribution
to the fund at all -> it is only the profit, if any, which is
received by the fund.
Funds from source (3), therefore, belonged to the
Crown as bona vacantia.
Goff J went on to hold that the funds from source (4),
contributions from members’ subscription were also
bona vacantia, and did not belong to the members.
NOTE -> Goff J was correct as to source
(2) collection box moneys -> but it seems
he was wrong not holding that sources
(1), (2), (3) and (4) belonged to the
remaining members -> he did not give
sufficient attention to why the funds of the
association subject to their contractual
rights under the association rules and to
rights that third parties might have under
contracts entered into, or trusts duly
declared, by the appropriate organ of the
association -> this was made clear by
Walton J in Re Bucks Constabulary
Widows and Orphans Fund Friendly
Society (No.2) where all the money was
treated as belonging to members, subject
to their contractual rights -> this approach
was followed in Hanchett-Stamford v AG
where only one member remained and
Lewison J held that all the assets belonged
to him as surviving JT, rather than
regarding the society as moribund so that
the assets should pass to the Crown as
bona vacantia. (below)
38

Re Bucks Illustrates how courts apply a
Constabulary contractual approach to the division
Widows and of surplus assets ->
Orphans Fund
Friendly Society The fund was formally registered as a
(No.2) friendly society, which meant that
under statute the society’s property
was vested in the trustees for the
benefit of the society and its
members ->>
Re Horley Town FC associations have various types of
memberships -> therefore not all
members equal, hence vary in shares
Re Sick and Funeral
Society
NOTE ->>> on the RIGHT up top!! Imp. Analysis ->>
Walton J followed Re Recher -> existing members
could agree to divide up the property amongst
themselves whenever they wished -> unless a gift was
clearly made subject to a trust -> property that had
been gifted to an association belonged to its
members
Walton J therefore held that surplus assets should be
distributed equally between current members at the
date of dissolution, subject to contractual rights.
This applied to assets whether provided by gift or by
way of members’ subscriptions or payments to
participate in club events
Walton J said -> contractual analysis was the correct
one to use, whatever the purpose of the association -
> provided no external control
The approach in Re Bucks is to be preferred over that
in Re West Sussex, regardless of whether the fund
concerns a friendly society or not.
Held -> club rules should be interpreted with fairness
and common sense -> only those members who could
call for the assets to be transferred to them (acting
unanimously or at a club AGM) were held to be
entitled to receive an equal share of the surplus
assets
Megarry J -> where the contractual burden and
benefit differed as between different classes of
members -> that inequality ought to be recognised
when the court came to divide the surplus -> therefore
It will generally be equal division between
existing members at the date of
dissolution, the reasons being:
1. It is assumed that past members
gave up their claims on the fund
on resignation;
2. Present members have each
received what they paid for (by
way of benefit of membership)
3. Although longer-standing
member have paid more
subscription than newer member -
> they have received the benefits
of membership for a longer time,
therefore distribution is equal,
regardless of newer or older.
HOWEVER ->not all members may be
regarded as equal -> as some
associations have various types of
memberships -> see case below
39
 ordered distribution of assets on the basis that each
young member got half of a full member’s share. ->

NOTE ->> this analogy should be applied wherever a

case of different classes of members, subject to facts
and level of use and rights within a association
Hanchett-Stamford Position where no surviving member Lewison J -> the death of one of the two surviving
v AG or only one last surviving member of members of an association effectively amounted to a
club dissolution of that association -> this was on the basis
that there cannot be an ‘association’ of just one
member -> the sole surviving member could therefore
claim the association’s surplus assets at that time ->
defeating the AG’s claim that such assets should
instead pass to the Crown as bona vacantia

The assets will only go as bona vacantia if the last

surviving member dies without having made a claim
to those surplus assets.

40
Statute has greatly restricted the
ambit of this area of law.
Regarding Marriage, the Matrimonial
Proceedings and Property Act 1970
and the Matrimonial Causes Act
1973 gives the court the general
power to do what is just having
regard to all of the circumstances
upon the parties getting a divorce.
A similar stance is now taken for
partnerships registered under the
Civil Partnership Act 2004
Constructive Trusts of the
Home
Lord Denning’s attempts in the 1980s to impute to (or
impose upon) the parties what the court considers to
be a fair share in justice and good conscience by virtue
of a ‘new model constructive trust’ have failed -> some
scope of imputation remains, however, under Jones v
Kernott once the court has found an express or implied
actual intention that the parties are to have shares in
the property different from the 100% or 50% share
appearing from the legal title being in the name of one
or both parties respectively. -> moreover, the HL in
Stack v Dowden and the Supreme Court in Jones v
Kernott have moved on to a broader range of inquiry
to try to infer actual intentions than was permitted by
the HL in Lloyds Bank v Rosset.
Headings
1. Property registered in the names of both
parties
2. Property registered in the name of one party
only
3. Detrimental reliance
4. Constructive trusts and Proprietary estoppel
And finally...
Reform
Douglas et al [2008] Conv 365 at 367
“There has been a significant increase in
the number of couples cohabiting outside
marriage in recent decades in Great
Britain. … It is estimated that the total
number of cohabiting couples will rise to
3.8 million in 2031. Cohabitation is no
longer a minority experience, but has
become the norm for a significant
proportion of the population. An
increasing number of cohabiting couples
are having children within that
relationship, and not marrying when the
child is born. ... There is also evidence to
suggest that there are higher rates of
breakdown amongst cohabiting unions
than marriages, with the children of
cohabitants being twice as likely to see
their parents separate as children born
within marriage…”
41
1. Property Where the property is registered in
the names of both parties -> they will
registered in both have a beneficial interest in the
the names of property -> the only question the
both parties court needs to address is the size of
that interest ->
Stack v Dowden The HL confirmed that equity follows
the law and therefore the normal
presumption will be that -> where
legal title to the home is acquired
with the assistance of a JT -> the
beneficial interest will be held jointly
-> although JT can be unilaterally
severed as to create a 50-50
equitable tenancy in common ->
whole also no equitable JT can arise if
unequal shares were intended -> the
equitable JT is only a presumption
and therefore can be rebutted by
evidence that the parties initially
intended their beneficial interests to
be different from their legal interests
Pettitt v Pettitt -> if a deed declares not merely in
whom the legal title is to vest but in whom the
beneficial title is to vest that necessarily concludes the
questions between the spouses for all time -> per Lord
Upjohn
However -> a declaration of the beneficial interest
need to be evidenced in writing to comply with s.53(1)
(b) or it will be unenforceable -> Lord Diplock in
Gissing v Gissing -> if it is not in writing it can only take
effect as a resulting, implied or constructive trust ->
s.53(2)
Where there has been no express declaration of trust,
the principles which apply to ascertaining the
beneficial interests of co-owners of the legal title to a
home were set out by HL in Stack v Dowden
To rebut the presumption -> the courts must, in the
absence of an express oral agreement as to the parties,
-> examine the parties’ shared intentions, in light of
their whole course of conduct. -> The starting point is
therefore to presume a 50/50 split, unless there is an
express oral common intention to have different
shares or a whole course of conduct between the
parties which indicates that it can be inferred that they
intended different shares.
HL confirmed -> it would only be in very unusual cases
that the presumption of equal shares (following
severance of JT) would be rebutted and the fact that
the parties’ financial contributions were unequal
would certainly not, by itself, suffice to rebut the
presumption. ->>
42
or has a subsequent common
intention to have unequal shares ->
the burden of proving this will be on
the person claiming that their
beneficial interests should be
apportioned differently ->>
Whilst stressing that ‘many more factors than
financial contribution may be relevant’, the majority
were particularly influenced by the fact that Ms
Dowden had contributed significantly more to the
acquisition of the property and the parties had kept
their finances separate -> this was considered
sufficient evidence to demonstrate the parties had not
intended equal shares and HL confirmed CA 65/35 split
in favour of Ms Dowden ->
Baroness Hale -> set out factors relevant for inferring
intentions (this was also endorsed in Jones v Kernott) -
>>
Each case will depend on its own facts -> many more
factors than financial contributions may be relevant to
giving parties’ true intentions -> these include -> any
advice or discussions at the time of the transfer which
cast light upon their intentions; the reasons why the
home was acquired in JT; the reasons why (if it be the
case) the survivor was authorised to give a receipt for
the capital moneys; the purpose for which the home
was acquired; the nature of the parties’ relationship;
whether they had children for whom they both had
responsibility to provide a home; how the purchase
was financed, both initially and subsequently; how
the parties arranged their finances, whether
separately or together or a bit of both, how they
discharged the outgoings on the property and their
other household expenses. -> when a couple are joint
owners of the home and jointly liable for the mortgage
-> the interferences to be drawn when only one is the
owner of the home -> the arithmetical calculation of
43
 how much was paid by each is less important -> it will
be easier to draw the interference that they intended
that each should contribute as much to the household
as they reasonably could and that they would
eventually benefit or be burdened equally -> the
parties’ individual characters and personalities may
also be a factor in deciding where their true intentions
lay -> in the cohabitation context, mercenary
considerations may be more to the fore than they
would be in marriage, but it should not be assumed
that they always take pride of place over natural love
and affection.-> these range of factors are known as
the ‘holistic approach’ (not a complete list)
Jones v Kernott Lord Walker and Lady Hale (with whom Lord Collins The supreme court clarified certain
agreed) -> the following are the principles applicable statements from Stack v Dowden.
where a family home is bought in the joint names of a
cohabitating couple who are both responsible for any
mortgage, but without any express declaration of
their beneficial interests:

1. The starting point is that equity follows the law

and they are JT in law and in equity
2. That presumption can be displaced by showing
(a) that the parties had a different common
intention and at the time they acquired the
home or (b) that they later formed the
common intention that their respective shares
would change
3. Their common intention is to be deduced
objectively from their conduct: ‘the relevant
intention of each party is that which was
reasonably understood by the other party to be
manifested by that party’s words or conduct

44
 notwithstanding that he did not consciously
formulate that intention in his own mind or
even acted with some different intention that
he did not communicate to the other party’
(Lord Diplock in Gissing v Gissing)
4. In those cases where it is clear (a) that the
parties did not intend JT at the outset or (b)
had changed their original intention, but it is
not possible to ascertain by direct evidence or
by inference what their actual intention was as
to the shares in which they would own the
property, ‘the answer is that each is entitled to
that share which the court considers fair
having regard to the whole course of dealing
between them in relation to the property’
(Chadwick LJ in Oxley v Hiscock). In our
judgment the whole course of dealing in
relation to the property’ should be given a
broad meaning, enabling a similar range of
factors to be taken into account as may be
relevant to ascertaining the parties’ actual
intentions.
5. Each case will depend on its own facts.
Financial contribution are relevant but there
are many other factors which may enable the
court to secede what shares were either
intended (as in point 3) or fair (as in point 4)

Lady Hale -> to displace the presumed JT it is

necessary first to prove that there was an express or
inferred actual common intention not to have such JT
-> if such proof does not extend to the exact size of the
parties’ shares, the court has to impute to the parties

45

Fowler v Barron CA held -> that a man, who had paid
the deposit, all the mortgage
payments and direct outgoings, was
unable to rebut the presumption of
what the court considers to be fair shares in all the
circumstances -> to ‘impute’ means to impose upon
them -> objective standard applied -> however -> to
impute is used as a last resort -> due to impute bring
uncertainty as it is not open to the court to impute to
the parties some other intention that they had not
actually had -> held -> accepted the trail judge’s
finding that after their separation it could be inferred
that the parties’ intentions had changed from a 50-50
basis and were themselves prepared to infer that J and
K actually intended the value of their shares to
crystallise in 1995 after they had failed to sell their
home and K was to buy a house for himself.
Lord Kerr and Lord Wilson (who found it difficult to
agree with the majority of Hale, Walker and Collins)
found it difficult to infer that J and K had intended the
value of their shares to crystallise in 1995 but would
have imputed to them a 90-10 split as fair in all the
circumstances -> Lord Wilson made the point that the
trail judge had found an inferred agreement after
parties had separated that their shares would change -
> so that it then became possible to impute to them
particular fair shares if no common intention as to
shares could be inferred. ->>>>> as mentioned earlier,
imputation is seen as a last resort -> this argument by
Lord Wilson provides for imputation -> this would bring
uncertainty as this would be not applying the parties
intentions, but applying abstract standards.
Arden LJ -> At [24]: “The legal technique that the court
will use to ascertain whether both joint owners who
had been co-habitees had a beneficial interest is that of
the common intention constructive test, rather than
46
Joint beneficial ownership that of resulting trust -> This will enable the court to
take a holistic view of the whole of the parties'
conduct so far as it illumines their shared intentions
about the ownership of the property. The court will not
impose any particular allocation of property on the
parties. It is not a question of the court deciding what
is fair as regards the division of ownership but of
determining what the co-owners' shared intentions
were as regards beneficial ownership... Where, as
here, a house is transferred into the joint names of two
individuals as their home, without any declaration of
trust, the transfer will indicate that the parties
intended to own the house in equal shares and thus the
onus will be on the one (here, Mr Barron) who asserts
that property is owned by them other than in equal
shares to show that they had a shared intention to own
the property in some other shares. The conduct that
the court will take into account will include, but is not
limited to, the financial contributions that they made
towards the acquisition of the property or repayment
of any loan raised for such purpose. The onus will not
be easy for that person to discharge. (my emphasis)

“35. In determining whether the presumption is

rebutted, the court must in particular consider whether
the facts as found are inconsistent with the inference of
a common intention to share the property in equal
shares to an extent sufficient to discharge the civil
standard of proof on the person seeking to displace the
presumption arising from a transfer into joint names.”
“36. The emphasis is on the parties' shared
intentions...”
“37. Thus any secret intention of Mr Barron, that Miss

47

Laskar v Lasker Indicated that where property is
bought as an investment rather than
as a joint home ->Stack v Dowden
does not apply ->>>
Fowler should only benefit in the event of his death and
on the basis that they were then still living together,
does not provide the evidential basis for rebutting the
presumption, since it is not evidence of the parties'
shared intention... For the same reason, the fact that
Mr Barron was mistaken as to the effect of putting the
property into joint names, and did not appreciate that
that would give Miss Fowler an immediate and
absolute entitlement to a beneficial interest is of no
materiality. He did not communicate his belief to Miss
Fowler, and there is no basis for saying that it should
have been apparent to her.” (her emphasis)
Lord Neuberger -> property bought for investment is a
‘commercial dealing’ and not ‘family’ ->
For commercial -> starting point is ‘resulting trust’ ->
resulting trusts are fixed, strict and don’t look at
whole conduct of later contributions

For family -> staring point is ‘constructive trust’ ->

constructive trusts are flexible and considers
everything
2. Property Where the property is conveyed to one party only, he
will be presumed to be the owner of the whole
registered in beneficial interest as well (Gissing, Stack, Jones) -> the
the name of best rebuttal evidence, as recognised in Rosset, will
one party only arise where evidence of discussion reveals that the
parties orally agreed at the time of conveyance or a
subsequent time that the non-owner was to have a
specific share or a fair share in the house -> as
emphasised in Rosset, however, the mere use of
expressions like ‘our’ house or ‘our flat’ relate simply
to shared occupation (‘the place where we live’) not to

48

Abbott v Abbott Statements by Lord Walker and Lady
Hale in Jones were echoed and
applied in this case when referring to
a family home put in the name of one
party ->>>>
shared ownership -> often there will be no evidence of
any ownership shares so the issue is whether the court
can infer a common intention that the legal owner
was not to be 100% beneficial owner.
Lady Hale -> The first issue is whether it was intended
that the other party have any beneficial interest in the
property at all -> if he does, the second issue is what
that interest is ->> their common intention has once
again to be deduced objectively from their conduct ->
if the evidence shows common intention to share
beneficial ownership but does not show what shares
were intended ->> the court will have to impute fair NOTE -> ‘IMPUTE’ used as last resort if
shares in light of the parties’ dealings with each other above not satisfied
->> a claimant will therefore need first of all establish
that she has an interest in the property at all, before
she can go on to prove the size of that interest ->>>
this time the courts have two separate questions to
address ->
1. Whether the claimant can establish any
interest in the property (this not at all being
presumed in case of property acquired in both
names)
2. How the interest should be quantified -> if the
evidence that established that there was an
express or inferred actual intention for the
claimant to have a beneficial interest also
establishes that this intention related to a
specific share -> then the claimant gets this
share -> if the evidence does not go so far as
specific shares, the court imputes to the
parties the shares which the court considers
fair having regard to the whole course of
49
 conduct of the parties (as in the case of jointly
owned family homes: Jones)
Burns v Burns Case accepted in Le Foe v Le Foe Fox LJ -> if there is a substantial contribution by the
woman to the family expenses and the house in
purchased on a mortgage, her contribution is
indirectly referable to the acquisition of the home
since, in one way or another, it enables the family to
pay the mortgage instalments. Thus a payment could
be said to be referable to the acquisition of the home
if, for example, the payer either (a) pay part of the
purchase price or (b) contributes regularly to the
mortgage instalments or (c) pay off part of the
mortgage or (d) makes a substantial contribution to
the family expenses so as to enable the mortgage
instalments to be paid’
Thomson v Performance of household duties, staying at home to
Humfrey look after children, contribution to paying some utility
bills and council tax, doin some painting and repairing
and maintenance jobs about the home, and the
purchase of some household chattels are not acts
capable of giving rise to any inferred intention in
relation to property -> similarly, a woman’s giving up
her job and assisting the legal owner in his business
because he said that he would always look after her or
marry her in due course are not acts capable of giving
rise to any inferred intention in relation to acquiring
an interest in property
James v Thomas This case James v Thomas was decided before Jones -
>> therefore In light of the bold approach to the
drawing of inferences in Jones noting Hale and Walker
-> James v Thomas would now be decided differently
so as to allow the woman a beneficial share in the
home -> taking in account of very substantial

50

3. Detrimental
reliance
Parris v Williams P held a flat bought in 1998 for
£64,000 on trust for W absolutely ->
the flat had been put into P’s name
because W’s impecuniosity had led
him into an Individual Voluntary
improvements made to the property by her heavy
manual labour, the work done by her as the
consideration for acquiring adjoining land from the
vendor and the possibility that her working in the
business made it easier for the man to make
mortgage payments, such payments coming from
their joint business account.
Where there is evidence of an express or inferred
actual common intention (i) to have particular shares
or fair shares in the home or (ii) for the beneficial
interest to be different from the legal title but it is
uncertain how different so that the court has to
allocate to the parties what it considers to be a fair
share -> a further equitable factor needs to be
satisfied: unconscionable ->>
As Lord Bridge stated in Rosset -> necessary for the
partner asserting a claim to a beneficial interest...to
show that he or she has acted to his or her detriment
or significantly altered his or her position in reliance
on the agreement in order to give rise to a constructive
trust or proprietary estoppel ->>>
It is this (above Lord Bridge) that makes it
unconscionable for the legal owner to deny the
claimant’s equitable interest, so that the interest is
valid and enforceable despite the lack of signed writing
within s.53(1)(b)
Held -> the acts of detrimental reliance do not have to
have been agreed or anticipated by the parties and
confirms that whether those acts are sufficient to count
as detrimental reliance will depend on the
circumstances of the particular case ->>
51
 Arrangement -> the rents covered the
mortgage payments and W Therefore so long as the detrimental reliance relates
contributed £2,000 towards repairs to acquisition of a beneficial share in a house/flat and
and maintenance as well as spending is not de minimis -> the courts will be ready to find
two days painting the flat -> necessary detrimental reliance -> as in cases of
proprietary estoppel that are often put forward in
conjunction with a common intention constructive trust
claim.
4. Constructive
trusts and
Proprietary
Estoppel
Stack v Dowden Lord Walker -> Proprietary estoppel typically consists
of asserting an equitable claim against the conscience
of the ‘true owner’ -> the claim is a ‘mere equity’ -> it
is to be satisfied by the ‘minimum award necessary to
do justice’, which may sometimes lead to no more
than a monetary award ->on the other hand, a
‘common intention constructive trust’ is identifying the
true beneficial owner or owners, and the size of their
beneficial interests.

Differences between the two concepts:

Contructive trust of the home -> is based on the
common intention of the parties and typically arises at
the time the property is acquired, though it may arise
later

Proprietary estoppel -> is based on the expectation of

one party encouraged by the other and often involves
assurances made over a long period of time. -> see
below

52
Thorner v Major Proprietary estoppel -> the HL confirmed that the
assurances do not have to be clear and unequivocal
(they merely have to clear enough in the sense that,
assessed objectively, they were intended to be taken
seriously and to be relied on), but that they must be
clear on the interest that the claimant is to have.

Lord Hoffmann -> provided for a wider view of

detrimental reliance in the context of proprietary
estoppel, stating -> that it is not necessary for the
defendant to have known about or foreseen the
particular acts of reliance ->

Lord Scott and Lord Neuberger confirmed and stated

that all that is required is that the claimant’s reliance
was reasonable in all the circumstances.

The remedies under proprietary estoppel also differ ->

they may range from an order to the defendant to
transfer the legal estate to the claimant to no more
than granting rights of occupation or even mere
monetary compensation -> in other words, they may
confer greater or lesser rights than under a
constructive trust -> it can be tailored to take account
of third party rights, e.g. mortgagee or other creditors.

Further a clear distinction was mad between

proprietary estoppel in commercial cases (which would
seem increasingly hard to argue) and proprietary
estoppel in the domestic setting (where courts might
be more willing to adapt the strict requirements to
circumstances of the case) -> this mirrors the pattern
that has developed within constructive trusts.

53
Reform
The Law The current law that determines The LC therefore attempted to devise a scheme that The Government announced on 6 March
Commission’s whether a person has rights in a would determine when a non-legal owner of the home 2008 that it was reserving any decision on
discussion paper -> shared home is rather complicated would acquire an interest in it -> it intended the the matter for the Parliament again in the
‘Sharing Homes and somewhat difficult to apply ->> scheme to be based solely on the contributions of the form of a Private Members’ Bill
2002’ ->> parties and to be independent of the parties’ intentions introduced by Lord Lester -> The Bill
-> such contributions would include both direct largely replicated the LC’s proposals ->
contributions to the purchase price as well as indirect however the Bill did not become law
contributions in the form of household expenditure and
even non-financial contributions such as looking after
the home and the family ->

Advantages -> would provide certainty and

predictability, as it would make it possible to value
contributions objectively

However -> the LC concluded that it was not possible

to devise a scheme that would operate fairly and
evenly across all the diverse circumstance that can be
encountered ->

LC stated that more useful reforms could be obtained

by the courts taking the broader view of the kinds of
contributions from which one might infer a common
intention -> it also suggested that the courts should
adopt a broader outlook to quantifying the size of non-
legal owner’s share in the home -> the courts have
taken up these suggestions as revealed by Stack and
Jones. ->>>

54
 Tracing
Headings and subheadings: This area of law massively developed following the by If the asset just goes from one volunteer
Lionel Smith’s book and PhD thesis. to another then easy to follow it and then
1. Requirements for tracing in claim it back.- > Jones v De Marchant
Equity Tracing itself an EVIDENTIARY PROCESS that is
2. Into whose hands can DISTINCT from claiming. BUT if asset goes into hands of a BFP then
property be traced? cannot follow it and claim it back. -> Have
3. The property must be So need to distinguish tracing from following: to trace into what asset is swapped for
identifiable instead if you want to claim something.
4. Tracing into unmixed funds Lord Millett in Foskett v McKeown at 127:
5. Tracing into mixed funds “The processes of following and tracing are, however, Note: BOTH are evidentiary processes,
6. Subrogation distinct. Following is the process of following the same which you choose depends upon how you
7. Payments in and out of bank asset as it moves from hand to hand. Tracing is the want to CLAIM!!
accounts: the position process of identifying a new asset as the substitute for
between the claimant and the old.” ->>>>>>>>
the trustee
8. The ‘Swollen Assets’ heresy
9. Payments in and out of bank
accounts: the position
between the claimant and
another trust or the claimant
and an innocent volunteer
10. Loss of right to trace and
claim in equity
11. The personal action in Equity
12. The personal action in Re
Diplock

55
1. Cases below
Requirements
for tracing in
Equity
Re Diplock CA held there are two pre-requisites (i) A Fiduciary relationship See page 276-277 for detail on facts and
to tracing in equity ->> (ii) An equitable proprietary interest in the reasoning/criticism
property being traced
2. Into whose 1. It can be traced into the hands of the person
who misapplied it
hands can 2. It can be traced into the hands of a person who
property be received it with knowledge that it was
traced? misapplied -> this will lead to a proprietary
claim and a personal action
3. It can also be traced into the hands of an
innocent volunteer -> that is a person who is
given the property without providing
consideration and who has no knowledge of
the property’s provenance (Re Diplock)
4. Property cannot be traced into the hands of a
‘bona fide purchaser for value’ without notice
->> (‘equity’s darling’ -> cannot get the
property back but can trace the money who
sold your property and put a charge on it for
example -> therefore -> claim for substitute
asset not the asset itself due to ‘equity’s
darling’) -> difference between point 3 and 4 is
that even though they are both innocent and
without knowledge, point 3 has given no
consideration/purchased and has been given
for free; point 4 has given
consideration/purchased and has
paid/purchased value

56
3. The property Case below
must be
identifiable
Bishopsgate v Money paid into overdrawn bank
Homan account or spent paying off other
unsecured debts cannot be traced ->
however, money spent paying a
secured debt may be traced into a
charge – see further in ‘Subrogation’
But what of concept of ‘Backwards
Tracing’? -> Backwards tracing is
when B is allowed to trace into an
asset that T bought on credit, and
then used the trust money to pay off
the debt. ->> This idea has been put
forward by Smith in his tracing book
but has met with resistance or
reluctance by the English courts
4. Tracing into
unmixed funds
Re Hallett’s Estate If trust property has been kept
separate -> it can be reclaimed
If it has been sold -> the beneficiaries
can trace into and claim proceeds of
sale
If the wrongdoer has used trust funds
to purchase other property -> the
claimant has a choice of remedies ->>
Property can only be traced if it identifiable -. If it has
been dissipated e.g. spent on food, drink or a holiday -
> it will no longer be identifiable and cannot be traced.
Dillon LJ suggested backwards tracing might be
allowed if there was an inference at the moment T
borrowed money that this debt was to be repaid using
trust money, or that trust money was specifically used
to reduce the overdraft and thereby make some
finance available to purchase an asset.->> this concept
is therefore intention based (could be argued very
good in exam!! Shows analysis and argument)
Penner (academic) -> supported this concept
However -> Dillon LJ held was not applicable to the
present case.
Legatt LJ agreed with Dillon LJ on the decision BUT
DIDN’T accept it was possible to trace through an
overdrawn bank account. He held that backwards
tracing concept was “fallacious.”
Held -> the claimant may elect either to take the
property or to have a charge over the property for the
amount of his money expended in its purchase -> if the
property has appreciated, the claimant would be best
advised to take the property, but if it had depreciated,
he would be advised to have a charge over the
property and sue the D for the balance.
57
5. Tracing into Claiming -> how to claim
mixed funds
(i) Claimant’s Where trust money or property is mixed with other
property mixed funds -> B have the right to a proportionate share of
with the trustee’s the property acquired with the mixed funds or an
own property equitable charge (or lien) over the property mixture, to
secure their claim.
Foskett v McKeown HL made it clear and rejected Re HL held -> the C were entitled to the proportion of the FACTS -> Foskett -> the T had paid
Hallett’s Estate as authority for a C policy proceeds that corresponded to their proportion premiums on his life assurance policy with
only having a charge over property of of the premium payments paid out of trust money, his own money and then with the trust
the D fiduciary that had been rather than merely a lien for the sums paid with trust money before dying, giving rise to a large
purchased with mixed money -> money pay-out

Lord Millet -> where a T wrongfully uses trust money

to provide part of the cost of acquiring an asset, the B
is entitled at his option either to claim a proportionate
share of the asset or to enforce a lien upon it to secure
his personal claim against the T for the amount of the
misapplied money.
(ii) Claimant’s Cases below Re Diplock -> where the T has mixed the funds of two NOTE -> If ‘innocent VOLUNTEER’ -> not
property mixed or more trusts -> the two trusts share the funds ‘equity darling’ as not purchased or
with that of rateably -> e.g. trust A’s contribution to the mixed provided consideration as bonafide
another trust fund fund was £6000 and trust B’s was £2000 -> only £4000 purchaser -> merely is just volunteer
or with property of is left, the remaining money having been dissipated -> receiving property for free therefore
an innocent therefore Trust A contributed ¾ = £3000 and Trust B tracing allowed subject to not having
volunteer contributed ¼ = £1000 -> there is no option of claiming option <<<--
an equitable charge on the fund here -> as both
parties innocent victims of mixing and would be
inappropriate to prefer one party’s claim at the
expense of the other. -> same rules apply where funds
of an innocent volunteer/contributor have been mixed
with funds belonging to a trust.

58
Foskett v McKeown Lord Millett obiter -> primary rule in regard to a mixed
fund -> gains and losses are borne by contributors
rateably
(iii) Claimant’s In cases where no value is added to the asset -> the
money used to claimant’s money is treated as dissipated and cannot
improve and be traced ->
innocent
volunteer’s pre- However, see case below
owned asset e.g.
home
Foskett v McKeown Lord Browne-Wilkinson obiter -> in cases where value
is added to the asset -> the trust would not be
entitled to a proportion of the value of the asset but
‘at most a proprietary lien’ over the asset

However -> the innocent volunteer may have a

defence to the claim if it would be inequitable to
enforce it (see below)
6. Subrogation This is a remedy NOT a cause of Subrogation -> means being in another’s place –
action stepping into another party’s shoes

Only be allowed in cases for secured Boscawen v Bajwa, per Millett LJ at 335
debt issues “Subrogation… is a remedy, not a cause of action…It is
available in a wide variety of different factual
Can also use in cases of ‘innocent situations in which it is required in order to reverse the
volunteer’ ->> defendant's unjust enrichment. Equity lawyers speak of
a right of subrogation, or of an equity of subrogation,
Cases below but this merely reflects the fact that it is not a remedy
which the court has a general discretion to impose
whenever it thinks it just to do so. The equity arises
from the conduct of the parties on well settled
principles and in defined circumstances”

59
 Millett LJ continued by noting that subrogation will
only be allowed for secured debts and that the terms
of the revived secured debt cannot be any more
favourable to the claimant than the original debt was
to the original lender, i.e. it must at best be on the
same terms!
Boscawen v Bajwa Facts on page 280 Where the C’s money has been used to pay off secured
debts -> he may be subrogated to the position of the
creditor and be given a charge over the property ->
however -> it is important to realise that the terms of
the revived mortgage can be no more favourable to
the claimant than the terms of the original mortgage
were to the original lender.

NOTE -> this remedy may be defeated on the grounds

of inequitable
7. Payments in Re Hallett’s Estate -> where the claimant’s money is
paint into the wrongdoer’s bank account and mixed
and out of with the wrongdoer’s money, the claimant has an
bank accounts: equitable charge on the bank account for the amount
the position of money paid in
between the
claimant and
the trustee
(i) The presumption Cases below
in Re Hallett’s
Estate: dissipated
money is that of
the trustee who
rightfully used his
own money

60
Re Hallett’s Estate T mixed C1’s money and C2’s money
with his money in his bank account ->
T died -> insufficient money to meet
his personal debt and to repay C1 and
C2 ->
CA held -> both the trust and Mrs Cotterill were
entitled to charges on the bank account and that any
withdrawals from the bank account must be treated
as payments of Hallett’s (T) own money and not of
Mrs Cotterill’s (C1) or the trusts (C2) -> the balance in
the account was sufficient to meet the claims of C1 and
C2

Jessel MR -> Trustee spends part of the fund and

dissipates it -> he is taken to spend his own money
first -> he cannot claim that he spent trust funds and
retained his own funds -> accordingly, the beneficiaries
may claim the fund remaining, up to the limit of their
entitlement
Re Oatway T mixed £3000 of trust money with Applying Re Hallett’s Estate Joyce J held -> the
over £4000 of his own -> spent £2137 beneficiaries were entitled to a charge on the shares
to buy shares for himself when he (which were worth more than their purchase price but
was not entitled to, unless and until less than the trust money paid into the account
he restored the £3000 to the trust ->
so he could not claim entitlement to
the shares -> (he dissipated the rest
of the money in the account)
(ii) Can the Cases below Where property bought with earlier payments out of
claimant claim the bank account has gone up in value -> it would be
valuable property C’s advantage to trace his money into this property
bought with earlier rather than simply claiming his money in the account
payments out of
the bank account
when there are still
sufficient funds in
the account to
repay him?

61
Foskett v McKeown Lord Millett -> the B is entitled at his option either to Academics -> If recipient has received
claim a proportionate share of the asset or to enforce property in good faith, then H&M
a lien upon it to secure a personal claim against the suggests (13-104) that the most claimants
trustee for the amount of the misapplied money should get is a lien.

In response to Re Tilley’s WT (in which this option was

not allowed because the trustee had done so
innocently and also had sufficient funds to repay) ->
Lord Millet stated -> it is not necessary to consider
whether there are any circumstances in which the
beneficiary is confined to a lien -> in cases where the
fund is more than sufficient to repay the contributions
of all parties.
Shalson v Russo ‘rolling charge’ method ->’cherry Rimer LJ -> considered that a beneficiary can claim
pick’ earlier payments used to purchase valuable assets as
coming from his own money rather than the trustees -
> it was said that the beneficiary may be allowed to
‘cherry pick’ if the only contest is between the
beneficiary and the wrongdoer, to avoid the
wrongdoer being left with all the cherries -> everything
is presumed against the wrongdoer who, having
wrongfully mixed the funds, is not in any position to
deny the beneficiaries’ claims that as a good man the
dissipated money was his own and the well-dissipated
money his beneficiaries.
Turner v Jacob This case followed Re Tilley’s WT and did not allow
the beneficiary to ‘cherry pick’ -> it is to be NOTED
that Tilley and Turner were family disputes, so
perhaps the judges may have provided a leeway and
felt it may be inequitable -> HOWEVER -> Shalson was
not a family case and where the C had been
appropriated by the wrongdoer who ultimately
dissipated large amounts of the mixed fund.

62
(iii) The Lowest
intermediate
balance rule –
Roscoe v Winder
Roscoe v Winder The P sold their business to W -> it
was agreed that W should collect
certain outstanding debts on P’s
behalf -> W did this and paid £450
into his account -> W then withdrew
money from the account leaving £26
-> later, before W dies, he added
£360 into the account ->>
If the wrongdoer spends the C’s money and his money
(from the mixed account) -> and then puts in moneys
of his own into the account -> this money is not
deemed to be a repayment to the C
Held -> the P’s proprietary claim over the account was
limited to the lowest intermediate balance of £26
Sargant J -> later payments into the account would
only be presumed to be repayments to the trust if the
trustee showed such intention e.g. by repaying the
money into a separate account opened for the trust ->
which wasn’t the case here.

Sargant J -> this is because tracing is about tracing

what is yours -> the money added later was from
elsewhere, not yours because the extra money was
from extra/external source
8. The ‘Swollen Cases below
Assets’ heresy
Space Investments Lord Templeman at 1074 NOTE -> BUT this theory is contrary to
v Canadian “Whether a bank trustee lawfully receives deposits or Lowest Intermediate Balance Rule!!
Imperial Bank wrongly treats trust money as on deposit from trusts, -
> all the moneys are in fact dealt with and expended by
the bank for the general purposes of the bank ->>

In these circumstances it is impossible for the

beneficiaries interested in trust money misappropriated
from their trust to trace their money to any particular
asset belonging to the trustee bank ->>>

But equity allows the beneficiaries, or a new trustee

appointed in place of an insolvent bank trustee to

63
 protect the interests of the beneficiaries, to trace the
trust money to all the assets of the bank and to
recover the trust money by the exercise of an
equitable charge over all the assets of the bank.”
9. Payments in The rules described above for mixing between the
claimant’s money and the wrongdoer’s own money do
and out of not apply where the claimant’s money is mixed with
bank accounts: either another trust fund or the money of an innocent
the position volunteer-> to discover which rules apply in such
between the instances, it will first be necessary to ascertain
whether the account is (i) a deposit account or(ii) an
claimant and active current account
another trust
or the claimant
and an
innocent
volunteer
(i) a Deposit Cases below
account
Re Diplock The general rule is that the two funs share the mixture e.g. if trust A’s contribution to the mixed
in an account rateably -> payments out of the account fund was £30000 and trust B’s was
will also be shared rateably ->> £10000 -> and £20000 is withdrawn to
buy a car -> trust A will own ¾ of the care
and trust B will own ¼
(ii) an Active Cases below There is different rule for payments out of active
current bank running accounts -> most typically current accounts
account
Re Clayton’s Case The Rule ->> This rule states that the first payment in to the e.g. it a T pays into a current account
(1816) account will be the first payment out -> this rule has £5000 from Trust A, then £3000 from
been applied as between two trusts and between a trust B and then withdraws £4000 from
trust and an innocent contributor ->> the account -> he is taken to have spent
£4000 of trust A’s money -> so trust A

64

Barlow Clowes v The case concerned the collapse of
Vaughan Barlow Clowes investment company -
> investors had paid into investment
plans -> but the money had been
stolen and the company was left
owing £115m with assets far less
than that -> some investors argued
that the rule in Re Clayton’s Case
should be applied -> this would mean
that the later investors would recover
nearly all their money, and the earlier
investors, nothing ->>
This rule originated to regulate relations between may trace into the account and claim only
banker and customer and it appropriateness in the up to the limit of £1000 (£5000-£4000),
present context has been doubted -> whereas trust B may recover the full
£3000 it is treated as still owning
However -> more recently -> CA in Barlow Clowes v
Vaughan has reluctantly confirmed that this rule is still The Mecca ->This rule was almost
good law, although subject to any contrary intention immediately seen as being unfair from
which the courts are ready to find -> the rationale for some perspectives and was very quickly
this -> Dillion LJ is that the rule has been enshrined in limited to current accounts.
English Law for so long that it can only be
replaced/overruled by the HL (Supreme Court) Re Sherry -> It was subsequently held that
judgement -> case below payments were only treated as
subsequent if they went in on subsequent
DAYS. -> Therefore if A and B’s money was
paid in on the Monday, then it would be
deemed both payments into T’s current
account took place at the same time.
Woolf J -> the rule need only be applied when it is
convenient to do so and when its application can be
said to do braid justice having regard to the nature of
the competing claims ->> it is not applied if this is the
intention or presumed intention of the beneficiaries -
>> the rule is sensibly not applied when the costs of
applying it is likely to exhaust the funds available for
the beneficiaries
On the facts of the case it was decided that the
investment fund was regarded by the investors as a
common pool, and that they should share rateably in
what remained because they had experienced a
common misfortune -> accordingly -> court ordered a
rateable distribution among the C’s who were
investors
65
 Therefore -> the ‘Clayton Rule’ should not be applied
if:
(i) It was contrary to the express or implied
intentions of the claimants
(ii) It was impractical or
(iii) It would cause injustice
Commerzbank v Further criticism Lawrence Collins J noted
IMB Morgan “Where the rule in Clayton's Case does not apply, then
(at least where the claimants have an equal right to be
paid) it will normally be appropriate for the parties to
be entitled to the mixed fund pari passu, i.e. the fund
will be shared rateably amongst the beneficiaries
according to the amount of their contributions.”
NOTE ->>> IMPRORTANT ->>>> NOTE -> although the rule in Clayton’s Case applies to
claims between two (or more) trusts and to a claim
between a trust and an innocent contributor ->> it
DOES NOT apply as between beneficiaries and the
trustee who has mixed trust funds with funds of his
own (Re Hallett’s Estate) -> look at pg 286 for working
example
10. Loss of Note -> a claim in equity is a (i) Inequitable
‘proprietary claim’ -> so even where (ii) Bone fide purchaser for value without
right to trace you lose your right for a proprietary notice
and claim in claim, you may still have a right in a (iii) The Property is not identifiable
equity ‘personal claim’
(i) Inequitable Cases below A proprietary claim may not be allowed if it is
inequitable
Re Diplock The charity, a hospital, had spent the CA -> did not allow this on the ground that it would
money improving its own pre-owned have been inequitable to force a sale
property -> the next-of-kin’s interest
in the property would have been a However -> see case below, arguing against this
charge, enforceable by sale ->> principle

66
Foskett v Mckeown There were dicta to the effect that as
proprietary remedies are enforcing
proprietary rights -> they should not
be discretionary ->>
ACADEMICS ->>
Lord Millett -> property rights are not discretionary,
but are determined by fixed rules and settled
principles -> the only defence to an equitable
proprietary claim is a bona fide purchase of the legal
estate for value without notice
Lord Browne-Wilkinson -> this case does not depend
on whether it is fair, just and reasonable to give the
purchaser an interest as a result of which the court in
its discretion provides a remedy. It is a case of
hardnosed property rights -> however -> citing Re
Diplock, said that where money had been spent on the
pre-owned assets of an innocent recipient, then a
proprietary lien would not be allowed over that asset
if it would be inequitable (a bit contradictory)
There are strong argument for saying that an innocent
recipient spending money on a pre-owned asset is the
only instance when there may be a defence of
Inequitability -> even in that situation, the defence
may not always be available
Goff and Jones (The Law of Restitution 6th ed) give the
example of the volunteer being a rich banker who
spends the trust money to increase the value of his
house and has ample liquid assets to discharge the
subsequent charge over his house, arguing that it
would not be inequitable to allow the charge in that
case.
Inequitability could be seen as the proprietary
equivalent of the defence of change of position from
Lipkin Gorman v Karpnale (here it was suggested,
obiter, that such a defence could also apply to personal
67
 and proprietary remedies in equity) -> in light of the
later case Foskett, it is doubtful that this is so.

Lord Millett has clearly stated extra-judicially in Equity

in Commercial Law (2005) that change of position is
not a defence to a proprietary claim.
(ii) Bone fide Equity’s darling See sub-heading 2 (above)
purchaser for value
without notice
(iii) The Property is See sub-heading 3 (above)
not identifiable
11. The Cases below While at common law there will always be a
restitutionary personal action against the recipient of
Personal the claimant’s property, this is not the case in equity
actions in
Equity
Re Montagu’s There will be no personal action A personal action will only arise against a recipient
Settlement against an innocent volunteer who whose knowledge of the provenance of the property
dissipated trust property before he would make it unconscionable for him no to return it
was aware that it was such ->> but deal with it as his own

BUT -> in case of maladministration it is different ->

see below
12. The Maladministration The CA in Re Diplock held, where money is wrongly
paid out in the administration of an estate, a personal
Personal action action is available against those who received the
in Re Diplock money

The CA stated that this remedy is subject to two

limitations:
1. The unpaid beneficiaries should firstly sue the
personal representative who acted wrongly,
the beneficiaries’ personal claim against those

68
 overpaid, or wrongly paid, being limited to
the amount which cannot be recovered from
the personal representative
2. The entitlement is to claim the principal sum
only, not the interest on it.

Further it was confirmed that no defence was allowed

to the personal claim -> however -> HL developed the
defence of change of position in Lipkin Gorman v
Karpnale and it is generally accepted that this defence
would be applicable to such a claim.

69
 A stranger is someone not appointed
a trustee -> the trustee de son tort is
referred to as a stranger but he may
be treated to all intents and purposes
as though he was an expressly
appointed trustee, apart from the
manner of his becoming a trustee
Distinct from the trustee de son tort
are strangers mad personally liable to
account to the beneficiary for a
breach of trust because of some fault
on their part ->>>>>>
‘Knowing receipt’ Personal liability of recipients and
and ‘dishonest accessories -> where a person receive
assistance’ property misappropriated from a
trust -> the recipient (unless a bona
fide purchaser for value without
notice) will be obliged to return the
property or its proceeds as soon as
he becomes aware of the position -.
This liability is a proprietary claim
arises even if the recipient had no
notice, actual or constructive, of the
breach of trust because he was a
innocent volunteer ->>>
Listen to the last slide of the London
Liability of Strangers lecture – again and again!! -> clarifies and
how to apply and what to write in exam
Such a stranger may become liable to account in one
of two ways:
1. He may knowingly receive or deal with the
trust property in breach of trust -> this is
referred to as ‘knowing receipt’ -> more
accurately regarded as dishonest or
unconscionable dealing with received trust
property in not returning the property to its
rightful owner when aware that it should be
returned; or
2. He may dishonestly assist or procure a breach
of trust -> referred to as ‘dishonest assistance’
This personal liability extends beyond trust property to
property in respect of which fiduciary duties exist.
If, however, you are going to be made personally
accountable in equity to pay compensation to a
claimant your conscience must be at fault. -> hence
you can only be made liable if you had some sort of
knowledge of the claimant’s equitable interest
If the recipient dissipates the property in
circumstances where he lacks the requisite
knowledge, his proprietary liability to return the
property (or its proceeds) thereby ceases -> moreover,
he cannot be made personally liable for those
innocent actions
However, the recipient will be under a personal
liability to account to the beneficiaries for the loss to
70

Baden v Societe ‘the Baden scale’ -> ‘knowledge’ –
divided into 5 types by Peter Gibson J
(you will see how this has been
replaced, yet still corresponded with)
the trust if he dissipated the trust property (or
proceeds) after becoming aware that it was trust
property -> furthermore, a person who is liable for
dishonestly assisting a breach of trust will be under a
personal liability to account for losses, though he may
never have received the trust property.
‘knowledge’ – divided into 5 types by Peter Gibson J ->
(i) Actual knowledge
(ii) Wilfully shutting one’s eyes to the
obvious;
(iii) Wilfully and recklessly failing to make
such inquiries as an honest and
reasonable man would make;
(iv) Knowledge of circumstances which would
indicate the facts to an honest and
reasonable man (but not a morally obtuse
man); and
(v) Knowledge of circumstances which would
put an honest and reasonable man on
inquiry

1. Knowing
receipt (or
recipient’s
liability)
El-Ajou v Dollar Hoffmann LJ identified three requisite elements of
Land Holdings ‘knowing receipt’ claim:

1. A disposal in breach of fiduciary duty

2. The ‘beneficial receipt’ by the defendant of
assets which are traceable assets of the

71

Point 2 ->
Beneficial receipt
Point 3 -> Point 3 concerns knowledge -> which
Knowledge as shown above, is judged upon the
Baden scale -> this however has been
altered -> see through the cases
evolved of what ‘knowledge’ would
constitute ->
claimant -> (D receives B’s traceable assets)
3. ‘Knowledge’ on the part of the defendant that
the assets are traceable to a breach of
fiduciary duty -> (D has knowledge of breach)
Point 2 and 3 will be analysed below -> in particular
Point 3 (knowledge)
As to point 2 -> where receipt was not beneficial but in
a ministerial capacity (e.g. banker or solicitor) on
behalf of a client to pass it on as directed by the client
there can be no liability for knowing receipt -> if he
passes it on -> only for dishonest assistance -> if,
however, an agent lawfully receives property but then
deals with it for his own benefit knowing this to be
consistent with the relevant fiduciary duty, he can be
personally liable
As to point 3 -> knowledge -> it is crucial to appreciate
the ambiguities created by the use of the word
constructive trustee in respect of a donee who
innocently receives property in breach of the
transferee’s equitable duties as a fiduciary -> an
equitable proprietary interest binds this donee as soon
as he receives title to the gifted property, so judges
regard him forthwith as a constructive trustee of the
property unknowingly holding it for the beneficiaries of
an express trust or other fiduciary relationship. -> it is,
however, necessary to liable till he has requisite sort
of knowledge that another person has a better right to
the property -> until that point in time, he can deal
freely with the property as if it is his own, so that he
cannot be liable in any way if he no longer has the
property or its traceable substitute -> after that point in
time, he is under duties to restore the property to its
72

BCCI v Akindele Requirements for knowledge where
problematic -> the test for knowledge
was Baden but caused problems as it
was verily and misapplied uncertain
application through different
interpretations -> therefore Nourse LJ
provided for a new test in respect of
point 3 (El-Ajou) and knowledge
applicable in this area (receipt
liability/knowledge) ->
rightful owner and not use it to profit himself -> thus
some judges regard him only from that time as a
constructive trustee personally accountable for losses
and for any profits -> if he gives away the property or
sells it and dissipates the proceeds, he will be liable for
its full value -> it is not receipt of the property that
makes him personally liable (as a constructive trustee)
but his subsequent dishonest dealing with it, subject to
dishonesty covering types (i) to (iv) of Baden
Therefore -> Where a stranger to the trust is to be
made a constructive trustee because of his ‘knowing
receipt or dealing’ -> It is clear that he must ‘know’ of
the breach of trust -> he must have knowledge
See the new test for knowledge in this area and how it
evolved through cases ->it is important for the exam
to not only state the current test but also the other
how it got there i.e. the prior interpretations/test ->
below
First the current test will be shown, and then the
interpretations/tests prior to it.
Nourse LJ -> new test -> current test -> that a NOTE: this is different from dishonest
defendant will be personally liable for ‘knowing assistance which will be dealt separately
receipt’ where it would be ‘unconscionable’ for him later ->>
not to be so liable -> so that he can be liable when not
dishonest, seemingly -> in the sense of not having type
(i), (ii) or (iii) knowledge ->
Therefore seemingly, type (i), (ii), (iii) and (iv) will
suffice for liability -> but that negligence conduct of
type (v) cannot give rise to liability
73
 Nourse LJ -> deprecated use of the five technical types
believing it easier to replace them by the
‘unconscionability’ test, despite the uncertainty that
this causes
Two cases ->> Prior to BCCI v Akindele (the current test)
interpretation/tests/cases below, regarding knowledge
for this area (recipient liability/knowing receipt)
Belmont Finance v 3 companies -> a company, its Buckley LJ held that Baden (i) – (v) would suffice
Williams Furniture subsidiary company and subsidiary
company’s subsidiary -> common
chairman (with a conflict of interest)
was involved in a conspiracy that
contravened s54 Companies Act (for
a company’s money was used to help
its shares be purchased) -> the
company that ended up with most
money was held liable as constructive
trustee -> chairman knew of all the
facts giving rise to the trust but did
not act dishonestly within (i) to (iii) ->
nevertheless held liable ->>

Re Montagu’s 10th duke was beneficiary to a trust -
Settlement > he disposed of certain chattels -> he
died -> now the 11th duke entitled to
chattels sued the executors of the
10th duke on the basis that 10th duke
was constructive trustee of those
chattels (even though the 10th duke
thought he had a right to dispose) ->>
Megarry V-C -> there was a muddle, an honest muddle
-> held -> the executors (as representatives of the 10 th
duke) were obliged to return those settled chattels
they still held -> as the 10th duke was not guilty of
dishonesty, he (and hence his executors) was not a
constructive trustee in respect of the settled chattels
which the 10th duke had disposed of.
Megarry V-C -> in the case of imposing a constructive
trust for knowing receipt ->’the basic question is
whether the conscience of the recipient is sufficiently

74
 affected to justify the imposition of such a trust -> (i) –
(iv) would suffice but not (v) and his highly doubtful
City Index v Gawler Both cases confirmed the test for knowing receipt
outlined in BCCI v Akindele though referring to the
Armstrong v Baden types of knowledge. ->
Winnington
however -> without clear definition of what
unconscionability is, there is the risk of it being
misinterpreted and misapplied by judges in future
decisions
Starglade v Nash Held -> that the unconscionability test was a flexible
one that was of lower objective standards than
dishonesty in dishonesty assistance -> (i) –(iv) would
suffice -> notes: raised that the test could be prone to
uncertainty (as mentioned above)
2. Dishonest Two subheading:
(knowing) 1. Dishonest Assistance
Assistance (or 2. Assistance -> Causation for dishonest
accessory assistance
liability)
Dishonest Cases below
Assistance
Royal Brunei Privy council Lord Nicholls said that ‘carelessness is not dishonesty’
Airlines v Tan -> ‘dishonesty is to be equated with ‘conscious
Lord Nicholls -> gave the advice to impropriety’, means simply ‘not acting as an honest
Privy Council -> stated accessory person would in the circumstances’
knowledge is not the key question ->
dishonesty was described as both a Therefore, it is clear, although the state of the
necessary ingredient of accessory accessory’s knowledge is no longer the crux of his
liability and a sufficient ingredient -> liability (categories (iv)-(v)), his knowledge of the
Lord Nicholls describes ‘knowingly’ circumstances is relevant in determining whether he
as ‘inapt as a criterion’ and said -> is acted honestly or not (categories (i)-(iii)) -> further

75
 better avoided as a defining
ingredient of the principle (i.e. of
accessory liability) and in the context
of this principle the Baden scale of
knowledge is best forgotten ->>
account should also be taken of the personal
attributes of the accessory, such as his experience and
intelligence

Lord Nicholls -> liability in equity to

make good resulting loss attaches to
a person who dishonestly procures or
assists in a breach of trust or fiduciary
obligation ->

The state of mind of the trustee is

irrelevant to the question of the
accessory’s liability -> (therefore,
categories (iv) –(v))

What matters is the state of mind of

the third party sought to be made
liable not the state of mind of the
trustee -> (therefore, categories (i) –
(iii)) ->>>>>
Twinsectra v Subjective element Lord Hutton -> The majority, whilst expressing
Yardley approval for the Privy Council’s advice in Royal Brunei
Airlines v Tan, appeared to have changed the test for
dishonesty to the more subjective criminal test -> so
that not only must the defendant have done
something that right-thinking people would consider
dishonest, he must have been aware that they would
so view his conduct.

Lord Millett (strongly dissented) -> appeared to hold

that since Leach was not himself subjectively aware

76

Barlow Clowes v Privy Council Lord Hoffmann
Eutotrust delivering the advice of the Privy
Council ->
Similar facts as above -> where
fiduciary acts contrary to
instructions believing/assuming it is
not a breach
that what he was doing was something that the
ordinary reasonable person would think was dishonest,
he had rightfully has the case against him dismissed by
the trail judge , whom the CA had reversed ->
Lord Millett applied an objective test. -> Leach, a
solicitor, had knowingly participated in arrangements
which he knew to be an unauthorised use of the money
in breach of Sims’ undertaking as a solicitor to
Twinsectra’s solicitors. Leach was liable, regardless of
whether or not he appreciated that the ordinary
reasonable person would consider his knowing
mishandling of the money (at the very least in breach
of Sims’ contractual undertaking) as dishonest.
Lord Hoffmann stated ‘the principles of liability for Further -> the PC had explained and
dishonest assistance which had been laid down in corrected any misconceptions about the
Twinsectra...were no different from the principles nature of the test as it had been set out in
stated in Royal Brunei Airlines v Tan Twinsectra.
Lord Hoffmann seemed hypocritical but further
acknowledged that there may have been an element
of ambiguity in remarks made in Twinsectra by himself
and Lord Hutton but that their statement to the effect
that a dishonest state of mind meant ‘intended to
require -> consciousness that one is transgressing
ordinary standards of honest behaviour -> it did not
require thought about what those standards were’
Lord Hoffmann -> if by ordinary standards a
defendant’s mental state would be characterised as
dishonest ->it is irrelevant that the defendant judges
by different standard->>>below
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Abou-Rahmah v The matter has now been settled ->
Abacha the court here preferred and applied
the PC in Barlow Clowes v Eurotrust
as opposed to the HL in Twinsectra v
Yardley ->>
Here the test for dishonesty had
been settled and reaffirmed Royal
Brunei Airlines v Tan (the proper
test)
Starglade v Nash Approved the test (above) and
subsequently applied -> further also
provided an important clarification -
> denominator of what ordinary people would consider
Assistance -> Cases below
Causation for
dishonest
assistance
PC held -> upheld the trail judge’s finding that the
defendant was therefore liable for dishonest
assistance -> this falls within category (iv) Baden,
though no judge referred to this.
Arden LJ -> the test for dishonesty was primarily an Settled and current ‘test for dishonesty’
objective one ->
Arden LJ -> it is unnecessary to show subjective
dishonesty in the sense of consciousness that the
transaction is dishonest ->
Arden LJ -> it is sufficient if the defendant knows of
the ‘elements’ of the transaction which make it
dishonest according to normally accepted standards
of behaviour
Morritt C -> Confirmed that the standard of behaviour
is that of the ordinary honest person -> not that of the
most scrupulous honest person or the lowest common
as dishonest ->
‘The relevant standard...is the ordinary standard of
honest behaviour. -> Just as the subjective
understanding of the person concerned as to whether
his conduct is dishonest is irrelevant -> so also is it
irrelevant that there may be a body of opinion which
regards the ordinary standard of honest behaviour as
being set too high’
The second requirement in finding liability under this
head is to find that the defendant assisted with the
breach of trust or fiduciary duty -> in essence, to find
there has been assistance means that we need to find
some form of causative link between the breach and
the acts of the defendant -> however see cases below
78
Grupo Torras v Al- This causal link need not relate
Sabah (No.5) purely to any loss suffered by the
claimant ->>
Casio Computer v The key point of this (above- Grupo)
Sayo is that there is no need for a direct
casual link between the defendant’s
actions and the claimant’s loss for a
dishonest assistance claim -> the gist
of Mance LJ’s sentiments were
reaffirmed and clarified ->>
Baden v Societe It is important to note Peter Gibson’s
ruling ->>
Balfron v Peterson Defence
Ultraframe v The key elements for assistance
Fielding were made clear by Lewison J ->>
Acts that come within this notion of
assistance (right-hand side 3 points)
should be widely interpreted. ->
CA -> Mance LJ -> ‘the starting point...is that the
requirement of dishonest assistance relates not to any
loss or damage which may be suffered, but to the
breach of trust or fiduciary duty -> the only relevant
inquiry is...what loss or damage resulted from the
breach of trust or fiduciary duty which has been
dishonestly assisted’
Tuckey LJ -> ‘Grupo Torras...establishes that in a claim Whilst the causation threshold is quite
for dishonest assistance it is not necessary to show a low -> there still has to be some form of
precise causal link between the assistance and the causative impact between the breach and
loss...but that loss caused by the breach of fiduciary the assistance
duty is recoverable from the accessory’
In that the claimant does not have to show that the
defendant’s actions ‘inevitably had the consequence
that a loss was suffered’
It is NOT a defence to state that the act would have
occurred anyway even if the defendant had not taken
part (this is because as mentioned earlier in Grupo that
it is about the breach not the loss)
Lewison J -> the defendant does not need to know However if the defendants actions have
precisely the nature of the breach of fiduciary duty -> only taken place after the breach and
so long as he has some appreciation that he is helping subsequent cover-up have been fully
someone who it up to no good implemented -> then the defendant
cannot have assisted in the breach at all.
Lewison J -> Assistance:
If the defendant has somehow made the : Further if the fiduciary and the assistant
1. Planning of the breach/the actual breach were acting in a joint venture -> the
2. Making it easier accessory is not liable for profit made by
3. Cover-up the fiduciary: accessory is only liable for
Then the defendant has assisted any profit that he made.
79
 In the exam always start with ‘what
remedy’ you require and then
‘define’ them -> further -> damages
are a final remedy and therefore
need to consider equitable remedies
first, esp. interim remedies
Headings:
 1. Specific Performance
 2. Injunctive relief
 3. Interim Prohibitory
Injunction
 4. Interim Mandatory
Injunction
 5. Search Order
 6. Freezing Injunction
 7. Rescission
 8. Rectification
 9. Account
 10. Defences
1. Specific ‘equity sees to what ought to be
done’
Performance
Cases below
Equitable Remedies
Equitable remedies are not available as of right, but
only at the discretion of the court. This discretion is
exercised on certain settled principles, so that a
claimant can usually be regarded as having an
entitlement on complying with those principles. It is
important to note:
 Equitable remedies will only be granted where
the common law remedy of damages would
not adequately remedy the wrong;
 The court will take into account equitable
principles such as the maxims of equity
The claimant has to show the court the need for the
equitable remedies and that damages are inadequate -
> therefore need to persuade court
Definition -> this is an order requiring a party to a
contract to carry out his obligation under a contract ->
it can only be sought in respect of positive obligations -
> breach of negative obligations may be restrained by
injunction.
VITAL -> Need to mention what goods (i.e. realty or
pure personalty) or services or land your are claiming
80
Adderley v Dixon Specific performance will only be
granted where an award of damages
would not be an adequate remedy ->
Sir John Leech V-C -> courts of Equity decree the SP of
contracts not upon any distinction between realty and
personalty -> but because damages at law may not
afford a complete remedy ->
SP if normally granted for a contract for land, not
because of the real nature of the land -> but because
damages at law, which must be calculated upon the
general money value of land, may not be a complete
remedy to the purchaser to whom the land may have a
peculiar and special value ->
SP is not normally granted for a contract
for the sale of stock or goods, not because
of their personal nature -> but because
damages at law, calculated upon the
market of the stock or goods, are as
complete a remedy to the purchaser as
the delivery of the stock or goods
contracted for; inasmuch as with the
damages, he may purchase the same
quality of the like stock or goods.

->>>>>>> (put it there to save paper)

Land (realty) is regarded as unique, Personal property (pure personalty), including stock or
hence SP granted -> good or contracts for services -> is not usually
regarded as unique, hence SP not granted and do
damages would be an adequate remedy ->

However -> if the item is unique or if identical

property cannot be obtained for some other reason,
the courts may award SP -> see cases below
Neville v Wilson Stocks and shares not available on the market, such
where they are in private company -> unique
Falcke v Gray Articles of unusual beauty, rarity and distinction or of
peculiar value to the claimant -> in this case a Ming
vase -> however, compare with below case Cohen
Cohen v Roche The court refused SP to a buyer of a set of Note: the buyer was contracting with a
Hepplewhite chairs saying that they were 'ordinary view to resale.
articles of commerce and of no special value or
interest'.
Behnke v Bede The term uniqueness was given a In the present case, an experienced ship valuer was of
Shipping wider meaning to include the opinion that he knew of only one comparable ship
commercial uniqueness ->> of this kind in question and that might have been sold.

81

Philips v Lamdin The P purchased the D’s property ->
only to discover that an ornamental
door designed by Adam (famous
artist) in the property has been
removed ->
Contracts for services -> where the
contract is one for provision of a
service rather than for sale of goods -
> it is often difficult to assess
adequacy of damages in the same
way ->>>
Verrall v Great SP of an agreement to provide
Yarmouth BC premises for National Front annual
conference was thus granted ->>
Co-op v Argyll SP asked for a covenant in shop lease
Stores -> to keep shop open as supermarket
during usual hours of business ->
shop was closed because it was losing
money ->
Contract of PERSONAL services ->
need to identify whether contract of
services (then above will apply) or
contract of ‘employment’ ->>>
Wright J -> ruled that the ship was of peculiar and
practically unique value to the buyer in respect of
which an order for specific performance could be
made.
Held -> the D had to take reasonable care to preserve
the property and the door had to be returned -> as
unique
In particular, it can be hard to classify a service as
unique unless there really is only one person in the
world who can perform it -> instead -> the courts tent
to focus on whether your losses could be quantified if
the service was not performed -> see cases below
The C could not find alternative premises and the
political effects of cancelling the conference could not
be compensated in damages
SP will not be granted where performance of the
contract requires constant supervision by the court ->>
Lord Hoffmann -> real problem -> for contracts
requiring an ongoing activity, the court may have to
give indefinite series of rulings to ensure the order was
carried out -> therefore SP cannot be granted which
require constant supervision by the court -> SP only
granted for finite/final issues e.g. come to an end
contracts, not on-going
The s.236 TULR(C)A 1992 -> no court shall compel an
employee to do any work or attend any place for the
doing of any work whether by way of (a) an order of SP
of a contract of employment or (b) an injunction
restraining a breach or threatened breach of such
82
 contract ->

Employees -> SP prohibited due to s.236 TULR(C)A 92

Contractors ->policy factor may prevent SP (see below)

In any other case than a contract of ‘employment’, for

example where the contract is a contact for ‘services’,
equitable principles usually prevent enforcement.
Unlike the Act, this is not an absolute prohibition, but
reasons for refusal are (in cases below):
Ryan v Mutual Are the services clearly defined? -> A lease of a service flat provided that the lessors
Tontine should provide a porter who was to be 'constantly in
attendance'. -> It was held that this undertaking could
not be specifically enforced. -> It would require 'that
constant superintendence by the court which the court
has always in such cases declined to give'
Posner v Scott- Are the services clearly defined? -> The court granted an application for specific
Lewis performance of a lessor's covenant to employ a
resident porter for certain duties. ->>> The court
distinguished Ryan v Mutual Tontine, where
supervision of the execution of the undertaking had
been required. -> > > Here neither personal services,
nor a continuous series of acts, were required, but
merely the execution of an agreement containing
provisions for such services.
De Francesco v If it would be against public policy -> Fry LJ -> the courts did not wish to ‘turn contracts of
Barnum services into contracts of slavery’ ->>

Girl of fourteen was apprenticed to D for seven years

in order to learn to dance -> D was not obliged to
maintain her, nor did he have to pay her unless he
found engagements for her -> Even when
engagements were found, the rate of pay was very low

83

Giles v Morris If it would lead to imperfections in
performance ->>
Court also considered factors for
‘slavery’ (not exclusive, can include
more depending on facts of cases) ->
2. Injunctive STARTING POINT (for all types of
injunction applications) -> an
relief injunction WILL ONLY be granted to
protect ‘Recognisable’ legal or
equitable rights -> always start with
this in exam and mention the case
Day v Brownrigg ->>
-> She could not obtain engagements for herself, nor
was she allowed to marry, during the seven years -> It
was held that the contract was not binding upon the
girl, as it was unreasonable, oppressive and not
beneficial to her.
Megarry J -> No SP if performance is poor and if it
depends on matters of opinions or judgement -> courts
cannot judge if the contract for services if e.g. a singer
(‘Artistic Services’) because hard to tell whether a
singer sings bad deliberately or is just poor, however,
court can judge if the contract for services is ‘Technical
Services’ e.g. builder/carpenter, as can be judged
objectively whether good or bad.
Megarry J also considered factors to judge in cases of
slavery or not -> the factors -> the court looks at the
‘daily impact of person upon person’ :
1. Contract duration
2. Relationship breakdown
3. Control
4. Proximity
Day v Brownrigg -> the P was refused an injunction
which sought to restrain his neighbour from calling his
house Ashford Lodge, which was the name of the P’s
house -> CA held that since no legal or equitable right
had been infringed, then no equitable remedy could be
granted
Types of Injunctions: two basic types ->
1. Prohibitory -> restraining a person doing
something
2. Mandatory -> ordering something to be done
or undone
84

Types of Injunctions:
 3. Interim Prohibitory Injunction
 4. Interim Mandatory Injunction
 5. Search Order
 6. Freezing Injunction
(numbered according to ‘sub-
headings’ shown in the start of this
topic)
3. Interim Always state the DEFINITION for any
type of remedy you are seeking in the
Prohibitory exam -> refer to above for the
Injunction definition for this injunction
Injunctions may be granted at different stages:
1. Final (or perpetual) -> the court makes an
order for an injunction at the trail -> order
finally settled (at the end)
2. Interim -> issued prior to the full trail taking
place and effective only until trail or a date
specified in the order
Additionally, injunctions may be granted with or
without notice and quia timet injuction (this is when, if
a person’s rights have not yet been infringed, but an
infringement is threatened or feared and serious
damage likely to ensure, he may apply for quia timet
(because he fears) injunction -> this is not a separate
category of injunction, but merely indicates that the
injunction is sought before the feared infringement or
wrong is occurred)
The Guidelines for granting interim prohibitory
injunctions are found in the HL case American
Cyanamid v Ethicon -> these are fundamental
guidelines and very important -> need to apply these
in every stage in the exam!!
Before American Cyanamid it was necessary, as first
step for the C to establish a prima facie case that his
rights have been infringed -> the term prima facie
means that, on the evidence as it stands at the time of
the application, the C would on a balance of
probabilities succeed in its claim -> however, in
American Cyanamid, Lord Diplock laid down ‘new
guidelines’ -> the main thrust of the guidelines is that
85

American Lord Diplock -> The American
Cyanamid v Ethicon Cyanamid GUIDELINES ->>
Cases including within the guideline
for easier understanding
the courts avoid considering the ‘merits’ of the case at
the interim stage of the proceedings.
Lord Diplock -> The guidelines are as follow:
1. ‘Serious Question’
The court must be satisfied that the claimant’s case is not frivolous or vexatious -> and that
there is a ‘serious question’ to be tried ->
There must be a real question between the parties to be determined at trail i.e. it must be
established that there is some prospect of success ->
If the prospects of success are so small that they lack substance in reality, then the C’s claim
for an injunction will fail, because there is no serious question to be tried ->
Morning Star v Express Newspapers -> The P alleging that Express’s tawdry new
tabloid “The Daily Star” would adversely affect sales of their own Communist daily, “The
Morning Star.” The P argued that Londoners might accidentally pick up the similarly-named
celebrity gossip rag instead, besmirching the Morning Star’s good name and confusing its
readers. -> The High Court rejected the claim, holding that “only a moron in a hurry would
be misled” into confusing the two magazines.
To determine whether a case passes this threshold -> it is necessary to examine the actual
claim made i.e. to establish that there is a real right asserted and a substantial
infringement alleged.
2. ‘Balance of Convenience’
If the above threshold is reached -> the court then goes ‘on to consider whether the
‘balance of convenience’ lies in favour of ‘granting or refusing’ the interim injunction’
The court carries out a balancing exercise to minimise the risk of doing injustice, hence
referred to as ‘balance of convenience’ -> (a) adequacy of damages (b) other factors (c)
special factors
(a) Adequacy of damages
i) On the one hand, the court will consider whether, if it refuses an injunction and
86
 the C wins at trail, he could be adequately compensated by damages for any
loss caused by the D’s actions prior to trail
ii) If so, and the D would be in a financial position to pay, an interim injunction
would usually be refused
iii) On the other hand, the court will consider whether, if the injunction is granted
and the C loses at trail, the D could be adequately compensated by the C’s
undertaking in damages for any loss caused by the granting of the interim
injunction
iv) If so, and the C would be in a financial position to pay, there would be no
reason to refuse an interim injunction

(b) Other factor (Lord Diplock stated unwise to draw up whole list, but matters found
important include: below)
Associated Newspaper v Insert Media -> damage to the goodwill of a business
Potters-Ballotini v Weston-Baker -> the closing down of a business
Catnic Components v Stressline -> preserving a substantial investment

(c) Special factors (they may also be special factors to take into consideration when
balance of convenience in particular circumstances of an individual -> differ per case
facts)

3. ‘Maintaining Status quo ante’

Where the balance of convenience does not clearly favour one party or the other, the
deciding factor will be the preservation of the ‘status quo ante’ -> ‘ante’ means the
previous state of affairs’, therefore the status/situation before the incident.

Garden Cottage Foods v MMB -> this is generally the state of affairs before the last change
and would thus generally favour the granting of the injunction as the ‘last change’ is usually
the commencement/commission of the alleged wrong

Shepherd Homes v Sandham -> the position may alter if the C delays his application, as
then the last state of affairs would actually be the alleged wrong, and the status quo would
thus favour letting the wrong continue and refusing injunction

87
 The key point to note is that the status quo is simply a point in time -> it is not fixed and can
change according to the action of the parties

4. ‘Merits of the case’

As a LAST RESORT the court may consider the merits of the case -> however -> the court
will not consider the merits unless the ‘balance of convenience’ is otherwise even and it is
apparent on the facts that the strength of one party’s case is disproportionate to that of
the other party.

For EXCEPTIONS to where American Cyanamid guidelines will not apply, look at page 318
4. Interim Always state the DEFINITION for any A stronger case is needed for the grant of an interim
type of remedy you are seeking in the mandatory injunction
Mandatory exam -> refer to above for the
Injunction definition for this injunction
Shepherd Homes v Test by Megarry J Megarry J -> the court must feel ‘a high degree of
Sandham assurance that at the trail it will appear that the
injunction was rightly granted’
Locabail v Approved the test suggested by CA -> this test was not affected by the decision in
Agroexport Megarry J in Shepherd American Cyanamid -> Interim Mandatory Injunctions
were one of special categories of interim injunctions
where American Cyanamid would not apply
Evans v BBC An interim mandatory injunction was granted to
compel the D to screen a party political broadcast by
Plaid Cymru just before election -> this was clear case
where damages would not have been an adequate
remedy.
Sky Petroleum v A negative injunction, which was The P contracted with the D to buy from it at a fixed
VIP Petroleum mandatory in effect, was granted -> price all its petrol and diesel fuel -> a dispute arose ->
when there was no real prospect for the P to obtain
fuel from any other source -> the D purported to
terminate the contract and not supply the P with any
fuel, which would have put the P out of business ->

88
 unless the P paid a higher price which would not be
commercial for the P -> the judge ordered that the D
be restrained from withholding supplies of fuel from
the P in accordance with the contract between them
until the judgement or further order -> this also
amounts to SP of the contract, which will not normally
be awarded for the sale of non-specific
unascertainable goods because damages will normally
be an adequate remedy -> damages, however, would
not be an adequate remedy where the D was likely to
be put out of business if the injunction was not granted
(and also it was seen unique as could not obtain fuel
from elsewhere, especially at that price)
Page One Records IMPORTANT NOTE -> court will unlikely grant an injunction (either
v Britton mandatory or prohibitory) if it would have the same
effect as SP where it would not be appropriate for
reasons -> reasons for where SP would not be
appropriate -> look at cases flowing from the small
heading ‘Contracts for PERSONAL Services’ -> those
reasons apply here as well for refusal
5. Search Definition -> These are interim Definition -> it is a order to the D to allow the C and his Failure to comply with the order is
mandatory injunctions designed to representatives to enter the D’s premises (business or contempt of court and likely to lead to
Orders ensure that the D does not destroy or residential) to search for, inspect, photograph or adverse inferences being drawn at the
remove evidence, in the form of remove such evidence -> trail
documents or items ->
Search orders are particularly useful in cases
concerning such matters as breach of confidence or
copyright or fraud -> the order is made to safeguard
vital evidence to prove the C’s case.
EMI v Pandit The first search order was made in An action for breach of copyright -> order was made
this case -> requiring the P to be allowed to enter the D’s property
to inspect, photograph and remove offending items

89
Rank Film v Video HL approved the practice of granting search orders
Information Centre
Also confirmed search orders are not like criminal,
therefore need permission to enter, cannot to force
your was through or break in.
Jurisdiction is now governed by s.7 of the
Civil Procedure Act 1997, and are also
dealt with in the Civil Procedure Rules
1998

Also search order should not require a D to disclose

Anton Piller v CA granted order which required the
Manufacturing D to permit the P to enter their
Processes premises to inspect documents
relating to confidential information
concerning the P’s electrical
equipment, which the P feared the D
would pass to a competitor ->
information which would incriminate him.
Search Order -> TEST
Ormrod LJ -> should only be made where there is no
alternative, that is to say, it should be treated as a
remedy of last resort ->
Ormrod LJ -> 3 pre-conditions for granting the order:
1. An extremely strong prima facie case (this is
much higher standard than for ordinary
mandatory interim injunctions) -> needs to be
a clear and specific case, not just a rumour or
presumption
2. Very serious damage, potential or actual to
the C -> not jus mere damage but serious
damage e.g. ruing full business
3. Clear evidence that the D has incriminating
documents/items in his possession and a real
possibility that he may destroy them ->
cannot be a ‘fishing expedition’, you cannot
just go for fishing hoping to find something ->
needs to be concrete proof e.g. a tip-off or
witness statement would satisfy
4. Lord Denning added a requirement ->
inspection will do no real hard to the D or his
case

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Lock International Hoffmann J referred to the need for
v Beswick ‘proportionality between the
perceived threat to the P’s rights and
the remedy granted’ ->
The P claimed that their former
employees, who were now
competing with them, were using the
P’s trade secrets and confidential
information -> but the D’s made a
successful application to have the
order discharged -> judge said -> they
were not ‘fly-by-night video pirates’,
but former long-term employees with
families and mortgages, who had
openly said they were entering into
competition.
Hoffmann J added an extra condition to Anton Piller
regarding the 3rd condition -> ‘real possibility of
destruction’ -> that the courts will have to looks at the
defendants ‘Conduct’ to infer whether a real
possibility of destruction
Defendants ‘Conduct’ -> e.g. evasive nature and/or
will disobey courts order, see whether married , with
families, with children, paying mortgages etc
The claimant must make full and frank disclosure to
the court of all material matters within his knowledge
and will be required to give an undertaking in
damages, with security if appropriate
Requirements for enforcement include:
1. Order to be served and carried out in presence
of a ‘supervising solicitor’ who is experienced
in such matters, is not a member of the firm
representing the C and who must explain
things to the D in fair and accurate manner
2. Entry must generally take place between
9.30am – 5.30pm so the D can seek legal
advice
3. Search must take place in the presence of the
D or a responsible employee
4. Al list must be made of any items to be
removed and the D given an opportunity to
check it -> (Columbia Pictures v Robinson ->
aggravated damages were awarded for seizing
items which were not covered by the order)
5. If the premises are likely to be occupied by a
woman alone, one member of the party
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Chappel v UK Search Orders and the Human Rights
Act 1998 ->
6. Freezing Definition -> These are interim
prohibitory injunctions ordering the
Injunctions D not to disclose of or remove his
assets from the jurisdiction before
trail
should be a woman -> (Universal
Thermosensors v Hibben)
If the solicitor in charge of the execution of the order
fails to comply with the exact terms of the order -> he
will be in contempt of court
The D may apply to the court at short notice for a
variation or discharge of the order, provided entry to
the premises has been allowed but the search has not
commenced
ECHR -> held search order valid and no conflict with it remains to be seen, however, whether
Art.8 (right to respect private and family life) -> there Art.6 (right to fair trail) is in conflict with
were necessary safeguards taken -> under supervision Search Order or not -> however, it can be
of High Court and rarely granted -> undertaking given assumed valid based on the reasons
by solicitor provided sufficient to ensure the proper provided in this case.
supervision -> strict procedure and abuse will be liable
in court e.g. Columbia Pictures (above) -> D may also
apply to court for variation or discharge order prior to
commencement -> therefore valid and also necessary
for democratic society
Definition -> a freezing injunction is a personal remedy Jurisdiction is now governed by s.37
-> in personam -> it is not proprietary and thus applies Senior Courts Act 1981 -> such relief may
to the D personally NOT the assets themselves -> a be granted where ‘it appears to the court
freezing injunction has no effect on the assets to be just and convenient to do so’
themselves -> the D could still physically deal with his
assets under a freezing injunction, but would be in
contempt of court if he did so i.e. sold or moved to
another jurisdiction
The C will be required to give an undertaking in
damages, with security if appropriate.
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 As ancillary to the order, the court will often grant an
order requiring disclosure of the D’s assets and their
whereabouts.

The D will be allowed to keep a reasonable amount of

Derby v Weldon The requirements are stricter than
other interim injuctions ->
money for living and business expenses. -> the D may
at any time apply for the injunction to be discharged
The claimant must show that:
1. He had a good arguable case -> showing string
case that C will win
2. The defendant has assets within the
jurisdiction (or without, where an extra-
territorial order is sought) -> e.g. house,
business, car, bank accounts etc
3. There is a real risk that they will be removed
or dissipated ->
In Customs and Excise Commissioners v
Anchor Foods -> Lord Neuberger J said that
what is required is a good arguable case for
risk of dissipation -> factors:

(i) Evasive? E.g. not trustworthy

(ii) Debt-dodger?
(iii) Means & know-how to easily remove
assets?
Ninemia Co-op v First point -> what is ‘good arguable Mustill LJ -> ‘which is more than barely capable of NOTE -> the above point 3 -> the Customs
Trave case’ ->> serious argument, but not necessarily one which the case -> Lord Neuberger J is stating the
‘judge considers’ that would have a better than 50% requirements of ‘dissipation’ for it to be a
chance success’ good arguable case
Third Chandris The C must make a full and frank disclosure of all
Shipping v material matter and, -> in a ‘without notice’
Unimarine application, he should fairly state the points that
could be made by the D against his claim

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Derby v Weldon Extra-territorial orders ->> In appropriate cases, the order will freeze assets NOTE -> this case it number 3 and 4 ->
(Nos. 3 & 4) outside England and Wales with appropriate different from the one mentioned at the
provision respecting the territorial sovereignty of start
foreign States
7. Rescission Rescission is the right to have a contract or voluntary
deed set aside in certain circumstances -> rescission
bring the contract to an end and puts the parties back
to their pre-contract positions – restitution in
integrum
8. Rectification Where the parties have reached an agreement, which
has been put in writing, the court may order
rectification of the written agreement if it does not
correctly embody what was agreed -> this also include
Pension scheme trusts and voluntary trusts

It also include wills in case where it fails to carry put

the testators intentions in consequence of a clerical
error or a failure to understand his instruction -> the
courts are empowered to do this under s.20
Administration of Justice Act 1982
9. Account The remedy to account is a Definition -> order to pay over unauthorised profits i.e.
final/perpetual remedy unlawful use of confidential information
AG v Guardian The MI6 ‘Spycatcher’ case -> where A person to account for profits for the unauthorised
Newspaper (No.2) former spy wrote a book and extracts use of information in breach of confidence
of it were also printed in the
Guardian news paper, in which the
paper made a lot of money due to
the stigma attached to publishing
those extracts of apparent ‘MI6
secrets’->
DEFENCES NOTE -> only write is relevant in
exam question!!!
Argyll v Argyll He who comes to equity must come the C will be refused an injunction if the claimant

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 with clean hands breaches his or her obligations or has behaved unfairly
in relation to the matter in hand (unfair conduct)
Coatsworth v He who seeks equity must do equity ‘a tenant cannot get SP of a contract if he is already in
Johnson breach of his obligations’
Patel v Ali Hardship Damages may be awarded in lieu of an injunction if the
injunction would cause serious hardship to the D ->
may also be suspended
Shepherd Homes v Delay Delay will more readily mean that an interim (as
Sandham opposed to final) injunction is refused as the court is
likely to think that the matter can wait until trail.

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