- Created by: Freya Lindsey
- Created on: 01-01-18 19:43
Introduction to Equity and Trusts
Equity is a body of law that was originally formulated by the Lord Chancellor in the Court of Chancery. It was not originally enforced by the common law courts. Equity includes trusts, but also equitable remedies such as injunctions, dealings with land and mortgages.
Development of Equity
Equity developed in response to the rigidity of the common law. There were a finite number of writs, and so a claimant's problem had to fit within one of the writs if they were to be permitted to bring an action.
Judicature Acts 1873-75 created the High Court. The chancery division heard cases concerning issues of equity, whilst the Queen's Bench heard common law cases.
The Earl of Oxford's Case established that where there is a conflict between equity and the common law, equity shall prevail. However, this does not mean that an equitable property interest is stronger than a legal property interest.
Introduction to Trusts
A trust is a relationship that arises where one person (known as a trustee) is compelled in equity to hold property for the benefit of someone else (known as the beneficiary). The trustee is bound by an obligation to execute the trust. The beneficiary has the power to enforce this obligation against the trustee.
A trust allows for the separation of control and enjoyment of a property. The trustee has control and management of the property, subject to the trust. The beneficiary is the real owner as they enjoy the benefit of the property.
Features of a Trust
The trustee has management and control of the property. The trustee holds legal title.
The beneficiary enjoys the benefit of the property. The beneficiary has an equitable/beneficial interest in the property.
Legal Title Held by Trustee
The trustee is able to manage and control the property as they hold legal title.
Strict duties are placed on the trustee. The duty forces the trustee to dispose of the property in accordance with the trust. This ensures that the beneficiary shall receive the benefit that the settlor intended. If the trustees breach any of their duties, the beneficiary(s) can sue them to make good any loss suffered as a result of the breach.
Equitable Interest Held by Beneficiary