Study guide: Equity and Trusts

📋 Course Outline

1. Origins and Role of Equity
2. Trust Definition and Property
3. Modern Equity and Remedies
4. Trust Participants and Ownership
5. Unconscionability and Its Limits
6. Trust Classification
7. Formalities for Express Trusts
8. Constitution and Transfer Methods
9. Imperfect Transfers and Equity
10. Equitable Interest Dispositions
11. Problem Question Method

📅 Key Dates

1. fourteenth and fifteenth centuriesthe Court of Chancery developed a distinct jurisdiction based on conscience
2. 1615the conflict between common law and equity reached its peak in the Earl of Oxford’s Case
3. 1873 and 1875the Judicature Acts reorganised the courts

📖 1. Origins and Role of Equity

📝 Essential Points

• From the Middle Ages, petitions against the rigidity of common-law remedies were increasingly referred to the Lord Chancellor, traditionally described as the Keeper of the King’s conscience.

💡 Memory Hook

Rigid common law → petitions to the Chancellor → equitable principles

📖 2. Trust Definition and Property

🔑 Key Concepts & Definitions

• Trust: a relationship recognised by equity in which property is vested in trustees who must hold it for the benefit of beneficiaries

★ Must-know

📌 The subject matter of a trust must be property, commonly legal ownership of land or invested funds.

📌 A beneficiary’s interest does not bind a bona fide purchaser for value of the legal estate who acquires it without notice of the beneficial interest.

Further detail

• A beneficiary’s proprietary interest can be sold, given away, or disposed of by will.

💡 Memory Hook

Legal ownership for trustees versus beneficial enjoyment for beneficiaries

📖 3. Modern Equity and Remedies

🔑 Key Concepts & Definitions

• Injunction: an equitable remedy ordering a person to do something or to stop doing something

★ Must-know

• The three pillars of modern equity are:

  • equitable maxims
  • equitable remedies
  • trusts

• Specific performance requires a party to carry out contractual obligations, while rescission sets a transaction aside and seeks to restore the parties to their pre-contract position.

Further detail

📌 The maxim that a person who comes to equity must come with clean hands may restrict equitable relief where the claimant’s conduct is improper.

📖 4. Trust Participants and Ownership

★ Must-know

• The settlor deliberately creates a trust, usually through a trust instrument, or is called the testator or testatrix when the trust is created by will.

• The trustee holds legal title, must act according to the trust instrument and trust law, and owes fiduciary duties to act in the beneficiary’s best interests.

• A trust must be created for a human beneficiary who can enforce the trust obligation and has locus standi.

• In a trust, the trustee receives legal title, a proprietary right in rem attaching to the property, while the beneficiary receives equitable title, a personal right in personam operating through the doctrine of notice.

Further detail

• The incidents of ownership include:
  • possession
  • use
  • management
  • income
  • capital
  • transfer
  • exclusion
  • destruction

💡 Memory Hook

Settlor creates → trustee manages → beneficiary benefits

📖 5. Unconscionability and Its Limits

🔑 Key Concepts & Definitions

• Unconscionability: concerns conduct or circumstances so unfair that equity may prevent a person from taking advantage of a benefit accepted subject to conditions or obligations

📝 Essential Points

• 🔄 The relevant combination is:

  1. an assurance
  2. reliance on the assurance
  3. detriment resulting from the reliance

• In Thorner v Major [2009], a family context, repeated assurances, and long-term reliance made it unconscionable to deny Thorner’s expectation of inheriting the farm.

• In Cobbe v Yeoman’s Row Management Ltd [2008], the claim failed because the experienced property developer knew that no binding contract had been concluded and accepted the commercial risk.

💡 Memory Hook

Thorner: family reliance; Cobbe: informed commercial risk

📖 6. Trust Classification

🔑 Key Concepts & Definitions

• Fixed trust: a trust in which the settlor or testator determines who receives what
• Discretionary trust: gives the trustee power, within the trust’s limits, to decide which identified beneficiaries receive property and when or how much they receive
• Bare trust: one in which the trustee holds property for an adult beneficiary absolutely, so the beneficiary may call for transfer of the legal estate at any time

📝 Essential Points

• Statutory trusts arise because Parliament has created them by legislation, whereas express trusts are deliberately created by a settlor or testator.

• An express trust requires an intention to create a trust, a valid declaration, and proper constitution by self-declaration or effective transfer of legal title.

• A resulting trust returns the beneficial interest to the person who provided the property, whereas a constructive trust arises by operation of law to prevent unconscionable retention of a benefit.

📖 7. Formalities for Express Trusts

★ Must-know

• A testamentary trust must be created by a validly executed will under section 9 of the Wills Act 1837.

• An inter-vivos declaration of trust of personal property generally requires no formality, but a declaration of trust of land must satisfy section 53(1)(b) of the Law of Property Act 1925.

• Section 53(1)(c) of the Law of Property Act 1925 requires a disposition of an existing equitable interest to be in writing and signed by the person disposing of it or an authorised agent.

Further detail

📌 Section 53(2) of the Law of Property Act 1925 provides that section 53 does not affect the creation or operation of resulting, implied, or constructive trusts.

💡 Memory Hook

Personalty may be oral; land generally requires signed writing

📖 8. Constitution and Transfer Methods

★ Must-know

📌 Constitution asks whether the steps necessary to create the intended trust have been completed, whereas formalities ask whether statutory requirements governing creation or disposition have been satisfied.

• A settlor can constitute a trust by declaring that they themselves hold the property on trust or by transferring the property to another person to hold as trustee.

• Under Milroy v Lord (1862), an effective gift or trust must use one of three methods: an outright transfer to the donee, a transfer to trustees, or a self-declaration of trust.

Further detail

• The required transfer procedure depends on the property: land generally requires a deed, shares require the relevant statutory transfer procedure, and money requires effective transfer of ownership or possession.

💡 Memory Hook

A → B, A → T → B, or A → A as trustee → B

📖 9. Imperfect Transfers and Equity

★ Must-know

📌 The orthodox rule is that equity will not perfect an imperfect gift or transfer by construing it as a declaration of trust.

📌 Under Re Rose [1952], equity may treat a transfer as complete when the donor has done everything within their power to transfer the property, even though a third party still must complete the legal process.

Further detail

• In Jones v Lock (1865), a father’s statement that he gave a £900 cheque to his baby son created neither a valid gift nor a declaration of trust.

• Pennington v Waine [2002] controversially extended the approach by treating an imperfect gift as effective where it would be unconscionable for the donor to withdraw it, despite failure to satisfy the strict Re Rose test.

💡 Memory Hook

Milroy rejects incomplete transfers; Re Rose accepts transfers completed as far as possible

📖 10. Equitable Interest Dispositions

★ Must-know

📌 A disposition of an existing equitable interest is void if it does not comply with section 53(1)(c) of the Law of Property Act 1925.

• In Hudson v Hathway [2022], an email containing the sender’s name could satisfy the signature requirement because the sender intended to authenticate the communication.

📌 In Grey v IRC [1960], a beneficiary’s direction that trustees transfer the beneficial interest to another person was a disposition requiring writing, whereas in Vandervell v IRC (No. 1) [1967], a direction to transfer the legal title extinguished the trust and did not require section 53(1)(c) formalities.

Further detail

• In Reid-Roberts & Anor v Mei-Lin & Anor [2026], an automatically displayed WhatsApp name did not satisfy the signature requirement because the sender had not deliberately added it to authenticate the message.

📌 A disclaimer is an unequivocal rejection of an equitable interest rather than a transfer to another person, so it operates by avoidance and does not fall within section 53(1)(c).

💡 Memory Hook

Grey transfers an equitable interest; Vandervell transfers legal title and extinguishes the trust

📖 11. Problem Question Method

★ Must-know

• A trust problem question should identify where the proprietary interest is moving, classify the transaction, apply the relevant law and any equitable exception, and reach a conclusion.

Further detail

• The principal categories include:
  • self-declaration
  • outright transfer
  • transfer to trustees
  • disposition of an existing equitable interest
  • imperfect transfers

💡 Memory Hook

Issue → Rule → Application → Conclusion

📊 Synthesis Tables

Types of Trust