The doctrine of equity was created to complete the gaps of common law by providing more adaptable remedies, unlike common legislation which only provide damages such as injunction, specific functionality, equitable estoppel etc. Equity only governed by the maxims where it really is based on the principles of fairness and conscience and so are much less strict as common rules.
Hence, as the doctrine of collateral developed and became more and more flexible previously centuries, it has been argued by various academics that equity is now also conceptually messy to come to be useful. It has been argued that collateral is a blend of strict rules and discretionary guidelines which features to English Law using its flexibility. He further explained that equity made up of firm rules and discretionary principles which will be applicable in different instances.[1] In deciding this, the flexibility of equity will be discussed, especially in the areas of including the three psychology-essays.com certainties, Quistclose trust and doctrine of fiduciaries.
In the case of Knight v Knight[2], Lord Langdale MR had laid down the 'three certainties test' to make a valid private express trust. Certainty can be an important element in trust as without certainty, the intention, object and subject matter of the trust cannot be determined by the courts which would in that case cause an invalid trust.
Under certainty of purpose, the settlor must use very clear terms and expression to impose a legal obligation for the trustee to hold the house on trust. Generally, crucial words are more motivated to be used in a will as compared to precatory words. Regarding Re Adams[3], the phrase 'in full confidence' was found in the clause and it was held that there is no trust created as there is no imperative words used in the will. Even so, in Comiskey v Bowring[4], also the same expression was used as in Re Adams case, but it happened that the wording designed a trust. It could be submitted that the courts right now no longer only look at a single word to determine whether you will find a trust but look at the whole of the will.
In more complex circumstances where there are no documents obtainable, the courts might infer objective from acts or what of the celebrations. In Paul v Constance[5], it was held that what 'the money is really as much yours since it is mine' is sufficient to create a valid trust as there was repeated conduct and includes a clear intention. It was suggested that the courts are being too generous in the decisions.
However, in Jones v Lock[6], it had been held that it was insufficient to manifest a distinct intention for the daddy to produce a trust for the boy. The trouble is that both instances were insufficient specific intention to produce a trust, there have been only general purpose to benefit. Nevertheless, both cases were held differently. It could be argued that the activities were louder than the words in Paul's circumstance. Gardner recommended that the difference of both circumstances was only the reflection of changing judicial attitudes.[7]
Next, beneath the certainty of subject matter, the test employed by the courts would be whether the property could possibly be certainly identified. Nevertheless, the courts have lately produced an artificial distinction between tangible and intangible home. In Re London Wine Co[8], it was held that no two bottles of wine are alike and therefore it could be determined for their customers.
However, in Re Goldcorp Exchange Ltd[9], it was placed that the claimants whose gold bullion have been segregated were powerful in the claim however, not those whose bullion was not segregated. The reasoning was that the share of the gold has been regularly changing and it had been hard to say which particular piece of gold belongs to any particular customer. It may be submitted that the courts had been hoping to uphold the theory of fairness by having a several decision from Re London'scase as the tangible home items here cannot be segregated properly.
On the other hands, in Hunter v Moss[10] where the property is intangible, a unique approach was considered by the courts. In the event, it was held in favour of the claimant and explained that the segregation as in tangible home is not necessary in which a trust is made over an intangible home. The reasoning for this is that since the shares is indistinguishable in one another, they will be treated as equal. Predicated on all three situations above, it may be seen that this place can be messy as this certainty has not been applied constantly and the judges contain too much discretion changing the judicial attitudes.
Lastly, the certainty of object matter required that there has to be ascertainable beneficiaries in a trust. Re Baden (No.2)[11] experienced shown that there are different approaches to manage when there exists a class of items in a discretionary trust. The test found in the case was comes from McPhail v Doulton[12] where the application of a entire list test was difficult and borrowed the 'is or is not' check from Re Gulbenkian's Settlements[13] to determine the beneficiaries.
However, there are 3 interpretations on the applicability of the evaluation. First of all, Sachs LJ upheld the literal program of the original test, but reversed the burden of evidence on the claimant to proof that he falls within the category of beneficiaries. Sachs LJ further more noted that does not apply to all discretionary trust circumstances as a lot of trust with uncertainty will be validated. Secondly, Megaw LJ recommended the approach used in Re Allen[14]which was overruled by Re Gulbenkian's case where it held that a trust should be valid if a considerable number of people can show they are in the category. Finally, Stamp LJ recommended a tight approach where he explained that it is necessary for both conceptual and evidential certainty to exist without any unknown of the certainties. Any unknown of the certainties would result in an invalid trust. It may be submitted that this area will be too messy for the future situations to refer as there are too many different views.
The effective guidelines on how to write a history research paper flexibility of equity could also be within Quistclose trust which designed by Lord Wilberforce in Barclays Bank Ltd v Quistclose Investments Ltd[15]. The 'Quistclose trust' arises when a company borrows money with a specific purpose at heart for that money. Lord Wilberforce advised there are major trust to pay dividend and secondary trust arose in favour of the lender if most important trust failed. However, this was heavily criticised as it failed to meet the three certainties to be a valid trust. In the future, Lord Millet in Twinsectra v Yardley suggested that there is merely one resulting trust instead of two trusts while majority of the court held that it had been an express trust. In Re EVTR[16], Dillon LJ suggested that it was a constructive trust for the intended purpose of the loan.Moreover, academics like Alastair Hudson had advised that the better evaluation for this ought to be an express trust.[17] Furthermore, in Re Farepak Food[18], Mann J held that there is no trust and described this is as a 'contractual relationship' as opposed to trustee-beneficiary.[19]
Furthermore, equity also shown its versatility in fiduciary region. A fiduciary is a person who holds a posture of trust and self-assurance. Fiduciary has the duty to do something in the very best interest of the main in a fiduciary romantic relationship. A fiduciary is bound by the 'no conflict' guideline where he must make sure that his duties to the principal do not conflict along with his own interest rather than allowed to make a profit. The leading case will be Boardman v Phibbs[20] that involves trust where it used the tight rule which formerly from cases such as Keech v Sandford[21] and Bray v Ford[22].The decision was a made in most the judges as the other two judges offered dissenting judgments. Lord Upjohn in dissenting suggested that the case should be approached in a far more equitable angle and really should be decided on its own individual facts instead of setting up a strict rule to be followed like the common law courts.
However, in Murad v Al-Saraj[23], the majority of courts again decided by following rules. Arden LJ from the majority suggested that the court should revisit the inflexibility of guideline of equity in severe situations. Furthermore, Jonathan Parker LJ from majority also suggested that it's enough time for the courtroom to relax the severity of the rule. In minority, Clarke LJ recommended that the fiduciary could argue for a show in profits despite the fact that they breached their duty by reasoning with Warman International v Dwyer[24]. In Foster Bryant Surveying v Bryant[25], it was held that the defendant had not been necessary to account his subsequent revenue as the reality were not the same as the 'traditional' cases. It had been suggested that this case law would just be followed whenever there are same facts down the road.
Based on the above, equity has been adaptable to evolve to match the demands of the society. Consequently, it is tremendously complex since it was made centuries of laws, but the courts are free to generate new principles and to adjust or apply the older ones depending on the problem. As recommended by Alastair Hudson, collateral forces us to consider the plight of the individual in this complex environment and to save that individual from being caught up in the legal machine or exposed to irremediable suffering.[26] In conclusion, it could be submitted that equity is still useful even though it could possibly be conceptually messy as shown above. However, this might be inevitable as collateral must be flexible but it would be also necessary to maintain some consistencies over the cases to prevent regulations from being vague.
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Bibliography
Books
Gardner S, An intro to regulations of Trusts (3rd edn OUP 2011)
Hudson A, Equity and Trust, (8th edn, Routledge, Oxon, 2015)
Hudson A, Great Debates in Collateral and Trusts,(1st edn, Palgrave Macmillan 2014)
Electronic Sources
Alastair Hudson, 'The Fundamentals of Quistclose Trusts', http://www.alastairhudson.com/trustslaw/Quistclose.pdf accessed on 13rd February 2017
Table of Cases
Barclays Lender Ltd v Quistclose Investments Ltd [1970] AC 567
Boardman v Phibbs [1967] 2 AC 46
Bray v Ford [1896] A.C. 44
Comiskey v Bowring-Hanbury [1905] A.C. 84
Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200
Hunter v Moss [1993] 1 WLR 934
Jones v Lock [1865] 1 Ch App 25
Keech v Sandford [1726] Sel. Cas.Ch.61
Knight v Knight [1840] 3 Beav 148
McPhail v Doulton [1971] AC 424
Murad v Al-Saraj [2005] EWCA Civ 959
Paul v Constance [1977] 1 All ER 195
Re Adams & Kensington Vestry [1884] LR 27 ChD 394
Re Allen [1953] 1 All ER 308
Re Baden's Trusts (No.2) [1973] Ch 9
Re EVTR [1987] BCLC 646
Re Farepak Foodstuff and Products Ltd (In Administration) [2008] BCC 22
Re Farepak Meals and Products Ltd (In Administration) [2008] BCC 22, 34
Re Goldcorp Exchange Ltd (In Receivership) [1994] 3 WLR 199
Re Gulbenkian's Settlements Trusts [1968] UKHL 5
Re London Wine Co (Shippers) Ltd [1986] PCC 121
Warman International v Dwyer [1994-5] 182 CLR 544
[1] Alastair Hudson, Great Debates in Equity and Trusts,(1st edn, Palgrave Macmillan 2014)
[2] Knight v Knight [1840] 3 Beav 148
[3] Re Adams & Kensington Vestry [1884] LR 27 ChD 394
[4] Comiskey v Bowring-Hanbury [1905] A.C. 84
[5] Paul v Constance [1977] 1 All ER 195
[6] Jones v Lock [1865] 1 Ch App 25
[7] Simon Gardner how to write a scientific research paper, An introduction to regulations of Trusts (3rd edn OUP 2011) 52-3
[8] Re London Wines Co (Shippers) Ltd [1986] PCC 121
[9] Re Goldcorp Exchange Ltd (In Receivership) [1994] 3 WLR 199
[10] Hunter v Moss [1993] 1 WLR 934
[11] Re Baden's Trusts (No.2) [1973] Ch 9
[12] McPhail v Doulton [1971] AC 424
[13] Re Gulbenkian's Settlements Trusts [1968] UKHL 5
[14] Re Allen [1953] 1 All ER 308
[15] Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567
[16] Re EVTR [1987] BCLC 646
[17] http://www.alastairhudson.com/trustslaw/Quistclose.pdf, 'The Fundamentals of Quistclose Trusts', accessed on 13rd February 2017
[18] Re Farepak Food and Gift ideas Ltd (In Administration) [2008] BCC 22
[19] Re Farepak Food and Products Ltd (In Administration) [2008] BCC 22, 34
[20] Boardman v Phibbs [1967] 2 AC 46
[21] Keech v Sandford [1726] Sel. Cas.Ch.61
[22] Bray v Ford [1896] A.C. 44
[23] Murad v Al-Saraj [2005] EWCA Civ 959
[24] Warman International v Dwyer [1994-5] 182 CLR 544
[25] Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200
[26] Alastair Hudson, Equity and Trust, (8th edn, Routledge, Oxon, 2015)