Equity & Trusts

# EQUITY & TRUSTS REVISION NOTES

## 1. NATURE OF EQUITY & MAXIMS
- **Equity's role**: Supplements common law; prevents unconscionable conduct (Earl of Oxford's Case (1615))
- **Key maxims**:
  - Equity acts in personam (Penn v Lord Baltimore (1750))
  - He who comes to equity must come with clean hands
  - Equity looks to intent rather than form
  - Equity will not suffer a wrong without a remedy

## 2. THREE CERTAINTIES (Knight v Knight (1840))
- **Certainty of intention**: Precatory words insufficient; need imperative language (Re Adams & Kensington Vestry (1884))
- **Certainty of subject matter**: Trust property must be identifiable (Palmer v Simmonds (1854); Hunter v Moss (1994) for intangibles)
- **Certainty of objects**: 
  - Fixed trust: Complete list test (IRC v Broadway Cottages (1955))
  - Discretionary trust: Is/was test (McPhail v Doulton (1971))

## 3. FORMALITIES & CONSTITUTION
- **Creation**: 
  - Land: Writing signed by settlor (s.53(1)(b) LPA 1925)
  - Testamentary trusts: Wills Act 1837 formalities
- **Constitution**: 
  - Equity will not perfect an imperfect gift (Milroy v Lord (1862))
  - Exceptions: Donatio mortis causa; Re Rose (1952) rule (transfer complete when settlor does all necessary)

## 4. EXPRESS PRIVATE TRUSTS
- **Fixed vs discretionary**: Discretionary trusts give trustees selection power (Gartside v IRC (1968))
- **Protective trusts**: s.33 Trustee Act 1925; determinable interests
- **Trustees' duties**: Investment, diversification, impartiality

## 5. CHARITABLE & PURPOSE TRUSTS
- **Charitable requirements**: 
  - Charitable purpose (s.3 Charities Act 2011)
  - Public benefit (Re Compton (1945) vs Re Resch (1969))
- **Cy-près doctrine**: When original purpose becomes impossible
- **Non-charitable purpose trusts**: Generally void unless limited duration (Re Denley (1969) exception)

## 6. RESULTING TRUSTS
- **Automatic resulting trusts**: Failure of express trust (Vandervell v IRC (1967))
- **Presumed resulting trusts**: Voluntary transfer (Westdeutsche v Islington (1996))
- **Presumption of advancement**: Rebuttable presumption for certain relationships

## 7. CONSTRUCTIVE TRUSTS
- **Institutional vs remedial**: Westdeutsche distinction
- **Breach of fiduciary duty**: Keech v Sandford (1726); Boardman v Phipps (1967)
- **Common intention constructive trusts**: Lloyds Bank v Rosset (1991) requirements
- **Unconscionable retention**: Paragon Finance v DB Thakerar (1999)

## 8. QUISTCLOSE TRUSTS
- **Requirements**: 
  - Loan for specific purpose (Barclays Bank v Quistclose (1970))
  - Primary trust for purpose; secondary resulting trust if purpose fails
- **Modern application**: Twinsectra v Yardley (2002); certainty of purpose required

## KEY CASES TO REMEMBER:
- Knight v Knight (1840) - Three certainties
- McPhail v Doulton (1971) - Certainty of objects
- Westdeutsche v Islington (1996) - Resulting trusts
- Quistclose (1970) - Purpose trusts
- Re Rose (1952) - Constitution of trusts

**I. NATURE OF EQUITY & MAXIMS**
- Equity acts in personam (against the person), not in rem (against the property)
- Key maxims: Equity will not suffer a wrong without a remedy; Equity follows the law; He who comes to equity must come with clean hands; Equity looks to intent rather than form; Equity imputes an intention to fulfil an obligation
- Historical development: Court of Chancery's role in mitigating common law rigidity

**II. THREE CERTAINTIES (Knight v Knight)**
1. **Certainty of Intention**: Clear intention to create trust (precatory words insufficient - *Lambe v Eames*)
2. **Certainty of Subject Matter**: Trust property must be identifiable (*Re London Wine* vs. *Hunter v Moss* for intangible assets)
3. **Certainty of Objects**: Beneficiaries must be ascertainable. For fixed trusts: complete list test (*IRC v Broadway Cottages*). For discretionary trusts: is/is not test (*McPhail v Doulton*)

**III. FORMALITIES & CONSTITUTION**
- **Creation**: Express trusts of land require writing (s.53(1)(b) LPA 1925)
- **Constitution**: Trust must be completely constituted to be enforceable (*Milroy v Lord*)
- Exceptions: Rule in *Strong v Bird* (uncompleted gift); Donatio mortis causa; Proprietary estoppel (*Thorner v Major*)

**IV. EXPRESS PRIVATE TRUSTS**
- Fixed trusts: Beneficiaries have fixed entitlements
- Discretionary trusts: Trustees have discretion over distribution (*Gartside v IRC*)
- Protective trusts: s.33 Trustee Act 1925 - determinable life interest with discretionary trust upon forfeiture

**V. CHARITABLE & PURPOSE TRUSTS**
- Charitable trusts require: Charitable purpose (Pemsel categories), Public benefit, Exclusively charitable
- Non-charitable purpose trusts generally void (*Re Endacott*) except for:
  - Monuments and graves (*Re Hooper*)
  - Animals (*Re Dean*)
  - Anomalous cases (*Re Thompson*)

**VI. RESULTING TRUSTS**
- **Automatic**: Failure of express trust or incomplete disposal of beneficial interest (*Vandervell v IRC*)
- **Presumed**: Voluntary transfer or purchase in another's name (rebuttable presumption - *Westdeutsche*)
- Modern approach: Unjust enrichment analysis (*Chambers v Miller*)

**VII. CONSTRUCTIVE TRUSTS**
- **Institutional**: Arises by operation of law when conscience affected (*Westdeutsche*)
- Key situations: Breach of fiduciary duty; Stranger liability (knowing receipt/assistance); Common intention constructive trusts (*Stack v Dowden*; *Jones v Kernott*); Mutual wills (*Re Cleaver*)

**VIII. QUISTCLOSE TRUSTS**
- Special purpose trust where funds advanced for specific purpose only (*Barclays Bank v Quistclose*)
- Dual structure: Primary purpose trust + secondary resulting trust if purpose fails
- Modern analysis: As part of law of loans (*Twinsectra v Yardley*)

**EXAMINATION FOCUS**: Apply principles sequentially, particularly Three Certainties test. Distinguish resulting/constructive trusts clearly. Analyze Quistclose as special constructive trust arrangement. Always consider formality requirements for validity.

**1. EQUITY ACTS IN PERSONAM ≠ NO PROPRIETARY EFFECT**
*Trap:* Thinking equitable remedies only bind conscience, not property.
*Reality:* Equitable interests are proprietary - bind successors with notice (Pilcher v Rawlins). Equitable charges, trusts create property rights.
*Exam tip:* Distinguish between personal remedies (specific performance) and proprietary consequences (trust interests).

**2. CERTAINTY OF SUBJECT ≠ PERFECT ASSET IDENTIFICATION**
*Trap:* Believing trust fails if assets not precisely identified.
*Reality:* 'Certainty' means identifiable by trustee - 'bulk' trusts valid if ascertainable (Hunter v Moss).
*Exam tip:* Focus on trustee's ability to administer, not mathematical precision.

**3. CONSTITUTION ≠ DECLARATION ALONE**
*Trap:* Assuming settlor's declaration creates immediate trust.
*Reality:* Constitution requires transfer to trustee/direct declaration as trustee (Milroy v Lord).
*Exam tip:* Always check: transfer complete? Self-declaration clear? Equity won't perfect imperfect gift.

**4. CHARITABLE TRUSTS ≠ ANY PUBLIC BENEFIT**
*Trap:* Thinking any socially useful purpose qualifies.
*Reality:* Must fit Pemsel categories, have public benefit, be exclusively charitable.
*Exam tip:* Apply 'spirit and intendment' test - not just 'beneficial to community'.

**5. RESULTING TRUSTS ≠ PRESUMED AUTOMATICALLY**
*Trap:* Assuming purchase money RT arises whenever A pays for B's property.
*Reality:* Presumption rebutted by evidence of gift/loan (especially family contexts - Stack v Dowden).
*Exam tip:* Analyze relationship context - commercial vs domestic changes presumption strength.

**6. CONSTRUCTIVE TRUSTS ≠ GENERAL FAIRNESS REMEDY**
*Trap:* Viewing CTs as discretionary 'fairness' tool.
*Reality:* Institutional CTs arise from specific events (breach of fiduciary duty, mutual wills). Remedial CTs rare in UK.
*Exam tip:* Identify triggering event - don't argue 'unconscionability' alone.

**7. QUISTCLOSE ≠ ORDINARY LOAN**
*Trap:* Treating purpose-specific loans as simple debt.
*Reality:* Creates primary trust for purpose, secondary resulting trust if purpose fails (Twinsectra v Yardley).
*Exam tip:* Identify clear purpose restriction - mere commercial purpose insufficient.

## UK LLB Equity & Trusts: Core Doctrine Roadmap

### **Phase 1: Foundations (Weeks 1-3)**
**Topics:** Nature of Equity & Maxims; Introduction to Trusts.
**Key Focus:**
- Historical distinction between Common Law and Equity (Earl of Oxford's Case).
- Core maxims: *Equity will not suffer a wrong without a remedy*, *He who seeks equity must do equity*, *Equity looks to intent rather than form*, *Equity acts in personam*.
- Basic trust structure: Settlor → Trustee (legal title) → Beneficiary (equitable/beneficial interest).
**Assessment:** Define trust, explain maxims, apply maxims to simple scenarios.

### **Phase 2: Creating an Express Private Trust (Weeks 4-7)**
**Topics:** The Three Certainties; Formalities & Constitution.
**Key Focus:**
1.  **Three Certainties (Knight v Knight):**
    - **Intention:** Precatory words vs. imperative intention (*Re Adams*, *Paul v Constance*).
    - **Subject Matter:** Trust property must be identifiable (*Palmer v Simmonds*, *Hunter v Moss*).
    - **Objects:** Beneficiaries must be ascertainable. Fixed trust: complete list test. Discretionary trust: *McPhail v Doulton* "is or is not" test (conceptual certainty).
2.  **Formalities:**
    - **Lifetime trusts of land:** s.53(1)(b) LPA 1925 – signed writing.
    - **Disposition of equitable interest:** s.53(1)(c) LPA 1925 – signed writing (*Grey v IRC*).
3.  **Constitution:**
    - Transfer to trustees (*Milroy v Lord*).
    - Self-declaration as trustee (*Jones v Lock*).
    - Exceptions: Donor doing all in their power (*Re Rose*), Proprietary estoppel.
**Assessment:** Problem question on validity of trust creation. Spot certainty issues, formality failures, and constitution problems.

### **Phase 3: Types of Trusts – Deep Dive (Weeks 8-12)**
**Topics:** Express Private Trusts (Fixed/Discretionary); Charitable & Purpose Trusts; Resulting Trusts.
**Key Focus:**
1.  **Express Private Trusts:** Administering fixed vs. discretionary trusts. Trustee duties and powers.
2.  **Charitable Trusts:**
    - Definition: Must be for charitable purposes *and* for public benefit (Charities Act 2011).
    - **Pemsel's Heads:** Poverty, Education, Religion, Other beneficial purposes.
    - Advantages: Perpetuity, certainty of objects (*Re Koettgen*), fiscal.
    - Distinguish from non-charitable purpose trusts (generally void – *Re Astor*). Exceptions: *Re Denley*, anomalous cases.
3.  **Resulting Trusts:**
    - **Automatic:** Failure of express trust (e.g., surplus funds – *Re Gillingham*).
    - **Presumed:** Voluntary transfer (*Tinsley v Milligan*) or joint purchase (*Stack v Dowden* principles). Rebutted by presumption of advancement.
**Assessment:** Essay on charity law; problem on resulting trusts in cohabitation/commercial contexts.

### **Phase 4: Imposed Trusts & Remedies (Weeks 13-15)**
**Topics:** Constructive Trusts; Quistclose Trusts; Tracing.
**Key Focus:**
1.  **Constructive Trusts:** Arise by operation of law.
    - **Common Intention CT (Domestic):** *Lloyds Bank v Rosset* (express agreement/direct contributions). Largely superseded by *Stack v Dowden* and *Jones v Kernott* (holistic approach).
    - **Commercial/Unconscionability:** *Westdeutsche* principles; knowing receipt (*Bank of Credit v Akindele*) and dishonest assistance (*Royal Brunei Airlines v Tan*).
2.  **Quistclose Trusts:** *Barclays Bank v Quistclose* → *Twinsectra v Yardley*.
    - Primary purpose trust for lenders, secondary resulting trust if purpose fails.
    - Key: identified funds, specific purpose, mutual intention.
3.  **Linking Doctrine:** Use **tracing** (common law & equitable) as a remedial tool to identify trust property (*Foskett v McKeown*).
**Assessment:** Complex problem question mixing Quistclose, constructive trusts, and tracing claims.

### **Final Revision & Exam Strategy (Weeks 16-)**
**Synthesis:** Map connections: e.g., failed express trust → resulting trust; failed purpose trust (non-charitable) vs. Quistclose.
**Exam Technique:**
- **Problem Questions:** IRAC. Identify type of trust first. Chronologically analyse creation (certainties, formalities) then failure/remedies.
- **Essay Questions:** Define, authority, critique, reform (e.g., "The three certainties are outdated").
**Essential Authorities:** *Knight v Knight, McPhail v Doulton, Milroy v Lord, Re Rose, Re Denley, Westdeutsche, Quistclose, Stack v Dowden*.
**Common Pitfalls:** Confusing certainty of intention with objects; misapplying *Re Rose*; conflating resulting and constructive trusts.

**INTRODUCTION**
• Define key terms: Equity (supplements common law, discretionary jurisdiction), Trust (fiduciary relationship where trustee holds property for beneficiary)
• Historical context: Development from Court of Chancery, fusion with common law (Judicature Acts 1873-1875)
• Outline structure: Address each element systematically with case authorities

**I. NATURE OF EQUITY & MAXIMS**
• **Equity's Role**: Acts in personam, follows common law but mitigates its rigidity (*Earl of Oxford's Case*)
• **Key Maxims Application**:
  - Equity will not suffer a wrong without a remedy: Remedial flexibility
  - He who comes to equity must come with clean hands: Unconscionable conduct bars relief
  - Equity looks to intent rather than form: Substance over technicality
  - Equity regards as done that which ought to be done: Perfecting imperfect gifts
  - Equity follows the law: Not contradicting common law where just

**II. THREE CERTAINTIES (*Knight v Knight*)**
• **Certainty of Intention**: Objective assessment of settlor's words/conduct (*Paul v Constance* vs. *Jones v Lock*)
• **Certainty of Subject Matter**: Property must be identifiable (*Palmer v Simmonds* - 'bulk of my estate' uncertain) vs. (*Hunter v Moss* - intangible shares certain)
• **Certainty of Objects**: 
  - Fixed trusts: Complete list test (*IRC v Broadway Cottages*)
  - Discretionary trusts: Given postulant test (*McPhail v Doulton*)

**III. FORMALITIES & CONSTITUTION**
• **Formalities**: 
  - Lifetime trusts of land: Writing required (s.53(1)(b) LPA 1925)
  - Wills: Wills Act 1837 formalities
• **Constitution**: 
  - Methods: Transfer to trustees, declaration of self as trustee, *donatio mortis causa*
  - Imperfect gifts: Equity will not assist a volunteer (*Milroy v Lord*) but exceptions:
    * Strong v Bird rule
    * *Re Rose* - transfer complete in equity when settlor does all in their power
    * Proprietary estoppel (*Thorner v Major*)

**IV. EXPRESS PRIVATE TRUSTS**
• **Types**: Fixed (beneficiaries' interests specified) vs. Discretionary (trustee selects from class)
• **Trustee Duties**: Investment, impartiality, no conflict rule (*Bray v Ford*)
• **Powers of Appointment**: Distinguish from trusts (no imperative obligation)

**V. CHARITABLE & PURPOSE TRUSTS**
• **Charitable Trusts**: Must be exclusively charitable, public benefit requirement
• **Charitable Heads (*Pemsel* case)**: Poverty, education, religion, other beneficial purposes
• **Advantages**: Perpetuity exemption, fiscal benefits, cy-près doctrine
• **Non-Charitable Purpose Trusts**: Generally void (*Morice v Bishop of Durham*) unless:
  - Monument cases
  - Animal cases (*Re Dean*)
  - *Re Denley* - purpose directly/indirectly for individuals

**VI. RESULTING TRUSTS**
• **Automatic Resulting Trusts**: Failure of express trust, surplus funds (*Vandervell v IRC*)
• **Presumed Resulting Trusts**: Voluntary transfer, purchase in another's name (*Fowkes v Pascoe*)
• **Presumption of Advancement**: Rebuttable presumption for transfers to children/spouses

**VII. CONSTRUCTIVE TRUSTS**
• **Categories**:
  - Unauthorised profit by fiduciary (*Keech v Sandford*)
  - Mutual wills (*Re Cleaver*)
  - Common intention constructive trusts (family home - *Stack v Dowden*, *Jones v Kernott*)
  - Secret trusts (fully/half secret - *Re Snowden*)
• **Remedial vs Institutional debate**

**VIII. QUISTCLOSE TRUSTS (*Barclays Bank v Quistclose*)**
• **Requirements**: Loan for specific purpose, failure of purpose
• **Analysis**: Primary trust for purpose, secondary resulting trust for lender
• **Modern application**: *Twinsectra v Yardley* - certainty of intention crucial

**CONCLUSION**
• Synthesise key principles across topics
• Emphasise equity's flexible, conscience-based approach
• Highlight contemporary developments (e.g., remedial constructive trusts)
• Balance doctrinal purity with practical justice

**I. Introduction**
- Identify parties: Settlor (S), Trustee (T), Beneficiary (B), Third Parties (TP)
- Outline key facts triggering equity/trusts issues
- State approach: Analyse sequentially using established principles

**II. Nature of Equity & Maxims Application**
- Check for unconscionability/unjust enrichment situations
- Identify relevant maxims: 'Equity will not suffer a wrong without a remedy', 'Equity looks to intent rather than form', 'He who comes to equity must come with clean hands'
- Consider whether common law remedies inadequate

**III. The Three Certainties Analysis**
A. Certainty of Intention
- Examine words used by S (precatory vs imperative language)
- Consider conduct consistent with trust creation
- Apply _Paul v Constance_ [1977] - informal expressions

B. Certainty of Subject Matter
- Identify trust property: specific assets vs fluctuating funds
- Apply _Hunter v Moss_ [1994] - intangible property certainty
- Consider segregation requirements for tangible assets

C. Certainty of Objects
- For fixed trusts: complete list test (_IRC v Broadway Cottages_ [1955])
- For discretionary trusts: is or is not test (_McPhail v Doulton_ [1971])
- Consider administrative unworkability

**IV. Formalities & Constitution**
A. Formality Requirements
- Land: s53(1)(b) LPA 1925 - signed writing
- Equitable interests: s53(1)(c) LPA 1925 - signed writing
- Exceptions: donatio mortis causa, proprietary estoppel

B. Constitution Requirements
- Perfect gift rules: transfer legal title or self-declaration
- Apply _Milroy v Lord_ [1862] and _Re Rose_ [1952] principles
- Consider equitable assignment vs declaration of trust

**V. Express Private Trusts Classification**
- Fixed vs discretionary trusts
- Bare trusts vs special trusts
- Successive interests: life interests, remainders
- Trustees' powers and duties

**VI. Charitable & Purpose Trusts Analysis**
A. Charitable Status
- Apply Pemsel categories from _IRC v Pemsel_ [1891]
- Consider public benefit requirement
- Cy-près doctrine application if initial purpose fails

B. Non-charitable Purpose Trusts
- Identify beneficiary principle issue
- Consider _Re Denley_ [1969] exception (direct/indirect benefit to individuals)
- Unincorporated associations rules

**VII. Resulting Trusts Analysis**
A. Automatic Resulting Trusts
- Failure of express trust: _Vandervell v IRC_ [1967]
- Surplus funds after purpose accomplished

B. Presumed Resulting Trusts
- Voluntary transfer to another: _Westdeutsche_ [1996] principles
- Purchase in another's name: _Dyer v Dyer_ [1788]
- Rebutting presumption: advancement evidence

**VIII. Constructive Trusts Analysis**
A. Common Intention Constructive Trust
- Apply _Stack v Dowden_ [2007] and _Jones v Kernott_ [2011]
- Direct contributions vs common intention
- Quantification of beneficial shares

B. Unconscionability-Based Trust
- _Rochefoucauld v Boustead_ [1897] - fraud prevention
- Joint venture situations

C. Vendor-Purchaser Constructive Trust
- Post-contract pre-completion position

**IX. Quistclose Trust Analysis**
- Identify loan for specific purpose: _Barclays Bank v Quistclose_ [1970]
- Primary trust for purpose, secondary resulting trust
- Apply _Twinsectra v Yardley_ [2002] - certainty of purpose requirement
- Relationship with contractual obligations

**X. Remedies & Defences**
- Tracing claims: common law vs equitable tracing
- Personal remedies: account, compensation
- Proprietary remedies: constructive trust, lien
- Defences: bona fide purchaser, change of position, limitation

**XI. Conclusion**
- Summarise findings on each issue
- State likely outcomes for parties
- Identify strongest/weakest claims

Arthur, a wealthy art collector, orally declares to his friend Brenda: 'I want you to hold my valuable Turner painting on trust for my nephew Charles. I'll transfer it to you next week.' Arthur dies unexpectedly two days later without having transferred the painting. The painting remains in Arthur's possession at his death. Arthur's will leaves his entire estate to his daughter, Diana.

Brenda claims she holds the painting on trust for Charles. Diana argues the trust fails for lack of constitution and the painting should form part of the estate.

Discuss the validity of Brenda's claim and the likely outcome regarding the painting, addressing:

1. Whether Arthur's oral declaration created a valid express trust under the three certainties
2. The formalities required for constitution of the trust
3. Whether the trust was completely constituted before Arthur's death
4. The resulting trust implications if the express trust fails
5. Any potential constructive trust arguments

Support your analysis with relevant case law (e.g. Milroy v Lord, Re Rose, Jones v Lock, T Choithram International SA v Pagarani) and statutory provisions.

**Drill 1: Formality Failures**

*Scenario:* Arthur orally declares he holds his vintage car collection on trust for Brenda. The cars are worth £200,000. He dies without documenting this. Can Brenda enforce? 

**Key Analysis:** Apply LPA 1925 s53(1)(b) - declaration of trust re land must be in writing. But here, property is chattels (cars). No formality required for declaration of trust of pure personality (Paul v Constance). However, constitution requires transfer of legal title (Milroy v Lord). Arthur held legal title until death - trust incompletely constituted. Brenda is mere volunteer - cannot enforce (Re Kayford Ltd distinguished).

**Common Pitfall:** Confusing declaration formality (none for personality) with constitution requirement (transfer essential). Exam tip: Always check: (1) property type (land/personality); (2) whether declaration or transfer; (3) volunteer status.

**Drill 2: Imperfect Gift vs. Trust**

*Scenario:* Clive emails Dana: "I give you my shares in XYZ Ltd. I'll arrange transfer next week." He dies before transferring. Dana claims shares held on trust. 

**Key Analysis:** Apply Milroy v Lord principles. Email may satisfy writing for declaration (s53(1)(c)) but shows donative intent (gift), not trust intention. No self-declaration as trustee - Clive retained legal title. Imperfect gift, not trust (Jones v Lock). Even if construed as declaration, lack of transfer means incompletely constituted. Dana is volunteer - no enforcement.

**Pitfall Alert:** Students often misapply Re Rose - but that requires transfer done everything necessary. Here, Clive did nothing. Distinguish: Strong v Bird requires debtor appointment as executor - not applicable.

**Drill 3: Constitution by Debtor's Act**

*Scenario:* Edward owes Fiona £10,000. He writes: "I hold my Picasso painting worth £50,000 on trust to satisfy my debt to you." He retains possession. 

**Key Analysis:** This is declaration of trust, not transfer. For personality, no formality required (Paul v Constance). But is it constituted? Fiona is creditor, not volunteer - may enforce if clear intention (Re Kayford). However, watch: declaration must be absolute (no power to revoke) and certain. Here, "to satisfy my debt" may create charge, not trust - ambiguity defeats constitution (Re Goldcorp). If construed as trust, Fiona must prove debt exists and amount certain.

**Exam Focus:** Scrutinize precise wording: "on trust" vs. "as security." Creditors have stronger position but still require certainty and intention.

**INSTRUCTIONS:** Answer BOTH questions. Time: 60 minutes total. This section tests core trust creation principles and classification skills.

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**QUESTION 1 (30 marks)**

Arthur, a wealthy art collector, orally tells his niece Beatrice: "I want you to hold my Picasso painting for my grandson Charles. Look after it until he turns 25." Arthur then hands Beatrice the painting. The next day, Arthur emails Beatrice saying: "Confirming our chat - the Picasso is for Charles at 25. Also, please use £50,000 from my account (details enclosed) to buy shares in GreenEnergy Ltd for my daughter Diana." Beatrice accesses the account but finds only £30,000. She uses it all to buy shares, which subsequently fall in value.

Discuss:
(a) Whether a valid trust of the painting has been created for Charles. (15 marks)
(b) The position regarding the £50,000/share instruction for Diana. (15 marks)

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**QUESTION 2 (30 marks)**

The 'Hope for Nature' charity receives a £100,000 gift from a donor "to be used for the protection of red squirrels in Scotland." The charity already runs a successful red squirrel project in Northumberland but has no operations in Scotland. The trustees propose using the funds to expand their Northumberland work, arguing this best serves the donor's broader conservation aim.

Advise the trustees, addressing:
(a) Whether this gift creates a charitable trust or a purpose trust; (10 marks)
(b) The validity of the trustees' proposed application of funds; (10 marks)
(c) What options are available if the gift cannot be applied as originally intended. (10 marks)

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**KEY AREAS TESTED:**
- Three Certainties (Intention, Subject, Object)
- Formalities (s.53 LPAA 1925, s.1 LP(MP)A 1989)
- Constitution (perfecting imperfect gifts)
- Charitable vs. Non-Charitable Purpose Trusts
- Cy-près doctrine
- Trustee duties regarding trust property

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[INTERMEDIATE]

QUESTION
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Arthur, a wealthy art collector, tells his niece, Beatrice, 'I am going to give you my prized painting, 'Sunset Over the Fens,' next month for your birthday. I want you to have it.' Arthur instructs his solicitor to prepare a deed of gift. The solicitor drafts the deed, which Arthur signs. The deed is dated and expressly states, 'I, Arthur, hereby assign all my legal and beneficial interest in the painting 'Sunset Over the Fens' to Beatrice.' Arthur places the signed deed in his safe. The next day, before the deed is delivered to Beatrice or anyone else on her behalf, Arthur dies unexpectedly. Beatrice claims the painting from Arthur's estate. Which of the following statements is the MOST accurate regarding Beatrice's claim?

ANSWER FRAMEWORK
----------------
['A: Beatrice is entitled to the painting because Arthur had expressed a clear intention to make a gift and had signed a deed.', 'B: Beatrice is not entitled to the painting because the deed was never delivered to her or to anyone as her agent.', "C: Beatrice is entitled to the painting because the equitable maxim 'equity looks to intent rather than form' perfects the imperfect gift.", 'D: Beatrice is not entitled to the painting because a deed of gift of a chattel requires both signing and delivery to be effective.']

MARKING GUIDANCE
----------------
Correct answer is D. A deed of gift of a chattel (a painting is a chattel) must be delivered to be effective. Mere signing and retention by the donor is insufficient (Jaffa v Taylor Gallery Ltd (1990) and the principle from Milroy v Lord (1862)). Option A is incorrect as intention alone is not enough; the formalities must be completed. Option B is correct in its conclusion but its reasoning is incomplete; it doesn't specify that this is a rule for deeds relating to chattels. Option C misapplies the maxim; it does not circumvent the requirement for delivery of a deed relating to a chattel.

COMMON PITFALLS
---------------
['Trap 1: Confusing the requirements for a deed (which requires signing and delivery) with a simple declaration of trust (which does not require delivery of the asset).', "Trap 2: Misapplying the maxim 'equity looks to intent rather than form' to override clear legal formalities for the transfer of legal title.", 'Trap 3: Assuming that because a deed was signed and the intention was clear, the gift is complete, ignoring the essential requirement of delivery for a deed of a chattel.']

[INTERMEDIATE]

QUESTION
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Clara, a successful artist, entered into a written contract with her friend, Ben, to sell him her prized painting 'Sunset Over the Fens' for £15,000. Ben paid the £15,000 in full. A week later, Clara received an unsolicited offer from a gallery to buy the same painting for £25,000. Tempted by the higher price, Clara refused to deliver the painting to Ben. Ben commenced legal proceedings. The court found that Clara was in breach of contract. However, Clara has no other significant assets, and the painting is her only item of substantial value. Ben wants the painting itself, not just monetary compensation. Which of the following equitable maxims is MOST directly relevant to the court's decision on whether to grant Ben the remedy he seeks?

ANSWER FRAMEWORK
----------------
['A. Equity looks to the intent rather than the form.', 'B. Equity will not suffer a wrong to be without a remedy.', 'C. Equity acts in personam.', 'D. He who seeks equity must do equity.', 'E. Equity regards as done that which ought to be done.']

MARKING GUIDANCE
----------------
The correct answer is E. Equity regards as done that which ought to be done. This maxim underpins the remedy of specific performance, which compels a party to perform their contractual obligations. Here, Ben seeks the painting itself, not damages. The court, applying this maxim, may treat the contract as if it has been performed (i.e., the painting transferred) and order Clara to deliver it, provided the painting is unique and damages are inadequate. A is incorrect; while relevant to contract interpretation, it is not the core maxim for specific performance. B is a general maxim but does not specify the particular equitable remedy in play. C explains equity's personal jurisdiction but is not the direct basis for the remedy. D relates to the conduct of the claimant and is not the primary maxim governing the grant of specific performance.

COMMON PITFALLS
---------------
["Trap 1: Selecting B ('Equity will not suffer a wrong...') because it is a broad, foundational maxim. However, the question asks for the maxim MOST directly relevant to the specific remedy sought (specific performance), which is E.", "Trap 2: Selecting A ('Equity looks to the intent...') because the parties' intent was to transfer the painting. While intent is relevant, the key equitable intervention here is compelling performance, not interpreting intent.", "Trap 3: Selecting C ('Equity acts in personam') because the order would be against Clara personally. Although true, this describes the nature of equitable remedies, not the doctrinal basis for granting specific performance in this scenario."]

[INTERMEDIATE]

QUESTION
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In 2023, Arthur, a wealthy art collector, executed a document headed 'My Wishes' which stated: 'I wish my trustees, Brenda and Charles, to hold my entire art collection for the benefit of the artistic community. I particularly wish them to use their discretion to support talented young artists who are struggling financially. I also wish that £50,000 from my bank account be given to my loyal housekeeper, Daisy, if she is still in my employ at the time of my death. The remainder of my estate is to be divided equally between my two children, Edward and Fiona.'

Arthur died recently. Brenda and Charles seek your advice on the validity of the trusts declared in the document 'My Wishes'. Daisy was still employed by Arthur at his death.

Advise Brenda and Charles.

ANSWER FRAMEWORK
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1. Introduction: Identify the issue as concerning the three certainties required for a valid express trust (Knight v Knight).
2. The Art Collection Trust:
   a. Certainty of Intention: Analyse the language used ('I wish'), considering context and imperative vs. precatory wording (Re Adams, Lambe v Eames).
   b. Certainty of Subject Matter: Identify the property (the entire art collection). Consider if this is sufficiently certain (Re London Wine Co, Re Goldcorp).
   c. Certainty of Objects (Beneficiaries): Analyse the class 'the artistic community' and 'talented young artists who are struggling financially'. Apply the test for a discretionary trust (McPhail v Doulton) and consider conceptual and evidential uncertainty (Re Baden's Deed Trusts (No 2)).
   d. Conclusion on Art Collection Trust: Likely fails for uncertainty of objects.
3. The £50,000 Provision for Daisy:
   a. Certainty of Intention: Analyse 'I wish that £50,000...be given'.
   b. Certainty of Subject Matter: The sum of £50,000 from the bank account.
   c. Certainty of Objects: Daisy is a clearly identified individual.
   d. Conclusion: Likely a valid trust or outright gift, subject to the condition precedent of employment at death.
4. The Remainder of the Estate: Brief note on the gift to Edward and Fiona as a valid absolute gift.
5. Overall Conclusion and Practical Advice: State the likely outcomes and consequences (e.g., resulting trust).

MARKING GUIDANCE
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**High Marks (65+):** Comprehensive identification and accurate application of all three certainties to both the art collection and the £50,000 provision. Clear distinction between tests for fixed and discretionary trusts. Sophisticated discussion of case law (e.g., McPhail, Baden, Re Barlow) and potential arguments. Clear, logical structure and definitive advice.
**Good Marks (50-64):** Correct identification of the three certainties and their application to both provisions. Some discussion of relevant cases. Correct conclusion on the art trust's invalidity and the likely validity of the gift to Daisy. May lack depth in analysing evidential vs. conceptual uncertainty.
**Satisfactory Marks (40-49):** Identifies the need for three certainties. Attempts to apply them to the facts. May reach broadly correct conclusions but with limited legal analysis or case authority. May confuse tests for different trust types.
**Lower Marks (<40):** Superficial or incomplete analysis. May not address all three certainties for each provision. Significant errors in law or application. Poor structure.

COMMON PITFALLS
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["Assuming 'wish' is automatically precatory without considering context; it could be imperative.", "Failing to distinguish between the test for certainty of objects for a discretionary trust (McPhail 'is or is not') and a fixed trust (complete list test).", "Conflating conceptual uncertainty (what is 'artistic community' or 'talented'?) with evidential uncertainty (difficulty in identifying members).", "Overlooking the condition precedent for Daisy's gift.", "Assuming the entire 'My Wishes' document fails if one part fails; may be subject to severance."]

[INTERMEDIATE]

QUESTION
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In 2023, Arthur, a wealthy art collector, executed a document titled 'Deed of Trust'. The deed stated: 'I hereby declare that I hold my collection of modern British paintings (currently housed in my London gallery) on trust. The income from any sales of these paintings is to be used for the benefit of my employees, past and present, in such proportions as my trustees, Brenda and Charles, shall in their absolute discretion determine. The capital of the trust shall eventually pass to my nephew, David, when he reaches the age of 30.' Arthur's collection consists of 25 identified paintings, all listed in an inventory attached to the deed. Arthur died shortly after executing the deed. Brenda and Charles now seek advice. Which of the following presents the MOST ACCURATE analysis of the validity of the trust declared over the paintings?

ANSWER FRAMEWORK
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A. The trust is completely valid. The subject matter is certain (the 25 listed paintings), the objects are certain (the employees are a conceptually certain class, and David is a certain individual), and the words are imperative.
B. The trust is void for uncertainty of objects. The class of 'employees, past and present' is not administratively workable as it is impossible to draw up a complete list of all possible beneficiaries, making the discretionary trust invalid.
C. The trust is void for uncertainty of objects. The direction to use income for the 'benefit' of employees is a mere power, not a trust, and the fixed trust in favour of David fails for lack of certainty of subject matter as the paintings may be sold.
D. The trust is valid. The discretionary trust for employees is valid as the class is conceptually certain and the trustees have a power of selection. The fixed trust for David is valid as the subject matter (the paintings or the proceeds of any sales) is certain.

MARKING GUIDANCE
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1 mark for selecting the correct option. The correct answer is D. Rationale: The 'three certainties' are satisfied. 1. Intention: The words 'I hereby declare that I hold... on trust' are imperative and show a clear intention to create a trust (Re Kayford). 2. Subject Matter: The paintings are identified and listed in an attached inventory, satisfying certainty (Re Goldcorp). The capital (the paintings or the proceeds if sold) is clearly destined for David. 3. Objects: For the discretionary trust of income, the class 'employees, past and present' is conceptually certain; it is possible to say whether any given individual is or is not an employee (McPhail v Doulton). The trustees have a power of selection, so a complete list of beneficiaries is not required; the trust is valid if it can be said with certainty that any given claimant is or is not a member of the class. The fixed trust for David (a certain individual) is also valid. Option A is incorrect because it misstates the test for the discretionary trust; administrative workability is a separate consideration, but the class here is likely administratively workable. Option B is incorrect; it applies the wrong test (complete list test for a fixed trust) to a discretionary trust. Option C is incorrect; the words create a trust, not a mere power, and the subject matter for David is certain (the capital fund).

COMMON PITFALLS
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["Misapplying the 'complete list' test (from fixed trust cases like IRC v Broadway Cottages) to a discretionary trust.", 'Confusing a discretionary trust with a mere power of appointment.', 'Overlooking that conceptual certainty, not list certainty, is the test for discretionary trusts post-McPhail v Doulton.', 'Misunderstanding certainty of subject matter where assets may be sold; the capital fund remains identifiable.']

[INTERMEDIATE]

QUESTION
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In 2023, Arthur decided to make financial provision for his two adult children, Ben and Clara. On 1st March, Arthur sent an email to Ben stating: 'I promise to transfer to you 10% of the shares I hold in TechGrowth Ltd within the next month. This is an early birthday present.' Arthur held 1,000 shares in TechGrowth Ltd, a private company. Ben replied immediately: 'That's fantastic, thank you. I accept.'

On 15th March, Arthur instructed his stockbroker, David, to transfer 100 shares to Ben and to prepare the necessary stock transfer form. David prepared the form, which Arthur signed on 20th March. Arthur placed the signed form in his desk drawer, intending to post it to the company's registrar the following week. Unfortunately, Arthur died suddenly on 25th March. The signed stock transfer form was found in his desk after his death.

Separately, on 10th March, Arthur had met Clara for lunch. He said to her: 'I am going to give you £15,000 to help with your house deposit. I'll write you a cheque now.' Arthur wrote out a cheque for £15,000, post-dated to 1st April, and handed it to Clara, saying: 'Don't cash it until the 1st, as that's when my funds will be in place.' Clara thanked him and took the cheque. The next day, Clara informed her bank of the impending cheque and, relying on Arthur's promise, entered into a contract to purchase a house, paying a non-refundable deposit of £5,000. Arthur died before 1st April. Clara presented the cheque to Arthur's bank on 2nd April, but payment was refused due to Arthur's death.

Advise Ben and Clara as to any proprietary claims they may have in relation to the shares and the £15,000 respectively, following Arthur's death. Consider also any alternative personal claims that may be available.

ANSWER FRAMEWORK
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1. Introduction: Outline the issues concerning constitution of trusts/gifts and the formalities required for shares and cheques. Mention the relevance of Arthur's death.

2. Ben's claim regarding the shares:
   a. Analyse the email promise of 1st March: Is it a declaration of trust or an imperfect gift? Apply *Milroy v Lord* and *Jones v Lock*. Consider the 'every effort' maxim from *Re Rose*.
   b. Examine the steps taken by Arthur: instruction to David, signing of stock transfer form. Apply *Re Rose (1949)* and *Pennington v Waine*. Discuss whether 'equity will not assist a volunteer' but may perfect an imperfect gift if the donor has done all in their power.
   c. The position on death: effect of finding the form in the drawer. Consider *Re Rose (1952)* and the requirement for delivery. Contrast with *Mascall v Mascall*.
   d. Conclusion on Ben's proprietary claim to the shares.

3. Clara's claim regarding the cheque:
   a. Nature of a cheque as a revocable mandate. Apply *Re Swinburne*.
   b. Effect of post-dating and death before presentation. Apply *Bills of Exchange Act 1882, s.75*.
   c. Proprietary claim: Is there a trust of the cheque or the debt? Consider *Re Owen*.
   d. Personal claim in unjust enrichment/estoppel? Briefly consider *Cobbe v Yeoman's Row* and *Thorner v Major* but note the high threshold for proprietary estoppel in commercial contexts. However, Clara's reliance (entering contract, paying deposit) may found a claim.
   e. Conclusion on Clara's claims.

4. Alternative personal claims:
   a. Consider whether Ben has a claim against Arthur's estate for breach of covenant/contract? Apply *Re Plumptre's Settlement* and *Fletcher v Fletcher*.
   b. For Clara, consider a personal claim in unjust enrichment against the estate, or possibly a claim for damages for reliance loss under estoppel.

5. Overall conclusion: Summarise the likelihood of success for Ben and Clara's respective claims.

MARKING GUIDANCE
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A strong answer will:
- Correctly identify and apply the key cases on constitution of trusts and imperfect gifts (*Milroy v Lord, Jones v Lock, Re Rose, Pennington v Waine*).
- Analyse the steps taken by Arthur regarding the shares and determine whether he had done 'all in his power' at the point of death.
- Explain the legal nature of a cheque and the impact of the donor's death before presentation (*Re Swinburne*).
- Consider proprietary estoppel as a potential route for Clara, addressing both the assurance and the detrimental reliance.
- Discuss alternative personal claims against the estate where proprietary claims may fail.
- Structure the advice clearly, dealing with Ben and Clara separately, and reach reasoned conclusions.

Common pitfalls to avoid:
- Confusing declaration of trust with an outright gift.
- Misapplying *Re Rose* without careful analysis of what constitutes 'all in his power'.
- Overlooking the significance of the post-dated cheque and death before the due date.
- Making unsupported assertions about estoppel without analysing the requirements of assurance, reliance, and detriment.
- Failing to consider the practical outcome given Arthur's death and the administration of his estate.

COMMON PITFALLS
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['Assuming the email promise itself creates a trust without the necessary certainty of intention and subject matter.', 'Overlooking that the share transfer form was signed but not delivered to the company or Ben, which is a key factual hurdle for *Re Rose*.', 'Treating the cheque as an immediate gift of money rather than a revocable mandate.', 'Suggesting Clara has a strong proprietary claim to the £15000 without addressing the revocation by death.', 'Failing to consider that personal claims (e.g., in estoppel or unjust enrichment) may yield only monetary compensation, not specific property.']

[INTERMEDIATE]

QUESTION
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Alice, a wealthy businesswoman, orally promised her nephew Ben that she would transfer her holiday cottage in Cornwall to him if he successfully completed his law degree. Ben, relying on this promise, worked diligently and graduated with first-class honours. However, Alice has now refused to transfer the cottage, stating that there was no written agreement. Ben seeks your advice on whether he can enforce Alice's promise. Discuss, with reference to relevant equitable maxims and principles.

ANSWER FRAMEWORK
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1. Identify the key issue: whether an oral promise to transfer property can be enforced in equity despite the absence of a written agreement.
2. Explain the doctrine of proprietary estoppel, including its requirements: assurance, reliance, and detriment.
3. Apply the facts: Alice's oral promise (assurance), Ben's reliance by completing his degree, and the detriment suffered (effort and opportunity cost).
4. Discuss relevant maxims: 'Equity will not permit a statute to be used as an instrument of fraud' (in relation to formality requirements) and 'Equity looks to the intent rather than the form'.
5. Reference case law, e.g., Crabb v Arun DC [1976] Ch 179 and Thorner v Major [2009] UKHL 18, to support the analysis.
6. Conclude on the likelihood of Ben successfully claiming proprietary estoppel.

MARKING GUIDANCE
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1. Correct identification of the issue (proprietary estoppel) – 2 marks.
2. Explanation of the three elements of proprietary estoppel (assurance, reliance, detriment) – 3 marks.
3. Application of facts to each element – 3 marks.
4. Discussion of relevant equitable maxims and their application – 2 marks.
5. Use of appropriate case law to support arguments – 3 marks.
6. Logical structure and conclusion – 2 marks.
Total: 15 marks.

COMMON PITFALLS
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["Assuming the lack of writing automatically invalidates the promise without considering equity's role", 'Overlooking the requirement for detriment or conflating it with mere effort', 'Failing to cite key cases like Crabb v Arun DC or Thorner v Major']