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What Is A Trust Notes

Law Notes > Trusts and Equity Notes

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Fundamentals of Equity Rationale Equity is a connecting rationale of preventing a person from using his or her legal powers of contracting, ownership and disposition in a manner that would be contrary to good conscience.

+ Snell: 'Equity refers to a conception of justice that transcends the substantive and procedural rules of the positive law. It introduces an ethical element into the positive law by holding the parties to a more sensitive or exacting standard of justice than the rules of positive law would require of them.'
---------------------------------------------------------------------------------------------------------------------------------------------Historical Development Historical connection in the jurisdiction of the Court of Chancery.

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Began with the Chancellor's intervention in conflicts. Lord Ellesmere later applied the same principles in all cases.

The Judicature Acts 1873-1875 The Judicature Commission recommended the creation of a single Supreme Court. (n.b. This is what we now, following the abolition of the judicial functions of the House of Lords on 1st October 2009 and their transfer to the Supreme Court of the United Kingdom, call the Senior Courts of England and Wales.) That new single court would have all of the jurisdiction then exercised by the superior courts of law, equity, probate, admiralty and divorce.

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The Judicature Acts 1873-1875, including section 25(11). See now Senior Courts Act 1981 (formerly known as the Supreme Court Act 1981), s.49.

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In terms of substantive law, this continues the relationship between law and equity established by the Earl of Oxford's Case (1615).

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A distinctive feature of equity in all legal systems has been its secondary or supplementary nature. Equitable intervention presupposes the existence of primary rules of positive law. The effect of equity is to qualify the enforcement of the positive law to ensure a more complete standard of justice than the law itself would attain.
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The Fusion of Law and Equity

a) Procedural fusion - Berry v. Berry [1929]
b) Substantive fusion and the 'fusion fallacy'

-Aquaculture Corporation v. New Zealand Green Mussel Co Ltd. [1990]; "For all purposes now material, equity and common law are mingled or merged. The practicality of the matter is that in the circumstances of the dealings between the parties the law imposes a duty of confidence. For its breach a full range of remedies should be available as appropriate, no matter whether they originated in common law, equity or statute".Chirnside v. Fay (No 2) [2005] 3 N.Z.L.R. 689; Facts: Breach of fiduciary duty alleged. These duties are purely equitable in origin. Ct tried to avoid common law damages for loss of a chance. Principle: Understanding thus is that the common law is merged in equity and so historical distinctions based on the origins of rights and remedies do not matter anymore.

c) Fusion by convergent evolution of principles
+ Burrows: This theory suggests that the distinction between law and equity is not technically abolished, but in similar situations the rules of equity evolve so they look like common law rules. There is a cross-fertilisation of ideas as two different systems of law are forced into the same situation. The argument is one of convergent evolution - i.e. common law rules of causation can apply to quantifying loss on the breach of trust claim; two separate origins but does not justify treating differently.
+ Fox: Argument is unobjectionable.
? What makes equitable principles distinct in the modern law?

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Notion of conscience - all equitable doctrines relating to conscience to control common law rights. Would lose that if assimilated all into grand scheme.

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Everything in equity is a kind of secondary scheme; assuming the existence of a primary common law foundation. All qualifications work in a secondary way to a primary structure of common law rights, so if you wanted to wipe the slate clean you could abolish equity and keep common law; but if you abolished the common law you would necessarily abolish equity.
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