Graduate Diploma in Law (GDL) Equity and Trusts Syllabus

Equity and Trusts syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Equity and Trusts in Graduate Diploma in Law (GDL), not a summary of it.

1. 1

   Principles of Equity and the Three Certainties

   4 topics

   • Nature of Equity and Maxims
   • Classification of Trusts
     • Express, resulting and constructive trusts
     • Fixed and discretionary trusts
   • The Three Certainties
     • Certainty of intention
     • Certainty of subject matter
     • Certainty of objects and the relevant tests
   • Constitution of Trusts and Formalities
2. 2

   Resulting, Constructive and Purpose Trusts

   4 topics

   • Resulting Trusts
     • Automatic and presumed resulting trusts
   • Constructive Trusts
   • Charitable Trusts
     • Charitable purposes and public benefit (Charities Act 2011)
   • Non-Charitable Purpose Trusts
3. 3

   Trusteeship and Breach

   4 topics

   • Duties and Powers of Trustees
     • Duty of care and investment (Trustee Act 2000)
     • Fiduciary duties and conflicts of interest
   • Breach of Trust and Trustee Liability
   • Tracing
     • Tracing at common law and in equity
   • Liability of Third Parties
     • Knowing receipt and dishonest assistance

Equity and Trusts flashcards for Graduate Diploma in Law (GDL)

20 of 62 cards from the Equity and Trusts deck — real questions with worked answers.

1. What is equity, and what is its core function within the English legal system?

   Equity is the body of rules originally developed and administered by the Court of Chancery to mitigate the rigidity of the common law. Its function is to act on the conscience of the parties, providing remedies and recognising rights (such as the trust) where the common law is inadequate or would produce injustice.

2. What does the maxim 'Equity will not suffer a wrong to be without a remedy' mean?

   Where a legal right exists but the common law provides no adequate remedy, equity will intervene to supply one (e.g. specific performance, injunction). It underpins equity's creative jurisdiction but is limited to recognised rights, not every grievance.

3. Explain the maxim 'Equity follows the law.'

   Equity does not override or contradict common law rules but supplements them; it respects legal rights and titles and only intervenes where the conscience of the legal owner is affected. It will not be invoked to defeat clear legal rules without good reason.

4. What does 'He who comes to equity must come with clean hands' require?

   A claimant seeking an equitable remedy must not himself be guilty of impropriety or unconscionable conduct connected to the claim. Misconduct relevant to the relief sought may bar the remedy (e.g. as in D&C Builders v Rees).

5. State the maxim concerning equity and intention over form, and give an example.

   'Equity looks to the intent (substance) rather than the form.' Equity gives effect to the true intention of the parties rather than rigid formalities, e.g. treating a document as a mortgage despite its form, or relieving against forfeiture.

6. What does 'Equity will not assist a volunteer' mean, and what is the related maxim about gifts?

   Equity will not perfect an imperfect gift or enforce a promise in favour of someone who has given no consideration (a volunteer). The related maxim is 'Equity will not perfect an imperfect gift' (Milroy v Lord).

7. Define a trust.

   A trust is an equitable obligation binding a person (the trustee) to deal with property over which they have legal control (the trust property) for the benefit of persons (beneficiaries) or a permitted purpose, any of whom may enforce the obligation. The trustee holds legal title; beneficiaries hold equitable title.

8. Distinguish an express trust, a resulting trust, and a constructive trust by how each arises.

   An express trust arises from the deliberate, expressed intention of the settlor. A resulting trust arises by operation of law to return beneficial interest to the settlor/contributor where intention fails or is presumed. A constructive trust is imposed by law, irrespective of intention, to prevent unconscionable conduct or unjust enrichment.

9. Distinguish a fixed trust from a discretionary trust.

   In a fixed trust the beneficiaries' interests are defined by the settlor and the trustee has no choice as to distribution. In a discretionary trust the trustees have a discretion as to which objects benefit and/or in what shares; objects have only a hope (and a right to be considered) until the discretion is exercised.

10. Distinguish a bare trust from a special trust.

    In a bare (simple) trust the trustee holds property on trust for an absolutely entitled, sui juris beneficiary with no active duties beyond conveying it on demand. In a special trust the trustee has active management duties to perform (e.g. investment, distribution).

11. What are the three certainties required for a valid express trust?

    Certainty of intention (to create a trust), certainty of subject matter (the trust property and the beneficial interests), and certainty of objects (the beneficiaries). Stated in Knight v Knight (1840).

12. How is certainty of intention established, and do particular words have to be used?

    Certainty of intention is established by construing the words and conduct as a whole to show an intention to impose a binding obligation, not a mere wish, hope or moral obligation. No technical words are needed; precatory words such as 'in full confidence' or 'desire' generally do not suffice (Lambe v Eames; Re Adams and the Kensington Vestry).

13. What two aspects must be certain for certainty of subject matter, and what case illustrates uncertain shares being saved?

    (1) The trust property itself must be certain, and (2) the beneficial interest of each beneficiary must be certain. In Boyce v Boyce the trust failed because the share was uncertain; in Re Golay's the direction to receive a 'reasonable income' was upheld because the court could quantify it objectively.

14. Compare the certainty of subject matter rules for tangible and intangible property (Re London Wine v Hunter v Moss).

    For tangible bulk goods, the specific items held on trust must be segregated/identified (Re London Wine Co; Re Goldcorp). For identical intangible property such as shares of the same class, segregation is not required because the items are interchangeable (Hunter v Moss).

15. State the test for certainty of objects in a fixed trust.

    The 'complete list' test: it must be possible to draw up a complete list of every beneficiary (IRC v Broadway Cottages). Both conceptual and evidential certainty of the whole class are required.

16. State the test for certainty of objects in a discretionary trust.

    The 'is or is not' / 'given postulant' test from McPhail v Doulton: it must be possible to say with certainty whether any given individual is or is not a member of the class. A complete list is not needed.

17. Distinguish conceptual certainty from evidential certainty.

    Conceptual certainty concerns the precision of the language defining the class (e.g. 'friends' is conceptually uncertain). Evidential certainty concerns whether it can be proved as a matter of fact that a person falls within the class. Conceptual uncertainty is fatal; evidential difficulty usually is not for discretionary trusts.

18. What are administrative unworkability and capriciousness as grounds for invalidating a discretionary trust?

    Administrative unworkability: the class is so hugely wide that the trust cannot sensibly be executed (e.g. 'all the residents of Greater London' in R v District Auditor ex p West Yorkshire). Capriciousness: the trust has no rational or sensible purpose connecting settlor to objects. Both can invalidate a discretionary trust even if the 'is or is not' test is met.

19. What is the beneficiary principle?

    A non-charitable trust must generally have ascertainable human beneficiaries who can enforce it (Morice v Bishop of Durham). Without someone to enforce the trust in whose favour the court can decree performance, the trust is void (subject to limited exceptions).

20. State the rule in Saunders v Vautier.

    A sole beneficiary (or all beneficiaries together) who is sui juris (of full age and capacity) and absolutely entitled to the trust property may direct the trustees to transfer the legal title to them and bring the trust to an end, regardless of the settlor's wishes.

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