Week 8 Lec.2 Equity Continued

Week 8 Lec.2 Equity Continued

1. Under the LCLRA 2009

   • A grantor can grant one or more life estates followed or not followed by a FEE SIMPLE REMAINDER under a trust of land. In such a situation, the legal fee simple is held by the trustees.
     • As long as the grantor DOES NOT grant the legal fee simple to ANOTHER, this will create a resulting trust for the grantor.
       • Legal Fee Simple: Trustees (of which the grantor may be one)
         • Trust
           • Life Estate to X
           • Life Estate to Y
         • Resulting Trust (Fee Simple) for the grantor.
   • It follows that FREEHOLD REMAINDERS now only exist in EQUITY.
     • Freehold reversion (in equity)

2. The Nature of Equitable Interests

   • Equity interventions are there to recognise that "Equity did not say that the [beneficiary] was the owner of the land, it said that the TRUSTEE was the OWNER OF THE LAND, but added that he was bound to HOLD THE LAND for the benefit of the [beneficiary]
   • Equitable rights under a trust are PRIORITY INTERESTS that exist in EQUITY ONLY e.g an easement can exist in equity, a lease, a mortgage.
     • Bona Fide Purchaser for Value Without Notice
       • Equitable rights are generally more precarious (likely to fall or collapse; not secure in position) than legal rights.
         • Historically, to protect cestuis, the court HELD that purchasers of property over which there were equitable interests were bound to give effect to that equitable interest.
           • Unless the purchaser could PROVE they were a "bona fide purchaser for value without notice" OR the legal owner can prove that there is a legal provision that "frees them from the equitable interest" (e.g s 21 LCLRA 2009)
             • Where this occurs, the purchaser becomes "EQUITY'S DARLING"
               • This principle applies to modern trusts.
       • 1) Bona Fide: Purchaser must act in good faith.
         • 2) Purchaser: Person must acquire property rights under a LEGAL transaction. (Excludes squatters, land that is inherited)
           • S 3 LCLRA 2009: "Purchaser" means an assignee, chargeant, grantee, lessee, mortgagee or other person who acquires land for VALUABLE consideration.
           • 3) For Value: The purchaser must give value for his/her interest.
             • 4) Without Notice: Purchaser must satisfy the court that they had NO NOTICE of the 3rd party interest.
               • However the law of equity will BIND a purchaser where they know or ought to have known about the third party interest.
                 • This is known as the DOCTRINE OF NOTICE.
                   • Set out in s 3 of the Conveyancing Act 1881, which was repealed by s 86 LCLRA 2009.
                     • 3 kinds of NOTICE in Irish law:
                       • 1) Actual Notice
                       • 2) Constructive Notice
                       • 3) Imputed Notice
                       • Doctrine of Notice
                         • 1) Actual Notice: the 3rd party interest is "in the purchaser's own knowledge"
                           • LCLRA 2009
                             • S 86 (1) A purchaser is NOT affected prejudicially by notice of any fact, instrument, matter or thing UNLESS -
                               • A) outlines actual notice and constructive notice
                                 • B) outlines imputed notice
                               • LCLRA 2009; Doctrine of Notice has been MINIMISED to a certain extent in s 21 LCLRA
                                 • S 21 (1) Subject to subsection 3), a conveyance to a purchaser of a legal estate or legal interest in land by the person or persons specified in subsection (2) overreaches any equitable interest in the land so that it ceases to affect that estate or interest, whether or not the purchaser has notice of the equitable interest.
                                   • In this case, the beneficiary will have an action AGAINST the trustee. There are exceptions however (fraudulent transactions)
                         • 2) Constructive Notice: interests that the purchaser would have known about had she made "such inquiries and inspections, as ought reasonably to have been made"
                           • Purchasers are expected to make inquiries relating to interests that might be already on the property.
                         • 3) Imputed Notice: the purchaser is treated as though they had (actual and constructive) knowledge that their agents have respect of the transaction.

3. Maxims of Equity

   • 1) Equity Will Not Suffer a Wrong To Be Without A Remedy = Equity will intervene and protect a recognised right where the common law fails to do so - nowadays, this must be a well established equitable right.
     • 5) Where the Equities are Equal, the Law Prevails; Where the Equities are Equal, the First in Time Prevails = where 2 interests are equal (i.e both legal or both equitable, or both registered, or both unregistered) priority will be given to the INTEREST that was CREATED FIRST.
       • Unless an interest created is a) LEGAL and b) held by a bona fide PURCHASER WITHOUT NOTICE of the earlier equitable interest.
       • 8) Equity is Equality = Where multiple people are entitled to land, equity favours an EQUAL DIVISION. E.g in co-ownership, the COMMON LAW favours JOINT TENANCY and EQUITY favours the TENANCY IN COMMON.
         • 9) Equity Looks to the Intent Rather Than Form = Clear intention will NOT BE OVERLOOKED in favour of formalities.
           • 10) Delay Defeats Equity = Where there is UNDUE DELAY, equity may REFUSE RELIEF (Smith v Clay 1767). The burden is the DEFENDANT. Note, this does NOT APPLY to actions under the Statute of Limitations 1957.
             • 11) Equity Acts In Personam = Equity related to A PERSON rather than their property - limited application in property law.
   • 2) Equity Follows the Law = Equity will follow the law UNTIL a modification is required to make it fairer.
     • 6) Equity Presumes an Intention to Fufill an Obligation = Acts done in line with an obligation will be presumed to have been carried out with that limitation.
       • 7) Equity Sees a Done that which Ought to Have Been Done = Specifically enforceable contracts will be enforced. E.g when a contract creates a lease, but that contract has been PARTLY PERFRORMED.
   • 3) He Who Seeks Equity Must Do Equity = In order for equity to come to the aid of the plaintiff, the plaintiff must have acted in an EQUITABLE MANNER.
   • 4) He Who Come to Equity Must Come with Clean Hands = Similar to He Who Seeks Equity Must Do Equity, but this one focuses on PAST behaviour of the plaintiff.