Flashcards
Trusts & Estates - 2
Flashcards do conjunto (51)
- 1What is a constructive trustIt is a relationship by which a person who has obtained title to property has an equitable duty to transfer it to another, to whom it rightfully belongs.
- 2What is the basis for the transfer the property to another under a constructive trust?The basis is that the acquisition or retention of it is wrongful and would unjustly enrich the person holding it if they were allowed to retain it.
- 3What distinguishes a constructive trust from an express trust or a resulting trust?Express and resulting trusts arise as a result of the settlor's intention.
A constructive arises independently of either express or implied wishes of the parties. - 4How is a constructive trust created?There are no formal requirements. The courts simply declare it as a remedy.
- 5What are the advantages of a constructive trust:1. Ability to claim the thing;
2. Captures increase in value
3. Acquires priority over other creditors
4. Can follow the property into anyone's hands (except those of 'equity's darling'- the bona fide purchaser for value) - 6Can anyone defeat the beneficiary of a constructive trust? And if so, who?Yes, the bona fide purchaser - "equity's darling"
- 7What is required to be protected from the claims of the lien holder?I need to be a "bona fide purchaser for value without notice", meaning that:
1 - I bought the property;
2 - in the ordinary course;
3 - from a seller in "goods of the kind" without notice. - 8What does "sale in the ordinary course" mean?It means a sale made in the ordinary course of the seller's business.
Ex. Rogers Communications sells me an iPhone
If Harrington sells me his iPhone, this is not a sale made in the ordinary course, and I am not a bona fide purchaser for value without notice. - 9What is a bona fide purchaser for value without noticeA bona fide purchaser for value without notice is someone who has bought from a seller in the ordinary course from a seller in goods of the kind without notice.
The bona fide purchaser has priority over the claims of a lien holder (ex. bank). - 10What are the 4 conditions for a constructive trust in Canada?1. Defendant must have been under an EQUITABLE OBLIGATION (i.e. trustee or fiduciary)
2. The wrong committed by D has to have occurred IN THE COURSE OF THE RELATIONSHIP
3. P must show a LEGITIMATE REASON for seeking the remedy (ex. unjust enrichment)
4. NO FACTORS would render the impositions of a construction trust UNJUST - 11How is the constructive trust different in Canada than in the UK or the US?UK - Institutional model
Can be used in a variety of factual settings, and can serve a larger purpose than remedying a loss.
US - Remedial model
Only used where there is breach of fiduciary duty or unjust enrichment
Canada - Hybrid but mostly remedial
Flexible vehicle to attack a variety of ills. - 12What are the 5 situations in which a constructive trust will be imposed as a response to wrongful conduct?1. Breach of fiduciary duty
2. Appropriation of corporate opportunity
3. Bribery
4. Breach of confidence
5. Preventing a criminal from retaining the benefit of his crime. - 13What are the 3 elements required to establish breach of confidence for a constructive trust?1. The information conveyed was CONFIDENTIAL;
2. That is was COMMUNICATED IN CONFIDENCE;
3. That is was MISUSED by the party to whom it was communicated. - 14What is the general rule that applies to directors of a trust with respect to appropriation of corporate opportunityDirectors are not permitted to personally take advantage of business opportunities otherwise available to the corporation that arise in the course of the director's duties or by reason of them (potential conflict of interest).
Where there is a POSSIBILITY OF CONFLICT OF INTEREST, an agent will be liable to account for profits made.
TO AVOID LIABILITY, the agent should disclose his intention to use acquired information to the company's committee or board of directors. - 15What happens if a fiduciary accepts a bribe?The amount of the bribe is held in trust for the principal.
If the property decreases in value, the fiduciary must pay the difference.
If the property increases in value, the principal gets the increase in value. - 16Can constructive trusts still be imposed where the defendant is NOT under an equitable obligation (is not a fiduciary or trustee)?Yes, where the 3 establishing elements have been established:
1. The information conveyed was CONFIDENTIAL;
2. That is was COMMUNICATED IN CONFIDENCE;
3. That is was MISUSED by the party to whom it was communicated. - 17What rights do beneficiaries of a trust have?To have the trust conducted prudently and in accordance with the principles of trust law.
They also possess the right to have a trust administered according to the terms established by the settlor or testator. - 18Trust remedies are primarily ____________ in character.Restitutionary
- 19What is the nature of trustee's liability when there is more than one trustee?The trustees are JOINTLY AND SEVERALLY LIABLE to the trust beneficiaries for losses stemming from a breach of trust.
If liable, a beneficiary can seek recovery from any or all of them. - 20What are the 2 types of trust remedies:1. Personal remedies
2. Proprietary remedies - 21What are the 2 kinds of personal remedies?1. Equitable compensation
2. Action in accounting - 22Describe the characteristics of a personal remedy : What type of action is a personal remedy? Who does it attach to? And when is it used?1. Enforceable against the trustee personally (in personam)
2. Attaches to the person against whom it was awarded
3. Often used where the trust property is no longer held by the trustee or where the value of the trust property is insufficient to satisfy the beneficiary's claim
4. Is ineffective if the trustee is insolvent. - 23What is the goal of equitable compensation as a personal remedy?Restitution: compensate P for the aACTUAL LOSS to the trust
- 24Is equitable compensation the same as equitable damages?No. Equitable damages are a statutory remedy which provides for damages in substitution for an injunction or specific performance.
- 25When is an action in accounting applicable?Where the trustee has made a PROFIT (though the trust need not have been damaged).
- 26What is the remedy sought in an action in accounting?To disgorge the trustee of their undue profit.
- 27How is the amount measured in an action in accounting?By the gain to the trustee rather than the loss to the trust.
- 28Describe the characteristics of a proprietary remedy :1. Enforced against property rather than people (in rem)
2. The right follows the property - even if it is converted into another form
3. Sought where the beneficiary wants a specific property returned (rather than compensation for its loss).
4. May be lost if the property cannot be traced. - 29What are the 2 kinds of proprietary remedies?1. Constructive trust
2. Equitable lien - 30When is an equitable lien applicable?When the circumstances require proprietary relief, but preclude the operation of the constructive trust.
- 31What is tracing?Tracing is an equitable procedure used to identify property (such as money) that has been taken from the claimant involuntarily.
It is not itself a way to recover the property, but rather to identify it so that the court can determine what remedy to apply. - 32What rule applies when trustees mix trust money with their own money?Where a trustee mixes trust money with his or her own money in a bank account, and then withdraw money from that account, it is assumed that the trustee first took out their own money rather than the money belonging to a trust beneficiary. (first in first out rule)
- 33Are there any limits to the rule that applies when a trustee mixes trust money with his own?Yes, a person may only lay claim to a maximum value of the lowest balance in the account during the intervening period.
Any amount above the lowest intermediate balance is deemed to be money replenished by and belonging to the trustee.
Any difference still owing to the beneficiaries can be made via a claim in personam, in addition to the claim in rem by means of an equitable lien. - 34What are the 3 areas in which we encounter environmental trust problems:1. The Public Trust Doctrine
2. Liability of trustee for environmental damage
3. Trusteed environmental fund (trusts in connection with environmental remediation after extraction) - 35What is the public trust doctrine?This is a US concept.
The principle that certain NATURAL and CULTURAL RESOURCES are preserved for PUBLIC USE, and that the GOVERNMENT OWNS and MUST PROTECT and maintain these resources for the public's use.
(ex. government hold title to all submerged land under navigable waters).
The government holds the property in trust for the public. - 36Is the Public Trust Doctrine applicable in Canada?No.
- 37Can provincial parks in Canada be the subject of the public trust doctrine?It is uncertain, and so it was found that there was no real trust as "the parks" are not certain because the province can expand or decreases the size of the parks at will.
(Green) - 38Why do we think that the courts in Canada run away from ruling in favour of the public trust doctrine?They are afraid of opening doors to all kinds of people challenging the Crown on its management of the environment.
The right to sue for damage to its property is retained by the Crown as landowner, but not in its capacity as trustee. - 39What is the liability of a trustee for environmental damage?The Environmental Protection Act and the Bankruptcy and Insolvency Act have specific provisions.
Generally, a trustee is not personally liable under federal or provincial legislation in respect of matters before appointment or after appointment.
However, a trustee is responsible for environment damage while he is appointment. As such, a trustee should consider insurance coverage against environmental claims. - 40What is a Trusteed Environmental FundIt is an express trust in the form of a trust to provide security through investment.
This is designed to provide assurance for the Crown that post-closure reclamation is adequately financed. - 41Who pays the costs for putting land back in order after extraction?1. Promise by the user - unreliable - think Peevyhouse (diminution in value was preferred)
2. Deposit scheme (money put in government controlled fund used to pay for remediation). Is this reliable?
3. Trusteed Environmental Fund - Company pays portion of income into a fund managed by trustees who will pay the costs of reclamation. - 42Is a Trusteed Environmental Fund a valid purpose trust?While doctrine says it would be recognized as such, Harrington doesn't think so.
The way around this is to set up a commercial trust with the purpose of making money. - 43Who are the beneficiaries of a Trusteed Environmental Fund?Beneficiaries: the people of a town/community being restored. Whoever has an interest in the property being restored.
- 44What are the advantages of a trust for commercial purposes?1. Tax: avoid problem of double taxation
2. Flexibility - can avoid statutory oversight
3. Monitoring - efficient way to monitor activities
4. Reducing contracting costs - fewer small transaction - 45What are the 3 main functions of a commercial trust?1. Pooling vehicle (to pool assets)
2. Finance vehicle - to finance a transaction
3. Mutual funds - 46What is a voting trust?It is a trust for commercial purposes used as a pooling vehicle. We put our shares into the voting trust and give someone in the group all of our shares for him to cast our vote.
Then, the trust instrument requires that the beneficial interest be returned to all the parties. - 47What 3 issues does the law need to account for with respect to marriage and cohabitation?1. Functional similarity between marriage and co-habitation
2. Scope for autonomy of the parties
3. State responsibility for vulnerable and needy persons - 48What equitable principles remain important in provinces without legislation protection cohabitating couples?Unjust enrichment and constructive trusts
- 49When can a constructive trust be awarded in cohabitating relationships?Where the plaintiff can show:
1. A CONTRIBUTION to the property; and
2. A monetary award would be INSUFFICIENT.
Note: ordinary housework done by the P is insufficient for a trust in property as there is NO SUFFICIENT NEXUS BETWEEN THE WORK AND THE PROPERTY. - 50What must be shown for a cohabitating spouse to claim unjust enrichment?1. Enrichment (gain)
2. Corresponding deprivation (must be linked to the enrichment)
3. No juristic reason for the enrichment. - 51What must be shown to get an award of constructive trust?1. A DIRECT LINK BY CONTRIBUTION; and
2. That monetary damages would be INSUFFICIENT.
Informações
- Descrição
- Juris Doctor Trusts FlashCards sobre Trusts & Estates - 2, criado por Nathalie Buissé em 21-04-2017.
- Criado por
- Nathalie Buissé
- Visualizações
- 6
- Avaliação