Equitable Principles

Question 1

Under the concept of trust, property can have two owners:

Answer 1

• trustee (legal owner)
• beneficial owner (beneficiary)

Question 2

who is the registered owner of a trust property

Answer 2

• Trust is listed as a registered owner on the trust property
• Although the trust is the legal owner, the beneficiary is entitled to benefit and profit from all aspects of the trust property as per the terms of the trust agreement

Question 3

What is a trust

Answer 3

An equitable obligation, binding on the trustee to deal with the trust property for the benefit of the beneficiaries (or cestuis que trust)

Question 4

what type of relationship is a trust

Answer 4

fiduciary relationship

Question 5

what is a protective trust

Answer 5

• allow a person to enjoy the benefit of trust income while preventing that beneficiary from having full control over the property.
• Property held for minors or adults unable to manage their own property

Question 6

testamentary trusts

Answer 6

• Allow for the management of a decedent’s estate.
• Giving money to trustee for specific purposes, e.g. education, environment, charitable purposes, or care for a pet.

Question 7

trust within the commercial realm

Answer 7

Numerous investment, corporate and business purposes. (pension plans, mutual fund investments, etc..)

Question 8

trust as a means of effecting public policy

Answer 8

landlord is a trustee for any monies of the tenant that are held as a security deposit; a response to environmental concerns (manage beaches, rivers, lakes, etc..…)

Question 9

two forms of trusts

Answer 9

resulting trust and a constructive trust

Question 10

what are the two forms of constructive trusts

Answer 10

institutional (for breaches of fiduciary duty) and remedial (unjust enrichment)

Question 11

what is a resulting trust

Answer 11

a trust that arises automatically when property is transferred to someone without the intention to benefit that person. The beneficial interest in the property results back to the original owner or contributor (if kid of a deceased parent, then back to their estate)

Question 12

presumption of resulting trust

Answer 12

where a person conveys the legal estate, the law presumes that the equitable interest was not conveyed. The beneficiary who did not contribute should return it to the original owner

Question 13

three situations when a resulting trust can arise

Answer 13

1. When the condition is not fulfilled in a grant of property on trust, the estate will result back to the settlor. i.e., a property is conveyed on trust ‘for my first child to turn 21 years of age’.
2. When the instrument of transfer fails — i.e., where trusts contravene public policy or where trusts are created through fraud/duress: equitable title results to the settlor.
3. The gratuitous transfers. i.e., A buys property and places title to it in the name of B, a resulting trust is presumed to arise in favour of A

Question 14

exception to the resulting trust rule

Answer 14

the presumption of advancement (presumption is reversed, shifts the burden of persuasion to the opposing party)

Question 15

what is advancement

Answer 15

is a gift during the transferor’s lifetime to a transferee who, by marriage or parent-child relationship, is financially dependent on the transferor

Question 16

does the presumption of advancement apply to adult children

Answer 16

no it only applies to minors

Question 17

the presumption of resulting trust and advancement can be rebutted by

Answer 17

showing that a gift was truly intended

Question 18

what is a constructive trust

Answer 18

• A constructive trust is an equitable remedy imposed by a court to benefit a party that has been wrongfully deprived of its rights due to another person obtaining or holding a legal property right which they should not possess due to unjust enrichment
• Unlike a resulting trust, a constructive trust is imposed when there has been unjust enrichment, regardless of the intention of the parties.
• Constructive trusts are based on the idea that a defendant would be unjustly enriched if they were allowed to keep property for themselves.

Question 19

what is an remedial constructive trust

Answer 19

provides a remedy in situations in which a title holder of property would be unjustly enriched unless equity compelled him or her to share the property with someone who contributed to acquiring or improving the property. [Unjust enrichment]

Question 20

when are remedial constructive trusts used

Answer 20

• It has been used most commonly about entitlement to property acquired during the course of an intimate partnership (unmarried persons in relationships followed by breakdown or death)— “judge made law and remains the only option”
  ○ One party make a substantial contribution to the property of another without compensation
  ○ Restoring a benefit which one might not ordinarily be entitled to retain at common law

Question 21

test for unjust enrichment (Beblow)

Answer 21

• Enrichment of or benefit to the defendant - something must have been given by one party and received and retained permanently by the other. The benefit must be tangible and may be positive or negative (expenses that would have had to undertake)
• A corresponding deprivation of the plaintiff (the claimant suffered a corresponding detriment); and
• Absence of “juristic reason” for the enrichment - the benefit must have occurred without a juristic reason (there is no reason in law or justice for the retention of the benefit conferred)

Question 22

what is the default trust presumption

Answer 22

resulting trust

Question 23

to demonstrate a joint family venture

Answer 23

• mutual effort
• economic integration
• actual intent
• priority of the family