PROPREITARY ESTOPPEL AND RESULTING TRUSTS

Intro
The presumption against advancement:
According to Ong, there are two methods of establishing a resulting trust: 1) by rebutting the presumption of advancement where
the presumption is raised 2) by not rebutting the presumption of a resulting in those situations where a presumption of a resulting
trust is raised.
In Caverley v Green Gibbs CJ stated the presumption of advancement (PA) arises when there is a relationship between
purchaser and other person whereby the purchaser intended to give the other a beneficial interest. This condition is fulfilled when
a husband makes a purchase in the name of his wife, or a father in the name of his child or other person to whom stands in loco
parentis. This proposition was endorsed in Aus by the high court in Cummins and NSW CA in Neilson v Letch. The PA applies in
favour of a person who has paid the entire purchase price, or only part of the purchase price ( Caverely v Green.)
Notwithstanding that a mother was at one time regarded as not standing loco parentis to her children See Bennett, it is now the
law, like a father, a mother does stand in loco parentis. Nelson v Nelson.
Distribution of the Purchase Price and Balance
The purchase price is what is paid to acquire the property (to vendor), as distinct from mortgage repayments (to lender) which
secures the release of that charge Brennan, Mason JJ in Caverely also Alvaro. The contributors hold the legal estate in trust for
themselves in the same proportions as they contributed to the purchase price. Ingram as applied in Caverely v Green.
Further, joint and several borrowing under a contract of loan was held in Caverely to entitle the joint and several borrowers to
share equally in the money thus borrowed.
Thus, in light of the aforementioned law, PA operates in favour of MOTHER
NO REBUTTAL
Mother: Deposit 200,000 plus 300,000 contribution (Nelson)
Daughter: Deposit plus balance of loan (Caverely)
Son: Balance 650,000 (Caverely)
Total:
For the sake of completeness, the following result is displayed, but is wrong for inconsistency with Nelson. REBUTTAL
OPERATES
Mother: 0
Daughter: Half mothers contribution plus half balance of loan (Caverely)
Son: Half mothers contribution plus own contribution plus half balance of loan (Caverely)
Total:
CASE EXPLANATION for P.E.
It is clear that X has been induced to act in his/her detriment in reliance on PROMISORS promise of receiving an interest in
property, because she paid of 100,000 of loan in response to H s request. This gives rise to the doctrine of proprietary estoppel
(P.E.), the ingredients of which were stated by Dixon J in Grundt who made it clear the detriment in estoppel is that avoided and
not suffered (and promisor should be estopped to full extent of promise.) Thus, estoppel imposes a constructive trust and thereby
avoids detriment suffered by induced promisee. This view was endorsed and applied in the Victorian case of Donis (See Nettle,
Maxwell and Ashley JA) where it was stated in relation to a discussion of Giumelli (see below) that compelling the promisor to
adhere to a reduced form of original promise still constitutes the prevention of detriment to the promisee.
Further, according to the case of Giumelli, P.E. is only a prima facie remedy as there are some circumstances which make the
imposition of a constructive trust unjust to the promisor. However, this must be interpreted in light of Agnew (Also Janssen) which
states the prima facie entitlement is not easily displaced, meaning in most cases a constructive trust will still be applied.
Therefore, it is necessary to ascertain the scope of PROMSIORS promise, because the scope will be enforced unless it is unjust
to do so. Here, the entitlement confirmed as not unjust to estopp PROMSIOR.
P.E. WHERE J.T PAYS by PARENT S INDUCEMENT
X paid (half amount paid) for herself and (half amount paid) for Y thereby conferring a detriment of half amount on Y and
suffering (half amount paid) which proprietary estoppel would avoid. Although X paid full amount s/he would be liable as a joint
borrower for half of that, so there was an inducement for the other half of that amount only.
Result
X: $ as above under resulting trust, plus $$$$ (half amount) under constructive trust.
Y: $ as above. The figure is unchanged as s/he is neither promisor nor promisee.
M: $ as above $$$ (half amount.)
Total:
P.E when Parent is induced by JT to pay part of loan.

Because Parent acted in response to JT request and paid off the bank loan, it is clear this was an inducement. The remedy for
which is proprietary estoppel.
Parent paid $X (half amount paid) for joint borrower one and $ X (half amount paid) for joint borrower two as joint borrowers,
thereby conferring a detriment of $ FULL AMOUTN PAID on JOINT BORROWERS and suffering of FULL AMOUNT PAID which
proprietary estoppel would avoid.
Joint Borrower and PROMISOR: As above minus full amount promised and paid by payee. Also a charge over other joint
borrowers interest for half amount paid by payee Calvery v Green As this joint borrower through payee has paid $ X (full
amount of payee) off the loan, and therefore can claim contribution from other joint borrower not involved.
Other Joint Borrower: No change as neither promisee or promisor
Payee: As above plus full amount paid by P.E.
Abbreviated P.E. explanation plus issue of fairness as in Sullivan
It is clear that H and L have been induced to act to their detriment in reliance on J s promise of receiving an interest in property,
because they paid of 200,000 each of the bank loan in response to J s request. Prima facie, J will be compelled to adhere to full
scope of promise (Grundt), unless unjust (Giumelli) and this is not easily rebutted (Agnew.) As there is no issue as to injustice on
the facts, p.f. position is confirmed, the question becomes - what is fair in this context. No case has attempted to, or is capable
of, defining fair, as it changes according to circumstances. Here it is submitted that H and L should share equally in the 500,000
increase in value of the house, notwithstanding they only contributed 200,000 each, because James did not contribute anything
to the renovations which caused the increase. This outcome is consistent with the view espoused in Grundt and Donis, that
estoppel means avoidance and not suffering. However, by application of Sullivan (NSW CA), which proposed a lingering
adherence to the reversal of detriment as basis for proprietary estoppel, both H and L would only get 200,000 each, because
detriment, if construed literally to mean suffering, would only amount to the value of the contribution given.
It is submitted that this is incorrect, especially given that in the case of Giumelli the high court decisively rejected the view that
reversal was an appropriate remedy and advocated prevention of the occurrence of detriment to compel the promisor to adhere
to her promise, unless unjust.
Further, the case of Sullivan never explained how such an increase in value of the property was to be distributed.
Result
Payee: $ as above plus amount contributed to renovation and appropriate share of appreciation according to amount contributed
to renovation
Promisor: $$$. Remains unchanged as he contributed nothing
Payee: $ as above, plus contribution to renovation, plus $ for appreciation based upon contribution to renovation
Total: New value of house.
Renovation and appreciation, with set amount of increase to be reflected in payee share
If amount to be reflected is lower than contribution and/ or appreciation the payee s loose the
difference. If amount to be reflected is higher than contribution and/ or appreciation the payee s gain the difference.
Proprietary Estoppel operates; A and B need to realise the $X (amount promised) increase as specified and as they are joint
promisors A + B loose/gain the (excess amount) equally
Promisor 1: Above figure /+ half the difference between amount promised and spent
Promisor 2: Above figure -/+ half the difference between amount promised and spent
Payee: Above figure + increase promised from P.E.
Gift with/out P.E. - a charge is given
There is no change in the beneficial interest as there is no proprietary estoppel. However, payee is able to obtain a charge on
other J.T. share of the house for half the amount paid to secure the contribution of the payment under Caverely v Green which
remains on the property until paid off.
Result:
H: No change.
Payee: Amount as above, with charge on other JT share of the house to secure mortgage repayments s/he contributed.
L: No change in beneficial interest.
Total:
P.E with gift

X has made a gift of $$$ by inducement; the remedy of proprietary estoppel will apply to prevent X incurring detriment. It is
submitted that what constitutes fair is that X should be given the value that he paid as a gift, to ensure s/he is not out of pocket.
Result:
H: As above
Payee: As above plus amount paid
Promisor: As above minus amount induced to be paid
Total: Value of house
The issue of illegality in Nelson
By application of Nelson, if X repays the Commonwealth there will be no change to the beneficial interest. If not, she will have to
surrender the $$$$ (amount obtained) property to her two children. However, as in Nelson, there was only one dishonest child
therefore the H.C. did not have to deal with any apportioning between two children. Thus, we do not know whether the 100,000
will be distributed equally or proportionately to their share in the land. Coincidentally, as the children have equal shares in the
land and therefore the resulting figures for H and J will be the same irrespective.
The resulting figures are:
Child 1: as above plus half illegal sum
Child 2: as above plus half illegal sum
Parentis: as above minus illegal sum per Nelson.
If the amount is not the same must give alternative answers: To calculate this systematic formula Add up the JT s interest. To
calculate a share, divide the share over that total and times it by the amount that was illegally obtained. i.e. 450/1.1. million time
110,000 = 45,000.
Writing Requirements
If someone said that in all the above transactions where P.E. applied, were cases of agreements to make dispositions in land,
which according s 59 are invalid as it states that no action may be brought upon any contract for the disposition in land or any
disposition in land unless the contract was evidenced in writing. As s 11 (2) only applies to immediate dispositions and not
agreements as we have here, and there is no equivalent to s 11 (2) for s 59. However, the case of Last and Rosenfield, which
were not concerned with P.E., both state in the case of a constructive trust s 59 does not apply, s 59 it falls outside of s 11 (2.)
JT takes unsecured loan off another and uses it to pay off part of loan
No proprietary estoppel. Therefore no change to beneficial ownership, A acquires a charge over Bs interest of ($ half the amount
paid) according to Calvery v Green as A and B are jointly and severally liable for the loan.
Giumelli Facts: Parents say to kid, if you stay on land and plant orchard instead of accepting an offer of employment, they would
subdivide and transfer the lot to the son.
The court refused to declare constructive trust over land, declaring that he only had a prima facie entitlement which was
demolished by the pending partnership between action between some of the family members other the claimant, the
improvements to the promised lot by family members, before an after his residency there, the breakdown in family relations and
continued residence on the promised lot by one of the brothers. He was instead, inconsistent with this reasoning, awarded a
monetary sum representing the present value of the promised lot.

CHARITABLE TRUSTS
Poverty
Relief of poverty may be expressed without reference to the word poor see Armenian General (orphans was held to denote poor
orphans.)
Definition of Poverty
A person is in necessitous circumstances if his financial resources are insufficient to enable him to obtain all that is necessary for
a modest standard of living in the Australia Community. Ballarat v FCT per Kitto J. Also instructive on the meaning of poverty;
degree s of poverty less acute than abject poverty or destitution, but poverty nonetheless Re: Gardom per Eve J
Scarisbrick

The First time: Jenkins LJ in Scarisbrick drew a distinction between a gift for the relief of poverty amongst a class of persons
(charitable trust) and a gift to individuals albeit with relief of poverty amongst those individuals as the motive of the gift (non
charitable trust.) This distinction was confirmed in re Segelman and approved in Dingle v Turner which stated trusts for the relief
of poverty, are not required to benefit persons constituting the public or section of the public (nevertheless they are for the public
benefit are as it benefits the community for the poor to be given benefits) and therefore, may benefit a private class of individuals
(See also In re Hilditch) See below **
The second time: On the authority of Scarisbrick, re Segelman, Dingle v Turner (as discussed above)
**The testators XXX cousins is a valid class of persons as they are defined by reference to a single propositus - the testator.
Conversely, if the cousins had been named individually the trust would not have been for the relief of poverty. Ong believes the
distinction drawn by Jenkins LJ in Scarisbrick is untenable - why should it depend upon how those persons are described?
Discrimination
We know that according to re Baddeley (as discussed above) we can not engage in improper discrimination. However, as trusts
for the relief of poverty are charitable whether or not they benefit a section of the public, it is irrelevant that the trust discriminates
against those who are below the age of 50 at the testators death. Improper discrimination is of no relevance where public benefit
has no relevance.
Go to severance/cy-pres
Education
The clause purports to establish a trust for the advancement of education. Just because the testator thinks something is
charitable, does not mean that it is a charitable purpose (Hummeltenburg + Vivisection). Therefore use of the word education
does not necessarily mean this is a trust for the advancement of education.
Trusts for advancement of education will not be charitable unless it confers benefits on the public or a section of it (Re: Compton
and enshrined in Oppenheim.) To satisfy this requirement two questions must be answered in affirmative: Is that conferred by
trust a benefit? Is it made available to be members of the public generally or a section thereof?
If there are no cases on point
Put in first if no vegetarian argument: Chitty J in Forveaux took the view that a donor s intention to benefit the public was
tantamount to an actual benefit to the public and the Irish Court of Appeal followed this decision in Re: Cranston in holding that a
vegetarian society was a charity. However, Cranston was doubted in Vivisection by Lord Simmons, who said any judicial decision
to the contrary, must be overruled.
First time: According to National Anti Vivisection as this purpose is not enumerated in the preamble, the element of public benefit
is required to be established by evidence (without benefit of a rebuttable presumption of public benefit which exists to support
those purposes specified in the preamble.)
Recognized illness (public benefit) etc vs. a mere personal opinion (not public benefit)
Second Time: Thus, applying Anti Vivisection, as discussed above, it is submitted that as
Sporting/games
In re Nottage a purported trust to provide funds for a cup for the best yacht of the season was held non-charitable as yachting
was considered a mere game. However, in Re: Dupree, chess was elevated above that of a mere game, as it was thought to
encourage the qualities of foresight, concentration, memory and ingenuity (Vaisey J). Thus, by analogy with re: Dupree
establishing a trust for . should be regarded as charitable.
The decision in Dupree ascribes a wider scope to the concept of education than Nottage and according to Ong is to be preferred,
and is consistent with wide ambit of education given in Royal Choral Society which proscribed interpreting education in a narrow
or pedantic sense.
Vegetarianism (general can be used for fourth category)
Chitty J in Forveaux took the view that a donor s intention to benefit the public was tantamount to an actual benefit to the public
and the Irish Court of Appeal followed this decision in Re: Cranston in holding that a vegetarian society was a charity. However,
Cranston was doubted in Vivisection by Lord Simmons, who said any judicial decision to the contrary, must be overruled, and
therefore applying Vivisection, you can not prove vegetarianism society was for public benefit, and therefore, conversely you can
not prove that non - vegetarianism is for a public benefit. The trust would fail as it is not for a charitable purpose.
Discrimination
According to Re Baddeley if the facilities offered are in their nature capable of being enjoyed by the general public but were in
terms restricted to enjoyment by a certain section thereof, the discrimination would deprived the trust of it s element of public
benefit and it therefore be invalid.
The discrimination here is not/is improper as .you can not give everything to everyone in the world.
Normal Fourth Category
This clause purports to create trust for other purposes beneficial to the public.
It is necessary and sufficient for the public benefit conferred by the purpose to fall within the spirit of the preamble (William s v
IRC.)
If no case law on point: According to re Hummultenburg and Anti- Vivisection (as discussed above) as this purpose is not
enumerated in the preamble, the element of public benefit is required to be established by evidence.
It is submitted this could/not be shown as recognized illness v mere opinion argument.
According to Williams v IRC also Re Baddeley (as discussed above) we can not engage in improper discrimination as it would
deprived the trust of it s element of public benefit and it therefore be invalid.
The discrimination here is not/is improper as .you can not give everything to everyone in the world.
Abolition of law - See cases below Bowman etc
Statutory Modification of Fourth Category
As this clause concerns other (recreational) purposes beneficial to the public, Charitable Trust Act s 103 (2) and (3) (b) (i)(ii) are
applicable. To determine whether the aforementioned legislative provisions are satisfied the provision must have the object of

improving the conditions of life for the persons for whom the facilities were primarily intended (s 103 (3) (a)? If answered in the
affirmative the trust will be deemed to have been provided in the interests of social welfare (s 103 (2))
It is submitted that person by virtue of their .. (youth, age, infirmity or disablement, poverty or social and economic
circumstances s 103 (3) (b) (i) .. do/not need .
There is no issue of improper discrimination here because the rule that a trust in order to qualify as charitable, must allow their
benefits to be enjoyed by every member of the public able to participate in those benefits (Williams also Baddeley) is modified by
statute, so that the recreational facilities may be restricted to person whom have need of such facilities as by reason of the
factors listed in s 103 (b) (i.)
Go to severance/cy-pres
Severance
As a disposition comprising charitable and non charitable purposes is void (unless the non charitable purposes are merely
incidental to the charitable purpose BCC v PWC) the clause can only be valid if s 104 can be used to sever the words insert non
charitable purpose.
It is submitted that it can because the clause contains another charitable purpose
It can not as this severance provision can not work a severance where a trust promoted a single non charitable purpose (see for
instance Dixon J in Lawlor)
Cy-pres
As the will took effect in September 2007, when there was no small pox in QLD, it will fail for initial impossibility. Applying Dixon
and Evatt JJ comments in Milly Milly case AG-NSW, it could be inferred that the trust has a paramount general charitable
intention, namely, the eradication of disease, and the court will apply the doctrine of cy-pres an approximate substitutional
trust.
s 104 can not be used to sever the provision and avoid application of cy-pres, as the severance provision can only be used to
sever a non-charitable purpose and this purpose is charitable.
Cases:
Purposes in/outside of the fourth category (can also apply to education)
Vivisection: A trust to promote a change in the law is intrinsically incapable of constituting a charitable trust as it is regarded as
political. In Bowman Lord Parker said political object was not charitable because the court had no means of judging whether a
change in the law would be for the public benefit. Further Dixon J in Royal North Shore v AG anticipated the decision in
Vivisection and stated: A coherent system of law can scarcely admit that objects which are inconsistent with its own provision are
for the public welfare. A trust for the purpose of changing legislation outside the domestic jurisdiction was held invalid
McGovervn.
Church of New Faith: The spiritual work of faith healing is charitable, conduct engaged in by a group of person for the purpose of
practicing a supernatural belief was seen as religious.
A trust merely benefiting animals without also benefiting mankind was held non charitable In re Grove Gady: Murdoch:
Benevolent Society of NSW: Re Green
Groove Gady was distinguished in Sawtell where a trust for the preservation of flora and fauna (native wildlife) was held to be
charitable. Holland J argued this with more benevolence than persuasiveness according to Ong.
By Contrast a trust with the express or implied object of preventing cruelty to animals, because it promotes humanness, unless
outweighed by some element of public detriment is charitable In re Wedgwood.
Inclusion within the spirit and intendment of the pre-amble
Locality cases:
Mc Duff established a philanthropic purpose was too wide and included purposes which where not within the spirit of the preamble statute, notwithstanding that it manifested goodwill toward mankind.
AG v National Provincial Bank held a patriotic purpose was too wide to constitute a charitable purpose because it included both
charitable and non-charitable purposes.
A public purpose was likewise scotched in Blair v Duncan as was a benevolent purpose as a synonym for charitable purpose in
Morice, Brown and Burns.
Wahr-Hansen any organizations or institutions operating for the public good was void as those purposes were not exclusively
charitable.
Exception: Trusts for the benefit of specified localities. i.e. for my country England see In re Smith but are very circumscribed
Wahr-Hansen.
Education
Promotion of Sports/Games
re Nottage (yacht racing) In re: Nottage a prize for the most successful yacht of the season was condemned as encouragement
of a mere sport or mere game, insufficient to support a charitable purpose. Ong suggests that in light of Dupree which ascribes a
wider scope to the concept of education, this case should be decided differently today.
re Mariette (squash courts for school) By contrast, the decision in re Mariette upheld building additional squash courts for a
school as a gift for the advancement of education because it was regarded necessary in a satisfactory system of education to
provide for both mental and bodily occupation. This is endorsed in McMullen and therefore good law.
Read together Nottage and Mariette enunciate the proposition that the promotion of sport as part of an education program
constitutes an educational purpose. In light of Lord Halishams speech in McMullen, this principle extends to all such gifts
wherever that educational programme may be conducted, not just a named institution.
IRC v McMullen upheld a trust to provide facilities to encourage students, in any part of the U.K., to play association football or
other games or sports.
In re Dupree (Chess) was regarded as educational, and elevated above the level of a mere game, because it nature was thought
to encourages the qualities of foresight, concentration, memory and ingenuity (Vaisey J). Dupree ascribes a wider scope to the
concept of education than Nottage and this decision is consistent with wide ambit of education given in Royal Choral Society.
In re Webber (boy scouts) a trust to further boy scouts movement was upheld because the main purpose of the movement was
the instruction of boys of all classes in principles of discipline, loyalty and good citizenship (per Vaisey J.)

In Perpetual Trustee Powell J concluded an annual competition for the best portrait painted was an education purpose as it helps
to preserve, or encourage the revival of, an old established art form and encourages it to move in new directions, educative to
both those who enter and the viewers. This echoed the view of Greene MR in Royal Choral Society.
In Oppenheim a result set up to pay for education of the children of employees or former employees of a group of companies,
was rejected as eduction because it was defined by reference to a group of private employers and not by reference to any public
element. The nexus was there relationship between a propositus, and therefore not the community or section thereof.
PT v Young: A trust will be still satisfy the element of public benefit notwithstanding trustee s are directed to give preference to a
private class of persons within a class of beneficiaries which constitutes a section of the public. See also re Koettgens.
Facts: A trust to award scholarships to person selected from the inhabitants of a town was upheld as charitable notwithstanding a
direction to the trustee s that, all other things being equal, they were to give preference to employee s to a particular company.
According to Cafoor a trust was not regarded to be educational because it was a family (private) trust with a gift over to a public
class of individuals in the event of there were no remaining members of the private class
Facts: A settlor purported to set up a trust for the eligible male descendants of himself, brother or sister failing whom the trust
was to be diverted to benefit the deserving youth of the Islamic faith in Colombo. This is consistent with Oppenheim.
According to Lloyd v FCT education is not to be construed in a narrow or pedantic way. A trust for sea cadets corps which
trained young people in the rudiments of a sea going career was upheld as educational.
In re Deluis a trust to search for the manuscripts of the plays commonly ascribed to Shakespeare was held to be educational.
In re Hopkins even more liberally a trust to search for the manuscripts of the plays commonly ascribed to Shakespeare was held
to be educational. The discovery of even one would be of the highest value to history and literature.
Re Weaver a cash prize for a top student at a school was held to promote education purposes, notwithstanding the money used
may be for other purposes.
A trust whose incidental purposes are not educational may still be an educational trust (General Application - BCC)
In Fern Tree Gully an institution established as a training farm for youth was held education notwithstanding the surplus farming
products were sold commercially and the proceeds used for the purposes of the institution.
Of general application: In Bathurst City Council it was held the fact that some non-charitable purposes may co-incidentally be
served does not of itself destroy the legal character of a charitable trust.
According to Nunawading Shire profits made pursuant to a purpose that is not merely incidental, but is collateral to that purpose,
will the purposes of the institution will be non charitable.
Are publishing law reports without profit education?
Pg. 341
Education not confined to teaching
In Taylor education was defined to include increasing stock of available knowledge
The trust may connote the diffusion of knowledge, not needed to be by way of teaching. (Royal
Choral Society) This stands in contrast to the decision in In re: Shaw where Harman J regarded it teaching was essential to
education, and consequently that research in to an alphabet which had 40 letters was not increasing stock of available
knowledge, as in Taylor, but worthless. Similarly a In Re: Pinion a museum for the exhibition of certain art was considered
rubbish. Ong suggests the latter two decisions should not be followed in Australia as they are value laden.

CONSTRUCTIVE TRUSTS
Liability
Fiduciary
As a manager, X owes a fiduciary duty to his/her company, but not shareholders (Regal Hastings) as there is no additional
circumstances to provide for the latter on the facts (Coleman v Myers)
According to Deane J in Chan v Zacharia a fiduciary must account to the person to whom the obligation is owed for any benefit
or gain obtained in circumstances where a conflict exists between fiduciary and personal interest or obtained by use of fiduciary
position.

1)
2)

Which has been obtained or received in circumstances where a conflict or significant possibility of conflict exist
between fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain (this is
known as the conflict rule) OR
Which was obtained or received by use or by reason of his fiduciary position or of opportunity of knowledge resulting
from it. (This is known as the profit rule)

This rule may apply even where the fiduciary has been faithful in performing his duties Regal Hastings and is based on premise
that s/he made profit by use of fiduciary position without consent.
3 possibilities
1.

IDC v Cooley applies when a person would be liable for a breach of the conflict rule but not for a breach of the profit
rule.

In realization of the fact that entered into partnership while employed as a manager for Fabhomes, X has contravened the
conflict rule, as the business of the partnership directly competes with the business of Fab Homes in the same area. There is an
actual conflict because X worked for Fabhomes simultaneously for one month while in partnership with Y.
This infringement is analogous to IDC v Cooley given the similarity of facts.
In IDC the defendant was the MD of the plaintiff, had been given information in his private capacity. No suggestion was made by
anyone the information, which would have been of value to the plaintiff, was received by the defendant thought the use of this
fiduciary position.
In light of the defendant s submission, Roskill J had to decide whether the rule of liability as enunciated in Regal that the
fiduciary duty to account for personal profits is founded on his unauthorized use of his fiduciary position was an exhaustive
statement of the fiduciaries liability to account for profit. Roskill J said it was not.
Likewise here there is nothing in the question that states X took clients or business opportunities and thereby made a profit for
him/herself. Although X undoubtedly acquired knowledge as a consequence of her position as managing director, she was only
in that position for a year, and could have acquired that knowledge prior.
Therefore, by analogy to IDC v Cooley, the court should accept that X, like Cooley, although in breach of the conflict rule, is not
in breach the profit rule.
2.

If a person mis-uses their position in a way that does not raise conflict between profit and duty, and thereby is only
liable for a breach of the profit but not conflict rule Boardmann v Phipps applies.

Here, X has exploited business opportunities, taken clients and acquired knowledge, property of the trust, and used it to profit
from the trust property without obtaining consent. Thus the facts are similar to that of Boardman and Phipps whereby .
The majorities reasoning for the decision in Regal was applied in Boardmann v Phipps.
Facts: Where a testator bequeathed his residuary estate in trust for his four children, subject to an annuity for life in favour of his
widow. Part of the estate consisted of shares. The solicitor and a beneficiary (one of the children) purchased the issued shares,
without objection by the other two beneficiaries, who had been informed. The third inactive trustee had not been consulted and
had not consented. Lord Wilberforce found for the plaintiff on the basis that the defendants had used their positions as fiduciaries
to make profits for themselves, and made no reference to conflict rule. He relied upon the statement made in Regal that
propounded liability on the basis of gains made by a fiduciary by mere unauthorized use of his position. On appeal Denning MR s
decisive reason was that the two fiduciaries had acquired the knowledge required for them to make the purchase of the shares,
and that knowledge was property of the trust so that in using that knowledge they had profited from the use of trust property.
Thus, given the similarity of facts to Boardmann v Phipps, the court should accept that like the solicitor, the fiduciary is in breach
of the profit rule for their actions.
3.

As both are rules are breached, Regal Hastings applies

Lord Russel of Kilowen, Mac Millian and Lord Porter in the majority applied the rule against fiduciary profiting. They avoided any
mention of the rule that a fiduciary must neither raise nor risk conflict between his duty and personal interest, and acclaimed the
defendants bona fides. Lord Wright and Viscount Sankey in the minority decided that the directors did place themselves in a
situation where there personal interest conflicted with duty to the company, as distinct from their merely having made profits from
use of their positions.
In conclusion, the ratio in Regal is that a fiduciary must account to the person to whom the fiduciary duty is owed for any gains
made by the use of his fiduciary position without consent.
Thus, given similarity of facts, the court should apply Regal and the fiduciary will be found in breach of both the profit and conflict
rule.
Assister
As X, is an assister, the relevant test to be applied in Australia is that of double dishonesty as propounded in Farrah
Constructions. As fiduciary has been dishonest, X will be liable if he behaves dishonestly in rendering assistance.
The test is founded on the second limb in Barnes v Addy (knowing assistance) which the High Court in Consul accepted, but the
privy counsel in Royal Brunei rejected. However in interpreting that second limb, the court in Consul did not require the breach to
have been committed dishonestly, thereby making the distinction between Counsel and Brunei indistinguishable. Ong suggest
this creates confusion.
Knowledge is to be classified according to the five categories propounded by Gibson J in Baden.

Actual knowledge
Wilfully shutting ones eyes to the obvious

Wilfully and recklessly failing to make such inquires as an honest and reasonable man would make.
Knowledge of such circumstances which would indicate the facts to an honest and reasonable man
Knowledge of circumstances which would put an honest and reasonable man on inquiry

It could be argued that X, having knowledge of circumstances which would have put an honest, reasonable man on inquiry
(Gibson J in Baden), was dishonest in failing to make the appropriate enquiries after his discussion with the bank manager. The
fact that he had already asked a manager does not preclude him from liability because Gertrude was self interested, and he was
trying to determine whether she was lying or not.
However, it could also be argued this constituted carelessness which is acceptable according to Farrah. There was previously a
conflict as to whether carelessness was sufficient, however Langor and Calcite, are no longer good law. However, the former
argument is more likely to succeed because the bank managers expressly told him to ask a manager who was privy to such
information. It is irrelevant whether X felt honest, because honesty is judged by an objective standard.
Remedies
There is no principle by which to determine whether the accounting is to be done as equitable debtor (as was the case in
Warman and Regal) or as constructive trustee. This was made clear in Gibbs J criticism of the judiciary in Consul Developments.
(Go to constructive trust)
Constructive Trust - Reid
Appreciation
If a constructive trust is declared, according to Reid (as followed in Australia by Zobory, and in England in Daraydan), the
principle of which is not confined to bribes (See Lord Templeton) X should hold the entirety of the property, including any
appreciation in that property, as constructive trustee to Fabhomes. X must account for the surplus because s/he is not entitled to
profit from the breach.
If also bankrupt
However as X is bankrupt, s 116 (2) Bankruptcy Act will apply to protect Fabhomes so that the property will not be divisible
among creditors under s 116 (1), as the property is held in trust by X for Fabhomes.
Depreciation
If a constructive trust is declared, according to Reid (followed in Australia by Zobory, and in England in Daraydan), the principle
of which is not confined to bribes (See Lord Templeton) X will hold the entirety of the (property) as constructive trustee to
Fabhomes. However, X will be ordered to pay equitable compensation to Fabhomes equal to the depreciation in the value of the
property.
If also Bankrupt
As X is bankrupt, s 116 (2) Bankruptcy Act will apply to protect Fabhomes so that the property held in trust will not be divisible
among creditors under s 116 (1), but X will have to account as an equitable debtor in respect of the equitable compensation and
Fabhomes, being subject s 108 BA, will have to cue as an unsecured to receive a dividend. As a result, Fabhomes could will get
$ X (the current value of property), but how much more is not certain and can receive as low as 1 cent in the dollar as a dividend.
Equitable debtor
Alternatively, if a constructive trust is not declared over the land, Fabhomes would be subject to s 108 in respect of the entire
amount of the property and would have to cue for a dividend.
First Time: The court in Warman suggested that if the accounting was to be made as an equitable debtor, a charge could be
made on the relevant assets, which is an improvement on Regal. However, if the peccant fiduciary is bankrupt you can not
impose a charge on the assets because they no longer belong to the fiduciary, but are vested in the trustee of bankruptcy
under s 108. This presupposes no constructive trust is made over the shares in which case s 116 (2) would apply.
Second time: As described above there can be no charge on the land as M is bankrupt and any liberal allowance would go
straight to trustee in bankruptcy
Conclusion if bankrupt
It is submitted that a constructive trust should be declared on these facts, because the alterative would be unfair. If there is no
trust, G would have to account as an equitable debtor and Fabhomes, being unsecured, would have to que with other creditors
to collect dividends under
s 108 of the Bankruptcy act.
Liberal Allowance (for a fiduciary only)
According to Boardmann v Phipps also Warman, fiduciary will be entitled to a liberal allowance, for the skill, expertise and
expenses s/he used to produce the profits made. But in this situation s/he will never see the proceeds as s 58 (1) BA vests all the
assets of a bankrupt in his or her trustee in bankruptcy. Therefore, the allowance will go straight to the trustee in bankruptcy
despite the award given under this principle. Note this is an allowance and not a means of profit sharing as the latter would be
inconsistent with the rule that a fiduciary can not profit from their breach.
Injunctions
Where both rules are infringed, an injunction maybe got on the basis of the first rule NZ decision of Pacifica Shipping Co. Ltd. v
Anderson if continuation is likely to occur.

TESTAMENTARY POWERS
Intro:

Perpetuity Period
The perpetuity period is valid by virtue of s 209 of the PLA which authorizes a settler/ testator to specify any period of up to 80
yrs as the perpetuity period and yrs falls within this. CL period (a valid alternative) is a life or lives in being plus 21 year s.
Testamentary power
The power conferred by the following clauses are all testamentary powers as the power is conferred by will, as opposed to inter
vivos which is conferred by an instrument executed by a person alive, i.e. a settler.
Validity of the trust
According to Knight v Knight a valid trust requires certainty of intention, subject matter and objects.
CSD v Joliffe is authority for the proposition that an express trust can not be created without a real intention. Here all clauses
possess certainty of intention as because they start with the phrase I direct which are imperative words, and therefore
distinguishable from cases such as Lamb v Eames in which the testator gave estate to widow to be at her disposal at way she
may think best, for the benefit of herself and family. Further, all clauses possess certainty of subject matter as the testator has
specified the amount of the interest which is to be distributed. Thus, they are distinguishable from cases such as Palmer v
Simmonds where the purported trust property was termed the bulk of the estate, and Sprange v Bernard, which use the phrase
the remainder.
With the sole exception of trusts to promote charitable purposes, every trust must have certainty of objects, namely certainty of
beneficiaries. The relevant test for determining this, subject to one anomalous NSW decision of Western, is to be applied at the
time the document takes effect, at the time of execution. Certainty of objects is now examined in the context of each clause
Optional - Precatory Trust
The precatory trust prescribes that words which literally merely express earnest request which when construed by reference to
context, are imperative although not explicitly. However, Mussoorie Bank v Raynor made it clear that words of placation are no
longer sufficient to create a trust, unless the content clearly compels the contrary.
Re: Williams: a testator gave the residue of his estate to his widow, in the fullest confidence that she will carry out my wishes in
the following particulars. Request not imperative words
Type of Power
It is a general power (only mere) because it confers the power to appoint property to any person or any number of persons in the
world, including the donee of the power, who can appoint everything to themselves. This precludes it from being a trust power as
there is no obligation. It should be noted that it is said erroneously the donee of a general power is equivalent to giving
ownership. This is untrue as they may choose not to exercise their power in their lifetime or in their will and the power would
lapse and there is nothing received.
This is a special power (either fixed or discretionary), as a power of selection has been given to donee of power, to appoint to
one or more persons from among a class designated by the donor.
This is a hybrid power (either trust or mere) as it confers the power to appoint property to any one or more persons in the world,
except to specified person/s or designated class/s of persons. It resembles general in the sense that potential beneficiaries are
not defined by any criterion and special because the donee is not free to appoint to anyone in the world. It may be mere or trust,
namely there may be an obligation to exercise it, or none.
- There are many ex: An inter vivos hybrid mere power is the case of In Re: Manistys settlement.
-

Testamentary hybrid trust power is the case of Horran v James where the testator can the trustee s could appoint to
any one in the world, except his wife.

This is a fixed trust because both beneficiaries and there interests/shares are specified. Ex: To As children in equal shares.
This is a discretionary trusts it has a single discretion or double discretion as to beneficiary/interests.
This is a mere power as there is no obligation to exercise the power conferred.
TRUST POWER: Prima Facie, the phrase I direct makes this a trust power. I submit the prima facie position is confirmed as
there is no gift over (which would have precluded the interpretation of a trust power as there is no obligation - the testator may or
may not exercise the power) and as there is no other indication that the power is mere, such as the testator conferring the power
on a non - trustee.
Ex of gift over: I direct my trustee to distribute to such of A s children in such shares as the trustee in their absolute discretion
determines but failing such distribution to B absolutely.
If there is no gift over or explicit indication as to the whether the power is trust or mere, the terms of disposition and
circumstances in which it was made will determine whether or not it s a trust or mere power.
- The trust power can only be given to a trustee.
-

A mere power can be given to a non trustee or a trustee. If a mere power is given to a non trustee, they can behave
capriciously, because the power is not given to them in a fiduciary capacity. If the mere power is given to a trustee, they
are under s fiduciary obligation and have a duty to consider whether or not to exercise the power (Lord Reid in
Gulbenkian) and in exercising that power must give careful considering to the power of selection. If it s given to a non
trustee, they can say thank you very much for the mere power, I will now forget about it.

(Obligation present, and if breached the courts will exercise the power)
Certainty of objects
List Certainty
- Subject to the anomalous decision of Weston, the relevant test for a fixed trust is List Certainty, according to NZ
decision of Re Beck Bessinger and Mc Phail v Doulton where Lord Wilberforce observed there can not be equal
division amongst a class unless all the members of the class are known. The burden of proof is on a balance.

Young J propounded the test will be satisfied if a reasonable time after the gift comes into effect, the court can be satisfied on the
balance of probabilities the substantial majority of the beneficiaries have been ascertained and that no reasonable enquires
could be made which would improve the situation. Ong believes this test fails for illogicality as its impossible to ascertain a
substantial majority of an unknown number, and even if this was possible, it would frustrate the explicit direction to distribute to all
members of the class (in Gulbankien Upjohn said no authorities in trustee s or court to make the distribution among a smaller
class than pointed out by the donor) and the test is meant to be applied at the time the instrument takes effect, not a reasonable
time after. No court has commented on the validity. It is definitely not valid in England or NZ. So we have to wait AND see
whether good law in QLD.
If we accept the inherent illogicality in this test it is possible to find a substantial majority of (max) of 7 generations, as the
decision in Weston concerned the successful application of this test to 5 or 6 generations.
The application of children s act (5, 6, 7 generations (the grey area) and upwards)
Ex: 9 th cousins
Application of this test is problematic here as it requires the compilation of 11 generations, producing a myriad of possible
beneficiaries, which are impossible to ascertain a list of. Further, s 3 Children Act 1998 QLD provides there must not be any
discrimination against children born out of wedlock or their descendents in any instrument. Earlyth prejudices against children born
out of wedlock meant they were not recorded, making it impossible to a comprehensive list of 9 cousins.
Young J test would fail also because it s impossible to obtain a substantial majority of 11 generations.
Young J test successfully applies up to 5th cousins (Westorn successfully applied Young J test to 3 rd or 4 th)
It is impossible to ascertain of list of all 5th cousins, as this is 7 generations. However, you could
compile a list of the substantial
majority as Weston concerned the successful application of this test to 5 or 6 generations (3 rd or 4th cousins), and here there are
7.
Criterion Certainty
- The relevant test for a trust power (according to McPhail v Doulton + Gulbenkian) mere power (according to
Gulbenkian) is Criterion Certainty; a class of objects is certain if it can be said with certainty of any postulant or
membership of the class that he or she is or is not a member of the class, there is no need for a complete list of the
members of the class, on a balance of probabilities.
Special Dictionary Meaning
According to normal usage the phrase is ambiguous, meaning the disposition will fail, unless there is a special dictionary
meaning which renders the testators idiosyncratic use of language clear. (Lord Upjohn in Gulbenkian) There is nothing in
extrinsic materials or the contents of the will to do this, meaning the trust fails.
If ambiguity to word in the exception of a HYRBID POWER
However, there is no authority on point indicating whether, if the exception is ambiguous, the entire clause is invalid for lack of
certainty or whether only the exception is to be disregarded for it s ambiguity. Ong suggests the latter is preferred. It can not be
a general power, because the trustees are able to appoint the property to themselves, whereas the trustee are impliedly
excluded from the potential class of beneficiaries in a hybrid testamentary power (as they are not expressly included) by virtue of
Horan v James. Therefore, this will remain a valid hybrid power which purports to confer power upon anybody in the world,
except the trustee.
If ambiguity in criterion of a special power the power fails (No need to go on about s 33 R as it is not a hybrid power.)
If ambiguity in the exception of a special power the clause will still be valid as a special power
Must state that the clause would be valid intervivos due to s 33 R Succession Act. However, if there is no special dictionary
meaning the power would fail as it would not be valid intervivos.
Tutorial Example:
If the court declines to give effect to the phrase due to incoherence, the clause would purport to confer a hybrid power. In
Tatham v Huxtable, Fullager and Kitto JJ thought such a purported disposition not
defined with sufficient certainty, did not reach the status of a testamentary disposition. In Horan v
James, it was argued criterion certainty did not apply to testamentary hybrid powers as it would infringe the rule against
delegation of testamentary power. However, s 33 R of the Succession Act QLD provides the clause will be valid as a
testamentary power if it is valid intervivos. The testator/ix has used the ambiguous term XXX to describe this excluded class of
persons. Thus, in the absence of an
accompanying a special dictionary meaning, the clause would fail the criterion certainty test as an
intervivos disposition, and therefore is invalid here.
Re: Baden
The contradiction of Lord Wilberforce s test:
Lord Wilberforce contradicted his own test by insisting to be able to say with certainty that of any individual he was or was not a
member of the class, thereby requiring that every member of the class be ascertainable. The contradiction arises with respect to
those classes of persons similar to that of a person s relatives, because one can not say with certainty that a person is not a
relative, given the lack of relevant evidence.
The trustee s can say with certainty whether a person is one eyed or not, notwithstanding that they would not be able to compile
a list of all one-eyed persons in the world.
If it does invoke contradiction, need to bring up all three justices views and apply them. If family tree or DNA testing exists, the
contradiction is not invoked.
Examples:
Low number of cousins
The internal inconsistency in Lord Wilberforce s test propounded in Mc Phail, as was the issue in Re: Badens, does not arise, as
it is possible to ascertain the trustee s third cousins simply by referring to a family tree.
Higher number of cousins

Six cousins upwards: because DNA testing is unable to that a person was or was not a sixth cousin of another, therefore we need
to apply the decision of the 3 judges in Badens no. 2.
Relative
The presence of DNA testing has overcome the ambiguity associated with use of the word relative which arose in by virtue of
the different views of the three justices taken in Re: Baden (no.2.)
Class invoking contradiction three justice s views
Higher number of cousins that family tree can resolve/Descendant of Grandparents example:
The designated class of beneficiaries is problematic as it raises the internal inconsistency in Lord Wilberforce s test in Mc Phail.
This issue was addressed in Re: Baden s no. 2, where all three justices took differing approaches in applying the test. Thus, there
is no clear ratio.
Sachs LJ adopted the rule of evidence to resolve the uncertainty, namely that a person not proved to be a member of the class
was to be regarded as outside of it. You can prove that a person was a descendant of your grandparents here and therefore he
would have upheld the clause.
Megaw LJ thought if you can find a substantial number of the class, the test would be satisfied.
You can here, therefore it s valid.
Stamp LJ Insisted on list certainty, as he construed relatives to mean nearest blood relations relying on Harding and Glyn.
However, it is not possible to change the meaning of eight great grandparents here, thus the clause would fail. However, even if
you could, he would be in the minority, the clause would remain valid.
s 33 R Succession Act 1981
First version: However, both Mc Phail and Gulbankien were concerned with inter vivos dispositions. In Horan v James the court
declared that a hybrid power created by will, would not be valid as it would infringed the rule against the delegation of
testamentary power, which requires list certainty. The NSW CA concluded that the high court decision in Tatham v Huxtable (see
Fullager and Kitto JJ) constituted this principle. Consequently there is no judicial authority which applies criterion certainty to
testamentary. This represents the position is all states of Australian except QLD where s 33 R Succession Act abolished this rule
by providing if the power is valid inter vivo s then it is valid as a testamentary power.
In thought such a purported disposition not defined with sufficient certainty, did not reach the status of a testamentary disposition.
In Horan and James, it was argued criterion certainty did not apply to testamentary hybrid powers as it would infringe the rule
against delegation of testamentary power.
Cases
Morris v Bishop of Durham: It was a power given to bishop of Durham to give property to such objects of beneficence and
liberality as the bishop in his own discretion as he may approve of. It concerned a trust power. It was held not sufficiently precise,
and trust failed for uncertainty of objects.
Commissioner of Stamp Duties v Joliffe: Mr. Joliffe opened a bank account and fraudulently said he was opening the account as
a trustee for his wife. It was held that given that he never intended to hold the account as trustee for his wife, his written
declaration that he was holding the account in trust for his wife was not effective to create a trust.
Sprange v Bernard: A testatrix gave property to her widower for his sole use provided that at his death the remainder is divided
between certain persons. The court ruled the subject matter of the trust uncertain as it did not know what the remainder
comprised.
Livingston: Radcliff said a beneficiary of assets where the estate is unadministered it can not be regarded as beneficiary of the
trust as the assets may have to be sold, so that you can not identify the trust property.
Hunter and Moss; the defendant declared himself a trustee of 50/950 identical company shares. He did not identify which 50 was
to be held in trust. Later he tried to repent of the trust. He said the trust fails because I forgot to identify which 50 shares I meant.
The English CA was not impressed by the changed in mind and held that because the shares were identical, it did not matter
which ones he meant. This is a common sense decision. However conceptually it is flawed because Hunter did not identify what
shares he meant when he declared the trust over 50 shares.