SCHOOL OF LAW
Principles of Equity and Trust (5.10706)
Tutorial Questions for assessment
1. The rules of priority could be stopped as follows:
Legal rights are good against the whole world. Equitable rights are good against all persons
except a bona fide purchaser for value of the legal estate without notice.
Bona fide purchaser who formed the exception is known as “equity’s darling”.
This principle is also expressed in the maxim “where there is equal equity, the law prevails”.
What is this bona fide purchaser rule?
2. In the case of a subsequent interest on the land, where the purchaser had notice of an
equitable estate or interest created after the contract to buy the land, he took free of it, or
without notice.
There are 3 kinds of notice. List each and explain their importance.
3. Explain the modern rules of priority.
Due: Friday 18 October, 12.0noon
Have a nice evening.
Dr. A P Minei
PhD, LLM, LLB (Hons), MSc, BSc
15 October 2024
Total Marks: 20%
SCHOOL OF LAW
Principles of Equity and Trust (5.10706)
Assignment Questions for assessment
1. Explain the Torrens System of Registered Titles.
2. Explain the meaning of the following terms:
(a) Prohibitory or negative injunction
(b) Mandatory injunction
(c) Interlocutory injunction
(d) Interim injunction
(e) Injunction Quia timet
(f) Perpetual injunction
Due: Friday 18 October, 12.0noon
Have a good time to study.
Dr. A P Minei
PhD, LLM, LLB (Hons), MSc, BSc
15 October 2024
Total Marks: 20%
SCHOOL OF LAW
Principles of Equity and Trust (5.10706)
Class Test Questions for assessment
Take-home test
a) B borrowed money from A, an unregistered money-lender and mortgaged certain securities to
him. The contract was illegal and void under the money launders’ Act 1900. B on discovering
this fact, then sued A for the return of mortgaged property. Advise B what he may do in this
circumstances.
This is equity maxim: “He who seeks equity must do equity.” The maxim "He who seeks equity
must do equity" emphasizes that a party seeking equitable relief must also act fairly and justly
toward the other party involved. In the scenario you presented, where B borrowed money from A,
an unregistered money-lender, and mortgaged certain securities under a contract that is illegal and
void according to the Moneylenders Act 1900, B is in a unique position.
Given that the contract is illegal, B may have a strong argument for seeking the return of the
mortgaged property. However, because B is seeking equitable relief, B must also be prepared to
fulfill the principles of equity. Here are the steps B may consider:
Claim for Recovery: B can sue A for the return of the mortgaged property, arguing that the
contract is illegal and, therefore, void. In equity, the courts may assist B by ordering the return of
the securities.
Equitable Considerations: As B seeks equity, B should be prepared to demonstrate that he has
acted fairly. For instance, if B has benefited from the loan, he may need to account for that
benefit. If he took the loan knowing it was illegal, this may complicate matters, as equity does not
assist a party involved in illegal dealings.
Restitution: B may need to show that he is willing to restore any benefits A may have conferred
upon him due to the loan, if applicable. This could include returning any money or benefits
received under the illegal contract.
Good Faith: B should demonstrate that he acted in good faith and did not have any fraudulent
intentions when entering the mortgage agreement. If B can show that he was unaware of the
illegality of the contract until after the fact, this might strengthen his case.
Equitable Defenses: B should also be prepared for potential defenses from A, who may argue that
B's actions in seeking the return of the property are inequitable given the circumstances. If A can
prove that B did not act in accordance with equity, this could weaken B's claim.
Legal Advice: It would be advisable for B to seek legal counsel to navigate the complexities of
both the illegal contract and the principles of equity. An experienced lawyer can help B formulate
a strategy for recovering the mortgaged property while adhering to equitable principles.
In summary, while B has a potential claim for the return of the mortgaged property based on the
illegality of the contract, B must also be prepared to demonstrate fairness and good faith in
seeking equitable relief. By doing so, B can strengthen his position in court and align with the
maxim that "he who seeks equity must do equity."
b) What is the distinction between?
(i) Legal Estates and Interests,
Distinction between Legal Estates and Equitable Interests
1. What are Legal Estates?
Legal estates refer to the rights that a person has to own or use a property, which the law clearly
recognizes. When you have a legal estate, you can enforce your rights in a court of law. This means if
someone tries to take your property from you, you can go to court to defend your ownership.
Types of Legal Estates
I. Freehold Estate: This means you own the property outright and can keep it forever. For
example, if you buy a house, you have a freehold estate in that property.
II. Leasehold Estate: This is when you have the right to use a property for a specific period of time.
For instance, when you rent an apartment, you have a leasehold estate. You can live there for the
duration of your lease agreement, but you don’t own the property.
Enforceability of Legal Estates
Legal estates are straightforward and easy to understand. If someone tries to take your property
unlawfully, you can go to court, and the law will protect your rights. This clarity is one of the main
advantages of having a legal estate.
Case Law: Sadelmi v. Morgan Equipment Pty Ltd.
A good example of legal estates can be found in the case of Sadelmi v. Morgan Equipment Pty Ltd1. In
this case, the court recognized a legal lien, which is a right allowing someone to keep another person’s
property until a debt is paid. This shows that legal interests are enforceable and supported by the law.
2. What are Equitable Interests?
Equitable interests are different from legal estates. These rights are based on principles of fairness and
justice. Even if you do not legally own a property, you might still have rights related to it. This is where
equity comes into play, focusing on what is fair rather than what is strictly legal.
Characteristics of Equitable Interests
Equitable interests are more flexible than legal estates. They can adapt to different situations based on
fairness. This means that even if you don’t have legal ownership of a property, you can still enforce your
rights under certain conditions.
Case law: Walsh v. Lonsdale
An important case is Walsh v. Lonsdale2. In this case, a tenant had an agreement for a lease but did not
have a formal legal lease. The court allowed the tenant to enforce the lease rights as if they had a formal
lease. This shows that equitable interests can be valid and enforceable even without legal title.
1
Sadelmi v. Morgan Equipment Pty Ltd.
2
Walsh v. Lonsdale
3. Key Differences between Legal Estates and Equitable Interests
Enforceability
The biggest difference between legal estates and equitable interests is how they are enforced. Legal
estates can be enforced directly in court. If you have a legal estate, the law protects your rights clearly and
directly. On the other hand, equitable interests may require different legal principles to enforce. You
might need to go through additional steps to prove your rights under equity.
Nature of Rights
Another key difference is the nature of the rights. Legal estates are clear and straightforward. They tell
you exactly what you can do with the property. Equitable interests, however, are more flexible and can
change based on what is fair in a given situation.
Priority of Rights
In most cases, legal interests take priority over equitable interests. This means if there is a conflict, the
legal owner usually wins. However, there are exceptions. For example, if someone has relied on their
equitable interest, they might be able to enforce it even against the legal owner.
Conclusion
In conclusion, understanding the distinction between legal estates and equitable interests is crucial in
property law. Legal estates are clear, enforceable rights recognized by law, while equitable interests arise
from fairness and provide flexibility and protection, even without formal ownership. Knowing these
differences helps individuals navigate their rights and responsibilities related to property.
(ii) Equitable Estates and Interest,
(iii) Mere Equities.
c) There are three certainties which are needed before a trust can come into existence:
(i) Certainty of Intention,
(ii) Certainty of Subject matter, and
(iii) Certainty as to identities of the beneficiaries (or certainty of object).
Briefly explain each.
Due: Tuesday 22 October, 12.0noon
Have a nice day.
Dr. A P Minei
PhD, LLM, LLB (Hons), MSc, BSc
15 October 2024
Total marks: 20%
