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Equity - From: 1996 To: 1996
This page lists 12 cases, and was prepared on 21 May 2019.
Sledmore v Dalby [1996] 72 P and CR 196; [1996] CLY 4949; [1996] EWCA Civ 1305
8 Feb 1996
CA
Roch LJ, Hobhouse LJ
Land, Equity
The plaintiff sought possession of a house. She had owned it with her late husband. The defendant lived in and had done much work on the house, but the deceased left it all to the plaintiff and the defendant's wife who had since also died. She sought possession after the defendant paid no rent. At first instance it was held that D had acquired an equitable interest in the house for the repairs and the expectation under the wills. Held: The will created no sufficient legitimate expectation to justify the claim. The plaintiff's and defendants needs had to be balanced, and an equitable remedy should not be used to create an injustice. The plaintiff's need was more pressing. D had lived in the house for 20 years rent free and the equity created by his expenditure had expired.
1 Cites
1 Citers
[ Bailii ]
Barclays Bank Plc v Estates and Commercial Limited [1997] 1 WLR 415; [1996] EWCA Civ 1354; (1997) 74 P and CR 30
20 Feb 1996
CA
Millett LJ, Waite LJ, Thorpe LJ
Equity, Land, Contract
Millett LJ discussed the assertion of a vendor's lien where a third party would be adversely affected: "A party with an equitable charge can be taken to agree to the postponement of his property against any party who was allowed to his knowledge to purchase the land on the faith that it is unencumbered." and
"As soon as a binding contract for sale of land is entered into the vendor has a lien on the property for the purchase money and a right to remain in possession of the property until payment is made. The lien does not arise on completion but on exchange of contracts. It is discharged on completion to the extent that the purchase money is paid: In re Birmingham, decd.; Savage v. Stannard [1959] Ch. 523, cited with approval in London and Cheshire Insurance Co. Ltd. v. Laplagrene Property Co. Ltd. [ 1971] Ch. 499 , 514. Even if the vendor executes an outright conveyance of the legal estate in favour of the purchaser and delivers the title deeds to him, he still retains an equitable lien on the property to secure the payment of any part of the purchase money which remains unpaid. The lien is not excluded by the fact that the conveyance contains an express receipt for the purchase money.
The lien arises by operation of law and independently of the agreement between the parties. It does not depend in any way upon the parties' subjective intentions. It is excluded where its retention would be inconsistent with the provisions of the contract for sale or with the true nature of the transaction as disclosed by the documents. It is also excluded where, on completion, the vendor receives all that he bargained for: Capital Finance Co. Ltd. v. Stokes [1969] 1 Ch. 261 and Congresbury Motors Ltd. v. Anglo-Belge Finance Co. Ltd. [1971] Ch. 81. In each of those cases the vendor took a legal charge to secure payment. The unpaid vendor's lien was held to be excluded notwithstanding that the charge later became void for want of registration. In Williams on Vendor and Purchaser , 4th ed. (1936), vol. 2, p. 984, there is a passage which deals with the exclusion of the lien: "The vendor may, however, waive or abandon his lien for the unpaid purchase-money, and his intention to do so may be either expressed or implied from the circumstances of the case."
After dealing with express waiver or abandonment the author continues:
"Where such waiver or abandonment is sought to be implied, the onus lies on those who deny the existence of the lien, which arises by the rule of equity in the absence of stipulation to the contrary; the question is one of the parties' intention, to be determined by the documents they have executed and the circumstances of the case; and the test is, whether they have in effect agreed that the vendor shall have some other security or mode of payment in substitution for his lien."
As the authorities demonstrate the test is an objective one. The question is: what intention is to be attributed to the parties from the transaction into which they have entered? . . "
1 Cites
1 Citers
[ Bailii ]
Neville and Another v Wilson and Others Times, 04 April 1996; [1997] Ch 14
4 Apr 1996
CA
Lord Justice Nourse, Lord Justice Rose and Lord Justice Aldous
Company, Equity
A parole agreement by all the shareholders in a company, to liquidate it, created a constructive trust. That a specifically enforceable agreement to assign an interest in property, created an equitable interest in the assignee, was unquestionably correct. A trust deed governed by s53(2) is not subject to the requirement to be in writing.
Law of Property Act 1925 53(2)
1 Cites
1 Citers
Trustee of the Property of F C Jones and Sons (A Firm) v Jones Gazette, 22 May 1996; Times, 13 May 1996; [1997] Ch 159
13 May 1996
CA
Miller LJ
Insolvency, Equity
A bankruptcy order was made in 1984. Under the 1914 Act the trustee in bankruptcy got title to all the assets of the bankrupt as of the date of the act of bankruptcy. So, the trustee owned the partnership assets. The wife drew £11,700 out of those assets and invested in potato futures. By November 1984, she had made £50,000 using that money. The trustee sought to recover that sum. Held: It was the fruit of his money. A trustee in bankruptcy was entitled to an account of profits of investments withheld from him.
Bankruptcy Act 1914
1 Citers
Kleinwort Benson Ltd v Birmingham City Council Times, 20 May 1996
20 May 1996
CA
Local Government, Equity
No defence of unjust enrichment was available to defend a claim on a failed interest rate swap agreement.
1 Cites
1 Citers
Westdeutsche Landesbank Girozentrale v Islington London Borough Council Times, 30 May 1996; [1996] 2 All ER 961; [1996] AC 669; [1996] UKHL 12; [1996] 2 WLR 802; [1996] 5 Bank LR 341
22 May 1996
HL
Lord Browne-Wilkinson, Lord Goff, Lord Woolf
Banking, Local Government, Equity
Simple interest only was payable on a debt payable for an interest rate swap agreement which had been avoided as ultra vires the council's powers. The failure of the swap agreement did not place the authority under any fiduciary duty to the claimants. A finding to that effect would create equitable interests with uncertain consequences for others. Accordingly simple interest only was payable. Parliament had made its intentions clear and it was not for the courts to create new situations in which compound interest would be awarded. "Although it is difficult to find clear authority for the proposition, when property has been obtained by fraud equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity." An innocent recipient of property wrongfully obtained does not become a constructive trustee of it until receipt of knowledge of the claim in equity of the true owner.
HL Lord Goff said: "Claims in restitution are founded upon a principle of justice, being designed to prevent the unjust enrichment of the defendant: see Lipkin Gorman v Karpnale Ltd. [1991] 2 A.C. 548. Long ago, in Moses v Macferlan (1760) 2 Burr. 1005, 1012, Lord Mansfield C.J. said that the gist of the action for money had and received is that "the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money". It would be strange indeed if the courts lacked jurisdiction in such a case to ensure that justice could be fully achieved by means of an award of compound interest, where it is appropriate to make such an award, despite the fact that the jurisdiction to award such interest is itself said to rest upon the demands of justice. I am glad not to be forced to hold that English law is so inadequate as to be incapable of achieving such a result. In my opinion the jurisdiction should now be made available, as justice requires, in cases of restitution, to ensure that full justice can be done. The seed is there, but the growth has hitherto been confined within a small area. That growth should now be permitted to spread naturally elsewhere within this newly recognised branch of the law. No genetic engineering is required, only that the warm sun of judicial creativity should exercise its benign influence rather than remain hidden behind the dark clouds of legal history."
Lord Browne-Wilkinson said: "The argument for a resulting trust was said to be supported by the case of a thief who steals a bag of coins. At law those coins remain traceable only so long as they are kept separate: as soon as they are mixed with other coins or paid into a mixed bank account they cease to be traceable at law. Can it really be the case, it is asked, that in such circumstances the thief cannot be required to disgorge the property which, in equity, represents the stolen coins? Moneys can only be traced in equity if there has been at some stage a breach of fiduciary duty, i.e. if either before the theft there was an equitable proprietary interest (e.g. the coins were stolen trust moneys) or such interest arises under a resulting trust at the time of the theft or the mixing of the moneys. Therefore, it is said, a resulting trust must arise either at the time of the theft or when the moneys are subsequently mixed. Unless this is the law, there will be no right to recover the assets representing the stolen moneys once the moneys have become mixed.
I agree that the stolen moneys are traceable in equity. But the proprietary interest which equity is enforcing in such circumstances arises under a constructive, not a resulting, trust. Although it is difficult to find clear authority for the proposition, when property is obtained by fraud equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity. Thus, an infant who has obtained property by fraud is bound in equity to restore it: Stocks v. Wilson [1913] 2 K.B. 235, 244; R. Leslie Ltd. v. Sheill [1914] 3 K.B. 607. Moneys stolen from a bank account can be traced in equity: Bankers Trust Co. v. Shapira [1980] 1 W.L.R. 1274, 1282C-E: see also McCormick v. Grogan (1869) L.R. 4 H.L. 82, 97".
Lord Browne-Wilkinson explained the differences between institutional and remedial constructive trusts: "Under an institutional constructive trust, the trust arises by operation of law as from the date of the circumstances which give rise to it: the function of the court is merely to declare that such trust has arisen in the past. The consequences that flow from such trust having arisen (including the possibly unfair consequences to third parties who in the interim have received the trust property) are also determined by rules of law, not under a discretion. A remedial constructive trust, as I understand it, is different. It is a judicial remedy giving rise to an enforceable equitable obligation: the extent to which it operates retrospectively to the prejudice of third parties lies in the discretion of the court."
1 Cites
1 Citers
[ Bailii ]
Goss and others v Laurence George Chilcott As Liquidator of Central Acceptance Limited (In Liquidation) Gazette, 12 June 1996; Times, 06 June 1996; [1996] UKPC 17; [1996] AC 788
23 May 1996
PC
Lord Goff of Chieveley, Lord Jauncey of Tullichettle, Lord Steyn, Lord Hoffmann, Lord Cooke of Thorndon
Banking, Commonwealth, Equity
(New Zealand) Mr and Mrs Goss, had been granted a loan by the claimant finance company under a mortgage instrument that had been avoided by the claimant because it had been fraudulently altered by Mr Haddon, an employee of the claimant, without the claimant's authority. Mr Haddon was the brother of Mrs Goss. The advance from the claimant having been made available to Mr and Mrs Goss, it was as agreed between them and Mr Haddon in fact received by Mr Haddon. Mr and Mrs Goss took no security from Mr Haddon. Mr Haddon was unable to repay the advance. Mr and Mrs Goss argued that their inability to recover the money from Mr Haddon constituted a defence of change of position to the claimant's action for restitution of the money paid for a consideration that had totally failed. Held: The loan remained repayable despite the unenforceability of the mortgage instrument under which it was secured. The defence failed because Mr and Mrs Goss knew that the money lent would have to be repaid to the claimant and, in paying it to Mr Haddon, they had taken the risk that the loss would fall on them.
Lord Goff said: "From the beginning, the Defendants were under an obligation to repay the advance once it had been paid to them or to their order; and this obligation was of course unaffected by the fact that they had allowed the money to be paid over to Mr Haddon. The effect of the alteration of the mortgage instrument was that their contractual obligation to repay the money was discharged; but they had nevertheless been enriched by the receipt of the money, and prima facie were liable in restitution to restore it. They had however allowed the money to be paid over to Mr Haddon in circumstances in which, as they well knew, the money would nevertheless have to be repaid to the company. They had, therefore, in allowing the money to be paid to Mr Haddon, deliberately taken the risk that he would be unable to repay the money, in which event they themselves would have to repay it without recourse to him. Since any action by them against Mr Haddon would now be fruitless they are seeking, by invoking the defence of change of position, to shift that loss onto the company. This, in their Lordships' opinion, they cannot do. The fact that they cannot now obtain reimbursement from Mr Haddon does not, in the circumstances of the present case, render it inequitable for them to be required to make restitution to the company in respect of the enrichment which they have received at the company's expense."
1 Cites
1 Citers
[ Bailii ]
Mothew (T/a Stapley and Co) v Bristol and West Building Society Times, 02 August 1996; [1996] EWCA Civ 533; [1998] Ch 1; [1997] 2 WLR 436; [1996] 4 All ER 698
24 Jul 1996
CA
Millett LJ
Professional Negligence, Legal Professions, Equity, Agency
The solicitor, acting in a land purchase transaction for his lay client and the plaintiff, had unwittingly misled the claimant by telling the claimant that the purchasers were providing the balance of the purchase price themselves without recourse to further borrowing when he knew that they were using an overdraft to obtain further funding. The plaintiff claimed in breach of trust. Held: A claim for damages for a solicitor's failure to disclose the existence of a 2nd mortgage must show that damage flowed from the failure alleged.
Millett LJ said: "A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary."
He is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary: "A fiduciary who acts for two principals with potentially conflicting interests without the informed consent of both is in breach of the obligation of undivided loyalty; he puts himself in a position where his duty to one principal may conflict with his duty to another . . This is sometimes described as 'the double employment rule.'" and
"Finally, the fiduciary must take care not to find himself in a position where there is an actual conflict of duty so that he cannot fulfil his obligations to one principal without failing in his obligations to the other . . If he does, he may have no alternative but to cease to act for at least one and preferably both. The fact that he cannot fulfil his obligations to one principal without being in breach of his obligations to the other will not absolve him from liability."
As to breach of the duty: "Breach of fiduciary obligation, therefore, connotes disloyalty or infidelity. Mere incompetence is not enough. A servant who loyally does his incompetent best for his master is not unfaithful and is not guilty of a breach of fiduciary duty."
If the trustee has benefited from the breach, the court will order him to account for it on the application of the beneficiary. Millett LJ described such relief as "primarily restitutionary or restorative rather than compensatory".
1 Citers
[ Bailii ]
Bank of Credit and Commerce International Sa (In Liquidation) (No 8); CA 2-Oct-1996 - Gazette, 02 October 1996; [1996] Ch 245
Banque Financiere De La Cite v Parc (Battersea) Limited Omnicorp Overseas Limited [1996] EWCA Civ 1065
29 Nov 1996
CA
Equity
1 Citers
Corporacion Nacional Del Cobre Gazette, 13 December 1996
13 Dec 1996
ChD
Damages, Equity
No defence of contributory negligence was to be allowed against a claim involving an allegation of corruption by means of bribery. The defendants had bribed one of the plaintiff's employees. The plaintiff claimed restitution, and an account from the defendants as constructive trustees for profits. The defendants wanted to assert that there was an equivalent to contributory negligence within the law of equity. There was no proper reason for distinguishing deceit by bribery from other forms of deceit. There had to be something to have put the plaintiff on notice of the deceit, and that was absent here.
Corporacion Nacional Del Cobre De Chile v Sogemin Metals Ltd and Others Times, 24 December 1996
24 Dec 1996
ChD
Equity
A plaintiff's failure to investigate an alleged fraud was no bar to recovery of damages for the fraud.
