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Equity Notes

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This is an extract of our Equity Notes document, which we sell as part of our Equity Notes collection written by the top tier of Griffith University students.

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Equitable

Maxims

........................................................................................................................

2


Overview

of

Relationships

of

Trust

and

Confidence


Fiduciary

Duties

..............................................................................................................

4


Confidential

Information

................................................................................................

10


Undue

Influence

..............................................................................................................

12


Equitable

Interests

in

Property


Assignments

....................................................................................................................

14


Unconscionable

Conduct


Unconscionable

Conduct

................................................................................................

18


Estoppel

...........................................................................................................................

22


Unfair

Outcomes


Unfair

Outcomes

..............................................................................................................

26


Relief

against

Forfeiture

.................................................................................................

28


Relief

against

Penalties

...................................................................................................

29


Equitable

Defences


Acquiescence

..................................................................................................................

32


Laches

.............................................................................................................................

33


Set--Off

.............................................................................................................................

35


Unclean

Hands

...............................................................................................................

36


Equitable

Personal

Remedies

I


Injunction

.......................................................................................................................

38


Mareva

Orders

................................................................................................................

40


Anton

Piller

Orders

........................................................................................................

41


Specific

Performance

.....................................................................................................

42


Equitable

Personal

Remedies

II:

Equitable

Proprietary

Remedy

of

Constructive

Trusts


Equitable

Compensation

...............................................................................................

44


Equitable

Damages

........................................................................................................

45


Account

of

Profits

...........................................................................................................

46


Constructive

Trust

.........................................................................................................

47


Equitable

Personal

Remedies

III


Rescission

.......................................................................................................................

50

EQUITABLE MAXIMS

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'A person seeking equity must do equity' 'A person coming to equity must have clean hands' 'Equity assists the diligent, not the tardy' 'Equity will not suffer a wrong without a remedy' 'Equity regards as done what ought to be done'


EQUITY

2

OVERVIEW

OF


RELATIONSHIPS


OF

TRUST

AND


CONFIDENCE


EQUITY

3

FIDUCIARY DUTIES


Fiduciary duties are a relationship of trust or confidence - an undivided loyalty

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Fiduciary = the person who is trusted - DUTY OF LOYALTY Principal = the person whose needs are fulfilled by the fiduciary The fiduciary is precluded from acting in a way other than in the interest of the person to whom the duty to act is owed o Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1. The fiduciary must act selflessly and put their own interests aside o No conflict duty o No profit duty
SS? Even if the fiduciary is acting in the best interests of the client and happens to make a profit, IT IS STILL A BREACH

* Boardman v Phipps [1967] 2 AC 46.
SS? If the principal consents, it is NOT A BREACH Fiduciary must act in good faith Fiduciary duty = togetherness

Proof of a fiduciary duty confers a cause of action or a remedy on a party that may be unavailable at common law

*

More remedies available in equity o Constructive trust o Account of profits o Injunctions o Estoppel o Laches (time delay)
SS? Even though most equitable remedies do not have a stipulated time, it does not mean that they can sue whenever

* Qld Mines v Hudson

Even though there can be a close working relationship, this does not mean that there is a fiduciary relationship in place

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No conflict duty o Duty verses interest o Duty versus duty No profit duty o A person who profits at the expense of another, or whose interest conflict cannot be described as being loyal

There is an imposition of a loyalty standard

EQUITY

4 Vertical Relationships Where the two parties are not on an equal standing and one has an advantage over another - hierarchy Dealings with:

* Infants

* Vulnerable parties

* Mentally disabled

* Financially challenged

* Lack of knowledge

Horizontal Relationships Where two parties are on equal footing and rely to the same extent on one another Dealings:

* Joint ventures

* Partner/partner

* Most commercial dealings

Fiduciary duties are PROSCRIPTIVE not prescriptive Proscriptive = "what not to do" Prescriptive = "what to do" Fiduciaries are under an obligation not to benefit from the relationship with another party and also not to be in a position of conflict. Test of Fiduciary Duties:

1. The EXISTANCE of a fiduciary duty a. Presumed - solicitor/client etc. b. Actual - question of fact by weighing up the key indicia of a fiduciary duty

2. The SCOPE of a fiduciary duty a. Decided from the terms of a contract and from an fully-informed consent i. Vertical relationships have a generally wide scope, but smaller in horizontal relationships

3. The BREACH of a fiduciary duty a. No conflict b. No profit

4. What DEFENCES apply?
a. Informed consent b. Laches c. Estoppel d. "Unclean hands"

5. Appropriate REMEDIES for breach a. Equitable compensation b. Account of Profits c. Interest d. Constructive e. Rescission f. Injunction

EQUITY

5 Trustee/
Beneficiary

Director/
Company

Partner/
partner

Presumed Fiduciary Relationships Keech v Infant beneficiary and a trustee for a lease. Sandford
- Trustee renewed the lease in his own name as he wasn't able to do it in the name of the trust or the beneficiary
- The lease continued (acting in the interests of the client)
- Held: there was a breach of fiduciary duty as the trustee held the benefit of the lease - CONSTRUCTIVE TRUST Regal
- Regal's subsidiary company had a share capitol (Hastings) Ltd of 5000 1 pound shares and wanted to acquire v Gulliver cinema leases
- Cinema owner wanted the share capitol to be fully subscribed
- Regal could only subscribe to 2000, so the directors agreed to subscribe to the remaining 3000
- Regal was sold and new directors put in place
- The old directors profited from the shares, which were given up on their exis
- Held: there was a breach as the directors obtained share profit because of a fiduciary duty to Regal
- They could have had the shares authorised by shareholders and then there wouldn't be a breach Qld Mines v
- QM wanted to mine iron ore, so Hudson, (the Hudson managing director) obtained mining licenses
- QM couldn't proceed due to financial problems and Hudson resigned from his position and, with the FULL KNOWLEDGE of the directors, he developed the mines
- 11 years later, QM sued for breach of fiduciary duty and account of profit
- Held: There was no breach of fiduciary duty as it fell beyond Hudsons duty as managing director. Even if it was in the scope, the directors had consented
- Critique: the shareholders should have also consented however, in this instance, the shareholders and directors were substantially the same
- Delay: Lacheys doctrine - took 11 years to sue UDC v Brian
- Brian completed a joint venture with two companies, (UDC and SPL) to construct a shopping centre, which he financed
- He didn't get repaid and didn't profit
- He didn't know that UDC was a secret mortgagee for SPL and a collateralization clause EQUITY

6 meant they were prioritized profits in the contract between SPL and UDC
- Held in the High Court: The joint venture was a partnership in substance as it demonstrated a high degree of trust and confidence. The collateralization clause was unenforceable against Brian and therefore he could be repaid Fraser Pre-partnership negotiation Edmiston v
- Plaintiff leased shopping center premises and AGT (Qld) received an offer for a better location
- He was approached by the defendant with prospects of business dealings, and shared confidential information in these negotiations
- Defendant sent an acceptance letter for the premises in his name only
- Held: there was a fiduciary duty and it was breached. Even through there was no formal partnership; there was a relationship of mutual trust and confidence. Chan v Applied Keech v Sandford Zacharia
- Parties were doctors and professional partners who had lease of a property for 3 years with 2 year renewal
- They decided to dissolve partnership but could still renew the lease. Chan said no.
- Chan obtained a new lease of the same property in his own name
- Held: there was a fiduciary duty and it was breached. Chan held the lease on CONSTRUCTIVE TRUST and had his exploited his position as a partner Agent/
McKenzie v
- Widow decided to buy a house and wanted to Principal McDonald sell her farm to do so
- Estate agent was advised that the price she wanted was too low, but he told her that it was too high and to reduce it and sell the property to him, in exchange for his residence for a cheap price (told her it was worth more than it was)
- She agreed and he then sold the farm at a profit
- Held: breach of a fiduciary duty as he assumed a position of confidence over a vulnerable person acting in what was considered to be full trust and confidence
- No profit duty Actual fiduciary relationships can be determined from the parties relative position. It must consider the substance of the relationship and whether it justifies imposing fiduciary duties. Joint ventures

Actual Fiduciary Relationships UDC v Brian See above. EQUITY

7

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