NO.1. DISTINGUISHING TRUST FROM OTHER FORMS OF LEGAL RELATIONS.

It is often important to decide in a given situation whether a trust or some other concept has
been created. There are several concepts which, at least superficially, are similar to a trust and
it is necessary to identify the characteristics of each of these concepts in order to be able to
verify that it is a trust which is being considered and not something else.

Contract. A contract is a common law personal obligation which arises from agreement
between the relevant parties supported by consideration on the part of the promise on the
other hand a trust is an equitable proprietary relation which can arise independently of the
agreement or provision.

The distinction between a trust and contract may be difficult to draw in the following;

With regard to settlement and covenant to settlement, where the property is vested in the
trustee of settlement it is held upon the trust of the settlement , consequently the beneficiaries
are owners in equity of their interests under the settlement. However if the property has not
yet been transferred to the trustee and is simply subject to a covenant to settle, the
beneficiaries will only be able to enforce the covenant if they have given consideration and this
is based on the principle that equity will not assist avolunteer.

Another distinction between the two concepts is that a contract creates rights which are merely
personal whereas a trust creates property rights. The remedy for a breach of contract is the
personal remedy of damages. A breach of trust renders the trustee personally liable to
compensate the trust for any loss suffered but additionally proprietary remedies may be
available .

In Barclays Bank v Quistclose Investments Ltd [1968] 3 All ER 651, the House of Lords found no
problem in finding that there was both a debt and a trust involved in the same transaction. A
company, Rolls Razor Ltd, declared a dividend but there were no funds from which to make the
payment to shareholders. A loan was negotiated from Quistclose Investments Ltd which was
made on the condition that ‘this amount will only be used to meet the dividend due’. The
cheque was paid into a separate account with Barclays Bank and the bank agreed that the
money was only to be used to fund the dividend payments. Rolls Razor Ltd went into liquidation
before the dividend was paid and the question that the House of Lords had to decide was
whether a trust had come into being with the lender as the beneficiary, because if it had the
lender would be able to reclaim the money. If only a debt existed the lender would have no
special claim and would have to compete with all the other creditors. The House of Lords held
that the essence of the bargain trust between the lender and the borrower was that the money
would not become part of the general assets of the borrower but that it should be used only to
pay the dividend and for nothing else. If for some reason the money was not used to pay the
dividend the parties intended that it should be returned to the lender. The fact that the loan
was to be ‘only’ for the purpose of paying the dividend could only mean, in the view of the
House of Lords, that if the money was not so used it was to be returned to the lender. The way
in which this intention would be implemented was via the creation of a trust. The money was
received on trust to apply it to the payment of the dividends and when that purpose failed the
money was held on trust for the lender.

Powers. It is often necessary to distinguish between trusts and powers. We are not discussing
here the powers a trustee may have to administer and manage the trust property. This relates
to the situation when the owner of property gives the power to another to decide on the
distribution or destination of that property. In other words, the powers we are addressing are
powers of appointment.

The key point is that trusts are imperative while powers are discretionary. If Arthur has been
given a power to appoint he is under no obligation to exercise the power and to make a
decision as to which child shall receive the property. If a person accepts to act as a trustee, he
must do as thr settlor directs.

There are two types of discretionary trusts. First, there is the exhaustive discretionary trust
where the trustee is under an obligation to distribute all the specified trust property (perhaps
all the income generated by the trust) and the discretion extends only to whom the property
shall be given. Second, there are non-exhaustive discretionary trusts where the trustee need
not distribute all the specified trust property. There may well be confusion if the transferor has
left decisions regarding allocation of property to others as to whether a discretionary trust or a
power of appointment has been created.

There are three types of powers of appointment. A general power exists where there is no
restriction as to whom the property may be appointed. It is even possible for the property to be
appointed to the person exercising the power.

A special power describes the situation where the property can be appointed only among
specified people or among a specified group or class of people. A hybrid power exists where the
property may be appointed to anyone except specified people or a specified class of people.
There is a difference in terminology between powers and trusts. Under a trust, the settlor
transfers the property to trustees who will hold for the benefit of beneficiaries. Under a power
of appointment the power is given by the donor of the power to the donee who has the power
to appoint the property to the objects of the power.

. A trust involves the clear intention that the property will be distributed among the
beneficiaries and the only uncertainty is to which of the beneficiaries will it be given. The
absence of this mandatory element necessarily means that a trust has not been created. One
indication of an intention to create a power rather than a trust is the presence of an express gift
over in default of appointment

. It must be stressed, however, that the absence of a gift over in default of appointment does
not mean that there is a trust but only that as a matter of construction there may be a trust. But
the presence of a gift over does mean that there cannot be a trust.

In Burrough v Philcox (1840) 5 My & Cr 72, Lord Cottenham found that a trust and a power both
existed. He decided that property was initially subject to a power of appointment but that
when the power was not exercised the intention was that the property should be distributed
and that the class as a whole should benefit in any event. In other words, the court found a
trust for equal division in default of the power being exercised. In the case, the testator gave a
life interest in property contained in a trust fund to his two children with remainders to their
issue. The testator stated that if each of the children should die without leaving lawful issue
then the survivor of the two children should have the power to dispose of the property by will
among the testator’s nephews and nieces, or their children ‘as my surviving child shall think
proper’. There was no gift over in default of appointment. The testator’s two children did both
die without leaving lawful issue. Lord Cottenham said, after reviewing a number of cases, that
the courts would carry out the general intention in favour of a class where there has been a
failure to exercise a power of appointment and to select individuals from within that class.

Lord Cottenham said that the intention will be implemented by fastening a trust on to the
property. In this particular case, Lord Cottenham felt that equal division would reflect the
intention of the testator. This was, of course, a family trust.

In Re Weeke’s Settlement [1897] 1 Ch 289, the court found that a power had been created in a
case where there was no express gift over in default. Mrs Slade gave her husband a life interest
in some property and went on to state ‘and I give him the power to dispose of all such property
by will amongst our children’. No appointment was made by the husband. If a trust had been
imposed on the husband the children would have been entitled to take, but as a power had
been created, the property resulted back to the estate of Mrs Slade. Romer J said: If in this case
the testatrix really intended to give a life interest to her husband and a mere power to appoint
if he chose, and intended if he did not think fit to appoint that the property should go on
default of appointment according to the settlement, why should she be bound to say anything
more than she has said in this will? Romer J then asked if there was any authority which
prevented him from concluding that a power was intended: The authorities do not shew, in my
opinion, that there is a hard and fast rule that a gift to A for life with a power to A to appoint
among a class and nothing more must, if there is no gift over in the will, be held a gift by
implication to the class in default of the power being exercised. In my opinion the cases shew ...
that you must find in the will an indication that the testatrix did intend the class or some of the
class to take – intended that the power be regarded in the nature of a trust – only a power of
selection being given, as for example a gift to A for life with gift over to such of a class as A shall
appoint. Having failed to find an intention that the class should benefit in any event, Romer J
held that a power had been created .

Bailment. If goods are delivered to a bailee they will be held for a particular purpose after
which they will be re-delivered to the bailor. Depositing goods for repair or for safe keeping are
examples of bailments. There is a clear but superficial similarity between a trust and a bailment.
In both cases property may be ‘handed’ over and the recipient takes the property subject to
certain duties and responsibilities. However, there are a number of crucial differences between
the two concepts, perhaps the most important being that a trustee does, but a bailee does not,
obtain full legal ownership of the property. This means that while a trustee can pass good title
to any third party (other than a bona fide purchaser for value of the legal estate) a bailee
cannot.

There are other differences: for example, bailment is the creation of the common law while the
trust was developed by equity. Also, while any type of property can be made subject to a trust,
only personalty can be bailed.

The trust may exist in respect of all kinds of property but bailment is restricted to chattels.

Agency. While there may be similarities between an agent and a trustee there is at least one
important distinction.

A trust creates proprietary rights whereas agency creates only personal rights. This will be
important if it is sought to recover money or property. Under a trust there will be rights created
against the property itself, while only personal claims against the agent can be made. This can
be particularly important if the one against whom the claim is being made has become
bankrupt.

In cases of trust a claim can be made against the trust property whereas it is only possible to
make a claim against an agent personally, which may have little chance of success if the debts
of the agent greatly exceed his assets. The office of trustee and agent are similar in that both
have to be performed personally and often an agent, like a trustee, is in a fiduciary position.
Many rules relating to principle and agent are common law in character while the trust trust
relationship is equity.

There exists a contractual relationship between a principle and an agent. This is not the case
between a trustee and a beneficiary.

Administration of estates. At first sight there would seem to be a similarity between the
position of those administering the estate of a deceased person and trustees. The persons
administering the estate of a deceased are called personal representatives. ‘Personal
representatives’ describes both executors and administrators. An executor is appointed by a
testator in his will. If there is no executor, perhaps because the deceased died intestate, the
court will appoint the personal representatives, who are called administrators. Both trustees
and personal representatives hold property, not for themselves but for other people, and both
are under a fiduciary duty. These factors point towards similarity between the two offices. The
apparent similarity between trustees and personal representatives is partly due to the fact that
in many cases a deceased will appoint the same persons to be both his executors and his
trustees.In this type of situation it is often rather difficult to determine when the changeover
from personal representative to trustee takes place. accepted view is that once all the assets
have been gathered in and the debts paid the residue will be held qua trustees. There are
differences, however, between personal representatives and trustees. The main objectives of
personal representatives are to gather in the assets of the deceased, to pay off debts and to
distribute whatever remains to those entitled under the will (or the intestacy rules if there is no
will). In other words, the personal representative aims to deal with the property and to pass it
on as quickly as possible.

. One of several personal representatives can pass title to personality but all trustees must join
in if the sale is to be effective. As mentioned above, it is not uncommon to appoint the same
persons as personal representatives and trustees and it may be important to determine in
which capacity property is held, and at what point the property is no longer held qua personal
representatives but is held qua trustees. If a transfer is purported to be made by trustees, the
purchaser must assure himself that the property has been vested by the personal
representatives in the trustees, otherwise he will not receive good title. If the property is
personality, the courts appear to be prepared to find an implied assent (transfer from personal
representative to trustee) by reference to conduct. This can sometimes work to the
disadvantage of one acquiring property.

In Attenborough & Son v Solomon [1911–13] All ER Rep 155, Moses Solomon appointed his two
sons, A A Solomon and J D Solomon, to be his executors and trustees. He directed that the
residue of his property should be held on specified trusts. All the debts and expenses were paid
within a year of the death. Some silver plate, which formed part of the residuary estate,
remained in the possession of A A Solomon. Some 14 years after the death of the testator A A
Solomon pledged the plate with Attenborough & Son for £65 and used the money to pay off a
personal debt. The House of Lords held that Attenborough & Son had no title to the plate and
must return it. The House inferred from the fact that the general administration had been
completed, and that no attempt had been made to do any act under their powers as executors
since that time, that the executors had assented to the vesting of the property in themselves as
trustees. As trustees must act together to deal effectively with personality, the title to the plate
remained with the trustees.

Conditions. If Arthur receives a legacy under a will ‘to pay Ben £200’ it is necessary to decide
whether a trust has been created or if Arthur takes a conditional gift. It is a matter of
construction whether a trust or a conditional gift has been created. As usual with equity, the
words used are not necessarily conclusive. For example, in Re Frame [1939] 2 All ER 865,
Simonds J decided that a trust had been created despite the fact that the testator gave
property to Mrs Taylor, his housekeeper, ‘on condition that she adopt my daughter Alma
Edwards and also gives my daughters Jessie Edwards and May Alice Edwards the sum of £5
each.

NO.2. ANSWERS; CAPACITIES OF THE SETTLOR

In general any person who has the capacity to own any particular form of property has the
capacity to create a trust of it and also to hold such property on trust .therefore in this regard a
number of situations may be considered when it comes to capacity and these include the
following;

Minors. Minor cannot be a legal owner of the land and therefore cannot create a trust of a legal
estate in land. Minors cannot unless they are either soldiers on active services or mariners at
sea, make a valid will. Therefore they cannot normally make a valid trust by will. In relation to
any other declaration of trust by a minor the position is the same as the validity of the contract
by a minor. It will be voidable that is binding upon the minor unless he repudiates it on reaching
his majority .where however the settlement is obviously prejudicial to the minors interests the
court may decide that it is wholly void and where the child is too young to appreciate the
nature of the act he may plead non est factum so that not even a voidable settlement was
created.

Mentally disordered persons. A person who is mentally abnormal cannot create a trust. Where
the mentally disordered patient with in the medical health Act of 1983 and receiver is
appointed for the management of the affairs, any purported disposition including any
declaration of trust will be void because the patient has ceased to have any legal control over
the property. In the circumstance the court of protection has wide power to direct the
settlement of the patients property on trust or indeed to make a will for the patient in terms
which the court believes the patient would have made had he had the requisite mental
capacity. Thus in Re TB (1966) 3ALLER 509 The court authorized a revocable settlement of the
patients property in favour of the patients illegitimate son and his family. The patient being
intestat ,the law as it then stood would have meant that the son would receive nothing from his
fathers estate and the court was satisfied that the patient would have made provisions for his
son had he been mentally able.

Furthermore where no receiver has been appointed any settlement will again be void unless
the patient made it during a lucid interval when he could understand the nature of his actions

Statutory bodies. Bodies created by statute as corporations are in a similar position,the

capacity will depend upon the provisions of the enabling statute. for example, the National
Health Service Act 1977 s 90 provides that: ‘A health authority has power to accept, hold and
administer any property on trust for all or any purposes relating to the health service.’ Regional
and district health authorities frequently hold property on trust for charitable purposes to do
with health care.

NO.2 (B) FORMALITIES •

As a general rule, equity does not insist on special formal requirements in order to create an
express trust: ‘Equity looks at the intent rather than the form.’ However, occasionally
Parliament has intervened and has imposed a number of formal requirements. These
formalities vary with the subject- matter of the trust, such as land, the nature of the interest
involved, such as an equitable interest, and the mode of creation, such as inter vivos or by will.
These formalities are distinct from the necessary pre- conditions needed to be satisfied in order
to transfer the property to the trustees and so constitute the trust. Many of these formalities
were originally enacted in the Statute of Frauds 1677. This was a statute passed in order to
prevent fraud and require writing in appropriate circumstances.

Declaration of a trust of land .Section 53(1)(b) of the Law of Property Act 1925 (originally s 7
of the Statute of Frauds 1677) enacts that,‘A declaration of trust respecting any land or any
interest therein must be manifested and proved by some writing signed by some person who is
able to declare such trust or by his will, The subsection is only applicable to inter vivos trusts
concerning land and not personal property, thus, a trust concerning one square inch of land is
subject to the subsection, but a trust of £1 million of personalty may be declared orally.

‘Manifested and proved by some writing. The requirement here is that the declaration of trust
is only required to be proved by writing. It is not required to be made in writing. The trust is
merely required to be evidenced in writing for the purposes of enforcement. The trust may
validly be declared orally, but it simply would not be enforceable in a court. Thus, the writing
need not be contemporaneous with the declaration but may be adduced some time after the
declaration of trust and may enforce the trust retrospectively. For instance, on Day 1, S, a
settlor orally declares a trust in respect of land in favour of B, absolutely. This declaration is
within s 53(1)(b) of the LPA 1925 and, because it is not supported by writing, it is
unenforceable. However on Day 2, S executes a document endorsing the terms of the trust
declared on Day 1. The trust is now enforceable, not from Day 2, but retrospectively, from Day
1. The effect of non- compliance with s 53(1)(b) is to render unenforceable the valid declaration
of trust.

Writing.Writing’ for these purposes does not assume any special mode and has taken the most
diverse set of forms, ranging from recitals in an instrument to affidavits, answers to
interrogatories, telegrams and even letters to third parties. In short, writing may take any form
that may be appropriate for the Land Registry. The test is whether the material terms of the
trust are included in a document (or series of documents) signed by the settlor. The material
terms, of course, involve the ‘three certainties’ test. In the law of evidence a ‘document’ has
been defined in s 13 of the Civil Evidence Act 1995 as ‘anything in which information of any
description is recorded’. Thus, a document for these purposes may include an audio or video
cassette, and even information stored in electronic form. But this notion of a document may be
too broad to constitute ‘writing’ for the purposes of the Law of Property Act 1925. The
objective under the 1925 Act assumes the delivery of the terms of the trust to the Registrar, for
the purposes of registration in the Land Registry.

The material terms of the trust need not be contained in one document but may be contained
in a variety of documents. There is a need for each document to refer to the other to such an
extent that the documents, taken as a whole, form a complete memorandum of the terms of
the trust. For instance, Document 1 may manifest the settlor’s intention to create a trust and be
signed by him, Document 2 may contain the subject- matter of the trust and Document 3 may
contain the objects of the trust. Provided that all three documents are joined, a complete
memorandum of the terms of the trust may exist. In this event, the documents may refer to
each other with sufficient certainty to identify them. Each document or at least one of the
documents is required to be signed by the settlor.

Signature Section 53(1)(b) of the Law of Property Act 1925 requires the person able to declare
the trust to sign the document(s). The requirement here is that the settlor must endorse the
document containing the terms of the trust. The signature need not be the full, formal
signature of the settlor but may take the form of some mark attributed to the settlor and
intended by him to authenticate the document(s). Thus, initials or the thumbprint of the settlor
will be sufficient.

Section 1(4) of the Law of Property (Miscellaneous Provisions) Act 1989 enacts that ‘ “sign” in
relation to an instrument includes making one’s mark on the instrument and “signature” is to
be construed accordingly’. Likewise, the settlor’s voice or image on a recording may amount to
a signature. However, the signature of the settlor’s agent is not effective for these purposes.

5.3 Exclusion Section 53(2) of the Law of Property Act 1925 (replacing s 8 of the Statute of
Frauds 1677) provides that ‘This section shall not affect the creation or operation of implied,
resulting and constructive trusts.’ Resulting and constructive trusts are types of implied trusts
that are created by the courts. These trusts are exempt from the above formal requirement.
Accordingly, an inter vivos resulting trust of land may arise without the terms being reduced
into writing.

Hodgson v Marks [1971] ch 892Mrs Hodgson (Mrs H), a widow aged 83, owned a house in
Edgware, London. She took a lodger, Mr Evans, whom she trusted, but who was disliked by her
nephew who also lived in the house. In order to prevent her nephew turning Mr Evans out of
the house, Mrs voluntarilytransferred the house to Mr Evans, who was duly registered as the
legal owner of the property. Mrs H had orally declared that the house was to remain hers. Mr
Evans later attempted to transfer the house to Mr Marks. When Mrs H discovered this, she
claimed that she was entitled in equity to the house. Mr Marks argued that no trust was
created in favour of Mrs H because the oral statement by Mrs H was not reduced into writing
signed by her.

Held: Mrs H had retained the absolute equitable interest in the house by way of a resulting
trust. This trust was enforceable by virtue of s 53(2) of the LPA 1925.

NO.3 ( A) brief facts

Chege wishes to leave some money to her boyfriend steve but does not want her husband Julio
to know about it. She has two friends nancy and Tom who are very discreet to her and will
witness the will and else required.

Issue; whether chege can leave some money to steve the boyfriend without her husband Julio
knowing about it.

Law applicable

Case law

Resolutions

Issue; whether chege can leave some money to steve her boyfriend without her husband julio
knowing about it. Yes she can, this can be done by her creating a secret trust. Secret trust is an
equitable obligation communicated to an intended trustee during the testators life time but
which is intended to attach to a gift arising under the testator’s will. In Ottaway v Norman
[1972] ch 698 A testator, Harry Ottaway, by his will devised his bungalow (with fixtures, fittings
and furniture) to his housekeeper, Miss Hodges, in fee simple and gave her a legacy of £1,500.
It was alleged that Miss Hodges had verbally agreed with the testator to leave by her will the
bungalow and fittings etc., and whatever ‘money’ was left over at the time of her death to the
claimants, Mr and Mrs William Ottaway (the testator’s son and daughter- in-law). By her will,
Miss Hodges left all her property to someone else. The claimants sued Mr Norman (Miss
Hodges’ executor) for a declaration that the relevant parts of Miss Hodges’ estate were held
upon trust for the claimants. The court decided that there was clear evidence that a fully secret
trust was created only in respect of the bungalow and fittings etc., but not in respect of the
‘money’. The intended trust of the money was uncertain and void. Mr Norman as her executor
therefore held the bungalow on trust for Mr and Mrs William Ottaway. Therefore even chege
can leave the some of money to her boyfriend steve by communicating her intention to her
intended trustee and Nancy and Tom to act as her witnesses.

A testator who wishes to create a trust over his property upon his death is required to express
his intention as well as the terms of the trust in his will, he must conform to the requirement
needed to create a will, that is the need for writing , signing and witnessed by two or more
witnesses. However secret trust is an exception to this rule because in limited circumstance
where the testator has not fully complied with the necessary formalities equity will
nevertheless impose a duty upon the legatees acquiring property under the will to carry out the
wishes of the testator. This will require the legatee to hold the property upon trust for the
secret beneficiary. Therefore chege must choose the legatee whom to leave the property with
on trust of her secret boyfriend steve.

On the testators death his will becomes a public documentand the wills are consequently open
to public scruntiny, but the testator may wish to make provisions after his death, for what he
considers to be some embarrassing object, such as a mistress or an illegitimate child or any
object that he does not wish to be disclosed to the public. To avoid adverse publicity, he may
make an apparent gift by will to an intended trustee, subject to an understanding to hold the
property for the benefit of the secret beneficiary . therefore since chege does not what her
husband to know of the gift of money she wants to leave to her boyfriend ever as it may look as
so a shaming to her and the boyfriend as she was married already she can create a secret to
her trustees to hold on behalf of her secret beneficiary the boy fiend steve.

However for chege’s secret trust to be valid he must show the intention of leaving the money
to the boyfriend for the will to be valid because the court in construing the will they consider
the intention of the testator in making the will . This was stated by Lord Neuberger MR in Royal
Society for the Prevention of Cruelty to Animals v Sharp [2010] EWCA 1474.In interpreting a
contract or a will the objective of the court is to ascertain the intention of the parties or the
testator. It gives effect to the meaning of relevant words in the light of the natural and ordinary
meaning of those words, the context of any other provisions of the document, the facts known
to the parties or the testator at the time that the document was executed but ignoring
subjective evidence of the parties’ or testator’s intention.

NO.3 (B) BRIEF FACTS

Tonda leaved a will to Imran created in January 2017 one of the provision in the will states’’ my
house on block 12 plot 275 Garaga at pearl-marina to my brother menya absolutely. In October
2017, Tnda tells Imran he is to hold the house on trust for someone to be disclosed at a later
date. In june 2018Tonda hands Imran an envelope instructing him not to open it until his death
he contends that it contained the detail of the other person.

Issue; whether Imran is to hold the plot on the trust of an illegitimate son as a secret trust.

Laws applicable

Case law

Resolution

Issue; whether Imran is to hold the plot on the trust of an illegitimate son as a secret trust.

A secret trust is an equitable obligation communicated to an intended trustee during the

testator’s lifetime, but which is intended to attach to a gift arising under the testator’s will.
Therefore the mere fact that testator Tonda leaved a will to Imran and communicated to himof
his wishes which were to take place after his death, this shows that the testator Tonda intended
to make a secret trust to Imran to hold the plot on behalf of his illegitimate son. .For example
In Ottaway v Norman [1972] ch 698 A testator, Harry Ottaway, by his will devised his bungalow
(with fixtures, fittings and furniture) to his housekeeper, Miss Hodges, in fee simple and gave
her a legacy of £1,500. It was alleged that Miss Hodges had verbally agreed with the testator to
leave by her will the bungalow and fittings etc., and whatever ‘money’ was left over at the time
of her death to the claimants, Mr and Mrs William Ottaway (the testator’s son and daughter- in-
law). By her will, Miss Hodges left all her property to someone else. The claimants sued Mr
Norman (Miss Hodges’ executor) for a declaration that the relevant parts of Miss Hodges’
estate were held upon trust for the claimants.

Therefore Imran can hold the plot on trust of the illegitimate son as the testator intended to
create a valid secret trust to Imran ,therefore the will was valid.
NO.3 ( C) . CERTAINTIES REQUIRED WHEN FORMING AN EXPRESS TRUST

It is obvious that the settlor must make his intentions clear in order to create a binding trust. He
must express himself in terms which are sufficiently certain in order that the trustees may know
what they are obliged to do, and to enable the courts, if need be, to identify the obligations
which it must enforce against the trustee. This requirement of certainty has long been regarded
as falling into three parts. First, the settlor must make it clear that his intended trustees are
under an obligation to carry out his wishes. Second, the settlor must make clear what property
is to be subject to the trust. Third, the settlor must identify who is to be the beneficiary of the
trust.

It should be stressed at the outset, however, that all these matters are ultimately a matter of
construction. Much may turn on the precise words used or the circumstances in which they are
used, but at the same time the courts are willing to accept any form of words provided it
conveys the necessary information and intention. It will also soon emerge that the ‘three
certainties’ are often closely interrelated. Once the court has determined, as a matter of
construction, what kind of gift the settlor intends to make (for example, whether it is a trust or
merely a power), it will then be possible to see whether he has identified the property and
beneficiaries with sufficient certainty for that particular kind of gift.

Certainity of intention.

In Wright v Atkyns (1823) Turn & R 143, it was stated that the words must be imperative’. In
other words, they must make it clear that the person holding the property is obliged to hold it
for the benefit of others. Provided this is the case, however, there is no requirement to use any
particular form of words to create the obligation.

In Megarry J’s words from Re Kayford [1975] 1 All ER 604: ‘It is well settled that a trust can be
created without using the word “trust” or “confidence” or the like; the question is whether in
substance a sufficient intention to create a trust has been manifested.’

Thus, in Paul v Constance [1977] 1 All ER 195, Mr Constance held a bank deposit account in his
sole name but said to Mrs Paul, when referring to the account: ‘The money is as much yours as
it is mine.’ This was accepted by the court as sufficient evidence that he regarded himself as
holding the account as trustee for himself and Mrs Paul and accordingly she was entitled to
claim a half share from Mr Constance’s estate.

If, however, the words are indicative of some other kind of intention, such as an intention to
make a gift, then this will not be construed as a trust.

This is demonstrated by the facts of Jones v Lock (1865) LR 1 Ch App 25. Jones had placed a
cheque, payable to himself, in the hands of his baby son, saying: ‘I give this to baby, it is for
himself, and I am going to put it away for him.’ He then placed the cheque in a safe. Jones died
six days later. The question then arose as to whether the cheque belonged to the baby or
formed part of Jones’s estate. This turned on whether, by his statement and actions, he had
intended to make a gift of the cheque to the child or whether he intended to declare himself
trustee of it for the child. Lord Cranworth concluded that Jones’s intention could only have
been to make a gift of the cheque. Such a gift was invalid as the law required the cheque to be
endorsed, which Jones had not done. It could not be construed as a declaration of trust. An
invalid gift cannot be construed as a valid declaration of trust.

A further difficulty arises where the settlor uses ‘precatory’ words, that is expressions of hope
or desire that the donee of the property will use it in a certain way. Historically, such words
were regarded as sufficient to create a trust obligation, but since Lambe v Eames (1871) 6 Ch
App 597, the courts have taken a stricter approach. In that case the testator left his estate to his
widow for her to dispose of ‘in any way she may think best, for the benefit of herself and the
family’. This was held to be ineffective to create a trust. the widow took absolutely. Thereafter,
such expressions of hope or confidence may or may not impose a trust: it is as always a matter
of construction, taking all the circumstances into account. There is no special magic in the use
of any particular phrase

Certainity of subject matter

The settlor must identify the property which he intends to be the subject matter of the trust.
Once again, the words must have a clear meaning that the trustees, and if necessary the court,
can interpret. Thus, a phrase such as ‘the bulk of my estate’, used in Palmer v Simmonds (1854)
2 Drew 221, will not identify the subject matter clearly since it may mean different things to
different people. In Re Goldcorp Exchange Ltd, , the Privy Council clearly regarded the fact that
specific property had not been identified in the contract as fatal both to the argument that
property in the goods had passed in law, and to the argument that the vendor was holding such
property on trust. As the Privy Council stated, common sense dictates that the buyer cannot
acquire title until it is known to what goods the title relates.

In Sprange v Barnard (1789) 29 ER 320, a particular problem arose in that the testatrix gave
certain stock to her husband, directing that ‘the remaining part of what is left that he does not
want for his own wants’ he should bequeath in his will in certain specified ways. It was held
that the husband took the stock absolutely. It was unclear what was bound by the trust
because the ‘remaining part’, if any, would

This approach would not, of course, save a case like Boyce v Boyce because the testator had
there specified a method of choice, which had become impossible.

Certainity of object

The final element of the requirement of certainty is that the settlor shall have identified the
persons who are to benefit under the trust. A number of different tests may apply depending
upon the nature of the trustees’ powers and duties. Here it will be sufficient to consider the
rule in relation to ‘fixed’ trusts, i.e. trusts where the trustees are under an obligation to
distribute to named persons or to all members of a specified group.

To carry out this obligation, trustees must clearly know who all the beneficiaries are. Where the
beneficiaries are named in the trust this will present no problem.If they are identified as
members of a class (for example, ‘to all my children in equal shares’), then the class must be
clearly defined so that the trustees know who each and every member is. This is frequently
referred to as the ‘list’ principle, the trustees must be able to draw up a list of all the
beneficiaries. Thus, in Re Endacott [1959] 3 All ER 562, Lord Evershed MR stated: ‘no principle
perhaps has greater sanction or authority behind it than the general proposition that trust by
English law ... in order to be effective, must have ascertained or ascertainable beneficiaries.’
However, Re Eden [1957] 2 All ER 430 makes clear that the question is not whether all potential
beneficiaries have been ascertained, but whether the evidence demonstrates beyond
peradventure that it is impossible to ascertain the range of objects at that date. In other words,
the crucial word is ascertainable. It is also clear that the fact that a large portion of the fund
might have to be expended in tracing them is not of itself a ground for saying that
ascertainment is impossible, though it would be unfortunate if the fund had to be spent in this
way.

• CONSTITUTION

Where a settlor creates a trust by declaring himself to be the trustee of property then, provided
that the requirements of formality and certainty are satisfied, the trust is complete and the
beneficiaries acquire rights under it. This is because the property is already vested in the
intended trustee, in this case the settlor. This is even true where the settlor declares the trust
intending the property to be held on trust by himself and others as trustees. Even though the
other trustees have not yet received the legal title, provided that the settlor has shown an
intention to make an irrevocable transfer to himself and the others as trustees, he is bound and
can be required to carry out the terms of the trust by transferring the property to the trustees
as a whole. This was held by the Privy Council in T Choithram International SA v Pagarani [2001]
2 All ER 492, where the settlor had shown an intention to make an immediate irrevocable
transfer of property he owned to a charitable foundation of which he was one of the trustees.
If, however, it is the intention of the settlor to create a trust by transferring property to others
(i.e. not including himself) to act as trustees, then the trust is incomplete until the transfer is
made and until that time it cannot be enforced by the beneficiaries. The settlor, whatever other
legal obligations he may have acquired by his declaration, which will be considered below, is
not trustee of the property he holds and the beneficiaries cannot act against him on the trust.
The trustees hold no property on trust for the beneficiaries though they may be subject to trust
obligations towards them (which is debatable.

QN.4 EXCEPTIONS TO THE RULE THAT EQUITY WILL NOT ASSIST A VOLUNTEER

Donatio mortis causa.Donationes mortis causa are gifts made in contemplation of death. They
are often referred to as hybrid gifts being midway between an inter vivos gift and a gift by will.
In Re Beaumont [1902] 1 Ch 889, Buckley J called a donatio mortis causa a gift of an
amphibious nature, being a gift that is neither entirely inter vivos nor testamentary. It is an act
inter vivos by which the donee is to have the absolute title to the subject of the gift, not at
once, but if the donor dies. If the donor dies the title becomes absolute not under but against
the executor.

In Senv Headley [1991] 2 All ER 636, Nourse LJ stated: the three general requirements for such
a gift may be stated very much as they are stated in Snell’s Equity. First, the gift must be in
contemplation, although not necessarily in expectation, of impending death. Secondly, the gift
must be made upon condition that it is to be absolute and perfected only on the donor’s death,
being revocable until that event occurs and ineffective if it does not. Thirdly, there must be a
delivery of the subject matter of the gift, or of the essential indicia of title thereto, which
amounts to a parting with dominion and not merely physical possession over the subject matter
of the gift.

Requirements A gift made in contemplation of death There is a requirement that the gift shall
be in contemplation of death. This means that the donor must have some specific cause in
anticipation. Contemplation would be equally satisfied if the donor were, for instance,
undertaking a dangerous journey and foresaw, not that death was inevitable, but that it was a
strong possibility. It is not sufficient, however, merely to recognize that death will occur
sometime: there must be some specific hazard in view, but it does not then matter if the death
occurs in a way other than that contemplated, as in Wilkes v Allington [1931] 2 Ch 104, where
the donor was suffering from an incurable disease (cancer), his contemplated mode of death,
but in fact died of something else (pneumonia).
Conditional on death.The gift must be intended to take effect only on death. Any attempt to
make an immediately effective gift will not fall within this rule. It must be clear that the donor
expects that if he survives, then no transfer will occur.

The rule in Strong v Bird. Where a donor intends to transfer ownership in personal property to
another and maintains that intention until his death but fails to make an effective transfer
during his lifetime, if, on the death of the donor, the property becomes vested in the intended
donee as the donor’s executor, that vesting is treated as completing the gift.

In Strong v Bird (1874) LR 18 Eq 315, the facts were as follows.B borrowed money from his
stepmother and it was agreed that repayment was to be made by reducing by £100 per month
the amount that she had previously paid B in rent. For six months she paid at the reduced rate,
but thereafter went back to paying the full rent for a further three-and-a-half years until her
death. The stepmother appointed B as her executor.This was sufficient evidence of her
intention to release him from the debt, but her right to sue was never formally surrendered.
However, the court took the evidence as sufficient, since the stepmother was by her actions
voluntarily surrendering her right to sue. B was not therefore obliged at common law to
account for the debt and, under the subsequent case of Re Stewart [1908] 2 Ch 251, equity
treated the gift as perfected. The reasoning in that case was given by Neville J: first that the
vesting of the property in the executor at the testator’s death completes the imperfect gift
made in the lifetime and secondly that the intention of the testator to give the beneficial
interest to the executor is sufficient to countervail the equity of beneficiaries under the will, the
testator having vested the legal estate in the executor. The executor holds the legal estate but,
normally, subject to the equitable rights of the beneficiaries. Here there is sufficient evidence
that those equitable rights are overturned. It must be remembered that the donor’s intention
must be, and be evidenced to be, to give some specific immediate benefit to the donee: it is not
sufficient that he intends to benefit him in some vague, general sense, or that he intends a
benefit to take place only at the time of the donor’s death.
Thus, in Re Gonin [1977] 2 All ER 720, where a mother expressed the intention to transfer her
house to her daughter but, believing that she was unable to do this, wrote out a cheque in her
daughter’s favour instead, the necessary specific intent in respect of the house was lacking.

Proprietary estoppel. Where a person spends money on property or otherwise acts to his
detriment in reliance on a misrepresentation, the owner may be prevented from asserting his
own rights against the person so relying. It may thus sometimes be an example of equity
perfecting an imperfect gift, as the court may convey the property to the victim of the
misrepresentation. However, it should be noted that the court has a wide discretion to take
whatever steps are appropriate in the case to ‘satisfy the equity’ created by the estoppel. It
should also be noted that proprietary estoppel of this nature is a cause of action in itself, rather
than being a mere shield to liability, as is the case with other forms of estoppel. A recent
example of this principle is Yaxley v Gotts [2000] 1 All ER 711, in which the fact that the
claimant had acted to his detriment allowed him to obtain a proprietary interest in a house,
even though the ‘contract’ for the transfer of this interest was not in writing and so was in
breach of s 2 of the Law of Property (Miscellaneous Provisions) Act 1989.

The pre-conditions for the operation of this doctrine were set out in Central London property
trust limited v high trees house limited (1947) KB 130, Denning J Stated that : In the first place
the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have
expended some money or must have done some act (not necessarily upon the defendant’s
land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right,
must know of the existence of his own right which is inconsistent with the right claimed by the
plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of
acquiescence is founded upon conduct with knowledge of your legal rights. Fourthly, the
defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his
rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, the
defendant must have encouraged the plaintiff in his expenditure of money or in the other acts
which he has done, either directly or by abstaining from asserting his legal right ... Nothing
short of this will do. What constitutes a sufficient act of detrimental reliance depends on the
nature of the case and a wide range of different types of act have been accepted.

In the classic case of Dillwyn v Llewelyn (1862) 4 De GF & J 517, for example, a father allowed
his son into possession of land and purported to convey the land to the son, though the
conveyance was in fact ineffective as it was not contained in a deed. In reliance on the mistaken
belief that the land was his, the son spent £14 000 on building a house on the land, which the
father encouraged him to do. The reliance here was quite clear and the son was entitled to
have the land conveyed to him.

The application of the principle requires a very much broader approach which is directed to
ascertaining whether, in particular individual circumstances, it would be unconscionable for a
party to be permitted to deny that which, knowingly or unknowingly, he has allowed or
encouraged another to assume to his detriment. This unconscionability is established by the
fact of the plaintiff’s acting to his detriment in reliance on the assurance of the legal owner. This
encouragement by the legal owner may be active, as in an assurance that the mistaken party
has or will be granted an interest, or it may be passive, as in looking on while the mistaken
party acts to his detriment. The acts done by the mistaken party must then be shown to have
been done in reliance on that assurance. This is a matter of causation: it may be readily
assumed, as in Grant v Edwards (above), but equally, depending upon the facts, it may be clear
that causation has not been established, particularly where there are other plausible
explanations for why the claimant behaved in the way he did.

NO.B REMEDIES AVAILABLE TO BENEFICIARIES FOR BREACH OF TRUST.

PERSONAL AND PROPRIETARY CLAIMS . Where a trustee holds property for the benefit of
another, that other, the beneficiary, has a proprietary remedy, that is the right to the property
and its fruits, or the profit made from it, since a trustee may not profit from the trust. The
trustee must administer the property solely for the benefit of the beneficiaries, and if they are
adult and sui juris they can of course call for the property to be transferred to them.
Where a trust exists, be it express, implied or constructive, the trustee is also personally liable
to account for the profits made by him from the trust. He will also be personally liable for any
losses arising from his breach of trust. Here the liability is for the value of the gains or losses
rather than for specific property. It will also be seen that a proprietary claim may be not only
against the specific property but also its product. Since this chapter is concerned with remedies
for breach of trust, reference should be had to Chapter 15 on trustees’ duties to determine
when breaches have occurred.

• PERSONAL LIABILITY •

A trustee is liable for breach of trust if he fails to do that which is required of him as trustee or if
he does what he is not entitled to do as trustee.Standardof care. The liability of a trustee for
breach of duty is strict, there is no need to establish fraud or even carelessness on the trustee’s
part (though a trustee is on occasion spared liability if he is without fault, e.g. under the Trustee
Act 1925 s 30). Where the loss arises from the exercise of discretionary powers, the
generalrequirement. It should be borne in mind, as set out in Re Speight (1883) 22 Ch D 727,
that the duty of the trustee is to conduct the business of the trust with the same care as an
ordinary prudent man of business would extend towards his own affairs.

The measure of liability In general, the trustee must account for profits made or replace losses
caused to the trust. As was stated in Re Dawson [1966] 2 NSWR 211, by Street J: The obligation
of a defaulting trustee is essentially one of effecting a restitution to the estate. The obligation is
of a personal nature and its extent is not to be limited by common law principles governing
remoteness of damage.

In Target Holdings Ltd v Redferns [1995] 3 All ER 785, the House of Lords considered the
principles to be applied in determining the issues of causation and remoteness in cases of
breach of trust.

In that case the defendants were solicitors acting for purchasers of certain property and for the
plaintiffs, who were the mortgagees. On the understanding that the properties in question
were to be purchased for £2 million, the plaintiffs loaned £1.5 million. In fact, the properties
were purchased for £775000. The £1.5 million was received by the defendants as trustees for
the plaintiffs, to pay to the purchasers only upon completion of the necessary transfers of the
property to them. In breach of trust, the defendants paid over the money before the transfers
had been completed, and falsely represented that they had so been. The plaintiffs subsequently
entered a contract to sell the property for £500000. The defendants argued that their breach
was a technical one only, and that the plaintiff had subsequently obtained the rights as
mortgagees which they should have had. The fact that the property was not worth what it was
supposed to be was not due to anything which the defendants had done: the true authors of
the loss were fraudulent third parties who had persuaded Target to enter into the transaction
in the first place. However, the Court of Appeal held that that causation argument was
irrelevant: the trustees were in breach of their trust, and the plaintiff had suffered loss, which
the defendant trustees must make good. The House of Lords allowed the solicitors’ appeal.
Lord Browne-Wilkinson considered the role of causation in equity and at common law, At
common law there are two principles fundamental to the awards of damages. First that the
defendant’s wrongful act must cause the damage complained of. Second that the plaintiff is to
be put ‘in the same position as he would have been in if he had not sustained the wrong for
which he is now getting his compensation or reparation’. Although ... in many ways equity
approaches liability for making good a breach of trust from a different starting point, in my
judgment those two principles are applicable as much in equity as at common law.

It should be presumed that the wrongdoer made the most beneficial use of it. But, whichever it
is, in order to give adequate compensation, the money should be replaced at interest with
yearly rests, i.e. compound interest. As this quotation implies, it is in the commercial sphere
that compound interest would appear most appropriate, in the sense that it is in that sphere
that property is most likely to have been used for profitable enterprise, or would have been had
it not been wrongfully withheld. Thus, in Guardian Ocean Cargoes Ltd v Banco de Brasil [1992]
2 Lloyd’s Rep 193, Hirst J rejected the argument that compound interest was payable only in
exceptional circumstances where the defendant is guilty of serious misconduct: ‘the authorities
I have cited make it clear that the award of compound interest is in no way punitive in
character, but is related to the commercial circumstances’. Accordingly, whereas in O’Sullivan v
Management Agency Ltd [1985] 3 All ER 351 simple interest was appropriate because the
defendant, a musician’s manager, was not engaged in investment business, in Guardian Ocean
Cargoes, the defendant recipent of the money was a bank, which ‘must be presumed to have
used the money for normal banking purposes as part of its working capital, and thus to have
been in a position to earn compound interest’.

Losses arising from breaches of duties of investment. Where trustees invest in un authorized
investments, they will be liable for any loss resulting when the investment is realised. Knott v
Cottee (1852) 16 Beav 77.if unauthorized investments are retained, the trustees will be liable
for any fall in value between the time when the assets ought to have been realised and when
they actually were.

Under the rule in Howe v Lord Dartmouth, it should be borne in mind. If there is no duty to
apportion, the remaindermen cannot seek to make the trustees liable for the fact that none of
the income has been added to capital: their only claim will be to loss of capital value, if any,
when the investment is realised. It should also be remembered that any loss incurred on the
sale of authorized investments can only be recovered from the trustees if they are guilty of
wilful default (Re Chapman [1896] 2 Ch 763), for if an investment is authorised it is a matter of
discretion on the part of the trustee if, acting as a prudent man of business, he retains it. If
trustees improperly realiseauthorised investments, they will be liable for the cost of replacing
them or for the amount realised in selling them, whichever is the higher.

Liability between trustees. Trustees are not vicariously liable for each other’s breaches of trust.
However, trustees are required to act jointly, there is no such thing as a sleeping trustee and
any trustee who leaves the administration of the trust to others does so at his peril. If a breach
of trust is committed, prima facie it is a breach by all the trustees.

In the words of Kay J in Re Flower(1884) 27 Ch D 592: ‘The duty of trustees is to prevent one of
themselves having the exclusive control over the money, and certainly not, by any act of theirs,
to enable one of themselves to have exclusive control over it.’ Likewise, no trustee should stand
by while a breach of trust is being committed by his fellow trustees, or, having become aware of
a breach of trust, take no steps to recover the trust’s losses. This general principle is, however,
subject to statutory intervention: for example, the Trustee Act 1925 s 30(1) provides that no
trustee shall be answerable for the acts of other trustees unless the same happens through his
own wilful default. Liability of trustees for breach of trust is joint and several, which means that
if more than one is in breach the beneficiaries may recover the loss either in equal shares from
all the trustees who are in breach or all of the loss from any one of them. Normally, where the
latter happens, the trustee against whom the beneficiaries act to recover the loss may obtain a
contribution from the other trustees who are in breach.

Conversely, if all trustees are sued the ‘passive’ ones are not entitled to an indemnity from the
‘active’ ones (remembering that passive trustees are equally liable with active ones if they
permitted the breach). Thus, in Bahin v Hughes (1886) 31 Ch D 390, both active and passive
trustees were equally liable and the passive one was not entitled to be indemnified by the
active one. Equity presumed equal contributions but this principle has been superseded by the
Civil Liability (Contribution) Act 1978, which provides that any person liable in respect of any
damage may recover from any other person liable for the same damage a contribution in an
amount that the court finds just and equitable, having regard to the extent of that person’s
responsibility for the damage, even, in appropriate cases, to the extent of the full amount of
the loss. Trustees are entitled to be indemnified by a trustee who alone is guilty of fraud. I

n addition, under the rule in Chillingworth v Chambers [1896] 1 Ch 685, where one of the
trustees in breach is also a beneficiary of the trust and intended to profit by the breach, the
trustee-beneficiary must indemnify the other trustees to the extent of his beneficial interest.

• RELIEF FROM LIABILITY •

Statutory power. The Trustee Act 1925 s 61 provides: If it appears to the court that a trustee,
whether appointed by the court or otherwise, is or may be personally liable for any breach of
trust but has acted honestly and reasonably, and ought fairly to be excused for the breach of
trust and for omitting to obtain the directions of the court in the matter in which he committed
such breach, then the court may relieve him either wholly or partly from personal liability for
the same. inPerrins v Bellamy [1898] 2 Ch 521 by Kekewich J, who pointed out that complete
absence of dishonesty was a prerequisite for the operation of the section. Beyond that, he took
the view that in general any trustee who acted reasonably ought to be relieved under the
section.

The burden of establishing reasonableness lies with the trustee.

Consent by beneficiaries.Fletcher v Collis [1905] 2 Ch 24 is authority for the proposition that a

beneficiary who knowingly consents to a breach cannot, provided he is of full age and capacity,
complain of the trustees’ conduct in committing the breach. Insofar as his interest is affected,
the consenting beneficiary cannot recover his losses resulting from that breach. According to
Holder v Holder [1968] 1 All ER 665, it is not necessary for the beneficiary to know that what he
is consenting to is a breach of trust, nor does the beneficiary have to derive any benefit from
the breach, but the court must consider whether, in all the circumstances, it is fair and
equitable that, having consented to the breach, the beneficiary should be allowed to sue the
trustees. To avoid the risk of being sued, the trustees must put the beneficiaries fully in the
picture, otherwise the court may not consider their consent sufficient to take away their right
of action:

In Boardman v Phipps. Another relevant factor is the freedom with which the beneficiary gives
his consent: it will afford the trustees no protection if it is given as a result of undue influence.

NO.5 Theterm equity means the notion of good conscience, fairness and justice. Therefore
equity refers to what is just and right in human relationships and transactions , equity
developed to solve the problems which the common law had failed to solve. The reason why
the law had failed to achieve its principle aim of maintaining justice is thatevery case presented
defferent problem and the law tended to be uniform and rigid and did not provide for changes
or variation presented by the pecuniar circumstance. Therefore equity developed to mitigate
the rigidity of the application of law, thus equity has been described as kind of justice superior
to legal justice a correction of law where it is defective owing to its generality. Common law
issued writs which where rigid and for the litigant to win his claim he had to conform to the
required writ. Corruption was mob under common law as the poor and local people were not
favoured. Common law provided inadequate remedies which would not lead to the end of
justice.
Therefore Equity came to providesolutions to ensure justice among all litigants ,it provided
remedies where common law did not or provided inadequate remedies , issued writs to the
litigants which where necessary for starting up the actions at common law and these writ bore
the royal seal and this was being done by the chancellor.

However when the equity courts started issuing out writs there developed a conflict between
the common law courts and the court of equity , the trend of this development was arrested by
the conservative nature of the of the common law judges who generally opposed the new
judicial development.

They developed a practice of declaring new writes issued by the lord chancellor to be invalid.
The statute of west minister 1285 tried to rectify the unsatisfactory situation, it gave power to
the chancery to modify the existing writs in order to cater for new cases but the statute was
frustrated by the common law judges who assume jurisdiction to decide on the validity of writs
issued by the chancery. They cancelled any writ which was different from the existing writ and
many injuries could not be redressed because they did not fit with I the existing writ.

Equity started expanding and developing in 17thcentury , however prior to the 17th century,
chancery jurisdiction tended to be vague or unclear that is to say ,there was wide variety of
reliefs sought to which the chancery responded, reports of equity decisions were few and
irregular thereby affecting the development of the decisions based on precedents,and the early
chancery where not bound by the previous decisions since no definite rule had been
formulated. However during the mid of 17 thcentury , chancery jurisdiction lost its flexibility and
adopted the common law system of precedents. This is because some common law judges
presided over chancery and influenced the adoption of the system of precedents, there was an
improved system of law reporting on equity cases.

Although equity became flexible and some systems of common law, the two failed to come
together but they were just developing conflicts between the two courts. For example the
conflict between chief justice coke and lord chancellor Ellesmere.this conflict was because of
the chancerys power to issue common injuction to restrain the enforcement of the common
law courts judgements.
The decisive stage of the conflict arose when Coke became the chief justice of the king bench
division of the high court. Coke was totally opposed to chancery jurisdiction , he claimed that
the common law courts passed the power to issue writs of prohibition against chancery
jurisdiction for any interference with the judgments of the common law courts.

The conflict between the common law courts and the chancery court crystallised in the Earl of
Oxfords case (1615)I rep.ch.1 in this casethe lord chancellor Ellesmere contended that he had
power to set aside the common law judgments on grounds of equity and good conscience.
Chief justice Coke of the common law court insisted that the chancery had no power either by
statute or by any law of the land to set aside common law judgments. The controversy came
before king James who ruled in favour of chancery jurisdiction.

However, King James decision had two fold effects these include the following

The chancerycourtsjurisdiction became more extensive and attracted a lot of litigants , as a

result the court became over burdened due to poor staffing, organization and complex and
inefficient procedure in administering justice.

Officials of the court became corrupt and incompetent and the course of justice was thereby
perverted owing to delay.

Although the Earl of oxfords case and the decision of king James led to some effects , they came
with new reforms which helped to epitomize the conflicts between common law and equity.
These are;

Minor reforms. These were to rectify the short comings, first the common law courts started
applying the rules of equity to cases brought before them whenever those rules conflicted or
differed from the common law rules . this aim was to prevent separate proceedinds one in
equity and the other in common law from being started in respect of the same cause of action
and this would save the litigants time and expenses.

The common law procedure Act of 1852,1854, and 1860 gave the common law courts power to
exercise certain jurisdictions which were originally reserved for chancery, foreinstance the
common law courts could order discovery of documents and interrogatories in certain cases ,
they were also empowered to grant injunction and other equitable reliefs.

Furthermore lord Cairns Act 1858 empowered the courts in cases of contracts and tort to award
damages in addition to or in lieu of injunction, specific performance or other equitable
remedies.However the above Acts did not achieve very much in dealing with the short coming
in dual system of administering justice. The Royal commission on the administration of justice
therefore recommended the complete fusion of the administration of justice by means of
consolidation of all superior courts of law and equity into one supreme court possessing the
jurisdiction of all the courts so consolidated.

The recommendations of the royal commission were enacted as the judicature Acts of 1873 to
1875.These Acts abolished all the then existing superior courts and in their place set up a
supreme court of judicature consisting of the High court of justice and the court of appeal. The
High court of justice was to consist of 3 divisions that is to say the kings bench division, the
chancery division and probate, divorce and Admiralty division.

The judicature Acts effectively abolished the dual administration of justice as between common
law courts and chancery courts. The High court of justice were given power to administer both
equity and law concurrently or together. All claims, obligations and defenses were recognized
and enforced by all 3 divisions of the high court.The common injunction exercised by the
chancery court was abolished since it was no longer necessary.

The rules of the equity came to be evolved in the Uganda legal system through the order in
council of1902 and 1911 which received English law into Uganda and equity were to be
administered concurrently and where there was conflict between the rule of equity and
common law with reference to the same subject matter , the rule of equity would prevail and
this is reflected under section 14(2) of the judicature Act cap 13 which governs the law to be
applied by the High court and Supreme courts and section 11 of the magistrates courts Act cap.
16.
Therefore since the order In councils were receive in Uganda the courts started the resolving
the conflicts between the application of rules of equity and rules of the common law to issue
before them through the following;

Liability for an executor of assets. Prior to the judicature Act 1873 of Britain , the common law
rule was that an executor was liable for the loss of his testators asset once he took possession
of them, it was immaterial whether the loss was accidental or arose from willful default.
However in equity an executor could only be liable for the loss of the testators assets if there
was willful default on his part.

In Job v Job (1877)6 ch 562. In this case JesselM.R applying section 25 of the judicature Act
1873 states that the rule of law and equity now is that an executor or administrator is in the
position of gratuitous bailee who cannot be charged with the loss of his testators asset without
willful default, therefore the rule of equity prevailed over the rule of the common law.

Agreement for lease. The agreement for lease is good as lease even if is not executed as
required by tne law. The expression conflict in section 25 of the judicature Act was considered
in walsh v Lonsdale (1882)21 ch9 . in this case the landlord the defendant agreed in writing to
grant alease of 7 years to the plaintiff, the rent was payable in advance on demand , lease was
not granted as required by the law, the plaintiff took possession and paid rent quarterly ,the
plaintiff failed to par arrears and the landlord distrained , the plaintiff sued for damages due to
illegal distress the action failed , although the distress was illegal at common law because the
7 years lease was not granted in equity the contract of lease is as good as a lease, therefore the
tenant was liable to pay a yearly rent in advance.

Joint undertaking .At common law if two or more people become surities of a debt and one of
them becomes bankrupt the solvent sureties were not liable for the bankrupt suretys share of
liability for the debt. However the position at equity is that solvent sureties are liable for the
insolvent surety in addition to their own share of liability.

Variation of deed. At common law a covenant in a deed could be varied by another

deed .however at equity a simple contract could vary a deed. For example in Berry v Berry
(1929) 2 KB316. Under a deed of separation , ahusband covenanted to pay his wife an
allowance. Later the parties concluded a written agreement which was not under a seal
reducing the allowance. The wife sued the husband on original deed claiming arrears of
allowance agreed u[on, the action failed, while accepting the plaintiffs contention that at
common law a covenant in deed could only be varied by another deed, in equity equity a
simple contract could varying adeed is a good defense to an action base on the deed.

NO.6

(A). THE JUDICATURE ACT OF 1873-1875

The judicature Acts of 1873 to 1875 came in force due to the conflicts between common law
and equity , and because the reforms which were brought up due the effect of the decision of
King James in the Earl of oxfords case, when he favoured the chancery jurisdiction , did not
solve the conflict to the end of justice, the Royal Commission on the administration of justice
recommended the complete fusion of the of the administration of justice by means of
consolidation of all superior courts of law and equity into one supreme court possessing the
jurisdiction of all the courts so consolidated.

The recommendation of the Royal commission were enacted as the Judicature acts of 1873-
18975. These acts abolished all the then existing superior courts and in their place set up a
supreme court of judicature consisting of the high court of justice and the court of Appeal.

The high court of justice was to consist of 3 divisions that is to say the kings bench division, the
chancery division and probate, divorce and admiralty division. The high courts of justice were
given power to administer both equity and law concurrently. This is reflected under section 14
and 15 of the judicature Act cap 13 which state that equity and common law are to be
administered concurrently and where there is conflict between the two on the same subject
matter equity shall prevail over common law. This is also considered under section 11 of the
magistrates courts Act cap 16.
The judicature Act cap 13 was received in Uganda through the 1902 order in council which
helped to solve the conflicts between equity and common law. The judicature Acts effectively
abolished the dual administration of justice as between common law and equity courts. The
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

(B) IMPUTED NOTICE. Imputed notice is the type of equitable doctrine of notice and other
types include actual, and constructive notice. The notice which is neither actual or constructive
may be imputed to the buyer through the actual or constructive notice of his agent .Therefore
this type of notice is commonly established in agency law that notice to agent is notice to the
principal and such notice will be imputed to the buyer through his bona fide agent.

In this regard the buyer who instructed his agent to buy property at the auction sale was taken
to be affected by notice of an equity which came to his knowledge in the course of the
transaction. However the vendor is not an agent of the buyer thus notice to the vendor is not
imputed to the buyer.

Solicitors were normally agents of the buyers in the land transactions, therefore notice of
information acquired by a solicitor in a transaction used to affect his principal. However
because of hardships of this rule, it was modified. In the mountford v scott (1823) 37 ER1105 to
the effect that information acquired by a solicitor in one transaction cannot affect through the
imputed notice of his principal in the subsequent transaction. Thus it has been held that
knowledge of the solicitor in the previous transaction cannot be imputed to the buyer in alater
transaction, the solicitor under this transaction is not under a dutytp pass knowledge in
previous transaction to the buyer when he later became his client.

However if the solicitor acts for both parties to the transaction, any notice which he acquires is
imputed to both parties, and if he conspired to the detriment of the other, then the aggrieved
party will be protected by the doctrine of the bona fide purchaser without notice.
(C) THE MAXIM DELAY DEFEATS EQUITY

Delay defeats equity (equity aids the vigilant and not the indolent). Where a party has slept on
his rights and has given the defendant the impression that he has waived his rights, the court of
equity may refuse its assistance to the claimant. This is known as the doctrine of laches.

Two matters must be noted here. First, the time in which an action for equitable relief may be
sought may be governed by the Limitation Act 1980 and, second, even where there is no
statutory limitation, it will be governed by the equitable principle of laches.

The Limitation Act 1980 lays down limitation periods in connection with the enforcement of
trust matters. For example, s 21(3) provides, as a general rule, that an action by a beneficiary to
recover trust property or in respect of any breach of trust shall not be brought after the
expiration of six years from the date the right of action accrued. However, the section also
provides, for example, that no time limit shall apply to an action by a beneficiary in respect of
fraud by a trustee.

The other main types of equitable claims regulated by the Act are claims to the personal estate
of deceased persons, claims to redeem mortgaged land and claims to foreclose mortgages of
real or personal property. Equity may in very limited cases apply the same limitation to
situations analogous to the express statutory ones. No statutory limitations apply to actions for
breach of a fiduciary duty, or to setting aside for undue influence or to actions for rescission. In
addition, the Limitation Act 1980 s 36 provides that nothing in the Act shall affect any equitable
jurisdiction to refuse relief on the grounds of acquiescence or otherwise.

Delay may be evidence of acquiescence, so the two issues cannot be separated. A failure to
bring an action may tend to confirm other slight evidence that the innocent party has accepted
or agreed to the breach of contract or other ground for seeking relief, thus preventing him from
enforcing his right to remedies for that breach. Whether the court will regard the claim as
barred will be a matter to be determined on the facts. As with all equitable principles, flexibility
is important. As the Privy Council stated in Lindsey Petroleum v Hurd (1874) LR 5 PC 221: The
doctrine of laches in the Courts of Equity is not an arbitrary or a technical doctrine. Where it
would be practically unjust to give a remedy, either because the party has, by his conduct, done
that which might fairly be regarded as waiver of it, or where by his conduct and neglect he has,
though perhaps not waived that remedy, yet put the other party in a situation in which it would
not be reasonable to place him if the remedy were afterwards to be asserted, in either of these
cases, lapse of time and delay are most material. But in every case, if an argument against
relief, which otherwise would be just, is founded upon mere delay, the validity of the defence
must be tried upon principles substantially equitable. Two circumstances, always important in
such cases, are the length of the delay and the nature of the acts done during the interval,
which might affect either party and cause the balance of justice or injustice in taking the one
course or the other, so far as it relates to the remedy.

(D). RIGHT IN REM

The right in rem is the right against the whole world , in other words it can be enforced against
all people accept the bona fide purchaser for value without notice. However if the buyer
claiming to be a bona fide purchaser without notice had notice or had any other way of get
notice of the particular interest in land he will not be bona fide purchaser for value and even
when he himself participate in fraud. this was stated in the case of katwiremu v katalikawe and
another. Where the first defendant sold the land to the plaintiff and went into possession but
the defendant did not transfer the title to the plaintiff contending that he had misplaced them
and need to make a replacement , but he did not and he went ahead and sold the same land to
the second defendant hid brother in law who did not even pay the purchase price. Court held
that he was not the bona fide purchaser for value as he had notice of the plaintiffs interest in
land cause the plaintiff was in possession and had done some improvement on the land.

Question One

1. With the aid of relevant case distinguish between trusts from other forms of legal
relations.
A trust is relationship where the settlor bequeaths the property to hold it for the other person
called beneficiary. According to the case of green v under hill. A trust has various characteristics
like trustee has the power and duty and he is accountable, title of trust assets stand in the name of
trustee or in the name of any other trustee, assets constitute a separate fund and are not part of the
trustees own estate. It should be noted that these may be implied or Imposed by the law.

Trust and Agency.

Agency is the contractual arrangement express or implied, where one person may act on behalf
of another and bind that other as if he or she acted personally. Agency a rises where a person
called the agent has expressed or implied authority to act on behalf of another called the principal
and he consents to it. An agent is normally regarded as an accounting fiduciary party and he
binds the principal vis-à-vis third parties.

The distinction between trust and agency have been expounded in the on going discourse.

1. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. Whereas a
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallotvs Wilson1

However if the beneficiary is suiJuris un-animoud and together entitled may demand that the
trust property be distributed and consequently that the trust be brought to an end.

2. The trustee in exercise of his office will contract as principal and cannot bind the beneficiaries
unless that have constituted him both trustee and agent binds his principal so long as he acts on
the principal's authority on apparent that he is deemed to have.

3. Although the trustee has a right of recoup an indemnity against the beneficiaries for any
property incurred expenses and creditors may subrogate those rights in certain circumstances
there's therefore no direct contractual link between the beneficiary and 3rd parties comparable to
link between the principal and third parties.

1
4. The principal in agency gives binding directions to his agent whereas beneficiaries cannot
control the exercise of the trustee's direction.

5. Trust is greatly different from agency in relation to property. Agents hold property for his
principal. Many agents do not obtain items of property and those who do so acquire only
possession but not the other hand there can be no trust unless title to the trust property vests in
the trustee or in another party on behalf of the trustee.

It's argued that Agent becomes trustee for his principal if he obtains title to the property for the
principals benefit, but this isn't easy to gauge in practice especially if what's transferred is a mere
chattel as it was in the case of Cohen vs Cohen court held that she succeeded in all the claims
that court finding that the husband stood in fiduciary relationship with regard to the wife's
property in the circumstances and was therefore a trustee for her benefit. Court followed the
decision in Burdick vs Garrick 900DM 2where Lord Justice Giffard stated

"In respect of attorneys who had been authorized and buy property and had attempted to set up
the statute of limitations as defence "there was very special power of attorney under which the
agents were authorised to receive and invest to buy real estate otherwise todeal with property but
under no circumstance could the money be called theirs".

Trust and Debt

The traditional view is that the relationship between trustee and beneficiary is not one of debtor
and creditor. That means that the trustee does not owe the value of the rights he hold to the
beneficiaries. This can be seen in the case of Morley vsMorley,Barclays Bank Ltd
vsQuistclose investment Ltd3created confusion in this area, holding that a borrower of money
can be both a debtor and a trustee in respect of the same sum. That decision is how ever
extremely controversial and has been recently reviewed in TwinsectraVs Yardley4,but the under
the traditional view enunciated above a trustee will not owe the value of the right held on trust,

4
this is not to say that a debt cannot form the subject matter of a trust. When we talk of trust of a
bank account, we mean nothing than the creditor’s right to sue is held on trust.

A debt may or may not be contractual and the obligation of the debtor is personal but a trust is
proprietary. A trustee where possible use trust property in income bearing investment and
account to the beneficiary for income. In the case of a debtor such an obligation is unnecessary
except in so far as provided for in agreements express or implied. This can be seen in the case of
Potters vsLoppert 1973 at 399.

If money borrowed is stolen from the borrower he is still under an obligation to repay, however
with in trusts, a trustee is not liable for the loss which is not attributed to his negligence Morley
vs Morley

Further the words of an instrument may be employed in such a manner as to create both personal
and trust obligation there by creating a situation where a debt and trust exist.

In the case of Barclays bank Ltd v Quits close investment ltd 5,In the above case Rolls Royce
Razor blade ltd was highly indebted to Barclays bank and was in need of 209,000 pounds to pay
dividends which has been declared on its shares. The sum was borrowed from Quitsclose under
an arrangement whereby the loan was to be used for that purpose. The money paid into a
separate account at Barclays bank which had notice of that nature of the arrangement. Before
dividends were paid rolls Razor went into liquidation.

Issue: whether the money on the account was owned by the beneficiary Rolls Razor ,in which
case Barclays bank claimed to set against the over draft or whether Rolls Razor had received the
money as trustee and still held it in trust of Quits close.

House of Lords held: The money had been received in trust to be applied for payment of
dividends that purpose having failed, the money was held in trust for Quit close.

Trust and Bailment

A bailment arises where an owner of property gives permission to another person to possess it. A
bailment is a delivery of personal chattels to bailee subject to a condition that they be returned to

5
the bailor or be dealt with as the Bailor directs when the purpose of the bailment has been carried
out.

The difference between the two is crucial a number of reasons;

One is in breach of instructions your friend sells the painting to an innocent purchaser it will
matter a great deal whether you created bailment or trust. If the friend was a bailee then the
purchaser will not acquire at the good against you and will be able to recover the paintings value
from purchase in action in tort law of conversion.

The basic rule is memo dat quod habet that means that no one gives who possesses not, but if
your friend was a trustee, the position of the purchaser would be different. For now your friend
has the right in question and capable of passing it on to third parties. You of course have rights
under trust but such rights destroyed when subject matter of the trust comes into the hands of an
innocent purchaser of value.

The position of bailment is thus governed by common law, the position of bailed is similar to
that of a trustee in that both are entrusted with another's property.

The Differences between Bailment and a Trust;

A bailee obtains only possession and what is reffered to as special property in the goods while
trustee takes title to the trust property.

Bailment is a common law notion worked out in proceedings for common law relief such as
actions of conversion, detinue, and breach of contract where as the trust a relationship is purely
equitable.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason.

Bailment only applies to personal chattels that are capable of delivery where as a trust may arise
in respect of real or personal property and whether tangible or in tangible.
A bailment is enforced by the bailor who is party to the arrangement while generally the trust is
enforced by the beneficiary who is not party to the trust instrument.

In bailment there's no transfer of property from the bailer to the bailed.Bailment duties are
dependent on the rules of common law and not equity.

The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.

Bailment is restricted to chattels but a trust may exist to all types of property

Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owners loose rights for example estoppel however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.

Contracts

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promisee, on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

Re Cook6,indeed there can be no hard and fast lines between contract and trust because contract
is a source of rights while trust is a way of holding rights, indeed many rights held in a trust are
born of contract.

Settlement and covenants to settle.

Where property is vested in trustees on a settlement, it was held upon a trust on settlement.
However if the property has not yet been transferred to trustees but it's simply subject to a
consent to settle. The beneficiaries will only be able to enforce consent if they have given
consideration based on the principle equity will not assist a volunteer.

Power of appointment.

6
This refers to a power that is conferred upon a donee to dispose of the donors property by
nominating and selecting one or more third parties to receive it.

The property may consist of tangible items like cars, boats, house hold items or it may consist of
an intangible interest in property such as the right to receive dividend income from stocks

The distinction between trusts and powers of appointment is fundamental. A trustee must do as
the settler directs where as powers of appointment are discretionary.

Further the beneficiaries under a trust are owners in equity of the trust property. However the
objects of powers of appointment are nothing unless and until the donor of the power makes an
appointment in favour of the done.Vestyvs IRC 7

Question 2

2(a). Discuss the capacity elements that must be possessed of a settlor in creation of a trust.

The trust instrument must show certanity of intention to create a trust, certainty of what the
subject matter of trust is and certainty of who the beneficiaries are and for trust to be valid there
must be transfer of property by the settlor to the trustees.

Therefore before creation of trust a number of situations may be considered and mostly its
ability, anyone who can hold property can create trust there are exceptions for statutory bodies
and corporations .Minors also can't hold property though they can in some circumstances.

The situations considered when creating trusts are discussed below;

Minors: A settlement on trust by minor is voidable in the sense that he can repudiate it during his
minority or within a reasonable time of attaining his majority.

In the case of Edward vscarter, such settlement is how ever only possible in respect of an
equitable interest. Since am infant cannot hold legal estate, a settlement of trust in respect of trust
in legal estate is not possible by him.

7
2.Mental abnormality.

Generally a person who is mentally abnormal cannot create a trust under the trustee's act S.50 (1)
b.That meant that for one to create trust he or she should be sane. "The court may direct a
settlement to be made of the property of a lunatic or any part thereof or any interest there in, on
such trusts and subject matter to such powers and provisions as the court may expedient."

The direction may affect property which has been acquired by the lunatic under a settlement, a
will or an intestacy with a view to protecting interested parties in the event of change in the lawn
of intestacy or circumstances affecting an earlier disposition by the lunatic.

Companies

Trading companies which are incorporated under the companies act have an implied power to
borrow for the purposes of the company's business.Normally this power is uses to issue
debentures and for the purpose of buttressing the issue the company has power to execute a trust
deed by which after covenanting to repay the loan with interest until payment, assigns to trustees
real property or lease holds belonging to the company, to constitute security for the repayment of
the loan, the trustees under taken to hold the property upon certain trusts in favour of the
debenture holders.

2b. Discuss the formalities if any, essentials for creation of a valid trust.

A settlor may create a trust by showing an intention to create it .This can be seen in the case of
Jones vs lock where the court of appeal of chancery held that there was no trust, because the
fathers intention was an outright transfer. They refused to perfect an imperfect gift through a
successful declaration of trust. It should be noted that no formalities are required for the creation
of an inter vivos trust of personality. However evidence in writing is required for the creation of
a trust in land. Thus by section 92 of the registration of Titles Act any declaration of trust
respecting land must be evidenced by a memorandum in writing signed by the party creating the
trust.

The following are the essentials of a trust;

In the case of Knight vs Knight it was stated that in order for a trust to be validly created, three
conditions are necessary: the words employed must be so used that taken as a whole, they ought
to be construed as imperative,

1.that is the words must be certain

2.The Subject matter of the trust must be certain

3.The objects or persons intended to be benefitted must also be certain

The three requirements are usually described as the three certainties of a trust. it's suggested that
apart from these requirements, a trustee is also necessary for the execution of a trust. Each of the
requirements will be considered in turn.

CERTAINITY OF WORDS.

As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. Consequently an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in LambeVs Eames,the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.

In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet.....in full confidence that she will do what is right as to the
disposal thereof between my children either in her life time or by will after her decease. "it was
held that the wife took absolutely and there was no trust in favour of the children. Similarly in
the case of Mussorie Bank VsRaynor, the privy council held that where a testator left all his
property to his widow, feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

However a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in ComiskeyVs Bowring
Banbury, a testator gave to his wife,"the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testaord intention was to give an absolute gift to the wife.

CERTAINITY OF SUBJECT MATTER

As was observed earlier, the subject matter of a trust could take many forms.it could be interest
in land in possession or reversion; chattels, money and chooses in action. In Re Diggles, it was
indicated that uncertainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis VsRippon,the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good,
remembering always according to the circumstances, the church of God and the poor.It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.

In Bardwell vs Bardwell, there was a direction, to remember certain persons, it was held that
there was no valid trust. In knight vs Knight, there was direction to reward. my old servants and
tenants according to their deserts.it was held that the purported trust was invalid In Re Jones, a
gift was given to a wife, absolutely, followed by a direction that, as to such parts of my estate as
she shall not have sold or disposed of ,it should be held in trust for certain persons.it was held
that the purported trust was invalid.
CERTAINITY OF OBJECTS.

This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re VandervellsTrusts, it was
indicated that in case of future interests, the beneficiaries must be ascertainable with in the period
of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. With regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

A trust can be defined as relationship that is recognized by equity, it arises where property is
vested in a person or persons known as trustees who those trustees are under a duty to hold for
the benefit of other persons known as beneficiaries. The interest of beneficiary are normally
described in the instrument creating the trust, however these may be implied or imposed by law.
It can also be noted that the beneficiary interest should be proprietary meaning it can be sold or
bought. And it should also be emphasized that for trust to be created there must certainty of
intention, object and the subject matter. A trustee have the legal ownership carrying with it
responsibilities and burdens whereas beneficiary would have the advantage of any ownership.
An executor would similarly have the burdens and responsibilities and could be expected to
distribute property in accordance with the will.

Question 3

3a.

I would adviceChegeto create a testamentary trust where she will bequeath the substantial money
through a secret trust to be particular a fully secret trust to hand it for the benefit of her long term
boyfriend.

Testamentary trust is created by a will and arises after the death of the settlor, secret trust is one
where the settlor calls or informs the intended trustee and tells him or her about the intension of
creation the trust. The purpose of this kind of trust is to keep the identity of the intended
beneficiary undisclosed.

There are two are essential elements which make a secret trust valid notwithstanding the three
certainties: communication and acceptance.

In fully secret trusts, is where the settlor communicates to the trusee all the contents of the trust
and bequeaths property to that intended trustee as a gift in a will and the trustee is the one who
knows the purpose of the trust.

On the facts above, chege(settor) would communicate to Nancy and tom (trustees) all the
contents of the trust and bequeath the substantial of money to Nancy and tom as a gift in a will.
Thus she would have given a long term boyfriend Steve the substantial sum of money without
her husband Julio knowing.

3(a) in advising Imran on the validity of the legal arrangement in the will, where there are
dispositions to two beneficiaries in respect of the same gift or subject matter. Ideally according to
equity, under the equitable maxism that “where there are equal equities the one first in time takes
precedence,” this would then mean thatMenya would be in right to take the property as he was
given there is a testamentary trust (will) and that will has beenamended by a codicil, the codicil
will take precedence thus the valid legal arrangement in this case would be to follow the last
wishes in the will.

I therefore advice Imran to bequeath the house to the illegitimate son, since, the provision in the
will, which stated that “my house on block 12 plot 275, garuga, at the pearl marina to my
brotherMenya, absolutely” was amended by the settlor (Tonda) in October 2017 where he told
Imran ,”that he was to hold the house on trust for someone to be disclosed at a late date thus this
being a codicil amending the provision in the will of June 2017.
In conclusion, Imran is under obligation to perform the last wishes of the settlor hence bequeath
the house to the illegitimate son is the legal arrangement.

3b.Discuss the three certainties required when forming an express trust. Express trust has
been defined as the trust which has been intentionally created by a settlor himself though
manifestation of an intention to create one. The most common methods of creation are by deed
or will by unsealed writing inter vivos or by word of mouth. It's a trust created in express terms
and usually in writing as distinguished from one inferred by the law from the conduct or dealings
of parties.

Property is transferred by person called trustor, settlor or grantor to a transferee who holds the
property for the benefit of one or more persons called beneficiaries.

Express trust may be sub divided into executory and executed trust, on the hand completely and
in completely constituted trusts, on the other. An executed trust is one which in which the settled
has indicated inappropriate technical terms what interests are to be taken by all the beneficiaries.
An executory trust is one in which the settlor has indicated to his trustees a scheme of settlement
but the details are to be gathered from his general expressions.

The distinction is of practical significance in two respects, Firstly while the language of an
executed trust is strictly construed, anexecutory trust is liberally construed. Secondly, where in
executed trust the settled makes use of technical expressions, the interpretation of which the law
recognizes certain rules, equity follows the law and gives effect to such interpretation. However,
with an executorytrust,equity attributes less importance to the use or omission of technical
words. Rather it seeks to discover the settlers true intention

Once the intention is discovered, equity orders the preparation of a final deed which gives effect
to the settlors intention which is discoverable from the language of the settlors instrument.

The distinction between a completely and in completely constituted trust is necessary in order to
distinguish a trust from a void settlement. A trust can only be valid if the title to the property is in
the trustee and if the trusts have been validly settled.

The three certainties of Express trust are;

CERTAINITY OF WORDS.

As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. Consequently an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in LambeVs Eames, the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.

In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet.....in full confidence that she will do what is right as to the
disposal thereof between my children either in her life time or by will after her decease. "it was
held that the wife took absolutely and there was no trust in favour of the children. Similarly in
the case of Mussorie Bank VsRaynor, the privy council held that where a testator left all his
property to his widow, feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

However a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in ComiskeyVs Bowring
Banbury, a testator gave to his wife,"the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.
It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testaord intention was to give an absolute gift to the wife.

CERTAINITY OF SUBJECT MATTER

As was observed earlier, the subject matter of a trust could take many forms. it could be interest
in land in possession or reversion; chattels, money and chooses in action. In Re Diggles, it was
indicated that uncertainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis VsRippon, the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good,
remembering always according to the circumstances, the church of God and the poor. It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.

In Bardwell vs Bardwell, there was a direction, to remember certain persons, it was held that
there was no valid trust. In knight vs Knight, there was direction to reward. my old servants and
tenants according to their deserts. it was held that the purported trust was invalid In Re Jones, a
gift was given to a wife, absolutely, followed by a direction that, as to such parts of my estate as
she shall not have sold or disposed of ,it should be held in trust for certain persons. it was held
that the purported trust was invalid.

CERTAINITY OF OBJECTS.

This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re Vandervells Trusts, it was
indicated that in case of future interests, the beneficiaries must be ascertainable with in the period
of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. With regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

A trust can be defined as relationship that is recognized by equity, it arises where property is
vested in a person or persons known as trustees who those trustees are under a duty to hold for
the benefit of other persons known as beneficiaries. The interest of beneficiary are normally
described in the instrument creating the trust, however these may be implied or imposed by law.
it can also be noted that the beneficiary interest should be proprietary meaning it can be sold or
bought. And it should also be emphasized that for trust to be created there must certainty of
intention, object and the subject matter. A trustee have the legal ownership carrying with it
responsibilities and burdens whereas beneficiary would have the advantage of any ownership.
An executor would similarly have the burdens and responsibilities and could be expected to
distribute property in accordance with the will.

QUESTION 4

4. Discuss the exceptions to the rule that equity will not assist a volunteer in any two of
thefollowing;

(i) Donatio Mortis Causa

(ii) Proprietary estople

(iii) The rule in strong Vs Bird

(i) Donatio Mortis Causa

A donatio mortis causa is a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor. This could be distinguished from a normal inter vivos gift
under which title immediately passes to the transferee, a testamentary gift which takes effect
under provisions of a property executed will.

The essentials of a valid donatio mortis causa were articulated by Lord Russels C.J in Cain vs
Moon They are;

1.The gift must have been in contemplation though not necessarily in expectation of death;

2.the subject matter of the gift must have been delivered to the donee;

3.the gift must have been made under such circumstances as to show that the property is to revert
to the donor if he should recover.

The first condition was illustrated in the case of Wilkes be Allingtin. In that case, the donor was
suffering from an incurable disease. He made a gift knowing that he did not have long to live .In
actual fact ,he had an even shorter time he imagined .He died two months later of pneumonia. It
was held that the gift was valid. The second condition may be illustrated from Re Weston, where
it was held that where a dying man, could be shown to have handed over to his fiancee his post
office savings book, his action was sufficient to constitute an effective donation mortis causa of
the balance recorded in the book.

The Rule in Strong vs Bird

Where a person makes an imperfect gift to x and subsequently appoints X his executor, upon the
death of the donor,the property vests in fully in X. The equity of the beneficiary under the will is
displaced by X's prior equity. Consequently, X may retain the property irrespective of the fact
that until the donor's death X's title was imperfect. The rule has been extended to apply to a done
who has taken out letters of administration to the state of the donor, and the personal
representatives of a person who had consented in favour of volunteers and had subsequently been
appointed a trustee of the settlement in favour of volunteers.

Further more for the rule to apply,the gift must have been perfect in every way except for the
legal formalities required for the transfer of title .Thus in Re Free land, a testatrix promised to
give the plaintiff a motor car in the future but didn't do so. On the death of the testatrix, the
plaintiff became her executrix and claimed that the imperfect gift had in consequence been there
by perfected. The court refused to apply the rule in strong vsBird, there having been no
intention to make the plaintiff the owner of the car immediately.

Finally, any one relying on the rule must show a continuing intention on the part of the donor up
to the time of his death. Thus in Re wale, investments of which the settlor was absolute owner
were settled by her voluntarily in 1938 for the benefit of her daughter. The settlor did not take
any steps to transfer these investments to trustees, who however, were appointed executors of the
settlors will .The will was subsequently altered from time to time and it eventually disposed of
all her estate to other beneficiaries. It was held that although an incompletely constituted trust in
favour of the daughter had been created by the settlement of 1939, the settled had not shown any
continuing intention to benefit the daughter.

4b Discuss the remedies available to the beneficiaries for breach of trust.

A breach of trust consists of an improper act, neglect, default or omission of a trustee with regard
to trust property or of a beneficiary. It may include; direct intermeddling with trust property for
improper purposes, failure to exercise proper care in discharging a duty and male fide exercise of
a discretion. In these instances, the trustee must replace any consequential loss from the trust
fund as a result of his or her actions. The purpose of the rule is not to punish the trustee but to
compensate the beneficiaries. The following are the remedies available to the beneficiaries for
breach of trust;

1. Compelling performance of the trust.

It should be noted that if a trustee neglects the administration of the trust or defaults in protecting
the trust estate, a beneficiary may take steps to ensure that he takes the necessary actions in the
interest of trust property.

For example where a trustee fails to renew lease hold, where the character of trustee is such as
would endanger to fraud among others. Apart from the general, there are certain equitable
remedies to which a beneficiary may resort; that is he may apply for an order of injunction to be
granted by court, where a breach of trust is contemplated. This can be seen in case of Milganvs
Mitchell.

In this respect by law of property legislation in some jurisdictions trustees for sale shall so far as
practicable give effect to the wishes of the beneficiaries of full age. Consequently failure to
consult them or some of them amounts to breach of trust which can be restrained by injunction.
An injunction may also be obtained against a bankrupt trustee who wants to obtain possession of
trust property.

The court may appoint a receiver upon the request, by application of a beneficiary. The
appointment of receiver is normally premised on the possibility of actual or prospective violation
of the duties of trusts likely to endanger trust property see the case of Middleton vsDodswell.For
example failure of the trustee to agree so that the trust cannot be properly administered, loss of
part of trust property through failure to realize it, refusal of trustee to act and denial of the trust.

In the case ofOdulatevsodulate, the applicants applied for an order of the court for a transfer of
administration of the estate in dispute to an administrator or receiver operating under the
supervision of the court pending the determination of the substantive proceedings.

when the property is endangered as when it is invested in un authorized and hazardous securities,
court mat on the admission of the trustee that the fund is in his co trustees hands order the
amount to be paid into court by trustee who is not holding the fund. if that trustee admits that the
fund has not been properly applied.

in the case of FregenevsAweshika;The plaintiff applied to court to remove defendants from the
office of trustees.An account and injunction restraining the defendants from carrying on the
duties of trustees, on ground of alleged misconduct. It was proved that the defendants relieved
the principal trustee of his post and replace him with another person.

It was held that that defendants were guilty of misconduct and mismanagement, should be
removed from office and render the account to trust fund. It has as well been observed that where
a trustee commits a breach of trust,fraudulent or otherwise any beneficiary can bring an action to
question the validity of the acts of the trustee and need not to sue in a representative capacity.

2.Proprietary Remedies

a)Advantage over personal remedies

It should be noted that with regard to proprietary remedy, satisfaction of the plaintiff's demand
does not depend on solvency of the defendant trustee. If the property to be traced belongs to
plaintiff in equity, it will escape the defendant’s bankruptcy. In some cases the plaintiff will be
able to take advantages of increases in value of property. Thirdly there are cases in which
proprietary remedy is available although no personal action is possible. Fourthly judgment from
a proprietary action Carries interest from the date with the property came to the defendants hands
while claims in personam carry interest only from the date of judgment.

b.Doctrine of unjust Enrichment.

It has been suggested that proprietary remedies cannot be fully understood without appreciation
of the doctrine in just enrichment. This doctrine appears in virtually every legal system. Basically
it's to the effect that where the defendant is in justly enriched in the expense of the plaintiff, the
defendant must make restitution to the plaintiff.

C.Tracing at common law.

A proprietary remedy is one which entitles a claimant to treat specific property thereof as his
own. The common law did not develop a real action in respect of chattels which entitled a
plaintiff to specific recovery thereof. The courts at common law recognized the owner of the
chattel but there was no action at common law of paying damages of returning the chattel.

Discretion to award specific recovery was in court. The issue thus arose if the right of the
plaintiff was limited in case of a specific chattel, should this right change when defendant
changed one chattel to another?. The answer is the chattel can be followed so long as its nature
could be ascertained as such. Right only ceases when the means of ascertainment fail.

d.Tracing in equity

Equity has developed more sophisticated methods of tracing.

1) Straight case

This is one where there has been no mixing of trust funds with the trustees own money.
Consequently,if the trustee has sold trust property, the beneficiary may take the proceeds of sale
have been used to buy other property bought or hold it as security for the amount of money used
in purchase. This is subject to the condition that claims in equity are invalid against a bona fide
purchaser for value without notice of the trust.

2) Mixed Funds

In the hands of trustees

The situation worsens when trustee has mixed trust fundshis own or after mixing there are
additional dealings with fund .The burden of proof is on the trustee to prove initially that part of
the mixed fund is his own.In Re Tolley’s W.T Thomas j stated that...

If a trustee amalgamated trust property with his own, his beneficiary will be entitled to every
position of the blended property which the trustee cannot prove to be his own.Consequently, if
the composition of the mixed fund is established at the time of the original mixing, the problem
of identification is of determining how to account for the reductions in the fund by payment to
increase in the fund by payment there in.

This can be seen in the case of Re Hallett's Estate;Hallet was a solicitor, died after having
mixed his own money certain funds from two trusts. The other trust had his client
clientMrsCotteril as beneficiary. At his death,the funds were insufficient to pay his personal
debts and to meet trust claims. Three issues arose

1 whether MrsCotteril not being a beneficiary of trust of which Hallet was a trustee was entitled
to tracing remedy on ground of her fiduciary relationship
2. assuming she was how to allocate the payments from the funds as between Hallet and
claimants

3. How to allocate payments as between claimants themselves.

It was held that MrsCoterril was entitled to trace and payements out must be treated as Payments
for Hallets own money.

In the Hands of Fiduciaries or Beneficiaries

Re Hallet's case shows that tracing remedy is available as between beneficiaries, In Sinclair vs
Brougham the Birkbeck society operated a banking business which was held to be ultra vires.in
the winding up competition arose between the claims of share holders and customers. The main
issue was whether customers had the right to trace into general assets of the society.it was held
that there was a fiduciary relationship between the customers and directors. The directors had
mixed the funds and customers had a right to trace into the hands of the society

In Re Diplck,a testator left his residuary estate"such charitable institution or institutions or other
institutions or other charitable or benevolent objects or objects in England as the executors
should select it was held by the house of Lords that the words included non charitable as well
charitable objects.consequently the gift failed for uncertainty.

In The hands of third parties

The right to trace property into the hands of a third party to whom it has been passed by trustee
will depend on the nature of the equitable interest in the property. Consequently, where a trustee
has transferred trust property in breach of trust of transferee will be bound by the trust except in
the following circumstances. First when he establishes that he has legal title to property, second
that he is a bonafide purchaser for valuable consideration without notice that the transactions
were breach of trust.In Pilichervs RawlinsJames L.J stated that "....a notice is an absolute, un
qualified, in answerable defence, and unanswerable plea to the jurisdiction of this
court....."Where the recipient is a volunteer and has no notice, the rights of beneficiary to trace
against him will be equal to that of the recipients own creditors

e) Critique of Right to trace.

Professor Maudsley has indicated that the right to trace should not be restricted to a proprietary
interest which is equitable but should also be available to a beneficial legal owner.This is inspire
of the suggestion in Re Diplock and Re Hallets Estate that the equitable remedy of tracing should
only be available where a fiduciary relationship can be established .secondly the right to trace
should not be limited to situations where a proprietary interest exists. The breach of fiduciary
duty should be sufficient to make available the tracing remedy.

Section B

Question 5.The Earl of Oxfords case optimized conflict between the common law and
equity consequently seeing the steady decline of the applicability of both common law and
equity in modern legal systems. Per LLB2 student, is this fair assessment evolution of
equity and is contractual applicability in contemporary Uganda.

History tells us, in brief, that Equity has its origins in the old English Courts of Chancery
(namely the court of the Chancellor). Due either to the inability of the Kings justices to enforce
judgments against powerful individuals (some noble families were very much a law unto
themselves in their Earldoms, Dukedoms etc during the Medieval period) or, with increasing
frequency in later years, defects or undue harshness of the common law people were driven to
submit petitions to the King, who was considered to be a repository of ‘Divine justice’. Such
petitions were often passed over to the Lord Chancellor, who would dispose justice in the name
of the King. With the passage of time such petitions were directed to the Chancellor and his
office of the Chancery began to function as a court of law. A significant aspect of the Equitable
principles developed in these courts of Chancery was that they were so developed by Priests
(most Chancellors of the medieval period were ‘men of the cloth’). This ensured that the
principles of Equity were fundamentally based on the concept of ‘natural justice’ in keeping with
the lines of the Christian tradition of Good and Evil, and indeed in ancient usage the word Equity
means ‘natural justice’

The different views taken in certain situations, by the principles of Common law and the
principles of Equity, naturally led to conflict and confusion. In the reign of King James the First
it was held that decisions of the courts of Chancery would have overriding authority. While
Equity was initially free of the concept of ‘precedent’ from the late 1500s to the mid 1800s a
body of precedent, of cases based on equitable principles began to take shape, and the rules or
principles of equity took their final form with clear lines and with the introduction of the
Judicature Acts of 1873 and 1875 the Court of Chancery, along with the other Courts such as
Kings/Queens Bench, Common Pleas, Exchequer, Exchequer Chamber, Court of Appeal in
Chancery were absorbed by the Supreme Court.

It would be fair to say that the Judicature Act played the role of ‘fusing’ the system under which
both the Common law and Equity was administered, namely an amalgamation of the different
courts under one. This can be equated to the reference made in the statement that sets the theme
for this article, the ‘two streams of jurisdiction’ meaning the common law and Equity, ‘run in
the same channel’ meaning the administration of both within a common system of courts.

While the above, is somewhat straightforward, it is this authors opinion that the reference ‘do not
mingle their waters’ implies that the Common Law and Equity themselves were not ‘fused’ but
continued to function as two separate systems of law.

Therefore I aim to establish that while the Common Law and Equity came to be administered
under the same system the fundamental principles of Common law and Equity continue to act
independently of each other in the interests of Justice. This can, be shown most effectively
through reference to decided cases, where it will be seen that equitable principles have produced
results quite different to what would be expected under principles of Common Law and
extending these decisions to derive certain fundamental facts as to the position equitable
principles hold within the legal system independently of the common law. I

Independence of Equity and Common Law through decided cases.

A landmark case in this regard was that of Central London Property Trust Ltd v High Trees
House Ltd8. The facts of the case were as follows, During the Second World War countless
people had left the City of London to escape the German bombing of Britain’s Capital. As a
result of this many housing complexes were vacated and left empty. In a certain block of flats,
flats had been leased out for a period of 99 years at 2,500 pounds a year. To curb vacation the
landlord had offered to cut the rent by half (1,250 pounds a year). Once the ‘blitz’ was over and
the tenants returned the landlord litigated to recover the full sum of 2,500 pounds. As per the
8
[1947] 1KB 130
Common Law the plaintiffs would have been legally able to recover the full sum of 2,500
pounds even for the period when the flats had been empty since the lease that fixed the amount
was under seal and hence(according to common law) could not be changed by a mere agreement
but only through a deed, however the principles of equity took on a different view. The judge
deciding the case – Lord Denning quoted “There has been a series of decisions over the last fifty
years which, although they are said to be cases of estoppel are not really such. They are cases in
which a promise was made which was intended to create legal relations and which, to the
knowledge of the person making the promise, was going to be acted on by the person to whom it
was made, and which was in fact acted on. In such cases the courts have said that the promise
must be honoured…..As I have said they are not cases of estoppel in the strict sense. They are
really promises – promises intended to be binding, intended to be acted on, and in fact acted on.”
(The Discipline of Law, Lord Denning, 1979)

In the judgement it was held that through equity, the promise made was binding on the party
making it (the common law did not make such an allowance) and that the plaintiff could not
recover the full amount of money for the period when the flats were empty.

This decision, in my opinion highlights the following key points;

a. While both the principles of Common law and Equity were administered as one totality,
in the above case we see the principles of equity coming into play to lead the judge to arrive at a
very different decision than he would have had to make if he had followed common law
principles. Hence we see equitable principles functioning, quite distinctly from those of the
common law in the interests of ‘justice’

b. As is quoted in Lord Denning’s book ‘The Discipline of Law’ a previous case where similar
equitable principles could have been applied, Salisbury(Marquess) v Gilmore 9 Lord Justice
Mackinnon felt unable to take an equitable view due a decision made by the House of Lords in
Jorden v Money 10which was thought to be binding where the concept of estoppel was confined
to representations of existing fact.

9
[1942]2 KB 38
10
[1845] 5HL Cas 185
The significance of this observation is that, though the principles of equity could be used to take
on a different view of a situation as opposed to that taken by the common law it, in some
instances, needed courage on the part of the judge to break free from the bindings of common
law and allow these equitable principles to take flight. We see the action of Lord Denning in the
High Trees case was doing precisely this – giving due credence to the independent place the
principles of equity held in the legal system, free from the rigidity of the common law in the
interests of doing ‘justice’.

c.That the decision was possible in the High Trees case was due to the ‘conflict or variance’
clause (section 25 of the Judicature Act of 1873) which deemed that where the rules of common
law and equity contradicted rather than complement, the rules of Equity would prevail. This
reality is one of the strongest arguments in this author’s opinion for establishing that the systems
of Equity and Common Law do not ‘mingle’ and will be discussed.

Question 6. Write short notes on the following

6a .Judicature act 1873-1875

Historically Equity developed due to mitigate the rights of rigidity of application of common law
and to provide reliefs or remedies which the common law could not avail to litigants.The
ordinary meaning of equity is therefore the right doing, good faith, honest and ethical dealing in
a transaction or relationships between individuals.

Equity introduced various reforms and these reforms affected the out dated and unsatisfactory
procedure of the court. And secondly the area between the common law courts and chancery
courts operated was not clearly defined.

There judicature act is one of the reforms introduced by equity. The recommendations of the
Royal commission was enacted as judicature 1873 to 1875.These acts abolished all the ten
existing superior courts and in their place set up a supreme court of judicature consisting of the
high Court of justice and the court of Appeal. The High Court of justice was to consist of three
divisions; the King's Bench, the chancery division and probate, Divorce and Admiralty Division.

The judicature acts effectively abolished the dual administration of justice as between the
common law courts and chancery court. Secondly the High Courts of justice were given power to
administer both equity and law concurrently together. Third, allclaims, obligations and defenses
were recognized and enforced by three divisions of the High Court of justice. Fourth the
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

b).Imputed Notice

The purpose for the doctrine of notice is to prevent buyer of superior title from setting it up
against prior earlier owners of inferior interests which affect the property. The effect of this is
that the buyer of legal estate with notice of prior equitable interests affecting the estate takes it
subject to those prior equitable interests

The doctrine of notice is one of the instances where equity looks at substance rather than form.
Notice simply means knowledge of an existing fact. This may be divided into actual,
constructive, and imputed notice

Imputed Notice;

This is notice which is either actual or constructive may be imputed to the buyer through actual
or constructive or his or her agent. Its established agency law that notice to the buyer is notice to
the principal. Such Notice will only be imputed to the buyer through his bonafided agent. In this
regard a buyer who instructed his agent to buy property at an auction sale was taken to be
affected by notice by notice of an equity which came to his knowledge in the course of
transactions

However because of hardship of this rule, it was modified in Mountfordvs Scott to the effect
that information acquired by a solicitor is one transaction cannot effect, though the doctrine of
imputed notice his principal in subsequent transactions .Thus it has been held that knowledge of
a solicitor in a previous transaction cannot be imputed to a buyer in a later transaction. The
solicitor for this purpose is not under a duty to pass his knowledge in a previous transaction to
the buyer when he later becomes his client. However, if the solicitor conspired to the detriment
of the other, then the aggrieved party will be protected by the doctrine of bona fide purchaser
without notice. In SejjakaNalimaVs Rebecca MusokeOdoki J held that the appellant was not a
bona fide purchaser without notice owing to the fact musoke and advocates who were acting as
his agents had known of the alleged fraud concerning disputed property.

There's also constructive notice under the doctrine of notice and this is defined by Walden j in
Williamson vs Brown as where a purchaser has knowledge of any fact sufficient to him on
inquiry as to the existence of some right or title in conflict with what he is about to purchase.

Actual notice on the other hand defined as the situation where the buyer of an estate has actual or
express notice of a prior interest at the time where he or she made the purchase at the time before
the purchase was completed. This can be seen in section 64 of the R.T.A a buyer of land shall
hold that land subject to all encumbrances as notified to the registrar.

In SempaMbabalivs W.K kidzaodoki J held SempaMbabalivs W.K KidzaOdoki j Held that

the defendants plea of Bonafide purchaser could not stand because they knew all along that part
of land they had purchased was for burial grounds and seller sold the land before his share was
ascertained.

c) The maxim Delay defeats equity

This maxim can as well be called the doctrine .The essence of the doctrine of lashes is that an
equitable relief will not be given if the applicant has unduly delayed in bringing the action.

The doctrine does not apply in situations which are governed by the statutes of limitation. For
instance the limitation act cap 80 prescribes periods with in which suits or actions should be
instituted in court. Six years is prescribed for actions based on contract or tort other than those
where the claim relates to personal injuries, in which case the action must be brought within
three years of the date on which the cause of action arose. Furthermore tortuous and contractual
actions against the government must be instituted within two year and three years respectively of
the date of the cause of action, while those related to recovery of land claim to the personal estate
of a deceased or under a mortgage must be instituted with in twelve years of the date on which
the claim accrued. Where fraud is alleged, there is no limitation period.

By way of illustration of the application of the doctrine of laches,in FagbemivsAluko,it was

stated that in considering the doctrine of laces the court acts on three factors. First the delay by
the plaintiff second acquiescence by the plaintiff in the delay. Third, change in the position of the
defendant. Furthermore, the doctrine will apply if the plaintiff behaves in a way which makes the
defendant alter his position in the belief that the plaintiff's claim has been abandoned or the delay
amounts to evidence of an agreement by the plaintiff to abandon his right.

Apart from the application of the doctrine to the equitable remedies of specific performance and
rescission of contracts,it also applies to the grant of letters of administration. An application for
letters of administration or challenge thereof must be made without delay; otherwise it may be
refused. Thus in Ephraim VsAsuquo,the plaintiff applied have the grant of letters of
administration set aside .it was held that since two years had passed since the grant and the
administrator had probably completed the distribution of the estate ,the doctrine of laches applied
and the plaintiff's claim could succeed.

There are three defences to invocation of the doctrine of laches. First, the plaintiff's ignorance of
the facts on which claim is based. Second the in fact or other disability of the plaintiff and finally
fraud on the part of defendant. In those circumstances delay will not be permitted to bar a claim.

d) Writs in Rem

In rem jurisdiction ("power about or against 'the thing'"[1]) is a legal term describing the power a
court may exercise over property (either real or personal) or a "status" against a person over
whom the court does not have in personam jurisdiction. Jurisdiction in rem assumes the property
or status is the primary object of the action, rather than personal liabilities not necessarily
associated with the property.

Question 2

A trust was defined in the case of knight v knight as a relationship which is recognised by equity.
This arises where a property is vested into a person or persons who is under a duty to hold for the
benefit of other persons known as the cestiusque trust. The interests of the beneficiary are usually
described in the instrument creating a trust and may be implied or imposed by law. However,
these interests can be bought or sold, given away or disposed of by will and it can cease to exist
where the legal estate in the property passes to a bona fide purchaser for value of the legal estate
without notice of the trust. It is also important to note that the subject matter must be some form
of propertyand normally this takes some form of legal ownership of land or vested funds. It may
be land, money, equitable interests and choses in action.
In the case of Knight v Knight 11, Richard Knight made a settlement on 26 th April 1729, which
passed the manors of Leintwardine and Downton, Herefordshire, including Croft Castle down
the family line. The first grandson was Payne Knight MP, an art connoisseur who rebuilt the old
manor house at Downton. Payne made a will on 3 rd June 1814, leaving the property to his
brother, Thomas Andrew Knight and in tail male to his male descendants. But if there was none,
the property was to pass to the next descendant in the direct male line of my late grandfather,
Richard Knight of Downton. However, he also stated that ‘’I trust to the liberality of my
successors to reward any others of my old servants and tenants according to their deserts, and to
their justice in continuing the estates in the male succession, according to the will of the founder
of the family, my above named grandfather’’. Thomas died intestate having been pre-deceased
by his only son and daughter who married William. Payne’s uncle Edward night had a grandson
John Knight who brought a claim alleging that Thomas had been bond to make a strict settlement
in favour of the male line of which he was the senior representative. Sir William argued that no
such trust had been created and that the property had in fact gone to Thomas absolutely, and thus
on charlotte and his family. Court held that the words of Payne’s will were not sufficiently
certain,which meant thatthere had been an absolute gift to Thomas, who had taken the property
unfettered by any trust in favour of the male line. Court formulate the three certainties. This test
specified for a valid trust to be created that is to say certainty of intention ,certainty of subject
matter and certainty of object. The matter was dismissed.

CERTAINTY OF WORDS

Equity looks at the intent rather than the form meaning that there is no special form of words in
order to create a valid trust. The intention may be gathered from the expression of the settlor and
court may give effect to such intention. Precatory words may give rise to a valid trust for
example desire, wish, request.Courts have not been consistent in holding that such words create a
valid trust. In the case of Lambe v Eames 12, the testator gave his estate to his widow to be
disposal in any way she may think best for herself and her family. By her will, she gave part of
the estate outside the family. It was held that since since she was absolutely entitled the gift was
valid. However, courts have resulted to using imperative words than the precatory words and that
a trust ca be inferred from use of precatory words if on proper construction of the will. The
intention may also be expressed or implied and under express may be public or private.

CERTAINTY OF SUBJECT MATTER

As earlier seen, the subject matter of the trust may take many forms for example chattels, interest
in land, money and choses in action. In the case of ReDiggles 13, it was indicated that uncertainty

11
(1840)3 Beav 148

12
(1871)LR.Ch.597

13
(1888)
of the subject matter will adversely affect the creation of a trust. In the case of Knight v Knight 14,
there was direction to reward the old servant and tenants according to their deserts and it was
held that the purported trust was invalid. However, the above cases may be contrasted with
situations where it is to the discretion of the trustee. Thus in Re Golay’s will trusts 15 there was a
direction to the executors to allow the beneficiary to enjoy one of my flats during her life time
and to receive any reasonable income from my other properties. It was held that there was a valid
trust because; the executors could select the flat, the words ‘’reasonable income‘’ were not
intended to allow the trustee to make a subjective decision.

CERTAINTY OF OBJECTS

This entails two aspects i.e the purpose of the gift should be identifiable with certainty and the
interest they take should be discoverable. In the case of ReVandervell’s 16, it was indicated that
in the case of future interests, the beneficiaries must be ascertainable within the period of
perpetuity. The test used in determining the ascertainment depends on trust and with a fixed trust
a trust is void unless it is possible to ascertain each and every and each every beneficiary. The
test of Lord Wilberforce is the same as one established for certainty of the objects of power in Re
Gulbenkins’s settlements17. It has been suggested that a combination of the tests for power and
discretionary trusts has destroyed what used to be the most important to reasons for
distinguishing between a trust and powers.

Question 7.

Maxims of equity are general legal principles or body of law that has developed to govern the
way in which equity applies. They are only guidelines and as such, courts do not strictly apply
them in every case. Maxims of equity are not rigid set of rules, but are rather general
principleswhich can be deviated from specific cases. It should be noted the application of these
maxims by courts of law is discretionary.

Equity regards as done that which ought to be done basically means that if someone undertakes
an obligation for the other, equity courts look on it as done and as producing the same results as
if the obligation had been actually performed. Equity courts therefore look to the acts of the
person bound by his conscience and interpret and construe them in such a way that they amount
to what ought to be done. For instance an agreement for a lease is as good as a lease. In the case
of Manzoor v Baram18, court held that specific performance is an equitable remedy grounded in
14
(1840)

15
( 1965)

16
(1974)

17
(1970)

18
(2003)
the equitable maxim that equity regards as done which ought to be done. For example if Brenda
makes Anna a trustee leaving 10 million shillings to purchase a land for the use of Vero. Anna
does not purchase land by the time, Vero dies leaving all immovable property to her son Fred
and all movable property to her daughter Jasmine. Now equity regards the purchase of land
which ought to have been made as made. Thus the money goes to Fred.

The equitable doctrine of conversion rests on the maxim that equity regards as done which ought
to be done. This doctrine becomes relevant wherever there is an obligation arising under a will,
trust, contract, court order or to purchase land. In the case of Lechmere v Lady Lechmere 19, Lord
Lechmere, by marriage articles bound himself to purchase land for the agreed sum, that would
then pass to his wife through death, Lady Lechmere. Upon his passing, it was discovered that
Lord had failed to uphold his requirement during lifetime of their marriage, by purchasing other
lands that now fell in the residue of his estate, and required a successor in title other than his son.
Through the application of this maxim, court allowed the transfer to his wife for the amount
agreed, and thus his obligations were deemed satisfied, as was expressed within the judgment.
However there are also types of circumstances in which the doctrine is operative and they are as
follows;

Where there is a binding and specifically enforceable contract for the purchase of land. In this
case, the doctrine of conversion becomes effective at the date and time of the contract expressing
the intention. The land which is the subject matter of the contract of sell is considered and treated
as personality and the purchase money is considered and treated as land. In the case of Seton v
Slade, Lord Elton stated that the effect a contract for purchase is very different at law and in
Equity. At law, the estate remains the estate of the vendor; and the money that of the vendee. It is
not so in equity. It descends to his heirs. Conversely, on the death of the purchaser before
completion, the land will devolve on his devisee who is however bound to pay the purchase
money.

Where there is an option to purchase. In the case of Lawes v Bannet, the general rule is that if the
owner of the real estate contracts to sell it and dies before the contract is executed, the estate is
converted into personality and that when a party under an agreement is given unilateral power of
making an election at future date, as to whether or not the contract should be carried out, and that
party has elected in favour of the contract there is conversion which is related back to the time
the power was granted.

Where there is a binding trust in purchase of land. Whenever there is a direction, contained in a
will, that trustees shall purchaseland, there is a trust for conversion which becomes operative
from the moment the instrument creating the trust becomes effective. There can only be a trust
for conversion where the direction to covert is imperative and definitive, J observed in Re
walker, it is possible for the legislature by a simple enactment, to make personality devolve and

19
(1735)
pass to series of persons successively for the same interests as if it had been reality. Thus equity
regards as done which ought to be done.

Where land is partnership property, such land has always been regarded in equity as personality.
In the case of Attorney General vHubbuck, the doctrine of conversion necessarily affects
partnership. This property is that which is held for partners as such for purposes of partnership
which for which is held for the purpose of carrying on adventure of the partnership and may be
wanted for that purpose and moreover, the time of winding up of partnership, the debts of the
partners will have to be paid an thus the maxim of equity regards as done which ought to be
done.

Where a court of competent jurisdiction directs a sell of reality, conversion becomes operative
from the date of the order. In the case of Rountleroy v Beebe, an absolute an absolute order for
sell may be made by a court of competent jurisdiction in an administrative action was held to
operate as conversion from the date of order and, the interests of the joint owners were nolonger
in the land but in the proceeds to be derived from the sale. Where conversion is rightfully
directed, it is for all purposes and all consequences of conversion must follow thus there is equity
in favour of any beneficiary either under a will, settlement or intestacy to take the property.

Question 6

A maxim has been defined as basic principles, general truth or rule of conduct. Therefore,
maxims of equity are the general legal principles or body of law that has developed to govern the
way in which equity applies. These are only guidelines so courts do not strictly use them in every
case. It should also be noted that the application of these maxims by the courts of law is
discretionary.

A volunteer is defined in equity as a person who has not paid consideration for the benefit of
what they have received or except to receive. For example if Natasha expects from past
conversation and friendship to receive property under any will of Alice, but Alice dies before
writing this into their will, Natasha having not made any contribution to Alice, will not be able to
seek equity’s aid. In essence equity favours a bona fide purchaser for value without notice.

This maxim is very important in restitution. Restitution developed as a series of writs called
special assumpsit, which were later additions in the courts of law, and were more flexible tools
of recovery based on equity. Restitution could provide means of recovery when people bestowed
benefits on one another according to the contracts that would be legally unenforceable.However,
pursuant to the equitable maxims, restitution does not allow a volunteer to recover.

Those successively pleading benefit from an estoppel will not be considered volunteers for the
purpose of this maxim. The main application of this maxim is where the donor purports to make
a gift to the donee, but the gift is not effective and the donor retains the legal title. Equity will not
perfect an imperfect gift. However, this maxim is trumped by the principle of unconscionability.
Thus if a donor purports to make a gift but does so ineffectively, if their conduct is held to be
unconscionable equity will impose a constructive trust in favour of the donee.

The principle that equity will not assist a volunteer captures the notion that where a person
received a benefit with no consideration, equity will not impose an obligation to ensure that the
benefit is received. This leads to the context that equity will not perfect an imperfect gift. This
seems to indicate a requirement that all three elements of a valid gift be met.

The general rule in equity is that it cannot perfect an imperfect giftas it was demonstrated in the
case of Milroy v Lord20 where it was held that equity will not assist a volunteer and so equitywill
not enforce gratuitous promisesor perfect an imperfect gift. However, there are in the facts
exceptions to maxim as demonstrate in the caser of Re Rose21 where it was established that
equity will perfect an imperfect gift if it is established that the donor did all that he was expected
of him to transfer legal title, yet the transfer was delayed by the routine operation of law.

However, the decision in Pennington has been criticised by many for extending the Re
Roseprinciple too far it was argued by Hudson that, ‘’Pennington v Waine 22 is so evidently
wrong since there is not even such a concatenation of circumstances as there in Re Rose and had
not been completion of all the formalities necessary for the transferor to have performed’’.

A gift will not be perfected by interpreting the donor of the gift as trustee of the property (Milroy
v Lord). Equally, an incompletely constituted trust will not be made effective to aid a volunteer.
Equity has attempted to remain steadfast and will not perfect and an imperfect transfer of
property. However, the firmness of this principle has been significantly softened by subsequent
judicial pronouncements and a range of exceptions to the rule.

The traditional approach to imperfect gifts was enunciated in the case of Milroy v Lord. An
uncle wishing to provide for his niece, gave shares certificates to Lord to hold on trust for her.
However, the physical passing of the certificates did not pass k legal to Lord. This would only be
occasioned where the certificates had been sent to the uncle’s bank and reissued in Lord’s name.
This requirement never satisfied. Thus trust was never constituted and the shares reverted to the
uncle’s estate on his death.it was held that the settlor must have done everything which was
necessary to transfer the property.

Re Rose and Onwards towards a subjective approach. In the case of Re Rose, Rose completed
company share transfer and forms and sent his share certificates to the claimant, who duly passed
them on to the company to register the claimant as the new shareholders. The material legal issue
centred on when the beneficial interests in the shares transferred to the claimant.

20
(1861)

21
(1952)

22
(2002)
However, there are exceptions to the maxims and are as follows;

Donatio Mortis Causa; this is a gift made inter vivid which is conditional and it also takes effect
upon the death of the donor. This could be distinguished from a normal intervivos gift under
which title immediately passes to the transferee or a testamentary gift which takes effect under
provisions of a properly executed will.The gift must have been in contemplation though
necessarily in exception of death. This can be seen in the case of Woordard v Woordard 23, where
the donor was admitted due to leukemia and prior to his death asked the son to keep his car. It
was held that it was donatio mortis causa and there was no need for the donor to reacquire the car
and then redeliver it again.

Non application to the will; under this exception, the executor is under a duty to carry to
provisions of the will in favour of the beneficiaries who are volunteers. The property vests by
death of the testatorin the executor on trust to execute the disposition of the will.

The rule in strong vs bird ; where the donor intends to transfer ownership in personal property to
another and maintains that intention until death but fails to make an effective transfer during his
lifetime, if, on the death of the donor the property is invested in the intended donee as the
donor’s executor then the gift is complete. In the case of strong v bird it was held that the
vestingof the property in the executor at the testator’s death completes the imperfect gift that was
made in the life time. And also if the donor had the intention to give beneficial interests to the
executor is sufficient to countervail the equity of the beneficiary under the will.

Equitable Estoppels; there are certain situations where equity estops or prevents the owner who
has made an imperfect gift of some estate or interests in it from asserting his title against the
donee. So the donee’s equity is said to where the expenditure in respect of the land in the
mistaken belief that he has or will acquire an interest in it and the owner knowing of the mistake
stood by and allowed the expenditure to be incurred.

Question 5.

Equity in simple terms means whatever is just or right in man being with fellow man. Equity also
possesses a technical meaning that may be divided into two categories, that is the general juristic
concept and the technical juridical concept all of which supplement each other and affect the
administration of justice24
The general juristic sense mainly denotes moral administration of justice by judicial
bodies taking into account special facts of a particular case that is to say. humane and liberal

23
(1991)

24
Equity and Trusts in Uganda by D.J Bakibinga
interpretation of the law. This is incorporated inArticle 126(2) (e) of the 1995 Constitution of the
Republic of Uganda.25This was manifested in the case of Stephen Mabosi V URA26
In Uganda the Equity was received by the 1902 and 191I Orders in Council which made Equity
and Common Law to be applied concurrently, and where there was conflict between the two with
reference to the same subject matter, the rules of equity would prevail.
The judicature statute cap 13section 14(3) gives strength to this principle as follows; the
applied law, the common law and doctrines of equity shall be in force in so far as the
circumstances of Uganda and its people permit.
The magistrates' court act cap 16 similarly facilitates the application of common law doctrines as
well as equity under sec 11(1)27as follows; in every civil case or matter before a magistrate's
court law and equity shall be administered concurrently. It follows that equity is applicable in
Uganda thereby giving relevance to its doctrines in Uganda's legal scene. It is of vital importance
to note that courts of law in applying Equity take into consideration the maxims of Equity which
are the basis of the various doctrines of equity that include the following.

DOCTRINE OF NOTICE
The concept of Notice refers to the knowledge of an existing fact; According to Professor.
Bakibinga28 the rationale of the doctrine is to prevent a buyer of superior title from setting it up
against earlier owners of inferior interests which affect the property. The effect of this is that the
buyer of the legal estate with notice of the prior equitable interests affecting the estate takes it
subject to prior equitable interests in this regard; “Equity looks at the substance rather than the
form” Notice can be Actual, constructive or imputed. And it is based on the maxim "he who
comes to equity must come with clean hands".

ACTUAL NOTICE; This is a situation where the buyer of an estate has actual or
express notice of a prior interest at the time when he or she made the purchase or at the time
before the purchase was completed .
In regard to the relevance of the doctrine of notice .The Registration of Titles Act29 Section 64
encompasses the doctrine and it provides that a buyer of land shall hold that land subject to such
encumbrances as notified to the registrar. In SempaMbabali v w k kizzaOdoki J held that the
defendants plea of bona fide purchaser could not stand because they knew all along that that part
of land they had purchased was for burial grounds and also the seller had sold them the land
25
Article 126(2) (e) provides that substantive justice shall be administered without undue regard to
technicalities.
26
Stephen Mabosi v URA
27
Magistrates court act cap 16 sec 11(1)
28
Supra.1
29
Cap 230
before his share of the land had been ascertained. This therefore means that his hands were not
clean.

CONSTRUCTIVE NOTICE; defined by Salden J in Williamson v Brown30; where a

purchaser has knowledge of any fact sufficient to put him in inquiry as to the existence of some
right or title in conflict with that he is about to purchase he is presumed either to have made the
inquiry and ascertained the extent of such prior right or to have made the inquiry and ascertained
the extent of such right or to have been guilty of a degree of negligence equally fatal to his claim.
The prior interest in land should always be put into consideration InU.P.T.C V Lutaaya31.
KarokoraJ.S.Cheld thus"A proprietor takes land subject to the interests of any tenant in the land
in possession even if he or she had no actual notice of the tenant".

IMPUTED NOTICE;notice which is neither actual nor constructive may be imputed to

the buyer through actual notice to the agent. It's established in agency law that that notice to an
agent is notice to the principal. In this regard, a buyer who instructed his agent to buy property at
an auction sale was taken to be affected by notice of an equity which came to his notice during
the course of the transaction. In SejjakaNalima v Rebecca Musoke32Odoki j a held that the
appellant was not bona fide purchaser without notice owing to the fact that Musoke and co
advocates who were acting as her agents had known of the alleged fraud concerning the disputed
property

DOCTRINE OF ELECTION
One of the most important doctrines of Equity is the doctrine of Election which is to the effect
that a person cannot claim benefit and reject burden under the same instrument. This meaning is
derived from the case of Codrington -v- Codringtonper Lord Cairns that a person cannot accept
a benefit under a deed or will without the same time conforming to all its provisions.

Election is based on the maxim that “he who seeks Equity must do Equity”. Equity is either
express implied from the electors conduct and it therefore if X gives a gift of his property to Y
and in the same instrument makes a gift of Y’s property to Z then Y will be put to his Election. Y
may elect to take under the instrument and take over X’s property or he may elect against the
instrument.

30
Salden L.J in Williamson-v-Brown Stated that constructive notice refers to knowledge of any fact
sufficient to put a purchaser on inquiry as to the existence of some right or title in conflict with that he is
about to purchase.
31
Uganda Posts and Telecommunications-v- A.K.M Lutaaya CA No36 of 1995 (un reported)
32
C.A no 12 of 1985 (supreme court of Uganda)
The essentials of election were espoused in Re Edwards.33 Lord Jenkins L.J stated that an
election should consist of an intention on the part of the testator to dispose of certain property,
that the property should not actually be the testators or testatrix own property the property the
testator purports to dispose of should be alienable by the owner, for if its inalienable, the owner
cannot comply with the wishes of the donor. The property given is available and finally that a
benefit should be given by the will to the true owner of the property.

In Uganda the relevance of the doctrine of election is manifest in The Succession Act which has
a number of provisions that incorporate the doctrine of election ranging from Section 167 to
Section 178, Section 16734andprovides that a person whose property has been disposed of by the
testator has a right to elect. Hence these provisions illustrate the fact that the doctrine of election
is incorporated into Uganda’s legal system.
Section 64(2)35 states that "…the land which is included in any certificate of title or registered
instrument shall be deemed to be subject to the reservations, exceptions, covenants conditions
and powers if any contained in the grant of the land and to any rights subsisting under any
adverse possession of the land and to any public rights of way and to any easements acquired by
enjoyment…."
It is noteworthy however, that though the doctrine is reflected in Uganda’s legal frame work, it
has been of little practical importance as no significant cases have been decided relating to
Election

DOCTRINE OF SATISFACTION.
Also in consideration is the doctrine of Satisfaction defined as “the donation of a thing with the
intention that it is to be taken wholly or in part in extinguishment of some prior claim of the
donee.” per Lord Romilly in Chichester-v-Coventry36 thuswhere W is under an obligation to
give X something and W gives X something else, there may be a presumption that W’s gift was
made with the intention of satisfying his obligation to X. This doctrine is based on the maxim
“equity imputes an intention to fulfill an obligation”

33
Re Edwards. [1958] Ch.168C.A
34
Section 167 stipulates that where a person by his will professes to dispose of something of which he or
she has no right to dispose the person to whom the thing belongs has a right to elect.
35
Section 64(2) succession Act
36
Lord Chichester-v-Coventry (1867) L.R2’H.L.71,95
Satisfaction takes several forms first in consideration is satisfaction of debts by legacies 37, the
general rule is that equity imputes to the donor an intention to give the legacy in satisfaction of
the debt. Thus in the case of Talbot v Duke of Shrewsbury 38 Lord Trevor stated that "if one
being indebted to another a sum of money does by his will give him a sum of money as great as
or greater than the debt without taking any notice at all of the debt, this shall never the less be in
satisfaction of the debt, so that he shall not take both the debt and legacy.
In this case the legatee has a choice to either to take the legacy and forego the debt or to forego
the legacy and insist on his contracted debt. However it should be noted that there are
circumstances in which intention to fulfill an obligation (satisfaction) may not be presumed,
hence limiting the application of the doctrine in Uganda. For example where the debt was
contracted after the will, where the legacy is less than the debt where the legacy and the debt are
of different nature and where the legacy is not as beneficial to the creditor as the debt. Also sec
164 of the succession Act has limited the application of this doctrine as far as this aspect of
satisfaction is concerned in Uganda.
"where a debtor bequeaths a legacy to his creditors and it does not appear from the will that
the legacy was is meant as satisfaction of the debt , the creditor shall be entitled to both the as
well as to the amount of the debt"
Secondly Satisfaction of portion debts by legacies 39the general rule is that equity leans against
double portions; hence equity will provide for the satisfaction of portion debts by legacies to
ensure equal division of the parents property among the children 40hence where the legacy is
equal to the promised portion or exceeds it satisfaction of the portion debt is presumed. In
Uganda however this is limited under Section 165 of the succession Act "where a father…does
not intimate by the will that the legacy is meant as a satisfaction of the portion , the child shall be
entitled to receive the legacy as well as the portion ". Under satisfaction of a portion debt by a
portion Lord Selborne41 stated "where a father…gives a legacy and later makes a gift in the
child's favour, there is a presumption that the gift was either wholly or in part in a substitute for
or an ademption of the legacy. " lastly is the satisfaction of legacies by legacies.
However the doctrine will only apply if the legacy is in a sum as great as or greater than the debt
or if there is a direction to pay debts42 (Satisfaction of debts by legacies)

37
Re Hawes where there was covenant by the testator made upon the dissolution of marriage to pay his
wife 3 a week ,charged upon specific assets and by his will, he gave her an annuity of 3 a week charged
on the whole of his estate. It was held that the testamentary annuity was satisfaction of the covenant.
38
(1714) precch 394
39
Boyd-v-Boyd (1867) L.R.4.Eq.305- paying of an admission fee to the Inns of Court.
40
Cotton C.J in Montoya v Earl of Sand wich (18860 32 CHD 525
41
RE Pollock (1885) 28 CHD 552
42
Bradshaw-v-Huish (1889) 43 Ch.D.260.
The doctrine of satisfaction has been incorporated in Uganda’s legal scene and can be traced in
Sections 164 to 166 of the Succession Act. Section 164 provides that where a debtor bequeaths a
legacy to his or her creditor, and it does not appear from the will that the legacy is meant as
satisfaction of the debt the creditor shall be entitled to the legacy as well as well as to the amount
of the debt. This means that a testator must show his intention to extinguish the debt which is in
conformity with the holding in Hammond –v-Smith43. The Judicature Act section 14(2)
(b)44Magistrates Court Act section 1145also provide for the application of the doctrine of
Satisfaction in Uganda’s legal scene. Its practicability is however very insignificant.

DOCTRINE OF PERFOMANCE
Performance is yet another doctrine of Equity which is to the effect that where a person
covenants to perform a particular act and later performs an act “which may be converted toa
completion of this covenant”, it shall be supposed that he meant to complete it per Kenyon MR,
in Sowden v Sowden.46 This doctrine is based on the maxim that “Equity imputes an intention to
fulfill an obligation”47
Performance may take the form of a covenant to purchase and settle land, or a covenant to leave
money; it also applies to covenants in marriage settlements to lay out money, on the purchase of
land to be held on trust of the settlement. The doctrine also applies to situations where there is a
covenant to pay money to trustees to be used by them for the purchase of land. In this case, the
covenanter will simply be regarded as performing the covenant by buying land himself. The
doctrine also applies where the covenant is to settle property of a certain value.

The doctrine of performance in our legal scene today has a great effect in succession matters;
wills are construed literally through the wording as well as the circumstances surrounding the
making. The other factors that reflect performance in succession matters are the onerous
bequests, contingent bequests and conditional bequests contained in Section 109-123 of the
succession Act. . However the fact that there is limited case law shows that the doctrine is of
little practical relevance in Uganda's legal scene.

CONCLUSION

43
(1804) 3Beav. 452
44
Supra.3
45
Cap.16

46
1785) 1 Cox Eq.Cas.165, 166, per Kenyon. M.R.
47
Lord Lechmere-v-Lady Lechmere(1733)3PWMs 211;25E.R .673’(1735) Cas Temp Talb.80
In sum, though the doctrines of equity are encapsulated in various legislations in Uganda, most
especially the succession act, it is generally agreed that they are more idealistic than practical in
Uganda's legal scene. This is due to prevalence of customs, illiteracy and the fact that many
people die intestate. It would be trite to say that the complex nature of these doctrines has limited
their relevance to Uganda since our legal system is not as developed as in England where they
are said to have originated.
It would therefore be worthwhile to educate the society on matters pertaining to the legal
principles underlying these doctrines and also revise the laws that have them embedded within
them so as to make them clearer and more understandable. In so doing with time the abstract
nature of these principles can be illuminated upon and made practicable in Uganda's legal scene.
Generally, decided cases incorporating the doctrines of Equity are hard to come by in Uganda.
However this does not mean that the doctrines are practically of no relevance having highlighted
some practical relevancies above.

Question 4
A contract is a common law personal obligation which arises from agreement between the
relevant parties, supported by consideration on the side of the promise. On the other hand a trust
is an equitable proprietary relation which may arise independently of agreement or the provisions
of consideration.
If Susan wants Anna to provide certain benefits to Gloria, Susan can set up a contract for the
benefit of Gloria. Or Susan could transfer property to Anna to hold on trust for Gloria. A contract
can be renegotiated between the parties and is therefore suitable when it is not intended to create
a permanent and irrevocable rights in favour of Gloria, but once a trust is created it is
irrevocable.
However, the distinction between a trust and a contract may be difficult to draw hence the
statement that there is no distinction between trusts and contract. It is the chancellor’s lust for
power, and nothing more to the development of trust as a distinct category. The argument in
support and against are discussed concurrently below;

Trust and contract. A contract is not a trust because it creates personal, common law
obligations between the contracting parties; a contract does not, per se, create proprietary
interests or impose fiduciary obligations. In Associated Alloys Pty Ltd v ACN 48, the High Court
noted that ‘the origins and nature of contract and trust are, of course, quite different. There is,
however, no dichotomy between the two. The contracted relationship provides one of the most
common bases for the establishment or implication and for the definition of a trust’. Contractual
obligations are enforceable under common law, whilst obligations arising under a trust are
enforceable in the equitable jurisdiction. Under the doctrine of privity in contract law, third
parties to the contract cannot enforce contractual terms. However, under a trust, a third party

48
001 452 106 Pty Ltd (2000)
beneficiary holds an equitable interest in the trust property and is entitled to enforce the terms of
the trust.

In some situations, a contract can result in the imposition of fiduciary obligations and even a
trust relationship; it will depend upon the intention of the parties. For example, if a person paying
over money intends the recipient to hold that money for the benefit of a third party, then the
money will vest in the recipient, who may then be under an equitable obligation to look after the
money for the benefit of the third party. Equity may impose a trust, so that the contracting party
is bound in equity to look after the money, and the third party acquires an equitable proprietary
interest in the money. Alternatively, if the person paying over the property allows the person
receiving the property to use the money as their own, and to be under an obligation to repay the
money at a future date with no specific obligation towards a third party, it is likely that a
contractual rather than a trust relationship will arise.

If, for example, A agrees to pay B a sum of money with the common intention that B should
invest the money for a period of one year, and at the end of the year should return the money to
Atogether with a half share of the profits earned by the investment, B may hold the money on
trust for A, or B may hold the money under a loan contract with A. In determining whether the
relationship is one of trust or contract, consideration must be given to the intention of the parties
and an examination of the express terms and the nature and circumstances of the case is
necessary. If a trust is created in the example, then A will be able to trace his money into B’s
hands or into any property B may have purchased with that money. If a debt contract exists,
Awill be limited to common law contractual remedies for the recovery of the money.

The functional distinction between trust and contract was directly raised in the decision of
Barclays Bank Ltd v Quistclose Investments Ltd 49. On the facts of that case, a loan contract was
held to constitute a trust relationship because of its particular characteristics. Rolls Razor Pty Ltd
had declared a dividend to its shareholders but lacked the necessary liquid funds to make the
payments. As the declaration of dividends constituted a debt, it was necessary for the payments
to be made. Rolls Razor Ltd then borrowed money from Quistclose Investments Ltd in order to
pay the dividends. The arrangement between Quistclose and Rolls Razor was that the borrowed
money was only to be used to pay dividends, and it was placed into a separate account with
Barclays Bank for this purpose. Rolls Razor went bankrupt before any dividends could be paid.
Barclays wanted to use the funds in the separate account to set off debts it was owed by Rolls
Razor. Quistclose argued that it could not do this because the loan contract created a trust and the
moneys were held by the bank with notice of this trust. Quistclose argued that the loan moneys
had been paid for a specific purpose and, until this specific purpose was performed, the moneys
were to be held under an express trust. Once the purpose of the loan was fulfilled and the
dividends were paid, the relationship would revert to a normal loan contract. If the purpose could

49
(1970)
not be performed, however, and the express trust failed, it was argued that the money should be
held under a resulting trust back to Quistclose. The bank was affected by this trust because it
received the deposit of the money with notice that it was to be paid for a specific purpose.

The House of Lords held in favour of Quistclose Investments. Lord Wilberforce considered the
interplay between contractual rights under common law and rights arising from trust principles in
equity. He felt that, where the primary purpose for the loan could not be carried out, a secondary
purpose could be implied and equity would impose a trust to protect this secondary purpose. The
flexible interplay between common law and equity helped the court give true effect to the
intentions of the parties. The ultimate conclusion favoured the lender because, as a beneficiary
under a trust, Quistclose could recover the loan money in full despite the bankruptcy of Rolls
Razor. If the company had remained solvent and the dividends had been paid, Quistclose would
only have been able to recover the money pursuant to its rights arising under the debt contract.

The decision in Quistclose raised a number of important issues concerning the creation of trust
and its relationship with contract. The decision may be summarised as follows:
• A loan contract for a specific purpose may result in the creation of an express trust where the
lender makes it apparent that the loaned money is only to be used in a particular manner. The
trust will exist until the purpose is carried out. The borrower will act as trustee for this purpose
and the beneficiaries will be the subject of the purpose; on the facts of Quistclose, this meant that
the shareholders of Rolls Razor were the beneficiaries.1 Where the borrower places the money in
a bank account and the bank has notice of the specific purpose for which the money is to be used,
the bank holds those moneys as constructive trustee.
• Once the purpose of the loan has been performed, the relationship between the lender and
borrower will revert to that of contract. If the purpose is not carried out, for whatever reason, a
secondary purpose may be imputed to the lender. If the lender intended the money to be returned.
Note that the loan contract in Quistclose favoured specifically identifiable beneficiaries, namely,
the shareholders. If the purpose does not identify the beneficiaries the trust may be unenforceable
for not complying with certainty requirements.in circumstances where the specific purpose for
which it was lent cannot be carried out, a secondary trust may be inferred. This secondary trust
would operate as a resulting trust. The secondary resulting trust will only arise where it can be
proven to be either expressly or impliedly incorporated into the initial contractual agreement.

The decision in Quistclose was supported by the English decision of Re Kayford Ltd 50, where
moneys received for the future supply of goods were paid into a special account. It was
determined that such moneys were to be held upon trust for the benefit of the customers and
would only pass to the company once the goods were supplied. Hence, when the company went

50
(1975)
into liquidation, the moneys were not treated as a part of the general assets and were held on trust
for the benefit of the clients who had paid them in.

The decision in Quistclose was approved by O’Loughlin J, in the Federal Court of Australia, in
Peter Cox Investments Pty Ltd v International Air Transport Association 51; his Honour noted the
‘in depth analysis’ of the Quistclose decision by Gummow J in Re Australian Elizabethan
Theatre Trust; Lord v Commonwealth Bank of Australia 52, where Gummow J emphasised that
the question as to the existence of any express trust will always have to be answered by reference
to intention, and the relevant intention is to be inferred from the language employed by the
parties in question. O’Loughlin J concluded that Quistclose stands as authority for the
proposition that an apparent debtor-creditor relationship can incorporate a trust relationship when
such a trust relationship accords with the mutual intentions of the parties, and that this approach
represents good law in Australia.

In both Quistclose and Re Kayford the contract involved was specifically designed to benefit a
third party. Third party contracts are more amenable to the application of trust principles than
ordinary two party transactions. This is because the third party has no recourse to contractual
rights as a result of the doctrine of privity and equity regards the trust as a protective device.
Where a trust is imposed, the third party will automatically acquire enforceable equitable
proprietary rights. This is not to suggest that a third party contract will automatically invoke the
equitable jurisdiction; it must be proven that the parties intended to confer equitable ownership
upon the beneficiary and equitable obligations upon the contracting party (Bahr v Nicolay (No 2)
(1988)).

In some third party contracts, courts have preferred to extend the doctrine of privity rather than
artificially impose trust obligations. In Trident v McNiece 53, it was held that a third party to an
insurance contract could sue on a policy of liability insurance provided he was specified or
referred to within that contract. The majority of the High Court (Mason CJ, Wilson and
TooheyJJ) held that when an insurer issues a liability insurance policy identifying the assured in
terms that evidence an intention on the part of the insurer and assured that the policy will also
cover third parties dealing with the assured, and third parties have acted in reliance of such an
agreement, the third parties may sue the insurer on the policy despite the lack of privity. Whilst
the decision in Trident has broadened the application of contractual principles, trust obligations
may still be a preferable option as they confer a proprietary rather than a personal right of action
(Bahr v Nicolay (No 2)(1988)).

51
(1999)

52
(1991)

53
(1987)
Courts have been more reluctant to impose trust obligations over other types of contract unless
clearly warranted in the circumstances. For example, in the decision of Lister v Stubbs 54, the
court refused to impose a constructive trust over money received by an employer through secret
bribes during the course of his employment. The court felt that imposing a trust relationship
would confer an unfair advantage upon one creditor against others in bankruptcy proceedings,
and there was nothing to justify such priority on the facts. The debt contract arose between an
employee and an employer, and there was no issue of the money being paid over to benefit a
third party; the employee was held to be contractually liable to return large sums of money he
had received as secret commissions during his employment, but there were no special
circumstances, apart from fraud, warranting the transformation of the contract into a trust
obligation. The decision in Lister v Stubbs has, however, been academically criticised (Meagher
RP, Gummow WMC and Lehane JRF and judicially disapproved (Attorney-General (Hong
Kong) v Reid (1994)).

The House of Lords has, however, imposed trust obligations in circumstances where contractual
rights were unenforceable, although the wisdom of such an approach has been recently
reassessed. In Sinclair v Brougham55, the House of Lords held that contracts which were entered
into without any prior knowledge that they were ultra vires could create trust obligations. On the
facts, it was held that contracts entered into by depositors when depositing money with a
building society were ultra vires. The unenforceability of the contract meant that the depositors
were unable to recover their money pursuant to contractual actions. The patent unfairness of this
led the court to conclude that the building society held the deposited amounts under trust
obligations. Viscount Haldane and Lord Atkinson felt that a resulting trust arose once the
contracts were proven to be ultra vires and unenforceable. Lord Parker held that the building
society actually received the money under an express trust, and the depositors could trace their
beneficial interest in the money even if the contract was unenforceable.

In the recent House of Lords decision, WestdeutscheLandesbankGirozentrale v Council of the

London Borough of Islington56, the ambit of Sinclair v Brougham was reconsidered. In that
decision, the court was careful not to ‘illegitimately distort’ (Lord Goff) equitable trust
principles. Lord Goff ultimately restricted the application of Sinclair v Brougham to its facts,
preferring to provide relief to the bank seeking the restitutionary claim through the application of
compound interest. Lord Browne-Wilkinson rejected the application of an express or resulting
trust to void contracts for a number of reasons. Primarily, he felt that it would accord unjust
priority upon the lender and may adversely affect third parties not coming within the bona
fidepurchaser for value principle.

54
(1890)

55
(1914)

56
(1996)
 As Lord Browne-Wilkinson notes:
I can see no moral or legal justification for giving such priority to the right of [lender] to obtain
restitution over third parties who have themselves not been enriched, in any real sense, at [the
lender’s] expense, and indeed have had no dealings with [the lender]. [The lender] paid over his
money and transferred property under a supposedly valid contract. If the contract had been valid
he would have had purely personal rights against [borrower]. Why should he be better off
because the contract is void?

Care must be taken in considering whether or not failed or ineffective contractual arrangements
should create valid and enforceable trust obligations. The trust has proprietary implications
which extend beyond immediate remedial needs and can adversely affect the priority status of
third party interest holders. The trust should not be superimposed upon a contractual relationship
without careful consideration and a clear delineation of the special circumstances justifying its
application. To do otherwise would distort the legitimate distinction between trust and contract
and the jurisdictional boundaries of common law and equity.

Question 3

Brief facts
Issues
Law applicable
Resolutions

Brief Facts
Theresa who died in 2002, settled a trust of 20,000 pounds cash on the trustees for Bill and
Babara. Barry was also given a gift of 10,000 ponds. Tricia in 2007, argued her fellow trustees to
invest a private company which will be a profitable investment and secure with the consent of
Bill and Babara. However, it is now April 2016, Bill and Babara have issued proceedings against
the trustees.

Issues

1. Whether there is breach of contract

2. Whether there are any remedies
3. Whether there are any defences
Law Applicable

1. Succession Act
2. Limitation Act
3. Case law
 Resolution

ISSUE 1

Whether there is breach of a trust

A breach refers to where one of the parties does not fulfil his or her obligation. Whereas a trust is
a relationship which is recognised by equity. So a breach of trust is where a trustee does not fulfil
his or her obligation towards the beneficiaries so they carry the liability for the loss. However, in
relation to our fact, Tricia, Tracy and Barry who were the trustees breached the trust and they
were liable for the loss since trust instrument prohibited investment in private companies but
they went ahead with the investment in the company and also inducing the beneficiaries that it
was a secure one so that they can get the consent.

ISSUE 2

Whether there are any remedies

Compensation in settlement trust; this is a remedy to the beneficiary and it is issued where the
trustee is in breach and has the duty to carry out compensation to beneficiaries. However in
relation to our facts, Tricia, Tracy and Barry are to compensate Bill and Babara for the loss.

ISSUE 2

Whether there are any defences

Statutory time bar; Under section 23 &24 57stupilates out the time limit in respect of actions for
an account and time limit for actions to enforce judgments and that is to say an action brought
under the expiry of six year shall not be enforceable. However in relation to our facts, this had
taken nine years where by the time had already expired so court could not help them thus a
defence to the trustees.

Laches; this is where one is aware of what is happening but does not take a step to stop it that is
to say sitting on your rights. In the case of Re sharpe 58, the liquidator of an insolvency company
brought an action against one of the former directors of the company, seeking to recover moneys
which had been paid to the shareholders of the company in the years prior to its insolvency.
Court held that the directors were to be treated as being the trustees, accordingly the defendant
could not raise the statute limitations as a bar to the action. Neither would the action be bared as

57
Limitation Act 1980

58
(1892)1 Ch 154, Court of Apeal
a stale demand. However in relation to our facts, Bill and Babarawere aware of what was going
on but still sat on their rights thus a defence to the trustees.

Beneficiary instigation of the breach or consent to the breach; this is where the plaintiff consents
to cause of harm. In the case of Re Somerset v Earl Poulett 59 where court held that the
beneficiary consented to the investments within the terms of the trust and trustees could be liable
in full. In relation to our facts, the trustees first obtained the consent of Bill and Babara hence a
defence to the trustees.

Question 1

A trust is defined as a relationship which is recognised by equity. This arises where a property is
vested into a person known as the trustees who are under a legal duty to hold for the benefit of
other persons. A fixed trust is one where the settlor specified what everyone will get.Where a
fixed interest trust exists, the objects must be identified with sufficient clarity to satisfy what is
known as the ‘list certainty’ rule. Under this rule, a fixed interest trust will only be valid if the
beneficiaries taking under the trust are set out with sufficient clarity for a court to be able to draw
up a complete list (Inland Revenue Commissioners v Broadway Cottages Trust)60.

The rationale of the list certainty rule is that, if all of the beneficiaries cannot be listed, then a
trustee will be unaware for whom he may be acting, and a court will be unaware who holds and
can enforce the equitable beneficial interest in the trust. If the trust is semantically unclear from
the wording in the trust, the disposition will be invalid. For example;Asettlor transfers property
to ‘Aon trust for the benefit of the settlors’ friends’. This is a fixed interest trust because there is
no discretion in the determination of the objects. As a fixed interest trust it is likely that it would
be invalid, for it does not satisfy the list certainty requirement: the term ‘friends’ is semantically
unclear.

The mere fact that it may be practically difficult to discover all the beneficiaries under a fixed
interest trust will not necessarily mean that list certainty is not satisfied. Evidential uncertainty
will not invalidate a fixed interest trust (McPhail v Doultonper Lord Wilberforce) 61. Furthermore,
it is not necessary for all of the objects of a fixed interest trust to be specifically identifiable at

59
(1894)

60
(1950)

61
(1971)
the date when the trust comes into effect, provided it is clear who the objects will be. Hence, a
fixed interest trust for unborn children may be properly established (Routledge v Dorril)62.

Under discretionary trust,Thecertainty rules for discretionary trusts differ from those applicable
to fixed interest trusts. The main reason for this is that, under a discretionary trust, the
beneficiaries are not yet determined and the trustee has a discretion to make a selection. Bearing
this in mind, the only certainty requirement for such trusts will be a clear and concise description
of the class of potential beneficiaries. The test has come to be known as ‘criterion certainty’. A
discretionary trust must satisfy the criterion certainty test; this test is applicable whether the
trustee holds a bare power or a trust power.

The nature of the criterion certainty test was considered in Re Gulbenkian’s Settlement 63. In that
case, the issue was whether the trust set up by Mr Gulbenkian was valid. Mr Gulbenkian
conferred on his trustees the power to appoint as beneficiaries ‘all or any one or more or wife,
children or remoter issue for the time being in existence whether minors or adults and any person
or persons in whose house or apartments or in whose company care or control Gulbenkian may
from time to time be residing or employed’.

Lord Upjohn came to the conclusion that, in such a discretionary trust, the trustees must be able
to say with certainty who comes within the range of beneficiaries and who is without. The
criterion certainty test was adopted. The criterion must be clear and comprehensible. Any
semantic uncertainty would invalidate the trust. The rationale given by the court for stringently
enforcing the criterion certainty test was, at least in the case of a bare power, the protection of the
takers in default. Astrict criterion certainty test would allow courts to watch over any
determinations made by the trustee and thereby protect takers in default from an improper
exercise of power.

.The decision of Re Baden’s Deed Trusts64 provides a good example of the application of the
criterion certainty test. The doubtful words in the trust instrument were held to be ‘dependants’
and ‘relatives’.

62
(1794)

63
(1968)

64
(no 2) (1973)
 Sachs LJ held that relatives are all those persons from whom it is possible to trace legal descent
from a common ancestor. The widest meaning for relative did not produce uncertainty and it was
satisfactory as a criterion for a discretionary trust. Dependant was held to mean a ‘dependant’ for
the ordinary necessities of life for a person of the applicant’s class and position. Dependant was
also held to satisfy criterion certainty

Megaw LJ agreed with Sachs LJ. He felt that the test was satisfied if it could be said that a
substantial number of applicants were relatives and were therefore within the class. This
judgment can, however, be criticised, as it seems to shift away from the purpose of the criterion
certainty test which is to determine with certainty whether anyone is within the class (not just a
substantial number of applicants).

Stamp LJ had no difficulty with dependants because he felt it had a clear criterion, but did have
problems with ‘relatives’. He felt that, if it was construed as referring to all descendants of a
common ancestor it would not satisfy criterion certainty, whereas if it was construed as ‘nearest
blood relations’, it would satisfy the test. He concluded that relatives would only satisfy the test
if the narrow construction of its meaning were adopted.

The criterion certainty test has not yet been authoritatively adopted in Australia. However, it has
been approved in a number of decisions. In Horan v James65, power to appoint to anyone other
than the testator’s wife and two sons in a will was held to satisfy the criterion certainty test, but
was struck down on the ground that it constituted an improper delegation of testamentary power.
In McCraken v Attorney General for Victoria 66, however, it was held that a direction in a will to
divide certain pecuniary legacies ‘between such Christian organisations and societies in such a
manner as my said trustee shall in his absolute discretion think fit’ was too indefinite to satisfy
the criterion certainty test.

However, in relation to our facts, the shs.100,000,000 which is to be divided between the sons,
with the largest share going to the eldest son, 10 % of the shares in K Tech Ltd and five of the
paintings to be held on trust for the brother Harry, $60,000 to K Tech Ltd on the sole condition
that the company uses the money to buy new equipment, whatever remains is to be held to my
65
(1982)

66
(1995)sss
wife are fixed trusts, intention of the settlor is present, the subject matter and the object. So I
would advise Dick that the above are the fixed trusts.

Shs.90,000,000 to the executor in belief that he will provide a reasonableincome for the favourite
nephews and $1 million to be distributed as the trustee may think fit amongst the relatives and
oldest friends, these are the discretionary trusts where it is him give them at his discretion so I
would advise him to do the same.

What will happen to the $60,000 advanced to K Tech Ltd if the company is wound up without
having spent the money on equipment?

Dick who is the trustee will be liable for breach of trust since it is a fixed trust in the will and he
has no powers on fixed trusts

QUESTION TWO

Brief facts

Chas and Dave are trustee of omega trust and trust fund is worth 500 million and beneficiaries
are martin and Jeremy for life, remainder to Gloria, trust is currently heavily invested in Neptune
ltd, cha decides to buy some share in Neptune ltd with his own money, Gloria is opposed to the
investment in Neptune because the business involved the production and sale of tobacco, martin
and Jeremy want the trust to buy a house, Chas is persuaded to make a modest investment with
some of the trust money in a new housing development.

Issues

1. Whether there is breach of the fiduciary duty.

2. Whether there is liability for co-trustee.
3. Whether there are any remedies available for the breach.

Resolutions

1. Whether there is breach of the fiduciary duty.

 Fiduciary duty is a duty of almost good faith that is owed by the trustee to the beneficiary
and the settlor, and fro the above facts Chas and Dave are both trustees and this implies
that they owe a duty of almost good faith which connects to the safeguard of the trust
property and failure to do so, this implies dishonest and the trustee shall be held liable.
Chas bought share in the Neptune ltd that heavily was invested with the trust fund with
his own money and subsequent became the director and was paid 500millions as a
director and didn’t mention it his co- trustee.
There is breach of trust under the following, circumstances, where the co-trustee invest in
the trust property and there are likely chances of conflict of interest between the personal
property and the trust property and the trustee shall be held liable for any damage or loss
to the trust property and there shall be liable because of failure to disclose relevant
information about the above argument Chas is liable for the breach of fiduciary duty.
2. Whether there is liability for co-trustee
There may be little difficult in ascertain whether the co-trustee is liable for the liable of
trust of a fellow trustee committed during the course of the trusteeship for example where
the trustee leaves the matters in the hands of fellow trustee without inquiry and from the
above facts Dave failed to inquiry into the matters of Chas becoming the director of
Neptune ltd, the position of the law was illustrated in the case of Underwood v Stevens. It
was held that the trustee was liable for the acts of co-trustee.
3. Whether Gloria has the right to oppose the investment
From the above facts Gloria has an interest in the in the trust property of which is a
remainder but Gloria can not oppose the investment of the trust fund for the mere fact
that she is a vehement anti-smoker and she thinks that the investment in tobacco
production is immoral.
4. Whether there are any remedies available for the breach of the trust.
Personal action is the remedy that is available for martin and Jeremy plus Gloria that can
taken an action against the co-trustees for the breach of the trust, personal action is an
action that is taken by the parties to a trust agreement against those that is in breach for
example misappropriation of the trust property , this was however illustrated in the case
of Re Dip lock were the next of kin took an action against the trustee and the charitable
 organization in recovery of the trust fund that had been appropriated and then court held
that the next of kin was entitled to the trust fund.

QUESTION THREE

Compare and contrast a trust with the following

a)bailment

b) Contract

c) Agency

d) Power of appointment

A trust arises where property is vested in a person or persons known as trustees which those
trustees are under a duty to hold for the benefit of other people known as beneficiaries or cestuis
que trust.

The interests of Beneficiaries are normally described in the instrument creating the trust. It
should be noted that these may be implied or Imposed by the law. The Beneficiary interest are
also always proprietary that is can be bought /sold, given away or disposed by the will.

Trusteeship thus involves onerous obligations where the donor retains no responsibility for the
property once the gift has been made.

A trust is defined in Hague Convention on law of trusts, this has been incorporated into English
law by U.K Recognition and a trust is defined as the legal relationships created inter vivos or on
death by a person, the settlor when assets have been placed under the control of a trustee for the
benefit of a beneficiary or for a specified purpose.

A trust has various characteristics like trustee has the power and duty and he is accountable, title
of trust assets stand in the name of trustee or in the name of any other trustee, assets constitute a
separate fund and are not part of the trustees own estate.

Trust and Agency.

Agency is the contractual arrangement express or implied, written or verbal where one person
may act on behalf of another and bind that other as if he or she acted personally. Agency arises
where a person called the agent has expressed or implied authority to act on behalf of another
called the principal and he consents to do so

An agent is normally regarded as an accounting fiduciary party and he binds the principal vis-à-
vis third parties. Royal Bruness Airlines vs Tan where a travel agent was appointed to sell
tickets for the plaintiff Airline on condition that all monies received by the agent were to be held
for the airline on trust.

The similarities between Trust and agency.

1. Relationship of trustee and beneficiary is fiduciary in nature and as well that of agent and
principal is normally fiduciary

2. Both must act personally and should not delay at the powers

3. Neither of them makes un authorized profits from their office

The Differences between trust and agency are discussed below;

1.The trustee in exercise of his office will contract as principal and cannot bind the beneficiaries
unless that have constituted him both trustee and agent binds his principal so long as he acts on
the principal's authority on apparent or ostensible that he is deemed to have .

2. Although the trustee has a right of recoup an indemnity against the beneficiaries for any
property incurred expenses and creditors may subrogate those rights in certain circumstances
there's therefore no direct contractual link between the beneficiary and 3rd parties comparable to
link between the principal and third parties.

3. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. Whereas a
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallot vs Wilson
However if the beneficiary is sui Juris un-animus and together entitled may demand that the trust
property be distributed and consequently that the trust be brought to an end.

4. The principal in agency gives binding directions to his agent whereas beneficiaries cannot
control the exercise of the trustee's direction seen in Re-brock

5. The central distinction between agency and trust is in relation to property. An agent does not
per se hold any property for his principal. Many agents do not obtain items of property and those
who do so acquire only possession but not the other hand there can be no trust unless title to the
trust property vests in the trustee or in another party on behalf of the trustee.

It should further be elaborated that trust and agency do over lap this of the reason that trust can
be created under which a trustee undertakes a contractual obligation to act on behalf of the
beneficiary and an agent may become a trustee for instance he acquired title to property to be
held for the benefit of his principal.

It's argued that Agent becomes trustee for his principal if he obtains title to the property for the
principals benefit, but this isn't easy to gauge in practice especially if what's transferred is a mere
chattel as it was in the case of Cohen vs Cohen court held that she succeeded in all the claims
that court finding that the husband stood in fiduciary relationship with regard to the wife's
property in the circumstances and was therefore a trustee for her benefit. Court followed the
decision in Burdick vs Garrick 900DM where Lord Justice Giffard stated

"In respect of attorneys who had been authorized and buy property and had attempted to set up
the statute of limitations as defense "there was very special power of attorney under which the
agents were authorized to receive and invest to buy real estate otherwise to deal with property but
under no circumstance could the money be called theirs".

Trust and Bailment

A bailment arises where an owner of property gives permission to another person to possess it. A
bailment is a delivery of personal chattels to bailee subject to a condition that they be returned to the
bailor or be dealt with as the Bailor directs when the purpose of the bailment has been carried
out.
Suppose you’re traveling abroad for a year you may have a painting which you do not want to
leave in the house you therefore hand it over to a friend to look after it in your absence and that
amounts to bailment.

This will depend on the location of your title, your right to exclusive possession of painting.

If you vested it in a friend then they will a trustee of that right for you. if you have however kept
your right in yourself, handing it over only the possession of painting the transactions will be one
of bailment not trust.

The difference between the two is crucial a number of reasons;

One is in breach of instructions your friend sells the painting to an innocent purchaser it will
matter a great deal whether you created bailment or trust. If the friend was a bailee then the
purchaser will not acquire at the good against you and will be able to recover the paintings value
from purchase in action in tort law of conversion.

The basic rule is memo dat quod habet that means that no one gives who possesses not, but if
your friend was a trustee, the position of the purchaser would be different. For now your friend
has the right in question and capable of passing it on to third parties. you of course have rights
under trust but such rights destroyed when subject matter of the trust comes into the hands of an
innocent purchaser of value .

The position of bailment is thus governed by common law, the position of bailed is similar to
that of a trustee in that both are entrusted with another's property.

The Differences between Bailment and a Trust;

1. A bailee obtains only possession and what is referred to as special property in the goods while
trustee takes title to the trust property.

2. Bailment is a common law notion worked out in proceedings for common law relief such as
actions of conversion, dentine, and breach of contract where as the trust relationships are purely
equitable.
In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Dentine is where the defeated is unlawfully with holding the plaintiff's goods with no
reason.

3. Bailment only applies to personal chattels that are capable of delivery where as a trust may
arise in respect of real or personal property and whether tangible or in tangible.

4. A bailment is enforced by the bailor who is party to the arrangement while generally the trust
is enforced by the beneficiary who is not party to the trust instrument.

In bailment there's no transfer of property from the bailer to the bailed. Bailment duties are
dependent on the rules of common law and not equity.

The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.

Bailment is restricted to chattels but a trust may exist to all types of property

Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owner’s loose rights for example estoppels however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.

Contracts.

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promisee, on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

Re Cook,indeed there can be no hard and fast lines between contract and trust because contract
is a source of rights while trust is a way of holding rights, indeed many rights held in a trust are
born of contract.

A contract is a common law personal obligation resulting from an agreement between parties on
the other hand a trust is an equitable relation which can rise independently of an agreement.
However the situation when a distinction between the two is hard to draw that is to say
Settlement and covenants to settle.

Where property is vested in trustees on a settlement, it was held upon a trust on settlement.
However if the property has not yet been transferred to trustees but it's simply subject to a
consent to settle. The beneficiaries will only be able to enforce consent if they have given
consideration based on the principle equity will not assist a volunteer.

Power of appointment.

Appointment often has it's everyday meaning, it's common talk of the appointment of a trustee
for example, how ever appointment also has a technical trust law meaning either

The act of appointing that is to say giving an asset from the trust to a beneficiary (usually where
there's some choice in a discretionary trust

The trustee's right to do this, where it exists is called power of appointment is given someone
other than the trustee such as the settlor, the protector or a beneficiary.

This refers to a power that is conferred upon a donee to dispose of the donor’s property by
nominating and selecting

QUSTION 5

The history traced shows clearly that equity was essentially an addendum to common law. it
provided a distinct set if rules, those were not meant to supersede the common law. However
equity is not a self –sufficient system, it was developed to assist the rigors of the law but not to
destroy. Critically examine the accuracy of the statement while drawing reference to the
evolution and development of equity with the perspective of the Uganda legal system.

England equity developed to mitigate the rigidity of the application of the common law and to
provide reliefs or remedies which the common law could not avail to litigant. Equity became
popularized by the court of chancery which was headed by the Lord Chancellor and to which
many litigants resorted to after being frustrated by the common law courts in terms of rigid
procedure and availability of suitable remedies.
 Equity acts as a shield toward common law and for that very reason, equity and common
law were administered concurrently by the supreme court of judicature as a result or by
virtue of the judicature act of 1873-1875.
The recommendation of the royal commission were enacted as the judicature acts 1873 to
1875, these acts abolished all the then existing supreme courts and in their place set up a
supreme of judicature consisting of the high court of justice and the court of appeal and
the high court of justice and probate divorce and admiralty division , that abolished dual
administration of justice which implies that equity was developed to assist the rigors of
the law but not to destroy it.
Equity was essentially an addendum to common law can be traced from case law that
brings a clearly perception of the proposition that equity was an addendum to common
law and provided a distinct set of rules . For example the cases like earl of oxford, Walsh
v Lonsdale

Equity in the Uganda Legal System

The dual administration of law and equity in England before the Judicature Acts 1873-1875 of
Britain does not exist in the Uganda system.

By the Uganda Orders-in-Council 1902 and 1911, which received English law into Uganda, law
and equity were to be administration concurrently and where there was conflict or variance
between rules of equity and rules of the common law with reference to the same subject matter,
the rules of equity would prevail This provision is flow reflected in Section 14(2) and (4) of the
Judicature Act which governs the law to be applied by the High Court arid Superior Courts of
Judicature arid Section 11(1)(3) of the Magistrates’ Courts Act, Cap.16 which deals with the law
to be applied by Magistrates’ Courts.

It is now apposite to examine how cowls have resolved the conflict between the application of
rules of equity and rules of the common law to issues before them.

Liability of an Executor for Assets

Be the judicature act of 1873-1875common law rule was that an executor was liable for the loss
of his testator’s assets once he took possession of them. It was immaterial whether the loss was
accidental or arose from willful default. However, in equity, an executor could only be liable for
the loss of the testator’s assets if there was willful default on his or her part. These conflicting
positions at law and equity were considered in Job V job

Thus Jessel M.R (applying Section 25(11) of the Judicature Act 1873) stated:

The rule at law and equity now is that an executor or administrator is in the position of a
gratuitous bailee who cannot be charged with the loss of his testator’s assets without willful
default. In essence the rule of equity prevailed over the common law by rule by virtue of the
judicature Act 1873.

Agreement for lease

The expression, “conflict or variance” in section 25(11) of the judicature Act 1873 was
considered in the case of Walsh V. Lonsdale In that case, the landlord (defendant) agreed in
writing to grant the tenant (plaintiff) a lease of a mill for seven (7) years. The agreement
provided that the rent was payable in advance on demand There of the mill common law. There
was no grant of lease by deed as required by the common law. The plaintiff took possession of
the mill and paid rent quarterly in arrears. Subsequently, the landlord, based on the agreement,
demanded one year’s rent in advance.

The tenant failed to pay and the landlord detrained. The tenant sued to damages for illegal
distress. The action failed on the ground that although the distress was illegal at common law
because a seven year lease had not been granted and a yearly tenancy which arose from the
tenant’s entry into possession did not provide for rent payment in advance, in equity the
agreement for a lease was as good as a lease. Consequently, the tenant was liable to pay a year’s
rent in advance.

It is significant that in this case, the conflict between common law and equity as to be the nature
of the agreement for a lease was an agreement was resolved in favor of the equitable principle
that an agreement for a lease is as good as a lease. Such an agreement can be decreed to
specifically perform by a court exercising its equitable jurisdiction thereby converting a written
lease into a formal lease
Joint Undertaking

At common law, if two or more people became sureties of a debt and one of them became
bankrupt, the solvent sureties were not liable for the bankrupt surety’s share of the liability for
the debt. However, the position at equity is that solvent sureties are liable for the share of the
insolvent surety in addition to their own share of liability. The conflicting principles
Were considered in Lowe y. Dixonwhere it was held that the equitable rule superseded the
Common law one in line with the Judicature Act.

Variation of Deed

In Berry y. Berry.Under a deed of separation. a husband covenanted to pay his wife an

allowance. Later the parties concluded a written agreement which was not under seal, reducing
the allowance. The wife sued the husband on the original deed claiming arrears of the allowance
agreed upon. The action failed. While accepting the plaintiff’s contention that at common law a
covenant in a deed could only be varied by another deed in equity a simple contract varying a
deed is a good defense to an action based on the deed. Furthermore In view of the Judicature Act,
Section 25(11) the equitable principle prevailed.

QUESTION SIX

In the year 1615 as reported in English report, mich. 13 jac.1[1615]1 chan rep 5vol.21 pp485-9-
16, a great disagreement emerged between lord chief justice coke, the head of the common law
courts and chancellor of the court of chancery, lord ellesmere over the exercise of the respective
jurisdiction.

During the sixteenth century, the rivalry between the Common Law Courts and the Chancery
became intensive. This was largely because of the Chancery’s Power to issue the Common
injunction to restrain the enforcement of common law courts judgments. The decisive stage of
the conflict arose when Coke became Chief Justice of the King’s
Bench division of the High Court. Coke was totally opposed to Chancery jurisdiction. He
claimed that the Common Law Courts possessed the power to issue a writ of prohibition
against Chancery jurisdiction for any interference with the judgments or decisions of the
common law courts.
The conflict between the Common Law Courts and the Chancery Court crystallized in
the Earl of Oxford’s Case. In that case, the then Lord Chancellor, Ellesmere contended
that he had power to set aside common law judgments on grounds of equity and good conscience
Chief Justice Coke of the Common Law Courts insisted that the Chancery has
no right either by statute or by any law of the land, to set aside common Law judgment
and that he would issue a writ of prohibition against Chancery interference with common
law judgments. The controversy came before King James I, who, after considering legal
advice from several lawyers including Bacon (a future Lord Chancellor), decided in favor
of Chancery jurisdiCt101 From that time, equity rules became supreme over the common law
rules in the English Legal System

b) How was the agreement resolve and by who

The earl of oxford case alleged that the judgment of coke has been obtained fraudulently. the
lord chancellor through the court of canary then issued a common injunction on the basis of an
unconscious able advantage which had developed in favor of the Magdalene college which the
earl of oxford rights to adequate compensation for loss of title resulting from the enforcement of
the common law order against the earl of oxford for branching the statue

The two jurisdictions they became estranged and situation ensued with no comprise on either
which eventually led to the impasses being referred to the attorney general sir Francis bacon who
petitioned the king. The attorney general acting on the authority of king James 1 upheld the use
of the common injunction issued by the lord chancellor and conclude the in the vent of all
conflict between the two jurisdictions of common law and equity , equity would prevail, thus the
agreement was resolved by king James

Effect of King James’s Decision

King James’s decision had a twofold effect. First the chancery court’s jurisdiction became more
extensive and attracted a lot of litigants. As a result, the court became overburdened due to poor
staffing organization and a complex and inefficient procedure in justice. Second, officials of the
court became corrupt and incompetent of justice was, thereby. Prevented owing to the delays.
Inevitably, there wet reform of the Chancery jurisdiction and procedure.

c) What major modification and reforms in the law and practice followed?

The major modifications and reforms in the law and practice as result of King James ruling were
minor’s attempts at reform to rectify that shortcoming are as discussed below
First common law, courts applied rules of equity to cases brought before them whenever those
rules conflicted or differed from common law rules. The aim here was to prevent separate
proceedings, one in equity and the other at common law from being started in respect of the same
of action. This would save litigants time and expense.

Second, the Common Lait; procedure Acts of 1852, 1854 and 1860 gave the common law courts
power to exercise certain jurisdiction which were originally reserved for Chancery. For instance,
the common law courts could order discovery of documents and interrogation in certain cases.
They were also empowered to grant an injunction and other equitable reliefs. Similarly the
Chancery Amendment Act, 1852, gave the Courts of Chancery power to exercise certain
common law powers. For instance, in an equity suit a relevant common law matter could be
decided by the Chancery Court. Before the Act, such matters’ have been referred to the Common
Law Courts. Additionally the Court of Chancery also takes evidence orally and in open court as
opposed to presenting it by bill and written ten forms. Furthermore, Lord Cairn’s Act, 1858
empowered the Court in cases of contracts and torts to award damages in addition to or in lieu of
injunction specific performance or in other equitable remedy.

The above Acts did not achieve very much in dealing with the shortcomings in the dual system
of administering justice. The Royal Commission on the Administration of justice therefore,
recommended the complete fusion of the administration of justice by means of the consolidation
of all superior courts of law and equity into one Supreme Court possessing the jurisdiction of all
the courts so consolidated.

Judicature Acts 1873-1875

The recommendations of the Royal Commission were enacted as the judicature Acts 1873 to
1875. These Acts abolished all the existing superior courts and in their place set up a supreme
court of appeal The High Court of Judicature consisting of the high court of justice and the court
of appeal. The high court of justice was consisting of three divisions the King’s Bench Division.

The Judicature Acts effectively abolished the dual administration of justice as between the
Common Law Courts and the chancery court. Second the High Courts of Justice were given
power to administer both equity and law concurrently together. Third, all claims, obligations, and
defenses were recognized and enforced by all the three divisions of the high court of justice.
Forth, the common injunction exercised by the chancery court was abolished since it was no
longer necessary.

QUESTION 7

With the aid of the decided cases mention and discuss the expectations to the equitable maxims
that ‘’equity will not perfect an imperfect gift’’ and ‘’equity will not assist a volunteer’’

The general rule in equity is that it cannot ‘perfect and imperfect’ gift as was demonstrated in the
case of Milroy v Lord where it was held that “equity will not assist a volunteer and so equity will
not enforce gratuitous promises or perfect and imperfect gift.” Nevertheless, there are in fact
exceptions to this maxim as demonstrated in the case of Re Rosewhere it was established that
equity will in fact be capable of perfecting an imperfect gift if it is established that the donor had
done all that can be expected of him to transfer the legal title, yet the transfer was in fact delayed
by the routine operation of the law. As such, in circumstances such as these the gift will be
capable of being effective. Thus, it is evident that such maxim is capable of being lifted in
certain instances and it will in fact depend entirely upon the facts of the case and the
circumstances in order to establish whether equity will be permitted to ‘perfect an imperfect gift
as discussed below

Every effort rule

This is an exception to the general rule that a transfer that fails at law will not take effect in
equity, if the donor has done everything he can do to transfer but its effectiveness depends on
some act of a third party, the gift may not necessarily fail. In the case of re rose(1952) the donor
executed a share transform and handed it together with the share certificate to the done. Although
the transfer would not be complete until the share had been registered by the company in the
name of the done, the gift was upheld. The donor had no more to do to perfect the gift.

Fortuitous vesting

Is that order where there is a purported gift to a done, and the done later happens to obtain legal
title to the property in the capacity of executor under the donor’s will the gift will then be perfect
re Stewart (1908) there is dubious authority to support that the rule applies equally where the
done is appointed an administrator on the intestacy of the donor.

Strong v bird

Concerned a deceased creditor who had appointed her debtor as an executor under will. the facts
involved the release of a 1000 pounds debt/executor and turned upon the presumed intention of
the deceased . even though there was no written release of the debt the release was effective . two
conditions are present :

 The intention to forgive the debt / make the gift must continue until death.
 There must be the intention to make an immediate release of the debt/ gift of the
property. According, In Re Freeland (1952), the promise to give a car at a future date fell
outside the rule.

Re Rall’s Will Trusts (1964), a testator left his estate on trust for his wife for life and then for his
daughter. Subsequently, the daughter entered into a covenant to transfer existing and after
acquired property to the trustees of her marriage trustees. The daughter however predeceased the
mother. On the mother’s death the trust property reverted back to the father’s estate and title
vested in the sole executor under the father’s will. The executor was, by coincidence, also the
remaining trustee under the daughter’s marriage settlement. The fact that the trustee had title
vested in him as executor perfected the otherwise imperfect trust.

Proprietary estoppels

There is situation where equity prevents an owner of land who has made an imperfect gift of
some estate or interest in it from asserting his title against the done. The donee’s equity is said to
exist where he incurs expenditure in respect of the land in the mistaken belief that he has or will
acquire an interest in it and the owner knowing of the mistake stood by and allowed the
expenditure to be incurred. it is respectfully submitted that this may not be a true exception to
the maxim that equity will not assist a volunteer since, the done by incurring detriment could be
said to have supplied consideration in the same way as a promise under a contract is accepted to
do

Donatio Mortis causa

A donation mortis causa is a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor .This could be distinguished from a normal intervolve gift
under which title immediately passed to the transferee

It was discussed in the case of Woodward 1991. The donor was hospitalized with Leukamie,
prior to his death he told his son to keep his car. The trial judge held that it was donation mortis
causa and there was no need for the donor to reacquire the car and then redeliver it again.

No application to the will.

The executor is under an obligation to carry out the provisions of a will in favor of beneficiaries
who are volunteers. The property vests by the death of the testator in the executor on trust to
execute the disposition of the will.

QUESTION EIGHTT

Discuss the remedies available for a breach of trust, paying particular attention to only the
equitable remedies of injunction and tracing.

Discuss the extent of liability of co trustees for breach of trust by one of them and the instances
when the trustees may be protected from liabilities.

Injunction

Is a court order that is granted by a court of competent jurisdiction to restrain an act from being
done or continued? An injunction may be granted against an individual, class or organization
restraining the unlawful acts of an unidentified people. a person may seek an injunction to
protect his existing private rights. Public rights’ are usually protected by injunctions obtained by
the attorney general. A local authority may also seek an injunction to protect public rights in the
locality or to enforce planning control.

Forms of injunctions

Each type of injunction has different functions which include

 Prohibitory injunction
This is an injunction that forbids a party to do or to continue to an unlawful act for example to
build above land in breach of restrictive covenants

 Mandatory injunctions

This is an injunction which orders that an act be undone for example to demolished a building
which has been built in breach of a restrictive covenant hence a mandatory injunction when
granted is likely to undo a wrongful act rather than to order the defendant to carry out a positive
obligation, this because of the difficulties of supervision. Craves ham bc v British railway board
1978, mandatory injunctions are uncommon.

 Final injunction

These injunctions are granted in final settlement of a dispute between the parties and are issued
at the incompletion of the court processing’s.

 Freezing injunction

This is formerly known as me rave injunction that prevent the defendant from taking his assets
out of the jurisdiction of the court before the completion of the final litigation

 Interim injunction

This is also known as interlocutory injunction are made during the course of legal processing
continue only until the eventual trial of the action. The purpose is to restrain the defendant
immediately without waiting for a full court hearing

Tracing at common law

A proprietary remedy is one which entitles a claimant to treat specific property thereof as his
own. The common law did not develop a real action in respect of chattels which entitled a
plaintiff to specific recovery thereof. The courts at common law recognized the owner of the
chattel but there was no action at common law of paying damages of returning the chattel.

Discretion to award specific recovery was in court. The issue thus arose if the right of the
plaintiff was limited in case of a specific chattel, should this right change when defendant
changed one chattel to another?. The answer is the chattel can be followed so long as it's nature
could be ascertained as such. Right only ceases when the means of ascertainment fail.

Tracing at equity

Equity has developed more sophisticated methods of tracing.

1) Straight case

This is one where there has been no mixing of trust funds with the trustees own money
consequently, if the trustee has sold trust property, the beneficiary may take the proceeds of sale
have been used to buy other property bought or hold it as security for the amount of money used
in purchase. This is subject to the condition that claims in equity are invalid against a bona fide
purchaser for value without notice of the trust.

2) Mixed Funds

In the hands of trustees

The situation worsens when trustee has mixed trust funds with his own or after mixing there are
additional dealings with fund .The burden of proof is on the trustee to prove initially that part of
the mixed fund is his own.In Re Tolley's W.T Thomas j Stated that...

If a trustee amalgamated trust property with his own, his beneficiary will be entitled to every
position of the blended property which the trustee cannot prove to be his own.

Consequently, if the compositions of the mixed fund are established at the time of the original
mixing, the problem of identification is of determining how to account for the reductions in the
fund by payment to increase in the fund by payment there in.

This can be seen in the case of Re Hallett's Estate;Hallet was a solicitor, died after having
mixed his own money certain funds from two trusts. The other trust had his client Mrs Cotteril as
beneficiary. At his death, the funds were insufficient to pay his personal debts and to meet trust
claims. Three issues arose

1 whether Mrs Cotteril not being a beneficiary of trust of which Hallet was a trustee was entitled
to tracing remedy on ground of her fiduciary relationship
2. assuming she was how to allocate the payments from the funds as between Hallet and
claimants

3. How to allocate payments as between claimants themselves.

It was held that Mrs Coterril was entitled to trace and payments out must be treated as Payments
for Hallets own money.

Proffesor Maudsley has critcised the application of tracing Rule in Re Hallets as having been too
precise in the sense that it could lead to a wrong result if earlier payment out was in favor of an
un authorized investment which prospered and the remainder disappeared. He suggests that the
correct rule should be that a beneficiary may claim a charge upon any part of trust fund which he
can identify as having been part of the trust fund.

Secondly he argues whether it's fair to apply the tracing remedy when the defendant is insolvent
and argues that this is a situation where it's necessary to ascertain whether the beneficiary who is
tracing should have priority over other creditors. Consequently the beneficiary will have to
compete with other creditors of the trustee, proffessor Maudsley states that this is unfair to
creditors in the Sense that they suffer when the trustee pays out money to a mixed fund.

In Rosco Ltd Vs Winder it was held that later payments into the mixed fund can not be treated
as repayments of the money unless the trustee shows an intention to do so.

In the Hands of Fiduciaries or Beneficiaries

Re Hallet's case shows that tracing remedy is available as between beneficiaries, In Sinclair vs
Brougham the Birkbeck society operated a banking business which was held to be ultra vires.in
the winding up competition arose between the claims of share holders and customers. The main
issue was whether customers had the right to trace into general assets of the society. it was held
that there was a fiduciary relationship between the customers and directors. The directors had
mixed the funds and customers had a right to trace into the hands of the society

In Re Dip lock testator left his residuary estate “such charitable institution or institutions or other
institutions or other charitable or benevolent objects or objects in England as the executors
should select it was held by the house of Lords that the words included non charitable as well
charitable objects. Consequently the gift failed for uncertainty.

In The hands of third parties

The right to trace property into the hands of a third party to which it has been passed by trustee
will depend on the nature of the equitable interest in the property. Consequently, where a trustee
has transferred trust property in breach of trust of transferee will be bound by the trust except in
the following circumstances. First when he establishes that he has legal title to property, second
that he is a bonafide purchaser for valuable consideration with out notice that the transactions
were breach of trust. In Pilicher vs Rawlins James L.J stated that "....a notice is an absolute, un
qualified, in answerable defense, and un answerable plea to the jurisdiction of this court....."

Where the recipient is a volunteer and has no notice, the rights of beneficiary to trace against him
will be equal to that of the recipients own creditors

For this purpose if an innocent volunteer mixes trust money with his own, the rule in Clayton’s
case neither applies nor Re Hallets case.

e) Critique of Right to trace.

Professor Maudsley has indicated that the right to trace should not be restricted to a proprietary
interest which is equitable but should also be available to a beneficial legal owner.This is inspire
of the suggestion in Re Diplock and Re Hallets Estate that the equitable remedy of tracing should
only be available where a fiduciary relationship can be setabliahed .secondly the right to trace
should not be limited to situations where a proprietary interest exists. The breach of fidiciary
duty should be sufficient to make available the tracing remedy.

The general rule is that a trustee can never be liable for the acts of his co trustees as such but in
certain circumstances he will be liable where a breach of trust is committed by his co trustees; if
he himself has been in some way at fault. The following ate circumstances that a trustee shall be
liable for the breach of trust of co trustees

i. Where the trustee leaves the matter in the hands of co trustee without inquiry
ii. Where he stands by while a breach of trust which he is aware is being committed
 iii. Where he allows trust fund to remain in the sole cannot of his co trustees
iv. Where on becoming aware of a breach of trust committed of contemplate by his co trust,
he takes no steps to redress

These rules sometimes operate inequitably in the case of passive breaches of trust, thus in Under
wood v Stevens, a trustee in good faith allowed trust funds to remain in the hand of his co trustee
and when he made inquiries of his co trustee as to certain transactions with those funds co trustee
gave false information. The trustee was liable for the breach

However to certain the trustee shall be held liable for his own acts: however there will usually be
little difficulty in ascertaining whether a breach of trust has been committed by a trustee during
his transaction

On appointment a trustee shall take certain steps, he should instruct the trust instrument ascertain
the terms of the trust and to see whether any notice has been endorsed on it. He should ensure
that all the trust property is transferred into his name jointly with the other trustees for may be
liable if he allows the property to remain in the hands of another

When a trustee retires from a trust, in principle he remains liable for the breaches committed
during his trust trusteeship and his asset will be held liable if he is dead

Instances when a trustee maybe protected from liability. Even if an action for breach of trust can
prima facie be brought against a trustee, it may never the less be possible for him to claim total
or partial relief, he may be able to do so by the following

1. Provision in the trust instrument

It has already been seen that a trust instrument can authorize a large number of acts which a
trustee would not be able to do if the trustee takes a advantage of such a provision he is of course
not guilty of breach of trust however even if a trustee is guilty of a breach of trust the provisions
of hr trust instruments nay never the late be effective to release from liability, for example
clauses of common use.

The effect of such clause has recently had to be considered by the court of Appeal in Armitage V
Nurse. Where the question was “no trustee shall be liable for any loss or damage which happen
to fund or any part therefore or the income therefore at anytime or from any cause whatever
unless such loss or damage caused by his actual fraud.

2. Applications to the court

Before an action is actually carried out, the court has power over wide field to sanction acts even
if they would otherwise be breach of trust; where no such application has been made prior to the
act being carried out however Court has a discretion is grant relief .If it appears to the court that a
trustee is or may personally liable for any breach of trust but has acted honestly and reasonably
and ought fairly to be executed for the breach of trust or for omitting to obtain the directions of
the court in the matter in which he committed such breach, then the court may relieve him either
wholly or partially for persona liable . In Re Ray , the applicant was both executor and trustee of
a will of a testator who left over 20000 with apparent liability of only 100,but be for advertising
for claims, the executor paid the widow a legacy of 300 and only afterwards learned of liabilities
which exceeded the value of the estate. It was held that executor was relieved from liability

3. Act of the beneficiaries

A beneficiary who has once agreed to or concurred in breach of trust cannot afterwards sue the
trustee in respect of it this only applies if there conditions are satisfied

 That the beneficiary was of full and sound mind at the time when he agreed or concurred.
 That he had full knowledge of all relevant facts and of the legal effect of his agreement or
concurrence.
 That he was an entirely free agent and was not under any undue influence

A good example of the working rule in Nail V punter in that case trustees held stock upon trust
for a married woman for life, with remainder to such person as she would by will
appoint .During her lifetime, the woman’s husband persuaded the trustee to sell the stock and
pay him the proceeds, The wife then brought an action against the trustee but before it was
concluded, deed. The husband having become, the beneficiary by virtue of exercise of power of
appointment could not succeed because he had been apart to the breach.

4. Indemnities obtainable from beneficiaries

It has already been shown that, subject to the conditions just mentioned above beneficiary who
with full knowledge concurs ie breach of trust cannot afterward sue his trustees. This does not
however affect the right of other beneficiaries to take action and if such action is taken the
trustee may be able to claim an indemnity out of the beneficial interest of the beneficiary who
has concurred in the breach of trust in the tenant for life and the trustee repairs the breach at the
behest of the remainder man, he is entitled to the income which the tenant for life would
otherwise have received during the remainder of his lifetime.

QUESTION ONE

Luke and Robert were brothers and purchased a house together with each providing 50% of the
purchase price but Luke doesn’t want the house to be in his name because of access to
government scheme for ex-servicemen but the house was registered in Roberts name .Luke
decided to give Owen 50% of his right to receive interest on a large loan to a colleague named
jack smith and UGX500000 of yearly net income from his shares in Uganda steel property
Ltd ;also all the rights and moneys owned as equitable mortgage with clary Bruce
ownen,5,000,000 to my brother on conditions he will made aware of, residue state to sister Lisa
for her lifetime and if it tails , it shall become property of my nephew Ethan, Lachlan ,Bryce,
illegitimate son Terry be given 5,000,000 gift

a)whether Luke’s estate have a claim on the house .

Under common law in regards with joint ownership, the estate of Luke shall not have a claim on
the house, this is because under joint tenancy there are certain conditions that ought to be in
place for example, there is right of survivorship, this implies that incase of death of death of one
joint owner, the property shall resume to another person and also under the unity of interest, the
interest of both owners should be registered for example Freehold or Leasehold.

Luke’s estate can successful have claim on the house under tenancy-in-common ,because there is
no right of survivorship and parties own their shares distinctly , and in case of death of one party
his or her interest shall assume to his estate

b) Whether the gift to Owen effective or do they form part of Luke’s estate.
Gift to Owen were effective and did not form part of Luke’s estate because of the maxim that
Equity will not perfect an imperfect gift however there are exceptions to this maxim and with
due regard to this maxim, the gifts to Owen shall be effective .For example the Every Effort Rule
which is an exception to the general rule that that transfer that fails at law will not take effect in
equity. If the donor has done everything he can do to transfer the gift but its effectiveness
depends on some act of a third party the gift may not necessarily fail

In Re Rose, the donor executed a share transfer from and handed it, together with the share
certificate so the done. Although the transfer would not be complete until the share had been
registered by the company in the name of the done., the gift was upheld .The donor had no more
to do to perfect the gift and from the above facts, Luke gave Owen all the rights and money owed
him as equitable mortgage, Owens’s life, the first Ug 500,000 of the yearly net income.

c) Of what kind is the disposition to Lisa and is it effective

Its secret trust we are testamentary trust that usually rise in a circumstance where the settlor
leaves a legacy in his will on the secret understanding that the legatee will hold that property on
trust for a third party. The legacy may either appear to be absolute or disclose the trust without
revealing its object.

From the above facts, Luke gave Lisa residuary estate at absolute discretion, give such residue to
anyone she thinks fit, burning herself and Robert and in case she fails during her life. It shall
become the property of Ethan, Lachlan and Bryce. In the case of Ottaway V Norman (1972) the
testator agreed with his housekeeper that she in turn, left to the testator’s son and daughter-in-law
on her own death. She agreed to this and the testator left the bungalow to her absolutely on her
death, however, she left the property to another .The court held that the son and daughter-in-law
were entitled to the property and the disposition was effective to Lisa.

d) Whether the gift to Terry is effective

The gift to Terry was effective, this is because of the beneficial principle, under this we shall
look at the certainty of objects of which the beneficiaries must be certain and ascertainable, this
also means that were the beneficiaries are capriousness, the trust shall fail and from the above
facts Terry is Luke’s illegitimate son in Iraq. Therefore the gift was effective
QUESTION FOUR

With the aid of relevant authorities discusses in details

A) Rationale of the doctrine of notice
Doctrine of notice
The concept of notice refers to the knowledge of an existing fact. The rationale of the doctrine
is to prevent a buyer of superior title from setting it up against earlier owners of inferior
interests which affect the property. The effect of this is that the buyer of the legal estate with
notice of the prior equitable interests affecting the estate takes it subject to prior equitable
interests in this regard; “Equity looks at the substance rather than the form” Notice can be
Actual, constructive or imputed. And it is based on the maxim "he who comes to equity must
come with clean hands".
b) Categories of the doctrine of notice
Actual notice; This is a situation where the buyer of an estate has actual or express notice of a
prior interest at the time when he or she made the purchase or at the time before the purchase
was completed . In regard to the relevance of the doctrine of notice .The Registration of Titles
Act Section 64 encompasses the doctrine and it provides that a buyer of land shall hold that
land subject to such encumbrances as notified to the registrar. In Sempa Mbabali v w k kizza
Odoki J held that the defendants plea of bona fid purchaser could not stand because they knew
all along that that part of land they had purchased was for burial grounds and also the seller
had sold them the land before his share of the land had been ascertained. This therefore means
that his hands were not clean.

Constructive notice; defined by Salden j in Williamson v Brown; where a purchaser has

knowledge of any fact sufficient to put him in inquiry as to the existence of some right or title in
conflict with that he is about to purchase he is presumed either to have made the inquiry and
ascertained the extent of such prior right or to have made the inquiry and ascertained the
extent of such right or to have been guilty of a degree of negligence equally fatal to his claim.
The prior interest in land should always be put into consideration in U.P.T.C V Lutaaya.
Karokora j.s.c held thus “A proprietor takes land subject to the interests of any tenant in the
land in possession even if he or she had no actual notice of the tenant".

Imputed notice; notice which is neither actual nor constructive may be imputed to the buyer
through actual notice to the agent. It's established in agency law that that notice to an agent is
notice to the principal. In this regard, a buyer who instructed his agent to buy property at an
auction sale was taken to be affected by notice of an equity which came to his notice during the
course of the transaction. In sejjaka nalima v Rebecca Musoke Odoki j a held that the appellant
was not bona fide purchaser without notice owing to the fact that Musoke and co advocates
who were acting as her agents had known of the alleged fraud concerning the disputed
property

c) Elements of a bonafide purchaser for value without notice

A bonafide purchaser is defined in the black’s law dictionary 8th edition at page 129 as one who
buys something for value without notice of another claim to the property and without actual or
constructive notice of any defects in or infirmities, claims or equities against the sellers title, one
who has in good faith paid valuable consideration for the property without notice of prior
adverse claim

The elements of who a bonafide purchaser is are manifeastedly pronounced in Hannington nagti
vs William nyanzi hccs no.434/1996

A bonafide purchaser must prove that:

 He holds a certificate of title

 He purchased in good faith
 He had no knowledge of fraud
 He purchased for valuable consideration
 The vendor had apparent good title
 He was not a party to the fraud
QUESTIONS AND ANSWERS FOR MAKERERE UNIVERSITY SCHOOL OF LAW -
OF EQUITY AND TRUSTS 2017-2018

UNIVERSITY SEMESTER 1 EXAMINATIONS 2017/2018

PAPER: LAW L208 EQUITY AND TRUSTS.

DATE; WEDNESDAY, 13TH DECEMEBRE 2017 TIME 9AM-12-30PM.

INSTRUCTIONS:

a) This is a closed book examination, candidates are not permitted to refer to any material
b) Attempt four questions only (2 from each section)
c) Do not use more than 01 (one) standard answer booklet of 16 pages
d) Read all instructions on the answer booklet.
1. (A). Celia died on 21st April 2017. Her executors seek your advice as to whether she
successfully passed tittle in any of the following items of property at the date of her
death based on the following information. On 1st February 2017, Celia was the absolute
owner of 200 shares in Ugaplex Ltd. Celia telephoned Dumba, her cousin to tell him that
she intended to transfer these shares to him immediately, Celia completed part of a share
transfer from but she immediately, Celia completed part of a share transfer from but she
did not sign it and she did not post it of the company as she was required to do.

ii. In your view; would it have made any difference if Celia had died very soon after the
conversation with Dumba, and if she had expressed her intention to complete that gift
on her death bed but without having prepared a will?
iii. Celia discussed to her executors that she intended to donate 100 acre of land to her
fiancé Tonda, who lived and worked in an upcountry station. Discuss the legal issues
involved. (15 marks
a) Discuss briefly the distinction and / or relationship between trusts and the following legal
relations.
i. Contact
ii. Agency
iii. Bailment (10marks)
1. Jaggwe is 62 years old and of sound mind. He has two secret children molly, aged 17 and
Paul aged 23, Jaggwe has hidden this fact from his wife and family for 23 years, Molly
and Paul are both enrolled in post-secondary education, which Jaggwe is paying for
managing their own affairs. Jaggwe doesn’t want to just give money to these children
because he wants them to use it only for their education. He could continue to pay for his
 children’s education directly but is concerned that if he becomes incapacitated or dies, the
children’s education will not be provided for. Advise on the best type of trust to be
formed for the above purposes, and why.
Suppose, also:

i. An Inter Vivos trust is suggested to provide for the education of the children.
ii. That under the proposed trust a substantial sum of money is to be settled on trust for the
purpose of educating Jaggwe’s children
iii. That the draft trust instrument has a list of beneficiary that includes Molly and Paul and
Directs the Trustees to Use the Income from the fund for the education of the children but
provides no. other purpose for the use of the income of funds
iv. That Jaggwe informed Chonjo of his intention to create a trust and to appoint him a
trustee, but Chonjo remained silent and did not affirm acceptance.
v. That upon Jaggwe’s death, Chonjo sold the trust property and applied the proceeds to
boast his private businesses.
Discuss the legal effect of all the above circumstances.
1. Discuss any two of the following in relation to the creation of a trust:
i. Capacity
ii. Formalities
iii. Constitution
iv. Certainties essentials
SECTION B:

2. With relevant authorities and illustrations, discuss the accuracy of the assertion that:
“equitable doctrines (have remained available to prevent the un conscientious exercise of
the plaintiff’s rights at law” (25marks)
3. Write notes on the following showing their continued applicability in Uganda: (i) Equity
will not suffer a wrong to applicability in Uganda: (i) Equity will not suffer a wrong to be
without a remedy (ii) Equity follows the law (iii) He who seeks equity must do Equity,
(iv) He who comes to Equity must come with clean hands (v) Delay defeats equity.
(25marks)
4. Discuss the continued relevance of study of the doctrine of notice in Uganda
No 1(a)

Brief facts.

Celia telephoned Dumba her cousin informing him of her intent to transfer her 200 shares to him
and immediately she completed part of a share transfer but did not sign it. As well Celia donated
100 acres of land to her finance tonda which intent she disclosed to her executors.

Issue

1. Whether or not Celia’s gift to dumba can be perfected

2. Whether or not Celia’s donation to tonda can be perfected.
Law applicable.
Case law
Resolution.
Issue 1. Whether or not celia’s gift to dumba can be perfected
In accordance to equity , it provides for a maxim that equity will not assist a volunteer
which is a general rule that equity will not perfect and imperfect gift.
It was demonstrated in the case of Milroy v lord .where it was held that equity will not
assist a volunteer and so equity will not enforce gratuitous promises or perfect and
imperfect gift.
However in Re Rose it was established that equity will in fact be capable of perfecting an
imperfect gift if it is established that the donor had done all that can be expected of him to
transfer the legal title , and the transfer were delayed by the route operation of the law . in
this circumstances the gift will be capable of being effective.
In the instant case, Celia did the transfer of the shares to Dumba by doing all what was
necessary to do the transfers of the shares to Dumba. Therefore Dumba’s gift from Celia
can be enforced.
Issue 2. Whether or not celia’s donation to tonda can be perfected.
In Milroy v lord , it was stated that a gift will not be perfected by interpreting the donor
of the gift as trustee of the property.
This means that an incompletely constituted trust will not be made effective to aid a
volunteer.
Re Brooks settlement trust .a volunteer was defined as a party who has proved no
consideration for the transfer.
In this regard equity has remained steadfast and imperfect transfer of property.
In the instant case , tonda cannot acquire the land of 1oo acre donated to

No 1(b)
A trust is a relationship which is recognised by equity and subsists when a person called the
trustee is compelled by a court when a person called a trustee is real or personal, legal or
equitable title for the benefit of the beneficiaries.

The interest of the beneficiaries are normally described in the instrument creating the trust and be
implied or imposed by law. The interest of beneficiaries is proprietary since it can be sold ,given
away or disposed of by will.

In trust, the title to the trust assets stand in the names of a trustee or other person on behalf of the
trustees. A trustee in this regard has the power and duty in respect of which he is accountable to
manage , employ or dispose of the duties imposed upon him by law.

A trust is distinguished from other legal relations as analysed below.

1. Agency

This is the relationship between a principle and the agent.

Its kinder similar to the one between beneficiary and trustee. For example;

 Similar to trustees, agents must act personally in agency transactions.

 Agents are countable to their principles as trustees are to the beneficiaries for any profits
made out of the property entrusted to them

However, there also some differences as analysed below.

 A trust is proprietary where as an agency is not for example, where an agent owes money
to a principle, it may be recovered from him personally. However if the agent is insolvent
the rule of insolvency becomes applicable and the principal’s claim will be subject there
to. this means that if the agent has no assets what so ever , the principle loses .
Whereas with trust, the beneficiary’s claim is proprietary in the sense that property held
by the defendant trustee is not available to meet his debts.

Conversely, if the trustee owes someone money, that money cannot be recovered from
the trust property.

 In agency, there exists a contractual relationship between a principle and an agent which
is not the case between a trustee and a beneficiary.
 The rules relating to a principle and an agent are common law in character while trust
relationship is solely equitable.
2. Bailment.
Is a relationship which is recognised by the common law as arises were a chattel owned by a
bailer is with the bailer’spremises but in the possession of the Bailee.
The right to parties to a bailment may or may not be governed by a contract.
 There is no transfer of ownership frombailer to a Bailee.
The bailer’s duty under bailment depends on common law rules and not equity while trust is
based on equity.
The bailer can lose his legal ownership of the bailed article only though one of the ways in
which legal owners lose rights . for example , estoppels, the operation of the factors act
1899, the sale of goods act and the laws relating to sales by agent under special powers of
court by pledge by carrier perishable goods as agent of necessity by an executor or
administrator.
In contrast , if property is held by a Bailee on trust for a bailer , the bailer’sequitable title
can only be defeated by the transfer of the trust.
A trust may exist in respect of all kinds of property , but bailment is restricted to only
chattels.
3. Contract.
This refers to a common law personal obligation which arises from agreement between the
relevant parties, supported by consideration on the part of the promise.
On the otherhand, a trust is an equitableproprietary relation which can a raise independently
of agreement or the provision of consideration.
The distinction is seen in regard to thefollowing.
 With regard to settlements and covenants to settlement where the property is vested
in trustees of a settlement, it is held upon the trust of the settlement.
Consequently, the beneficiaries are owners in equity of their interests under
settlements. However if the property has not yet been transferred to the trustee and is
simply to a covenant to settle , the beneficiaries will only be able to enforce to
covenant if they have given consideration ,it’s based on the maxim equity will not
assist a volunteer
 Another is the case of unincorporated associations.
An unincorporated association is not a legal entity. Therefore a gift is made to an
unincorporated association there is usually doubt as to whether the property is held
by the donees on trust for the members of the association of the purpose of the
association.

QN2:

Brief facts.

Jaggwe has two secret children. He has hidden this fact from his wife and family for 23 years. He
does not want to give money to these children because he wants them only to use it for their own
education. He could continue to pay for his children’s education directly but he is concerned that
if he becomes incapacitated or dies, his children’s education could not be provided for.

Issue
1. Whether or not there is any trust to be formed.

Law applicable.

Succession Act Cap 162.

Case law.

Resolutions.

Whether or not there is any trust to be formed.

While resolving the above issue, we shall briefly go through a brief discussion on trusts. A trust
is defined as a relationship which is recognized by equity. Trust is a right of property held by one
person the trustee under a duty to apply for another person, the beneficiary. The person giving up
a trust is called a settler. The settler may also be referred to as a donor and the beneficiary a
donee. In Green V Underhill Justice Romer stated; a trust is defined as an equitable obligation
binding a person (trustee) to deal with property over which he has control (the trust property) for
the benefit of persons (beneficiaries) of whom he may himself be one, am anyone of whom may
enforce the obligation. Any act or neglect on the part of the trustee which is not authorized or
excused by the terms of the trust instrument or by law is a breach of trust.

A trustee can be a natural person, a business entity or a public body. A trust takes two forms that
is a testamentary trust, one that is created by a will and arises after the death of the settler and
an inter vivos trust that is created during the settler’s lifetime also known as a living trust.

Trusts are classified into their mode of creation and these include; Express trusts, those that
have been intentionally created by the settler himself through manifestation of an intention to
create one, Implied trusts, those which the court deduces from the conduct of the parties and
circumstances of the transaction“, Resulting trusts that is those where the property has been
transferred to another person but the beneficial interest returns or results to the transferor and
lastly constructive trusts which arise from acts of the parties, other classification include
statutory trusts, public and private trusts

Considering the given facts in order to look for the best type of trust to be formed for Jaggwe, we
shall discuss secret trusts. A secret trust is one which arises when a testator wishes to benefit
some person who is not mentioned in the will. The secret trust operates in contravention of the
provisions of the wills Act. And illustrates equity’s determination to prevent the statute from
being used as an engine of fraud.

Secret trusts fall into two main categories these are; fully secret trusts and half secrettrusts. A
fully secret trust is one which is not referred to at all in terms of a will. While a half a secret
trust is one which is mentioned in some form. Importantly, there is the existence of the trust but
it isn’t mentioned in the will
The most important difference between fully and a half secret trust lies in the communication of
the trust formed to the trustee. The terms of the half secret trust must be communicated to the
trustee and accepted by him or her before the execution of the will.

Relating to the facts given the settlor in my advice should adopt a full secret trust because he
does not want because any suspicions especially among his wife and family who don’t know
about the existence of the children intended to be the beneficiaries.

Suppose (i). Whether or not an inter vivos trust can he formed.

An inter vivos trust is one in which the settler transfers the property to the trustee in his or her
life time. It is also called a living trust. Here a settler could even name him or herself as a trustee
or even beneficiary. This distinguishes it from the other form of a trust called a testamentary
trust which is that created by will and transfer property of the deceased settler to a trustee for the
benefit of the beneficiary. A testamentary trust contrary to a living trust must be probated a legal
procedure required to give legal effect to a will. There is no requirement needed for an inter
vivos trust to be formed rather than sufficient intention to create a trust. Key formalities
prescribed by law must be complied with to form a valid trust. The requirement of formality is
technically intended to prevent fraud as in the case of Jones V Lock where the court of appeal in
Chancery held that there was no trust and refused to perfect an imperfect gift through declaration
of a trust. Lord Cranworth held that handing the baby the cheque was symbolic only. There was
insufficient certainty of intention from to create a trust or a gift.

However in creation of any valid trust like an inter vivos one, there must be three certainties as
was put in the case of Knight V Knight' where it was held that for a trust to be validly created,
three conditions are necessary that is; the words used must be so used that taken as a whole, they
ought to be taken as to be construed as imperative, that is the words must be certain, the second
is that the subject matter of the trust must be certain, and thirdly the objects or persons intended
to be benefited must also be certain. These three requirements are described as the three
certainties of a trust.

In a brief explanation of the three certainties; Looking at Certainty of the words, equity looks at
the intent rather than the form. Therefore no special form of words is necessary in order to create
a valid trust. An intention may be gathered from the expressions which the settler has used and
the court gives effect to such intention. In LombeV Eamesl, court held that since the widow was
absolutely entitled to use the estate in any way she may think best of her and her family, the gift
was valid. According to the certainty of the subject it may take many forms for example interest
in land in possession or reversion the money and choses in action. In Re Golay’s will trusts”, it
was held that there was a valid trust because the executers could select the flat, the words
reasonable income were not intended to allow the trustees to make a subjective decision. They
provided a sufficient objective determinant to enable the court if necessary to quantify the
amount. Lastly looking at the certainty of objects entails two aspects that is; that the recipients or
purposes of the gift should be identifiable with certainty and that the interest they take should be
discoverable as it was in the Knight case

Considering the given facts therefore, about Jaggwe in relation to the three certainties for
formation of a valid trust; looking at certainty of the word, it‘s clearly indicated that Jaggwe‘s
intention was to educate his children hence there was certainty of the words.

Secondly. For the certainty of the subject matter, the facts show that there was the money which
Jaggwe intended for the education of his children. Lastly, for the certainty of the object or
persons in this case were the children Molly and Paul who ere the beneficiaries.

In conclusion therefore, an inter vivos trust can be formed since all the three certainties that
make a trust valid of which an inter vivos one is among as discussed above are present.

(ii). Whether or not the word substantial amount, amounts to certainty of the subject
matter.

In the case of Knight V Knight it was discussed by court that to create a valid trust, the terms of
the trust must be sufficiently certain. There are three forms of certainties which the courts require
that is; certainty of words or intention to relate the trust, certainty of the identity of the subject
matter comprising of the trust fund and certainty of objects or the beneficiaries of the trust in
question.

According to the given facts, the Certainty of the words was give and this was that Jaggwe
wanted the trust to educate the children. The certainty of the object was also given and in this
case scenario were the children Molly and Paul were the beneficiaries. Then lastly relating to the
issue about Certainty of the subject matter, there was the money which Jaggwe intended for the
education of Molly and Paul in this case scenario, it was the subject matter. Certainty of the
subject matter can be in different forms for example interest in land in possession or reversion,
chattels, money and according to the given facts; it was the money for the education of the
children. In Re Golay’s case”, there was a direction to the executers to allow a beneficiary to
enjoy one of my flats during her lifetime and to receive a reasonable income from my other
properties. It was held that there was a valid trust because the executers could select the flat and
the words reasonable income were not intended to allow the trustees to make a subjective
decision.

Conclusively therefore, considering what was laid out in Re Golay’s case, the words substantial
amount, amount to certainty of the subject matter. This because the subject matter in the given
facts is that money, which Jaggwe intends for the education of his children Molly and Paul as
discussed above.

(iii). Whether or not there was a resulting trust.

A resulting trust is that where property has been transferred to another person but the beneficial
interest results to the transferor. An example is where property is transferred to trustees upon
certain trusts but those trusts do not exhaust the whole beneficial interest. A resulting trust is
therefore one implied by court but not created. In Vander well V IRC, the settler had transferred
the legal title in property to a trustee but had failed to identify the persons who will take the
equitable interests that part held for unidentifiable beneficiary which he had on the resulting trust
for the settler. The underlying principle being if the property is not vested in another person it
will belong back to the settler.

In conclusion therefore, there is a resulting trust. This is simply because since the main purpose
which Jaggwe had intended for the trust or the income, that is for the education of his children
Paul and Molly was finished and there was no other purpose left for the use of the income from
the fund, then it had to return back to Jaggwe the settler. Hence there is a resulting trust since the
income returns back to Jaggwe as there is no other purpose left for it to serve.

(iv). Whether or not there was a fully secret trust formed.

For there to be a fully secret trust, there are three essentials that have to be fulfilled so as to make
it valid. These are; intention, communication and acceptance. Under intention, if a trust is secret,
then there must be clearly some evidence of it some car for it to be enforceable. This evidence
may be oral or written as with express trusts to clearly indicate the Intention of the trust. An
expression of a mere hope or predatory wore is not t sufficient. In Re Snowden, the deceased
left property to the brother in hope that could do with it what he thought she would have wanted
and it was held to be sufficient to give a clear indication to set up a trust.

The other essential is Communication whereby there must be communication of the trust to the
trustee or otherwise his or her conscience will not be bound. Thus the legatee must know before
or at the time of receiving the property at he takes it as a trustee. In case of a fully secret trust, it
is sufficient if communication takes place sometime before the property vests in the trustee and
the purpose here is to give the trustee chance to accept the office or not. Whereas for a half secret
trust, communication must occur before or at the same time the will is made as was put in
Blackwell v Blackwell's.

Lastly looking at Acceptance, the trustee must agree either expressly or implicitly to hold as a
trustee. In Re Boyes, Kay J observed that communication requires allowing the trustee chance to
refuse his office as such since it cannot be done after death. Wallgrave v Tebbs,
Communication was after the testator’s death and it was held that they took absolutely. The
office of the trustee must be accepted by the trustee.

Relating to the given facts, while looking at Intention we can see that Jaggwe had the intention
which was to educate his children Paul and Molly using the income. While for the case of
Communication, Chonjo the intended trustee was not communicated to the terms of the trust
before the creation of the will hence there was no fully secret trust since the intended trustee was
not communicated to and therefore communication which is one of the essential elements of a
fully secret trust was not fulfilled. Then looking at Acceptance, it was also not there since the
intended trustee, Chonjo was not communicated to. Therefore she could not accept if there was
no communication. .

Conclusively therefore, there was no fully secret trust formed. This is because all the essentials
of a fully secret trust were not fulfilled. As we have seen in the facts, there was no
communication to Chonjo the intended trustee and therefore she couldn’t accept the trust or
reject it hence defeating the other essential of fully secret trust which is acceptance. Hence
basing on the above discussion, there was no fully secret trust formed.

(v). Whether or not silence amounts to acceptance.

Under acceptance, the trustee must agree either expressly or implicitly to hold as a trustee. In Re
Boyes, kay .l observed that communication require allowing the trustee the chance to refuse
office since it cannot be done after death. Therefore the office of the trustee must be accepted by
the trustee. Acceptance can be communicated in two a as was discussed in the case of Wallgrave
V TebbsWood VC stated that; where a person, knowing that a testator is making a disposition in
his favor intends it to be applied For purposes other than his own benefit, either expressly
promises or by silence implies, that he will carry on the testator’s intention in effect, and the
property is left to him upon faith of that promise or understanding, it is in effect of a trust

Acceptance can therefore be communicated in two ways; either by the trustee directly stating his
acceptance, or by implying it through not declining it. However, silence may be sufficient to hold
as trustee. This was also laid out 'n the similar case of Wallgrave V Tebbs where there had been
no previous communicate to Mr. Martin and Mr. Tebbs that they were to hold property as
trustees. This only emerged after the testator’s death. It was held that they took absolutely.

In conclusion therefore, relating to the given facts, Chonjo’s silence about Jaggwe’s intention to
create a trust may be sufficient to amount to acceptance. This is because if she was not interested
in the trust, she would have declined to it but for the mere fact that she chose to remain silent and
not to affirm the acceptance, she will at law be considered to have accepted the trust. Therefore
in relation to the issue, silence amounts to acceptance as previously discussed above.

(vi). Whether or not there was a breach.

A breach of trust consists an improper act, neglect default or omission of a trustee with regard to
trust property of a beneficiary’s interest in it. It may include, direct intermeddling with trust
property for improper purposes, failure to exercise proper care in discharging a duty and
malafide exercise of discretion”. In these instances, the trustee must replace any consequential
loss from the trust fund, as a result of his or her actions. The purpose of the rule therefore is not
to punish the trustee but to compensate the beneficiaries.
The general rule is that the trustee is liable only for his or her own breaches and not those of his
or her co-trustees as was in the case of Townely V Sherborne . Nevertheless a trustee will be
held liable if he left the matter in the hands of a co-trustee without inquiry of which he or she
stood by while a breach of trust was being formed. However in Re Strahan a trustee is not liable
for breaches of trust committed before his or her appointment. Where a trustee makes an
unauthorized investment, he or she will be liable the loss caused on the sale.

Considering the given facts, Chonjo sold the trust property and applied the proceeds to boast her
private business. This means that Chonjo breached the trust and was therefore liable for using the
proceeds to boast her private business which was not the intention or purpose of the trust. The
only limitation that would protect him as if any of the beneficiaries participated in or consented
to the breach but since this is not mentioned in the facts, then Chonjo cannot escape liability
since none of the beneficiaries acquiesced in the breach.

One of the possible remedy available for the beneficiaries that is Paul and Molly is tracing in
equity. This arises where the trustee has mixed the funds in his own dealings or private business.
This relates to how Chonjo had used the proceeds to boast his private business. The burden of
proof is on the trustee to prove initially that part of the mixed fund is his own. In Re Tilley’s
W.T Ungoed Thomas J. Stated that; if a trustee amalgamated trust property with his own, his
beneficiary will be entitled to every portion of the blended property which the trustee cannot
prove to be his own.

In conclusion therefore as discussed above, there was breach of a trust since Chonjo had sold the
trust property and applied the proceeds to boast her private business yet Jaggwe the settler had
intended it only for the education of his children

No3.

1. Capacity .

It refers to the ability to hold and dispose of a legal equitable interest in property.

For one to be considered to have capacity to create a trust the following situations have to be
considered.

a. Minors , its stipulated that settlements on trust by minors are voidable since he or she can
repudiate it during his majority.

Such settlements however are possible only in equitable interests due to the fact that an infant
can not hold a legal estate.

b. Mental abnormality. This is provided under a trustees acts.64 were an abnormal person
mentally cannotcreate a trust.
c. Married woman.Art. 33of the constitution provides for the rights of women and clause
(1) stipulates for the accord of full and equal dignity of the person with men. This implies
that a married woman can create trust for her property.

d. Companies. Trading companies which are incorporated under the companies act have an
implied power to borrow if or the purpose of the company’s business. This power is used to
the debentures and the purpose of buttressing the issue the company has to execute a trust
deed by which after covenanting to repay the loan with interestuntilpayment ,assigns to
trustees real property or lease holds belonging to the company to constitute security for the
repayment of the loan, and the trustees under take to hold the property upon a certain trust in
favour of the debenture holder.

2. Formalities for creation of trust.

a. By registration of titles act. Here a settlor can create a trust by manifesting an intent to
create it. Evidence in writing for the creation of a trust in land is required as s.92 of the
R.T.A provide the declaration in writing signed by the party creating the trust although no
formalities are required for the creation of an inter vivos trust of personality.

b. By will also know as secret trust. All trusts created by testamentary disposition must be
executed and attested in accordance with the formalities there in prescribed as provided by
s.50 of the succession act. Including;

The will has to be written and signed at the foot or end there of by his direction.

There have to be two witnesses who sign and acknowledge the will in the presence of the
testator.

Formalities were not intended to prevent fraud but in instances were a trust induces the transfer
of land to himself by means of an oral promise to hold it on trust for the third party or were the
legatee or advisee induces the testator to make a disposition in his favour , equity in this regard
will not permit a statute to be used as an instrument of fraud no because that equity dose not a
abrogate the requirement of the statute but to ensure that the statute is not used in an inequitable
way .

It follows that if the trust is regarded as part of the will, equity will not validate it if it does not
fulfill the statutory requirements for the creation of a will.

A secret trustee cannot be a beneficiary. if a secret trustee is expressed this regard then in so far
as it relates to land it must be evidenced in writing in order to comply with the formal
requirements are dispensed with even as regards land.

Half secret trust arises were under a will property is given expressly on trust with out stating
what the trusts are.
Question 4

With relevant authorities and illustrations, discuss the accuracy of the assertion that equitable
doctrines have remained available to prevent the unconscientious exercise of the plaintiff’s rights
at law.

According to Aristotle, equity refers to fairness and just that is supposed to be put in to
consideration in the human interpretation of the law.

S.14 (2) of the judicature act provides that in application and adjudication of both civil and
criminal matters , the doctrines of equity shoal be considered.

Equity was initiated due to the rigidities that had been brought by common law.it has both the
technical juristic sense and the general juristic sense which is used by courts in the adjudicating
of matters.

Art 126(2)(e) of the constitution provides that substantive justice shall be administered
withoutunder regard to technicalities.

Equity in this regard come to bring new perspective of law which has not been catered for by
common laws.

The doctrines of equity have been applied in the legal system so as to prevent riding application
of the laws as they prescribe below.

1. Doctrine of notice.

This refers to the knowledge of existing fact. The rational in this is to prevent a buyer of a
superior title from enforcing it against those with the inferior interests in the same property.

Draza AbdulSalam .it was held that the major purpose of the doctrine is to control the eviction
of people from land with inferior titles.

The effect of this therefore is that the buyer of the legal estate with notice of the prior equitable
interests affecting the estate takes it subject to the prior equitable interests. Its based on the
maxim that equity looks at the substance rather than the form.

Notice can be constructive, actual or imputed and in this regard the maxim he who comes to
equity must com with clean hands is considered.
i. Constructive notice.

This was defined in the case of Williamson v brown that where a purchaser had knowledge
of any fact sufficient to put him on inquiry as to the existence of some rights or title in conflict
with that he is about to purchase he is presumed either to have made the inquiry and ascertained
the extent of such right or to have made the inquiry of a degree of negligence equally fatal to his
claim.

In other words, it’s the existence of some facts that can put the party on inquiry. The prior
interest in land as well is always put into consideration.

In U.P.T.C. V Lutaaya.

It was held that a proprietor takes land subject to the interests of any tenant in the land in
possession even if he or she had no actual notice of the tenant.

S.64 of the R.T.A further provides that a person who buys land shall buy it subject to the
encumbrances as notified to him by the registrar.

ii. Actual notice.

This is where the buyer of an estate has actual or express notice of a prior interest at the time
when he or she made the purchase or at the time before the purchase was complied.

S.64 of the R.T.A encompasses the doctrine and provides that a person who buys land shall
buy it subject to the encumbrances as notified to him by the registrar.

JUSTICE ODOKI IN SEMPA MBABALI v W KkIZA HELD that the defendants plea
of bona fide purchaser could not stand because they knew all along that that part of land they had
purchased was for burial grounds and also the seller had sold them the land before his share of
the land had been ascertained. This therefore meant that his hands were not clean.

iii. Imputed notice

This is imputed to the buyer through the actual notice to the agent. It’s established in agency
law that the notice to an agent is notice to the principle.

Therefore a buyer who instructed his agent to buy property at an auction sale in this regard is
taken to be affected by the notice of an equity which came to his notice during the course of the
transaction.

Justice Odoki in sejjaka Nalima vRebecca Musoke

Held that the appellant was not a bonafied purchaser without notice since musoke & c.o
advocates who were acting as her agent had known of the alleged fraud concerning the disputed
property.

However,a vender is not an agent to the buyer consequently, notice to a vender is not imputed to
the buyer.

But however on the other hand Solicitors are normally agents of the buyer in land transactions
and consequently notice of information acquired by a solicitor in a transaction used to affect his
principle in a later transactions.

However, due to hardships of this rule, it was modified in mount fort v Scottto the effect that
information acquired by a solicitor in one transaction can not affect through the doctrine of
imputed notice his principle in subsequent transaction. Thus held that the knowledge of a
solicitor in a previous transaction can not de imputed to the buyer in a later transactions.

2. Doctrine of performance.

This is to the effect that where a person covenants to perform a particular act and later
performs another act which may be converted to the completion of this covenant, it shall be
supposed that he meant to complete it as per Kenyon. . In sowden v sowden.

The doctrine is based on the maxim that equity imputes an intent to fulfill an obligation.

3. Doctrine of Laches.

The maxim stipulates that delay defeats equity. It is applicable to situations where a person
defaults to bring his claim.

However, there instances for example where the person has a dis ability, or during infancy and
when he never knew of the subject matter the doctrine is not applicable.

This was evidenced in stephen mabosin v U.R.A

Were it was held that the appeal was granted because the appellant would not have it before
obtaining the official record of proceedings from the high court despite the lapse of sixty days.

4. Doctrine of satisfaction.

This is based on the equitable maxim that equity imputes an intent to fulfill an obligation.

Lord romilly defined it as the donation of a thing with the intent that it is taken wholly or in part
in the extinguishment of some prior claim of the done.

The doctrine applies in the following ways:

 Satisfaction of debts by legacies.

The basic issue is that if a testator gives a legacy to a person whom he owes money , a legatee
can’t claim both the estate and the money but rather takes the estate given to him as a legacy.

In Hammond v smith .

Court on relying on the intent of the debt owed to the creditor, it said that it’s a general rule
that the debt should be satisfied by a legacy equaling to it .

 Satisfaction of portion debts by legacies.

The general rule is that equity leans against double portions hence equity will provide for the
satisfaction of property among the children hence were the legacy is equal to the promise portion
or exceeds it satisfaction of the portion debt is presumed.

 Satisfaction of a portion debt by a portion.

It was stated by lord selborne that where a father gives a legacy and later makes a gift in the
child’s favour, there is a presumption that the gift was either wholly or in part in a substitute foe
or an adept ion of legacy.

5. Doctrine of election.

This is based on the fact that a person cannot claim for a benefit and then reject the burden.
This depends on the maxim that equity is equality.

This is evidenced in Uganda v basajja Balaba. Were it was held that the respondent could not
seek equity because he had forged the court order.

It is applicable in s.167 of the Ugandasuccession act which provides that a person whose
property had been disposed of the testator has a right to elect.

In conclusion therefore, the doctrines have been applied in the legal system, s.14 of the
judicature act, s.11 of the magistrates court act so as to provide justice as well as Art. 126 of the
constitution of Uganda which provides that substantive justice shall be administered
withoutunder regard to technicalities.

No 5.

1. Equity will not suffer a wrong to be with out a remedy.

The maxim means that equity can find another remedy where money will not pay for injury.
Its a restatement of ibis jus ibi remedies meaning if there is a wrong there broke hearted which
implies that every wrong capable of being remedied by courts is addressed.

The maxim also implies that were common law confers a right, it also gives a remedy for
interference with the right because each party has his or her share at the table of equity.

The maxim calls for recognised remedies for well-established wrongs.

The maxim is applied in the enforcement of trust, and the auxiliary jurisdiction.

Auxiliary comprised of matters in which a court of equity entertained jurisdiction in order to

enable parties claiming legal rights the more convenient way to establish these rights in a court
of common law.

The maxim as well has some limitations to where it is exempted from being applied

 If there is a breach of a moral right only

 If the right and remedy both were within the jurisdiction of the common laws

 Where due to his own negligent a party either destroyed or allowed to be destroyed, the
evidence in his own favour or waived his right to an equitable remedy.

2. Equity follows the law.

The maxim is from a Latin phrase acquitas sequitur legem meaning equity backs up the
lawekyll M.R observed that the discretion of the court is governed by the rules of the law and
equity which are not to oppose, but each in turn to be subservient to the other. Maitland said
equity came not to destroy the law but to fulfill it to supplement it.

The maxim is applied in trust were byits provided that although beneficiaries are regarded as the
equitable owners ,equity does not deny the legal title of the trustees. This implies that equitable
interests devolve in the same way as legal estates

3. He who seeks equity must do equity

The maxim provides that a person who is seeking the aid of a court of equity must act fairly, and
follow the court’s direction as well abiding by whatever condition the court gives for the relief.

This implies that a party seeking relief must be willing to recognise the equitable rights of the
other party against the plaintiff himself since equity is a law of conscience.

The maxim is mostly applied in injunctions were courts will normally impose certain conditions
for granting certain conditions for granting the injunctions .that to say;
Illegal loans which was well explained in Lodge v National union investment company ltd were
it was held that in case that the granting equitable remedies, the court should apply equitable
principles to ascertain on what conditions such remedies should be granted.

4. He who comes to equity must come with clean hands.

Equity demands fairness not only from the defendants but also from the plaintiff hence he
that hair committed an inequity shall not have equity. The maxim bars relief for any one guilty of
improper conductin the matter at hand. Any one praying for an equitable relief over a particular
matter must show that she or he has behaved honestly and fairly in regard to that matter.

The rule is not meant to punish carelessness or mistake since its possible that the wrongful
conduct is not an act but a failure to act.

Further, the wrong conduct that is condemned by the clean hands doctrine must be part of the
transaction that is the subject of the law suit. In the case of Gasciogne v Gasciognewere a
husband conveyed property to his wife so as to protect it from his creditors .an action by the
husband to claim the property back was denied on ground of his inequitable conduct to his
creditors.

The maxim is also applied where there is giving the relief of specific performance, injunction
and rescission.

For example if the tenant has lost a lease due to nonpayment of rent, he will not be able to get an
equitable relief.

5. Delay defeats equity.

Where a party sits on his right and acquiesced for a length of time, equity will not aid to stale
demand

Conscience, goodfaith and reasonable diligence are crucial ti this maxim and were wanting, the
courts will be passive and will do nothing.

However, in laches which is a delay sufficient to prove a party from obtaining an equitable
remedy an equitable remedy will no be given if the application has unduly delayed in bringing
the action.

In john oitamong v mohammadeolinga. It was held that laches is an equitable doctrine which is
a defence to enforce equitable rights .it means that unreasonable delay in asserting or enforcing a
right ,for equity aids the vigilant and not the indolent.

Question 6

Doctrine of notice.
Refers to the knowledge of existing fact. The rational in this is to prevent a buyer of a superior
title from enforcing it against those with the inferior interests in the same property.

In Draza Abdul Salam .it was held that the major purpose of the doctrine is to control the
eviction of people from land with inferior titles.

The effect of this therefore is that the buyer of the legal estate with notice of the prior equitable
interests affecting the estate takes it subject to the prior equitable interests. Its based on the
maxim that equity looks at the substance rather than the form.

Notice can be constructive, actual or imputed and in this regard the maxim he who comes to
equity must com with clean hands is considered.

iv. Constructive notice.

This was defined in the case of Williamson v brown that where a purchaser had knowledge
of any fact sufficient to put him on inquiry as to the existence of some rights or title in conflict
with that he is about to purchase he is presumed either to have made the inquiry and ascertained
the extent of such right or to have made the inquiry of a degree of negligence equally fatal to his
claim.

In other words ,its the existence of some facts that can put the party on inquiry. The prior interest
in land as well is always put into consideration.

In U.P.T.C. VLutaaya.

It was held that a proprietor takes land subject to the interests of any tenant in the land in
possession even if he or she had no actual notice of the tenant.

S.64 of the R.T.A further provides that a person who buys land shall buy it subject to the
encumbrances as notified to him by the registrar.

v. Actual notice.

This is where the buyer of an estate has actual or express notice of a prior interest at the time
when he or she made the purchase or at the time before the purchase was compiled.

S.64 of the R.T.A encompasses the doctrine and provides that a person who buys land shall
buy it subject to the encumbrances as notified to him by the registrar.

Justice odoki in sempa mbabali v W KkIZA HELD that the defendants plea of bona fide
purchaser could not stand because they knew all along that that part of land they had purchased
was for burial grounds and also the seller had sold them the land before his share of the land had
been ascertained. this therefore meant that his hands were not clean.
vi. Imputed notice

This is imputed to the buyer through the actual notice to the agent. Its established in agency
law that the notice to an agent is notice to the principle.

Therefore a buyer who instructed his agent to buy property at an auction sale in this regard is
taken to be affected by the notice of an equity which came to his notice during the course of the
transaction.

Justice odoki in sejjakaNalimavRebeccaMusoke

Held that the appellant was not a bonafied purchaser without notice since Musoke&c.o advocates
who were acting as her agent had known of the alleged fraud concerning the disputed property.

However , avender is not an agent to the buyer consequently , notice to a vender is not imputed
to the buyer.

But however on the other hand Solicitors are normally agents of the buyer in land transactions
and consequently notice of information acquired by a solicitor in a transaction used to affect his
principle in a later transactions.

However, due to hardships of this rule, it was modified in Mountfort V Scott to the effect that
information acquired by a solicitor in one transaction can not affect through the doctrine of
imputed notice his principle in subsequent transaction .thus held that the knowledge of a
solicitor in a previous transaction can not de imputed to the buyer in a later transactions.

 Priority of interests under the doctrine of notice

Where two or more people assert rival clams over the same land, the question as to which
interest takes priority over the other depends on how the interests are ranked against each
other on accordance with prescribed rules.

 Legal interests created prior to equitable interest.

The legal interest will not be affected by an equitable interest created later .in certain
instances a holder of a prior equitable claim may be stopped from denying that the vender
had title to the subsequentpurchase where he held out the seller as such.

 Competing legal interests.

The general rule is that an earlier created legal interest prevails over any subsequently
created interest.

 Equitable interests followed by legal interests.

 The general rule is that a legal claim prevails over an earlier created equitable interests
unless there are equitable grounds for its post ponement. However , where the equities are equal
with the legal interest owner being a bonafide purchaser for value withoutnotice, his interest will
prevail. The purchaser must have no notice of the rival equitable claim.

 Competing equitable interests.

Where equities are equal in all respects, priority of time gives a better equity thus, first in
time ,first in right. This is based on the maxim that where equities are equal, the first in time shall
prevvail.

Impacts of the R.T.A on the doctrine of notice.

S.54of the R.T.A requires registration of instruments affecting land and stresses that

‘’no instrument until registered in the manner here in provided shall be affected to pass any
estate or to render such land liable to any mortgage’’.

The purpose of the R.T.A is to inform an intending buyre, mortgagee or other person involved in
a transaction relating to the land of transactions affecting the land.

Further more , s.48 of the R.T.A provides for the registration of the instrument to be made in
duplicate and registered in the order of and as from the time at which the same is produced for
that purpose and instruments purporting to affect the same estate or interest shall not
withstanding any actual or constructive notice be entitled to priority as between themselves
according to the date of registration and not that of instrument.

The purpose of this section is that every instrument registered under R.T.A supersedes other
instruments affecting the land from the date of its registration.
QUESTION . 1: The development of Equity was both controversial and significant to the legal
system . Do you agree with this statement ?

Equity is the branch of Law which was administered in the court of Chancery hither to the coming of
the judicature ACTS 1873- 1875. It is basically the judicial body’s power to administer law justly taking
into account special facts of previous cases. Indeed I entirely agree to the notion that the
development of equity was both controversial reflected in the Irregular decisions, high level
inconsistences together with incompetence that was exhibited in hearing of cases which later on paved
for the significant development and this has been explained in the ongoing discourse.

Creation of new rights. The exclusive Jurisdiction ofequity,this refers to the rights which the court of
chancery had created and which the common law court had failed to enforce. For example Trusts,
Mortgages, partnerships, administration of estate, bankruptcy, company law.

Betterstil, Equitydevelopedwiderange of remedies for the enforcement of rights, Both at law and of
equity. In that vein, equity would order specific performance of contract whose subject matter was
unique to grant injunction to restrain commission of continuing trespass or injury. The was
Rectification, under this defendant was compelledto modify document to reflect the agreement made
with the claimant.

It should be noted however that equitable remedies were conditional upon breach of legally
enforceable rights and remedy at law being Inadequate , all these conditions still apply in Uganda and
they are provided for in Judicature Act section 38 caps 13.

Development of new procedures, due to the defective procedures at common law, there was
emergence of new procedures which included interrogatories and discovery of document now
provided for in the in Order 10 of the civil procedural Rules Caps 65 and perpetuation of testimony The
exercise of this jurisdiction however depended on legal principles

It should be noted however that in spite of development ushered in by equity, it had some
controversies for instance, Equity like common law had slain Justice on the alter of corruption and
adherence to precedents and this latter called for reforms in chancery jurisdiction.
QUESTION 2: With the aid of relevant examples and authorities discuss in detail the doctrine of
Notice and the impact of registration legislation on the Doctrine of Notice.

The doctrine of Notice means the knowledge of an existing fact. The purpose of this doctrine is to
prevent a buyer of superior title from setting it up against prior or earlier owners of inferior interests
which affects the property. The `effect of this is that buyer of legal estate with notice of prior
equitable interest affecting the estate takes it subject to those prior equitable interests.This doctrine is
divided into three categories namely, Actual notice , Constructive and Imputed notice.

Actual notice , This refer to the situation where buyer of an estate has actual or express notice prior of
prior interest at time when he or she made purchase or any time before the purchase was made. It
consist of personal knowledge of prior equitable interests affecting the property which the buyer
intends to buy. What is important is to show that the buyer had actual notice of equitable interest
before he acquired the superior title.

In the case of Daniel Sempa VS WK Kidz 1985 HCB 46 - Court held that the defendant’s plea of
bonafide purchaser could not stand because they knew all along that part of the land he had
purchased was for burial ground and also the seller who had sold them land before his share had been
ascertained , the purchasers hands therefore were not clean.

Constructive Notice, This was defined in salden J . in Williamson Vs Brown thus, where purchaser
has knowledge of any fact sufficient to put him on inquiry as to the existence of some rights or title in
conflict with that he is about to purchase ,he is presumed to have made the inquiry ascertained the
extent of such prior right………………,

The rationale of the constructive notice is that the buyer should make reasonable inquiry relating the
circumstance of the transaction. Forinstance when purchasing land, inquiries should be made tothe
appropriate authorities like registry offices, chiefs and others to find out whether the land is subject to
encumbrance or claim, if this is not done , equity will assume that this is due to bad faith or gross
negligence thus affecting the buyer.

In the case of Uganda post and Telecommunications VS AKPM Lutaaya CA 36 1996, It was held
that if person purchases an estate which he knows to be in occupation of another other than the
vendor, he is bound by all the equities which the parties in such occupation may have in the land , in
coming to this decision, court based on various verdicts torelatin to presumption of constructive notice

Imputed Notice, This is notice which is either actual or constructive and it may be imputed on the
purchaser through his or her agents. It is established in Agency law that notice to an agent is notice to
the principle.In this regard, buyer who instruct his agent to buy propertyon auctions sale was taken to
be affected by notice of equity which came to his knowledge in the course of transaction.

The impact of Registration Legislation on the Doctrine of Notice were observed in section 54 of
registration of title act that requires registration of instruments affecting land and stresses that

No instrument until registered in the manner herein provided shall be effectual to pass any estate or
interest in any land under the operation of this Act.

Equally also, section 48 of the RTA, states that, every instrument except transfer presented for
registration may be made in duplicate and shall be registered in the order of and as from the time at
which the same is produced for that purpose and instrument purporting to affect the same estate or
interest shall not withstanding any actual or constructive notice be entitled to priority as between
themselves according to the date of registration and not according to the date of instrument .

In the case of Rickett VS Shotte, a registered transfer were held sufficient notice to the defendant if
he had bothered to carry out a search of register.

Question : 3: Explain the nature and principles guiding the issue of interlocutory Injunctions.

An interlocutory injunction is an order by the court directed to a party to the suit to the effect he
refrain from doing particular act. This injunction is limited to apply until the final determination of the
rights of the parties by the court., the object of interlocutory injunction is to maintain status quo until
the trial of an action . They may be prohibitory, mandatory or quiatimet , they also include Temporary
injunction and interim Orders.The principle that govern the grant of interlocutory injunctions have
been discussed below.
Prima Facie Case, The plaintiff must show a strong prima facie case that his or her rights have been
infringed . In UCB VS Uganda parts (U) Ltd, the defendants applied under ORDER 37 Rule 9 of civil
procedure rules for temporary injunction to restrain the respondent from disposing off the applicant’s
property until the main suit is determined, It was held that the first condition for the grant of an
injunction is the establishment of prima facie case and the possibility of success in the main suit.

Equally also is substantial and irreparable injury. The applicant must show to court that if an
injunction is not granted, he or she is likely to suffer irreparable injury which could not be compensated
by payment of damages at the termination of trial .Examples of irreparable loss includes the
distribution of dividends to shareholders based on erroneous calculations,

Balance of convenience, the plaintiff must show that the balance of convenience favours the issue of an
interlocutory injunction, In Caryne VS Global Natural Resource PLC (1984)– The balance that one seeks
to make is the balance of risk of doing an injustice, therefore court consider which side would suffer
more injustice if the application is granted or denied.

Conditions and undertaking. Under this principle, the plaintiff is required to give an undertaking as to
damages in case the injunction is discharged at the trial and this is because the injunction was granted
without good cause.

Question 4 : Discuss in details the requirement for Valid assignment.

An assignment is transaction between the person entitled to the benefit of the contract
(called the creditors or assignor) and (the third party called assignee) as result the assignee
becomes entitled to to sue the person liable under the contract. However the requirement for
the valid assignment have been discussed below.

Formalities , Assignment which does not satisfy this requirement may take effect as an
equitable assignment. For instance while an oral assignment cannot take effect under the
statute by be valid under equity. Consequently statute merely provide an alternative method
of assignment and it does not destroy the old method.
Equally also is the intention to assign. It is necessary to establish the intention to assign. Thus
in the case of Williams Brandit sons& co VS Dunlop Rubber CO, It was held
that……………………………The language is immaterial if the meaning is plain, All that is necessary
is that the debtor should be given to understand that the debt has been made over the
creditor to some third person.

Communication to the Assignee, An assignment is not effective unless it is communicated to

the assignee by the assignor, or someone with authority. An explanation requiring
communication to the assigneeis that it is equivalent of the delivery which is necessary to
perfect a gift of chattel made

Otherwise than by deed. Thus finally the requirement is based on nature of assignment of
transaction between assignor and assignee.

Notice to the debtor, Notice of an equitable assignment may be Oral or writings. Oral notice is
seldom effective between successive assignees and notice of statutory assignment must be
in writing, it may not be given by the assignor nor at the time of assignment.. The effect of
the Notice may affect the relative rights of the assignor and the assignee and debtor of
together with successive assignees.

QUESTION 5 : Explain the followings

Equality is equity.The maxim Equality is equity basically applies in three dimensions namely:

The presumption of Tenancy in common, Severance of Joint Tenancy and the principle of Equal
division. Under presumption of Tenancy in common, the basic rule is that equity operate
against joint tenancies and in steady advocates for tenant in common where the property of
the deceased pass on to his estate. It should be emphasized that while at common law the
survivor is entitled to the whole property, in equity the survivor is regarded as Trustee of the
deceased share for the benefit of the beneficiaries under a will or intestacy.
The principle of equal division come in play where there is no basis for distribution of property
between two or more rival claimants, the court may apply the maxim of equality is equity to
divide the property equally.

Equality follows the law: This maxim means that equity supplements the law and is based on
the law. This is evidenced in trust whereby since the beneficiaries are regarded as equitable
owners, equity does not deny the legal title of the trustee. Equally also, equity recognized the

common law doctrine of estate where by an estate which was recognized at law could exist as
an equitable interest under a trust.

Anton pillar injunction : This is court order that provides the right to search premises and
seize evidence without prior warning. This is intended to prevent destruction of relevant
evidence particularly in cases of alleged trade mark, copy right or patent infringements. In
Ugandan case of Uganda performing society Limited Vs Fred Mukubira HCMA No 818 of
2003, Justice KiryabwireGranted Anton Pillar, ………the defendant by the Anton pillar order only
enjoined by court to do permit the entry, inspection or other direction of court.

Quiatimet ; This is an injunction which is issued to prevent the infringement of the plaintiff's
rights where the infringement is threatened but has not yet occurred. It is granted to restrain
threatened injury to the claimant's rights even though no injury has occurred yet.

QUESTION 5: Malik a rich man by a will made the following bequests.

a, 5 acres to my son Amos.

b, 2 acres to the health Centre in lower Konge

c, My freehold house to my lovely wife Franca absolutely in full confidence that she
will hold it for either my daughter Shakira or my son Shafic as she deems fit.

d, The remainder would go to my nephew

Discuss the legal effect of this Trust.

Trust is the is the fragmentation of legal tittle (Legal ownership) and equitable tittle where the
legal title is vested in in the trustee who hold the trust property on behalf of the beneficiaries.

According to the KnightVs Knight, fully constituted trust requires three certainties that is
words, object and subject matter. In the instant case, Malik intentionally and expressively
declared 2acres of land to his son Amos. The general rule says that express trust may be
created deed, will or even writings, Therefore the evidence to create trust is an intention
which is established by use of mandatory words.

The two acres to the health Centre in lower Konge exhibited public trust which is meant
benefit public class of the community thus constituting charitable trust.

The settlor Malik gave Franca Discretion powers to select who from the two children Shakira
and Shafic would benefit from the trust property and normally in what shares. It must be noted
that under discretion trust, no one has any property right until trustee exercise hi discretion.
QUESTION 1

Brief facts
A file was given to me a trainee of Jin Kirkland and Associates to give adviee to trustees in
relation to the estate of the deceased Andrew Felix Kaweesi.

a) I give all my savings with the Uganda police saving scheme to my friend aigp kayima
and honourable Simeon fie the good times we had at Makerere University.
This clause in the will creates an express trust in a particular an executed express trust.
This is simply because it clearly sets out intention of the trust. The Uganda police Saving
Scheme are the trustees of the money and AIGP Kayima and Hon Simeon Nsubuga are the
beneficiaries of the trust.
A trust is created because all the certainties are present that is, the intention is expressed in the
words "I give my" meaning the money is in possession of the saving scheme is held on behalf of
another.
The certainty if the subject matter that is the savings and the object (beneficiaries) are clearly
indicated thus the saving scheme is charged with a duty to do as the trust instructs.

b) The giving ifw50,000,000 million shillings to st. Peter's kulumbiro, Lubega children's
home and sanyu babies home created a charitable trust in the trustees.
The money given was placed for a a particular purpose and that is to help public bodies that offer
caring services to community. This will have to be divided equally among the stated bodies as
beneficiaries.
This clause is to be effected by the Attorney General since it falls among public trusts.

c) The savings in Barclay's bank

The clause creates a discretionary trust in the trustees to divide the savings in Barclay's bank to
those children they deem fit. Its at the discretion of the trustees and the objects( beneficiary) are
those children that are deserving.
d) The residue to be given to the grandchildren.
QUESTIONN 2
Brief facts
Luke bought house together with his brother and both contributed 50% to it however the house
was registered in the names of his brother. Luke gave the interest he had it gain from a debt owed
to him and 500,000 of the net income for his life time shares he held in Uganda steel company
Ltd to Owen. He also gave him all his Rights and interest as a mortgagee in an equitable
mortgage. All these were contained in deed that was given to Owen. Luke wrote a will in which
he gave Robert 50,000,000 for which the conditions would be revealed. Before his death, he
handed him a letter that was to be opened after his death. Upon his death, the letter instructed
Robert to look for Luke's illegitimate son and give him the money. He also left the residue of his
estate to Lisa that she would dispose of at her discretion and if she didn't, would go to his neices.

a) Does Luke's estate have a claim on the house?

While buying the house, equal shares we're contributed though the house was registered in the
names of one proprietor. Under common law, where two or more persons advance a purchase
money jointly and the conveyance is in one of their names or that of a third party, the one with
legal title is deemed to hold it in trust for the purchasers to an extent proportionate to the amount
of the purchase money which each has contributed.
Therefore basing on the above, Luke's estate has a claim over the house since they are joint
owners with the legal proprietor and thus has equitable interests in the property.

b) Were the gifts to Owen effective or do they form part of Luke's estate.
Assignment refers to transfer of one’s rights or interests in a contract to a third party called the
assignee.
The elements required for as assignment to be valid include; the assignor must follow the
formalities that the particular assignment his making must conform to. For example if it’s a
statutory assignment, it must be in writing.
The assignment must be communicated to the assignee. This is to ensure that they exercise their
right to repudiate the assignment when they don't want it and it also validates the imperfect gift
and makes it perfect.
The intention to assign also should be shown. This can be seen in the wording of the assignment
deed or by conduct. What matters is that the debtor understands that his to pay the debt to a third
party.
Notice must be given to the debtor. This can be made orally or in writing and is effective as
longit’s brought before the action is sought. It can also be through post.
Basing on the facts above, the intention to assign was seen when its indicated that Luke wanted
to provide for his friend who was in dire financial need, the assignment was in writing, the
debtor was given notice and it was communicated to Owen through a recorded deed.
Therefore in conclusion, the gifts given to Owen were effective and no longer belonged to Luke's
estate. This is because Owen has an equitable charge/ lien over all the interests assigned to him.
Owen can also sue against the debtor to enforce the assignment.

c) What kind of disposition was of Lisa and was it effective.

The kind of disposition given to Lisa is a trust disposition. That is, she has been given the residue
property to dispose it off to anyone she deems fit and she and Robert are not entitled to it.
The disposition falls particular under a discretionary trust which is defined as one where the
trustee holds property on trust for a group of beneficiaries and are required by the terms of the
trust to hold the income or capital in favour of such beneficiaries as the trustee shall in their
discretion think fit. Whatever each individual beneficiary is entitled to depends on how the
trustee deems fit to give him.
In the case of Abasi Vs kapon, the testator appointed the defendant as executor of his will. He
directed them to give and bequeath all his properties to his children who were loyal to him
excluding the plaintiff. It was held that the testator created a discretionary trust and the duty of
the executor/ trustees was to select the beneficiaries in accordance with the direction in the will.
The disposition is very effective since it contained all the certainties required for a valid trust.
That is certainty of intention. This was expressed through the words in the will that " I give to
my sister Lisa my residue to distribute to those she thinks fit barring her and Robert ". This
statement clearly showed the intention to create a discretionary trust.
The certainty of subject matter. This was certain in that it was mentioned as the residue of the
estate and the certainty of the object was in regard to those she deemed fit and to her nieces if she
failed to dispose during her life time. This showed that she was a trustee on behalf of those fit
and for her nieces if she didn't dispose off during her life time.
Therefore basing on the facts above, the disposition was that of a discretionary trust and it was
effective since it satisfied all the certainties.
d) Is the gift to Terry effective.
A half secret trust arises where under a will property is given expressly on trust but without
stating what the trust is about.
In ReBoyes67 a legacy was given to the testator's solicitor who undertook the property on
direction which he would receive from a letter. The letter was discovered after the testator's
death. The solicitor accepted that he held as trustee and would carry out the trust.
The principles which apply to this trust were set out in the case of Blackwell vs Blackwell68 that
there must be communication of the purpose to the legatee, coupled with acquiescence or
promise on his part and intention to create a trust.
In Moss vs Cooper, it was held that it's immaterial whether communication occurred before or
after the making the will.
In the will made by Luke, Robert was made a trustee of 50,000,000 million shillings conditions
of which would be given to him through a letter. The fact that he accepted the money showed
acceptance and the receiving of the letter after Luke's death cemented the fact that Robert
became a trustee for the money on behalf of Terry.
Therefore, the gift to Terry is effective as a beneficiary under the will irrespective of whether he
is illegitimate or not.

QUESTION3. Compare and contrast a trust with the following:

a) Bailment
b) Contract
67
1884,
68
1929,
 c) Agency
d) Power of appointment

BAILMENT
Trust is defined by Keeton69 as a relationship which is recognized by equity. It arises where
property is vested in a person or persons known as trustees which those trustees are under duty to
hold for the benefit of other persons known as cestuis que trust or beneficiaries.
Bailment is a transaction whereby goods are delivered by one party who is known as the bailor to
another who is a bailee to hold the goods and ultimately re-deliver them to the bailor in
accordance with the given instructions. For example a chattel owned by X is with X’s permission
in the possession of Y.
Bailment is relationship which is recognized by rules of common law well as trust is recognized
by equity.
The rights of parties to a bailment may or may not be governed by contract. Bailment requires a
certain standard of care from the bailee as it was highlighted in the case of Mbale Exporters
and Importers v Ibero. The same standard of care is required from trustees managing the
property entrusted to them by the settlor on behalf of beneficiaries.
Under bailment there is no transfer of ownership that is property from the bailor to the bailee
where as there is transfer of ownership from the settlor to a trustee.
The bailor may lose his legal ownership of the bailed article only through one the ways in which
legal owners lose rights, for example estoppels, laws relating to sale by agent, by executor or
administrator, in a marker overt among others. On the other hand a beneficiary’s equitable title
can only be defeated by the transfer of the legal title to a bonafide purchaser for value without
notice of the trust.
A trust may exist in all kinds of property that is a trust maybe created on fixtures like land,
house, and intangible property like shares in a company and chattels like a car. On the other hand
bailment is restricted to chattels.

CONTRACT

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Law of Trusts, 10th edition
A contract is defined under section 1070 as an agreement made with the free consent of parties
with capacity to contract, for a lawful consideration and with a lawful object, with the intention
to be legally bound. A contract may be oral or written or partly oral and partly written or may be
implied from the conduct of the parties.
A trust is defined by Keeton71
A contract is a common law personal obligation which arises from agreement between the
relevant parties, supported by consideration on the part of the promise. Consideration is anything
of value given, suffered or undertaken by any party to the contract.
On the other hand, a trust is a relationship that can arise without any agreement or provision of
consideration from any of the parties, that is a settlor, trustee and beneficiaries. With trusts there
is no consideration and there is no bargain or meeting of minds. The creation of a trust is an
unilateral event, the settlor transferring property to another for the benefit of a third party and
gaining nothing in return.
Still in contrast the creation of a trust and a contract is that, with a trust, the beneficiaries will
only be able to enforce the covenant if they have given or furnished consideration. This is based
on the maxim that equity will not assist a volunteer though there are exceptions to this maxim for
example Donatio Mortis Causa which includes gifts given inter vivos, equitable estoppels among
others.
A contract is governed by the rules of common law and this extends to remedies available in case
of breach of a contract, for example, damages. On the other hand a trust is governed by the rules
of equity, in case of breach of a trust the beneficiaries are entitled to proprietary remedy like
specific performance against the trustees.

AGENCY
Agency is created by either by expressed or implied contract or by law, whereby one party called
the principal delegates the transaction of some lawful business or the authority to do certain acts
for him or in relation to his rights or property, with more or less discretionary power to another
person called the agent.

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The Contracts Act, 2010
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Law of Trusts, 10th edition (supra)
The relationship between a principle and agent under agency is similar to the one between a
beneficiary and a trustee under trust, for instance, similar to trustees, agents must act personally
in agency transactions.
Agents are accountable to their principals just as trustees are to the beneficiaries for any profits
made out of the property or business entrusted to them. For example, if X entrusts apartments to
Y for the benefit M, where Y misappropriates the incomes from the property, Y would be
accountable to M the beneficiary.
In both cases, the relationship is fiduciary, this basically means where one holds a thing in trust
for another.
Nevertheless, there are differences between agency and trust.
First, a trust is proprietary that is relating to owning something where an agent owes money to a
principal, it may be recovered from him personally however, if the agent is insolvent, the rules of
insolvency become applicable in that the principal’s claim will be subject thereto. This means
that if the agent has no assets whatsoever, the principal loses.
With a trust, the beneficiary’s claim is proprietary in the sense that property held by the
defendant trustee is not available to meet his debts.
Conversely, if the trustee owes someone money, that money cannot be recovered from the trust
property. It follows however that where the trustee disposes of trust property, the beneficiary can
claim and recover it if it is identifiable through the remedy of tracing.
In this respect, it is notable that the property for which an agent is liable to account to his
principal is only subject to a personal claim against the agent. Consequently, the remedy of
tracing is not available to the principal.
Also, usually there exists a contractual relationship between a principal and an agent. This need
not be the case between a trustee and a beneficiary.
Lastly, many rules relating to a principal and an agent are common law in character while the
trust relationship is solely equitable.

POWER OF APPOINTMENT
Refers to the authority to dispose of some interest in land, but confers no right to enjoyment of
the land. A power is the right to dispose of an Estate or interest in property rather than ownership
of an estate or interest.
The following differences may be between a power and a trust.
First, while a power is discretionary, a trust is imperative. This means that if a person accepts to
acts as a trustee, he must do as the settlor directs
Secondly, under a power, the persons amongst whom the appointment is to be made have no
right of action against the appointer in the absence of fraud if he does not appoint. However,
property is left on trust for division among certain people, the court would compel its division.
Also, the objects of a power need not necessarily be capable of exact ascertainment. With a trust,
the objects the trust must be certain. For instance, if property is held on trust for the members of
a class, the trust is void for uncertainty except where the class has been described with sufficient
precision to enable the trustees (with minimal trouble and expense) to compile a list of all its
members throughout the duration of the trust. In contrast, a power would be valid even where no
list can be made. The only requirement of certainty is that a sufficient criterion of class
membership should be provided to enable the court to say of any person whether he is an object
of the power or not.
There are instances where power exists in the nature of a trust. For instance where an instrument
purports to give a power, when in fact a trust is really intended. Thus in BURROUGHS Vs
PHILCOX, a testator gave property to trustees on trust for his two children for their lives,
remainder to their issue and in default of issue, the survivor of the4m was to dispose of the
property by one of them or to as many of them as my surviving child shall think proper. The
testator’s children died without issue and without any appointment having been made by the
survivor. It was held that in favor of the testator‘s nephews and nieces and their children had
been created, subject to a selection and distribution. It is significant that where there is a power
with a gift over to other persons in default of appointment, his negatives the presumption that
there is a trust in favor of persons who are objects of the power. in such a case, the test is
whether the testator has shown an intention to benefit the class in any event.
Similarly, in RE PEROWNE, a testatrix gave her property to her husband for life, knowing that
he will make arrangements for the disposal of my estate, according to my wishes, for the benefit
of my family. There was no gift over default of appointment. The husband died without having
validly exercised the power to appoint. It was held that there was no intention to create a trust
from the power.
QUESTION 4. With the aid of relevant authorizes, discuss in detail:
a) The rationale of the Doctrine of Notice.
b) Categories of the Doctrine of Notice; and
c) The elements of bonafide purchaser for value without notice.

a. The rationale of doctrine of notice

Notice literally means knowledge of an existing fact.
The doctrine of notice is an equitable doctrine that seeks to protect persons having equitable
rights over land from those with superior legal rights against placing them to defeat their rights.

b. The categories of notice

This doctrine is divide into three namely; actual notice, constructive notice and imputed notice.
Actual notice
This refers to express knowledge/ Information of a prior interest at the time the buyer made the
purchase or completed it. Here the purchaser has prior knowledge before acquiring the superior
title, the effect of this is that, the owner of the superior title can't defeat the owner of the
equitable interest because he is not a bonafide purchaser for value without notice therefore, he
buys the land subject to the equitable interest of the other owner. In the case of Sempa Mbabali
vs WKKidza, the purchaser bought the land with full knowledge that it had in it burial grounds
thus couldn't claim to be a bonafide purchaser for value without notice.
However, if he buys without notice of the equitable interest, then that makes him a bona fide
purchaser for value without notice therefore his/ her estate will not be subject to the equitable
interest. He buys it free from any other interests or incumbrance

Constrictive notice.
This was well defined from the case of Williamson vs Brown 72as notice which occurs where
the purchaser has knowledge of any fact sufficient to put him on inquiry of the prior existing
interest that conflicts with the one his intending to purchase. The failure to carry out inquiry, the

72
1887,
purchaser is deemed to be aware of such prior conflicting interest or is guilty of gross
negligence.
The buyer is to carryout inquiry from persons such as the registrar of titles, local council
authorities, village elders, the neighbours etc. Facts that are sufficient to put one on inquiry
include, finding another person or different family settled on the land one intends to purchase. If
this is so, one is required to inquire from this on the land about the kind of interest they hold in
the land and failure to do so, one is presumed to have made an inquiry and their interest will be
subject to the equitable interest if they proceed to purchase.
This was best illustrated in the case of Uganda Post Telecommunications vs AKM Lutaaya, in
this case the purchaser before completion of the purchase visited the land and found a family
settled on it, he didn't bother to inquire the nature of their interest. He went in ahead and
purchased the land, later he wanted to evict them. It was held that he purchased the land subject
to the equitable interest of those settled on it prior to him.
Furthermore, the case of Fredrick Zaabwe vs OrientBank&5Others, this clearly showed
instance where the purchaser of the land had sufficient facts to put him on inquiry but overlooked
them. In this case, the plaintiff Zaabwe gave powers of attorney to one of the defendants that is
Sewanyana in regard to his land for a debt he had obtained from him. The defendant used these
powers to mortgage the land to Orient bank which took valuers to it to estimate its value. When
Sewanyana and his company failed to satisfy the loan, Orient bank sold the land to one Ali
Hussien who bought it yet the land had a caveat placed on it.
It was held that the plaintiff was entitled to his land because, the defendants in the first place
misused the powers of Attorney by benefiting themselves to the detriment of the one that granted
it to them. The bank acquired the land with constructive notice as it was aware of the existence
of the family of the plaintiff and his law chambers on the day the valuers went to ascertain the
value of the land. The bank was to be put to inquiry with the existing rights however still went on
to take on the land
Furthermore, Ali Hussien who bought the land couldn't claim to be a bonafide purchaser for
value because by the time he obtained a legal title to the land, there had been place caveat by the
plaintiff thus he had no superior title over the plaintiffs.
This presumption can only be disapproved when one is able to show that they carried out
inquires but were unable to find any facts that could put them on inquiry. This makes them a
bona fide purchaser for value without notice and thus the superior title will not be subject to any
equitable prior interest.

Imputed notice.
This is the kind of notice that is either actual or constructive and maybe imputed on the buyer
through his agent's actual or constructive knowledge of existing facts.
Here, notice to the agent is notice to the buyer/ principal. This is because his working on his
behalf and for his benefit. The notice from one transaction cannot be used as notice in another
transaction. That is it can't be used to affect the principal in other transactions as stated in the
case of Mountford vs Scott.
Where an agent is working for more than one person, the notice acquired by him is taken to be
notice acquired by all the parties. However, where information acquired is used to the detriment
of one of the principal, then he/ she will be protected as a bonafide purchaser for value without
notice since there existed an element of fraud on the side of the other party. This was well set out
in the case of SejjakavsRebecca.

The element of bonafide purchaser for value without notice.

The registration legislation to the doctrine of notice is that, for any instrument purporting to
convey and interest in land, it must be registered in order for it to be effective as stated under
section5473. This is to the effect that the whole world that is anyone intending to make any
transactions and dealing in relation to such land is brought to notice officially about an already
existing interest. This enables one to make a decision on whether to go on with the transaction or
not.
In addition, section4874 is to the effect that registration of such instrument as mentioned above is
only effective as to such date of registration and not when the document was obtained. It further
suggests that instruments affected with actual or constructive notice shall not be given priority.
If others are two competing registered instruments, the first to be registers takes priority and a
bonafide purchaser for value without notice is only affected by notice of the registered estate of
the previous owner.

73
The registration of titles act
74
supra
Question 5. The history traced shows clearly that equity was essentially an addendum to
common law. It provided a distinct set of rules set of rules, no doubt those were not meant
to supersede the common law. However, equity is not a self sufficient system, it was
developed to assist/fulfill the rigors of the law, but not to destroy it.
Critically examine the accuracy of the statement while drawing reference to the evolution
and development of equity with the perspective of the Uganda Legal System.

Common law is a body of law that derives its origin from the customs and cultures of the people
of England or a body of law developed in England primarily from judicial decisions based on
custom and precedent, unwritten in statute or code, and constituting the basic of the English legal
system.
Equity in simple terms means principle of fairness. Equity evolved by chancery courts in
England in order to mitigate the difficulties of common law. Common law was rigid and where it
didn’t provide a remedy, the aggrieved party went away without a remedy. The king’s subjects
who were aggrieved at common law, petitioned the king for a remedy and the king authorized his
chancellors, who originally held ecclesiastical powers to solve their disputes.
Since the courts of equity existed side by side with the common law courts, there arose a conflict
between common law and equity and this was sparked off by the Earl of Oxford’s case75
The Earl of Oxford case of 1615 occupies a rather unique position in the development of the
English legal system and is frequently referred to as the cornerstone of equity in the modern
English legal system. It could be said that the case shares an ipso facto relationship with the court
of chancery.
The Earl of Oxford’s case was concerned with a parcel of land in London which Henry VIII had
gifted to Thomas, Lord Audley, as a reward for procuring the trial and eventual execution of
Anna Boleyn. By his will Lord Audley left the land to Magdalene college, Cambridge which
subsequently sold it and which were indirectly acquire by the Earl of Oxford. Magdalene college,
then challenged the Earl of Oxford’s title to the land on the basis of a statue which prohibited
the sale of college lands but against this was the fact that as part of the original sale,
Magdalene college had made an immediate transfer to Queen Elizabeth with the deliberate

75
1615.
intention of circumventing the statue. At common law chief justice Coke ruled in favour of
Magdalene college, however on appeal to the chancery court, the Lord chancellor issued a
common injunction on the basis of an unconscionable advantage which had developed in favour
of the Magdalene college and denied the Earl of Oxford’s rights to adequate compensation for
loss of title, resulting from the enforcement of the common law order against the Earl of Oxford
for breaching the statute.
The Magdalene college action acted as a catalyst for the dispute between common and equity.
This dispute set the two Leviathans’ of the English legal system on a confrontation path (Sir
Edward coke, chief justice of the King’s Bench and the Lord Chancellor Ellesmere). The two
jurisdictions became estranged and a stalement situation ensued, with no compromise on either
side which eventually led to the impasse being referred to the Attorney General Sir Francis
Bacon, who petitioned the king. The attorney general acting on the authority of James I upheld
the use of the common injunction issued by the Lord Chancellor and concluded that in the event
of any conflict between the two jurisdictions, equity would prevail.
Later on this dual system of courts proved to be expensive, cumbersome and inconvenient. The
judicature Acts of 1873 and 1875 addressed these issues and provided that all courts could now
exercise both a common law and equitable jurisdiction. The Acts merged or fused the two courts
and formed the Supreme Court of Judicature. However, the Acts established the supremacy of
equity by providing that in a conflict between common law and equity, rules of equity were to
prevail. There a number of developments that the judicature Act came up with for example, both
courts would offer the same remedies among others.
There a number of contributions to the substantive law that have been made by equity as
discussed below,
Trust, under common law a trustee was never liable for mismanaging a trust, in other words the
beneficiaries were vulnerable and at the mercy of a trustee, however equity reformed the state of
affairs holding a trustee accountable for mismanagement or breach of a trust.
Restrictive covenants, under common law a third party to a contract had no right of enforcing it
in case a party to the contract was absent under the principle of privity, however equity provided
for an exception for beneficiaries.
The mortgagor’s equity right to redeem, this is as far as the date of redemption is concerned,
under common law where a mortgagor failed to pay a debt in time as stipulated in the mortgage
deed, it would amount to a breach of contract and he or she would not be able to redeem his or
her property, however under equity came reforms that where a mortgagor failed to pay back as
stipulated in the mortgage deed he or she would not completely lose the right to redeem the
property.
The Subponeno order, this is an order that was developed by chancery courts to compel a litigant
to appear in person before court and be questioned.
Estoppel, this means that where a person made a promise to another person, he or she would be
prevented from backtracking from his or her statement. The defendant must have relied on the
plaintiff’s word to his or her detriment. This was highlighted in the High Trees case.
Remedies, equity came up with new remedies for justice unlike common law where damages
was the only remedy available to an aggrieved party, equity provided options like specific
performance, injunction, prohibition among others.
Equity and common law were imported into Uganda by the Uganda order in council, 1902. It
started with section 15(2) of the Order in Council that contained a reception clause which
empowered the commissioner to apply any law of the United Kingdom to Uganda. It was sealed
off by section 20 of the Order in Council which contained a repugnancy clause. The clause
recongised native laws and customs subject only to whether they were in conformity with the
rules of good conscience, natural justice and morality.
Equity in Uganda was finally domesticated by section 1476 and section 1177 which emphasizes
that in every civil cause or matter before a magistrate’s court, law and equity shall be
administered concurrently.

Question 6. In the year 1615 as reported in English Reports,Mich.13 Jac 1 [1615] 1 Chan.
Rep 5vol. 21, Pp485-9-16, as great disagreement emerged between Lord Chief Justice, the
Head of the common Law Courts and Chancellor of the Courts of chancery, Lord
Ellesmere over the exercise of the respective jurisdictions.
a) What prompted the disagreement
b) How was the agreement resolved and by who

76
The Judicature Act

77
The Magistrates Court Act
 c) What major modifications/ reforms in the law and practice followed

In the second part of the 16 th Century, the rivalry between the common Law Courts and the
Chancery became intensive. This was largely because of the Chancery’s power to issue the
common injunction to restrain the enforcement of the common Law Court’s judgments.
The conflict reached its peak when core because Chief Justice of the King’s Bench division of
the High Court. He was totally opposed to Chancery jurisdiction.
The conflict between common Law Courts and the Chancery Courts hit peak in the Earl of
Oxford’s case. In this case Lord Chancellor, Ellesmere contended that he had power to set aside
Common Law Judgments on grounds of equity and good conscience. On the contrary CJ Coke of
common Law Courts insisted that the Chancery had no right either by statute or by any Law of
the Lands to set aside common Law judgments and that he would issue writ of prohibition
against Chancery interference with common Law Judgments. The friction reached King James I
who on advice from several Lawyers including Bacon a future Lord Chancellor ruled in favour
of Chancery jurisdiction. This meant that equity rules became supreme over the common Law
rules in England.
The decision by King James I had the following modifications in the Law and practice as
follows:-
The Chancery Courts’ jurisdiction became more extensive and attracted a lot of litigants. This
resulted to equity courts being flooded with cases and over burdened due to poor staffing,
organization and a complex an inefficient procedure.

Common Law Courts applied rules of equity to cases brought before them whenever those rules
conflicted or differed from Common Law rules. The aim here was to prevent separate
proceedings, one in equity and the other of common Law from being started in respect of the
same cause of action
The enactment of the Common Law procedure Acts of 1852, 1854 and 1860 gave the common
Law Courts power to exercise certain jurisdiction which were originally reserved for Chancery,
for example common Law Courts could order discovery of documents and interrogatories in
certain cases. They also empowered to grant an injunction and other equitable reliefs.
The Chancery Amendment Act78 gave the Courts of Chancery power to exercise certain
Common Law powers. For example in an equity suit, a relevant Common Law matter could be
decided by the Chancery Court. It’s important to note that the above Acts did not adhere much in
dealing with the shortcomings in the dual system of administering justice. The Royal
Commission on the Administration of Justice, therefore recommended the complete fusion of the
administration of justice by means of the consolidation of all superior Courts of Law and equity
into one supreme Court possessing the jurisdiction of all the Courts to consolidation and hence
the enactment of Judicature Acts 1873-1875.
The Judicature Acts abolished all the then existing superior courts and in their place set up a
Supreme Court of Judicature consisting of the High Court of Justice and the Court of Appeal.
The High Court of Justice was to consist of three divisions, the King’s Bench Division, the
Chancery Division and Probate, Divorce and Admiralty Division.
The Judicature Acts effectively abolished the dual administration of justice as between the
Common Law Courts and the Chancery Court. Second, the High Courts of Justice were given
power to administer both equity and Law concurrently or together.
All claims, obligations and defences were recognized and enforced by all the three divisions of
the High Court of Justice. And the common injunction exercised by the Chancery Court was
abolished since it was no longer necessary.

Question 7. With the aid of the decided cases mention and discuss the exceptions to the
equitable maxims that “equity will not perfect an imperfect gift” and “equity will not assist
a volunteer”

A beneficiary under a trust is a Volunteer unless he has provided valuable consideration. Where
a gift is made, the beneficiary will always be a Volunteer as it is by definition made without
consideration. Therefore a Volunteer under equity is one or a person who has not furnished
consideration for a benefit they have received or expect to receive. The traditional equitable
maxim is that equity will not assist a Volunteer. This generally means that where a gift is made
imperfectly, equity will not unable the intended beneficiary to claim the gift under a trust.

78
1852
Therefore equity will not assist a Volunteer to a position of equity, if in doing so, it would repair
the consequences of a would be donor’s folly.
In the case of Milroy –V- Lord where a Voluntary deed which purported to assign 50 shares to
Samuel Lord on trust for Milroy’s agent under a power of attorney. The formalities of the share
transfer were not complied with Milroy therefore sought to establish that a trust had been
declared. It was held that an ineffective transfer does not constitute a declaration of trust without
there being a clear intention to create a trust. Furthermore, if a Voluntary settlement is to be valid
and effectual, the settler must have done to transfer the property and rende4r the settlement
binding upon him. As the shared had not been transferred no trust was created and gift made.
The case of Milroy –V- Lord thus provides that for the settlement to be binding there must be
either an outright transfer, a declaration of self as trustee or a transfer of property to a third party
as trustee. The same was highlighted in the case Jones –V- Lock.

Exceptions to the Maxims

Donatio Mortis Causa
The means a gift made intervivos which is conditional upon and which takes effect upon the
deaths of the donor. This could be distinguished from a normal intervivos gift under which title
immediately passes to the transferee, a testamentary gift which takes effect under provisions of a
property executed will. The essentials of a valid dontio mortis Causa were explained by the
Russel CJ in the case of Cain –V- Moon. That the gift must have been in contemplation though
not necessarily in expectation death, That the subject matter of the gift must have been delivered
to the donee and that the fit must have been made under such circumstances as to show that the
property is to revert to the donor if he should recover.
The first condition was illustrated in the case of Wilkes –V- Allington. In this case the donor
was suffering from an incurable disease. He made a gift knowing that he did not have long to
live. In actual fact, he had an even shorter time than he imagined. He died two months later and it
was held the gift was valid. The second condition is illustrated from Re Weston, where it was
held that where a dying man, could be shown to have handed over to his fiancée his Post Office
Savings Book, his action was sufficient to constitute an effective Donatio Mortis Causa.

Non Application to Wills

The executor is under an obligation to carry out the provisions of a will in favour of beneficiaries
who are Volunteers. The property vests by the death of testators in the executor on trust to
execute the disposition of the Will.

The rule in Strong –V- Bird

If a person makes an imperfect gift to X and subsequently appoints X his executor, upon the
death of the donor, the property vests fully in X. The equity of the beneficiary under the will is
displaced by X’s prior equity. Consequently, X may retain the property irrespective of the fact
that until the donor’s death X’s title was imperfect. The rule has been extended to apply to a
donee who has taken out letters of administration to the estate of the donor. Further for the rule
to apply the gift must have been perfect in every way except for the legal formalities required for
the proper transfer of title. In the case of Re Freeland, a testatrix promised to give the Plaintiff a
motor car in the future but did not do so. On the death of the testatrix, the plaintiff became her
executrix and claimed that the imperfect gift had in consequence been thereby perfected. The
rule in Strong –V- Bird was refused because there was no intention to make the plaintiff the
owner of the car immediately.

Equitable Estoppel
Situation may occur where equity prevents an owner of land who has made an imperfect gift of
some estate or interest in it from asserting his title against the donee. The donee’s equity is said
to exist where he incurs expenditure in respect of the land in the mistaken belief that he has or
will acquire an interest in it and the owner knowing of the mistake stood by and allowed the
expenditure to be incurred. It’s respectfully submitted that this may not be a true exception to the
maxim that equity will assist a volunteer since the donee by incurring detriment could be to have
supplied consideration in the same way as a promise under a contract.

Delay by the routine operation of the Law

In the case of Re Rose where it was established that equity will in fact be capable of perfecting
an imperfect gift if its established that the donor had done all that can be expected of him to
transfer the legal title, but the transfer was in fact delayed by the routine operation of the Law.
As such, in circumstances such as these the gift will be capable of being effective.
The principle in Re Rose has nonetheless been further enunciated in the case of T choithram
International SA –V- Pagarani where it was again demonstrated that imperfect gifts in equity
can in fact be made perfect on the circumstances. Here, it was held that “that valid trust was
created over that property even though the deceased person had not transferred the legal title in
the trust property.

Question 8
Breach of trust is an act of a trustee that violates the trustee’s duties or the terms of a trust. A
breach of trust need not be intentional or malicious, it can be due to carelessness or negligence.
Breach of trust is any act or omission on the part of the trustee which is inconsistent with the
terms of the trust agreement or the law of trusts.
The remedies can be divided into namely, personal liability, extent liability, measure of liability
and trustee’s liability for Acts of Co-trustee. The remedies available for breach of trust may
include: compelling the trustee to perform the trustee’s duties, enjoin the trustee from
committing a breach of trust, compel the trustee to redress a breach pf trust by paying money,
restoring property or other means, order a trustee to account; appoint a special fiducian to take
possession of the trust property and administer the trust, suspend the trustee, an injunction and
tracing, among others. My main discussion is going to pay particular attention to only equitable
remedies of injunction and tracing.

Injunction
The equitable remedy of injunction bears such a marked resemblance to certain forms of the
interdicts, which were granted by the proctors under the Roman law, that it has been said by
some authors to have had its origin in the Roman law.
An injunction is our order by a court directed to Party to a suit to the effect that he/she should do
or refrain from doing a particular act. Previously, this remedy could only be granted by Chancery
Courts, however in 1854, by virtue of Common Law Procedure Act, the Common Law Courts
also got powers to grant injunctions in certain cases.
In the case of trust, the trustee may be compelled by Court through an injunction to carry out
with the trust, abide by the rules of the trust as were given by the settler or the trustee may be
refrained from doing a particular act which may be contrary to the rules or guidelines that were
given by the settler of any given trust.
There are different types of injunctions as discussed below:-

Prohibitory
The prohibitory or restructure injunction is the most common form of injunction, this form of
injunction prohibits the trustee from taking a particular action and maintains the position of the
trust until there is a hearing to determine the matter in dispute.

Mandatory injunction is an injunction which orders a party or requires them to do an

affirmative act or mandates a specified course of conduct from trustees.

Temporary injunction
This is an exercise of judicial discretion and is meant to preserve matters in status quo pending
final determination. This injunction basically restrains the trustee from further action for the sake
of maintaining the status quo. Status quo was defined as an existing state of affairs, things or
circumstances during the period immediately proceeding the application for an interlocutory
injunction. An application for temporary injunction is granted from a pending trust suit and
therefore there must be a cause of action to sustain the application.

Interim injunction,
This restrains some one only until further order or until the hearing of the main trust application
for a temporary injunction. This kind of injunction is often granted ex-parte.

Tracing
This is one of the remedies available to a beneficiary for breach of trust. Its proprietary remedy is
one which entitles a claimant to treat specific property or a portion thereof as his own. Tracing at
Common Law did not develop a real action in respect of chattels which entitled a plaintiff to
specific recovery thereof. Common Law recognized the Plaintiff as the owner of the Chattel, but
there was no action at common law of paying damages on returning the chattel The right to trace
at law is only lost if the money becomes part of a mixed account because it is no longer
identifiable. For this purpose, mere payment into a bank account does not prevent identification.
Equity has tried to overcome this problem. In practical terms, the Common Law remedy
becomes irrelevant because in practice, tracing is limited to cases where the Plaintiff is seeking
money in mixed account. Consequently, the tracing remedy is limited to cases where there is
breach of a fiduciary relation which makes the equitable remedy available.
Equity has developed more sophisticated methods of tracing namely;

Straight case
This is one which there has been no mixing of trust funds with the trustee’s own money.
Consequently, if the trustee has sold trust property, the beneficiary may take the proceeds if he
can identify them. In a situation where the proceeds of sale have been used to any other property
they take the property bought or to hold it as security for the amount of money used in the
purchase. This is subject to the condition that claims in equity are invalid against a bonafide
purchaser for value without notice of the trust.
Mixed funds in the hands of trustee, the situation becomes complicated where the trustee has
mixed trust funds with his own or, if after mixed, there are additional dealings with the funds.
The problem then becomes one of identifying the trust funds in a mixed account or in other
property into which it has been converted. In this regard, the burden of proof is on the trustee to
prove initially that part of the mixed fund is his own. In Re Tilley’s W.T, Court stated that if a
trustee amalgamated trust property with his own, his beneficiary will be entitled to every portion
of the blended property which the trustee can not prove to be his own. In the other cases in the
hands of fiduciaries/beneficiary and in the hands of third parties. The liability of a trustee may be
personal, extent, measure of liability and trustee’s liability for acts of co-trustee.
The main discussion is more with trustee’s liability for acts of a co-trustee. Where there exists
more than one trustee their liability for breach of trust is joint and several. A beneficiary may
claim the whole loss by suing all or some of or anyone of those who are liable and an levy
execution for the whole sum against anyone of them liability for acts of agents.
In general, a trustee is not liable for the acts or omission of an agent, however, if the agent acts at
the direct of the trustee and such action would be a breach of trust, a trustee will be liable to the
trust beneficiary. Similarly, If the trustee delegates an authority to the agent under which the
trustee is under a duty not to delegate. Finally, if the trustee acts to conceal from knowledge the
acts of the agent or fails to take steps to make the agent redress wrongs of which it has
knowledge, the trustee is guilty of breach of trust.

Liability for acts of co-trustees

In general, a trustee is not liable for the acts or omissions of a co-trustee. However, if the trustee
participates with a co-trustee in a breach of trust, the trustee will be liable to the beneficiary. A
trustee who improperly delegates a duty to a co-trustee “approves, knowingly acquiesces in, or
conceals a breach of trust committed by a co-trustee” or is negligent in enabling a co-trustee to
commit a breach of trust, has also committed a breach of trust and is liable to the trust
beneficiary. Each trustee who is liable should contribute equally regardless of the degree of fault.

Instances when a trustee may be protected from liability.

Indemnity
This is where a trustee is not liable to contribute. These are situation where he is entitled to
indemnity from his co-trustee against his own liability. Where a trustee has acted fraudulently on
his own and he alone is liable. Secondly where one trustee is a solicitor and has exercised such
controlling influence that the other trustee is unable to exercise independent judgment, thirdly
where a beneficiary has participated in a breach of trust with a view of obtaining a personal
benefit, he is required to indemnify the trustee.

Where beneficiary participate in or consents to breach of trust.

The beneficiary may fail to sue the trustees where he or she consented or participated in the
breach. The beneficiary must be in a situation where he or she is free to choose, secondly the
court should consider all the circumstances in which the beneficiaries concurred in order to
ascertain whether they were fair and equitable so as to prevent him from turning around and sue
the trustees.

Release and acquiescence, these relate to conduct of the beneficiary after the breach has taken
place. The release may be but need not be formal and may be inferred from conduct. In Egg v
Devey, a beneficiary accepted benefits under his mother’s will which prevented him from
claiming in respect of time taken by a beneficiary in making the claim may be evidence to the
trustee of an intention to release by a beneficiary.

Statutory relief
Where a trustee may be personally liable for a breach of trust but he has acted honestly and
reasonably and ought to be fairly excused for the breach or for omitting to obtain the directions
of the court in a matter in which such breach was committed. In Perrius v Bellamy, by mistake
of law, trustees believed they had a power of sale in pursuance thereof sold settled leaseholds,
with the result that the income of the tenant for life was reduced. It was held that (having been
advised by a solicitor that they had power to sell and by a surveyor that it was undesirable to
retain the properties) they were entitled to relief.

Statute of limitation and laches.

Where beneficiaries delay instituting a suit against a trustee or trustees in breach of trust, the
limitation Act is the guiding law when it comes to laches. The Act provides that an action to
recover money or other property or in respect of any breach of trust may not be brought against a
trustee or any person claiming through him after the expiration of 6 years from the date on which
the right of action accured, however it’s important to note that there are exceptions to the general
rule, where the claim is to recover from the trustee and the right action shall not be deemed to
have accured to a beneficiary who is entitled to a future interest in the trust property. The
limitation Act also provides that if on the date on which the right of action accured, the person to
whom it accured is under a disability (such as infancy or mental derangement), an action may be
brought upon the expiration of 6 years.
ISLAMIC UNIVERSITY IN UGANDA KAMPALA
CAMPUS-KIBULI

FACULTY OF LAW
SCHOOL OF LAW
LLB III
Semester II, 2018/2019

COURSE WORK
 COURSE UNIT: EQUITY AND TRUST

NAME: ISABIRYE ASHIRAFU

REG. NO. 216-053012-08667
LECTURER: Mr. Lubogo Isaac Christopher

Equity and Trusts examination paper of 2018/2019

Makerere University (MUK) School of Law

QUESTION ONE

2. With the aid of relevant case distinguish between trusts from other forms of legal
relations.

A trust is a fiduciary relationship where the settlor bequeaths the property to hold it for the other
person called beneficiary According to the case of green v under hill.

Trust and Agency.

Agency is the contractual arrangement express or implied, written or verbal where one person
may act on behalf of another and bind that other as if he or she acted personally. Agency a rises
where a person called the agent has expressed or implied authority to act on behalf of another
called the principal and he consents to it.

The trustee in exercise of his office will contract as principal and cannot bind the beneficiaries
unless that have constituted him both trustee and agent binds his principal so long as he acts on
the principal's authority on apparent that he is deemed to have.

Although the trustee has a right of recoup an indemnity against the beneficiaries for any property
incurred expenses and creditors may subrogate those rights in certain circumstances there's
therefore no direct contractual link between the beneficiary and 3rd parties comparable to link
between the principal and third parties.

Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. Whereas a
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallot vs Wilson79

Trust and Debt

The traditional view is that the relationship between trustee and beneficiary is not one of debtor
and creditor. That means that the trustee does not owe the value of the rights he holds to the
beneficiaries. This can be seen in the case of Morley vs Morley,Barclays Bank Ltd vs
Quistclose investment Ltd80created confusion in this area, holding that a borrower of money
can be both a debtor and a trustee in respect of the same sum. That decision is how ever
extremely controversial and has been recently reviewed in Twinsectra V Yardley81, but the
under the traditional view enunciated above a trustee will not owe the value of the right held on
trust, this is not to say that a debt cannot form the subject matter of a trust. When we talk of trust
of a bank account, we mean nothing than the creditor’s right to sue is held on trust.

Trust and Bailment

A bailment arises where an owner of property gives permission to another person to possess it. A
bailment is a delivery of personal chattels to bailee subject to a condition that they be returned to
the Bailer or be dealt with as the Baylor directs when the purpose of the bailment has been
carried out.

The Differences between Bailment and a Trust;

A Bailee obtains only possession and what is referred to as special property in the goods while
trustee takes title to the trust property.

79
(1930).
80
(1970)Ac 56
81
(2002) UKHL
 Bailment is a common law notion worked out in proceedings for common law relief such as
actions of conversion, detinue, and breach of contract whereas the trustrelationship is a purely
equitable relationship.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason.

Bailment only applies to personal chattels that are capable of delivery where as a trust may arise
in respect of real or personal property and whether tangible or in tangible.

A bailment is enforced by the bailer who is party to the arrangement while generally the trust is
enforced by the beneficiary who is not party to the trust instrument.

In bailment there's no transfer of property from the bailer to the bailed. Bailment duties are
dependent on the rules of common law and not equity.

The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.Bailment is restricted to chattels but a trust may exist to all types of property

Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owner loose rights for example estoppel however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.

Contracts and trust

A contract as defined in sec 10 of contracts Act is an agreement where personal obligation which
arises from agreement between relevant parties supported by consideration on the part of the
promise on the other hand a trust is an equitable proprietary relation which can arise independent
of agreement or the provision of consideration. The distinction between contract and trust is how
ever difficult to draw.
Re Cook82,indeed there can be no hard and fast lines between contract and trust because contract
is a source of rights while trust is a way of holding rights, indeed many rights held in a trust are
born of contract.
82
(1965)CH 1902
Settlement and covenants to settle.
Where property is vested in trustees on a settlement, it was held upon a trust on settlement.
However, if the property has not yet been transferred to trustees but it's simply subject to a
consent to settle, The beneficiaries will only be able to enforce consent if they have given
consideration based on the principle equity will not assist a volunteer.
Power of appointment.
This refers to a power that is conferred upon a donee to dispose of the donor’s property by
nominating and selecting one or more third parties to receive it.
The property may consist of tangible items like cars, boats, house hold items or it may consist of
an intangible interest in property such as the right to receive dividend income from stocks

The distinction between trusts and powers of appointment is fundamental. A trustee must do as
the settler directs whereas powers of appointment are discretionary.

Further the beneficiaries under a trust are owners in equity of the trust property. However the
objects of powers of appointment are nothing unless and until the donor of the power makes an
appointment in favor of the done. Vesty vs IRC 83

QUESTION 2

2(a). Discuss the capacity elements that must be possessed of a settlor in creation of a trust.

The trust instrument must show certainty of intention to create a trust, certainty of what the
subject matter of trust is and certainty of who beneficiaries are and for trust to be valid there
must be transfer of property by the settlor to the trustees.

Therefore before creation of trust a number of situations may be considered and mostly its
ability, anyone who can hold property can create trust there are exceptions for statutory bodies
and corporations’ .Minors also can't hold property though they can in some circumstances.

The situations considered when creating trusts are discussed below;

83
(1980)Ac 1148
Minors: A settlement on trust by minor is voidable in the sense that he can repudiate it during his
minority or within a reasonable time of attaining his majority.

In the case of Edward vs carter, such settlement is how ever only possible in respect of an
equitable interest. Since am infant cannot hold legal estate, a settlement of trust in respect of trust
in legal estate is not possible by him.

2. Mental abnormality.
Generally a person who is mentally abnormal cannot create a trust under the trustee's Act S.50
(1) b. That meant that for one to create trust he or she should be sane. "The court may direct a
settlement to be made of the property of a lunatic or any part thereof or any interest there in, on
such trusts and subject matter to such powers and provisions as the court may expedient."
The direction may affect property which has been acquired by the lunatic under a settlement, a
will or an intestacy with a view to protecting interested parties in the event of change in the lawn
of intestacy or circumstances affecting an earlier disposition by the lunatic.

Companies
Trading companies which are incorporated under the companies act have an implied power to
borrow for the purposes of the company's business. Normally this power is uses to issue
debentures and for the purpose of buttressing the issue the company has power to execute a trust
deed by which after covenanting to repay the loan with interest until payment, assigns to trustees
real property or lease holds belonging to the company, to constitute security for the repayment of
the loan, the trustees under taken to hold the property upon certain trusts in favour of the
debenture holders.

2(b). Discuss the formalities if any, essentials for creation of a valid trust.

A settlor may create a trust by manifesting an intention to create it .This can be seen in the case
of Jones vs lock where the court of appeal of chancery held that there was no trust, because the
fathers intention was an outright transfer. They refused to perfect an imperfect gift through a
successful declaration of trust. It should be noted that no formalities are required for the creation
of an inter vivos trust of personality. However evidence in writing is required for the creation of
a trust in land. Thus by section 92 of the registration of Titles Act any declaration of trust
respecting land must be evidenced by a memorandum in writing signed by the party creating the
trust.

The following are the essentials of a trust;

In the case of Knight vs Knight it was stated that in order for a trust to be validly created, three
conditions are necessary: the words employed must be so used that taken as a whole, they ought
to be construed as imperative, that is the words must be certain

The Subject matter of the trust must be certain

The objects or persons intended to be benefitted must also be certain

The three requirements are usually described as the three certainties of a trust. It’s suggested that
apart from these requirements, a trustee is also necessary for the execution of a trust. Each of the
requirements will be considered in turn.

CERTAINITY OF WORDS.
As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. Consequently an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.
The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in Lambe Vs Eames, the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.
In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet.....in full confidence that she will do what is right as to the
disposal thereof between my children either in her life time or by will after her decease. "it was
held that the wife took absolutely and there was no trust in favour of the children. Similarly in
the case of Mussorie Bank Vs Raynor, the privy council held that where a testator left all his
property to his widow, feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

However a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in Comiskey Vs Bowring
Banbury, a testator gave to his wife,"the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testator’s intention was to give an absolute gift to the wife.

CERTAINITY OF SUBJECT MATTER

As was observed earlier, the subject matter of a trust could take many forms. It could be interest
in land in possession or reversion; chattels, money and chooses in action. In Re Diggles, it was
indicated that uncertainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis Vs Rippon, the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good,
remembering always according to the circumstances, the church of God and the poor. It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.
In Bardwell vs Bardwell, there was a direction, to remember certain persons; it was held that
there was no valid trust. In knight vs Knight, there was direction to reward. my old servants and
tenants according to their deserts. it was held that the purported trust was invalid In Re Jones, a
gift was given to a wife, absolutely, followed by a direction that, as to such parts of my estate as
she shall not have sold or disposed of ,it should be held in trust for certain persons. it was held
that the purported trust was invalid.

CERTAINITY OF OBJECTS.
This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re Vandervells Trusts, it was
indicated that in case of future interests, the beneficiaries must be ascertainable with in the period
of perpetuity.
The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. With regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

A trust can be defined as relationship that is recognized by equity, it arises where property is
vested in a person or persons known as trustees who those trustees are under a duty to hold for
the benefit of other persons known as beneficiaries. The interest of beneficiary are normally
described in the instrument creating the trust, however these may be implied or imposed by law.
It can also be noted that the beneficiary interest should be proprietary meaning it can be sold or
bought. And it should also be emphasized that for trust to be created there must certainty of
intention, object and the subject matter. A trustee have the legal ownership carrying with it
responsibilities and burdens whereas beneficiary would have the advantage of any ownership.
An executor would similarly have the burdens and responsibilities and could be expected to
distribute property in accordance with the will.

QUESTION 3

(a)In advising Imran on the validity of the legal arrangement in the will, where there are
dispositions to two beneficiaries in respect of the same gift or subject matter. Ideally according to
equity, under the equitable maxims that “where there are equal equities the one first in time takes
precedence,” this would then mean that Menya would be in right to take the property as he was
given there is a testamentary trust (will) and that will has been amended by a codicil, the codicil
will take precedence thus as seen in the facts were , the provision in the will, which stated that
“my house on block 12 plot 275, garuga, at the pearl marina to my brother Menya, absolutely”
was amended by the settlor (Tonda) in October 2017 where he told Imran ,”that he was to hold
the house on trust for someone to be disclosed at a late date thus this being a codicil amending
the provision in the will of June 2017. I therefore conclude that the valid legal arrangement in
this case would be to follow the last wishes in the will.

3b.Discuss the three certainties required when forming an express trust.

An express trust is one which has been intentionally created by a settlor himself though
manifestation of an intention to create one. The most common methods of creation are by deed
or will by unsealed writing inter vivos or by word of mouth. It's a trust created in express terms
and usually in writing as distinguished from one inferred by the law from the conduct or dealings
of parties.

Property is transferred by person called trustor, settlor or grantor to a transferee who holds the
property for the benefit of one or more persons called beneficiaries.
Express trust may be sub divided into executory and executed trust, on the hand completely and
in completely constituted trusts, on the other. An executed trust is one which in which the settled
has indicated inappropriate technical terms what interests are to be taken by all the beneficiaries.
An executory trust is one in which the settlor has indicated to his trustees a scheme of settlement
but the details are to be gathered from his general expressions.

The distinction is of practical significance in two respects, Firstly while the language of an
executed trust is strictly construed, an executory trust is liberally construed. Secondly, where in
an executed trust the settled makes use of technical expressions, the interpretation of which the
law recognizes certain rules, equity follows the law and gives effect to such interpretation.
However, with an executory trust, equity attributes less importance to the use or omission of
technical words. Rather it seeks to discover the settlor’s true intention

Once the intention is discovered, equity orders the preparation of a final deed which gives effect
to the settlor’s intention which is discoverable from the language of the settlor’s instrument.

The distinction between a completely and in completely constituted trust is necessary in order to
distinguish a trust from a void settlement. A trust can only be valid if the title to the property is in
the trustee and if the trusts have been validly settled.The three certainties of Express trust are;

CERTAINITY OF WORDS.
As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. Consequently an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.
The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in Lambe Vs Eames, the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.

However a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in Comiskey Vs Bowring
Banbury, a testator gave to his wife,"the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testator’s intention was to give an absolute gift to the wife.

CERTAINITY OF SUBJECT MATTER

As was observed earlier, the subject matter of a trust could take many forms. it could be interest
in land in possession or reversion; chattels, money and chooses in action. In Re Diggles, it was
indicated that uncertainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis Vs Rippon, the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good,
remembering always according to the circumstances, the church of God and the poor. It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.
In Bardwell vs Bardwell, there was a direction, to remember certain persons; it was held that
there was no valid trust. In knight vs Knight, there was direction to reward. My old servants and
tenants according to their deserts. it was held that the purported trust was invalid In Re Jones, a
gift was given to a wife, absolutely, followed by a direction that, as to such parts of my estate as
she shall not have sold or disposed of ,it should be held in trust for certain persons. it was held
that the purported trust was invalid.

CERTAINITY OF OBJECTS.
This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re Vandervells Trusts, it was
indicated that in case of future interests, the beneficiaries must be ascertainable with in the period
of perpetuity.
The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. With regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

A trust can be defined as relationship that is recognized by equity, it arises where property is
vested in a person or persons known as trustees who those trustees are under a duty to hold for
the benefit of other persons known as beneficiaries. The interest of beneficiary are normally
described in the instrument creating the trust, however these may be implied or imposed by law.
It can also be noted that the beneficiary interest should be proprietary meaning it can be sold or
bought. And it should also be emphasized that for trust to be created there must certainty of
intention, object and the subject matter. A trustee have the legal ownership carrying with it
responsibilities and burdens whereas beneficiary would have the advantage of any ownership.
An executor would similarly have the burdens and responsibilities and could be expected to
distribute property in accordance with the will.
I would advise Chege to create a testamentary trust where she will bequeath the money through a
secret trust to be particular a fully secret trust to hand it for the benefit of her long term
boyfriend.

Testamentary trust is created by a will and arises after the death of the settlor, this is normally
done in secret a trust which is a situation where the settlor calls or informs the intended trustee
and tells him or her about the intension of creation the trust. The purpose of this kind of trust is
to keep the identity of the intended beneficiary undisclosed.

This kind of trust has two are essential elements which make a secret trust valid besides the three
certainties: communication and acceptance.

In fully secret trusts, this is where the settlor communicates to the trustee all the contents of the
trust and bequeaths property to that intended trustee as a gift in a will and the trustee is the one
who knows the purpose of the trust. As mentioned the facts above that the settlor does don’t want
her husband to know about it the best way is then to give him the property through a secret trust

On the facts above, chege here in known as (settlor) would communicate to Nancy and tom
(trustees) all the contents of the trust and bequeath the substantial of money to Nancy and tom as
a gift in a will. Thus she would have given a long term boyfriend Steve the substantial sum of
money without her husband Julio knowing.

QUESTION 4

4a. Discuss the exceptions to the rule that equity will not assist a volunteer in any two of
thefollowing;

(i) Donatio Mortis Causa

(ii) Proprietary estoppel
(iii) The rule in strong Vs Bird

(i) Donatio Mortis Causa.

A donatio mortis causais a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor. This could be distinguished from a normal inter vivos gift
under which title immediately passes to the transferee, a testamentary gift which takes effect
under provisions of a property executed will.
The essentials of a valid donatio mortis causa were articulated by Lord Russels C.J in Cain vs
Moon They are;

1) The gift must have been in contemplation though not necessarily in expectation of death;
2) The subject matter of the gift must have been delivered to the donee;
3) The gift must have been made under such circumstances as to show that the property is to
revert to the donor if he should recover.
The first condition was illustrated in the case of Wilkes be Allingtin. In that case, the donor was
suffering from an incurable disease. He made a gift knowing that he did not have long to live .In
actual fact,he had an even shorter time he imagined .He died two months later of pneumonia. It
was held that the gift was valid. The second condition may be illustrated from Re Weston, where
it was held that where a dying man, could be shown to have handed over to his fiancee his post
office savings book, his action was sufficient to constitute an effective donation mortis causa of
the balance recorded in the book.

(ii) Proprietary Estoppel

There are situations where prevents an owner of land who has made an imperfect gift of some
estate or interest in it from asserting his title against the done for the donee’s equity is said to be
present where he incurs expenditure in respect of the land in the mistake belief that he has or will
acquire an interest in it an the owner knowing of the mistake stood by and allowed the
expenditure to be incurred.

(ii) The Rule in Strong vs Bird

Where a person makes an imperfect gift to x and subsequently appoints X his executor, upon the
death of the donor, the property vests in fully in X. The equity of the beneficiary under the will is
displaced by X's prior equity. Consequently, X may retain the property irrespective of the fact
that until the donor's death X's title was imperfect. The rule has been extended to apply to a done
who has taken out letters of administration to the state of the donor, and the personal
representatives of a person who had consented in favour of volunteers and had subsequently been
appointed a trustee of the settlement in favour of volunteers.

Furthermore for the rule to apply, the gift must have been perfect in every way except for the
legal formalities required for the transfer of title .Thus in Re Free land, a testatrix promised to
give the plaintiff a motor car in the future but didn't do so. On the death of the testatrix, the
plaintiff became her executrix and claimed that the imperfect gift had in consequence been there
by perfected. The court refused to apply the rule in strong vs Bird, there having been no
intention to make the plaintiff the owner of the car immediately.

Finally, any one relying on the rule must show a continuing intention on the part of the donor up
to the time of his death. Thus in Re wale, investments of which the settlor was absolute owner
were settled by her voluntarily in 1938 for the benefit of her daughter. The settlor did not take
any steps to transfer these investments to trustees, who however, were appointed executors of the
settlors will .The will was subsequently altered from time to time and it eventually disposed of
all her estate to other beneficiaries. It was held that although an incompletely constituted trust in
favour of the daughter had been created by the settlement of 1939, the settled had not shown any
continuing intention to benefit the daughter.

4b Discuss the remedies available to the beneficiaries for breach of trust.

A breach of trust consists of an improper act, neglect, default or omission of a trustee with regard
to trust property or of a beneficiary. It may include; direct intermeddling with trust property for
improper purposes, failure to exercise proper care in discharging a duty and male fide exercise of
a discretion. In these instances, the trustee must replace any consequential loss from the trust
fund as a result of his or her actions. The purpose of the rule is not to punish the trustee but to
compensate the beneficiaries. The following are the remedies available to the beneficiaries for
breach of trust;

Compelling performance of the trust.

It should be noted that if a trustee neglects the administration of the trust or defaults in protecting
the trust estate, a beneficiary may take steps to ensure that he takes the necessary actions in the
interest of trust property.
For example where a trustee fails to renew lease hold, where the character of trustee is such as
would endanger to fraud among others. Apart from the general, there are certain equitable
remedies to which a beneficiary may resort; that is he may apply for an order of injunction to be
granted by court, where a breach of trust is contemplated. This can be seen in case of Milgan vs
Mitchell.

In this respect by law of property legislation in some jurisdictions trustees for sale shall so far as
practicable give effect to the wishes of the beneficiaries of full age. Consequently failure to
consult them or some of them amounts to breach of trust which can be restrained by injunction.
An injunction may also be obtained against a bankrupt trustee who wants to obtain possession of
trust property.

The court may appoint a receiver upon the request, by application of a beneficiary. The
appointment of receiver is normally premised on the possibility of actual or prospective violation
of the duties of trusts likely to endanger trust property see the case of Middleton vs Dodswell.
For example failure of the trustee to agree so that the trust cannot be properly administered loss
of part of trust property through failure to realize it, refusal of trustee to act and denial of the
trust.

In the case of Odulate vs odulate, the applicants applied for an order of the court for a transfer
of administration of the estate in dispute to an administrator or receiver operating under the
supervision of the court pending the determination of the substantive proceedings.

When the property is endangered as when it is invested in un authorized and hazardous

securities, court mat on the admission of the trustee that the fund is in his co trustees hands order
the amount to be paid into court by trustee who is not holding the fund. if that trustee admits that
the fund has not been properly applied.

In the case of Fregene vs Aweshika;the plaintiff applied to court to remove defendants from the
office of trustees. An account and injunction restraining the defendants from carrying on the
duties of trustees, on ground of alleged misconduct. It was proved that the defendants relieved
the principal trustee of his post and replace him with another person.

It was held that that defendant was guilty of misconduct and mismanagement, should be
removed from office and renders the account to trust fund. It has as well been observed that
where a trustee commits a breach of trust, fraudulent or otherwise any beneficiary can bring an
action to question the validity of the acts of the trustee and need not to sue in a representative
capacity.

2. Proprietary Remedies

a) Advantage over personal remedies

It should be noted that with regard to proprietary remedy, satisfaction of the plaintiff's demand
does not depend on solvency of the defendant trustee. If the property to be traced belongs to
plaintiff in equity, it will escape the defendant’s bankruptcy. In some cases the plaintiff will be
able to take advantages of increases in value of property. Thirdly there are cases in which
proprietary remedy is available although no personal action is possible. Fourthly judgment from
a proprietary action Carries interest from the date with the property came to the defendants hands
while claims in personam carry interest only from the date of judgment.
b. Doctrine of unjust Enrichment.

It has been suggested that proprietary remedies cannot be fully understood without appreciation
of the doctrine in just enrichment. This doctrine appears in virtually every legal system. Basically
it's to the effect that where the defendant is in justly enriched in the expense of the plaintiff, the
defendant must make restitution to the plaintiff.

C. Tracing at common law.

A proprietary remedy is one which entitles a claimant to treat specific property thereof as his
own. The common law did not develop a real action in respect of chattels which entitled a
plaintiff to specific recovery thereof. The courts at common law recognized the owner of the
chattel but there was no action at common law of paying damages of returning the chattel.
Discretion to award specific recovery was in court. The issue thus arose if the right of the
plaintiff was limited in case of a specific chattel, should this right change when defendant
changed one chattel to another?. The answer is the chattel can be followed so long as its nature
could be ascertained as such. Right only ceases when the means of ascertainment fail.

d. Tracing in equity

Equity has developed more sophisticated methods of tracing which include;

1) Straight case
This is one where there has been no mixing of trust funds with the trustees own money.
Consequently, if the trustee has sold trust property, the beneficiary may take the proceeds of sale
have been used to buy other property bought or hold it as security for the amount of money used
in purchase. This is subject to the condition that claims in equity are invalid against a bona fide
purchaser for value without notice of the trust.

2) Mixed Funds
The situation worsens when trustee has mixed trust funds his own or after mixing there are
additional dealings with fund .The burden of proof is on the trustee to prove initially that part of
the mixed fund is his own. In Re Tolley’s W.T Thomas j stated that...
If a trustee amalgamated trust property with his own, his beneficiary will be entitled to every
position of the blended property which the trustee cannot prove to be his own.Consequently, if
the composition of the mixed fund is established at the time of the original mixing, the problem
of identification is of determining how to account for the reductions in the fund by payment to
increase in the fund by payment there in.

This can be seen in the case of Re Hallett's Estate; Hallet was a solicitor, died after having
mixed his own money certain funds from two trusts. The other trust had his client client Mrs
Cotteril as beneficiary. At his death, the funds were insufficient to pay his personal debts and to
meet trust claims. Three issues arose;

a) Whether Mrs Cotteril not being a beneficiary of trust of which Hallet was a trustee was
entitled to tracing remedy on ground of her fiduciary relationship
 b) Assuming she was how to allocate the payments from the funds as between Hallet and
claimants
c) How to allocate payments as between claimants themselves.
It was held that Mrs. Coterril was entitled to trace and payments out must be treated as Payments
for Hallets own money.

In the Hands of Fiduciaries or Beneficiaries

Re Hallet's case shows that tracing remedy is available as between beneficiaries, In Sinclair vs
Brougham the Birkbeck society operated a banking business which was held to be ultra vires.In
the winding up competition arose between the claims of shareholders and customers. The main
issue was whether customers had the right to trace into general assets of the society.it was held
that there was a fiduciary relationship between the customers and directors. The directors had
mixed the funds and customers had a right to trace into the hands of the society

In Re Diplck, a testator left his residuary estate "such charitable institution or institutions or other
institutions or other charitable or benevolent objects or objects in England as the executors
should select it was held by the house of Lords that the words included non-charitable as well
charitable objects. Consequently the gift failed for uncertainty.

In The hands of third parties

The right to trace property into the hands of a third party to which it has been passed by trustee
will depend on the nature of the equitable interest in the property. Consequently, where a trustee
has transferred trust property in breach of trust of transferee will be bound by the trust except in
the following circumstances. First when he establishes that he has legal title to property, second
that he is a bonafide purchaser for valuable consideration without notice that the transactions
were breach of trust. In Pilicher vs RawlinsJames L.J stated that "....a notice is an absolute, un
qualified, in answerable defence, and unanswerable plea to the jurisdiction of this
court....."Where the recipient is a volunteer and has no notice, the rights of beneficiary to trace
against him will be equal to that of the recipients own creditors

e) Critique of Right to trace.

Professor Maudsley has indicated that the right to trace should not be restricted to a proprietary
interest which is equitable but should also be available to a beneficial legal owner. This is inspire
of the suggestion in Re Diplock and Re Hallets Estate that the equitable remedy of tracing should
only be available where a fiduciary relationship can be established .secondly the right to trace
should not be limited to situations where a proprietary interest exists. The breach of fiduciary
duty should be sufficient to make available the tracing remedy.

QUESTION 5

The Earl of Oxfords case optimized conflict between the common law and equity consequently
seeing the steady decline of the applicability of both common law and equity in modern legal
systems. Per LLB2 student, is this fair assessment evolution of equity and is contractual
applicability in contemporary Uganda.

Equity has its origins in the old English Courts of Chancery (namely the court of the Chancellor).
Due either to the inability of the Kings justices to enforce judgments against powerful
individuals (some noble families were very much a law unto themselves in their Earldoms,
Dukedoms etc during the Medieval period) or, with increasing frequency in later years, defects
or undue harshness of the common law people were driven to submit petitions to the King, who
was considered to be a repository of ‘Divine justice’. Such petitions were often passed over to
the Lord Chancellor, who would dispose justice in the name of the King. With the passage of
time such petitions were directed to the Chancellor and his office of the Chancery began to
function as a court of law. A significant aspect of the equitable principles developed in these
courts of Chancery was that they were so developed by Priests (most Chancellors of the
medieval period were ‘men of the cloth’). This ensured that the principles of Equity were
fundamentally based on the concept of ‘natural justice’ in keeping with the lines of the Christian
tradition of Good and Evil, and indeed in ancient usage the word Equity means ‘natural justice’

The different views taken in certain situations, by the principles of Common law and the
principles of Equity, naturally led to conflict and confusion. In the reign of King James the First
it was held that decisions of the courts of Chancery would have overriding authority. While
Equity was initially free of the concept of ‘precedent’ from the late 1500s to the mid-1800s a
body of precedent, of cases based on equitable principles began to take shape, and the rules or
principles of equity took their final form with clear lines and with the introduction of the
Judicature Acts of 1873 and 1875 the Court of Chancery, along with the other Courts such as
Kings/Queens Bench, Common Pleas, Exchequer, Exchequer Chamber, Court of Appeal in
Chancery were absorbed by the Supreme Court.

It would be fair to say that the Judicature Act played the role of ‘fusing’ the system under which
both the Common law and Equity was administered, namely an amalgamation of the different
courts under one. This can be equated to the reference made in the statement that sets the theme
for this article, the ‘two streams of jurisdiction’ meaning the common law and Equity, ‘run in
the same channel’ meaning the administration of both within a common system of courts.

While the above, is somewhat straightforward, it is this authors opinion that the reference ‘do not
mingle their waters’ implies that the Common Law and Equity themselves were not ‘fused’ but
continued to function as two separate systems of law.

Therefore I aim to establish that while the Common Law and Equity came to be administered
under the same system the fundamental principles of Common law and Equity continue to act
independently of each other in the interests of Justice. This can, be shown most effectively
through reference to decided cases, where it will be seen that equitable principles have produced
results quite different to what would be expected under principles of Common Law and
extending these decisions to derive certain fundamental facts as to the position equitable
principles hold within the legal system independently of the common law. I
A landmark case in this regard was that of Central London Property Trust Ltd v High Trees
House Ltd84. The facts of the case were as follows, During the Second World War countless
people had left the City of London to escape the German bombing of Britain’s Capital. As a
result of this many housing complexes were vacated and left empty. In a certain block of flats,
flats had been leased out for a period of 99 years at 2,500 pounds a year. To curb vacation the
landlord had offered to cut the rent by half (1,250 pounds a year). Once the ‘blitz’ was over and
the tenants returned the landlord litigated to recover the full sum of 2,500 pounds. As per the
Common Law the plaintiffs would have been legally able to recover the full sum of 2,500
pounds even for the period when the flats had been empty since the lease that fixed the amount
was under seal and hence(according to common law) could not be changed by a mere agreement
but only through a deed, however the principles of equity took on a different view. The judge
deciding the case – Lord Denning quoted “There has been a series of decisions over the last fifty
years which, although they are said to be cases of estoppel are not really such. They are cases in
which a promise was made which was intended to create legal relations and which, to the
knowledge of the person making the promise, was going to be acted on by the person to whom it
was made, and which was in fact acted on. In such cases the courts have said that the promise
must be honoured…..As I have said they are not cases of estoppel in the strict sense. They are
really promises – promises intended to be binding, intended to be acted on, and in fact acted on.”
(The Discipline of Law, Lord Denning, 1979)

In the judgment it was held that through equity, the promise made was binding on the party
making it (the common law did not make such an allowance) and that the plaintiff could not
recover the full amount of money for the period when the flats were empty.

This decision, in my opinion highlights the following key points;

a. While both the principles of Common law and Equity were administered as one totality, in the
above case we see the principles of equity coming into play to lead the judge to arrive at a very
different decision than he would have had to make if he had followed common law principles.
Hence we see equitable principles functioning, quite distinctly from those of the common law
in the interests of ‘justice’

84
[1947] 1KB 130
b. As is quoted in Lord Denning’s book ‘The Discipline of Law’ a previous case where similar
85
equitable principles could have been applied, Salisbury (Marquess) v Gilmore Lord Justice
Mackinnon felt unable to take an equitable view due a decision made by the House of Lords in
Jorden v Money 86which was thought to be binding where the concept of estoppel was confined
to representations of existing fact.

The significance of this observation is that, though the principles of equity could be used to take
on a different view of a situation as opposed to that taken by the common law it, in some
instances, needed courage on the part of the judge to break free from the bindings of common
law and allow these equitable principles to take flight. We see the action of Lord Denning in the
High Trees case was doing precisely this – giving due credence to the independent place the
principles of equity held in the legal system, free from the rigidity of the common law in the
interests of doing ‘justice’.

c. That the decision was possible in the High Trees case was due to the ‘conflict or variance’
clause (section 25 of the Judicature Act of 1873) which deemed that where the rules of common
law and equity contradicted rather than complement, the rules of Equity would prevail. This
reality is one of the strongest arguments in this author’s opinion for establishing that the systems
of Equity and Common Law do not ‘mingle’ and will be discussed.

QUESTION 6.
Write short notes on the following
a .Judicature act 1873-1875

Historically Equity developed due to mitigate the rights of rigidity of application of common law
and to provide reliefs or remedies which the common law could not avail to litigants. The
ordinary meaning of equity is therefore the right doing, good faith, honest and ethical dealing in
a transaction or relationships between individuals.

85
[1942]2 KB 38
86
[1845] 5HL Cas 185
Equity introduced various reforms and these reforms affected the out dated and unsatisfactory
procedure of the court. And secondly the area between the common law courts and chancery
courts operated was not clearly defined.

There judicature act is one of the reforms introduced by equity. The recommendations of the
Royal commission was enacted as judicature 1873 to 1875.These acts abolished all the ten
existing superior courts and in their place set up a supreme court of judicature consisting of the
high Court of justice and the court of Appeal. The High Court of justice was to consist of three
divisions; the King's Bench, the chancery division and probate, Divorce and Admiralty Division.

The judicature acts effectively abolished the dual administration of justice as between the
common law courts and chancery court. Secondly the High Courts of justice were given power to
administer both equity and law concurrently together. Third, all claims, obligations and defenses
were recognized and enforced by three divisions of the High Court of justice. Fourth the
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

b. Imputed Notice;
This is notice which is either actual or constructive may be imputed to the buyer through actual
or constructive or his or her agent. Its established agency law that notice to the buyer is notice to
the principal. Such Notice will only be imputed to the buyer through his bonafided agent. In this
regard a buyer who instructed his agent to buy property at an auction sale was taken to be
affected by notice by notice of an equity which came to his knowledge in the course of
transactions
However because of hardship of this rule, it was modified in Mountford vs Scott to the effect
that information acquired by a solicitor is one transaction cannot effect, though the doctrine of
imputed notice his principal in subsequent transactions .Thus it has been held that knowledge of
a solicitor in a previous transaction cannot be imputed to a buyer in a later transaction. The
solicitor for this purpose is not under a duty to pass his knowledge in a previous transaction to
the buyer when he later becomes his client. However, if the solicitor conspired to the detriment
of the other, then the aggrieved party will be protected by the doctrine of bona fide purchaser
without notice. In Sejjaka Nalima Vs Rebecca Musoke Odoki J held that the appellant was not
a bona fide purchaser without notice owing to the fact musoke and advocates who were acting as
his agents had known of the alleged fraud concerning disputed property.

There's also constructive notice under the doctrine of notice and this is defined by Walden j in
Williamson vs Brown as where a purchaser has knowledge of any fact sufficient to him on
inquiry as to the existence of some right or title in conflict with what he is about to purchase.

Actual notice on the other hand defined as the situation where the buyer of an estate has actual or
express notice of a prior interest at the time where he or she made the purchase at the time before
the purchase was completed. This can be seen in section 64 of the R.T.A a buyer of land shall
hold that land subject to all encumbrances as notified to the registrar.

In Sempa Mbabali vs W.K kidza odoki J held Sempa Mbabali vs W.K Kidza Odoki j Held
that the defendants plea of Bonafide purchaser could not stand because they knew all along that
part of land they had purchased was for burial grounds and seller sold the land before his share
was ascertained.

c) The maxim Delay defeats equity

This maxim can as well be called the doctrine .The essence of the doctrine of lashes is that an
equitable relief will not be given if the applicant has unduly delayed in bringing the action.
The doctrine does not apply in situations which are governed by the statutes of limitation. For
instance the limitation act cap 80 prescribes periods with in which suits or actions should be
instituted in court. Six years is prescribed for actions based on contract or tort other than those
where the claim relates to personal injuries, in which case the action must be brought within
three years of the date on which the cause of action arose. Furthermore tortuous and contractual
actions against the government must be instituted within two year and three years respectively of
the date of the cause of action, while those related to recovery of land claim to the personal estate
of a deceased or under a mortgage must be instituted with in twelve years of the date on which
the claim accrued. Where fraud is alleged, there is no limitation period.
By way of illustration of the application of the doctrine of laches, in Fagbemi vs Aluko, it was
stated that in considering the doctrine of laces the court acts on three factors. First the delay by
the plaintiff second acquiescence by the plaintiff in the delay. Third, change in the position of the
defendant. Furthermore, the doctrine will apply if the plaintiff behaves in a way which makes the
defendant alter his position in the belief that the plaintiff's claim has been abandoned or the delay
amounts to evidence of an agreement by the plaintiff to abandon his right.

Apart from the application of the doctrine to the equitable remedies of specific performance and
rescission of contracts, it also applies to the grant of letters of administration. An application for
letters of administration or challenge thereof must be made without delay; otherwise it may be
refused. Thus in Ephraim Vs Asuquo, the plaintiff applied have the grant of letters of
administration set aside .it was held that since two years had passed since the grant and the
administrator had probably completed the distribution of the estate ,the doctrine of laches
applied and the plaintiff's claim could succeed.

There are three defences to invocation of the doctrine of laches. First, the plaintiff's ignorance of
the facts on which claim is based. Second the in fact or other disability of the plaintiff and finally
fraud on the part of defendant. In those circumstances delay will not be permitted to bar a claim.

d) Writs in Rem

In rem jurisdiction ("power about or against 'the thing'"[1]) is a legal term describing the power a
court may exercise over property (either real or personal) or a "status" against a person over
whom the court does not have in personam jurisdiction. Jurisdiction in rem assumes the property
or status is the primary object of the action, rather than personal liabilities not necessarily
associated with the property.
ISLAMIC UNIVERSITY IN UGANDA KAMPALA
CAMPUS-KIBULI

FACULTY OF LAW
SCHOOL OF LAW
 LLB III
Semester II, 2018/2019

COURSE WORK
COURSE UNIT: EQUITY AND TRUST

NAME: ISABIRYE ASHIRAFU

REG. NO. 216-053012-08667
LECTURER: Mr. Lubogo Isaac Christopher

Equity and Trusts examination paper of 2017/2018

Uganda Christian University (UCU) School of Law

QUESTION 1. COMPARE AND CONTRAST A TRUST WITH A DEBT

A debt may or not be contractual and the duty of the debtor is to repay money to the creditor
whereas a trust need not be contractual and the duty of the trustee is to hold trust property on
trust for the beneficiary

Debtor’s obligation is personal whereas the trust is proprietary

A trustee should where possible use trust funds in income bearing investments and account to the
beneficiaries for the income whereas with a debtor such an obligation is unnecessary except in
so far as provided for in an agreement

A CONTRACT
A contract is a common law personal obligation which arises from an agreement between the
relevant parties supported by consideration on the part of the promise whereas a trust is an
equitable proprietary relation which can arise independently of agreement or the provision of
consideration

AGENCY
In some aspects a trust and agency are similar for example agents are accountable to their
principals just as trustees to the beneficiary for any profit made out of the property or business
entrusted to them
One of the differences is that usually in a agency there exists a contractual relationship whereas
in a trust this not be the case

In agency rules relating to a principal and agent are common law whereas in equity the trust
relationship is solely equity.

BAILMENT
Bailment is a relationship which is recognized by common law it differs from trust in the
following ways.
In bailment there is no transfer f of ownership from X to Y whereas there is transfer of
ownership from settlor to trustee in trusts

Ys duty in bailment depends on common law rules and not equity

A trust may exist in all kinds of property whereas bailment is restricted to chattels

QUESTION 2. WRITE SHORT NOTES ON THE FOLLOWING

1. PERPETUAL INJUCTION

These do not necessarily last forever but they are final in that they will finally resolve the issue
between the parties. perpetual injunctions may be prohibitory i.e. restraining the doing an act or
mandatory commanding he doing of the act.

2. EQUITY FOLLOWS THE LAW

This means that equity supplements the law or is based on the law. Equity does not replace or
violate the law but it backs it up and supplements it

This is applied under a trust although beneficiaries are regarded as the equitable owners; equity
does not deny the legal title of the trustee. This maxim is limited in where the rule of law did not
specifically and clearly apply and where even by analogy the rule of law did not apply. In the
case of Hussein Hamdani v Uganda electricity board it was held it was held that that the relief
in equity of unjust enrichment could not apply in this case because equity follows the law. The
learned judge stated the plaintiff could not maneuver equity doctrines in order o enforce what
written law said he could not achieve.

3. PRECATORY TRUSTS

Is one created with an intention of creating a trust, purpose of trust, beneficiary and the trust
property where an author uses words such as I hope, I request, or I recommend the first condition
is missing in cases where subsequent ingredients are found, in early days it was held by equity
courts that that he had the intention.

4. EQUITABLEESSTOPEL

It is an exception that equity will not perfect an imperfect gift/equity shall not assist a volunteer.
It’s aimed at compensating a claimant who has suffered a detriments caused y a reliance on a
representation by the defendant that the done will receive rights in property. In Gillet v Holt it
was held that the plaintiff had satisfied the representation requirement, detriment came in form of
the claimant not taking other jobs

QUESTION 3. UNDER WHAT CIRCUMSTANCES WOULD COURTS GRANT

SPECIFIC PERFORMANCE

Under common law the claimant’s rights were limited to award of damages. later courts of equity
developed the remedy of specific performance instead should damages prove inadequate.
Specific performance is an order of court compelling the defendant personally to do what she/he
promised to do. S.64 of the contracts Act 2010 provides that where a party to a contract is in
breach, the other part may obtain an order of court requiring the party in breach to specifically
perform his or her promise under the contract.

Section 64(2)87 gives the instances under which party is not entitled to specific performance
namely

(a) Where it is not possible for the person against whom the claim s made to perform the contract

b) Where the specific performance will produce hardship which would not have resulted if there
was no specific performance

c) Where the rights of a third party acquired in good faith would be infringed by specific
performance

d)where the specific performance would occasion hardship to the person against whom the claim
is made out of proportion to the benefit likely to be gained by the claimant.

The Situations where the remedy is granted include inter allies.

a. Contracts for disposition of interests in land

Each piece of land is unique and damages would not be adequate because the purchaser will not
be able to purchase a replacement in the market. In the case of Manzoor v Baram it was held
that for long courts have considered damages inadequate for breach of a contract for the sale of
land thus courts readily grant specific performance

b. Chattels of unique character

Where chattels in question are of such unique value because of their individuality, beauty or
rarity that replacement will not be readily be available courts will order for specific performance.
In the case of sky petroleum v VIP Petroleum Goulding j held that court had jurisdiction to order
specific performance of a contract for the sale of nonspecific chattels where the remedy of
damages would be inadequate.

c. Shares in a private limited company

87
The contacts act 2010
Since there is no readily available in the market for shares in a private company because of the
restriction on their transferability, damages will normally be an adequate remedy thus specific
performance will be granted

d. The mutuality principle

As a general rule, specific performance will be granted only in cases where there is mutuality of
remedy which means that the right to performance must be mutual. Thus equity will not compel
performance by the other.

QUESTION 4. DISCUSS POWERS AND DUTIES OF A TRUST AS KNOWN IN THE

LAWS OF UGANDA

DUTIES, Upon appointment and acceptance to act as trustee, a trustee should bear in mind that
his duty an onerous. some of the duties include the following.

1. Duty to collect and secure the trust property.

A trustee should ascertain what the trust property is and make sure that the same is vested in him.
In Hallows v Lloyds88 the trustee must inquire about the whereabouts of the trust property,
locate them and secure them by taking possession of them.

2. Duty of investment

88
1886,
A trustee has a duty to invest the trust fund in order to grow it and ensure that fund is not eroded
and can invest the trust fund as the trust investment or law may permit

Duty not to delegate trustees by virtue of their peculiar and fiduciary position cannot delegate
their duty to others, as equity does not allow a delegate to delegate his duties. However, a trustee
can delegate if trust instrument allows it or when it is reasonably necessary. In the case of
Exp.Belchier an agent was employed merely to carry out things already agreed by the trustees it
is permitted to delegate. Apart from a trust instrument a statute may also confer on a trustee the
righ to delegate by appointing agents to perform specialized or professional duties.

3. Duty to distribute trust property.

One of the cardinal duties of a trustee is the distribution of the trust property to the beneficiaries
according to dictates of the trust instrument. a trustee is therefore liable for the breach of trust if
he fails to do sob or made wrong payments to wrong persons.

4. Duty to act gratuitously

A trustee is by the rules of equity a volunteer and therefore expected to act gratuitously without
any remuneration, notwithstanding the onerous tasks placed upon him by the trust. A trustee may
however earn remuneration if a provision to that effect is reserved in the trust instrument and the
court can grant an order to that effect .in addition statutes may also authorize the trustee to earn
remuneration.

5. Duty to provide accounts and information

It’s a cardinal duty of a trustee to provide accounts of the trust property and equally furnish
necessary information as regards the same as may be required by the beneficiaries where a
trustee failed to keep accounts of the trust, the beneficiaries on application to the can compel him
to do so. In the case of O’Rourke v Derbyshire per lord wren bury the beneficiaries have a right
to access and inspect all trust documents.

POWERS, Trustees powers are normally contained in the relevant trust instrument in addition
certain powers are given to him by statutes.

1. Power of sale
This is usually given either expressly or impliedly by the trust instrument or statute. With regard
to trust property the trustees have a duty to sell not merely a power although in most cases they
are empowered to postpone this

2. Power to insure

A trustee is empowered to insure against loss to damage by fire, any property up to three quarters
of the value of the property insured. The premiums thereof may be paid out of the income of
such insured property or the income of any other property subject to the same trust.

Power of maintenance and advancement act as a trustee

5. a) COMPARE AND CONTRAST A TRUST WITH A POWER OF APPOINTMENT

Power is an authority to dispose of some interest in land but confers no right to enjoyment of the
land

Power is discretionary whereas a trust is imperative if a person accepts to act as a trustee, he

must do as the settlor directs.

Under a power the persons amongst whom the appointment is made have no right of action
against the appointer in absence of fraud if he does not appoint however if the property is left on
trust for division among certain people the court would compel its division

Thirdly the objects of a power need not necessarily be capable of exact ascertainment whereas
with a trust objects must be certain.

However, there may be instances where powers exist in nature of a trust for example where an
instrument purports to give power when in fact a trust is really intended thus in Burroughs v
Philcox a testator gave property to trustees on trust for his two children for their lives, remainder
to their issue and in default of issue, the survivor of them was to dispose of the property by one
of them or to as Many of them as my surviving child shall think proper. The testators’ children
without issue and without any appointment. It was held that a trust in favour of nephews and
nieces and their children was created subject to power of selection and distribution.
QUESTION 5. b) WHAT DO YOU UNDERSTAND BY TERM POWER OF ATTORNEY
UNDER EQUITY AND TRUST.

A creditor gives a third party a power of attorney authorizing him to sue for a debt in the
creditors name without liability to account to the creditor. this is not helpful though to the
assignee because the creditor can at any time revoke the power and this is automatically done at
his death.

QUESTION 6. DISCUSS ALL THE ISSUES AND ADVISE THE PARTIES

ACCORDINGLY

Brief facts

TUMUTENDEREZE was a prominent member of the church in Bugolobi and passed away last
year, was married to KISAKYE 70 Year with seven children, served as head of laity and chief
usher in the same church. He wrote a way “To my dear KISAKYE I loved you dearly until death
did us part. I love my Mutungo estate to her to use as he will decide for the benefit of herself
during her life time and the interest of the children. He further stated in the will; that knowing
very will; “that knowing very well that I am a committed Christian which KISAKYE is also and
given the spiritual role that I loved my church, the church of Resurrection, Bugolobi played in
my entire existence an earth, I direct that the church, be considered in respect of my other
properties in Mukono and Mengo “His wife also died last month before handling the estate of
TUMUTENDEREZI and the relatives who are Muslims believe children cannot take their sisters
share of the property and church has no business in the affairs of their relative’s estate. The
church and parish of Bugulobi believe their parishioner intended to benefit them in his will since
they have the copy of the will they are confident that they have a share in estate,, in the Lord
TUMUTENDEREZE.

Issues

Whether the children and church have shares in the trust property.

Whether the relatives of late KISAKYE who are Muslims are beneficiary in the testators
property upon the death of KISAKYE (Trustee)

Whether there are any remedies available for any contending parties

Law applicable

Case law

Trustee Act cap 164

Resolution

Issue I

Whether the children and church have shares in the trust property. According to the will of the
testator, the children and child have shares on the testator/settlers property as he used both
precatory and imperative words in his will before his death. The words the will indicates that
Mrs. TUMUTEDEREZE intended to benefit the church and children in the will by entrusting the
property estate to his dear wife with the words of intention. The words raised the
principle/certainty of intention where the settlor intended by using predatory words and
imperative words in his will. His wife (KISAKYE) was a trust and the distribution of property to
the children and church was upon her Discretion and this raised the issue of Discretionary trust.

A discretionary trust is one where the trustees hold property on trust in a group of beneficiaries,
and are required by the terms of the trust to pay or apply the income or capital in favour of such
of the beneficiaries as the trustees shall in their discretion think fit and whatever each individual
beneficiary is entitled to, depends on what the trustee deems fit to give him. This was illustrated
in the case of Abasi Vs Kapon89 where the fastatu appointed the defendants as executor of his
89
1921
will and had directed them how to distribute his estate to children and an Appeal was held that
the trust was void on ground of uncertain both individual as class who were to be the
beneficiaries of the trust. The reflection of the contention, the appellate court held that, the
intention of the testator was to devise all his estate to her executors for the benefit of his children
excluding the appellant, the testator created a discretionary trust and the duty of the
executor/trustees was to select the beneficiaries in accordance with the direction in the will.

Since in the will TUMUTEDEREZE identified the entitled beneficiaries (children and church),
he created discretionary trust by the words in the will.

Issue II

Whether the relatives of late KISAKYE who are Muslims are beneficiciers in the testators
property upon the death of KISAKYE ( a trustee). According to case of Knight vs. Knight
which tries to explain the three certainties that validates the Trust the relatives who are Muslims
are not beneficiaries of the testators estate, this was illustrated in the cases of Re-burdens Deed
trust (No. 1 and 2) and Mcphare Vs Dalton where Judges SACHS, STAMP and MEGAW
argued that for a valid Trust to exist. There must be three certainties (certainty of intention,
certainty of subject matter and certainty of object) which are already identified in our facts
above, the issue of class test was raised who are the people to benefit. The argument for the
plaintiff and appellant, this should be such a device to them to give and bequeath all the estate of
testator to his children who were loyal and church and the relatives who are Muslim must be
excluded and the words of testator constitutes a general device and bequeath and personal
property to the executive who was his wife in the trust for the church and children as identified in
the will as was illustrated in the case of Abasi V Kapon90.

The intention of TUMUTENDEREZE in his will was to benefit the children and church
excluding any other person, the testator also created a discretionary trust and the duty of the
trustee his wife was to select the beneficiaries in accordance with the direction in the will.

Therefore the relatives of KISAKYE who were Muslims were not beneficiaries and could not get
share in the testator estate.

90
1891
Issue III

Whether there are any remedies available for any contending parties. the children and church are
the only beneficiaries to estate of deceased as identified in the will and could seek for the remedy
of specific performance from courts of competent jurisdiction against the relatives of late
KISAKYE who were not included in the will and were Muslims. Since we know as the testator
in his/her will indicates the parties and share to benefit in his/her estate, the title pass to those
parties in the will. Therefore KISAKYE’S relatives have no share in the will and do not have any
remedy since they were not included in the will.

Conclusion, the children and church are the only beneficiaries to the estate of late
TEMUDEREZE estate as he identified in his will and his wife KISAKYE had to distribute the
estate to children and church but his relatives had no right/interest in the estate of deceased.

Q.2

Critically analyse the origins, rationale and nature of equitable remedies with particular

References to the remedies of specific performance, rescission and rectification.

Equity does not have a universal definition but it refers to right doing, good faith, honest and ethical
dealings between individuals. Equity and equitable remedies owe their origin in England.
Before the development of equity in England, there was administration of common law by the judges.
This led to the rigidity and inflexibility in administering justice by the judges as a result of political and
judicial developments. Common law courts would also handle cases with well established remedies and
the courts distinguished law and ethics. Thus this created a loop hole in the law towards the
administration of justice, the remedies that were awarded by the common law courts were inadequate
thus not fulfilling the end result of justice this lead to the litigants to begin to petition the Lord chancery
which led to the development of chancery courts
Thus the development of equitable remedies in England. Since the courts were now administered by the
common law judges and chancery, they granted both equitable remedies and inadequate remedies. The
development of equity was to correct the any injustice that was caused by strict application of common
law.

There was no administration of law and equity in Uganda before the Judicature Acts 1873-1875 of the
British However, through the Uganda Order-in-Council 1902 and 1911 Order Uganda received the
English laws. Equity and common law were to be administered concurrently. Where the laws do conflict,
the principles of equity do apply. This is embedded in Article 2(2)where any law or custom that is
inconsistent with the Constitution shall be null and void. The Constitution does preserve the natural
justice which leads to equity. This is further reflected
in section 14(2) of Judicature Act which provides for how law is to be applied by the High and Supreme
Courts; and common law and equity are recognized. Section 11(1) and (2) of the Magistrate Court Act
Cap 16 also provides for the application of law and equity concurrently. Therefore, that is how Ugandan
courts came to apply the law and principles of equity. The development of equity therefore, makes the
courts today to administer the principles of equity for example by awarding equitable remedies like
specific performance, rescission, rectification, injunctions, delivery up and cancellation of documents.

Specific performance is an equitable remedy that is within courts discretion to award whenever the
common law remedy is insufficient, either because the damages would be inadequate or the damages
could not possibly be established
The rationale of specific performance is to enforce positive contractual obligations unlike an injunction.
It is an equitable which is granted by court as provided for in section 33 of the Judicature Act Cap 13.
The nature of the remedy is that it is granted when the common law remedies are inadequate, at the
court’s discretion and that equity will not act in vain. In addition, the remedy is granted where the
defendant will comply with the order.
In Jones v Lipman the defendant signed a contract where he sold a piece of land to the plaintiff.
However, he changed his mind by selling the land to a company where he was the owner. It was held
that the defendant could not resist the order of specific performance since he was still in possession to
complete the contract therefore, court ordered for specific performance against the vendor and the
company.

The remedy also operates in personam. The remedy will be issued against the individual defendant if he
is within the jurisdiction of the court. In Jones v Lipman ibid, it was the defendant whom the court
ordered to perform not any other person.
The general rule is that the remedy is not granted if the plaintiff would be adequately compensated by
the common law remedy of damages. Therefore, if the plaintiff can be compensated with the damages,
specific performance will not be granted. The instances of where the remedy can be granted include the
following.
In contracts for sale of land. Land is a real estate and unique therefore damages are inadequate
remedies for the purchaser. However, the remedy is discretionary. If damages are however adequate,
then specific performance will not be granted. This also portrays that the remedy acts in personam. In
Verall v Great Yarmouth Borough Counci] the court of Appeal confirmed the grant of specific
performance to enforce a contractual licence to occupy premises, there being no alternative premises.

Contracts for sale of personal property. The general principle is that chattels, stocks and share are not
enforceable. Contracts for the purchase of government stock will not be enforceable however damages
will be awarded instead. However, section 51 of Sales of Goods Act Cap 82 provides that the court has
power to decree the remedy of a contract of specific or ascertained goods. The exception to the rule is
also that if chattels are special, unique or of special value like individuality, beauty, or rarity the remedy
will be enforceable
Specific performance will also be granted were the contract is enforceable. In Ogden v Fossickit was
held that specific performance could not be granted because the part of the contract of the employment
could not be enforced

The defenses available to stop the court from granting the remedy include mistake and
misrepresentation, in Malins v Freeman the remedy was not granted although the mistake was due to
the defendants fault and not on the vendor. The conduct of the plaintiff that is if he comes with unclean
hands and they are also not prepared to do equity, the remedy will not be granted.
This is also supported by the maxim of equity that delay defeats equity. The remedy will also be refused
if there will be any hardships caused on parties thus equity does not act in vain. If there is misdirection
of the matter and also where if the remedy is granted will be against public policy for example a remedy
forcing one to perform an illegal contract.

Thus, the remedy is discretionary and awarded to enforce a positive contractual obligation. Damages
awarded should be equitable and within the jurisdiction..

Rescission is an agreement by contracting parties to discharge all remaining of performance and

terminate the contract
Rescission is another equitable remedy that was developed. The nature of the remedy is that a contract
is voidable but not void. Therefore, the contract remains valid until it is rescinded by the parties to it.
The rationale of the remedy is to restore the parties to their original place as if the contract had not
occurred. Rescission is not a judicial remedy but an act of the party entitled to rescind. However, court
may interfere and order an account to be taken of property that had passed between parties. The main
essence will be restoring the parties to their status qou before the contract.

The remedy is granted on the following grounds. Where there is mistake. This is both common or
mutual and unilateral mistake. Mutual mistake is where both parties to the contract are mistaken about
the contract thus, rescinding the contract. In Sole v Butcher [1950]1 KB 671, it was held that a contract,
is liable to be set aside if the parties were under a common misapprehension as to the facts or to the
respective rights which were so fundamental. The recognized mistakes are the existence of the subject
matter, identity to the subject matter and the quality of thing contracted for. Unilateral mistake is where
one party is mistaken. In Cundy v Lindsay (1878)3 AC it was held that there was no contract between
the defendant and the plaintiffs since the plaintiffs did not intend to deal with the defendant but with
another person. Therefore, the contract can be rescinded.

Misrepresentation is also another ground where the remedy can be granted. Innocent
misrepresentation is where the defendant believes in the truth of his action even if he has no
reasonable ground for his belief. Therefore, a misrepresentation may arise where one does not disclose
something. In Anderson & Sons Ltd v Rhodes Ltd [1967] ALLER 850, a commission agent made a
representation to the seller about the insolvency of his principal, the buy. It was held that agent owed a
duty of care to the seller thus in such situation a contract can be rescinded

Fraudulent misrepresentation is where a party makes a false representation knowingly so that the other
can act upon it. The law of equity therefore renders that contract as rescinded. In Derry v Peek (1889)
14 AC 337 the House of Lords held that a statement is fraudulent when made with knowledge of its
falsity; without belief in its truth or not caring whether it is true.

Constructive fraud is also another ground for reward of the remedy. This is mainly as a result of undue
influence. This arises where one party is influenced into a contract which he does not want. However,
the burden of proof is on the one who alleges. There are some contracts that do not arise to undue
influence like parent and child; doctor and patient; solicitor and client; teacher and student; trustee and
beneficiary; employer and employee; and religious ministry and disciples. Non-disclosure of material
facts is another situation.
However the general rule is that a party to a contract is not under a duty to disclose information relation
to a transaction. The exception is that sometimes the non-disclosure may lead to misrepresentation for
example in Land Matters

Rectification is a discretionary remedy to rectify a document a document so that it accords correctly

with what the parties agreed upon. In Lavell v Christmas v Wall (1911), Cozen-Hardy M.R said that the
essence of rectification is to bring the document which was expressed and intended to be in pursuance
of a prior agreement into harmony with that prior agreement. Thus the remedy presupposes an
antecedent contract.
The rationale and nature of the remedy is therefore to rectify a number of documents in concluding
conveyancing documents. In White v White (1872) , the court ordered rectification of the deed of
conveyance to conform to the agreed intention of the parties
However, the documents that cannot be rectified include wills where there is fraud The remedy is also
limited to harmonized written documents.
The remedy can be granted on grounds that there existed a contract and thus there has to be a contract
to rectify
The remedy is denied when the contract cannot be performed that is when it is granted it will act in vain
for example where there is a bona fidepurchaser for value (Smith v Jones [1954]2 ALLER when the
contract was fully executed. This means that the parties agreed and where there are laches thus delays
in time, the remedy will not be granted. This follows a principle that delay defeats equity
In conclusion, the above remedies are all discretionary. They were developed to fill the gaps that
common law was leaving for example by not providing an adequate remedy. This created a meaningless
end of the law since it was not achieving justice. Therefore, through the chancery courts, the remedies
were developed to ensure justice by providing equitable remedies as they have been discussed above in
particular specific performance, rescission and rectification.

Q.4

Explain with relevant examples each of the following maxims of equity. 

1. Equity aids the vigiliant not the indolent(4Mks)

2. Where equities are equal, the law will prevail(4Mks)
3. Equity will not suffer a wrong to be without a remedy(4Mks)
4. One who seeks equity must do equity(4Mks)
5. Equity imputes an intent to fulfill an obligation(5Mks)
6. He who comes into equity must come with clean hands(4Mks)

Equity is a body of rules of fairness or natural justice or public morality. Courts administer justice by
applying rules of fairness or principles of natural justice and not any other law.
Equity is applicable to Uganda with reference to the judicature Act1[1] which states that, in every case
or matter before the high court, the rules of equity and rules of common law shall be administered
concurrently. The contract Act2[2] also preserves the rights of parties to a contract both at law and in
equity.
Equity therefore is law3[3], in the sense that its part of Uganda’s law with reference to the magistrates
court Act4[4], which provides that, in every civil cause or matter before a magistrates court, law and
equity shall be administered concurrently.
However in underlying the application of equity are certain maxims or principles which guide the
courts. These maxims not only help to explain the essence of equity but indicate situations in which
equitable rules would or wouldn’t be applied as well as the relationship between law and equity5[5]. As
such they act as rather general guidelines to a
court in reaching a decision6[6].

He who comes to equity must come with clean hands

The plaintiff must approach the court free from any blame on his part because court wont grant
equitable relief to the plaintiff if there is any evidence of fraud, mistakes, misrepresentation or illegality,
thus in Katarikawe Vs Katwiremu where court held that if a tenant is in breach of several terms of his
agreement with the land owner then court wont grant relief.

Also when certain transactions are illegal and one seeks to get an equitable relief out of such a
transaction for example under the Employment Act23[23] which provides that wages can only be paid
in local currency and not in kind and any agreement to such will be illegal, null and void. However for the
inequitable conduct to amount to un clean hands, it need not be illegal strictly as required by law. Its
sufficient if the conduct is un conscionable and morally reprehensible and need not have been to the
other party to the action.

He who seeks equity must do equity

A person seeking an equitable remedy must him or herself act fairly, thus in case of Bank Of Uganda Vs
Hassan Bassajabalaba where court held that Bassajabalaba failed to act fairly when he forged a court
order so as to get back his land titles hence an equitable remedy couldn’t be granted to him.
This maxim can be illustrated through the following arrangements that is, doctrine of election, notice to
redeem mortgage, consolidation of mortgage and illegal loans.

Equity imputes an intention to fulfill an obligation

The doctrine of performance and satisfaction are based on this maxim because both doctrines are based
on intention, however in our legal system courts tend to rely more on the presumptions as to the party’s
intensions that is where a person who is under a duty to do an act, does an act amounting to the
performance of the duty, in equity he/ she will be deemed to have executed the duty.

Equity won’t suffer a wrong to be without a remedy.

Trusts exemplifies this maxim, equity enabled the beneficiary through the procedures of the trust, to
enforce obligations where no remedy at common law existed24[24]. That is the beneficiary has no right
at common law to have the terms of the trust enforced but our legal system never the less requires the
trustee to carry out those terms to prevent him or her to commit what would be in effect wrong against
that beneficiary.
Specific performance and injunctions constitute one of the chief ways in which equity supplements the
law by granting auxiliary or additional remedies where the common law remedies where inadequate.
The remedy will only be granted where it’s just and equitable to do so having considered all the
circumstances of the case for example it won’t be awarded in contracts of every description but only
where legal remedy is inadequate or defective that it becomes necessary for equity to interfere like in
the Sale Of Goods Act25[25], contracts for sale of goods, damages may be a warded for failure to supply
goods.
Where Equities are equal the Law prevails

Where the claims of the parties are equally fair and deserve merit the preference will be given to the
person with Legal Interest

Q.3
Write short notes on any four of the following case demonstrating their continued relevance to the
study of equity in Uganda

a. Uganda revenue Authority vs Stephen Mabosi 1995

This is acase which was filled in the court of appeal in 1995 on the grounds that the memorandum of
Appeal was filed out of time by the appellant and so should be rejected. Court held that the
memorandum could not be rejected because the appellant could not fill it before obtaining the official
record of proceeding from the High Court which were released after the official 60 days period required
for filling a memorandum of appeal had elapsed. It’s against this back ground that equity developed in
Uganda with proper justification hence the Maxim of Equity will not suffer a wrong to be without a
remedy
b. Walsh vs Lonsdale (1882)
In this case the Landlord (defendant) agreed in writing to grand the tenant (plaintiff) a lease of a mill for
7 years, the agreement provided that the rent was payable in advance but there was no grant of lease as
required at common law. The plaintiff took possession of the mill and paid in quarterly in arrears. The
landlord based on the agreement demanded one year rent in advance the tenant failed to pay and the
landlord distained. The tenant sued for damages for illegal distress. The action failed and court held that
although the distress was illegal at common law because a 7 year lease had not been granted and the
year tenancy did not provide for payment in advance in Equity the agreement for a lease is as good as a
lease. The written lease was converted to a formal lease and the tenant was liable to pay a years rent in
advance
In this case the conflict between common law and equity as regard to the nature of agreement for a
lease was resolved in favor of equitable principle that an agreement for a lease is as good as a lease.
c. American Cynamid vs Ethicon
The appellant was a company that held a patent for artificial absorbable surgical sutures. The
respondent was a company that intended to launch a suture to the British market which the appellant
claimed was in breach of its patent. At first instance, the appellant was granted an injunction preventing
the respondent’s use of the type of suture at issue until the trial of the patent infringement. On appeal,
the Court of Appeal discharged the injunction on the basis that the case for patent infringement was not
made out. The appellant appealed to the House of Lords. Court held that (a) it was not the courts’ role
to consider conflicting evidence in respect of an interim application. This was a matter for trial. (b) All
that was necessary at this stage was that the claimant should show that there was a real issue to be
tried. (c) The court should consider whether damages were an adequate remedy for a claimant if an
injunction was not granted. If so, an injunction would not be available. (d) If damages were not an
adequate remedy, the court should then ask whether the claimant would be able to give an undertaking
in damages to the defendant. (e) If it was considered that there was any difficulty regarding the
availability of damages on either side, the court should consider the balance of convenience between
the parties. (f) If these factors were evenly balanced, the court should consider maintaining the status
quo. On the facts of this case, the balance of convenience lay with the appellant and the appeal was
allowed. This also brings out the maxim of equity looks at substance rather than form which is so
applied in Uganda while adjudicating cases

Q.5
Vincent, a renowned artist, died in 2016. His will contains the following provisions:
(a)To my favourite artist, Tomie Wine, I devise my Music studio and gardens in Ntinda-
absolutely in full confidence that he will make such use of them as I should have made
myself and that at his death he will leave them to the Uganda National Cultural Theatre
and in default of any disposition by him thereof by his will or testament I hereby direct
that all my estate and property acquired by him under this my will shall at his death be
given to the Uganda National Theatre absolutely

(b) To my executors, my personal estate (excluding my art collection) to hold upon trust for
such artists as they shall select having regard to their knowledge of my personal taste in
art

(c) To my executors, the greater part of my art collection to be held by them on trust for my
favourite model Naomias long as she stops modeling when she turns 30 years, subject to
any pictures which my friends may choose

With your understanding on the Law of Trusts, Consider the validity of each provision.

SOLUTION
Atrust can be defined as the imposition of an equitable obligation on a person who is not the legal
owner of the property (a trustee) by the legal owner (Settlor) which requires that person to act in good
conscience while dealing with the property in favor of any person (beneficiary) who has a beneficial
interest recognized by equity in the property.

There are 3 main essentials of a valid trust and these include Certainty of object, Certainty of Subject
matter and certainty of words
In Knight vs Knight it was discussed by court that to create a valid trust the terms of a trust must be
sufficiently certain

The purpose of certainty of object is that the recipient and purposes of the gift should be identified and
that the interest they take should be clearly stated.

For certainty of subject matter the underlying principle is that trust fund must be identifiable. The
general rule is failure to segregate the intended trust property will lead to the trust to be void, Re
London Wine Co. creditors of a ventures business sought to claim that contracts for the purchasers of
wine ought to grant them proprietary rights in wine held in the cellars. It was held that this could create
a trust which demanded which demanded that each creditors to demonstrate the particular, identifiable
bottle had been segregated from the general stores held with the cellar separately to their account .
Certainty of the subject matter was also emphasized in the case of Comiskey vs Bowning

Certainty of Words This is based on the maxim of equity looks at intent rather than form. For a trustee
to establish whether a fiduciary relation or obligation there under has been created. I.e. that the settlor
intended to create a trust rather than to merely impose a moral obligation or to make a gift. He
intention can be express intention or orally to create a trust as held in the case of Paul vs Constance
 (a) In this paragraph certainty of words is not clearly ascertained whether the Artists intended for
the music studio and gardens in Nalya to be benefited by Tomie or Uganda National Cultural
Centre
(b) For paragraph two the subject matter was not clearly ascertained by the settlor, he did not
clearly state what his personal estate are and this contradicts to the underlying principle that a
trust must be identifiable as discussed above. In Re Diggles it was indicated that uncertainty of a
subject matter will adversely affect the creation of a trust
(c) In the third paragraph the intent of the words are not clearly ascertained. the act of a settlor
imposing a condition of Naomias to only be given as long as she stops modeling at 30 years
imposes an obligation

Q.6
Compare and contrast a trust with the following
a. Bailment
b. Agency
c. Debt
d. Contract
A trust is a fudicial relationship between a settler who bequeaths hi s property to a trustee to keep it in
benefit of the 3rd party called the beneficiary
A bailment
This is a transaction where goods / property are delivered by one party (bailor) t another
(bailee) to hold the goods and ultimately re deliver them to the bailor in accordance with the
given transaction
A bailment and Trust are both entrusted with another persons property
Differences

1.A bailee obtains only possession and what is referred to as special property in the goods property
while a trustee takes title to the trust property. As a consequence a bailee cannot except in a sale in
market overt by virtue of estoppel or under special legislations such as the Factors Acts pass a title to
the Chattels valid against the bailor whereas a bona fide purchaser who purchases the legal estate
from a Trustee for value without notice of the trust acquires a good title;

2. Bailment is a common law notion worked out in proceedings for common law relief such as
actions for conversion, detinue or breach of contract whereas the trust relationship is purely
equitable. In conversion, initial possession is lawful but later converts the goods contrary to what the
owner intended. Detinue is where the defendant is unlawfully withholding the plaintiff’s goods with
no good reason

3. Bailment applies only to personal chattels that are capable of delivery whereas a trust may arise in
respect of real or personal property and whether tangible or intangible

4. A bailment is enforced by the bailor who is a party to the arrangement while generally the trust is
enforced by the beneficiary who is not a party to the trust instrument.
-In bailment, there is no transfer of property from the bailer to the bailee, i.e from A to B
-Bailment duties are dependent on rules of common law and not equity.
-The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.
-Bailment is restricted to chattels but a trust may exist for all types of property.
-Under bailment, the bailer can lose his legal ownership of the bailed property through any of
the ways by which legal owners lose rights; for example, Estoppel, however under a trust, the
beneficiary’s interest/title can only be defeated by transfer of legal title to a bonafide
purchaser for value without notice of the trust.

Agency

Agency is a contractual arrangement express or implied, written or verbal whereby one person
may act on behalf of another and bind that other as if he or she acted personally. An agency
arises where a person called the agent has expressed or implied authority to act on behalf of
another called the principal and he consents to do so. The agent is normally treated as an
accounting fiduciary party and he binds the principal vis-à-vis third parties. Royal Brunei
Airlines v Tan [1995] 2 AC 378 where a travel agent was appointed to sell tickets for the
plaintiff airline on condition that all monies received by the agent were to be held for the airline
on trust.
There are some similarities between trustees and agents
The relationship of trustee and beneficiary is fiduciary in nature while that of principle and agent is
normally fiduciary but not inevitably
Both trustees and agents must act personally and should not delegate their duties
-Neither of them may make un-authorised profits from their office
There are differences however
1. The trustee in exercise of his office will contract as principal and cannot bind the
beneficiaries unless they have constituted him both trustee and agent but an agent binds his
principal so long as he acts on the principal’s authority or on the apparent or ostensible
authority that he is deemed to have.
2. Although the trustee has a right of re-coup an indemnity against the beneficiaries for any
properly incurred expenses and creditors may subrogate those rights in certain circumstances
there is therefore no direct contractual link between the beneficiary and 3 rd parties
comparable to the link between the principal and 3 rd parties

3. The trustee in exercise of his office will contract as principal and cannot bind the
beneficiaries unless they have constituted him both trustee and agent but an agent binds his
principal so long as he acts on the principal’s authority or on the apparent or ostensible
authority that he is deemed to have.
4. Although the trustee has a right of re-coup an indemnity against the beneficiaries for any
properly incurred expenses and creditors may subrogate those rights in certain circumstances
there is therefore no direct contractual link between the beneficiary and 3 rd parties
comparable to the link between the principal and 3 rd parties

5. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there is no contract to the contrary or the contract permits him to do so. On the
other hand a trust cannot be revoked unless the trust instrument reserves the power of
revocation. Mallot v. Wilson [1930] 2 Ch. 494.
6. However the beneficiaries if sui juris unanimous and together entitled may demand that the
trust property be distributed and consequently that the trust be brought to an end.
7. Normally the principal in agency gives binding directions to his agent whereas beneficiaries
cannot control the exercise of the trustee’s discretion.
 8. The central distinction between agency and trust is in relation to property. An agent does not
per se hold any property for his principal. Many agents do not obtain items of property at all
and those who do so acquire only possession but not title. On the other hand there can be no
trust unless title to the trust property vests in the trustee or in another party on behalf of the
trustee.

A debt may or may not be contractual and the duty of the debtor is to repay money to the creditor. In
contrast, the trust does not need to be contractual and the duty of a trustee is to hold trust property for
the beneficiary.

The obligation of a debtor is personal but a trust is proprietary.

A trustee should where possible use trust property in income bearing investment and account to the
beneficiary for income. In the case of a debtor, such an obligation is unnecessary except in so far as
provided for in agreements express or implied.

A trustee is not liable for the loss which is not attributed to his negligence
In the case of Morley vs Morley A trust fund was the victim of robbery and E40 of gold was taken.
Lord Nottingham held that a trustee could not be liable If the money of the trust fund was robbed so
long as he otherwise performed his duties

Contract
There can be no hard and fast line between contract and trust because contract is a source of rights
while trust is a way of holding rights. Indeed, many of the rights held in trust are born of contract. A
simple example will illustrate. Suppose I open a bank account and pay in £1,000. I have a right born
of contract that the bank repays me £1,000 on demand. If I then declare that I hold that right on trust
for my children, it is impossible to say that this is now a case of trust and not contract; in truth, it is
both.
A contract is a common law personal obligation resulting from an agreement between parties. On
the other hand, a trust is an equitable relation which can rise independently of an agreement.
However, there are situations when a distinction between the two is hard to draw eg Where property
is vested in trustees on a settlement, it is held upon a trust on the settlement. However if the property
has not yet been transferred to the trustees but it is simply subject to
a consent to settle, the beneficiaries will only be able to enforce the consent if they have given
consideration. This is based on the principle that “equity will not assist a volunteer

Brief facts

Cecilia died on 24th/4/2014, on first Feb. 2017; she was the sole owner of 200 shares in Ugaplex
ltd, she called Ddumba her cousin that she intended to transfer those shares to him immediately
and she completed part of her share transfer form but she didn’t sign it and also didn’t post it off
the company as required to do. She disclosed to her executor that she intended to donate 100
acres of her land to her fiancé Tonda.

Legal issues

1. Whether the transfer of the shares by Cecilia was complete as a trust

2. Whether her communication to her executor was sufficient to make the transfer of land
valid
3. Whether there is a breach of trust by Cecilia’s executor and remedies available to him.

Laws applicable

 The 1995 Republic of the Uganda Constitution as amended.

 Companies act 2012
 Judicature Act
 Trust Act
 Decided cases.

Resolution of issues

Resolution of issue 1, Whether the transfer of the shares by Cecilia was complete as a trust

No, the transfer of the shares by her was not complete. Basing on the formalities of creation of a
trust, under constitution of the trust, the property must legally be transferred and it should be
evidenced by some witnesses and must be in writing and signed in which case she just filled the
transfer form but didn’t sign and was not witnessed.

Resolution of issue 2, Whether her communication to her executor was sufficient to make the
transfer of land valid

Yes, her communication to her executor was valid basing on the three certainties and in this case,
certainty of intention, the words that she used was effort to create a trust as it was clear. She
intended to transfer the property and the shares to the cousin and to tonda

Resolution of issue 3, Whether there is a breach of trust by Cecilia’s executor and whether there
is any remedy available to her boy friend.

Yes there is a breach of trust, in this sense is the failure to sustain a duty in that Cecilia informed
her executor about her intention to transfer her 100 acres of land to him but instead the executor
converted the property to his benefit.

There are also remedies available to him. At any time a beneficiary may ask a trustee for an
account of the profit or losses of the trust.

1(b)
Discuss briefly the distinction and/ or relationship between trusts and the following forms of legal
relations.

i. Contract.
ii. Agency.
iii. Bailment.

A trust is a relationship which subsists when a person called the trustee is compelled by a court
of Equity to hold property, whether real or personal, and whether by legal or equitable title for
the benefit of some persons, of whom the trustee himself may be one and who are called cestui
que trust or beneficiaries, or for some object permitted by law; in such a way that the real benefit
of the property accrues not to the trustee, as such, but to the beneficiaries or other objects of the
trust.
A better definition has been incorporated into English Law by the UK Recognition91and under
Article 292, a trust for the purpose of this convention, the word ‘trust’ refers to the legal
relationships created inter vivos or on death by a person, the settlor, when assets have been
placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.

Trust & Agency

Agency is a contractual arrangement express or implied, written or verbal whereby one person
may act on behalf of another and bind that other as if he or she acted personally. An agency
arises where a person called the agent has expressed or implied authority to act on behalf of
another called the principal and he consents to do so. The agent is normally treated as an
accounting fiduciary party and he binds the principal vis-à-vis third parties. Royal Brunei
Airlines v Tan93 where a travel agent was appointed to sell tickets for the plaintiff airline on
condition that all monies received by the agent were to be held for the airline on trust.
There are some similarities between trustees and agents;
i. The relationship of trustee and beneficiary is fiduciary in nature while that of principle
and agent is normally fiduciary but not inevitably so.
ii. Both trustees and agents must act personally and should not delegate their duties
iii. Neither of them may make un-authorised profits from their office

There are differences however

1. The trustee in exercise of his office will contract as principal and cannot bind the
beneficiaries unless they have constituted him both trustee and agent but an agent binds
his principal so long as he acts on the principal’s authority or on the apparent or
ostensible authority that he is deemed to have.

91
Trusts Act 1987
92
Convention
93
[1995] 2 AC 378
 2. Although the trustee has a right of re-coup an indemnity against the beneficiaries for any
properly incurred expenses and creditors may subrogate those rights in certain
circumstances there is therefore no direct contractual link between the beneficiary and 3rd
parties comparable to the link between the principal and 3rd parties

3. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there is no contract to the contrary or the contract permits him to do so. On
the other hand a trust cannot be revoked unless the trust instrument reserves the power of
revocation. Mallot v. Wilson94, However the beneficiaries if sui juris unanimous and
together entitled may demand that the trust property be distributed and consequently that
the trust be brought to an end.

4. Normally the principal in agency gives binding directions to his agent whereas
beneficiaries cannot control the exercise of the trustee’s discretion. Refer to Re
Brockbank95

5. The central distinction between agency and trust is in relation to property. An agent does
not per se hold any property for his principal. Many agents do not obtain items of
property at all and those who do so acquire only possession but not title. On the other
hand there can be no trust unless title to the trust property vests in the trustee or in
another party on behalf of the trustee.

Trust and agency overlap

Note that trust and agency may overlap. A trust may be created under which the trustee
undertakes a contractual obligation to act on behalf of the beneficiary e.g. the vesting of
company shares in a nominee for a fee. Conversely an agent may become a trustee if for
instance he acquires title to property to be held for the benefit of his principal.

It has been said that an agent becomes a trustee for his principal if he obtains title to the property
for the principal’s benefit and on the face of if this is a clear proposition. However this is not
easy to gauge in practice especially if what is involved is a mere chattel or money whose title
may be transferred by mere delivery of possession with an intention to transfer it. The question
was tested in Cohen v. Cohen 96 in which a wife had sued her estranged husband for several
sums of money and the husband in defence pleaded the statute of limitations her claims were
time barred under the statutes of the Limitations Act. The defence would succeed unless the
94
[1930] 2 Ch. 494.
95
[1948]Ch. 206
96
[1929]1 CLR
claims arose under a trust or had been acknowledged within the limitation period applicable to
personal claims. The claims were as follows: 9000 DM being money and the sale price of
chattels sold on her behalf by an agent in Germany. In order to overcome difficulties which
attended transfer of funds from Germany to England where she lived, the wife had arranged for
her husband to collect her 9000 marks and use it for purchase of goods in Germany for his own
business, it being agreed that he would pay her out of his own funds in England.

The second claim was for £123 pounds sterling being the sale price of surplus furniture of the
wife sold after the marriage, the husband having retained this amount.
The third claim was as to £80 pounds sterling being settlement of an insurance claim arising
from the loss of the wife’s jewellery again the husband having retained this amount.
The court held that she succeeded in all the claims, the court finding that the husband stood in a
fiduciary relationship with regard to the wife’s property in the circumstances and was therefore a
trustee for her benefit. In arriving at this decision the court followed the decision in Burdick v.
Garrick 97 where Lord Justice Giffard stated as follows:
“in respect of attorneys who had been authorised and buy property and had attempted
to set up the statute of limitations as a defence “there was a very special power of attorney
under which the agents were authorised to receive and invest to buy real estate otherwise to
deal with the property but under no circumstances could the money be called theirs.” Under
no circumstances had they the right to apply the money to their own use or to keep it otherwise
than to a distinct and separate account throughout the whole of the time that this agency lasted,
the money was the money of the principal and not in any sense theirs. Under these
circumstances, I have no hesitation in saying that there was in the plainest possible terms a direct
trust created. I do not hesitate to say that where the duty of persons is to receive property and to
hold it for another and to keep it until it is called for, they cannot discharge themselves from that
trust by pleading lapse of time.”

Trust and bailment

Bailment refers to a relationship which arises where an owner of property gives permission to
another person to possess it. A bailment is a delivery of personal chattels to a bailee subject to a
condition that they be returned to the Bailor or be dealt with as the Bailor directs when the
purpose of the bailment has been carried out. There is an element of delivery in bailment as
reflected under section 998
A good example is like suppose that you are going abroad for a year. You may have a painting
which you do not want to leave in the house. You therefore hand it to a friend to look after
during your absence. This will probably amount to a bailment, though it could be a trust.

97
9000 DM (1870) L.R. 5 C.L 233

98
Contract Act No 7 Of 2010.
Everything will depend on the location of your title, your right to exclusive possession, of the
painting.
If you vested it in a friend, then they will be a trustee of that right for you. If however, you kept
your right in yourself, handing over only the possession of the painting, the transactions will be
one of bailment, not trust. The difference between the two is crucial for a number of reasons.
One is this. If, in breach of instructions, your friend sold his title to the painting to an innocent
purchaser, it will matter a great deal whether you created a bailment or a trust. If your friend was
a bailee, then the purchaser will not acquire a title good against you and you will be able to
recover the painting’s value from the purchaser in an action in the tort of conversion, no matter
how innocent the purchaser may have been.
The basic rule is nemo dat quod habet (no one gives what he does not have) in the section 2699,
and since your friend did not have your title to the painting, he could not transfer it to the
purchaser.
But if your friend was a trustee, the position of the purchaser would be different; for now your
friend does have the right in question and so is capable of passing it on to third parties. You, of
course, have rights under the trust, but such rights are destroyed when the subject-matter of the
trust comes into the hands of an innocent purchaser of value. It suffices to note that bailment is
governed by common law. The position of a bailee is similar to that of a trustee in the sense that
both are ‘entrusted’ with another’s property. The Trustee’s duty to take care of trust property is
roughly comparable with the duty of a gratuitous bailee although generally the trustee’s duties
are more onerous. There are however differences

Bailment differs from a trust in the following ways:

1) A bailee obtains only possession and what is referred to as special property in the goods
property while a trustee takes title to the trust property. As a consequence a bailee cannot
except in a sale in market overt by virtue of estoppel or under special legislations such as
the Factors Acts pass a title to the Chattels valid against the bailor whereas a bona fide
purchaser who purchases the legal estate from a Trustee for value without notice of the
trust acquires a good title;

2) Bailment is a common law notion worked out in proceedings for common law relief such
as actions for conversion, detinue or breach of contract whereas the trust relationship is
purely equitable. In conversion, initial possession is lawful but later converts the goods
contrary to what the owner intended. Detinue is where the defendant is unlawfully
withholding the plaintiff’s goods with no good reason.

3) Bailment applies only to personal chattels that are capable of delivery whereas a trust
may arise in respect of real or personal property and whether tangible or intangible.

99
Sales of Goods and Supply Of Services Act 2017
 4) A bailment is enforced by the bailor who is a party to the arrangement while generally the
trust is enforced by the beneficiary who is not a party to the trust instrument.

Please note that,

 In bailment, there is no transfer of property from the bailer to the bailee, i.e from A to B
 Bailment duties are dependent on rules of common law and not equity.
 The duties of trustees under a trust are minimal in character compared to the duties that
exist in bailment.
 Bailment is restricted to chattels but a trust may exist for all types of property.
 Under bailment, the bailer can lose his legal ownership of the bailed property through any
of the ways by which legal owners lose rights; for example, Estoppel, however under a
trust, the beneficiary’s interest/title can only be defeated by transfer of legal title to a
bonafide purchaser for value without notice of the trust.
Trust and Contracts
There is no clean division between contract and trust, though some judges have attempted to
draw one as in Re Cook100 Indeed, there can be no hard and fast line between contract and trust
because contract is a source of rights while trust is a way of holding rights. Indeed, many of the
rights held in trust are born of contract. A simple example will illustrate. Suppose I open a bank
account and pay in £1,000. I have a right born of contract that the bank repays me £1,000 on
demand. If I then declare that I hold that right on trust for my children, it is impossible to say that
this is now a case of trust and not contract; in truth, it is both.

A contract is a common law personal obligation resulting from an agreement between parties.
On the other hand, a trust is an equitable relation which can rise independently of an agreement.
However, there are situations when a distinction between the two is hard to draw, for example;
Settlement and covenants to settle
Where property is vested in trustees on a settlement, it is held upon a trust on the settlement.
However if the property has not yet been transferred to the trustees but it is simply subject to a
consent to settle, the beneficiaries will only be able to enforce the consent if they have given
consideration. This is based on the principle that “equity will not assist a volunteer”

Question 3

Discuss any two of the following in relation to the creation of a trust

A trust is an obligation which binds a person (or persons) to deal with property for the benefit of
beneficiaries or for a charitable purpose in accordance with the terms of the trust. A trust can
come into existence in any manner, by an instrument in writing (including a will), by a unilateral
100
[1965] Ch. 902
declaration, by operation of law and also by oral declaration. However, when a trust is created
orally, the law requires that there is sufficient evidence of the setlor’s intention to create a trust.
In the absence of unequivocal evidence of this intention the law will presume that the person
intended mandate or deposit and not the creation to a trust, hence there are four matters that
needs to be considered when dealing with creation of a trust and they include;

 Compliance with the formalities that need to be followed

 Legal effectives of disposition of property.
 Any matter which may vitiate a trust.

Formalities

A trust has two main formalities for creation a trust. These are Registration of Titles
Act101hereafter referred to as the (R.T.A) and by will. A settlor may create a trust by manifesting
an intention to create it in102 However, under section 95103, a creation of a trust must be
evidenced by a memorandum in writing signed by a party creating the trust this also seen in
section 54. Under by will, section 50104can apply. It provides for the forms of executing a will
according to the following provisions if he is not a member of armed forces, engaged in actual
warfare, or a mariner at sea. The provision are (a), that the will shall be in writing; (b) that it
shall be signed at the foot and end, thereof by a testator or other person in his presence and by his
direction; and that the signature be acknowledged by at least two witnesses in writing in the
presence of the testator.

Certainties- essentials.

There are basically three main certainties refer to a rule which was stated in the UK case of
Knight vs Knight. Lord Langdale was the first who conceptualised the idea of the three
certainties. The case stated that for an express trust to be valid, the trust instrument must show
certainty of intention, certainty of subject matter and certainty of objects.

Certainty of intention

Certainty of intention is also known as certainty of words. This means that it must be clear that
the settlor wishes to create a trust; independently from any particular language used. Looking at
Re Kayford105 Megarry J said that, “the question is whether in substance a sufficient intention to
101
Cap 230

102
D.J Bakibinga, Equity and Trusts in Uganda. Page 116

103
R.T.A

104
Succession Act

105
(1975)
create a trust has been manifested”. Kayford Ltd had disposed customer’s money into a separate
bank account. Although not conclusive, it was held as an indication that there was an intention to
create a trust. Words were necessary for the conclusion of this case because a trust was held on
the basis of conversations between the company’s managing director, accountant and manager.

However, in contrast to this case, the word ‘trust’ may not be a conclusive evidence of the
existence of a Trust. In the leading case Re Adams & Kensington v Vestry106 the testator said:
“I give, devise, and bequeath all my real and personal estate…unto…my wife…in full
confidence that she will do what is right as to the disposal thereof between my children”. Even
though the words “in full confidence” were used, it does not give rise to legal obligation. Hence,
in this case there is no trust.

Looking at past court decisions, one could note the emphasis made on the words used to create a
trust. These must make it plain that ultimately there was an intention to create a trust. Today, in
most instances, trust documents are drafted by professionals and one would hope that these
should not present any difficulty to show certainty of intention.

Certainty of subject matter

The property subject to the trust must be clearly identified. There are two aspects to this
requirement that include the certainty as to what property is to be held upon trust and the
certainty as to the extent of the beneficial interest of each beneficiary. The former is necessary
because a trustee must know what is and what is not included in the trust. It is also essential that
the trustee knows what or how much each beneficiary will be entitled to and what income should
be accumulated for the beneficiary.

In the court case Palmer v. Simmonds107 it was held that the phrase “the bulk of my residuary
estate” was not certain enough for a trust relationship to subsist. However in another case Re
Golay108 the statement “one of my flats and a reasonable income” was enough certain to
constitute trust. When it comes to distinguishing trust property from other assets, the courts have
dealt with this according to the nature of the subject-matter involved. In Re Goldcorp109 the
court held that the subject-matter in the trust was not separate form other assets and so the trust
was not valid. On the other hand, in Hunter vs Moss110 it was held that even though the assets

106
(1883)

107
(1854)

108
(1965)

109
(1995)

110
(1993)
(which were fungibles or incorporeal) are not separate, this does not hinder the constitution of a
valid trust.

Certainty of object

This relates to the idea that there must be, in general, a person or persons entitled to the benefit
of the trust. Such beneficiaries must be clearly identified or at least ascertainable. The test for
determining this depends on the type of trust being created. This beneficiary principle in fact is
inapplicable to charitable trusts. Alternatively, beneficiaries may include people not born at the
date of the trust (for example, “my future grandchildren”).

In the case of discretionary trusts, where the trustees have power to decide who the beneficiaries
will be, the settlor must have described a clear class of beneficiaries. In the court case McPhail v
Doulton 111it was established that in the case of a discretionary trust, there is certainty of object if
you can determine whether any given person is a beneficiary or not. The words used in this case
were “my relatives and dependants of staff”. The Court held that there was conceptual certainty.
However, one may note that in Brown vs Gould112 the words “my old friends” lacked precise
definition and so the court held that there was no certainty of objects. In a fixed trust, the trustee
has no discretion of how to delegate trust property and therefore the class of beneficiaries must
be known or else the trust will fail. Objects here may be described as a class for example “my
children”. When the validity of the trust is impeached because of lack of certainty of objects, the
trustee will hold the assets on trust for the benefit of the settlor and his heirs.

The Effect of Uncertainty

If there is no certainty of intention, the transferee will take the property outright. If there is a lack
of certainty of subject matter, then the whole transaction is ineffective (with the result of course,
that the potential transferor remains liable for tax purposes). If there is no certainty of objects
then the trustee will hold on a resulting trust for the transferor, or if he is dead, his estate in
regards to the Trusts Law and Management.

Question 4

With relevant authorities and illustrations, discuss the accuracy of the assertion that, “
equitable doctrines have remained available to prevent the unconsciousness exercise of the
plaintiffs rights at law”.

Equity is a body of rules of fairness or natural justice or public morality. Courts administer
justice by applying rules of fairness or principles of natural justice and not any other law.
111
(1971)
112
(1972)
Equity is applicable to Uganda with reference to the judicature Act113 which states that, in every
case or matter before the high court, the rules of equity and rules of common law shall be
administered concurrently. The contract Act under section 2114 also preserves the rights of
parties to a contract both at law and in equity. Equity therefore is law115, in the sense that its part
of Uganda’s law with reference to the magistrates court Act116, which provides that, in every
civil cause or matter before a magistrates court, law and equity shall be administered
concurrently.
The historical evolution of equity is hereby traced along with its rationale,
Equity arose and developed in the early days as a reaction to the rigors and inadequacies of the
common law. The inability of writs for some who needed them, the high costs, too many
procedural difficulties and the dominance of technicalities meant that common law was losing
touch with requirement of community117.Disappointed litigants began to petition the king as the
“Fountain of Justice” asking him to do justice in respect of some complaint, the King with the
Chancellor eventually set up a special court, court of chancery to deal with these petitions. The
Chancellor dealt with these petitions on the basis of what was morally right not according to any
precedent but according to the effect produced upon his own individual sense of right or wrong
by the merits of a particular case before him.118 In Uganda, the Judicature Act119states that the
rules of Equity and the rules of common law shall be administered concurrently and where there
is a conflict or variance between the rules of equity and the rules of common law with reference
to the same subject the rules of equity shall prevail.
The Constitution of Uganda 1995120recognizes that in adjudicating cases both civil and criminal
in nature, the courts must take into consideration that substantive justice shall be administered
without undue regard to technicalities. That’s why in Stephen Mabosi V Uganda Revenue
Authority121 the Supreme court of Uganda held that a Memorandum of Appeal which was filled
out of time could not be rejected because the appellant could not file it before obtaining the
official record of proceeding from the High Court which were released after the 60 day period

113
Judicature Act

114
No 10 of 2010

115
GLANVILLE WILLIAMS “learning the law “10 EDITION.PP 23.

116
SECTION 11 (1) CAP 16

117
Carson page 23

118
Law teacher/ Equity

119
Section 14 (2) (4) 1996

120
Article 126(2)e

121
(1995) supreme court of Uganda
required for filing the Memorandum of Appeal had elapsed. It’s against this background that
Equity developed with proper justification.
Equity jurisdiction is divided in to three categories; exclusive jurisdiction (creation of new
rights) that is common law courts had rights that they recognized and enforced but for their
inflexibility, Equity created new rights which included some of the following;
Trusts; these arise where one party gives property to trustees to hold for the use of beneficiaries.
A trust is an ownership structure, developed by courts of equity, which divides legal and
beneficial rights to an object of property among two separate entities. The cestui que trust, or
trustee, is said to hold legal title ‘on trust’ for the beneficiary, who holds equitable (beneficial)
title. There are several classes of trusts which include; Express trust are inferred by law from
unequal contributions made to a purchase price, subject to contrary presumption or evidence of
actual intention as to beneficial ownership, implied trusts which the court deduces from the
conduct of the parties and circumstances of the transaction.122

Mortgagor's Equity of redemption.

At common law, if the mortgagor had not repaid the loan once the legal redemption date had
passed, he would lose the property but remain liable to repay the loan. Equity allowed him to
keep the property if he repaid the loan with interest. Thus this right to redeem the property is
known as the equity of redemption. Equitable mortgages are where a mortgagor who only has
an equitable interest in a piece of property can only create an equitable mortgage over it when he
borrows money and uses that interest as security. Similarly, a beneficiary under a trust can create
an equitable mortgage over his equitable interest under a trust if he uses it as security for a loan
advanced to him.

Concurrent jurisdiction (creation of new remedies) depended on rights which common law
recognized and enforced. Initially the exercise of concurrent jurisdictions depended on rights
recognized and enforced by the common law, the problem being that the remedies given by
common law courts were inadequate. Equity intervened to provide adequate and just remedies
like specific performance, whose subject matter was unique, injunction, and an order for an
account. However there were conditions to grant the equitable remedies and these still apply in
Uganda today.

The decree of specific performance.

The general rule of specific performance is stated by Mukanza, Ag J123 that specific
performance is not granted if the plaintiff would be adequately compensated by the common law
remedy of damages .A decree of specific performance is an order of the court compelling the
defendant personally to do what he or she promised to do. Thus, specific performance is the
equitable right to the specific relief in respect of an intermediate class of agreements which do

122
D.J Bakibinga, EQUITY AND TRUSTS IN UGANDA, pg 112.

123
Haji Lutakome v Sentogo[1988-90] HCB 95
not call for the execution of a further instrument.124 In Beswick v Beswick125 it was stated that
the common law remedy may be regarded as inadequate and specific performances may be
available in an appropriate case, where only damages can be recovered by an action of law.
Rescission.
This is defined as the unmaking of a contract between parties. The equitable remedy is concerned
with the avoidance abinitio of agreements or other dispositions. It requires a court order, and the
court has discretion whether to grant it or not. In a situation where the contract is voidable but
not void, the contract remains valid but may be rescinded. It arises where a contract is expressed
by word or orally in an unequivocal manner that he or she is no longer willing or that he or she
refuses to be bound by the contract. This puts an end to the contract and restores the parties as to
the position they were in before the contract was entered into. Instances recognized under
this are those where the mistake is as to existence of the subject matter, identity of subject
matter, quality of the subject matter of the contract. Also for the unilateral mistake where the
party is mistaken as to whom he or she he contracted with. In Cooper v Phibbs126 the appellant
was a legal owner and trustee of land, unknown to the other party was that the property belonged
to them. The appellant renovated the place and let it to the defendant. The defendant discovered
it was their property and wanted to set aside the contract. The House of Lords held that the
contract should be set aside subject to expenditure of the former. A contract is rescindable
because such a mistake is fundamental to render the contract void which may not be provided in
common law however equity resolves it.
Rectification. It is a remedy whereby court orders a change in a written document to
reflect what it ought to have said in the first pIace.127 Rectification may be used to rectify
documents which include conveyancing documents, building contracts, insurance policies, bills
of exchange and marriage settlements. Rectification is limited to the harmonization of the written
document with the intention of the parties. In Rose v Pim128, Denning LJ stressed that it is
necessary to show that the parties were in complete agreement on the terms of other contract but
by an error wrote them down wrongly. Then the concurrent intention of the parties must remain
unaltered up to the time of execution of the documents intended to the effect of the antecedent
agreement subject to the contract. On the contrary, where the contract has been fully executed
and nothing remains to be done under it, it will not be rectified.129

Injunction.
An injunction is an order made to compel observance or performance of some obligation.
Section 38130tates that the High Court shall have power to grant an injunction to restrain any

124
Philip H. Pettit, Equity and the Law of Trusts, 11th edition

125
(1962)2 ALLER 1197.

126
[1867]L. R. 2 H.L 149

127
Bird, Roger; Osborn's Concise Law Dictionary, London, Sweet & Maxwell

128
Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd [1953] 2 QB 450

129
Caird v Moss 33 Ch. Div. 22 (1886)

130
Judicature Act, Cap 13 Laws of Uganda 2000
person from doing any act as may be specified by the High Court. Injunctions should be applied
as it is provided for by the law. That is the evidence should be applied to the law. Being an
equitable remedy, injunctions require a balance of convenience. That is, where granting of the
injunction would cause harm to the other party then, the courts should not grant it if you can get
another remedy ( if one can be paid damages for the loss suffered.) Osotraco limited V AG
clearly shows that injunctions can be issued against the state.

Delivery up and cancellation.

Under certain circumstances, where the existence of a seemingly valid document which is, in
fact, void, may cause embarrassment to the plaintiff for example, because an action is brought on
it, the court can order the document to be delivered up for cancellation. The remedy applies to all
kinds of document for example insurance policies and negotiable instruments.

Auxillary jurisdiction (Creation of New Procedures) Equity’s auxiliary jurisdiction was

exercised in order to assist the defective procedure at common law with a view to common law
courts giving better and effective justice.131 Under auxiliary jurisdiction, courts of equity would
allow a defendant to give evidence when a common law court would not allow him to do so, or
adding parties to the proceedings to be heard where a common law court would not allow. In
another creation of new procedure, courts of equity had the power to force what is known as
disclosure whereas common law had no power to do so.132 When the auxiliary jurisdiction is
invoked, the Court’s reasoning process is, or should be, different, and the range of available
relief that requires consideration might include common law damages. These facts necessarily
affect the conduct of a case in at least three ways; There is need for a claimant to first establish a
common law right, either under the general law (in contract, tort or to the extent that the law of
restitution is not in truth equitable in character, restitution) or a statute, in aid of which equitable
relief such as an injunction or an order of specific performance is sought. Secondly, that even if
the legal right is established the claimant needs to persuade the court that he or she should not,
on an exercise of the court’s discretion, be left to his or her remedy in damages at Law. That is,
the claimant must establish that damages are not an adequate remedy. The third is that
consideration needs to be given to a range of policy objections to a grant of equitable relief in aid
of legal rights. For example, equitable relief might be refused if a grant of relief is directed
towards restraint of commission of a crime and the court is minded to leave the criminal law to
take its ordinary course.133 Equitable relief might also be refused if enforcement of relief,
whether by way of specific performance or injunction, would acquire a degree of supervision
beyond the court’s capacity to administer. 134 The above illustrated policy issues do not only arise
in the auxiliary jurisdiction. In one guise or another, they might arise in exclusive jurisdiction
(for instance in the enforcement of the obligations of a trustee) and be taken into account on a
discretionary defence or in the moulding of relief. Nevertheless, auxiliary jurisdiction provides a
fertile field for a consideration of policy issues because inherent in the jurisdiction is the
131
Supra

132
Solicitors and Lawyers; Court of Equity; Disputes and Litigation

133
Gouriet v. Union of Post Office Workers [1978] AC 435 at 481

134
J C Williamson Ltd v. Lukey & Mulholland (1931) 45 CLR 282, Patrick Stevedores Operations No. 2 Pty Ltd v.
Maritime Union of Australia (1998) 195 CLR 1
existence of a question whether or not a claimant for relief should be left to pursue a remedy for
which the law otherwise provides.135
In conclusion the underlying principle is that under Equity doctrines, and has seen from Equity
cannot suffer a wrong without a remedy. Equity jurisdiction addresses the lacunas in the law that
common law creates since it is based on morally accepted justice.

Question 5

Write short notes on the following showing their continued applicability

Equity won’t suffer a wrong to be without a remedy.

Trusts exemplifies this maxim, equity enabled the beneficiary through the procedures of the
trust, to enforce obligations where no remedy at common law existed under section 55136. That
is the beneficiary has no right at common law to have the terms of the trust enforced but our
legal system never the less requires the trustee to carry out those terms to prevent him or her to
commit what would be in effect wrong against that beneficiary.
Specific performance and injunctions constitute one of the chief ways in which equity
supplements the law by granting auxiliary or additional remedies where the common law
remedies where inadequate. The remedy will only be granted where it’s just and equitable to do
so having considered all the circumstances of the case for example it won’t be awarded in
contracts of every description but only where legal remedy is inadequate or defective that it
becomes necessary for equity to interfere like in section 52 Sale Of Goods and supply of services
Act137, contracts for sale of goods, damages may be a warded for failure to supply goods.
However there are situations where equity can’t provide a remedy for example in situations of
unfair trade competition or contracts involving personal services. In such situations, courts may
be unable to order specific performance even where damages are inadequate 138.therefore the
maxim is subject to what is realistic, practicable and convenient for the court.

Equity follows the law

According to the Judicature Act,139 provides that equity is based on the law. Equity has adopted
some of the rules of common law for example those affecting mistake that is under mistake
common law is rigid or at times harsh that’s why equity has attempted to temper the unfairness
135
Equity: Principles, Practice and Procedure by Geoff Lindsay SC, 25 November 2003 9Revised 20 September 2007)

136
Trustees Act, CAP 164

137
2017

138
D J BAKIBINGA, Law Of Contract In Uganda”(1996) pp 379

139
SECTION 2 CAP75.
in some areas by introducing certain remedies where the common law failed to grant any, a
leading example of an equitable remedy could be granted at common law is Solle Vs Butcher .
The principle that only parties to a contract will be bound by that contract under the law of
contract is observed by a doctrine of equity for example special performance can’t be granted
where damages will provide adequate remedy, this is because equity follows the law and is
designed to supplement the grant of damages but not to override them like in contracts for sale or
lease of land or where chattels sold have a special beauty or interest specific performance will be
decreed
However if the common law rules are ancient or too rigid then equity won’t follow them since it
won’t promote fairness to the litigants

He who seeks equity must do equity

A person seeking an equitable remedy must him or herself act fairly, thus in case of Bank Of
Uganda Vs Hassan Bassajabalaba where court held that Bassajabalaba failed to act fairly when
he forged a court order so as to get back his land titles hence an equitable remedy couldn’t be
granted to him.
This maxim can be illustrated through the following arrangements that is, doctrine of election,
notice to redeem mortgage, consolidation of mortgage and illegal loans.

He who comes to equity must come with clean hands

The plaintiff must approach the court free from any blame on his part because court wont grant
equitable relief to the plaintiff if there is any evidence of fraud, mistakes, misrepresentation or
illegality, thus in Katarikawe Vs Katwiremu where court held that if a tenant is in breach of
several terms of his agreement with the land owner then court wont grant relief.
Also when certain transactions are illegal and one seeks to get an equitable relief out of such a
transaction for example under the Employment Act140 which provides that wages can only be
paid in local currency and not in kind and any agreement to such will be illegal, null and void.
However for the inequitable conduct to amount to unclean hands, it need not be illegal strictly as
required by law. Its sufficient if the conduct is unconscionable and morally reprehensible and
need not have been to the other party to the action.

Delay defeats equities/Doctrine of laches

The essence of the doctrine is that an equitable relief won’t be given if the applicant has unduly
delayed in bringing the action unlike adverse possession, the doctrine can only be used as a
defense against an action and not as a basis for establishment of a cause of action thus where the
land owner knows that his rights are being violated and he chooses to sit idly, he is taken to have

140
CAP 16 SECTION 30
delayed in the violation and will be stopped from arguing otherwise, in climatong Vs
Olinga141the applicant for a period of thirty years occupied and cultivated the respondents land
although the latter was aware of the intrusion, he made no attempt to stop it or recover the land.
High court held that the applicant had taken long to enforce his right. there is no fixed time for
the doctrine to operate its up to the court to decide whether or not in the circumstances of a
particular case it considers that delay to ring an action was unreasonable.
However the courts won’t apply the doctrine in situations which are governed by statutes of
limitations for example under The Limitation Act142, provides that no person shall make an
action to recover land after the expiration of twelve years from the date the cause of action
accrued to him, where fraud is alleged there is no limitation period143
There are three basic defenses to the invocation of the doctrine of laches, where by courts won’t
permit delay so as to bar a claim and they include disability or infancy of the plaintiff, fraud on
the part of the defendant, ignorance of the facts on which the claim is based144

Question 1(a)

Brief facts

Cecilia died on 24th/4/2014, on first Feb. 2017; she was the sole owner of 200 shares in Ugaplex
ltd, she called Ddumba her cousin that she intended to transfer those shares to him immediately
and she completed part of her share transfer form but she didn’t sign it and also didn’t post it off
the company as required to do. She disclosed to her executor that she intended to donate 100
acres of her land to her fiancé Tonda.

Legal issues

4. Whether the transfer of the shares by Cecilia was complete as a trust

5. Whether her communication to her executor was sufficient to make the transfer of land
valid
6. Whether there is a breach of trust by Cecilia’s executor and remedies available to him.

Laws applicable

 The 1995 Republic of the Uganda Constitution as amended.

141
[1952-56] 7 ULR PP.31

142
SECTION 6,19,21 CAP.70.

143
Ibid. SECTION 20 (1)

144
Ibid SECTION 3,22,26
  Companies act 2012
 Judicature Act
 Trust Act
 Decided cases.

Resolution of issues

Resolution of issue 1, Whether the transfer of the shares by Cecilia was complete as a trust

No, the transfer of the shares by her was not complete. Basing on the formalities of creation of a
trust, under constitution of the trust, the property must legally be transferred and it should be
evidenced by some witnesses and must be in writing and signed in which case she just filled the
transfer form but didn’t sign and was not witnessed.

Resolution of issue 2, Whether her communication to her executor was sufficient to make the
transfer of land valid

Yes, her communication to her executor was valid basing on the three certainties and in this case,
certainty of intention, the words that she used was effort to create a trust as it was clear. She
intended to transfer the property and the shares to the cousin and to tonda

Resolution of issue 3, Whether there is a breach of trust by Cecilia’s executor and whether there
is any remedy available to her boy friend.

Yes there is a breach of trust, in this sense is the failure to sustain a duty in that Cecilia informed
her executor about her intention to transfer her 100 acres of land to him but instead the executor
converted the property to his benefit.

There are also remedies available to him. At any time a beneficiary may ask a trustee for an
account of the profit or losses of the trust.

1(b)

Discuss briefly the distinction and/ or relationship between trusts and the following forms of legal
relations.

iv. Contract.
v. Agency.
vi. Bailment.

A trust is a relationship which subsists when a person called the trustee is compelled by a court
of Equity to hold property, whether real or personal, and whether by legal or equitable title for
the benefit of some persons, of whom the trustee himself may be one and who are called cestui
que trust or beneficiaries, or for some object permitted by law; in such a way that the real benefit
of the property accrues not to the trustee, as such, but to the beneficiaries or other objects of the
trust.
A better definition has been incorporated into English Law by the UK Recognition145and under
Article 2146, a trust for the purpose of this convention, the word ‘trust’ refers to the legal
relationships created inter vivos or on death by a person, the settlor, when assets have been
placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.

Trust & Agency

Agency is a contractual arrangement express or implied, written or verbal whereby one person
may act on behalf of another and bind that other as if he or she acted personally. An agency
arises where a person called the agent has expressed or implied authority to act on behalf of
another called the principal and he consents to do so. The agent is normally treated as an
accounting fiduciary party and he binds the principal vis-à-vis third parties. Royal Brunei
Airlines v Tan147 where a travel agent was appointed to sell tickets for the plaintiff airline on
condition that all monies received by the agent were to be held for the airline on trust.
There are some similarities between trustees and agents;
iv. The relationship of trustee and beneficiary is fiduciary in nature while that of principle
and agent is normally fiduciary but not inevitably so.
v. Both trustees and agents must act personally and should not delegate their duties
vi. Neither of them may make un-authorised profits from their office

There are differences however

6. The trustee in exercise of his office will contract as principal and cannot bind the
beneficiaries unless they have constituted him both trustee and agent but an agent binds
his principal so long as he acts on the principal’s authority or on the apparent or
ostensible authority that he is deemed to have.
7. Although the trustee has a right of re-coup an indemnity against the beneficiaries for any
properly incurred expenses and creditors may subrogate those rights in certain
circumstances there is therefore no direct contractual link between the beneficiary and 3rd
parties comparable to the link between the principal and 3rd parties

8. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there is no contract to the contrary or the contract permits him to do so. On
the other hand a trust cannot be revoked unless the trust instrument reserves the power of
revocation. Mallot v. Wilson148, However the beneficiaries if sui juris unanimous and
145
Trusts Act 1987
146
Convention
147
[1995] 2 AC 378
148
[1930] 2 Ch. 494.
 together entitled may demand that the trust property be distributed and consequently that
the trust be brought to an end.

9. Normally the principal in agency gives binding directions to his agent whereas
beneficiaries cannot control the exercise of the trustee’s discretion. Refer to Re
Brockbank149

10. The central distinction between agency and trust is in relation to property. An agent does
not per se hold any property for his principal. Many agents do not obtain items of
property at all and those who do so acquire only possession but not title. On the other
hand there can be no trust unless title to the trust property vests in the trustee or in
another party on behalf of the trustee.

Trust and agency overlap

Note that trust and agency may overlap. A trust may be created under which the trustee
undertakes a contractual obligation to act on behalf of the beneficiary e.g. the vesting of
company shares in a nominee for a fee. Conversely an agent may become a trustee if for
instance he acquires title to property to be held for the benefit of his principal.

It has been said that an agent becomes a trustee for his principal if he obtains title to the property
for the principal’s benefit and on the face of if this is a clear proposition. However this is not
easy to gauge in practice especially if what is involved is a mere chattel or money whose title
may be transferred by mere delivery of possession with an intention to transfer it. The question
was tested in Cohen v. Cohen 150 in which a wife had sued her estranged husband for several
sums of money and the husband in defence pleaded the statute of limitations her claims were
time barred under the statutes of the Limitations Act. The defence would succeed unless the
claims arose under a trust or had been acknowledged within the limitation period applicable to
personal claims. The claims were as follows: 9000 DM being money and the sale price of
chattels sold on her behalf by an agent in Germany. In order to overcome difficulties which
attended transfer of funds from Germany to England where she lived, the wife had arranged for
her husband to collect her 9000 marks and use it for purchase of goods in Germany for his own
business, it being agreed that he would pay her out of his own funds in England.

The second claim was for £123 pounds sterling being the sale price of surplus furniture of the
wife sold after the marriage, the husband having retained this amount.
The third claim was as to £80 pounds sterling being settlement of an insurance claim arising
from the loss of the wife’s jewellery again the husband having retained this amount.
149
[1948]Ch. 206
150
[1929]1 CLR
The court held that she succeeded in all the claims, the court finding that the husband stood in a
fiduciary relationship with regard to the wife’s property in the circumstances and was therefore a
trustee for her benefit. In arriving at this decision the court followed the decision in Burdick v.
Garrick 151 where Lord Justice Giffard stated as follows:
“in respect of attorneys who had been authorised and buy property and had attempted
to set up the statute of limitations as a defence “there was a very special power of attorney
under which the agents were authorised to receive and invest to buy real estate otherwise to
deal with the property but under no circumstances could the money be called theirs.” Under
no circumstances had they the right to apply the money to their own use or to keep it otherwise
than to a distinct and separate account throughout the whole of the time that this agency lasted,
the money was the money of the principal and not in any sense theirs. Under these
circumstances, I have no hesitation in saying that there was in the plainest possible terms a direct
trust created. I do not hesitate to say that where the duty of persons is to receive property and to
hold it for another and to keep it until it is called for, they cannot discharge themselves from that
trust by pleading lapse of time.”

Trust and bailment

Bailment refers to a relationship which arises where an owner of property gives permission to
another person to possess it. A bailment is a delivery of personal chattels to a bailee subject to a
condition that they be returned to the Bailor or be dealt with as the Bailor directs when the
purpose of the bailment has been carried out. There is an element of delivery in bailment as
reflected under section 9152
A good example is like suppose that you are going abroad for a year. You may have a painting
which you do not want to leave in the house. You therefore hand it to a friend to look after
during your absence. This will probably amount to a bailment, though it could be a trust.
Everything will depend on the location of your title, your right to exclusive possession, of the
painting.
If you vested it in a friend, then they will be a trustee of that right for you. If however, you kept
your right in yourself, handing over only the possession of the painting, the transactions will be
one of bailment, not trust. The difference between the two is crucial for a number of reasons.
One is this. If, in breach of instructions, your friend sold his title to the painting to an innocent
purchaser, it will matter a great deal whether you created a bailment or a trust. If your friend was
a bailee, then the purchaser will not acquire a title good against you and you will be able to
recover the painting’s value from the purchaser in an action in the tort of conversion, no matter
how innocent the purchaser may have been.

151
9000 DM (1870) L.R. 5 C.L 233

152
Contract Act No 7 Of 2010.
The basic rule is nemo dat quod habet (no one gives what he does not have) in the section 26153,
and since your friend did not have your title to the painting, he could not transfer it to the
purchaser.
But if your friend was a trustee, the position of the purchaser would be different; for now your
friend does have the right in question and so is capable of passing it on to third parties. You, of
course, have rights under the trust, but such rights are destroyed when the subject-matter of the
trust comes into the hands of an innocent purchaser of value. It suffices to note that bailment is
governed by common law. The position of a bailee is similar to that of a trustee in the sense that
both are ‘entrusted’ with another’s property. The Trustee’s duty to take care of trust property is
roughly comparable with the duty of a gratuitous bailee although generally the trustee’s duties
are more onerous. There are however differences

Bailment differs from a trust in the following ways:

5) A bailee obtains only possession and what is referred to as special property in the goods
property while a trustee takes title to the trust property. As a consequence a bailee cannot
except in a sale in market overt by virtue of estoppel or under special legislations such as
the Factors Acts pass a title to the Chattels valid against the bailor whereas a bona fide
purchaser who purchases the legal estate from a Trustee for value without notice of the
trust acquires a good title;

6) Bailment is a common law notion worked out in proceedings for common law relief such
as actions for conversion, detinue or breach of contract whereas the trust relationship is
purely equitable. In conversion, initial possession is lawful but later converts the goods
contrary to what the owner intended. Detinue is where the defendant is unlawfully
withholding the plaintiff’s goods with no good reason.

7) Bailment applies only to personal chattels that are capable of delivery whereas a trust
may arise in respect of real or personal property and whether tangible or intangible.

8) A bailment is enforced by the bailor who is a party to the arrangement while generally the
trust is enforced by the beneficiary who is not a party to the trust instrument.

Please note that,

 In bailment, there is no transfer of property from the bailer to the bailee, i.e from A to B
 Bailment duties are dependent on rules of common law and not equity.
 The duties of trustees under a trust are minimal in character compared to the duties that
exist in bailment.
 Bailment is restricted to chattels but a trust may exist for all types of property.
153
Sales of Goods and Supply Of Services Act 2017
  Under bailment, the bailer can lose his legal ownership of the bailed property through any
of the ways by which legal owners lose rights; for example, Estoppel, however under a
trust, the beneficiary’s interest/title can only be defeated by transfer of legal title to a
bonafide purchaser for value without notice of the trust.
Trust and Contracts
There is no clean division between contract and trust, though some judges have attempted to
draw one as in Re Cook154 Indeed, there can be no hard and fast line between contract and trust
because contract is a source of rights while trust is a way of holding rights. Indeed, many of the
rights held in trust are born of contract. A simple example will illustrate. Suppose I open a bank
account and pay in £1,000. I have a right born of contract that the bank repays me £1,000 on
demand. If I then declare that I hold that right on trust for my children, it is impossible to say that
this is now a case of trust and not contract; in truth, it is both.

A contract is a common law personal obligation resulting from an agreement between parties.
On the other hand, a trust is an equitable relation which can rise independently of an agreement.
However, there are situations when a distinction between the two is hard to draw, for example;
Settlement and covenants to settle
Where property is vested in trustees on a settlement, it is held upon a trust on the settlement.
However if the property has not yet been transferred to the trustees but it is simply subject to a
consent to settle, the beneficiaries will only be able to enforce the consent if they have given
consideration. This is based on the principle that “equity will not assist a volunteer”

Question 3

Discuss any two of the following in relation to the creation of a trust

A trust is an obligation which binds a person (or persons) to deal with property for the benefit of
beneficiaries or for a charitable purpose in accordance with the terms of the trust. A trust can
come into existence in any manner, by an instrument in writing (including a will), by a unilateral
declaration, by operation of law and also by oral declaration. However, when a trust is created
orally, the law requires that there is sufficient evidence of the setlor’s intention to create a trust.
In the absence of unequivocal evidence of this intention the law will presume that the person
intended mandate or deposit and not the creation to a trust, hence there are four matters that
needs to be considered when dealing with creation of a trust and they include;

 Compliance with the formalities that need to be followed

 Legal effectives of disposition of property.
 Any matter which may vitiate a trust.

Formalities
154
[1965] Ch. 902
A trust has two main formalities for creation a trust. These are Registration of Titles
Act155hereafter referred to as the (R.T.A) and by will. A settlor may create a trust by manifesting
an intention to create it in156 However, under section 95157, a creation of a trust must be
evidenced by a memorandum in writing signed by a party creating the trust this also seen in
section 54. Under by will, section 50158can apply. It provides for the forms of executing a will
according to the following provisions if he is not a member of armed forces, engaged in actual
warfare, or a mariner at sea. The provision are (a), that the will shall be in writing; (b) that it
shall be signed at the foot and end, thereof by a testator or other person in his presence and by his
direction; and that the signature be acknowledged by at least two witnesses in writing in the
presence of the testator.

Certainties- essentials.

There are basically three main certainties refer to a rule which was stated in the UK case of
Knight vs Knight. Lord Langdale was the first who conceptualised the idea of the three
certainties. The case stated that for an express trust to be valid, the trust instrument must show
certainty of intention, certainty of subject matter and certainty of objects.

Certainty of intention

Certainty of intention is also known as certainty of words. This means that it must be clear that
the settlor wishes to create a trust; independently from any particular language used. Looking at
Re Kayford159 Megarry J said that, “the question is whether in substance a sufficient intention to
create a trust has been manifested”. Kayford Ltd had disposed customer’s money into a separate
bank account. Although not conclusive, it was held as an indication that there was an intention to
create a trust. Words were necessary for the conclusion of this case because a trust was held on
the basis of conversations between the company’s managing director, accountant and manager.

However, in contrast to this case, the word ‘trust’ may not be a conclusive evidence of the
existence of a Trust. In the leading case Re Adams & Kensington v Vestry160 the testator said:
“I give, devise, and bequeath all my real and personal estate…unto…my wife…in full
confidence that she will do what is right as to the disposal thereof between my children”. Even

155
Cap 230

156
D.J Bakibinga, Equity and Trusts in Uganda. Page 116

157
R.T.A

158
Succession Act

159
(1975)

160
(1883)
though the words “in full confidence” were used, it does not give rise to legal obligation. Hence,
in this case there is no trust.

Looking at past court decisions, one could note the emphasis made on the words used to create a
trust. These must make it plain that ultimately there was an intention to create a trust. Today, in
most instances, trust documents are drafted by professionals and one would hope that these
should not present any difficulty to show certainty of intention.

Certainty of subject matter

The property subject to the trust must be clearly identified. There are two aspects to this
requirement that include the certainty as to what property is to be held upon trust and the
certainty as to the extent of the beneficial interest of each beneficiary. The former is necessary
because a trustee must know what is and what is not included in the trust. It is also essential that
the trustee knows what or how much each beneficiary will be entitled to and what income should
be accumulated for the beneficiary.

In the court case Palmer v. Simmonds161 it was held that the phrase “the bulk of my residuary
estate” was not certain enough for a trust relationship to subsist. However in another case Re
Golay162 the statement “one of my flats and a reasonable income” was enough certain to
constitute trust. When it comes to distinguishing trust property from other assets, the courts have
dealt with this according to the nature of the subject-matter involved. In Re Goldcorp163 the
court held that the subject-matter in the trust was not separate form other assets and so the trust
was not valid. On the other hand, in Hunter vs Moss164 it was held that even though the assets
(which were fungibles or incorporeal) are not separate, this does not hinder the constitution of a
valid trust.

Certainty of object

This relates to the idea that there must be, in general, a person or persons entitled to the benefit
of the trust. Such beneficiaries must be clearly identified or at least ascertainable. The test for
determining this depends on the type of trust being created. This beneficiary principle in fact is
inapplicable to charitable trusts. Alternatively, beneficiaries may include people not born at the
date of the trust (for example, “my future grandchildren”).

161
(1854)

162
(1965)

163
(1995)

164
(1993)
In the case of discretionary trusts, where the trustees have power to decide who the beneficiaries
will be, the settlor must have described a clear class of beneficiaries. In the court case McPhail v
Doulton 165it was established that in the case of a discretionary trust, there is certainty of object if
you can determine whether any given person is a beneficiary or not. The words used in this case
were “my relatives and dependants of staff”. The Court held that there was conceptual certainty.
However, one may note that in Brown vs Gould166 the words “my old friends” lacked precise
definition and so the court held that there was no certainty of objects. In a fixed trust, the trustee
has no discretion of how to delegate trust property and therefore the class of beneficiaries must
be known or else the trust will fail. Objects here may be described as a class for example “my
children”. When the validity of the trust is impeached because of lack of certainty of objects, the
trustee will hold the assets on trust for the benefit of the settlor and his heirs.

The Effect of Uncertainty

If there is no certainty of intention, the transferee will take the property outright. If there is a lack
of certainty of subject matter, then the whole transaction is ineffective (with the result of course,
that the potential transferor remains liable for tax purposes). If there is no certainty of objects
then the trustee will hold on a resulting trust for the transferor, or if he is dead, his estate in
regards to the Trusts Law and Management.

Question 4

With relevant authorities and illustrations, discuss the accuracy of the assertion that, “
equitable doctrines have remained available to prevent the unconsciousness exercise of the
plaintiffs rights at law”.

Equity is a body of rules of fairness or natural justice or public morality. Courts administer
justice by applying rules of fairness or principles of natural justice and not any other law.
Equity is applicable to Uganda with reference to the judicature Act167 which states that, in every
case or matter before the high court, the rules of equity and rules of common law shall be
administered concurrently. The contract Act under section 2168 also preserves the rights of
parties to a contract both at law and in equity. Equity therefore is law169, in the sense that its part
of Uganda’s law with reference to the magistrates court Act170, which provides that, in every

165
(1971)
166
(1972)
167
Judicature Act

168
No 10 of 2010

169
GLANVILLE WILLIAMS “learning the law “10 EDITION.PP 23.
civil cause or matter before a magistrates court, law and equity shall be administered
concurrently.
The historical evolution of equity is hereby traced along with its rationale,
Equity arose and developed in the early days as a reaction to the rigors and inadequacies of the
common law. The inability of writs for some who needed them, the high costs, too many
procedural difficulties and the dominance of technicalities meant that common law was losing
touch with requirement of community171.Disappointed litigants began to petition the king as the
“Fountain of Justice” asking him to do justice in respect of some complaint, the King with the
Chancellor eventually set up a special court, court of chancery to deal with these petitions. The
Chancellor dealt with these petitions on the basis of what was morally right not according to any
precedent but according to the effect produced upon his own individual sense of right or wrong
by the merits of a particular case before him.172 In Uganda, the Judicature Act173states that the
rules of Equity and the rules of common law shall be administered concurrently and where there
is a conflict or variance between the rules of equity and the rules of common law with reference
to the same subject the rules of equity shall prevail.
The Constitution of Uganda 1995174recognizes that in adjudicating cases both civil and criminal
in nature, the courts must take into consideration that substantive justice shall be administered
without undue regard to technicalities. That’s why in Stephen Mabosi V Uganda Revenue
Authority175 the Supreme court of Uganda held that a Memorandum of Appeal which was filled
out of time could not be rejected because the appellant could not file it before obtaining the
official record of proceeding from the High Court which were released after the 60 day period
required for filing the Memorandum of Appeal had elapsed. It’s against this background that
Equity developed with proper justification.
Equity jurisdiction is divided in to three categories; exclusive jurisdiction (creation of new
rights) that is common law courts had rights that they recognized and enforced but for their
inflexibility, Equity created new rights which included some of the following;
Trusts; these arise where one party gives property to trustees to hold for the use of beneficiaries.
A trust is an ownership structure, developed by courts of equity, which divides legal and
beneficial rights to an object of property among two separate entities. The cestui que trust, or
trustee, is said to hold legal title ‘on trust’ for the beneficiary, who holds equitable (beneficial)
title. There are several classes of trusts which include; Express trust are inferred by law from
unequal contributions made to a purchase price, subject to contrary presumption or evidence of
170
SECTION 11 (1) CAP 16

171
Carson page 23

172
Law teacher/ Equity

173
Section 14 (2) (4) 1996

174
Article 126(2)e

175
(1995) supreme court of Uganda
actual intention as to beneficial ownership, implied trusts which the court deduces from the
conduct of the parties and circumstances of the transaction.176

Mortgagor's Equity of redemption.

At common law, if the mortgagor had not repaid the loan once the legal redemption date had
passed, he would lose the property but remain liable to repay the loan. Equity allowed him to
keep the property if he repaid the loan with interest. Thus this right to redeem the property is
known as the equity of redemption. Equitable mortgages are where a mortgagor who only has
an equitable interest in a piece of property can only create an equitable mortgage over it when he
borrows money and uses that interest as security. Similarly, a beneficiary under a trust can create
an equitable mortgage over his equitable interest under a trust if he uses it as security for a loan
advanced to him.

Concurrent jurisdiction (creation of new remedies) depended on rights which common law
recognized and enforced. Initially the exercise of concurrent jurisdictions depended on rights
recognized and enforced by the common law, the problem being that the remedies given by
common law courts were inadequate. Equity intervened to provide adequate and just remedies
like specific performance, whose subject matter was unique, injunction, and an order for an
account. However there were conditions to grant the equitable remedies and these still apply in
Uganda today.

The decree of specific performance.

The general rule of specific performance is stated by Mukanza, Ag J177 that specific
performance is not granted if the plaintiff would be adequately compensated by the common law
remedy of damages .A decree of specific performance is an order of the court compelling the
defendant personally to do what he or she promised to do. Thus, specific performance is the
equitable right to the specific relief in respect of an intermediate class of agreements which do
not call for the execution of a further instrument.178 In Beswick v Beswick179 it was stated that
the common law remedy may be regarded as inadequate and specific performances may be
available in an appropriate case, where only damages can be recovered by an action of law.
Rescission.
This is defined as the unmaking of a contract between parties. The equitable remedy is concerned
with the avoidance abinitio of agreements or other dispositions. It requires a court order, and the
court has discretion whether to grant it or not. In a situation where the contract is voidable but
not void, the contract remains valid but may be rescinded. It arises where a contract is expressed
by word or orally in an unequivocal manner that he or she is no longer willing or that he or she
refuses to be bound by the contract. This puts an end to the contract and restores the parties as to
176
D.J Bakibinga, EQUITY AND TRUSTS IN UGANDA, pg 112.

177
Haji Lutakome v Sentogo[1988-90] HCB 95

178
Philip H. Pettit, Equity and the Law of Trusts, 11th edition

179
(1962)2 ALLER 1197.
the position they were in before the contract was entered into. Instances recognized under
this are those where the mistake is as to existence of the subject matter, identity of subject
matter, quality of the subject matter of the contract. Also for the unilateral mistake where the
party is mistaken as to whom he or she he contracted with. In Cooper v Phibbs180 the appellant
was a legal owner and trustee of land, unknown to the other party was that the property belonged
to them. The appellant renovated the place and let it to the defendant. The defendant discovered
it was their property and wanted to set aside the contract. The House of Lords held that the
contract should be set aside subject to expenditure of the former. A contract is rescindable
because such a mistake is fundamental to render the contract void which may not be provided in
common law however equity resolves it.
Rectification. It is a remedy whereby court orders a change in a written document to
reflect what it ought to have said in the first pIace.181 Rectification may be used to rectify
documents which include conveyancing documents, building contracts, insurance policies, bills
of exchange and marriage settlements. Rectification is limited to the harmonization of the written
document with the intention of the parties. In Rose v Pim182, Denning LJ stressed that it is
necessary to show that the parties were in complete agreement on the terms of other contract but
by an error wrote them down wrongly. Then the concurrent intention of the parties must remain
unaltered up to the time of execution of the documents intended to the effect of the antecedent
agreement subject to the contract. On the contrary, where the contract has been fully executed
and nothing remains to be done under it, it will not be rectified.183

Injunction.
An injunction is an order made to compel observance or performance of some obligation.
Section 38184tates that the High Court shall have power to grant an injunction to restrain any
person from doing any act as may be specified by the High Court. Injunctions should be applied
as it is provided for by the law. That is the evidence should be applied to the law. Being an
equitable remedy, injunctions require a balance of convenience. That is, where granting of the
injunction would cause harm to the other party then, the courts should not grant it if you can get
another remedy ( if one can be paid damages for the loss suffered.) Osotraco limited V AG
clearly shows that injunctions can be issued against the state.

Delivery up and cancellation.

Under certain circumstances, where the existence of a seemingly valid document which is, in
fact, void, may cause embarrassment to the plaintiff for example, because an action is brought on
it, the court can order the document to be delivered up for cancellation. The remedy applies to all
kinds of document for example insurance policies and negotiable instruments.

Auxillary jurisdiction (Creation of New Procedures) Equity’s auxiliary jurisdiction was

180
[1867]L. R. 2 H.L 149

181
Bird, Roger; Osborn's Concise Law Dictionary, London, Sweet & Maxwell

182
Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd [1953] 2 QB 450

183
Caird v Moss 33 Ch. Div. 22 (1886)

184
Judicature Act, Cap 13 Laws of Uganda 2000
exercised in order to assist the defective procedure at common law with a view to common law
courts giving better and effective justice.185 Under auxiliary jurisdiction, courts of equity would
allow a defendant to give evidence when a common law court would not allow him to do so, or
adding parties to the proceedings to be heard where a common law court would not allow. In
another creation of new procedure, courts of equity had the power to force what is known as
disclosure whereas common law had no power to do so.186 When the auxiliary jurisdiction is
invoked, the Court’s reasoning process is, or should be, different, and the range of available
relief that requires consideration might include common law damages. These facts necessarily
affect the conduct of a case in at least three ways; There is need for a claimant to first establish a
common law right, either under the general law (in contract, tort or to the extent that the law of
restitution is not in truth equitable in character, restitution) or a statute, in aid of which equitable
relief such as an injunction or an order of specific performance is sought. Secondly, that even if
the legal right is established the claimant needs to persuade the court that he or she should not,
on an exercise of the court’s discretion, be left to his or her remedy in damages at Law. That is,
the claimant must establish that damages are not an adequate remedy. The third is that
consideration needs to be given to a range of policy objections to a grant of equitable relief in aid
of legal rights. For example, equitable relief might be refused if a grant of relief is directed
towards restraint of commission of a crime and the court is minded to leave the criminal law to
take its ordinary course.187 Equitable relief might also be refused if enforcement of relief,
whether by way of specific performance or injunction, would acquire a degree of supervision
beyond the court’s capacity to administer. 188 The above illustrated policy issues do not only arise
in the auxiliary jurisdiction. In one guise or another, they might arise in exclusive jurisdiction
(for instance in the enforcement of the obligations of a trustee) and be taken into account on a
discretionary defence or in the moulding of relief. Nevertheless, auxiliary jurisdiction provides a
fertile field for a consideration of policy issues because inherent in the jurisdiction is the
existence of a question whether or not a claimant for relief should be left to pursue a remedy for
which the law otherwise provides.189
In conclusion the underlying principle is that under Equity doctrines, and has seen from Equity
cannot suffer a wrong without a remedy. Equity jurisdiction addresses the lacunas in the law that
common law creates since it is based on morally accepted justice.

Question 5

Write short notes on the following showing their continued applicability

Equity won’t suffer a wrong to be without a remedy.

185
Supra

186
Solicitors and Lawyers; Court of Equity; Disputes and Litigation

187
Gouriet v. Union of Post Office Workers [1978] AC 435 at 481

188
J C Williamson Ltd v. Lukey & Mulholland (1931) 45 CLR 282, Patrick Stevedores Operations No. 2 Pty Ltd v.
Maritime Union of Australia (1998) 195 CLR 1

189
Equity: Principles, Practice and Procedure by Geoff Lindsay SC, 25 November 2003 9Revised 20 September 2007)
Trusts exemplifies this maxim, equity enabled the beneficiary through the procedures of the
trust, to enforce obligations where no remedy at common law existed under section 55190. That
is the beneficiary has no right at common law to have the terms of the trust enforced but our
legal system never the less requires the trustee to carry out those terms to prevent him or her to
commit what would be in effect wrong against that beneficiary.
Specific performance and injunctions constitute one of the chief ways in which equity
supplements the law by granting auxiliary or additional remedies where the common law
remedies where inadequate. The remedy will only be granted where it’s just and equitable to do
so having considered all the circumstances of the case for example it won’t be awarded in
contracts of every description but only where legal remedy is inadequate or defective that it
becomes necessary for equity to interfere like in section 52 Sale Of Goods and supply of services
Act191, contracts for sale of goods, damages may be a warded for failure to supply goods.
However there are situations where equity can’t provide a remedy for example in situations of
unfair trade competition or contracts involving personal services. In such situations, courts may
be unable to order specific performance even where damages are inadequate 192.therefore the
maxim is subject to what is realistic, practicable and convenient for the court.

Equity follows the law

According to the Judicature Act,193 provides that equity is based on the law. Equity has adopted
some of the rules of common law for example those affecting mistake that is under mistake
common law is rigid or at times harsh that’s why equity has attempted to temper the unfairness
in some areas by introducing certain remedies where the common law failed to grant any, a
leading example of an equitable remedy could be granted at common law is Solle Vs Butcher .
The principle that only parties to a contract will be bound by that contract under the law of
contract is observed by a doctrine of equity for example special performance can’t be granted
where damages will provide adequate remedy, this is because equity follows the law and is
designed to supplement the grant of damages but not to override them like in contracts for sale or
lease of land or where chattels sold have a special beauty or interest specific performance will be
decreed
However if the common law rules are ancient or too rigid then equity won’t follow them since it
won’t promote fairness to the litigants

He who seeks equity must do equity

190
Trustees Act, CAP 164

191
2017

192
D J BAKIBINGA, Law Of Contract In Uganda”(1996) pp 379

193
SECTION 2 CAP75.
A person seeking an equitable remedy must him or herself act fairly, thus in case of Bank Of
Uganda Vs Hassan Bassajabalaba where court held that Bassajabalaba failed to act fairly when
he forged a court order so as to get back his land titles hence an equitable remedy couldn’t be
granted to him.
This maxim can be illustrated through the following arrangements that is, doctrine of election,
notice to redeem mortgage, consolidation of mortgage and illegal loans.

He who comes to equity must come with clean hands

The plaintiff must approach the court free from any blame on his part because court wont grant
equitable relief to the plaintiff if there is any evidence of fraud, mistakes, misrepresentation or
illegality, thus in Katarikawe Vs Katwiremu where court held that if a tenant is in breach of
several terms of his agreement with the land owner then court wont grant relief.
Also when certain transactions are illegal and one seeks to get an equitable relief out of such a
transaction for example under the Employment Act194 which provides that wages can only be
paid in local currency and not in kind and any agreement to such will be illegal, null and void.
However for the inequitable conduct to amount to unclean hands, it need not be illegal strictly as
required by law. Its sufficient if the conduct is unconscionable and morally reprehensible and
need not have been to the other party to the action.

Delay defeats equities/Doctrine of laches

The essence of the doctrine is that an equitable relief won’t be given if the applicant has unduly
delayed in bringing the action unlike adverse possession, the doctrine can only be used as a
defense against an action and not as a basis for establishment of a cause of action thus where the
land owner knows that his rights are being violated and he chooses to sit idly, he is taken to have
delayed in the violation and will be stopped from arguing otherwise, in climatong Vs
Olinga195the applicant for a period of thirty years occupied and cultivated the respondents land
although the latter was aware of the intrusion, he made no attempt to stop it or recover the land.
High court held that the applicant had taken long to enforce his right. there is no fixed time for
the doctrine to operate its up to the court to decide whether or not in the circumstances of a
particular case it considers that delay to ring an action was unreasonable.
However the courts won’t apply the doctrine in situations which are governed by statutes of
limitations for example under The Limitation Act196, provides that no person shall make an

194
CAP 16 SECTION 30

195
[1952-56] 7 ULR PP.31

196
SECTION 6,19,21 CAP.70.
action to recover land after the expiration of twelve years from the date the cause of action
accrued to him, where fraud is alleged there is no limitation period197
There are three basic defenses to the invocation of the doctrine of laches, where by courts won’t
permit delay so as to bar a claim and they include disability or infancy of the plaintiff, fraud on
the part of the defendant, ignorance of the facts on which the claim is based198

Question 1(a)

Brief facts

Cecilia died on 24th/4/2014, on first Feb. 2017; she was the sole owner of 200 shares in Ugaplex
ltd, she called Ddumba her cousin that she intended to transfer those shares to him immediately
and she completed part of her share transfer form but she didn’t sign it and also didn’t post it off
the company as required to do. She disclosed to her executor that she intended to donate 100
acres of her land to her fiancé Tonda.

Legal issues

7. Whether the transfer of the shares by Cecilia was complete as a trust

8. Whether her communication to her executor was sufficient to make the transfer of land
valid
9. Whether there is a breach of trust by Cecilia’s executor and remedies available to him.

Laws applicable

 The 1995 Republic of the Uganda Constitution as amended.

 Companies act 2012
 Judicature Act
 Trust Act
 Decided cases.

Resolution of issues

Resolution of issue 1, Whether the transfer of the shares by Cecilia was complete as a trust

No, the transfer of the shares by her was not complete. Basing on the formalities of creation of a
trust, under constitution of the trust, the property must legally be transferred and it should be

197
Ibid. SECTION 20 (1)

198
Ibid SECTION 3,22,26
evidenced by some witnesses and must be in writing and signed in which case she just filled the
transfer form but didn’t sign and was not witnessed.

Resolution of issue 2, Whether her communication to her executor was sufficient to make the
transfer of land valid

Yes, her communication to her executor was valid basing on the three certainties and in this case,
certainty of intention, the words that she used was effort to create a trust as it was clear. She
intended to transfer the property and the shares to the cousin and to tonda

Resolution of issue 3, Whether there is a breach of trust by Cecilia’s executor and whether there
is any remedy available to her boy friend.

Yes there is a breach of trust, in this sense is the failure to sustain a duty in that Cecilia informed
her executor about her intention to transfer her 100 acres of land to him but instead the executor
converted the property to his benefit.

There are also remedies available to him. At any time a beneficiary may ask a trustee for an
account of the profit or losses of the trust.

1(b)

Discuss briefly the distinction and/ or relationship between trusts and the following forms of legal
relations.

vii. Contract.
viii. Agency.
ix. Bailment.

A trust is a relationship which subsists when a person called the trustee is compelled by a court
of Equity to hold property, whether real or personal, and whether by legal or equitable title for
the benefit of some persons, of whom the trustee himself may be one and who are called cestui
que trust or beneficiaries, or for some object permitted by law; in such a way that the real benefit
of the property accrues not to the trustee, as such, but to the beneficiaries or other objects of the
trust.
A better definition has been incorporated into English Law by the UK Recognition199and under
Article 2200, a trust for the purpose of this convention, the word ‘trust’ refers to the legal
relationships created inter vivos or on death by a person, the settlor, when assets have been
placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.

Trust & Agency

199
Trusts Act 1987
200
Convention
Agency is a contractual arrangement express or implied, written or verbal whereby one person
may act on behalf of another and bind that other as if he or she acted personally. An agency
arises where a person called the agent has expressed or implied authority to act on behalf of
another called the principal and he consents to do so. The agent is normally treated as an
accounting fiduciary party and he binds the principal vis-à-vis third parties. Royal Brunei
Airlines v Tan201 where a travel agent was appointed to sell tickets for the plaintiff airline on
condition that all monies received by the agent were to be held for the airline on trust.
There are some similarities between trustees and agents;
vii. The relationship of trustee and beneficiary is fiduciary in nature while that of principle
and agent is normally fiduciary but not inevitably so.
viii. Both trustees and agents must act personally and should not delegate their duties
ix. Neither of them may make un-authorised profits from their office

There are differences however

11. The trustee in exercise of his office will contract as principal and cannot bind the
beneficiaries unless they have constituted him both trustee and agent but an agent binds
his principal so long as he acts on the principal’s authority or on the apparent or
ostensible authority that he is deemed to have.
12. Although the trustee has a right of re-coup an indemnity against the beneficiaries for any
properly incurred expenses and creditors may subrogate those rights in certain
circumstances there is therefore no direct contractual link between the beneficiary and 3rd
parties comparable to the link between the principal and 3rd parties

13. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there is no contract to the contrary or the contract permits him to do so. On
the other hand a trust cannot be revoked unless the trust instrument reserves the power of
revocation. Mallot v. Wilson202, However the beneficiaries if sui juris unanimous and
together entitled may demand that the trust property be distributed and consequently that
the trust be brought to an end.

14. Normally the principal in agency gives binding directions to his agent whereas
beneficiaries cannot control the exercise of the trustee’s discretion. Refer to Re
Brockbank203

15. The central distinction between agency and trust is in relation to property. An agent does
not per se hold any property for his principal. Many agents do not obtain items of
201
[1995] 2 AC 378
202
[1930] 2 Ch. 494.
203
[1948]Ch. 206
 property at all and those who do so acquire only possession but not title. On the other
hand there can be no trust unless title to the trust property vests in the trustee or in
another party on behalf of the trustee.

Trust and agency overlap

Note that trust and agency may overlap. A trust may be created under which the trustee
undertakes a contractual obligation to act on behalf of the beneficiary e.g. the vesting of
company shares in a nominee for a fee. Conversely an agent may become a trustee if for
instance he acquires title to property to be held for the benefit of his principal.

It has been said that an agent becomes a trustee for his principal if he obtains title to the property
for the principal’s benefit and on the face of if this is a clear proposition. However this is not
easy to gauge in practice especially if what is involved is a mere chattel or money whose title
may be transferred by mere delivery of possession with an intention to transfer it. The question
was tested in Cohen v. Cohen 204 in which a wife had sued her estranged husband for several
sums of money and the husband in defence pleaded the statute of limitations her claims were
time barred under the statutes of the Limitations Act. The defence would succeed unless the
claims arose under a trust or had been acknowledged within the limitation period applicable to
personal claims. The claims were as follows: 9000 DM being money and the sale price of
chattels sold on her behalf by an agent in Germany. In order to overcome difficulties which
attended transfer of funds from Germany to England where she lived, the wife had arranged for
her husband to collect her 9000 marks and use it for purchase of goods in Germany for his own
business, it being agreed that he would pay her out of his own funds in England.

The second claim was for £123 pounds sterling being the sale price of surplus furniture of the
wife sold after the marriage, the husband having retained this amount.
The third claim was as to £80 pounds sterling being settlement of an insurance claim arising
from the loss of the wife’s jewellery again the husband having retained this amount.
The court held that she succeeded in all the claims, the court finding that the husband stood in a
fiduciary relationship with regard to the wife’s property in the circumstances and was therefore a
trustee for her benefit. In arriving at this decision the court followed the decision in Burdick v.
Garrick 205 where Lord Justice Giffard stated as follows:
“in respect of attorneys who had been authorised and buy property and had attempted
to set up the statute of limitations as a defence “there was a very special power of attorney
under which the agents were authorised to receive and invest to buy real estate otherwise to
deal with the property but under no circumstances could the money be called theirs.” Under
no circumstances had they the right to apply the money to their own use or to keep it otherwise
204
[1929]1 CLR
205
9000 DM (1870) L.R. 5 C.L 233
than to a distinct and separate account throughout the whole of the time that this agency lasted,
the money was the money of the principal and not in any sense theirs. Under these
circumstances, I have no hesitation in saying that there was in the plainest possible terms a direct
trust created. I do not hesitate to say that where the duty of persons is to receive property and to
hold it for another and to keep it until it is called for, they cannot discharge themselves from that
trust by pleading lapse of time.”

Trust and bailment

Bailment refers to a relationship which arises where an owner of property gives permission to
another person to possess it. A bailment is a delivery of personal chattels to a bailee subject to a
condition that they be returned to the Bailor or be dealt with as the Bailor directs when the
purpose of the bailment has been carried out. There is an element of delivery in bailment as
reflected under section 9206
A good example is like suppose that you are going abroad for a year. You may have a painting
which you do not want to leave in the house. You therefore hand it to a friend to look after
during your absence. This will probably amount to a bailment, though it could be a trust.
Everything will depend on the location of your title, your right to exclusive possession, of the
painting.
If you vested it in a friend, then they will be a trustee of that right for you. If however, you kept
your right in yourself, handing over only the possession of the painting, the transactions will be
one of bailment, not trust. The difference between the two is crucial for a number of reasons.
One is this. If, in breach of instructions, your friend sold his title to the painting to an innocent
purchaser, it will matter a great deal whether you created a bailment or a trust. If your friend was
a bailee, then the purchaser will not acquire a title good against you and you will be able to
recover the painting’s value from the purchaser in an action in the tort of conversion, no matter
how innocent the purchaser may have been.
The basic rule is nemo dat quod habet (no one gives what he does not have) in the section 26207,
and since your friend did not have your title to the painting, he could not transfer it to the
purchaser.
But if your friend was a trustee, the position of the purchaser would be different; for now your
friend does have the right in question and so is capable of passing it on to third parties. You, of
course, have rights under the trust, but such rights are destroyed when the subject-matter of the
trust comes into the hands of an innocent purchaser of value. It suffices to note that bailment is
governed by common law. The position of a bailee is similar to that of a trustee in the sense that
both are ‘entrusted’ with another’s property. The Trustee’s duty to take care of trust property is
roughly comparable with the duty of a gratuitous bailee although generally the trustee’s duties
are more onerous. There are however differences
206
Contract Act No 7 Of 2010.

207
Sales of Goods and Supply Of Services Act 2017
Bailment differs from a trust in the following ways:

9) A bailee obtains only possession and what is referred to as special property in the goods
property while a trustee takes title to the trust property. As a consequence a bailee cannot
except in a sale in market overt by virtue of estoppel or under special legislations such as
the Factors Acts pass a title to the Chattels valid against the bailor whereas a bona fide
purchaser who purchases the legal estate from a Trustee for value without notice of the
trust acquires a good title;

10) Bailment is a common law notion worked out in proceedings for common law relief such
as actions for conversion, detinue or breach of contract whereas the trust relationship is
purely equitable. In conversion, initial possession is lawful but later converts the goods
contrary to what the owner intended. Detinue is where the defendant is unlawfully
withholding the plaintiff’s goods with no good reason.

11) Bailment applies only to personal chattels that are capable of delivery whereas a trust
may arise in respect of real or personal property and whether tangible or intangible.

12) A bailment is enforced by the bailor who is a party to the arrangement while generally the
trust is enforced by the beneficiary who is not a party to the trust instrument.

Please note that,

 In bailment, there is no transfer of property from the bailer to the bailee, i.e from A to B
 Bailment duties are dependent on rules of common law and not equity.
 The duties of trustees under a trust are minimal in character compared to the duties that
exist in bailment.
 Bailment is restricted to chattels but a trust may exist for all types of property.
 Under bailment, the bailer can lose his legal ownership of the bailed property through any
of the ways by which legal owners lose rights; for example, Estoppel, however under a
trust, the beneficiary’s interest/title can only be defeated by transfer of legal title to a
bonafide purchaser for value without notice of the trust.
Trust and Contracts
There is no clean division between contract and trust, though some judges have attempted to
draw one as in Re Cook208 Indeed, there can be no hard and fast line between contract and trust
because contract is a source of rights while trust is a way of holding rights. Indeed, many of the
rights held in trust are born of contract. A simple example will illustrate. Suppose I open a bank
account and pay in £1,000. I have a right born of contract that the bank repays me £1,000 on

208
[1965] Ch. 902
demand. If I then declare that I hold that right on trust for my children, it is impossible to say that
this is now a case of trust and not contract; in truth, it is both.

A contract is a common law personal obligation resulting from an agreement between parties.
On the other hand, a trust is an equitable relation which can rise independently of an agreement.
However, there are situations when a distinction between the two is hard to draw, for example;
Settlement and covenants to settle
Where property is vested in trustees on a settlement, it is held upon a trust on the settlement.
However if the property has not yet been transferred to the trustees but it is simply subject to a
consent to settle, the beneficiaries will only be able to enforce the consent if they have given
consideration. This is based on the principle that “equity will not assist a volunteer”

Question 3

Discuss any two of the following in relation to the creation of a trust

A trust is an obligation which binds a person (or persons) to deal with property for the benefit of
beneficiaries or for a charitable purpose in accordance with the terms of the trust. A trust can
come into existence in any manner, by an instrument in writing (including a will), by a unilateral
declaration, by operation of law and also by oral declaration. However, when a trust is created
orally, the law requires that there is sufficient evidence of the setlor’s intention to create a trust.
In the absence of unequivocal evidence of this intention the law will presume that the person
intended mandate or deposit and not the creation to a trust, hence there are four matters that
needs to be considered when dealing with creation of a trust and they include;

 Compliance with the formalities that need to be followed

 Legal effectives of disposition of property.
 Any matter which may vitiate a trust.

Formalities

A trust has two main formalities for creation a trust. These are Registration of Titles
Act209hereafter referred to as the (R.T.A) and by will. A settlor may create a trust by manifesting
an intention to create it in210 However, under section 95211, a creation of a trust must be
evidenced by a memorandum in writing signed by a party creating the trust this also seen in
section 54. Under by will, section 50212can apply. It provides for the forms of executing a will
209
Cap 230

210
D.J Bakibinga, Equity and Trusts in Uganda. Page 116

211
R.T.A

212
Succession Act
according to the following provisions if he is not a member of armed forces, engaged in actual
warfare, or a mariner at sea. The provision are (a), that the will shall be in writing; (b) that it
shall be signed at the foot and end, thereof by a testator or other person in his presence and by his
direction; and that the signature be acknowledged by at least two witnesses in writing in the
presence of the testator.

Certainties- essentials.

There are basically three main certainties refer to a rule which was stated in the UK case of
Knight vs Knight. Lord Langdale was the first who conceptualised the idea of the three
certainties. The case stated that for an express trust to be valid, the trust instrument must show
certainty of intention, certainty of subject matter and certainty of objects.

Certainty of intention

Certainty of intention is also known as certainty of words. This means that it must be clear that
the settlor wishes to create a trust; independently from any particular language used. Looking at
Re Kayford213 Megarry J said that, “the question is whether in substance a sufficient intention to
create a trust has been manifested”. Kayford Ltd had disposed customer’s money into a separate
bank account. Although not conclusive, it was held as an indication that there was an intention to
create a trust. Words were necessary for the conclusion of this case because a trust was held on
the basis of conversations between the company’s managing director, accountant and manager.

However, in contrast to this case, the word ‘trust’ may not be a conclusive evidence of the
existence of a Trust. In the leading case Re Adams & Kensington v Vestry214 the testator said:
“I give, devise, and bequeath all my real and personal estate…unto…my wife…in full
confidence that she will do what is right as to the disposal thereof between my children”. Even
though the words “in full confidence” were used, it does not give rise to legal obligation. Hence,
in this case there is no trust.

Looking at past court decisions, one could note the emphasis made on the words used to create a
trust. These must make it plain that ultimately there was an intention to create a trust. Today, in
most instances, trust documents are drafted by professionals and one would hope that these
should not present any difficulty to show certainty of intention.

Certainty of subject matter

The property subject to the trust must be clearly identified. There are two aspects to this
requirement that include the certainty as to what property is to be held upon trust and the

213
(1975)

214
(1883)
certainty as to the extent of the beneficial interest of each beneficiary. The former is necessary
because a trustee must know what is and what is not included in the trust. It is also essential that
the trustee knows what or how much each beneficiary will be entitled to and what income should
be accumulated for the beneficiary.

In the court case Palmer v. Simmonds215 it was held that the phrase “the bulk of my residuary
estate” was not certain enough for a trust relationship to subsist. However in another case Re
Golay216 the statement “one of my flats and a reasonable income” was enough certain to
constitute trust. When it comes to distinguishing trust property from other assets, the courts have
dealt with this according to the nature of the subject-matter involved. In Re Goldcorp217 the
court held that the subject-matter in the trust was not separate form other assets and so the trust
was not valid. On the other hand, in Hunter vs Moss218 it was held that even though the assets
(which were fungibles or incorporeal) are not separate, this does not hinder the constitution of a
valid trust.

Certainty of object

This relates to the idea that there must be, in general, a person or persons entitled to the benefit
of the trust. Such beneficiaries must be clearly identified or at least ascertainable. The test for
determining this depends on the type of trust being created. This beneficiary principle in fact is
inapplicable to charitable trusts. Alternatively, beneficiaries may include people not born at the
date of the trust (for example, “my future grandchildren”).

In the case of discretionary trusts, where the trustees have power to decide who the beneficiaries
will be, the settlor must have described a clear class of beneficiaries. In the court case McPhail v
Doulton 219it was established that in the case of a discretionary trust, there is certainty of object if
you can determine whether any given person is a beneficiary or not. The words used in this case
were “my relatives and dependants of staff”. The Court held that there was conceptual certainty.
However, one may note that in Brown vs Gould220 the words “my old friends” lacked precise
definition and so the court held that there was no certainty of objects. In a fixed trust, the trustee
has no discretion of how to delegate trust property and therefore the class of beneficiaries must
be known or else the trust will fail. Objects here may be described as a class for example “my
215
(1854)

216
(1965)

217
(1995)

218
(1993)

219
(1971)
220
(1972)
children”. When the validity of the trust is impeached because of lack of certainty of objects, the
trustee will hold the assets on trust for the benefit of the settlor and his heirs.

The Effect of Uncertainty

If there is no certainty of intention, the transferee will take the property outright. If there is a lack
of certainty of subject matter, then the whole transaction is ineffective (with the result of course,
that the potential transferor remains liable for tax purposes). If there is no certainty of objects
then the trustee will hold on a resulting trust for the transferor, or if he is dead, his estate in
regards to the Trusts Law and Management.

Question 4

With relevant authorities and illustrations, discuss the accuracy of the assertion that, “
equitable doctrines have remained available to prevent the unconsciousness exercise of the
plaintiffs rights at law”.

Equity is a body of rules of fairness or natural justice or public morality. Courts administer
justice by applying rules of fairness or principles of natural justice and not any other law.
Equity is applicable to Uganda with reference to the judicature Act221 which states that, in every
case or matter before the high court, the rules of equity and rules of common law shall be
administered concurrently. The contract Act under section 2222 also preserves the rights of
parties to a contract both at law and in equity. Equity therefore is law223, in the sense that its part
of Uganda’s law with reference to the magistrates court Act224, which provides that, in every
civil cause or matter before a magistrates court, law and equity shall be administered
concurrently.
The historical evolution of equity is hereby traced along with its rationale,
Equity arose and developed in the early days as a reaction to the rigors and inadequacies of the
common law. The inability of writs for some who needed them, the high costs, too many
procedural difficulties and the dominance of technicalities meant that common law was losing
touch with requirement of community225.Disappointed litigants began to petition the king as the
“Fountain of Justice” asking him to do justice in respect of some complaint, the King with the
Chancellor eventually set up a special court, court of chancery to deal with these petitions. The
Chancellor dealt with these petitions on the basis of what was morally right not according to any

221
Judicature Act

222
No 10 of 2010

223
GLANVILLE WILLIAMS “learning the law “10 EDITION.PP 23.

224
SECTION 11 (1) CAP 16

225
Carson page 23
precedent but according to the effect produced upon his own individual sense of right or wrong
by the merits of a particular case before him.226 In Uganda, the Judicature Act227states that the
rules of Equity and the rules of common law shall be administered concurrently and where there
is a conflict or variance between the rules of equity and the rules of common law with reference
to the same subject the rules of equity shall prevail.
The Constitution of Uganda 1995228recognizes that in adjudicating cases both civil and criminal
in nature, the courts must take into consideration that substantive justice shall be administered
without undue regard to technicalities. That’s why in Stephen Mabosi V Uganda Revenue
Authority229 the Supreme court of Uganda held that a Memorandum of Appeal which was filled
out of time could not be rejected because the appellant could not file it before obtaining the
official record of proceeding from the High Court which were released after the 60 day period
required for filing the Memorandum of Appeal had elapsed. It’s against this background that
Equity developed with proper justification.
Equity jurisdiction is divided in to three categories; exclusive jurisdiction (creation of new
rights) that is common law courts had rights that they recognized and enforced but for their
inflexibility, Equity created new rights which included some of the following;
Trusts; these arise where one party gives property to trustees to hold for the use of beneficiaries.
A trust is an ownership structure, developed by courts of equity, which divides legal and
beneficial rights to an object of property among two separate entities. The cestui que trust, or
trustee, is said to hold legal title ‘on trust’ for the beneficiary, who holds equitable (beneficial)
title. There are several classes of trusts which include; Express trust are inferred by law from
unequal contributions made to a purchase price, subject to contrary presumption or evidence of
actual intention as to beneficial ownership, implied trusts which the court deduces from the
conduct of the parties and circumstances of the transaction.230

Mortgagor's Equity of redemption.

At common law, if the mortgagor had not repaid the loan once the legal redemption date had
passed, he would lose the property but remain liable to repay the loan. Equity allowed him to
keep the property if he repaid the loan with interest. Thus this right to redeem the property is
known as the equity of redemption. Equitable mortgages are where a mortgagor who only has
an equitable interest in a piece of property can only create an equitable mortgage over it when he
borrows money and uses that interest as security. Similarly, a beneficiary under a trust can create
226
Law teacher/ Equity

227
Section 14 (2) (4) 1996

228
Article 126(2)e

229
(1995) supreme court of Uganda

230
D.J Bakibinga, EQUITY AND TRUSTS IN UGANDA, pg 112.
an equitable mortgage over his equitable interest under a trust if he uses it as security for a loan
advanced to him.

Concurrent jurisdiction (creation of new remedies) depended on rights which common law
recognized and enforced. Initially the exercise of concurrent jurisdictions depended on rights
recognized and enforced by the common law, the problem being that the remedies given by
common law courts were inadequate. Equity intervened to provide adequate and just remedies
like specific performance, whose subject matter was unique, injunction, and an order for an
account. However there were conditions to grant the equitable remedies and these still apply in
Uganda today.

The decree of specific performance.

The general rule of specific performance is stated by Mukanza, Ag J231 that specific
performance is not granted if the plaintiff would be adequately compensated by the common law
remedy of damages .A decree of specific performance is an order of the court compelling the
defendant personally to do what he or she promised to do. Thus, specific performance is the
equitable right to the specific relief in respect of an intermediate class of agreements which do
not call for the execution of a further instrument.232 In Beswick v Beswick233 it was stated that
the common law remedy may be regarded as inadequate and specific performances may be
available in an appropriate case, where only damages can be recovered by an action of law.
Rescission.
This is defined as the unmaking of a contract between parties. The equitable remedy is concerned
with the avoidance abinitio of agreements or other dispositions. It requires a court order, and the
court has discretion whether to grant it or not. In a situation where the contract is voidable but
not void, the contract remains valid but may be rescinded. It arises where a contract is expressed
by word or orally in an unequivocal manner that he or she is no longer willing or that he or she
refuses to be bound by the contract. This puts an end to the contract and restores the parties as to
the position they were in before the contract was entered into. Instances recognized under
this are those where the mistake is as to existence of the subject matter, identity of subject
matter, quality of the subject matter of the contract. Also for the unilateral mistake where the
party is mistaken as to whom he or she he contracted with. In Cooper v Phibbs234 the appellant
was a legal owner and trustee of land, unknown to the other party was that the property belonged
to them. The appellant renovated the place and let it to the defendant. The defendant discovered
it was their property and wanted to set aside the contract. The House of Lords held that the
contract should be set aside subject to expenditure of the former. A contract is rescindable
because such a mistake is fundamental to render the contract void which may not be provided in
common law however equity resolves it.
Rectification. It is a remedy whereby court orders a change in a written document to
reflect what it ought to have said in the first pIace.235 Rectification may be used to rectify
documents which include conveyancing documents, building contracts, insurance policies, bills
231
Haji Lutakome v Sentogo[1988-90] HCB 95

232
Philip H. Pettit, Equity and the Law of Trusts, 11th edition

233
(1962)2 ALLER 1197.

234
[1867]L. R. 2 H.L 149
of exchange and marriage settlements. Rectification is limited to the harmonization of the written
document with the intention of the parties. In Rose v Pim236, Denning LJ stressed that it is
necessary to show that the parties were in complete agreement on the terms of other contract but
by an error wrote them down wrongly. Then the concurrent intention of the parties must remain
unaltered up to the time of execution of the documents intended to the effect of the antecedent
agreement subject to the contract. On the contrary, where the contract has been fully executed
and nothing remains to be done under it, it will not be rectified.237

Injunction.
An injunction is an order made to compel observance or performance of some obligation.
Section 38238tates that the High Court shall have power to grant an injunction to restrain any
person from doing any act as may be specified by the High Court. Injunctions should be applied
as it is provided for by the law. That is the evidence should be applied to the law. Being an
equitable remedy, injunctions require a balance of convenience. That is, where granting of the
injunction would cause harm to the other party then, the courts should not grant it if you can get
another remedy ( if one can be paid damages for the loss suffered.) Osotraco limited V AG
clearly shows that injunctions can be issued against the state.

Delivery up and cancellation.

Under certain circumstances, where the existence of a seemingly valid document which is, in
fact, void, may cause embarrassment to the plaintiff for example, because an action is brought on
it, the court can order the document to be delivered up for cancellation. The remedy applies to all
kinds of document for example insurance policies and negotiable instruments.

Auxillary jurisdiction (Creation of New Procedures) Equity’s auxiliary jurisdiction was

exercised in order to assist the defective procedure at common law with a view to common law
courts giving better and effective justice.239 Under auxiliary jurisdiction, courts of equity would
allow a defendant to give evidence when a common law court would not allow him to do so, or
adding parties to the proceedings to be heard where a common law court would not allow. In
another creation of new procedure, courts of equity had the power to force what is known as
disclosure whereas common law had no power to do so.240 When the auxiliary jurisdiction is
invoked, the Court’s reasoning process is, or should be, different, and the range of available
relief that requires consideration might include common law damages. These facts necessarily
affect the conduct of a case in at least three ways; There is need for a claimant to first establish a
common law right, either under the general law (in contract, tort or to the extent that the law of
restitution is not in truth equitable in character, restitution) or a statute, in aid of which equitable
235
Bird, Roger; Osborn's Concise Law Dictionary, London, Sweet & Maxwell

236
Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd [1953] 2 QB 450

237
Caird v Moss 33 Ch. Div. 22 (1886)

238
Judicature Act, Cap 13 Laws of Uganda 2000

239
Supra

240
Solicitors and Lawyers; Court of Equity; Disputes and Litigation
relief such as an injunction or an order of specific performance is sought. Secondly, that even if
the legal right is established the claimant needs to persuade the court that he or she should not,
on an exercise of the court’s discretion, be left to his or her remedy in damages at Law. That is,
the claimant must establish that damages are not an adequate remedy. The third is that
consideration needs to be given to a range of policy objections to a grant of equitable relief in aid
of legal rights. For example, equitable relief might be refused if a grant of relief is directed
towards restraint of commission of a crime and the court is minded to leave the criminal law to
take its ordinary course.241 Equitable relief might also be refused if enforcement of relief,
whether by way of specific performance or injunction, would acquire a degree of supervision
beyond the court’s capacity to administer. 242 The above illustrated policy issues do not only arise
in the auxiliary jurisdiction. In one guise or another, they might arise in exclusive jurisdiction
(for instance in the enforcement of the obligations of a trustee) and be taken into account on a
discretionary defence or in the moulding of relief. Nevertheless, auxiliary jurisdiction provides a
fertile field for a consideration of policy issues because inherent in the jurisdiction is the
existence of a question whether or not a claimant for relief should be left to pursue a remedy for
which the law otherwise provides.243
In conclusion the underlying principle is that under Equity doctrines, and has seen from Equity
cannot suffer a wrong without a remedy. Equity jurisdiction addresses the lacunas in the law that
common law creates since it is based on morally accepted justice.

Question 5

Write short notes on the following showing their continued applicability

Equity won’t suffer a wrong to be without a remedy.

Trusts exemplifies this maxim, equity enabled the beneficiary through the procedures of the
trust, to enforce obligations where no remedy at common law existed under section 55244. That
is the beneficiary has no right at common law to have the terms of the trust enforced but our
legal system never the less requires the trustee to carry out those terms to prevent him or her to
commit what would be in effect wrong against that beneficiary.
Specific performance and injunctions constitute one of the chief ways in which equity
supplements the law by granting auxiliary or additional remedies where the common law
remedies where inadequate. The remedy will only be granted where it’s just and equitable to do
so having considered all the circumstances of the case for example it won’t be awarded in
contracts of every description but only where legal remedy is inadequate or defective that it
241
Gouriet v. Union of Post Office Workers [1978] AC 435 at 481

242
J C Williamson Ltd v. Lukey & Mulholland (1931) 45 CLR 282, Patrick Stevedores Operations No. 2 Pty Ltd v.
Maritime Union of Australia (1998) 195 CLR 1

243
Equity: Principles, Practice and Procedure by Geoff Lindsay SC, 25 November 2003 9Revised 20 September 2007)

244
Trustees Act, CAP 164
becomes necessary for equity to interfere like in section 52 Sale Of Goods and supply of services
Act245, contracts for sale of goods, damages may be a warded for failure to supply goods.
However there are situations where equity can’t provide a remedy for example in situations of
unfair trade competition or contracts involving personal services. In such situations, courts may
be unable to order specific performance even where damages are inadequate 246.therefore the
maxim is subject to what is realistic, practicable and convenient for the court.

Equity follows the law

According to the Judicature Act,247 provides that equity is based on the law. Equity has adopted
some of the rules of common law for example those affecting mistake that is under mistake
common law is rigid or at times harsh that’s why equity has attempted to temper the unfairness
in some areas by introducing certain remedies where the common law failed to grant any, a
leading example of an equitable remedy could be granted at common law is Solle Vs Butcher .
The principle that only parties to a contract will be bound by that contract under the law of
contract is observed by a doctrine of equity for example special performance can’t be granted
where damages will provide adequate remedy, this is because equity follows the law and is
designed to supplement the grant of damages but not to override them like in contracts for sale or
lease of land or where chattels sold have a special beauty or interest specific performance will be
decreed
However if the common law rules are ancient or too rigid then equity won’t follow them since it
won’t promote fairness to the litigants

He who seeks equity must do equity

A person seeking an equitable remedy must him or herself act fairly, thus in case of Bank Of
Uganda Vs Hassan Bassajabalaba where court held that Bassajabalaba failed to act fairly when
he forged a court order so as to get back his land titles hence an equitable remedy couldn’t be
granted to him.
This maxim can be illustrated through the following arrangements that is, doctrine of election,
notice to redeem mortgage, consolidation of mortgage and illegal loans.

He who comes to equity must come with clean hands

The plaintiff must approach the court free from any blame on his part because court wont grant
equitable relief to the plaintiff if there is any evidence of fraud, mistakes, misrepresentation or

245
2017

246
D J BAKIBINGA, Law Of Contract In Uganda”(1996) pp 379

247
SECTION 2 CAP75.
illegality, thus in Katarikawe Vs Katwiremu where court held that if a tenant is in breach of
several terms of his agreement with the land owner then court wont grant relief.
Also when certain transactions are illegal and one seeks to get an equitable relief out of such a
transaction for example under the Employment Act248 which provides that wages can only be
paid in local currency and not in kind and any agreement to such will be illegal, null and void.
However for the inequitable conduct to amount to unclean hands, it need not be illegal strictly as
required by law. Its sufficient if the conduct is unconscionable and morally reprehensible and
need not have been to the other party to the action.

Delay defeats equities/Doctrine of laches

The essence of the doctrine is that an equitable relief won’t be given if the applicant has unduly
delayed in bringing the action unlike adverse possession, the doctrine can only be used as a
defense against an action and not as a basis for establishment of a cause of action thus where the
land owner knows that his rights are being violated and he chooses to sit idly, he is taken to have
delayed in the violation and will be stopped from arguing otherwise, in climatong Vs
Olinga249the applicant for a period of thirty years occupied and cultivated the respondents land
although the latter was aware of the intrusion, he made no attempt to stop it or recover the land.
High court held that the applicant had taken long to enforce his right. there is no fixed time for
the doctrine to operate its up to the court to decide whether or not in the circumstances of a
particular case it considers that delay to ring an action was unreasonable.
However the courts won’t apply the doctrine in situations which are governed by statutes of
limitations for example under The Limitation Act250, provides that no person shall make an
action to recover land after the expiration of twelve years from the date the cause of action
accrued to him, where fraud is alleged there is no limitation period251
There are three basic defenses to the invocation of the doctrine of laches, where by courts won’t
permit delay so as to bar a claim and they include disability or infancy of the plaintiff, fraud on
the part of the defendant, ignorance of the facts on which the claim is based252

SECTION A
248
CAP 16 SECTION 30

249
[1952-56] 7 ULR PP.31

250
SECTION 6,19,21 CAP.70.

251
Ibid. SECTION 20 (1)

252
Ibid SECTION 3,22,26
QUESTION 1

EITHER:

Chas and Dave are trustees of Omega trust. The trust fund is worth UGX 500 million and the
beneficiaries are Martin Jeremy for life, the remainder to Gloria. Chas is a retired stock broker
and is concerned about the current trust investments. The trust is currently heavily invested in
Neptune Ltd, and the company is not doing very well. Dave is perfectly happy to leave all that
type of thing to Chas as Dave likes to spend long periods abroad sailing his yacht. The following
events occur:

a. Chas decides to buy some shares in Neptune ltd with his own money. He adds these
shares to the trust shares, giving Chas a controlling interest in and a seat on board of
Neptune. Neptune subsequently pays Chas UGX 50 million a year as a director. Chas
does not mention this money to Daveas Chas feels he has earned it. Under the control
of Chas, Neptune starts making substantial profits for all shareholders.
b. Gloria is opposed to the investment in Neptune because the business is involved in the
production and sale of tobacco. Gloria is a vehement anti smoker and thinks that any
investment in tobacco products is immoral.
c. Martin and Jeremy want the trust to buy a house for them to live in as they want to
move to Kampala but can’t afford to do so themselves.
d. Chas is persuaded to make a modest investment with some of the trust money in a new
housing development in Kenya. On paper the investment does not look very good, but
Chas was given a gift of a new car by the developers to sweeten the deal. Chas does not
tell Dave about the new car. Martin, Jeremy and Gloria are all un happy with the
behavior of their trustees. Advise them

My advice to the above parties is as follows:-

Chas’s act of not informing Dave of the money he had obtained from Neptune amounting to
50,000,000/= was not fair to Dave an act that is highly condemned in the law of Equity and trust
which advocates for transparency between the co trustees.

Gloria’s opposition to the investment in Neptune which deals in tobacco an act which is
immoral according to her is legally right because the law does not accept dealing in immoral
kind of business.

Martin and Jeremy, though they are beneficiaries, they cannot compel the trustees to buy for
them a house in Kampala because it was not mentioned anywhere in the trust agreement and
so the trustees cannot be bound to do so.
OR

You are a trainee solicitor at Jn Kirkland & Associates, a prominent law firm doing wide practice
in succession law. One of the senior partners, Mrs. Lucky Tomson hands over to you two files
for advice; one require advise to the trustee of the late Andrew Felix Kaweesi on what they are
allowed to do under the terms of the will availed to you with the file. You are required to advise
on the following section in the will:

a) I give all my savings with Uganda police saving scheme to be shared between my friends
AIGP Kayima and Hon Semoen Nsubuga in the memory of the solidarity we had while at
Makerere University.
b) I give Ugx 50,000,000/= to be divided between the following charities:
i) St peters Kulambiro
ii) Lubaga children charity
iii) Sanyu babies home

These shares to be dived in such shares as my trustees shall in their wisdom determine.

c) I give my savings on my account held in Barclays bank to my trustees to divide them

between those of my children they consider most deserving in their absolute discretion.
d) I leave the residue of my estate to be divided equally between those of my
grandchildren as my trustees shall consider deserving.
my advice in the above circumstances is that since there was a will, the clauses had to
be full filled since it was a valid will and it is what the deceased wanted his property to
be distributed and so not following it can amount to a breach.

The second file provides the following facts: after the death of Owek’ MyanjaNkangi , since
no will was found to have been left behind by him, his wife Mrs. Spencer Nkangi , who did not
have any child for OwekNkangi applied for a grant of letters of administration in respect of her
husband’s estate. After the grant of letters of administration in her favor, OwekNkangi’s mother
Mummy Mayanja filed an action in court seeking a revocation of the letters of administration
granted to Mrs. Spencer Nkangi, contending that according to their native custom, a wife who
did not have any child for the husband can not have a say in respect of her late husband’s estate
and that she is the person entitled to the estate of her son since she was the one that brought him
up. It was later discovered that Owek’ Mayanja Nkangi in fact left a will where he named his
adopted so Arnold Nkangiand mother, Mummy mayanja as the only executors of the will.

Identify the legal issue involved and advise the parties. Write an opinion on this will.
The legal issue I can I identify in the above case are as follows:-

1. Whether Mrs. Spencer Nkangi’s letters of administration were valid?

2. WhetherMrs. Spencer Nkagi’s not having any children with Mayanja Nkangi was an
issue that would be used to revoke her letters of administration?
3. Whether there was a valid will?

Resolutions

1. Mrs. Spencer Nakagi’s letters of Administration were valid because by the time they
were acquired, the will had not yet been found.
2. Mrs. Spencer Nakagi’s not having children with Mayanja Nkagi was not a valid issue that
would be used to revoke her latters of Administration as alleged by his mother Mummy
Nakangi
3. There was a valid will though it was seen after Mrs. Spencer Nkangi had obtained letters
of administration; they would be revoked basing on that ground.

My opinion on the above will is that though OwekNkangi had chosen his adopted son
AnorldNkangi and his mother Mummy Nkangi, leaving out his wife Mrs. Spencer Nkangiwas un
fair according to the definition of equity in that equity is fairness and so leaving out Nkagi’s
wife was an un fair act odne to her in other words she was subjected to un fairness.

QUESTION 2

Like and Robert were brothers. They purchased a house together with each providing 50% of the
purchase price but luke did not want the house to be in his name because he wanted to access a
government scheme for ex-service menwhere they could borrow money from the government for
the first house at a cheap rate .luke had fought in the first gulf war. The house was registered in
Robert’s name Luke earned income through providing loan to small businesses.

Luke later won the lottery and with the money decided that he would like to provide for his
friend Owen who was in dire financial straits. Luke decided to give Owen 50% of his (Luke’s)
right to receive interest on a large loan to a college named Jack Smith. The loan was payable
immediately on demand with interest to be paid to the date of repayment. Luke also had a large
share of holdings in Ug steel property ltd and decided to also give Owen “every yearly net
income to accrue to me as dividends from my shares in Ug Steel property Ltd. Finally, Luke also
gave Owen “all rights and moneys owed to me as mortgagee pursuant to an equitable mortgage
that I have with Clary Bruce. Clary Bruce was another borrower who had borrowed money from
Luke and executed an equitable mortgage in favor of Luke as security for the loan. All the rights
to Owen were recorded in a deed. Luke also wrote a will which contained the following clauses:

a) I give UGX 5,000,000 to my brother Robert, in condition that he will be made aware of.
 b) I give the residue of my estate to my sister Lisa who may, at her absolute discretion, give
such residue to any one she thinks fit, barring herself, and Robert. If Lisa fails to dispose
of the residue in her life time, it shall become property of my nephew, Ethan Lachlan and
Bryce.

Three days after writing the will Luke gave a letter to Robert and asked him to follow the
instructions in the letter, but only after he died. Robert agreed with a wink and wry smile. Luke
died three months later in a motor cycle accident. Robert opened the later and found that it
instructed him to truck down his illegitimate son, Terry who was born in Iraq during Luke’s
service and give the UGX 5,000,000 gift to him.

a) Does Luke’s estate have any claim for the house?

b) Were the gifts given to Owen effective or they form part of Luke’s estate
c) Of what kind is the disposition Lisa and is it effective?
d) Is the gift to terry effective?

SECTION B

QUESTON 3

Compare and contrast a trust with the following:

a) Bailment

Bailment is a relationship which is recognized by the common law. It arises where a chattel
owned by X is with X’s permission in the possession of Y. The right of parties to a bailment
entails certain standards of care by Y in his custody of X’s chattel.

Bailment differs from the trust in the following respects:-

First, there is no transfer of ownership from X to Y whereas there is such transfer of ownership
from X to Y whereas there is such transfer of ownership from a settler to a trustee.

Second, Y’s duties under a bailment depend on common law rules not equity.

Third bailorX could lose his legal ownership of the bailed article only through one of the ways in
which legal owners lose rights e.g estoppel, the operation, the operation of the factors Act,
1899, and the sale of Goods Act and the laws relating to the sales by agent of necessity; by an
executor or administrator, in market overt; under voidable title; by seller and buyer, in
possession. In contrast, if property is held by Y on trust for X, X’s equitable title can only be
defeated by the transfer of the legal title to a bonafide purchaser for value without notice of
the trust.
Fourth, a trust may exist in respect of all kinds of property, but bailment is restricted to
chattels.

b) Contract

A contract is a common law personal obligation which arises from agreement between the
relevant parties, supported by consideration on part of the promise. On the other hand a trust
is an equitable proprietary relation which can arise independently of agreement or the
provision of consideration.

The distinction between a trust and a contract may be difficult to draw in the following
circumstances:-

First, with regard to settlements and covenants to settle where the property is vested in
trustees of a settlement, it is held upon the trusts of settlement. Consequently, the
beneficiaries are owners in equity of their interests under the settlement. However, if the
property has not yet been transferred to the trustees and is simply subject to a covenant to
settle,the beneficiary will only be able to enforce the covenant if they have given consideration.
This based on the maxim that equity will not assist a volunteer.

Second, is the controversy as to whether the problem or inability by a third party to sue on a
contract made for his benefit can be resolved by implying that one of the parties to the contract
contracted as a trustee for him. It has been suggested that the issue here is not of distinction
between a trust and a contract. Rather it is one of whether there is a trust of the promise,
under the contract. This is resolved by looking at the rules relating to the creation of express
trusts and determining whether there is an intension to create a trust of the promise.

Third is the case of unincorporated associations. An unincorporated association is not a legal

entity. Where therefore a gift made to an unincorporated Association, there is usually doubt as
to whether the property is held by the done on trust for members of the association, subject to
members’ contractual rights as evidenced by the constitution governing their relationship.

There are also statutory exceptions to the rule that only a party to the contract can sue upon it.
For instance, section 81 of the property and conveyancing laws of Bendel, Ogun, Ondo and Oyo
states of Nigeria provides that a person may take an immediate other interests in land or other
property, although he may not be named as a party to the conveyance or other instrument.
Property has been defined to include things in action.

c) Agency

In some respects, the relationship between a principle and agent is similar to the one between
a beneficiary and trustee. For instance similar to trustees, agents must act personally in agency
transactions. In additional agents are accountable to their principles just as trustees are to the
beneficiaries for any profits made out of the property or business entrusted to them in both
cases the relationship is fiduciary. Never the less, there are differences between an agency and
trust:-

First a trust is proprietary whereas an agent owes money to the principle it may be recovered
from him personally however if the agent is insolvent, the rules of insolvency become
applicablein that the principle’s claim will be subject thereto. This means that if the agent has
no assets what so ever, the principle loses with a trust the beneficiary’s claim is proprietary in
the sense that the property held by the defendant trustee is not available to meet his debts.
Conversely, if the trustee owes someone money, that money cannot be recovered from the
trust property. It follows, however, that where the trustee disposes of trust property, the
beneficiary can claim and recover it if it is identifiable through the remedy of tracing. In this
respect, it is notable that the property for which an agent is liable to account to his principle is
only subject to a personal claim against the agent. Consequently, the remedy of tracing is not
available to the principle.

Second, usually there exists a contractual relationship a principal and an agent. This need not
be the case between the trustee and the beneficiary.

Third, many rules relating to principle and agent are common law in character while the trust
relationship is solely equitable.

d) Power of appointment

Power is defined as an authority to dispose of some interest in land, but confers no right to
enjoyment of the land. A power is the right to dispose of an estate or interest in property
rather than ownership of an estate or interest.

The following differences may be made between a power and a trust:-

First while a power is discretionary, a trust is imperative. This means that if a person accepts to
act as a trustee, he must do as the settler directs.

Second, under a power, the persons amongst whom the appointment is to be made have no
right of action against the appointer in the absence of fraud if he does not appoint. However, if
the property is left on trust for division among certain people, the court would compel its
division.

Third the object of a power need not necessarily be capable of exact ascertainment. With a
trust, the objects of a trust must be certain. For instance, if property is held on trust for
members of a class, the trust is void for uncertainty except where the class has been described
with sufficient precision to enable the trustees (with minimal trouble and expense) to compile a
list of all its members throughout the duration of the trust. In contrast, a power would be valid
even where no such list can be made. The only requirement of certainty is that is that a
sufficient criterion of class membership should be provided to enable the court to say of any
person whether he is an object of the power or not.

There may be instances where power exists in a nature of a trust. For instance wherean
instrument purports to give a power when in fact a trust is really intended. Thus in Burroughs v.
Philcoxa testator gave property to trustees on trust for his two children for their lives,
remainder to their issue and in default of issue, the survivor of them was to dispose of the
property by one of them or to as many of them as my surviving child shall think proper.

QUESTION 4

With aid of relevant authorities, discuss in detail:

a) The rationale of the doctrine of notice

Notice simply means knowledge of an existing fact.

The purpose of the doctrine of notice is to prevent a buyer of a superior title from setting it up
against prior or earlier owners of inferior interests which affect the property. The effect of this
is that the buyer of legal estate with notice of prior equitable interests affecting the estate
takes it subject to those prior equitable interests. The doctrine of notice is one of the instances
where equity looks at the substance rather than form of a transaction in order to arrive at ajust
result.

b) Categoriesof the doctrine of notice

i) Actual notice

Actual notice is a situation where the buyer of an estate has actual or express notice of a prior
interest at the time when he or she made the purchase or at any time before the purchase was
completed. An actual notice consists of personal knowledge of the prior equitable interest
affecting the property which the buyer intends to buy what is important is to show that the
buyer had actual notice of equitable interest before she/he acquires his or her superior title.
However a buyer is not bound by notice where whose source is unreliable such as rumors.

ii) Constructive notice

Constructive notice was defined by Salden J in Williamson versus Brownthus where a buyer
has knowledge of any fact sufficient to put him on inquiry as to the existence of some right or
title in conflict with that he is about to purchase, he is presumed to either have made the
inquiry and ascertained the extent of such prior right or to have been guilty of a degree of
negligence equally fatal to his claim. It is notable that this is mere presumption which may be
disproved by showing that the buyer failed to discover the prior right after exercising due
diligence. The essence of constructive notice is that the buyer should make reasonable inquiry
relating to the circumstances of the transaction. For instance when purchasing a piece of land,
inquiry should be made to appropriate authorities such as the chiefs, elders, local council
officials or the registry of land titles to find out whether the land is subject to any
encumbrances or claims. If the inquiry is not carried out, equity will assume that this is due to
bad faith or gross negligence and thereby affects the buyersbonafides that is he/she ceases to
be a bonafide purchaser.

For example in the case of Crayem versus Consolidated African Selection Trust Ltd , the
plaintiffs took a lease of land which was subject to an equitable lease of the defendant who was
in possession. The defendant tried to exercise the option. The plaintiffs sued him arguing that
they had no notice of the defendant’s option to renew. They relied on information given to
them by the lessor. It was held that the plaintiff/appellant had such constructive notice of the
option to renew which they could have discovered upon reasonable inspection of the
defendant / respondent’s lease.

iii) Imputed Notice

Notice which is neither actual nor constructive may be imputed to the buyer the actual or
constructive notice or his or her agent. It is established in agency law that notice to an agent is
notice to the principal.Such notice will only be imputed to the buyer through his bonafide
agent. In this regard, a buyer who instructed his agent to buy property at an auction sale was
taken to be affected by notice of an equity which came to his knowledge in the course of the
transactions. However, a vendor is not an agent of the buyer and so consequently, notice to the
vendor is not imputed to the buyer. Solicitors are normally agents of the buyers in land
transactions. Consequently notice of information acquired by a solicitor in a transaction used to
affect his principle in a letter transaction.

However because of hardships of this rule, it was modified in the case ofMountford versus
Scottto the effect that information acquired by a solicitor in one transaction cannot affect,
through the doctrine of imputed notice by his principal in subsequent transactions. Thus it has
been held that knowledge of a solicitor in a previous transaction cannot be imputed to a buyer
in a later transaction. The solicitor for this purpose is not under a duty to pass his knowledge in
a previous transaction to the buyer when he later becomes his client. However if the solicitor
acts for both parties in a transaction, any notice which he acquires is imputed to both parties.
However if it is shown that the solicitor conspired to the detriment of the other, then the
aggrieved party will be protected by the doctrine of bonafide purchaser for value without
notice.

c) The elements of bonafide purchaser for value without notice

The following are the elements of a bonafide for value without notice

The purchaser must not have been involved in any kind of fraud in other words the
purchaser must be innocent and must not have been involved in any fraudulent dealing
pertaining the suit property. this normally applies to land where it has been sold and
transferred to different purchasers more than 3 (three) times as it was in the case
Bugisu cooperative union.

QUESTION 5

The history traced clearly shows that equity was essentially an addendum to common law. It
provided a distinct set of rules, no doubt those were not meant to supersede the common law.
However, equity is not a self sufficient system, it was developed to assist / fulfill the rigors of
the new law, but not to destroy it.

Critically examine the accuracy of the statement while drawing reference to the evolution and
development of equity within the perspective of the Uganda legal system.

According to Aristotle, he defines equity as fairness, justice that is supposed to be put into
consideration in the humane interpretation of the law.

Equity was initiated into Uganda through the 1902 and 1911 orders in council it was introduced
due to the rigidities that had been brought by common law e.g harshness and unjustness.

Section 14 (2) of the judicature Act provides that in application and adjudication of both
criminal and civil matters the doctrines of equity shall be put into consideration.

Equity is divided into 2 that is the general juristic sense and technical juristic sense.

The general juristic sense meaning the courts power to apply the doctrines of equity in
adjudicating matters.

Article 126 (2)(e) provides that substantive justice shall be administered without un due regard
to technicalities. For example in the case of stevenmabosi versus U.R.Ait was held that the
appeal could not be rejected because the Appellant could not have filed it before obtaining the
official record of proceedings from the lower court.

QUESTION 6
In the year 1615 as reported in English Reports, mich.13 Jac. 1 [1615] 1 Chan Rep 5 Vol 21 Pp
485 -9-16a great disagreement emerged the lord Chief Justice Coke, head of the common law
courts and chancellor of the court of chancery, Lord Ellesmere over the exercise of the
respective jurisdictions.

a) What prompted the disagreement?

During the second half of the sixteenth century, the rivalry between the common law courts
and the chancery became intensive. This was largely because of the chancery power to issue
the common injunction to restrain the enforcement of common law courts judgments.

The decisive stage of the conflict when Coke became the chief Justice of the King’s Bench
division of the high court. Coke was totally opposed to the chancery jurisdiction. He claimed
that the common law courts possessed the power to issue a writ of prohibition against the
chancery jurisdiction for any interference with the judgments or decisions of the common law
courts.

The conflict between the common law courts and the chancery courts was crystallized in the
Earl of Oxford’s case. In that case the then lord Chancellor Ellesmere contended that he had
the power to set aside common law judgments on grounds of Equity and good conscience.
Chief justice Coke of the common law courts insisted that the Chancery had no right either by
statute or by any law of the land to set aside common law judgments and that he would issue a
writ of prohibition against chancery interference with common law judgments.

b) How was the agreement resolved and by who?

The conflict came before King James who solved it after considering legal advice from several
lawyers including bacon (a future Lord Chancellor) and made a decision in favor of the chancery
jurisdiction. From that time equity rules became supreme over common law rules in the English
legal system.

What major modifications/reforms in the law and practice followed?

The reforms advocated for affected firstly the out dated and unsatisfactory procedure and
organization of the court and secondly the area of jurisdiction within which the common law
courts and Chancery courts operated was not clearly defined.

a) Minor Reforms

There were minor attempts at reform to rectify those short comings. First common law courts
applied rules of equity to cases brought before them whenever those rules of equity to cases
brought before them whenever those rules conflicted or differed from common law rules. The
aim here was to prevent separate proceedings, one in equity and the other at common law
from being stated in respect of the same cause of action. This would save litigants time and
expenses.

Second the common law procedure Acts of 1852, 1854 & 1860 gave the common law courts
power to exercise certain jurisdiction which were originally reserved for chancery. For instance
the common law courts could order discovery of documents and interrogatories in certain
cases. They were also empowered to grant an injunction and other equitable reliefs. Similarly
the chancery amendment Act of 1852 gave the courts of chancery power to exercise certain
common law powers. For instance in an equity suit a relevant common law matter would be
decided by the chancery court. Before the Act such matters would be referred to the common
law courts. Additionally the courts of chancery could also take evidence orally and in open court
as opposed to presenting it by bill and in written form.

Furthermore lord Cairns Act 1858 empowered the court in cases of contract and torts to award
damages to addition to or in lieu of injunctions, specific performance or other equitable
remedy.

The above Acts did not achieve very much in dealing with the short comings in the dual
administering of justice. The royal commission on the administration of justice therefore
recommended the complete fusion of the administration of justice by means of the
consolidation of all superior courts of law and equity into one Supreme Court possessing the
jurisdiction of all the courts so consolidated.

b) The judicature Acts 1873/1875

The recommendations of the royal commission were enacted as the Judicature Acts 1873 to
1875. These Acts abolished all the then existing superior courts and in their place set up a
supreme court of judicature consisting of the high court of justice and the court of appeal. The
high court of justice was to consist of three divisions i.e. the King’s Bench division, the chancery
division and the probate, divorce and admiralty division.

The judicature Acts effectively abolished the dual administration of justice as between the
common law courts and the chancery court. Second the courts of justice were given power to
administer both equity and common law concurrently or together. Thirdly all claims.
Obligations and defenses were recognized and enforced by all the three divisions of the high
court of justice. Fourth the common injunction exercised by the chancery court was abolished
since it was no longer necessary.
QUESTION 7

With the aid of decided cases mention and discuss the exceptions to the equitable maxims that
“equity will not perfect an imperfect gift” and equity will not assist a volunteer.

The above general principle has four exceptions as seen below:-

1. DONATIO MORTIS CAUSA

This is agift made inter vivos which is conditional upon and which takes effect upon the death of
the donor. This could be distinguished from (1) a normal intervivos gift under which title
immediately passes to the transferee (2) a testamentary gift which takes effect under provisions
of a properly executed will.

The essentials of a valid donation mortis causa were articulated by lordRussel C.J in Cain Versus
Moon. These are:-

i) The gift must have been in contemplation though not necessarily in expectation of
death.
ii) The subject matter of the gift must have been delivered to the done.
iii) The gift must have been made under circumstances as to show that the property is
to revert if he should recover.

The first condition was illustrated in the case of Wilkes versus Allington where the donor was
suffering from an incurable disease. He made a gift knowing that he did not have long to live. In
actual fact he had an even shorter time than he imagined, he died two months later of
pneumonia. It was held that the gift was valid. The second condition may be illustrated from Re
Weston where it was held that where a dying man could be shown to have handed over to his
fiancée his post office savings book, his action was sufficient to constitute an effective donotio
mortis causa of the balance recorded in the book.

2) Non applicable to wills

The executor is under an obligation to carry out the provisions of a will in favor of the
beneficiaries who are volunteers. The property vests by the death of the testator in the
executor on trust to execute the disposition of the will.

3) The rule in strong Versus Bird

Where a person makes an imperfect gift to X and subsequently appoints X as his executor, upon
the death of the donor, the property vests fully in X. the equity of the beneficiary under the will
is displaced by X’s prior equity. Consequently X may retain the property in respect of the fact
that until the donor’s death, X’s title was imperfect.
QUESTION 8

a) Discuss the remedies available for breach of trust, paying particular attention to only the
equitable remedies of injunction and tracing.

A trustee is subject to a number of duties of both fiduciary and non fiduciary nature. A breach
of trust will have occurred when the trustees made decisions which they should not have made
or failed to make decisions they should have made.

In the case of Bahin versus Hughes it was confirmed that courts view whom is liable for a
breach of a trust from the beneficiaries stand point. The beneficiaries are the innocent parties
when a breach of a trust has occurred. They should be permitted the greatest possible number
of opportunities to take action against to restore the trust fund to its pre breach position.

Traditionally equity saw no role for its self in awarding damages. That was a function of
common law. Equity’s role was to provide a remedy that would actually enforce equitable
remedies themselves.

For example in Red ferm’s casethe court of Appeal presided over by Peter Gibson L J held that
in general the liability of a trustee in breach of a trust was not to pay damages but instead the
correct measure of liability was either to restore the trust fund to the value of what had been
lost. This was to be the entire amount of funds less such that the fund would be reconstituted
with the total amount it had been in immediately before the breach of the trust occurred. Or
pay the beneficiaries equitable compensation for his loss so that the beneficiary goes back to
the position he was in before the breach of the trust occurred.

In brief Restoration refers to equity holding the trustee to account to the trust fund for a loss
that he has caused to the trust. The remedy is for the trustee to restore the trust fund or to
ensure the return of any property that he has caused to be taken from the fund or monetary
payment instead. The trust must be restored to its full value as long as the trust subsists.

In brief equitable compensation refers to compensation payable by the trustee to a beneficiary

instead of to trust fund and is usually payable after the trust has come to an end.

b) Discuss the extent of liabilities of co-trustees for a breach of trust committed by one of
them and the instances when a trustee may be protected from a liability.
When there an exemption clause excluding the trustee from liability then he or she
cannot be held liable in case of any breach of trust as it was in the case of Amiitgate
versus Nurse.
The position of equity is that an executor is not liable for any loss caused to trust property
without his or her negligence or fraud, as clearly mentioned in the case of Job versus Job.
Under common law, an executor was liable for any loss. However under the Judicature Act
section 25(11) states that whenever there is any conflict between common law and equity,
Equity shall prevail.

If only a sole trustee exists, clearly that trustee must be liable for every breach of trust he
commits. If there are two or more trustees, the general rule remains that only the trustee who
has committed the breach of trust will be liable for it. However all the trustees all of the trustee
will be held liable for any breach of trust that occurs even if it was committed by one of them,
in the following circumstances:-

If one trustee leaves a matter to aco trustee without inquiring what has happened and a breach
of trust occurs. For example in Hale versus Adams , trust property was sold and money
received by only one of the trustees, the money was then lost by that trustee, the trustee who
did not receive the money made no inquiry of the receiving trusteeabout what had happened
to the sale proceeds. Court held that both trustees were liable for breach of trust.

If one trustee is aware of a breach of trust by a co trustee and does nothing to remedy it. For
example in the case of Style versus Guy.

If a trustee allows the trust funds to remain in sole control of a co trustee. For example in the
case of Eglish versus Willats , trust property was sold but the sale proceeds were paid to only
one of the trustees. The non receiving trustee was held liable to make good the loss to the trust
fund.

If one trustee allows a co trustee to manage the trust funds by themselves as it was in the case
of Bahin versus Hughes.
Tumutendereza who was a prominent member of the church of resurrection, bugolobi church
of Uganda and 70 years ago he got married to kisakye and all there seven children were
christened and confirmed in the same church. He passed on last year. In his will he wrote as
follow “to my dear kisakye I loved you dearly until death did us part. I leave my mutungo estate
to use as she will decide for the benefit of herself during her life time and the interest of the
children” and further stated that “that knowing very well that I am a committed Christian which
kisakye is also and given the spiritual role that I loved my church, the chaurch of resurrection,
Bugolobi played in my entire existence on earth, I direct that the church, be considered in
respect of my other properties in mukono and mengo. Kisakye died last month before handling
the estate of the husband. The relatives who are Muslims believe that all estate belonged to
theirsister as indicated in the will. They don’t believe that the children would take their sister’s
property neither does the church have any business in the affairs of their relative’s sister and
the perish of Bugolobi and the church believe that the late intended in his will to benefit them.

Issues

1. Whether the late kisakye had any trust for the children.
2. Whether the late kisakye had any trust for the children.

Laws applicable
1. Constitution of Uganda 1995
2. Case law
3. Equity

Resolution
Issue no.1
In the case of knight vs knight, lord langdale stated that in order for a trust to be validly created
there three essentials that are necessary 1) certainty of words 2) certainty of the subject matter
3) certainty of the object.
Now in relation to the first issue, it’s about the certainty of word were it refers to the intention
of the settlor whether he intended to create a valid trust.
As equity it looks at the intent rather than the form as it is provided for under article 126(2) (e)
of the 1995 constitution of Ugandawhere it provides that substantive justice shall be
administered without undue regard to technicalities.
The issue always will be whether the precatory words can rise to a binding trust. But court has
been consistent in bolding that such do not create trust. For example in the case re hamtton
lopes lj indicated that the court will not allow a precatory trust after considering all the words
used to come to the conclusion that it was the intent of the testator to create trust.
For example in the case of mussorie bank ltd vs raynor the privy council held that where a
testator left all his property to his wisdom” feeling confident that she will act justly to our
children in dividing the same when no longer required by her there was no trust for the
children. To relate the case to the facts at hand the husband in the some way left the mutungu
estate to the wife for to use as she discide for the benefit of her life during her life in the best
interest of the Children which as per the holding in the case children have no interest in the
estate therefore there is trust between kisakya and the children.
Its more illustrated in the case of lambe vs eames where the testator gave his estate to his
widow “to be at her disposal in any way she may think fit for the benefit of herself and her
family” but in her will she gave part of the estate outside of the family, it was held that since
she was absolute entitled so the gift was valid. In relation to the facts is that the late kisakye
was entitled to the mutungo estate so the relatives of the late had interest in the estate in
other wards the mutungo estate moved to the estate of
Kisakye

Issue no.2
The trust to the church was absolute because settlor had the intention to create a trust because
all the three essentials are identified the words were certain and the object was certain were he
pointed out the church of resurrection, bugolobi church of Uganda as the beneficiaries and the
subject matter was certain were he identified both mukono and mengo as the estate to the
church. This can be well explain in the case of pettingall v pettingall, testator bequeathed 50
pounds to be paid for the upkeep of his “favorite black mare “it was held that the bequest in
favor of animal was valid. And since this trust was in the benefit of the public it was charitable
trust.
Question no.2
Compare and contrast the trust with the powers of appointment
What do you understand by the power of attorney as studied under equity and trust?

1a) a trust is a relationship which is recognized by equity. It arises where property is vested in a
person as persons called a trustee(s) which are under a duty to hold for the benefit of other
persons known as cestius que trust or beneficiaries according to Keeton Law of trusts further
more in the case of Pillcher V Rawlins (1872) explains the interests of the beneficiaries
described in the instrument creating the trust that may be implied or imposed by law. The
beneficiary’s interest is proprietary in the sense it can be bought as sold, given away or
disposed of by will and the case illustrates law the beneficiary (s) interests ceases to exist where
the legal estate in the property passes to a bonafide purchaser for value of the legal estate
without notice of trust. Section 311 of Trustees Act Cap 164 provides for the subject matter of
the trust must be some form of property and takes the form of legal ownership of land or of
invested funds and may be sort of property such as land, money, chattels, equitable interests
and choses in action. Whereas;

A power of Appointment according to Keeton law of Trusts page 14 is an authority to dispose

of some interest in land but confers no right to enjoyment of the land. A power is the right to
dispose of an estate or interest in property rather than ownership of an estate or interest.

The differences between power and Trust

A power is discretionary while a trust is imperative, meaning that if a person accepts to act as a
trustee, he must do as the settlor directs.

Under a power, the persons amongst whom the appointment is to be made have no right of
action against the appointer in the absence of fraud if he does not appoint while under trusts,
courts would compel the division of property left on trust for division made by the settlor to
trustee.

A power does not necessarily be capable of exact ascertainment while a trust, the projects must
be certain e.g. if property is held an trust for members of a class, the trust is void for
uncertainty except where the class is descried with sufficient precision to enable the trustees to
compile a lot of all its members brought out the duration of the trust. In Re Gestatner’s
settlement 1953, the requirement of certainty is that a sufficient criterion of class membership
should be provided to enable the court to say of any person whether he is an object of the
power or not.

However the following are the instances where powers exist in the nature of a trust for
example where an instrument purports to give a power when infact a trust is intended.in
Burroughs vs. Philox 1840 where a testator gave property to trustees an trust for his children
and the children died without issue and any appointment having been made by the survivor. It
was held that a trust in favour of the testator’s nephews and nieces and their children had been
created subject to a power of election and distribution.

Where there a power with a gift over to other persons in default of appointment, this negatives
the presumption that there is a trust in favour of persons who are objects of the power and
here the test is whether the testator shows the intention to benefit the class in any event as
was illustrated in the Re Weakes’ settlement 1871 where a woman gave her husband a
property by will for life, with the power to dispose it among their children it was held that there
was no gift to such of class as the husband might appoint but a mere power to appoint with no
general intention to benefit the class in any event.

b) Power of Attorney. According to Osborn’s concise law Dictionary 7th Edition power of
Attorney is a formal instrument by which a person empowers another to represent him or act in
his stead for certain purposes usually in the form of a deed poll and attested by two witness.

According to section 2 stamp Act 1949 a power of Attorney means any instrument except a
warrant to act as a solicitor in any judicial proceeding empowering a specified person to act in
the stead of the person executing it. A power of Attorney is an instrument where one party
(person) (the donor of the power) formally authorizes another (the done of the power) to act as
his agent, the donor effect an instrument (the power of Attorney) to appoint the done his
attorney under power; and the result of appointing the done as attorney is to enable the done
to act for the donor generally or in a specified transaction as series of transactions. This was
illustrated by Judith E. Sihombing in “The National Land Code-A commentary”.

Trevor Aldridge in powers of Attorney 10 th edition, A power of Attorney is a document by which

one person (donor) gives another person “attorney” the power to act as his behalf and in his
name. it may be completely general, entitling the Attorney to do almost everything the donor
could himself do, as it may be limited to certain defined objects.

Section 5 of the power of Attorney Act 1949 states that every instrument purporting to create a
power of Attorney of which is a true copy or an office copy has been deposited in the office of
the registrar or a senior Assistant Registrar in accordance with this Act or any law repealed by
the Act whether before or after the commencement of the Act. Instrument is valid and may be
compatible with the terms of the instrument, continue in force until receiving and has been
made against him in bankruptcy. In the case of Markwick Vs Handingha, (1880) is on the
plaintiff’s bankruptcy the defendant ceased to be the agent and attorney of the plaintiff and did
not become the agent of the assignee upon the donor becoming bankruptcy, the power is
automatically revoked.

Section 35(6) of the companies Act 1965 provides for the powers to appoint Attorney of the
company and Article 76 of Table A of the companies Act 1965 provides that one of the power of
the directors is to appoint Attorney of the company by way of power of attorney and to
determine the extent of the power authority, term of office and the discretion of the Attorney.

Section 3 of the powers of Attorney Act provides for a power Attorney to be valid if it is
executed and authenticated

Question no.3

A trust is a relationship where by property is held by one party for the benefit of another
whereas duties refers to the obligations of the trustee in this context. The following are the
duties and powers of a trust.

1. Reduction of property into possession

The first duty of a trustee, following appointment, is to find out what the trust property is, the
directions of the trust instrument in regard to it and whether the trust property has been
properly and safely invested. He should also ensure the transfer to himself or any property
which did not pass to him under the deed of appointment as well as the transfer of all the
documents affecting the trust property, such as title deeds and share certificates.

2. Duty to invest
A trustee is under a duty to invest funds in his custody. Investment in this context refers to the
employment of money in the purchase of anything from which interest or profit is expected.
In investing, a trustee should consider the life tenant; that is a person entitled to the
income and also the remainder man, i.e. the person who is entitled to the capital.
Consequently, the investments must produce income and also maintain capital. In Re Power,
the Acquisition of a house for occupation by a beneficiary, which did not produce income, was
held not to be an investment.
 3. Duty to distribute
A trustee is under a duty to make out payments of income and capital as they become due and
to do so to persons who are properly entitled. If he fails to do so this amounts to breach of the
trust.

4. Duty to maintain equity between the beneficiaries

A trustee should not favour one beneficiary at the expense of another. Consequently, he should
act impartially between all the beneficiaries. An obvious example of this is that the trustee
should act impartially between life a life beneficiary, who is entitled to the income out of the
trust property and remainder man, who is entitled to the capital under the trust.

5. Duty provide accounts and information, this include;

Accounts
A trustee should keep accounts and be ready to produce them to the beneficiaries at any
time. The beneficiary’s right in this regard is merely to see and inspect the accounts. If he
requires a copy thereof, he has to pay for it; a beneficiary reminder man is entitled only to
such information as relate to capital transactions. Accounts should be prepared in a simple
form understandable to the beneficiaries.

Information
Beneficiaries are entitled to be informed about matters affecting the trust. To facilitate the
supply of up-to-date information, the trustees should keep trust diary or minute book
recording decisions and events affecting the trust. A large trust can also keep other
documents such as the minutes of the trustee’s meetings. Documents affecting the trust are
trust documents and therefore, the property of the beneficiaries, who may inspect them.
Nevertheless, the trustee’s power and discretions cannot be challenged if they have been
exercised bona fide.

6. Fiduciary duties, these include;

Remuneration and reimbursement
The general rule is that a trustee, in administering the acts gratuitously or voluntarily and is
therefore not paid for his services. This is irrespective of whether his services are of a
personal or professional nature. Consequently, a trustee will only be able to claim
remuneration if he can show that he is specifically entitled to it. To the general ruler is the
exception that a trustee can recover for his proper out of pocket expenses, including, (i)
payment of agent’s fees, where their employment is justified; (i) call on shares; (ii) proper
costs of litigation.
Trustee not to purchase trust property
i) The general rule is that trustees should not acquire either absolutely or by the way of
lease, trust property. This is irrespective of the consideration given by the trustee for the
property or the lease. Thus in E&M Khoury V Jojo, the defendant trustee bought a house
which was part of the trust estate at a public auction. It was held, inter alia that he was
liable to reconvey the house to the estate. Korsah J.A. thus stated.

ii) Purchase of beneficial interest in property

Equity is less strict when it comes to buying by a trustee of the beneficial interest of a
benefiacry. Their purchase will be allowed if the trustee has given full value and all the relevant
information has been given to the beneficiary at the time of the sale.

POWERS
A trustee’s powers are normally contained in the relevant trust instrument. In addition,
certain discretionary powers are coffered on him by statute which is applicable in given
circumstances and in the absence of contrary provision in the trust instrument.

Power of sale
The power of sale is usually given either expressly or impliedly by the trust instrument or
statute. With regard to trust property comprising land held on trust for sale, the trustees have a
duty to sell not simply a mere power, although in most cases they are empowered to postpone
sale.
The trustees are under an obligation “to obtain the best price they can for the beneficiaries and
must act prudently.

Power to insure
A trustee is empowered to insure against loss or damage by fire, “any building or other
insurable property” up to three quarters of the value of the property insured. The premiums
thereof may be paid out of the income or any other property subject to the same trust. Any
money received by the trustees under the policy of insurance shall be capital money for the
purposes of the trust and may be used for rebuilding or any other authorized purpose of the
trust.

Power of maintenance and advancement

a) maintenance
Section 31 (1) gives the trustees wide powers to apply income for the maintenance of a
beneficiary during his minority. The power is exercisable by the trustee in respect of any
interest whether vested or contingent subject to any prior interests or charges affecting the
trust property. It also applies to intestacies and is additional to any power conferred by the
trust instrument, but also so far as no contrary intention is expressed.

b) advancement
Under section 32 of the Trustee Act, the trustees may pay up to one half of the beneficiary’s
share by way of advancement, whether the share is vested or contingent, and whether or not
the interest is liable to be defeated by the exercise of a power of appointment or revocation. all
the sums advanced must be brought into account as part of the share, and no advancement
may be made to prejudice any person entitled to a prior interest, unless he is existence and is of
full age and consents in writing to the advancement.

Questions no.4 under what circumstances would the court in Uganda and also in the British
common wealth grant a remedy of specific performance

The Black’s law dictionary 2nd editiondefines specific performance as the court order that is
mandatory where a party must full fill its contractual obligations according to the exact terms of
the contract, Cheshire, Fifoot &furmston’s law of contract 14th edition at page 698, also
defines specific performance as a decree issued by the court which constrains a contracting
party to do that which he promised to do
It is a form of relief that is purely equitable and even S33 of the judicature Act Cap 13 provides
for its applicability because it fallows among the equitable remedies which the high court of
Uganda can grant one in a given claim for instance in breach of a contract.
It should be noted that this remedy [specific performance] can be granted to any one
provided he /she fulfills its principles as stated here down.

The plaintiff must show a cause that other remedies like damages are inappropriate, The
normal remedy for the breach of contract is the recovery of damages at common law in most
cases this affords adequate reparation but in many instances, and especially where a vendor
refuses to convey the land sold, mere award of damages would defeat the just and reasonable
expectations of the plaintiff. The fundamental rule therefore is that specific performance
willnot be decreed if there is an adequate remedy at law. In the case of Shazim limited v
Norattam Bhatia HCCS N0.411 OF 1998, Justice Nyanzi yasin noted that the remedy of
damages was notadequate because it was the defendant who had frustrated the plaintiff from
paying him the remaining balance to the contract or sales agreement, the defendant was at
default and therefore he awarded specific performance to the plaintiff directing the defendant
to perform as they had previously agreed.

The remedy is also available where the subject matter of the contract is unique, in the
situations where the subject matter is unique as to its nature or quality, the grant of damages
may be considered to be inadequate. Holding in the case of Bermuke v Bede shipping co
ltd(1927)1 KB 649, Specific performance was awarded because the contract was for the supply
of unique or specific goods. It should be noted that specific performance is a discretional
remedy, in Cheshire 14th edition, it is stated that the exercise of the equitable jurisdiction to
grant specific performance is not a matter of right in the person seeking relief, but discretion in
the court. but this does not mean that the decision is left to the uncontrolled caprice of the
individual judge, but that a decree which would normally be justified by principle governing the
subject may be withheld, if to grant it in the particular circumstances of the case will defeat the
ends of justice lord parker said indeed, the dominant principle has always been that equity will
only grant specific performance if, under all the circumstances, it is just and equitable so to do.

Under S 64(2) b of the contracts Act 2010 provides that situations where the order of specific
performance is likely to cause hardships to the defendant, it may not be granted. The court will
reject the plaintiff’s claim if it will cause undue hardship to the defendant. In other words
Courts must take account of all the circumstances known to exist at the time when an order is
sought, as well as of circumstances likely to occur subsequently, when they are called upon to
decide whether the effect of ordering specific performance will be to cause such great hardship
as to amount to an injustice for example in case of in co-operative insurance society ltd vs.
Argyll stores (holdings) ltd [1997] UKHL 17 The House of Lords considered in particular that it
would be wrong to order specific performance where the effect would be to compel the
defendant to carry on business at a loss

The plaintiff seeking for the remedy of specific performance must come with clean hands this
can be expressed in equity maxim that he who comes to equity must come with clean hands,
S64 (2) f of the contracts Act 2010 provides that the claimant of specific performance should
not have committed a fundamental breach in other words the plaintiff or one who seeks this
remedy must have performed his obligations in the contract so he or she is at no default, if
there is any evidence of fraud, mistake, misrepresentation or illegality on the plaintiff then the
court will not grant him equitable relief. In the case of Bir Singh v parmar 1972 E.A 211 the
appellant contracted to sell land to the respondent, the appellant defaulted and the buyer
successfully sued for specific performance. On appeal the appellant argued that the respondent
had not shown that he is ready and willing to perform the agreement in that he had not paid
the deposit and could not be believed, and therefore he had not come to court with clean
hands. The court of appeal dismissed the appellant’s claim on the grounds that the
nonpayment of the deposit in this particular case was not sufficient to disentitle the buyer from
a remedy .the buyer had always been ready and willing to pay.

Under Section 64 [2] e of the contracts ACT 2010 provides that a plaintiff shall not be granted
specific performance provided the defendant was at that time free or entitled to discharge or
terminate the contract it’s immaterial whether he was in breach because a contract can also be
determined by lapse time. This can be observed in situations where the plaintiff is barred by
time for example the limitation ACT 1959 provides actions for breach of contract must be
brought within 5years, land matters should also be brought within 12 years , and this is an
implication that delay defeats equity. in the case of Mzee bin Ali v Allibhoy Nurbhoy ,the
remedy of specific performance was not granted because the plaintiff had ‘slept on his rights’
by delaying to petition for a redress or remedy from court, however where the delay was
caused by the defendant it won’t be the same case for example in the case of Shazimlimited v
Norattam Bhatta HCCS NO 4111 OF 1998,JUSTICE Nyanzi yasin rejected the defendants plea
that the plaintiff was barred by time on grounds that , it was the defendant’s default of failing
to disclose the means in which their monies where to be paid in other words defendants had
frustrated the plaintiffs which made them to be caught by time so the defendants couldn’t
succeed on that ground .

Section 64 [2] a contracts ACT 2010 provides that a claimant is not entitled to specific
performance where it is not possible for the defendant to perform the contract, in falcke v
gray, specific performance of an option to purchase rare china jars at a price 80 per cent below
market value was declined on grounds of hardship to the defendant. The court shall not grant
specific performance of a contract of personal services because this would entail forcing
anunwilling person to continue working or to continue a person’s employment against the
employer’s wishes. Also one must note that equity does nothing in vain as a result the courts
will never grant specific performance unless the judges are sure that they are capable of
supervising performance and ensuring that the order can be carried out. in the case of Ryan v
Mutual Tontine Westminsterchambers Association [1893]1ch116 under a tenancy agreement
the land lord was obliged to provide a hall porter to take care of the common areas , the
person whom he employed failed to do the work properly an order of specific performance
couldn’t be granted because the court couldn’t supervise the work. Other circumstance in
which one might not be in position to perform his obligations, includes situations where the
subject matterof contract has perished most especially where the defendant had no control
over the situation or he never had it in his contemplations for example in case of couturier v
Hastie [1856]5HLC673, the cargo had perished on the way and this was the subject matter to
the contract so the claimant couldn’t succeed for specific performance because the defendant
never had it in contemplation that it will perish so it will be difficult for one to perform has they
had specifically agreed.
The remedy of specific performance shall not be granted unless mutuality is possible,
mutuality is often said to be a condition of specific performance. This is statement really
involves two assertions, which may be called positive and negative mutuality. The first is
exemplified by the vendor of the land who can obtain specific performance even though
damages would usually be an adequate remedy because the purchaser is entitled to specific
performance and it’s so unfair to deny the vendor what is granted to the purchaser. Negative e
mutuality involves denial of specific performance to a plaintiff because it would not be available
to the defendant. Thus, an infant cannot maintain an action for specific performance, since it
not maintainable against him. Courts will not because of equity award the remedy unless
mutuality between the parties can be achieved. In this way the remedy will not be a warded
against the one party where it would be unavailable against the other party in same
circumstances. In the case of Flight v Bolland [1828]4Russ 298, in this the application for the
remedy of specific performance by a minor was not granted by court because it would not
award it since the other party could not have succeeded in obtaining the same remedy against
the minor who obviously lacked capacity.

Section 64 (2) c of the contracts ACT 2010 provides that a remedy of specific performance shall
not be granted to a plaintiff un less it does not infringe on the right of the third Party which he
or she acquired in good faith in nutshell its available were it does not prejudice the rights of
the third party to the contract Contracts for the benefits of a third party, contracts in which
the promisor’s obligation to be enforced is the conferral of a benefit upon a third party to the
contract rise particular issues as to whether damages at common law are an adequate remedy,
an important example of such a contract is where the promisor’s obligation is to pay a sum of
money to a third party, at first it could be surmised that damages would generally be an
adequate remedy. However, this is not the case .the plaintiff’s measure of damages in such case
would usually be nominal, in the case of Coulls v Bagot executor and Trustee co ltd [1967]119
CLR 460 .Mr. Coulls contracted With O’Neil constructions to quarry part of his land O’Neill was
to pay royalists to Mr. Coulls and his wife as joint tenants [he said tenants in common but
meant just the one that goes to living partner] when Mr. Coulls’ died ,his executor [bigots]
sought to determine whether O’Neill was required to pay the royalties’ to the estate or Mrs.
Coulls A majority of the high court held that the royalties’ where only payable only to the estate
as the royalties had not been has signed to Mrs. Coulls , Barwick CJ AND Windeyer j concluded
that where a promise is made to joint promises when either promise can enforce even though
consideration only moved from one .also in Beswick v Beswick A promises B to pay an Annuity
to C in consideration of B’S Transferring the goodwill of his business to A .It was held that
although the promise did not give C any right of action ,it could specifically enforced by B’s
representative against A with the result that A WAS ordered to make the promised payments to
C.
In a nut shell specific performance is a form of relief that is purely equitable and can be granted
to any person in all common wealth countries as long as he has all the grounds as stated above.

Question no.5

5) Perpetual injunction

This is a restraining order whose effect is to finally settle the existing dispute between
the parties. However, this does not imply that the injection lasts forever. In Babumba V Bunju, it
was held that where a grant of a temporary injunction would decide the whole suit, that grant
will prematurely dispose to the whole case depends on the facts of each case.

b) Equity follows the law.

This is an equitable maximum whose Latin form is “aequitas sequitur legem”. The
maximum implies that equity supplements the law on is based on the law but does not replace
it. This was asserted by Maitland who noted that; “Thus equity came not to destroy the law but
to fulfill it, to supplement it, to explain it.” However, according to shell, “Equity follows the law
but not slavishly or away” which implies that equity cannot follow a law which is defective.

c) Precatory trust
It is an express trust that is created with language that expresses a future intent or a wish, but
in which the court nevertheless finds legally enforceable duties. Trust language must be express
a present intent to create legally enforceable duties on the trustee in wide to have trust intent.
If there is no trust intent, the trust fails. Sometimes the courts will nonetheless find intent to
create legally enforceable duties in a trust that uses precatory language by looking at fiduciary
and familiar relationships. If there is a familial or fiduciary relationship between the parties, the
court will often use that content to presume that intent to create enforceable duties exists.
Thus the trust will not fail for lack of trust intent. It is a trust that is created with words to
entreaty such as wish and request rather than command and direct and the law recognize it to
carryout the wishes of the testator or grants even though the statement in question is in the
nature of an entreaty a recommendations rather than a positive command and precatory words
create an express trust if they satisfy three certainties of words (intent), subject (the property
and beneficial interests) and object (beneficiaries a benefiting causes).

d) Equitable estopul
 This is one the four exceptional to the rule that “Equity will not assist a volunteer.
It is invoked where equity wants to prevent an owner of the land who has made an imperfect
gift of same estate or interest in it from asserting his title against the donee. The donee’s equity
is said to exist where he incurs expenditure in respect of land, in a mistaken belief that he has
or will acquire an interest in it and the owner knowing of the mistake stood by and allowed the
expenditure to be incurred.
However, it may be argued that this is not a true exception to the general rule above
since the done by incurring detriment, to be said to have furnished consideration in the same
way as a promise under a contract is expected to do.

Question no.6 compare and contrast a trust with:

a) Debt

The traditional view is that the relationship between trustee and beneficiary is not one of
debtor and creditor. That means that the trustee does not owe the value of the rights he holds
to the beneficiaries. This can be seen in the case of Barclays Bank Ltd vs Quistclose investment
Ltdcreated confusion in this area, holding that a borrower of money can be both a debtor and a
trustee in respect of the same sum.

A debt may or may not be contractual and the obligation of the debtor is personal but a trust is
proprietary. A trustee where possible use trust property in income bearing investment and
account to the beneficiary for income. In the case of a debtor such an obligation is unnecessary
except in so far as provided for in agreements express or implied.

If money borrowed is stolen from the borrower he is still under an obligation to repay, however
with in trusts, a trustee is not liable for the loss which is not attributed to his negligence its
shown in the caseMorley v MorleyA trust fund was the victim of robbery and 40 pounds of gold
was taken. Lord Nottingham held that a trustee could not be liable if 40 pounds of gold of trust
funds was robbed, so long as he otherwise performed his duty

Further the words of an instrument may be employed in such a manner as to create both
personal and trust obligation there by creating a situation where a debt and trust exist.
In the case of Barclys bank Ltd vs Quits close investment lt1970 Ac 561,In the above case Rolls
Royce Razor blade ltd was highly indebted to Barclays bank and was in need of 209,000 pounds
to pay dividends which has been declared on its shares. The sum was borrowed from Quitsclose
under an arrangement whereby the loan was to be used for that purpose. The money used into
a separate account at Barclays bank which had notice of that nature of the arrangement. Before
dividends were paid rolls Razor went into liquidation.

House of Lords held: The money had been received in trust to be applied for payment of
dividends that purpose having failed, the money was held in trust for Quit close.

The fact that the transaction was a loan recoverable by an action at law did not exclude the
implication of a trust. The legal and equitable rights exist the bank having notice of the trust
and not retain the money against Quit close.

b) Contracts.

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promisee, on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

indeed there can be no hard and fast lines between contract and trust because contract is a
source of rights while trust is a way of holding rights, indeed many rights held in a trust are born
of contract.

c) Agency.

Agency is the contractual arrangement express or implied, written or verbal where one person
may act on behalf of another and bind that other as if he or she acted personally. Agency arises
where a person called the agent has expressed or implied authority to act on behalf of another
called the principal and he consents to do so

An agent is normally regarded as an accounting fiduciary party and he binds the principal vis-à-
vis third parties. Royal Bruness Airlines vs Tan where a travel agent was appointed to sell
tickets for the plaintiff Airline on condition that all monies received by the agent were to be
held for the airline on trust. The similarities between Trust and agency are as follows .

1.Relationship of trustee and beneficiary is fiduciary in nature and as well that of agent and
principal is normally fiduciary

2.Both must act personally and should not delay at the powers

3.Neither of them make un authorized profits from there office

The Differences between trust and agency are discussed below;

1. The trustee in exercise of his office will contract as principal and cannot bind the beneficiaries
unless that have constituted him both trustee and agent binds his principal so long as he acts
on the principal's authority on apparent or ontesible that he is deemed to have.

2. Although the trustee has aright of recoup an indemnity against the beneficiaries for any
property incurred expenses and creditors may subrogate those rights in certain circumstances
there's therefore no direct contractual link between the beneficiary and 3rd parties comparable
to link between the principal and third parties.

3. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. Whereas
a trust cannot be revoked unless the trust instrument reserves the power of revocation

However if the beneficiary is sui Juris un-animoud and together entitled may demand that the
trust property be distributed and consequently that the trust be brought to an end.

4.The principal in agency gives binding directions to his agent whereas beneficiaries cannot
control the exercise of the trustee's direction

5. The central distinction between agency and trust is in relation to property. An agent does not
per se hold any property for his principal. Many agents do not obtain items of property and
those who do so acquire only possession but not the other hand there can be no trust unless
title to the trust property vests in the trustee or in another party on behalf of the trustee.
It should further be elaborated that trust and agency do overlap this of the reason that trust
can be created under which a trustee undertakes a contractual obligation to act on behalf of
the beneficiary and an agent may become a trustee for instance he acquired title to property to
be held for the benefit of his principal.

It's argued that Agent becomes trustee for his principal if he obtains title to the property for the
principals benefit, but this isn't easy to gauge in practice especially if what's transferred is a
mere chattel as it was in the case of Cohen vs. Cohen court held that she succeeded in all the
claims that court finding that the husband stood in fiduciary relationship with regard to the
wife's property in the circumstances and was therefore a trustee for her benefit. Court followed
the decision in Burdick vs Garrick 900DM where Lord Justice Giffard stated "In respect of
attorneys who had been authorized and buy property and had attempted to set up the statute
of limitations as defence "there was very special power of attorney under which the agents
were authorized to receive and invest to buy real estate otherwise to deal with property but
under no circumstance could the money be called theirs".

d) Bailment

A bailment arises where an owner of property gives permission to another person to possess it.
A bailment is a delivery of personal chattels to bailee subject to a condition that they be
returned to the bailor or be dealt with as the Bailor directs when the purpose of the bailment
has been carried out

Suppose you’re traveling abroad for a year you may have a painting which you do not want to
leave in the house you therefore hand it over to a friend to look after it in your absence and
that amounts to bailment.

This will depend on the location of your title, your right to exclusive possession of painting.
If you vested it in a friend then they will a trustee of that right for you. If you have however kept
your right in yourself, handing it over only the possession of painting the transactions will be
one of bailment not trust.

The difference between the two is crucial a number of reasons;

One is in breach of instructions your friend sells the painting to an innocent purchaser it will
matter a great deal whether you created bailment or trust. If the friend was a bailee then the
purchaser will not acquire at the good against you and will be able to recover the paintings
value from purchase in action in tort law of conversion.

The basic rule is memo dat quod habet that means that no one gives who possesses not, but if
your friend was a trustee, the position of the purchaser would be different. For now your friend
has the right in question and capable of passing it on to third parties. You of course have rights
under trust but such rights destroyed when subject matter of the trust comes into the hands of
an innocent purchaser of value.

The position of bailment is thus governed by common law, the position of bailed is similar to
that of a trustee in that both are entrusted with another's property.

The Differences between Bailment and a Trust are as follows;

1. A bailee obtains only possession and what is referred to as special property in the goods
while trustee takes title to the trust property.

2. Bailment is a common law notion worked out in proceedings for common law relief such as
actions of conversion, detinue, and breach of contract where as the trust relationships are
purely equitable.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason.
3.Bailment only applies to personal chattels that are capable of delivery where as a trust may
arise in respect of real or personal property and whether tangible or in tangible.

4. A bailment is enforced by the bailor who is party to the arrangement while generally the
trust is enforced by the beneficiary who is not party to the trust instrument.

In bailment there's no transfer of property from the bailer to the bailed. Bailment duties are
dependent on the rules of common law and not equity.

The duties of trustees under a trust are minimal in character compared to the duties that exist
in bailment.

Bailment is restricted to chattels but a trust may exist to all types of property

Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owners’ loose rights for example estoppel however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.

Questions:

SECTION A

1. The development of Equity was both controversial and significant to the legal
system. Do you agree with this statement?

2. Discuss in details whether the judicature act of 1873-1875 Simply fused the rules
or the administration of equity and law
 3. With the aid of relevant examples and authorities, discuss in details the doctrine
of notice and the Impact of registration legislation on the doctrine of notice.

4. Malik the rich man by a will made the following bequests

(a) Five acres to my son Amos.
(b) Two acres to the healthy centre in lower Konge
(c) My freehold house to my lovely wife Franca absolutely in full confidence that She
win hold it for either my daughter Shakira or my son Shafiq as she deems fit.
(d) The remainder will go to my nephew

Discuss the legal effect of this trust

SECTION B
5. Explain the nature and principles guiding the issue of Interlocutory Injunctions.

6. Discuss the manner in which constructive trusts arises and what makes it
different from an express Trust

7. Discuss in details the requirements of a valid assignment

8. Explain 3 out of the following

(a) Equality is Equity
(b) Equity follows the law
(c) Anton pillar injunction
(d) Quia timet Injunction
(e) The effect of precatory words.

SOLUTIONS

Question 3. Answers
Doctrine of notice can be defined as where the buyer of a superior title is prevented from
setting up against prior or earlier owners of Interior Interests which affect the property. The
effect of this is that the buyer of the legal estate without notice of prior equitable interest
affecting the estate takes is subject to those prior equitable interests. The doctrine of notice
is one of the Instances where equity looks at the substance rather than form of a
transaction in order to arrive at a just result.

Notice means knowledge of an existing fact. Notice is divided into three categories, namely;
actual notice, constructive notice and imputed notice.

(a) Actual notice.

This refers to a Situation where the buyer of an estate has actual or
express notice of a prior Interest at the time when he /she made
the purchase or any time before the purchase was completed. It
consists of personal Knowledge of the prior equitable interest
affecting the property which the buyer intends to buy. what is
important is to show that the buyer had actual notice of the
equitable Interest before he/she acquires his/her Superior title.

In the case of Daniel Sempa Mbabali V. W.K. Kidza (1985) HCB 46 Court held that the
defendant’s plea of bonafide purchaser could not stand because they knew all along that
the part of the Land was for burial grounds and the seller had sold them land before his
share had been ascertained. The purchaser’s hands therefore were not clean.

(b) Constructive notice

Salden J in Williamson V Brown (1857) 15 NY 354 at 362 defined
constructive notice thus;
“ where A purchaser has knowledge of any fact sufficient to put
him on an inquiry as to the existence of some right or title in
conflict with that he is about to purchase he is presumed either, to
have made the inquiry and ascertained the extent of such prior
right or to have been guilty of a degree of negligence equally fatal
to his claim”
Duty to make inquiries. In making purchase of land, inquiries should be made to
appropriate persons such as neighbors, elders, local council officials and the office of the
registry of titles in order to ascertain whether the Land is subjected to any encumbrances or
claims. If such inquiries aren’t carried out, equity will assume that this is due to bad faith or
toss negligence and thereby taints the buyer’s title with mala fides. The effect of failure to
investigate the title of the sure is that the purchaser cannot Claim priority over earlier
equitable interests.

Duty to Inspect the land; For instance if the property is occupied by someone other than
the seller, this is regarded as notice to the buyer. This is because the buyer should inspect
the and he/she wants to buy to see it there’s an occupier and find out the right or interest
which such a person possess in the land. If the buyer fails to inspect the land or make
inquiries as to the title, he will take the subject to the prior equitable interests.

In Uganda post and Telecommunications V AKPM Lutaaya CA No. 36 of 1996 Karakora JSC
held that if a person purchases an estate which he knows to be in the occupation of another
other then the Vendor, he is bound by all the equities which the parties a such occupation
may have in the land. In coming to this decision, Court relied on various decisions relating to
the presumption of constructive notice for example;

In the case of Fredrick J.K Zaabwe V Orient Bank Ltd & 5 others SCCA No. 04 of 2006.
Where it was held that the bank had knowledge that the directors were acting dishonestly,
it did not scrutinize the powers of attorney among others. The bank had at the very least,
constructive notice of the fraud but chose to ignore it. Therefore Count ordered the
Registrar of titles to cancel the registration of the mortgage and the transfer to Ali and to
reinstate the appellant as registered proprietor.

(c) Imputed Notice.

Notice which is actual or constructive may be imputed on the
purchaser through his/her agent. It is established in agency law that
notice to an agent is notice to the principal. Previously notice of
Information by a solicitor or lawyer in an earlier transaction would
bind a principal in a later transaction.
This was modified in the case of Mountfield V Scott 37ER 1105(1823) , to the effect that
information acquired by a solicitor in one transaction can not affect his principal in a
subsequent transaction. Where the solicitor acts for both parties, any notice that he
acquires is imputed on both parties. However, if it is shown that the solicitor conspired to
the detriment of the other, then the aggrieved party will be protected by the doctrine of
bonafide purchaser without notice.

In the case of David Ssejjaka Nalima V Rebecca Musoke (1992) KALR 736, m/s Musoke &
Co. Advocates who were acting on behalf of the appellant and Sendaula knew of
unregistered interest of the respondent and the fraud of sendaula who was selling to the
appellant. The appellant was not a bona fide purchaser without notice because the
advocates who were acting as his agents had known of the alleged band concerning the
disputed property.

Questi on 2.Answers

The recommendations of the Royal commission where enacted as judicature acts 1873-75.
These acts abolished all the then existing superior courts and in their place Set up a
supreme court of judicature consisting of the High court of justice and the court of appeal.
The judicature effectively abolished the dual administration of justice as between the
common law courts and the Chancery Court. The High courts were given power to
administer both equity and law concurrently. All claims, obligations and defaces were
recognized and enforced by the High court. Common law Injunction exercised by chancery
was abolished since it was no longer necessary.

The dual administration of law and equity in England before the judicature Acts 1873-75 of
Britain does not exist in the Uganda system. By the Uganda Orders In council 1902 and
1911, which received English law into Uganda law and equity were to be administered
concurrently and where there was conflict or variance between rules of equity and rules of
common law with reference to the same subject matter, the rules of equity would prevail.

H is now opposite to examine how courts have resolved the conflict between the
application of rules of equity and rules of Common law to issues before them.

Fusion of Law and Equity.

The issue arises as to whether the judicature Acts in regard to the relationship between law
and equity and common law merged to form one rule. There are Two school of thoughts on
this issue;

The first is the view that there is no significant conflict and Consequently Section 25(11) of
the judicature Act 1873 is superfluous or unnecess ary. In this vein, Maitland maintained
that the conflict, if any between law and of equity was simply jurisdictional and that equity
came not to destroy the land but to fulfill it.

The second school of thought is that there is a definite Conflict between rules of the
common law and those of equity hence relevance of the conflict resolution clause.

Fusion of rules or fusion of administration.

Finally is the controversy as to whether the judicature acts 1873-75 simply fused rules of or
the administration of equity and law.

One of the views is that the Acts achieved a fusion of both administration of justice and
fusion of the common law and equitable rules with the result that there is now one
common rule. The second opposing view is that the effects of the acts was only to create a
common Count for the administration of law and equity and not a fusion of law and equity.

Where there’s a conflict between the two, those of equity prevail. This is supported by the
prevailing distinction between equitable ownership of a beneficiary and the legal ownership
of a trustee under a trust and the maxim that were the equities are equal to the law
prevails.

Question8. Answers

(a) Equality is equity

This equitable maxim ensures that where there’s a dispute over property in which
more than one party has a beneficial Interest, be divided equally unless there’s
evidence showing that the property should be divided in some other way. In the
case of Midland Bank Vs Cooke (1995) 4 ALLER 562Pg which concerned a dispute
between husband and wife over the Ownership of a matrimonial home, L] Waite
said that in such a case court must do its best to discover the conduct of the
spouses understanding the amount of share of the contributing spouses upon which
 each must have acted in doing what each did, Otherwise court will apply the maxim
equality is equity that the Interest belongs to the Spouses in equal shares

(d) Quia Timet Injunction

This type of injunction is granted to prevent a threatened Infringement of the
plaintiff’s rights. This is where there are signs that infringement will occur but the
rights haven’t been infringed yet. This also occurs where the claimant has been fully
recomposed for the damages already suffered but alleges that there’s a risk that
further damage may occur. To grant this injunction, the following conditions must
be established;
a. The plaintiff must show a very Strong probability of a future infringement.
b. That the damage is imminent and;
c. Will cause substantial and irreparable damage and that an award of damages
will not be of a sufficient remedy.
d. Damage will be of a serious nature.

(b) Equity follows the law.

The court of chancery never claimed to over-de the court of common law. Where a
rule, either of the common or Statute law, is direct, and governs the case with all its
circumstances or the particular point, a court of Equity is as much bound by it as a
court of law and can as little justify a departure from it. Its only when there’s some
important circumstance disregarded by common law rules that equity Interferes.
Equity follows the law but not slavishly nor always.

Question7. Answers

The benefit of a contract can be transferred to a third-party by a process known as

assignment. This is a transaction between the person entitled to the benefit of a contract
and the third party as A result of which the assignee becomes entitled to sue the liable
under the contract called the debtor. The debtor is not a party to the transaction and his
consent is not necessary for its Validity.

Common law enforced three types of transactions which in effect amounted to

assignment i.e.Novation, acknowledgment and Power of attorney.
Equitable assignments Included legal chose and equitable choses. Statutory assignments
include absolute assignments i.e. assignment by way of charge, assignment of part of a debt
and Conditional assignments, and debt or other thing in action.

The following are the requirements of a valid assignment.

(i) Formalities.
A statutory assignment must be in writing and Signed by the assignor.
Assignment which doesn’t satisfy this requirement may take effect as an
equitable assignment. A disposition of an equitable interest must be in writing
and signed by the assignor or his agent. Consequently, an oral assignment of an
equitable chose is void.

(ii) Intention to assign.

It’s necessary to establish an Intention to assign. In William Brandit Son’s and Co.
VS Dunlop Rubber Co. Lord Macnaghten Stated thus, “an equitable assignment
does not always take that form, it may be addressed to the debtor, A may be
coached in the language of command. VA may be a courteous request. H may
assume the form of mere permission. The language is Immaterial if the meaning
is plain. All that’s necessary is that the debtor should be given to understand that
the debt has been made over by the creditor to some third person”

It must be observed that simply because the creditor has asked a debtor
to pay third party doesn’t mean that he has assigned the debt.

(iii) Communication to assignee.

An assignment is not effective unless it is communicated to the assignee, or

someone with his authority, unless it is made pursuant to a prior agreement
between the assignor and assignee. The requirement of the communication to the
assignee is that it is equivalent of the delivery which is necessary to perfect a gift of a
chattel made otherwise than by deed.

(iv) Notice to debtor.

Notice of an equitable assignment may oral. However, if the chose assigned is
equitable, oral notice is seldom effective between successive assignees. Notice of
the statutory assignment must be in writing. It need not to be given by the
assignor, nor at the time of assignment; it may be given by the assignee and is
 effective so long as It is brought before the action is brought. The notice must be
clear and unconditional.

Question 5. Answers

An interlocutory order means one made before final judgment in a suit. This injunction is
limited to apply only until the final determination of the rights of the parties by court. The
object of an Interlocutory injunction is to preserve the status quo until the trial of an action,
for example to restrain an association from holding a meeting without allowing certain
members to attend. Woodford V smith (1970) They may be prohibitory, mandatory or quia
timet. Interlocutory injunctions Include temporary and interim orders

(i) Temporary Injunction

Granting a temporary Injunction is an exercise of judicial discretion and is meant
to preserve matters in status quo pending final determination as was held by the
constitutional court in Hon. Andrew Baryayanga V AG in an application such as
this one, it’s necessary to consider what the status quo that the applicant seeks
to preserve. Status quo was defined as the existing State of affairs, things or
circumstances during the period immediately preceding the application for an
interlocutory injunction.

The application for a temporary Injunction is granted from a pending suit and therefore
there must be a cause of action to sustain the application.

The locus classicus on the pre-conditions for grant of a temporary injunction in the case of
American Cynamid co. v Ethicon ltd (1975) HL There was an application for a quia timet
injunction to prevent the infringement of a patent. The court laid down the following
principles to be followed when deciding to grant an interlocutory injunction;

(a) Is there a serious question to be tried? If the defendant has no arguable

defense at all, then an injunction will be granted
(b) If there’s a serious issue, will damages be an adequate issue, will damages be
an adequate remedy so that an injunction will not be needed? This must be
looked at from the point of view of:
 (i) The claimant i.e. would damages be adequate compensation for loss
caused to him by acts of the defendant before the trial?
(ii) The defendant i.e. if the claimant loses at the trial then could any loss
to the defendant be compensated by the claimant giving an
undertaking in damages.
(c) If damages would be inadequate, then should an injunction be granted taking
into account the balance of convenience to each party?

In Uganda, temporary injunctions have been provided for in our laws. Order 41 Rule 1 of
the Civil Procedure Rules s.1 71-1 provides for injunctions; thus in the case of Kiyimba
kaggwa v Katende (1985) HCB 43 where Odoki J stated the three conditions for the grant
of a temporary injunction thus;

“the granting of a temporary injunction is an exercise of judicial discretion and the purpose
of granting it is to preserve the matters in the status quo until the question to be
investigated in the main suit is finally disposed of. The conditions for the grant of the
interlocutory injunction are?

(ii) That the applicant must show the probability of success.

(iii) Such injunction will not normally be granted unless the applicant
might otherwise suffer irreparable injury which would not adequately
be compensated by an award of damages.
(iv) If the court is in doubt, it would decide an application on the balance
of convenience prima facie case with;
(a) Prima facie case/ serious issue to be tried.
Courts have opined that at this stage, it is impossible to know the
prospects of success of either parties and it is embarrassing for court
to try a case with pre-conceived mind. Therefore the term serious
issue to be tried has been preferred to prima facie case with a
probability of success.

(b) Irreparable injury or damage.

This refers to damage that cannot be adequately compensated for in
damages. In the American cynamide case (supra) Lord Diplock noted
that court should consider whether in the event of success of the
plaintiff at the trial for permanent injunction, the loss which is a
result a result of the defendants continuation to do was sought to be
 restrained can be adequately compensated for in damages if
damages are a good remedy, then the injunction will not be granted.
(c) Balance of convenience.
Caryne v Global Natural Resources PLC (1984) 1 ALL ER 225 the
balance that one seeks to make is the balance of risk of doing an
injustice. Therefore, courts consider which side would suffer more
injustice if the application is granted or denied.

(i) Interim injunction.

This restrains someone only until a named day or further
order or until the hearing of the main application for a
temporary injunction. It is often granted ex-parte.

The principles applicable to the exercise of the courts

discretion in granting or refusing to grant an interim order
to maintain status quo are now settled in the case of
kitende kalibogha and ors v Eleonara Wismer where it was
stated that the application and the existence of imminent
threat which will render the main application nugatory.

Question 4

(a) Five acres to my son Amos.

This is a private trust which is for the benefit of a named individual i.e. Amos. This
benefit is a fixed trust as its share is stipulated i.e. 5 acres.

(b) Two acres to the healthy centre in lower Konge

This is a charitable trust thus a public trust. This is usually designed to promote a
purpose that is beneficial to the society. Two acres to the healthy center in lower
Kongo, is obviously beneficial in the advancement of health to the public.

(c) My freehold house to my lovely wife Franca absolutely in full confidence that she
will hold it for either my daughter Shakira or my son Shafiq as she deems fit.
 This is the secret trust that usually arise in circumstances where the settlor leaves a
legacy in his will on a secret understanding that the legatee will hold that property
on trust for the third party. In the above scenario, Franca holds property on behalf of
either shakira or shafiq as determination on who to benefit will be based the
prevailing circumstances at the time of disposal.

(d) The remainder will go to my nephew

The nephew is a residuary beneficiary who receives all property transferred into the
trust that is not passed to specific beneficiaries. Thus the nephew will benefit under the
will after all the above three named beneficiares i.e. Amos, health centre in lower konge
and either shakira or shafiq.

Question 6. Answers

Constructive trust is a form of implied trust that arises by operation of law and not by the
deliberate act of parties. No formalities are required for its creation. It is a trust Implied in a
variety of circumstances while the defendant has knowledge of some factor that affects his
Conscience m respect of specific property. In the case of Carl Zeiss Stiftung Herbert Smith &
Co. of 1967, LJ Edmund Davis explained a constructive trust as one which is imposed by
equity in order to satisfy the demands of justice and good conscience without reference and
express or presumed intentions of the parties.

The following are some of the most useful illustrations relied on to categorize the many
examples of constructive trusts.

(i) Unauthorized Fiduciary Gains.

A fiduciary is liable to his principle in respect of unauthorized gains obtained by reason

of his fiduciary office. Fiduciaries include not only trustees but also others who owe
similar duties of reality and good faith to their principle, such as solicitors and company
directors, partners and agents. Unauthorized gains may take a variety of forms such as
secret profit, a bribe or the use of confidential information to make unauthorized profit.
 Any profits made by exploiting trust property or the office of trustee are held by the
trustee on constructive notice for the beneficiaries OJ the pre-existing trust

(ii) Strangers to the Trust.

This concerns a constructive Trust that is imposed on a person who intermeddles or

interferes with the trust so that he assumes the responsibility of a trustee and faces
consequent liability on that basis. This is grandly known as trusteeship de son tort. The
responsibility of the trustee de son tort are the same as those of express trustee. Similar
liability extends to those who participate in fraudulent conduct.

(iii) Unconscionability
A further context in which constructive trusts arise concerns general and
unconscionable behavior i.e prevention of fraud. Courts have proved willing to
apply constructive principles to a range of cases where the defendant acquires
property belonging to another by Unconscionable means for Instance acquisition
of property by killing, absence of statutory formalities and property acquired by
joint venture.

(iv) Enforcement of agreements between parties.

Specifically enforceable contracts of Sale, mutual wills and family home
constructive trusts prevent a defendant from Unconscionably resiling from an
agreement entered to with the claimant.

Difference with express trust.

Constructive trust. Unlike an express or implied trust, a constructive trust is not created by
an agreement between a settlor and the trustee. A constructive trust is imposed by the law
as an "equitable remedy." This generally occurs due to some wrongdoing, where the
wrongdoer has acquired legal title to some property and cannot in good conscience be
allowed to benefit from it. A constructive trust is, essentially, a legal fiction. For example, a
court of equity recognizing a plaintiff's request for the equitable remedy of a constructive
trust may decide that a constructive trust has been "raised" and simply order the person
holding the assets to the person who rightfully should have them. The constructive trustee
is not necessarily the person who is guilty of the wrongdoing, and in practice it is often a
bank or similar organization.
Question 1 Answer

Definition

The word ‘equity’ literally means fairness. Equity is defined in the Oxford Advanced
Learner’s dictionary 6th edition as“a system of natural justice allowing a fair judgment in a
situation where the existing laws are not satisfactory”. To a layman, the question ‘what is
equity?’ does not create any difficulty. It simply means right doing, good faith, honest and
ethical dealings in transactions and relationships.

The juristic sense of the term ‘equity’ may be subdivided into two, one complementary to the
other and both affecting the administration of law and justice by recognized judicial
tribunals.

In the first place, there is the general juristic sense of the term ‘equity’. Here ‘equity’ means
the power to meet the moral standards of justice in a particular case by a tribunal having
discretion to mitigate the rigidity of the application of strict rules of law so as to adapt the
relief to the circumstances of the particular case or a liberal and humane interpretation of
law in general, so far as that is possible without actual antagonism to the law itself.

In the second place, there is the technical sense of the term ‘equity’. Equity in this sense
means a special and peculiar department of the English legal system which was created,
developed and administered in the Court of Chancery. This may be a satisfactory definition
of English equity before the Judicature Act of 1875 which provides for the administration of
law and equity by the same tribunal.

But after 1875, it is no longer satisfactory to define equity in terms of a court, that is, the
Court of Chancery as distinct from the other superior courts. The Judicature Act of 1875 has
amalgamated all the superior courts into a Supreme Court of Judicature administering both
the rules of equity and the rules of common law. Thus, ‘Equity now is that body of rules
administered by our English courts of justice which, were it not for the operation of the
Judicature Acts, would be administered only by those courts which would be known as
Courts of Equity.

At the beginning of the nineteenth century, the court structure in England and Wales was in
a mess. The population was subject to the jurisdiction of a dual system of superior courts.
On the one side were the three ‘common law’ courts, viz – the Common Pleas, the Queen’s
Bench and the Exchequer of Pleas. On the other hand was the Court of Chancery. The three
common law courts had grown up under the authority of the English kings during the
Middle Ages. They were known as courts of ‘common’ law because according to royal
propaganda, that law applied to all subjects and the whole realm.

The system of justice administered by the early Chancery was based on common law rules,
though the rules were administered in a more liberal and more humane manner with a view
to achieving the end of justice. This is borne out of the fact that early petitions were in
respect of indubitable legal wrongs, assaults, batteries, imprisonments, and a variety of
outrages inherent in the feudal society.

These wrongs were cognizable in the common law courts, but were presented before the
Chancery in form of petitions because of the inflexible position of the common law courts in
respect of writs; and because of certain ills of the society which made it difficult for
commoners and people of poor means to obtain justice from the common law courts.

Conscience jurisdiction

The jurisdiction of the Chancery in granting reliefs to the various petitions was based on
reason, conscience and justice in the administration of law. Chancery had a reputation as a
court administering an individual discretionary justice in contrast to the inflexible monoliths
of the common law. Whether this was perceived by all litigants in Chancery (or even
common law) may be doubted. Much of the jurisprudence of the court has been concerned
with working out the detailed administrative implications of having taken an earlier moral
stance. Many of these decisions, like much administration, have little reference to
individuated notions of right and wrong

Troubles Develop

Under the Chancellorship of the illustrious Thomas More in the mid-16th century, the
cordial relationship between law and equity was at its acme. Yet after his death, a major
cause of friction between the two, which had raised its head intermittently before, now
broke into the open: Chancery's ability to issue injunctions.It wasn't, however, the ability
to issue injunctions in the abstract that angered the law courts; it was Chancery's increasing
desire to enjoin actions at law either while they were going or, especially, before execution
on a judgment. Because the Chancellor was supposed to act "on the conscience," he had
authority to cancel or enjoin "unconscionable" actions or "sharp practice."

A case from 1482, described by Professor David Raack in an article on the history of the
injunction before 1700, illustrates this tension. In Russell's Case, the defendant committed a
trespass of the plaintiff's goods. Damages were set at 20 pounds, and judgment was
awarded to the plaintiff. Before execution on judgment, defendant went to Chancery and
got an injunction forbidding execution. After a while, one of the judge's in King's Bench,
where the case was heard and adjudged, asked the plaintiff's attorney if he wanted to pray
for a judgment, but the attorney was hesitant to do so because he might be imprisoned for
disobeying a Chancellor's injunction. The King's Bench judge then said that even if this was
the case, the law courts had the authority to release him by habeas corpus. Thus, a judicial
ping-pong match, with potentially dramatic and acrimoniousconsequences, was set up
with the rival jurisdictions and courts.

NO.2. ANSWERS;CAPACITIES OF THE SETTLOR

In general any person who has the capacity to own any particular form of property has the
capacity to create a trust of it and also to hold such property on trust . therefore in this regard a
number of situations may be considered when it comes to capacity and these include the
following;

Minors. Minor cannot be a legal owner of the land and therefore cannot create a trust of a legal
estate in land. Minors cannot unless they are either soldiers on active services or mariners at
sea, make a valid will. Therefore they cannot normally make a valid trust by will. In relation to
any other declaration of trust by a minor the position is the same as the validity of the contract
by a minor. It will be voidable that is binding upon the minor unless he repudiates it on reaching
his majority . where however the settlement is obviously prejudicial to the minors interests the
court may decide that it is wholly void and where the child is too young to appreciate the
nature of the act he may plead non est factum so that not even a voidable settlement was
created.

Mentally disordered persons. A person who is mentally abnormal cannot create a trust. Where
the mentally disordered patient with in the medical health Act of 1983 and receiver is
appointed for the management of the affairs, any purported disposition including any
declaration of trust will be void because the patient has ceased to have any legal control over
the property. In the circumstance the court of protection has wide power to direct the
settlement of the patients property on trust or indeed to make a will for the patient in terms
which the court believes the patient would have made had he had the requisite mental
capacity. Thus in Re TB (1966) 3ALLER 509 The court authorized a revocable settlement of the
patients property in favour of the patients illegitimate son and his family. The patient being
intestat ,the law as it then stood would have meant that the son would receive nothing from his
fathers estate and the court was satisfied that the patient would have made provisions for his
son had he been mentally able.
Furthermore where no receiver has been appointed any settlement will again be void unless
the patient made it during a lucid interval when he could understand the nature of his actions.
Thus in RE Beaney (1978) ALLER 595 A mother suffering from senile dementia, purported to
transfer her house to unmarried daughter who had looked after her for many years , since this
was the mothers onysubstabtial asset this virtually disinherited her other children. The court
held the transfer void.

Corporations. Corporations only have powers which are granted to them in their memoranda
of association or which are reasonably incidental to the carrying on of their business and
therefore have capacity to a create a trust. A declaration of trust by a corporation may thus be
ultra vires. Under trading Acts, trading companies s have powers, which are frequently
exercised, to execute trust deeds in connection with the raising of money by the issue of
debentures. It should also be noted that a person dealing with a company in good faith is not
obliged to inquire into the company’s capacity to enter into the transaction.

Statutory bodies. Bodies created by statute as corporations are in a similar position, the
capacity will depend upon the provisions of the enabling statute. for example, the National
Health Service Act 1977 s 90 provides that: ‘A health authority has power to accept, hold and
administer any property on trust for all or any purposes relating to the health service.’ Regional
and district health authorities frequently hold property on trust for charitable purposes to do
with health care.

NO.2 (B) ANSWERS. FORMALITIES

As a general rule, equity does not insist on special formal requirements in order to create an
express trust: ‘Equity looks at the intent rather than the form.’ However, occasionally
Parliament has intervened and has imposed a number of formal requirements. These
formalities vary with the subject- matter of the trust, such as land, the nature of the interest
involved, such as an equitable interest, and the mode of creation, such as inter vivos or by will.
These formalities are distinct from the necessary pre- conditions needed to be satisfied in order
to transfer the property to the trustees and so constitute the trust. Many of these formalities
were originally enacted in the Statute of Frauds 1677. This was a statute passed in order to
prevent fraud and require writing in appropriate circumstances.

Declaration of a trust of land . Section 53(1)(b) of the Law of Property Act 1925 (originally s 7
of the Statute of Frauds 1677) enacts that,‘A declaration of trust respecting any land or any
interest therein must be manifested and proved by some writing signed by some person who is
able to declare such trust or by his will, The subsection is only applicable to inter vivos trusts
concerning land and not personal property, thus, a trust concerning one square inch of land is
subject to the subsection, but a trust of £1 million of personalty may be declared orally.
‘Land or an interest in land’ ‘Land’, under Section1 of the Interpretation Act 1978, ‘includes
buildings and other structures, land covered with water, and any estate, interest, easement,
servitude or right in or over land’. Thus, included in the definition of ‘land’ are all rights to the
land. In addition, s 2(6) of the Law of Property (Miscellaneous Provisions) Act 1989 defines an
‘interest in land’ as ‘any estate, interest or charge in or over the land’. Thus, a mortgagee’s right
over the land is treated as an interest in land.

‘Declarations of trusts’ Section 53(1)(b) of the Law of Property Act 1925 is only applicable in
respect of declarations of trusts as the means of benefiting another. The test is whether a
present, irrevocable intention to create a trust was manifested by the settlor. This requires the
settlor to comply with the ‘three certainties’ test: certainty of intention, subject- matter and
objects.

‘Manifested and proved by some writing. The requirement here is that the declaration of trust
is only required to be proved by writing. It is not required to be made in writing. The trust is
merely required to be evidenced in writing for the purposes of enforcement. The trust may
validly be declared orally, but it simply would not be enforceable in a court. Thus, the writing
need not be contemporaneous with the declaration but may be adduced some time after the
declaration of trust and may enforce the trust retrospectively. For instance, on Day 1, S, a
settlor orally declares a trust in respect of land in favour of B, absolutely. This declaration is
within s 53(1)(b) of the LPA 1925 and, because it is not supported by writing, it is
unenforceable. However on Day 2, S executes a document endorsing the terms of the trust
declared on Day 1. The trust is now enforceable, not from Day 2, but retrospectively, from Day
1. The effect of non- compliance with s 53(1)(b) is to render unenforceable the valid declaration
of trust.

Writing. Writing’ for these purposes does not assume any special mode and has taken the most
diverse set of forms, ranging from recitals in an instrument to affidavits, answers to
interrogatories, telegrams and even letters to third parties. In short, writing may take any form
that may be appropriate for the Land Registry. The test is whether the material terms of the
trust are included in a document (or series of documents) signed by the settlor. The material
terms, of course, involve the ‘three certainties’ test. In the law of evidence a ‘document’ has
been defined in s 13 of the Civil Evidence Act 1995 as ‘anything in which information of any
description is recorded’. Thus, a document for these purposes may include an audio or video
cassette, and even information stored in electronic form. But this notion of a document may be
too broad to constitute ‘writing’ for the purposes of the Law of Property Act 1925. The
objective under the 1925 Act assumes the delivery of the terms of the trust to the Registrar, for
the purposes of registration in the Land Registry.
The material terms of the trust need not be contained in one document but may be contained
in a variety of documents. There is a need for each document to refer to the other to such an
extent that the documents, taken as a whole, form a complete memorandum of the terms of
the trust. For instance, Document 1 may manifest the settlor’s intention to create a trust and be
signed by him, Document 2 may contain the subject- matter of the trust and Document 3 may
contain the objects of the trust. Provided that all three documents are joined, a complete
memorandum of the terms of the trust may exist. In this event, the documents may refer to
each other with sufficient certainty to identify them. Each document or at least one of the
documents is required to be signed by the settlor.

Signature Section 53(1)(b) of the Law of Property Act 1925 requires the person able to declare
the trust to sign the document(s). The requirement here is that the settlor must endorse the
document containing the terms of the trust. The signature need not be the full, formal
signature of the settlor but may take the form of some mark attributed to the settlor and
intended by him to authenticate the document(s). Thus, initials or the thumbprint of the settlor
will be sufficient.

Section 1(4) of the Law of Property (Miscellaneous Provisions) Act 1989 enacts that ‘ “sign” in
relation to an instrument includes making one’s mark on the instrument and “signature” is to
be construed accordingly’. Likewise, the settlor’s voice or image on a recording may amount to
a signature. However, the signature of the settlor’s agent is not effective for these purposes.

Exclusion. Section 53(2) of the Law of Property Act 1925 (replacing s 8 of the Statute of Frauds
1677) provides that ‘This section shall not affect the creation or operation of implied, resulting
and constructive trusts.’ Resulting and constructive trusts are types of implied trusts that are
created by the courts. These trusts are exempt from the above formal requirement.
Accordingly, an inter vivos resulting trust of land may arise without the terms being reduced
into writing.

Hodgson v Marks [1971] ch 892Mrs Hodgson (Mrs H), a widow aged 83, owned a house in
Edgware, London. She took a lodger, Mr Evans, whom she trusted, but who was disliked by her
nephew who also lived in the house. In order to prevent her nephew turning Mr Evans out of
the house, Mrs voluntarilytransferred the house to Mr Evans, who was duly registered as the
legal owner of the property. Mrs H had orally declared that the house was to remain hers. Mr
Evans later attempted to transfer the house to Mr Marks. When Mrs H discovered this, she
claimed that she was entitled in equity to the house. Mr Marks argued that no trust was
created in favour of Mrs H because the oral statement by Mrs H was not reduced into writing
signed by her.Held, Mrs H had retained the absolute equitable interest in the house by way of a
resulting trust. This trust was enforceable by virtue of s 53(2) of the LPA 1925.

NO.4 ANSWERS.EXCEPTIONS TO THE RULE THAT EQUITY WILL NOT ASSIST A VOLUNTEER

Donatio mortis causa. Donationes mortis causa are gifts made in contemplation of death. They
are often referred to as hybrid gifts being midway between an inter vivos gift and a gift by will.
In Re Beaumont [1902] 1 Ch 889, Buckley J called a donatio mortis causa a gift of an
amphibious nature, being a gift that is neither entirely inter vivos nor testamentary. It is an act
inter vivos by which the donee is to have the absolute title to the subject of the gift, not at
once, but if the donor dies. If the donor dies the title becomes absolute not under but against
the executor.

In Sen v Headley [1991] 2 All ER 636, Nourse LJ stated: the three general requirements for
such a gift may be stated very much as they are stated in Snell’s Equity. First, the gift must be in
contemplation, although not necessarily in expectation, of impending death. Secondly, the gift
must be made upon condition that it is to be absolute and perfected only on the donor’s death,
being revocable until that event occurs and ineffective if it does not. Thirdly, there must be a
delivery of the subject matter of the gift, or of the essential indicia of title thereto, which
amounts to a parting with dominion and not merely physical possession over the subject matter
of the gift.

Requirements A gift made in contemplation of death There is a requirement that the gift shall
be in contemplation of death. This means that the donor must have some specific cause in
anticipation. Contemplation would be equally satisfied if the donor were, for instance,
undertaking a dangerous journey and foresaw, not that death was inevitable, but that it was a
strong possibility. It is not sufficient, however, merely to recognize that death will occur
sometime: there must be some specific hazard in view, but it does not then matter if the death
occurs in a way other than that contemplated, as in Wilkes v Allington [1931] 2 Ch 104, where
the donor was suffering from an incurable disease (cancer), his contemplated mode of death,
but in fact died of something else (pneumonia).

Conditional on death. The gift must be intended to take effect only on death. Any attempt to
make an immediately effective gift will not fall within this rule. It must be clear that the donor
expects that if he survives, then no transfer will occur.

Parting with dominion. The donor must either hand over the thing to be given, or the
documents which constitute the essential evidence of title, with the intention of surrendering
dominion over the thing and not, for example, merely for safe keeping. Dominion is obviously
not the same as ownership, since if the donor gave up ownership the gift would not be effective
only on death. If the item is a chattel, delivery of the chattel itself will suffice, provided there is
the right kind of evidence of intent to make a gift of it conditional on death. Equally effective
would be delivering the only means to obtain the chattel, such as the only key to a safety
deposit box where the chattel was kept.

The requirement of parting with dominion was considered by Farwell J in Re Craven’s Estate
[1937] 3 All ER 33. A testatrix was about to enter hospital for a serious operation. In her will she
had given her son a power of attorney over some shares and money in a bank account. She told
her son to get the property transferred into his name as she wanted him to have it if anything
should happen to her. The son, using the power of attorney, had the shares and the money
transferred into his name. His mother died a few days later. Farwell J decided that when his
mother instructed him to transfer the property into his name, having already given him a power
of attorney, there was sufficient parting with dominion to satisfy the requirement for a valid
donatio mortis causa. Farwell J said that the reason underlying the requirement to part with
dominion was that the subject matter of the donatio must be some ‘clear, ascertained and
definable property’. It must not be open to the donor to alter the subject matter of the donatio
or substitute other property between the date of the donatio and death. As long as the subject
matter remains within the dominion of the donor such changes are possible.

The rule in Strong v Bird. Where a donor intends to transfer ownership in personal property to
another and maintains that intention until his death but fails to make an effective transfer
during his lifetime, if, on the death of the donor, the property becomes vested in the intended
donee as the donor’s executor, that vesting is treated as completing the gift.

In Strong v Bird (1874) LR 18 Eq 315, the facts were as follows.B borrowed money from his
stepmother and it was agreed that repayment was to be made by reducing by £100 per month
the amount that she had previously paid B in rent. For six months she paid at the reduced rate,
but thereafter went back to paying the full rent for a further three-and-a-half years until her
death. The stepmother appointed B as her executor.This was sufficient evidence of her
intention to release him from the debt, but her right to sue was never formally surrendered.
However, the court took the evidence as sufficient, since the stepmother was by her actions
voluntarily surrendering her right to sue. B was not therefore obliged at common law to
account for the debt and, under the subsequent case of Re Stewart [1908] 2 Ch 251, equity
treated the gift as perfected. The reasoning in that case was given by Neville J: first that the
vesting of the property in the executor at the testator’s death completes the imperfect gift
made in the lifetime and secondly that the intention of the testator to give the beneficial
interest to the executor is sufficient to countervail the equity of beneficiaries under the will, the
testator having vested the legal estate in the executor. The executor holds the legal estate but,
normally, subject to the equitable rights of the beneficiaries. Here there is sufficient evidence
that those equitable rights are overturned. It must be remembered that the donor’s intention
must be, and be evidenced to be, to give some specific immediate benefit to the donee: it is not
sufficient that he intends to benefit him in some vague, general sense, or that he intends a
benefit to take place only at the time of the donor’s death.

Thus, in Re Goning[1977] 2 All ER 720, where a mother expressed the intention to transfer her
house to her daughter but, believing that she was unable to do this, wrote out a cheque in her
daughter’s favour instead, the necessary specific intent in respect of the house was lacking.

Proprietary estoppel. Where a person spends money on property or otherwise acts to his
detriment in reliance on a misrepresentation, the owner may be prevented from asserting his
own rights against the person so relying. It may thus sometimes be an example of equity
perfecting an imperfect gift, as the court may convey the property to the victim of the
misrepresentation. However, it should be noted that the court has a wide discretion to take
whatever steps are appropriate in the case to ‘satisfy the equity’ created by the estoppel. It
should also be noted that proprietary estoppel of this nature is a cause of action in itself, rather
than being a mere shield to liability, as is the case with other forms of estoppel. A recent
example of this principle is Yaxley v Gotts [2000] 1 All ER 711, in which the fact that the
claimant had acted to his detriment allowed him to obtain a proprietary interest in a house,
even though the ‘contract’ for the transfer of this interest was not in writing and so was in
breach of s 2 of the Law of Property (Miscellaneous Provisions) Act 1989.

The pre-conditions for the operation of this doctrine were set out in Central London property
trust limited v high trees house limited (1947) KB 130, Denning J Stated that : In the first place
the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have
expended some money or must have done some act (not necessarily upon the defendant’s
land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right,
must know of the existence of his own right which is inconsistent with the right claimed by the
plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of
acquiescence is founded upon conduct with knowledge of your legal rights. Fourthly, the
defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his
rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, the
defendant must have encouraged the plaintiff in his expenditure of money or in the other acts
which he has done, either directly or by abstaining from asserting his legal right ... Nothing
short of this will do. What constitutes a sufficient act of detrimental reliance depends on the
nature of the case and a wide range of different types of act have been accepted.

In the classic case of Dillwyn v Llewelyn (1862) 4 De GF & J 517, for example, a father allowed
his son into possession of land and purported to convey the land to the son, though the
conveyance was in fact ineffective as it was not contained in a deed. In reliance on the mistaken
belief that the land was his, the son spent £14 000 on building a house on the land, which the
father encouraged him to do. The reliance here was quite clear and the son was entitled to
have the land conveyed to him.

The application of the principle requires a very much broader approach which is directed to
ascertaining whether, in particular individual circumstances, it would be unconscionable for a
party to be permitted to deny that which, knowingly or unknowingly, he has allowed or
encouraged another to assume to his detriment. This unconscionability is established by the
fact of the plaintiff’s acting to his detriment in reliance on the assurance of the legal owner. This
encouragement by the legal owner may be active, as in an assurance that the mistaken party
has or will be granted an interest, or it may be passive, as in looking on while the mistaken
party acts to his detriment. The acts done by the mistaken party must then be shown to have
been done in reliance on that assurance. This is a matter of causation: it may be readily
assumed, as in Grant v Edwards (above), but equally, depending upon the facts, it may be clear
that causation has not been established, particularly where there are other plausible
explanations for why the claimant behaved in the way he did.

NO.B ANSWERS REMEDIES AVAILABLE TO BENEFICIARIES FOR BREACH OF TRUST.

PERSONAL AND PROPRIETARY CLAIMS . Where a trustee holds property for the benefit of
another, that other, the beneficiary, has a proprietary remedy, that is the right to the property
and its fruits, or the profit made from it, since a trustee may not profit from the trust. The
trustee must administer the property solely for the benefit of the beneficiaries, and if they are
adult and sui juris they can of course call for the property to be transferred to them.

Where a trust exists, be it express, implied or constructive, the trustee is also personally liable
to account for the profits made by him from the trust. He will also be personally liable for any
losses arising from his breach of trust. Here the liability is for the value of the gains or losses
rather than for specific property. It will also be seen that a proprietary claim may be not only
against the specific property but also its product. Since this chapter is concerned with remedies
for breach of trust, reference should be had to Chapter 15 on trustees’ duties to determine
when breaches have occurred.

PERSONAL LIABILITY

A trustee is liable for breach of trust if he fails to do that which is required of him as trustee or if
he does what he is not entitled to do as trustee.
Standardof care. The liability of a trustee for breach of duty is strict, there is no need to
establish fraud or even carelessness on the trustee’s part (though a trustee is on occasion
spared liability if he is without fault, e.g. under the Trustee Act 1925 s 30). Where the loss arises
from the exercise of discretionary powers, the generalrequirement. It should be borne in mind,
as set out in Re Speight (1883) 22 Ch D 727, that the duty of the trustee is to conduct the
business of the trust with the same care as an ordinary prudent man of business would extend
towards his own affairs.

The measure of liability In general, the trustee must account for profits made or replace losses
caused to the trust. As was stated in Re Dawson [1966] 2 NSWR 211, by Street J: The obligation
of a defaulting trustee is essentially one of effecting a restitution to the estate. The obligation is
of a personal nature and its extent is not to be limited by common law principles governing
remoteness of damage.

In Target Holdings Ltd v Redferns [1995] 3 All ER 785, the House of Lords considered the
principles to be applied in determining the issues of causation and remoteness in cases of
breach of trust.

In that case the defendants were solicitors acting for purchasers of certain property and for the
plaintiffs, who were the mortgagees. On the understanding that the properties in question
were to be purchased for £2 million, the plaintiffs loaned £1.5 million. In fact, the properties
were purchased for £775000. The £1.5 million was received by the defendants as trustees for
the plaintiffs, to pay to the purchasers only upon completion of the necessary transfers of the
property to them. In breach of trust, the defendants paid over the money before the transfers
had been completed, and falsely represented that they had so been. The plaintiffs subsequently
entered a contract to sell the property for £500000. The defendants argued that their breach
was a technical one only, and that the plaintiff had subsequently obtained the rights as
mortgagees which they should have had. The fact that the property was not worth what it was
supposed to be was not due to anything which the defendants had done: the true authors of
the loss were fraudulent third parties who had persuaded Target to enter into the transaction
in the first place. However, the Court of Appeal held that that causation argument was
irrelevant: the trustees were in breach of their trust, and the plaintiff had suffered loss, which
the defendant trustees must make good. The House of Lords allowed the solicitors’ appeal.
Lord Browne-Wilkinson considered the role of causation in equity and at common law, At
common law there are two principles fundamental to the awards of damages. First that the
defendant’s wrongful act must cause the damage complained of. Second that the plaintiff is to
be put ‘in the same position as he would have been in if he had not sustained the wrong for
which he is now getting his compensation or reparation’. Although ... in many ways equity
approaches liability for making good a breach of trust from a different starting point, in my
judgment those two principles are applicable as much in equity as at common law.

It should be presumed that the wrongdoer made the most beneficial use of it. But, whichever it
is, in order to give adequate compensation, the money should be replaced at interest with
yearly rests, i.e. compound interest. As this quotation implies, it is in the commercial sphere
that compound interest would appear most appropriate, in the sense that it is in that sphere
that property is most likely to have been used for profitable enterprise, or would have been had
it not been wrongfully withheld. Thus, in Guardian Ocean Cargoes Ltd v Banco de Brasil [1992]
2 Lloyd’s Rep 193, Hirst J rejected the argument that compound interest was payable only in
exceptional circumstances where the defendant is guilty of serious misconduct: ‘the authorities
I have cited make it clear that the award of compound interest is in no way punitive in
character, but is related to the commercial circumstances’. Accordingly, whereas in O’Sullivan v
Management Agency Ltd [1985] 3 All ER 351 simple interest was appropriate because the
defendant, a musician’s manager, was not engaged in investment business, in Guardian Ocean
Cargoes, the defendant recipent of the money was a bank, which ‘must be presumed to have
used the money for normal banking purposes as part of its working capital, and thus to have
been in a position to earn compound interest’.

Losses arising from breaches of duties of investment. Where trustees invest in un authorized
investments, they will be liable for any loss resulting when the investment is realised. Knott v
Cottee (1852) 16 Beav 77. if unauthorized investments are retained, the trustees will be liable
for any fall in value between the time when the assets ought to have been realised and when
they actually were.

Under the rule in Howe v Lord Dartmouth, it should be borne in mind. If there is no duty to
apportion, the remaindermen cannot seek to make the trustees liable for the fact that none of
the income has been added to capital: their only claim will be to loss of capital value, if any,
when the investment is realised. It should also be remembered that any loss incurred on the
sale of authorized investments can only be recovered from the trustees if they are guilty of
wilful default (Re Chapman [1896] 2 Ch 763), for if an investment is authorised it is a matter of
discretion on the part of the trustee if, acting as a prudent man of business, he retains it. If
trustees improperly realiseauthorised investments, they will be liable for the cost of replacing
them or for the amount realised in selling them, whichever is the higher.

Liability between trustees. Trustees are not vicariously liable for each other’s breaches of
trust. However, trustees are required to act jointly, there is no such thing as a sleeping trustee
and any trustee who leaves the administration of the trust to others does so at his peril. If a
breach of trust is committed, prima facie it is a breach by all the trustees.
In the words of Kay J in Re Flower(1884) 27 Ch D 592: ‘The duty of trustees is to prevent one of
themselves having the exclusive control over the money, and certainly not, by any act of theirs,
to enable one of themselves to have exclusive control over it.’ Likewise, no trustee should stand
by while a breach of trust is being committed by his fellow trustees, or, having become aware of
a breach of trust, take no steps to recover the trust’s losses. This general principle is, however,
subject to statutory intervention: for example, the Trustee Act 1925 s 30(1) provides that no
trustee shall be answerable for the acts of other trustees unless the same happens through his
own wilful default. Liability of trustees for breach of trust is joint and several, which means that
if more than one is in breach the beneficiaries may recover the loss either in equal shares from
all the trustees who are in breach or all of the loss from any one of them. Normally, where the
latter happens, the trustee against whom the beneficiaries act to recover the loss may obtain a
contribution from the other trustees who are in breach.

Conversely, if all trustees are sued the ‘passive’ ones are not entitled to an indemnity from the
‘active’ ones (remembering that passive trustees are equally liable with active ones if they
permitted the breach). Thus, in Bahin v Hughes (1886) 31 Ch D 390, both active and passive
trustees were equally liable and the passive one was not entitled to be indemnified by the
active one. Equity presumed equal contributions but this principle has been superseded by the
Civil Liability (Contribution) Act 1978, which provides that any person liable in respect of any
damage may recover from any other person liable for the same damage a contribution in an
amount that the court finds just and equitable, having regard to the extent of that person’s
responsibility for the damage, even, in appropriate cases, to the extent of the full amount of
the loss. Trustees are entitled to be indemnified by a trustee who alone is guilty of fraud.

In addition, under the rule in Chillingworth v Chambers [1896] 1 Ch 685, where one of the
trustees in breach is also a beneficiary of the trust and intended to profit by the breach, the
trustee-beneficiary must indemnify the other trustees to the extent of his beneficial interest.

RELIEF FROM LIABILITY

Statutory power. The Trustee Act 1925 s 61 provides: If it appears to the court that a trustee,
whether appointed by the court or otherwise, is or may be personally liable for any breach of
trust but has acted honestly and reasonably, and ought fairly to be excused for the breach of
trust and for omitting to obtain the directions of the court in the matter in which he committed
such breach, then the court may relieve him either wholly or partly from personal liability for
the same. in Perrins v Bellamy [1898] 2 Ch 521 by Kekewich J, who pointed out that complete
absence of dishonesty was a prerequisite for the operation of the section. Beyond that, he took
the view that in general any trustee who acted reasonably ought to be relieved under the
section.
The burden of establishing reasonableness lies with the trustee.

Consent by beneficiaries. Fletcher v Collis [1905] 2 Ch 24 is authority for the proposition that a
beneficiary who knowingly consents to a breach cannot, provided he is of full age and capacity,
complain of the trustees’ conduct in committing the breach. Insofar as his interest is affected,
the consenting beneficiary cannot recover his losses resulting from that breach. According to
Holder v Holder [1968] 1 All ER 665, it is not necessary for the beneficiary to know that what he
is consenting to is a breach of trust, nor does the beneficiary have to derive any benefit from
the breach, but the court must consider whether, in all the circumstances, it is fair and
equitable that, having consented to the breach, the beneficiary should be allowed to sue the
trustees. To avoid the risk of being sued, the trustees must put the beneficiaries fully in the
picture, otherwise the court may not consider their consent sufficient to take away their right
of action:

In Boardman v Phipps. Another relevant factor is the freedom with which the beneficiary gives
his consent: it will afford the trustees no protection if it is given as a result of undue influence.

TIME LIMITS ON ACTIONS

The Limitation Act 1980 provides as follows: Section 21. Time limit for actions in respect of trust
property (1) NoperiodoflimitationprescribedbythisActshallapplytoanactionbyabeneficiary under
a trust, being an action – (a) in respect of any fraud or fraudulent breach of trust to which the
trustee was a party or privy; or (b) to recover from the trustee trust property or the proceeds of
trust property in the possession of the trustee or previously received by the trustee and
converted to his use ... (3) Subject to the preceding provisions of this section, an action by a
beneficiary to recovertrustpropertyorinrespectofanybreachoftrust,notbeinganactionfor which
the limitation is prescribed by any other provision of this Act,shallnotbebroughtafter the
expirationof sixyears fromthe dateonwhichtheactionaccrued. For the purposes of this
subsection, the right of action shall not be treated as having accrued to any beneficiary entitled
to a future interest in the trust property until the interest fell into possession. In general, the
effect of these provisions is that if the beneficiaries are seeking a proprietary remedy, i.e. to
recover trust property in the hands of trustees, their claim is not subject to any statutory time
limit, whereas if they are seeking any other action against trustees for breach of trust it will be
subject to a six-year time limit unless it concerns fraud by the trustee or fraud to which he was
privy. Thus, most personal actions against trustees will be subject to the six-year limit.
NO.1. ANSWERS DISTINGUISHING TRUST FROM OTHER FORMS OF LEGAL RELATIONS.

It is often important to decide in a given situation whether a trust or some other concept has
been created. There are several concepts which, at least superficially, are similar to a trust and
it is necessary to identify the characteristics of each of these concepts in order to be able to
verify that it is a trust which is being considered and not something else.

Contract. A contract is a common law personal obligation which arises from agreement
between the relevant parties supported by consideration on the part of the promise on the
other hand a trust is an equitable proprietary relation which can arise independently of the
agreement or provision.

The distinction between atrust and contract may be difficult to draw in the following;

With regard to settlement and covenant to settlement, where the property is vested in the
trustee of settlement it is held upon the trust of the settlement , consequently the beneficiaries
are owners in equity of their interests under the settlement. However if the property has not
yet been transferred to the trustee and is simply subject to a covenant to settle, the
beneficiaries will only be able to enforce the covenant if they have given consideration and this
is based on the principle that equity will not assist avolunteer.

Another distinction between the two concepts is that a contract creates rights which are merely
personal whereas a trust creates property rights. The remedy for a breach of contract is the
personal remedy of damages. A breach of trust renders the trustee personally liable to
compensate the trust for any loss suffered but additionally proprietary remedies may be
available.

In Barclays Bank v Quistclose Investments Ltd [1968] 3 All ER 651, the House of Lords found no
problem in finding that there was both a debt and a trust involved in the same transaction. A
company, Rolls Razor Ltd, declared a dividend but there were no funds from which to make the
payment to shareholders. A loan was negotiated from Quistclose Investments Ltd which was
made on the condition that ‘this amount will only be used to meet the dividend due’. The
cheque was paid into a separate account with Barclays Bank and the bank agreed that the
money was only to be used to fund the dividend payments. Rolls Razor Ltd went into liquidation
before the dividend was paid and the question that the House of Lords had to decide was
whether a trust had come into being with the lender as the beneficiary, because if it had the
lender would be able to reclaim the money. If only a debt existed the lender would have no
special claim and would have to compete with all the other creditors. The House of Lords held
that the essence of the bargain trust between the lender and the borrower was that the money
would not become part of the general assets of the borrower but that it should be used only to
pay the dividend and for nothing else. If for some reason the money was not used to pay the
dividend the parties intended that it should be returned to the lender. The fact that the loan
was to be ‘only’ for the purpose of paying the dividend could only mean, in the view of the
House of Lords, that if the money was not so used it was to be returned to the lender. The way
in which this intention would be implemented was via the creation of a trust. The money was
received on trust to apply it to the payment of the dividends and when that purpose failed the
money was held on trust for the lender.

Powers. It is often necessary to distinguish between trusts and powers. We are not discussing
here the powers a trustee may have to administer and manage the trust property. This relates
to the situation when the owner of property gives the power to another to decide on the
distribution or destination of that property. In other words, the powers we are addressing are
powers of appointment.

The key point is that trusts are imperative while powers are discretionary. If Arthur has been
given a power to appoint he is under no obligation to exercise the power and to make a
decision as to which child shall receive the property. If a person accepts to act as a trustee, he
must do as thr settlor directs.

There are two types of discretionary trusts. First, there is the exhaustive discretionary trust
where the trustee is under an obligation to distribute all the specified trust property (perhaps
all the income generated by the trust) and the discretion extends only to whom the property
shall be given. Second, there are non-exhaustive discretionary trusts where the trustee need
not distribute all the specified trust property. There may well be confusion if the transferor has
left decisions regarding allocation of property to others as to whether a discretionary trust or a
power of appointment has been created.

There are three types of powers of appointment. A general power exists where there is no
restriction as to whom the property may be appointed. It is even possible for the property to be
appointed to the person exercising the power.

A special power describes the situation where the property can be appointed only among
specified people or among a specified group or class of people.

A hybrid power exists where the property may be appointed to anyone except specified people
or a specified class of people. There is a difference in terminology between powers and trusts.
Under a trust, the settlor transfers the property to trustees who will hold for the benefit of
beneficiaries. Under a power of appointment the power is given by the donor of the power to
the donee who has the power to appoint the property to the objects of the power.

In many cases the objects of powers of appointment are individuals but it is possible to create
powers in favour of purposes. the law of trusts generally does not permit trusts to be set up for
non-charitable purposes but powers in favour of purposes are allowed. Creating a power of
appointment among a range of purposes may be an attractive alternative to one who wishes to
benefit purposes but wishes to ‘delegate’ the decisions as to the precise purpose to benefit and
the extent of any benefit. The problem in creating a power is that there is no possibility of the
objects seeking the aid of the court if appointments are not made

A beneficiary may also apply to the court if the trustees refuse to exercise their discretion or
exercise it improperly. It is very difficult to see where the equitable interest in the trust’s
property is, pending the trustees exercising their discretion and passing it to one of the
beneficiaries. What is clear is that no single beneficiary has an equitable interest pending
allocation to him, nor do the beneficiaries collectively own the beneficial interest. Perhaps it is
simply in suspense pending the trustees exercising their discretion. Whether a trust or a power
of appointment has been created is a matter of of an intention to create an exhaustive
discretionary trust is that the beneficiaries are to benefit in any construction for the courts.

A trust involves the clear intention that the property will be distributed among the
beneficiaries and the only uncertainty is to which of the beneficiaries will it be given. The
absence of this mandatory element necessarily means that a trust has not been created. One
indication of an intention to create a power rather than a trust is the presence of an express gift
over in default of appointment

It must be stressed, however, that the absence of a gift over in default of appointment does not
mean that there is a trust but only that as a matter of construction there may be a trust. But the
presence of a gift over does mean that there cannot be a trust.In Burrough v Philcox (1840) 5
My & Cr 72, Lord Cottenham found that a trust and a power both existed. He decided that
property was initially subject to a power of appointment but that when the power was not
exercised the intention was that the property should be distributed and that the class as a
whole should benefit in any event. In other words, the court found a trust for equal division in
default of the power being exercised. In the case, the testator gave a life interest in property
contained in a trust fund to his two children with remainders to their issue. The testator stated
that if each of the children should die without leaving lawful issue then the survivor of the two
children should have the power to dispose of the property by will among the testator’s
nephews and nieces, or their children ‘as my surviving child shall think proper’. There was no
gift over in default of appointment. The testator’s two children did both die without leaving
lawful issue. Lord Cottenham said, after reviewing a number of cases, that the courts would
carry out the general intention in favour of a class where there has been a failure to exercise a
power of appointment and to select individuals from within that class.

Lord Cottenham said that the intention will be implemented by fastening a trust on to the
property. In this particular case, Lord Cottenham felt that equal division would reflect the
intention of the testator. This was, of course, a family trust.

In Re Weeke’s Settlement [1897] 1Ch 289, the court found that a power had been created in a
case where there was no express gift over in default. Mrs Slade gave her husband a life interest
in some property and went on to state ‘and I give him the power to dispose of all such property
by will amongst our children’. No appointment was made by the husband. If a trust had been
imposed on the husband the children would have been entitled to take, but as a power had
been created, the property resulted back to the estate of Mrs Slade. Romer J said: If in this case
the testatrix really intended to give a life interest to her husband and a mere power to appoint
if he chose, and intended if he did not think fit to appoint that the property should go on
default of appointment according to the settlement, why should she be bound to say anything
more than she has said in this will? Romer J then asked if there was any authority which
prevented him from concluding that a power was intended: The authorities do not shew, in my
opinion, that there is a hard and fast rule that a gift to A for life with a power to A to appoint
among a class and nothing more must, if there is no gift over in the will, be held a gift by
implication to the class in default of the power being exercised. In my opinion the cases shew ...
that you must find in the will an indication that the testatrix did intend the class or some of the
class to take – intended that the power be regarded in the nature of a trust – only a power of
selection being given, as for example a gift to A for life with gift over to such of a class as A shall
appoint. Having failed to find an intention that the class should benefit in any event, Romer J
held that a power had been created .

Bailment. If goods are delivered to a bailee they will be held for a particular purpose after
which they will be re-delivered to the bailor. Depositing goods for repair or for safe keeping are
examples of bailments. There is a clear but superficial similarity between a trust and a bailment.
In both cases property may be ‘handed’ over and the recipient takes the property subject to
certain duties and responsibilities. However, there are a number of crucial differences between
the two concepts, perhaps the most important being that a trustee does, but a bailee does not,
obtain full legal ownership of the property. This means that while a trustee can pass good title
to any third party (other than a bona fide purchaser for value of the legal estate) a bailee
cannot.

There are other differences: for example, bailment is the creation of the common law while the
trust was developed by equity. Also, while any type of property can be made subject to a trust,
only personalty can be bailed.
The trust may exist in respect of all kinds of property but bailment is restricted to chattels.

Agency. While there may be similarities between an agent and a trustee there is at least one
important distinction. A trust creates proprietary rights whereas agency creates only personal
rights. This will be important if it is sought to recover money or property. Under a trust there
will be rights created against the property itself, while only personal claims against the agent
can be made. This can be particularly important if the one against whom the claim is being
made has become bankrupt.

In cases of trust a claim can be made against the trust property whereas it is only possible to
make a claim against an agent personally, which may have little chance of success if the debts
of the agent greatly exceed his assets. The office of trustee and agent are similar in that both
have to be performed personally and often an agent, like a trustee, is in a fiduciary position.

Many rules relating to principle and agent are common law in character while the trust trust
relationship is equity.

There exists a contractual relationship between a principle and an agent. This is not the case
between a trustee and a beneficiary.

Personal representative/ Administration of estates. At first sight there would seem to be a

similarity between the position of those administering the estate of a deceased person and
trustees. The persons administering the estate of a deceased are called personal
representatives. ‘Personal representatives’ describes both executors and administrators. An
executor is appointed by a testator in his will. If there is no executor, perhaps because the
deceased died intestate, the court will appoint the personal representatives, who are called
administrators. Both trustees and personal representatives hold property, not for themselves
but for other people, and both are under a fiduciary duty. These factors point towards similarity
between the two offices. The apparent similarity between trustees and personal
representatives is partly due to the fact that in many cases a deceased will appoint the same
persons to be bothhisexecutorsandhistrustees.Inthistypeofsituationitisoftenratherdifficult to
determine when the changeover from personal representative to trustee takes place. accepted
view is that once all the assets have been gathered in and the debts paid the residue will be
held qua trustees.

There are differences, however, between personal representatives and trustees. The main
objectives of personal representatives are to gather in the assets of the deceased, to pay off
debts and to distribute whatever remains to those entitled under the will (or the intestacy rules
if there is no will). In other words, the personal representative aims to deal with the property
and to pass it on as quickly as possible.
One of several personal representatives can pass title to personality but all trustees must join in
if the sale is to be effective. As mentioned above, it is not uncommon to appoint the same
persons as personal representatives and trustees and it may be important to determine in
which capacity property is held, and at what point the property is no longer held qua personal
representatives but is held qua trustees. If a transfer is purported to be made by trustees, the
purchaser must assure himself that the property has been vested by the personal
representatives in the trustees, otherwise he will not receive good title. If the property is
personality, the courts appear to be prepared to find an implied assent (transfer from personal
representative to trustee) by reference to conduct. This can sometimes work to the
disadvantage of one acquiring property.

In Attenborough & Son v Solomon [1911–13] All ER Rep 155, Moses Solomon appointed his
two sons, A A Solomon and J D Solomon, to be his executors and trustees. He directed that the
residue of his property should be held on specified trusts. All the debts and expenses were paid
within a year of the death. Some silver plate, which formed part of the residuary estate,
remained in the possession of A A Solomon. Some 14 years after the death of the testator A A
Solomon pledged the plate with Attenborough & Son for £65 and used the money to pay off a
personal debt. The House of Lords held that Attenborough & Son had no title to the plate and
must return it. The House inferred from the fact that the general administration had been
completed, and that no attempt had been made to do any act under their powers as executors
since that time, that the executors had assented to the vesting of the property in themselves as
trustees. As trustees must act together to deal effectively with personality, the title to the plate
remained with the trustees.

Conditions. If Arthur receives a legacy under a will ‘to pay Ben £200’ it is necessary to decide
whether a trust has been created or if Arthur takes a conditional gift. It
isamatterofconstructionwhetheratrustoraconditionalgifthasbeencreated. As usual with equity,
the words used are not necessarily conclusive. For example, in Re Frame [1939] 2 All ER 865,
Simonds J decided that a trust had been created despite the fact that the testator gave
property to Mrs Taylor, his housekeeper, ‘on condition that she adopt my daughter Alma
Edwards and also gives my daughters Jessie Edwards and May Alice Edwards the sum of £5
each.
NO.5 ANSWERS. Theterm equity means the notion of good conscience, fairness and justice.
Therefore equity refers to what is just and right in human relationships and transactions ,
equity developed to solve the problems which the common law had failed to solve. The reason
why the law had failed to achieve its principle aim of maintaining justice is thatevery case
presented defferent problem and the law tended to be uniform and rigid and did not provide
for changes or variation presented by the pecuniar circumstance. Therefore equity developed
to mitigate the rigidity of the application of law, thus equity has been described as kind of
justice superior to legal justice a correction of law where it is defective owing to its generality.
Common law issued writs which where rigid and for the litigant to win his claim he had to
conform to the required writ. Corruption was mob under common law as the poor and local
people were not favoured. Common law provided inadequate remedies which would not lead
to the end of justice.

Therefore Equity came to providesolutions to ensure justice among all litigants ,it provided
remedies where common law did not or provided inadequate remedies , issued writs to the
litigants which where necessary for starting up the actions at common law and these writ bore
the royal seal and this was being done by the chancellor.

However when the equity courts started issuing out writs there developed a conflict between
the common law courts and the court of equity , the trend of this development was arrested by
the conservative nature of the of the common law judges who generally opposed the new
judicial development.

They developed a practice of declaring new writes issued by the lord chancellor to be invalid.
The statute of west minister 1285 tried to rectify the unsatisfactory situation, it gave power to
the chancery to modify the existing writs in order to cater for new cases but the statute was
frustrated by the common law judges who assume jurisdiction to decide on the validity of writs
issued by the chancery. They cancelled any writ which was different from the existing writ and
many injuries could not be redressed because they did not fit with I the existing writ.

Equity started expanding and developing in 17 th century , however prior to the 17 th century,
chancery jurisdiction tended to be vague or unclear that is to say ,there was wide variety of
reliefs sought to which the chancery responded, reports of equity decisions were few and
irregular thereby affecting the development of the decisions based on precedents,and the early
chancery where not bound by the previous decisions since no definite rule had been
formulated. However during the mid of 17 th century , chancery jurisdiction lost its flexibility and
adopted the common law system of precedents. This is because some common law judges
presided over chancery and influenced the adoption of the system of precedents, there was an
improved system of law reporting on equity cases.

Although equity became flexible and some systems of common law, the two failed to come
together but they were just developing conflicts between the two courts. For example the
conflict between chief justice coke and lord chancellor Ellesmere.this conflict was because of
the chancerys power to issue common injuction to restrain the enforcement of the common
law courts judgements.

The decisive stage of the conflict arose when Coke became the chief justice of the king bench
division of the high court. Coke was totally opposed to chancery jurisdiction , he claimed that
the common law courts passed the power to issue writs of prohibition against chancery
jurisdiction for any interference with the judgments of the common law courts.

The conflict between the common law courts and the chancery court crystallised in the Earl of
Oxfords case (1615)I rep.ch.1 in this casethe lord chancellor Ellesmere contended that he had
power to set aside the common law judgments on grounds of equity and good conscience.
Chief justice Coke of the common law court insisted that the chancery had no power either by
statute or by any law of the land to set aside common law judgments. The controversy came
before king James who ruled in favour of chancery jurisdiction.

However, King James decision had two fold effects these include the following

The chancerycourtsjurisdiction became more extensive and attracted a lot of litigants , as a

result the court became over burdened due to poor staffing, organization and complex and
inefficient procedure in administering justice.

Officials of the court became corrupt and incompetent and the course of justice was thereby
perverted owing to delay.

Although the Earl of oxfords case and the decision of king James led to some effects , they came
with new reforms which helped to epitomize the conflicts between common law and equity.
These are;

Minor reforms. These were to rectify the short comings, first the common law courts started
applying the rules of equity to cases brought before them whenever those rules conflicted or
differed from the common law rules . this aim was to prevent separate proceedinds one in
equity and the other in common law from being started in respect of the same cause of action
and this would save the litigants time and expenses.

The common law procedure Act of 1852,1854, and 1860 gave the common law courts power to
exercise certain jurisdictions which were originally reserved for chancery, foreinstance the
common law courts could order discovery of documents and interrogatories in certain cases ,
they were also empowered to grant injunction and other equitable reliefs.

Similarly the chancery amendment Act of 1852 gave the courts of chancery power to exercise
certain common law powers for example suit relevant to common law matters could be
decided by the chancery court.

Furthermore lord Cairns Act 1858 empowered the courts in cases of contracts and tort to award
damages in addition to or in lieu of injunction, specific performance or other equitable
remedies.

However the above Acts did not achieve very much in dealing with the short coming in dual
system of administering justice. The Royal commission on the administration of justice
therefore recommended the complete fusion of the administration of justice by means of
consolidation of all superior courts of law and equity into one supreme court possessing the
jurisdiction of all the courts so consolidated.

The recommendations of the royal commission were enacted as the judicature Acts of 1873 to
1875.These Acts abolished all the then existing superior courts and in their place set up a
supreme court of judicature consisting of the High court of justice and the court of appeal. The
High court of justice was to consist of 3 divisions that is to say the kings bench division, the
chancery division and probate, divorce and Admiralty division.

The judicature Acts effectively abolished the dual administration of justice as between common
law courts and chancery courts. The High court of justice were given power to administer both
equity and law concurrently or together. All claims, obligations and defenses were recognized
and enforced by all 3 divisions of the high court.

The common injunction exercised by the chancery court was abolished since it was no longer
necessary.

The rules of the equity came to be evolved in the Uganda legal system through the order in
council of1902 and 1911 which received English law into Uganda and equity were to be
administered concurrently and where there was conflict between the rule of equity and
common law with reference to the same subject matter , the rule of equity would prevail and
this is reflected under section 14(2) of the judicature Act cap 13 which governs the law to be
applied by the High court and Supreme courts and section 11 of the magistrates courts Act cap.
16.
Therefore since the order In councils were receive in Uganda the courts started the resolving
the conflicts between the application of rules of equity and rules of the common law to issue
before them through the following;

Liability for an executor of assets. Prior to the judicature Act 1873 of Britain , the common law
rule was that an executor was liable for the loss of his testators asset once he took possession
of them, it was immaterial whether the loss was accidental or arose from willful default.
However in equity an executor could only be liable for the loss of the testators assets if there
was willful default on his part.

In Job v Job (1877)6 ch 562. In this case Jessel M.R applying section 25 of the judicature Act
1873 states that the rule of law and equity now is that an executor or administrator is in the
position of gratuitous bailee who cannot be charged with the loss of his testators asset without
willful default, therefore the rule of equity prevailed over the rule of the common law.

Agreement for lease. The agreement for lease is good as lease even if is not executed as
required by tne law. The expression conflict in section 25 of the judicature Act was considered
in walsh v Lonsdale (1882)21 ch 9 . in this case the landlord the defendant agreed in writing to
grant alease of 7 years to the plaintiff, the rent was payable in advance on demand , lease was
not granted as required by the law, the plaintiff took possession and paid rent quarterly ,the
plaintiff failed to par arrears and the landlord distrained , the plaintiff sued for damages due to
illegal distress the action failed , although the distress was illegal at common law because the
7 years lease was not granted in equity the contract of lease is as good as a lease, therefore the
tenant was liable to pay a yearly rent in advance.

Joint undertaking . At common law if two or more people become surities of a debt and one of
them becomes bankrupt the solvent sureties were not liable for the bankrupt suretys share of
liability for the debt. However the position at equity is that solvent sureties are liable for the
insolvent surety in addition to their own share of liability.

Variation of deed. At common law a covenant in a deed could be varied by another deed .
however at equity a simple contract could vary a deed. For example in Berry v Berry (1929) 2
KB316. Under a deed of separation , ahusband covenanted to pay his wife an allowance. Later
the parties concluded a written agreement which was not under a seal reducing the allowance.
The wife sued the husband on original deed claiming arrears of allowance agreed u[on, the
action failed, while accepting the plaintiffs contention that at common law a covenant in deed
could only be varied by another deed, in equity equity a simple contract could varying adeed is
a good defense to an action base on the deed.
NO.6 (A)ANSWERS. THE JUDICATURE ACT OF 1873-1875

The judicature Acts of 1873 to 1875 came in force due to the conflicts between common law
and equity , and because the reforms which were brought up due the effect of the decision of
King James in the Earl of oxfords case, when he favoured the chancery jurisdiction , did not
solve the conflict to the end of justice, the Royal Commission on the administration of justice
recommended the complete fusion of the of the administration of justice by means of
consolidation of all superior courts of law and equity into one supreme court possessing the
jurisdiction of all the courts so consolidated.

The recommendation of the Royal commission were enacted as the Judicature acts of 1873-
18975. These acts abolished all the then existing superior courts and in their place set up a
supreme court of judicature consisting of the high court of justice and the court of Appeal.

The high court of justice was to consist of 3 divisions that is to say the kings bench division, the
chancery division and probate, divorce and admiralty division. The high courts of justice were
given power to administer both equity and law concurrently. This is reflected under section 14
and 15 of the judicature Act cap 13 which state that equity and common law are to be
administered concurrently and where there is conflict between the two on the same subject
matter equity shall prevail over common law. This is also considered under section 11 of the
magistrates courts Act cap 16.

The judicature Act cap 13 was received in Uganda through the 1902 order in council which
helped to solve the conflicts between equity and common law. The judicature Acts effectively
abolished the dual administration of justice as between common law and equity courts. The
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

(B) IMPUTED NOTICE. Imputed notice is the type of equitable doctrine of notice and other
types include actual, and constructive notice. The notice which is neither actual or constructive
may be imputed to the buyer through the actual or constructive notice of his agent . Therefore
this type of notice is commonly established in agency law that notice to agent is notice to the
principal and such notice will be imputed to the buyer through his bona fide agent.

In this regard the buyer who instructed his agent to buy property at the auction sale was taken
to be affected by notice of an equity which came to his knowledge in the course of the
transaction. However the vendor is not an agent of the buyer thus notice to the vendor is not
imputed to the buyer.

Solicitors were normally agents of the buyers in the land transactions, therefore notice of
information acquired by a solicitor in a transaction used to affect his principal. However
because of hardships of this rule, it was modified. In the mountford v scott (1823) 37 ER1105 to
the effect that information acquired by a solicitor in one transaction cannot affect through the
imputed notice of his principal in the subsequent transaction. Thus it has been held that
knowledge of the solicitor in the previous transaction cannot be imputed to the buyer in alater
transaction, the solicitor under this transaction is not under a duty tp pass knowledge in
previous transaction to the buyer when he later became his client.

However if the solicitor acts for both parties to the transaction, any notice which he acquires is
imputed to both parties, and if he conspired to the detriment of the other, then the aggrieved
party will be protected by the doctrine of the bona fide purchaser without notice.

(C) THE MAXIM DELAY DEFEATS EQUITY

Delay defeats equity (equity aids the vigilant and not the indolent). Where a party has slept on
his rights and has given the defendant the impression that he has waived his rights, the court of
equity may refuse its assistance to the claimant. This is known as the doctrine of laches.

Two matters must be noted here. First, the time in which an action for equitable relief may be
sought may be governed by the Limitation Act 1980 and, second, even where there is no
statutory limitation, it will be governed by the equitable principle of laches.

The Limitation Act 1980 lays down limitation periods in connection with the enforcement of
trust matters. For example, s 21(3) provides, as a general rule, that an action by a beneficiary to
recover trust property or in respect of any breach of trust shall not be brought after the
expiration of six years from the date the right of action accrued. However, the section also
provides, for example, that no time limit shall apply to an action by a beneficiary in respect of
fraud by a trustee.

The other main types of equitable claims regulated by the Act are claims to the personal estate
of deceased persons, claims to redeem mortgaged land and claims to foreclose mortgages of
real or personal property. Equity may in very limited cases apply the same limitation to
situations analogous to the express statutory ones. No statutory limitations apply to actions for
breach of a fiduciary duty, or to setting aside for undue influence or to actions for rescission. In
addition, the Limitation Act 1980 s 36 provides that nothing in the Act shall affect any equitable
jurisdiction to refuse relief on the grounds of acquiescence or otherwise.

Delay may be evidence of acquiescence, so the two issues cannot be separated. A failure to
bring an action may tend to confirm other slight evidence that the innocent party has accepted
or agreed to the breach of contract or other ground for seeking relief, thus preventing him from
enforcing his right to remedies for that breach. Whether the court will regard the claim as
barred will be a matter to be determined on the facts. As with all equitable principles, flexibility
is important. As the Privy Council stated in Lindsey Petroleum v Hurd (1874) LR 5 PC 221: The
doctrine of laches in the Courts of Equity is not an arbitrary or a technical doctrine. Where it
would be practically unjust to give a remedy, either because the party has, by his conduct, done
that which might fairly be regarded as waiver of it, or where by his conduct and neglect he has,
though perhaps not waived that remedy, yet put the other party in a situation in which it would
not be reasonable to place him if the remedy were afterwards to be asserted, in either of these
cases, lapse of time and delay are most material. But in every case, if an argument against
relief, which otherwise would be just, is founded upon mere delay, the validity of the defence
must be tried upon principles substantially equitable. Two circumstances, always important in
such cases, are the length of the delay and the nature of the acts done during the interval,
which might affect either party and cause the balance of justice or injustice in taking the one
course or the other, so far as it relates to the remedy.

(D). RIGHT IN REM

The right in rem is the right against the whole world , in other words it can be enforced against
all people accept the bona fide purchaser for value without notice. However if the buyer
claiming to be a bona fide purchaser without notice had notice or had any other way of get
notice of the particular interest in land he will not be bona fide purchaser for value and even
when he himself participate in fraud. this was stated in the case of katwiremu v katalikawe and
another. Where the first defendant sold the land to the plaintiff and went into possession but
the defendant did not transfer the title to the plaintiff contending that he had misplaced them
and need to make a replacement , but he did not and he went ahead and sold the same land to
the second defendant hid brother in law who did not even pay the purchase price. Court held
that he was not the bona fide purchaser for value as he had notice of the plaintiffs interest in
land cause the plaintiff was in possession and had done some improvement on the land.

NO.3 ( A) brief facts

Chege wishes to leave some money to her boyfriend steve but does not want her husband Julio
to know about it. She has two friends nancy and Tom who are very discreet to her and will
witness the will and else required.

Issue; whether chege can leave some money to her boyfriend steve without her husband
knowing about it.

Law applicable
Case law

Resolutions

Issue; whether chege can leave some money to her boyfriend without her husband knowing
of it. Yes she can, this can be done by her creating a secret trust. Secret trust is an equitable
obligation communicated to an intended trustee during the testators life time but which is
intended to attach to a gift arising under the testator’s will. In Ottaway v Norman [1972] ch
698 A testator, Harry Ottaway, by his will devised his bungalow (with fixtures, fittings and
furniture) to his housekeeper, Miss Hodges, in fee simple and gave her a legacy of £1,500. It
was alleged that Miss Hodges had verbally agreed with the testator to leave by her will the
bungalow and fittings etc., and whatever ‘money’ was left over at the time of her death to the
claimants, Mr and Mrs William Ottaway (the testator’s son and daughter- in-law). By her will,
Miss Hodges left all her property to someone else. The claimants sued Mr Norman (Miss
Hodges’ executor) for a declaration that the relevant parts of Miss Hodges’ estate were held
upon trust for the claimants. The court decided that there was clear evidence that a fully secret
trust was created only in respect of the bungalow and fittings etc., but not in respect of the
‘money’. The intended trust of the money was uncertain and void. Mr Norman as her executor
therefore held the bungalow on trust for Mr and Mrs William Ottaway. Therefore even chege
can leave the some of money to her boyfriend steve by communicating her intention to her
intend trustees and Nancy and Tom to act as her witnesses.

A testator who wishes to create a trust over his property upon his death is required to express
his intention as well as the terms of the trust in his will, he must conform to the requirement
needed to create a will, that is the need for writing , signing and witnessed by two or more
witnesses. However secret trust is an exception to this rule because in limited circumstance
where the testator has not fully complied with the necessary formalities equity will
nevertheless impose a duty upon the legatees acquiring property under the willto carry out the
wishes of the testator. This will require the legatee to hold the property upon trust for the
secret beneficiary. Therefore chege must choose the legatee whom to leave the property with
on trust of her secret boyfriend steve.

On the testators death his will becomes a public documentand the wills are consequently open
to public scruntiny, but the testator may wish to make provisions after his death, for what he
considers to be some embarrassing object, such as a mistress or an illegitimate child or any
object that he does not wish to be disclosed to the public. To avoid adverse publicity, he may
make an apparent gift by will to an intended trustee, subject to an understanding to hold the
property for the benefit of the secret beneficiary . therefore since chege does not what her
husband to know of the gift of money she wants to leave to her boyfriend ever as it may look as
so a shaming to her and the boyfriend as she was married already she can create a secret to
her trustees to hold on behalf of her secret beneficiary the boy fiend steve.

However for chege’s secret trust to be valid he must show the intention of leaving the money
to the boyfriend for the will to be valid because the court in construing the will they consider
the intention of the testator in making the will . This was stated by Lord Neuberger MR in Royal
Society for the Prevention of Cruelty to Animals v Sharp [2010] EWCA 1474.In interpreting a
contract or a will the objective of the court is to ascertain the intention of the parties or the
testator. It gives effect to the meaning of relevant words in the light of the natural and ordinary
meaning of those words, the context of any other provisions of the document, the facts known
to the parties or the testator at the time that the document was executed but ignoring
subjective evidence of the parties’ or testator’s intention.

NO.3 (B) BRIEF FACTS

Tonda leaved a will to Imran created in January 2017 one of the provision in the will states’’ my
house on block 12 plot 275 Garaga at pearl-marina to my brother menya absolutely. In October
2017, Tnda tells Imran he is to hold the house on trust for someone to be disclosed at a later
date. In june 2018 Tonda hands Imran an envelope instructing him not to open it until his
death he contends that it contained the detail of the other person. In December 2018
Tondadied, Imran opened the envelope and discovered block 12 plot 275 at pearl marina had
been left to illegitimate son.

Issue; whether Imran is to hold the plot on the trust of an illegitimate son as a secret trust.

Lawsapplicable

Case law

Resolution

Issue; whether Imran is to hold the plot on the trust of an illegitimate son as a secret trust.

A secret trust is an equitable obligation communicated to an intended trustee during the

testator’s lifetime, but which is intended to attach to a gift arising under the testator’s will.
Therefore the mere fact that testatorTonda leaved a will to Imran and communicated to himof
his wishes which were to take place after his death, this shows that the testator Tonda intended
to make a secret trust to Imran to hold the plot on behalf of his illegitimate son. .For example
In Ottaway v Norman [1972] ch 698 A testator, Harry Ottaway, by his will devised his bungalow
(with fixtures, fittings and furniture) to his housekeeper, Miss Hodges, in fee simple and gave
her a legacy of £1,500. It was alleged that Miss Hodges had verbally agreed with the testator to
leave by her will the bungalow and fittings etc., and whatever ‘money’ was left over at the time
of her death to the claimants, Mr and Mrs William Ottaway (the testator’s son and daughter- in-
law). By her will, Miss Hodges left all her property to someone else. The claimants sued Mr
Norman (Miss Hodges’ executor) for a declaration that the relevant parts of Miss Hodges’
estate were held upon trust for the claimants. The court decided that there was clear evidence
that a fully secret trust was created only in respect of the bungalow and fittings etc., but not in
respect of the ‘money’. The intended trust of the money was uncertain and void. Mr Norman as
her executor therefore held the bungalow on trust for Mr and Mrs William Ottaway. Therefore
even chege can leave the some of money to her boyfriend steve by communicating her
intention to her intend trustees and Nancy and Tom to act as her witnesses.

Therefore Imran can hold the plot on trust of the illegitimate son as the testator intended to
create a valid secret trust to Imran ,therefore the will was valid.

NO.3 ( C) . CERTAINTIES REQUIRED WHEN FORMING AN EXPRESS TRUST

It is obvious that the settlor must make his intentions clear in order to create a binding trust. He
must express himself in terms which are sufficiently certain in order that the trustees may know
what they are obliged to do, and to enable the courts, if need be, to identify the obligations
which it must enforce against the trustee. This requirement of certainty has long been regarded
as falling into three parts. First, the settlor must make it clear that his intended trustees are
under an obligation to carry out his wishes. Second, the settlor must make clear what property
is to be subject to the trust. Third, the settlor must identify who is to be the beneficiary of the
trust.

It should be stressed at the outset, however, that all these matters are ultimately a matter of
construction. Much may turn on the precise words used or the circumstances in which they are
used, but at the same time the courts are willing to accept any form of words provided it
conveys the necessary information and intention. It will also soon emerge that the ‘three
certainties’ are often closely interrelated. Once the court has determined, as a matter of
construction, what kind of gift the settlor intends to make (for example, whether it is a trust or
merely a power), it will then be possible to see whether he has identified the property and
beneficiaries with sufficient certainty for that particular kind of gift.

Intention. In Wright v Atkyns (1823) Turn & R 143, it was stated thatthe words must be
imperative’. In other words, they must make it clear that the person holding the property is
obliged to hold it for the benefit of others. Provided this is the case, however, there is no
requirement to use any particular form of words to create the obligation.
In Megarry J’s words from Re Kayford [1975] 1 All ER 604: ‘It is well settled that a trust can be
created without using the word “trust” or “confidence” or the like; the question is whether in
substance a sufficient intention to create a trust has been manifested.’

Thus, in Paul v Constance [1977] 1 All ER 195, Mr Constance held a bank deposit account in his
sole name but said to Mrs Paul, when referring to the account: ‘The money is as much yours as
it is mine.’ This was accepted by the court as sufficient evidence that he regarded himself as
holding the account as trustee for himself and Mrs Paul and accordingly she was entitled to
claim a half share from Mr Constance’s estate.

If, however, the words are indicative of some other kind of intention, such as an intention to
make a gift, then this will not be construed as a trust.

This is demonstrated by the facts of Jones v Lock (1865) LR 1 Ch App 25. Jones had placed a
cheque, payable to himself, in the hands of his baby son, saying: ‘I give this to baby, it is for
himself, and I am going to put it away for him.’ He then placed the cheque in a safe. Jones died
six days later. The question then arose as to whether the cheque belonged to the baby or
formed part of Jones’s estate. This turned on whether, by his statement and actions, he had
intended to make a gift of the cheque to the child or whether he intended to declare himself
trustee of it for the child. Lord Cranworth concluded that Jones’s intention could only have
been to make a gift of the cheque. Such a gift was invalid as the law required the cheque to be
endorsed, which Jones had not done. It could not be construed as a declaration of trust. An
invalid gift cannot be construed as a valid declaration of trust.

A further difficulty arises where the settlor uses ‘precatory’ words, that is expressions of hope
or desire that the donee of the property will use it in a certain way. Historically, such words
were regarded as sufficient to create a trust obligation, but since Lambe v Eames (1871) 6 Ch
App 597, the courts have taken a stricter approach. In that case the testator left his estate to
his widow for her to dispose of ‘in any way she may think best, for the benefit of herself and the
family’. This was held to be ineffective to create a trust. the widow took absolutely. Thereafter,
such expressions of hope or confidence may or may not impose a trust: it is as always a matter
of construction, taking all the circumstances into account. There is no special magic in the use
of any particular phrase

Subject matter The settlor must identify the property which he intends to be the subject matter
of the trust. Once again, the words must have a clear meaning that the trustees, and if
necessary the court, can interpret. Thus, a phrase such as ‘the bulk of my estate’, used in
Palmer v Simmonds (1854) 2 Drew 221, will not identify the subject matter clearly since it may
mean different things to different people. In Re Goldcorp Exchange Ltd, , the Privy Council
clearly regarded the fact that specific property had not been identified in the contract as fatal
both to the argument that property in the goods had passed in law, and to the argument that
the vendor was holding such property on trust. As the Privy Council stated, common sense
dictates that the buyer cannot acquire title until it is known to what goods the title relates.

In Sprange v Barnard (1789) 29 ER 320, a particular problem arose in that the testatrix gave
certain stock to her husband, directing that ‘the remaining part of what is left that he does not
want for his own wants’ he should bequeath in his will in certain specified ways. It was held
that the husband took the stock absolutely. It was unclear what was bound by the trust
because the ‘remaining part’, if any, would

In Re Knapton [1941] 2 All ER 573, the testatrix provided for a number of houses that she
owned to be distributed among several relatives and friends, but did not specify either who was
to receive which house or how any choice was to be exercised. The court held that the
beneficiaries had the right to choose a house in the order in which they were listed in the will.
Among the beneficiaries were ‘my nephews and nieces’, not listed in any particular order. Here
Simonds J adopted a civil law principle and held that the order of choosing was to be
determined by lot, if the nephews and nieces could not themselves agree on an order.

This approach would not, of course, save a case like Boyce v Boyce because the testator had
there specified a method of choice, which had become impossible.

Objects. The final element of the requirement of certainty is that the settlor shall have
identified the persons who are to benefit under the trust. A number of different tests may
apply depending upon the nature of the trustees’ powers and duties. Here it will be sufficient to
consider the rule in relation to ‘fixed’ trusts, i.e. trusts where the trustees are under an
obligation to distribute to named persons or to all members of a specified group.

To carry out this obligation, trustees must clearly know who all the beneficiaries are. Where the
beneficiaries are named in the trust this will present no problem. If they are identified as
members of a class (for example, ‘to all my children in equal shares’), then the class must be
clearly defined so that the trustees know who each and every member is. This is frequently
referred to as the ‘list’ principle, the trustees must be able to draw up a list of all the
beneficiaries. Thus, in Re Endacott [1959] 3 All ER 562, Lord Evershed MR stated: ‘no principle
perhaps has greater sanction or authority behind it than the general proposition that trust by
English law ... in order to be effective, must have ascertained or ascertainable beneficiaries.’
However, Re Eden [1957] 2 All ER 430 makes clear that the question is not whether all potential
beneficiaries have been ascertained, but whether the evidence demonstrates beyond
peradventure that it is impossible to ascertain the range of objects at that date. In other words,
the crucial word is ascertainable. It is also clear that the fact that a large portion of the fund
might have to be expended in tracing them is not of itself a ground for saying that
ascertainment is impossible, though it would be unfortunate if the fund had to be spent in this
way.

Question1. With the aid of relevant cases distinguish trusts from other forms of legal
relations.
Trusteeship involves onerous obligations, where a donor retains no responsibility for the
property once the gift has been made. Difficulty has been found in providing a comprehensive
definition of a trust but various authors have made attempts to define the term trust.
A trust is a relationship which subsists when a person called the trustee is compelled by a court
of Equity to hold property, whether real or personal, and whether by legal or equitable title for
the benefit of some persons, of whom the trustee himself may be one and who are called
cestuique trust or beneficiaries, or for some object permitted by law; in such a way that the
real benefit of the property accrues not to the trustee, as such, but to the beneficiaries or other
objects of the trust.
Definition in Hague Convention on Law of Trusts:
This has been incorporated into English Law by the UK Recognition of Trusts Act 1987 and
under Article 2 of that convention, a trust is defined as follows:-
For the purpose of this convention, the word ‘trust’ refers to the legal relationships created –
inter vivos or on death – by a person, the settlor, when assets have been placed under the
control of a trustee for the benefit of a beneficiary or for a specified purpose.
A trust has the following characteristics—
(a) the assets constitute a separate fund and are not part of the trustee’s own estate;
(b) title to the trust assets stands in the name of the trustee or in the name of another person
on behalf of the trustee;
(c) The trustee has the power and duty, in respect of which he is accountable, to manage,
employ or dispose of the assets in accordance with the terms of the trust and the special duties
imposed upon him by law.
A trust can be distinguished from other legal concepts such as bailment, agency, contract,
debts, conditions and charges, powers.
Trust & Agency
Agency is a contractual arrangement express or implied, written or verbal whereby one person
may act on behalf of another and bind that other as if he or she acted personally. An agency
arises where a person called the agent has expressed or implied authority to act on behalf of
another called the principal and he consents to do so. The agent is normally treated as an
accounting fiduciary party and he binds the principal vis-à-vis third parties. Royal Brunei
Airlines v Tan [1995] 2 AC 378 where a travel agent was appointed to sell tickets for the
plaintiff airline on condition that all monies received by the agent were to be held for the airline
on trust.
There are some similarities between trustees and agents;
-The relationship of trustee and beneficiary is fiduciary in nature while that of principle and
agent is normally fiduciary but not inevitably so.
-Both trustees and agents must act personally and should not delegate their duties
-Neither of them may make un-authorised profits from their office
There are differences however
1. The trustee in exercise of his office will contract as principal and cannot bind the
beneficiaries unless they have constituted him both trustee and agent but an agent binds his
principal so long as he acts on the principal’s authority or on the apparent or ostensible
authority that he is deemed to have.
2. Although the trustee has a right of re-coup an indemnity against the beneficiaries for any
properly incurred expenses and creditors may subrogate those rights in certain circumstances
there is therefore no direct contractual link between the beneficiary and 3rd parties
comparable to the link between the principal and 3rd parties
3. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there is no contract to the contrary or the contract permits him to do so. On the
other hand a trust cannot be revoked unless the trust instrument reserves the power of
revocation. Mallot v. Wilson [1930] 2 Ch. 494.
However the beneficiaries if suijuris unanimous and together entitled may demand that the
trust property be distributed and consequently that the trust be brought to an end.
4. Normally the principal in agency gives binding directions to his agent whereas beneficiaries
cannot control the exercise of the trustee’s discretion. Refer to Re Brockbank [1948]Ch. 206;
5. The central distinction between agency and trust is in relation to property. An agent does
not per se hold any property for his principal. Many agents do not obtain items of property at
all and those who do so acquire only possession but not title. On the other hand there can be
no trust unless title to the trust property vests in the trustee or in another party on behalf of
the trustee.
Trust and agency overlap
Note that trust and agency may overlap. A trust may be created under which the trustee
undertakes a contractual obligation to act on behalf of the beneficiary e.g. the vesting of
company shares in a nominee for a fee. Conversely an agent may become a trustee if for
instance he acquires title to property to be held for the benefit of his principal.
It has been said that an agent becomes a trustee for his principal if he obtains title to the
property for the principal’s benefit and on the face of if this is a clear proposition. However this
is not easy to gauge in practice especially if what is involved is a mere chattel or money whose
title may be transferred by mere delivery of possession with an intention to transfer it. The
question was tested in Cohen v. Cohen [1929]1 CLR in which a wife had sued her estranged
husband for several sums of money and the husband in defence pleaded the statute of
limitations her claims were time barred under the statutes of the Limitations Act. The defence
would succeed unless the claims arose under a trust or had been acknowledged within the
limitation period applicable to personal claims. The claims were as follows: 9000 DM being
money and the sale price of chattels sold on her behalf by an agent in Germany. In order to
overcome difficulties which attended transfer of funds from Germany to England where she
lived, the wife had arranged for her husband to collect her 9000 marks and use it for purchase
of goods in Germany for his own business, it being agreed that he would pay her out of his own
funds in England.
The second claim was for £123 pounds sterling being the sale price of surplus furniture of the
wife sold after the marriage, the husband having retained this amount.
The third claim was as to £80 pounds sterling being settlement of an insurance claim arising
from the loss of the wife’s jewellery again the husband having retained this amount.
The court held that she succeeded in all the claims, the court finding that the husband stood in
a fiduciary relationship with regard to the wife’s property in the circumstances and was
therefore a trustee for her benefit. In arriving at this decision the court followed the decision in
Burdick v. Garrick 9000 DM (1870) L.R. 5 C.L 233 where Lord Justice Giffard stated as follows:
“in respect of attorneys who had been authorised and buy property and had attempted to set
up the statute of limitations as a defence “there was a very special power of attorney under
which the agents were authorised to receive and invest to buy real estate otherwise to deal
with the property but under no circumstances could the money be called theirs.” Under no
circumstances had they the right to apply the money to their own use or to keep it otherwise
than to a distinct and separate account throughout the whole of the time that this agency
lasted, the money was the money of the principal and not in any sense theirs. Under these
circumstances, I have no hesitation in saying that there was in the plainest possible terms a
direct trust created. I do not hesitate to say that where the duty of persons is to receive
property and to hold it for another and to keep it until it is called for, they cannot discharge
themselves from that trust by pleading lapse of time.”
A trust and a debt
The distinction between trust and debt is more difficult. The traditional view is that the
relationship between trustee and beneficiary is not one of debtor and creditor. In other words,
the trustee does not owe the value of the rights he holds to the beneficiaries. Take a simple
example. If I lend you £100, your obligation to repay me £100 will not be taken away if a bolt of
lightning immediately destroys the very banknotes I gave you. But if you hold £100 on trust for
me, then destruction of the subject-matter of the trust by lightning (so long as it was without
fault on your part) will mean that your obligations to me are at an end; it is not possible for me
to bring an action against you, claiming that you owe me £100 Morley v Morley (1678) 2 CasCh
2). Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 created confusion in this
area, holding that a borrower of money can be both a debtor and trustee in respect of the same
sum. That decision is, however, extremely controversial, and has been recently reviewed in
Twinsectrav Yardley [2002] UKHL 12 But though, under the traditional view enunciated above,
a trustee will not owe the value of the right held on trust, this is not to say that a debt cannot
form the subject-matter of a trust. When we talk of a trust of a bank account, we mean nothing
more than that the creditor’s right to sue is held on trust.
A debt may or may not be contractual and the duty of the debtor is to repay money to the
creditor. In contrast, the trust does not need to be contractual and the duty of a trustee is to
hold trust property for the beneficiary.
The obligation of a debtor is personal but a trust is proprietary.
A trustee should where possible use trust property in income bearing investment and account
to the beneficiary for income. In the case of a debtor, such an obligation is unnecessary except
in so far as provided for in agreements express or implied. Potters v loppert (1973) CH. 399.
Furthermore if money borrowed is stolen from the borrower, he is still under obligation to
repay it. However within trusts, a trustee is not liable for the loss which is not attributed to his
negligence. Morley v Morley 22 ER 817 (1678) 2 CH.D.2
Further the words of an instrument may be employed in such a manner as to create both
personal and trust obligation thereby creating a situation where a debt and trust exist.
In Barclays Bank ltd v quitsclose investment ltd 1970 AC 567
In the above case Rolls Royce Razor ltd was highly indebted to Barclays bank and was in need of
209,000 pounds to pay dividends which had been declared on its shares. The sum was
borrowed from Quitsclose under an arrangement whereby the loan was to be used for that
purpose. The money paid into a separate account at Barclays Bank which had notice of the
nature of the arrangement. Before dividends were paid, Rolls Razor went into liquidation. The
issue was whether the money on the account was owned by the beneficiary Rolls Razor, in
which case Barclays Bank claimed to set it off against the overdraft or whether Rolls Razor had
received the money as trustee and still held it in trust for Quitsclose. The House of Lords
unanimously held that the money had been received in trust to be applied for payment of
dividends that purpose having failed, the money was held in trust for Quitclose.
The fact that the transaction was a loan, recoverable by an action at law did not exclude the
implication of a trust. The legal and equitable rights of remedy could coexist; the bank having
notice of the trust could not retain the money against Quitclose.

A TRUST AND BAILMENT

Bailment refers to a relationship which arises where an owner of property gives permission to
another person to possess it. A bailment is a delivery of personal chattels to a bailee subject to
a condition that they be returned to the Bailor or be dealt with as the Bailor directs when the
purpose of the bailment has been carried out. There is an element of delivery in bailment.
Read part 9 of the contract Act No 7 of 2010.
Suppose that you are going abroad for a year. You may have a painting which you do not want
to leave in the house. You therefore hand it to a friend to look after during your absence. This
will probably amount to a bailment, though it could be a trust. Everything will depend on the
location of your title, your right to exclusive possession, of the painting.
If you vested it in a friend, then they will be a trustee of that right for you. If however, you kept
your right in yourself, handing over only the possession of the painting, the transactions will be
one of bailment, not trust. The difference between the two is crucial for a number of reasons.
One is this. If, in breach of instructions, your friend sold his title to the painting to an innocent
purchaser, it will matter a great deal whether you created a bailment or a trust. If your friend
was a bailee, then the purchaser will not acquire a title good against you and you will be able to
recover the painting’s value from the purchaser in an action in the tort of conversion, no matter
how innocent the purchaser may have been.
The basic rule is nemodat quod habet(no one gives what he does not have), and since your
friend did not have your title to the painting, he could not transfer it to the purchaser.
But if your friend was a trustee, the position of the purchaser would be different; for now your
friend does have the right in question and so is capable of passing it on to third parties. You, of
course, have rights under the trust, but such rights are destroyed when the subject-matter of
the trust comes into the hands of an innocent purchaser of value. It suffices to note that
bailment is governed by common law. The position of a bailee is similar to that of a trustee in
the sense that both are ‘entrusted’ with another’s property. The Trustee’s duty to take care of
trust property is roughly comparable with the duty of a gratuitous bailee although generally the
trustee’s duties are more onerous. There are however differences
Bailment differs from a trust in the following ways:
(a) A bailee obtains only possession and what is referred to as special property in the goods
property while a trustee takes title to the trust property. As a consequence a bailee cannot
except in a sale in market overt by virtue of estoppel or under special legislations such as the
Factors Acts pass a title to the Chattels valid against the bailor whereas a bona fide purchaser
who purchases the legal estate from a Trustee for value without notice of the trust acquires a
good title;
(b) Bailment is a common law notion worked out in proceedings for common law relief such
as actions for conversion, detinue or breach of contract whereas the trust relationship is
purely equitable. In conversion, initial possession is lawful but later converts the goods
contrary to what the owner intended. Detinue is where the defendant is unlawfully withholding
the plaintiff’s goods with no good reason.
(c) Bailment applies only to personal chattels that are capable of delivery whereas a trust may
arise in respect of real or personal property and whether tangible or intangible.
(d) A bailment is enforced by the bailor who is a party to the arrangement while generally the
trust is enforced by the beneficiary who is not a party to the trust instrument.
-In bailment, there is no transfer of property from the bailer to the bailee, i.e from A to B
-Bailment duties are dependent on rules of common law and not equity.
-The duties of trustees under a trust are minimal in character compared to the duties that exist
in bailment.
-Bailment is restricted to chattels but a trust may exist for all types of property.
-Under bailment, the bailer can lose his legal ownership of the bailed property through any of
the ways by which legal owners lose rights; for example, Estoppel, however under a trust, the
beneficiary’s interest/title can only be defeated by transfer of legal title to a bonafide purchaser
for value without notice of the trust. Pilcher V Rawlins (1872) LR.7 Ch.APP. 259
Contracts
There is no clean division between contract and trust, though some judges have attempted to
draw one (e.g. as in re Cook [1965] Ch. 902). Indeed, there can be no hard and fast line
between contract and trust because contract is a source of rights while trust is a way of holding
rights. Indeed, many of the rights held in trust are born of contract. A simple example will
illustrate. Suppose I open a bank account and pay in £1,000. I have a right born of contract that
the bank repays me £1,000 on demand. If I then declare that I hold that right on trust for my
children, it is impossible to say that this is now a case of trust and not contract; in truth, it is
both.
A contract is a common law personal obligation resulting from an agreement between parties.
On the other hand, a trust is an equitable relation which can rise independently of an
agreement. However, there are situations when a distinction between the two is hard to draw,
for example;
Settlement and covenants to settle
Where property is vested in trustees on a settlement, it is held upon a trust on the settlement.
However if the property has not yet been transferred to the trustees but it is simply subject to a
consent to settle, the beneficiaries will only be able to enforce the consent if they have given
consideration. This is based on the principle that “equity will not assist a volunteer”
Power of Appointment
· Appointment. In trust law, "appointment" often has its everyday meaning. It is common to
talk of "the appointment of a trustee", for example. However, "appointment" also has a
technical trust law meaning, either:
o the act of appointing (i.e. giving) an asset from the trust to a beneficiary (usually where there
is some choice in the matter—such as in a discretionary trust); or
o the name of the document which gives effect to the appointment.
The trustee's right to do this, where it exists, is called a power of appointment. Sometimes, a
power of appointment is given to someone other than the trustee, such as the settlor, the
protector, or a beneficiary.
This refers to a power that is conferred upon a done to dispose of the donor’s property by
nominating and selecting one or more third-parties to receive it. The property may consist of
tangible items like cars, boats, house hold items, or it may consist of an intangible interest in
property such as the right to receive dividend income from stocks.
The distinction between trusts and powers of appointment is fundamental. A trustee must do
as the settler directs whereas powers of appointment are discretionary.
Further, the beneficiaries under a trust are owners in equity of the trust property. However, the
objects of powers of appointments are nothing unless and until the donor of the power makes an
appointment in favour of the donee. Vesty v IRC (1980) AC 1148

QUESTION 4,

(a) Discuss the exceptions to the rule that equity wiil not assist a volunteer in respect of any
two of the following
(i) Donatio Mortis causa
(ii) Proprietary estoppels
(iii) The rule in strong vs bird (1874) L.R.18 Eq.315.
(b) Discuss the remedies available to a beneficiary for breach of trust.

Answers

Avolunteer is defined in equity as one has not offered consideration for a benefit they have
received or expect to receive. For example , if a person a expects from past conversations and
friendship to receive property under any will of person B, but person B dies before writing this
into their will, person A, having not made any contribution to person b, will not be able to seek
equity’s aid . In essence, equity favors a purchaser for value without notice

The principle that “equity will not assist a volunteer “captures the notion that where a person
received a benefit for no consideration, equity will not impose an obligation in order to ensure
the benefit is received. This leads, in the context of gift, to the well accepted principle that
“equity will not perfect an imperfect gift”. On its face, this seems to indicate a requirement that
all three elements of a valid gift be strictly met.

This was well elucidated in the case of Milroy vs. lord, a settler exhibited a voluntary deed
purporting to transfer shares in the bank of Louisiana to lord to be held in trust for the plaintiff.
The shares however could only be transferred by registration of the name of the transferee in the
books of the bank. Lord held the power of attorney on behalf of the settler and it would have
enabled him to take the necessary steps obtain registration, however, this has not been it was held
that there was no clarity to benefit the intended beneficiaries. Turner L J Stated that, in ordered
to render voluntary settlement valid and actual effect the settler must have done everything
which according to the nature of the property comprised in settlement was necessary to transfer
the property and to render the settlement binding upon him.

However, case law has provided exceptions to the sometimes onerous third requirement that gifts
be delivered to the recipient of the gift. Thus this maxim should also be read or applied
concurrently the equitable maxim of “equity will not strive officiously to defeat a gift”

DonatiomartisCausa

This is the gift made intervivos which is conditional upon and which takes effect upon the death
of the donor. It is distinguished from a normal intervolves gift whose title immediately passes to
the transferees

.To constitute a donation mortis causa, there are certain requirements which must be fulfilled as
stated by lord Russell C.J in Cain Vs Moon and these include;

 the gift must have been in contemplation though not necessarily in expectation of death
 The subject matter of the gift must have been delivered to the donee.
 The gift must have been made under such circumstances as to show that the property is
to revert to the donor if he should recover.

In wilkesvsAllington , the donor was suffering from an incurable disease. He made a gift
knowing that he did not have long time to live .he died two month later of pneumonia. It was
held that the gift was valid.

Re Weston, it was held that where a dying person could have handed over to his spouse his post
office saving book his action was sufficient to constitute an effective Donatio Mortis causa of the
Balance in the book.

Equitable estoppels,

There is situations were equity prevents an owner of land who made an imperfect gift of some
estate or interest in it from asserting his title against the donee. The donee equity is said to exist
where he incurs expenditure in respect of land in the mistaken belief that he has or will acquire
an interest in it and the owner knowing of the mistake stood by allowed the expenditure to be
incurred. this is at times applicable to contracts between parties where some formalities have
been complied with, for instance where the registered proprietor vends his land but delays to
issue transfer form to the purchaser, here the vendor is prevented from going against his promise
its immaterial whether the conveyance had not be formally completed or registered, it’s basically
a sword no t a cause of action as observed in the case of central London property trust ltd v
high trees

b) Remedies to a beneficiary upon breach of a trust

A Trust is a relationship which arises where proprietary interests are vested in persons or a
person known as trustees for the benefit of persons or person known as the beneficiaries.

As a result of the equitable nature of the trust, several remedies are available against the trustee
and third parties for breach of trusts, some of which have been examined above .others will
however it shall be briefly outlined as fallows.

Injunction and receivership the court may make an order of injunction to restrain a trustee
from performing his duties in respect of the trust property, if the trust property is endangered and
receiver may b e appointed in respect of the same this was stated in Fletcher v Fletcher

The Remedy of tracing,

Equity had developed a more realistic approach to tracing as opposed to the common law .the
fact that the subject matter of tracing did not exist in its original form, but subsists in a
substituted form, was not a bar to the process of tracing in equity. Equity had conceived the
notion that once property was identifiable, recognition of the claimant’s right could be given by
attaching the order; to specific [property or by charging the asset for the amount of the claim. But
this can be best examined by referring to the concept of unmixedfunds and mixed funds

Unmixed fund

Equity followed the common law and declared that where the property had been transferred in
breach of trust but exists in its original form in the hands of the defendant the claimant will be
entitled to follow the property and an order to give effect to his proprietary interest. This right
does not extend against a defendant who is a bonafide purchaser of the legal estate for value
without notice

A beneficiary may institute such calm in equity. However, where the trust property has been
transformed into property of a different form by the trustees and has been kept separate and
distinct from the trustee’s resources, the beneficiary may trace his interest and take the proceeds.
If the proceeds of sale have been used to acquire further property, the benefit may elect;

(i) To take the property this has been acquired wholly with the trust property; or (II) to
charge the property for the amount belonging to the trust. , the modern doctrine of Equity as
regards property disposed of by persons in a fiduciary position is a very clear and well
established doctrine . There is no distinction of the property so far as the right of the beneficial
owner to follow the proceeds. You can take the proceeds of the sale if you can identify them.

But it very often happens that you cannot identify the proceeds. The proceeds may have been
invested together with money belonging to the person standing in a fiduciary position, in a
purchase. He may have bought land with it. In that case , according to the now well –
established doctrine of equity, the beneficial owner has a fright to elect either to take the
property purchased ,or to hold it as security for the amount of the purchase money , or , as we
generally express it , he is entitled at his election either to take the property or to have a charge
on the property for the amount of the trust money

Thus in BanqueBelgepour Vhambfrouck (1921) 1 KB321 The defendant drew cheques from
his employers bank account which were paid into his own account. Sums were drawn out of this
account and paid into the account of his mistress, mille spanoghe. A claim to trace and recover
the sum from her account succeeded.

Mixed fund

Where the trustee or fiduciary mixed his funds with that of the beneficiary or has purchased
further property with the mixed fund, the beneficiary losses his right to elect to take the property
acquired. The reason is that the property would not have been bought with the beneficiary’s
money pure and simple but with the mixed fund. However in the exercise of the exclusive
jurisdiction of equity, the beneficiary would be entitled to have the property charge for the
amount trust money. , Jessel Mr. in Hallet Re Estate (1880) observed that; where the trustee has
mixed the money with his own the beneficiary can no longer elect to take the property because it
is no longer bought with the trust money but with a mixed fund. He is however, still entailed to
charge on the property purchased for the amount of the trust money laid out in the purchase.

QUESTION 6

(1) Write short notes on the following demonstrating their continued relevance to
practice in Uganda.
(i) The judicature Act of 1873 -75
(ii) Imputed notice
(iii) The maxim “delay defeats equity
(iv) Rights in rem

Judicature Acts 1873 - 1875

The recommendations of the Royal commission were enacted as the judicature Acts
1873 to1875. These Acts abolished all the existing superior courts and in their place set
up a supreme me court of appeal the High court of justice was consist of three divisions
the king “s bench Division.
The judicature Acts effectively abolished the dual administration of justice as between
the common law courts and the chancery court. secondly the high court s of justice e
were given power to administer both equity and law concurrently together .Third , all,
claims , obligations, and defenses were recognized and enforced by all the three divisions
of the high court of justice. Forth, the common injunction exercised by the chancery court
was abolished
It’s prudent to examine the impact of Section 25 of the judicature Act of 1873, which clearly
lays down the operating mechanism for common law and equity to function. it is specific its
meaning that , while both the common law as well as equity are ideally to complement each
other in the interests of justice , in the event of a situation where in a conflict between the two
that the principles of equity must prevail . its impact on Uganda can be inferred from the
reception clause of the 1902 0rders in council and also the judicature Act cap 13 under
section S14 (2) which states that the rules of equity and the rules of common law shall be
administered concurrently and where there is a conflict or variance between the rules of equity
and the rules of common law with reference to the same subject the rules of equity shall prevail.
Also under Article 126(2) e of the 1995 constitution it’s stipulated that substantive justice shall
be administered without undue regard to technicalities’

thus in the case of Stephen mambos v Uganda Revenue Authority (1995) , the supreme court
of Uganda held that a memorandum of appeal which was filled out of time could not be rejected
because the a appellants could not file it before the 60 days period required for filing the
memorandum of appeal had elapsed . It’s against this background that equity developed with
proper justification.

Imputed notice

This is a type of notice which is neither actual nor constructive may be imputed to the buyer
through actual notice to the agent. its established in agency law that notice to an agent is notice
to principal in this regard, a buyer who instructed his agent to buy property at an auction sale was
taken to affected by notice of an equity which came to his notice notice during the transaction. In
sejjaknalima v rebecccaMusoke, that Musoke and co advocates who were acting as the her
agents had known of alleged fraud concerning the disputed. Also in Fredrick zabwe v orient bank
and another 2006, the same point was considered

Delay defeats equity

A court of equity has always refused its aid to stale demands, where a party has slept on his right
and acquiesced for a great length of time. Nothing can call forth this court into activity, but
conscience, good faith and reasonable diligence; where these want the court is passive, doe
nothing. Delay which is sufficient to prevent a party from obtaining an equitable remedy is
technically called “laches”

The essence of the doctrine of laches is that an equitable remedy will not be given if the
applicant has unduly delayed in bringing the action

In the case of john otiamong vs. Mohammed olinga (1985] HCB 86, odoki J. held laches is an
equitable doctrine. It is a defense to enforce equitable rights. It means unreasonable delay in
asserting or enforcing a right, for equity aids the vigilant and not the indolent.

This maxim however has no application to cases to which the statutes of limitation apply either
expressly or perhaps, by analogy. There are thus three cases to consider, and these include ,
equitable claims to which the statute applies expressly, equitable claims to which to which the
statute is applied by analogy and equitable claims to which no statute applies and which are
therefore covered by the ordinary rules of laches.

Rights in rem, basically these are rights which are enforced or enforceable against the whole
world or public and in most cases the rights in rem accrue on legal interests holders for instance
the holder of certificate of title under the RTA has rights in rem but any person with equitable
interest in any property has rights in personam and they are enforced against individual to
individual basis.

QUESTION 5,

The Earl of oxford’s case epitomized the conflict between the common law and equity and
consequently seeing the steady decline of the applicability of both common law and equity in
modern legal system per Llb ii student. This is a fair assessment of the evolution of equity and its
continued applicability in contemporary Uganda?

The relationship between common law and equity.

This can be premised on the conflicts that arose in the earl of oxford’s case 1615

In this case , the messuages and garden of Christ church were sold by the master and fellows of
magdalane college to queen in 1574,then the queen sold to Benedict spinola in 1575 and spinola
sold to oxford in 1580.,but the statute of Ecclesiastical leases Act 1571 provided that
conveyances of estates by the masters ,fellows ,any college ,dean to any one for anything more
than a term of 21years or three lives , shall be void but oxford had developed the place and its
value had increased to 10000 pounds later the new master of the college sought evicting the
tenants and Mr. oxford inclusive , the common law judge , Mr. coke who was the chief justice
held that in light with the position of the law , the conveyance was void. Later oxford [Henry de
vere ] also brought this to the chancery , and lord Elsmere contended that equity ought to join
hands in moderating and restraining hardships by the law , brought analogies that he that builds a
house ought to dwell in it, an d he that plants a vine yard ought to gather the grapes thus it
wicked for the earl of oxford not enjoy their fruits. He issued a common injunction prohibiting
the enforcement of the chief justice , this was contentious issue which stimulated conflicts
between the chancery and common law judges , the chief justice contended that common law
had powers to issue a writ of prohibition preventing the effectiveness of chancery decisions later
the matter was referred to the king [James 1] and in consultation with Attorney Francis Bacon
decided in favor of equity thus from that date equity began to prevail over common law.

Effects of king James‘s decision;

The chancery courts become more extensive and attracted a lot of litigants as a result court
became overburdened due to poor staffing and inefficient procedure in administering justice.

Second, officials of the court became corrupt and incompetent and the course of justice was there
by perverted due to delays this called for reforms within the chancery jurisdictions a d
procedures ,jurisdictions’ of operation between common law courts and outdated procedure of
equity were questions which n needed an answer

Reforms over this; 1, common law courts started applying rules of equity and in cases of conflict
equity prevailed

2, the enactment of common law procedure Acts,1852,1854 and 1860, which officially gave
common law courts powers to exercise certain jurisdictions which were ordinarily reserved for
chancery .i.e. asking for discovery of document, interrogatories injunctions an d other equitable
reliefs and also courts of chancery adopted some practices of common law , like taking g
evidence in open courts which wasn’t the case , handling common law cases in case they came to
chancery and also the lord cairns Act of 1858 which allowed award of damages ,injunction and
specific performance in contracts and torts

It’s worth noting that the above Acts didn’t achieve a lot because the issue of dual system of
recommendations made by the royal commission the judicature Acts of 1873-75 were enacted
recommending the complete fusion of administration of justice, this Act abolished the old court
system and replaced it with the a new High court of justice which was vested with all of the
jurisdiction previously exercised by the separate courts which included administering both equity
and law concurrently or together, the common injunction exercised by the chancery courts was
abolished since it was no longer necessary

How did courts try to give life or enforce section 25 of the judicature Act of 1873-75

Liability of An executor for Assets

Prior to the judicature Act ,1873 -75, the common law rule was that executor was liable for the
loss of his testators assets once he took possession of them .it was immaterial whether the loss
was accidental or arose from willful default. However, in equity an executor could only be liable
for the loss of the testator’s assets if there was willful default on his or her part .these conflicting
positions at law and equity were considered in job v job jessel MR while applying section
25[11] of the judicature Act 1873, stated the rule at law equity now is that an executor or
administrator is in the position of a gratuitous bailee who cannot be charged with the loss of his
testator’s assets without willful default. In the essence the rule of equity prevailed over the
common law rule by virtue of the judicature Act1873.
Agreement for a lease , this was discussed in the case of wash v Lonsdale ,in this case a land
lord agreed with a tenant to acquire a lease for 7years and they agreed that some of the monies
will be paid in advance , but the law required that such a type of lease to registered or be done by
a deed but this was not done by the plaintiff , the plaintiff distressed the defendant’s property
for arrears the defendant contended that the plaintiff couldn’t acquire a remedy at law because
they transaction was not done has the law requires but the courts of chancery contented that an
agreement of lease at equity is as good as lease thus equity regards as done as ought to be done.

Variation of Deed

This was discussed in the case of Berry v Berry, under a deed of separation, a husband
covenanted to pay his wife an allowance. Later the parties concluded a written a agreement
which was not under seal, reducing the allowance .the wife sued the husband on the original deed
claiming arrears of the allowance agreed upon the action failed while accepting the plaintiffs
contention that at common law a covenant in a deed could only be varied by another deed in
equity a simple contract varying a deed is a good defense to an action based on the deed
furthermore in view of the judicature Act section 25[11] the equitable principle prevailed.

Joint Undertaking, at common law if two or more people became sureties of a debt and one of
them became bankrupt, the solvent sureties were not liable for the bankrupt surety’s share of the
liability for the debt however the position at equity is that solvent sureties are liable for the share
of insolvent surety in addition to their own share of liability, this was considered in Lowe and
son v Dixon and sons makes it clear that sureties remain liable to the extent of the full
amount .thus if one of the them become insolvent , the other or others will be liable for his own
share.

But it’s prudent to note that it’s not a fair assessment to assert that there is a decline in
application of common law and equity, because the application is of these laws is inevitable
provided its procuring justice and that why in the interest of justice these laws part each other.
There relevance to Uganda is very substantial and paramount in the interest of justice this can be
observed from several cases for instance , in Stephen mabosi vs. Uganda revenue authority ,
it was held that a memorandum of appeal which was filed out of time couldn’t be rejected
because the appellant couldn’t file it before obtaining the official record of proceedings from the
high court which were released after 60 days period required for filling the memorandum of
appeal had elapsed but in the inertest of justice some formalities of the law shall be waived.

Question 3 a
Brief facts

Chege wants to leave a sum a substantial sum for her long term boyfriend steve but doesn’t wish
the husband to know about it and she also has two friends nacy and tom who will witness her
will.

Issues

Whether chege can leave a substantial sum to her boyfriend steve?

Resolution

A trust is an equitable obligation binding a person called a trustee to deal with property over
which he has control which is called the trust property for the benefit of persons who are called
beneficiaries or( cestuisque trust) of whom he may himself be one and any one of whom may
enforce the obligation.253

The interest of beneficiary are normally described in the instrument creating the trust, however
these may be implied or imposed by law. it can also be noted that the beneficiary interest should
be proprietary meaning it can be sold or bought. And it should also be emphasized that for trust
to be created there must certainty of intention, object and the subject matter.

A trustee have the legal ownership carrying with it responsibilities and burdens whereas
beneficiary would have the advantage of any ownership. An executor would similarly have the
burdens and responsibilities and could be expected to distribute property in accordance with the
will.

The whole scenario of chege when I analyze it concerns a gift. A gift results in a donor
transferring rights in the relevant property directly to the done for no valuable consideration .And
for a gift to be effective the owner should have the intention. Chege has the intention to transfer
money to steve, and it should be noted that a promise to make a gift in the future is unforeseeable
and legally meaningless even if the promise is accompanied by immediate transfer of the
physical property in question.

The gift should also be delivered to the donee for it to be effected. If the gift is of a type that can't
be delivered in conventional, it can be delivered in a constructive way and the donee must accept

253
Underhill and D Hayton, Law of Trusts and Trustees 16 th edn,Butterworths,2002
the gift in order for the property transfer to take place,however because people accept gifts one
will be presumed so long as the done does not expressly reject.

A gift can be inter vivos ,and this per our case for today, Inter vivos is a legal term referring to
transfer of gift made during one's life time as opposed to testamentary that is transfer of gift takes
place after the death .

A trust can thus be created inter vivos or by will,this is obviously that chege should apply inter
vivos trust. There two types of inter vivos trust that is the settler may transfer the property to the
trustees and declare that those trustees will hold the property on trust for steve. The settlor may
declare himself as trustee holding the property on trust for others.

However as per cheges case, the best type to use is that chege may transfer the money to her
friends that is Tom and Nancy, and they be trustees for Steve .That is they hold it for Steve since
Chege does not want her husband Julio to know about this. Therefore the gift will not be quested
in the will.

But if it was not for chege not hiding it from the Husband she could also declare herself as
trustee holding property for others, or include it in the will just and given after her death.

Question3(b)

Brief facts

Tonda leaves a will to Imran created in june 2017. One of the provisions in the will states, “my
house on Block 12 plot 275, Garuga at pearl marina, to my brother menyaabsolutely”in October
2017, tonda tells Imram that he holds the house for someone which was later discovered that
house had been left to an illegitimate son.

Issues

Whether there was a trust created?

Resolution
A trust can be defined as an equitable obligation binding a person called a trustee to deal with
property over which he has control which is called the trust property for the benefit of persons
who are called beneficiaries or( cestuisque trust) of whom he may himself be one and any one of
whom may enforce the obligation.

The tests to prove that a trust was created were laid in the case of knight v knight (supra) and
thes are certainity of the intention, certainity of the subject and certainity of the object. Courts
will look at these words to ascertain whether the testator had the intention of creating a trust. The
requirement here is that the obligations of trusteeship are intended in respect of the property.

This issue is determined by reference to all the circumstances of the case thus oral and written
statements as well as the conduct of the parties are construed by the courts to determine whether
a trust relationship has been created.

Intention is a question of fact and degree, it subjected to both mixed subjective and objective test.
The question whether the settlor has manifested a present, unequivocal irrevocable intention to
create a trust. Oral statements, the conduct of the parties and documentary evidence if any will be
construed by the courts.

The maxim of equity looks at the intent rather than form is applicable in this context. The
word trust need not be used but if used by the settlor is construed in its context. Alternatively
expressions will be construed by references concept is intended. To the surrounding
circumstances for the purpose of ascertaining whether the trust

Accordingly the issue is whether objectively a trust was intended by reference to the relevant
facts of each case. In the case of shah v shah in this case the issue was whether a letter signed
shareholder coupled with the signing of a share transfer form amounted to sufficiently clear
evidence of an intention to create a trust. In this case, the claimant executed and delivered letter
his brother ,m, the defendant declaring that ‘as from this day’ he was holding 4000 shares in a
specified company for mas from the date of this date of this declaration and letter. In addition
the claimant executed and delivered transfer forms for 4000 shares in the same company in
favour of m however the share titles had not been delivered to m. the transfer of legal title to the
shares was duly completed and m was registered as the new owner. The claimant later claimed
the between the date of delivery of the letter and the legal transfer of the shares, no trust had been
created. Dismissing his appeal, the court decided that the construction of the letter and
execution of the share transfer forms, the claimant had declared a trust of the shares in
favour of m. the question of whether the trust had been created was to be judged
objectively by reference to the wording of the letter and facts. The terms of the letter
indicated an intention from the date of its execution that the claimant was holding the
shares for m. The use of the word ‘as from today’ and declaration had effect. These words
conveyed an intention to hold the beneficial interest in shares for M until registration.
In this scenario Tonda has the intention of creating a trust on behalf of his brother menya thus
Imran has to hold the property on trusteeship on behalf of menya, tonda’s brother.

On the issue of illegitimate child ,there is no trust created as courts will not enforce a void trust.

Question3(c)

The creation of an express trust maybe achieved by one of two modes. The first involves the
transfer of relevant property to the trustees subject to a declaration of trust in favour of
beneficiaries (a transfer and declaration). The second mode requires the settlor to declare himself
a trustee of the relevant property for the beneficiaries (self-declaration). It is crucial importance
that the transferor/settlor and the transferee/trustee recongnise their obligations. The
transferor/settlor loses all interests, as settlor on the creation of the trust. He is treated as a
complete stranger in regard to the trust property and is incapable as a settlor of bringing or
defending a claim concerning property subject to an express trust.

The transferees in this context involve the trustees and beneficiaries. These are parties who are
entitled to bring proceedings in respect of the trust property.

Trustees are individuals who have the control of the property and are required to comply with
their fiduciary responsibilities to avoid litigation for breach of trust. The beneficiaries acquire
equitable interests in the property on the creation of the trust and are given a bundle of rights in
order to protect their interests. It imperative that parties to a trust are familiar with their
respective duties and rights.

Equally courts are required to apply a rational set of rules in order to determine whether a trust
has been validly created or not. The court have formulated a test to determine this question
known as the three certainties laid down in the case by Lord Langlade MR in the case of Knight
v Knight254The brief facts were that payne Knight made his will leaving his property to his
brother Thomas Andrew knight and in tail his male descendants but if there was none, the
property was to pass to the next descendant in the direct line of my grandfather Richard Knight
of Downton .however he also started ‘I trust to the liberty of my successors to reward any
others of my old servants and tenants according to their deserts and to their justice in
continuing the estates in the male succession according to the will of the founder of the
family ,my above named grandfather’ Held; Lord Longdale stated that the word s of Payne’s
will were not sufficiently certain which meant that there had been an absolute gift to Thomas
who had taken the property unfettered by any trust in favour of the male line. He formulated a
legal test now known as the “the three certainities”. This test specified that for a valid trust to
be created there must be three certainities:

254
[1840]3Beav 148
Certainty of intention. The requirement here is that the obligations of trusteeship are intended
in respect of the property. This issue is determined by reference to all the circumstances of the
case thus oral and written statements as well as the conduct of the parties are construed by the
courts to determine whether a trust relationship has been created.

Intention is a question of fact and degree, it subjected to both mixed subjective and objective test.
The question whether the settlor has manifested a present, unequivocal irrevocable intention to
create a trust. Oral statements, the conduct of the parties and documentary evidence if any will be
construed by the courts.

The maxim of equity looks at the intent rather than form is applicable in this context. The
word trust need not be used but if used by the settlor is construed in its context. Alternatively
expressions will be construed by references concept is intended. To the surrounding
circumstances for the purpose of ascertaining whether the trust

Accordingly the issue is whether objectively a trust was intended by reference to the relevant
facts of each case. The doctrine of binding precedent does not apply as each case is determined
by its own facts. In the case of shah v shah in this case the issue was whether a letter signed
shareholder coupled with the signing of a share transfer form amounted to sufficiently clear
evidence of an intention to create a trust. In this case, the claimant executed and delivered letter
his brother ,m, the defendant declaring that ‘as from this day’ he was holding 4000 shares in a
specified company for mas from the date of this date of this declaration and letter. In addition
the claimant executed and delivered transfer forms for 4000 shares in the same company in
favour of m however the share titles had not been delivered to m. the transfer of legal title to the
shares was duly completed and m was registered as the new owner. The claimant later claimed
the between the date of delivery of the letter and the legal transfer of the shares, no trust had been
created. Dismissing his appeal, the court decided that the construction of the letter and
execution of the share transfer forms, the claimant had declared a trust of the shares in
favour of m. the question of whether the trust had been created was to be judged
objectively by reference to the wording of the letter and facts. The terms of the letter
indicated an intention from the date of its execution that the claimant was holding the
shares for m. The use of the word ‘as from today’ and declaration had effect. These words
conveyed an intention to hold the beneficial interest in shares for M until registration.

The intention to create a trust is fundamentally from the broader concept of an intention to
benefit another simpliciter. There are many modes of providing a benefit another solely by
creating trust. The trust involves the separation of the legal and equitable interests and imposes
fiduciary duties on the trustees with correlative rights in the hands of the beneficiaries. Decided
cases are used merely for illustrative purposes.
In case of jones v lock255 in this case Robert jones placed a cheque for 900 (drawn in his favour)
saying ‘ I give this baby and iam going to put it away for him’ he then took the cheque to the
nanny ; ‘I am going to put this away for my son’.he put the cheque his safe and also informed his
soliciter that he would go to him so as to change his will that he may take care of his son.
Unfortunately he died before changing the will and the issue was whether the cheque funds
belonged to the child or to residuary legatees under Robert Jone’s will. Held: no valid gift was
made in favour of the child, for the funds were not paid over to him and no trust was
created because jones had not made himself a trustee for the child.

Precatory words.

These are edxtremely ambiguous expressions used in wills , such as expressions of obligation on
the transferee. The positrion is that such words may or may not create a trust dependcing on the
wsording of the will and the surrounding circumstances. The introduction of the executors Act
1830 declared tghat the executor will be entitled to an interest under the testator’s will, if this
accords wsith the clear intentrion of vthe testator. This paved wsay for the modern approach to
precatory words to construe them in the context of the will and surrounding circumstances.

In the case of re Adams and Kensington Vestry256 a testator left his property by will ‘unto and
to the absolute use of my wife…. In full consideration that she will do what is right as to the
disposal thereof between my children’. The issue was whether a trust was created. Held; Cotton
Lj observed that considering all the words which were used , we have to see what is their true
edffect and what was the intention of the testator as expressed in his will. As thus in this
scenario a trust was not created. CERTAINITY OF SUBJECT MATTER

As was observed earlier, the subject matteris ambiguous and inherently deals with two concepts
namely; the trust of property and the beneficial interest. a trust could take many forms.it could be
interest in land in possession or reversion; chattels, money and chooses in action.if the trust in
property is uncertain because the testator didn’t specify it with sufficient clarity, the intended
trust swill fail. In Re Diggles,it was indicated that un certainty of subject matter will adversely
affect the creation of a trust. Thus in Curtis VsRippon,the testator appointed his wife, guardian
of his children and then left his property to her, trusting that she will in fear of God and in love to
the children committed to her care, make such use of its shall be for her own and their spiritual
and temporal good, remembering always according to the circumstances, the church of God and

255
[1865]LR 1 Ch App 25

256
[1884]27 Ch D394
the poor. It was held that the wife took property absolutely since no specific part of it was
apportioned to the children, the church or the poor.

In Bardwell vs Bardwell, there was a direction, to remember certain spersons; it was held that
there was no valid trust. In knight vs Knight, there was direction to reward. my old servants and
tenants according to their deserts.it was held that the purported trust was invalid In Re Jones, a
gift was given to a wife, absolutely, followed by a direction that, as to such parts of my estate as
she shall not have sold or disposed of ,it should be held in trust for certain persons.it was held
that the purported trust was invalid.

In case of Re Sheldon and Kemble [1885]53 LT 527, A testator bequeathed in substance all his
real and personal estate to his wife but added the desire that at her death, what might remain of
his property should be equally divided among his surviving children. The issue was the nature
and extent of the interest that was acquired by the widow and consequently the children. Held if
there is any sort of ambiguity, the court ought to adopt the construction, which most effectively
regards the testators intention, reading the whole will together. The children were entitled
equally to the property on the death of the widow.

The above cases may be contrasted with situations where the subject matter of the gift is to be
decided by the discretion of the trustee. Thus In Re Golay's Will trust, there was a direction to
the executors to allow a beneficiary to enjoy one of my flats during her life time and to receive a
reasonable income from my other properties.it was held that there was a valid trust because the
executors could select the flat, the words reasonable were not intended to allow the trustees to
make a subjective decision. They provided a sufficient objective determinant to enable the court
if necessary to quantify the amount.

CERTAINITY OF OBJECTS.

This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. Accordingly there is need for the
trustees to be able to ascertain the beneficieries under the express trust. In Re Vandervells
Trusts, it was indicated that in case of future interests, the beneficiaries must be ascertainable
with in the period of perpetuity.

The test to be used in determining certainty of object varies with the type of express trust created.
I.e fixed and discretionary trusts. There is a narrow test for certainity of fixed trusts and a
broader test for discreationary trusts. If the settlor fails to satisfy the relevant test for certainity of
objects, the express trust will fail and the a resulting trust will arise in his favour.
Fixed Trusts

A fixed trust is one where the settlor has attempted to specify the number of beneficieries and the
extent of their interest in the trust instrument forexample a trust in favour of my children equally.
The trustees do not have a discretion to distribute the funds to the intended beneficiaries.on
contrary, in a fixed trust each of the intended beneficiares acquires a vested interest in the trust
property on the date of creation of a trust. The test for certainity of objects is whether the objects
are ascertained or ascertainable with clarity so that the courts may, if necessarryexecute the
trust.

This is known as the ‘list’ test in the sense that trutsees are required to draw up a comprehensive
list of beneficiaries. The test is sometimes known as the ‘ classascertainability’ test. The settlor is
required to identify the the beneficiary or a group of beneficiaries with such precision that the
court may be to able to attach an order of property only in favour of the relevant beneficiaries
and not any other.

With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
In IRC v Broadway Cottages Trust257 the issue was whether the trust was void or valid and the
court decided that the trust was void for uncertainability of objects and the claim for repayment
of income tax failed.

In the case of OT Computers Ltd v First NationalTricity Finance Ltd and others258the
question in issue was whether a valid trust had been created for customers and urgent suppliers.
Held; though there was a clear declaration that the directors of the company intended to create
trusts in favour of its customers and urgent suppliers, a valid declaration of trust in favour of the
customers, it was impossible to identify each member of the class of urgent suppliers and
accordingly the trust failed and resulting trust for the company’s creditors was created.

Discretionary trusts.

A discretionary trust is an express trust wshereby the trustees are required to exercise their
discretion to select the beneficieries from among a class of objects and/ or determine the quatum
of interest the beneficieres may enjoy. The modern test for certainity of objects in respect to
discretionary trusts is known as the ‘individual ascertainability’ test or ‘is or not’ test or the
‘any given postulant’test the test was laid down in the case of Mcphail v Dolton259, the settlor
Betram Baden transferred property to trustees to apply the net income in their absolute
discretion, to the officers,ex-officers, employees and ex-employees of the company or relative or
dependant. The issue was whether the trust was valid as sastifying the the test for certainity of

257
[1955] Ch 20

258
[2003]EWHC 1010 (Ch), HL

259
[1971]AC424
objects. The House of lords decided that the trust was valid and changed the test for certainity in
respect for discretionary trusts. The new test for such trusts is whether the trustees may say with
certainty that any given postulant is or is not a member of a class of objects and there is no need
to draw up a list of the objects.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust is one which trustees hold the trust for such
members of a class of beneficiaries as they shall in their absolute discretion determine and the
test for validity of trust powers ought to be similar to that proffered by Lord Wilberforce in
ReGulbenkia's settlements consequently that the trust is valid if it can be said with certainity
that any given individual is or is not a member of class.

It has been suggested that a combination of the tests for powers and discretionary trusts has
destroyed what used to be the most important reasons for distinguishing between trust and
powers. In Re Gulbenkian’s settlement260, a special power of appointment was granted to
trustees to appoint in favour of NubarGuibenkian, ‘any wife and his children or remoter
issue…….. and any person…….. in whose house or apartment or in whose company or under
whose care and control or by or with whom he may from time to time be employed or residing’.
The House of Lords overruled the diluted approach to the test adopted by court of appeal and
held that the gift created a valid power of appointment within the strict Gestetner(1953) test

More about certainty of objects can be seen in the case of Re wood there was a provision of a
sum of £ 2 per week fo the week's Good cause of the BBC it was held that the beneficiary in this
instance was uncertain. Even if the directions were to be followed ,the beneficiary could still not
be because seven good causes were advocated one week in each month from different solutions.

Related to test of certainty of objects is what has been described as trusts of imperfect
obligations.

As is evident from the requirement of certainty of objects, a trust in order to be valid should be
beneficiary who can enforce it. Where there's no such beneficiary, except in cases of charitable
trusts, the trust will be regarded as unenforceable and thus bind.

In Re Astor's settlement Trusts, a trust was set up for the objects and purposes which included
the improvement of good understanding between nations ,the preservations of the independence
and integrity of newspapers, the promotion of freedom, Independence and integrity of the press,
the protection of newspapers from being absorbed by combines, the restoration and maintenance
of the independence of the editors of and writers in newspapers ,the securing for the public of
means of ascertaining by whom any newspapers is actually owned or controlled and the
establishment of any charitable public or benevolent schemes for the improvement of news
260
[1970]AC508
papers, the relief of persons engaged in journalism, for ant of the objects previously mentioned.
It was held that the trust failed for lack of ascertainable beneficiary.

We can also see in the case of Re shaw where it was held that the trust failed due to lack of
someone to enforce it.

Therefore when the words of trust are not certain there's no creation of trust, consequently the
done of the gift takes beneficially, likewise the done will take beneficially where the trust fails
for un certainty of property, the reason being that although an intention to create a trust may be
evident there's no property to which it can be attached.

Question 1

The development of Equity was both controversial and significant to the legal system. Do
you agree with this statement?

Yes, the development of equity was both controversial and significant in the following ways;

Equity refers to right doing, honest and ethical dealings or relationships between individuals. It
can also be defined as whatever is just and right in all human relationships and transactions.

The evolution of equity was as a result of various factors which include; to correct the injuries
that were created by common law, to accommodate the exceptional circumstances which
common law didn't address and to mitigate the rigidity of the application of common law.

As it developed, it created a lot of controversy since it was eyed by the common law judges as a
system which was undermining their authority and position in the legal system. Equity was
practised in the courts of chancery by the Lord chancellor who was given authority by the king.

Its development greatly interfered with the application of common law in that, both jurisdictions
were utilized by persons, where one sought a relief under common law but was dissatisfied, they
always appealed to the loryd Chancellor. He had the right to grant a common injunction
restraining the implementation of a common law judgement which caused alot of commotion
amongst the two arms of the legal system

This prompted the common law courts to grant a writ of prohibition against the Chancery courts
to restrain then from interfering with the judgment or decisions made by common law courts.
This caused a lot of confusion and pulling of ropes within the state and its judicial system thus
culminating into conflicts amongst the two notions in regard to who is superior to the other.

This conflict was best illustrated and solved in the Earl of Oxford's case 1615 where common
law and equity confronted one another in the same court between Justice's from both sects that us
Justice Coke of the commin law and Lots Ellesmere if the court of chancery. but later came to
common ground. The case related to land that changed hand several times till when it was
purchased by her Highness of England which was then transferred to Oxford whobkeased it out
and this was challenged by the college master of Magdalene. The issue in the suit was in which
court was the matter going to h heard. The case was taken to the courts if common law where
they made a decision in favour of college Master.

This decision was later on challenged by the courts of Chancery where the Lord chancellor felt
he had the power to do away with the decision of the common law court basing on justice and
good conscience and asserted that where equity and common law conflicted, equity takes
precedence. However Justice Coke contended that he would issue a writ of prohibition against
the lord Chancellor and disagreed with the assertion.

The conflict was later brought before King James 1 who determined the matter in favor of equity
gaining a supreme position over common law. This is also codified in our laws and can be seen
in the Judicature Act section 14(2) and (4).

Rising out of that controversy, equity brought about a very significant effect in the legal system
where justice was better served and delivered. Its significance is discussed d below;

The development of equity led to the creation of a particular heirachy of courts which provided
for both the application of common law rules and equity rules in that the same court which
helped to prevent double proceedings in regard to the same matter. This can be seen under
section 11(1)(3) and 14 of the magistrate act and judicature act respectively thus proving its
significance to the legal system.

It was further significant in that it was used to ensure the promtion of justice for instance in
creation of an equitable lease as seen in the case of Walsh vs Lonsdale where it was stated that
an agreement to lease is as good as lease that is registered. This protected the rights of equitable
interest owners who were not protected under the law.

It was also applied when varying a deed whereby for a variation of a deed to be valid, under
common law it had to be written as the initial agreement and under seal however equity
narrowed this by allowing any document under seal to be regarded as a variation of the deed.

Equity also significantly played a role where there is Joint undertaking by ensuring that incase
one surety defaulted, all the others had to take blame and share the burden equally then institute a
suit against the one who defaulted for their compensation. It further applied under liability for an
executor in regard to trust property in that an executor could only be liable for destruction of
trust property only when he was negligent.

It developed equitable maxims that were used as guiding principles in the application of both
equity and common law since they were to be administered in the same court. For example
equity follws the law which simply implies that equity supplement the law where it was
defective and unfair. Other maxims include equity acts in personam, he who comes to equity
must come with clean hands and he who seeks equity must do equity. These were very
significant in the legal system in the country.

It introduced new Remedies into the legal system those that were applied both at equity and at
law. For example, injunctions which were used to restrain performance of an act or to compelle
someone to do a positive act.

Specific performance which provided better relief to litigants where common law remedies
(damages) were inadequate by compelling performance of an obligation in the contract.

It was significant in that it brought with it new Procedures that were created to assist defective
procedure at common law and provide effective justice. For example, administration of
interrogatories where a person had to be questioned that is asking him/ her questions to retrieve
evidence which was unheard of at common law.

In addition to the above, it also introduced discovery of documents where a party to a suit is
asked by the other party through court to deliver up certain documents that are relevant to
formulation of a good case. This is incorporated in our laws under order 10 of the Civil
Procedure Rules. It also came with perpetuation of testimony.

Equity is significant in that it created new Rights to be recognized by law and equity. These
include, rights of a beneficiary under a trust which were never upheld at common law. Other
rights included estate contracts, equitable mortgages etc

It also came with developments in regard to equitable Doctrines such as doctrine of notice. This
protected person with equitable interests as against an owner of a superior legal interest who had
knowledge of particular existing facts.

The Doctrine of Satisfaction. This was in conformity with the equitable maxim that equity
imputed an intention to fulfill an obligation. Its where an individual does an act in fulfillment of
another prior promise.

The Doctrine of Performance, is the act which a person has placed himself/herself and if he does
it in another manner its deemed to have fulfilled the promise.

Doctrine of Election, this literally connotes to taking the benefit with the burden. That is the
beneficiary is given a gift under a will in condition that they give up something in their
possession to another in order for them to actually own the gift.
Question 3

With the aid of relevant examples and authorities discuss in details the Doctrine of Notice
and the impact of registration legislation on the Doctrine of Notice.

Notice literally means knowledge of an existing fact. The doctrine of notice is an equitable
doctrine that seeks to protect persons having equitable rights over land from those with superior
legal rights against placing them to defeat the equitable rights.

This doctrine is divided into three namely; actual notice, constructive notice and imputed notice.

Actual notice

This refers to express knowledge/ Information of a prior interest at the time the buyer made the
purchased or was completed. Here the purchaser has prior notice before acquiring the superior
title, the effect of this is that, the owner of the superior title can't defeat the owner of the
equitable interest because he is not a a bonafide purchaser for value without notice therefore, he
buys the land subject to the equitable interest of the other owner. In the case of Sempa Mbabali
vs W K Kidza, the purchaser bought the land with full knowledge that it had on it burial grounds
thus couldn't claim to be a bonafide purchaser for value without notice.

However, if he buys without notice of the equitable interest, then that makes him a bona fide
purchaser for value without notice therefore his/ her estate will not be subject to the equitable
interest. He buys it free from any other interests or incumbrance

Constructive Notice.

This was well defined from the case of Williamson vs Brown 1887, as notice which occurs
where the purchaser has knowledge of any fact sufficient to put him on inquiry of the prior
existing interest that conflicts with the one his intending to purchase. The failure to carry out
inquiry, the purchaser is deemed to be aware of such prior conflicting interest or is guilty of
gross negligence.

The buyer is to carryout inquiry from persons such as the Registrar of Titles, local council
Authorities, Village elders, the neighbours etc.
Facts that are sufficient to put one on inquiry include, finding another person or different family
settled on the land one intends to purchase. If this is so, one is required to inquire from this on
the land about the kind if interest they hold in the land and failure to do so, one is presumed to
have made an inquiry and their interest will be subject to the equitable interest if they proceed to
purchase.

This was best illustrated in the case of Uganda Post Telecommunications vs A K M Lutaaya,
in this case the purchaser before completion of the purchase visited the land and found a family
settled on it, he didn't bother to inquire the nature of their interest. He went on ahead and
purchased the land, later he wanted to evict them. It was held that he purchased the land subject
to the equitable interest of those settled on it prior to him.

Furthermore, the case of Fredrick Zaabwe vs Orient Bank & 5 Others, this clearly showed
instance where the purchaser of the land had sufficient facts to put him on inquiry but overlooked
them. In this case, the plaintiff Zaabwe gave powers of Attorney to one of the defendants that is
Sewanyana in regard to his land for a debt he had obtained from him. The defendant used these
powers to mortgage the land to Orient bank which took valuers to it to estimate its value. When
Sewanyana and his company failed to satisfy the loan, Orient bank sold the land to one Ali
Hussien who bought it yet the land had a caveat placed on it.

It was held that the plaintiff was entitled to his land because, the defendants in the first place
misused the powers of attorney by benefiting themselves to the detriment of the one that granted
it to them. The bank acquired the land with constructive notice as it was aware of the existence
of the family of the plaintiff and his law chambers on the day the valuers went to ascertain the
value of the land. The bank was to be put to inquiry with the existence of such rights however
still went on to take on the land.

Furthermore, Ali Hussien who bought the land couldn't claim to be a bonafide purchaser for
value because by the time he obtained a legal title to the land, there had been placed a caveat by
the plaintiff thus he had no superior title over the plaintiffs.

This presumption can only be disapproved when one is able to show that they carried out
inquires but were unable to find any facts that could put them on inquiry. This makes them a
bona fide purchaser for value without notice and thus the superior title will not be subject to any
equitable prior interest.

Imputed Notice.

This is the kind of notice that is either actual or constructive and maybe imputed on the buyer
through his agent's actual or constructive knowledge of existing facts.

Here, notice to the agent is notice to the buyer/ principal. This is because his working on his
behalf and for his benefit. The notice gotten form one transaction can not be used as notice in
another transaction. That is it can't be used to affect the principal in other transactions as stated in
the case of Mountford vs Scott.

Where an agent is working for more than one person, the notice acquired by him is taken to be
notice acquired by all the parties. However, where information acquired is used to the detriment
of one of the principals, then he/ she will be protected as a bonafide purchaser for value without
notice since there existed an element of fraud on the side of the other party. This was well set out
and applied in the case of Sejjaka vs Rebecca.

The impact of registration legislation to the doctrine of notice is that, for any instrument
purporting to convey an interest in land, it must be registered in order for it to be effective as
stated under section 54 of the Registration of Titles Act. This is to the effect that the whole
world and anyone intending to make any transactions and dealing in relation to such land is put
to notice officially about an already existing interest. This enables one to make a decision on
whether to go on with the transaction or not.

In addition, section 48 of the Registration of Tiles Act is to the effect that registration of such
instrument as mentioned above is only effective as to such date of registration and not when the
document was obtained. It further suggests that instruments affected with actual or constructive
notice shall not be given priority.

If there are two competing registered instruments, the first to be registered takes priority and a
bonafide purchaser for value without notice is only affected by notice if the registered estate of
the previous owner.
In conclusion therefore, the effect of notice (actual, constructive and imputed) is that it affects
priority of interests in land and protects equitable interests obtained prior to the legal interests
except in instances where one is a bonafide purchaser for value with out notice of the previous
interest.
No 2

Question

Discuss in details whether the judicature acts of 1873-75 simply fused the rules of or the
administration of equity and law.

Equity is a body of rules, the primary source of which was neither custom nor written law but the
imperative details of conscience and which had been set forth and developed in the Court of
Chancery. The concept of equity came up to temper the harshness and rigidness of the common
law and the aforementioned definition regarding equity clearly expresses it. Equity in one hand
filled the gaps in law and ensured the smooth flow of justice, which is the main purpose of law,
and in another way, tempered the rigidness of law by amending strict laws and also by
introducing new rules to reduce the rigidness of the existing set of laws. In Dudley v Dudley, it
was held that “Equity does not destroy the law, nor create it, but assists it.”

This arose after people were getting inadequate remedies at law since it over relied on the
principle of precedence and thus could not handle the needs of the people at that time. Common
law was corrupted by the feudal era and justice was really hard to come by and thus people run
to the king who in turn, being the fount of justice, administered fairness via the lord chancellor
and thus chancery courts came into being. Conflict with common law was inevitable as common
law courts were losing popularity and many of their decisions were “disrespected” as common
injunctions . However, this was put to an end by the Earl of Oxford`s Case upon a decision by
King James. This was later codified by the Judicature Acts of 1873 and 1875. This was after a
report giving recommendations which included fusion of of the administration of justice by
means of the consolidatin of all superior courts of law and equity into one supreme court
possessing the jurisdiction of all the courts so consolidated.

The Judicature Acts, in the first place abolished all the existing superior courts that is, The
Courts of Queens Bench, Exchequer and Common Pleas and the Court of Chancery, Court of
Exchequer Chamber and the Court of Appeal in Chancery. These were replaced them with a
Supreme Court consisting of Court of Appeal and High Court; and the Supreme Court was
directed to administer both Law and Equity however the rules of common law and equity and tus
it could be said that “ The Courts that were manifold dwindle To delivers Divisions of one.”
Not only did the Judicature Acts fuse the jurisdiction of administration of common law and
equity, all claims, obligations and defences were recognized and enforced by all the three
divisions of the High Court of Justice. More so, Common injunction exercised by the chancery
courts was abolished since it was no longer necessary.

The fusion of the administration of Equity and Law, was best experimented and tested in the case
of Central London Property Trust V High Trees House, a case which promulgated the doctrine of
Equitable Estoppel where it was held that through equity, the promise made was binding on the
party making it and the plaintiff couldn’t recover the full amount of the money when the flats
were less occupied. This couldn’t have been the case under common law as law doesn’t allow a
promise that is not by deed to make any adjustments on the contract.

From the above case, an issue arises that infers that indeed administration wasn’t really fused.
Documents drawn under equity receive treatment independent of the rules governing common
law, however rules of equity can be applied to common law issues. This impliedly shows the
dominance and superiority of equity and that thus equity acquired favour over common law, and
it can’t be rightly said that administration of the two was equitably made.

Conclusively therefore, the fusion of equity and common law wasn’t complete as they are “two
steams of jurisdiction though the run in the same channel run side by side and do not mingle their
waters.”. instances have come up where Equit has overridden principles of common law for
example in equitable leases, variance of deeds and executor`s liability for assets.
Question 5

Explain the nature and principles guiding the issue of interlocutory injunctions.

Interlocutory injunctions are injunctions given until the commencement of the trial. It is warded
where after a suit has been filed, the plaintiff realises that there would be delay before the case is
heard and may suffer loss therefore it's sought for. When granting it, both parties are to be
present in court.

Interlocutory injunctions are provided for under section 37 of the Judicature Act and are
discretionary in nature that is granted at courts will.

Its also provided for under Order 41 of the Civil Procedure Rules which provides that the suit to
be presented with an affidavit and its to keep the subject matter of the suit from any disposal,
alienation, destruction and waste.

Interlocutory injunctions are granted in order to maintain status quo while rights are to be
established since it remains in force till the trial. Status quo simply means the situation at hand,
the current situation in place as defined in the case if Dr. Byarugaba vs AG...,

An interlocutory injunction maybe discontinued if it was based on the wrong application of the
law and this can be applied for by the dissatisfied party for it to be set a side.

It will not be granted where it will have no effect. For example in the case of Bentley Stevens vs
Jones, a director was removed in the course of irregular proceedings which were convened
without being served on him. The court declined to grant the injunction sought because the
irregularity could be cured by going through the proper process or serving a valid notice.

The guiding principles governing issuance of interlocutory injunctions are as follows;

These principles were set out in the case of Americana Cynamid vs Ethicon Co Ltd and
Kiyimba kaggwa vs Katende and these include;

Prima Facie case.

This simply means, that there must be an issue that needs to be answered by court and the
defendant has no arguable defence. The plaintiff must show that his/ her right exists and has been
infringed that is possibility of success in the main suit.

In UCB vs General Parts( U) ltd, an injunction was applied to restrain the respondent from
disposing of the applicats property until the disposal of the main suit. The defendant had
breached a loan agreement by delaying the processing of the letters of credit in favour of the
applicant leading to delay in delivery and negotiations of another loan. Kireju justice held that
the plaintiff had establishes a prima facie case and possibility of success in the main suit.

The possibility of success need not be more than 50% and a prima facie case doesn't mean a
good case.

Substantial and irreparable injury is also another guiding principle in issuing an injunction.

The plaintiff must show that if an interlocutory injunction is not granted, she/ he would suffer
substantial and irreparable injury which could not be compensated by award of damages at the
termination of the trial. In UCB supra, the justice was satisfied that the applicant would suffer
irreparable damages that were so material as if the property was sold and he couldn't be
compensated.

Examples of irreparable damages include, loss of a job with prospects, construction of structures
on land which may not be applicants desire, publication of confidential material.

Balance of convenience is the last principle governing issuance of injunctions.

. Court takes into account the injury to be suffered by the defendant if the injunction is given and
the injury likely to be suffered by the plaintiff or applicant if the injunction is not granted.

The court first considers the adequacy of damages to each party and then proceeds to either grant
or not.
Question 6

Discuss the manner in which a constructive trust arises and what makes it different from
an express trust.

This trust arises by operation of law and thereby results from the effect of a rule of equity that is
certain circumstances a legal owner of property must hold it in trust for others.

It can also be referred to as a relationship created by equity in the interests of good conscience
and without reference to any express or implied intention of the parties. It follows that if a person
is in a fiduciary position and uses it to gain personal advantage, he becomes a constructive
trustee for the person thereby deprived of the profit.

Constructive trust arises in the following ways;

Where vendor is a constructive trustee. In a situation where a binding contract for the sale of
land exists the vendor is held to be a constructive trustee for the property of the purchaser until
the sale is complete. In Lysaght vs Edward's 1876, it was held that from the moment a valid
contract is concluded, the vendor becomes in equity a trustee for the purchaser if the estate is
sold and the beneficial ownership passes to the purchaser. The vendor is not entitled to dispose
off the property as his own.

The vendor as a constructive trustee must exercise reasonable care in respect of the relevant
property. In Philips vs Silvester 1872, the vendor allowed the property to waste away, the
purchase price was reduced by court.

Where property is held by a mortgagee gives rise to a constructive trust. A mortgagee in

possession of mortgaged property is in the nature of a trustee for the mortgagor. This is because
the mortgagee is liable to account for profits an rent derived from the mortgaged property while
in possession. This position is consistent with constructive trust.

Another instance in regard to mortgage is where a person sells mortgaged property and receives
a price exceeding the mortgage debt. The mortgagee is said to be a constructive trustee for the
surplus money and must account to the mortgagor.
A constructive trust can arise from a express trust. It is principle law in equity that a trustee
should not make a profit from his position of trust and should not use that position to obtain a
personal advantage adverse to the beneficiary. If he does so, he is taken to hold the profit or
advantage as a constructive trustee for the beneficiary.

Constructive trust arising from a stranger to trust. If a stranger to the trust obataind trust
property or funds from the trustee with knowledge that it forms part of the trust estate and that he
is receiving it in breach of trust, he is judged as a constructive trustee for the beneficiary of the
trust.

A volunteer who receives trust property either with or without notice is constituted as a
constructive trustee.

Difference between constructive trust and express trust.

A constructive trust arise by operation of alw and rules of equity. That is, doesn't look at the
intention of the parties. However, under express trust, the intention for creating the trust us set
out clearly.
Question 7

Discuss in details the requirements for a valid assignment.

Assignment refers to transfer of rights, interests and benefits of a contract or agreement to

another person. It can also be defined to mean the transfer of a benefit of a contract to a third
party.

It takes place between the person entitled to the interest called the assignor (creditor) and the
third party called the assignee as a result of which the assignee becomes entitled to sue the
person liable under the contract called the debtor.

The requirements necessary for a valild assignment include;

Formalities.

That is, the assignment being made must conform to its required form. For example a statutory
assignment must be in writing and signed by the assignor. The failure to comply with the
required formality can affect the effectiveness of the assignment.

Intention to assign

Its to the effect that the debtor must be made to understand that the debt has been assigned to a
third party. The mere asking of a debtor by a creditor to pay a third party doesn't amount to
assignment. In Exp Hall 1878, the landlord authorized his tenants to pay his bank for His credit,
this didn't amount to assignment.

Similarly, a person who draws up a cheque for a third party from Hus bank doesn't create an
assignment.

Communication to the assignee

Am assignment will have no effect if its not communicated to assignee or someone with
authority unless to is made pursuant with a prior agreement between the assignee and assignor.
This is essential in order to allow one to accept this responsibility and to perfect a gift of a chattel
made by deed.
Notice to debtor

This maybe oral or in writing. For example notice of an equitable assignment can be oral as its as
much effective. However a statutory assignment must be given notice of in writing and it need
but be made by the assignor himself as long as its brought before the action.

Notice must clearly and unconditionally tell the debtor to pay a third party as assignee and not
merely as an agent of the assignor. It must clearly state the date and amount of the debt or else its
invalid. A notice sent through the post takes effect when it is received by the debtor.
Question 8

Explain 3 out of the following

Equality is equity

This is an equitable maxim that connotes to the fact that "equity delighteth in equality" which
means that equity would put the litigating parties on an equal level so far as their rights and
responsibilities are concerned.

This maxim is applied in the following ways

Under receivership that is a receiver appointed to collect the assets of a business in financial
trouble and must use the income to pay every creditor an equal share of what is owned to
him/her. Everyone is entitled to benefit must suffer a fair share of the loss.

It should be noted that this only applies where the parties are in equal footing. Under
receivership, if one is a secured creditor, has the right over assets in totality meaning there will
be no equal shares thus the maxim doesn't apply.

Where parent dies intestate, the property sub divided equally among the children.

Where courts Presume a Tenancy in Common as against a Joint Tenancy. The instances
include,

Where property has been bought by partners in unequal shares. Much as the documents of
partnership shows joint ownership, equity will take it as a tenancy in common so that if any party
dies, his/ her share devolves to his estate as it’s not reasonably thought that one contributed all
the money for it to devolve to another’s estate.
Another instance is where parties are holding loan on mortgage that is two parties are holding
property as security for loans got by another person from both of them. Under joint tenancies, if
a party died, the other property would devolve to the other the proceeds inclusive. However
under tenancy in common, if one party died before the debt was paid, the proceeds gotten from
the sale of the property will devolve to his estate.
Under partnership. Where the partnership deed doesn't specify the shares of the partners each of
them will be entitled to equal shares of assets and liabilities of the partnership.
 Severance of Joint Tenancy. This refers to conversion of a joint tenancy into a tenancy in
common.

Equal division. This is to the effect that where there is no basis for disturbing property between
two or more rival claimants, the court may apply the maxim. In Re bowers settlement trust
1942, it was established that a fund should be held in trust for certain people in unequal share,
any share which falls to be distributed will share equally.

Copy rights. For instance if the rights are vested in different parties, the proceeds will be shared
equally amongst all the parties.

Equity follows the law

Jekyll MR, the discretion of the courts is governed by the rules of law and equity which are not
to oppose but each in turn to be subservient to the other. Thus equity came not to destroy the law
but to fulfill it, to supplement it to explain it.

Equity followed the law and where it was defective, equity rights had to be recognized.

Instances where equity follows include; equity recognized the position of a trustee as the legal
owner though under equity the beneficiary was taken as the rightful owner.

Equity followed the concept of estates as under common law for example it recognized interests
in land like fee simple, fee tail, life estate.

Equitable interests devolve just like legal estates under common law. For example passing on
intestacy Strickland vs Aldridge 1804, if a father died leaving an elder son and siblings, he will
be the heir under equity as it was under common law. Unless he will be made heir under duress
or fraudulently.

Equity also follows the law in regard to joint tenancies.

Anton Pillar injunction.

This is an order given by court authorising or conferring the right to search another's premises
and seize evidence without prior warning.

Its awarded exparte that is without notice to prevent destruction of the evidence. Its usually
granted in cases involving copy rights, trade marks and video pirating. The injunction is derives
its name from the case in which it was born that is the Anton Pillar KG vs Manufacturing
Processes Ltd 1976, the applicant was a Germany based car company whose sub agent was the
defendant who he shared with all his business secrets. He later received information that the
agent would spread the companies detailed plans and drawings to competitors. Since the
appellants were about to launch a new model, they feared that it would fall in the hands of the
competitors so they sought for an injunction to retrieve the evidence from the premises of the
respondents for breach of confidentiality and it was granted.

For one to succeed, they must prove a strong prima facie case, actual or potential harm and that
the defendant had the evidence which is the subject of the suit in their possession.

This order is not a search warrant which entitles a holder to force his way into defendants
premises against his will. It only confers permission of entry, inspection or other direction of the
court. If the defendant refuses to allow entry onto his premises, the appellant can take it to court
for application for contempt of court. This was stated in the case of Uganda performing Rights
Society ltd v Fred Mukubira 2003

Quia timet injunction

Quia timet injunctions refers to injunctions that are awarded by court to protect the infringement
of rights of an individual from threatened violation by the defendant. The right has not yet been
violated but is just threatened.

The person seeking for this injunction must prove that there exists a right that is recognized
either under law or in equity and this is provided under section 39(b) of the Judicature Act.

When granting it, court considers the following, the damages are not adequate relief, the cost of
lessening the performance by the defendant to prevent future apprehended harm and that the
defendant knows exactly what he is required to do
No.4

Brief facts;

Malik made bequests by will that five acres to his son Amos, two acres to the health centre in
lower Konge, his freehold house to his wife Franca in confidence that she would hold it either for
his daughter Shakira or his son Shafic as she deemed fit and the remainder to the nephew.

Issue;

Whether this trust is legally effective.

Law Applicable;

Case Law

Resolution;

For a trust to be valid, it has to be certain as far as the intention , the subect matter and the object
as er Lord Langdale Knight v Knight. That the words must show that the settlor intenda to create
a trust, that the subject matter of the trust must be certain too likewise the objects The objects are
the beneficiaries of a trust.

A trust is a relationship which arises whenever a person called a trustee is compelled in equity to
hold property, whether real or personal, and whether by legal or equitable title, for the benefit of
some person, of whom he may be one and who are termed beneficiaries, or for some obrct
permitted at law in such a way that a benefit of the property accrues, not to the trustee, but to the
beneficiaries or other objects of the trust. To determine whether the trust is legally effective, I
have to look at the effectiveness of every bequest. This as demystified hereunder.

As to whether the bequest to Amos is effective;

In Palmer v Simmons, it was held that in order to create a valid trust, the description of the trust
property must be must be sufficiently certain. If there is not sufficient certainty the disposition is
ineffective and no transfer of property to the trustee takes place. In the case at hand, the five
acres that are purported to be settled for Amos is not sufficiently described as far as where the
land is found, how its registered or so. Therefore the bequest to Amos doesn’t stand due to
uncertainty of subject matter.

As to whether the second bequest is valid;

As a principle, if the beneficiaries are are uncertain, the trust will fail. It must be possible to
ascertain who the beneficiaries are. There are two tpes of uncertainties in this case, linguistic
uncertainty and evidentialuncertainty. What applies here is the linguistic uncertainty but not the
evidential uncertainty. Evidential uncertainty is where the beneficiaries are not easily
ascertainable or that the trust is administratively unworkable. In the case at hand, the health
center in Lower Konge is not certain and cannot be ascertained .there may be many or none.
Ifthere is only one health center then the object is certain but as far as the question is, obect is
uncertain and thus the. Bequest is unenforceable.

As to whether there is a valid settlement for Shakira and Shafic;

The general rule is that precatory words are not sufficient to create a trust. As James L.J stated “I
could not help the feeling that the officious kindness of the court of Chancery in interposing
trusts where in many cases the father of the family never meant to create trusts, must have been a
cruel kindness indeed.” In Re Hill , Public Trustee v O`Donnellwhere residuary bequest to the
testator`s brothers and sisters “for the benefit of themselves and their respective families” it was
held to be a a gift to the legatees absolutely and not as trustees for their children

In the case at hand, it is an absolute gift to the wife Franca but not to the children as the intention
to settle the house for them is not certain.

The bequest to the nephew;

In the case of Salusbury v Denton, it was held that a gift of part to one and the remainder to
another will be divided equally however in the case of Palmer v Simmonds it was held that a
declaration of trust as to “the bulk of my said residuary” fails to create any trust. In the case at
hand, the bequest to the nephew falls within the second as the first three bequests are invalid and
residuary is indeed clear. Tis would make the bequest valid only if the settlor has only one
nephew lest it would be invalid for uncertainty of obect.
Question 1

The development of equity was both controversial and significant the legal system, do you
agree with this statement.

Equity is equality in the layman language according to Byakibinga equity refers to good
conscience however authors state that equity is nature justice. 261 Lord Diplock however states
that equity can be conscience though may not be just to refer to it in that manner,further due to
the rigidity of common law that was harsh and unfair as cases were strictly decided on customs
and norms of England at the time.262This prompted the people to petition the king as to the
injusticesof common law.The king at the time then appointed Lord Chancellor to handle the
petitions which gave rise to the courts of equity that decided cases on religious beliefs and
interest of equality that forwarded all the petitions to the Lord Chancellor as to be handled in the
interest of natural justice. This however did not go on well as it became a different stream of law
together with common according to Ashbury hestated, that these are two streams flowing in the
same direction but their waters don’t mix, he referred to common law and courts of equity as the
two streams that dispense justice though in different ways.

In the case earl of oxford,where it was held that where common law and doctrines of equity
conflict, the doctrines of equity prevail.

Equity and common law both are to the interest of justice however due to the different forms of
procedures of reaching to the finaljudgment were different as equity was based on equality and

261
Laws of trust and equity

262
'Common law' here is used in its narrow sense, referring to that body of law principally developed in the superior
courts of common law: King's Bench
good conscience whereas common law was strictly the laws at the time and there was no room
for redress as to the rigid nature of common .

This later saw the up lifting of the other courts of equity for example, equity had become as rigid
as common law during the medieval period as the wealthy class disrespected court orders,
corruption of the courts of equity officials as to defeat the interest of justice at the expense of the
poor.

Yes I agree with the statement however to a larger extent as discussed below:

The development of equity was controversial at the time as its development was defeating the
laws at the time that’s common law as many litigants opted to petition the king as to the
injustices of common law which was jeopardizing with the interest of justice at the time this
becoming controversial as to the existing laws , this compelled lord Diplock to state the equality
can be as long as the chancellors foot , as may think fit on religious grounds thus
contrivancehowever was significant to the interest of the unjust fairness at common law which
brought up new rules of justice based on natural justice.

The common lawfavored the interest of the wealthy class who controlled the economy of the
state, this was sincerely unfair as gave room for injustices at the expense of the poor that led to
the development of equity to prove equality as a way of securing justice and good
conscience .This was however was taken in as an abuse of common law judgments as per Lord
Coke in the case of:Lord coke Vs. chancellorElsmere. Where it was held for interest justice
equity shall prevail where there’s conflict between common law and equity as per King James
with the advice of his lawyers.263

The development of equity led to the development of other courts for example court of Appeal
and later supreme court as those who were dissatisfied with the decision would appeal to a higher
courts for example where one is dissatisfied in the high court by the judges’ decision he/she has
the right to appeal to a higher court.

The development of equity led to the introduction of new award of remedies for example the
only remedy that was available for common courts were damages. However court equity came

263
An Introduction to English Legal History. Butterworth by baker j.h
up with other remedies such specific performance and injunctions and had no powers to award
damages which was controversial to the existing laws, significantly this lead to the development
of maxims of equity.

Question 2

Discuss in details whether thejudicature of 1873-1875 simply fused the rules of or the
administration of equity and law.

In an attempt to determine whether the concepts of Common Law and Equity are fused or run
concurrently, it is important to avail the begging question of what these concepts are with a
definitional clarification and further examine the evolvement of the English Legal System
concepts. This will enable a holistic understanding of the concepts and aid in the discussion of
whether they are fused or concurrently operated.

Common Law and the development of Equity

Common Law developed from the common culture and practices of the people of England.
These laws were administered by the King’s justices on circuit and the manorial courts (King’s
Bench, Common Pleas and Exchequer).264 This system of law was frequently referred to as a
harsh legal system composed of rigid rules. It was accused that it paid undue attention to
technicalities. The practice and procedure of its courts were generally unsatisfactory in many
respects; thus exposing the weaknesses of the system, which are;

Claims could only be vindicated if they fit within an existing form of action and the then forms
were very restrictive;

A claim could be defeated by technicalities, misspelling or specious defenses;

The speed at which justice travelled was slow, as the courts were corrupt;

Its remedy could hardly satisfy the requirements of justice in particular cases.

In the Common Law system, the powers to issue writs was vested in the crown. A key figure in
the administration of justice in this system was the Lord Chancellor, one of whose functions was

264
https://www.lawteacher.net/free-law-essays/equity-law/history
the issuing of royal writs on behalf of the crown which began every action at Common Law. The
rule was that a plaintiff had no cause of action unless his claim came within the scope of an
existing writ. By issuing new writs and varying existing ones, the Chancellor was able to
influence the development of the Common Law. His chief concern in dealing with petitions was
to do substantial justice; treating parties like equals, hence the phrase “Equity” came to be
associated with his jurisdiction. He granted or withheld relief, not according to precedent, but
according to his individual sense of justice. Reliefs granted by the Chancellor unlike those of the
Common Law, were adopted to meet particular justice, as Equity fashioned new types of
remedies unknown to the Common Law.

Gradually the Chancellor came to determine matters raised in the petitions independently of the
King-in-Council, so that, by the end of the fifteenth century, petitions were addressed directly to
him, the issues were tried in his own court, and decrees were made in his name. This was the
beginning of the equitable jurisdiction of the Court of Chancery.

The word ‘Equity’ has a wide range of meanings and to many people it is a synonym for
‘fairness’ or ‘justice’. Equity is that body of rules which before the Judicature Act, 1873, was
developed and applied exclusively by the Court of Chancery. Its concern is the observance of
conscience, fairness, equality and the protection of relationship of trust and confidence. It is in
this manner that Lord Cowper in Dudley v Dudleyopined that ‘now Equity is no part of law, but
a moral virtue, which qualifies, moderates and reforms the rigour, hardness and edge of the law,
and is a universal truth; it does also assist the law where it is defective and weak in the
constitution (which is the life of the law) and defends the law from crafty evasions’265

The position of Lord Cowper was further strengthened by Lord Denning in Packer v Packer,
where he stated, “if we do not do something just because it has never been done before; the law
will stand still and will not develop; while the rest of the world moves ahead. This will be bad for
both” Lord Atkin also expressed similar views in United Australia Ltd v Barclays Bank Ltd. He
said: “…when these ghosts of the past stand in the path of justice clanking their medieval chains,
the proper cause for the judge is to pass through them undeterred.”266
265
Birchall, John. "An Introduction to Equity & Trusts"

266
Hudson, Alistair. "Part 1, Fundamentals of Equity and Trusts"(PDF). Equity and Trusts. Retrieved 16 September
2012.
As seen from the general juristic sense, the origins of Equity lie in the deficiencies of the
Common Law. The Common Law had gaps where a remedy was not available or where a
remedy was available but was not appropriate to the particular loss of a plaintiff. While Common
Law remedies were basically compensatory, the Chancellor developed the following preventive
remedies;

He could prevent a wrongdoing by injunction, either in the restrictive or mandatory form.

He could compel parties to a contract to respect its sanctity by an order of specific performance.

He could also alter a document to reflect the parties’ true intention by an equitable order of
rectification when he makes an order of rescission of a contract which can materially utter the
parties’ position he can decree that they be restored their pre-contractual status quo.

In doing so, the Chancellor did not consider himself as administering a separate body of law. He
was said to act in personam. Equity was thus not conceived as a complete alternative to law, but
as an appendage for improving its machinery. The combination of the administration of both
systems had the effect of:

Creating and introducing to the English legal system new rights and interests

Improving the existing procedure and remedies for claimants

Fusion of the administration of law and Equity

The orthodox view of scholars is that the Judicature Act 1873 (“the Act”) fused the
administration of Common Law and Equity by amalgamating the superior court into the
Supreme Court of Judicature having jurisdiction over matters of law and Equity. This view
implies that (for both law and Equity, especially Equity) no new cause of actions, remedies or
defenses would become available which was not previously available in one or more of the
courts. Traditionally it is suggested that “the two streams of jurisdiction, though they run in the
same channel, run side by side and do not mingle their waters”.

The other view, often referred to as the “fusion theory” states that the Act codifies both Common
Law and Equity into one subject matter and in effect severed the historical roots of the separate
concepts of law and Equity. This was well explicated in the dictum of erudite Lord Diplock
stating that “the innate conservatism of English lawyers may have made them slow to recognize
that by the Judicature Act 1873 the two systems of substantive and adjectival law formerly
administered by courts of law and Equity have surely mingled now” 267. By this proposition, the
Act merged together the substantive law. One of the strongest advocates of the fusion theory is
Lord Diplock. His Lordship’s exposition of fusion of the two branches of the English
jurisprudence primarily derives from his views expressed in United Scientific Holdings Ltd V.
Burnley Borough Council, where he stated;268

My Lords, ‘if by rules of Equity’ is meant that body of substantive and adjectival law, that prior
to 1875, was administered by the Court of Chancery but not by courts of Common Law, to speak
of the rules of Equity as being part of the laws of England in 1977 is about as meaningful as to
speak similarly of the statutes of Uses or of QuiaEmptores. Historically all three have in their
time played an important part in the development of the corpus Juris into what it is today; but to
perpetuate a dichotomy between rules of Equity and rules of Common Law which it was a major
purpose of the Supreme Court of Judicature Act 1873 to do away with, is, in my view, conducive
to erroneous conclusions as to the ways in which the law of England has developed in the last
100 years.

The orthodox view (which is that the Judicature Act 1873 fused the administration of Common
Law and Equity by amalgamating the superior court into the Supreme Court of Judicature having
jurisdiction over matters of law and Equity) was most recently reasserted by Mummery LJ who
observed that the Judicature Acts ‘were intended to achieve procedural improvements in the
administration of law and Equity in all courts, not to transform equitable interests into legal
titles or to sweep away altogether the rules of the Common Law, such as the rule that a plaintiff
in an action for conversation must have possession or a right to immediate possession of the
goods’

In Walsh v Lonsdalewhere the defendant landlord entered into a tenancy agreement with the
plaintiff tenant for the lease of a mill for seven years. The parties agreed that the rent was to be
paid in advance. The lease was however not granted by deed as required by law for a lease
exceeding three years. Since no lease under seal was executed, the tenancy was void at law. The
267
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court held that the agreement for the lease was as good as the lease, because it is an agreement
for which specific performance could be decreed, it is submitted that to talk of the fusion of law
and Equity is misleading.269 This assertion is substantiated by virtue of the Judicature Act 1873,
where it was the administration of Common Law and Equity that was fused into a Court and not
the substantive laws in themselves. Thus, these two separate systems were not to be fused but
rather to run side by side in the courts to foster development, give room for more remedies and
allow for Equity to serve as a lubricant to the wheel of justice.

Also, if indeed Common Law and the doctrines of Equity were intended to be fused by the Act,
the need for Section 25(11) which states that were there is a conflict between Common Law and
Equity, Equity should prevail, will be of no need.

In present day, in the view of the writer of this paper, the position of the law remains the same as
Section 49 of the Supreme Court Act 1984 (an English Legislation) upholds the position of
Section 25(11) Judicature Act 1873.

In conclusion, indeed the Judicature Act 1873 creates for the fusion of the two separate systems
to be administered by one court, however, beyond the cold letters of the law, both systems have
indeed borrowed from the other in furthering the harmonious development of the law as a whole.
Simply put, Equity acts as a gloss to cover the deficiencies of Common Law

Question 3

With the aid of relevant examples and authorities discuss in details the doctrine of notice
and the impact of registration legislation on the doctrine of notion.

The concept of notice refers to the knowledge of an existing fact. The importance of the doctrine
is to prevent a buyer of superior title from setting it up against earlier owners of inferior interior
interest which affects the property. The effect of this that the buyer of the legal estate with notice
of the prior equitable interest affecting the estate takes it subject to the prior equitable interests in
this regard; equity look at the substance rather than the form

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For a purchaser or mortgagee to acquire the land free of the pre-existing equitable interest they
must prove that they are a bona fide purchaser of a legal estate for value without notice.

Bona fides; is a Latin term meaning good faith. The purchaser or mortgagee must demonstrate
they acted in good faith in entering the transaction.

Legal estate; this includes a purchase of the freehold, a legal lease or charge by way of legal
mortgage

For value; this excludes gifts and conveyances for a nominal consideration. The consideration
need not be market value:

Without notice

For the purchaser or mortgagee to take the legal estate free from the equitable interest, they must
not have notice (knowledge) of the interest. Where a purchaser or mortgagee is aware or should
have been aware of the equitable interest this affects their conscience and they are then bound by
the interest. There are three types of notice: actual notice, constructive notice and imputed notice.

Actual notice

This is where the purchaser or mortgagee was consciously aware of the existence of the equitable
interest.SempaMbabali Vs. W K KidzaOdoki J held that the defendants plea of bona fide
purchaser could not stand because they knew all along that part of the land that have purchased
was for burial grounds and also the seller had sold them the land before his share of the land had
been ascertained. This therefore means that his hands were not clean.

Constructive notice

Constructive notice; it was defined by Salden J in Williamson Vs. Brown; where a purchaser or
mortgagee ought to be aware of or what they would have discovered by making reasonable
inquiries. Constructive notice is set out in Law of Property Act 1925 which provides that a
purchaser will be fixed with notice if "it is within his own knowledge or would have come to his
knowledge if such inquiries and inspections had been made as ought reasonably to have been
made by him."
Reasonable inquiries including visiting the property and asking any occupants if they have
an interest or if they are a tenant to whom they pay their rent:

The purchaser is required to make inquiries as to all occupants even if their occupation is
consistent with the title offered: See:

Failure to make any inspection of the property at all will result in the purchaser or mortgagee
being fixed with constructive notice:

An inadequate inspection may also result in being fixed with constructive notice. For example
where a pre-arranged visit allows the legal owner to hide evidence of occupation:

Imputed notice

A purchaser or mortgagee is deemed to know all that his agent knows or has constructive notice.
It’s established in the agency law that the notice to an agent is notice to the principal. In this
regard, a buyer who instructed his agent to buy property at an auction sale was taken to be
affected by notice of an equity which came to his notice during the course of transaction. In
SejjakanalimaVs. Rebecca Musoke. Odoki J held that the appellant was not bona fide
purchaser without notice owing to the fact that Musoke and co. advocates who were acting as
her agents had known of the alleged fraud concerning the disputed property.

Question 4

Malik a rich man by will made the following bequests:

5 acres to my son Amos

Malik applied a fixed trust where the beneficiaries and their shares are fixed. For example the 5
acres to my son Amos were fixed.

2 acres to the health Centre in lower Konge.

Malik applied a fixed trust where the beneficiaries and their shares are fixed. For example the 5
acres to my son Amos were fixed.
My freehold house to my lovely wife Franca absolutely in full confidence that she will hold
it for either my daughter Shakira or my son Shaficas she deems it.

Malik used a discretionary trust where the settlor gives the trustee the discretion to select who
from the given class of people will receive the trust property and in what shares.

The remainder will go to my nephew.

The trust failed failed becauseat its creation the subject matter was totally uncertainty. Its
difficulty to tell how many nephews did Malik had and among whom was to receive the trust
property as in the case of Sprange V Barnard.

Question 5

Explain the nature and principles guiding the issue of interlocutory injunctions.

An injunction as a judicial process is where a party is required to do a particular thing or to

refrain from doing a particular thing according to the exigency of the writ.270

Types of injunction

Injunction are either

Interlocutory injunction, PerpetualInjunction, Mandatory injunction, Quiatimet or prohibitory

injunction.

Interlocutory injunctions are such as are to continue until the hearing of the cause upon the
merits or generally until further order. It may be granted at any stage if the suit. It’s merely
provisional in its nature and does not conclude a right.

Perpetual injunctions are such as form of the decree made at the hearing upon the merits.

Instances when an interlocutory injunction may be granted.

Where in any suit it is proved by affidavit or otherwise:

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That any property in dispute in a suit is in danger of being wasted, damaged, or alienated by any
party to the suit, or wrongfully sold in execution of a decree: or

That the defendant threatens or intends to remove or dispose of his or her property with a view to
defraud his or her creditors.

Court may grant a temporary injunction to restrain such act or make such order to prevent the
damaging, alienation, sale, removal or disposition of the until the determination of the suit.

General principles for grant of interlocutory injunction.

When deciding whether to grant an application for an interlocutory injunction the court will
follow the guideline stated in American Cyanarnid v Ethicon limited271 as stated below.

Is there a serious issue to be tried?

Are damages an adequate remedy?

Where does the balance of convenience lie?

Are there special factors?

American Cyanamid v Ethicon [1975] AC 396

Guidelines and the issues to be taken into account by the court for the grant of an interim
injunction

Facts

The appellant was a company that held a patent for artificial absorbable surgical sutures. The
respondent was a company that intended to launch a suture to the British market which the
appellant claimed was in breach of its patent. At first instance, the appellant was granted an
injunction preventing the respondent’s use of the type of suture at issue until the trial of the
patent infringement. On appeal, the Court of Appeal discharged the injunction on the basis that
the case for patent infringement was not made out. The appellant appealed to the House of Lord.

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Issue

The issue on these facts was primarily the extent of any substantive claim necessary for the grant
of an interim injunction. The House of Lords however, set out detailed guidelines with regards to
how the courts should deal with the grant of interim injunctions in general.

Held.

It was held that (a) it was not the courts’ role to consider conflicting evidence in respect of an
interim application. This was a matter for trial. (b) All that was necessary at this stage was that
the claimant should show that there was a real issue to be tried. (c) The court should consider
whether damages were an adequate remedy for a claimant if an injunction was not granted. If so,
an injunction would not be available. (d) If damages were not an adequate remedy, the court
should then ask whether the claimant would be able to give an undertaking in damages to the
defendant. (e) If it was considered that there was any difficulty regarding the availability of
damages on either side, the court should consider the balance of convenience between the
parties. (f) If these factors were evenly balanced, the court should consider maintaining the status
quo. On the facts of this case, the balance of convenience lay with the appellant and the appeal
was allowed.

Question 6

Discuss the manner in which a constructive trust arises and what makes it different from
an express trust

Constructive trusts a form of trust created by the English law courts primarily where the
defendant has dealt with property in an "unconscionable manner". The property is held in
"constructive trust" for the harmed party, obliging the defendant to look after it. The main factors
that lead to a constructive trust are unconscionable dealings with property, such as stealing it,
possessing it via fraud, and accepting a bribe while in occupation of a fiduciary office.

In Paragon Finance plc v DB Thakerar& Co,Millet LJ defined a constructive trust as a trust

that "arises by operation of law whenever the circumstances are such that it would be
unconscionable for the owner of property (usually but not necessarily the legal estate) to assert
his own beneficial interest in the property and deny the beneficial interest of another". 272
Essentially, a constructive trust arises whenever an owner either ignores, or interferes, with the
rights of another person with an interest in that property . There is a distinction between personal
and proprietary rights to property.

Constructive trusts may arise in one of three situations.

First, when the parties form an agreement to buy the land, or show "common intention" by
jointly contributing to the price or mortgage of a property, as in Lloyds Bank plc v Rosset.

Second, when a contract to transfer rights is agreed to, the equitable interest is automatically
transferred, something that also applies to personal property

Third, a constructive trust may be created where there are several parties interested in
commercially exploiting land, and some refrain from doing so due to an agreement with the
defendant, as in Pallant v Morgan.[11] In Banner Homes Group plc v Luff Developments Ltd

Other types of constructive trust not relating to unconscionable dealings are constructive trusts
over property, mutual wills, and arguably secret trust

Profits from unlawful act

Where acts lead to profit and are illegal, under an established legal principle, equity puts any
property acquired through these acts into a constructive trust. The most common type of trust
here is one resulting from bribery; where somebody in a fiduciary office makes unlawful profit,
that money is held on constructive trust for the beneficiaries of his office.

Whether or not someone is a fiduciary depends on their position. Trustees, company directors,
agents and business partners are all fiduciaries, as in Yugraneft v Abramovich, but other positions
may be recognised by the court if the misuse of powers in a particular circumstance renders them
so, as in Reid. In Brink's Ltd v Abu-Saleh (No. 3),a security guard who was bribed to give
information on a company's security systems, allowing a gang of armed robbers to burgle their
warehouse, was found to be in a fiduciary position. While a security guard would not normally
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be a fiduciary due to not holding a senior enough role, in relation to security arrangements the
guard would be found to be acting in a fiduciary capacity.

Murder makes the killer a constructive trustee of whatever property they acquire as a result. This
applies to murder, as in the Estate of Crippen,inciting someone to murder, as in Evans v Evans,
[25]
and causing death by reckless driving.

Express trusts

An express trust is when a settlor creates a trust declaring herself or himself as a trustee of their
own property, or transferring said property to another trustee.  Although, an express trust is
created pursuant to the intention of the settlor, the courts can also make an inference to the
intention to create an express trust if it is satisfied that the parties want to create a equitable
interest in a third party, and the trust relationship is the appropriate means of creating that
intention.

Types of express trusts

Private trusts: a trust that is created to benefit at least one natural, or corporate person is
referred to as a private trust.

Public trust: a trust for the purpose of a charity (or anything else recognised by law) is referred
to as a public trust.

Fixed trusts: when talking about fixed trusts, the beneficiaries, or class of beneficiaries is
ascertainable and entitled in equity to the trust property, and is ascertained in accordance with the
terms of the trust. Beneficiaries can force the trust property to be administered and distributed.

Discretionary trusts: in discretionary trusts, the discretion of the trustee is absolute. Therefore,
a trustee can apply the trust income or capital to beneficiaries, or for charitable purposes.
Beneficiaries of a discretionary trust have a mere expectancy, and as a consequence, have no
enforceable claim to the trust income, or capital until the trustee chooses to exercise the
discretion in their favour.
Executed trusts: under an executed trust, all the necessary steps to complete the trust have been
fulfilled, the terms are clear, and the formalities completed, therefore, the trust has been
‘executed’.

Difference between an express trust and constructive trust

Constructive trusts is where the defendant has dealt with property in an "unconscionable
manner". The property is held in "constructive trust" for the harmed party, obliging the defendant
to look after it while express trust is when a settlor creates a trust declaring herself or himself as
a trustee of their own property, or transferring said property to another trustee. 

The main factors that lead to a constructive trust are unconscionable dealings with property, such
as stealing it, possessing it via fraud, and accepting a bribe while in occupation of a fiduciary
office while an express trust is created pursuant to the intention of the settlor.

In constructive trusts, the courts impose constructive trusts if there has been no declaration of a
trust. However, the principles of equity would consider it to be a ‘fraud’ for a person whom the
court imposes the trust to assert a beneficial ownership, or not account for a gain, or compensate
another for a loss while under express trust the courts may make an inference to the intention
to create an express trust if it is satisfied that the parties want to create an equitable interest in a
third party, and the trust relationship is the appropriate means of creating that intention.

Question 7

Discuss in details the requirement for a valid assignment

Assignments were defined in the case of Norman vs. Federal Commissioner of taxation 1963
109 Clr 9

Assignment means the immediate transfer of an existing proprietary right vested or contingent
from the assignor to the assignee. Anything that in the eyes of the law can be seen as an existing
subject of ownership, whether it’s chosen in possession or a chose in action, can today be
assigned unless it be accepted from the general rule on some ground of public policy or statute.273

At common law, declaimed to give effect to assignments of choses in action that is to say rights
which could only be enforced by bringing an action and not by taking possession of the physical
thing. The rule of the law was based on the apprehension that assignments of choses in action
would lead to maintenance or unnecessary litigation.

Equity regarded choses in action as property that can be transferred. Enforcement of such
assignment of chose in action depended on its nature which would be legal or equitable.

A legal chose in action as property which could only be sued for in common law for example a
contract debt. An equitable chose is one that could only be sued for in the court of chancery for
example an interest in a trust fund.

Types of assignment

Absolute assignment, where the assignor transfers his entire interests in a chose to the assignee.
This form of assignment ought to be contrasted with other forms of assignments where the
assigner retains an interest in the chose.

Assignment by way of charge, where the assignor uses the assignment as security for a loan such
that the assignee can only exercise rights with regard to the chose at the stage of enforcement of
the security.

Requirements of a valid assignment.

Formalities

A disposition of an equitable interest must be in writing and signed by the assignor or agent, an
oral assignment of an equitable chose is void as seen in the case of OugbhterdVs. Irc 1960 ac
206.
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Although writing is not necessary for an equitable assignment of a legal chose in action, the
contract may be provide that rights under it shall only be assigned by use of action of a certain
forms such as writing. Consequently an attempt to assign without using the stipulated form may
be ineffective as an assignment although it may amount to a contract to assign.

Intention to assign

It is necessary to establish an intention assign as seen in the case of Williams BrandtsSone and
Co. vs. Dunlop Rubberco. 1905 Ac 454. “An equitable interest assignment does not always take
that form. It may be addressed to the debtor. It maybe couched in some language of command. It
may be a courteous request. It may assume the form of mere permission. The language is
immaterial if the meaning is pain. All that is necessary is that the debtor should be given to
understand that the debt has been made over the creditor to some third party”.

Communication to assignee

An assignment is not effective until its communicated to the assignee as seen in the case of
Alexander Vs. Stenihardt Walter And Co. 1903

This can be done by the assignor or any person with his authority in the case of Burn Vs.
Carvalfio 1939.

Notice to the debtor

Where there are two successive assignment (legal and equitable) of the same chose in action, the
rule in DearlVs. Hall 1823 applies to regulate priorities.

In this case brown a beneficiary assigned his interest by way of security first to Dearl and then
Shering. The trustees were not given a notice of assignment. Some year later brown assigned his
interest to hall. Before purchasing the interest, hall made inquiries of the trustees who indicated
that the interest was unencumbered. Hall gave the trustees notice of his assignment.
Unfortunately Dearl and Sherringgave the trustees notice of the assignments. It was held that an
assignee for value who is first to give notice to the debtor, trustee or fund holder takes priority
unless he knew of the earlier assignment when he took his assign
Question 8

Explain 3 out of the following

Equality is equity (Aequalitusest quasi equitas)

Where two persons have an equal right, the property will be divided equally.

This maxim flows from the fundamental notion of equality or impartiality due to the conception
of Equity and is the source of many equitable doctrines. The maxim is of very wide application.
The rule of ordinary law may give one party an advantage over the other. But, the court of equity
where it can, put the litigating parties on a footing of equality. Equity proceeds in the principle
that a right or liability should as far as possible, be equalized among all interested. In the Simple
Word's then two parties have equal Rights in any of property so the same was distributed equal
as per their concerned Law.

Equity follows the law (aquitassequitarlegem)

Equity has no clash with law neither it overrides the provisions of law, nor it is the enemy of law.
It adopts and follows the basic rules of law. It is said that equity is not a body of jurisprudence
acting contrary to law but is rather a supplement to law. It is a well-known rule that equity
follows the analogies of law. The equity came not to destroy the law but to fulfill it, to
supplement it, to explain it.Equity respects every word of law.
Equity is intended to supplement the law and not to supersede it.
The discretion of the court is to be governed by the rules of law and equity, which are not
oppose, but each, in turn, to be subservient to the other, this discretion, in some cases, follows
the law implicit, in other assists it and advances the remedy; in other against it relieves against
the abuse, or allays the rigor of it but in no case does it contradict or overturn the grounds of
principle thereof.

APPLICATION
It has application in the following two aspects.

I. As to legal estates, rights and interest:

As regards legal estates, right and interests, equity was and is strictly bound by the rules of law
and it has no discretion to deviate there from. Equity does not allow an unfair use to be made of
legal rights so equity follows the in regard to the rule of primogeniture.

II. As to equitable rights and interest:

In many cases equity acts by analogy to the rules of law in relation to equitable titles and estates.
Equitable estates are guided by the rules of decent as legal estate.

IMPORTANT ASPECTS OF MAXIM:

Following are two important aspect of this maxim.
(i) Equity adopts and follows the rules of law in all cases where applicable.
(ii) Equity follows the analogy of law
.
EXCEPTIONS:
(i) Where a rule of law did not specifically apply.
(ii) Where even by analogy the rule of law did not apply, equity formulated and applied it's own
rules.

Anton pillar injunction

Ex-parte court injunction that requires a defendant to allow the plaintiff to (1) enter defendant's
premises, (2) search for and take away any material evidence and, (3) force the defendant to
answer some questions. Employed usually in cases of possible copyright violation, its primary
objective is to prevent destruction or removal of evidence. This order is not a search warrant, but
the defendant is in contempt of court if he or she refuses to comply. Named after the 1976 UK
case of Anton Piller KG v. Manufacturing Processes.' Nowadays called search order.

QuiaTimet Injunction.

In London Borough of Islington v Elliot and Morris [2012] EWCA Civ 56, the Court of Appeal
reviewed the principles that apply when considering the power of a court under English law to
grant injunctions before damage has taken place. These are known as QuiaTimet(“because he
fears”) injunctions. The decision overturning the County Court’s assessment that such an
injunction was warranted illustrates the reluctance of English courts to take such action at least in
nuisance cases. It also strongly suggests that common law actions may generally be ill-suited as a
preemptive defensive measure.274 In contrast, the Patents Court recently handed down its
decision in Merck Sharp Dohme Corp and Bristol-Myers Squibb Pharmaceuticals Limited v
TevaPharma BV [2013] EWHC 1958 (Pat), in which a QuiaTimetinjunction was granted to stop
threatened and intended patent infringement. The analyses in both cases are instructive on the
potential benefits and limits of this procedural tool.

Question One

The development of Equity was both controversial and significant to the

legal system. Do you agree with this statement?
Equity is doing something out of good faith, honest and doing what is right when dealing
with relationships between individuals.

Historically, equity developed due to mitigate the rigidity of common law and to provide
reliefs which the common law could not provide to litigants.

 Equity introduced various reforms i.e.the Judicature Act is one of the reforms
introduced by equity. The recommendations of the Royal commission basically
investigated some matter of public importance and made recommendations hence the
Judicature Act of 1873 to 1875 was enacted which brought laws and abolished all
existing superior courts hence putting up a supreme court of judicature consisting of
the High Court which was to consist of three divisions i.e. the King's Bench, the
Chancery Division and Probate, Divorce and Admiralty Division. The Court of
Appeal was also put up. The Judicature Act abolished the dual administration of
justice as between the Common law courts and Chancery Court.
 Secondly, the High Courts of justice were given power to administer both equity and
law concurrently together. All claims, obligations and defenses were recognized and
enforced by three divisions of the High Court.

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 Thirdly, the area of operation between the Common law courts and Chancery courts
was not clearly defined. Hence the continuous petitions to the King led to the
establishment of the Chancery courts which were a separate court from other
Common law courts. The king hence requested the Chancellors to handle these cases
and be able to use their powers under conscience and natural justice though it was
found out that what was of conscience to one chancellor would not necessarily to
another.
 Remedies introduced where damages but also equitable remedies like specific
performance and injunctions came into place though courts of equity won’t grant an
equitable remedy if a legal remedy is adequate. The Chancery would provide a
remedy where common law was rigid hence equity came up to fill in the gaps that
existed hence showing that common law and equity together for the progress of the
law.

Rules of Equity are regarded as portion of natural justice that was enforceable though in
Common law courts,there were reasons for its non application. The effect was that Equity
would get priority in decisions which would conclude differently from the common law
solution. In CreswellV Potter, the transaction was set aside for that the parties didn’t
seek for legal advice and they undervalued the land of the poor.

In conclusion I therebysay that that the development of equity was both controversial
and significant in the legal system as discussed above.

Question two

Discuss in details whether the judicature Acts of 1873-1875 simply

fused the rules of or the administration of equity and law.
Equity basically refers to doing something out of good faith, honest and doing what is
right when dealing with relationships between individuals.

It should be noted that Equity has its origins in the old English Courts of Chancery. It
developed due to the inability of the Kings justices to enforce judgments against powerful
individuals and with increasing frequency in later years of the defects of the Common
law, people started submitting petitions to the King who was considered to be a
repository of Divine justice. Such petitions were often passed over to the Lord
Chancellor, who would dispose justice in the name of the King. With the passage of time,
such petitions were directed to the Chancellor and he began to function as a Court of law.
Equitable principles developed in these courts of Chancery and it was that they were so
developed by Priests i.e. most Chancellors were men of the cloth. This hence ensured that
the principles of Equity were fundamentally based on the concept of natural justice in
keeping with the lines of the Christian tradition of good and evil, and indeed in ancient
usage the word Equity means natural justice.

The different views taken by the principles of Common law and the principles of Equity
naturally led to conflicts. In the reign of King James the 1 st, it was held that decisions of
the Chancery would have overriding authority. While Equity was initially free of the
concept of precedent from the late 1500s to the mid 1800s, cases based on equitable
principles began to take shape, and the rules or principles of equity took their final form
with clear lines and by the introduction of the Judicature Acts of 1873 and 1875 the
Court of Chancery, along with the other Courts such as Kings or Queens Bench,
Common Pleas, Exchequer, Exchequer Chamber, Court of Appeal in Chancery were
absorbed by the Supreme Court.

The Judicature Act played a role in fusing the system under which both the Common law
and Equity was administered hence an amalgamation of the different courts under one
Court.

The Common Law and Equity themselves were not fused but these continued to function
as two separate systems of law. This therefore establishes that while the Common Law
and Equity came to be administered under the same system, the fundamental principles of
Common law and Equity continue to act independently of each other in the interests of
Justice. This can, be illustrated through reference to decided cases likeCentral London
Property Trust Ltd v High Trees House Ltd (1947). The facts of the case are
thatduring the 2ndWorld War,people left London due to the German bombing it and as a
result, many residential premises were vacated. In a certain block of flats, flats had been
leased out for a period of 99 years at 2,500 pounds a year. In order to curb vacation, the
landlord had offered to cut the rent by half i.e.1, 250 pounds a year. Once the fighting
was finished, the tenants returned and the landlord litigated to recover 2,500 pounds. As
per the Common Law, the plaintiffs would have been able to recover 2,500 pounds even
for the period when the flats had been empty since the lease that fixed the amount was
under seal and it could not be changed by a mere agreement but only through a deed.
However, the principles of equity took on a different view as Lord Denning held that
through equity, the promise made was binding on the party making it and that the
plaintiff could not recover the full amount of money for the period when the flats were
empty.

From the above case, a number of observations as to equitable principles against those of
common law can be drawn, namely,

 It is clear that the legal position with regard to a lease or contract drawn up in
equity will receive treatment independent of the common law. Hence legal
remedies that would have been valid under common law cease to apply in equity.
This implies that the two systems operate independently of each other while
aiming for the common goal of justice.
 When a particular situation is to fall within equitable principles, it becomes
subject to the full principles of Equity hence all maxims of equity except ‘Equity
acts in personam’ are inter related and act in accordance with the fundamental
maxim that Equity will not suffer a wrong to be without a remedy .i.e. The
principles of equity can be though to act as a whole within the legal system but
independent of the common law.
 Section 25 of the 1873 Judicature Act states the operating mechanism for
Common law and Equity to function. This is specific that while equity is meant to
complement Common law in interests of justice, but in case of a conflict between
the two, Equity shall prevail.
In conclusion, I thereby say that the Judicature Act did not simply fuse the rules of
Equity and Common law butSection 25 ofthe 1873 Judicature Act stressed that equity
will prevail where common law and equity are in conflict.

Question three

With the aid of relevant examples and authorities discuss in details the
Doctrine of Notice and the impact of registration legislation on the
Doctrine of Notice.
Notice is defined to mean knowledge of an existing fact.

The rationale of the doctrine is to protect the buyer of a superior title from setting it up
against prior owners of inferior interests which affect the property i.e. the buyer of the
legal estate with notice of prior equitable interests affecting the estate takes it subject to
those prior equitable interests.

Notice is divided into three categories i.e. actual, constructive and imputed notice

Actual notice: This is where a buyer of an estate has actual or express notice of prior
interest at the time when he or she made the purchases or before the purchases was
completed. This consists of personal knowledge of the prior equitable interest affecting
the property which the buyer intends to buy.

In Daniel Sempa v Kizza,it was held that the defendant’s plea of bonafide purchaser for
value could not stand because they knew all along that the part of the land they had
purchased was for burial ground and also the seller had sold them land before his share
had been ascertained.

Constructive notice :The case of Williams v browndefined constructive notice as

where a purchaser has knowledge of any fact sufficient to put him on inquiry as to the
existence of some right or title in conflict with that he is about to purchase.

However, this is a mere presumption which may disproved by showing that the buyer
failed to discover prior right after exercising due diligence.

The essence is that the buyer should make reasonable inquiry relating to the
circumstances of the transaction i.e. when buying a particular piece of land, inquiry
should be made to appropriate authorities like chiefs, elders, local council office, or the
registry of land titles to find out any other interests.
In Uganda Post and Telecommunications v AKPM lutaya,it was held that if a person
purchases an estate which he knows to be in the occupation of another other than the
vendor, he is bound by all the equities which the parties in such occupation may have in
the land.

Imputed notice: This is notice which is either actual or constructive and it maybe
imputed on the purchaser through his or her agent. It is established in Agency law that
notice to an agent is notice to the principal hence such notice will only be imputed to the
buyer through his bonafide agent.

In David Ssejjaka v Rebecca Musoke, Mrs. Musoke and Co. Advocates who were
acting on behalf of the appellant and Sendawula knew of the unregistered interest of the
respondent and the fraud of Sendawula who was selling to the appellant. The appellant
was not a bonafide purchaser because the advocates who were acting as his agents had
known of the alleged fraud concerning the disputed property.

The impact of registration legislation on the doctrine of notice

 Section 54 of the RTA requires registration of instruments affecting land and it

further states that no instrument until registered shall be effectual to pass any
interest in any land under this act. This helps the title to be traced either down
wards or upwards to the original certificate of title.
 Section 48 of the RTA states that every instrument presented for registration
maybe made in duplicate and shall be registered in the order of and as from the
time at which the same is produced for that purpose and instruments purporting to
affect the same interest shall not withstanding any actual or constructive notice be
entitled priority as between themselves according to the date of registration and
not according to the date of instrument.

NB: The effect of the sections mentioned above is that every instrument registered under
the RTA supersedes other instruments affecting the land from the date of its registration

Question four

Malik a rich man by will made the following bequest;

a. 5 acres to my son
b. 2 acres to the health center in lower konge
c. My freehold to my lovely wife franca absolutely in full confidence that she will
hold it for either my daughter or my son Shafik as she deems fit
d. The remainder would go to my nephew.
Discuss the legal effect of this trust

Issues

Whether 5 acres to the son constituted a valid trust

Whether 2 acres to the health centre was a charitable trust

Whether the precatory words by Malik that his lovely wife Franca will hold the freehold
in full confidence that she will hold it for the son and daughter constituted trust

Whether there was a valid trust in favour of the nephew

Law applicable

Charities act 2011

Case law

Resolutions

Whether 5 acres to the son constituted a valid trust

In the case of Knight v Knight, essentials of a valid trust were set out and they include
certainty of intention, subject matter and objects.

From the facts, Malik willed 5 acres of land to his son which shows that he intended that
after his death his son is entitled to receive that portion of land, the subject matter was
certain that is 5 acres and the object was also certain that is his son therefore the trust was
a valid one as the three certaintieswere ascertainable.

Whether 2 acres to the health centre was a charitable trust

A charitable trust is a public trust which benefits the public as a whole in a number of
specified ways such as relief of poverty, advancement of education, propagation of
religion and other purposes beneficial to society. Section (3) (1) (d) of the Charities Act
enacts that the advancement of or saving of lives is for charitable purpose.From the facts,
Malik gave 2 acres to the health center fell under the category of any other purpose
beneficial to the society as the land was to be used by the hospital for a certain objective
therefore it is a not valid charitable trust.
Whether the precatory words by Malik that his lovely wife Franca will hold the freehold
in full confidence that she will hold it for the son and daughter constituted a trust.

Precatory words are extremely ambiguous expressions used in a will. From the facts,
Malik’s words were ambiguous in that it was hard to ascertain whether he made his wife
a trustee for the children. InRe Adams and Kensington vestry, it was held that no trust
was made for the children so the wife was entitled to the property absolutely. Therefore
Malik’s wife Franca was entitled to the property absolutely as he had not made his wife a
trustee for the children.

Whether there was a valid trust in favor of the nephew

For a trust to be valid three elements must be satisfied i.e. certainty of subject matter,
intention and objects.From the facts, Malikgavea remainder of the nephew, the certainty
of object and intention here was ascertainable but subject matter was not certain because
the trust property and beneficial interests were not certain. In Sprange v Barnard, a
testatrix transferred property by her will to Sprange for his sole use and added that at his
death the remaining part was to be divided to his equally two named persons. Court
decided that Sprange was not a trustee and took property beneficially. Therefore a trust
had not been created to the nephew because of uncertainty of subject matter.

In conclusion. I say that Malik had created a trust to the son and to the wife as land to the
hospital and to the nephew could not be enforceable because of their uncertainties.

Question five

Explain the nature and principles guiding the issue of interlocutory

injunctions.
An interlocutory injunction is a court order which compels or prevents a party from
doing certain acts pending the final determination of the case. This is an order made at an
interim stage during the trial and it is usually issued to maintain the status quo until
judgment can be made. It should be noted that since the plaintiff must show irreparable
harm to obtain the injunction, it is usually critical that the plaintiff applies for an
injunction quickly after learning of the defendant's conduct. On delay, the court may infer
that the plaintiff will not suffer irreparable harm from the continued conduct of the
defendant.
In Uganda, Courts have powers to grant injunctions under Section 38(1) of the
Judicatureact cap 3 which states that the high court shall have power to grant an
injunction to restrain any person from doing any act as may be specified by the high
court.

Nature of the Interlocutory Injunctions

 The injunction normally remains in force until the trial of the suit. In
Hon.Baryayanga Andrew v AG, status quo was defined as the existing state of
affairs things or circumstances during the period immediately preceding the
application for an interlocutory injunction.
 The plaintiff should serve notice to the defendant before the suit is heard.
However, in exceptional cases, an injunction maybe given exparte without serving
notice on the defendant if the matter is so urgent that the plaintiff will suffer
irreparable damages if he/she had to go through the normal procedure.
 Discontinuation of interlocutory injunction i.e. it can be discontinued if it was
based on a wrong application of the law as was in Regent Oil v Leavesley, the
court discharged an interlocutory injunction which was granted to restrain the
breach of 7 and a half years solus agreement because the agreement was void for
being an unreasonable restraint of trade.
 Complete relief i.e. an interlocutory injunction may provide the complete relief
sought. Although courts have tried to avoid this effect, nevertheless whether an
interlocutory injunction would dispose of the matter depends on the circumstances
of the case.InWoodford v smith, an interlocutory injunction was granted to
restrain a residents association from breaking its contract by holding a meeting
without permitting the plaintiff members to attend and vote, this constituted a
complete relief.
 Ineffective injunction i.e. since equity does not act in vain, an interlocutory
injunction would not be granted if it is of no effect. In Bentley Stevens v Jones, a
director was removed in the course of irregular proceedings which were convened
without notice being served on him. The court declined to grant the injunction
sought because the irregularitycould be stopped by going through the proper
processes and serving a valid notice.

Principles governing the issuance of an interlocutory injunction

In Beecham Group v Bristol Laboratories, it was stated that the order will be granted
on presence of: a)A serious question to be tried which must be of a greater importance
and if determined in favor of the plaintiff, damages would not be an adequate remedy. b)
The balance of convenience favors the imposition of an interlocutory injunction. The
court must weigh the positions of the parties in order to determine the likelihood and
extent of the harm that may be suffered by the plaintiff if no injunction is granted and
how onerous theinjunction would impact to the defendant.
Question six

Discuss the manner in which a constructive trust arises and what makes
it different from an express trust.
The case ofGreen v Underhill defines a trust as an equitable obligation on a trustee to
deal with property over which he has no control for the benefit of persons of whom he
may himself be one and anyone of whom may enforce the obligation.

Any act which is not authorized by the terms of the trust instrument or by law is a breach
of trust.

Trusts are classified according to creation into express trusts and implied trusts which
include resulting trusts and constrictive trusts.

Constructive trusts are the ones created by courts in the interests of justice and
conscience. It’s a legal fiction that is used as a remedy for unjust enrichment thus there is
no trustee but the constructive terms orders the person. Constructive trust extend even
more in express trustees thus may attach to strangers who interfere with trust property
with knowledge that they are dealing with trust property. These hence normally arise
under operation of law and they are basically against fraud by one party onto another.

Express trusts are trusts created with the express intention of the settler to benefit a
particular person. The intention maybe expressed in writing or oral and assented to by
the parties.

The difference is that Express trusts are those which came into existence because settlers
have expressed their intention to that effect while Constructive trusts arise not because of
anyone’s expression of trust intent but because one party needs to surrender property to
another party and this is machinery which the court employs in order to get the 2 nd party
to do that.

Question seven

Discuss in details the requirements for a valid assignment.

The case of Norman v Federal Commissioner of Taxationdefines an assignmentas the
immediate transfer of an existing propriety right vested from the assignor to the assignee.

Assignment has different types of Assignment i.e.

 Absolute Assignment is where the assignor transfers his entire interest in a chose
to the assignee.
 Assignment by way of charge is where an assignor uses the assignment as a
security for a loan.In the case of Durham Brothers v Robertson, a builder
borrowed some money assigned them money due to him to the lender as security
for the loan, until the money lent is repaid. It was held that this assignment was by
way of charge.
 Assignment of part of a debt is where one assigns only a portion of the amount due
to him or her hence this is not absolute.
 Conditional Assignment is where the assignment is subject to a condition.

Below are the requirements of a valid Assignment:

a. Intention to assign. In William BrandtsSone& Co. vs. Dunlop Rubber Co.

an equitable assignment does not take that form it may be in any way
considered that the debtor understands that the debt has been made over by the
creditor to a third party.
b. Communication to assignee i.e. in the case of Alexander v Steinhardt Walter
& Co. it was stated that an assignment is not effective until it is communicated
to the assignee.
c. Notice to the debtor i.e. the notice should be made early and also the maxim of
where two equities are equal, the first in time prevails applies here as well. In
Dearle vs. Hall, a beneficiary assigned his interest as security first to Dearle
and then to another but however the trustees were not given notice of the
assignment. Later Brown assigned his interest to Hall and Hall made inquiries
of the trustees who indicated there was an encumbrance. Hall gave notice of
their assignments. It was held an assignee for value that is first to give notice to
the debtor, the trustee takes priority unless he had knowledge of the earlier
interest.

However there are rights which are not assignable and they include:

1. Contracts stated that they should not to be assignable.

 2. Where it is clearly stated that rights under it shall not be assignable, such rights
cannot be assigned in breach of contract.
3. Personal contracts.i.e. if it’s found out that the debtor is willing to act in favor of a
particular creditor then the benefit of a contract cannot be assignable.
4. Mere Expectancies i.e. these are normally rights that do not exist yet or that do not
yet belong to the assignor hence they can’t be effective but however, where an
agreement to assign future property maybe held to be enforceable agreement to
assign if by consideration.
NB:There is also assignment by operation of law i.e. death where one of the
contracting parties dies, his rights pass to his personal representative hence they
can recover the damages for the breach. Operation of the law also arises on
bankruptcy i.e. when one becomes bankrupt his property his or her estate is
deemed to have been assigned to his trustee in bankruptcy thus the trustee can
recover debts and claim damages for breach of contract with the bankrupt from the
other party as stated in Section 51(4) of the bankruptcy Act cap 67.

Question eighty

Explain 3 out of the following;

a. Equity is equity
b. Equity follows the law
c. Anton pillar injunction
d. Quiatimet Injunction
e. The effect of precatory words.
a. Equality is equity
Equity always tries to put the litigating parties on an equal level so far as their
rights and liabilities are concerned. Equity acts in such manner that no party gets
an under advantage over the other party. Benefits and burden of common interests
and obligation cannot be imposed upon and pressed against any one. It is also
expressed that “Equity delighted in equality” meaning that as far as possible equity
would put the litigating parties at equal pedestal. It expresses the object of both
law and equity in order to effectuate distribution of property and losses
proportionate to several claims and liabilities of the parties concerned so equality
therefore means proportionate equality.
Application of the maxim:
I. Joint tenancy:
Joint tenancy means joint ownership regarding the rights of survivor ship.
 This means that if the surviving tenant is regarded as a trustee of the
Deceased’s share for the benefit of the children under the will, joint tenancy
will be invoked to a tenancy in common.
II. Abatement of legacies:
If legacies are general, they are liable to a proportionate reduction in assets
proving insufficient to pay to the legacies in full.
III. Power of appointment:
Where donee of powers in the nature of the trust fails to exercise his
power, the courts of equity on the principle of equality will carry the same
into effect so that it may not fail to distribute the property equally among
the persons concerned.
In conclusion, I can say that equity always tries to keep the parties at same
position. A party cannot get any undue advantage over the other. In the
distribution of property, the highest equity is to make equality between the parties
standing in the same relation.
b. Equity follows the law
Equity has no clash with law neither it overrides the provisions of law nor it is the
enemy of law but it adopts and follows the basic rules of law. It is said that equity
is not a body of jurisprudence acting contrary to law but is rather a supplement to
law hence equity is intended to supplement the law and not to supersede it. It
should be noted that the discretion of the court is to be governed by the rules of
law and equity which are not to oppose each other but in turn to be subservient to
the other. In Hussein Hamdani VUEB, it was held that the fact that the plaintiff’s
suit against breach of contract was restrained by Section 14 of the Judicature Act
hence it wouldn’t succeed in equity because equity is only applicable in case of
gaps in the law but the time frame of bringing a suit was already stipulated in the
law.
Application of the maxim:
Trusts:
Under a trust, a beneficiary is an equitable owner but equity does not deny a
legal title to the Trustee.

In conclusion, I can say that equity always follows the law in the sense of
obeying it and conforming to its general rules and policy whether contained
in common law or statue law. The rules of equity can not override the
specific provisions of law.

C. Anton pillar Injunction

This is a court order that provides the right to enter search and seize evidence without
prior warning. It is an injunctive relief named after the case of Anton Piller KG v
Manufacturing Processes Limited where Lord Denning stated that the order sought is
not a search warrant hence It does not authorize the Plaintiffs' Solicitors to enter the
Defendant's premises against his will but It only authorizes entry and inspection by the
permission of the Defendants. It actually orders him to give permission and on failure to
give permission, he is guilty of contempt of court.

In Uganda, Section 38(1) of the Judicature Act states that the High court shall have power
to grant an injunction to restrain any person from doing any act as may be specified by
the High court.

Tests to be proved before awarding the injunction:

 There is an extremely strong prima facie case against the respondent.
 The damage either potential or actual must be very serious for the applicant.
 There must be clear evidence that the respondents have in their possession relevant
documents or things and that there is a real possibility that they may destroy such
material before an inter partes application can be made.

D. QuiaTimet Injunction

Thisis an injunction to restrain wrongful acts which are threatened or imminent but have
not yet commenced. Itis filed by a person fearing some injury to his right or property, real
or personal, from the negligence, fault or fraud of another. The party seeking it does so
because he fears some probable injury will be caused to his rights or interests and not
because an injury has already occurred. The case of Fletcher V Bealey provides that in
order to seek for the injunction, the applicant must illustrate imminent danger, proof that
the threatened injury will be practically irreparable and proof that whenever the injurious
circumstances ensue, it will be impossible to protect plaintiff’s interests if the relief is
denied.
E.The effect of precatory words

Precatory words are words that express a wish or a desire rather than a clear command.
These words are common in a trust document like a will and these appear to express a
wish or a desire rather than a clear command direction to the trustee. This can be
illustrated like in a will where the words like "my daughter will have control over the
estate" are precatory as they don’t provide a clear wish as a sale by the daughter may be
construed as control. In case of a trust, if a court finds that it was created by such
language, there has been formation of a precatory trust. The effect of precatory words is
that they do not constitute to a trust as a precatory trust is not perfected and equity does
not perfect an imperfect gift.
MAKERERE UNIVERSITY SCHOOL OF LAW

DEPARTMENT OF LAW AND JURISPRUDENCE

UNIVERSITY SEMESTER 1 EXAMINATIONS 2017/2018

PAPER: LAW L208 EQUITY AND TRUSTS.

DATE; WEDNESDAY, 13TH DECEMEBRE 2017 TIME 9AM-12-30PM.

INSTRUCTIONS:

e) This is a closed book examination, candidates are not permitted to refer to any material
f) Attempt four questions only (2 from each section)
g) Do not use more than 01 (one) standard answer booklet of 16 pages
h) Read all instructions on the answer booklet.
1 (a). Celia died on 21st April 2017. Her executors seek your advice as to whether she
successfully passed tittle in any of the following items of property at the date of her
death based on the following information. On 1 st February 2017, Celia was the
absolute owner of 200 shares in Ugaplex Ltd. Celia telephoned Dumba, her cousin to tell
him that she intended to transfer these shares to him immediately, Celia completed part
of a share transfer from but she immediately, Celia completed part of a share transfer
from but she did not sign it and she did not post it of the company as she was
required to do.

iv. In your view; would it have made any difference if Celia had died very soon after the
conversation with Dumba, and if she had expressed her intention to complete that gift
on her death bed but without having prepared a will?
v. Celia discussed to her executors that she intended to donate 100 acre of land to her
fiancé Tonda, who lived and worked in an upcountry station. Discuss the legal issues
involved. (15 marks
b) Discuss briefly the distinction and / or relationship between trusts and the following legal
relations.
iv. Contact
v. Agency
vi. Bailment (10marks)
2. Jaggwe is 62 years old and of sound mind. He has two secret children molly, aged 17 and
Paul aged 23, Jaggwe has hidden this fact from his wife and family for 23 years, Molly
and Paul are both enrolled in post-secondary education, which Jaggwe is paying for
managing their own affairs. Jaggwe doesn’t want to just give money to these children
because he wants them to use it only for their education. He could continue to pay for his
 children’s education directly but is concerned that if he becomes incapacitated or dies, the
children’s education will not be provided for. Advise on the best type of trust to be
formed for the above purposes, and why.

Suppose, also:

vi. An Inter Vivos trust is suggested to provide for the education of the children.
vii. That under the proposed trust a substantial sum of money is to be settled on trust for the
purpose of educating Jaggwe’s children
viii. That the draft trust instrument has a list of beneficiary that includes Molly and Paul and
Directs the Trustees to Use the Income from the fund for the education of the children but
provides no. other purpose for the use of the income of funds
ix. That Jaggwe informed Chonjo of his intention to create a trust and to appoint him a
trustee, but Chonjo remained silent and did not affirm acceptance.
x. That upon Jaggwe’s death, Chonjo sold the trust property and applied the proceeds to
boast his private businesses.
Discuss the legal effect of all the above circumstances.
5. Discuss any two of the following in relation to the creation of a trust:
v. Capacity
vi. Formalities
vii. Constitution
viii. Certainties essentials
SECTION B:

6. With relevant authorities and illustrations, discuss the accuracy of the assertion that:
“equitable doctrines (have remained available to prevent the un conscientious exercise of
the plaintiff’s rights at law” (25marks)
7. Write notes on the following showing their continued applicability in Uganda: (i) Equity
will not suffer a wrong to applicability in Uganda: (i) Equity will not suffer a wrong to be
without a remedy (ii) Equity follows the law (iii) He who seeks equity must do Equity,
(iv) He who comes to Equity must come with clean hands (v) Delay defeats equity.
(25marks)
8. Discuss the continued relevance of study of the doctrine of notice in Uganda
QN: 1a)

In order to be enforceable, a trust must be properly constituted either by the settler making a
declaration of trust or by transferring the trust property to trustees. A trust of shares can be
declared orally but an ineffective gift will not be construed as a declaration of a trust as was in
Jones v Lock.

In this case Cecilia had purported to transfer the shares to Dumba. The general rule is that equity
will not perfect an imperfect gift. In the facts given, we see that to transfer shares, a share
transfer form must be executed and the shares registered in the company in the names of the
transferee, therefore the transferor did everything that she was supposed to do for example she
transferred the shares to Dumba, but the effectiveness of the gift depends on the third party, the
gift will not fail as was in Re rose. Where the transferor needs to take some further steps like
signing and posting off the company, the gift will not be effective. On the facts that Cecilia had a
telephone conversation with Dumba was clearly insufficient because in order to make a perfect
gift, the donor must comply with the requirements necessary to transfer legal title to the property.
There are numerous examples where equity has not interfered when although a transfer was
intended, the transferor did not follow the appropriate transfer process just like the case at hand.
Also in the case of Jones v Lock, where a father intended to make a gift a gift of a cheque to his
child, but failed to endorse the cheque with the result that legal title did not pass therefore equity
refused to cure the defect and the gift failed. This rule however has its exceptions and these
include deathbed gift as was evidenced in this case where Cecilia was assumed to have died on
her deathbed without preparing a will therefore in my view equity shall come in to perfect an
imperfect gift.

BRIEF FACTS

That Cecilia died on the 21st of April, 2017 and was the absolute owner of 200 shares in Ugaplex
limited. That Cecilia telephoned Dumba her cousin to tell him that she intended to transfer those
shares to him immediately and that she had completed part of the share transfer form but had not
signed it or post it off the company as she was required to do.

LEGAL ISSUES

Whether or not the donation of 100 acres by Cecilia to her fiancé Tonda was valid?

LAW APPLICABLE

Case law

Succession Act
RESOLUTION

ISSUE 1;

In the circumstances surrounding the case at hand it’s clear that indeed there is a valid trust
between Cecilia and Tonda because for a valid trust to exist there should be the three certainties.
Further more due to onerous duties placed upon a trustee, its necessary that the settler makes
clear that the trust was intended, what property is subject to the trust and who the beneficiaries
are in order for the trust to be enforced. Accordingly the law has developed a test known as the
three certainties that encompasses certainty of intention, certainty of subject matter and certainty
of objects in the case of Knight v Knight and in continuation except as to charitable trusts which
do not need certainty of objects, the three certainties need to be present so that a trust can be
workable and capable of supervision by the court.

From the case above in my opinion it’s a charitable trust because Cecilia donated the 100 acre to
her fiancé Tonda. And further more to explain this under certainty of intention, it’s necessary for
the settler to intend to create a trust as opposed to some other type of legal relationship.
Nevertheless, there is no magic formula necessary to show the intention to create a trust. Equity
looks to the intent rather than the form. Although desirable, the use of the word “trust” is not
essential. Even if the term “trust” is employed, this is no guarantee that a trust will be discerned
as was in Midland Bank v Wyatt. There is however no general requirement that a trust be created
or even evidenced in writing and a trust can be inferred from the conduct of the parties and the
surrounding circumstances therefore the fact that Cecilia intended to donate the 100 acres of land
to her fiancé was a valid trust.

The other element is certainty of subject matter whereby although any existing property may be
the subject matter of a trust, trust property must be certain. The entire property that is to be the
subject of the trust must be described in such a way that it becomes certain and ascertainable and
there has to be an identifiable trust fund, this therefore means by Cecilia disclosing to her
executors that she intended to donate 100 acres of land to her fiancé Tonda, the trust property
was certain to the executors knowledge.

QN1(b)

Trust & Agency

Agency is a contractual arrangement express or implied, written or verbal whereby one person
may act on behalf of another and bind that other as if he or she acted personally. An agency
arises where a person called the agent has expressed or implied authority to act on behalf of
another called the principal and he consents to do so. The agent is normally treated as an
accounting fiduciary party and he binds the principal vis-à-vis third parties. Royal Brunei
Airlines v Tan [1995] 2 AC 378 where a travel agent was appointed to sell tickets for the
plaintiff airline on condition that all monies received by the agent were to be held for the airline
on trust.

There are some similarities between trustees and agents;

-The relationship of trustee and beneficiary is fiduciary in nature while that of principle and
agent is normally fiduciary but not inevitably so.

-Both trustees and agents must act personally and should not delegate their duties

-Neither of them may make un-authorised profits from their office

There are differences however

1. The trustee in exercise of his office will contract as principal and cannot bind the
beneficiaries unless they have constituted him both trustee and agent but an agent binds his
principal so long as he acts on the principal’s authority or on the apparent or ostensible authority
that he is deemed to have.

2. Although the trustee has a right of re-coup an indemnity against the beneficiaries for any
properly incurred expenses and creditors may subrogate those rights in certain circumstances
there is therefore no direct contractual link between the beneficiary and 3rd parties
comparable to the link between the principal and 3rd parties

3. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there is no contract to the contrary or the contract permits him to do so. On the
other hand a trust cannot be revoked unless the trust instrument reserves the power of
revocation. Mallot v. Wilson [1930] 2 Ch. 494.

However the beneficiaries if suijuris unanimous and together entitled may demand that the trust
property be distributed and consequently that the trust be brought to an end.

4. Normally the principal in agency gives binding directions to his agent whereas
beneficiaries cannot control the exercise of the trustee’s discretion. Refer to Re Brockbank
[1948]Ch. 206;

5. The central distinction between agency and trust is in relation to property. An agent does not
per se hold any property for his principal. Many agents do not obtain items of property at all
and those who do so acquire only possession but not title. On the other hand there can be no
trust unless title to the trust property vests in the trustee or in another party on behalf of
the trustee.

Trust and agency overlap

Note that trust and agency may overlap. A trust may be created under which the trustee
undertakes a contractual obligation to act on behalf of the beneficiary e.g. the vesting of
company shares in a nominee for a fee. Conversely an agent may become a trustee if for
instance he acquires title to property to be held for the benefit of his principal.

It has been said that an agent becomes a trustee for his principal if he obtains title to the
property for the principal’s benefit and on the face of if this is a clear proposition. However
this is not easy to gauge in practice especially if what is involved is a mere chattel or money
whose title may be transferred by mere delivery of possession with an intention to transfer it. The
question was tested in Cohen v. Cohen [1929]1 CLR in which a wife had sued her estranged
husband for several sums of money and the husband in defence pleaded the statute of limitations
her claims were time barred under the statutes of the Limitations Act. The defence would
succeed unless the claims arose under a trust or had been acknowledged within the limitation
period applicable to personal claims. The claims were as follows: 9000 DM being money and the
sale price of chattels sold on her behalf by an agent in Germany. In order to overcome difficulties
which attended transfer of funds from Germany to England where she lived, the wife had
arranged for her husband to collect her

9000 marks and use it for purchase of goods in Germany for his own business, it being agreed
that he would pay her out of his own funds in England.

The second claim was for £123 pounds sterling being the sale price of surplus furniture of the
wife sold after the marriage, the husband having retained this amount.

The third claim was as to £80 pounds sterling being settlement of an insurance claim arising
from the loss of the wife’s jewellery again the husband having retained this amount.

The court held that she succeeded in all the claims, the court finding that the husband stood in a
fiduciary relationship with regard to the wife’s property in the circumstances and was therefore a
trustee for her benefit. In arriving at this decision the court followed the decision in Burdick v.
Garrick 9000 DM (1870) L.R. 5 C.L 233 where Lord Justice Giffard stated as follows:

“in respect of attorneys who had been authorised and buy property and had attempted to set up
the statute of limitations as a defence “there was a very special power of attorney under which
the agents were authorised to receive and invest to buy real estate otherwise to deal with the
property but under no circumstances could the money be called theirs.” Under no
circumstances had they the right to apply the money to their own use or to keep it otherwise than
to a distinct and separate account throughout the whole of the time that this agency lasted, the
money was the money of the principal and not in any sense theirs. Under these circumstances, I
have no hesitation in saying that there was in the plainest possible terms a direct trust created. I
do not hesitate to say that where the duty of persons is to receive property and to hold it for
another and to keep it until it is called for, they cannot discharge themselves from that trust by
pleading lapse of time.”
A TRUST AND BAILMENT

Bailment refers to a relationship which arises where an owner of property gives permission to
another person to possess it. A bailment is a delivery of personal chattels to a bailee subject to a
condition that they be returned to the Bailor or be dealt with as the Bailor directs when the
purpose of the bailment has been carried out. There is an element of delivery in bailment.

Read part 9 of the contract Act No 7 of 2010.

Suppose that you are going abroad for a year. You may have a painting which you do not want to
leave in the house. You therefore hand it to a friend to look after during your absence. This will
probably amount to a bailment, though it could be a trust. Everything will depend on the location
of your title, your right to exclusive possession, of the painting.

If you vested it in a friend, then they will be a trustee of that right for you. If however, you kept
your right in yourself, handing over only the possession of the painting, the transactions will be
one of bailment, not trust. The difference between the two is crucial for a number of reasons.
One is this. If, in breach of instructions, your friend sold his title to the painting to an innocent
purchaser, it will matter a great deal whether you created a bailment or a trust. If your friend was
a bailee, then the purchaser will not acquire a title good against you and you will be able to
recover the painting’s value from the purchaser in an action in the tort of conversion, no matter
how innocent the purchaser may have been.

The basic rule is nemodat quod habet(no one gives what he does not have), and since your
friend did not have your title to the painting, he could not transfer it to the purchaser.

But if your friend was a trustee, the position of the purchaser would be different; for now your
friend does have the right in question and so is capable of passing it on to third parties. You, of
course, have rights under the trust, but such rights are destroyed when the subject-matter of the
trust comes into the hands of an innocent purchaser of value. It suffices to note that bailment is
governed by common law. The position of a bailee is similar to that of a trustee in the sense that
both are ‘entrusted’ with another’s property. The Trustee’s duty to take care of trust property is
roughly comparable with the duty of a gratuitous bailee although generally the trustee’s duties
are more onerous. There are however differences

Bailment differs from a trust in the following ways:

(a) A bailee obtains only possession and what is referred to as special property in the goods
property while a trustee takes title to the trust property. As a consequence a bailee cannot
except in a sale in market overt by virtue of estoppel or under special legislations such as the
Factors Acts pass a title to the Chattels valid against the bailor whereas a bona fide purchaser
who purchases the legal estate from a Trustee for value without notice of the trust acquires a
good title;
(b) Bailment is a common law notion worked out in proceedings for common law relief such
as actions for conversion, detinue or breach of contract whereas the trust relationship is purely
equitable. In conversion, initial possession is lawful but later converts the goods contrary to
what the owner intended. Detinue is where the defendant is unlawfully withholding the
plaintiff’s goods with no good reason.

(c) Bailment applies only to personal chattels that are capable of delivery whereas a trust
may arise in respect of real or personal property and whether tangible or intangible.

(d) A bailment is enforced by the bailor who is a party to the arrangement while generally
the trust is enforced by the beneficiary who is not a party to the trust instrument.

-In bailment, there is no transfer of property from the bailer to the bailee, i.e from A to B

-Bailment duties are dependent on rules of common law and not equity.

-The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.

-Bailment is restricted to chattels but a trust may exist for all types of property.

-Under bailment, the bailer can lose his legal ownership of the bailed property through any of the
ways by which legal owners lose rights; for example, Estoppel, however under a trust, the
beneficiary’s interest/title can only be defeated by transfer of legal title to a bonafide purchaser
for value without notice of the trust.

See Pilcher V Rawlins (1872) LR.7 Ch.APP. 259

Contracts

There is no clean division between contract and trust, though some judges have attempted to
draw one (e.g. as in re Cook [1965] Ch. 902). Indeed, there can be no hard and fast line between
contract and trust because contract is a source of rights while trust is a way of holding rights.
Indeed, many of the rights held in trust are born of contract. A simple example will illustrate.
Suppose I open a bank account and pay in £1,000. I have a right born of contract that the bank
repays me £1,000 on demand. If I then declare that I hold that right on trust for my children, it is
impossible to say that this is now a case of trust and not contract; in truth, it is both.

A contract is a common law personal obligation resulting from an agreement between parties.
On the other hand, a trust is an equitable relation which can rise independently of an
agreement. However, there are situations when a distinction between the two is hard to draw,
for example;

Settlement and covenants to settle

Where property is vested in trustees on a settlement, it is held upon a trust on the settlement.
However if the property has not yet been transferred to the trustees but it is simply subject to

a consent to settle, the beneficiaries will only be able to enforce the consent if they have given
consideration. This is based on the principle that “equity will not assist a volunteer”
QN2:

Brief facts.

Jaggwe has two secret children. He has hidden this fact from his wife and family for 23 years. He
does not want to give money to these children because he wants them only to use it for their own
education. He could continue to pay for his children’s education directly but he is concerned that
if he becomes incapacitated or dies, his children’s education could not be provided for.

Issue

1. Whether or not there is any trust to be formed.

Law applicable.

Succession Act Cap 162.

Case law.

Resolutions.

Whether or not there is any trust to be formed.

While resolving the above issue, we shall briefly go through a brief discussion on trusts. A trust
is defined as a relationship which is recognized by equity. Trust is a right of property held by one
person the trustee under a duty to apply for another person, the beneficiary. The person giving up
a trust is called a settler. The settler may also be referred to as a donor and the beneficiary a
donee. In Green V Underhill Justice Romer stated; a trust is defined as an equitable obligation
binding a person (trustee) to deal with property over which he has control (the trust property) for
the benefit of persons (beneficiaries) of whom he may himself be one, am anyone of whom may
enforce the obligation. Any act or neglect on the part of the trustee which is not authorized or
excused by the terms of the trust instrument or by law is a breach of trust.

A trustee can be a natural person, a business entity or a public body. A trust takes two forms that
is a testamentary trust, one that is created by a will and arises after the death of the settler and
an inter vivos trust that is created during the settler’s lifetime also known as a living trust.

Trusts are classified into their mode of creation and these include; Express trusts, those that
have been intentionally created by the settler himself through manifestation of an intention to
create one, Implied trusts, those which the court deduces from the conduct of the parties and
circumstances of the transaction“, Resulting trusts that is those where the property has been
transferred to another person but the beneficial interest returns or results to the transferor and
lastly constructive trusts which arise from acts of the parties, other classification include
statutory trusts, public and private trusts
Considering the given facts in order to look for the best type of trust to be formed for Jaggwe, we
shall discuss secret trusts. A secret trust is one which arises when a testator wishes to benefit
some person who is not mentioned in the will. The secret trust operates in contravention of the
provisions of the wills Act. And illustrates equity’s determination to prevent the statute from
being used as an engine of fraud.

Secret trusts fall into two main categories these are; fully secret trusts and half secrettrusts. A
fully secret trust is one which is not referred to at all in terms of a will. While a half a secret
trust is one which is mentioned in some form. Importantly, there is the existence of the trust but
it isn’t mentioned in the will

The most important difference between fully and a half secret trust lies in the communication of
the trust formed to the trustee. The terms of the half secret trust must be communicated to the
trustee and accepted by him or her before the execution of the will.

Relating to the facts given the settlor in my advise should adopt a full secret trust because he
dose not want because any suspicions especially among his wife and family who don’t know
about the existence of the children intended to be the beneficiaries.

Suppose (i). Whether or not an inter vivos trust can he formed.

An inter vivos trust is one in which the settler transfers the property to the trustee in his or her
life time. It is also called a living trust. Here a settler could even name him or herself as a trustee
or even beneficiary. This distinguishes it from the other form of a trust called a testamentary
trust which is that created by will and transfer property of the deceased settler to a trustee for the
benefit of the beneficiary. A testamentary trust contrary to a living trust must be probated a legal
procedure required to give legal effect to a will. There is no requirement needed for an inter
vivos trust to be formed rather than sufficient intention to create a trust. Key formalities
prescribed by law must be complied with to form a valid trust. The requirement of formality is
technically intended to prevent fraud as in the case of Jones V Lock where the court of appeal in
Chancery held that there was no trust and refused to perfect an imperfect gift through declaration
of a trust. Lord Cranworth held that handing the baby the cheque was symbolic only. There was
insufficient certainty of intention from to create a trust or a gift.

However in creation of any valid trust like an inter vivos one, there must be three certainties as
was put in the case of Knight V Knight' where it was held that for a trust to be validly created,
three conditions are necessary that is; the words used must be so used that taken as a whole, they
ought to be taken as to be construed as imperative, that is the words must be certain, the second
is that the subject matter of the trust must be certain, and thirdly the objects or persons intended
to be benefited must also be certain. These three requirements are described as the three
certainties of a trust.
In a brief explanation of the three certainties; Looking at Certainty of the words, equity looks at
the intent rather than the form. Therefore no special form of words is necessary in order to create
a valid trust. An intention may be gathered from the expressions which the settler has used and
the court gives effect to such intention. In LombeVEamesl, court held that since the widow was
absolutely entitled to use the estate in any way she may think best of her and her family, the gift
was valid. According to the certainty of the subject it may take many forms for example interest
in land in possession or reversion the money and choses in action. In Re Golay’swill trusts”, it
was held that there was a valid trust because the executers could select the flat, the words
reasonable income were not intended to allow the trustees to make a subjective decision. They
provided a sufficient objective determinant to enable the court if necessary to quantify the
amount. Lastly looking at the certainty of objects entails two aspects that is; that the recipients or
purposes of the gift should be identifiable with certainty and that the interest they take should be
discoverable as it was in the Knight case

Considering the given facts therefore, about Jaggwe in relation to the three certainties for
formation of a valid trust; looking at certainty of the word, it‘s clearly indicated that Jaggwe‘s
intention was to educate his children hence there was certainty of the words.

Secondly. For the certainty of the subject matter, the facts show that there was the money which
Jaggwe intended for the education of his children. Lastly, for the certainty of the object or
persons in this case were the children Molly and Paul who ere the beneficiaries.

In conclusion therefore, an inter vivos trust can be formed since all the three certainties that
make a trust valid of which an inter vivos one is among as discussed above are present.

(ii). Whether or not the word substantial amount, amounts to certainty of the subject
matter.

In the case of Knight V Knight it was discussed by court that to create a valid trust, the terms of
the trust must be sufficiently certain. There are three forms of certainties which the courts require
that is; certainty of words or intention to relate the trust, certainty of the identity of the subject
matter comprising of the trust fund and certainty of objects or the beneficiaries of the trust in
question.

According to the given facts, the Certainty of the words was give and this was that Jaggwe
wanted the trust to educate the children. The certainty of the object was also given and in this
case scenario were the children Molly and Paul were the beneficiaries. Then lastly relating to the
issue about Certainty of the subject matter, there was the money which Jaggwe intended for the
education of Molly and Paul in this case scenario, it was the subject matter. Certainty of the
subject matter can be in different forms for example interest in land in possession or reversion,
chattels, money and according to the given facts; it was the money for the education of the
children. In Re Golay’s case”, there was a direction to the executers to allow a beneficiary to
enjoy one of my flats during her lifetime and to receive a reasonable income from my other
properties. It was held that there was a valid trust because the executers could select the flat and
the words reasonable income were not intended to allow the trustees to make a subjective
decision.

Conclusively therefore, considering what was laid out in Re Golay’s case, the words substantial
amount, amount to certainty of the subject matter. This because the subject matter in the given
facts is that money, which Jaggwe intends for the education of his children Molly and Paul as
discussed above.

(iii). Whether or not there was a resulting trust.

A resulting trust is that where property has been transferred to another person but the beneficial
interest results to the transferor. An example is where property is transferred to trustees upon
certain trusts but those trusts do not exhaust the whole beneficial interest. A resulting trust is
therefore one implied by court but not created. In Vander well V IRC, the settler had transferred
the legal title in property to a trustee but had failed to identify the persons who will take the
equitable interests that part held for unidentifiable beneficiary which he had on the resulting trust
for the settler. The underlying principle being if the property is not vested in another person it
will belong back to the settler.

In conclusion therefore, there is a resulting trust. This is simply because since the main purpose
which Jaggwe had intended for the trust or the income, that is for the education of his children
Paul and Molly was finished and there was no other purpose left for the use of the income from
the fund, then it had to return back to Jaggwe the settler. Hence there is a resulting trust since the
income returns back to Jaggwe as there is no other purpose left for it to serve.

(iv). Whether or not there was a fully secret trust formed.

For there to be a fully secret trust, there are three essentials that have to be fulfilled so as to make
it valid. These are; intention, communication and acceptance. Under intention, if a trust is secret,
then there must be clearly some evidence of it some car for it to be enforceable. This evidence
may be oral or written as with express trusts to clearly indicate the Intention of the trust. An
expression of a mere hope or predatory wore is not t sufficient. In Re Snowden, the deceased
left property to the brother in hope that could do with it what he thought she would have wanted
and it was held to be sufficient to give a clear indication to set up a trust.

The other essential is Communication whereby there must be communication of the trust to the
trustee or otherwise his or her conscience will not be bound. Thus the legatee must know before
or at the time of receiving the property at he takes it as a trustee. In case of a fully secret trust, it
is sufficient if communication takes place sometime before the property vests in the trustee and
the purpose here is to give the trustee chance to accept the office or not. Whereas for a half secret
trust, communication must occur before or at the same time the will is made as was put in
Blackwell v Blackwell's.
Lastly looking at Acceptance, the trustee must agree either expressly or implicitly to hold as a
trustee. In Re Boyes, Kay J observed that communication requires allowing the trustee chance to
refuse his office as such since it cannot be done after death. Wallgrave v Tebbs,
Communication was after the testator’s death and it was held that they took absolutely. The
office of the trustee must be accepted by the trustee.

Relating to the given facts, while looking at Intention we can see that Jaggwe had the intention
which was to educate his children Paul and Molly using the income. While for the case of
Communication, Chonjo the intended trustee was not communicated to the terms of the trust
before the creation of the will hence there was no fully secret trust since the intended trustee was
not communicated to and therefore communication which is one of the essential elements of a
fully secret trust was not fulfilled. Then looking at Acceptance, it was also not there since the
intended trustee, Chonjo was not communicated to. Therefore she could not accept if there was
no communication. .

Conclusively therefore, there was no fully secret trust formed. This is because all the essentials
of a fully secret trust were not fulfilled. As we have seen in the facts, there was no
communication to Chonjo the intended trustee and therefore she couldn’t accept the trust or
reject it hence defeating the other essential of fully secret trust which is acceptance. Hence
basing on the above discussion, there was no fully secret trust formed.

(v). Whether or not silence amounts to acceptance.

Under acceptance, the trustee must agree either expressly or implicitly to hold as a trustee. In Re
Boyes, kay .l observed that communication require allowing the trustee the chance to refuse
office since it cannot be done after death. Therefore the office of the trustee must be accepted by
the trustee. Acceptance can be communicated in two a as was discussed in the case of Wallgrave
V TebbsWood VC stated that; where a person, knowing that a testator is making a disposition in
his favor intends it to be applied For purposes other than his own benefit, either expressly
promises or by silence implies, that he will carry on the testator’s intention in effect, and the
property is left to him upon faith of that promise or understanding, it is in effect of a trust

Acceptance can therefore be communicated in two ways; either by the trustee directly stating his
acceptance, or by implying it through not declining it. However, silence may be sufficient to hold
as trustee. This was also laid out 'n the similar case of Wallgrave V Tebbswhere there had been
no previous communicate to Mr. Martin and Mr. Tebbs that they were to hold property as
trustees. This only emerged after the testator’s death. It was held that they took absolutely.

In conclusion therefore, relating to the given facts, Chonjo’s silence about Jaggwe’s intention to
create a trust may be sufficient to amount to acceptance. This is because if she was not interested
in the trust, she would have declined to it but for the mere fact that she chose to remain silent and
not to affirm the acceptance, she will at law be considered to have accepted the trust. Therefore
in relation to the issue, silence amounts to acceptance as previously discussed above.

(vi). Whether or not there was a breach.

A breach of trust consists an improper act, neglect default or omission of a trustee with regard to
trust property of a beneficiary’s interest in it. It may include, direct intermeddling with trust
property for improper purposes, failure to exercise proper care in discharging a duty and
malafide exercise of discretion”. In these instances, the trustee must replace any consequential
loss from the trust fund, as a result of his or her actions. The purpose of the rule therefore is not
to punish the trustee but to compensate the beneficiaries.

The general rule is that the trustee is liable only for his or her own breaches and not those of his
or her co-trustees as was in the case of Townely V Sherborne . Nevertheless a trustee will be
held liable if he left the matter in the hands of a co-trustee without inquiry of which he or she
stood by while a breach of trust was being formed. However in Re Strahan a trustee is not liable
for breaches of trust committed before his or her appointment. Where a trustee makes an
unauthorized investment, he or she will be liable the loss caused on the sale.

Considering the given facts, Chonjo sold the trust property and applied the proceeds to boast her
private business. This means that Chonjo breached the trust and was therefore liable for using the
proceeds to boast her private business which was not the intention or purpose of the trust. The
only limitation that would protect him as if any of the beneficiaries participated in or consented
to the breach but since this is not mentioned in the facts, then Chonjo cannot escape liability
since none of the beneficiaries acquiesced in the breach.

One of the possible remedy available for the beneficiaries that is Paul and Molly is tracing in
equity. This arises where the trustee has mixed the funds in his own dealings or private business.
This relates to how Chonjo had used the proceeds to boast his private business. The burden of
proof is on the trustee to prove initially that part of the mixed fund is his own. In Re Tilley’s
W.T Ungoed Thomas J. Stated that; if a trustee amalgamated trust property with his own, his
beneficiary will be entitled to every portion of the blended property which the trustee cannot
prove to be his own.

In conclusion therefore as discussed above, there was breach of a trust since Chonjo had sold the
trust property and applied the proceeds to boast her private business yet Jaggwe the settler had
intended it only for the education of his children

QN: 3
It’s concerned with 3 certainties. Each certainty will be examined in turn and the various
principles, distinction and requirements of each identified due to the onerous duties placed upon
a trustee. It is necessary that the settler makes clear that the trust was intended, what property is
subject to the trust and who the beneficiaries are. In order that the trust can be enforced, the law
has developed a test known as the 3 certainties that encompasses certainty of intension, certainty
of subject matter and certainty of objects. In Knight V Knight, except as to charitable trust which
do not need certainty of objects, the 3 certainties need to be present so that a trust can be
workable and capable of supervision by the court.

CERTAINITY OF INTENTION

It’s necessary for the settler to intend to create a trust as opposed to other types of legal
relationship. There is no magic formula necessary to show the intention to create a trust because
equity looks to the intent rather than the form.

In Midland Bank v Wyatt, where court noted that there is no general requirement that a trust be
created or even evidenced in writing. A trust can be even inferred from the conduct of the parties
and the surrounding circumstances.

A gift is not a trust:

There must however be the intention to declare a trust and not the intention to make an
immediate gift. In Jones v Lock, a father held out a cheque which was payable to him in front of
his child and said,”I give this to baby.” This was a failed gift as the title to the cheque did not
pass and could not be construed as a declaration of trust.

Family context:

In the case of Gold v Hill, Mr. Gilbert took out a life assurance policy. The main beneficiary of
the shares was Mr. Gold. Mr. Gilbert had however said to Mr. Gold that he wanted the insurance
money to be used to look after his mistress carol and children. The conversation had the effect of
nominating Mr. Gold as a trustee.

Commercial context:

In this context, a trust is inferred usually as a guard against the possibility of the recipient of
funds becoming insolvent. For example a solicitor will pay money received on behalf of the
clients into a specially designated “client account” and by doing so that account will be shielded
from the claim of the solicitors other creditors. Similarly a lender may advance money to the
recipient on condition that the money be used only for specific purpose with the result that
property rights in those funds do not move from the lender unless and until the money is
deployed for that specific purpose. In the case of Barclays Bank v Quist close, where quistclose
lent money to a company, Rolls Razor Limited for a specific purpose of payment of dividends to
its share holders at a time when the company was having over drawn facilities from Barclays
bank. It was held that on 2nd July 1964, payment of final dividend of 120% was approved.

Absence of intention
There are two possible variations; first if the property is transferred to the third party and there is
no intention to create a trust, the transfer will amount to an absolute gift to the done. In the case
of Lassence v Tierney, court noted that where the settler unsuccessfully declares himself to be a
trustee no title passes and the property remains in the settler’s estate.

CERTAINITY OF SUBJECT MATTER

Although an existing property may be the subject matter of a trust, trust property must be
certain .the entire property that is to be the subject of the trust must be describe in such a way
that it becomes certain and ascertainable .there has to be an identifiable trust fund .in the case of
palmer v Simmons court noted that declaration concerning the bulk of my said residuary estate
was held to be ineffective to create a trust because bulk has no clear meaning and its totally un
certain.

Tangible and intangible

A distinction is to be drawn between trust of tangible that is to say some thing which have
physical form and intangible some thing without physical form such as shares, money and debts.

The major distinction is that with tangible the physical segregation of the trust property from
other property is necessary; conversely with intangible no segregation is required

A trust of the residue of an estate.

a residuary estate may form the subject matter of a trust for example if a testator leaves a will
containing a number of legacies and crates a trust of whoever is left, there is certainty of subject
matter .the executor can readily calculate the residual estate .there are cases however which may
be thought to conflict and turning on the presence or not of the life estate, are about 5to cause
difficulties.

Estate of last, in the estate of the last property was left to the brother on terms that at his death
any thing that is left, that came from me, was to pass to the specified persons. This was held to
be trust because the brother only had a life interest in the property. A similar approach was
adopted in re Thompson where the subject matter of the trust was identified as anything
remaining on a wife’s’ death this was applied as a trust because the widow only had a life
interest in her deceased husband’s estate.

Beneficial interest must be certain;

Not only must the trust property be certain and ascertainable, but except as regards discretionary
trust where the beneficial interest are never certain Boyce v Boyce a fixed trust was set up by
will on the death of a testator .the trust property considered of two houses and there was two
named beneficiaries ,Maria and charlotte . Maria was to choose which house she wanted, the
other house was to be held on trust by charlotte, Maria predeceased the testator and died without
making any selection as it was now impossible to say which house charlotte should have, the
entire trust has to fail for uncertainty of beneficial shares .both parties there of stayed in the
settlers estate the difficulty here was that the testator had prescribe a method of allocation that
have subsequently become impossible.

Equity is equality, as regards to fixed trust the equitable maxim equity is equality must be
brought into play to safe an otherwise invalid trust. this was demonstrated in borough v philcox
where a trust was set up to benefit the settlers son and the daughter .there shares however were
not specified .by relying upon the maxim each was deem to have an equal share , the maxim can
be invoke only where there is no contrary intention shown . If the trust is to benefit my children
un equally the maxim could not apply and the maxim would necessarily fail

Uncertain subject matter , where there is no certainty of trust property there can be no trust , the
property whatever it is, it will remain with the settler or if he is dead will either pass by will or
under the intestacy rules. If however the trust fails for uncertainty of beneficial shares then if
the trust property has already been transferred to the trustee it will be held on resulting trust for
the settler if legal title has not moved then the property remained with the settler.

CERTAINTY OF OBJECTS.

There have to be beneficiaries that is to say subject of the trust who are certain or capable of
being rendered certain .re Endecott, this is because there has to be some one who can enforce the
trust, this rule does not however apply to charitable trust because the attorney general and charity
commission can enforce such a public trust .as they become clear a private trust can fail for
conceptual uncertainty, evidential uncertainty, administrative, un workability and or
capriciousness. Fixed trust ,in relation to fixed trust that is to say where the interest of the
beneficiaries are specified in the trust instrument the court take a strict approach the trust is void
unless each and every beneficiary is ascertainable. In the case of Morice v bishop of durhamthis
is called the complete list test. A trust will not fail however because particular beneficiary cannot
be found or because there are doubt as to whether the beneficiary is still alive. In such case the
money can be paid to court and steps can be taken either to trace or to confirm the existance of
the beneficiary. If the trustee decides eventually to distribute the trust property among the known
beneficiaries this will be done on the basis that any new claim can recover against them.

Discretionary trusts

This arises where a trustee is given the desecration to choose that, among the specified class of
beneficiaries should benefit under the trust. In modern time, a discretionary trust is used to
benefit a large class of people such as employees and dependents. In such case a complete list
maybe practical impossibility

The class test since McPhail v doulton 1971 the for certainty of object for discretionary said
with certainty of any potential that he is or is not the member of the class .the problem with the
class test is how it is to be applied .the potential difficulty lies with proving the negative how can
a trustee prove that a particular person is not ,for example a relative of the deceased this issue
was subsequently addressed in the re Baden no2 this case concern a trust to benefit relatives and
dependents although the trust was upheld the court of appeal did not speak with one voice
concerning the operation of the class test the views of the court of appeal

Stamp l.j. took the literal approach that the class test could be satisfied only if it could be said to
every potential claimant that that they were or where not within the class .there is no room for
any doubt with this approach.

QN: 4

(1)The doctrine of satisfaction

The doctrine of satisfaction is based on the equitable doctrine that equity imputes an intention to
fulfill an obligation. Lord Romilly defined it as the donation of a thing with the intention that it
is taken either wholly or in part in the extinguishment of some prior claim of the done. The
doctrine applies in many different ways some of which are discussed below.

Satisfaction of debts by legacies

The basic issue is that if a testator gives a legacy to a person whom he owes money, can the
legatee claim the estate and the debt? Therefore this issue in the eyes of equity looks at the
intention of a testator. In the case of Hammond v Smith, the court relied on the intention of the
testatrix who had made a proposal that the legacy should extinguish part of the debt owed to the
creditor. It is a general that the debt should be satisfied by a legacy equaling to it. The doctrine
does not apply if the debt was incurred after making the will.

Satisfaction of portion debts by legacies

The general rule is that equity leans against double portions; hence equity will provide for the
satisfaction of portion debts by legacies to ensure equal division of the parents property among
the children hence where the legacy is equal to the promised portion or exceeds it satisfaction of
the portion debt is presumed.

Satisfaction of a portion debt by a portion

 Lord Selborne stated "where a father…gives a legacy and later makes a gift in the child's
favor, there is a presumption that the gift was either wholly or in part in a substitute for or an
ademption of the legacy. " lastly is the satisfaction of legacies by legacies. In the case of Lawes
v laes where the father had promised his son a bond of 10000 pounds as a gift but before the due
date he got him a partnership in which he had shares of 19000 pounds. It was held the latter
portion satisfied the first one.

However the doctrine will only apply if the legacy is in a sum as great as or greater than the debt
or if there is a direction to pay debts

(2) The doctrine of election.

The essence of the doctrine is that a person my not take a benefit and reject an associated burden
in it. This is derived from the case of Codrington v Codrington per Lord Cairns that a person
cannot accept a benefit under a deed or will without the same time confirming to all its
provisions.

The doctrine is based on the maxim that he who seeks equity must do equity. Equity is either
express implied from the electors conduct and it therefore if X gives a gift to his property to Y
and in the same makes a gift of Ys property to Z then Y will be put to his election. Y may elect
to take under the instrument and take over X’s property or he may elect against the instrument.

The essentials of the doctrine were espoused in Re Edwards Lord Jenkins L.J stated that an
election should consist of an intention on the part of the testator to dispose of certain property
that the property should not actually be the testators or testatrix own property . The property the
testator purports to dispose off should be alienable by the owner, for if it’s inalienable by the
owner, for if its inalienable by the owner cannot comply with the wishes of the donor

(3) The doctrine of conversion and reconversion

Direct equitable conversion is to cause a thing to devolve on the death of its owner not according
to the nature and equality which equity by a fiction attributes to it. It was used to express the
intention in Fletcher v Ashburer Sir Thomas Sewell MR .attempted to justify the development
of the doctrine when he said that nothing was better established than this principle , that money
directed to be employed in the purchase of land and money directed to be sold and turned into
money are to be considered as that species of property into which they are directed to be
converted and this in whatever manner the direction is given whether by will, by way of contract
and whether the money is actually conveyed or only agreed to be conveyed the owner of the land
or the contracting parties may make land money.

(4) Doctrine of notice

The concept of notice refers to the knowledge of an existing fact. The rationale of the doctrine
is to prevent a buyer of superior title from setting it up against earlier owners of inferior
interests which affect the property. The effect of this is that the buyer of the legal estate with
notice of the prior equitable interests affecting the estate takes it subject to prior equitable
interests in this regard; “Equity looks at the substance rather than the form” Notice can be
Actual, constructive or imputed. And it is based on the maxim "he who comes to equity must
come with clean hands".
Actual notice; This is a situation where the buyer of an estate has actual or express notice of a
prior interest at the time when he or she made the purchase or at the time before the purchase
was completed . In regard to the relevance of the doctrine of notice .The Registration of Titles
Act Section 64 encompasses the doctrine and it provides that a buyer of land shall hold that
land subject to such encumbrances as notified to the registrar. In SempaMbabali v w k
kizzaOdoki J held that the defendants plea of bona fid purchaser could not stand because they
knew all along that that part of land they had purchased was for burial grounds and also the
seller had sold them the land before his share of the land had been ascertained. This therefore
means that his hands were not clean.
Constructive notice; defined by Salden j in Williamson v Brown; where a purchaser has
knowledge of any fact sufficient to put him in inquiry as to the existence of some right or title in
conflict with that he is about to purchase he is presumed either to have made the inquiry and
ascertained the extent of such prior right or to have made the inquiry and ascertained the
extent of such right or to have been guilty of a degree of negligence equally fatal to his claim.
The prior interest in land should always be put into consideration in U.P.T.C V Lutaaya.
Karokoraj.s.c held thus “A proprietor takes land subject to the interests of any tenant in the
land in possession even if he or she had no actual notice of the tenant".
Imputed notice; notice which is neither actual nor constructive may be imputed to the buyer
through actual notice to the agent. It's established in agency law that that notice to an agent is
notice to the principal. In this regard, a buyer who instructed his agent to buy property at an
auction sale was taken to be affected by notice of an equity which came to his notice during the
course of the transaction. In sejjakanalima v Rebecca MusokeOdoki j a held that the appellant
was not bona fide purchaser without notice owing to the fact that Musoke and co advocates
who were acting as her agents had known of the alleged fraud concerning the disputed
property
(5) The doctrine of performance.
The doctrine is to the effect that where a person covenants to perform a particular act and later
performs another act which may be converted to a completion of this covenant, it shall be
supposed that he meant to complete it per Kenyon MR, in Sowden v Sowden, This based on
the maxim that Equity imputes an intention to fulfill an obligation.
Performance may take the form of a covenant to purchase and settle and lay out money on the
purchase of money.

QN: 5.
a) EQUITY WILL NOT SUFFER A WRONG TO BE WITHOUT A REMEDY
It’s the traditional purpose for equity to find solutions in law suits. Where money will not
pay for the injury equity has the authority to find another remedy. This underlines the
equitable jurisdiction where common law did not recognize or enforce a right or fail to
provide a remedy, equity stepped in or intervened to provide a suitable remedy. It was
aimed at filling in the gaps which existed in common law. In the case of Ashby v White,
Mr. Ashby was prevented from voting at an election by the misfeasance of a constable.
Mr. White on the apparent pretext that he was not a settled inhabitant. The house of lords
upheld the decision that, “if a plaintiff has a right, he must of necessity have a means to
vindicate and maintain it and a remedy if he is injured in the exercise or enjoyment of it
and indeed it’s a vain thing to imagine a right without a remedy for want of right and
want of remedy are reciprocal.
b) EQUITY FOLLOWS THE LAW
It means that equity supplements the law or is based on the law. This maxim forms the
basis of the law on priority and can be contrasted with the maxim where the equities are
equal; the first in time shall prevail. It implies that where the claims of the parties are
equally fair and deserve merit, preference is given to the legal interest.
This governs priority of competing interest in property one which is legal and the other
being equitable. If there is competing interest in the eyes of the law, the legal interest will
take priority over the equitable interest.
c) HE WHO SEEKS EQUITY MUST DO EQUITY
Under this maxim, a person who seeks equity must do equity. Essentially this means a
person seeking an equitable relief or remedy must himself/ herself act fairly. The
claimant will not receive the court support unless he acted entirely fairly himself/ herself.
Equity will not act in favor of someone who has committed an illegal act. This means that
a person who is seeking the aid of a court of equity must be prepared to act fairly, follow
the courts directions, and abide by whatever condition the court gives for the relief. He or
she is considered to be ready and willing to recognize the equitable rights of other parties
as against the plaintiff himself.
In the case of Lodge v National Union Investment company limited where the plaintiff
borrowed money from the defended an unrecognized money lender under the moneys
lenders Act 1900 which provided that the contract that the contract that money lenders
who where not registered under the Act were void. The plaintiff sued demanding back his
securities and payments. The defendant then took the defense that the plaintiff is seeking
an equitable remedy so he should do equity too. The defendant was willing to give back
the plaintiffs money if the plaintiff pays back the loan taken. It was held that in granting
equitable remedies the courts will apply equitable principles to ascertain on what
conditions such remedies should be granted.
d) HE WHO COMES TO EQUITY MUST COME WITH CLEAN HANDS
As a development of this principle of fairness, an applicant for an equitable remedy will
not receive that remedy where she has not acted equitably herself. Anybody praying for
 an equitable relief for a particular matter should show that he or she has behaved honestly
and fairly in regard to that matter. This maxim is distinguishable from the maxim that he
who seeks equity must do equity; the present maxim refers to conduct before a suit for
relief while the previous maxim deals with the future conduct of the plaintiff.
Note that, an applicant will not be entitled to an order of specific performance if a lease
of that applicant is already in breach of a material term of that lease. In the case of Coats
Worth v Johnson, it was held that a tenant with an equitable interest under a lease
agreement could not get a decree of specific performance because he was in breach of
that covenant under the lease.
e) DELAY DEFEATS EQUITY/ DOCTRINE OF LACHES
The essence of the doctrine of laches is that an equitable relief will not be given if the
applicant has unduly delayed in bringing the action. The doctrine does not apply to
situations which are governed by the statute of limitation, for instance the Limitation Act
Cap. 80 prescribes the periods within which suits or actions should be instituted in court
for example 6 years is prescribed for actions based on contracts or tort other than those
where the claim relates to personal injuries, in which case the action must be brought
within 3 years from the date on which the cause of action arose. Under section 3 of the
Limitation Act where fraud is alleged there is no limitation period. In the case of Ephraim
V Asuquo, the plaintiff applied to have the grant of the letters of administration set aside,
it was held that since 2 years had passed, the grant and the administrator had probably
completed the distribution of the estate, the doctrine of laches applied and the plaintiff
could not succeed.
However there are 3 basic defenses to the invocation of the doctrine of laches;
1. The plaintiff’s ignorance of the facts on which the claim is passed.
2. Infancy or other disability of the plaintiff.

Fraud on the part of the defendant.

QN: 6:

The concept of notice refers to the knowledge of an existing fact. According to prof. Bakibinga,
the rationale of the doctrine is to prevent a buyer of superior title from settling it up against
earlier owners of inferior interests which affect the property. The effect of this is that the buyer
of the legal estate with notice of the prior equitable interests affecting the estate takes it subject
to prior equitable interests in this regard, “equity looks at the substance rather than the form”.
Notice can be Actual, Constructive or imputed and it’s based on the maxim, “He who comes to
equity must come with clean hands.”

a) ACTUAL NOTICE:
This is a situation where the buyer of the estate has express or actual notice of prior
interest at the time when he or she made the purchase or at the time before the purchase
was completed. In regard to the relevance of the doctrine of notice. The registration of the
titles Act under section 64 encompasses the doctrine and it provides that a buyer of land
shall hold that land subject to such encumbrances as notified to the registrar.
(sempambabali v wkkidsza) it was held that the defendants plea of bona fide purchaser
could not stand because they knew all along that part of the land they had purchased was
a for burial ground and also the seller had sold them the land before his share of the land
had been ascertained this therefore means that his hands were not clean
b) Constructive notice
In the case of (Williamson v brown) it was defined to mean where the purchaser has
knowledge of any fact sufficient to put him in inquiry as to the existence of some right or
title in conflict with that his about to purchase he is presumed either to have made inquiry
and ascertain the extent of such prior right or to have been guilty of a degree of
negligence equally vital to his claim .the prior interest in land should always be put into
consideration
c) Imputed notice
Notice which is neither actual nor constructive may be imputed to the buyer through
actual notice to the agent .it is established in agency law that the notice to an agent is
notice to the principal. In this regard a buyer who instructed his agent to buy property at
an auction was taken to be affected by notice of an equity which came to his notice
during the course of the transaction. In the case of SejjakaNalima v Rebecca Musoke it
was held that the appellant was not a bona fide purchaser without notice owing to the fact
that musoke and company advocates who where acting as her agent had known of the
alleged fraud concerning the disputed property.

AN: 6: Discuss the continued relevance of the study of the study of the
doctrine of notice in Uganda

The concept of notice refers to the knowledge of an existing fact. According to

prof. Bakibinga, the rationale of the doctrine is to prevent a buyer of superior title
from settling it up against earlier owners of inferior interests which affect the
property. The effect of this is that the buyer of the legal estate with notice of the
prior equitable interests affecting the estate takes it subject to prior equitable
interests in this regard, “equity looks at the substance rather than the form”. Notice
can be Actual, Constructive or imputed and it’s based on the maxim, “He who
comes to equity must come with clean hands.”

d) ACTUAL NOTICE:
This is a situation where the buyer of the estate has express or actual notice
of prior interest at the time when he or she made the purchase or at the time
before the purchase was completed. In regard to the relevance of the doctrine
of notice. The registration of the titles Act under section 64 encompasses the
doctrine and it provides that a buyer of land shall hold that land subject to
such encumbrances as notified to the registrar.(sempa mbabali v wk kidsza)
it was held that the defendants plea of bona fide purchaser could not stand
because they knew all along that part of the land they had purchased was a
for burial ground and also the seller had sold them the land before his share
of the land had been ascertained this therefore means that his hands were not
clean
e) Constructive notice
In the case of (Williamson v brown) it was defined to mean where the
purchaser has knowledge of any fact sufficient to put him in inquiry as to the
existence of some right or title in conflict with that his about to purchase he
is presumed either to have made inquiry and ascertain the extent of such
prior right or to have been guilty of a degree of negligence equally vital to
his claim .the prior interest in land should always be put into consideration
f) Imputed notice
Notice which is neither actual nor constructive may be imputed to the buyer
through actual notice to the agent .it is established in agency law that the
notice to an agent is notice to the principal. In this regard a buyer who
instructed his agent to buy property at an auction was taken to be affected by
notice of an equity which came to his notice during the course of the
transaction. In the case of Sejjaka Nalima v Rebecca Musoke it was held
that the appellant was not a bona fide purchaser without notice owing to the
fact that musoke and company advocates who where acting as her agent had
known of the alleged fraud concerning the disputed property.
QN: 5.

a) EQUITY WILL NOT SUFFER A WRONG TO BE WITHOUT A

REMEDY
It’s the traditional purpose for equity to find solutions in law suits. Where
money will not pay for the injury equity has the authority to find another
remedy. This underlines the equitable jurisdiction where common law did
not recognize or enforce a right or fail to provide a remedy, equity stepped in
or intervened to provide a suitable remedy. It was aimed at filling in the gaps
which existed in common law. In the case of Ashby v White, Mr. Ashby was
prevented from voting at an election by the misfeasance of a constable. Mr.
White on the apparent pretext that he was not a settled inhabitant. The house
of lords upheld the decision that, “if a plaintiff has a right, he must of
necessity have a means to vindicate and maintain it and a remedy if he is
injured in the exercise or enjoyment of it and indeed it’s a vain thing to
imagine a right without a remedy for want of right and want of remedy are
reciprocal.
b) EQUITY FOLLOWS THE LAW
It means that equity supplements the law or is based on the law. This maxim
forms the basis of the law on priority and can be contrasted with the maxim
where the equities are equal; the first in time shall prevail. It implies that
where the claims of the parties are equally fair and deserve merit, preference
is given to the legal interest.
This governs priority of competing interest in property one which is legal
and the other being equitable. If there is competing interest in the eyes of the
law, the legal interest will take priority over the equitable interest.
c) HE WHO SEEKS EQUITY MUST DO EQUITY
Under this maxim, a person who seeks equity must do equity. Essentially
this means a person seeking an equitable relief or remedy must himself/
 herself act fairly. The claimant will not receive the court support unless he
acted entirely fairly himself/ herself. Equity will not act in favor of someone
who has committed an illegal act. This means that a person who is seeking
the aid of a court of equity must be prepared to act fairly, follow the courts
directions, and abide by whatever condition the court gives for the relief. He
or she is considered to be ready and willing to recognize the equitable rights
of other parties as against the plaintiff himself.
In the case of Lodge v National Union Investment company limited where
the plaintiff borrowed money from the defended an unrecognized money
lender under the moneys lenders Act 1900 which provided that the contract
that the contract that money lenders who where not registered under the Act
were void. The plaintiff sued demanding back his securities and payments.
The defendant then took the defense that the plaintiff is seeking an equitable
remedy so he should do equity too. The defendant was willing to give back
the plaintiffs money if the plaintiff pays back the loan taken. It was held that
in granting equitable remedies the courts will apply equitable principles to
ascertain on what conditions such remedies should be granted.
d) HE WHO COMES TO EQUITY MUST COME WITH CLEAN
HANDS
As a development of this principle of fairness, an applicant for an equitable
remedy will not receive that remedy where she has not acted equitably
herself. Anybody praying for an equitable relief for a particular matter
should show that he or she has behaved honestly and fairly in regard to that
matter. This maxim is distinguishable from the maxim that he who seeks
equity must do equity; the present maxim refers to conduct before a suit for
relief while the previous maxim deals with the future conduct of the
plaintiff.
Note that, an applicant will not be entitled to an order of specific
performance if a lease of that applicant is already in breach of a material
term of that lease. In the case of Coats Worth v Johnson, it was held that a
tenant with an equitable interest under a lease agreement could not get a
decree of specific performance because he was in breach of that covenant
under the lease.
e) DELAY DEFEATS EQUITY/ DOCTRINE OF LACHES
The essence of the doctrine of laches is that an equitable relief will not be
given if the applicant has unduly delayed in bringing the action. The doctrine
does not apply to situations which are governed by the statute of limitation,
for instance the Limitation Act Cap. 80 prescribes the periods within which
suits or actions should be instituted in court for example 6 years is
prescribed for actions based on contracts or tort other than those where the
claim relates to personal injuries, in which case the action must be brought
within 3 years from the date on which the cause of action arose. Under
section 3 of the Limitation Act where fraud is alleged there is no limitation
period. In the case of Ephraim V Asuquo, the plaintiff applied to have the
grant of the letters of administration set aside, it was held that since 2 years
had passed, the grant and the administrator had probably completed the
distribution of the estate, the doctrine of laches applied and the plaintiff
could not succeed.
However there are 3 basic defenses to the invocation of the doctrine of
laches;
3. The plaintiff’s ignorance of the facts on which the claim is passed.
4. Infancy or other disability of the plaintiff.
5. Fraud on the part of the defendant.
QN: 4

(1)The doctrine of satisfaction

The doctrine of satisfaction is based on the equitable doctrine that equity imputes
an intention to fulfill an obligation. Lord Romilly defined it as the donation of a
thing with the intention that it is taken either wholly or in part in the
extinguishment of some prior claim of the done. The doctrine applies in many
different ways some of which are discussed below.

Satisfaction of debts by legacies

The basic issue is that if a testator gives a legacy to a person whom he owes
money, can the legatee claim the estate and the debt? Therefore this issue in the
eyes of equity looks at the intention of a testator. In the case of Hammond v
Smith, the court relied on the intention of the testatrix who had made a proposal
that the legacy should extinguish part of the debt owed to the creditor. It is a
general that the debt should be satisfied by a legacy equaling to it. The doctrine
does not apply if the debt was incurred after making the will.

Satisfaction of portion debts by legacies

The general rule is that equity leans against double portions; hence equity will
provide for the satisfaction of portion debts by legacies to ensure equal division of
the parents property among the children hence where the legacy is equal to the
promised portion or exceeds it satisfaction of the portion debt is presumed.

Satisfaction of a portion debt by a portion

Lord Selborne stated"where a father…gives a legacy and later makes a gift in the
child's favor, there is a presumption that the gift was either wholly or in part in a
substitute for or an ademption of the legacy. " lastly is the satisfaction of legacies
by legacies. In the case of Lawes v laes where the father had promised his son a
bond of 10000 pounds as a gift but before the due date he got him a partnership in
which he had shares of 19000 pounds. It was held the latter portion satisfied the
first one.

However the doctrine will only apply if the legacy is in a sum as great as or greater
than the debt or if there is a direction to pay debts

(2) The doctrine of election.

The essence of the doctrine is that a person my not take a benefit and reject an
associated burden in it. This is derived from the case of Codrington v Codrington
per Lord Cairns that a person cannot accept a benefit under a deed or will without
the same time confirming to all its provisions.

The doctrine is based on the maxim that he who seeks equity must do equity.
Equity is either express implied from the electors conduct and it therefore if X
gives a gift to his property to Y and in the same makes a gift of Ys property to Z
then Y will be put to his election. Y may elect to take under the instrument and
take over X’s property or he may elect against the instrument.

The essentials of the doctrine were espoused in Re Edwards Lord Jenkins L.J
stated that an election should consist of an intention on the part of the testator to
dispose of certain property that the property should not actually be the testators or
testatrix own property . The property the testator purports to dispose off should be
alienable by the owner, for if it’s inalienable by the owner, for if its inalienable by
the owner cannot comply with the wishes of the donor
(3) The doctrine of conversion and reconversion

Direct equitable conversion is to cause a thing to devolve on the death of its owner
not according to the nature and equality which equity by a fiction attributes to it. It
was used to express the intention in Fletcher v Ashburer Sir Thomas Sewell MR
.attempted to justify the development of the doctrine when he said that nothing was
better established than this principle , that money directed to be employed in the
purchase of land and money directed to be sold and turned into money are to be
considered as that species of property into which they are directed to be converted
and this in whatever manner the direction is given whether by will, by way of
contract and whether the money is actually conveyed or only agreed to be
conveyed the owner of the land or the contracting parties may make land money.

(4) Doctrine of notice

The concept of notice refers to the knowledge of an existing fact. The rationale of
the doctrine is to prevent a buyer of superior title from setting it up against earlier
owners of inferior interests which affect the property. The effect of this is that the
buyer of the legal estate with notice of the prior equitable interests affecting the
estate takes it subject to prior equitable interests in this regard; “Equity looks at
the substance rather than the form” Notice can be Actual, constructive or
imputed. And it is based on the maxim "he who comes to equity must come with
clean hands".

Actual notice; This is a situation where the buyer of an estate has actual or express
notice of a prior interest at the time when he or she made the purchase or at the
time before the purchase was completed . In regard to the relevance of the doctrine
of notice .The Registration of Titles Act Section 64 encompasses the doctrine and
it provides that a buyer of land shall hold that land subject to such encumbrances as
notified to the registrar. In Sempa Mbabali v w k kizza Odoki J held that the
defendants plea of bona fid purchaser could not stand because they knew all along
that that part of land they had purchased was for burial grounds and also the seller
had sold them the land before his share of the land had been ascertained. This
therefore means that his hands were not clean.

Constructive notice; defined by Salden j in Williamson v Brown; where a

purchaser has knowledge of any fact sufficient to put him in inquiry as to the
existence of some right or title in conflict with that he is about to purchase he is
presumed either to have made the inquiry and ascertained the extent of such prior
right or to have made the inquiry and ascertained the extent of such right or to have
been guilty of a degree of negligence equally fatal to his claim. The prior interest
in land should always be put into consideration in U.P.T.C V Lutaaya. Karokora
j.s.c held thus “A proprietor takes land subject to the interests of any tenant in the
land in possession even if he or she had no actual notice of the tenant".

Imputed notice; notice which is neither actual nor constructive may be imputed to
the buyer through actual notice to the agent. It's established in agency law that that
notice to an agent is notice to the principal. In this regard, a buyer who instructed
his agent to buy property at an auction sale was taken to be affected by notice of an
equity which came to his notice during the course of the transaction. In sejjaka
nalima v Rebecca Musoke Odoki j a held that the appellant was not bona fide
purchaser without notice owing to the fact that Musoke and co advocates who were
acting as her agents had known of the alleged fraud concerning the disputed
property
(5) The doctrine of performance.
The doctrine is to the effect that where a person covenants to perform a particular
act and later performs another act which may be converted to a completion of this
covenant, it shall be supposed that he meant to complete it per Kenyon MR, in
Sowden v Sowden, This based on the maxim that Equity imputes an intention to
fulfill an obligation.
Performance may take the form of a covenant to purchase and settle and lay out
money on the purchase of money.
QN: 3

It’s concerned with 3 certainties. Each certainty will be examined in turn and the
various principles, distinction and requirements of each identified due to the
onerous duties placed upon a trustee. It is necessary that the settler makes clear that
the trust was intended, what property is subject to the trust and who the
beneficiaries are. In order that the trust can be enforced, the law has developed a
test known as the 3 certainties that encompasses certainty of intension, certainty of
subject matter and certainty of objects. In Knight V Knight, except as to charitable
trust which do not need certainty of objects, the 3 certainties need to be present so
that a trust can be workable and capable of supervision by the court.

a) CERTAINITY OF INTENTION
It’s necessary for the settler to intend to create a trust as opposed to other
types of legal relationship. There is no magic formula necessary to show the
intention to create a trust because equity looks to the intent rather than the
form.
In Midland Bank v Wyatt, where court noted that there is no general
requirement that a trust be created or even evidenced in writing. A trust can
be even inferred from the conduct of the parties and the surrounding
circumstances.

A gift is not a trust:

There must however be the intention to declare a trust and not the intention
to make an immediate gift. In Jones v Lock, a father held out a cheque which
was payable to him in front of his child and said,”I give this to baby.” This
was a failed gift as the title to the cheque did not pass and could not be
construed as a declaration of trust.
Family context:
In the case of Gold v Hill, Mr. Gilbert took out a life assurance policy. The
main beneficiary of the shares was Mr. Gold. Mr. Gilbert had however said
to Mr. Gold that he wanted the insurance money to be used to look after his
 mistress carol and children. The conversation had the effect of nominating
Mr. Gold as a trustee.
Commercial context:
In this context, a trust is inferred usually as a guard against the possibility of
the recipient of funds becoming insolvent. For example a solicitor will pay
money received on behalf of the clients into a specially designated “client
account” and by doing so that account will be shielded from the claim of the
solicitors other creditors. Similarly a lender may advance money to the
recipient on condition that the money be used only for specific purpose with
the result that property rights in those funds do not move from the lender
unless and until the money is deployed for that specific purpose. In the case
of Barclays Bank v Quist close, where quistclose lent money to a company,
Rolls Razor Limited for a specific purpose of payment of dividends to its
share holders at a time when the company was having over drawn facilities
from Barclays bank. It was held that on 2nd July 1964, payment of final
dividend of 120% was approved.

Absence of intention
There are two possible variations; first if the property is transferred to the
third party and there is no intention to create a trust, the transfer will amount
to an absolute gift to the done. In the case of Lassence v Tierney, court
noted that where the settler unsuccessfully declares himself to be a trustee no
title passes and the property remains in the settler’s estate.

b) CERTAINITY OF SUBJECT MATTER

Although an existing property may be the subject matter of a trust, trust
property must be certain .the entire property that is to be the subject of the
trust must be describe in such a way that it becomes certain and
ascertainable .there has to be an identifiable trust fund .in the case of palmer
v Simmons court noted that declaration concerning the bulk of my said
residuary estate was held to be ineffective to create a trust because bulk has
no clear meaning and its totally un certain.
Tangible and intangible
A distinction is to be drawn between trust of tangible that is to say some
thing which have physical form and intangible some thing without physical
form such as shares, money and debts.
The major distinction is that with tangible the physical segregation of the
trust property from other property is necessary; conversely with intangible
no segregation is required
A trust of the residue of an estate.
a residuary estate may form the subject matter of a trust for example if a
testator leaves a will containing a number of legacies and crates a trust of
whoever is left, there is certainty of subject matter .the executor can readily
calculate the residual estate .there are cases however which may be thought
to conflict and turning on the presence or not of the life estate, are about 5to
cause difficulties.
Estate of last, in the estate of the last property was left to the brother on
terms that at his death any thing that is left, that came from me, was to pass
to the specified persons. This was held to be trust because the brother only
had a life interest in the property. A similar approach was adopted in re
Thompson where the subject matter of the trust was identified as anything
remaining on a wife’s’ death this was applied as a trust because the widow
only had a life interest in her deceased husband’s estate.

Beneficial interest must be certain;

Not only must the trust property be certain and ascertainable, but except as
regards discretionary trust where the beneficial interest are never certain
Boyce v Boyce a fixed trust was set up by will on the death of a testator .the
trust property considered of two houses and there was two named
beneficiaries ,Maria and charlotte . Maria was to choose which house she
wanted, the other house was to be held on trust by charlotte, Maria
predeceased the testator and died without making any selection as it was
now impossible to say which house charlotte should have, the entire trust
has to fail for uncertainty of beneficial shares .both parties there of stayed in
the settlers estate the difficulty here was that the testator had prescribe a
method of allocation that have subsequently become impossible.
Equity is equality, as regards to fixed trust the equitable maxim equity is
equality must be brought into play to safe an otherwise invalid trust. this was
demonstrated in borough v philcox where a trust was set up to benefit the
settlers son and the daughter .there shares however were not specified .by
relying upon the maxim each was deem to have an equal share , the maxim
can be invoke only where there is no contrary intention shown . If the trust is
to benefit my children un equally the maxim could not apply and the maxim
would necessarily fail
Un certain subject matter , where there is no certainty of trust
property there can be no trust , the property whatever it is, it will remain
with the settler or if he is dead will either pass by will or under the intestacy
rules. If however the trust fails for uncertainty of beneficial shares then if
the trust property has already been transferred to the trustee it will be held on
resulting trust for the settler if legal title has not moved then the property
remained with the settler.

CERTAINTY OF OBJECTS.
There have to be beneficiaries that is to say subject of the trust who
are certain or capable of being rendered certain .re Endecott, this is because
there has to be some one who can enforce the trust, this rule does not
however apply to charitable trust because the attorney general and charity
commission can enforce such a public trust .as they become clear a private
trust can fail for conceptual uncertainty, evidential uncertainty,
administrative, un workability and or capriciousness. Fixed trust ,in relation
to fixed trust that is to say where the interest of the beneficiaries are
specified in the trust instrument the court take a strict approach the trust is
void unless each and every beneficiary is ascertainable. In the case of
Morice v bishop of durhamthis is called the complete list test. A trust will
not fail however because particular beneficiary cannot be found or because
there are doubt as to whether the beneficiary is still alive. In such case the
money can be paid to court and steps can be taken either to trace or to
confirm the 4existance of the beneficiary. If the trustee decides eventually to
distribute the trust property among the known beneficiaries this will be done
on the basis that any new claim can recover against them.
Discretionary trusts
This arises where a trustee is given the desecration to chose that,
among the specified class of beneficiaries should benefit under the trust. In
 modern time, a discretionary trust is used to benefit a large class of people
such as employees and dependants. In such case a complete list maybe
practical impossibility
The class test since McPhail v doulton 1971 the for certainty of object
for discretionary said with certainty of any potential that he is or is not the
member of the class .the problem with the class test is how it is to be
applied .the potential difficulty lies with proving the negative how can a
trustee prove that a particular person is not ,for example a relative of the
deceased this issue was subsequently addressed in the re Baden no2 this case
concern a trust to benefit relatives and dependants although the trust was
upheld the court of appeal did not speak with one voice concerning the
operation of the class test the views of the court of appeal
Stamp l.j. took the literal approach that the class test could be satisfied
only if it could be said to every potential claimant that that they were or
where not within the class .there is no room for any doubt with this approach

QN1(b)
Trust & Agency
Agency is a contractual arrangement express or implied, written or verbal whereby
one person may act on behalf of another and bind that other as if he or she acted
personally. An agency arises where a person called the agent has expressed or
implied authority to act on behalf of another called the principal and he consents to
do so. The agent is normally treated as an accounting fiduciary party and he binds
the principal vis-à-vis third parties. Royal Brunei Airlines v Tan [1995] 2 AC 378
where a travel agent was appointed to sell tickets for the plaintiff airline on
condition that all monies received by the agent were to be held for the airline on
trust.
There are some similarities between trustees and agents;
-The relationship of trustee and beneficiary is fiduciary in nature while that of
principle and agent is normally fiduciary but not inevitably so.
-Both trustees and agents must act personally and should not delegate their duties
-Neither of them may make un-authorised profits from their office
There are differences however
1. The trustee in exercise of his office will contract as principal and cannot
bind the beneficiaries unless they have constituted him both trustee and agent
but an agent binds his principal so long as he acts on the principal’s authority or
on the apparent or ostensible authority that he is deemed to have.
2. Although the trustee has a right of re-coup an indemnity against the beneficiaries
for any properly incurred expenses and creditors may subrogate those rights in
certain circumstances there is therefore no direct contractual link between the
beneficiary and 3rd parties comparable to the link between the principal and
3rd parties
3. Agency is normally terminated on death of either party and also by the
principal acting unilaterally if there is no contract to the contrary or the contract
permits him to do so. On the other hand a trust cannot be revoked unless the
trust instrument reserves the power of revocation. Mallot v. Wilson [1930] 2
Ch. 494.
However the beneficiaries if sui juris unanimous and together entitled may demand
that the trust property be distributed and consequently that the trust be brought to
an end.
4. Normally the principal in agency gives binding directions to his agent
whereas beneficiaries cannot control the exercise of the trustee’s discretion.
Refer to Re Brockbank [1948]Ch. 206;
5. The central distinction between agency and trust is in relation to property. An
agent does not per se hold any property for his principal. Many agents do not
obtain items of property at all and those who do so acquire only possession but not
title. On the other hand there can be no trust unless title to the trust property
vests in the trustee or in another party on behalf of the trustee.
Trust and agency overlap
Note that trust and agency may overlap. A trust may be created under which the
trustee undertakes a contractual obligation to act on behalf of the beneficiary e.g.
the vesting of company shares in a nominee for a fee. Conversely an agent may
become a trustee if for instance he acquires title to property to be held for the
benefit of his principal.
It has been said that an agent becomes a trustee for his principal if he obtains
title to the property for the principal’s benefit and on the face of if this is a clear
proposition. However this is not easy to gauge in practice especially if what is
involved is a mere chattel or money whose title may be transferred by mere
delivery of possession with an intention to transfer it. The question was tested in
Cohen v. Cohen [1929]1 CLR in which a wife had sued her estranged husband for
several sums of money and the husband in defence pleaded the statute of
limitations her claims were time barred under the statutes of the Limitations Act.
The defence would succeed unless the claims arose under a trust or had been
acknowledged within the limitation period applicable to personal claims. The
claims were as follows: 9000 DM being money and the sale price of chattels sold
on her behalf by an agent in Germany. In order to overcome difficulties which
attended transfer of funds from Germany to England where she lived, the wife had
arranged for her husband to collect her
9000 marks and use it for purchase of goods in Germany for his own business, it
being agreed that he would pay her out of his own funds in England.
The second claim was for £123 pounds sterling being the sale price of surplus
furniture of the wife sold after the marriage, the husband having retained this
amount.
The third claim was as to £80 pounds sterling being settlement of an insurance
claim arising from the loss of the wife’s jewellery again the husband having
retained this amount.
The court held that she succeeded in all the claims, the court finding that the
husband stood in a fiduciary relationship with regard to the wife’s property in the
circumstances and was therefore a trustee for her benefit. In arriving at this
decision the court followed the decision in Burdick v. Garrick 9000 DM (1870)
L.R. 5 C.L 233 where Lord Justice Giffard stated as follows:
“in respect of attorneys who had been authorised and buy property and
had attempted to set up the statute of limitations as a defence “there was a
very special power of attorney under which the agents were authorised to
receive and invest to buy real estate otherwise to deal with the property but
under no circumstances could the money be called theirs.” Under no
circumstances had they the right to apply the money to their own use or to
keep it otherwise than to a distinct and separate account throughout the
whole of the time that this agency lasted, the money was the money of the
principal and not in any sense theirs. Under these circumstances, I have no
hesitation in saying that there was in the plainest possible terms a direct trust
created. I do not hesitate to say that where the duty of persons is to receive
property and to hold it for another and to keep it until it is called for, they
cannot discharge themselves from that trust by pleading lapse of time.”
A TRUST AND BAILMENT
Bailment refers to a relationship which arises where an owner of property gives
permission to another person to possess it. A bailment is a delivery of personal
chattels to a bailee subject to a condition that they be returned to the Bailor or be
dealt with as the Bailor directs when the purpose of the bailment has been carried
out. There is an element of delivery in bailment.
Read part 9 of the contract Act No 7 of 2010.
Suppose that you are going abroad for a year. You may have a painting which you
do not want to leave in the house. You therefore hand it to a friend to look after
during your absence. This will probably amount to a bailment, though it could be a
trust. Everything will depend on the location of your title, your right to exclusive
possession, of the painting.
If you vested it in a friend, then they will be a trustee of that right for you. If
however, you kept your right in yourself, handing over only the possession of the
painting, the transactions will be one of bailment, not trust. The difference between
the two is crucial for a number of reasons. One is this. If, in breach of instructions,
your friend sold his title to the painting to an innocent purchaser, it will matter a
great deal whether you created a bailment or a trust. If your friend was a bailee,
then the purchaser will not acquire a title good against you and you will be able to
recover the painting’s value from the purchaser in an action in the tort of
conversion, no matter how innocent the purchaser may have been.
The basic rule is nemo dat quod habet (no one gives what he does not have), and
since your friend did not have your title to the painting, he could not transfer it to
the purchaser.
But if your friend was a trustee, the position of the purchaser would be different;
for now your friend does have the right in question and so is capable of passing it
on to third parties. You, of course, have rights under the trust, but such rights are
destroyed when the subject-matter of the trust comes into the hands of an innocent
purchaser of value. It suffices to note that bailment is governed by common law.
The position of a bailee is similar to that of a trustee in the sense that both are
‘entrusted’ with another’s property. The Trustee’s duty to take care of trust
property is roughly comparable with the duty of a gratuitous bailee although
generally the trustee’s duties are more onerous. There are however differences

Bailment differs from a trust in the following ways:

(a) A bailee obtains only possession and what is referred to as special property
in the goods property while a trustee takes title to the trust property. As a
consequence a bailee cannot except in a sale in market overt by virtue of estoppel
or under special legislations such as the Factors Acts pass a title to the Chattels
valid against the bailor whereas a bona fide purchaser who purchases the legal
estate from a Trustee for value without notice of the trust acquires a good title;
(b) Bailment is a common law notion worked out in proceedings for common
law relief such as actions for conversion, detinue or breach of contract whereas
the trust relationship is purely equitable. In conversion, initial possession is
lawful but later converts the goods contrary to what the owner intended. Detinue is
where the defendant is unlawfully withholding the plaintiff’s goods with no good
reason.
(c) Bailment applies only to personal chattels that are capable of delivery
whereas a trust may arise in respect of real or personal property and whether
tangible or intangible.
(d) A bailment is enforced by the bailor who is a party to the arrangement
while generally the trust is enforced by the beneficiary who is not a party to
the trust instrument.
-In bailment, there is no transfer of property from the bailer to the bailee, i.e from
A to B
-Bailment duties are dependent on rules of common law and not equity.
-The duties of trustees under a trust are minimal in character compared to the
duties that exist in bailment.
-Bailment is restricted to chattels but a trust may exist for all types of property.
-Under bailment, the bailer can lose his legal ownership of the bailed property
through any of the ways by which legal owners lose rights; for example, Estoppel,
however under a trust, the beneficiary’s interest/title can only be defeated by
transfer of legal title to a bonafide purchaser for value without notice of the trust.
See Pilcher V Rawlins (1872) LR.7 Ch.APP. 259
Contracts
There is no clean division between contract and trust, though some judges have
attempted to draw one (e.g. as in re Cook [1965] Ch. 902). Indeed, there can be no
hard and fast line between contract and trust because contract is a source of rights
while trust is a way of holding rights. Indeed, many of the rights held in trust are
born of contract. A simple example will illustrate. Suppose I open a bank account
and pay in £1,000. I have a right born of contract that the bank repays me £1,000
on demand. If I then declare that I hold that right on trust for my children, it is
impossible to say that this is now a case of trust and not contract; in truth, it is
both.
A contract is a common law personal obligation resulting from an agreement
between parties. On the other hand, a trust is an equitable relation which can rise
independently of an agreement. However, there are situations when a distinction
between the two is hard to draw, for example;
Settlement and covenants to settle
Where property is vested in trustees on a settlement, it is held upon a trust on the
settlement. However if the property has not yet been transferred to the trustees but
it is simply subject to
a consent to settle, the beneficiaries will only be able to enforce the consent if they
have given consideration. This is based on the principle that “equity will not assist
a volunteer”
QN: 1a)
i. In order to be enforceable, a trust must be properly constituted either by the
settler making a declaration of trust or by transferring the trust property to
trustees. A trust of shares can be declared orally but an ineffective gift will
not be construed as a declaration of a trust as was in Jones v Lock.
In this case Cecilia had purported to transfer the shares to Dumba. The
general rule is that equity will not perfect an imperfect gift. In the facts
given, we see that to transfer shares, a share transfer form must be executed
and the shares registered in the company in the names of the transferee,
therefore the transferor did everything that she was supposed to do for
example she transferred the shares to Dumba, but the effectiveness of the
gift depends on the third party, the gift will not fail as was in Re rose. Where
the transferor needs to take some further steps like signing and posting off
the company, the gift will not be effective. On the facts that Cecilia had a
telephone conversation with Dumba was clearly insufficient because in order
 to make a perfect gift, the donor must comply with the requirements
necessary to transfer legal title to the property. There are numerous
examples where equity has not interfered when although a transfer was
intended, the transferor did not follow the appropriate transfer process just
like the case at hand. Also in the case of Jones v Lock, where a father
intended to make a gift a gift of a cheque to his child, but failed to endorse
the cheque with the result that legal title did not pass therefore equity refused
to cure the defect and the gift failed. This rule however has its exceptions
and these include deathbed gift as was evidenced in this case where Cecilia
was assumed to have died on her deathbed without preparing a will therefore
in my view equity shall come in to perfect an imperfect gift.

ii. BRIEF FACTS

That Cecilia died on the 21st of April, 2017 and was the absolute owner of 200
shares in Ugaplex limited. That Cecilia telephoned Dumba her cousin to tell him
that she intended to transfer those shares to him immediately and that she had
completed part of the share transfer form but had not signed it or post it off the
company as she was required to do.
LEGAL ISSUES
f. Whether or not the donation of 100 acres by Cecilia to her fiancé Tonda was
valid?
LAW APPLICABLE
5. Case law
6. Succession Act
RESOLUTION
ISSUE 1;
In the circumstances surrounding the case at hand it’s clear that indeed there is a
valid trust between Cecilia and Tonda because for a valid trust to exist there should
be the three certainties. Further more due to onerous duties placed upon a trustee,
its necessary that the settler makes clear that the trust was intended, what property
is subject to the trust and who the beneficiaries are in order for the trust to be
enforced. Accordingly the law has developed a test known as the three certainties
that encompasses certainty of intention, certainty of subject matter and certainty of
objects in the case of Knight v Knight and in continuation except as to charitable
trusts which do not need certainty of objects, the three certainties need to be
present so that a trust can be workable and capable of supervision by the court.
From the case above in my opinion it’s a charitable trust because Cecilia donated
the 100 acre to her fiancé Tonda. And further more to explain this under certainty
of intention, it’s necessary for the settler to intend to create a trust as opposed to
some other type of legal relationship. Nevertheless, there is no magic formula
necessary to show the intention to create a trust. Equity looks to the intent rather
than the form. Although desirable, the use of the word “trust” is not essential. Even
if the term “trust” is employed, this is no guarantee that a trust will be discerned as
was in Midland Bank v Wyatt. There is however no general requirement that a
trust be created or even evidenced in writing and a trust can be inferred from the
conduct of the parties and the surrounding circumstances therefore the fact that
Cecilia intended to donate the 100 acres of land to her fiancé was a valid trust.
The other element is certainty of subject matter whereby although any existing
property may be the subject matter of a trust, trust property must be certain. The
entire property that is to be the subject of the trust must be described in such a way
that it becomes certain and ascertainable and there has to be an identifiable trust
fund, this therefore means by Cecilia disclosing to her executors that she intended
to donate 100 acres of land to her fiancé Tonda, the trust property was certain to
the executors knowledge.
QUESTION 1

The development of Equity was both controversial and significant to the legal system.

Do you agree with this statement?

The word ‘equity’ has a wide range of meanings and to many people it is a synonym for
‘fairness’ or ‘justice’. To a lawyer, however, equity has a very special and narrow
meaning: that body of rules developed and applied by the Court of Chancery. This court
was presided over by the Chancellor and the rules were developed under his authority.
The origins of equity lie in the deficiencies of the common law. The common law had
gaps where a remedy was not available or where a remedy was available but was not
appropriate to the particular loss of a plaintiff. The Chancellor was responsible, among
other things, for the issue of writs and all actions had to be commenced by the issue of a
royal writ. If there was no writ appropriate to a claim there could be no action and thus no
remedy. To some extent the severity of this was tempered by the Chancellor’s willingness
to develop new writs but this came to an end and where a plaintiff may have had a
common law remedy but he was prevented from enforcing it because of the power or
influence of the other party to the case. Again the plaintiff might be the victim of the
corruption of the jury which heard his case. Additionally, the common law was
preoccupied with formality. For example, if two parties tried to enter into a verbal
contract which was required, at common law, to be in writing the result would be that the
common law would not recognize the contract nor grant any remedies on it. This was the
case whatever the situation, whatever the merits of the case and irrespective of how the
parties had behaved. The original role of equity was often as a ‘gloss on the common
law’. Equity might well provide a remedy where the common law provided none or
provide a more suitable remedy than the common law. Equity might also intervene to
ensure that the available common law remedy was actually enforceable. In other words,
equity worked alongside the common law and provided different solutions to problems. If
a subject believed that the common law would not provide an appropriate solution to his
case he could petition the King and the Council asking that justice be done and that a
remedy should be ordered. It was considered that a residual of justice resided in the King
and petitions were directed at tapping this as a last resort if the common law had not
provided justice. These petitions were referred to the Chancellor and eventually the
Chancellor was petitioned directly. It was only very gradually that equity developed and
came to be regarded as a separate and in some ways a rival system of law. Originally,
Chancellors, though generally well versed in the law, particularly the canon law, were
ecclesiastics rather than lawyers. They were sometimes referred to as the keepers of the
King’s conscience. Early decisions tended to be Peculiar to the individual and to be based
on the ideas, beliefs and conscience of each particular Chancellor. So it was said that
equity varied with the length of the Chancellor’s foot. In other words the decision in any
particular case would be relatively unpredictable and uncertain. This may be an
acceptable approach in single isolated cases but the uncertainty meant that the rights of
individuals were impossible to assess.

Introduction of rigidity: The appointment of Lord Nottingham as Chancellor in 1675

marked the start of the systemization of equity. He was responsible for setting down the
principles upon which equity operated, thus moving away from the era of idiosyncratic 275,
unpredictable decisions. He also laid out the boundaries within which equity functioned.
Of the great Chancellors involved in the development of equity into a modern system of
law was Lord Eldon, who was twice the Chancellor for a total of almost a quarter of a
century. He stressed that decisions must be based on precedent applied in a flexible and
creative manner, and he consolidated the principles previously developed. Lord Eldon
was the consolidator, who worked on the application of the rules and principles of equity
which he inherited from Lord Nottingham and Lord Hardwicke. Gradually, decisions
began to be based on precedent. This development took place at the same time as lawyers
began to be appointed as Chancellors and eventually a body of law evolved which was as
fixed and rigid as the common law. This move towards a more predictable, precedent-
based system started at the end of the seventeenth century and coincided with the
refinement of the reporting of cases heard in the Chancery courts.

Conflicts between equity and the common law

The general approach of equity was to follow the common law unless there was a sound
reason to do otherwise. So, equity recognized and protected those estates in land and
those interests in land that were recognized and protected by the common law. In fact,
equity recognized other estates too. But in a legal system where two bodies of law existed
there were bound to be occasions when there was a conflict. If conflicts arose between
equity and the common law, equity would use the common injunction, which had the
effect of preventing the common law action from proceeding or preventing the common
law judgment from being enforced. This was clearly not acceptable to the common
lawyers and for many years there was very active conflict. This was not resolved until the
reign of James I when it was decided that equity should prevail. The Supreme Court of
Judicature Act 1873 s 25(11) provided that in cases of conflict between the rules of equity
and the rules of the common law, equity shall prevail.
275
Peculiar to the individual
There are a number of very important underlying principles which relate to the ways in
which equity intervened.

“Equity acts in personam” The main remedy available at common law is damages.
Equity, however, acted against the person and ordered him to do something (a decree of
specific performance) or not to do something (an injunction). Other equitable remedies
are rescission, rectification and account. If the order of the court is not obeyed then
imprisonment may follow.

Equitable remedies are discretionary A common law remedy can be claimed as of right.
For example, if a breach of con- tract is proved the victim can demand an award of
damages. However, the award of an equitable remedy is at the discretion of the court. The
victim of a breach of contract to transfer property can only ask the court to exercise its
discretion and award a decree of specific performance ordering the transfer of the
property. The bona fide purchaser whereas a legal right may be said to be enforceable
against anyone in the world, an equitable right is enforceable against anyone except a
bona fide purchaser for value without notice. (This principle is of less importance
following the introduction of registration of rights over land but is nevertheless a basic
principle of equity.) In conclusion therefore I agree with the statement that the
development of equity was both controversial and significant to the legal system as
briefly discussed above.

QUESTION 2

Discuss in details whether the judicature acts of 1873-1875 simply fused the rules of or
the administration of equity and law.

It is clear that although equity started life as mere supplement to the common law it
developed into a separate system. Equity was administered by the Courts of Chancery
which were separate from the common law courts. This caused many problems. For
example, it was often necessary to use both the common law courts and the court of
equity in the same dispute. There were some improvements but it was not until the
Supreme Court of Judicature Acts 1873–75 that the position changed significantly. This
legislation provided for the creation of one single Supreme Court to replace the separate
courts that existed previously. The Courts of Exchequer, Queen’s Bench, Chancery,
Common Pleas, Probate, Admiralty and the Divorce Court were abolished. In their place
was one court, divided, for convenience only, into three Divisions of the High Court
(Queen’s Bench, Chancery and the Probate Divorce and Admiralty Divisions, the latter
being renamed the Family Division in 1970). In practice, matters are allocated to the most
appropriate Division but in fact any Division can adjudicate on any matter and both
common law and equitable remedies can be awarded by any Division. As mentioned
above, it was specifically provided that, if there was a conflict between the rules of the
common law and the rules of equity, equity shall prevail (Supreme Court of Judicature
Act 1875 s 25(11); now the Supreme Court Act 1981 s 49). There is no doubt that this
legislation merged the administration of the two systems of law. There is, however, some
debate as to whether the two systems of law themselves have been fused into one.
Ashbury, in Principles of Equity, expressed his view by saying that ‘the two streams of
jurisdiction, though they run in the same channel, run side by side and do not mingle their
waters’. There have been judicial and academic statements to the effect that there is a
fused system of law. For example, in United Scientific Holdings Ltd v Burnley Borough
Council [1977] 2 WLR 806, Lord Diplock said: ‘The innate conservatism of English
lawyers may have made them slow to recognize that by the Supreme Court of Judicature
Act 1873, the two systems of substantive and adjectival law formerly administered by
courts of law and Courts of Chancery (as well as those administered by Courts of
Admiralty, Probate and Matrimonial Causes) were fused.’ The prevailing view appears to
be that, although the two systems operate closely together, they are not fused. In MCC
Proceeds Inc v Lehman Brothers International (Europe) [1998] 4 All ER 675, Mummery
LJ said that the substantive rule of law was not changed by the Judicature Acts. These
were intended to achieve procedural improvements in the administration of the law and
equity in all courts, not to transform equitable interests into legal titles or to sweep away
the rules of the common law. However, Lord Browne-Wilkinson, in Tinsley v Milligan
[1993] 3 All ER 65, appears to take a different view. He said: More than 100 years has
elapsed since the fusion of the administration of law and equity. The reality of the matter
is that, in 1993, English law has one single law of property made up of legal estates and
equitable interests. The distinction still remains between equitable and common law
remedies. There remain important differences between common law and equitable rights.
In conclusion therefore, the judicature acts of 1873-75 simply fused rules of the common
law and equitable rules with the result that there is now one common rule 276. The second
opposing view is that the effect of the Act was only to create a common court for the
Administration of law and equity and not a fusion of law and equity. The general rule
being that where conflict arises, equity prevails and this is supported by the prevailing
distinction between the equitable ownership of a beneficiary and the legal ownership of a
trustee under a trust and the maxim that where the equities are equal the law prevails

QUESTION 3

276
Nelson v larholt (1948) 1 KB 399….
With the aid of relevant examples and authorities discuss in details the Doctrine of Notice
and the impact of registration legislation on the Doctrine of Notice.

The purpose of the doctrine of notice is to prevent a buyer of superior title from setting it
up against prior or earlier owners of inferior interests which affect the property. The
effect of this is that the buyer of the legal estate with notice of prior equitable interests
affecting the estate takes it subject to those prior equitable interests. The doctrine is one
of the instances where equity looks at substance rather than form of transaction to arrive
at a just result. Notice basically is knowledge of a fact in existence and it comes in three
i.e. actual, constructive and imputed as will be defined briefly below

Actual notice is where a buyer of an estate has express notice of a prior interest at the
time when he or she made or at any time before the purchase was completed. It consists
of personal knowledge of the prior equitable interest affecting property buyer intends to
purchase and here it is important to show that the buyer had actual notice of the equitable
interest before he or she acquires his/her superior title. A buyer is not bound by notice if
their source is unreliable such as rumors.

Constructive notice which is where a purchaser has knowledge of any fact sufficient to
put him on inquiry as to the existence of some right or title in conflict with the one he is
about to purchase, the presumption is that he either inquired and ascertained the extent of
such prior right or guilty of a degree of negligence equally fatal to his claim. The mere
presumption however may be disproved by showing that the buyer failed to discover the
prior right after doing due diligence. The essence of constructive notice is that the buyer
should make reasonable inquiry relating to the circumstances of transaction. If this
inquiry is not done equity will assume that this is due to bad faith and thereby affect the
buyer’s right to be a bona fide purchaser.

Imputed notice- this may be imputed to the buyer through actual or constructive notice
though it’s none of the above stated but through an agent. It is established that notice to
an agent is notice to the principal. Such notice will only be imputed to the buyer through
his bona fide agent and in this regard a buyer who instructs his agent to buy property at
auction sale is taken to be affected by notice of an equity which comes to his knowledge
in the course of transaction

Furthermore, section 54 of the Registration of Titles Act cap 230 requires registration of
instruments affecting land and stresses that no instrument until registered in the manner
herein shall be effectual to pass any estate or interest in any land under the operation of
this Act or to render such land liable to any mortgage…….
For this purpose entries are meant to allow the title be traced either downwards from or
upwards to the original certificate of title. The purpose of the Registration of Titles Act
(RTA) is to notify a buyer, mortgagee or other person involved in a transaction relating to
the land of transactions affecting the land.

In the same spirit section 48 of the RTA comes into play for that every memorial entered
in the Register book is required to state the nature of the instrument to which it relates,
the time of the production of such instrument for registration and the name of the petty to
whom the same is given and be signed by the Registrar.

The effect of the sections mentioned above is that every instrument registered under the
RTA supersedes other instruments affecting the land from the date of its registration, only
a person who has registered his or her transfer can plead it in evidence. If there are two
competing registered instruments then the first one to be registered takes priority. In
conclusion, it appears that a subsequent owner who is not a purchaser for value takes the
estate subject to any unregistered estate affecting the estate of a previous registered
owner, while a first registered owner who is affected by notice of the prior unregistered
interest takes subject to such interest.

SECTION B

QUESTION 4

Explain the nature and principles guiding the issue of interlocutory Injunctions

Injunctions are orders issued by a court that prohibit or reverse some kind of wrongful
activity. These are powerful legal tools: to fail to comply with their conditions is to act in
contempt of court and can result in imprisonment. Injunctions can be categorized
according to how they achieve their goals. For example, an injunction can be constructed
so as to stop some kind of activity. Thus a group of people may be ordered to stop
demonstrating on property that belongs to another, or, a fiduciary may be ordered to
desist from acting in breach of his duty. This type of injunction a ‘prohibitory’ injunction
may therefore be characterized as having a ‘negative’ effect. By contrast, a ‘mandatory’
injunction is phrased so that it orders some kind of activity to be carried out. Injunctions
can also be granted on a permanent as well as a temporary basis. Claims that their rights
have been infringed can be resolved by granting a ‘perpetual’ injunction in claimants’
favor.

Granting interlocutory injunctions creates a dilemma for a court. The object of civil
proceedings is to achieve justice as between parties, usually, one might hope, through the
equal treatment of the parties. Where, pending trial, one side claims ongoing and
irreparable harm to its interests by the other, the court faces the difficulty that if it allows
matters to continue as they are, then the claimant may well suffer damage which cannot
ultimately be compensated at trial. Whether there is legally recognized damage, however,
depends on the claimant’s claim being substantiated at full trial. Until then, there is the
risk that if an injunction is granted, the defendant’s rights will instead be infringed.
Whatever the court does at this stage, it must of necessity act partially: it must take the
side of the claimant or of the defendant, even though matters have not yet been finally
adjudicated. A balance must be found between on the one hand, the need to reduce the
risk of harm to lawful rights pending litigation and, on the other...the imperative of
impartiality which argues for non-interference prior to final judgment. For example, the
jurisdiction to grant interlocutory injunctions is based in part on the need for a quick
decision. This means that hearings are likely to be quickly prepared. Evidence will
normally be presented in affidavit form only (Civil Procedure Rules)

In addition, the courts proceed on the assumption that the dispute will be litigated in full
later. The implications of this are both that it might be inappropriate to go too far in
prejudging the final court’s findings at an interlocutory stage, and that any harm done in
the meantime can be put right by the final court. In light of these considerations, the
approach is to preserve the status quo–the existing position – until trial. In doing so, the
courts recognize nevertheless that harm may be done in the meantime to one or other
party, depending on the final outcome. They have therefore developed a test that looks to
the ‘balance of convenience’ as between the parties. This involves assessing both the
harm that each side is likely to incur, according to whether the injunction is granted or
not, and whether that harm can be compensated at trial in money terms. To ensure that
this is not a hollow exercise, across-undertaking in damages for any loss incurred must be
given by the claimant as part of the order. The leading case in the area is American
Cyanamid Co v Ethicon Ltd [1975] AC 396. The case sets out the dilemma facing the
court, and focuses on the extent to which the plaintiff’s chances of success at final trial
need to be established relevant to the prospects of injustice and harm to the defendant
before relief will be granted. Before American Cyanamid, the courts had held that in
order to obtain an interim injunction, the plaintiff had to make out a prima facie case: that
at trial, he would have a better than even chance of winning as in Fellowes & Son v
Fisher [1976] QB 122). Only in these circumstances would the court consider whether it
was in the balance of convenience to grant or withhold the injunction. In American
Cyanamid the House of Lords appeared to establish a different test. Lord Diplock
emphasized that the governing principle on this point was that the court should first
consider whether the plaintiff or defendant would be adequately compensated by
damages from the other party whichever one should be successful at trial.

QUESTION 6

Discuss the manner in which a constructive trust arises and what makes it different from
an express trust.

A trust is a right, enforceable solely in equity, to the beneficial enjoyment of property to which
another person holds the legal title. This is also a property interest held by one person (the
trustee) at the request of another (the settlor) for the benefit of a third party. 277Therefore under the
law of trusts there is an order that is mainly characterized of the settlor who is the owner or who
is bequeathing, the trustee who holds the property on behalf of the third party who is the
beneficiary. This means that the beneficiary will be the owner of the trust if the trustee executes
it. However, the beneficiary’s interest in the trust can be bought or sold off. The interest of the
beneficiary will be lost if it is the bonafide purchaser for value who takes the property.
The decision in Keech v Sandford is usually taken to be the originator of the development
of the principles on constructive trusts, while there are cases which predate it like Holt v
Holt. It would appear that English law conceives the Constructive trust as “an institution
and as one variety of trust, though of an anomalous kind, linking a number of situations
not possessing any unifying thread, and some of them of doubtful utility to modern law.
It has sought to remedy this defect in part by stressing the importance of the keech case
stated above, and by extending the principle which they embody to all situations where a
fiduciary relationship exists and by making the principle of tracing applicable”. The
scope of the expression constructive trust is amorphous in so far as it encompasses a
number of situations with very little common criteria. The duties and rights of
constructive trustee may differ so widely that it is advisable to treat each relationship
separately in order to identify its implications. The principle is that if a person in a
fiduciary position uses it to gain some personal advantage; he becomes a constructive
trustee for the person thereby deprived of the profit. Some of the noted situations include

f) Vendor as a constructive trustee; where a binding contract for the sale of land
exists, the view is held that the vendor is, until completion, a constructive trustee
for the property of the purchaser. Although the purchaser would take the benefits
and bear the losses, this doesn’t automatically render the vendor a constructive
trustee, where vendors position is between bare trustee or mere trustee and
mortgagee who is not in equity.
g) Mortgagee as constructive trustee; for a long time there is the assertion that a
mortgagee in possession of mortgaged property is “in the nature of a trustee for the
mortgagor” the idea that the equity of redemption available to a mortgagor is an
277
Bryan A. Garner, Black’s Law Dictionary 8th Edition. Page 1546
 estate in land rather than a mere chose in action and constitutes a mortgagee a
trustee in respect therefore of the mortgagor.
h) Acquisition of property through fraud; if individual acquires property through
fraud upon another, equity converts him into a constructive trustee for the benefit
of the person affected by the fraud and it need not be person whom the fraud was
operated as the cases on secret trust portray. The fraud which is personal must be
proved and for this purpose too, a statute cannot be used to frequent fraud. The
concept is better elucidated in the cases Bannister V Bannister and Binions V
Evans
i) Express Trustee as a constructive trustee; the general principal of equity is that a
trustee should not use that position to obtain a personal advantage adverse to the
beneficiary. If he does so he is taken to hold the profit or advantage as constructive
trustee for the beneficiary.

And other various situations like

The express trust is, as its name implies, a trust which has been expressly and
intentionally declared by its creator, known as the settlor (or, in the case of a trust
created by will, known as the testator). There are a number of requirements for the
valid creation of an express trust, but the underlying objective of these requirements is
that the settlor should have acted in such a way as to enable the courts, if necessary, to
intervene to enforce the settlor’s wishes. The settlor must, of course, be legally
capable of declaring a trust and the people he intends to benefit must be capable of
being beneficiaries. The settlor must show his intention to create a trust (even if he
does not use the word ‘trust’); he must make clear that he intends the legal owner of
the property (which may be himself or someone to whom he is transferring it) to be
subject to a binding obligation to the intended beneficiary. He must make clear who is
to benefit under the trust in order that the court may know who has a sufficient interest
to be able to sue. He must identify the property which is to be subject to the trust and
if he wishes persons other than himself to be trustees he must effectively transfer the
property to them. Finally, in certain cases, he must do this in the form required by
statute. These requirements are known respectively as capacity, certainty and
constitution of trusts, and formality.

QUESTION 6

Discuss in details the requirements for a valid assignment

An assignment a transaction between the person entitled to the benefit of the contract
i.e. creditor or assignor and the third party i.e. assignee as a result of which the
assignee becomes entitled to sue the person liable under the contract i.e. debtor. The
debtor is not a party to the transaction and his consent is not necessary for its validity.
There are various types of assignments with backgrounds like those at common law
like novation, acknowledgment and those of equitable nature like legal chose,
equitable chose and lastly statutory assignments. For an assignment to be valid and
unchallengeable it must meet the following requirements below

For formality; statutory assignments must be in writing and signed by the assignor.
Assignment which does not satisfy this requirement may take effect as an equitable
assignment. For instance, while an oral assignment cannot take effect under the
statute, it may be valid in equity. Consequently, the statute merely provides an
alternative method of assignment; it does not destroy the old method. A disposition of
an equitable interest must be in writing and signed by the assignor or his agent.
Consequently, an oral assignment of an equitable chose is void.

There ought to be an intention to assign for an assignment to be deemed valid. It is

necessary to establish the intention to assign. It should be observed that although a
creditor has requested debtor to pay third party it does not imply the he has assigned
the debt. Just as a person who draws a cheque on his bank in favour of a third party
doesn’t assign part of his bank balance.

For a valid assignment to arise there must be communication to the assignee. An

assignment is not of an effect if it’s not communicated to the assignee by the assignor
or related authority. The reason for the requirement is not instantly obvious because
it’s evidential in nature for intention to assign although such an intention could
equally be proved by other evidence. The other explanation for the essence of
communication is that it is equivalent of the delivery which is necessary to perfect a
gift of a chattel made otherwise than by deed.

Furthermore, notice validates an assignment as discussed briefly: notice to the debtor

takes form that is either oral or written. However if the chose assigned is equitable,
oral notice is seldom effective between successive assignees. Notice of a statutory
assignment must be in writing and it need not be given by assignor, nor at the time of
assignment, it may be given by the assignee and is effective as long as it is brought
before action is brought. Notice may affect the relative rights of assignor and
assignee, of assignee and debtor, and number of successive assignees.
 The rights of assignor and assignee may depend on whether the assignment is
statutory and it can only have this character if notice is given and in the absence of
notice the assignment, may take effect in equity. It is significant that notice to the
debtor is not necessary to perfect the rights of an equitable assignee against the
assignor as elaborated more in the case of Gorridge V Irewell India Rubber Co Elc.
Works. In conclusion therefore, an assignment as defined above can be deemed
invalid in case it doesn’t carry to entail the briefly stated above i.e. formalities, intent
of assigning, communication to assignee and notice to debtor which looks at relations
and form and effect of the said notice

QUESTION 7

Explain the following

a. Equality is equity
b. Equity follows the law
c. Anton pillar injunction
d. Quia timet Injunction
e. The effect of precatory words

Equality is equity : “The maxim that equality is equity expresses in general the object
both of law and equity, namely to effect a distribution of property and losses.

Proportional to the several claims or to the several liabilities of persons concerned;

Equality in this connection does not necessarily mean literal equality but proportional
equality…”

This maxim has many applications including presumption of tenancy in common,

severance of joint tenancy and the principle of equal division. This maxim operates
against joint tenancy. In joint tenancy, there is a right of survivorship (jus acrescendi)
where one joint tenant dies, the remaining joint tenants takes the whole property thus the
heirs of the deceased take nothing. In such a case equity operates against the right of
survivorship and presumes a tenancy in common. The effect of this is that the share of the
deceased tenants passed on to those who are entitled to his or her property under his or
her property under his or her intestacy. The survivor of the joint tenancy is regarded in
equity as a trustee of the deceased’s share for the benefit of the deceased’s beneficiaries
under a will of intestacy. Equity will also prefer tenancy in common where the property
of the parties is bought with money provided by them in unequal shares and take the
conveyance to them jointly. In the absence of special circumstances, equity treats the
property as belonging to them as tenancy in common not joint tenancy. The survivors are
thus considered in equity as being trustees for the personal representatives of the
deceased purchaser to the extent of his share in the purchase money.

This rule does not apply where the purchase is made for the purpose of joint undertaking
for example partnership for the right of survivorship is incompatible with the relationship
of partners and in every such case whether the purchase money is advanced equally or
unequally, equity treats the parties as tenants in common with regard to their beneficial
interests in the property. In LAKE.V.CRADDOCK, it was held that 17 partners buy land
from their firms business, in law they will be regarded as tenants in common, where
partnership deed does not specify the shares of partners the result is that each partner is
entitled to an equal share of the assets and liabilities of the partnership. Also where
persons advance money jointly on loan whether equally or unequally, in equity they are
regarded as tenancy in common.

Under the principle of equal division where there is no basis for distributing property
between two or more rival claimants, the court will divide the property equally. This
applies in regard to trust property when dividing it to beneficiary by trustees. Also in
cases where a parent has died leaving many children the presumption in equity is that
they should all share equally in the property. The succession Act8 provides that all-lineal
descendants, wives and dependent relatives shall be entitled to share their proportion of a
deceased intestates property in equal shares. Where two or more parties have an interest
in the same property but their respective interests have not been quantified, equity as a
last resort may divide the interest equally.

EQUITY FOLLOWS THE LAW

This is an attempt to indicate the relationship between common law and equity, which is
a complex one. The traditional role of equity, as stated in ‘Doctor and Student’ 1523 by
Christopher St German was ‘to temper and mitigate the rigour of the law’, which implies
that equity would intervene and overrule the common law if justice required it. It was
stressed, even at that time; however, that it did not attempt to overrule common law
judgments, but rather to act in personam on the parties to prevent injustice (This maxim
indicates that, where possible, equity will ensure that its own rules are in line with the
common law ones. Examples of equity overcoming the effect of the common law are
frequent enough, but it should be noted that in most cases the principle is that equity
supplements but does not contradict the common law. Thus, in the case of the trust, the
interests of the beneficiary are recognized, but so too, of course, is the status of the trustee
as legal owner. The trust exists, as it were, behind the legal ownership. Equally, the
courts will in appropriate cases allow the common law effects to stand. For instance, in
the case of Re Diplock [1948] 2 All ER 318 it was argued that, where money had been
distributed to charities under the provision of a will which subsequently turned out to be
invalid, the charities should be allowed to retain it.

ANTON PILLAR INJUNCTION

The Anton pillar injunction, which is also interlocutory, arose from the case of Anton
pillar K.G. v Manufacturing process Ltd. The action was for the infringement of certain
registered trademarks. The plaintiffs sought an order ex parte to compel the defendants to
allow the plaintiffs solicitor to inspect the matters in issue in the suit and to produce them
upon oath. The plaintiffs argued that if the defendants were given notice of the
application, relevant evidence would disappear. Consequently, the application was heard
ex parte and in camera. It was held that the injunction be granted on the ground that it
was in the interest of justice to make the order sought. In the course of judgement
Ormrod LJ laid down three conditions for the award of the injunction. First, that there
should be an extremely strong prima facie case. Second that damage, potential or actual
must be serious for the applicant. Thirdly, there must be clear evidence that the
defendants have their possession incriminating documents or things and that there is a
real probability that they may destroy such material before any application inter partes
can be made. However, even where all the conditions met, the court must be satisfied that
the need for the order outweighs the injustice of making an order against the defendant
without him or her having been heard. This means that ordinarily the order would not be
made against a person of good standing. It will also be rarely given in matrimonial
proceedings unless there is strong evidence.

QUIA TIMET INJUNCTION

A quia timet injunction is one which is ordered to protect the applicant from an action
which it is feared may be committed in the future, on the basis that some right of the
applicant will otherwise be infringed. Literally, the term ‘quia timet’ means “he who
fears”, that is, he who fears that he will suffer some harm. Clearly, this category of
injunction stands out from the general principles of equity above which required that
there be some right of the applicant affected. The quia timet injunction does not require
that some right of the applicant has been affected, only that there is a risk of its being
affected. Therefore, the grant of this type of injunction is typically limited to situations in
which there is a real risk of detriment to the applicant. As Lord Buckmaster held in
Graigola Merthyr Co Ltd v Swansea Corp, “a mere vague apprehension is not sufficient
to support an action for a quia timet injunction. There must be an immediate threat to do
something”. It must be demonstrated that the respondent intends to, or is likely to,
participate in the act complained of. Where the respondent demonstrates a disinclination
to participate in the action then the injunction will not be granted.

EFFECT OF PRECATORY WORDS

It is possible, therefore, that as part of making a gift to someone, the donor will seek to
impose a moral obligation on them. When a parent gives a child money to buy a book as
a reward and says ‘don’t spend it all on sweets’, that does not make the child a trustee of
the money. Instead the child is under a moral (rather than a legal) obligation to use the
money to buy a book. The expression generally used by the courts to distinguish between
a declaration of a trust and a moral obligation is to define merely moral obligations as
setting out ‘precatory words’. Mere ‘precatory words’ do not create substantive trust
obligations. In short, the nature of the intention is to be inferred from all the
circumstances. In Re Adams and Kensington Vestry, a testator left property to his wife
(W) by wills ‘in full confidence that she would do what was right by his children’. It was
argued on behalf of the children that the moral obligation imposed on W in the will
created a trust. However, it was held that the property passed to W absolutely. The court
interpreted the statement in the will to have added only a moral obligation on the wife to
use the money in a way which would benefit the children and not to place her under an
obligation to hold that money as trustee for the children. Where a statement is analyzed as
being merely a statement of wishes in this way, it will not have the force of a trust. On
the other hand, in Comiskey v Bowring-Hanbury, the testator left property by will to his
wife subject to a provision for equal division amongst his nieces on his wife’s death. The
precise words of the bequest were that the property was left to the wife ‘in full confidence
that . . . she will devise it to one or more of my nieces as she may think fit’. Therefore, on
the face of it, there would appear to be a merely moral obligation on the part of the wife
to benefit the testator’s nieces. However, it was held that there was an executory gift over
the whole of his property which was intended to give those nieces some rights in that
property under a trust. In part this was due to the fact that there was no property
segregated from the rest of the testator’s estate which could have been identified as being
for the benefit of the nieces alone. Therefore, it was held that the wife should be
prevented from dealing with that money as though she were entitled to it absolutely
beneficially. Thus, the court found that the testator’s intention was to give the nieces
property rights from the moment that the will came into effect. Therefore, his wife did
not take that property absolutely subject to a merely moral obligation to take care of her
deceased husband’s nieces; rather, she was subject to the obligations of a trustee and the
property was held on trust for her for life and then in remainder to her nieces equally. In
conclusion therefore precatory words are aimed at elaborating desire, intention, wish of
an individual and court will infer a trust from the use of precatory words depending on
whether the subject matter and objects of the trust have been clearly indicated

SECTION A

Question One

1. With the aid of relevant case distinguish between trust from other forms of legal
relations.

A trust is defined in Hague Convention on law of trusts,this has been incorporated into English
law by U.K Recognition and a trust is defined as the legal relationships created inter vivos or on
death by a person,the settlor when assets have been placed under the control of a trustee for the
benefit of a beneficiary or for a specified purpose.A trust has various characteristics like trustee
has the power and duty and he is accountable, title of trust assets stand in the name of trustee or
in the name of any other trustee,assets constitute a separate fund and are not part of the trustees
own estate.

Trust and Agency.

Agency is the contractual arrangement express or implied,written or verbal where one person
may act on behalf of another and bind that other as if he or she acted personally.Agency arises
where a person called the agent has expressed or implied authority to act on behalf of another
called the principal and he consents to it. An agent is normally regarded as an accounting
fiduciary party and he binds the principal vis-à-vis third parties.

The Differences between trust and agency are discussed below;

1.The trustee in exercise of his office will contract as principal and cannot bind the beneficiaries
unless that have constituted him both trustee and agent binds his principal so long as he acts on
the principal's authority on apparent that he is deemed to have .

2. Although the trustee has a right of recoup an indemnity against the beneficiaries for any
property incurred expenses and creditors may subrogate those rights in certain circumstances
there's therefore no direct contractual link between the beneficiary and 3rd parties comparable to
link between the principal and third parties.
3. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. Whereas a
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallotvs Wilson278

Trust and Debt

The traditional view is that the relationship between trustee and beneficiary is not one of debtor
and creditor. That means that the trustee does not owe the value of the rights he holds to the
beneficiaries. This can be seen in the case of Morley vsMorley,Barclays Bank Ltd
vsQuistclose investment Ltd279created confusion in this area,holding that a borrower of money
can be both a debtor and a trustee in respect of the same sum.That decision is how ever
extremely controversial and has been recently reviewed in TwinsectraVs Yardley280, butthe
under the traditional view enunciated above a trustee will not owe the value of the right held on
trust, this is not to say that a debt cannot form the subject matter of a trust. When we talk of trust
of a bank account, we mean nothing than the creditor’s right to sue is held on trust.

In the case of Barclays bank Ltd vs Quits close investment ltd 1970 Ac 561,the sum was
borrowed from Quitsclose under an arrangement whereby the loan was to be used for that
purpose.The money paid into a separate account at Barclays bank which had notice of that nature
of the arrangement. Before dividends were paid rolls Razor went into liquidation.

Issue:whether the money on the account was owned by the beneficiary Rolls Razor ,in which
case Barclays bank claimed to set against the over draft or whether Rolls Razor had received the
money as trustee and still held it in trust of Quits close.

House of Lords held:The money had been received in trust to be applied for payment of
dividends that purpose having failed, the money was held in trust for Quit close.

278
(1930).
279
(1970)Ac 56
280
(2002) UKHL
The fact that the transaction was a loan recoverable by an action at law did not exclude the
implication of a trust.The legal and equitable rights exist the bank having notice of the trust and
not retain the money against Quit close.

Trust and Bailment

A bailment arises where an owner of property gives permission to another person to possess it.A
bailment is a delivery of personal chattels to bailee subject to a condition that they be returned to
the bailor or be dealt with as the Bailor directs when the purpose of the bailment has been carried
out.

Contract act part 9 of 2010 discusses bailment.

Suppose you’re traveling abroad for a year you may have a painting which you do not want to
leave in the house you therefore hand it over to a friend to look after it in your absence and that
amounts to bailment.

This will depend on the location of your title,your right to exclusive possession of painting.

If you vested it in a friend then they will a trustee of that right for you.if you have however kept
your right in yourself, handing it over only the possession of painting the transactions will be one
of bailment not trust.

The Differences between Bailment and a Trust;

1. Abailee obtains only possession and what is reffered to as special property in the goods while
trustee takes title to the trust property.

2. Bailment is a common law notion worked out in proceedings for common law relief such as
actions of conversion, detinue,and breach of contract where as the trust relationships are purely
equitable.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason.
3. Bailment only applies to personal chattels that are capable of delivery where as a trust may
arise in respect of real or personal property and whether tangible or in tangible.

4. A bailment is enforced by the bailor who is party to the arrangement while generally the trust
is enforced by the beneficiary who is not party to the trust instrument.

In bailment there's no transfer of property from the bailer to the bailed.Bailment duties are
dependent on the rules of common law and not equity.

The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.

Bailment is restricted to chattels but a trust may exist to all types of property

Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owners loose rights for example estoppel however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser .

Contracts.

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promisee,on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

Re Cook281,indeed there can be no hard and fast lines between contract and trust because
contract is a source of rights while trust is a way of holding rights, indeed many rights held in a
trust are born of contract.A contract is a common law personal obligation resulting from an
agreement between parties on the other hand a trust is an equitable relation which can rise
independently of an agreement. However the situation when a distinction between the two is
hard to draw that is to say

Settlement and covenants to settle.

281
(1965)CH 1902
Where property is vested in trustees on a settlement, it was held upon a trust on settlement.
However if the property has not yet been transferred to trustees but it's simply subject to a
consent to settle.The beneficiaries will only be able to enforce consent if they have given
consideration based on the principle equity will not assist a volunteer.

Power of appointment.

This refers to a power that is conferred upon a donee to dispose of the donors property by
nominating and selecting one or more third parties to receive it.The property may consist of
tangible items like cars,boats,house hold items or it may consist of an intangible interest in
property such as the right to receive dividend income from stocks

The distinction between trusts and powers of appointment is fundamental. A trustee must do as
the settler directs where as powers of appointment are discretionary.

Further the beneficiaries under a trust are owners in equity of the trust property. However the
objects of powers of appointment are nothing unless and until the donor of the power makes an
appointment in favour of the done.Vestyvs IRC (1980)Ac 1148

2(a).Discuss the capacity elements that must be possessed of a settlor in creation of a trust.

A trust is a three party fiduciary relationship in which the first party,the settlor or trustor
transfers or settles a property (often but not necessarily a sum of money)upon the second party
(the trustee)for the benefit of the third party the beneficiary.

The trustee is the legal owner of the property in trustas fiduciary for the beneficiaries who is or
are equitable owners of the trust property. Before creation of trust,there must be capacity that is
capacity to create.A trust is similar to the ability to hold and dispose of a legal equitable interest
in this regard.

Therefore before creation of trust a number of situations may be considered and mostly it's
ability, anyone who can hold property can create trust there are exceptions for statutory bodies
and corporations .Minors also can't hold property though they can in some circumstances .
The trust instrument must show certanity of intention to create a trust,certainty of what the
subject matter of trust is and certainty of who the beneficiaries are and for trust to be valid there
must be transfer of property by the settlor to the trustees.

2b.Discuss the formalities if any, essentials for creation of a valid trust.

In the case of Knight vs Knight it was stated that in order for a trust to be validly created ,three
conditions are necessary: the words employed must be so used that taken as a whole,they ought
to be construed as imperative, that is the words must be certain

The Subject matter of the trust must be certain

The objects or persons intended to be benefitted must also be certain

The three requirements are usually described as the three certainties of a trust.it's suggested that
apart from these requirements, a trustee is also necessary for the execution of a trust.Each of the
requirements will be considered in turn.

CERTAINITY OF WORDS.

As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust.Consequently an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire,wish,and
request,has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.Thus
in LambeVsEames,the testator gave his estate to his widow,to be at her disposal in any way she
may think best for the benefit of herself and her family. By her will she gave part of the estate
outside the family. It was held that since she was absolutely entitled the gift was valid. In Re
Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.
In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet.....in full confidence that she will do what is right as to the
disposal thereof between my children either in her life time or by will after her decease."it was
held that the wife took absolutely and there was no trust in favour of the children.Similarly in the
case of Mussorie Bank VsRaynor,the privy council held that where a testator left all his
property to his widow,feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

However a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will,this is the intention of the testator. This is in ComiskeyVs Bowring
Banbury,a testator gave to his wife,"the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

CERTAINITY OF SUBJECT MATTER

As was observed earlier, the subject matter of a trust could take many forms. It could be interest
in land in possession or reversion;chattels, money and chooses in action.In Re Diggles, it was
indicated that uncertainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis VsRippon,the testator appointed his wife,guardian of his children and then left his
property to her,trusting that she will in fear of God and in love to the children committed to her
care,make such use of its shall be for her own and their spiritual and temporal good,
remembering always according to the circumstances, the church of God and the poor. It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.

In Bardwell vs Bardwell,there was a direction,to remember certain persons;it was held that
there was no valid trust.In knight vs Knight,there was direction to reward. my old servants and
tenants according to their deserts. It was held that the purported trust was invalid In Re Jones, a
gift was given to a wife,absolutely,followed by a direction that,as to such parts of my estate as
she shall not have sold or disposed of, it should be held in trust for certain persons. It was held
that the purported trust was invalid.
The above cases may be contrasted with situations where the subject matter of the gift is to be
decided by the discretion of the trustee.Thus In Re Golay'sWill trust, there was a direction to the
executors to allow a beneficiary to enjoy one of my flats during her life time and to receive a
reasonable income from my other properties. It was held that there was a valid trust because the
executors could select the flat;the words reasonable were not intended to allow the trustees to
make a subjective decision. They provided a sufficient objective determinant to enable the court
if necessary to quantify the amount.

CERTAINITY OF OBJECTS.

This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re VandervellsTrusts, it was
indicated that in case of future interests,the beneficiaries must be ascertainable with in the period
of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the
trust.With a fixed trust,the trust is void unless it's possible to ascertain each and every
beneficiary. Indeed a fixed trust is understood to be one where the share or interest of the
beneficiaries is specified in the instrument creating the trust.With regard to discretionary trust,the
test is,” can it be said with certainty that any individual is or is not a member of that class.

The test to be used in determining certainty of ascertainment depends on the nature of the
trust.With a fixed trust,the trust is void unless it's possible to ascertain each and every
beneficiary.Indeed a fixed trust is understood to be one where the share or interest of the
beneficiaries is specified in the instrument creating the trust.

With regard to discretionary trust,the test is can it be used with certainty that any individual is or
not a member of that class.A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion

3b.Discuss the three certainties required when forming an express trust.

An express trust is one which has been intentionally created by a settlor himself though
manifestation of an intention to create one. The most common methods of creation are by deed
or will by unsealed writing inter vivos or by word of mouth. It's a trust created in express terms
and usually in writing as distinguished from one inferred by the law from the conduct or dealings
of parties.

Property is transferred by person called trustor,settlor or grantor to a transferee who holds the
property for the benefit of one or more persons called beneficiaries.

Express trust may be sub divided into executory and executed trust,on the hand completely and
in completely constituted trusts,on the other.An executed trust is one which in which the settled
has indicated inappropriate technical terms what interests are to be taken by all the beneficiaries.
An executory trust is one in which the settlor has indicated to his trustees a scheme of settlement
but the details are to be gathered from his general expressions.

The distinction is of practical significance in two respects, Firstly while the language of an
executed trust is strictly construed, anexecutory trust is liberally construed. Secondly,where in an
executed trust the settled makes use of technical expressions, the interpretation of which the law
recognizes certain rules,equity follows the law and gives effect to such interpretation.
However,with an executorytrust,equity attributes less importance to the use or omission of
technical words.Rather it seeks to discover the settlors true intention

Once the intention is discovered,equity orders the preparation of a final deed which gives effect
to the settlors intention which is discoverable from the language of the settlors instrument.

The distinction between a completely and in completely constituted trust is necessary in order to
distinguish a trust from a void settlement. A trust can only be valid if the title to the property is in
the trustee and if the trusts have been validly settled.

3 a)I would adviceChege to create a testamentary trust where she will bequeath the substantial
money through a secret trust to be particular a fully secret trust to hand it for the benefit of her
long term boyfriend.

Testamentary trust is created by a will and arises after the death of the settlor, secret trust is one
where the settlor calls or informs the intended trustee and tells him or her about the intension of
creation the trust. The purpose of this kind of trust is to keep the identity of the intended
beneficiary undisclosed.
There are two are essential elements which make a secret trust valid notwithstanding the three
certainties: communication and acceptance.

In fully secret trusts, is where the settlor communicates to the trustee all the contents of the trust
and bequeaths property to that intended trustee as a gift in a will and the trustee is the one who
knows the purpose of the trust.

On the facts above, chege(settor) would communicate to Nancy and tom (trustees) all the
contents of the trust and bequeath the substantial of money to Nancy and tom as a gift in a will.
Thus she would have given a long term boyfriend Steve the substantial sum of money without
her husband Julio knowing.

3(a) However in advising Imran on the validity of the legal arrangement in the will, where there
are dispositions to two beneficiaries in respect of the same gift or subject matter. Ideally
according to equity, under the equitable maxism that “where there are equal equities the one first
in time takes precedence,” this would then mean that Menya would be in right to take the
property as he was given there is a testamentary trust (will) and that will has been amended by a
codicil, the codicil will take precedence thus the valid legal arrangement in this case would be to
follow the last wishes in the will.

I therefore advice Imran to bequeath the house to the illegitimate son, since, the provision in the
will, which stated that “my house on block 12 plot 275, garuga, at the pearl marina to my brother
Menya, absolutely” was amended by the settlor (Tonda) in October 2017 where he told Imran
”that he was to hold the house on trust for someone to be disclosed at a late date thus this being a
codicil amending the provision in the will of June 2017.

4.Discuss the exceptions to the rule that equity will not assist a volunteer in any two of
thefollowing;

(i) Donatio Mortis Causa

(ii) Proprietary estoppel

(iii) The rule in strong Vs Bird

(i) DonatioMortis Causa

A donatio mortis causa is a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor.This could be distinguished from a normal inter vivos gift
under which title immediately passes to the transferee,a testamentary gift which takes effect
under provisions of a property executed will.

The essentials of a valid donatio mortis causa were articulated by Lord Russels C.J in Cain vs
Moon They are;

1.The gift must have been in contemplation though not necessarily in expectation of death;

2.the subject matter of the gift must have been delivered to the donee;

3.the gift must have been made under such circumstances as to show that the property is to revert
to the donor if he should recover.

The first condition was illustrated in the case of Wilkes be Allingtin.In that case,the donor was
suffering from an incurable disease. He made a gift knowing that he did not have long to live .In
actual fact, he had an even shorter time he imagined .He died two months later of pneumonia. It
was held that the gift was valid.The second condition may be illustrated from Re Weston,where
it was held that where a dying man,could be shown to have handed over to his fiancee his post
office savings book,his action was sufficient to constitute an effective donation mortis causa of
the balance recorded in the book.

The Rule in Strong vs Bird

Where a person makes an imperfect gift to x and subsequently appoints X his executor, upon the
death of the donor,the property vests in fully in X.The equity of the beneficiary under the will is
displaced by X's prior equity.Consequently, X may retain the property irrespective of the fact
that until the donor's death X's title was imperfect. The rule has been extended to apply to a done
who has taken out letters of administration to the state of the donor, and the personal
representatives of a person who had convented in favour of volunteers and had subsequently
been appointed a trustee of the settlement in favour of volunteers.

Further more for the rule to apply, the gift must have been perfect in every way except for the
legal formalities required for the transfer of title .Thus in Re Freeland, a testatrix promised to
give the plaintiff a motor car in the future but didn't do so.On the death of the testatrix, the
plaintiff became her executrix and claimed that the imperfect gift had in consequence been there
by perfected. The court refused to apply the rule in strong vsBird, there having been no
intention to make the plaintiff the owner of the car immediately.

4b Discuss the remedies available to the beneficiaries for breach of trust.

A breach of trust consists of an improper act,neglect, default or omission of a trustee with regard
to trust property or of a beneficiary. It may include;direct intermeddling with trust property for
improper purposes,failure to exercise proper care in discharging a duty and male fide exercise of
a discretion. In these instances,the trustee must replace any consequential loss from the trust fund
as a result of his or her actions.The purpose of the rule is not to punish the trustee but to
compensate the beneficiaries. The following are the remedies available to the beneficiaries for
breach of trust;

1. Compelling performance of the trust.

It should be noted that if a trustee neglects the administration of the trust or defaults in protecting
the trust estate,a beneficiary may take steps to ensure that he takes the necessary actions in the
interest of trust property.

For example where a trustee fails to renew lease hold,where the character of trustee is such as
would endager to fraud among others.Apart from the general,there are certain equitable remedies
to which a beneficiary may resort; that is he may apply for an order of injunction to be granted
by court,where a breach of trust is contemplated. This can be seen in case of Milganvs Mitchell.

In this respect by law of property legislation in some jurisdictions trustees for sale shall so far as
practicable give effect to the wishes of the beneficiaries of full age.consequently failure to
consult them or some of them amounts to breach of trust which can be restrained by
injunction.An injunction may also be obtained against a bankrupt trustee who wants to obtain
possession of trust property.

The court may appoint a receiver upon the request ,by application of a beneficiary. The
appointment of receiver is normally premised on the possibility of actual or prospective violation
of the duties of trusts likely to endanger trust property see the case of Middleton vsDodswell.For
example failure of the trustee to agree so that the trust can not be properly administered, loss of
part of trust property through failure to realize it,refusal of trustee to act and denial of the trust.
In the case of Odulatevsodulate,the applicants applied for an order of the court for a transfer of
administration of the estate in dispute to an administrator or receiver operating under the
supervision of the court pending the determination of the substantive proceedings.

It appeared from the pleadings that there was a total dead lock in the adminstration of the estate
and it was no longer possible for the defendants to meet to perform duties and functions as
administrators and trustees of the estate. The trust funds which could have been paid into the
estate account with the bank were under control of factions trustees.

Thirdly when the property is endangered as when it is invested in un authorized and hazardous
securities, court mat on the admission of the trustee that the fund is in his co trustees hands order
the amount to be paid into court by trustee who is not holding the fund.if that trustee admits that
the fund has not been properly applied.

2.Proprietary Remedies

a)Advantage over personal remedies

It should be noted that with regard to proprietary remedy,satisfaction of the plaintiff's demand
does not depend on solvency of the defendant trustee. If the property to be traced belongs to
plaintiff in equity,it will escape the defendants bankruptcy.in some cases the plaintiff will be able
to take advantages of increases in value of property.Thirdly there are cases in which proprietary
remedy is available although no personal action is possible. Fourthly judgment from a
proprietary action Carries interest from the date with the property came to the defendants hands
while claims in personam carry interest only from the date of judgment.

b.Doctrine of unjust Enrichment.

It has been suggested that proprietary remedies cannot be fully understood without appreciation
of the doctrine of in just enrichment. This doctrine appears in virtually every legal system.
Basically it's to the effect that where the defence is in justly enriched in the expense of the
plaintiff, the defendant must make restitution to the plaintiff.

C.Tracing at common law.

A proprietary remedy is one which entitles a claimant to treat specific property thereof as his
own.The common law did not develop a real action in respect of chattels which entitled a
plaintiff to specific recovery thereof.The courts at common law recognized the owner of the
chattel but there was no action at common law of paying damages of returning the chattel.

Discretion to award specific recovery was in court.The issue thus arose if the right of the plaintiff
was limited in case of a specific chatte,should this right change when defendant changed one
chattel to another?. The answer is the chattel can be followed so long as it's nature could be
ascertained as such. Right only ceases when the means of ascertainment fail.

d.Tracing in equity

Equity has developed more sophisticated methods of tracing.

1)Straight case

This is one where there has been no mixing of trust funds with the trustees own
money.consequently,if the trustee has sold trust property, the beneficiary may take the proceeds
of sale have been used to buy other property bought or hold it as security for the amount of
money used in purchase. This is subject to the condition that claims in equity are invalid against
a bona fide purchaser for value without notice of the trust.

2)Mixed Funds

In the hands of trustees

The situation worsens when trustee has mixed trust funds with his own or after mixing there are
additional dealings with fund .The burden of proof is on the trustee to prove initially that part of
the mixed fund is his own.In Re Tolley's W.T Thomas j Stated that...

If a trustee amalgamated trust property with his own,his beneficiary will be entitled to every
position of the blended property which the trustee cannot prove to be his own.

Consequently, if the composition of the mixed fund is established at the time of the original
mixing,the problem of identification is of determining how to account for the reductions in the
fund by payment to increase in the fund by payment there in.
This can be seen in the case of Re Hallett's Estate;Hallet was a solicitor, died after having
mixed his own money certain funds from two trusts.The other trust had his client
clientMrsCotteril as beneficiary. At his death, the funds were insufficient to pay his personal
debts and to meet trust claims.Three issues arose

1 whether MrsCotteril not being a beneficiary of trust of which Hallet was a trustee was entitled
to tracing remedy on ground of her fiduciary relationship

2.Assuming she was how to allocate the payments from the funds as between Hallet and
claimants

3.How to allocate payments as between claimants themselves.

It was held that MrsCoterril was entitled to trace and payements out must be treated as Payments
for Hallets own money.

ProffesorMaudsley has critcised the application of tracing Rule in Re Hallets as having been too
precise in the sense that it could lead to a wrong result if earlier payment out was in favour of an
un authorized investment which prospered and the remainder disappeared. He suggests that the
correct rule should be that a beneficiary may claim a charge upon any part of trust fund which he
can identify as having been part of the trust fund.

Secondly he argues whether it's fair to apply the tracing remedy when the defendant is insolvent
and argues that this is a situation where it's necessary to ascertain whether the beneficiary who is
tracing should have priority over other creditors. Consequently the beneficiary,will have to
compete with other creditors of the trustee,proffessorMaudsley states that this is unfair to
creditors in the Sense that they suffer when the trustee pays out money to a mixed fund.

In Rosco Ltd Vs Winder it was held that later payments into the mixed fund can not be treated
as repayments of the money unless the trustee shows an intention to do so.

In the Hands of Fiduciaries or Beneficiaries

Re Hallet's case shows that tracing remedy is available as between beneficiaries, In Sinclair vs
Brougham the Birkbeck society operated a banking business which was held to be ultra vires.in
the winding up competition arose between the claims of share holders and customers. The main
issue was whether customers had the right to trace into general assets of the society.it was held
that there was a fiduciary relationship between the customers and directors. The directors had
mixed the funds and customers had a right to trace into the hands of the society

In Re Diplck,a testator left his residuryestate"such charitable institution or institutions or other

institutions or other charitable or benevolent objects or objects in England as the executors
should select it was held by the house of Lords that the words included non charitable as well
charitable objects.consequently the gift failed for uncertainty.

In The hands of third parties

The right to trace property into the hands of a third party to whom it has been passed by trustee
will depend on the nature of the equitable interest in the property. Consequently, where a trustee
has transferred trust property in breach of trust of transferee will be bound by the trust except in
the following circumstances. First when he establishes that he has legal title to property,second
that he is a bonafide purchaser for valuable consideration without notice that the transactions
were breach of trust.InPilichervs RawlinsJames L.J stated that "....a notice is an absolute, un
qualified, in answerable defence,and un answerable plea to the jurisdiction of this court....."

Where the recipient is a volunteer and has no notice, the rights of beneficiary to trace against him
will be equal to that of the recipients own creditors

e) Critique of Right to trace.

Professor Maudsley has indicated that the right to trace should not be restricted to a proprietary
interest which is equitable but should also be available to a beneficial legal owner.This is inspire
of the suggestion in Re Diplock and Re Hallets Estate that the equitable remedy of tracing should
only be available where a fiduciary relationship can be setabliahed .secondly the right to trace
should not be limited to situations where a proprietary interest exists.The breach of fidiciary duty
should be sufficient to make available the tracing remedy.

Section B

Question 5 The Earl of Oxfords case optimized conflict between the common law and equity
consequently seeing the steady decline of the applicability of both common law and equity in
modern legal systems.Per LLB2 student, is this fair assessment evolution of equity and is
contractual applicability in contemporary Uganda.

The different views taken in certain situations, by the principles of Common law and the
principles of Equity, naturally led to conflict and confusion. In the reign of King James the First
it was held that decisions of the courts of Chancery would have overriding authority. While
Equity was initially free of the concept of ‘precedent’ from the late 1500s to the mid 1800s a
body of precedent, of cases based on equitable principles began to take shape, and the rules or
principles of equity took their final form with clear lines and with the introduction of the
Judicature Acts of 1873 and 1875 the Court of Chancery, along with the other Courts such as
Kings/Queens Bench, Common Pleas, Exchequer, Exchequer Chamber, Court of Appeal in
Chancery were absorbed by the Supreme Court.

It would be fair to say that the Judicature Act played the role of ‘fusing’ the system under which
both the Common law and Equity was administered, namely an amalgamation of the different
courts under one. This can be equated to the reference made in the statement that sets the theme
for this article, the ‘two streams of jurisdiction’ meaning the common law and Equity, ‘run in
the same channel’ meaning the administration of both within a common system of courts.

While the above, is somewhat straightforward, it is this authors opinion that the reference ‘do not
mingle their waters’ implies that the Common Law and Equity themselves were not ‘fused’ but
continued to function as two separate systems of law.

Therefore I aim to establish that while the Common Law and Equity came to be administered
under the same system the fundamental principles of Common law and Equity continue to act
independently of each other in the interests of Justice. This can, be shown most effectively
through reference to decided cases, where it will be seen that equitable principles have produced
results quite different to what would be expected under principles of Common Law and
extending these decisions to derive certain fundamental facts as to the position equitable
principles hold within the legal system independently of the common law.I

Independence of Equity and Common Law through decided cases.

A landmark case in this regard was that of Central London Property Trust Ltd v High Trees
House Ltd282. The facts of the case were as follows, During the Second World War countless
people had left the City of London to escape the German bombing of Britain’s Capital. As a
result of this many housing complexes were vacated and left empty. In a certain block of flats,
flats had been leased out for a period of 99 years at 2,500 pounds a year. To curb vacation the
landlord had offered to cut the rent by half (1,250 pounds a year). Once the ‘blitz’ was over and
the tenants returned the landlord litigated to recover the full sum of 2,500 pounds. As per the
Common Law the plaintiffs would have been legally able to recover the full sum of 2,500
pounds even for the period when the flats had been empty since the lease that fixed the amount
was under seal and hence (according to common law) could not be changed by a mere agreement
but only through a deed, however the principles of equity took on a different view. The judge
deciding the case – Lord Denning quoted “There has been a series of decisions over the last fifty
years which, although they are said to be cases of estopple are not really such. They are cases in
which a promise was made which was intended to create legal relations and which, to the
knowledge of the person making the promise, was going to be acted on by the person to whom it
was made, and which was in fact acted on. In such cases the courts have said that the promise
must be honoured…..As I have said they are not cases of estopple in the strict sense. They are
really promises – promises intended to be binding, intended to be acted on, and in fact acted on.”
(The Discipline of Law, Lord Denning, 1979)

In the judgement it was held that through equity, the promise made was binding on the party
making it (the common law did not make such an allowance) and that the plaintiff could not
recover the full amount of money for the period when the flats were empty.

This decision, therefore highlights the following key points;

a. While both the principles of Common law and Equity were administered as one totality,
in the above case we see the principles of equity coming into play to lead the judge to arrive at a
very different decision than he would have had to make if he had followed common law
principles. Hence we see equitable principles functioning, quite distinctly from those of the
common law in the interests of ‘justice’

282
[1947] 1KB 130
b. As is quoted in Lord Denning’s book ‘The Discipline of Law’ a previous case where
283
similar equitable principles could have been applied, Salisbury(Marquess) v Gilmore Lord
Justice Mackinnon felt unable to take an equitable view due a decision made by the House of
284
Lords in Jorden v Money which was thought to be binding where the concept of estopple
was confined to representations of existing fact.

The significance of this observation is that, though the principles of equity could be used to take
on a different view of a situation as opposed to that taken by the common law it, in some
instances, needed courage on the part of the judge to break free from the bindings of common
law and allow these equitable principles to take flight. We see the action of Lord Denning in the
High Trees case was doing precisely this – giving due credence to the independent place the
principles of equity held in the legal system, free from the rigidity of the common law in the
interests of doing ‘justice’.

c.That the decision was possible in the High Trees case was due to the ‘conflict or variance’
clause (section 25 of the Judicature Act of 1873) which deemed that where the rules of common
law and equity contradicted rather than complement, the rules of Equity would prevail. This
reality is one of the strongest arguments in this authors opinion for establishing that the systems
of Equity and Common Law do not ‘mingle’ and will be discussed

Question 6
Write short notes on the following

6a .Judicature act 1873-1875

Historically Equity developed due to mitigate the rights of rigidity of application of common law
and to provide reliefs or remedies which the common law could not avail to litigants.

The ordinary meaning of equity is therefore the right doing,good faith,honest and ethical dealing
in a transaction or relationships between individuals.

283
[1942]2 KB 38
284
[1845] 5HL Cas 185
Equity introduced various reforms and these reforms affected the out dated and un satisfactory
procedure of the court.And secondly the area between the common law courts and chancery
courts operated was not clearly defined.

There judicature act is one of the reforms introduced by equity. The recommendations of the
Royal commission was enacted as judicature 1873 to 1875.These acts abolished all the ten
existing superior courts and in their place set up a supreme court of judicature consisting of the
high Court of justice and the court of Appeal.The High Court of justice was to consist of three
divisions; the King's Bench,the chancery division and probate, Divorce and Admiralty Division.

The judicature acts effectively abolished the dual administration of justice as between the
common law courts and chancery court. Secondly the High Courts of justice were given power to
administer both equity and law concurrently together. Third, allclaims, obligations and defenses
were recognized and enforced by three divisions of the High Court of justice. Fourth the
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

b).Imputed Notice

The purpose for the doctrine of notice is to prevent buyer of superior title from setting it up
against prior earlier owners of inferior interests which affect the property. The effect of this is
that the buyer of legal estate with notice of prior equitable interests affecting the estate takes it
subject to those prior equitable interests

The doctrine of notice is one of the instances where equity looks at substance rather than
form.Notice simply means knowledge of an existing fact.This may be divided into
actual,constructive, and imputed notice In SempaMbabalivs W.K kidzaodoki J held
SempaMbabalivs W.K KidzaOdoki j Held that the defendants plea of Bonafide purchaser
could not stand because they knew all along that part of land they had purchased was for burial
grounds and seller sold the land before his share was ascertained.
c) The maximDelay defeats equity

This maxim can as well be called the doctrine .The essence of the doctrine of lashes is that an
equitable relief will not be given if the applicant has unduly delayed in bringing the action.

The doctrine does not apply in situations which are governed by the statutes of limitation. For
instance the limitation act cap 80 prescribes periods with in which suits or actions should be
instituted in court. Six years is prescribed for actions based on contract or tort other than those
where the claim relates to personal injuries, in which case the action must be brought within
three years of the date on which the cause of action arose.Furthermore tortuous and contractual
actions against the government must be instituted within two year and three years respectively of
the date of the cause of action, while those related to recovery of land claim to the personal estate
of a deceased or under a mortgage must be instituted with in twelve years of the date on which
the claim accrued. Where fraud is alleged,there is no limitation period.

By way of illustration of the application of the doctrine of laches,inFagbemivsAluko,it was

stated that in considering the doctrine of laces the court acts on three factors. First,the delay by
the plaintiff second acquiescence by the plaintiff in the delay.Third,change in the position of the
defendant. Furthermore,the doctrine will apply if the plaintiff behaves in a way which makes the
defendant alter his position in the belief that the plaintiff's claim has been abandoned or the delay
amounts to evidence of an agreement by the plaintiff to abandon his right.

Apart from the application of the doctrine to the equitable remedies of specific performance and
rescission of contracts, it also applies to the grant of letters of administration. An application for
letters of administration or challenge thereof must be made without delay;otherwise it may be
refused.Thus in Ephraim VsAsuquo,the plaintiff applied have the grant of letters of
administration set aside .it was held that since two years had passed since the grant and the
administrator had probably completed the distribution of the estate ,the doctrine of laches applied
and the plaintiff's claim could succeed.

There are three defences to invocation of the doctrine of laches.First, the plaintiff's ignorance of
the facts on which claim is based. Second the in fact or other disability of the plaintiff and finally
fraud on the part of defendant. In those circumstances delay will not be permitted to bar a claim.
d) Writs in Rem

In rem jurisdiction ("power about or against 'the thing'") is a legal term describing the power a
court may exercise over property (either real or personal) or a "status" against a person over
whom the court does not have in personam jurisdiction. Jurisdiction in rem assumes the property
or status is the primary object of the action, rather than personal liabilities not necessarily
associated with the property. SECTION A

QUESTION 1

The development of Equity was both controversial and significant to the legal
system.

Do you agree with this statement?

The word ‘equity’ has a wide range of meanings and to many people it is a synonym for
‘fairness’ or ‘justice’. To a lawyer, however, equity has a very special and narrow
meaning: that body of rules developed and applied by the Court of Chancery. This court
was presided over by the Chancellor and the rules were developed under his authority.
The origins of equity lie in the deficiencies of the common law. The common law had
gaps where a remedy was not available or where a remedy was available but was not
appropriate to the particular loss of a plaintiff. The Chancellor was responsible, among
other things, for the issue of writs and all actions had to be commenced by the issue of a
royal writ. If there was no writ appropriate to a claim there could be no action and thus no
remedy. To some extent the severity of this was tempered by the Chancellor’s willingness
to develop new writs but this came to an end and where a plaintiff may have had a
common law remedy but he was prevented from enforcing it because of the power or
influence of the other party to the case. Again the plaintiff might be the victim of the
corruption of the jury which heard his case. Additionally, the common law was
preoccupied with formality. For example, if two parties tried to enter into a verbal
contract which was required, at common law, to be in writing the result would be that the
common law would not recognize the contract nor grant any remedies on it. This was the
case whatever the situation, whatever the merits of the case and irrespective of how the
parties had behaved. The original role of equity was often as a ‘gloss on the common
law’. Equity might well provide a remedy where the common law provided none or
provide a more suitable remedy than the common law. Equity might also intervene to
ensure that the available common law remedy was actually enforceable. In other words,
equity worked alongside the common law and provided different solutions to problems. If
a subject believed that the common law would not provide an appropriate solution to his
case he could petition the King and the Council asking that justice be done and that a
remedy should be ordered. It was considered that a residual of justice resided in the King
and petitions were directed at tapping this as a last resort if the common law had not
provided justice. These petitions were referred to the Chancellor and eventually the
Chancellor was petitioned directly. It was only very gradually that equity developed and
came to be regarded as a separate and in some ways a rival system of law. Originally,
Chancellors, though generally well versed in the law, particularly the canon law, were
ecclesiastics rather than lawyers. They were sometimes referred to as the keepers of the
King’s conscience. Early decisions tended to be Peculiar to the individual and to be based
on the ideas, beliefs and conscience of each particular Chancellor. So it was said that
equity varied with the length of the Chancellor’s foot. In other words the decision in any
particular case would be relatively unpredictable and uncertain. This may be an
acceptable approach in single isolated cases but the uncertainty meant that the rights of
individuals were impossible to assess.

Introduction of rigidity: The appointment of Lord Nottingham as Chancellor in 1675

marked the start of the systemization of equity. He was responsible for setting down the
principles upon which equityoperated, thus moving away from the era of idiosyncratic 285,
unpredictable decisions. He also laid out the boundaries within which equity functioned.
Of the great Chancellors involved in the development of equity into a modern system of
law was Lord Eldon, who was twice the Chancellor for a total of almost a quarter of a
century. He stressed that decisions must be based on precedent applied in a flexible and
creative manner, and he consolidated the principles previously developed. Lord Eldon
was the consolidator, who worked on the application of the rules and principles of equity
which he inherited from Lord Nottingham and Lord Hardwicke. Gradually, decisions
began to be based on precedent. This development took place at the same time as lawyers
began to be appointed as Chancellors and eventually a body of law evolved which was as
fixed and rigid as the common law. This move towards a more predictable, precedent-
based system started at the end of the seventeenth century and coincided with the
refinement of the reporting of cases heard in the Chancery courts.

Conflicts between equity and the common law

The general approach of equity was to follow the common law unless there was a sound
reason to do otherwise. So, equity recognized and protected those estates in land and
those interests in land that were recognized and protected by the common law. In fact,
equity recognized other estates too. But in a legal system where two bodies of law existed
there were bound to be occasions when there was a conflict. If conflicts arose between
equity and the common law, equity would use the common injunction, which had the
285
Peculiar to the individual
effect of preventing the common law action from proceeding or preventing the common
law judgment from being enforced. This was clearly not acceptable to the common
lawyers and for many years there was very active conflict. This was not resolved until the
reign of James I when it was decided that equity should prevail. The Supreme Court of
Judicature Act 1873 s 25(11) provided that in cases of conflict between the rules of equity
and the rules of the common law, equity shall prevail.

There are a number of very important underlying principles which relate to the ways in
which equity intervened.

“Equity acts in personam” The main remedy available at common law is damages.
Equity, however, acted against the person and ordered him to do something (a decree of
specific performance) or not to do something (an injunction). Other equitable remedies
are rescission, rectification and account. If the order of the court is not obeyed then
imprisonment may follow.

Equitable remedies are discretionary A common law remedy can be claimed as of right.
For example, if a breach of con- tract is proved the victim can demand an award of
damages. However, the award of an equitable remedy is at the discretion of the court. The
victim of a breach of contract to transfer property can only ask the court to exercise its
discretion and award a decree of specific performance ordering the transfer of the
property. The bona fide purchaser whereas a legal right may be said to be enforceable
against anyone in the world, an equitable right is enforceable against anyone except a
bona fide purchaser for value without notice. (This principle is of less importance
following the introduction of registration of rights over land but is nevertheless a basic
principle of equity.) In conclusion therefore I agree with the statement that the
development of equity was both controversial and significant to the legal system as
briefly discussed above.

QUESTION 2

Discuss in details whether the judicature acts of 1873-1875 simply fused the rules of
or the administration of equity and law.

It is clear that although equity started life as mere supplement to the common law it
developed into a separate system. Equity was administered by the Courts of Chancery
which were separate from the common law courts. This caused many problems. For
example, it was often necessary to use both the common law courts and the court of
equity in the same dispute. There were some improvements but it was not until the
Supreme Court of Judicature Acts 1873–75 that the position changed significantly. This
legislation provided for the creation of one single Supreme Court to replace the separate
courts that existed previously. The Courts of Exchequer, Queen’s Bench, Chancery,
Common Pleas, Probate, Admiralty and the Divorce Court were abolished. In their place
was one court, divided, for convenience only, into three Divisions of the High Court
(Queen’s Bench, Chancery and the Probate Divorce and Admiralty Divisions, the latter
being renamed the Family Division in 1970). In practice, matters are allocated to the most
appropriate Division but in fact any Division can adjudicate on any matter and both
common law and equitable remedies can be awarded by any Division. As mentioned
above, it was specifically provided that, if there was a conflict between the rules of the
common law and the rules of equity, equity shall prevail (Supreme Court of Judicature
Act 1875 s 25(11); now the Supreme Court Act 1981 s 49). There is no doubt that this
legislation merged the administration of the two systems of law. There is, however, some
debate as to whether the two systems of law themselves have been fused into one.
Ashbury, in Principles of Equity, expressed his view by saying that ‘the two streams of
jurisdiction, though they run in the same channel, run side by side and do not mingle their
waters’. There have been judicial and academic statements to the effect that there is a
fused system of law. For example, in United Scientific Holdings Ltd v Burnley
Borough Council [1977] 2 WLR 806, Lord Diplock said: ‘The innate conservatism of
English lawyers may have made them slow to recognize that by the Supreme Court of
Judicature Act 1873, the two systems of substantive and adjectival law formerly
administered by courts of law and Courts of Chancery (as well as those administered by
Courts of Admiralty, Probate and Matrimonial Causes) were fused.’ The prevailing view
appears to be that, although the two systems operate closely together, they are not fused.
In MCC Proceeds Inc v Lehman Brothers International (Europe) [1998] 4 All ER
675, Mummery LJ said that the substantive rule of law was not changed by the Judicature
Acts. These were intended to achieve procedural improvements in the administration of
the law and equity in all courts, not to transform equitable interests into legal titles or to
sweep away the rules of the common law. However, Lord Browne-Wilkinson, in Tinsley
v Milligan [1993] 3 All ER 65, appears to take a different view. He said: More than 100
years has elapsed since the fusion of the administration of law and equity. The reality of
the matter is that, in 1993, English law has one single law of property made up of legal
estates and equitable interests. The distinction still remains between equitable and
common law remedies. There remain important differences between common law and
equitable rights. In conclusion therefore, the judicature acts of 1873-75 simply fused rules
of the common law and equitable rules with the result that there is now one common
rule286. The second opposing view is that the effect of the Act was only to create a

286
Nelson v larholt (1948) 1 KB 399….
common court for the Administration of law and equity and not a fusion of law and
equity. The general rule being that where conflict arises, equity prevails and this is
supported by the prevailing distinction between the equitable ownership of a beneficiary
and the legal ownership of a trustee under a trust and the maxim that where the equities
are equal the law prevails

QUESTION 3

With the aid of relevant examples and authorities discuss in details the Doctrine of
Notice and the impact of registration legislation on the Doctrine of Notice.

The purpose of the doctrine of notice is to prevent a buyer of superior title from setting it
up against prior or earlier owners of inferior interests which affect the property. The
effect of this is that the buyer of the legal estate with notice of prior equitable interests
affecting the estate takes it subject to those prior equitable interests. The doctrine is one
of the instances where equity looks at substance rather than form of transaction to arrive
at a just result. Notice basically is knowledge of a fact in existence and it comes in three
i.e. actual, constructive and imputed as will be defined briefly below

Actual notice is where a buyer of an estate has express notice of a prior interest at the
time when he or she made or at any time before the purchase was completed. It consists
of personal knowledge of the prior equitable interest affecting property buyer intends to
purchase and here it is important to show that the buyer had actual notice of the equitable
interest before he or she acquires his/her superior title. A buyer is not bound by notice if
their source is unreliable such as rumors.

Constructive notice which is where a purchaser has knowledge of any fact sufficient to
put him on inquiry as to the existence of some right or title in conflict with the one he is
about to purchase, the presumption is that he either inquired and ascertained the extent of
such prior right or guilty of a degree of negligence equally fatal to his claim. The mere
presumption however may be disproved by showing that the buyer failed to discover the
prior right after doing due diligence. The essence of constructive notice is that the buyer
should make reasonable inquiry relating to the circumstances of transaction. If this
inquiry is not done equity will assume that this is due to bad faith and thereby affect the
buyer’s right to be a bona fide purchaser.

Imputed notice- this may be imputed to the buyer through actual or constructive notice
though it’s none of the above stated but through an agent. It is established that notice to
an agent is notice to the principal. Such notice will only be imputed to the buyer through
his bona fide agent and in this regard a buyer who instructs his agent to buy property at
auction sale is taken to be affected by notice of an equity which comes to his knowledge
in the course of transaction

Furthermore, section 54 of the Registration of Titles Act cap 230 requires registration of
instruments affecting land and stresses that no instrument until registered in the manner
herein shall be effectual to pass any estate or interest in any land under the operation of
this Act or to render such land liable to any mortgage…….

For this purpose entries are meant to allow the title be traced either downwards from or
upwards to the original certificate of title. The purpose of the Registration of Titles Act
(RTA) is to notify a buyer, mortgagee or other person involved in a transaction relating to
the land of transactions affecting the land.

In the same spirit section 48 of the RTA comes into play for that every memorial entered
in the Register book is required to state the nature of the instrument to which it relates,
the time of the production of such instrument for registration and the name of the petty to
whom the same is given and be signed by the Registrar.

The effect of the sections mentioned above is that every instrument registered under the
RTA supersedes other instruments affecting the land from the date of its registration, only
a person who has registered his or her transfer can plead it in evidence. If there are two
competing registered instruments then the first one to be registered takes priority. In
conclusion, it appears that a subsequent owner who is not a purchaser for value takes the
estate subject to any unregistered estate affecting the estate of a previous registered
owner, while a first registered owner who is affected by notice of the prior unregistered
interest takes subject to such interest.

QUESTION 4

Malik a rich man by a will made the following bequests:

a) 5 acres to my son Amos

b) 2 acres to the health center in lower Konge
c) My freehold house to my lovely wife franca absolutely in full confidence that she
will hold it for either my daughter Shakira or my son Shafic as she deems fit
d) The remainder would go to my nephew

Discuss the legal effect of this trust.

SECTION B
QUESTION 5

Explain the nature and principles guiding the issue of interlocutory Injunctions

Injunctions are orders issued by a court that prohibit or reverse some kind of wrongful
activity. These are powerful legal tools: to fail to comply with their conditions is to act in
contempt of court and can result in imprisonment. Injunctions can be categorized
according to how they achieve their goals. For example, an injunction can be constructed
so as to stop some kind of activity. Thus a group of people may be ordered to stop
demonstrating on property that belongs to another, or, a fiduciary may be ordered to
desist from acting in breach of his duty. This type of injunction a ‘prohibitory’ injunction
may therefore be characterized as having a ‘negative’ effect. By contrast, a ‘mandatory’
injunction is phrased so that it orders some kind of activity to be carried out.Injunctions
can also be granted on a permanent as well as a temporary basis. Claims that their rights
have been infringed can be resolved by granting a ‘perpetual’ injunction in claimants’
favor.

Granting interlocutory injunctions creates a dilemma for a court. The object of civil
proceedings is to achieve justice as between parties, usually, one might hope, through the
equal treatment of the parties. Where, pending trial, one side claims ongoing and
irreparable harm to its interests by the other, the court faces the difficulty that if it allows
matters to continue as they are, then the claimant may well suffer damage which cannot
ultimately be compensated at trial. Whether there is legally recognized damage, however,
depends on the claimant’s claim being substantiated at full trial. Until then, there is the
risk that if an injunction is granted, the defendant’s rights will instead be infringed.
Whatever the court does at this stage, it must of necessity act partially: it must take the
side of the claimant or of the defendant, even though matters have not
yetbeenfinallyadjudicated.Abalancemustbefound between ontheonehand, the need to
reduce the risk of harm to lawful rights pending litigation and, on the other...the
imperative of impartiality which argues for non-interference prior to final judgment. For
example, the jurisdiction to grant interlocutory injunctions is based in part on the need for
a quick decision. This means that hearings are likely to be quickly prepared. Evidence
will normally be presented in affidavit form only (Civil Procedure Rules)

In addition, the courts proceed on the assumption that the dispute will be litigated in full
later. The implications of this are both that it might be inappropriate to go too far in
prejudging the final court’s findings at an interlocutory stage, and that any harm done in
the meantime can be put right by the final court. In light of these considerations, the
approach is to preserve the status quo–the existing position – until trial. In doing so, the
courts recognize nevertheless that harm may be done in the meantime to one or other
party, depending on the final
outcome.Theyhavethereforedevelopedatestthatlookstothe‘balanceof
convenience’asbetweentheparties.Thisinvolvesassessingboththeharmthateach
sideislikelytoincur,accordingtowhethertheinjunctionisgrantedornot,and whether that harm
can be compensated at trial in money terms. To ensure that
thisisnotahollowexercise,across-undertakingindamagesforanylossincurred must be given
by the claimant as part of the order.
TheleadingcaseintheareaisAmericanCyanamidCovEthiconLtd[1975]AC 396. The case
sets out the dilemma facing the court, and focuses on the extent to which the plaintiff’s
chances of success at final trial need to be established relevant to the prospects of
injustice and harm to the defendant before relief will be granted. Before American
Cyanamid, the courts had held that in order to obtain an interim injunction, the plaintiff
had to make out a prima facie case: that at trial, he would have a better than even chance
of winning as in Fellowes & Son v Fisher [1976] QB 122). Only in these circumstances
would the court consider whether it was in the balance of convenience to grant or
withhold the injunction. In American Cyanamid the House of Lords appeared to establish
a different test. Lord Diplock emphasized that the governing principle on this point was
that the court should first consider whether the plaintiff or defendant would be adequately
compensated by damages from the other party whicheveroneshould be successful at trial.

QUESTION 6

Discuss the manner in which a constructive trust arises and what makes it different
from an express trust.

A trust is a right, enforceable solely in equity, to the beneficial enjoyment of property to which
another person holds the legal title. This is also a property interest held by one person (the
trustee) at the request of another (the settlor) for the benefit of a third party. 287Therefore under
the law of trusts there is an order that is mainly characterized of the settlor who is the owner or
who is bequeathing, the trustee who holds the property on behalf of the third party who is the
beneficiary. This means that the beneficiary will be the owner of the trust if the trustee executes
it. However, the beneficiary’s interest in the trust can be bought or sold off. The interest of the
beneficiary will be lost if it is the bonafide purchaser for value who takes the property.
The decision in Keech v Sandford is usually taken to be the originator of the
development of the principles on constructive trusts, while there are cases which predate
it like Holt v Holt. It would appear that English law conceives the Constructive trust as
“an institution and as one variety of trust, though of an anomalous kind, linking a number
of situations not possessing any unifying thread, and some of them of doubtful utility to
287
Bryan A. Garner, Black’s Law Dictionary 8th Edition. Page 1546
modern law. It has sought to remedy this defect in part by stressing the importance of the
keech casestated above, and by extending the principle which they embody to all
situations where a fiduciary relationship exists and by making the principle of tracing
applicable”. The scope of the expressionconstructive trustis amorphous in so far as it
encompasses a number of situations with very little common criteria. The duties and
rights of constructive trustee may differ so widely that it is advisable to treat each
relationship separately in order to identify its implications. The principle is that if a
person in a fiduciary position uses it to gain some personal advantage; he becomes a
constructive trustee for the person thereby deprived of the profit. Some of the noted
situations include

a) Vendor as a constructive trustee; where a bindingcontract for the sale of land

exists, the view is held that the vendor is, until completion, aconstructive trustee
for the property of the purchaser. Although the purchaser would take the benefits
and bear the losses, this doesn’t automatically render the vendor a constructive
trustee, where vendors position is between bare trustee or mere trustee and
mortgagee who is not in equity.
b) Mortgagee as constructive trustee; for a long time there is the assertion that a
mortgagee in possession of mortgaged property is “in the nature of a trustee for the
mortgagor” the idea that the equity of redemption available to a mortgagor is an
estate in land rather than a mere chose in action and constitutes a mortgagee a
trustee in respect therefore of the mortgagor.
c) Acquisition of property through fraud; if individual acquires property through
fraud upon another, equity converts him into a constructive trustee for the benefit
of the person affected by the fraud and it need not be person whom the fraud was
operated as the cases on secret trust portray. The fraud which is personal must be
proved and for this purpose too, a statute cannot be used to frequent fraud. The
concept is better elucidated in the cases Bannister V Bannister and Binions V
Evans
d) Express Trustee as a constructive trustee; the general principal of equity is that a
trustee should not use that position to obtain a personal advantage adverse to the
beneficiary. If he does so he is taken to hold the profit or advantage as constructive
trustee for the beneficiary.

And other various situations like

The express trust is, as its name implies, a trust which has been expressly and
intentionally declared by its creator, known as the settlor (or, in the case of a trust
created by will, known as the testator). There are a number of requirements for the
valid creation of an express trust, but the underlying objective of these requirements is
that the settlor should have acted in such a way as to enable the courts, if necessary, to
intervene to enforce the settlor’s wishes. The settlor must, of course, be legally
capable of declaring a trust and the people he intends to benefit must be capable of
being beneficiaries. The settlor must show his intention to create a trust (even if he
does not use the word ‘trust’); he must make clear that he intends the legal owner of
the property (which may be himself or someone to whom he is transferring it) to be
subject to a binding obligation to the intended beneficiary. He must make clear who is
to benefit under the trust in order that the court may know who has a sufficient interest
to be able to sue. He must identify the property which is to be subject to the trust and
if he wishes persons other than himself to be trustees he must effectively transfer the
property to them. Finally, in certain cases, he must do this in the form required by
statute. These requirements are known respectively as capacity, certainty and
constitution of trusts, and formality.

QUESTION 7

Discuss in details the requirements for a valid assignment

An assignment a transaction between the person entitled to the benefit of the contract
i.e. creditor or assignor and the third party i.e. assignee as a result of which the
assignee becomes entitled to sue the person liable under the contract i.e. debtor. The
debtor is not a party to the transaction and his consent is not necessary for its validity.
There are various types of assignments with backgrounds like those at common law
like novation, acknowledgment and those of equitable nature like legal chose,
equitable chose and lastly statutory assignments. For an assignment to be valid and
unchallengeable it must meet the following requirements below

For formality; statutory assignments must be in writing and signed by the assignor.
Assignment which does not satisfy this requirement may take effect as an equitable
assignment. For instance, while an oral assignment cannot take effect under the
statute, it may be valid in equity. Consequently, the statute merely provides an
alternative method of assignment; it does not destroy the old method.A disposition of
an equitable interest must be in writing andsigned by the assignor or his agent.
Consequently, an oral assignment of an equitable chose is void.

There ought to be an intention to assign for an assignment to be deemed valid. It is

necessary to establish the intention to assign. It should be observed that although a
creditor has requested debtor to pay third party it does not imply the he has assigned
the debt. Just as a person who draws a cheque on his bank in favour of a third party
doesn’t assign part of his bank balance.

For a valid assignment to arise there must be communication to the assignee. An

assignment is not of an effect if it’s not communicated to the assignee by the assignor
or related authority. The reason for the requirement is not instantly obvious because
it’s evidential in nature for intention to assign although such an intention could
equally be proved by other evidence. The other explanation for the essence of
communication is that it is equivalent of the delivery which is necessary to perfect a
gift of a chattel made otherwise than by deed.

Furthermore, notice validates an assignment as discussed briefly: notice to the debtor

takes form that is either oral or written. However if the chose assigned is equitable,
oral notice is seldom effective between successive assignees. Notice of a statutory
assignment must be in writing and it need not be given by assignor, nor at the time of
assignment, it may be given by the assignee and is effective as long as it is brought
before action is brought. Notice may affect the relative rights ofassignor and assignee,
of assignee and debtor, and number of successive assignees.

The rights of assignor and assignee may depend on whether the assignment is
statutory and it can only have this character if notice is given and in the absence of
notice the assignment, may take effect in equity. It is significant that notice to the
debtor is not necessary to perfect the rights of an equitable assignee against the
assignor as elaborated more in the case of Gorridge V Irewell India Rubber Co Elc.
Works. In conclusion therefore, an assignment as defined above can be deemed
invalid in case it doesn’t carry to entail the briefly stated above i.e. formalities, intent
of assigning, communication to assignee and notice to debtor which looks at relations
and form and effect of the said notice

QUESTION 8

Explain the following

a. Equality is equity
b. Equity follows the law
c. Anton pillar injunction
d. Quiatimet Injunction
e. The effect of precatory words
 Equality is equity :“The maxim that equality is equity expresses in general the object
both of law and equity, namely to effect a distribution of property and losses.

Proportional to the several claims or to the several liabilities of persons concerned;

Equality in this connection does not necessarily mean literal equality but proportional
equality…”

This maxim has many applications including presumption of tenancy in common,

severance of joint tenancy and the principle of equal division. This maxim operates
against joint tenancy. In joint tenancy, there is a right of survivorship (jus acrescendi)
where one joint tenant dies, the remaining joint tenants takes the whole property thus the
heirs of the deceased take nothing. In such a case equity operates against the right of
survivorship and presumes a tenancy in common. The effect of this is that the share of the
deceased tenants passed on to those who are entitled to his or her property under his or
her property under his or her intestacy. The survivor of the joint tenancy is regarded in
equity as a trustee of the deceased’s share for the benefit of the deceased’s beneficiaries
under a will of intestacy. Equity will also prefer tenancy in common where the property
of the parties is bought with money provided by them in unequal shares and take the
conveyance to them jointly. In the absence of special circumstances, equity treats the
property as belonging to them as tenancy in common not joint tenancy. The survivors are
thus considered in equity as being trustees for the personal representatives of the
deceased purchaser to the extent ofhis share in the purchase money.

This rule does not apply where the purchase is made for the purpose of joint undertaking
for example partnership for the right of survivorship is incompatible with the relationship
of partners and in every such case whether the purchase money is advanced equally or
unequally, equity treats the parties as tenants in common with regard to their beneficial
interests in the property. In LAKE.V.CRADDOCK, it was held that 17 partners buy land
from their firms business, in law they will be regarded as tenants in common, where
partnership deed does not specify the shares of partners the result is that each partner is
entitled to an equal share of the assets and liabilities of the partnership. Also where
persons advance money jointly on loan whether equally or unequally, in equity they are
regarded as tenancy in common.

Under the principle of equal division where there is no basis for distributing property
between two or more rival claimants, the court will divide the property equally. This
applies in regard to trust property when dividing it to beneficiary by trustees. Also in
cases where a parent has died leaving many children the presumption in equity is that
they should all share equally in the property. The succession Act8 provides that all-lineal
descendants, wives and dependent relatives shall be entitled to share their proportion of a
deceased intestates property in equal shares. Where two or more parties have an interest
in the same property but their respective interests have not been quantified, equity as a
last resort may divide the interest equally.

EQUITY FOLLOWS THE LAW

This is an attempt to indicate the relationship between common law and equity, which is
a complex one. The traditional role of equity, as stated in ‘Doctor and Student’ 1523 by
Christopher St German was ‘to temper and mitigate the rigour of the law’, which implies
that equity would intervene and overrule the common law if justice required it. It was
stressed, even at that time; however, that it did not attempt to overrule common law
judgments, but rather to act in personam on the parties to prevent injustice (This maxim
indicates that, where possible, equity will ensure that its own rules are in line with the
common law ones. Examples of equity overcoming the effect of the common law are
frequent enough, but it should be noted that in most cases the principle is that equity
supplements but does not contradict the common law. Thus, in the case of the trust, the
interests of the beneficiary are recognized, but so too, of course, is the status of the trustee
as legal owner. The trust exists, as it were, behind the legal ownership. Equally, the
courts will in appropriate cases allow the common law effects to stand. For instance, in
the case of Re Diplock [1948] 2 All ER 318 it was argued that, where money had been
distributed to charities under the provision of a will which subsequently turned out to be
invalid, the charities should be allowed to retain it.

ANTON PILLAR INJUNCTION

The Anton pillar injunction, which is also interlocutory, arose from the case of Anton
pillar K.G. vManufacturing process Ltd. The action was for the infringement of
certain registered trademarks. The plaintiffs sought an order ex parte to compel the
defendants to allow the plaintiffs solicitor to inspect the matters in issue in the suit and to
produce them upon oath. The plaintiffs argued that if the defendants were given notice of
the application, relevant evidence would disappear. Consequently, the application was
heard ex parte and in camera. It was held that the injunction be granted on the ground that
it was in the interest of justice to make the order sought. In the course of
judgementOrmrod LJ laid down three conditions for the award of the injunction. First,
that there should be an extremely strong prima facie case. Second that damage, potential
or actual must be serious for the applicant. Thirdly, there must be clear evidence that the
defendants have their possession incriminating documents or things and that there is a
real probability that they may destroy such material before any application inter partes
can be made. However, even where all the conditions met, the court must be satisfied that
the need for the order outweighs the injustice of making an order against the defendant
without him or her having been heard. This means that ordinarily the order would not be
made against a person of good standing. It will also be rarely given in matrimonial
proceedings unless there is strong evidence.

QUIA TIMET INJUNCTION

A quiatimet injunction is one which is ordered to protect the applicant from an action
which it is feared may be committed in the future, on the basis that some right of the
applicant will otherwise be infringed. Literally, the term ‘quiatimet’ means “he who
fears”, that is, he who fears that he will suffer some harm. Clearly, this category of
injunction stands out from the general principles of equity above which required that
there be some right of the applicant affected. The quiatimet injunction does not require
that some right of the applicant has been affected, only that there is a risk of its being
affected. Therefore, the grant of this type of injunction is typically limited to situations in
which there is a real risk of detriment to the applicant. As Lord Buckmaster held in
GraigolaMerthyr Co Ltd v Swansea Corp, “a mere vague apprehension is not
sufficient to support an action for a quiatimet injunction. There must be an immediate
threat to do something”. It must be demonstrated that the respondent intends to, or is
likely to, participate in the act complained of. Where the respondent demonstrates a
disinclination to participate in the action then the injunction will not be granted.

EFFECT OF PRECATORY WORDS

It is possible, therefore, that as part of making a gift to someone, the donor will seek to
impose a moral obligation on them. When a parent gives a child money to buy a book as
a reward and says ‘don’t spend it all on sweets’, that does not make the child a trustee of
the money. Instead the child is under a moral (rather than a legal) obligation to use the
money to buy a book. The expression generally used by the courts to distinguish between
a declaration of a trust and a moral obligation is to define merely moral obligations as
setting out ‘precatory words’. Mere‘precatory words’ do not create substantive trust
obligations. In short, the nature of the intention is to be inferred from all the
circumstances. In Re Adams and Kensington Vestry,a testator left property to his wife
(W) by wills ‘in full confidence that she would do what was right by his children’. It was
argued on behalf of the children that the moral obligation imposed on W in the will
created a trust. However, it was held that the property passed to W absolutely. The court
interpreted the statement in the will to have added only a moral obligation on the wife to
use the money in a way which would benefit the children and not to place her under an
obligation to hold that money as trustee for the children. Where a statement is analyzed as
being merely a statement of wishes in this way, it will not have the force of a trust. On
the other hand, in Comiskey v Bowring-Hanbury, the testator left property by will to his
wife subject to a provision for equal division amongst his nieces on his wife’s death. The
precise words of the bequest were that the property was left to the wife ‘in full confidence
that . . . she will devise it to one or more of my nieces as she may think fit’. Therefore, on
the face of it, there would appear to be a merely moral obligation on the part of the wife
to benefit the testator’s nieces. However, it was held that there was an executory gift over
the whole of his property which was intended to give those nieces some rights in that
property under a trust. In part this was due to the fact that there was no property
segregated from the rest of the testator’s estate which could have been identified as being
for the benefit of the nieces alone. Therefore, it was held that the wife should be
prevented from dealing with that money as though she were entitled to it absolutely
beneficially. Thus, the court found that the testator’s intention was to give the nieces
property rights from the moment that the will came into effect. Therefore, his wife did
not take that property absolutely subject to a merely moral obligation to take care of her
deceased husband’s nieces; rather, she was subject to the obligations of a trustee and the
property was held on trust for her for life and then in remainder to her nieces equally. In
conclusion therefore precatory words are aimed at elaborating desire, intention, wish of
an individual and court will infer a trust from the use of precatory words depending on
whether the subject matter and objects of the trust have been clearly indicated