EQUITY LAW

Equity Law

Equity Law

Summary of the relevant law

The law of equity encompasses a body of rules, principles and doctrines initially developed by the Court of Chancery, broadly aimed to address the conflicts identified with uniform rules of justice that were inflexible and often harsh on particular individuals in specific situations and standards of fairness and conscience. It is discretionary and not based on precedent so this jurisdiction has continually changed and developed by judicial decision of the substantive principles of law and since its conception. Relief against forfeiture is but one of the substantive doctrines of equity that has evolved.(Hudson 2001:12)

Precedents Cases

In the worst case scenario - and assuming that someone came forward to challenge the situation which seems unlikely - if the Citizen's Advice Bureau manager failed to apportion the fund, it would be possible for the court to dismiss her as trustee, seize the funds and appoint new trustees to fulfil Jim's wishes. IRC v Broadway Cottages Trust offers authority on this point. Although it would be an unusual step to take, the court could even take it upon itself to distribute the property itself.

In Re Baden's Deed Trusts (No.1), McPhail v Doulton (1971) the court stated that trustees of a discretionary trust should undertake a reasonable survey of the field of possible beneficiaries and thereafter turn their minds to the question as to which, if any, are deserving of support. Re Manisty's Settlement sounds a note of caution over administrative workability, which can serve to defeat a settlers intention if taken to extremes, but the scope of this trust seems reasonable - indeed it is in effect to be defined by the trustee herself.

Because Jim apparently passed away without reverting to the CAB manager it seems that the manager has a relatively free hand to deal with the money, for individual charitable purposes, as she sees fit. There is no reason on the face of it why Jim's estate would choose to intervene. The CAB manager should be advised of this, but reminded that she owes a moral and legal duty to meet Jim's wishes under the trust. Hopefully she will be prepared to perform this altruistic function in the course of her day to day work at the Bureau.

The best advice for the CAB manager is therefore that a discretionary trust has been settled under which she has considerable free reign to allocate money to deserving cases. She owes a legal duty to do so although it would be difficult to enforce that duty effectively given the breadth of her discretion.

Jim informed the treasurer of the town's Community Welfare Association that he was giving the Association on trust one of his holiday homes so that the Association could use the home to offer disadvantaged families rest breaks. Unfortunately he stipulated that there were two houses and that the choice as to which house would go to the Association was reserved for Gill. Gill died before making that choice and then Jim also died leaving the situation ...