Notions of Equitable Maxims Law Essay

"A constructive trust arises by operation of law rather than by the intention of the parties and it can arise in a wide variety of circumstances. But there is little agreement amongst the judiciary or academic writers as to when a constructive trust will be recognised and why it will be recognised."

Discuss whether there is a single rationale justifying the imposition of constructive trusts. Explain the difficulties in formulating an all-embracing definition:

Introduction:

This chapter will consider the historical make-up of equity with special emphasis on the notions of equitable maxims and how they were used by the law to protect those weaker persons under English Law, which the common-law was unable to protect; this especially became important in protecting rights in property, who were unable to use the common-law system. The most important notion that equity created was it dealt in personam at the discretion of the Chancellor, i.e. in the interests of justice. This became historically important in protecting the Lord’s benefit in his vassal’s (feoffee) land. As Martin argues equity works in respect to maxims is that equity’s rights are in personam, i.e. historically equity acted at the discretion of the Chancellor. The origins of the use of equitable rights, by the Chancellor, were run by the liege’s (feoffees) for the benefit of the liege lord (cestui que use); even though legal ownership was in the hands of the liege. As Maitland argues:

‘Equity did not say that the cestui que trust was the owner of the land, but added that he was bound to hold the land for the benefit of the cestui que trust’.

Hence Martin and Maitland illustrate that equity was originally used to protect the natural order and hierarchy in land ownership, i.e. the interests of the Lord and King were protected, but the ownership was vested in their vassals. However as the notions of land ownership and governance changed over the centuries equity was no longer used to protect the King’s interests; instead it was used to protect those persons who could not hold an interest in land. This discretion of the Chancellor has today developed into a body of law whereby in personam rights have been used to protect rights to do with ownership of property and land, especially in respect to women.

Women and Equity:

The following case study will attempt to explain the importance of equity dealing with property law, especially in respect to those who do not hold property rights, socially and traditionally, therefore a body of constructive trusts were created. Hence the reason for choosing women, because traditionally women never held property, in fact they were seen as property, at the worst, and akin to children, at the best, and equity became involved to ensure that women were protected under equity. In the modern era, women can own property and are seen as equal to men; however socially women still do not own property at the same scale as men and traditionally are the home and child carer and the financial contributions to the mortgage are usually be the husband, therefore equitable protection is very important in the case of marital break up. It must be noted that this notion can protect the husband, if in the weaker position; also there is possible indications that it is viable for common-law couples and possibly in the future the modern notion of same-sex couples.

A Historical Dimension:

‘Until little more than a century ago the common law did not permit married women to own any property whatsoever. It became the property of her husband. When a measure of reform was proposed in 1856 one Member of Parliament protested, ‘If a woman had not full confidence in a man, let her refrain from marrying him’.’

This quote illustrates the historical disadvantage to women under the law, therefore introducing a bias in the common-law system in favour of men. However equity was used a method to protect property interests of women, therefore fathers who feared that family property may be misused by future husbands had this property put into trust in order to protect their daughter’s and family’s proprietary interests. Although this is no longer the problem, because women can own property it illustrates that equity can be used to protect the interests of weaker parties and women today.

Modern Matrimonial Home Trust - A Constructive Trust:

Probert argues that both sides of the argument concerning the possible and inadequacies of the law of equity in relation to woman are deficient. Those who argue that the law of equity is deficient have not properly analyzed the situation and needs to be applied to modern situations and not the Burns v Burns case from 1961, she argues that there needs to be more than a discussion of the deficiencies of the resulting and constructive trusts.Probert further argues that the law did operate to the disadvantage of Mrs Burns who walked away with nothing after a 19-year relationship; but this is not a typical scenario of the modern cohabitant. Probert also illustrates that the argument that purports that there is no discrimination against women and modern co-habitants is lacking, because the only argument that they purport is that in the modern situation that the law does not discriminate against women only suggest that the greater participation of women in the workforce may have made a difference in the situation between men and women. Probert further argues that this line of argument is very deficient, because it provides no legal analysis and does not distinguish between cohabitating women and women, as a whole. Also she argues that the link between earnings and property ownership has not been conclusive, because returning to the Burns case, where Mrs Burns in 1961 was in paid employment but even though she financially contributed to the home, she did receive a beneficial interest in the home, as she was only a cohabitee.

This has become a very modern problem, because the nature of the family and the home is changing; however women traditionally are the non-legal owners of property and the titles are vested in the husband and either women are home-makers or juggle this with a very low paid job and their financial contributions are to children’s clothing and housekeeping. Men, on the other hand, are the main contributors to mortgage and home improvement payments. Judges in the late 60s and 70s recognized this problem, as well as the growing number of co-habiting couples and had not entered into the institution of marriage and aimed to protect the rights of women, which the common law was neglecting when families split up because these women did not hold property rights. Lord Denning developed this to ensure that non-financial contributions to the home were recognized and the matrimonial constructive trust was created. However the House of Lords rejected this approach as encroaching on property and in rem rights, but did allow for a trust to be created if substantial contributions were submitted to the matrimonial home, e.g. mortgage payments and home improvements. However there was an outcry and protection was afforded to women statutorily; yet there are still problems that equity is still trying to deal with, such as unmarried couples and same-sex couples and as Sir Scott Medforth states:

‘I do not, for my part, think it matters one jot whether the duty is expressed as a common law duty or as a duty in equity. The result is the same.’

Therefore it is justice that equity is aiming to create and its flexibility is important, if it shies away because of the property rights versus equitable rights debate then it is not filling the voids and deficiencies of the common law. However as Probert argues that the law of trusts has some benefits in protecting women’s and cohabiters’ rights, because this law can be developed for further protection, i.e. reform is not necessarily going to eradicate equity’s role in protecting cohabiting women’s property and possible beneficial ownership rights. Probert purports that equity’s flexibility will be important in the future of the rights and duties of the parties in matrimonial and cohabitation disputes. In fact Probert argues thatthe of trusts provides an adequate solution in many cases for ensuring women’s justice; however some adaptation is necessary so that unpaid domestic contributions are taken into account, in order to ensure that justice is being done in respect to the division of labour between the public (paid) and private (unpaid) is taken into account.

Conclusion:

The above exploration has considered the notions of in personam and in rem rights and the involvement of equity in property ownership; it must now be discussed whether equity’s involvement in property ownership is valid. As already mentioned a lot of English law is based on the notion of property ownership; however the present legal system has had centuries of deficiencies in protecting ownership rights because certain categories where unable to own property, such as women, and only recently in the history of English law has the notion of property ownership changed, i.e. all capable persons may own property, including women and children; however with regard to real property children cannot be legal owners but can be beneficial owners, hence equity’s role. Equity has a very important role because it is flexible, unlike common-law, due to its historically discretionary basis and creativity. Therefore it is able to fill the voids within the English law in a more efficient manner than the common-law, which is based on years of precedent; whereby if equity never became involved in the law of property and proprietary interest then it would not be satisfying the needs of justice. To conclude Martin’s argument will be supported; whereby he recognizes that the constructive trust has provided many situations of justice in the arena of property law, spanning from the ‘enforcement of contractual licenses against third parties’ to upholding ‘unprotected minor interests to be enforced against purchasers of unregistered land’ and aiming to provide some form of protection for the unfair division of rights in the matrimonial home and determine what ownership rights are held under equity within quasi-matrimonial property. Martin purports that the new model constructive trust has provided a further testament to the flexibility of equity in property law, which would have resulted with injustice if equity was afraid to step into the bounds of property law because of the possible erosion of the distinction between rights in rem and in personam. This is illustrated in the case of Eves v Eves where Lord Denning stated:

‘Equity is not past the age of childbearing. One of her latest progeny is a constructive trust of a new model. Lord Diplock brought it into the world and we have nourished it.’’

Bibliography

  • W. Ashburner (1933) Principles of Equity 2nd Edition, London, Butterworths
  • Cheshire & Burn (2000) The Modern Law of Real Property 16th Edition London, Butterworths
  • R. Edwards & N. Stockwell (2002) Trusts and Equity, Harlow England, Longman
  • J. Eekelaar (1987) A Woman’s Place - A Conflict between Law and Social Values, Conv93
  • P. Ferguson (1993) Constructive Trusts - a Note of Caution, 109 LQR 530
  • Goff & Jones (1998) The Law of Restitution 5th Edition, London, Sweet & Maxwell
  • Hayton & Marshall (1996) Commentary and Cases on the Law of Trusts and Equitable Remedies 10th Edition, London, Sweet & Maxwell
  • Heydon, Gummow & Austin (1993) Cases and Materials on Equity & Trusts 4th Edition, London, Butterworths
  • Holdsworth (1974) History of English Law Vol. 17, London, Sweet & Maxwell
  • Maitland (1936) Maitland’s Equity 2nd Edition, Cambridge, Cambridge University Press
  • J. Martin (2005) Hanbury and Martin: Modern Equity , London, Sweet & Maxwell
  • Maudsley and Burn, 2002,Trusts and Trustees Cases and materials 6th edition, Lexis-Nexis
  • Megarry & Wade (2000) The Law of Real Property 6th Edition, London, Sweet & Maxwell
  • Meagher, Gummow & Lehane (1992) Equity: Doctrines & Remedies 3rd Edition, London, Butterworths
  • E. J. Mockler (1962) Commentary on Gladys Evans v Minister of National Revenue, 40 CBR 265-284 [The Case that this piece is referring to can found at: [1960] CTC 69]
  • Oakley (1997) Constructive Trusts 3rd Edition, London, Sweet & Maxwell
  • Parker & Mellows (1998) The Modern Law of Trusts 7th Edition, London, Sweet & Maxwell
  • Pettit (1997) Equity and the Law of Trusts 8th Edition, Croyden, Butterworths Tolley
  • R. Probert (2001) Trusts and the Modern Woman - establishing an interest in the family home, CFam 13.3 275
  • Snell (2000) Principles of Equity 30th Edition, London, Sweet & Maxwell
  • D.W.M Waters (1967) The Nature of Trust Beneficiary’s Interest, 45 CBR 219-283

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