English Property Law - Case Study Example

Introduction: English property law is wide and diverse. “English property law is distinctive primarily becauseof the intervention of equity, a discretionary system of jurisprudence which supplemented and corrected the common law” (Sparks P. []). It is supplemental to the Common law and could not stand alone according to The Origins of Equity (Maitland, F. W. 19080). The most significant contributions of equity are the acknowledgement of informal rights, the rights of the borrowers under mortgages, and the restrictive covenants. Equity is being used now in the Chancery Division of the High Court keeping its flexibility and is a good medium for modern case law developments in property law especially the proprietary estoppels; a way or means of acknowledgement of the informal interests in the land. It also acknowledges constructive trusts, the informal contributions made in acquiring the land e g paying the mortgage installments (Spakes P. []). The following are aspects of property law: Equity Law Equitable jurisdiction Trusts and other branches thereof: express trust, resulting trust, and constructive trust What is equity? Equity is jurisprudence which deals with the informal interest for a property; it recognizes both the property rights of the trustees and the beneficiaries. It has found its way to English law to balance the traditionally inflexible common law, which enforced law without regards to fairness. The notion of equity is to protect the rights of those who are the weaker parties; its main focus is to “Equitable interests operate in a shadowy hinterland that the civilian systems would not accept in which the interest displays most characteristics of a property rights but stop short of being fully real” (Sparkes, P. []). Proprietary status and equitable interests are in many aspects the same; both are assignable, can survive insolvency, inheritable and bind the inheritance of the land; however equity does not bind future owners (Sparkes P. []). Equity law stands upon the judicial assessment of what is fair and just contrary to that of the strict and harsh ruling of the common law. One good example of this is the unjust enrichment which the common law does not recognize but it’s the legal relief developed by the equity courts (Duhaime L. 2010). Equitable Jurisdiction Mistake, Rectification & Misrepresentation by Duhaime Lloyd says that when something went wrong with an agreement or a contract because of misapprehension of one party in the contract, the contact is liable to equity. The party who is not the one who made the mistake can ask the contract to be set aside. If both of the parties made the mistake in the very basic element of the contract, the contract is considered null and void. This is because of the fact that meeting of the minds is fundamental to a contract, without this basic element everything collapses. One example is if A signed the contract thinking that B is buying his original copy of a Picasso painting, yet B is thinking that what he is buying is the original Picasso painting; there is a mistake here that warrants the nullification of the said contract. In English case law it is called “false and fundamental assumption of a contract” (R. v. Ontario Flue-cured Tobacco Growers, 1965). Trusts Trust when legal matter is concerned means that a person (trustee) is holding a property for the benefit of another person (beneficiary). There are three main characters in trust namely: the Donor, the Donee, and the Trustee. The Donor or the Settlor is the word used to describe the person who is giving up the property; the Donee is the one who is the recipient of the property given up by the Donor. The trustee is the person assigned to take care of the property for the beneficiary. The key word here is trust because trust is the basic element of a trust, and the trustee is the major player in this legal instrument. He must make sure that the trust given to him by the donor is well executed. The trustee must make sure that the property entrusted to him is properly managed for the benefit of the donee or the beneficiary. This is fiduciary; he must carry this duty in all faithfulness and loyalty. The good side of this is that the piece of property entrusted to him can be both enjoyed by him and the beneficiary. The 3 Elements of Trust in Order to make it Legally Enforceable 1. Trust – it means that the agreement or the documents shows clearly that trust is conveyed by the Donor to the Trustee. If the word trust is not seen in the document however it shows that trust is intended then it is taken as such (Luscar Ltd. v. Pembina Resources Ltd. (1995) 165 Alberta Reports 104). 2. The subject matter of trust must be certain. All property and all that exist that can be understood as property can be a subject of trust, even the one without monetary value. 3. There must be a sure beneficiary so that trust can be enforceable. All three will be fully functional only if the property is received by a trustee. Express Trust When a Donor makes it known by means of a document e. g. “will” his intention of giving up a property so a particular person can benefit from it, it is called express trust. "Trusts ... created intentionally by the act of the settlor ... are called express trusts (Hayton 2003)." Resulting Trust The basic principle or the ground on which all trusts stand is conscience; it can be traced back to Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (Sarah Wilson 2007). Due to the fact that resulting trust is quite difficult to define because it often surface only through the intervention of the court, it will be explored here scenarios on which resulting trusts can be defined. Contrary to the express trust, a resulting trust is founded on the presumed intention of the transferor or the purchaser of the property. In Pecore v. Pecore, the father of Paula Pecore made bulk gratuitous transfers of assets in his joint accounts with his daughter Paula who was then married to Michael Pecore. The father continued to use and control his account and paid all the taxes from the income generated from his assets in the joint accounts. When the father was still alive he helped Paula and her family financially. At his last will he made specific bequests to Paula, Michael and their children; the residue of his assets will be divided equally among Paula, Michael and their children. Regarding the accounts, the father did not say anything. When the father died, Paula was able to redeem the balance in the accounts based on the rights of survivorship. Later Paula and Michael divorced and during the matrimonial settlement Michael claimed that Paula held the balance in the accounts in trust for the benefit of the father’s assets, and as such the balance became residue of the assets that should be divided equally according to the bequests made in the last will (Pecore v Pecore 2007 SCC 17). The trial judge dismissed the claim made by Michael Pecore and held that a gift of beneficial interest was made by the father to Paula alone. The presumption of resulting trust is the general rule in the gratuitous transfers and the burden of responsibility is upon the transferee to prove that a gift is intended. Depending on the nature of the relationship between the transferor and the transferee, the presumption of advancement may apply and it is upon the party challenging it to refute the presumption of a gift. The principle of resulting trust can be applied also here, because the rule on the presumption of advancement is not evident since Paula Pecore is already an independent adult at the time of the transfer of the assets. Presumption of advancement only applies on gratuitous transfer made by parents to a minor child. However even though, there seems to be an error in court proceedings, the court decision still can stand because the evidence clearly demonstrated the intention of the father that the balance in the account should go to Paula alone through the right of survivorship. In case of the balance of the joint accounts as pictured in the Pecore v. Pecore case, the rights of survivorship start when the joint accounts are opened. The gift of this kind is manifested as inter vivos in nature, and because the nature of joint accounts is that the balance is not quite stable in nature as it fluctuates, the gift here is the transferee’s survivorship interest of the account balance at the time of the transferor’s death (Pecore v Pecore 2007 SCC 17). "A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner. While the trustee almost always has the legal title, in exceptional circumstances it is also possible that the trustee has equitable title (Pecore v Pecore, Justice Rothstein of Canadas Supreme Court/2007 SCC 17). Constructive Trust Constructive Trust happens when a specific circumstance occurs such as unjust enrichment and the court has to impose to the participants the constructive trust. It is imposed by equity when under specific circumstance the owner of the property cannot hold the subject matter for the benefit of another, this happens to satisfy the demands of justice and good conscience (Osborn 1954). Unjust enrichment even though fast becoming fashion to family law to give way and give remedy on how to split assets in two unmarried couple, it is very prominent in commercial cases. Justice Anderkson in the Queen’s Bench says “unjust enrichment is when a person has made a considerable amount to the property of another person but has not been compensated doing it. The three elements of unjust enrichment are the following: Enrichment Deprivation of another person The absence of juristic reason for enrichment Pettkus v. Becker In the Canadian Supreme Court in 1980 the 19 year-old common law relationship of Mr. Pettkus and Ms. Becker was ended acrimoniously. In the 19 years of relationship Mr. Pettkus has developed and managed a thriving beehive business, and when the relationship ended Ms. Becker filed a lawsuit against Mr. Pettkus claiming half of the beehive operation. The basis of the claim was that during the relationship, the salary of Ms. Becker was spent to meet various “family” expenses while the Mr. Pettkus was able to save his income resulting to the purchase of the bee-hiving farm. Ms. Becker’s ground was first there was an implied trust that developed in the farm operation that warrants her interest on half of the property. She argued that if this was not the case, then a constructive trust and unjust enrichment was developed. These are court imposed trusts that were designed to remedy injustices if three requirements are met: (1) Someone has benefitted (2) At the expense of another and (3) The enrichment is "unjust" or without legal justification. For the reason that three of these requirements are met, the court decided on the favor of Mr. Becker entitling her to the half of the beehive farming (canlii.org/en/ca/scc/doc/1980/1980canlii22/1980canlii22.html Conclusion: The equity law as it has been mentioned above has evolved to be an important part of the English legal system when the litigants in the century past would go to the king in order to secure the justice they were denied through the common law. The common law although fundamental in legal system obviously lacks the wisdom or the ability to weigh the circumstances surrounding a particular issue like unjust enrichment that often results to the denying of justice to the one whom truly deserves of it. . REFERENCES: Duhaime L (2010) Accessed April 29, 2010 at http://www.duhaime.org/legaldictionary/M/Mistake.aspx Hayton, David, Underhill and Hayton - Law Relating to Trusts and Trustees (London: Butterworths LexisNexis, 2003), page 53. Maitland, F. W., the Origins of Equity (1908) Osborn, P. G., A Concise Law Dictionary, 4th Edition (London: Sweet & Maxwell, 1954) Pecore v Pecore2007 SCC 17 Pettkus v Becker 1980 2 SCR 834, published at canlii.org/en/ca/scc/doc/1980/1980canlii22/1980canlii22.html Wilson S. Todd & Wilsons Textbook on Trusts 2007 p.154 Sparkes P., Real Property Law and Procedure in the European Union Annotated Draft Questionnaire [], pdf. p.3 published at http://www.eui.eu/Documents/DepartmentsCentres/Law/ResearchTeaching/ResearchThemes/EuropeanPrivateLaw/RealPro . Read More