Equitable interest
Equitable doctrines |
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In
Equity
Equity is a concept of
Perhaps the most common example of an equitable interest is the interest of a beneficiary under a
The precise nature of the interests and rights of the beneficiary under a trust is contested. Ben McFarlane states that there are three principal theses about the nature of equitable rights:[3]
- Equitable interest is a right against a right, rather than right against a thing or right against a person.
- Whenever a party B has a right against a right of another A, B's right is prima facie binding on anyone who acquires a right that derives from A's right.
- B will acquire such a persistent right whenever A is under a duty to hold a specific claim-right or power, in a particular way, for B.
The rights and
In DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW),[4] the High Court of Australia held that if a person has an equitable interest in property, this implies that some other person has the legal interest in that property. If one person has both the legal and equitable interest in the relevant property, he or she has no ‘equitable interest’ in that property as such. Aickin J said "If one person has both the legal estate and the entire beneficial interest in the land he holds an entire and unqualified legal interest and not two separate interests, one legal and the other equitable".[4]: p 463 [7] [5] As stated by Brennan J held that "[an] equitable interest is not carved out of a legal estate but impressed upon it".[4]: p 474 [8]
Latec Investments Ltd v Hotel Terrigal Pty Ltd[6] establishes that, in New South Wales, there are 3 classes of equitable interests: equitable interest, mere equity and personal equity.[6] Mere equity, for example, may arise when one party has been unjustly disadvantaged by the unconscionable behaviour of another. Importantly, however, a ‘mere equity’ will not prevail over an actual bona fide equitable interest – such as an equitable charge.
Land law
An enforceable contract for sale confers an equitable interest on the purchaser of the land, as per the rule established in Lysaght v Edwards[7] It was similarly held in Walsh v Lonsdale that 'equity looks on as done that which ought to be done'.[8] A contract, which does not meet the requirements of a deed, required by the Law of Property Act 1925 s.52(1), may be specifically enforced to convey the equitable interest to the new purchaser. This rule has had a significant impact because it allows interests that have not been conveyed by a deed to still be binding on future purchasers, through the doctrine of constructive notice. However, the UK Parliament has weakened the impact of this rule, with the Law of Property (Miscellaneous Provisions) Act 1989 s.2,[9] which requires all contracts for the sale of land (which could be specifically enforceable) to be in writing, to contain all the terms of the agreement and be signed by both parties. Any contracts that are not in writing and signed by both parties cannot be specifically enforced and so will not create or transfer an equitable interest in land.
See also
References
- ^ Black's Law Dictionary. Second Pocket Edition. p. 361. 2001 West Group. Bryan A. Garner (editor in chief)
- ^ a b Black's Law Dictionary. Second Pocket Edition. p. 241. 2001 West Group. Bryan A. Garner (editor in chief)
- ^ Ben Mcfarlane and Robert Stevens, The Nature of Equitable Property (2010) 4 Journal of Equity
- ^ a b c DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14, (1982) 149 CLR 431 (21 April 1982), High Court (Australia).
- ^ Commissioner of State Revenue v Lend Lease Funds Management Pty Ltd [2011] VSCA 182 (21 June 2011), Court of Appeal (Vic, Australia).
- ^ a b Latec Investments Ltd v Hotel Terrigal Pty Ltd [1965] HCA 17, (1965) 113 CLR 265 (12 April 1965), High Court (Australia).
- Ch D499.
- Ch D9.
- ^ "Law of Property (Miscellaneous Provisions) Act 1989, section 2".