Equity

What the unit requires

The topics should cover the elements of trust law, equitable doctrines apart from those relating to trusts, and equitable remedies. The following aspects of trust law should be dealt with: various kinds of trusts; the rights, duties and powers of trustees; the consequences of breach of trust. Apart from trusts, the following equitable doctrines might be covered, for example, fiduciary obligations, equitable assignments, unconscionability and confidential information. The remedies of specific performance, injunction, declaration and damages in equity should be included. (It is expected that about half the course will be devoted to trusts.)

• a The nature of equity
• b Equitable rights, titles and interests
• c Equitable assignments
• d Estoppel in equity
• e Fiduciary obligations
• f Unconscionable transactions
• g Equitable remedies
• Either Trusts, with particular reference to the various types of trusts and the manner and form of their creation and variation. The duties, rights and powers of trustees should be included, as should the consequences of breach of trust and the remedies available to, and respective rights of, beneficiaries. (It is expected that about half the course will be devoted to trusts.)

Topics and descriptor are the instrument's own words, transcribed in curriculum-spine-data.ts. UAR Sch 1 cl 2 states that the topics need not all be taught in a single subject, so the mapping from units to topics is many-to-many.

The ideas that decide the mark

• Equity acts on conscience, but the categories are the evidence

  The unifying principle is unconscionability, but it is applied through established categories — fiduciary obligation, estoppel, unconscionable dealing, breach of confidence. Naming unconscionability without a category is an assertion, not an analysis.

  The usual error: Treating "it would be unconscionable" as a freestanding cause of action, which ignores that the court asks whether a recognised equity is engaged.

• Fiduciary duties are proscriptive, not prescriptive

  The core duties are negative: no conflict of interest and no unauthorised profit. There is generally no positive duty to act in the beneficiary's best interests, and no general duty of disclosure, unless the relationship itself supplies one.

  The usual error: Asserting a fiduciary duty to disclose or to act in the client's best interests, which is the error the High Court corrected in the medical context and which recurs everywhere.

• Estoppel is one doctrine and the remedy is the minimum equity

  Common law and equitable estoppel now share a foundation in unconscionable reliance. The remedy is what is necessary to prevent the detriment, which may be less than the promise and is not automatically expectation performance.

  The usual error: Assuming the plaintiff gets the promised outcome. The court asks what the minimum is to remove the unconscionability, and proportionality runs through it.

• Certainty of intention is about the words used, not what was meant

  Whether a trust was created turns on the objective meaning of the language, not on the settlor's unexpressed intention. Clear words — "on trust" — will be given effect even if the settlor misunderstood them.

  The usual error: Searching for subjective intention, which is a contractual instinct and the wrong test in equity.

• A trust is not a contract and not a company

  A trust is an obligation attached to property, enforceable by beneficiaries against the trustee. It is not an entity, it does not contract in its own name, and its beneficiaries are not shareholders. Commercial documents often use "trust" loosely.

  The usual error: Analysing the trustee's obligations as contractual promises to the beneficiaries, which misidentifies both the source of the obligation and its enforceability.

How it is assessed

• Problem questions where a relationship must first be classified, then the obligations that flow from it, then the breach, then the remedy.
• Remedy questions asking what the plaintiff is entitled to, which are marked on proportionality and on distinguishing personal from proprietary relief.
• Essay questions on doctrine: the fusion debate, the scope of fiduciary obligation, and the relationship between estoppel and contract.

Whether the unit treats trusts as a separate subject or embeds them in equity, and the depth of tracing and priorities, differ by institution and are not recorded here.

The authorities

Each was resolved against the corpus. Where a paragraph could be verified it is given; where it could not, the case is cited without one rather than with an invented paragraph.

• Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41AustLII paragraph

  The tests for when a fiduciary relationship arises, and its limits.

  Find it at [1984] HCA 64, AustLII [54] (Dawson J) — AustLII's own numbering. This judgment predates paragraph numbering, so cite the case without a pinpoint in an exam.

• Breen v Williams (1996) 186 CLR 71AustLII paragraph

  Fiduciary duties are proscriptive; the rejection of a positive duty of best interests.

  Find it at [1996] HCA 57, AustLII [40] (Gaudron and McHugh JJ) — AustLII's own numbering. This judgment predates paragraph numbering, so cite the case without a pinpoint in an exam.

• Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447AustLII paragraph

  Unconscionable dealing: special disability, and why a bank that knows of it cannot rely on the guarantee.

  Find it at (1983) 151 CLR 447, AustLII [2] (Mason J) — AustLII's own numbering. This judgment predates paragraph numbering, so cite the case without a pinpoint in an exam.

• Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89Pinpoint verified

  Knowing receipt and the knowledge requirements for third-party liability.

  Cite at [2007] HCA 22 at [121] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ)

• Byrnes v Kendle (2011) 243 CLR 253Pinpoint verified

  Certainty of intention assessed objectively from the words used.

  Cite at [2011] HCA 26 at [106] (Heydon and Crennan JJ)

• Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62Pinpoint verified

  When a commercial arrangement creates a trust, and why the label is not enough.

  Cite at [2015] HCA 6 at [85] (Hayne and Kiefel JJ)

• Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484Pinpoint verified

  A trustee's duty to adhere to the terms of the trust, and why good faith and the absence of loss do not answer a breach of trust.

  Cite at [2003] HCA 15 at [33] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ)

• Sidhu v Van Dyke (2014) 251 CLR 505Pinpoint verified

  Estoppel remedy as the minimum equity, and how detriment is measured.

  Cite at [2014] HCA 19 at [2] (French CJ, Kiefel, Bell and Keane JJ)

• Giumelli v Giumelli (1999) 196 CLR 101Held, no pinpoint

  Proportionality in estoppel relief, including when expectation relief is not granted.

  held and numbered, but no paragraph ranked as discussing this proposition — cite the case without a pinpoint

• Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165Pinpoint verified

  Conflict of interest, informed consent, and the limits of the fiduciary standard.

  Cite at [2001] HCA 31 at [78] (McHugh, Gummow, Hayne and Callinan JJ)

• Maguire v Makaronis (1997) 188 CLR 449Held, no pinpoint

  Informed consent as the answer to a conflict, and what informed consent requires.

  The copy of this judgment in the corpus does not preserve verifiable paragraph numbering, so no paragraph pinpoint can be checked against it — which is not a statement about whether the judgment is numbered in the report. Cite the case without a pinpoint. The passages below are the judgment itself, so rely on what they say rather than on recollection, and do not attach a paragraph or page number to them.

• Warman International Ltd v Dwyer (1995) 182 CLR 544AustLII paragraph

  Account of profits for breach of fiduciary duty, and how the court measures the gain to be surrendered.

  Find it at (1995) 182 CLR 544, AustLII [17] (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) — AustLII's own numbering. This judgment predates paragraph numbering, so cite the case without a pinpoint in an exam.

• Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57Pinpoint verified

  The test for an interlocutory injunction, and the limits of prior restraint on publication.

  Cite at [2006] HCA 46 at [68] (Gummow and Hayne JJ)

The method

1. Classify the relationship first. Whether it is fiduciary, contractual, trustee-beneficiary, or none of these determines which obligations exist at all.
2. State the obligation precisely: no conflict, no profit, or a specific trust duty. An unparticularised "duty of loyalty" cannot be breached in a way a court can assess.
3. Test for breach against the specific obligation, and then address defences, particularly informed consent and the court's discretion.
4. For estoppel, work the elements in order — assumption, inducement, reliance, detriment, unconscionability — and do not skip detriment, which is where most answers fail.
5. For remedy, say what the minimum equity requires and why a lesser remedy would not suffice. Proportionality is the marked question, not the promise.

What loses marks

• Using "unconscionable" as the cause of action

  Unconscionability is the principle behind recognised categories. Without a category there is nothing for the court to apply.

• Asserting a fiduciary duty of best interests or disclosure

  Fiduciary duties are proscriptive. Claiming a prescriptive duty invites the correction in Breen v Williams.

• Awarding the promised outcome on estoppel automatically

  The remedy is the minimum equity to avoid detriment, and the court may award less than the promise.

• Omitting detriment in an estoppel analysis

  Detriment is an element, not a conclusion. Without it there is no unconscionability however strong the assumption.

• Treating a trust as an entity that contracts

  The trustee contracts personally. Misidentifying the party defeats the remedy as well as the analysis.