Equity & Trusts Law: Paul v Constance, Keech v Sandford, Dishonest Assistance

This article discusses the leading cases of Equity & Trusts Law including Paul v Constance, Keech v Sandford and Dishonest Assistance. It explains the facts, legal issues, court decisions and critical evaluations of these cases. The article also covers the principles of Equity & Trusts Law and the importance of certainty of intention in creating a trust.

MOD000030 Equity &
Trusts Law
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Table of Contents
Task 1..............................................................................................................................................4
Paul v Constance is a leading case relevant to which if the three certainties? Explain the facts,
the legal issue at stake and the court’s decision. Critically evaluate the court’s decision in the
context of certainty of intention...................................................................................................4
Keech v Sandford serves as precedent for the idea that fiduciary duties are strict. Explain the
Court’s reasoning in light of subsequent case law.......................................................................6
Explain what is meant by the ‘dishonest’ as an element of ‘dishonest assistance’ by making
reference to the case of Royal Brunei Airlines v Tan [1995] UKPC 4 ......................................8
BIBLIOGRAPHY.........................................................................................................................10
CASE LAWS.............................................................................................................................11
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TASK 1
Paul v Constance 1 is a leading case relevant to which if the three certainties? Explain the
facts, the legal issue at stake and the court’s decision. Critically evaluate the court’s
decision in the context of certainty of intention.
Equity and Trusts plays an crucial role in the British property laws, when two bodies of
laws acting in contradicting manner and two laws application have conflicts within the equity
would succeed triumph. Equity precisely works on the various principles whose ground is
covered by maxims in it ,the principles are namely as , Equity sees that as done what must be
done ,Equity will not suffer a wrongdoing without attaining a remedy for it,Equity enchants
equity ,therefore equality is equity, Equity states that one who is seeking equity should do equity
as well,Equity spadework on an individual person not towards an object
The case of Paul v. Constance lays down the legalities of the equity and trust law. A trust arises
legal obligatory relationship by the suitor , when the assets are in the control of the trustee for the
for satisfaction of the beneficiary, this case will determine the value of concept of intention is
important.
1 [1977] 1 All ER 195
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Facts of the Case
Denise Albert Constance, the deceased who was married to the defendant and their
married broke down in 1965 , the deceased was earning his bread and butter in a form of daily
wages , he passed away on March 9,1974. after the ties of his marriage bantered with Bridget
Frances Constance (defendant), In the year of 1967 the deceased met Mrs. Doreen Grace
Paul . Who is representing as plaintiff in the following law suit, after the alleged relationship
they were having in account to that they both together set up a house in December 1967,there
they lived in a tight knitted relationship till the deceased passed away , the address to the house
they lived in was 42,Larput Place, St.-Paul's,Cheltenham , the property of the house belonged
to Mrs. Grace Paul. The departed Mr. Constance was employed in the neighbourhood ,happen to
be injured at work and he claimed the damages of his injury against the supervisors and
employers of the workplace, In the time span of the year 1973 , after the initiation of the legal
proceedings by Constance , the claim was predisposed for the injury as a amount of £950. the
fiduciary claim was acquired in form of cheque in the year of 1973. after the complete
transaction , the deceased with the claim , discussed with the plaintiff in order to decide what to
do with the money received, the transparency for tracking the money is evident because of the
receipt it was gone in the bank account. The bank account in which the monetary claim valued
was stored was the St George's Square, branch of Lloyd's Bank in Cheltenham, after the
couple decided to meet the manager of he bank of the matter of opening an account , this solid
notion is also included in the evidence support that the money was present in the bank, after an
brief interview with Mr. Thomas , a former employee of Mr. Constance , revealed that he knew
the deceased and the plaintiff were not married but very few people knew about it , the bank
called for that Mr. Constance should open the account under his name as he is not married to the
plaintiff, Therefore, the legal owner of the bank account was the deceased. Later on the couple
went ahead and added a bingo account in the bingo for the storage of their bingo winnings. Some
of the savings were used for the family holiday as well, During the running of the trail there was
a statement by Mr. Constance which was taken an confirmatory evidence which he had said to
Paul that ' This Money Is As Much Yours As Mine',
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Constance died ,and Bridget (the wife) looked for attaining the bank account under name
presenting as her widow under the rules for the beneficiary, However plaintiff had other plans ,
she argued that the account opened by constance was on the basis of both of their trust and hence
the account belonged to Paul and Constance bequeath, the deceased as the legal owner of the
account , Hence , The account should be given to the sole surviving beneficiary.
Issue
 Whether there is express declaration of trust.
 Whether the expression ‘ This money is as much yours of mine ’constituted an express
declaration trust.
 Whether the Certainty of Intention is Present
 Whether the Certainty of Intention is an essential component of creating a trust
Judgement
Where the certainty of trust is not certain, the implied trust will be rescued by the
constructive trust, In particular it focus on the case of Lehman Brothers, were the intention of
trust recognizes the creation of trust, an intention to general a trust is to establish on a property
owner an obligation to inflict on the property of the benefit of the beneficiary, The indeed
intention of creating a trust bring about the exclusive cases of insolvency , the insolvent person
involved in the breakage of the trust bond, the award to one person as favour of the monetary or
fiduciary or namely property , irrespective of denying to the other creditor ,
The complicated synthesis of the liquidation of the prized property just like Lehman Brothers ,
the prescribed judicial review can obtain in increasing the sum of the amount the award ,
but in the judgement which stands with the case of Paul v Constance , it put forwards applying
the appropriate example of shared ownership in laws of family homes, the law concede the
formation of trust as a reverberations of the parties , if the trust swings to south from the
certainty then the offered conventional perspective will be involving in the demand of the
commercial insolvency, which is the area which demands much wider scope of certainty in the
law.
Constance declared a fleck of trust in the money which is present in the bank account, affirming
it by the statement ' The Money Is As Much Yours As Mine' which definitely indicated adequate
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intention that Constance would take a hold of the monetary formation claim on the trust of for
them both. Morever,The couple had treated the money in the account as joint money ,which was
cosidered as intention to create trust.
Keech v Sandford 2 serves as precedent for the idea that fiduciary duties are strict. Explain the
Court’s reasoning in light of subsequent case law.
This legal pronouncement highlights the fiduciary duty of an individual while creating trust.
A fiduciary relation may breach an obligation to betray the confidence by any person to pursue
personal gains. One of the major challenge of fiduciary law is situation of conflict of interest
mostly involved. This is the fundamental case that is based on english trust law , defines
fiduciary duty of loyalty3.
Facts of the Case
In this case, the child was a beneficiary and trustee wants to renew the lease on its
expiration. Later, his request was refused on the ground of child incapacity to bound by lease.
However, trustee renew the the lease on his own name with the intention for benefit of the
beneficiary.
Issue
 Whether the trustee can use he trust fund.
Judgement
The Court held that trustee does not use the unauthorized profit from trust It is based on the
principle of ‘strictly pursued as risk of fraud allows trustee to get benefit of renowned leases
which they entrusted on trust. It is based on the relationship of trust and confidence that rely
upon other party in relation to property. Therefore, the fiduciary duty requires high standards of
care in dealing with the equity or law. The Recognition of Trust Act, 1987, provides jurisdiction
of the matters to be decided under the certain courts laid down under this Act. This it was argued
that an express trustee has to perform the nature of their work and conduct to authorize
2 [1726] EWHC Ch J76
3 Tappenden, S., 2009. Commercial Equity: The Quistclose Trust and Asset
Recovery. Journal of Politics and Law, 2(3).
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representative and his agent. In the case of Webb v. Earl of Shaftesbury4 the Court observed
that trustee was exercising certain rights over trust and responsible for effectively reimburse any
lose incurred by the trustee if uses such position for their personal benefits. In the case of
Vyse v. Foster5 , the death of the partner does not arise liabilities over the trustee for delay in
making payment. The concept of fiduciary relative build constructive trust to avoid any ill intent
or dishonesty in mind of the trustee and the beneficiary. The United Kingdom legal system
obligates the parties to ensure the conflict of interest. The fiduciary position should not accept
benefit from the third party6. The general rule was made to prevent trustee from retainig the lease
benefit from his own name which was previously assumed on trust. One of the best example of
fiducairy duty includes bribe taken to betray the trust and belief lies to agent by his principal and
company director who uses corporate benfit for personal interest.
Fiducairy duty arises when voluntary efforts is made to benefit the other. It has narrow
approach in context to fiducairy duties. It restricts the prescriptive duties which includes no
profit and no conflict rule. The theories has been made to identify the core elements of fiduciary
duty to provide wide protection to avoid conflict of interest.
Explain what is meant by the ‘dishonest’ as an element of ‘dishonest assistance’ by making
reference to the case of Royal Brunei Airlines v Tan [1995] UKPC 4
The dishonest person is defined as a person who fails to perform his obligation , duties for
which he is obliged to do. In equity law, dishonest assistance requires basic ingredients to
establish claim for it. It includes:
 There must be a trust.
 There must be breach of trust
 The defendant must assist the breach of trust.
 The act must be dishonest.
4 (1802) 7 para,480,
5 (1874) L.R. 7 H.L. 318
6 Virginia Law Review, 1945. Equity. Attachment, Sequestration, and Ne Exeat in Equity
Suit. Nature of Relief under Sherman Anti-Trust Act and Wilson Tariff Act. Certiorari as
Available for Review of Order Made without Judicial Power. 31(4), p.946.
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It is quite difficult to consider the dishonesty may cause trouble to evaluate in the case. This case
defines the test of claiming dishonest assistance. In the case of Royal Brunei Airlines v Tan 7 ,
sale was made into the wrong account. They had paid into specific instead of transferring into
the current account of managing director . But the Court found that the intention was not bad
only wanted to use it for temporary basis. Thus, the company became insolvent and Tan was
liable for dishonest assistance8.
Issue
 Whether the principle of dishonesty has been applied.
Judgment
The Privy Council held that dishonest assistance shows the state of mind . Dishonest assistance
depends on the dishonest objective of the person. Dishonesty is a core element for breach of trust
by the third parties. It helps to identify different state of mind and knowledge which put
restitution liability on the trustee. Any liability in equity to procures a breach of fiduciary
obligation. It is truly false basdoc_1980809766ed way to put liability on a person. The Court in
the case of Byers & Ors v Samba Financial Group9 , any claim made which alleged dishonest
assistance when beneficiary equitable proprietary interest may destroy and may hold the rights of
the beneficiary owner10. The judgment shows the breach of trust by the defendants may resulted
into fall of vicarious liability on the person.
The Court in the case of Macmillan Inc v Bishopsgate Investment Trust plc11 , explained the
distinction between the dishonest assistance and receipt knowledge which means if the defendant
7 [1995] UKPC 4
8 Ewald, J., Potts, G. and Aebischer, N., 2012. Restoration of a wild grey partridge shoot:
a major development in the Sussex study, UK. Animal Biodiversity and Conservation, 35(2),
pp.363-369
9 [2021] EWHC 60 (Ch)
10 Giliker, P., 2018. Comparing UK and Irish law. Common Law World Review, 47(1),
pp.3-6.
11 [1995] 1 WLR 978)
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unconsciously retains any property may liable the defendant for breach of trust12. Usually,
dishonest assistanc held liable to the defendant when he act as a trustee when he compensate the
trust for losses and accrued the accounts results in dishonest assistance. Dishonest is an element
that assist the person to inappropriately used the fiduciary obligation and infringes the breach of
trust. The above mentioned case is commolny used as 'knowing assistance' under law of equity.
The test of honesty is determined to examine the objective of the trust. The relevant case is
determined the defandant's knowledge and state of mind to applied the pure objective of the
defendant. As per equity law, dishonest assistance is recognised to make liable the trsutee then
the defandent must meet the following criteria:
 The nature of laibility
 The necessity of trust property
 The fiducairy laibilty in relation to secret profit.
Generally, a person who breach the fiduciary duty mostly happens in the case of bribery and
mispaproperiation of funds in trust property. Dishonest assistance arise accessory liabilty on the
defendant which makes third party laible due to unauthorised interferenceinto right of the
claimant. However, mental element plays key role in ascertainig the dishonest assiatnce of a
person. The equity law provides three essential element to meet the conduct of disonest
assistance including causation, ommission and mental conduct of the person. It helps to
harmoise the various forms of accesory liability and infirngement of equitable rights due to an
act of third party acts.
BIBLIOGRAPHY
Li, Y., 2022. The regulation of equity crowdfunding in the US: remaining concerns and lessons
from the UK. Journal of Corporate Law Studies, pp.1-34.
Gelgel, I., 2021. LOCAL LAW WISDOM IN ATTACHING RADICALISM IN THE NAME
OF RELIGION. Journal Equity of Law and Governance, 1(2), pp.95-100.
Tappenden, S., 2009. Commercial Equity: The Quistclose Trust and Asset Recovery. Journal of
Politics and Law, 2(3).
Liu, G., 2016. Trust without Equity: the Commercial Nature of Chinese Trust Law. Trusts
& Trustees, 22(10), pp.1118-1133.
12 Moorcraf, S., Desai, S., Mohite, U., Teixeira Mendes, L., Begum, R., Rana, I., Collins,
C. and Chau, I., 2018. Optimising diagnostic biopsies for molecular analysis in oesophagogastric
cancer. Annals of Gastroenterology and the Digestive System, 1(2).
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Virginia Law Review, 1945. Equity. Attachment, Sequestration, and Ne Exeat in Equity Suit.
Nature of Relief under Sherman Anti-Trust Act and Wilson Tariff Act. Certiorari as
Available for Review of Order Made without Judicial Power. 31(4), p.946.
Ewald, J., Potts, G. and Aebischer, N., 2012. Restoration of a wild grey partridge shoot: a major
development in the Sussex study, UK. Animal Biodiversity and Conservation, 35(2),
pp.363-369.
Dietrich, J., 2005. Attempting Fusion: Professor Worthington's ‘Equity’ and its Integration with
the Common Law. Common Law World Review, 34(1), pp.62-84.
Giliker, P., 2018. Comparing UK and Irish law. Common Law World Review, 47(1), pp.3-6.
Moorcraf, S., Desai, S., Mohite, U., Teixeira Mendes, L., Begum, R., Rana, I., Collins, C. and
Chau, I., 2018. Optimising diagnostic biopsies for molecular analysis in
oesophagogastric cancer. Annals of Gastroenterology and the Digestive System, 1(2).
MacNeil, I., 2007. Private equity: the UK regulatory response. Capital Markets Law Journal,
3(1), pp.18-31.
MacNeil, I., 2007. Private equity: the UK regulatory response. Capital Markets Law Journal,
3(1), pp.18-31.
CASE LAWS
Paul v. Constance[1977] 1 All ER 195
Lambe v. Eames (1871) 6 Ch App 597
Comiskey v. Bowring Handbur(1905) AC 84 HL
Webb v. Earl of Shaftesbury(1802) 7 para,480
Vyse v. Foster (1874) L.R. 7 H.L. 318[1726] EWHC Ch J76
Keech v Sandford(1726] EWHC Ch J76
Royal Brunei Airlines v Tan [1995] UKPC 4
Byers & Ors v Samba Financial Group [1995] 1 WLR 978)
Macmillan Inc v Bishopsgate Investment Trust plc[1995] 1 WLR 978)
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