Questions

3 write short notes on any four of the following demonstrating their continued relevance to
the study of trusts in Uganda

4 “the law of trusts has a paradox at its heart on one hand we are told that trust is based on
conscience, while on the other hand there are large number of technical rules underpinning
the law on express trusts which make the trust to appear more like a species of contract
than anything” discuss

6 write short notes

7write short notes on any six equitable maxims

8equitable remedies are strict and of limited flexibility. Critically evaluate this statement in
relation to;

NO.1

A trust has been defined as a relationship which is recognized by equity. It arises where
property is vested in a person or persons known as trustees which those trustees are under a
duty to hold for the benefit of other persons known as cestvis que trust or beneficiaries . The
interests of the beneficiaries are normally described in the instrument creating the trust.

Brief facts

James Mbwatekamwa is a resident of Bukoto Street. He has property in Kampala. He also has
income from the two UBER cars... James Mbwatekamwa appoints his wife as the trustees. And
that the wife should appoint at anytime any of her children to benefit under the trust.

James Mbwatekamwa had to pit into consideration the essentials of making a valid trust and
these are as discussed below.

In the case of Knight V Knight is was states that in order for a trust to be validity created three
conditions are necessary the words employed must be so used that taken as a whole they ought
to be construed as imperative , that is the words must be certain . The subject matter of the trust
be certain

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The objects of persons intended to be benefited must also be certain. The three requirements are
usually described as the three certainties of trust. It’s suggested that apart from these requirement
a trustee is also necessary for the execution of a trust.

Certainty of words.

As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. Consequently an intention to create a trust may clearly be gathered from
the expression which the settled has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words of recommendation or expression
of belief can give rise to abiding trust examples include desire , wish, request, have full
assurance and confident hope. The courts have not been consistent in holding that such words do
not create a biding trust. In Lambe V Eames, it was held that since the was absolutely entitled the
GIFT WAS VALID. In Re Hamilton hopes L.S indicated that the court will not allow a precatory
trust to be raised unless after considering all the words used. It comes to the conclusion that it
was attention of the testator to create a trust.

In Re Adams and Kensingdom V Vesty, it was held that the wife took absolutely and these
were no trust in factors of the children.

More so in the case of Mussorie Bank V Raynor, the privy consul held that where a testator
left all his property to his widow feeling confident that she will act justly to or children in
dividing the same when no longer required by her there was no trust for the children

However a trust can be inferred from the use of precatory words if on paper construction of the
language of the will, this is the intention of the testator. In the case of Comskey V Bowring
Banbury. It was held by a majority in English court house of lords that there was intention in the
testator to make a gift over the whole property at how death to such of her nieces as school
survives her. Shared according to the wife’s will and other wise equally.

Certainty of subject matter

The subject matter of the trust could take many forms. It covered be interest in land in profession
or reversion chattels money and choses in action. Re Diggles, it was indicated that un certainty
of subject matter will adversely affect the creation of a trust.

Also in Curtis V Rippon, where the testator appointed his wife guardian of his children and then
left his property to her.

It was held that the wife took property absolutely since no specific part of it was apportioned to
the children the church or the poor.

In Bardwell V Bardwell, there was a direction, to remember certain persons; it was held that
there was no valid trust.

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  The cases above may be contrasted with situations where the subject matter of
the gifts is to be decided by the direction of the trustee. In Re Golay’s will trust, there
was a direction to the executors to allow a beneficiary to enjoy one of my flats during
her life time and to receive a reasonable income from my other property . It was held
that there was a valid trust because the executors could select the flat the words
reasonable were not intended to allow the trustees to make a subjective decision.

Certainty of objects

This covers two aspects that the receipts or purposes of the gift should be identifiable with
certainty and that the interest they take should discoverable. IN Re Vandevells Trust, it was
indicated that in case of future interest, the beneficiaries must be ascertainable within the period
of perpetuity. The test to be used in determining curtaining of ascertainment depends on the
nature of the trust with a fixed trust; the trust is void unless it’s possible to ascertain each and
every beneficiary. A fixed trust is understood to be one when the share or interest of the
beneficiaries is specified in the instrument crediting the trust. It was indicated that in the case of
future interest the beneficiaries must be ascertainable within the period of perpetuity

The test to be used in determining containing of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it’s possible to ascertain each and every beneficiary.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not member of that class.

A discretionary trust is one which trustees hold the trust for such members of a class of
beneficiaries as they shall in their absolute discretion determine.

In Re Gulbankins settlements’ consequently it has been suggested that a combination of the test
for powers and discretionary trusts has destroyed what used to be the most important reason
for distinguishing between trust and power. In Re Wood, it was held that the beneficiary in this
instance was uncertain.

A trust in order to be valid should be beneficiary who can enforce it where there’s no such
beneficiary except in cases of charitable trusts the trust will be regarded as unenforceable and
thus bind.

In Re Astor’s settlement, it was held that the trust failed for lack of ascertainable beneficiary.

In the case of Re Shaw, it was held that the trust failed due to lack of someone to enforce it

Therefore when the words of trust are not certain there is no creation of trust consequently the
donee of the gift takes beneficially likewise the donee will take beneficially where the trust fails.
For un certainty of property the reason being that although an intention to create a trust may be
avidact there no properly to which it can be attached.

Therefore a trust can created inter vivos or by will.

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There are two types of inter vivos that is the softer may transfer the property to the trustees and
declare that those trustees will hold the property on trust for Steve . The settler may declare
himself as trustees holding the property on trust for others.

NO. 2.

Brief facts

Mama Brown is a successful trade in Kikuubo he has been bed ridden for 2 months.

John has been taking care of her while she was bed ridden.

In anticipation of death coming, she decides to give John her brand new Mercedes Benz as a gift.

Mamma Brown also is afraid she is in her last days any may not recover.

Mama Brown secretly decides to create a trust over her plot of land in Kireka her anticipated
damage sin Civil suit No 009 of 2004 and Shs200, 000,000 held in an account in Barclays
Bank.

Issues

 Whether the gift of Mercedes Benz given to John was valid.

 Whether Mama Brown a secret trust.
 Law applicable
 Succession Act
 Case law.
 Resolutions

Issue 1.

Whether gifts made in contemplation of death. This is also known as deathbed gift. It is a gift
made inter vivos but which takes effect on death. There is an express or implied condition that
the gift will not become absolute until the donor dies.

Donatio Mortis causa is distinguished from Normal inter vivos where the title immediately
passes to the transferred. And a testamentary gift which takes effect under the provisions of
properly executed will.

If the donor intends the donee to keep property which would belong to the donor, if the done
dies, equity would perfect the donee’s title although she/he may be volunteers. Hence the
donation Mortis causa cannot be revoked by will for it is deemed to precede the will.

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The essential of a valid Donatio mortis causa was spelt out in the case of Cain V Moon (1896) 2
QB 283 lord Russell set out the conditions required for the donation mortis cause.

The gift must have been in contemplation of death though not necessarily in expectation of
death. In the case of Wilkes V Allington (1931) 2 Ch 104. Here the donor was suffering from an
incurable diseases cancer, He made a gift knowing that he did not have long to live he died two
months later of pneumonia after riding on an open top boss in the rain. It was held that the gift
was valid not withstanding that death does not occur in the manner contemplated is irrelevant.

Also in Agnew V Belfast Banking Co. (1896) where a gift was make upon embarking on a
dangerous mission. The gift was held to be valid.

The subject of the gift must have been delivered to the donee. In Re Weston (1902) 1 ch 680, It
was held that a dying could be shown to have handled over to his financé his post office saving
book his action was sufficient.

In Re Rilingstone where a locked box was given but the key was retained it was held not to be a
donation mortis causa.

The property must be capable of passing by way of donation mortis causa generally all person
properly are capable of Donatio Mortis causa e.g. Chattels, saving certificates etc. However
certain classes of property e.g. cheques and promissory notes including donor’s cheques cannot
pass by donation mortis causa because canner constitute property but an order to the bank. If
the donor dies, automatically. It is cancelled as in Re Beaumont (1902) 1 Ch.

Issue 2. Secret trust

A secret trust arises when a testator wishes for whether reason to transfer the benefit of the
property to a person without specifying that person has a legatee under his will. In these
circumstance equity will enforce trust in favors that intended beneficiary inspire of the fact that
it breaches the success Act equity primary concern in developing the doctrine of secret trust was
to prevent the trustee from committing fraud and attempting to keep the property under the
clandestine arrangement for himself.

Secret trust in English law can be defined as an agreement between testators a trustee to come
into force after death that aims to benefit a person without having been written in a formal will.
Secret trust cannot arise inter vivos. They are usually testamentary trusts. The property is given
to the trustees in the will and there be expected to pass it onto the real beneficiary for these to be
valid for a person seeking trust must move that

The testator intended to form a trust

That this information was communicated to the trustee

That the trustee accepted his office

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Secret trust is classifieds into two that is fully secret and half secret trust.

Fully secret trust. The will of a testator will not mention what of a trust. However the tester will
have declared that a legatee who under the will takes absolutely is in that a trustee and is to hold
on trust to a third person. Neither the existence nor the terms of the trust are disclosed in the will.
However the existence the terms of the will must be communicated prior to the testator’s death
.Blackwell V Blackwell and Re Boyles. The intended trustees must accept the office of
trusteeship and acquiesced to the terms of the trust. In Re Boyes, the high court held that the
terms of the trust were not communicated during the testator’s lifetime.

Half secret trust, in the case of a half secret trust, the face of the will names the trustees as the
trustee but does not give the trusting terms including the beneficiary. The trust property is left
on trust in the will only the identity of the beneficiaries, remains hidden. It is therefore clear that
the legatee is not entitled to the trust property absolutely although it is not clear for whom he
holds on trust.

The most important difference between a full and heal secret trust lies in communication of the
trust, the terms of a half secret trust must be communicated to the trustee and accepted by
him/her before the execution of the will whereas in the case of a fully secret trust the terms may
be communicated after the execution of the will as long as this is before the testators death.

For a valid half secret trust the existence and terms of the trust must be communicated to the
trustees before the creation of the will. The intended trustee must have accepted office and
acquiesced to the terms of the trust. In the case of Re young (1951) ch 344.

A Donatio mortis causa is a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor. Therefore, Mama Brown anticipated her death gave a gift of
Mercedes Benz to john hence the gift was valid.

A secret trust is an arrangement between a testator and a trustee to make to come into force
after the death that aims to benefit a person without being written in a formal will. Hence Mama
Brown decides to create a trust over her plot of land in Kireka and shs 200,000,000 to John and
Amin who were trustees to execute the trust on behalf of the beneficiaries. The trust was
therefore valid. However Ramla was not entitled to the other property that was outside the will.

No.3.

A trust this is a relationship which is recognized by equity .It arises where property is vested
in a person or persons known as trustees which those trustees are under a duty to hold for the
benefit of other persons knows as cest tuis que or beneficiaries.

American Restatement (third) of trust Article 64; the trust is relationship with respect to
property arising as a result of a manifestation of intention to create that relationship

Pilcher V Rawlins (1972) LR 7 ch App2

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Facts

A fathers settled a real estate on trust for his children one of the trustees, was the uncle of the
beneficiaries. The trustees advanced money to R on the security of a mortgage (the mortgage
deed explained the existence of the trust. Two of the trustees died leaving P as the sole trustee. P
and R devised a fraud whereby the property would be mortgaged to S and L who has no notice of
the trustees or the existence of the beneficiaries’ equitable interest. The fraud was revealed and
the beneficiaries sought a declaration that S and L took a legal title subject to their equitable
proprietary rights in the property and an order that it to be reconvened to the trust

Issue

This case called for a consideration of how a competing interest of innocent parties ought to be
balanced where it was not possible to give the effect of one without underlay prejudicing and
equally blameless partly. Moreover the count was required to address the extent of the defence
available for bonafide purchaser for value without notice of any pre- existing equitable interest.

Held

The court found in favour of S and L whom thus took their true charge S and L had acted
diligently and reasonably believed they had taken good title they, had neither knowledge nor
means of knowledge “ of the trust ( at 274 per mellish lJ) where the equities were equal as was
the case hove the law must prevail.

The rule in strong V Bind (1874) LR 18 ER 315. in this rule where a person makes an imperfect
gift to X and subsequently appoints X as his executor, upon the death of the donor, the property
vests fully in X . The equity of the beneficiary under the will is displaced by X‘s prior equity.
Consequently X may retain the property irrespective of the fact that until the donor’s
death X’s title was imperfect. The rule has been extended to apply to a donee who has
taken out letters of administrative to the estate of the donor and the personal representatives of a
person who has covenanted in favour of volunteers and had subsequently been appointed a
trustees of the settlement of in favor of the volunteer.

The rule to apply the gift must have been perfect in every way except for legal formalities
required for proper transfer of title. In the case of Re Freeland (1952) ch 110 a testatrix and
claimed that the perfect gift in consequence been thereby perfected court refused to apply the
rule in strong V Bird there having been no intention to make the plaintiff the owner of the car
immediately.

Therefore anyone relying on the rule must show a continuing intention on the plant of the donor
up to the time of his death. As in the case of Re Wale (1956) WLR 1346

Beswick V Beswick (1968) Ac 58

Facts

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Old Peter Beswick was a coal merchant in Eceles Lancashire he had no business premises. All he
had was a lorry scales and weights. He used to take the lorry to the yard for the national coal
board where he begged coal and took it would his customer in the neighborhood for his nephew,
John Joseph Beswick who helped him in his business in march 1962, Old Peter Beswick and
his wife were both at 70years he had his leg imputed and was not in good health the nephew
was anxious to get hold of the business before the man died . He went to the solicitor who drew
up an agreement for them.

The agreement was that Peter assigns his business to his nephew in consideration of the nephew
employing him for the rest of his life and paying a weekly annuity to Mrs. Beswick since the
latter term was for the benefit of someone not a party to the contract.

Court of Appeal lord Denning held that Mrs. Beswick was entitled to claim in her capacity as a
third party intended of to benefit from the contract. He said where a contract is made for the
benefit of a third person who has a legitimate interest to enforce it; it can be enforced by the third
person.

(d) Re Gestetners settlement (1953) 1 ALL Er 1150

In this case, this is or not test for certainty of oblast for these with power of appointment was
born since the power - holder has no duty to distribute property all that matter is misfeasance. If
the appoints property at all he must be sure to appoint only to those within the class of objects.
Does not need complete list of objects. Merely needs to know with certainty whether particular
person is within class or not.

In Gestetner, court held that a power of appointment which is neither nor special but which is in
respect of an indefinite trough limited class is valid. It is to be remembered that. In re Gestetner
dealt with a settlement created by deed and that as the rules of testamentary disposition are in
some respect sticker such powers way not be valid if created by will .

Te Re Gestetner cases brings about powers of appointment among a class whose membership is
uncertain through limited.

Here a settler may vest property is person intending that he should hold it as trustee for certain
third parties with a power to appoint among them. As the settler intends that at least some of
these persons must benefit from the trust if the trustee fails to exercise this power to appoint
which is not are discretionary power of appoint but which is couple with a trust the count will
enforce the trust by equal appointment among the third parties. But such beneficiaries must be
chosen is clearly destrived consequently, it is uncertain who are the members of the lass the
trust is invalid.

Cain V Moon (1896) 2 QB 283

The donation mortis causa exception is manifested in the case of Cain V Moon Donatio Mortis
cause is a gift made during the life of the donor which is conditional to the donor’s
contemplation of death” and takes effect when the later dies.

8
Therefore according to Lord Russell CS in Cain V Moori in order to establish for a valid
donation mortis cause is that

a) The gift must have been made in contemplation of death.

b) The gift must have conditional on death
c) The donor must have parted with dominion over the subject matter of the gift.

A gift made in contemplation with death means that donor believes he is going to die in the
near future due to some illness or other perilous factor in that, it seems that although Henry
contemplated death at the time of his gift to loose , he did not due of the though cause.

No.4

A trust is defined as a relationship which is recognized by equity it arises where the property
vested in a person or persons known as trustees which where trustees are under a duty to hold
for the benefit of other persons known’s as cest tui que trust or beneficiaries .

The interest of the beneficiaries is normally described in the instrument creating the trust.
However these may be implied or imposed by law. It is also notable that the beneficiary interest
is propriety in the sense that it can be bought or sold given away or disposes of by will. It ceases
to exist where the legal estate in the property passes to a bonafide purchase from value of the
legal estate without notice of the trust. His significant that the subject matter of the trust must be
some form of property, normally this takes the form of legal ownership of land or of invested
funds.

Trusts are classified into many categories include; express trust, Implies trust, resulting trusts
constructive trusts statutory trusts public and private trusts.

Formalities for creation of trust.

(i) Registration of titles Act.

A settler may create a trust by manifesting an intention to create it, in Jones V lock) 1865)
LR I ch app. 25. No formalities are required for creating of an inter vivos trust of
personality. However evidence in writing is requires for the creation of a trust in land. Thus
by section 92 of the registration of titles Act cap 230 any declaration of trust respecting land
must be evidenced by a memorandum in writing signed by the creating the trust.

2. by will

(a) Secret trusts

Under section 50 of the succession Act Cap 162, all trust created by testamentary
disposition must be executed and attested in accordance with the formalities there in
prescribed in Keeton and Sheridan. These are (I) all that the will shall be in writing (ii) that
it shall be signed at the foot or end there of by the testator or some other person in the

9
 presence and by his direction (iii) that the signature be acknowledged by at least two
witnesses is writing in the presence of the testator.

The issue arises as to the effect of dispositions which do not comply with the formalities.
Although the requirement of formalities was intended to prevent fraud what would happen if
the intended trustee hides behind the provision of the statutes. This could happen in two
instances

(a) Its first when the trustee induces the transfer of land to himself by means of an
oral promise to hold on trust for the third party.
(b) Where the legate or decisee induce the testate to make a disposition in his favour
by will relying on an oral promises to hold the gift in trust for a third party. The general
view is that equity will not permit a statute to be used as an instrument of fans.

It’s a doctrine that is responsible for development of secret trusts as one of the inevitable
principles. These principles are traceable from the second half of the 17 th century in England
as seen in the case of Cook V Brooking 2 even 50 (19688) where a testator bequeathed
pounds 1500 to Simon and Joseph Snow to be disposed by them on secret trust which he
communicated to Simon. After her death Simon revealed the secret trust to Joseph. Are
object of trust war that if the testator’s daughter slaughter died in the lifetime of her
husband, the money should go to the children or another daughter as the 1 st daughter should
direct. The 1st daughter and children of the 1st daughter claims as the beneficiaries. The
court held that since the testator has declared the term of the trust to Simon in his life
time there was goes secret trust although the actual method of distribution among the
beneficiaries was uncertain.

A secret trust can be classified as express or constructive that if the secret trust is express then
in so far as it relates to land it trust be evidenced in writing in order to comply with the
registration in Titles Act. I fits contrastive then the formal requirements are dispenses with even
as regard land. Professor Marshal argues that the fully secret trust is an example of the
constructive trust.

The requirement of communication of the trust to the trustee’s crucial to the existence of secret
trust the trust should be communicated before the testator’s death either orally or in writing.

(b) Half secret trusts

These arise where under a will property is given expressly trust but without stating what the trust
is. It’s suggest Han bury and Maudley that there would been possibility of fraud by the legatee
in view of the contents of will and the express declaration of trust such as declaration
destroys the possibility of personal gain on the part of the legate in Moss V Copper it was
suggested that mentioned of the existence or a trust in a will prevented the operation of
doctrine of secret trust .

The view in Moss V Cooper is that it’s immaterial whether communication occurred before or
after the making of the will.

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One hand of that the trust is based on conscience is shown above where as on the other hand
large number of technical rules under pining law on express trust which make the trust appear
more like a species of contract than anything is as discussed below.

Express trusts

An express trust is one which has been intentionally created by the settles himself through the
manifestation of an intention create one. The most common methods of creation are by deed or
will by un sealed writing inter vivos or by words of mouth.

As defined by Wikipedia, inter vivos is a legal term referring to a transfer of gift made during
one’s lifetime as opposes to testamentary transfer under the subject of trust.

This express trust may be subdivided into excutory and executes on the one hand and completely
and incompletely constituted trusts on the other. An executed trust is one in which the settler has
indicates in appropriate technical terms what interest are to be taken by all the beneficiaries.

An executory trust is one in which the settle has indicates his trustee a scheme of settlement
but the details are to be gathered from his general expression. Distinction is of practical
significance in two respects. 1st while the language of an executes trust is strictly construed an
executory trust is liberally construes 2 dly where in an executed trust the settles makes use of
technical expression, the interpretation of which law recognizes certain rules /equity follows the
law and gives effect to such interpretation

However, in an executory trust equity attributes less importance to the use or omission of
technical words. Rather it seeks to discover eth settles true intention .Once the intention is
discovered exuty order the preparation of actual sees which gives effect to the settler intention
which is discoverable from the languages of the settlor’s instrument.

The distinction between a completely and incompletely constitutes trust is necessary in order to
distinguish a trust from avoid settlement. A trust can only be valid if the title to the property is in
the trustee and it the trusts have been validly settled.

NO.5

Definition of satisfaction in lord Chichestor v Country (1967) LR Lord Romilly defined

satisfaction as the donation of thing with the intention that it is to be taken either wholly or in
part in the extinguishment of some prior claim of the donee.

Performance

Performance defined by J Bakinga in his book of equity and trust at page 171 as closely linked to
satisfaction and in earlier cases what presently is referred to as performance was commonly
described as satisfaction by implication in British the doctrines of performance has been
curtailed by changes introduced by the law of intestate succession by the property legislation of
1925.

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Similarities

Satisfaction and performance both doctrines based on intention. Thus maxim that equity imputes
on intent to fulfill on obligation there courts tend to rely more on the presumption as to the
party’s intentions.

The doctrine of satisfaction performance is bad on the maxim” equity imputes an intention to
fulfill an obligation the eskers of the doctrine of perform is that where x is bound in equity to do
something for Y but towards the undone equity ill in certain circumstance regard something
else which X has done performance of that obligation. Equity regards what has been done as
having been done in the performance of obligation. This was illustrated in case of Sow den V
Sow den (1785) 1 Esq. 165166 per Kenyan Mr. however, the must be some positive acts on
which equity bosses the presumption

Differences

The doctrine of performance is distinguished from the satisfaction is firstly connected with
covenants in a marriage settlement to lay out many on the purchase of land to be held on the
trusts of the settlements. This is illustrated by leading case on the doctrine lord Lechmer V
Lady Lechmer (1722) 3 PWM 211 25 ER 673 (1735) case emp Talb 80 in these case upon the
marriage of lord and lady Lechmer conversed to lay out within a year after his marriage and with
consent to the trustees court held that estates already owned by lord Lechmer at the time of the
marriages did not also constitution performance of the covenant to purchases after marriages.

The doctrine of performance is also distinguished from satisfaction. satisfaction is against double
portions with performance is not satisfaction it is assumed that in the absence of special
circumstance must parent would wish to show our family capital in equal show among their
children. This however is not obligatory however equal division could occur unintentionally
where after a partner has made will for equal division he/she incurs on obligation to pay a
portion or makes a distribution to sons of the children during his or her life time . In such a case
the maxim “ equity learns against double portions” applies and provisions for the satisfaction
of portion debt by the legacy where the distribution is interviews , it provided for ad emption of
the legacy by the portion . Some the rule against double portion is called satisfaction as portion
debts by legacies

Satisfaction is differed from the performance by satisfaction of portion debts by portions. The
rules which apply to the satisfaction of portion debts by legacy… equally apply to the
satisfaction of portion debts by portion which is not the case to performance.

The satisfaction is differ from the performance in the adoption of loaners by portion
satisfaction in equitable presumption against double portion may dump a legacy essentially, the
rule is that a legacy by way of portion is derived or ceases to take effect if other making the
will, the legatine actually receives apportion or obtain an a forcible right to receives one for
instance by mean of a cons mentor agreement. Adoption only applies to portions between a
parent and child or some in loco parents extrinsic evidence may be admitted for this purpose.
The presumption in favor of adoption is stronger than the presumption in favour of satisfaction.

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The presumption in favour of satisfaction of ordinary debts by legacies may be excluded by
small differences between the two white difference must be substantial in order to exclude the
presumption of satisfaction of portion debts by legacies. However with the presumption in favor
of ad emption, this can only be resulted by considerable difference.

Both satisfaction and performance has convent to loans money or instatement portion convent.
The doctrine of performance and satisfaction an associative with performance satisfaction
through infancy. Thus if X convents that he will leave, by his or her will part of his or her
personal estate to Y or that his or her executors shall pay a sum of money to Y and X dies
intestate , under his or her intestacy Y becomes entitled to apportion of X’s personal estate . It
should be stressed that Y cannot claim both the agreed sum and the intestate portion. The
intestate portion is derived to be performance or satisfaction of the covenant.

NO.6

Equity under Bakibinga defining it as the ordinary or population meaning of equity to refers to
right doing good faith honest and ethical dealings in transaction or relationship between
individuals.

(a) In Uganda Revenue Authority V Stephen Mabosi.

In applying Article 126 (2) (e) of the constitution i.e. supreme court of Uganda under Ugandan
Revenue authority v Stephen Mabosi (1995) it was held that a memorandum of appeal
which was filed out of time would not be rejected because the appellant could file before
obtaining official records of proceedings from the high court which was released after the 60
days period required for filing the memorandum of appeal had elapsed – therefore equity looks
at subsistence not form.

(b) The Earl of oxfords case (1615) a foundational is the case for the common law
world that held equity (equitable principle) takes precedence over the common law. The
Attorney general acting on authority said; I uphold the use of the common injunction
issued by this lord chancellor and concluded that in the event of any conflict between
the jurisdictions of common law and equity, equity would prevail common law rules
must lead to an unjust or unconscionable outcomes. Otherwise the lord chancellor has
no jurisdiction to in…… but in the Earl of oxfords case demonstrated how fragile and
susptible equity was to political upheaval during the 17th century the slop he sent one
fatuloge ( who was S and P to have given the land to the defendant) to him to remain
the slop. He also report him to owe of llesha obo domolararm, who spoke to the
defendant and laton asked me of his chief’s , chief Obala and others tried to persuade
the plaintiff to allow the defendant to stay on land.

Holding

The learned judge of appeal in the high court, it would appear agreed with the findings of the
president of the llesha Grade 1 customary court in regard to the traditional history of the land

13
and that it belonged to the plaintiffs ancestral but disagreed with his statement of the law on
the equitable remedy of laches.

(c) In Walsh Vs Lonsdale (1882) 21 ch D.9

Mr. Lonsdale agreed to lease Mr. Walsh amyl for seven years. Rent varied with number of looms
being operated, But there was a minimum deed rent paid yearly in granted by deed ( as was
required for lease over three years) yet Mr. Walsh moved in and began paying rent quarterly.
Mr. Lonsdale demanded payment in Advance and levied distress for nonpayment of rent. If the
terms of the agreement were enforceable then Mr. Lonsdale had acted lawfully.

The court of appeal held that as it now had jurisdiction to apply equitable principle, it would
regard that as done which ought to be done and also lease had been effective in absence of the
formality

(d) Americana Egnamid Vs Ethicon

The appellant was a company that held a patent for artificial absorbable surgical futures. The
respondents was a company that intended t launch a future to the British Market which the
appellant claimed was in Breach of its patent at the first instance the Appellant was granted an
injunction preventing the respondents use of the type of future at issue until the trial of the
patent infringement.

Issue

The issue on these facts was primarily the extent of any substantive claim necessary for the
grant of an interim injunction. The house of lord however set out detailed guidelines with the
regards to how the court should deal with the grant of interim injunction in general.

Holding

It was held that (a) it was not the court’s role to consider conflicting evidence in respect of an
item application. This was a matter for trial (b) all that was necessary at this stage was that the
claimant should show that there was real issue to be tried. The court should consider whether
damages were an adequate remedy for claimant if an injunction was not granted. If so an
injunction would not be available the court should consider maintaining status quo.

(e) Fabgemin Vs Aluko (1969) 1 All N LR 233.

Facts

This is appeal from the judgment of high court of Western Nigeria held at Oshabgo , the
plaintiff claims before that court was for a declaration of title to the piece of land at B64
Okesha strict, llesha the president in a considered judgment ,entered judgment for the plaintiff in
terms of the writ & cost.

14
The plaintiff’s evidence which was accepted by the president is briefly as follows the land in
dispute originally belonged to one yesiri, plaintiffs ancestor his (plaintiff) take, omirin, but at the
back of it. Plaintiff succeeded to the land. He later went to place called Kishi and on his return he
two and a newly but …on the land in front of his ancestor house on finding out that the
defendant built

NO. 7

Underlying the applicable of equity are certain principles which guide the courts. These
principles or maxims not only help to explain the essence of equity but indicate situations in
which equitable rules would or would not be applied as well as the relationship between law and
equity.

(i) Equity will not suffer a wrong to be without a remedy; the maxim equity will
not suffer a wrong to be without a remedy underlies the equitable jurisdiction. As where
the common law did not recognize or enforce a right or failed to provide remedy equity
estopped in or intervened to provide a suitable remedy. This maxim is illustrated by the
exclusive con current and auxiliary jurisdiction which as was aimed at filling in gaps
which existed in the common law.
Its notable thought that three may be situation where equity cannot provide a remedy
for instance unfair trade competition or in contracts requiring constant supervision or
those involving personal services.
(ii) Equity follows the law
This maxim means that equity supplements the law or is based on the law for maple
under a trust although the beneficiaries are regarded as the equitable owners , equity
doesn’t deny the legal title of the trustee judge principle of equity . Secondary equity
recognized the common law doctrine of estates. Thirdly equitable interest devolves or
passes on intestacy in the same way as the legal estate. The fourth this equity follows
the common law rules on joint tenancy and lastly equity follows the common law
rules affecting mistake. It only supplements them by providing equitable remedies
(iii) He/she who comes to equity must come with clean hands; that any one praying
for an equitable relief over a particular matter should that she/he has behaved honestly
and fairly in regard to that matter. This maxim is distinguishable from the maxim that
she/he who seeks equity must do equity. The present maxim refers to conduct before the
suit for relief while the previous maxim deals with future conduct of the plaintiff.
The examples to which illustrates this maxim
First if at tenant has lost a lease because if nonpayment of rent she/he will not be
able to get an equitable relief the is she/he has previously been using premises for
immoral purposes secondly, the case of Coats worth V Johnson (1886) 54L.T 520.
It was held that a tenant with an equitable interest under a lease agreement could not
get a decree of specific performance of the legal lease because he was in breach of the
covenants under lease.

(iv) She/he who seeks equity must do equity

15
 Under this month he who seeks equity must do equity essentially person seeking and
equitable relief or remedy much himself or herself act fairly. This maxim can be
illustrated through the following instances. Doctrine of election is a person under seed
goes his property to another person in same documents goes X’s property to Y a will
not be able to claim the gift until he her allowed the gift until he has allowed the gift
to Y to take effect
(a) Notice of redeem mortgage
(b) Consolidation of mortgages
(c) Illegal loans
(v) Delay defeats equity /doctrine of laches
The essence of the doctrine of laches is that an equitable relief will not be given in the
applicant has unduly delayed in bring the action.
The doctrine does not apply to situations which are governess by the statutes of
limitation. For instance the Limitation Act cap 80 prescribes periods within which
suits or actions should be institutes in court. Six years is prescribed for actions bases
on contract or tort other than these where the claim relaters to personal injuries in
which case the action must be brought within three years of the state on which the
cause of action while those related to recovery of land or claim to the personal
estate of a decease or under a mortgage must be instituted within twelve years of the
state on which the a claim accrues . Where fraud is alleged, there is no limitation
period. This doctrine of laches is illustrated in Fagbeni V Aluko (1968) ALL N.L.R
233. It was stated that in considering the doctrine of laches the court acts in three
factors

(vi) Equity looks at the substance rather than the form.

We have seen that before the decent of equity, the common law attached a lot of
importance to the use of correct forms or procedures in relation to an act. Failure to
comply with such forms invalidated actions whether these were suits or agreement.
Equity developed with the aim of achieving justice rather than sticking strictly to
forms. This approach to technicalities has constructional backing which requires
courts to administer justice without undue regard to technicalities. His intended for
examine instance where equity has intervenes to ensure that the substance siplhas
over formalities
(a) Time clauses
(b) Covenants
(c) Mortgages
(d) Instrument of repossession
(e) Penalties and forfeitures

NO.8

Equitable remedies are strict and of united flexibility. Critically evaluate this statement in
relation to

(a) Specific performance

16
 A decree of specific performance is an order of the court compelling the defendant
personally to do what he/she promised to do. Specific performance is an equitable
remedy and is governed by three main principles. Thus similar to an injunction the
remedy of specific performance will only be ordered
(i) Where common law remedies are inadequate
(ii) If the court is satisfied that it will be observed in line with the maxim that equity
does not in vain

Discretionary nature of remedy and principles equity will not Act in vain

The discretion to order specific performance by a court is exercised in accordance with settled
principles it is not arbitrary the remedy will also only be ordered where the defendant can
comply with the order Thus in Jones V Lipmann the defendant concluded a binding contract to
sell some land to the defendant changed his mind tried to avoid by selling the land to a company
acquired by himself for that purpose.

It was held that the defendant could not resist the order as he was still in opposition to complete
the contract Russell stated that the company was the creature of the vendor, a device and a
shame, a mask which he holds before his face in an attempt to avoid to cognition by the eye of
equity.

Specific performance in particular situations

The general rule is that specific performance is not granted if the plaintiff would be adequately
compensated by the common law remedy of damages.

Its intended to examine the particular instance in which may be granted bearing in mind the
principles underling such jurisdiction leased to contract of sale of personal property

(b) Recession. In a situation where the contract is voidable but not the contract
remains valid but may be rescinded.

Rescission arises where a party to the contract expresses by word of mouth in an unequivocal
manner that he or she is no longer willing or that she /he refuses to be bound by the contract this
puts an end to the contract.

In other words restituo in integrum must be possible

It is significant that rescission is not a judicial remedy but an act of the party entitled to rescind
the parties is restored to the status quo before the contract in this case the court normally decides.

(i) Whether right to rescind was justified and

(ii) Whether the rescission relied upon is effective.

Grounds for rescission

17
The remedy of rescission may be based, namely mistake misrepresentation constructive fraud
and non disclosure.

(a) Common of mutual mistake

Rescission can be granted where two parties to a contract are under a common or mutual mistake
in Sole V Butcher it was held that a contract is liable to be sent aside if the parties were under a
common misrepresentation.

(iii) Unilateral mistake

It may also be granted where one part to Cundy V Lindsay 1878. The contract is mistaken as to
be person she/ he contracted. It was held that as the claimant did not intend to sell
handkerchiefs to Blenkarm but to Blakiron and Co. There was no consent of the claimant to
the contract with the former.

According as no contract was concluded between the claimant and Blenkarm so as to constitute a
valid transfer of title which the latter could rightful convey to the defendant. Hence the defendant
being possession without a good title over such goods, were held liable for conversion

Misrepresentation is of two types i.e. innocent misrepresentation and fraudulent

misrepresentation. A contract which is induced by misrepresentation made either fraudulently or
innocently can be rescinded. In Derry v Peek.

(c) Rectification

Is a remedy whereby a court order a change in a written document to reflect what if ought to
have said in the first place? It is an equitable remedy which means the circumstances where it
can be applied are limited in the United States this remedy is commonly referred to as
reformation.

In English law the rule was summarized in Fowler V Fowler (1859)

Only after the court has been satisfied by evidence which leaves no fair and reasonable doubt
that the deed impeached does not embody the final intention of the parties. This evidence must
makes it clear that the alleged intention to which the plaintiff asks that the deed be made to
conform continued concurrently in the minds of all the parties down to the time of its execution
and the plaintiff must success in showing also the precise form in which the instrument will
express this intention.

Constructive fraud

It consists of a variety of unconscientiously conduct which if made use of induces a party to

enter into transaction may be a ground for rescinding a transaction.

18
Examples

Include influences refers to part begins influenced into transactions which do not want to enter
into. As in Johnson v Maja

(d) Mareva and Anton pillar injunction

An Anton pillar injunction grants the right to search a suspects premises and seize evidence
without prior notice while a Mareva injunction freezes their assets neither is granted lightly
and it is vital to have the supporting information in place and properly documents before
applying to the court these are two of the most significant civil remedies available in case where
there is wrong doing that has caused financials losses. An Anton pillar order grants the right to
search a suspect premise and seize evidence without prior notice whole a Mareva injunction
freezes their assets.

Qtn 1

BRIEF FACTS

TUMUTENDEREZA who was a prominent member of the church of Resurrection,, Bugolobi

church of Uganda until his passing on last year was a very committed member of the church. He
got married to KISAKYE 70 years ago and all their 7 children were christened and confirmed in
the same church. The couple also served as head of laity and chief usher respectively.

In his Will TUMUTENDEREZE wrote as follows;

To my dear KISAKYE I loved you dearly until death did us part. I leave my Mutungu estate to
her to use as she will decide for the benefit of herself during her life time and the interest of the
children.

TUMUTENDEREZE further stated on the will;

That knowing very well that am a committed Christian which KISAKYE is also; and given the
spiritual role that I love my church, the church of Resurrection, Bugolobi, played in my entire
existence on earth. I direct that the church, church of resurrection, be considered in respect of my
properties in Mukono and Mengo.

KISAKYE died last month before she would handle the estate of her late husband. Her relative
who are Muslim believe that the property left by her husband all belong to her as indicated on the
will. They do not believe that the children can take their sister’s share of the estate when they, as
adult of the living clan members are around. They also believe that church has no business in the
affairs of their relative’s estate.

On the other hand the parish of Bugolobi in general and the church of resturration in particular
believe that their parishioner , the late TUMUTENDEREZE intended on the will to benefit

19
them .they got the copy of the will and they are confident that they have a share in the estate of
their deceased brother in the Lord, TUMUTENDEREZE

Legal issues

1 whether or not TUMUTENDEREZE left behind a valid will.

2 whether or not KISAKYE is entitle to any share of the estate.

3 whether or not the children of the deceased are entitle to the share in the decease estate,

4 whether church is entitle to benefit from the estate of the deceased.

5 whether or not the relative of KISAKYE (Muslim) are entitle to benefit from the deceased’s
estate.

6 whether or not there is any remedy available to the parties

LAWS APPLICABLE

1 The 1995 Uganda Constitution

2 Succession Act cap. 162

3 judicature Act

4 administration of Estates Act 1925

5 case laws

RESOLUTIONS

TUMUTENDEREZE left behind a valid will the laws of will is provided for under part vii of
the succession Act1. One of the formalities for creation of trust is by will: secret trusts.

Section 50 of the Succession Act provide that all trusts created by testamentary disposition must
be executed and attested in accordance with the formalities. This is done in order to prevent
fraud.

According to issue number 2, KISAKYE is entitle to the share in the property of the deceased
(husband’s) estate as it was clearly manifested by the husband in the will. The wishes of the
1
Succession Act

20
settler ,on one of the beneficiaries KISSAAKYE amounted to life trust and she is entitle to only
generate profit from the estate to earn a living for her entire life and she cannot transfer the title
in the estate but finally the estate can settle in children after her death. Similarly this was
evidenced in the case of COOK BROOKING2.in this case the testator bequeathed $1,500 to
Simon and Joseph to be disposed of by them on a secret trust which he communicated to Simon.
After the testator’s death, Simon revealed the secret trust to Joseph. The object of the trust was
that if the testator’s daughter died in the life time of her husband, the money should go to the
children or another daughter as the first daughter would direct. The first daughter died in her
husband’s life time. The children of other daughter claimed as beneficiaries under verbal secret
trust. It was held that since the testator had declared the term of the trust to Simon in his life
time, there was a good secret trust although the actual method of distribution among the
beneficiaries were uncertain.

In respect of the third issue, the children of the deceased are entitle to benefit from the property
of the deceased’s estate as it was intended by testator. Article 34 of the 1995 Uganda
Constitution3provide for rights of children and also section 4 of the Children Act cap
59.4Since the settler had intended to benefit a woman by a life trust and after her death, the
estate will benefit the children therefore children are entitle to benefit from the estate of the
deceased.

As per issue number 4, church is entitle to benefit from the property of the estate of the deceased
because it was clearly stated in the will and the purpose of the will is to clearly express the
intention of the testator on how his property should be shared and distributed after his death. This
was exemplified in the case of LEMAGE V GOOGBAN (1865)5. Where sir JP stated that a will
is the aggregate of a man’s testamentary intentions.

According to issue number 5, KISAKYE’s relatives are not entitle to any share from the property
of the deceased estate because the will was not meant to benefit them and testator never included
their names as the beneficiaries of his estate. And in accordance with the succession Act the
testator or settler is only obliged to make a provision of his estate for the dependants among his
children below 18years and those above the age of 18 and if at all they have been dependant on
him partially or fully and relatives who are dependent on the deceased are the only which the law
mandate the testator to include in the will beside that others are on the discretion of the testator’s
wishes.

2
Cook brooking case
3
Article 34 of the 1995 constitution
4
Section 4 of Children act
5
Lesage v Goog ban

21
As per the issue number 6, remedy available to the party particularly the children is the
injunction which may either be prohibitory or mandatory. The jurisdiction to grant an injunction
in Uganda is governed by Judicature Act. Section 38(1) 6is to the effect that the High Court
shall have the power to grant an injunction to restrain any person from doing any act as may be
specified by the High Court.

In conclusion, a will is a written document that expresses the intention of the person making it on
how he or she want is property to be shared and distributed after his or her death. In Uganda the
laws relating to a will is governed by Succession Act cap 162.7 In the instant case a testator is
regarded as a settler in the law of trust and that is TUMUTENDEREZE (deceased), the
beneficiaries are Kisakye (wife), children and church.

Qtn 2 differences between trust and power of Attorney include the following as discussed below;

In trust, the trustee holds and manages the property of the settler for the benefit of other persons
called the beneficiaries while in power of Attorney it does not.

In trust, if the asset is owned by the trust, then the trustee is in charge of that asset. The trustee
can borrow, sell, encumber and invest in this asset if the trust document give them power to do
so in contrast a power of Attorney does not control anything that is down by your trust.

A trustee always takes control over the property in the estate after the death of the settler whereas
a power of attorney does not.

A power of attorney is authorized to carry out transaction over real property whereas in trust, a
trustee dose not unless otherwise.

A power of attorney may be hired for instituting claims and assist in litigation which is not the
case with the trust.

A power of ATTORNEY is entrusted with power to sign legal document and execute legal
transaction whereas a trustee is not.

In comparison, a trustee and a power of Attorney both operate on behave of another person i.e.
they don’t operate on their own.

In another development, both are no entitle to benefit from the property in question.

Qtn 3 a Trustee is a person who holds property for the benefit of another person

6
Section 38 of the judicature Act
7
Succession Act Cap 162

22
DUTIES

1. REDUCTION OF PROPERTY INTO POSSESSION

The most paramount important duty of the Trustee is to find out the trust property. Is the
direction of trust instrument in line with it and whether the trust property has been safely
invested? A trustee should know that the transfer of any property which was not passed to him in
the deed of appointment affects the trust property.

Where the trust found indicates the equitable interest, the trustee duty is to give notice
immediately to the person in whom the legal estate is vested.

Where the trust property include chattels, the trustee should make out a proper inventory

A). Time for realization

With respect to the time period within which to realize trust property, there is no absolute rule
specifying a particular time. The trustee must use his discretion in the matter. The test of the
trustee’s liability on the matter is whether he has acted (I) honestly and (ii) in the belief that he
was acting in the best interests of all the beneficiaries.

Where the trust investment depreciates, thereby jeopardizing the trust found, the trustee should
consider realizing it. Thus in Re MEDLAND8, money was lent out on security of freehold
mortgages, the proper margin been allowed however the property later depreciated so that the
margin of safety was overstepped and the trustee failed to call in the mortgage. It was held that
while there was no absolute duty of the trustee to call for mortgage at once, there was a
discretion of which they must exercise with due regards to the circumstances, including the
solvency of the mortgagor.

b) Money

A trustee or executor should never allow money to remain outstanding simple on the personal
security of the debtor. Even though the money was lent by the testator personally. This is
because the quality of the debtor may change from day to day. Consequently, if the trustee fails
to recover the debt within a reasonable time, he himself becomes the debtor surety.

A trustee should not lend money on personal security even with a guarantor .this is subject to the
exception that if a trustee is expressly authorized to lent on the personal security, he may do so.

(c). operation as Sues generis or by agent

If there exist more than one trustees of property, it should be left in the control of all the trustees
and not left in the control of one trustee.

d). Legal proceedings

8
Re Medland case

23
A trustee may institute legal proceedings in respect of the trust property.

The trustee is also entitling to the custody of all the relevant deed though the beneficiaries are
entitled to inspect them.

e). Trustee’s liability

Should the trustee in the execution of trust carry out the business on behalf of the beneficiaries,
he is personally liable to the creditor and may be made bankrupt in respect of the debt.

2. Duty to invest

A trustee is under duty to invest funds in his custody. Investment in this context refers to
employment of money in the purchase of anything from which interest or profit is expected.

A). Nature of investment

investment takes two forms; (I) giving out money on loan at a rate of interest, (ii) participating in
profit making activities such as buying shares in the companies with a going concern.

b). Statutory investment. This is where the trustee invests by the virtue of statutory provisions.
This was evidence in the case of Re Whitely

3. Duty to distribute

A trustee is under a duty to make out payments of income and capital as they become due and to
do so the person who are properly entitled. If he failed to do so this amount to breach of trust.

4. Duty to maintain equality between the beneficiaries

A trustee should not favour one beneficiary at the expense of another.

A). conversion of property and the scope of application of the Rule.

b). Apportionment.

5. Duty to provide accounts and Information

The trustee should keep account and be ready to produce them at any time to the beneficiaries
when needed.

Beneficiaries are entitled to be informed about matters affecting the trust. The trustee should put
down information on writing.

6. Fiduciary Duties such as remuneration and reimbursement.

24
B POWERS

A trustee powers are normally contained in the relevant trust instrument. In addition, certain
discretionary powers are conferred on him by statute. These powers include power of sale, power
of insure, power of maintenance and advancement.

Qtn 4. Specific performance is an order of the court which compels the defendant personally to
do what he or she promised to do. The general rule is that specific performance is no granted if
the plaintiff would be adequately compensated by the common law remedy of damages. The
courts in Uganda and in the British Common Wealth would grant remedy of specific
performance under the following circumstances;

1 contracts for sale of Land

Court normally grants the remedy of specific performance to create a legal estate in land such as
a sale of land or lease. This remedy is subject to the discretion of the court and is not granted as
right. This was exemplified in the case of HASHAM V ZENAB9 where court granted specific
performance before the date fixed for the competition for the contract for sale of land.

2. Contract for sale of personal property

Chattels, stocks and shares do not usually possess such unique character as land except, if they
are shares in the private company. Consequently most contracts for the purchase of Government
stock will not be ordered to be specifically performed, and damages are awarded instead.
However specific performance will be ordered here the chattel is unique or of specific value
because of its individuality, beauty or rarity. This was evidenced in the case of BEHNKE V
SHIPPING co10 whereby the court ordered specific performance for the sale of ship.

3 Contract to pay money

Contract to pay money are not specifically enforceable normally, however there are exceptions to
this rule. The first is where the contract to pay money to a third party so that if damages are
awarded they would be nominal. Secondly where contract is to payment of an annuity or
periodical sums. In the case of BESWICK V BESWICK11 it was held that, the widow was not a
party to the contract.

4 volunteers

Specific performance is not granted to a party to a contract under which he has not supplied
consideration. Exception is where the plaintiff is in possession of the land as a volunteer in
circumstances in which it would be unjust to deprive him or her of the legal estate.

9
Hasaham v Zenab
10
Behnke v Shipping Co
11
Beswick v Beswick

25
5 contracts requiring supervision

It is a settled law that a court will not grant specific performance where the decree will require
constant supervision by the court. In the case of Ryan v Mutual Tontine West minister
chambers Association12. Court held that, a court could not make and order of specific
performance of such an arrangement against a lessor at the request of the lessee because
supervision was impracticable and equity does not act in vein.

6 contracts for personal services

The general rule is that contracts of personal nature or which involve the performance of
personal services will not specifically enforce. This is because such contract requires constant
supervision of the court and it would be contrary to public policy for a court to continue an
association which the two parties can no sustain on their own.

7 contracts to leave property by will

The normal remedy for breach of a contract to leave property by will is damages. Any remedy
will amount to the interference with testamentary freedom. However there are exceptions. Thus
in Synge v Synge13 parties to continue with their marriage.

8 . Contract to transfer Goodwill

A contract to transfer Goodwill of the business is not of its own specifically enforceable because
the subject matter is uncertain .however the specific performance can be ordered for the transfer
goodwill and the premises of the assets of the business.

9 contracts to refer to arbitration

These contracts are not specifically enforceable

10 the mutuality principle

Specific performance may be obtained under the principle of mutuality even where damages are
adequate compensation. In the case of Holland v Flight14minor failed to get an order of specific
performance because a suit for specific performance could not be maintained against him.

Qn5 (a) perpetual injunction

12
12 Ryant v Mutual Tontine West Minister Chamber Association
13
Synge v Synge
14
Holland v Flight

26
Perpetual injunction is the one whose effect is o finally settle the existing dispute between the
parties though this does not mean that the injunction last forever. Thus in Babumba v Bunju15 it
was held that where a grant of temporary injunction would decide suit, that grant would not
usually be made.

(b) Equity follows the law

The maxim “equity follows the law” means that equity supplements the law or is based on the
law. Under a trust, although the beneficiaries are regarded as the equitable owners, equity does
not deny the legal title of the trustee. But when the rules of common law are too rigid, equity will
not follow them.

(c) Precatory Trust

Precatory trust is an express trust that is created with the language that expresses a future intent
or a wish, but in which the court nevertheless finds legally enforceable duties. Normally the trust
language must express a present intend to create legally enforceable duties on the trustee in order
to have a trust intent.

(d) Equitable Estoppel

Equitable estoppel is a defensive doctrine preventing one party from taking unfair advantage of
another when, through false language or conduct, the person to be estopped has induced another
person to act in a certain way which resulted in the other person being injured in some way.

6 I) a debt differs from a trust in that a debt may or may not be contractual and the duty of
debtor is to repay money to the creditor in contrast a trustee need not be contractual and the duty
of a trustee is to hold trust property on the trust for the beneficiaries.

Ii) Contract

A contract is the common law personal obligation which arises from agreement between the
relevant parties, supported by consideration on the part of the promise .on the other hand a trust
is an equitable proprietary relationship which arises independently of agreement or the provision
of consideration. Similarity between a trust and a contract is that, with regard to settlements and
covenants to settlement. The beneficiaries will be able to enforce the covenant when they
provided consideration as that of a contract.

iii) Agency

In some respects, the relationship between the principal and agent is similar to the one between a
beneficiary and trustee. For instance, similar to trustee, agents must act personally in agency

15
Babumba v Bunju

27
transactions. In addition agents are accountable to their principal s just as trustees are to
beneficiaries for any profit made out of the property or business entrusted to them.

iv) Bailment

Bailment is the relationship which is recognised by the common law. It arises where a chattel
owned by x is with x’s permission in the possession of y. the right to the parties to a bailment
may or may not be governed by contract. Bailment entails certain standards of care by y in his
custody of x’s chattel.

Bailment differs from trust in the following ways;

First there is no transfer of ownership from x to y whereas there is such ownership in from a
settler to a trustee. Secondly y’s duties under bailment depend on common law rules and not of
equity.

REFERENCES

1. 1995 UGANDA CONSTITU

2. CHILDREN ACT
3. Succession Act
4. Judicature Act
5. CASE LAWS
6. TESXT BOOKS

QTN 1: ACCOUNT FOR AND AGAINST THE FACTORS WHICH LED TO THE
DEVELOLPMENT OF EQUITY.

The reasons behind the development of equity

Common law refers to the body of legal precedent that is compiled by a number of past court
decisions and or similar tribunals as opposed to executive action or through legislative statutes.
These legal precedents are the rules that common law judges use to decide on legal disputes.

In the common law legal system, laws are created by and/or refined by judges. This implies that
a ruling in a case currently pending depends on the rulings made in previous cases and affects the
law to be applied in future cases. Whenever an authoritative statement of the law does not exist,
common law judges have a provision to make laws by creating precedent.

This body of precedent is what is called “common law” and it is binding to all future decisions
the court has to make. However, the decisions of a court are binding only in a particular

28
jurisdiction. Common law legal systems are in widespread use, particularly in those nations
which trace their legal heritage to Britain, including the United Kingdom, most of the United
States and Canada, and members of the Commonwealth of Nations (Holmes O. W., 1881)

Equity is a term denoting a system of justice, that is administered in particular court, whose
nature and extent can only be understood and explained after studying both the history and
principles upon which that court acts. It was developed and administered in England by the high
court of chancery in the exercise of its extraordinary jurisdiction. Equity defines a set of legal
principles, in all the jurisdictions that follow the English common law tradition, that supplements
strict rules of law where their application would operate harshly, and this is done to achieve
“natural justice (Anon. Historical Outlines of Equity).

This document elaborates on the historical reasons behind creation of equity as a system of law,
the differences that exist between equity and common law. In addition, the nature of the present
relationship between common law and equity is also discussed.

The reasons behind the development of equity.

Historically, the High Court of Chancery in England administered the equity system of justice in
the exercise of its extraordinary jurisdiction. The much older system of law was the common
law, which was administered by the King’s Benches. Equity was viewed essentially as a more
modern body of legal doctrine that served to supplement the coercive old law. It is worth noting
that these two systems of law were largely identical and in harmony. This is because the rules
already established in the common law courts were readily adopted by the chancellor and
incorporated into the systems of equity.

There was also provision for the rejection and modification of some of these rules if justified by
sufficient reason. Creation of the equity as a system of law was to serve as a means through
which a legal system could strike the balance between the rule-making process and the
need to achieve fair results in individual and separate circumstances (Megha K., 2008).

The equity system is attributed for contributing significantly towards the development of law.
These contributions are particularly evident in the areas of auxiliary (new procedures), exclusive,
and concurrent jurisdictions. These three categories are elaborated as follows:

Auxiliary jurisdiction: equity has contributed to the rise of new procedures created from
discoveries made by the court of chancery in documents, subpoena of witnesses, interrogates,
and from testimonies made on oath.

Exclusive jurisdiction: these are new rights also created by the court of chancery but which the
common law courts had failed to enforce e.g. partnerships, mortgages, bankruptcy, company law,
trusts and administration of estates.

Concurrent jurisdiction: refers to the new wide range of remedies that the equity system
developed for the enforcement of rights both at law and in equity. Some examples include the
following:

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Rectification; this is an order that requires the defendant to promptly modify a document to
reflect the agreement made between the defendant and the claimant.

Injunctions: refers to an order given by a court to restrain a party from committing a wrong.

Account: refers to a court order requiring that a party, which has control of money belonging to
the claimant, reports on the way in which the funds have been spent.

Specific performance: this is an order that seeks to force the defendant to fulfill his/her bargain
(Anon. Historical Outlines of Equity).

Nature of the present relationship between common law and equity.

Common law proves to be a self-sufficient legal system or source of law when compared to
equity. This can be attested by the fact that equity presupposes the existence of common law and
if we abolished the equity system, we would still have a coherent system of law, common law,
but not vice versa.

The equity system of law was developed as a measure to address the rigidity of the common law
system. Therefore, in its early years, the equity system was largely viewed as being against
common law. The general feeling among a majority of people in legal circles was that the
common law system would be equity abrogated by the inception of equity. On the contrary, it is
evident that the modern development of equity is has in no way come to abrogate the common
law but instead it serves to strengthen it.

Because of the nature of equity, a conflict between the two systems was in the offing and so
between the years 1873-75, the court of chancery abolished the courts that propagated the equity
system of law, by means of the Judicature Act (Holmes O. W., 1881). This was done through the
transfer of their jurisdiction to the new supreme court of judicature, which in its administration
led to the fusing of both the common law and equity. However, the substantive body of rules or
laws found in the two systems was still maintained as separate entities. It is worth noting that the
relationship between equity and common law is today is not one of contradiction but rather one
of complementarily. The Judicature Acts (1873–75) succeeded in the merge of the administration
of both equity and common law. This means that a majority of modern day law courts apply the
two set of rules in their proceedings.

Whenever conflict still existed between the rules of the two systems, the rules of equity were to
prevail in favor of those of common law. The overall effect of the Judicature Act that merged the
two systems was the conversion of the exclusive and separate jurisdiction of equity into a
concurrent jurisdiction. It also served to abolish the auxiliary jurisdiction, which meant that there
was no longer need to go to a separate court if one wishes to obtain an equitable remedy. This
change applied not only in the United Kingdom but also in the Commonwealth Nations.

However, the equity system continues to perform its core function, which is to complement and
supplement the common law, in accordance with the morally accepted notions of justice and
fairness (Antoine R. B. 2008).

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Conclusion

Before the unification of equity and common law, achieved by the enactment of the Judicature
Acts (1873–75), the latter provided some stability for the English legal system. This was in spite
of its characteristic rigidity, whereas the former, due to its original unprincipled and loose
application, led to serious instability and inconsistencies. The nature of the relationship between
the two systems today is that they strive to balance each other. This is accomplished without
having either of the two systems being accorded less significance than the other is.

It is evident that there exists a mutual relationship between the two systems of law. This is in the
interest of providing fair and just rulings and arbitration in any given legal dispute.

QUESTION 2;

Critically analyze issues and process which led to the development of equity.

According to the oxford Advanced Learners dictionary 6 th edition Equity refers to the system of
natural justice allowing affair judgment in a situation where the existing laws are not
satisfactory.

Equity came into existence during the thirteenth century, at that time the courts of law had frozen
the types of claims they would hear as well as the procedure governing the hearing of those
claims, so claims became narrow and the processes to bring actions to court became so technical
with jurors often being bribed. As a result of these charges plaintiffs with meritorious claims
were often denied relief.

In retaliation to these changes, the king who had residual judicial power to deal with such
matters was petitioned. The king delegated the chancellor to deal with such petitions. The
chancery evolved into a judicial body known as a court of chancery until by the end of fifteenth
century the judicial power of the chancery was fully recognized. The court of chancery was in
effect developed as a court of conscience to counter act the defects that existed in the common
law system. As equity developed it began to conflict with common law. In the case of Earl of
oxford 1615 the court chancery issued common injunction prohibiting the enforcement of
common law order. The matter was referred to the Attorney general Sir Francis Bacon when no
resolution could be reached between the two courts Bacon upheld the common injunction and
stated that ‘’in the event of any conflict between the common law and the law of equity, equity
would prevail.

By the seventeenth century only lawyers where appointed to the office of chancellor. From 1529
onwards when Sir Thomas Moore was appointed as Chancellor Records of proceedings in courts
of chancery where kept which led to development of equitable doctrines.

By the beginning of the nineteenth century the court of chancery had become the court of equity
as In the case of Gee v Pritchard. The primacy of equity as stated by Sir Francis Bacon was later

31
enshrined in the Judicature Act 1873 section 25 which also joined the courts of equity and the
courts of common law into one under the title of the Supreme court. The Supreme was divided
into The High court and Court of Appeal. Later High court was divided into five divisions
namely; the chancery, Kings bench, common plea, exchequer and probate, divorce and marriage
admiralty division.

The major feature of these reforms was that every court would possess the power and have the
duty to decide cases in line with common law and equity where there is discrepancy between the
common law solution and an equitable one. The precedent Earl of oxfords case still applies
meaning that equity will be paramount in the decision making process. Supreme court Act 1981
s.49 has embodied this principle.

In 1880 there was an order in council which reduced the divisions to 3 for example the Queen’s
Bench, the court of chancery and probate divorce and admiralty. The administration of justice
Act 1970 led to changes and probate divorce and admiralty became the family division. Matters
dealing with Admiralty where now taken to division within the Queen’s Bench.

The Supreme Court act 1981 affirmed those divisions. This arrangement was such that the
Supreme Court was directed to apply both common law and equity but where now administered
in the same court.

In conclusion, principles of justice and conscience are the basis of equity jurisdictions, but it
must not be thought that the contract between law and equity is one between system of strict
rules and one of broad discretion. Equity got no monopoly of the pursuit of justice.

QUESTION 3

DISCUSS BRIEFLY THE FOLLOWING;

Equity follows the law;

This is one of the maxims of equity which means that equity supplements the law or is based on
the law. This can be illustrated as follows; under a trust although the beneficiaries are regarded
as equitable owners, equity does not deny legal title of the trustee.

Secondly equity recognized the common law doctrine of estates consequently; an estate or
interest which was recognized at law could exist as an equitable interest under a trust.

Thirdly equitable interests pass on intestacy in the same way as the legal estate.

Fourthly equity follows the common rules or joint tenancies. Finally equity follows the common
law rules affecting mistakes .it only supplements them by providing equitable remedies.
Nevertheless if the rules of common law too rigid or archaic, equity will not follow them.

Assignment;

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The benefit of a contract can transferred to a third party by assignment. Its transaction between
the persons entitled to benefit from contract and third party called assignor as result of which
assignee becomes entitled to sue the person liable under the contract called the debtor. The
common law enforced 3 types of transactions which in effect amounted to assignment.

Novation; its contract between the debtor ,creditor and third party that the debtor shall from that
point onwards be owed to third party. This is not assignment because the consent of all the 3
parties is necessarily because the original debt not strictly transferred. The third parties including
that of the debtor is necessary and because the original debt is not strictly transferred. The third
parties rights against the debtor are based on a new contract between him and the debtor.
Consequently the third will fail if no consideration moves from him for the debtors’ promise to
pay him.

Power of Attorney

A creditor gives a third party a power of attorney authorizing him to sue for a debt in the
creditors name without liability to account for the creditor. This is not helpful to the assignee
because the creditor can at any time revoke the power and this automatically done at his death.

QTN; DISCUSS THE DOCTRINE OF SATISIFACTION AND PERFORMANCE AND ITS

APPLICABILITY IN UGANDA.

The application of Doctrines of Equity in Uganda

Equity in simple terms means whatever is just or right in man’s being with fellow man. Equity
also possesses a technical meaning that may be divided into two categories, that is the general
juristic concept and the technical juridical concept all of which supplement each other and affect
the administration of justice [I].

The general juristic sense mainly denotes moral administration of justice by judicial bodies
taking into account special facts of a particular case .i.e. humane and liberal interpretation of the
law. This is incorporated in Art 126(2) (e) of the 1995 Constitution of the Republic of Uganda.
This was manifested in the case of Stephen Mabosi v URA

In Uganda the Equity was received by the 1902 and 191I Orders in Council which made
Equity and Common Law to be applied concurrently, and where there was conflict between the
two with reference to the same subject matter, the rules of equity would prevail.

The judicature statute cap 13 sec 14(3) gives strength to this principle as follows; the applied
law, the common law and doctrines of equity shall be in force in so far as the circumstances of
Uganda and its people permit.

The magistrates' court act cap 16 similarly facilitates the application of common law doctrines
as well as equity under sec 11(1)[iv] as follows; in every civil case or matter before a
magistrate's court law and equity shall be administered concurrently. It follows that equity is
applicable in Uganda thereby giving relevance to its doctrines in Uganda's legal scene. It is of

33
vital importance to note that courts of law in applying Equity take into consideration the maxims
of Equity which are the basis of the various doctrines of equity that include the following.

DOCTRINE OF SATISFACTION.

Also in consideration is the doctrine of Satisfaction defined as “the donation of a thing with the
intention that it is to be taken wholly or in part in extinguishment of some prior claim of the
donee.” per Lord Romilly in Chichestor-v-Coventry[xiii] thus where W is under an obligation to
give X something and W gives X something else, there may be a presumption that W’s gift was
made with the intention of satisfying his obligation to X. This doctrine is based on the maxim
“equity imputes an intention to fulfill an obligation”

Satisfaction takes several forms first in consideration is satisfaction of debts by legacies[xiv], the
general rule is that equity imputes to the donor an intention to give the legacy in satisfaction of
the debt. Thus in the case of Talbot v Duke of Shrewsbury Lord Trevor stated that "if one
being indebted to another a sum of money does by his will give him a sum of money as great as
or greater than the debt without taking any notice at all of the debt, this shall never the less be in
satisfaction of the debt, so that he shall not take both the debt and legacy.

In this case the legatee has a choice to either to take the legacy and forego the debt or to forego
the legacy and insist on his contracted debt. However it should be noted that there are
circumstances in which intention to fulfill an obligation (satisfaction) may not be presumed,
hence limiting the application of the doctrine in Uganda. For example where the debt was
contracted after the will, where the legacy is less than the debt where the legacy and the debt are
of different nature and where the legacy is not as beneficial to the creditor as the debt. Also sec
164 of the succession Act has limited the application of this doctrine as far as this aspect of
satisfaction is concerned in Uganda.

"Where a debtor bequeaths a legacy to his creditors and it does not appear from the will that
the legacy was is meant as satisfaction of the debt, the creditor shall be entitled to both the as
well as to the amount of the debt"

Secondly Satisfaction of portion debts by legacies the general rule is that equity leans against
double portions; hence equity will provide for the satisfaction of portion debts by legacies to
ensure equal division of the parents property among the children hence where the legacy is equal
to the promised portion or exceeds it satisfaction of the portion debt is presumed. In Uganda
however this is limited under Sec 165 of the succession Act "where a father…does not intimate
by the will that the legacy is meant as a satisfaction of the portion , the child shall be entitled to
receive the legacy as well as the portion ". Under satisfaction of a portion debt by a portion Lord
Selbornestated "where a father…gives a legacy and later makes a gift in the child's favour, there
is a presumption that the gift was either wholly or in part in a substitute for or an ademption of
the legacy. " lastly is the satisfaction of legacies by legacies.

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However the doctrine will only apply if the legacy is in a sum as great as or greater than the debt
or if there is a direction to pay debts (Satisfaction of debts by legacies)

The doctrine of satisfaction has been incorporated in Uganda’s legal scene and can be traced in
Sections 164 to 166 of the Succession Act. Section 164 provides that where a debtor bequeaths
a legacy to his or her creditor, and it does not appear from the will that the legacy is meant as
satisfaction of the debt the creditor shall be entitled to the legacy as well as well as to the amount
of the debt. This means that a testator must show his intention to extinguish the debt which is in
conformity with the holding in Hammond –v-Smith. The Judicature Act section 14(2) (b),
Magistrates Court Act section 11[xxii] also provide for the application of the doctrine of
Satisfaction in Uganda’s legal scene. Its practicability is however very insignificant.

DOCTRINE OF PERFOMANCE

Performance is yet another doctrine of Equity which is to the effect that where a person
covenants to perform a particular act and later performs an act “which may be converted to a
completion of this covenant”, it shall be supposed that he meant to complete it per Kenyon MR,
in Sow den v Sow den. This doctrine is based on the maxim that “Equity imputes an intention to
fulfill an obligation”.

Performance may take the form of a covenant to purchase and settle land, or a covenant to leave
money; it also applies to covenants in marriage settlements to lay out money, on the purchase of
land to be held on trust of the settlement. The doctrine also applies to situations where there is a
covenant to pay money to trustees to be used by them for the purchase of land. In this case, the
covenanter will simply be regarded as performing the covenant by buying land himself. The
doctrine also applies where the covenant is to settle property of a certain value.

the doctrine of performance in our legal scene today has a great effect in succession matters;
wills are construed literally through the wording as well as the circumstances surrounding the
making. The other factors that reflect performance in succession matters are the onerous
bequests, contingent bequests and conditional bequests contained in Section 109-123 of the
succession Act. . However the fact that there is limited case law shows that the doctrine is of
little practical relevance in Uganda's legal scene.

Conclusion

In sum, though the doctrines of equity are encapsulated in various legislations in Uganda, most
especially the succession act, it is generally agreed that they are more idealistic than practical in
Uganda's legal scene. This is due to prevalence of customs, illiteracy and the fact that many
people die intestate. It would be trite to say that the complex nature of these doctrines has limited
their relevance to Uganda since our legal system is not as developed as in England where they
are said to have originated. It would therefore be worthwhile to educate the society on matters

35
pertaining to the legal principles underlying these doctrines and also revise the laws that have
them embedded within them so as to make them clearer and more understandable. In so doing
with time the abstract nature of these principles can be illuminated upon and made practicable in
Uganda's legal scene. Generally, decided cases incorporating the doctrines of Equity are hard to
come by in Uganda. However this does not mean that the doctrines are practically of no
relevance having highlighted some practical relevancies above

QUESTION 5

Brief facts

Lambe gave his estate his wife HARRIET and made various instructions as a guardian of his will
and to make arrangements for his children to take over the estate after his demise. Wife later
gave away the estate to his nephew.

Issues

Whether there was valid trust.

Whether there was a breach of trust.

Law applicable

Case law

Resolution

Whether there was a valid trust

A trust has been defined as a relationship which is recognized by equity. It arises where property
is vested in a person known a trustee who is under a duty to hold for the benefit of other persons
known as beneficiaries.

There was a valid trust stated in knight v Knight that in order for a trust to validly be created,
there are 3 conditions necessary which include; the words employed must be taken as a whole,
they ought to be construed as imperative, i.e. the words must be certain. The Beneficiaries
intended must be certain. In this circumstance therefore there was valid trust due to the fact that
the words employed where certain, the subject matter and the persons were also certain.

Whether there was breach of trust.

A breach of trust consists of improper acts, neglect, default or omission of a trust with regard to
trust property i.e. Failure to exercise proper care in discharging a duty .In this case therefore
there was a breach of a trust where the trustee later gave away part of the estate.

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QTN 6; KASANGO WHO IS 69 IS A POPULAR LOTTERY DRAWER IN KANSANGA
WHO HAS BEEN WINNING A LOT OF MONEY THOUGH PLAYING LOTTERY AND
BETTING.RECENTLY HE BOUGHT A HUNDRED TICKETS FROM WHICH HE
EXPECTS TO WIN A HEFTY AMOUNT OF MONEY IN ABOUT TWO YEARS.HE HAS
TOLD HIS UNCLE THAT IF HE WINS,HE SHOULD GIVE 65% TO HIS CHILDREN
WHOM HE FATHERED WHEN HE WENT FOR HOILDAY TO BUKOBA IN
TANZANIA.KASANGO HAS NEVER SEEN THESE CHILDREN NOR GIVEN ANY
PROOF OF THE EXISTENCE OF THE CHILDREN BUT HE WANTS TO HELP IF THEY
ARE THERE.

IDENTIFY THE ISSUES IN THE FACTS ABOVE AND ADVISE KASANGO

ACCORDINGLY.

Brief facts

Kasango is a popular lottery drawer in kasanga who listened brought a hundred of which he
expects to win hefty money in about 2 years

Kasango has told his uncle that if he wins he will give 60% to his children whom he fathered
when he went for holiday in bukoba and he has never see his children but has no proof of the
children

Legal issues

Whether there is valid trust

LAW APPLICABLE

Case law

Resolution

First and foremost, a trust has been defined as a relationship which is recognized by equity. It
arises where property is vested I a person or person known as trustees which those trustees are
under a duty to hold for the benefit of other persons known as beneficiaries.

In the case of knight v knight it was stated that in order for a trust to be validly created. Three
conditions are necessary that’s to say; the words employed, the object or persons intended to be
benefitted, the subject matter of the trust must be certain.

There was certainty of words as an essential to a valid trust as equity looks at the intent rather
then, no special form of words is necessary in order to create a valid trust .consquently,an
intention to create a trust may clearly be gathered from the expressions which the settler has used
and the court gives effect to such intention.

37
 Thus in the case Lambe v Eames LJ indicated that court will not allow precatory trust to be
raised unless after considering all the words used. It comes to the conclusion that it was the
intention of the tester to create a trust. Therefore kasangos words had indicated intention to
create a trust.

The certainty of object is also a said above has to be certain, in this an object may mean these
people to be beneficiaries to the estate but while, there has to be present, available and known.

However this entails two aspects that have to say that the purposes of the gift should be
identifiable with certainty and that the interest they take should be discoverable. This should be
seen in the case of Revandervells trust. It was indicated that in the case of future interests the
beneficiaries must be ascertainable within the period of perpetuity. However, the object was not
certain since some were not there.

Lastly is certainty of subject matter. These could take many forms in trust. It could be interest in
land, in possession or reversion; chattels, money and choses in action. In Re Diggles, it was
indicated that uncertainty of subject matter will adversely affect the creation of a trust. Therefore
in this case the subject matter is not certain

In conclusion therefore there is a valid trust hence I would advise kasanga to respect the other
essentials of a trust i.e. the certainty of object and that of subject matter. In this case, kasanga if
he needs to become a valid trust, he should use the right language or word and then the object or
beneficiaries must be certain and then the subject matter.

Question seven

Write short notes on any of the three statements.

Equity is equality

As regards to fixed trusts, the equitable maxim equity is equality might be brought into play to
save an invalid trust. This was demonstrated in Burroughs vs. philocox. Where a trust was set up
to benefit the settlors son and daughter. Their shares however were not specified. By relying
upon the maxim, each was deemed to have an equal share. The maxim can be invoked only
where there is no contrary intention shown, if the trust is to benefit my children unequally, the
maxim could not apply and the trust would necessarily fail.

The effect of precatory words

Precatory words are words merely of hope and desire, e.g. "in the hope that, I would like that, I
desire that” etc .although in the older cases precatory words were sometimes sufficient to create a
trust, since the late nineteenth century this is no longer the case. The court is now looking for
imperative words to impose a mandatory obligation on the trustee. A moral obligation is not

38
enough. Sweeney v Cog hill. If there is doubt, the burden lies on the claimant to establish the
necessary intention on a balance of probabilities.

Statutory obligations

Unless the trust instrument contains an express investment clause, the duty to invest is now
widened and regulated by pt I of the trustees Act 2000. This duty is designed to ensure that the
trustees treat income and capital beneficiaries in an impartial manner. This might be described as
a duty to act fairly between all beneficiaries. As Hoffman JJ admitted in Nestlé v National
Westminster bank p/c (1988), the trustees must act fairly in making investment decisions which
may have different consequence for different classes of beneficiaries. It is also intended to
minimize risk while the trustees achieve a reasonable return on the capital invested.

Question: 1

Celia died 0n 21st April 2017. Her executors seek your advice as to whether the successfully
passed title in any of the following items of property at the date of her death based on the
following information. On 1st February 2017 Celia was the absolute owner of 200 shares in
Ugaplex ltd. Celia telephoned Ddumba, her cousin to tell him that she intended to transfer
those shares to him immediately. Celia completed part of a share transfer form but she did
not sign it and she did not sign it and she did not post it off the company as she was
required to do.

i) In your view would it have made any difference if Celia had died very soon after the
conversation with Ddumba and if she had expressed her intention to complete that gift on
her death bed but without having prepared a will?

There would have been a difference if she had completed the transfer form but
since she hadn’t then there would be no difference.

Jones v Lock (1865) 1 ch App 25 KB Home Equity & Trusts

Facts

Jones had a son with the first wife and infant son with the second wife. Jones gave his infant son
a cheque for 900 pounds. Cheque was payment for discharge of mortgage. Jones died before
formally amending the will, the rest of the estate was to go to the children of Jones first marriage.
The infant’s mother sought 900 pounds out of estate as it was transferred to his son. The cheque
had not been endorsed (signed back). Attempted to argue declaration of trust of cheque in favor
of infant son.

Issue

Was there an express trust for 900 pounds in favour of the infant son?

39
Held

No, there was no express trust. The evidence showed an intention to make a gift of the cheque to
the infant, not to declare a trust. Equity will not perfect an imperfect gift.

Voluntary settlements are only valid when the settler has done everything which, according to
the nature of the property, is necessary to be done to transfer the property and render the
settlement binding upon him. Intention not carried into effect. If one intends to use one method
and fails, equity will not save the failed gift and treat it as some other type of gift. There has been
no declaration of trust, only a loose conversation. The testator did not intend to deprive himself
of all property, or to declare himself trustee of the money for the child.

Quotes

“If the settlement is intended to be effectuated by one of the modes... the court will not give
effect to it by applying another of those modes. If it is intended to take effect by transfer, the
court will not hold the intended transfer to operate as a declaration of trust, for then every
imperfect instrument would be made effectual by being converted into a perfect trust.” Per
Turner L.J in the case of Milroy v Lord.

The implication of this statement is that transfer to trustee must follow the rules which
apply to the property concerned i.e.

Trust in respect of;

1. Legal estates in land must be transferred and evidenced in writing and signed by the
person creating the trust.
2. Shares must follow the formalities as prescribed in the companies Act.
3. Equitable interests and copy rights must be in writing and signed by the person disposing
them.
4. Chattels must be in form of deed or evidenced by intention to give coupled with delivery
or possession.

ii) Celia disclosed to her executors that she intended to donate 100 acres of land to her
fiancée Tonda, who lived and worked in an up country station state the legal issues
involved

Legal issues

I) Whether or not a trust can be created orally.

Yes a trust can be created orally but you have to prove and the words must be clear. When a trust
is created orally, the law requires that there is sufficient evidence of the settler’s intention to
create a trust. In the absence of unequivocal evidence of this intention the law will presume that

40
the person intended mandate or deposit and not the creation to a trust (Dr. M. Bianchi, 2005).
The most efficient method of establishing a trust is by a written document since it mitigates the
possibility of misunderstanding or legal challenge to validity of the trust. However there is no
legal necessity for this document, as it is possible to create a trust by simply verbal
communicating a desire to do so (Anon, 2010).

“A valid declaration of trust over personal property will not require any formalities provided it
can be demonstrated that the settler intended to create an immediate trust over property.

Hudson 2007, p 207

Specifically in this case of unit trusts and inter-vivos trusts, these cannot be created by an oral
declaration. Both of them are generally created by written instrument. One of the key distinctions
that can be made in creating a trust is that between inter-vivos trust (living trust) and
testamentary trusts. A living trust is created during the lifetime of the settler and comes into
effect within this period. On the other hand, a testamentary trust is a trust created by will, which
comes into effect only upon the settler’s death.

II) Whether or not the Tonda falls under the beneficiaries.

Tonda falls under the beneficiaries because he was Celia’s fiancé as it was in the case of Re
adens and mcphali v Dolton where the House of Lords affirmed that upholding the settlers
intention was of paramount importance. It dealt with the same fact as Mcphali V Doulton, since
the lords here remanded the case to the court of appeal to be decided using the legal principles
set out in mcphali

iii) Whether or not there is a trust created.

There wasn’t any trust created because Celia did not follow the required necessities to create
a trust

b) Discuss briefly the distinction and or relationship between trusts and the following forms
of legal relations

A trust arises where property is vested in a person or persons known as trustees who those
trustees are under duty to hold for the benefit of other people known as beneficiaries or cestui
que trust.

The interests of beneficiaries are normally described in the instrument creating the trust. It
should be noted that these may be implied or imposed by the law. The beneficiary interests are
also always proprietary that it can be bought/sold, given away or disposed by the will.

A trust is defined in Hague Convention on law of trusts, this has been incorporated into English
law by U.K Recognition and a trust is defined as the legal relationship created inter vivos or on

41
death by a person, the settler when assets have been placed under the control of a trustee for the
benefit of a beneficiary or for a specified purpose.

A trust has various characteristics like trustee has the power and duty and he is accountable, title
assets stand in the name of the trustee or in the name of trustee or in the name of any other
trustee, assets constitute a separate fund and are not part of the trustees own estate.

I) Trust and Agency.

Agency is the contractual arrangement express or implied, written or verbal where one person
may act on behalf of another and bind that other as if he or she acted personally. Agency arises
where a person called the agent has expressed or implied authority to act on behalf of another
called the principal and he consents to do so

An agent is normally regarded as an accounting fiduciary party and he binds the principal vis-à-
vis third parties. Royal Bruness Airlines v Tan 16where a travel agent was appointed to sell
tickets for the plaintiff Airline on condition that all monies received by the agent were to be held
for the airline on trust.

The similarities between Trust and Agency.

1. Relationship of trustee and beneficiary is fiduciary in nature and as well that of agent and
principal is normally fiduciary

2. Both must act personally and should not delay at the powers

3. Neither of them makes UN authorized profits from their office

The Differences between trust and agency are discussed below;

1. The trustee in exercise of his office will contract as principal and cannot bind the beneficiaries
unless that have constituted him both trustee and agent binds his principal so long as he acts on
the principal's authority on apparent that he is deemed to have.

2. Although the trustee has a right of recoup an indemnity against the beneficiaries for any
property incurred expenses and creditors may subrogate those rights in certain circumstances
there's therefore no direct contractual link between the beneficiary and 3rd parties comparable to
link between the principal and third parties.

3. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. Whereas a

16
(1995)2 Ac 378
42
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallot v Wilson17

However if the beneficiary is Sui Juris un-animoud and together entitled may demand that the
trust property be distributed and consequently that the trust be brought to an end.

4. The principal in agency gives binding directions to his agent whereas beneficiaries cannot
control the exercise of the trustee's direction seen in Re-brock 18

5. The central distinction between agency and trust is in relation to property. An agent does not
per se hold any property for his principal. Many agents do not obtain items of property and those
who do so acquire only possession but not the other hand there can be no trust unless title to the
trust property vests in the trustee or in another party on behalf of the trustee.

It should further be elaborated that trust and agency do over lap this of the reason that trust can
be created under which a trustee undertakes a contractual obligation to act on behalf of the
beneficiary and an agent may become a trustee for instance he acquired title to property to be
held for the benefit of his principal.

It's argued that Agent becomes trustee for his principal if he obtains title to the property for the
principals benefit, but this isn't easy to gauge in practice especially if what's transferred is a mere
chattel as it was in the case of Cohen v Cohen court held that she succeeded in all the claims
that court finding that the husband stood in fiduciary relationship with regard to the wife's
property in the circumstances and was therefore a trustee for her benefit. Court followed the
decision in Burdick v Garrick 900DM 19where Lord Justice Giffard stated

"In respect of attorneys who had been authorized and buy property and had attempted to set up
the statute of limitations as defense "there was very special power of attorney under which the
agents were authorized to receive and invest to buy real estate otherwise to deal with property
but under no circumstance could the money be called theirs".

If money borrowed is stolen from the borrower he is still under an obligation to repay, however
with in trusts, a trustee is not liable for the loss which is not attributed to his negligence Morley
v Morley

ii) Trust and Bailment

A bailment arises where an owner of property gives permission to another person to possess it. A
bailment is a delivery of personal chattels to bailee subject to a condition that they be returned to
the bailor or be dealt with as the Bailor directs when the purpose of the bailment has been carried
out.

Contract act part 9 of 2010 discusses bailment.

17
(1930).
18
(1948)Ch 206
19
1(870)L.R C.L 233
43
Suppose you’re traveling abroad for a year you may have a painting which you do not want to
leave in the house you therefore hand it over to a friend to look after it in your absence and that
amounts to bailment.

This will depend on the location of your title, your right to exclusive possession of painting.

If you vested it in a friend then they will a trustee of that right for you. if you have however kept
your right in yourself, handing it over only the possession of painting the transactions will be one
of bailment not trust.

The difference between the two is crucial a number of reasons;

One is in breach of instructions your friend sells the painting to an innocent purchaser it will
matter a great deal whether you created bailment or trust. If the friend was a bailee then the
purchaser will not acquire at the good against you and will be able to recover the paintings value
from purchase in action in tort law of conversion.

The basic rule is memo dat quod no habet that means that no one gives who possesses not, but if
your friend was a trustee, the position of the purchaser would be different. For now your friend
has the right in question and capable of passing it on to third parties. You of course have rights
under trust but such rights destroyed when subject matter of the trust comes into the hands of an
innocent purchaser of value.

The position of bailment is thus governed by common law, the position of bailed is similar to
that of a trustee in that both are entrusted with another's property.

The Differences between Bailment and a Trust;

1. A bailee obtains only possession and what is referred to as special property in the goods while
trustee takes title to the trust property.

2. Bailment is a common law notion worked out in proceedings for common law relief such as
actions of conversion, detinue, and breach of contract where as the trust relationship is purely
equitable.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason.

3. Bailment only applies to personal chattels that are capable of delivery where as a trust may
arise in respect of real or personal property and whether tangible or in tangible.

4. A bailment is enforced by the bailor who is party to the arrangement while generally the trust
is enforced by the beneficiary who is not party to the trust instrument.

44
In bailment there's no transfer of property from the bailer to the bailed. Bailment duties are
dependent on the rules of common law and not equity.

The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.

Bailment is restricted to chattels but a trust may exist to all types of property

Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owner’s loose rights for example estoppels however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.20

iii) Contracts and trusts

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promisee; on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

Re Cook21,indeed there can be no hard and fast lines between contract and trust because contract
is a source of rights while trust is a way of holding rights, indeed many rights held in a trust are
born of contract.

A contract is a common law personal obligation resulting from an agreement between parties on
the other hand a trust is an equitable relation which can rise independently of an agreement.
However the situation when a distinction between the two is hard to draw that is to say

Settlement and covenants to settle.

Where property is vested in trustees on a settlement, it was held upon a trust on settlement.
However if the property has not yet been transferred to trustees but it's simply subject to a
consent to settle. The beneficiaries will only be able to enforce consent if they have given
consideration based on the principle equity will not assist a volunteer.

Even in English society this trend has historical connotation. in the words of professor’s keeton
and Sheridan.

The progressive emancipation of the married woman from the restrictions to impose by the
common law upon her capacity to hold and deal with real property was, until the second part of
the nineteenth century almost exclusively the result of equitable intervention. At common law a
wife's chattels became the absolute property of the husband.

20
Pilcher v Rawlins

21
(1965)CH 1902
45
 Jaggwe is 62yrs old and of sound mind, he has two secret children Molly aged 17 and Paul aged
23. Jaggwe has hidden this fact from his wife and family for 23yrs. Molly and Paul are both
enrolled in post secondary education which Jaggwe is paying for. Molly and Paul are doing well
at school and are quite capable of managing their own affairs; Jaggwe does not want to just give
money to these children because he wants them to use it only for their education. He could
continue to pay for his children’s education directly but he is concerned if he becomes
incapacitated or dies the children’s education wouldn’t be provided for. Advise the best type of
trust to be formed for the above purposes and why.

Suppose also,

I. An inter vivos trust is suggested to provide for the education of the children
II. That under the proposed trust a substantial sum of money is to be settled on trust for the
purpose of educating Jaggwe’s children
III. That the draft trust instrument has a list of beneficiaries including molly and Paul and
directs the trustees to use the income from the fund for the education of the children but provide
no other purpose for the use of the income of the fund
IV. That the terms of the trust are not communicated to Chonjo, the intended trustee before
the creation of the will/trust
V. That Jaggwe informed Chonjo of his intention to create a trust and to appoint him a
trustee, but Chonjo remained silent and didn’t affirm acceptance
VI. That upon Jaggwe’s death Chonjo sold the trust property and applied the proceed to boost
his private business

Discuss the legal effects of all the above circumstances

A trust is an obligation which binds a person (or persons) to deal with property for the
benefit of beneficiaries or for a charitable purpose in accordance with the terms of the trust22.

It is also a three-party fiduciary relationship in which the first party, the trust or settler, transfers
("settles") a property (often but not necessarily a sum of money) upon the second party (the
trustee) for the benefit of the third party, the beneficiary 23
A trust that would fit the purposes and intention of Jaggwe in this case can probably be a fixed
trust.

What are fixed trusts?

Fixed trusts are an established form of living trust for estate planning. They enable the settler to
control money and assets for the benefit of the trust’s beneficiaries. Beneficiaries of a fixed trust
receive trust property on a specific schedule set forth by the settler. The trustee of a fixed trust
has little or no discretion to distribute trust property. He or she cannot change the beneficiaries or
the benefits they are set to receive.

22
Lawteacher.net
23
Wikipedia, the free encyclopaedia

46
The most common type of fixed interest trust is a life interest trust, under the terms of which one
individual will have a right to all of the trust’s income during his or her lifetime. On this
individual’s death, the trust property will generally be payable to named capital beneficiaries.
Another type of fixed trust is one contingent upon the beneficiaries satisfying certain conditions,
such as reaching a certain age. Once the expressed condition is satisfied, the beneficiaries will
typically have an absolute interest in the capital.

The settler may also choose multiple beneficiaries and provide a fixed benefit or percentage for
each of his or her beneficiaries. For example, the settler may grant 70% of the trust’s benefits to
a spouse and 30% of the trust’s benefits to a child. Or the trust may be established for a
handicapped child to ensure that he or she is properly cared for if the child’s parents or guardians
die. The trustee is bound to make a distribution to the beneficiaries in this predetermined manner
as set out in the trust deed. The beneficiaries have an interest in possession under the trust,
subject to a deduction of sums paid by the trustees in the exercise of their administrative
management powers.

The reason why a fixed trust is fit for the purposes and intentions of the settler, Jaggwe is
because with this type the courts follow the complete list test where all the beneficiaries must be
ascertainable and certain, there interests as well must be certain under the trust deed. In this case
therefore, if the trust is fixed to benefit the beneficiaries only educational wise the courts shall
enforce that so24.

PART 2

An inter vivos trust is one that is created during the trustor’s lifetime and becomes effective
upon creation. There are many reasons to create an inter vivos trust, but the main benefit is that it
is the best way to avoid probate. Inter vivos trust has two forms i.e. revocable and irrevocable.

The legal effect of an inter vivos trust is that the trust becomes effective upon creation, in
other words it’s different from a testamentary trust where the trust takes effect only after the
settler has passed on. E.g. Wills.

Where the draft instrument has a list of beneficiaries, the legal principle here is that court must
employ the complete list test where it takes the strict approach and all the beneficiaries should
be ascertainable. (Mourice V Bishop of Durham)
And here if the names of the beneficiaries are indicated then it’s a must that each and every
beneficiary must benefit from the trust.

The fact that trusts bare contractual obligations, the general rule in contracts therefore is that
silence does not constitute acceptance. See McGlone v. Lacey, 288 F.Supp 662 (D.S.D. 1968).
However, there are exceptions to this general rule.

Chonjo selling the trust property and applying the proceeds to boost his private businesses would
amount to breach of the trust as it was made clear in the case of Armitage v Nurse, “a breach of
trust may be deliberate or inadvertent and may consist of an actual misappropriation or
24
Mourice V Bishop of Darhum

47
misapplication of the trust property or merely an investment that is outside the trustees powers”.
Furthermore, it was also made clear in the case that a breach of trust can in fact occur regardless
of whether the breach was beneficial or injurious to the beneficiaries. Therefore, even if the
shares which have been purchased or the bet which was placed were beneficial to the
beneficiaries a breach will still be capable of occurring. This is because, as provided under
section 1 of the Trustee Act 2000 a trustee has a duty to ensure that reasonable care and skill is
exercised when managing the trust. Nevertheless, if Sue can demonstrate that she took all of the
necessary precautions that an ordinary prudent man would have taken when exercising the trust
fund then her breaches will be discharged as shown in Speight v Gaunt

QTN 3

Discuss any two of the following in relation to the creation of the trust

1. Capacity
2. Formalities
3. Constitution
4. Creations

ANSWERS

1. CAPACITY

The capacity to create a trust is similar to the ability to hold and dispose of a legal equitable

Interest in property. In their regard, a number of situations may be considered.

1. MINORS
A settlement on trust by a minor is voidable in the sense that he can repudiate it during
the minority or within a reasonable time of attaining his majority. Such a settlement is
however, only possible in respect of an equitable interest. Since an infant cannot hold
legal estate, a settlement of trust in respect of a legal estate is not possible by him

2. MENTAL ABNORMALITY
A person who is mentally abnormal cannot create a trust .under the trustees Act “The
court may direct a settlement to be made of the property of a lunatic or any part there of
or any interest there in, on such trusts and subject to such powers and provisions as the
court may deem expedient” the direction may affect the property which has been
acquired by the lunatic under a settlement, a will or an intestacy and with a view to
protecting interested parties in the event of change in the law of circumstances effecting
earlier disposition by the lunatic.

3. MARRIED WOMEN
A married woman may create trust of her property. This is an obvious provision in the
twentieth century yet significant given the relatively inferior status attributed to women

48
 by African Customs Even in English Society this trend has historical connotation. In the
words of professor keeton and Sheridan.

4. COMPANIES
Trading companies, which are incorporated under the companies act, have an implied
power to borrow for the purposes of the company’s business.
Normally, this power is used to issue debentures and for the purpose of buttressing the
issue the company has power to execute a trust deed by which “after covenanting to
repay the loan with interest until payment, assigns to trustees real property or leaseholds
belonging to the company, to constitute security for the repayment of the loan, and the
trustees undertake to hold the property upon a certain trust in favor of the debenture
holders.

FORMALITIES

1. REGISTRATION OF TITLES ACT

A settler may create a trust by a manifesting an intention to create it. No formalities are
required for creation of an inter vivo trust of personality. However, evidence in writing is
required for the creation of a trust in land. Thus by section 92 of the registration of titles
act any declaration of trust respecting land must be evidenced by a memorandum in
writing signed by the party creating the trust.
2. BY WILL; SECRET TRUSTS
Under section 50 of the succession act all trusts created by testamentary disposition must
be executed and attested in accordance with the formalities therein prescribed. These are
(1) That the will shall be in writing
(2) That it shall be signed at the foot or end thereof by the testator, or some other
person in his presence and by his direction
(3) That the signature be acknowledge by at least two witnesses in writing in the
presence of the testator.
HALF SECRET TRUST
These arise where under a will property is given expressly on trust but without stating
what the trusts are. It is suggested that here there would be no possibility of fraud by
the legatee in view of the contents of the will and the express declaration destroys the
possibility of personal gain on the part of the legatee. In moss v copper it was
suggested that mention of the existence of a trust in a will prevented the operation of
the doctrine of secret trust. Nevertheless, half secret trusts have been held to be valid
since 1929. In Blackwell v Blackwell by a codicil, the testator gave a legacy of euro
12000 to legatees upon trust to apply the income, “for the purpose indicated by me to
them”. The trust was accepted by the legatees before the execution of the codicil. It
was held that the trust was enforceable. It was enforceable. It was further observed
that the secret trust doctrine applied, (a) where there was a gift on trust, (b) where
there was no question of fraud in the legatee. In the words of lord summer, a secret
trust.

49
Discuss the continued relevance of the study of the doctrine of notice in Uganda

It prevents a buyer of a superior title from setting it up against earlier owners of inferior interests
which affect the property. Under a notice a person should have knowledge of the existing fact.”
He who seeks equity must come with clean hands” is a maxim of equity set in the doctrine of
equity.

The effect of this is that the buyer of the legal estate with notice of the prior equitable interests
affecting the estate takes it subject to prior equitable interests in this regard. “Equity looks at
the substance rather than the form”. Notice to an agent is a notice to the principle

Actual notice

This is a situation where the buyer of an estate has actual or express notice of a prior interest at
the time when he or she made the purchase or at the time before the purchase was completed.

Registration of title act section 64, the buyer and land shall hold that land subject to such
encumbrances as notified to the registrar.

Sempa Mbabali v W K Kidza, the court held that the defendants’ plea of bonafide purchaser
could not stand because they knew all along that, that part of land they had purchased was for
burial grounds and also the seller had sold them the land before his share of the land had been
ascertained. Therefore that means that they were not clean.

Constructive notice

In the case of Williamson v Brown, the purchaser has knowledge of any fact sufficient to put
him in inquiry as to the existence of some right or title in conflict with that he is about to
purchase, he is presumed either to have made the inquiry and ascertained the extent of such right
or to have been guilty of a degree of negligence equally fatal to his claim. The prior interest in
land should always be put into consideration in.

UPTC V LUTAAYA thus, ”a proprietor takes land subject to the interest of any
tenant in the land in possession even if he or she had no actual notice of the tenant”

Imputed notice
Notice which is neither actual nor constructive may be imputed to the buyer through
actual notice to the agent. It’s established in agency law that that notice to an agent is
notice to the principal a buyer who instructed his agent to buy property at an auction

50
sale was taken to be affected by notice of an equity which came to his notice during
the course of the transaction.

Sejjaka Nalima v Rebecca Musoke

The court held that the appellant was not bonafide purchaser without notice owing to
the fact that Musoke and co advocates who were acting as her agents had known of
the alleged fraud concerning the disputed property.

THE IMPACT OF REGISTRATION LEGISLATION ON THE DOCTRINE OF

NOTICE

Section 54 of the registration of titles act requires registration of instruments

affecting land and stresses that;

No instrument until registered in the manner herein provided shall be effectual to

pass any estate or interest in any land under the operation of this act or to tender
such land liable to any mortgage….

An instrument is defined to include any document in pursuance of which an entry is

made in the register. For this purpose entries are meant to allow the title to be traced
either downwards from or upwards to the original certificate of title it is therefore,
apparent that mortgagee or other person involved in a transaction relating to the land
of transactions

Furthermore, section 48 of the RTA

Every instrument (expecting a transfer) presented for registration maybe made in

duplicate and shall be registered in the order of and as from the time at which the
same is produced for that purpose; and instruments purporting to affect the same
estate or interest shall, not withstanding any actual or constructive notice, be entitled
to priority as between themselves according to the date of registration and not
according to the date of the instrument.

For the purpose every memorial entered in the register book is required to state the
nature of the instrument for registration and the name of the party to whom the same
is given and shall be signed by the registrar. Such memorial is also required to be
entered on the duplicate certificate of title issued to the registered proprietor.

51
 With relevant authorities and illustrations discuss the accuracy of the assertion that;
‘equitable doctrines [have] remained available to prevent the unconscientiously
exercise of the plaintiff‘s rights at law. “

Qn. 4Withrelevant authorities and illustrations discuss the accuracy of the assertion that
equitable doctrines remained available prevent the unconscientiously exercise of the plaintiff’s
rights at law.

Equity means whatever is just or right in mass being with fellow man. Equity also possesses a
technical meaning that may be divided into two categories, that is the general juristic concept and
the technical juridical concept all of which supplement each other and affect the administration
of justice [I].

The general juristic sense mainly denotes moral administration of justice by judicial bodies
taking into account special facts of a particular case. I.e. humane and liberal interpretation of the
law.

This is incorporated in Act 126(2) € of the 1995 constitution of the Republic of Uganda. [ii] This
was manifested in the case of Stephen Mabosi v URA [iii].

In Uganda the Equity was received by the 1902 and 1911 Orders in Council which made Equity
and common Law to be applied concurrently, and where there was conflict between the two with
reference to the same subject matter, the rules of equity would prevail.

The judicature statue Cap 13 sec 14(3) gives strength to this principle as follows; the applied
law, the common law ad doctrines of equity shall be in force in so far as the circumstances of
Uganda and its people permit.

The magistrates ‘Court Act Cap 16similarly facilitates the application of common law doctrines
as well as equity under Sec 11(1)[iv] as follows; in every civil case or matter before a
Magistrate’s Court Law and equity shall be administered concurrently. It follows that equity is
applicable in Uganda thereby giving relevance to its doctrines in Uganda’s legal scene. It is of
vital importance to note that courts of law in applying Equity take into consideration the maxims
of Equity which are the basis of the various doctrines of equity that include the following.

5.0 DOCTRINE OF NOTICE.

The concept of notice refers to the knowledge of an existing fact; According to prof. Bakibinga
[v] the rationale of the doctrine is to prevent a buyer of superior title from setting it up against
earlier owners of inferior interests which affect the property. The effect of this is that the buyer
of the legal estate with notice of the prior equitable interests affecting the estate takes it subject
to prior equitable interests in this regard; “Equity looks at the substance rather than the form”
Notice can be Actual, constructive or imputed. And it is based on the maxim “he who comes to
equity must come with clean hands”.

52
ACTUAL NOTICE: this is a situation where the buyer of an estate has actual or express notice
of a prior interest at the time when he or she made the purchase or at the time before the purchase
was completed.

In regard to the relevance of the doctrine of notice. He Registration of Titles Act (R.T.A) Section
64[vi] encompasses the doctrine and it provides that a buyer of land shall hold that land subject
to such encumbrances as notified to the registrar. In Sempa Mbabali v w k KidzaOdoki J held
that the defendants plea of bona fid purchaser could not stand because they knew all along that
part of land they had purchased was for burial grounds and also the seller had sold them the land
before his share of the land had been ascertained. This therefore means that his hands were not
clean.

CONSTRUCTIVE NOTICE: defined by Salden J in Williamson v Brown [vii]; where a

purchaser has knowledge of any fact sufficient to put him in inquiry as to the existence of some
right or title in conflict with that he is about to purchase he is presumed either to have made the
inquiry and ascertained the extent of such prior right or to have made the inquiry and ascertained
the extent of such right or to have been guilty of a degree of negligence equally fatal to his
claim .The prior interest in land should always be put into consideration in U.P.T.C V Lutaaya
[viii].Karokoraj .s.c held thus ‘’Appropriator takes land subject to the interests of any tenant in
the land in possession even if he or she had no actual notice of the tenant’’

IMPUTED NOTICE; notice which is neither actual nor constructive may be imputed to the
buyer through actual notice to the agent. Its established in agency law that notice to an agent is
notice to the principal. In this regard, a buyer who instructed his agent to buy property at an
auction sale was taken to be affected by notice of an equity which came to his notice during the
course of the transaction. In SejjakaNalima v Rebecca Musoke[ix]Odoki j a held that the
appellant was not bona fide purchaser without notice owing to the fact that Musoke and co
advocates who were acting as her agents had known of the alleged fraud concerning the disputed
property

2.0 DOCCTRINE OF ELECTION

One of the most important doctrines of equity is the doctrine of Election which is to the effect
that a person cannot claim benefit and reject burden under the same instruments. This meaning is
derived from the case of codrington –v-codrington per lord cairns that a person cannot accept a
benefit under a deed or will without the same time conforming to all its provisions.

Election is based on the maxim that ‘’he who seeks Equity must do Equity’’. Equity is either
express implied from the electors conduct and it therefore if x gives a gift of his property to y
and in the same instrument makes a gift of Y’s property to Z then Y will be put to his Election. Y
may elect to take under the instrument and take over X’s property or he may elect against the
instrument

The essentials of election were espoused in Re Edwards.[x] Lord Jenkins l.j stated that an
election should consist of an intention on the part of the testator to dispose of certain property,
that he property should not actually be the testators or testatrix own property the property the

53
testator purports to dispose of should be alienable by the owner, for if its inalienable, the owner
cannot comply with the wishes of the donor .The property given is available and finally that a
benefit should be given by the will to the true owner of the property.

In Uganda the relevance of the doctrine of election is manifest inthe Succession Act which has a
number of provisions that incorporate the doctrine of election ranging from section 167 to
section 178, Sec167[xi]and provides that a person whose property has been disposed off by the
testator has a right to elect. Hence these provisions illustrate the fact that the doctrine of election
is incorporated into Uganda’s legal system

Sec 64[2] [xii] states that ‘’the land which is included in any certificate of title or registered
instruments shall be deemed to be subject to the reservations, exception, covenants conditions
and powers if any contained in the grant of the land and to any rights subsisting under any
adverse possession of the land and to any public rights of way and any easements acquired by
enjoyment’’

It is noteworthy however, that though the doctrine is reflected in Uganda’s legal frame work, it
has been of little practical importance as no significant cases have been decided relating to
Election.

3.0. DOCTRINE OF SATISFACTION.

Also in consideration is the doctrine of satisfaction defined as “the donation of a thing with the
intention that it is to taken wholly or in part in extinguishment of some prior claim of done.”Per
Lord Romilly in Chichestor-v- Coventry [xiii] thus where W is under an obligation to give X
something and W gives X something else, there may be a presumption that W’s gift was made
with the intention of satisfying his obligation to X. this doctrine is based on the maxim “ equity
imputes an intention to fulfill an obligation”.

Satisfaction takes several forms first in consideration is satisfaction of debts by legacies [xiv],
the general rule is that equity imputes to the donor an intention to give the legacy in satisfaction
of the debt. Thus in the case of Talbot v Duke of Shrewsbury [xv] Lord Trevor stated that “if one
being indebted to another a sum of money does by his will give him a sum of money as great as
or greater than the debt without taking any notice at all of the debt, this shall never the less be in
satisfaction of the debt, so that he shall not take both the debt ad legacy.

In this case the legatee has a choice to either to take the legacy and forego the legacy and forego
the debt or to forego the legacy and insist on his contracted debt. However it should be noted that
there are there circumstances in which intention to fulfill an obligation (satisfaction) may not be
presumed hence limiting where the legacy is less than the doctrine in Uganda. For example
where the debt was contracted after the will where the legacy is less than debt where the legacy
and debt are of different nature and where the legacy is not as beneficial to the creditor as the
debt. Also sec 164 of the succession Act has limited the application of this doctrine as this aspect
of satisfaction is concerned in Uganda.

54
“Where a debt or bequeaths a legacy to his creditor and it does not appear from the will that the
legacy was is meant as satisfaction of the debt the creditor shall be entitled to both the as well as
to the amount of the debt”

Secondly satisfaction of portion debts by legacies (xvi) the general rule is that equity leans
against double portion hence equity will provide for the satisfaction of portion debts by legacies
to ensure equal division of the parents property among the children (xvii) hence where the legacy
is equal promised or exceeds it satisfaction of the portion debts is presumed .in Uganda however
this is limited under sec 165 of the succession Act “where a father ….. does not intimate by the
will that the legacy is meant as a satisfaction of the portion the child shall be entitled to receive
the legacy as well as the portion “ under satisfaction of a portion debt by a portion lord selborne
(xviii) stated “where a father …gives a legacy and later makes a gift in the child favour there is
presumption that the gift was either wholly or in part in a substitute for or an ademption of the
legacy “lastly is the satisfaction of legacies by legacies.

However the doctrine will only apply if the legacy is in a sum as great as or greater than the debt
or if there is a direction to pay debts (xix) (satisfaction of debts by legacies).

The doctrine of satisfaction has been incorporated in Uganda’s legal scene and can be traced in
sections 164 to 166 of the succession Act. Section 164 provides that where a debtor bequeaths a
legacy to his or her creditor, and it does not appear from the will that the legacy is meant as
satisfaction of the debt the creditor shall be entitled to the legacy as well as to the amount of the
debt. This means that a testator must show his intention to extinguish the debt which is in
conformity with the holding in Hammond-v-Smith [xx]. The judicature Act section 14(2) (b)
[xxi], Magistrates Court Act Section 11[xxii] also provide for the application of the doctrine of
satisfaction in Uganda’s legal scene. Its practicability is however very insignificant.

4.0 DOCTRINE OF PERFOMANCE.

Performance is yet another doctrine of Equity which is to the effect that where a person
covenants to perform a particular Act and later performs an Act “which may be converted to a
completion of this covenant”, it shall be supposed that he meant to complete it per Kenyon MR,
in Sow den v Sow den.[xxiii]. This doctrine is based on the maxim that “Equity imputes an
intention to fulfill an obligation” [xxiv].

Performance may take the form of a covenant to purchase and settle land, or a covenant to leave
money; it also applies to covenants in marriage settlements to lay out money, on the purchase of
land to be held on trust of the settlement. The doctrine also applies to situations where there is a
covenant to pay money to trustees to be used by them for the purchase of land. In this case, the
covenanter will simply be regarded as performing the covenant by buying land himself. The
doctrine also applies where the covenant is to settle property of a certain value.

The doctrine of performance in our legal scene today has a great effect in succession matters;
will are construed literally through the wording as well as the circumstances surrounding the
making. The other factors that reflect performance in succession matters are the onerous
bequests, contingent bequests and conditional bequests contained in Sections 109-123 of the

55
succession Act. However the fact that there is limited case law shows that the doctrine is of little
practical relevance in Uganda’s legal scene.

Question 5

(I)Equity won’t suffer a wrong to be without a remedy

The rationale behind the rule is that equity will intervene to protect a right which perhaps due to
technical effects is enforceable at common law. It’s not sufficient that the is equity of some
moral wrong the claimants right must be suitable for end enforcement by a court. Under trusts it
exemplifies this maxim, equity enabled the beneficiary through the procedures of the trust, to
enforce obligations where no remedy at common law existed. That is the beneficiary has no right
at common law to have the terms of the trust enforced but our legal system never the less
requires the trustee to carry out those terms to prevent him or her to commit what would be in
effect wrong against that beneficiary. Savers international (u) Ltd v DFCU bank ltd

Specific performance and injunctions constitute one of the chief ways in which equity
supplements the law by granting auxiliary or additional remedies where the common law
remedies where inadequate. The remedy will only be granted where it’s just and equitable to do
so having considered all the circumstances of the case for example it won’t be awarded in
contracts of every description but only where legal remedy is inadequate or defective that it
becomes necessary for equity to interfere like in the Sale Of Goods Act, contracts for sale of
goods, damages may be a warded for failure to supply goods.

However there are situations where equity can’t provide a remedy for example in situations of
unfair trade competition or contracts involving personal services. In such situations, courts may
be unable to order specific performance even where damages are inadequate. Therefore the
maxim is subject to what is realistic, practicable and convenient for the court.

(ii)Equity follows the law

This means that equity supplements the law and it's based on the law .equity may not depart from
statute law nor does it refuse to follow common law. This is further noted that maxim provides
that equity came to fill law.

According to the Judicature Act, equity is based on the law. Equity has adopted some of the rules
of common law for example those affecting mistake that is under mistake common law is rigid or
at times harsh that’s why equity has attempted to temper the unfairness in some areas by
introducing certain remedies where the common law failed to grant any, a leading example of an
equitable remedy could be granted at common law is sole Vs Butcher.

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The principle that only parties to a contract will be bound by that contract under the law of
contract is observed by a doctrine of equity for example special performance can’t be granted
where damages will provide adequate remedy, this is because equity follows the law and is
designed to supplement the grant of damages but not to over ride them like in contracts for sale
or lease of land or where chattels sold have a special beauty or interest specific performance will
be decreed. However if the common law rules are ancient or too rigid then equity won’t follow
them since it won’t promote fairness to the litigants.

(iii)He who seeks equity must do equity

A person seeking an equitable remedy must him or herself act fairly towards the defendant, thus
in case of Bank Of Uganda Vs Hassan Bassajabalaba where court held that Bassajabalaba
failed to act fairly when he forged a court order so as to get back his land titles hence an
equitable remedy couldn’t be granted to him.

This maxim can be illustrated through the following arrangements that is, doctrine of election
where donor by will gives property to E and in the same instrument purports to give Es property
to X, E will not be able to claim the whole of the gift to him unless he allows the gift X to take
effect , notice to redeem mortgage where a mortgage wishes to exercise his equitable right to
redeem he must give , consolidation of mortgage and illegal loans the maxim is effective since a
person has to prepare to do equity by repaying the amount of the loan.

(iv)He who comes to equity must come with clean hands

This means person seeking an equitable remedy or relief must show that his past conduct in the
transaction has been fair and honest. it ma redder to behaviour prior to the suit as opposed to
future conduct.The plaintiff must approach the court free from any blame on his part because
court wont grant equitable relief to the plaintiff if there is any evidence of fraud, mistakes,
misrepresentation or illegality, thus in Katarikawe Vs Katwiremu where court held that if a
tenant is in breach of several terms of his agreement with the land owner then court wont grant
relief.

Also when certain transactions are illegal and one seeks to get an equitable relief out of such a
transaction for example under the Employment Act which provides that wages can only be paid
in local currency and not in kind and any agreement to such will be illegal, null and void.
However for the inequitable conduct to amount to un clean hands, it need not be illegal strictly as
required by law. Its sufficient if the conduct is un conscionable and morally reprehensible and
need not have been to the other party to the action.

(v)Delay defeats equities

The essence of the doctrine is that an equitable relief won’t be given if the applicant has unduly
delayed in bringing the action unlike adverse possession, the doctrine can only be used as a
defense against an action and not as a basis for establishment of a cause of action thus where the

57
land owner knows that his rights are being violated and he chooses to sit idly, he is taken to have
delayed in the violation and will be stopped from arguing otherwise, in climatong Vs Olinga the
applicant for a period of thirty years occupied and cultivated the respondents land although the
latter was aware of the intrusion, he made no attempt to stop it or recover the land. High court
held that the applicant had taken too long to enforce his right. there is no fixed time for the
doctrine to operate its up to the court to decide whether or not in the circumstances of a particular
case it considers that delay to ring an action was unreasonable.

However the courts won’t apply the doctrine in situations which are governed by statutes of
limitations for example under The section 6 Limitation Act, provides that no person shall
make an action to recover land after the expiration of twelve years from the date the cause of
action accrued to him, where fraud is alleged there is no limitation period.

There are three basic defenses to the invocation of the doctrine of larches, where by courts won’t
permit delay so as to bar a claim and they include disability or infancy of the plaintiff, fraud on
the part of the defendant, ignorance of the facts on which the claim is based.

CONCLUSION

Basing on the above discussion, equity didn’t deny the existence of the legal right but it has
added something to it .Our legal system as a whole would have been UN fair to justice if the
system of the common law hadn’t been supplemented by the system of equity

QTN 6. Discuss the continued relevancy of the study of the doctrine of notice in Uganda.
(25mks)

The concept of notice refers to the knowledge of an existing fact. The rationale of the doctrine is
to prevent a buyer of superior title from setting it up against earlier owners of inferior interests
which affect the property. The effect of this is that the buyer of the legal estate with notice of the
prior equitable interests affecting the estate takes it subject to prior equitable interests in this
regard; “Equity looks at the substance rather than the form” Notice can be Actual,
constructive or imputed. And it is based on the maxim "he who comes to equity must come with
clean hands".

Actual notice; This is a situation where the buyer of an estate has actual or express notice of a
prior interest at the time when he or she made the purchase or at the time before the purchase
was completed . In regard to the relevance of the doctrine of notice .The Registration of Titles
Act Section 64 encompasses the doctrine and it provides that a buyer of land shall hold that land
subject to such encumbrances as notified to the registrar. In Sempa Mbabali v w k kizza Odoki
J held that the defendants plea of bona fid purchaser could not stand because they knew all along
that that part of land they had purchased was for burial grounds and also the seller had sold them
the land before his share of the land had been ascertained. This therefore means that his hands
were not clean.

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Constructive notice; defined by Salden j in Williamson v Brown; where a purchaser has
knowledge of any fact sufficient to put him in inquiry as to the existence of some right or title in
conflict with that he is about to purchase he is presumed either to have made the inquiry and
ascertained the extent of such prior right or to have made the inquiry and ascertained the extent
of such right or to have been guilty of a degree of negligence equally fatal to his claim. The prior
interest in land should always be put into consideration in U.P.T.C V Lutaaya. Karokora j.s.c
held thus “A proprietor takes land subject to the interests of any tenant in the land in possession
even if he or she had no actual notice of the tenant".

Imputed notice; notice which is neither actual nor constructive may be imputed to the buyer
through actual notice to the agent. It's established in agency law that that notice to an agent is
notice to the principal. In this regard, a buyer who instructed his agent to buy property at an
auction sale was taken to be affected by notice of an equity which came to his notice during the
course of the transaction. In Sejjaka Nalima v Rebecca Musoke Odoki j a held that the
appellant was not bona fide purchaser without notice owing to the fact that Musoke and co
advocates who were acting as her agents had known of the alleged fraud concerning the disputed
property

Question 6; Write short notes on the following

b).Imputed Notice

The purpose for the doctrine of notice is to prevent buyer of superior title from setting it up
against prior earlier owners of inferior interests which affect the property. The effect of this is
that the buyer of legal estate with notice of prior equitable interests affecting the estate takes it
subject to those prior equitable interests the doctrine of notice is one of the instances where
equity looks at substance rather than form. Notice simply means knowledge of an existing fact.
This may be divided into actual, constructive, and imputed notice

Imputed Notice; This is notice which is neither actual nor constructive may be imputed to the
buyer through actual or constructive or his or her agent. Its established agency law that notice to
the buyer is notice to the principal. Such Notice will only be imputed to the buyer through his
bonafide agent. In this regard a buyer who instructed his agent to buy property at an auction sale
was taken to be affected by notice by notice of an equity which came to his knowledge in the
course of transactions

However because of hardship of this rule, it was modified in Mount ford vs. Scott to the effect
that information acquired by a solicitor is one transaction cannot effect, though the doctrine of
imputed notice his principal in subsequent transactions .Thus it has been held that knowledge of
a solicitor in a previous transaction cannot be imputed to a buyer in a later transaction. The
solicitor for this purpose is not under a duty to pass his knowledge in a previous transaction to
the buyer when he later becomes his client. However, if the solicitor conspired to the detriment
of the other, then the aggrieved party will be protected by the doctrine of bona fide purchaser
without notice. In Sejjaka Nalima Vs Rebecca Musoke Odoki J held that the appellant was not a
bona fide purchaser without notice owing to the fact Musoke and advocates who were acting as
his agents had known of the alleged fraud concerning disputed property. There's also

59
constructive notice under the doctrine of notice and this is defined by Walden j in William son v
Brown as where a purchaser has knowledge of any fact sufficient to oust him on inquiry as to the
existence of some right or title in conflict with what he is about to purchase.

Actual notice on the other hand defined as the situation where the buyer of an estate has actual or
express notice of a prior interest at the time where he or she made the purchase at the time before
the purchase was completed. This can be seen in section 64 of the R.T.A a buyer of land shall
hold that land subject to all encumbrances as notified to the registrar. In Odoki J held Sempa
Mbabali vs. W.K Kidza and Sempa Mbabali vs. W.K Kidza that the defendant’s plea of
Bonafide purchaser could not stand because they knew all along that part of land they had
purchased was for burial grounds and seller sold the land before his share was ascertained.

c) The maxim Delay defeats equity

This maxim can as well be called the doctrine of latches .The essence of the doctrine of laches is
that an equitable relief will not be given if the applicant has unduly delayed in bringing the
action. The doctrine does not apply in situations which are governed by the statutes of limitation.
For instance the limitation act cap 80 prescribes periods with in which suits or actions should be
instituted in court. Six years is prescribed for actions based on contract or tort other than those
where the claim relates to personal injuries, in which case the action must be brought within
three years of the date on which the cause of action arose.

In addition tortuous and contractual actions against the government must be instituted within two
year and three years respectively of the date of the cause of action, while those related to
recovery of land claim to the personal estate of a deceased or under a mortgage must be
instituted with in twelve years of the date on which the claim accrued. Where fraud is alleged,
there is no limitation period. In Fabgemin vs. Aluko, it was stated that in considering the
doctrine of laces the court acts on three factors. First, the delay by the plaintiff second
acquiescence by the plaintiff in the delay. Third, change in the position of the defendant.
Furthermore, the doctrine will apply if the plaintiff behaves in a way which makes the defendant
alter his position in the belief that the plaintiff's claim has been abandoned or the delay amounts
to evidence of an agreement by the plaintiff to abandon his right.

Apart from the application of the doctrine to the equitable remedies of specific performance and
rescission of contracts, it also applies to the grant of letters of administration. An application for
letters of administration or challenge thereof must be made without delay; otherwise it may be
refused. Thus in Ephraim Vs Asuquo, the plaintiff applied have the grant of letters of
administration set aside .it was held that since two years had passed since the grant and the
administrator had probably completed the distribution of the estate ,the doctrine of laches applied
and the plaintiff's claim could succeed.

There are three Defences to invocation of the doctrine of laches. First, the plaintiff's ignorance of
the facts on which claim is based. Second the in fact or other disability of the plaintiff and finally
fraud on the part of defendant. In those circumstances delay will not be permitted to bar a claim.

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a) Judicature act 1873-1875

Equity evolved as a remedy to mitigate the rights of rigidity of application of common law and to
provide reliefs or remedies which the common law could not avail to litigants. The ordinary
meaning of equity is therefore the right doing, good faith, honest and ethical dealing in a
transaction or relationships between individuals. Equity introduced various reforms and these
reforms affected the out dated and unsatisfactory procedure of the court. And secondly the area
between the common law courts and chancery courts operated was not clearly defined.

There judicature act is one of the reforms introduced by equity. The recommendations of the
Royal commission was enacted as judicature 1873 to 1875.These acts abolished all the ten
existing superior courts and in their place set up a supreme court of judicature consisting of the
high Court of justice and the court of Appeal. The High Court of justice was to consist of three
divisions; the King's Bench, the chancery division and probate, Divorce and Admiralty Division.

The judicature acts effectively abolished the dual administration of justice as between the
common law courts and chancery court. Secondly the High Courts of justice were given power to
administer both equity and law concurrently together. Third, all claims, obligations and defences
were recognized and enforced by three divisions of the High Court of justice. Fourth the
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

d) Writs in Rem

In rem jurisdiction ("power about or against 'the thing'") is a legal term describing the power a
court may exercise over property (either real or personal) or a "status" against a person over
whom the court does not have in personam jurisdiction. Jurisdiction in rem assumes the property
or status is the primary object of the action, rather than personal liabilities not necessarily
associated with the property.

Question 5

The Earl of Oxfords case optimized conflict between the common law and equity
consequently seeing the steady decline of the applicability of both common law and equity
in modern legal systems. Per LLB2 student, is this fair assessment evolution of equity and
is contractual applicability in contemporary Uganda.

Answer

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History tells us, in brief, that Equity has its origins in the old English Courts of Chancery
(namely the court of the Chancellor). Due either to the inability of the Kings justices to enforce
judgments against powerful individuals (some noble families were very much a law unto
themselves in their Earldoms, Dukedoms etc during the Medieval period) or, with increasing
frequency in later years, defects or undue harshness of the common law people were driven to
submit petitions to the King, who was considered to be a repository of ‘Divine justice’. Such
petitions were often passed over to the Lord Chancellor, who would dispose justice in the name
of the King. With the passage of time such petitions were directed to the Chancellor and his
office of the Chancery began to function as a court of law. A significant aspect of the equitable
principles developed in these courts of Chancery was that they were so developed by Priests
(most Chancellors of the medieval period were ‘men of the cloth’). This ensured that the
principles of Equity were fundamentally based on the concept of ‘natural justice’ in keeping with
the lines of the Christian tradition of Good and Evil, and indeed in ancient usage the word Equity
means ‘natural justice’

The different views taken in certain situations, by the principles of Common law and the
principles of Equity, naturally led to conflict and confusion. In the reign of King James the First
it was held that decisions of the courts of Chancery would have overriding authority. While
Equity was initially free of the concept of ‘precedent’ from the late 1500s to the mid 1800s a
body of precedent, of cases based on equitable principles began to take shape, and the rules or
principles of equity took their final form with clear lines and with the introduction of the
Judicature Acts of 1873 and 1875 the Court of Chancery, along with the other Courts such as
Kings/Queens Bench, Common Pleas, Exchequer, Exchequer Chamber, Court of Appeal in
Chancery were absorbed by the Supreme Court.

It would be fair to say that the Judicature Act played the role of ‘fusing’ the system under which
both the Common law and Equity was administered, namely an amalgamation of the different
courts under one. This can be equated to the reference made in the statement that sets the theme
for this article, the ‘two streams of jurisdiction’ meaning the common law and Equity, ‘run in
the same channel’ meaning the administration of both within a common system of courts.

While the above, is somewhat straightforward, it is this authors opinion that the reference ‘do not
mingle their waters’ implies that the Common Law and Equity themselves were not ‘fused’ but
continued to function as two separate systems of law. Therefore I aim to establish that while the
Common Law and Equity came to be administered under the same system the fundamental
principles of Common law and Equity continue to act independently of each other in the interests
of Justice. This can, be shown most effectively through reference to decided cases, where it will
be seen that equitable principles have produced results quite different to what would be expected
under principles of Common Law and extending these decisions to derive certain fundamental
facts as to the position equitable principles hold within the legal system independently of the
common law. Independence of Equity and Common Law through decided cases.

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An important case in this regard was that of Central London Property Trust Ltd v High Trees
House Ltd. The facts of the case were as follows, During the Second World War countless
people had left the City of London to escape the German bombing of Britain’s Capital. As a
result of this many housing complexes were vacated and left empty. In a certain block of flats,
flats had been leased out for a period of 99 years at 2,500 pounds a year. To curb vacation the
landlord had offered to cut the rent by half (1,250 pounds a year). Once the ‘blitz’ was over and
the tenants returned the landlord litigated to recover the full sum of 2,500 pounds. As per the
Common Law the plaintiffs would have been legally able to recover the full sum of 2,500
pounds even for the period when the flats had been empty since the lease that fixed the amount
was under seal and hence (according to common law) could not be changed by a mere agreement
but only through a deed, however the principles of equity took on a different view. The judge
deciding the case – Lord Denning quoted “There has been a series of decisions over the last fifty
years which, although they are said to be cases of estoppel are not really such. They are cases in
which a promise was made which was intended to create legal relations and which, to the
knowledge of the person making the promise, was going to be acted on by the person to whom it
was made, and which was in fact acted on. In such cases the courts have said that the promise
must be honored….. As I have said they are not cases of estoppel in the strict sense. They are
really promises – promises intended to be binding, intended to be acted on, and in fact acted on.”
(The Discipline of Law, Lord Denning, 1979)

In the judgment it was held that through equity, the promise made was binding on the party
making it (the common law did not make such an allowance) and that the plaintiff could not
recover the full amount of money for the period when the flats were empty.

The case, in my opinion highlights the following key points;

a. While both the principles of Common law and Equity were administered as one
totality, in the above case we see the principles of equity coming into play to lead the
judge to arrive at a very different decision than he would have had to make if he had
followed common law principles. Hence we see equitable principles functioning, quite
distinctly from those of the common law in the interests of ‘justice’

b. As is quoted in Lord Denning’s book ‘The Discipline of Law’ a previous case where
similar equitable principles could have been applied, Salisbury Marques v Gilmore Lord
Justice Mackinnon felt unable to take an equitable view due a decision made by the
House of Lords in Jorden v Money which was thought to be binding where the concept
of estoppel was confined to representations of existing fact.

The significance of this observation is that, though the principles of equity could be used to take
on a different view of a situation as opposed to that taken by the common law it, in some

63
instances, needed courage on the part of the judge to break free from the bindings of common
law and allow these equitable principles to take flight. We see the action of Lord Denning in the
High Trees case was doing precisely this – giving due credence to the independent place the
principles of equity held in the legal system, free from the rigidity of the common law in the
interests of doing ‘justice’.

c. That the decision was possible in the High Trees case was due to the ‘conflict or
variance’ clause (section 25 of the Judicature Act of 1873) which deemed that where the
rules of common law and equity contradicted rather than complement, the rules of Equity
would prevail. This reality is one of the strongest arguments in this authors opinion for
establishing that the systems of Equity and Common Law do not ‘mingle’ and will be
discuses

Question One

With the aid of relevant cases distinguish between trust from other forms of legal relations.

Answer

A trust is a fiduciary relationship where the settler bequeaths the property to hold it for the other
person called beneficiary According to the case of green v under hill.

Trust and Agency. Agency is the contractual arrangement express or implied, written or verbal
where one person may act on behalf of another and bind that other as if he or she acted
personally. Agency a rises where a person called the agent has expressed or implied authority to
act on behalf of another called the principal and he consents to it. The trustee in exercise of his
office will contract as principal and cannot bind the beneficiaries unless that have constituted
him both trustee and agent binds his principal so long as he acts on the principal's authority on
apparent that he is deemed to have.

Although the trustee has a right of recoup an indemnity against the beneficiaries for any property
incurred expenses and creditors may subrogate those rights in certain circumstances there's
therefore no direct contractual link between the beneficiary and 3rd parties comparable to link
between the principal and third parties.

Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. Whereas a
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallot vs. Wilson

Trust and Debt

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The traditional view is that the relationship between trustee and beneficiary is not one of debtor
and creditor. That means that the trustee does not owe the value of the rights he hold to the
beneficiaries. This can be seen in the case of Morley vs. Morley, Barclays Bank Ltd vs. Quist
close investment Ltd25created confusion in this area, holding that a borrower of money can be
both a debtor and a trustee in respect of the same sum. That decision is how ever extremely
controversial and has been recently reviewed in Twinsectra Vs Yardley26, but the under the
traditional view enunciated above a trustee will not owe the value of the right held on trust, this
is not to say that a debt cannot form the subject matter of a trust. When we talk of trust of a bank
account, we mean nothing than the creditor’s right to sue is held on trust.

Trust and Bailment

A bailment arises where an owner of property gives permission to another person to possess it. A
bailment is a delivery of personal chattels to bailee subject to a condition that they be returned to
the bailor or be dealt with as the Bailor directs when the purpose of the bailment has been carried
out.

The Bailment and a Trust;

A bailee obtains only possession and what is referred to as special property in the goods while
trustee takes title to the trust property. Bailment is a common law notion worked out in
proceedings for common law relief such as actions of conversion, detinue, and breach of contract
whereas the trust a relationship is purely equitable.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason. Bailment only applies to personal chattels that are capable of delivery where as a trust
may arise in respect of real or personal property and whether tangible or in tangible. A bailment
is enforced by the bailor who is party to the arrangement while generally the trust is enforced by
the beneficiary who is not party to the trust instrument. Minimal in character compared to the
duties that exist in bailment. Bailment is restricted to chattels but a trust may exist to all types of
property

Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owner loose rights for example estoppel however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.

25
(1970)Ac 56
26
(2002) UKHL
65
Contracts and trust

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promise; on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

Re Cook27,indeed there can be no hard and fast lines between contract and trust because contract
is a source of rights while trust is a way of holding rights, indeed many rights held in a trust are
born of contract.

Settlement and covenants to settle.

Where property is vested in trustees on a settlement, it was held upon a trust on settlement.
However if the property has not yet been transferred to trustees but it's simply subject to a
consent to settle. The beneficiaries will only be able to enforce consent if they have given
consideration based on the principle equity will not assist a volunteer.

Power of appointment.

This refers to a power that is conferred upon a donee to dispose of the donor’s property by
nominating and selecting one or more third parties to receive it. The property may consist of
tangible items like cars, boats, house hold items or it may consist of an intangible interest in
property such as the right to receive dividend income from stocks The distinction between trusts
and powers of appointment is fundamental. A trustee must do as the settler directs whereas
powers of appointment are discretionary. Further the beneficiaries under a trust are owners in
equity of the trust property. However the objects of powers of appointment are nothing unless
and until the donor of the power makes an appointment in favour of the done. Vesty vs. IRC

Question 2

2(a). Discuss the capacity elements that must be possessed of a settler in creation of a trust.

A trust is a three party fiduciary relationship in which the first party, the settler or trustor
transfers or settles a property (often but not necessarily a sum of money)upon the second party
(the trustee)for the benefit of the third party the beneficiary.

The trustee is the legal owner of the property in trust as fiduciary for the beneficiaries who is or
are equitable owners of the trust property. Before creation of trust, there must be capacity that is
capacity to create. A trust is similar to the ability to hold and dispose of a legal equitable interest
in this regard.
27
(1965)CH 1902
66
Therefore before creation of trust a number of situations may be considered and mostly its
ability, anyone who can hold property can create trust there are exceptions for statutory bodies
and corporation’s .Minors also can't hold property though they can in some circumstances.

The trust instrument must show certainty of intention to create a trust, certainty of what the
subject matter of trust is and certainty of who the beneficiaries are and for trust to be valid there
must be transfer of property by the settler to the trustees.

The situations considered when creating trusts are discussed below;

Minors: A settlement on trust by minor is voidable in the sense that he can repudiate it during his
minority or within a reasonable time of attaining his majority.

In the case of Edward vs. carter, such settlement is how ever only possible in respect of an
equitable interest. Since am infant cannot hold legal estate, a settlement of trust in respect of trust
in legal estate is not possible by him.

1. Mental abnormality.

Generally a person who is mentally abnormal cannot create a trust under the trustee's act S.50 (1)
b. That means that for one to create trust he or she should be sane. "The court may direct a
settlement to be made of the property of a lunatic or any part thereof or any interest there in, on
such trusts and subject matter to such powers and provisions as the court may expedient."

The direction may affect property which has been acquired by the lunatic under a settlement, a
will or an intestacy with a view to protecting interested parties in the event of change in the lawn
of intestacy or circumstances affecting an earlier disposition by the lunatic.

3. Married Women: A married woman may create trust of her property. This is an obvious
provision in the 20th century yet significant given the relatively inferior status attributed to
women by African customs.

Even in English society this trend has historical connotation. In the words of professor’s keeton
and Sheridan.

The progressive emancipation of the married woman from the restrictions to impose by the
common law upon her capacity to hold and deal with real property was, until the second part of
the nineteenth century almost exclusively the result of equitable intervention. At common law a
wife's chattels became the absolute property of the husband. He also possessed the power to
reduce her chooses in action into possession whilst upon the birth of issue, he enjoyed the seizing
for life of such present estates of inheritance as his wife might have possessed as tenancy by
courtesy. From the reign of Elizabeth one on wards; however the court of chancery steadily
evolved the doctrine of estate of the married woman although it does not seem that this doctrine
was applied to real property before restoration.

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In pursuance of this object, the court of chancery established that wherever property was given to
trustees for the separate use of a married woman, she could hold and dispose of it in equity free
from her husband's interference and such property was protected effectually against the
husband's debts or other obligations.

Companies

Trading companies which are incorporated under the companies act have an implied power to
borrow for the purposes of the company's business.

Normally this power is uses to issue debentures and for the purpose of buttressing the issue the
company has power to execute a trust deed by which after covenanting to repay the loan with
interest until payment, assigns to trustees real property or lease holds belonging to the company,
to constitute security for the repayment of the loan, the trustees under taken to hold the property
upon certain trusts in favour of the debenture holders.

2b. Discuss the formalities if any, essentials for creation of a valid trust.

A settler may create a trust by manifesting an intention to create it .This can be seen in the case
of Jones vs. lock where the court of appeal of chancery held that there was no trust, because the
fathers intention was an outright transfer. They refused to perfect an imperfect gift through a
successful declaration of trust. It should be noted that no formalities are required for the creation
of an inter vivos trust of personality. However evidence in writing is required for the creation of
a trust in land. Thus by section 92 of the registration of Titles Act any declaration of trust
respecting land must be evidenced by a memorandum in writing signed by the party creating the
trust.

By will: secret trusts

Under section 50 of the succession act all trusts created by testemtary disposition must be
executed and attested in accordance with the formalities there in prescribed.

These are the will shall be in writing ,that it shall be signed at the foot or end there of by the
testator, or some other person in his presence and by direction, that the signature be acknowledge
by at least two witness in writing in the presence of the testator.

The issue arises as to the effect of dispositions which do not comply with formalities. Although
the requirement of formality was intended to prevent fraud what would happen if the intended
trustee hides behind the provisions of the statutes? This could happen in two instances. First
where the trustee induces transfer of land to himself by means of an oral promise to hold on trust
for the third party.

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Second, where the legatee or devisee induces the testator to make disposition in his favor by will
relying on an oral promise to hold the gift in trust for a third party. The general view is that
equity will not permit a statute to be used as an instrument of fraud.

The doctrine is said to be responsible for the growth of equitable principles relating to secret
trusts seen in the case of Cook Vs Brooking it was held that since the testator had declared the
terms of the trust to Simon in his life time there was a good secret trust although the actual
method of distribution among beneficiaries was uncertain.

Issue arises how secret trusts can be classified that is express or constructive; if the secret trust is
express it must be evidenced in writing in order to comply with the registration of titles act. If it
is constructive then the formal requirements are dispensed with even as regards land.

Professor Marshall argues that the fully secret trust is an example of constructive trust.

Half secret trust.

These arises where under a will property is given expressly on trust but without stating what the
trusts are its suggested that here there would be no possibility of fraud by the legatee in the view
of the contents of the will and the express declaration of trust. Such declaration destroys
possibility of personal gain on the part of the legatee. Half secret trusts have said to be valid
since Black well vs. Black well.

Completely and in completely trusts.

A trust is said to be completely constituted when the trust property has been finally and
completely vested in trustees. Where this has not been done this is said to be in completely
constituted.

Consequently a mere declaration of intention to create a trust is insufficient to create a trust.

Nevertheless all trusts arising under a will are completely constituted notwithstanding the fact
that may be either executed or executory.

The distinction between completely and incompletely constituted trusts is significant with
respect to the issue of consideration in the creation of the trust. Where valuable consideration has
been given for the creation of a trust, the issue of whether the trust is completely or incompletely
constituted is irrelevant since equity regards as done which ought to be done. However equity
will not perfect an imperfect gift since equity does not assist a volunteer.

The basic principle applicable in determining whether a trust has been validly constituted is
found in Milroy Vs Lord where Turner L.J stated that;

"In order to render a voluntary settlement valid and effectual, the settler must have done
everything which, according to the nature of the property comprised in the settlement was
necessary to be done in order to transfer the property and render the settlement binding upon
him. He may of course do this by actually transferring the property to the persons for whom he

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intends to provide and the provision will then be effectual or declares that himself holds it on
trust for those purposes.....but in order to render the settlement binding, one or other of these
modes must as I understand the law of this court be resorted for there is no equity in courts to
perfect an imperfect gift."

The implication of this statement is that transfer of property to trustees must follow the rules to
apply to the property concerned. Thus trust in respect of legal estates in land must be transferred
and evidenced in writing by the person creating the trust.

2. Shares should follow the format of transfer prescribed thereof.

3. Equitable interests and copyrights must be in writing signed by the person disposing of the
same.

4. Chattels must be in form of deed of gift or evidenced by intention to give, coupled with
delivery or possession.

A bill of exchange should be endorsement thereof, Milloy Vs Lord; a settler executed a

voluntary deed purporting to transfer shares in the bank of Louisiana to Lord, to be held on trust
of the plaintiff name of the transferee in the books of the bank Lord held that a power of attorney
on behalf of the settler and it would have enabled him to take all necessary further steps to obtain
registration. However this was not done. It was held that there was not trust although the
intention was clearly to the benefit of the beneficiary.

Discretionary and protective trusts.

A discretionary trust is one where the trustees hold property on trust for a group of beneficiaries,
and are required by the terms of the trust to pay or apply the income or capital in favour of such
of the beneficiaries as the trustee shall in their discretion think fit, whatever each individual
beneficiary is entitled to depends on what the trustee deems fit to give him.

In the case of Abasi vs. Kapon a testator appointed the defendants as executors of his will. He
directed them to give and bequeath all his properties to his children who were loyal to him,
excluding the plaintiff.it was held by the Divisional court that the words constituted a general
device and bequest of the testators real and personal property to the executors in trust for the
children of the deceased, excluding the plaintiff in such shares as the executors think fit.

On appeal it was argued for the plaintiff appellant that even if there was such a device to the
executors on trust, the trust was void. On ground of uncertainty both as to the individuals or class
who were to be beneficiaries of the trust.

In rejection of contention the appellate court held that the intention of the testator was to devise
all his estate to his executors for the benefit of his children excluding the appellant, the testator
created a discretionary trust and the duty of the executor was to select the beneficiaries in
accordance with the direction of the will.

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Discretionary trusts have to be drafted in such a way that they do not fail for uncertainty. They
are in a nature of special power of appointment. The power of election must be exercised with in
perpetuity period.

Protective Trusts.

A protective trust arises where the settled settles property on X for life until alienation or
bankruptcy, and when that happens the interest is directed to pass to Y or the settlement in with a
proviso that when a particular event happens to the interest would shift to y.

The protected life interest will be extinguished where there is sequestration of the tenant for life's
property, in which case a discretionary trust arises, where the principal beneficiary resides in
enemy controlled territory, although this may be avoided by a specially drawn protective trust,
where an order of the court is made charging a husband's protected interest with payment to his
wife.

The following are the essentials of a trust;

In the case of Knight vs. Knight it was stated that in order for a trust to be validly created, three
conditions are necessary: the words employed must be so used that taken as a whole, they ought
to be construed as imperative that is the words must be certain

The three requirements are usually described as the three certainties of a trust. It’s suggested that
apart from these requirements, a trustee is also necessary for the execution of a trust. Each of the
requirements will be considered in turn.

Certainty of Words.

As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. Consequently an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in Lambe Vs Eames, the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.

In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet.....in full confidence that she will do what is right as to the

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disposal thereof between my children either in her life time or by will after her decease. "It was
held that the wife took absolutely and there was no trust in favour of the children. Similarly in
the case of Mussorie Bank Vs Raynor, the privy council held that where a testator left all his
property to his widow, feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

However a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in Comskey Vs Bowring
Banbury; a testator gave to his wife, “the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testator intention was to give an absolute gift to the wife.

Certainty of Subject Matter

As was observed earlier, the subject matter of a trust could take many forms. It could be interest
in land in possession or reversion; chattels, money and chooses in action. In Re Diggles, it was
indicated that uncertainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis Vs Rippon, the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good
remembering always according to the circumstances, the church of God and the poor. It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.

In Bardwell vs. Bardwell, there was a direction, to remember certain persons; it was held that
there was no valid trust. In knight vs. Knight, there was direction to reward. My old servants and
tenants according to their deserts. it was held that the purported trust was invalid In Re Jones, a
gift was given to a wife, absolutely, followed by a direction that, as to such parts of my estate as
she shall not have sold or disposed of, it should be held in trust for certain persons. It was held
that the purported trust was invalid.

The above cases may be contrasted with situations where the subject matter of the gift is to be
decided by the discretion of the trustee. Thus In Re Golay's Will trust, there was a direction to
the executors to allow a beneficiary to enjoy one of my flats during her life time and to receive a
reasonable income from my other properties. It was held that there was a valid trust because the
executors could select the flat; the words reasonable were not intended to allow the trustees to
make a subjective decision. They provided a sufficient objective determinant to enable the court
if necessary to quantify the amount.

Certainty of Objects.

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This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re Vandevells Trusts, it was
indicated that in case of future interests, the beneficiaries must be ascertainable with in the period
of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. With regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

The rest proffered by Lord Wilberforce is the same as one established in certainty of the objects
of a power in Re Gulbenkia's settlements consequently, it has been suggested that a combination
of the tests for powers and discretionary trusts has destroyed what used to be the most important
reasons for distinguishing between trust and powers.

More about certainty of objects can be seen in the case of Re wood there was a provision of a
sum of £ 2 per week for the week's Good cause of the BBC it was held that the beneficiary in this
instance was uncertain. Even if the directions were to be followed, the beneficiary could still not
be because seven good causes were advocated one week in each month from different solutions.

Related to test of certainty of objects is what has been described as trusts of imperfect
obligations.

As is evident from the requirement of certainty of objects, a trust in order to be valid should be
beneficiary who can enforce it. Where there's no such beneficiary, except in cases of charitable
trusts, the trust will be regarded as unenforceable and thus bind.

In Re Astor's settlement Trusts, a trust was set up for the objects and purposes which included
the improvement of good understanding between nations ,the preservations of the independence
and integrity of newspapers, the promotion of freedom, Independence and integrity of the press,
the protection of news papers from being absorbed by combines, the restoration and maintenance
of the independence of the editors of and writers in newspapers ,the securing for the public of

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means of ascertaining by whom any news papers is actually owned or controlled and the
establishment of any charitable public or benevolent schemes for the improvement of news
papers, the relief of persons engaged in journalism, for ant of the objects previously mentioned.
It was held that the trust failed for lack of ascertainable beneficiary. We can also see in the case
of Re Shaw where it was held that the trust failed due to lack of someone to enforce it.

Therefore when the words of trust are not certain there's no creation of trust, consequently the
drone of the gift takes beneficially, likewise the done will take beneficially where the trust fails
for un certainty of property, the reason being that although an intention to create a trust may be
evident there's no property to which it can be attached.

3.You have been consulted by Chege .she wishes to leave a substantial sum of money to her long
term boyfriend Steve, but she does not wish any reference to the gift to appear in her will. She
does not want her husband Julio to know about it. She has two friends Nancy and tom that she
says are my discretion and will witness the will and do anything else required. Advice Chege on
how far all her wishes can come into effect.

A trust can be defined as relationship that is recognized by equity, it arises where property is
vested in a person or persons known as trustees who those trustees are under a duty to hold for
the benefit of other persons known as beneficiaries. The interests of beneficiary are normally
described in the instrument creating the trust; however these may be implied or imposed by law.
It can also be noted that the beneficiary interest should be proprietary meaning it can be sold or
bought. And it should also be emphasized that for trust to be created there must certainty of
intention, object and the subject matter. A trustee have the legal ownership carrying with it
responsibilities and burdens whereas beneficiary would have the advantage of any ownership.
An executor would similarly have the burdens and responsibilities and could be expected to
distribute property in accordance with the will.

The whole scenario of Chege when I analyze it concerns a gift. A gift in the law of property is
the voluntary transfer of property from one person to another without valuable consideration
.And for a gift to be effective the owner should have the intention; we Chege having the intention
to transfer money to Steve, and it should be noted that a promise to make a gift in the future is
unforeseeable and legally meaningless even if the promise is accompanied by immediate transfer
of the physical property in question.

The gift should also be delivered to the done for it to be effected. If the gift is of a type that can't
be delivered in conventional, it can be delivered in a constructive way and the done must accept
the gift in order for the property transfer to take place, however because people accept gifts one
will be presumed so long as the done does not expressly reject.

A gift can be inter vivos ,and this per our case for today, Inter vivos is a legal term referring to
transfer of gift made during one's life time as opposed to testamentary that is transfer of gift takes
place after the death .

A trust can thus be created inter vivos or by will, this is obviously that Chege should apply inter
vivos trust. There two types of inter vivos trust that is the settler may transfer the property to the

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trustees and declare that those trustees will hold the property on trust for Steve. The settler may
declare himself as trustee holding the property on trust for others.

However as per chugs case, the best type to use is that Chege may transfer the money to her
friends that is Tom and Nancy, and they be trustees for Steve .That is they hold it for Steve since
Chefs does not want her husband Julio to know about this. Therefore the gift will not be quested
in the will.

But if it was not for Chege not hiding it from the Husband she could also declare herself as
trustee holding property for others, or include it in the will just and given after her death.

Question 3

Discuss the three certainties required when forming an express trust.

Answer;

An express trust is one which has been intentionally created by a settler himself though
manifestation of an intention to create one. The most common methods of creation are by deed
or will by unsealed writing inter vivos or by word of mouth. It's a trust created in express terms
and usually in writing as distinguished from one inferred by the law from the conduct or dealings
of parties.

Property is transferred by person called settler or grantor to a transferee who holds the property
for the benefit of one or more persons called beneficiaries.

Express trust may be sub divided into executory and executed trust, on the hand completely and
in completely constituted trusts, on the other. An executed trust is one which in which the settled
has indicated inappropriate technical terms what interests are to be taken by all the beneficiaries.
An executory trust is one in which the settler has indicated to his trustees a scheme of settlement
but the details are to be gathered from his general expressions.

The distinction is of practical significance in two respects, Firstly while the language of an
executed trust is strictly construed, an executory trust is liberally construed. Secondly, where in
an executed trust the settled makes use of technical expressions, the interpretation of which the
law recognizes certain rules, equity follows the law and gives effect to such interpretation.
However, with an executory trust, equity attributes less importance to the use or omission of
technical words. Rather it seeks to discover the settler’s true intention

Once the intention is discovered, equity orders the preparation of a final deed which gives effect
to the settlor’s intention which is discoverable from the language of the settlor’s instrument.

The distinction between a completely and in completely constituted trust is necessary in order to
distinguish a trust from a void settlement. A trust can only be valid if the title to the property is in
the trustee and if the trusts have been validly settled.

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The three certainties of Express trust are; Certainty of intention; there must be real intention by
the settled to dispose of property and create trust ,not just make a gift ,a trust can also be created
contrary to the intention of the settler alleged to have created it .Commissioner of stamp Duties
vs. Soliffe

Certainty of subject: The property the subject of the trusts must be sufficiently ascertainable at
the time the trust was created. Herdegen VS Federal Commissioner of Taxation

Certainty of object: Beneficiaries must be ascertainable

Fixed trust Weston vs. Weston

Discretionary trust .Criteria certainty test. Is whether it can be said that a given individual is or
not a member of the range of objects? Re badems Deed trusts Mc Phail vs. Doulton

QUESTION 4

Discuss the exceptions to the rule that equity will not assist a volunteer in any two of the
following;

a) Donatio Mortis Causa

A Donatio mortis causa is a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor. This could be distinguished from a normal inter vivos gift
under which title immediately passes to the transferee, a testamentary gift which takes effect
under provisions of a property executed will.

The essentials of a valid Donatio mortis causa were articulated by Lord Russels C.J in Cain vs.
Moon They are;

 The gift must have been in contemplation though not necessarily in expectation of death;
 The subject matter of the gift must have been delivered to the donee;
 The gift must have been made under such circumstances as to show that the property is to
revert to the donor if he should recover.

The first condition was illustrated in the case of Wilkes be Allingtin. In that case, the donor was
suffering from an incurable disease. He made a gift knowing that he did not have long to live .In
actual fact, he had an even shorter time he imagined .He died two months later of pneumonia. It
was held that the gift was valid. The second condition may be illustrated from Re Weston, where
it was held that where a dying man, could be shown to have handed over to his fiancée his post
office savings book, his action was sufficient to constitute an effective donation mortis causa of
the balance recorded in the book.

b) The Rule in Strong vs. Bird

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Where a person makes an imperfect gift to x and subsequently appoints X his executor, upon the
death of the donor, the property vests in fully in X. The equity of the beneficiary under the will is
displaced by X's prior equity. Consequently, X may retain the property irrespective of the fact
that until the donor's death X's title was imperfect. The rule has been extended to apply to a done
who has taken out letters of administration to the state of the donor, and the personal
representatives of a person who had converted in favor of volunteers and had subsequently been
appointed a trustee of the settlement in favor of volunteers.

Further more for the rule to apply, the gift must have been perfect in every way except for the
legal formalities required for the transfer of title .Thus in Re Free land, a testatrix promised to
give the plaintiff a motor car in the future but didn't do so. On the death of the testatrix, the
plaintiff became her executrix and claimed that the imperfect gift had in consequence been there
by perfected. The court refused to apply the rule in strong vs. Bird, there having been no
intention to make the plaintiff the owner of the car immediately.

Finally, any one relying on the rule must show a continuing intention on the part of the donor up
to the time of his death. Thus in Re wale, investments of which the settler was absolute owner
were settled by her voluntarily in 1938 for the benefit of her daughter. The settler did not take
any steps to transfer these investments to trustees, who however, were appointed executors of the
settlors will .The will was subsequently altered from time to time and it eventually disposed of
all her estate to other beneficiaries. It was held that although an incompletely constituted trust in
favor of the daughter had been created by the settlement of 1939, the settled had not shown any
continuing intention to benefit the daughter.

4b) Discuss the remedies available to the beneficiaries for breach of trust.

A breach of trust consists of an improper act, neglect, default or omission of a trustee with regard
to trust property or of a beneficiary. It may include; direct intermeddling with trust property for
improper purposes, failure to exercise proper care in discharging a duty and male fide exercise of
a discretion. In these instances, the trustee must replace any consequential loss from the trust
fund as a result of his or her actions. The purpose of the rule is not to punish the trustee but to
compensate the beneficiaries. The following are the remedies available to the beneficiaries for
breach of trust;

Compelling performance of the trust.

It should be noted that if a trustee neglects the administration of the trust or defaults in protecting
the trust estate, a beneficiary may take steps to ensure that he takes the necessary actions in the
interest of trust property.

For example where a trustee fails to renew lease hold, where the character of trustee is such as
would endanger to fraud among others. Apart from the general, there are certain equitable
remedies to which a beneficiary may resort; that is he may apply for an order of injunction to be
granted by court, where a breach of trust is contemplated. This can be seen in case of Milgan vs.
Mitchell.

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In this respect by law of property legislation in some jurisdictions trustees for sale shall so far as
practicable give effect to the wishes of the beneficiaries of full age. Consequently failure to
consult them or some of them amounts to breach of trust which can be restrained by injunction.
An injunction may also be obtained against a bankrupt trustee who wants to obtain possession of
trust property.

The court may appoint a receiver upon the request, by application of a beneficiary. The
appointment of receiver is normally premised on the possibility of actual or prospective violation
of the duties of trusts likely to endanger trust property see the case of Middleton vs.
Dodswell.For example failure of the trustee to agree so that the trust cannot be properly
administered, loss of part of trust property through failure to realize it, refusal of trustee to act
and denial of the trust.

In the case of Odulate vs. odulate, the applicants applied for an order of the court for a transfer
of administration of the estate in dispute to an administrator or receiver operating under the
supervision of the court pending the determination of the substantive proceedings.

It appeared from the pleadings that there was a total dead lock in the administration of the estate
and it was no longer possible for the defendants to meet to perform duties and functions as
administrators and trustees of the estate. The trust funds which could have been paid into the
estate account with the bank were under control of factions trustees.

Thirdly when the property is endangered as when it is invested in un authorized and hazardous
securities, court mat on the admission of the trustee that the fund is in his co trustees hands order
the amount to be paid into court by trustee who is not holding the fund. if that trustee admits that
the fund has not been properly applied.

Seen in the case of Fregene vs. Aweshika; the plaintiff applied to court to remove defendants
from the office of trustees. An account and injunction restraining the defendants from carrying
on the duties of trustees, on ground of alleged misconduct. It was proved that the defendants
relieved the principal trustee of his post and replace him with another person.

It was held that those defendants were guilty of misconduct and mismanagement should be
removed from office and renders the account to trust fund. It has as well been observed that
where a trustee commits a breach of trust, fraudulent or otherwise any beneficiary can bring an
action to question the validity of the acts of the trustee and need not to sue in a representative
capacity.

Proprietary Remedies

a) Advantage over personal remedies

It should be noted that with regard to proprietary remedy, satisfaction of the plaintiff's demand
does not depend on solvency of the defendant trustee. If the property to be traced belongs to
plaintiff in equity, it will escape the defendant’s bankruptcy. In some cases the plaintiff will be
able to take advantages of increases in value of property. Thirdly there are cases in which

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proprietary remedy is available although no personal action is possible. Fourthly judgment from
a proprietary action Carries interest from the date with the property came to the defendants hands
while claims in personam carry interest only from the date of judgment.

Doctrine of unjust Enrichment.

It has been suggested that proprietary remedies cannot be fully understood without appreciation
of the doctrine of in just enrichment. This doctrine appears in virtually every legal system.
Basically it's to the effect that where the defend is in justly enriched in the expense of the
plaintiff, the defendant must make restitution to the plaintiff.

Tracing at common law.

A proprietary remedy is one which entitles a claimant to treat specific property thereof as his
own. The common law did not develop a real action in respect of chattels which entitled a
plaintiff to specific recovery thereof. The courts at common law recognized the owner of the
chattel but there was no action at common law of paying damages of returning the chattel.

Discretion to award specific recovery was in court. The issue thus arose if the right of the
plaintiff was limited in case of a specific chattel, should this right change when defendant
changed one chattel to another? The answer is the chattel can be followed so long as it's nature
could be ascertained as such. Right only ceases when the means of ascertainment fail.

Tracing in equity

Equity has developed more sophisticated methods of tracing.

Straight case

This is one where there has been no mixing of trust funds with the trustees own money.
Consequently, if the trustee has sold trust property, the beneficiary may take the proceeds of sale
have been used to buy other property bought or hold it as security for the amount of money used
in purchase. This is subject to the condition that claims in equity are invalid against a bona fide
purchaser for value without notice of the trust.

Mixed Funds

In the hands of trustees

The situation worsens when trustee has mixed trust funds with his own or after mixing there are
additional dealings with fund .The burden of proof is on the trustee to prove initially that part of
the mixed fund is his own. In Re Tolley’s W.T Thomas j stated that...

If a trustee amalgamated trust property with his own, his beneficiary will be entitled to every
position of the blended property which the trustee cannot prove to be his own.

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Consequently, if the compositions of the mixed fund are established at the time of the original
mixing, the problem of identification is of determining how to account for the reductions in the
fund by payment to increase in the fund by payment there in.

This can be seen in the case of Re Hallett's Estate; Hallet was a solicitor, died after having
mixed his own money certain funds from two trusts. The other trust had his client Mrs. Cotteril
as beneficiary. At his death, the funds were insufficient to pay his personal debts and to meet
trust claims. Three issues arose

1 whether Mrs. Cotteril not being a beneficiary of trust of which Hallet was a trustee was entitled
to tracing remedy on ground of her fiduciary relationship

2. assuming she was how to allocate the payments from the funds as between Hallet and
claimants

3. How to allocate payments as between claimants themselves.

It was held that Mrs. Cotteril was entitled to trace and payments out must be treated as Payments
for Hallets own money.

Professor Maudsley has criticized the application of tracing Rule in Re Hallets as having been
too precise in the sense that it could lead to a wrong result if earlier payment out was in favour of
an un authorized investment which prospered and the remainder disappeared. He suggests that
the correct rule should be that a beneficiary may claim a charge upon any part of trust fund
which he can identify as having been part of the trust fund.

Secondly he argues whether it's fair to apply the tracing remedy when the defendant is insolvent
and argues that this is a situation where it's necessary to ascertain whether the beneficiary who is
tracing should have priority over other creditors. Consequently the beneficiary will have to
compete with other creditors of the trustee, professor Maudsley states that this is unfair to
creditors in the Sense that they suffer when the trustee pays out money to a mixed fund.

In Rosco Ltd Vs Winder it was held that later payments into the mixed fund cannot be treated
as repayments of the money unless the trustee shows an intention to do so.

In the Hands of Fiduciaries or Beneficiaries

Re Hallet's case shows that tracing remedy is available as between beneficiaries, In Sinclair vs.
Brougham the Birkbeck society operated a banking business which was held to be ultra vires.in
the winding up competition arose between the claims of share holders and customers. The main
issue was whether customers had the right to trace into general assets of the society. It was held
that there was a fiduciary relationship between the customers and directors. The directors had
mixed the funds and customers had a right to trace into the hands of the society

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In Re Diplck,a testator left his residuary estate “such charitable institution or institutions or other
institutions or other charitable or benevolent objects or objects in England as the executors
should select it was held by the house of Lords that the words included non charitable as well
charitable objects. Consequently the gift failed for uncertainty.

In The hands of third parties

The right to trace property into the hands of a third party to which it has been passed by trustee
will depend on the nature of the equitable interest in the property. Consequently, where a trustee
has transferred trust property in breach of trust of transferee will be bound by the trust except in
the following circumstances. First when he establishes that he has legal title to property, second
that he is a bonafide purchaser for valuable consideration without notice that the transactions
were breach of trust. In Pilcher vs. Rawlins James L.J stated that "....a notice is an absolute, un
qualified, in answerable defense, and un answerable plea to the jurisdiction of this court....."

Where the recipient is a volunteer and has no notice, the rights of beneficiary to trace against him
will be equal to that of the recipients own creditors

For this purpose if an innocent volunteer mixes trust money with his own, the rules in Clayton’s
case neither apply nor Re Hallets case.

e) Critique of Right to trace.

Professor Maudsley has indicated that the right to trace should not be restricted to a proprietary
interest which is equitable but should also be available to a beneficial legal owner. This is inspire
of the suggestion in Re Dip lock and Re Hallets Estate that the equitable remedy of tracing
should only be available where a fiduciary relationship can be established .secondly the right to
trace should not be limited to situations where a proprietary interest exists. The breach of
fiduciary duty should be sufficient to make available the tracing remedy.

Questions: section A

QN. 1 The development of Equity was both controversial and significant to the legal system.
Do you agree with this statement?

QN 2 Discuss in details whether the judicature act of 1873-1875 simply fused the rules or the
administration of equity and law

QN 3 With the aid of relevant examples and authorities, discuss in details the doctrine of
notice and the Impact of registration legislation on the doctrine of notice.

QN 4 Malik the rich man by a will made the following bequests

(a) Five acres to my son Amos.

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 (b) Two acres to the healthy centre in lower konge
(c) My freehold house to my lovely wife Franca absolutely in full confidence that
She win hold it for either my daughter shakira or my son Shafiq as she deems fit.
(d) The remainder will go to my nephew

Discuss the legal effect of this trust

Section B
QN5. Explain the nature and principles guiding the issue of Interlocutory Injunctions.

QN6. Discuss the manner in which constructive trusts arises and what makes it different
from an express Trust

QN7. Discuss in details the requirements of a valid assignment

QN8. Explain 3 out of the following

(a) Equality is Equity
(b) Equity follows the law
(c) Anton pillar injunction
(d) Quia timet Injunction
(e) The effect of precatory words.

Good luck

Solutions

QN8. Answers

(a) Equality is equity

This equitable maxim ensures that where there’s a dispute over property in which more
than one party has a beneficial Interest, be divided equally unless there’s evidence
showing that the property should be divided in some other way. In the case of Midland
Bank Vs Cooke (1995) 4 ALLER 562Pg which concerned a dispute between husband
and wife over the Ownership of a matrimonial home, L] Waite said that in such a case
court must do its best to discover the conduct of the spouses understanding the amount
of share of the contributing spouses upon which each must have acted in doing what
each did, Otherwise court will apply the maxim equality is equity that the Interest
belongs to the Spouses in equal shares

(d) Quia Timet Injunction

This type of injunction is granted to prevent a threatened Infringement of the plaintiff’s
rights. This is where there are signs that infringement will occur but the rights haven’t
been infringed yet. This also occurs where the claimant has been fully recomposed for

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 the damages already suffered but alleges that there’s a risk that further damage may
occur. To grant this injunction, the following conditions must be established;
a. The plaintiff must show a very Strong probability of a future infringement.
b. That the damage is imminent and;
c. Will cause substantial and irreparable damage and that an award of damages will
not be of a sufficient remedy.
d. Damage will be of a serious nature.

(b) Equity follows the law.

The court of chancery never claimed to over-de the court of common law. Where a rule,
either of the common or Statute law, is direct, and governs the case with all its
circumstances or the particular point, a court of Equity is as much bound by it as a court
of law and can as little justify a departure from it. It’s only when there’s some important
circumstance disregarded by common law rules that equity Interferes.
Equity follows the law but not slavishly nor always.

QN 7. Answers

The benefit of a contract can be transferred to a third-party by a process known as

assignment. This is a transaction between the person entitled to the benefit of a contract and the
third party as A result of which the assignee becomes entitled to sue the liable under the contract
called the debtor. The debtor is not a party to the transaction and his consent is not necessary for
its Validity.

Common law enforced three types of transactions which in effect amounted to

assignment i.e.Novation, acknowledgment and Power of attorney.

Equitable assignments Included legal chose and equitable choses. Statutory assignments include
absolute assignments i.e. assignment by way of charge, assignment of part of a debt and
Conditional assignments, and debt or other thing in action.

The following are the requirements of a valid assignment.

(i) Formalities.
A statutory assignment must be in writing and Signed by the assignor. Assignment
which doesn’t satisfy this requirement may take effect as an equitable assignment. A
disposition of an equitable interest must be in writing and signed by the assignor or
his agent. Consequently, an oral assignment of an equitable chose is void.

(ii) Intention to assign.

It’s necessary to establish an Intention to assign. In William Brandit Son’s and Co.
VS Dunlop Rubber Co. Lord Macnaghten Stated thus, “an equitable assignment does
not always take that form, it may be addressed to the debtor, and A may be coached
in the language of command. VA may be a courteous request. H may assume the form
of mere permission. The language is Immaterial if the meaning is plain. All that’s

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 necessary is that the debtor should be given to understand that the debt has been
made over by the creditor to some third person”

It must be observed that simply because the creditor has asked a debtor to pay
third party doesn’t mean that he has assigned the debt.

(iii) Communication to assignee.

An assignment is not effective unless it is communicated to the assignee, or someone

with his authority, unless it is made pursuant to a prior agreement between the assignor
and assignee. The requirement of the communication to the assignee is that it is
equivalent of the delivery which is necessary to perfect a gift of a chattel made otherwise
than by deed.

(iv) Notice to debtor.

Notice of an equitable assignment may oral. However, if they chose assigned is
equitable, oral notice is seldom effective between successive assignees. Notice of the
statutory assignment must be in writing. It needs not to be given by the assignor, nor
at the time of assignment; it may be given by the assignee and is effective so long as
it is brought before the action is brought. The notice must be clear and unconditional.

QN2.Answers

The recommendations of the Royal commission where enacted as judicature acts 1873-75. These
acts abolished all the then existing superior courts and in their place Set up a supreme court of
judicature consisting of the High court of justice and the court of appeal. The judicature
effectively abolished the dual administration of justice as between the common law courts and
the Chancery Court. The High courts were given power to administer both equity and law
concurrently. All claims, obligations and defaces were recognized and enforced by the High
court. Common law Injunction exercised by chancery was abolished since it was no longer
necessary.

The dual administration of law and equity in England before the judicature Acts 1873-75 of
Britain does not exist in the Uganda system. By the Uganda Orders In council 1902 and 1911,
which received English law into Uganda law and equity were to be administered concurrently
and where there was conflict or variance between rules of equity and rules of common law with
reference to the same subject matter, the rules of equity would prevail.

H is now opposite to examine how courts have resolved the conflict between the application of
rules of equity and rules of Common law to issues before them.

Fusion of Law and Equity.

The issue arises as to whether the judicature Acts in regard to the relationship between law and
equity and common law merged to form one rule. There are two schools of thoughts on this
issue;

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The first is the view that there is no significant conflict and Consequently Section 25(11) of the
judicature Act 1873 is superfluous or unnecessary ary. In this vein, Maitland maintained that the
conflict, if any between law and of equity was simply jurisdictional and that equity came not to
destroy the land but to fulfill it.

The second school of thought is that there is a definite Conflict between rules of the common law
and those of equity hence relevance of the conflict resolution clause.

Fusion of rules or fusion of administration.

Finally is the controversy as to whether the judicature acts 1873-75 simply fused rules of or the
administration of equity and law.

One of the views is that the Acts achieved a fusion of both administration of justice and fusion of
the common law and equitable rules with the result that there is now one common rule. The
second opposing view is that the effects of the acts were only to create a common Count for the
administration of law and equity and not a fusion of law and equity.

Where there’s a conflict between the two, those of equity prevail. This is supported by the
prevailing distinction between equitable ownership of a beneficiary and the legal ownership of a
trustee under a trust and the maxim that was the equities are equal to the law prevails.

QN5. Answers

An interlocutory order means one made before final judgment in a suit. This injunction is limited
to apply only until the final determination of the rights of the parties by court. The object of an
Interlocutory injunction is to preserve the status quo until the trial of an action, for example to
restrain an association from holding a meeting without allowing certain members to attend.
Woodford V smith (1970) they may be prohibitory, mandatory or Quia timet. Interlocutory
injunctions Include temporary and interim orders

(i) Temporary Injunction

Granting a temporary Injunction is an exercise of judicial discretion and is meant to
preserve matters in status quo pending final determination as was held by the
constitutional court in Hon. Andrew Baryayanga V AG in an application such as
this one, it’s necessary to consider what the status quo that the applicant seeks to
preserve. Status quo was defined as the existing State of affairs, things or
circumstances during the period immediately preceding the application for an
interlocutory injunction.

The application for a temporary Injunction is granted from a pending suit and
therefore there must be a cause of action to sustain the application.

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 The locus classicus on the pre-conditions for grant of a temporary injunction in the
case of American Cynamid co. v Ethicon ltd (1975) HL There was an application
for a Quia timet injunction to prevent the infringement of a patent. The court laid
down the following principles to be followed when deciding to grant an interlocutory
injunction;
(a) Is there a serious question to be tried? If the defendant has no arguable defense at
all, then an injunction will be granted
(b) If there’s a serious issue, will damages be an adequate issue; will damages be an
adequate remedy so that an injunction will not be needed? This must be looked at from
the point of view of:
(i) The claimant i.e. would damages be adequate compensation for loss caused to
him by acts of the defendant before the trial?
(ii) The defendant i.e. if the claimant loses at the trial then could any loss to the
defendant be compensated by the claimant giving an undertaking in damages.
(c) If damages would be inadequate, then should an injunction be granted taking into
account the balance of convenience to each party?

In Uganda, temporary injunctions have been provided for in our laws. Order 41
Rule 1 of the Civil Procedure Rules s.1 71-1 provides for injunctions; thus in the
case of Kiyimba kaggwa v Katende (1985) HCB 43 where Odoki J stated the
three conditions for the grant of a temporary injunction thus;
“The granting of a temporary injunction is an exercise of judicial discretion and
the purpose of granting it is to preserve the matters in the status quo until the
question to be investigated in the main suit is finally disposed of. The conditions
for the grant of the interlocutory injunction are?
(i) That the applicant must show the probability of success.
(ii) Such injunction will not normally be granted unless the applicant might otherwise
suffer irreparable injury which would not adequately be compensated by an award of
damages.
(iii) If the court is in doubt, it would decide an application on the balance of
convenience prima facie case with;

Prima facie case/ serious issue to be tried.

Courts have opined that at this stage, it is impossible to know the prospects of success of either
parties and it is embarrassing for court to try a case with pre-conceived mind. Therefore the term
serious issue to be tried has been preferred to prima facie case with a probability of success.

Irreparable injury or damage.

This refers to damage that cannot be adequately compensated for in damages. In the American
cyanide case (supra) Lord Dip lock noted that court should consider whether in the event of
success of the plaintiff at the trial for permanent injunction, the loss which is a result a result of

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the defendants continuation to do was sought to be restrained can be adequately compensated for
in damages if damages are a good remedy, then the injunction will not be granted.

Balance of convenience.

Caryne v Global Natural Resources PLC (1984) 1 ALL ER 225 the balance that one seeks to
make is the balance of risk of doing an injustice. Therefore, courts consider which side would
suffer more injustice if the application is granted or denied.

Interim injunction.

This restrains someone only until a named day or further order or until the hearing of the main
application for a temporary injunction. It is often granted ex-parte.

The principles applicable to the exercise of the courts discretion in granting or refusing to grant
an interim order to maintain status quo are now settled in the case of kitende kalibogha and ors
v Eleonara Wismar where it was stated that the application and the existence of imminent
threat which will render the main application nugatory.

QN3. Answers

Doctrine of notice can be defined as where the buyer of a superior title is prevented from setting
up against prior or earlier owners of Interior Interests which affect the property. The effect of this
is that the buyer of the legal estate without notice of prior equitable interest affecting the estate
takes is subject to those prior equitable interests. The doctrine of notice is one of the Instances
where equity looks at the substance rather than form of a transaction in order to arrive at a just
result.

Notice means knowledge of an existing fact. Notice is divided into three categories, namely;
actual notice, constructive notice and imputed notice.

Actual notice.

This refers to a Situation where the buyer of an estate has actual or express notice of a prior
Interest at the time when he /she made the purchase or any time before the purchase was
completed. It consists of personal Knowledge of the prior equitable interest affecting the

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property which the buyer intends to buy. What is important is to show that the buyer had actual
notice of the equitable Interest before he/she acquires his/her Superior title.

In the case of Daniel Sempa Mbabali V. W.K. Kidza (1985) HCB 46 Court held that the
defendant’s plea of bonafide purchaser could not stand because they knew all along that the part
of the Land was for burial grounds and the seller had sold them land before his share had been
ascertained. The purchaser’s hands therefore were not clean.

Constructive notice

Salden J in Williamson V Brown (1857) 15 NY 354 at 362 defined constructive notice thus;

“ where A purchaser has knowledge of any fact sufficient to put him on an inquiry as to the
existence of some right or title in conflict with that he is about to purchase he is presumed either,
to have made the inquiry and ascertained the extent of such prior right or to have been guilty of
a degree of negligence equally fatal to his claim”

Duty to make inquiries. In making purchase of land, inquiries should be made to appropriate
persons such as neighbors, elders, local council officials and the office of the registry of titles in
order to ascertain whether the Land is subjected to any encumbrances or claims. If such inquiries
aren’t carried out, equity will assume that this is due to bad faith or toss negligence and thereby
taints the buyer’s title with mala fides. The effect of failure to investigate the title of the sure is
that the purchaser cannot Claim priority over earlier equitable interests.

Duty to Inspect the land; For instance if the property is occupied by someone other than the
seller, this is regarded as notice to the buyer. This is because the buyer should inspect the and
he/she wants to buy to see it there’s an occupier and find out the right or interest which such a
person possess in the land. If the buyer fails to inspect the land or make inquiries as to the title,
he will take the subject to the prior equitable interests.

In Uganda post and Telecommunications V AKPM Lutaaya CA No. 36 of 1996 Karokora

JSC held that if a person purchases an estate which he knows to be in the occupation of another
other then the Vendor, he is bound by all the equities which the parties a such occupation may
have in the land. In coming to this decision, Court relied on various decisions relating to the
presumption of constructive notice for example;

In the case of Fredrick J.K Zaabwe V Orient Bank Ltd & 5 others SCCA No. 04 of 2006.
Where it was held that the bank had knowledge that the directors were acting dishonestly, it did

88
not scrutinize the powers of attorney among others. The bank had at the very least, constructive
notice of the fraud but chose to ignore it. Therefore Count ordered the Registrar of titles to cancel
the registration of the mortgage and the transfer to Ali and to reinstate the appellant as registered
proprietor.

Imputed Notice.

Notice which is actual or constructive may be imputed on the purchaser through his/her agent. It
is established in agency law that notice to an agent is notice to the principal. Previously notice of
Information by a solicitor or lawyer in an earlier transaction would bind a principal in a later
transaction.

This was modified in the case of Mount field V Scott 37ER 1105(1823), to the effect that
information acquired by asolicitor in one transaction can not affect his principal in a subsequent
transaction. Where the solicitor acts for both parties, any notice that he acquires is imputed on
both parties. However, if it is shown that the solicitor conspired to the detriment of the other,
then the aggrieved party will be protected by the doctrine of bonafide purchaser without notice.

In the case of David Sejjaka Nalima V Rebecca Musoke (1992) KALR 736, m/s Musoke &
Co. Advocates who were acting on behalf of the appellant and Sendaula knew of unregistered
interest of the respondent and the fraud of Sendaula who was selling to the appellant. The
appellant was not a bona fide purchaser without notice because the advocates who were acting as
his agents had known of the alleged band concerning the disputed property.

ON6. Answers

Constructive trust is a form of implied trust that arises by operation of law and not by the
deliberate act of parties. No formalities are required for its creation. It is a trust Implied in a
variety of circumstances while the defendant has knowledge of some factor that affects his
Conscience m respect of specific property. In the case of Carl Zeiss Stiftung Herbert Smith &
Co. of 1967, LJ Edmund Davis explained a constructive trust as one which is imposed by equity
in order to satisfy the demands of justice and good conscience without reference and express or
presumed intentions of the parties.

The following are some of the most useful illustrations relied on to categorize the many
examples of constructive trusts.

(i) Unauthorized Fiduciary Gains.

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 A fiduciary is liable to his principle in respect of unauthorized gains obtained by reason of
his fiduciary office. Fiduciaries include not only trustees but also others who owe similar
duties of reality and good faith to their principle, such as solicitors and company directors,
partners and agents. Unauthorized gains may take a variety of forms such as secret profit, a
bribe or the use of confidential information to make unauthorized profit. Any profits made by
exploiting trust property or the office of trustee are held by the trustee on constructive notice
for the beneficiaries OJ the pre-existing trust

(ii) Strangers to the Trust.

This concerns a constructive Trust the art is imposed on a person who intermeddles or
interferes with the trust so that he assumes the responsibility of a trustee and faces
consequent liability on that basis. This is grandly known as trusteeship de son tort. The
responsibility of the trustee de son tort are the same as those of express trustee. Similar
liability extends to those who participate in fraudulent conduct.

(iii) Unconscionability
A further context in which constructive trusts arise concerns general and
unconscionable behavior i.e. prevention of fraud. Courts have proved willing to apply
constructive principles to a range of cases where the defendant acquires property
belonging to another by Unconscionable means for Instance acquisition of property
by killing, absence of statutory formalities and property acquired by joint venture.

(iv) Enforcement of agreements between parties.

Specifically enforceable contracts of Sale, mutual wills and family home constructive
trusts prevent a defendant from Unconscionably resiling from an agreement entered
to with the claimant.

Difference with express trust.

Constructive trust. Unlike an express or implied trust, a constructive trust is not created by an
agreement between a settler and the trustee. A constructive trust is imposed by the law as an
"equitable remedy." This generally occurs due to some wrongdoing, where the wrongdoer has
acquired legal title to some property and cannot in good conscience be allowed to benefit from it.
A constructive trust is, essentially, a legal fiction. For example, a court of equity recognizing a
plaintiff's request for the equitable remedy of a constructive trust may decide that a constructive
trust has been "raised" and simply order the person holding the assets to the person who
rightfully should have them. The constructive trustee is not necessarily the person who is guilty
of the wrongdoing, and in practice it is often a bank or similar organization.

Qtn 1 Answer

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Definition

The word ‘equity’ literally means fairness. Equity is defined in the Oxford Advanced Learner’s
dictionary 6th edition as “a system of natural justice allowing a fair judgment in a situation
where the existing laws are not satisfactory”. To a layman, the question ‘what is equity?’ does
not create any difficulty. It simply means right doing, good faith, honest and ethical dealings in
transactions and relationships.

The juristic sense of the term ‘equity’ may be subdivided into two, one complementary to the
other and both affecting the administration of law and justice by recognized judicial tribunals.

In the first place, there is the general juristic sense of the term ‘equity’. Here ‘equity’ means the
power to meet the moral standards of justice in a particular case by a tribunal having discretion
to mitigate the rigidity of the application of strict rules of law so as to adapt the relief to the
circumstances of the particular case or a liberal and humane interpretation of law in general, so
far as that is possible without actual antagonism to the law itself.

In the second place, there is the technical sense of the term ‘equity’. Equity in this sense means a
special and peculiar department of the English legal system which was created, developed and
administered in the Court of Chancery. This may be a satisfactory definition of English equity
before the Judicature Act of 1875 which provides for the administration of law and equity by the
same tribunal.

But after 1875, it is no longer satisfactory to define equity in terms of a court, that is, the Court
of Chancery as distinct from the other superior courts. The Judicature Act of 1875 has
amalgamated all the superior courts into a Supreme Court of Judicature administering both the
rules of equity and the rules of common law. Thus, ‘Equity now is that body of rules
administered by our English courts of justice which, were it not for the operation of the
Judicature Acts, would be administered only by those courts which would be known as Courts of
Equity.

At the beginning of the nineteenth century, the court structure in England and Wales was in a
mess. The population was subject to the jurisdiction of a dual system of superior courts. On the
one side were the three ‘common law’ courts, viz – the Common Pleas, the Queen’s Bench and
the Exchequer of Pleas. On the other hand was the Court of Chancery. The three common law
courts had grown up under the authority of the English kings during the middle Ages. They were
known as courts of ‘common’ law because according to royal propaganda, that law applied to all
subjects and the whole realm.

The system of justice administered by the early Chancery was based on common law rules,
though the rules were administered in a more liberal and more humane manner with a view to
achieving the end of justice. This is borne out of the fact that early petitions were in respect of
indubitable legal wrongs, assaults, batteries, imprisonments, and a variety of outrages inherent in
the feudal society.

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These wrongs were cognizable in the common law courts, but were presented before the
Chancery in form of petitions because of the inflexible position of the common law courts in
respect of writs; and because of certain ills of the society which made it difficult for commoners
and people of poor means to obtain justice from the common law courts.

Conscience jurisdiction

The jurisdiction of the Chancery in granting reliefs to the various petitions was based on reason,
conscience and justice in the administration of law. Chancery had a reputation as a court
administering an individual discretionary justice in contrast to the inflexible monoliths of the
common law. Whether this was perceived by all litigants in Chancery (or even common law)
may be doubted.
Much of the jurisprudence of the court has been concerned with working out the detailed
administrative implications of having taken an earlier moral stance. Many of these decisions, like
much administration, have little reference to individuated notions of right and wrong

Troubles Develop

Under the Chancellorship of the illustrious Thomas More in the mid-16th century, the cordial
relationship between law and equity was at its acme. Yet after his death, a major cause of
friction between the two, which had raised its head intermittently before, now broke into
the open: Chancery's ability to issue injunctions. It wasn't, however, the ability to issue
injunctions in the abstract that angered the law courts; it was Chancery's increasing desire to
enjoin actions at law either while they were going or, especially, before execution on a judgment.
Because the Chancellor was supposed to act "on the conscience," he had authority to
cancel or enjoin "unconscionable" actions or "sharp practice."

A case from 1482, described by Professor David Raack in an article on the history of the
injunction before 1700, illustrates this tension. In Russell's Case, the defendant committed a
trespass of the plaintiff's goods. Damages were set at 20 pounds, and judgment was awarded to
the plaintiff. Before execution on judgment, defendant went to Chancery and got an injunction
forbidding execution. After a while, one of the judge's in King's Bench, where the case was heard
and adjudged, asked the plaintiff's attorney if he wanted to pray for a judgment, but the attorney
was hesitant to do so because he might be imprisoned for disobeying a Chancellor's injunction.
The King's Bench judge then said that even if this was the case, the law courts had the authority
to release him by habeas corpus. Thus, a judicial ping-pong match, with potentially dramatic
and acrimonious consequences, was set up with the rival jurisdictions and courts.

Question 4

(a) Five acres to my son Amos.

This is a private trust which is for the benefit of a named individual i.e. Amos. This
benefit is a fixed trust as its share is stipulated i.e. 5 acres.

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 (b) Two acres to the healthy centre in lower Konge
This is a charitable trust thus a public trust. This is usually designed to promote a purpose
that is beneficial to the society. Two acres to the healthy center in lower Kongo, is
obviously beneficial in the advancement of health to the public.

(c) My freehold house to my lovely wife Franca absolutely in full confidence that
she will hold it for either my daughter Shakira or my son Shafiq as she deems fit.
This is the secret trust that usually arises in circumstances where the settler leaves a
legacy in his will on a secret understanding that the legatee will hold that property on
trust for the third party. In the above scenario, Franca holds property on behalf of either
shakira or Shafiq as determination on who to benefit will be based the prevailing
circumstances at the time of disposal.

(d) The remainder will go to my nephew

The nephew is a residuary beneficiary who receives all property transferred into the trust that
is not passed to specific beneficiaries. Thus the nephew will benefit under the will after all
the above three named beneficiaries i.e. Amos, health centre in lower konge and either
shakira or Shafiq.

SECTION A

Question One

2. With the aid of relevant case distinguish between trusts from other forms of legal
relations.

A trust arises where property is vested in a person or persons known as trustees who those
trustees are under a duty to hold for the benefit of other people known as beneficiaries or cestui
que trust.

The interests of Beneficiaries are normally described in the instrument creating the trust. It
should be noted that these may be implied or Imposed by the law. The Beneficiary interest are
also always proprietary that is can be bought /sold, given away or disposed by the will.

Trusteeship thus involves onerous obligations where the donor retains no responsibility for the
property once the gift has been made.

A trust is defined in Hague Convention on law of trusts, this has been incorporated into English
law by U.K Recognition and a trust is defined as the legal relationships created inter vivos or on
death by a person, the settler when assets have been placed under the control of a trustee for the
benefit of a beneficiary or for a specified purpose.

93
A trust has various characteristics like trustee has the power and duty and he is accountable, title
of trust assets stand in the name of trustee or in the name of any other trustee, assets constitute a
separate fund and are not part of the trustees own estate.

Trust and Debt

The traditional view is that the relationship between trustee and beneficiary is not one of debtor
and creditor. That means that the trustee does not owe the value of the rights he holds to the
beneficiaries. This can be seen in the case of Morley vs. Morley, Barclays Bank Ltd vs. Quist
close investment Ltd28created confusion in this area, holding that a borrower of money can be
both a debtor and a trustee in respect of the same sum. That decision is how ever extremely
controversial and has been recently reviewed in Twinsectra Vs Yardley29, but though under the
traditional view enunciated above a trustee will not owe the value of the right held on trust; this
is not to say that a debt cannot form the subject matter of a trust. When we talk of trust of a bank
account, we mean nothing than the creditor’s right to sue is held on trust.

A debt may or may not be contractual and the obligation of the debtor is personal but a trust is
proprietary. A trustee where possible use trust property in income bearing investment and
account to the beneficiary for income. In the case of a debtor such an obligation is un necessary
except in so far as provided for in agreements express or implied. This can be seen in the case of
Potters vs. Loppert 1973 at 399.

If money borrowed is stolen from the borrower he is still under an obligation to repay, how ever
with in trusts, a trustee is not liable for the loss which is not attributed to his negligence Morley
vs. Morley

Further the words of an instrument may be employed in such a manner as to create both personal
and trust obligation there by creating a situation where a debt and trust exist.

In the case of Barclays bank Ltd bs Quits close investment lt1970 Ac 561,In the above case
Rolls Royce Razor blade ltd was highly indebted to Barclays bank and was in need of 209,000
pounds to pay dividends which has been declared on its shares. The sum was borrowed from
Quits close under an arrangement whereby the loan was to be used for that purpose. The money
used into a separate account at Barclays bank which had notice of that nature of the arrangement.
Before dividends were paid rolls Razor went into liquidation.

Issue: whether the money on the account was owned by the beneficiary Rolls Razor ,in which
case Barclays bank claimed to set against the overdraft or whether Rolls Razor had received the
money as trustee and still held it in trust of Quits close.

House of Lords held: The money had been received in trust to be applied for payment of
dividends that purpose having failed, the money was held in trust for Quit close.

28
(1970)Ac 56
29
(2002) UKHL
94
The fact that the transaction was a loan recoverable by an action at law did not exclude the
implication of a trust. The legal and equitable rights exist the bank having notice of the trust and
not retain the money against Quit close...

The difference between the two is crucial a number of reasons;

One is in breach of instructions your friend sells the painting to an innocent purchaser it will
matter a great deal whether you created bailment or trust. If the friend was a bailed then the
purchaser will not acquire at the good against you and will be able to recover the paintings value
from purchase in action in tort law of conversion.

The basic rule is memo data quod habit that means that no one gives who possesses not, but if
your friend was a trustee, the position of the purchaser would be different. For now your friend
has the right in question and capable of passing it on to third parties. You of course have rights
under trust but such rights destroyed when subject matter of the trust comes into the hands of an
innocent purchaser of value.

The position of bailment is thus governed by common law, the position of bailed is similar to
that of a trustee in that both are entrusted with another's property.

Contracts.

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promise; on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

Re Cook30,indeed there can be no hard and fast lines between contract and trust because contract
is a source of rights while trust is a way of holding rights, indeed many rights held in a trust are
born of contract.

A contract is a common law personal obligation resulting from an agreement between parties on
the other hand a trust is an equitable relation which can rise independently of an agreement.
However the situation when a distinction between the two is hard to draw that is to say Trust
and Bailment

A bailment arises where an owner of property gives permission to another person to possess it. A
bailment is a delivery of personal chattels to bailed subject to a condition that they be returned to
the bailer or be dealt with as the Baylor directs when the purpose of the bailment has been
carried out. Contract act part 9 of 2010 discusses bailment. For example Suppose your you have
an emergency meeting some were and your looking after some properties and on this note you
may trust or bail someone to act in your absence with the bailment price or benefits.

This will depend on the location of your title, your right to exclusive possession of the property

30
(1965)CH 1902
95
If you vested it in a friend then they will a trustee of that right for you. If you have however kept
your right in yourself, handing it over only the possession of the property the transactions will be
one of bailment not trust.

The difference between the two is crucial a number of reasons;

One is in breach of instructions your friend sells the painting to an innocent purchaser it will
matter a great deal whether you created bailment or trust. If the friend was a bailed then the
purchaser will not acquire at the good against you and will be able to recover the paintings value
from purchase in action in tort law of conversion.

The basic rule is memo data quod habit that means that no one gives who possesses not, but if
your friend was a trustee, the position of the purchaser would be different. For now your friend
has the right in question and capable of passing it on to third parties. You of course have rights
under trust but such rights destroyed when subject matter of the trust comes into the hands of an
innocent purchaser of value.

The position of bailment is thus governed by common law, the position of bailed is similar to
that of a trustee in that both are entrusted with another's property.

The Differences between Bailment and a Trust;

1. A bailed obtains only possession and what is referred to as special property in the goods while
trustee takes title to the trust property.

2. Bailment is a common law notion worked out in proceedings for common law relief such as
actions of conversion, retinue, and breach of contract where as the trust relationships are purely
equitable.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason.

3. Bailment only applies to personal chattels that are capable of delivery where as a trust may
arise in respect of real or personal property and whether tangible or in tangible.

4. A bailment is enforced by the bailor who is party to the arrangement while generally the trust
is enforced by the beneficiary who is not party to the trust instrument.

In bailment there's no transfer of property from the bailer to the bailed. Bailment duties are
dependent on the rules of common law and not equity.

The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.

Bailment is restricted to chattels but a trust may exist to all types of property

96
Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owner’s loose rights for example estoppel however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.31

Settlement and covenants to settle.

Where property is vested in trustees on a settlement, it was held upon a trust on settlement. How
ever if the property has not yet been transferred to trustees but it's simply subject to consent to
settle. The beneficiaries will only be able to enforce consent if they have given consideration
based on the principle equity will not assist a volunteer.

Power of appointment.

Appointment often has its everyday meaning, its common talk of the appointment of a trustee for
example, how ever appointment also has a technical trust law meaning either

The act of appointing that is to say giving an asset from the trust to a beneficiary (usually where
there's some choice in a discretionary trust)

The name of the document which gives effect to the appointment.

The trustee's right to do this, where it exists is called power of appointment is given someone
other than the trustee such as the settler, the protector or a beneficiary.

This refers to a power that is conferred upon a donee to dispose of the donor’s property by
nominating and selecting one or more third parties to receive it.

The property may consist of tangible items like cars, boats, house hold items or it may consist of
an intangible interest in property such as the right to receive dividend income from stocks

The distinction between trusts and powers of appointment is fundermental. A trustee must do as
the settler directs where as powers of appointment are discretionary.

Further the beneficiaries under a trust are owners in equity of the trust property. However the
objects of powers of appointment are nothing unless and until the donor of the power makes an
appointment in favour of the done. Vesty vs. IRC (1980) Ac 1148

Trust and Agency.

Agency is the contractual arrangement express or implied, written or verbal where one person
may act on behalf of another and bind that other as if he or she acted personally. Agency arises
where a person called the agent has expressed or implied authority to act on behalf of another
called the principal and he consents to do so

31
Pilcher vs. Rawlins
97
An agent is normally regarded as an accounting fiduciary party and he binds the principal vis-à-
vis third parties. Royal Bruness Airlines vs. Tan 32where a travel agent was appointed to sell
tickets for the plaintiff Airline on condition that all monies received by the agent were to be held
for the airline on trust.

The similarities between Trust and agency.

 Relationship of trustee and beneficiary is fiduciary in nature and as well that of agent and
principal is normally fiduciary
 Both must act personally and should not delay at the powers
 Neither of them make un authorized profits from their office

The Differences between trust and agency are discussed below;

 The trustee in exercise of his office will contract as principal and cannot bind the
beneficiaries unless that have constituted him both trustee and agent binds his principal so long
as he acts on the principal's authority on apparent or ostensible that he is deemed to have .
 Although the trustee has a right of recoup an indemnity against the beneficiaries for any
property incurred expenses and creditors may subrogate those rights in certain circumstances
there's therefore no direct contractual link between the beneficiary and 3rd parties comparable to
link between the principal and third parties.
 Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. whereas a
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallot vs. Wilson33
 However if the beneficiary is Sui Juris un-animoud and together entitled May demand
that the trust property be distributed and consequently that the trust be brought to an end.
 The principal in agency gives binding directions to his agent whereas beneficiaries cannot
control the exercise of the trustee's direction seen in Re-brock 34
 The central distinction between agency and trust is in relation to property. An agent does
not per se hold any property for his principal. Many agents do not obtain items of property and
those who do so acquire only possession but not the other hand there can be no trust unless title
to the trust property vests in the trustee or in another party on behalf of the trustee.

It should further be elaborated that trust and agency do overlap this of the reason that trust can be
created under which a trustee undertakes a contractual obligation to act on behalf of the
beneficiary and an agent may become a trustee for instance he acquired title to property to be
held for the benefit of his principal.

It's argued that Agent becomes trustee for his principal if he obtains title to the property for the
principals benefit, but this isn't easy to gauge in practice especially if what's transferred is a mere
chattel as it was in the case of Cohen vs. Cohen court held that she succeeded in all the claims
that court finding that the husband stood in fiduciary relationship with regard to the wife's
32
(1995)2 Ac 378
33
(1930).
34
(1948)Ch 206
98
property in the circumstances and was therefore a trustee for her benefit. Court followed the
decision in Burdick vs. Garrick 900DM 35where Lord Justice Giffard stated

"In respect of attorneys who had been authorized and buy property and had attempted to set up
the statute of limitations as defence "there was very special power of attorney under which the
agents were authorized to receive and invest to buy real estate otherwise to deal with property
but under no circumstance could the money be called theirs

Question 2

2(a). Discuss the capacity elements that must be possessed of a settler in creation of a trust.

The trustee is the legal owner of the property in trust bas fiduciary for the beneficiaries who is or
are equitable owners of the trust property. Before creation of trust, there must be capacity that is
capacity to create. A trust is similar to the ability to hold and dispose of a legal equitable interest
in this regard.

Therefore before creation of trust a number of situations may be considered and mostly its
ability, anyone who can hold property can create trust there are exceptions for statutory bodies
and corporation’s .Minors also can't hold property though they can in some circumstances.

The trust instrument must show certainty of intention to create a trust, certainty of what the
subject matter of trust is and certainty of who the beneficiaries are and for trust to be valid there
must be transfer of property by the settler to the trustees.

The situations considered when creating trusts are discussed below;

Minors: A settlement on trust by minor is voidable in the sense that he can repudiate it during
his minority or within a reasonable time of attaining his majority.

In the case of Edward vs. carter, such settlement is how ever only possible in respect of an
equitable interest. Since am infant cannot hold legal estate, a settlement of trust in respect of trust
in legal estate is not possible by him.

Mental abnormality.

Generally a person who is mentally abnormal cannot create a trust under the trustee's act S.50 (1)
b.That means that for one to create trust he or she should be sane. "The court may direct a
settlement to be made of the property of a lunatic or any part thereof or any interest there in, on
such trusts and subject matter to such powers and provisions as the court may expedient."

The direction may affect property which has been acquired by the lunatic under a settlement, a
will or an intestacy with a view to protecting interested parties in the event of change in the lawn
of intestacy or circumstances affecting an earlier disposition by the lunatic.

35
1(870)L.R C.L 233
99
Married Women: A married woman may create trust of her property. This is an obvious
provision in the 20th century yet significant given the relatively inferior status attributed to
women by African customs.

Even in English society this trend has historical connotation. In the words of professors keeton
and Sheridan.

The progressive emancipation of the married woman from the restrictions to impose by the
common law upon her capacity to hold and deal with real property was, until the second part of
the ninety century almost exclusively the result of equitable intervention. At common law a
wife's chattels became the absolute property of the husband. He also possessed the power to
reduce her chooses in action into possession whilst upon the birth of issue, he enjoyed the seizing
for life of such present estates of inheritance as his wife might have possessed as tenancy by
courtesy. From the reign of Elizabeth one on wards; however the court of chancery steadily
evolved the doctrine of estate of the married woman although it does not seem that this doctrine
was applied to real property before restoration.

In pursuance of this object, the court of chancery established that wherever property was given to
trustees for the separate use of married women, she could hold and dispose of it in equity free
from her husband's interference and such property was protected effectually against the
husband's debts or other obligations.

Companies

Trading companies which are incorporated under the companies act have an implied power to
borrow for the purposes of the company's business.

Normally this power is uses to issue debentures and for the purpose of buttressing the issue the
company has power to execute a trust deed by which after covenanting to repay the loan with
interest until payment, assigns to trustees real property or lease holds belonging to the company,
to constitute security for the repayment of the loan, the trustees under taken to hold the property
upon certain trusts in favour of the debenture holders.

2b. Discuss the formalities if any, essentials for creation of a valid trust.

A settler may create a trust by manifesting an intention to create it .This can be seen in the case
of Jones vs. lock where the court of appeal of chancery held that there was no trust, because the
fathers intention was an outright transfer. They refused to perfect an imperfect gift through a
successful declaration of trust. It should be noted that no formalities are required for the creation
of an inter vivos trust of personality. However evidence in writing is required for the creation of
a trust in land. Thus by section 92 of the registration of Titles Act any declaration of trust
respecting land must be evidenced by a memorandum in writing signed by the party creating the
trust.

100
By will: secret trusts

Under section 50 of the succession act all trusts created by testemtary disposition must be
executed and attested in accordance with the formalities there in prescribed.

These are the will shall be in writing ,that it shall be signed at the foot or end there of by the
testator, or some other person in his presence and by direction, that the signature be acknowledge
by at least two witness in writing in the presence of the testator.

The issue arises as to the effect of dispositions which do not comply with formalities. Although
the requirement of formality was intended to prevent fraud what would happen if the intended
trustee hides behind the provisions of the statutes? This could happen in two instances. First
where the trustee induces transfer of land to himself by means of an oral promise to hold on trust
for the third party.

Second, where the legatee or devisee induces the testator to make disposition in his favour by
will relying on an oral promise to hold the gift in trust for a third party. The general view is that
equity will not permit a statute to be used as an instrument of fraud.

The doctrine is said to be responsible for the growth of equitable principles relating to secret
trusts seen in the case of Cook Vs Brooking it was held that since the testator had declared the
terms of the trust to Simon in his life time there was a good secret trust although the actual
method of distribution among beneficiaries was uncertain.

Issue arises how secret trusts can be classified that is express or constructive; if the secret trust is
express it must be evidenced in writing in order to comply with the registration of titles act. If it
is constructive then the formal requirements are dispensed with even as regards land.

Professor Marshall argues that the fully secret trust is an example of constructive trust.

Half secret trust.

These arises where under a will property is given expressly on trust but without stating what the
trusts are its suggested that here there would be no possibility of fraud by the legatee in the view
of the contents of the will and the express declaration of trust. Such declaration destroys
possibility of personal gain on the part of the legatee. Half secret trusts have said to be valid
since 36Black well vs. Black well.

Completely and in completely trusts.

A trust is said to be completely constituted when the trust property has been finally and
completely vested in trustees. Where this has not been done this is said to be in completely
constituted.

36
1929
101
Consequently a mere declaration of intention to create a trust is insufficient to create a trust.
Nevertheless all trusts arising under a will are completely constituted notwithstanding the fact
that may be either executed or executory.

The distinction between completely and incompletely constituted trusts is significant with
respect to the issue of consideration in the creation of the trust. Where valuable consideration has
been given for the creation of a trust, the issue of whether the trust is completely or incompletely
constituted is irrelevant since equity regards as done which ought to be done. However equity
will not perfect an imperfect gift since equity does not assist a volunteer.

The basic principle applicable in determining whether a trust has been validly constituted is
found in Milroy Vs Lord where Turner L.J stated that;

"In order to render a voluntary settlement valid and effectual, the settler must have done
everything which, according to the nature of the property comprised in the settlement was
necessary to be done in order to transfer the property and render the settlement binding upon
him. He may of course do this by actually transferring the property to the persons for whom he
intends to provide and the provision will then be effectual or declares that himself holds it on
trust for those purposes.....but in order to render the settlement binding, one or other of these
modes must as I understand the law of this court be resorted for there is no equity in courts to
perfect an imperfect gift."

The implication of this statement is that transfer of property to trustees must follow the
rules to apply to the property concerned. Thus trust in respect of legal estates in land must
be transferred and evidenced in writing by the person creating the trust.

 .Shares should follow the format of transfer prescribed thereof.

 .Equitable interests and copyrights must be in writing signed by the person disposing of
the same.
 .Chattels must be in form of deed of gift or evidenced by intention to give, coupled with
delivery or possession.

A bill of exchange should be endorsement thereof, Milloy Vs Lord; a settler executed a

voluntary deed purporting to transfer shares in the bank of Louisiana to Lord, to be held on trust
of the plaintiff name of the transferee in the books of the bank

Lord held that a power of attorney on behalf of the settler and it would have enabled him to take
all necessary further steps to obtain registration. However this was not done. It was held that
there was not trust although the intention was clearly to the benefit of the beneficiary.

Discretionary and protective trusts.

A discretionary trust is one where the trustees hold property on trust for a group of beneficiaries,
and are required by the terms of the trust to pay or apply the income or capital in favour of such
of the beneficiaries as the trustee shall in their discretion think fit, whatever each individual
beneficiary is entitled to depends on what the trustee deems fit to give him.

102
In the case of Abasi vs. Kapon a testator appointed the defendants as executors of his will. He
directed them to give and bequeath all his properties to his children who were loyal to him,
excluding the plaintiff.it was held by the Divisional court that the words constituted a general
device and bequest of the testators real and personal property to the executors in trust for the
children of the deceased, excluding the plaintiff in such shares as the executors think fit.

On appeal it was argued for the plaintiff appellant that even if there was such a device to the
executors on trust, the trust was void. On ground of un certainty both as to the individuals or
class who were to be beneficiaries of the trust.

In rejection of contention the appellate court held that the intention of the testator was to devise
all his estate to his executors for the benefit of his children excluding the appellant, the testator
created a discretionary trust and the duty of the executor was to select the beneficiaries in
accordance with the direction of the will.

Discretionary trusts have to be drafted in such a way that they do not fail for un certainty. They
are in a nature of special power of appointment. The power of election must be exercised with in
perpetuity period .Protective Trusts. A protective trust arises where the settled settles property on
X for life until alienation or bankruptcy, and when that happens the interest is directed to pass to
Y or the settlement in with a proviso that when a particular event happens to the interest would
shift to y.

The protected life interest will be extinguished where there is sequestration of the tenant for life's
property, in which case a discretionary trust arises, where the principal beneficiary resides in
enemy controlled territory, although this may be avoided by a specially drawn protective trust,
where an order of the court is made charging a husband's protected interest with payment to his
wife.

The following are the essentials of a trust;

In the case of Knight vs. Knight it was stated that in order for a trust to be validly created, three
conditions are necessary: the words employed must be so used that taken as a whole, they ought
to be construed as imperative,

 That is the words must be certain

 The Subject matter of the trust must be certain

 The objects or persons intended to be benefitted must also be certain

The three requirements are usually described as the three certainties of a trust. it's
suggested that apart from these requirements, a trustee is also necessary for the execution
of a trust. Each of the requirements will be considered in turn.

CERTAINITY OF WORDS.

103
As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. consequently an intention to create a trust may clearly be gathered from
the expressions which the settler has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in Lambe Vs Eames, the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.

In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet.....in full confidence that she will do what is right as to the
disposal thereof between my children either in her life time or by will after her decease. "it was
held that the wife took absolutely and there was no trust in favour of the children. Similarly in
the case of Mussorie Bank Vs Raynor, the privy council held that where a testator left all his
property to his widow, feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

How ever a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in Comskey Vs Bowring
Banbury; a testator gave to his wife,"the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testator’s intention was to give an absolute gift to the wife.

CERTAINITY OF SUBJECT MATTER

Under certainty, the subject matter of a trust take many forms .it could be interest in land in
possession or reversion; chattels, money and chooses in action. In The Case Of Re Diggles, it
was indicated that un certainty of subject matter will adversely affect the creation of a trust. Thus
in Curtis Vs Rippon, the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good,
remembering always according to the circumstances, the church of God and the poor. It was held

104
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.

In Bardwell vs. Bardwell, there was a direction, to remember certain persons; it was held that
there was no valid trust. In knight vs. Knight, there was direction to reward. my old servants
and tenants according to their deserts. it was held that the purported trust was invalid In Re
Jones, a gift was given to a wife, absolutely, followed by a direction that, as to such parts of my
estate as she shall not have sold or disposed of ,it should be held in trust for certain persons. it
was held that the purported trust was invalid.

The above cases may be contrasted with situations where the subject matter of the gift is to be
decided by the discretion of the trustee. Thus In Re Golay's Will trust, there was a direction to
the executors to allow a beneficiary to enjoy one of my flats during her life time and to receive a
reasonable income from my other properties. it was held that there was a valid trust because the
executors could select the flat; the words reasonable were not intended to allow the trustees to
make a subjective decision. They provided a sufficient objective determinant to enable the court
if necessary to quantify the amount.

CERTAINITY OF OBJECTS.

Under the doctrine of certainty two aspects that the recipients or purposes of the gift should be
identifiable with certainty and that the interest they take should be discoverable. In Re
Vandevells Trusts, it was indicated that in case of future interests, the beneficiaries must be
ascertainable with in the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
with a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. with regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
with a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

The rest proffered by Lord Wilberforce is the same as one established in certainty of the objects
of a power in Re Gulbenkia's settlements consequently, it has been suggested that a

105
combination of the tests for powers and discretionary trusts has destroyed what used to be the
most important reasons for distinguishing between trust and powers.

More about certainty of objects can be seen in the case of Re wood there was a provision of a
sum of £ 2 per week for the week's Good cause of the BBC it was held that the beneficiary in this
instance was uncertain. Even if the directions were to be followed, the beneficiary could still not
be because seven good causes were advocated one week in each month from different solutions.

Related to test of certainty of objects is what has been described as trusts of imperfect
obligations.

As is evident from the requirement of certainty of objects, a trust in order to be valid should be
beneficiary who can enforce it. where there's no such beneficiary, except in cases of charitable
trusts, the trust will be regarded as unenforceable and thus bind.

In Re Astor's settlement Trusts, a trust was set up for the objects and purposes which included
the improvement of good understanding between nations ,the preservations of the independence
and integrity of newspapers, the promotion of freedom, Independence and integrity of the press,
the protection of news papers from being absorbed by combines, the restoration and maintenance
of the independence of the editors of and writers in newspapers ,the securing for the public of
means of ascertaining by whom any news papers is actually owned or controlled and the
establishment of any charitable public or benevolent schemes for the improvement of news
papers, the relief of persons engaged in journalism, for ant of the objects previously mentioned.
It was held that the trust failed for lack of ascertainable beneficiary. We can also see in the case
of Re Shaw where it was held that the trust failed due to lack of someone to enforce it.

Therefore when the words of trust are not certain there's no creation of trust, consequently the
drone of the gift takes beneficially, likewise the done will take beneficially where the trust fails
for un certainty of property, the reason being that although an intention to create a trust may be
evident there's no property to which it can be attached.

QUESTION 3.

.You have been consulted by Chege .she wishes to leave a substantial sum of money to her long
term boyfriend Steve, but she does not wish any reference to the gift to appear in her will. she
does not want her husband Julio to know about it. she has two friends Nancy and tom that she
says are my discretion and will witness the will and do anything else required. Advice Chege on
how far all her wishes can come into effect.

Brief fact

Settlors wishes to leave money to her long boyfriend Steve but she does not wish any reference
because she does not want her man Julio to know about it and she has two friends Nanny and
Tom whom she says that their very discreet to be witness of the will.

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Issues

1. Whether this is a trust in face of the law.

LAW APPLICABLE

2. Succession act.
3. Case law.

Resolving

Secret trust are testamentary trusts that are usually arise in circumstances where the settler leaves
legacy in his will on the secret understanding that the legatee will hold that property on trust for
third party or beneficiary .the legacy is either appear to be absolute or disclose the trust without
revealing its objects .

The purpose of the secret trust is to

The purpose of the secret trust is to keep the identity of the of the beneficiary because they be the
iligitment children of the settler or his or her mistress therefore this type of trust tend to protect
their identity.

There are two types of the secrete trust that’s the

a) fully secret trust. and the half secret trust.

1. A full secret trust. this refers to the two type of trust which operates in the circumstances
where it appears from the face of the will that the legatee is entitled to take the legacy absolutely.

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2. A half secret trust is the one that the existence of the trust of trust is not secret but it is
the terms of the trust that will remain private and undisclosed. for example provision that the
50000 for x to be hold on the trust for the purpose as I have communicated to him. The trust is
evidenced from the will itself.

Relating the facts to the law this was a half secret trust due to the facts that trust is not secret but
the beneficiary is private /secret. Therefore to my conclusion this was a half trust and is
enforceable on the face of the law.

Question 3a (ii)

Facts

The settler Tonda created a will to in 2017 June and one of the provision was in the will stated
that my house block 12 plot 275 Maruga at the pearl marina. to my brother Manya then I n
October he tells the Imran that the house on trust will hand it to someone to be disclosed at the
later date after his death.

ISSUE.

Whether there is At rust.

LAW APPLICABLE.

Succession Act.

Case law.

RESOLVING.

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 Secret trust are testamentary trusts that are usually arise in circumstances where the settler
leaves legacy in his will on the secret understanding that the legatee will hold that property on
trust for third party or beneficiary .the legacy is either appear to be absolute or disclose the trust
without revealing its objects .

The purpose of the secret trust is to

The purpose of the secret trust is to keep the identity of the of the beneficiary because they be the
iligitment children of the settler or his or her mistress therefore this type of trust tend to protect
their identity.

Relating to the facts to the law of trust, the settler (trusted) Imran to keep a will and the envelope
which contains all the details of the beneficially and was to open it after his death and upon his
death the trustee opened up the envelope which contained the details of the iligitment son o f the
settlors. therefore in this regard the illigitiment child was protected by the secret will.

There are two types of the secrete trust that’s the

a) fully secret trust. and the half secret trust.

A full secret trust. this refers to the two type of trust which operates in the circumstances where it
appears from the face of the will that the legatee is entitled to take the legacy absolutely.

3. A half secret trust is the one that the existence of the trust of trust is not secret but it is
the terms of the trust that will remain private and undisclosed. for example provision that the
50000 for x to be hold on the trust for the purpose as I have communicated to him. The trust is
evidenced from the will itself.

Therefore according to our facts this was a full secret trust as it was illustrated in the case of the
Ottawa v Norman (1972)

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 3b.Discuss the three certainties required when forming an express trust.

An express trust is one which has been intentionally created by a settler himself though
manifestation of an intention to create one. The most common methods of creation are by deed
or will by un sealed writing inter vivo or by word of mouth. It's a trust created in express terms
and usually in writing as distinguished from one inferred by the law from the conduct or dealings
of parties.

Property is transferred by person called a settler or grantor to a transferee who holds the property
for the benefit of one or more persons called beneficiaries.

Express trust may be sub divided into executor and executed trust, on the hand completely and in
completely constituted trusts, on the other. An executed trust is one which in which the settled
has indicated inappropriate technical terms what interests are to be taken by all the beneficiaries.
An executor trust is one in which the settler has indicated to his trustees a scheme of settlement
but the details are to be gathered from his general expressions.

The distinction is of practical significance in two respects, Firstly while the language of an
executed trust is strictly construed, an executory trust is liberally construed. Secondly, where in
an executed trust the settled makes use of technical expressions, the interpretation of which the
law recognizes certain rules, equity follows the law and gives effect to such interpretation.
However, with an executor trust, equity attributes less importance to the use or omission of
technical words. Rather it seeks to discover the settler’s true intention

Once the intention is discovered, equity orders the preparation of a final deed which gives effect
to the settlor’s intention which is discoverable from the language of the settlor’s instrument.

The distinction between a completely and in completely constituted trust is necessary in order to
distinguish a trust from a void settlement. A trust can only be valid if the title to the property is in
the trustee and if the trusts have been validly settled. The three certainties of Express trust are;

Certainty of intention; there must be real intention by the settled to dispose of property and create
trust ,not just make a gift ,a trust can also be created contrary to the intention of the settler
alleged to have created it . Certainty of subject: The property the subject of the trusts must be
sufficiently ascertainable at the time the trust was created. Hydrogen VS Federal Commissioner
of Taxation 37 Certainty of object: Beneficiaries must be ascertainable Fixed trust Weston vs.
Weston.

QUESTION 4

4. Discuss the exceptions to the rule that equity will not assist a volunteer in any two of the
following;

(I) Donation Mortis Cause

37
(1988)
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(ii) Proprietary staple

(iii) The rule in strong Vs. Bird

(I) Donation Mortis Causa

A Donatio mortis causa is a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor. This could be distinguished from a normal inter vivos gift
under which title immediately passes to the transferee, a testamentary gift which takes effect
under provisions of a property executed will.

The essentials of a valid Donatio mortis causa were articulated by Lord Russels C.J in Cain vs.
Moon They are;

1. The gift must have been in contemplation though not necessarily in expectation of death;

2. the subject matter of the gift must have been delivered to the donee;

3. the gift must have been made under such circumstances as to show that the property is to
revert to the donor if he should recover.

The first condition was illustrated in the case of Wilkes be Allingtin. In that case, the donor was
suffering from an incurable disease. He made a gift knowing that he did not have long to live .In
actual fact, he had an even shorter time he imagined .He died two months later of pneumonia. It
was held that the gift was valid. The second condition may be illustrated from Re Weston, where
it was held that where a dying man, could be shown to have handed over to his fiancée his post
office savings book, his action was sufficient to constitute an effective donation mortis causa of
the balance recorded in the book.

The Rule in Strong vs. Bird

Where a person makes an imperfect gift to x and subsequently appoints X his executor, upon the
death of the donor, the property vests in fully in X. The equity of the beneficiary under the will is
displaced by X's prior equity. consequently, X may retain the property irrespective of the fact
that until the donor's death X's title was imperfect. The rule has been extended to apply to a done
who has taken out letters of administration to the state of the donor, and the personal
representatives of a person who had convened in favour of volunteers and had subsequently been
appointed a trustee of the settlement in favour of volunteers.

Further more for the rule to apply, the gift must have been perfect in every way except for the
legal formalities required for the transfer of title .Thus in Re Free land, a testatrix promised to
give the plaintiff a motor car in the future but didn't do so. on the death of the testatrix, the
plaintiff became her executrix and claimed that the imperfect gift had in consequence been there
by perfected. The court refused to apply the rule in strong vs. Bird, there having been no
intention to make the plaintiff the owner of the car immediately.

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Finally, any one relying on the rule must show a continuing intention on the part of the donor up
to the time of his death. Thus in Re wale, investments of which the settler was absolute owner
were settled by her voluntarily in 1938 for the benefit of her daughter. The settler did not take
any steps to transfer these investments to trustees, who however, were appointed executors of the
settlors will .The will was subsequently altered from time to time and it eventually disposed of
all her estate to other beneficiaries. It was held that although an incompletely constituted trust in
favour of the daughter had been created by the settlement of 1939, the settled had not shown any
continuing intention to benefit the daughter.

4b Discuss the remedies available to the beneficiaries for breach of trust.

A breach of trust consists of an improper act, neglect, default or omission of a trustee with regard
to trust property or of a beneficiary. It may include; direct intermeddling with trust property for
improper purposes, failure to exercise proper care in discharging a duty and male fide exercise of
a discretion. In these instances, the trustee must replace any consequential loss from the trust
fund as a result of his or her actions. The purpose of the rule is not to punish the trustee but to
compensate the beneficiaries. The following are the remedies available to the beneficiaries for
breach of trust;

1. Compelling performance of the trust.

It should be noted that if a trustee neglects the administration of the trust or defaults in protecting
the trust estate, a beneficiary may take steps to ensure that he takes the necessary actions in the
interest of trust property .this can be seen in a case of Milgan vs. Mitchell.

In this respect by law of property legislation in some jurisdictions trustees for sale shall so far as
practicable give effect to the wishes of the beneficiaries of full age. consequently failure to
consult them or some of them amounts to breach of trust which can be restrained by injunction.
An injunction may also be obtained against a bankrupt trustee who wants to obtain possession of
trust property.

The court may appoint a receiver upon the request, by application of a beneficiary. The
appointment of receiver is normally premised on the possibility of actual or prospective violation
of the duties of trusts likely to endanger trust property see the case of Middleton vs.
Dodswell.For example failure of the trustee to agree so that the trust cannot be properly
administered, loss of part of trust property through failure to realize it, refusal of trustee to act
and denial of the trust.

Thirdly when the property is endangered as when it is invested in un authorized and hazardous
securities, court mat on the admission of the trustee that the fund is in his co trustees hands order
the amount to be paid into court by trustee who is not holding the fund. if that trustee admits that
the fund has not been properly applied.

Seen in the case of Fregene vs. Aweshika;

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The plaintiff applied to court to remove defendants from the office of trustees. An account and
injunction restraining the defendants from carrying on the duties of trustees, on ground of alleged
mis conduct. it was proved that the defendants relieved the principal trustee of his post and
replace him with another person.

It was held that those defendants were guilty of mis conduct and mis management, should be
removed from office and renders the account to trust fund. It has as well been observed that
where a trustee commits a breach of trust, fraudulent or otherwise any beneficiary can bring an
action to question the validity of the acts of the trustee and need not to sue in a representative
capacity.

2. Proprietary Remedies

a) Advantage over personal remedies

It should be noted that with regard to proprietary remedy, satisfaction of the plaintiff's demand
does not depend on solvency of the defendant trustee. If the property to be traced belongs to
plaintiff in equity, it will escape the defendant’s bankruptcy. in some cases the plaintiff will be
able to take advantages of increases in value of property. Thirdly there are cases in which
proprietary remedy is available although no personal action is possible. Fourthly judgment from
a proprietary action Carries interest from the date with the property came to the defendants hands
while claims in personam carry interest only from the date of judgment.

b.Doctrine of unjust Enrichment.

It has been suggested that proprietary remedies cannot be fully understood without appreciation
of the doctrine of in just enrichment. This doctrine appears in virtually every legal system.
Basically it's to the effect that where the defend is in justly enriched in the expense of the
plaintiff, the defendant must make restitution to the plaintiff.

C.Tracing at common law.

A proprietary remedy is one which entitles a claimant to treat specific property thereof as his
own. The common law did not develop a real action in respect of chattels which entitled a
plaintiff to specific recovery thereof. The courts at common law recognized the owner of the
chattel but there was no action at common law of paying damages of returning the chattel.

Discretion to award specific recovery was in court. The issue thus arose if the right of the
plaintiff was limited in case of a specific chattel, should this right change when defendant
changed one chattel to another? The answer is the chattel can be followed so long as its nature
could be ascertained as such. Right only ceases when the means of ascertainment fail.

d.Tracing in equity

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Equity has developed more sophisticated methods of tracing if the court finds out that the
property has been hold by a person without aright and he/she claiming the right the court may
trace the all process from the current holder from the initiator. For example Mixed Funds

In the hands of trustees

The situation worsens when trustee has mixed trust funds with his own or after mixing there are
additional dealings with fund .The burden of proof is on the trustee to prove initially that part of
the mixed fund is his own. In Re Tolley’s W.T Thomas j Stated that...

If a trustee amalgamated trust property with his own, his beneficiary will be entitled to every
position of the blended property which the trustee cannot prove to be his own.

Consequently, if the compositions of the mixed fund are established at the time of the original
mixing, the problem of identification is of determining how to account for the reductions in the
fund by payment to increase in the fund by payment there in.

This can be seen in the case of Re Hallett's Estate; Hallet was a solicitor, died after having
mixed his own money certain funds from two trusts. The other trust had his client Mrs. Cotteril
as beneficiary. At his death, the funds were insufficient to pay his personal debts and to meet
trust claims. Three issues arose

1 whether Mrs. Cotteril not being a beneficiary of trust of which Hallet was a trustee was entitled
to tracing remedy on ground of her fiduciary relationship

2. Assuming she was how to allocate the payments from the funds as between Hallet and
claimants

3. How to allocate payments as between claimants themselves.

It was held that Mrs. Cotteril was entitled to trace and payments out must be treated as Payments
for Hallets own money.

Professor Maudsley has criticized the application of tracing Rule in Re Hallets as having been
too precise in the sense that it could lead to a wrong result if earlier payment out was in favour of
an un authorized investment which prospered and the remainder disappeared. He suggests that
the correct rule should be that a beneficiary may claim a charge upon any part of trust fund
which he can identify as having been part of the trust fund.

Secondly he argues whether it's fair to apply the tracing remedy when the defendant is insolvent
and argues that this is a situation where it's necessary to ascertain whether the beneficiary who is
tracing should have priority over other creditors. Consequently the beneficiary will have to
compete with other creditors of the trustee, professor Maudsley states that this is unfair to
creditors in the Sense that they suffer when the trustee pays out money to a mixed fund.

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In Rosco Ltd Vs Winder it was held that later payments into the mixed fund cannot be treated
as repayments of the money unless the trustee shows an intention to do so.

In the Hands of Fiduciaries or Beneficiaries

Re Hallet's case shows that tracing remedy is available as between beneficiaries, In Sinclair vs.
Brougham the Birkbeck society operated a banking business which was held to be ultra vires.in
the winding up competition arose between the claims of share holders and customers. The main
issue was whether customers had the right to trace into general assets of the society. it was held
that there was a fiduciary relationship between the customers and directors. The directors had
mixed the funds and customers had a right to trace into the hands of the society

In Re Diplck,a testator left his residuary estate “such charitable institution or institutions or other
institutions or other charitable or benevolent objects or objects in England as the executors
should select it was held by the house of Lords that the words included non charitable as well
charitable objects. Consequently the gift failed for uncertainty.

In The hands of third parties

The right to trace property into the hands of a third party to which it has been passed by trustee
will depend on the nature of the equitable interest in the property. Consequently, where a trustee
has transferred trust property in breach of trust of transferee will be bound by the trust except in
the following circumstances. First when he establishes that he has legal title to property, second
that he is a bonafide purchaser for valuable consideration without notice that the transactions
were breach of trust. In Pilcher vs. Rawlins James L.J stated that "....a notice is an absolute, un
qualified, in answerable defence, and un answerable plea to the jurisdiction of this court....."

Where the recipient is a volunteer and has no notice, the rights of beneficiary to trace against him
will be equal to that of the recipients own creditors

For this purpose if an innocent volunteer mixes trust money with his own, the rule in Clayton’s
case neither applies nor Re Hallets case.

e) Critique of Right to trace.

Professor Maudsley has indicated that the right to trace should not be restricted to a proprietary
interest which is equitable but should also be available to a beneficial legal owner. This is inspire
of the suggestion in Re Dip lock and Re Hallets Estate that the equitable remedy of tracing
should only be available where a fiduciary relationship can be established .secondly the right to
trace should not be limited to situations where a proprietary interest exists. The breach of
fiduciary duty should be sufficient to make available the tracing remedies.

Section B

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Question 5

5. The Earl of Oxfords case optimized conflict between the common law and equity
consequently seeing the steady decline of the applicability of both common law and equity
in modern legal systems. Per LLB2 student, is this fair assessment evolution of equity and
is contractual applicability in contemporary Uganda.

History tells us, in brief, that Equity has its origins in the old English Courts of Chancery). Due
either to the inability of the Kings justices to enforce judgments against powerful individuals
(some noble families were very much a law unto themselves in there, Dukedoms etc with
increasing frequency in later years, defects or undue harshness of the common law people were
driven to submit petitions to the King, who was considered to be a repository of ‘Divine justice’.
Such petitions were often passed over to the Lord Chancellor, who would dispose justice in the
name of the King. With the passage of time such petitions were directed to the Chancellor and
his office of the Chancery began to function as a court of law. A significant aspect of the
Equitable principles developed in these courts of Chancery was that they were so developed by
Priests (most Chancellors of the medieval period were ‘men of the cloth’). This ensured that the
principles of Equity were fundamentally based on the concept of ‘natural justice’ in keeping with
the lines of the Christian tradition of Good and Evil, and indeed in ancient usage the word Equity
means ‘natural justice’

The different views taken in certain situations, by the principles of Common law and the
principles of Equity, naturally led to conflict and confusion. In the reign of King James the First
it was held that decisions of the courts of Chancery would have overriding authority. While
Equity was initially free of the concept of ‘precedent’ from the late 1500s to the mid 1800s a
body of precedent, of cases based on equitable principles began to take shape, and the rules or
principles of equity took their final form with clear lines and with the introduction of the
Judicature Acts of 1873 and 1875 the Court of Chancery, along with the other Courts such as
Kings/Queens Bench, Common Pleas, Exchequer, Exchequer Chamber, Court of Appeal in
Chancery were absorbed by the Supreme Court.

It would be fair to say that the Judicature Act played the role of ‘fusing’ the system under which
both the Common law and Equity was administered, namely an amalgamation of the different
courts under one. This can be equated to the reference made in the statement that sets the theme
for this article, the ‘two streams of jurisdiction’ meaning the common law and Equity, ‘run in
the same channel’ meaning the administration of both within a common system of courts.

While the above, is somewhat straightforward, it is this authors opinion that the reference ‘do not
mingle their waters’ implies that the Common Law and Equity themselves were not ‘fused’ but
continued to function as two separate systems of law.

Therefore I aim to establish that while the Common Law and Equity came to be administered
under the same system the fundamental principles of Common law and Equity continue to act
independently of each other in the interests of Justice. This can, be shown most effectively
through reference to decided cases, where it will be seen that equitable principles have produced
results quite different to what would be expected under principles of Common Law and

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extending these decisions to derive certain fundamental facts as to the position equitable
principles hold within the legal system independently of the common law. I

Independence of Equity and Common Law through decided cases.

A landmark case in this regard was that of Central London Property Trust Ltd v High Trees
House Ltd38. The facts of the case were as follows, During the Second World War countless
people had left the City of London to escape the German bombing of Britain’s Capital. As a
result of this many housing complexes were vacated and left empty. In a certain block of flats,
flats had been leased out for a period of 99 years at 2,500 pounds a year. To curb vacation the
landlord had offered to cut the rent by half (1,250 pounds a year). Once the ‘blitz’ was over and
the tenants returned the landlord litigated to recover the full sum of 2,500 pounds. As per the
Common Law the plaintiffs would have been legally able to recover the full sum of 2,500
pounds even for the period when the flats had been empty since the lease that fixed the amount
was under seal and hence (according to common law) could not be changed by a mere agreement
but only through a deed, however the principles of equity took on a different view. The judge
deciding the case – Lord Denning quoted “There has been a series of decisions over the last fifty
years which, although they are said to be cases of estopple are not really such. They are cases in
which a promise was made which was intended to create legal relations and which, to the
knowledge of the person making the promise, was going to be acted on by the person to whom it
was made, and which was in fact acted on. In such cases the courts have said that the promise
must be honoured…..As I have said they are not cases of estopple in the strict sense. They are
really promises – promises intended to be binding, intended to be acted on, and in fact acted on.”
(The Discipline of Law, Lord Denning, 1979)

In the judgement it was held that through equity, the promise made was binding on the party
making it (the common law did not make such an allowance) and that the plaintiff could not
recover the full amount of money for the period when the flats were empty.

This decision, in my opinion highlights the following key points;

a. While both the principles of Common law and Equity were administered as one totality,
in the above case we see the principles of equity coming into play to lead the judge to
arrive at a very different decision than he would have had to make if he had followed common
law principles. Hence we see equitable principles functioning, quite distinctly from those of the
common law in the interests of ‘justice’

b. As is quoted in Lord Denning’s book ‘The Discipline of Law’ a previous case where
similar equitable principles could have been applied, Salisbury (Marques) v Gilmore 39 Lord
Justice Mackinnon felt unable to take an equitable view due a decision made by the House of
Lords in Jorden v Money 40which was thought to be binding where the concept of estopple was
confined to representations of existing fact.

38
[1947] 1KB 130
39
[1942]2 KB 38
40
[1845] 5HL Cas 185
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The significance of this observation is that, though the principles of equity could be used to take
on a different view of a situation as opposed to that taken by the common law it, in some
instances, needed courage on the part of the judge to break free from the bindings of common
law and allow these equitable principles to take flight. We see the action of Lord Denning in the
High Trees case was doing precisely this – giving due credence to the independent place the
principles of equity held in the legal system, free from the rigidity of the common law in the
interests of doing ‘justice’.

b.That the decision was possible in the High Trees case was due to the ‘conflict or variance’
clause (section 25 of the Judicature Act of 1873) which deemed that where the rules of common
law and equity contradicted rather than complement, the rules of Equity would prevail. This
reality is one of the strongest arguments in this authors opinion for establishing that the systems
of Equity and Common Law do not ‘mingle’ and will be discuses

Question 6

Write short notes on the following

6a .Judicature act 1873-1875

Historically Equity developed due to mitigate the rights of rigidity of application of common law
and to provide reliefs or remedies which the common law could not avail to litigants.

The ordinary meaning of equity is therefore the right doing, good faith, honest and ethical
dealing in a transaction or relationships between individuals.

Equity introduced various reforms and these reforms affected the out dated and un satisfactory
procedure of the court. and secondly the area between the common law courts and chancery
courts operated was not clearly defined.

There judicature act is one of the reforms introduced by equity. The recommendations of the
Royal commission was enacted as judicature 1873 to 1875.These acts abolished all the ten
existing superior courts and in their place set up a supreme court of judicature consisting of the
high Court of justice and the court of Appeal. The High Court of justice was to consist of three
divisions; the King's bench, the chancery division and probate, Divorce and Admiralty Division.

The judicature acts effectively abolished the dual administration of justice as between the
common law courts and chancery court. Secondly the High Courts of justice were given power to
administer both equity and law concurrently together. Third, all claims, obligations and defences
were recognized and enforced by three divisions of the High Court of justice. Fourth the
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

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b) Imputed Notice;

According to the bakibinga’s book of equity and trust he defined imputed notice which is
neither actual nor constructive and may be imputed to the buyer through actual or constructive.
Such notice will only be imputed to the buyer through his bonafide agent. In this regard a buyer
who instructed his agent to buy property at an auction sale was taken to be affected by notice by
notice of an equity which came to his knowledge in the course of transactions

However because of hardship of this rule, it was modified in Mount ford vs. Scott to the effect
that information acquired by a solicitor is one transaction and cannot effect, though the doctrine
of imputed notice his principal in subsequent transactions .Thus it has been held that knowledge
of a solicitor in a previous transaction cannot be imputed to a buyer in a later transaction. The
solicitor for this purpose is not under a duty to pass his knowledge in a previous transaction to a
buyer when he later becomes his client. However, if the solicitor conspired to the detriment of
the other, then the aggrieved party will be protected by the doctrine of bona fide purchaser
without notice. There's also constructive notice under the doctrine of notice and this is defined by
Walden j in William son v Brown as where a purchaser has knowledge of any fact sufficient to
oust him on inquiry as to the existence of some right or title in conflict with what he is about to
purchase.

Actual notice on the other hand defined as the situation where the buyer of an estate has actual or
express notice of a prior interest at the time where he or she made the purchase at the time before
the purchase was completed. This can be seen in section 64 of the R.T.A. buyer of land shall
hold that land subject to all encumbrances as notified to the registrar.

In Sempa Mbabali vs. W.K Kidza Odoki J held Sempa Mbabali vs. W.K Kidza Odoki j
Held that the defendants plea of Bonafide purchaser could not stand because they knew all along
that part of land they had purchased was for burial grounds and seller sold the land before his
share was ascertained. This doctrine looks at the intent than the substance. And the purpose for
the doctrine of notice is to prevent buyer of superior title from setting it up against prior earlier
owners of inferior interests which affect the property

c) The maxim Delay defeats equity

This maxim can as well be called doctrine of lashes that an equitable relief will not be given if
the applicant has unduly delayed in bringing the action.

The doctrine does not apply in situations which are governed by the statutes of limitation. For
instance the limitation act cap 80 prescribes periods with in which suits or actions should be
instituted in court. Six years is prescribed for actions based on contract or tort other than those
where the claim relates to personal injuries, in which case the action must be brought within
three years of the date on which the cause of action arose. Furthermore tortuous and contractual
actions against the government must be instituted within two year and three years respectively of
the date of the cause of action, while those related to recovery of land claim to the personal estate
of a deceased or under a mortgage must be instituted with in twelve years of the date on which
the claim accrued. Where fraud is alleged, there is no limitation period.

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By way of illustration of the application of the doctrine of laches in Fabgemin vs. Aluko, it was
stated that in considering the doctrine of laches the court acts on three factors. First, the delay by
the plaintiff. Second acquiescence by the plaintiff in the delay. Third, change in the position of
the defendant. Furthermore, the doctrine will apply if the plaintiff behaves in a way which makes
the defendant alter his position in the belief that the plaintiff's claim has been abandoned or the
delay amounts to evidence of an agreement by the plaintiff to abandon his right.

Apart from the application of the doctrine to the equitable remedies of specific performance and
rescission of contracts, it also applies to the grant of letters of administration. An application for
letters of administration or challenge thereof must be made without delay; otherwise it may be
refused. Thus in Ephraim Vs Asuquo, the plaintiff applied have the grant of letters of
administration set aside .it was held that since two years had passed since the grant and the
administrator had probably completed the distribution of the estate ,the doctrine of laches applied
and the plaintiff's claim could succeed.

There are three defences to invocation of the doctrine of laches. First, the plaintiff's ignorance of
the facts on which claim is based. Second the in fact or other disability of the plaintiff and finally
fraud on the part of defendant. in those circumstances delay will not be permitted to bar a claim.

d) Rights in Rem

In a rem jurisdiction ("power about or against 'the thing'"[1]) is a legal term describing the power
a court may to exercise over property or a "status" against a person over whom the court does not
have in personam jurisdiction. Jurisdiction in rem assumes the property or status is the primary
object of the action, rather than personal liabilities not necessarily associated with the property
the rights is mainly enjoyed by the public this was more clearly in the case of united states v
thirty nine thousands one hundred and fifty cigars. Were the judge said that the right in rem
regardless of who you are must be enjoyed by the mass or the public.

This right in rem is of vital relevance to the practicing of the law in Uganda in that remedies does
not only benefits the personam but Ruther the public in the general and hence the duty of care to
the public structure.

3.You have been consulted by Chege .she wishes to leave a substantial sum of money to her long
term boyfriend Steve, but she does not wish any reference to the gift to appear in her will. she
does not want her husband Julio to know about it. she has two friends Nancy and tom that she
says are my discretion and will witness the will and do anything else required. Advice Chege on
how far all her wishes can come into effect.

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1. A trust can be defined as relationship that is recognized by equity, it arises where
property is vested in a person or persons known as trustees who those trustees are under a duty to
hold for the benefit of other persons known as beneficiaries. The interests of beneficiary are
normally described in the instrument creating the trust; however these may be implied or
imposed by law. it can also be noted that the beneficiary interest should be proprietary meaning
it can be sold or bought. And it should also be emphasized that for trust to be created there must
certainty of intention, object and the subject matter. A trustee have the legal ownership carrying
with it responsibilities and burdens whereas beneficiary would have the advantage of any
ownership. An executor would similarly have the burdens and responsibilities and could be
expected to distribute property in accordance with the will.
2. The whole scenario of Chege when I analyze it concerns a gift. A gift in the law of
property is the voluntary transfer of property from one person to another without valuable
consideration .And for a gift to be effective the owner should have the intention; we Chege
having the intention to transfer money to Steve, and it should be noted that a promise to make a
gift in the future is unforeseeable and legally meaningless even if the promise is accompanied by
immediate transfer of the physical property in question.
3. The gift should also be delivered to the done for it to be effected. If the gift is of a type
that can't be delivered in conventional, it can be delivered in a constructive way and the done
must accept the gift in order for the property transfer to take place, how ever because people
accept gifts one will be presumed so long as the done does not expressly reject.
4. A gift can be inter vivos ,and this per our case for today, Inter vivos is a legal term
referring to transfer of gift made during one's life time as opposed to testamentary that is transfer
of gift takes place after the death .
5. A trust can thus be created inter vivos or by will, this is obviously that Chege should
apply inter vivos trust. There two types of inter vivos trust that is the settler may transfer the
property to the trustees and declare that those trustees will hold the property on trust for Steve.
The settlors may declare himself as trustee holding the property on trust for others.
6. How ever as per chugs case, the best type to use is that Chege may transfer the money to
her friends that is Tom and Nancy, and they be trustees for Steve .That is they hold it for Steve
since Chefs does not want her husband Julio to know about this. Therefore the gift will not be
quested in the will.
7. But if it was not for Chege not hiding it from the Husband she could also declare herself
as trustee holding property for others, or include it in the will just and given

Reference

8. The 1995 constitution of Uganda

9. The contract act.
10. The judicature act
11. Magistrates courts act
12. The modern law of trust 7ths edition
13. Nutshells book of equity and trust
14. David Bakibinga’s book of equity and trust

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Questions

1, critically analyze the nature and scope of different types of injunctions which may be granted
by court.

Approach

An injunction is an order by a court directed to the party to a suit to the effect that he/ she should
do or stop doing a particular act. In 1854 by virtue of common law procedure Act, the common
law courts also got powers to grant injunctions in certain cases.

Under section 38(1) of the judicature Act, Ugandan courts have powers to grant injunctions. The
section states that the High court shall have powers to grant an injunction to restrain any person
from doing any act as may be specified by high court.

Similarly, magistrate courts have powers to grant remedies or Reliefs whether interlocutory or
final. The different types of injunctions include the following:

Prohibitory injunctions / Restrictive injunctions

Prohibitory injunction is the most common form of injunction and it refers to an injunction that
prohibits the defendant from taking a particular action and maintains the position of the parties
until there is a hearing to determine the matter in dispute. However, where an unlawful act h as s
been done. The order restraining commission of the said act will be meaningless therefore justice
will be done by issuing as mandatory injunction which calls for someone to un do an act e.g.
mandatory injunction to pull down a wall that was built and it obstructs neighbors view

Mandatory injunction

This is an injunction which orders a party or requires them to do an affirmative action or

mandates a specified course of conduct... In the case of sky petroleum Vs VIP petroleum Ltd
1974, the court ordered an injunction restraining the defendant from withholding supplies of
petrol

Perpetual and interlocutory injunctions

Perpetual injunctions do not necessarily last forever but they are final in that they will finally
resolve the issue between the parties I.e. they may also be prohibitory

Interlocutory injunctions

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These are injunctions or orders made before final judgement in a suit. This injunction is limited
to apply only until the final determination of the rights of the parties by court, the object of
interlocutory injunctions is to preserve the status quo until the trial of the case or matter in
dispute. Interlocutory injunctions include temporary injunctions and interim orders

Temporary injunction

This is granted at the discretion of court to maintain the status quo. In the case of Hon Andrew
Baryayanga Vs Ag, the status quo was defined as the state of affairs, things or circumstances
during the period pending suit and therefore there must be cause of action to sustain the
application. In the locus classicism case of American Cynamid Co Vs Ethicon Ltd, under
temporary injunctions, court laid down the following principles to be followed when deciding to
grant an interlocutory injunction. In Uganda, temporary injunctions have been provided for in
our laws. Order 41 rule 1 of the civil procedure Rules s. 1 71-1

Cases in which temporary injunctions may be granted where in any suit it is provided by
affidavit or otherwise,

That any property in dispute is in danger of being wasted, damaged by one party to the suit.

That the defendant threatens or intends to remove or dispose off his property with view to
defraud his or her creditors.

In the case of Kiyimba kaggwa Vs Katende, justice Odoki stated the three conditions for the
grant of temporary injunctions thus,

That the applicant must show probability of success I.e. Prima facie case should be proved that
there is capability of success

Irreparable injury or damage. This refers to damage that cannot be adequately compensated for
in damages

Balance of convenience

This means that courts may consider which side would suffer more injustice if the application is
granted or denied.

Interim injunction. this restrains someone only until a named day or further order or until the
hearing of the main application for a temporary injunction ,it is often granted Ex parte.

Ex parte injunctions. this is an injunctions that is granted without notice to the other side.

Quia Timet injunction. This is an injunction which is issued to prevent the infringement of the
plaintiff's rights where the infringement is threatened but not yet occurred.

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2. Equitable remedies are strict and of limited flexibility, critically evaluate this statement in
relation to:

a, Rectification

Approach

This is a remedy where by a change in a written document is made to reflect what it ought to
have said in the first place. Rectification is an equitable remedy through which the court can
rectify, or correct a mistake in a written contract. It is an equitable remedy, meaning, the
circumstances where it can be applied are limited. Rectification only applies in the case of
written contracts.

Parties may agree upon rectification by entering into a deed of rectification. This applies s
mostly in case of common mistake where both parties make the same mistake. In case of
Whiteside Vs Whiteside., the court refused rectification of a deed because the parties had
already voluntarily rectified the issue in dispute by drawing up a supplemental deed. I.e.
where the parties may have already rectified the instrument on a voluntary basis, court cannot
make an order for rectification

Rectification by court. it is necessary to apply to court for an order for rectification if either there
is a dispute or the parties wish to ensure that rectification has retrospective effect. In rectifying
the document, the court is aiming to put the parties in the position in which they would have
been had the mistake or oversight not occurred. The burden of proof is upon the party seeking for
the remedy to produce convicting proof that the agreement does not reflect the intentions of the
parties.

Rectification I snapped equitable remedy and therefore discretionary in nature, so even where
valid grounds for rectification exist, court may still refuse to grant it.

For rectification under common mistake is to be granted, the following must be considered.

There must have been continuing common intention I.e. there must have been no change of
heart. The common intention must have continued right up to the time the instrument was drawn
up and executed.

b, Rescission

The word rescission is derived from the word "rescind" which means to cancel. This remedy
arises where a party to the contract expresses that he/ she is no longer willing or that she / he
refuses to be bound by the contract. In the case of Buckland Vs farmer & moody, the term
rescind was considered to be used to describe the effect of the sort of relief that is normally
granted where the contract has been obtained by fraud, misrepresentation or some other grounds.

Grounds for Rescission.

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There are four grounds for rescission and they include.,

Mistake

Common or mutual mistake

Rescission may be granted under a common or mutual mistake. In the case of sole Vs butcher, it
was held that a contract is capable of being set aside if the parties were under a common
misrepresentation either as to facts or their relative and respective rights, provided the
misapprehension was fundamental and the party seeking to set it aside was not himself at fault.
For example mistake as to the existence of the subject matter, identity of the subject matter.

Unilateral mistake

This applies where one party to the contract is mistaken as to the person he/ she contracted with.
Collateral mistake may also manifest itself where one party is mistaken as to identity of the
subject matter of the contract or terms of the contract.

Misrepresentation

A contract may be induced by misrepresentation either fraudulently or innocently

Innocent misrepresentation.

This is where the defendant believed in the truth of his assertions even if he has no reasonable
ground for his or her belief.

Fraudulent misrepresentation.

This is when a false representation is made knowingly and intentionally or without caring in its
truth or recklessly without caring whether it is true or false with intention that the other party acts
on it.

C, Specific performance

At common law, a claimant's rights were limited to an award of damages. Later the court of
equity developed the remedy of specific performance instead, should the damages prove to be
inadequate. A degree of specific performance is an order compelling the defendant personally to
do what he / she promised to do. Section 64(1) of the contracts Act provides that where a party
to a contract is in breach, the other party may obtain an order of court requiring the party in
breach to specifically perform his or her promise under contract

In Jones v Lipmann 1962, Lipmann agreed to sell a property to Jones for £ 5250, but
subsequently changed his mind. He then formed his own company which had £ 100 as capital
and made himself the director and share holder. He then transferred the land which he had
agreed to sell to Jones to this sham company for £ 3000. The purchaser applied for specific

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performance to be carried out against the vendor and the vendors company for the transfer of the
property in question.

Specific performance is a remedy in personam meaning that it is issued against the individual
defendant to execute his/ her obligation.

Section 64(2) of the contracts Act gives the instances under which a party Is not entitled to
specific performance.

Where the specific performance will produce hardship which would not have resulted if there
was no specific performance.

Where the rights of a third party acquired in good faith would be infringed by the specific
performance.

The claimant committed a fundamental breach of his or her obligations under the contract: but in
case where performance is available to him or her subject to his or her paying of composition for
breach.

Applicability of specific performance

As a general rule, specific performance will not be granted if the plaintiff can be
adequately compensated by the common law remedy of damages.

- Contracts for disposition of an interest in land.

it is argued that each piece of land or real estate is unique and as such damages would not be an
adequate remedy for a purchaser because the purchaser will not be able to purchase a
replacement in the market. In the case of manzoor Vs Baram., court noted that the basic rule is
that specific performance will not be decreed where a common law remedy, such as damages
would be adequate to put the plaintiff in the position he would have been but for the breach.

Chattels of unique value.

Where chattels in question are of such unique or special value because of their individuality,
beauty or rarity that replacement may not be readily available, courts will order specific
performance., in the case of sky petroleum Vs VIP petroleum Ltd, Goulding j held that court had
jurisdiction to order specific performance of a contract for the sale of non specific chattels where
the remedy of damages would be inadequate.

Defences to specific performance.

Mistake and misrepresentation.

If these hounds are raised, specific performance will be denied even though the contract is not
rescinded.

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SECTION B

3. Write short notes on the following authorities demonstrating their continued relevance to the
study and practice of Equity and trusts in Uganda.

Approach

a, mcphali Vs Doulton 1970.

This is also known as Re Baden's Deeds Trusts no 1. is a leading English trusts law case by the
house of lords on the certainty of beneficiaries? It held that so long as any given claimant can
clearly be determined to be a beneficiary, or not, a trust is valid. I.e. it is a case concerning
circumstances under which a trust may be uncertain.

The brief facts of the case are.

Mr. Bertram Baden settled a trust for the employees, relatives and dependants of his company,
Matthew hall & Co Ltd. It said the net income of the trust fund should be applied by the trustees
in their absolute discretion and as they thought fit for the employees, relatives and dependants in
grants. It was held in mcphali Vs Doulton that the trust would in principle be valid if it would be
proved that the claimant is or is not among the beneficiaries.

b, Blackwell Vs Blackwell 1929

This is an English trusts law case, concerning the doctrine of secret trusts.

Facts are as follows: A testator gave £ 12000 in a codicil to five people on trust, saying they
should invest using their discretion and to apply the income .for the purposes indicated by me to
them. four were told the general objects, and the fifth got detailed instructions all accepted. The
fifth also made a memorandum of the testator’s instructions, but a few hours after the codicil was
executed. The residuary legatees claimed that trust was invalid. It was held that the secret trust
was valid because the details were laid out around the same time as the execution of the codicil
to the will

C, Strong Vs Bird 1874

This is an English property law case. It is an exception to the maxim that Equity does not assist
a volunteer

Facts

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Bird borrowed £ 1100 From his Step mother; she was living with him and paying him for rent. It
was agreed by both parties that the loan was to be repaid by a reduction in the rent, until the loan
was settled. Bird's step mother only played the reduced amount of rent only twice. There after
she paid the full rent until her death. On her death, she appointed bird as her executor and the
next of kin now attempted to recover the debt from Bird. The conduct of his stepmother does not
discharge the debt at Law because there was no consideration varnished for the realize. The issue
whether Bird must pay backs the loan. It was held that the appointment of Bird as the Executor
was an evidence that the loan to Bird was a gift to him. This is because the executor is
responsible for calling debts to the testator's estate; it would be ridiculous for the executor to sue
himself for the debt. Therefore common law rulings cancelled the debt to avoid this anomaly.

D, Grey Vs inland revenue commissioner1960

Under this case, it was held that the word disposition is to be given it's natural meaning,
disposition is a familiar enough word in the law of property and ordinarily means an act by
which some one ceases to be the owner of that property in law or equity. If a beneficiary wishes
to direct his trustees to hold the property on trust. For another, then such a direction is a
disposition within the subsection and must comply with it

4, okello is a successful business man with various properties in Uganda running under okello
limited and employing approximately 100 people whilst running his business, he sets aside most
of the profits for the benefit of all employees, former employees and their respective spouses. In
the event that there is any unexpected / excess profit the trustees are to distribute the same to
okellos two favorite daughter s if the trustees think that they deserve but in the event that they are
not then the trustees shall defiantly pay the said income to Makerere university mosque. Okello
hands to kayo one of the trustees, several documents, pertaining to the business in which he finds
a hand written letter instructing him to hold a plot no 56 summit view to challenge the above
arrangement. U are interested in wining over the above business to your firm but have been
requested to first advise both Mr. okello on the merits and the wife how she can challenge the
same.

Issues rose

Whether Kato created a valid trust

Whether okellos wife can succeeds in challenging the validity of the trust

On The raised issue of whether there is a valid trust created by Kato. I agree and confirm that
Kato created a valid trust which was intervivos since he created it while he was still alive

Okellos desire to include employees, former employees and their respective spouses was to be
validated by a matter of facts

In The case of mcphali Vs Doulton 1970 (Re Baden’s case)

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Mr. Bertram Baden settled a trust for the employee, relatives and dependants of his company,
Matthew hall & Co Ltd it said the net income of the trustees in their absolute discretion and as
they thought fit for the employees, relatives and dependants in grants.

On the matter of certainty of beneficiaries, pertaining this case, court held that the trust would in
principle be valid it could be proved that there claimant is or is not among the beneficiaries

Therefore with regards to the matter in dispute, okello created a valid trust in that if the
employees, former employees and their respective spouses are to be counted as those among the
beneficiaries, they would prove themselves to be among as it was stated in the case of Re badens
trust

The trustees were to exercise a discretionary trust I.e. Kato since they were to distribute the
profits / property as they think fit

How ever the act done by okello of handing in to Kato one the trustees, several documents,
pertaining to the business, in which he finds a hand written letter to hold a plot no 56 summit for
"a very special friend of mine " could be challenged because there was some degree of
uncertainty.

Under the three certainties, there is the certainty of objects which requires that the person
creating the trust must be clear on who or which people he/ she intends to be his beneficiaries.

In the case of Re Gulbenkians settlement Trusts 1968, concerning the certainty of trusts, it held
that while the "is or not test was suitable for mere powers, the complete list test remained the
appropriate test for discretionary trusts.

5, " Equity fastens on the conscience of the person who is put to his election and refuses to allow
him to take benefit of a disposition continued in the will, the validity of which is not in the will,
the validity of which is not in question except on certain conditions " per Buckley l in Re
Mangle’s wT 1962

The doctrine of election

This refers to the doctrine where the beneficiary receives a gift only if he accepts the burden.

Election is an equitable doctrine which applies where a testator makes a gift to a beneficiary and
by the same instrument gives property belonging to the beneficiary to the third party, often
mistakenly thinking that it belongs to the testator. The beneficiary has three choices,

first, he may disclaim the gift to him, in which case he presumes his own property but cannot
derive any benefit.

Secondly , he may take under the will I.e. he complies with the testators wishes by taking the gift
meant for him and passing the his property to the third party

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Thirdly, he may take against the will, I.e. he takes the gift intended for him but does not pass his
own property to the third party in which case, he must compensate the latter for the loss of the
benefit

The doctrine of election is different from disclaimer. A beneficiary who disclaims does not elect
in the technical Since, he renounces. Election strictly occurs where the beneficiary accepts his
gift and elects whether to give his own property to the third party or to compensate him. The
basis of the doctrine is that it would be unconscionable to allow the beneficiary to take his gift
but not satisfy the testators expressed wishes, hence an obligation is made or imported on his
conscience to compensate the third party if the beneficiary choses not to part with his own
property ,in Remengel WT 1962. Buckley described election at page 787 as a doctrine by which
equity fastens on the conscience of the person who is put to his election and refuses to allow him
to take the benefit of a disposition contained in the will, except upon certain conditions, for
critique of the doctrine and perspectives on its evolution, cargo, in mistakes in wills and election
in equity 1990, expressed severe doubts at page 505 about the utility of the doctrine. The
equitable doctrine which tends to defeat a testators real intentions

on the other hand, regards the doctrine useful and sound when it is confined to its original basis

Requirements of the doctrine

There are several requirements for the doctrine of election to apply

First, it does not apply if a contrary intention appears in the will, as it was asserted in Re Baden’s
Trusts 1886

Secondly, both gifts must be given in the same instrument, for this purpose, a will and a
subsequent codicil is treated as one instrument.

Thirdly, the testator must make an effective gift of his property i.e. property that he / she is
competent to dispose off to the beneficiary

Fourthly, the beneficiary’s property must be freely alienable; he must be able to dispose off his
property in favour of a designated third party

Fifthly, the property given to the beneficiary must be capable of being used to compensate the
third party

Therefore, if any of these requirements is not satisfied, the doctrine of election may not be
applicable.

6. Discuss the formalities if any, essentials for creation of a valid trust.

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A settler may create a trust by manifesting an intention to create it. This can be seen in the case
of Jones vs. lock where the court of appeal of chancery held that there was no trust, because the
father’s intention was an outright transfer. They refused to perfect an imperfect gift through a
successful declaration of trust. It should be noted that no formalities are required for the creation
of an inter vivos trust of personality. However, evidence in writing is required for the creation of
a trust in land. Thus by section 92 of the registration of Titles Act any declaration of trust
respecting land must be evidenced by a memorandum in writing signed by the party creating the
trust.

By will: secret trusts

Under section 50 of the succession act all trusts created by testamentary disposition must be
executed and attested in accordance with the formalities there in prescribed.

These are the will shall be in writing, that it shall be signed at the foot or end there of by the
testator, or some other person in his presence and by direction, that the signature be acknowledge
by at least two witness in writing in the presence of the testator.

The issue arises as to the effect of dispositions which do not comply with formalities. Although
the requirement of formality was intended to prevent fraud what would happen if the intended
trustee hides behind the provisions of the statutes? this could happen in two instances. First
where the trustee induces transfer of land to himself by means of an oral promise to hold on trust
for the third party.

Second, where the legatee or devisee induces the testator to make disposition in his favor by will
relying on an oral promise to hold the gift in trust for a third party. The general view is that
equity will not permit a statute to be used as an instrument of fraud.

The doctrine is said to be responsible for the growth of equitable principles relating to secret
trusts seen in the case of Cook Vs Brooking it was held that since the testator had declared the
terms of the trust to Simon in his life time there was a good secret trust although the actual
method of distribution among beneficiaries was uncertain.

Issue arises how secret trusts can be classified that is express or constructive; if the secret trust is
express it must be evidenced in writing in order to comply with the registration of titles act. If it
is constructive then the formal requirements are dispensed with even as regards land.

Professor Marshall argues that the fully secret trust is an example of constructive trust.

Half secret trust.

These arises where under a will property is given expressly on trust but without stating what the
trusts are its suggested that here there would be no possibility of fraud by the legatee in the view
of the contents of the will and the express declaration of trust. such declaration destroys

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possibility of personal gain on the part of the legatee. half secret trusts have said to be valid since
41
Black well vs. Black well.

Completely and in completely trusts.

A trust is said to be completely constituted when the trust property has been finally and
completely vested in trustees. where this has not been done this is said to be in completely
constituted.

Consequently, a mere declaration of intention to create a trust is insufficient to create a trust.

Nevertheless, all trusts arising under a will are completely constituted notwithstanding the fact
that may be either executed or executory.

The distinction between completely and incompletely constituted trusts is significant with
respect to the issue of consideration in the creation of the trust. Where valuable consideration has
been given for the creation of a trust, the issue of whether the trust is completely or incompletely
constituted is irrelevant since equity regards as done which ought to be done. However, equity
will not perfect an imperfect gift since equity does not assist a volunteer.

The basic principle applicable in determining whether a trust has been validly constituted is
found in Milroy Vs Lord where Turner L.J stated that;

"In order to render a voluntary settlement valid and effectual, the settler must have done
everything which, according to the nature of the property comprised in the settlement was
necessary to be done in order to transfer the property and render the settlement binding upon
him. He may of course do this by actually transferring the property to the persons for whom he
intends to provide and the provision will then be effectual or declares that himself holds it on
trust for those purposes.... but in order to render the settlement binding, one or other of these
modes must as I understand the law of this court be resorted for there is no equity in courts to
perfect an imperfect gift."

The implication of this statement is that transfer of property to trustees must follow the rules to
apply to the property concerned. Thus trust in respect of legal estates in land must be transferred
and evidenced in writing by the person creating the trust.

2. Shares should follow the format of transfer prescribed thereof.

3. Equitable interests and copyrights must be in writing signed by the person disposing of the
same.

4. Chattels must be in form of deed of gift or evidenced by intention to give, coupled with
delivery or possession.

41
1929
132
A bill of exchange should be endorsement thereof, Milloy Vs Lord; a settler executed a
voluntary deed purporting to transfer shares in the bank of Louisiana to Lord, to be held on trust
of the plaintiff name of the transferee in the books of the bank

Lord held that a power of attorney on behalf of the settler and it would have enabled him to take
all necessary further steps to obtain registration. However, this was not done. it was held that
there was not trust although the intention was clearly to the benefit of the beneficiary.

Discretionary and protective trusts.

A discretionary trust is one where the trustees hold property on trust for a group of beneficiaries,
and are required by the terms of the trust to pay or apply the income or capital in favor of such of
the beneficiaries as the trustee shall in their discretion think fit, whatever each individual
beneficiary is entitled to depends on what the trustee deems fit to give him.

In the case of Abasi vs. Kapon a testator appointed the defendants as executors of his will. He
directed them to give and bequeath all his properties to his children who were loyal to him,
excluding the plaintiff.it was held by the Divisional court that the words constituted a general
device and bequest of the testators real and personal property to the executors in trust for the
children of the deceased, excluding the plaintiff in such shares as the executors think fit.

On appeal it was argued for the plaintiff appellant that even if there was such a device to the
executors on trust, the trust was void. On ground of un certainty both as to the individuals or
class who were to be beneficiaries of the trust.

In rejection of contention the appellate court held that the intention of the testator was to devise
all his estate to his executors for the benefit of his children excluding the appellant, the testator
created a discretionary trust and the duty of the executor was to select the beneficiaries in
accordance with the direction of the will.

Discretionary trusts have to be drafted in such a way that they do not fail for un certainty. They
are in a nature of special power of appointment. The power of election must be exercised with in
perpetuity period.

Protective Trusts.

A protective trust arises where the settled settles property on X for life until alienation or
bankruptcy, and when that happens the interest is directed to pass to Y or the settlement in with a
proviso that when a particular event happens to the interest would shift to y.

The protected life interest will be extinguished where there is sequestration of the tenant for life's
property, in which case a discretionary trust arises, where the principal beneficiary resides in
enemy controlled territory, although this may be avoided by a specially drawn protective trust,
where an order of the court is made charging a husband's protected interest with payment to his
wife.

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The following are the essentials of a trust;

In the case of Knight vs. Knight, it was stated that in order for a trust to be validly created, three
conditions are necessary: the words employed must be so used that taken as a whole, they ought
to be construed as imperative that is the words must be certain

The Subject matter of the trust must be certain

The objects or persons intended to be benefitted must also be certain

The three requirements are usually described as the three certainties of a trust. it's suggested that
apart from these requirements, a trustee is also necessary for the execution of a trust. Each of the
requirements will be considered in turn.

CERTAINITY OF WORDS.

As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. consequently, an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in Lambe Vs Eames, the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.

In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet....in full confidence that she will do what is right as to the
disposal thereof between my children either in her life time or by will after her decease. "it was
held that the wife took absolutely and there was no trust in favor of the children. Similarly, in the
case of Mussorie Bank Vs Raynor, the privy council held that where a testator left all his
property to his widow, feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

However, a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in Comskey Vs Bowring
Banbury; a testator gave to his wife, “the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death

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she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testator intention was to give an absolute gift to the wife.

CERTAINITY OF SUBJECT MATTER

As was observed earlier, the subject matter of a trust could take many forms. it could be interest
in land in possession or reversion; chattels, money and chooses in action. In Re Diggles, it was
indicated that un certainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis Vs Rippon, the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good,
remembering always according to the circumstances, the church of God and the poor. It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.

In Bardwell vs. Bardwell, there was a direction, to remember certain persons; it was held that
there was no valid trust. In knight vs. Knight, there was direction to reward. my old servants
and tenants according to their deserts. it was held that the purported trust was invalid in Re
Jones, a gift was given to a wife, absolutely, followed by a direction that, as to such parts of my
estate as she shall not have sold or disposed of, it should be held in trust for certain persons. it
was held that the purported trust was invalid.

The above cases may be contrasted with situations where the subject matter of the gift is to be
decided by the discretion of the trustee. Thus in Re Golay's Will trust, there was a direction to
the executors to allow a beneficiary to enjoy one of my flats during her life time and to receive a
reasonable income from my other properties. it was held that there was a valid trust because the
executors could select the flat; the words reasonable were not intended to allow the trustees to
make a subjective decision. They provided a sufficient objective determinant to enable the court
if necessary to quantify the amount.

CERTAINITY OF OBJECTS.

This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re Vandevells Trusts, it was
indicated that in case of future interests, the beneficiaries must be ascertainable with in the period
of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
with a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.

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Indeed, a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. with regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
with a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed, a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

The rest proffered by Lord Wilberforce is the same as one established in certainty of the objects
of a power in Re Gulbenkia's settlements consequently, it has been suggested that a
combination of the tests for powers and discretionary trusts has destroyed what used to be the
most important reasons for distinguishing between trust and powers.

More about certainty of objects can be seen in the case of Re wood there was a provision of a
sum of £ 2 per week for the week's Good cause of the BBC it was held that the beneficiary in this
instance was uncertain. Even if the directions were to be followed, the beneficiary could still not
be because seven good causes were advocated one week in each month from different solutions.

Related to test of certainty of objects is what has been described as trusts of imperfect
obligations.

As is evident from the requirement of certainty of objects, a trust in order to be valid should be
beneficiary who can enforce it. where there's no such beneficiary, except in cases of charitable
trusts, the trust will be regarded as unenforceable and thus bind.

In Re Astor's settlement Trusts, a trust was set up for the objects and purposes which included
the improvement of good understanding between nations ,the preservations of the independence
and integrity of newspapers, the promotion of freedom, Independence and integrity of the press,
the protection of newspapers from being absorbed by combines, the restoration and maintenance
of the independence of the editors of and writers in newspapers ,the securing for the public of
means of ascertaining by whom any newspapers is actually owned or controlled and the
establishment of any charitable public or benevolent schemes for the improvement of
newspapers, the relief of persons engaged in journalism, for ant of the objects previously
mentioned. It was held that the trust failed for lack of ascertainable beneficiary. We can also see
in the case of Re Shaw where it was held that the trust failed due to lack of someone to enforce
it.

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Therefore, when the words of trust are not certain there's no creation of trust, consequently the
don of the gift takes beneficially, likewise the done will take beneficially where the trust fails for
un certainty of property, the reason being that although an intention to create a trust may be
evident there's no property to which it can be attached.

A trust can be defined as relationship that is recognized by equity, it arises where property is
vested in a person or persons known as trustees who those trustees are under a duty to hold for
the benefit of other persons known as beneficiaries. The interests of beneficiary are normally
described in the instrument creating the trust; however these may be implied or imposed by law.
it can also be noted that the beneficiary interest should be proprietary meaning it can be sold or
bought. And it should also be emphasized that for trust to be created there must certainty of
intention, object and the subject matter. A trustee has the legal ownership carrying with it
responsibilities and burdens whereas beneficiary would have the advantage of any ownership.
An executor would similarly have the burdens and responsibilities and could be expected to
distribute property in accordance with the will.

The whole scenario of Chege when I analyze it concerns a gift. A gift in the law of property is
the voluntary transfer of property from one person to another without valuable consideration.
And for a gift to be effective the owner should have the intention; we Chege having the intention
to transfer money to Steve, and it should be noted that a promise to make a gift in the future is
unforeseeable and legally meaningless even if the promise is accompanied by immediate transfer
of the physical property in question.

The gift should also be delivered to the done for it to be effected. If the gift is of a type that can't
be delivered in conventional, it can be delivered in a constructive way and the done must accept
the gift in order for the property transfer to take place, however because people accept gifts one
will be presumed so long as the done does not expressly reject.

A gift can be inter vivos, and this per our case for today, inter vivos is a legal term referring to
transfer of gift made during one's life time as opposed to testamentary that is transfer of gift takes
place after the death.

A trust can thus be created inter vivos or by will, this is obviously that Chege should apply inter
vivos trust. There two types of inter vivos trust that is the settler may transfer the property to the
trustees and declare that those trustees will hold the property on trust for Steve. The settler may
declare himself as trustee holding the property on trust for others.

However as per chugs case, the best type to use is that Chege may transfer the money to her
friends that is Tom and Nancy, and they be trustees for Steve. That is, they hold it for Steve since
Chefs does not want her husband Julio to know about this. Therefore, the gift will not be quested
in the will.

But if it was not for Chege not hiding it from the Husband she could also declare herself as
trustee holding property for others, or include it in the will just and given after her death.

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Section AQ1. With the aid of relevant case distinguish between trusts from other forms of
legal relations.

(i) Agency.
(ii) Debt
(iii) Bailment
(iv) Contracts

Q2

2(a). Discuss the capacity elements that must be possessed of a settler in creation of a trust.

(b). Discuss the formalities if any, essentials for creation of a valid trust.

Q3

3(a).You have been consulted by Chege .she wishes to leave a substantial sum of money to her
long term boyfriend Steve, but she does not wish any reference to the gift to appear in her will.
she does not want her husband Julio to know about it. she has two friends Nancy and tom that
she says are my discretion and will witness the will and do anything else required. Advice Chege
on how far all her wishes can come into effect.

(b). Discuss the three certainties required when forming an express trust.

Q4

4. Discuss the exceptions to the rule that equity will not assist a volunteer in any two of the
following;

(I) Donatio Mortis Causa

(ii) Proprietary estopple

(iii) The rule in strong Vs Bird

4(b). Discuss the remedies available to the beneficiaries for breach of trust.

SECTION B

Q5

5. The Earl of Oxfords case optimized conflict between the common law and equity
consequently seeing the steady decline of the applicability of both common law and equity in
modern legal systems. Per LLB2 student, is this fair assessment evolution of equity and is
contractual applicability in contemporary Uganda.

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Q6

6. Write short notes on the following

(a) Judicature act 1873-1875

(b) Imputed Notice

(c) The maxim Delay defeats equity

(d) Writs in Rem

Q.7

Write short notes on ANY FOUR of the following case demonstrating their continued relevance
to the study of equity in Uganda.

a. Uganda Revenue Authority v. Stephen Mabosi 1996

b. Walsh v. Lonsdale (1882) 21 Ch. D. 9
c. American Cynamid vs. Ethicon
d. The cases of Mareva and Anton Piller
e. The Management Committee of Rubaga Girls School —Vs- Dr. Bwogi
Kanyerezi CA No. 34/99

Question One

3. With the aid of relevant case distinguish between trusts from other forms of legal
relations.

A trust arises where property is vested in a person or persons known as trustees who those
trustees are under a duty to hold for the benefit of other people known as beneficiaries or cestui
que trust.

The interests of Beneficiaries are normally described in the instrument creating the trust. It
should be noted that these may be implied or Imposed by the law. The Beneficiary interest are
also always proprietary that is can be bought /sold, given away or disposed by the will.

Trusteeship thus involves onerous obligations where the donor retains no responsibility for the
property once the gift has been made.

A trust is defined in Hague Convention on law of trusts, this has been incorporated into English
law by U.K Recognition and a trust is defined as the legal relationships created inter vivos or on

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death by a person, the settler when assets have been placed under the control of a trustee for the
benefit of a beneficiary or for a specified purpose.

A trust has various characteristics like trustee has the power and duty and he is accountable, title
of trust assets stand in the name of trustee or in the name of any other trustee, assets constitute a
separate fund and are not part of the trustees own estate.

Trust and Agency.

Agency is the contractual arrangement express or implied, written or verbal where one person
may act on behalf of another and bind that other as if he or she acted personally. Agency arises
where a person called the agent has expressed or implied authority to act on behalf of another
called the principal and he consents to do so

An agent is normally regarded as an accounting fiduciary party and he binds the principal vis-à-
vis third parties. Royal Bruness Airlines vs. Tan 42where a travel agent was appointed to sell
tickets for the plaintiff Airline on condition that all monies received by the agent were to be held
for the airline on trust.

The similarities between Trust and agency.

1. Relationship of trustee and beneficiary is fiduciary in nature and as well that of agent and
principal is normally fiduciary

2. Both must act personally and should not delay at the powers

3. Neither of them makes un authorized profits from their office

The Differences between trust and agency are discussed below;

1.The trustee in exercise of his office will contract as principal and cannot bind the beneficiaries
unless that have constituted him both trustee and agent binds his principal so long as he acts on
the principal's authority on apparent or ostensible that he is deemed to have .

2. Although the trustee has a right of recoup an indemnity against the beneficiaries for any
property incurred expenses and creditors may subrogate those rights in certain circumstances
there's therefore no direct contractual link between the beneficiary and 3rd parties comparable to
link between the principal and third parties.

3. Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. whereas a
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallot vs. Wilson43

42
(1995)2 Ac 378
43
(1930).
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How ever if the beneficiary is sui Juris un-animoud and together entitled may demand that the
trust property be distributed and consequently that the trust is brought to an end.

4. The principal in agency gives binding directions to his agent whereas beneficiaries cannot
control the exercise of the trustee's direction seen in Re-brock 44

5. The central distinction between agency and trust is in relation to property. An agent does not
per se hold any property for his principal. Many agents do not obtain items of property and those
who do so acquire only possession but not the other hand there can be no trust unless title to the
trust property vests in the trustee or in another party on behalf of the trustee.

It should further be elaborated that trust and agency do over lap this of the reason that trust can
be created under which a trustee undertakes a contractual obligation to act on behalf of the
beneficiary and an agent may become a trustee for instance he acquired title to property to be
held for the benefit of his principal.

It's argued that Agent becomes trustee for his principal if he obtains title to the property for the
principals benefit, but this isn't easy to gauge in practice especially if what's transferred is a mere
chattel as it was in the case of Cohen vs. Cohen court held that she succeeded in all the claims
that court finding that the husband stood in fiduciary relationship with regard to the wife's
property in the circumstances and was therefore a trustee for her benefit. Court followed the
decision in Burdick vs. Garrick 900DM 45where Lord Justice Giffard stated

"In respect of attorneys who had been authorized and buy property and had attempted to set up
the statute of limitations as defence "there was very special power of attorney under which the
agents were authorized to receive and invest to buy real estate otherwise to deal with property
but under no circumstance could the money be called theirs".

Trust and Debt

The traditional view is that the relationship between trustee and beneficiary is not one of debtor
and creditor. That means that the trustee does not owe the value of the rights he holds to the
beneficiaries. This can be seen in the case of Morley vs. Morley, Barclays Bank Ltd vs. Quist
close investment Ltd46created confusion in this area, holding that a borrower of money can be
both a debtor and a trustee in respect of the same sum. That decision is how ever extremely
controversial and has been recently reviewed in Twinsectra Vs Yardley47, but though under the
traditional view enunciated above a trustee will not owe the value of the right held on trust; this
is not to say that a debt cannot form the subject matter of a trust. When we talk of trust of a bank
account, we mean nothing than the creditor’s right to sue is held on trust.

A debt may or may not be contractual and the obligation of the debtor is personal but a trust is
proprietary. A trustee where possible use trust property in income bearing investment and
44
(1948)Ch 206
45
1(870)L.R C.L 233
46
(1970)Ac 56
47
(2002) UKHL
141
account to the beneficiary for income. In the case of a debtor such an obligation is un necessary
except in so far as provided for in agreements express or implied. This can be seen in the case of
Potters vs. Loppert 1973 at 399.

If money borrowed is stolen from the borrower he is still under an obligation to repay, how ever
with in trusts, a trustee is not liable for the loss which is not attributed to his negligence Morley
vs. Morley

Further the words of an instrument may be employed in such a manner as to create both personal
and trust obligation there by creating a situation where a debt and trust exist.

In the case of Barclays bank Ltd bs Quits close investment lt1970 Ac 561,In the above case
Rolls Royce Razor blade ltd was highly indebted to Barclays bank and was in need of 209,000
pounds to pay dividends which has been declared on its shares. The sum was borrowed from
Quits close under an arrangement whereby the loan was to be used for that purpose. The money
used into a separate account at Barclays bank which had notice of that nature of the arrangement.
Before dividends were paid rolls Razor went into liquidation.

Issue: whether the money on the account was owned by the beneficiary Rolls Razor ,in which
case Barclays bank claimed to set against the over draft or whether Rolls Razor had received the
money as trustee and still held it in trust of Quits close.

House of lords held: The money had been received in trust to be applied for payment of
dividends that purpose having failed, the money was held in trust for Quit close.

The fact that the transaction was a loan recoverable by an action at law did not exclude the
implication of a trust. The legal and equitable rights exist the bank having notice of the trust and
not retain the money against Quit close.

Trust and Bailment

A bailment arises where an owner of property gives permission to another person to possess it. A
bailment is a delivery of personal chattels to bailee subject to a condition that they be returned to
the bailor or be dealt with as the Bailor directs when the purpose of the bailment has been carried
out.

Contract act part 9 of 2010 discusses bailment.

Suppose you’re traveling abroad for a year you may have a painting which you do not want to
leave in the house you therefore hand it over to a friend to look after it in your absence and that
amounts to bailment.

This will depend on the location of your title, your right to exclusive possession of painting.

142
If you vested it in a friend then they will a trustee of that right for you. if you have however kept
your right in yourself, handing it over only the possession of painting the transactions will be one
of bailment not trust.

The difference between the two is crucial a number of reasons;

One is in breach of instructions your friend sells the painting to an innocent purchaser it will
matter a great deal whether you created bailment or trust. If the friend was a bailee then the
purchaser will not acquire at the good against you and will be able to recover the paintings value
from purchase in action in tort law of conversion.

The basic rule is memo dat quod habet that means that no one gives who possesses not, but if
your friend was a trustee, the position of the purchaser would be different. For now your friend
has the right in question and capable of passing it on to third parties. you of course have rights
under trust but such rights destroyed when subject matter of the trust comes into the hands of an
innocent purchaser of value.

The position of bailment is thus governed by common law, the position of bailed is similar to
that of a trustee in that both are entrusted with another's property.

The Differences between Bailment and a Trust;

1. A bailee obtains only possession and what is referred to as special property in the goods while
trustee takes title to the trust property.

2. Bailment is a common law notion worked out in proceedings for common law relief such as
actions of conversion, detinue, and breach of contract where as the trust relationships are purely
equitable.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason.

3. Bailment only applies to personal chattels that are capable of delivery where as a trust may
arise in respect of real or personal property and whether tangible or in tangible.

4. A bailment is enforced by the bailor who is party to the arrangement while generally the trust
is enforced by the beneficiary who is not party to the trust instrument.

In bailment there's no transfer of property from the bailer to the bailed. Bailment duties are
dependent on the rules of common law and not equity.

The duties of trustees under a trust are minimal in character compared to the duties that exist in
bailment.

Bailment is restricted to chattels but a trust may exist to all types of property

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Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owner’s loose rights for example estoppel however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.48

Contracts.

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promisee; on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

Re Cook49,indeed there can be no hard and fast lines between contract and trust because contract
is a source of rights while trust is a way of holding rights, indeed many rights held in a trust are
born of contract.

A contract is a common law personal obligation resulting from an agreement between parties on
the other hand a trust is an equitable relation which can rise independently of an agreement. How
ever the situation when a distinction between the two is hard to draw that is to say

Settlement and covenants to settle.

Where property is vested in trustees on a settlement, it was held upon a trust on settlement. How
ever if the property has not yet been transferred to trustees but it's simply subject to consent to
settle. The beneficiaries will only be able to enforce consent if they have given consideration
based on the principle equity will not assist a volunteer.

Power of appointment.

Appointment often has its everyday meaning, its common talk of the appointment of a trustee for
example, how ever appointment also has a technical trust law meaning either

The act of appointing that is to say giving an asset from the trust to a beneficiary (usually where
there's some choice in a discretionary trust)

The name of the document which gives effect to the appointment.

The trustee's right to do this, where it exists is called power of appointment is given someone
other than the trustee such as the settler, the protector or a beneficiary.

This refers to a power that is conferred upon a donee to dispose of the donor’s property by
nominating and selecting one or more third parties to receive it.

48
Pilcher vs. Rawlins

49
(1965)CH 1902
144
The property may consist of tangible items like cars, boats, house hold items or it may consist of
an intangible interest in property such as the right to receive dividend income from stocks

The distinction between trusts and powers of appointment is fundermental. A trustee must do as
the settler directs where as powers of appointment are discretionary.

Further the beneficiaries under a trust are owners in equity of the trust property. However the
objects of powers of appointment are nothing unless and until the donor of the power makes an
appointment in favour of the done. Vesty vs. IRC (1980) Ac 1148

Question 2

2(a). Discuss the capacity elements that must be possessed of a settler in creation of a trust.

A trust is a three party fiduciary relationship in which the first party, the settler or trustor
transfers or settles a property (often but not necessarily a sum of money)upon the second party
(the trustee)for the benefit of the third party the beneficiary.

The trustee is the legal owner of the property in trust as fiduciary for the beneficiaries who is or
are equitable owners of the trust property. Before creation of trust, there must be capacity that is
capacity to create. A trust is similar to the ability to hold and dispose of a legal equitable interest
in this regard.

Therefore before creation of trust a number of situations may be considered and mostly its
ability, anyone who can hold property can create trust there are exceptions for statutory bodies
and corporation’s .Minors also can't hold property though they can in some circumstances.

The trust instrument must show certainty of intention to create a trust, certainty of what the
subject matter of trust is and certainty of who the beneficiaries are and for trust to be valid there
must be transfer of property by the settler to the trustees.

The situations considered when creating trusts are discussed below;

Minors: A settlement on trust by minor is voidable in the sense that he can repudiate it during his
minority or within a reasonable time of attaining his majority.

In the case of Edward vs. carter, such settlement is how ever only possible in respect of an
equitable interest. Since am infant cannot hold legal estate, a settlement of trust in respect of trust
in legal estate is not possible by him.

2. Mental abnormality.

Generally a person who is mentally abnormal cannot create a trust under the trustee's act S.50 (1)
b.That means that for one to create trust he or she should be sane. "The court may direct a

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settlement to be made of the property of a lunatic or any part thereof or any interest there in, on
such trusts and subject matter to such powers and provisions as the court may expedient."

The direction may affect property which has been acquired by the lunatic under a settlement, a
will or an intestacy with a view to protecting interested parties in the event of change in the lawn
of intestacy or circumstances affecting an earlier disposition by the lunatic.

3. Married Women: A married woman may create trust of her property. This is an obvious
provision in the 20th century yet significant given the relatively inferior status attributed to
women by African customs.

Even in English society this trend has historical connotation. in the words of professors keeton
and Sheridan.

The progressive emancipation of the married woman from the restrictions to impose by the
common law upon her capacity to hold and deal with real property was, until the second part of
the ninety century almost exclusively the result of equitable intervention. At common law a
wife's chattels became the absolute property of the husband. He also possessed the power to
reduce her chooses in action into possession whilst upon the birth of issue, he enjoyed the seizing
for life of such present estates of inheritance as his wife might have possessed as tenancy by
courtesy. From the reign of Elizabeth one on wards; however the court of chancery steadily
evolved the doctrine of estate of the married woman although it does not seem that this doctrine
was applied to real property before restoration.

In pursuance of this object, the court of chancery established that wherever property was given to
trustees for the separate use of married women, she could hold and dispose of it in equity free
from her husband's interference and such property was protected effectually against the
husband's debts or other obligations.

Companies

Trading companies which are incorporated under the companies act have an implied power to
borrow for the purposes of the company's business.

Normally this power is uses to issue debentures and for the purpose of buttressing the issue the
company has power to execute a trust deed by which after covenanting to repay the loan with
interest until payment, assigns to trustees real property or lease holds belonging to the company,
to constitute security for the repayment of the loan, the trustees under taken to hold the property
upon certain trusts in favour of the debenture holders.

2b. Discuss the formalities if any, essentials for creation of a valid trust.

A settler may create a trust by manifesting an intention to create it .This can be seen in the case
of Jones vs. lock where the court of appeal of chancery held that there was no trust, because the

146
fathers intention was an outright transfer. They refused to perfect an imperfect gift through a
successful declaration of trust. It should be noted that no formalities are required for the creation
of an inter vivos trust of personality. However evidence in writing is required for the creation of
a trust in land. Thus by section 92 of the registration of Titles Act any declaration of trust
respecting land must be evidenced by a memorandum in writing signed by the party creating the
trust.

By will: secret trusts

Under section 50 of the succession act all trusts created by testemtary disposition must be
executed and attested in accordance with the formalities there in prescribed.

These are the will shall be in writing ,that it shall be signed at the foot or end there of by the
testator, or some other person in his presence and by direction, that the signature be acknowledge
by at least two witness in writing in the presence of the testator.

The issue arises as to the effect of dispositions which do not comply with formalities. Although
the requirement of formality was intended to prevent fraud what would happen if the intended
trustee hides behind the provisions of the statutes? this could happen in two instances. First
where the trustee induces transfer of land to himself by means of an oral promise to hold on trust
for the third party.

Second, where the legatee or devisee induces the testator to make disposition in his favour by
will relying on an oral promise to hold the gift in trust for a third party. The general view is that
equity will not permit a statute to be used as an instrument of fraud.

The doctrine is said to be responsible for the growth of equitable principles relating to secret
trusts seen in the case of Cook Vs Brooking it was held that since the testator had declared the
terms of the trust to Simon in his life time there was a good secret trust although the actual
Method of distribution among beneficiaries was uncertain.

Issue arises how secret trusts can be classified that is express or constructive; if the secret trust is
express it must be evidenced in writing in order to comply with the registration of titles act. If it
is constructive then the formal requirements are dispensed with even as regards land.

Professor Marshall argues that the fully secret trust is an example of constructive trust.

Half secret trust.

These arises where under a will property is given expressly on trust but without stating what the
trusts are its suggested that here there would be no possibility of fraud by the legatee in the view
of the contents of the will and the express declaration of trust. such declaration destroys
possibility of personal gain on the part of the legatee. half secret trusts have said to be valid since
50
Black well vs. Black well.

50
1929
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Completely and in completely trusts.

A trust is said to be completely constituted when the trust property has been finally and
completely vested in trustees. where this has not been done this is said to be in completely
constituted.

Consequently a mere declaration of intention to create a trust is insufficient to create a trust.

Nevertheless all trusts arising under a will are completely constituted notwithstanding the fact
that may be either executed or executory.

The distinction between completely and incompletely constituted trusts is significant with
respect to the issue of consideration in the creation of the trust. Where valuable consideration has
been given for the creation of a trust, the issue of whether the trust is completely or incompletely
constituted is irrelevant since equity regards as done which ought to be done. However equity
will not perfect an imperfect gift since equity does not assist a volunteer.

The basic principle applicable in determining whether a trust has been validly constituted is
found in Milroy Vs Lord where Turner L.J stated that;

"In order to render a voluntary settlement valid and effectual, the settler must have done
everything which, according to the nature of the property comprised in the settlement was
necessary to be done in order to transfer the property and render the settlement binding upon
him. He may of course do this by actually transferring the property to the persons for whom he
intends to provide and the provision will then be effectual or declares that himself holds it on
trust for those purposes.....but in order to render the settlement binding, one or other of these
modes must as I understand the law of this court be resorted for there is no equity in courts to
perfect an imperfect gift."

The implication of this statement is that transfer of property to trustees must follow the rules to
apply to the property concerned. Thus trust in respect of legal estates in land must be transferred
and evidenced in writing by the person creating the trust.

2. Shares should follow the format of transfer prescribed thereof.

3. Equitable interests and copyrights must be in writing signed by the person disposing of the
same.

4. Chattels must be in form of deed of gift or evidenced by intention to give, coupled with
delivery or possession.

A bill of exchange should be endorsement thereof, Milloy Vs Lord; a settler executed a

voluntary deed purporting to transfer shares in the bank of Louisiana to Lord, to be held on trust
of the plaintiff name of the transferee in the books of the bank

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Lord held that a power of attorney on behalf of the settler and it would have enabled him to take
all necessary further steps to obtain registration. However this was not done. it was held that
there was not trust although the intention was clearly to the benefit of the beneficiary.

Discretionary and protective trusts.

A discretionary trust is one where the trustees hold property on trust for a group of beneficiaries,
and are required by the terms of the trust to pay or apply the income or capital in favour of such
of the beneficiaries as the trustee shall in their discretion think fit, whatever each individual
beneficiary is entitled to depends on what the trustee deems fit to give him.

In the case of Abasi vs. Kapon a testator appointed the defendants as executors of his will. He
directed them to give and bequeath all his properties to his children who were loyal to him,
excluding the plaintiff.it was held by the Divisional court that the words constituted a general
device and bequest of the testators real and personal property to the executors in trust for the
children of the deceased, excluding the plaintiff in such shares as the executors think fit.

On appeal it was argued for the plaintiff appellant that even if there was such a device to the
executors on trust, the trust was void. On ground of un certainty both as to the individuals or
class who were to be beneficiaries of the trust.

In rejection of contention the appellate court held that the intention of the testator was to devise
all his estate to his executors for the benefit of his children excluding the appellant, the testator
created a discretionary trust and the duty of the executor was to select the beneficiaries in
accordance with the direction of the will.

Discretionary trusts have to be drafted in such a way that they do not fail for un certainty. They
are in a nature of special power of appointment. The power of election must be exercised with in
perpetuity period.

Protective Trusts.

A protective trust arises where the settled settles property on X for life until alienation or
bankruptcy, and when that happens the interest is directed to pass to Y or the settlement in with a
proviso that when a particular event happens to the interest would shift to y.

The protected life interest will be extinguished where there is sequestration of the tenant for life's
property, in which case a discretionary trust arises, where the principal beneficiary resides in
enemy controlled territory, although this may be avoided by a specially drawn protective trust,
where an order of the court is made charging a husband's protected interest with payment to his
wife.

The following are the essentials of a trust;

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In the case of Knight vs. Knight it was stated that in order for a trust to be validly created, three
conditions are necessary: the words employed must be so used that taken as a whole, they ought
to be construed as imperative that is the words must be certain

The Subject matter of the trust must be certain

The objects or persons intended to be benefitted must also be certain

The three requirements are usually described as the three certainties of a trust. it's suggested that
apart from these requirements, a trustee is also necessary for the execution of a trust. Each of the
requirements will be considered in turn.

CERTAINITY OF WORDS.

As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. consequently an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in Lambe Vs Eames, the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.

In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet.....in full confidence that she will do what is right as to the
disposal thereof between my children either in her life time or by will after her decease. "it was
held that the wife took absolutely and there was no trust in favour of the children. Similarly in
the case of Mussorie Bank Vs Raynor, the privy council held that where a testator left all his
property to his widow, feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

How ever a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in Comskey Vs Bowring
Banbury; a testator gave to his wife,"the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

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It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testator’s intention was to give an absolute gift to the wife.

CERTAINITY OF SUBJECT MATTER

As was observed earlier, the subject matter of a trust could take many forms. it could be interest
in land in possession or reversion; chattels, money and chooses in action. In Re Diggles, it was
indicated that un certainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis Vs Rippon, the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good,
remembering always according to the circumstances, the church of God and the poor. It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.

In Bardwell vs. Bardwell, there was a direction, to remember certain persons; it was held that
there was no valid trust. In knight vs. Knight, there was direction to reward. my old servants
and tenants according to their deserts. it was held that the purported trust was invalid In Re
Jones, a gift was given to a wife, absolutely, followed by a direction that, as to such parts of my
estate as she shall not have sold or disposed of ,it should be held in trust for certain persons. it
was held that the purported trust was invalid.

The above cases may be contrasted with situations where the subject matter of the gift is to be
decided by the discretion of the trustee. Thus In Re Golay's Will trust, there was a direction to
the executors to allow a beneficiary to enjoy one of my flats during her life time and to receive a
reasonable income from my other properties. it was held that there was a valid trust because the
executors could select the flat; the words reasonable were not intended to allow the trustees to
make a subjective decision. They provided a sufficient objective determinant to enable the court
if necessary to quantify the amount.

CERTAINITY OF OBJECTS.

This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re Vandevells Trusts, it was
indicated that in case of future interests, the beneficiaries must be ascertainable with in the period
of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
with a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. with regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

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It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
with a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

The rest proffered by Lord Wilberforce is the same as one established in certainty of the objects
of a power in Re Gulbenkia's settlements consequently, it has been suggested that a
combination of the tests for powers and discretionary trusts has destroyed what used to be the
most important reasons for distinguishing between trust and powers.

More about certainty of objects can be seen in the case of Re wood there was a provision of a
sum of £ 2 per week for the week's Good cause of the BBC it was held that the beneficiary in this
instance was uncertain. Even if the directions were to be followed, the beneficiary could still not
be because seven good causes were advocated one week in each month from different solutions.

Related to test of certainty of objects is what has been described as trusts of imperfect
obligations.

As is evident from the requirement of certainty of objects, a trust in order to be valid should be
beneficiary who can enforce it. where there's no such beneficiary, except in cases of charitable
trusts, the trust will be regarded as unenforceable and thus bind.

In Re Astor's settlement Trusts, a trust was set up for the objects and purposes which included
the improvement of good understanding between nations ,the preservations of the independence
and integrity of newspapers, the promotion of freedom, Independence and integrity of the press,
the protection of news papers from being absorbed by combines, the restoration and maintenance
of the independence of the editors of and writers in newspapers ,the securing for the public of
means of ascertaining by whom any news papers is actually owned or controlled and the
establishment of any charitable public or benevolent schemes for the improvement of news
papers, the relief of persons engaged in journalism, for ant of the objects previously mentioned.
It was held that the trust failed for lack of ascertainable beneficiary. We can also see in the case
of Re Shaw where it was held that the trust failed due to lack of someone to enforce it.

Therefore when the words of trust are not certain there's no creation of trust, consequently the
donor of the gift takes beneficially, likewise the done will take beneficially where the trust fails
for un certainty of property, the reason being that although an intention to create a trust may be
evident there's no property to which it can be attached.

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3.You have been consulted by Chege .she wishes to leave a substantial sum of money to her long
term boyfriend Steve, but she does not wish any reference to the gift to appear in her will. she
does not want her husband Julio to know about it. she has two friends Nancy and tom that she
says are my discretion and will witness the will and do anything else required. Advice Chege on
how far all her wishes can come into effect.

A trust can be defined as relationship that is recognized by equity, it arises where property is
vested in a person or persons known as trustees who those trustees are under a duty to hold for
the benefit of other persons known as beneficiaries. The interests of beneficiary are normally
described in the instrument creating the trust; however these may be implied or imposed by law.
it can also be noted that the beneficiary interest should be proprietary meaning it can be sold or
bought. And it should also be emphasized that for trust to be created there must certainty of
intention, object and the subject matter. A trustee have the legal ownership carrying with it
responsibilities and burdens whereas beneficiary would have the advantage of any ownership.
An executor would similarly have the burdens and responsibilities and could be expected to
distribute property in accordance with the will.

The whole scenario of Chege when I analyze it concerns a gift. A gift in the law of property is
the voluntary transfer of property from one person to another without valuable consideration
.And for a gift to be effective the owner should have the intention; we Chege having the intention
to transfer money to Steve, and it should be noted that a promise to make a gift in the future is
unforeseeable and legally meaningless even if the promise is accompanied by immediate transfer
of the physical property in question.

The gift should also be delivered to the done for it to be effected. If the gift is of a type that can't
be delivered in conventional, it can be delivered in a constructive way and the done must accept
the gift in order for the property transfer to take place, how ever because people accept gifts one
will be presumed so long as the done does not expressly reject.

A gift can be inter vivos ,and this per our case for today, Inter vivos is a legal term referring to
transfer of gift made during one's life time as opposed to testamentary that is transfer of gift takes
place after the death .

A trust can thus be created inter vivos or by will, this is obviously that Chege should apply inter
vivos trust. There two types of inter vivos trust that is the settler may transfer the property to the
trustees and declare that those trustees will hold the property on trust for Steve. The settlors may
declare himself as trustee holding the property on trust for others.

How ever as per chugs case, the best type to use is that Chege may transfer the money to her
friends that is Tom and Nancy, and they be trustees for Steve .That is they hold it for Steve since
Chefs does not want her husband Julio to know about this. Therefore the gift will not be quested
in the will.

But if it was not for Chege not hiding it from the Husband she could also declare herself as
trustee holding property for others, or include it in the will just and given after her death.

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Question 3

3b.Discuss the three certainties required when forming an express trust.

An express trust is one which has been intentionally created by a settler himself though
manifestation of an intention to create one. The most common methods of creation are by deed
or will by un sealed writing inter vivos or by word of mouth. It's a trust created in express terms
and usually in writing as distinguished from one inferred by the law from the conduct or dealings
of parties.

Property is transferred by person called trustor, settler or grantor to a transferee who holds the
property for the benefit of one or more persons called beneficiaries.

Express trust may be sub divided into executory and executed trust, on the hand completely and
in completely constituted trusts, on the other. An executed trust is one which in which the settled
has indicated inappropriate technical terms what interests are to be taken by all the beneficiaries.
An executory trust is one in which the settler has indicated to his trustees a scheme of settlement
but the details are to be gathered from his general expressions.

The distinction is of practical significance in two respects, Firstly while the language of an
executed trust is strictly construed, an executory trust is liberally construed. Secondly, where in
an executed trust the settled makes use of technical expressions, the interpretation of which the
law recognizes certain rules, equity follows the law and gives effect to such interpretation. How
ever, with an executory trust, equity attributes less importance to the use or omission of technical
words. Rather it seeks to discover the settler’s true intention

Once the intention is discovered, equity orders the preparation of a final deed which gives effect
to the settlor’s intention which is discoverable from the language of the settlor’s instrument.

The distinction between a completely and in completely constituted trust is necessary in order to
distinguish a trust from a void settlement. A trust can only be valid if the title to the property is in
the trustee and if the trusts have been validly settled.

The three certainties of Express trust are;

Certainty of intention; there must be real intention by the settled to dispose of property and create
trust ,not just make a gift ,a trust can also be created contrary to the intention of the settler
alleged to have created it .Commissioner of stamp Duties vs. Soliffe

Certainty of subject: The property the subject of the trusts must be sufficiently ascertainable at
the time the trust was created. Herdegen VS Federal Commissioner of Taxation 51

Certainty of object: Beneficiaries must be ascertainable

Fixed trust Weston vs. Weston

51
(1988)
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Discretionary trust .Criteria certainty test.

Is whether it can be said that a given individual is or not a member of the range of objects?

Re badems Deed trusts

Mc Phail vs. Doulton

QUESTION 4

4. Discuss the exceptions to the rule that equity will not assist a volunteer in any two of the
following;

(I) Donatio Mortis Causa

(ii) Proprietary estopple

(iii) The rule in strong Vs Bird

(I) Donatio Mortis Causa

A Donatio mortis causa is a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor. This could be distinguished from a normal inter vivos gift
under which title immediately passes to the transferee, a testamentary gift which takes effect
under provisions of a property executed will.

The essentials of a valid Donatio mortis causa were articulated by Lord Russels C.J in Cain vs.
Moon They are;

1. The gift must have been in contemplation though not necessarily in expectation of death;

2. the subject matter of the gift must have been delivered to the donee;

3. the gift must have been made under such circumstances as to show that the property is to
revert to the donor if he should recover.

The first condition was illustrated in the case of Wilkes be Allingtin. In that case, the donor was
suffering from an incurable disease. He made a gift knowing that he did not have long to live .In
actual fact, he had an even shorter time he imagined .He died two months later of pneumonia. It
was held that the gift was valid. The second condition may be illustrated from Re Weston, where
it was held that where a dying man, could be shown to have handed over to his fiancée his post
office savings book, his action was sufficient to constitute an effective donation mortis causa of
the balance recorded in the book.

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The Rule in Strong vs. Bird

Where a person makes an imperfect gift to x and subsequently appoints X his executor, upon the
death of the donor, the property vests in fully in X. The equity of the beneficiary under the will is
displaced by X's prior equity. consequently, X may retain the property irrespective of the fact
that until the donor's death X's title was imperfect. The rule has been extended to apply to a done
who has taken out letters of administration to the state of the donor, and the personal
representatives of a person who had convened in favour of volunteers and had subsequently been
appointed a trustee of the settlement in favour of volunteers.

Further more for the rule to apply, the gift must have been perfect in every way except for the
legal formalities required for the transfer of title .Thus in Re Free land, a testatrix promised to
give the plaintiff a motor car in the future but didn't do so. on the death of the testatrix, the
plaintiff became her executrix and claimed that the imperfect gift had in consequence been there
by perfected. The court refused to apply the rule in strong vs. Bird, there having been no
intention to make the plaintiff the owner of the car immediately.

Finally, any one relying on the rule must show a continuing intention on the part of the donor up
to the time of his death. Thus in Re wale, investments of which the settler was absolute owner
were settled by her voluntarily in 1938 for the benefit of her daughter. The settler did not take
any steps to transfer these investments to trustees, who however, were appointed executors of the
settlors will .The will was subsequently altered from time to time and it eventually disposed of
all her estate to other beneficiaries. It was held that although an incompletely constituted trust in
favour of the daughter had been created by the settlement of 1939, the settled had not shown any
continuing intention to benefit the daughter.

4b Discuss the remedies available to the beneficiaries for breach of trust.

A breach of trust consists of an improper act, neglect, default or omission of a trustee with regard
to trust property or of a beneficiary. It may include; direct intermeddling with trust property for
improper purposes, failure to exercise proper care in discharging a duty and male fide exercise of
a discretion. In these instances, the trustee must replace any consequential loss from the trust
fund as a result of his or her actions. The purpose of the rule is not to punish the trustee but to
compensate the beneficiaries. The following are the remedies available to the beneficiaries for
breach of trust;

1. Compelling performance of the trust.

It should be noted that if a trustee neglects the administration of the trust or defaults in protecting
the trust estate, a beneficiary may take steps to ensure that he takes the necessary actions in the
interest of trust property.

For example where a trustee fails to renew lease hold, where the character of trustee is such as
would endanger to fraud among others. Apart from the general, there are certain equitable
remedies to which a beneficiary may resort; that is he may apply for an order of injunction to be

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granted by court, where a breach of trust is contemplated. This can be seen in case of Milgan vs.
Mitchell.

In this respect by law of property legislation in some jurisdictions trustees for sale shall so far as
practicable give effect to the wishes of the beneficiaries of full age. consequently failure to
consult them or some of them amounts to breach of trust which can be restrained by injunction.
An injunction may also be obtained against a bankrupt trustee who wants to obtain possession of
trust property.

The court may appoint a receiver upon the request, by application of a beneficiary. The
appointment of receiver is normally premised on the possibility of actual or prospective violation
of the duties of trusts likely to endanger trust property see the case of Middleton vs.
Dodswell.For example failure of the trustee to agree so that the trust cannot be properly
administered, loss of part of trust property through failure to realize it, refusal of trustee to act
and denial of the trust.

In the case of Odulate vs. odulate, the applicants applied for an order of the court for a transfer
of administration of the estate in dispute to an administrator or receiver operating under the
supervision of the court pending the determination of the substantive proceedings.

It appeared from the pleadings that there was a total dead lock in the administration of the estate
and it was no longer possible for the defendants to meet to perform duties and functions as
administrators and trustees of the estate. The trust funds which could have been paid into the
estate account with the bank were under control of factions trustees.

Thirdly when the property is endangered as when it is invested in un authorized and hazardous
securities, court mat on the admission of the trustee that the fund is in his co trustees hands order
the amount to be paid into court by trustee who is not holding the fund. if that trustee admits that
the fund has not been properly applied.

Seen in the case of Fregene vs. Aweshika;

The plaintiff applied to court to remove defendants from the office of trustees. An account and
injunction restraining the defendants from carrying on the duties of trustees, on ground of alleged
mis conduct. it was proved that the defendants relieved the principal trustee of his post and
replace him with another person.

It was held that those defendants were guilty of mis conduct and mis management, should be
removed from office and renders the account to trust fund. It has as well been observed that
where a trustee commits a breach of trust, fraudulent or otherwise any beneficiary can bring an
action to question the validity of the acts of the trustee and need not to sue in a representative
capacity.

2. Proprietary Remedies

a) Advantage over personal remedies

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It should be noted that with regard to proprietary remedy, satisfaction of the plaintiff's demand
does not depend on solvency of the defendant trustee. If the property to be traced belongs to
plaintiff in equity, it will escape the defendant’s bankruptcy. in some cases the plaintiff will be
able to take advantages of increases in value of property. Thirdly there are cases in which
proprietary remedy is available although no personal action is possible. Fourthly judgment from
a proprietary action Carries interest from the date with the property came to the defendants hands
while claims in personam carry interest only from the date of judgment.

b.Doctrine of unjust Enrichment.

It has been suggested that proprietary remedies cannot be fully understood without appreciation
of the doctrine of in just enrichment. This doctrine appears in virtually every legal system.
Basically it's to the effect that where the defend is in justly enriched in the expense of the
plaintiff, the defendant must make restitution to the plaintiff.

C.Tracing at common law.

A proprietary remedy is one which entitles a claimant to treat specific property thereof as his
own. The common law did not develop a real action in respect of chattels which entitled a
plaintiff to specific recovery thereof. The courts at common law recognized the owner of the
chattel but there was no action at common law of paying damages of returning the chattel.

Discretion to award specific recovery was in court. The issue thus arose if the right of the
plaintiff was limited in case of a specific chattel, should this right change when defendant
changed one chattel to another? The answer is the chattel can be followed so long as its nature
could be ascertained as such. Right only ceases when the means of ascertainment fail.

d.Tracing in equity

Equity has developed more sophisticated methods of tracing.

1) Straight case

This is one where there has been no mixing of trust funds with the trustees own money.
consequently, if the trustee has sold trust property, the beneficiary may take the proceeds of sale
have been used to buy other property bought or hold it as security for the amount of money used
in purchase. This is subject to the condition that claims in equity are invalid against a bona fide
purchaser for value without notice of the trust.

2) Mixed Funds

In the hands of trustees

The situation worsens when trustee has mixed trust funds with his own or after mixing there are
additional dealings with fund .The burden of proof is on the trustee to prove initially that part of
the mixed fund is his own. In Re Tolley’s W.T Thomas j Stated that...

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If a trustee amalgamated trust property with his own, his beneficiary will be entitled to every
position of the blended property which the trustee cannot prove to be his own.

Consequently, if the compositions of the mixed fund are established at the time of the original
mixing, the problem of identification is of determining how to account for the reductions in the
fund by payment to increase in the fund by payment there in.

This can be seen in the case of Re Hallett's Estate; Hallet was a solicitor, died after having
mixed his own money certain funds from two trusts. The other trust had his client Mrs. Cotteril
as beneficiary. At his death, the funds were insufficient to pay his personal debts and to meet
trust claims. Three issues arose

1 whether Mrs. Cotteril not being a beneficiary of trust of which Hallet was a trustee was entitled
to tracing remedy on ground of her fiduciary relationship

2. Assuming she was how to allocate the payments from the funds as between Hallet and
claimants

3. How to allocate payments as between claimants themselves.

It was held that Mrs. Cotteril was entitled to trace and payments out must be treated as Payments
for Hallets own money.

Professor Maudsley has criticized the application of tracing Rule in Re Hallets as having been
too precise in the sense that it could lead to a wrong result if earlier payment out was in favour of
an un authorized investment which prospered and the remainder disappeared. He suggests that
the correct rule should be that a beneficiary may claim a charge upon any part of trust fund
which he can identify as having been part of the trust fund.

Secondly he argues whether it's fair to apply the tracing remedy when the defendant is insolvent
and argues that this is a situation where it's necessary to ascertain whether the beneficiary who is
tracing should have priority over other creditors. Consequently the beneficiary will have to
compete with other creditors of the trustee, professor Maudsley states that this is unfair to
creditors in the Sense that they suffer when the trustee pays out money to a mixed fund.

In Rosco Ltd Vs Winder it was held that later payments into the mixed fund cannot be treated
as repayments of the money unless the trustee shows an intention to do so.

In the Hands of Fiduciaries or Beneficiaries

Re Hallet's case shows that tracing remedy is available as between beneficiaries, In Sinclair vs.
Brougham the Birkbeck society operated a banking business which was held to be ultra vires.in
the winding up competition arose between the claims of share holders and customers. The main
issue was whether customers had the right to trace into general assets of the society. it was held

159
that there was a fiduciary relationship between the customers and directors. The directors had
mixed the funds and customers had a right to trace into the hands of the society

In Re Diplck,a testator left his residuary estate “such charitable institution or institutions or other
institutions or other charitable or benevolent objects or objects in England as the executors
should select it was held by the house of Lords that the words included non charitable as well
charitable objects. Consequently the gift failed for uncertainty.

In The hands of third parties

The right to trace property into the hands of a third party to which it has been passed by trustee
will depend on the nature of the equitable interest in the property. Consequently, where a trustee
has transferred trust property in breach of trust of transferee will be bound by the trust except in
the following circumstances. First when he establishes that he has legal title to property, second
that he is a bonafide purchaser for valuable consideration without notice that the transactions
were breach of trust. In Pilcher vs. Rawlins James L.J stated that "....a notice is an absolute, un
qualified, in answerable defence, and un answerable plea to the jurisdiction of this court....."

Where the recipient is a volunteer and has no notice, the rights of beneficiary to trace against him
will be equal to that of the recipients own creditors

For this purpose if an innocent volunteer mixes trust money with his own, the rule in Clayton’s
case neither applies nor Re Hallets case.

e) Critique of Right to trace.

Professor Maudsley has indicated that the right to trace should not be restricted to a proprietary
interest which is equitable but should also be available to a beneficial legal owner. This is inspire
of the suggestion in Re Dip lock and Re Hallets Estate that the equitable remedy of tracing
should only be available where a fiduciary relationship can be established .secondly the right to
trace should not be limited to situations where a proprietary interest exists. The breach of
fiduciary duty should be sufficient to make available the tracing remedy.

Question 5

5. The Earl of Oxfords case optimized conflict between the common law and equity
consequently seeing the steady decline of the applicability of both common law and equity in
modern legal systems. Per LLB2 student, is this fair assessment evolution of equity and is
contractual applicability in contemporary Uganda.

History tells us, in brief, that Equity has its origins in the old English Courts of Chancery
(namely the court of the Chancellor). Due either to the inability of the Kings justices to enforce
judgments against powerful individuals (some noble families were very much a law unto
themselves in their Earldoms, Dukedoms etc during the Medieval period) or, with increasing

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frequency in later years, defects or undue harshness of the common law people were driven to
submit petitions to the King, who was considered to be a repository of ‘Divine justice’. Such
petitions were often passed over to the Lord Chancellor, who would dispose justice in the name
of the King. With the passage of time such petitions were directed to the Chancellor and his
office of the Chancery began to function as a court of law. A significant aspect of the Equitable
principles developed in these courts of Chancery was that they were so developed by Priests
(most Chancellors of the medieval period were ‘men of the cloth’). This ensured that the
principles of Equity were fundamentally based on the concept of ‘natural justice’ in keeping with
the lines of the Christian tradition of Good and Evil, and indeed in ancient usage the word Equity
means ‘natural justice’

The different views taken in certain situations, by the principles of Common law and the
principles of Equity, naturally led to conflict and confusion. In the reign of King James the First
it was held that decisions of the courts of Chancery would have overriding authority. While
Equity was initially free of the concept of ‘precedent’ from the late 1500s to the mid 1800s a
body of precedent, of cases based on equitable principles began to take shape, and the rules or
principles of equity took their final form with clear lines and with the introduction of the
Judicature Acts of 1873 and 1875 the Court of Chancery, along with the other Courts such as
Kings/Queens Bench, Common Pleas, Exchequer, Exchequer Chamber, Court of Appeal in
Chancery were absorbed by the Supreme Court.

It would be fair to say that the Judicature Act played the role of ‘fusing’ the system under which
both the Common law and Equity was administered, namely an amalgamation of the different
courts under one. This can be equated to the reference made in the statement that sets the theme
for this article, the ‘two streams of jurisdiction’ meaning the common law and Equity, ‘run in
the same channel’ meaning the administration of both within a common system of courts.

While the above, is somewhat straightforward, it is this authors opinion that the reference ‘do not
mingle their waters’ implies that the Common Law and Equity themselves were not ‘fused’ but
continued to function as two separate systems of law.

Therefore I aim to establish that while the Common Law and Equity came to be administered
under the same system the fundamental principles of Common law and Equity continue to act
independently of each other in the interests of Justice. This can, be shown most effectively
through reference to decided cases, where it will be seen that equitable principles have produced
results quite different to what would be expected under principles of Common Law and
extending these decisions to derive certain fundamental facts as to the position equitable
principles hold within the legal system independently of the common law. I

Independence of Equity and Common Law through decided cases.

A landmark case in this regard was that of Central London Property Trust Ltd v High Trees
House Ltd52. The facts of the case were as follows, During the Second World War countless
people had left the City of London to escape the German bombing of Britain’s Capital. As a
result of this many housing complexes were vacated and left empty. In a certain block of flats,
52
[1947] 1KB 130
161
flats had been leased out for a period of 99 years at 2,500 pounds a year. To curb vacation the
landlord had offered to cut the rent by half (1,250 pounds a year). Once the ‘blitz’ was over and
the tenants returned the landlord litigated to recover the full sum of 2,500 pounds. As per the
Common Law the plaintiffs would have been legally able to recover the full sum of 2,500
pounds even for the period when the flats had been empty since the lease that fixed the amount
was under seal and hence (according to common law) could not be changed by a mere agreement
but only through a deed, however the principles of equity took on a different view. The judge
deciding the case – Lord Denning quoted “There has been a series of decisions over the last fifty
years which, although they are said to be cases of estopple are not really such. They are cases in
which a promise was made which was intended to create legal relations and which, to the
knowledge of the person making the promise, was going to be acted on by the person to whom it
was made, and which was in fact acted on. In such cases the courts have said that the promise
must be honoured…..As I have said they are not cases of estopple in the strict sense. They are
really promises – promises intended to be binding, intended to be acted on, and in fact acted on.”
(The Discipline of Law, Lord Denning, 1979)

In the judgement it was held that through equity, the promise made was binding on the party
making it (the common law did not make such an allowance) and that the plaintiff could not
recover the full amount of money for the period when the flats were empty.

This decision, in my opinion highlights the following key points;

a. While both the principles of Common law and Equity were administered as one totality,
in the above case we see the principles of equity coming into play to lead the judge to
arrive at a very different decision than he would have had to make if he had followed common
law principles. Hence we see equitable principles functioning, quite distinctly from those of the
common law in the interests of ‘justice’

b. As is quoted in Lord Denning’s book ‘The Discipline of Law’ a previous case where
similar equitable principles could have been applied, Salisbury (Marques) v Gilmore 53 Lord
Justice Mackinnon felt unable to take an equitable view due a decision made by the House of
Lords in Jorden v Money 54which was thought to be binding where the concept of estopple was
confined to representations of existing fact.

The significance of this observation is that, though the principles of equity could be used to take
on a different view of a situation as opposed to that taken by the common law it, in some
instances, needed courage on the part of the judge to break free from the bindings of common
law and allow these equitable principles to take flight. We see the action of Lord Denning in the
High Trees case was doing precisely this – giving due credence to the independent place the
principles of equity held in the legal system, free from the rigidity of the common law in the
interests of doing ‘justice’.

b.That the decision was possible in the High Trees case was due to the ‘conflict or variance’
clause (section 25 of the Judicature Act of 1873) which deemed that where the rules of common
53
[1942]2 KB 38
54
[1845] 5HL Cas 185
162
law and equity contradicted rather than complement, the rules of Equity would prevail. This
reality is one of the strongest arguments in this author’s opinion for establishing that the systems
of Equity and Common Law do not ‘mingle’.

Question 6

Write short notes on the following

6a .Judicature act 1873-1875

Historically Equity developed due to mitigate the rights of rigidity of application of common law
and to provide reliefs or remedies which the common law could not avail to litigants.

The ordinary meaning of equity is therefore the right doing, good faith, honest and ethical
dealing in a transaction or relationships between individuals.

Equity introduced various reforms and these reforms affected the out dated and un satisfactory
procedure of the court. and secondly the area between the common law courts and chancery
courts operated was not clearly defined.

There judicature act is one of the reforms introduced by equity. The recommendations of the
Royal commission was enacted as judicature 1873 to 1875.These acts abolished all the ten
existing superior courts and in their place set up a supreme court of judicature consisting of the
high Court of justice and the court of Appeal. The High Court of justice was to consist of three
divisions; the King's bench, the chancery division and probate, Divorce and Admiralty Division.

The judicature acts effectively abolished the dual administration of justice as between the
common law courts and chancery court. Secondly the High Courts of justice were given power to
administer both equity and law concurrently together. Third, all claims, obligations and defences
were recognized and enforced by three divisions of the High Court of justice. Fourth the
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

b).Imputed Notice

The purpose for the doctrine of notice is to prevent buyer of superior title from setting it up
against prior earlier owners of inferior interests which affect the property. The effect of this is
that the buyer of legal estate with notice of prior equitable interests affecting the estate takes it
subject to those prior equitable interests

The doctrine of notice is one of the instances where equity looks at substance rather than form.
Notice simply means knowledge of an existing fact. This may be divided into actual,
constructive, and imputed notice

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Imputed Notice;

This is notice which is neither actual nor constructive may be imputed to the buyer through
actual or constructive or his or her agent.

Its established agency law that notice to the buyer is notice to the principal. such Notice will only
be imputed to the buyer through his bonafide agent. In this regard a buyer who instructed his
agent to buy property at an auction sale was taken to be affected by notice by notice of an equity
which came to his knowledge in the course of transactions

How ever because of hardship of this rule, it was modified in Mount ford vs. Scott to the effect
that information acquired by a solicitor is one transaction cannot effect, though the doctrine of
imputed notice his principal in subsequent transactions .Thus it has been held that knowledge of
a solicitor in a previous transaction cannot be imputed to a buyer in a later transaction. The
solicitor for this purpose is not under a duty to pass his knowledge in a previous transaction to a
buyer when he later becomes his client. How ever, if the solicitor conspired to the detriment of
the other, then the aggrieved party will be protected by the doctrine of bona fide purchaser
without notice. In Sejjaka Nalima Vs Rebecca Musoke Odoki J held that the appellant was not
a bona fide purchaser without notice owing to the fact Musoke and advocates who were acting as
his agents had known of the alleged fraud concerning disputed property.

There's also constructive notice under the doctrine of notice and this is defined by Walden j in
William son vs. Brown as where a purchaser has knowledge of any fact sufficient to oust him
on inquiry as to the existence of some right or title in conflict with what he is about to purchase.

Actual notice on the other hand defined as the situation where the buyer of an estate has actual or
express notice of a prior interest at the time where he or she made the purchase at the time before
the purchase was completed. This can be seen in section 64 of the R.T.A A buyer of land shall
hold that land subject to all encumbrances as notified to the registrar.

In Sempa Mbabali vs. W.K Kidza Odoki J held Sempa Mbabali vs. W.K Kidza Odoki j
Held that the defendants plea of Bonafide purchaser could not stand because they knew all along
that part of land they had purchased was for burial grounds and seller sold the land before his
share was ascertained.

c) The maxim Delay defeats equity

This maxim can as well be called the doctrine .The essence of the doctrine of lashes is that an
equitable relief will not be given if the applicant has unduly delayed in bringing the action.

The doctrine does not apply in situations which are governed by the statutes of limitation. For
instance the limitation act cap 80 prescribes periods with in which suits or actions should be
instituted in court. Six years is prescribed for actions based on contract or tort other than those
where the claim relates to personal injuries, in which case the action must be brought within
three years of the date on which the cause of action arose. Furthermore tortuous and contractual
actions against the government must be instituted within two year and three years respectively of

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the date of the cause of action, while those related to recovery of land claim to the personal estate
of a deceased or under a mortgage must be instituted with in twelve years of the date on which
the claim accrued. Where fraud is alleged, there is no limitation period.

By way of illustration of the application of the doctrine of laches, in Fabgemin vs. Aluko, it was
stated that in considering the doctrine of laces the court acts on three factors. First, the delay by
the plaintiff second acquiescence by the plaintiff in the delay. Third, change in the position of the
defendant. Furthermore, the doctrine will apply if the plaintiff behaves in a way which makes the
defendant alter his position in the belief that the plaintiff's claim has been abandoned or the delay
amounts to evidence of an agreement by the plaintiff to abandon his right.

Apart from the application of the doctrine to the equitable remedies of specific performance and
rescission of contracts, it also applies to the grant of letters of administration. An application for
letters of administration or challenge thereof must be made without delay; otherwise it may be
refused. Thus in Ephraim Vs Asuquo, the plaintiff applied have the grant of letters of
administration set aside .it was held that since two years had passed since the grant and the
administrator had probably completed the distribution of the estate ,the doctrine of laches applied
and the plaintiff's claim could succeed.

There are three defences to invocation of the doctrine of laches. First, the plaintiff's ignorance of
the facts on which claim is based. Second the in fact or other disability of the plaintiff and finally
fraud on the part of defendant. in those circumstances delay will not be permitted to bar a claim.

d) Writs in Rem

In rem jurisdiction ("power about or against 'the thing'"[1]) is a legal term describing the power a
court may exercise over property (either real or personal) or a "status" against a person over
whom the court does not have in personam jurisdiction. Jurisdiction in rem assumes the property
or status is the primary object of the action, rather than personal liabilities not necessarily
associated with the property.

Question 1

The development of Equity was both controversial and significant to the legal system. Do
you agree with this statement?

It is my opinion that the development of equity was both controversial and significant as the
discussion below;

Equity in simple terms means fairness, justice and consciousness while dealing with any matter.
It can also be defined as whatever is just and right in man’s being with fellow man.

The rules of equity developed as a result of harshness, strictness and rigidities of common law.
Equity therefore developed to cure defects of common law.

165
Common law courts were forced to grant a writ of prohibition against the Chancery courts to
restrain them from interfering with the judgment and decisions of common law courts. This
resulted into confusion within the judicial system thus resulting into conflicts between the two
courts of common law and courts of chancery.

In 1873-1875 the judicature Act was enacted as a means of having both rules of equity and
common law run together following the advice of Attorney General to the king. King James
declared that where there is conflict between common law and equity, the rules of equity
prevails.

This conflict was best illustrated and solved in the Earl of Oxford's case 1615 where common
law and equity confronted one another in the same court between Justices from both common
law courts and courts of chancery that is Justice Coke of the common law and Lord Ellesmere of
the court of chancery. But later came to common ground. The case related to land that changed
hand several times till when it was purchased by her Highness of England which was then
transferred to Oxford who based it out and this was challenged by the college master of
Magdalene. The issue in the suit was in which court the matter was going to h heard. The case
was taken to the courts if common law where they made a decision in favour of college Master.

This decision was later on challenged by the courts of Chancery where the Lord chancellor felt
he had the power to do away with the decision of the common law court basing on justice and
good conscience and asserted that where equity and common law conflicted, equity takes
precedence. However Justice Coke contended that he would issue a writ of prohibition against
the Lord Chancellor and disagreed with the assertion.

The conflict was later brought before King James 1 who determined the matter in favor of equity
gaining a supreme position over common law. This is also codified in our laws and can be seen
in the Judicature Act CAP 13 under section 14(2) and (4), the magistrate’s court Act CAP 16
under -section 11 and Article 126(2)(e) which is to the effect that justice shall be administered
without regard to undue technicalities.

it follows that equity is applicable in Uganda’s legal system. it also important to note however
that courts do consider common law in applying equity take into considerations of the maxims of
equity which are the basis of the various doctrines of equity.

SIGNIFICANCY OF EQUITY TO THE LEGAL SYSTEM;

The development of equity led to the creation of a particular hierarchy of courts which provided
for both the application of common law rules and equity rules in that the same court which
helped to prevent double proceedings in regard to the same matter. This can be seen under
section 11(1) (3) and 14 of the magistrate act and judicature act respectively thus proving its
significance to the legal system.

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It was further significant in that it was used to ensure the promotion of justice for instance in
creation of an equitable lease as seen in the case of Walsh vs. Lonsdale where it was held that
an agreement to lease is as good as lease that is registered. This protected the rights of equitable
interest owners who were not protected under the law.

Equity also significantly played a role where there is Joint undertaking by ensuring that incase
one surety defaulted, all the others had to take blame and share the burden equally then institute a
suit against the one who defaulted for their compensation. It further applied under liability for an
executor in regard to trust property in that an executor could only be liable for destruction of
trust property only when he was negligent.

It was also applied when varying a deed whereby for a variation of a deed to be valid, under
common law it had to be written as the initial agreement and under seal however equity
narrowed this by allowing any document under seal to be regarded as a variation of the deed.

It developed equitable maxims that were used as guiding principles in the application of both
equity and common law since they were to be administered in the same court. For example
equity follows the law which simply implies that equity supplement the law where it was
defective and unfair. Other maxims include equity acts in personam, he who comes to equity
must come with clean hands and he who seeks equity must do equity. These were very
significant in the legal system in the country.

It introduced new Remedies into the legal system those that were applied both at equity and at
law. For example, injunctions which were used to restrain performance of an act or to compelled
someone to do a positive act.

Specific performance which provided better relief to litigants where common law remedies
(damages) were inadequate by compelling performance of an obligation in the contract.

It was significant in that it brought with it new Procedures that were created to assist defective
procedure at common law and provide effective justice. For example, administration of
interrogatories where a person had to be questioned that is asking him/ her questions to retrieve
evidence which was unheard of at common law.

In addition to the above, it also introduced discovery of documents where a party to a suit is
asked by the other party through court to deliver up certain documents that are relevant to
formulation of a good case. This is incorporated in our laws under order 10 of the Civil
Procedure Rules. It also came with perpetuation of testimony.

Equity is significant in that it created new Rights to be recognized by law and equity. These
include rights of a beneficiary under a trust which were never upheld at common law. Other
rights included estate contracts, equitable mortgages etc

It also came with developments in regard to equitable Doctrines such as doctrine of notice. This
protected person with equitable interests as against an owner of a superior legal interest who had
knowledge of particular existing facts.

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The Doctrine of Satisfaction. This was in conformity with the equitable maxim that equity
imputed an intention to fulfill an obligation. It’s where an individual does an act in fulfillment of
another prior promise.

The Doctrine of Performance is the act which a person has placed himself/herself and if he does
it in another manner it’s deemed to have fulfilled the promise.

Doctrine of Election, this literally connotes to taking the benefit with the burden. That is the
beneficiary is given a gift under a will in condition that they give up something in their
possession to another in order for them to actually own the gift.

Question No 2

Question

Discuss in details whether the judicature acts of 1873-75 simply fused the rules of or the
administration of equity and law.

Equity is a body of rules, the primary source of which was neither custom nor written law but the
imperative details of conscience and which had been set forth and developed in the Court of
Chancery. The concept of equity came up to temper the harshness and rigidness of the common
law and the aforementioned definition regarding equity clearly expresses it. Equity in one hand
filled the gaps in law and ensured the smooth flow of justice, which is the main purpose of law,
and in another way, tempered the rigidness of law by amending strict laws and also by
introducing new rules to reduce the rigidness of the existing set of laws. In Dudley v Dudley, it
was held that “Equity does not destroy the law, nor create it, but assists it.”

This arose after people were getting inadequate remedies at law since it over relied on the
principle of precedence and thus could not handle the needs of the people at that time. Common
law was corrupted by the feudal era and justice was really hard to come by and thus people run
to the king who in turn, being the fount of justice, administered fairness via the Lord Chancellor
and thus chancery courts came into being. Conflict with common law was inevitable as common
law courts were losing popularity and many of their decisions were “disrespected” as common
injunctions55. However, this was put to an end by the Earl of Oxford`s Case 56 upon a decision by
King James. This was later codified by the Judicature Acts of 1873 57 and 1875. This was after a
report58 giving recommendations which included fusion of the administration of justice by means
of the consolidating of all superior courts of law and equity into one supreme court possessing
the jurisdiction of all the courts so consolidated.

55
A court order by Chancery court setting aside a decision from common law courts.
56
(1615) 21 ER 485 - It is a foundational case for the common law world, that held equitable principle
takes precedence over the common law.
57
Section 25
58
By the Royal Commission on the administration of justice

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The Judicature Acts59, in the first place abolished all the existing superior courts that is, The
Courts of Queens Bench, Exchequer and Common Pleas and the Court of Chancery, Court of
Exchequer Chamber and the Court of Appeal in Chancery. These were replaced them with a
Supreme Court consisting of Court of Appeal and High Court; and the Supreme Court was
directed to administer both Law and Equity however the rules of common law and equity and
trust it could be said that “ The Courts that were manifold dwindle To delivers Divisions of
one.”60

Not only did the Judicature Acts fuse the jurisdiction of administration of common law and
equity, all claims, obligations and defences were recognized and enforced by all the three
divisions of the High Court of Justice. More so, Common injunction exercised by the chancery
courts was abolished since it was no longer necessary.

The fusion of the administration of Equity and Law, was best experimented and tested in the case
of Central London Property Trust V High Trees House 61, a case which promulgated the doctrine
of Equitable Estoppel where it was held that through equity, the promise made was binding on
the party making it and the plaintiff couldn’t recover the full amount of the money when the flats
were less occupied. This couldn’t have been the case under common law as law doesn’t allow a
promise that is not by deed to make any adjustments on the contract.62

From the above case, an issue arises that infers that indeed administration wasn’t really fused.
Documents drawn under equity receive treatment independent of the rules governing common
law; however rules of equity can be applied to common law issues. This impliedly shows the
dominance and superiority of equity and that thus equity acquired favour over common law, and
it can’t be rightly said that administration of the two was equitably made.

Conclusively therefore, the fusion of equity and common law wasn’t complete as they are “two
steams of jurisdiction though the run in the same channel run side by side and do not mingle their
waters.”63. instances have come up where Equity has overridden principles of common law for
example in equitable leases, variance of deeds and executor`s liability for assets

Question 3

With the aid of relevant examples and authorities discuss in details the Doctrine of Notice
and the impact of registration legislation on the Doctrine of Notice.

Notice literally means knowledge of an existing fact. The doctrine of notice is an equitable
doctrine that seeks to protect persons having equitable rights over land from those with superior
legal rights against placing them to defeat the equitable rights.

59
Of 1873-75
60
Pollock, Leading Cases Done into English (1892), p. 57.
61
[1947]1 KB 130
62
High Trees Case
63
Ashbury Principles of Equity of Orthodox View

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This doctrine is divided into three namely; actual notice, constructive notice and imputed notice.

Actual notice

This refers to express knowledge/ Information of a prior interest at the time the buyer made the
purchased or was completed. Here the purchaser has prior notice before acquiring the superior
title, the effect of this is that, the owner of the superior title can’t defeat the owner of the
equitable interest because he is not a bonafide purchaser for value without notice therefore; he
buys the land subject to the equitable interest of the other owner. In the case of Sempa Mbabali
vs. W K Kidza, the purchaser bought the land with full knowledge that it had on it burial
grounds thus couldn't claim to be a bonafide purchaser for value without notice.

However, if he buys without notice of the equitable interest, then that makes him a bona fide
purchaser for value without notice therefore his/ her estate will not be subject to the equitable
interest. He buys it free from any other interests or encumbrance

Constructive Notice.

This was well defined from the case of Williamson vs. Brown 1887, as notice which occurs
where the purchaser has knowledge of any fact sufficient to put him on inquiry of the prior
existing interest that conflicts with the one his intending to purchase. The failure to carry out
inquiry, the purchaser is deemed to be aware of such prior conflicting interest or is guilty of
gross negligence.

The buyer is to carryout inquiry from persons such as the Registrar of Titles, local council
Authorities, Village elders, the neighbors etc.

Facts that are sufficient to put one on inquiry include, finding another person or different family
settled on the land one intends to purchase. If this is so, one is required to inquire from this on
the land about the kind if interest they hold in the land and failure to do so, one is presumed to
have made an inquiry and their interest will be subject to the equitable interest if they proceed to
purchase.

This was best illustrated in the case of Uganda Post Telecommunications vs. A K M Lutaaya;
in this case the purchaser before completion of the purchase visited the land and found a family
settled on it, he didn't bother to inquire the nature of their interest. He went on ahead and
purchased the land, later he wanted to evict them. It was held that he purchased the land subject
to the equitable interest of those settled on it prior to him.

Furthermore, the case of Fredrick Zaabwe vs. Orient Bank & 5 Others, this clearly showed
instance where the purchaser of the land had sufficient facts to put him on inquiry but overlooked
them. In this case, the plaintiff Zaabwe gave powers of Attorney to one of the defendants that are
Sewanyana in regard to his land for a debt he had obtained from him. The defendant used these
powers to mortgage the land to Orient bank which took values to it to estimate its value. When
Sewanyana and his company failed to satisfy the loan, Orient bank sold the land to one Ali
Hussein who bought it yet the land had a caveat placed on it.

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It was held that the plaintiff was entitled to his land because; the defendants in the first place
misused the powers of attorney by benefiting themselves to the detriment of the one that granted
it to them. The bank acquired the land with constructive notice as it was aware of the existence
of the family of the plaintiff and his law chambers on the day the values went to ascertain the
value of the land. The bank was to be put to inquiry with the existence of such rights however
still went on to take on the land.

Furthermore, Ali Hussein who bought the land couldn't claim to be a bonafide purchaser for
value because by the time he obtained a legal title to the land, there had been placed a caveat by
the plaintiff thus he had no superior title over the plaintiffs.

This presumption can only be disapproved when one is able to show that they carried out
inquires but were unable to find any facts that could put them on inquiry. This makes them a
bona fide purchaser for value without notice and thus the superior title will not be subject to any
equitable prior interest.

Imputed Notice.

This is the kind of notice that is either actual or constructive and maybe imputed on the buyer
through his agent's actual or constructive knowledge of existing facts.

Here, notice to the agent is notice to the buyer/ principal. This is because his working on his
behalf and for his benefit. The notice gotten form one transaction cannot be used as notice in
another transaction. That is it can't be used to affect the principal in other transactions as stated in
the case of Mount ford vs. Scott.

Where an agent is working for more than one person, the notice acquired by him is taken to be
notice acquired by all the parties. However, where information acquired is used to the detriment
of one of the principals, and then he/ she will be protected as a bonafide purchaser for value
without notice since there existed an element of fraud on the side of the other party. This was
well set out and applied in the case of Sejjaka vs. Rebecca.

The impact of registration legislation to the doctrine of notice is that, for any instrument
purporting to convey an interest in land; it must be registered in order for it to be effective as
stated under section 54 of the Registration of Titles Act. This is to the effect that the whole
world and anyone intending to make any transactions and dealing in relation to such land is put
to notice officially about an already existing interest. This enables one to make a decision on
whether to go on with the transaction or not.

In addition, section 48 of the Registration of Tiles Act is to the effect that registration of such
instrument as mentioned above is only effective as to such date of registration and not when the
document was obtained. It further suggests that instruments affected with actual or constructive
notice shall not be given priority.

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If there are two competing registered instruments, the first to be registered takes priority and a
bonafide purchaser for value without notice is only affected by notice if the registered estate of
the previous owner.

In conclusion therefore, the effect of notice (actual, constructive and imputed) is that it affects
priority of interests in land and protects equitable interests obtained prior to the legal interests
except in instances where one is a bonafide purchaser for value without notice of the previous
interest.

Question No.4

Brief facts;

Malik made bequests by will that five acres to his son Amos, two acres to the health centre in
lower Konge, his freehold house to his wife Franca in confidence that she would hold it either for
his daughter Shakira or his son Shafiq as she deemed fit and the remainder to the nephew.

Issue;

Whether this trust is legally effective.

Law Applicable;

Case Law

Resolution;

For a trust to be valid, it has to be certain as far as the intention, the subject matter and the object
as Er Lord Lansdale64 Knight v Knight65. That the words must show that the settler intends to
create a trust, that the subject matter of the trust must be certain too likewise the objects 66. The
objects are the beneficiaries of a trust.

A trust is a relationship which arises whenever a person called a trustee is compelled in equity to
hold property, whether real or personal, and whether by legal or equitable title, for the benefit of
some person, of whom he may be one and who are termed beneficiaries, or for some orbit
permitted at law in such a way that a benefit of the property accrues, not to the trustee, but to the
beneficiaries or other objects of the trust67. To determine whether the trust is legally effective, I
have to look at the effectiveness of every bequest. This as demystified hereunder.

As to whether the bequest to Amos is effective;

64
MR
65
(1840)
66
Cestuis que trust
67
As per Prof Keeton in The Law of Trusts (10th ed. 1974), p.5

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In Palmer v Simmons68, it was held that in order to create a valid trust, the description of the trust
property must be must be sufficiently certain. If there is not sufficient certainty the disposition is
ineffective and no transfer of property to the trustee takes place. In the case at hand, the five
acres that are purported to be settled for Amos is not sufficiently described as far as where the
land is found, how it’s registered or so. Therefore the bequest to Amos doesn’t stand due to
uncertainty of subject matter.

As to whether the second bequest is valid;

As a principle, if the beneficiaries are uncertain, the trust will fail. It must be possible to ascertain
who the beneficiaries are69. There are two types of uncertainties in this case, linguistic
uncertainty and evidential uncertainty. What applies here is the linguistic uncertainty but not the
evidential uncertainty. Evidential uncertainty is where the beneficiaries are not easily
ascertainable or that the trust is administratively unworkable70. In the case at hand, the health
center in Lower Konge is not certain and cannot be ascertained .there may be many or none. If
there is only one health center then the object is certain but as far as the question is, object is
uncertain and thus the. Bequest is unenforceable.

As to whether there is a valid settlement for Shakira and Shafiq;

The general rule is that precatory words are not sufficient to create a trust. As James L.J stated “I
could not help the feeling that the officious kindness of the court of Chancery in interposing
trusts where in many cases the father of the family never meant to create trusts, must have been a
cruel kindness indeed.”71 In Re Hill, Public Trustee v O`Donnell72where residuary bequest to the
testator`s brothers and sisters “for the benefit of themselves and their respective families” it was
held to be a gift to the legatees absolutely and not as trustees for their children

In the case at hand, it is an absolute gift to the wife Franca but not to the children as the intention
to settle the house for them is not certain.

The bequest to the nephew;

In the case of Salisbury v Denton, 73 it was held that a gift of part to one and the remainder to
another will be divided equally however in the case of Palmer v Simmons 74 it was held that a
declaration of trust as to “the bulk of my said residuary” fails to create any trust. In the case at
hand, the bequest to the nephew falls within the second as the first three bequests are invalid and
residuary is indeed clear. Tis would make the bequest valid only if the settler has only one
nephew lest it would be invalid for uncertainty of object.

Question 5
68
(1854)
69
J.W. Harris (1971) 87 L.Q.R 31.
70
Lord Wilberforce in Mcphali v Doulton (1971)
71
Lambe v Eames (1871)
72
[1923] 2 Ch. 259
73
(1857)
74
(1854)

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Explain the nature and principles guiding the issue of interlocutory injunctions.

Interlocutory injunctions are injunctions given until the commencement of the trial. It is warded
where after a suit has been filed, the plaintiff realises that there would be delay before the case is
heard and may suffer loss therefore it's sought for. When granting it, both parties are to be
present in court.

Interlocutory injunctions are provided for under section 37 of the Judicature Act and are
discretionary in nature that is granted at courts will.

It’s also provided for under Order 41 of the Civil Procedure Rules which provides that the suit
to be presented with an affidavit and it’s to keep the subject matter of the suit from any disposal,
alienation, destruction and waste.

Interlocutory injunctions are granted in order to maintain status quo while rights are to be
established since it remains in force till the trial. Status quo simply means the situation at hand,
the current situation in place as defined in the case if Dr. Byarugaba vs. AG...,

An interlocutory injunction maybe discontinued if it was based on the wrong application of the
law and this can be applied for by the dissatisfied party for it to be set aside.

It will not be granted where it will have no effect. For example in the case of Bentley Stevens
vs. Jones, a director was removed in the course of irregular proceedings which were convened
without being served on him. The court declined to grant the injunction sought because the
irregularity could be cured by going through the proper process or serving a valid notice.

The guiding principles governing issuance of interlocutory injunctions are as follows;

These principles were set out in the case of Americana Cynamid vs. Ethicon Co Ltd and
Kiyimba kaggwa vs. Katende and these include;

Prima Facie case.

This simply means that there must be an issue that needs to be answered by court and the
defendant has no arguable defence. The plaintiff must show that his/ her right exists and has been
infringed that is possibility of success in the main suit.

In UCB vs. General Parts (U) ltd, an injunction was applied to restrain the respondent from
disposing of the applicant’s property until the disposal of the main suit. The defendant had
breached a loan agreement by delaying the processing of the letters of credit in favour of the
applicant leading to delay in delivery and negotiations of another loan. Kireju justice held that
the plaintiff had establishes a prima facie case and possibility of success in the main suit.

The possibility of success need not be more than 50% and a prima facie case doesn't mean a
good case.

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Substantial and irreparable injury is also another guiding principle in issuing an injunction.

The plaintiff must show that if an interlocutory injunction is not granted, she/ he would suffer
substantial and irreparable injury which could not be compensated by award of damages at the
termination of the trial. In UCB supra, the justice was satisfied that the applicant would suffer
irreparable damages that were so material as if the property was sold and he couldn't be
compensated.

Examples of irreparable damages include loss of a job with prospects, construction of structures
on land which may not be applicant’s desire, publication of confidential material.

Balance of convenience is the last principle governing issuance of injunctions.

Court takes into account the injury to be suffered by the defendant if the injunction is given and
the injury likely to be suffered by the plaintiff or applicant if the injunction is not granted.

The court first considers the adequacy of damages to each party and then proceeds to either grant
or not.

Question 6

Discuss the manner in which a constructive trust arises and what makes it different from
an express trust.

This trust arises by operation of law and thereby results from the effect of a rule of equity that is
certain circumstances a legal owner of property must hold it in trust for others.

It can also be referred to as a relationship created by equity in the interests of good conscience
and without reference to any express or implied intention of the parties. It follows that if a person
is in a fiduciary position and uses it to gain personal advantage; he becomes a constructive
trustee for the person thereby deprived of the profit.

Constructive trust arises in the following ways;

Where vendor is a constructive trustee. In a situation where a binding contract for the sale of
land exists the vendor is held to be a constructive trustee for the property of the purchaser until
the sale is complete. In Lysaght vs. Edward's 1876, it was held that from the moment a valid
contract is concluded, the vendor becomes in equity a trustee for the purchaser if the estate is
sold and the beneficial ownership passes to the purchaser. The vendor is not entitled to dispose
of the property as his own.

The vendor as a constructive trustee must exercise reasonable care in respect of the relevant
property. In Philips vs. Sylvester 1872, the vendor allowed the property to waste away, the
purchase price was reduced by court.

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Where property is held by a mortgagee gives rise to a constructive trust. A mortgagee in
possession of mortgaged property is in the nature of a trustee for the mortgagor. This is because
the mortgagee is liable to account for profits a rent derived from the mortgaged property while in
possession. This position is consistent with constructive trust.

Another instance in regard to mortgage is where a person sells mortgaged property and receives
a price exceeding the mortgage debt. The mortgagee is said to be a constructive trustee for the
surplus money and must account to the mortgagor.

A constructive trust can arise from an express trust. It is principle law in equity that a trustee
should not make a profit from his position of trust and should not use that position to obtain a
personal advantage adverse to the beneficiary. If he does so, he is taken to hold the profit or
advantage as a constructive trustee for the beneficiary.

Constructive trust arising from a stranger to trust. If a stranger to the trust obtained trust
property or funds from the trustee with knowledge that it forms part of the trust estate and that he
is receiving it in breach of trust, he is judged as a constructive trustee for the beneficiary of the
trust.

A volunteer who receives trust property either with or without notice is constituted as a
constructive trustee.

Also consider

Constructive Trust

A relationship by which a person who has obtained title to property has an equitable duty to
transfer it to another, to whom it rightfully belongs, on the basis that the acquisition or retention
of it is wrongful and would unjustly enrich the person if he or she were allowed to retain it.

A constructive trust does not arise because of the expressed intent of a settler, one who
establishes a trust. It is created by a court whenever title to property is held by a person who, in
fairness, should not be permitted to retain it. It is frequently based on disloyalty or other breach
of trust by an express trustee (the person appointed or required by law to execute a trust), and it
is also created where no express trust is created but property is obtained or retained by other
Unconscionable conduct. The court employs the constructive trust as a remedial device to
compel the defendant to convey title to the property to the plaintiff. It treats the defendant as if
he or she had been an express trustee from the date of the unlawful holding of the property in
question. A constructive trust is not a trust, in the true meaning of the word, in which the trustee
is to have duties of administration enduring for a substantial period of time, but rather it is a
passive, temporary arrangement, in which the trustee's sole duty is to transfer the title and
possession to the beneficiary.

The right to a constructive trust is generally an alternative remedy. The aggrieved party can
choose between a trust and other relief at law, such as recovery of money wrongfully taken, but
cannot obtain both types of relief.

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A constructive trust, as with an express trust, must cover specific property. It cannot be
predicated on mere possession of property or on a breach of contract where no ownership of
property is involved.

The court decides what acts are required of the plaintiff as conditions precedent to the securing
of a decree (a court order that determines the rights of all the parties to the suit). For example, if
the defendant has acquired title to property of the plaintiff by means of Fraud, the plaintiff will
be required to return any consideration (inducement to enter into a contract) received from the
defendant. In addition, if the defendant has, during his or her period of wrongful retention of the
property, spent money for the preservation or protection of the property, such as by paying taxes
or the principal or interest on a mortgage, reimbursement might be required of the plaintiff. If the
defendant has made improvements or performed services in managing the property, some courts
require the plaintiff to compensate the defendant to the extent of the benefits inuring to the
plaintiff through the imposition of a constructive trust, particularly in cases in which the
defendant was not an intentional wrongdoer, but rather acted under mistake or ignorance.

The decree establishing the constructive trust requires the defendant to deliver possession and
convey title to the property and to pay to the plaintiff profits received or rental value during the
period of wrongful holding and otherwise to adjust the equities of the parties after taking an
accounting.

Mistake, Undue Influence, or Duress

If by Mistake of Fact the plaintiff conveys title to the wrong person or the wrong property is
conveyed to the intended person, or the plaintiff is otherwise induced to act by reason of mistake,
the transfer can be set aside. An alternative is to obtain a decree which reforms the instrument of
conveyance so that it expresses the intent of the parties. In these cases, the conveyance is not
void (without legal effect). The plaintiff actually intends a transfer, but the circumstances which
cause the plaintiff's mind to operate are such that the court considers it unfair for the transferee to
retain the property.

The same doctrine applies where the plaintiff is induced to make the conveyance through the
exertion of Undue Influence (conduct by a person that dominates and destroys the free will of
another). If the conduct of the defendant goes beyond persuading the plaintiff to convey—if it
encompasses violence, threats of violence or restraint, or other injury—there is an even stronger
case for charging the transferee as a constructive trustee on the ground of duress.

Fraudulent Misrepresentation or Concealment

The courts hold in numerous cases that a transferee who uses fraud to obtain the transfer of
property is a constructive trustee. Such situations might involve an affirmative assertion of the
truth of a material fact or concealment of the existence of a material fact when there was a duty
to speak. The state of the defendant's mind is a material fact and might be a basis for a
constructive trust—such as when the defendant promises to use the property for certain purposes
beneficial to the plaintiff but intends at the time of the transfer to retain it for him or herself. The

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defrauded party can also proceed on the theory of setting aside the transfer, which is substantially
equivalent to obtaining a constructive trust, or the defrauded party can sue for damages.

Property Obtained by Homicide

If a person obtains property through a will or intestacy by wrongfully and intentionally killing
the owner, a constructive trust can be decreed as to the property obtained. The beneficiaries of
the constructive trust imposed on the murderer are those persons who would have taken by
intestacy or will or otherwise from the murdered person, as if the murderer had predeceased the
victim.

Statutes in many states prevent the murderer from acquiring or retaining the property of the
victim. They vary from state to state, but most require that the excluded person must be
convicted of wrongfully and intentionally causing the death of the property owner. None applies
to negligent killing. It is not necessary for the murderer to have committed the crime for the
purpose of acquiring the property. The statutes apply if the murderer commits suicide
immediately after killing the property holder. They do not apply, however, to an insane murderer
or to one who kills in Self-Defense.

Gift by Will or Intestacy Based upon Broken Promise

If a property owner is induced to make an absolute gift to the defendant by will due to reliance
on an oral promise by the defendant to apply all or part of the property to the use of another
designated person and, after the death of the testator, the defendant refuses to do as promised, he
or she can be made a constructive trustee. The same result will hold when the property owner is
induced to die intestate on the faith of an oral agreement by his or her heir or next of kin.

If the recipient by will or intestacy promises to hold for others to be later described by the
property owner and no description is communicated to the recipient until after the death of the
property owner, the recipient will hold as a trustee of a Resulting Trust for the heirs, next of kin,
or residuary legatees or devisees of the property owner. No trust will be established for the
intended beneficiaries but such persons might take the property as the recipients of the resulting
trust.

If a will provides that a gift is to be made to a recipient as trustee, but no description of the
beneficiary appears in the will, and the recipient verbally agrees to hold it for beneficiaries who
are orally or otherwise informally described to the recipient, the successors of the decedent can
enforce a resulting trust in their favor against the recipient. The courts rely on the argument that a
property owner who wishes the property to pass to others than the heirs at his or her death must
give it to those others by a formally executed will.

Breach of Express Trust by Disloyalty

If a trustee of an express trust acquires property by a breach of trust—for example, by a violation

of an obligation to be loyal to the beneficiary—a constructive trust can be imposed on such
property. The constructive trust can be applied not only to the property originally obtained by

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disloyalty, but also to its products and proceeds. It can be used against persons who succeed the
disloyal trustee as the owner of the products of the disloyalty if they are not bona fide purchasers.

It is immaterial that the trustee acted innocently because of ignorance or in the belief that the
conduct was not disloyal. It is unnecessary to prove that the acquisition of the property by dis-
loyalty damaged the beneficiary, since it is sufficient to show the receipt by the trustee of
property obtained by breach of his or her duty.

In addition, the duty and the remedy exist with respect to persons who are in a confidential
relation. This term has no exact definition but entails dominance and superiority of one
individual over another because of such elements as a close familiar relationship, an enduring
practice of entrusting business matters to the knowledge of a confidant, and differences in age,
health, and education.

Breach of Duty in Direct Dealing with Beneficiary

The trustee has a duty to make a complete disclosure and to treat the beneficiary with the utmost
fairness when there is a direct conveyance, contract, or other transaction between them. This
duty extends to everyone who acts as a fiduciary and to persons in a confidential relation, similar
to the duty of loyalty in the administration of a trust. It is a duty arising from the superiority and
dominance of the fiduciary and the danger of overreaching or undue influence.

The trustee or other representative can be declared a constructive trustee of any property
obtained through a transaction where there was a breach of the duty to make full disclosure and
to act fairly. Such clearly inequitable conduct justifies the imposition of a constructive trust. If,
therefore, a trustee purchases the interest of one of the beneficiaries under the trust for an
inadequate price, without revealing facts that the beneficiary did not know concerning the value
of the interest being sold, and later the trustee realizes a profit on the transaction, a constructive
trust can be imposed to remove this gain from the trustee.

Statute of Frauds

The Statute of Frauds, an old English Law adopted in the United States that requires certain
contracts to be in writing, does not apply to constructive trusts. The courts create constructive
trusts, whether the evidence on which they are based is oral or written and whether the property
involved is real or personal.

However, public policy favors the security of titles to property. Therefore, reluctant to disturb
record title or other apparent ownership, courts require the plaintiff to prove his or her case for a
constructive trust by clear and convincing evidence. In nearly all suits to establish constructive
trusts, the defendant appears to be the complete owner of the property, by virtue of deeds, wills,
records, or otherwise. As a result, the courts reject the plaintiff's claim if the evidence is vague,
conflicting, or dubious.

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Breach of Unenforceable Contract to Convey Ordinarily the breach of an oral contract to
convey realty by deed or will is not a basis for charging the defendant as a constructive trustee,
where the defendant employs the statute of frauds as a defense and refuses to perform the
contract. The statute provides that contracts to convey interests in land are not enforceable when
they are not in writing and no memorandum was signed by the seller. To decree a constructive
trust in such a case would usually constitute an evasion of the statute. The plaintiff can be
protected adequately by an award of damages that, in effect, mandates a return of any
consideration paid for the promise to convey.

With respect to the breach of some contracts, however, the constructive trust is occasionally used
to prevent Unjust Enrichment, as in the case of a contract to leave property by will in return for
personal services that have been rendered, the value of which is not computable in money.

Breach of Oral Trust of Realty by Retention of Property When the plaintiff conveys land by
absolute deed (a document that transfers real property without restriction) based on an oral
promise by the defendant to hold it in trust for the plaintiff or for a third person, and the
defendant retains the property for his or her own benefit, refusing to execute the trust because it
violates the statute of frauds, the majority of courts refuse to make the defendant a constructive
trustee for the plaintiff or for the intended beneficiary of the oral trust. The courts reason that to
construct a trust in such a case would circumvent the purpose of the statute of frauds.

A minority of courts grant the decree for a constructive trust for the intended beneficiary of the
oral trust because they view it as dishonest for the defendant to withhold the land from the
intended beneficiary by employing the statute.

If the defendant obtains the land by Misrepresentation of the state of his or her mind as to
intended performance of the oral trust or other false statement and later refuses to perform the
trust, the court will enforce a constructive trust against him or her.

If the defendant was in a confidential or fiduciary relation with the plaintiff at the time of the
deed and the oral promise to hold in trust, the defendant is usually made a constructive trustee for
the intended beneficiary of the oral trust because the wrong entailed a violation of the
relationship by repudiation of the promise.

Product of Theft

The remedy of constructive trust applies to Personal Property that is stolen or misappropriated
and used to purchase other property in the name of the perpetrator. A constructive trust in favor
of the aggrieved party can be imposed on such property, so long as it remains in the hands of the
wrongdoer or any person to whom the wrongdoer transfers it who is not a bona fide purchaser. In
order to facilitate the unimpeded flow of commercial transactions, bona fide purchasers are not
subject to the application of a constructive trust.

Difference between constructive trust and express trust.

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A constructive trust arises by operation of law and rules of equity. That is, doesn't look at the
intention of the parties. However, under express trust, the intention for creating the trust us set
out clearly.

Question 7

Discuss in details the requirements for a valid assignment.

Assignment refers to transfer of rights, interests and benefits of a contract or agreement to

another person. It can also be defined to mean the transfer of a benefit of a contract to a third
party.

It takes place between the person entitled to the interest called the assignor (creditor) and the
third party called the assignee as a result of which the assignee becomes entitled to sue the
person liable under the contract called the debtor.

The requirements necessary for a valid assignment include;

Formalities.

That is, the assignment being made must conform to its required form. For example a statutory
assignment must be in writing and signed by the assignor. The failure to comply with the
required formality can affect the effectiveness of the assignment.

Intention to assign

It’s to the effect that the debtor must be made to understand that the debt has been assigned to a
third party. The mere asking of a debtor by a creditor to pay a third party doesn't amount to
assignment. In Exp Hall 1878, the landlord authorized his tenants to pay his bank for His credit,
this didn't amount to assignment.

Similarly, a person who draws up a cheque for a third party from Hus bank doesn't create an
assignment.

Communication to the assignee

An assignment will have no effect if it’s not communicated to assignee or someone with
authority unless to is made pursuant with a prior agreement between the assignee and assignor.
This is essential in order to allow one to accept this responsibility and to perfect a gift of a chattel
made by deed.

Notice to debtor

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This maybe oral or in writing. For example notice of an equitable assignment can be oral as its as
much effective. However a statutory assignment must be given notice of in writing and it need
but be made by the assignor himself as long as its brought before the action.

Notice must clearly and unconditionally tell the debtor to pay a third party as assignee and not
merely as an agent of the assignor. It must clearly state the date and amount of the debt or else its
invalid. A notice sent through the post takes effect when it is received by the debtor.

Others to consider are;

Considerations

Lenders have the right to sell their home loans. This can happen once or several times over the
long life of a mortgage. The usual customers for mortgages are banks and other companies that
are seeking safe and stable investment returns. This "secondary" market for mortgages is quite
active, and a lender has plenty of opportunity to sell a mortgage and turn a profit.

Assignment

When a lender sells the loan, it assigns the trust deed to the buyer. “Assignment” means to
convey a claim or a right to another party, known as the “assignee.” This is done by creating
another legal document — the assignment of trust deed — and having it signed by both buyer
and seller. The trust deed, and other documents associated with the loan, becomes the property of
the buyer.

Document

The assignment of trust deed is a short, usually single-page document. The body text gives the
names of the deed buyer and the property owner, the date of the original trust deed, and the legal
description of the property for which the original deed was executed. It may also give the terms
of the deed sale. The seller signs and dates the document, and has it notarized. The buyer then
has the assignment of trust deed recorded with the registrar of the county where the property is
located.

Borrowers

A borrower has no legal right to block or negotiate the terms of an assignment of trust deed. The
assignment does not affect the terms of the loan. The monthly payments remain the same,
although the borrower will have to send them to a new address. The new owner of the trust deed
becomes the lender and collects all mortgage payments, sometimes on its own and sometimes

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through a servicing company. If a default occurs, the latest assignee has the right to foreclose and
repossess the home

Question 8

Explain 3 out of the following

Equality is equity

This is an equitable maxim that connotes to the fact that "equity delighted in equality" which
means that equity would put the litigating parties on an equal level so far as their rights and
responsibilities are concerned.

This maxim is applied in the following ways

Under receivership that is a receiver appointed to collect the assets of a business in financial
trouble and must use the income to pay every creditor an equal share of what is owned to
him/her. Everyone is entitled to benefit must suffer a fair share of the loss.

It should be noted that this only applies where the parties are in equal footing. Under
receivership, if one is a secured creditor, has the right over assets in totality meaning there will
be no equal shares thus the maxim doesn't apply.

Where parent dies intestate, the property sub divided equally among the children.

Where courts Presume a Tenancy in Common as against a Joint Tenancy. The instances
include,

 Where property has been bought by partners in unequal shares. Much as the
documents of partnership shows joint ownership, equity will take it as a tenancy in
common so that if any party dies, his/ her share devolves to his estate as its not
reasonably thought that one contributed all the money for it to devolve to another’s
estate.
 Another instance is where parties are holding loan on mortgage that is two
parties are holding property as security for loans got by another person from both of
them. Under joint tenancies, if a party died, the other property would devolve to the other
the proceeds inclusive. However under tenancy in common, if one party died before the
debt was paid, the proceeds gotten from the sale of the property will devolve to his estate.
 Under partnership. Where the partnership deed doesn't specify the shares of the
partners each of them will be entitled to equal shares of assets and liabilities of the
partnership.

Severance of Joint Tenancy. This refers to conversion of a joint tenancy into a tenancy in
common.

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 Equal division. This is to the effect that where there is no basis for disturbing property between
two or more rival claimants, the court may apply the maxim. In Re bowers settlement trust
1942, it was established that a fund should be held in trust for certain people in unequal share,
any share which falls to be distributed will share equally.

Copy rights. For instance if the rights are vested in different parties, the proceeds will be shared
equally amongst all the parties.

Equity follows the law

Jekyll MR, the discretion of the courts is governed by the rules of law and equity which are not
to oppose but each in turn to be subservient to the other. Thus equity came not to destroy the law
but to fulfill it, to supplement it to explain it.

Equity followed the law and where it was defective; equity rights had to be recognized.

Instances where equity follows include; equity recognized the position of a trustee as the legal
owner though under equity the beneficiary was taken as the rightful owner.

Equity followed the concept of estates as under common law for example it recognized interests
in land like fee simple, fee tail, life estate.

Equitable interests devolve just like legal estates under common law. For example passing on
intestacy Strickland vs. Aldridge 1804, if a father died leaving an elder son and siblings, he will
be the heir under equity as it was under common law. Unless he will be made heir under duress
or fraudulently.

Equity also follows the law in regard to joint tenancies.

Quia Timet Injunction

Quia Timet injunctions refer to injunctions that are awarded by court to protect the infringement
of rights of an individual from threatened violation by the defendant. The right has not yet been
violated but is just threatened.

The person seeking for this injunction must prove that there exists a right that is recognized
either under law or in equity and this is provided under section 39(b) of the Judicature Act.

When granting it, court considers the following, the damages are not adequate relief, the cost of
lessening the performance by the defendant to prevent future apprehended harm and that the
defendant knows exactly what he is required to do.

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Anton Pillar Injunction.

This is an order given by court authorizing or conferring the right to search another's premises
and seize evidence without prior warning.

It’s awarded Exparte that is without notice to prevent destruction of the evidence. It’s usually
granted in cases involving copy rights, trademarks and video pirating. The injunction is derives
its name from the case in which it was born that is the Anton Pillar KG vs. Manufacturing
Processes Ltd 1976, the applicant was a Germany based car company whose sub agent was the
defendant who he shared with all his business secrets. He later received information that the
agent would spread the company’s detailed plans and drawings to competitors. Since the
appellants were about to launch a new model, they feared that it would fall in the hands of the
competitors so they sought for an injunction to retrieve the evidence from the premises of the
respondents for breach of confidentiality and it was granted.

For one to succeed, they must prove a strong prima facie case, actual or potential harm and that
the defendant had the evidence which is the subject of the suit in their possession.

This order is not a search warrant which entitles a holder to force his way into defendant’s
premises against his will. It only confers permission of entry, inspection or other direction of the
court. If the defendant refuses to allow entry onto his premises, the appellant can take it to court
for application for contempt of court. This was stated in the case of Uganda performing Rights
Society ltd v Fred Mukubira 2003

Question 6; Write short notes on the following

b).Imputed Notice

The purpose for the doctrine of notice is to prevent buyer of superior title from setting it up
against prior earlier owners of inferior interests which affect the property. The effect of this is
that the buyer of legal estate with notice of prior equitable interests affecting the estate takes it
subject to those prior equitable interests the doctrine of notice is one of the instances where
equity looks at substance rather than form. Notice simply means knowledge of an existing fact.
This may be divided into actual, constructive, and imputed notice

Imputed Notice; This is notice which is neither actual nor constructive may be imputed to the
buyer through actual or constructive or his or her agent. Its established agency law that notice to
the buyer is notice to the principal. Such Notice will only be imputed to the buyer through his
bonafide agent. In this regard a buyer who instructed his agent to buy property at an auction sale

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was taken to be affected by notice by notice of an equity which came to his knowledge in the
course of transactions

However because of hardship of this rule, it was modified in Mount ford vs. Scott to the effect
that information acquired by a solicitor is one transaction cannot effect, though the doctrine of
imputed notice his principal in subsequent transactions .Thus it has been held that knowledge of
a solicitor in a previous transaction cannot be imputed to a buyer in a later transaction. The
solicitor for this purpose is not under a duty to pass his knowledge in a previous transaction to
the buyer when he later becomes his client. However, if the solicitor conspired to the detriment
of the other, then the aggrieved party will be protected by the doctrine of bona fide purchaser
without notice. In Sejjaka Nalima Vs Rebecca Musoke Odoki J held that the appellant was not a
bona fide purchaser without notice owing to the fact Musoke and advocates who were acting as
his agents had known of the alleged fraud concerning disputed property. There's also
constructive notice under the doctrine of notice and this is defined by Walden j in William son v
Brown as where a purchaser has knowledge of any fact sufficient to oust him on inquiry as to the
existence of some right or title in conflict with what he is about to purchase.

Actual notice on the other hand defined as the situation where the buyer of an estate has actual or
express notice of a prior interest at the time where he or she made the purchase at the time before
the purchase was completed. This can be seen in section 64 of the R.T.A A buyer of land shall
hold that land subject to all encumbrances as notified to the registrar. In Odoki J held Sempa
Mbabali vs. W.K Kidza and Sempa Mbabali vs. W.K Kidza that the defendant’s plea of
Bonafide purchaser could not stand because they knew all along that part of land they had
purchased was for burial grounds and seller sold the land before his share was ascertained.

c) The maxim Delay defeats equity

This maxim can as well be called the doctrine of latches .The essence of the doctrine of laches is
that an equitable relief will not be given if the applicant has unduly delayed in bringing the
action. The doctrine does not apply in situations which are governed by the statutes of limitation.
For instance the limitation act cap 80 prescribes periods with in which suits or actions should be
instituted in court. Six years is prescribed for actions based on contract or tort other than those
where the claim relates to personal injuries, in which case the action must be brought within
three years of the date on which the cause of action arose.

In addition tortuous and contractual actions against the government must be instituted within two
year and three years respectively of the date of the cause of action, while those related to
recovery of land claim to the personal estate of a deceased or under a mortgage must be
instituted with in twelve years of the date on which the claim accrued. Where fraud is alleged,
there is no limitation period. In Fabgemin vs. Aluko, it was stated that in considering the
doctrine of laces the court acts on three factors. First, the delay by the plaintiff second
acquiescence by the plaintiff in the delay. Third, change in the position of the defendant.

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Furthermore, the doctrine will apply if the plaintiff behaves in a way which makes the defendant
alter his position in the belief that the plaintiff's claim has been abandoned or the delay amounts
to evidence of an agreement by the plaintiff to abandon his right.

Apart from the application of the doctrine to the equitable remedies of specific performance and
rescission of contracts, it also applies to the grant of letters of administration. An application for
letters of administration or challenge thereof must be made without delay; otherwise it may be
refused. Thus in Ephraim Vs Asuquo, the plaintiff applied have the grant of letters of
administration set aside .it was held that since two years had passed since the grant and the
administrator had probably completed the distribution of the estate ,the doctrine of laches applied
and the plaintiff's claim could succeed.

There are three Defences to invocation of the doctrine of laches. First, the plaintiff's ignorance of
the facts on which claim is based. Second the in fact or other disability of the plaintiff and finally
fraud on the part of defendant. In those circumstances delay will not be permitted to bar a claim.

b) Judicature act 1873-1875

Equity evolved as a remedy to mitigate the rights of rigidity of application of common law and to
provide reliefs or remedies which the common law could not avail to litigants. The ordinary
meaning of equity is therefore the right doing, good faith, honest and ethical dealing in a
transaction or relationships between individuals. Equity introduced various reforms and these
reforms affected the out dated and unsatisfactory procedure of the court. And secondly the area
between the common law courts and chancery courts operated was not clearly defined.

There judicature act is one of the reforms introduced by equity. The recommendations of the
Royal commission was enacted as judicature 1873 to 1875.These acts abolished all the ten
existing superior courts and in their place set up a supreme court of judicature consisting of the
high Court of justice and the court of Appeal. The High Court of justice was to consist of three
divisions; the King's Bench, the chancery division and probate, Divorce and Admiralty Division.

The judicature acts effectively abolished the dual administration of justice as between the
common law courts and chancery court. Secondly the High Courts of justice were given power to
administer both equity and law concurrently together. Third, all claims, obligations and defences
were recognized and enforced by three divisions of the High Court of justice. Fourth the
common injunction exercised by the chancery court was abolished since it was no longer
necessary.

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d) Writs in Rem

In rem jurisdiction ("power about or against 'the thing'") is a legal term describing the power a
court may exercise over property (either real or personal) or a "status" against a person over
whom the court does not have in personam jurisdiction. Jurisdiction in rem assumes the property
or status is the primary object of the action, rather than personal liabilities not necessarily
associated with the property.

Question 5

The Earl of Oxfords case optimized conflict between the common law and equity
consequently seeing the steady decline of the applicability of both common law and equity
in modern legal systems. Per LLB2 student, is this fair assessment evolution of equity and
is contractual applicability in contemporary Uganda.

Answer

History tells us, in brief, that Equity has its origins in the old English Courts of Chancery
(namely the court of the Chancellor). Due either to the inability of the Kings justices to enforce
judgments against powerful individuals (some noble families were very much a law unto
themselves in their Earldoms, Dukedoms etc during the Medieval period) or, with increasing
frequency in later years, defects or undue harshness of the common law people were driven to
submit petitions to the King, who was considered to be a repository of ‘Divine justice’. Such
petitions were often passed over to the Lord Chancellor, who would dispose justice in the name
of the King. With the passage of time such petitions were directed to the Chancellor and his
office of the Chancery began to function as a court of law. A significant aspect of the equitable
principles developed in these courts of Chancery was that they were so developed by Priests
(most Chancellors of the medieval period were ‘men of the cloth’). This ensured that the
principles of Equity were fundamentally based on the concept of ‘natural justice’ in keeping with
the lines of the Christian tradition of Good and Evil, and indeed in ancient usage the word Equity
means ‘natural justice’

The different views taken in certain situations, by the principles of Common law and the
principles of Equity, naturally led to conflict and confusion. In the reign of King James the First
it was held that decisions of the courts of Chancery would have overriding authority. While
Equity was initially free of the concept of ‘precedent’ from the late 1500s to the mid 1800s a
body of precedent, of cases based on equitable principles began to take shape, and the rules or
principles of equity took their final form with clear lines and with the introduction of the
Judicature Acts of 1873 and 1875 the Court of Chancery, along with the other Courts such as

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Kings/Queens Bench, Common Pleas, Exchequer, Exchequer Chamber, Court of Appeal in
Chancery were absorbed by the Supreme Court.

It would be fair to say that the Judicature Act played the role of ‘fusing’ the system under which
both the Common law and Equity was administered, namely an amalgamation of the different
courts under one. This can be equated to the reference made in the statement that sets the theme
for this article, the ‘two streams of jurisdiction’ meaning the common law and Equity, ‘run in
the same channel’ meaning the administration of both within a common system of courts.

While the above, is somewhat straightforward, it is this authors opinion that the reference ‘do not
mingle their waters’ implies that the Common Law and Equity themselves were not ‘fused’ but
continued to function as two separate systems of law. Therefore I aim to establish that while the
Common Law and Equity came to be administered under the same system the fundamental
principles of Common law and Equity continue to act independently of each other in the interests
of Justice. This can, be shown most effectively through reference to decided cases, where it will
be seen that equitable principles have produced results quite different to what would be expected
under principles of Common Law and extending these decisions to derive certain fundamental
facts as to the position equitable principles hold within the legal system independently of the
common law. Independence of Equity and Common Law through decided cases.

An important case in this regard was that of Central London Property Trust Ltd v High Trees
House Ltd. The facts of the case were as follows, During the Second World War countless
people had left the City of London to escape the German bombing of Britain’s Capital. As a
result of this many housing complexes were vacated and left empty. In a certain block of flats,
flats had been leased out for a period of 99 years at 2,500 pounds a year. To curb vacation the
landlord had offered to cut the rent by half (1,250 pounds a year). Once the ‘blitz’ was over and
the tenants returned the landlord litigated to recover the full sum of 2,500 pounds. As per the
Common Law the plaintiffs would have been legally able to recover the full sum of 2,500
pounds even for the period when the flats had been empty since the lease that fixed the amount
was under seal and hence (according to common law) could not be changed by a mere agreement
but only through a deed, however the principles of equity took on a different view. The judge
deciding the case – Lord Denning quoted “There has been a series of decisions over the last fifty
years which, although they are said to be cases of estoppel are not really such. They are cases in
which a promise was made which was intended to create legal relations and which, to the
knowledge of the person making the promise, was going to be acted on by the person to whom it
was made, and which was in fact acted on. In such cases the courts have said that the promise
must be honored….. As I have said they are not cases of estoppel in the strict sense. They are
really promises – promises intended to be binding, intended to be acted on, and in fact acted on.”
(The Discipline of Law, Lord Denning, 1979)

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In the judgment it was held that through equity, the promise made was binding on the party
making it (the common law did not make such an allowance) and that the plaintiff could not
recover the full amount of money for the period when the flats were empty.

The case, in my opinion highlights the following key points;

a. While both the principles of Common law and Equity were administered as one
totality, in the above case we see the principles of equity coming into play to lead the
judge to arrive at a very different decision than he would have had to make if he had
followed common law principles. Hence we see equitable principles functioning, quite
distinctly from those of the common law in the interests of ‘justice’

b. As is quoted in Lord Denning’s book ‘The Discipline of Law’ a previous case where
similar equitable principles could have been applied, Salisbury Marques v Gilmore Lord
Justice Mackinnon felt unable to take an equitable view due a decision made by the
House of Lords in Jorden v Money which was thought to be binding where the concept
of estoppel was confined to representations of existing fact.

The significance of this observation is that, though the principles of equity could be used to take
on a different view of a situation as opposed to that taken by the common law it, in some
instances, needed courage on the part of the judge to break free from the bindings of common
law and allow these equitable principles to take flight. We see the action of Lord Denning in the
High Trees case was doing precisely this – giving due credence to the independent place the
principles of equity held in the legal system, free from the rigidity of the common law in the
interests of doing ‘justice’.

c. That the decision was possible in the High Trees case was due to the ‘conflict or
variance’ clause (section 25 of the Judicature Act of 1873) which deemed that where the
rules of common law and equity contradicted rather than complement, the rules of Equity
would prevail. This reality is one of the strongest arguments in this authors opinion for
establishing that the systems of Equity and Common Law do not ‘mingle’ and will be
discuses

Question One

With the aid of relevant cases distinguish between trusts from other forms of legal relations.

Answer

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A trust is a fiduciary relationship where the settler bequeaths the property to hold it for the other
person called beneficiary According to the case of green v under hill.

Trust and Agency. Agency is the contractual arrangement express or implied, written or verbal
where one person may act on behalf of another and bind that other as if he or she acted
personally. Agency a rises where a person called the agent has expressed or implied authority to
act on behalf of another called the principal and he consents to it. The trustee in exercise of his
office will contract as principal and cannot bind the beneficiaries unless that have constituted
him both trustee and agent binds his principal so long as he acts on the principal's authority on
apparent that he is deemed to have.

Although the trustee has a right of recoup an indemnity against the beneficiaries for any property
incurred expenses and creditors may subrogate those rights in certain circumstances there's
therefore no direct contractual link between the beneficiary and 3rd parties comparable to link
between the principal and third parties.

Agency is normally terminated on death of either party and also by the principal acting
unilaterally if there's no contract to the contrary or the contract permits him to do so. Whereas a
trust cannot be revoked unless the trust instrument reserves the power of revocation and this is
well explained in the case of Mallot vs. Wilson

Trust and Debt

The traditional view is that the relationship between trustee and beneficiary is not one of debtor
and creditor. That means that the trustee does not owe the value of the rights he holds to the
beneficiaries. This can be seen in the case of Morley vs. Morley, Barclays Bank Ltd vs. Quist
close investment Ltd75created confusion in this area, holding that a borrower of money can be
both a debtor and a trustee in respect of the same sum. That decision is how ever extremely
controversial and has been recently reviewed in Twinsectra Vs Yardley76, but the under the
traditional view enunciated above a trustee will not owe the value of the right held on trust, this
is not to say that a debt cannot form the subject matter of a trust. When we talk of trust of a bank
account, we mean nothing than the creditor’s right to sue is held on trust.

Trust and Bailment

A bailment arises where an owner of property gives permission to another person to possess it. A
bailment is a delivery of personal chattels to bailee subject to a condition that they be returned to
the bailor or be dealt with as the Bailor directs when the purpose of the bailment has been carried
out.

75
(1970)Ac 56
76
(2002) UKHL
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The Bailment and a Trust;

A bailee obtains only possession and what is referred to as special property in the goods while
trustee takes title to the trust property. Bailment is a common law notion worked out in
proceedings for common law relief such as actions of conversion, detinue, and breach of contract
whereas the trust a relationship is purely equitable.

In conversion initial possession is lawful but later converts the goods contrary to what the other
intended .Detinue is where the defeated is unlawfully with holding the plaintiff's goods with no
reason. Bailment only applies to personal chattels that are capable of delivery where as a trust
may arise in respect of real or personal property and whether tangible or in tangible. A bailment
is enforced by the bailor who is party to the arrangement while generally the trust is enforced by
the beneficiary who is not party to the trust instrument. Minimal in character compared to the
duties that exist in bailment. Bailment is restricted to chattels but a trust may exist to all types of
property

Under bailment a bailer, can lose his legal ownership of the bailed property through any of the
ways by which legal owner loose rights for example estoppel however under a trust the
beneficiary's interest can only be defeated by transfer of legal title for value without notice to a
bona fide purchaser.

Contracts and trust

A contract is a common law personal obligation which arises from agreement between relevant
parties supported by consideration on the part of the promise; on the other hand a trust is an
equitable proprietary relation which can arise independent of agreement or the provision of
consideration. The distinction between contract and trust is how ever difficult to draw.

Re Cook77,indeed there can be no hard and fast lines between contract and trust because contract
is a source of rights while trust is a way of holding rights, indeed many rights held in a trust are
born of contract.

Settlement and covenants to settle.

77
(1965)CH 1902
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Where property is vested in trustees on a settlement, it was held upon a trust on settlement.
However if the property has not yet been transferred to trustees but it's simply subject to a
consent to settle. The beneficiaries will only be able to enforce consent if they have given
consideration based on the principle equity will not assist a volunteer.

Power of appointment.

This refers to a power that is conferred upon a donee to dispose of the donors property by
nominating and selecting one or more third parties to receive it. The property may consist of
tangible items like cars, boats, house hold items or it may consist of an intangible interest in
property such as the right to receive dividend income from stocks The distinction between trusts
and powers of appointment is fundamental. A trustee must do as the settler directs whereas
powers of appointment are discretionary. Further the beneficiaries under a trust are owners in
equity of the trust property. However the objects of powers of appointment are nothing unless
and until the donor of the power makes an appointment in favour of the done. Vesty vs. IRC

Question 2

2(a). Discuss the capacity elements that must be possessed of a settler in creation of a trust.

A trust is a three party fiduciary relationship in which the first party, the settler or trustor
transfers or settles a property (often but not necessarily a sum of money)upon the second party
(the trustee)for the benefit of the third party the beneficiary.

The trustee is the legal owner of the property in trust as fiduciary for the beneficiaries who is or
are equitable owners of the trust property. Before creation of trust, there must be capacity that is
capacity to create. A trust is similar to the ability to hold and dispose of a legal equitable interest
in this regard.

Therefore before creation of trust a number of situations may be considered and mostly its
ability, anyone who can hold property can create trust there are exceptions for statutory bodies
and corporations .Minors also can't hold property though they can in some circumstances.

The trust instrument must show certainty of intention to create a trust, certainty of what the
subject matter of trust is and certainty of who the beneficiaries are and for trust to be valid there
must be transfer of property by the settler to the trustees.

The situations considered when creating trusts are discussed below;

Minors: A settlement on trust by minor is voidable in the sense that he can repudiate it during his
minority or within a reasonable time of attaining his majority.

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In the case of Edward vs. carter, such settlement is how ever only possible in respect of an
equitable interest. Since am infant cannot hold legal estate, a settlement of trust in respect of trust
in legal estate is not possible by him.

4. Mental abnormality.

Generally a person who is mentally abnormal cannot create a trust under the trustee's act S.50 (1)
b. That means that for one to create trust he or she should be sane. "The court may direct a
settlement to be made of the property of a lunatic or any part thereof or any interest there in, on
such trusts and subject matter to such powers and provisions as the court may expedient."

The direction may affect property which has been acquired by the lunatic under a settlement, a
will or an intestacy with a view to protecting interested parties in the event of change in the lawn
of intestacy or circumstances affecting an earlier disposition by the lunatic.

3. Married Women: A married woman may create trust of her property. This is an obvious
provision in the 20th century yet significant given the relatively inferior status attributed to
women by African customs.

Even in English society this trend has historical connotation. In the words of professor’s keeton
and Sheridan.

The progressive emancipation of the married woman from the restrictions to impose by the
common law upon her capacity to hold and deal with real property was, until the second part of
the nineteenth century almost exclusively the result of equitable intervention. At common law a
wife's chattels became the absolute property of the husband. He also possessed the power to
reduce her chooses in action into possession whilst upon the birth of issue, he enjoyed the seizing
for life of such present estates of inheritance as his wife might have possessed as tenancy by
courtesy. From the reign of Elizabeth one on wards; however the court of chancery steadily
evolved the doctrine of estate of the married woman although it does not seem that this doctrine
was applied to real property before restoration.

In pursuance of this object, the court of chancery established that wherever property was given to
trustees for the separate use of a married woman, she could hold and dispose of it in equity free
from her husband's interference and such property was protected effectually against the
husband's debts or other obligations.

Companies

Trading companies which are incorporated under the companies act have an implied power to
borrow for the purposes of the company's business.

Normally this power is uses to issue debentures and for the purpose of buttressing the issue the
company has power to execute a trust deed by which after covenanting to repay the loan with
interest until payment, assigns to trustees real property or lease holds belonging to the company,

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to constitute security for the repayment of the loan, the trustees under taken to hold the property
upon certain trusts in favour of the debenture holders.

2b. Discuss the formalities if any, essentials for creation of a valid trust.

A settler may create a trust by manifesting an intention to create it .This can be seen in the case
of Jones vs. lock where the court of appeal of chancery held that there was no trust, because the
fathers intention was an outright transfer. They refused to perfect an imperfect gift through a
successful declaration of trust. It should be noted that no formalities are required for the creation
of an inter vivos trust of personality. However evidence in writing is required for the creation of
a trust in land. Thus by section 92 of the registration of Titles Act any declaration of trust
respecting land must be evidenced by a memorandum in writing signed by the party creating the
trust.

By will: secret trusts

Under section 50 of the succession act all trusts created by testemtary disposition must be
executed and attested in accordance with the formalities there in prescribed.

These are the will shall be in writing ,that it shall be signed at the foot or end there of by the
testator, or some other person in his presence and by direction, that the signature be acknowledge
by at least two witness in writing in the presence of the testator.

The issue arises as to the effect of dispositions which do not comply with formalities. Although
the requirement of formality was intended to prevent fraud what would happen if the intended
trustee hides behind the provisions of the statutes? This could happen in two instances. First
where the trustee induces transfer of land to himself by means of an oral promise to hold on trust
for the third party.

Second, where the legatee or devisee induces the testator to make disposition in his favor by will
relying on an oral promise to hold the gift in trust for a third party. The general view is that
equity will not permit a statute to be used as an instrument of fraud.

The doctrine is said to be responsible for the growth of equitable principles relating to secret
trusts seen in the case of Cook Vs Brooking it was held that since the testator had declared the
terms of the trust to Simon in his life time there was a good secret trust although the actual
method of distribution among beneficiaries was uncertain.

Issue arises how secret trusts can be classified that is express or constructive; if the secret trust is
express it must be evidenced in writing in order to comply with the registration of titles act. If it
is constructive then the formal requirements are dispensed with even as regards land.

Professor Marshall argues that the fully secret trust is an example of constructive trust.

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Half secret trust.

These arises where under a will property is given expressly on trust but without stating what the
trusts are its suggested that here there would be no possibility of fraud by the legatee in the view
of the contents of the will and the express declaration of trust. Such declaration destroys
possibility of personal gain on the part of the legatee. Half secret trusts have said to be valid
since Black well vs. Black well.

Completely and in completely trusts.

A trust is said to be completely constituted when the trust property has been finally and
completely vested in trustees. Where this has not been done this is said to be in completely
constituted.

Consequently a mere declaration of intention to create a trust is insufficient to create a trust.

Nevertheless all trusts arising under a will are completely constituted notwithstanding the fact
that may be either executed or executory.

The distinction between completely and incompletely constituted trusts is significant with
respect to the issue of consideration in the creation of the trust. Where valuable consideration has
been given for the creation of a trust, the issue of whether the trust is completely or incompletely
constituted is irrelevant since equity regards as done which ought to be done. However equity
will not perfect an imperfect gift since equity does not assist a volunteer.

The basic principle applicable in determining whether a trust has been validly constituted is
found in Milroy Vs Lord where Turner L.J stated that;

"In order to render a voluntary settlement valid and effectual, the settler must have done
everything which, according to the nature of the property comprised in the settlement was
necessary to be done in order to transfer the property and render the settlement binding upon
him. He may of course do this by actually transferring the property to the persons for whom he
intends to provide and the provision will then be effectual or declares that himself holds it on
trust for those purposes.....but in order to render the settlement binding, one or other of these
modes must as I understand the law of this court be resorted for there is no equity in courts to
perfect an imperfect gift."

The implication of this statement is that transfer of property to trustees must follow the rules to
apply to the property concerned. Thus trust in respect of legal estates in land must be transferred
and evidenced in writing by the person creating the trust.

2. Shares should follow the format of transfer prescribed thereof.

3. Equitable interests and copyrights must be in writing signed by the person disposing of the
same.

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4. Chattels must be in form of deed of gift or evidenced by intention to give, coupled with
delivery or possession.

A bill of exchange should be endorsement thereof, Milloy Vs Lord; a settler executed a

voluntary deed purporting to transfer shares in the bank of Louisiana to Lord, to be held on trust
of the plaintiff name of the transferee in the books of the bank Lord held that a power of attorney
on behalf of the settler and it would have enabled him to take all necessary further steps to obtain
registration. However this was not done. It was held that there was not trust although the
intention was clearly to the benefit of the beneficiary.

Discretionary and protective trusts.

A discretionary trust is one where the trustees hold property on trust for a group of beneficiaries,
and are required by the terms of the trust to pay or apply the income or capital in favour of such
of the beneficiaries as the trustee shall in their discretion think fit, whatever each individual
beneficiary is entitled to depends on what the trustee deems fit to give him.

In the case of Abasi vs. Kapon a testator appointed the defendants as executors of his will. He
directed them to give and bequeath all his properties to his children who were loyal to him,
excluding the plaintiff.it was held by the Divisional court that the words constituted a general
device and bequest of the testators real and personal property to the executors in trust for the
children of the deceased, excluding the plaintiff in such shares as the executors think fit.

On appeal it was argued for the plaintiff appellant that even if there was such a device to the
executors on trust, the trust was void. On ground of uncertainty both as to the individuals or class
who were to be beneficiaries of the trust.

In rejection of contention the appellate court held that the intention of the testator was to devise
all his estate to his executors for the benefit of his children excluding the appellant, the testator
created a discretionary trust and the duty of the executor was to select the beneficiaries in
accordance with the direction of the will.

Discretionary trusts have to be drafted in such a way that they do not fail for uncertainty. They
are in a nature of special power of appointment. The power of election must be exercised with in
perpetuity period.

Protective Trusts.

A protective trust arises where the settled settles property on X for life until alienation or
bankruptcy, and when that happens the interest is directed to pass to Y or the settlement in with a
proviso that when a particular event happens to the interest would shift to y.

The protected life interest will be extinguished where there is sequestration of the tenant for life's
property, in which case a discretionary trust arises, where the principal beneficiary resides in
enemy controlled territory, although this may be avoided by a specially drawn protective trust,

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where an order of the court is made charging a husband's protected interest with payment to his
wife.

The following are the essentials of a trust;

In the case of Knight vs. Knight it was stated that in order for a trust to be validly created, three
conditions are necessary: the words employed must be so used that taken as a whole, they ought
to be construed as imperative that is the words must be certain

The three requirements are usually described as the three certainties of a trust. it's suggested that
apart from these requirements, a trustee is also necessary for the execution of a trust. Each of the
requirements will be considered in turn.

Certainty of Words.

As equity looks at the intent rather than the form no special form of words is necessary in order
to create a valid trust. Consequently an intention to create a trust may clearly be gathered from
the expressions which the settled has used and the court gives effect to such intention.

The issue however often arises as to whether precatory words that is words of recommendation
or expression of belief can give rise to a binding trust. Examples include desire, wish, and
request, has full assurance and confident hope etcetera.

The courts have not been consistent in holding that such words do not create a binding trust.
Thus in Lambe Vs Eames, the testator gave his estate to his widow, to be at her disposal in any
way she may think best for the benefit of herself and her family. By her will she gave part of the
estate outside the family. It was held that since she was absolutely entitled the gift was valid. in
Re Hamilton Lopes L.J indicated that the court will not allow a precatory trust to be raised unless
after considering all the words used it comes to the conclusion that it was the intention of the
testator to create a trust.

In Re Adams and Kensington Vestry, a testator gave his real and personal estate, unto and to
the absolute use of my dear Harriet.....in full confidence that she will do what is right as to the
disposal thereof between my children either in her life time or by will after her decease. "it was
held that the wife took absolutely and there was no trust in favour of the children. Similarly in
the case of Mussorie Bank Vs Raynor, the privy council held that where a testator left all his
property to his widow, feeling confident that she will act justly to our children in dividing the
same when no longer required by her." there was no trust for the children.

How ever a trust can be inferred from the use of precatory words if on a proper construction of
the language of the will, this is the intention of the testator. This is in Comskey Vs Bowring
Banbury; a testator gave to his wife, “the whole of my real and personal estate.... In full
confidence that she will make such use of it as I should have made myself and that at her death
she will devise it to such one of her will...I here by direct that all my estate and property acquired
by her under this my will shall at her death be equally divided among the surviving said nieces.

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It was held by a majority in English court House of Lords that there was intention in the testator
to make a gift over the whole property at her death to such of her nieces as should survive her,
shared according to the wife's will and otherwise equally. Though Lord Lindley thought that the
testator intention was to give an absolute gift to the wife.

Certainty Of Subject Matter

As was observed earlier, the subject matter of a trust could take many forms. it could be interest
in land in possession or reversion; chattels, money and chooses in action. In Re Diggles, it was
indicated that uncertainty of subject matter will adversely affect the creation of a trust. Thus in
Curtis Vs Rippon, the testator appointed his wife, guardian of his children and then left his
property to her, trusting that she will in fear of God and in love to the children committed to her
care, make such use of its shall be for her own and their spiritual and temporal good
remembering always according to the circumstances, the church of God and the poor. It was held
that the wife took property absolutely since no specific part of it was apportioned to the children,
the church or the poor.

In Bardwell vs. Bardwell, there was a direction, to remember certain persons; it was held that
there was no valid trust. In knight vs. Knight, there was direction to reward. my old servants and
tenants according to their deserts. it was held that the purported trust was invalid In Re Jones, a
gift was given to a wife, absolutely, followed by a direction that, as to such parts of my estate as
she shall not have sold or disposed of, it should be held in trust for certain persons. It was held
that the purported trust was invalid.

The above cases may be contrasted with situations where the subject matter of the gift is to be
decided by the discretion of the trustee. Thus In Re Golay's Will trust, there was a direction to
the executors to allow a beneficiary to enjoy one of my flats during her life time and to receive a
reasonable income from my other properties. It was held that there was a valid trust because the
executors could select the flat; the words reasonable were not intended to allow the trustees to
make a subjective decision. They provided a sufficient objective determinant to enable the court
if necessary to quantify the amount.

Certainty of Objects.

This entails two aspects that the recipients or purposes of the gift should be identifiable with
certainty and that the interest they take should be discoverable. In Re Vandevells Trusts, it was
indicated that in case of future interests, the beneficiaries must be ascertainable with in the period
of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust. With regard to discretionary trust, the test is, “can it
be said with certainty that any individual is or is not a member of that class.

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It was indicated that in the case of future interests, the beneficiaries must be ascertainable with in
the period of perpetuity.

The test to be used in determining certainty of ascertainment depends on the nature of the trust.
With a fixed trust, the trust is void unless it's possible to ascertain each and every beneficiary.
Indeed a fixed trust is understood to be one where the share or interest of the beneficiaries is
specified in the instrument creating the trust.

With regard to discretionary trust, the test is can it be used with certainty that any individual is or
not a member of that class. A discretionary trust as we have seen is one which trustees hold the
trust for such members of a class of beneficiaries as they shall in their absolute discretion
determine.

The rest proffered by Lord Wilberforce is the same as one established in certainty of the objects
of a power in Re Gulbenkia's settlements consequently, it has been suggested that a combination
of the tests for powers and discretionary trusts has destroyed what used to be the most important
reasons for distinguishing between trust and powers.

More about certainty of objects can be seen in the case of Re wood there was a provision of a
sum of £ 2 per week for the week's Good cause of the BBC it was held that the beneficiary in this
instance was uncertain. Even if the directions were to be followed, the beneficiary could still not
be because seven good causes were advocated one week in each month from different solutions.

Related to test of certainty of objects is what has been described as trusts of imperfect
obligations.

As is evident from the requirement of certainty of objects, a trust in order to be valid should be
beneficiary who can enforce it. Where there's no such beneficiary, except in cases of charitable
trusts, the trust will be regarded as unenforceable and thus bind.

In Re Astor's settlement Trusts, a trust was set up for the objects and purposes which included
the improvement of good understanding between nations ,the preservations of the independence
and integrity of newspapers, the promotion of freedom, Independence and integrity of the press,
the protection of news papers from being absorbed by combines, the restoration and maintenance
of the independence of the editors of and writers in newspapers ,the securing for the public of
means of ascertaining by whom any news papers is actually owned or controlled and the
establishment of any charitable public or benevolent schemes for the improvement of news
papers, the relief of persons engaged in journalism, for ant of the objects previously mentioned.
It was held that the trust failed for lack of ascertainable beneficiary. We can also see in the case
of Re Shaw where it was held that the trust failed due to lack of someone to enforce it.

Therefore when the words of trust are not certain there's no creation of trust, consequently the
drone of the gift takes beneficially, likewise the done will take beneficially where the trust fails
for un certainty of property, the reason being that although an intention to create a trust may be
evident there's no property to which it can be attached.

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3.You have been consulted by Chege .she wishes to leave a substantial sum of money to her long
term boyfriend Steve, but she does not wish any reference to the gift to appear in her will. she
does not want her husband Julio to know about it. She has two friends Nancy and tom that she
says are my discretion and will witness the will and do anything else required. Advice Chege on
how far all her wishes can come into effect.

A trust can be defined as relationship that is recognized by equity, it arises where property is
vested in a person or persons known as trustees who those trustees are under a duty to hold for
the benefit of other persons known as beneficiaries. The interests of beneficiary are normally
described in the instrument creating the trust; however these may be implied or imposed by law.
It can also be noted that the beneficiary interest should be proprietary meaning it can be sold or
bought. And it should also be emphasized that for trust to be created there must certainty of
intention, object and the subject matter. A trustee have the legal ownership carrying with it
responsibilities and burdens whereas beneficiary would have the advantage of any ownership.
An executor would similarly have the burdens and responsibilities and could be expected to
distribute property in accordance with the will.

The whole scenario of Chege when I analyze it concerns a gift. A gift in the law of property is
the voluntary transfer of property from one person to another without valuable consideration
.And for a gift to be effective the owner should have the intention; we Chege having the intention
to transfer money to Steve, and it should be noted that a promise to make a gift in the future is
unforeseeable and legally meaningless even if the promise is accompanied by immediate transfer
of the physical property in question.

The gift should also be delivered to the done for it to be effected. If the gift is of a type that can't
be delivered in conventional, it can be delivered in a constructive way and the done must accept
the gift in order for the property transfer to take place, however because people accept gifts one
will be presumed so long as the done does not expressly reject.

A gift can be inter vivos ,and this per our case for today, Inter vivos is a legal term referring to
transfer of gift made during one's life time as opposed to testamentary that is transfer of gift takes
place after the death .

A trust can thus be created inter vivos or by will, this is obviously that Chege should apply inter
vivos trust. There two types of inter vivos trust that is the settler may transfer the property to the
trustees and declare that those trustees will hold the property on trust for Steve. The settler may
declare himself as trustee holding the property on trust for others.

However as per chugs case, the best type to use is that Chege may transfer the money to her
friends that is Tom and Nancy, and they be trustees for Steve .That is they hold it for Steve since
Chefs does not want her husband Julio to know about this. Therefore the gift will not be quested
in the will.

But if it was not for Chege not hiding it from the Husband she could also declare herself as
trustee holding property for others, or include it in the will just and given after her death.

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Question 3

Discuss the three certainties required when forming an express trust.

Answer;

An express trust is one which has been intentionally created by a settler himself though
manifestation of an intention to create one. The most common methods of creation are by deed
or will by unsealed writing inter vivos or by word of mouth. It's a trust created in express terms
and usually in writing as distinguished from one inferred by the law from the conduct or dealings
of parties.

Property is transferred by person called settler or grantor to a transferee who holds the property
for the benefit of one or more persons called beneficiaries.

Express trust may be sub divided into executory and executed trust, on the hand completely and
in completely constituted trusts, on the other. An executed trust is one which in which the settled
has indicated inappropriate technical terms what interests are to be taken by all the beneficiaries.
An executory trust is one in which the settler has indicated to his trustees a scheme of settlement
but the details are to be gathered from his general expressions.

The distinction is of practical significance in two respects, Firstly while the language of an
executed trust is strictly construed, an executory trust is liberally construed. Secondly, where in
an executed trust the settled makes use of technical expressions, the interpretation of which the
law recognizes certain rules, equity follows the law and gives effect to such interpretation.
However, with an executory trust, equity attributes less importance to the use or omission of
technical words. Rather it seeks to discover the settler’s true intention

Once the intention is discovered, equity orders the preparation of a final deed which gives effect
to the settlor’s intention which is discoverable from the language of the settlor’s instrument.

The distinction between a completely and in completely constituted trust is necessary in order to
distinguish a trust from a void settlement. A trust can only be valid if the title to the property is in
the trustee and if the trusts have been validly settled.

The three certainties of Express trust are; Certainty of intention; there must be real intention by
the settled to dispose of property and create trust ,not just make a gift ,a trust can also be created
contrary to the intention of the settler alleged to have created it .Commissioner of stamp Duties
vs. Soliffe

Certainty of subject: The property the subject of the trusts must be sufficiently ascertainable at
the time the trust was created. Herdegen VS Federal Commissioner of Taxation

Certainty of object: Beneficiaries must be ascertainable

Fixed trust Weston vs. Weston

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Discretionary trust .Criteria certainty test. Is whether it can be said that a given individual is or
not a member of the range of objects? Re badems Deed trusts Mc Phail vs. Doulton

QUESTION 4

Discuss the exceptions to the rule that equity will not assist a volunteer in any two of the
following;

c) Donatio Mortis Causa

A Donatio mortis causa is a gift made inter vivos which is conditional upon and which takes
effect upon the death of the donor. This could be distinguished from a normal inter vivos gift
under which title immediately passes to the transferee, a testamentary gift which takes effect
under provisions of a property executed will.

The essentials of a valid Donatio mortis causa were articulated by Lord Russels C.J in Cain vs.
Moon They are;

 The gift must have been in contemplation though not necessarily in expectation of death;
 The subject matter of the gift must have been delivered to the donee;
 The gift must have been made under such circumstances as to show that the property is to
revert to the donor if he should recover.

The first condition was illustrated in the case of Wilkes be Allingtin. In that case, the donor was
suffering from an incurable disease. He made a gift knowing that he did not have long to live .In
actual fact, he had an even shorter time he imagined .He died two months later of pneumonia. It
was held that the gift was valid. The second condition may be illustrated from Re Weston, where
it was held that where a dying man, could be shown to have handed over to his fiancée his post
office savings book, his action was sufficient to constitute an effective donation mortis causa of
the balance recorded in the book.

d) The Rule in Strong vs. Bird

Where a person makes an imperfect gift to x and subsequently appoints X his executor, upon the
death of the donor, the property vests in fully in X. The equity of the beneficiary under the will is
displaced by X's prior equity. Consequently, X may retain the property irrespective of the fact
that until the donor's death X's title was imperfect. The rule has been extended to apply to a done
who has taken out letters of administration to the state of the donor, and the personal
representatives of a person who had converted in favor of volunteers and had subsequently been
appointed a trustee of the settlement in favor of volunteers.

Further more for the rule to apply, the gift must have been perfect in every way except for the
legal formalities required for the transfer of title .Thus in Re Free land, a testatrix promised to
give the plaintiff a motor car in the future but didn't do so. On the death of the testatrix, the
plaintiff became her executrix and claimed that the imperfect gift had in consequence been there

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by perfected. The court refused to apply the rule in strong vs. Bird, there having been no
intention to make the plaintiff the owner of the car immediately.

Finally, any one relying on the rule must show a continuing intention on the part of the donor up
to the time of his death. Thus in Re wale, investments of which the settler was absolute owner
were settled by her voluntarily in 1938 for the benefit of her daughter. The settler did not take
any steps to transfer these investments to trustees, who however, were appointed executors of the
settlors will .The will was subsequently altered from time to time and it eventually disposed of
all her estate to other beneficiaries. It was held that although an incompletely constituted trust in
favor of the daughter had been created by the settlement of 1939, the settled had not shown any
continuing intention to benefit the daughter.

4b) Discuss the remedies available to the beneficiaries for breach of trust.

A breach of trust consists of an improper act, neglect, default or omission of a trustee with regard
to trust property or of a beneficiary. It may include; direct intermeddling with trust property for
improper purposes, failure to exercise proper care in discharging a duty and male fide exercise of
a discretion. In these instances, the trustee must replace any consequential loss from the trust
fund as a result of his or her actions. The purpose of the rule is not to punish the trustee but to
compensate the beneficiaries. The following are the remedies available to the beneficiaries for
breach of trust;

Compelling performance of the trust.

It should be noted that if a trustee neglects the administration of the trust or defaults in protecting
the trust estate, a beneficiary may take steps to ensure that he takes the necessary actions in the
interest of trust property.

For example where a trustee fails to renew lease hold, where the character of trustee is such as
would endanger to fraud among others. Apart from the general, there are certain equitable
remedies to which a beneficiary may resort; that is he may apply for an order of injunction to be
granted by court, where a breach of trust is contemplated. This can be seen in case of Milgan vs.
Mitchell.

In this respect by law of property legislation in some jurisdictions trustees for sale shall so far as
practicable give effect to the wishes of the beneficiaries of full age. Consequently failure to
consult them or some of them amounts to breach of trust which can be restrained by injunction.
An injunction may also be obtained against a bankrupt trustee who wants to obtain possession of
trust property.

The court may appoint a receiver upon the request, by application of a beneficiary. The
appointment of receiver is normally premised on the possibility of actual or prospective violation
of the duties of trusts likely to endanger trust property see the case of Middleton vs.
Dodswell.For example failure of the trustee to agree so that the trust cannot be properly
administered, loss of part of trust property through failure to realize it, refusal of trustee to act
and denial of the trust.

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In the case of Odulate vs. odulate, the applicants applied for an order of the court for a transfer
of administration of the estate in dispute to an administrator or receiver operating under the
supervision of the court pending the determination of the substantive proceedings.

It appeared from the pleadings that there was a total dead lock in the administration of the estate
and it was no longer possible for the defendants to meet to perform duties and functions as
administrators and trustees of the estate. The trust funds which could have been paid into the
estate account with the bank were under control of factions trustees.

Thirdly when the property is endangered as when it is invested in un authorized and hazardous
securities, court mat on the admission of the trustee that the fund is in his co trustees hands order
the amount to be paid into court by trustee who is not holding the fund. if that trustee admits that
the fund has not been properly applied.

Seen in the case of Fregene vs. Aweshika; The plaintiff applied to court to remove defendants
from the office of trustees. An account and injunction restraining the defendants from carrying
on the duties of trustees, on ground of alleged misconduct. It was proved that the defendants
relieved the principal trustee of his post and replace him with another person.

It was held that those defendants were guilty of misconduct and mismanagement should be
removed from office and renders the account to trust fund. It has as well been observed that
where a trustee commits a breach of trust, fraudulent or otherwise any beneficiary can bring an
action to question the validity of the acts of the trustee and need not to sue in a representative
capacity.

Proprietary Remedies

b) Advantage over personal remedies

It should be noted that with regard to proprietary remedy, satisfaction of the plaintiff's demand
does not depend on solvency of the defendant trustee. If the property to be traced belongs to
plaintiff in equity, it will escape the defendant’s bankruptcy. In some cases the plaintiff will be
able to take advantages of increases in value of property. Thirdly there are cases in which
proprietary remedy is available although no personal action is possible. Fourthly judgment from
a proprietary action Carries interest from the date with the property came to the defendants hands
while claims in personam carry interest only from the date of judgment.

Doctrine of unjust Enrichment.

It has been suggested that proprietary remedies cannot be fully understood without appreciation
of the doctrine of in just enrichment. This doctrine appears in virtually every legal system.
Basically it's to the effect that where the defend is in justly enriched in the expense of the
plaintiff, the defendant must make restitution to the plaintiff.

Tracing at common law.

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A proprietary remedy is one which entitles a claimant to treat specific property thereof as his
own. The common law did not develop a real action in respect of chattels which entitled a
plaintiff to specific recovery thereof. The courts at common law recognized the owner of the
chattel but there was no action at common law of paying damages of returning the chattel.

Discretion to award specific recovery was in court. The issue thus arose if the right of the
plaintiff was limited in case of a specific chattel, should this right change when defendant
changed one chattel to another? The answer is the chattel can be followed so long as its nature
could be ascertained as such. Right only ceases when the means of ascertainment fail.

Tracing in equity

Equity has developed more sophisticated methods of tracing.

Straight case

This is one where there has been no mixing of trust funds with the trustees own money.
Consequently, if the trustee has sold trust property, the beneficiary may take the proceeds of sale
have been used to buy other property bought or hold it as security for the amount of money used
in purchase. This is subject to the condition that claims in equity are invalid against a bona fide
purchaser for value without notice of the trust.

Mixed Funds

In the hands of trustees

The situation worsens when trustee has mixed trust funds with his own or after mixing there are
additional dealings with fund .The burden of proof is on the trustee to prove initially that part of
the mixed fund is his own. In Re Tolley’s W.T Thomas j stated that...

If a trustee amalgamated trust property with his own, his beneficiary will be entitled to every
position of the blended property which the trustee cannot prove to be his own.

Consequently, if the compositions of the mixed fund are established at the time of the original
mixing, the problem of identification is of determining how to account for the reductions in the
fund by payment to increase in the fund by payment there in.

This can be seen in the case of Re Hallett's Estate; Hallet was a solicitor, died after having
mixed his own money certain funds from two trusts. The other trust had his client Mrs. Cotteril
as beneficiary. At his death, the funds were insufficient to pay his personal debts and to meet
trust claims. Three issues arose

1 whether Mrs. Cotteril not being a beneficiary of trust of which Hallet was a trustee was entitled
to tracing remedy on ground of her fiduciary relationship

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2. Assuming she was how to allocate the payments from the funds as between Hallet and
claimants

3. How to allocate payments as between claimants themselves.

It was held that Mrs. Cotteril was entitled to trace and payments out must be treated as Payments
for Hallets own money.

Professor Maudsley has criticized the application of tracing Rule in Re Hallets as having been
too precise in the sense that it could lead to a wrong result if earlier payment out was in favour of
an un authorized investment which prospered and the remainder disappeared. He suggests that
the correct rule should be that a beneficiary may claim a charge upon any part of trust fund
which he can identify as having been part of the trust fund.

Secondly he argues whether it's fair to apply the tracing remedy when the defendant is insolvent
and argues that this is a situation where it's necessary to ascertain whether the beneficiary who is
tracing should have priority over other creditors. Consequently the beneficiary will have to
compete with other creditors of the trustee, professor Maudsley states that this is unfair to
creditors in the Sense that they suffer when the trustee pays out money to a mixed fund.

In Rosco Ltd Vs Winder it was held that later payments into the mixed fund cannot be treated
as repayments of the money unless the trustee shows an intention to do so.

In the Hands of Fiduciaries or Beneficiaries

Re Hallet's case shows that tracing remedy is available as between beneficiaries, In Sinclair vs.
Brougham the Birkbeck society operated a banking business which was held to be ultra vires.in
the winding up competition arose between the claims of share holders and customers. The main
issue was whether customers had the right to trace into general assets of the society. It was held
that there was a fiduciary relationship between the customers and directors. The directors had
mixed the funds and customers had a right to trace into the hands of the society

In Re Diplck,a testator left his residuary estate “such charitable institution or institutions or other
institutions or other charitable or benevolent objects or objects in England as the executors
should select it was held by the house of Lords that the words included non charitable as well
charitable objects. Consequently the gift failed for uncertainty.

In The hands of third parties

The right to trace property into the hands of a third party to which it has been passed by trustee
will depend on the nature of the equitable interest in the property. Consequently, where a trustee
has transferred trust property in breach of trust of transferee will be bound by the trust except in
the following circumstances. First when he establishes that he has legal title to property, second
that he is a bonafide purchaser for valuable consideration without notice that the transactions

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were breach of trust. In Pilcher vs. Rawlins James L.J stated that "....a notice is an absolute, un
qualified, in answerable defense, and UN answerable plea to the jurisdiction of this court....."

Where the recipient is a volunteer and has no notice, the rights of beneficiary to trace against him
will be equal to that of the recipients own creditors

For this purpose if an innocent volunteer mixes trust money with his own, the rules in Clayton’s
case neither apply nor Re Hallets case.

e) Critique of Right to trace.

Professor Maudsley has indicated that the right to trace should not be restricted to a proprietary
interest which is equitable but should also be available to a beneficial legal owner. This is inspire
of the suggestion in Re Dip lock and Re Hallets Estate that the equitable remedy of tracing
should only be available where a fiduciary relationship can be established .secondly the right to
trace should not be limited to situations where a proprietary interest exists. The breach of
fiduciary duty should be sufficient to make available the tracing remedy.

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