Equity and Trusts

Introduction:

The equitable maxims are general principles, which were historically developed by the Court
of Chancery. The maxims set down the values and principles in which the Court of Chancery
used its equitable jurisdiction. In many respects the maxims gave a structure to the
discretionary jurisdiction of the court. These principles are still used by the courts and are
relevant in modern law, notwithstanding that they are not rules of law.

I. Equity regards as done which ought to be done

Where a specifically enforceable obligation exists, equity regards the parties as already in
the position which they may have been after the performance of the obligation. This
equitable remedy is usually used in relation to leases. A good example of this can be seen in
the case of Walsh v Lonsdale (1882) in which the court held that an agreement to enter into
a lease was as good as a lease. The decision of Carroll J in Shanahan v Redmond (1994),
suggests that the maxim may also benefit volunteers.

II. Equity will not suffer a wrong to be without remedy

This maxim provides a remedy in equity, which could not otherwise be dealt with in the
common law courts. At common law, the plaintiff only has a remedy when an actionable
wrong has been committed against him, however in the equitable doctrine of the quia timet
injunction, a remedy may be granted to prevent a potential breach of applicants rights (AG v
Rathmines & Pembroke Joint Hospital Board - 1904).

Modern law has held that the maxim will not provide a remedy in every case of a possible
injustice. This is reflected in the case of L v L [1992] in which the Supreme Court held that
there was no resulting trust where a wife had made non-financial contributions in the family
home. The court held that it was a matter for legislature to deal with.

III. Equity acts “in personam”

This maxim is derived from the fact that the Courts of Equity exercised jurisdiction over the
parties personally rather than against particular property owned by them. In this way, the use
of trusts was first recognised where the equity took into account the fact that title vested in a
legal owner on trust that was held for the benefit of another. The person would be
considered a mere trustee and any act in contravention to the trust will leave him open to a
breach of trust action.
This maxim represents the modern position only to a limited extent. The equitable doctrine of
‘tracing’ highlights this point in Re Diplock and Agip v. Jackson, where a beneficiary is
allowed to trace or follow trust property especially where such property has been converted
to another form.

IV. He who seeks equity must do equity

Party seeking equitable relief must act fairly towards other. This also complements the
maxim ‘he who comes to equity must come with clean hands’. This maxim is forward looking
in that it concerns the conduct required by the applicant before the equitable relief be
granted. In Chappell v. Times Newspapers Ltd (1975) – plaintiffs sought an injunction to
restrict their employer from terminating their contracts of employment even though they
refused to give an undertaking that they will not engage in disruptive behaviour. Court of
Appeal refused it on the ground that the plaintiff failed to establish that they intended to act
equitably by abiding to the terms of their contracts of employment. Lord Denning MR – ‘if
one party seeks relief, he must be ready and willing to do part in it.’

V. He who comes to equity must come with clean hands

This maxim concerns the previous conduct of the applicant. For an equitable relief, the
applicant must establish that he is not guilty of misconduct in the event leading up to the
application. In Smelter Corporation v. O’Driscoll – plaintiffs application for specific
performance was refused as a result of misrepresentations by its representatives.

Express Trusts: The Three certainties

For valid express trusts, the three certainties must be present for its creation. An express
trust requires the coincidence of three conditions which are known as "the three certainties".
If any of these conditions are absent then the trust will be void ab initio, from the very start.
These ‘three certainties’ were laid down in Knight v Knight and adopted in Ireland in
Chambers v Fahy
i. Certainty of intention;
ii. Certainty of subject matter; and
iii. Certainty of objects.

1. Certainty of intention
The trust will fail if the settlor’s intentions are not sufficiently clear. The courts have drawn
fundamental distinction between precatory and imperative words when considering the
requirement of certainty of intention for creating a valid express trust.

Precatory words merely evidence the wish or desire on the donor’s part that the property
should be used in a certain way. Words such as ‘in the hope that’ or ‘with the desire that’ are
held precatory in nature. Imperative words in the other hand place the donee under a distinct
and definable trust obligation.

No precise language is necessary to demonstrate intention to create a trust; not even the
word ‘trust’ is required as per Paul v Constance. The court will examine the substance and
effect of the words in determining the testator’s actual intention. As shown in Comiskey v
Bowing it was held that precatory words do not preclude certainty of intention. You must
construe the trust as a whole.

In Re Humphrey’s Estate , the testator left the entirety of his estate to his wife and stated
that he wished she would devise or give a house to his son and the remaining property to his
daughters. It was held that this did not amount to a certainty of intention to create a trust,
and that an absolute interest had passed to the wife.

In Re Sweeney (1976), the testator left all his assets to his wife subject to an “express wish”
that she make provision for payment of certain legacies after her death. The court cited Re
Humphrey’s Estate and held that in this case, a clear gift had been made and if the testator
had wished a trust to be created after the gift he would have done so in equally clear terms.

One important point to note is that the courts will not recognise a purportedly express
intention to create a trust where that intention is false. In other words, the court will not
recognise a “sham” trust. This is illustrated by the case of Midland Bank v Wyatt (1995). In
that case, a husband and wife declared a trust of the beneficial interest in their family home
in favour of their two daughters. The property was mortgaged and the husband continued to
borrow, using the house as security for the loans, without informing the bank of the existence
of the trust. The bank ultimately sought to sell the house in order to recover debts owed by
the husband. The court held that the husband and wife had never truly intended to divest
themselves of the beneficial interest in the house and that the trust declared in favour of their
daughters was a sham device to protect the family home from claims by the bank.

In Lamb v Eames the testator had left 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" The Court held that it was
not a trust but an absolute gift to the widow.

2. Certainty of subject matter

For an express trust, both the property itself and the extent of the beneficial interest of each
beneficiary must be certain. In Palmer v Simmonds and Re Jones the trusts failed where the
subject matters were described as either ‘the bulk of my estate’ or ‘part of the estate.’ It was
deemed insufficiently certain.

If the trustees are given a discretion to decide the subject matter or an objective criterion is
provided the trust will not fail. In Re Golays Wills Trust A testamentary disposition which
instructed the executors to allow a beneficiary “enjoy one of my flats during her lifetime and
to receive a reasonable income from my other properties” was upheld. The court held that
the executors could select the flat and stated that a reasonable income were sufficiently
objective that could be derived by the beneficiary’s standard of living.

Lack of certainty of subject matter may evidence a lack of intention to create a trust at all, in
which case the transfer will be effective as a gift. In Sprange v. Barnard, the done was
allowed to keep the property absolutely. However, where there is a clear intention to create a
trust and the only lack of certainty being as to beneficial interests, a resulting trust of
beneficial interest will arise in favour of the donor.

Tangible; - Re: Gold Corp Exchange. A dealership who purchased gold bullions on behalf of
clients and provided storage went into receivership and the bank sought to claim any
remaining stocks on the basis of a floating charge which it held over the dealer’s assets.
o The clients claimed, however, that the contracts they had entered into had
created a series of trusts and that they as beneficiaries were entitled to the stock
ahead of the bank.
o Privy Council held; the clients who could claim identifiable stock that had been
separated from the rest of the stock, and was purchased especially for them, had
established a trust because the subject matter was certain.
o The court held, however, that no trust could be established for the benefit of the
customers who had purchased gold for future delivery but had not been allocated
any specific portion of the bullion in storage.
o The court held that in those cases there was a total absence of certainty of
subject matter.

 Where the property that is a subject matter of a trust is of an intangible nature, the
English courts have held that the fact that the specific portion is not precisely identifiable
may not prevent the establishment of a trust.
 Hunter v Moss.
o Settlor declared a trust of 5 per cent of his shares in a company.
o The settlor owned 1,000 shares in a company and thus had declared a trust of 50
shares.
o The Court of Appeal upheld the trust, stating that provided the shares were of the
same class and in the same company, there was no need to separate the 50
shares before declaring the trust.
 o Prior to this decision, it had been thought that a trust of intangible property would
only be valid if the settlor declared a trust of his entire interest or an identified
proportion of it.
 Controversial decision and it is not clear whether the Irish courts would follow it since it
could give rise to difficulties in relation to subsequent dealings with the interest.

But a contrary view was taken by the English Court of Appeal in MacJordan v Brookmount
Erostin and in Re Global Trader Europe Ltd., who concluded that there could only be a trust
over part of a fund in a bank account if that part had been segregated from the rest. The
modern authority on this remains uncertain in this jurisdiction.

3. Certainty of object (beneficiaries)

Certainty of Objects must exist in order to create a valid express trust. In order to satisfy the
requirement of certainty of objects, the beneficiaries must be identifiable and defined in order
for the trust to be administered.

Different considerations as to whether a trust satisfies the certainty of objects requirement

apply depending upon whether the instrument creates a mere power, a fixed trust, or a
discretionary trust.

a) Mere powers
b) The power is valid if it can be said with certainty whether any given individual is or is
not a
c) member of the class and does not fail simply because it was impossible to ascertain
every
d) member of the class.
e) The power is valid if it can be said with certainty whether any given individual is or is
not a
f) member of the class and does not fail simply because it was impossible to ascertain
every
g) member of the class.
h) The power is valid if it can be said with certainty whether any given individual is or is
not a
i) member of the class and does not fail simply because it was impossible to ascertain
every
j) member of the class.
k) The power is valid if it can be said with certainty whether any given individual is or is
not a
l) member of the class and does not fail simply because it was impossible to ascertain
every
m) member of the class.
The power is valid if it can be said with certainty whether any given individual is or is not a
member of the class and does not fail simply because it was impossible to ascertain every
member of the class.

In the House of Lords case of Re Gulbenkian’s Settlement [1970], Lord Upjohn set down the
test for a mere power as being the ability to say with certainty whether any given individual is
or is not a member of the class, and that it is not necessary to ascertain every member of the
class, and one must be able to say with certainty who is within and who is without the power.
This was referred to as the ‘is or is not’ test. Certainty of objects will be satisfied once it can
be said whether any given individual is or is not a beneficiary.
A similar viewpoint was put forward by Murnaghan J in Re Bayley in the Supreme Court
where a power of appointment amongst such of the testator’s ‘Irish relative’ as his sister
should appoint was upheld as valid. While the SC did not go as far as following the broader
approach adopted by the HOL in Gulbenkians, Murnaghan J did show his willingness to
adopt a flexible attitude stating that it was not necessary for a valid exercise of a power of
appointment that the donee should be able to range in his mind every person capable of
taking under the power. It is sufficient if the person chosen as an object comes properly
within the description of the class amongst which an appointment has been made.

b) Fixed Trusts
Under the terms of a fixed trust, the interest which each beneficiary is to take is specified in
the trust instrument and the trustees have no discretion to determine either who will benefit
or the extent of that individuals share. i.e. it must be clearly identified by the time it comes
into operation.

The test for certainty of objects in a fixed trust is the comprehensive list test, otherwise
known as ‘class ascertainability rule’. This test requires the trustees to be able to draw up a
complete list of all the beneficiaries who are clearly identified or identifiable by the time the
trusts come into operation. In Morice v. Bishop of Durham, Lord Eldon held that to be valid, a
trust must be one that the court can control and execute. Therefore, the settlor must
produce a comprehensive list of names of all people to benefit under the fixed trust.

c) Discretionary Trusts
The essence of discretionary trusts is that trustees are under an obligation to distribute the
trust property to the beneficiaries, although they have a discretion to select which members
of the class should benefit and to what extent. There is some uncertainty as to the
appropriate test for certainty of objects in the case of discretionary trusts in Ireland and
whether the comprehensive list test or ‘is or is not’ test would be applicable.

Traditionally, under English law, the test for discretionary trusts is same as the fixed trusts
which was echoed in IRC v. Broadway Cottages Trust (1955), by relying on the ‘complete
list’ test, to fulfil which it must be able to draw up a complete list of the beneficiaries. The
Irish decision in Re Parker (1966) established that a comprehensive list test also applied for
both fixed and discretionary trusts.

This requirement was overruled by the House of Lords in McPhail v. Doulton (1971), a deed
was drawn up in order to provide monetary benefit to members of staff of a company as well
as the relatives and dependants of such people. It was held that this was a discretionary
trust without any general intention in favour of a class. There was no intention on the part of
the settlor that the property be equally divided amongst the class should the trustees fail to
exercise their discretion. The appropriate test for certainty of objects in these circumstances
was the individual ascertainability test (Similar to Re Gulbenkian test). The trust will be valid
if it can be said with certainty that any given individual is or is not a member of the class.
This was also reiterated in Re Baden’s Deed Trusts where it was accepted that the trustees
are under no obligation to survey the entire field of potential beneficiaries.

The decision of the HOL in McPhail was not followed by the Irish Law and remain that as
formulated in Broadway Cottages and Re Parker. This was approved by Murphy J in
O’Byrne v Davoren(1994). The testatrix’s will provided that the residue of her estate should
be held on trust for the post-primary education of such members of a class consisting of the
grandchildren, children and direct descendants of named persons whom the trustees in their
discretion should decide would be most likely to benefit there from. Murphy J was satisfied
that the trust in question was sufficiently certain, but stated that a trust for the division of
income will be invalid unless the entire class of potential beneficiaries is ascertainable.
Conceptual and Evidential Certainty
Delany notes that “irrespective of the nature of the trust or power involved, the description
used to define the class of potential beneficiaries must be conceptually certain”. In Re
Barlow’s Will Trusts a testatrix directed her executors ‘to allow any members of my family
and any friends of mine who may wish to do so” to purchase any of her paintings at a
reduced price. The court upheld the validity of a gift as it was possible to say of one or more
persons that he or they undoubtedly qualify even though it may be difficult to say of others.
Further, in Re Baden’s Deed Trusts the COA accepted that there was conceptual certainty
in the word of relatives and dependants. “[O]nce the class of persons to be benefited is
conceptually certain, it then becomes a question of fact to be determined on the evidence
whether any postulant has on inquiry been proved to be within it; if he is not so proved, then
he is not in it.”

Administrative Unworkability and Capriciousness

This issue is concerned with the width of the class specified. This was first advanced in
McPhail v Doulton by Lord Wilberforce who acknowledged albeit by way of obiter, that
cases of beneficiaries might be “so hopelessly wide as to not to form anything like a class so
that the trust is administratively unworkable.” He suggests that a trust for “all resident of
Greater London” would necessarily be void. A discretionary trust in favour of ‘any or all or
some of the inhabitants of the County of West Yorkshire’ was found to be invalid in R v.
District Auditor Ex parte West Yorkshire Metropolitan County Council (1986) on the
basis that the definition of the beneficiaries was so hopelessly wide as to be incapable of
forming anything like a class.

It should be noted that while administrative unworkability can invalidate a discretionary trust,
the weight of authority supports the view that it will not affect the validity of a mere power.
The statement of Templeman J in Re Manisty’s Setlement Trusts that a power cannot be
uncertain merely because it is wide in ambit found favour with Megarry VC in Re Hays
Setlement Trusts where the latter concluded that he did not see how mere numbers could
inhibit the donees from considering whether or not to exercise it.

Formal requirements of a valid Express Trust

Inter vivos Trusts (during one’s lifetime rather than taking effect after death) includes:

 Personalty (Personal Property) : no formal requirements but merely an evidence of clear

intention to create a trust over the property in question.

 Realty (Real property) - s 4 of the Statute of Frauds 1695

Primarily with a view to preventing fraud, legislation has intervened to provide that in specific
cases, certain formalities must be observed in the creation of express trusts. Although no
formalities are required for the creation of an intervivos express trusts of land, whether
freehold or leasehold, Section 4 of the Statute of Frauds (Ireland) 1965 requires that the
trust be evidenced in writing and signed by a person able to declare the trust, or by his will. It
is important to note that the declaration of trust itself does not need to be in writing but
written evidence must exist to prove the declaration and its essential terms.

Effect of a lack of formalities

One of the most frequently cited examples of the operation of this is the English decision of
Rochefoucauld v Boustead [1897], the plaintiff was the owner of a mortgaged property
which was sold by the mortgagee to the defendant. The defendant had orally agreed to hold
the property on trust for the plaintiff subject to repayment to the defendant of the purchase
price and other expenses incurred in the transaction. The defendant subsequently sold the
land and the plaintiff who claimed that the land had been conveyed to the defendant as
trustee for her, was held to be entitled to obtain an order for an account. Lindley LJ stated:
“Notwithstanding the statute, it is competent for a person claiming land conveyed to another
to prove by oral evidence that it was so conveyed upon trust of the claimant, and that the
grantee, knowing the facts, is denying the trust and relying upon the form of conveyance and
the statute, in order to keep the land himself.”

This principle was applied in the Irish case of McGillicuddy v Joy [1959]. In that the plaintiff
and the defendants agreed to purchase a farm jointly and the contract was signed by one of
the defendants. The plaintiff paid one third of the purchase price and the defendants then
reneged on the agreement. The plaintiff sought a declaration that the defendant, who had
signed the agreement, held the benefit of the contract in trust for him. Budd J held that the
principle in Rochefoucauld applied even though there was only a contract of sale, as
opposed to a conveyance. He concluded that the defendant had purchased that part of the
lands previously agreed between them in trust for the plaintiff and the former’s repudiation of
that trust constituted a fraud.

A question which has provoked considerable debate in recent years is whether a third party
beneficiary can rely on the principle enunciated in Rochefoucauld to enforce such an
informal trust. Feltham has argued that there is a strong line of authority against allowing a
third party to rely on the doctrine and has stated that ‘neither precedent nor policy’ support
the extension of the principle in this way. However, Youdan has asserted that the relevant
authorities favour the view that such trusts can be enforced at the instance of a third party
beneficiary and on balance this would seem the fairer approach on the basis that:

(1) There is evidence to establish the existence of the trust, and

(2) To allow the defendant to rely on the statute would allow him to perpetrate a fraud.

Express Trusts: Complete Constitution

 Definition of Trust = that relationship recognised by equity which arises where a

property
 General principles: Milroy v. Lord 1862, - Medley executed deed transferring 50
shares of Louisiana bank to Lord in favour of Milroy – share transfer not entered
executed – whether deed sufficient for transfer of shares and complete constituting
trust. = not sufficient, Turner L.J.:
o In order to render voluntary settlement valid and effective, settlor must have
done everything according to the nature of the property – 3 courses
 Timpsons Executers v. Yerbury – applying Milroy principle – if consideration has
passed from purported transferee, the equity may deem the transfer to be effective.
 Chattels: Re Cole, husband showed house which he recently purchased and said, its
all yours, later she sued him for chattels = argument rejected by court – husbands
dealing with chattel as if his own – no intention
 Complete constitution of Trust : McArdle v. O’Donohoe, -
o O’Donovan J adopted the statement of Johnson J in Re Wilson – a gift is a
gift – no equity to compel the completion of gift.
o O’Donovan J referred to Milroy: absence of stated intention by settlor to
constitute himself trustee and absence of an effective transfer of trust
property to trsutees, equity will not construe the trust
 Exception to Milroy: Re Rose – settlor has done everything within his power to
transfer title but could not ensure compliance with some formality outside his control,
the trust will be regarded as completely constituted
  Pennington v. Waine – donor told nephew of transfer of 400 shares of a company for
which he was supposed to be made Director – share transfer form was sent to the
company’s auditor – donor died before the auditor had delivered the form to the
company – question whether these shares became part of her residuary estate.
Although technically, auditor is agent of donor and act of agent is act of donor. Agent
had not done everything in his power to complete transfer = held nephew had
equitable interest – Arden LJ – since he was told about the gift of shares and he had
been made director of company, it would have been unconscionable for the donor to
revoke gift.
 Liberal approach - Choithram v. Pagarani – Settlor close to death bed – intended to
create an inter vivos trust – nine trustees- held that it constituted trust by a
declaration of trust, even though property had not vested in co-trustees. Both
commended and criticised
 Recent cases – Orthodox approach – Curtis v. Pullbrook – intended settlor failed to
transfer his shares to wife and daughter prior to emigrating to Thailand with his new
partner. His failure to do everything which was necessary from him to do – court held
that exception in Re Rose had not been met.

Marriage consideration
 Re Densham – Goff LJ – 3 requirements for marriage settlement gving rise to
marriage consideration
o settlement on the occasio of marriage
o take effect only on the marriage taking place
o made with a view to encouraging or facilitating marriage.
 Enforcing of marriage settlement – Attorney-General v. Jacobs Smith – held that
children of former marriages whose interests are intertwined with the children of the
current marriage was inseparable within the scope of marriage consideration
 Re Plumptres Marriage settlement – husbands next of kin not party to the deed
cannot sue
 Paul v. Paul – as no children, wife and husband claim to entire settlement fund paid
to them was rejected as next of kin were volunteers

Covenants to settle
 Re Pryce – wife covenanted to settle future property – can trustees sue on behalf of
beneficieries who who were volunteer – Eve J held no – not parties to the original
deed – ‘ought not to proceed’
 Re Cooks Settlement – followed the above case on the reasoning of the property
involved – future property
A Trust of a promise
 Lloyds v. Harper – Father of Lloyds underwriter gave guaranteed for his son against
default of his creditor – Lloyds were held to be trustees to the promise for the benfit
of creditors
 Fletcher v. Fletcher – A covenanted with B that his sons C and D should be paid
within 12 months 60,000 pounds

Declaration of self as trustee – irrevocable declaration of trust

Exception to the Rule that Equity will not assist volunteers nor perfect an imperfect
gift

1. Subsequent acquisition – Rule in Strong v. Bird

 incomplete gift made during the life of the donor and the donor appointed
donee as executor, or in the case of intestacy, the donee is appointed
 administrator, the vesting of the property as such may be treated as
completion of the gift.
 Facts – bird borrowed GBP 1,100 from his stepmother – previously paid him
GBP 212 – entered into an agreement to pay GBP 100 per quarter and this
was done for 2 quarters – she then expressly forgave her debt. She
appointed Bird as executor and then subsequently died. The residuary
legatees sough to enforce the payment of the remainder of the debt – rule in
Pinnel’s case – part payment can never forgive the full amount. Bird release
fro debt was oral, therefore at law , he was a volunteer.
 Lord Jessel MR – debt had been released at common law with Bords
appointment as executor. Even though gift was not supported by
consideration – the appointment meant the legal title of the debt was vested
in him.
 This conclusion conflicted the rule in equity that a trustee shall not profit from
his position and has a duty to account for any benefit derived. Residuary
legatees used this argement
 Lord Jessel MR - usually trustee will be prevented from profiting from his
position – however – all equitable remedies are discretionary, the onus was
on the legatees to persuade him that the justice of the case was on their side
– moral entitlement was more than Birds. Failed to prove that – Legatees
equity superseded by Birds equity – strong proof that the testator had an
unchanged intention unto her death to forgive Bird.
 Rise to the rule – imperfect gift is perfected by subsequent acquisition of the
title.
 Extension of this rule to imperfect gifts of real property in Re Stewart.
 In Re James, rule was applied where the donee was not an executor but had
taken letters of administration in the estate of the donor.
 Re Gonin – Walton LJ – criticised Re James – one appointed as executor on
the intention of the testator, whereas, one becomes administrator by virtue of
an act of choice of administrator himself. Walton J distinguished the present
case because there was lack of evidence of continuing intention to forgive a
debt
 Intention of future gift will not fall under this rule as there is no intention to
made immediate gift of property. Re Wilson, testator intended to make
immediate gift of certain securities to his son , who hwas executor of his will
although the gift was not completed during his life. Court satisfied with the
intention and the rule in Strong v. Bird applied. However, the rule did not
apply to other properties that father had promised to transfer to his son.
 Re Freeland, a testatrix promised to give a car at a future date but never did
so – on death, plaintiff became executrix – she then claimed to perfect the
imperfect gift – Court of Appeal – no merits – insufficient evidence of
continuing intention to make the gift up to testatrix death – intention to make
testamentary gift is not enough – there must be an intention of immediate gift.

2. Dual Title by Executor

 Re Ralli’s Wills Trust – Another application of the rule in Strong v. Bird.
o Testator died 1899 and left property to wife for life and the remainder
for his two daughter, Helen and Irene. Helen subsequently made a
marriage settlement in which covenanted to settle any property she
received under her fathers will. Helen died in 1956 and mother in 196.
Irene’s husband sole surviving trustee (executor) of Helens Will and
marriage settlement. Question whether Irene’s husband helds Helens
share of her fathers will for the benfit of those claiming under her or
under the marriage settlement.
 o Court adopted the logic of Lord Justice Jessel – because husband
was the legal owner of the property in two capacities, he was entitled
to choose for whose benefit he held the legal title. Once he chose to
benefit from the marriage settlemt – upto other potential beneficeires
to prove they had greater equity.

3. Equitable Proprietary Estoppel

 Pascoe v. Turner – decision of Dillwyn v. Llewellyn was adopted - co-habitee
– house was hers – number of expenses incurred in repairing house
 Ramsden v. Dyson – acted in detriment believing land was his and true owner
refrained from correcting mistake

4. Donatio Mortis Causa:

 Essentially an exemption for the dying allowing them to transfer property
without normal stringent formal requirements
 In Re Beaumont , Buckley J – described this as – a gift of an amphibious
nature. It is neither gift inter vivos nor legacy
 Under Donatio Mortis Causa – donor must have made gift in contemplation of
death. Farwell J in Re Craven’s Estate – donor must contemplate death in
near future. Test subjective – relevance of donor’s state of mind
 Re Wasserberg – donor on death bed told donee- certain bonds in a bank
were hers to keep and gave key of the bank vault to her and this was held to
be valid donatio mortis causa. Give requirements for valid donation mortis
causa –
1. gift in contemplation and not necessarily anticipation of death
2. subject matter delivered to the donee
3. gift made in circumstances where it would revert to the donor should
he recover
4. donor must part with control/dominion of the property before death
5. property capable of being subject matter of donation mortis causa
 Lord Porter in Agnew v. Belfast Banking Co. – a donatio mortis acusa is
incomplete until death and depends on it. If the sick man recovers, it is of no
avail. No property passes until death.
 Manner of death irrelevant - Wilkes v. Allington – donor mad Donatio mortis
causa in the belief that he was dying from cancer but he died from pneumonia
as a result of a trip in an open topped bus in the rain
 Donatio mortis cause made pre-suicide: conflicting authorities – Re Dudman
– gift no valid. Mills v. Shields and Kelly – relying on Wilkes case – gift
effective
 Subject matter: All forms of personalty can be subject of donatio mortis
causa – Bird v. Treasury Solicitor 1951
 Since 1991 – Sen v. Headley – real property can also be the property of
donatio mortis causa
 Cheques and promissory notes – not capable of being subject – Re
Beaumont
 Stocks and shares – not capable of being subject according to Martin –
however in Staniland v. Willot – except shares in public company – thought
this is doubted
 Complete parting with the dominion of the subject matter: Sen v.
Headley and Irish case of Re Mulroy.
 Woodard v. Woodard – fathers car was held by son during cancer treatment.
 Bentham v. Porterton – unaware death – onus on party laying claim on
donatio mortis causa – failed to establish validity on the balance of
probabilities
  Recent English cases – Valle v. Birchwood – donor said the he didn’t expect
to live that long and proceed to hand her title deeds and keys – died three
months later -valid donatio mortis causa – such gap not fatal to claim even
though donor continued to live in the property without involvement or
interference from donee
 King v. Dubrey – Jackson LJ limited the circumstances of limited donatio
mortis causa – in contemplation of imminent death for a specific reason –
general feeling of approaching ones end of natural lifespan not sufficient.
Criticised Valle v. Birchwood – first requirement not satisfied in that case.
Jackson LJ – strict proof was necessary to prevent abuse and avoidance of
requirements of statute. Skeptical of the usefulness of the doctrine in modern
times – DMC is an anamoly in English law.

Secret Trusts
 Lord Wood V.C in McCormick v. Grogan – where a person expressly or impliedly
promises that he will carry out the intentions of the testator into effect, and property is
left with him on that promise – it is in effect a trust
 Secret Trust evolved as a response to Wills Act 1837, Succession Act 1965 and the
Statute of Frauds Act 1695 – that imposed certain formalities for creation of valid will
o Executed in writing
o Signed by testator or someone on his behalf
o Signature attested by two witnesses
 Secret trust – function is to keep the identity of the object or the beneficiaries a secret
 Generally , on death – will submitted to probate office – if valid, admitted to probate –
can be inspected by public in the probate registry office
 Ostensible beneficiary and true beneficiary
 Two types of trust – fully secret and the half secret trust
 Applicable to both testate and intestacy succession
 McCormick v. Grogan – donor on his deathbed – sent for groga – gave him a letter –
but did not expressly ask to comply – letter named beneficiaries but also mentioned –
Court = not intended to create trust obligation – no legally binding obligation on
grogan – Lord Westbury – 3 conditions for valid secret trust
o An intention to create a trust
o There must be a communication of the donor intention to donee during life
time of donor
o There must be acceptance by the legatee/secret trustee of the trust obligation

 Intention and communication:

o Walgrave v. Tebbs – testator left 12,000 pounds and certain lands to two
persons beneficially as joint tenants – shortly before his death – asked
executor to write to the donees on the object to which the yrust fund will apply
– however this was never sent = held donees entitled to property beneficially
as the secret trust was not communicated to them
o If some terms not communicated or communicated after death, then no
trust – Re Boyes, testator made will leaving estate to solicitor who was
executor of his estate. Solicitor drawn up the will and gave oral evidence that
the testator had intended him to hold the property as trustee for objects to be
subsequently told to him – testator died – found letter after in his bureau =
Kay J – communication to be made during lifetime of testator and this must be
accepted by the trustee – court held that trust in favour of next of kin
o Inconsistencies in communication: Re Keens Estate – before making will,
testator gave letter to A and B – not to open until after his death – on his
death – left 10,000 pounds to A and B on trust to be disposed of by them to
 such person or charities as may be notified to them – letter opened – womans
name indicated – half trust – Lord Wright MR – phrasing of will indicated
future date where as letter was already given to them – inconsistent

 Acceptance of the Secret Trust Obligation:

o Acceptance can be implied – Ottaway v. Norman – testator left bungalow to
his housekeeper – mentioned to one of his sons that it is hers for life and then
to pass to sons – housekeeper received under late employers will –
housekeeper made will leaving house to sons – but later changed it to a
friend = court held that this a secret trust and the housekeeper understood
and implicitly accepted the trust obligation
o Any addition to the trust property must comply with three requirements
in McCormick: Re Colin Cooper – testator left 5000 pounds to A and B on a
secret trust jointly – communication made – legacy was increased by a further
5000 – included in the will – but sum not specified – and not mention to the
donees = court held first 5000 valid and not second as this was not
communicated and accepted to the donee
o Joint trustees issues – Re Stead – rules –
 Tenants in common – only those that was communicated and
accepted – others take beneficially
 Joint tenants – will made before acceptance – then only accepting
party – other take beneficially. If will after acceptance – then both
party
o Walker J criticised the above decision in Geddis v. Semple – a further
distinction – tenanst in common that were aware of the trust but not accepted
– a resulting trust will arise on the failure of secret trusts – Benfically only of
knew nothing of trust

Half secret trust

 By their very nature – risk of fraud is low
 Blackwell v. Blackwell – testator left sum of money to certain persons to hold it for
purposes indicated by me to them – one of the legatees informaed in detail and the
other in outline before execution of will – secret trust for mistress and son – wife
claimed to deem trust invalid – held valid half secret trust created – Obiter – Viscount
Sumner – requirements for communication in half secret more strict – communication
mjst be made before will or while making the will – criticized for making illogical
distinction
 Irish case – Riordan v. Banon – Chatterton VC, adopted different test – similar to fully
secret trust – communication and acceptance before death
 Overend J in Re Browne – communication and acceptance may validly occur after
will is made provided it is during lifetime
 Prendiville v. Prendiville – HC Barron J reiterated Riordan decision – refused to
follow the decision of Blackwell and Re Keen. However still conflicting views – words
she has been advised indicates the communication before or while making the will –
no clear decision on the time of execution – not clear whether rejection of prior
communication part of ratio
 Re Stead and half secret trust – joint tenancy
 Theory of inducement
 Onus of proof on the person seeking to show the existence of secret trust to establish
this on the balance of probabilities
o Re Snowdon – ordinary civil standard of proof applies and the standard might
be higher if any question of fraud arose
o Banco Ambrosiano v. Ansbacher &Co – SC – rejected that a higher standard
of proof applied in issues of fraud
  Other jurisdictions:
o Australia abolishes distinction between half and full
o Canada –
 Glasspool v. Everett- mineral rights from grandmother to plaintiff father
in promise that it will pass to son – plaintiff father left the property to
partner – son successfully claim- secret tru
 Chin v. Hanrieder – property mineral rights left to wife and then to
children – told them in their presence – wife said not interested – but
later changed mind – held to be a secret trust

Other issues to be addressed

 Dehors the will:
o Re Young – witness to the will – Wills Act has nothing to do with the matter
o Irish case of O’Brien v. Condon – witness not precluded from benefitting in
secret trust – what she takes under the trust is something not under the will
 Legatee attests the will – no clear case – Canadian case Re Amstrong – half secret
trust valid where legatee attested the will
 Beneficiary predeceases the testator: held in Re Gardner – beneficiary receives
interest as soon as will is made and trust created rather than during his death.
Decision not expressly overruled but heavily criticised
 Beneficial legatees: cautious view
o Re Pughs Wills Trust – solicitor executor leaving 1500 pounds to each brother
– residue to dispose in accordance with any letter of memorandum – however
– no such letter = court held as trust had no objects – void for uncertainty –
went to next of kin – such claims for full benficial ownership raise suspicion
o Re Rees – half secret trust – surplus – legatee to keep = Court – CoA -
resulting trust for surplus but legatee could not provide evidence of such
indication
 Legatee predeceases testator:
o full secret – invalid – Re Maddock
o half secret – valid as long as the object is clear

English cases – Terms of time of communication

 Walgrave v. Tebbs – even if legatee is aware a secret trust was intended by the
settlor after settlors death – legatee can take half secret trust beneficially if it was not
communicated to him
 Re Boyes – solicitor case – secret trust not valid

Charitable Trusts
 Irish Statute of Charitable Uses 1634 – repealed by Statute Law Revision Act 1878.
 Lord Greene MR in Re Compton – popular meaning of the words charity or charitable
does not necessarily coincide with their legal meaning
 Until 2009, repealed preamble, no definition – decided on precedents
 Charities Act 2009
o Definition for charitable purpose – section 3(1) – mirror broad 4 categories
identified by Lord McNaghten in Commission for Income Tax v. Pemsel case
 Prevention or relief of poverty or economic hardship
 Advancement of education
 Advancement of religion
 Any other purpose that is of benefit to the community
o Section 3(2) – it is to be of public benefit
 o Section 3(3) – furtherance of public benefit
o Section 3(7) – factor to consider for public benefit
o 3(8) – limitation on the beneficiaries and personal connection with donor
o 3(11)- lists of charitable purpose that are benefit to the community
o Charities Regulatory Authority
 Donors intentions irrelevant:
o Incorporated Council of Law reporting v. Att-General – enterprise for
publishing law report deemed to be charitable for advancement of education –
argued that vast majority are used by professional lawyers for fees – since
reports aided dissemination of law, educational element conferred public
benefit
o Re King – trust for erection of stained glass window on a church as a
memorial to the donor was charitable notwithstanding it was inspired by
donor’s pride

Trust for the prevention or relief of poverty or economic hardship

 Broad meaning under 1634 preamble. Re Coulthurst – Lord Evershed MR – noted
poverty did not constitute destitution but was satisfied where the person in question
has ‘to go short’
 Re Lucas – a gift to the oldest respectable inhabitant in the town was held to be
charitable considering the sum of money and the words used
 Re Gwyon – testator left fund – in providing knickers for the boys of Farnham and
district = court refused this as charitable as no reference to poor boys was made in
his bequest
 Re Niyazi’s Wills Trust – testator left a portion of estate for construction of working
mans hostel in cyprus – interpretation of the words working man and hostel denoted
poverty – sum left insufficient for luxury residence – held to be charitable – relief of
poverty is implied

Public benefit element:

 Personal nexus test – Lord Greene MR in Re Compton - gift under which the
beneficiaries are defined by reference to a purely personal relationship to a named
propositus, cannot in principle be a valid charitable gift
 Strict public benefit rule exceptions:
o Poor relations - Re Scarisbrick – Jenkins LJ – recognised trusts benefitting
relations under the category of the relief of property deserve different
treatment from the usually strict rules – test to be applied – whether the gift
was the relief of poverty amongst a class of persons….or was merely a gift
individuals, albeit with relief of poverty amongst those individuals as a motive
of the gift
o Re Segelman – testator made a gift to the poor and and needy members of a
class of his relatives – not to close for 21 years after his death = Chadwick J –
valid charitable trust despite the restricted nature of class – reasonable to
assume by the end of 21 years it will be significantly larger
o Poor employees: Dingle v. Turner – Lord Cross – poor employees decision
were a natural development of poor relations decisions – true question must
be whether the gift was really for the relief of poverty amongst a class of
persons or merely a gift to individuals
o Re Denison – HC of Ontario – bequest for the relief of impoverished or
indigent member of the law society (of upper Canada ) and of their wives and
children, was charitable
o Poor relations and poor employees after Charities Act 2009 is uncertain –
Delaney opines that it is unlikely to qualify for charitable status in the future in
 this jurisdiction given the personal connection between the donor of the gift
and the intended beneficiaries.
o Divergence from English Law –
 Similar Acts in English jurisprudence Charities Act 2006 and 2011–
need for public benefit but no limitation of personal connection as in
Ireland
 Impact of new legislation was examined in Attorney General v. Charity
Commission for England and Wales, = we do not think abolition of the
presumption of public benefit has had any impact on whether a trust
for the relief of poverty is charitable or not – relief of charity could be
upheld even if confined to a restricted class defined by personal
relationship or contract of employment – acknowledged poor relations
cases represent an exception to the general rule or anomaly and are
not to be extended – within the exception, logic and coherence must
prevail
 Irish courts may have regard to this when the issue comes up
 However specific section -3(8) rules out gifts based on
personal connections – provision noticeably absent from the
English Acts – to create a uniform test for all types of
charitable trusts in Irish Law

Trust for advancement of education

 Preamble – reference to maintenance of schools of learning, free schools and
scholars in universities
 Re Delius – a trust to promote the works of the composer, Delius – held to advance
education and thus charitable
 Re Penion – collection of art works was held to have no artistic merit by CoA.
Bequest by their owner to keep them intact and displayed to public was held to be
non-charitble as they were regarded by the court as ‘atrociously bad’ or ‘worthless’
 Two elements for public benefit:
o Trust must confer a benefit upon those who are object of the charity
o Should also confer a benefit upon public at large

 Class benefitted not constitute an appreciable section of public: Davies v.

Perpetual Trustee Co – privy council held = trust confined to the benefit of
Presbyterians descended from Northern Irish Settlors to New South Wales – class
did not constitute sufficient section of public to confer a public benefit
 Scope of Education: IRC v. McMullen – English Football Association set up trust –
object – furtherance of education in schools and universities and facilitating the
playing of association football = held to be charitable – education not confined to
formal instruction in classroom – settlors intention to promote physical education is
an integral part of education per se
 Recent case – Magee v. Attorney General – Lavan J stated obiter – provision of local
community hall to be used for meetings and seminars by self-help and other groups (
A.A, Unislim, Drugs Awareness and so on) was an educational purpose
 Sport for sports sake – not charitable:
o Re Nottage – trust established for the purpose of perpetual trophy to be
awarded for winner of yacht race – not charitable
o Re Clifford – gift for the improvement of angling on the river Thames and
Cherwell – not charitable – merely for sports
o Re Dupree – Vaisey J held the object of the trust to be charitable which was
establish and fund a chess tournament – trial judge – while chess is of
educational value – later courts have to beware of the slippery slope.
  Private Schools: Most not for profit will be charitable - UK
o Independent Schools Council v. Charity Commission – public benefit
requirement? – such schools must provide public benefit over and above that
provided by educating their students – such benefit must be ‘more than a
token benefit’ to those who generally cannot afford – schools not obliged or
limited to offering bursaries and scholarships when meeting the public benefit
requirement – Ex: sharing facilities or teaching staff with state schools might
suffice = Provision for poor more than de minimis or merely token

 Personal Nexus test:

o Stricter view in the advancement of education. Verge v. Sommerville – gift for
the advancement of education will only qualify as charitable – benefit of the
public generally or appreciably important class of the public
o Lord Greene MR in Re Compton formulated the personal nexus test- gift
under which the beneficiaries are defined by reference to a purely personal
relationship to a named propositus, cannot in principle be a valid charitable
gift
o Oppenheim v. Tobacco Securities Trust Ltd, - Simmonds LJ – potential
number of beneficiaries must not be negligible and their entitlement to benefit
must not be contingent on their relationship with the settlor. In this case, the
trust for the advancement of education of employees and former employees –
potential beneficiaries more than 100,000 was held not charitable due the
personal nexus test
o Latimer v. Commissioner for Inland Revenue – discretionary trust for the
benefit of common descent of the maoris – breach of personal nexus test
o In Dingle v. Turner – Lord Cross noted decision in Oppenheim and Compton
were pretty obviously influenced by consideration of perceived fiscal immunity
o Irish case of Re Worth Library – Keane J – trust not charitable for
advancement of education – library expressed to be for use and benefit of
three named office holders in the hospital alone

Trust for advancement of Religion

 Clear Divergence in English (objective test ) and Irish Law (subjective test) in this
regard
 Irish approach given statutory recognition under Section 45 of Charities Act 1961 and
now Section 2(4) of the Charities Act 2009 – It shall be presumed, unless the
contrary is proved, that a gift for the advancement of religion is of public benefit
 English approach: From 1871 (Cocks v. Manners), - English courts – deemed gift to
contemplative order to be non-charitable. HoL in 1949 – Gilmour v. Coats – such gift
confer no public benefit – objective test
 Irish approach: Subjective test and charitable status of such gift – Maguire v.
Attorney General, and Re Sheridan was given statutory effect under S. 45. It
provided that:
o In determining a gift qualifies shall be conclusively presumed to confer public
benefit
o For avoidance of doubts to give effect of to the intentions of the donor – shall
be construed in accordanc with the laws, canons, ordinances and tenets of
the religion concerned
 What is religion? Keane: logical consequence that encouragement of any doctrine or
ritual which according to the tenets of particular religion , was for benefit of the
community, should also be charitable. The only necessary qualification – purpose
should neither be illegal nor immoral
 meaning of the term religion – Section 3(10) – gift not for advancement of religion if it
made to or for the benefit of a cult or an organisation:
 o principle object is amking profits
o employs oppressive psychological manipulation
 of its followers
 for the purpose of gaining new followers

Charitable purposes of benefit to the community

 Section 3(11) sets out other purposes
 Generally, the courts have adopted an approach of analogy to determining whether a
trust qualifies as a charitable trust under this fourth heading. Some judgements have,
however, indicated that a more flexible approach could be adopted. In Incorporated
Council for Law Reporting for England and Wales v AG (1972), Russell LJ suggested
that the test should be that if a purpose is shown to be of sufficient benefit or utility
to the community, it is prima facie charitable in law.

 In England, the courts appear to have adopted an objective standard. This is

evident in the National Anti-Vivisection Society v Inland Revenue Commissioners
(1948).1 In that case the society argued that it was entitled to tax relief on the basis
that its object, the total suppression of vivisection, was charitable. The court said that
the question was: “whether the court, for the purposes of determining whether the
object of the society is charitable may disregard the finding of fact that any assumed
public benefit in the direction of the advancement of morals and education was far
outweighed by the detriment to medical science and research and consequently to
the public health which would result if the society succeeded in achieving its object,
and that on balance, the object of the society, so far from being for the public benefit,
was gravely injurious thereto”.

In Ireland, however, some authorities that suggest a subjective standard is

appropriate. The seminal authority is Re Cranston (1898).2 The court in that case
had to decide whether gifts for certain vegetarian societies were charitable in nature.
The court held that the gift could be considered charitable and that the view of the
donor should be considered decisive in this context. It was stated that:
“… the benefit must be one which the founder believes to be of public advantage,
and his belief must be at least rational and not contrary either to the general law of
the land, or to the principles of morality”.

 Trusts for the relief of sick people and trusts for hospitals usually come in 4 th category
- Re Smith – private profiteering hospital was held non-charitable . Irish case of
Barrington’s Hospital v. Commissioner of Valuation – SC – presence of limited
number of fee paying patients did not detract from the charitable purpose of the
institution.

 In this jurisdiction, the most celebrated consideration of the public benefit question
under this fourth heading arose in the Re Worth case. The bequest in that case was
to provide a library for three persons: the physician, surgeon and chaplain of the
hospital. The bequest failed to satisfy the public benefit requirement because it was a
bequest to three people only. Keane J, however, then went on to consider whether
the gift could nonetheless in some way be regarded as being for the benefit of the
hospital generally and therefore charitable. Keane J concluded that it could be
regarded as charitable because the library would provide a “haven of quiet
intellectual relaxation for the beneficiaries”. He felt, therefore, that the bequest played
a role in the advancement of the charity represented by the hospital and for that
reason could be considered a charitable bequest under the fourth heading. Delany is
critical of this decision and argues that the result is not consistent with theoretically
1 [1948] AC 31.
2 [1898] 1 IR 431.
 strict requirement of public benefit that it is necessary to overcome. 3 She raises the
question of the rationale behind applying a stringent public benefit requirement and
suggests that it lies in the potentially undeserved fiscal advantages that such a gift
might enjoy if accorded charitable status. She suggests that the rationale of Keane J
in Re Worth in finding the trust to be charitable was to enable the court to apply the
property cy-prés rather than the issue of fiscal privileges. Delany concludes that even
if one was to accept that no more stringent a test as regards public benefit should be
applied to the trusts falling under the fourth heading than any other kind, the trust in
Re Worth would still not appear to meet such a threshold.

 In the recent case of National Tourism Development Authority –v- Coughlin (2009),4
Charleton J. considered whether a trust comprising of shares in a company which
owned and operated three golf courses in Kerry constituted a charitable trust within
the fourth category of the McNaughton classification as being beneficial to the
community by preserving the natural beauty of the area and promoting tourism.
Whilst Charleton J. noted that the golf course had resulted in the preservation of the
countryside from destructive and suburban development, it was primarily for the
benefit of the members only or those who could afford the green fees. He noted that
tourism had never been held to be a valid charitable purpose and in respect of the
community benefit, whilst the trust had elements of a charitable purpose for example
the profits were not distributed amongst the members of the company by way of
dividends but rather were put back into the golf courses so as to give effect to
improvements and provide better services, sport has never been recognised to be an
object of sufficiently wide benefit to the community as to enjoy charitable status. He
held that where there is exclusivity in terms of those who benefit from the trust, it is
an indication against charitable status and the more particular the benefit the less
likely it is to attain charitable status. Whilst it did achieve some level of preservation
to the local scenery and countryside, the primary subject matter of the trust was a
golf course. He concluded that this could not be the subject matter of a charitable
trust under ordinary circumstances; however, he noted that an expectation might
arise in respect of a trust established for the use of a golf course by members of the
army or persons with disabilities.

Political Trusts
 Generally, not charitable
 Section 2 of Charities Act 2009 – excluded bodies – a political party or a body that
promotes a political party or candidate. Exemption – charities which promote political
causes which relate directly to their charitable purpose
 Re Bushnell – testator left a sum for the advancement and teaching of socialist
medicine – held to have a political element and thus not charitable
 Two English cases of Bonar Law Memorial Trust v. IRC and Re Hopkinson, trusts for
British Conservative and Labour party respectively was held not charitable. Irish
equivalent Goff v. Gurhy- trust for Fianna Fail was held to be non-charitable
 organisations that wish to campaign prospectively for changes in the law
cannot be considered charitable trusts: English case of McGovern v. Attorney
General – Amnesty International sought to obtain charitable status by setting up
Amnesty International Trust. The objects of the trust were (i) the relief of needy
persons who were, or were likely to become, prisoners of conscience, and their
relatives; (ii) attempting to secure the release of prisoners of conscience; (iii) the
abolition of torture or inhuman or degrading treatment or punishment; (iv) research
into human rights and disseminating the results of the research. The trust failed on
the grounds that it was political.

3 Delany, op.cit, p 361.

4 [2009] 3 I.R. 549.
 o Although the objectives set out above would appear prima facie to be
charitable, the objects included putting pressure on foreign governments to
achieve the relevant objective. The court held that such a trust could never be
regarded as being for the public benefit in the manner which the court regards
as charitable. The court stated that trusts of which a direct or principal
purpose is either
 (i) to further the interests of a particular political party; or
 (ii) to procure changes in the laws of this country; or
 (iii) to procure changes in the laws of a foreign country; or
 iv) to procure a reversal of government policy or of particular decisions
of governmental authorities in this country; or
 (v) to procure a reversal of government policy or of particular
decisions of governmental authorities in a foreign country,
could never be considered to be charitable trusts.
 National Anti-Vivasection Society v. IRC, promotion of abolition of vivisection –
political and thus non-charitable
 Delany opines - This principle has been criticised on the basis that charities may
often be the natural bodies to suggest or campaign for changes in the law as it
relates to them, and the Law Reform Committee of the Law Society recommended in
a report in 2002 that “a charity should be able to advocate a change in the law of
public policy which can reasonably be expected to help it to achieve its charitable
purposes and be allowed to oppose a change in the law of public policy which can
reasonably be expected to hinder its ability to do so.

 Australian HC – Aid Watch v. Commissioner of Tax – primary objective to general

public debate on the effectiveness of foreign aid – held charitable. McGovern not
binding – no provision for excluding promotion of political objectives. Held charitable
under heading of 4th head of CIT v. Pemsel case – public welfare

Exclusive Charitable Trusts

 Under English law – charitable status – trust be wholly and exclusively charitable
o number of cases points that inclusion of even ancillary non-charitable objects
can lead to a trust being held as non-charitable
o Test of substance – Incorporated Council of Law Reporting case – lawyers
principle users of law reports and earn professional fee – did not defeat
charitable purpose
o Re Gower – gift to certain hospitals deemed charitable – notwithstanding the
provision of GBP 100 for an annual dinner for the trustees
o Attorney General of the Cayman Islands v. Wahr Hensen – trust constituted
for funds to be applied for religious, charitable or educational institutions. –
Privy Council – accepted that in certain instances, trusts drafted in general
terms with reference to a particular area had been impliedly limited to
charitable purposes – however not open to courts to construe the general
terms of the trust artificially so as to limits its remit – trusts were void
 Under Irish Law – Section 49(1) – where any of the purpose in a gift include both
charitable and non-charitable objects, its terms shall be construed or given effect so
as to exclude the non-charitable objects and the purpose shall accordingly be held
charitable

The Cy-Pres Doctrine

 Cy-pres – French word – as close.

 Where a valid charitable trust fails or becomes impossible or impracticable to carry
out, the doctrine of cy-pres becomes applicable. Under this doctrine – where trust is
 charitable – court may apply the gift to objects ‘as near as possible’ to the original
objects. The doctrine – only available where the orginal trust was for a valid
charitable purpose. Budd J in Re Royal Kilmainham Hospital – this principle is
applied where the method indicated by the donor of carrying out his charitable
intentions becomes impractical or cannot be executed literally, most frequently owing
to altered circumstances
 Requirement of General Charitable Intention:
o Re Rymer – testator left sum of money to the rector of a particular seminary
which closed down before the gift took effect. No general charitable intention
– but only specific
o Re Vernon’s Wills Trust – gift to Coventry and District Cripples Guild at a time
when it was being taken over by NHS= held gift could be applied cy-pres. No
lapse of charitable bequest if the gift is for the purposes of an institution rather
than an institution itself
o Re Jenkins – testator left residue of estate to seven charities and the eight to
Bristol Union of Anti-Vivisectionists. = Court refused to infer a general
charitable intention – Buckley J – ‘ if you meet seven men with black hair and
one with red hair, you are not entitled to say there are eight men with black
hair. A gift for non-charitable purpose is not made charitable by being
included in the list of other gifts which are charitable.
o Irish case for test: Re Trust of the Worth Library - The bequest in that case
was to provide a library for three persons: the physician, surgeon and
chaplain of the hospital. The bequest failed to satisfy the public benefit
requirement because it was a bequest to three people only. Keane J,
however, then went on to consider whether the gift could nonetheless in
some way be regarded as being for the benefit of the hospital generally and
therefore charitable. Keane J concluded that it could be regarded as
charitable because the library would provide a “haven of quiet intellectual
relaxation for the beneficiaries”. He felt, therefore, that the bequest played a
role in the advancement of the charity represented by the hospital and for that
reason could be considered a charitable bequest under the fourth heading
 Keane J – gift was undoubtedly an absolute and perpetual gift – for
this reason – could apply the doctrine of cy-pres when the hospital
ceased to exist, but must be applied is such a way that the original
intentions of the testator are adhered to as far as possible
o Buckley J – flexible approach in Re Lysaght – funds for medical studentships
to Royal College of Surgeons in England – one of the clause – qualifying
students must be male, sons of British born Doctors registered in the UK, and
not of Jewish or Roman Catholic faith. College refused to accept the bequest
in the terms set out – Buckley J – to insist on enforcing a discriminatory
clause would defeat the paramount intention of testatrix – trust would be
enabled by omitting the words – not of Jewish or Roman Catholic Faith
o Recent case – Re Jordan – Testator bequeathed four fifths of his estate to a
memorial fund in memory of his son which was never set up – the rest to
charity which wound up after will but before death of testator = court held
specific bequest – court cannot go beyond the true and real intent of the will =
decision of Re Lysaght – where discriminatory additions were ignored – no
general charitable intention expressed in this will
o Legislative reform –
 Common law – quite restrictive – could only be exercised where it
impossible or impractical to give effect to the wishes of the donor
 Section 47(1) of the Charities Act 1961 – broader parameters – where
diificulties in implementing the original terms or where more effective
use might be made by providing an alternative scheme
  Re Royal Kilmainham Hospital, Budd J – found that original purpose –
no longer be carried out according to the directions given and spirit of
gift – original purpose atleast in part had ceased to provide a suitable
and effective method of using the property available
 Representative Church Body v. Attorney General – S. 47 (1)
subsection 1 (e (iii)) – sale of collection of books kept in the old library
of St Canice’s Cathedral – plaintiff wished to sell them and use
proceeds for maintenance and repair of the Cathedral. = O’Hanlon J –
original purpose – ceased to provide a suitable or effective method or
using the property available – permissible to alter the original purpose
and to allow the property to be applied cy-pres – should be in the spirit
of the gift
 Recent case of Cheshire Foundation in Ireland v. Attorney General –
Laffoy J – 47(2) retains the established common law requirements
that a general charitable intention is an essential pre-requisite of cy-
pres doctrine
 More relaxed than initial common law approach

Non-charitable Purpose Trusts

 A purpose trust is a trust created for the fulfilment of a purpose, not for the benefit
of a person.
 With the exception of charitable trusts, these are normally not recognised and
enforced by the courts; most often because they have no beneficiaries, and
therefore nobody who can enforce the trust.

Objections to Recognising and Enforcing

A. Purpose Trusts Offend the “Beneficiary Principle”
Beneficiary principle: a trust must have a human beneficiary or human beneficiaries.

 Principle applied by: Morice –

o There must be someone in whose favour the courts can decree specific
performance.

 Strict approach taken in: Re Astors Settlement Trust

o Trusts for the co-operation between nations and the preservation of the
independence and integrity of newspapers fell foul of the beneficiary principle.

 Compromise approach: Re Denley’s Trust Deed

o Trust for land for the purpose of recreation for the benefit of employees of the
company and any other persons the trustees may allow upheld.
o Trust was one for the benefit of individuals.
o Where the benefit of a purpose trust is so indirect or intangible that
beneficiaries would not have the locus stand to apply to the court to enforce
their trust the beneficiary principle would apply to invalidate the trust.
o Where the trust though expressed as a purpose is directly or indirectly for
the benefit of an individual or individuals the beneficiary principle will not
apply.

B. Purpose Trusts are Vague and lack definition

Any trust which is couched in vague terms will not be recognised and enforced.

 Re Astors Settlement Trust

 o Trusts for the co-operation between nations and the preservation of the
independence and integrity of newspapers fell foul of the beneficiary principle:
 Purposes must be stated in phrases which define definite concepts.
 The means by which the trustees are to try to attain them must be
prescribed with a sufficient degree of certainty.

 The Trust in Morice v. Bishop of Durham – was deemed invalid on similar lines as the
trust was deemed to lack a sufficient degree of certainty

C. Purpose Trusts Offend the Rule Against Perpetual Trusts/Inalienability

 First two principles based on the principle that a trust should be capable of being
properly controlled and if necessary administered by the court.
 Rationale behind rule against perpetual trusts/inalienability is that property should not
be rendered inalienable (tied up for too long).
 Strict application of rule is trust is inalienable if property might remain inalienable for
21 years after the creation of the trust.
 The rule would not defeat the trust if the trust were expressed to last for so long as
the law allows.

 Mussett v Bingle
o Two gifts of money.
o The first to be used to erect a monument, the income from the second to be used
to maintain it.
o First gift upheld, second gift was void as it was perpetual in nature.

 Re Kelly
o Gift to be applied to the upkeep of testator’s dogs applied, but only for 21
years after the testators death and did not violate the rule against perpetuities,
even though theoretically the trust could have continued beyond 21 years.

 Section 50 of Charities Act 1961 – Every gift after the commencement of this Act for
provision, maintenance or improvement of a tomb, vault or grave or tombstone or
memorial to a deceased person, be a charitable gift provided the gift does not exceed
o Gift of income only of GBP 60 a year
o Any other case GBP 1000 in amount or value

Exceptions to the General rule that purpose trusts are invalid

Charitable trusts are an exception – for public benefit and add general comments

Exceptions – trust for non-charitable purpose

1. Trusts for the Erection/Maintenance of a Tomb/Monument
 Section 50 of Charities Act 1961 – Every gift after the commencement of this Act for
provision, maintenance or improvement of a tomb, vault or grave or tombstone or
memorial to a deceased person, be a charitable gift provided the gift does not exceed
 Gift of income only of GBP 60 a year
 Any other case GBP 1000 in amount or value
o Monetary limits have not been increased since 1961 and in 2000, LRC
recommends they be increased substantially.
• Because trusts for the erection/maintenance of a tomb/monument will virtually always
involve sums of money greater than those stipulated in the 1961 Act they will continue to
be treated as non-charitable trusts.
• Under this exception, it is necessary that such a trust is sufficiently certain and
complies with the rule against perpetual trusts/inalienability.

Mussett v Bingle
• Two gifts of money.
• The first to be used to erect a monument, the income from the second to be used to
maintain it.
• First gift upheld, second gift was void as it was perpetual in nature. Capital sum would
never be touched, only the income would be used.

Indirectly securing the purpose - Re Conner – gift to the General Cemetery Company of
Dublin to be applied to the maintenance of a grave in Mount Jerome Cemetery was upheld

2. Trusts for the Maintenance of Particular Animals

• A trust for the prevention/relief of suffering of animals is generally regarded as a trust for
a charitable purpose as a purpose that is of benefit to the community.
• Trusts for the maintenance of particular animals offend the beneficiary principle.

Re Dean
• A trust for a period of 50 years was upheld for the upkeep of the testator’s horses and
dogs, should any live that long.
• Court seemed to ignore the rule against perpetual trusts/inalienability and upheld it
provided it would not be for too long a period.

Re Kelly
• A gift applied for the upkeep of the testator’s dogs applied but only for a period of 21
years after his death.

Re Thompson - a trust to promote fox hunting was held to be a valid purpose trust

3. Gifts to Unincorporated Associations that advance/promote a non-charitable

purpose
 Unincorporated associations have no legal personality and therefore cannot own
property. However, equity has developed ways for money to be held on trust for such
organisations.
 An unincorporated association is. “two or more persons bound together for one or
more common purposes, not being business purposes, by mutual undertakings each
having mutual duties and obligations, in an organisation which has rules which
identify in whom control of it and its funds rests and on what terms and which can be
joined an left at will. The bond of union between members of an unincorporated
association has to be contractual (Conservative and Unionist Central Office v Burrell,
Lawton LJ)

 Generally, gifts to unincorporated associations will be void as it lacks the legal

identity to receive it

 Unincorporated associates were one considered an exception to the general principle

of invalidity of non-charitable purpose trusts. However, this was rejected in Leahy v
AG for New South Wales in which property left on trust for an order of nuns
(unincorporated association) was held to be void as it was a non-charitable purpose.

 However, In Re Denley’s Trust - if the trust can be considered to be for the direct or
indirect benefit of the members, those members will be in a position to enforce and
 thus outside the scope of beneficiary principle. It will be considered a valid express
trust for the benefit of members provided that it did not breach rule against
perpetuities

 Problem that if member were to leave association he could take his share of the
property with him and new members would not have an interest in the property
addressed by:
Madden
• “It may be a gift to the existing members subject to their respective
contractual rights and liabilities towards one another as members of an
organisation”
• Member cannot sever his share in such a case, it will accrue to the other
members even if such members became members after gift took effect.

Implied/Resulting Trusts
 Under a resulting trust, the beneficial interest of the trust property reverts to the
testator or his estate based on his presumed intention.
o Sometimes called implied trusts because they are presumed to arise as a
result of the settlor’s implied intention.
o Arise where there has been an apparent gift of property.
o Arise where an express trust has failed to dispose of the trust property.

 In Re Vandervell’s Trusts (No. 2)1 Megarry J recognised two categories of

resulting trust:
o the automatic resulting trust - Where a transfer to B is made on trusts
but some or all of the beneficial interest is not disposed of. Here, B
automatically hold on a resulting trust for A to the extent that the beneficial
interest has not been carried to him or other. The resulting trust does not
depend on any intentions or presumptions, but is the automatic
consequence of A’s failure to dispose what is vested in him;
o the presumed resulting trust - Such trusts arise where A voluntarily
transfers property to B who gives no consideration, it is presumed that A
did not intend to make a gift of the property to B. It is presumed that B
holds the property on a resulting trust for A unless such presumption is
rebutted.

Westdeutsche Landesbank Girozentrale v Islington Borough Council [1996] AC

Lord Browne-Wilkinson cast doubt on Megarry J’s conclusion that some trusts
(automatic) do not depend on intention but operate automatically.
 He opines that automatic trust is only a presumption which can be easily rebutted by
either making a counter presumption of advancement or by direct evidence of A’s
intention to make an outright transfer.
 He adds that both resulting trusts are examples of trusts giving effect to the common
intention of the parties. A resulting trust is not imposed by law against the intentions
of the trustee but gives effect to his presumed intention.

Automatic Resulting Trusts:

This may arise due to:

1. Failure for lack of certainty of objects

 In Vandervell – there was an ineffective declaration of trust of an option to purchase
the shares, the beneficial interest in the option resulted back to Vandervell on
automatic resulting trust and he was obliged to pay the surtax on dividends.
  Lord Wilberforce - ‘the conclusion on the facts found, is simply that the option was
vested in the trustee company as a trustee on trusts, not defined at the time, possibly
to be defined later. But the equitable, or beneficial interest, cannot remain in the air:
the consequence in law must be that it remains in the settlor'.

2. Failure to exhaust the beneficial interest

 a trust does not often fail completely but a situation may quite frequently arise
where there has been an incomplete disposal of the beneficial interest under a
trust.
 Even though it may appear at the time a trust instrument or will is executed that
this interest has been fully disposed of, subsequent events may occur, or fail to
occur, which may change this position.
 Re Lane’s Trust – a trust of £1000 for the benefit of testators children was held on
resulting trusts by the administrator and executor where there were no surviving
issues.
 No resulting trust - Re Andrews Trust - a trust was created for the education of a
deceased clergyman’s children. the deceased’s friends contributed to it. After the
children had completed their formal education there was a surplus in the fund.
Kekewich J held that ‘the surplus should be divided equally (“equality is equity”)
among the children, i.e., no resulting trust in favour of the contributors automatically
arose.
o Relying on an earlier decision in Re Sanderson’s Trusts, Wood VC : “If a
gross sum be given, or if the whole income of the property be given, and a
special purpose be assigned for that gift, this Court always regards the gift as
absolute, and the purpose merely as the motive of the gift, and therefore
holds that the gift must take effect as to the whole sum or the whole income,
as the case may be.”
 In Re Osoba - a testator bequeathed property to his widow on trust to be used
“for her maintenance and for the training of my daughter up to the University
grade and for the maintenance of my aged mother…” When he died, his mother
was already dead and his wife died shortly after him. When his daughter finished
university, there was a surplus of funds and the question arose as to whether the
funds resulted to the testator's estate. The testator had children from a previous
marriage who sought to claim their portion of the surplus.
o Megarry VC stated that you must look at who the testaotor intended to
benefit. If they are dead, then a resulting trust should arise in favour the
testators estate. However, if they are still alive, “the major purpose of
providing help and benefit for the beneficiaries can still be carried out even
after the stated means have been accomplished.” The specified purpose
should be merely regarded as an expression of his motives and no
resulting trust

3. Failure for illegality

 Ayerst v. Jenkins – man married deceased wife’s sister which was illegal at the time.
He transferred certain properties as a marriage settlement and after his death –
representatives sought to set it aside. Rejected by HOL – trust fully effectuated and
not implement any illegality

4. Failure for surplus of funds voluntarily subscribed

 Re Gillingham Bus Disaster Fund [1958]- a number of marine cadets had been
injured or killed in a bus crash. the mayors of three towns appealed for
contributions to a fund that would benefit those injured and provide a memorial to
those killed. The funds comprised mainly of anonymous donations; and more
money was collected than was needed.
 o Harman J held that a resulting trust in favor of the contributors. he
recognised the inconvenience of such a finding. however, he noted that
each contributor had intended to contribute to a specific purpose and once
that purpose was attained or no longer attainable each contributor had an
interest in a resulting trust. Accordingly, he rejected the Crown's Claim to
the surplus as being bona vacantia (property that is unclaimed or that has
no known owner).
 A different approach was taken by Goff J in Re West Sussex Constabulary’s
Widows, Children and Benevolent Fund Trust [1971] - the fund comprised
 the proceeds of fund-raising ventures
 collection box proceeds
 donations and legacies.
Goff J held that gifts in the first two sources of income went as bona vacantia to
the Crown, as they represented absolute gifts. However, gifts in the third category
were to be held on an automatic resulting trust for the donors or their estates.
 Re Buckingham Constabulary Widows case - the principle of equal distribution is
favored in the English jurisdiction where the question is raised on the associations
assets and not on individual contributions.
o Case where court held that no resulting trust arose in favour of members that
paid money in return for the protection of widow. Surplus assets went to the
Crown bona vacantia
 Irish approach – based on contributions in Tierney v. Tough
o Equal distributions as division on contribution made by every member would
be an impossible task – Feeney v. MacManus

5. Quistclose Trusts
 Where money is lent to a debtor for a specific purpose and the funds are used for a
purpose other than that agreed or it is no longer possible to use the money for that
purpose, the money will be held on automatic resulting trust for the creditor.
 Delany notes that considerable debate has surrounded the manner in which the so
called Quistclose trust should be classified. While it may be considered to be a form
of express trust, the secondary trust that may arise in certain circumstances can be
classified as an automatically resulting trust.
 HoL - Barclays Bank Ltd v. Quistclose Investments LtD
o Rolls Razer declared a dividend to shareholders that they couldn’t meet and
so borrowed a sum of money from Quistclose – expressly agreed for this
prupose only and held in separate account with Barclays Bank – on
liquidation both Barclays and Quistclose claimed money
o HoL – money had been paid into the account on trust for the prupose of
paying the dividend, and since that purpose could not be carried out, it was
held on a resulting trust for Quistclose.
o Lord Wilberforce “….when the money is advanced, the lender acquires an
equitable right to see that it is applied for the primary designated
purpose….when the purpose has been carried out (i.e. the debt paid) the
lender has his remedy against the borrower in debt: if the primary purpose
cannot be carried out, the question arises if a secondary purpose (i.e.
repayment to the lender) has been agreed, expressly or by implication: if it
has, the remedies of equity may be invoked to give effect to it, if it has not
(and the money is intended to fall within the general fund of the debtor's
assets) then there is the appropriate remedy for recovery of a loan….In the
present case the intention to create a secondary trust for the benefit of the
lender, to arise if the primary trust to pay the dividend could not be carried
out, is clear and I can find no reason why the law should not give effect to it.”
  In Twinsectra Ltd. v. Yardley12 Lord Millet held that: ‘It is well established that a
loan to a borrower for a specific purpose where the borrower is not free to apply the
money for any other purpose gives rise to fiduciary obligations on the part of the
borrower which a court of equity will enforce.’
 In Re McKeown – Applicant loaned money to McKeown to pay fees and costs who
was awaiting an arbitration award. Once that was received, loan would be repaid –
but went bankrupt before receiving – applicant sought declaration that the Official
Assignee held the sum of the loan on trust for him. Court upheld – it was sufficient
that the money had been loaned for a specified purpose and the purpose had been
made clear from the outset despite the fact none of the language usually used to
create a trust had been used
 Recent decision Bieber v. Teathers Ltd – held that before Quistclose trust can arise,
it must be demonstrated that the monies transferred were to be for particular purpose
and not form part of general body of assets of recipients. In this case, the original
investment was stipulated to be for ‘profitable’ purposes, and such Quistclose could
not arise.
 Harlequin Property v. O’Halloran – endorsing Bieber case and the explanation by
Thomas and Hudson in ‘The Law of Trusts’ – court held that payment made by the
plaintiff for the purpose of developing a hotel resort in the Caribbean were not limited
to ‘use for a specific purpose and no other purpose’.

Presumed resulting trust

o A presumed resulting trust arises where it is presumed that the donor did not intend
to dispose of his entire beneficial interest in the property. The property will be held
on resulting trust for the donor.
o Where the ownership of property is transferred to a grantee who gives no
consideration, an inference arises that the grantee holds the property by way of a
resulting trust for the grantor where there is:
o Voluntary conveyance or transfer
o Purchase in the name of another.

However, it must be stressed that this is only a presumption which can be rebutted by
evidence that a contrary result was intended. It can also be displaced by the presumption
of advancement, which involves the inference being drawn that a gift of property was
intended rather than that it should be held on a resulting trust because of the relationship
between the parties.

Presumption of Advancement

o Where a distinct and definable obligation rests on one person to provide for another,
and the person so obliged transfers the property to the person to whom he owed a
duty, then the court will presume that no resulting trust but a presumption of
advancement – Shephard v. Cartwright
o Murles v. Franklin – Lord Eldron referred to the presumption as being one which
arises where the transferor ‘is under a species of natural obligation to provide for the
nominee’ This includes voluntary conveyance to a wife or child of the donor (father to
child only) or someone to whom the donor stands in loco parentis.
o The presumption of advancement can be rebutted by evidence that shows the
donor did not intend to benefit the done
o Husband and wife –
o General presumption that transfer of property from husband to wife –
Finlay P in W v. W and Keane J in JC v. JHC
 o Father and Child –
o Shephard v Cartwright [1955] AC - where a man purchases shares,
and they are registered in the name of his child, there is no resulting
trust, but a presumption of advancement’. However, If a wife transfers
property to her child or purchases property in the child’s name, there is no
presumption that she intended to make a gift to him/her. exception: the
presumptifon of advancement arises only if she had assumed the father’s
obligation to provide e.g. in the cases of single mothers, or widowed
mothers.
o The presumption also applies where the donor or purchaser of property
stands in loco parentis to the person in whose name this property is held
or bought. so if a person is in locus parentis to a child and voluntarily
transfers property to him, it is presumed that he intended to make a gift of
the property to the child. Bennet v. Bennet
o Delany notes that this may not stand in modern times with the constitutional
guarantee of equality

o Rebutting the presumption –

o RF v. MF – presumption held to be rebutted where a wife refused to live in a
house purchased by her husband unless it was put in their joint names. The
husband did so but the wife still refused to live in the house. The presumption
that the husband intended the wife to hold 50% of the beneficial interest in the
house was rebutted due to the course of the dealings. Henchy J said that on
the facts it was clear that the man would never have agreed to the transaction
if his wife had not promised to live in the house.
o Anson v Anson [1953]
 Court looked at the intentions of the parties. It was not intended to be
a gift.
 A transaction of this nature (a husband guaranteeing a debt owed to
a bank by his wife) cannot be presumed to be an advancement unless
the donor makes it clear to the donee at the time of making the
guarantee that he does not expect to be reimbursed. it was held that
the presumption of advancement was rebutted, as the husband had
made it clear to his wife that he did not intend to ultimately relieve her
of her debt.
o Pecore v. Pecore – SC of Canada – case of joint accounts – person must
prove rebutting the presumption on the balance of probabilities that he did not
intend to gift to his wife.
o Sekhon v. Alissa – English case – rebut transfer of property between mother
and daughter. Where mother contributed significantly for purchase by
daughter. Considering the intentions and came to conclusion that mother did
not intend to create entire beneficial interest
o Illegal acts –
 Re Emery’s Investment Trust – to evade tax
 Gascoigne v. Gascoigne – avoid credits
 Both cases – could not consider evidence – improper purpose
o Not for relationship of commercial nature – Fitzpatrick v. Criminal Assts
Bureau

Nature of Evidence Admissible to Rebut Presumption

Prior Acts or Statements
 O’Brien v Sheil:
 o ‘declarations of the transferor, subsequent to the advancement, if they are not so
connected with it as to be reasonably regarded as contemporaneous, cannot be
evidence to rebut the presumption of advancement’.
 Most important authority in this area is the decision of the HOL in Shepherd v
Cartwright.
o The deceased father had transferred shares in a company to his children.
o The father subsequently dealt with the shares, at one point crediting the profits of
these dealings to a bank account in the children’s names.
o However, he later appropriated these funds to his own purposes.
o HOL held that the father’s conduct after allotting these shares could not go to
prove that he had not intended to make an advancement to his children and laid
down a number of important general principles in this regard.
 ‘the acts and declarations of the parties before or at the time of the
purchase, or so immediately after it as to constitute a part of the
transaction, are admissible in evidence either for or against the party
who did the act or made the declaration.
 It has been held that subsequent acts and declarations may only be
admissible as evidence against the part who made them, and not in his
favour. ‘

• These principles were followed in this jurisdiction in RF v MF, the Supreme Court
further noting that; evidence of subsequent acts and declarations by the transferee
can be admitted against him in order to enable the transferor to rebut the
presumption of advancement.

▫ Thus, A transfers property to son, B. One week later both A and B say to C
that gift wasn’t intended - Authorities establish that A may not rely on his own
statement, but may rely on B’s to rebut the presumption and vice versa.

Joint accounts
 Presumed resulting trust where there has been a transfer of property by one party
into an account held jointly
 Owens v. Greene – deceased made two deposits jointly– one with Pat Freely and the
other with Michael Owens – question whether these named persons took the
respective sums on survivorship or held on trust for the testators estate.
o SC – case of an incompletely constituted trust – property held on resulting
trust for the benefit of testators estate. Deceased never intended to make
money in the joint accounts as immediate gift
 However, in Lynch v. Burke and AIB – the decision in Owens was overturned – in this
case – deceased opened a deposit accopunt with her niece and the account was
expressly made payable only to the deceased. On her will, she left all her property to
the executrix (plaintiff) – plaintiff sought declaration that niece (Ms Burke) held the
monies on resulting trust for her benefit.
o O’Flaherty – placed emphasis on the part that the money in the account could
only be part of the estate if the plaintiff could prove that there was an
equitable obligation on Ms Burke which made her a trustee of the money
which prima facie she was taking under the right of survivorship.
o In this case, because there was voluntary transfer, without consideration,
without an express trust, without circumstances giving rise to presumption of
advancement – therefore a prima facie presumed resulting trust arose.
o However, presumption of resulting trust was rebutted by evidence that the
intentions of the deceased were inconsistent with the presumption. In
essence, the concept of resulting trust is a creation of equity to defeat the
 misappropriation of property of fraudulent purposes, it would be paradoxical if
the doctrine was allowed to defeat the clear intention of the donor
o This decision was welcomes as Delany notes that it laid to rest the
paradoxical decision in Owens.
 This decision was recently upheld in O’Meara v. Bank Of Scotland – where a bank
intended to set off monies owed by the plaintiffs husband in the joint account held by
husband and wife. A surviving joint account holder – she became entitled to the
balance
 Talbot v. Cody – man lodged sum of money in number of joint accounts in the name
of himself and wife, held that wife was entitled as survivor
 Colohan v. Condrin. – not rebutted by the fact that the name of husbands brither was
included on the deposit receipt.

Trusteeship

 The office of trustee is an extremely onerous one and there are significant obligations in
terms of the duties of a trustee and the powers and liability of a trustee.
o The overriding principle is that trustees must act bona fide and in the best
interests of the trust at all times.
 In Ireland, the office of trustee is still governed largely by the Trustee Act 1893.
 Any person may be appointed a trustee in this jurisdiction, even a minor.

 Although trustees are bound by many duties and obligations, they enjoy very few rights.
 They are not entitled to profit from their position as trustee.
o They may be entitled to remuneration for their work, but only if the terms of the
trust provide for such.
 Generally, therefore, trustees fall into two broad categories:
o family trustees where they feel obligated to take office by reason of a family or
personal loyalty;
o professional trustees such as banks, solicitors or other financial institutions.
 Such persons will usually only agree to become a trustee if there is
provision in the trust for their remuneration.
 A trust may continue for a long period of time, and so provision has to be made for the
appointment, removal and retirement of trustees.

In relation to the appointment, retirement and removal of trustees it is vital that candidates
not only refer to case law in their answer, but also the statute.

Appointment of trustees
1. Trust instrument
 The first trustees are usually appointed by the settlor or testator in the trust instrument
 The power to appoint new or additional trustees may be exercised by persons nominated
for that purpose in the trust instrument.
o The settlor does not have any power to subsequently appoint either himself or
another as trustee.
o This is because once the trust is declared, legal ownership vests in the trustees.

2. Statutory Power
 There is also a statutory power to appoint trustees under s 10 of the Trustee Act 1893.
Where:
o a trustee is dead,
o remains out of the jurisdiction for more than 12 months,
 o desires to be discharged from duties,
o refuses to act or
o is unfit to act or incapable of acting.
 Power is to replace an original or substituted trustee only
 Can be exercised by the person who enjoys the power of appointment under the trust
instrument.
o If there is no such person or such a person is unable to act, then the power may
be exercised by the surviving trustees.
 Section 10(1) requires that the appointment be made in writing.

3. Courts
 Section 25 of the Trustee Act 1893 confers a power on the court to appoint a new
trustee whenever it is expedient to do so and would be “inexpedient, difficult or
impracticable so to do without the assistance of the court”.
o Since the power under s 10 only permits appointment of replacement trustees
and does not allow appointment of additional trustees, the court’s power under s
25 will have to be relied upon if it is sought to appoint an additional trustee in
circumstances where there is no express power of appointment in the trust
instrument.

Retirement of trustees
 A trustee may disclaim his appointment and refuse to take up office at the outset.
 However, once a trustee has been appointed and has failed to disclaim the office within
a reasonable time then there are only limited circumstances in which he can retire;
o If there is an express clause in the trustee instrument allowing him to do so.
o If he receives the consent of all the beneficiaries, provided that they are sui juris
[of age] and between them entitled to the entire beneficial interest in the trust
property.
o Section 11 of the Trustee Act 1893 provides that where there are a number of
trustees, a trustee may retire if the co-trustees and any person who has power to
appoint trustees under the trust consent.
o Finally, a trustee could also seek the assistance of the court under s 25 of the
Trustee Act 1893

Removal of trustees
 A trustee can be removed from office;
o if there is an express power provided for in the trust instrument.
o by the beneficiaries, provided they are all sui juris and between them are entitled
to the entire beneficial interest in the trust property.
o by the courts under s 25 of the Trustee Act 1893 which allows the court to
appoint a new trustee where an existing trustee refuses or is unfit to act.

 The court also has an inherent jurisdiction to remove a trustee.

o Arnott v Arnott
o It was stated that this jurisdiction will generally be exercised where a trustee acts
dishonestly or incompetently or wilfully obstructs the objects of the trust.
o Defendant was removed from the position of trustee where her persistent non-
cooperation rendered the trust virtually unworkable

o Moore v McGlynn
 o The court held that it would also exercise this jurisdiction where there was a clear
conflict of interest between the trustees’ personal interests and the
interests of the trust.
o In this case the defendant was trustee of a business for the benefit of the family
of his deceased brother.
o He set up a rival business in competition with the family business.
o The court held that it would be improper for the trustee to continue in opposition
where his personal interests and his duty to the trust might conflict.

 The courts have consistently emphasised that the guiding principle at all times as
regards the removal of trustees must be the welfare of the beneficiaries.

 This was recognised by the court in Arnott and confirmed in Spencer v Kinsella
o Showgrounds were vested in trustees to be used as sports grounds or park or
pleasure grounds.
o The users of the lands sought to have the trustees removed on the basis that
they were allowing the lands to fall into disrepair.
o Barron J found in their favour on the basis that it was essential to the welfare of
the beneficiaries that the trustees be removed.

Powers and duties of trustees

 At the outset, a distinction must be drawn between the duties and powers of a trustee.
o Equity requires strict performance of trustees’ duties.
o Powers, however, are discretionary in nature and so there is no obligation to
exercise a power as such.

Duties;
1. Duty to properly exercise discretion
 If a trustee enjoys discretion in the performance of a duty or the exercise of a power, he
is duty-bound to exercise such discretion properly.
 Basically, this means that, in exercising his discretion, the trustee must (i) take into
account all relevant considerations and (ii) ignore all irrelevant considerations when
exercising their discretion.
 This principle was set out in Re Hastings-Bass
o “[w]here by the terms of a trust ... a trustee is given a discretion as to some
matter under which he acts in good faith, the court should not interfere with his
action notwithstanding that it does not have the full effect which he intended,
unless;
1. what he has achieved is unauthorised by the power conferred
upon him,
2. it is clear that he would not have acted as he did (a) had he not
taken into account considerations which he should not have
taken into account, or (b) had he not failed to take into account
considerations which he ought to have taken into account.”

 In Hasting-Bass the court said that it would only interfere where it is shown that the
trustee’s decision would have been different.

 Since that decision a more flexible interpretation of the principle has been adopted by the
courts and a test has been applied which looks at whether the trustees might have acted
differently, as opposed to whether they would have acted differently.
o Abacus Trust Co. (Isle of Man) v Barr
 o In that case a settlor had asked the trustees to exercise a power of appointment
and create a discretionary trust of 40 per cent of the trust fund.
o The message was mistakenly conveyed with the effect that the trustee appointed
60% of the fund.
o The court held that the rule in Re Hastings-Bass did not require that a mistake
be fundamental; rather, the rule required that it be established that there was
some unconsidered relevant consideration that would or might have affected the
trustee’s decision.
o However, he rejected the settlor’s argument that any mistake on the part of the
trustee suffices;
 ‘what has to be established is that the trustee making his decision…. has
failed to consider what they were under a duty to consider”
 In this case, this was established by their failure to check the
accuracy of the information they received as to the percentage of
the fund that was to be used to create a discretionary trust.
 Martin comments that it would appear that Lightman J in the decision
imposed a new condition for the application of the rule

 In Greene v Coady – while holding the trustees in this case to have acted honestly,
reasonable and at all times in good faith for the best interests of the beneficiaries –
“Court should avoid the temptation to listen to the evidence and to make its own
conclusion as to what should have been done by the trustees…..the hot seat of the
trustee is where the court should place itself and on the basis of what the trustee knew or
ought to have known and should look at the decision informed by the same material and
relevant considerations that were properly to have been then considered…Trustees must
take all relevant matters into account; trustees must exclude all irrelevant matters;
trustees must direct themselves properly in law and in interpreting the provisions of a
trust deeds and rules”

2. Duty not to profit from the trust

This is regularly examined.
 This stems from the fundamental principle that a fiduciary may not profit from their
position.

(a) Remuneration and Expenses

 A distinction can be drawn between recovering expenses and being remunerated.
 A trustee can recover for legitimate expenses such as agent fees and litigation costs.
o S 24 of the 1893 Act provides that a trustee ‘may reimburse himself, or pay or
discharge out of the trust premises all expenses incurred in or about the
execution of his trusts or powers’.
 However, since the position of trustee is a voluntarily, a trustee may only claim
remuneration if he has a specific entitlement to it.
 Despite this, the court has an inherent jurisdiction to order that a trustee be remunerated.
o Boardman v Phipps
o Where the court awarded significant remuneration to the trustees for their
services which had resulted in a large profit for the trust.

 Special considerations arise as regards solicitor-trustees.

o Cradock v Piper
o Court laid down the rule that a solicitor-trustee may only charge costs if has acted
for a co-trustee as well as himself provided that the expenses would have been
the same regardless of his involvement.

(b) Purchase of Trust Property

 There is a general principle that trustees may not purchase the trust property from
himself as he would essentially be both the vendor and purchaser – this is known as the
self-dealing rule.
o Transaction will be voidable at the option of the beneficiary.
o Kane v Radley-Kane
o Court applied the rule by analogy to a situation where a widow, who was the sole
administatrix of her husband’s estate, appropriated £50,000 worth of shares in
satisfaction of the statutory legacy to which she was entitled on her husband’s
intestacy.
o She did this without the consent of her stepsons, who were entitled on intestacy
subject to her rights.
o It was held that the appropriation of the shares breached the self-dealing rule and
was equivalent to a purchase of trust property by a trustee.
o It was held that she held the shares and their proceeds on constructive trust for
the estate.

 Holder v Holder; a more flexible application of the rule is evident.

o In this case an executor purported to renounce the position of executorship, but
the renouncement was invalid.
o He took no further part in the administration of the estate and subsequently
purchased some land belonging to the estate of which he had previously been a
tenant.
o The Court of Appeal, in holding that the transaction was not voidable, relied on
the following facts;
 the executor had not interfered with the administration of the estate;
 there was no conflict of interest and duty because the beneficiaries were
not looking to him to protect their interests; and
 any special knowledge he had about the property was acquired as tenant
and not as executor.
o Biehler;
 “it would be fair to say that the circumstances of this case were
exceptional and it would be incorrect to assume that this decision marks
the beginning of any general trend towards a watering down of the self-
dealing rule.”

 Equity takes a less stringent approach to a purchase by a trustee of a beneficial interest

in trust property.
o Tito v Wadell
o “If a trustee purchases the beneficial interest of any of his beneficiaries, the
transaction is not voidable ex debito justitae, but can be set aside unless the
trustee can show that he has taken no advantage of his position and has
made full disclosure to the beneficiary, and that the transaction is fair and
honest.”

 Accordingly, the onus is on the trustee to establish that he gave full value and that all the
information was put before the beneficiary.
 This point was made by Costello J in Smyth v Smyth
o Costello J confirmed that the onus of proving that the transaction was bona fide
rested on the defendant and the court was required to examine the surrounding
circumstances with a view of ascertaining whether there was any unfair
advantage obtained by the defendant
o However he concluded that there was no obligation on the trustee to ensure that
the plaintiff received independent legal advice nor was he under a duty to obtain
an independent valuation.
 o In this case, price was fair and transaction not set aside.

(c) Duty not to be in competition with the trust

 One of the most common ways in which this can arise is where the trustee enters into
business in competition with the trust.
o Re Thompson
o Held that an executor of a will could not set up a business in competition with
deceased’s yachting business.
o Moore v McGlynn
o Held a business on trust for the benefit of the family of his deceased brother.
o Set up a rival business in competition with the family business.
 ‘I am not prepared to hold that a trustee is guilty of a breach of trust in
setting up for himself in a similar line of business in the neighbourhood,
provided that he does not resort to deception, or solicitation of custom
from persons dealing at the old shop’.
o However, he went on to hold that ‘the trustees new position disqualifies him from
remaining any longer a trustee’.

 Recent case of Green v Coady

o “Trustees are not entitled to out themselves into a situation of conflict of interest
whereby they may be influenced by how they themselves make profit from any
decision which the body of trustees make.’

3. Duty to Safeguard Assets of the Trust

This is regularly examined. Pay particular attention the nature and scope of the power to
invest and to the issue of ethical investments.
 This duty is one of the most onerous placed upon a trustee.
 Failure to institute and prosecute legal proceeding to recover a debt owed to the trust
may constitute a breach of this duty.
 Re Brogden
o Liability was imposed on a trustee to a marriage settlement where they took steps
to ensure that a sum owing was paid but they stopped short of instituting
proceedings as they feared that this would have an adverse effect on the family
partnership
o The court stated that when the trust is owed money the trustee is bound to take
every step to secure payment, irrespective of the personal feelings within the
family.
o The court stated that a trustee would only be exempt from bringing a legal action
to recover money owed to the trust where he believed that such an action would
fail.

 If, however, a trustee brings a legal action on behalf of the trust that is unsuccessful, the
onus is on him to show that the action was reasonably necessary.
o A trustee will only be indemnified for costs that are properly incurred.

o Re Beddoe
o Court emphasised that the test of whether a trustee should have brought and
action is an objective one.
o While a court will not make a trustee personally liable for a mere error in
judgement, a trustee must have a reasonable belief that litigation is necessary.
o The courts have said on numerous occasions that a trustee would be advised to
seek authority of the court prior to initiating any legal action on behalf of the trust.
4. Duty to Invest
 The duty to invest is a specific example of the general duty to safeguard the trust
property.
 A trustee must invest with a view to providing an income for those beneficiaries with a life
interest in the trust but also with a view to ensuring a capital appreciation for those
beneficiaries with a remainder interest.
o In other words, he must act impartially and with a view to the interests of all the
beneficiaries.
 Having said that, there is no obligation on trustees to consult beneficiaries as to possible
investments; and they are not bound in any way to act in accordance with the
beneficiaries’ wishes.

(i) Scope of the power of investment

 The trust instrument may either give the trustee a specified power of investment or he
may select investments authorised by law.
 One type of investment clause which is commonly included in the trust instrument is one
which gives trustees power to invest in such investments as they think fit.
o Re Harari Settlement Trusts
o The court held that such a clause empowered the trustees to invest in any
investments which they honestly thought were desirable.

 The statutory power of investment is provided for by the Part 1 Trustees Act 1893;
o Trustee (Authorised Investment) Act 1958, SI No 28 of 1998 introduced a
number of variations to the list, and further amendments were made by the
Trustee (Authorised Investments) Order 1998 (Amendment) Order 2002 set
out the current list of authorised investments
o s 2 of the Act permits variation of this list by the Minister of Finance

(ii) Standard of care

 Even where the trustee remains within the boundaries set by statute and the trust
instrument, he must nonetheless observe certain standards in carrying out his duties in
this regard.
o Re O’Connor –
o However limited the power of investment may be, the trustee remains subject to
the jurisdiction of the Court. The trustee has no power to act dishonestly,
negligently or in breach of trust to invest on insufficient security.

o Learoyd v Whitley –
o Held that, in exercising his duty to invest the trustee must exercise the care that
an ordinary prudent man of business would exercise in making investments, not
only on his own behalf, but also on behalf of those for whom he felt morally
bound to provide.
 Delany notes that this line of authority would appear to suggest that ‘the degree of
care which a trustee would take as regards his own investments is insufficient and a
greater degree of care is required as regards the trust property.’
 However, a more flexible approach can be seen in more recent decisions.

o Bartlett v Barclays Bank Trust Co. Ltd –

o "The cases establish that it is the duty of a trustee to conduct the business of the
trust with the same care as an ordinary prudent man of business extend towards
his own affairs’
o Court stated that this does not mean “that the trustee is bound to avoid all risk
and in effect act as an insurer of the trust fund….
  …The distinction is between a prudent degree of risk on the one hand,
and hazard on the other.
o Nor must the court be astute to fix liability upon a trustee who has committed no
more than an error of judgement, from which no business man, however prudent
can expect to be immune.”
 In that case, Brightman J also recognised that professional trustees with particular skills
and experience will be judged by a higher standard.

 It seems that in practice, it will be difficult for a beneficiary to succeed in a claim based
on poor investment choices, even against professional trustees, particularly where the
fault lies in being too passive.
o Nestle v National Westminster Bank Plc
o Court held that although the trustees had failed to appreciate the scope of their
investment power and also had failed to conduct regular reviews, the beneficiary
had not proved that these failures had resulted in wrong investment decisions.
o The Court of Appeal found that the investments fell “woefully” short of maintaining
the real value of the fund and disagreed with the trial judge that it could be said
that the bank acted conscientiously.
 Despite this view, the court said a failure to maintain the value was not in
itself a breach of trust because to hold trustees to such a standard would
be impossible since it requires both skill and luck.
o The case illustrates that a trustee who is guilty of a mere error of judgement is
unlikely to be held liable for breach of duty of care.

 There is a similarly generous example in the Irish decision of Stacey v Branch

o Beneficiary brought a claim alleging that a trustee breached his duty by leaving
the trust property in the care of a caretaker for 14 years rather than renting it out
and thus failing to receive a substantial rent income.
 While Murphy
 J doubted that “any competent valuer or other expert would have recommended or
 approved the course adopted by the trustee”, he concluded tha
o While Murphy J doubted that “any competent valuer or other expert would have
recommended or approved the course adopted by the trustee”, he was satisfied
that the defendant’s decision was one made bona fide in the exercise of his
discretion and dismissed the plaintiff’s claim.

o He noted that a trustee must

 “take such care as a reasonably cautious man would take having regard
not only to the interest of those who are entitled to the income but to the
interest of those who will take in the future.”
o Additionally, Murphy J echoed that the standard required of trustee to invest was
that he must
 ‘act honestly and use as much diligence as a prudent man of business
would exercise in dealing with his own private affairs’.
o Murphy J continued that although businessmen of ordinary prudence frequently
select investments of a speculative character- it is the duty of the trustee to avoid
all such investments of that class that are ‘attended with hazard’. (in addition to
confining to investments permitted by statue or trust instrument).
o While Murphy J did not elaborate on what investments are to be considered as
investments with hazard, his comments leave no doubt but that the court will be
loath to find a trustee in breach of his duty to invest merely because he was
somewhat over-cautious in his dealings with the property.
  Biehler has lamented that on the authority of Stacey and Nestle it is very difficult to
establish there had been a breach of trust for the lack of ingenuity shown by the
trustees.
o It is worth noting that in England, s 1 of the Trustees Act 2000 has reformulated
the “prudent man of business” test and now provides that there is a duty on
trustees to exercise such care and skill as is reasonable in the circumstances.

(iii) Ethical Investments

 Ethical investments raise the question of to what extent trustees are entitled to take into
account non-financial considerations.

o Cowan v Scargill
o Defendants were appointed by the National Union of Mineworkers to manager a
mineworker’s pension fund
o The union trustees rejected the investment plan submitted to them by experts as
they were unimpressed with the idea of investing in energies that were in
competition with coal and investing overseas.
o The court held that the trustees would be in breach of their duties if they refused
to adopt the investment plan.
 The trustees had a duty to act in the best interests of the beneficiaries and
the court held that where the purpose of the trust was the provision of a
financial benefit, then the best interests of the beneficiaries normally
meant their best financial interests.
 Trustees had to put aside their personal interests and social and political
views.
 Notably, Megarry VC appeared to accept that trustees might pursue an ethical
investment policy provided that the financial benefit was the same from the perspective
of the beneficiaries.

 Different considerations arise in the context of a charitable trust.

 Where the trust is pursuing a particular objective, an issue arises as to whether the
trustees can make investments which are incompatible with the objective of the charity.
o The usual example is a cancer charity investing in the tobacco industry.
o Harries v Church Commissioners for England
o The Court rejected the plaintiffs argument that the investment policy carried on by
the church commissioners was contrary to its purpose and sought declarations
that the trust investment policy ought be directed by the ethical considerations of
the purpose for which the trust was established, even where this was financially
disadvantageous.
o The court held that the best interests of the trust would be served by the greatest
financial return.
 The court did accept that there might be extreme examples (such as the
cancer/tobacco example) where there would be a direct conflict between
an investment and the aims of the charity in which case the trustees
should not invest.
 Nicholls VC stated:
o “The law is not so cynical as to require trustees to behave in a fashion which
would bring them or their charity into disrepute ... On the other hand, trustees
must act prudently. They must not use property held by them for investment
purposes as a means for making moral statements at the expense of the charity
of which they are trustees.”
5. Duty not to delegate duties
 Generally speaking, a trustee may not delegate the performance of his duties or the
exercise of his powers to another person.
o This principle arises from the fiduciary nature of the relationship between trustee
and beneficiary whereby the beneficiary places their trust and confidence in the
trustee.

 Of course, the trust instrument may permit the trustee to delegate.

 The general principle is also subject to the long-recognised exceptions that a trustee
may delegate in situations of “legal necessity” or “moral necessity”.
 Furthermore, the courts have recognised that the administration of a trust would be
impracticable if trustees were not able to delegate to professionals such as solicitors,
bankers and financial advisers.
o Speight v Gaun - The general principle is that a trustee can employ an agent in
circumstances where an ordinary prudent man of business would employ an
agent.
o Once an agent has been properly appointed, the trustee must still exercise a
reasonable degree of supervision over his activities.
 However, s 24 of the Trustee Act 1893 provides that a trustee is only
liable for his own acts and not for those of any other trustee or banker or
broker unless any loss occurs as a result of “wilful default” on his part.
 “Wilful default” was considered in Re Chapman, where the court said that
“trustees acting honestly, with ordinary prudence and within the limits of
their trust, are not liable for mere errors of judgement”.

Power of trustees
1. Power of sale and power to issue receipts
 A trustee may be authorised to sell the trust property by instrument.
 Various powers are conferred on trustees under the Trustee Act 1893 as regards the
power of sale;
o Section 13 provides that, subject to a contrary intention being expressed in the
trust instrument, a trustee is empowered to sell the trust property in whole or in
part and either by public auction or by private contract subject to such conditions
as he thinks fit
 Buttler v Saunders- The overriding duty of the trustee would be to obtain
the best price for the beneficiaries
o Section 14 provides that a sale may not be impeached by a beneficiary on the
grounds that any of the conditions of sale were unduly depreciatory unless it
appears that the consideration for the sale was thereby rendered inadequate.
 S20(1) LCLRA 2009- Provides that subject to the duties of a trustee, and any restrictions
imposed by statute, the law of trusts or any instrument or court order, a trustee of land
has the full power of an owner to convey or otherwise deal with the land.

2. Power of maintenance
 Section 43 of the Conveyancing Act 1881 provides that trustees can apply the income
of the trust property for the maintenance or education of infant beneficiaries in certain
circumstances.
 Section 11 of the Guardianship of Infants Act 1964 provides that an application can
be brought by the guardian of an infant asking the court to make payments of income or
capital where necessary for the maintenance or education of the infant.
3. Power to Insure
 Section 18 of the Trustee Act 1893 provides that a trustee may insure trust property
against loss or damage by fire to an amount not exceeding three-quarters of the full
value of the property.

Tracing
 There are a number of remedies available to a beneficiary where a breach of trust has
occurred.
 Tracing is a proprietary remedy i.e., it is an action based ‘in rem’ or in the thing itself.
Although it is usually referred to as a remedy, Swadling states that it merely serves an
evidentiary function and it is not a remedy in itself.
 Morritt L.J. has stated that tracing property is “neither a claim nor a remedy but a
process”

 While a trustee may be personally liable to beneficiaries, where, e.g. he has transferred
the trust property to another in breach of trust and has disposed of the proceeds of sale,
this remedy will be of little value if he no longer has the trust property in his possession
and has insufficient assets to meet any personal claim against him.
 Another option is the constructive trust.
o However, if the recipient of the trust property had no constructive or actual
knowledge of the breach of trust (an innocent volunteer), no personal liability can
be imposed.
 In these situations, tracing will provide a process whereby a beneficiary may identify the
trust property belonging to him and any traceable proceeds.

Tracing can occur both at common law and in equity

Tracing at common law

 At common law, while a person who was wrongfully deprived of his property could follow
it into the hands of another party, he could only do so in circumstances where this
property was still identifiable and had not been mixed with other funds. ( Taylor v
Plumer )
 Common law only recognises legal ownership and this action is available to trustees as
of right and no pre-requisites

Tracing at equity

 Equitable tracing is an exception to the rule that equity acts in personam.

 A major advantage of tracing in equity is the fact that the remedy will not be defeated by
the fact that the property has been placed into a mixed fund.
 In Re Diplock, Court noted that equity ‘adopted a more metaphysical approach’ to the
common law and is able to assume that the plaintiff’s property continues to exist in the
mixture even though it is not possible to say which part belongs to him.

The Fiduciary Requirement

A condition precedent to the operation of the equitable doctrine of tracing is that there be a
fiduciary relationship.
 P must prove that he lost property, and that D received it, as a result of P’s agent’s
breach of fiduciary duty.
 Sinclair v Brougham,
 o It was held that it was not necessary that the fiduciary relationship exist as
between the parties to the action provided the plaintiffs were in a fiduciary
relationship as regards another.

Principles of Tracing:
a) Where the money is mixed with the money of the defendant

The general principle is that if an agent, in breach of fiduciary duty, mixes his principal’s
money with his own, the principal’s claim to the mixed fund will prevail over the agent’s and
the agent’s creditors.
If an agent withdraws and spends money from such a fund, his principal may rely on either
of the following alternative presumptions.

 If the agent withdrew and spent his own money first, the principal is entitled to at least
part of the balance remaining in the account.
o Re Hallett’s Estate.
o A solicitor misappropriated funds of a trust and of a client into his own personal
bank account.
o The problem was that the trustee, who had mixed trust money with his own
money in his account, drew out some money then dissipated it.
o After his death, it emerged that there were insufficient funds to meet his debts,
and the COA held that the trust and the client were entitled to a lien or charge on
the monies in the bank account in priority to the general creditors.
o Importantly, court held that; where a trustee mixes trust money with his or her
own money in a bank account and then withdraws money from that
account, it is assumed that the trustee acted honestly and spent his own
private monies first rather than the trust monies

 If the agent withdrew and spent his principal’s money and used the money to purchase
an asset and then dissipated the remaining amount, his principal is entitled to the asset
o Re Oatway –
o A trustee withdrew misappropriated trust monies from a mixed fund and invested
them and subsequently dissipated the remainder of the fund.
o Joyce J refused to apply the Hallett principle strictly as this would have led the
conclusion that the money withdrawn initially and invested was the trustee’s own
and held instead that the beneficiaries were entitled to the assets represented by
the investments.

b) Where the money is mixed with the money of an innocent volunteer

 In this context, by ‘innocent volunteer’ means a person who is given money by an agent
in breach of the agent’s fiduciary duty but who has no knowledge of the breach.
 If the volunteer received the money with actual or constructive knowledge of the breach,
he would hold the property on a constructive trust for the benefit of the principal.
 Where funds are mixed with the funds of an innocent volunteer who received the money
bona fide, the general principle is that the court will presume the money belongs to both
parties.
 As laid out in Re Diplock, the principle applied is that the claimant's entitlement
ranks pari passu to that of the volunteer; each has an equal claim to their funds.
 Thus, if the value of the mixed fund decreases or increases in value, each party can
claim a percentage equal to their contribution.
 o In that case executors of Mr Diplock’s estate had paid out significant amounts
of money to various charities under what later turned out to be an invalid
charitable trust.
o The court held that the next of kin could trace into the funds but the funds
would have to be shared rateably with the charities, as innocent volunteers.

Foskett v Mckeown (important case, note dissenting judgement)

 View was reiterated by Lord Millet where he stated that innocent contributors must
be treated equally inter se and that where a beneficiary’s claim is in competition with
the claims of other innocent contributors, there is no basis upon which any of the
claims can be subordinated to any of the others.
 The facts of the case concerned a trustee who had fraudulently used trust monies to
pay two of the five annuities on his life insurance premium.
o After his death, the benefit from the life policy was paid out to the children of
the deceased.
o The majority of the House of Lords held that the trustee wrongly mixed the
funds with the value of the policy and the beneficiaries were entitled to trace
into a share of the life insurance policy in proportion to the premiums that had
been paid out of the trust monies.
o Thus, the beneficiaries could trace into 40 per cent (2/5 th) of the total worth of
the death benefit.
o The court laid down that the ‘Basic rule’ is:
 Where a trustee wrongfully uses trust money to provide part of the
cost of acquiring an asset, the beneficiary is entitled at his option
either (i) to claim a proportionate share of the asset or (ii) to
enforce a lien upon it to secure his personal claim against the
trustee for the amount of the misapplied money.
o The alternative to claiming a proportionate share, namely a lien for the
amount of the misapplied money, may be useful where the mixed fund is
ultimately deficient.
 However, Lord Millett stressed that the right of a beneficiary to claim a
lien is ‘not available against competing contributors who are innocent
of any wrongdoing’.

c) Where the Principal’s Money is mixed with another Principal’s Money

 If an agent mixes two or more principal’s funds and subsequently withdraws money from
the mixed fund and spends it, the rule in Clayton’s case may be applied in order to
determine which of the two or more principals is entitled to the balance.

o This rule gives rise to a presumption that where trust money is paid into a current
account and mixed with the money of the beneficiary of a different trust, the money
which was first paid into the bank account is deemed to be that which is first paid out—in
other words, a rule of “first in, first out”.
o The rule in Clayton’s case has been subject to much criticism and is in reality a
presumption that will be rebutted if it is impractical or unjust to apply.
o An example where the presumption was rebutted is Barlow Clowes International v
Vaughan. An issue arose as to whether the receiver should distribute the remaining
funds to a large number of investors of a company on a first in, first out basis. The court
rejected this approach and The Court of Appeal held that the ‘the rule need only be
applied when it is convenient to do so and when its application can be said to do broad
justice having regard to the nature of the competing claims’.
o A rateable basis of distribution should be adopted instead. This decision has been seen
as introducing a relaxation of the rule in the Clayton’s case which was seen as arbitrary.

o In this jurisdiction, consideration was given to the circumstances in which the rule in
Clayton’s case should be applied by Laffroy J in Re Money Markets International
Stockbrokers Ltd –

 The applicant had transferred a sum of money to a stock broking firm (the
company) which was going to purchase shares for him on the Irish stock
exchange. The company was subsequently wound up and the applicant
sought to be paid ahead of other creditors of the company. The funds had
been mixed in the account with other monies of the company. The issue
arose therefore as to whether the rule in Clayton’s case should be applied.

 Laffroy J accepted that in the case of a current account, where trust funds
sourced from various beneficiaries are mixed or pooled in the account it is
settled law that as a general proposition the rule in Clayton’s case is
applicable in determining to whom the balance on the account belongs.
 However, the application of the rule may be displaced in the particular
circumstances of a case, for instance, if it is shown or to be inferred that it
does not accord with the intention or the presumed intention of the
beneficiaries of the trust funds.’
 Equally if the rule in Clayton’s case was not applicable, she believed that,
having regard to the uniqueness of the applicant’s position, the equity of the
applicant was superior to the equity of any other client creditor so that he
could not be bound by a rateable distribution.

Loss of the Right to Trace

1. Dissipation of the asset or fund

Traditionally, a beneficiary’s right to trace into a mixed fund in a bank account only applied to
the extent that the trust monies could be shown to be still there, and where the fund has
been dissipated and no specific asset can be identified which derives from it, tracing will fail.

o James Roscoe Ltd v Winder –

 The defendant had misappropriated £455 of the claimant company’s money which he
was under a fiduciary duty to collect and pay over to the claimant.
 He paid the money into his own account and then dissipated all but £25 of it.
 He then mixed in his own money to the account so that at his death the balance in the
account was £358.
 The court held that the claimant could only trace through to the £25.
 Held that subsequent payments into an account will not generally be treated as
repayments of the misappropriated trust monies. ‘lowest intermediate balance rule’

 In the context of overdrawn back accounts, the court in Re Bishopsgate held that;
 the plaintiff could not trace into an account because when the misappropriated
monies were paid into the account, the account was overdrawn.
 Since the account was overdrawn, there is no asset which can be considered to
represent the plaintiff’s property.

 PMPA LTD v PMPS Ltd.

 Principle adopted in this jurisdiction.
  Murphy J held that the plaintiff could not pursue a tracing remedy because as an
overdrawn account, the fund was non-existent.

 It seems therefore that once the balance in the account falls below a certain level or
becomes overdrawn, the capacity to trace is limited to the lowest intermediate
balance and in the case of an overdrawn account, ceases altogether.

 However, in Brazil v Durant International Corporation

o Privy Council rejected the argument that there can never be backward tracing, or that the
court can never trace the value of an asset whose proceeds are paid into an overdrawn
account
o But the court stated that the claimant has to establish ‘coordination between the depletion of
the trust fund, and the acquisition of the assets which are subject to the tracing claim, looking
at the whole transaction, such as to warrant the court attributing the value of the interest
acquired to the misuse of the trust fund’.

2. Bona fide purchaser for value

 Where trust property has been transferred to a bona fide purchaser for value without
notice, the purchaser takes free of the claims of the beneficiaries.
 The claimant may only pursue a claim against the proceeds of the sale or the trustee.

3. Inequitable to allow a tracing claim to proceed

 Generally, a plaintiff cannot assert a proprietary interest against property in the
defendant’s possession where the defendant was already in possession of that property
before receiving the claimant’s money.
 An example would be where a plaintiff’s money is used to improve the property of
the defendant.
o This arose in Re Diplock where trust money that had been paid by
mistake to Schools was used to pay a debt that had been incurred by the
recipient in improving a building.
o In that case Greene MR stated that where a volunteer uses trust money to
improve property which they own, it does not follow that it is possible to
trace into the adapted property.
 Can be contrasted with a situation where a volunteer has purchased an asset
with a mixed fund in which case there would be nothing inequitable in forcing a
sale and dividing up the proceeds as he would recover what he invested.

4. Defence of change of position

 The defence of change of position can be relied on in relation to a restitutionary claim,
where the defendant has irretrievably changed his position so that it would be inequitable
to require him to make full restitution.
 Lipkin Gorman v Karpanale Ltd –
o ‘the defence is available to a person whose position has so changed that it would
be inequitable in all the circumstances to require him to make restitution, or
alternatively to make restitution in full’.
 It has been accepted that the defence, while available to an innocent defendant, is not
open to a wrongdoer or to a person who has changed his position in bad faith.

Interlocutory Injunction
  Established in American Cyanamid v Ethicon – Lord Diplock laid down test - balance
of convenience
 Applied in Ireland in Campus Oil Ltd v Minister for Industry and Energy –
 Westman Holding v McCormack – previous employees picketing in newly acquired
business premises
 Metro International v Independent News – serious question to be tried and damages
were not an adequate remedy
 Ryanair Ltd V Club Travel – Budget Travel – unsuccessful – unquatifiable damage –
somewhat unreal and fanciful
 Merck Sharp v Clonmel Healthcare – reasserted essential flexibility of American
Cyanamid and also adequacy of damages form part of the consideration of balance
of convenience – it is not separate hurdle

Departure from Campus oil

1. Where trial of action is unlikely and where the parties agree that an interlocutory
hearing will constitute the trial of the action
a. Cayne v Global Resources
b. Jocob v Irish Amateur Rowing Union

2. Where there is no arguable defence to the plaintiffs claim for an injunction

a. Keating v Jervis Shopping Centre

3. Where interlocutory injunction is sought to restrain industrial action

a. G & T Crampton v Building and Allied Trades Union

4. Where an interlocutory injection is sought to refrain the presentation of a petition for

winding up of the company

5. Where an interlocutory injunction is sought in defamation proceedings

a. Sinclair v Gogarty
b. Quinlivan v O’Dea

Interlocutory Mandatory Injunction

 In the English case of Shepherd Homes Ltd v Sandham. – before granting a
mandatory injunction - Megarry J
o where he made it clear that the ‘case has to be unusually strong and
clear and the court must “feel a high degree of assurance that at the trial
it will appear that an injunction was rightly granted.”

o There is some uncertainty in this jurisdiction as to the applicable test for the
granting of mandatory interlocutory injunctions.
o Although the test to be applied where an application is made for a mandatory
interlocutory injunction in this jurisdiction now seems reasonably settled,
inconsistent approaches have been applied over the years.
o Initially , Irish courts favoured the well-established Campus oil principles.
However, there was a considerable debate over whether the traditional campus
oil test should apply or whether the Heightened test in Shephard homes should
apply.
o More recently, courts have adopted a general principle based on whether the
grant or refusal of injunctive relief carries the greater risk of injustice
Campus Oil Approach
o Bula v Tara Mines
o Courts stressed that whether the plaintiff was likely to succeed at trial was not
a relevant factor in determining whether a mandatory interlocutory injunction
should be granted and that it was not appropriate at the interlocutory stage for
the court to make a judgement as to the strength of either party’s case.
o This is in line with Campus Oil
o In similar vein, this principle was reiterated in A&N Pharmacy v United Drug
Wholesale - where the court applied the balance of convenience test
o Sheehy v Ryan - stated that only in exceptional circumstances that the
balance of convenience would life in favour of granting the relief when
mandatory orders are involved

Restrictive – a strong case approach

 However, in many other HC decisions it has been stressed that mandatory
interlocutory injunctions will only issue where there is likelihood of the plaintiff
succeeding at trial.
o Boyhan v Tribunal of Inquiry into the Beef Industry
o Denham J described the mandatory injunction as a ‘powerful instrument’ and
said that in seeking ‘this exceptional form of relief…it is up to the plaintiffs to
establish a strong and clear case-so that the court can feel a degree of
assurance that at a trial of the action a similar injunction would be granted.”

Boyle v An Post – where the court directed An Post to pay the plaintiffs their monthly
salary pursuant to shut down of the payroll computer following the suspension of a
number of staff. Court preferred the elevated approach along Boyhan and observed
that the present case was an exceptional case where one can say with assurance
that at the hearing of the substantial action the plaintiffs are bound to succeed

Lingam v Health Service Executive (Supreme Court) [2006]

o Fennelly J stated : “It is well established that the ordinary test of a fair case
to be tried is not sufficient to meet the first leg of the test for the grant of an
interlocutory injunction where the injunction sought is in effect mandatory.
o In such a case it is necessary for the applicant to show at least that he has a
strong case that he is likely to succeed at the hearing of the action.”
In the years following Maha Lingham, the courts have cited it as the leading authority
for the applicability of the strong case test in the application for interlocutory
injunctions
Recently in Nolan v Emo oil – confirm the strong case test in seeking mandatory
interlocutory injunctions in the employment context

Risk of injustice approach

o A more flexible approach to the question of mandatory interlocutory injunctions
was developed by the English Courts in Film Rover International v Cannon Films
Sales – where Hoffman J held that the fundamental aim of the courts was to take
 whichever course carried the lower risk of injustice for the parties, and that the
competing tests that had been so debated were only guidelines as to how to
achieve that aim.

o Films Rover, was adopted by Kelly J in Shelbourne Hotel Holdings v Torriam

Hotel
o Kelly J noted cases had shown inconsistency in standard to be met when
seeking an interlocutory injunction of mandatory nature.
o Considered the conflicting approach: On one view it is the demonstration of a
fair case or serious issue for trial under Campus Oil , on the other, a higher
standard of proof must be achieved that has variously been described as a
strong case likely to succeed at the hearing of the action or a strong and clear
case in Boyhan and Lingham.
o He held that pending a final determination of the issue by the Supreme Court,
he was attracted by the approach of Hoffman J. (as he then was) in the Films
Rover case where he took the view that the fundamental principle on
interlocutory applications for both prohibitory and mandatory injunctions is that
the court should adopt whatever course would carry the lower risk of
injustice if it turns out to have been the ‘wrong’ decision.
o He went on to say that whatever standard applies it is clear that the grant of
mandatory interlocutory relief is exceptional and the mandatory nature of
the relief will also be a factor to be taken into consideration when the balance
of convenience falls to be considered.”

o Okuande v Minister for Justice, Equality and Law Reform,

o SC reaffirmed that if an order sought in case is of a mandatory nature, then
courts will require plaintiff to establish not just a fair and arguable case but
rather a higher standard as set out by the SC in Lingham.
o Even where a higher standard may need to be met, that requirement should
not require complex detailed analysis of facts or complex questions of law in
interlocutory context.
o “rather it obliges the plaintiff to put forward, in a straightforward way, a case
which meets the higher threshold.”

 it now seems clear that the standard which will generally be applied where an
interlocutory injunction of a mandatory nature is sought is a strong case that the
plaintiff is likely to succeed at trial.
 There is also considerable merit in taking the approach adopted by Kelly J in
Shelbourne, which would allow a court not to insist on this higher onus of
proof being met in such cases where withholding an interlocutory injunction
would carry with it a greater risk of injustice than granting it.
 It should also be borne in mind that the Balance of convenience is unlikely to lie
in favor of granting mandatory relief other than in exceptional cases.
Conclusion
 In light of the above cases, it can said that the debate has tended more towards
the strongs case test couples with lower risk of injustice.
 Biehler says the most appropriate test for courts in Ireland to apply may be:
o “…in the interests of clarity, the standard of a strong case that the
plaintiff is likely to succeed at trial, subject to the qualification that the
court should not insist on this higher onus of proof being met in such cases
where withholding an interlocutory injunction would carry with it a greater
risk of injustice than granting it, may be the most appropriate test for
the courts in this jurisdiction to apply.

Quia Timet Injunctions

The key to identifying the topic from the question is a Fear or Apprehension of an
interference with a right (usually right to earn a livelihood)
 While an injunction will generally issue on the basis of an infringement of a
plaintiff’s rights, a quia timet injunction may be granted in circumstances where
the injury to the plaintiff is merely threatened or apprehended.
 Jurisdiction for Quia Timet Injunction is preventative in nature and will be
exercised either where person threatens and intends to do an unlawful act or
where the plaintiff’s rights have already been infringed and he alleges that this
infringement will be repeated.
 Spry: same principles apply whether or not breach or mere threat to breach
plaintiff’s rights
o But fact no breach has yet occurred is of relevance as it may be more
difficult to establish that there is a sufficient risk of future injury to justify the
immediate grant of an injunction.

Perpetual
 It is insufficient for a plaintiff merely to state that he harbours fear in this regard; in
Attorney-General v Manchester Corporation;
o ‘he must show a strong case of probability that the apprehended mischief
will, in fact, arise’.
 The onus of proof which lies on a plaintiff seeking a quia timet injunction has
been considered in this jurisdiction on a number of occasions.
 Attorney General (Boswell) v Rathmines and Pembroke Joint Hospital
Board
o Local residents sought to restrain the construction of a quarantine hospital
on the basis that there was a risk of infection.
o Conflicting evidence on the risk of the spread of disease, injunction
refused on the ground that no real danger had been proved.
o Statement of Fizgibbon LJ has been frequently referred to; who stated that
the plaintiff is required to provide; ‘proof of a well-found apprehension of
injury – proof of actual and real danger - a strong probability, almost
amounting to moral certainty’.
 However, the slightly less stringent test of ‘reasonable probability’ was applied in
Independent Newspapers Ltd v Irish Press Ltd.
 o Passing off claim – refused as P had failed to prove damage would occur,
as evidence did not show that goodwill in the name was still an attractive
force.
o Meredith J said court would not grant a quia timet injunction “unless it is
satisfied that there is a reasonable probability that what is threatened to be
done is calculated in the ordinary course of events, to cause damage to
the plaintiff.”

 In the view of the lack of consensus in relation to the degree of probability of

injury required before a court will grant a quia timet injunction, perhaps the
suggestion made in Hooper v Rogers has much to commend it.
o Russell LJ stated that : “degree of probability of future injury is not an
absolute standard: what is to be aimed at is justice between the parties
having regard to all the relevant circumstances.’
o In addition, it should be stated that the degree of probability of injury is not
the only factor which should influence the court and the greater the
damage or prejudice likely to be cause, the more justifiable the court’s
intervention will be.

 The most detailed consideration to the circumstances in which a quia timet

injunction should be granted in this jurisdiction is the judgement of Geoghegan J
in Szabo v ESAT Digiphone Ltd.
 The case concerned an application for a quia timet injunction by a group of
school children who claimed that the erection of a mobile phone base station
beside their school was going to emit pulsed radio frequency radiation that was
likely to be harmful to their health.
 He referred to the test employed in Boswell, namely that the plaintiff must
show ‘a strong case of probability that the apprehended mischief will, in fact,
arise’ and stated that he was inclined to think that it went too far, although he
did say that for a quia timet injunction to be granted, there would have to be ‘a
proven substantial risk of danger’. (Perpetual)
o In exercising its discretion, the Court will be required to balance the
magnitude of the evil against the chances of its occurrence'.
 Geoghegan J. concluded that it was highly improbable at the very least that
any injury would occur to the children before the hearing of the action and in
these circumstances he did not think that it would be just or reasonable to
grant a quia timet injunction which just or reasonable to grant a quia timet
injunction, which would have disastrous effects as far as the Defendant is
concerned,
Interlocutory
 Geoghegan J. considered the principles applicable in context of interlocutory
Quia Timet injunctions and expressed his favour for the approach set out in
Spry on Equitable Remedies, who had suggested that there was no difference
between the legal principles to be applied to interlocutory quia timet
injunctions and any other interlocutory injunction.
 o Geoghegan noted the fact that no breach of the plaintiff’s rights has
taken place as of the date of the hearing is relevant because it may be
more difficult to establish as a matter of evidence that there is a
sufficient risk of a future injury to justify the immediate grant of an
injunction.
o He noted that normally at an interlocutory stage ,courts do not consider
the merits of each side however he felt that in light of the fact that he
was being asked to assess the danger to the plaintiffs and determine
the grant of an injunction on the basis of that assessment, he was
entitled to have some regard to the qualifications, expertise and
background of the expert witnesses relied upon.

This approach was followed by Kelly J in Ryanair v Aer Rianta and Garrahy v
Bord nag Con (2001) – where it was reiterated that there was no difference
between the principles applicable to interlocutory quia timet injunctions and other
kinds of interlocutory injunction applications. In such cases, the Court will be required
to balance the magnitude of the evil against the chances of its occurrence and must
require a proven substantial risk of danger
 In terms of the relevance of the Campus Oil principles to quia timet injunctions,
in Szabo Geoghegan J held that the principles were not of application in this
case because he felt there was something distasteful in balancing the
convenience of the defendant being able to carry on his business against the
alleged health risks to the plaintiff children’s health.
o He did note however that if he was wrong not to apply the Campus Oil
principles he would have refused the injunction nonetheless.
o He held that in view of the high degree of probability that is required before
a court is willing to grant a permanent quia timet injunction, the plaintiffs
had not established that there was a ‘serious issue to be tried’.

In National Irish Bank Ltd v RTE, Shanley

o Decided the interlocutory application before him on the basis of the
principles in Campus Oil, rather than on the basis of the test laid down in
Boswell, even though the application was of a quia timet nature.
o He explained that he was doing so because he was dealing with a
situation where the defendant had actually conceded that its aim was to
publish confidential information belonging to the plaintiff and, in his view, in
such a case the Campus Oil principle were ‘a more appropriate guide
than the more stringent evidential burden’ that the test in Boswell
would impose.

 Biehler says: on use of Campus Oil in such case

o “…would appear that even if courts no longer insist upon the test of ‘a
proven substantial risk of danger’ being satisfied in every case in which a
quia timet injunction is sought, it will nevertheless remain more difficult to
obtain an injunction of this nature, not least because, as Spry has pointed
out, if no wrongdoing has yet occurred, it will be more difficult to establish,
 as a matter of evidence, that there is sufficient risk of future injury to justify
the grant of an injunction.”

Mareva Injunctions

 Mareva Injunction (also referred to as a “freezing order”) is an order which freezes the
assets of the defendant, preventing him from dissipating or otherwise dealing with his
assets for the purpose of defeating any judgment that P might obtain or has obtained
against him in a substantive action.
 Usually interlocutory in nature and are typically awarded on a pre-trial basis following an
ex parte application.
 Prohbitory and quia timet in nature.
 Mareva injunction operates in personam to restrain the defendant from dealing
with the assets to which the order relates and it gives the plaintiff no proprietary
right over these assets nor priority over other creditors.
 However - Dowley v O’Brien
o “a third party who, knowing of the terms of a Mareva injunction, willfully
assists in the breach of that injunction, or in its frustration, is liable for
contempt of court.”
Origins of the Mareva Injunction
 The genesis of Mareva injunctions can be traced to the decision of the English
COA in Nippon Yusen Kaisha v Karageorgis.
o Held that where there is a strong prima facie case that a plaintiff is entitled
to money from a defendant within the jurisdiction and the plaintiff has
reason to believe that the defendant may remove the assets from the
jurisdiction, the Court may grant an interlocutory injunction on an ex parte
basis restraining the defendant from disposing of these assets
 Principle confirmed in:
o Mareva Compania Naviera SA v International Bulkcarriers SA –the
House of Lords confirmed that where there is an imminent danger of the
defendant dissipating his assets the court may grant an injunction to
restrain him from doing so.
 Since Fleming and Others v Rank (Ireland) Ltd – injunctions have been granted
at the interim and interlocutory stages in a vast number of Irish cases in which the
defendants were Irish citizens and resident within the jurisdiction.

Features of Mareva Injunction

 Summary of the criteria for Mareva Injunction created - Lord Denning in Third
Chandris Shipping Corporation v Unimarine SA
 Ireland - In O’Mahoney v Horgan the Supreme Court set out that a plaintiff in an
application for a Mareva Injunction has to establish;
 Plaintiff is required to make a full and frank disclosure
 That he has a substantive action against the defendant.
 That the plaintiff has a good arguable case in the substantive action;
  The defendant has an intention to dissipate the assets with a view to
evading his obligation to the plaintiff and frustrating the anticipated
court order.
 That the defendant has beneficial ownership of the assets.
 That the balance of convenience favours granting the injunction.

Duty of Full and Frank disclosure

 Generally due to issues of urgency and secrecy - application for Mareva
injunction made on an interim ex parte basis.
 However, given that proceedings of an ex parte nature deprive the defendant of
the right to be heard and may expose him to the risk of serious and even
irreparable harm, the court insist on full and frank disclosure to protect the
interests of the defendant.
 The imposition of a duty to make full and frank disclosure been characterised as
the ‘golden rule’ in Tate Access Floors v Boswell in the following terms:
o “a plaintiff applying for ex parte relief must disclose to the court all
matters relevant to the exercise of the court’s discretion whether or
not to grant relief before giving the defendant an opportunity to be heard.
 An applicant is obliged to make all proper inquiries before making the ex parte
application and the duty of disclosure applies not only to material facts known to
him but to any additional facts which he would have known if he had made such
inquiries.

 Bambrick v Cobley –
o Clarke J asserted that the ’test by reference to which materiality should be
judged is one of whether objectively speaking the facts could reasonably
be regarded as material with materiality to be construed in a reasonable
and not excessive manner’.
o Further asserted that the courts have a discretion, in cases where failure
to disclose has been established, to refuse to grant the interlocutory
injunction and to discharge the already granted interim injunction but it is
not necessarily obliged to do so.’
o The courts discretion will be heavily influenced by;
 The materiality of the facts not disclosed
 The extent to which it may be said that the plaintiff is culpable in
respect of a failure to disclose.
 The overall circumstances of the case which lead to the application
in the first place.
 On the facts of that case, Clarke J. discharged the order. He held that
although the plaintiff had not deliberately misled the court, his solicitor had
been culpable in failing to disclose material facts to the court.

I) A substantive cause of action against the defendant

 Where the plaintiff has a substantive cause of action against the defendant in the
jurisdiction, it is straightforward to establish this requirement.
 It may however be the case that the plaintiff’s substantive cause of action lies in a
different jurisdiction.
 The plaintiff is then looking for a Mareva injunction as an ancillary order
to a cause of action taking place in another jurisdiction.
 If the country is a contracting State to the EC Regulation on
Jurisdiction and the Recognition and Enforcement of Judgments in
Civil and Commercial Matters then the court will have the power to
make such an ancillary order.
 Section 13(1) of the Jurisdiction of Courts and Enforcement of
Judgments Act 1998 provides that the courts of this jurisdiction have
the power to grant provisional, including protective measures where
proceedings have been commenced or are about to be commenced in
another member state, even where the plaintiff has no independent
cause of action within the jurisdiction.
 This section reversed the original finding of the Supreme Court in Caudron v Air
Zaire (1985) that a Mareva injunction could not be claimed as primary relief in an
action but only as an ancillary order.
 The Supreme Court in that case had held that there had to be a subsisting
cause of action in this jurisdiction if the courts were to award a Mareva
Injunction.

ii) A ‘good arguable’ case

 The standard of proof usually required in an interlocutory injunction application is

that the applicant can show there is ‘a serious issue to be tried’.
 Although a Mareva injunction is a form of interlocutory injunction, it has been
argued that the strength of the plaintiff’s case is more important in Mareva
proceedings and there is authority in England to the effect that; a ‘good arguable
case’ is needed in context of Mareva injunction- The Pertamina
 The Niederarsachsen –
 ‘good arguable case’ was described as 'one which is more than barely
capable of serious argument, but not necessarily one which the judge
considers to have a better than 50% chance of success'.
 There has been conflicting authority on the matter in this jurisdiction;
 The good arguable case test was followed in Fleming v Ranks (Ireland) Ltd,
however, other cases have shown reluctance to deviate from the Campus Oil test
in the context of mareva injunctions
 Countyglen plc v Carway
 Murphy J doubted any difference between expressions “good arguable
case” and “substantial question to be tried”, however favored use of
latter formulation.
 Confirmed that the ‘probability test’ had been rejected by the Supreme
Court in Campus Oil and stated ‘“in my view, it would be entirely
inappropriate for the court on an interlocutory application to review
such of the evidence as is available to it and attempt to forecast the
outcome of the proceedings as a matter of probability or likelihood.
 It is interesting to note that the SC in O’Mahony v Horgan seemed to favour the
‘good arguable case’ test.
 While Capper suggests that it may be more difficult to establish this than that
there is a serious or substantial question to be tried, he also says that the
differences between the tests should not be exaggerated.
 In any event it is the other aspects of the proofs required to establish an
entitlement to a Mareva injunction which clearly differentiate such applications
from those in which an ordinary interlocutory injunction is sought.
 Biehler notes for Mareva injunction – real difference from other injunctions is how
questions of:
 Balance of convenience, and
 Adequacy of damages are considered.
Intention
 One of the most important issues which must be addressed in the context of
Mareva injunctions is the extent to which it is necessary to adduce evidence that
the defendant’s intention is to frustrate the judgement of the court.
 Issue addressed in some detail by the SC in O’Mahony v Horgan
 In that case the directors of a company in liquidation were appealing to
the Supreme Court against the decision of the High Court to grant a
Mareva Injunction against them, restraining them from paying a sum of
money owed on an insurance policy.
 SC allowed appeal;
 “The cases establish that there must be an intention on the part
of the defendant to dispose of his assets with a view to
evading his obligations to the plaintiff and to frustrate the
anticipated order of the court. It is not sufficient to establish
that the assets are likely to be dissipated in the ordinary course
of business or in the payment of lawful debts.”
 As Capper has pointed out, it may be unrealistic to expect a plaintiff to be in a
position to adduce evidence of a defendant’s intentions in an ex parte application,
and a more flexible approach may be necessary when a Mareva injunction is
sought on this basis, suggesting that: ‘an intention may be inferred from the risk
that assets will be disposed of for no good reason’.
 Indeed, English courts have tended to adopt a broader approach looking at the
effect of the defendant’s actions rather than solely his intention - The
Niedersachsen
 A more pragmatic approach towards the issue of establishing the so called
‘requisite intention’ was taken in this jurisdiction - Bennett Enterprises Inc. v
Lipton –
 In which it was accepted that direct evidence of an intention to evade
would rarely be available at the interlocutory stage
 O’Sulivan qualified the usual requirement of requisite intention and held
that it was reasonable for the court to consider all the circumstances of
the case and considered that this was consistent with the decision of
the Supreme Court in O’Mahony v Horgan.
 Similar approach taken in Tracey v Bowen –
  where Clarke J. accepted an inference could be drawn from the facts
and circumstances of the case and the nature of the alleged
wrongdoing.
 In that case, the assets in question were real property and were not
therefore assets of a type that were likely to be easily dissipated, such
as for example money in bank accounts.
 Clarke J felt that there was insufficient evidence to create an
apprehension that the plaintiff would dissipate the assets.
 Approach in Bennett was developed by Clarke J in Hughes v Hitachi Koki
Imaging Solutions Europe
 Requisite intention will have to be established by inference from other
facts.
 He stated that while O’Mahony v Horgan was clear authority for the
proposition that the payment of lawful debts in the course of an
ongoing business should not give rise to any inference sufficient to
justify the grant of a Mareva injunction, there was at least in principle a
need to apply different considerations to a corporate entity which might
be insolvent.
 A plaintiff could seek a Mareva injunction where it could show that the
insolvent company intended to deal with assets in a manner
incompatible to its obligations under insolvency law.

 In Bambrick v Cooley Clarke J stated obiter that while evidence of an intention

to remove assets to another jurisdiction could allow the court to draw the
inference that the defendant intended to evade his obligation to the plaintiff, that
inference would be less strong where the country was a party to the Brussels
Convention.
 Where a country is a party to the Brussels Convention the judgement
of the Irish Court is as enforceable in that country as it is in Ireland.
Balance of Convenience
 A consideration of the balance of convenience between the parties will
necessarily involve the weighing up of different factors to those which will
normally be of relevance where an interlocutory injunction is sought.
 Unlike other cases, plaintiff will not be looking for injunction at trial but instead for
an award of damages and Mareva injunction is being sought to safeguard
damages.
 Similarly, the question of the adequacy of damages as a remedy, which is often
of considerable importance in deciding where the balance of convenience lies,
will not be a factor.
 Instead court has to weigh up plaintiff’s claim for relief against any
likelihood of undue hardship or inconvenience being caused to the
defendant.

Extra-territorial Mareva Injunction

Candidates should be wary of problem questions concerning Mareva injunctions
and other countries. If the other country is within the EU, with the exception of
 Denmark, the Brussels Regulation applies. If the country is not within the EU
then the rule in Air Zaire applies. Furthermore, in a general essay question on
the criteria required in order to grant a Mareva injunction candidates should also
address the possible application of the Brussels Regulation or principle in Air
Zaire.

 A Mareva injunction is an order made in personam.

o Therefore, provided the defendant is amenable to the jurisdiction of the
court, the courts have held that they are entitled to grant Mareva
injunctions where the assets are held outside the jurisdiction.

 One of the most significant developments in relation to Mareva injunctions in

recent years has been the willingness of the courts to make such orders in
respect of assets outside the jurisdiction on a worldwide basis.
 The fact that Mareva injunctions can be made on a worldwide basis was
confirmed in this jurisdiction in Deutsche Bank Atkiengesellschaft v Murtagh
 As a general rule the courts have indicated that worldwide Mareva injunctions are
more likely to be granted after judgement has been obtained.
o Republic of Haiti v Duvalier - This is to avoid the risk of prejudice to
the defendant that granting such an order pre-judgement entails.
 Derby & Co. Ltd v Weldon –
o Court of Appeal indicated that a Mareva injunction should be limited to
assets within the jurisdiction of the court if those assets are sufficient to
satisfy the plaintiff’s claim
 More recently the courts have focused in particular on two issues as regards
worldwide Mareva injunctions.
I) The effect that such an order has on third parties
ii) The second is the prejudice that may be caused to the defendant by
allowing the plaintiff to enforce the order in a number of jurisdictions.

Worldwide Mareva Injunction and Third Parties

 The first issue that needs to be considered is how the courts should enforce
extra territorial injunctions against third parties (often a bank).
 Since the injunction operates in personam, if a third party is within the
jurisdiction the injunction can be enforced.
o If however the third party is located wholly outside the jurisdiction the
courts does not have power to enforce the injunction against it.
 The courts addressed this problem by holding that the terms of a freezing
order should include a proviso regarding third parties.
 Babanaft Internaional Co. SA v Bassantne [England]
o Kerr LJ stated that: ‘in appropriate cases, though they may well be
rare, there is nothing to preclude our courts from granting Mareva type
injunctions against defendants which extend to their assets outside the
jurisdiction”.
 o However, he stressed that unqualified Mareva injunctions covering
assets abroad can never be justified as they involve an exorbitant
assertion of jurisdiction of an in-rem nature over third parties outside
the jurisdiction of the court.
o Must restrict such injunction to bind only the defendant personally
and include a limiting proviso which made it clear that the order
would not effect third parties. (became known as the ‘babanaft
proviso’).
 Derby & Co. Ltd v Weldon
o The Babanaft Proviso was modified to affect third parties who are
subject to the jurisdiction of the court, provided that they have received
written notice of the order and are in a position to prevent breaches
outside the jurisdiction of the court by, say, their overseas subsidiary or
branch.

It is likely that this would be followed in this jurisdiction;

Bennet Enterprises Ltd v Lipton
 O’Sullivan did not consider that the plaintiff’s alleged failure to establish that there
were assets within the jurisdiction was necessarily fatal to their application.
o On the contrary, he noted that the fewer the assets within the
jurisdiction the greater necessity for taking protective measures in
relation to those outside it.
 Plaintiffs accepted that any order which the court might make would subject to
the ‘Babanaft provisio’ and O’Sullivan J concluded that he would make an
interlocutory order as sought by the plaintiffs.

Enforcement of a Worldwide Mareva Injunction in other Jurisdictions

 If a P obtains a WMI in Ireland, he will have to seek and obtain the permission of
the foreign court to enforce the WMI in that jurisdiction.
 The enforcement of a WMI is a matter of concern for the courts because of the
potential oppression that a number of proceedings in foreign jurisdictions might
cause to the defendant and it should be the responsibility of the courts to control
such oppression.
 The English courts have sought to protect defendants in this regard by
requiring that permission be sought by the plaintiff from the domestic court
before it enforces a worldwide Mareva in another jurisdiction.
 The question faced by the courts is in what circumstances is it appropriate for the
courts to grant permission to enforce a worldwide Mareva in another jurisdiction?
 This point has not yet been dealt with in Ireland, however the English Court of
Appeal have recently considered the point in Dadourian Group International
inc. v Simms
o In this case, the Respondents had previously obtained a World Freezing
Order (‘WFO') against the Appellants and applied to enforce it in
Switzerland.
 o Arden LJ set out the practical guidelines on how the court should exercise
its discretion when considering whether to permit a party to enforce a
worldwide freezing order.

 “Guideline 1; The grant of permission enforcing a worldwide Mareva abroad

should be just and convenient for the purpose of ensuring the effectiveness of the
worldwide Mareva, and in addition that it is not oppressive to the parties to the
domestic proceedings or to third parties who may be joined to the foreign
proceedings”

 “Guideline 2. All the relevant circumstances and options need to be

considered.
o In particular consideration should be given to granting relief on terms,
for example terms (i) as to the extension to third parties of the
undertaking to compensate for costs incurred as a result of the
worldwide Mareva and (ii) as to the type of proceedings that may be
commenced abroad.
o Consideration should also be given to the proportionality of the steps
proposed to be taken abroad, and in addition to the form of any
order.”

 “Guideline 3. The interests of the applicant should be balanced against the

interests of the other parties to the proceedings and any new party likely to be
joined to the foreign proceedings.”
o Requires the court to balance the interests of the plaintiff in freezing the
assets against the burden to the defendant of defending proceedings in
a number of courts. It also requires the court to have regard to the
inconvenience that being sued in the domestic courts may inflict upon
any third party.
 Where the third party is not independent of the defendant less
weight will be given to this consideration.

 “Guideline 4. Permission should not normally be given in terms that would

enable the applicant to obtain relief in the foreign proceedings superior to the
relief given by the [worldwide Mareva].”
o Reflects the well-established principle that a Mareva Injunction will not
provide a plaintiff with any priority over other creditors.
o It is logical therefore that the court should not enable a plaintiff to get
superior relief by enforcing the worldwide Mareva in another
jurisdiction.

 “Guideline 5. “The evidence in support of the application for permission should

contain all reasonably obtainable information which is necessary to allow the
judge to reach an informed decision including evidence as to;
- the applicable law and practice of the foreign jurisdiction; nature of any
proposed proceedings to be commenced; assets believed to be located in the
 jurisdiction of the foreign court and the names of the parties by whom such
assets are held.”

 “Guideline 6. The applicant must show that there is a real prospect that such
assets are located within the jurisdiction of the foreign court in question.”
o The standard of establishing a “real prospect” that the assets exist is a
lesser standard than the requirement imposed on application for a
worldwide Mareva that a “good arguable case” be established.
o The court, in applying the lesser standard of proof, appear to have
accepted that the dangers associated with enforcing an existing
Mareva Injunction are much less than those associated with the
original grant of such an order.

 “Guideline 7. There must be evidence of a risk of dissipation of the assets in

question.”
o Court of Appeal did not indicate what level of risk of dissipation needs
to be established however, Meisel has observed that where a “real
prospect” of the assets existing has been established, the evidence
proffered in the original English proceedings as regards dissipation is
likely to suffice

 “Guideline 8. “In the normal course of events the application should be made on
notice to the respondent, however if there is a real risk that the assets will be
removed from the jurisdiction before the application can be heard the courts can
hear the application on an ex parte basis.
 But that party should have the earliest practicable opportunity of having the
matter reconsidered by the court at a hearing of which he is given notice”

 It remains to be seen whether the Irish Courts would take a similar approach to
that laid down in the Dadourian Guidelines.

 Conclusion
 Where jurisdiction of the substantive action lies with another court in a country
that is party to the Brussels Convention, the Irish courts have the power to
grant a Mareva injunction as ancillary relief to the substantive action.
 Where the assets of the defendant are outside the jurisdiction, the plaintiffs
may seek to obtain a worldwide Mareva injunction.
 In the final analysis the effectiveness of Mareva injunctions, particularly those of
an extra-territorial nature, will depend on the extent to which the courts can
guarantee their observance.
 Nicholls LJ stated in Babanaft International Co SA v Bassatne that:
o It would be wrong in principle for the courts in one jurisdiction: “to impose
or attempt to impose obligations on person not before the court in respect
of acts to be done by them abroad regarding property outside the
jurisdiction” as this would amount to an attempt to claim an exorbitant
extra territorial authority.
 As Collins has commented: ‘in practice the remedy is likely to be most effective
where the defendant is an individual present within the jurisdiction or if the
defendant has a real interest in defending the substance of the English action or
in appealing the English judgement.’

Uniformal Ltd v Taurus Gemini Real Estate (2021)

Anton Pillar Orders

 Developed in the 1970s as a means of dealing with cases where there is a
serious risk that a defendant, when warned of impending litigation, may
destroy or otherwise dispose of material in his possession which may be of
vital importance to the plaintiff if he is to establish a claim at trial.
 This remedy is of particular use in the context of the misappropriation of
intellectual property, where the defendants may seek to destroy the allegedly
forged or copied goods.

Effect
 The effect of an APO is not to create a right in rem – but rather in personam
 An APO requires the defendant to consent to a plaintiff, attended by his solicitor,
entering his premises to inspect and if necessary take away any documents or
articles specified in the order.
 Such an order is obtained on an ex parte basis and applications are often heard
in camera as secrecy will be of the essence if the order is to have the required
effect and if the defendant is forewarned he will in all likelihood take steps to
frustrate the plaintiff’s intentions.
- This was acknowledged by Smyth J in Microsoft Corporation v
Brightpoint Ireland Ltd

Conditions that must be satisfied

 The practise of making orders of this nature developed in England in the mid
1970s and the jurisdiction to do so was confirmed by the COA in Anton Piller
KG v Manufacturing Process Ltd, the decision which gave its name to the form
of order:
 The P claimed that the defendants were selling confidential information
to their competitors which they had obtained in their capacity as selling
agents for the plaintiffs’ electrical equipment and sought access to
documents located on the defendant’s premises.
 The COA made an ex parte order permitting the plaintiff’s to enter the
defendant’s premises to inspect, remove or make copies of documents
relating to the equipment.
 Lord Denning confirmed that the court had the jurisdiction to make sure an order:
 ‘but it should only be made where it is essential that the plaintiff
should have inspection so that (i) justice can be done between the
 parties: and when, (ii)if the defendant were forewarned, there is a
grave danger that vital evidence will be destroyed and taken beyond
the jurisdiction, and so the ends of justice be defeated: and when (iii)
the inspection would do no real harm to the defendant or his case’.
 Describing such an order as being ‘at the extremity of the courts powers’, Omrod
LJ laid down a number of ‘essential pre-conditions’ which must be satisfied
before an order of this nature will be granted;
1. The plaintiff must have an extremely strong prima facie case,
2. the potential or actual damage must be very serious for the plaintiff,
3. there must be clear evidence that the defendant has incriminating
documents or articles in his possession and there must be a real
possibility that these will be destroyed before any application inter
partes can be made.
 As Omrod LJ made clear in his judgement, the order operates in personam
against the defendant and requires him to consent to its execution.
- While it is not equivalent to a search warrant and cannot be
enforced by the plaintiff without the defendant’s consent, failure to
comply with the order will constitute contempt of court.

The Nature of Anton Piller Orders

 Like Mareva Injunctions, Anton Piller Orders have also been described as
‘draconian’ and their very nature makes them susceptible to abuse by claimants.
 This occurred in Lock International plc v Beswick
 Where the claimant’s solicitors searched the business premises and
homes of the defendants and removed not only documents containing
confidential information but also nearly all their commercial papers,
computer records and prototypes.
 The search order should never have been granted and was later
discharged.
 In view of the potential for abuse the courts have adopted a relatively strict
approach to the granting of Anton Piller Orders and have developed certain
safeguards to protect the position of the defendant.

Full and frank disclosure

 Firstly, as with all ex parte applications, a plaintiff is required to make full and
frank disclosure and a failure to do so may result in the order being discharged
or a finding of liability in damages.
 Microsoft Corporation v Brightpoint Ireland Ltd
 Smyth J stated that P and his solicitor ought to err on the side of
excessive disclosure, as it is for the court to decide on which side of
the ‘relevance line’ information lies.
Damages
 As with other forms of orders of an interlocutory nature, the plaintiff will be
required to give an undertaking in damages and where he has acted
improperly, either in the manner in which he made his application or executed
 the order, the court will not hesitate to enforce his undertaking or to award
both compensatory and aggravated damages.
 The point is illustrated by the judgement in Columbia Picture Industries v
Robinson, in which the Defendants brought a motion seeking to have an APO
obtained by the plaintiff in respect of alleged video piracy set aside
 Scott J found that the plaintiffs and their solicitors had failed to make
full and frank disclosure of all material matters to the court and, by
removing items not included in its terms, had acted oppressively and in
abuse of their powers in executing the order.
 He made a finding that no purpose would be served by setting aside
the order as it had already been executed but held that the plaintiffs
were liable in damages to the defendants who had ceased trading as a
result.
 Scott J was clearly acutely aware of the potential for abuse inherent in APO as
can be seen from the following extract of his judgement:
 A decision whether or not an APO should be granted requires a
balance to be struck between the plaintiff’s need that the remedies
allowed by the civil law for the breach of his rights should be attainable
and the requirement of justice that a defendant should not be deprived
of his property without being heard.
 The practise of the court in this case has allowed the balance to
swing much too far in favour of plaintiffs and that APO have been
too readily granted and with insufficient safeguards for
respondents.
 The draconian and essentially unfair nature of APO from the point of
view of respondents requires that they be so drawn as to extend no
further than the minimum extent necessary to achieve the purpose for
which they are granted, namely the preservation of documents or
articles which might otherwise be destroyed or concealed.
Microsoft Corporation v Brightpoint
o Smyth J had to consider, inter alia, an application brought by the
defendant for relief arising out of the grant and execution of an APO.
o On the facts the court was satisfied that there had been full and proper
disclosure by the P as to the circumstances of the case and that there was
strong prima facie evidence of dishonest conduct by the defendants
which indicated a strong probability that they would destroy records.
o In relation to the defendant’s argument that the APO had been
oppressively executed, Smyth J stated that the conflict of evidence as to
what happened in the course of its execution could only be resolved by an
oral hearing which could not be heard at this stage; and that he was not
disposed to set the order aside given this conflict.

Safeguards
Universal Thermosensors Ltd v Hibben,
 Nicholls VC – clearly felt that the procedure lent itself ‘too readily to abuse’ and
laid down a number of safeguards in relation to the execution of APO which he
felt should be observed.
1. He noted that often the courts will make it a condition of the order that
the plaintiff give the defendant the opportunity of obtaining legal
advice provided this is done forthwith.
 Such a term, if it to be of use, requires in general that APO
should be permitted to be executed only on working days in
office hours, when a solicitor can be expected to be available.
2. Private house, woman in house alone, solicitor must be accompanied
by a woman.
3. He suggested that unless seriously impractical, a detailed list of items
removed from the premises should be prepared which the defendant
should be given an opportunity to check at the time
4. The order should not be executed at business premises in the absence
of a responsible company representative unless there is a good reason
for doing so.
5. Also recommended that judges should give serious consideration to
the desirability of providing that the order should be served and its
execution supervised by an experienced solicitor familiar with the
workings of such orders other than a member of the firm of solicitors
acting for the P and that a summary inter partes review of the
manner in which the order is executed should then be conducted by
the court.

 ‘if plaintiffs wish to take advantage of this truly draconian type of order,
they must be prepared to pay for the safeguards which experience has
shown are necessary if the interests of defendants are fairly to be
protected’.

 There have not been many written legal judgements concerning Anton Piller
Orders in this jurisdiction.
 Microsoft Corporation v Brightpoint Ireland Ltd – court did not consider the
appropriate safeguards that should be observed while carrying out such an order.
 Smyth J did agree with counsel however that it might have been
sensible for an inventory of items taken to have been made and signed
by the defendant.
 He made it clear however, that there was no obligation on the plaintiffs
to provide such a list to the defendants since the plaintiffs are obliged
under the terms of the order to preserve copies of all documents taken.
 In this regard, Smyth J stated that the law on this issue was properly
put by the court in Columbia Picture Industries Inc where the court had
said that it is essential that a detailed record of the material taken
should be made by a solicitor executing an APO before the material is
removed from the premises.
Contempt of Court
- While it cannot be disputed that failure to comply with the terms of an APO in any
circumstances technically amounts to contempt of court and should not be
condoned; it is submitted that the courts should be slow to impose penalties
where the order is subsequently set aside in view of the potential for abuse
inherent in this far-reaching and often draconian form of relief.
- However, Scott J in Columbia Picture Industries v Robinson –
o If D refuses to allow access to premises, and subsequently applies
successfully to have the APO discharged, he would nevertheless be guilty
of contempt of court.
o Judge noted that the provision usually inserted into an APO to the effect
that D enjoys liberty to apply to the court is of questionable value, since it
can only be acted upon after D has either allowed the search to take place
or has committed an act of contempt.

Options for a defendant facing an APO

 Capper has commented on the options facing a defendant when confronted with
an APO which he believes should not have been granted.
1. If the defendant believes that the order has been wrongly granted he could
refuse to comply with it until he has had an opportunity to apply for discharge
of the order.
- This may be a potentially dangerous course of action as the defendant’s
refusal to comply with the order immediately constitutes contempt of court,
although if the application to discharge the order is successful this will not
necessarily have serious consequences.
2. Second possibility is to apply for the order to be discharged after it has been
executed, which is what happened in the Columbia case.
- However, this is often of questionable value as the damage will already
have been done, and the defendant will usually simply be seeking to force
the plaintiff to comply with his undertaking in damages.
3. Third option which can be pursued where a P fails to serve a statement of
claim or otherwise proceed with the action after the execution of an order, the
defendants can apply to the court for a dismissal of the plaintiffs action.
4. Finally a defendant can seek to swing the balance back in his favour by
invoking the privilege of self- incrimination

Self-incrimination
 The effect of the privilege of self-incrimination in this context has been considered
in some detail in the UK.
 During the 1970s the privilege was successfully invoked on a number of
occasions to resist Anton Piller Orders.
Rank Film Distributors Ltd v Video Information Centre
o It was held by the HOL that disclosure of the information sought by the
appellants would tend to expose the respondents to a criminal charge
of conspiracy to defraud in respect of video privacy and that there was
no way in which the court could compel disclosure while at the same
 time protecting the respondents from the consequences of self-
incrimination.
o Lord Russell pointed out in the course of his judgement that because
the privilege against self-incrimination could largely deprive the owner
of copyright of his right to the protection of his property, legislation in
this area would be desirable.

 The legislature responded by introducing s 72 of the Supreme Court Act 1981,

revoking the right of a defendant to exercise this privilege in proceedings
concerning the disclosure of information relating to the infringement of rights in
this area of intellectual property; which provided that matters disclosed would not
be admissible in evidence against the defendant in proceedings against him for a
related offence.
O.Ltd. v Z (2005)
- COA granted an APO following the claimants allegation that the defendant
had wrongfully retained access to software and other materials that might
harm their business.
- The issue then arose as to whether the discovery of child pornography
could be disclosed to the police or whether the defendant could rely on a
privilege of self incrimination.
- Lindsay J held that no privilege of self-incrimination could be
retrospectively claimed by the defendant after the incriminating evidence
had been found.
- `Whether the defendant knows of the privilege and whether or not it is
explained or mentioned to him, he will be taken to have lost the privilege if
he does not claim it before answering questions or produces the
documents in issue.

 The difficulties caused by the overuse of the privilege against self-incrimination

are even more marked in this jurisdiction where it remains unaffected by
legislation cutting down its effect.
 While there have been few cases involving APO in which written judgements
have been delivered in this jurisdiction, such orders are being sought with
increasing frequency and legislative intervention to at least the common law
privilege may well be necessary if effectiveness of Anton Piller Orders is to be
preserved.
 It should be noted that Irish authorities have recognised that the privilege has the
status of a constitutional right. – Re National Irish Banks Ltd
o This has the effect that any abridgement of the right must be
proportionate.
o The impact of this constitutional protection in the context of Anton Piller
orders has yet to be examined by the Irish courts;
o But It may be that the Irish courts would not consider the approach
adopted by Lindsay J to be a proportionate response in view of the
constitutional protection that the privilege enjoys.
 Issue of self-incrimination in respect of AP raised but did not have to be
determined in Microsoft Corporation in which the defendant contended that the
plaintiffs through their agents had failed to advise the defendant of its privilege
against self-incrimination.
- However, given the assertion made on the defendant’s behalf that the
company was complying with the law, Smyth J stated that the issue of self-
incrimination could not arise and he found that this was therefore not a
basis for setting aside the APO in the circumstances.

 In an English context, Dockray and Laddie have suggested that unless the ambit
of section 72 is extended, AP jurisdiction will to a large extent become incapable
of being exercised and they comment that in their view something more than
limited legislative tinkering’ is required.
- They quite readily suggest that if legislation in this area is introduced it
should also tackle the thorny question of potential abuse of this jurisdiction
by plaintiffs and it would certainly appear that the ‘inherently oppressive’
nature of the order is now more readily acknowledged by the judiciary.

In the past the examiner has asked an essay question concerning Anton Piller orders
wherein the question compares such orders to a form of torture, see for example Question
7(b), October 2003 and Question 4(a), April 2006. In addressing that particular issue
candidates should tie in the potential breach of the privilege against self-incrimination
which is protected under both the constitution and the European Convention on Human
Rights.

Specific performance

Rectification
Rescission

Estoppel