Equity Law Cases Overview

Cases Summarized

• Brothers' Property Sale: Two brothers with limited means sold property interests below market value; the court overturned the transaction, highlighting fair dealing and protection of vulnerable parties in contracts.

• Diplock: Equitable tracing and compensation were central; misapplied estate funds were traced to third parties, establishing the equitable right to follow misappropriated money.

• Central London Property Trust v. High Trees House: Promissory estoppel was established; a landlord couldn't reclaim full rent after wartime reduction, showing equity prevents reneging on promises.

• Tinsley v. Milligan: A resulting trust case concerning a property purchased to defraud social security; despite the illegal purpose, a contributing partner gained a beneficial interest.

• Chappell & Co Ltd v. Nestle Co Ltd: Chocolate bar wrappers were sufficient consideration in a contract case, demonstrating that consideration doesn't need to be adequate, just sufficient.

• Donoghue v. Stevenson: While focused on negligence, this case implied equitable principles by establishing a manufacturer's duty of care to consumers, creating fairness in commercial relationships.

Equitable Proprietary Interests and Priority Rules

• Transferability of Equitable Interests: Equitable interests transfer subject to existing equitable rights and obligations; the rule in Saunders v. Vautier allows beneficiaries to terminate trusts if they're all adults and agree.

• Equitable Priority Rules: Courts use these rules to determine which competing equitable interests have priority over the same asset; this often complements or differs from common law.

• First in Time, First in Right: Generally, the first equitable interest created gets priority.

• Notice and Bona Fide Purchasers: A subsequent interest holder's knowledge (actual, constructive, or imputed) of a prior interest may impact priority; a bona fide purchaser without notice is generally protected.

• Inequitable Conduct: Courts may disregard priority if a party's conduct is inequitable.

• Equitable Liens and Charges: Priority depends on creation timing and notice.

Equitable Assignments

• Creation of Equitable Assignments: Occurs when an equitable interest is transferred without meeting all legal assignment requirements; a clear intent to transfer is crucial.

• Notice to the Debtor or Obligor: While not strictly required between assignor and assignee, notice protects against other creditors.

• Rights of the Assignee: Assignees enforce the assigned interest in equity, but are subject to any defenses against the assignor.

• Differences from Legal Assignments: Legal assignments require absolute transfer, writing, and notice; equitable assignments have more flexibility.

Case Law: High Court of Australia & UK

• Hewitt v. Court: Constructive trusts can arise from a common intention to share property, and one party's detrimental reliance on that intention.

• J & H Just Holdings Pty Ltd v. Bank of NSW: A wife guaranteeing her husband's company debt was under undue influence; the guarantee was voided.

• Northern Counties of England Fire Insurance Company v. Whipp: An insurer, after paying a claim, could recover the amount from a third party responsible, demonstrating the doctrine of subrogation.

• Holroyd v. Marshall: A contract to sell future property creates an equitable interest once the property exists, even if the seller didn't own it at contract time.

• Hospital Products Ltd v. United States Surgical Corp: Fiduciary duties exist in distribution agreements with significant control over the other party's business.

• Chan v. Zacharia: Fiduciary obligations exist between medical practice partners.

This quiz explores key equitable cases that shape contract law, such as promissory estoppel and resulting trusts. Understand how courts protect vulnerable parties and the principles behind equitable tracing. Dive into landmark cases like High Trees House and Tinsley v. Milligan to grasp the nuances of equity in legal contexts.