Equity: Trusts, Fiduciary Duties and Remedies
Trusts
A trust separates legal and equitable ownership. Express trusts require certainty of intention, subject matter, and objects. Resulting trusts arise from failed express trusts or contributions to purchase price. Constructive trusts arise by operation of law, often as a remedy for unconscionable conduct or breach of fiduciary duty.
Fiduciary duties
Fiduciaries must act in good faith, avoid conflicts of interest, and not profit from their position without informed consent. The duties are strict; the 'no conflict' rule can be breached even where the principal suffers no loss. Remedies include account of profits, equitable compensation, rescission, and injunction.
Equitable maxims and doctrines
Know the maxims (he who seeks equity must do equity; delay defeats equity; equity looks to substance over form). Understand doctrines such as part performance, proprietary estoppel, and the requirement that equitable remedies are discretionary.
Traps
- Confusing a resulting trust with a constructive trust.
- Forgetting that certainty of objects for a trust differs from certainty for a power.
- Assuming equitable remedies are available as of right; they are discretionary.
- Missing that fiduciary duties can be modified by informed consent.
Worked example
A solicitor acts for both buyer and seller in a conveyance without disclosure. The solicitor has breached the no-conflict rule. The court may order an account of profits or equitable compensation, and the retainer may be set aside. The client need not prove loss for the conflict rule to be engaged.