WEEK 6 –
CONSOLIDATION
(W1-5)
Legal Studies [30 credits]
Connor Watts
WattsC5@cardiff.ac.uk
This Photo by Unknown Author is
licensed under CC BY-SA-NC
STRUCTURE
1.English court structure – a recap.
2.UK Constitution.
3.Statutory interpretation.
4.Equity and trusts.
WHAT ARE THE RULES OF
STATUTORY INTERPRETATION?
In groups, 10 minutes to think of as many as
you can with an example of each.
Don’t spend too long on one rule. Try to cover
them all.
TRADITIONAL RULES OF
STATUTORY INTERPRETATION
1. Literal rule – judge applies ordinary, plain meaning to the words, even if the
result was unjust or nonsensical. Following parliament closely, not straying
into law making. E.g. R v Harris (1836).
2. Mischief rule – est. 1584 = oldest rule – what mischief was parliament trying
to prohibit? Purpose of the statute. E.g. Smith v Hughes (1960) charged under
Street Offences Act 1959.
3. Purposive rule/approach – similar to mischief but more concerned with
parliament’s intentions when passing the Act than just the mischief caused.
+ Golden rule - modifies the literal rule in an attempt to avoid absurd results.
MODERN APPROACH TO
STATUTORY INTERPRETATION
The Human Rights Act 1998 also impacts statutory interpretation in
modern times.
Section 3 of the Human Rights Act is the interpretative provision, and
it applies to primary and secondary legislation whenever enacted,
whether before or after the Human Rights Act.
The duty of the court under this section is to interpret legislation ’so
as far as is possible’ consistently with the European Convention on
Human Rights
Monarchy
Executive Legislature Judiciary
• Governments (UK, Wales,
Scotland, NI).
• Local authorities and other
public bodies (e.g. HMRC,
Dept for Education).
• Parliaments (UK,
Wales, Scotland, NI).
• Courts (with the
Supreme Court at the
top and responsible for
whole of the UK for
constitutional matters.
PRIMARY AND SECONDARY
LEGISLATION
Primary =
statutes.
Secondary = laws
passed under the
authority of
another statute.
Key constitutional principles
3. Rule of law
2. Separation of powers
1. Sovereignty of parliament
2. THE MAXIMS OF EQUITY.
• 12 maxims of equity
per Hudson (2022: pp.
20-28). These are
applied flexibly,
showing equity’s
preference for broad
ethical principles over
the strict rules of CL.
(Ibid.)
1. Equity will not
suffer a wrong to
be without a
remedy.
2. Equity follows
the law.
3. Where there is
equal equity, the
law shall prevail.
4. Where the
equities are equal,
the first in time
shall prevail.
5. Delay defeats
equities.
6. He who seeks
equity must do
equity.
7. He who comes to
equity must come
with clean hands.
8. Equality is
equity.
9. Equity looks to
the intent rather
than to the form.
10. Equity looks on
as done that which
ought to have been
done.
11. Equity imputes
an intention to fulfil
an obligation.
12. Equity acts in
personam.
1. Equity will not suffer a wrong to
be without a remedy.
Where the common law or statute
don’t have a remedy, equity will
intervene.
2. Equity follows the law.
But not slavishly or always.
Generally, equity will win over non-
statutory common law, but not over
statute.
3. Where there is equal equity, the
law shall prevail.
If there is no clear outcome, the
most suitable common law
principle will be applied.
4. Where the equities are equal, the
first in time shall prevail.
The first to create/acquire rights
will have the court’s priority.
5. Delay defeats equities.
6. He who seeks equity must do
equity.
If a claimant has acted unfairly, this
will defeat a claim in equity.
7. He who comes to equity must
come with clean hands.
If a claimant has acted
unconscionably themselves, this
defeats a claim in equity.
8. Equality is equity.
If parties have an equal claim in a
property, the title will generally be
divided equally amongst them.
9. Equity looks to the intent rather
than to the form.
10. Equity looks on as done that
which ought to have been done.
11. Equity imputes an intention to
fulfil an obligation.
12. Equity acts in personam.
13. Equity will not
permit statute or
common law to be used
as an engine of fraud.
14. Equity will not
permit a person who is
trustee of property to
take a benefit from
that property qua
trustee.
15. Equity will not
assist a volunteer.
16. Equity abhors a
vacuum.
17. A trust operates on
the conscience of a
legal owner of the
property.
Hudson also adds these maxims that “cut to
the heart of equity”:
3. EQUITABLE REMEDIES.
1. Specific
performance
2.
Injunctions
3. Recission
4.
Rectification
5. Account
• Where financial damages wouldn’t be sufficient, the courts can
order for specific performance. This involves a party being
compelled to complete their obligation.
• Specific performance can only be granted at trial, because it’d be
inappropriate for a judge to do so without knowing the full
picture/examining all the arguments and evidence at a trial, etc.
• Must usually be a unique obligation required.
• Courts won’t enforce obligations that would require constant
supervision and are reluctant to enforce SP for specific services.
• Examples: Sky Petroleum v VIP Petroleum [1974] and Behnke v
Bede Shipping Co Ltd [1927].
1. Specific performance
• More commonly awarded at the end of a trial, but an interim
injunction can be awarded before a trial.
• Can be prohibitive, mandatory or quia timet.
2. Injunctions
PROHIBITIVE MANDATORY QUIA TIMET
MANDATORY Prevent a breach of some
obligation. E.g. Venables v News
Group Newspapers [2001].
At full trial, require
performance of
obligation like SP.
----
INTERIM Lord Diplock in American Cyanamid
Co v Ethicon Ltd [1975] set out the
guidelines: serious question to be
tried, damages inadequate, balance
of convenience requires injunction –
risk of doing injustice to a party.
American Cyanamid
tests apply, but a
high degree of
assurance that the
grant will be the right
decision after the
trial is needed.
Do not require proof of
actual harm as they
prevent harm from
occurring – e.g.
Venables case.
• Freezing orders (previously: Mareva injunctions)
Orders to freeze a defendant’s assets. If there is a danger that
someone will try to destroy or hide assets to avoid paying
damages, a freezing order can be issued to freeze assets up to
the value of the claim being pursued.
The claimant gains no property rights over the frozen assets – an
example of equity acting personally. However, it is possible that
this is somewhat not the case – Z Ltd v A-Z and AA-LL [1982].
Test is American Cyanamid + Derby & Co Ltd v Weldon [1990].
• Aims to restore both parties to their original positions before
any wrong happened. Can be used for misrepresentation,
undue influence, duress or mistake per Bainbridge v
Bainbridge [2016].
• Can be barred if:
3. Rescission
Circumstance Case
Innocent 3rd party negatively affected Phillips v Brooks [1919]
Delay in making the claim Leaf v International Galleries [1950]
Claimant affirms the contract Long v Lloyd [1958]
Impossibility of restoring the parties Erlanger v New Sombrero Phosphate Co (1873)
• Allows the amendment of a document that doesn’t reflect the
parties’ actual agreement.
• Courts hesitate to do this unless there is good reason – per City of
Westminster Properties Ltd v Mudd [1959].
• Principles to test laid down in Racal Group Services Ltd v Ashmore
[1995] and Giles v RNIB [2014]:
a. Clear evidence that document doesn’t reflect true intentions of the
parties.
b. The flaw is not just about the consequences of what they wanted
but the real intentions.
c. All parties agreeing to the rectification is not enough by itself.
4. Rectification
• Per Attorney-General v Blake [2000], this is used to make a
fiduciary repay any bribes, unauthorised profit or profit
obtained from a breach of confidence.
5. Account
4. WHAT IS A TRUST?
• Watt (2021: 27) says it is difficult to define a “trust”.
• Thomas and Hudson (2010) define a trust as:
“the imposition of an equitable obligation on a person who is the legal
owner of a property (a trustee) which requires that person to act in
good conscience when dealing with that property in favour of any
person (the beneficiary) who has a beneficial interest recognised by
equity in the property.”
• It is almost always true that the trustee holds the legal title and the
trustee must discharge the purposes for which the property is
vested in them. (Watt 2021: 26)
• Parties involved.
• See: (Hudson 2022: 42)
TRUSTEE
BENEFICIARY
SETTLOR
Legal title
and
equitable
interest
Personal
obligations
under the
trust
• Settlor must own whole property – legal and equitable interests to
be able to transfer it. Once trust is validly declared (e.g. property
transferred), settlor has no further active role.
• Trustee has property vested in them. BUT the trustee cannot use the
asset for their own purposes. The wording of the terms of the trust
are important for establishing what the trustee can and cannot do.
Exact obligations found in the trust document.
• However, law does impose some obligations – e.g. amount of info
trustee must give the beneficiaries, appointment/retirement of
trustees, termination of the trust, etc.
• The trustee’s powers are FIDUCIARY in nature. This means a person
has entered into a relationship of trust and confidence from another
and the trusted person must fulfil their obligations to the other.
• Per Millett LJ in Bristol & West Building Society v Mothew [1998],
some key duties of a fiduciary – and thus a trustee – are that:
• A fiduciary can be made to make up for any losses suffered.
To act in good
faith
Not to make a
profit from the
trust
Must avoid
conflicts of
interest
Cannot act for
interest of others
or self without
principal’s
informed
consent
Beneficiaries has a range of remedies in the event of a breach of trust,
including:
• Protection from insolvency of the trustee, as the property rights are
part of the beneficiary’s estate, not the trustee’s.
• Right of compensation if a breach of trust results in the property
being lost, per Target Holdings v Redferns [1996].
• Right to trace and assert rights over any substitute property, per
Pilcher v Rawlings (1872), including any one not a trustee but who
participated in the breach, per Royal Brunei Airlines v Tan [1995].
Beneficiaries’ position will vary somewhat depending on the terms of
the trust.
5. THE TYPES OF TRUSTS.
• Three different types of trusts.
EXPRESS RESULTING CONSTRUCTIVE
Trusts created
explicitly by the settlor.
Implied by the court, so not
created by settlor but
settlor may’ve intended to
create it.
Arises by operation of law
– by court when
circumstances are
appropriate. No settlor.
Can be created by
writing or orally.
Per Westdeutsche
Landesbank Girozentrale v
Islington LBC [1996],
created in 2 situations:
1 – beneficiaries unclear;
or,
2 – contributor to price of
land.
When defendant has
unconscionably taken
property into their
possession, they’ll be
treated as holding it on
trust for rightful owner.
Trust property must be
sufficiently identifiable.
Beneficiaries must be
clear.
Also used by courts to
effect common intentions
of families.
DAMAGES
• Aims to compensate a party for loss suffered – aka “expectation loss”
or “expectation interest”.
• Robinson v Harman (1848) – Baron Parke:
“… where a party sustains a loss by reason of a breach of contract, he is,
so far as money can do it, to be placed in the same position, with respect
to damages, as if the contract had been performed”.
• The court will only compensate for the loss actually suffered by the
victim. Generally, no loss = no damages (perhaps nominal damages).
• In Planation Holdings (FZ) LLC v Dubai Islamic Bank PJSC [2017], UKSC
said:
“… it is necessary to consider what level of damages would fairly
compensate the claimant. The claimant should not be shortchanged.
Equally, however, the claimant ought not to be allowed to recover a
windfall.”
• To determine how much loss has taken place, courts divide losses into 2
categories: pecuniary and non-percuniary.
PERCUNIARY LOSS NON-PERCUNIARY LOSS
Financial loss. Damages will be calculated
to compensate the innocent party for any
financial losses that may have happened
due to the breach.
Non-financial harm suffered. Generally
cannot sue for N-P losses in contract
cases, unless a major object of the
contract is pleasure, relaxation or peace
of mind.
• Is calculating non-percuniary losses difficult to do? How do you quantity
a loss of relaxation, peace of mind or pleasure?
• There are also limits on damages that can be awarded.
Limit Overview Example case
Causation Party only liable for losses
caused by their breach. Must be
the “dominant” or “effective”
cause if not the only.
Galoo Ltd v
Bright Grahame
Murray [1994] in
EWCA.
Remoteness Some losses which clearly
result from the def’s breach of
contract BUT are considered to
far removed from the breach for
breaching party to fairly be
expected to pay.
Hadley v
Baxendale
(1854)
+ Contributory
negligence and
mitigation,
which we will
look at in S2.