ABSTRACT
This chapter considers the rules governing the creation and enforcement of equitable interests in property. Property law draws a fundamental distinction between legal and equitable interests. The distinction is a product of the organisation of the courts prior to the judicature legislation of the 19th century. Originating from the jurisdiction of medieval chancellors, the equity jurisdiction has survived the introduction of the Torrens system of establishing title to land by registration, which recognises established legal and equitable interests in real property while radically reforming the methods by which they can be transferred and enforced. (See further discussion on the Torrens system, Chapter 11.)
The most significant creation of the chancellors and courts of equity is the trust. This is a device enabling real or personal property to be held by the legal owner for the benefit of some other person. For example, A, a landowner, might want to leave all her property to her children, who are minors. A may decide to leave the property by will to a friend or relative, B, to be held on trust for the children. Upon A’s death, B will hold legal title to the property (historically a title enforceable in common law courts). However, a court administering an equity jurisdiction will compel B to administer the property solely for the benefit of the children. The children themselves are entitled to an equitable interest in the property, enforceable in a court of equity not only against B, but also against most persons who acquired the legal title to the property from B. The trust can therefore be used as a method of making provision for the children. Historically, the trust was often used as a means for providing for members of a family at a time when the common law rules of inheritance to real property on death permitted land to pass only to the eldest son.
