(ii) Agreements to assign
•    Equity treats an assignment for value as if a contract has been made to assign the property. That contract is enforceable, because “equity regards as done that which ought to be done”
Chang v Registrar of Titles (HCA)
Facts:     Registered proprietor of bock of land in Melbourne was China. Appellants contracted with agents of Taiwan govt to purchase the land. Later Australia withdrew recognition of Taiwan govt and recognised People’s Rep of China. Victorian registrar then refused to register transfer in appellants favour and appellants sought an order vesting the land in them arguing the vendor had become a trustee for them as purchasers.

Held:    Appeal dismissed
“It has been accepted in decisions in England and Australia that at least when the purchaser has paid the purchase money the vendor becomes constructive trustee of the property sold…” per Mason J.
A purchaser under a contract for the sale of land can obtain an equitable interest in that property, where a court of equity would grant specific performance. This does not automatically make the vendor a constructive trustee.
- Being a purchaser under contract did not entitle them to title without payment
- If there is defect in the vendor’s title, it may impinge on purchaser’s equitable interest

(iii) Creating new equitable property by a declaration of trust
•    A declaration of trust is a final and binding statement by the absolute owner of the property that she holds the property in trust for another.
•    Conveyancing Act 1919 (NSW) S23C(1)(b)  requires that a declaration of trust over an interest in land must be manifested and proved by writing, however an oral declaration of trust over personal property is effective and may be inferred from conduct (Paul v Constance)

Paul v Constance
Facts:    C lived in a de facto relationship with Mrs P. C received workers’ compensation payment for £950 which C and P put in account in C’s name. However, C and P made oral statements that it was their money. P had authority to operate the account. When C died, his estranged wife became administratrix. Since the account was in C’s name, money went to his estate. P argued that C was holding the account (legal chose in action) on trust for her and himself.
Held:    The account was held on trust for both C and P. The requisite intention could be inferred from the following facts:
1.    there had been deposits of money they had jointly earned
2.    money had been withdrawn from the account for P’s purposes
3.    they had generally acted as if the account was a joint account

(iv) Future Property
Examples of future property:
•    An expected legacy under the will of a living person
•    Copyright in unwritten songs
•    Damages claimed under pending litigation
Are these things really property at all, while they are still so contingent? Are they not merely “expectancies”? If it doesn’t presently exist, how can the law recognise a present transfer?
•    Future property cannot be assigned in law but can be assigned in equity for value
•    Does the effectiveness of the assignment depend on whether an agreement to assign the property would be specifically enforceable? (Tailby v Official Receiver)

Re Lind
Facts: L had an expectancy of a share in his mother’s estate. Mother is insane (but still alive) so she won’t be able to change will. L mortgaged it to N (i.e. assigned the expectancy to N in exchange for value (money)) in 1905 and to A in 1908. Between 1908-1910 L is bankrupt and neither N or A make claim on L’s estate (L is discharged in 1910). In 1914 mother dies, L acquires interest in estate, assigns it all to Plaintiff, P, for value (P has taken an assignment of presently existing property for value, but it is an equitable assignment). P argued that debts owed to N and A were discharged and that he took the expectancy unencumbered by any other interest, because P wants to be first in line for payment.

Issue: Who gets what between N, A or P?

Held:    In 1905 property hasn’t passed to A yet, but it will be effective in equity when mother dies, because value has been given. P’s interest was third in line and the first in time prevails. Held that N gets first then A then P (All entitled to be paid back but their security is affected by priority). N and A both had contingent proprietary rights which arose before the bankruptcy, hence these interests survived the bankruptcy. Before the bankruptcy an interest did come alive and
simply bore fruit when the mother died. When P takes interest from L, they must do so subject to already existing equities (i.e. L is trustee for N and A of the property, so N and A have equitable interests).

“An assignment for value of future property actually binds the property itself directly it is acquired – automatically on the happening of the event and without any further act on the part of the assignor – and does not merely rest in, and amount to, a right in contract, giving rise to an action. The assignor, having received the consideration, becomes in equity on the happening of the event, trustee for the assignee of the property devolving upon or acquired by him, and which he had previously sold and been paid for.” – per Swinfen Eady LJ

The tree or the fruit?
Distinguish a presently existing right to receive income (“the tree”) from the income as it arises (“the fruit”).
 
Norman v FCT (1963) 109 CLR 9
Facts: A taxpayer entered into deed in 1956 under which he agreed to transfer to his wife in 1958 “all his right title and interest” on a loan and dividends on shares. Note: The wife gave no consideration, the loan was repayable by the borrower at will (without notice) and the company has discretion in the payment of dividends. In 1958, FCT tried to tax him on the shares and the interest, but he claimed he transferred them to his wife. FCT argued that they were future property when transferred in 1956 and the absence of consideration meant it was not a valid transfer.

Held: Majority: The rights to the interest and dividends were future property, not presently existing rights.
The interest: Since the loan was repayable at will, it was clearly possible in 1956 that the loan could be repayed before 1958. Hence there was no presently existing right to obtain interest in 1958 or any way of knowing it would be paid. There were “gifts of interest paid but not a gift of interest to be paid…”
For this voluntary assignment (by way of a gift) to be effective, consideration should have been paid. Here there was no consideration so the property was taxable.
The dividends: This was a right not already in existence (future property). It is uncertain whether a dividend will be paid in a particular year, it is only a possibility until declared.

Windeyer J (Dissent): “A contract to pay a sum of money on a future day, call it interest or what you will, calculable in amount according to conditions presently agreed, is in my view a presently existing chose in action . . . Why should not the creditor before the date when this debt becomes due and payable, assign his right to receive payment on the due date? . . . What he assigns is not . . . a right to arise in the future but a present contractual right to be paid at a future date a sum of money to be calculated in the agreed manner.”

Note: Have to look at two things in determining what is assigned
1.    What words have been used, how has the assignor expressed himself
2.    The nature of the property being assigned e.g. if it is a bank account, is it a term deposit?
- Here the husband assigned the fruit (the interest itself) not the tree (the present right which will bear the future interest). If he assigned “any rights that accrue from owning the shares”, that would have been presently existing property (the tree) and would have included dividends arising in the future when the tree bore fruit.
- If you are assigning the tree (present right which entitles the assignee to receive a benefit in the future), value consideration need not be given.
- If there is assignment for no value, equity will only enforce it if it is presently existing right (and even then only with respect to principles discussed in ‘Voluntary Assignment’).

Shepherd v Commissioner of Taxation (1965) 113 CLR 385.

Facts:    S granted a licence to a company to manufacture castor wheels he invented in return for an agreed royalty payment of 5% of the gross sale price.  He then assigned as a gift “all right title and interest in 90% of the royalties which may accrue for 3 years” under the patent licence agreement. The FCT wanted to tax S on 100% of the royalties received.
Issue: Was this an assignment of a present right, or a purported assignment of a mere expectancy/future property?

Held:    It was a valid assignment therefore the tax assessment was wrong. S was not assigning the future money that would be received from the royalties, he was assigning the right to receive the royalties. S had no present right to receive money from the royalties but had a present contractual right to receive royalties should production occur.
Kitto J: What was assigned was the contractual right to receive royalties (a legal chose in action), not the royalty payments that may be received pursuant to the contractual right. (i.e. S was assigning the tree not the fruit.)
 Agreed with Windeyer J in Norman

•    Note the distinction between Norman and Shepherd

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