A Sourcebook on Equity and Trusts in Australia

Introduction

Legal property and equitable property

Assignments are transfers of property from one party to another. The dualist nature of our legal system is exhibited here. The common law originally only recognised two kinds of property (land and chattels), and developed mechanisms for their legal transfer. Equity was more creative and recognised rights in a wider range of cases. For example, the beneficiary's equitable interest in trust property is recognised in equity alone.

Over time, new varieties of property interests (such as shares in companies) were recognised by the common law, and transfer methods adopted for them. Different methods of assignment (most now sourced in statute) apply to different forms of legal property (see textbook at [9.5]). Equity developed its own methodology for assignment of property or rights recognised in Chancery, such as the partnership interest and the beneficiary's interest in trust property. All equity required was that the assignor manifest an immediate intention to assign the equitable property interest. It was even possible to manifest an immediate intention to assign without any writing. A statutory requirement of writing was, however, later introduced (see textbook at [9.25]–[9.27]). As different transfer rules apply to each, a crucial initial question when dealing with assignments is deciding whether the property in question is legal or equitable in nature.

Equity's intervention in assignments of legal property

In addition to recognising transfers of equitable interests, equity treats assignments of legal property as being sufficiently complete in some situations where the common law would regard the assignment as ineffective (see textbook at [9.7]–[9.12]). In such cases, equity will enforce the assignment against the assignor, and insist that whatever steps necessary to complete the assignment at law are taken. The guiding principle here is that equity intervenes when the assignor's conscience can be regarded as bound by the transaction. Practically, equitable intervention in legal assignments happens in two scenarios: