Professional Documents
Culture Documents
Submitted By
Submitted To
ALIGARH-202002 (INDIA)
2020-21
SYNOPSIS
1-INTRODUCTION.
5- EFFECT OF AN ACCUMULATION.
7-CONCLUSION.
8-BIBLIOGRAPHY.
ACKNOWLEDGEMENT
THANKING YOU
17BALLB-72
1-INTRODUCTION:
A property owner is thinking of making a will or creating a trust. How far into the future should
the law allow him or her to reach when tying up that property? Can he or she control the
devolution of that property indefinitely? For a lifetime? For a fixed period of years? How far
should one generation be given freedom to dispose of property in ways that will restrict the
freedom of the next? These fundamental questions, which are the substance to be analyzed, are
ancient ones, and different answers have been given to them at different times. With the erosion
of the Rule Against Perpetuities, however, the rule against accumulations of income may have
newfound relevance. Perpetual trusts are more likely than ordinary trusts to prescribe
accumulations of income, and such trusts are designed to endure beyond the traditional
perpetuities period of lives in being plus twenty-one years. Income from trust assets must either
be distributed, retained as income or accumulated. If it is accumulated it becomes additional
capital of the trust, in turn (usually) generating future income. It has long been accepted that the
rule restricting accumulation, and particularly the restriction on the period for which income may
lawfully be accumulated, is an important aspect of trust administration and law, with potentially
serious consequences for any breach. Questions relating to accumulations, to the extent that they
ever arose, were simply considered under the umbrella of the wider question of whether the trust
itself was lawful. We were told that the rule against excessive accumulations works a similar
mischief in relation to trusts. It long predates the emergence of the modern discretionary trust, in
which powers to accumulate are an important element. The reasonable wishes of settlors will
often be incapable of fulfilment or will run the risk of being defeated by an absolute rule that
cannot be side-stepped.
5-EFFECT OF AN ACCUMULATION: -
*The effect of an excessive accumulation depends upon whether the direction merely
breaches the rule against excessive accumulations of income or whether it also contravenes the
rule against perpetuities. The latter has more serious consequences than the former.
*First, a direction to accumulate that not only exceeds the relevant accumulation period
but also contravenes the rule against perpetuities is wholly void. For example, a direction to
accumulate income until the first grandchild of A reaches the age of 21, where A is alive and
unmarried at the relevant date, is void for perpetuity at common law. It is not certain that the first
grandchild of A to attain 21 will do so within 21 years of A’s death. That grandchild might, for
example, be the offspring of a future born child of A. In these circumstances, it appears that the
common law test alone applies. It is far from certain that Act extended the principle of “wait and
see” to directions to accumulate. If it has not, in the example given, the direction to accumulate
income is wholly void, like any breach of the rule against perpetuities at common law.
*Secondly, the direction to accumulate may comply with the common law rule against
perpetuities but breach the statutory rule against excessive accumulations. An example would be
a direction to accumulate income until the first child of A (who is alive and unmarried at the
relevant date) should attain the age of 21. In those circumstances, the direction to accumulate is
void only to the extent that it exceeds the appropriate statutory period.
Tulk v Moxhay Brief Fact Summary: The Plaintiff, Tulk (Plaintiff), had sold Leicester Square
by deed containing. The Defendant, Moxhay (Defendant), a subsequent purchaser sought to
build upon the land. Plaintiff brought a bill for injunction.
Synopsis of Rule of Law: Since a covenant is a contract between the vendor and the vendee, it
may be enforced against a subsequent purchaser who has notice of the contractual obligation of
his vendor, even though it does not run with the land.
Facts: The Plaintiff sold Leicester Square with the restriction that it be maintained in a certain
form as a public “pleasure ground”. The deed restriction was covenant for heirs and assigns
requiring that the land be maintained as a square garden. The Plaintiff continued to own homes
and live around the square after its sale. In 1808, the person who originally purchased Leicester
Square from the plaintiff had notice of the covenant contained in the deed. Forty years later, the
property was sold to the Defendant, Moxhay. Moxhal sought to build upon the land on the
square. Plaintiff brought a bill for injunction to stop any construction.
Issue: Can a covenant restricting a property to a specific use be enforced against a subsequent
purchaser?
Held: Whether or not the covenant runs with the land, such an agreement could properly be
enforced in equity because the one who purchases the land from Tulk had notice of that
covenant. Defendant, Moxhal could not stand in a different situation from the owner from whom
he purchased the property. An equitable servitude is enforceable by injunction with no regard to
privity, so long as the promise is intended to run and the subsequent purchaser has actual or
constructive knowledge of the covenant.
7-CONCLUSION: -
The rule against accumulations of income limits the time during which a settlor may direct the
trustee to accumulate and retain income in trust. At common law, the accumulations period was
that of the applicable perpetuities period. Thus, for two hundred years the rule against
accumulations has lurked in the shadow of its older and more distinguished cousin, the Rule
Against Perpetuities. With the erosion of the Rule Against Perpetuities, however, the rule against
accumulations of income may have newfound relevance. Perpetual trusts are more likely than
ordinary trusts to involve accumulations of income, and such trusts are designed to endure
beyond the common law period for permissible accumulations. Thus, assessed the relevance of
the rule against accumulations for the rise of the perpetual trust. In short, because repeal of the
Rule Against Perpetuities probably also modifies the rule against accumulations, and if not, the
accumulations rule will likely be abolished by legislation, there is little reason to think that the
accumulations rule will impede the rise of the perpetual trust. Thus, found the continuing
soundness of the accumulations rule.