Equity - Constitution Of Trusts

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Introduction

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• 'Milroy v Lord': Turner LJ:
- E won't perfect an imperfect gift: trust only when legal title conclusively vested
- E won't assist a volunteer: if gave no consideration, volunteer can't claim prop. under an incompletely constituted trust

• Had some exceptions, but on the whole they were clear and defined

• But much less coherence and principle since 'P v W' per Arden LJ

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Constitution of a trust - 'Milroy v Lord'

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'Milroy v Lord': settlor had used a deed not a share transfer form; gift void.
Turner LJ: for each form of transfer, donor must do "everything which...was necessary to be done"

1: Outright transfer: prop. passed to donee
2: Declaration of trust: prop. vested in trustee
3: Self-declaration of trust: leg. title already vested; need certainty of intention

• An imperfect gift cannot be saved by ct's construing as another form, or "every imperfect instrument would be made effectual"

• Would undermine the purpose of and policy considerations behind the formality requirements

COMMENT: rules were unforgiving but clear
• Doggett: the burdens of trusteeship shouldn't be imposed where there is ambiguity re intention

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Formalities per property type

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Land: s.53(1)(b) LPA 1925 - writing

Eqt. interests: s.53(1)(c) LPA 1925 - writing

Shares: Companies Act 2006 - share transfer form + registration

Chattels: deed, delivery or gift

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Strict application of rules

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'Jones v Lock': failed outright transfer (handing cheque to baby) couldn't be construed as self-declaration of trust

• 'Re Fry': donor hadn't obtained Treasury consent to a transfer of shares still had something to do himself

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Exception 1
Donationes mortis causa

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DEF: a lifetime gift conditional upon- and taking effect upon- death

'Cain v Moon': L. Russell CJ: 3 req's:

1: Made in contemplation of death. Not nec. expectation, but fairly imminent; not awareness of mortality
- 'Agnew v Belfast Banking Co': e.g. illness, war service, hazardous journey
- 'Wilkes v Allington': doesn't matter that COD different than expected (expected cancer, died of pneumonia)

2: S-M delivered to the donee; intention to part w/'dominon' over it
- 'Sen v Headley': title deed were ess. indicia to house; constructively delivered
- 'Re Mustapha'; 'Woodward v Woodward': keys sufficient

3: Donor's intention is conditional
- 'Re Lillingston': needn't be expressed; can be implied from the circ's

NB: not certain that DMC can be used to create a trust
'Birch v Treasury Solicitor': sometimes said to imply this, but contested

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Exception 2
'Strong v Bird' rule

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1: Testator intended to make an immediate ('Re Freeland') inter vivos gift ('Re Stewart') or to forgo a debt ('Strong v Bird')
- 'Re Innes': intention to make a testamentary gift not sufficient

2: Intention continued until death
- 'Re Gonin': no gift of house as mother had prepared cheque as alternative

3: Intention re specific property, not just gen. desire to provide sth. for the donee

4: Donee is appointed executor - idea that trust completed by legal vesting at death

'Re Ralli': problematic; extended rule to the declaration of a trust BUT status is uncertain
• Meagher & Lehane: is a "sorry example of equity abused"; assisting a volunteer this way def. undermines leg. certainty

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Exception 3
Proprietary estoppel

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Unlike promissory estoppel, both shield and sword; can create a proprietary interest in a volunteer, even though no valid gift/trust in his favour

- HL 'Cobbe v Yeoman's Row'
- 'Gillett v Holt'
- 'Jennings v Rice'
- 'Taylor Fashions'

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Influence of equity 1
Every effort/last act

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'Re Rose' & 'Re Rose': both settlors had done all in their power to make the donation; gifts improperly constituted due to oversights by 3Ps
• Evershed LJ (CA 1952): would be 'unconscionable' for E not to intervene, as testator had done the 'last act' nec.; thus couldn't resile from their promise

'Mascall v Mascall': father prevented from revoking gift of land from son after arg. (land transfer form not yet registered)

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Influence of equity 2
Generous/equitable results

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'Vandervell v IRC': L. Wilberforce: V had done 'everything in his power' to effect the gift to the Royal College
BUT: he palpably hadn't; he wished to retain control of the option to repurchase the shares

'Paul v Constance': joint bingo winnings in man's account 'as much yours as mine'. Held to be self-declaration of trust as were "simply people", unversed in the subtleties of equity

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PC 'Choithram v Pagarani'

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Facts: TCP died before signing the doc's which would have constituted the gift. But- CRUCIALLY- he was to be a trustee of the charitable foundation and already had legal title --> could view gift as self-declaration of trust; no writing nec.
• L. B-W: equity will not strive officiously to defeat a gift

- TCP had provided for his family
- Solemn declaration: 'I die happy; I have done all I intended to do'

Need sufficient certainty of intention:
- E looks to intention, not form - 'Re Williams'
- Word 'trust' not nec. - 'Paul v Constance'

COMMENTS:
• Decision was a 'humane fiddle'
• NB: TCP's failure due to incapacity, not oversight/foolishness
• Didn't seriously undermine certainty as peculiar facts/limited application of ratio

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CA 'Pennington v Waine'
(Case)

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New head of exception - uncon.?

Facts: Settlor (Ada) tried to transfer parcel of shares to nephew (Harold). But instead of passing share transfer form to co. for registration, gave to auditors; failed to pass on.
- Hadn't done everything in her power - 'Re Rose'
- Hadn't declared self as trustee - 'C v P'

Arden LJ: would be 'uncon.' for A to have changed mind and H not receive shares; CT arose; constituted the gift. "Equity has tempered the wind to the shorn lamb"
- Was uncon. for a to resile as solicitor had told H 'everything's done'
--> Gunnow: unclear what makes this uncon.; no detrimental reliance (cf. other CT's e.g. in PE)

Clarke LJ: no need for delivery to effect "an equitable assignment"
• BUT: didn't explain grounds for this exception to formalities

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CA 'Pennington v Waine'
(Criticism)

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• Oakley; Halliwell etc: CA misunderstood L. B-W in 'C v P'

• Halliwell: such a power is an "unwieldy beast"; ct ess. giving itself unfettered discretion. Need more principled and coherent development of uncon.

• Resulting uncertainty means P's forced to litigate wherever there's a chance of uncon. perfecting an imperfect gift via a CT

• Tech. point: CA 'Milroy' was authority, not PC 'C v P, esp. was was on v. different facts

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Covenants

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Can only be enforced here if the ct finds that the covenantee held the promise itself a trust for the beneficiary - 'Fletcher v Fletcher'

PREV.: ct's unwilling to allow volunteers to sue to enforce the trust - 'Re Kay'; 'Re Cork'

BUT: Contracts (Rights of Third Parties) Act 1999: 3Ps may sue to enforce contracts/covenants:
- If are intended to confer a benefit on them
- Except where it wasn't the intention that they should be able to enforce it

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Conclusions

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NB: if such a gift/trust fails, property usually held on resulting trust for donor's estate

• Equitable outcome in 'P v W' perhaps to be supported, but has deprived law of much certainty and coherence

• Now unclear if/when gifts will be held constituted for uncon. (inherently vague term) via a CT

• Such a vague approach also goes ag. the maxim 'equity is equality'; it treats similar cases differently