3- Rule in Re Rose Flashcards
The rule in Re Rose
- Where settlor or donor did everything necessary to transfer title to trustee or donor,
- but this hasn’t happened for reasons outside the control of the settlor or donor,
- the maxim that Equity will treat as done that which ought to be done will apply.
- Title will pass in equity but not in law, so that the settlor/donor holds the property on constructive trust for the trustee/donee.
Re Rose (1952)- Reccomended
Case: Transferor purported to both gift some shares to his wife and to put some shares on trust by transfering to trustee in March. He completed the necessary documents and delivered them to the company where shares were held. Transfer registered by company in June. Transferor had by then died.
If transfer had been effective in March estate duty would not have been payable on the transfers by the transferor’s estate, but duty would have been payable by the estate if the transfers were effective in June.
Decision:
- Loosened the strict rule in Milroy v Lord that all that is necessary to transfer the property must be done.
- Though the transfers were not legal until June, it was effective in equity in March, because the transferor had done everything in his power to effect a transfer by that date.
- The fact that an intention to make a gift could not be interpreted as an intention to declare a trust did not prevent the court recognising that that shares were held on CT for wife because this rule applies to express trusts.
Midland Bank v Rose (1949) NB: different case to Rose 1952, just conincidence that same name.
Case: T wished to give H shares. He had executed the share transfer docs in accordance with the co’s regulations to transfer them to H, and gave him the share certificate.
BUT by the time of T’s death the shares had not been registered in H’s name by the co.
Decision: Because testator had done all he needed to do to vest the title in H, equity should treat the vesting of title as having occurred while T was living (because if he the shares had not vested in H they would have gone to others under his will)
Re Paradise Motor Co 1968
Re Rose- Transferor of shares considered to have done all that was necessary for shares to be transferred even though he had not signed the transfer document, because this was considered a mere irregularity, and not essential.
Re Fry [1946]
Contrast with Paradise Motor.
Case: Donor, who lives abroad, needed to obtain HM Treasury consent to transfer shares. Though he had applied for this consent, it had not been obtained.
Rule: Not sufficient if settlor’s further input needed. Consent of Treasury needed, which might have required settlor to provide further information or answer questions
Is Fry reconcilible with Re Rose?
- Jenkins in Re Rose 1949- “[Milroy v Lord and Re Fry] turn on the fact that the deceased donor had not done all in his power, according to the nature of the property given, to vest the legal interest in the property in the donee.
- In such circumstances, it is well settled that there is no equity to perfect the imperfect gift.
- BUT in both Re Rose cases it might have been held that the settlor and donor had not done everything necessary since consent of the directors was required before the transfer could be registered and they may have requested more info before giving it.
- So the preferable view is that It wil always be the case that the settlor/donor could have done more, but it should be sufficient that they have done everything that is essential for him to effect the transfer and without which the transfer could not take place.
Mascall v Mascall [1984]
Case: Father intened to gift son house. Gave him certificate and made transfer doc. Son just needed to take it to Registry for approval but before he did F and S fell out and F sought to have gift set aside as void.
Decision:
- Gift had been effective in equity. F had done all that needed to be done to transfer the house to S.
- Though it was possible for F to have sought registration of the change in title himself, this was not considered relevant because the test was whether F had done everything in his power in the ordinary way to transfer title,
3. it was usual for the donee to seek registration.
Pennington v Waine [2002] - Required- Facts and decision
Extending Re Rose.
Case: Donor wanted to give her nephew 400 shares in a co. She wanted him to be its director, for which he needed to hold at least 1 share under the arts.
The auditors informed the nephew of the transfer and asked him to complete consent forms. Both he and the donor (his aunt) signed, but she died before the auditor had delivered the consent form to the co.
In donor’s will she made specific gifts of the balance of her shareholding, but made no mention of the 400 shares. The executors of her estate (residuary beneficiaries of the will) claimed there had been no valid transfer because it had not been completed before death.
Decision:
- Donor had not done everything in her power. The auditor was acting as her agent and he had not done everything in his power to transfer title.
- Aunt could have demanded the return of the share form at any point before the agent delivered it, which meant the simple transfer of the form to the agent did not fulfil the Re Rose test.
- BUT court extend the rule to make the transfer effective.
4. Rule- Equity will not insist donor has completed all the necessary steps if it would be ‘unconscionable’ for donor to recall the gift.
- Since N had been informed about the gift of the shares and he had been made a director of the co it would have been unconscionable for the donor to revoke the gift before her death- Used Choithram v Pagarani 2001 as support for considering ‘unconscionability’.
- “There can be no comprehensive list of factors which makes it unconscionable for the donor to change his or her mind: it must depend on the court’s evaluation of all the relevant considerations”.
- Further ground on which case could be decided- After the share transfers were executed auditor wrote to nephew on donor’s instructions informing him of the gift and stating that there was no action that he needed to take. I would also decide this appeal in favour of the respondent on this further basis.
Pennington v Waine [2002] - Arden on policy on maxims.
1. No consistent single policy consideration. Could be:
(a) Ensuring donors do not by acting voluntarily act unwisely in a way they may subsequently regret; furthered by permitting donors to change their mind at any time before constitution.
- parernalistic and can oughtweigh the respect to be given to the donor’s original intention as gifts are often held by the courts to be incompletely constituted despite the clearest intention of the donor to make the gift.
(b) To safeguard the position of the donor if discovered insolvent- to make sure gift didn’t defeat rights of creditors.
- I do not consider that this need concern the court to the exclusion of other considerations as in the event of insolvency there are other potent remedies available to creditors.
(c) legal certainty- but tempering means there isnt any.
2. Policy considerations against the maxims
Equity should perfect an imperfect gift because this would:
A. effectuate, rather than frustrate, the clear and continuing intention of the donor
B. Prevent the donor, or her personal representatives, from acting unconscionably by revoking the gift.
Pennington v Waine [2002]- Required- How the maxims have been tempered
1. By Re Rose- difficulty with this exception- it assumes there is a clear answer to the Q ‘when does an equitable assignment of a share take place?’. Q is actually circular. The equitable assignment clearly occurs at some stage before the shares are registered- but does it occur when share is delivered to transferee or when transfer is lodged for registration?
-If by handing transfer form to auditors the donor completed the gift and the shares were thus assigned in equity, then N is able to bring an action to recover the shares, and equity will not perfect an imperfect gift.
2. Equity will not assist a volunteer- tempered the maxim by finding a CT in Re Rose cases and deathbed cases.
Pennington v Waine evaluation
- CoA (particularly Arden) influenced by fact that H was told that the transfer had been effected, and that H agreed to be director. He considers this sufficient to make any attempts by the personal reps to revoke the gift unconscionable.
- The better view is that they indicate that the donor made a representation to the nephew on which he had relied, albeit not to his detriment, so an estoppel arises which does not require detriment.
- Arden approach leaves uncertainty about whe it will be unconscionable for a transfer to be denied? ‘No comprehensive list’
- Not clear at what point the transfer becomes complete in equity?
Virgo on unconscionability
“Whenever the word ‘unconscionable’ is used as the basis for a test in Equity, there are genuine concerns about lack of certainty and principle”
Halliwell, ‘Perfecting imperfect gifts and trusts: have we reached the end of the chancellor’s foot?’ (2003)
“While this writer has continually argued for the recognition of the role of unconscionability in Equity, it must be based on principled reasoning.
Pennington v Waine represents the situation of a court according itself unfettered discretion with possibly far-reaching consequences for voluntary dispositions of property.”
Curtis v Pulbrook [2011]
Later cases retreat from Pennington and always seek to distinguish it.
Briggs
Case: D had been the director and substantial shareholder in a company and he was trustee of three family settlements. In 2009 the beneficiaries were awarded equitable compensation against him for breach of trust and obtained an interim charging order over the shares in the company that they believed were registered in his name and beneficially owned by him.
D however claimed that he had in 2007 given 300 of his shares to his wife and 14 to his daughter, so that these could not be subject to the final charging order.
Decision:
- The gifts were not effective at law. D couldn’t issue share certificates alone under Milroy and Re Rose could not apply as he had not done all that was necessary because D had not left the share transfer forms with his wife and daughter.
2) Disntinguished Pennington. This case could not be decided in the same way.
3) Pennington should have just been estoppel based on detrimental reliance, and there was no evidence of detrimental reliance here as to justify a CT.
Luxton 2012
In Curtis v Pulbrook, Briggs treated Pennington as a case of detrimental reliance. This is a desirable limitation, as unconscionability underlies many equitable doctrines including estoppel and the constructive trust but is too uncertain in meaning to be the sole criterion for equitable intervention.
