Constitution Flashcards
Paul v Paul (1882)
Until the trust is completely constituted, then the beneficiaries are what we call “volunteers.” They have not got anything they can enforce. They have not given consideration, so there is nothing they can enforce in a contractual sense. And, there is no valid trust if it is not completely constituted.
So a beneficiary acquires no right.
Milroy v Lord - ways of affecting a settlement
1) Transfer the property to the persons for whom he intends to provide.
I give the property to B (Settlor Beneficiary)
To give you the complete picture, we always start with “this is a gift”. A trust is a gift, and if you think about it in that way it makes more sense. In every example I have ever given you of a trust you are getting something for naught; a trust of my library, for example – what are you getting? The use of the library. What have you given? Nothing.
This is not that dual relationship which a contract is. It is a one-sided relationship. And it is enforceable by you where the trust is properly constituted.
2) Transfer the property to a trustee.
I transfer the property in my second transaction to a trustee. So, there is a third party. There is room for three parties in a trust.
So, I transfer the property to the trustee to hold on trust for the beneficiary. So I now have three parties – settlor, trustee, and beneficiary.
Settlor –> Trustee to hold on trust for the Beneficiary.
3) Declare that he himself holds it in trust.
I can simply change my character in the transaction. I start by being the absolute beneficial owner. I then declare that I am now a trustee and you are a beneficiary.
So, a declaration of self as trustee is the third way to effect a settlement according to Milroy v Lord.
So I declare that I want the property on trust for the beneficiary.
I, the Settlor, become the Trustee.
Settlor = Trustee
Jones v Lock
Was the baby case with the father waving the check over the baby… Was that a declaration of himself as trustee? He has the cheque and the money…He shows an action and the cheque – he had that in his hands and the legal title was his and he said it was for the baby.
Did he do any of the three things?
Did he give it to the child is an out and out transfer? No because it was still in his desk after he died. He had not moved the money.
Did he transfer it to a trustee? No, because there is no third party in the transaction.
Did he declare himself to be trustee? The court said no. What he failed to do was to make an out and out gift, and you can’t get around that by saying “let’s pretend he created a trust”.
If you could say that he failed to make the gift but what he really meant was to declare himself trustee… The court said that you can’t create a fiction here. But you may be able to see an argument here for why the court could say that he meant to do this. However, the court would not go that far; it was one of those sort of boundary things where equity stops short of solving a problem.
Equity won’t perfect and imperfect gift, as how the courts describe it. The court will not allow equity to be used to perfect and imperfect gift.
(PAGARANI) - T. Choithram International SA v Pagarani
The Settlor said “I declare myself and seven other people trustees.”
But he then failed to actually transfer the legal title to the seven others. Then the question arises: have you affected the transfer?
The court said “your conscience is affected”. What happened is he wanted to change his mind.
Once you have affected a settlement properly… Once you’ve done the job – once you transfer the legal title – than the court says your conscience is affected.
Milroy v Lord
In order to make a “voluntary settlement” valid with the effect to others and enforceable to give you rights as a beneficiary behind the settlement, then “the settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him.”
The court will not allow a purported gift which is ineffective because there is no delivery of the subject matter to take effect as a trust.
The Wills Act, Section 9.
A legal estate in land - Section 52(1) LPA 1925. Also, Land Registration Act 2002.
For choses in possession (Chattel):
(1) deed of gift.
(2) deliver it and hand it over + intention.
(3) deliver the exclusive means of control.
Other choses in action:
Debts, copyrights, legal choses in action - Section 136(1) LPA 1925.
Shares:
Section 183 Companies Act 1985.
Re Rose
“Equity regards as done that which ought to be done”
If you have done everything within your power, then you have perfected the transfer.
- Stock transfer form
- Deliver that form to the transferee together with the share certificate
- The form and the share certificate have to be delivered by the transferee to the company.
- Acceptance by the company of the transfer and registration in the books of the company.
Mascall v Mascall
This case was about a close familial relationship where everything is all glorious between the parent and the child and then it all goes wrong to the point where people will litigate over it and spent half of the property on the litigation.
The father fell out with the son and decided he did not want to transfer the farm. The son said that his father agreed to transfer, and he executed the deed but he did not register.
The court said that that is a Re Rose principle, because the registration was in the hands of the sister.
Strong v Bird
Strong v Bird was the forgiveness of a debt. There was money owed – it was rent money and a familial relationship between a stepmother and her stepson – and the landlady forgave the debt. However, there was nothing to document it. It needs a Section 136 written document because it is a transfer of a debt. This is common law, remember, and common law comes back and says, similar to the Earl of Oxford case, where’s the money? There was no comeback from the stepmother, but she had then died…and the question is on your death… The job of the executors is to collect all of the debts, so legally speaking that money is still owing to the estate. So, the stepson could have been required by the estate to pay the debt at that point. But it just so happens at that point that he was the executor of his stepmother’s will.
As executor, what title do you get? Legal title. So, she has already done it. Now of course, the stepmother she didn’t think that. There is no way in a million years she says “well of course I know I should do a Section 136 assignment. I knew all about that…but never mind I will write a will making you the executor and you get the legal title on my death.” That’s just an unreal situation and a fiction.
Does a fiction work? The court says it does.
Re Ralli’s Wills Trust
This is an even more elaborate process where you have got several trusts and trustees, and executors. But, the net result is the same. However you end up with the legal title – the fortuitous receipt of the trust property by the trustee – it will work, and it will constitute the trust.
But you have got to be able to show that the intention is there. If that intention hasn’t lasted until death then you’ve got a problem.
Re James
(Related to Strong v Bird - receiving legal title)
“equity will not aid the donee [if it is an imperfect gift], but on the other hand if the donee gets the legal title to the property vested in him he no longer wants the assistance of equity and is entitled to rely on his legal title [notice common law and equity operating side by side] as against the donor or persons claiming through him.”
Re Gonin [1977]
Related to Strong v Bird.
1) You must intend the gift, and you must intend the gift to give effect. “Must intend immediate inter vivos gift”.
2) The intended donee must be an executor or administrator of the estate.
3) The donor’s intention to give must continue at the date of death. So, you have to intend at the time, and you have to continue that intention until the date of death.
4) The subject matter must be capable of enduring the death of the donor.
Cain v Moon 1896
Donatio Mortis Causa
1) The gift or donation must have been made in contemplation, though not necessarily in expectation of death.
2) There must have been delivery to the donee of the subject matter of the gift.
3) The gift must be made under such circumstances as to show that the thing is to revert to the donor in case he should recover.
Sen v Headley [1991] which nicely resurrected it all where they did rely upon the Donatio Mortis Causa rules.
Re Plumptre’s Marriage Settlement [1910]
In consideration of the marriage… Even the language of it is about consideration. “In consideration of the marriage the money is settled on the parties to the transaction – the birde and groom – and on their children”. It’s about the children too because it’s about dynasty. It is about making sure that that land stays in this family to kingdom come. It is about ensuring that the money is there, the property is there, and it gushes down to the generations.
If you are within the marriage consideration… And clearly, the immediate parties of the marriage are the bride and groom and they can enforce it because they brought something to the table. Downton Abbey and the money, for example.
Also, the fruit of that marriage…whether they are in existence yet…they will also be in the marriage consideration – children and grandchildren will be within the marriage consideration.
Cannon v Hartley [1949]
So, I enter into this deed…me, the settlor, with a trustee… I will transfer all of my present property, future acquired property, to you to hold on trust. There is then this relationship between me and the trustee. We therefore have something that they can sue on.
This is common law stuff. This is not equity and conscience. This is because the deed substitutes for conscience.
The moment you have got that deed it is a suable thing; it is an enforceable thing at common law.
Fletcher v Fletcher
Trust of a promise.
So, what we are saying is that there is a piece of property over here that is not in the trust. We want it in the trust because we are beneficiaries. Is it constituted? Well, it is not in the trust, so it is not. But there is a covenant that says a trustee could enforce it. But it won’t do the beneficiaries any good, because what’s the trustee’s loss? So, can we say that there is a trust of the benefit of the covenant – a trust of the promise to move the money into the house…the vary tin???…the trustee, which is enshrined in the covenant. So it is the trust of the promise to transfer.
