Constitution Of Trusts

Question 0

Re Cole

Answer 0

Showing a chattel and saying it was for someone does not mean that legal title transfer has taken place - words spoken are too loose to reflect an intention to donate

Question 1

Milroy v Lord

Answer 1

Trust will arise in favour of intended beneficiary only if valid declaration of trust and effective transfer of property to trustee
LJ Turner– trust will be completely constituted when
A) the settlor vested the legal title to the trust property in the trustees name
B) the settlor has validly declared that he now holds the property as the trustee
Maxims:
“Equity will not perfect an imperfect gift”
“Equity will not aid a volunteer”
“Equity will not constitute an incompletely constituted trust”

Question 2

Methods by which trust property is transferred to trustees:

Answer 2

Legal estates in land– deed s. 52(1)b; if registrable under Land Reg Act 2000

Disposition of equitable interest – must be in writing under s53(1)c LPA1925

Shares – must be transferred by the form of transfer laid down in ss 182 and 183 companies act 1985

Copyright – writing s.90(3) CDPA 1988

Bills of exchange – transferred by endorsement

Choses in possession: delivery to trustee coupled with intention to make a gift ; by deed of gift - immediately vests property to trustee even if delivery is later ; by contract

Question 3

Jones v Lock

Answer 3

If donor sets out to make an outright gift but does not vest the property in the donee, gift will not be enforced on the basis that the donor declared himself a trustee
- no decl by Jones that he now held the cheque on trust for the baby.

Question 4

Richards v Delbridge

Answer 4

Transferor must not be treated as a trustee if this down not accord with his intention

A) there was no effective transfer of the lease because not under seal s.52(1)
B) there was no declaration of trust - ‘for man to make himself a trustee there must be an expression of intention to do so’

Question 5

Re Rose principle

Answer 5

Equity recognizes that vesting takes place once a donor/settlor has done everything in his power to divest himself of the property even if the law requires some further task (ie.registration) to be performed by 3rd party

Question 6

T Choithram v Pagarani

Answer 6

Constitution where settlor and others are declared trustees

• shares could not be accepted by unincorporated association ( no legal personality to accept transfer of shares) had to be transferred to trustees, but TCP died without executing the transfer or making an express decl of trust into the company’s favour.
• TCP has appointed himself one of the trustees - L Browne Wilkinson ‘it would be unconscionable and contrary to the principles of equity to allow such a donor to resile from his gift’ also said ‘although equity will not aid a volunteer it will not strive officiously to defeat a gift’

Question 7

Pennington v Waine

Answer 7

Gift is complete in equity if it would be unconscionable for donor to retract gift
- relaxed requirement by holding the gift of shares assigned in equity by the execution of a share transfer form without delivery to the donee or company

Question 8

Re Ralli

Answer 8

A settlor may expressly declare himself a trustee pending a transfer to the third party trustees. If the transfer takes place during the lifetime of the settlor, trust will be perfect

Question 9

Fletcher v Fletcher

Answer 9

The benefit of a covenant (chose in action of a debt) may be the subject matter of a trust

Question 10

Exceptions to maxim : “equity will not perfect an imperfect gift”

Answer 10

A) rule in strong v bird : enables imperfect gift to be perfected if donee of the gift is appointed as executor of the donor’s will and if the donor had a continuing intention until death to make the gift

B) DMC (donatio mortis causa): gift made in donor’s lifetime but expressed to be conditional on and intended to take effect on his death
Cain v Moon 3 conditions for DMC to be valid:
-gift must be in contemplation of donor’s death
-donor must intend property to revert to him if he does not die
-subject matter of DMC must be delivered to the donee (Re Lillington)

C) enforcement under doctrine of proprietary estoppel: if property owner represents to another that they are entitled to an interest and thereby inducing that person to act to their detriment, owner is estoppel in equity from denying the truth of the representation (Pascoe v Turner)

Question 11

Contracts (right of 3rd parties) act 1999

Answer 11

S1 - third party to contract is entitled to enforce a term of the contract if term of contract confers a benefit on him