Constitution Of Trusts

Question 1

What is constitution of trusts?

Answer 1

It considers circumstances where a trustee will hand sufficient title to the property in order for the trust to be effective

Question 2

How can constitution occur?

Answer 2

Milroy v Lord: constitution can occur:

1) either through transfer of legal title to a third party
2) settlor declares himself as a trustee

Question 3

What are the different methods of transfer?

Answer 3

Copyright: signed writing
Land: deed followed by registration of title
Cheque: endorsement and delivery
Charles: physical delivery with intention - parting dominion over an article
Shares: the general rule is that there must be a completion of share transfer form, handing over relevant share certificate and registration of dealing.

Question 4

What cases are there to support self declaration of trust?

Answer 4

Paul v Constance - There was irrevocable declaration of trust of bank account

T Choithram v Pagarami - trust effectively declared by an individual even though he intended to be one of several trustees. It would be unconsciabke for settlor to renege

Shah v Shah - there was an imperfect gift but an accompanying letter made it clear that he was holding on trust until gift perfected

Question 4

What happens if attempts are unsuccessful?

Answer 4

Transfer will have failed:

• Richards v Delbridge: an imperfect transfer of land (and failed gift) because transferor did not draft a deed of conveyance
• Antrobus v Smith: ineffective transfer of shares by mere endorsement written on the back of a share certificate.

Question 6

What does equity cannot perfect an imperfect gift mean?

Answer 6

Means the because the beneficiary provides no consideration, they therefore have no interest they can enforce. Reinforces idea that court will not assist a volunteer.

Therefore if settlor does not adopt appropriate mode of transfer then the gift will fail.

Question 7

What cases supports maxim that equity will not interfere

Answer 7

Zeital v Kaye - was an imperfect transfer in circumstances where the donor has handed a blank stock transfer signed by a third party agent - did not add donee s name and was undated

Curtis v Pulbrook - there were two gifts of shares which failures because absence of proper transfer of title. Donor had passed over share certificate but not stock transfer form, meaning legal title not transferred.

Question 8

What is every effort doctrine?

Answer 8

Re Rose (share transfer form): if donor has done everything needed to effect transfer of title, gift will not fail because donor subsequently dies OR as a change of mind (Mascall v Mascall)(executed land transfer form)

Question 9

What was said in Zeital v Kaye

Answer 9

Once donor has done all in power to transfer the shares, he will be regarded as holding legal title to them upon trust for the donee, who will become their beneficial owner

Question 10

What was the judgement in Pennington v Waine

Answer 10

Arden LJ: for interests of legal certainty, there must be ascertainable point at which it can be said gift has been completed and that point of no return must be identified.

This state is reached when it becomes unconscionable for the door to renege on the gift.

There is no list of factors, it must depend on the court’s evaluation of all relevant considerations. They will draw a balance between detriment and benefit - is it proportionate?

Bradbury : moved out of house
Jennings v Rich : promised a house

Question 11

How was it unconscionable in Pennington?

Answer 11

It would have been unconscionable for the donor to recall the gift once the donee had agreed to become a director. By withdrawing, the donor would have been taking unconscientious advantage of the donee. It would also be equally unconscionable for her personal representative to refuse to hand over the share transfer form to the donee.

Here delivery of share transfer before her death was unnecessary so far as perfection of the gift was concerned.

Question 12

What are the relevant factors in Pennigton?

Answer 12

Ada made gift of her free will, told Harold and Pennington of intentions, signed a transfer for, and gave it to agent Pennington for him to secure registration. Pennington told Harold he would not need to take any action. Harold had agreed to become director of the company which he could not do without the gift of shares.

Question 13

What support has Pennington v Waine received?

Answer 13

Jordan v Roberts: where High Court accepted that an otherwise imperfect gift of shares be treated as having completely constituted IF it would be inequitable for the donor to resile from the transaction

Question 14

What is Donationes Morris Causa

Answer 14

Exception to rule that equity will not assist a volunteer: gift made on donor’s death bed may be perfected even though necessary formalities have not been followed

Question 15

What can be the subject of DMC?

Answer 15

Following Sen v Headly, any time of property can be subject, even land

Question 16

What is the first condition of DMC?

Answer 16

Duffield v Elwes: The gift must have been made in contemplation of death. Death must be considered to be imminent and there is required to be more than mere general contemplations.

Re Craven: contemplation of death within the near future.

Vallee v Birchwood: gift made in contemplation of death from an identified source and not necessarily the expectation of death. Donor does not have to be in extremis or at death’s door when gift is made.

Gardner v Parker: contemplation does not have to be expressed but can be inferred.

However: Re Kirkley: gift made by bed ridden donor not in contemplation of death because donor was worn out, was not ill. Reference to death would have needed to be express to create a DMC

Wilkes v Allington: deceased may die of another cause than was anticipated when making DMC

Question 17

What was held in King v Chiltern Dog Rescue, Red Wings Horse Sanctuary

Answer 17

Donor not suffering from fatal illness, dangerous operation or journey. She had no reason to anticipate death in near future from a known cause. She had opportunity to take advice and make a will.

As the gift lapses If the donor recovers or survives, DMC cannot run on until death inevitably occurs. the gift comes to an end if the donor fails to succumb to death which was anticipated when DMC was made.

Question 18

What is the second condition of DMC?

Answer 18

Gift must be conditional on the death of he donor.

Cain v Moon: gift must be made so that property reverts to the donor if he/she recovers.

Sen v Headley: gift is absolute only on donor’s death - therefore no DMC if donor intends to make immediate gift

Question 19

What is the third condition?

Answer 19

Dominion or control/possession must pass from donor to the donee - there must be delivery before death (Ward v Turner)

Words are insufficient (Bunn v Markham)

There must be actual and physical delivery of an item OR constructive delivery by the passing over the means of obtaining the property or some indicia of title to the item. If there is no change of possession, there can be no DMC- Cain v Moon

Question 20

What was it held in Vallee v Birchwood?

Answer 20

Father passed to donee the deeds of property and key. But donor still lived in property for four months after passing over keys

Not necessary that donee be given exclusive physical possession or control over the land. By handing over titled deeds by gift, donor has put it outside his power to transfer legal title or alter the interests that is subject matter of the gift

Question 21

What is the rule in Strong v Bird?

Answer 21

Case established rule that an imperfect immediate gift of property will be perfected on the death of the donor if the intended donee is appointed to the executor/administrator under the donor’s will.

This case it was the release of the debt that was the gift

Question 22

What developments are there on Strong v Bird?

Answer 22

Intention to make the gift has to persist until the death of the donor:
Re Pink: continuing intention that the gift should have been given at the time it was given
Re Wale: testatrix intended to constitute a trust but forgot to transfer all of the property = she clearly didn’t have necessary continuing intention for the rule

Question 23

What happened in Re Stewart?

Answer 23

Recognised that this rule in Strong v Birdn operates generally in relation to failed gifts, not just to the release of debt

Question 24

What future examples are there of Strong v Bird?

Answer 24

Re Freeland: promise to give a car at a future date fell outside of the rule because there has to be an intention to make an immediate gift

Re James: if donor dies without a will, donee takes out letters of administration (of estate) legal title to property will be entitled to them

Question 25

What is proprietary estoppel?

Answer 25

Yeoman’s Row Managmemt: estoppel can operate to perfect an otherwise imperfect gift when it would be unconscionable for a part to rely on their strict legal rights.

Based on requirements: assurance, reliance, detriment

Doctrine applied in disciplined and principled way.

Question 26

What are examples of proprietary estoppel?

Answer 26

Suggit v Suggit: Estoppel might be employed in inheritance cases where testator assured a relative house will be their’s when they die. But there is no express trust because no contract. Possible here to invoke estoppel.

Bradbury v Taylor: respondent couple argued that Taylor had promised that he would leave the house to them in will and that property held on trust for them. As the couple were willing to move out on basis of this representation, estoppel could intervene.

Lothian v Dixon: Lothians awarded deceased entire estate under doctrine of proprietary estoppel, because she had looked after deceased in return for a promise for the entire estate. Held unconscionable for estate to renegade on this assurance even though formalities of express trust of land were satisfied. Executors held estate on trust for the claimants.

Question 26

How is the estoppel to be fed?

Answer 26

Lothian v Dixon: task of the court is to do justice - to do what is necessary to avoid an unconscionable task.

Sledmore v Dalby: claimant can never have more than that which was assured = minimum equity necessary to achieve justice

Bradbury v Taylor: such detriment as they suffered is to be balanced against the advantage they gained and should not be found to be substantial