Defective Transfers Flashcards
Three stages to analysing whether a gift or trust is valid?
STEP 1: Identify the type of disposition and the necessary declaration
STEP 2: Where there is a transfer i.e. Gifts and Trust with someone else/others as trustee, identify the correct formalities (state: “there must also be a proper constitution”)
STEP 3: Where transfer (i.e. NOT declaration) has been defective, consider whether equity will perfect an imperfection
Starting point for discussing defective transfers?
STEP 3: Where transfer (i.e. NOT declaration) has been defective, consider whether equity will perfect an imperfection
Richards v Delbridge (1874)
Grandfather tries to transfer lease to son by writing on back of it: “This deed and all thereto I give to [Grandson] from this time henceforth…”. Invalid – should be deed. Court of Appeal refused to recognise the imperfect gift as a declaration of trust.
Exceptions:
Exception to the rule that “equity will not assist a volunteer by perfecting an imperfect gift”?
Rule in Strong v Bird (1874): on death of donor, donee can claim legal title if in priority to those entitled to the rest of the estate:
i. Transfer fails due to NOT SATISFYING FORMALITIES
ii. Intention to make IMMEDIATE GIFT by donor (Re Freeland [1952])
iii. INTENTION CONTINUES UNTIL DEATH. If donor deals with property in way which suggests it is still theirs, intention has not continued - (Re Gonin [1979])
iv. DONOR BECOMES EXECUTOR/PR/administrator of donor
Re Freeland [1952] - Facts?
Stated intention to give a car to a donee ‘as soon as I can get it on the road’ was not an immediate gift, and so the rule did not apply.)
Re Gonin [1979] - Facts?
a mother allegedly attempted to give a house and garden to daughter but did not sign a deed. Subsequently she sold part of garden, indicating she considered herself owner. Prevented rule from applying.)
Which exception to the rule in Milroy v Lord went one step further than Strong v Bird?
Every Effort Test (Re Rose [1952]): gift complete in equity if donor has done everything he can
Facts of Re Rose [1952]?
i. FACTS: Mr Rose executed STF to transfer shares in company to his wife (30th March) and hands transfer and share certificate to her. Documents sent to company and Mrs Rose registered as new shareholder (30th June). Mr Rose dies, govt claims estate duty on gift, but to do this it had to be perfected 10th April +. Court found gift perfected 30th March even if legal title didn’t pass until registered.
What was the legal/equitable interest situation between establishment of valid gift and the registration of new owner in Re Rose?
Mr Rose held on constructive trust for Mrs Rose.
Which 1984 case confirmed Re Rose?
iii. Mascall v Mascall (1984) Browne-Wilkinson L.J: “in equity it is held that a gift is complete as soon as the settlor or donor has done everything that the donor has to do.”
Which controversial 2002 Court of Appeal case went one step further than Re Rose?
Unconscionable? (Pennington v Waine [2002] Court of Appeal) – applies to v specific situation only. Extends Re Rose to gifts even when incomplete. Must be unconscionable to invalidate disposition.
Facts of Pennington v Waine?
i. FACTS: woman told auditor she wanted to transfer shares to nephew; woman signed STF and sent to auditor; auditor told nephew that woman wanted to transfer shares to him and that he didn’t have to do anything; auditor did not register nephew; woman tried to go back on her word and not transfer the shares – this was UNCONSCIONABLE, even though every effort had not been made
Which commentator has given unfavourable comment on Pennington v Waine?
Margaret Halliwell -
. Rule in Milroy v Lord on every effort has been “tolerably clear” – few exceptions, such as Re Rose and Re Ralli’s Will Trusts
. Says that Pennington v Waine is completely irreconcilable with all previous authorities
. The legacy of Pennington v Waine may be even greater if the courts use their discretion to give effect to ineffective transactions where it would be unconscionable not to do so. Many varied transactions could conceivably fall into this category.
. Unpredictable when equity may save an imperfect gift
Facts of Pennington v Waine?
i. FACTS: woman told auditor she wanted to transfer shares to nephew; woman signed STF and sent to auditor; auditor told nephew that woman wanted to transfer shares to him and that he didn’t have to do anything; auditor did not register nephew; woman tried to go back on her word and not transfer the shares – this was UNCONSCIONABLE, even though every effort had not been made
Which commentator has given unfavourable comment on Pennington v Waine?
Margaret Halliwell -
. Rule in Milroy v Lord on every effort has been “tolerably clear” – few exceptions, such as Re Rose and Re Ralli’s Will Trusts
. Says that Pennington v Waine is completely irreconcilable with all previous authorities
. The legacy of Pennington v Waine may be even greater if the courts use their discretion to give effect to ineffective transactions where it would be unconscionable not to do so. Many varied transactions could conceivably fall into this category.
. Unpredictable when equity may save an imperfect gift
