Defective Transfers

Question 1

Steps to follow (Workshop)

Answer 1

1. What is person trying to do?
2. What is the property concerned?
3. What are the rules?
4. Have the rules been followed?
5. If not, do any exceptions apply

Question 2

Steps to follow (YourGDL)

Answer 2

1. Identify type of disposition and the necessary declaration
2. Formalities required (where there has been a transfer)
3. If transfer is defective, consider whether equity will perfect any imperfection

Question 3

Types of disposition

Answer 3

Gift
Trust with self as trustee
Trust with someone else/others are trustee(s)

Question 4

Declaration required for a gift

Answer 4

The three certainties:

• Certainty of intention
• Certainty of subject
• Certainty of object

Question 5

Re Beaney
(Certainty of intention)

Answer 5

‘Donor must have necessary mental capacity. Level required rises with value/size of gift.’

Question 6

Certainty of subject

Answer 6

Must be a tangible benefit that can be enforced

Question 7

Palmer v Simmonds

Answer 7

‘Bulk of’ is unclear, when it comes to certainty of subject

Question 8

Re Golay

Answer 8

Subject matter of trust is certain if settlor provides a workable formula.
Eg. ‘reasonable income’, ‘the profit from my capital’

Question 9

Re London Wine Company (Shippers) Ltd

Answer 9

Must segregate tangible items of trust property from like items.

Question 10

Hunter v Moss

Answer 10

Need not segregate intangible items if items are indistinguishable (eg. identical shares)

Question 11

Certainty of Object

Answer 11

Those who will/may benefit must be certain

Question 12

Declaration needed for trusts

Answer 12

• Three certainties (as usual, but there must be a binding obligation on trustee for intention)
• Beneficiary principle
• Rules against perpetuity
• Formalities for declaration (Land evidenced in writing)

Question 13

Paul v Constance

Answer 13

Intention is ascertained by words or conduct

Question 14

Re Adams and Kensington Cestry

Answer 14

Merely precatory worlds will not suffice (my best friends)

Question 15

Beneficiary principle

Answer 15

There must be identifiable human beneficiaries who can enforce the trust

Question 16

Rules against perpetuity

Answer 16

For discretionary trusts - rule against remoteness of vesting (max 125 yers)
For non-charitable purpose trusts - rule against alienability (limited to 21 years, or allow trustees to spend all trust capital on the purpose)

Question 17

Formalities for declaration

Answer 17

Land: Evidenced by writing, signed by the transferor (s.53(1)(b))
Other types of property: none needed (writing is desirable though)

Question 18

Formalities for the transfer of chattel

Answer 18

Simple physical delivery (Re Cole) or deed

If physical delivery is impossible, the item may still be considered transferred (Jaffa v Taylor Gallery Ltd)

Question 19

Formalities for the transfer of shares

Depends on what type of system - check Manual notes

Answer 19

1. Complete and sign stock transfer form
2. Send STF and share certificate to transferee
3. Transferee must send documents to company to register new owner.

Question 20

Formalities for the transfer of land

Answer 20

• Must be done by deed . Send deed to Land Registry and notify as new legal owner (s. 52(1) LPA 1925)
• Deed must say it’s a deed, be in writing and be signed, witnessed and delivered as a deed (s.1 LP(MP)A 1989)

Question 21

Formalities for equitable interests

Answer 21

See s.53(1)(c) LPA 1925

Must be in writing (Grey v IRC)
Signed by person disposing of the interest/an authorised agent or in will

Exceptions:
Resulting trusts; constructive trusts; proprietary estoppels

Question 22

Remedies for imperfect transfers

Answer 22

Milroy v Lord
There is no equity in this court to protect an imperfect gift; equity will not benefit a volunteer;
equity will not construe a trust from an invalid gift

Question 23

Strong v Bird

Answer 23

On death of donor, donee can claim legal title if:

a. transfer fails due to not satisfying formalities;
b. intention to make immediate gift by donor (Re Freeland)
c. intention continues until death (Re Gonin); and
d. donee becomes executor/PR/administrator of donor

Question 24

Every effort test (Re Rose)

Answer 24

Gift complete in equity if donor has done everything he can.

Eg. once STF and share certificate handed over, the gift is complete in equity

Question 25

Unconscionable (Pennington v Waine)

Answer 25

Applies to very specific situations only
Extends Re Rose to gifts even when incomplete
Must be unconscionable to invalidate disposition

Question 26

Choithram International SA v Pagarani

Answer 26

If the transfer is defective, equity will not strive officiously to defeat a gift. Rather, may interpret gift as a trust if the settlor is a trustee.
Court of equity requires less from the transferor than demanded in Re Rose as it is enough that the transferor’s conscience is affected. Important that the settlor becomes a trustee

Question 27

Exception for transfer of equitable interest

Answer 27

If interest is under a bare trust, and the beneficiary directs the trustee to transfer the equitable estate with the intention of transferring the legal estate as well, s.53(1)(c) LPA will not apply, and an oral instruction will be sufficient (Vandervell v IRC)
This rule only applies if the legal estate is being transferred (Zeital v Kaye)