Formalities and Consitution

Question 1

Trusts created by Will

Answer 1

• Must be in writing signed by the testator or person under his direction and witnessed by two people (s. 9 Wills Act)
• A trust contained in a will is bound to fail if the Will is void
• exceptions of secret trusts.

Question 2

Trusts created Inter Vivos

Answer 2

• Trusts created during the testator’s lifetime
• Trusts may be declared informally
  orally or by conduct (Paul v Sonstance)

Question 3

Testamentary Trusts

Answer 3

Trusts created upon death via a Will

• Must comply with s. 9 Wills Act
• must be in writing, signed by the testator and attested to by two witnesses (Payne v Payne)

Question 4

Trusts of Land

Answer 4

Must be evidenced in writing (s. 52 LPA 1925)
- only applies to express trusts (Hodgeson v Marks)
Failure to comply with s. 53 will render the declaration of the trust unenforceable
Must also be registered (s. 27 LRA 2002)
Non compliance will render the trust unenforceable not void (Rochefoucauld v Boustead)

Question 5

A disposition of a subsisting (already existing) equitable interest.

Answer 5

A disposition is an act by which a person ceases to own the item of property in question.

Question 6

Constitution of a trust

Answer 6

As well as declaring the trust, the settlor must vest the property in the trustees.
- constitution makes the trust legally binding on the settlor and the beneficiaries can enforce their rights to the property.

Question 7

If the trust property is not property vested in the trustee.

Answer 7

The trust is incompletely constituted.
It will be void, and unenforceable
- equity will not compel the settlor to constitute an imperfect trust (Milroy v Lord)

Question 8

General Rules for Constitution

Answer 8

Set out in Milroy v Lord

Question 9

Constitution: An absolute gift

Answer 9

Complete constitution is necessary

Question 10

Constitution: transfer of legal title to a trustee to hold on trust for the beneficiary

Answer 10

Complete constitution is necessary

Question 11

Constitution: Self declaration

- The Settlor retains legal title and holds it on trust for the beneficiary

Answer 11

No movement of legal title so constitution is not relevant.

Question 12

A Trust that has been completed cannot be revoked

Answer 12

Paul v Paul

Question 13

Equity will not perfect and imperfect gift, and equity will not assist a volunteer

Answer 13

So if a settlor intends to use one method to confer a benefit on a person but fails to complete the required steps, equity will not save the gift or construe the intended method as another method.

Question 14

If the settlor intends to create a trust by transfer, but fails to vest the legal estate in the trustee

Answer 14

Equity will not view that as a declaration of trust - void

- Milroy v Lord

Question 15

If the donor intended an absolute gift, but failed to effectively transfer the property

Answer 15

Equity will not construe the failed absolute gift as a declaration of trust.

Question 16

Declared that he was going to give a cheque to his baby, but died shortly afterwards and he had not signed the cheque, so the property had not been transferred.

Answer 16

The court rejected the argument that he had declared himself as a trustee of the cheque
Jones v Lock

Question 17

Declared that the deed to a leasehold property belonged to another, but died before the lease had been assigned by a separate deed.
Attempted transfer could not be construed as a declaration of trust, because he had not intended to declare a trust.

Answer 17

The Court cannot change the meaning of words in order to carry out someone’s intention
Richards v Delbridge.

Question 18

There was an effective declaration of trust as there was sufficient intention on the party to make him a trustee of the money in the account

Answer 18

Paul v Constance.

Question 19

The donor orally declared his intention to make a gift on trust to a charity but he did not actually transfer the legal title of the property to the charity before he died

Answer 19

Privy council prepared to uphold the gift
- the donor was already one of the trustees of the charity anyway. Therefore, one of the charities trustees had already had the property vested in him
Choithram v Pagarani.

Question 20

Methods of transferring different types of trust property

Answer 20

in order to vest the trust property in the trustees, it must be transferred using the correct method for the particular property in question

Question 21

Correct transfer: Estate in land

Answer 21

Transfer must be by deed (s. 52 LPA 1925)

• headed in deed, in writing, signed, witnessed and delivered
• registered.

Question 22

Correct transfer: Shares

Answer 22

• using a stock transfer form

Question 23

Correct transfer: Chattels (goods)

Answer 23

By deed or gift or by actual delivery (Re Cole)

Accompanied by the transferor intending to transfer them (Glaister-Carlisle)

Question 24

Correct transfer: Bills of Exchange

Answer 24

Cheques made in favour of the transferee may be transferred to a third party by the transferor endorsing the cheque (signing) according to the Bills of Exchange Act

Question 25

Correct transfer: Money

Answer 25

Transferred by actual delivery; merely writing a cheque does not transfer money as it is only transferred when the cheque clears.

Question 26

Correct transfer: Chosen Action

- debts and money in bank accounts

Answer 26

Must be compliant with s. 136 LPA 1925

- in writing, signed with written notice to the debtor

Question 27

Correct Transfer: Equitable interests

Answer 27

must be compliant with s. 53 LPA 1925

- in writing and signed

Question 28

Exceptions to the maxim that equity will not perfect an imperfect gift

Answer 28

1. Where the transferor has done everything in his power
2. Fortuitous Vesting
3. Proprietary Estoppel
4. Donatio Mortis Causa

Question 29

Where the transferor has done everything in his power

Answer 29

Re Rose
Mascall v Mascall
Pennington v Waine

Question 30

Re Rose

Answer 30

Mr Rose executed 2 share transfers but they were not registered by the directors until 3 months later.
Court of appeal held that the transfers were effective in equity once MR rose had done everything in this power to vest the shares in the transferees.
Requirements:
1. The transferor must use the correct form of transfer
2. He must have done all that he can to the extent that the rest of the transfer is beyond his control

Question 31

Mascall v Mascall

Answer 31

The principle in Re Rose was extended to the transfer of registered title in land
Once all the relevant documents had been executed, and the transfer stamped and handed to the transferee, the gift was viewed as complete in equity.

Question 32

Re Rose and Mascall v Mascall

Answer 32

The transfer and other documents must either have been sent off for registration or delivered to the donee, such that the transfer is irrevocable by the transferor.

Question 33

Pennington v Waine

Answer 33

Transfer forms and share certificates had been transferred to the agent of the transferor, who gave assurance that the transferor would not go back on his word.
Court held that it is not necessarily essential for the transferor to have irrevocably transferred ownership.
Arden LJ: ‘a donor will not be permitted to change hs or her mind if it would be unconscionable, in the eyes of equity to do so’

Question 34

Fortuitous Vesting

Answer 34

Failure to perfect the intended transferee’s title may be resolved if they later happen to obtain the legal title.

Question 35

When the donor intends to make a gift during his lifetime but fails to vest the legal title in the donee the gift may still be perfected if legal title fortuitously becomes vested in the donee because he becomes executor of the deceased donor’s estate.

Answer 35

Strong v Bird

Question 36

Requirements for fortuitous vesting

Answer 36

a. The donor intended to make an immediate gift (Re Freeland)
b. Intention did not change before death (Re Gonin)
c. Donee acquires legal title as personal representative of the settlor.

Question 37

Strong v Bird

Answer 37

Bird’s Stepmother expressly forgave in her lifetime a debt he owed to her, so the debt was released at common law when Bird was appointed as executor of her will
Bird would normally have been required to account in equity but this was displaced by proof of the stepmother’s unchanged intention.

Question 38

Re Ralli’s Wills Trusts

Answer 38

The fortuitous vesting rule was extended by analogy to trusts.
Re Ralli suggested that the trust would become constituted if the trust property came into the trustee’s hands in any legitimate way.

Question 39

Re Stewart

Answer 39

The fortuitous vesting rule was to apply to gifts

Question 40

Re James

Answer 40

The fortuitous vesting rule applies where the donee becomes an administrator

Question 41

Proprietary Estoppel

Answer 41

It arises where there has is an assurance, reliance and detriment so that it would be unconscionable to go back on the assurance (Gilet v Holt)

Question 42

Donatio Mortis Causa

Answer 42

Where a gift is made on contemplation of death, but neither the rules for lifetime gifts nor those for wills are complied with. It is effective only if the conditions in Cain v Moon are met.

Question 43

Cain v Moon Conditions (DMC)

Answer 43

a. The gift is made in contemplation of death, which the donor believes to be imminent.
b. The gift is conditional upon death (‘if i die)
c. There is actual or constructive delivery of the property - the donor must part with control of the property by handing it over or passing something that represents title to the donee.

Question 44

Terminally ill man told a friend that his house was hers and that the deeds were in a steel box. He then slipped the keys to the body into her bad.

Answer 44

Sen v Headley

- this was a valid DMC of the house by constructive delivery of the title deeds.

Question 45

The money is in a savings account and the savings book was handed over.

Answer 45

Birch v Treasury Solicitor

- this was a valid DMC

Question 46

Exception to DCM

Answer 46

A donor’s cheque payable to the donee is recoverable by the bank on death (Re Beaumont), but if it is made in contemplation of death a cheque payable to the donor may be the subject matter fo a DMC if it is delivered, even without being properly endorsed (Re Mead)

Question 47

Covenant to settle

Answer 47

Where a promise is made to create a trust but where the trust has not been completely constituted.
Whether the promise can be enforced depends on whether it is supported by consideration.
If there has been full consideration then the other party are not volunteers and the contract is enforceable (Pullan v Koe)