Large Group 2

Question 1

What are formalities, and why are they important?

Answer 1

Formalities refer to the legal steps required to transfer property. They provide protection for the donor (e.g. preventing rash decisions), clear evidence of ownership, and prevent disputes over property transfers. Without following the formalities, the gift is void, and the donor retains ownership.

Question 2

What are the basic requirements for a valid lifetime gift?

Answer 2

• The donor must have mental capacity: the donor must fully understand the gift and its consequences
• The donor must clearly intend to make the gift.
• The subject matter and donees must be certain: the property and people receiving it must be clearly identified
• The donor must transfer the property to the donee in the appropriate manner, following legal steps, which vary depending on the type of property

Question 3

What is required for a donor to have the mental capacity to make a gift?

Answer 3

The donor must understand the nature of the transaction and its consequences. If the donor suffers from a mental illness affecting this understanding, the gift is invalid.

Question 4

What does “intention to make a gift” mean?

Answer 4

The donor must clearly intend to make a gift. This is often determined by the words used by the donor. If the intention to gift is unclear, the gift may be deemed invalid.

Question 5

What are the consequences of uncertainty in the subject matter or donees of a gift?

Answer 5

If the subject matter (e.g., “best land”) or donees (e.g., “friends”) are uncertain, the gift is void. The gift must be specific enough that both the property and the recipients are identifiable.

Question 6

What happens if the transfer formalities are not completed?

Answer 6

The gift remains imperfect, and the ownership of the property stays with the donor. Without proper transfer formalities, the gift is not valid.

Question 7

What are the different formalities required for different types of property?

Answer 7

The formalities differ depending on the type of property:

Land: Requires a transfer deed and registration with the Land Registry.

Chattels: Can be transferred by delivery or deed.

Money: Can be transferred via cash, bank transfer, or cheque.

Shares: Transfer depends on whether they are in the CREST system or require physical certificates.

Question 8

What are the three steps to transfer legal title to land under the Law of Property Act 1925?

Answer 8

The donor must execute a transfer deed (Section 52 of LPA 1925).
The deed must be sent to the Land Registry or the donee.
The Land Registry must register the donee as the new proprietor for legal title to pass.

Question 9

What are the three requirements for a document to be a deed under the Law of Property (Miscellaneous Provisions) Act 1989?

Answer 9

• The document must be in writing.
• It must indicate the parties’ intention for it to be a deed.
• It must be signed by the transferor in the presence of a witness.

Question 10

What are chattels, and how are they transferred?

Answer 10

Chattels are tangible personal possessions (e.g., cars, furniture, jewellery). They can be transferred by delivery (handing over the item) or by deed if delivery is impractical (e.g., distance).

Question 11

What are the methods of transferring money?

Answer 11

Money can be transferred by:

• Handing over cash.
• Arranging a bank transfer.
• Writing a cheque (but the cheque must be cashed before the donor dies, as death revokes the bank’s mandate to honour the cheque).

Question 12

What is CREST and how does it affect the transfer of shares?

Answer 12

CREST is an electronic paperless system used by larger PLCs to own and transfer shares. If shares are in CREST, no share certificate is needed, and transfers are completed electronically.

Question 13

What are the three steps to transfer shares not in the CREST system?

Answer 13

• The transferor completes and signs a stock transfer form.
• The stock transfer form and share certificate are handed to the donee or the company.
• The company registers the donee as the new shareholder.

Question 14

What does the phrase “equity will not assist a volunteer” mean?

Answer 14

Equity will not assist someone who has not provided consideration (a volunteer) in completing a gift. If a gift is imperfect and the donee has not provided consideration, equity will not perfect it.

Question 15

What is the “every effort test” from Re Rose?

Answer 15

The every effort test states that equity will regard the gift as complete if the donor has done everything in their power to transfer the property, even if a third party must complete the legal formalities (e.g., registration).

Question 16

What happens if the donor has not done everything in their power to complete the gift?

Answer 16

If the donor has not done everything in their power, the gift is imperfect, and legal title does not pass to the donee. Equity will not perfect the gift.

Question 17

What are the key exceptions to the maxim that equity will not perfect an imperfect gift?

Answer 17

• Every effort test (Re Rose): If the donor has done everything they can to transfer the gift, equity considers the gift complete, even if a third party (e.g., the Land Registry) hasn’t finished the legal steps.
• Unconscionability (Pennington v Waine): If it would be unfair for the donor to take back the gift (e.g., because the donee has relied on it), equity may uphold the gift even if formalities haven’t been fully followed.
• Strong v Bird (where the donee becomes the executor of the donor’s estate): If the donee becomes the executor of the donor’s estate, equity will perfect the gift if certain conditions are met, including the donor’s intention to make the gift remaining until their death.

Question 18

What is the significance of the case Pennington v Waine?

Answer 18

In Pennington v Waine, the Court of Appeal held that a gift is enforceable in equity if it would be unconscionable for the donor to revoke the gift, even if formalities have not been completed. Factors such as the donee acting on the gift are considered.

Question 19

What are the key conditions for the rule in Strong v Bird to apply?

Answer 19

• The donor must have intended to make an immediate and unconditional lifetime gift.
• The gift was imperfect.
• The donor’s intention to give continued up until death.
• The donee became the executor or administrator of the donor’s estate.

Question 20

What are the steps for transferring equitable interests under a trust?

Answer 20

Equitable interests can only be transferred in writing, signed by the donor or their authorised agent, as per Section 53(1)(c) of the Law of Property Act 1925.

Question 21

What is a bear trust, and how does it affect the transfer of shares?

Answer 21

A bear trust is where a nominee (e.g., stockbroker) holds shares on trust for an adult beneficiary, typically for convenience. The beneficiary retains the equitable interest and can dictate what happens to the shares.

Whether Section 53(1)(c) applies depends on whether the beneficiary is transferring the equitable interest or both the equitable and legal interest.

Question 22

What is the significance of the cases Grey v IRC and Vandervell v IRC in the context of equitable interests?

Answer 22

These cases deal with the transfer of equitable interests and the application of Section 53(1)(c). Grey v IRC concerns the transfer of equitable interests, while Vandervell v IRC deals with the transfer of both legal and equitable interests.

Question 23

What is the order of applying the exceptions to perfect an imperfect gift?

Answer 23

The order of application is:

• Re Rose (every effort test).
• Pennington v Waine (unconscionability).
• Strong v Bird (if the donee becomes executor).

Question 24

What happens if a donor gifts an expectancy?

Answer 24

An expectancy refers to something the donor does not yet own (e.g., future inheritance). Such a gift is void because the donor cannot give away something they do not yet own.

For example, Aunt Tessa could not give away property she expected to inherit from Celia, as Celia could change her will and cut Tessa out.

Question 25

What are the two equitable maxims relevant to imperfect gifts?

Answer 25

The two maxims are:

• Equity will not assist a volunteer: If the donee has not given anything in return, equity will not intervene to perfect the gift.
• Equity will not perfect an imperfect gift: If the formalities for a gift are incomplete, equity will not automatically step in to fix it/perfect it unless an exception applies.

Question 26

What is the significance of the Mascall v Mascall case in relation to lifetime gifts?

Answer 26

In Mascall v Mascall, the court held that once the donor has done everything in their power to transfer property (e.g., completing and handing over the transfer deed), the gift is complete in equity, even if the donee has not yet registered the property. It is too late for the donor to revoke the gift once it is beyond their recall.

Question 27

What are the requirements for the rule in Strong v Bird to apply?

Answer 27

1. The donor must intend to make an immediate, unconditional gift.
2. The gift remains imperfect due to incomplete formalities.
3. The donor’s intention to give continues until their death.

4.The donee acquires legal title to the property by becoming the executor or administrator of the donor’s estate.

Question 28

How does the Re Freeland case limit the application of Strong v Bird?

Answer 28

In Re Freeland, the donor’s intention to give was conditional (i.e., Hilda could have the car once it roadworthy).

The gift was therefore not immediate, and Strong v Bird could not perfect the imperfect gift.

Additionally, the donor lent the car to another person before her death, indicating a change of intention.

Question 29

What are the differences between transferring legal and equitable interests?

Answer 29

Legal interest: The legal title to property (e.g., land, shares) requires formalities like a transfer deed or stock transfer form, often registered with an official body (e.g., the Land Registry).

Equitable interest: Equitable interests (e.g., a beneficiary’s interest in a trust) must be transferred in writing and signed under s.53(1)(c) of the Law of Property Act 1925. Equitable interests are often held by beneficiaries who do not have legal title.

Question 30

What is an equitable maxim?

Answer 30

An equitable maxim is like a basic rule of fairness that helps courts and judges make decide cases fairly.

For example, Equity will not assist a volunteer”: This means that if someone hasn’t given anything in return (like money or some service), equity won’t help them enforce a gift if the legal formalities weren’t completed.

Equitable maxims help ensure that the law not only follows strict rules but also considers fairness in individual situations.