W1 - Lifetime Gifts

Question 1

Four conditions for making outright gifts

Answer 1

(1) Necessary mental capacity;
(2) Intention to make a gift (manifested by words/conduct);
(3) Certainty of subject matter and objects;
(4) Property must be transferred to the donee in the correct manner.

Question 2

Mental Capacity

Answer 2

The level of understanding rises with the value/size of the gift.

Question 3

Re Beaney

Answer 3

• Involved mother with senile dementia making a gift of her house.
• The understanding required includes being able to understand the claims of the donees.

Question 4

Intention to make the gift

Answer 4

This can usually be inferred from the circumstances if there is no express wording (eg existence of gift within the will)

Question 5

Certainty of Subject Matter and Objects

Answer 5

(1) The subject matter (item) of the gift must be certain.

(2) The object (donee) of the gift must be certain.

Question 6

How to create ‘perfect gift’: Chattels

Answer 6

Simple physical delivery (Re Cole) or by deed (but deed is not necessary)

Question 7

How to create ‘perfect gift’: Private shares

Answer 7

Falls outside the CREST system.

1) Transferor completes and signs the stock transfer form;
2) Transferor sends the STF and share certificate to the transferee;
3) Transferee must send the two documents to the company to register the new owner.

Question 8

How to create ‘perfect gift’: Public shares

Answer 8

Falls within the CREST system.

• Transfer of ownership of shares are recorded automatically on the instructions of the shareholder without the need for them to sign a STF.
• Registration and transfer of title is immediate.

Question 9

How to create ‘perfect gift’: Land

Answer 9

Must be transferred by deed (s52(1) LPA) and sent to the Land Registry to register as a new owner (Richards v Delbridge).

Question 10

What happens if the property is not correctly transferred?

Answer 10

The donee can have no benefit from the imperfect gift.

Question 11

Defective transfer of a gift: equitable maxim?

Answer 11

“Equity will not assist a volunteer”

The court will not save an invalid gift by categorising a failed gift as a successfully created trust (Milroy v Lord).

Question 12

How to save a defective transfer by contract law?

Answer 12

If the disappointed recipient could show that there was a contract and that there is evidence of consideration, he could potentially sue via contract law.

Question 13

Exception: Rule in Strong v Bird

Answer 13

Exception to ‘equity will not perfect an imperfect gift’.

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

1) Transfer fails due to not satisfying formalities (eg s52(1) LPA);
2) Intention to make immediate gift by donor (Re Freeland)
3) Intention continues until death (Re Gonin)
4) Donee becomes executor/PR/Administrator for dead donor

Question 14

Re Freeland

Answer 14

There is an intention to make an immediate gift by the donor.

“as soon as I get the car on the road” was not an immediate gift.

Question 15

Re Gonin

Answer 15

Mother dealt with property as if she owned it (sold part of the garden) which indicated that she still considered herself the owner.

Question 16

Exception: Every Effort Test - Re Rose

Answer 16

The gift completes in equity if the donor did everything he could. Exception to the rule that equity will not assist a volunteer.

Mr Rose sent a completed and signed stock transfer form along with the share certificate to his wife. The documents were then sent to the company. The company didn’t register the transfer until months later.

Held: Gift was made perfect in equity upon sending the documents to the company.

Question 17

Mascall v Mascall

Answer 17

Possession of a transfer deed was sufficient to enable registration.

Question 18

Exception: Unconscionability - Proprietary Estoppel

Answer 18

Exception to the rule that equity will not assist a volunteer.

Despite the fact that the transferor does not hand the transfer form and share certificate to the transferee, it would’ve been unconscionable for the transferor to retract the gift (Pennington v Waine)

Question 19

Pennington v Waine

Answer 19

1) Transferor informed the auditor that she wanted to transfer shares to her nephew.
2) Transferor signed STF and sent to auditor
3) The auditor told the nephew that the transferor wanted to transfer the shares to him and that he didn’t have to do anything.
4) Auditor sent the transferee a form to agree in becoming a director, which he signed and returned.
5) Transferor passed away with the transferor incomplete.

Held: Unconscionable not to treat the transfer as complete (in equity), even though every effort had not been made (Re Rose)

Question 20

Curtis v Pulbrook

Answer 20

Confirmed that the Pennington case involves detrimental reliance.

Ada was bound because she told her nephew she was giving him the shares and he acted to his detriment by becoming a director of the company.