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Question 1

Richards v Delbridge

Answer 1

Held: the settlor does not need to use particular words or technical expressions to create a trust by declaration, but he must do something which is equivalent to it and use expressions which have that meaning.

Question 2

Jones v lock

Answer 2

words spoken in loose conversation will not amount to an effective declaration of trust because the necessary intention to create a trust is lacking.

Question 3

Paul v Constance

Answer 3

Unlike Jones v lock

Where words are repeated over a period of time, this will be held sufficient.

Question 4

Choithram International SA v Pagarani

Answer 4

Wealthy philanthropist wished to set up a charitable foundation to receive much of his wealth when he died. Knowing he was dying, he signed a trust deed establishing the foundation. The deed stated that he was the settlor and appointed several trustees, he was one. After signing the deef, he orally stated that he was giving all his wealth to the foundation. Hethen died but had no executed any share transfers to the foundation, nor executed a formal declaration of trust.

PC - allowed the appeal, advising that the settlor had constituted the trust.

In effect the settlor made a gift of the itnended trust property to himself in his capacity as trustee, which had the effect of constituting the trust. The trust was enforcable even though the trust peoperty had only been vested in one of the trustees.

Held: the words of gift by settlor to himself on trust should be regarded in substance as a declaration of self as trustee.

Question 5

Re Vandervell’s Trust (NO2)

Answer 5

Declaration of trust by conduct

Vandervell Trust Company held a share option on trust for Mr V. The option was exercised using £5k that the trust company held on seperate trust for V’s children. Thereafter, the trustees wrote saying that the shares would be held on trust for the childrens settlement and dividends arising from the shares were to be paid into the childrens settlement. CA Held: as this was done with full consent of Mr V, the intention to declare a trust was clear and manifest and the trustee company held the shares on trust for the children. Unless the trustee can be treated as acting as agents for Mr V in delcaring the trust, the reasoning in this case is unconvincing as passive assent by Mr V does not suggest a clear and rpesent irrevocable declaration of trust.

Question 6

Don King Promotions Inc v Warren

Answer 6

2 million pound contracts between leading boxing promoters in the US and UK. By agreements, the UK boxing promoter, purported to assign his promotion, management and associated contracts to a partnership with the US boxing promoter. The contracts related to personal services so no assignment could take place. But held: the benefit of the contracts had been subject to a trust in favour of the partnership since this had been the overridign intentions of the parties.

Question 7

What does s52 LPA 1925 mean?

Answer 7

All conveyances of land are void unless made by deed. The transfer of the legal title to land must also be perfected by the registration of the transferee as the registered proprietor at the land registry.
An attempted oral transfer of land, a transfer by mere writing, or even granting the trustees physical possession of the land will thus be insufficient ot create a constituted trust.

Question 8

Richards v Delbridge

Answer 8

Grandfather attempted to create a trust of a leasehold interest for his grandson by assigning the lease to the boy’s mother. Although the assignment was in writing, it was not made by deed. Held: no effective transfer of the lease and the trust remained incompletely constituted.

Question 9

What does a transfer of shares require?

Answer 9

Requires a share transfer form to be completed and signed by the owner, and forwarded with the share certificate to the company registrat for registration.

Question 10

Milroy v Lord

Answer 10

X attempted to create a trust of 50 shares in favour of the plaintiffs by transfering htem to Y. By the constitution of the bank, the shares were only transferable in the books of the company. Although X had executed a deed of assignment and delivered the share certificated, to Y, the view of the court was that the title had not been effectively transferred and the trust remained incompletely consituted.

Question 11

Re Rose (Decd)

Answer 11

Where registration is needed fully to complete a transfer, equity will treat the transfer as complete from the moment that the transferor has done “ everything within his power” to achieve the transfer of the property.

Here Mr Rose trasnfered shares to his wife. The share trasnfer form was registered in the book of the company on 30 June. Estate duty was due unless the transfer was complered prior to 10 April. CA held: transfer had in fact been completed on 30 March, since at that time, the transferor had dpne everything within his power to divest himself of his interest on the shares.

Question 12

Re Fry

Answer 12

The Re Rose rule did not operate here where the requierments were applied strictly.

Question 13

Mascall v Mascall

Answer 13

Rule in Re Rose was applied to a transfer of registered land. Mascall wanted to transfer his house to his son. He filled in all the relevant parts of the land registry transfer form and handed it to his son. The son completed those parts that the itnended transferr was required to complete and sent the form to the Stamp Office, a necessaru step prior to sending the form of reigstration. H ethen had a row with his father, who sought a declaration that the transfer was void. The transfer form had not yet been sent to the Land Regiry.

Ca: held that the transfer was completed when the father completed his part of the form and handed it to his son. Although it had not yet been sent to the land registry, this was the responsibility of his son as transferre, and threfore, the father had done everything within his power, to transfer the title. ALl that remained were the acts of third parties, the son sending the form to the land registry and their registrering him as proprietor was out of the father’s control.

Question 14

Pennington v waine

Answer 14

CA held: in appropriate circumstances, the execution of a share transfer form might in itself be sufficient to give rise to an equitable assign,ment of the benficial interest in the shares. The result would be that the transferor would hold the shares on trust for the transferee, even though the completed form has not been delivered to the transferee or the complany’s registrat.

Question 15

Pennington v waine

FACTS

Answer 15

Ada executed a share trasnfer form in favour of her nephew(X), in respect of 400 shares in a family company. The STF had been drawn up for her by a partner in the company’s auditors. She returned the form to him and it was placed on the company’s file. Ada wanted X to become a director of the company, and the auditor wrote to him enclosing instructions to ocmplete the prescribed form of consent to act as a director, and alspo stating that Ada had instructed him to arrange the transfer to him of 400 shares in the company, adding that this did not require any action on his paert. The auditor took no further action to transfer the shares prior to Ada’s death. It was clear that Ada had not done verything in her powerr to effect trasnfer of the shares, because the transfer form had no been delvivered to X or submitted to the company for resitration.

Nevertheless, the CA held: that the gift was complete because Ada had intended to make an immediate gift, and it woudl have been unconscionable for her to recall the gift. The execution of the share transfer form could be taken as a complete assignment of her equitable interest in the shares, thus generating a trust under which she could have been compelled to procure the registraiton of shares in X’s name

VIEW OF MAJORITY: the crucial element that renders a transfer complete in equity is that it would be unconscionable for the transferor to recall the gift.

This undermines the established principles that equity will not act to perfect an imperfect gift nor assist a volunteer.

Signfiicant that there have been no decisions since pennington v waine which have adopted a similarly benevolent view of when a n incpomplete transfer will be treated as effective

Question 16

Curtis V Pullbrook

Answer 16

FIRST INSTANCE CASE considered the unruly approach of unconscionability in Pennington v Waine.

Despite Mr Pullbrook having done “his incompetent best” as the managing director of a private company to transfer legal title in some shares to his wife and daughter, the power to issue and record share transfers was a power of the company board which had not been delgated to Mr Pullbrook.
Mr Pullbrook had not been satisfied the requirements in Re Rose, as he had not done all he could do to transfer the shares, as he had not deposited the STF with the company solicitors.

Biggs held: treated the question as a matter of detrimental reliance. Hence twhere there is detrimental reliance by the donee, that may bind the ocnscience of the donor to justify the imposigion of a constructive trust. In the present case, there was no evidence of anyy reliance, detrimental or aotherwise, byt he wife or dauighter of Mr p’s purported gift of shares.

This interpretation of Pennington v Waine was adopted by carr in Winkler v Shamoon

Question 17

Re Ralli’s WT

Answer 17

In most cases, a trust will only be fully constituted if the trust property is transferred to the trustee by the deliverate act of the settlor. However, in ratre cases like this , a trust will be fully constitued if the trustee received the legal title to the trust property by coinsident.

Question 18

: Paul v Paul

Answer 18

Once the trust has been fully constituted, the settlor cannot change his mind,

Question 19

Exceptions to the rule that equity will not assist a volunteer:

Answer 19

1_ rule in strong v bird

Question 20

Strong v Bird

Answer 20

Where a donor makes an imperfect gift during his lifetime, so that the donee does not receive the legal title to the rpoperty, the rule in strong v bird can operate to perfect the gift if the donee is appointed the donor’s executor, or becomes the odnor’s administrator on intestacy.
The gift is pefected because the donee receives legal title to all the donor’s property in his capacity as executor or administrator, including the property that was the intended subject matter of the gift. This has the effect of completing the imperfect transfer, by vesting the necessary legal title in the trustee.

Question 21

Strong v Bird conditions

Answer 21

1) Donor must have intended to make an inter vivos gift
2) Donor’s intention must have constinuted until his death
3) donee must have been granted administration
4) property must have survived the death of the donor

Question 22

If incompletely constituted trust declared by deed, can the beneficiarCannon v Hartleyy do anything?

Answer 22

1) may be entitled to sue the settlor at common law and recover compensatory damaged for the failure to constitute the trust, ThiS IS BECAUSE COmmon law will enforce contracts made by deed, even if they are not support3ed by consideration.

The availabiltiy of volunteer beneficiaries to obtain a remedy at common law has been widened by the contracts (Rights of third parties) act 1999.

Question 23

Cannon v Hartley

Answer 23

SETTLOR CONTARCTED WITH B
Where a settlor has contracted directly with a beneficiary, either by way of deed, or for consideration, even nominal, the beneficiary will be entitled to sue to recover damages at sommon law if the settlor fails t fulfil his promise to constitute the trust. The beneficiary is a party to the covenant or contract, so there is no difficulty of privitry.

Question 24

Settlor covenanted or contracted only with the trustees from 11 May 2000

Answer 24

Contracts (rights of third partys) act 1999, s1(1) provides that a third party is entitled to enforce a term of a contract if it expressly provides that he may or if it purports to confer a benefit on him. Where a settlor entered into a covenant, or contract to create a trust with the intended trustee, the beneficiary will be entitled to sue to recove rdamages under common law if the settlor fails to fulfil his promise, unless the ocntract made clear that it was not intended to be enforceable by the beneficiary.

Question 25

Settlor covenanted or contracted only with the trustees before 11 May 2000

Answer 25

The rights of the B to enforce such a covenant will cpontinue to be determined by older rules. The B cannot sue the settlor for breach in his own right, as he has no privity of contract to do so. Unless the intended trustees hold the benefit of the convent on trust for him. he similarly cannot compel them to bring an action for breach against the settlor.

Central question: whether the intended trustee is able to sue the settlor if he so wishes and if so, as to the damaged recoverable.

Question 26

Milroy v Lord

Answer 26

Turner LJ: Pointed out that there are three methods of making a gift of property:

1) Outright transfer/gift
2) Transfers property to trustee to hold on trust for intended beneficiary.
3) Self declaration of trust

Question 27

Paul v Paul

Answer 27

Where a trust is completely/fully constituted it has full legal effect and the settlor cannot reclaim the property even if the beneficiaries are volunteers unless he has reserved a power to do so:

Question 28

What does an ineffective assignment of property mean?

Answer 28

An ineffective assignment of property can only be regarded as a promise to assign.

Question 29

Law of Property Act 1925, s 52(1)

Answer 29

: to transfer legal title with land/transfer legal interest, there must be a deed

Question 30

Land Registration Act 2002, s 27

Answer 30

provides that certain transfers, including transfer of a registered estate must be completed by registration to be effective at law so the conveyance of a registered fee simple needs to be effected by both a deed AND then by registration. Otherwise it will not be effective by law. If all paperwork is in order, the land register don’t have the power to refuse to register new owner, it does it automatically. But has to be done before legal title passes.

Question 31

Law of Property Act 1925, s 53(1)(c)

Answer 31

Equitable interests: disposition of equitable interest must be made in writing s53(1)©

Question 32

Transfering shares:

Answer 32

evidence by share certificate. Ownership is evident with share certification but only effected by entry in a register held by the company. In order to transfer legal ownerships of shares, the transferor has to complete a stock transfer form, send that to the company along with share certificates and then directors of company need to register the new owner in the register of shares. Transfer of legal ownership only takes place when all these steps have been complied with. Unlike situation with land, transfer of owner of shares is not always automatic.

If shares are in a private company: the directors will usually have the power to refuse to register a transfer. The company’s article association will likely contain restrictions on assignment of shares.

Public company: can only refuse to register new owner in limited circumstances. Therefore, this is practically automatic.

Today, many shares are held electronically in CREST and transfer of these are slightly different, rather then stock transfer form, transfer is by instruction but by enter in company’s register is still essential.

Question 33

: Re Ellenborough

Answer 33

It is not possible to assign or make a declaration of trust of future property.#
Re Ellenborough: Settlor executed a voluntary settlement by deed in favour of trustees of property to which she might become entitled on the death of her brother. When she inherited, she refused to transfer the property to the trustees. Held: The deed could not operate as a grant but only as an agreement in equity to transfer.

Attempt to create a settlement of future property could only operate as an agreement in equity when that transfer of the property was received. An agreement maybe enforceable but only if consideration is received.

Question 34

Milroy v Lord (1862), CA.

Answer 34

A voluntary transfer of legal title is ineffective both at law and in equity where something remains to be done by the transferor:

Voluntary deed of transfer of shares by the settlor to a trustee on trust for his niece. However, title was transferable only by entry in books of bank. No entry was made before the settlor’s death. Held: ineffective transfer. Legal Title had not passed because no entry in the books. Something remained to be done to transfer legal title. It was a voluntary transfer so equity would not enforce settlor to complete the transfer. To apply this to land and shares, every step must have been taken: correct form of transfer – i.e. stock transfer form with shares, deed with land, then must have been registered under LRA or under company. If any steps not taken, then legal title will not pass, even if settlor complied forms, until registration that new owner has taken it, legal title will not be transferred.

Question 35

Jones v Lock

Answer 35

: Father put a cheque in the hand of his nine-month old son saying, “I give this to baby for himself”. He did not endorse the cheque as required. Held: he did not declare himself trustee, he was intended to make na outright gift, not a self declaration.

Question 36

Richards v Delbridge

Answer 36

Owner of leasehold premises endorsed the lease with “This deed and all thereto belonging I give to E”. E was his nephew. Ownership could only pass by means of a deed of transfer. Held: clear intention was to make an outright gift, no intention to hold as trustee.

Question 37

Pappadakis v

Answer 37

: Form used for attempted transfer of life policy was for a transfer to trustees on trust. Documentation was incomplete. Held: by using this form, the intention shown was to transfer to trustees to hold on trust, no intention to make a self-declaration of trust.

Question 38

Choithram International SA v Pagarani

PC decision

Answer 38

An incomplete transfer to trustees to hold on trust was effective where the settlor was one of the trustees.

While the donor (TCP) was seriously ill in England he executed a trust deed establishing a philanthropic foundation and appointed himself as one of the trustees. He then stated orally that he gave all his wealth to the foundation, expressly including his shares in four British Virgin Island companies. He told the accountant of those companies that he was to transfer the shares to the foundation. At board meetings of the companies later the same day the donor reported orally that he had established the foundation and had gifted all his wealth to it. The shares were not transferred; transfer forms were not executed. An action was brought in BVI High Court by members of his family, who claimed to be entitled to the donor’s estate on his intestacy.

Lord Browne-Wilkinson: started by analysing the facts. He looked for the intention of the donor – which of the methods in Milroy v Lord did he intent to use to transfer his wealth? Analysis what the settlor said in the context of the facts, the PC took the view that although on the face of it he seemed to be making an outright gift, when looking at facts it looked as if to transfer ownership of property to trustees on trust and this was a trust. Nothing exceptional about this case so far as it is about deciding true intention of the transferor. However, this does not solve problem because whether interpretation is of outright give or transfer to trustees to hold on trust. Problem of this case is that ownership of the shares had not been transferred to the foundation. Go to last para to see how they solve this.

Question 39

Choithram International SA v Pagarani

General point of application

Answer 39

if settlor intends to transfer to a body of trustees, then it will be sufficient to transfer ownership to just one of those trustees. If you go back to last sentence of exert above proves this.

What kind of trust was it that courts enforced? Little doubt that this was enforcement of an express trust. Arden in Pennington v Waine was wrong in seeing it as imposition of a constrictive trust.

Makes clear that : initial question is: what is the intention of the transferor and clear you look at what was said and done in context (surrounding circumstances).

Question 40

Shah v Shah [2010] EWCA

Answer 40

example of case of what the intention of case at first sight, was not what the court eventually concluded was the intention of the parties. Interpretation of intention by court, meant that the disposition was effective.

At first sight looked like an intended gift of shares. New owner not registered as owner, legal title not transferred. Argument was: this letter simply showed intention to make a gift, the gift had not been completed and if intention was to make a gift then the court could not instead find a trust. However, CA interpreted the letter as showing an intention to give an immediate interest in the shares.
Arden LJ: referred to the certain words in the letter and reference to a declaration. In light of this, intention to give immediate rights in the shares and because legal ownership would only pass once new owner was registered in the company books, then the only way immediate ownership would pass is if there was a declaration of trust. Letter interpreted as declaration of trust so rights passed to intended beneficiary.

Question 41

Re Rose

CA

Answer 41

principle established: If a settlor/transferor has done all that it is obligatory for him to do but something remains to be done by a third party, the transfer will be ineffective at law but effective in equity.

Settlor had executed voluntary transfers of shares in favour of his wife beneficially and in favour of trustees on certain trusts in the form required by the company’s articles. He gave the transfers and the share certificates to the trustees (for themselves and as agent for his wife) in March. The transfers were only registered by the directors in the company books at a later date (June). The court had to consider for tax reasons at which date the transfers were effective. Held: transfers valid and effective in equity in March. If transfers effective in March, no estate duty would be payable on death of settlor, but if effective in June, estate duty is payable. CA held: at that date in March, the settlor had done everything in his power to do, everything necessary for him and him alone to do in order to transfer shares. There was nothing else the settlor could personally do to pass ownership of the shares. Therefore, he could not change his mind and fine for trustees and the wife to apply for registration in company books (not something the settlor had to do).

What must the settlor have done? Transfer will be effective IN EQUITY, but not in law, if the settlor has done everything necessary for him to do to transfer ownership.

Question 42

Re Rose principle

Answer 42

Settlor must do everything HE has to do so all that remains to be done is the act of a third party. In Re Rose, all that needed to be done was registering in company books – settlor did not have control over this. We are looking for settlor to have completed necessary documentation and either to have sent all necessary documentation to third party, (Re Rose – in relation to shares was the company) or what happened in re rose, donor gives all documents to donee who can then send them to the third party (the company).

Reference to settlor to having put the situation ”out of his control”. Jenkins J in Re Rose said settlor could not have demanded the documents back. Arden in Pennington v Waine commented that by delivering the documents, to either donee or the company, the donor then loses control over whether the transfer is completed and this is essential. Settlor doesn’t have to do everything he COULD have done. But everything he and he alone can do.

1) Re Rose in context of transfer of shares. Only settlor as owner of the shares has to do: Settlor must complete and sign CORRECT form of transfer. This ground that Re Rose distinguished Milroy v Lord because in Milroy v lord, the wrong form was used.
2) Having completed correct form, the settlor must then provide everything necessary for registration of the new owner of the shares. Settlor must provide: transfer form and share certificates. If share certificates, new owner cannot be registered unless company has share certificates, these can be provided to the company or done who will then provide them to the company.

Question 43

Milroy v Lord

Answer 43

Settlor must complete and sign CORRECT form of transfer. This ground that Re Rose distinguished Milroy v Lord because in Milroy v lord, the wrong form was used.

Question 44

Pennington v Waine

Answer 44

The transfer form was not handed over. It was duly completed (filled in and signed) but kept by donor’s agent. So Re Rose was not satisfied.

Question 45

Zeital v Kaye [2010] EWCA

Answer 45

159 Share certificae was missing so transferor had not done everything in his power because he could have applied for a duplicate certificate. So Re Rose was not satisfied.

If share certificate is already IN THE HANDS of the company, then this is enough.

Question 46

Can Re Rose be reconciled with Re Fry?

Answer 46

? Re Rose : looking for consent of directors, in Re Fry looking for consent of Treasury. Re Fry – treasury might have asked for further information but so might have the directors in Re Rose. The only way in which a distinction can be made is: on the basis that the directors consent in Re Rose was the absolute final consent that needed to be given and that unless the directors had refused their consent within a specific period, they would have HAD TO register as a new owner of the shares.

Question 47

Re Fry?

Answer 47

Re Fry [1946] Ch 312: Transferor lived in the US. He had executed the transfers and sent them to the company but the company could not register them unless Treasury consent was obtained for the purposes of the Defence (Finance) Regulations 1939. Transferor had sent the relevant application forms but consent had not been obtained at his death. Held: the transferor had not done all that was required at his death because it was necessary to obtain (not just apply for) consent. Also the Treasury might have acquired extra information from him which he could have refused to give or consent might never have been obtained, though that was unlikely. Company not allowed to register new owners of the shares without Treasury consent. Transferor applied for consent but not been granted consent at the time he died. In this case, court held: transferor had not done everything required for him to do because it was not enough that he applied for consent but that he got consent for transfer of ownerhisp of shares and the treasury might have required extra information which he could have refused.

Question 48

Mascall v Mascall

Answer 48

Principle of Re Rose applied in transferred of registered land.

Father had delivered to his son the executed transfer form and Land Certificate. These had been sent to the Inland Revenue for payment of stamp duty and there was some delay. In the meantime father and son fell out and the Inland Revenue wrongly returned the documents to the father’s solicitor. The documents were nevertheless considered as belonging to the son; the solicitors held them to the order of the court. The transfer was effective in equity from the moment the father had given the required documents to his son. had been done by father, all that needed was act of third party and this would be automatic. Purported transfer ineffective at law, is effective in equity so long as transferor has done everything necessary and then from that moment, the transferrer will hold on trust for the intended done because the done is now the owner in equity but transferor remains the owner at law. This seems to be by way of a constructive trust.

Question 49

• Is Re Rose consistent with Milroy v Lord?

Answer 49

? Milroy v Lord – where intend to make outright gift, not be interpreted as self-declaration of a trust. CA in Re Rose held: a trust can arise, donor can hold property on trust. But not an express trust. Comments in Re Rose take view that a constructive trust arises (Evershed) and both masters of rolls and Evershed and Arden hold a constructive trust is not inconsistent with Milroy v Lord. This distinction may be valid: courts are not reinterpreted donors intention (not intending to be trustee or declared himself as trustee), they say his actions are such that a trust arose. In theory, it may not be inconsistent with Milroy v Lord to the extent that we are reinterpreting. But ultimate outcome of Re Rose is that donor becomes a trustee even though he never intended to become a trustee. Outcome is contrary to the donor’s intention. He never intended to subject himself to obligations of being a trustee. But this is the outcome. To this extent, Re Rose is inconsistent with Milroy v Lord. Milroy V lord – Where transferor attempts to make outright gift, the courts will not make effect to it by reinterpreting it as as self-declaration of trust., although you can join them together by saying that in Re Rose imposes a constructive trust on transferor, but ultimate outcome is a transferor who never intended to be a trustee (With all obligations imposed) nevertheless ended up being a trustee and holding this on trust. In Re Rose, the CA was only involved in interim period – the transferor had taken all steps HE needed to do in March, he new owner was registered in company books in June, by the time the case came to court, legal title had past. The only issue for court was that interim period, from period He took all necessary steps to when legal title was passed. Outcome: although he was a trustee, he was only a trustee from March to June. However, the reasoning of the CA in Re Rose was not limited to such a situation. It would appear that the principle in Re Rose applies even if the directors of the company refused on justifiable grounds, to register the new owner. In this situation, the transferor would remain a trustee indefinitely. Therefore, it has been suggested that principle in Re Rose should be limited to two situations:

1) Where automatic right for transferee to be registered as new owner
a. This is the case where you transfer registered land or transfer shares IN A PUBLIC COMPANY

2) In situation like Re Rose, where final steps to transfer legal title have been taken.
On basis Re Rose is inconsistent with Milroy – transferor never intended to be a trustee, principle in Re Rose should only apply where trusteeship is only for a limited period.

Re Rose involves imposition of constructive trust on transferor. Constructive trusts are imposed where it would be unconscionable otherwise. The unconscionability is usually found in detrimental reliance or in some unfair benefit. But in circumstances covered by Re Rose, what is there to make it unconscionable for transferor to change his mind? There is no question of transferor unfairly benefiting, no requirement for transferee to have acted in reliance to his potential detriment. Case is different to majority of cases imposing constructive trust – more of a technical rule rather than rule based on unconscionably.

Question 50

Pennington v Waine

CA

Answer 50

A transfer will be effective in equity when it would be unconscionable for the transferor to recall the gift, even if the transferor has not done everything he is required to do to complete the transfer.

In order to be a director, he needed to have at least one share in the company.
Ada Crampton wanted to transfer 400 of her shares in a company to her nephew, Harold, and to make him a director of the company, which, under the articles of association, required H to hold at least one share in the company. A signed a share transfer form and the company’s auditors wrote to H to inform him of the share transfer and asking that he complete the prescribed form of consent to act as a director. He was also told he need take no further action. H signed the form and it was countersigned by A. Problem: The signed share transfer form which was completed and signed, was retained by the auditors and was not sent to H. She not only needs to sign share transfer form but the STF and certificate are in hands of transferee (H) or to the company for registration of the new owner. A died having executed a will in which she made specific gifts of the balance of her shareholding but made no mention of the 400 shares because she thought she disposed of these shares to H. An action was brought to determine whether there had been a valid equitable transfer of the shares. Held: transfer was effective in equity. Re Rose could not be applied but CA held: it was effective in equity and that Ada and her personal representatives, held the shares on constructive trust for H. This is a step further than Re Rose.

Arden LJ (with whom Schiemann LJ agreed): referred for two reasons that gift was effective in equity:

1) Ada had a clear and continuing intention until her death to make that transfer
2) It would otherwise be unconscionable.

Question 51

Arden’s arguments in Pennington v Waine

Answer 51

1) It would otherwise be unconscionable
a. She relied heavily on judgment of PC in Choithram for the relevance of unconscionability in this area. However, this is a misreading (Arguably) of what the PC said in Choithram. Not PC saying a trust arose because otherwise it would be unconscionable. Unconscionability was not a reason for decision in Choithram, rather CA is saying that since we can see that Choithram is a trustee, since we have found a declaration of trust, he cannot do back on it. In Choithram, the reference to unconscionability only came into place once the court already found the existence of a trust. Whereas Lady Arden in Pennington v Waine creates a trust on grounds of unconscionability so her reasoning (reliance in Choithram is suspicious). Her biggest criticism is her reliance on unconscionability because unconscionability is too vague, it is too uncertain. Why would it be unconscionable if the gift was not effective in equity. Arden gave no indication in judgment as to what amounts to unconscionability, all she did was consider what amounts to unconscionability on the facts.
What is, in the facts, unconscionable about this case?:
1) Signed transfer form (this is not enough, we saw this in other cases
2) Told H she would make a transfer (but simply telling someone they are going to make a gift would not be unconscionable
3) H told he does not have to do anything further (but he could not have done anything for, he could have asked for the share certificate, but she did not have to).
4) Arguably only factor which made in unconscionable to change her mind was that he agreed to be a director of the company that he agreed to take on obligations in reliance on the transfer.

There are cases where it would be unconscionable, they are generally about detrimental reliance, so estoppal stops them.

There are those who argue that principles in Pennignton v Waine should be seen also on detrimental reliance. Mr Justice Briggs in case of Curtis v Pulbrook believes this.

Question 52

Briggs J, Curtis v Pulbrook

Answer 52

Mr Justice Briggs’ analysis of Pennington v waine is that it is detrimental reliance giving rise to a constructive trust, but this was not said in Pennington v Waine. LJ Arden only spoke of unconscionability, she did not rely on detrimental reliance. Thinking back to 4 factors showing unconscionability, difficult to see clearly any of those did involve detrimental reliance because what is potential detriment of H agreeing to be director of company, how will he suffer detriment if he does not get the shares. Only possibility: by agreeing to be a director, he is potentially liable if he does something wrong. Although it might be preferable and easier to accept Pennington v Waine as a decision if we could say reference to unconscionability means we require detrimental reliance, it is a stretch and it is a limitation of Pennington v Waine IF detrimental reliance is required. It does making Pennington v Waine consistent with other areas of law, less far reaching in effect and less uncertain in its effect.

Question 53

Is the case justifiable on the basis of policy and the introduction of flexibility into the law?

Answer 53

Far reaching impact: Look for unconscionability (pennington v waine
Narrow reaching impact: look for detrimental reliance. (Briggs)

Question 54

Alternative ground in Pennington v Waine

Answer 54

Two alternative grounds for Pennington:
1) Ada and Auditor, although the auditor kept STF, they actually held that STF as agents for H because:
a. They told H of gift
b. Told H he did not need to do anything further
So they became agents for H, so it was as if the STF had been given to H. The share certificate was already with the company so on this analysis, Re Rose was satisfied.

Lord Justice Clarke took different approach:
His view: the signing of the transfer form, on its own, effective a valid equitable assignment. But arguably reasoning wrong because Ada was the sole owner of the property, this was not a case where there was a separate equitable interest which he could have assigned by writing in s53(1)© LPA. A person who is the sole owner of the property is regarded as owning the whole, they own one composite interest. Arguable for there to be an assignment of equitable interest only, you need to separate that equitable interest from legal, which would require a declaration of trust which there was not. Therefore, his reasoning is arguably insupportable.
`

Question 55

Re Brooks’ ST

principle

Answer 55

There is conflicting authority as to whether a trust will be completely constituted if the trustee acquires legal title other than by transfer by the settlor

993 is authority that the trust is not constituted; Re Ralli’s WT [1964] Ch 288, in which Re Brooks was not cited, contains dicta that it is on the basis the trustee now has the legal title and neither the settlor nor her personal representatives could assert an equity against him.

Question 56

Re Brooks’ ST

Facts

Answer 56

Settlor executed a voluntary settlement in favour of a trustee of any interest he might be appointed under his parents’ marriage settlement. A sum was later appointed to him, by which time the trustee had also become the trustee of the parents’ marriage settlement. Question whether the trustee held the property as trustee of the parents’ marriage settlement and was under an obligation to give the sum to settlor because appointment to settlor under the marriage settlement or whether he held it on the terms of the settlor’s voluntary settlement, as settlor said he would transfer property on trust to the trustee (that it would be held on these terms).. Held: the settlor could demand from the trustee the sum appointed to him and could not be compelled to transfer to the trustee the funds. There was no trust. Purported trust of future property, he did not have this property so could not transfer. A sum was appointed later to settlor and by the time this appointment was made, the intended trustee had also become trustee of the parents marriage settlement so intended trustee of the settlor’s trust had the legal title to the property. Held did not constituted the voluntary settlement, settlor could demand transfer of property to him. As it was a voluntary settlement (gift, as was not fully constituted settlor was not required to transfer property into trust, there was no trust.

Question 57

Re Ralli’s WT

Answer 57

Contrary view was expressed OBITER here. Re Brooks was not cited in this case. View expressed in Re Ralli was that the trustee had acquired the legal title and the settlor was unable to assert a right to that property against the trustee. Settlor’s marriage settlement contained a covenant to settle existing and after-acquired property attempted settlement of future property. One of the trustees (T) was later appointed a trustee of the will of the settlor’s father under which the settlor acquired an interest under father’s will. T became the sole surviving trustee under each (marriage settlement and fathers will. Again intended trustee had actually acquired legal title of property intended to be transferred on trust but not due to settlor’s acts. Actual decision was on basis that there was an independent declaration of trust by settlor in the marriage settlement. So when settlor acquired settlors property, there was a trust fully constituted. Had there not been a desperate declaration by trust of settlor, the could said obiter: it was irrelevant how, and in what capacity, T became the legal owner of the property. There was no need to invoke the assistance of equity for specific performance of the covenant because T had the legal estate and it was therefore irrelevant that the beneficiaries were volunteers. The sole question was who could assert an equity against T. The settlor could not have done so because of the covenant and neither could her personal representatives. The moment T became legal owner of property, he held it on trust of marriage settlement and it could not be claimed by either settlor or settlor’s personal representatives because once the trustee had the legal estate, the sole question was who could assert an equity against a trustee. Who had a right to claim that property in the hands of the trustee. And the Court expressed the view (inconsistent with Re Brooks) that settlor and their representatives could not asset a right of property in hands of trustee because of the covenant because settlor had covenanted to transfer property on trust. So the only person in any rights of property, once in hands of trustees, were beneficiaries under marriage settlement. This was because the legal title had fortuitously invested in trustee in another capacity because there was no need to seek specific performance of the covenant. If someone else was appointed as trustee of the father’s will, the trust would have been incompletely constituted. This was the result purely because trustee under marriage settlement was also trustee under the father’s will. Reference as made by the court to the case of Strong v Bird.

Re Books and dicta in Re Ralli are contradictory.

Question 58

Should acquisition of legal title by mere chance, rather than the act of the settlor, be relevant?

Answer 58

When looking at situation where acquisition of legal title by intended trustee is a matter of mere chance. It was pure chance in Re Ralli that the father chose to appoint the same person as trustee of his will as his son had already chosen in marriage settlement. So why should mere chance of same person be appointed in two different capacities make the trust completely constituted. Outcome may be acceptable if the settlor has a role in the appointment. If settlor appointed trustee in another capacity where he gets legal title because here we can say it is still settlors acts which means legal title gets to the trustee.
Practical problem: reasoning in Re Ralli was that the settlor who was on the face of it intended to benefit under his father’s will, was not permitted to enforce that right because of a covenant in another settlement. And Penner has pointed out that this seems wrong where you have professional trustee because professional trustees will be acting for another of different trusts. At any one moment they cannot be expected to remember any one terms of the trust and therefore to know whether a beneficiary under one trust cant enforce their rights in the terms of another trust. Argues that IF dicta in Re Ralli is to be followed it should only be where trustees know that there is a connection between the trust.

Question 59

The rule in Strong v Bird

Answer 59

315 applies in different situation but similar approach taken under Strong v Bird to approach taken in Re Ralli. In Re Ralli the court referred to rule in Strong v Bird, so this supports approach in Re Ralli.

Rule in Strong v Bird is often referred to an exception to the equitable principle that equity will not held those voluntary. But instead it is better to see it as comparable to Re Ralli and another example of a fortuitous case.

Rule applies: Where a donor intends to make an immediate lifetime gift of specific property and that intention continues to his death, the appointment of the donee as the executor of the donor’s will or as administrator of the donor’s intestate estate will perfect the gift. If the done is appointed either as executor of donor’s will or administer this appointment perfects the gift.

Question 60

Requirements for strong v bird to be effective

Answer 60

1) Donor must intended to make a lifetime gift
a. Not apply where intention is to make and testatory gift. (Re Steward
2) This intention to make a lifetime gift must have intended right up and until donor’s death.
a. Donor must believe right up till his death that he has made a gift. If change of mind, the doctrine does not apply. (Re Gonin)
3) Donee must have been appointed as either executive or administrator of donor’s estate so acquire legal estate in question.
a. Donee does not need to be sole executor or administrator only as long as he is ONE of these (Re Stewart)
b. Appointment of administrator is sufficient (Re James)

Question 61

Re Gonin

Answer 61

: Daughter brought a claim against her mother’s estate based on an intention to make gift of land; however, the mother later wrote a cheque in favour of her daughter instead which was taken to show a change in intention (though cheque was not found until after death and was ineffective). In fact, the gift of money was ineffective, and was ineffective but showed intention to make gift of land had not continued until death so strong v bird did not imply.

Question 62

Re James

Answer 62

a. Appointment of administrator is sufficient (Re James)

Question 63

Re Stewart

Answer 63

1) Donor must intended to make a lifetime gift
a. Not apply where intention is to make and testatory gift.
3) Donee must have been appointed as either executive or administrator of donor’s estate so acquire legal estate in question.
a. Donee does not need to be sole executor or administrator only as long as he is ONE of these (Re Stewart)

Comments:
1) The fact that all that seems to be necessary for rule in strong v bird to apply is that done acquires legal estate on the donor’s death. That according to Re James does not need to be because the donor has appointed done as executor, it can be simply because the done has become administrator of the donor’s estate. There is a distinction between appointment of executor and administrator because appointment of executor is the choice of the deceased, they choose who should be appointed as executor so donors chose as to who acquires legal estate. But appointment of administrator is an act of law, not the deceased. Because of this Mr J Walton in Re Gonin expressed doubt that rule should apply to an administrator rather than an executor.

Question 64

Should this apply only where the acquisition of the legal title is a consequence of an act of the deceased?

Answer 64

Re Gonin:.” He said fine if the donor intends done to become legal owner, this is okay we can accept this because donor has meant done has meant to get legal title but if extended to administrators, it could be a mere chance if donee is the first person asked to be administrator, so he is arguing that it should not extend to that extent. In Re Ralli – it is the same issue, should it be the mere chance that the intended done gets the legal estate which is sufficient or should be limit fortuitous vesting where donor or settlor has a role in the donee/trustee getting the legal title. It could be argued that when a testator is writing his will and choosing his executors, it still is a matter of chance where the donor is appointed as executor because testator probably doesn’t have ruling in strong v bird in mind when choosing executors.

All cases about ruling in strong v bird have outright gifts or release of debts in them. In principle, there is no reason why it could not extend to an intended lifetime gift to trustees which is ineffective, but trustee was appointed as executor.

Reasoning: justification is that the done has got the legal estate, no longer needs assistance of court to acquire the legal estate. So equity does not need to assist a volunteer because volunteer has got the legal estate. This reasoning was made clear in Strong v Bird and Re James.

Underlying principle that equity will not assist a volunteer = basic rule. A purported gift, whether outright or gift on trust will therefore have to be completely constituted because equity will not force a donor or settlor to complete the intended transfer.

And some cases where court have managed to hold the transfer complete even though some steps have not been taken . But coming basis to basis principle, looking at this which is that : if person seeking to enforce the gift or trust is not a volunteer, if intended donee or beneficiary has provided consideration then equity will enforce the intended gift or transfer to trustees.

Question 65

: Re Ellenborough.

Answer 65

. An attempted assignment of future property will also be regarded as a promise/agreement to assign

Question 66

Pullan v Koe

Answer 66

If the settlor does not initially have the property, it will be impressed with a trust in favour of the assignee as soon as it is acquired by the settlor:

Marriage settlement with covenant by husband and wife to settle the wife’s after-acquired property of a value greater than £100. She received £285 which was partly invested in bonds. Action by trustees under marriage settlement under wife. Held: from the moment it was received the £285, the money was specifically bound by the covenant and therefore subject in equity to a trust in favour of all persons within the marriage consideration.

Therefore, crucial issue: this promise is only enforceable IF valuable consideration has been given for it. We need to consider in what circumstances valuable consideration will have been given. We have been looking at the situation where there is an intended gift of property. Where intended gift, there is no consideration. We also look primarily at transfers into trust and transfers into trust are generally gifts. However, what most of the cases in this area have been concerned with (where valuable consideration) are cases involving marriage settlements because valuable consideration does not just include money but also marriage consideration. Most of the cases concern covenants in marriage settlements to transfer after acquired property.

Question 67

Re Plumptre’s Marriage Settlement

Answer 67

Marriage consideration exists where a promise is made before and in consideration of marriage.
Those within the marriage consideration include the parties to the marriage, their children and remoter issue. Next of kin are mere volunteers:

If a promise in a marriage settlement then anyone who falls within marriage consideration is not a volunteer and can enforce that covenant. In Pullan v Koe it was children who sought to enforce the covenant and they could do so. Anyone who us not within marriage consideration will not be able to enforce a promise, they will be volunteers and equity will not assit a volunteer and it is relevant where someone has given consideration but rather people seeking to enforce the promise have given consideration (Re Plumptre).

Even if someone has given consideration, that is not enough to make the promise enforceable. Consideration must have been given by the intended beneficiary who is trying to enforce. In re Plumptre, it was the next of kin who were trying to enforce the promise/covenant. Next of kin are not within the marriage consideration. There was a husband who was in the marriage consideration, but that was irrelevant. Next of kin could not sue to enforce the promise because they had not provided consideration.

Question 68

Re Plumptre,

Answer 68

A promise will not be enforceable in favour of a beneficiary who has not given consideration, even if someone else has:

Marriage settlement with covenant by husband and wife to transfer after-acquired property to the trustees. Wife died and husband held property acquired by her as her administrator. There were no children, so, after husband’s death, the next of kin would be entitled to the trust property. Action by trustees to ask, inter alia, whether they should take steps to enforce the covenant on behalf of the next of kin. Held: Next of kin could not enforce the covenant and therefore trustees were not bound to take any steps to obtain transfer of the property. Next of kin tried to enforce covenant. Held: they could not, even though there were people who had provided consideration, those who were seeking to enforce covenant had not.

Question 69

Re Cook’s Settlement Trusts

Answer 69

: Settlement made pursuant to agreement between settlor and his father which contained a covenant to settle on trust for his children the proceeds of sale of any picture received from his father and sold during his lifetime. Consideration was provided by father. Held: the beneficiaries were not parties to the covenant and had given no consideration so they could not enforce it. Was consideration but not given by the person seeking to enforce the promise. Undoubtedly consideration for this covennt had been given by the father, however it was the beneficiaries of the settlement who sought to enforce the covenant, they had given no consideration, therefore they could neither enforce the covenant nor require the trustees of the settlement to enforce the covenant.

It is only the beneficiaries who have given consideration can sue.
But if a beneficiary who has given consideration sues, then the trust will, at the order of the court, become fully constituted for the benefit of all beneficiaries. So as long as the beneficiary who sues has given consideration, all beneficiaries will benefit from the court order, even those beneficiaries who have not themselves given consideration.

Question 70

Beswick v Beswick

Answer 70

Mr Beswick had sold his business to his nephew. The agreement contained a promise by the nephew to pay a pension to Mr B’s wife. After Mr B’s death, Mrs B sued as his personal representative and was awarded specific performance of that promise on the basis damages would be an inadequate remedy as Mr B had suffered no loss.
Damages would be to compensate for Mr b’s loss and he had suffered no loss. Clearly here this was an example of effectively a party to an agreement – Mr B’s personal representative – suing to enforce a promise for which that party had given consideration, but suing to enforce it for the benefit of somebody else. It could be argued that this is comparable with a trustee suing in order to fully constitute a trust for the benefit of the beneficiaries.

There are two reasons given for suggesting that Beswick v Beswick would not be applicable in this area.

Question 71

Re Cook.

Answer 71

The first is by reference to Re Cook. In Re Cook the fact that someone had given consideration was irrelevant. The other problem in the application of Beswick v Beswick is Mr B was not a trustee. Going to look at cases shortly where the courts have prevented trustees from suing where the aim is to benefit a volunteer beneficiary.

Question 72

Cannon v Hartley

Answer 72

If a settlor covenants to transfer property to trustees to hold on trust, then, any party to the covenant can sue for damages for breach of that covenant: authority

Trustee will normally be party to covenant, but sometimes the beneficiary will be party to the covenant, and if this is the case, the beneficiary can sue for damages at law even if the beneficiary is a volunteer. An action can be brought whether it relates existing or future property.

Voluntary covenant in deed of separation between husband, wife and their daughter that the husband would settle certain after-acquired property on trust for his wife and daughter. Held: as a party to the covenant, daughter was entitled to damages for its breach. However, this is rare that a beneficiary will be a party to a covenant to settle.

However it is rare that a beneficiary will actually be a party to a covenant to settle. Continuing with a possibility that an intended beneficiary can sue on a covenant is the possible applicability of the CRTPA1999:

Question 73

Re Pryce
Prima facie a trustee still has the right to sue as a party to the covenant even if the property is to be held for the benefit of someone else.

Answer 73

However, it has been held that the trustees ought not to sue (Re Pryce [1917] 1 Ch 234 judge held: trustees ought not to sue because beneficiaries were volunteers and they could not themselves sue and if trustees sued, it would give the beneficiaries indirectly what they could not get directly.), they have been directed not to sue (Re Kay’s Settlement judge felt bound by re pryce and went further to direct trustees not to sue.[1939] Ch 329) and the beneficiaries cannot force them to sue (Re Cook -Volunteer beneficiaries cannot force trustees to sue.)

Question 74

If a trustee did sue, what would be the measure of damages and who would be beneficially entitled to them?

Answer 74

Re Cavendish Browne’s ST

Question 75

Re Cavendish Browne’s ST

Answer 75

trustee awarded substantial damages. Covenant related to specific property so damages could be measured. Argued position might be different if covenant did not relate to specific property or related to after acquired property. Held: the damages held by trustee on trust for intended beneficiary. But there are theoretical difficulties with this. The damages of breach of covenant, the covenant is not held on trust for the beneficiary. If it were, it would fall under the next heading. The trustee is clearly not intended to benefit personally, so argument could be made that the only possibility is that the damages for breach of covenant are held on resulting trust for the settlor so what is the point in suing? Another possibility is to draw a comparison with gratuitous vesting and to say that when the trustee receives damages for breach of covenant then this fully constitutes a trust. So lots of problems in way of a trustee suing for breach of covenant, some may never be resolved because courts have indicated not to sue, so we may never get resolution of measure of damages. There is one case which may help potential beneficiaries: Fletcher v Fletcher – situation where trust of the covenant. The covenant itself is property, it is an asset.

Question 76

Fletcher v Fletcher

Answer 76

There can be a completely constituted trust of the benefit of the covenant itself
.) although the courts are reluctant to find this (e.g. Re Plumptre, Re Pryce, Re Cook).

Question 77

Can a covenant to settle future property be the subject of a trust?

Answer 77

Re Cook Considered the issues if covenant to settle future property can be held on trust and suggested that this is impossible. Arguably dicta in Re Cook is wrong because even if covenant deals with future property, the covenant itself is in existence, the promise in a deed exists, even if only a promise to transfer future property. So that covenant itself should be seem as capable of being held on trust.

Question 78

. EXCEPTIONS TO THE RULE THAT EQUITY WILL NOT ASSIST A VOLUNTEER

Answer 78

• The rule in Strong v Bird
• Donatio mortis causa (an inter vivos gift of a chattel made in contemplation of death where certain conditions are fulfilled). Not going to look at this.
• Proprietary estoppel