CONSTITUTION
A transfer on trust requires the property (legal title) to be vested in trustees. This is CONSTITUTING. Once it is CONSTITUTED, it is binding on settlor and they cannot change their mind and revoke. They cease to have beneficial int trust. The Bs can then also enforce rights against T even though they may have given no cons for trust. a self dec is automatically const on declaration and there ar no further requirements. If the trust prop is not vested in trustees, trust is completely const. If no cons has been given for the incompletely const trust, it is void. Equity will not compel settlor to const trust or treat failed transf as self dec of trust 'equity will not assist a volunteer'. Same applies to imperfect gifts: if a donor has not perfected gift by transferring legal title to donee, they will not be compelled to do so.
Milroy v Lord
In Milroy, the settlor executed a voluntary deed purporting to transfer shares to Lord to be held on trust for claimants. This was not correct method of transferring legal title. To properly const, it was necessary to complete an appropriate transfer form and send to company registrar, who would then register new legal owner in company's books . INstead, settlor simply handed share certs to Lord. Lord had PofA to act on behalf of settlor that would have enabled him to register shares in own name, but did not use it. Settlor died several years later and dispute arose over ownership of shares. CofA decided that there was no trust of shares as they had never been vested in Lord.
3 different ways a legal owner can confer benefit of his property to another: 1. outright gift 2. transf on trust 3. self-dec of trust. Made clear that a settlor must have done everything necessary to make intended disp. If fail to do so, eq will not perfect disp or treat him as having used one of the other methods. If a donor fails to properly transf legal title to an intended donee, eq will not treat him as having self-declared a trust. If a settlor intends a transf on trust but does not properly transf legal title to trustees, settlor will not be treated as trustee as they never intended to take on such an obligation.
Application
Jones v Lock father returned from business trip and paid self a cheque of £900 for baby. He died shortly after. Property had not been transferred and court rejected argument that he had declared self a trustee of cheque. He had intended absolute gift, which entails giving away all benefit to, control of and obligation for prop. £900 therefore passed to his estate
Richars v Delbridge - gdad wanted to assign lease to gson (minor). Endorsed on deed, which is ineefective to assign lease. A separate deed should not have been used. As in Jones v Lock, gdad had intended to make outright gift therefore could not be self dec of trust
Therefore, const is linked with intention. if legal title to prop has not been transferred, court needs strong evidence that original owner intended self dec of trust. It must be certain that they inteded to divest self of beneficial owenership
Choithram v Pagarani oral dec of intent to make gift to charity but had not transferred legal title to all Ts before death. Charity is not a legal entity. Although there was .a Q as to whether businessman intended gift or trust, in practice, any gift to charity would amount to transfer on trust. In order to const trust, prop should have been vested in all Ts. HOWEVER, Choithram was one of the trustees of the charity so it was concluded that he could be regarded as having manifested intent to hold on trust for purposes of charity. because one of the trustees already had the truste properly vested in him, and all Ts are entitled to have the trust property veste in them jointly, the PC ordered personal rep of dec'd T to vest prop in all surviving Ts
Transferring legal title
Land
52(1) LPA 1925. 53(1)(b) only deals with creation of Bs new eq int under dec of trust. To const trust, it is necessary to complete transfer deed (complies with s1 LP(MP)A 1989. With reg land, the transf will require reg with Land Reg (s27 LRA 2002)
Shares in UK incorp company
S 1 Stock Transf Act 1963 - shares must be transferred by transferor signing stock transf form in favour of transferee Transfer must be registered in share register of company . The existing share cert with stock transf form must be sent to company's registrar. Title only passes on reg of transferee as new shareholder.
Chattels
either by deed of gift or actual delivery (re Cole) with intention on part of transferor to transfer them
Money
Choses in action
writing, s136 LPA 1925 - notice in writing must be given to debtor or other party
Cash transferred by intention to give and delivery. Bank accounts requir compliance with s136 LPA 1925. Cheques required being cleared. If payer dies before, their death countermands instructions to bank. if payee has no cons for cheque, cannot enforce payment.
EXCEPTIONS TO THIS RULE
Re Rose
executed 2 transfers of shares in private company, one by way of gift, the other to Ts. Transfers and share certs were delivered to company reg but were not registered until a month later. Even though legal title did not pass until reg, CofA held hat the transfers were effective in eq once Mr Rose had done everything in his power to vest the shares in the transferees. Pending reg, the settlor held legal title to shares on constructive trust for transferees. If company reg had refused to reg transfer, legal title would remain with settlor but he would have to pay dividend income to transferees
Mascall v Mascall (extension of Re Rose). Princinple was applied to transfer of reg land. All relevant docs had been executed and transf stamped and handed to transferee, gift was vied as complete in eq. It is important that transferor puts matter beyond their control. HOWEVER< this would be insufficient if had merely sent docs to own agent. COMPARE Re Fry- transferor domiciled abroad had not obtained Treasury consent and died before it was obtained. Transfer of shares ineffective, as transferor had not put matter beyond their control. FURTHER- Zeital v Kaye deceased owner of abs eq int in a shareholding had not done everuthing in power to transfer when had not handed over share cert
Pennington v Waine- CofA held that it was not necessarily essential that docs must have been sent off for reg or delivered to donee or agent. Ada Crampton owned 1500 of 2000 ussed shares in a private company and was one of 2 directors. 2 months prior, she told Mr Pennington that she wished to immediately transf 400 of her shares to her newphew, Harold. Ada's share certs were held by company. Ada signed stock trans form and gave to Penninton, who placed on file. NO further action ws taken. He was held not to be an agent. It was argued that for Re Rose to apply, Ada must have done all in her power, and that meant giving docs to company or Harold. CofA disagreed and upheld judge's decision that gift to Harold was effective in eq as a stage had been reached where it would have been unconsionable for Ada to recall gift.
Arden LJ said there could be no list of factors which makes it unconscionable for donor to change mind. Factors would be considered if 1. Ada made gift from own free will, 2. she told Harold about gift and signed share transf form, whichshe delivered to Pennington for secure reg, 3. Pennington, her aget, told Harold he need take no action, 4. Harold agreed to become a director which he could not do without shares being transferred to him and 5. Ada countersigned form of consent to act as director
Rather than relying on unconscionability, Pennington may be better explained as based on estoppel resulting from detrimental reliance upon a registration Curtis v Pullbrook [2011]. This doctrine has sometimes been used for imperfect gifts Gillett v Holt & Thorner v Major. PE arises where there is an assurance, reliance and detriment, so that it would be uncons to go back on assurance. Award is based on minimum equitry required to do justice.
FORTUITOUS VESTING
EXCEPTION IN STRONG V BIRD. Bird borrowed some money from stepmother who later agreed to forgive debt. an oral release of debt is ineffective and thus Bird still owed her money. When stepmother died, the legatees under her estate requested repayment of debt. Bird was appointed her exec and would therefore have been responsible for collecting his debt. Held that debt was released at CL by Bird's appointment as exec as could not sue self. In eq, Bird would normally have been liable to account to the estate, but this was displaced by proof of stepmoter's unchanged intent to forgive debt followed by appointment as exec. This appointment demonstrated intent. This was extended to Re Stewart where it showed that this concept would still apply if one of many execs
In Re Freeland CofA made it plain that there must have been intention to make immeidatiate gift. On facts of the case, the testatrix hadonly intended to give Claimant property in future after car had been put in running order and recoevred from 3rd p. So, there was no intention to make immediate gift. Also applied where donee became admin on intestacy of donor Re James.
Re Ralli
Suggested that a trust would become const if the trust property came into Ts hands in any legit way. In this case, testator left prop on trust for wife for life, remainder to daugetrs equally. His daughter, Helen, set up separate trst known as marriage settlement. She covenanted to transf all of her current property to her trustees. This would have included property she received from her father's will trust. However, Helen died while her interest under that trust was still in remainder. On her mother's death, Helen's interest under her father's trust fell into possessopn. At this time, X was sole surviving trustee of father's trust. If Helen had still been alive, she could then have asked him to transfer her share of property to trustee of her marriage settlement. Helen could no longer do this after her death and neither did her exec have authority to do so. X was sole surviving T of marriage settlement so had legal title to prop that Helen had covenanted to transfer. However, he was only holding in his capacity as T. He asked court whether Helen's interest under father's will trust formed part of her estate or should be held on trust of marriage settlement. HELD: X held prop on trust of Helen's settlement.
Donationes Mortis Causa
Final exception to Milroy. Hybrid of lifetime gift and testamentary gift but does not comply with rules for either. DEATHBED GIFT.
Requirements: 1. gift made in contemplation of death, which donor believes to be imminent, 2. gift is conditional on death, 3. there is delivery of the property; donor must part with dominion of property by handing it, or something which represents title, to donee.
In case of chattel, delivery is sufficient. Other forms of property must be pefected.