TOPIC

DERIVATIVE METHODS
OF ACQUIRING RIGHTS
TO GOODS
Gifts
To p i c o v e r v i e w
In the last topic we looked at accession and intermixture, two of the
less common derivative methods of acquiring rights to personal
property.
The other derivative methods are the gift and sale of rights to
personal property, some of the most common and most significant
ways by which a person may receive rights to such property. This topic will
provide an introduction to gifts while we will cover complicating factors in the
next.

To p i c o u t l i n e
1.0 Introduction

2.0 Gifts inter vivos

2.1 Common law and equitable requirements for gifts inter vivos
2.1.1 Intention to immediately transfer rights of ownership
2.1.2 Formalities for making gift
2.2 Statutory requirements for gifts inter vivos
2.2.1 Prior governmental approval
2.2.2 Prescribed forms of transfer
2.2.3 Minor defects in prescribed forms do not invalidate
2.2.4 Registration of gifts
2.3 Completed gift cannot be revoked by donor
2.4 Disclaimer or rejection of gift

3.0 Gifts on account of death, donatio mortis causa

3.1.1 Made in contemplation of death
3.1.2 Transfer of rights of ownership to take effect on death of donor
3.1.3 Formalities for making gift mortis causa
3.1.4 Disclaimer by donee

Summary

Key terms

Review questions

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.2

Learning outcomes
After you have successfully completed this topic you should be able to:
 Identify and discuss the various Roman law on choses in
possession or gifts and their influence on current English,
American and South Pacific laws on personal property;
 Demonstrate a critical knowledge of the general principles of law
relating to the Gift inter vivos and Gift on account of death transfer
and acquisition of property rights; and
 Recognise likely scope of encumbrance in conjunction with the
conceivable consequences.

Checklist of activities
To complete this topic you must:
1. Complete the in-book and online activities;
2. Read these course notes; and
3. Complete the set readings.

Readings
Reading 7.1: Bridge, Personal Property Law, 2nd ed, 1996, pp 80–89.
Reading 7.2: Farran and Paterson, South Pacific Property Law, 2004,
pp 196–203.
Reading 7.3: Garrow and Fenton, Law of Personal Property, 6th ed,
1998, Ch 4.
Reading 7.4: 20(1) Halsbury's Laws of England, 4th ed, 1994, pp 1–
55; paras1–78.
Reading 7.5: 38 Am Jur 2d, Gifts, paras 1–108.

Study time
You should spend approximately 8–10 hours working through this
topic. Remember to do all the activities.

Studying course notes 130 min

Studying Reading 1 60 min
Studying Reading 2 60 min
Studying Reading 3 60 min
Studying Reading 4 60 min
Studying Reading 5 60 min
Completing Review questions 30 min
Total (Approximate) 520 min

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.3

1.0 Introduction
A gift is a transfer of rights of ownership of property by one person, called the
donor, to another person or persons, called the donee(s), which is made without
any consideration. Sometimes, the more formal term, donation, is used to refer to
a gift, especially nowadays in relation to gifts to charitable bodies.
Gifts made by a living person during his or her lifetime fall into two categories:
gifts inter vivos, which is a Latin term meaning between living people, are gifts
that are made between living people and take effect immediately; and gifts mortis
causa which are made between living people, but take effect only when the donor
dies.
Gifts may also be made by a person who is dead, by means of the terms of the
will or testament of that person, which only comes into effect when that person
dies. These are usually referred to as testamentary gifts.
In this course, we will concern ourselves mainly with gifts made by persons who
are alive, ie gifts inter vivos, and gifts mortis causa. The third form of gift, ie
testamentary gifts, will be dealt with more fully in LW303 Succession
Roman law accepted that rights to choses in possession, ie tangible movable
things, could be acquired by way of gift or present, ie without payment. It
recognised basically three kinds of gifts:
 donatio inter vivos—a gift made between living persons;
 donatio mortis causa—a gift made between living persons but to take effect
only upon death of the donor; or
 legatum—a gift made by will to take effect when the donor died, a legacy or
bequest.

English and American common law have followed the same categorisation of
gifts, and have allowed that gifts may be:
 a gift inter vivos, between living people;
 a gift mortis causa between living people but to take effect only upon the
death of the donor; or
 a gift by will, a legacy or bequest.

In this course, LW300 Property Law I, we will be concerned with the first two
kinds of gifts, ie, gifts inter vivos, and gifts mortis causa. Testamentary gifts will
be dealt with in the separate course relating to wills and succession, LW303:
Succession.
The English and American common law, unlike the Roman law and the civil law
adopted in European countries, placed no limit upon the amount of personal
property that a person could give away, or acquire, by gift. But English and
American common law have insisted on certain requirements that must be present
before they would accept a transaction as a valid gift inter vivos or mortis causa.
.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.4

2.0 Gifts inter vivos
The common law and equity developed two basic requirements for recognising a
gift inter vivos: intention to transfer at that time rights of ownership of a thing,
sometimes referred to as animus, from the Latin word meaning mind, and action
to give effect to that intention, sometimes referred to as actus or factum, from the
Latin words meaning action or fact.
The requirements imposed by the courts in respect of a gift mortis causa are three
fold, not only intention and action, as in the case of gifts inter vivos, but also
contemplation of death. Moreover, in the case of gifts mortis causa the intention
is that the rights of ownership will pass when the donor dies, at the time of death,
not immediately, as in the case of gifts inter vivos.
It is also important to remember that the legislation and subsidiary legislation of a
country may have imposed some additional requirements with regard to gifts of
certain kinds of personal property.
We will consider first the requirements of common law and equity; and then
consider additional statutory requirements impose by legislation and subsidiary
legislation.

2.1 Common law and equitable requirements for gifts inter

vivos
The English and American common law have held that there are three elements
that must be present to constitute a valid gift inter vivos. The courts of equity in
both countries allowed an alternative to one of these elements, but maintained the
other two requirements.

2.1.1 Intention to immediately transfer rights of ownership

To constitute a valid gift there must be an intention by the owner to transfer rights
of ownership immediately. Consequently a promise to transfer something in the
future is not a gift, and so also there can not be a gift of something that is not yet
in existence.
 Woodward v Woodward [1995] 3 All ER 980—A father handed the
keys of his car to his son, and told him that he could keep them,
although the son admitted that if the father had recovered he would
have had the car back . Held not a valid gift, but a valid donatio mortis
causa - see later.

2.1.1.1 Presumptions as to intention

Presumption of gift
Where property is given by a parent, or a person in loco parentis, to a child, the
courts have held that they should, in the absence of evidence to the contrary,
presume that there is an intention to make a gift, ie there is a presumption of gift,
or, as it is more technically described, a presumption of advancement:
 Shepherd v Cartwright [1955] AC 432—A father arranged for shares
which he had in some companies to be registered in the name of his
children, and the House of Lords held that these shares, which greatly

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.5

 increased in value, must be presumed to be gifts to the children and not
owned by the father.
The presumption of advancement is, however, a rebuttable presumption, and may
be displaced by evidence which indicates that a gift by the parent to the child was
not intended:
 Tribe v Tribe [1996] Ch 107—A father transferred shares to his son,
but later claimed that the shares were held by the son in trust for the
father until after possible claims against the father were settled. The
Court of Appeal held that normally a gift to the son would be
presumed, but in this case there was evidence to prove that the shares
were held on trust for the father, and must be returned to him once the
claims had been settled

Presumption of resulting trust

Where money is supplied by a person to another person, who is not a child of the
supplier, the courts have held that they should, in the absence of evidence to the
contrary, presume that a gift is not intended, and there is, instead, a presumption
that what has been supplied, is subject to a trust in favour of the supplier if the
purpose for which the money was supplied can not be achieved:
 Tinsley v Milligan [1994] 1 AC 340—A woman paid money to
contribute to the purchase price of a house which was placed in the
name of a woman friend who also contributed to the purchase price.
Later the two women quarrelled and the friend claimed that she was the
owner of the house. The House of Lords held that the contributions
made by the first woman were not intended to be gifts but were
instead held on a resulting trust in her favour.

2.1.2 Formalities for making gift

The early English common law, like the early Roman law, held that a gift could
only be made by handing over the thing to the donee. Later, the courts of
common law accepted that a document could have the same effect if it was made
in the form of a deed. Later still the courts of equity held that a gift could be
established by a person merely making a declaration, oral or written, that he or
she held a thing in trust for some other person. Accordingly today there are three
alternative methods which can be used to make a gift. We will consider each of
these in turn:
2.1.2.1 Actual handing over
The original method of making a gift was by handing the object over to the
person who was to receive the gift. Still today physical delivery is the most
common method adopted for making a gift of personal property. But to constitute
actual physical delivery there must be a handing over the object to the donee. The
following cases illustrate the importance of ensuring that there is complete
physical delivery of the thing intended as a gift:
 Irons v Smallpiece (1819) 106 ER 467—A father said that his son
would have two colts but the colts stayed on the father’s farm and were
never handed over to the son. Held there was no gift of the colts which
remained the property of the father.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.6

  Jones v Lock (1865) LR Ch App 25—A father put a cheque for 900
pounds into the hand of his nine months old baby and said that he was
giving it to baby for himself, and then took back the cheque. The Lord
Chancellor held that there was no sufficient delivery or handing over of
the cheque to constitute a gift.
 Re Ridgway (1885) 15 QBD 447—A cask of port wine was set aside by
a father in his cellar for his son, and known as the son’s port, but the
court held that there had not been a valid gift to the son.
 Cochrane v Moore (1890) 25 QBD 57—The owner of horse said that
he was giving the rider of the horse a quarter share of the horse, which
the rider accepted, but later the owner sold the horse to a person to
whom he was indebted. The rider claimed a quarter of the proceeds of
the sale, but his claim was rejected by the Court of Appeal which held
that there had been no delivery.
 Williams v Williams [1956] NZLR 970—A father said that a musical
instrument which was played in the father’s house by the son was the
son’s. The court held that there had not been a gift of the instrument to
the son. (See Flinn v White [1950] SASR 195 for similar situation with
regard to a piano).
 Re Cole [1964] 1 Ch 175—A husband took his wife into a house which
he had just bought and showing her the contents of the rooms said to
her: “This is all yours.” The Court of Appeal held that there was not
sufficient delivery of the house or the furniture to constitute a gift.

Special cases of delivery

There are some special cases where the courts have considered that there is
sufficient delivery even although there is not an actual handing over of the
articles that were intended to be given:
Symbolic or representative delivery
If the subject of the gift is very large or heavy, full physical delivery may not be
possible, and the courts have accepted symbolic or representative delivery of a
part of the thing, or:
 Lock v Heath (1892) 8 TLR 295—A gift by a husband to his wife of all
the goods set out in an inventory, was held to be valid, when he handed
to her one of those goods, a chair.
 Rawlinson v Mort (1905) 93 LT 555—A gift of a church organ to an
organist was held to be valid when the donor placed the hand of the
organist on the instrument.
Constructive delivery
If the donor provides a person with the means to take physical delivery of the
thing that is regarded as sufficient delivery:
 Re Stoneham [1919] 1 Ch 149—A man said that his son was to have
some furniture, arms and armour that were in a house owned by the
father which was, at the father’s request, occupied by the son. This was
held to be a valid gift of the articles.
 Re Lillingston [1952] 2 All ER 184—The donor handed over the keys
to a safe and to a trunk. This was held to be a valid gift of the contents
of the trunk and the safe.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.7

  Thomas v The Times Book Co [1966] 1 WLR 911—The author
of a famous play was about to leave for USA to give some readings
of the play when he discovered that he had lost the original manuscript
of the play. He told the producer of a broadcast version of the play of
his loss, and the producer made some copies from his copy of
the manuscript and gave them to the author. The author was very
pleased and told the producer that the original manuscript was probably
in one of several public houses that he frequented and that if the
producer found it, he could keep it. The producer did find the
manuscript in one of the public houses and kept it. The author died
during his tour of USA, and the court held that there held been a valid
gift of the manuscript to the producer.

2.1.2.2 Deed and other formal instrument

It seems that in early times physical delivery of things was sometimes recorded in
deeds, which were the most formal document known to the common law. Later,
deeds were allowed by the courts of common law to be used to make a gift in
place of physical delivery of the subject matter of the gift. Today the courts of
both England and America accept that a written deed, made by the donor in
accordance with the formal requirements of the law is sufficient to convey
personal property as a gift to a donee:
 French v Gethig [1922] 1 KB 236—A husband signed a written deed
giving to his wife certain household furniture which was in the house in
which they were living. This was held to be a valid gift of the furniture
to the wife so that when the husband became bankrupt, the furniture
could not be taken by his creditors, but remained in the ownership of
the wife.
2.1.2.3 Other formal instruments
There has been some discussion in England, but no conclusive decision, as to
whether formal instruments other than deeds signed should be regarded by the
courts as sufficient to transfer personal property by gift.
In America there have been decided cases, but no clear line of authority as to
whether other formal instruments should be accepted: “There is a division of
authority upon the question of whether a gift inter vivos may be made by a
written instrument without a delivery, where the instrument, although not a deed
and not under seal, is formally executed and purports to pass title to the donee. In
some cases, it is held that delivery of the property is unnecessary where there is a
formal instrument, such as an assignment or bill of sale, purporting to transfer
title to the donee. In other cases, however, it is held that a gift inter vivos by
formal instrument purporting to transfer title is ineffective without a delivery of
the property to the donee. In a third line of cases, the view appears to have been
adopted that a formal instrument purporting to pass title to a doneee is effective
without delivery, if a manual delivery is impossible or impracticable, but that it is
not effective if actual delivery is feasible…. It is generally held, where a paper is
not a deed, a sealed instrument, or a formal instrument purporting to pass title,
but is only an informal instrument or writing, such as a letter, order, or
memorandum, that the instrument or writing is ineffective as a gift without a
delivery of the property.”: 38 Am Jur 2d, Gifts, paras 32,33.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.8

2.1.2.4 Declaration of trust of the property by the donor
The courts of equity intervened to modify the strictness of the common law by
allowing that if a donor declares, orally or in writing, that a thing is held, either
by himself or by some other person, in trust for another person, that is sufficient
to constitute a valid gift, even although there is no physical delivery of the thing
to the donee, nor signing of any deed. Technical words are not necessary, but the
donor must use words that indicate a present and irrevocable trust of the property
in favour of the donee:
 Jones v Lock (1865) LR Ch App 25—A father put a cheque for 900
pounds into the hand of his nine months old baby and said that he was
giving it to baby for himself and then took back the cheque. The Lord
Chancellor held that these were not words of declaration of trust, and
since he had also found that there was no physical delivery of the
cheque to the baby (see above), there was no gift.
 Morgan v Malleson (1870) LR 10 EQ 475—A man who had been ill
signed a written note stating that he was giving an Indian bond to his
doctor for his kind attentiveness during his sickness. This was held to
be a sufficient declaration of trust of the Indian bond.

2.1.2.5 Vesting of property in proposed donee as executor or administrator of

deceased donor
The courts of England have held that if a person intends to make a gift of
property to another person, but dies before he or she can complete the gift, the
gift will be regarded as completed if the property of the deceased becomes vested
in the proposed donee as executor or administrator of the estate of the deceased
donor. This principle applies to both personal and real property under the
common law:
 Strong v Bird (1874) LR 18 Eq 315—A man borrowed L1100 from his
stepmother, and agreed that it would be repaid to her at the rate of
L100 per month. After the first two payments the stepmother said that
she did not require any more repayments. When she died some years
later, leaving a will in which the stepson was appointed as executor of
her estate, it was argued that the gift that she had made to her stepson
of the balance was not valid. The court held that the fact that the
stepson had been appointed executor of her will meant that he now had
the legal right to her personal property, including the money that she
had intended to give to him.
 Re James [1925] 1 Ch 449—The owner of a farm in England stated
that he intended that on his death the farm would be owned by his
housekeeper who had worked for him for many years without wages.
The only son of the farmer, who had succeeded to his father’s estate,
gave her the title deeds of the property, but died a bachelor and
intestate without transferring the farm to her. The housekeeper was
appointed as the administrator of the estate of the son of the father. The
court held that now she had the legal title to the farm in her capacity as
administrator of the donor’s estate, the gift to her of the farm was
legally complete.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.9

2.2 Statutory requirements for gifts inter vivos
The foregoing paragraphs describe the common law and equitable requirements
for a valid gift inter vivos, ie intention to immediately transfer ownership of the
thing to another; and action to give effect to that intention, such as delivery, deed
or formal document, declaration of trust, or acquiring legal title to the property of
the donor, as executor or administrator.
It is possible that the legislature may also impose certain requirements as to how
gifts of personal property, or transfers of personal property, are to be made inter
vivos. If these statutory requirements are not complied with, there obviously
cannot be a valid gift. This has arisen, with regard to gifts of personal property,
particularly .with regard to shares in companies, but it may arise also with regard
to other personal property, such as motor vehicles. The main examples of such
statutory provisions that have come before the courts are:
2.2.1 Prior governmental approval
If statutory provisions state that a person must obtain approval or consent from
some governmental agency before making gifts of certain personal property,
obviously if that approval is not obtained there cannot be any valid gift of that
thing:
 Re Fry [1946] 1 Ch 312—A man domiciled in America signed a
transfer form to transfer some shares in a company in England to his
son. The transfer form was in a form acceptable to the company, and he
forwarded the transfer and the share certificates to his son. Subsidiary
legislation in force in England at the time, ie the Defence Regulations
1939, prohibited transfers of shares in English companies by foreigners
without the prior approval of the Treasury Department. The American
man applied for approval, but died before the approval was given. The
Court held that the transfer of the shares to the son was incomplete
because the transferor had failed to obtain the approval from Treasury
required by the subsidiary legislation.

2.2.2 Prescribed forms of transfer

Sometimes legislation or subsidiary legislation prescribes the form which should
be used to transfer personal property. The main example of such a requirement is
in the legislation relating to companies. In all countries in the USP region, the
Companies Act states that shares must be transferred by a “proper instrument of
transfer”, and usually the articles of association of a company stipulate that an
instrument of transfer of shares must be signed by the transferor and the
transferee, and be attested by a witness.. If there is no valid instrument of transfer,
there can be no transfer or gift of shares, as illustrated in the following case:
 Re Greene [1949] 1 Ch 353—The directors of a private company in
England wanted their shares in the company to pass directly to their
wives when they died, and they passed a resolution amending the
articles of association to provide that “upon the death of a director the
shares of such deceased director shall be deemed to have passed to
such deceased director’s wife”. The Court held that this did not operate
to transfer the shares to the wives, p339: “no proper instrument of
transfer has been delivered. There was, in my judgment, no gift at all
here.”

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.10

  Re Paradise Motor Co Ltd [1968] 1 WLR 1125—In 1948, a man,
who held shares in a private company, signed a document
transferring 350 shares to his stepson, without the knowledge of the
stepson The articles of association of the company stated that “the
transfer of a share shall be in writing and signed by the transferor
and the transferee and attested.” In 1954 the man had a serious
disagreement with his stepson, and presented to the secretary of the
company a document handwritten in pencil, which was not
witnessed and which purported to be signed by the stepson and to
transfer 300 shares back to the stepfather. This document was
registered as changing the ownership of the 300 shares, leaving 50
shares in the name of the stepson. In 1964, the company was
wound up, leaving a surplus for distribution amongst the
shareholders, and for the first time the stepson discovered that he
was the owner of 50 shares and had been the owner of 300 shares.
The stepson at first said that he did not want the shares but later
changed his mind, and claimed them. The Court of first instance
held that the transfer of the shares by the man to the stepson in
1948 was not a valid transfer because it was not signed by the
stepson as transferee as required by the articles of association. The
Court also went on to say, that if that transfer had been valid, the
transfer back to the stepfather in 1954 was not valid because the
signature of the stepson on the transfer was forged and the
document was not a valid instrument of transfer:” I have found that
the 1954 document relating to the 300 shares did not bear the
signature of [the stepson]. It was thus a complete nullity. I would
add, that even if, contrary to my finding, the signature was that of
[the stepson], I would hold that this pencilled document, not signed
by [the man] as transferee and with no attestation of [the stepson’s]
signature, was not a proper transfer and could not be properly
registered by the company.” This judgment was appealed (see
below) but the finding of the trial court that the 1954 document was
not a proper instrument of transfer was not challenged.

2.2.3 Minor defects in prescribed forms do not invalidate

The courts have, however, been willing to accept that minor or unessential
omissions or defects in an instrument of transfer of shares do not invalidate or
nullify the instrument or prevent it from being a proper instrument of transfer. In
particular, the absence of the signature of the transferee, even though required by
the articles of association of a company, has been held to be a mere irregularity
and not to cause the document not to be a proper instrument of transfer:
 Re Paradise Motor Co Ltd [1968] 1 WLR 1125 (Facts see
above)—The Court of Appeal held that the judge at first instance
was wrong in holding that the transfer of 350 shares made by the
man in 1948 was not a proper instrument of transfer because it did
not contain the signature of the stepson as transferee as required by
the articles of association of the company, because it was not a
serious omission:” The transfer in the present case is certainly an
instrument…The question is whether …it is a proper instrument of
transfer so as to satisfy the section, and whether the absence of the

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.11

 transferee’s signature makes the transfer a nullity.:…There is
plenty of authority for the proposition that neglect of unessential
matters on a transfer may not be fatal to the transfer’s validity, and
may amount to mere irregularities….In view of the lapse of time,
and [the step father’s] actions in relation to the shares, [he] surely
cannot now be allowed to take advantage of his own failure to
procure execution of the transfer by [the stepson]. This can be
treated as a mere irregularity. The transfer was not invalid…” The
Court of Appeal went on to hold, however, that the stepson had
disclaimed the gift of shares and therefore could not now claim
them - see later.

2.2.4 Registration of gifts

Sometimes legislation or subsidiary legislation provides that transfers of personal
property must be presented to some governmental agency or to some other body
for registration or recording. It will depend on the wording of such provisions as
to whether registration is something that must be done by the transferor to
complete the transfer and render it valid, or whether it is something that must be
done after the transfer is completed by the transferor and/or by the transferee in
order to record the change of ownership resulting from the transfer.

This issue has arisen particularly with regard to the statutory provisions relating
to the registration of transfers of shares in companies, and the registration of
transfers of motor vehicles. In both cases, it is clear that the purpose of the
registration is to record a transfer that has occurred - it is not a requirement of the
transfer itself. So there can be a complete gift of shares or a motor vehicle, even
although it has not been recorded as required by legislation:
 Re Rose [1949] 1 Ch 78—A business man in England wanted to
give some shares in a company to his friend, and signed a transfer
of shares form and gave that together with the share certificates to
the friend in August 1944. These were later registered by the friend
with the company in March 1946, two months after the death of the
businessman in January 1946. The court held that the gift was
complete in August 1944, because the businessman had then done
all that he was required to do to transfer the shares.
 Re Rose [1952] 1 Ch 499—A business man in England wanted to
give some shares in a company to his wife and in March 1943 he
signed some share transfer forms and handed them, together with
the share certificates, to the company secretary to register in the
books of the company. The transfer was registered in the company
books in June 1943, and the businessman died in 1947. The Court
of Appeal held that the gift of the shares was complete in March
1943, even although it was not registered in the company books
until some months later.
It should be noted that the effect of the legislation with regard to the registration
of transfers of real property in Fiji, Solomon Islands and Vanuatu is quite
different, from the legislation relating to the registration of transfers of personal
property discussed above, because those three countries have adopted the Torrens
system of registration which requires that registration of a document of title is

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.12

necessary to constitute a complete and valid transfer of legal rights, in relation to
land.

2.3 Completed gift cannot be revoked by donor

Once a gift has been completed by the donor, it cannot be revoked, even if the
donee is unaware of it:
 Standing v Bowring (1885) 31 Ch D 282—A woman made a gift of
bonds to her godson by putting them in the name of herself and her
godson, but without telling him. Later she wanted to change the bonds
into her name alone. The godson heard of this and refused to co-
operate. The original gift was held to be completed and irrevocable.
 Ah Far v Ah Far [2003] WSSC 1—A mother in Samoa gave a large
block of land to one of her sins. Several years later, she changed her
mind, and wanted to get the land back, but he refused. The Supreme
Court held that the mother could not reclaim the land back: Sapolu CJ
said: “Once the gift was complete in equity, it was beyond recall by the
mother as donor.”

2.4 Disclaimer or rejection of gift

The common law of England and America considered that no person should be
required to accept a gift that he or she does not want. Accordingly, the courts
have held that a donee can refuse to accept, or disclaim, or reject, a gift.
However, once a gift has been rejected, it cannot be later reclaimed:
 Mallott v Wilson [1903] 2 Ch 494—The owner of land gave it to
another man on trust for the benefit of the settlor’s wife and children.
The next year the trustee disclaimed the gift of land on trust, and the
court held that this was effective to release him from the trust.
 Re Paradise Motor Co [1968] 1 WLR 1125—A stepfather registered
some shares in a company in the name of his stepson unbeknown to the
stepson. When the stepson learned of the shares in his name he stated
that he did not want them as he disliked his stepfather so much. Later
he changed his mind and claimed the share, but the Court of Appeal
held that the stepson had disclaimed the gift, and could not now claim
the shares.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.13

3.0 Gifts on account of death, donatio mortis causa
To establish a valid gift inter vivos, it is necessary to demonstrate, as discussed
above, an intention to immediately grant or transfer the rights of ownership to the
donee. However, where the gift is made to take effect at the time of the death of
the donor which is anticipated to occur, the courts have made an exception, and
recognised the transaction as a gift, even although the normal requirement
of intention of immediate transfer or grant is not present. Such a gift, which is
called a gift mortis causa or a donatio mortis causa, is valid even although the
transfer of rights of ownership is only to occur at the time of the death of the
donor.
This is a concession to the normal requirements of a gift inter vivos, and it is a
concession also to the normal statutory requirements as to the making of a
testamentary gift, which has to be made by a written will, signed by the testator
and signed by witnesses, in order to transfer property on death. For these reasons,
claims of gifts mortis causa were regarded with some suspicion by courts in
England, and at one time it was thought that such a gift would be allowed only in
respect of personal property. Recently, however, it was held in England that such
a gift could also be made in respect of land: Sen v Headley [1991] Ch 425 (see
later).
3.1 Common law requirements of valid gift mortis causa
To be valid as a gift mortis causa or donatio mortis causa the courts have held
that the gift must be:

3.1.1 Made in contemplation of death

The gift must have been made with death in the near future in the mind of the
donor, not necessarily death from illness, but death from a specific cause, such as
a hazardous journey or medical treatment, or extreme old age, but not just the
inevitable uncertainty of the human condition:
 Re Lillingston [1952] 2 All ER 184—An elderly woman who said that
she felt that she “was done for”, told a married couple who had been
looking after her, that she was giving them all her jewellery and handed
them a packet from under her pillow which contained jewellery, and
told them to keep it and they could have it when she was gone.
This was held to be a valid gift mortis causa.

3.1.2 Transfer of rights of ownership to take effect on death of donor

The intention of the donor must be that rights of ownership are transferred at the
time of death, not before. So, in order to establish a gift mortis causa, it must be
clear that there is no intention to transfer the rights of ownership immediately as
is normally required for a valid gift.
 Woodward v Woodward [1995] 3 All ER 980—A father handed the
keys of his car to his son, and told him that he could keep them,
although the son admitted that if the father had recovered he would
have had the car back . This was held not to a valid gift inter vivos, but
a valid gift mortis causa.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.14

This requirement that rights of ownership are to be transferred at the time of
death has several consequences:
3.1.2.1 Recovery of donor
If the donor recovers and does not die, the property remains with the donor:
 Staniland v Willott (1852) ER 416—A man had a severe epileptic fit,
and thinking he was going to die, he transferred some shares into the
name of his cousin who was looking after him. The man recovered, but
later became insane and the cousin was appointed his committee or
guardian. The court held that the cousin must hold the shares in trust
for the man, and her did not own the shares beneficially for himself

3.1.2.2 Death of donee before death of donor

Since the gift is to take effect only when the donor dies, it seems to follow that if
the donee dies first the gift must lapse or be regarded as revoked. There is no
authority in England, but this position is accepted in American common law:
“The death of the donee before the donor will operate as a revocation of the gift
and restore the ownership of the property to the donor.”: 36 Am Jur 2d, Gifts,
para 90.

3.1.3 Formalities for making gift mortis causa

As with other gifts of personal property, courts in England have held that gifts
made in contemplation of death must be made by physical delivery to the donee,
or by deed, or by declaration of trust. Such formalities may be undertaken by the
donor personally or by some person acting under the directions of the donor.
Also, as with gifts inter vivos, the courts have accepted that symbolic or
constructive delivery is sufficient when actual physical delivery is not possible:
 Re Craven’s Estate [1937] 1 Ch 423—A mother gave a power of
attorney to her son to deal with her property, and, shortly before an
operation which she knew might be fatal, she instructed her son to
direct a bank that her shares which they were holding should be
changed from her name to his name, because she wanted him to have
them if she died. This was held by the court to be a valid gift mortis
causa.
 Re Lillingston [1952] 2 All ER 184 (see above)—An elderly woman
who said that she felt that she “was done for”, told a married couple
who had been looking after her, that she was giving them all her
jewellery which was in a safe deposit box and handed them a key to a
trunk in which she said that the key to the safe deposit was to be found
and said that when she was gone they could have the jewellery. This
was held to be a valid gift mortis causa.
 Sen v Headley [1991] Ch 425—a patient in hospital told the woman
with whom he had been living that the house in which they had been
living was hers, and put the key in her handbag . This was held to be a
valid donatio mortis causa.
 Woodward v Woodward [1995] 3 All ER 980—A father handed the
keys of his car to his son, and told him that he could keep them,
although the son admitted that if the father had recovered the would
have had the car back. Held not a valid gift, but a valid donatio mortis
causa.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.15

3.1.4 Disclaimer by donee
Although the issue does not seem to have arisen with regard to gifts mortis causa,
it would seem that in principle a gift mortis causa should be able to be rejected
by the donee, if the gift is not one which he or she wishes to accept.

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.16

Summary
In summary, it should be noted that gift is the third derivative method of
acquiring rights to goods. There are two ways in which a gift could be made:
1) gift inter vivos; and
2) gift mortis causa.
These two type of gifts need to comply with formalities in order to be valid.

Key terms
Gift inter vivos
Donatio mortis causa
Symbolic delivery
Constructive delivery

Review questions

1. What formalities does a gift inter vivos need to fulfil in order to be made
valid?
2. What formalities does a gift mortis causa need to fulfil in order to be
made valid?

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.17

Topic 7: Derivative methods of acquiring rights to goods—Gifts 7.18