Formalities

 If you want to make certain types of transactions valid, you must have a certain level
of proof (or formality)
 Idea is to encourage people to have evidence of their transaction in case of a dispute
 E.g. Trust found in a Will
o Must be:
 In writing
 Signed at the foot of the will
 Attested by two witnesses
 Governed by the Succession Act 1965
Inter Vivos Trusts – Personal Property
 Trusts of personality/chattels i.e. property
 No necessary formality
 Law merely requires evidence of the settlor’s clear intention to create a trust over
the property in question
Jones v Lock (1865)
 FACTS: Jones had a son with first wife and infant son with second wife.
 Jones gave his infant son a cheque for £900. He put the cheque into the hand of his
son of nine months old, saying, “I give this to baby for himself,” and then took back
the cheque and put it away. Jones died before formally amending the will; the rest of
the estate was to go to the children of Jones’ first marriage.
 The infant’s mother sought that £900 out of estate as it was transferred to his son.
The cheque had not been endorsed (signed on back). She attempted to argue
declaration of trust of cheque in favour of infant son. The Vice-Chancellor Stuart held
that there had been a valid declaration of trust by the father for the infant, and that
the claim must be allowed. This was appealed in the Court of Appeal in Chancery.
 HELD: Lord Cranworth: “the case turns on the very short question, of whether Jones
intended to make a declaration that he held the property in trust for the child; and
I cannot come to any other conclusion than that he did not. I think it would be of
very dangerous example if loose conversations of this sort, in important
transactions of this kind, should have the effect of declarations of trust.”
 Holding there was no express trust as the evidence showed an intention to make a
gift of the cheque to the infant, not to declare a trust. Equity will not perfect an
imperfect gift. Voluntary settlements are only valid when the settlor has done
everything which, according to the nature of the property, is necessary to be done to
transfer the property and render the settlement binding upon him. Intention not
carried into effect.
 If one intends to use one method and fails, equity will not save the failed gift and
treat it as some other type of gift. There had been no declaration of trust, only a
loose conversation. The testator did not intend to deprive himself of all property, or
to declare himself a trustee of the money for the child.
Inter Vivos Trusts – Real Property
 Section 4 of the SOF Act 1695 lays down the formal requirements for the creation of
an express trust with regards to land.
 Must be evidenced in writing and signed by settlor.
Childers v Childers (1857)
 FACTS: a letter referring to the existence of the trust of land written and signed by
the transferor was held to satisfy the requirements of section 53(1)(b) of the Law of
Property Act 1925 (the English successor to the Statute of Frauds).
 Two other points are noteworthy. First, a trust of land will be valid from the date of
oral declaration. Written evidence created subsequent to the oral declaration will be
deemed to have been in existence since the oral declaration4 (1793). Furthermore, a
purported trust of land without evidence in writing is not void, merely
unenforceable.
 This fact will become important when we consider whether equity will intervene to
enforce an oral trust of land, or at least prevent an alleged trustee unjustly enriching
himself.
The Instrument of Fraud Principle
 What happens if people do not obey the SOF requirements?
 Equity will not allow a statute to be used as an instrument of fraud

Complete Constitution
In order for a trust to be completely constitute, the trustor must have done everything there
is to be done to transfer property. Principle in Milroy v Lord [1862]
Milroy v Lord [1862]
 Authority for the proposition that in order to ensure that a trust is completely
constituted, the settlor must have done everything in his power to effect the
transfer.
 FACTS: A settlor executed a voluntary deed purporting to transfer 50 shares in the
Louisiana bank to the defendant/Trustee Mr Lord be held on trust for the plaintiff.
Such a transfer could only be properly effected by registration of the name of the
transferee in the bank’s records. But this never occurred, only that the trustee had
the settlor’s shares certificate (still in his name). The trustee held a power of
appointment to act on the settlor’s behalf, but failure to register the transfer,
deemed the trust unenforceable.
 Formalities outside the control of the settlor to transfer title renders such trust still
valid.
 HELD: Where the settlor has done everything in their power to transfer the title of
the title to the property but cannot ensure compliance with some formality which is
outside his control, the trust will nevertheless be regarded as completely
constituted.
Turner LJ
“In order to render a voluntary settlement valid and effective, the settlor must have done
everything which, according to the nature of the property comprised in the settlement,
was necessary to be done in order to transfer the property and render the trust binding on
him. He may of course do this by:
1) Actually transferring the property to the person to whom he intends to provide and
the provision will then be effectual (outright gift).
2) It will be equally effective if he transfers the property to a trustee for the purposes
of a settlement (classic trust).
3) He may declare that he himself holds the property on trust for the person he
intended to provide (declaration of self as trustee).
 But in order to render the settlement binding, one or other of these modes must, as I
understand the law of this court, be resorted to, for there is no equity in this court to
perfect an imperfect gift”.
Timpson’s Executors v. Yerbury (1936)
 Roemer L.J. applied Turner L.J.’s judgment in Milroy. He also noted that if
consideration has passed from the purported transferee, equity may deem the
transfer to be effective (equity considering done that which ought to be done,
although equity will not assist a volunteer).
Re Cole (1964)
 FACTS: a husband showed his wife around a house which he had recently purchased
and said, “It’s all yours”. She later sued him for the chattels in the house. She could
not sue him for the house itself since there was no transfer of legal title by deed. Her
argument in relation to the chattels was rejected by the court.
 The court looked at all the circumstances of the case, in particular, the husband’s
later dealing with the chattels as if they were his own.
 HELD: The court found no intention on the husband’s part to transfer the chattels to
the wife.
McArdle v. O’Donohoe (1999)
 Involved an application of these principles relating to the complete
 constitution of trusts. O’Donovan J. stated that he would adopt the following
statement of Johnson J. in Re Wilson (1933) that: High
“a gift is a gift and, of course if a donor, while expressing an intention to give something standard
and taking certain steps in the direction of giving it, has not gone the whole way, the for fully
expectant donee has no equity to compel the completion of the gift”. constitute
 O’Donovan J. referred to the Milroy v. Lord decision and stated as follows:
“It would appear that, if it is the intention to create a trust by transfer of property then, in
the absence of a stated intention by the settlor to constitute himself a trustee of the trust
property and in the absence of an effective transfer of the trust property to the trustees,
equity will not construe the ineffective transfer as a declaration of trust by the settlor”.
Re Rose [1952]
 Qualified the above rule, in that if the settlor has done everything in his power to
Exception transfer property to a trust, but not all the formalities were met, without fault of the
settlor, the trust will be regarded as completely constituted.
 FACTS: A settlor executed a voluntary deed which purported to transfer shares in a
private company to trustees but died before the company’s directors registered the
transfer. The issue was whether the settlor was still the owner of the shares at the
time of his death for the purpose of determining whether estate duty was payable.
 HELD: The Court of Appeal held that as the settlor had done all in his power to divest
himself of the shares, although he remained in law the owner until the transfer was
registered, in equity, the transfer was regarded as being effective from the date of
the deed.
 The reasoning in Re Rose has been criticised but has yet been applied subsequently
in England.

Pennington v Waine [2002]

  Similar to Milroy v Lord except there was a signed consent form to appoint the
donor’s nephew (second named defendant) as a director countersigned by the
donor, but the share transfer form was only signed by the donor who died before it
was delivered to donor’s nephew and the company’s auditor
Expanding
 HELD valid even if it was not delivered. The donor has taken all the necessary steps
Exception
that were required of her, and the gift was valid.
Choithram v. Pagarani (2001)
 A settlor who was close to death intended to create an inter vivos trust over which
there would be nine trustess (eight and the settlor himself).
 It was held (Lord Browne-Wilkinson, Privy Council) that the intended trust was
completely constituted by a declaration of trust made by him alone, even though the
property had not vested in his co-trustees.
 This decision has been commended by Hopkins (2001, CLJ 483) on the basis that it
would have been unconscionable to permit the donor to resile from making the gift
in the circumstances. However, it has also been criticised in equal measure as an
unjustified breach of the principle in Milroy v. Lord. Hudson (p. 262) suggests that
‘on a literal interpretation of the principle in Milroy v. Lord, it is not possible to
support an incompletely constituted trust or to rescue a gift by another, artificial
means’.

Zeital v Kaye [2010]

 The plaintiffs claimed that the purported that the transfer of one share by their
father to his partner was an imperfect gift as he did not give her the share certificate
or any document to indicate the transfer.
Return to  It was held that a purported gift of a share in a company, in which the deceased
Orthodoxy transferor had a beneficial interest, failed in circumstances in which he had neither
of completed nor dated a share transfer form. The principle in Re Rose required that
exception the deceased should have done all within his power to secure the transfer of the
share, but in his view, he had not done this and the gift failed as an imperfect one.
Curtis v Pulbrook [2011]
 A man failed to transfer shares to his wife and daughter as he had not properly
completed the shares transfer process, but he deposited the form with his solicitors
before moving to Thailand with his new partner.

Requirement of Consideration
While equity considers done that which ought to be done, equity will not assist a volunteer.
A volunteer is someone who has not furnished consideration, and, for this purpose, an
agreement to marry is consideration for a covenant to settle property on the married
couple.
 Marriage consideration: Re Densham (1975)
 Deeds and Covenants to settle
 A Trust of a Promise: Lloyds v Harper (1880)
 Declaration of Self as Trustee Re Cozens (1913)

The Rule in Strong v Bird [1874]

 Exception to the Rule that Equity Will not Assist a Volunteer Nor Perfect an Imperfect Gift
 Where an incomplete gift is made during a donor’s lifetime and the legal title to this
property subsequently becomes vested in the done, the donor’s prior intention to
make the gift is regarded as having been perfected provided that the intention has
continued until the date of the donor’s death (Hanbury & Martin).
 An executor did not have to account for a debt where a testator had manifested an
intention to forgive the debt during her lifetime and this intention continued until
her death.
Strong v Bird [1874]
 Bird borrowed £1,100 from his stepmother. She was living with him and paying him
rent. Both parties agreed that a reduction in the rent would repay the loan until the
loan was settled. Bird’s stepmother only paid the reduced rent twice. Thereafter, she
paid the full rent until her death.
 On her death, she appointed Bird as her executor and the next of kin now attempted
to recover the debt from Bird. The conduct of his stepmother (who stopped paying
the reduced rent as per their agreement) does not discharge the debt at law because
there was no consideration provided for the release. The question for the court was
whether Bird must pay back the loan.
 The problem for Bird was the rule in Pinnel’s Case (1602) which provides that part
payment of a debt can never forgive the full amount due. Bird’s release from the
debt was oral, therefore at law (due to the rule in Pinnel) he was a volunteer.
 The court held that the appointment of Bird as the executor was evidence that the
loan to Bird was a gift to him. This is because the executor is responsible for calling in
debts to the testator's estate. It would be ridiculous for the executor to sue himself
for the debt. Therefore, common law rulings cancelled the debt to avoid this
anomaly. Furthermore, the stepmother's donative intention had continued until her
death.
 Therefore, where an incomplete gift is made during a donor’s lifetime and the legal
title to this property is subsequently vested in the donee (as an executor of the
donor’s estate), the donor’s prior intention to make the gift is regarded as having
been perfected on the condition that such intention had continued until the date of
the donor.
Lord Jessel M.R. held that the debt had been released at common law by Bird’s appointment
as executor, so even though the “gift” was not supported by consideration at common law,
the fact that Bird was appointed executor of her legal estate meant that the legal title to the
debt became vested in him. However, this conclusion seems to ignore the rule in equity that
a trustee shall not profit from his position and has a duty to account for any benefit derived
as a result of his position. The residuary legatees used this argument in their attempt to
have Bird forced to repay the £900. Lord Jessel M.R. agreed that a trustee will usually be
prevented from profiting from his position. However, he went on to state that, because all
equitable remedies are discretionary, the onus was on the legatees to persuade him that
the justice of the case was on their side. The legatees were required to show that their
moral entitlement to the £900 was greater than Bird’s. This they could not do. Therefore the
legatees’ equity was superseded by Bird’s equity (there was strong proof that the testator
had an unchanged intention up to her death to forgive Bird the debt).

The rule in Strong v. Bird provides that an imperfect gift is perfected by the donee’s
Applications and Extensions of Strong v Bird Rule
subsequent acquisition of the title to the thing intended to be given if the donor’s intention
to give it continues.
Re Stewart [1908]
 A husband had bought some bonds which he intended to give to his wife. However,
he died before they had actually been delivered to him and, so he was unable to
assign them to her in his lifetime. Due to her appointment as one of 5 executors,
coupled with his continuing intention to give the bonds to her, was held to be
sufficient to perfect the gift. The intention was expressed, and unchanged, which
entitled the executor to hold the property for their benefit. This is because the
vesting of the property at the testator in the executor is completing the gift, and
secondly because the intention of the testator is enough to outweigh any other
equity owed to other beneficiaries.
 Thus, the Rule was extended beyond just debt but to include imperfect gifts of Real
Property.
Re Freeland (1952)
 A testatrix promised to give the plaintiff a car at a future date but subsequently
loaned the car out to a third party. On the death of the Testatrix, the Plaintiff
became the Testatrix’s Executrix. She then claimed the imperfect gift had been
perfected.
 The case went to the Court of Appeal, where the executrix lost on the merits. The
court held that this was not a case of perfecting an imperfect gift, as there was
insufficient evidence of a continuing intention to make the gift up to the testatrix’s
death.
 The Court emphasised that the Donor must intend to make an immediate inter vivos
gift (i.e., the exception does not apply to an intention to make a gift in the future or
make a future testamentary gift). An intention to make a testamentary gift is not
enough. It is essential that there was an intention to give the gift in question, which
continued right up until death.
Re Wilson (1933)
 The son was the executor of the will, and the court held that the intention to create
an immediate gift was valid. The testator had manifested an intention to make an
immediate gift of certain securities to his son, who was the executor of his will,
although he did not complete or perfect this gift during his lifetime. The court held
that the principle of Strong v Bird applied to perfect the gift but not to other
properties that were promised for the future.
 Therefore, the intention should relate to a specific gift.
Re James (1935)
 Extension of the rule to administrators. The rule in Strong v Bird also applied to
administrators. This is where a person dies intestate.
 This was highly criticised when the intentions cannot be known due to them dying in
testate.
Re Gonin (1979)
 Criticism of the extension to administrators. The daughter (plaintiff) had given up her
career to look after her parents, and her mother had initially planned to leave the
family home to the plaintiff. She could not do so legally because her daughter was
illegitimate. She did that by leaving a cheque, and the cheque became stale when
she died. The plaintiff claimed the house, which forms part of her mum’s estate and
argued that her mum had the intention to leave her the house, and this intention
had continued until her death.
  The court held that the rule in Strong v Bird did not apply as there was no continuing
intention where a mother, who had initially decided to gift her house to her
daughter, later changed her mind and wrote a cheque for the value of the house
instead.
 Thus, for the Strong v Bird rule to apply, the intention to make the gift must have
continued until the time of the donor’s death.
Re Freeland (1952)
 A testatrix promised to give the plaintiff a car at a future date but never did so. On
the death of the testatrix, the plaintiff became the testatrix’s executrix. She then
claimed the imperfect gift had been perfected.
 The case went to the Court of Appeal where the executrix lost on the merits.
 The court held that this was not a case of perfecting an imperfect gift, as there was
insufficient evidence of continuing intention to make the gift up to the testatrix’s
death.
 The court emphasised that the donor must intend to make an immediate inter vivos
gift. An intention to make a testamentary gift is not enough.