Formality & Constitution

(1) Formalities must be satisfied

(2) Trust must be fully constituted

(3) The three certainties must be satisfied

(4) MUST NOT be contrary to public policy or the perpetuity rules

General rule - no formalities are required to create a trust

Trusts can be made orally

Some formalities are required by statute

Inter vivos trust - becomes effective within the life of the settlor

Inter vivos personality (money & shares) do not need formalities

Require certain formalities

• S53(1)(b) Law Property Act 1925

Statute applies to any type of land

Land - mines, minerals, buildings, incorporeal hereditaments

Contracts to create trust of land must be in writing

• S2 Law of Property (Miscellaneous Provisions) Act 1989

GARDNER V ROWE (1828)

Facts: S orally declared trust of land - he became bankrupt - decided to then put it in writing

Held: Trust was validly created in writing & was enforceable by beneficiaries

Writing can be...

In typing, printing, photography & other modes of visible form.

• can be made before OR after declared trust
• can be from more than one document

CLOSE INVOICE FINANCE V ABAOWA

Principle: Document must be genuine

RANDOM HOUSE V ALLASON [2003]

Facts: Original document lost - copy adduced in evidence

Held: Trustee's must satisfy that the original document existed & must provide a reasonable explanation for it being lost

Writing must be signed!

FIRSTPOST HOMES V JOHNSON

Held: Typed insertion of parties names at the top of the lette was an insufficient signature

SIMPSON V SIMPSON [2005]

Facts: Oral trust - signed by person with dyslexia

Held: the dyslexic party had document explained to him, so the signature was sufficient

HILMI V PEMBRIDGE VILLAS

Principle: Document must be signed 'BY' the company, not 'ON BHEALF OF' the company

S9 Wills Act 1837

S53(1)(c) LPA 1925

GREY V IRC

Principle: where there is no writing, there is no disposition

VANDERWELL V IRC [1967]

Principle: An exception - if legal and equitable title are being transferred together there is no need for seperate disposition of his equitable interest

Signature of agent will suffice for purposes of S53(1)(C)

• ONLY APPLIES when legal & equitable title are seperated

Disposition of equitable interest must be in document form

Prevents a settlement or trust lasting indefinitely

Settlor should not be able to control property for long after death

• prevents beneficiaries from having full power over property

Strikes against trust provision attempting to sterilise capital indefinitely for a long period

DOES NOT APPLY to unconditional gifts vested immediately

All trusts created AFTER act have a 125 year perpetuity period

Possibility that the gift may not vest within the period is enough to validate it

RE DAWSON (1888)

Facts: possibility of a 60 year old giving birth made the trust void

Held: this was an unsatisfactory state of affairs that had no common sense

Constitution can occur by an effective declaration of trust or a transfer of property to trustees

Legal title of trust MUST be vested in the trustee

No constiution = no trust

MILROY V LORD (1862)

Principle: to render a voluntary settlement valid, S must have done everything which according to nature of the property comprised in the settlement was necessary to be done in order to render settlement binding upon him

• LEADING CASE

"Equity will not perfect an imperfect gift"

"Equity will not assist a volunteer"

Conveyance of land to a minor

The 'every effort' rule

When it would be unconscionable for the donor to change his mind

Deathbed gifts

The rule in STRONG V BIRD

Proprietary estoppel

Trusts created by will

Completely constituted provided the three certainties are met

Inter-vivos trusts

MILROY V LORD

Leading principle:

A trust can be constituted when...

(1) entire ownership is transferred to the trustee (legal & equitable)

(2) legal title is transferred to another to hold on trust for the beneficiary

(3) Settlor retains legal ownership but declares the property to be held on trust.

Absolute owner = trustee

There are 2 ways to constitute a trust - transfer & declaration - mutually exclusive

JONES V LOCK (1865)

Facts: F reprimended for not bringing baby a gift - wrote a cheque payable to himself & said "i give this to the baby" - gave to baby - before he ripped it up, put it in safe

Held: imperfect gift - cheque had not been endorsed - F did not intend to declare himself as trustee

Trusts constituted by declaration

S with legal interest can declare himself as trustee

Land - trust must be evidenced in writing & signed by S or his agent

• S53(1)(b) LPA 1925

PAUL V CONSTANCE [1977]

• Principle: S can use any form of words to demonstrate intention

(A) Money

3 criteria: intention - identify property - act to show intention of legal title to pass to trustee

• Example: giving trustee the cash

(B) Chattels

Transferred by...

Executed deed or gift

Must have phsyical delivery of item with obvious intention

RE COLE (1964)

Facts: H arranged for furniture to be delivered - address he shared with wife

Held: delivery did not coincide with intention to transfer legal title - no gift

Transfer does not occur by merely saying words alone - insuficient 

(B) Chattels (cont)

JAFFA V TAYLOR GALLERY (1990)

Principle: there can be oral transfer provided means of acquiring physical possession is given

(C) Land

S52 LPA 1925 - form of deed

S7 & 27 Land Registry Act 2002 - registration at land registry

MASCALL V MASCALL (1984)

Facts: F executed transfer of house to son -  sent to LR - father sought declaration the transfer was ineffective - had a disagreement with son

Held: gift was complete - S done everything required - every effort rule

(D) Shares

S must sign stock transfer form & share certificate sent to company

Shares not transferred until company enters new name

(E) Chose in action

CIA - All personal rights of property that can be enforced by taking action, not by possession

Intangible - debts, shares

DON KING PRODUCTION V WARREN [2000]

Principle: right to take action to enforce contract can be held upon trust even if contract is unassignable

Types of chose

(1) Legal - Debts, contract rights

(2) Equitable - beneficiaries interest under a trust

(1) Legal assignment

S136 LPA 1925 - defines what assignment be

WARNER BROS V ROLLGREEN

Principle: Later notice is sufficient

MUST BE a debt or legal thing in action

(2) Equitable assignment

PHELPS V SPON-SMITH (2000)

Sets out requirements for an equitable assignment:

• S must show intention to assign
• assignment must identify chose
• some act by assignor showing transfer to assignee
• doesn't need to be in writing
• no notice required

If correct procedure not followed, transfer is ineffective

JONES V LOCK (1865)

Principle: failed gift will not be regarded as declaration of trust

RICHARDS V DELBRIDGE (1874)

Facts: D purported to assign legal title to lease of grandson - he wrote on back of lease 'this deed belongs to my grandson'

Held: gift failed - no deed created to convey property

MILROY V LORD (1862)

Principle: D has done everything necessary for him to transfer title

• Amended by Re Rose

RE ROSE [1952]

Principle: D must have done 'everything within his power' necessary to be done to render settlement binding upon him

• the only thing left to do is a job of a third party

RE FRY [1946]

Facts: D living in America wanted to transfer shares in Brit company - permission was required to transfer - D signed form, sent for permission - died before permission granted

Held: invalid transfer - did not acquire consent

PENNINGTON V WAINE [2002]

Facts: case concerned purported gift of 400 shares in company - by A to her nephew - D signed share transfer form - gave documents to her advisor to deal with. Prior to D's death, adviser written to D - he had been instructed to transfer shares to him - invited him to become company director.

D signed form agreeing to this - assured there was nothing more for him to do - no further action taken by adviser. On death of donor - issue arose as to whether shares formed part of D's estate or were held on trust for Donee - pending registration

Held: must be an ascertainable point at which it is said a gift is completed and point of no return must be identified - unconscionable for D to reverse gift

MASCALL V MASCALL (1984)

Facts: Father delivered land transfer form & certificate to son - after argument, before registration, father sought to reverse transaction

Held: too late to withdraw - every effort rule applied

JORDAN V ROBERTS [2009]

Principle: an otherwise imperfect gift could be treat as completely constituted if it would be inequitable for donor to release from transaction

The 'every effort' rule applies to all types of property

T. CHAITHRAM INTERNATIONAL V PAGARANI [2001]

Facts: S executed deed of trust in favour of charitable organisation - nominated himself & 9 others as trustees - before death he purported orally to settle money & shares in organisation - he did not transfer title to other trustees

Held: S done enough to declare himself as trustee

Exception to 'equity will not assist a volunteer'

CAIN V MOON [1896]

Principle:

(1) Gift must have been made in contemplation of death

(2) Gift must be made under such circumstances to show property is to revert to D in case of death

(3) There must have been delivery of subject matter

In contemplation of death

DUFFIELD V ELWES [1827]

Principle: must be impending risk of death occuring & requires more than philosophical musing 

Does not need to be 'on deaths door' when gift is made

Gift must be made in circumstances that show property is to revert to the donor if he recovers

SEN V HEADLEY [1991]

Principle: gift becomes absolutely only on the donor's death

Any time prior to death, gift can be revoked - express or implied

WARD V TURNER [1752]

Principle: Valid donation morti causa is a delivery of subject matter from donor to donee before death

Something must be done to demonstrate intention to transfer

• Actual or physical delivery - words are insufficient

VALLEE V BIRCHWOOD [2014]

Facts: M's father handed her keys to property - have when he died - continued to live there until he died

Held: no reason why donee could not enjoy property until his death

Occurs when there is failure to transfer legal title to trustees

The rule in Strong v Bird

Exception to the ruke 'equity will not perfect an imperfect gift'

• Where there is forgiveness of a debt & donee obtains legal title in capacity of executor

Facts: there was intention to release X from debt - on death of T, X became executor of his will - legal title of T's estate vested in him

Held/Principle: if T intends to give property to donee but fails to make transfer - gift will normally fail

• If Testator appoints Donee as executor of will, ownership falls into D's hands and the gift can be completed

RE STEWART [1908]

Principle: applies to an imperfect inter-vivos gift

Donor must intend to make a perfect gift

RE FREELAND [1952]

Held: promise to give car at a later date fell outside of Strong v Bird rule

• no present intention to make immediate gift - it was not perfected and failed

Property must be specifically identified

Intention to make gift must persist until death of donor

RE WALE [1956]

Facts: T intended to constitute trust but forgot to transfer all property to trustees

Held: failure to transfer showed she did not have intention for Strong v Bird to apply

A completely constituted trust is enforceable by all beneficiaries whether or not they have given consideration

Where beneficiary has given consideration it is up to B to rely on a contractual remedy

There is need to find consideration - equity will not assist a volunteer

RE ELLENBOROUGH [1903]

Facts: individual expected voluntary settlement by deed that se would transfer property she expected to inherit - when she inherited she did not transfer

Held: Court would not enforce voluntary covenant - no consideration given

If B has given consideration for promise - can rely on contractual remedy & equity can constitute the trust

Settlement made in consideration of marriage made BEFORE marriage or is one made in fulfillment of an anti-nuptual agreement

Does not include trust by existing husband & wife

Can be enforced by those within scope - husband, wife, children & grandchildren

PULLAN V KOE [1913]

Facts: Marriage settlement - settled property on husband, wife & children - wife agreed to put on trust any property she may acquire - she did not do this

Held: children could obtain specific performance - they were in the marriage consideration

RE PRYCE [1917]

Facts: marriage settlement - voluntary contract to settle after acquired property - only remaining beneficiaries were distant relatives

Held: could not sue as they were volunteers (the trustees)