“Equity will not seek to perfect an imperfect gift”.
To what extent, if at all, does this remain a defensible maxim in the context of the constitution
of a gift or trust?
The constitution of a trust denotes the complete setting up of a trust through a valid declaration of trust
and the vesting of legal title of trust property in T (excluding self-declarations of trust)
If formalities are not satisfied, the trust fails (as T does not have legal title)
As such, the bright line rule laid down in Milroy v Lord functions as one of the overarching principles
in equity so that if P intends (and fails) to make an outright transfer of legal title, a court will simply
not construe this as an intention to create a trust, solely to effect the transfer
Relies on equitable maxims of (1) equity will not perfect an imperfect gift and (2) equity will
not assist a volunteer
The strict operation of this rule was applied in Jones v Lock
Policy justifications for the maxim ‘equity will not perfect an imperfect gift’ were provided by Arden
LJ in Pennington v Waine as-
(1) Ensuring Ds do not act in ways they will later regret (‘paternalistic objective’)
(2) Safeguarding the position of D
(3) Legal certainty (providing a clear point in time in which the trust is constituted)
However, the bright line rule is undermined by several exceptions which seem to circumvent this
rule, which while seem designed to ensure that the donor’s intention is respected, arguably go too
far in the context of the maxim ‘equity will not seek to perfect an imperfect gift’
Re Rose establishes a rule whereby, if the donor has done everything in his power to effect the transfer,
equity may be willing to step in to perfect the gift
On the facts, D had properly executed the required documents to transfer the shares (and hence
beneficial interest), but a delay in registration meant a discretion in the date upon which
inheritance tax had to be paid
The court ruled that, as D had done everything he needed to do prior to this date,
inheritance tax would not be paid as the beneficial interest had passed (created a
constructive trust until the actual transfer of legal title)
Re Rose represents an attempt to bypass Milroy by focusing on D’s personal actions
Rationale that the clarity of D’s intentions made it unfair for equity to absolve
Therefore, marks a common sense and practical approach (see Mascall v Mascall)
However, the approach in Re Rose is arguably unduly idealistic as the case failed to address the
issue of, once equity has stepped in and created a constructive trust, what would have happened if
the company had subsequently rejected the share transfer
Seems to undermine one of the required formalities by bypassing the need to obtain the
company’s consent and in this regard, the case lacks clarity on the precise point in which
equitable title passes (Garton, 2003)
, Notes the distinction drawn from Re Fry, as in theory the authorities (the Treasury) could
request more information from D before granting consent, although this same possibility
exists for share registration
This seems to suggest that the rule that equity enforces a transfer once D has done
everything required of him should logically only apply where directors have zero discretion
to refuse or query registration (which would significantly limit its scope
Similarly, Garton notes how it seems to depend on D making his thoughts on the matter
known, as otherwise it would be impossible to determine whether he intended the transfer
to be effective ‘immediately’ as opposed to ‘as soon as the law allows’)
Pagarani concerns hybrid cases of self-declaration and transfer on trust
In the case, there was a valid trust despite it not technically being fully constituted, as in practice,
he had constituted the trust through a self-declaration (despite not actually doing anything)
Held that there is no real difference between a self-declaration of trust and the case where T
declares himself to be one of the Ts for that (charitable) purpose, as effectively just a self-
declaration of trust with other Ts
This rule circumvents the clear separation between self-declarations of trust and transfer of trust
laid out in Milroy and in this sense, appears potentially unreasonable and not pragmatic by
appearing open-ended insofar as it allows D to circumvent all formality requirements on the basis
that he is also part of the trustee board
Reasoned on the basis that D had legal title before his death and that it would be
unconscionable, once he declared the trust, to then resile on that gift (follows equitable
maxim that ‘equity will not strive officiously to defeat a gift’)
However, difficult to reconcile with the maxim ‘equity will not perfect an imperfect gift’
Similarly, it is unclear why another outcome would have been unconscionable given he had
not done any formalities to actually constitute a trust (Garton recognises as a benevolent
construction without any clear intention to create a trust)
Despite recognising the logic behind the maxim ‘equity will not perfect an imperfect gift’, Pennington v
Waine introduced the doctrine of unconscionability extending the bright line rule even beyond the rule in
Re Rose
Held in the case that it would be unconscionable for D to resile from the gift when she was still alive
and instead a constructive trust was created, with legal title transferred to her nephew
Followed arguments that the gift was made competently of her own will, D told the intended
transferee, D signed the transfer form and delivered it to her agent, the nephew was told he
did not need to do anything and the nephew had agreed to become director (which
necessitated the transfer)
To what extent, if at all, does this remain a defensible maxim in the context of the constitution
of a gift or trust?
The constitution of a trust denotes the complete setting up of a trust through a valid declaration of trust
and the vesting of legal title of trust property in T (excluding self-declarations of trust)
If formalities are not satisfied, the trust fails (as T does not have legal title)
As such, the bright line rule laid down in Milroy v Lord functions as one of the overarching principles
in equity so that if P intends (and fails) to make an outright transfer of legal title, a court will simply
not construe this as an intention to create a trust, solely to effect the transfer
Relies on equitable maxims of (1) equity will not perfect an imperfect gift and (2) equity will
not assist a volunteer
The strict operation of this rule was applied in Jones v Lock
Policy justifications for the maxim ‘equity will not perfect an imperfect gift’ were provided by Arden
LJ in Pennington v Waine as-
(1) Ensuring Ds do not act in ways they will later regret (‘paternalistic objective’)
(2) Safeguarding the position of D
(3) Legal certainty (providing a clear point in time in which the trust is constituted)
However, the bright line rule is undermined by several exceptions which seem to circumvent this
rule, which while seem designed to ensure that the donor’s intention is respected, arguably go too
far in the context of the maxim ‘equity will not seek to perfect an imperfect gift’
Re Rose establishes a rule whereby, if the donor has done everything in his power to effect the transfer,
equity may be willing to step in to perfect the gift
On the facts, D had properly executed the required documents to transfer the shares (and hence
beneficial interest), but a delay in registration meant a discretion in the date upon which
inheritance tax had to be paid
The court ruled that, as D had done everything he needed to do prior to this date,
inheritance tax would not be paid as the beneficial interest had passed (created a
constructive trust until the actual transfer of legal title)
Re Rose represents an attempt to bypass Milroy by focusing on D’s personal actions
Rationale that the clarity of D’s intentions made it unfair for equity to absolve
Therefore, marks a common sense and practical approach (see Mascall v Mascall)
However, the approach in Re Rose is arguably unduly idealistic as the case failed to address the
issue of, once equity has stepped in and created a constructive trust, what would have happened if
the company had subsequently rejected the share transfer
Seems to undermine one of the required formalities by bypassing the need to obtain the
company’s consent and in this regard, the case lacks clarity on the precise point in which
equitable title passes (Garton, 2003)
, Notes the distinction drawn from Re Fry, as in theory the authorities (the Treasury) could
request more information from D before granting consent, although this same possibility
exists for share registration
This seems to suggest that the rule that equity enforces a transfer once D has done
everything required of him should logically only apply where directors have zero discretion
to refuse or query registration (which would significantly limit its scope
Similarly, Garton notes how it seems to depend on D making his thoughts on the matter
known, as otherwise it would be impossible to determine whether he intended the transfer
to be effective ‘immediately’ as opposed to ‘as soon as the law allows’)
Pagarani concerns hybrid cases of self-declaration and transfer on trust
In the case, there was a valid trust despite it not technically being fully constituted, as in practice,
he had constituted the trust through a self-declaration (despite not actually doing anything)
Held that there is no real difference between a self-declaration of trust and the case where T
declares himself to be one of the Ts for that (charitable) purpose, as effectively just a self-
declaration of trust with other Ts
This rule circumvents the clear separation between self-declarations of trust and transfer of trust
laid out in Milroy and in this sense, appears potentially unreasonable and not pragmatic by
appearing open-ended insofar as it allows D to circumvent all formality requirements on the basis
that he is also part of the trustee board
Reasoned on the basis that D had legal title before his death and that it would be
unconscionable, once he declared the trust, to then resile on that gift (follows equitable
maxim that ‘equity will not strive officiously to defeat a gift’)
However, difficult to reconcile with the maxim ‘equity will not perfect an imperfect gift’
Similarly, it is unclear why another outcome would have been unconscionable given he had
not done any formalities to actually constitute a trust (Garton recognises as a benevolent
construction without any clear intention to create a trust)
Despite recognising the logic behind the maxim ‘equity will not perfect an imperfect gift’, Pennington v
Waine introduced the doctrine of unconscionability extending the bright line rule even beyond the rule in
Re Rose
Held in the case that it would be unconscionable for D to resile from the gift when she was still alive
and instead a constructive trust was created, with legal title transferred to her nephew
Followed arguments that the gift was made competently of her own will, D told the intended
transferee, D signed the transfer form and delivered it to her agent, the nephew was told he
did not need to do anything and the nephew had agreed to become director (which
necessitated the transfer)
