Revision: Equity [CONSTITUTION]
Formalities: Equitable title
Constitution: Legal Title
● Concerned with constitution during lifetime (as constitution takes place under the will upon death)
Milroy v Lord:
1. Methods appropriate to transferring different types of property
2. Methods of conferring the benefit of property on people set down:
▪ An outright gift
▪ A transfer on trust – with someone else as the trustee (transfer on trust)
▪ Self-declaration of trust – settlor declares himself as trustee
3. That equity will not perfect an imperfect gift
5 main types of property:
1. Chattels – pure personal – you can do it formally – but you don’t have to: intention/delivery (informal
transfer)
2. Shares: Shares in a private company:
● Must execute a stock transfer form - s1, Stock Transfer Act 1963
● Must send it with the old share certificate to the company – where registrar of the company will
register the new shares (unless exemption in Articles)
● (Shares in public companies: CREST system)
3. Copyright: S90(3), Copyright, Designs and Patents Act 1988
4. Bank Account: A Bank Account = a debt – creditor/debtor relationship – chose in action – if you want to
transfer the benefit – s1376 Law of Property Act – signed, written notice to the debtor (the bank)
5. Land: s52, LPA 1925 – by deed
● deed defined in s1 LP(MP)A 1989:
a) Written
b) Signed
c) Witnessed
d) Headed deed
e) Delivered
Methods of Benefiting Another:
1
, Revision: Equity [CONSTITUTION]
Legal Interests:
1. Outright gift
2. Transfer on trust
3. Self-declaration of trust
Equitable interests:
4 types from Timpson’s Executors v Yerbury (Above)
Failure to constitute – Ineffectual transfer
The Principle
● Equity will not assist a volunteer - A volunteer is someone who doesn’t provide any consideration – doesn’t
give anything in return
● Equity will not perfect an imperfect gift
● Equity will not treat a failed gift as a self-declaration of trust
Application:
1. If as in Milroy v Lord – settlor intends to create a settlement by transfer but fails to vest legal title in the
trustees – then equity will not perfect
2. If donor intended absolute gift – but failed to effectively transfer the property – equity will not construe the
failed absolute gift (method 1) as a declaration of trust (method 3)
o Jones v Lock – Jones returned home without a present for his baby so produced a cheque payable to
himself and said ‘I give this to baby; it is for himself’ – he died shortly afterwards – but as he had not
endorsed the cheque to his son – the property had not been transferred – courts rejected argument
that he had declared himself a trustee of the cheque
o Richards v Delbridge – grandfather endorsed on his lease a memorandum saying ‘this deed and all
thereto belonging I give to Edward (a minor) from this time forth’ – he later died – held that lease
hadn’t been legally assigned (needs to have a separate deed) – and couldn’t be construed as a
declaration of trust because he had intended an absolute gift
o Paul v Constance – contrast to above cases: effective declaration of trust found because of
sufficient intention on the part of Constance to make himself a trustee of the money in the account
o Shah v Shah –CA construed a letter referring to transfer of shares as a declaration of trust of the
shares, rather than a gift
2
, Revision: Equity [CONSTITUTION]
Unless an exception applies:
o Rule in Re Rose
o Rule in Strong v Bird
o Donatio Mortis Causa
o Proprietary Estoppel
o Choithram v Pagarani
o Pennington v Waine
THE EXCEPTIONS:
Transfer Effectual in Equity
Re Rose: A Transferor has done all in his power
● A gift of shares: S1 Stock Transfer Act – stock transfer form needs to be sent with old share certificates to the
company for registration
● This was done – but she died before registration had happened: legal title was not completed in lifetime and
there was no mention of them in the will so under Milroy v Lord: shares would go into her residue
● CA: if you have (1) Used the correct methods (2) Done all that he/she can (3) Put the matter beyond his
control then the transfer will be effective
● Delay here was caused by the company: no fault on the part of the donor
● Mascall v Mascall : principle will also apply where all the relevant documentation has been given to the
donee/trustee:
o Transfer of land: executed deed and gave everything necessary to the son
o Son hadn’t sent it to the land registry yet – so legal transfer not yet transferred
o But father had put it beyond his control so equity stepped in
● Re Fry: still more the transferor needed to do: was domiciled abroad and had not obtained Treasury consent
(as required by statute at the time) and died before it was obtained: transfer was ineffective
● Zeital v Kaye: handed over a share transfer form signed by the registered shareholder but had not handed
over the share certificate: CA held that he had not done everything in his power to transfer the
shareholding
Pennington v Waine: under narrow circumstances there will be no legal requirement for the form to be
delivered to the donee or the company
3
, Revision: Equity [CONSTITUTION]
● Donor told Mr Pennington (partner in the Company’s auditors), two months before her death, that she
wished to immediately transfer 400 shares to her nephew: signed share transfer form and gave it to Mr P
who placed it on his file but took no further action, and told her to ‘do nothing’
● Donee was informed of the gift
● Donor also informed donee that she wanted him to become director (needed at least 1 share): form of
consent, took on benefits/burdens of directorship
● Documentation given to an agent: not directly to the company or to the donee: so not identical to Re Rose
● But CA said that it would be unconscionable to deny the gift: Arden LJ – if the donor were still alive it would
be unconscionable for her to change her mind
● Whether something is unconscionable depends on the facts of the case: has never been defined, very
subjective: ‘the refuge of the analytically lazy’
Choithram v Pagarani
Principle revisited by PC: but narrow case, unlikely to be applied to a different set of facts
● PC: affirmed the principle but construed unusual circumstances as amounting to a declaration of trust
● Donor orally declared intention to make a ‘gift on trust’ to a charity, but did not transfer the legal title to the
charity before his death
● PC willing to uphold the gift, because the donor was himself one of the trustees of the charity – could be
regarded as having manifested an intention that, instead of being legal beneficial owner of the property, he
would hold it as trustee
● Lord Browne-Wilkinson: if he had lived it would have been unconscionable for him to go back on it
Fortuitous Vesting in intended Transferee
Strong v Bird
● Immediate intention to give – but you die before you have given it
● But if the person who is going to be the recipient of the gift is also the executor of the estate : then the gift
can be perfected
3 requirements:
1. Must be intention to make an immediate gift (Re Freedland 1952) – cannot be an intention to make a gift
in the future – effectively just a promise
4
Formalities: Equitable title
Constitution: Legal Title
● Concerned with constitution during lifetime (as constitution takes place under the will upon death)
Milroy v Lord:
1. Methods appropriate to transferring different types of property
2. Methods of conferring the benefit of property on people set down:
▪ An outright gift
▪ A transfer on trust – with someone else as the trustee (transfer on trust)
▪ Self-declaration of trust – settlor declares himself as trustee
3. That equity will not perfect an imperfect gift
5 main types of property:
1. Chattels – pure personal – you can do it formally – but you don’t have to: intention/delivery (informal
transfer)
2. Shares: Shares in a private company:
● Must execute a stock transfer form - s1, Stock Transfer Act 1963
● Must send it with the old share certificate to the company – where registrar of the company will
register the new shares (unless exemption in Articles)
● (Shares in public companies: CREST system)
3. Copyright: S90(3), Copyright, Designs and Patents Act 1988
4. Bank Account: A Bank Account = a debt – creditor/debtor relationship – chose in action – if you want to
transfer the benefit – s1376 Law of Property Act – signed, written notice to the debtor (the bank)
5. Land: s52, LPA 1925 – by deed
● deed defined in s1 LP(MP)A 1989:
a) Written
b) Signed
c) Witnessed
d) Headed deed
e) Delivered
Methods of Benefiting Another:
1
, Revision: Equity [CONSTITUTION]
Legal Interests:
1. Outright gift
2. Transfer on trust
3. Self-declaration of trust
Equitable interests:
4 types from Timpson’s Executors v Yerbury (Above)
Failure to constitute – Ineffectual transfer
The Principle
● Equity will not assist a volunteer - A volunteer is someone who doesn’t provide any consideration – doesn’t
give anything in return
● Equity will not perfect an imperfect gift
● Equity will not treat a failed gift as a self-declaration of trust
Application:
1. If as in Milroy v Lord – settlor intends to create a settlement by transfer but fails to vest legal title in the
trustees – then equity will not perfect
2. If donor intended absolute gift – but failed to effectively transfer the property – equity will not construe the
failed absolute gift (method 1) as a declaration of trust (method 3)
o Jones v Lock – Jones returned home without a present for his baby so produced a cheque payable to
himself and said ‘I give this to baby; it is for himself’ – he died shortly afterwards – but as he had not
endorsed the cheque to his son – the property had not been transferred – courts rejected argument
that he had declared himself a trustee of the cheque
o Richards v Delbridge – grandfather endorsed on his lease a memorandum saying ‘this deed and all
thereto belonging I give to Edward (a minor) from this time forth’ – he later died – held that lease
hadn’t been legally assigned (needs to have a separate deed) – and couldn’t be construed as a
declaration of trust because he had intended an absolute gift
o Paul v Constance – contrast to above cases: effective declaration of trust found because of
sufficient intention on the part of Constance to make himself a trustee of the money in the account
o Shah v Shah –CA construed a letter referring to transfer of shares as a declaration of trust of the
shares, rather than a gift
2
, Revision: Equity [CONSTITUTION]
Unless an exception applies:
o Rule in Re Rose
o Rule in Strong v Bird
o Donatio Mortis Causa
o Proprietary Estoppel
o Choithram v Pagarani
o Pennington v Waine
THE EXCEPTIONS:
Transfer Effectual in Equity
Re Rose: A Transferor has done all in his power
● A gift of shares: S1 Stock Transfer Act – stock transfer form needs to be sent with old share certificates to the
company for registration
● This was done – but she died before registration had happened: legal title was not completed in lifetime and
there was no mention of them in the will so under Milroy v Lord: shares would go into her residue
● CA: if you have (1) Used the correct methods (2) Done all that he/she can (3) Put the matter beyond his
control then the transfer will be effective
● Delay here was caused by the company: no fault on the part of the donor
● Mascall v Mascall : principle will also apply where all the relevant documentation has been given to the
donee/trustee:
o Transfer of land: executed deed and gave everything necessary to the son
o Son hadn’t sent it to the land registry yet – so legal transfer not yet transferred
o But father had put it beyond his control so equity stepped in
● Re Fry: still more the transferor needed to do: was domiciled abroad and had not obtained Treasury consent
(as required by statute at the time) and died before it was obtained: transfer was ineffective
● Zeital v Kaye: handed over a share transfer form signed by the registered shareholder but had not handed
over the share certificate: CA held that he had not done everything in his power to transfer the
shareholding
Pennington v Waine: under narrow circumstances there will be no legal requirement for the form to be
delivered to the donee or the company
3
, Revision: Equity [CONSTITUTION]
● Donor told Mr Pennington (partner in the Company’s auditors), two months before her death, that she
wished to immediately transfer 400 shares to her nephew: signed share transfer form and gave it to Mr P
who placed it on his file but took no further action, and told her to ‘do nothing’
● Donee was informed of the gift
● Donor also informed donee that she wanted him to become director (needed at least 1 share): form of
consent, took on benefits/burdens of directorship
● Documentation given to an agent: not directly to the company or to the donee: so not identical to Re Rose
● But CA said that it would be unconscionable to deny the gift: Arden LJ – if the donor were still alive it would
be unconscionable for her to change her mind
● Whether something is unconscionable depends on the facts of the case: has never been defined, very
subjective: ‘the refuge of the analytically lazy’
Choithram v Pagarani
Principle revisited by PC: but narrow case, unlikely to be applied to a different set of facts
● PC: affirmed the principle but construed unusual circumstances as amounting to a declaration of trust
● Donor orally declared intention to make a ‘gift on trust’ to a charity, but did not transfer the legal title to the
charity before his death
● PC willing to uphold the gift, because the donor was himself one of the trustees of the charity – could be
regarded as having manifested an intention that, instead of being legal beneficial owner of the property, he
would hold it as trustee
● Lord Browne-Wilkinson: if he had lived it would have been unconscionable for him to go back on it
Fortuitous Vesting in intended Transferee
Strong v Bird
● Immediate intention to give – but you die before you have given it
● But if the person who is going to be the recipient of the gift is also the executor of the estate : then the gift
can be perfected
3 requirements:
1. Must be intention to make an immediate gift (Re Freedland 1952) – cannot be an intention to make a gift
in the future – effectively just a promise
4
