Constitutions and formalities
Wednesday, 9 February 2022 22:46
What's it all about?
Elements of a valid express private trust:
- Settlor with capacity
- Adequately defined trust
- Appropriately assembled
Capacity for settlors
- Basic rule = sui iuris = adult
○ Children's settlements are revocable
- Mental capacity
○ Boardman v Phipps trap
- Substantial issues with wills
Setting up a trust
1. Declare self as a trustee of the trust property
a. Follow formalities rules for declaration
2. Transfer to the trustees and declare a trust
a. Follow formalities rules for declaration
b. Follow constitution rules for transfer
You could mix the two together but this is generally a bad idea - Choithram v Pagarani [2000]
Constitution and formalities
- How complete must a trust be to bind?
○ 100% complete - the common law likes certainty
Milroy v Lord (1862) (CA)
○ S tries to set up trust of bank shares for niece M
○ Uses very wrong forms to give to solicitor L as trustee
○ Error realised by niece M only after S' death
○ M says that uncle tried and came close ish, so lets pretend that S declared himself
trustee
○ CoA said no - equity will not assist a volunteer to perfect an imperfect gift
Constitution - common law rules about the transfer of property, fulfil them or it is void - IS THE
TRUST PROPERTY WHERE IT SHOULD BE
Formalities - statutory rules about some equity property, fulfil them or it is void - effects vary - HAS
THE EQUITY GOT TO WHERE IT SHOULD BE
Exceptions - where common law or equity or other don’t insist 100% completion after all
Private express trusts
- For people, not for public purposes
- Deliberately (ish) created
Implied trusts
- Read in by the courts
- Very broadly to prevent injustice on the particular facts
Main kinds of trust
- Resulting trusts - reflect payment towards property
- Constructive trusts - to prevent unconscionable behaviour
- Statutory trusts
Equity and Trusts Page 1
, - Statutory trusts
Common law constitution rules
Constitution
- The rules for transfers of property at common law
- The same rules apply for
○ Gifts - from donor to donee
○ Trusts - from settlor to trustee
- Which rules depends on what kind of property it is
○ Valuable property = more rules e.g. land
○ Non-tangible property = more rules e.g. shares
○ Ordinary property = fewer rules e.g. chattels
Land transfer rules
- By deed
○ S52 LPA 1925 and S1 LP(MP)A 1989
- Registration
○ Registrable disposition - S27
○ Minor interest - notice or restriction unless there is an overriding interest
- Contract for an X
○ S2 LP(MP)A 1989
Land - what could go wrong?
- Didn't use a deed
○ Richards v Delbridge (1874)
- Didn't register the disposition or interest
○ City of London BS v Flegg [1988]
○ Overreached / lost priority to later suitable transfer
- Contract didn’t fulfil S2 LP(MP)A
○ Void unless there is rectification?
Chattel transfer rules
- Kept simple as a matter of policy
- Normal method = delivery of chattel with the intention to give
- Includes constructive or indirect delivery
○ Thomas v Times Books [1968]
- Alternative - Deed of gift
Chattels - what could go wrong?
- Did you do enough delivery?
○ Re Cole [1964]
- Did you intend a gift?
○ Glaister-Carlisle v Glaister Carlisle [1968]
○ Thrown from contempt not donative intention
Shares transfer rules
- Company law - ownership / right to participate in a company
- Chose in action - invisible but may be very valuable
- Companies maintain a register of their shares' owners
- So Stock Transfer Act 1963 / Companies Act 2006 process
○ Old owner executes transfer form
○ Transfer form and certificates to the company
○ Company registers new owner
- The timing of the third step is unpredictable
Shares - what could go wrong?
Equity and Trusts Page 2
Wednesday, 9 February 2022 22:46
What's it all about?
Elements of a valid express private trust:
- Settlor with capacity
- Adequately defined trust
- Appropriately assembled
Capacity for settlors
- Basic rule = sui iuris = adult
○ Children's settlements are revocable
- Mental capacity
○ Boardman v Phipps trap
- Substantial issues with wills
Setting up a trust
1. Declare self as a trustee of the trust property
a. Follow formalities rules for declaration
2. Transfer to the trustees and declare a trust
a. Follow formalities rules for declaration
b. Follow constitution rules for transfer
You could mix the two together but this is generally a bad idea - Choithram v Pagarani [2000]
Constitution and formalities
- How complete must a trust be to bind?
○ 100% complete - the common law likes certainty
Milroy v Lord (1862) (CA)
○ S tries to set up trust of bank shares for niece M
○ Uses very wrong forms to give to solicitor L as trustee
○ Error realised by niece M only after S' death
○ M says that uncle tried and came close ish, so lets pretend that S declared himself
trustee
○ CoA said no - equity will not assist a volunteer to perfect an imperfect gift
Constitution - common law rules about the transfer of property, fulfil them or it is void - IS THE
TRUST PROPERTY WHERE IT SHOULD BE
Formalities - statutory rules about some equity property, fulfil them or it is void - effects vary - HAS
THE EQUITY GOT TO WHERE IT SHOULD BE
Exceptions - where common law or equity or other don’t insist 100% completion after all
Private express trusts
- For people, not for public purposes
- Deliberately (ish) created
Implied trusts
- Read in by the courts
- Very broadly to prevent injustice on the particular facts
Main kinds of trust
- Resulting trusts - reflect payment towards property
- Constructive trusts - to prevent unconscionable behaviour
- Statutory trusts
Equity and Trusts Page 1
, - Statutory trusts
Common law constitution rules
Constitution
- The rules for transfers of property at common law
- The same rules apply for
○ Gifts - from donor to donee
○ Trusts - from settlor to trustee
- Which rules depends on what kind of property it is
○ Valuable property = more rules e.g. land
○ Non-tangible property = more rules e.g. shares
○ Ordinary property = fewer rules e.g. chattels
Land transfer rules
- By deed
○ S52 LPA 1925 and S1 LP(MP)A 1989
- Registration
○ Registrable disposition - S27
○ Minor interest - notice or restriction unless there is an overriding interest
- Contract for an X
○ S2 LP(MP)A 1989
Land - what could go wrong?
- Didn't use a deed
○ Richards v Delbridge (1874)
- Didn't register the disposition or interest
○ City of London BS v Flegg [1988]
○ Overreached / lost priority to later suitable transfer
- Contract didn’t fulfil S2 LP(MP)A
○ Void unless there is rectification?
Chattel transfer rules
- Kept simple as a matter of policy
- Normal method = delivery of chattel with the intention to give
- Includes constructive or indirect delivery
○ Thomas v Times Books [1968]
- Alternative - Deed of gift
Chattels - what could go wrong?
- Did you do enough delivery?
○ Re Cole [1964]
- Did you intend a gift?
○ Glaister-Carlisle v Glaister Carlisle [1968]
○ Thrown from contempt not donative intention
Shares transfer rules
- Company law - ownership / right to participate in a company
- Chose in action - invisible but may be very valuable
- Companies maintain a register of their shares' owners
- So Stock Transfer Act 1963 / Companies Act 2006 process
○ Old owner executes transfer form
○ Transfer form and certificates to the company
○ Company registers new owner
- The timing of the third step is unpredictable
Shares - what could go wrong?
Equity and Trusts Page 2
