A trust is an equitable obligation, binding a person (called a trustee) to deal with property owned by him (called trust property, being distinguished from his private property) for the benefit of persons (called beneficiaries or, in old cases, cestuis que trust), of whom he may himself be one, and any one of whom may enforce the obligation [or for a charitable purpose, which may be enforced at the instance of the Attorney-General, or for some other purpose permitted by law though unenforceable (Hayton, Matthews & Mitchell , 2010, p. 2).
In determining the claims of the parties, some time-tested principles of Equity and Trust will be examined.
Was there an intention to create trusts for the benefits of George and Jayne on the part of Barry?
- ISSUE 1
Intention to create a trust is crucial for the validity of any trust. The court said in Twinsectra Ltd v Yardley
(2002): A settlor must, of course, possess the necessary intention to create a trust, but his subjective intentions are irrelevant. If he enters into arrangements which have the effect of creating a trust, it is not necessary that he should appreciate that they do so; it is sufficient that he intends to enter into them
(p. 71) Furthermore, an express trust is invalid until it is completely constituted. There are two ways by which a valid express trust may be completely constituted: by an effective declaration of oneself as trustee or by transfer of properties to trustees (Davies & Virgo, 2013). In effect, Turner LJ in Milroy v Lord
(1862) stated that: 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 render the settlement binding upon him. He may do this by: â€¢ Actually transferring the property to the persons for whom he intends to provide â€¢ If he transfers it to a trustee for the purposes of a settlement â€¢ Declares that he holds it on trust (p.
Either of the two methods of constituting trust must be completely satisfied for the trust to be effective. According to Davies & Virgo (2013), where the settlor declares himself a trustee of the property, the issue of transfer becomes irrelevant, as the legal title already vests in him. The only issue which would be left to the courts to clarify is if there was a valid declaration of trust. They further opined that for a declaration of trust to be valid, there must be certainty of the settlorâ€™s intention to create a trust. Indeed, this is also true for an express trust constituted by transfer to trustees. Lord Eldon in Wright v. Atkyns
(1823) made it clear that for a trust to be valid, â€œ...first...the words must be imperative...; secondly...the subject must be certain...; and thirdly...the object must be as certain as the subject"
(pp. 143, 157). The requirement of intention is more easily ascertainable where the trust is constituted by transfer, as the settlorâ€™s intention is manifested by the transfer. Intention can be inferred from actions. Lord Selborne, L.O., in Lyell v. Kennedy (1889) said: A man who receives the money of another on his behalf, and places it specifically to an account with a banker ear-marked and separate from his own moneys, though under his control, is, in my opinion, a trustee of the fund standing to the credit of that account. For the constitution of such a trust no express words are necessary; anything which may satisfy a Court of Equity that the money was received in a fiduciary character is enough. It is not requisite that any acknowledgment of such a trust should be made to the ces tui que trust or his agent; to whomsoever made it is evidence against the trustee (p. 457).
The case of Jones v. Lock
(1865) is quite instructive. Mr. Jones produced a cheque for 900 pounds made payable to himself, which he handed over to his baby and said: â€˜look you here, this is for baby; it is for himself and I am going to put it away for him and will give him a great deal more along with itâ€
. Mr. Jones died six days later. It was held that there had been no valid gift to the baby (since the gift of a non-bearer cheque required endorsement of the issuer), neither was there a declaration of trust in his favour. The court could not infer an intention to make himself a trustee, and the gift was ineffective and thus, failed. The case of Richard v. Delbridge
(1874) also establishes that an intention to give a gift cannot be transformed into an intention to create a trust. Richard wished to hand over his business to Edward. He demonstrated his intention by endorsing a memorandum on the lease of the business premises, which read thus: â€œThis deed and all thereto belonging I give to Edward from this time forth with all the stock in tradeâ€
. The court decided that it was meant as an outright gift, not a declaration of trust. Sir George Jessel MR held: If it is intended to take effect by transfer, the court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument will be made effectual by being converted into a perfect trust. It is true he need not use the words â€˜I declare myself a trusteeâ€™, but he must do something which is equivalent to it, and use expressions which have that meaningâ€¦
(at 11) A mere promise without mo is not a valid declaration of trust. The law will not enforce mere promises; it will only enforce contractual bargain and trusts (Hudson, 2008). Thus, a mere promise is unenforceable if beneficiary gave no consideration (Re Ralliâ€™s Will Trust
2.1.1 GEORGEâ€™S CLAIM
George claims that Barry promised to transfer the car into his name. There is nothing from Barryâ€™s words or action to indicate that he was making himself a trustee of the car for the benefit of George. Neither did Barry seek to transfer the car to another person to hold in trust for Barry. Therefore, the two methods of constituting a valid express- by declaration of self as trustee, and by transfer to a trustee- are conspicuously lacking. Furthermore, the rule set out in Wright v. Atkyns
(supra) which insists that the intention to create a trust must be certain for any trust to be valid, is clearly lacking. It would rather seem like Barry intended to make an outright gift of the car to George, but as the case of Richard v. Delbridge
(supra) clearly indicates, the courts will not turn this into a trust. The fact that he started using the car again, and he never sent the vehicle registration documents which he had filled out to the right authority indicate that he may have changed his mind about transferring the car into Georgeâ€™s name. 2.1.2. JAYNEâ€™S CLAIM
Jayne insists that Barry verbally agreed to give her his cottage in Wales. Again, it was a verbal agreement to part with property. There is nothing in his words to indicate that he intended to create a trust of the property for Jayneâ€™s benefit. As the court held in Richardâ€™s case
, â€œthe court will not hold the intended transfer to operate as a declaration of trustâ€.
Whereas there was an intended transfer, the court will not interpret this as Barryâ€™s intention to create a trust on the property, neither will it enforce a mere promise, without consideration by the beneficiary.
Will equity aid a volunteer or perfect an imperfect gift?
- ISSUE 2
It is trite law that equity will not aid a volunteer nor perfect an imperfect gift. Turner LJ in Milroy v. Lord
(supra) clearly stated the law: â€œSettlor must have done everything which according to the nature of the property comprised in the settlement was necessary to be done in order to render the settlement binding upon him
â€¦there is no equity in this court to perfect an imperfect giftâ€(p. 264).
In the case of a transfer of landed property, Section 9 of the Statute of Fraud requires that any form of transfer be in writing. By this provision, transfer of landed property cannot be done orally, no matter how clear the intention. However, the following exceptions exist to this rule of equity:
- The strict position laid down in Milroyâ€™s case has been modified to the effect that â€˜equity will not aid a volunteer except the donor has done all that is in his power to do to perfect the giftâ€™. The court in Re Rose made the above modification when it held that the donor had done all in his power to effect the transfer of the shares he held in the company, having made the transfer in the form required by the articles of the company on 30th of March. It was held that the effective date of transfer was on the 30th of March, not 30th of June when the transfer was registered by the companyâ€™s directors. This is obviously an attempt to balance the rule and ensure that while equity does not aid a volunteer by perfecting an imperfect gift, the principle of equity that â€˜equity will not strive officiously to defeat a giftâ€™ is not relegated.
- The rule in Strong v. Bird (1874). The rule provides that where a donee of an imperfect gift who has not furnished consideration obtains title to the gift in another capacity, then this will be sufficient to perfect the gift in equity (Davies & Virgo, 2013). This usually happens where such a donee becomes executor of the donorâ€™s will. In Strongâ€™s case, the donor was Birdâ€™s step-mother whom he owed some money before her death. However, it turned out that she made him executor to her will. The court held that by vesting the legal title in her estate on him, she had manifested her intention to release him from the debt.
The rule in Strong v. Bird
has been applied to administrators in Re James
(1935), although the accuracy of this application has been questioned in Re Gonin
(1979). I must state here that I totally agree with the court in Re Gonin.
The donor, having died intestate, could not have been involved in the choice of administrators of his estate, therefore, the intention to forfeit the debt or perfect the imperfect gift is lacking.
3.1 APPLICATION 3.1.1. GEORGEâ€™S CLAIM
- Where the donee has furnished valuable consideration in expectation of the gift, the law no longer sees him as a mere volunteer, but gives him contractual rights (Re Plumptreâ€™s Marriage Settlement (1910)).
- Donationes mortis causa (gifts made in contemplation of death). This exception originated from Roman law, but has now found a place in English law through decisions of English courts (per Nourse LJ, in Sen v. Headley (1991)). For an effective donatio mortis causa, three elements must be present: â€œthe gift or donation must have been in contemplation, though not necessarily in expectation of death; there must have been delivery to the donee of the subject matter of the gift; the gift must be made under such circumstances as to show that the thing is to revert back to the donor in case he should recoverâ€ (Watt, 2014, p. 134 ; Cain v. Moon (1896)).
George will remain a volunteer before the law, as he his case does not fall under any of the exceptions to Milroyâ€™s case
. Barry did not do all in his power to vest the car in George (he could have at least, sent the registration documents to the Vehicle Licensing Authority). Furthermore, George furnished no consideration, he was not an executor but an administrator of the estate, and the promise was not made in contemplation of death. 3.1.2. MIDREDâ€™S CLAIM
Mildredâ€™s claim would have been on all fours with Strong v. Bird
(supra), except that Barry died intestate and Mildred is an administrator of Barryâ€™s estate, not an executor. That will put Mildredâ€™s claim within the contemplation of the highly controversial Re James.
My opinion concerning this matter, Mildred is advised to abandon her claim, as Re James
is an isolated case, and subsequent cases have criticized it, and/or made decisions inconsistent with it. 3.1.3. JAYNEâ€™S CLAIM
Jayneâ€™s case does not seem to fit into any of the exceptions to the rule in Milroy v. Lord
(supra). Barry had not done all that he needed to do to effect the transfer and Jayne had not furnished any consideration whatsoever. Jayneâ€™s claim will fail also because there is nothing to show from the circumstances that Barry made the promise to transfer his cottage to her in contemplation of death, although he was indeed, ill when he made the promise. However, if Jayne can prove that the promise was made to her in contemplation of death, or that the cottage keys were delivered to her, her claim may stand.
Georgeâ€™s claim has been adjudged as baseless, Mildredâ€™s claim stands on unstable waters, while Jayne requires further proof of certain facts to be able to effect Barryâ€™s promise to her. REFERENCE LIST
Davies, P. and Virgo, G.(2013) Equity & Trusts: Text, Cases and Materials.
Oxford: Oxford University Press, page 145 Hayton D, Matthews P. and Mitchell, C. (2010) Underhill and Hayton: Law Relating to Trusts and Trustees,
edn. London: LexisNexis Hudson, A. and Thomas, G. (2010) The Law of Trusts,
Edn. OUP: Oxford Hudson, A. (2008 ) Understanding Equity and Trusts
edn. Abingdon, Oxon: Routledge Cavendish. Watt, G. (2014). Trusts & Equity.
Oxford: Oxford University Press CASES CITED Cain v Moon (1896)2 QB 283, per Lord Killowen CJ at 286. Jones v Lock (1865) 1 Ch App 25 Lyell v. Kennedy (1889)14 App. Cas. 437 Milroy v Lord (1862) 4 De GF & J 264 Re Ralliâ€™s Will Trust  1 Ch 288 Re Rose (1952) Ch. 499 Re Gonin (1979 Ch. 16, 34 Re James (1935) Ch. 449 Re Plumptreâ€™s Marriage Settlement(1910) 1 Ch 609 Richard v Delbridge (1874) LR 18 Eq. 11 Sen v Headley (1991) Ch 425 CA Strong v Bird (1874) LR 18 Eq. 315 Twinsectra Ltd v Yardley(2002) UKHL 12 at ;  2 All ER 377 at  Wright v. Atkyns (1823) Turn. & R. 143, 157