Milroy v Lord (1861)

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“…..There is not equity in this court to perfect an imperfect gift”- Turner LJ in Milroy v Lord (1861)- How accurate is this statement in current English law? In order to assess the accuracy of Turner LJ’s statement, it is first necessary to consider the context of it, and discuss briefly what it refers to. It refers to trusts, which become fully set up or constituted when the trust property is in the hands of a person who is properly bound to be the trustee. Within this context, certain equitable principles come into play; specifically regarding gifts. There are several situations where equity has developed its role, away from Turner LJ’s statement, so that in effect it will perfect an imperfect gift. A gift is any transaction which benefits an individual who has not paid, ie given any consideration for it; such an individual is called a volunteer.[1] In the same case which the above quotation is taken from, Milroy v Lord, Turner LJ also identified three modes of making a gift. These were an outright transfer of the legal title to a property, a transfer of the legal title of a property to a trustee to hold on trust, and a self-declaration of trust (in which case the constitution of the trust is automatic). At this point, an important maxim of equity has an effect. The maxim is equity will not assist a volunteer, and its manifestation here is that equity will not perfect an imperfect gift. Therefore, in order for a gift to be perfected, or rather for the trust to be fully constituted, one of the three modes must be referred to. Equity will not, in itself, treat the intentions of a donor to make an outright gift as a self-declaration of trust, where the property fails to pass from the donor to the donee. Two cases which came in the wake of the highly significant Milroy v Lord, and which seemed to confirm Turner LJ’s sentiments were Jones v Lock and Richards v Delbridge. In these cases, the crucial factor was the intention of the donor. Nor will equity (historically) perfect an ineffective transfer of the legal title to property to an intended trustee to constitute a trust by treating the intending settlor as having made a valid self-declaration of trust. In other words, if the property fails to get into the hands of the intended trustee, there is no trust. In this context, however, there has been a recent move away from Turner LJ’s maxim that equity will not perfect an imperfect gift. in the 2001 case of T Choithram SA v Pagrani, the words of a businessman were generously construed to give most of his wealth on trust. his words of a mere gift were interpreted as words of declaration of trust. A second seminal case in the development of the doctrine came in Re Rose in 1952, when the rule laid down in Milroy v Lord was relaxed to the extent that equity would now treat as effective an intended transfer where the donor has done everything he is obliged to do to make the gift valid.

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