Soton Equity and Trusts - alastairhudson.com

(D)
trusts.
The proper constitution of trusts & the problem of incompletely constituted
General reading: Hudson, sections 5.4 and 5.6
Question: What if the settlor promises to settle property on trust but fails to constitute the
trust properly: can the intended beneficiary claim a right in conscience to the property?
1) Methods for the proper constitution of a trust
Reading: Hudson, section 5.4
Milroy v. Lord (1862) 4 De G. F. & J. 264
2) Imperfect gifts may not be effected by means of a trust …
Reading: Hudson, sections 5.4.3
**Milroy v. Lord (1862) 4 De G. F. & J. 264, per Turner LJ (there is no equity to perfect
an imperfect gift):
‘... in order to render a voluntary settlement valid and effectual, the 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 transfer
the property [to the trustee] and render the settlement binding upon him. He
may, of course, do this by actually transferring the property to the persons
for whom he intends to provide, and the provision will then be effectual and
it will be equally effectual if he transfers the property to a trustee for the
purposes of the settlement, or declares that he himself holds it in trust for
those purposes … but in order to render the settlement binding, one or
other of these modes must, as I understand the law of this court, be
resorted to, for there is no equity in this court to perfect an imperfect gift.’
3) … except where transferor has does everything necessary for him to do to effect the
transfer
Reading: Hudson, section 5.4.4
Re Rose [1949] Ch 78
**Re Rose [1952] Ch. 499 (ineffective transfer of legal title to shares but equitable title held to
pass because inequitable for transferor to seek to renege on the transfer).
Cf. Re Fry [1946] Ch 312 (no agreement by Treasury, still transferor could not rely on having
done everything necessary for him to do)
4) A loosening of the Rose principle
Reading: Hudson, section 5.4.4
T Choithram International SA v Pagarani [2001] 1 WLR 1
Pennington v Waine [2002] 1 WLR 2075
5) The return of common sense
Reading: Hudson, section 5.4.4
*Kaye v Zeital [2010] EWCA Civ 159, [2010] 2 BCLC 1
*Curtis v Pulbrook [2011] EWHC 167 (Ch), [2011] 1 BCLC 638, Briggs J, three
ways to make the Rose principle work:
“The first is where the donor has done everything necessary to enable the
donee to enforce a beneficial claim without further assistance from the
donor... The second is where some detrimental reliance by the donee upon
an apparent although ineffective gift may so bind the conscience of the
donor to justify the imposition of a constructive trust … The third is where
by a benevolent construction an effective gift or implied declaration of trust
may be teased out of the words used.”
(E)
A reminder: how is an effective declaration made by the settlor?
Reading: Hudson, section 2.6, and especially 3.3
These cases have already been considered in relation to certainty of intention.
Jones v. Lock (1865) 1 Ch. App. 25 (no effective declaration).
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