Candidate Number: 116380

Advise Charles regarding the

100,000 loan, the 400,000
contained in the building
society account, the company
shares and the 3 million given
to the SRAA.
In 1862, Turner LJ delivered his landmark judgement in the case of Milroy
v. Lord

in response to a plaintiff claiming she was entitled to shares that

were not properly delivered. He affirmed that for a voluntary statement to

be valid and effectual, the settlor must have done everything that was
necessary to be completed2. This followed three examples that are now
the criteria for finding a properly constituted trust the actual transfer of
property to the intended beneficiary, declaring oneself as trustee or
holding it on trust3 - finishing with the infamous maxim there is no equity
in this court to perfect an imperfect gift 4. Unless the donee has furnished
consideration, it is not possible for him to enforce the trust where no
vesting has occurred.
Charles query concerns the constitution of trusts, thus to advise him the
criteria for creating a properly constituted trust will be analysed in each
1 (1862) 45 E.R. 1185
2 Ibid, at 274 per The Lord Justice Turner
3 Ibid.
4 Ibid.

Candidate Number: 116380

scenario. If so, then the intended beneficiary will be able to recover their
property in equity. This will be the overture of the essay if the trusts
have not been constituted then the exceptions to the rule in Milroy will be
discussed and tested to determine if Charles and the other intended
beneficiaries may rely on them. It will finalise with a summary of the facts
and the approach Charles should take regarding each property.

A) CHARLES & 100,000

For a trust to be properly constituted, the three certainties must be
present in addition to the legal title being vested in the trustee. Although
the three certainties have been fulfilled, Charles has failed to provide any
consideration in regards to Lord Marchmain striking off Charles debt,
rendering him a volunteer. Equity holds the maxim equity will not assist a
volunteer 5, however there are situations when a gift or trust that has not
been constituted can still be capable of enforcement; such as donatio
mortis causa and the rule in Strong v. Bird 6. It is possible that Charles can
recover what is left under Strong v. Bird.
The doctrine has traditionally been characterised as an exception to the
principle that equity will not perfect an imperfect gift however it remains
extrinsic. Of all the exemptions to Milroy, it cannot be justified by the
exigencies of the situation in which the donor finds himself such as
donatio mortis causa nor the fact that the perfecting of the gift lied
outside of his control (e.g. Re Rose 7)8.
It is possible to view the 100,000 as either debt as Charles gave no
consideration or a gift following Lord Marchmain disclosing to Charles not
to worry about paying [the] loan back. Despite substantial arguments
5 Milroy v. Lord (1862) 45 E.R. 1185.
6 (1874) L.R. 18 Eq. 315.
7 [1949] Ch. 78, also Re Rose [1952] EWCA Civ 4.
8 Jaconelli, J. 2006. Problems in the rule in Strong v. Bird. Conveyancer and

Property Lawyer, Issue Sep/Oct, p. 435.

Candidate Number: 116380

that Strong only applies to the former 9, the case is able to remedy both
eventualities.
When a testator appoints his debtor as executor, he is no longer liable at
law as there is no equity against him to take the property away 10.
Supplementary, when a gift is incomplete, if the intended recipient is
named executor then its deemed completed as long as an inter vivos gift
is intended, opposed to a testamentary disposition otherwise the intention
would be ineffective as failing to comply with formalities of section nine of
the Wills Act

11

. As Charles was appointed executor, any debt would be

translated to be a gift. Forasmuch a gift, he would again succeed as its

inter vivos to take effect during the donors lifetime 12. Correspondingly
Charles would be able to recover the 100,000 as a gift without being
indebted to Lord Marchmains estate. Despite the rule being approved as
recently as Day v. Royal College of Music 13, its difficult to see why the
mere appointment of a personal representative should tip the scales
against those entitled under will or the law of intestate succession.

B) SEBASTIAN & 400,000

Sebastian provided no consideration to the 400,000, thus creating a gift.
For a gift to be legally effective, the donor must have given donative
intent

14

. There are two categories of gift inter vivos and donatio mortis

causa (DMC). DMC is imperfect as it cannot be completed by the offeror; it

9 Ibid, p. 433.
10 Strong v. Bird (1874) L.R. 18 Eq. 315 at 318-319 per Sir G. Jessel, M.R.
11 Wills Act 1837, s.9.
12 Garner, B. A., 2009. Blacks Law Dictionary: 9th ed. St Paul, MN: Thomson

West.
13 [2014] Ch. 211.
14William Ferguson v. The Commissioner for Her Majestys Revenue & Customs

[2014] UKFTT 433 (TC) at 27 per Kevin Poole, J.

Candidate Number: 116380

will only take effect after his death. As Lord Marchmain is stricken with a
terminal illness, it will be argued that Lord Marchmain intended a DMC
gift.
Authorities generally dictate three requirements for a valid DMC although
they have varied over time. The original formulation lies in Cain v. Moon15,
although later formulations have arisen, requiring modification of the
original formula. The accustomed approach follows that DMC must have
been made in contemplation and conditional upon the donors death and
the delivery of the indicia of title16.
There is no requirement of the donor being in extremis, but with death
within the near future17. The justification lies in Hedges v. Hedges18;
when a man lies in extremity or being surprizes with sickness 19, he
would not have an opportunity to make his will. This is mirrored by
Marchmain seeing death in the near future due to his terminal illness. It is
also conditional that no vesting occurs until the death of the donor 20. This

15 [1896] 2 Q.B. 283, the original formulation was provided by Lord Russell of

Killowen who gave the criteria of; (1) gift made in contemplation of death (2)
delivery to the donee (3)made under circumstances as shew that the thing is to
revert to the donor should he recover.
16 A non-exhaustive list of recent cases that have followed the outlined criteria

includes King v. Dubrey [2014] EWCH 2083 (Ch), Valle v. Birchwood [2014] Ch.
271 & Re Lillington (Deceased) [1952] 2 All E.R. 184.
17 Re Cravens Estate (No. 1) [1937] Ch. 423 at 426 per Farwell, J.
18 (1708) 25 E.R. 9.
19 Ibid, per Lord Cowper.

Candidate Number: 116380

allows the transaction to be revocable at any time before the death of the
testator.
Finally, there must be a passing of dominion 21; as it is money in a building
society it would be classed as intangible property thus the transfer of
indicia of title suffices22. Evershed MR in Birch v. Treasury Solicitor
reiterated that symbolic delivery is not enough; there must be transfer of
the subject matter or something [similar]23. It was held in Re Weston

24

that a savings book could be a subject matter with proper delivery 25,
however the Birch v. Treasury Solicitor allows some accounts to be valid
whilst others not. As the sort of account is not stated, it cannot be
determined if the DMC is valid. This fault is likely due to the laws flirtation
with DMC in addition to its inconsistency and absence of clearly
propounded principles26.

20 Examples from cases include The house is yours, Margaret in Sen v.

Headley [1991] Ch 425 & You can keep the keys, I wont be driving [the car]
anymore in Woodard v. Woodard [1995] 3 All E.R. 980.
21 Re Cole [1964] 1 Ch 175, CA.
22 Birch v. Treasury Solicitor [1951] Ch. 298.
23 Ibid, at 308 per Evershed MR.
24 [1902] 1 Ch. 680.
25 Ibid, at 685 per Bryne, J.
26 Samuels, A. 1966. Donatio mortis causa of a share certificate. Conv, 30(295),

p. 189.

Candidate Number: 116380

C) CORDELIA & COMPANY SHARES

As the shares in Marchmains company have not gone through all the
required formalities, the trust is not fully constituted. For shares to be
transferred validly such that a trustee is vested with the legal title, the
shares must be registered in the name of the trustee27.
Marchmain completed everything required of him; the reason the trust
remains incomplete is due to the negligence of Rex. Justifiably, it is
possible to rely on the rule of Re Rose28. The case turned upon a situation
in which the transfer of shares was ineffective not to any transgression of
the settlor, but due to the directors of the company retaining the right to
veto the transfer. Milroy was distinguished on the basis that the settlor
had not done all in his power to perfect the gift. The case held that if the
donor had done everything for him to make the gift then equity will deem
an

equitable

interest

in

the

relevant

property

to

have

passed

automatically29. This is defended by Lord Evershed who stated how could

he deny the proposition that he had transferred the shares?

30

A more factually similar case is that of Pennington v. Waine

31

; Mrs.

Crampton (C) wished to transfer 400 shares in her company to her

27 Convention on the Law Applicable to Trusts and on their Recognition, Ch. I,

Art. 2(b).
28There are two cases under the name of Re Rose with slightly differing facts
however the ratio and principle remains the same; [1952] EWCA Civ 4; [1949] Ch 78.
29 Re Rose [1952] Ch. 499 at 509 per Evershed MR.
30 Ibid at 512 per Evershed MR.
31 [2002] EWCA Civ 227.

Candidate Number: 116380

nephew. She requested Mr. Pennington (P) to prepare a transfer form

which she filled and handed back to P, who then put it on file but failed to
continue his required duties. It was held, inter alia, that the gift was
perfect as there was nothing else the donor could do 32 and in the
circumstances it would have been unconscionable for C to have recalled
the gift33. The maxim has been approved recently in Shah v. Shah

34

It can be found that Cordelia has a right to the shares; Marchmain

completed everything required of him to transfer the shares; equity will
intervene and remedy a donor or donee who had done everything within
their power necessary to transfer the gift, even if acts to be performed by
third parties had not been completed35. It would be reasonable to advise
Charles that Cordelia would be entitled to the shares, although it has been
suggested that it is difficult to predict the chances of success; much
seems to depend on how the court perceives the justice of the individual
case36. On the facts given, it would appear that the party would succeed,
but further checks would need to be completed to ensure that everything
was in place or it may be subject to failure an example being Zeital v.

32 Ibid, at 65 per Arden LJ.

33 Ibid, at 66 per Arden LJ; this and the above was unanimously approved by the

other sitting judges Clarke LJ at 70-71 and Schiemann LJ at 117-118.

34 [2010] EWCA Civ 1408.
35 See Pennington v. Waine [2002] EWCA Civ 227 & Shah v. Shah, Ibid.
36 McGhee, J., 2002. Alls Fair The Relationship between completely constituted

gifts and equity. Trusts and Estates Law Journal.

Candidate Number: 116380

Kaye

37

where the case failed due to the donor not being the registered

owner of the shares.

D) SRRA & 3,000,000

Lord Marchmain intended to give 3 million to the SRRA but lapsed into
unconsciousness, therefore the formalities required to create a constituted
trust have not been met. The scenario closely resembles that of T
Choithram International SA v. Pagarani

38

which brought rise to the

extension to the Re Rose principle described above. It is possible for

Charles to rely on this recent extension to ensure the SRRA receives the
3,000,000.
In Choithram, a man on his death bed and sought to declare an inter vivos
trust over his property. One of nine trustees, he failed to transfer the legal
title to the other eight. Under ordinary trust laws, the trust would not have
been validly constituted however it was held to be valid; the rationale
being Re Rose could apply so that the settlor could be taken to have done
all that was necessary to create a trust, therefore equitable interest in the
property passes automatically.
Despite the case being seen as the courts doing nothing more but trying
to give effect to a dying mans wish in spite of technical rules 39, the case

37 [2010] EWCA Civ 159.

38 [2001] 1 WLR 1.
39 Hudson, A. 2014. Doing everything necessary, not an incompletely constituted
trust. In: Equity and Trusts. Oxon: Routledge, p. 442.

Candidate Number: 116380

shows that the court prefers to give effect to a deceased intentions rather
than have a trust over a particularly valuable properly lapse into residue.
Choithram, with Re Rose, displays willingness on the court to depart from
strict legal formalisms and, in that sense, is in line with the approach of
Lord Wilberforce in McPhail v. Doulton

40

concerning certainty of objects in

trust powers and of Lord Cross Chelsea in Dingle v. Turner

41

concerning

public benefits in certain charitable trusts.

The maxim equity will not assist a volunteer is churned out as a formula
much too readily as a cloak for the avoidance of thought 42. It has been
suggested that the cases have brought about a new maxim; [a]lthough
equity will not aid a volunteer, it will not strive officiously to defeat a
gift43, which may possibly become a classic dictum alongside the more
conventional remarks of Turner LJ in Milroy and of Lord Cransworth in
Jones v. Lock

44 45

40 [1971] A.C. 424.

41 [1972] A.C. 601.
42 Hopkins, J. 2001. Constitution of trusts a novel point. Cambridge Law Journal,
60(3), pp. 485.
43 T Choithram International SA v. Pagarani [2001] 2 All E.R. 492 at 501 per Lord
Browne-Wilkinson; quoted in Pennington v. Waine [2003] EWHC 2691 (Ch) at 52 per
Arden LJ.
44 (1865-66) L.R. 1 Ch. App. 25.
45 Hopkins, J. 2001. Constitution of trusts a novel point. Cambridge Law Journal,
60(3), pp. 485.

Candidate Number: 116380

Although it would seem logical to advise Charles to rely on Re Rose and

assert Marchmain did everything in his power to effect the trust, the law is
too unclear to give such dry and cut advice. The decisions of Pennington
and Choithram appeared to be a godsend that rescues donees in sticky
situations46 however the recent cases of Kaye v. Zeital
Pulbrook

48

47

and Curtis v.

that attempted to follow that route failed. This has brought the

application of Re Rose into great confusion, Briggs J commenting how he

reached his judgement without any great comfort that the existing
rules serve any clear identifiable or rational policy objective 49.
Furthermore, Choithram comes to the aid of an inequitable transfer into
settlements only when the settlor is one of the initial trustees 50. Its
unclear if Marchmain is indeed a trustee due to the wording then
declared in front of the other trustees which can infer he is a trustee,
meaning he can rely on the extension of Re Rose. Due to this uncertainty,
as well as the vagueness of the law, its near impossible to determine in
Charles would be successful.

46 Morris, J. 2003. Questions: when is an invalid gift a valid gift? When is an

incompletely constituted trust a completely constituted trust? Answer: after the
decisions in Choithram and Pennington. Private Client Business, Volume 6, pp. 403.
47 [2010] EWCA Civ 159.
48 [2011] EWHC 167 (CH).
49 Curtis v. Pulbrook [2011] 1 BCLC 638 at 47 per Briggs, J.
50 Morris, J., 2003. Questions: when is an invalid gift a valid gift? When is an
incompletely constituted trust a completely constituted trust? Answer: after the
decisions in Choithram and Pennington. Private Client Business, Volume 6, pp. 397.

Candidate Number: 116380

In advising Charles, it would be acceptable to inform him that he would be

likely to claim the 100,000 as a gift relying on Strong v. Bird as well as
being able to complete the incomplete transfer of shares although with
this scenario caution will need to be taken as the facts given are not
comprehensive. The following two scenarios are extremely vague, if not
due to the facts of the case but because of the law. In advising Charles in
these areas, more information will need to be presented as to be certain
that the facts of his case meet the criteria for the exception of law will
not perfect an imperfect gift as well as caution particularly in the case
concerning SRRA. The law surrounding the area seems to shift depending
on the case, thus the result will be dependant purely on the court that
judges the case.
Word count: 2003.

Candidate Number: 116380

BIBLIOGRAPHY
Birch v. Treasury Solicitor [1951] Ch. 298.
Birks, P., 2000. English Private Law, Vol l. 1 ed. Oxford: Oxford University Press.
Cain v. Moon [1896] 2 Q.B. 283.
Curtis v. Pulbrook [2011] 1 BCLC 638.
Day v. Royal College of Music [2014] Ch. 211.
Dingle v. Turner [1872] A.C. 601.
Garner, B. A., 2009. Black's Law Dictionary. 9th ed. St. Paul, MN: Thomson West.
Grimke, J. F., 1797. The duty of executors and administrators ... shewing also who
are entitled by law to be the administrators of an intestate person : with full and
clear directions to a man's relations how his estate will be distributed among them,
according to the laws.... 1st ed. New York: T. and J. Swords.
Hedges v. Hedges (1708) 25 E.R. 9.
Hopkins, J., 2001. Constitution of trusts - a novel point. Cambridge Law Journal,
60(3), pp. 483-486.
Hudson, A., 2014. Perfecting Imperfect Gifts. In: Equity and Trusts. Oxon: Routledge,
p. 447.
Jaconelli, J., 2006. Problems in the rule in Strong v Bird. Conveyancer and Property
Lawyer, Issue Sep/Oct.
Jones v. Lock (1865-66) L.R. 1 Ch. App. 25.
King v. Dubrey [2014] EWCH 2083 (Ch).
McPhail v. Doulton [1971] A.C. 424.
McGhee, J., 2002. Alls Fair ... The relationship between completely constituted gifts
and equity. Trusts and Estates Law Journal.
Milroy v. Lord (1862) 45 E.R. 1185.

Candidate Number: 116380

Moffett, W., 2014. Deathbed gifts in rude health: the recent case of Vallee v
Birchwood. Trust & Trustees, 20(5), pp. 459-468.
Morris, J., 2003. Questions: when is an invalid gift a valid gift? When is an
incompletely constituted trust a completely constituted trust? Answer: after the
decisions in Choithram and Pennington. Private Client Business, Volume 6, pp. 393403.
Pennington v. Waine [2002] EWCA Civ 227.
Re Cole [1964] 1 Ch 175, C.A.
Re Lillington (Deceased) [1952] 2 All E.R. 184.
Re Rose [1949] Ch. 78.
Re Rose [1952] EWCA Civ. 4.
Re Weston [1902] 1 Ch. 680.
Roberts, N., 2013. Donationes mortis causa in a dematerialised world. The
Conveyancer and Property Lawyer, Volume 2, pp. 113-128.
Samuels, A., 1966. Donatio mortis causa of a share certificate. Conv, 30(295), p. 189.
Sen v. Headley [1991] Ch. 425.
Shah v. Shah [2010] EWCA Civ 1408.
Strong v. Bird [1874] L.R. 18 E.q. 315.
T Choithram International SA v. Pagarani [2001] 1 WLR 1.
Valle v. Birchwood [2014] Ch. 271.
Wills Act 1837.
Woodard v. Woodard [1995] 3 All E.R. 980.
Zeital v. Kaye [2010] EWCA Civ 159.