Mr. Levy had made an interest free loan, repayable on demand, to his Company to prevent it becoming insolvent.
Nourse J upheld the finding of the Special Commissioner that there was no settlement in these circumstances.
Before a disposition, trust, covenant, agreement or arrangement can be a settlement it must contain an element of bounty. For that purpose a derivative bounty of the kind conferred by the exercise of a special power of appointment may be enough.
On the other hand, a commercial transaction devoid of any element of bounty is not. The absence of any correlative obligation on the part of him who is at the receiving end of the transaction may be material, but it is not conclusive, in determining whether it contains an element of bounty or not.
If those principles are applied to the facts of the present case it is clear that there was no disposition, agreement or other transaction. it was the simple case of a commercial transaction devoid of any element of bounty, and immaterial that Parkspa did not assume any correlative obligation for the payment of interest or otherwise.
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Trusts and Equity | Trust Remedies Including Tracing Knowing Receipt Trust Dutiies And Powers And Equitable Damages Notes (60 pages) |