This is an extract of our Constitution document, which we sell as part of our GDL Equity and Trusts Notes collection written by the top tier of Cambridge/Bpp/College Of Law students.
The following is a more accessble plain text extract of the PDF sample above, taken from our GDL Equity and Trusts Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Topic 4 - ConstitutionFinal component in creation of express trusts = constitution (movement of legal title from S to T)Trust created through trustees = Settlor must declare trust and vest property in trustees ('constituting' the trust). 'Completely constituted' = when trust property is vested in trustees. Then binding on Settlor who cannot change their mind and revoke the trust (unless trust specifically authorises revocation). o Beneficiaries have enforceable rights even though given no consideration for trust.?
'Incompletely constituted' = when trust property not vested in trustees. o If no consideration given it is void (some exceptions to this). Equity will not compel Settlor to make trust completely constituted (i.e. perfect an imperfect gift). Maxim that 'equity will not assist a volunteer'. o If consideration given - May be specifically enforced. Maxim 'equity regards as done that which ought to be done'.Case = Milroy v Lord o Settlor executed voluntary deed to transfer shares in Bank to Lord to be held for plaintiffs. Shares legally transferred by appropriate transfer form only (not deed), followed by registration of new owner in company, which was never done. o Settlor gave Lord share certificates, who had general power of attorney to act on behalf of settlor to register shares. Dividends received by Lord and distributed to plaintiffs on Settlors death. o = CoA held shares not vested in Lord, no trust of the shares, despite Settlors clear intention to create one.
? Render voluntary settlement valid/effectual to transfer property and make settlement binding:
? Settlement effective:
? 1. Transfer property to person intended = provision effectual.
? 2. Transfer property to trustee for purposes of settlement =
? 3. OR, declares he holds it in trust for purpose of settlement
? 4. AND, if property personal - trust may be declared in writing or by parole (oral declaration)
? Provision binding:
? Must use one of the methods above, as not equity for 'imperfect gift'.If settlement intended to be effectuated by one of the modes above = Court will not give effect to it by applying another mode.
? I.e. if intended to take effect by transfer - court will not hold intended transfer to operate as declaration of trust.
? = Otherwise every instrument would be effected by being converted into perfect trust. Cannot happen.
Methods of benefitting another by transferring property (different types):
? To vest trust property in trustees, it must be transferred using correct method:
? ? ? ? 1. Land
?? ? ?Transfer legal estate in land = Requirements S52(1) LPA 1925 o Transfer must be in Deed S1 LP(MP)A 1989
[Richards v Delbridge]
? Witnessed by 1+ independent witnesses
? Described as 'Deed'
? Delivered o Registration ss4/27 LRA 2007 (both need to be registered)
? Title Unregistered land = Deed is called conveyance.
? Title Registered land (HM Land Registry) = Deed called transfer.
? = Legal title to doesn't pass until registration of transfer at Land Registry!?Deed used to grant lease (unless Short Lease not >3yrs) Assignment = Deed used to transfer/'assign' existing lease. Transfer subsisting equitable interest in land = Settlor must comply with S53(1)(c) LPA 1925
? ? ? ? 2. Shares in UK Incorporated Company
? Stock Transfer Act 1962 = shares transferred by Transferor signing 'stock transfer form' in favour of transferee. o Transfer must be registered in share register of company = existing share certificates and 'stock transfer form' are sent to company's registrar. o = Title only passes on registration of transferee as new shareholder.?
Shares of Public Limited Companies (plcs) = Director cannot refuse to register transfer of shares. Shares of Private Limited Companies = Frequently provision in company articles of association (part of constitution) restricting transfer of company's shares. They may also refuse to register the transfer (Re Rose).
? ? ? ? 3. Chattels?
Transferred by either Deed of gift or o Need Intention to make gift o And actual delivery (Re Cole) o =then valid lifetime gift Accompanied by transferor intending to transfer them.
? ? ? ? 4. Bills of Exchange
?? ? ?Cheques (other Bills of Exchange) made in favour of transferor, can be transferred to 3rd party, other than named payee by transferor endorsing cheques i.e. signing his name on back of cheques (Jones v Lock).
? ? ? ? 5. Money
?? ? ?Transferred by delivery = writing a cheques an handing it over to payee doesn't transfer the money to them until cheques has been cleared.
?? ? ?Cheque = Mandate (instruction) to payers bank to transfer money to payee. If payee has given no consideration for the cheques, they cannot enforce payment.
? ? ? ? 6. Chooses in A
?? ? ?Debts and other 'chooses in action' (rights under bank accounts) = transferred by writing S136 LPA 1925 o Notice in writing given to debtor/other party.
? ? ? ? 7. Equitable Interests
?? ? ?Transferred by signed writing S53(1)(c) LPA 1925
Methods of conferring a benefit on another:Legal Interests: o 3 ways Settlor (Donor) may, during lifetime, confer benefit of property to another Beneficiary (Donee) o 1. S makes absolute gift to B; if made effectually, legal title will vest in Donee, wo will also enjoy property beneficially. o 2. Settlement by transfer = S may transfer property to trustees to hold on trust for B. Where S will part with legal title to property.
? Transfer requires S53(1)(b) LPA 1925 o 3. Declaration of a Trust = S may retain legal title in property but declare he holds it on trust for B. Settlor ceased to be beneficial owner of property, but remains legal owner.
? Settlor declares themselves trustee, declaration requires S53(1)(b) LPA 1925Equitable Interests: o Romer LJ in Timpson's Executors v Yerbury = Equitable interests could be disposed by their owner in 4 ways o Note - Settlor may confer on trustee power to create new equitable interest by declaring new trusts for persons within their power:
? Land is involved, declarations fall in S53(1)(b) LPA 1925
Ineffectual Transfer - 'Equity will not perfect an imperfect gift' or an incompletely constituted trust:General Rule = if attempted transfer of property to trustees imperfect, the trust is not 'completely constituted'; since equity will not assist a volunteer = no effective trust created. o
i.e. If Settlor intends to use 1 method to confer benefit, but fails to do effectually = equity will not save the gift! Equity will not construe intended ineffectual method for another method.
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