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There are two ways S may set up a trust:

declare himself trustee, or appoint someone else to act as trustee.

For (i), S need only effectively declare his intention to create a trust.
For (ii), S must declare the trust AND transfer his interest in the trust property to the prospective trustee - this second step is constitution of the trust.
Note that, in a completely constituted trust, the beneficiary can enforce the trust regardless of whether the beneficiary is a volunteer or not (Paul v Paul); the principle of
'equity will not assist a volunteer' does not apply once the trust is fully constituted.

1. Transfer of (legal) title a. The rules for transfer differ with the type of proprietary interests:
i. For tangible personal property, physical delivery is sufficient (or deed of gift)

1. Where there is a contract for the sale of specific or ascertained goods, the property in them transferred to the buyer at such time as the parties to the contract intend it to be transferred
(s17 Sale of Goods Act 1979)
a. 'Sale' is defined by s2(1) SGA as "a contract by which the seller transfers or agrees to transfer the property goods to the buyer for a money consideration".
ii. For land, a deed is required ( s52(1) LPA 1925)

1. For registered land, then the transferee must be registered as the new proprietor (s27 LRA 2002)
iii. For shares, either (i) completion of a share transfer form and registration by the company OR (ii) electronically (s1 Stock Transfer
Act 1963 and ss770-772 Companies Act 2006)
iv. For debts and other choses in action, writing followed by notice to the debtor is required (s136 LPA 1925).
v. The payee of a cheque can transfer his right to payment by endorsing the cheque (signing its back and writing the name of the new payee,
Jones v Lock).
vi. Where S's interest in the property is equitable, then its transfer must be made in writing and signed by the transferor (s53(1)(c) LPA 1925).
vii. A person can hold their entitlement under a trust on trust (this is called a sub-trust, and can be created: by a declaration of sub-trust;
OR if the principle under which the constructive trust arose required there to be a sub-trust)

1. Note that the trustees might instead hold the covenant on trust for Mark (i.e. the rights under the covenant, see below)

2. Imperfect transfer of title a. While doing so might better give effect to S's intentions, a failed outright transfer will not be interpreted as a self-declaration of trust simply to ensure
On the facts of Milroy v that a gift is effective  an imperfect gift is NOT an effective declaration of
Lord, S intended to trust (Milroy v Lord).
make Lord a trustee of i. (NB: 'imperfect gift' = 'ineffective outright transfer': where S tries but shares for Milroy. While fails to transfer his property)
S signed a deed with ii. Turner LJ in Milroy v Lord set out the 3 ways to pass the benefit of
Lord, but S never property to someone else:
transferred the shares to Lord; when S died the

1. Legal transfer of title to the recipient (gift)
shares remained in his

2. Transfer of title to T for B (trust)
name - the trust had

3. Self-declaration of trust for B (trust)
not been constituted.
iii. Turner LJ: "[The case law establishes that] if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of
FACTS of Choithram v these modes. If it is intended to take effect by transfer, the Court will
not hold the intended transfer to operate as a declaration of trust,
S wanted to set up a for then every imperfect instrument would be made effectual by foundation to which he being converted into a perfect trust."
would transfer much of his

1. Maxim: 'equity will not perfect an imperfect gift'. Trusts wealth. A trust deed was should not be used to save gifts from being defeated. 'Equity drawn up to such effect,
will not assist a volunteer'.
with S himself as one of the iv. Webb: This approach seems overly strict, especially when one
Ts. S announced that he considers that S likely does not have any particular mode in mind, but had transferred his wealth rather just an intention to benefit B.
to the foundation, but died

1. (Given the rule in Saunders v Vautier this analysis makes before executing the sense.)
necessary documents to v. BUT: The UKPC avoided this harsh rule in Choithram v Pagarani by effect the transfer of legal title to the Ts named in the holding that, in the context, S's announcement could be interpreted deed.
as showing an intention to make a trust rather than a gift, and since S
himself was one of the Ts, no transfer of title was needed to constitute the trust, because title to the trust property was already vested in one of the Ts - the trust property need only be vested in one of the trustees to constitute the trust. - interpreted S's words as a self-declaration (benevolently construing it as such)

1. (Thus, Choithram is not actually an exception to the rule that equity will not perfect imperfect gifts.)

2. Re Ralli went even further holding that as long as T receives legal title to the property, the trust will be constituted,
regardless of the reason why title is vested in T.
a. On the facts, H was entitled to T's property under T's will. By her marriage settlement, H covenanted to settle property subsequently acquired in favour of I
(her sister's) children. H later died, leaving I's husband as the sole surviving trustee both of T's will and H's marriage settlement. The court held that the property was held upon the trusts of the marriage settlement,
rather than on trust for those interested under H's will,
because the trust was properly constituted.
b. Webb: S covenanted to transfer to T her equitable interest under the second trust, but what T ended up receiving was the legal title to the trust property 
unclear if the trust was ever properly constituted.
vi. One must note the earlier case of Re Brooks, where S had covenanted to transfer to Ts all interests he has and would receive under his mother's trust. Both trusts had the same Ts. But when S purported to create the trust, he had no interest in the money  S was purporting to assign a mere expectancy, and so the trust was not created.

1. Are Re Brooks and Re Ralli inconsistent?
a. Re Ralli  trust. Re Brooks  no trust.
b. In both cases, both the first and second trust had the same Ts, so the trust property coincidentally came to be vested in T.
c. Distinguish the cases:
i. Re Brooks concerned a mere expectancy; the purported settlor did not yet have any interest in property he would later receive under his mother's trust.
ii. Re Ralli concerned an equitable interest in the residue of the purported settlor's father, which the courts have held is not uncertain subject matter.
a. The key issue (of whether a trust was properly constituted because T coincidentally already had title to the trust property) was never addressed or even considered in Re Brooks  doubtful whether Re
Brooks should be treated as an authority opposed to
Re Ralli.
i. The reasoning in Re Brooks was instead that the person was trying to assign a right that they did not have.
b. When will the court impose a constructive trust?
i. Lysaght v Edwards - As soon as there is a valid contract for sale, "the vendor is a constructive trustee from the moment the contract is entered into". However…

1. BUT: This ONLY applies where the sale is of specific property
AND the obligation is one which the court will order to be specifically performed (e.g. Shaw v Foster, Lysaght v
Edwards, Walsh v Lonsdale)  this is an application of the maxim 'equity regards as done that which ought to be done'
(i.e. if the matter were to come to court, then applying the maxim, equity treats the parties as though the transfer has already occurred, with the effect that B becomes the owner in equity under a constructive trust).
a. NB: The important criterion for 'specific property' is the uniqueness of the property, e.g. land, or shares in a private company (which are not for sale on a public market).
b. The effect of the maxim is to convert A's personal right that A transfer him property into an interest in that property  this may make no difference between A
and B, but it makes a big difference when it comes to third parties.
ii. Re Rose (CoA) - If S has done everything in his power to complete the transfer, then the property will be held on constructive trust for the intended donee (applied by the CoA in Mascall v Mascall in relation to an outright gift of title to registered land - the DONEE had received all the documentation to register but had not put it in; the donee had everything they needed to have in order to be able to complete the transfer; so there was a trust).

1. The court in Re Rose held that the beneficial interest in the shares passed upon execution of the share transfer forms by S,
and so the shares were held on constructive trust by T. Once S
handed over the transfer forms, she was no longer at liberty to cancel the transfer, so S had done everything in her power to effect the transfer and could not have prevented it. This is how the court DISTINGUISHED Milroy v Lord - in that case, S
attempted the wrong method of transfer, so had not done everything required of him.
a. Thus the question here was NOT whether equity should intervene to correct a defective transfer, but rather to accelerate a transfer that was as yet incomplete but in no way defective.
i. On this view, equity is not perfecting an imperfect gift, and not diluting the principle in
Milroy v Lord.

2. Justification for the rule in Re Rose? - may help to interpret its scope (and thus to criticise the rule in Pennington)
a. Giving effect to S's intention iii. BUT: Even if the donor has NOT done everything in his power to complete the transfer, a constructive trust will arise in favour of the donee if it would be 'unconscionable' for the donor to revoke the transfer (Pennington v Waine, CoA, again involving an imperfect gift of shares - filled in share transfer form but had not been handed over; applying Mascall v Mascall, had not been handed over, so Re
Rose rule does not apply, but Court in Pennington made this exception / separate point.)

1. This actually does dilute the Milroy v Lord principle, as the gift is imperfect.

2. Swadling: The court relied on Choithram v Pagarani as authority, but that was a case of an express trust, where it would of course be 'unconscionable' to resile from a perfectly valid trust. But Pennington was a case of a constructive trust,
as the purported donor did not make a self-declaration of trust.

3. Briggs J in Curtis v Pulbrook analysed Pennington, claiming that it as decided on the basis of detrimental reliance as the cause of unconscionability: there was "sufficient detrimental reliance by the donee [the nephew], who had agreed to become a director of the subject company upon an assumption that he had received an effective gift of qualifying shares in it".
a. BUT: Davies & Virgo: It only would have been
We only allow detrimental had the nephew assumed the onerous proprietary estoppel duties placed upon a director. But it is not clear that when there's detrimental the donee in Pennington actually suffered any reliance, so why should detriment at all, or that losing his directorship would we allow Pennington if there isn't detrimental leave him in a worse position  this position is reliance?
controversial. Sounds like legal realism. Moreover,
detrimental reliance was not the basis on which
'What does the court in
Pennington was reasoned.
Pennington mean by b. Briggs J asserted that Pennington could not have been
'unconscionable' if the decided on the rule in Re Rose, as the 'settlor' had not main definition we have done all that she could have done, as she had not is detrimental reliance
(which we get from handed the completed transfer form to the company proprietary estoppel)?
(she merely handed it to her auditor). Nor could a
"benevolent construction" of an effective gift or implied declaration of trust be "teased out of the words used" in Pennington.
c. Nor could it be based on d. Jenny: So no real basis on which we can say Pennington actually involves unconscionable conduct - why shouldn't S be able to renege before she hands over the forms?

4. Webb: This is problematic. Clarke LJ effectively treated an imperfect gift as creating a trust (which goes against the rule in
Milroy v Lord) and Arden LJ gave no requirements for

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