Regarding Milroy v Lord[1]. Those rules fall into two

Regarding the
general principle of equity, in the constitution of trust, ‘equity will not
assist a volunteer in perfecting an incompletely constituted trust’. This maxim
is part of the general principles of the English law of consideration. Without
a perfectly constituted trust, the beneficiary will not acquire rights and
equitable interests in the promised property. The fundamental rules for how a
trust can be completely constituted were set out by Turner LJ in Milroy v Lord1.
Those rules fall into two methods of constitution: firstly, when the settlor
has vested the legal title to the trust property in the trustees. Secondly,
when the settlor has declared that he now holds the property as a trustee.
Thus, a completely constituted trust exists only when the settlor has actually
vested the trust property in the trustee(s). It is, then, not sufficient for a
settlor to just “intend” to create a trust.

            Nonetheless, as equity sometimes
trumps sometimes the law and is always evolving, the law of equity seems to
enable a certain number of exceptions and sometimes permits to “assist a
volunteer” in perfecting an imperfect trust.

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            Then, we will consider in our analysis,
firstly the general rule of the constitution of a complete trust, notably in
regards of the rules set up in Milroy v Lord, before considering the extent to
which, exceptions exist to trump that principle and help a volunteer in
perfecting an incompletely constituted trust.

 

 

 

 

 

 

            The general rule in equity held that
to be valid a trust needs to be completely constituted following the rules
established in the case of Milroy v Lord. In this later, Turner LJ held that:
“The settlor must have done everything which (…) was necessary to be done to
transfer the property and render the settlement binding upon him (…)” He, then
has to transfer the property to the trustee “for the purpose of the settlement”
or has to hold the trust himself, and because equity cannot perfect an
imperfect trust. Indeed, an imperfect attempt to create a trust using third
party as a trustee will not be interpreted as a declaration by the settlor of
himself as trustee.

            Then if the settlor has failed to
create a perfect trust, the court will not create a trust that was not intended
by the settlor. When the trust is imperfect, the intended beneficiary does not
necessarily acquire an interest in the property, as seen in Milroy.             So, if the settlor does not succeed
to set up a trust property and did not comply with the requisite formalities,
then the court will not intervene to save it , as seen in the case of Jones v
Lock.2
To be perfectly constituted, the trust needs to be binding on the settlor and
should clearly define what interest are to be taken by the beneficiaries. When
the trust is not correctly established, beneficiaries have then no equitable
interest, in such circumstances, they are volunteers. A trust will not be completely constituted until the
legal title has been vested in the intended trustees. Then, it may fail if it
does not follow the legal rules unless all the formal steps to vest the
property in the trustee have been followed. 
Where there was an agreement to create a trust but there was no legal
transfer of the title, the trust is incomplete and there is no possibility to
enforce it as the requirement for constituting a trust were not satisfied. In
Milroy, what makes it an imperfect trust is that there was no intention for the
settlor to create a trust as the property was not vested in the name of the
transferee. Moreover, for an effective constitution of trust legal title must
be transferred to the trustee. In case of fraud, equity will not permit common
law to be used as an engine of fraud as seen in the case of La Rochefoucauld3.

 

            The principle held in Milroy v Lord4,
 was beside confirmed by Jessel, in the
case of Richards v Delbridge5,
that a man may transfer his property only in one of two ways : first he may do
such acts as amounted in law to a conveyance or assignment of the property, and
thus completely divest himself of the legal ownership, in which case the
transferee takes it beneficially or on trust, as the case may be, or the
legal owner may by one or other of the modes recognised as amounting to a valid
declaration of trust, constituting himself as a trustee. In the case of
Richards v Delbridge6,
the court confirmed the decision in Milroy that a purposed gift will not save
(or perfect) an imperfect gift by creating a trust. Thus, to be perfectly and
correctly constituted, an express trust needs to see the settlor declare
himself a trustee of the trust  or
transfer to trustees to hold on trust, as confirmed by Lord Cranworth LC in the
case of Jones v Lock,7
that if there is no valid declaration of trust to be held in favour of the
trustee, then the trust fails. Therefore, an imperfect transfer will not give
rise to a valid constitution of trust. In this case, no trust was created, as the grandfather did not  declare himself a trustee of the lease for
the grandson, therefore the court will not construe an ineffectual transfer as
a valid declaration of trust as supported by Maitland8.

            Consequently, as analysed by
Halliwell9,
the case of Milroy sets up three methods to establish a settlement, “by way of
gift, by way of transfer to trustee to hold on trust or by declaration of
trust”. Therefore, if it is not following one of those three methods, it will
fail as equity does not assist a volunteer in perfecting an imperfect trust.

 

            This principle is applicable to both
imperfect gifts and trusts and can cover two situations; when a person promises
an outright gift of property rather than promises to create a trust of it, or
where a person promises to give property to others for them to hold as
trustees. Because, generally a trust is created by the settlor without
consideration (volunteer) being promised by the beneficiaries. If so, the
beneficiaries under a trust have also been promised a gift. Thus, whether it is
a straight gift or a gift in the form of a trust, equity will not assist a
person (volunteer) to obtain it unless, it fits the frame of the following exceptions.
However, the court have held a formal declaration of trust to be effective as
in the case of Paul v Constance10
where Mr Constance clearly stated that the money won from the Bingo, was “as
much yours as mine”. The court held in these words, supported by evidence of
the transactions in the account, established that Constance intended to declare
himself a trustee of the money for himself and the plaintiff jointly. This is
one of the numerous exceptions that equity allows in perfecting an imperfect gift
or trust in the interest of the trustees and or beneficiary.

 

 

 

 

            It is true that there exist some
exceptions which enables equity to assist a volunteer in perfecting an
incompletely constituted gift which are also applicable to trusts and where
equity may overlook a defective transfer and then “perfect an imperfect trust”.
We will consider here, only a restricted number of them: the “every effort
rule” from Re Rose, the exception of unconscionability and the ‘Donatio Mortis
Causa’ situations as exceptions to the maxim that “equity will not assist a
volunteer in perfecting an imperfect trust”

 

            In the case of Re Rose11,
the court held that the effective date was when Rose executed the transfer as
by then he had done everything in his power to transfer the property (“every
effort rule”). This case has then completely questioned the position taken by
Turner LJ in Milroy. In Re Rose, Evershed MR held that the principle that if a
gift “is intended to take effect by transfer the court will not hold the
intended transfer to operate as a declaration of trust” only applied where the
transfer was incomplete because of failure to comply with the appropriate
formalities. In the case of Re Fry,12
the transferor had completed forms to transfer title and sent the forms to be
registered but died before the consent was given. The court held that the
transferor still held power of the shares and had not done all that was
required to transfer them. So the trust failed as it was imperfect. Indeed, we
can conclude that courts will perfect the transfer when the transferor can no
longer change his or her mind and the property has been taken out of the
control of the transferor, as established in the case of Mascall, where the
pending acquisition by the son was considered as constructive declaration of
trust, concluding that no written declaration was needed.13

But, this exception
to Milroy was heavily criticized by Peter Luxton, who considered that these kind
of situations arise disputes and litigation between family members, when imperfect
gifts or trusts, whilst ineffective at law are perfected in equity. He said it
is too arbitrary as it lies “on the conscience of the donor to justify the
imposition of constructive trust”14.
He adds, that it was unclear what “donor has done everything necessary to be
done” means in concrete.

This is an
exception of the principle held in Milroy, where the trust has been held to be
completely constituted when the settlor has done everything he could to
transfer the property trust even though the transfer is not complete until some
other has done a particular act.

 

 

                   But the rule of Milroy was also
debated by Arden LJ and Clarke LJ, where in the case of Pennington v Waine15,
the court held that the principle that equity will not assist a volunteer was
looking too “hard-edged” and was not permitting “much exception” leading to
inconsistent equity policy and “harsh and seemingly paradoxical results” by not
favouring the beneficiary and enabling the testator to change his mind. Making
the transfer ineffective and preventing the trustee getting what he was suppose
to get because of an uncertain or unclear intention of the testator. Hence the
development of a certain number of exceptions to the equitable maxim.  In this case, the court tends to take a more
liberal view of the requirement for consideration and gave a more relaxed rule
on the application of the rule in constitution of trusts. undeniably, the rule
in Pennington v Waine, is a sort of extension of the Re Rose principle, where
the Court of Appeal held that there was clear evidence of the intention of Mrs
Crampton to make an immediate gift of the shares and then it would have been
unconscionable to allow her to change her mind as criticised by Hudson16.

 

 

            The rule in Strong v Bird17
 can be applied to both trusts and gifts.
undoubtedly, in Strong v Bird, the settlor failed to transfer the property
directly to the intended trustee but it reached him by a different, indirect
route. In this case the transfer was imperfect because it was incomplete. To be
perfected, the trust requires to have a clear intention to transfer, the
intention remains unchanged until death and the intended transferee obtains
legal title by appointment as the executor. The case of Strong v Bird is then,
an extension of the “every effort rule” as an exception to the equitable maxim.
It applies, when having a continual intention to release the defendant from
debt and his appointment as executor. Indeed, the second condition set up in
Strong v Bird, is that the donor must have an immediate intention to make the
gift of his property while he is still alive, and this intention must have
endured until he dies. The rule in Strong v Bird has been extended further to
perfect an incompletely constituted trust, only if the trustee was appointed
executor of the settlor’s estate and had a continuing intention to settle the
property, as defined in Re Wale.

            18Although
very practical for assisting imperfectly constituted trusts and gifts, the
exception held in Strong v Bird has been the subject of heavy criticism,
notably from Jaconelli, who notes that this exception of the maxim was :”surely
the strangest”19 as
based on the only continuing intention of the settlor and which is really inflexible
as it means that he cannot change is mind before he died, whatever happens by
then.

 

                   in the case of Choithram, Lord
Brown Wilkinson, assumes that the principle that equity will not assist a
volunteer by perfecting an imperfect gift or trust is too rigid and that it
needs to be temporised, as “although equity will not aid a volunteer, it will
not strive to defeat a gift (or trust).” 20
This appears, as a mark that equity may also assist a volunteer. Indeed, in the
case of Choithram, the Caribbean Court of Appeal, held that the trust would be
constituted. Mr Pagarani, had executed a trust deed establishing a foundation,
making himself one of the trustees and saying that “all his wealth, including
shares of the companies, will go to the trust”. But he failed to sign the
necessary forms. The court held that the trust was constituted, rested on two
points, primarily, that Pagarani had made an effective declaration of trust
which clearly indicated that he intended to give all his wealth to the
foundation, and this body was a trust. Secondly, assuming that Pagarani had
declared himself a trustee, the Privy Council held that it did not matter that
the trust property was not vested in the other trustees. Pagarani had executed
a solemn declaration of trust and therefore it would be unconscionable to allow
him to resile from this promise. This case is then,  a sort of extensive application of the Re Rose
“principle” where, the settlor could be taken to have done everything necessary
to create a trust and therefore that the equitable interest in the property
should have been transferred automatically to him. The principle of unconscionability
has been considered as contrary to the good conscience. It is an elusive and
unclear principle, that may be subject to a large number of different
interpretations and definitions, as highlighted by Delany and Ryan.21
It is true that the principle of unconscionability has been considered as being
too vague and used as a “shell” principle to obtain what you want by using
equity as an end and not a mean, as criticized by Gummow.22

                   Nonetheless, this exception
illustrates that sometimes, equity may assist a volunteer in perfecting an
imperfectly constituted trust.

 

 

            Finally,
the Donatio Mortis Causa (DMC), is another exception to the maxim. Altough it
mainly applies to gift, it also applies to trust situation trusts as the
donor is required to transfer dominion over the property during his lifetime, hence its importance here, to
justify that, sometimes, equity will assist a volunteer in perfecting an
imperfect trust.  This principle has been
identified in the case of Cain v Moon.23  It is a transfer of dominion over the
property inter – vivos (whilst still alive) and is only effective in
contemplation of death. To be
valid, the deathbed gift must: be made in contemplation of death (the testator
or donnee must be dying or about to die), thus must part with control or dominion
over the property. However,
the application of such exception does not succeed every time. There
must be good reason to anticipate death of the donor or settlor, such as a
fatal and incurable illness and this later must have fully transferred the
property into the donee or trustee. Indeed, the case of Re Craven’s Estate24
held that the retention of a second set of keys by the donor did not prove that
he has given up enough control on the property. 

            But,
those extensions were criticised by Brook25
as being too permissive and endangering the Will Act 1837 formalities for
testamentary dispositions. Referring to Jackson LJ, who defined the
doctrine: “as a means of validating death bed gifts” which tend to be imperfectly
nay unlawful, because promptly made. Aside, Brook pointed out that, if the
donor knew he was about to die and had the time to prepare a gift, he had then
sufficient time to see his solicitor and execute her valid will in order to
consolidate her wishes in favour of her nephew and in regards of section 9
Wills Act 1837, rather than making a hasty deathbed gift .26
Notwithstanding, It also permits
the beneficiaries to obtain what they are supposed to get, validating
ineffective wills, as seen by Lord Cowper in the case of Jones v Selby and who
insists on the importance of the requirements to validate the deathbed gift. 27

 

 

 

            Thus,
we have seen that, following the case of Milroy v Lord, the law has seen the
creation of different methods to constitute a trust, deviating from the general
rule developed in Milroy v Lord and giving rise to a certain number of
exceptions to the maxim of “Equity will not assist a volunteer in perfecting an
imperfectly constituted trust”. Assuredly, there exist specific situations where
Equity will assist a volunteer in perfecting an imperfectly constituted trust,
when the testator has done everything he could to transfer the property (as
seen in the case of Re Rose), or when the testator had a continuing intention
to transfer it (as established in Strong v Bird), when it seems unconscionable
for him to come back on his promise (case of Choithram), or when Donatio Mortis
Causa gifts are involved.

 

1 Milroy v Lord (1862) EWHC J78  1861-73 All ER Rep 783

2
Jones v Locks (1865) 1 Ch App 25

3 La Rochefoucauld v Boustead (1897)
1 Ch 196

4
Ibid1

5
George Jessel, in Richards v
Delbridge (1874) LR 18 Eq 11 CA

6 Ibid

7 Ibid 2

8 Frederic W Maitland, Equity :
A Course of Lectures (Cambridge University Press, 1909),73

9 Margaret Halliwell,’Perfecting imperfect gifts and trusts: have we
reached the end of the Chancellor’s foot’ (2003) Conv 192,3

10 Paul v
Constance (1976) EWCA Civ 2 1977 1 WLR 527

11 Re Rose 1952 1 Ch 499 1952 EWCA Civ 4

12 Re Fry 1946 Ch 312 1946 2 All ER 105

13 Mascall v
Mascall 1984 EWCA Civ 10 CA

14 Peter Luxton,’In search of perfection : the Re Rose
rule rationale’ (2012), Conv 72, 2

15 Pennington v Waine (2002) 1 WLR 2075

16
Alstair Hudson, Equity and Trusts (Routledge, 2017), 9th Ed, 5, 210

17 Strong v Bird
(1874) LR 18 Eq 315

18 Re Wale (1956)
1 WLR 1346

19 Joseph Jaconelli, ‘Problems in the
rule in Strong v Bird’ (2006) Conv 432, 434

20 T Choithram International SA v
Pagarani (2001) 2 All ER 492, 501; applied in Pennington v Waine (2004) 4 All
ER 215.

21 Hilary Delany and Ryan Desmond, ‘Unconscionability: a unifying theme in
equity” (2008), Conv 401,3

22 Justice
Gummow, ‘Equity: too successful?'(2003)
ALJ, 31

23 Cain v Moon (1896) 2 QB 283

24 Re Craven Estate (1937) Ch 423

25 Juliet Brook,’ King
v Dubrey : A Donatio Mortis Causa Too Far ?’ (2014), Conv 525

26 Jackson LJ, in Vallee v Birchwood (2013) EWHC 1449 (Ch)

27 Jones v
Selby (2016) Ch 221 (51)