CONSTITUTION OF TRUST (COMPLETELY & INCOMPLETELY CONSTITUTED TRUST)

- A gift is a transaction which benefits an individual who has not paid, i.e. provided any consideration.
-In order for trust to be fully constituted the property must be in the hands of the person who is properly bound to
be the trustees. Meanwhile, for a gift to be perfected, the property must be in the hands of the person who is to
benefit from the gift (donee). Equity will not perfect an imperfect gift.
-2 elements in perfect gift: Intention to make the gift & Transfer of legal title to the property in question to donee.

Formal Requirements for Change of Legal Title

Land: S.52(1) Law of Property Act 1925
-All conveyances of land or any interest therein are void for purposes of conveyancing or creating legal estate
unless made by deed.
Shares: S.183 Companies Act 1985
-This section states that the owner of the shares must: (i) execute share transfer form (ii) give notice to the recipient
(iii) give notice to the company (iv) the company must register the transfer.

A. Declaration of self as trustee (Effective declaration/ Owners declaration)

Jones v Lock
-A father wrote a cheque intended for his infant baby but failed to transfer the property.
-There was no effective transfer of gift, as he did not create an account for the baby and transfer the money, nor
declaration of trust, as no inference that he made himself as trustee.

Richards v Delbridge
-An owner of a leasehold premise endorsed & signed on the lease w/ intention to give the premise to his grandson.
-There was no perfect transfer of gift as the endorsement failed to meet the formalities necessary for a deed.

Paul v Constance
-Given that Constance was not married to the claimant, the bank advised him to open a bank account in his own
name to deposit his personal injury claim. He then assured that the claimant would be able to draw on the account.
Subsequently, several deposits were made into the account as the couple won bingo as a joint venture.
-Upon Constances death, the defendant (his wife) claimed for that account. However, the court found that there
was an express declaration of trust and the claimant is entitled to the account.

B. Trusts by Transfer to Trustee (Effective Transfer)

Milroy v Lord
-Milroys uncle intended to leave shares for her with Lord as the trustee but the uncle died before the power of
attorney was registered as Lord, trust was not constituted.
-In order to render the settlement binding, one of the 3 modes of making a gift must be resorted to:
i. Outright transfer of the legal title to the property
ii. Transfer of the legal title of the property to a trustee to hold on trust
iii. Self-declaration of trust

Re Fry
-The donor of a British comp shares died after completing the transfer form as required by the UK treasury to his
son, but before the UK treasury had given permission for the transfer.
-The transfer was not effective as the court deemed that the donor should obtain the permission instead of merely
applying as the application may be questioned and rejected, which couldve led to the failure of transfer.
Re Rose
-Mr Rose died after executing the formalities of a share transfer to his wife, but before the BOD ratified the transfer.
-The transfers were effective as the transferor had done everything in his power to vest the legal interest in the
transferees (aka Re Rose principle), but something is yet to be done by a third party. As the transferee only holds
the equitable title, the transferor will hold the legal title on trust for the transferees until they acquired legal title.

T. Choithram International SA v Pagarani

-Although a man lying on his deathbed sought to declare a trust over his property by being one of the trustees over
that property, he failed to transfer the legal title.
-The transfer was effective as the settlor have done all that was necessary to create a trust, allowing the passing of
equitable interest of his property.

Pennington v Waine
-The donor had executed a share transfer of a comp with the intention of having her nephew to become the director,
where the position requires him to own shares.
-The transfer was effective as the donor had sent the transfer form to the comps auditor, who had told the nephew
that theres no further step required. The nephew signed a form of consent to act as director & was duly appointed.

Imperfectly Constituted Trust (Exception to the Maxim)

A. The Rule in Strong v Bird

When a donee of an imperfect inter vivos gift becomes the executor of the donor's estate, it perfects the gift.
For the rule to apply, there are four conditions:
1. The donee must be an executor of the donors estate
2. The donor must have intended to give donee an inter vivos gift
3. The donative intention of the donor did not change before death
4. The subject matter of the gift must be capable of enduring the death of the donor.

Strong v Bird
-As they lived together, Bird agreed to pay back the loan he owed his step-mother by reducing her rent. She started
to pay reduced rent, but subsequently pay full rent until she died.
-Upon death, her beneficiaries attempted to collect the money owed by Bird, but the court held that the stepmother
made an inter vivos gift to Bird. This was demonstrated by making Bird the executor of her estate, where Bird
would be responsible for calling in all debts to the estate. It would not make sense for Bird to sue himself.

Re Gonin
-The donee/ daughter was appointed as the administatrix of her mothers estate. She claimed the house under the
rule of Strong v Bird.
-There was no continuing intention on the mothers part that the daugther should have the house. The giving of
cheques indicated that she should have the money instead.
B. Proprietary Estoppel
Arise if there is promise, assurance or encouragement is made to the volunteer that he will acquire rights in land
and as a consequence the volunteer relies on the promise and acts to his detriment. (,
)

Dillwyn v Llewelyn
-A son spent $14,000 to construct a house on his fathers land as his father promised to convey the land to the son.
-Although no actual conveyance took place, the court entitled the son to have the imperfect transfer perfected

Pascoe v Turner
-When the marriage relationship ended, the husband told his wife that the house is yours and everything in it, the
wife then spent her own money on repairs and improvement.
- Although no actual conveyance took place, the court awarded her a conveyance to the house.

C. Donatio Mortis Causa (Death-bed gift)

Cain v Moon
-3 requirements to DMC:
i. The gift must be made in the contemplation of death. (Subjective test based on the donors state of mind not
actual circumstances. Will not be invalidated if the donor dies from other cause he was contemplating.)
ii. The gift must have been conditional on the death of the donor. (The gift will revert to the donor if he recovers
from illness, he can also revoke his gift at any time during his lifetime)
iii. There must be some form of delivery of subject matter of the gift. (The donor must deliver the gift or part of
means of the gift to the donee. The circumstance of delivery must be sufficient to demonstrate that the donor can no
longer interfere with the subject matter of gift.)

Sen v Headly
-When a husband was terminally ill, he told his wife The house is yours, Margaret. You have the keys. They are in
your bag. The deeds are in the steel box.
-The next of kin to the husband claimed for the property but was rejected by the court as the husbands act has
constituted a DMC.