Constitution

 Trust will be properly constituted where the property in question is vested in the
intended trustee.
 Methods of vesting depend on the nature of the property.
 In self declaration of trust, *methods of vesting have no application.
 Settlor himself to be the sole trustee and no transfer is required.
 Gift – *is any transaction which benefits an individual who has not paid.
 Such an individual is called a *volunteer.

Effect of perfect constitution

 Once the trust is perfectly constituted, beneficiaries can enforce it against the
trustee, *irrespective of the fact that they have not provided consideration. – even
volunteers can enforce it.
 Settlor cannot *revoke a perfectly constituted trust on the ground that beneficiaries
have not provided any consideration.

Cases on vesting

*Milroy V Lord

 Settlor has converted to transfer bank shares to the Defendant on trust for the
plaintiff.
 Did not transfer until his death.
 Defendant power to transfer property in to his own name, but did not do prior to
Settlor’s death.
 Power of Attorney becomes revoked with Settlor’s death.
 Shares remained as Settlor’s property and formed part of his residuary estate.
 Plaintiff could not claim the property.

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*Re Fry

 Settlor executed a transfer of his shares in a company in USA by way of Gift to his
son and partly on trust.
 Company was unable to register the transfer. *Because the consent of the treasurery
had not been obtained.
 *Forms required the consent was signed by the settlor and submitted to the
treasurery.
 Held
- Trust had not been completely constituted. Shares did not pass either to the son
or to the trust.
- Mere applying for permission is not enough.
- It was up to the donor to obtain permission.
- *Treasurery might have sought further information before granting permission.
- There were something more, *that the Settlor was required to do and Settlor
may have ruined his own gift by failing to provide that information.
- Accordingly Settlor had not done everything necessary to divest.
 If Settlor has done everything within his power to render a transfer effectual, *but
something yet to be done by a third party, The transfer will be immediately effectual
in equity; *Re Rose.

Cases on self declaration of trust.

 *Jones V Lock
- No effectual transfer by way of a gift or by way of trust.
- eg – in *Paul V Constance – there was a valid declaration of trust.

Defective Constitution.

 The general rule is provided in Milroy V Lord.

 *It is provided that equity will not assist a volunteer to perfect an imperfect trust.

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  Further it was held that, *an imperfect attempt to create a trust, using a TP as
trustees will not be interpreted as trusts by the Settlor as himself a trustee.
 Why? *Because, three modes of conferring a benefit are mutually exclusive; Jones V
Lock.
 Such three modes are –*
i) Giving a gift
ii) Appointing a trustee
iii) Settlor appoints himself as trustee and benefit the beneficiary.
- *These methods are exclusive form each other; *Turner LJ

*Richards V Delbirdge

- Court would not affect a trust, in order to perfect an imperfect legal assignment,
which requires it to be by deed.
- Settlor cannot expressly declare himself to be the trustee of the subject matter
pending that transfer.

*Choithram V Pagarani (contrasts with the general principle)

Exceptions to Milroy V Lord.

1) *Detrimental reliance.
- Intended donee of a land, might detrimentally relied on the supposed validity of
the transfer by spending money to develop the land.
- Detrimental reliance may lead the court to order a perfection of the imperfect
gift/trust.
- Purported transferor will hold the property on a constructive trust to the
intended donee.
- *Dillwyn V Llewelyn
- Father put his son to the possession of the land without conveying it to his son.
- It was intended that the son should build the house on land and he in fact did.
- Exception adopted.

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 - Lord Wesbury – *“ I cannot doubt that the donee acquires a right from the
subsequent transaction to call on the donor to perform that contract”
- *Pascoe V Turner.
- Man encouraged the mistress to improve the house in belief that it belonged to
her.
- Held – exception should apply.
- As the above cases suggest, in case of detrimental reliance, court enjoys
considerable flexibility. And the remedy can be provided appropriate to each
individual case.

Formular that is followed.

Assurance Reliance Detriment

2) *Rule in Re Rose
- This rule applies in a situation where the donor requires assistance of a TP to
prefect a gift or trust property.
- Once the donor had done everything that he could do, there will be a time gap
until TP’s work is done.
- eg – there will be a time gap, between the date of executing the transfer (1) and
date of registration (2)
- Here the transfer is perfected upon registration.
- CA in Re Rose – *Transfer could be said to be perfected at the first stage. That is
where the donor executed the transfer.
- Facts in brief of Re Rose.
- There were two transfers of shares.
1) By way of a gift
2) To trustees on trust.
- Transfer was not registered until three months later.
- Held – once the transferor had executed the transfers, in the appropriate form,
transferor had done everything within his power which was necessary to vest the
legal interest in shares.

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 - At that moment in equity, *transferor held the legal title to the shares on
constructive trust for transferees until they acquire the legal title upon
registration.
- *Mascall V Mascall
- Delivery of the duly executed transfer form and the land certificates to the
transferee is sufficient even though the registration of the transferee’s title is
pending.
- Transferor will hold the property on trust for the transferee until the registration
is done.

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