This is an extract of our Gifts document, which we sell as part of our Property, Equity and Trusts 1 Notes collection written by the top tier of University Of New South Wales students.
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Class 11 - Acquisition by way of gifts, Gifts and Chattels, Gifts and Land
Though Walsh v Lonsdale is authority for the proposition that contracts for the sale of land can be given effect if specifically enforceable - this does not apply to gifts, no longer does equity 'deem done that which ought be'
The general rule is that where a donor purports to make a gift but fails to take the steps necessary, equity declines to provide a remedy in favour of the done o
These represent applications to the maxims that 'equity does not assist a volunteer' and 'will not perfect an imperfect gift'*
Generally applications of the principle is straight forward - o
For legal interests the legal requirements must be complied with (deliver with intent to pass possession for chattels or execute a deed of gift)o
In general equity is satisfied with a 'clear manifestation of an intention to transfer an equitable interest to a done or to a trustee for the donee (Comptroller of Stamps v Howard Smith)
Some cases are more complex - what constitutes 'imperfect' in the circumstances in indicative. For general law land the process is outlined in Walsh v Londsdale but certain situations have legal requirements for the transfer of title involving several steps. o
Failure to do so means equity will not perfect the imperfect gift
If the donor has equitable title - the requirements of equity must be satisfied*
But the first isn't applied for volunteers enforcing a validly establish trust under which they are beneficiary - but where a donor purports to make a gift of property and fails to take the necessary steps for transfer; equity refuses to assist
In certain circumstances equity regards the gift as complete even if all the steps are not complete - in such a case the donor retains the legal interest until the steps are taken, but holds it in trust for the donee (representing an exception to the 'equity will not assist a volunteer' rule)
In Milroy v Lord (1862) it was held: o
Facts: Donor intended to establish a trust of shares for his niece. He executed a deed poll setting out its terms but never executed the document for transfer. The memo of association fo the company required registration for transfer to be executed.
Law: The law is settled that in order to render a voluntary settlement valid the settler must have done everything, which according to the nature of the property in the settlement was necessary to be done in order to transfer the property and render the settlement bindingThere are many ways to transfer property; but one of these MUST be resorted to since there is no equity in this court exists to perfect an imperfect gift.
Further, the court does not give effect by applying another of these modes - if transfer is used to give effect the court does not hold that the intended transfer operates by trust; since then every imperfect instrument would be made effectual by being converted int o a perfect trust
Held: Since the donor didn't take the first step of executing the transfer - the gift was incomplete and no assistance could be derived from equity.
Milroy v Lord was refined in Re Rose o
Facts: The donor executed documents in appropriate form transferring shares to his wife in one case and to his company secretary. The donor handed the transfers to the secretary as agent for the wife and the transferred were lodged for registration. The donor died and the questions was when the gift became complete (this was key to determining what kind of tax would apply to it)
Held: Since the donor did everything necessary to transfer the gift, the beneficial interest in the shares passed upon execution of the transfers and handing them to the transferees; accordingly an equitable interest in the shares passed to the donees before registration.
Lord Evershed reviewed Milroy v Lord saying that the statement that documents that intend to transfer cannot take effect as a trust is too broadThough one purporting to transfer property executes documents not apt to do so a trust won't exist, but it doesn't flow from this that during some limited period a trust may arise giving effect to a proper transferAS per the authority of Milroy v Lord the settler did, "according to the nature of the property comprised in the settlement was necessary to be done by him in order to transfer the property" - this does not negative the conclusion that, pending registration, the settler was a trustee for the legal interest of the transferee
Re Rose illustrates that in certain cases equitable interests may pass to a donee before legal title - diminishing the 'equity will not assist a volunteer' proposition. It may be said that this occurs where several steps need be taken e.g.: a)Some acts which can only be done by the donor (execution) b)Some acts which can be done by either the donor or donee (e.g. lodgement for registration) c)Others can only be done by third parties
In Milroy v Lord no action within neither a) or b) or c) was done; but in Re Rose it was stressed that all that was necessary by the donee was done, suggesting that gifts may be complete even if a) is done
In Anning v Anning (1907) the HCA split as to when a transfer would be effective o
Griffith CJ held it was sufficient if all acts under a) was done
Higgins J said it was necessary for a) and b) to be done
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