Tutorial : Completely & Incompletely Constituted Trusts
1. In terms of formalities, what is different about land?
It is important to note that certain requirements must be met in order for legal title to
change hands from the settlor to the trustees. For example under English law as far as
land is concerned, the requirement of sec 52(1) of the LPA 1925 must be fulfilled.
2. What is the significance of the case of Milroy v Lord?
In Milroy v Lord (1862), Lord as trustee was given some shares to hold for the plaintiffs.
Although Lord had a power of attorney over the settlors property, he failed to register
the shares in his own name. It was held that the beneficiaries could not enforce the trust
which was not completely constituted. Such an imperfect trust cannot be enforced by
volunteers.
Milroy v Lord - on the different ways a legal owner can dispose himself of his property
1. Outright gift (legal and beneficial title travel to the donee)(must comply with any
legal transfer requirements + must be intention)
2. Transfer on trust (legal title to trustee, beneficial title to beneficiary) (must
comply with any legal title requirements, 3 certainties and any other formalities)
3. Self-declaration of trust (legal title stays with settlor, beneficial title to
beneficiary)(must have 3 certainities & comply with any formalities e.g. land =
s53(1)(b).
3. What is a marriage consideration in the law of trusts?
Exception to the general rule of Incompletely Constituted Trust.
General rule: if a trust is incompletely constituted, there is no trust at all. Thus, the
intended or would-be beneficiaries have no rights to enforce the intended trust. They are
viewed as volunteers and equity will not assist a volunteer.
Exception to the general rule: such a trust can be enforced by beneficiaries who
have given consideration. For example, in equity, marriage consideration is recognized as
a valid consideration. Thus, those within the marriage consideration would be allowed to
enforce the settlement even though technically the settlement has not been constituted.
In the case of Re Densham- where Goff J stated that marriage consideration or settlement
is a settlement that is made:
a) On the occasion of the marriage, before & in the consideration of marriage.
b) It must be conditional only to take effect on the marriage taking place.
c) It must be made for the purpose of or with a view of encouraging the marriage.
4. Elaborate the three modes of making a gift.
Turner LJ lad down three modes of constitution of a gift/trust in the case of Milroy v
Lord (1862) and they are:
(a) An outright gift to B without the imposition of trust;
(b) A transfer of the legal title of the property to a trustee to hold on trust
i.e. S declaring a trust in favour of B, but with T being the trustee of the property; or
(c) A self declaration of trust
i.e. S declaring himself as trustee of property he holds in favour of B.
5. Evaluate the principles in the following cases:
(a) Re Rose (1952)
exception to the Milroy case, equity will intervene and remedy a donor and donee
who have done everything within their own power necessary to transfer the gift, even
if acts to be performed by third-parties have not been completed.
(b)T Choithram International v Pagarini (2001)
(c) Pennington v Waine (2002)
The decision extends the principle of Re Rose beyond its former boundaries where it
could be demonstrated that the donor had indeed done everything necessary for her to
have done to finalise the transfer.
6. Elaborate extensively on the exceptions (below) to methods by which a
Trust can be fully constituted i.e. Equity will not perfect an imperfect
gift:
(a) The rule in Strong v Bird
Certain conditions must be fulfilled in order to resort to the rule. Such conditions are:
(i) there must be a present intention of forgiving a debt, or making a gift of existing
property. A future intention will not suffice nor will promise to make a gift on future
occasions.
(ii) the intention be a continuous one i.e. Until the donors death
(b)Donatio Mortis Causa
Conditions :
(i) It must be made in contemplation, although not necessarily in the expectation, of the
donor's death;
(ii) it must be made subject to the condition that it will only become indefeasible in the
event of the donor's death and should the deceased imminent death not occur the gift will
fail; or, put another way, it must be shown to be conditional upon the death of the donor
and capable of revocation by the donor until that time; and
(iii) there must delivery of the gifted property to the donee, or delivery of part of the
means of getting access to the property, or delivery of what has been termed the
essential indicia of title
(c) Proprietary Estoppel
proprietary estoppel can only arise when:
(a) the plaintiff has incurred expenditure or otherwise has prejudiced himself or acted to
his detriment;
(b) the plaintiff has acted in the belief that he already owns a sufficient interest or will
obtain such an interest to justify the expenditure;
(c) such belief must arise through the representation or encouragement of the State
Government;
(d) the equity claimed would not prevent the exercise of a statutory discretion.
