Milroy v Lord
To make an effective gift or trust, the donor must do everything necessary to transfer the property, and equity will not treat a failed gift as a declaration of trust.
Facts
Thomas Medley executed a deed purporting to transfer shares in the Bank of Louisiana to Samuel Lord, to be held on trust for Mr Milroy. The shares could only be transferred by registration in the bank's books, and this was never done. Mr Lord held a power of attorney from Mr Medley, which would have allowed him to register the transfer, but he did not use it. After Mr Medley's death, the question arose whether the trust had been completely constituted.
Legal principle
Turner LJ held that the trust had not been constituted, so Mr Milroy had no claim. He said that, to render a voluntary settlement valid, the settlor must have done everything which, according to the nature of the property, was necessary to be done to transfer the property and render the settlement binding upon him. There are three ways of conferring a benefit: by an outright transfer, by transferring the property to trustees, or by declaring oneself a trustee. If the settlor intends one method and it fails, the court will not give effect to it by applying another, because there is no equity to perfect an imperfect gift.
Related cases on formalities and constitution of trusts
- Re Brooks' Settlement Trusts [1939] Ch 993
- Cannon v Hartley [1949] Ch 213
- Choithram (T) International SA v Pagarani [2001] 1 WLR 1
- Fletcher v Fletcher (1844) 4 Hare 67
- Grey v IRC [1960] AC 1
- Hodgson v Marks [1971] Ch 892
- King v Dubrey [2015] EWCA Civ 581, [2016] Ch 221
- Mascall v Mascall (1984) 50 P & CR 119
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