Equity and Imperfect Transfer
Legal writing and credit
For a trust instrument to be valid and effective, it must be properly constituted. For a trust to be deemed as completely constituted, all of the relevant formalities must have been satisfied by the settlor, hence the legal title of the property must transfer to the trustees. The reason for a conveyance of property to the hands of trustee is explained in Milroy v Lord (1862) by Turner L.J. is that a valid and effectual voluntary settlement will exist, when the settlor have done everything which was necessary according to the nature of property comprised in the settlement, which is to transfer that particular property to the trustee. This requirement of constitution of trust is clear and straightforward, the law require the trust to be completely constituted, so the trust would bind the the settlor and it will be enforceable by the beneficiary. However if the formalities is not satisfied, the law will render the settlement as incompletely constituted trust. Once the settlement is deemed to be incompletely constituted trust, the beneficiary could not enforce their right in the trust. This is due to the maxim in equity “equity will not assist a volunteer” and “equity will not perfect an imperfect gift”, which meant that equity is reluctant to offer assistance to those who does not provide consideration. Hence an absolute owner must transfer the legal ownership of the property to the trustee in accordance to the relevant formalities, and if the formalities are not satisfied, there will be no transfer of property to the beneficiary. It is also important for the court to understand the meaning of an ‘imperfect gift’, as Arden L.J in Pennington v Waine [2002] would treat a gift as imperfect if it was ineffective at law; but a gift can be perfected in equity if the legal title have not transferred. Also the court is prevented from helping a volunteer beneficiary regardless of how undesirable the outcome turn out to be. The general rule is seen
For a trust instrument to be valid and effective, it must be properly constituted. For a trust to be deemed as completely constituted, all of the relevant formalities must have been satisfied by the settlor, hence the legal title of the property must transfer to the trustees. The reason for a conveyance of property to the hands of trustee is explained in Milroy v Lord (1862) by Turner L.J. is that a valid and effectual voluntary settlement will exist, when the settlor have done everything which was necessary according to the nature of property comprised in the settlement, which is to transfer that particular property to the trustee. This requirement of constitution of trust is clear and straightforward, the law require the trust to be completely constituted, so the trust would bind the the settlor and it will be enforceable by the beneficiary. However if the formalities is not satisfied, the law will render the settlement as incompletely constituted trust. Once the settlement is deemed to be incompletely constituted trust, the beneficiary could not enforce their right in the trust. This is due to the maxim in equity “equity will not assist a volunteer” and “equity will not perfect an imperfect gift”, which meant that equity is reluctant to offer assistance to those who does not provide consideration. Hence an absolute owner must transfer the legal ownership of the property to the trustee in accordance to the relevant formalities, and if the formalities are not satisfied, there will be no transfer of property to the beneficiary. It is also important for the court to understand the meaning of an ‘imperfect gift’, as Arden L.J in Pennington v Waine [2002] would treat a gift as imperfect if it was ineffective at law; but a gift can be perfected in equity if the legal title have not transferred. Also the court is prevented from helping a volunteer beneficiary regardless of how undesirable the outcome turn out to be. The general rule is seen