EQT Midterm - good luck PDF

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Summary

Mr. Philip who is a CEO of Artisan Company Ltd (ACL), went through a major operation last week after suffering from a heart attack. A month prior to his operation, Mr. Philip had attended a board meeting of his company and made a few announcements relating to the structure of his company and some de...

Description

Mr. Philip who is a CEO of Artisan Company Ltd (ACL), went through a major operation last week after suffering from a heart attack. A month prior to his operation, Mr. Philip had attended a board meeting of his company and made a few announcements relating to the structure of his company and some details of his intention concerning some of his properties. He said 60% of the shares that he was currently holding will be given to his step son Simon so that Simon will hold 40% for his two twin sons , aged 7, until they reach the age of majority and the remaining 20% for Simon absolutely, who is currently the senior Manager of HR unit at ACL. Philip further said that his parcel of land in Rawang, will need to be transferred to his newly established charitable foundation, Artisan Trustwell, which is focused on research and preservation of wildlife in Malaysian forests. He has given the title deed to Simon, who happened to be a member of the board of trustees of the foundation. Philip passed away last week, two days after his operation. When his will was read, it stipulated that all his shares in ACL were to be given to his secretary, Miss Molly and there was nothing in the will indicating that his land in Rawang needed to be given to Artisan Trustwell. Nonetheless, a voice recording by Philips was sent to Simon, a day before he passed away in which Philip had said ; “ my land in Rawang to the foundation.” Simon on the other hand, has been staying with his sick uncle since 2018. Over the years, his health has been declining and on several occasions his uncle told him that after his death the house will be Simon’s. Last month his uncle, feeling on the verge of death presented Simon with the title deeds to his house and said; “this will be yours soon upon my death.” He died on the same day and his will stated that the house is to be given to his only daughter, Daphne. Advise Simon and Artisan Trustwell. Legal Issues: 1. Whether there is an effectual transfer of the trust property from Mr Phillips to Miss Molly? 2. Whether there was an effectual declaration of trust by Mr Phillip for the trust to be enforceable? 3. Whether Ally and Aiwa can raise any exception to the rule that equity shall not assist a volunteer? 4. Whether Ally and Aiwa can raise the exception of the rule in Strong v Bird? 5. Whether the ICT falls within the exception of Donatio Mortis Causa?

Answer The first legal issue is whether there is an effectual transfer of the trust property from … to ...?

The validity of an express trust requires more than just compliance of formalities and the three certainties. The trust must also be properly constituted to be enforceable. Once the subject matter is transferred it is a completely constituted trust.

There are two elements of completely constituted trust which are the transfer of property to trustee and the declaration of trust and appointing self as trustee. The elements are laid down in Milroy v Lord where it was stated that “He may, of course, do this by actually transferring the property to the persons for whom he intends to provide and the provision will then be effectual and it will be equally effectual if, he transfer the property to a trustee for the purposes of the settlement or declares that he himself holds it in trust for those purposes and if the property be personal.”

The court will decide if there is transfer by using the strict view in the case of Milroy v Lord. In this case, the settlor executed a deed to transfer shares to Mr Lord on trust for Mr Milroy. Shares were only capable of being transferred by registration in the name of transferee in the company’s book. The settlor failed to complete the transfer although Mr Lord held POA. The court held that there was no transfer in this case since there is no registration.

Also, by using a wider view in the case of Re Rose. The judges in this case had departed from the decision in Milroy’s case. In this case, the transfers were executed and transferred to the trustee on 10th April 1943. The transfer was registered by the company on 30th June 1943. The court held that there was transfer of the shares to the trustee since the settlor has done everything in his power to transfer the shares. What is left is only for the director to register the shares.

… MASUK RELEVANT CASE TO SUPPORT…

APPLICATION

The second legal issue is whether there was an effectual declaration of trust by … for the trust to be enforceable?

An effectual declaration of trust and appointing self as trustee is a declaration, subject to compliance with any formality, where relevant, is sufficient to create a trust. It can happen in a situation where the donor/settlor intended to make a gift/trust to the donee/trustee but failed. There will be no transfer of legal ownership because the person that holds the property is the same.

The law may be stated in the following manner: firstly, the creation of a trust requires an intention on the part of the owner to declare a trust. It was held in Richard v Delbridge that there is no need to say or to use the words “I declare myself a trustee”. It must do something which is equivalent to it and use expressions which have that meaning. Secondly, it is a question of evidence whether he intends to hold the property as a trustee, a matter which can be decided by implication, as per Paul v Constance. In this case, Mrs. P claimed that Mr C had assured her more than once and on many occasions when referring to the money in the account, that “the money in the account is as much as yours as mine.” It was held that the deceased had expressed his intention on more than one occasion was essential in establishing the seriousness of his desire to create trust.

APPLICATION

The concept of declaration and self-appointment is that the owner does not have to transfer the property to the trustee, since he himself will become the trustee. In applying it to our case, it was clearly mentioned/not clearly mentioned... To distinguish the case of Paul v Constance to our case, the settlor expressed his intention to create trust more than once to show seriousness. In this case, a trustee was never in the picture. Hence, it can be assumed that he was appointing himself as the trustee. However, in our case… Therefore, there was no effectual declaration and self appointment of trust by Adam for the trust to be enforceable.

If trust is Incompletely Constituted Trust... The third legal issue is whether … can raise any exception to the rule that equity shall not assist a volunteer?

Incompletely Constituted Trust happens when there is no effectual transfer of property to trustee or there is no effectual declaration of trust and appointment as self trustee. In Yeong Ah Chee V Lee Chong Hai, it was stated that “An incompletely constituted trust is one in which the trust property has not been finally and completely vested in the trustee.”

In order to make a gift of property, a donor must transfer legal title in that property to the donee. If this is not done the gift will be deemed imperfect and, as Sir George Jessel MR famously averred in Richards v Delbridge, equity will not perfect an imperfect gift. In legal terms, this means that equity will not regard the beneficial interest as having been transferred to the intended donee before legal title is considered to have done so.

The effect of Incompletely Constituted Trust is that it cannot operate as a trust and volunteers cannot enforce the trust. Volunteer is a person who in relation to any transaction has not given valuable consideration. A person is not a volunteer when he provides/furnishes valuable consideration and if the parties are within the marriage settlement/consideration. In Yeong Ah Chee, it was held that “A volunteer is a beneficiary who has not given any valuable consideration (in the usual sense of the ordinary law of contract), for the creation of a settlement or trust.” and “It is a settled rule of equity that a court of equity would not render assistance to a volunteer in the case of an incompletely constituted trust.”

In Re Fry, a settlor intended to purport a transfer of shares. He executed a shares transfer form and attached the share certificate. However, at the time, there was a restriction in foreign national dealing in English shares. Therefore, Fry had to obtain the consent of the treasury. Fry applied to the treasury, but before consent could be granted he died. It was held that the gift was incomplete. Equity will not complete an imperfect gift. The testator had not done everything that was required to be done by him at the time of his death. Despite the treasury eventually giving their consent, they might have either: denied the transfer, or, asked for further documentation.

APPLICATION

The fourth legal issue is whether … can raise the exception of the rule in Strong v Bird?

The rule in Strong v Bird is that if an incomplete gift is made during the donor’s lifetime and the donor had appointed the donee as executor or in the case of intestacy, the donee is appointed as administrator; the vesting of the property in the donee in his capacity as executor or administrator may be treated as the completion of the gift.

In this case, a son borrowed £11,000 from his stepmother who lived with him in his house. Prior to borrowing the money, she paid him £212 every four months for her board. They decided that he would pay her back by reducing the amount of rent she pays to him per month. However, before the debt was fully repaid, the stepmother died. Subsequently, the stepson became the executor under his step mother’s will. It was held that generally, where a deceased person intended to make a gift of property to another person without ever making a complete gift of it, if that intended recipient is named as executor of the deceased’s estate, then the gift is deemed to have been completed.

The requirements for the rule to apply: firstly, there must be an intention to create an inter vivos gift. Secondly, the donor’s intention to make the gift must continue until the donor’s death. The benefit to be given to the donee must not be in a vague term. Thirdly, the donee must be appointed an executor or granted letter of administration of the donor’s estate. Fourthly, the subject matter must be capable of enduring the donor’s death.

In Re Gonin, the donee/daughter was appointed as the administrator of her mother’s estate. She claimed the house under the rule of Strong v Bird. The court held that there was no continuing intention on the mother’s part that the daughter should have the house. The giving of cheques indicated that she should have the money instead.

APPLICATION The ICT may fall within the exception of the rule in Strong v Bird so long as both of them are appointed as executors/administrators

The fifth legal issue is whether the ICT falls within the exception of Donatio Mortis Causa?

Donatio Mortis Causa is if the donor intends or wants the donee to keep property which would belong to the donee, if the donor dies, equity would perfect the donee’s title although he may be for a volunteer.

According to Lord Russell in Cain v Moon, there are 3 conditions that must be satisfied: firstly, the gift is made in contemplation of death though not necessarily in expectation of death. The donor must have been doing more than merely contemplating the fact that he is not immortal but, on the other hand, he need not be in extremis or in his last illness. What seems to be required is that the donor should believe his death to be impending for some reason and in practice a donatio will often be made when the donor is very ill.

MASUK RELEVANT CASE & APPLICATION

Secondly, the subject matter must have been delivered to the donee. The donor must hand over the chattel itself or the means of obtaining control of it, such as the key to the box where it is. In Wood v Woodward, the deceased having allowed his son to use his car and given him the keys said to him on his deathbed ‘You can keep the keys, I won't be driving it anymore’. It was held that this was a valid donatio. Also, in Bayliss v The Public Trustee it was held that land and shares cannot be the subject matter of a donatio.

APPLICATION

Thirdly, the gift must be made under circumstances so as to show that property is to revert to the donor should he recover. The donor is making a gift which will only be absolute on his death and is in the meantime revocable. As the gift is intended to be conditional on death it follows that it will fail if the donee fails to survive the donor, as per Tate v Hilbert.

MASUK RELEVANT CASE & APPLICATION The ICT does not falls within the exception of Donatio Mortis Causa...