Milroy v Lord Death of transferor PDF

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Milroy v Lord exceptions: Death of transferor This element explores two further exceptions to the rule in Milroy v Lord, both of which operate to perfect the intended transfer on the death of the transferor. ‘Although a failed gift or an incompletely constituted trust cannot be saved by treating the donor or settlor as an express trustee of the property…simply because this will not have been intended, Equity has found other ways of fulfilling the settlor’s or donor’s intention.’ The Principles of Equity and Trusts, Graham Virgo, 3rd Edition How else can equity fulfil the transferor’s intention to make a gift or declare a trust if constitution has not occurred? Exceptions to the rule in Milroy v Lord We have seen that the effect of the rule in Milroy v Lord is that if legal title has not been vested in the intended recipient the disposition will fail. There are three possible lines of exceptions to this rule: 1. 2. 3.

Principle in Re Rose Fortuitous Vesting Donationes Mortis Causa This element considers the circumstances in which these last two exceptions apply. What is Fortuitous Vesting? In some cases a failure to perfect the intended recipient’s title may be cured if they obtain legal title through another route. This exception is called fortuitous vesting because legal title vests in the recipient in another capacity. This will usually occur because the intended recipient of a gift is also the personal representative of the transferor’s estate. On the transferor’s death, legal title to all their property will transfer to their personal representative to administer their estate. If their personal representative was also the intended recipient of an imperfect gift, this gift may be perfected on the death of transferor. Diane intends to give Ciara an antique sword but Diane dies before this is delivered to Ciara and so legal title has not transferred to her. Ciara is named as executor in Diane’s will. Ciara will obtain legal title to the antique sword as executor. The gift to Ciara will be perfected via fortuitous vesting because Ciara has obtained legal title in her capacity as executor. Origins of Fortuitous Vesting

Fortuitous vesting is commonly known as the rule in Strong v Bird (1874) LR 18 Eq 3015 Whilst this case established the rule which is commonly applied to gifts, the case was actually about forgiving a debt. FACTS: FACTS: Bird had borrowed money from his step-mother. He had agreed to repay her by instalments. He paid two instalments but she then she then orally agreed to forgive the debt. An oral release of debt is ineffective at law and so on her death Bird still owed her estate the money. On her death, Bird was appointed executor of her estate. HELD: The debt was released at common law by Bird's appointment as executor because, as the legal owner of the estate, he was both creditor and debtor. But this did not prevent equity from enforcing the debt.

However, Jessel MR held that equity would not enforce the debt if the creditor appointed the debtor as their executor and had manifested an unchanged intention during their lifetime to forgive the debt. Extension of the rule in Strong v Bird Re Stewart[1908] 2 Ch 251 extended the principle in Strong v Bird to perfect imperfect gifts. This case also confirmed that Strong v Bird will apply even if the intended recipient is one of several executors. The following conditions must be met in order for the Rule in Strong v Bird to apply:1. 2. 3.

There must be an intention to make an immediate gift (Re Freeland) The intention must continue until the donor’s death (Re Gonin) The intended donee becomes an executor (or one of the executors) of the donor’s estate (Re Stewart) An immediate gift In Re Freeland, the Court of Appeal made it plain that the donor must have the intention to make an intention to make an immediate gift. FACTS: The Claimant, Mrs Jackson claimed that Mrs Freeland had given her a Hillman motor car. As the car was not in running order, Mrs Freeland agreed to give it Mrs Jackson when it was back on the road. Several months later, Mrs Freeland wrote to her saying that she had lent the car to another friend (Mrs Rodgers) for a few months but that she was not going back on her word to let Mrs Jackson have it. Mrs Freeland died having appointed Mrs Rodgers and Mrs Jackson as her executors.

HELD: Lord Evershed MR said there must be “an intention of giving, as distinct from an intention to give…” The fact that the car had been lent indicated a future intention to give, after it had been put in running order and recovered from Mrs Rodgers. There was no intention to make an immediate gift to Mrs Jackson. It follows that the gift must also relate to existing, not future (or after acquired) property. Continuing intention In Re Gonin a mother intended to pass her house to her daughter but incorrectly developed the believe that she could not transfer the house to her. She therefore wrote a cheque for £33,000 in favour of her daughter in lieu of transferring the house. The mother died without a will (intestate). The daughter was appointed as administrator of the mother’s estate and attempted to claim the house under the rule in Strong v Bird. It was held that Strong v Bird requires a continuing intention to give which remains unchanged until the death of the donor. By writing the cheque, the mother had changed her intention and so there was no continuing intention to give the house. Extension to administrators If a person dies without making a will, they are said to die intestate. On their death, an administrator is appointed by the court in order to administer their estate. In contrast, a person who makes a will can appoint executors to administer their estate. In Re James [1935] Ch 449 the rule in Strong v Birdwas held to apply where the donee was appointed administrator. This therefore extends the principle of fortuitous vesting to include personal representatives appointed independently of the donor, which some commentators consider unjustifiable. Walton J doubted that Strong v Bird applied the daughter (appointed administratrix) in obiter in Re Gonin. He argued that in these circumstances the donor has no responsibility for making the donee administrator so Strong v Bird should not apply. These comments were obiter because the court had found no continuing intention to give the house to the claimant in any event. The British Virgin Islands Court of Appeal applied Walton J’s remarks in Re Pagarini [1999] 2 OFLR 1. Donationes Mortis Causa

A gift made in contemplation in death (traditionally known as a ‘donatio mortis causa’ or ‘deathbed gift’) is the final exception to Milroy v Lord. As a hybrid between a lifetime gift and a testamentary gift it does not fully comply with the rules for either. This exception is utilised in circumstances where a person contemplates their imminent death and wishes to leave their property to another person but does not have time to execute a will. They may also not have time to effectively transfer legal title and if they don’t know when they are going to die, they might not want to part with the property just yet. It is an anomalous exception which only applies in very specific circumstances i.e. where the donor does not have time to make a valid lifetime disposition or create a valid will transferring the property to the intended recipients. They also must comply with strict conditions. Conditions for valid DMC Cain v Moon[1896] 2 QB 283 sets out the following requirements: The gift is made in contemplation (though not necessarily expectation) of death from an identifiable cause which the donor believes to be imminent(King v Dubrey [2015] EWCA) The gift is conditional on death (i.e. it is not intended to be fully effective until then and can be revoked before death); There is delivery of the property; the donor must part with ‘dominion’ (control) of the property by handing it, or something which represents title (not simply possession) to the donee. (Sen v Headley [1991] Ch 425) King v Dubrey [2015] EWCA It was argued that an elderly women had made a deathbed gift of her home to her nephew 4-6 months before she died. She also attempting to gift the home to him in a number of invalidly executed wills.

The Court of Appeal held that she had no reason to anticipate dying immediately. The gift had not been made in contemplation of death. Moreover, the fact that she had made subsequent wills was inconsistent with the idea that she had already disposed of her property. Example 1 Nico promises Elena his vintage Porsche when he dies. The next day Nico dies in a car accident. There is no DMC. Nico has no reason to anticipate dying and the gift isn’t conditional on his death, nor has the car been delivered.

Example 2 Nico is racing one of his cars in a rally the next day. He gives his vintage Porsche to Elena saying, “if I die tomorrow, the Porsche is all yours.” This is a DMC. Nico is anticipating his death and delivers the car to Elena. His words (“if I die”) make the gift conditional. Elena can only keep the car if Nico dies. Delivery and passing of dominion In the case of a chattel, delivery (with intention) is sufficient to pass title to the donee and they will be entitled to keep the property after the donor’s death. However, for other types of property (such as land, shares or bank accounts) more must be done to transfer title. A valid DMC does not require full transfer of legal title provided the donor parts with control (‘dominion’) of the property. If all requirements of a valid DMC are present the donee may request that the donor’s personal representatives then complete the transfer legal title to them. Passing of dominion can also be constructive as Sen v Headley [1991] Ch 425 illustrates. FACTS: A man dying from terminal cancer told his friend that his house was hers, giving her the keys to a steel box which contained the title deeds to the house. HELD: The Court of Appeal held that there was a valid DMC of the house by constructive delivery of the title deeds via the keys to the steel box. The fact that she had keys to the house would not alone be enough as this represents a right of access rather than ownership. Summary · Fortuitous vesting and donationes mortis causa are both exceptions to the rule in Milroy v Lord which apply on the death of the donor. · Fortuitous vesting is also known as the rule in Strong v Bird and it operates where a gift is made to a donee who subsequently obtains legal title to it by becoming the donor’s personal representative. · In order for the rule in Strong v Bird to operate there must be a continuing intention to make an immediate gift to the intended donee who becomes the executor/one of the executors under the donor’s will. · Donationes mortis causa are recognised in exceptional circumstances where a donor anticipates dying and wants to make a gift but does not have time to make a valid will.

· A valid donatio mortis causa will be recognised where the donor is contemplating their imminent death, expresses the intention that the gift is conditional on their death and parts with dominion of the property....