Law of Trust in Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Equity refers to rules that are fair, just and reasonable. The law of trust is a set of rules
that was developed to regulate circumstances where a person trusts another for a particular
purpose. It is mostly created to look after the fund or property that is left for somebody by the
help of a will or trust deed. Equity deals with injustices that are affected by the application of
Common law or an unconscionable behaviour1. Equity depends on various equitable maxims,
which direct the court to exercise their powers as well as discretions accordingly. However, it is
stated that the maxims upon which equity depends are sometimes unreliable. If not meaningless
totally, the maxims have a tendency to mislead and obstruct the process of analysis of the
policies and principles2. The maxims lay down the truth about the principles of equity and trust,
along with exhibiting several exceptions like when the court disallows a volunteer to assist
equity for it did not find convincing reasons to change its decision (when consisting a trust, like
in Milroy v Lord )3. A trust is created when there is a division of legal and equitable interest in
the property4.
The decision held in the case of Re Rose amended the approach of equity in context to
imperfect transactions5. The judgment of this case is related to the creation of a trust property
where it is held that the quotes assist beneficiaries when a trust is created by helping them to
enforce their rights even if being a volunteer6. The principles held in Re Rose can be evaluated,
compared and contrasted only on the basis of its former cases, which held dissenting judgment,
like in Milroy v Lord7. In Milroy v Lord the donor of the trust transferred certain amount of
1 Watt, Gary. Trusts and equity. Oxford University Press, 2018.
2 Webb, Charlie, and Tim Akkouh. Trusts law. Macmillan International Higher Education, 2015.
3 [1862] EWHC J78
4 Clements, Richard, and Ademola Abass. Complete Equity and Trusts: Text, Cases, and Materials. Oxford
University Press, 2018.
5 [1952] EWCA Civ 4
6 Paul v Paul [1882] 20 Ch.D. 742
7 [1862] EWHC J78

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shares to Lord so that he could hold them on trust for Milroy. The deed of trust executed in this
context was not updated by the company whose shares were transferred to Lord as a trustee for
Milroy. Subsequently Lord could not acquire the shares and thus it was held that no trust was
formed. Such traditional approach was undertaken by justice turner who stated that the donor of
the trust must do everything which is necessary for transferring the property to the trustee and
such a transfer could also be affected by the way of outright gift, self declaration of trust or
transfer on the basis of trust. In this case the court adopted a restrictive approach and refused to
allow the creation of a trust as it would not have benefitted the volunteer. This judgment follows
the legal maxim which says that equity shall not perfect an imperfect gift, if it will not benefit the
volunteer8. The incompletion of the necessary formalities caused the invalidity of the trust, the
transfer of it and subsequently the court’s refusal followed to save it. As commented by Smith,
the judgment passed in Milroy serves as an example that incomplete transactions would be
frustrated and the donor’s intention would not be considered9. This judgment has been criticized
heavily as it contradicts the principles of equity that serves justice. On the other hand, several
jurists have praised this decision for taking a stand on incomplete transactions, transfer of
properties and incorrect formalities. It was said that the judgment protected the standard of
formalities, which is in Subway an opportunity for the donor to reconsider his decisions
pertaining to the transaction and ensure certain amount of time for him to rethink and
reconsider10.
The judgment of Milroy v Lord was followed by Re Fry, which followed the judgment of
Milroy and took an approach as restrictive as Milroy where the judge disallowed the creation of a
8 Labatt, C. B. "The Inconsistencies of the Laws of Gifts." Am. L. Rev. 29 (1895): 361.
9 Smith, Oliver. "Incompletely Constituted Gifts: A Historical Assessment of Case Law." NEL Rev. 2 (2014): 33.
10 Ibid.

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trust11. In this case the donor of the trust gave certificates of share to the trustee which was
subject to the approval of the treasury. However, the donor of the trust died before the treasury
approves the transfer. In this condition the court refused to approve the transaction as it held that
the transfer could have been we considered or rejected by the donor or he may have added for the
details to it for it was in its initial stage as well as unapproved by the treasury. The court chose
not to go against the treasury’s decision. Unlike this case, in Milroy v Lord, it was even uncertain
that the transaction of the deed of trust was complete.
The court of appeal in Re Rose followed the decision of Midland Bank v Rose where
Justice Jenkins had said that the donor had completed all his duties pertaining to the transfer of
shares even do the registration was not given effect to even after the transfer of shares12.
Therefore, the transfer of shares was allowed by the court. This case marks a change in the
interpretation of the phrase 'all in his power’ which included that the donor is at liberty to do
everything by himself, not subjected to the activity of the third party.
The case of Re Rose laid down exceptions in context to the decision held in Milroy v
Lord. The Milroy case has been interpreted as that an imperfect gift will not be perfected by the
help of equity where the donor of the trust has not fulfilled his task or formalities pertaining to
the transfer of his title to the trustee13. A transaction relating to the deed of trust would be
allowed by the court only if the donor can prove that he has done all that he was supposed to do
to perfect the creation of the gift. This rule is operational where the act of a third party is
involved for the completion of the transfer of legal title or transfer of shares14.
11 [1946] Ch 312, [1946] 2 All ER 105
12 (1949) Ch 78
13 Novotna Krtousova, Lucie. "Equity will not perfect an imperfect gift. A review and an evaluation." (2017).
14 Ollikainen-Read, Aleksi. "Assignments of Equitable Interests and the Origins of Re Rose." Conveyancer and
Property Lawyer 82.1 (2018): 63-73.

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In Re Rose, the transfer of trust was complete as Rose did all that he would have done for
the transaction and delivered the necessary documents to pass the interest, as well as crossing the
point of no return which could have defeated the completion of the transaction15. In this context
Re Rose can be compared with Re Fry on the ground that the former had all the necessary
deliverables completed which gave effect to the transfer of shares while the latter failed to satisfy
the requirements that were supposed to be carried out. In a nutshell, it was held in Re Rose that
the donor of the trust must transfer the deed of trust by using the correct method and by
completing all the necessary requirements which are essential to complete the transfer
successfully that includes the delivery of the documents. From this perspective, Milroy v lord
can be compare and contrasted from Re Rose, where the former lacked the donors complete
participation in the completion of the transaction and subsequently the court failed to consider
the donor’s intention pertaining to the transaction and emphasized on the lacunas. The principles
held by the court in Re Rose violate the principles that world laid down in Milroy, as it speaks of
benefiting the volunteers by the help of equity. The case of Mascall v Mascall followed the
principle laid down in Re Rose16. A transaction relating to the deed of trust would be allowed by
the court only if the donor can prove that he has done all that he was supposed to do to perfect
the creation of the gift. This rule is operational where the act of a third party is involved for the
completion of the transfer of legal title or transfer of shares17.
At present the principle of Re Rose is not considered as absolute after the judgment
delivered by the court of appeal in Pennington v Waine where the ambit of transfer of trust
property was expanded by the introduction of the new concept of unconscionability which is
15 [1952] EWCA Civ 4
16 [1985] 49 p & CR 119
17 Brien, Christopher. Equity and trusts guidebook. Oxford University Press, 2015.

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giving effect of completion to a transfer of trust even before the standard formalities are
completed18. In this case the court held that equity is in such a position that it has the authority to
perfect and imperfect gift given the fact that it is unconscionable for the donor to take back the
gift, which he purported to offer.
In the recent case of Curtis v Pulbrook, the principles of Pennington v Waine has been
observed to some extent19. In this case the High court observed that the principle of Detrimental
Reliance is required for a constructive analysis of the transaction of a trust property. In this case
Richard Pulbrook had an intention to make a transfer of shares by way of gift yet he could not
complete the share certificate and fails to share the share certificate to the recipient. Leaving the
transfer documents with his legal advisor, Pulbrook left the country which purposes the fact that
he failed to carry out all the necessary standard procedure to transfer the shares successfully.
This case altered and contravened the principles that were held in Re Rose as put forwarded by
Justice Briggs. He rejected the principles of Re Rose for the case lacked any kind of evidence of
detrimental Reliance.
The case of Curtis v Pulbrook modified the principles that were laid down in Re Rose
which supported the concept of perfecting and imperfect gift by overpowering the principles of
equity. However it does not include the concepts of unconscionability and detrimental Reliance
which makes it less popular and less acceptable; the decision of Zeital v Kaye has been said to
have taken over this judgment20. The Pulbrook case contravene to the principal of Re Rose where
the court had allowed equity to perfect an imperfect gift, however only if the donor of the trust
had carried out all the necessary formalities to complete the transaction successfully. This kind
18 [2002] EWCA Civ 227
19 [2011] EWHC 167
20 [2010] EWCA Civ 159

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of approach of the court had diminished judicial discretion by introducing certainty into the
matter for it would all depend on the donor’s activity. However the Pulbrook case modified this
principle to the extent where the court returned to its traditional approach which gave priority to
the factual condition of a matter and the intention of the donor rather than leaving it all upon the
donor’s activity and diminishing the discretion of the court. The Curtis v Pulbrook case
modified the decision of Re Rose to an extent where the court reverted back to its older
judgments for reference as the decision of Re Rose was being too lenient in terms of
safeguarding the standard of approving transfer of shares21. Therefore, Re Rose is the only case
to which the courts refer to for perfecting an imperfect gift.
Therefore to conclude the overall paper, it can be summed up that the case of Re Rose
had diluted the orthodox and strict principles and approach of Milroy v Lord which give
importance to the discretion of the judicial system in deciding that equity will not perfect an
imperfect gift where the volunteer is not benefited. It is worth debating that whether the cases
that involve matters pertaining to equity and trust should be dealt on the basis of fairness held by
equity or by way of certainty and legality as discussed in Milroy v Lord. In addition, the paper
has successfully discussed the chronological order of case studies pertaining to equity and trust
where at first common law was put at the highest pedestal, which degraded with time and equity
took its place. At present the judicial system is trying its best to strike a balance between the
principles of common law with the principles of equity for maintaining justice along with
certainty and legality. The principle held in Re Rose has strived to be a medium between Milroy
v Lord and Curtis v Pulbrook creating a perfect balance, which is however less explored
depending on the activity of the donor.
21 Pawlowski, Mark. "Is equity past the age of childbearing?." Trusts & Trustees 22.8 (2016): 892-897.

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References
Books/Articles
Brien, Christopher. Equity and trusts guidebook. Oxford University Press, 2015.
Clements, Richard, and Ademola Abass. Complete Equity and Trusts: Text, Cases, and
Materials. Oxford University Press, 2018.
Labatt, C. B. "The Inconsistencies of the Laws of Gifts." Am. L. Rev. 29 (1895): 361.
Novotna Krtousova, Lucie. "Equity will not perfect an imperfect gift. A review and an
evaluation." (2017).
Ollikainen-Read, Aleksi. "Assignments of Equitable Interests and the Origins of Re
Rose." Conveyancer and Property Lawyer 82.1 (2018): 63-73.
Pawlowski, Mark. "Is equity past the age of childbearing?." Trusts & Trustees 22.8 (2016): 892-
897.
Watt, Gary. Trusts and equity. Oxford University Press, 2018.
Webb, Charlie, and Tim Akkouh. Trusts law. Macmillan International Higher Education, 2015.
Cases

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Curtis & Ors v. Pulbrook & Ors [2011] 1 BCLC 638, [2011] EWHC 167 (Ch)
Mascall v Mascall 1985] 49 p & CR 119
Milroy v Lord [1862] EWHC J78
Paul v Paul [1882] 20 Ch.D. 742
Pennington v Waine [2002] EWCA Civ 227
Re Fry [1946] Ch 312, [1946] 2 All ER 105
Re Rose [1952] EWCA Civ 4
Zeital v Kaye [2010] EWCA Civ 159