Milroy v Lord and the Three Certainties in Trusts

This article discusses the three certainties required for a trust to be valid and enforceable, as well as the importance of formalities in documenting a trust. It also explores the Milroy v Lord case and the principle of equity's approach to imperfect transactions.

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Critically analyse the difference between Milroy
A trust may be sufficiently certain to be valid and hence enforceable. On this regard, three
certainties are required namely;
1) Certainty of intention,
2) Certainty of subject and
3) Certainty of object.1
If all the certainties are present, court can impose the trust if required. However, where the
trustee fail to do so, then the disposition can be rendered as void as it fail to comply with the
certainties requirement. The three certainties were later reaffirmed in the case of Hunter v Moss.2
Furthermore, until the relevant trust property has been vested, that is if the legal title is transferred
to the intended trustee, a trust will not be completely accomplished. If it has not been transferred by
the right means as per the legal rules, then it will not be considered as operable and will fail to be
considered as a significant result. However, this can have an exception if the necessary formal steps
have been completed to entrust the property in the trustee, or an equitable right is given to the
trustee or the intended beneficiary that compels the settlor to carry out the remaining necessary
steps to entrust the trusted property in the trustee.
Additionally, Equity does not assist a volunteer.3 When a valuable consideration is not given to the
person to whom the transfer is intended to be made, they are considered to be volunteer. Since
settlor makes a gift to the beneficiaries, they would be given no consideration and hence makes the
most trusts, as donative transactions. However, regardless of the fact that the beneficiaries are
volunteers, they can also enforce the trustee's duties once the trust is properly constitutive as well
as operative. However, in case the trust has not been fully constituted, they have no legal rights and
the court would not be able to assist in such cases.
Similarly, Milroy v Lord4 has identified important three ways in transferring the legal title which gives
a benefit with the property from the absolute owner of property. The ways are namely,
1. Making an outright gift,
2. Self-declaration where the certain property declared by the settlor vested on him or her is
subsequently to be hold on trust for beneficiary
3. Settlor effectively transfers certain property to trustee on the trust that he will hold the
property for the respective beneficiaries.
Apart from three certainties, there should be certain formalities while documenting in order to
ensure validation of a trust. The transfer of legal ownership of some properties should be
incorporated in written format or through any other formal processes. Thus, the beneficiary interest
1 Atkins, S. (2015). Equity and Trusts. Routledge.
2 Pearce, R. A., & Barr, W. (2015). Pearce & Stevens' Trusts and Equitable Obligations. Oxford University Press.
3 Hedlund, R. (2016). Conscience and Unconscionability in English Equity (Doctoral dissertation, University of
York).
4 Liew, Y. K. (2017). Rationalising Constructive Trusts. Bloomsbury Publishing.

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or the legal title in the property can be transferred to the beneficiary or trustee respectively if and
only if the trust is provided in written rather than merely in the form of oral promises.
Some statutes sets the exemplary for such formal processes. The Law of Property Act 19255 sets
the transaction for the creation and disposition of an interest in the land that must be by a deed and
completed by registration at the Land registry department. Similarly, Stock Transfer Act 19636 and
Companies Act 19857 sets out the mandatory need of a memorandum of transfer along with
registration of shares for a private limited company. Likewise, a compliance with the electronic
system is a must for the public limited company that results in the adequacy of correct information.
Notably, it is sufficient to transfer absolute title as a gift in a chattel without any formal
requirements which can also be made by deed. However, for a non-chattel like land, it cannot be
gifted and hence requires a formal requirements to transfer a legal title in case of land.
In case of an ineffective transfer of legal title, it might be possible for Equity to complete the gift as
the legal owner holds the property on trust for the recipient that was held in the case of Oughtred v
Inland Revenue Commissioners8. But the general rule as stated in Pennington v Waine9 is that equity
will not be applicable as a perfect or imperfect gift in such case and the court will rarely blur the
distinction between the gifts and trust. It can be clearly seen that the maxim is undermined in
Pennington as the equity will not support a volunteer by perfecting the imperfect gifts.
In the leading case of Milroy, upon trust for Milroy's benefit, Thomas Medley assigned 50 shares by
voluntary deed to Samuel Lord. Nevertheless, following the formalities of transferring shares, no
such registration for the transfer of shares were made. Due to the failure of implementing the
requisite formalities, the trust was incompletely constituted as a consequence of it. This case was
later applied in the case of, Richard v Delbridge10, where it was held that the gift was imperfect and
could not be enforced as the legal title for the leasehold property was not transferred by deed. As
demonstrated in Milroy v Lord and Richards v Delbridge, unless the beneficiary/ donee has furnished
consideration, it is not possible for him or her to enforce the trust against the trustee/ donor,
particularly in case of equity where no vesting has occurred.11 Therefore, maxims that are applicable
in case of incomplete gifts are:
1. Equity will not aid a volunteer and
2. Equity will not perfect an imperfect gift.12
However, under certain circumstances to ameliorate its strictness, court might depart from
the general rule in Milroy, as once stated by Lord Browne -Wilkinson that although equity will not
5 Kelly, R., & Hatfield, E. (2017). Land Law: A Problem-based Approach. Routledge.
6 Yeowart, G., Parsons, R., Murray, E., & Patrick, H. (2016). Yeowart and Parsons on the Law of Financial
Collateral. Edward Elgar Publishing.
7 Pikis, G. M. (2016). An Analysis of the English Common Law, Principles of Equity and Their Application in a
Former British Colony, Cyprus. Brill.
8 Oughtred v Inland Revenue Commisioners
9 Penner, J. (2016). The law of trusts. Oxford University Press.
10 Smith, L. (2017). Massively Discretionary Trusts. Current Legal Problems, 70(1), 17-54.
11 Virgo, G. (2018). The Principles of Equity & Trusts. Oxford University Press.
12 Ramjohn, M. (2017). Unlocking equity and trusts. Routledge.

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aid a volunteer, it will not strive officiously to defeat a gift.13 Therefore, the 'every effort rule' was
introduced in Re Rose.14 A share transfer form was signed and given by the settlor to trustees.
However, to become registered in the company's records, it took the trustees three months which as
a result raised a question regarding whether the transfer was complete or not at the time when
documents were delivered or the trustees registered. The court held the transfer complete as soon
as Rose delivered the documents as here he had done everything in his power to divest himself of
his interest, passing the point of no return making him unable to prevent the completion of the
transfer.15 In this case, a change in interpretation was marked where 'all in his power' to now meant
everything settlor could do himself now what third parties must do.16 In fact, it was observed that
the test set out by Turner LJ in Milroy was not only reaffirmed but amplified in Re Rose too17.
Although the case was about an ineffective transfer of legal title to shares but since the settlor had
made all the effort on executing the transfer to transfer his legal and beneficial title in the shares to
the donee, the equitable title was held to pass. Whereas, in other case of Re Fry18, Romer J refused
to perfect an imperfect gift of shares as the testator did not do anything that was needed to be done
at the time of his death. However, Re Rose is still considered as a landmark case that was later
applied in case such as Mascall v Mascall.19
Therefore, in terms of imperfect transactions, Re Rose fundamentally changed equity's
approach. The decision concerns the constitution of trusts, when a trust is created the courts assist
beneficiaries by enforcing their rights20 even if they are a volunteer21. Case laws prior Re Rose has
been arguably straightforward as explained above in the leading authority, Milroy. The decision in
Milroy serves to frustrate incomplete transactions rather than give effect to the donor's intention22
and therefore has received criticisms for challenging principles of fairness and justice. Meanwhile, it
also protects the formalities that make donor's aware to ensure they are certain about their
transaction. The decision made in Re Rose was a step forward from Milroy that effectuated the
donor's intention rather than frustrating the transaction. The operation of the rule infringes the
general principle in Milroy by assisting volunteers allowing equity to deem a transfer complete in
equity before legal title has passes.23
In Curtis v Pulbrook,24 Pennington was treated as a case of detrimental reliance. In this case
D being a shareholder in a company was trustee of three family settlements. In 2009, for breach of
trust, beneficiaries were awarded equitable compensation obtained an interim charging order for
13 Webb, C., & Akkouh, T. (2015). Trusts law. Macmillan International Higher Education.
14 Bryan, M., Degeling, S., Donald, S., & Vann, V. (2016). A Sourcebook on Equity and Trusts in Australia.
Cambridge University Press.
15 Pearce R, Stevens J & Barr W, 'The law of Trusts and Equitable Obligations' 5th edition(oxford University
Press 2011) p 204
16 Riches, J. (2016). Equity and Trusts: A Problem-Based Approach. Routledge.
17 Wilkie, M., Luxton, P., & Malcolm, R. (2016). Concentrate Questions and Answers Equity and Trusts. Oxford
University Press.
18 Malcolm, R. (2018). Concentrate Questions and Answers Equity and Trusts: Law Q&A Revision and Study
Guide. Oxford University Press.
19 Watt, G. (2018). Trusts and equity. Oxford University Press.
20 Watt, G. (2016). Cases and Materials on Equity and Trusts. Oxford University Press.
21 A volunteer is a party who has not provided any valuable consideration
22 Hudson, A. (2016). Understanding equity & trusts. Routledge.
23 Pearce R, Stevens J & Barr W, 'The law of Trusts and Equitable Obligations' 5th edition(oxford University
Press 2011) p 205
24 Liew, Y. K., & Mitchell, C. (2017). The Creation of Express Trusts.

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over the 445 shares that were believed to be beneficially owned by him. However, D claimed to have
given 300 of his shares to his wife and 14 to his daughter, as these could not subject to final charging
order. Since, D could not issue any share certificate, the gifts could not be considered effective as
that in Re Rose. The fact of the case contradicted ruling in the previous cases that lead to ineffective
gifts at law. Since, there was no evidence that D has done everything necessary, the equity could not
perfect an imperfect gift as in Re Rose. There were no evidence of any detrimental reliance that may
bind the conscience of the donor to prove a constructive trust. It was evident that there was no
intent of D to declare himself a trustee as in Choithram b Pagarani25, and therefore the court was not
able to construe a purported gift or declaration by the D or himself as a trustee. Nevertheless, in
Curtis, the executors distinguished the decision with the Re Rose, as of that D had not done
everything within his power to divest himself of his legal interest in the shares. As there were no
such evidence of share transfer, D could not rely on the exception identified in the Re Rose
decisions. This was supported by the majority of the CA in Pennington who held that the ratio of Re
Rose was that in equity, the gift can only be perfected when the donor has executed the share
transfers and delivered them to the transferees26. This decision was also supported by the decision
made in Zietal and another v Kaye and others27, where it was held that if the possession of the
donor's share certificate is not given to a donee, then it cannot rely on the Re Rose exception. Arden
LJ in Curtis analysed the ratio of the Re rose and found out that the court could dispense with the
requirement for delivery if the circumstances were such that it would have been unconscionable for
the donor to have recalled the gift.28
Conclusively, the principle in Re Rose diluted the strict approach in Milroy regardless of the
practical and theoretical problems that arose from Pennington.29 Equity's stance is much more
complicated although it seems to be more equitable. It is argumentative to whether dictate the
policy reasons behind the principle with fairness as offered by recent case laws, or by convenience
and certainty as offered by Milroy. Therefore, although the rule in Re Rose should not be extended
to the extent in Pennington, it should still be preserved as it seems to have provided a medium
between the two. Similarly, Curties identified and differentiated between every efforts and moral
acceptability. It modified the general rule of Re Rose and concluded that in similar circumstances
when equity will or will not perfect an apparent imperfect gift of shares, it will serve any clearly
identifiable or rational objective. Therefore, if everything can be done in an every effort rule, not
everything can be done with moral acceptability. But since it will be unconscionable for the gift
without perfecting it, this has been heavily criticised in Pennington.
25 Pikis, G. M. (2017). Origin and Principles of Equity. In An Analysis of the English Common Law, Principles of
Equity and their Application in a former British Colony, Cyprus (pp. 39-42). Brill Nijhoff.
26 Ollikainen-Read, A. (2018). Assignments of Equitable Interests and the Origins of Re Rose. Conveyancer and
Property Lawyer, 82(1), 63-73.
27 McDonald, I., & Street, A. (2018). Equity & Trusts Concentrate: Law Revision and Study Guide. Oxford
University Press.
28 Stone, M. (2018). Why should I listen to my conscience? Equity and the question of ontological obligation.
In Law, Obligation, Community (pp. 36-52). Routledge.
29 Jonathan Garton, 'The Role of the Trust Mechanism and the Rule in Re Rose', [2003] Conv 364 p2

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References
Bryan, M., Degeling, S., Donald, S., & Vann, V. (2016). A Sourcebook on Equity and Trusts in Australia.
Cambridge University Press.
Hudson, A. (2016). Understanding equity & trusts. Routledge.
Jonathan Garton, 'The Role of the Trust Mechanism and the Rule in Re Rose', [2003] Conv 364 p2
Liew, Y. K., & Mitchell, C. (2017). The Creation of Express Trusts.
Malcolm, R. (2018). Concentrate Questions and Answers Equity and Trusts: Law Q&A Revision and
Study Guide. Oxford University Press.
McDonald, I., & Street, A. (2018). Equity & Trusts Concentrate: Law Revision and Study Guide. Oxford
University Press.
Ollikainen-Read, A. (2018). Assignments of Equitable Interests and the Origins of Re
Rose. Conveyancer and Property Lawyer, 82(1), 63-73.
Pearce R, Stevens J & Barr W, 'The law of Trusts and Equitable Obligations' 5th edition(oxford
University Press 2011) p 204
Pearce R, Stevens J & Barr W, 'The law of Trusts and Equitable Obligations' 5th edition (oxford
University Press 2011) p 205
Pikis, G. M. (2017). Origin and Principles of Equity. In An Analysis of the English Common Law,
Principles of Equity and their Application in a former British Colony, Cyprus (pp. 39-42). Brill Nijhoff.
Riches, J. (2016). Equity and Trusts: A Problem-Based Approach. Routledge.
Stone, M. (2018). Why should I listen to my conscience? Equity and the question of ontological
obligation. In Law, Obligation, Community (pp. 36-52). Routledge.
Watt, G. (2016). Cases and Materials on Equity and Trusts. Oxford University Press.
Watt, G. (2018). Trusts and equity. Oxford University Press.
Webb, C., & Akkouh, T. (2015). Trusts law. Macmillan International Higher Education.
Wilkie, M., Luxton, P., & Malcolm, R. (2016). Concentrate Questions and Answers Equity and Trusts.
Oxford University Press.