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2 Scope of the rule “equity will not assist a volunteer”
3 Unconscionability as the new main policy objective?
The law regulating the constitution of trusts and gifts is governed by two equitable maxims which form two sides of the same coin: firstly, if the settlor has failed to constitute a trust, equity will not do so for him with the reference to the equitable maxim that equity will not perfect an imperfect gift; secondly, the would-be beneficiaries under incompletely constituted trust have no rights unless they have provided consideration which is in accordance with another equitable maxim that equity will not assist a volunteer. Since the judgement inMilroy v LordandRose v Inland Revenue Cormsthe area of law was ´tolerably clear´until the recent developments inT. Choithram International S v Pagaraniand inPennington v Waine, which promoted generous interpretation of the above mentioned maxims. The first part of this paper reviews and evaluates the change of the scope of the maxim that equity will not assist a volunteer and the second part looks at the recent shift in objectives underlying the maxim. I will argue that the recent changes to the maxim are not underpinned by clear and rational objective which would unify the approach of the courts when considering whether to perfect an imperfect gift or not.
The classic statement inMilroy v Lordestablished that to render a voluntary settlement valid, the settlor must have done everything which was necessary to be done in order to transfer the property, whereas the seemingly exclusive modes of transfer are outright transfer by way of a gift, transfer of trust and declaration of trust. Truner L.J. goes further by stating that failure to transfer property by one of these methods will not be construed as a successful attempt by the other methods.Re Rosemodified the outlined rigid approach in terms that a disposition in equity will be completely constituted where the transferor has done everything within his own power to transfer property to the transferee. At first sight,Re Rose, today widely accepted, seems to offend the above discussed maxim, but the assistance given by the court was not of the active sort prohibited by it.
InChoithramthe scope of the maxims was again widened as Lord Browne-Wilkinson held that “although equity will not assist a volunteer, it will not strive officiously to defeat a gift”. This was justified with the fact that there is no distinction between a donor declaring himself to be a sole trustee and a donor declaring himself to be one of the trustees for the donee. In both cases, the donor's conscience is affected and it would be unconscionable and contrary to the principles of equity to allow the donor to resile from the gift. On these grounds it could be claimed that to the three exclusive transfer modes declared inMilroy v Lordwas added a fourth one: declaration of self and others as trustees where no transfer is needed because conscience is affected.
If the diversion inChoithramfrom the rule established inMilroy v LordandRe Rosejustify novel facts of the case, the same cannot be said about the decision inPennington v Waine. The Court of Appeal upheld the gift contrary to the principle inRe Rosenotwithstanding the fact that the donor has not done everything in his power to transfer the shares to the donee. Arden LJ stated that there was a clear finding to make an immediate gift and that an apparently incomplete gift is to be treated as completely constituted trust if the donor will not be permitted to change his mind because it would be unconscionable to do so. She did not provide a comprehensive list of factors to assess the unconscionability of recall of gift-making as each case must depend on the evaluation of all relevant considerations. Following the argument of adding heads toMilroy v Lordrule it may be argued that declaration of trust where the transfer is inadequate but the conscience of the transferor is affected constitutes an additional possibility how to transfer beneficial interest in the property.
A J Oakley,Parker and Mellows: The Modern Law of Trusts(9th edn, Sweet & Maxwell 2008) 146.
Milroy v Lord(1862) 4 De GF & J 264.
Rose v Inland Revenue Corms Ch 499.
M Halliwell, ´Perfecting imperfect gifts and trusts: have we reached the end of the Chancellor's foot?´  Conv 192.
T. Choithram International SA v Pagarani All ER 492  1 WLR 1.
Pennington v Waine EWCA Civ 227  1 WLR 2075.
Milroy(n 2) 274.
Milroy(n 2) 274.
Re Rose(n 3) 515.
G Moffat, G Bean and R Probert,Trust Law: Text and Materials(5th edn, Cambridge University Press 2009) 140.
G Watt,Trusts and Equity(4th edn, Oxford University Press 2010) 122.
Choithram(n 5) 11.
Choithram(n 5) 12.
J Morris, ´ Questions: when is an invalid gift a valid gift? When is an incompletely constituted trust a completely constituted trust? Answer: after the decisions in Choithram and Pennington´ (2003) 6 PCB 393, 400.
Pennington(n 6) 2091.
Pennington(n 6) 2092.
Morris (n 14) 402.
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