'Equity will not assist a volunteer and that equity will not perfect an imperfect gift....'

It is apparent that subsequent case law has sought to eliminate such principle by introducing various exceptions which allow incomplete gifts to be perfected. There has nonetheless been much criticism and debate in regards to this area of the law since it is felt on the one hand, that the scope is for exceptions is being widened too far, whilst it is argued on the other that it allows for situations to be perfected which would otherwise be unconscionable to the parties. What is clear nonetheless is that the exceptions have advanced over the years since the principle was enunciated in Milroy and it is inevitable that it will continue to advance and thus create a topic for criticisms and debate.

The general rule in equity is that it cannot ‘perfect and imperfect’ gift as was demonstrated in the case of Milroy v Lord[1] where it was held that “equity will not assist a volunteer and so equity will not enforce gratuitous promises or perfect and imperfect gift.” Nevertheless, there are in fact exceptions to this maxim as demonstrated in the case of Re Rose[2] where it was established that equity will in fact be capable of perfecting an imperfect gift if it is established that the donor had done all that can be expected of him to transfer the legal title, yet the transfer was in fact delayed by the routine operation of the law. As such, in circumstances such as these the gift will be capable of being effective. Thus, it is evident that such maxim is capable of being lifted in certain instances and it will in fact depend entirely upon the facts of the case and the circumstances in order to establish whether equity will be permitted to ‘perfect an imperfect gift.’ 

The principle in Re Rose has nonetheless been further enunciated in the case of T Choithram International SA v Pagarani[3] where it was again demonstrated that imperfect gifts in equity can in fact be made perfect on the circumstances. Here, it was held that “that a valid trust was created over that property even though the deceased person had not transferred the legal title in the trust property.” Accordingly, the rationale in Re Rose was taken in that it was demonstrated that the settler had done all that was necessary of him to do in transferring the trust property. In accordance, this case was an indication of the advancement of the principle and was seen to be a major step forward in its development and recognition. Thus, ensuing from this case Pennington v Waine[4] further revealed the Re Rose principle and held that a gift of shares could be perfected where the donor had in fact done everything which was necessary even though a share transfer form had not been effectuated.

Nevertheless, the decision in Pennington has been criticised by many for extending the Re Rose principle too far. It was argued by Hudson that; “Pennington v Waine is so evidently wrong since there is not even such a concatenation of circumstances as there was in Re Rose and there had not been completion of all of the formalities necessary for the transferor to have performed.”[5] He went on to further say that; “it is a nonsense to suggest that equity should compel the transfer since equity is purporting to transfer an equitable interest in circumstances in which there has not been a transfer of title at common law nor a specifically enforceable transfer of such title.”[6] Accordingly, it is clear that the decision in Pennington does purport to give courts of equity an “unfettered discretion as to whether a voluntary gift or trust should take effect with far reaching consequences for voluntary dispositions of property.”[7]

Nevertheless, not all feel that the decision in Pennington was wrong and may believe that it was in fact a welcoming step forward in the law regarding incomplete trusts and gifts. As put forward by McGhee; “it has given much greater scope for arguing that apparently incomplete gifts are nevertheless effective in equity”[8] and that “the case is another useful illustration of the power of equity to extend existing doctrine to do justice in the individual case but at the expense of certainty.”[9] He went on to further conclude that Pennington provides much that will be useful for those seeking to uphold gifts which are not formally complete. But although a donee can be advised in such circumstances that he may have a respectable argument that the gift is valid, it will be difficult to predict the chances of success and much seems to depend on how the court perceives the justice of the individual case.”[10] However, it seems obvious that McGhee would in fact agree with the decision in this case since he represented the successful party in the case.

Accordingly, it seems that the decision in Pennington will be open to much criticism or debate whether good or bad, yet it appears to have paved the way for some much needed clarification in the law. Since the decision in Milroy, there has been an array of case law opposing the maxim that ‘equity will not perfect and imperfect gift’ and it seems that the exceptions have in the majority of cases proven to adequate and welcoming. The Re Rose principle was in fact the foundation for such exceptions and since then it appears that there has and will continue to be cases where incomplete gifts are held to be valid. Nevertheless, such exceptions will not go without its critics and it is felt that the scope of incomplete gifts being perfected is opening too wide and as a result producing inconsistent and unjust decisions. Nevertheless, not all agree with such views and believe that the law in this area is in fact developing and that it is clear from the case law that whether an incomplete gift can in fact be perfected will depend entirely upon the facts and circumstances of the individual case. Yet, it is overall comprehensible that the law in regards to incomplete gifts has advanced over the years and will continue to so for as long as parties will be claiming for property of their loved ones.

[1] [1861-73 ] All ER Rep 783, 7 LT 178

[2] [1952] Ch 499

[3] [2001] 1 WLR 1

[4] [2002] 1 WLR 2075

[5] Hudson. A, Choithram and Pennington Discussed, Available [Online] at: www.alastairhudson.com/trustslaw/choithram andpenningtoncasenotes

[6] Ibid.

[7] Halliwell. M, Perfecting Imperfect Gifts and Trusts: Have we Reached the end of the Chancellor’s foot, Conveyancer and Property Lawyer, (2003).

[8] McGhee. J, The Recent Case of Pennington v Breen, Maitland Chambers, (2003), Available [Online] at: http://www.maitlandchambers.com/Files/Article/PDF/JMAllsfair.pdf

[9] Ibid.

[10] Ibid.