Overview
Express trusts form a foundational element of trust law, requiring precise adherence to established legal principles for their creation and enforcement. The maxim "equity will not assist a volunteer" encapsulates the principle that equity does not perfect imperfect gifts to those who have provided no consideration. However, notable exceptions exist where equity intervenes to uphold certain transfers despite the absence of consideration. This article examines the essential requirements for the creation of express trusts, explores the rule that equity will not assist a volunteer, and analyzes the significant exceptions to this rule as developed through case law.
Elements of Express Trusts
For an express trust to be valid, it must satisfy the three certainties established in Knight v Knight (1840) 3 Beav 148:
1. Certainty of Intention
The settlor must clearly intend to create a trust, imposing a fiduciary obligation upon the trustee to hold and manage property for the benefit of the beneficiaries. Courts assess intention by examining the settlor's words and actions, without requiring specific formal language.
Case Law: In Paul v Constance [1977] 1 WLR 527, the court held that the statement "the money is as much yours as mine" demonstrated sufficient intention to create a trust.
2. Certainty of Subject Matter
The trust property must be precisely identified, covering two aspects:
- The property subject to the trust must be clearly specified.
- The beneficial interests of the beneficiaries must be ascertainable.
Case Law: Hunter v Moss [1994] 1 WLR 452 established that a trust over a portion of indistinguishable, identical shares was valid, as the shares were fungible and did not require individual segregation.
3. Certainty of Objects
The beneficiaries of the trust must be identifiable.
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Fixed Trusts: Require the "complete list" test, where all beneficiaries are ascertained.
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Discretionary Trusts: Utilize the "is or is not" test from McPhail v Doulton [1971] AC 424, determining whether any given person is or is not a member of the beneficiary class.
Administrative Unworkability
A trust may fail if the class of beneficiaries is so wide that it becomes administratively unworkable.
Case Law: In R v District Auditor, ex p West Yorkshire Metropolitan CC [1986] RVR 24, a trust for all inhabitants of West Yorkshire was invalidated due to its impracticable breadth.
The Rule That Equity Will Not Assist a Volunteer
The principle that "equity will not assist a volunteer" reflects the reluctance of equity to enforce imperfect gifts or voluntary covenants in favor of individuals who have provided no consideration.
Application of the Rule
This maxim applies to:
- Incomplete Gifts: Where the donor has not completed all necessary steps to transfer legal title.
- Voluntary Covenants: Promises made without consideration, which equity generally does not enforce.
Case Law: Milroy v Lord (1862) 4 De GF & J 264 established that equity will not perfect an imperfect gift, reinforcing the necessity for proper legal formalities.
Exceptions to the Rule
Certain exceptions allow equity to assist a volunteer, thereby perfecting transfers that would otherwise remain incomplete.
1. The Rule in Strong v Bird
An imperfect inter vivos gift may be perfected if the intended recipient becomes the executor or administrator of the donor's estate, provided specific conditions are met.
Requirements:
- The donor intended to make an immediate gift.
- The intention persisted unchanged until the donor's death.
- The donee was appointed as executor or administrator.
Case Law: In Strong v Bird (1874) LR 18 Eq 315, the court upheld the imperfect gift when the donee became the executor, as the donor's intention remained consistent.
2. Donatio Mortis Causa (Deathbed Gifts)
A donatio mortis causa is a gift made in contemplation of imminent death, which takes effect upon the donor's death without adhering to standard formalities.
Requirements:
- The gift is made in contemplation of impending death.
- There is delivery of the subject matter or an essential item representing it.
- The gift is intended to be conditional upon death.
Case Law: Cain v Moon [1896] 2 QB 283 outlined the criteria for a valid donatio mortis causa.
3. The Rule in Re Rose
If the donor has done everything within their power to transfer the property, but the transfer is not complete due to pending actions by third parties, equity may treat the transfer as effective.
Case Law: Re Rose [1952] Ch 499 demonstrated that equitable title passes when the donor has fulfilled all necessary steps.
4. Pennington v Waine Exception
Equity may perfect an imperfect gift if it would be unconscionable for the donor to retract the gift, even if not all formalities have been completed.
Factors Considered:
- Assurance from the donor to the donee.
- Reliance by the donee on the gift.
- Detriment suffered by the donee as a result of that reliance.
Case Law: Pennington v Waine [2002] EWCA Civ 227 expanded the circumstances under which equity will intervene.
5. Unconscionability
Equity will intervene to prevent unconscionable outcomes, enforcing a transfer where it would be unjust not to do so.
Case Law: Choithram v Pagarani [2001] 1 WLR 1 highlighted equity's role in enforcing a trust to prevent injustice.
Illustrative Examples
Example 1: Donatio Mortis Causa
An individual, seriously ill, hands over the keys to a vehicle to a friend, expressing that the car should belong to the friend upon death. This may constitute a valid donatio mortis causa if the requirements are satisfied.
Example 2: The Rule in Re Rose
A person executes all necessary documents to transfer shares to a relative but passes away before registration is completed. Since the donor did everything required, equity may recognize the transfer as effective.
Conclusion
The exceptions to the maxim that equity will not assist a volunteer reveal the complex interaction between strict legal formalities and equitable principles in trust law. While the general rule withholds assistance to volunteers lacking consideration, exceptions such as the Rule in Strong v Bird, donatio mortis causa, and the principles from Re Rose and Pennington v Waine provide avenues through which equity upholds the donor's intent. These exceptions are significant to understanding how equity operates to achieve fairness, ensuring that genuine intentions are honored even when formal legal requirements are incomplete.
