Ratio Decidendi
There are three and only three modes of making a valid voluntary settlement of property: (i) an outright transfer of property to the intended beneficiary; (ii) a declaration of trust in favour of the beneficiary by the owner (making themselves trustee); or (iii) a transfer of property to third-party trustees. Equity will not perfect an imperfect gift: if the donor has chosen one of these modes but failed to complete the necessary steps to effectuate it, the court will not intervene to achieve the intended result by treating the failed transaction as if it had been effected by another mode. Specifically, a failed transfer to trustees will not be treated as a self-declaration of trust by the settlor, even if that would produce the result the settlor intended.
حقائق
Thomas Medley purported to transfer shares to Samuel Lord to hold on trust for the claimants. However, the shares were never registered in Lord's name — only a power of attorney was given. Medley died without completing the transfer.
فیصلے کا خلاصہ
The Court of Appeal in Chancery (Turner LJ and Knight Bruce LJ) held the trust was not constituted and dismissed the claim. Thomas Medley executed a voluntary settlement purporting to transfer bank shares to Samuel Lord to hold on trust for himself for life, then on trust for the claimants. The transfer was to be effected by Lord exercising a power of attorney. Lord never registered the shares in his own name. Medley died. The claimants contended that either the trust was constituted (shares in Lord's name as trustee) or, alternatively, that Medley must be treated as having declared himself trustee. Turner LJ rejected both arguments. First, the trust was not constituted because the shares were never transferred to the trustee — legal title never left Medley. The power of attorney was merely an authority to register; it was not a transfer of the shares themselves. Second, the court would not treat the failed transfer as a self-declaration of trust. To do so would be to complete by one method a settlement that the donor had plainly intended to effect by a different method. Equity 'will not perfect an imperfect gift'. The claimants therefore took nothing. The case is the foundation of the rule against perfecting imperfect gifts and of the constitution of trusts doctrine. Turner LJ's formulation of the three modes of settlement remains a standard starting-point for trusts courses.
اہم اقتباسات
"There is no equity in this court to perfect an imperfect gift."
— Turner LJ at 274
"If the settlement is intended to be effectuated by one of the modes to which I have referred, the court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the court will not hold the intended transfer to operate as a declaration of trust."
— Turner LJ at 274
"In order to render a voluntary settlement valid and effectual, the settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him."
— Turner LJ at 274
بعد کا علاج
Followed as the fundamental authority on constitution of trusts and the rule against perfecting imperfect gifts. Applied in Jones v Lock (1865) LR 1 Ch App 25 and Re Fry [1946] Ch 312.
Distinguished in Re Rose [1952] Ch 499 (CA), where the donor had done everything within their power to transfer shares — only the company's act of registration remained. The Court of Appeal held the gift was effective in equity from the date the transfer form was delivered, before registration.
Qualified by Pennington v Waine [2002] EWCA Civ 227, where Arden LJ held that in exceptional circumstances unconscionability could prevent the donor from resiling from a purported transfer even before the formal steps were complete, though the case has been criticised as uncertain in scope.
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