COMPLETELY CONSTITUTED TRUST AND INCOMPLETELY CONSTITUTED TRUST

(CCT & ICT)

Introduction
CCT is how a trust is set up.
CCT is the formalities that the property will demand if the settlor want to transfer the property.
Transfer formalities will play a vital role for the settlor to transfer the legal estate in the trust
property to the trustee. This will depend on the nature of the property involve.
CCT
1. Cover actual completion of transfer of title into name of trustee by mode required due to nature of
property
2. Settlor doing everything necessary to effect transfer in order to transfer in accordance to nature of
property – power to complete transfer out of settlor hand – equity look as done what ought to have
been done
Inter-vivos v testamentary trust
1. Inter-vivos trust (during settlor lifetime)
- trust property vested in the trustee during settlor lifetime
- need to comply with formalities to transfer the land to trustee
2. By will or testamentary trust
- trust created upon the death of the settlor
- need to comply with the requirement with regard to the validity of the will for the trust to take effect
- does not need to comply with formalities to transfer the land to trustee as required in inter-vivos

Inter-vivos trust
For a trust to be effective, there must be a transfer of property from the settlor to the trustee. An
express trust requires the settlor or the testator to dispose of his interest in the property and pass the
legal title to trustee and beneficial title to beneficiary.
The vesting of the trust property in the trustee constitutes the trust. In CCT there is no need for
consideration and the question of whether a beneficiary is a volunteer is not relevant.
Property has to be transferred by proper legal rules. If it is not, then the transfer fails and the title
is said to be imperfect.
The transferee who has not given valuable consideration is called a volunteer.
A volunteer cannot enforce the promise as it is not a contract and has no enforceable right. Hence
the maxim equity will not assist a volunteer will apply.

Examples of CCT
Re Bowden
The settlor prior to becoming a nun in 1868 conveyed to trustee all property which she might become
entitled under her father will. No trust yet as there was no property. In 1869, her father died and during
the course of 5 years the settlor’s share of her father estate was transferred to the trustee. In 1935, the
settlor requested return of property. 12
Held, trust was completely constituted and effectively settled and was held in trust of the settlement.
Fawziah Holdings Sdb Bhd v Metramac Corp Sdn Bhd
On the much firmer ground that there is a valid, binding and enforceable express trust it is trite law
that in the case of a completely constituted trust, it may be enforced by beneficiary whether he has
given consideration or not.
Principles in CCT
Principle 1: The appropriate mode of vesting property in a trustee must be used.
Principle 2: Equity will not perfect an imperfect gift
Principle 3: Where the transferor has done all in his power to complete the transfer, the transfer will
be given effect in equality.
Principle 4: Where beneficiaries have provided consideration they may seek specific performance to
complete the transfer of property.
Principle 5: Next of kin are volunteers and cannot obtain equitable relief as equity will not assist a
volunteer to enforce a trust
Principle 1: The appropriate mode of vesting property in a trustee must be used.
Milroy v Lord
The settlor executed a voluntary deed transferring shares to Lord on trust (trustee) for Milroy
(beneficiary). To complete the transfer, however, registration in the company’s books was required.
Lord, through a power of attorney could have completed this further stage but failed to do so.
Issue: Whether the share were held on trust for plaintiff?
The transfer was held ineffective and the trust was not properly constituted. An invalid transfer is not
to be construed as a valid trust.
To render voluntary settlement effectual, the settlor must have done everything which, according to
the nature of the property comprised in the settlement, was necessary in order to transfer the property
and render the settlement binding on him. This case laid out how transfer effected
1. outright gift;
2. a transfer of legal title to trustee to hold on trust for benefit of another or;
3. self- declaration of owner that he now holds property on trust for another
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Paul v Constance (self-declaration as a trustee)
When a person holding legal and beneficial title to a personal or real property declares themselves
as holding the title as a trustee for the beneficiary. Created by declaration of trust and no need
formalities

Deceased C separated from wife in 1965. In 1967 Mrs Paul lived together with C as man and wife. C
received 950 pounds from a personal injury claim and open an account to bank it in. C wanted to open
a joint account with his mistress but did not do so. C said on many occasions that he regarded money
in the account as belonging to both of them, “as much as yours as mine.” Monies from joint bingo
winnings were paid into account and money was withdrawn for benefit of both of them. C died and his
wife claimed that the monies were hers on account of his intestacy.
Court of Appeal held that C held the monies on express trust for himself and C. Hence monies were to
be shared between mistress and wife
Re Goldcorp Exchange
Goldcorp Exchange Ltd had a business of holding gold reserves in coins and ingots for customers. It
sold some customers gold and customers paid in advance. At the same time it owed the bank money.
The bank went into liquidation and neither had gold to give to the customers nor assets to the debts of
the bank.
Issues: Whether the gold buyers or the bank creditor gets to be paid first?
Held, the bank of NZ has first right. There is no separation, entitlement and identification.
Goods need to be specifically identified before legal title can pass: no property passes under a mere
contract of sale by description for the supply of generic goods.
There was no completed constituted trust between customer and Goldcorp
Mode of Vesting
Chattels
Includes things like jewellery and painting etc

By deed or

By delivery of chattel

and intention that legal ownership is transferred

Mode of vesting: Delivery: Can be actual delivery or constructive

1. Actual – physical delivery of thing itself

2. Constructive – delivery of means to control chattel or transfer dominion is given to trustee /donee
14
Thomas v Times Books
Dylan Thomas statement to a friend that he could have the original manuscript of Under the Milk Wood
if he could find it in one of a number of pubs that Dylan might have left it, was sufficient to give
ownership to friend.
Woodward v Woodward
Car – giving of car keys to a car
Re London Wine
If chattels part of a greater bulk then need to separate in some way to comply with certainty of subject
matter
Carlisle v Glaister
Owner of miniature female white poodle was upset that his wife allowed her to mate with the wife’s
black poodle. Threw white poodle at he and said ‘she is your responsibility now”. Held: The language
too vague to transfer legal title despite delivery.
Shares
Related legislation Companies Act 1965
Need to follow the procedure to effect transfer of title to trustee
Registration of trustee as owner of shares would amount to completely constituted trust
Private company – a gift / trust of shares valid if

(a) transferor execute form of transfer required

(b) has done everything else (eg deliver share certificate) which is obligatory for him alone to do to
make the transfer effective and binding upon him
(c) so that it is out of his power to prevent the donee /trustee to do what is necessary
Gift effective in law when transfer registered.
But until then, the transferor who satisfies (a) and (b) is a constructive trustee for the transferee.
Public Company – electronic registration – compliance with process of e- registration - correct
instruction to transfer will be adequate.

Re Fry
The donor wanted to give a gift of shares; due to wartime regulations he had to gain the consent of
government before a share transfer can take place. Held no valid transfer and gift was void.
When new trustees are appointed (Trustee Act 1949):
S40 (7) and S47: They shall have the same trust property and accompanying rights and duties vested
in him. The trust instrument may provide for express vesting declarations or it may specify an
appropriate form of conveyance or transfer.
15
 S44 and S45 (2) set out the method of vesting trust property in new and continuous trustees.
S48-58 says that the court has power to make vesting orders.
S54 states that the court can appoint a person to convey trust property in circumstances arising under
S48-S58.

Principle 2: Equity will not perfect an imperfect gift

Jones v Lock
The father put a £900 cheque in the baby’s hand and said: “Look you here, I give this to baby; it is for
himself and I am going to put it away for him, and will give him a great deal more along with it”. The
wife said the baby might tear it and the father said it is his own he may do whatever he likes with it.
He locked in the safe and died 6 days later.
It was argued that although there was never an outright transfer, because he had not actually endorsed
the cheque by signing it, there was a trust of the cheque for the baby.
Held, there has not been a transfer of the property as it has not been delivered. It could not be used as
a declaration of trust.
It was held that this was too insufficient to establish his intention to create a trust. It was a one-off
declaration and was not enough to prove he intended on giving the baby the money for himself.
Chothiram International SA v Lalibai Thakurdas Pagarani (2001) (Pragmatic approach after Re
Rose)
Shortly before his death C created a charitable foundation with the expressed intention of giving his
shares in and his credit balances with to his companies. C did not actually sign share transfers. However
one of the trustees Mr Pagarani executed the trust deed and £1,000 was transferred to the foundation.
After his death the companies transferred his shares and credit balances to the foundation.
Held, the PC held that an oral declaration by a donor that assets vested in him were now to be held as
trustee of a charitable foundation was sufficient to create an immediate and unconditional gift. This
was so, even though the assets have not been transferred to the other trustees.
Fairness required by equity. The fact that the trust property was vested in one trustee (Mr Pagarani
himself) at the time of the gift was sufficient to make the conveyance to the trust valid.
Principle 3: Where the transferor has done all in his power to complete the transfer, the transfer
will be given effect in equality.
Re Rose
The deceased transferred 10,000 shares to his wife and another 10,000 shares in the same company to
trustees to hold on trust. These were eventually stamped and registered on April 12, 1943 and registered
in the company’s books on June 30, 1943 (the relevant date for 16
completion of transfer to avoid tax). The Court of Appeal held that the deceased had done everything
in his power to transfer the legal and beneficial interest in the shares. The beneficial interest in the
shares passed on March 30, 1943 and consequently was not assessable for estate duty.
Broader than Re Rose and following pragmatic approach in Chothiram: In Pennington v Waine
Mrs Ada filled up a share transfer form and gave it to Mr Pennington, company’s auditor, to transfer
her 400 shares in a company to her nephew, Harold.
Mr Pennington put it on the auditors’ files but never gave it on to the company for the registration of
shares in Harold’s name to be completed. Ada died.
The other people who stood to inherit, (including Philip Waine) argued that unlike Re Rose, Ada had
not done all she could have, because she had not handed the completed transfer form to Harold or the
company. Harold contended that the shares were held on trust for him, so that the transfer must be
completed.
Held, in the case the donor had told the donee (Harold) of the gift of the shares, she had signed the
transfer form and given it to a partner in the firm.
The partner had told the donee that he need take no further action
Moreover, the partner agreed to become director of the firm. Without a transfer of shares he could not
have become a partner.
It is unconscionable for Ada to change her mind.
Principle 4: Where beneficiaries have provided consideration they may seek specific
performance to complete the transfer of property.
If the owner of the property has the intention to make a gift but doesn’t hand over the property to
the beneficiary, there is no legal principle that one can apply to compel the legal owner to make the
gift.
However, if the beneficiary has given some consideration as understood by law (money/ money
worth/ marriage) the imperfect gift will be converted into a valid contract. The beneficiary can apply
to the court for a decree of specific performance to compel the owner to honour his part of the contract.
Trust of a marriage settlement
Is a trust with consideration where spouses set up for their imminent marriage and for children of
their marriage
The spouse and children are part of the marriage settlement
Children are deemed to be within a marriage consideration and treated as having given
consideration. It may include stepchildren if they are treated as children of the family but does not
include next of kin or any other relations.
Next of kins are volunteers and cannot get equitable assistance.
Maxim: Equity regards as done that which ought to be done.
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Pullan v Koe
In the marriage settlement, the husband and wife promised to settle any property acquired after
marriage that exceeded the value of 100 pounds to the marriage trust.
She then received a sum of money from her mother which was not added to the trust but simply put in
her husband’s account
His husband used it to buy securities but she has a right to withdraw
On his death the question the trustees brought action against husband’s estate and claimed that the
bond should be held for the benefits of the beneficiaries of the marriage settlement.
Held:
The trustees cannot take any legal action for damages of the promise because it has been time-barred.
However since the husband had received the bonds with notice of the trusts of marriage settlement, the
trustees were able to claim the bonds in equity on behalf the beneficiaries
It is true that court will not assist a volunteer but the trustees/claimant in this case were acting on behalf
of person within the marriage consideration
Principle:
The court said the children were objects of marriage settlement and therefore they were not
volunteers and could enforce an incompletely constituted trust
A person can covenant for valuable consideration to settle property which is to come into existence in
the future and when it comes into existence equity sees as done that which ought to be done and will
not insist upon the specific performance of the covenant.
Principle 5: Next of kin are volunteers and cannot obtain equitable relief as equity will not assist
a volunteer to enforce a trust.
Re Plumptre's Marriage Settlement 1910
Briefly similar to Pullan's. In this case, the next of kin were trying to enforce the covenant/promise as
the wife died childless.
The court held the next-of-kin were not objects of marriage settlement.
The covenant was between the husband and the wife and the next-of-kin were not parties to it. The
next-of-kins were volunteers being strangers to the marriage consideration and cannot enforce the
covenant against the husband.
Re Pryce
Next of kin were trying to get property within a marriage settlement as there was a promise to settle
after-acquired property. The trustees sought directions as to whether they should take proceedings to
enforce a covenant to settle after-acquired property.
Held: No because the next-of-kin were volunteers and were not parties to the covenant, they had no
right to enforce it. To direct the trustee to act would be to allow the next-of-kin to obtain 18
by indirect means a benefit which they could not obtain directly themselves. Trustees could not sue or
be allowed to sue on behalf of volunteers or next-of-kin.
[The court was saying that the trustee cannot act for the next of kin, not your business, your duty is for
beneficiaries only]
Exceptions
3 exceptions to the rule that equity will not assist a volunteer
Exception 1: Principles of Strong v Bird
Bird borrowed £1,100 from his stepmother. She was living with him and paying him for rent. It was
agreed by both parties that the loan was to be repaid by a reduction in the rent, until the loan was
settled. She paid the full rent until her death.
On her death, she appointed Bird as her executor and the next of kin now attempted to recover the debt
from Bird.
Held, the debt had gone as the appointment of Bird as executor released the debt at law for he could
not sue himself.
Further the stepmother showed a clear intention to forgive him the debt and this intention continued
till her death.
Principle:
A debt is released at law if the debtor becomes the executor of the creditor’s estate.
Therefore, if a balance of a loan remains outstanding from debtor to creditor the appointment of the
debtor as executor of the creditor’s estate releases the debt.
Though Bird was just a volunteer without consideration but the court held that the debt is released
as law when the debtor is appointed by the creditor. This is because the appointment vest property in
the debtor and this completes the gift.

To invoke the rule in Strong v Bird,

There must be a present intention of forgiving a debt, or making a gift of existing property. A future
intention will not suffice nor will a promise to make a gift on future occasions.
The intention must continue up till the donor’s death.
The property must vest in the donee. This may be satisfied if he becomes the sole executor or several
executors (Re Stewart). It should be noted that the property will automatically vest in the hands of the
executors by virtue of their appointment.
In Malaysia, by virtue of Section 64(b) and (c) of the Contracts Act 1950, a debt can be released
without consideration. An imperfect gift may be perfected by applying the rule in Strong v Bird was
upheld in Lee Hun Kee & Yeoh Seng Huat.

Exception 2: Principle of Donatio Mortis Causa

This is an exception to the rule that equity will not assist a volunteer. A gift made inter-vivos (transfer
of gift during lifetime) can take effect if the essentials laid down by Lord Russel in Cain v Moon are
satisfied: 19
 The gift must have been made in contemplation though not necessarily in expectation of death
The subject matter of the gift must have been delivered to the donee
The gift must have been made under such circumstances to show that the property is to revert to
the donor if he should recover.

The rule allows a volunteer to take a gift of property that would otherwise go to the deceased’s estate.
Certain types of property are excluded from the rule including stocks and cheques. Cheques and
promissory notes drawn by third party are capable of passing donation. But a cheque drawn by the
donor on his own bank account cannot be the subject matter of DMC because it does not constitute
property but merely an order to the donor’s bank which is revoked on his death. Land can be the
subject-matter of a DMC.
Exception 3: The concept of proprietary estoppel
Dillwyn v Llewellyn
Facts:
The father placed one of his sons in possession of land belonging to him and at the same time signed a
memorandum that he had presented the land to the son so the latter could build a dwelling house on it.
The son with the assent and approval of the father built at his own expense house on the land and
resided there. On the father’s death, the son sought a declaration that he was entitled to call for a
conveyance of the fee simple.
Held, this was not mere incomplete gift of a life interest but it was clear the memorandum was to
vest in the son the absolute ownership of the estate. As the son had been put into possession and
incurred expenditure on the land with the assent of the father, equity would intervene and perfect
the imperfect gift.