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Disposing of property on death

Disposing of Property on Death

As Kenneth is the owner of the house and the shares at law and in equity, he can make Louise the beneficial owner of this property by transferring the shares, and conveying the house to her. Generally, in order to transfer shares to a beneficiary, it is necessary to use the appropriate form of transfer, and the legal title to the shares will pass on the registration of the new owner on the company's books. Where land is concerned, section 52(1) of the Law of Property Act 1925 requires that the transfer of the legal estate be made by deed, however, the facts indicate that it may be possible for Kenneth to avoid these formality requirements by the operation of the principle of donatio mortis causa.

A donatio mortis causa is a gift made in contemplation of, and conditional upon, the death of the donor. The donee's title will not come into existence until the death occurs, and until that time, the donor can revoke the gift. In Re Craven's Estate[1], Farwell J set out three conditions which must be shown before it can be said that a valid donatio mortis causa exists, namely:

i) The transfer must be with the intention of giving the property; This writing from studentcentral.co.uk

ii) It must be clear that the property was handed over in contemplation of a real possibility of death, and some specific focus on the possibility of death must be shown; and,

iii) The donor must have effectively parted with dominion over the subject matter of the gift. The test is whether the donor has handed over such documents as constitute "the essential indicia or evidence of title, possession or production of which entitles the possessor to the property purported to be given".[2]

  • If we apply these conditions to the facts, it can be argued that when Kenneth addresses an envelope containing the Land Registration and share certificate "for Louise on my death", it can be inferred that this act shows an intention to give Louise the property, therefore fulfilling the first condition. Additionally, as Kenneth is terminally, and his condition had worsened when he performed this act, again it can be inferred that this was done in contemplation of death, thus satisfying the second condition. A problem may lie in fulfilling the third of Farwell J's conditions, as delivery of the Land Certificate is not enough to convey the legal estate to Louise.
  • It had long been considered that land could not be the subject matter of a donatio mortis causa, and although there was no English authority directly on the point, Lord Eldon in Duffield v Elwes[3] doubted the possibility. However, in Sen v Headley[4], the matter was reviewed and it was held that the possession of title deeds were essential indicia of title to a house. The facts tell us that Kenneth regards the share and Land Registration certificates as already belonging to Louise, and by following the decision in Sen v Headley, these words do not indicate a retention of dominion by Kenneth. If the same principle is applied to the facts here, then it is possible that Louise's claim to the house may be upheld.

  • Additionally, Louise may also have a claim to the shares which were given to her by Kenneth. As mentioned earlier, in order to transfer shares, the appropriate form of transfer must be used. If it is not, the gift will be incomplete due to the lack of the formal requirement. However, there is authority for the proposition that where an incomplete gift is made during the donor's lifetime, in the case of an intestacy, the donee, if appointed as the donor's administratix, will have the property vested in her, and the gift will be regarded as complete, overriding any claims to the estate[5]. This principle is reffered to as the rule in Strong v Bird[6].
  • For the principle to apply, it must be clear that the donor intended to make the gift and that this intention continued until the donor's death. It is submitted that this principle can be applied to Louise's claim to the shares. The facts show that the share certificate was placed in the same envelope as the Land Registration certificate addressed to Louise. This indicates that there was an intention to make the gift, and there is nothing in the facts to suggest that Kenneth had changed his mind before he died. As in Re James, as administratrix of the Kenneth's estate, the gift would vest in Louise, and will therefore override any claim to the estate made by Kenneth's brother.
  • In Re Gonin[7], Walton J cast some doubt on the decision in Re James. The case of Strong v Bird concerned the appointment of an executor by the donor, and Walton J took the view that the appointment of an administrator was different to the appointment of an executor since it is not a voluntary act of the deceased, but of the law. Nevertheless, it is possible to defend the position in Re James as it can be argued that the important point to consider is that the gift is perfected by the vesting of the legal title in the donee, and it is immaterial whether that vesting is brought about by the act of the donor, or by the operation of the law[8]. Walton J did not need to decide whether Re James was correct however, as even if the rule in Strong v Bird applied to administrators, the evidence in Re Gonin did not point to a continuing intention on the part of the deceased to give to the claimant.
  • The facts also suggest that there may be an alternative claim to the property for Louise by the imposition of a Constructive Trust, or by the operation of a Proprietary Estoppel. The requirements of a Constructive Trust were analysed by Lord Diplock in Gissing v Gissing[9], and it is clear that an oral declaration of trust would be void for want of writing by virtue of section 53(1)(b) of the Law of Property Act 1925, so at first glance, although the facts show that Kenneth intends to benefit Louise, this declaration would be void. However, where the declaration is acted upon so as to render it inequitable for the donor to deny the trust, it will then take effect as a Constructive Trust, to which by virtue of section 53(2) of the LPA 1925, section 53(1)(b) does not apply. It could be argued that as Louise had given up her home 10 years ago to look after Kenneth, this was done in detrimental reliance on the assurance that Kenneth "would do right by her". If these words can be construed as a declaration of trust, as the declaration is not in writing, the function of detrimental reliance is to invoke section 53(2) of the Act, and therefore avoid the formality requirements.

  • The facts show us that the intention of Kenneth was to benefit Louise, and believing that she could not benefit from his will because she was illegitimate, was the only reason why he did not make a will in her favour. If Louise believed that by giving up her house to look after Kenneth gave her an interest to the property involved, then it can be argued that Louise had relied to her detriment on the common intention. If this evidence points to the fact that Louise acted in a manner which was explicable only on the basis that she was to have an interest in the property, a Constructive Trust may arise in her favour and she may therefore be entitled to a claim to the property[10].
  • Alternatively, Louise may be able to rely on the doctrine of Promissory Estoppel to secure a claim to the property. The doctrine is applicable where one party knowingly encourages another to act, or acquiesces in the other's actions, to his detriment. It may then be required to make good the expectation which the other party was encouraged by, so again, if Louise was encouraged by the assurance that Kenneth would see her right, a Proprietary Estoppel may create a claim and entitlement to positive property rights for her. Detrimental reliance need not involve the expenditure of money, so it will be enough that Louise acted on the faith of the assurance given to her by Kenneth[11].

Bibliography

· Textbook on Trusts This writing from studentcentral.co.uk

Authors: Paul Todd & Sarah Lowrie

Published by: Blackstone Press Ltd

Publishing date: 2000cocg cgr secgcgw orcg cgk incg focg cg:

· Modern Equity - 16th Edition

Author: Jill E. Martin

Published by: Sweet & Maxwell Ltdcocg cgr secgcgw orcg cgk incg focg cg:

Publishing date: 2001


[1] [1937] Ch. 423 This writing from studentcentral.co.uk

[2] Birch v Treasury Solicitor [1951] Ch 298 at 311

[3] (1827) 1 Bli (N.S.) 497cocg cgr secgcgw orcg cgk incg focg cg:

[4] [1991] Ch. 425

[5] As illustrated in Re James [1935] Ch 449

[6] (1874) L.R. 18 Eq. 315

[7] [1979] Ch 16

[8] Kodilinye [1982] Conv 14, at p.17

[9] [1971] AC 886

[10] Illustrated in Grant v Edwards [1986] 1 Ch 638

[11] Greasely v Cooke [1980] 1 WLR 1306



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