Exceptions to the rule “Equity Will Not Assist

Volunteer”

Nur Syafiqah bt Mohd Najib 1122045

Kamaliah bt Abbas 1122492Siti Nur Jannah bt Hasanuddin 1122051

Exception: Equity will not assist a volunteer

•An incomplete transfer of property to the trustee will be regarded as complete in an exceptional circumstances.•The consequences of these principles is to enable the transferees entitled the support of equity in order to perfect imperfect gifts.•The claims may be brought even at the request of volunteers.

Circumstances: Equity will assist a volunteer

1. The rule in Strong v Bird (1874) LR 18 Eq 315

2. Proprietary estoppels3. Donatio Mortis Causa (DMC)

Facts of the case Strong v Bird (1874) LR 18 Eq 315

• Facts. The defendant’s stepmother lived with him and his wife, paying for board and lodging. He had borrowed £1,000 from her and it was agreed that the debt should be repaid by deductions of £100 from each quarter’s rent. Deductions were made for two quarters and on the third quarter the stepmother refused to hold the defendant to the agreement and paid the full rent until her death. This arrangement by conduct did not discharge the debt at law since there was no consideration for the release. The defendant became the sole executor of his stepmother’s estate. The issue was whether the loan was repayable by the defendant. The next of kin (plaintiff) attempted to recover the money from the defendant.

• Held. The transfer of the relevant sum had been perfected and the debt extinguished by the appointment of the defendant as executor. The stepmother’s donative intention had continued until her death.

The rule in Strong v Bird (1874) LR 18 Eq 315

• Where an inter vivos gift (or transfer) is imperfect because the transferor has failed to transfer the relevant property to the transferee, the imperfect transfer will become perfect on the death of the transferor.

• This will be the case if the transferee becomes the executor of the transferor’s estate and the donor manifests a present, continuing intention to make an inter vivos gift.

• A perfect gift of property requires the donor to transfer the property to the donee with the intention of gifting the property to the donee.

• The rule in Strong v Bird is that if an inter vivos gift is imperfect by reason only of the transfer to the donee being incomplete, the gift will become perfect.

• When the donee acquires the property in the capacity of executor, who, after payment of all the debts of the testator, is required to distribute the estate in accordance with the testator’s will.

• The donee will take the property beneficially in accordance with the intention of the donor, even though he acquires the asset in the capacity of executor of the donor’s estate.

Issues: Was Bird required to pay back the loan?

• When a donee of an imperfect inter vivos gift becomes the executor of the donor's estate, it perfects the gift.

• For the rule to apply, there are four conditions:1. The donee is appointed executor.2. The donor must have intended to give donee an inter vivos gift.3. Intention continued until death.4. Intention to give specific property. Not just general

• This is an exception to the general rule that equity will not perfect and imperfect gift.

Answer

• No, the stepmother made an inter vivos gift to Bird. This was demonstrated by making Bird the executor of her estate. As the executor of her estate, Bird would be responsible for calling in all debts to the estate. It would not make sense for Bird to sue himself.

Malaysian case: RE SYED HASSAN BIN ABDULLAH ALJOFRI, DECD; SYED HAMID BIN HASSAN ALJOFRI v SHARIFAH SALMAH BINTE ABDULLAH ALHABSHI & ANOR [1953] 1 MLJ 190

• The plaintiff who was one of the executors of the deceased's estate claimed that the deceased had made a gift to him of a piece of land during his lifetime. He also claimed that the house standing on this land and in which he has been staying was built with moneys belonging to him. His Counsel relied on the principle in Strong v Bird LR 18 Eq 315 that "where a testator has expressed the intention of making a gift of personal estate belonging to him to one who upon his death becomes his executor, the intention continuing unchanged, the executor is entitled to hold the property for his own benefit.- That principle applies also to real estate”.

• Held: to succeed in this case the plaintiff had to prove that there was on the part of the deceased a present intention to make an immediate gift and that such intention survived until the date of the deceased's death.

• While it is not a principle of law that there must be corroboration in proving the claim against the estate of a person who is dead, the claimant must prove his case against the estate clearly and convincingly.

• From the evidence, the plaintiff has not discharged the onus upon him to prove that there was a valid gift of land to him by the deceased. The plaintiff's claim on the issue will be dismissed.

PROPRIETARY ESTOPPEL

• Arise if there is promise, assurance or encouragement is made to the volunteer that he will acquire rights in land and as a consequence the volunteer relies on the promise and acts to his detriment.

• Estoppel by encouragement

• Gopal Sri Ram JCA in Boustead Trading v Arab Malaysian Merchant Bank Bhd : The detriment is not prerequisite.

• For the specific purpose of the rule that equity will not assist a volunteer, the application is this :

- English Law : B may be entitled to have an imperfect transfer perfected if B could show that A had made representation which A intended to be relied upon and which in fact was relied upon by B causing B to suffer a detriment.

- Malaysian Law : B may be entitled to have an imperfect transfer perfected if B could show that A had made representation which he intended to be relied upon and which in fact was relied upon by B where the circumstances of the case renders it unconscionable for A to go back on the representation.

Dillwyn v Llewelyn

• A father wanted the son to stay nearby and encouraged him to build a house on the father’s land.

• The father promised to convey the land to the son but this was not by deed.

• No actual conveyance took place and the son spent $14, 000 to have the house constructed

• The court held that the son was entitled to have the imperfect transfer perfected.

Pascoe v Turner

• When the marriage relationship ended, the husband told his wife that the “house is yours and everything in it”.

• In reliance of the promise the wife spent her own money on repairs, improvement and decoration, as well as on furniture

• In spite of his promise to have the house conveyed to her, this was never done.

• Thus, the court awarded her a conveyance to the house.

Greasley v Cooke• A maid lived with a family for much of her life.• She cared for mentally disabled member of

the family.• She was promised the right to stay in the

property as long as she wanted and in exchange she did not reveive wages

• When a member of the family later tried to evict her, the court held that she had right to occupy the property for the rest of her life.

Taylor Fashions LTD v Liverpool Victoria Trustees Society Co Ltd

• The modern doctrine was laid down.• It is absed on the prevention of

unconscionable conduct by the party where he relies on his strict legal rights to prevent the volunteer from making a claim.

Sim Siok Eng v Government of Malaysia [1978] 1 MLJ 15

• Appellant was a local contractor, entered into a contract with the Government of Malaysia in respect of one tender of construction.

• After signing the contract appellant discovered that his office had made a serious error of calculation involving $1,300,000.

• Appellant found difficulty in obtaining building materials to complete the work because of the insufficient budget.

• Appellant went to see the Director of Public Works Department, Sarawak.

• As a result, the respondent orally agreed to supply the appellant with certain building materials the cost thereof to be deducted from the payment due to the appellant.

• From then on whenever the appellant wanted such building materials he would just write to the Divisional Engineer.

• After some time, no building materials were supplied after seizure of plywood by the Anti Corruption Agency.

• Consequently, appellant stopped work. • After he stopped work his contract was

terminated on the understanding that following the October meeting he was relieved from supplying the materials and the contract was varied. The important thing is that he relied on the promise or assurance given by respondent and altered his position accordingly.

• Relying on the promise or assurance given appellant had altered his position. His responsibilities to supply those materials had been suspended or kept in abeyance. For respondent to re-impose the contractual provision adequate notice should be given.

• By whatever name the promise was called - concession or temporary arrangement - it was binding on respondent but terminable by respondent giving reasonable notice.

• Where it is not possible for the promisee who has altered his position, upon reliance of the promise of the promisor, to resume his previous position, the benefit of the estoppel would continue in effect for the promisee’s benefit.

Cheng Hang Guan v Perumahan Farlim Sdn Bhd [1993] 3 MLJ 352

• The plaintiffs claimed that they were and are lawful and protected tenants and were entitled in law and equity to possession of portion of land on which were situated their two dwelling houses and their vegetable farm

• The registered proprietors of the land are the trustees of Khoo Kongsi. Plaintiffs had converted what was once a swampy jungle land into a productive farm.

• The visiting trustee of Khoo Kongsi had told Plaintiff that it was not necessary to change the tenancy of the vegetable plot to her name and that she could continue planting vegetables as long as she wished provided she paid rent.

• This is an assurance given by Khoo Kongsi that as long as plaintiff continued to pay ground rent he could stay and cultivate the vegetable plot as long as he wanted.

• After the assurance given by the visiting trustee, the plaintiffs invested RM12,000 in installing a sprinkler system.

• The assurance given to Plaintiffs is consistent with the practice of Khoo Kongsi before the developers Farlim came on to the scene in the late seventies.

• For more than 50 years, neither Khoo Kongsi or anyone else had interfered with the farming activities of the plaintiffs’ family.

• Only after Khoo Kongsi had entered into a joint-venture agreement was there any interference with the plaintiffs’ possession of the plot concerned.

• Here the plaintiffs and their forbears have been in possession of the plot concerned for decades and they have commenced these proceedings to protect their rights to remain in possession relying on equity or equitable estoppel.

• In the circumstances, the plaintiffs’ claim to the alleged equity does not depend on the availability of the remedy of specific performance.

• Plaintiffs’ claim was allowed by the court.

Donatio Mortis Causa (DMC)

Definition

• DMC is a latin term • It means a gift under apprehension of death• Eg; when any thing is given upon condition

that if the donor dies, the donee shall possess it absolutely, or return it if the donor recover or should repent of having made the gift, or if the donee should die before the donor...

• DMC is differ from an absolute inter vivos gift because the transfer of the asset is conditional on death.

• DMC is distinct from testamentary gift where the conditional transfer of property inter vivos is not made by will. Hence the procedures under Wills Act 1959 are not required to be comply with.

History of DMC• originated in Roman law where it appeared to

be the product of attempts to avoid the technical or formal elements of succession law.

• The Roman law permitted this transactions between husband and wife because these were gifts conferred during the course of a valid marriage.

Elements of DMC

a) Must be made upon contemplation of death (illness)

b) Must be intended upon death (revocable)

c) Must be delivery of the subject matter to the donee (part dominion)

(a) Must be made upon contemplation of death (illness)

• the gift must be made upon contemplation of death specifically rather than merely reflecting that we all must die some day.

• The test here is subjective and the court may decide this question by having regard to the surrounding circumstances such as the injuries, or illness of the donor, or the fact that the donor was a patient in a hospital or etc.

Wilkes v Allington

• the donor was suffering from an incurable disease (cancer) in 1922. Therefore, he made a several incomplete gifts to his nieces. In January 1928, after coming home from a market by a bus, he caught a chill and died of (pneumonia).

• Held : there was a valid donatio mortis causa eventhough the precise cause death was different to the contemplated cause.

Thompson v Mechan

• The deceased, who was very apprehensive of flying, delivered the keys of his car and the vehicle permit to the plaintiff shortly before departing on a regular flight to Winnipeg. The deceased arrived safely, but died suddenly from a coronary thrombosis two days later whilst still in Winnipeg.

• Held : the risk of normal air travel did not satisfy the requirement of contemplation of death. It is not sufficient merely to recognise that death will occur sometime.

Question : DMC when suicide?• The answer used to be DMC was not valid in

the case of suicide.• Agnew v Belfast Banking Co and Re Dudman,Held : that a donatio mortis causa was not possible as that would be against public policy and its an offence.• However, in 1961 suicide is no longer a crime (Suicide Act 1961)• Thus, DMC is valid in a case of suicide.

(b) Must be intended upon death (revocable)

• the gift must be intended upon death which means the intention of the donor is dependent on death.

• If the donor recovers, the gift is revocable.

Gardner v Parker

• the donor was terminally ill when he made the gift and died shortly after making it.

• Held that the DMC is valid,‘If a gift is made in expectation of death, there is an implied condition that it is to be held only in the event of death.’

Tate v Hibert

• the deceased attempted to make an immediate and unconditional gifts to the nieces.

• The court ruled that an absolute gift to take effect immediately cannot be considered as donatio mortis causa.

(c) Must be delivery of the subject matter to the donee (part dominion)

• there must be delivery of the subject matter to the donee and intention to part dominion over it.

• The donor must either hand over the thing to be given, or the documents which constitute the essential evidence of title, with the intention of surrendering dominion over the thing and not merely for safe keeping.

• Eg; key of the car, name title for the land and etc

Re Craven’s Estate• A testatrix was about to enter hospital for a serious operation.

In her will she had given her son a power of attorney over some shares and money in a bank account.

• She told her son to get the property transferred into his name as she wanted him to have it if anything should happen to her.

• The son, using the power of attorney, had the shares and the money transferred into his name.

• His mother died a few days later• Held; when his mother instructed him to transfer the property

into his name, having already given him a power of attorney, there was sufficient parting with dominion to satisfy the requirement for a valid donatio mortis causa

FYI : Problem arise to what kind of property can be the subject of donatio

mortis causa ? Stock & shares Cheques Bank accounts Real property ( chattels/ lands & etc..) Safety Deposit Box Furniture & Personal Effacts

Cheques

• The donor’s cheques is a revocable order to the bank to pay the person in whose favour the cheque is drawn and is incapable of being the subject matter of a DMC.

• Payment of the cheque may be revoked during the lifetime of the donor and is revoked on death

Re Beaumont• Mr Beaumont who was very ill and in fear of impending death, on 19

February 1901 drew a cheque for 300 in favour of Mrs Ewbank, to whom it was delivered.

• Mrs E endorsed the cheque and on 23 February it was presented for payment at Mr B’s bank, where his account was overdrawn. The bank manager refused payment, stating that Mr. B’s alleged signature was unlike his ordinary signature and required confirmation of the genuineness of the signature.

• The court found that the manager was willing to lend the money if he was satisfied that the signature was genuine. Mr B died on 25 February 1901 without the cheque having been cashed. Mrs E claimed that Mr B’s personal representatives ought to be compelled to complete her title on the ground of valid DMC.

• The court held that the cheque was a revocable mandate which was not a proper subject of a DMC.

Real property• For many years it was assumed, on the basis

of nineteenth-century dicta, that land could not be the subject of a donatio mortis causa...

• However…in Sen v Hedley, the court held that land can be the subject of DMC.

• But its only restricted to unregistered land. • In Duffield v Elwes, the court ruled that the

registered land cannot be the subject of DMC.

Sen v Hedley

• Mr Hewett and Mrs Sen was husband and wife. In 1986 he was taken terminally ill, was admitted to hospital and knew that he did not had a long time.

• In the event of his death, he told his wife, ‘The house is yours, Margaret. You have the keys. They are in your bag. The deeds are in the steel box.’ Then he died intestate.

• The next of kin of Mr Hewitt claimed for the property. The court gave judgment to the next of kin of Mr. Hewitt

• Then Mrs Sen appealed to the CoA.• The CoA ruled that in doing so (giving the key

to the steel box containing the title deeds of the deceased) , the deceased had indisputably made a gift of the house to the plaintiff in contemplation of his death to be effective on his death and his parting with the dominion over the title deeds to the house was sufficient to satisfy the third of the requirements necessary to establish a valid donatio mortis causa.

ConclusionExceptions to the rule of equity ‘equity will not assist volunteer’ & ‘ equity will not perfect an imperfect gift’ :• Rule in Strong v Bird• DMC• Proprietary estoppel