Milroy v Lord

Milroy v. Lord
Court	Court of Appeal
Date decided	1862
Citation(s)	[1861-73] All ER Rep 783, 7 LT 178
Transcript(s)	transcript at BAILII[1]
Judge(s) sitting	Knight-Bruce, Turner

Milroy v. Lord is a case in English trust law which is significant for defining the modes of constitution of trusts, and its relation to one of the Maxims of equity "Equity will not assist a volunteer" which has two sub-strands ^[2] - these are that "Equity will not enforce gratuitous promises" and "Equity will not perfect an imperfect gift".

Facts

Thomas Medley set up a trust for his niece, Eleanor Milroy (neé Dudgeon). Samuel Lord was to be the Trustee. Medley took a number of steps to achieve this: He set up a written deed to establish the trust, consideration was given for the shares, and Miss Dudgeon was intended to receive the dividends of shares when she married and to receive the shares when Medley died.

However, Medley did not in fact transfer the shares to Lord, but merely gave Lord power to distribute the dividends, which meant that the gift was incomplete. Had Medley transferred the gift to Lord as stated, all would have been well. However: because Medley kept the shares which he had originally said were going to be transferred, the trust wasn't valid.

Judgment

Turner LJ stated that there were three 'modes' of making a gift:

• An outright transfer of the legal title to the property
• A transfer of legal title of the property to a trustee to hold on trust
• A self-declaration of trust

He went on to state that:

in order to render the settlement binding, one or other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases I think go further to this extent, that 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, for then every imperfect instrument would be made effectual by being converted into a perfect trust. (Turner LJ)

There were subsequently two exceptions to the Milroy v. Lord rule set out in Re. Rose [1952] (the gift will be an effective transfer where the donor has done everything he is obliged to do to make the gift valid) and Strong v. Bird [1874] (a debtor appointed to an estate as executor will have his debt forgiven if, and only if, the testator manifested an intention to forgive the debt and this intention continued until death).

References

1. ^ Milroy v Lord [1862] EWHC J78 (Ch), 45 ER 1184, (1862) 4 De GF & J 264 (26 July 1862), High Court (England and Wales)
2. ^ See. Penner, JE, The Law of Trusts, Oxford, 2008