COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(HIS HONOUR JUDGE EDWARD NUGEE Q.C.)
B e f o r e :
LORD JUSTICE BROWNE-WILKINSON
SIR DENYS BUCKLEY
| WILLIAM JAMES MASCALL
MR. J. D. MARTINEAU (instructed by Messrs. Drysdales & Janes, Southend, Essex) appeared for the Respondent.
Crown Copyright ©
LORD JUSTICE LAWTON: This is an appeal by the plaintiff, Mr. William James Mascall, against a judgment delivered by Mr. Edward Nugee, sitting as a Deputy Judge of the Chancery Division of the High Court, on 11th March 1983, whereby he refused the plaintiff the relief for which he had asked, namely that the court should declare that a document dated 11th February 1981 and signed by the plaintiff was void and of no effect, and that the plaintiff was not bound by contract or otherwise to transfer to the defendant, Mr. William Mascall, the freehold property at 67 Lifstan Way, Thorpe Bay, Southend, Essex, registered at H.M. Land Registry under title absolute No. EX181302.
The essence of this case was this. The judge found at the trial that the plaintiff intended to make a gift of that freehold property to the defendant, his son. It was submitted to the judge and has been submitted again in this court that, whatever the plaintiff's intention may have been, in law it was ineffective because he had not done all that was necessary to transfer the property.
The story is an unhappy one. The details of it are set out in a long and careful judgment of the deputy judge. I do not find it necessary to refer to more than a skeleton of the material facts because many of those which were before the judge have become irrelevant because of a finding which he made that the son had not used any undue influence to get his father to execute a transfer. At the present time the plaintiff is 85 years of age. He has been retired for many years from his occupation as a builder. He had certainly two children, maybe three. His relations with his son, the defendant, have been strained for some time. The plaintiff wanted his son to take over his builders' business. The son had other ideas. He himself was engaged in the building trade, but on a bigger scale than his father.
Between 1954 and the material period, which was the early part of 1981, the son spent much of his time in Canada, following his chosen occupation, which was that of a Project Manager. From time to time, however, he came to England and when he came he visited his father.
When the plaintiff was about to retire, which was in or about the year 1965, he bought in his wife's name a house known as 42 Lifstan Way. He and his wife lived there and the plaintiff, as far as I know, is living there up to the present time. The plaintiff's daughter in the early 1970's was suffering from a disease which turned out to be terminal. The plaintiff was anxious that she should come to live near him. In order to induce her to do so, on 15th March 1976 he bought the house which is in dispute in this case. He paid £9,000 for it and had it registered in the Land Registry in the name of himself and his wife. Unfortunately from the plaintiff's point of view the daughter declined to come to live at No. 67. There was evidence that the plaintiff was displeased by this refusal.
At about the time when the daughter refused to come to live at No. 67 the defendant happened to be in the United Kingdom and in touch with his father. On the occasion of a meeting with his father some time about the year 1976 and after the purchase of No. 67 there was a discussion between the plaintiff and the defendant as to what was going to happen to No. 67 after the daughter's refusal to live in it. The plaintiff, according to the judge's findings, said something to the effect that he intended to sell No. 67. The evidence was that thereupon the defendant said: "Don't sell it; I will buy it off you for £9,000". The plaintiff then said he did not want the defendant's money. The defendant's evidence was that his father went further and said: "If you want it, it is yours".
In his evidence the defendant claimed that from 1976 onwards he treated the house, with his father's knowledge and approval, as if it were his. He paid many of the bills which came in in relation to that house and did some work on it. The plaintiff himself also did some work. I should add that, at the time of this conversation about the house, the plaintiff's wife was present and, according to the defendant's evidence, she did not disassociate herself in any way from the plaintiff's statement that the defendant could have the house.
At the trial the plaintiff told a story which was very different from that given by the defendant. The learned judge did not make any specific finding with regard to this incident as to whose version of it he preferred, but he did in his judgment say that, on the whole, he preferred the defendant's evidence to that of the plaintiff. I infer that there was an intention from 1976 onwards on the part of the plaintiff to let his son have the beneficial use of the house. In law, of course, whatever was said in 1976 would be ineffective to transfer the title in the house to the defendant.
By 1981, when the defendant was again in the United Kingdom, he thought it prudent to have a conversation with his father about the legal position relating to this house because, according to his evidence, he had always regarded himself since 1976 as being the owner. He felt the time had come to get the title to the house transferred into his own name. The plaintiff was somewhat reluctant to take the steps of transferring the title into his son's name. According to the son, the plaintiff tended to be what the son called an "Indian giver", namely one who gives with one hand and takes away with the other. As I have said, the son tried to persuade his father to agree to the formalities being carried out and it was his attempts at persuasion which led to the allegation that he had used undue influence to get his father to agree to what he wanted. It was an allegation which was not accepted by the judge. The father did agree in the end that he would complete the necessary formalities. A firm of solicitors in Southend was instructed to deal with the matter. According to the son, his father gave instructions to him that, whatever was going to be done should be done without incurring any liability on the father for what the father called the "gift tax". The inference is that he knew something about Capital Gains Tax.
The son went to the solicitors. He there saw a legal executive. At the trial there was an issue as to who conceived the idea of having the transfer in a form which, on the face of it, would avoid the father having to pay Capital Gains Tax. The device which was thought up was that the transfer by the father to the son should be for a consideration of £9,000. It is unnecessary for this court to try and decide whose idea it was that the transaction should be dealt with in a way which, as I say, on the face of it might have avoided Capital Gains Tax. One thing is clear: the position with regard to the proposed transfer and its terms were explained by the solicitors to the father and as a result a form of transfer was made out. It was on one of the printed forms used by the Land Registry. It purported to be a transfer of the whole of the interest in the house It is dated 12th February 1981. The relevant parts read as follows:
"In consideration of £9,000, the receipt whereof is hereby acknowledged, I William James Mascall of 42 Lifstan Way, Thorpe Bay, Southend on Sea, in the county of Essex, as beneficial owner hereby transfer to William Mascall of 67 Lifstan Way, Thorpe Bay, Southend on Sea, in the county of Essex, the land comprised in the titles above mentioned".
There was the usual declaration for the purpose of Stamp Duty that it did not form part of any other transfer. That transfer was signed by the plaintiff and duly witnessed. At or about the time when the plaintiff signed that transfer he handed over to his son the Land Certificate relating to 67 Lifstan Way.
The son through his solicitors sent the transfer to the Stamp Office. The solicitors had warned the plaintiff that there might be problems with the Inland Revenue about the genuineness of the consideration, and it may be because of that problem the Stamp Office was not very quick in dealing with the matter. Unfortunately for the defendant and, in the outcome, for the plaintiff, whilst the Stamp Office were waiting to deal with the matter the plaintiff and the defendant had a very serious quarrel. It is clear from the findings of the judge that, during the course of that quarrel, the defendant did not behave as a son should have behaved to his father. The consequence was that the father became frightened of his son. The son decided he was going to have nothing more to do with his father and took himself off to Canada.
The father, having had this quarrel with the son, decided that he did not want to go on with the transfer of the house. He instructed another firm of solicitors. As a result of their participation, the Stamp Office, wrongly as the judge found, sent the Land Certificate back to the father. The situation by the middle of 1981 was this. The father had executed, the transfer. There was no consideration for it. He had handed over the Land Certificate and, in the ordinary way, had there not been a decision by the father to go back on what he had earlier intended, the son's solicitors would have sent the transfer and the Land Certificate to the Land Registry and, in the absence of any caveat or the like from the father, the Land Registry would have registered the son as the owner of the house.
Mr. Nugee adjudged that there had been a gift of the house to the son, that the father had done all that was in his power to transfer the title to the son and that, pending registration, the father held the legal title in the house on trust for the son. Mr. Nugee, in adjudging as he did, followed the decision of this court in the case of In Re Rose, Rose v. Inland Revenue Commissioners (1952) Ch 499. Mr. Pearson accepted in the course of his submissions in this court that, if the decision in In Re Rose was correctly decided, then Mr. Nugee was right to follow it. His submission, however, was that, in coming to the conclusion it did in In Re Rose, this court misunderstood and misapplied a much earlier and binding decision in the case of Milroy v. Lord, which is reported in (1862) Vol. 4 of De Gex, Fisher & Jones Reports at page 264.
We have found it necessary to examine that case in some detail because Mr. Nugee was perplexed by some statements made by the then Master of the Rolls, Sir Raymond Evershed, in the course of the case as to what the facts in Milroy v. Lord really were. What happened in Milroy v. Lord was this. The settlor by deed poll settled some shares for the benefit of his daughter. The deed poll was lengthy and clearly was not the kind of transfer which is used for the transfer of shares from one person to another. At page 267 of the report in the statement of facts it is said "no transfer was ever made into the name of the defendant Lord of the 50 shares comprised in the settlement" and, in the course of his judgment, Lord Justice Turner said this:
"The more difficult question is, whether the Defendant Samuel Lord did not become a trustee of those shares? Upon this question I have felt considerable doubt; but in the result, I have come to the conclusion that no perfect trust was ever created in him.- The shares, it is clear, were never legally vested in him; and the only ground on which he can be held to have become a trustee of them is, that he held a power of attorney under which he might have transferred them into his own name; but he held that power of attorney as the agent of the settlor; and if he had been sued by the Plaintiffs as trustee of the settlement for an account under the trust, and to compel him to transfer the shares into his own name as trustee, I think he might well have said - These shares are not vested in me; I have no power over them except as the agent of the settlor, and without his express directions I cannot be justified in making the proposed transfer, in converting an intended into an actual settlement. A Court of Equity could not, I think, decree the agent of the settlor to make the transfer, unless I could decree the settlor himself to do so, and it is plain that no such decree could have been made against the settlor. In my opinion, therefore, this decree cannot be maintained as to the fifty Louisiana Bank shares."
It seems to me that what Lord Justice Turner was saying was that the settlor had not done all that was necessary to transfer the shares to Mr. Lord. Something still required to be done before Lord was in a position to get the Bank to register the shares in his name.
The matter is complicated by the fact that, in this court in the 1952 case of In Re Rose, the Master of the Rolls referred to the transfer not having been made in accordance with the regulations of the Bank. It is not easy to see where that came from but, having regard to the composition of the court -the Master of the Rolls, Lord Justice Jenkins and Lord Justice Morris (as they then were) - I feel that I must accept that they had some information which may have come from some public source such as the Record Office as to what were the full facts of that case. But it matters not because it seems to me that, by looking solely at the report in De Gex, Fisher & Jones, it is right to infer that in Milroy v. Lord the Chancery Court of Appeal proceeded on the basis that the settlor had not done everything that was necessary to give the legal title to Mr. Lord. The first person to appreciate that Milroy v. Lord did not have the effect which it was often thought to have had, namely that everything had to be done before a gift could be perfected, was Mr. Justice Jenkins (as he then was) in the case of In Re Rose, Midland Bank Executor & Trustee Co. Ltd. v. Rose, which is reported in (1949) Ch. 78. In the course of his judgment in that case he said this:
"In Milroy v. Lord the imperfection was due to the fact that the wrong form of transfer was used for the purpose of transferring certain bank shares." - Presumably he was referring to the deed poll. "The document was not the appropriate document to pass any interest in the property at all."
In In Re Fry the flaw in the transaction, which was a transfer or transfers of shares in a certain company, was failure to obtain the consent of the Treasury which in the circumstances surrounding the transfers in question was necessary under the Defence (Finance Regulations) Act, 1939, and, as appears from the headnote, what was held was that the donor's executors ought not to execute confirmatory transfers. That is, of course, exactly in accordance with the principle that equity will not compel an imperfect gift to be completed. Something had to be done by the donor's executors if the gift was to be completed, and that was the execution of further transfers which were not open to the objection of the absence of Treasury consent. In this case, as I understand it, the testator had done everything in his power to divest himself of the shares in question to Mr. Hook."
The same problem arose in the other In Re Rose case of 1952 -had the donor done everything in his power to effect the transfer of the interest? - and the court adjudged that he had. There was one point taken in the 1952 case based upon comments which had been made in earlier cases, namely that, if a transaction purports to be a transfer and it is ineffective as a transfer, in the ordinary way it is wrong to infer that there is a trust. But, in the course of the 1952 case, lord Justice Jenkins pointed out that the statement that a failed transfer cannot be construed in any circumstances as a trust was a statement which was much too wide. He qualified the proposition by saying that, if the effect in law is that the donor holds the legal interest for the benefit of the donee, in those circumstances there is a trust to which the court will give effect.
In my judgment, that is the situation here. The father had done everything in his power to transfer the house to his son. He had intended to do it. He had handed over the Land Certificate. He had executed the transfer and all that remained was for the son, in the ordinary way of conveyancing, to submit the transfer for stamping and then to ask the Land Registry to register his title. Mr. Pearson sought to say that, in relation to registered land, if not to unregistered land, the father could have done more because he himself, pursuant to section 18 of the Land Registration Act 1925, could have asked the Land Registry to register the transfer and he had not done so; therefore he had not done everything within his power. In my judgment, that is a fallacious argument. He had done everything in his power in the ordinary way of the transfer of registered property and, in the ordinary way, it was for the son to get the Land Registry to register him as the proprietor of the property. In those circumstances, it seems to me that Mr. Nugee's judgment was correct and I would dismiss the appeal.
The first point argued by Mr. Pearson was that it was not right for the judge to have treated this case as a gift because a consideration of £9,000 was stated in the transfer. The judge treated it as common ground that the plaintiff was not expecting to get £9,000: there was no evidence to that effect. In my judgment, that argument is not open since there is a receipt for the £9,000 in the transfer. Moreover, the evidence showed quite clearly that it was explained to the plaintiff, the father, before the transaction was carried through that it was being carried through on the basis that he was treated as having received £9,000. In my judgment, it was simply not open to the father, in those circumstances, to raise the question of non payment.
As to the other argument put forward by Mr. Pearson, it revives the well known academic discussion as to what constitutes a completed gift in equity. The dispute was thought to have been put to rest by the decision of the Court of Appeal in Re Rose (1952) Ch 499. Gifts can be made by a donor either direct to the donee or to a trustee for donees. In either case the property, the subject matter of the gift, has to be vested in the donee or the trustee for the donee. The settlor can achieve that broadly in two different ways. First, he can transfer the gifted property itself. Secondly, he can declare himself a trustee of the gifted property for the benefit of the donee. In the present case, a declaration of trust of that kind by the plaintiff for the benefit of the defendant simply does not arise. The only question is: Has there been a sufficient transfer of the land to the son?
The basic principle underlying all the cases is that equity will not come to the aid of a volunteer. Therefore, if a donee needs to get an order from a court of equity in order to complete his title, he will not get it. If, on the other hand, the donee has under his control everything necessary to constitute his title completely without any further assistance from the donor, the donee needs no assistance from equity and the gift is complete. It is on that principle, which is laid down in Re Rose, that in equity it is held that a gift is complete as soon as the settlor or donor has done everything that the donor has to do, that is to say as soon as the donee has within his control all those things necessary to enable him, the donee, to complete his title.
The learned deputy judge in the present case, although reaching the same final conclusion as I do, suggested that there were certain difficulties in reconciling the modern law as laid down in Re Rose with the well known older case of Milroy v. Lord, to which my Lord has referred. For myself, I do not think there are any such difficulties. I believe the cases to be consistent throughout. First of all, in Re Rose the Court of Appeal stated that in Milroy v. Lord there was no proper document effective to transfer the shares in the Bank, since there were certain requirements in the Bank's constitution for such transfers. As my Lord has said, it is not easy to find where the detailed statement of the Bank's requirements is to be found in the report of Milroy v. Lord. But, in my judgment, we are bound to assume that the Court of Appeal in Re Rose was acting on information it had properly acquired. Even apart from that, in my judgment, Milroy v. Lord is entirely
consistent with Re Rose. In Milroy v. Lord the document purporting to assign the shares was a voluntary settlement. Mr. Lord was the sole trustee of that settlement. The share certificate relating to the Bank's shares was handed to him and he held a power of attorney from the settlor. The argument put forward by the beneficiaries under the settlement was that, by reason of the power of attorney, everything had been done by the settlor that was necessary to constitute the trust since Mr. Lord could use the power of attorney to register himself as owner of the shares. But the passage my Lord has read from the judgment of Lord Justice Turner shows that that argument was rejected since the power of attorney could not be exercised by Mr. Lord contrary to the wishes and contrary to the interests of the settlor. Accordingly, that was a case in which the settlor had not done everything necessary to complete the gift. The principle set out by Lord Justice Turner in his judgment is often treated as being a general proposition that everything must have been done which was necessary to complete the legal transfer of property. But the passage on page 274 of Lord Justice Turner's judgment said this:
"I take the law of this court to be well settled, that, 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".
I can see nothing in that quotation requiring that all formalities necessary to complete a legal transfer have to be carried through. Lord Justice Turner is saying the settlor must have done everything it is necessary for him to do. For those reasons, I can see no inconsistency in the authorities.
In this case, the plaintiff executed a transfer and put it within the control of the defendant together with the Land Certificate. He had done everything necessary to complete the transaction so far as he, the plaintiff, was concerned. The gift was in equity complete.
Finally, to my mind, there is a much shorter way through the whole matter. The transfer having been handed over together with the Land Certificate, the burden in this case would lie on the plaintiff to show that he had some right to recover those documents from the defendant. Mr. Pearson has been unable to suggest what equity he could have to recover. That being so, it is open to the defendant at any time to demand his registration as the owner of the property and as such to perfect the gift. The fact that the Stamp Duty Office had wrongly put the document in the hands of the plaintiff's solicitors who are holding it subject to the order of the court cannot affect the matter. There can be no doubt that those documents themselves are the documents of the defendant.