“Imperfect gifts cannot be rescued by implying declaration of trust”
The gift failed because it was not completely constituted. The court could not treat the imperfect gift as a declaration of trust without clear evidence that the settlor intended to declare himself a trustee.
Thomas Medley executed a deed purporting to transfer 50 shares in the Bank of Louisiana to Samuel Lord as trustee for Medley's niece, Eleanor Milroy. However, the shares were never properly transferred according to the bank's constitution, which required registration in the company's books. Lord held the share certificates and a power of attorney and collected the dividends for the three years until Medley's death, but the shares remained registered in Medley's name.
Whether an imperfect gift could be treated as a valid declaration of trust, and what constitutes complete constitution of a trust.
Turner LJ established that there are three ways to make a voluntary settlement effectual: transfer the property outright to the donee, transfer it to a trustee for the purposes of the settlement, or declare oneself a trustee of the property. Where the settlor intends one of these modes, the court will not give effect to the settlement by applying another of them: it cannot perfect an imperfect gift by implying a declaration of trust where none was intended, as this would contradict the settlor's actual intention to effect a transfer.
This case established the foundational rule for gift constitution in equity and remains the leading authority on when imperfect gifts can be saved as declarations of trust. Later cases including Richards v Delbridge (1874) LR 18 Eq 11 and Jones v Lock (1865) LR 1 Ch App 25 followed it, while Re Rose [1952] Ch 499 and Pennington v Waine [2002] EWCA Civ 227 qualified its strictness. It is fundamental to understanding voluntary transfers and trust creation.
Equity will not assist a volunteer to perfect an imperfect gift; failed transfers cannot be treated as declarations of trust without clear intention.
The Court of Appeal held that the imperfect transfer of shares created no valid trust because the proper formalities were not completed and equity would not assist the volunteer.
It established the fundamental principle that equity will not assist volunteers and defined the essential requirements for constituting valid trusts through transfer or declaration.
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Try the free SQE1 diagnosticThe court noted that the intention of the donor must be clear and that equity will not assist a volunteer by perfecting an imperfect gift through artificial construction of the donor's actions.
OSCOLA Citation
Milroy v Lord (1862) 4 De GF & J 264
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[2026] EWHC 426 (Ch)
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