Facts
- Mr. Delbridge intended to give his leasehold business to his grandson, Edward.
- He wrote a note on the lease stating, "This deed and all related to it I give to Edward from this time on."
- Mr. Delbridge did not formally transfer the legal ownership of the lease.
- Upon his death, Edward’s entitlement to the business was disputed.
Issues
- Whether the note on the lease constituted a valid legal transfer of the property to Edward as a gift.
- Whether the failed gift could instead take effect as a valid declaration of trust in Edward’s favour.
- What distinguishes the creation of a gift from the creation of a trust in law.
Decision
- The court held that the note was insufficient to transfer the legal interest in the business; the transfer was not completed.
- The arrangement did not satisfy the requirements for a valid declaration of trust, lacking clear intention and proper constitution.
- Equity would not intervene to perfect a failed gift by construing it as a trust; the principle "equity will not assist a volunteer" applied.
- The court confirmed that the intended outcome could not be achieved without effective compliance with the formalities for gifts or trusts.
Legal Principles
- To effect a valid gift, the donor must complete legal transfer of ownership to the donee, relinquishing all control.
- Declaration of trust requires a clear intention to create a trust and proper constitution of the trust property.
- A failed gift cannot be rescued by treating it as a trust unless clear intention and requisite formalities are shown.
- The maxim "equity will not assist a volunteer" demonstrates that courts will not perfect incomplete gifts.
- Related authorities, such as Milroy v Lord and Jones v Lock, further clarify the importance of proper formalities and clear express declarations when creating gifts or trusts.
Conclusion
Richards v Delbridge affirms the strict legal distinction between gifts and trusts: a gift requires completed transfer of ownership, while a trust demands clear intention and proper constitution; equity will not repurpose failed gifts as trusts absent explicit compliance with these requirements.