Zeital v Kaye [2010] EWCA Civ 159

Facts

• Z intended to transfer shares he owned to his lover, S.
• Documentation showed Z's intention, but he did not complete the share transfer form nor hand over the share certificates to S.
• Z died intestate, resulting in a dispute between his children (legal heirs) and S over the ownership of the shares.
• S argued that an equitable interest had been created in her favour despite the lack of formal transfer.
• The main issue concerned whether Z’s actions could be interpreted as creating a trust in favour of S to perfect the imperfect gift.

Issues

1. Whether Z’s incomplete actions could give rise to a trust to perfect the imperfect gift of shares to S.
2. Whether the requirements of the 'every effort' rule in Re Rose, or the relaxation in Pennington v Waine, were met in this case.
3. Whether a mere intention to transfer property, absent full compliance with formalities, could suffice under equity for the creation of a trust.

Decision

• The Court of Appeal held that Z had not done everything in his power to effect the transfer of shares to S.
• Z did not complete the share transfer form and retained the share certificates, failing to meet the requirements of Re Rose.
• The facts of Pennington v Waine were distinguished; Z had not delivered the transfer form nor surrendered control of the certificates, elements present in Pennington.
• The intended gift remained imperfect and no trust was imposed in favour of S.
• The claim of Z’s children as legal heirs to the shares was upheld.

Legal Principles

• Equity will not perfect an imperfect gift unless the donor has done everything within their power to transfer the property.
• The 'every effort' rule in Re Rose requires the donor to complete all necessary steps within their own control; registration or other third-party actions are not required.
• The exception in Pennington v Waine is narrowly applied where delivery of transfer documentation is not practically possible but the donor has done all other required acts.
• Mere intention to make a gift or partial steps are insufficient; control or retention of key documents prevents creation of a trust.

Conclusion

The Court of Appeal confirmed that the perfection of an imperfect gift in equity requires strict compliance with established principles: the donor must complete all necessary actions within their power to transfer the property. Since Z neither executed the share transfer form nor relinquished the share certificates, no trust arose, and the imperfect gift could not be perfected for S. The court thereby reinforced the boundaries and application of the Re Rose and Pennington v Waine exceptions.