T Choithram International SA v Pagarani
T Choithram International SA v Pagarani | |
---|---|
Case opinions | |
Lord Browne-Wilkinson | |
Keywords | |
Formality, express trusts |
T Choithram International SA v Pagarani [2000] UKPC 46 was a decision of the
Facts
Mr Thakurdas Choithram Pagarani wanted to start a foundation called the Choithram International Foundation. He was dying of
Advice
Court of Appeal
The Court of Appeal of the British Virgin Islands, upholding the judge at first instance, held that the trust failed. It took the view that a perfected gift could only be made in one of two ways, viz.
- by a transfer of the gifted asset to the donee, accompanied by an intention in the donor to make a gift; or
- by the donor declaring himself to be a trustee of the gifted property for the donee.
In case 1 above, the donor must have done everything necessary to be done which is within his own power to do in order to transfer the gifted asset to the donee. If the donor has not done so, the gift is incomplete since the donee has no equity to perfect an imperfect gift, for which there is a long line of authority.[3] Moreover, the court will not give a benevolent construction so as to treat ineffective words of outright gift as taking effect as if the donor had declared himself a trustee for the donee, see Milroy v Lord (1862) 4 De G F & J 264.
So in this case Mr Pagarani used words of gift to the Foundation (not words declaring himself a trustee) – unless he transferred the shares and deposits so as to vest title in all the Trustees, he had not done all that he could in order to effect the gift; so under the law as it had previously been understood, the gift would have failed. Further it would not be possible to treat Mr Pagarani's words of gift as a declaration of trust, because they make no reference to trusts. Therefore, if the case does not fall within either of the possible methods by which a complete gift can be made, then the gift should have failed.
Privy Council
The Privy Council advised that the fairness required by equity meant the fact that the trust property was vested in one trustee (Mr Pagarani himself) at the time of the gift was sufficient to make the conveyance to the trust valid.
, or was it (as the judge at first instance and the Court of Appeal had held) a case where there has been an imperfect gift which cannot be enforced against Mr Pagarani's estate whatever his intentions might have been?It expressed "some doubt" whether Bridge v Bridge[4] had been correctly decided when it said that vesting of property in one trustee among many was insufficient, but they distinguished the case on technical grounds.
Significance
Most academic commentary was to the effect that the decision made new law, notwithstanding the comments of the Privy Council to the contrary. Suggestions have also been made to the effect that the Privy Council was prepared to bend the law to prevent the intention of the donor being frustrated, and the charitable foundation losing such a large bequest. The logic behind the decision is slightly fuzzy, relying more upon notions of fairness than legal rules, and it has been questioned in some quarters whether it would be followed in similar less clear cut circumstances. One commentator has suggested politely that in the decision "the courts are not entirely consistent with their message in relation to equity's power to perfect imperfect gifts".[5]
- Background
Mr Pagarani was born in 1914 in
Throughout his life Mr Pagarani gave to charity, amounting to more than a million US dollars. The judge at first instance found as a fact that:
... having made generous provision for his first wife and each of his children, [he] intended to leave much of the remainder of his wealth to charity, to the exclusion of his children. This he hoped to achieve by setting up a foundation to serve as an umbrella organisation for those charities which he had already established and which would in due course be the vehicle to receive most of his assets when he died. This was from all accounts, a longstanding intention of the deceased.
See also
- English trusts law
Notes
- ^ "Perfecting the imperfect trust: T Choithram International SA v Pagarani". Offshore Investment. 5 January 2003. Retrieved 8 June 2017.
- ^ "Constitution And Formalities Notes". Oxbridge Law Note. Retrieved 8 June 2016.
- ^ Milroy v Lord (1862) 4 De G F & J 264; Richards v Delbridge (1874) LR 18 Eq 11; In re Rose: Midland Bank Executor v Rose [1949] Ch 78; Re Rose [1952] Ch 499
- ^ (1852) 16 Beav 315
- ^ "Chapter 3: Constitution of trusts and covenants to settle" (PDF). Todd & Wilson’s Textbook on Trusts: 7e. Archived from the original (PDF) on 29 September 2007.
- lex loci celebrationis, but that claim was rejected and not appealed; see page 4 of the judgment of Georges J at first instance, Suit No 184 of 1992 of the High Court of Justice of the British Virgin Islands (Civil).