The Gazette 1980

JULY-AUGUST

1

GAZETTE

"DONATIO MORTIS CAUSA" IN RELATION TO REAL PROPERTY by Julian Deale, Barrister-at-law

real estate and the person to whom the gift was intended to be made was subsequently appointed to be the intending donor's personal representative. The Court had no difficulty in upholding the principle of the two estates, that is the "equitable" estate comprising the desire to give, and the legal estate passing to the donee by being appointed as the personal representative of the donor, but held, further, that by the merger of the two estates in the same person, the need for a note of memorandum in writing was apparently dispensed with. It should be pointed out that the principles of Strong v. Bird have already been followed in this country in the case of In Re Wilson (1933) I.R. 729. It is not unlikely that, if such a case arose, the decision in Comberlach could also be followed in this country. In the administration of estates, instances of imperfect gifts from testator to executor or administrator must arise, and it is suggested that practitioners should consider carefully such apparently imperfect dispositions with a view to ascertaining whether or not they might in fact be perfected by the implementation of the decisions outlined above. This applies not only to "donatio mortis causa" but to other forms of imperfect gift, which may have the potential to be perfected in the eyes of equity. However, until an imperfect gift arises of sufficient magnitude to justify the cost of proceedings, the question may well remain untested. UP TO ^INTEREST TAX NOT DEDUCTED

Practising lawyers in their everyday work are aware that equity will not complete an incomplete trust in favour of a volunteer. Essentially this means that where there is a gift of property without consideration, the aid of equity cannot be invoked in order to perfect that gift. However, for centuries the Courts have recognized that a "donation mortis causa" is a particular type of gift and in many, many instances the Courts have been prepared to perfect such a gift. However, it is well settled in the casebooks that a donatio mortis causa cannot be the subject matter of a valid gift when that gift concerns cither real property or leasehold interests. There is no doubt that this rule has a solid foundation in that, under the Statute of Frauds, 1695, any disposition of any interest in land must be evidenced in writing. However, a line of English decisions which commenced in 1874, the principles of which have been followed in this country, has established that an "intention" to make a gift can be perfected in the manner outlined below. This novel approach has, in fact, been extended in England to a gift of real property which, on its face, would appear to be in contravention of the Statute of Frauds. As long ago as 1874 (Strong v. Bird (1874) L.R. 18 E.Q. 315) it was decided that where a person owed money to another and that other person manifested during his lifetime an obvious desire to forgive the debt, the subsequent appointment of the debtor as the creditor's executor was sufficient to forgive the debt. The principle underlying this decision was, simply, that the desire of the creditor to forgive the debt was treated by the Court as being, in cffcct, an "equity" which conferred upon the debtor an equitable interest in the amount of the debt; by the appointment of the debtor as the executor of the creditor, the debtor enjoyed both the legal estate in the subject matter of the " g i f t" and the equitable interest; consequently, the two estates, the equitable and legal, merged into one and the debtor was, therefore, released from the need to repay the debt. This proposition was further extended in the case of In Re Stewart (1908) 2 Ch. 25 1 to the case of a testator who intended to make a gift of personal estate, not merely to forgive a debt. In the case of In Re James (1935) Ch. 449 it was held to be irrelevant how the debtor or donee became the personal representative of the creditor or donor: in other words, the debtor or donee could be the executor appointed by the will or, alternatively, an administrator cither with will annexed or intestate. None of these cases, of course, necessarily suggests that a "donatio mortis causa" of real estate could be perfected by the appointment of the intended donee as the executor or administrator of the estate of the donor. However, a very significant development in this doctrine took place in the case of In Rc Combcrlach; Saundcrson v. Jackson (1923) 73 Sol Jo. 403, in which the principles in Strong v. Bird were extended to apply to real property. In the case of Combcrlach, the circumstances were that a person manifested over a long p- r od a desire to make a gift of

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