Perfecting imperfect gifts: a new authority

John Aldis (instructed by Mir Solicitors) was successful in an appeal which may be of general interest on the questions of: (a) the circumstances in which a failed transfer of a legal interest can operate as an assignment of an equitable interest; and (b) the circumstances in which the court will perfect an imperfect gift where the donor has not done everything in his power to effect the gift.

The parties were the joint registered proprietors of the property in question, which was occupied by the Appellant. In 2007, the Respondent attempted to transfer his entire legal and beneficial interest in the property to the Appellant for nil consideration by executing a TR1 deed. He showed the TR1 to the Appellant as evidence that the transfer was complete; and he relied on it in criminal proceedings to prove that he had no interest in the property.

In fact, the TR1 was defective (because it named the Respondent as the sole transferor). However, this defect did not immediately come to light because neither party attempted to register the transfer. The Respondent was aware of the requirement for registration, but the Appellant was not.

9 years later, the Respondent sought to resile from his gift. In the first instance trial, the Respondent obtained a declaration that he had a 50% beneficial interest in the property.

On appeal, Mr Justice Marcus Smith held that: (a) the execution of the TR1 operated as an assignment of the Respondent’s equitable interest in the property; and/or (b) the court would perfect the imperfect gift because it was unconscionable for the Respondent to resile from the gift in the circumstances of this case.