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GAZETTE
JULY-AUGUST
1
"DONATIO MORTIS CAUSA"
IN RELATION TO REAL PROPERTY
by
Julian Deale, Barrister-at-law
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
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.
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