LAW 501

“ASSIGNMENT 2”

PREPARED BY
KHAZATUL NAIMA BT ABD TALIB 2009749517
NUR ASMANIZA BT MOHAMAD 2009764707

PREPARED FOR
MR. MOHAMMAD RIZAL ABIDIN
GROUP MEMBERS

Nur Asmaniza binti Mohammad. Born to Mr Mohammad bin Mahmud and Mrs Suraya
bt Haroon, in Alor Setar, Kedah on 17 April 1990. She is the eldest in the family of four
siblings. They currently live in Mentaloon, Kedah Darul Aman. She started her early
education at Sekolah Kebangsaan Seri Negeri, Langkawi. She then pursued her studies at
MRSM Pendang in 2003 and MRSM Tun Ghafar Baba in 2006. In 2008, she decided to
pursue law at UiTM Kedah, as a pre-law student. In 2009, she managed to enroll into
UiTM Law Faculty doing LW213, Bachelor of Legal Studies (Hons). She does not hope
much from life as she wishes to have a normal and infamous yet peaceful life. Her motto
is “Those who work hard for something will eventually get what they desire”.

Khazatul Naima binti Abd Talib was born on 11 April 1990. She is the eldest children
of Mr Abd Talib b. Majid and Mrs. Norizan bt. Zainal who currently live in Jitra, Kedah.
She enjoyed her primary education at Sekolah Kebangsaan Anak-Anak Tentera. In 2003,
she began her secondary education at SMK Jitra and later she was admitted into MRSM
Beseri in 2006. In 2008, she pursued her tertiary education in law at UiTM Kedah. Later,
in 2009, her dreams come true, when she got admitted to UiTM Law Faculty as full time
students doing Bachelor of Legal Studied (Hons). She is a person who is always able to
capture hearts of others with her caring attitude and nice smile. Her motto is “I may not
be the best, but whatever I do, I do my very best”.
METHODS OF CONDUCTING RESEARCH

1. Internet based research. We found many articles on equity. We also found cases
from the web.

2. Library based research. We borrowed books from the library as reference in

answering the questions.

3. Interview based research. We ask for senior’s opinion as well as our fellow
friends to assist us in completing this assignment.

DISTRIBUTION OF WORKS

Since our group comprises of two members, each of us is required to answer two issues.
It was decided by drawing lots. Before answering the question, we discuss on some basic
things to be included in the question. We always contacted each other to let the others
know our current conditions and problems. We then read each other’s answer,
commented and made changes to it. Nur Asmaniza works on issue 1 and 4 while
Khazatul Naima works on issue 2 and 3.
APPRRECIATIONS

Alhamdulillah, thanks to Allah the Most Gracious and the Most Merciful.
Without his blessing and grace we are unable to finish this work properly. With His love,
we are finally able to complete the assignment given within the stipulated time. We are
very thankful that we were given enough energy and spirit by Him throughout the process
in completing this assignment.

A million thanks to Mr. Rizal for giving us the opportunity to have a better
understanding of the Law of Equity and Trusts. Thank you again for all your advices
which have helped us a lot throughout the process.

Not to forget, a billion thanks to our family especially our parents who keep
giving us love and support. It somehow gives us spirit especially when we are at a dead
end. Lastly, thank you very much to our seniors, friends and those who have contributed
their effort in helping us to finish this assignment.
Issue 1
Equity will not perfect an imperfect gift.

Law
For a gift to be complete, it is necessary that the donor must have demonstrated
intention to make a gift and it is also necessary that the donee be delivered the property
so as to make the donee the legal owner of the property 1. In the event where the donor
disclose intention to make a gift, but later fail to deliver the property to donee or the
donor has a change of heart regarding his intention, then the donee has no action under
equity. This is because of the principles that equity will not perfect an imperfect gift and
equity will not assist a volunteer.
A volunteer at law means a person who has given no consideration for that gift.
Both principles simply mean that equity will not force the donor to honor the promise if
he decides not to make it because equity will not assist a person to acquire rights if that
person has not given consideration to acquire rights under contract.2 However, there are
certain exceptions to these rules namely the rule in Strong v Bird (1874), Donatio Mortis
Causa and proprietary estoppel.
Rules in Strong v Bird states that if a person expresses a present intention to
make a gift of personal estate to another, and that intention remains so until the former
passed away and the latter becomes the executor of the will, then the vesting of the
property in the donee completes the gift. Donatio mortis causa is applied where the
property is delivered to the donee, in contemplation of the donor’s death, and the gift is
conditioned to take effect upon the donor’s death. Whereas proprietary estoppel is
applicable in circumstances where a person has been led to act upon the statement of
another, he can prevent that other person from acting inconsistently with his statement. If
the gift falls within any of these exceptions, then the donor has to deliver the property to
the donee.
Lisa’s problem falls under the rule in Strong v Bird. In Strong v Bird, Mr Bird
borrowed $1 100 from his stepmother who lived in his house, paying $212.10s a quarter
for board, and they both agreed that the loan was to be repaid by deduction of $100 from
1
Mohd Rizal Abidin (2005). Equity and Trust-Law 501 Manual, pg 37
2
Alistair Hudson, Equity and Trust, 2010, pg 96.
the quarterly payments. After two quarterly payments, she indicated that she did not want
the loan to be repaid and he continued making full payments. When she died, there was
an unpaid balance of $900. Mr Bird was appointed the executor and the stepmother’s
next-of-kin claimed the amount. The court held that the appointment of Mr. Bird as the
executor released the debt. Jessel MR explained;
“… it appears to me that there being a continuing intention to give, and there
being a legal act which transferred the ownership or released the obligation – for it is
the same thing – the transaction is perfected, and he does not want the aid of a court of
equity to carry it out, or to make it complete, because it is complete already, and there is
no equity against him to take the property away from him.”
However, rules in Strong v Bird is subjected to following conditions; the rules
apply only to inter vivos gift and does not extend to testamentary gift, the donor’s
intention to make a gift must be a continuous one, the donee must be appointed an
executor or one of the executors and the rule would probably be the same if he or she is
appointed as administrator and lastly, the subject matter of the gift must survive at the
donor’s death.3
Firstly, the gift must be an inter vivos gift. Inter vivos gift is Latin for "between
the living" or "from one living person to another." A gift inter vivos is one that is
perfected and takes effect during the lifetime of the donor and donee and that is
irrevocable when made. It is a voluntary transfer of property, at no cost to the donee,
during the normal course of the donor's life.4
Secondly, the donor’s intention to make a gift must be continuous. In Re Gonin
[1979] Ch 16, the mother promised her illegitimate daughter a house. However, the
mother wrongly thought that her illegitimate daughter could not be entitled to property
under her will, and thus left her a cheque for $33 000 which was discovered after the
mother’s death. The cheque could not be cashed upon death. The daughter was appointed
as administratrix of her mother’s estate. She then claimed the house. Walton J, in refusing
the claim said that;

3
Wan Azlan Ahmad & Paul Linus Andrews, Equity and Trusts in Malaysia, Sweet Maxwell, 2005, pg 48,
49
4
http://legal-dictionary.thefreedictionary.com/gift
 “.. so far as the land is concerned no such continuing intention can be found … I
think that the intention changed by the latest in 1962 when the deceased drew her cheque
in favour of her daughter. I find it impossible to think that the plaintiff would inherit the
cheque on the deceased’s death – no immediate gift, and no gift of land.”
Thirdly, the donee must be appointed an executor or one of the executors and the
rule would probably be the same if he or she is appointed as administrator. Being the
executors or administrator, deceased’s estate will be tranfered to them to make it easy for
them to manage and divide the property to the next-of-kin. This transfer has made them
the legal owners, which then satisfy the second requirement of a gift which is the
property must be delivered to the donee so as to make the donee the legal owner of the
property.
Lastly, subject matters of the gift must survive at the donor’s death.
Disappearance of subject matter will defeat the gift by donor since the gift does not exist
anymore.
The effect of the rules in Strong v Bird is the donee can enforce the incomplete
gift, ie the donee will get the gift.

Application
Applying the above discussion to Lisa’s case, an incomplete gift has been made to
her by Homer since Homer only declare his intention but does not transfer the gift to her.
Clearly, this is a situation which could attract the application of the rules in Strong v Bird.
However, to invoke this rule, Lisa must first make sure that she passed all the
elements. Firstly, the gift must be an inter-vivos gift not testamentary gift. In Lisa’s case,
the gift was intended to be an inter-vivos gift since Homer’s intention to give a yacht to
Lisa was made on his deathbed not via a will. Secondly, there was also a continuous
intention on the part of Homer, since there was no indication of changes of intention by
Homer. Third element is also fulfilled as Lisa was appointed as one of the executors of
the will. Lastly, the property must survive upon the donor’s death which is also fulfilled
since the yacht still exists after Homer’s death.
Therefore, having fulfilled all the requirements under the rule in Strong v Bird
[1874], Lisa can have the yacht as a gift.
Conclusion
Lisa can take the luxury yacht and Homer’s next-of-kin have no rights to prevent
Lisa from taking the yacht in question because the yacht was an absolute gift to Lisa
under the rule of Strong v Bird [1874].
Issue 2
Doctrine of Satisfaction- Satisfaction of portion debts by legacy.

Law
There are four types of equitable doctrine namely doctrine of, conversion,
election, satisfaction and performance. The relevant doctrine in this problem is the
doctrine of satisfaction. Doctrine of satisfaction is based of the equitable maxim, “Equity
imputes an intention to fulfill an obligation”. Where a person is legally obliged to do one
thing, but in fact does a different thing, the doing of this may be held to satisfy the legal
obligation. This doctrine can be divided into two categories, (i) Satisfaction of debts by
legacies and (ii) Satisfaction of portion debts.
Satisfactions of debts by legacies involve a situation of ordinary debts. Which
refer to the relationship between debtor and creditor. This situation involve a will, where
the debtor had make a will, in his will he had give a certain amount of money to the
creditor, there is a presumption that the legacy extinguishes the debt. However, the
amount given must be either equal to or exceed the amount of debt; Talbott v Duke of
Shrewbury (1714). If not, the creditor can take the money given and then claim for the
amount of debt. There are 3 situation in which this presumption will not apply ; (1) where
the debt was incurred after making a will, (2) where the debt is not a specific sum but a
running account i.e overdraft account and (3) where the will contain a direction to pay
debts.
While satisfaction of portion debt can be divided into 3 situations (1) satisfaction
of portion debt by legacy, (2) satisfaction of portion debt by subsequent portion and (3)
ademption of legacy by portion. The first two situations usually involve a promise made
by a father to his children but fail to fulfill it, and then it became a portion debt. Portion
mean a gift made or an obligation under taken by a parent or person standing in loco
parentis to set the children up in life. It is for the benefit of the child. The satisfaction of
portion debt by legacy and ademption involve a will, while the satisfaction of portion
debt by subsequent portion did not involve will.
Satisfaction of portion debt by legacy is a situation where a father promise to give
his son or daughter gift (money) but he fails to fulfill it during his life time. The
presumption arise when he later give the child a legacy of the same amount or of the
greater amount of what he had promised. Then it is presume that the legacy was intended
to satisfy the portion debt. If the legacy is less than the debt, satisfaction pro tanto will
take place. In this situation, the child has a choice to make. He or she can either elect to
enforce the portion debt or to take under the will.
While , satisfaction of portion debt by subsequent portion involve a situation
where a father promise to give a sum of money to his son but he do not fulfill it yet (P1),
later the father without any reason give son a sum of money which same like what he
had promise (P2) and then the father died. If this happen the son cannot claim the
amount of portion debt (P1) from his father’s estate as equity presume that the latter
portion(P2) satisfy the first portion(P1) and the portion debt is treated as discharged. This
is known as presumption against double portion. However if the amount given is less
than what had been promise, satisfaction pro tanto will take place.
While ademption of legacies by portion involve a situation where the father make
a will giving his child legacy and later gives a portion to the same child it is presumed
that the portion was not intended to be in addition to the legacy, which will therefore be
adeemed. If the portion amount is less than the amount in the will, the child can only
claim for the balance.

Application
This problem involves a satisfaction of portion debt by legacy. The testator,
Homer in his life time had promise to give his daughter RM 9000 for her to pursue her
tertiary education. Homer died before he can fulfill his promise. Then, the promise
became a portion debt. However, in his will he gives Maggie a legacy of RM 10000
which is a greater amount than what has been promised. Thus applying the equitable
maxim of “Equity imputes an intention to fulfill an obligation” and the doctrine of
satisfaction of portion debt by legacy it is presume that the RM 10000 given to Maggie is
intended to satisfy the portion debt.

Conclusion: Therefore, Maggie cannot claim addition amount of RM9000 from her
father estate as the legacy, RM 10000 is presume as to satisfy the portion debts.
Issue 3
Express Private Trust – Certainty of Subject Matter

Law
Trust is an equitable obligation, binding on trustee to deal with property over
which he has controlled (trust property) for the benefit of beneficiaries (cestui que trust)
of whom he himself may be one and any one of whom may enforce the obligation. The
type of trusts involved in this problem is Express Private Trust.
Express Private Trust (EPT) comes into account when there is an express
declaration of trust by the settler/testator5. It is a combination of express trust and private
trust. It can be either in writing or verbal. There are three main stages for the creation of
EPT. (i) Satisfying the three certainties, (ii) fulfilling any formal requirement laid down
by statute and (iii) transferring of trust property to trustee by formal method.
In order for EPT to be created, three elements of certainties must be established.
Firstly is certainty of intention. This type of certainties is bound on the part of
settler/testator whose create the trust. The settler/testator must show that he/she is
intended to create a trust. In most cases, the court will look at the wording of the trust
deed or will whether it constituted trust or not. There is no particular form of words is
required to create a trust since the equity looks at the intent rather than form. However,
the language used must be sufficiently expressive to show that it is an intention to create
a trust. Lord Eldon in the case of Wright v Atkyns (1823) held that in order to constitute
a trust, the words used must be imperative which mean it must be clear.
Secondly is certainty of subject matter. This type of certainties is referring to the
trust property. It may comprise of cash, choses in action, livestock, chattels, land and
building subject to the lex loci situs6. Settler/testator must be clear and certain on the
property that he/she want to dispose of. The trust property must be identifiable and
ascertainable. There are two aspects to this requirement. First, there must be certainty as
to what is to be held upon trust. In the case of Palmer v Simmonds(1854) the court held
that the phrase “ bulk of my estate” amount to uncertainty as the subject matter is unclear
since it may mean different thing to different people. Second is there must be certainty as
5
Wan Azlan Ahmad & Paul Linus Andrews, Equity and Trusts in Malaysia, Sweet Maxwell, 2005,pg 21.
6
Mary George, Malaysian Trust Law, 1999, pg87.
to what is the extent of beneficial interest of each beneficiaries. The beneficial interest of
each beneficiary must be certain so that the trustees know what and how much each
beneficiaries will entitle to. In the case of Boyce v Boyce (1849) it was held that the
Charlotte’s share was uncertain since it depend on Maria’s choice. In this case Maria died
before she made her choice. Thus, the court held that the trust was failed.
The final element is certainty of objects. It refers to who is the beneficiary of the
trust created. The settler/testator must identify the persons who are to benefit under the
trust. In order to identify the beneficiary we need to look whether the trust if fixed trust or
discretionary trust. A fixed trust is one where the trustees are under obligation to
distribute the trust property to the named persons or to all members of specified group.
This is known as ‘list principle’. While, in discretionary trust, the trustee is given the
absolute discretionary power to appoint who is the beneficiaries. This refers to the ‘any
given postulant’ test.

Application
Applying the above discussion to Marge’s problem, Homer clearly used the words
‘trust’ in his will making it certain that the trust is intended by him. Therefore, applying
Wright v Atkyns, the first element is established.
For the second element, the trust property is certain as it is possible to ascertain
and identify the paintings which are “The Red Dragon and the Woman Clothed with the
Sun” and “The Venus of Urbino”. However, for the second requirement which is to what
extent the beneficial interest of each beneficiaries is uncertain as the painting which
Marge will receive depend on Krusty choice. In this situation, Krusty died before making
his choice. Therefore, this element is not established.
For the last certainty, the trust exist is a fixed trust as the trustees were not given
any discretionary power to decide on the beneficiaries since Homer has named Krusty
and Marge as the beneficiaries. Therefore, applying the ‘list pinciple’ test, it is possible
for the trustees to draw the list of all the beneficiaries as the beneficiary has been named
in the trust itself. Therefore, the last certainty is established.

Conclusion
The trust created in Marge’s favour is an invalid trust as it lack of the certainty of the
subject matter. Hence, the trust failed.

Issue 4
Express private trust – certainty of subject matter

Law
Trust is an equitable obligation, binding on trustee to deal with property over
which he has controlled (trust property) for the benefit of beneficiaries (cestui que trust)
of whom he himself may be one and any one of whom may enforce the obligation. The
type of trusts involved in this problem is Express Private Trust.
Express Private Trust (EPT) comes into account when there is an express
declaration of trust by the settler/testator7. It is a combination of express trust and private
trust. It can either be in writing or verbal. There are three main stages for the creation of
EPT. (i) satisfying the three certainties, (ii) fulfilling any formal requirement laid down
by statute and (iii) transferring of trust property to trustee by formal method.
In order for EPT to be created, three elements of certainties must be established.
Firstly is certainty of intention. This type of certainties is bound on the part of
settler/testator who creates the trust. The settler/testator must show that he/she intends to
create a trust. In most cases, the court will look at the wording of the trust deed or will
whether it constituted trust or not. There is no particular form of words required to create
a trust, it is unnecessary to use the words ‘trust’ since equity looks at intent rather than
form. However, the language used must be sufficiently expressive to show that it is an
intention to create a trust. In the case of Wright v Atkyns (1823), Lord Eldon held that in
order to constitute a trust the words used must be imperative in which it is clear.
Secondly is certainty of subject matter. This type of certainties is referring to the
trust property. It may comprise of cash, choses in action, livestock, chattels, land and
building subject to the lex loci situs8. This is a requirement that the property which is
intended to constitute the trust fund is segregated from all other property so that its
identity is sufficiently certain.9 Therefore, settler/testator must be clear and certain on the
property that he/she want to dispose of. The trust property must be identifiable and
ascertainable. There are two aspects to this requirement. First, there must be certainty as
to what is to be held upon trust. In Re Kolb’s Will Trust [1962] Ch 531, the court held

7
Wan Azlan Ahmad & Paul Linus Andrews, Equity and Trusts in Malaysia, Sweet Maxwell, 2005, pg 21.
8
Mary George, Malaysian Trust Law, 1999, pg87.
9
Alistair Hudson, Equity and Trust, 2010, pg 96.
that the words ‘blue chip securities’ used in an investment clause was uncertain. This is
because, back then, it was difficult to determine which shares are ‘blue chip shares’ and
which are not. However, with the development of economy sectors over the years, it is
now possible to determine blue chip shares by checking at the bursa. Therefore,
considering this, the words ‘blue chip shares’ is now ascertainable and identifiable.
Secondly, there must be certainty as to what extent of the benefits is to be enjoyed
by each beneficiary. In Re Golay Morris v Bridgewater and Ors [1965] 1 WLR 969, it
was held that a provision that ‘a reasonable income’ be provided out of a fund could be
held to be valid if one could make an objective measurement of what would constitute a
reasonable income in any particular case. In this case, the court held that it was possible
to ascertain the ‘reasonable income’ by looking at the beneficiary’s previous standard of
living. Court further held that the trustees were under obligation to pay the beneficiaries
reasonable income and if necessary beneficiary could go to court for a declaration that the
income she was receiving was not reasonable and seek to have it reviewed.
The final element is certainty of objects. This refers to the beneficiary of the trust
created. The rule is that there must be a sufficient certainty as to the ‘objects’ or
‘beneficiaries’ of a trust, or else the trust will be void. 10 To decide whether or not it is
possible to identify the beneficiaries of a trust with sufficient certainty it is first necessary
to identify the nature of power which is being exercised. It is important therefore to
identify between fixed trust and discretionary trust. A fixed trust is one where the trustees
are under obligation to distribute the trust property to the named persons or to all
members of specified group as stated by the settlor/testator. This is known as ‘list
principle’. While, in discretionary trust, the trustee is given the absolute discretionary
power to decide on who will be the beneficiaries. This refers to the ‘any given postulant’
test.

Application

10
Alistair Hudson, Equity and Trust, 2010, pg 115
 Applying the above discussion to Uncle Bob’s problem, Homer clearly used the
words ‘trust’ in his will making it certain that the trust is intended by him. Therefore,
applying Wright v Atkyns, the first element is established.
For the second element, the trust property is certain as it is possible to ascertain
and identify ‘blue chip shares’ by checking at the bursa as the bursa has prepared a list of
blue chip shares available for people to view. Applying Re Golay, the extent of
beneficiaries that Uncle Bob will enjoy is also certain and identifiable since the trustees
can decide on the ‘reasonable income’ by examining and looking at the previous living
standard of Uncle Bob. If Uncle Bob is not satisfied with the benefits he received, he may
go to court to ask court to review the income for him. Therefore, the second requirement
is established.
For the last certainty, the trust exist is a fixed trust as the trustees were not given
any discretionary power to decide on the beneficiaries since Homer has named uncle Bob
as the beneficiary. Therefore, applying the ‘list pinciple’ test, it is possible for the trustees
to draw the list of all the beneficiaries as the beneficiary has been named in the trust
itself. Therefore, the last certainty is established.

Conclusion
The trust created in favour of Uncle Bob is a valid trust as all the certainty of the Express
Private Trust has been satisfied.

REFERENCES
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9780199561025/resources/chapters/ pettit_ch32.pdf

Equitable Doctrine of Satisfaction, Ademption and Performance Retrieved from

www.oup.com/uk/orc/bin/9780199561025/pettit_ch31.pdf

George, M (1999). Malaysian Trust Law. Selangor, KJ: Pelanduk Publications.

Hanbury, H. G., Martin, J. E. (1981). Modern Equity (11th ed.).

London: Stevens&Sons.

Hudson, A. (2010). Equity And Trusts (6th ed.). London, Oxon:

Routledge-Cavendish.

Megha Karnwall (2008). Law of Equity. Retrieved from http://jurisonline.in/

2008/11/law-of-equity/

Mohd Rizal Abidin (2005). Equity and Trust-Law 501 Manual.

Wan Azlan Ahmad., Adrews, P. L. (2005). Equity and Trusts in

Malaysia. Malaysia: Sweet&Maxwell Asia.