The rule in Re Rose: donor has done everything in their power
Tomasz Nowak owned 1,000 shares in Vistula Joinery Ltd, a private company registered in England. Intending an immediate gift, he signed a valid stock transfer form in favour of his niece, Ana Kowalczyk, and handed it with the share certificate to the company secretary for registration. The articles give the directors no power to refuse to register a transfer. Before the next board meeting at which the transfer would have been registered, Tomasz died suddenly. His will leaves his residuary estate to his son, Piotr. The company has not yet registered Ana.
Who is entitled in equity to the shares?
Choose one answer to see the reasoning.
Worked answer
Correct answer A: Ana, because Tomasz had done everything in his power to transfer the shares, so the gift was complete in equity.
THE RULE TO REMEMBER
Where a donor has done everything within their own power to transfer property, the gift is complete in equity even though a third party has not yet completed the legal transfer (Re Rose).
The rule in Re Rose: donor has done everything in their power
Equity will not perfect an imperfect gift, but a gift is not imperfect where the donor has done everything necessary that was within his own power to do to transfer the asset. This principle comes from In re Rose and was restated by the Privy Council in Choithram v Pagarani. The only remaining step was registration by the company, which Tomasz could not do himself. He had executed a valid transfer and delivered it, with the certificate, to the company for registration. At that point the gift was complete in equity, and pending registration he held the legal title for Ana. His death before registration does not undo this. His personal representatives take the legal title subject to Ana's equitable interest and must allow the registration to proceed. The case does not depend on treating his words as a declaration of trust. It rests on the gift being complete in equity because he had done all that he could.
Why B is wrong: Piotr takes only Tomasz's bare legal title; equity regards the gift as complete because Tomasz had done all he could.
Why C is wrong: The timing of registration relative to probate is irrelevant; Ana's equitable entitlement arose when Tomasz did all that was in his power.
Why D is wrong: No resulting trust arises; Tomasz had parted with the beneficial interest to Ana.
Why E is wrong: Re Rose does not rest on a declaration of trust; equity treats the outright gift itself as complete.
A little more practice done.
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