Re Cole, A Bankrupt

JurisdictionEngland & Wales
JudgeLORD JUSTICE HARMAN,LORD JUSTICE PEARSON
Judgment Date30 July 1963
Judgment citation (vLex)[1963] EWCA Civ J0730-1
CourtCourt of Appeal
Date30 July 1963

[1963] EWCA Civ J0730-1

In The Supreme Court of Judicature

Court of Appeal

From Mr. Justice Cross

Before

Lord Justice Harman

Lord Justice Pearson and

Lord Justice Pennycuick

Re Cole, a Bankrupt Ex parte the Trustee of the property of the Bankrupt
and
Marjorie Ray Cole

MR J. P. ARNOLD, Q. C. and MR MUIR HUNTER (instructed by Messrs Isadore Goldman & Son) appeared as Counsel for the Appellant.

MR R. E. MEGARRY, Q. C, MR OWEN STABLE, Q. C. and the Hon. CHRISTOPHER BATHURST (instructed by Messrs Gouldens) appeared as Counsel for the Respondent.

LORD JUSTICE HARMAN
1

This is an appeal for an order of Mr Justice Cross made on the 22nd March, 1963, on a motion by the trustee in the bankruptcy of Theodore Cole by which the Court declared that certain articles of furniture specified in the schedule to the notice of motion were the property of the applicant who is the bankrupt's wife. The value of these articles is comparatively small but we are told that the decision will probably cover other articles of very much greater value in respect of which a like claim has been made. These particular articles have been sold by the applicant and the order affects the proceeds of sale.

2

We first hear of the bankrupt and his wife in 1937 when they were living in a modest rented house at Hendon which, as well as its furniture, were the bankrupt's property. In July 1940 the bankrupt, being Austrian by nationality, was apprehensive of internment as an enemy alien and he executed a deed of gift transferring the house to his wife and also gave her the furniture. The method of this latter gift is not known and is not in question. The family then moved to Clitheroe in Lancashire where they rented a house which was furnished largely from the Hendon house. The activities of the bankrupt during the war, apparently in the textile trade, resulted in his becoming before its end a very rich man indeed. In July 1945 the war being over he acquired a long lease of a large mansion at Hendon which he proceeded to furnish. A few articles were sent down from Clitheroe, three or four thousand pounds worth was bought from the vendor, and the rest to the tune of some £20, 000 the bankrupt purchased himself and caused to be installed in the new house, to which he, together with one child and its nannie, removed in September, leaving the applicant and another child who was unwell at Clitheroe. In December, however, she came down to London with the other child and the bankrupt met her at the station and took her to the new home. He brought her into the house, took her into aroom, put his hands over has eyes and then uncovered the saying "Look" He then accompanied her into other road on the ground floor where she handled certain of the articles: next she went upstairs by herself arid examined the rest of the house. When she came down again he said: "It's all yours". She now says that this was a gift to her of the furniture in the house, though apparently not of the house itself and the Judge accepted the evidence of the husband and wife that they had since believed that this was the position. We must accept the Judge's finding in this respect notwithstanding that the house and its contents and also £20,000 worth of furs and Jewellery, said to have been other presents to the wife, remained insured in the bankrupts name. Until the mid-'50s the bankrupt lived the life of a very rich man owning, among other things, a villa at Cannes and afleet of cars, but the death of one of his associates, a Mr Littman, was followed by a Judgment against him by Mr Littman's executors for a very large sum which remained unsatisfied, and in 1961 bankruptcy ensued and there is a very large deficiency. The trustee on behalf of the creditors resists the wife's claim to the furniture in the house, except the small items from Clitheroe, and that was the question tried on this motion: the learned Judge acceded to the wife's claims the trustee now appeals.

3

Mr Megarry on behalf of the wife boldly put forward an entirely novel proposition to the effect that a perfect gift of chattels is constituted by showing them to the done and speaking words of gift. It is enough, he says, that the done should be brought to the chattels rather than the chattels to the done and that she should be "near" the chattels (though what degree of proximity is needful remained vague) when the words of gift are spoken. This amounts to a change of possession, says Mr Megarry, particularly if you are dealing with a collection of chattels, a fortiori if the chattels are or come under the physical control of the done,and the case is strengthened if the done handles some of the chattels in the donor's presence.

4

This remarkable submission is unsupported by authority and is in my judgment entirely heterodox. It is I think trite law that a gift of chattels is not complete unless accompanied by something which constitutes an act of delivery or a change of possession. The English law of the transfer of property, dominated as it has always been by the doctrine of consideration, has always been chary of the recognition of gifts. Witness the equitable doctrine of the resulting trust. In the early days when no clear distinction was made between what we now call real and personal property, transfer lay in livery and until a comparatively recent date the transfer of realty or chattels real lay in livery and not in grant. Indeed until the Statute of Frauds no written instrument was required. I need not I think for the purposes of this judgment touch further on the question of the transfer of anything except chattels personal. Where consideration is given, possession of these is regulated by the Sale of Goods Act which, broadly speaking, causes possession to pass when the parties intend that it should, but in the absence of consideration, delivery is still necessary except in the cases of a gift by will or by deed, which latter itself imports both consideration and delivery. Attempts have been made to make use of the law of trusts to perfect gifts, particularly in the case of gifts mortis cause, but it has long been the doctrine of equity that it will not assist imperfect gifts by the introduction of the doctrine of trusts. In Milroy v. Lord (4 De Gex, Fisher & Jones, p. 264) Lord Justice Turner thus stated the law — I cite from White & Tudor's Leading Cases, Vol. 2, p. 880, I take the law of this Court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the Property comprised in the settlement, was necessary to be donein order to transfer the property and render the settlement binding upon bin. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual and it will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for those purposes and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but in order to render the settlement binding one or other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases, I think, go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of those modes, if it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust. These are the principles by which, as I conceive, this case must be tried".

5

The leading case on delivery is Irons v. Smallpiece (2 Barewall & Alderson, p. 551), an action of troves for two colts said to have been given to the plaintiff by his father under an oral gift. This was rejected by the Court, Chief Justice Abbott saying that "By the law of England in order to transfer property by gift there must either be a deed or instrument of gift or there must be an actual delivery of the thing to the donee". Mr Justice Holroyd said: "In order to change the property by a gift of this description there must be a change of possessions here there has been no change of possession",

6

She delivery may be what has been called constructivedelivery", as in Winter v. Winter (4 fines Law Reports, p. 639) which was a case about a large which belonged to the plaintiff's father, a lighterman. It appeared that the plaintiff had been put into actual possession of the barge by his father and worked it as his father's agent or servant and was so doing when the father gave it him by word. It was held that this was sufficient, the delivery preceding the gift, and this it may do or it may accompany the gift or succeed it — see ( Alderson v. Peel 7 Times Law Reports, p. 418), re ( Stoneham 1919, 1 Chancery, p. 149). In Winter's case (supra) Mr Justice Crompton went so far as to cast doubt on Irons v. Smallpieces which had indeed been doubted in other cases about that time, but the leading case was fully re-established in the elaborate Judgments in Cochrane v. Moore (25 Queen's Bench Division, p. 57). This was a case about a quarter undivided share in a horse and the Court of Appeal held that the property did not pass by the gift he cause there had been no delivery. Lord Justice Fry in a Judgment concurred in by Lord Justice Bowan reviewed the whole of the cases and came to this conclusion at the foot of p. 72 he said "This review of the authorities leads us to conclude that according to the old law no gift or grant of a chattel was effectual to pass it whether by parol or by deed, and whether with or without consideration...

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