'The recognised exceptions are so limited, and the effects of the Contracts Act 1999 are so minimal, that the traditional rule that Equity will not assist a volunteer remains virtually intact - is this statement an accurate assessment of the law regarding

Strong v Bird has the effect of perfecting an imperfect gift made during ones life provided that the donee is appointed as the donor’s executor, or becomes his administrator on intestacy. The circumstances of the case were that a stepmother lived with her stepson, and had lent him £1,100 repayable by means of a reduction of £100 in the board she paid quarterly. After two quarters the stepmother returned to paying full board as she told her stepson that she did not want the money repaid. This was not an effective release of the debt because a deed and consideration is required at common law. Four years later the stepmother died, appointing her stepson as the sole executor of the will. The court held that his appointment operated to perfect the imperfect release of the debt as he would have to pay the debt back to himself. Jessel MR laid out three requirements for this principle to apply. Requirement one is that the donor intended to make an immediate inter vivo gift. This means that the donor must have intended to make the gift immediately, not at a later date or at the point of their death.

The donor appointed the donee an executor of their estate is the second requirement which  necessitates the legal title to be vested to the donee in his capacity as the executor or administrator of the donor. Re Stewart illustrates that it is irrelevant whether the donee is a sole or one of several joint executors. Re Gonin created doubt as to whether the rule should apply to administrators because “it is often a matter of pure chance which of many persons equally entitled to a grant of letters of administration finally takes them out”. However this was ignored when applying the rule to Re James, which was later, affirmed in Re Ralli’s Will Trust’s.

The last requirement is that the property must be capable of forming the Subject matter which is regarded as the same for donatio mortis causa, as discussed above.

The Contracts (Rights of Third Parties) Act 1999 applies to contracts or covenants created on or after 11 May 2000. S 1 (1) of this act provides that a third party is entitled to enforce a term of a contract if it expressly provides that he may, or it purports to confer a benefit on him. The beneficiary is entitled to recover damages when the settlor enters into a covenant with the intended trustee provided that the contract does not express that it was not intended to be enforceable by the beneficiary. However, by means of s 1 (5) any remedy is available to the beneficiary which would have been accessible to him in an action for breach of contract if he had been a party to the contract. Despite this the view appears to be that s 1(5) does not mean that specific performance is available as the equitable maxim, that equity will not assist a volunteer, has not been abrogated.

The courts, however, have taken the position to direct beneficiaries not to take proceedings to enforce covenants, as shown in Re Pryce and Re Kay’s Settlement. The incentive behind these decisions is that to allow trustees to recover damages under a settlor’s deed at common law would indirectly assist volunteers who are not entitled to the direct assistant of the court in equity. Aside from this direction, beneficiaries are free to take action on their own initiative. However, it is debateable as to whether they will be able to recover substantial damages. This is due to the principle that a covanantee is only entitled to recover damages as compensation for his own personal loss.  A trustee who was party to the covenant was never to receive any personal gain for himself, thus cannot have suffered any personal loss, therefore only nominal damages should be available to him.

In order to avoid the large restrictions in the application of the act it is possible for the beneficiary to sue in their own right because the covenant may be said to be held  on trust for the beneficiary. The trustees will either join them in action as co-plantiffs, or as co-defendants. This is possible as a covenant is a ‘chose in action’ thus is capable of forming the subject matter of a trust because it is intangible property. This notion was first accepted in Fletcher v Fletcher, later being confirmed in Don King Productions v Warren and many other cases. However, it is evident that these type of trusts are not commonplace as they are capable of undermining the doctrine of privity of contract. Fletcher v Fletcher is criticised as there was no indication to create such a trust and the beneficiaries and trustees were unaware of the existence of the covenant. As a result of this criticism, the Privy Council in the case of Vandepitte v Preferred Accident Insurance Corpn of New York held that to find a trust of this nature “the intention to constitute the trust must be affirmatively proved”. This type of trust is further restricted by the fact that the scope of the concept is that future property is incapable of forming the subject matter of a trust.

In essence as a whole these three exceptions bring important rights for beneficiaries, though individually they appear very weak and have little affect on the maxim “equity will not assist a volunteer”.

Donatio mortis causa is a very specialist exception though has a wide interpretation in relation to subject matter, as shown in Stainland v Williot. This encroaches on the maxim, thus eroding it slightly as it allows a volunteer to have their right upheld.  Whereas one may argue that Strong v Bird is nothing more than a widened interpretation of the circumstances in which equity is willing to find a transfer has in fact being completed. The Contract (Rights of Third Parties) Act 1999 does give beneficiaries rights, though is very limited in scope. The courts are reluctant to advise beneficiaries to sue, as shown in Re Pryce, and even if they do only minimal damages are arguable available. This may be interpreted to show that the courts are keen to uphold the maxim. The courts have also added a large restriction on the ability of the beneficiary to sue under their own right, as mentioned in Vandepitte v Preferred Accident Insurance Corpn of New York above. Thus the only real exception to erode at the maxim is donatio mortis causa, therefore it is accurate to describe the law as retaining the maxim “virtually intact”.

(Word Count 1789)

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