T Choithram International v Pagarani [2000]
Share
T Choithram International SA v Pagarani [2000] UKPC 46 was a trusts law case decided by the Judicial Committee of the Privy Council on appeal from the British Virgin Islands in relation to the vesting of trust property in a trustee.
Mr Thakurdas Choithram Pagarani, a successful businessman, wanted to establish the Choithram International Foundation before his death due to cancer. He drafted a trust deed, designating himself as a trustee. In a ceremony at his son's London home, he announced the transfer of his wealth to a Jersey trust for the proposed foundation. Despite using words of gift, he died before executing the documents to transfer legal title to the assets to the trustees. The Court had to determine the validity of the gift.
The Court of Appeal in the British Virgin Islands held that the trust failed. It stated that a perfected gift could be made either by transferring the gifted asset to the donee with the donor's intention or by the donor declaring himself a trustee. Since Mr Pagarani used words of gift and did not transfer the shares properly, the gift was deemed incomplete, and the trust failed.
The Privy Council, in its advice, focused on whether the trusts of the Foundation trust deed were enforceable against the shares and deposits. It disagreed with the lower courts, stating that fairness required the trust property to be vested in one trustee (Mr Pagarani) at the time of the gift, making the conveyance to the trust valid. The Privy Council questioned the correctness of Bridge v Bridge but distinguished it on technical grounds.
The decision was seen by some as making new law, emphasising fairness over strict legal rules. Critics argued that the decision's logic was unclear, relying more on notions of fairness than established legal principles. While the Privy Council expressed doubts about the correctness of Bridge v Bridge, it upheld the validity of the trust in this case. The decision's significance lies in its departure from a strict application of legal rules to prevent the frustration of the donor's intentions, particularly in the context of a charitable foundation receiving a substantial bequest.
Mr Thakurdas Choithram Pagarani, a successful businessman, wanted to establish the Choithram International Foundation before his death due to cancer. He drafted a trust deed, designating himself as a trustee. In a ceremony at his son's London home, he announced the transfer of his wealth to a Jersey trust for the proposed foundation. Despite using words of gift, he died before executing the documents to transfer legal title to the assets to the trustees. The Court had to determine the validity of the gift.
The Court of Appeal in the British Virgin Islands held that the trust failed. It stated that a perfected gift could be made either by transferring the gifted asset to the donee with the donor's intention or by the donor declaring himself a trustee. Since Mr Pagarani used words of gift and did not transfer the shares properly, the gift was deemed incomplete, and the trust failed.
The Privy Council, in its advice, focused on whether the trusts of the Foundation trust deed were enforceable against the shares and deposits. It disagreed with the lower courts, stating that fairness required the trust property to be vested in one trustee (Mr Pagarani) at the time of the gift, making the conveyance to the trust valid. The Privy Council questioned the correctness of Bridge v Bridge but distinguished it on technical grounds.
The decision was seen by some as making new law, emphasising fairness over strict legal rules. Critics argued that the decision's logic was unclear, relying more on notions of fairness than established legal principles. While the Privy Council expressed doubts about the correctness of Bridge v Bridge, it upheld the validity of the trust in this case. The decision's significance lies in its departure from a strict application of legal rules to prevent the frustration of the donor's intentions, particularly in the context of a charitable foundation receiving a substantial bequest.
