Property Law

Ma Yait v. Official Assignee

(1930) 32 Bom LR 125; AIR 1930 PC 17

Facts

A settlor transferred substantial movable and immovable property to trustees.
During his lifetime, he retained management of the property and the benefit of its income.
After his death:
part of the income was to be paid to his widow;
the remaining income was to be divided among his children.
The corpus was to be distributed when:
the youngest child attained twenty years, regarding some properties; and
the youngest child died, regarding another property.
Only the children surviving on the relevant date, or the issue of a deceased child where permitted, would receive the corpus.
One child, Maung Chit Maung, assigned his rights under the settlement.
The trustees challenged the assignment, claiming that his right was only:
a mere chance of succession prohibited by Section 6(a); or
a mere right to sue prohibited by Section 6(e).

Whether a contingent interest created by an existing settlement is transferable.
Whether it is equivalent to the chance of an heir apparent succeeding to property.

Section 6(a) prohibits transfer of a mere possibility such as:
the chance of an heir apparent succeeding to an estate; or
the chance of a relative receiving a future legacy.
A contingent interest is different.
It is an existing proprietary interest created by an operative instrument, although its ultimate enjoyment depends upon an uncertain event.
A mere right to sue is also non-transferable, but a beneficial interest under a settlement is not merely a cause of action.

The settlor had already executed the settlement and transferred the property to trustees.
The children’s rights therefore arose from an existing and legally operative disposition.
Their interest was not based on the hope that the settlor might leave them property in the future.
The eldest son had:
a vested right in the income; and
a contingent interest in the corpus.
His right to the corpus depended upon his surviving until the date specified for distribution.
Nevertheless, the subject matter and conditions of that interest were already ascertainable.
It was therefore a recognised form of property capable of being:
valued;
assigned;
charged; or
dealt with for consideration.
The possibility that the interest might later fail did not reduce it to a mere expectancy.
The assignee simply took the same contingent interest, subject to the same possibility of failure.
It was also not a mere right to sue because the beneficiary possessed an interest under the trust independently of litigation.

The vested interest in income and contingent interest in the corpus were transferable property.
They were neither spes successionis under Section 6(a) nor a mere right to sue under Section 6(e).
The assignment was valid.
The appeal challenging the assignment was dismissed.