What May Be Transferred (S.6) & Restraints on Alienation — Transfer of Property Notes

Immovable Property and Oral Transfer

In Ananda Behera v State of Orissa (1955) a man had paid for the right to catch and carry away all the fish from the Chilka Lake for years. When the State refused to honour it, the Supreme Court had to decide one small-sounding question with big consequences: was that right movable or immovable? The answer — immovable, a “profit à prendre” — decided the whole case. Classification is never a formality.

What is Immovable Property?

Before you transfer anything, you must know which set of rules applies, and that turns on whether the thing is movable or immovable. The Transfer of Property Act, 1882 (the “TPA”) does not give a full definition. Section 3 only tells you what immovable property does not include — “standing timber, growing crops or grass”. The positive definition is borrowed from the General Clauses Act, 1897, s.3(26): immovable property “includes land, benefits to arise out of land, and things attached to the earth”.

So there are three classes of immovable property:

Land — the earth’s surface, the column above and the strata below, plus things naturally part of it (ponds, wells).
Benefits to arise out of land — rights that come out of land even though you cannot touch them: the right to collect rent, a right of ferry, a right of fishery, the right to catch fish, a right to collect lac from trees. These are called a profit à prendre [a right to take something from another’s land].
Things attached to the earth — s.3 explains this: (i) rooted in the earth (trees and shrubs), (ii) imbedded in the earth (walls, buildings), or (iii) attached to what is so imbedded for its permanent beneficial enjoyment (doors, windows fixed to a building).

The real test hiding underneath all this is permanence of attachment and the intention behind it. A thing fixed to enjoy it where it stands is immovable; a thing fixed only to steady it while it is used, or meant to be removed, stays movable.

The standing-timber trap. Trees are tricky. A fruit-bearing or shade tree (mango, jackfruit) is immovable because it is meant to keep standing and growing on the land. But a tree grown only to be cut and used as timber — “standing timber” — is treated as movable, because the intention is to sever it. The same mango tree can even change character: if it is sold on the footing that the buyer will fell it at once, it is standing timber (movable).

Not every W is loud here, but the ones that matter:

What — land, benefits arising out of land, and things permanently attached.
Why — the mode and formalities of transfer (writing, registration, stamp) differ for immovable property, so the class decides the whole procedure.
How — apply the attachment-and-intention test; ask whether the thing is enjoyed where it stands or is meant to be moved.

🧩 WORKED EXAMPLE — the mango tree

Facts. A asks whether “a mango tree” is movable or immovable property.

Rule. A tree rooted in the earth is a “thing attached to the earth” and therefore immovable (s.3, General Clauses Act s.3(26)); but a tree meant to be cut is “standing timber” and movable (s.3 TPA exclusion).

Apply. A mango tree is a fruit tree — kept for its fruit and shade, meant to keep standing. It is immovable property. It becomes movable only if it is dealt with as timber to be felled.

Conclusion. A mango tree is immovable property unless sold specifically to be cut down as timber.

Oral Transfer (Section 9)

Section 9 says a transfer of property may be made without writing in every case where writing is not expressly required by law. But the Act does require writing (and usually registration) in the important cases: a sale of tangible immovable property worth Rs. 100 or more, all mortgages (except a deposit of title-deeds), leases from year to year or for more than one year, gifts of immovable property, and the transfer of an actionable claim. Below those thresholds an oral transfer with delivery of possession is valid.

Section 9, TPA: “A transfer of property may be made without writing in every case in which a writing is not expressly required by law.”

In Simple Terms: Writing is the exception, not the rule — but for land deals that matter (sale of land worth Rs. 100+, mortgages, longer leases and gifts) the law does demand a written, registered document, so those cannot be done by word of mouth.

🧩 WORKED EXAMPLE — the oral fishing right

Facts. A orally grants B, for Rs. 10,000, the right to catch and carry away fish from A’s lake.

Rule. A right to catch fish is a benefit arising out of land — immovable property (Ananda Behera, 1955). A transfer of such a right for value is a sale of immovable property worth Rs. 100+, which s.54 requires to be by a registered instrument; s.9 does not save it.

Apply. The grant is of immovable property worth well over Rs. 100 and was made only orally. It fails the writing-and-registration requirement.

Conclusion. The oral grant is invalid; B acquires no transferable right. (At best it is a licence, revocable by A.)

flowchart TD
    A["Immovable Property"]
    A --> B["Land"]
    A --> C["Benefits arising out of land<br/>(profit a prendre: fishery, ferry, rent)"]
    A --> D["Things attached to earth<br/>(rooted / imbedded / for permanent enjoyment)"]
    A --> E["NOT included:<br/>standing timber, growing crops, grass"]
    classDef box fill:#e8f0fe,stroke:#333,color:#111;
    class A,B,C,D,E box;

Case Laws

Ananda Behera v State of Orissa (1955) — a right to catch and carry away fish from a lake is a profit à prendre, a benefit arising out of land, hence immovable property.
Shantabai v State of Bombay (1958) — a right to enter land and cut/carry timber over years is a benefit arising out of land (immovable), not a bare sale of movable trees.
Marshall v Green (1875) — trees sold to be cut and removed at once are “standing timber” and pass as movable property.

Transfer of Property — Meaning, Inter-Vivos Rule and Essentials

The draftsmen of 1882 chose their words with care. They did not say “a transfer gives away property”; they said it is an act by which a living person conveys to another living person. That single word — living — is why a gift by will is not governed by this Act, and why a gift to a child not yet born needs a special provision. Every essential of a valid transfer flows from that opening sentence.

What is a Transfer of Property?

Section 5 defines “transfer of property” as an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons; and “to transfer property” is to perform such an act. A “living person” includes a company, association or body of individuals, whether incorporated or not.

Three ideas are packed in:

It is inter vivos [between living persons] — so a will (which operates on death) is not a transfer under this Act.
It may be “in present or in future” — you can transfer property to take effect later, but you cannot transfer property that does not yet exist; only the transfer may be future, not the property.
The transferor and transferee must both be living.

Exceptions to the two-living-persons rule. The rule is not absolute. The Act itself allows a transfer for the benefit of a person not yet born (s.13, through a prior living-person’s interest), and a “living person” is stretched to include a company or association. These are the standard “exceptions” the examiner wants when the question quotes the two-living-persons line.

Essentials of a valid transfer. Read s.5 with ss.6, 7 and 9, and a valid transfer needs:

Two competent parties, both living — a transferor and a transferee.
A transferor competent to transfer (s.7) — every person competent to contract (major, sound mind, not disqualified) and entitled to the property, or authorised to dispose of it.
Transferable property (s.6) — property the law permits to be transferred (see Section 3 below).
A lawful object and consideration — the transfer must not be for an unlawful purpose (s.6(h)).
The proper mode (s.9) — oral where allowed, otherwise a written, attested and registered instrument.
The transfer must convey a present or future interest to a living transferee — and, where future, it must not offend the rules on perpetuity and unborn persons.

Section 5, TPA: “’transfer of property’ means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons; and ’to transfer property’ is to perform such act.”

In Simple Terms: A transfer under this Act is a living-to-living handover of property — now or later — done by someone entitled to give it, over property the law allows to be given, in the form the law prescribes.

🧩 WORKED EXAMPLE — is it a “transfer”?

Facts. A executes a deed today giving his house to his nephew B, the gift to take effect after A’s own lifetime.

Rule. Section 5 allows a transfer “in future” so long as both parties are living persons at the date of the act and the property exists now.

Apply. A and B are both living; the house exists; only enjoyment is postponed. This is a valid inter vivos transfer (in future), not a will.

Conclusion. It is a transfer under the TPA. (Had A directed it to operate only on his death by a testament, it would be a will, outside this Act.)

flowchart TD
    A["Valid Transfer (s.5)"]
    A --> B["Competent transferor (s.7)"]
    A --> C["Transferable property (s.6)"]
    A --> D["Living transferee<br/>(exception: unborn via s.13)"]
    A --> E["Lawful object & consideration"]
    A --> F["Proper mode (s.9)"]
    classDef box fill:#e8f0fe,stroke:#333,color:#111;
    class A,B,C,D,E,F box;

Case Laws

Harish Chandra v Chandra Sekhar (AIR 1977 All) — a transfer under s.5 must be inter vivos; a testamentary disposition operating on death is outside the Act.
Jugalkishore v Raw Cotton Co. (1955) — property “in future” cannot be transferred; only the operation of a transfer may be postponed to the future.

What May Be Transferred — Section 6 and Operation of Transfer

The Act opens the door wide, then names the few things that may not walk through it. “Property of any kind may be transferred” — that is the rule in s.6. The marks are not in the rule; they are in the nine lettered exceptions that follow, each guarding against a transfer the law thinks unfair or pointless.

The General Rule and its Exceptions (Section 6)

Section 6 lays down the general rule that property of any kind may be transferred, then carves out exceptions in clauses (a) to (i). The clauses you must be able to explain:

(a) Spes successionis [the mere chance of an heir succeeding] — the chance of an heir-apparent inheriting, or of a relation getting a legacy, or any other mere possibility of a like nature, cannot be transferred. You cannot sell your hope of inheriting from a living relative.

(b) Right of re-entry — a bare right of re-entry for breach of a condition cannot be transferred apart from the land.

(c) Easement — an easement cannot be transferred apart from the dominant land it serves.

(d) Restricted interest — an interest restricted in its enjoyment to the owner personally (e.g. a religious office’s emoluments) cannot be transferred.

(dd) Right to future maintenance — a right to future maintenance, however secured, is for the personal benefit of the holder and cannot be transferred.

(e) Mere right to sue — a bare right to sue (e.g. for damages for a tort) cannot be transferred. Contrast an actionable claim (a debt), which can be transferred under s.130.

(f) Public office / salary — a public office, and the salary of a public officer (before or after it becomes payable), cannot be transferred.

(g) Pensions — stipends and pensions of military, naval, air-force and civil pensioners cannot be transferred.

(h) Unlawful transfers — no transfer can be made so far as it is opposed to the nature of the interest affected, or for an unlawful object or consideration (s.23, Contract Act), or to a person legally disqualified to be a transferee.

(i) Untransferable tenancies — a statutory tenant’s untransferable right of occupancy, a farmer of an estate in default, or a lessee of an estate under management, cannot assign his interest.

Operation of transfer (Section 8) — what passes. Once a valid transfer is made, s.8 tells you how much passes: unless a different intention is expressed, a transfer passes to the transferee all the interest the transferor was then capable of passing in the property, and in its legal incidents. Those incidents include, for land, the easements attached, the rents and profits accruing after the transfer, and things attached to the earth; for a house, the easements, rents and fixtures; for money or other property yielding income, the interest or income accruing after the transfer takes effect.

Section 6 (opening), TPA: “Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force.”

Section 8 (part), TPA: “Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof.”

In Simple Terms: Almost anything can be transferred; the law blocks only a short list — a mere hope of inheriting, a bare right to sue, public offices and pensions, and unlawful transfers. And when a transfer is made, the transferee gets everything the owner could give, along with all the property’s natural benefits, unless the deed says otherwise.

🧩 WORKED EXAMPLE — selling a hope

Facts. A’s rich uncle U is alive. A, hoping to inherit, “sells” his future share in U’s estate to B for cash today.

Rule. Section 6(a) forbids the transfer of spes successionis — the mere chance of an heir-apparent succeeding.

Apply. While U lives, A has no interest in U’s property, only a hope. That hope is a mere possibility and is not transferable.

Conclusion. The transfer to B is void; A conveys nothing. (Had U died and A actually inherited, A could then transfer his real share.)

flowchart TD
    A["s.6 — Property of any kind is transferable EXCEPT:"]
    A --> B["Spes successionis (a)"]
    A --> C["Right of re-entry (b) / Easement (c)"]
    A --> D["Restricted interest (d) / Future maintenance (dd)"]
    A --> E["Mere right to sue (e)"]
    A --> F["Public office & salary (f) / Pensions (g)"]
    A --> G["Unlawful transfers (h) / untransferable tenancies (i)"]
    classDef box fill:#e8f0fe,stroke:#333,color:#111;
    class A,B,C,D,E,F,G box;

Case Laws

Jugalkishore v Raw Cotton Co. (1955) — a transfer of a mere future possibility (spes) is void; the transferor must have a present transferable interest.
Official Assignee, Madras v Sampath Naidu (1933) — a mortgage of a mere spes successionis is void and does not become valid even when the interest later materialises.

Notice — Actual and Constructive

A buyer who “did not know” of an earlier claim often loses anyway. Why? Because the law fixes him with knowledge he should have gained. That is constructive notice — the doctrine that turns “I didn’t ask” into “you are treated as if you knew”. It quietly decides who wins nearly every priority dispute in property law.

What is Notice?

“Notice” means knowledge of a fact. Section 3 of the TPA recognises three forms:

Actual (express) notice — you actually know the fact, from a definite, reliable source (not vague rumour).
Constructive (implied) notice — you did not actually know, but the law treats you as knowing because a reasonable person would have found out. Section 3, Explanation I and II, fixes you with constructive notice in these situations: (i) wilful abstention from an enquiry you would have made (deliberately not asking to stay “innocent”); (ii) gross negligence in not making an enquiry; (iii) registration — registration of a document is notice of it to a later transferee from the date of registration; (iv) actual possession — if a person is in actual possession of the property, you are deemed to have notice of his title/interest; and (v) notice to an agent — knowledge your agent acquired in the course of the same business is imputed to you (Explanation III).

So the three heads are actual, constructive and imputed (through an agent) notice.

What — the knowledge of a fact that the law treats a party as having.
Who — it binds a transferee/mortgagee/buyer, and protects the person whose interest the fact concerns.
When — it is judged at the time of the transaction (e.g. registration is notice from its date; possession is notice while it continues).
How — apply the four Explanation heads; ask whether a prudent person, acting with ordinary care, would have discovered the fact.

Section 3, TPA (Explanation I): “Where any transaction relating to immovable property is required by law to be and has been effected by a registered instrument, any person acquiring such property … shall be deemed to have notice of such instrument as from the date of registration…”

In Simple Terms: You have “notice” of a fact if you actually know it, if you deliberately or carelessly avoided finding it out, if it was on the public register, if someone was openly in possession, or if your agent knew it. The law will not let you profit from staying wilfully blind.

🧩 WORKED EXAMPLE — the tenant in possession

Facts. B buys a house from S without inspecting it. A tenant, T, is living there under a long lease from S. B claims he had no notice of T’s lease.

Rule. Section 3, Explanation II — actual possession of a person is notice of his title. A buyer must enquire of anyone in visible possession.

Apply. T was in open possession. Had B inspected, he would have learnt of the lease. His failure to enquire fixes him with constructive notice.

Conclusion. B is deemed to have notice of T’s lease and takes the house subject to it.

flowchart TD
    A["Notice (s.3)"]
    A --> B["Actual / express"]
    A --> C["Constructive"]
    A --> D["Imputed (through agent)"]
    C --> C1["Wilful abstention"]
    C --> C2["Gross negligence"]
    C --> C3["Registration"]
    C --> C4["Possession"]
    classDef box fill:#e8f0fe,stroke:#333,color:#111;
    class A,B,C,D,C1,C2,C3,C4 box;

Case Laws

Ahmedabad Municipal Corporation v Haji Abdul Gafur (1971) — constructive notice fixes a person with knowledge he would have gained by ordinary diligence; wilful blindness is no defence.
Tilakdhari Lal v Khedan Lal (1921) — registration operates as constructive notice to a subsequent transferee only where a reasonable search would have revealed the deed.

Conditions Restraining Alienation and Repugnant Conditions

You give your friend a house outright — and then add, “but you may never sell it.” Can you keep that string attached? The law’s answer is a firm no for total restraints: once you give ownership, you cannot also forbid the owner from doing what owners do. Sections 10 and 11 draw the line between a string the law will cut and one it will tolerate.

Restraint on Alienation (Section 10)

Section 10 says: where property is transferred subject to a condition or limitation absolutely restraining the transferee from parting with or disposing of his interest, the condition is void (the transfer itself stays good — only the condition is struck out). The reasoning: the power to alienate is a natural incident of ownership; an absolute restraint is repugnant to the very grant.

But the section has two limits:

Partial restraints are valid. A condition that only partly restrains alienation — e.g. “do not sell to X,” or “do not sell for a limited time,” or “sell only to family members” — may be good. The test is whether the restraint is substantial and absolute (void) or partial and reasonable (valid).
Two exceptions in s.10 itself: (i) a lease where the condition is for the benefit of the lessor (a landlord may forbid sub-letting), and (ii) a transfer to or for the benefit of a woman (not being a Hindu, Muhammadan or Buddhist) where she is restrained from transferring her beneficial interest.

Repugnant Conditions (Section 11)

Section 11 deals with a different string: a condition that does not stop the transferee from selling, but tries to dictate how he shall use or enjoy the property after an absolute transfer. Where property is transferred absolutely, a condition directing that the transferee shall apply or enjoy it in a particular manner is void as repugnant to the absolute interest given, and the transferee may enjoy the property as if the condition did not exist. (Exception: where the condition is for securing the beneficial enjoyment of another piece of land of the transferor, s.11 lets it stand — this is how easements/covenants survive.)

Section 10 versus Section 11 — the exam hinge:

s.10 — the condition blocks transfer/alienation (“don’t sell”).
s.11 — the condition dictates use/enjoyment after an absolute gift (“reside in it,” “use only as a school”).

Both make the offending condition void while leaving the transfer intact.

Section 10, TPA: “Where property is transferred subject to a condition or limitation absolutely restraining the transferee … from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of a lease…”

Section 11, TPA: “Where, on a transfer of property, an interest therein is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.”

In Simple Terms: If you give property absolutely, you cannot also forbid the owner from selling it (s.10 — total bans are void, reasonable partial ones survive) or dictate how he must live in or use it (s.11 — such directions are void). The gift stands; the string is cut.

🧩 WORKED EXAMPLE — “reside in it forever”

Facts. A makes an absolute gift of a house to B with a direction that B shall reside in it (and never let it out).

Rule. Once an absolute interest is given, a direction controlling how the transferee shall enjoy the property is void as repugnant (s.11).

Apply. The direction to reside/occupy dictates B’s use of an absolutely gifted house. It does not secure any other land of A. It is repugnant.

Conclusion. The gift is valid; the condition to reside is void. B owns the house and may live elsewhere, sell or let it.

Decoy. Do not treat this as s.10 (restraint on alienation) — it controls enjoyment, not selling, so it is s.11.

flowchart TD
    A["Condition attached to an absolute transfer"]
    A --> B{"Does it restrain SELLING or dictate USE?"}
    B -->|"Restrains selling"| C["s.10"]
    C --> C1["Absolute restraint = VOID"]
    C --> C2["Partial/reasonable = VALID"]
    B -->|"Dictates use/enjoyment"| D["s.11 — VOID as repugnant<br/>(unless it benefits transferor's other land)"]
    classDef box fill:#e8f0fe,stroke:#333,color:#111;
    class A,C,C1,C2,D box;

Case Laws

Rosher v Rosher (1884) — a condition that the transferee may sell only to the transferor (or at a fraction of value) is an absolute restraint in disguise and is void.
Zoroastrian Co-op Housing Society v District Registrar (2005) — a restraint may be valid where it is a partial restraint reasonably serving the objects of a co-operative society.
Mata Prasad v Nageshar Sahai (1925) — a partial restraint on alienation (e.g. confined to a class of persons or a period) can be upheld as reasonable.

Void Conditions; Condition Precedent and Subsequent

“I’ll give you my land if you touch the sky with your little finger.” No one can do it — so is the gift good, bad, or simply free of the silly string? The Act has a crisp answer, and it depends on where the impossible condition sits: at the door (before the interest starts) or at the exit (to take it away later).

Void Conditions (Section 25)

Section 25 provides that an interest created on a transfer is void if the condition on which it is to take effect is (i) impossible, (ii) forbidden by law, (iii) fraudulent, (iv) involves injury to a person or property, or (v) the court regards it as immoral or opposed to public policy. So an impossible or unlawful condition precedent destroys the interest that depends on it.

Condition Precedent (Section 26) and Condition Subsequent (Section 29)

A condition precedent is a condition that must be fulfilled before an interest can vest (“to B if he qualifies as a doctor”). A condition subsequent is a condition that, on happening after the interest has vested, divests it (“to B, but if he ceases to reside in India, the interest shall go over to C”).

The rules of fulfilment differ:

Condition precedent — substantial compliance suffices (s.26). Where the terms require a condition precedent to be fulfilled before a person can take an interest, it is enough that the condition is substantially complied with.
Condition subsequent — strict compliance required (s.29). An ulterior interest that is to arise on the fulfilment of a condition subsequent takes effect only if that condition is strictly fulfilled. A divesting condition is read narrowly, because the law dislikes taking back an interest already vested.
An impossible/unlawful condition precedent voids the gift (s.25); an impossible or unlawful condition subsequent is simply ignored and the prior interest becomes absolute (s.32).

Section 25, TPA: “An interest created on a transfer of property and dependent upon a condition fails if the fulfilment of the condition is impossible, or is forbidden by law, or … fraudulent, or involves … injury to the person or property of another, or … immoral or opposed to public policy.”

In Simple Terms: A silly or unlawful condition attached at the entrance (condition precedent) kills the gift; the same condition attached at the exit (condition subsequent) is thrown away and the owner keeps the property free. A real condition precedent needs only substantial compliance; a real condition subsequent must be met exactly.

🧩 WORKED EXAMPLE — “run 80 km per hour”

Facts. A transfers property to B on condition that B shall run 80 km per hour. Is the condition valid?

Rule. Section 25 — an interest dependent on an impossible condition precedent fails.

Apply. Running 80 km/h unaided is humanly impossible. It is a condition precedent (B must do it before taking). An impossible condition precedent voids the interest that hangs on it.

Conclusion. The transfer to B is void — B takes nothing.

Note the limit. If instead the words had merely divested B on an impossible event (a condition subsequent), that condition would be ignored and B would keep the property absolutely (s.32).

flowchart TD
    A["Impossible / unlawful condition"]
    A --> B{"Precedent or subsequent?"}
    B -->|"Precedent (before vesting)"| C["s.25 — interest is VOID"]
    B -->|"Subsequent (divesting)"| D["s.32 — condition IGNORED,<br/>prior interest becomes absolute"]
    classDef box fill:#e8f0fe,stroke:#333,color:#111;
    class A,C,D box;

Case Laws

The rule for a condition subsequent (s.29) — a divesting condition must be strictly fulfilled and is construed narrowly, because the law is reluctant to defeat an interest already vested.
The rule for an impossible condition precedent (s.25) — where the fulfilment of a condition precedent is impossible (or unlawful), the interest depending on it fails and the transfer is void.

Direction for Accumulation

An owner may want the income of his property saved up rather than spent — to build a fund, pay a debt, or provide portions for children. But saving income means no one presently enjoys it, which is another way of tying property up. So the law caps how long income may be piled away.

The Rule on Accumulation (Section 17)

Section 17 says a direction to accumulate the income of property is valid only for one of two periods (whichever the transferor chooses):

the life of the transferor; or
18 years from the date of the transfer.

A direction to accumulate for longer than the permitted period is void for the excess — accumulation stops at the limit, and the surplus income is released to the person who would have been entitled had there been no such direction.

Exceptions (s.17(2)) — where accumulation beyond the period is allowed for:

the payment of the debts of the transferor or any other person taking an interest under the transfer;
the raising of portions for children of the transferor or of any person taking an interest; and
the preservation or maintenance of the property transferred.

Section 17, TPA: “Where the terms of a transfer of property direct that the income arising from the property shall be accumulated … for a period longer than — (a) the life of the transferor, or (b) a period of eighteen years from the date of the transfer, such direction shall … be void … and the property … shall be disposed of as if the period during which the accumulation has been directed … had elapsed.”

In Simple Terms: You can order income to be saved up only for your own lifetime or 18 years; ask for longer and the extra is void — unless the saving is to pay debts, provide for children, or maintain the property, in which case a longer accumulation is allowed.

🧩 WORKED EXAMPLE — accumulate 5 years to pay a debt

Facts. A transfers property to B directing that the income be accumulated for 5 years to discharge A’s Rs. 5-lakh debt.

Rule. Accumulation is valid up to the transferor’s life or 18 years (s.17(1)); and accumulation to pay the transferor’s debts is expressly saved (s.17(2)).

Apply. Five years is well within the 18-year cap; and even otherwise, the purpose — paying A’s debt — is a permitted exception.

Conclusion. The direction to accumulate for 5 years is valid.

flowchart TD
    A["Direction to accumulate income (s.17)"]
    A --> B["Valid period: life of transferor OR 18 years"]
    A --> C["Beyond that = VOID for the excess"]
    A --> D["Exceptions (s.17(2)): pay debts /<br/>portions for children / maintain property"]
    classDef box fill:#e8f0fe,stroke:#333,color:#111;
    class A,B,C,D box;

Case Laws

Thellusson v Woodford (1805) — the case that provoked accumulation limits: an unlimited direction to accumulate is against public policy, prompting statutory caps.

Rule of Acceleration

A gives his land “to B for life, then to C.” If B’s life interest fails at the outset — say B disclaims or the gift to B is void — must C wait for a life that will never run? Common sense says no: C’s interest should simply move up. That moving-up is the rule of acceleration.

What is Acceleration? (Sections 27–28)

Where a transfer creates a prior interest and an ulterior (later) interest, and the prior interest fails, the ulterior interest may be accelerated — it takes effect earlier than it otherwise would, unless a contrary intention appears from the transfer. Sections 27 and 28 govern conditional and ulterior dispositions:

Section 27 — where property is transferred so that an interest passes to one person, and by the same transfer an ulterior disposition is made in favour of another on the failure of the prior disposition, the ulterior disposition takes effect on the failure of the prior one, even if the failure does not occur in the manner contemplated — unless the words show the ulterior interest was meant to arise only on failure in a particular way.
Section 28 — an ulterior interest may be made to take effect on the happening or non-happening of a specified event.

The doctrine rests on the idea that the transferor’s clear ultimate intention (C is to have it after B) should not be defeated merely because the intermediate step drops out.

Section 27, TPA (part): “Where, on a transfer of property, an interest therein is created in favour of one person, and by the same transaction an ulterior disposition of the same interest is made in favour of another, if the prior disposition under the transfer shall fail, the ulterior disposition shall take effect upon the failure of the prior disposition, although the failure may not have occurred in the manner contemplated by the transferor.”

In Simple Terms: If the first gift in a chain falls through, the next gift moves up and takes effect early — unless the deed clearly ties the later gift to the first failing in one particular way.

🧩 WORKED EXAMPLE — the disclaimed life interest

Facts. A transfers “to B for life, and then to C absolutely.” B disclaims (refuses) the life interest at the outset.

Rule. On failure of the prior (life) interest, the ulterior interest is accelerated (ss.27–28), absent a contrary intention.

Apply. B’s life interest never takes effect. C’s interest, meant to follow B, moves up.

Conclusion. C’s absolute interest is accelerated and takes effect at once.

flowchart LR
    A["Prior interest (B for life)"] --> B{"Prior interest FAILS?"}
    B -->|"Yes"| C["Ulterior interest (C) is ACCELERATED — takes effect early"]
    B -->|"No"| D["C takes in the ordinary course, after B"]
    classDef box fill:#e8f0fe,stroke:#333,color:#111;
    class A,C,D box;

Case Laws

Jull v Jacobs (1876) — where a prior gift fails, the remainder is accelerated unless the instrument shows a contrary intention.

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