This week a dispute has been heard in the High Court regarding whether a father gave four Lancia Stratos rally cars, estimated to be worth £2.2 million, to his son as a loan or a gift. The father, Ernst Hrabalek, insists that the cars were lent to his son so they could be displayed at a car show. However, the son, Christian Hrabalek, claims his father gave them to him as a gift following his graduation.

Both sides are adducing evidence as to the intention of the transfer – does the evidence show that the father intended a loan or gift? The father is relying on an email from his son referring a request to him from former World Rally Champion, Sandro Munari, to borrow one of the cars for a show. The father alleges that the fact his son referred the request to him indicates that the son did not believe that he was the true legal owner of the cars and that his father had retained ownership.

The issue of whether the transfer of property to another is a gift or a loan is certainly not a new issue and there is a wealth of case law on the subject. A gift between living persons, as is alleged by the son in relation to the rally cars, can be summarised as the gratuitous transfer of property from one person to another while the donor is alive. The donor voluntarily transfers the property to the recipient with the full intention that it should not be returned to him.

There cannot be a gift without a giving and a taking. It is well established that if there is no written evidence of the gift, then a gift of chattels, such as the rally cars, is not complete unless accompanied by delivery. This does not appear to be an issue in relation to the rally cars. However, delivery was a key issue in the fascinating case of Thomas v Times Book Company [1966] 1 WLR 911 which explored the legal requirements of making a gift.

Dylan Thomas had lost the original manuscript of the play Under Milk Wood in a London pub. Before he left for a trip to America, Thomas told the BBC producer Donald Cleverdon that if he could find it, he could keep it. Cleverdon checked in the London pubs that Thomas suggested and found the manuscript. Thomas subsequently died whilst in America and never returned to England. Thomas’ wife sued for the return of the manuscript and argued that it did not satisfy the requirements of a gift as delivery had not been completed.

The Judge held that it was for Cleverdon to prove there had been a valid gift and he was satisfied that he had. The Judge found that Cleverdon had established both an intention on Thomas’ part to make a gift of the manuscript and deliver it to Cleverdon. The fact that Cleverdon had obtained possession of the manuscript with Thomas’ consent was sufficient delivery to perfect the gift. The Judge could see nothing in the previous case law which prevented him from taking the common sense view of the matter.

In relation to the case of the rally cars, we await the decision of Court.

This article was written by Rebecca Foden, a lawyer at Boodle Hatfield LLP.