A plaque in Maple, Ontario describes Lord Beaverbrook as one of the Commonwealth's best known publishers, politicians and philanthropists.

Lord Beaverbrook is well known for his ownership of the Daily Express, which he transformed from a failing publication into what was for a time the most read newspaper in the world, earning him the title 'First Baron of Fleet Street'.

His philanthropic gestures were largely directed towards his native Canada and it was in 1954 that he proposed what he was content to describe as "the Beaver's biggest gift" – a public art gallery and a collection of paintings for the province of New Brunswick. The province accepted the proposed donation and provided a prestigious site for the gallery.

Lord Beaverbrook died in 1964. Today, the Beaverbrook Art Gallery's collection is extensive, with more than 130 paintings, drawings and sculptures estimated to be worth more than £100m and including works by Turner, Gainsborough, Botticelli, Dali and Lucian Freud. Indeed, Turner's The Fountain of Indolence (pictured) is alone estimated to be worth as much as £18.5m and Hotel Bedroom by Freud is believed to be valued at £4m.

However, the effect and extent of Lord Beaverbrook's philanthropy has recently been under scrutiny in a legal dispute in Canada. In a battle over ownership of the collection in the gallery, the issue was whether the Beaver's biggest gift really was a gift or whether he intended to be able to ask for the paintings to be returned one day.

The Beaverbrook dispute has so far resulted in a division of the gallery's collection. Some 88 pieces of valuable artwork on display in the Beaverbrook Art Gallery, which were provided by Lord Beaverbrook for the gallery's grand opening in 1959, were held to have been a gift to the gallery.

However, works of art that had been purchased subsequently by Lord Beaverbrook, or the foundation that he established for the purpose, were held not to have been a gift and remained the property of the Beaverbrook Foundation. An appeal has been lodged.

So, when is a gift not a gift? The position under English law concerning the making of an inter vivos gift of personal property (as opposed to real property, for example land) can be easily stated. The gift may be made either by way of deed or other instrument in writing, or by way of delivery.

This article deals with the latter scenario – giving by way of delivery. Here, all that is needed is that the donor delivers the property to the donee with the intention that the donee benefits immediately from the receipt. No other formalities are required.

However, the courts apply this simple rule with such rigour that determining whether or not these apparently simple requirements have been met is fraught with difficulty.

The question of ownership at any particular time can be critical where rules on taxation, succession or insolvency come to be applied to assets, a fact which is drawn out by the Beaverbrook dispute and other reported cases in this area – frequently involving the Inland Revenue, heirs or creditors. The following guidelines can be taken from the reported decisions in this area.

Is physical delivery of the property required?

Ordinarily, actual, or physical, delivery is required; anything less gives rise to the potential for dispute. This strict rule has been relaxed by the courts in only a limited way, such that constructive, or symbolic, delivery can satisfy the test.

It is sufficient if the donee is put in possession of the goods by the donor, or if the donee obtains possession with the donor's consent.

Where goods cannot be actually delivered owing to their bulk, they can be constructively delivered, for example, by the delivery of the key to a warehouse in which they are stored, or by delivery of part as representing the whole (Ryall v Rowles [1750]).

However, it is clear that an oral gift, without some act of delivery, will not affect the ownership of the goods purported to be given (Smith v Smith [1733]).

How absolute is absolute?

For an effective gift, the donor must have a present intention to confer an immediate benefit on the donee, which is for the donee to prove in any dispute as to ownership. If a condition is imposed upon the gift, restricting the donee's entitlement to or use of the gift, then title in the property will not have passed.

Problems may arise where a donor attaches a condition to a gift, for example, that the donee must reach 30 years of age or that the gift itself must be used only for the purposes of the donee's education. It then becomes a question of interpretation to determine whether the apparent restriction is truly a condition that qualifies the donor's intention to benefit the donee, or whether it merely articulates the motive for making an absolute gift (Re Osoba [1979]).

Revoking a gift

In the first instance a gift, once completed with the necessary intention and delivery discussed above, cannot be revoked unless it is tainted by fraud, undue influence, misrepresentation or mistake. It may also be set aside if the gift offends overriding insolvency rules or is otherwise illegal, for instance if it promotes matters against public policy or contravenes money laundering regulations.

It is, however, possible to revoke a particular class of gift – a donatio mortis causa, which is a gift of property made by a donor in contemplation of their death within the near future. Impending death can motivate even the most miserly to give away property.

The requirements are set out in the leading case of Sen v Hedley [1991]. The gift must be made in contemplation, although not necessarily in expectation, of impending death. Second, it must be made on the condition that it is to be absolute and perfected only on the donor's death, being revocable until that event occurs and ineffective if it does not.

Finally, there must be actual or constructive delivery. The gift will be ineffective if the danger passes and death does not occur.

A challenge to the validity of any purported gift is raised by disputing the existence of the necessary ingredients for an effective gift.

The Beaverbrook case illustrates the difficulties in resolving such disputes where it is necessary to establish the intention of a donor who has since died or who made the purported gift in the distant past.

Philip Davis is a partner in the commercial litigation department and Graham Ludlam is a professional development lawyer at Davies Arnold Cooper.