Express trusts - constitution and formalities

Question 1

3 ways of constituting a trust

Answer 1

1) delceration of self as trustee
2) transfer of property to trustee
3) transfer by will

Question 2

2 requirements

Answer 2

1) compliance with formalities
2) Valid constitution of trust

Question 3

LPA 1925 s53(1)(b)

Answer 3

declerations over trusts of land must be evidenced in writing
- necessary to have an identifiable paper trail of rights

Question 4

LPA s53(1)(c)

Answer 4

-dispositions of existing interests in a trust must also be in writing
-future parties can identify rights and interests

Question 5

s9 wills act

Answer 5

• testamnetary trust must comply with strict will making requirements
• testator has to sign, make, acknolwedge an existing signature, in the presence of 2 witnesses, and the witness has to add/acknowledge signatures in the presence of witnesses as well
• only for testamenary as will comes live after death so you can no longer change the trust

Question 6

• lon fullers considerations for why theres formalities

3

Answer 6

1) evidentairy function
2) cautionary function
3) channelling function

Question 7

evidentiary function

Answer 7

-provides proof of trusts existence
-ensures clear evidence is available for the courts to resolve disputes where a trust was intended
prevents false claims and protects settlors intention

2

Question 8

cautionary function

3

Answer 8

• ensures settlors intentions is deliberate
• imposes a degree of seriousness preventing impulsive decisions
• for more important examples of property

Question 9

channelling function

Answer 9

• needs to be identifiable by 3rd parties, and future purchasers

Question 10

statutory formalities for a delceration of trust

Answer 10

LPA 1925 s53(1)(b)
- trust in land must be evidenced in writing
- without a valid deed to evidence the trust of land the beneficiary cannot enforce the trust

Question 11

hudson and hathway

Answer 11

-existing beneficial interest
-issue of modification of beneficial interest
- man sent email to his former partner saying take all the property its yours and sell 100% of the proceeds can go to you
- signed off his emails
- coa said this can constitute a valid deed for the purposes of s53(1)(b)

Question 12

statutory exceptions

Answer 12

• resulting, constructive and implied trusts do not require written evidence, under s53(2) because trusts are not not expressly delcared but imputed by the court
• exception to s53(1)(b) where legal title has transferred to b on the unwritten understanding that they would hold on trust for A, and B seeks fraudulently to claim absolute title on grounds of there being no written decleration of trust

Question 14

Case law exceptions to the formalities for a decleration of trust - cases

2

Answer 14

-bannister v bannister
rouchefocuald v boustead

Question 15

bannister v bannister

Answer 15

• A sold her cottage to B on the unwritten undersatdning that he would hold the property on trust for her for life
• b tried to evict a
• coa held that b could not rely on lack of formalities fraudulently to deny he was holding the property on trust for a
• for him to go back on the promise constutues an act of fraud
• court imputed a constructive trust that he has to hold the property on trust for her for life

case law exception to formalities

Question 16

rouchefoucald v boustead

Answer 16

• mrs rouchefoucald in sri lanka, and owned coffee plantations
• to purchase them she borrowed money from a lendor, she was a mortgagor of a mortgage
• business was booming then dropped and she was falling behind on the mortgage payment and tried to sell it to a new buyer
• mortgagee got fed up with lack of payment and tried to sell to a new buyer
• she strikes a deal w her friend to put the property up for sale on auction, and he would buy it on auction and hold it on trust for her
• he purchases it below market price
• realises the lack of formalities
• trys to take it for himself
• coa - cant allow as it would create a fraudulent outcome
• ## imputed a constructive trust to ensure they imposed a beneficial title to her

Question 17

jones v lock 1865

Answer 17

-husband made cheque of 900 pounds
- put it in babys cradle
- wife takes it out incase it rips
- mr jones puts it in a safe, passes away a week later
- q whether it was an outright gift, self declaration of trust, or an attempt at declaring someone else a trustee
- decided it was intending an outright gift, no intention to create a trust for the benefit of his son
- rule for outright gift = intention, delivery of cheque but he hadnt cashed it in so no valid outright gift
- court had to see how equity could intervene, tried to see if they could hold that he delcared himself as trustee to hold the cheque on behalf of his son so equity could intervene to keep the trust alive
- held no - once theres an intention to create an outright gift or intention of any other way, you have to stick with this decision so equity couldnt perfect an imperfect gift
- money stayed in his estate

Question 18

T choithram international v Pagarani

Answer 18

• elderly man end of life, thinking about his legacy
• decided he wanted to set up a foundation to ‘transfer all my wealth’
• appointed himself as one of many trustees
• validly executed the foundation
• as they transfer his savings into the foundations name, he then passes away before the transactions have been complete
• statutory rules not complied with
• Court looked at facts and said, he had appointed other trustees to be the trustees in the foundation he also appointed himself so he had made a self declaration of trust, and appointment of other trustees
• Court decided even though other trustees had been appointed to but because he made a self declaration of trust and he was one of those trustees, there was no requirement to transfer, valid legal title to the foundation as he was one of the trustees himself, he already held legal title to those assets.
• ## equity can intervene and rescue these imperfect gifts

Question 19

difference between jones v lock and t choithram

Answer 19

• If there’s confusion about the method of transfer of property, like in jones v lock was it an outright gift or a self decerlation of trust you assess the facts, jones and lock was clearly intended as an outright gift, not a self declaration so equity wont intervene and impose an alternative intention (alternative intention to make a self declaration of trust for example)
• they will stick with your original intention, rather than imposing an alternative intention as a means to rescue the trust
• But in t choithram they found it was his intention to appoint himself as trustee and make a self declaration of trust, so this is what the court went with to perfect the remaining imperfect transactions and upholding the transfer of the entire estate into the foundation

Question 20

equitable maxims relevant

Answer 20

• Equity will not assist a volunteer; (someone who hasn’t provided consideration)
• Equity will not perfect an imperfect gift

Question 21

cases where equity did not intervene

4

Answer 21

1)milroy v lord
2)re mcardle
3)re rose
4)pennington v wayne

Question 22

milroy v lord

Answer 22

-mr thomas settlor caring for his niece, transferred 50 shares to her to make her finanically indepedent
- trust valdily executed
- he appointed power of attorney mr sameul as trustee
- instructed him to transfer 50 shares from him to samuel lord, to hold on trust for niece
- mr samuel lord was meant to take a transfer share form and deliver it so the company would register it
- mr thomas medley passes away
- there was money in other beneficarys too
-COME BACK

equity did not intervene

Question 23

Re Mcardle

Answer 23

• the donor has a locus poenitentiæ and can change his mind at any time. No question of conscience enters into the matter, for there is no consideration, and there is nothing dishonest on the part of an intending donor if he chooses to change his mind at any time before the gift is complete.’
• if there is no consideration can change your mind
• if not would create a flood of cases, i was promised this etc

Question 24

Re Rose 1952

Answer 24

• Created an exception to Milroy v Lord by establishing that if the donor had done everything in their power to transfer the legal title, equity would perfect the transfer
• 10,000 shares to his wife on 13th march
• puts together the share transfer form and delivers it
• company register it on 30th june
• tax year begins 10th april
• if transfer legally took place on 13th march his estate wouldnt be liable to pay tax
• if transfer was when shares were registered with the company on 30th june, then new tax year so he would have to pay tax
• mr rose on the 30th march when he completed the share transfer form, signed in, executed it, delivered it himself to the property and did everything in his power to complete that transfer and the gift therefore equity will intervene to perfect the imperfect gift
• imperfect at law as it hadnt been registered with the company until 30th june
• Law will intervene to perfect the delay

Question 25

pennington v wayne

Answer 25

-mrs crabton wanted to appoint her newphew as director of the company, he first has to have a share in the company company auditor tells her how to do it - she does it and leaves it on the companys file - passes away before the shares are transferred - couldnt say she did everything in her power as she didnt have over form herself to the register - lady justice arden - nephew suffered to his detriment on the promise, given up his future career - uses detrimental reliance as it would have been unconscionable not to perfect the imperfect gift for the newphew