Formalities Flashcards
What are the two methods of expressly creating a trust?
1) Settlor make a self-declaration of a trust 2) transfer to trustee to hold on trust
What are the justifications for requiring formalities?
1) Certainty and evidence
2) Protective/ cautionary
Simon Gardner’s “facilitative policy”.
Garner thought that we should facillitate what the settlor wanted. Formality requierments get in the way of this.
What is a constructive trust?
1) Imposed by the courts
2) arises by operation of law
3) arises automatically from the moment a certain circumstance occurs.
4) has nothing to do with the intentions of the parties to create a trust
Normally, a constructive trust is imposed because otherwise it would be unconscionable.
inter vivos
living people
Are inter vivos declarations of trust
other than property
formalities required?
No formalities.
Can be created orally.
Paul v Constance
Declaration of trust of personal property can be implied from conduct:
Inter vivos declarations of trust
Formalities required for land?
Yes
s53(LPA 1925)
If a inter vivos declaration of trust does not adhere to s53(1)(b) LPA 1925 then is it void?
iT IS NOT VOID.
S53(1)(b) deals with the issue of proof. It will still be a tist (not void), it just will not be enforced.
Taylor v Taylor [2017]
Purchase of property by father and son whose solicitor inserted a statement in the transfer deed that they were to be equitable joint tenants. Transfer deed only signed by the seller. Held: sufficient; the declaration of trust was by the seller, who was conveying as directed by the purchasers. Alternatively, there was later evidence in writing in a notice of severance of the equitable joint tenancy signed by father and son
Can you have a later document evidencing intention of trust (property is land)?
Yes - does not matter that declaration of trust is not made in writign, can have a document evidencing intent later.
Gardner v Rowe (1828)
An oral or informal declaration of land is valid but unenforceable NOT void, if it doesn’t comply with s53
settlor who transfers land to a trustee to hold onto trust for beneficiary. The declaration of trust is NOT made in writing – this does not matter (can have a later document evidencing intention of trust) but who signs it declaring such trust. Assumption is: the trustee who will sign the later evidence because settlor has given the property away so can no longer declare a trust in that property. This is obiter dicta.
Can a statute be used as an instrument of fraud?
NO! Court will enforce trust despite absence of writing in cases of fraud!
Court prepared to ignore requirement of writing IF they feel that it would be otherwise fraudulent.
Rochefoucauld v Boustead [1897]
CA
easy
Court prepared to ignore requirement of writing IF they feel that it would be otherwise fraudulent.
Oral testimonay is sufficient
, where the transferee of property has been party to an oral agreement that he will hold the property on trust before the property was transferred to him
Rochefoucauld v Boustead [1897]
CA
Rochefoucauld was the owner of estates subject to a mortgage for £25,000. She could not afford to pay the debt. In order to protect her interest, her friend, Boustead, orally agreed to buy the estates from the mortgagee and to hold them on trust for her, subject to her paying the purchase price and expenses. Boustead later claimed the trust was unenforceable.
CA held he did hold the estates on trust and could not rely on the lack of writing as that would be to use the statute as an instrument of fraud.
LJ Lindley : it is fraud on the part of a person to whom land is coneyed AND KNOWS it is so conveyed.
Bannister v Bannister [1948] CA
‘statute cannot be used as an instrument of fraud’
Widow orally agreed to sell two cottages to her brother-in-law on the understanding she could live rent free in one of them for as long as she wished. No mention in the conveyance. Evidence was such that she wouldnot have sold to brother in law, had there not been thisunderstanding. . She would not have sold to her brother-in-law at the agreed price otherwise.
CA held that there was a trust and that it would be fraud to rely on the absence of writing, relying, inter alia, on Rochefoucauld v Boustead.
Oral agreement in Rochefoucauld, was that it would HOLD ON trust for countess, in banister v banister there was no mention of a trust. This was irrelevant it was enough that the bargain included “a stipulation of some sufficiently defined beneficial interest in the property was to be taken by another”
Needs:
- a stipulation of some sufficiently defined beneficial interest in the property was to be taken by another”
What have Bannister and Rochefoucauld got in common?
1) Both CA cases
- agreement to hold on trust, or agreement that another will have beneficial interest
- No writing to prove this
- Because of cirucmsaatances, court was prepared to hold and enforce a trust.
- There is NO MENTION in either case of detrimental reliance, only mention on fraudlent behaviour.
Pre existing agreement. No case where agreement between transferor and transferee is that a third party should have rights in property AFTER transfer.
Lyus v Prowsa Developments Ltd
The exception applies where the purchaser agrees to give effect to the interests of a third party?
Agreement by purchaser to give effect to rights of third party which had not been registered under LRA. Judge relied on Banister v Banister
Binions v Evans [1972]
The exception applies where the purchaser agrees to give effect to the interests of a third party?
Denning prepared to hold purchaser bound by a contractual licence of a third party
De Bruyne v De Bruyne [2010] EWCA
recent case winch discussed Bannister v Bannister.
These cases do not depend on some form of detrimental reliance. The concept of fraud in equity is much wider and can extend to unconscionable or inequitable conduct in the form of a denial or refusal to carry out the agreement to hold the property for the benefit of the third party which was the only basis upon which the property was transferred.
What kind of trust was Rochefoucauld v Boustead and Bannister v Bannister
Express trust
Lindley LJ in Rochefoucauld v Boustead seems to support an express trust despite absence in writing.
But later cases have preferred to reach decision based on constructive trust.
Bannister v Bannister
Lyus v Prowsa Developments
De Bruyne v De Bruyne
TESTAMENTARY DECLARATIONS OF TRUST
formalities
s9 Wills Act 1937
If you incorporate a document into the will, is this okay?
Yes! as long as the document is in existence at the time the will was written AND it is possible to identify this document!
1) Existence
2) identification
What are secret trusts exceptions to?
The need for all details of the disposition to appear in the will.
They are enforced despite the failure to comply with s9 of the Wills Act
Definition: A testator leaves property to a person in his will intending that person (the legatee) to hold that property as trustee. The testator communicates that trust and/or its terms to the legatee outside the will.
Fully secret trust - on the face of the will there is an absolute gift to the legatee
Half secret trust – gift to legatee on trust in the will but no mention of the terms of trust