Formalities (Summaries)

Question 1

Formalities for Creation Summaries

Answer 1

1. Creating an equitable interest under an express trust of personalty, during the settlor’s life, requires no formalities.
2. The creation of an equitable interest under an express trust of land, during the settlor’s life, must be evidenced in writing signed by the settlor himself to be enforceable against third parties (LPA 1925, s 53(1)(b)).
3. Where no writing is used:
4. The trustee cannot rely on the lack of formality if he is sued by the settlor or beneficiary for breach of trust, (Rochefoucauld v Boustead).
5. In litigation with third parties, the trustee of an informally declared trust of land will typically be treated as having held it on resulting trust for the settlor, (Hodgson v Marks)
6. The informal declaration of express trust may form a representation on which the intended beneficiary relies to their detriment. The beneficiary could thus acquire an interest under a constructive trust, despite the express trust never being evidenced in signed writing, (Bannister v Bannister, Paragon Finance v Thakerar).

Question 2

Are Rochefoucauld and Bannister better regarded as express or constructive trusts

Answer 2

BIG ARGUMENT: Is the point simply that an informally declared trust of land can be pleaded to have had been effective in a range of different ways? Do we really need to say that there is one true way that cases can be pleaded when there’s a trust of land declared without any writing? Might it be for the claimant to frame their case as either an express trust, a resulting trust, or a constructive trust, depending on what is most to their advantage?

Question 3

Formalities for disposition of equitable interests

Answer 3

1. A disposition of a pre-existing equitable interest under a trust requires writing signed by the beneficiary or his agent.
2. Where the beneficiary makes a direct transfer of his interest, or instructs the trustee to hold on trust for a third party, that amounts to a disposition and writing signed by the beneficiary (or his agent) is needed.
3. Where the beneficiary directs the trustee to transfer legal title to a third party; declares a trust over his equitable interest; or enters into a specifically enforceable contract to transfer his equitable interest; then there is no disposition requiring writing signed by the beneficiary (or his agent).