Trusts Law

Question 1

Section 53(1)(b) LPA 1925

Answer 1

-Section 53(1)(b) LPA 1925 provides that “a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will”

-Generally possible for a settlor to declare a trust without complying to any specific requirements (Paul v Constance) BUT there are specific rules for the declaration of “Trusts of Land”

Question 2

Section 53(1)(b) Requirements

Answer 2

-The declaration and the writing need not be contemporaneous. The order in which they take place is unimportant

-The trust will be unenforceable unless and until s53(1)(b) is satisfied

-No prescribed form, just something in writing that shows settlor’s intention to create the trust & the terms of the trust

-Signature will usually be that of the settlor but arguable that the trustee (as legal owner) can also provide the written evidence. Unsettled point - it is preferable to seek directions from the court in these situations

-Expressly provides for the possibility that a trust of land is created by will. As long as the will is validly executed (complies with S9 Wills Act 1837), this will be sufficient to satisfy S53(1)(b)

Question 3

Non-Compliance? (S53, LPA)

Answer 3

-Renders trust “unenforceable” rather than “void”

-An unenforceable trust exists from the moment is declared but the beneficiary cannot enforce their rights unless and until S53(1)(b) is satisfied (one result: so settlor can change their mind)

-A void trust does not come into existence at all

Question 4

Certain Cases With Lack of S53(1)(b) Compliance

Answer 4

-In cases of gratuitous self-declaration of trust over land, the settlor can simply not create the signed, written evidence of the declaration. In the absence of any facts rendering it unconscionable for the settlor to deny the trust (such as proprietary estoppel) the beneficiary will not be able to assert any interest in the land

-In cases involving an intended transfer on trust: A) If the settlor changes their mind and makes no attempt to constitute it, the trust will not only be unenforceable under S53(1)(b) but also void for lack of constitution (subject to estoppel) and B) If the settlor transfers legal title but does not comply with S53(1)(b) it would be prudent for the trustee to seek direction