A trust is not a novel concept to many. It is a way of managing a person’s assets. A person (a settlor) places his/her assets into a trust, appointing someone (trustee which can be the person him/herself) to manage the assets for the interest of someone else or even the person him/herself （beneficiary）.
Due to the potential high value involved, when dealing with land/properties, the law normally requests that a trust shall be in writing. Section 53 (1) (b) of the Law of Property Act 1925 states “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.”
However, if a trust fails to meet the above requirements, what will happen? A recent case Archibald and another v Alexander  EWHC 1621 (Ch) arose in just such a context.
This case was about a family. The property was purchased in the name of the mother with one of the siblings (the defendant). After the mother has passed away, the defendant’s siblings (the claimants) had each claimed a beneficial interest in the property on the basis that the property owned by the defendant was held on trust for the other siblings with the absence of a written trust and registering under the title deeds.
Following the Country Court judgement, it was held that before the purchase of the property in 1997, there was a face to face oral agreement between the mother and the three siblings in 1996 that the property would be purchased in the name of the mother with the defendant as joint tenants, to be held for the mother for life and her three children equally after her death. Based on the agreement made earlier, the judge had decided that the defendant as the surviving legal owner, held the property on constructive trust for herself and her siblings. The defendant appealed the decision.
Issues and decision
The appeal was remotely held via Skype by Justice Fancourt according to the current guidance. The judge dismissed the appeal agreeing that there was a constructive trust. The judge, on the evidence before him concluded that the claimants had relied on the 1996 agreement not seeking to have themselves in the title of the property. The judge also found that it was not necessary for the claimants to have acted to their detriment to prove the existence of such a trust. If a property is transferred to a person only on the basis of their agreement to hold it on trust for someone else, equity will not allow the transferee to rely on the absence of a formal deed of trust and keep the property for herself, a principle established in Rochefoucauld v Boustead  1 Ch 550.
The decision shows the Courts are willing to uphold informal family arrangements when it would be inequitable for a landowner to deny a claimant an interest in land.
The judgement clearly makes sense. By its natural meaning, trust is confidence a person holds in another person, which makes the person reliable. Natural justice requests that such person (trustee) shall not abuse his/her position by making personal gains from such trust.
Having said the above, evidence has shown that it is not always easy to prove the existence of such trust. Even it is achievable, it always comes with a price.
We have to say that the claimants in this case have been lucky to be able to prove what they had said. In many other cases, people have failed to do so.
It is clearly advisable to put trust into some form of writing, even when it is between family members.
Still have further queries on this topic or want to know more about trust? Please do contact Lisa’s litigation team.
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