English Trust Law Cases

7/22/2019 English Trust Law Cases

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Ali v Khan [2002] EWCA Civ 974)

Attorney General for Hong Kong v Reid

Blackwell v Blackwell,

Bourne v Keane [1919]

Boyce v Boyce

Burrough v Philcox (1840)

Chaine-Nickson v Bank of Ireland [1976] IR 393Chase Manhattan Bank NA v Israel-British Bank (London) Ltd

Cowan v scargil [1985]

Dillwyn v Llewelyn [1862] EWHC Ch J67

DKLR Holdings Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980]

Earl of Oxford's case

Fowkes v Pascoe (1875) LR 10 Ch App 343,

Gissing v Gissing [1970] UKHL 3

Goodman v Gallant ([1986] 2 WLR 236, [1986] 1 All ER 311

IRC v. Broadway Cottages Trust

Jones v Lock (1865) 1 Ch App 25

Knight v Knight (1840) 49 ER 58

Leahy v. Attorney-General for New South Wales [1959];

McPhail v Doulton [1970] UKHL 1

Milroy v Lord [1862] EWHC J78

Morice v Bishop of Durham [1805] EWHC Ch J80

Mussett v Bingle [1876]

Palmer v. Simmonds (1854)

Paul v Constance

Paul v Constance [1977] 1 WLR 527

Pennington v Waine [2002]

Pettingall v. Pettingall, [FN32]Pilkington v IRC 1964

Re Adams and Kensington Vestry 1884

Re Astors Settlement Trusts *1952+;

Re Barlows Will Trusts *1979+

Re Bowes [1896] 1 Ch 507

Re Clores Settlement Trusts; ChD 1966

Re Denleys Trust Deed *1969+ 1 Ch 373

Re Ellenborough [1903]-

Re Endacott [1959] EWCA Civ 5

Re Golay

Re Goldcorp Exchange Ltd [1995] 1 AC 74 iRe Grants Will Trusts *1979+ 3 All ER 359

Re Hooper [1932]

Re Kayford Ltd [1975] 1 WLR 279

Re Lipinskis Will Trusts *1976+ Ch 235

Re London Wines Co (shippers) Ltd,

Re Londonderry's Settlement [1965] Ch 918

Re Rallis Will Trusts *1964+,

Re Tucks Settlement Trusts *1977+


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Re Vandervell's Trusts (No 2) [1974] Ch 269

Re Vesteys Settlement *1951+

Richards v Delbridge (1874) LR 18 Eq

ROCHEFOUCAULD v BOUSTEAD[1897] 1 Ch 196

Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378

Saunders v Vautier (1841)

Stack v Dowden ([2007] UKHL 17, [2007]Strong v Bird [1874] LR 18 Eq 3

T Choithram International SA v Pagarani and Others [2001]

Thynn v Thynn (1684)

Vandervell v Inland Revenue Commissioners [1967] 2 AC 291

Warren v Gurney [1944] 2 All ER 472

Westdeutsche Landesbank Girozentrale v Islington LBC

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Attorney General for Hong Kong v Reid

Bourne v Keane [1919]

Boyce v Boyce

Burrough v Philcox (1840)

Chaine-Nickson v Bank of Ireland [1976] IR 393

Chase Manhattan Bank NA v Israel-British Bank (London) Ltd

Cowan v scargil [1985]DKLR Holdings Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980]

Earl of Oxford's case

Gissing v Gissing [1970] UKHL 3

Jones v Lock (1865) 1 Ch App 25

Knight v Knight (1840) 49 ER 58

McPhail v Doulton [1970] UKHL 1

Milroy v Lord [1862] EWHC J78

Morice v Bishop of Durham [1805] EWHC Ch J80

Mussett v Bingle [1876]

Palmer v. Simmonds (1854)

Paul v Constance

Paul v Constance [1977] 1 WLR 527

Pettingall v. Pettingall, [FN32]

Pilkington v IRC 1964

Re Adams and Kensington Vestry 1884

Re Barlows Will Trusts *1979+

Re Clores Settlement Trusts; ChD 1966

Re Ellenborough [1903]-

Re Endacott [1959] EWCA Civ 5

Re Golay

Re Goldcorp Exchange Ltd [1995] 1 AC 74 iRe Hooper [1932]

Re Kayford Ltd [1975] 1 WLR 279

Re London Wines Co (shippers) Ltd,

Re Londonderry's Settlement [1965] Ch 918

Re Tucks Settlement Trusts *1977+

Re Vandervell's Trusts (No 2) [1974] Ch 269

Re Vesteys Settlement *1951+

Richards v Delbridge (1874) LR 18 Eq

Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378

Saunders v Vautier (1841)

T Choithram International SA v Pagarani and Others [2001]Vandervell v Inland Revenue Commissioners [1967] 2 AC 291

Westdeutsche Landesbank Girozentrale v Islington LBC


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Ali v Khan [2002] EWCA Civ

974)

The registered proprietors will either be beneficial tenants n common, or bare

trustees for a third party

Attorney General for Hong

Kong v Reid

It was held that bribe money accepted by a person in a position of trust, can be

traced into any property bought and is held on constructive trust for the beneficiary

Mr Charles Warwick Reid was the Hong Kong Deputy Crown Prosecutor and then

Acting Director of Public Prosecutions, so in a fiduciary relationship with the Hong

Kong government. He took bribes to obstruct prosecution of some criminals, and

used the money to buy land. Some was kept by Mr Reid and his wife, Mrs JudithMargaret Reid, some conveyed to Reids solicitor. The Hong Kong government

argued the land was held on trust for them.

The Privy Council advised the bribe money received by Reid, and the land acquired

after, was held on constructive trust for the Hong Kong government. This meant

that the land bought by Reid and his wife was held on trust, and had to be given

over to the Hong Kong government. This was held to be necessary to ensure that

people in positions of trust could in no way profit from their wrongdoing. If the

property was badly invested, the fiduciary in breach would still be under a duty to

make good the shortfall. Lord Templeman delivered the advice of the Board.

Blackwell v Blackwell, In Blackwell v Blackwell, Lord Viscount Sumner described as *seeming+ to be a

perfectly normal exercise of general equitable jurisdiction whereby the Court of

Conscience does not allow the secret trustee to retain legally owned property. The

court of conscience to which he refers is equity; and he explained the equitable

obligation of the secret trustee as acting on his conscience therefore compelling the

trustee to perform the testator's intentions. The fraud theory is integral to the

argument of this binding obligation whereby if the testator retains the property

himself the fraud is committed.

Bourne v Keane [1919] Trusts for the saying of private masses, are barely distinguishable from publicmasses. Only Re Hetherington [1990] Ch 1 divided the two, somewhat dubiously,

because only if the prayer can be publicly be witnessed can it be for the publics

benefit.

Boyce v Boyce Boyce v Boyce 16 where the testator left "four houses in trust, one for Maria, to do

with whatever she shall choose and the other three to Charlotte." Maria

predeceased the testator. The effect of this was to cause the gift to her to lapse.

One of the houses thus fell into residue. It was held that Charlotte's gift failed for

uncertainty as to her beneficial interest as it was impossible to decide which of the

three houses she was entitled to. The result was that the four properties were held

on resulting trust for the testator's estate. If Maria had survived the testator, then

the trust would have been valid as Maria's estate could have made the choice and

Charlotte would have been certain as to her beneficial entitlement.

Certainly this trust could be said not to be acceptable as to the objects that it

relates to. If the children reach the age of 25 then how exactly is the property to be

split? This is very likely to prompt the court that the trust will fail.


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Burrough v Philcox (1840) This relates to the issue of certainty of intention, and the certainty of objects, that

are requisites of any trust. The rule is that the object, or each member of a class of

objects, must be known and identifiable with certainty. Where this requirement is

not met, the trust will fail. In the case of a Burrough v Philcox discretionary trust,

the test for certainty is the so-called complete list test', which demands that a

complete list of the objects be drawn up. Under such a trust, if the trustee fails to

appoint the trust property, each individual object will take an equal share. This can

be said to represent, then, an identifiable beneficial interest in the trust property to

counterbalance the legal interest vested in the trustee. it is, to some extent,illusory, however, as this equal share will only apply in the case of default by the

trustee.

Chaine-Nickson v Bank of

Ireland [1976] IR 393

Chaine-Nickson v Bank of Ireland [1976] IR 393 was a decision of the High Court of

Ireland (Kenny J). It was concerned with an application for disclosure of accounts

and other information made by the beneficiary of what was described as a

discretionary trust. But the report does not give an adequate summary of the trust.

The only dispositive provision set out verbatim looks more like a power than a trust,

as it begins upon trust to pay, divide or apply the whole or such part (if any) of the

income and capital respectively thereof as [the trustees] shall from time to time in

their absolute and uncontrolled discretion think fit .... It appears that initially the

settlement infringed the rule against perpetuities and had to be corrected, but

again the summary is terse.

After stating the general rule that a beneficiary with a vested interest is entitled to

disclosure Kenny J continued (at p 396):

However, in the case of a discretionary trust, none of the potential beneficiaries

have any right to be paid capital or income. All the trust fund is held by the trustees

in this case on discretionary trusts and, if the plaintiff is not entitled to the trust

accounts and particulars of the investments, it follows that none of the potential

beneficiaries have a valid claim to any information from the trustees. The result is

that the trustees are not under an obligation to account to anyone in connectionwith their management of the trust fund. This logical conclusion from the

defendants argument leads to remarkable consequences.

The amount of remuneration to which the trustees are entitled is specified in the

settlement and the potential beneficiaries have an interest in seeing that the

amount is not exceeded, for they are the persons who will ultimately benefit by

payments of capital and income. The defendants contention, however, has the


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Chase Manhattan Bank NA v

Israel-British Bank (London) Ltd

Chase Manhattan Bank NA v Israel-British Bank (London) Ltd is an English trusts law

case, concerning constructive trusts. It held that a trust arose to protect a payment

made under a mistake, with the benefit of a proprietary remedy. This is seen

important for the question of what response, personal or proprietary, may come

from a claim in unjust enrichment.

Chase Manhattan was instructed to pay $2m to the Israel-British Bank, but it paid

the sum twice by mistake. The Israel-British Bank went insolvent, and Chase

Manhattan wished to claim the money back, without waiting in the insolvencyqueue. The Israel-British bank had known about the mistake before it finally went

into liquidation.

Goulding J held that Chase Manhattan could recover the full sum, because the

money was held on trust from the moment it was received. a person who pays

money to another under a factual mistake retains an equitable property in it and

the conscience of that other is subjected to a fiduciary duty to respect his

proprietary right.

Cowan v scargil [1985] The trustees of the National Coal Board pension fund had 3,000 million in

assets.[3] Five of the ten trustees were appointed by the NCB and the other five

were appointed by the National Union of Mineworkers. The board of trustees set

the general strategy, while day to day investment was managed by a specialist

investment committee. Under a new "Investment Strategy and Business Plan 1982"

the NUM wanted the pension fund to (1) cease new overseas investment (2)

gradually withdraw existing overseas investments and (3) withdraw investments in

industries competing with coal. This was all intended to enhance the mines'

business prospects. The five NCB nominated trustees made a claim in court over the

appropriate exercise of the pension fund's powers.

Mr JR Cowan was the deputy-chairman of the board. Arthur Scargill led the NUM

and was one of the five member nominated trustees, and represented the other

four in person.[4]

Megarry VC held the NUM trustees would be in breach of trust if they followed the

instructions of the union, saying the best interests of the beneficiaries are normally

their best financial interests. So if investments of an unethical type would be more

beneficial to the beneficiaries than other investments, the trustees must not refrain

from making the investments by virtue of the views that they hold. Only if all

beneficiaries, all of full age, consent to something different is it possible to invest

ethically. His judgment outlined his view of the law.[5]


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Dillwyn v Llewelyn [1862]

EWHC Ch J67

In 1853 a father (who lived at Sketty Hall) wished to give his younger son (Lewis

Llewelyn Dillwyn) an estate at Hendrefoilan in Wales, and thought he had done so

by signing a memorandum presenting it to him for the purpose of furnishing

himself with a dwelling-house. The memorandum was unfortunately not a deed.

The son incurred great expense in building himself a house on the land. Two years

later the father died and the elder son (John Dillwyn Llewelyn) disputed his younger

brother's title.

Sir John Romilly MR decreed that the younger son was entitled to a life interest,

worth 14,000.

Lord Westbury LC held that the younger son did not have merely an incomplete gift,

but was in fact entitled to call for a legal conveyance, and not merely of a life-

estate, but of the whole fee-simple. He said the following

DKLR Holdings Co (No 2) Pty

Ltd v Commissioner of Stamp

Duties [1980]

An unconditional legal estate in fee simple is the largest which a person may hold

in land. Subject to qualifications arising under the general law, and to the manifold

restrictions now imposed by or under statutes, the person seised of the land for an

estate in fee simple has full and direct rights to possession and use of the land and

its profits, as well as full rights of disposition. An equitable estate in land, even

where its owner is absolutely entitled and the trustee is a bare trustee, is

significantly different.

Having said that the essential character of the beneficiarys interest had to be

understood in the context of the historical development of trusts from the medieval

use, Hope JA continued (at 518):

After some hesitation, a trust interest in respect of land came to be regarded, not

merely as some kind of equitable chose in action, conferring rights enforceable

against the trustee, but as an interest in property

Hope JA then noted (at 519) several consequences flowing from that proposition:

Firstly, an absolute owner in fee simple does not hold two estates, a legal estate

and an equitable estate. He holds only the legal estate with all the rights and

incidents that attach to that estate

Secondly, although the equitable estate is an interest in property, its essential

character still bears the stamp which its origin placed upon it. Where the trustee is

the owner of the legal fee simple, the right of the beneficiary although annexed to

the land, is a right to compel the legal owner to hold and use the rights which the

law gives him in accordance with the obligations which equity has imposed upon


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Earl of Oxford's case Earl of Oxfords case (1615) 21 ER 485 is a foundational case for the common law

world, that held equitable principle takes precedence over the common law.

A judgment of Chief Justice Coke was allegedly obtained by fraud.

The Lord Chancellor, Lord Ellesmere, issued a common injunction out of the

Chancery prohibiting the enforcement of the common law order. The two courts

became locked in a stalemate, and the matter was eventually referred to the

Attorney-General, Sir Francis Bacon. Sir Francis, by authority of King James I, upheldthe use of the common injunction and concluded that in the event of any conflict

between the common law and equity, equity would prevail. Equity's primacy in

England was later enshrined in the Judicature Acts of the 1870s, which also served

to fuse the courts of equity and the common law (although emphatically not the

systems themselves) into one unified court system.

Fowkes v Pascoe (1875) LR 10

Ch App 343,

evidence was shown that a woman had purchased stock in the names of herself and

her grandson; evidence by the grandson and granddaughter-in-law that this had

been done as a gift was admissible. On the other hand, the presumption is solely

concerned with evidence of an intent to create a trust; ulterior motives to create a

trust are not taken into account.

Gissing v Gissing [1970] UKHL 3 The respondent spent money on furniture in the home and mowing the lawn and

made no contribution to the payment of the mortgage.

It was not possible to draw inference of a common intention from this. If there was

no agreement on how the interest should be shared initially, the common intention

can be evidenced by the conduct of the parties. E.g. contributions to the purchase

price or contributions to mortgage payments. The wife had made no contribution to

the acquisition of title to the matrimonial home from which it could be inferred that

the parties intended her to have any beneficial interest in it.

Goodman v Gallant ([1986] 2

WLR 236, [1986] 1 All ER 311

If a deed (such as a conveyance) contains an express declaration as to whether a co-

ownership is a joint tenancy or a tenancy in common then this declaration is

conclusive. The severance of a joint tenancy leads to each joint tenant having an

equal share as tenant in common.

In Goodman v Gallant ([1986] 2 WLR 236, [1986] 1 All ER 311, CA (Eng)) Goodman

and Gallant were co-habitees. Their home had been conveyed into their joint names

and the conveyance expressly provided that they were to hold as beneficial joint

tenants. The Court of Appeal, Slade LJ giving the leading judgment, held that the

express declaration was conclusive and that (in the absence of express words to the

contrary in the conveyance) when a joint tenancy is severed the result is that the

joint tenants hold as tenants in common in equal shares. The judgment of Slade LJ

shows that there had been considerable doubt as to the correct law on each of

these fundamentally important issues.


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IRC v. Broadway Cottages Trust The case concerned the validity of a discretionary trust where it was admitted by

the taxpayers "that it would be impossible at any given time to achieve a complete

and exhaustive enumeration of all the persons then qualified for inclusion in the

class of beneficiaries", but it was admitted by the Crown that it was "possible to

determine with certainty whether any particular individual is or is not a member of

the class." In other words, the individual, but not the class ascertainability test was

satisfied, and the trust was held void.

The case no longer represents the law, having been overruled in McPhail v.Doulton.

Note that in this case and in Re Ogden [1933] Ch. 678, where the class

ascertainability test was satisfied, the test is of an evidential rather than conceptual

nature. However, the concessions made in Broadway that the class could not be

ascertained were criticised in Gulbenkian, and the individual ascertainability test,

which now applies to both powers and discretionary trusts, would seem to be a test

of conceptual rather than evidential certainty.

Jones v Lock (1865) 1 Ch App

25

A father returned from a business trip without a gift for his son. When the family

told him off, he put a 900 cheque in the babys hand, and said

look you here, I give this to baby; it is for himself and I am going to put it away for

him, and will give him a great deal more along with it.

The wife said the baby might tear it, and the father said, it is his own, and he may

do what he likes with it. He locked it in the safe and died six days later. It was

argued that although there was never an outright transfer, because he had not

actually endorsed the cheque by signing it, there was a trust of the cheque for the

baby.

The Court of Appeal in Chancery held that there was no trust, because the fathers

intention was an outright transfer. They refused to perfect an imperfect gift

through a successful declaration of trust. Lord Cranworth LC gave the judgment ofthe court.


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Knight v Knight (1840) 49 ER 58 Richard Knight made a settlement on 26 April 1729, which passed the manors of

Leintwardine and Downton, Herefordshire, including Croft Castle and Downton

Castle, down the family line. The first grandson, of his second son, was Richard

Payne Knight (a specialist on phallic imagery). He made a will on 3 June 1814,

leaving the property to his brother, Thomas Andrew Knight (a horticulturalist), and

to his male descendants. But if there were none, the property was to pass to the

next descendant in the direct male line of my late grandfather, Richard Knight of

Downton He had also said, however,

I trust to the liberality of my successors to reward any others of my old servantsand tenants according to their deserts, and to their justice in continuing the estates

in the male succession, according to the will of the founder of the family, my above-

named grandfather.

Thomas son died early, and Thomas died intestate. His daughter, Charlotte, had

married Sir William Edward Rouse Boughton. Richards second brother, Edward,

had a grandson named John Knight, who brought a claim alleging that Thomas had

been bound to make a strict settlement in favour of the male line. William

Boughton argued that no such trust had been created and the property had in fact

gone to Thomas absolutely, and thus on to Charlotte and his family.

Lord Langdale MR held that the words of Richards will were not sufficiently certain,

but that meant there had been an absolute gift to Thomas, who had taken the trust

unfettered by any trust in favour of the male line. He formulated the test, known as

the "three certainties". This test specified that, for a valid trust, there must be

certainty of (1) intention (there must be intention to create a trust), (2) subject

matter (the assets constituting the trust fund must be readily determinable) (3)

objects (the people to whom the trustees are to owe a duty must be readily

determinable).

Leahy v. Attorney-General for

New South Wales [1959];

Facts: A testamentary gift made by the widow of a wealthy man. Left residuary

estate: *My homestead and furniture+ upon trust for such orders of nuns of the

Catholic Church or the Christian Brothers as my executors and trustees shall select.

Decision: This was a purpose trust in disguise. This was not a charity because not all

religious orders are charitable. It was so wide that some orders may be

contemplative orders, rather than pursuing extraneous good works. So taking a

broad view of construction it was void could further non-charitable purposes. Cf.

now the contract-holding theory of gifts to unincorporated associations (see

notes on property holding by unincorporated associations).


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Milroy v Lord [1862] EWHC J78 English trusts law case that held trusts should not be used to save gifts from being

defeated. It purported to follow one of the maxims of equity that "Equity will not

assist a volunteer" which has two sub-strands.

Thomas Medley set up a trust for his niece, Eleanor Milroy (ne Dudgeon). Samuel

Lord was to be the Trustee. Medley took a number of steps to achieve this: He set

up a written deed to establish the trust, consideration was given for the shares, and

Miss Dudgeon was intended to receive the dividends of shares when she married

and to receive the shares when Medley died. However, Medley did not in facttransfer the shares to Lord, but merely gave Lord power to distribute the dividends,

which meant that the gift was incomplete. Had Medley transferred the gift to Lord

as stated, all would have been well. However: because Medley kept the shares

which he had originally said were going to be transferred, the trust wasn't valid.

Turner LJ stated that there were three 'modes' of making a gift:

An outright transfer of the legal title to the property

A transfer of legal title of the property to a trustee to hold on trust

A self-declaration of trust

He went on to state that:

in order to render the settlement binding, one or other of these modes must, as I

understand the law of this Court, be resorted to, for there is no equity in this Court

to perfect an imperfect gift. The cases I think go further to this extent, that if the

settlement is intended to be effectuated by one of the modes to which I have

referred, the Court will not give effect to it by applying another of those modes. If it

is intended to take effect by transfer, the Court will not hold the intended transfer

to operate as a declaration of trust, for then every imperfect instrument would be

made effectual by being converted into a perfect trust. (Turner LJ)

Morice v Bishop of Durham

[1805] EWHC Ch J80

Concerning the policy of the beneficiary principle.

The testator purported to make a trust for such objects of benevolence and

liberality as the trustee in his own discretion shall most approve.

Court of Chancery

Sir William Grant held that the will could not amount to a charity, and so the money

had to return to the next of kin

High Court of Chancery

Lord Eldon LC, on appeal, also found that the trust could neither be valid as a

private trust, because it lacked beneficiaries.

As it is a maxim, that the execution of a trust shall be under the control of the court,

it must be of such a nature, that it can be under that control; so that the

administration of it can be reviewed by the court; or, if the trustee dies, the courtitself can execute the trust: a trust therefore, which, in case of mal-administration

could be reformed; and a due administration directed; and then, unless the subject

and the objects can be ascertained, upon principles, familiar in other cases, it must

be decided, that the court can neither reform maladministration, nor direct a due

administration. That is the principle of that case.


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Mussett v Bingle [1876] If no stipulation as to the period then the trust is void unless it must necessarily

determine within the perpetuity period 21 years in most cases. If trust might exceed

period then will be void.

Implied limitation e.g. Mussett v Bingle [1876] WN 170 building of monument /

maintenance of monument within period. Valid because assumed monument would

be erected within 21 years. Further clause for maintenance void because no period

stipulated.

Palmer v. Simmonds (1854) Palmer v Simmonds, where the testator left the bulk of my residuary estate ontrust, It was held that there was no trust as the word bulk was uncertain.

Paul v Constance Paul v Constance [1977] 1 WLR 527 is an important English trust law case. It sets out

what will be sufficient to establish the first of the "three certainties" necessary for a

trust (certainty of intention). It is necessary that a settlor's "words and actions ...

show a clear intention to dispose of property ... so that someone else acquires a

beneficial interest.

Mr Constance, deceased, set up a bank account in his own name. On many

occasions he stated to his de facto partner Mrs Paul (the plaintiff), that "The money

is as much yours as mine."[2] Mr Constance was still legally married to Mrs

Constance (the defendant). Mr Constance died intestate, and his assets including

the account passed to the defendant. This statement itself was not sufficient to

imply a trust was created. One of the key facts was that both Mr Constance and the

claimant played bingo and both parties paid their bingo winnings into this account.

Their conduct in this situation implied to the court that Mr Constance did intend

this to be a trust.

To establish a trust, there must be sufficient certainty of intention that the settlor is

granting a beneficial interest to the beneficiary. This can be expressed orally, and no

particular form of words or conduct are necessary.[3] The word 'trust' need not be

used. However, an imperfect gift (as in Jones v Lock) does not show sufficient

certainty of intention.

Paul v Constance [1977] 1 WLR

527

Mr Constance, deceased, set up a bank account in his own name. On many

occasions he stated to his de facto partner Mrs Paul (the plaintiff), that "The money

is as much yours as mine."[2] Mr Constance was still legally married to Mrs

Constance (the defendant). Mr Constance died intestate, and his assets including

the account passed to the defendant. This statement itself was not sufficient to

imply a trust was created. One of the key facts was that both Mr Constance and the

claimant played bingo and both parties paid their bingo winnings into this account.

Their conduct in this situation implied to the court that Mr Constance did intend

this to be a trust.

To establish a trust, there must be sufficient certainty of intention that the settlor is

granting a beneficial interest to the beneficiary. This can be expressed orally, and no

particular form of words or conduct are necessary.[3] The word 'trust' need not be

used. However, an imperfect gift (as in Jones v Lock) does not show sufficient

certainty of intention.


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Pennington v Waine [2002] Ada wanted to transfer her 400 shares to her nephew, Harold. She asked Mr

Pennington, who represented the companys auditors, to prepare a share transfer

form. She filled it in and gave it back to Mr Pennington. Mr Pennington put it on the

auditors files but never gave it on to the company for the registration of shares in

Harolds name to be completed. Ada died. Her other inheritors argued that unlike

Re Rose, Ada had not done all she could have, because she had not handed the

completed transfer form to Harold or the company.

The Court of Appeal held that the shares did indeed belong to Harold.Arden LJ held that it would have been unconscionable for Ada to change her mind

and go back on the transfer. Ada had given the transfer form to Pennington so that

he could do the registration. She had told Harold about the gift, and no action on

his part was necessary. Moreover, Harold had agreed to be a company director, for

which a shareholding was needed.

Clarke LJ held that equitable title could transfer without registration. Completion of

forms and delivery to a company was enough in Re Rose, but it should be

recognised that delivery to the company was not a further essential step. It was

enough that the transfer was intended to have immediate effect.

Schiemann LJ concurred with both judgments.

Pettingall v. Pettingall, [FN32] The pet owner provided that a fixed amount be paid for the benefit of his black

mare. The will explained exactly what the owner desired as follows:

I hereby bequeath, that at my death, 50 l. per annum be paid for her keep in some

park in England or Wales; her shoes to be taken off, and she never to be ridden or

put in harness; and that my executor consider himself in honour bound to fulfil my

wish, and see that she be well provided for . . . . At her death all payment to cease.

[FN33] The Pettingall case provided the basis for the court to make a direct ruling

on the validity of provisions for the benefit of specific animals. However, since all

parties assumed the gift valid, the court addressed other issues.


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Pilkington v IRC 1964 A testator directed his trustees to hold the income of his residuary estate upon

protective trusts in equal shares for all his nephews and nieces living at his death

with a provision that their consent to any exercise of any applicable power of

advancement should not cause a forfeiture of their interests, and after the death of

a nephew or niece to hold the capital and income of such beneficiarys share for his

or her children or remoter issue as he or she should appoint, and in default of

appointment for his or her children at 21.

The will contained no provision replacing or excluding the power of advancementcontained in section 32 of the Trustee Act 1925.

One of the nephews was married and had three infant children. The second child, a

daughter was born on the 20th December 1956 and the trustees wished to exercise

the statutory power of advancement in her favour, for the purpose of avoiding

death duties.

It was proposed that one half of her expectant share in the testators trust fund

should advanced in her favour, by adding it to a new settlement which was to be

applied for her maintenance until she attained 21, and from then on, until she

attained 30, when the capital was to be held on trust for her absolutely. If she

should die under that age, the trust fund was to be held upon trust for her children

who should attained the age of 21 years, and subject as aforesaid upon trust for the

nephews other children.

The trustees of the will took out a summons to determine whether they could

lawfully exercise the powers conferred upon them by Section 32 of the Trustee Act

1925, in order to take this step. The Inland Revenue objected on the grounds that

Re Adams and Kensington

Vestry 1884

a husband gave all of his property to his wife, "in full confidence that she will do

what is right as to the disposal thereof between my children...". The Court held that

the wife may have been under a moral obligation to treat the Property a certain

way but this was not sufficient to create a binding trust. Precatory words can still

sometimes create a trust.

Re Astors Settlement Trusts

[1952];

Facts: Involved the entire share holding of the Observer Newspaper. All shares

given to trustees trustees required to apply the shares for: 1. maintenance and

improvement of good understanding sympathy and co-operation between nations;

2. The preservation of the independence and integrity of newspapers 5. The

protection of newspapers from being absorbed or controlled by combines.

Decision: Void because there were no private beneficiaries; just vague purposes.


16/27

Re Barlows Will Trusts *1979+ Miss Helen Alice Dorothy Barlow, the testatrix had a large collection of pictures. She

specifically bequeathed some. For the remainder, she declared them to be held by

her executor on trust to sell them, but that her family and friends could buy them

first at 1970 valuations or at the probate value, whichever was lower. The proceeds

would go to the residuary estate. The executors asked the court whether the

direction about family and friends was void, given its uncertainty, and if it was valid,

who the family and friends were.

Browne-Wilkinson J held that the trust was valid, because both concepts of friendsand family could be given a workable meaning. Although friend could have a wide

variety of meaning, the minimum requirements were that (a) the relationship had

to be long standing (b) be a social and not a business or professional relationship,

and (c) although they may not have met for some time, when circumstances

allowed, they would meet frequently.*1+ The word family could be construed as

any blood relation, and the only reason in other cases to restrict the concept to

statutory next of kin had been to save gifts from failing for uncertainty.

Re Bowes [1896] 1 Ch 507 Mr Bowes, in his will left his estate to the Earl of Strathmore for life, and then the

rest in tail. But included, was a gift of 5000 to the trustees for planting trees forshelter on the Wemmergill estate. There was much more money than needed for

planting trees.

North J held that the trust was for the benefit of the owners of the estate. Hence the

residents could use the surplus money in the way they chose.

Re Clores Settlement Trusts;

ChD 1966

A 21 year old beneficiary of a substantial trust fund requested the trustees to apply

for his benefit a sum (equal to about one-seventh of the fund) to a family charitable

foundation. He would be entitled to the capital of the fund on attaining 30, in

default of which the capital went to his issue if any and subject thereto to his sister

and her family in trust.

Held: It was open to the trustees to make the advance: i) the improvement of the

material situation of the beneficiary is not confined to his direct financial situationbut could include the discharge of certain moral or social obligations particularly in

relation to provision for family and dependants. And ii) the court has always

recognized that a wealthy person has a moral obligation to make appropriate

charitable donations and that: a beneficiary under a settlement may indeed in

many cases be reasonably entitled to regard himself as under a moral obligation to

make donations towards charity. The nature and amount of those donations must

depend upon all the circumstances, including the position in life of the beneficiary,

the amount of the fund and the amount of his other resources. Once that

proposition is accepted, it seems to me that it must lie within the scope of a power

such as that contained in clause 8 of this settlement for the trustees to raise capital

for the purpose of relieving the beneficiary of his moral obligation towards

whatever charity he may have in mind. If the obligation is not to be met out of the

capital of the trust fund, he would have to meet it out of his own pocket, if at all.

Accordingly, the discharge of the obligation out of the capital of the trust fund does

improve his material situation. The precise amount which the trustees can in any

given case apply for this purpose must depend, I think, on the particular

circumstances, and in this respect quantum is a necessary ingredient in the proper

exercise of the power. It is difficult, for example, to see how the trustees under a

power such as that in clause 8 could validly pay over the whole authorized two-

thirds to charitable purposes. On the other hand, it is certainly not for the court to


17/27

Re Denleys Trust Deed *1969+

1 Ch 373

In 1936 the settlor company, HH Martyn & Co Ltd, from Sunningend Works,

Cheltenham, transferred land to trustees to, under clause 2(c) be maintained and

used as and for the purpose of a recreation or sports ground primarily for the

benefit of the employees of the company and secondarily for the benefit of such

other person or persons (if any) as the trustees may allow to use the same. Clause

2(j) added that the employees would cease entitlement if the number dropped

below 75% of them or if the said land shall at any time cease to be required or to

be used by the said employees as a sports ground or if the company shall go into

liquidation then the trustees shall ... convey the said land to the General HospitalCheltenham or as it shall direct. It was argued that this was a non-charitable

purpose trust and should fall foul of the beneficiary principle.

The claimants were the trustees, the first defendant was the company, who argued

clause 2(j) was void for uncertainty, and if not clause 2(c) was also void, and hence

the property would be on resulting trust to the company. The second defendant

was an employee representing the others, who argued that clause 2(c) is valid, and

if not then clause 2(j) would be void. The third defendants was the Cheltenham

Group Hospital Management Committee, which under the National Health Service

Act 1946 was successor to the assets of the Cheltenham General Hospital, argued

that clause 2(c) is void, and that clause 2(j) is valid, so that they would get the

grounds.

Goff J held that the trust was valid, because it could be construed as being

ultimately for the benefit of people and thus made to work

Re Ellenborough [1903]- A trust cannot be created of future property i.e. an interest person expects to

inherit/ future income.

Re Ellenborough [1903]- tried to create a trust for property which she might inherit

on the death of her brother/ sister.

The trust failed for lack of certainty of subject matter.

Re Endacott [1959] EWCA Civ 5 Mr Albert Endacott wrote in his will that he would give his son some houses and afactory, and then all the rest to the North Tawton Devon Parish Council for the

purpose of providing some useful memorial to myself unless his wife was still alive,

in which case the interest should be paid to her.

Lord Evershed MR held that the trust was invalid, because it would be a purpose

trust going beyond the fixed list that had been previously exempt

Re Golay which refers to the beneficial entitlement in this case, the executors under a will

were directed to allow a beneficiary to enjoy the use of one of the flats and receive

a reasonable income from the properties although the word reasonable seemed

to uncertain the gift was upheld as the courts assumed that it referred to the

beneficiarys previous standard of living.


18/27


19/27


20/27

Re Londonderry's Settlement

[1965] Ch 918

Facts

A beneficiary did not like the small sums proposed to be distributed to her. She

wanted information about the reasons for the decision.

Judgment

The Court of Appeal held that there was no need for disclosure of reasons, because

it could cause family strife, fruitless litigation or make the trustees role impossible.

Re Rallis Will Trusts *1964+, the settlor entered into a covenant to transfer property to the trustees of hermarriage settlement but there was a failure to transfer certain property to the

trustees which didnt vest in her possession until after she died. Buckley J held the

settlor declared herself trustee of any such property pending transfer and so a

completely constituted trust arose by declaration, enforceable by the beneficiaries

against the settlors personal representative.

Re Tucks Settlement Trusts

[1977]

A baronet created a trust for future baronets who were married to a wife of Jewish

blood and who continues to worship according to the Jewish faith. If in doubt,

the decision of the Chief Rabbi in London of either the Portuguese or Anglo

German Community shall be conclusive. It was contended that the Jewish faith

and blood were too uncertain.

Lord Denning MR held the trust was valid, and the Chief Rabbi could resolve any

uncertainty.

Lord Russell of Killowen also upheld the trust but on other grounds.

Eveleigh LJ said the trust was valid, but because the Chief Rabbis opinion of who

was Jewish was part of the definition of the class of beneficiaries (but he would not

have been able to resolve an uncertain class.)


21/27

Re Vandervell's Trusts (No 2)

[1974] Ch 269

Concerning resulting trusts.

Tony Vandervell, an old and wealthy racing car manufacturer, was attempting to

make a donation to the Royal College of Surgeons to establish a chair in his name.

He wanted to avoid paying tax, and had come up with a second scheme, after a first

attempt to make a tax free donation had failed in Vandervell v IRC.[1]

He instructed the tax company to repurchase shares in his company, through the

option that had been granted. Vandervell did not want to pay tax on the option, and

did not want to pay tax on the shares (the trust of which he would be an object, thetrustee being his trust company).

The purchase money came from a trust, held by the same trust company, but in

favour of Vandervell's children. As such, the trust company took themselves as

holding the purchased shares on trust for the children.

The Court of Appeal (overturning the judgment of Megarry J in the High Court) held

that the option ceased to exist once it was exercised. Thus, there was no

disposition, and no consequent liability to pay tax. It also held that the children

were the equitable owners of the shares, and, as such, Vanderwell had divested

himself of equitable ownership of the shares.

Megarry J. distinguished between automatic and presumed resulting trusts, as

follows:

"(a) The first class of case is where the transfer to B is not made on any trust ...

there is a rebuttable presumption that B holds on resulting trust for A. The question

is not one of the automatic consequences of a dispositive failure by A, but one of

presumption: the property has been carried to B, and from the absence of


22/27

Re Vesteys Settlement *1951+ The income of a fund was held on trust to be paid or applied to or for the support or

benefit of the members of a class as the trustees might decide in their discretion.

The trustees resolved in each of three successive periods to distribute part of the

income to certain adult beneficiaries and declared the balance to belong to infant

beneficiaries in specified shares. The minute of each resolution went on to record

that the trustees were of the opinion that none of the income falling to infant

beneficiaries under the resolution was required for the maintenance of the

beneficiaries and accordingly they resolved that the income should be accumulated

under section 31 of the Trustee Act1925. It appeared that, in taking this decision, the trustees had regard to the fact

that if income were distributed it would be subject to surtax whereas if it were

accumulated it would not be taxed in that way.

Later the trustees came to doubt whether what they had done had been effective

as they had intended, and they brought proceedings to have the position clarified,

joining the adult beneficiaries and the infant beneficiaries as defendants. Harman J

held that the allocation of the income to the infants with a view to its being

accumulated was not a valid exercise of the power conferred by the settlement.

The infant beneficiaries appealed to the Court of Appeal. There the situation was

analysed differently. It was held that the allocation of the balance of the income to

the infant beneficiaries was valid under the power in the settlement, as an

application of the income for their benefit, but that this made the income the

absolute property of the relevant beneficiaries, and the power to accumulate under

section 31 therefore did not apply. That then raised the question whether, because

of the erroneous belief that the income would fall to be accumulated, the allocation

of the income to the infant beneficiaries was valid and effective at all. It is that last

question that makes the case relevant to

Richards v Delbridge (1874) LR

18 Eq

Ownership of Freehold or Leasehold property can only pass by deed and if relevant

the deed must be stamped for the gift to be enforceable. Thus any property

transfer such as the creation of a lease must be by deed with similar considerations

applying to declarations of trust involving land and any subsequent transfers of the

declared interests. a donor wrote on a lease that it had been given to a member of

his family. No deed so no gift.


23/27

ROCHEFOUCAULD v BOUSTEAD

[1897] 1 Ch 196

The question raised by this appeal is whether the plaintiff is entitled to an account

from the defendant of the proceeds of sale of certain coffee estates in Ceylon. The

estates in question are known as the Delmar estates. They formerly belonged to the

plaintiff; they were mortgaged first to Barings and then to a Dutch company, and on

May 27,1873, they were sold and conveyed to the defendant. In form the

conveyance was to him absolutely, but the plaintiff insists that the estates were

conveyed to the defendant as a trustee for the plaintiff, subject, however, to the

repayment to the defendant of the amount which he paid for them and of the

expenses which he has incurred in managing the estates. The estates were sold bythe defendant or his mortgagees many years ago without the knowledge of the

plaintiff, and she says that the proceeds of sale were more than sufficient to repay

to the defendant all his advances, and that a considerable surplus remained which

the defendant ought to have paid over to her. The defendant, in answer to this

claim, says (1.) the estates were conveyed to him, not as a trustee for the plaintiff,

but as beneficial owner; (2.) the trusts alleged by the plaintiff cannot be proved by

any writing signed by the defendant, and the Statute of Frauds affords a defence to

the action; (3 ) the plaintiff's claim, even if proved, is barred (a) by the defendant's

bankruptcy, (b) by the Statute of Limitations, (c) by the plaintiffs laches, and the

equitable doctrines applicable to delay independently of the statute.

Kekewich J. decided against the plaintiff on the first ground - namely, that there

was no trust in favour of the plaintiff. This view of the case rendered it unnecessary

for him to consider the other defences. The plaintiff has appealed from this

decision; and, as we have been unable to take the same view as the learned judge

of the effect of the evidence, it will be necessary for us to deal with all the other

defences relied upon by the defendant.

Royal Brunei Airlines Sdn Bhd v

Tan [1995] 2 AC 378

English trusts law case, concerning breach of trust and liability for dishonest

assistance.

Royal Brunei Airlines appointed Borneo Leisure Travel Sdn Bhd to be its agent for

booking passenger flights and cargo transport around Sabah and Sarawak. Mr Tan

was Borneo Leisure Travels managing director and main shareholder. It was

receiving money for Royal Brunei, which was agreed to be held on trust in a

separate account until passed over. But Borneo Leisure Travel, with Mr Tans

knowledge and assistance, paid money into its current account and used it for its

own business. Borneo Leisure travel failed to pay on time, the contract was

terminated, and it went insolvent. So Royal Brunei claimed the money back from Mr

Tan.

The Judge held Mr Tan was liable as a constructive trustee to Royal Brunei. The

Court of Appeal of Brunei Darussalam held that the company was not guilty of fraud

or dishonesty, and so Mr Tan could not be either.

Lord Nicholls held it was the dishonest assistants state of mind which matters.Knowledge depends on a gradually darkening spectrum. Therefore the test for

being liable in assisting breach of trust must depend on dishonesty, which is

objective. It is irrelevant what the primary trustees state of mind is, if the assistant

is himself dishonest.


24/27

Saunders v Vautier (1841) A testator had bequeathed 2,000 worth of stock in the East India Company on

trust for Vautier. According to the terms of the trust, it was to accumulate until V

attained the age of 25. The stock's dividends were to be accumulated along with

the capital. Upon reaching the age of maturity (21 at the material time) he sought

access to the capital and dividends immediately.[2]

Judgment

The case was ruled in favor of the defendant. The rights of the beneficiary were

held to supersede the wishes of the settlor as expressed in the trust instrument.

Lord Langdale MR held as follows:

I think that principle has been repeatedly acted upon; and where a legacy is

directed to accumulate for a certain period, or where the payment is postponed,

the legatee, if he has an absolute indefeasible interest in the legacy, is not bound to

wait until the expiration of that period, but may require payment the moment he is

competent to give a valid discharge.[3]

Stack v Dowden ([2007] UKHL

17, [2007]

In Stack v Dowden ([2007] UKHL 17, [2007] 2 AC 432) an unmarried couple bought a

home in joint names. There was no express declaration that they were beneficial

joint tenants nor as to how the beneficial ownership of the property was to be

divided between them. Ms Dowden contributed around 65% of the purchase price

(in the form of an initial down payment and of mortgage contributions) and Mr

Stack the remaining 35%. When the relationship broke down, Mr. Stack sought an

order for sale and half of the proceeds of sale. The majority of the House of Lords

took a constructive trust approach. Baroness Hale (with whom the majority aligned

themselves) held that where family property is in joint names and there is no

express declaration as to how ownership is to be shared, the starting presumption

is that the parties intended a beneficial joint tenancy. Following a severance, in the

absence of a contrary intention, this results in equal beneficial shares under a

tenancy in common. This presumption can be departed from in exceptionalcircumstances. Here the fact of unequal contributions and the fact that the parties

had kept their finances and savings separate justified a departure from the

presumption. Mr. Stack was entitled to 35% of the proceeds of sale.

Lord Neuberger agreed with the conclusion but not the approach. He thought that

a resulting trust approach should be taken to the calculation of the respective

interests of the parties. In cases such as this, equal beneficial ownership should be

the starting point unless there was relevant evidence (concerning the parties

respective contributions to the purchase price) pointing to a different conclusion.


25/27

Strong v Bird [1874] LR 18 Eq 3 Bird borrowed 1,100 from his stepmother. She was living with him and paying him

for rent. It was agreed by both parties that the loan was to be repaid by a reduction

in the rent, until the loan was settled. Birds stepmother only paid the reduced rent

twice. Thereafter, she paid the full rent until her death.

On her death, she appointed Bird as her executor and the next of kin now

attempted to recover the debt from Bird. The conduct of his stepmother (stopped

paying the reduced rent as per their agreement) does not discharge the debt at law

because there was no consideration provided for the release. The issue was

whether Bird must pay back the loan.

The appointment of Bird as the executor was an evidence that the loan to Bird was

a gift to him. This is because the executor is responsible for calling in debts to the

testator's estate, It would be ridiculous for the executor to sue himself for the debt.

Therefore, common law rulings cancelled the debt to avoid this anomaly.

Furthermore, the stepmother's donative intention had continued until her death.

T Choithram International SA v

Pagarani and Others [2001]

Thakurdas Choithram Pagarani died. Shortly before his death, he tried to transfer

various assets to the Choithram International Foundation, a philanthropic body

created by him at the same time as the gift.

Mr Pagarani was born in 1914 in India. He was a devout Hindu. In 1928 he married

his first wife, Lalibai Thakurdas Pagarani, by whom he had six daughters. In about

1937 Mr Pagarani left India and eventually established a supermarket business in

Sierra Leone, Lalibai and their children remaining in India. In Sierra Leone he met

and in 1944 married Virginia Harding, who bore him eight children including three

sons.[1]

Mr Pagarani remained in Sierra Leone until the 1980s but used to return to India to

visit his Indian family and those members of his Sierra Leone family whom he had

taken to India to be brought up according to Indian ways and customs.

The businesses carried on by Mr Pagarani were outstandingly successful and spread

widely throughout the world. They were usually named "T. Choithram and Sons"and were often known simply as "Choithrams". In 1989 Mr Pagarani brought most

of his business under the umbrella of the first various offshore companies (including

T Choithram International SA), in effect, holding companies. He was not the sole

owner of the shares in those companies, but he held a majority share.

Throughout his life Mr Pagarani was outstandingly generous in his charitable giving.

His gifts amounted to many millions of U.S. dollars. The judge at first instance found

as a fact that:

having made generous provision for his first wife and each of his children, [he]

intended to leave much of the remainder of his wealth to charity, to the exclusion

of his children. This he hoped to achieve by setting up a foundation to serve as an

umbrella organisation for those charities which he had already established and

which would in due course be the vehicle to receive most of his assets when he

died. This was from all accounts, a longstanding intention of the deceased.

Thynn v Thynn (1684) Secret trusts fall into two categories: fully secret trusts and half-secret trusts. In a

fully secret trust, property is given by will to a legatee absolutely without mention

of any trust: the gift appears to be absolute and there is no trust on the face of the

will


26/27

Vandervell v Inland Revenue

Commissioners [1967] 2 AC

291

Concerning resulting trusts. It demonstrates that the mere intention to not have a

resulting trust (for example, to avoid taxes) does not make it so.

Tony Vandervell was a wealthy racing car manufacturer with a company called

Vandervell Products Ltd. He wanted to donate to the Royal College of Surgeons, to

establish a chair of pharmacology. He also wanted to avoid paying tax on the

donation. At the time, stamp duty applied to outright donations and taxes applied

to any income through dividends on company shares.[1] However, since the Royal

College of Surgeons was a charity it was not liable to pay tax on any income.So Vandervell orally instructed his trust company (Vandervell Trustees Ltd, which

was also set up to administer his money for his children) to transfer 100,000 shares

in Vandervell Products Ltd to the Royal College of Surgeons, with an option for the

trustees to purchase back the shares back for 5000. He then instructed the

company to declare a dividend on the shares. So while the shares were in the

possession of the Royal College of Surgeons, it paid out 145,000 in dividends up to

1961. Vandervell had hoped this would mean that he would avoid tax (as opposed

to simply getting income for himself, on which he would pay tax, and then giving

the money to the College). Unfortunately, in 1961, the Inland Revenue made a

claim for tax on the transfer.[2]

The Inland Revenue argued that Vandervell retained an equitable interest in the

shares. They were still his, even though the shares were possessed by the College,

he had the option to get them back. They argued his oral instruction to the trust

company was not capable of transferring the equitable interest, because it did not

comply with the formality requirements specified in Law of Property Act 1925

section 53(1)(c). This section requires signed writing to evidence the existence of a

disposition. So he should be liable to pay tax on the value of those shares.[3]

Warren v Gurney [1944] 2 All

ER 472

a father purchased a house in the name of his daughter prior to her wedding. He

retained the title deeds until his death. The Court of Appeal held that the

presumption of advancement was rebutted by evidence that at the time of the

transaction the father had intended her husband to repay the money. The retention

of the title deeds was considered a very significant fact, as one would have

expected the father to have handed them over either to [his daughter] or her

husband, if he had intended the gift.


27/27

Westdeutsche Landesbank

Girozentrale v Islington LBC

English trusts law case concerning the circumstances under which a resulting trust

arises. It held that such a trust must be intended, or must be able to be presumed

to have been intended. In the view of the majority of the House of Lords, presumed

intention to reflect what is conscionable underlies all resulting and constructive

trusts.

The Westdeutsche Landesbank Girozentrale sued Islington LBC to get back

1,145,525, including compound interest that it had paid under an interest rate

swap agreement, which had been held ultra vires the powers of the council. Thebank argued there was a resulting trust of the money it paid to the council, and so

because the contract had no legal effect, nothing was given in return for the

money, and the presumption of a resulting trust was raised. The bank argued that

presumption was not rebutted because the bank did not intend to make a gift of

the money to the council. Establishing a proprietary right would have meant that

the bank was entitled to compound interest, whereas a mere personal claim for the

money back would have meant (at the time, before the House of Lords decision in

Sempra Metals Ltd v Inland Revenue Commissioners[2]) only simple interest was

payable. The council argued that it should not have to pay compound interest,

because that was only available if the money was held on trust for the bank, and

there was no trust. There needed to be presumption of an intention to create a

resulting trust. But there was none, because the bank plainly had intended from the

start to enter a valid swap agreement, and had never set out to create a trust.

In February 1993, Hobhouse J held the bank could recover the money because the

council had been unjustly enriched at the banks expense, and could recover

compound interest. Hazell v Hammersmith and Fulham LBC[3] was considered and

Sinclair v Brougham[4] was applied. The Court of Appeal, with Dillon LJ, Leggatt LJ

and Kennedy LJ, upheld the High Court, with Andrew Burrows acting for Islington

English Trust Law Cases

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