Equity and Trusts PDF

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KEY FACTS KEY CASES
Equity & Trusts

KEY FACTS KEY CASES
The Key Facts Key Cases revision series is designed to give you a clear
understanding and concise overview of the fundamental principles of your
law course. The books’ chapters reflect the most commonly taught topics,
breaking the law down into bite-size sections with descriptive headings.
Diagrams, tables and bullet points are used throughout to make the law easy
to understand and memorise, and comprehensive case checklists are provided
that show the principles and application of case law for your subject.
Titles in the series:

Contract Law
Criminal Law
English Legal System
Equity & Trusts
EU Law
Family Law
Human Rights
Land Law
Tort Law
For a full listing of the Routledge Revision range of titles, visit

www.routledge.com/law
KEY FACTS KEY CASES
Equity & Trusts

Chris Turner and Judith Bray
Routledge
Taylor & Francis Group
LONDON AND NEW YORK

First edition published 2014

by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2014 Chris Turner and Judith Bray
The right of Chris Turner and Judith Bray to be identified as authors of this work has been
asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents
Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form
or by any electronic, mechanical, or other means, now known or hereafter invented, including
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and are used only for identification and explanation without intent to infringe.
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ISBN: 978–0–415–83327–1 (pbk)

ISBN: 978–1–315–85784–8 (ebk)
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Contents
PREFACE ix
TABLE OF CASES xii
Chapter 1
INTRODUCTION TO EQUITY & TRUSTS 1
1.1 A brief history of equity 2
1.2 The basic character of a trust 8
Key Cases Checklist 12
Chapter 2
THE CREATION OF EXPRESS PRIVATE TRUSTS 15
2.1 Capacity and the creation of trusts 16
2.2 Formalities – general 16
2.3 Trusts of land 16
2.4 Dispositions of existing equitable interests 17
2.5 Formality and fraud 18
2.6 The three certainties 18
Chapter 3
PURPOSE TRUSTS 40
3.1 Non-charitable purpose trusts 41
3.2 The rules on unincorporated associations 44
Chapter 4
CONSTITUTION OF TRUSTS 56
4.1 General 57
4.2 Formalities 57
4.3 Declaration of self as trustee 58
4.4 Enforcement of trusts – volunteers and non-volunteers 58
vi Contents
4.5 Exceptions to the rule that equity will not assist a volunteer 59
Chapter 5
SECRET TRUSTS 71
5.1 The background to secret trusts 72
5.2 The rules governing fully secret trusts 72
5.3 The rules governing half secret trusts 73
5.4 The theoretical basis of secret trusts 74
Chapter 6
PROTECTIVE AND DISCRETIONARY TRUSTS 82
6.1 Protective trusts 82
6.2 Discretionary trusts 82
Chapter 7
RESULTING TRUSTS AND
CONSTRUCTIVE TRUSTS 86
7.1 Introduction 87
7.2 Resulting trusts 87
7.3 Constructive trusts 93
7.4 Trusts of the family home 98
Chapter 8
CHARITABLE TRUSTS 126
8.1 The history of the charitable trust 127
8.2 The difference between charitable trusts and other trusts 128
8.3 Essential requirements of charitable trusts 128
8.4 Charitable objects 129
8.5 The political element 135
8.6 The public benefit element 135
8.7 Exclusivity of charitable objects 136
8.8 The basis of the cy-près doctrine at common law 137
8.9 Initial failure 137
8.10 Subsequent failure 138
8.11 Non-charitable alternatives 139
Contents vii
8.12 Statutory cy-près 140

Chapter 9
THE NATURE OF TRUSTEESHIP 157
9.1 Who can be a trustee? 158
9.2 The number of trustees 159
9.3 Appointment of trustees 159
9.4 Selection of trustees 160
9.5 The vesting of the trust property 160
9.6 Termination of trusteeship 160
9.7 Standard of conduct expected of trustees 161
Chapter 10
THE DUTIES OF THE TRUSTEES 165
10.1 The trustees’ duties to the trust property 166
10.2 The duty to invest 167
10.3 The trustees’ duties to the beneficiaries 172
10.4 The fiduciary nature of trusteeship 174
Chapter 11
THE POWERS OF TRUSTEES 187
11.1 Introduction 188
11.2 Trustees of land under the Trusts of Land and
Appointment of Trustees Act 1996 189
11.3 General powers 189
11.4 The power to delegate 191
11.5 Powers of maintenance and advancement 192
Chapter 12
VARIATION OF TRUSTS 198
12.1 The need for variation 199
12.2 Variation under the inherent jurisdiction of the courts 199
12.3 Variation under statutory provisions 199
12.4 Variation under the Variation of Trusts Act 1958 200
viii Contents
Chapter 13
BREACH OF TRUST AND REMEDIES 208

13.1 Breach of trust and liability 209
13.2 Personal remedies and proprietary remedies 209
13.3 Equitable remedies – injunctions 213
13.4 Equitable remedies – specific performance 216
13.5 Equitable remedies – rescission 218
13.6 Equitable remedies – rectification 218
INDEX 231
Preface
This new series of Key Facts Key Cases is built on the two well-known
series, Key Facts and Key Cases. Each title in the Key Facts series now incor-
porates a Key Cases section at the end of most chapters which is designed to
give a clear understanding of important cases. This is useful when studying a
new topic and invaluable as a revision aid. Each case is broken down into fact
and law. In addition many cases are extended by the use of important extracts
from the judgment, by a commentary or by highlighting problems. In some
instances students are reminded that there is a link to other cases or material.
If the link case is in another part of the book, the reference will be clearly
shown. Some links will be to additional cases or materials that do not feature
in the book.
The basic Key Facts sections are a practical and complete revision aid that
can be used by students of law courses at all levels from A Level to degree
and beyond, and in professional and vocational courses. They are designed to
give a clear view of each subject. This will be useful to students when tack-
ling new topics and is invaluable as a revision aid.
Most chapters open with an outline in diagram form of the points covered in
that chapter. The points are then developed in a structured list form to make
learning easier. Supporting cases are given throughout by name, and for
some complex areas facts are given to reinforce the point being made. The
most important cases are then given in more detail.
The Key Facts Key Cases series aims to accommodate the syllabus content of
most qualifications in a subject area, using many visual learning aids.
The topics covered for Equity and Trusts include all of those contained in
mainstream syllabuses. Equity and Trusts is often seen as a fairly dry and dull
area. In fact it is actually more relevant to most people’s lives than, for
example, Criminal Law, which is a very popular area of study. Anyone who
jointly owns a domestic home or who wants to leave property in a will to
underage children, who has anything to do with charity work or who has a
private pension, for instance, would be able to identify what a very practical
and useful subject it is.
x Preface
In the Key Cases sections, in order to give a clear layout, symbols have been
used at the start of each component of the case. The symbols are:
Key Facts – These are the basic facts of the case.
Key Law – This is the major principle of law in the case.
Key Judgment – This is an actual extract from a judgment made on

the case.
Key Comment – Influential or appropriate comments made on the

case.
Key Problem – Apparent inconsistencies or difficulties in the

law.
Key Link – This indicates other cases which should be considered

with this case.
The Key Link symbol alerts readers to links within the book and also to cases
and other material, especially statutory provisions that are not included.
The court abbreviations used in the key case sections of this book are shown
below.
Ass Assize Court CA Court of Appeal
CC County Court CCA Court of Criminal Appeal
CCR Crown Cases Reserved CH Court of Chancery
ChDiv Chancery Division CJEU Court of Justice of the

European Union
C-MAC Court Martial Appeal CP Court of Probate

Court
Preface xi
DC Divisional Court EAT Employment Appeal

Tribunal
ECHR European Court of ECJ European Court of

Human Rights Justice
ET/IT Employment tribunal/ Exch Court of the Exchequer

Industrial tribunal
HC High Court HL House of Lords
KBD King’s Bench Division NIRC National Industrial

Relations Court
PC Privy Council QBD Queen’s Bench Division
RC Rolls Court SC Supreme Court
The law is as I believe it to be on 1 May 2013.

Table of Cases
Abbott Fund Trusts, Re [1900] 2 Ch 326 . . . . . . . . . . . . . . . . . . 89, 103, 107

Abou-Rahmah v Abacha [2006] EWCA Civ 1492, [2006]
All ER (D) 80, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97, 122
Abrahams v Trustee in Bankruptcy of Abrahams HC
[1999] BPIR 637 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92, 112–13
Adams and Kensington Vestry, Re (1884) 27 Ch
D 394 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 19, 25–6, 29
Adekunle v Ritchie [2007] WTLR 1505, [2007] 2 P & CR
DG20, [2007] BPIR 1177 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Agip (Africa) Ltd v Jackson and others 1990] Ch 265, [1991]
3 WLR 116 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Air Jamaica Ltd v Charlton [1999] 1 WLR 1399. . . . . . . . . . . . . . . . . . . 104
Allcard v Skinner (1887) LR 36 Ch D 145 . . . . . . . . . . . . . . . 4, 12, 13, 218
Allen, Re [1953] Ch 810 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 37
Allhusen v Whittell (1867) LR 4 Eq 295 . . . . . . . . . . . . . . . . . . . . . . . . . 173
American Cyanamid Co v Ethicon Ltd [1975] AC 295, [1975]
2 WLR 316 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208, 215, 228
Ames’ Settlement, Re [1946] Ch 217, HC . . . . . . . . . . . . . . . . . 88, 103, 106
Anthony v Donges [1998] 2 FLR 775 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55,
[1996] 1 All ER 779 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 229
Armitage v Nurse [1998] Ch 241, [1997] 3
WLR 1046 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162, 163, 208–10, 222
Ashman v Price and Williams [1942] Ch 219, [1942]
1 All ER 310 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Astor’s Settlement Trust, Re [1952] Ch 534 . . . . . . . . . . . . . . . . . 41, 43, 47
Attorney-General v Charity Commission (2012) 156 SJ
(No 8) 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Attorney-General v National Provincial Bank of England
[1924] AC 262, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Attorney-General v Power (1809) 1 Ball & B 145 . . . . . . . . . . . . . . . . . . 129
Attorney General for Hong Kong v Reid and
Others [1994] 1 AC 324, [1993] 3 WLR 1143, PC . . . . . . . . . . . . . . 186
Table of Cases xiii
Attorney-General of the Bahamas v Royal Trust Co [1986]

1 WLR 1001, PC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Baden’s Deed Trusts, Re (No 2) [1972] 2 All ER 81 . . . . . . . . . . . . . . . . . 21

Baden Delvaux, Re; Baden Delvaux and Lecuit v Société
Générale pour Favouriser le Développement de Commerce
en France SA [1983] BCLC 325, HC . . . . . . . . . . . . . . . . . . . . . . . 122–3
Bahin v Hughes (1886) 31 Ch D 390 . . . . . . . . . . . . . . . . . . . . 210, 220, 230
Baldry v Feintuck [1972] 2 All ER 81 . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Ball’s Settlement, Re [1968] 1 WLR 899 . . . . . . . . . . . . . . . . . 198, 201, 205
Bank of Credit and Commerce International (Overseas)
Ltd and Another v Akindele [2001] Ch 437, [2000]
4 All ER 221, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86, 97, 123
Bannister v Bannister [1948] 2 All ER 133 . . . . . . . . . . . . . . . . 5, 12, 13–14
Banque Belge pour L’Etranger v Hambrouck [1921] 1 KB
321, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208, 212, 222–3
Barclays Bank v OBrien [1994] 1 AC 180, [1993]
4 All ER 417, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Barclays Bank v Quistclose Investments Ltd [1970] AC 567,
[1968] 3 All ER 651,HL . . . . . . . . . . . . . 10, 12, 14, 26, 88, 89, 103, 108
Barlow Clowes International Ltd (in liquidation)
v Eurotrust International Ltd and others [2006]
1 All ER 333, [2005] UKPC 37, Privy Council . . . . . . . . . . . . 97, 121–2
Barlow Clowes International Ltd (in liquidation) and
others v Vaughan [1992] 4 All ER 22, CA . . . . . . . . . . . . . . . . . . . 226–7
Barlow’s Will Trusts, Re [1979] 1 All ER 296. . . . . . . . . . . . . . . . . . . . . . . 21
Barlow’s Will Trust, Re [1979] 1 WLR 278, [1979]
1 All ER 296 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26, 38–9
Barnes v Addy (1874) LR 9 Ch App 244 . . . . . . . . . . . . . . . . . . . . . . 96, 119
Barrett v Barrett [2008] EWHC 1061 (Ch), [2008]
2 P & CR 345 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980]
Ch 515, [1980] 1 All ER 139, [1980] 2 WLR 430, Ch D . . . 171, 180–1
Beaney (deceased), Re [1978] 2 All ER 595. . . . . . . . . . . . . . . . . . . . . 15, 16
Beatty’s Will Trusts, Re [1990] 1 WLR 1503, HC . . . . . . . . . . . . . . . . . . . 42
Bell’s Indenture, Re, Bell v Hickley [1980] 3 All
ER 425, [1980] 1 WLR 1217 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86, 98
Belmont Finance Corporation v Williams Furniture Ltd
(No 2) [1980] 1 All ER 393, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Beloved Wilkes Charity, Re (1851) 3 Mac & G 440. . . . . . . . . 167, 177, 188
Benjamin, Re [1902] 1 Ch 723 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 26, 35
Bennett, Re, Gibson v Attorney-General [1920]
1 Ch 305, 84 JP 78, 89 LJ Ch 269, [1920] All ER Rep 624 . . . . . . . . 136
xiv Table of Cases
Bennett v Bennett (1879) 10 Ch D 474, CA . . . . . . . . . . . . . . . . . . . 91, 104

Best, Re [1904] 2 Ch 354, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 137
Besterman Wills Trusts, Re (1980) The Times, 21 January . . . . . . . . . . . . 145

Binions v Evans [1972] 1 Ch 298 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Birch v Treasury Solicitor [1951] 1 Ch 298, CA . . . . . . . . . . . . . . . . . 59, 70
Biscoe v Jackson (1887) 25 Ch D 460 . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Biss, Re [1903] Ch 40, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94, 176
Blackwell v Blackwell [1929] AC 318 . . . . . . . . . . . . . . . . 71, 73, 74, 76, 80
Blair v Duncan [1902] AC 37, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Blyth v Fladgate [1891] 1 Ch 337 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Boardman and Another v Phipps [1967] 2 AC 46, [1966]
3 All ER 721, HL. . . . . . . . . . . . . . . . . . . . . . . 86, 94, 165, 175, 177, 186
Bourne v Keane [1919] AC 815 . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 43, 50
Bowman v Secular Society [1917] AC 406 . . . . . . . . . . . . . . . . . . . 131, 147
Boyce v Boyce (1849) 16 Sim 476 . . . . . . . . . . . . . . . . . . . . . . . 20, 26, 34–5
Boyes, Re: Boyes v Carritt (1884) 26 Ch D 531 . . . . . . . . . . . . . . . 72, 76, 77
Bray v Ford [1896] AC 44, HL . . . . . . . . . . . . . . . . . . . . . . 94, 165, 176, 182
British Museum v White (1826) 2 Sim & St 594 . . . . . . . . . . . . . . . . . . . 135
British School of Egyptian Archaeology, Re [1954]
1 All ER 887 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Brogden, Re, Billing v Brogden (1888) 38 Ch D 546,
37 WR 84, CA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165, 166, 209
Brooks v Brooks [1996] AC 375, [1995] 3 All ER 257, HL . . . . . . 198, 200
Brown v Gellatly (1867) 2 Ch App 751, 15 WR 1188 . . . . . . . . . . . . . . . 173
Bryant v Law Society [2007] EWHC 3043 (Admin),
[2009] 1 WLR 163, DC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Bucks Constabulary Widows’ and Orphans’ Fund Friendly
Society (No 2), Re [1979] 1 WLR 936, HC . . . . . . . . . . . . . 90, 104, 109
Bull v Bull [1955] 1 QB 234, CA . . . . . . . . . . . . . . . . . . . . . . . . . 86, 92, 100
Burns v Burns [1984] 2 WLR 582 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Burrough v Philcox (1840) 5 My & Gr 72 . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bushnell, Re, Lloyds Bank Ltd v Murray [1975]
1 All ER 721, [1975] 1 WLR 1596 . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Buttle v Saunders [1950] 2 All ER 193 . . . . . . . . . . . . . . . . . . 166, 187, 190
CL, Re [1969] 1 Ch 587, [1968] 1 All ER 1104 . . . . . . . . . . . . . . . . 198, 202

Cain v Moon [1896] 2 QB 283. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59, 68
Cameron (Deceased), Re: Phillips v Cameron and
others [1999] 2 All ER 924 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Cannon v Hartley [1949] Ch 213 . . . . . . . . . . . . . . . . . . . . . . . 56, 59, 65–6
Carl Zeiss Stiftung v Herbert Smith & Co [1969]
2 Ch 276, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Cattley v Pollard [2006] EWHC 3130 (Ch), HC . . . . . . . . . . . . . . . . . . . 211
Table of Cases xv
Cavendish-Browne’s Settlement Trusts, Re, Horner v

Rawle [1916] WN 341, (1916) 61 SJ 27, HC . . . . . . . . . . . . . . . . . 56, 59
Chapman v Chapman [1954] AC 429 . . . . . . . . . . . . . . . . . . . . . 199, 202–3

Chappell v Times Newspapers Ltd [1975] 1 WLR 482 . . . . . . . . . . 5, 12, 13
Chase Manhattan Bank v Israel–British Bank (London)
Ltd [1981] Ch 105, [1979] 3 All ER 1025 . . . . . . . . . . . . . . . . . . . . . 212
Cheese v Thomas [1994] 1 All ER 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Chichester Diocesan Fund and Board of Finance
Ltd v Simpson [1944] AC 341, [1944] 2 All ER
60, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 136
Chillingworth v Chambers [1896] 1 Ch 685 . . . . . . . . . . . . . . . . . . 210, 221
Chirkinian v Arnfield [2006] EWHC 1917 (Ch), HC . . . . . . . . . . . . . . . 188
Choithram (T) International SA and Others v Pagarani
and Others [2001] 2 All ER 492, PC . . . . . . . . . . . . . . . . . . . . . 58, 63–4
Church of the New Faith v Commissioners of the
Payroll Tax (Victoria) (1982) 154 CLR 120, 57 ALJR
785, (Aust HC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Churchill, Re, Hiscock v Lodder [1909] 2 Ch 431 . . . . . . . . . . . . . . 187, 194
Clayton’s case: Devaynes v Noble (1816) 1 Mer 529 . . . . . . . . . . . . . . . . 226
Cleaver, Re [1981] 2 All ER 1018, [1981] 1 WLR 939, HC . . . . . . . 94, 119
Clifford, Re [1912] 1 Ch 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Clitheroe’s Settlement Trusts, Re (1959) . . . . . . . . . . . . . . . . . . . . . . . . . 201
Cobbetts v Hodge [2009] EWHC 786 (Ch) . . . . . . . . . . . . . . . . . . . . . . . 94
Comiskey and Others v Bowring-Hanbury and Another
[1905] AC 84, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 19, 26, 29–30
Compton, Re [1945] Ch 123, [1945] 1 All ER 198, CA . . . . . . . . . . . . . 135
Conservative and Unionist Central Office v Burrell [1982]
1 WLR 522 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 44, 50–1
Cook’s Settlement Trust, Re [1965] Ch 902, [1964]
3 All ER 898, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59, 66
Cooper v PRG Powerhouse Ltd (in Liquidation) [2008]
EWHC 498 (Ch), [2008] 2 All ER 964 . . . . . . . . . . . . . . . . . . 89, 106–7
Cooper (Colin), Re [1939] Ch 811 . . . . . . . . . . . . . . . . . . . . . . . 73, 76, 78–9
Cottam’s Will Trusts, Re [1955] 1 WLR 1299 . . . . . . . . . . . . . . . . . . . . . 133
Coulthurst, Re [1951] Ch 661 . . . . . . . . . . . . . . . . . . . . . . . . . 126, 129, 143
Cowan v Scargill and others [1985] Ch 270, [1984]
3 WLR 501 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168, 171, 178–9, 182
Coxen, Re [1948] Ch 747, [1948] 2 All ER 492 . . . . . . . . . . . . . . . 126, 136
Crabb v Arun UDC [1976] Ch 179 . . . . . . . . . . . . . . . . . . . . . . . . . . . 56, 60
Craddock v Piper (1850) 1 Mac & G 664 . . . . . . . . . . . . . . . . . . . . . . . . 175
Crippen, Re [1911] P 108 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86, 95
Cunnack v Edwards [1895] 1 Ch 489, [1896] 2 Ch 679, CA . . . . . . . . . . 90
Curley v Parkes [2004] All ER (D) 344 (Oct) . . . . . . . . . . . . . . . . . . . . . 100
xvi Table of Cases
D (a child) v O [2004] 3 All ER 780, HC . . . . . . . . . . . . . . . . . . . . . . . . 202

Dale (Deceased), Re [1994] Ch 31, [1993] 3 WLR 652 . . . . . 86, 95, 124–5
Danish Bacon Co Staff Pension Fund Trusts, Re [1971]

1 WLR 248, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Davis v Richards and Wallington Industries Ltd [1991]
2 All ER 563, [1990] 1 WLR 1511, HC . . . . . . . . . . . . . . . . . . . . . . . 104
Dean, Re (1889) 41 Ch D 552 . . . . . . . . . . . . . . . . . . . . . . . . . 40, 43, 49–50
Delamere’s Settlement Trusts, Re [1984] 1 WLR 813, CA . . . . . . . . . . . 194
Delius’ Will Trust, Re [1957] Ch 299, [1957]
1 All ER 854 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 131, 133, 149
Denley’s Trust Deed, Re [1969] 1 Ch 373, [1968]
3 All ER 65, HC . . . . . . . . . . . . . . . . . . . . . . . . 40, 41, 45, 46, 52–3, 128
Derby Co Ltd v Weldon [1990] Ch 48, [1989]
2 WLR 279 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Dillwyn v LLewellyn (1862) 4 De GF & J 517 . . . . . . . . . . . . . . . . . . . . . . 60
Dingle v Turner [1972] AC 601, HL . . . . . . . . . . 126, 130, 135, 136, 153–4
Diplock, Re; Diplock v Wintle [1948] Ch 465,
CA, on appeal from [1947] Ch 716, Ch D . . . . . . . . 86, 88, 166, 212, 227
Dolley v Ogunseitan [2009] EWHC 1601 (Ch),
[2009] All ER (D) 66 (Jul) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Dominion Students’ Hall Trust, Re [1947] 1 Ch 183, HC . . . . . . . . . . . . 137
Dover Coalfield Extension, Re [1908] 1 Ch 65, CA . . . . . . . . . . . . . . . . 176
Drake v Whipp [1996] 1 FLR 826, [1996]
2 FCR 296, (1995) Times, 19 December, CA . . . . . . . . . . . . . . 86, 92, 98
Druce’s Settlement Trusts, Re [1962] 1 All ER
563, [1962] 1 WLR 363, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Drummond, Re [1914] 2 Ch 90, [1914–1915] All ER 223, HC . . . . . . . . 45
Dubai Aluminium v Salaam [2002] UKHL 48, [2003] 2 AC 366, HL,
reversing [2001] QB 133, [2000] 3 WLR 910, CA, reversing in part
[1999] 1 Lloyd’s Rep 415, QBD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Dufour v Pereira (1769) 1 Dick 419, HL . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Dupree’s Deed Trusts, Re [1945] Ch 16, [1944] 2 All ER 443 . . . . . . . . 131
Dyer v Dyer (1788) 2 Cox Eq Cas 92, HC . . . . . . . . . . . . . . . . . . . . . 92, 103
Eades, Re, Eades v Eades [1920] 2 Ch 353 . . . . . . . . . . . . . . . . . . . . . . . . 137

Earl of Oxford’s case (1615) 1 Rep Ch 1 . . . . . . . . . . . . . . . . . . . . . . . . . 1, 3
Eastes (deceased), Re: Pain v Paxon [1948] 1 All ER 536 . . . . . . . . . . . . 132
Eastgate, Re, ex parte Ward [1905] 1 KB 465, 74 LJKB 324 . . . . . . . . . . . 218
Elithorn v Poulter [2009] All ER (D) 22 (Jan). . . . . . . . . . . . . . . . . . . . . . 92
Endacott (Decd), Re, Corpe v Endacott [1960] Ch 232,
[1959] 3 All ER 562, CA . . . . . . . . . . . . . . . . . 15, 20, 40, 41, 43, 44, 47
Essery v Cowlard (1884) 26 Ch D 191 . . . . . . . . . . . . . . . . . . . . . . . . . 86, 88
Eves v Eves [1975] 1 WLR 1338, CA . . . . . . . . . . . . . . . . . 86, 98, 101, 115
Table of Cases xvii
Ex parte Belchier; Ex parte Parsons; In the Matter of Parsons, Bankrupt

(1754) Amb 218, (1754) 27 ER 144 . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Eykyn’s Trusts, Re (1877) 6 Ch D 115, 37 LT 261 . . . . . . . . . . . . . . . . 86, 91
Factortame, see R v Secretary of State for Transport,

ex parte Factortame—
Faraker, Re [1912] 2 Ch 488 . . . . . . . . . . . . . . . . . . . . . . . . . . . 138, 139, 154
Farepak Foods and Gifts Ltd (in administration), Re [2008]
2 BCLC 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 26, 31
Farley and Others v Westminster Bank Ltd and Others, Re
Ashton’s Estate, Westminster Bank Ltd v Farley [1939]
3 All ER 491, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Fellowes v Fisher [1976] QB 122, [1975] 2 All ER 829, CA . . . . . . . . . . 215
Finger’s Will Trust, Re [1972] Ch 286 . . . . . . . . . . . . . . . . . . . . . . . 138, 156
Firstpost Homes v Johnson [1995] 4 All ER 355, [1995]
1 WLR 1567 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 17
Fisher v Brooker and Others [2009] 1 WLR 1764, (2009)
The Times, 12 August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
Fletcher v Fletcher (1844) 4 Hare 67 . . . . . . . . . . . . . . . . . . . . . 56, 59, 66–7
Flight v Bolland (1828) 38 ER 817 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Foskett v McKeown [2001] 1 AC 102 . . . . . . . . . . . . . . . . . . . . . 213, 224–5
Foster v Spencer [1996] 2 All ER 672, (1995)
The Times, 14 June, HC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Fowkes v Pascoe (1875) LR 10 Ch App 343 . . . . . . . . . . . . 86, 92, 104, 113
Fowler v Barron [2008] EWCA Civ 377, [2008]
All ER (D) 318 (Apr) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102, 103, 118
Frederick E Rose Ltd v William Pim Jnr & Co [1953]
2 QB 450 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Fry v Tapson (1884) 28 Ch D 268 . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 191
Gardner (No 1), Re, Huey v Cunnington [1920]

2 Ch 523, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71, 73
Gardner (No 2), Re [1923] 2 Ch 230, HC . . . . . . . . . . . . . . . . 71, 74, 76, 79
Gascoigne v Gascoigne [1918] 1 KB 223, CA . . . . . . . . . . . . . . . . . . . . . . 91
Gibbs v Harding [2007] EWHC 3 (Ch), [2008] Ch 235,
Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Gillingham Bus Disaster Fund, Re [1959] Ch 62, [1958]
Ch 300, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . 86, 89, 103, 107, 165, 166
Gilmour v Coats and Others [1949] AC 426, [1949]
1 All ER 848, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 132, 136, 148
Girls’ Public Day School Trust, Re: Girls’ Public Day School
Trust Ltd v Minister of Town and Country Planning [1951]
Ch 400 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
xviii Table of Cases
Gissing v Gissing [1969] 2 Ch 85, [1970] 2 All ER 780, [1971]

AC 886, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86, 92, 98
Golay (deceased), Re; Morris v Bridgewater and Others [1965]

2 All ER 660 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Golay’s Will Trusts, Re [1965] 2 All ER 660 . . . . . . . . . . . . . . . . . 20, 26, 34
Goldcorp Exchange Ltd, Re [1995] 1 AC 74, [1994]
3 WLR 199 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 26, 32–3
Gonin (Decd), Re [1979] Ch 16, HC . . . . . . . . . . . . . . . . . . . . . . . . . . 59, 67
Goodman v Carlton [2002] All ER (D) 284, CA. . . . . . . . . . . . . . . . . . . . 98
Goulding v James [1997] 2 All ER 239, CA. . . . . . . . . . . . . . . . . 205–6, 207
Gower’s Settlement, Re [1934] Ch 365, 103 LJ Ch 164 . . . . . . . . . 198, 200
Grant v Edwards [1986] Ch 638, CA, [1986] 2 All ER 426 . . . . . . 101, 115
Grant’s Wills Trusts, Re [1980] 1 WLR 360, HC . . . . . . . . . . . . . . . . . 45, 53
Gravesham Borough Council v British Railways Board
[1978] Ch 379, [1978] 3 All ER 853, Ch D . . . . . . . . . . . . . . . . . . . . 215
Gray, Re, Todd v Taylor [1925] Ch 362, 94 LJ Ch 430 . . . . . . . . . . . . . . . 134
Green’s Will Trusts, Re, Fitzgerald-Hart v Attorney-General
[1985] 3 All ER 455, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Grey v Inland Revenue Commissioners [1960] AC 1,
[1959] 3 All ER 603, HL, affirming [1958] Ch 690, [1958]
2 All ER 428, CA, reversing [1957] TR 293, 102 SJ 84,
Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 17, 23
Grove-Grady, Re [1929] 1 Ch 557, CA . . . . . . . . . . . . . . . . . . . . . . 134, 150
Guild v Inland Revenue Commissioners [1992] 2 AC 310,
[1992] 2 All ER 10, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Guinness v Saunders [1990] 2 WLR 324, HL . . . . . . . . . . . . . . . . . . . . . 175
Gulbenkian’s Settlement Trusts, Re, Whishaw v Stephens
[1970] AC 508, [1968] Ch 126, HL . . . . . . . . . . . . . . . . 20, 26, 37, 37–8
Gwyon, Re, Public Trustee Attorney General [1930]
1 Ch 255, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 130
Hagger, Re [1930] 2 Ch 190, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Halifax Building Society v Thomas [1996] Ch 217,
[1995] 4 All ER 673, [1996] 2 WLR 63, CA . . . . . . . . . . . . . . . . . . . . 94
Hallett’s Estate, Re (1880) 13 Ch D 696, CA. . . . . . . . . . . . . . 208, 212, 223
Halton International Inc and another v Guernroy Ltd
[2006] EWCA Civ 801, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Hambro v Duke of Marlborough [1994] 3 WLR 341. . . . . . . . . . . . 198, 200
Hammond v Mitchell [1991] 1 WLR 1127, HC . . . . . . . . . . . . . . . . . . . 101
Hanchett-Stamford v Attorney-General [2009] Ch 173,
[2008] EWHC 330 (Ch), [2008] All ER (D) 391 (Feb),
Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46, 55
Harari’s Settlement Trusts, Re [1949] 1 All ER 430. . . . . . . . . . . . . . . . . 169
Table of Cases xix
Harries and Others v Church Commissioners for England

[1993] 2 All ER 300, [1992] 1 WLR 1241 . . . . . . . . . . . . . . . . . 172, 180
Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 . . . . . . . . . 174

Harwood, Re Coleman v Innes [1936] Ch 285 . . . . . . . . . . . . 138, 139, 155
Hazell v Hazell [1972] 1 All ER 923, [1972] 1 WLR 301, CA . . . . . . . . 101
Head v Gould [1898] 2 Ch 250 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209, 221
Heilbut Symons & Co v Buckleton [1913] AC 30,
82 LJKB 245, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Hetherington (deceased), Re [1990] Ch 1, [1989]
2 All ER 129, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43, 50, 126, 136
Hobourn Aero Components Air Raid Distress Fund, Re,
Ryan v Forrest [1946] Ch 194, CA, [1946] Ch 86,
Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Hodgson v Marks [1971] Ch 892, CA . . . . . . . . . . . . . . . . 90, 100, 103, 109
Holder v Holder [1968] Ch 353, CA . . . . . . . . . . . . . . . . . . . . 165, 176, 184
Holmes v Attorney-General (1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Holt’s Settlement, Re [1969] 1 Ch 100, HC. . . . . . . . . . . . . . . . . . . 202, 204
Hooper, Re [1932] 1 Ch 38, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 43, 49
Hopkins’ Will Trusts Re [1965] Ch 669, [1964]
3 All ER 46, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 130, 131
Hopkinson, Re [1949] 1 All ER 346 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Horley Town Football Club, Re, Hunt and another
v McLaren and others [2006] EWHC 2386, [2006]
All ER (D) 34, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46, 54, 134
Howe v Earl of Dartmouth (1802) 7 Ves Jun 137 . . . . . . . . 5, 165, 172, 173
Hubbard v Pitt [1976] QB 142 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Hussey v Palmer [1972] 1 WLR 1286, CA . . . . . . . . . . . . . . . . . . . . . . . . 86
Hunt v McLaren, see Horley Town Football Club, Re,
Hunt and another v McLaren and others—
Hunter v Moss [1994] 1 WLR 452, CA affirming [1993]
1 WLR 934 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 19, 26, 32–3, 57
Incorporated Council of Law Reporting for England and

Wales v Attorney-General [1972] Ch 73, [1971]
3 All ER 1029, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 130, 133
Independent Schools Council v Charity Commission for
England and Wales [2011] UKUT 421 . . . . . . . . . . . . . . . . . . . . 130, 144
Industrial Development Consultants v Cooley [1972]
1 WLR 443, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165, 177, 183
Inland Revenue Commissioners v Baddeley [1955]
AC 572, [1955] 2 WLR 552, HL . . . . . . . . . . . . . . . . . . 126, 134–6, 152
Inland Revenue Commissioners v Broadway Cottages
Trust [1955] Ch 20, [1954] 1 All ER 878 . . . . . . . . . . . . . . . . . 20, 26, 36
xx Table of Cases
Inland Revenue Commissioners v City of Glasgow Police

Athletic Association [1953] AC 380, [1953] 1 All
ER 747, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134, 149–50

Inland Revenue Commissioners v McMullen and Others
[1981] AC 1, [1979] 1 WLR 130, [1978]
1 WLR 664, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . 131, 134, 146–7, 149
Inland Revenue Commissioners v Pemsel [1891]
AC 531 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 127, 129, 142–3
Jackson, Re, Jackson v Talbot (1882) 21 Ch D 786 . . . . . . . . . . . . . 198, 199

James v Thomas [2007] EWCA Civ 1212, [2007] 3 FCR 696,
[2008] 1 FLR 1598, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Jenkins’ Will Trusts, Re, Public Trustee v British Union for
the Abolition of Vivisection [1966] Ch 249, [1966]
1 All ER 926, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Jones, Re, Richards v Jones [1898] 1 Ch 438, 67 LJ Ch 211, Ch D . . . . . . 19
Jones v Kernott [2011] UKSC 53 . . . . . . . . . . . . . . . . . . . . . . . . . 102, 117–8
Jones v Lock (1865) LR 1 Ch App 25, CA. . . . . . 15, 19, 26, 28–9, 56, 60–1
Joscelyne v Nissen [1970] 1 All ER 1213, CA . . . . . . . . . . . . . . . . . . . . . 218
Kayford Ltd, Re [1975] 1 WLR 279, [1975]

1 All ER 604, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 26
Kay’s Settlement, Re [1939] Ch 329, [1939]
1 All ER 245 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56, 59
Keech v Sandford (1726) Sel Cas Ch 61, LC . . . . . . . . . . . . . . 165, 176, 185
Keen, Re [1937] Ch 236, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . 71, 76, 77–8
Kelly, Re (1932) 4 ABC 258 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Kelsen v Imperial Tobacco Co (of Great Britain
and Ireland) Ltd [1957] 2 All ER 343, QBD . . . . . . . . . . . . . . . . . . . 216
Kennaway v Thompson [1981] QB 88, [1980]
3 WLR 361, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Keren Kayemeth Le Jisroel v IRC [1932] AC 650, HL
affirming [1931] 2 KB 465,, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
King, Re, Kerr v Bradley [1923] 1 Ch 243, [1923]
All ER Rep 688 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132, 136, 138, 139
Klug v Klug [1918] 2 Ch 67 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167, 178
Knight v Knight (1840) 3 Beav 148 . . . . . . . . . . . . . . . . . . . . . . . . 18, 26, 27
Koeppler’s Wills Trust, Re [1986] Ch 423 . . . . . . . . . . . . 131, 133, 135, 151
Laing (JW) Trust, Re [1984] Ch 143 . . . . . . . . . . . . . . . . . . . . . . . . 139, 141

Lake v Bayliss [1974] 2 All ER 1114, [1974] 1 WLR 1073 . . . . . . . . . . . . 95
Lambe v Eames (1871) 6 Ch App 597 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Laskar v Laskar [2008] All ER (D) 104 (Feb) . . . . . . . . . . . . . . . . . 102, 103
Table of Cases xxi
Law Society of England and Wales v Habitable Concepts Ltd

[2010] EWHC 1449 (Ch), [2010] All ER (D) 156 (Jun) . . . . . . . . . . 98
Le Cren Clarke, Re, Funnell v Stewart, sub nom

Funnell v Stewart [1996] 1 All ER 715, [1996]
1 WLR 288, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 43
Le Foe v Le Foe [2001] All ER (D) 325, HC . . . . . . . . . . . . . . . . . . . . . . 101
Leaf v International Galleries HC [1950] 2 KB 86 . . . . . . . . . . . . . . . . 4, 12
Leahy v Attorney General for New South Wales [1959]
AC 457, PC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 45, 51
Learoyd v Whiteley (1887) 12 App Cas 727, 57 LJ Ch 390,
HL, affirming (1886) 33 Ch D 347, CA . . . . . . . . . . . . . . . 165, 171, 191
Lepton’s Charity, Re [1972] Ch 276 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Lewis (deceased), Re [1955] Ch 104, [1954] 3 All ER 257 . . . . . . . . . . . 133
Lipinski’s Wills Trusts, Re [1976] Ch 235, [1977]
1 All ER 33, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 46, 54
Lipkin Gorman (A Firm) v Karpnale Ltd [1991] 2 AC 548,
[1991] 3 WLR 10, [1992] 4 All ER 512, HL, reversing in part
[1992] 4 All ER 409, [1989] 1 WLR 1340, CA, reversing in part
[1992] 4 All ER 331, QBD . . . . . . . . . . . . . . . . . . . . . . . . . . 97, 124, 213
Lister and Co v Stubbs (1890) 45 Ch D 1 . . . . . . . . . . . . . . . . . . . . 184, 186
Lloyds Bank plc v Carrick [1996] Conv 295 . . . . . . . . . . . . . . . . . . . . . . . 95
Lloyds Bank v Duker [1987] 3 All ER 193 . . . . . . . . . . . . . . . . . . . . 165, 172
Lloyds Bank v Rosset [1991] 1 AC 107, [1990] 1 All ER
111, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86, 98, 99, 101, 114
Lloyds TSB Bank plc v Markandan and Uddin [2012]
EWCA Civ 65, [2012] 2 All ER 884, CA. . . . . . . . . . . . . . . . . . . . . . 210
Locker’s Settlement Trusts, Re [1977] 1 WLR 1323 . . . . . . . . . . . . 83, 84–5
Londonderry’s Settlement, Re [1965] Ch 918, [1964]
3 All ER 855 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174, 181
London Hospital Medical College v IRC [176] 1 WLR 613 . . . . . . . . . . 136
London Wine Company (Shippers) Ltd, Re [1986]
PCC 121, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 26, 32, 33
Lucking’s Will Trusts, Re [1968] 1 WLR 866 . . . . . . . . . . . . . . . . . . 185, 191
Lysaght (Decd), Re, Hill v Royal College of Surgeons [1966]
1 Ch 191, [1965] 2 All ER 888, HL . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Lysaght v Edwards (1876) 2 Ch D 499, CA . . . . . . . . . . . . . 86, 95, 103, 114
Lyus v Prowsa Developments [1982] 1 WLR 1044 . . . . . . . . . . . . . . . . . 103
Macadam, Re [1946] Ch 73, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . 176, 185

McCaig v University of Glasgow 1907 SC 231 . . . . . . . . . . . . . . . . 40, 43, 48
McCaig’s Trustees v Kirk Session of United Free Church
of Lismore 1915 SC 426 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 42, 48
McCormick v Grogan (1869) LR 4 HL 82, HL . . . . . . . . . . . . . . . . . . . . . 76
xxii Table of Cases
McGovern v Attorney General [1982] Ch 321, [1981]

3 All ER 493, HC . . . . . . . . . . . . . . . . . . . . 125, 128, 133, 135, 136, 151
McGrath v Wallis [1995] 2 FLR 114, (1995) The Times,

13 April, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
MacJordan Construction Ltd v Brookmount Brostin Ltd
[1992] BCLC 350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
McPhail v Doulton [1971] AC 424, HL . . . . . . . . . 15, 20, 21, 26, 36–7, 44
Manser, Re: Attorney-General v Lucas [1905] 1 Ch 68 . . . . . . . . . . . . . . 132
Mareva Compania Naviera SA v International Bulk
Carriers SA [1975] 2 Lloyds Rep 509 . . . . . . . . . . . . . . . . . . . . . . . 8, 228
Margulies v Margulies (2000) 2 ITELR 641, [2000] All ER
(D) 344, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Mariette, Re [1915] 2 Ch 284 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Martin v City of Edinburgh District Council [1989] 1 PLR 9,
1988 SLT 329, 1988 SCLR 90, Ct of Sess. . . . . . . . . . . . . . . . . . . . . . 172
Mason v Fairbrother [1983] 2 All ER 1078 . . . . . . . . . . . . . . . . . . . 198, 199
Medlock, Re, Ruffle v Medlock (1886) 55 LJ Ch 738,
54 LT 828, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 194
Midland Bank v Cooke [1995] 4 All ER 562 . . . . . . . . . . . . . . . . . . 103, 116
Midland Bank v Wyatt [1995] 1 FLR 696 . . . . . . . . . . . . . . . . . 19, 26, 30–1
Miller v Jackson [1977] QB 966, [1977] 3 All ER
338, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Miller’s Trust Deed, Re (1978) 75 LSG 454 . . . . . . . . . . . . . . . . . . . 208, 209
Mills v Haywood (1877) 6 Ch D 196 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Milroy v Lord (1862) 31 LJ Ch 798 . . . . . . . . . . . . . . . . . . . . . 56, 57, 61, 62
Montagu’s Settlement Trusts, Re [1987] Ch 246, HC . . . . . . . . 97, 123, 124
Moore v McGlynn (1894) 1 IR 74, (1874) LR 18 Eq 474 . . . . . . . . . . . . 161
Morice v Bishop of Durham (1804) 9 Ves Jr 399, (1805)
10 Ves Jr 522 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 42, 48
Morris v Morris [2008] EWCA Civ 257, [2008] Fam Law
521, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Moss, Re [1949] 1 All ER 495 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Moss v Cooper (1861) 1 J & H 352, HL . . . . . . . . . . . . . . . . . 71, 72, 76, 78
Mussett v Bingle [1876] WN 170, HC . . . . . . . . . . . . . . . . . . . . . . . 43, 48–9
Nant-y-glo and Blaina Ironworks Co v Grave (1878)

12 Ch D 738 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
National Anti-Vivisection Society v IRC [1948] AC 31,
[1947] 2 All ER 217, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Nestlé v National Westminster Bank [1993]
1 WLR 1260, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172, 179
Neville v Wilson [1997] Ch 144, [1996] 3 All ER 171,
[1996] 3 WLR 460, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Table of Cases xxiii
Neville Estates Ltd v Madden and Others [1962] Ch 832,

[1961] 3 All ER 769, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 45, 52
Niyazi’s Will Trusts, Re [1978] 3 All ER 785, HC . . . . . . . . . . . . . . . . . . 130

Nottage, Re [1895] 2 Ch 649 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131, 134
OT Computers Ltd v First National Tricity Finance Ltd

[2003] EWHC 1010, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Oatway, Re [1903] 2 Ch 356. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Olins v Walters [2009] Ch 212, [2008] EWCA Civ 782 . . . . . . . . . . 95, 125
Oldham, Re [1925] Ch 75, HC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94, 118
Oppenheim v Tobacco Securities Trust Co Ltd [1951]
AC 297, [1951] 1 TLR 118, [1951] 1 All ER 31, HL . . . . . . . . 136, 153
Osoba, Re [1979] 1 WLR 247, CA . . . . . . . . . . . . . . . . . . . . . . . 89, 103, 108
Ottaway v Norman [1972] Ch 698, [1971] 3 All ER
1325, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71, 73, 75, 76, 79, 86, 96
Oughtred v Inland Revenue Commissioners [1960] AC 206,
HL [1958] Ch 383, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 17, 25
Oxley v Hiscock [2004] EWCA Civ 546, [2005] Fam
211, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102, 103, 116
Palmer v Simmonds (1854) 2 Drew 221, HC . . . . . . . . . . . . . . . . . 19, 26, 31

Paragon Finance v Thakerar [1999] 1 All ER 400, CA . . . . . . . . . . . . . . . 93
Paradise Motor Co, Re [1968] 1 WLR 1125, CA . . . . . . . . . . . . . . . . . 15, 17
Patel v Ali [1984] Ch 283, [1984] 1 All ER 978 . . . . . . . . . . . . . . . 217, 230
Paul v Constance [1977] 1 All ER 195, [1977] 1 WLR
527, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 26, 28, 56, 58, 63
Pauling’s Settlement Trusts, Re [1964] Ch 303,
CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 196, 197, 208, 210, 220
Pearson v Lehman Brothers Finance SA [2010] EWHC
2914 (Ch), [2010] All ER (D) 232 (Nov), Ch D . . . . . . . . . . . . . . . . . 19
Peggs v Lamb [1994] Ch 172, 195, [1994] 2 All ER 15,
[1994] 2 WLR 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139, 141
Pennington v Waine and Others [2002] 1 WLR 2075,
[2002] All ER (D) 24, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57, 62, 64
Pettingall v Pettingall (1842) 11 LJ Ch 176 . . . . . . . . . . . . . . . . . . 40, 43, 49
Pettitt v Pettitt [1970] AC 777, [1969] 2 All ER
385, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91, 92, 98, 100, 104, 111
Peyman v Lanjani [1985] Ch 457, [1984] 3 All ER 703, CA . . . . . . . . . 218
Phillips v Royal Society for the Protection of Birds
[2012] EWHC 618 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138, 155
Pilkington v IRC [1964] AC 612, [1962] 3 All ER 622. . . . . . 187, 195, 196
Pinion (Decd), Re, Westminster Bank Ltd v Pinion
and Another [1965] 1 Ch 85, CA . . . . . . . . . . . . . 125, 131, 133, 145–6
xxiv Table of Cases
Pirbright v Salway [1896] WN 339, Ch D . . . . . . . . . . . . . . . . . . . . . . 40, 43

Plumptre’s Marriage Settlement, Re, Underhill v
Plumptre [1910] 1 Ch 609 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58, 65

Polly Peck International plc (in administration)
(No 2), Re: Marangos Hotel Co Ltd v Stone [1998]
3 All ER 812, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Polly Peck International plc (in administration)
(No 5), Re [1998] 3 All ER 812 . . . . . . . . . . . . . . . . . . . . . . 103, 113–14
Posner v Scott-Lewis [1987] Ch 25 . . . . . . . . . . . . . . . . . . . . . . . 7, 217, 229
Power, Re [1947] Ch 572 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198, 200
Price v Strange [1978] Ch 337, [1977] 3 All ER 371 . . . . . . . . . . . . . . . 217
Pride of Derby Angling Association v British Celanese
and Others [1953] Ch 149 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208, 215
Printers’ and Transferrers’ Amalgamated Trades Protection
Society, Re [1899] 2 Ch 84, HC . . . . . . . . . . . . . . . . . . . . . . . . 40, 46, 90
Protheroe v Protheroe [1968] 1 All ER 1111, [1968]
1 WLR 519, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165, 176
Pryce, Re, Nevill v Pryce [1917] 1 Ch 234, HC . . . . . . . . . . . . . . . . . . . . . 59
Pullan v Koe [1913] 1 Ch 9, HC . . . . . . . . . . . . . . . . . . . . . . . . . . 56, 58, 65
Quadrant Visual Communications Ltd v Hutchinson

Telephone (UK) Ltd (1991) Times, 4 December, CA . . . . . . . . . . . . . 217
Queensland Mines v Hudson (1978) 18 ALR 1, (1979)
42 MLR 711 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177, 183–4
R v District Auditor No 3 Audit District of West Yorkshire

Metropolitan County Council ex parte West Yorkshire
Metropolitan County Council (1986) 26 RVR 24, DC . . . 15, 21, 39, 41
R v Ghosh [1982] QB 1053 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
R v Secretary of State for Transport, ex parte Factortame Ltd,
sub nom Factortame Ltd v Secretary of State for Transport
[1990] 2 AC 85, [1989] 2 All ER 692, HL . . . . . . . . . . . . . . . . . . . . . 214
Ralli’s Will Trusts, Re [1964] Ch 288, HC . . . . . . . . . . . . . . . . . . . . . . 58, 63
Reading v Attorney-General [1951] AC 507 . . . . . . . . . . . . . . . . . . 176, 182
Recher’s Will Trusts, Re [1972] Ch 526, [1971] 3 All ER
401, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45, 53
Redland Bricks Ltd v Morris [1970] AC 652 . . . . . . . . . . . . . . . . . . . . . . 214
Rees Wills Trust, Re [1950] Ch 204, CA . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378, HL,
[1967] 2 AC 134n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165, 177, 182
Remnant’s Settlement Trusts, Re, [1970] Ch 560 . . . . . . . . . . 198, 202, 207
Resch’s Will Trusts, Re [1969] 1 AC 514 . . . . . . . . . . . . . . . . . 133, 135, 149
Ridgwell v Ridgwell [2007] EWHC 2666 (Ch) . . . . . . . . . . . . . . . . . . . . 201
Table of Cases xxv
Roberts, Re [1946] Ch 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Robinson (deceased), Re [1951] Ch 198 . . . . . . . . . . . . . . . . . . . . . . . . . 133
Rose, Re, Rose v IRC [1952[ Ch 499, [1952] 1 All ER 1217,

CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56, 57, 61, 62
Rouchefoucauld v Boustead [1897] 1 Ch 196 . . . . . . . . . . . . . . . . . . . 18, 22
Rowntree (Josehp) Memorial Trust Housing Association Ltd
v Attorney-General [1983] Ch 159, [1983]
1 All ER 288, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Royal Brunei Airlines Sdn Bhd v Tan Ming [1995]
2 AC 378, [1995] 3 WLR 64, [1995] 3 All ER 97 . . . . . . 86, 96, 119–20
Royal Choral Society v Inland Revenue Commissioners
[1943] 2 All ER 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130, 146, 149
Royal College of Surgeons of England v National Provincial
Bank Ltd [1952] 1 All ER 984 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Ryan v Mutual Tontine Westminster Chambers
Association [1893] 1 Ch 116 . . . . . . . . . . . . . . . . . . . . . . . . . 7, 217, 229
Rymer, Re [1895] 1 Ch 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138, 139, 154
Sacred Hands Spiritual Centre’s Application for Registration

as a Charity [2006] WTLR 873 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Salusbury v Denton (1857) 3 K & J 529, HC . . . . . . . . . . . . . . . . . . . . . 137
Sanders’ Will Trust, Re [1954] 1 Ch 265, ChD, [1954]
1 All ER 667, [1954] 2 WLR 487 . . . . . . . . . . . . . . . . . . . . 125, 130, 144
Sanderson’s Trusts, Re (1857) 3 K & J 497, 26 LJ
Ch 804 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Satterthwaite’s Will Trusts, Re [1966] 1 WLR 277, CA. . . . . . . . . . . . . . 138
Saunders v Vautier [1835–42] All ER 58, (1841) Cr &
Ph 240 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198, 199, 202
Sayers v Collyer (1884) 28 Ch D 103, 54 LJ Ch 1, [1881–5]
All ER Rep 385, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Scarisbrick, Re, Scarisbrick’s Will Trusts [1951]
Ch 622, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125, 130, 135, 143
Schmidt v Rosewood Trust Ltd [2003] 2 WLR 1442,
[2003] 3 All ER 76, PC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174, 181–2
Scott v National Trust [1998] 2 All ER 705. . . . . . . . . . . . . . . . . . . 167, 178
Scottish Burial Reform and Crematorium Society v Glasgow
Corporation [1968] AC 138, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Scowcroft, Re [1898] 2 Ch 638, HC . . . . . . . . . . . . . . . . . . . . . . . . . 131, 135
Seale’s Marriage Settlement, Re [1961] 3 All ER 136 . . . . . . . . . . . . . . . 202
Sen v Headley [1991] Ch 425, [1991] 2 WLR 1308, CA . . . . . . . 56, 59, 69
Series 5 Software v Clarke [1996] 1All ER 853 . . . . . . . . . . . . . . . . . . . . 215
Sharpe (a Bankrupt), Re [1980] 1 WLR 219, [1980]
1 All ER 198, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
xxvi Table of Cases
Shaw, Re [1958] 1 All ER 245n, CA, on appeal from [1957]

1 All ER 745, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 130, 145
Shaw’s Will Trust, Re [1952] 1 All ER 712 . . . . . . . . . . . . . . . . . . . . . . . 130

Shelfer v City of London Electric Lighting Co [1895]
1 Ch 287 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208, 216
Shephard v Cartwright [1955] AC 431, [1954]
3 All ER 649 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86, 91
Shepherd Homes v Sandham [1971] 1 Ch 340 . . . . . . . . . . . . . . . . . . . . 216
Shipwrecked Fishermen’s and Mariners’ Royal
Benevolent Society, Re [1959] Ch 220 . . . . . . . . . . . . . . . . . . . . . . . . 200
Sick and Funeral Society of St John’s Sunday School
Golcar, Re [1973] Ch 51, [1972] 2 All ER 439,
Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 46, 90
Siffert, Re (1961) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198, 201
Sinclair Investments (UK) Ltd Holding SA v Versailles
Trade Finance Ltd [2011] EWCA Civ 722, CA . . . . . . . . . . . . . 176, 184
Sky Petroleum Ltd v VIP Petroleum Ltd [1974] 1 WLR 576. . . . . . . . . . 214
Slevin, Re, Slevin v Hepburn [1891] 2 Ch 236, CA . . . . . . . . . . . . 138, 139
Smith, Re, Public Trustee v Aspinall [1928] Ch 915, HC . . . . . . . . . . 83, 85
Snowden, Re, Smith v Spowage and Others [1979]
Ch 528, [1979] Conv 448, HC . . . . . . . . . . . . . . . . . . . 71, 73, 74, 76, 80
Solle v Butcher [1950] 1 KB 671 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
South Carolina Insurance Co v Assurantie Maatschappij
de Zeven Provincien NV [1987] AC 24, [1986]
3 All ER 487, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
South Place Ethical Society, Re [1980]
1 WLR 1565, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132, 147
Space Investments Ltd v Canadian Imperial Bank of
Commerce Trust Co (Bahamas) Ltd [1986] 1 WLR 1072 . . . . . . . . . 213
Speight v Gaunt (1883) 9 App Cas 1 . . . . . . . . . . . . . . . . 157, 161, 187, 191
Spiller v Bolton (1947) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Sprange v Barnard (1789) 2 Bro CC 585, CA . . . . . . . . . . 15, 19, 20, 26, 32
Stack v Dowden [2007] UKHL 17, [2007] 2 AC
432, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99–102, 110, 116
Staden v Jones [2008] 2 FLR 1931 . . . . . . . . . . . . . . . . . . . . . . . . . 18, 26, 27
Standford, Re (1924) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Starglade Properties Ltd v Nash [2010] EWCA
Civ 1314, [2011] Lloyd’s Rep FC 102, CA . . . . . . . . . . . . . . . . . . . . . . 97
Stead, Re, Witham v Andrew [1900] 1 Ch 237, HC . . . . . . . . . . . . . . . . . 76
Steed’s Will Trust, Re, Sandford v Stevenson [1960]
Ch 407, [1960] 1 All ER 487 . . . . . . . . . . . . . . . . . . . . . . . . . . . 201, 206
Steel’s Will Trusts, Re, National Provincial Bank Ltd
v Steele [1948] Ch 603, HCM . . . . . . . . . . . . . . . . . . . . . 19, 26, 30, 198
Table of Cases xxvii
Stock v McAvoy (1872) LR 15 Eq 55 . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Strakosch, Re [1949] Ch 529, 539, [1949] 2 All ER 6,
[1949] LJR 1477 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Stratton, Re, Knapman v Attorney-General [1931]
1 Ch 197, 100 LJ Ch 62, [1930] All ER Rep 255, CA . . . . . . . . . . . . 132
Strickland’s Will Trusts, Re, National Guarantee and
Suretyship Association Ltd v Maidment [1936]
3 All ER 1027, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Strong v Bird (1874) LR 18 Eq 315, CA . . . . . . . . . . . . . . . . . 56, 59, 67, 68
Suffert’s Settlement, Re [1961] Ch 1, HC . . . . . . . . . . . . . . . . . . . . . . . . 203
Sutton, Re: Stone v Attorney-General (1885)
28 Ch D 464 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 137
Swain v The Law Society [1983] 1 AC 598, [1982]
2 All ER 827, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
TB, Re [1967] Ch 247, [1966] 3 All ER 509 . . . . . . . . . . . . . . . . . . . . . . . 16

T’s Settlement Trusts, Re [1964] Ch 158, [1963]
3 All ER 759, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . 82, 84, 198, 202, 204
Target Holdings Ltd v Redferns (A Firm) [1996] AC 421,
[1995] 3 All ER 785 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208–10, 219
Taylor v Plumer (1815) 3 M & S 562 . . . . . . . . . . . . . . . . 208, 211, 212, 222
Taylor v Taylor (1875) LR 20 Eq 155, Ch D . . . . . . . . . . . . . . . . . . . . . . . 195
Templeton Insurance Ltd v Penningtons Solicitors [2006]
All ER (D) 191, HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Thomas v Howell (1874) LR 18 Eq 198, 43 LJ Ch 511 . . . . . . . . . . . . . . 135
Thomas v Time Books [1966] 1 WLR 911. . . . . . . . . . . . . . . . . . . 56, 57, 60
Thompson v Thompson (1844) 13 LJ Ch 455 . . . . . . . . . . . . . . . . . 126, 129
Thomson, Re, Thomson v Allen [1930] 1 Ch 203 . . . . . . . . . . . . . . 176, 185
Thorner v Major, sub nom Thorner v Curtis [2009]
UKHL 18, [2009] 3 All ER 945, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Thornton v Howe (1862) 31 Beav 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Tilley’s Will Trust, Re [1967] Ch 1179 . . . . . . . . . . . . . . . . . 208, 212, 225–6
Tinker v Tinker [1970] 1 All ER 540, [1970] P 136, CA . . . . . . . . . . . . . 91
Tinker’s Settlement Trusts, Re [1960] 3 All ER 85n,
[1960] 1 WLR 1011, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198, 202
Tinsley v Milligan [1994] 1 AC 340, [1993] 3 All
ER 65, [1993] 3 WLR 126, HL, affirming [1992]
Ch 310, [1992] 2 All ER 391, CA . . . . . . . . . . . . 91, 100, 104, 111, 112
Tito v Waddell (Ocean Island No 2) [1977] Ch 106,
[1977] 2 WLR 496 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Town Investments Ltd v Department of the Environment
[1978] AC 359, [1977] 1 All ER 813, HL . . . . . . . . . . . . . . . . . . . . . 158
Tribe v Tribe [1996] Ch 107, [1995] 3 WLR 913, CA . . . . . . . . 91, 104, 112
xxviii Table of Cases
Trustee of the Property of FC Jones and Sons (a firm)

v Jones [1997] Ch 159, [1996] 4 All ER 721, [1996]
3 WLR 703, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212, 223

Tuck’s Settlement Trusts, Re [1978] Ch 49, HC . . . . . . . . . . . . . . . . . . . . 26
Turner, Re, Barker v Ivimey [1897] 1 Ch 536, Ch D . . . . . . . . . . . . . . . . 210
Turner v Turner [1984] Ch 100, [1983] 2 All ER 745, Ch D . . . . . . . . . 167
Turner’s Will Trusts [1937] Ch 15 . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 193
Twinsectra v Yardley [2002] 2 All ER 377, [2002]
UKHL 12, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88, 97, 120, 121
United Grand Lodge of Ancient Free and Accepted Masons

v Holborn Borough Council [1957] 1 WLR 1090, HC . . . . . . . . . . . 132
Vandervell v Inland Revenue Commissioners [1967] 2 AC 291,

HL, affirming [1966] Ch 261, CA, on appeal from [1966]
Ch 261, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 17, 24, 87, 89, 103
Vandervell’s Trusts, Re (No 2) [1974] Ch 269, [1974]
1 All ER 47, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26–7, 86, 105–6
Varsani v Jesani [1999] Ch 219, [1998] 3 All ER 273, CA . . . . . . . . . . . 132
Verge v Somerville [1924] AC 650 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Vernon’s Will Trusts, Re [1972] Ch 300 . . . . . . . . . . . . . . . . . . . . . . 138, 139
Vickery, Re: Vickery, Vickery v Stephens [1931]
1 Ch 572 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 191, 209
Vinogradoff, Re [1935] WN 68, HC . . . . . . . . . . . . . . . 86, 90, 103, 110, 158
Walker v Stones [2000] 4 All ER 412, [2000] Lloyds

Rep PN 877, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . 162, 163–4, 210, 222
Wallgrave v Tebbs (1855) 2 K & J 313, HC . . . . . . . . . . . . . . . 71, 72, 76, 77
Warren v Gurney [1944] 2 All ER 472, CA . . . . . . . . . . . . . . . . . . . . . . . . 92
Waterman’s Will Trusts, Re, Lloyds Bank Ltd v Sutton
[1952] 2 All ER 1054, Ch D . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157, 162
Webster v Cecil (1861) 30 Beav 62 . . . . . . . . . . . . . . . . . . . . . 5, 7, 217, 230
Wedgwood, Re, Allen v Wedgwood [1915] 1 Ch 113, CA. . . . . . . . 133, 150
West Sussex Constabulary’s Widows, Children and
Benevolent (1930) Fund Trusts, Re [1971] Ch 1, HC . . . . . 90, 104, 108
Westdeutsche Landesbank Girozentrale v Islington
London Borough Council [1996] AC 669, [1996]
2 All ER 961, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93, 104, 106
Weston’s Settlement Trust, Re [1969]
1 Ch 223, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198, 201, 203–4
Whitehead’s Will Trusts, Re, Burke v Burke [1971]
2 All ER 1334, [1971] 1 WLR 833, Ch D . . . . . . . . . . . . . . . . . . . . . 202
Wilkes v Allington [1931] 2 Ch 104 . . . . . . . . . . . . . . . . . . . . . 56, 59, 68–9
Table of Cases xxix
Williams (1942), see Ashman v Price and Williams—

Williams v Parris [2008] EWCA Civ 1147, [2009]
1 P & CR 169, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Williams’ Trustees v IRC [1947] AC 447, HL . . . . . . . . . . . . . . . . . 133, 135
Wilson, Re [1913] 1 Ch 314 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Windeatt’s Will Trusts, Re [1969] 1 WLR 692 . . . . . . . . . . . . . . . . . . . . . 202
Woodard v Woodard [1995] 3 All ER 980, [1992] RTR 35, (1991)
The Times, 18 March, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59, 69–70
Woodham Deceased, Re [1981] 1 All ER 202, HC . . . . . . . . . . . . . 138, 139
Wragg, Re [1918–19] All ER 233 . . . . . . . . . . . . . . . . . . . . . . . . . . . 165, 167
Wright, Re, Blizard v Lockhart [1954] Ch 347, [1954]
2 All ER 98, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138, 139, 155
Wright v Atkyns (1823) 37 ER 1051 . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 18
Wrotham Park Estates Ltd v Parkside Homes Ltd [1974]
1 WLR 798, [1974] 3 All ER 321 . . . . . . . . . . . . . . . . . . . . . . . . 215, 227
Wyndham v Egremont [2009] EWHC 2076 (Ch) . . . . . . . . . . . . . . 201, 205
Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55,

[2008] 4 All ER 713, HL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Young, Re [1951] Ch 344, HC . . . . . . . . . . . . . . . . . . . . 74, 76, 81, 126, 129
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1 Introduction to
Equity & Trusts
History of equity Equitable maxims
• Defects in common law writ system • Equity acts in personam.

and inadequate remedies. • Equity looks to intention, not the
• Petitioning of King for fair solution as form.
‘fountain of justice’. • Delay defeats equity.
• Delegation of task to Lord • Equity regards that which should
Chancellor. be done as being done.
• Creation of separate Court of • Equity is equality.
Chancery – staffed by clerics. • He who comes to equity must
• Solutions based on discretion of come with clean hands.
court. • Equity will not assist a volunteer.
• Conflict in Earl of Oxford’s case – in • First in time prevails.
conflict, equity prevails. • Equity will not suffer a wrong to be
• Merged with common law in without a remedy.
Judicature Acts 1873 and 1875. • Equity will not allow statute to be
• Still developing, e.g. search orders used as an engine of fraud.
and freezing injunctions. • Equity follows the law.
Equitable remedies Definition/classification of trusts
• Injunctions – to prevent occurrences • Settlor/donor transfers real or

such as a breach of trust. personal property to trustee to
• Specific performance – to ensure a use for benefit of beneficiaries or
contract is carried out. for purposes (charity).
• Rescission – to return parties to a • Can be expressed by settlor,
pre-contractual position. implied by law or statutory.
• Rectification – to change a • Can be private (human
document to reflect an actual beneficiaries) or public, e.g.
agreement. charitable purposes.
• Can be fixed (settlor’s terms) or
discretionary (decided by trustee).
2 Introduction to Equity & Trusts
Equitable interests Context of trusts

• Equitable redemption of a mortgage • Pension funds.

– to allow larger loans with security • Investment – unit trusts.
for lender, based on legal title. • Security for loans.
• Lien – to hold property until a debt • Voluntary arrangements with
paid. creditors.
• Restrictive covenants – to retain • NHS trusts.
control over use of land sold. • Trade union funds.
• Easements – to enable legitimate • Co-ownership.
use of another person’s land. • Clubs and unincorporated
• The trust itself – a means of splitting associations.
legal and beneficial ownership to • Charities.
protect beneficial owner by allowing • Non-charitable purposes.
him to enforce terms of trust. • Protection of minors.
• Nominees in property transfers.
• Protective trusts.
• Secret trusts.
• Preserving wealth.
• Disputes over property ownership.
• Tax saving.
Z 1.1 A brief history of equity

1.1.1 The origins of equity
1 Following the Norman Conquest, law was at first administered by the
King’s Council, the Curia Regis.
2 Later, a system of courts was developed with specific jurisdiction.
3 Henry II played a major role in developing the legal system and created
a professional judiciary, administering courts that dispensed justice on
‘circuits’ travelling around the country, and in a settled bench at
Westminster.
4 But the common law was formal, slow-moving and highly technical.
5 A variety of significant defects – it was out of the need to inject fairness
and justice into the legal system that equity grew. Defects included:
O the writ system developed so that judges could reach decisions based
on established legal reasoning;
O but became very formalised; the maxim ‘no remedy without a writ’;
O writ system also depended on ‘oral pleading’ – which had deficiencies
– a mistake in reciting the Latin could lose the action;
A brief history of equity 3
O with growth in number of writs to respond to new ‘original’ types of

action, law became bulky for lawyers who were bound to remember
writs for oral pleadings;

O because of this, Provisions of Oxford 1258 and Statute of Westmin-
ster 1285 restricted introduction of new writs – with consequent
injustice to potential claimants without a formal claim;
O use of juries unpredictable as jurors (in trial by presentiment, in
effect a type of witness) could be bribed or intimidated;
O common law courts provided only one remedy – damages, or money
compensation – often an ineffective remedy, particularly in the case
of interference in a person’s property rights;
O common law preoccupied with form – e.g. parol evidence rule.
6 Equity developed to combat deficiencies – initially from disgruntled liti-
gants petitioning the king for fairer answer as ‘fountain of all justice’.
7 But extent to which people petitioned him led to delegation of responsi-
bility to the Lord Chancellor – who was a cleric (churchman), and
considered to be ‘keeper of the king’s conscience’.
8 Extent of petitioning led to creation of separate court – Court of
Chancery, staffed by clerks of Chancellor – independent court in 1474.
9 Court not bound by writ system – based decisions on fact, not law – and
cases heard in English, not Latin.
10 New procedures introduced included:
O an order for disclosure of documents;
O a subpoena to compel attendance in court for examination.
11 Because Chancery overruled decisions of the common law courts,
conflict developed between the two.
12 That decisions were based on discretion was a source of contempt in the
common law courts – hence John Sedden’s criticism that ‘if the measure
of equity was the Chancellor ‘s own conscience, one might as well make
the standard measure of one foot the Chancellor’s foot’.
13 Conflict came to a head in the Earl of Oxford’s Case (1616). Ellesmere
incensed Chief Justice Coke of Common Pleas by issuing writs of
habeas corpus, and the king decided that in conflict, equity would
prevail.
14 Eventually, equity became just as formalised as common law and subject
to its own technicalities and was heavily criticised in the nineteenth
century for excessive delays. In the Judicature Acts 1873 and 1875, the
Court of Chancery became a division of the new High Court and
equitable remedies could be awarded in any court alongside the common

law remedy of damages.
15 As a result of potential conflict when administering both types of

remedies, s 25 Judicature Act 1873 provided that in the event of a
conflict of principles, equitable principle should prevail.
16 So equity is defined as ‘that body of legal principles built up by
the old Court of Chancery, supplemental and superior to the common
law’.
17 And equity has been responsible for creating a variety of interests and
remedies otherwise unavailable at common law, and is still capable of
expanding, e.g. search orders, freezing injunctions.
1.1.2 The equitable maxims

1 The basic character of equity and its key purpose was to introduce
fairness and justice into law – on which basis a system of determining
the outcome of disputes also evolved, based on reaching a fair
solution.
2 These principles guiding judges in a court of equity developed and are
known as the maxims of equity – all have to do with fairness.
3 They are guiding principles and so are only followed subject to the
discretion of the court – they include:
O equity acts in personam:
O an equitable dispute is between the parties;
O so it will not pass onto a third party.
O equity looks to the intention not the form:
O the classic example is equitable redemption of a mortgage;
O the purpose of the mortgage is to secure a higher loan than would
otherwise be possible;
O and the mortgagee is protected by being granted beneficial rights
in the property by the mortgagor.
O delay defeats equity:
O the equitable equivalent of limitation;
O if a person seeking an equitable solution to a legal problem fails to
bring an action in a reasonable time, he may lose remedy (Allcard
v Skinner (1887); Leaf v International Galleries (1950) (both
contract law cases)).
O equity regards that which should be done as being done:

O the remedy of specific performance is an obvious example;

O as is the rule in Howe v Earl of Dartmouth (1802) on the duty to
act fairly between beneficiaries.
O equity is equality:
O equity tends towards an equal division of property unless the
contrary is shown (Burrough v Philcox (1840)).
O he who comes to equity must come with clean hands – and he
who seeks equity must do equity:
O both involve the unwillingness of equity to produce a remedy for
a party who himself behaves unconscionably;
O first refers to past conduct – denial of specific performance for
trying to take advantage of a mistake in a document of transfer
(Webster v Cecil (1861));
O second demands a basic standard for future conduct – person
seeking an injunction to prevent a breach of contract must be
prepared to perform his side of the bargain (Chappell v Times
Newspapers (1975)).
O equity will not assist a volunteer:
O where there is a covenant to settle property by trust, the trust is
only enforceable by those who have provided consideration;
O however, the rule has some well-established exceptions.
O where equities are equal, the first in time prevails:
O whenever trying to assert any equitable right against the owner of
an existing equitable right.
O equity will not suffer a wrong to be without a remedy:
O includes remedies such as specific performance and injunctions
– because damages are inadequate;
O and the trust itself – which allows the beneficial owner to enforce
the trust against the legal owner, the trustee.
O equity will not allow statute to be used as an engine of fraud:
O commonly used where to allow a party to rely on a statutory provi-
sion is to another’s detriment, e.g. the requirement of writing in
s 53 Law of Property Act 1925 (Bannister v Bannister (1948));
O also the basis of the secret trust – trust enforceable despite not
conforming to the Wills Act.
O equity follows the law:

O equity acts in personam by seeking to prevent injustice, not by

replacing or overruling common law;
O so restrictive covenants enforced to avoid unconscionable behav-
iour by parties subject to them (and genuine interests of legal
owner of land are not interfered with);
O but positive covenants are not enforced because this would inter-
fere with the common law doctrine of privity (the person trying
to enforce the covenant not being a party to it).
1.1.3 Equitable interests (beside the trust)

1 Equitable redemption of a mortgage:
O equitable redemption of a mortgage allows wider land ownership;
O involves conveyance of equitable interests in property with provision
for redemption, i.e. upon repayment of the loan but will usually now
be a legal mortgage;
O mortgagor can use land purchased as collateral for loan;
O mortgagee holds legal interest in land so loan is protected if mortgagor
defaults on loan.
2 Lien:
O a device of commercial law that again splits proprietary interests;
O creditor of a debt can legally hold property that is subject to the debt
until the debt is paid.
3 Restrictive covenants:
O a way of retaining proprietary interest over land that has been sold;
O vendor inserts a covenant with initial purchaser, e.g. preventing use
of land for business purposes;
O all subsequent owners of the land are bound – and all subsequent
owners of the vendor’s land can enforce the covenant.
4 Easements:
O a means of securing rights over another person’s property;
O could be, e.g. rights of way – and are enforceable;
O easements can also be legal.
1.1.4 Equitable remedies

1 Injunctions:
O an enforceable order of the court to prevent unjust behaviour, e.g.
breach of contract, breach of trust;
O usually prohibitory rather than mandatory because of the difficulty of
overseeing them otherwise;
O can be final (include all necessary relief), or interim (in advance of
trial of the issue).
2 Specific performance:
O enforceable order of court for contract be carried out, e.g. transfer of
land;
O because of difficulty of enforcing, only available where subject of
contract is unique, e.g. land; and damages would be inadequate –
compare Ryan v Mutual Tontine (Westminster Chambers) Association
(1893) with Posner v Scott-Lewis (1987).
3 Rescission:
O more of relevance to contracts;
O where a vitiating factor would make the contract voidable by one
party, rescission is a remedy putting the parties back to their
pre-contractual position if that is possible to achieve.
4 Rectification:
O appropriate where a written contract is inaccurate as to the actual
terms of the contract;
O where equitable, court will order a written document to be changed
to reflect actual agreement – outcome in Webster v Cecil (1861).
5 Account:
O a trustee must account for all profits made from the position as
trustee or for any losses caused to the trust;
O this is part of the trustee’s personal liability.
6 Tracing:
O tracing is a proprietary remedy;
O and is a basic means of recovering property belonging to the trust.
1.1.5 The scope for expansion and

development
1 Lord Denning in particular thought that there was scope to use equity to
continue to add fairness and justice to the law.
2 The ‘fair and equitable’ cases in implied co-ownership illustrate this,
with resulting and constructive trusts used interchangeably.
3 Developments of specific uses for injunctions also show expansion:
O search orders – originally Anton Piller orders – originated in Anton
Piller KG v Manufacturing Processes Ltd (1976) to permit entry to
defendant’s premises to search for documents that may incriminate
the defendant – so subject to strict constraints;
O freezing injunctions – originally Mareva injunctions – originated in
Mareva Compania Naviera SA v International Bulk Carriers SA (1975)
as means of preventing defendant from disposing of assets to defeat a
judgment – so only awarded subject to strict controls, otherwise may
force defendant out of business.
Z 1.2 The basic character of a trust

1.2.1 The nature of the trust
1 The trust is an instrument originally devised by equity.
2 It helps to distinguish between legal and beneficial ownership of prop-
erty and also to protect beneficial interests.
3 Legal title vests in trustees while beneficial entitlement is with benefici-
aries (in certain cases, e.g. express co-ownership, these may be the same
people).
4 Trustees must carry out requirements of trust according to what is in the
trust instrument or according to law.
5 Courts will uphold wishes of settlor/testator and protect legitimate
interests of all beneficiaries.
6 Mechanism preserves the justice (equity) of the situation.
1.2.2 Definition of a trust

1 A trust is:
O a legal (equitable) arrangement by which:
The basic character of a trust 9
O one person, called settlor/donor (inter vivos) or testator (on

death);
O transfers title in property (whether realty or personalty);

O to another person(s) called the trustee(s) (the person(s) responsible
for administering the trust).
O in doing this the settlor/testator, through the trust instrument, (or
the courts in certain instances):
O directs the trustee(s) to hold or use the property;
O for the benefit of certain persons (donees under an inter vivos gift
– beneficiaries in inheritance on death);
O or for the promotion of certain purposes (and with few exceptions
these purposes must be charitable).
2 If the trustee(s) undertake(s) to carry out directions of settlor/testator
(or of court) then they become subject to a binding legal obligation
which equity will enforce.
3 A trust imposes a duty on a trustee. By contrast a settlor may impose a
power on another person which allows a donee of a power a discretion
whether or not to act.
4 An example of a power is where a settlor grants a power to his surviving
widow to appoint one of their children to money from his estate. The
widow has a choice whether or not to appoint.
5 Trusts always impose imperative duties on the trustee whereas powers
are discretionary.
6 Where a power is imposed on a trustee it is regarded as a fiduciary power.
It means the trustee does not have to exercise the power but the trustee
must consider whether or not to act.
1.2.3 Classifications of trusts

1 Trusts can be classified in different ways according to context.
2 These include:
O classifcation according to method of creation:
O express trusts – created by settlor/testator;
O implied trusts – created usually by operation of law;
O statutory trusts – ‘trusts of land’ under Trusts of Land and
Appointment of Trustees Act 1996.
O classification according to type of beneficiary:

O private trusts – for individual beneficiaries or classes of beneficiary;

O public trusts – usually for a purpose, e.g. charities.
O classification according to the character of the interest:
O fxed trusts – an exact sum identified by the settlor/testator or the
residuary estate;
O discretionary trusts – the interest and the exact distribution of
the property is identified by the trustee.
1.2.4 The context in which trusts operate

1 Trusts originated to protect the family interests of absent knights.
2 The simple mechanism of splitting legal and beneficial interests in prop-
erty has allowed trusts to expand and gain a context in the modern
world as a means of responding flexibly to most problems thrown up by
property ownership.
3 Different uses of the trust include:
O pension funds:
O trust used to protect the fund;
O and for tax concessions advantage.
O investment – unit trusts:
O safer way to invest in shares;
O because the fund is managed by trustees.
O security for loans:
O copying traditional mechanism of mortgage in real property;
O trusts can be attached to loans generally to protect the loan
(Barclays Bank v Quistclose Investments Ltd (1968)).
O voluntary arrangements with creditors:
O creditors subject to the arrangement can be protected as against
other creditors, e.g. during liquidation.
O NHS trusts:
O users of services are not quite in same position as beneficiaries of
a trust;
O but management and administration of facilities are handled in
the same way;
The basic character of a trust 11
O created by National Health Service and Community Care Act

1990.
O trade union funds:

O s 2 Trade Union and Labour Relations Act 1974;
O means funds held on trust for benefit of Union (not members).
O co-ownership of land:
O trust is the accepted method of joint ownership of property;
O before 1996 as a trust for sale;
O since the Trusts of Land and Appointment of Trustees Act
(TOLATA) 1996 as a trust of land.
O clubs and other unincorporated associations:
O only incorporation creates a separate legal personality;
O so if unincorporated, then a trust is a means of holding property
for the benefit of members.
O charities:
O the most common purpose trust;
O but subject to various requirements.
O non-charitable purpose trusts:
O can be trusts for monuments or tombs;
O and specific animals.
O Protection of minors’ interests:
O Law of Property Act 1925 prevents minors from holding the legal
estate of land;
O originally any gift of land to a minor would create a settlement
under Settled Land Act 1925;
O now it would create a trust of land under TOLATA 1996.
O use of nominees in property transfers:
O common in larger purchases of shares;
O used to hide identity of real purchaser.
O protective trusts:
O devised to allow a financially inept beneficiary to have some
control over the property;
O while trustees will ensure that the trust fund does not suffer.
O secret trusts:

O can be fully secret or half secret;

O but in either case trust hides identity of the beneficiary.
O preserving wealth:
O trusts can be used to keep intact a body of wealth that otherwise
may be dissipated.
O disputes over property ownership:
O courts may intervene using implied trusts;
O to distribute ownership fairly.
O tax saving:
O placing property in trust is a common tax-saving device;
O an example is avoiding inheritance tax.
Key Cases Checklist
ґ і >
The contexts in which trusts Equitable Maxims
operate Delay defeats equity
Barclays Bank v Ouistclose Leaf V International Galleries (1950)
Investments Ltd (1968) Allcard V Skinner(1887)
Security for loans
He who conies to equity must do equity
Chappell V Times Newspapers Ltd (1975)
Equity will not allow a statute to be used

as an instrument of fraud
Equity Bannister V Bannister (1948)
Delay defeats equity
1.1.2 Leaf v International Galleries [1950]

2 KB 86 HC
Key Facts
A contract for the sale of a painting, innocently misrepre-

sented as painted by Constable, could not be set aside after
the plaintiff had delayed in bringing an action for five years.
1.1.2 Allcard v Skinner (1887) LR 36 Ch D 145 CA
Key Facts
The claimant sought to rescind gifts of her property which

she had made to a religious order on the basis of undue
influence. The court held that she could not do so because
of her delay in bringing the action.
Key Law
In cases of undue influence, actions must be brought within

a reasonable time after the removal of the influence.
He who comes to equity must do equity/He who

comes to equity must come with clean hands
1.1.2 Chappell v Times Newspapers Ltd [1975]

1 WLR 482 CA
Key Facts
Employees who had been on strike sought an injunction to

restrain their dismissal.
Key Law
The court refused to grant an injunction because the

employees refused to sign an undertaking not to become
involved in strike action in the future in strike action.
Equity will not allow a statute to be used as an

instrument of fraud
1.1.2 Bannister v Bannister [1948] 2 All ER 133 CA
Key Facts
Mrs Bannister sold two cottages to her brother-in-law at

undervalue on an oral undertaking that she would be
allowed to live in one of the cottages rent-free for the rest of
her life. Later he tried to evict her.
Key Law
At common law the promise was not enforceable because

it had not been recorded in writing according to s 40 LPA
1925 (now s 2 LP(MP) Act 1989). The court upheld her right
to remain in the cottage on the basis of the maxim that
equity would not allow the statute to be used as an instru-
ment of fraud.
1.2.4 Barclays Bank v Quistclose Investments Ltd

[1970] AC 567 HL
Key Facts
Quistclose lent money to Rolls Razor, a firm in severe finan-

cial difficulties, in order to pay out dividends which had
been declared on its shares. Before the dividend had been
declared Rolls Razor went into liquidation. Quistclose
claimed that the money lent was held on trust for them, and
since the express purpose was not carried out then it
should be returned to them in full. Barclays Bank claimed
that the money was part of the assets of the firm.
Key Law
It was held unanimously that the money was held on

resulting trust for Quistclose.
Key Link
See 2.6.2 Certainty of intention. There was some doubt as

to whether Quistclose had the intention that the money lent
to Rolls Razor should be held on trust but the courts found
that there was an express trust.
2 The creation of
express private
trusts
f '
Capacity: Trusts of land:
• children - settlements are • testamentary requirements of Wills Act
voidable - cannot hold land • words used must be capable of forming trust
other than behind a trust • s 53 LPA 1925 requires proof in writing
• mentally incapacitated • s 2 Law of Property (Miscellaneous Provisions)
- protected by Court of Act 1989 requires actual written document
Protection under s 95 Mental incorporating all of terms {Firstpost Homes v
Health Act 1983 - and can Johnson).
create trusts (Re Веапеў).
The three certainties:

Trust must be expressed in such a way that the
testator’s instructions can be carried out. Certainty of
intention:
CREATION OF j • words should express an imperative obligation
EXPRESS ( Wright vAtkyns)
• so if words demonstrate a different obligation no
PRIVATE TRUSTS/
i. trust is created (Jones v Lock)
• precatory words, e.g. ‘hope’, ‘desire’ may be too
uncertain for trust to succeed (Re Adams and the
Kensington Vestry} - but see Comisky v
Bowring-Hanbury.
Ґ -------------------- N Certainty of subject matter:
Disposition of existing equitable
interests: • gift must be precisely identified - so ‘remaining part
of what is left’ would fail (Sprange v Barnard)
• by s 53(1 )(c) must be in
• position on shares is different {Hunter v Moss
writing or disposition void
(1994))
• problem is what amounts to
• court may use objective standard in deciding what
a disposition - most likely
comes within gift (Re Golay’s).
given natural meaning (Greyv
Certainty of objects:
IRQ
• the beneficiaries should be clearly identified - or if
• some actions do not count as
part of a class ‘list principle' applies (Re Endacott)
dispositions, e.g. disclaimer
• trustees may use ‘Benjamin orders' for protection
of a beneficial interest (Re
when distributing funds
Paradise Motor Co)
• in discretionary trusts ‘any given postulant’ test is
• where sole owner disposes
used - based on conceptual and evidential
of legal and equitable title
certainty (McPhail v Doulton)
together no written
• unless class is too large then uses ‘administrative
disposition needed
workability’ test (R v District Auditor ex parte West
(Vandervell V IRQ
Yorkshire County Council).
• position of specifically ч____________________________________ -
performable contracts is
more problematic (Oughtred
^vIRQ.___________
16 The creation of express private trusts
Z 2.1 Capacity and the creation of trusts

1 Capacity to create a trust usually goes hand in hand with the ability to
hold or dispose of legal or equitable interests.
2 So two specific instances of parties lacking capacity to create a trust:
O children – minors under age 18:
O any settlement is voidable;
O children cannot hold a legal estate in land – so any land comes to
a child behind a trust.
O mentally incapacitated:
O ability to create a trust is limited by the size of the gift and
relationship with assets owned (Re Beaney (1978));
O Court of Protection can produce settlement for a mentally incapaci-
tated person by virtue of s 95 Mental Health Act 1983 – guiding
principle being what would the person him/herself do if not
incapacitated (Re T.B. (1967)).
Z 2.2 Formalities – general

1 To create a lifetime gift of land – must conform to s 53 Law of Property
Act 1925 and the ‘three certainties’.
2 Section 53 requires written evidence for land – no requirement for
personalty.
3 If gift is testamentary, additional requirements in Wills Act 1837, as
amended, must be followed – written form, signing, witnessing etc.
4 Words used must also always be capable of creating a trust.
5 All the above applies to express trusts but not resulting or constructive.
Z 2.3 Trusts of land

1 Land inevitably requires special formalities – as it does in law of real
property.
2 In the case of trusts of land, two specific provisions are significant:
O by s 53(1)(b) LPA 1925 ‘A declaration of trust respecting any land
or any interest therein must be manifested and proved by some
writing signed by the person who is able to declare such a trust or by
his will’;
Dispositions of existing equitable interests 17
O by s 2 Law of Property (Miscellaneous Provisions) Act 1989

contracts for disposition of land ‘can only be made in writing
and only by incorporating all of the terms which the parties

have expressly agreed in one document’ – so dispositions of land,
including trust, are void if not written (Firstpost Homes v Johnson
(1995)).
Z 2.4 Dispositions of existing equitable

interests
1 By s 53(1)(c) LPA 1925 ‘A disposition of an equitable interest or trust
subsisting at the time of the disposition must be in writing signed by the
person disposing of the same or by his agent thereto lawfully authorised
in writing or by will.’
2 So failure to comply means disposition is void.
3 Key question is what amounts to a ‘disposition’.
4 Most cases on meaning of disposition involve tax avoidance schemes –
so not surprising that courts take a tough line.
5 Case law suggests that the word ‘disposition’ is to be given its natural
meaning (Grey v IRC (1957)) – so oral instructions will count as a
failed disposition for lack of written form.
6 However, where a sole owner disposes of both legal and equitable title
simultaneously there may be no need for a written disposition of the
equitable interest as long as the formalities for the legal estate are
complied with (Vandervell v IRC (1967)).
7 An assignment of an equitable interest is straightforwardly a disposition
and will be void unless in writing.
8 However, certain actions appear not to be dispositions, e.g.: Dispositions
of existing equitable interests
O a disclaimer of a beneficial interest (Re Paradise Motor Co (1968));
O nominations under a staff pension scheme (Re Danish Bacon Co Staff
Pension Fund Trusts (1971));
O a declaration by a beneficiary that he holds his beneficial interest for
someone else.
9 The much more difficult question concerns the position of specifically
enforceable contracts for sale – here the main emphasis may be on
preventing tax avoidance rather than following technicalities absolutely
(Oughtred v IRC (1960)).
Z 2.5 Formality and fraud

1 One further key issue is whether or not a trust can be set aside to avoid
sanctioning fraud.
2 Two equitable maxims may apply:
O equity looks to the intention and not the form;
O equity will not allow statute to be used as a cloak of fraud.
3 It has been held possible to set aside operation of s 53(1)(b) in order to
avoid obvious fraud (Rochefoucauld v Boustead (1897)).
4 A further example of equity acting to prevent a fraud is the secret trust.
Z 2.6 The three certainties

2.6.1 Introduction
1 For a trust to be formed, settlor must make intentions absolutely
clear.
2 So the trust must be sufficiently clear for trustee to carry out all instruc-
tions and for court to be able to enforce it against trustee.
3 So, besides statutory formalities, creation of an express private trust
depends on the presence of the ‘three certainties’ test laid down by Lord
Langdale in Knight v Knight (1840):
O certainty of intention – the words creating a binding obligation;
O certainty of subject matter – the property subject to the trust;
O certainty of objects – the beneficiaries.
4 But certainty has entirely different meaning in relation to purpose trusts.
5 In all cases there is interrelationship between the three and certainty is
a question of construction for the courts.
2.6.2 Certainty of intention

1 The most significant point is that the ‘words must be imperative’: Lord
Eldon in Wright v Atkyns (1823).
2 The words must make clear that trustee is under a binding obligation.
3 The best words are clearly ‘to hold upon trust for’ – but the word ‘trust’
is not vital – Megarry J in Re Kayford (1975) – and it may not even be
necessary to use the word ‘trustee’ (Staden v Jones (2008)).
The three certainties 19
4 Only sufficient intention to create a trust must be shown (Paul v

Constance (1977)).
5 If the words demonstrate a different intention then there is no trust

created (Jones v Lock (1865)).
6 A further difficulty concerns use of ‘precatory’ words, e.g. ‘hope’, ‘desire’.
7 Traditionally, it was accepted that these could still create a trust – but a
turning point came in Lambe v Eames (1871).
8 And they are generally now taken to be too uncertain to create a trust
(Re Adams and the Kensington Vestry (1884)).
9 But context is all-important and it is still possible to construe a trust
from precatory words if sufficient intention can be found (Comiskey v
Bowring-Hanbury (1905)).
10 Specific words accepted in the past as creating or not creating a trust can
act as precedents (Re Steele’s Will Trusts (1948)).
11 But courts only accept trust intended to be acted upon – and
reject a sham covering an ulterior purpose (Midland Bank plc v Wyatt
(1995)).
12 A court will accept evidence of conduct as sufficient to show an
intention to create a trust (Re Farepak Foods and Gifts Ltd (2008)).
2.6.3 Certainty of subject matter

1 Almost anything can form the subject matter of a trust – but the prop-
erty settled must be identified precisely.
2 So there are many examples of choice of words that failed to create a
trust:
O ‘the bulk of my estate’ (Palmer v Simmonds (1854));
O ‘such parts of my estate as she shall not have sold’ (Re Jones (1898));
O ‘the remaining part of what is left’ (Sprange v Barnard (1789)).
3 In the case of chattels if the specific property is not identified then, as is
the case with commercial law where property will not pass, neither will
a trust be created (Re Goldcorp Exchange Ltd (1994)).
4 Although quite different problems are created where the property is
shares (Hunter v Moss (1994)) or other financial securities (Pearson v
Lehman Brothers Finance SA (2010)).
5 So the position is different (Re London Wine Co (Shippers) (1986)).
6 Absence of certainty of subject matter can have two possible results:
O the gift goes absolutely to the first donee;

O the gift fails and falls on resulting trust back to the settlor’s estate
(Sprange v Barnard (1789)).
7 One further problem, besides identifying what property comes within
the trust, is how it is distributed between beneficiaries – in which the
court might use an objective standard (Re Golay’s Will Trusts (1965)).
8 But if division of property is left to the discretion of a specific individual
who can no longer exercise discretion then the gift fails (Boyce v Boyce
(1849)).
2.6.4 Certainty of objects

1 In fixed trusts (i.e. where obligation is to named beneficiaries or to all
members of a named class), trustees must know the precise identities of
the objects – known as the ‘list principle’ (Re Endacott (1959)):
O in fixed trusts the restrictive principle still applies so where a class
of beneficiaries is named in an inconclusive way the gift fails and
property returns to the settlor under a resulting trust (OT Computers
Ltd v First National Tricity Finance Ltd (2003)).
2 The general rule is that the description of the beneficiaries should be
neither conceptually nor evidentially uncertain – otherwise the gift will
fail.
3 To avoid unfairness when the class is certain but individual members
cannot be found the courts have developed the ‘Benjamin order ‘ from
Re Benjamin (1902) – this authorises distribution to known benefici-
aries, and missing beneficiaries then claim against existing beneficiaries
rather than against the trustees.
4 The rule on certainty of objects should be no wider than necessary to
allow the trustees to undertake their duties properly.
5 Traditionally, with discretionary trusts, the same rule applied – benefici-
aries must all be identifiable (IRC v Broadway Cottage Trust (1955)).
6 In McPhail v Doulton (1971) the position was examined in detail since
with the size of the apparent class of beneficiaries equal distribution
would have been completely impracticable:
O the court adopted the ‘any given postulant test’ derived from rules
on powers in Re Gulbenkian (1968): ‘power is valid if it can be said
with certainty whether any given individual is or is not a member of
the class and does not fail simply because it is impossible to ascertain
every member of the class’;
The three certainties 21
O in analysing test CA (in Re Baden’s Deed Trusts (No 2) (1972))

distinguished between conceptual and evidential certainty:
O ‘conceptual’ means precise definition of class settlor wishes to

benefit – without which gift fails;
O ‘evidential’ means extent to which evidentially a person can be
included in the class – complete certainty virtually impossible;
O court accepted that some people would definitely come within the
class and some would definitely fall outside it – in the case of others
they would fall outside the class unless they could prove they were
within it;
O it is of course possible for a class to be so wide that it could not be
upheld even though both conceptual and evidential certainty tests
from McPhail v Doulton are possible – then the court suggested a
further test of ‘administrative workability’ – since applied in R v
District Auditor ex parte West Yorkshire County Council (1986);
O sometimes a testator will not create a trust but instead leave
individual gifts of property to a group of people who must satisfy a
condition (a condition precedent or a condition subsequent) before
being able to claim the gift;
O the test of certainty of objects in a gift subject to a condition
precedent is the Re Allen test. The gift will be valid if it is possible to
say of one or more persons that he or they undoubtedly qualify even
though it may be difficult to say of others whether or not they qualify;
O the test was applied in Re Barlow’s Wills Trusts (1979) where a gift
of paintings allowing my family and friends to purchase them at a
price below market value was upheld.
Is the gift land or personalty?

LAND PERSONALTY
Is s 53 LPA 25 complied I -NO GIFT IS

with? - Gift is in writing! INVALID
V V
YES
ґ
Does gift comply with the ‘three certainties’?
• Intention is clear from w ords (certainty of intention).
• The gift is plainly stated o r is residue (certainty o f subject).
■ The identity o f beneficiaries are known - and if a class, the class is not
v too wide (certainty o f objects)._______________________________________
YES
VALID EXPRESS PRIVATE TRUST IS FORMED
Diagram illustrating the major requirements for valid formation o f express
Key Cases Checklist
2.5.3 Rochefoucauld v Boustead [1897] 1 Ch 196 HC
Key Facts
Land had been sold by a mortgagee to a purchaser who

had taken the title expressly on trust for the claimant. The
claimant sought a declaration that the defendant had
acquired the land on trust for her. The defendant claimed
that there could be no trust because there was no written
evidence in support of her claim.
Key Law
It was held that although the legal formalities had not been
complied with, the defendant held the property on trust for
the claimant.
Key Judgment
Lindley LJ: ‘It is a fraud on the part of a person to whom

land is conveyed as a trustee, and who knows it was
so conveyed, to deny the trust and claim the land for
himself.’
Key Comment
The following cases all concern attempts to avoid the

payment of stamp duty, which at the time was payable on
deeds of gift. The tax was payable on the deed rather than
the transaction. If the transaction was made orally then no
tax would be paid, but it needed to satisfy s 53(1)(c) Law
of Property Act to be a valid disposition, which requires
a disposition of an equitable interest to be made in
writing.
2.4.5 Grey v IRC [1960] AC 1 HL
Key Facts
In 1949 the settlor Mr Hunter transferred shares of nominal

amounts to trustees on trust for his six grandchildren. In 1955
the settlor transferred 18,000 £1 shares to the same trustees
upon trust for himself. In order to avoid paying stamp duty he
orally directed his trustees to hold the property upon the
trusts of the six settlements. A few weeks later, Hunter
executed a declaration of trust in writing. If the interest
passed on the oral instruction to the trustees, then stamp
duty would not be payable, but if there was a transfer when
the declaration of trust was put in writing, then that would
attract tax.
Key Law
The House of Lords held that the transfer of the equitable

interest only took place when the written document
was executed, and the oral instructions by Hunter to the
trustees were ineffective and no interest passed.
2.5.6
Vandervell v IRC [1967] 2 AC 291 HL
Key Facts
Mr Vandervell wanted to found a Chair in Pharmacology at

the Royal College of Surgeons. He decided to do so by
transferring some shares in his company, Vandervell
Products, which were held by nominee trustees, to the
College. He retained an option to repurchase the shares for
£5,000 when the College had sufficient capital to found the
chair. The College received dividends worth over £250,000.
The Inland Revenue wanted to tax Vandervell on the
amount. They argued that at all times Mr Vandervell retained
an equitable interest in the shares because he did not
comply with s 53(1)(c) Law of Property Act 1925. This
section required the disposition of an equitable interest to
be evidenced in writing. If it was not evidenced in writing
then the disposition would be void. If both the legal interest
and the equitable interest are transferred at the same time,
then s 53(1)(c) does not apply.
Key Law
It was held that as Mr Vandervell was the beneficiary of a

bare trust, he did not have to comply with s 53(1)(c) and was
entitled simply to direct the trustees to transfer the legal title
to the trust property. There would be no separate disposi-
tion of the equitable title. Transfer of both the legal and equi-
table interest at the same time does not require writing.
Key Judgment
Lord Upjohn: ‘. . . when the beneficial owner owns the

whole beneficial estate and is in a position to give direc-
tions to his bare trustee with regard to the legal as well as
the equitable estate there can be no possible ground
for invoking the section where the beneficial owner wants
to deal with the legal estate as well as the equitable estate.’
2.4.9 Oughtred v IRC [1960] AC 206 HL
Key Facts
Mrs Oughtred owned 72,000 shares in a company and she

was also tenant for life in a settlement containing a large
number of shares, in which her son Peter was entitled to the

property in remainder. As a tax-saving device Mrs Oughtred

and her son decided to transfer shareholdings, so Peter
gave up his remainder in the estate to his mother and she
agreed to transfer her 72,000 shares to him. A deed of
release was executed. The Inland Revenue argued that
stamp duty was payable, as there had been a contract for
sale which would attract duty. However, as the shares were
in a private company the contract could be specifically
enforced. The Oughtreds argued that the equitable interest
had already passed by reason of the right to specifically
enforce the contract.
Key Law
Where a contract is specifically enforceable, a constructive

trust will arise as soon as the contract is effective because
the equitable interest passes to the purchaser.
A constructive trust is outside s 53(1)(c) and so the agree-
ment did not need to be in writing.
The majority in the House of Lords thought that there had
been a transfer of sale for the purposes of the Stamp Act,
and stamp duty was payable.
Key Judgment
Lord Radcliffe (dissenting judgment): ‘There was, in fact,

no equity in the shares that could be asserted against
her, and it was open to her, if she so wished, to let
the matter rest without calling for a written assignment,
from her son . . . It follows that . . . this transfer cannot
be treated as a conveyance of the son’s equitable reversion
at all . . .’.
Key Comment
Lord Radcliffe gave a dissenting judgment in this case,

arguing that ownership in equity had passed as soon as the
agreement became specifically enforceable, in which case
there was no conveyance of interest.
ґ N
Definition of Certainty
Knight V Knight (1840)

A trust can only exist if the words are imperative; the subject matter is certain and the objects of
. the trust are certain
4____________________________________________________________________ ^
The Three Certainties
ґ" \
Certainty of Objects Certainty of Intention Certainty of Subject
Fixed trusts Jones V Lock (1865) Matter
IRC V Broadway Cottages Loose conversation does not Palmer v Simmonds (1854)
Trz/sf (1954) show the intention to create A gift of the bulk of an estate
A trustee must be able to a trust will fail for uncertainty of
draw up a complete list of all Paul V Constance (1977) subject matter
the beneficiaries Intention to create a trust can Sprange v Barnard (1789)
Discretionary trusts be shown without using the A gift of the remaining
McPhail V Doulton (1971) word trust so long as there is part of an estate failed for
The trustee must be able to intention to be bound uncertainty of subject matter
say whether a single Re Kayford (1975) Re London Wine Co
beneficiary ‘is or is not’ within Barclays Bank v Quistclose (Shippers) (1986)
the class (1970) Re Goldcorp (1995)
Gifts subject to a condition Precatory words Unsegregated tangible
precedent Re Adams and Kensington assets could not form the
Re Barlow’s Will Trusts Vestry (1884) subject matter of a trust
(1979) Ae Steele’s Will Trusts Hunter V Moss (1994)
The test for certainty of (1948) Unsegregated intangible
objects in a gift subject to Precatory words may create assets (shares) were capable
a condition precedent is a trust if intention was of forming the subject matter
whether one person comes shown from surrounding of a trust
within the class circumstances Anthony V Donges (1998)
A fixed trust can only be Comiskey V Bowring- A trust of an unspecified part
upheld if it has conceptual Hanbury{1905) of an estate will be void for
and evidential certainty Precatory words do not show uncertainty
Re Gulbenkian’s intention to create a trust Re Golay (1965)
settlement (1970) Midland Bank v Wyatt A reasonable income could
Missing beneficiaries (1995) be sufficiently certain
Re Benjamin (1902) If the intention is a sham Boyce V Boyce (1849)
A Benjamin order protects there is no trust A gift dependent on selection
a trustee from an action for Staden V Jones (2008) by another beneficiary will
breach of trust if the proceeds On the creation of a trust it be void
of an estate are distributed was not necessary to use the MacJordan Construction
and one or more of the word trustee Ltd V Brookmount (1992)
beneficiaries are missing Ae Farepack etc (2008) No trust created of a builders’
Resolving uncertainty by Moneys in an account retainer held as percentage
appointing a third party expressly intended to be kept of a general fund
Re Tuck’s Settlement in trust could be claimed by
Trusts {1978) customers after a company
went into administration
V У
Re Vandervell’s Trusts (No 2) [1974]

Ch 269 CA
Key Facts
There was further litigation in relation to the interest in the

shares that had resulted back to the Vandervell estate.
Both the trustees of the children’s settlement and the

executors of the estate claimed the shares.
Key Law
At first instance Megarry J upheld the claim of the execu-

tors to the shares, but this was reversed by the Court of
Appeal. The executors had argued that the shares could
only pass to the trustees if there was a declaration in
writing, but the court rejected this, saying that there was
no need for a written instrument. There were several
reasons for this but the most important reason was that
s 53(1)(c) does not apply to the declaration of new trusts.
The law would not regard this as a disposition within the
section.
2.6.1.3 Knight v Knight (1840) 3 Beav 148 CA
Key Judgment
Lord Langdale MR: ‘First, if the words were so used, that

upon the whole, they ought to be construed as imperative;
secondly, if the subject of the recommendation or wish
be certain; and thirdly, if the objects of persons intended
to have the benefit of the recommendation or wish be
also certain.’
Was sufficient certainty of intention shown?
2.6.2.3 Staden v Jones [2008] 2 FLR 1931 CA
Key Law
The Court of Appeal emphasised that on the creation of a

trust it was not necessary to refer expressly to the word
‘trustee’, but according to Arden LJ the words said or acts
done by the settlor must have been intended to have had
that meaning.
Key Link
See cases on the constitution of a trust. See Chapter 4.

2.6.2.4 Paul v Constance [1977] 1 WLR 527 CA
Key Facts
Mr Constance and Ms Paul lived together as man and wife.

Mr C received a sum in compensation for an industrial
injury and he put the money in a deposit account in his own
name. He told Ms Paul on a number of occasions that the
money in the account was as much hers as it was his. Later
joint winnings from bingo were paid into the account and a
subsequent withdrawal was regarded as a withdrawal of
joint money. After his death Ms P claimed the fund from the
administratrix Mrs Constance, his surviving wife.
Key Law
It was held that Mr C had declared himself to be trustee of

the fund by his words and by his actions, and so 50 per
cent of the fund was held for Ms P.
The evidence for the necessary intention to create a trust was
gathered from Mr C’s assurance that ‘the money is as much
yours as mine’, although at no time did he use the word trust.
2.6.2.5 Jones v Lock (1865) LR 1 Ch App 25 CA
Key Facts
Robert Jones, responding to criticism that he had not given

his child a gift, placed a cheque for £900 in the hand of the
baby, aged nine months. He said ‘I give this to baby and
I am going to put this away for him.’ He took the cheque
away and put it into his safe. A few days later he died. The
issue before the courts was whether the cheque was held
on trust for the son or whether it could be claimed by the
residuary legatees under the will.
Key Law
The court held that there had been no declaration of trust.
Key Judgment
Lord Cranworth LC: ‘The case turns on the very short ques-
tion whether Jones intended to make a declaration that he
held the property in trust for the child; and I cannot come to
any other conclusion than that he did not. I think it would be

a very dangerous example if loose conversations of this
sort, in important transactions of this kind, should have the
effect of declarations of trust.’
Precatory words
Precatory words are words such as ‘hope’ or ‘wish’. They
do not generally create a trust and the fund can be kept
absolutely by the recipient.
2.6.2.8 Re Adams and Kensington Vestry (1884) 27

Ch D 394 CA
Key Facts
A testator left property on the following terms: ‘unto and to

the absolute use of my wife Harriet, in full confidence that
she will do what is right as to the disposal thereof between
my children either in her lifetime or by will after her decease.’
Key Law
It was held that the words did not create a trust and the wife
was able to claim the property absolutely for herself.
2.6.2.9 Comiskey and Others v Bowring-Hanbury and

Another [1905] AC 84 HL
Key Facts
The testator left his property to his wife in full confidence

that ‘. . . at her death she will devise it to such one or more
of my nieces as she may think fit’. He added a gift over in
default of appointment. A majority in the House of Lords
held that the testator’s will created a gift to his wife during
her life but subject to a trust over the remaining part in
favour of the surviving nieces to be shared in accordance
with the wife’s will or otherwise equally. This was in spite of
the use of the words ‘in full confidence’.
Key Law
If the will as a whole and surrounding circumstances are

sufficiently clear for the court to conclude that a trust was
intended by the testator, then a trust will be found in spite

of the use of precatory words. If there is evidence that the

testator intended a trust to arise but the precatory words
used were based on words from an earlier trust instrument,
the court may also conclude that there is a trust.
2.6.2.10 Re Steele’s Will Trusts [1948] Ch 603 HC
Key Facts
A testatrix left a diamond necklace to her son by will. The will

contained the following clause: ‘I request the said son to do
all in his power by his will or otherwise to give effect to this
my wish.’ The words had been included because the
testatrix wanted her son to make the necklace a family
heirloom.
Key Law
The words used appeared to be precatory but evidence

was given that the form of words had been expressly
taken from another earlier case where a trust had been
created. This indicated that there was an intention to create
a trust.
‘Sham’ intention
2.6.2.11 Midland Bank plc v Wyatt [1995] 1 FLR 696 HC
Key Facts
A husband and wife executed a declaration of trust over

the jointly owned family home, in favour of the wife and
daughters. The document was put into a safe but was not
acted on. The couple continued to act as joint owners of
the property. When the husband’s business failed, the bank
successfully obtained a charging order against the house.
The husband relied on the trust in order to prevent the bank
from enforcing the order against the property. It was held
that the purported declaration of trust in favour of the wife
and children was a sham and therefore he retained the
entire beneficial interest in the property.
Key Law
The intention to create a trust must be genuine and not a

sham, so that the settlor does not really intend the trust to
be acted on except in certain circumstances.
2.6.2.12 Re Farepak Foods and Gifts Ltd

(in administration) [2008] 2 BCLC 1 HC
Key Facts
A court will accept conduct as sufficient evidence of inten-

tion to create a trust. Farepak operated a Christmas savings
scheme where customers were able to save for Christmas
over a year. The money received from the customers was
not kept in a separate account. When the company went
into liquidation they were unable to claim that their money
was held in trust.
Key Law
However, the court did decide money deposited by

customers three days before the company went into liqui-
dation was held on trust because the company had
executed a deed that the money belonging to the customers
was to be put into a separate account
The testator must identify the subject matter

clearly
2.6.3.2 Palmer v Simmonds (1854) 2 Drew 221 HC
Key Facts
A testatrix left the residue of her estate to a named benefi-

ciary, subject to a provision that if he died without children,
he should leave ‘the bulk of his residuary estate’ for the
benefit of four named individuals.
Key Law
It was held that there was no trust because there was no

identifiable property which was capable of becoming the
subject matter of a trust.
2.6.3.2 Sprange v Barnard (1789) 2 Bro CC 585 HC
Key Facts
A testatrix left her property to her husband with instructions

that he should divide up equally the remaining part of what
was left and what he did not want for his own use between
her brother and sister.
Key Law
The law draws a distinction between unascertained prop-

erty where it involves tangible goods such as personal
property and intangible goods such as money and shares.
Tangible property
2.6.3.3 Re Goldcorp Exchange [1995] 1 AC 74 PC
Key Facts
Suppliers of gold bullion went into liquidation and a number

of purchasers claimed proprietary rights in the bullion,
arguing it had been held in trust for them.
It was held that the bullion could not be held in trust for the
purchasers, because there was no identifiable property.
Key Law
Only those purchasers who could show that their bullion

had been segregated could claim their order in full. Until
segregation, the property could not be said to be held in
trust because the subject matter was uncertain.
Intangible property
2.6.3.4 Hunter v Moss [1994] 1 WLR 452 CA
Key Facts
The defendant held a large shareholding and declared

himself to be trustee in respect of a 5 per cent holding of
the shares for the benefit of the claimant. Since the
defendant held 950 shares, it represented about 50 shares.

The shares had not been segregated from the whole.

It was held that a trust was created in favour of the claimant.
Key Law
The law treats intangible property differently from tangible

property when considering whether the subject matter of a
trust is certain. Intangible property such as money and
shares does not have to be segregated from the whole in
order for a trust to arise.
Key Problem
Not everyone agrees that tangible assets such as wine and

intangible assets such as shares can be distinguished in
this way. In particular, there will be a difference between an
inter vivos transfer of shares and a gift on death. If a share-
holder declares himself to be trustee of shares from a larger
shareholding then it will not be enforceable by the benefi-
ciary until he has divested himself of the ownership of those
shares otherwise he could continue to claim them for
himself.
Key Comment
Re London Wine (see below) was distinguished in Hunter

v Moss because in the former case the property was
tangible property and individual bottles of wine could be
distinguished by year and type, whereas the shares were
intangible property and no single share was distinguishable
from another. It would make no difference if the shares had
been segregated.
2.6.3.5 Re London Wine Co (Shippers) Ltd [1986]

PCC 121 HC
Key Facts
Purchasers of wine claimed bottles of wine were held in

trust for them after the suppliers went into liquidation, and
could not be claimed by the trustee in bankruptcy. The wine
was held in large warehouses but had not been segregated
for the individual purchasers from the whole.
Key Law
It was held there was no express trust for the purchasers

because there was no certainty of subject matter.
Key Judgment
Oliver J: ‘It seems to me that in order to create a trust it

must be possible to ascertain with certainty not only what
the interest of the beneficiary is to be, but to what property
it is to attach . . .’.
2.6.3.7 Re Golay and others [1965] 2 All ER 660 HC
Key Facts
A testator instructed his trustees to allow the beneficiary to

enjoy one of his flats during her lifetime and also to receive
a ‘reasonable income’ from other properties.
Key Law
It was held that this was sufficiently certain because the

words ‘reasonable income’ could be construed objectively
and it was possible for the court to apply this determinant.
Key Judgment
Ungoed-Thomas J: ‘In this case the yardstick indicated by

the testator is not what he or any other specified person
subjectively considers to be reasonable but what he identifies
objectively as “reasonable income”. The court is constantly
involved in making such objective assessments of what is
reasonable and it is not to be deterred from doing so because
subjective influences can never be wholly excluded . . .’.
2.6.3.8 Boyce v Boyce (1849) 16 Sim 476 HC
Key Facts
The settlor left two houses on trust for his two daughters.
One of the daughters was required to make a selection
from the two houses, and the remaining house would pass
to the other daughter. When the first daughter failed to

make a selection before she died, the second daughter

claimed one of the houses for herself.
Key Law
The trust failed for uncertainty of subject matter.
Key Comment
This suggests that the claim of the second sister was

dependent on the claim by the first sister. It could not exist
independently of the first claim.
Key Problem
A trust will only be valid if it exists for the benefit of identi-

fied legal persons. The test for certainty of objects varies
according to whether it is a fixed trust or a discretionary
trust, or a gift subject to a condition precedent.
Fixed trusts
Missing beneficiaries
2.6.4.3 Re Benjamin [1902] 1 Ch 723 HC
Key Facts
The testator left his estate to his children in equal shares.

He had 12 children. All but one could be traced, but one
had disappeared when on holiday in France while the
testator was still alive.
It was held that he could be presumed dead and his share
could be shared out between the other brothers and sisters.
If it turned out that he was still alive then the other benefici-
aries would be liable for the return of his share and the
trustee would not be liable for breach of trust.
Key Law
A ‘Benjamin Order’ allows the trustees to distribute the

proceeds of an estate without fearing an action for breach of
trust from a beneficiary who was presumed dead and who
suddenly returns and claims a share. The order can only be
made after all practicable inquiries have been made.
The test for certainty of objects in a fixed trust
2.6.4.5 IRC v Broadway Cottages Trust [1954] 1 All

ER 878 HC
Key Law
In a fixed trust, the class must be capable of ascertainment,

which means that the trustee must be able to draw up a
complete list of all the beneficiaries of the trust. The trust
will fail if such a list cannot for some reason be drawn up.
Discretionary trusts
2.6.4.6 McPhail v Doulton [1971] AC 424 HL
Key Facts
A settlement was executed by Mr Baden in favour of a large

class of persons who were employees of Matthew Hall &
Co or were connected with the employees in some way.
They included officers and employees or ex-officers or
ex-employees of the company as well as ‘any of their
relatives or dependents of any such persons in such
amounts at such times and on such conditions . . . as they
think fit.’ One of the issues before the court was whether
this created a mere power or a trust power.
Key Law
The test to be applied for certainty of objects in a discre-

tionary trust is the same as the test for certainty of objects
for a power, namely the ‘given postulant test’ or ‘is or is not’
test. Under this test it must be possible to say of any given
individual that he is or is not within the class. The trustees
do not need to have a complete list of all the beneficiaries
before exercising their discretion.
Key Judgment
Lord Wilberforce: ‘a trustee with a duty to distribute, partic-

ularly among a potentially very large class, would surely
never require the preparation of a complete list of names,
which anyhow would tell him little that he needs to know . . .’.
Sachs LJ: ‘. . . the court is never defeated by evidential
uncertainty, and it is in my judgment clear that it is concep-
tual certainty to which reference was made when the “is or
is not a member of the class” test was enunciated . . . the
suggestion that such trusts could be invalid because it

might be impossible to prove of a given individual that he

was not in the relevant class is wholly fallacious.’
Conceptual certainty
2.6.4.6 Re Gulbenkian’s Settlement Trusts

[1970] AC 508 HL
Key Facts
A special power of appointment was granted to the trustees

to appoint in favour of Nubar Gulbenkian ‘. . . and any wife
and his children or remoter issue . . . and any person . . . in
whose house or apartment or in whose company or under
whose care or control or by or with whom [he] may from time
to time be employed or residing’. There were trusts over in
default of appointment. The power was upheld because it
could be said with certainty whether any given individual was
or was not a member of the class, so the power was valid.
Key Law
A trust to divide a fund equally between ‘my old friends’

would be void for uncertainty because the class is concep-
tually uncertain. No court could define what ‘an old friend’
means. The same problem would arise if the gift were to my
‘best friends’.
Key Judgment
Lord Upjohn: ‘Suppose the donor directs that a fund be

divided equally between “my old friends” then unless there
is some admissible evidence that the donor has given some
special “dictionary meaning” to that phrase which enables
the trustees to identify that class with sufficient certainty, it
is plainly bad as being too uncertain . . .’.
See 2.6.4.5 Certainty of objects in discretionary trusts.
Evidential certainty
2.6.4.6 Re Gulbenkian’s Settlement Trusts (above)
Key Judgment
Lord Upjohn: ‘If a donor directs . . . trustees to make . . .

provision for “John Smith”, then gives legal effect to that
provision it must be possible to identify “John Smith”. If the

donor knows three John Smiths then by the most elemen-

tary principles of law neither the trustees nor the court in
their place can give effect to that provision; neither the trus-
tees nor the court can guess at it. It must fail for uncertainty
unless of course admissible evidence is available to point to
a particular John Smith as the object of the donor’s bounty.’
Key Comment
A fixed trust will not fail if it is conceptually and evidentially

certain even though the trustees may not be able to physi-
cally locate every beneficiary on the list. If the settlor left his
estate to be divided equally between ‘all my children’, a
‘child’ is conceptually clear and the trustees may know
that the settlor had five children but one went to America
10 years ago and has not been heard of since. That
beneficiary is said to be unascertainable.
Gifts subject to a condition precedent
2.6.4.6 Re Barlow’s Will Trusts [1979] 1 WLR 278 HC
Key Facts
The testatrix left a number of valuable paintings with

instructions that ‘any member of my family and any friends
of mine’ could, when she died, buy any of the paintings at
the prices contained in a catalogue of valuations made five
years before her death. These prices were well below the
market value of the paintings.
Key Law
It was held that although the class of ‘any friends of mine’

would be conceptually uncertain, this was not a gift to a
class but a series of gifts to the testatrix’s friends. Therefore
anyone who could prove that he/she was a friend of the
testatrix could claim the right to buy a painting.
The test for certainty of objects for gifts subject to a condi-
tion precedent is whether it can be said with sufficient
certainty that one person qualifies within the class. The fact
that there may be residual uncertainty about others will not
defeat the gift. It is up to the claimant to prove that he/she
comes within the class. The Re Allen test was applied as
discussed above (in 2.6.4.6).
Key Judgment
Lord Browne-Wilkinson: ‘In my judgment, Lord Upjohn was

considering only cases where it was necessary to establish
all the members of the class. He made it clear that the
reason for the rule is that in a gift which requires one to
establish all the members of the class . . . you cannot hold
the gift good in part, since the quantum of each friend’s
share depends on how many friends there are . . .’.
Administrative unworkability
2.6.4.6 R v District Auditor No 3 Audit District of West

Yorkshire MCC ex p West Yorkshire MCC
[1986] (above, Chap X) DC
Key Facts
A discretionary trust in favour of the inhabitants of the

County of West Yorkshire failed because although the class
was conceptually certain, the range of objects, which
comprised over 2.5 million people, was so wide as to be
‘incapable of forming anything like a class’.
Key Law
It was thus administratively unworkable and void.

3 Purpose trusts
r λ
Objections to purpose Accepted non-charitable purpose trusts:
treats: Upkeep of tombs and monuments:
• Lack of certainty (Morice v • e.g. for a family enclosure (Pirbright v
Bishop of Durham). Salway)
• Lack of ascertainable • if involves moderate expenditure (McCaig)·,
beneficiaries - so needs certain (Re Endacott)·, and satisfies
residuary beneficiary. perpetuity rule (Re Hooper).
• Offends perpetuity - so Maintenance of specific animals:
only valid if expressed to • will fail test for charitable purpose (Pettingall
fall inside period. V Pettingall)
• Policy reasons, e.g. • valid if perpetuity rule met (Re Dean).
should not involve
Saying of masses:
capricious expenditure
• private masses fail charity tests (Re Le Cren
(McCaig’s Trustees).
Clarke)
• but upheld here (Bourne v Keane).
PURPOSE
TRUSTS
The rules on unincorporated associations:

• Two or more people joined for ‘common purposes ... each having mutual
duties ... in an organisation [with] rules which identify in whom control of it
and its funds’ (Conservative and Unionist Central Office v Burrell).
• Question of what happens to gifts to such associations decided in Neville
Estates V M adden- gift is to existing members ... subject to their respective
contractual rights and liabilities towards one another.
• But gift fails if rules offend perpetuity period or rules prevent members from
ending association and dividing fund (Re Lipinski’s Will Trusts).
• So each member has contractual obligations to prevent misapplication of gift
- and committee members are also bound by rules which may be enforced
against them.
• Alternative is that gift is purely for members but difficulty is that members
must be ascertainable (Re Denley’s Trust Deed).
• Distribution originally based on resulting trust (Re Printers’ and Transferrers’
Amalgamated Trades Protection Society) but now on contract basis above
(Re The Sick and Funeral Society of St John’s Sunday School ΘοΙοβή.
Non-charitable purpose trusts 41
Z 3.1 Non-charitable purpose trusts

3.1.1 General
1 A private trust is a trust in favour of ascertainable beneficiaries.
2 A charitable trust, on the other hand, is a trust for purposes which
according to established tests is accepted as charitable and thus exempt
from certain requirements of express private trusts.
3 Non-charitable purpose trusts fall outside of either category above.
4 They do not get the benefits accorded to charitable trusts – but in certain
cases may be upheld as valid.
5 One logic of accepting such categories of trusts is that, while they are
expressed as being for purposes, they can still possibly be construed as
being for the benefit of individuals affected by the purpose (Re Denley’s
Trust Deed (1969)).
6 But the same logic cannot be applied where the class of beneficiaries
is too wide and therefore makes the trust ‘administratively unworkable’
(R v District Auditor ex parte West Yorkshire Metropolitan County Council
(1986)).
3.1.2 The objections to having purpose trusts

1 Traditionally there was no absolute prohibition on the creation
of non-charitable purposes – but a rule was developed in Re Endacott
(1960).
2 Traditionally such trusts failed because of defects in their creation, e.g.:
O lack of certainty;
O lack of an ascertainable beneficiary;
O offending the perpetuity period;
O excess delegation of testamentary powers.
3 Certainty:
O all trusts need certainty – and a non-charitable purpose trust is no
exception;
O so the purpose must be ‘stated in phrases which embody definite
concepts and the means by which the trustees are to try to attain
them must also be prescribed with a sufficient degree of certainty’
(Roxburgh J in Re Astor (1952));
42 Purpose trusts
O the trust is only valid if expressed with sufficient certainty for court
to control performance (Morice v Bishop of Durham (1804)). So a
trust will fail for lack of ascertainable beneficiaries.

4 Ascertainable beneficiaries:
O many purpose trusts may indirectly benefit individuals – but unless
these rank as ascertainable beneficiaries then the trust fails – as
Grant MR identifies in Morice;
O it follows that there can be no obligation on the trustees without a
corresponding right enjoyed by an identifiable beneficiary;
O in the case of private trusts these are named beneficiaries – and in
charitable trusts the Attorney-General.
5 The perpetuity rule:
O the rule has two aspects:
i) no gift should fall outside the perpetuity period;
ii) no gift should last for longer than the perpetuity period.
O the point of the rule at common law was originally to avoid tying
up land for excessive periods and the uncertainty such gifts could
create;
O the original perpetuity period at common law was – the life in being
plus 21 years (the life in being was some person alive at the time of
the gift – and the gift would fail if it could vest outside of the 21-year
period, e.g. ‘To the first child of A to reach the age of 25’);
O so non-charitable purpose trusts failed if could fall outside the
period;
O common law rule is modified by Perpetuities and Accumulations Act
1964 – this Act allows the settlor to specify a period of no more than
80 years, and introduces the principle of ‘wait and see’ (i.e. wait to
see if gift vests outside of period before invalidating it).
6 Policy:
O the courts may invalidate a gift which they feel is capricious or an
inappropriate way of spending the money (McCaig’s Trustees v The
Kirk Session of the United Free Church of Lismore (1915));
O delegation of testamentary power has also been challenged in Leahy
v A-G for New South Wales but accepted in Re Beatty’s Will Trusts
(1990).
Non-charitable purpose trusts 43
3.1.3 Exceptions to the rule against

non-charitable purpose trusts

1 Despite valid objections to purpose trusts some exceptions exist.
2 They are generally referred to as ‘trusts of imperfect obligation’ – are
anomalous, and fall into a limited range of specific exceptions.
3 Trusts for tombs and monuments:
O it is valid to provide a gift for creation and upkeep of a family enclo-
sure (Pirbright v Salway (1896));
O a gift may also succeed in respect of monuments to persons other
than the testator (Mussett v Bingle (1876));
O but the courts will only usually accept the use of quite moderate
sums of money for such gifts (McCaig);
O as usual, a gift fails for any lack of certainty (Re Endacott (1960));
O and in any case a gift is only valid if falling inside the perpetuity
period (Re Hooper (1932)).
4 Trusts for the maintenance of specific animals:
O a trust for animals generally can succeed as charitable if certain
conditions are met;
O a trust for an individual animal must necessarily fail as a charitable
gift – but might still be upheld as a non-charitable purpose trust
(Pettingall v Pettingall (1842));
O but not if such a gift offends perpetuity (Re Dean (1889));
O the perpetuity period must refer to human lives (Re Kelly (1932)).
5 Trusts for the saying of masses:
O a mass said in public place will generally be upheld as charitable (Re
Hetherington (1989));
O but a gift for purely private religious ceremonies cannot be classed as
charitable (Re Le Cren Clarke (1996));
O but this does not always matter since trusts for the saying of purely
private masses have been upheld as valid purpose trusts (Bourne
v Keane (1919)).
3.1.4 The modern position

1 In Re Astor’s Settlement Trusts (1952) it was suggested that all the excep-
tions are merely ‘concessions to human weakness or sentiment’.
44 Purpose trusts
2 In Re Endacott (1960) it was also noted that they are ‘troublesome,

anomalous and aberrant’.
3 It is thus unlikely that they will be extended in any way.

4 However, the development of the discretionary trust in McPhail
v Doulton (1971) has been said to have ‘broken the stranglehold imposed
on the development of trusts’.
Z 3.2 The rules on unincorporated

associations
3.2.1 The nature of unincorporated
associations
1 An unincorporated association is a joining together of two or more people
for ‘common purposes by mutual undertakings, each having mutual duties
and obligations in an organisation which has rules which identify in whom
control of it and its funds rests and on what terms and which may be joined
or left at will’ (Conservative and Unionist Central Office v Burrell (1982)).
2 Such associations lack the formal creation of incorporation so have no
separate legal personality so cannot hold property in their own right or
be the subject of rights and obligations in their own names.
3 The common classes of such groups include sports and social clubs,
cultural groups and certain charitable bodies.
4 Such groups can still be the beneficiaries of gifts and also are required to
handle funds – so a number of significant problems arise:
O what happens to gifts made to these associations?
O how do these associations hold funds or property?
O what happens to funds on dissolution of the association?
3.2.2 Gifts made to unincorporated

associations
1 If an association is charitable and a gift is for the association’s purposes
then it is taken as prima facie for charitable purposes – the usual rules on
certainty do not apply and even when the association ceases to exist the
gift can be saved by the cy-près doctrine.
2 If the association is not charitable then the gift is void as a purpose trust
unless falling under the very limited exceptions.
The rules on unincorporated associations 45
3 If a gift cannot take effect as a gift on trust for the purposes of the
association then the question arises how such gifts can take effect and
whether or not they can take effect as gifts to the members.

4 Originally it was thought that there was no need to identify who would
be the beneficiaries – as long as persons holding the gift as trustees had
the power to spend any money (Re Drummond (1914)).
5 The different possible outcomes were considered in Neville Estates v
Madden (1961) where Cross J identified three possible categories:
O ‘a gift to the members . . . at the relevant date . . . so that any . . . can
sever his share and claim it’ (a gift to present members);
O ‘a gift to the existing members . . . subject to their respective contrac-
tual rights and liabilities towards one another’ (a gift to members
subject to the constitutional rules of the association as to members’
rights and liabilities);
O ‘a gift . . . at the disposal of the members for the time being . . . held
in trust’ (a gift on trust for members).
6 Where the trust instrument only states that the gift is to the association
then prima facie it may be construed as a gift for the members (Leahy v
A-G for New South Wales (1959)).
7 It is easier to see the first of Cross J’s three categories as acceptable if the
gift identifies clearly a limited class of persons who may benefit from it
(Re Denley’s Trust Deed (1969)).
8 The third of Cross J’s three categories throws up a number of other
points of note:
O that the trust mechanism is inappropriate if it is clear that the
members are not intended to benefit from the gift;
O that the gift, unless charitable, will fail unless limited by the perpe-
tuity period;
O also that the gift cannot be to members if rules of association actually
prescribe against that eventuality (Re Grant’s Will Trusts (1980)).
9 The most plausible of the three alternatives is the second, that the gift
takes effect as a gift to the members of the association subject to their
contractual rights and liabilities to one another – and it is this solution
that causes the least problems (Re Recher’s Will Trusts (1971)).
10 On this basis, the question as to whether or not the gift is subject to any
restrictions on its use depends on the intentions of the association as to
the relationship of its members rather than on the explicit intention
of the settlor. The gift will fail if rules of the association offend the
46 Purpose trusts
perpetuity period or if members are prevented by rules from ending the

association and dividing the funds amongst themselves (Re Lipinski’s
Will Trusts (1976)).
3.2.3 Funds held by unincorporated

associations
1 The problems are exactly the same as those identified above.
2 Again, the ‘contractual solution’ is the best.
3 Each member, therefore, has contractual obligations to prevent the
misapplication of the gift – and committee members are also bound by
the rules of the association which may be enforced against them.
4 The alternative based on trust poses the obvious problem that a trust
cannot generally be held for purposes unless charitable.
5 The alternative that the gift is purely for the members again has the
difficulty that the members must be ascertainable, as in Re Denley’s.
6 Other problems, of course, still exist – e.g. if the gift is one of land rather
than chattels.
3.2.4 Distribution of the fund

1 A final problem is what happens to the fund if the association is
wound up.
2 Many of the used solutions appear at odds with the reasoning above.
3 The general rule traditionally was that funds were held on resulting trust
for members according to their contribution (Re Printers’ and Transfer-
rers’ Amalgamated Trades Protection Society (1899)).
4 The more modern approach is to follow the contract argument – the
logic of using resulting trusts is at odds with the argument that a gift is
an outright gift to members subject to the rules of the association (Re
The Sick and Funeral Society of St John’s Sunday School Golcar (1972)).
5 So where there are surplus funds, the court can imply a term that these
can be divided amongst the existing members on a per capita basis (Hunt
v McLaren (2006)).
6 And funds can be passed to a sole surviving member of the association
(Hanchett-Stamford v A.G. (2009)).
Key Cases Checklist

3.1.3.3 Re Endacott [1960] Ch 232 CA
Key Facts
Money was left by Albert Endacott to the North Tawton

Parish Council ‘for the purpose of providing some useful
memorial to myself’. The gift failed because it offended the
beneficiary principle and did not come within any of the
exceptions, because it was unclear what was meant by
‘some useful memorial’.
Key Law
A purpose trust within the exceptional cases will fail if it

is too vague in its terms or it does not comply with the
perpetuity period.
3.1.2.3 Re Astor’s Settlement Trusts [1952]

Ch 534 HC
Key Facts
The terms of a trust made by Viscount Astor were ‘. . . that

the income was to be applied for the maintenance of good
understanding between nations’ and ‘. . . the preservation
of the independence and integrity of the newspapers’.
Key Law
These purposes were not charitable. The trust could not be

upheld as a private express trust because:
i) it offended against the beneficiary principle and
ii) the objects of the trust were uncertain.
48 Purpose trusts
3.1.2.3 Morice v Bishop of Durham (1805)

10 Ves Jr 522 CA
Key Judgment
Sir William Grant: ‘Every trust must have a definite object.

There must be somebody in whose favour the court can
decree specific performance.’
Capricious purposes
3.1.2.6 M’Caig v University of Glasgow 1907 SC

231/M’Caig’s Trustees v Kirk Session of
United Free Church of Lismore 1915 SC 426 SC
Key Facts
In the first case a trust was set up for the purpose of erecting
statues of the testator and ‘artistic towers’ around his estate.
The second case concerned a similar trust to erect bronze
statues of the testatrix’s parents and their children.
Key Law
Both trusts were set aside on public policy grounds. The

judge described them as a ‘sheer waste of money’.
Key Comment
The court appears to have been interfering with a testator’s

complete freedom to deal in his property as he wishes after
his death subject to certain statutory controls such as the
Inheritance (Provision for Family and Dependants) Act 1975.
Note that changes to the perpetuity period made by the
Perpetuities and Accumulations Act 2009 do not affect
non-charitable purpose trusts.
Tombs and monuments
3.1.3.3 Mussett v Bingle [1876] WN 170 HC
Key Facts
This is a case about a testator who wished his wife’s first

husband to be remembered in a special memorial, which he
agreed to pay for. A gift of £300 to erect a monument was

upheld as an exception to the purpose trust cases but a

second gift for the upkeep of the monuments failed, being
void for perpetuity. No limit had been placed on the length
of time the trust was to last.
3.1.3.3 Re Hooper [1932] 1 Ch 38 HC
Key Facts
A sum of money was left for the purpose of the upkeep

and care of certain family graves and monuments as well as
a tablet in a window in the church for as long as the
trustees could legally do so. This was upheld for a period of
21 years.
Key Comment
Even where a purpose trust is upheld within the exceptional

cases, it must still comply with the perpetuity period.
Animals
Pettingall v Pettingall (1842) 11 LJ Ch 176 HC
Key Facts
A gift by the testator of £50 per annum for the upkeep of his
favourite mare was upheld.
3.1.3.4 Re Dean (1889) 41 Ch D 552 HC
Key Facts
A gift of £750 per annum for 50 years was left by William

Dean to his trustees for the upkeep of his eight horses and
his hounds. The judge held that this was a valid private
purpose trust.
50 Purpose trusts
Key Law
The court upheld the gift, although it offended the perpe-

tuity period. The case can be justified on the basis that the
judge considered lives as including the life of an animal.
However, later cases have held that lives must be human
lives.
Trusts for saying masses for the dead
3.1.3.5 Re Hetherington [1990] Ch 1 HC
Key Law
In this case the saying of masses was held in public and so

could be a valid charitable trust as it satisfied the public
benefit test.
Key Comment
However, it was held in Bourne v Keen [1919] AC 815 that

the saying of masses for the dead will still be valid as a
private purpose trust even if it is held in private.
The definition of an unincorporated association
3.2.1.1 Conservative and Unionist Central Office v

Burrell [1982] 1 WLR 522 CA
Key Facts
The case concerned the status in law of the Conservative

Association. The Inland Revenue wanted to assess it for
corporation tax, which was payable only if it was an
unincorporated association. It was held that it was not
an unincorporated association because it lacked some of
the key characteristics. In particular, the people joining the
party did not have a set of mutual rights and duties arising
from a contract between them and there were no rules
determining who controlled the body and its funds. The
local branches of the Conservative Party had these rules,
but not Central Office.
Key Law
1 An unincorporated association is composed of two or

more people bound together for a common purpose.
2 The people are bound by mutual undertakings arising
from a contract between them.
3 The body has rules which identify
a) who controls the body and its funds and
b) the terms on which such control is exercisable.
4 The body can be joined at will.
Constructions of gifts to unincorporated

associations
3.2.2.6 Leahy v A-G for New South Wales [1959]

AC 457 PC
Key Facts
A testator left land of over 730 acres of land to be held on

trust ‘for such an order of nuns of the Catholic Church or
the Christian Brothers as my executors and trustees shall
select’.
Key Law
The gift failed as a charitable trust because some orders

are purely contemplative whose activities were not recog-
nised as charitable purposes in law. It also failed as a
private trust. If it were held to be a gift for the purposes of
the group then it would fail for perpetuity and it would fail as
a gift to the members to enjoy jointly as the numbers of all
the orders were too extensive to enforce this for their
benefit.
Key Comment
The gift in Leahy v New South Wales was upheld under a

special statute passed by the New South Wales government
permitting it to have charitable status even though contem-
plative orders could benefit.
52 Purpose trusts
3.2.2.5 Neville Estates v Madden [1962] Ch 832 HC
Key Law
Cross J held that gifts to the members of an unincorporated

association fell into three categories:
1 A gift to members at the relevant date as joint tenants,
each having the right to sever a share;
2 A gift subject to the contractual rights and liabilities of
the members towards each other. There would be no
right to sever a share and a member’s interest will on his
death or resignation accrue to the remaining members;
3 A gift to present or future members which will fail unless
it is expressly within the perpetuity period.
3.2.2.7 Re Denley’s Trust Deed [1969] 1 Ch 373 HC
Key Facts
Land was transferred by Charles Denley to trustees with the

purpose of providing a sports field for employees of his
company. The transfer was limited for a period of 21 years.
There were no named beneficiaries so it appeared to fail
under the beneficiary principle.
Key Law
The court held that although the trust appeared to be

expressed for a purpose it was for the benefit of individuals
and so it did not offend the beneficiary principle because
they had sufficient interest to enforce.
Key Judgment
Goff J: ‘I think there may be a purpose or object trust,

the carrying out of which would benefit an individual or
individuals, where the benefit is so indirect or intangible or
which is otherwise so framed as not to give this person any
locus standi to apply to the court to enforce the trust, in
which cases the beneficiary principle would, as it seems to
me, apply to invalidate the trust, quite apart from any ques-
tion of uncertainty or perpetuity. Such cases can be consid-
ered if and when they arise. The present is not, in my
judgment of that character . . .’.
Key Problem
Re Denley raises problems because it is difficult to decide

whether it was upheld as a purpose trust or as a private
purpose trust. The wording of the trust was for the use of
recreation facilities of employees so it was a non-charitable
purpose trust. However, Goff J suggests that as there were
ascertainable beneficiaries it could be upheld. The difficult
problem is that in a conventional private trust a beneficiary
will own an equitable interest, but in this trust the employees
merely had a right to use the land for a limited period of
time. They did not have an interest in the land.
The contract holding theory
3.2.2.8 Re Grant’s Wills Trusts [1980] 1 WLR 360 HC
Key Facts
A gift was made to the Chertsey Labour Party. The nature

of the Labour Party was such that a local branch of the
Labour Party could not be an unincorporated association
because it did not have its own rules; the local branches of
the Labour Party do not have separate rules, therefore the
gift failed.
3.2.2.9 Re Recher’s Will Trusts [1972] Ch 526 HC
Key Facts
Funds left to the London and Provincial Anti-Vivisection

Society were held for the Society as part of its assets and
would be owned by the members according to the rules of
the Society.
Key Law
On the facts of the case the gift failed because the Society
had been dissolved before the date of the gift.
Key Judgment
Brightman J: ‘. . . The legacy in the present case to the

London & Provincial Society ought to be construed as a
54 Purpose trusts
legacy of that type, that is to say, a legacy to the members

beneficially as an accretion to the funds subject to the

contract which they had made inter se.’
3.2.2.10 Re Lipinski’s Wills Trusts [1976] Ch 235 HL
Key Facts
Harry Lipinski left his residuary estate to an association

called the Hull Judaeans (Maccabi) Association, an unin-
corporated association ‘in memory of my late wife to be
used solely in the work of constructing new buildings for
the association and/or improvements to the said buildings’.
The next of kin challenged the gift, arguing that it was
invalid because it was a gift for a purpose and the purpose
could last indefinitely, so making it void for perpetuity.
Key Law
It was held that the gift could be construed as a gift to the

members and it would be possible for the members to use
it for any purpose according to their rules. If it was a gift for
a purpose it could still be upheld because the purpose was
one that could be carried out immediately and under Re
Denley there were specific beneficiaries who could enforce.
Re Horley Town FC Hunt and Another v

McLaren and others [2006] EWHC 2386 HC
Key Facts
Members of this football club ranged from full to associate

and temporary members. The trustees applied to the court
to ask how different types of membership might effect
distribution of the funds.
Key Law
Lawrence Collins J concluded that where membership

prevented a member from deciding on whether the club
should be wound up or not, in this case the associate and
temporary members should not have a right to a share in
the funds if the club was wound up.
3.2.4.6 Hanchett-Stamford v Attorney-General

[2009] Ch 173 HC
Key Law
Lewison J applied the contract-holding theory which holds

that the fund is owned by the members according to their
contract. However, where there is a sole surviving member
of an unincorporated association all remaining funds could
be claimed by the surviving member as it then ceased to be
an unincorporated association.
4 Constitution of
trusts
ґ
Formalities: Declaration of self as
• Trust complete if settlor is also trustee - but if trustee:
other trustees then incomplete until property • Must be evidence of
passed to them. intention to create trust.
• Transfer and formalities must be by prescribed • For land would need written
method. evidence.
• Chattels = delivery (Thomas v Times Books). • Otherwise no particular
• Cheques = endorsement (Jones v Lock). words needed (Jones v
• Land by conveyance. Lock).
• Copyright = written transfer. • May show intention to hold
• Shares = share transfer form and registration for benefit of third party
(Milroy V Lord- but see also Re Rose). (Paul V Constance).
V
CONSTITUTION OF TRUSTS
Enforcement of trusts: Exceptions to the rule

that equity will not assist
Enforcement of trusts:
a volunteer:
• Gratutious statement of intention not
binding. The rule in Strong v Bird·.
• If more formal - then depends on • Incomplete gift made during
whether volunteer or non-volunteer. settlor's lifetime and donee made
• Equity will not assist a volunteer, i.e. executor then gift complete -
one not giving valuable consideration. beneficiaries have no claim.
• Includes person covered by marriage
Donatio mortis causa (death-bed
settlement (Pullan v Koe).
• If beneficiary is party to covenant in a gift):
• Must be made in contemplation of
deed then common law action for
death (Wilkes vAllington)·, and
damages possible (Cannon vHartiefl.
• Subject matter passed to donee
• Or Contracts (Rights of Third Parties)
(Sen V Headley)·, and
Act 1999 possible.
• Gift made in circumstances that
• Generally felt that trustees cannot
show it will revert to donor if he
enforce covenant on behalf of
recovers.
volunteers (Re Kay's Settlement).
• If trustee seeks damages instead of Proprietary estoppel:
specific performance then may • A person led to act in reliance on
succeed (Re Cavendish-Browne). promise made by other person -
• And also argued that promise may then person making promise
create trust (Fletcher v Fletcher). cannot go back on it.
• So sometimes creates a
proprietary interest in favour of a
v volunteer (Crabb vArun UPC).
Formalities 57
Z 4.1 General
1 If the settlor creates a trust by declaring himself as trustee then:

O trust is complete and beneficiaries may acquire rights in property;
O providing both formalities and certainty is satisfied;
O because property will already be vested in the trustees.
2 But if settlor intends to create trust by transferring property to other
trustees then:
O the trust is incomplete until he does so;
O and the trust is unenforceable by beneficiaries until he does so.
Z 4.2 Formalities
1 Turner LJ in Milroy v Lord (1862): ‘to render a voluntary settlement
effectual the settlor must have done everything which, according
to the nature of the property comprised in the settlement, was
necessary in order to transfer the property and render the settlement
binding’.
2 Formalities and transfer must be according to prescribed method.
3 With chattels delivery is sufficient (Thomas v Times Books (1966)).
4 With cheques, endorsement is needed ( Jones v Lock (1865)).
5 Deed of gift is the surest way.
6 Land needs conveyance in form of a deed (LPA 1925 and LP(MP)A
1989).
7 Copyright needs transfer in writing.
8 Shares need completion of share transfer forms and registration (Milroy
v Lord (1862)):
O though a contradictory position was taken in Re Rose (1952) because
the transferor had done everything in his power to transfer the shares;
O followed in trust context in Hunter v Moss (1994);
O and a broader approach may be taken where it is unconscionable for the
donor to deny that a transfer occurred (Pennington v Waine (2002)).
58 Constitution of trusts
Z 4.3 Declaration of self as trustee

1 While settlor must transfer property to trustees by appropriate method

there must also be evident an intention to create a trust.
2 This need only be a clear intention (but for land would require writing).
3 Specific words declaring the trust are unnecessary if intention that one
party holds as trustee for another’s benefit is shown (Jones v Lock).
4 In contrast to above is situation where owner has not transferred prop-
erty to third-party but has shown that he intends to hold it for benefit of
the third party (Paul v Constance (1977)).
5 Where the settlor expressly states an intention to transfer property to
third-party trustees but before transfer is complete he declares himself as
trustee, the trust is only completed if the property is transferred to them
during his lifetime (Re Ralli’s Will Trust (1964)).
6 But if settlor appoints multiple trustees including himself and then fails
to transfer property gift need not fail (Choithram International v Pagarani
(2001)).
Z 4.4 Enforcement of trusts – volunteers and

non-volunteers
1 If a settlor merely makes a gratuitous oral statement of intention to
create a trust then this is not binding.
2 If, however, settlor’s intention is demonstrated by more formal means,
e.g. written covenant to transfer property, then enforceability may
depend on whether intended beneficiary is volunteer or non-volunteer.
3 Equity will generally not assist a volunteer.
4 A volunteer in this context is one not providing valuable
consideration.
5 But in equity this can include a person covered by a marriage settlement
(Pullan v Koe (1913)).
6 A marriage settlement includes spouses, children (who are said to be
coated with consideration) and sometimes also e.g. stepchildren – if
there is a sufficiently close relationship – but it will not cover next of kin
generally (Re Plumptre’s Marriage Settlement (1910)).
7 Since enforcement depends on specific performance of the covenant
then the property must also be of a type to which specific performance
can apply (Pullan v Koe (1913)).
Exceptions to the rule that equity will not assist a volunteer 59
8 But if one of the intended beneficiaries is a party to a covenant in a deed

then whether that person is a volunteer or not, common law may provide
an action for damages for breach of covenant even though specific

performance is unavailable (Cannon v Hartley (1949)).
9 Now Contracts (Rights of Third Parties) Act 1999 is available
sometimes.
10 But for enforcement of covenants made before Act another issue is
whether trustees can enforce covenant on behalf of volunteers – courts
have been unwilling to accept this possibility (Re Pryce (1917)).
11 But have suggested that trustees cannot pursue such a course of action
(Re Kay’s Settlement (1939)).
12 And trustees ‘could not and should not seek to enforce covenants on
behalf of volunteers’ (Re Cook’s Settlement Trusts (1964)).
13 But if a trustee seeks damages instead of enforcement then they may
succeed (Re Cavendish-Browne’s Settlement Trusts (1916)).
14 A final way of a trustee assisting a volunteer in unique circumstances is
to argue that, once a promise has been made to settle property this itself
is the subject of an enforceable trust (Fletcher v Fletcher (1844)).
Z 4.5 Exceptions to the rule that equity will

not assist a volunteer
1 The rule in Strong v Bird (1874):
O if incomplete gift made during donor’s lifetime, and donee then
made executor to donor’s will, gift is completed and beneficiaries
have no claim on property;
O but vagueness of intention defeats the rule (Re Gonin (1979)).
2 Donatio mortis causa (gift made in contemplation of death):
O In Cain v Moon (1896) Lord Russell CJ set basic requirements:
Lc the gift must have been made in contemplation of death (Wilkes v
Allington (1931));
LLc subject matter must have been passed to done, e.g. freehold land
(Sen v Headley (1991)); chattels – delivery (Woodward v Woodward
(1992)); choses in action – necessary documents (Birch v Treasury
Solicitor (1951));
iii) the gift must be made in such circumstances that show that the
property will revert to the donor should he recover.
3 Proprietary estoppel:
O if one person has been led to act on a statement of another, he may
in some circumstances prevent the other from going back on the
promise;
O but the promise must be unequivocal – so a gentlemen’s agreement
in a commercial agreement is unenforceable (Yeoman’s Row v Cobbe
(2008)) – but possible in a domestic situation (Thorner v Major
(2009)) – although it has been suggested that the better remedy
would be a remedial constructive trust;
O but sometimes the doctrine has the effect of creating a proprietary
interest in favour of a volunteer – see Dillwyn v Llewellyn (1862) and
Crabb v Arun UDC (1976).
Key Cases Checklist
Chattels
4.2.3 Thomas v Times Books [1966] 1 WLR 911 HC
Key Facts
The widow of Dylan Thomas claimed ownership of the

manuscript of his play Under Milk Wood from a third party.
He had received it from the author in a taxi during a night of
heavy drinking. It was held that the property had passed
and the wife could not claim the property back.
Key Law
Where chattels are the subject matter of a trust or a gift,

evidence of an intention to give and delivery of the subject
matter of the gift or trust will fully constitute the trust or
perfect the gift.
4.2.4 Jones v Lock (1865) (see above, Chap 2) CA
Key Law
The court held that he had not created a trust of the prop-
erty as he did not show sufficient intention to create a trust.
Alternatively the cheque had not been properly transferred

as an outright gift to the baby because it had not been

endorsed on the back.
4.2.8 Milroy v Lord (1862) 31 LJ Ch 798 HC
Key Judgment
Turner LJ: ‘. . . in order to render a voluntary settlement

valid and effectual, the settlor must have done everything
which, according to the nature of the property comprised
in the settlement was necessary to be done in order to
transfer the property . . . he may do this if he transfers the
property to a trustee . . . or declares that he himself holds it
in trust for those purposes . . . but in order to render the
settlement binding, one or other of these modes must . . .
be resorted to.’
Transfer of property requiring an act of a third

party to perfect the title
4.2.8 Re Rose [1952] Ch 499 CA
Key Facts
Mr Rose had transferred 10,000 shares to his wife,

completing the transfer in March 1943. The transfer was
completed by the company in June 1943 when his wife was
registered as legal owner. The settlor died and his estate
was assessed for estate duty.
Key Law
The shares would escape duty if they had been transferred

before April 1943. It was held that the property had passed
in March 1943 because the transferor had done everything
in his power to transfer the shares and the final act was one
that had to be carried out by a third party.
Unconscionability
4.2.8 Pennington v Waine [2002] 1 WLR 2075 CA
Key Facts
Ada Crampton owned a 75 per cent shareholding in a

private company of which she was one of the directors. She
told her nephew that she was giving him 400 of her shares
and that she wanted him to become a director. She repeated
this to one of the company’s auditors. She signed a stock
transfer form, but instead of transferring it to her nephew
she gave the form to the auditors who put it on file. When
she died, the form was still with the auditors and she had
not made any provision for the 400 shares in her will. The
court decided that although she had not done everything
that was necessary to be done under Re Rose, the transfer
could still be upheld on the principle of unconscionability.
She had told him that she was transferring the shares to him
and that she wanted him to become a director, and he could
not do this without a shareholding of his own.
Key Law
The court may uphold a transfer even where there are further
steps to be carried out by the transferor, where it would be
unconscionable for the transferor to revoke the transfer.
Shares
4.2.8 Milroy v Lord (above) CA
Key Facts
An attempt was made to create a trust consisting of

50 shares in the Bank of Louisiana in favour of the claimant
by transferring them on trust to Lord. The Bank required
that the shares be registered in the name of the transferee
at the Bank for title to pass. This was never done although
a deed of assignment had been executed and the share
certificates had been delivered.
Key Law
Although the transferor had intended to create a trust no

trust had been created because the trust was incompletely
constituted.
4.3.4 Paul v Constance (1977) (above, Chap 2) CA
Key Facts
Money was placed in a deposit account in the name of

Mr Constance. He told Ms Paul on many occasions that
the money was as much hers as his.
Key Law
This was sufficient declaration of trust although the specific

moment when the trust was declared was not clear.
4.3.5 Re Ralli’s Will Trusts [1964] Ch 288 HC
Key Facts
A testator left property on trust for his widow for life and the
remainder for his two daughters. One daughter, H, had prom-
ised as part of a marriage settlement that she would settle
after-acquired property in favour of volunteers. She died
before her mother but had not transferred her interest under
the trust to the marriage settlement. Her executor was trustee
of H’s marriage settlement as well as her mother ‘s will.
The court held that as he was trustee of both the trust and
the marriage settlement, the property within the trust came
to him in his capacity as trustee of the settlement and so
the trust was fully constituted.
Key Law
A trust may be fully constituted where the trustee receives

trust property in some other capacity in purely fortuitous
circumstances.
Choithram (T) International SA v Pagarani

[2001] 2 All ER 492 PC
Key Facts
A very wealthy man from the British Virgin Islands wished

to set up a charitable foundation, to which he intended
to transfer most of his property including company shares.

He became gravely ill, but before he died he signed a trust

deed establishing the foundation. There were to be seven
trustees including himself, and after he signed the deed he
stated that he was giving all his wealth to the foundation.
His health deteriorated further and he died before he had
formally transferred the property to the foundation.
The claimants were the man’s first wife and her children,
who argued that the gifts he had made to the foundation
were ineffective because of a failure of transfer.
Key Law
Both the trial judge and the Court of Appeal in the British
Virgin Isles found that a trust had been created in spite of
the failure of the settlor to vest the properties in the founda-
tion. On appeal to the Privy Council by the defendants, who
were the executors of the settlor, it was also held that there
was a completely constituted trust.
Key Judgment
Lord Browne-Wilkinson: ‘The foundation has no legal exist-

ence apart from the trust declared by the foundation
trust deed. Therefore the words “I give to the foundation”
can only mean “I give to the trustees of the foundation
trust deed to be held by them on the trusts of the founda-
tion trust deed.” Although the words are apparently
words of outright gift they are essentially words of gift on
trust . . .’.
Key Comment
The trust property was only vested in one of the trustees,

but once the property was vested in one trustee this would
be sufficient to constitute the trust. The court held that
there could be no distinction between the case where one
of the trustees simply declared himself as sole trustee and
a case where the donor declares himself to be one of the
trustees. The court were anxious to uphold the gift on the
principle of unconscionability. (See the later case of
Pennington v Waine, 4.2.8 below.)
Benefi.ciaries who are deemed to have given

consideration
4.4.7 Pullan v Koe [1913] 1 Ch 9 HC
Key Facts
A wife covenanted to settle after-acquired property in

excess of £100. She received the sum of £285 but did not
settle this sum as agreed, and paid it into a separate
account.
Key Law
The children were able to enforce her promise as they were

parties to the marriage settlement and were not volunteers,
as they were deemed to have given consideration.
4.4.6 Re Plumptre’s Marriage Settlement [1910] 1

Ch 609 HC
Key Facts
A husband and wife had agreed to settle any property they

received exceeding £500 and to pay the income to any
issue, and if there were none to the wife’s next of kin. The
wife did not pay the agreed sums and the next of kin sought
to enforce the covenant, as there were no children to the
marriage. They were not entitled to enforce.
Key Law
The beneficiaries of a covenant to settle after-acquired

property within a marriage settlement could not force the
parties to the covenant to settle property because they had
not provided consideration.
4.4.8 Cannon v Hartley [1949] Ch 213 HC
Key Facts
A daughter was able to sue on a deed of separation which

had been drawn up between her parents and herself when
her father did not pay her an agreed sum of money received
from his parents.
Key Law
Although she was a volunteer she had the right to claim

damages for breach of the covenant to settle property
because she was a party to the deed of separation.
Beneficiaries who have failed to give consideration
4.4.12 Re Cook’s Settlement Trusts [1965]

Ch 902 HC
Key Facts
Sir Francis Cook covenanted that he would settle the

proceeds of sale of certain property, including a valuable
painting, on trust for his family. He gave this to his wife and
the court considered whether the beneficiaries could
enforce the covenant in relation to the proceeds of sale of
this picture.
Key Law
It was held that the beneficiaries were volunteers and could

not enforce an incompletely constituted trust and recover
the painting from his wife.
Trusts of the benefit of a covenant
4.4.14 Fletcher v Fletcher (1844) 4 Hare 67 HC
Key Facts
Fletcher covenanted with trustees that if either or both of

his illegitimate sons Jacob and John should survive him
and attain the age of 21, his executors would pay to the
covenantees £60,000 within 12 months of his death to be
held on trust for the relevant natural issue. Jacob survived
and he sued the executors of his father’s estate.
Key Law
It was held that he had the right to sue because the trustees
held the benefit of the covenant on trust for him.
Key Comment
The important point about this case is that the court found
that the benefit of the covenant formed the subject matter
of a trust. So the claimant based the claim not on the cove-
nant itself, but on a trust of the covenant. However, there is
some doubt about the validity of this approach since a trust
requires intention, and there is no evidence that Fletcher
intended to create a trust of the benefit of the covenant.
4.5.1 Strong v Bird (1874) LR 18 Eq 315 CA
Key Facts
The defendant’s stepmother lived in his house and paid him

for her board and lodging. The stepson owed her £1,100
and they agreed that she would pay a reduced amount to
cover the loan. After two quarters she resumed paying at
the full amount, and she told him she did not want the debt
repaid. She should have put this into writing if she wanted
to formally release him from the debt. She died some years
later, appointing her stepson as executor.
Key Law
It was held that his appointment perfected the imperfect

release of the debt, and the stepson was not required to
repay the sum to the estate.
There are several conditions that must first be satisfied for
the rule to apply:
1 The donor must have intended to make an inter vivos
gift or release a debt.
2 The intention must continue until the date of death.
3 The donee must have been appointed an executor or an
administrator must have been appointed.
4.5.1 Re Gonin [1979] Ch 16 HC
Key Facts
A mother wanted to give her house to her daughter, but

she wrongly thought that the daughter could not inherit the
house because she was illegitimate. Instead she wrote the

daughter a cheque for £33,000, which was found after

the mother’s death. The daughter could not cash the
cheque, as a personal cheque cannot be cashed after
death. The daughter was administratrix of her mother’s
estate and claimed the house under the rule in Strong
v Bird. It was held that she could not claim the house,
because the mother did not show a continuing intention to
benefit the daughter up until her death. Once she signed
the cheque, she no longer intended the daughter to have
her house.
Key Law
The rule in Strong v Bird will only apply if there is a contin-

uing intention to benefift the claimant until death.
Donatio mortis causa
4.5.2 Cain v Moon [1896] 2 QB 283 HC
Key Law
There are three essentials for a valid donatio mortis causa:

1 The gift must have been made in contemplation, though
not necessarily in the expectation of death.
2 The subject matter of the gift must have been delivered
to the donee.
3 The gift must have been made under such circum-
stances as to show that the property is to revert to the
donor if he should recover.
Contemplation of death
4.5.2 Wilkes v Allington [1931] 2 Ch 104 HC
Key Facts
The donor had been diagnosed with cancer and as a

consequence he made a number of incomplete gifts. He
later caught pneumonia and died. It was held that he had
made a valid donatio mortis causa.
Key Law
A donatio mortis causa may still be valid even though the

donor has contemplated death from one cause but died
from another.
There must be delivery of the subject matter of the gift
4.5.2 Sen v Headley [1991] Ch 425 CA
Key Facts
The claimant had lived for many years with the deceased,
but they never married. On his deathbed in hospital he said
to her that the house and contents were hers. The title to
the house was unregistered and he gave her a key to a box
where the deeds were kept. She had a set of house keys
and he kept a set for himself. It was held that the transfer of
the key to the strong box containing the title deeds was
sufficient delivery.
Key Law
Land can be the subject matter of a donatio mortis causa,

and in unregistered land, transfer of the title deeds is
evidence of delivery.
Key Comment
It is difficult to see how there can be delivery in registered

land today, since under the LRA 2002, land certificates
are no longer issued on registration of title at the Land
Registry.
4.5.2 Woodard v Woodard, The Times,

18 March 1991 CA
Key Facts
A son claimed the right to sell a car given to him by his late
father. The father, who had become seriously ill, had given
him a set of keys to the car but had retained a set for
himself.
Key Law
The court held that there was no outright gift but there was
evidence to support a valid donatio mortis causa.
4.5.2 Birch v Treasury Solicitor [1951] 1 Ch 298 CA
Key Facts
Before going into hospital Mrs Birch, who was seriously ill,
told her nephew and his wife that she wanted them to have
the money she had in three separate accounts and her post
offce account and she gave them the passbooks.
Key Law
Delivery of the passbooks was sufficient evidence of a

donatio mortis causa because the books had to be produced
in order to withdraw funds from any of the accounts.
5 Secret trusts
Λ
General:
• Idea is to create trust without
Fully secret trusts:
revealing identity of beneficiaries -
because of moral obligations. • Ostensible beneficiary must be
• Courts accept them if: i) intention to told of trust and agree to be
create trust and three certainties bound before testator’s death -
satisfied; ii) trust communicated to or ostensible beneficiary takes
legatee; iii) trust accepted by legatee. absolutely ( Wallgrave v Tebbs).
• Fully secret = apparent gift to • Acquiescence is sufficient for
ostensible beneficiary. acceptance (Moss v Cooper).
• Half secret apparent on face of will. • They cannot be changed so are
clearly inconsistent with the Wills
Act (Ottaway v Norman).
• Reason they are enforced is to
prevent fraud on the beneficiary.
SECRET TRUSTS
ґ Half secret trusts:

Theoretical basis of secret trusts:
• Traditionally not enforced
• Both secret and half secret fail to comply
- because fraud on
with Wills Act requirements.
beneficiary not possible.
• So testator is ‘opting out’.
• But were accepted in
• Fraud argument cannot apply to half
Blackwell V Blackwell.
secret.
• But to be valid must be
• So ‘independent trust’ theory has been
communicated before
applied to both (Re Snowden).
making of will - not
• But has caused anomalies (Re Gardner
before death of testator
and Ottaway v Norman).
as in fully secret (Re
• And uncertain whether they are express or
Keen).
constructive.
72 Secret trusts
Z 5.1 The background to secret trusts

1 A will is a public document – so can be read by anyone.

2 This can cause problems for testators who wish to keep the identity
of certain beneficiaries secret, e.g. because of moral obligations to
them.
3 One traditional answer was to make an absolute gift to an ‘ostensible
beneficiary’ who was instructed as to the real purpose of the gift (the
fully secret trust) – and equity would prevent the ostensible beneficiary’s
unjust enrichment and enforce the trust.
4 A further way is to identify that person as a trustee in the will but still
not reveal the identity of the secret beneficiary, i.e. ‘to X for purposes
which I have made known to him’ (the half secret trust) – the gift being
immediately enforceable after the testator ‘s death as there is no ques-
tion of the trustee taking it.
5 Secret trusts are potentially problematic because their exact nature is
unclear and because they do not meet the requirements of certain
formalities – s 9 Will Act 1837.
6 But courts do still approve of secret trusts if there is ‘i) an intention
by the testator to create a trust, satisfying the traditional requirements
of the three certainties; ii) communication of the trust to the legatees;
iii) acceptance of the trust by the legatees . . . which . . . can take the
form of silent acquiescence. . .’ (Nourse LJ in Margulies v Margulies
(2000)).
Z 5.2 The rules governing fully secret trusts

1 The ostensible beneficiary must be informed of the trust and agree to be
bound by it before the testator’s death – so the trust must be communi-
cated or the ostensible beneficiary will take absolutely (Wallgrave v
Tebbs (1855)).
2 The ostensible beneficiary must be told of the terms of the trust as well
as of the existence of the trust (Re Boyes (1884)).
3 The trust can be communicated orally or in writing, and could be in
sealed instructions to be opened after death (Re Keen (1937)).
4 Acceptance of the trust does not have to be formal – silence or acquies-
cence is sufficient (Moss v Cooper (1861)).
5 The ostensible beneficiary must be informed of changes or additions
to the trust or (s)he will take them absolutely. Communication and
The rules governing half secret trusts 73
acceptance reached in an earlier will is not to be taken as communication

and acceptance for a secret trust in a later will (Re Colin Cooper (1939)).
6 It has also proved possible for a testator to use a secret trust to create an
obligation on the ostensible beneficiary to make provision on the death
of the secret trustee for the secret beneficiary (Re Gardner (No 2)
(1923)).
7 This creates a clear inconsistency with the normal rules on wills since a
secret trust cannot be altered once made while a will can (Ottaway v
Norman (1972)).
8 The original justification for secret trusts was preventing any fraud by
the ostensible beneficiary – in which case the standard of proof should
be high as for fraud (Ottaway v Norman) – but Megarry V-C suggested
that either oral or written proof is sufficient and that the standard of
proof is only the normal civil measure (Re Snowden (1979)).
Z 5.3 The rules governing half secret trusts

1 Courts traditionally had greater difficulty in accepting half secret
trusts.
2 The rationale for fully secret trusts – prevention of fraud by the osten-
sible beneficiary – clearly cannot apply since a trust is created on the
face of the will and there would never be any question of the trustee
taking the property absolutely.
3 Traditionally, then, it was argued that there was no reason not to
demand compliance with the requirements of the Wills Act 1837 – so
half secret trusts were commonly not enforced and returned instead on
resulting trust to the testators’ estate.
4 But half secret trusts were eventually accepted as valid in Blackwell v
Blackwell (1929), where Lord Sumner stated that ‘it is communication
of the purpose to the legatee coupled with acquiescence or promise on
his part that removes the matter from the provisions of the Wills Act
and brings it within the law of trusts’.
5 However, as Lord Sumner also identified obiter: ‘. . . a testator cannot
reserve to himself a power to make future unwitnessed dispositions by
merely naming a trust and leaving the purposes of the trust to be supplied
afterwards’.
6 So there is clear inconsistency in the relative positions on communica-
tion in fully secret trusts and half secret trusts – the former communica-
tion need only be before the testator ‘s death – but with the latter it must
be at or before the making of the will (Re Keen (1937)).
74 Secret trusts
Z 5.4 The theoretical basis of secret trusts

1 While there are good reasons why testators use secret trusts and why
courts will enforce them they are still problematic.
2 Both fully secret and half secret trusts fail to comply with necessary
formalities in the Wills Act.
3 The traditional justification for allowing secret trusts to disregard statu-
tory requirements is the equitable maxim – equity will not allow statute
to be used as an engine of fraud.
4 This fraud theory obviously applies in the case of fully secret trusts
but cannot apply to half secret trusts where a trust is apparent on the
face of the will and there is no possibility of the trustee keeping the
property.
5 Also the view of Lord Sumner in Blackwell v Blackwell that secret trusts
are based on ‘intention, communication, and acquiescence’ is insuffi-
cient justification on its own because this has the effect of allowing a
testator to ‘contract out’ of the provisions of the Wills Act – to choose
to avoid statutory provision.
6 The more modern view is that both fully secret and half secret trusts
operate outside of the will so have no need to comply with the provisions
of the Wills Act – as Megarry V-C points out in Re Snowden: ‘The whole
basis of secret trusts . . . is that they operate outside of the will, changing
nothing that is written in it, and allowing it to operate according to its
tenor, but then fastening a trust onto the property in the hands of the
recipient.’
7 So a major justification for the ‘independent trust theory’ is still based on
the personal obligation accepted by the ostensible beneficiary (Re Young
(1951)).
8 But the principle has led to some dramatic and controversial results
(Re Gardner (No 2) (1923)).
9 One final point is whether the secret trust operates as a constructive
trust or as an express trust:
O in the case of half secret trusts, they can only ever be express as the
trust is apparent on the face of the will;
O in the case of fully secret trusts, either could apply;
O if they are a means of avoiding formal requirements of the Wills Act
to prevent fraud by the ostensible beneficiary, then they would
operate as constructive trusts;
The theoretical basis of secret trusts 75
O if they operate independently of the will, then they must be regarded
as express trusts;
O the significance is in whether or not s 53(1)(b) must be complied

with in the case of a trust of land – it need not be in a constructive
trust – but in Ottaway v Norman an oral fully secret trust of land was
upheld without the issue being discussed.
Fully secret trusts Half secret trusts
Are created to benefit a ‘secret’ Are created to benefit a ‘secret’

beneficiary. beneficiary.
Are not apparent on the face of the Are apparent on the face of the
will. will.
Do not fulfil certain requirements of Do not fulfil certain requirements

the Wills Act. of the Wills Act.
Secret trustee (ostensible beneficiary) Secret trustee is identified on face

must be informed before testator’s of will – and must be informed
death of existence and terms of trust before will is made – and accept
– and must accept. or acquiesce.
If trust fails then ostensible beneficiary If trust fails then gift returns to
takes gift absolutely. testator’s estate as a resulting
trust.
Justified originally on basis that they There never could be a fraud on

avoid fraud on the secret beneficiary. the secret beneficiary – because
the trust is apparent on the face
of the will.
Are based on intention, Are based on intention,

communication – and operate communication – and operate
outside the Wills Act. outside the Wills Act.
Could exist as either an express trust Can only ever operate as an

or as a constructive trust. express trust – because trust
apparent on face of will.
Diagram illustrating the similarities and differences between fully secret trusts
and half secret trusts
76 Secret trusts
Key Cases Checklist

McCormick V Grogan (1869)

The basis of secret trusts was originally the prevention of fraud. If a testator tells
the secret trustee that a trust is to be established then it would be a fraud on the
part of the trustee to deny it.
The fu lly secret trust

Ottaway V Norman (1972)
A fully secret trust must satisfy THREE requirements: intention; communication
any time up until the death of the testator; and acceptance by the secret trustee
Re Snowden (1979)
A secret trust will only arise if the words used impose a trust rather than a moral
obligation (intention)
Wallgrave v Tebba (1855)
A letter found amongst papers after the testator’s death is not proper
communication of a secret trust to a secret trustee
Re Stead (1900)
Where secret trustees hold the trust property as joint tenants communication of
the trust to one of the joint tenants will be sufficient
ReBoyes (1884)
There is no communication if there is a suggestion that communication will be
made after the execution of the will and it is not made until after the death of the
testator
Яе Cooper (1939)
Where a codicil adds further property to the trust then this too must be
communicated to the secret trustee
Moss V Cooper (1861)
Silence can constitute acceptance of a secret trust by a secret trustee
The half secret trust Issues arising from secret

Blackwell V Blackwell (1929) trusts
A half secret trust must satisfy Re Gardner (No 2) (1923)
THREE requirements: intention, The estate of a beneficiary who
communication before or at the time predeceased the testator could keep
of execution and acceptance the gift promised in the secret trust
Re Keen (1937)
although it is usually regarded as
There will be sufficient communica
tion where the testator hands a taking effect only on the death of the
sealed envelope to the trustee testator
containing the names of the Re Young(1951)
beneficiaries if the settlor shows A witness to a will could still claim a
that he intends to create a trust gift under a secret trust contained in
Re Rees Wills Trust (1950) the will in spite of the operation of s
Trustees of a half secret trust are 15 Wills Act 1837 because the gift
unable to keep payments promised takes effect outside the will
to them where a will imposes a trust 4______________ '
over the whole sum
Communication
5.2.1 Wallgrave v Tebbs (1855) 2 K & J 313 CA
Key Facts
Property was left under a will to the defendants absolutely.

A letter was found after the testator’s death which showed
an intention that the defendants should apply the property
to a charitable purpose connected with the church.
Key Law
As this intention was not communicated until after the

death of the testator, the defendants were entitled to take
the property absolutely.
5.2.2 Re Boyes (1884) LR 26 Ch D 531 HC
Key Facts
The testator, George Boyes, left his entire estate to his

solicitor. He told him he would communicate the terms of
the trust by letter. There was no communication whilst the
testator was alive, but papers were discovered after his
death which made provision for the solicitor to hold the
property for the testator’s mistress and illegitimate child.
Key Law
There could be no enforceable secret trust because the

terms had not been communicated during the testator’s
lifetime. The property could not be claimed by the solicitor
because he was aware that it was held for another, so it
reverted back to the testator’s next of kin.
5.3.2 Re Keen [1937] Ch 236 CA
Key Facts
The testator gave a sum of money to trustees ‘to be held on

trust and disposed of by them among such person or
78 Secret trusts
persons or charities as may be notified by me to them or

either of them during my lifetime’.

He handed a sealed envelope to the trustees which contained
the names of the beneficiaries of the intended trust.
Key Law
It was held that this could be a valid communication of the

terms of the secret trust, but in this case it was inconsistent
with the terms of the will.
Key Judgment
Lord Wright MR: ‘To take a parallel, a ship which sails under
sealed orders is sailing under orders though the exact
terms are not ascribed by the Captain till later.’
Acceptance
5.2.4 Moss v Cooper (1861) 1 J&H 352 HC
Key Facts
Property was left jointly between three trustees. The

testator told all three of them the terms of the bequest,
which was that they should transfer the property to named
charities after his death. Only two of the three trustees
accepted the trust; the third did not refuse the trust but
remained silent.
Key Law
It was held that silence can constitute acceptance of a

trust.
5.2.5 Re Colin Cooper [1939] Ch 811 CA
Key Facts
A testator left £5,000 by will to two trustees. He had

communicated the existence of the trust to them both.
Later he added a codicil which increased the amount to
£10,000 but he did not communicate the alteration to them
both.
Key Law
It was held that only the £5,000 was subject to the trust.
Re Gardner (No 2) [1923] 2 Ch 230 HC
Key Facts
A testatrix had left her estate to her husband for life and
then to her nieces under a secret trust. One of the nieces
predeceased her.
Key Law
It was held that the gift to the niece took effect when the will
was executed and her estate could benefit.
Key Comment
This decision has been criticised as it undermines the main

principle of the secret trust, which is that it is a trust which
becomes fully constituted on the death of the testator.
5.2.7 Ottaway v Norman [1972] Ch 698 HC
Key Facts
Miss Hodges lived with Harry Ottaway in his house and he

left it to her in his will. She in turn left it to Mr and Mrs
Norman. Harry Ottaway’s son claimed that she held the
house for him under a secret trust and so she had no right
to leave it to others on her death. The judge held that a fully
secret trust had been created and so the son had a valid
claim.
Key Law
A fully secret trust must satisfy three requirements:

i) intention;
ii) communication; and
iii) acceptance.
80 Secret trusts
Intention
5.2.8 Re Snowden [1979] Ch 528 CA
Key Facts
The testatrix left her estate to her brother because she was
not certain how to distribute it among her relatives. Some
days before her death she announced that her brother
‘would know what to do’. She died and a few days later the
brother died. He had made a will in favour of his son. The
question before the court was whether the son could inherit
the estate, or whether it was held on secret trust for all the
nephews and nieces.
Key Law
It was held that the words only imposed a moral obligation

on him and did not show an intention to create a trust.
5.3.4 Blackwell v Blackwell [1929] AC 318 HL
Key Facts
The testator left a legacy to trustees to apply the income

‘for the purposes indicated by me to them. . .’. This was
enforced as a half secret trust.
Key Law
In a half secret trust there must be intention, communica-

tion and acceptance of the trust. The communication must
either be before the will is executed, or at the same time.
Key Judgment
Lord Sumner: ‘A testator cannot reserve himself a power of

making future unwitnessed dispositions by merely naming
a trustee and leaving the purposes of the trust to be
supplied afterwards . . .’.
5.4.7 Re Young [1951] Ch 344 HC
Key Facts
A chauffeur had witnessed the will of his employer. He left

his entire estate to his wife. He had privately told her to hold
a sum for the chauffeur on his death.
Key Law
It was held that this gift should be upheld in spite of s 15

Wills Act 1837, which prevents a witness from benefiting
from a will that he/she witnesses.
6 Protective and
discretionary trusts
Z 6.1 Protective trusts

1 This is a simple device that ensures that a beneficiary who is likely to
dissipate the fund through inexperience, immaturity or irresponsibility is
prevented from doing so (Re T’s Settlement Trusts (1964)).
2 It will arise where the settlor/testator knows that the trust property
could be sold or mortgaged resulting in the effective waste of the assets
with possible detriment to the beneficiary’s spouse and children.
3 Such a trust could be drafted individually or incorporating the
provisions of s 33 TA 1925.
4 The beneficiary in effect receives a life interest in the property
determinable in the event of e.g. bankruptcy of the beneficiary or
attempts to dispose of the assets of the trust by the beneficiary.
5 In that case a discretionary trust will usually arise.
6 Trustees can then use the property to benefit the beneficiary and his/her
dependants by whatever method they select.
7 While this type of trust is useful in guarding against irresponsible use of
the trust property, it can also be seen as unfair to creditors.
Z 6.2 Discretionary trusts

6.2.1 The purpose of discretionary trusts
1 By definition, a discretionary trust is one where the trustee has a power
to select from a number of potential beneficiaries to whom (s)he will
distribute the assets under the trust.
2 The mechanism has the advantage that beneficiaries have no rights
in the interest until selected – and formerly there were also specific
tax-saving advantages but these have now gone.
3 Discretionary trust then may be used:
Discretionary trusts 83
O in conjunction with protective trusts to protect the fund from benefi-
ciaries who are irresponsible or spendthrift;
O to protect a beneficiary against a creditor in bankruptcy;

O to allow flexibility to take account of changing circumstances of
beneficiaries.
6.2.2 How discretionary trusts operate

1 Property is normally conveyed to the trustees to be held on trust to apply
either the income or the capital or both for the benefit of members of a
class of beneficiaries in such proportions as the trustees in their absolute
discretion think fit.
2 The trust lasts for any designated period that is not in excess of the
perpetuity period, i.e. since the Perpetuities and Accumulations Act
1964 for a maximum of 80 years, but see Perpetuities and Accumula-
tions Act 2009 for wills and trusts taking effect after April 2010.
3 There may well be a power to accumulate – although this is subject to
various statutory restrictions.
4 Distinction is made between ‘exhaustive’ discretionary trusts (where
trustees are required to distribute the whole income) and ‘non-
exhaustive’ discretionary trusts (where in relation to income the income
does not have to be distributed each year, or to capital where the whole
capital would not have to be distributed during the currency of the
discretionary trust) (Re Locker’s Settlement (1977)).
5 Powers may be given to add to, or to exclude beneficiaries and for a
resettlement on new trusts.
6.2.3 The interests of the beneficiaries

1 Unlike in fixed trusts, beneficiaries under a discretionary trust have no
proprietary interest in the trust – but depend on selection by trustees.
2 If the trust is exhaustive then the class of beneficiaries as a whole if adult
and not suffering any disability may terminate the trust and enforce
distribution (Re Smith (1928)).
3 Otherwise the duty of the trustee is only to exercise the discretion.
4 In the case of a non-exhaustive discretionary trust this duty may be satis-
fied merely by exercising a power to accumulate.
84 Protective and discretionary trusts
Key Cases Checklist

6.1.1 Re T’s Settlement Trusts [1964] Ch 158 HC
Key Facts
A beneficiary had an interest in a trust subject to attaining

her majority (i.e. at that time reaching the age of 21). She
was immature and irresponsible and the trustees sought an
order allowing them to vary the terms so that the trust
became a protected life interest.
Key Law
The court held that although this was not strictly within the
court’s powers, because it was not obviously for her benefit
in its own right, an order would be made postponing the
vesting of the capital until a specified age and holding the
property on protective trusts.
Key Comment
A protective trust can be used as a way to protect a benefi-

ciary who is likely to dissipate the fund. The beneficiary of a
protective trust receives a life interest in the property, which
is determinable in the event of a certain event such as
bankruptcy. When the trust has determined a discretionary
trust will arise and the beneficiary of the protective trust
becomes just one of the class of beneficiaries entitled
under the discretionary trust.
Types of discretionary trusts

Exhaustive discretionary trusts
6.2.2.4 Re Locker’s Settlement Trusts [1977] 1 WLR

1323 HC
Key Facts
The terms of a trust of an exhaustive discretionary trust

required the trustees to pay, divide and apply the income for
charitable purposes or among the class of beneficiaries as
the trustees ‘shall in their discretion determine’. The trustees
did not distribute for a period between 1965 and 1968. The
court held that the surplus fund should be distributed and

could not be accumulated.
Key Law
The court can intervene in an exhaustive discretionary trust

and either appoint new trustees where the trustees have
failed to distribute or direct the trustees to distribute. In an
exhaustive discretionary trust the trustees are under a duty
to distribute and have no discretion whether or not to act.
6.2.3.2 Re Smith [1928] Ch 915 HC
Key Facts
Property was held on a discretionary trust for a mother and

her three children.
Key Law
The court held that the beneficiaries in a discretionary trust

had sufficient interest in the trust to combine together and
claim the legal title.
7 Resulting trusts
and constructive
trusts
f Constructive trusts: R esulting trusts:

Arise by operation of law - and some overlap Based on return of trust fund to settlor’s
with resulting - and basic duty is to return estate:
fund to rightful owner - but uncertain whether • can be automatic (where settlor fails to
a trust or a remedy. dispose of entire beneficial interest)
Can occur in the case of: • or presumed (from presumed intent of
• secret profit made by a fiduciary settlor).
{Boardman v Phipps) Failure of express trust e.g.:
• mutual wills - agreement between two • charitable рифове not properly identified
parties on identity of beneficiary when both (Яе Diplock)
die - avoids fraud on first to die • failure to meet contingency in a contingent
(Re Dale) interest (Essery V Cowlard)
• vendor of land once contract is concluded Failure to dispose of entire beneficial interest:
(Lysaght v Edwards) • settlor must keep what he has not disposed
• property acquired by killing (Re Crippen) - of (Re Vandervell)
subject to other rules in Forfeiture Act • can involve surpluses (Re Gillingham Bus
• fully secret trusts - but not half secret Disaster Fund)
(which are on face of will) - but see • or dissolution of unincorporated associations.
Ottaway V Norman Presumption in voluntary conveyance:
• strangers who dishonestly assist in abreach • does not apply to personality (Re
of trust (Royal Brunei Airlines v Tan) Vinagradoff)
• strangers who knowingly receive trust • can be rebutted by presumption of
property when it is unconscionable to do sc advancement (Re Eykyn’s)
(Bank o f Credit Commerce • or either by evidence to contrary (Shephard
International (Overseas) Ltd vAkindele) V Cartwright).
• agents and partners where they act Purchase in name of others:
dishonestly (Re Bell's Indenture) • unless indication that actual purchaser does
• ‘new model’ trusts where it is just and not intend to keep beneficial interest, then
V equitable (Hussey v Palmer).___________ . presumption of resulting trust in his favour
(Fowkes V Pascoe)
RESULTING AND • if many contributions then based on actual
C O NSTRUCTIVE TRUSTS contribution (Bull V Bull).
^ T ru s ts of the family home: ^

• used as ways of dealing with implied co-ownership
• judges have confused implied, resulting, and constructive trusts - now re-classified in
Drake V Whipp
• resulting based on implied co-owner's contribution (Bull vB u ll)
• constructive based on evidence of legal owner’s intention to share and actual detriment
suffered by implied co-owner (Eves v Eves)
• but constructive cannot be based on work alone (Lloyds Bank v Rosset)
• in many cases in 1970s CA used ‘new model’ constructive trust based on what was just and
equitable (Gissing v Gissing); but HL took different view.
Resulting trusts 87
Z 7.1 Introduction
1 These groups of trusts can defy simple definition because even within
themselves they include many different types or arise in quite different
situations.
2 The essential feature linking them all is that they are not expressly stated
in a trust instrument but are implied from the circumstances in which
they arise.
3 Although resulting trusts have been defined in various ways they are in
essence used as the basis of an action for return of one’s own property;
the modern view is that they arise because of the absence of any inten-
tion by the transferor to pass any beneficial interest to the transferee.
4 Even then, while some resulting trusts are implied from the presumed
intention of the settlor not all are – so the area is far from straightforward.
5 Constructive trusts, as resulting trusts do not meet formality require-
ments for express trusts – but the two are still distinct.
6 The distinction is that while resulting trusts involve the real equitable
owner of property asserting a continuing interest in the property, the
constructive trust is imposed by the court in order to redress a breach of
a fiduciary relationship.
7 It has been said that the constructive trust is a residual category which
is used by the court in circumstances where it wishes to impose a trust
and no other category is appropriate.
8 Extra confusion has been added at times by the application of the
principles to shared ownership of domestic property.
Z 7.2 Resulting trusts

7.2.1 General
1 A resulting trust is one that comes about through operation of law as
would a constructive trust, only for different reasons.
2 In effect it occurs where a settlor retains beneficial interest in trust
property – or there are indications that settlor did not intend to part
with beneficial ownership of the property.
3 So often said to be based on presumed intention of settlor – though that
will not always seem to be case – e.g. Vandervell v IRC (1967) where
effect of resulting trust was to impose an extra tax burden on a settlor
who was trying to avoid tax.
88 Resulting trusts and constructive trusts
4 Resulting comes from the Latin ‘resultare’ meaning ‘to spring back’ – in
essence, what happens to the beneficial entitlement.
5 Although it could be argued that the beneficial entitlement is actually

never disposed of.
6 Resulting trusts are sometimes referred to as:
O presumed – where they are said to arise from the presumed intent of
the settlor;
O automatic – where settlor merely fails to dispose of all of the benefi-
cial interest.
7 There are many different situations where such trusts arise:
O property is transferred to the trustees but the trust fails to take effect
as the settlor intended it to;
O the settlor fails to dispose of the entire interest;
O property bought by one person but in name of another;
O property which is already owned is transferred into the name of
someone else.
7.2.2 Failure of an express trust

1 An express trust may fail for numerous reasons:
O the settlor fails to identify the property that passes; or
O fails to identify some or all of the beneficiaries; or
O fails to properly identify what the interests are.
2 Or a gift may fail where a settlor fails to properly identify the specific
purpose in a charitable gift – property then returns to the settlor’s estate
on resulting trust (Re Diplock (1947)).
3 If a gift fails for becoming void then again a resulting trust is created
(Re Ames’ Settlement (1946)).
4 And if any contingent requirement is not met, again, the trust fails and
a resulting trust will arise (Essery v Cowlard (1884)).
5 A resulting trust has been accepted in respect of a loan made for a
specific purpose when the purpose was not then carried out (Barclays
Bank v Quistclose (1970)), Lord Wilberforce stating that a secondary
trust arose from the failure to carry out the primary trust:
O Lord Millet in Twinsectra v Yardley (2002) suggested this was
wrong since ‘the primary trust was for an abstract purpose with no
one but the lender to enforce performance’;
Resulting trusts 89
O the High Court has stated that a resulting trust is created in favour
of the payer but subject to a power exercised by the recipient to use
the fund for the stated purpose (Templeton Insurance Ltd v Penning-
tons Solicitors (2006));
O the effect of a Quistclose trust is that the payee is the fiduciary of the
payer so that on bankruptcy of the payee the payer can trace his
funds (Cooper v PRG Powerhouse Ltd (2008)).
7.2.3 Failure to dispose of the entire

beneficial interest
1 Arguably the most common reason why resulting trusts occur – it
certainly leads to the most case law.
2 Can occur quite accidentally, e.g. as a result of poor drafting, or by a
failure to provide for a particular eventuality.
3 There are four possible outcomes – not just a resulting trust:
O if fund for charitable purposes may be redirected cy-près;
O or court might construe outright gift to one benefciary;
O in the absence of benefciaries on intestacy the property may be redi-
rected to the Crown by bona vacantia;
O but there may indeed be a resulting trust.
4 General rationale of applying resulting trust in such situations is
argument that settlor must keep what he has not parted with – and
courts must construe whether or not he has disposed of entire interest
(Vandervell v IRC (1967)).
5 Where gifts are made to specific persons for specific purposes then
generally the ‘court always regards the gift as absolute, and the purpose
merely as the motive for the gift’ (Page-Wood V-C in Re Sanderson’s
Trusts (1857)).
6 So surplus after purpose achieved may still pass absolutely to beneficiary
rather than resulting trust (Re Osoba (1979)).
7 In rare situations, if it can be shown that there was no intention to
provide absolute benefit then a resulting trust of surplus property is
possible (Re Abbot Fund Trusts (1900)).
8 Resulting trusts may often occur on surplus from, e.g. a disaster fund
(Re Gillingham Bus Disaster Fund (1958)).
9 Surplus funds on dissolution of unincorporated associations can lead to
a number of possible outcomes – although in general what happens
depends on rules of association which acts as a contract between the

members:
O in certain situations if a trust is accepted surplus is distributed

amongst existing members on resulting trust (Re Printers’ and Trans-
ferrors’ Society (1899));
O although applying resulting trusts is more problematic if not limited
to existing members (Re Hobourn Aero Components Air Raid Distress
Fund (1946));
O if members are said to be receiving contractual benefit then no
resulting trust (Cunnack v Edwards (1896));
O usually no resulting trust possible where fund arose from variety of
sources not just subscriptions of members (Re West Sussex Constabu-
lary’s Widows, Children and Benevolent (1930) Fund Trust (1971));
O more modern solution is that (even if fund held on trust) it is distrib-
uted to members if constitution of association permits (Re Bucks
Constabulary Fund (No 2) (1979));
O where entitlement is by resulting trusts then distribution of surplus is
to all members past and present according to their contribution (Re
Sick and Funeral Society of St John’s Sunday School Golcar (1973)).
7.2.4 Voluntary conveyances and presumption

of resulting trust
1 In land, prior to 1925 in order to prevent a resulting trust from arising in
a voluntary conveyance it was necessary to insert an express statement
that beneficial interest also transferred:
O s 60(3) Law of Property Act 1925 then provided that a resulting trust
would not arise merely because an express statement to the contrary
was not included;
O however, if an outright gift is intended then it is still best to expressly
state so – to prevent a resulting trust being construed as settlor’s
intention (Hodgson v Marks (1971)).
2 Section 60(3) does not apply to pure personalty – transfer governed by
general principles of equity – in voluntary transfer of personalty a
resulting trust arises and transferee holds on trust for transferor (the
presumption of a resulting trust) – based on idea that transferor would
not wish to part with beneficial interest where there is only a voluntary
transfer (although it is hard to see why they cannot be construed as
outright gifts) (Re Vinogradoff (1935)).
Resulting trusts 91
3 The presumption of a resulting trust can of course be rebutted by

evidence of a contrary intention – this may also be the case where the
presumption of advancement applies:

O presumption is based on relationship between settlor and beneficiary
– so in certain cases outright gift presumed, e.g. husband/wife, father/
children, father/any person for whom he is in loco parentis (Re Eykyn’s
Trusts (1877));
O s 199 Equality Act 2010 has abolished the presumption of advance-
ment but this section has not yet been brought into force;
O while presumption derives from moral obligation – Lord Diplock in
Pettitt v Pettitt (1970) said it is ‘based upon inferences of fact which
an earlier generation of judges drew as the most likely intentions of
earlier generations of spouses belonging to the propertied classes of a
different social era’;
O presumption will not apply to a mother’s gift to her child (Bennett
v Bennett (1879)), or a father ‘s gift to his illegitimate child (though
in practice both should now be covered by loco parentis), nor to
voluntary transfer from a wife to her husband, or from a man to his
mistress – although in all these it is suggested that a more modern
approach should be taken (Re Cameron (Deceased) (1999)).
4 Both presumptions of a resulting trust and of advancement can be
rebutted by evidence to the contrary – though there are limitations on
what evidence is available to rebut the presumption (Shephard
v Cartwright (1954)).
5 Traditionally, courts were reluctant to let a party introduce evidence
of an improper motive in order to rebut a presumption (Gascoigne
v Gascoigne (1918)):
O as Lord Denning put it in Tinker v Tinker (1970) it may leave the
judge ‘on the horns of a dilemma’;
O the whole area of improper motive was reviewed by both CA and HL
– with HL determining that interests under illegal transactions can
be enforced only if the party seeking to can establish their title
without relying on their own illegality – and rejecting CA’s idea that
the answer should be based on what does or does not offend public
conscience (Tinsley v Milligan (1993));
O one further point established is that presumption of advancement
can be rebutted by evidence of unlawful or improper motive when
purpose not actually carried out – the so-called ‘repentance’ prin-
ciple (Tribe v Tribe (1996));
O the Law Commission has been critical of courts’ handling of these
issues and has suggested reforms.
7.2.5 Purchase in the name of others and the

presumption of resulting trust
1 As Chief Baron Eyre said in Dyer v Dyer (1788), ‘the trust of a legal
estate . . . results to the man who advances the purchase money’.
2 So whenever a person has bought property in another’s name, unless
there is some indication that he does not intend to keep beneficial
interest, there is a presumption of a resulting trust in his favour (Fowkes
v Pascoe (1875)).
3 As with voluntary transfers of property, the presumption of advance-
ment can rebut the presumption of a resulting trust and the same rules
apply as to admissibility of evidence (Warren v Gurney (1944)).
4 Where a purchase by several parties is made in name of one then title is
held on resulting trust in proportion to which each contributed to
purchase:
O and this is particularly appropriate to implied co-ownership
cases – Bull v Bull (1955), Pettitt v Pettitt (1970) and Gissing v Gissing
(1971);
O and criticisms of earlier cases were aired and precise difference
between application of resulting trust and constructive trust was
identified in Drake v Whipp (1995);
O and members of a lottery syndicate who have contributed their share
can enforce their rights to the winnings through a resulting trust
(Abrahams v Abrahams (1999));
O and where parties have bought property with one paying their share
and lending the other, even though the debt is not paid off, the
debtor still gains an interest in the property (Elithorn v Poulter
(2009)).
5 If a joint purchase is put in name of one person who is wife or child of
the other party then presumption of advancement arises in any case as a
last resort and can be rebutted by very comparatively slight evidence
(McGrath v Wallis (1995)).
6 Law Commission has been critical and suggested reforms.
Constructive trusts 93
Z 7.3 Constructive trusts

7.3.1 General
1 A constructive trust is a form of implied trust which arises only by opera-
tion of law.
2 According to Edmund Davies LJ in Carl Zeiss Stiftung v Herbert Smith &
Co (1969), ‘English law provides no clear and all-embracing definition
. . . Its boundaries have been left perhaps deliberately vague, so as not to
restrict the court by technicalities in deciding what the justice of a
particular case may demand’:
O Lord Millet in Paragon Finance v Thakerar (1999) identifies two
different interpretations:
i) where constructive trustee is really a trustee because of an
arrangement with beneficial owner meaning that using property
for his own benefit would be unconscionable;
ii) where defendant is implicated in a fraud and, though not in fact
a trustee, is bound to account in the same way.
3 However, the mechanism has been crucial to the development of real
property rights in English law.
4 There are certain overlaps with resulting trusts, e.g. that neither conform
to the formality requirements, but, though they have been, the two
should not be confused.
5 Another major questions to follow the constructive trust is whether it
exists as a type of trust or is in fact a remedy:
O Lord Browne-Wilkinson described the distinction in Westdeutsche
Landesbank Girozentrale v Islington BC (1996) – in ‘institutional’ the
consequences for third parties are determined by law, in ‘remedial’
third-party rights are set at the court’s discretion.
7.3.2 Duties of the constructive trustee

1 Duties and liabilities of a constructive trustee are generally different to
those of an express trustee.
2 This is because the trust arises by operation of law.
3 So, e.g. duties to invest and general duty of care will not apply.
4 And duties will probably vary according to circumstances in which the
trust arises.
5 Certainly in many instances the most significant duty of the constructive

trustee will be to return the property (or to account for it) to the actual
beneficiary.
6 This is why in certain jurisdictions, e.g. USA, the trust is seen as being
essentially remedial, has to do with restitution, and is a means of
preventing unjust enrichment.
7 But the English courts have generally tended to reject this approach –
e.g. in the case of mortgage arrears (Halifax Building Society v Thomas
(1996)) and in the case of the assets of an insolvent company (Re Polly
Peck International plc (in administration) (No 2) (1998)).
7.3.3 Traditional categories of

constructive trust
1 Where a fiduciary obtains an unauthorised (secret) profit as a result of
his/her connection with the trust:
O the basic principle is that from Lord Herschell’s judgment in Bray v
Ford (1896) ‘a person in a fiduciary position . . . is not, unless other-
wise expressly provided, entitled to make a profit; he is not allowed
to put himself in a position where his interest and his duty conflict’;
O and the fiduciary will be prevented from keeping any advantage gained
directly or indirectly from the position as fiduciary (Re Biss (1903));
O and in such circumstances the fiduciary holds property gained on
constructive trust for beneficiaries under the trust (Boardman v
Phipps (1967));
O and while employment is not generally a fiduciary relationship, it can
give rise to one (Cobbetts v Hodge (2009)).
2 Mutual wills:
O where two people, usually husband and wife, leave property to each
other, but also agree that on the death of survivor of two property
should go to named beneficiaries;
O there must be a clear and binding agreement between the parties not
to revoke the will – compare Re Oldham (1925) with Re Cleaver
(1981);
O to maintain rule that wills should always be revocable but still allow
agreement to be enforceable, equity imposes a trust on personal
representatives of second of two parties to agreement to die in favour
of ultimate beneficiary identified in agreement (Dufour v Pereira
(1769));
O one argument used to justify enforcing mutual will is that survivor of
two parties to agreement is receiving some benefit – and it is this that
makes it inequitable for that party to go back on the agreement;

O disputed by Morritt J in Re Dale (Deceased) (1994) – where it was
stated that the theoretical basis of the trust is to prevent fraud against
the other party to an agreement that was intended by both to be
binding;
O it is likely that the trust arises on the death of the first party – but
there are then difficulties in determining to what property the trust
applies (Re Hagger (1930));
O area is full of difficulties and has been said ‘is a clumsy and inade-
quate way of dealing with a complicated problem’ (Martin, see also
Mummery LJ in Olins v Walters (2008)).
3 The vendor of land:
O not an ordinary trusteeship – because a contract for land is specifi-
cally enforceable – once contract is concluded purchaser becomes
effective owner of land and vendor in that sense is trustee of it
(Lysaght v Edwards (1876));
O uncertain at which precise point vendor becomes trustee;
O but it is possible that where after exchange of contracts vendor
then sells on to a different purchaser (s)he may be constructive
trustee of the purchase monies for benefit of purchaser (Lake v Bayliss
(1974));
O on completion once the price is paid property must be conveyed
because at this stage vendor has only a bare legal estate while
purchaser owns entire beneficial interest (Lloyds Bank plc v Carrick
(1996));
O this is an example of the maxim that equity treats as done that which
ought to be done.
4 Acquisition of property by killing:
O English courts have established rules to ensure that beneficiaries who
kill the testator (or someone they would inherit from in intestacy)
should not profit from the killing (Re Crippen (1911));
O in certain circumstances the killer is said to hold on a constructive
trust for the person who would be next entitled under the deceased’s
will or by intestacy rules;
O but the area is not without difficulty and is complicated, e.g. by the
Forfeiture Act 1982.
5 Secret trusts:
O there is debate as to whether secret trusts are constructive trusts or

express trusts;
O half secret trusts can only ever be express because the trust is clear in
the will;
O but with fully secret, if they operate to prevent fraud by the osten-
sible beneficiary they could be constructive;
O the significance is that for express trusts of land s 53(1)(b) Law of
Property Act 1925 must be complied with but not in a constructive
trust;
O in Ottaway v Norman an oral fully secret trust of land was upheld
without the issue being discussed.
7.3.4 Constructive trusts involving strangers

to the trust
1 Strangers to the trust are people who are not themselves express trustees
but intermeddle in the trust:
O they may be made personally liable for their dishonest involvement
in a breach of trust; or
O they may come into possession of trust property and then be obliged
to hold it on trust for the beneficiaries.
2 Dishonest assistance:
O now more correctly described as ‘accessory liability’;
O on the basis of Lord Selborne’s judgment in Barnes v Addy (1874)
it was originally taken that the accessory was not liable unless the
breach of trust arose from the dishonesty of the trustee, and there is
no dishonest assistance unless the accessory was aware that the fund
had been obtained dishonestly (Dolley v Ogunseitan (2009));
O now it is accepted that it is the accessory’s dishonesty that is critical
regardless of whether the trustee has been dishonest – otherwise the
accessory could get away with unconscionable behaviour merely
because the trustee acted honestly (Royal Brunei Airlines v Tan
(1995));
O on this basis the liability of the accessory is really personal but it has
been suggested that using the label of constructive trust is to avoid the
difficulty of a beneficiary not being able to sue anybody but a trustee;
O where an accessory is not dishonest and there is a breach of trust still
then the action is against the trustees (Lipkin Gorman v Karpnale
Ltd (1989));
O the test for dishonesty is the criminal test from Ghosh (1982) the
defendant was dishonest according to standards of reasonable honest
people and realised he was dishonest by those standards (Twinsectra
v Yardley (2002));
O it has been suggested that there is an element of ambiguity in the
Twinsectra judgment – but that the best view is that the defendant’s
knowledge of the transaction must not make his participation in the
transaction contrary to the normal accepted standards of honest
conduct (Barlow Clowes International Ltd (in liquidation) v Euro-
trust International and others (2006));
O and it has been suggested that there is a strong reason to use the Ghosh
test in the case of professionals (Bryant v Law Society (2007)) – so there
is an objective and a subjective element to the test (Abou-Rahmah
[2006] All ER (D) 80) but the preference is for an objective test;
O and there is no sliding scale of dishonesty (Starglade Properties Ltd
v Nash (2011)).
3 Knowing receipt and dealing:
O now more appropriately called ‘recipient liability’;
O a person in actual receipt of trust property has always been bound to
return the property unless (s)he is a bona fide purchaser for value
without notice – and so long as (s)he retains the property tracing is
possible;
O formerly, constructive notice was sufficient for the person in the
receipt of the property to take subject to the trust (Belmont Finance
Corporation v Williams Furniture Ltd (No 2) (1980));
O however, a different view was taken by Megarry V-C in Re Montagu’s
Settlement Trusts (1987) – where it was suggested that only actual
knowledge is sufficient;
O reviewing the authorities, Nourse LJ in Bank of Credit and Commerce
International (Overseas) Ltd v Akindele (2000): considered that
for recipient liability: ‘The recipient’s state of knowledge must be
such as to make it unconscionable for him to retain the benefit of
the receipt’ – although accepting that this strict liability may be
inappropriate to commercial transactions;
O receiving trust property without entitlement in any case places a
burden on the recipient to enquire and a failure to do so amounts to
knowingly receiving (Law Society of England and Wales v Habitable

Concepts Ltd (2010)).
4 An agent who knowingly receives trust property will not be liable ‘so
long as he acts honestly . . . unless he intermeddles in the trust by doing
acts . . . outside the duties of an agent’ (Williams – Ashman v Price and
Williams (1942)).
5 Liability of partners of a constructive trustee:
O since partners are jointly and severally liable a partner may be equally
liable for his partner ‘s misapplication of trust monies;
O but this will not be the case where the partner has acted honestly
throughout and has not received funds as a trustee but only as an
agent (Re Bell’s Indenture (1980));
O in Blyth v Fladgate (1891) solicitors who were partners became trus-
tees because there were no trustees at the time that the money was
paid into their account;
O but it has also been held that a partnership can be vicariously liable
under s 10 Partnership Act 1890 for torts and also as constructive
trustee (Dubai Aluminum v Salaam (1999)).
7.3.5 The ‘new model’ constructive trust

1 Term ‘new model’ adopted by Denning in Eves v Eves (1975). So applied
by Lord Denning in cases involving share of family home (spouses or
cohabitants) based on work done etc (Gissing v Gissing (1971); Eves v
Eves; Petitt v Petitt (1970)).
2 But the common feature was that the party would have failed under
traditional trust or land law principles
3 New principles were introduced by Lord Bridge in Lloyds Bank plc v
Rosset (1991); and applied in Drake v Whipp (1996)).
Z 7.4 Trusts of the family home

7.4.1 The nature of implied co-ownership
1 Whenever land is conveyed at law to two or more people they are both
entitled as beneficial as well as legal owners – express co-ownership:
O unless this is contrary to the intentions of the parties (Goodman v
Carlton (2002)).
Trusts of the family home 99
2 Implied co-ownership is also possible – where there is only one legal

owner, e.g. where a wife or cohabitant contributes towards purchase of
matrimonial home.
3 In implied co-ownership the legal owner now holds the property on a
trust of land the beneficial title for himself and all other beneficial
owners.
4 Certain problems are created by this situation:
O with only one legal title holder, there is only one trustee creating
complications for the overreaching mechanism in land transfers;
O the problem of protecting the beneficial owner’s interest, particularly
rights of occupation;
O disputes over sales of the property.
5 There are generally two ways in which the beneficial interest can arise to
become an implied co-ownership:
O where there is a resulting trust – requiring a contribution to the
acquisition of the property;
O where there is a constructive trust – based on common intention
that the implied co-owner is to own a beneficial share (Lloyd’s Bank
v Rosset (1991)).
6 Since the decision in Stack v Dowden (2007) it is now questioned
whether the criteria laid down by Lord Bridge in Lloyd’s Bank v Rosset
should be used by the courts in deciding whether a constructive trust
arises in sole ownership cases.
7 In Stack v Dowden Baroness Hale suggested that ‘the law has moved on’
and today the court must find the intention of the parties whether
express, inferred or imputed and should not be confined to finding
a common intention either through an express agreement or
impliedly because the claimant contributed towards the purchase of the
property.
7.4.2 Implied co-ownership under a

resulting trust
1 The basis of the resulting trust is that the person claiming implied
co-ownership has made a contribution towards the acquisition of the
property.
2 The resulting trust has many applications in diverse areas of law,
e.g. company law – a traditional example of a resulting trust in land
ownership is where a person made a grant of property with an express

trust which failed to dispose of the whole beneficial interest, then
trustees would hold the residue on a resulting trust for the settlor.
3 Originally the obvious example of a resulting trust is where two or more
people jointly contributed (in whatever proportions) to the purchase of
land but the legal estate was in one name only – the legal owner held on
resulting trust for both his/her own and the other party’s beneficial
interest (Bull v Bull (1955)). But now in Stack v Dowden (2007) HL has
suggested that the resulting trust was inappropriate for deciding shares
in the family home.
4 Another classic example is a bare trust where the conveyance of legal
title was to a ‘volunteer’ who gave no consideration, unless it can be
shown that the property was transferred as a gift (Hodgson v Marks
(1971)).
5 Where there is a gift of land no trust exists – the whole beneficial owner-
ship is transferred (Tinsley v Milligan (1992)).
6 A presumption of trust is rebuttable by raising the presumption of
advancement – that a gift is made in specific relationships, e.g. father
and daughter where one is bound to materially support the other
(Stock v McAvoy (1872) and see also Barrett v Barrett (2008) but note
provisions of Equality Act 2010 discussed above.
7 In family law, ‘property adjustment orders’ may now give entitlement in
land to spouses on divorce – first introduced in Matrimonial Proceedings
and Property Act 1970, and now contained in Matrimonial Causes
Act 1973, as amended by Family Law Act 1996 – clearly, before these
provisions were introduced, the need to prove a trust was greater.
8 Direct financial contribution to purchase of property creates a resulting
trust of those contributions made at the time of the purchase in favour
of contributor (although this is more doubtful since the decision in
Curley v Parkes (2004)) but contributions in another form are more
problematic.
9 So the courts have had to consider claims based on minor contributions
to household expenses and work done – accepted as creating a resulting
trust by the Court of Appeal but rejected by the House of Lords (Pettitt
v Pettitt (1970); Burns v Burns (1984)).
10 And it is possible that a contribution to regular domestic expenses may
create an interest but where it is only by this that the legal owner can
actually make the purchase of the property.
11 So share under resulting trust is directly proportional to contribution.
Trusts of the family home 101
7.4.3 Implied co-ownership under a

constructive trust
1 A constructive trust arises by operation of law and is imposed on owner
of legal title usually as result of his conduct.
2 So may be imposed as result of fraudulent, unconscionable or inequi-
table conduct on part of the legal title holder.
3 There are essentially three elements:
O a common intention expressed by the parties (not necessarily in
writing);
O reliance on this promise made by legal title owner by party claiming
an interest evidenced by sufferance of some detriment on their part,
which involves altering one’s position in reliance (Williams v Parris
(2008));
O unconscionable behaviour by legal title owner.
4 So first job for court is to identify a common intention. According to
Lord Bridge in Lloyds Bank v Rosset this must either be express or implied:
O express, e.g. a simple promise of title holder (Eves v Eves (1975));
O or where title holder has negatively explained the reason that the
beneficial owner is excluded from the title (Grant v Edwards (1986)
or Hammond v Mitchell (1991));
O implied must be based on direct financial contributions (Le Foe v Le
Foe (2001));
O and the common intention can be formed after the acquisition but
only where there is a post-acquisition agreement (James v Thomas
(2008) where no such intention was formed) and no interest is
acquired based on conduct where there is no express intention
(Morris v Morris (2008)).
5 Features identifiable as a detriment have included financial expenditure,
e.g. household expenses (Hazell v Hazell (1972)) and care for children
(Grant v Edwards (1986)).
6 The courts have recently developed a more sensible and more modern
test for establishing the quantification of the beneficial interests in a
constructive trust. In Stack v Dowden (2007) it was held that primarily
‘equity follows the law’ so that where the legal estate is held jointly the
beneficial estate should also be held as a joint tenancy. This presump-
tion can be rebutted by exceptional circumstances, which Baroness Hale
held included a range of factors more appropriate than merely concen-
trating on financial contributions in determining the issue including:
O any advice or discussions at the time of the transfer;

O the reason why the home was acquired in joint names;
O the purpose for which the home was acquired;
O the relationship of the parties;
O the presence of children;
O how the purchase was financed and how the parties arranged their
joint finances;
O the character and personality of the parties.
7 This followed the fair apportionment principle from Oxley v Hiscock
(2004), although rather than the ‘fair apportionment principle’ which is
the subjective view of the court, the court determined share objectively
from conduct of parties:
O so e.g. where a house was brought jointly by a son who financed it
and his mother who had nine other children the presumption ‘equity
follows the law’ was rebutted and it was held that her intention could
not have been that the son would eventually gain sole ownership
(Adekunle v Ritchie (2007));
O and in a relationship where the woman contributed nothing to the
acquisition but she financed the upkeep of the house and their two
children, there was a presumption of joint ownership so upholding
the presumption that ‘equity follows the law’ (Fowler v Barron
(2008));
O but it has been stated that the Stack v Dowden principles do not
extend to investment properties (Laskar v Laskar (2008)).
8 More recently in Jones v Kernott (2011) it was held that the intention of
the parties can change during the ownership of property:
O a couple had purchased property jointly but one party (Mr Kernott)
left and the other party (Ms Jones) remained in the property for
nearly 15 years. The House of Lords held that Mr Kernott could only
claim a 10 per cent share in the property as the parties’ intentions
about the ownership of the property had changed;
O the House of Lords held that where the intention of the parties
has not been expressly stated it is possible to either infer or impute
that intention.
Key Cases Checklist

Automatic Presumed ' Constructive

Resulting Trusts Resulting Trusts Trusts
Re Ames Settlement Dyer V Dyer (1788) Binions V Evans (1972)
(1946) A trust of a legal estate Property will be held on
Where a valid trust falls will result to the man constructive trust where it
for any reason the who advances the has been purchased
remaining property will purchase money expressly subject to the
be held on resulting trust unless the rights of another and
for the settlor presumption Is equity will not allow such
Vandervell V IRC rebutted rights to be denied
(1967) The remedial
Where a trust fails the constructive trust
surplus assets will be Re Polly Peck (No 5)
held on resulting trust (1998)
for the settlor even if the This is not recognised in
transferor did not intend the UK
a trust to arise The institutional
Barclays Bank v constructive trust
Quistclose (1970) Traditionally recognised
by the UK courts
Trust fund not fully Land The use of the

exhausted Hodgson V Marks Constructive Trust
Re Gillingham Bus (1971) Lysaght v Edwards
Disaster Fund (1958) Where no written (1876)
Where unknown declaration of trust has The vendor becomes a
contributors had been made to conform constructive trustee in a
contributed for a named with s 53(1 )(b) the contract for sale of land
purpose which failed the interest can still be held Neville V Wilson (1997)
fund will be held on under an implied trust Lyus V Prowsa
resulting trust for the which does not need to Developments (1982)
contributors comply with written A constructive trust will
Re Abbott Fund Trusts formalities arise where a purchaser
(1900) Laskar v Laskar (2008) purchases expressly
Money collected for the subject to the rights of a
care of two elderly Personalty
third party
inhabitants of a village Re Vinogradoff (1935) ч____________________ '
was held on resulting A minor could hold
trust after their death personalty on resulting Constructive
Re Osoba (1979) trust for another but Trusts of the
A fund left for the never land family home
education of the settlor’s
Oxley V Hiscock
daughter could be
(2004)
claimed absolutely by
Midland Bank v
her after she had
Cooke (1995)
completed her university
Stack V Dowden
education
(2007)
Fowler V Barron
(2008)
V____________
ґ > r
The dissolution of an Surplus funds in a pension
unincorporated association fund

Re West Sussex Constabulary’s Davis V Richards and Wellington
Widows (1971) Industries L td (t 991)
The surviving members had no claim A surplus in a pension fund was held
over a fund that had been established to pass to the Crown after the
for widows of members of the employers had been able to claim
constabulary in West Sussex. The fund overpayments to the fund
went bona vacantia to the Crown Air Jamaica v Charlton (1999)
Re Bucks Constabulary Widows and A pension fund surplus could be
Orphans Fund Friendly Society claimed by the employers as well as
(No 2) (1979) the members
Surplus funds left after the dissolution of
a friendly society were held to pass to
the members alive at the date of
dissolution
V_____________________ ■
Presumption of Rebuttal of a resulting trust
advancement and rebuttal of Fowkes V Pascoe (1875)
presumption of resulting Property purchased in joint names of the
trust transferor and the transferee were not
held on resulting trust for the transferor if
Яе Roberts (1946)
evidence suggests they were to be a gift
There was a presumption of
Re Sharpe (a Bankrupt) (1980)
advancement from father to son
Where there is evidence of a loan there
Bennett V Bennett (1879)
is no presumption of a resulting trust
There was no presumption of
advancement from mother to child
Transfers for illegal purposes
PettiIf V Pettitt (1970)
Lord Diplock criticised the Tinsley V Milligan (1994)
presumption of advancement Where an illegal purpose exists but does
between husband and wife in this not have to be relied on by the claimant
case, but in spite of attempts to it will not affect a finding of a resulting
introduce legislation to reform this, trust
the presumption remains Tribe V Tribe (1996)
7.3.1.5 Westdeutsche & Landesbank Girozentrale v

Islington LBC [1996] 2 All ER 961 HL
Key Facts
Money was lent by Westdeutsche, a German bank, to the

Borough of Islington in ‘an interest swap agreement’ which
was later found to be a void agreement. The bank brought
a claim for compound interest, rather than simple interest
which could only be paid if the money had been held on
trust by the local authority.
Key Law
The liability of the local authority to repay the loan from

Westdeutsche under the ultra vires agreement was subject
only to a personal liability to repay because the bank had
intended the local authority to become absolute owners of
the fund. Their liability to repay lay in common law and not
in equity, therefore since the claim lay in common law only
simple interest could be claimed. Compound interest is
only payable under equity.
Key Judgment
Lord Browne-Wilkinson: ‘The local authority had no knowl-

edge of the invalidity of the contract but regarded the
money as its own to spend as it thought fit. There was
never a time at which both (a) there was defined trust prop-
erty, and (b) the conscience of the local authority in relation
to such defined trust property was affected. The basic
requirements of a trust were never satisfied . . .’
He identified the following two sets of circumstances when
a resulting trust will arise:
1 Where A makes a voluntary payment to B or pays
(wholly or in part) for the purchase of property which is
vested either to B or pays (wholly or in part) for the
purchase of property which is vested either in B alone
or in joint names of A and B, there is a presumption that
A did not intend to make a gift to B.
2 Where A transfers property to B on express trusts but
the trust declared does not exhaust the whole benefi-
cial interest.
Re Vandervell’s Trusts (No 2) [1974] 1 All ER

47 (see facts of earlier case above) HL
Key Facts
This case concerned the issues arising about ownership of

the shares transferred to the Royal College of Pharmacology
by Mr Vandervell. It was held that he had retained sufficient
interest for the shares to be held on resulting trust for him.
Since the court held the shares were held on resulting trust
for Mr Vandervell, the transfer of his interest by the trustees
to a trust for his children did not require writing. Implied
trusts are excluded from the operation of s 53(1)(c).
Key Law
Resulting trusts can be classified into two categories:

‘automatic’ and ‘presumed’. Automatic resulting trusts
arise where there is a gap in the ownership, and presumed
resulting trusts arise where property is purchased in the
name of another and the title is held on presumed resulting
trust for the party providing the purchase money.
Key Link
Formalities Chapter 4.
Automatic resulting trusts

An automatic resulting trust arises ‘. . . where A transfers
property to B on express trusts, but the trusts declared
do not exhaust the whole of the beneficial interest’: Lord
Browne-Wilkinson in Westdeutsche Landesbank Girozentrale
v Islington London Borough Council (1996).
7.2.2.3 Re Ames Settlement [1946] Ch 217 HC
Key Facts
A marriage settlement was created by a father in favour of

his son. The marriage was later declared void due to the
husband’s incapacity to consummate the marriage and as
a result there was total failure of consideration of the
marriage settlement. The property was held to result back
to the father ‘s estate.
Key Law
If a valid trust is created and then later fails, any property

remaining in the fund will be held on resulting trust for the
settlor.
7.2.2.5 Cooper v PRG Powerhouse Ltd

(in Liquidation) [2008] All ER 964 HC
Key Facts
Mr Cooper was employed by a company and was provided

with a car, for which he made payments. After he resigned
he paid a sum for the outstanding amount for the car but
before it could be transferred to the car manufacturers, the

company went into liquidation.
Key Law
The employee successfully argued that the money paid

was held for a purpose and was therefore held on trust by
the company and since the purpose had failed it should be
returned to him.
7.2.3.8 Re Gillingham Bus Disaster Fund [1958]

Ch 300 HC
Key Facts
A number of marine cadets were killed or seriously injured in

an accident and a large sum of money was collected for the
care of the survivors and also for ‘worthy causes’. There was
a surplus after the injured had been cared for. The secondary
cause was not charitable. The court found the surplus funds
were held on resulting trust for the contributors.
Key Law
The subscribers had intended to contribute to a specific

purpose and that had now failed, so each donor retained an
interest, which resulted back to them.
7.2.3.7 Re Abbott Fund Trusts [1900] 2 Ch 326 HC
Key Facts
A sum of money was collected in a village for two deaf and

dumb old ladies. On their death there was a surplus in the
fund.
Key Law
The surplus could not be claimed by the next of kin but was
held on resulting trust for the subscribers on the basis that
the contributors had transferred their fund on express trust
for the care of the two old ladies and that purpose had now
failed.
7.2.3.6 Re Osoba [1979] 1 WLR 247 CA
Key Facts
Property was left on trust for the testator’s widow, the

maintenance and training of his daughter up to university
grade, and for the maintenance of his aged mother. Both
the widow and the testator’s mother had died and the
daughter had completed her university education.
Key Law
The court held that the gifts were intended to be absolute

and the reference to maintenance and education were
words of motive. The daughter was therefore entitled to
keep the surplus.
Key Link
Compare Barclays Bank v Quistclose Investments Ltd

(1970), where a resulting trust arose when the primary trust
had failed.
7.2.3.9 Re West Sussex Constabulary’s Widows,

Children and Benevolent (1930) Fund Trusts
[1971] Ch 1 HC
Key Facts
A fund was established to provide benefits for widows and

dependants of members of the West Sussex Constabulary.
The money was collected from a number of sources
including raffles, subscriptions, entertainments, sweep-
stakes and collecting boxes as well as legacies. The West
Sussex Constabulary was combined with other police
forces, leaving a surplus in this fund.
Key Law
It was held that the surviving members had no claim at all

because they had received all that they had contracted for
and the money was paid on the basis of contract and not of
trust. A similar view was taken over the raffles, subscrip-
tions, entertainments and sweepstakes. The funds from
outside legacies were held on resulting trust for the
subscribers and the remainder went bona vacantia to the

Crown.
7.2.3.9 Re Bucks Constabulary Widows and

Orphans Fund Friendly Society (No 2)
[1979] 1 WLR 936 HC
Key Facts
A fund was set up to provide benefits for the widows and

orphans of deceased police officers and the provision of
payments on the death of a member or during sickness.
When the Bucks Constabulary wound up there was a
surplus in the fund. The court held that the fund would be
held for the members alive at the date of dissolution and
would be split between them.
Key Law
This is a contractual solution to the problem of surplus funds

in an unincorporated association. Walton J suggested that
there would be only one circumstance when the property
would be held bona vacantia to the Crown, and that would
be where the association was reduced to only one member.
Key Problem
There are inherent problems with surplus funds on the disso-

lution of an unincorporated association. There are a number
of solutions: there could be a resulting trust for those who
had contributed for a purpose, there could be distribution
between the members of the association, or the money
could pass bona vacantia to the Crown. It could be argued
that where it is held bona vacantia for the Crown, the Crown
has made an unexpected gain in the circumstances and the
members always have a stronger claim to any surplus funds.
Land
7.2.4.1 Hodgson v Marks [1971] Ch 892 CA
Key Facts
Mrs Hodgson transferred her house to her lodger on the

oral understanding that she would be able to remain there
and that he would look after her affairs. There was no
written agreement complying with s 53(1)(b) LPA 1925,

which holds that an express trust of land must be made in

writing in order to be enforceable. The lodger sold the
house to a bona fide purchaser, Mr Marks.
Key Law
The court held that Mrs Hodgson retained an interest in the

property in equity as the lodger had held the property on
resulting trust after the transfer to him, and Mrs Hodgson’s
interest remained binding on the purchaser.
Key Comment
Recently it appears that courts no longer regard resulting

trusts as an appropriate way of discovering common inten-
tion between the parties in the context of land held between
family members (see Stack v Dowden below). However,
Lord Neuberger in a dissenting judgment in Stack v Dowden
suggested that the resulting trust may still be useful in this
context. The appropriate situation identified in recent cases
is where property is purchased as an investment. Even
between family members this will be regarded as held
under a resulting trust.
Key Link
Note that the formalities for the creation of a trust in land

had not been complied with but under s 53(2) a resulting
trust does not require any formalities.
Personalty
7.2.4.2 Re Vinogradoff [1935] WN 68 HC
Key Facts
A grandmother transferred by way of gift £800 worth of war

loan stock into the joint names of herself and her grand-
daughter, who was aged four. The grandmother continued
to receive the dividends.
Key Law
Under her will the stock passed to another and it was held
that the granddaughter held it on resulting trust for the
grandmother ‘s estate.
Husband to wife
Pettitt v Pettitt [1970] AC 777 HL
Key Facts
A husband made contributions in kind towards the matri-

monial home, which was registered in the name of his wife.
Key Law
The court held that the wife did not hold the property on
resulting trust for him and he had no share in the property
based on his contributions in kind.
Key Judgment
Lord Diplock: ‘It would . . . be an abuse of the legal tech-

nique for ascertaining or imputing intention to apply to trans-
actions between the post-war generation of married couples
“presumptions” which are based upon inferences of fact
which an earlier generation of judges drew as the most likely
intentions of earlier generations of spouses belonging to the
propertied classes of a different social era . . .’.
Key Comment
The presumption of advancement from husband to wife

has been abolished by s199 Equality Act 2010 but it has not
yet been brought into force. It has prospective effect only
so does not affect existing transfers.
Transfers for illegal purposes
7.2.4.5 Tinsley v Milligan [1994] 1 AC 340 HL
Key Comment
The claimant relied on a presumption of a resulting trust

and did not need to base her claim on the illegal purpose,
so the court was able to find in favour of the claimant.
Key Link
See 1.1 A brief history of equity.

7.2.4.5 Tribe v Tribe [1996] Ch 107 CA
Key Facts
A father transferred shares into the name of his son with the
express purpose of minimising his assets to prevent his
landlord from recovering a contribution towards essential
repairs on the property which he rented. The repairs were
carried out without the father having to pay for them, so he
tried to recover the shares from his son, who refused to
return them.
Key Law
The court held that they must be returned in spite of the

illegal motive. Although the presumption of advancement
may have applied, the father could rely on the presumption
of a resulting trust. Although the reasons for the transfer
were illegal, i.e. to defraud the creditors, the illegal purpose
had not been carried out.
Key Comment
In 2009 the Law Commission recommended that the law on

illegality should be replaced with a statutory discretion for
the court to declare the trust to be illegal or invalid. This
would have allowed the House of Lords to declare the trust
in Tinsley v Milligan invalid as it would not depend on
whether or not the parties had relied on the illegality.
However, the Law Commission has recommended that the
illegality should only have an effect on the beneficial entitle-
ment where there are exceptional circumstances.
Purchase in the name of others and the

presumption of resulting trust
7.2.5.4 Abrahams v Trustee in Bankruptcy of

Abrahams [1999] BPIR 637 HC
Key Facts
A wife contributed to a syndicate for the purchase of lottery

tickets in the name of herself and her husband.
Key Law
The syndicate won and it was held that the presumption of

advancement did not operate in favour of the husband. As
a result, the wife could claim both shares because the
husband held his share of the winnings on resulting trust for
his wife.
Rebuttal of the presumption of a resulting trust
7.2.5.2 Fowkes v Pascoe (1875) 10 Ch App 343 CA
Key Facts
Annuities were purchased by Sarah Baker in the joint

names of herself and John Pascoe, raising a presumption
of a resulting trust. This was rebutted by evidence that a gift
was intended. She had purchased some of the stock in her
sole name and some in joint names of herself and another.
Key Law
The court found that as she held the shares in separate

shareholdings, this was evidence that a gift was intended.
The remedial constructive trust
7.3.2.7 Polly Peck (No 5) A [1998] 3 All ER 812 CA
Key Facts
The claimants owned land in Cyprus and they claimed the

right to proceed against the administrators of Polly Peck
International. They claimed that they were entitled to a
share of the profits that Polly Peck had made by exploiting
their land after it had been misappropriated by the Turkish
republic of Northern Cyprus. They based their claim on a
remedial constructive trust. This would allow them to gain
priority over the creditors.
Key Law
The claim was rejected and it was commented by Nourse

LJ in the case that the remedial constructive trust could
only be introduced into English law by Act of Parliament.
Key Comment
English law traditionally only recognises the institutional

constructive trust. This is brought into being on the occur-
rence of specified events without the need for the interven-
tion of the courts.
Specifically enforceable contract to sell property
7.3.3.3 Lysaght v Edwards (1876) 2 Ch D 499 HC
Key Judgment
Jessel MR: ‘. . . the moment you have a valid contract for

sale the vendor becomes a trustee in equity for the
purchaser of the estate sold, and the beneficial ownership
passes to the purchaser . . .’.
Where the legal title of the land is in a sole name
7.3.5.3 Lloyds Bank v Rosset [1991] 1 AC 107 HL
Key Facts
A married couple purchased a house. It was registered in

the husband’s sole name and he provided the purchase
money. The wife contributed towards the renovation of the
property and claimed a share in equity. It was held that she
did not have a share because she could not prove that
there was a common intention to share the property.
Key Law
A common intention to share must either be expressly

agreed, in which case contributions in kind can be evidence
of detriment, or it can be inferred, in which case only contri-
butions to the purchase money will be sufficient evidence
of intention.
Where one party claims a share in property based on rights
in equity there must be proof of a common intention to
share the property. A common intention to share can either
be express or implied but in each case there must be
evidence of detriment. Where the common intention is
expressly agreed then contributions in kind will qualify
as detriment. In cases of implied common intention only
financial contributions towards the purchase price will be

sufficient evidence of common intention.
Key Problem
Common intention can often be difficult to prove because

people do not always discuss shares in property but make
assumptions about ownership.
7.4.3.4 Grant v Edwards [1986] Ch 638 CA
Key Facts
A couple set up home together. The woman was married to

another man. A house was purchased and registered in the
sole name of the man, because he thought it would preju-
dice her entitlement on divorce if the house was registered
in joint names.
Key Law
The court held that this was sufficient evidence of a

common intention to share ownership.
Key Link
Eves v Eves [1975] 1 WLR 1338
7.4.3.4 Eves v Eves [1975] 1 WLR 1338 CA
Key Facts
An unmarried couple moved in together in property owned

by Mr Eves. He told the woman that he had intended to put
her name on the title but he thought (wrongly) that she was
too young because she was only 18.
Key Law
The court held that there was sufficient proof of an intention

to share the title and she was awarded a quarter share.
Quantification of the shares under a

constructive trust
Midland Bank plc v Cooke [1995]

4 All ER 562 CA
Key Facts
A common intention to share was found here because the

wife had made a financial contribution (albeit very small) to
the purchase of the property.
Key Law
When quantifying the shares the court held that it was enti-
tled to look at ‘the whole course of dealing’ between the
parties and as it was clear the parties shared both income
and expenditure equally the beneficial interest in the prop-
erty was split equally between them.
7.4.3.7 Oxley v Hiscock [2005] Fam 211 CA
Key Law
Where shares under a constructive trust are being quanti-

fied and the courts cannot identify an assumed intention
between the parties as to how the shares are to be divided,
the courts have a broad discretion to award what share
they feel is ‘fair ‘ in all the circumstances. This principle was
disapproved of in the case of Stack v Dowden.
Where legal title is in joint names
7.4.1.6 Stack v Dowden [2007] 2 AC 432 HL
Key Facts
This case concerned quantifying shares in a family home

jointly owned by an unmarried couple with four children and
who had been together for 25 years. The first house of the
couple had been purchased and funded by Ms Dowden.
However, the property in question was partly funded by
Mr Stack, who contributed 35 per cent whilst Ms Dowden
contributed the rest.
Key Law
The House of Lords, disapproving of the ‘fairness’ principle

from Oxley v Hiscock, held that the general rule should be
that ‘equity should follow the law’, so in most cases where
the legal title is jointly owned the beneficial interests should
be split equally unless there were exceptional circum-
stances. In this case circumstances were exceptional
because the parties had kept their finances separate
throughout their relationship and the equitable interest was
shared 65/35 per cent with Ms Dowden entitled to 65%.
Key Judgment
Lady Hale: ‘. . . cases in which the joint legal owners are to

be taken to have intended that their beneficial interest
should be different from their legal interests will be very
unusual . . .’
Jones v Kernott [2011] UKSC 53
Key Facts
Ms Jones and Mr Kernott purchased property in joint

names in 1985. They financed the purchase with a joint
mortgage and also paid the outgoings from a joint fund.
Mr Kernott left in 1993 and made no further contributions
towards the property. He then purchased another property
in his sole name. After 15 years, when both properties had
increased in value, he claimed a 50 per cent share in the
first property. At first instance the court held the shares to
be 10 per cent and 90 per cent. This was reversed by the
Court of Appeal, where the shares were held to be in equal
shares on the basis that they were joint owners at law and
in equity. The Supreme Court reinstated the decision of the
first instance judge. The parties had not agreed the shares;
instead the court drew inferences from the conduct of the
parties, in particular the fact that Mr Kernott had purchased
his own house after he left in 1993 and had ceased to
contribute towards the outgoings of the property.
Key Law
Where a couple purchase property in joint names but

without an express declaration of their beneficial interests
the presumption that the beneficial interests will be held
jointly can be rebutted by evidence of a contrary intention.

If there is no evidence of what the parties intended with

regard to the shares then it is for the court to decide what
shares were either intended or fair. Where that intention has
not been expressly stated the court can infer or impute that
intention.
Key Judgment
Lord Walker: ‘The time has come to make it clear . . . that in

the case of the purchase of a house or flat in joint names for
joint occupation by a married or unmarried couple where
both are responsible for the mortgage there is no presump-
tion of a resulting trust arising from their having contributed
to the deposit . . . in unequal shares.’
Fowler v Barron [2008] EWCA Civ 377 CA
Key Facts
The family home was owned jointly by this couple but

whereas Mr Barron paid all the expenses on the property, Ms
Fowler paid ancillary expenses such as clothes for the family.
Key Law
However, there was nothing to rebut the presumption that

equity follows the law.
Agreement to be bound
7.3.3.2 Re Oldham [1925] Ch 75 HC
Key Facts
The parties had made wills in similar form leaving their prop-
erty to each other absolutely. After the death of the husband
the wife married and made a new will on different terms.
Key Law
It was held that the original wills were identical but not
intended to take effect as mutual wills because she had
always intended to be bound by the terms of the will.
7.3.3.2 Re Cleaver [1981] 2 All ER 1018 HC
Key Facts
Mr and Mrs Cleaver married when they were both in their

seventies. They executed identical wills leaving their estates
to the survivor absolutely and in default to the three chil-
dren of the husband’s frst marriage. On her husband’s
death the wife executed a new will leaving her estate to only
one of the children.
Key Law
It was held that the wife’s estate was held on the terms of
the mutual wills because she had always intended to be
bound by the terms of the will.
7.3.4.2 Barnes v Addy (1874) 9 Ch App 244 CA
Key Judgment
Lord Selbourne: ‘Strangers are not to be made constructive

trustees merely because they act as agents of trustees in
transactions within their legal powers, transactions,
perhaps of which the Court of Equity may disapprove,
unless those agents receive and become chargeable with
some part of the trust property, or unless they assist with
knowledge in a dishonest and fraudulent design on the part
of the trustees . . .’.
Strangers who assist in a breach of trust
7.3.4.2 Royal Brunei Airlines Sdn Bhd v Tan

[1995] 2 AC 378 PC
Key Facts
The claimants were an airline who used a firm to act as

agents in ticket sales. In breach of trust the firm used
money from the ticket sales for its own business. The firm
became insolvent and Tan, who was the director and prin-
cipal shareholder, was sued for the proceeds of the sales.
The claimants argued that he was an accessory to the
breach of trust committed by the now insolvent firm. Tan
claimed that he was not liable because, although the firm

had misused the money, it had acted neither fraudulently

nor dishonestly. The court held that he was personally
liable for dishonestly assisting in the firm’s breach of trust.
Key Law
A stranger can be held to be liable for dishonest assistance

in a breach of trust where the breach of trust was neither
fraudulent nor dishonest. A stranger can be held liable
even where the breach of trust by the trustee is innocent or
negligent. The liability of the stranger depends on his
personal fault and his fraud or dishonesty.
Key Judgment
Lord Nicholls: ‘If the liability of the third party is fault-based,

what matters is the nature of the fault, not that of the
trustee. In this regard dishonesty on the part of the third
party would seem to be a sufficient basis for his liability,
irrespective of the state of mind of the trustee who is in
breach of trust . . .’.
Key Comment
In this case Lord Nicholls emphasised that dishonesty

would be judged on an objective standard although there
were subjective elements because dishonesty had to be
judged in the light of what the defendant knew at the time.
However, he emphasised that individuals were not free to
set their own standards.
7.2.2.5 Twinsectra v Yardley [2002] 2 All ER 377 HL
Key Facts
Twinsectra agreed to lend money on certain terms to Mr

Yardley, a businessman. They advanced the money to Sims,
solicitors acting on behalf of Mr Yardley, on an undertaking
that the fund would be applied solely in the acquisition of
specified property. Mr Leach, an independent solicitor also
acting for Mr Yardley, received the money from Sims.
Contrary to the undertaking the money was advanced to
Yardley without ensuring it was used to purchase property. It
was used for other purposes by Yardley and never repaid.
Twinsectra claimed the money had been held on trust for
them by the first set of solicitors and Mr Leach had dishon-

estly assisted them in a breach of trust and was personally

liable for the loss. The House of Lords held that he was not
liable for dishonestly assisting in the breach of trust.
Key Law
The judge at first instance (Carnwath J) held that the money

had not been held on trust and Mr Leach had not acted
dishonestly. The Court of Appeal held there was a trust and
he had acted dishonestly.
The House of Lords held that there was a trust, but by a
majority they held that Mr Leach had not acted dishonestly.
Key Judgment
Lord Hutton: ‘There is a purely subjective standard, whereby

a person is only regarded as dishonest if he transgresses
his own standard of honesty; even if that standard is
contrary to that of reasonable and honest people . . . there
is a purely objective standard whereby a person acts
dishonestly if his conduct is dishonest by the ordinary
standards of reasonable and honest people, even if he does
not realise this; thirdly there is a standard which combines
an objective and a subjective test, and which requires that
before there can be a finding of dishonesty it must be
established that the defendant’s conduct was dishonest by
the standards of reasonable and honest people and that he
himself realised that by those standards his conduct was
dishonest. I will call this “the combined test”.’
Twinsectra v Yardley held that the standard of dishonesty
necessary for the imposition of accessory liability is the
combined test.
7.3.4.2 Barlow Clowes International Ltd (in

liquidation) v Eurotrust International Ltd and
others [2006] 1 All ER 33 PC
Key Facts
The defendant was a Director of Eurotrust, a company

operating in the Isle of Man providing offshore services.
Money misappropriated from investors was placed with the
company. The Director of Eurotrust strongly suspected that
the money had been stolen but had not made inquiries. He
argued that he was not dishonest on the basis of the test
from Twinsectra because he had not been aware that his
actions were dishonest by ordinary standards.
Key Law
The court held that the defendant was liable. It was not
necessary for the claimants to prove that he had actually
considered what normally acceptable standards of honest
conduct might be.
7.3.4.2 Abou-Rahmah v Abacha [2006] EWCA Civ

1492 CA
Key Facts
This case concerned money laundering. The claimant was

a lawyer practising in Kuwait. He had been the victim of a
fraud. He sought to recover some money which he had
transferred to a bank on instruction from the fraudsters. He
argued that the bank had dishonestly assisted in the breach
of trust and was liable. The local bank manager admitted
that he was suspicious that the fraudsters were involved in
money laundering but there was nothing in the transaction
itself to make him unduly suspicious.
Key Law
The Court of Appeal held that the bank was not liable.
Strangers who receive trust property in

breach of trust
Re Baden Delvaux v Société General

[1983] BCLC 325 HC
Key Facts
The defendant bank was not held liable as constructive

trustees for the transfer of moneys to an account which
was not designated as a trust account, which had then
been dissipated.
Key Law
There are five classes of knowledge:

i) actual knowledge;
ii) wilfully shutting one’s eyes to the obvious;
iii) wilfully and recklessly failing to make such inquiries as

an honest and reasonable man would make;

iv) knowledge of circumstances which would indicate the
facts to an honest and reasonable man; and
v) knowledge of circumstances which would put an
honest and reasonable man on inquiry.
Key Comment
Recent cases (see Re Montagu below) suggest that classes

(i)–(iii) will generally give rise to liability, but classes (iv)–(v)
derive from negligence and will not generally give rise to
liability as a constructive trustee.
7.3.4.2 BCCI Ltd v Akindele [2000] 4 All ER 221 CA
Key Facts
The defendant received money as a return on an invalid

loan. The liquidators claimed this sum on the basis that he
had dishonestly received it and therefore held it as a
constructive trustee. He did not know that the loan was
fraudulent, nor of the other frauds that were being perpe-
trated within the group.
Key Law
He was not held liable to account as constructive trustee of

the monies, since he had not acted unconscionably.
Key Judgment
Nourse LJ: ‘I have come to the view that, just as there is

now a single test of dishonesty for knowing assistance, so
ought there to be a single test of knowledge for knowing
receipt. The recipient’s state of knowledge must be such as
to make it unconscionable for him to retain the benefit of
the receipt . . .’.
Re Montagu’s Settlement Trusts [1987] Ch

264 HC
Key Facts
The 10th Duke of Manchester received a large number of

chattels from a family trust. He sold a number of them
believing them to be his own. On his death it was found that
he had sold items that should have passed to the 11th
Duke of Manchester, who claimed that the 10th Duke had
held them as constructive trustee and his estate should
have to personally account for these items to him.
Key Law
It was held that he was not personally liable as a construc-

tive trustee for the items because he did not have subjec-
tive knowledge of the breach, he had simply made an
honest mistake.
7.3.4.2 Lipkin Gorman (a firm) v Karpnale Ltd

[1991] 3 WLR 10 HL
Key Facts
A solicitor used money from his firm’s client account to

gamble at the Playboy Club. The firm later tried to recover
this money, alleging the club were constructive trustees of
the money received. The money had ceased to be identifi-
able under the rules of tracing.
Key Law
The court held that the club had not received the money
with sufficient knowledge in order to make it accountable
as a constructive trustee.
Consideration
Re Dale [1994] Ch 31 HC
Key Facts
A husband and wife both agreed to execute wills leaving

each other’s estates to their son and daughter equally. The
husband died first and the wife made a new will leaving her
estate to her son, with a small gift to her daughter.
Key Law
It was held that the estate was held on trust for both the
children in equal shares. The consideration in a mutual will
was not of benefit to the surviving spouse but was the fact
that the first party had executed a mutual will and then had
not taken advantage of his right to revoke it in his/her
lifetime.
7.3.3.2 Olins v Walters [2009] Ch 212 CA
Key Facts
A husband and wife made mutual wills in 1988 and later in

1998 the husband and wife executed similar codicils
agreeing not to revoke their existing wills. The wife died in
2006 and the husband argued that he was not bound by
the mutual wills.
Key Law
The Court of Appeal found that the husband was bound

because there was evidence of a contract between the
parties which was binding on the death of the wife, and the
husband then held the estate as a constructive trustee.
Key Judgment
Mummery LJ: ‘it is a legally necessary condition of mutual

wills that there is clear and satisfactory evidence of a
contract between two testators’.
8 Charitable trusts
Charitable objects: Public benefit:

Originally had to confonm to ‘spirit and intendment of • used to be different for
preamble to 1601 statute and MacNaghten’s four each head
categories from IRC v Pemsel. • with poverty a public
Relief of poverty: benefit was generally
• no general definition - but not destitution (Re presumed.
Coutthurst) Now under the Charities
• includes widows and orphans (Re Young), and Act 2006 2 tests:
distressed gentlefolk (Thompson v Thompson) • is there a public benefit?
• not working class (Re Sander's W T) or if rich can • is there a sufficient class
receive (Re Gwyon) of people?
• can include poor relatives (Re Scarisbrick) and poor ·
employees (Dingle v Tumefy CHARITABLE
Advancement of education:
TRUSTS
• includes any fonm of worthwhile instruction or cultural
pursuit (Incorporated Council of Law Reporting v f \
A-G for England & Wales) ] Wholly and exclusively
• and useful research - compare Re Hopkins and Re charitable:
Shaw,
• and aesthetics, e.g. literature (Re Hopkins), music • usually political motive fails
(Re Delius)·, (McGovern vA-G)
• but must have value (Re Pinion). • gift succeeds if other
Advancement of religion: purposes are only ancillary
• under 2006 Act broad definition (Re Coxen)
• but needs public involvement - compare Re • problems if trust drafted too
Hetherington and Gilmour v Coates. widely (IRC VBaddelerf
Other purposes beneficial to the community: • or if linked to other
Now under Charities Act includes first three, plus: purposes by disjunctive
a) the advancement of health or the saving of lives words (Chichester
b) the advancement of citizenship or community Diocesan Fund and Board
development of Finance Ltd VSimpson)
c) the advancement of the arts, culture, heritage or • more likely to succeed with
science conjunctives link words,
d) the advancement of amateur sport e.g. Re Sutton ‘charitable
e) the advancement of human rights, conflict and deserving’ and Re
resolution or reconciliation or the promotion of Best ‘charitable and
religious or racial harmony or equality and benevolent1
diversity • can save by severance or
f) the advancement of environmental protection or Charitable Trusts
improvement (Validation) Act.________
g) the relief of those in need by reason of youth,
age, ill-health, disability, financial hardship or any
other disadvantage
h) the advancement of animal welfare
i) the promotion of the efficiency of the armed
forces of the Crown, or of the efficiency of the
police, fire and rescue services or ambulance
services
j) any other purpose within subsection (4) (this latter
basically refers to all other analogous purposes).
The history of the charitable trust 127
Z 8.1 The history of the charitable trust

1 Medieval society upheld charitable gifts wherever possible – pre-eminence

of religion – benefit to church – but disliked by Parliament – ‘mortmain’
(inalienability).
2 Changed by reformation and seizure of church lands – loss of charitable
activities carried out by church – so burden on parish – or disorder
resulted.
3 Parliament changed attitudes with Statute of Charitable Uses 1601 (the
Elizabethan statute) – commissioners appointed to oversee administra-
tion of charitable gifts.
4 Preamble defined charitable: ‘relief of aged, impotent, and poor people;
maintenance of sick and maimed soldiers and mariners; schools of
learning, free schools, and scholars in universities; repair of bridges,
ports, havens, causeways, churches, seabanks and highways; education
and preferment of orphans; the relief, stock or maintenance of houses of
correction; marriage of poor maids; supportation, aid, and help of young
tradesmen, handicraftsmen, and persons decayed; the relief or redemp-
tion of prisoners or captives; the aid or ease of any poor inhabitants
concerning the payment of ffteens, setting out of soldiers, and other
taxes’.
5 Subsequent statutory intervention:
O 1601 statute, repealed in Mortmain and Charitable Uses Act 1888
– but expressly preserved preamble;
O Charities Act 1960 – preamble repealed in s 38(4);
O Charities Act 1993 – repealed 1960 Act preserved s 38(4);
O Charities Act 2006 – redefined categories;
O Charities Act 2011 – has consolidated the law.
6 So ‘spirit and intendment’ preserved in case law. Lord MacNaghten in
Commissioners of IRC v Pemsel – ‘no doubt the popular meaning of the
words “charity” and “charitable” does not coincide with their legal
meaning . . . “charity” in its legal sense comprises four principal divisions:
trusts for the relief of poverty; trusts for the advancement of education;
trusts for the advancement of religion; and trusts for other purposes
beneficial to the community, not . . . under any of the preceding heads’.
7 Scottish Burial Reform and Crematorium Society v Glasgow Corporation
(1968) – Lord Wilberforce: ‘It is now accepted that what must be
regarded as charitable is not the wording of the preamble itself, but the
effect of the decisions given by the court as to its scope . . . which have
128 Charitable trusts
endeavoured to keep the law . . . moving according as new social need

arises or old ones become obsolete and satisfied’.
8 So can use appropriate wording but gift fails because real purpose not
charitable (McGovern v A-G (1982)).
9 Now categories of charitable trust and rules on public benefit are in
Charities Act 2011
Z 8.2 The difference between charitable trusts

and other trusts
1 Private trusts benefit individuals – charitable trusts benefit society in
general as well as individuals.
2 Charitable trusts for purposes, so no human beneficiaries.
3 There is no requirement for certainty.
4 Charitable trusts may be perpetual.
5 They also gain significant tax exemptions:
O income tax – s 505 Income and Corporation Tax Act 1988;
O exempt from capital gains tax and inheritance tax;
O also from stamp duty on conveyancing;
O and from national insurance surcharge;
O and also 80 per cent exemption from non-domestic rates;
O in 1997 tax exemption amounted to £1.75 billion – so not surprising
so many cases brought by IRC.
6 Sometimes attempts are made to validate failed charitable gifts under
the rule in Re Denley.
Z 8.3 Essential requirements of

charitable trusts
1 For a gift to be charitable there are three principal requirements:
O traditionally a gift was one where the purpose falls ‘within the spirit
and intendment’ of preamble to Statute of Elizabeth. Since 2006, a
gift must be one that falls within the categories identified in the
Charities Act 2006 and now in s 3 Charities Act 2011;
O trust must promote public benefit accepted by courts;
O purposes must be wholly and exclusively charitable.
Charitable objects 129
2 What is charitable is a question of law, not settlor’s intentions.

3 The categories under the 2011 Act are in s 3(1):

a) the prevention or relief of poverty;
b) the advancement of education;
c) the advancement of religion;
d) the advancement of health or the saving of lives;
e) the advancement of citizenship or community development;
f) the advancement of the arts, culture, heritage or science;
g) the advancement of amateur sport;
h) the advancement of human rights, conflict resolution or reconcilia-
tion or the promotion of religious or racial harmony or equality and
diversity;
i) the advancement of environmental protection or improvement;
j) the relief of those in need by reason of youth, age, ill health, disability,
financial hardship or any other disadvantage;
k) the advancement of animal welfare;
l) the promotion of the efficiency of the armed forces of the Crown, or
of the efficiency of the police, fire and rescue services or ambulance
services;
m) any other purpose (this last category basically refers to all other anal-
ogous purposes).
4 Traditionally under Lord MacNaghten’s test from Pemsel there were
only four categories: the relief of poverty, the advancement of educa-
tion, the advancement of religion, and for other purposes (this last was
a general head now represented by (d) to (m) from s 3(1)).
Z 8.4 Charitable objects

8.4.1 Trusts for the relief of poverty (s 3(1)(a)
and also s 3(1)(j))
1 Poverty is not generally defined – but it need not mean destitution
(Re Coulthurst (1951)).
2 Need not be for poor – A-G v Power (1809) widows and orphans;
Re Young (1951) distressed gentlefolk; Thompson v Thompson (1844)
unsuccessful writers.
3 ‘Working class’ need not be poor; compare Re Sanders’ Will Trusts

(1954) and Re Niyazi’s Will Trusts (1978).
4 So failure to avoid wealthy recipients will cause a gift to fail (Re Gwyon
(1930)).
5 Gift to poor relations upheld in Re Scarisbrick (1951).
6 And for poor employees in Dingle v Turner (1972).
7 Trusts for poverty succeed whenever presumed to benefit people in need
(Biscoe v Jackson (1887)).
8 They more easily satisfy the public benefit requirement since they only
need to satisfy the first test for public benefit (Independent Schools
Council v Charity Commission (2011)). And Attorney General for
England and Wales v Charity Commission (2012) – so the courts suggest
that the 2006 and 2011 Acts have not altered the original position.
8.4.2 Trusts for the advancement of

education (s 3(1)(b))
1 Described in preamble as ‘maintenance of schools of learning, free
schools, and scholars in universities’.
2 Modern cases have widened to include ‘any form of worthwhile
instruction or cultural advancement except for purely professional
courses’ (Incorporated Council of Law Reporting for England & Wales v A-G
(1972)).
3 Originally gift often valid when attached to educational institution (Re
Shaw’s Will Trust (1952)).
4 But if primary purpose of institution is profit making, gift may fail (Re
Girls’ Public Day School Trust (1951)).
5 Professional bodies not usually seen as charitable but can be if charitable
purpose identified (Royal College of Surgeons of England v National
Provincial Bank Ltd (1952)).
6 Research can be charitable because can beneft public:
O so must be of educational value to researcher or add to store of public
knowledge (Re Hopkins’ Will Trust (1965));
O but must involve useful knowledge (Re Shaw (1957)).
7 Courts will also accept art and aesthetics as charitable (Royal Choral
Society v IRC (1943)) including:
O music (Re Delius (1957));

O artefacts and antiquities (Re British School of Egyptian Archaeology

(1954));
O literature (Re Hopkins’ Will Trusts (1965));
O but if no artistic merit gift will fail (Re Pinion (1965)).
8 Sport and recreation attached to educational institutions:
O may succeed where it benefits young people but fail otherwise (Re
Mariette (1915));
O and facilities need not be restricted to particular school or university
(IRC v McMullen (1981));
O but gifts for bodies outside of education will usually fail (Re Nottage
(1895) and Re Clifford (1912));
O courts impose limits to avoid ‘a slippery slope from chess to draughts
to bridge to whist to stamp collecting to acquiring birds’ eggs’ (Re
Dupree’s Deed Trusts (1945)).
9 Question of political educational is much more confused:
O generally, political purposes are not charitable (Re Hopkinson
(1949));
O though gifts with political objects can succeed if not party political
(Re Koeppler’s Will Trusts (1986));
O contradicted by some cases (Re Scowcroft (1898));
O where a body attached to education is identifiably charitable it may
still be prevented from using funds for political purposes (Baldry
v Feintuck (1972)).
8.4.3 Trusts for the advancement of religion

(s 3(1)(c))
1 Reference in preamble merely to ‘repair of churches’.
2 Modern definition of religion has developed – and numerous ‘sects’ have
benefited from charitable status.
3 Originally meaning of religion quite narrow – but change to a multicul-
tural society has meant a wider meaning must be adopted (Bowman
v Secular Society (1917)). The Charities Act 2011 includes belief in
more than one god and belief in no god.
4 Relationship between religion and charity tested against two criteria and
five indicia (Church of the New Faith v Commissioners of the Payroll Tax
(Victoria) (1982)).
Criteria:
O a belief in a supernatural being;
O acceptance of code of behaviour to effect belief.
Indicia:
O collection of ideas involves belief in the supernatural, i.e. beyond the
senses;
O ideas relate to man’s nature and place in universe;
O ideas are accepted by adherents as requiring conforming to a code of
behaviour;
O adherents form identifiable group, even if disparate;
O adherents see their ideas and practices as religion.
5 So ethics alone will not be religion (Re South Place Ethical Society
(1980)).
6 Bodies with similar objectives to religions may still be classed as not
charitable (Keren Kayemeth Le Jisroel v IRC (1931)).
7 And merely requiring belief in God will not make a body charitable
(United Grand Lodge of Ancient Free and Accepted Masons v Holborn
Borough Council (1957)).
8 Advancement requires public involvement – compare Holmes v A-G
(1981) with Gilmour v Coats (1949).
9 Gifts for related purposes can be upheld (Re King (1923)).
10 Gifts to non-standard Christian groups upheld (Re Manser (1905) and
Re Strickland’s Will Trusts (1936)).
11 Also to non-Christian religions (Varsani v Jesani (1999)).
12 But courts are conscious that it is an area that can be subject to ‘crankish
views’ (Thornton v Howe (1862)).
13 If the gift is ‘for God’s work’ or at discretion of clergy, wording is vital –
compare Farley v Westminster Bank (1939), Re Eastes (1948) and Re
Stratton (1931).
8.4.4 Other purposes beneficial to the

community (now represented by

(d) to (m) from s 2(2))
1 Was originally a residual head – public benefit being critical.
2 Followed from preamble – so new categories developed by analogy to
preamble and subsequent case law.
3 And public benefit must be in a way that is recognised as charitable
(Williams’ Trustees v IRC (1947)).
4 Gift may fail for political character (Re Strakosch (1949)).
5 Whether gift is of public benefit is measured objectively (National Anti-
Vivisection Society v IRC (1948)).
6 Modern method is to identify if any reasons for not upholding gift (Incor-
porated Council of Law Reporting v A-G (1972)).
7 The additional categories now under s 3(1) Charities Act 2011 are:
d) the advancement of health or the saving of lives (Re Resch (1969));
e) the advancement of citizenship or community development;
f) the advancement of the arts, culture, heritage or science – contrast
Re Delius (1957) with Re Pinion (1965);
h) the advancement of human rights, conflict resolution or reconciliation
or the promotion of religious or racial harmony or equality and diver-
sity – contrast Re Koeppler (1986) with McGovern v A-G (1982);
i) the advancement of environmental protection or improvement;
j) the relief of those in need by reason of youth, age, ill-health, disa-
bility, financial hardship or any other disadvantage:
O would include trusts for old and disabled:
O in preamble, poverty referred to as ‘aged, impotent, and
poor ’ – three categories can be seen disjunctively (Re Robinson
(1951));
O no precise age (Re Cottam’s Will Trusts (1955));
O gift might stand even though aged person can profit from it
(Rowntree Housing Association v A-G (1983));
O ‘impotent’ referred to disability (Re Lewis (1955)).
k) the advancement of animal welfare:
O improving man’s humanity (Re Wedgwood (1915));
O so animal welfare can be charitable (Re Moss (1949));

O but not if public excluded (Re Grove-Grady (1929)).

l) the promotion of the efficiency of the armed forces of the Crown, or
of the efficiency of the police, fire and rescue services or ambulance
services (IRC v City of Glasgow Police Athletic Association (1953));
m) any other purpose (this latter basically refers to all other analogous
purposes and might traditionally have included).
O trusts for sporting and recreational facilities now under s 3(1)f) or
s 3(1)(g);
O sport alone is not charitable (Re Nottage (1895));
O but can be if for advancement of education (IRC v McMullen
(1981));
O and can be charitable if incidental to provision of education (Re
Gray (1925));
O but wording of gift is critical (IRC v City of Glasgow Police Athletics
Association (1953));
O and inclusion of purely social purposes may cause gift to fail (IRC
v Baddeley (1955));
O the case cast doubt on many charitable institutions – so led to
Recreational Charities Act 1958;
O and surplus funds can be divided between the existing members
per capita when the club is dissolved (Re Horley Town Football
Club (2006));
O the Recreational Charities Act 1958 was passed to ensure
charitable status for boys clubs, womens’ institutes, the
National Playing Fields Association, and other bodies affected
potentially by Baddeley – but possibly creates as many problems as
it solves:
O s 1(1) stated that charitable status shall be presumed for
recreational facilities that are provided in interest of welfare,
and public benefit is evident;
O s 1(2) defined social welfare:
a) facilities improve condition of life of those persons for
whom they are provided;
b) i) those persons need facility because of age, youth or
infrmity; or
ii) they are available to public generally;
The public benefit element 135
O s 1(3) applied s 1(1) particularly to village halls, community

centres, women’s’ institutes; but Act appears to have little
effect on cases such as Williams and Baddeley; although a gift

with object of promoting physical wellbeing of public in
general has succeeded (Guild v IRC (1992)).
O now the Act incorporates these provisions and sets out the
same conditions in s 5(3) and s 5(4).
O miscellaneous trusts beneficial to the community:
O gift to RNLI (Thomas v Howell (1874));
O gift to museum (British Museum v White (1826));
O hospital/medical facilities (Re Resch’s Will Trusts (1969));
O a gift for ‘the black community’ of a particular London
borough has also been accepted as charitable (Gibbs v Harding
(2008)).
Z 8.5 The political element

1 Usually, political purposes are not charitable (Re Bushnell (1975)).
2 Reasons to deny charitable status include: no means of ensuring that
change in law would benefit public; court must decide in light of current
law; court might be seen as not acting impartially (McGovern v A-G
(1982)).
3 But there is apparent inconsistency in approach – compare Re Koeppler
and Re Scowcroft.
4 Charity Commission has given revised guidelines.
Z 8.6 The public benefit element

1 All charitable gifts have different public benefit requirements (now
under s 4 Charities Act 2011) and relief of poverty is simpler to show.
2 Here public benefit is presumed but a key issue is how narrow the class
benefited can be for the gift still to survive – see Re Scarisbrick and Dingle
v Turner.
3 In educational trusts, public benefit is more difficult to find:
O must distinguish between personal (not charitable) and impersonal
relationships (charitable) (Re Compton (1945));
O test is now that:
i) class is not numerically negligible; and

ii) quality that distinguishes them from rest of community does not
depend on relationship with a specific individual (Oppenheim v
Tobacco Securities Trust Co (1951));
O a further problem is determining what is and is not a personal rela-
tionship (Dingle v Turner (1972)).
4 In religious trusts, public benefit problem is usually whether or not public
have access – compare Gilmour v Coates with Re Hetherington Deceased
(1989).
5 With all heads except poverty, public benefit is particularly important:
O a distinction has been drawn between a gift for a section of the public
and a gift for ‘a fluctuating body of private individuals’ (Verge v
Somerville (1924));
O but has been argued against in Dingle v Turner;
O better test is between ‘a form of relief extended to the whole commu-
nity yet by its very nature advantaged only to a few and a form of
relief accorded to a select few out of a large number equally willing to
take advantage of it’ (IRC v Baddeley (1955)).
Z 8.7 Exclusivity of charitable objects

1 Trust may be invalid if for other than charitable purposes – and similarly
can be invalid if charitable part cannot be separated from other purposes.
2 If other purposes merely subsidiary to main charitable purpose, then gift
may succeed (Re Coxen (1948)).
3 Mere fact that another person benefits will not defeat it (London Hospital
Medical College v IRC (1976)).
4 And motive of donor is irrelevant (Re King (1923)).
5 But problems can arise where trust drafted too widely (McGovern v A-G
(1982) and IRC v Baddeley (1955)).
6 One further problem occurs where word ‘charitable’ linked with other
words in gift – to succeed, these may need to be linked by disjunctive
rather than conjunctive words (Chichester Diocesan Fund and Board of
Finance Ltd v Simpson (1944)):
O if disjunctive words used, question of construction whether gift succeeds
– compare Blair v Duncan (1902) with Re Bennett (1920) (disjunctive
words succeed because of use of ‘other objects’ throughout – meaning
that by ejusdem generis the ‘or’ was not actually disjunctive);
Initial failure 137
O with conjunctive words, gift more likely to succeed – Re Sutton

(1885): ‘charitable and deserving’ and Re Best (1904): ‘charitable
and benevolent’;
O though this is not always possible (A-G of the Bahamas v Royal Trust
Co (1986));
O gift may fail if extra words used (Re Eades (1920));
O again, because other words can be seen as other than charitable – so
again construction is vital (A-G v National Provincial Bank of England
(1924)).
7 There are two potential ways round the problem:
O doctrine of severance (Salusbury v Denton (1857)) – remove offending
words on construction;
O the Charitable Trusts (Validation) Act 1954 – read the gift as being
only for charitable purposes.
Z 8.8 The basis of the cy-près doctrine at

common law
1 Ancient doctrine designed to save charitable gifts that fail for whatever
reason.
2 Usual effect of failure would be a resulting trust, which may be against
the settlor’s express wishes – so cy-près tries to ensure gift redirected to
similar charitable purpose if possible.
3 Before Charities Act 1960, doctrine was narrow and only applied if gift
failed for impossibility or impracticability – but reformed in ss 13 and 14
which moved away from such rigidity.
4 The widest example of common law was Re Dominion Students’ Hall
Trust (1947).
5 Where cy-près applies, distinction drawn between initial failure and
subsequent failure – latter easier as gift already vested.
Z 8.9 Initial failure

1 If gift cannot take effect on date of gift, e.g. because body that is object
of gift no longer exists, there are two possibilities:
O the gift fails and falls into residue;
O the property can be reapplied cy-près.
2 Court must find wider charitable intent (Re Rymer (1895)).

3 So if intent of donor is wide enough to include general charitable intent

then gift may succeed (Re Lysaght (1966)).
4 And this will often be because of impossible or impracticable conditions
imposed in gift (Re Woodham Deceased (1981)).
5 And a gift that fails because a project cannot be carried out can still be
rescued by cy-près (Re Wilson (1913)).
6 A gift to a specific charity will not fail because it has ceased if it is shown
to continue in another form (Re Faraker (1912)).
7 But if a gift is to a named body, distinction is drawn between unincorpo-
rated associations and charitable corporations – a gift to an
unincorporated charity must be charitable because no individual can
identify a claim to a share – where a gift to a corporation is a gift simply
to the corporation in its own name (Re Vernon’s Will Trusts (1972)).
O so a gift to a defunct charitable corporation fails and falls into residue
and cy-près possible only if wider charitable intent can be found (Re
Finger’s Will Trusts (1972));
O possible conflict of reasoning in Faraker and Vernon’s.
8 If a gift is made to a body that has never existed it is said to be easier to
apply cy-près than one to a body that has ceased to exist (Re Harwood
(1936)).
9 If a settlor makes a number of gifts that are all charitable except
one then it may be possible to see a general charitable intent (Re Satter-
thwaite’s Will Trusts (1966)).
10 But if disputed part of gift is to known non-charitable body, there is no
cy-près and gift falls into residue (Re Jenkins’ Will Trusts (1966)).
Z 8.10 Subsequent failure

1 If gift fails after it is vested then no lapse of gift and no need to find a
wider charitable intent (Re Wright (1954)).
2 This is because the property has transferred at the moment of the sett-
lor’s death – so cy-près can apply (Re Slevin (1891) and Phillips v Royal
Society for the Protection of Birds (2012)).
3 But less consistency where failure is because of surplus fund – compare
Re King (1923) with Re Standford (1924).
Non-charitable alternatives 139
Z 8.11 Non-charitable alternatives

1 Settlor can decide what is to be done in event of a failure – which of

course may be charitable or non-charitable.
2 So in an inter vivos gift failed gift might return to settlor, or on death or
in life it might pass to a named third party.
3 Prior to the Perpetuities and Accumulations Act 1964 if resulting trust
followed a determinable interest it was immune from perpetuity rule
(though any express gift over was subject to it).
4 So a determinable charitable gift could terminate at a future point and
result to settlor – no possibility of cy-près as no outright gift to charity.
5 Section 12 introduced a ‘wait and see’ rule – so in a determinable chari-
table gift a gift over or resulting trust operates and excludes cy-près
providing it falls within perpetuity period – if not, gift is absolute and
cy-près applies on subsequent failure.
ґ N
Initial failure: Statutory cy-pres:
• court must find wider charitable • S 13 CA 1993 - cy-pres
intent (Re Ηγιτιβή applies if gift a) fulfilled or
• usually gift fails for impossibility or cannot be carried out; b)
impracticability (Re Woodham) purpose uses only part of
• gift to specific charity saved if fund; c) gift can be more
continued in new form (Re Fara/rer) effectively used in other
• must distinguish between ways; d) original purpose
corporation and unincorporated has ceased; e) original
association (Re Vernon) purpose adequately provided
• easier if body never existed (Re for by other means, ceased
Harwood). to be charitable, or ceased to
be suitable way of using gift
• cannot be used for purely
CY-PRES administrative changes (Re
JW Laing Trust)
• but possible for inappropriate
distribution (Peggs v Lamb)
Subsequent failure: • S 14 for donations, e.g. to
• if gift fails after testator's disaster funds and donors
death no need to find wider cannot be found after proper
charitable intent (Re Wright) advertising etc
• because property transfers • Ss 74 and 75 contain rules to
on death (Re Sleviri) redistribute really small
• surplus not so easy (Re funds.
King).
Z 8.12 Statutory cy-près

1 Before the Charities Act 1960, cy-près possible only if a gift failed for
impossibility or impracticability of the purpose.
2 So cy-près could not be used to save a trust that had become uneco-
nomic or outdated.
3 Section 13 passed to avoid this and was re-enacted in the 1993 Act.
4 Section 13(1) provides five circumstances where the purposes of a chari-
table gift can be altered to allow property to be reapplied under a cy-près
scheme – these are now in s 62 Charities Act 2011:
a) where the original purposes in whole or in part:
i) have been as far as may be fufiflled; or
ii) cannot be carried out or not according to the dictates or spirit of
the gift; or
b) where the original purposes provide a use for part only of the prop-
erty available by virtue of the gift; or
c) where the property available by virtue of the gift and other property
available for similar purposes can be more effectively used in conjunc-
tion and can suitably be made applicable to common purposes; or
d) where the original purposes were laid down by reference to an area
which then was but has since ceased to be suitable regard being had
to the spirit of the gift or to practicality in administering the gift; or
e) where the original purposes in whole or in part have, since they were
laid down:
i) been adequately provided for by other means; or
ii) ceased as being useless or harmful to the community or for other
reasons in law to be charitable; or
iii) ceased in any other way to provide a suitable and effective
method of using the property available by virtue of the gift
regard being had to the spirit of the gift.
5 So s 13(2) provides that conditions other than impossibility have not
been affected.
6 Width of charitable intent in case of subsequent failure is not significant
– but Commissioners do try to adhere to settlor’s intention, bearing in
mind realities of current conditions.
7 First use of Act was to increase size of a gift where there was a surplus of
funds (Re Lepton’s Charity (1972)).
Statutory cy-près 141
8 But s 13 cannot be used for purely administrative changes (Re J W Laing

Trust (1984)).
9 But may be used where current distribution of fund is inappropriate

(Peggs v Lamb (1994)).
10 Section 14 overcomes difficulties where money is collected for a partic-
ular purpose that then proves to be unattainable and donors are then
untraceable, e.g. flag days.
11 So cy-près shall be applied where the property belongs to:
a) a donor who after –
i) the prescribed advertisements and inquiries have been published
and made; and
ii) the prescribed period beginning with the publication of the
advertisements has expired
– cannot be identified or cannot be found; or
b) a donor who has executed a disclaimer in the prescribed form for his
right to have the property returned.
12 The Act also makes certain provisions for small charities:
O charities with under £5,000 gross income and no land on trust may
with agreement of two-thirds of trustees transfer property to other
charities if better use of resources – s 74;
O charities with a permanent endowment but no land and an income
of under £1,000 may with agreement of two-thirds of trustees remove
restrictions on spending capital if income is too small to fulfil their
purposes – s 75.
13 The rules on cy-près are now in ss 61–68 Charities Act 2011.
Key Cases Checklist

8.1.6 IRC v Pemsel [1891] AC 531 HL
Key Law
Charitable purposes can only be upheld if they fall within

four categories: trusts for the relief of poverty; trusts for the
advancement of education; trusts for the advancement of
religion; and trusts for other purposes beneficial to the
community.
Key Comment
Traditionally there was no statutory definition of charitable

purposes. Before the enactment of the Charities Act 2006
the definition of a charity was largely derived from the
preamble of the Statute of Charitable Uses 1601 and the
common law in particular IRC v Pemsel. The Charities Act
2006 s 2(2) defines and lists charitable purposes:
a) the prevention of poverty;
b) the advancement of education;
c) the advancement of religion;
d) the advancement of health or the saving of lives;
e) the advancement of citizenship or community
development;
f) the advancement of the arts, culture, heritage or science;
h) the advancement of human rights, conflict resolution or
reconciliation or the promotion of religious or racial
harmony or equality and diversity;
i) the advancement of environmental protection or
improvement;
j) the relief of those in need by reason of youth, age, ill-
health, disability, financial hardship or other
disadvantage;
k) the advancement of animal welfare;
i) the promotion of the efficiency of the armed forces of
the Crown, or the efficiency of the police, fire and
rescue or ambulance services;
m) any other purposes . . . [recognised by existing charity
law].
Previously charitable purposes under the first three heads

of charity under IRC v Pemsel were presumed to be

charitable.
Trusts for the relief of poverty

Poverty is not defined in the Charities Act. It has tradition-
ally been regarded as a relative concept.
8.4.1.5 Re Scarisbrick [1951] Ch 622 CA
Key Facts
A gift for such relations of my son and daughter who ‘shall

be in needy circumstances’ was upheld.
Key Judgment
Jenkins LJ: ‘ “Poverty” is necessarily to some extent a rela-

tive matter, a matter of opinion.’
8.4.1.1 Re Coulthurst [1951] Ch 661 CA
Key Facts
The testator transferred a fund of £20,000 to be paid to

widows and orphans of officers of Coutts & Co who the
trustees decided were ‘the most deserving of such assist-
ance having regard to their financial circumstances’. This
was held to be a charitable bequest.
Key Judgment
Lord Evershed MR: ‘It is quite clearly established that

poverty does not mean destitution: it is a word of wide and
somewhat indefinite import; . . . meaning persons who
have to “go short” in the ordinary acceptance of that term,
due regard being had to their status in life.’
8.4.1.3 Re Sanders Will Trusts [1954] Ch 265 HC
Key Facts
A testator transferred one-third of his residuary estate ‘to

provide or assist in providing dwellings for the working
classes and their families resident in the area of Pembroke
Dock’.
Key Law
This was not a charitable gift as the expression ‘working

classes’ was not necessarily a gift to alleviate poverty.
8.4.1.8 Independent Schools Council v Charity

Commission for England and Wales [2011]
UKUT 421 TCC
Key Facts
The ISC challenged the guidance issued by the Charity

Commission after the Charities Act 2006 came into
force. The ISC argued that the guidance placed too much
emphasis on the extent to which independent schools
offered bursaries to poor children.
Key Judgment
The Upper Tier Tax Tribunal held that ‘it was for the charity
trustees of the school concerned to address and assess
how their obligations might best be fulfilled in the context of
their own particular circumstances . . . Provided that the
operation of the school is seen overall as being for
the public benefit, with an appropriate level of benefit
for the poor, a subsidy to the not-so-well-off is to be taken
account of in the public benefit . . .’.
Trusts for the advancement of education

Traditionally education has been given a broad meaning
and is not confined to teaching in schools.
Research as education
Re Besterman Wills Trusts, The Times,

21 January 1980 HC
Key Facts
A fund to research the works of Voltaire and Rousseau was

upheld as charitable because the research met certain criteria.
Key Law
A trust for research will only be charitable if:

1 the subject matter of the research is a useful subject
of study;
2 the knowledge acquired by the research will be dissem-
inated to others;
3 the trust will be for the beneft of the public, or a
suffciently important section of the public.
8.4.2.6 Re Shaw [1958] 1 All ER 245 HC
Key Facts
A gift of money left by George Bernard Shaw for research

into a 40-letter alphabet and for the translation of one of his
plays into the new alphabet was not charitable.
Key Problem
Compare Re Shaw and Re Besterman Wills Trusts. It is diffi-

cult to see the distinction and it is doubtful whether a court
today would refuse charitable status to the research
proposed in Re Shaw.
Trusts for the promotion of culture as education
8.4.4.7 Re Pinion [1965] 1 Ch 85 CA
Key Facts
A testator left his studio and the contents to be maintained

as a collection to the National Trust. They refused to accept
it, although they were willing to accept some items for

display.
Key Law
It was held that the collection was not charitable because it

lacked any artistic merit.
Key Comment
Such a trust today would be considered under the separate

head of ‘the advancement of the arts’.
Key Judgment
Harman LJ: ‘I can conceive of no useful purpose to be

served in foisting upon the public this mass of junk. It has
neither public utility nor educative value . . .’
8.4.2.7 Royal Choral Society v IRC [1943] 2 All

ER 101 CA
Key law
A trust to promote the practice and performance of choral

works was upheld as charitable.
Key Judgment
Lord Greene: ‘I protest against that narrow conception of

education when one is dealing with aesthetic education. In
my opinion, a body of persons established for the purpose
of raising the artistic state of the country . . . is established
for educational purposes.’
8.4.2.8 IRC v McMullen [1981] AC 1 HL
Key Facts
A trust to provide facilities for pupils at schools and universi-

ties in the United Kingdom to play association football or other
games or sports was held to be valid by the House of Lords. It
was upheld because it was connected with education.
Key Comment
Lord Hailsham said in this case that the playing of sport

was not charitable per se, nor necessarily educational.
However, the Charities Act includes the advancement of
amateur sport as a separate head of charity.
What is religion?
Under s 2(3) of the Charities Act, religion includes a religion
which involves belief in more than one god, and a religion
which does not involve belief in a god. This represents a
change in the law.
8.4.3.3 Bowman v Secular Society [1917] AC 406 HL
Key law
It was held by Lord Parker that only monotheistic faiths

could qualify as a religion.
Key Comment
Lord Parker’s very restricted view of what constitutes reli-

gion would not be acceptable today under the Charities Act
2006.
8.4.3.5 Re South Place Ethical Society [1980] 1 WLR

1565 HC
Key Facts
The society had as one of its aims the ‘study and dissemi-
nation of ethical principles and the cultivation of a rational
religious sentiment’.
Key law
This was held not to be a charitable purpose because it did

not advance religion.
Key Judgment
Dillon J: ‘Religion as I see it, is concerned with man’s rela-

tions with God, and ethics are concerned with man’s
relations with man. The two are not the same . . .’
Sacred Hands Spiritual Centre’s Application

for Registration as a Charity [2006]
WTLR 873 HC
Key Law
The Charity Commission registered an organisation as a

charity which was involved with spiritual healing because it
considered that a belief in spiritualists in the spirit world
could itself be seen as a faith.
Public benefit in religion
8.4.3.8 Gilmour v Coats [1949] AC 426 HL
Key Facts
A gift was left to a Carmelite priory. The priory consisted of

about 20 nuns who lived a cloistered life of prayer and
contemplation. They did not involve themselves in work in
the community.
Key Law
This failed as a charitable trust because it lacked the neces-

sary public benefit. It was held that the value of prayer was
not susceptible to proof in a court of law.
The advancement of health or saving lives
Key Comment
Although this appears to be a new category, the purposes

have been recognised as charitable before and reflect the
preamble to the Statute of Charitable Uses which referred
to ‘the relief of the aged, impotent and the poor’.
8.4.4.7 Re Resch’s Will Trusts [1969] 1 AC 514 PC
Key Law
A private hospital was held to be charitable although the

patients were fee paying because of the benefit provided to
the community resulting from the beds and medical staff,
nursing etc., which was held to supplement the care
provided by the general hospital.
The advancement of the arts
Key Law
Although trusts which promote art and culture have been

recognised for many years, under the advancement of
education, the Charities Act now recognises this as a sepa-
rate heading.
8.4.2.7 Re Delius (Dec’d) [1957] Ch 299 PC
Key Law
A trust to promote the music of the composer Frederick

Delius was upheld.
Key Comment
To uphold the works of a composer or an artist or a sculptor

depends on a value judgement on the artistic merit of a
work. In some cases, e.g. a composer such as Delius, there
would be no challenge but it would be open to any court to
seek expert evidence about the artistic merit in any work.
8.4.4.7 IRC v City of Glasgow Police Athletic

Association [1953] AC 380 HL
Key Facts
An association whose object was ‘to encourage and

promote all forms of athletic sport and general pastimes’
was held not to be charitable. It was held that the promo-

tion of the efficiency of the police force would have been

charitable but that was held to be incidental to the provision
of recreation, which was not a charitable purpose, and so it
failed to gain charitable status.
The advancement of amateur sport

Key Law
It was originally thought that a trust encouraging the playing

of sport would not be considered charitable but sport is
now included as a separate charitable purpose under the
Charities Act.
The advancement of animal welfare
8.4.4.7 Re Wedgwood [1915] 1 Ch 113 CA
Key Facts
Property was left on trust for the protection and benefit of

animals.
Key Law
This was held to be charitable because of the beneficial

effect it would have on people, stimulating humane and
generous sentiments and promoting feelings of humanity
and morality generally
8.4.4.7 Re Grove-Grady [1929] 1 Ch 557 CA
Key Law
A gift to an animal refuge where animal life of all kinds might

be completely undisturbed by man was held not to be char-
itable, because the public derived no benefit from such a
refuge.
Key Comment
This case was decided in 1929 and might be treated differ-

ently today.
8.4.4.7 McGovern v Att-Gen [1982] Ch 321 HC
Key Facts
Amnesty International wanted to set up a charitable trust

for part of its activities. There were four main aspects of its
work:
1 Relief of needy persons who were prisoners of
conscience and their dependents;
2 Attempting to secure the release of prisoners of
conscience;
3 Abolition of torture or inhuman or degrading treatment
or punishment;
4 Research into human rights and disseminating the
results of research.
Although the first and last purposes were charitable, the
others were political in nature and the trust was not
charitable.
Key Law
A trust cannot be charitable if its main purpose is to secure

a change in the law of the United Kingdom or of foreign
countries.
8.5.3 Re Koeppler’s Wills Trust [1986] Ch 423 CA
Key Law
A gift of money to Wilton Park was upheld as charitable

because it promoted greater co-operation in Europe and
was not allied to any political party.
Key Comment
The Charity Commission now takes a slightly more relaxed

approach to what may be regarded as political purposes,
holding that if a charity is not engaging in campaigning or
political activity as its sole purpose but merely in order
to support its charitable purposes it can carry out some
political activity.
What constitutes public benefit?

S 3 Charities Act 2006

Key Law
A charitable purpose under the Act must be demonstrated

that it is for the public benefit. The benefit must be to the
public as a whole or a section of the public.
Public benefit is defined as having the same meaning as
under previous law, i.e. there must be an identifiable benefit
which must be clear and related to the aims of the charity
and must be balanced against any detriment or harm.
Where the benefit is restricted to a section of the public
there must be no geographical or financial restrictions.
Private benefits must be incidental and people in poverty
must not be excluded from benefiting.
The restrictions placed must not be arbitrary
8.6.5 IRC v Baddeley [1955] AC 572 HL
Key Facts
A gift to the Methodist mission in London for the promotion

of the religious, social and physical training of persons resi-
dent in West Ham and Leyton ‘who were or were likely to
become members of the Methodist Church’ was held to be
non-charitable. This was because there was a recreational
purpose, but the court also decided that the public benefit
test was not satisfied because the beneficiaries did not
constitute a section of the public.
The personal nexus rule

Key Law
A charity will not satisfy the public benefit test if it benefits a

‘class within a class’. Traditionally a trust has not been
upheld as charitable if the class to benefit are dependent
on a personal nexus with the settlor.
8.6.3 Oppenheim v Tobacco Securites Trust Co Ltd

[1951] AC 297 HL
Key Facts
A testator left a sum of money on his death to be held on

trust and the income to be applied for the education of the
children of the employees of British American Tobacco. The
trust failed because it did not satisfy the public benefit test.
Key Law
In order for a trust for education to succeed as a charitable

trust the beneficiaries must not be numerically negligible
and must not be defined by means of a personal nexus to
the settlor.
Key Judgment
Lord Simmonds: ‘. . . a group may be numerous but, if the

nexus between them is their personal relationship to a
single propositus or to several propositi, they are neither
the community nor a section of the community for chari-
table purposes.’
Lord Macdermott (dissenting judgment): ‘But can any
really fundamental distinction, as respects the personal or
impersonal nature of the common link, be drawn between
those employed, for example by a particular university and
those whom the same university has put in a certain
category as the result of individual examination and
assessment? Again if the bond between those employed by
a particular railway is purely personal, why should the bond
between those who are employed as railwaymen be so
essentially different?’
8.6.3 Dingle v Turner [1972] AC 601 HL
Key Facts
The testator left his estate to trustees directing them to use

the income to provide pensions for poor employees of a
company which he jointly owned.
Key Law
It was held to be a valid charitable trust because the

personal nexus test does not apply to the relief of poverty.
There were some anomalous exceptions pre-2006.
No failure of the charity
8.9.6 Re Faraker [1912] 2 Ch 488 CA
Key Facts
A testatrix left money to Hannah Bayly’s Charity. The charity

had been founded for poor widows of Rotherhithe but had
ceased to exist as a separate charity when it amalgamated
with other charities in 1905.
Key Law
The court held that it had not failed but continued in another
form, and the funds could be transferred to the amalga-
mated charities.
8.9.2 Re Rymer [1895] 1 Ch 19 CA
Key Facts
A legacy was left for St Thomas’s Seminary in Westminster,

which had closed down before the testator’s death. There
was no evidence of a general charitable intent. The gift had
specifically been left to the named institution.
Key Law
Where a charitable gift fails because it ceases to exist or

the charitable purpose becomes impossible to implement
between the death of the testator and the administration of
the estate by the executors it can be applied cy-près
without the need to show a general charitable intent.
8.10.1 Re Wright [1954] Ch 347 CA
Key Facts
A testatrix left her residuary estate to a named person for life

and then to be used to provide a convalescent home
for impecunious gentlewomen. On the death of the tenant
for life it was impracticable to provide a convalescent home.
Key Law
The court held it had already been dedicated to charity on

the death of the settlor as it would then have been possible
to set up the home and the property could be directed to
another similar purpose.
8.10.2 Phillips v Royal Society for the Protection of

Birds [2012] EWCH 618 Ch
Key Facts
A testatrix left her residuary estate to a charity which

dissolved after the will had been executed.
Key Law
The court applied the gift cy-près so that it was directed to

a charity with similar purposes and which had acquired
assets from the charity prior to its dissolution.
Charities that have never existed
8.9.8 Re Harwood [1936] Ch 285 HC
Key Facts
Funds were left for a list of charitable societies, including

the Wisbech Peace Society, which had ceased to exist
before the testator’s death, and the Peace Society of
Belfast, which had never existed.
Key Law
The gift to the institution which had ceased to exist failed,

but the gift to the society which had never existed showed
a general charitable intent and could be transferred under
the cy-près doctrine.
Unincorporated charitable associations
8.9.7 Re Finger’s Will Trusts [1972] Ch 286 HC
Key Facts
The testatrix left a share of her estate to a number of chari-

table institutions, including the National Radium
Commission, which was an unincorporated charity, and the
National Council for Maternity and Child Welfare, which was
an incorporated charity; both had ceased to exist.
Key Law
It was held that the gift to the unincorporated association

could succeed because it was a gift for the purposes of the
association, but the gift to the incorporated charity failed
9 The nature of
trusteeship
Ґ N
Who can be a trustee: Selection, appointment, vesting:
• anyone who has capacity to • court selection must acknowledge wishes of
hold property settlor; interests of all beneficiaries; efficient
• certain difficult ones which administration of trust; and avoid possible
include - children (cannot own conflict of interests
land); Crown (rarely); judicial • new trustees can be appointed by trust
trustees (where existing trust instrument; court under s 36 ТА 25 when
breaks down); Public Trustee proposed or existing trustees discharged,
(on intestacy); custodians (hold refuse, outside UK, incapable or unfit, die etc;
property only); trust be beneficiaries under TOLATA 96; by court
corporations (e.g. solicitors) under s 41 ТА 25 when trustee incapacitated
• no maximum or minimum by Mental Health Act 1983, or sole trustee
numbers except in land - but dies, or is otherwise expedient
should remember receipt rules. • trustees cannot act until property is vested in
them - can be automatic (s 40 LPA 25).
NATURE OF
TRUSTEESHIP ґ 4
Termination of trusteeship:
Disclaimer:
Standard of care: • possible any time before act of acceptance
• originally was standard or • usual by deed.
‘ordinary prudent Death:
businessman managing • automatically terminates
his own affairs’ (Speight v • property vests in other trustees and
Gaunt) personal representatives on death of last
• professionals owed a trustee.
higher standard of care Retirement:
(Re Waterman’s)
• discharges liability unless used to facilitate a
• now by s 1 ТА 2000: ‘must breach
exercise such skill and • can use express power in instrument,
care as it reasonable in all or court using s 36 ТА 25 (appointing
the circumstances’ - and replacement), or s 39 (with no
must have proper regard to replacement), or s 41 (where proper to allow
special skills and whether retirement), or by beneficiaries under s 19
acting professionally TOLATA 96.
• duty applies to investment,
acquiring property, Removal:
appointing nominees and • court has inherent jurisdiction where trustee
custodians, and insuring - goes abroad, becomes unfit, bankrupt, or
but not maintenance and acts improperly
advancement. • no need to show actual misconduct.
158 The nature of trusteeship
Z 9.1 Who can be a trustee

1 In principle, anyone with capacity to own/hold property can be a trustee.

2 But certain classes of people require further consideration:
O minors:
O by Law of Property Act 1925 no minor can hold a legal estate in
land – so cannot be a trustee of land;
O but a minor may possibly act as trustee of personalty – or can be
a resulting trustee (Re Vinagradoff (1935)).
O the Crown:
O can be a trustee in certain very rare circumstances;
O but would need to state specifically that it acted as a trustee in
private law – Lord Diplock in Town Investments Ltd v Department
of the Environment (1978).
O judicial trustees:
O rare but possible under Judicial Trustee Rules 1983 – in absence
of any fit and proper person;
O i.e. where administration by existing trustees breaks down.
O the Public Trustee:
O these have a variety of possible roles;
O including holding property of intestate deceased prior to the
appointment of an administrator to the estate.
O custodian trustees:
O Public Trustee, Custodian for Charities, or a trust corporation;
O can charge a fee – but not in excess of the proper fee charged by
the Public Trustee;
O hold property and documents – but leave day-to-day administra-
tion to the management trustees.
O trust corporations:
O a common features of administrative trusts;
O banks, insurance companies, Public Trustee, Official Solicitor;
O capable of acting alone – where normal trustees could not, e.g.
the overreaching mechanism;
O by TA 2000 now have general power to charge – before they
would have relied on insertion of a charging clause in the trust
instrument.
Appointment of trustees 159
3 Nobody can be forced to act as trustee – though a resulting trustee is

created by operation of law.
4 An intended trustee can always disclaim:

O safest method is by deed;
O but can be implied by acquiescence – to satisfaction of court;
O any attempt to deal with estate classed as acceptance of role.
Z 9.2 The number of trustees

1 There is no general maximum or minimum for personalty.
2 Usually taken to be no more than four in land (except in charities or
pension funds) – because legal estate only vests in first four names.
3 By s 14(2) TA 1925, impossible for sole trustee to give receipt for
proceeds of sale arising from a trust of land or land under the Settled
Land Act 1925.
Z 9.3 Appointment of trustees

1 First trustees can be appointed by settlor in trust instrument (though
they do not have to accept office):
O the gift will not fail merely because there is none;
O the court will appoint trustees in that case.
2 Trustees hold as joint tenants – until retire or removed – when property
vests in survivors: ss 1–3 Administration of Estates Act 1925.
3 New trustees can be appointed through express powers in trust instru-
ment – where such a power is expressly given to a specific person over
and above the statutory powers.
4 New trustees can also be appointed by s 36(1) and s 36(2) TA 1925:
O s 36(1) lists circumstances where the power is required:
O existing trustee is dead;
O trustee remains outside of UK for 12 months or more;
O trustee wishes to be discharged or refuses to take on role;
O trustee is unfit to act or incapable of acting;
O trustee is a minor.
O then lists persons responsible for nominating trustees – if none avail-
able then surviving trustees or personal representatives can.
5 Beneficiaries can also appoint trustees under s 19 TOLATA 96:

O if all are of full age; and

O all are absolutely entitled; and
O all agree to the appointment.
6 The court can also appoint under s 41 TA 1925:
O when it is expedient to appoint only with help of court;
O to replace trustee incapacitated by Mental Health Act 1983 order;
O when sole trustee dies intestate or trustees predecease testator.
Z 9.4 Selection of trustees

1 Court appointing under s 41 TA 1925 should take into account:
O wishes of the settlor;
O interests of all beneficiaries (and these may be conflicting);
O the efficient administration of the trust.
2 Important for trustees to act together – but no veto for existing
trustees.
3 Court should avoid appointment that would lead to conflict of interests,
e.g. relative of a beneficiary, solicitor of trust (latter is not uncommon).
4 Offshore (foreign) trustees now rare – no longer same tax advantages.
Z 9.5 The vesting of the trust property

1 Trustees cannot act until the property is vested in them.
2 S 40 Law of Property Act 1925 saves need for formal transfer – property
automatically vested whenever appointment is made by deed.
3 Exceptions in s 40(4): mortgage of land to secure loan of trust money;
land held on lease with covenant against assignment without consent;
stocks and shares.
4 Vesting orders also available to courts by ss 44–56 LPA 1925.
Z 9.6 Termination of trusteeship

1 Can occur by: disclaimer, death, retirement, or removal.
2 Disclaimer:
Standard of conduct expected of trustees 161
O any trustee can disclaim any time up to indicating acceptance;

O but it is normal to disclaim by deed.

3 Death:
O this automatically terminates trusteeship;
O property vests in surviving trustees and personal representatives on
last death.
4 Retirement:
O discharges further responsibility and liability – unless retirement is
used to facilitate a breach of trust in which case liability continues;
O retirement can be achieved by various methods:
O by an express power in the trust instrument;
O by s 36 TA 1925 when new trustee appointed for retiring one;
O by s 39 TA 1925, can retire even without a new appointment if:
– does so in deed;
– obtains consent of co-trustees by deed;
– and two trustees or a trust corporation remains in place;
– by an order of the court where it replaces a trustee under s 41
TA 1925, or where it is proper to allow the trustee to retire;
– by direction of the beneficiaries under s 19 TOLATA 1996.
5 Removal:
O the court has inherent jurisdiction to remove a trustee who:
O takes up residence abroad;
O refuses to act or is unfit to act or is incapable of acting;
O becomes bankrupt;
O behaves improperly although not in breach of trust.
O no need to show actual misconduct – court must be satisfied contin-
uing as trustee prejudices trust (Moore v McGlynn (1894)).
Z 9.7 Standard of conduct expected of

trustees
1 Traditionally, the appropriate standard was that of the ’ordinary prudent
businessman managing his own affairs’ (Speight v Gaunt (1883)).
2 But now there is a statutory standard set in s 1 Trustee Act 2000.
3 Even before 2000 Act, courts recognised that the standard must be
higher for professional trustees (Re Waterman’s Will Trusts (1952)).
4 Distinction maintained in s 1 TA 2000: ‘must exercise such skill and

care as is reasonable in all the circumstances, having regard in particular
(a) to any special knowledge or experience that he has or holds himself
out as having, and (b) if he acts as trustee in the course of a business or
profession, to any special knowledge or experience that it is reasonable
to expect of a person acting in the course of that kind of business or
profession’.
5 The standard applies to various functions exercised by the trustee:
O investment;
O acquiring land;
O appointing nominees and custodians;
O insuring property.
6 But not to e.g. exercise powers of maintenance and advancement.
7 So duty concerns way power exercised not whether discretion used.
8 On the contrary, a failure to exercise a duty leads to a breach of trust.
9 Trustees not liable by s 61 TA 1925 if acted ‘honestly and reasonably’.
10 TA 2000 does not specifically deal with trustee exemption clauses but
the statutory duty will only not apply ‘if or insofar as it appears from the
trust instrument that the duty is not meant to apply’.
11 Even express exemption will not protect a trustee in cases of bad faith,
recklessness, or deliberate breach of a duty – because to allow exemption
in such cases would offend public policy.
12 But a trustee might be protected against a claim of gross negligence
under an express clause (Armitage v Nurse (1998) and see Walker v
Stones (2000)).
13 However, must still comply with s 2(3) Unfair Contract Terms Act
1977.
14 Trustees can make contracts with third parties – but these are generally
not enforceable by the third parties against the trust assets.
Key Cases Checklist

9.7.12 Armitage v Nurse [1998] Ch 241 CA
Key Facts
A clause inserted into a trust deed which exempted the

trustees from liability for any loss whatsoever ‘unless such
loss or damage shall be caused by his own actual fraud’
was upheld.
Key Law
An exemption clause will exempt trustees from liability for

any breach unless it arises through dishonesty. Dishonesty
was defined as when a trustee acts in a way which he does
not honestly believe is in the beneficiaries’ interests and it is
nonetheless dishonest even though he does not intend to
benefit himself.
Key Judgment
Millett LJ: ‘I accept . . . that there is an irreducible core of

obligations owed by the trustees to the beneficiaries and
enforceable by them which is fundamental to the concept
of a trust. If the beneficiaries have no rights enforceable
against the trustees there are no trusts. But I do not accept
the further submission that these core obligations include
the duties of skill and care, prudence and diligence. The
duty of trustees to perform the trusts honestly and in good
faith for the benefit of the beneficiaries is the minimum
necessary to give substance to the trusts, but in my opinion
it is sufficient . . .’
9.7.12 Walker v Stones [2000] 4 All ER 412 CA
Key Facts
A trust instrument had included an exclusion clause which

purported to exempt a solicitor–trustee from liability for
wilful fraud or dishonesty. The issue was how far this clause
would exempt a trustee from a breach of trust.
Key Law
It was held that there must be an objective standard in

assessing what the trustee could have genuinely believed.
They could not be exempt from something that no reason-
able solicitor trustee could have thought that what he did or
agreed to do was for the benefit of the trust.
Key Judgment
Sir Christopher Slade: ‘That clause in my judgment would

not exempt the trustee from liability for breaches of trust,
even if committed in the genuine belief that the course
taken was in the best interests of the beneficiaries, if such
belief was so unreasonable that no reasonable solicitor
trustee could have held that belief.’
Key Comment
A recent Law Commission report on exemption clauses

rejects a total prohibition on their use but suggests that
there should be greater control over the content of such
clauses. There should also be a distinction between the use
of exemption clauses by professional and lay trustees.
However, it recommended that control should come from a
Code of Practice rather than through legislation.
10 The duties of the
trustees
f > r '
General duties to the T h e d u t y t o in v e s t:
trust property: • investment is ‘anything from which interest or profit is
To collect assets: expected’ (Re Wragg)
• new trustee must check state of • complex history of rules through 1925 Act and 1961
investments and ensure all Trustee Investment Act because of speculative
property is vested in trustees nature of equities and land
• to safeguard trust (Яе • now rules are in Part II ТА 2000 - can make any
Brogden). investment as if absolute owner of fund
To distribute fund correctly: • general power in s 3 additional to any express power
• must pay income or capital as it in trust instrument
becomes due to beneficiaries; • power to provide mortgages of land or invest in land
• or make payment into court if in ss 3 and 8
beneficiaries cannot be found • must follow ‘standard investment criteria in s 4 - and
(Re Gillingham Bus Disaster be aware of need for diversification - ‘portfolio
Fund)] theory’
• or distribute after seeking • should take advice by s 5 - need not be written
Benjamin Orders. • can delegate investment powers - and use
\ A custodians s 16, and nominees s 17
• original standard of care - that in Learoyd v Whiteley
- reasonable prudent businessman test - now in s 1
- what is reasonable in all circumstances - and
standard is more stringent if a professional trustee.
( t r u s t e e d u t ie s
Fiduciary nature of trusteeship:
• basic principle in Bray v F ord - trustee must not
allow interest and duty to conflict
General duties to the • so remuneration only possible if authorised, e.g. in
beneficiaries: trust instrument (charging clauses) or by court,
statutory authorisation or by beneficiaries
Duty to convert:
• must not buy trust property - except if independent of
• must maintain equality between
trust (Holder V ΗοΙάβή
beneficiaries (Lloyds Bank v
• must not make a secret or incidental profit
Duker)\
(Boardman v Phipps)
• so must take equal view of
• rule strict - so applies even though does not harm
income for life tenant and
trust and even benefits it
capital for remainderman;
• only significant point is that fiduciary gained
• and sell unauthorised or
personal benefit from his position as fiduciary
wasting assets to ‘convert’ to
• can be liable to account for renewing lease owned by
authorised - rule in Howe v
trust in own name (Keech v Sandford)
Dartmouth unless stated
• or for taking freehold reversion in own name
contrary in will.
(Protheroe vProtheroe)
Duty to apportion:
• applies equally to directors coming by benefits ( Regal
• builds on conversion to
(Hastings) v Gulliver)
apportion funds appropriately
• even when knowledge came in personal capacity but is
between income and capital.
useful to company (IDC v Cooley)
Duty to provide accounts.
• but Upjohn J in Boardman felt it unfairly decided.
166 The duties of the trustees
Z 10.1 The trustees’ duties to the trust

property
10.1.1 The duty to collect assets
1 On first appointment a trustee must:
O familiarise himself with the terms of the trust;
O check the state of the investments;
O ensure that all property is vested in his and other trustees’ names;
O if a replacement trustee, check nothing amounting to breach of trust
remains from the previous trustee.
2 One purpose of checks is to ensure trust is safeguarded – a continuing
and stringent obligation (Re Brogden (1888)).
3 Duty is so strict that a trustee might be bound to break his word in order
to protect trust (Buttle v Saunders (1950)).
4 So trustees may have to use litigation to protect trust.
5 But can take costs from fund unless: litigation arose from trustee’s
breach; litigation was speculative and unsuccessful; or trustee acted in a
hostile way towards beneficiaries.
10.1.2 The duty to distribute

1 Trustee must pay income and capital as they become due – failure to do
so is breach and trustee is personally liable.
2 If trustee overpays a beneficiary, this can be adjusted in later payments.
3 If trustee pays a person not entitled, remedy is in quasi-contract – so
beneficiary can proceed against that person as well as trustee – subject
to the doctrine of notice (Re Diplock).
4 If trustee is in doubt about a beneficiary’s claim, then he can seek direc-
tions from court.
5 If beneficiaries cannot be found then trustees can make payment into
court to discharge themselves (Gillingham Bus Disaster Fund (1959)).
6 Courts may also make ‘Benjamin orders’ – so that fund can be distrib-
uted and later claims would be against those over-endowed, not the
trustees (Re Green’s Will Trusts (1985)).
7 Trustees may advertise for claimants by s 27 TA 1925 following certain
formalities.
The duty to invest 167
8 Trustee may be protected by s 61 TA 1925 if he acted honestly and

reasonably.
9 Best way for trustees to discharge themselves is to obtain a release deed

from beneficiaries after providing final account.
10.1.3 Duty to exercise discretion

1 In a discretionary trust the trustees have a duty to exercise their discre-
tion in favour of one or more of the beneficiaries.
2 The trustees cannot be forced to give their reasons for the exercise of
their discretion (Re Beloved Wilkes Charity (1851)).
3 The court can intervene in the decision making of trustees in the
following circumstances:
O where the trustees have failed to consider whether or not to exercise
their discretion at all (Turner v Turner (1983)); or
O whenever there is evidence that the selection has been made improp-
erly (Klug v Klug (1918)); or
O where trustees have failed to give reasons where the beneficiaries
have a legitimate expectation (Scott v National Trust (1998)).
Z 10.2 The duty to invest
10.2.1 The basis of the duty

1 Duty to invest is part of trustee’s duty to safeguard and protect trust.
2 Investment is not defined in Trustee Act 2000 – nor in Law Commission
Report No 260 (1999) Trustees’ Powers and Duties that preceded it – but
Lawrence J in Re Wragg defined it as ‘to employ money in the purchase
of anything from which interest or profit is expected’.
3 Report No 260 identified investment as ‘an evolving concept’ that could
be ‘capital appreciation rather than income yield’.
4 Investment inevitably affects life tenants (interest is in income) and
remaindermen (interest is in capital) – so trustee must be careful not to
advantage one at expense of other.
5 Trustees must operate within powers of investment granted either in the
trust instrument or by the courts, or from statute.
6 Trustees are also bound by the duty of care, originally at common law,
but now in s 1 TA 2000.
10.2.2 The types of investment

1 Basically two different types which incorporate all others:

O a loan at a rate of interest;
O a profit-making activity, an equity.
2 In general, though, there is a confusing array of potential investments –
some relatively safe with low interest rates, some more speculative with
higher interest.
3 Loans at a rate – can include:
O bank and building society deposit accounts – with variable interest
rates;
O government/local authority stock – usually fixed interest;
O debentures – loans to companies, supported by a floating charge on
assets of company (leaving company free to deal with assets) – value
depends on current commercial viability of company;
O preference shares – have preference over ordinary shares in relation
to payment of dividends.
4 Equities can include:
O ordinary shares in a company – return may be good if company
performs well, but disastrous if it performs badly – the reason why
they were prohibited under the Trustee Investments Act 1971;
O unit trusts – investment spread over range of companies, managed by
investment experts as a single fund divided into units;
O investment trusts – a company in which shares are bought which
then invests in shares in other companies itself – return being divi-
dend from investment trust.
5 Pension funds sometimes take advantage of ‘derivatives’ (made up of
‘futures’ and ‘options’ – so potentially very high yield but very risky) –
but most trusts could not invest in them.
6 Trustees’ only real consideration when deciding on a particular invest-
ment is that the financial benefits should be maximised – they must not
be influenced by others (Cowan v Scargill (1985)).
10.2.3 Express investment powers

1 In the past, wide investment powers were commonly drafted into trust
instrument by testator.
2 This would be essentially for two reasons:

O investment powers prior to and included in the 1961 Act were felt to
be very narrow and restrictive;
O procedures required by the 1961 Act were felt to be overcomplicated
and expensive to comply with.
3 Wider powers of investment in Part II TA 2000 (to make any investment
as if absolutely entitled to fund) may make express clauses unnecessary,
except to restrict or exclude statutory power.
4 At one time, express clauses were construed very strictly – so as only to
allow trustees to invest in those securities authorised by general law.
5 But relaxed in Re Harari’s Settlement Trusts (1949) – where words ‘in or
upon such investments as to them may seem fit’ were held to include
equities.
10.2.4 Development of statutory powers of

investment
1 Originally rules on investment were aimed at avoiding all risk to capital
of fund – and founded on idea that there would be little inflation – only
investment in fixed government securities was originally permitted.
2 The 1925 Act liberalised this to an extent – but still only allowed
investment in ‘narrow range’ – with no power to invest in equities or
in land.
3 Trustee Investment Act 1961 passed to modernise law and allow limited
scope to invest in equities and land – and to give more flexibility to
trustees:
O trustees could originally invest half of fund in equities;
O later increased to three-quarters by Trustee Investments (Division of
Trust Fund) Order 1996;
O but Act was complicated to apply – fund literally had to be divided
before trustees were safe to invest – and complex rules regarding
when withdrawing funds from trust – and out of date with general
investment practice.
4 Law Commission recognised the limitations and need for reform – as did
Treasury consultation paper: Investment Powers of Trustees 1996 – so
expanding investment powers was a major purpose of the 2000 Act.
10.2.5 Powers of investment under Trustee

Act 2000
1 Basic investment power is in s 3(1): ‘a trustee may make any kind of
investment that he could make if he were absolutely entitled to the
assets of the trust’:
O described in s 3(2) as the ‘general power of investment’ – appropriate
to any trust;
O general power is in addition to any express power;
O but does not apply to trusts of pension funds, unit trusts or
charities;
O by s 3(4) limited power to provide mortgages of land under 1925 and
1961 Acts is replaced by general power to invest in land by way of
loans secured against the land by legal mortgage.
2 Trustees could not formerly invest in land without express power:
O and purchasing a house for a beneficiary to live in not originally
possible as an investment (Re Power (1947));
O s 6(3) Trusts of Land and Appointment of Trustees Act 1996 gave
trustees powers to purchase legal estate in land – under s 6(4) this
was for: investment; occupation by a beneficiary; or any other
purpose;
O now widened by s 8 TA 2000 – subject to any exclusion or restriction
in trust, trustees may acquire freehold or leasehold land in UK for
same purposes as above – and trustee for this purpose has all powers
of absolute owner.
3 Section 4 sets out the ‘standard investment criteria’:
O must be followed when exercising investment powers:
a) the suitability to the trust of investments of same kind as any
particular investments proposed to be made or retained and of
that particular investment of that kind; and
b) the need for diversification of investments of the trust, insofar as
is appropriate to the circumstances of the trust;
O trustees should review investments from time to time – and in light
of standard investment criteria, consider whether or not are appro-
priate or should be varied;
O trustees should also take into account ‘portfolio theory’ – invest-
ments should not be seen in isolation but as part of an overall strategy
of investment.
4 Advice may still be needed as it formerly was:

O by s 5, trustee should when reviewing investments or exercising

investment powers obtain and consider ‘proper advice’;
O ‘proper advice’ is that believed by trustees to be from those qualified
to give it, having regard to investments;
O unlike 1961 Act, no need for advice to be in writing;
O by s 3, trustee need not seek advice where in all the circumstances he
believes it unnecessary/inappropriate.
5 Delegation of trustee powers not originally possible (except with express
permission – as involved delegating discretion):
O trustees had to apply to court for extension of powers or could dele-
gate by power of attorney under s 25 TA 1925;
O now TA 2000 permits delegation by listing in s 11 all those functions
that may not be delegated;
O s 16 allows for nominees to be appointed;
O s 17 allows for custodians to be appointed;
O whenever trustees delegate to nominees, custodians or agents they
must keep the arrangement under review;
O statutory duty applies to appointment and functions.
6 Duty of care owed by trustees formerly set by common law:
O in Learoyd v Whiteley (1886) Lord Lindley MR said: ‘The duty is not
to take such care only as a prudent man of business would take if he
only had himself to consider; the duty rather is to take such care as
an ordinary prudent man of business would take if he were minded to
make an investment for the benefit of other people for whom he felt
morally bound to provide’;
O and the duty is also to act fairly between all beneficiaries (Bartlett v
Barclays Bank plc (1980));
O and also to do the best financially that can be done for the benefici-
aries (Cowan v Scargill (1984));
O now under s 1 2000 Act trustee ‘must exercise such care and skill as
is reasonable in the circumstances, having regard in particular (a) to
any special knowledge or experience that he has or holds himself out
as having, and (b) if he acts as a trustee in the course of a business or
profession, to any special knowledge or experience that it is reason-
able to expect of a person acting in the course of that kind of business
or profession’.
10.2.6 Choice of investment

1 Following 2000 Act, the trustee must still avoid investments ‘which are
attended with hazard’.
2 Trustee who commits an error of judgement is not likely to be held in
breach of trust (Nestlé v National Westminster Bank plc (1993)).
3 So trustees may pursue an ‘ethical’ investment policy as long as it is also
as financially sound as any alternatives (Martin v City of Edinburgh
District Council (1989)).
4 And in charitable trusts trustees may in any case need to be satisfied
that investment is in line with objectives of charity (Harries v Church
Commissioners for England (1992)).
5 The trust instrument may also provide for ‘ethical’ investment.
Z 10.3 The trustees’ duties to the

beneficiaries
10.3.1 The duty to convert

1 The first duty of the trustee to the beneficiaries is to maintain equality
between them (Lloyds Bank plc v Duker (1987)).
2 The duty to convert arises where beneficiaries are entitled in
succession:
O life tenant has immediate use of property plus income;
O the remainderman is entitled to the capital only after the life tenant’s
death;
O so injustice would result unless investment is balanced – too specula-
tive and fund might be dissipated at expense of remainderman, too
cautious and fund might be preserved at expense of life tenant’s income.
3 The duty to convert is to sell certain unauthorised assets to buy author-
ised ones.
4 Called rule in Howe v Dartmouth (1802) – that, unless there is a contrary
provision made in the will, where residual personalty is settled in succes-
sion, trustees must ‘convert’:
O any asset of a wasting nature;
O any asset of a reversionary nature;
O any unauthorised investments.
The trustees’ duties to the beneficiaries 173
5 Rule has limited application as does not apply to:

O lifetime settlements;

O specific or general bequests rather than a residuary gift;
O leasehold land;
O where the rule is expressly or impliedly excluded, e.g. a provision
that nothing in the estate should be sold.
10.3.2 The duty to apportion

1 This duty arises also when there is a duty to convert.
2 Reason is to ensure income derived from unauthorised investments is
then fairly distributed between capital and income – so both life tenant
and remainderman fairly treated.
3 In case of wasting, hazardous or unauthorised investments assumption is
that these unfairly favour the life tenant:
O so apportionment ensures life tenant receives an income repre-
senting the current yield on authorised investments;
O currently 4 per cent – but out of line with accurate yield;
O if there is no power to postpone then trustees should convert within
one year (the time expected for full administration) – assets sold within
a year are valued at time of sale, otherwise value after one year is taken;
O if there is a power to postpone then value is taken as from the testator’s
death (Brown v Gellatly (1867)).
4 For future, reversionary or other non-income producing property appor-
tionment necessary to protect life tenant who otherwise gains no benefit.
5 Possible to avoid rules if contrary intention shown by testator.
6 Also solicitors on making wills usually exclude the rule in Howe
v Dartmouth.
7 Law Reform Committee 23rd Report 1982 suggested a statutory rule
rather than replacing rule altogether – would place duty on trustee to
hold fair balance between life tenant and remainderman.
8 Other rules also deal with apportionment:
O the Apportionment Act 1870 concerns dividing income, profit, rents
etc unpaid at time of testator’s death;
O the rule in Allhusen v Whittell (1867) – because the life tenant should
only take an income net of testator’s debts, then he is obliged to
make a contribution.
10.3.3 The duty to provide accounts

and information
1 Trustees owe duty to keep accurate and up-to-date accounts.
2 Beneficiary entitled to inspect accounts but no right to a copy.
3 Remainderman only entitled to capital accounts relating to his reversion
– life tenant entitled to full accounts.
4 Discretionary beneficiary may see accounts – but not a potential discre-
tionary beneficiary.
5 Charitable trusts and pension funds require proper audited accounts.
6 Other trusts usually do not – but trustees may have them audited and
charge fund – but only occasionally not annually.
7 Beneficiaries are also entitled to be informed of matters currently
affecting the trust (for charities there is a statutory list) – with private
trusts this might generally include:
O documents in possession of trustees acting as trustees;
O documents containing information on the trust that beneficiaries are
entitled to know about.
8 Re Londonderry’s Settlement (1965) – identified that beneficiaries have a
proprietary interest in these documents. But PC in Schmidt v Rosewood
Trust Ltd (2003) suggested that it is a part of the trustee’s fiduciary duties
and that disclosure is within the court’s inherent jurisdiction to decide
after balancing interests of beneficiaries, trustees and third parties.
9 Beneficiary may be denied access to testator’s confidential wishes
(Hartigan Nominees Pty Ltd v Rydge (1992)).
Z 10.4 The fiduciary nature of trusteeship
10.4.1 Remuneration and reimbursement of

trustees
1 Basic principle trustee is volunteer – so no payment.
2 So can only receive remuneration if specifically entitled.
3 But trustee can use lien over trust fund to recover out-of-pocket
expenses, e.g. agent’s fees, proper costs of litigation.
4 The right to reimbursement is statutory – s 31 TA 2000.
5 Numerous ways that remuneration may be authorised:
The fiduciary nature of trusteeship 175
O in the trust instrument itself:

O commonly in ‘charging clauses’ before the 2000 Act;

O now by s 28 an express clause will be upheld even if it is possible
to use a lay (and thus free) trustee.
O under TA 2000:
O Part V gives professional trustees right to take remuneration
even if not expressly provided for;
O by s 29 they may take ‘a reasonable remuneration’;
O but sole trustees excluded as no scrutiny possible.
O other statutory authorisation:
O Public Trustees entitled under s 9 Public Trustees Act 1906;
O judicial trustees are entitled under s 1 Judicial Trustees Act 1898;
O corporations appointed as Custodian Trustees are entitled by s 4
Public Trustees Act 1906.
O authorisation by the court:
O court has inherent jurisdiction exercisable retrospectively or
prospectively when work of trustee (fiduciary) (even one in
breach of trust) has been of significant value to trust (Boardman
v Phipps (1967));
O can also use this jurisdiction if trustee has used specialist skills
and would not have if aware there would be no remuneration
(Foster v Spencer (1996));
O courts do not usually use inherent jurisdiction in respect of
directors because of likelihood of conflict of interest and duty
(Guinness v Saunders (1990)).
O remuneration for litigious work by solicitor trustees:
O the so-called rule in (Craddock v Piper (1850));
O whereby a solicitor may charge costs where he has acted for a
co-trustee as well as himself.
O contracts with sui juris beneficiaries for payment possible.
10.4.2 Trustees as purchasers of trust

property
1 Trustees should not become owners or lessees of trust property – this is
to avoid any potential conflict of interest – and it is irrelevant that a fair
price is paid.
2 Though the rule has been somewhat relaxed – where there is clearly no
conflict of interest (Holder v Holder (1968)).
3 Should not even buy property a long time after retiring.

4 But possible for trustee to buy beneficial interest providing that there is
no undue influence (Tito v Waddell (No 2) (1977)).
10.4.3 Trustees and incidental (secret) profits

1 According to Lord Herschell in Bray v Ford (1896), ‘it is an inflexible
rule of equity that a person in a fiduciary position . . . is not, unless
otherwise expressly provided, entitled to make a profit; he is not allowed
to put himself in a position where his interest and his duty conflict.’
2 So this is the logic behind the twin rule that trustee must not:
O be paid for his services without express authorisation;
O make any kind of secret profit from the trust.
3 Rule in Keech v Sanford (1726) prevents trustee renewing in his own
name a lease he held formerly as a trustee.
4 But applies only to fiduciaries (Re Biss (1903)).
5 If trustee acquires freehold reversion then may be liable if used his posi-
tion as trustee to gain personal benefit (Protheroe v Protheroe (1968)).
6 Where directors have received their positions as result of their being
trustees then they may be liable to the trust for money they receive (Re
Macadam (1946)).
7 But they may keep remuneration if they were directors before being trus-
tees (Re Dover Coalfield Extension Ltd (1908)).
8 Basic rule is – however trustee comes by profit, if made as result of posi-
tion as trustee then must account to trust for it – and beneficiary has
only a personal remedy not a proprietary interest (Sinclair Investments
(UK) Ltd v Versailles Trade Finance Ltd (2011)).
9 Trustee must never compete with trust (Re Thomson (1930)).
10 Bray v Ford (1896) applies to fiduciaries generally, not just trustees.
11 One major problem is identifying fiduciary relationship – some obvious
ones such as solicitor and client, agents and their principals, directors
and shareholders, partners:
O but list not fixed and courts do label someone a fiduciary merely for
desired result (Reading v A-G (1951));
O or deny relationship (Swain v The Law Society (1983)).
12 Company directors are identified as fiduciaries – so are prevented from

using knowledge gained in office for private gain (Regal (Hastings) Ltd
v Gulliver (1967)).
13 This point has been extended so that directors have even been held
liable for profit made using knowledge gained in a personal capacity if it
could have been used by the company (Industrial Development Consult-
ants Ltd v Cooley (1972)).
14 Leading case, demonstrating how rigidly principle applies, is Boardman v
Phipps (1967):
O the case involved one beneficiary and the trust solicitor;
O latter held to account as fiduciary, not as trustee – though Lords
were split on whether he acted in a private capacity;
O the fact that the trust lost nothing and actually gained was held to be
irrelevant;
O Lord Upjohn (dissenting) felt principle of preventing conflict of
interest and duty wrongly applied – called it ‘unreasonable and ineq-
uitable application of such doctrines’;
O other problem was who fiduciary owes duty to, trust or beneficiaries
(consent obtained from two active trustees) – position now modified
by TA 2000 which authorises conflicts of interests if necessary for
benefit of trust.
15 In comparison to Boardman, Commonwealth courts are less hostile to
fiduciaries (Queensland Mines Ltd v Hudson (1978)) – similar to
dissenting judgments of Lords Upjohn and Dilhorne in Boardman.
Key Cases Checklist
10.1.3.2 Re Beloved Wilkes Charity (1851)

3 Mac & G 440 CA
Key Facts
Trustees had the power to select a boy to be educated as a

priest in the Church of England with a preference within a
certain area. They chose a boy from outside the area.
Key Law
It was held that it was a proper choice and the trustees did
not have to give reasons for their decision.
10.1.3.3 Scott v National Trust [1998] 2 All ER 705 HC
Key Facts
The trustees of the National Trust without notice decided to

withdraw the right to hunt over National Trust land. The
court considered whether the trustees had to give reasons
for the decision [this was at a time when hunting was legal].
Key Law
Trustees could not be compelled to give reasons for the

exercise of a discretion but where the beneficiaries had a
legitimate expectation which had arisen over time then trus-
tees had a duty to give them a reason for a change in policy.
10.1.3.3 Klug v Klug [1918] 2 Ch 67 HC
Key Facts
A mother who was trustee of a settlement under which her

daughter was a beneficiary refused to exercise her discre-
tionary power to advance capital to her daughter because
she had married without her mother’s consent.
Key Law
The court held that where reasons were given for the exer-
cise of a trustee’s discretion and those reasons were
improper then the court had power to intervene.
10.2.2.6 Cowan v Scargill [1985] Ch 270 CA
Key Facts
Union trustees of the Pension Fund for the National Union of

Mineworkers challenged the investment policy of the pension
fund, which included investments in overseas industries in

direct competition with the United Kingdom coal industry.
Key Law
It was held that the duty of trustees is to optimise the benefits

which the beneficiaries are to receive, and in general, finan-
cial considerations would prevail over ethical considerations.
Key Judgment
Sir Robert Megarry: ‘Trustees may have strongly held social

or political views. They may be firmly opposed to any
investments in South Africa or other countries or they may
object to any form of investment in companies concerned
with alcohol, tobacco, armaments or other controversial
products. . . . if investments of this kind would be more
beneficial to the beneficiaries than other investments, the
trustees must not refrain from making the investments by
reason of the views that they hold.’
10.2.6.2 Nestlé v National Westminister Bank plc

[1993] 1 WLR 1260 CA
Key Facts
The NatWest Bank acted as trustees to a settlement of the

Nestlé family. One of the beneficiaries claimed that if the
bank had invested the fund properly it would have increased
in value by four times.
Key Law
The court held that although they had made errors of judg-
ment, there had not been a breach of trust. They had failed
to fully understand the extent of their investment powers and
they had failed to review the investments, but these failures
could not be directly linked to the loss to the beneficiary.
Key Comment
This decision suggests that it is very difficult for a benefi-

ciary to successfully sue trustees for breach on the basis of
investment decisions. However, under the Trustee Act
2000 they would have been liable for a breach of their stat-
utory duty of care and in particular their failure to review the
investments, which is now a statutory duty.
10.2.6.4 Harries v Church Commissioners for England

[1993] 2 All ER 300 CA
Key Facts
The Church Commissioners’ investment policy was based

on ethical considerations, which meant they chose not to
invest in some high-proft-yielding investments such as
gambling and the tobacco industry. This policy was upheld
by the courts, since it could be justified for a religious charity
whose members were likely to support such a policy.
Key Law
Trustees are under a duty to maximise their investments for

their beneficiaries but some charitable institutions were
entitled to operate an ethical investment policy.
Key Comment
The Trustee Act 2000 lays down statutory duties with regard
to investment including the standard investment criteria
which impose a duty on trustees to consider the suitability
of investments and to ensure that they are sufficiently diver-
sified. They also have a duty to review the investments from
time to time and a duty to take advice where appropriate.
10.2.5.6 Bartlett v Barclays Bank Trust Co. Ltd (No 1)

[1980] Ch 515 HC
Key Facts
The trust property of a trust consisted largely of shares in a

private property company and the trustees were profes-
sional trustees. The company decided that it would invest in
some speculative property deals. One, called the Guildford
project, was a success, but the second, called the Old
Bailey project, was a disaster and resulted in a loss. It was
held that the losses in the Old Bailey project could be set off
against the gains made in the Guildford project.
Key Law
Generally where the trustees in breach of trust make a profit

on one transaction and a loss on another they are not
allowed to set off the loss against the profit, unless the profit
and the loss are treated as part of a single transaction.
Key Judgment
Brightman J: ‘I think it would be unjust to deprive the bank

of the element of salvage in the course of assessing the
cost of the shipwreck.’
10.3.3.8 Re Londonderry’s Settlement [1965] Ch 918 CA
Key Law
A beneficiary is entitled to see trust documents. These

include any documentation concerning the administration
of the trust but not documentation revealing the reasons for
the trustees’ decisions.
10.3.3.8 Schmidt v Rosewood [2003] 2 WLR 1442 PC
Key Facts
An object of a power of appointment sought disclosure of

certain trust documents including letters written by his
father about the exercise of power.
Key Law
The Privy Council held that he may have the right to disclo-
sure of documents in the same way as the object of a
discretionary trust, but it was a matter for the court’s discre-
tion as to whether disclosure would be exercised. They
held that no beneficiary has a right to see any trust docu-
ment, and it is always a matter for the court’s discretion.
This will depend on such issues as the likelihood of the
claimant’s benefiting under the trust or power.
Key Judgment
Lord Walker: ‘Their lordships consider that the more princi-

pled and correct approach is to regard the right to seek
disclosure of trust documents as one aspect of the court’s
inherent jurisdiction to supervise, and if necessary inter-
vene in, the administration of trusts. The right to seek the
court’s intervention does not depend on entitlement to a
fixed and transmissible beneficial interest . . .’
Key Link
See also Cowan v Scargill (above).
10.4.3.1 Bray v Ford [1896] AC 44 HL
Key Judgment
Lord Herschell: ‘It is an inflexible rule of a Court of Equity

that a person in a fiduciary position . . . is not, unless other-
wise expressly provided, entitled to make a profit; he is not
allowed to put himself into a position where his interest and
his duty conflict . . .’
Types of fiduciary relationships
10.4.3.11 Reading v Att-Gen [1951] AC 507 HC
Key Facts
A sergeant in the British army used his position to enable

civilians to pass through checkpoints with smuggled goods.
Key Law
It was held that he was in a fiduciary relationship and must

account to the Crown the profits that he had wrongly made
through the misuse of his position.
Company directors and fiduciary duties in the

commercial context
10.4.3.12 Regal (Hastings) Ltd v Gulliver [1967]

2 AC 134n HL
Key Facts
Four company directors of R Ltd personally subscribed for

shares in a subsidiary company because R Ltd did not have
the requisite money available. The directors were held liable
to account to the company for the profits made from their
personal shareholding.
Key Law
A fiduciary must account for any profit made through his

position although he has acted bona fide throughout.
10.4.3.13 Industrial Developments Consultants Ltd v

Cooley [1972] 1 WLR 443 HC
Key Facts
The defendant was employed by the claimant company,

which offered construction consultancy services. He entered
into negotiations with the Gas Board on their behalf but the
negotiations broke down. He then left the company, having
told them that he was ill, and went to work for the Gas Board
himself. It was held that he had to account for the profts he
gained to his employers. His employers would not have
released him if they had been aware of the full facts.
Key Law
A fiduciary must not place himself in a position where his

duty and his interest conflict.
10.4.3.15 Queensland Mines Ltd v Hudson (1978)

18 ALR 1 PC
Key Facts
The defendant, who was the managing director of a

company, successfully obtained mining licences on its
behalf. When the company did not proceed he resigned as
managing director and proceeded, several years later, with
the full knowledge of the company with the mining venture
himself. It was held that he did not have to account for the
profits to the company.
Key Law
Where a fiduciary acts with the full knowledge and consent

of his principal, then the fiduciary is entitled to retain profits
made through his position.
Key Problem
In this case, could it be argued that consent should have

come from the shareholders and not from the board?
10.4.3.8 Sinclair Investments (UK) Ltd Holding SA v

Versailles Trade Finance Ltd [2011] EWCA
Civ 722 CA
Key Facts
Versailles Trade Finance was part of a larger group in which

the defendant had a substantial interest. He was able to
make a large profit and thereby repay a mortgage on a
property which he sold for £8.6 million because the group
falsely inflated its turnover through some dishonest deal-
ings. The claimant argued the defendant owed him a fidu-
ciary duty which had been breached and claimed this profit.
Key Law
The court held that any profit made through his position as
trustee must be returned to the claimant but the defendant
was accountable for the profit under a personal claim and
rather than a proprietary claim thereby upholding the prin-
ciple in Lister v Stubbs (1890).
10.4.2.2 Holder v Holder [1968] Ch 353 CA
Key Facts
An executor, the son of the deceased, purchased trust

property at a public auction after renouncing his executor-
ship. Unknown to him, he was technically regarded as an
executor because he had undertaken some executor
duties. The sale was not set aside, because he had never
assumed the duties of an executor and there was no
conflict of interest.
Key Law
The self-dealing rule applies when a trustee purchases trust

property from the trust. It prevents a trustee from purchasing
trust property even where it is at public auction and at a fair
price. The transaction is voidable by a beneficiary.
Purchase of a lease
10.4.3.3 Keech v Sandford (1726) Sel Cas Ch 61 HC
Key Facts
A trustee held the profits of a lease of Romford market on

trust for a child. He asked the landlord to renew the lease
and he refused to grant the lease to the child, because he
felt he had no rights of enforcement against a child because
he was a minor. The trustee then renewed the lease in his
own name. It was held that the trustee must hold the lease
on trust for the child, and account for any profits he made.
Key Law
A trustee cannot keep for his own benefit a renewal of a

lease which he was able to obtain for himself by reason of
his being the trustee of the original lease.
Re Macadam [1946] Ch 73 HC
Key Facts
Trustees had the power to appoint two directors of a

company, and they chose to appoint themselves. It was
held that they must account to the trust for the remunera-
tion that they received.
Key Law
If trustees acquire their position as directors through the

trust, then they are accountable to the trust for any remu-
neration that they receive.
Competition with trust
Re Thomson [1930] 1 Ch 203 HC
Key Facts
A trustee of a yacht-broking business set up independently

as a yacht broker. It was held that he had to account for any
profits he received to the trust, because he was in breach
of his fiduciary duty.
Key Law
If the trustee forms a business which is similar but not in

direct competition with the trust then the trustee does not
have to account for any profits he receives.
10.4.1.5 Boardman v Phipps [1967] 2 AC 46 HL
Key Facts
Boardman was a solicitor to a trust which held a share-

holding in a private company. Boardman and a beneficiary
were dissatisfied with the way the company was run and its
poor performance which yielded a poor return to the trust.
Boardman personally acquired a majority shareholding
using knowledge he had gained from the trust in order to
gain control of the company. Some of the beneficiaries
were informed of his actions but the elderly widow was
unable to give consent as she was senile. The company
became profitable and both Boardman and the trust prof-
ited. It was held that any personal profit made by Boardman
was held on constructive trust for the beneficiaries.
Unusually the court held that he should be rewarded by the
payment of a quantum meruit because at all times he had
acted bona fides and in the best interests of the trust.
Key Law
A fiduciary will be held strictly liable to account for any

profits made, wherever it can be said that his duty and
interest conflict. The law does not distinguish between the
dishonest and the honest trustee; both must account for
any profit made by virtue of their position. Until Att-Gen for
Hong Kong v Reid, the law seemed to favour the dishonest
fiduciary making a profit from his position. Reconsider the
decision in Lister v Stubbs above.
11 The powers of
trustees
Trusts of land: General powers:

• by s 6 TOLATA trustee of land All powers are discretionary - general powers include:
has all rights of absolute owner • to sell trust property - s 6 TOLATA for land - or s 12
• applies to express or implied ТА 25 - but must obtain best price (Buttle v
trusts Saunders)
• further powers include - to • to give receipts - s 14 ТА 25, e.g. for overreaching
transfer property, or to partition • to insure - s 19 ТА 2000 - money recovered must
- in either case with consent of be treated as capital and applied accordingly
adult beneficiaries all in • to compound liabilities.
agreement.
C POWERS OF TRUSTEES
Power to delegate:
Maintenance and advancement: • originally possible only if
necessary and conforms with
Discretionary powers not subject to ТА duty of care. standard business practice
Maintenance = s 31 ТА 25 beneficiary with vested or (Speight V Gaunt)
contingent interest - either before 18 or after if • must be careful in selection
contingency not yet met - trustee can apply income for, (Fry V Tapson)
e.g. support, education, etc. • S 23 ТА 25 gave indemnity to
• Only possible if not prior claim, e.g. life interest. trustee who delegated in
• Can be expressly denied in trust instrument (Re good faith
Turner's Will Trusts). • S 30 protected trustee against
• Only applies to gifts carrying with them the loss caused other than by his
intermediate income - vested gifts; contingent wilful default
residuary personalty; but not contingent pecuniary - • scope of protection uncertain
unless settlor is father of child, intention shown in - compare Re Vickery and
instrument (Re Churchill) or separate sum set aside Re Lucklngs
(Re Medlock). Advancement = s 32 ТА 25 • now ТА 2000 gives wider
beneficiary with unmet contingent interest - trustee power to delegate
can apply capital; to ‘set beneficiary up in life’ - • can delegate functions other
examples in Pilklngton v IRQ. than those in s 11:
• only half of presumptive share can be applied distribution of fund,
• share advanced is set off against entitlement maintenance and
• must not disadvantage person with prior interest advancement, appointment
unless adult and consents in writing of new trustees
• contrary intention can be shown in instrument • by s 16 trustees can appoint
• provision for accumulation precludes advancement nominees and bys 17
• must ensure that advance is supervised (Re custodians
Pauling's Settlement Trusts). • some delegation of discretion
possible, e.g. s 9 TOLATA.
188 The powers of trustees
Z 11.1 Introduction
1 Powers must be distinguished from duties – because there are significant

consequences depending on whether something is one rather than the
other:
O duties are obligatory – and failure to comply can lead to breach of
trust actions;
O powers are discretionary – so there is no compulsion other than to
exercise the discretion;
O but trustees must act impartially towards beneficiaries where they
exercise discretion – and would not be impartial if the discretion
were exercised to achieve an unlawful purpose (Chirkinian v Arnfield
(2006)).
O trustees need not give reasons for their the exercise of their discre-
tion (Re Beloved Wilkes Charity (1851));
O where the trustees give reasons for a decision and the reasons are
not bona fide then the court can intervene in the exercise of a
discretion.
2 Powers of trustee were originally identified in trust instrument:
O but TA 1925 gave detail on powers needed by all trustees;
O but the Act became outdated with regard to powers of delegation,
insurance, remuneration, investment, appointing nominees and
custodians;
O so most of these areas are now updated in Trustee Act 2000.
3 Certain significant powers are enjoyed by trustees:
O to sell the property to use the fund in different ways;
O to give receipts to purchasers to enable overreaching mechanism;
O powers in respect of liability to the trust or by the trust;
O powers in relation to reversionary interests.
4 But the two major powers are:
O delegation;
O maintenance and advancement.
General powers 189
Z 11.2 Trustees of land under the Trusts of

Land and Appointment of Trustees

Act 1996
1 By s 6(1) TOLATA trustees of land are given ‘all of the powers of an
absolute owner’ (formerly trustees of a trust for sale had a duty to sell
with only a power to postpone).
2 So trustee now has greater flexibility – but must still:
O give proper regard to rights of beneficiaries and there is a duty to
consult adult beneficiaries in possession of the land;
O maintain all general duties and all statutory restrictions.
3 Section 6 applies to any trust of land whether express or implied –
though an express trust of land may be excluded by the settlor.
4 Two further major powers within the Act:
O trustees have power to transfer trust property where adult benefici-
aries of full capacity acting together call for a transfer;
O trustees can partition lands when consented to by beneficiaries and
they are all adult and absolutely entitled as tenants in common.
Z 11.3 General powers
11.3.1 The power to sell trust property

1 By s 6(1) TOLATA trustees of a trust of land (or post-1996 settlement)
are vested with the legal estate and thus have power to sell.
2 For pre-1996 settlements the legal estate is vested in the tenant for life
who thus has the power of sale.
3 For overreaching to occur the receipt of two trustees or a trust corpora-
tion must be obtained by purchasers.
4 Power of sale exists for chattels and receipt of only a single trustee is
needed.
5 Power of sale often implied in case of unauthorised investments which
are not suitable for trust – and should be sold and replaced in more
permanent form:
O Trustee Act 2000 puts this into statutory form;
O trustees may also mortgage property to raise money for authorised
purposes.
6 Rules on sale of trust property are in s 12 TA 1925:

O can sell all or any of trust property by public auction or private sale;
O can subject any sale to conditions;
O but have duty to obtain best possible price (Buttle v Saunders) –
beneficiary can restrain by injunction a sale that does not do this.
11.3.2 The power to give receipts

1 By s 14 TA 1926 trustees may give receipts for money, securities,
investments etc sold.
2 Receipt protects purchaser from liability to beneficiaries for misapplication
of fund.
3 Applies irrespective of any contrary statement in trust instrument and
can apply to sole trustees.
4 Section 14 applies other than to proceeds of sale of a trust of land or
settled land under SLA 1925 when receipt of two trustees or trust corpo-
ration is needed to evoke overreaching mechanism to protect purchaser.
11.3.3 The power to insure

1 At common law there is a power to insure – which in any case is one way
of safeguarding the trust property.
2 By s 19 TA 1925 trustees were also given limited powers to insure – now
under s 19 Trustee Act 2000:
O the trustee may insure against any risks;
O and may pay the premiums from capital.
3 The statutory duty of care from s 1 TA 2000 applies.
4 Money recovered from policies must be treated as capital and applied
accordingly.
11.3.4 The power to compound liabilities

1 By s 15 TA 1925 settlement can be made with any person claiming to be
a beneficiary.
2 And trustee can adjust interests between competing beneficiaries – to
reach a sensible compromise instead of facing litigation in every
competing claim.
The power to delegate 191
3 Providing they comply with the statutory duty of care, trustees will not
be liable for loss caused by exercising their powers under s 15.
Z 11.4 The power to delegate

1 The original common law rule is that a trustee will not be liable for the
faults of another to whom he has delegated functions.
2 In practice, trustees need to delegate all manner of functions – recognised
as early as ex parte Belchier (1754).
3 Trustees traditionally could delegate only where necessary and when
delegation conforms with standard business practice (Speight v Gaunt
(1883)) and where they act as reasonable prudent businessmen (Learoyd
v Whiteley (1887)).
4 Trustees must also employ the ‘agent’ in the course of their business and
must take care in selecting them – and originally could not delegate
discretionary powers (Fry v Tapson (1884)).
5 So in nineteenth century commonplace to insert express delegation powers
with exemption for trustees from anything except their wilful default.
6 Wide powers of delegation powers were granted in s 23(1) TA 1925:
‘trustees . . . may instead of acting personally employ . . . an agent
whether a solicitor, banker, stockbroker or other person to . . . do
any act . . . in the execution of the trust or the administration of an
estate . . . and shall not be liable for the default of any such agent if
employed in good faith.’
7 Similarly, s 30 TA 1925 created an indemnity for acts and defaults of
agents unless loss caused through trustees’ ‘wilful default’.
8 Exact scope of provisions was uncertain and case law contradictory –
compare Re Vickery (1931), where there was said to be no liability unless
trustee acted with wilful default, with Re Lucking’s Will Trusts (1968),
where court said trustee was allowed to delegate but had a corresponding
duty to supervise.
9 Where s 23 did not permit delegation of discretions this was permissible
by power of attorney under s 25.
10 Trustee Act 2000 passed to repeal these and provide clear framework.
11 The Act widens powers of delegation but can still be subject to restrictions
in the trust instrument.
12 In effect trustees can delegate all or any delegable functions other than
those in s 11:
O those relating to how assets should be distributed;

O decisions on whether payments should be from income or capital;

O power to appoint new trustees;
O any power conferred by other enactment permitting trustees to dele-
gate functions or to appoint custodians or nominees.
13 So significantly allows for delegation of investment powers to experts.
14 Functions delegable in charitable trusts are also listed.
15 By s 16 trustees can appoint nominees and by s 17 custodians – so
prevents delays in transferring shares.
16 Trustee must maintain statutory duty of care under s 1 when delegating –
which applies to supervision as well as appointing.
17 Under s 23 TA 2000 trustee is not liable for acts of agent, nominee or
custodian unless he has failed to comply with the duty of care both in
appointing and supervision.
18 Some delegation of discretion is permitted:
O by s 9 TOLATA 1996 trustee of trust of land can delegate any func-
tions relating to land, including sale to beneficiaries of full age;
O under s 1 Trustee Delegation Act 1999 trustee of trust of land can
delegate all functions, including discretions, by power of attorney;
O s 25 TA 1925 in any case allowed for delegation of powers and discre-
tions either by deed or by power of attorney.
Z 11.5 Powers of maintenance and

advancement
11.5.1 Introduction
1 Maintenance and advancement covers situations where a beneficiary
will not receive until a set date in the future but wants support now.
2 Maintenance is when trustees allow a beneficiary money from income.
3 Advancement is when trustees allow a contingent beneficiary money
from capital.
4 There are a variety of reasons for doing so:
O commonly for tax saving;
O for contingent interests no use is made of the intermediate income so
it is a way of using it for the immediate benefit of the beneficiary;
O it can also help children with vested interests.
Powers of maintenance and advancement 193
5 Neither power is significantly subject to the statutory duty of care.

6 Both should result from conscious exercise of trustees’ discretion – not

automatic right – and it does not matter that other parties are benefited.
11.5.2 Maintenance
1 The power derives from the trust instrument or from s 31 TA 1925:
‘Where any property is held by trustees in trust for any person for
any interest whatsoever, whether vested or contingent, then,
subject to any prior interests or charges affecting that property –
(i) during the infancy of any such person, if his interest so long
continues, the trustees may, at their sole discretion, pay to his
parent or guardian, if any, or otherwise apply for or towards his
maintenance or education or benefit, the whole or such part, if
any, of the income of that property as may, in all the circum-
stances, be reasonable whether or not there is – a) any other
fund applicable for the same purposes; or b) any person bound
by law to provide for his maintenance or education; and
(ii) if such person attaining the age of [18] years has not a vested
interest in such income, the trustees shall thenceforth pay the
income of that property and of any accretion thereto under
subsection (2) of this section to him until he either attains a
vested interest or dies, or until failure of his interest . . .’.
2 So trustees can use their discretion to support a minor beneficiary with
either a vested or contingent interest.
3 And even after the minor reaches 18 the income can still be used to
support him if he has a contingent interest.
4 Decision to grant should result from conscious exercise of discretion – so
not a right – and will not matter that someone else benefits.
5 Once beneficiary meets the contingency he is also entitled to the capital.
6 By s 53 TA 1925 application can be made to the court where the trust
instrument does not provide for maintenance.
7 Maintenance only possible where no prior interest, e.g. a life interest.
8 A contrary intent can always be expressed in the trust instrument – and
may be construed, e.g. from a direction to accumulate (Re Turner’s Will
Trusts (1937)).
9 By s 31(2) surplus income is accumulated for child beneficiaries until
they reach majority:
O child is entitled to accumulations if he has a vested interest before

reaching majority – because then he is in any case entitled to the
income;
O but principle may not apply if there is an express contrary intention
in trust instrument (Re Delamere’s Settlement Trusts (1984)).
10 Section 31 only applies to gifts that carry with them entitlement to the
intermediate income – though it is not absolutely clear which gifts do
and which do not:
O vested gifts always carry the intermediate income unless contrary
intent is shown;
O with contingent residuary gifts of personalty, intermediate income is
said to attach to beneficiary unless a contrary intention is shown;
O with a contingent pecuniary legacy this will not usually carry with it
intermediate income on basis that a bequest of a fixed amount means
testator only intended that amount to pass to beneficiary – but there
are three exceptions:
i) where the settlor is the father of the child;
ii) where intention to maintain is shown (Re Churchill (1909));
iii) where testator has set aside the legacy as distinct and separate
fund for beneficiary (Re Medlock (1886)).
11 In a contingent gift for a class of beneficiaries maintenance can still be
given to those beneficiaries who do not yet have a vested interest even
though some of the class have met their contingency.
12 If a member of a class dies before his interest is vested, accumulation of
interests representing his contingent interest is added to the capital.
11.5.3 Advancement
1 Where maintenance concerns application of income to support a child
beneficiary’s needs advancement is application of capital before the
minor is actually entitled.
2 Advancement is authorised in the trust instrument or in s 32 TA
1925:
‘Trustees may at any time or times pay or apply any capital money
subject to a trust, for the advancement or benefit, in such manner
as they may, in their absolute discretion, think fit, of any person
entitled to the capital of the trust property or of any share thereof,
whether absolutely or contingently on his attaining any specified
Powers of maintenance and advancement 195
age or on the occurrence of any other event, and whether in posses-

sion or in remainder or reversion, and such payment or application
may be made notwithstanding that the interest of such person is

liable to be defeated by the exercise of a power of appointment or
revocation, or to be diminished by the increase of the class to which
he belongs:
Provided that –
a) the money so paid or applied for the advancement or benefit
of any person shall not exceed altogether in amount one half of
the presumptive or vested share or interest of that person in the
trust property; and
b) if that person is or becomes absolutely and indefeasibly entitled
to a share in the trust property the money so paid or applied
shall be brought into account as part of such share; and
c) no such payment or application shall be made so as to prejudice
any person entitled to any prior life or other interest, whether
vested or contingent, in the money paid or applied unless such
person is in existence and of full, age and consents in writing to
such payment or application’.
3 As with maintenance a major purpose of applying the money is tax
saving but generally the purpose is ‘the establishment in life of the bene-
ficiary . . . or some step that will contribute to the furtherance of his
establishment’: Jessel MR in Taylor v Taylor (1875).
4 Traditional examples of advancement were:
O buying an apprenticeship for a young person;
O buying a commission in the armed forces;
O buying a young person a share in a business, company or
partnership;
O helping a person to get started at the Bar;
O enabling a woman to marry.
5 More modern examples include:
O paying off debts;
O providing for a charity;
O providing the means of supporting a wife or children or both.
6 Many of these were discussed in Pilkington v IRC (1964), in which it was
also identified that any other way of improving the material situation of
the beneficiary is acceptable.
7 The scope of express powers of advancement was traditionally construed

quite narrowly – so it was practice in drafting such clauses to include
words to widen the scope, e.g. ‘for the advancement of or otherwise for
his benefit’.
8 In practice since TA 1925 any express provision would only add to the
whole of the beneficiary’s presumptive share.
9 Section 32 TA 1925 is the major process for advancement – with many
important features:
O it obviously means money can be applied from capital regardless of
whether beneficiary’s interest is vested or contingent;
O decision to apply capital for advancement is at trustees’ discretion;
O only half of the presumptive share can be applied;
O share advanced is set off against entitlement when received;
O advancement must not disadvantage a person with a prior interest
unless that person is adult and consents in writing;
O but a contrary intention to the last three points can be shown in the
trust instrument;
O it is assumed a provision for accumulation precludes the possibility of
advancement.
10 Many problems arise from definition of advancement in s 32 and were
considered in Pilkington v IRC (1964) – including:
O it was immaterial that the minor would not receive the property until
much later because advancement is not necessarily about getting the
property early but about the beneficiary being set up in life;
O it does not matter that other people benefit from the advance;
O it is not a problem that arrangement is by creation of a new trust;
O necessity to delegate trustee powers was not a problem either;
O but offending the perpetuity period will invalidate the advance.
11 Trustees in making an advancement must bear in mind the need to
supervise the transaction and the use of the advance (Re Pauling’s
Settlement Trusts (1964)).
Key Cases Checklist

11.5.3.11 Re Pauling’s Settlement Trusts [1964]

Ch 303 CA
Key Facts
A marriage settlement created in 1919 included an express

provision that the trustees could advance up to one-half of
the beneficiaries’ presumptive share under the trust for
their advancement or absolute use. Advances had been
made by the trustees, who were the bank Coutts & Co. The
beneficiaries sued the trustees for breach of trust in
advancing the shares to the beneficiaries when the money
had generally been paid not to them but into their mother ‘s
bank account. The court held that the trustees were not
liable because the beneficiaries were all of age and had
consented to the advances.
Key Law
A beneficiary can only consent if he/she is of full age and is

not under any other incapacity.
12 Variation of trusts
f
Purpose of variation: Court’s inherent jurisdiction:
• allows terms of trusts to • can vary where necessary to protect trust
be varied to achieve property (Re Jackson)
other beneficial purpose • or to reach compromise between competing
• adult beneficiaries acting beneficiaries (Mason v Fairbrother).
V ,
together can terminate
trust and demand
distribution of fund
(Saunders V Vautier)
• so variation usually for
people lacking capacity.
Statutory powers to vary:
• s 57 ТА 25 in management or
administration of trust when expedient
(Re Power)
• s 64 Settled Land Act 25 for settled
land (Hambro v Duke of Marlborough)
• s 53 ТА 25 for maintenance or
education of child (Re Gower)
VARIATION OF TRUSTS • ss 23-25 Matrimonial Causes Act
1925 for domestic settlements (Brooks
V Brooks)
• s 96 Mental Health Act 1983 for
mental patients.
r
Variation of Trusts Act 1958:
• applies to those: a) with vested or contingent interests lacking capacity through
e.g. age; b) who may fulfil a condition; c) who are unborn; d) with a discretionary
interest under a protected trust as yet not determined
• so can only apply to beneficiaries who cannot consent themselves (Re Siffert)
• wide powers but not to alter purposes (Re Ball’s Settlement)
• must consider settlor’s intentions (Re Steele’s Will Trusts)
• usual reason for variation is tax savings (Re Weston’s ST)
• but could be moral or social benefit (Re CL)
• postponed vesting possible to protect beneficiary from his own immaturity or
irresponsibility (Re Ts Settlement Trusts)
• family benefit should also be considered - compare Re Remnant’s ST with Re
Тткеґв ST.
V
Variation under statutory provisions 199
Z 12.1 The need for variation

1 The basic concept of variation is simple – to allow the terms of the trust
to be altered to achieve some beneficial purpose.
2 Trustees alone cannot alter the trust – this would be a breach of trust.
3 An adult beneficiary who is sui juris would be able to deal with his/her
own beneficial interest as (s)he saw fit.
4 Similarly, all the beneficiaries, if adult and absolutely entitled, may act
together to terminate the trust and demand distribution of fund
(Saunders v Vautier (1841)).
5 People lacking capacity, e.g. children, cannot deal with their interest in
this way.
6 Variation is often, but not always, for tax saving.
7 The courts can use various devices to vary the trust:
O by using their inherent jurisdiction;
O by certain specific statutory provisions;
O by application of Variation of Trusts Act 1958 – but only for certain
beneficiaries who could not consent to variation themselves.
Z 12.2 Variation under the inherent jurisdiction

of the courts
1 The court can use inherent jurisdiction to vary a trust where it is abso-
lutely necessary in an emergency to protect the trust, i.e. to use fund to
prevent collapse of a building owned by trust (Re Jackson (1882)).
2 It can also use inherent jurisdiction to reach a compromise in a dispute
between beneficiaries (Mason v Farbrother (1983)).
3 Providing that the dispute is genuine (Chapman v Chapman (1954)).
Z 12.3 Variation under statutory provisions

1 By s 57(1) Trustee Act 1925 court may grant variation ‘Where in the
management or administration of any property vested in trustees, any
sale, lease, mortgage, surrender, release, or other disposition, or any
purchase, investment, acquisition, expenditure or other transaction is,
in the opinion of the court expedient, but the same cannot be effected
by reason of the absence of any power for that purpose vested in the
trustees by the trust instrument, if any, or by law, the court may by order
confer upon the trustees . . . the necessary power . . .’:
O so ‘expedient’ is significantly broader than ‘emergency’ which is used

in the inherent jurisdiction;
O but the power is only available for ‘management or administration’;
O so s 57 has been used e.g. to buy a house for tenant for life to live in
Re Power (1947) and to widen a charity’s investment powers to make
it more efficient (Re Shipwrecked Fishermen and Mariners’ Royal
Benevolent Society (1959)).
2 Variation is also possible under s 64(1) Settled Land Act 1925 where it
is ‘for the benefit of the settled land . . . or the person interested under
the settlement’ if change is one that ‘could have validly been effected by
an absolute owner’ (Hambro v Duke of Marlborough (1994)).
3 By s 53 TA 1925 the court can authorise various dealings with property
held on trust for a child for ‘the maintenance, education, or benefit’ of
the child – though this is an overlap with s 57 it can be used e.g. to bar
entails (Re Gower’s Settlement (1934)).
4 Sections 23–25 Matrimonial Causes Act 1973 give the court wide
powers to make orders in matrimonial proceedings in respect of both
spouses and children (Brooks v Brooks (1996)).
5 By s 96(1)(d) Mental Health Act 1983 the Court of Protection may vary
a settlement in favour of a mental patient.
Z 12.4 Variation under the Variation of

Trusts Act 1958
1 Contains the widest powers for the courts to allow variation of trusts.
2 However, the Act only applies to a restrictive range of people – basis of
the courts’ power being to consent to variations on behalf of people who
could not consent for themselves – so s 1 includes:
‘Where property, whether real or personal, is held on trusts arising
under any will, settlement, or other disposition, the court may, if it
thinks fit, by order approve . . . any arrangement (by whomsoever
proposed) varying or revoking all or any of the trusts, or enlarging
the powers of the trustees. The court has the power to give approval
on behalf of the following categories:
a) any person having, directly or indirectly, an interest, whether
vested or contingent, under the trusts, who by reason of infancy
or other incapacity is incapable of assenting;
Variation under the Variation of Trusts Act 1958 201
b) any person (whether ascertained or not) who may become enti-

tled in future – on a future date, fulfilling a condition, happening
of a future event, prospective member of a class;

c) any person unborn;
d) any person who has a discretionary interest under a protective
trust and the interest of the principal beneficiary has not failed
or determined.’
3 So the courts will not use 1958 Act in respect of beneficiaries who could
consent to the variation themselves (Re Siffert (1961)).
4 In applications under the Act all parties should be represented – in the
case of those who cannot be represented, such as the unborn, their
interests at least should be represented.
5 While court has wide powers to vary trust, it will not agree to variation
that alters original purposes of trust (Re Ball’s Settlement (1969)). In
Wyndham v Egremont (2009) the court distinguished between a varia-
tion and a resettlement.
6 And the court will of course in ordering a variation keep in mind the
settlor’s intentions (Re Steed’s Will Trusts (1960)).
7 In approving a variation the court must also consider whether or not
it will benefit those people for whom it gives its approval if they fall
under (a), (b) or (c) of s 1 – and ‘benefit’ can be interpreted in different
ways:
O financial benefit:
O the classic example of which is tax saving (Re Weston’s
Settlements (1969));
O which could be avoiding inheritance tax or estate duty (Re Druce’s
Settlement Trusts (1962));
O or capital gains text (Ridgwell v Ridgwell (2007));
O or income tax (Re Clitheroe’s Settlement Trusts (1959)).
O moral and social benefit:
O the court should consider the wider benefit and general welfare
on whose behalf it is asked to approve a variation (Re Weston’s
Settlements (1969));
O and Weston shows that the court may be reluctant to allow a
variation that will take the trust into a foreign jurisdiction if it is
felt not to be a permanent move;
O though there is contradictory case law (Re Seale’s Marriage Settle-
ment (1961); Re Windeatt’s Will Trusts (1969); Re Whitehead’s Will
Trusts (1971));
O and social benefit might involve doing something for another
person that the beneficiary would want if in a position to make
the decision (Re CL (1969)).
O postponed vesting:
O the courts will happily delay the date at which an interest vests if
this will benefit the beneficiary (Re Holt’s Settlement (1969));
O and this may be to protect the beneficiary against their own irre-
sponsibility or immaturity (Re T’s Settlement Trusts (1964)).
O family benefit:
O the court may consider whether the existing trust may damage
family relations (Re Remnant’s Settlement Trusts (1970));
O but may also take a narrower view of family benefits to focus on
financial benefits (Re Tinker’s Settlement Trusts (1960)).
8 No need to show benefit under s 1(1)(d) but court must weigh all advan-
tages and disadvantages when deciding on a variation (D (a child) v O
(2004)).
Key Cases Checklist
12.1.4 Saunders v Vautier (1841) Cr & Ph 240 HC
Key Facts
If all the beneficiaries are sui juris and in agreement and

together have absolute entitlement, they have power to
terminate the trust and demand that the fund be handed
over to them.
12.2.3 Chapman v Chapman [1954] AC 429 CA
Key Law
There are four situations where the court has the power to
vary the terms of a trust:
1 conversion of personalty to realty;

2 emergency jurisdiction, where the court can authorise

transactions not included in the trust instrument but
cannot vary the interests of the beneficiaries;
3 maintenance jurisdiction allowing the court power to
advance income to the beneficiaries for their
maintenance;
4 compromise jurisdiction allowing variation in the benefi-
cial interests of the beneficiaries where there is a dispute
about the extent of the rights of the beneficiaries.
12.4.3 Re Suffert [1961] Ch 1 HC
Key Facts
A trust was established giving a lifetime interest for Elaine

Suffert and remainder to such of those issue as she should
appoint. If she died intestate then the property would pass
to those entitled on her intestacy. She was a spinster and
had no children but had three adult cousins. She wanted to
vary the settlement, but only one cousin consented. The
court held that they had no jurisdiction to vary on their
behalf as they were not persons who ‘would become enti-
tled at a future date’.
Key Law
Consent from the court cannot be sought on behalf of

persons who are not within s 1 Variation of Trusts Act; if
they do not give their consent or cannot be found then the
trust cannot be varied.
Interpretation of benefits
12.4.7 Re Weston’s Settlement [1969] 1 Ch 223 CA
Key Facts
A variation was sought for infant beneficiaries of a settlement

which would transfer the whole of the trust to Jersey.
Key Law
There was a considerable financial benefit to be gained by

doing so, but the court thought that the social benefits for
the children in remaining in England far outweighed these
financial benefits.
12.4.7 Re Holt’s Settlement [1969] 1 Ch 100 HC
Key Facts
A variation was approved where the interests of the benefi-

ciaries were postponed until they attained the age of 30. It
was felt that it was important that they should not receive
the income until they were reasonably advanced in their
careers and settled in life.
Key Law
Benefit under the Variation of Trusts Act 1958 should be

given a wide definition. It is not merely confined to financial
benefit, but may extend to ‘moral or social benefit’.
Key Link
Consider the formalities necessary under the Variation of

Trusts Act. Megarry J held in Re Holt’s Settlement that
s 53(1)(c) did not apply on a variation leading to a disposi-
tion of an existing beneficial interest.
Variation or resettlement?
12.4.7 Re T’s Settlement Trusts [1964] Ch 158 HC
Key Facts
Mr Justice Wilberforce refused an application for a variation

of a trust preventing an infant from receiving a quarter of
the income on attaining her majority.
Key Law
Although there was evidence that the child was irrespon-

sible and immature because he believed the variation
amounted to a complete resettlement of the trust.
Key Comment
The court took a different view in Re Holt (see above),

where the children’s entitlements were postponed until
they attained the age of 30.
12.4.5 Re Balls’ Settlement Trusts [1968]

1 WLR 899 HC
Key Law
A test was laid down intended to guide the judiciary in

applications under the VTA. It was held that an arrange-
ment changing the whole substratum of the trust would
not be regarded as a variation but if the substratum was
unaffected the court could give consent.
12.4.5 Wyndham v Egremont [2009] EWHC

2076 (Ch) HC
Key Facts
A variation of a family trust was drawn up to defer tax

liability. It was intended to maintain the original purpose of
the trust, which was to ensure that the Petworth estate
continued to pass to male heirs of a family.
Key Law
The court concluded that this was not a resettlement and

could therefore be approved. The statement in Re Ball’s
Settlement was criticised because it did not give sufficient
guidance on the difference between a variation and a
resettlement.
Relevance of the settlor’s intention to the

variation?
Goulding v James [1997] 2 All ER 239 CA
Key Facts
An estate was left by the testatrix for her daughter for life,
with the remainder to her grandson on his attaining the age
of 40. If he failed to attain the age of 40 then it was provided

that the estate should pass to such of his children as were

living at the date of his death. The testatrix did not trust her
son-in-law and thought her grandson needed to settle
down before he inherited the capital. The trust was varied,
allowing the daughter to receive some capital and the
grandson to become entitled before the age of 40. This was
clearly contrary to the wishes of the settlor.
Key Law
The settlor’s intentions in the variation of a trust on behalf

of unborn beneficiaries are not relevant to the decision of
the court.
Key Judgment
Ralph Gibson LJ: ‘The fact that a testator would not have
approved or would have disapproved very strongly does
not alter the fact that the beneficiaries are entitled in law to
do it and, if it can be proved, that the arrangement is for the
benefit of the unborn . . .’
12.4.6 Re Steed’s Will Trusts [1960] Ch 407 CA
Key Facts
A farm had been left on trust for the testator’s faithful house-
keeper for her life on protective trusts and on her death to
whoever she should appoint. The trustees had the power to
pay capital monies to her as they should think ft. The testator
had left a protective trust believing that her family might take
advantage of her. She exercised her power of appointment
to herself but under the protective trust she could not resist
decisions of the trustees. She sought an order to vary the
arrangement after the trustees decided to sell a farm rented
by one of her brothers. The variation would give her abso-
lute entitlement to the property.
Key Law
The court refused to vary the trust taking into account the
wishes of the settlor.
Key Judgment
Lord Evershed: ‘The court must, in performing its duty

under the Variation of Trusts Act 1958, regard the proposal
in the light of the purpose of the trust as shown by the
evidence of the will or settlement itself and any other rele-
vant evidence available. . .’
Key Problem
Compare the decisions in Re Steed and Goulding v James.

The court was guided by the settlor’s wishes in Re Steed.
Perhaps the reason for this was as the Court of Appeal
said: it is the arrangement that has to be approved, not just
the interest of the person on whose behalf the court’s duty
is to consider it.
12.4.7 Re Remnant’s Settlement Trusts [1970]

Ch 560 HC
Key Facts
A variation was sought to a settlement which contained a

forfeiture clause forfeiting interests of members of the
family who became or who married Roman Catholics.
Key Law
The variation removing this clause was approved by the

court. There was a benefit to the children and retention of
the clause was undesirable.
Key Comment
This variation defeated the settlor ‘s intention, but

although that was a serious matter, the benefit to the trust
outweighed this.
13 Breach of trust
and remedies
f ^
Personal liability: Tracing:
• beneficiary entitled to have trust • common law tracing possible if
administered according to funds unmixed and still identifiable
provisions of trust (Target ( Taylor V Plumer)
Holdings V Redfems) • even if transferred to third party
• trustee is liable to account for all (Banque Beige pour L'Etranger v
profits made from trust position Hambrouk)
and any losses caused to trust • three basic conditions for tracing to
(Re Miller’s) apply in equity:
• by s ЗО ТА 25 trustee not liable • claim must be founded on an
unless in wilful default (Armitage initial fiduciary relationship;
V Nurse) • property is in a traceable form;
• beneficiary cannot sue if • must be equitable to trace.
participates in breach (Re • unmixed funds or property used to
Pauling's) - and s 61 ТА 25 buy other things then can still trace
protects trustee who acts (Re Hailet’s Estate)
honestly and reasonably • if in mixed funds can still trace if still
• trust instrument may exempt identifiable (Re Tilley’s Will Trust)
trustee from liability • unless reduced below level of trust
• breach of trust action must be • if property transferred to third party
within 6 years (s 21 Limitation - then cannot trace against bona
Act 1980). fide purchaser - volunteer is bound
by trust.
BREACH AND REMEDIES
Other equitable remedies:

Injunctions:
Specific performance:
• usually only enforceable if prohibitory • only if: contract already exists;
• perpetual - settle claim: interim - for requirement yet to be
where claimant would suffer if forced performed; damages
to wait for full claim - quia tim et- no inadequate; property is unique;
loss but used to prevent infringements order can be overseen by the
• granted subject to ‘balance of courts
convenience’ test from American • not possible if: would cause
Cyanamld v Ethicon hardship; claimant’s conduct
• can grant perpetual injunction but unconscionable, delay,
suspend operation so defendant can property misdescribed; policy
comply (Pride of Derby Angling dictates.
Association V British Celanese)
Rescission:
• not granted if claimant delays or • possible for mistake, undue
acquiesces, order will harm defendant
influence, misrepresentation
or claimant behaves inequitably • but lost if restitutio in integrum
• by s 50 Supreme Court Act 1980 can not possible, delay, affirmation.
give damages in lieu if: injury to
claimant small, or capable of Rectification:
assessment in monetary terms, or • to correct inaccurate
oppressive to grant injunction (Shelter document.
V City of London Electric Lighting Co).
Personal remedies and proprietary remedies 209
Z 13.1 Breach of trust and liability

1 Lord Browne-Wilkinson in Target Holdings Ltd v Redferns (1996): ‘Basic

right of . . . beneficiary is to have . . . trust duly administered in accord-
ance with . . . provisions of . . . trust, if any, and . . . general law.’
2 So if trustee fails in duty he is personally liable for loss even if acted in
belief that what he did was in best interests of trust (Re Brogden (1888)).
3 Trustee must account for any profit made from trust and make good any
loss (Nant-y-glo and Blaina Ironworks Co v Grave (1878)).
4 Beneficiary must show both breach of trust and loss caused by the breach
(Re Miller’s Trust Deed (1978)).
5 In Target Holdings Ltd v Redferns (1996) Lord Browne-Wilkinson said
damages should be measured at date of judgment not breach (so not like
common law damages) – loss here was after breach.
Z 13.2 Personal remedies and proprietary

remedies
13.2.1 The personal remedy against trustees

1 The trustee is personally liable to beneficiaries for incidental profit
gained from a breach of trust or loss caused to the trust.
2 Section 30 TA 1925: ‘trustee shall not unless guilty of wilful default be
liable for the acts and defaults of other trustees’ – so liable for own breaches:
O in Re Vickery (1931) wilful default was described as consciousness or
recklessness by the trustee;
O in Armitage v Nurse (1998) it was reaffirmed as when trustee
‘consciously takes a risk that loss will result or is recklessly indifferent
as to whether it will or not’.
3 Liability may also arise where a trustee does nothing about a breach of
trust by other trustees of which he is aware.
4 An incoming trustee is generally not liable for past breaches – but has a
duty to take action, even legal action, against a trustee in breach.
5 A retired trustee is only liable for the breaches of other trustees if he
retired in order to make the breach possible (Head v Gould (1898)).
6 Trustees are jointly and severally liable if all responsible for breach or
those in breach are assisted by wilful default of others – but by Civil
Liability (Contribution) Act 1981 court can decide what is fair for each.
210 Breach of trust and remedies
7 One trustee may be obliged to indemnify another, e.g. solicitor trustee

exercising control over lay trustee (Chillingworth v Chambers (1896)) –
or trustee is fraudulent in procuring breach (Bahin v Hughes (1886)).

8 Personal liability is set against profit made by trustee or loss suffered by
trust (Target Holdings Ltd v Redferns (1996)).
13.2.2 Defences to an action for

personal liability
1 A beneficiary who participates in a breach of trust cannot sue on the
breach (Re Paulings Settlement Trust (1964)):
O beneficiary must have been aware of the breach;
O and must have freely agreed to it with no undue influence;
O and must have fully understood what he was agreeing to;
O there is no need to show beneficiary gained from breach.
2 Where the beneficiary acquiesces or releases the trustee from liability
this has same effect as if beneficiary agreed to breach from start but a
defence that there has been an unreasonable delay will not succeed
where the defendant has suffered no detriment and has gained by the
delay (Fisher v Brooker (2009)).
3 Section 62 TA 1925 allows court to impound the interests of a benefi-
ciary who has instigated or consented to a breach of trust.
4 Section 61 TA 1925 allows court discretion to relieve a trustee of
liability:
O where the trustee acted honestly and reasonably (Lloyds TSB Bank
plc v Markandan & Uddin (2012)); and
O where it would be fair to excuse him from liability;
O trustee must show he has acted prudently – what relieves trustee
from liability is a question of fact in each case (Re Turner (1897)).
13.2.3 Excluding liability

1 Sometimes the trust instrument expressly states that the trustee is not
liable for acts or omissions that would otherwise be a breach of trust.
2 This may then give the trustee a good defence to a claim of breach of
trust by the beneficiaries (Armitage v Nurse (1997); Walker v Stones
(2000)).
Personal remedies and proprietary remedies 211
13.2.4 Limitation
1 By s 21(3) Limitation Act 1980 ‘action by a beneficiary to recover trust

property or in respect of any breach’ must be brought within six years.
2 There are certain exceptions:
O where the beneficiary’s interest is in the future e.g. Cattley v Pollard
(2006);
O where the beneficiary lacked capacity to bring the action earlier;
O where the action by the beneficiary involves fraud by the trustee but
this exception does not apply where the dispute does not involve
proprietary rights (Halton International Inc and another v Guernroy Ltd
(2006));
O where the action involves trust property converted to trustee’s use.
13.2.5 Tracing as a proprietary remedy

1 Applies where e.g. a trustee has insufficient funds to make good a loss
arising from a breach of trust, or intermingled the fund with his own:
O and personal remedy against trustee is no good where trustee has
insufficient funds, or against insolvent trustee. Or where fund is
intermingled, or where beneficiary has no right to profits, because
claimant has no greater rights than other creditors.
2 So it involves tracing the trust property into its changed form.
3 Because remedy is in rem rather than in personam, right to trace is not
lost merely because of trustee’s insolvency – the right taking priority
over unsecured creditors:
O and allows property to be traced even where form of property has
changed;
O and can take advantage of increases in value of property;
O and interest is from date property came into the defendant’s hands
where in personal action is from date of judgment.
13.2.6 Tracing in common law

1 At common law a beneficiary may trace trust property as long as it is still
identifiable and unmixed with other funds (Taylor v Plumer (1815)) –
and common law tracing applies to chattels particularly.
2 And this applies even where the property has been transferred to a third
party (Banque Belge v Hambrouk (1921)) or has been used to purchase
other property (Taylor v Plumer).

3 And where trustee has invested property at a profit, tracing extends to
profit as well as original property (Trustees of the Property of FC Jones
v Jones (1997)).
4 But unlike in equity, common law tracing not allowed where trust prop-
erty has become mixed and is therefore unascertainable (Agip (Africa)
Ltd v Jackson (1990)).
13.2.7 Tracing in equity

1 Usually by beneficiaries against trustees because in common law benefi-
ciaries have no interest in trust property as against the trustees.
2 Three basic conditions for tracing to apply in equity:
O claim must be founded on an initial fiduciary relationship;
O there must be property in a traceable form;
O it must be equitable to trace.
3 What is a ‘fiduciary relationship’ has been widely drawn by courts, e.g.:
O executors of a will and residual benefciaries (Re Diplock (1948));
O a bank receiving money from another bank under a mistake of fact
(Chase Manhattan Bank v Israel–British Bank (1981)).
4 Unless property is in a ‘traceable form’ remedy is unavailable because
‘equity does nothing in vain’ – see Re Diplock (1948).
5 If the fund remains unmixed the claimant can trace it:
O and if it has been sold then the claimant may take the proceeds;
O and if proceeds are used to buy other property can take that or use it
as security for amount of trust fund (Re Hallett’s Estate (1880)).
6 If fund has become mixed, still can trace if property remains identifiable:
O ‘If a trustee amalgamated trust property with his own, the beneficiary
will be entitled to every portion of the property which the trustee
cannot prove to be his own’: Ungoed-Thomas J in Re Tilley’s Will
Trust (1967);
O so if the mixed fund is reduced below the amount of the trust fund
then that part of the trust fund must have been spent;
O later payments in are not treated as repayments by trustee – so to
trace must ascertain what is the ‘lowest intermediate balance’;
Equitable remedies – injunctions 213
O if trustee becomes bankrupt after wrongly mixing trust funds with
own funds tracing beneficiaries can trace to gain priority over other
creditors – but if funds lawfully mixed then cannot (Space Investments

Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd
(1986));
O where property is purchased with a mixed fund, part the trust’s and
part the trustee’s, the benefciary can claim a proportionate share of
the property or claim a lien upon it prior to a personal claim (Foskett
v McKeown (2000)).
7 Where trustee in breach of trust has transferred property to third party
whether tracing can apply depends on who third party is:
O cannot trace against bona fide purchaser for value without notice;
O if third party is an innocent volunteer then tracing possible because
(s)he takes subject to trust, provided beneficiary shows a proprietary
interest and property is in traceable form;
O but if full restitution inequitable doctrine of ‘change of position’ may
provide defence to tracing (Lipkin Gorman v Karpnale Ltd (1991)).
8 In Foskett v McKeown (2000) Lord Millet in obiter condemned the need
for proving a fduciary relationship for equitable tracing, and suggested
that tracing is in fact a process not a remedy so that ‘one set of tracing
rules is enough’.
Z 13.3 Equitable remedies – injunctions
13.3.1 Introduction
1 As an equitable remedy, injunctions:
O arise from the power to act in personam;
O can result in contempt of court if not complied with;
O are at the discretion of the court.
2 They may be perpetual, interim or ancillary.
3 Granted by High Court by s 37(1) Supreme Court Act 1981 ‘in all cases
in which it appears just and convenient to do so’.
4 County Court has similar powers but cannot issue search orders or
freezing injunctions.
5 In South Carolina Insurance v Assurantie Lord Brandon identified where
to grant injunction:
i) where one party has invaded or intends to invade an enforceable

legal or equitable right;
ii) where behaviour of party against whom injunction is sought is

unconscionable.
13.3.2 Types of injunctions

1 Prohibitory injunctions must be distinguished from mandatory:
O prohibitory – prevent breach of a legal or equitable right;
O mandatory – rarely granted as impose positive obligations and hard
to enforce – but prohibitory with positive effect has been granted
(Sky Petroleum Ltd v VIP Petroleum Ltd (1974)).
2 Perpetual injunctions (final relief) should be distinguished from interim
(interlocutory – before Woolf reforms):
O perpetual would settle the dispute – so only granted where damages
is an inadequate remedy;
O interim are granted where claimant might suffer irreparable harm if
forced to wait for main action.
3 Quia timet injunctions – granted when no harm has yet been caused but
claimant is trying to prevent future infringements of his rights:
O can be both prohibitory and mandatory;
O and perpetual or interim;
O claimant must show very strong probability of future infringement of
rights – Lord Upjohn in Redland Bricks Ltd v Morris (1970).
13.3.3 General rules in granting injunctions

1 Discretionary remedy – so only awarded where damages inadequate.
2 It is argued whether or not public interest should be considered –
compare Miller v Jackson (1977) and Kennaway v Thompson (1981).
3 Failure to comply is contempt of court.
4 Will not usually be granted against the Crown (Crown Proceedings Act
1947) – but see Factortame (1990).
13.3.4 Perpetual injunctions

1 Not granted if damages is an adequate remedy.
2 With mandatory injunctions enforcement is the main problem:
Equitable remedies – injunctions 215
O two types:

i) remedy to restore claimant to position prior to damage – and

prohibitory could have been granted if sought before wrongful act;
ii) order is for defendant to carry out a positive act;
O not granted if involve performing continuing positive obligations
(Gravesham Borough Council v British Railways Board (1978));
O extent of damage – and possible harm to defendant may be consid-
ered (Wrotham Park Estate v Parkside Homes Ltd (1974)).
3 Can grant injunction but suspend operation so defendant can comply
with terms (Pride of Derby Angling Association v British Celanese and
Others (1953)).
13.3.5 Interim injunctions

1 Can be prohibitory, mandatory or quia timet.
2 Granted subject to rule that nothing should be done that may prejudice
final outcome at trial or permanently damage position of either party.
3 Formerly based on showing – strong prima facie case of infringement of
rights, damages inadequate, balance of convenience favoured grant.
4 Rules generally now in Lord Diplock’s test in American Cyanamid Co v
Ethicon Ltd (1975):
O court is satisfied claim is neither frivolous or vexatious; and
O court is satisfied that there is a serious issue to try;
O so test of whether injunction is granted is based on balance of
convenience test;
O as last resort only – court may consider relative strength of each
party’s case.
5 Although Lord Denning preferred previous prima facie case approach
(Fellowes v Fisher (1975) and Hubbard v Pitt (1976)).
6 Generally, courts use balance of convenience test with no reference to
merits of either party’s case (Series 5 Software v Clarke (1996)).
13.3.6 Defences to claims for injunctions

1 Delay in seeking order by claimant:
O so will not be granted if delay is unreasonable;
O an acceptable delay is less for interim than for permanent relief;
O but grant also depends on facts – compare Shepherd Homes v Sandham
(1971) with Kelsen v Imperial Tobacco Co Ltd (1957).
2 Acquiescence:
O the inference is that claimant has accepted interference with his
rights (Sayers v Collyer (1885));
O modern approach:
i) was defendant encouraged to believe he was entitled to act as
he did?
ii) if so, did this cause him detriment?
iii) if so was it unconscionable for claimant then to assert his right?
3 Hardship to defendant:
O can be taken into account, particularly with mandatory injunctions;
O hardship can be avoided by granting injunction but suspending it.
4 Conduct of claimant:
O all equitable maxims apply as remedy is discretionary;
O so, e.g. claimant must come to court with clean hands.
13.3.7 Damages in lieu of injunctions

1 Now under s 50 Supreme Court Act 1981 court can award damages
where none are available in law, e.g. quia timet.
2 So main requirement is that court has jurisdiction to grant injunctions.
3 Damages awarded according to conditions in Shelfer v City of London
Electric Lighting Co (1895):
O injury to claimant is only small;
O injury is capable of assessment in monetary terms;
O injury would be adequately compensated by a small payment;
O case is one where it would be oppressive to grant an injunction.
Z 13.4 Equitable remedies – specific

performance
13.4.1 General principles

1 Equitable order of court that defendant should carry out terms of a
contractual agreement.
Equitable remedies – specific performance 217
2 Granted at the discretion of court – so it is only allowed where:

O contract already exists – because equity will not assist a volunteer;
O some requirement in contract is yet to be performed;
O damages inadequate – damages normally considered appropriate
remedy so must be special circumstances;
O the property under the agreement is unique;
O the order can be overseen by the courts – compare Ryan v Mutual
Tontine (Westminster Chambers) Association (1893) with Posner v
Scott-Lewis (1987);
O person seeking order must comply with equitable maxims and have
performed or be ready to perform his side of the bargain;
O must not cause hardship to other party (Spiller v Bolton (1947)).
3 One significant restriction is order will not be granted without
mutuality:
O i.e. it will not be granted against one party unless it could also be
awarded against the other (Price v Strange (1977));
O so this rule will be applied e.g. where the party seeking the order
lacks capacity (Flight v Bolland (1828)).
13.4.2 Defences
1 The court may exercise discretion to refuse specific performance.
2 It may do so where:
O order would cause real hardship (Patel v Ali (1984)) or injustice as
in mistake or misrepresentation (Webster v Cecil (1861));
O where claimant’s conduct is inequitable (Quadrant Visual Communi-
cations Ltd v Hutchinson Telephone (UK) Ltd (1991));
O in the case of laches or unreasonable delay (Mills v Haywood (1877))
– although there is no statutory limitation period to bar a claim, time
is generally not of the essence in equity, and there is no hard and fast
definition of what is an unreasonable delay;
O property is misdescribed;
O public policy dictates.
Z 13.5 Equitable remedies – rescission

1 Rescission is possible where an agreement is based on:

O a mistake not void by common law (Solle v Butcher (1950));
O a misrepresentation (Heilbut Symons & Co v Buckleton (1913));
O undue influence (Barclays Bank v O’Brien (1993)).
2 But bars to rescission include:
O that restitutio in integrum is impossible (Cheese v Thomas (1994));
O laches or unreasonable delay (Allcard v Skinner (1887));
O acquisition of rights by innocent third party (Re Eastgate (1905));
O affirmation, e.g. by taking benefits (Peyman v Lanjani (1985)).
Z 13.6 Equitable remedies – rectification

1 This is an order of the court to correct an inaccurate document.
2 So it applies where ‘the parties were in complete agreement on the terms
of their contract, but by an error wrote them down wrongly’: Lord
Denning in Frederick E Rose Ltd v William Pim Jnr & Co (1953).
3 So party seeking order needs convincing proof that document does not
represent each party’s intentions (Joscelyne v Nissen (1970)).
Key Cases Checklist

13.1.5 Target Holdings v Redferns [1995] 3 All

ER 785 HL
Key Facts
An amount of £1.525 million was lent by the claimant mort-

gagees Target Holdings to a company to be secured on
property which had been fraudulently made to appear to be
worth £2 million, but in reality was worth £775,000. The
defendants Redferns were a firm of solicitors and were
not party to the fraud but acted for both the purchasers
and the mortgagees. The purchasers became insolvent and
the property was repossessed by the mortgagees, the
claimants. The claimants sued the solicitors for the shortfall
between the money lent and the actual value of the
property.
It was held that although the solicitors had acted in breach
of trust by paying out the mortgage funds without authority,
they were not liable for the loss because it was not caused
by the defendants. If the claimants had advanced the same
amount of money they would have got the same security
with or without the breach of trust by the defendants.
Key Law
Lord Browne-Wilkinson was concerned that the rules

developed from traditional trusts should not be applied in
the setting of a commercial trust. However, where the
claimant can show that the loss would not have occurred
but for the breach then the trustee would be liable for the
total loss irrespective if the immediate cause of the loss
was connected with a third party. This is because the
common law rules of remoteness and causation do not
apply.
Key Judgment
Lord Browne-Wilkinson: ‘. . . there does have to be some

causal link between the breach of trust and the loss to the
trust estate for which compensation is recoverable, viz
the fact that the loss would not have occurred but for the
breach.’
13.2.2.1 Re Pauling’s Settlement Trusts [1964]

Ch 303 CA
Key Facts
A marriage settlement created in 1919 included an express

provision that the trustees could advance up to one-half of
the beneficiaries’ presumptive share under the trust for
their advancement or absolute use. Advances had been
made by the trustees, who were the bank Coutts & Co. The
beneficiaries sued the trustees for breach of trust in
advancing the shares to the beneficiaries when the money
had generally been paid not to them but into their mother’s
bank account. The court held that the trustees were not
liable because the beneficiaries were all of age and had
consented to the advances.
Key Law
A beneficiary can only consent if he/she is of full age and is

not under any other incapacity and has full knowledge of
the facts and consents freely.
13.2.1.7 Bahin v Hughes (1886) 31 Ch D 390 CA
Key Facts
A passive trustee sought an indemnity against a fellow

trustee, who had invested funds in an unauthorised
investment.
Key Law
Trustees are jointly and severally liable for a breach of trust

and cannot claim to be indemnified because they have not
taken an active role in the breach of trust.
Key Judgment
Cotton LJ: ‘Miss Hughes was the active trustee and

Mr Edwards did nothing and in my opinion it would be
laying down a wrong rule that where one trustee acts
honestly though erroneously the other trustee is to be held
entitled to indemnity who by doing nothing neglects his
duty more than the acting trustee . . .’
13.2.1.5 Head v Gould [1898] 2 Ch 250 HC
Key Facts
A solicitor and a beneficiary were appointed as trustees of

a trust. A number of breaches of trust occurred and the lay
trustee claimed to be indemnified by her co-trustee. The
court found that she was aware of the circumstances of the
breaches of trust and had actively encouraged her
co-trustee to commit the breach of trust. They held that she
could not claim an indemnity from her co-trustee.
Key Law
A lay trustee can claim to be indemnified where one trustee

is a solicitor and has exercised such a degree of influence
over the other trustee that the other trustee has been unable
to exercise an independent judgment.
Key Judgment
Kekewich J: ‘A man is not bound to indemnify his co-trustee

against loss merely because he was a solicitor, when that
co-trustee was an active participator in the breach of trust
complained of, and is not proved to have participated
merely in consequence of the advice and control of the
solicitor.’
Key Comment
The rule in Chillingworth v Chambers lays down that where

a trustee who is also a beneficiary participates in a breach
of trust, he may not claim a share in the trust estate until he
has made good his liability as trustee. The beneficiary
trustee must indemnify his co-trustee to the extent of his
beneficial interest. However, if the loss exceeds the benefi-
cial interest, the trustees will share the excess loss equally
between them.
13.2.1.2 Armitage v Nurse [1998] Ch 241 (see above,

Chap 9) CA
13.2.3.2 Walker v Stones [2000] 4 All ER 412 (see

above, Chap 9) CA
13.2.6.1 Taylor v Plumer (1815) 3 M & S 562 CA
Key Facts
Sir Thomas Plumer gave a sum of money to Walsh, his

stockbroker, expressly to be invested in Exchequer bonds.
Walsh used the money to purchase American bonds and
bullion. Ownership in the American bonds and the bullion
was disputed between Plumer and Walsh’s trustee in bank-
ruptcy. The property was held to belong to Plumer.
Key Law
Property can be traced at common law where there has

been a clean substitution of the property and it has not
been mixed with any other property.
Key Judgment
Lord Ellenborough: ‘It makes no difference in reason or law

into what other form, different from the original, the change
may have been made . . . for the product or the substitute
for the original thing still follows the nature of the thing
itself . . .’
13.2.6.2 Banque Belge pour L’Etranger v Hambrouck

[1921] 1 KB 321 CA
Key Facts
A man unlawfully obtained cheques from his employer and

paid them into his bank account. The money was then
passed to his mistress, who in turn paid it into her own
bank account. It was held that the money could be traced
at common law into her account.
Key Law
There was nothing to prevent tracing at common law into a

bank account if the funds had not been mixed with other
moneys.
13.2.6.3 Trustee of the Property of FC Jones and Son

(a firm) v Jones [1996] 3 WLR 703 CA
Key Facts
One partner in a firm of potato growers took £11,700 from

the partnership and transferred it to his wife, who used it to
purchase potato futures, which increased in value to
£50,760. The partnership was adjudicated bankrupt and
the trustee in bankruptcy claimed he was entitled to both
the sum taken from the partnership account as well as the
profit generated. The trustee in bankruptcy could trace the
whole sum at common law. There had been no mixing of
the fund in the bank account.
Key Law
Once the claimant could show he/she was entitled to the

property at common law then he/she would be entitled not
only to trace the property into any exchange product, but
also to trace any profit made from it.
Key Problem
If Mrs Jones had had £1 of her own money in the account,

then there would have been no right to trace at common
law. There would have been no right to trace in equity
either, because there was no fiduciary relationship between
the trustee in bankruptcy and Mrs Jones.
13.2.7.5 Re Hallett’s Estate (1880) 13 Ch D 696 CA
Key Facts
Mr Hallett was a solicitor. He mixed funds from a trust with

his own personal money in a money account. On his death
there was insufficient money in his account to pay his debts
and to return the money in full to the trust.
Key Law
Where a trustee or fiduciary has mixed his funds with that

of the beneficiary, or has purchased further property with a
mixed fund the following principles apply:
i) the beneficiaries are entitled to a charge on the fund in
order to satisfy their claim;
ii) if a trustee withdraws money for his own purposes he is
deemed to draw out his own money first, so that the
beneficiaries can claim the fund as against the general
creditors.
13.2.7.6 Foskett v McKeown [2001] 1 AC 102 HL
Key Facts
Mr Murphy held over £2.7 million as trustee for various

investors in a property development scheme in Portugal
but the land was purchased and never developed. The
funds of the investors were dissipated and were used
partly to pay premiums towards a life insurance policy for £1
million taken out on Mr Murphy’s life in 1986. He paid the
first three premiums but in breach of trust the investor’s
funds were used to pay the remaining two premiums in 1989
and 1990. Mr Murphy committed suicide in 1991 and the
insurance company paid out £1 million. Mr McKeown
acted on behalf of the investors, who claimed that they
should be able to claim a share in the monies from the life
insurance policy.
Key Law
At first instance Laddie J held that the claimants were enti-

tled to a lien on the proceeds equivalent to their contribu-
tion, which was 54.46 per cent.
The Court of Appeal held the claimants were only entitled to
recover the premiums paid with their money, amounting to
approximately £20,000.
The House of Lords, reinstating the decision of the court at
first instance, held that the depositors could trace into the
premiums paid as the money had been used to purchase
an asset (the policy) and then into the chose in action which
was the policy and then into the proceeds of the insurance
policy.
Key Judgment
Lord Millett: ‘Where a trustee wrongfully uses trust money

to provide part of the cost of acquiring an asset, the
beneficiary is entitled at his option either to claim a propor-
tionate share of the asset or to enforce a lien upon it to
secure his personal claim against the trustee for the amount
of the misapplied money. It does not matter whether the
trustee mixed the trust money with his own in a single fund
before using it to acquire the asset, or made separate
payments out of the differently owned funds to acquire a
single asset.’
Key Problem
It was assumed that the reason why the investors were

successful was because the proceeds could not be paid
unless all the premiums were paid, but this was not true
since the money was payable on the receipt of one premium
only. However, if Mr McKeown had failed to pay all the
premiums then the insurance company would not have
been bound to honour the policy.
Re Oatway [1903] 2 Ch 356 HC
Key Facts
A trustee withdrew funds from a mixed bank account and

invested it. He then withdrew the remaining funds in the
account and dissipated it. The beneficiaries could claim
rights in the asset purchased by the trustee.
Key Law
The beneficiaries’ claim must first be satisfied from any

identifiable part of the mixed fund before the trustee could
claim any part of it for him/herself.
13.2.7.6 Re Tilley’s Wills Trust [1967] Ch 1179 HC
Key Facts
Small sums from a trust fund had been paid into a bank
account by an executrix of an estate. The executrix herself
had a life interest. She had used these funds, along with an
overdraft facility at the bank, to purchase property, which

had increased in value. On her death the increase in value
of the properties was claimed by those entitled to the
estate. The court held that the trust money had not been
used for the purchase of the property but instead it had
been used towards the reduction of the overdraft. The
beneficiaries were only entitled to the return of their money
with interest.
Key Law
Where a trustee uses trust monies to purchase an asset

then the beneficiaries are entitled to choose either to claim
a charge over the asset or to a claim for the proportional
increase in the value of the asset.
Key Comment
This case clearly states that it is not possible to trace into

an overdrawn bank account because the payment merely
goes towards a reduction in the overdraft, which is itself a
debt owed to the bank. Where property is used to discharge
a debt the law holds it has been dissipated as there is no
asset remaining that could constitute the beneficiaries’
property.
Barlow Clowes International Ltd

(In Liquidation) and Others v Vaughan
and Others [1992] 4 All ER 22 CA
Key Facts
After the Barlow Clowes investment company collapsed

the company owed over £115 million. The court decided
not to apply Clayton’s Case but to share the assets pari
passu.
Key Law
The court held that they were at liberty to depart from the
rule when they felt that it would work injustice. In this case
the investment fund was regarded by the investors as a
common pool and so it was fairer to apply pari passu,
allowing them all to recover some of their money back.
Key Judgment
Woolf LJ: ‘The rule need only be applied when it is conven-

ient to do so . . . it is not applied if this is the intention or
presumed intention of the beneficiaries. The rule is sensibly
not applied when the cost of applying it is likely to exhaust
the fund available for the beneficiaries.’
13.2.7.4 Re Diplock [1948] Ch 465 CA
Key Facts
A large trust fund was left by Caleb Diplock for various char-
itable causes. The fund was distributed to the charities but
when challenged by the next of kin, the beneficiaries under
the estate, it was found to fail as a charitable trust on strict
construction of the wording of the trust document. The next
of kin could recover the property through tracing since the
charities were in the position of innocent volunteers.
Key Law
The charities were held strictly liable to account as

constructive trustees for the amounts even though they
had acted entirely innocently. However, the beneficiaries
had first to exhaust all their personal remedies against the
executors who had wrongly paid the funds to the charities
13.3.4.2 Wrotham Park Estate Co Ltd v Parkside

Homes Ltd [1974] 1 WLR 798 HC
Key Facts
A number of houses had been built in contravention of a

restrictive covenant. An application was made for a manda-
tory injunction.
Key Law
This was not granted by the court because they felt it would
be ‘a waste of much needed houses’. Instead, damages
were granted which were substantially more than that
which would have been granted at common law, because
the actual loss to the claimant was purely nominal, as the
value of his own house had not been reduced.
13.3.5.4 American Cyanamid Co v Ethicon Ltd

[1975] AC 295 HL
Key Facts
The case concerned an application for an injunction to

restrain the infringement of a patent. It was held that there
was no rule which required the claimant to prove a prima
facie case.
Key Law
A number of factors must be taken into account before a

court will grant an interlocutory injunction:
i) Is there a serious issue to be tried? The claim must not
be frivolous or vexatious.
ii) The balance of convenience. The court must weigh the
balance of convenience between granting and refusing
an injunction.
iii) Other factors to be taken into account.
Mareva Compania Naviera SA v International

Bulk Carriers SA [1975] 2 Lloyd’s Rep 509 CA
Key Comment
It was first introduced as a ‘Mareva injunction’ after the

decision in the above case; now it has been renamed a
freezing order under the Civil Procedure Rules. The order
freezes assets, preventing the defendant from dissipating
or removing them from the jurisdiction.
Derby & Co v Weldon [1990] Ch 48 CA
Key Law
The courts are prepared to grant a world-wide order under

very strict conditions. The claimant must show that any
English assets are insufficient and that there are foreign
assets and there is real risk of dissipation if the
foreign assets are not frozen.
Anton Piller KG v Manufacturing Processes

Ltd [1976] Ch 55 CA
Key Law
This is an order requiring the defendant to permit the

claimant to enter the defendant’s premises for specified
purposes. This is usually for the preservation of evidence.
There are three conditions for granting such an order:
i) strong prima facie case;
ii) serious potential damage;
iii) real possibility evidence will be destroyed.
A further condition was added later that an order would do
no real harm to the defendant.
13.4.1.2 Ryan v Mutual Tontine Westminster

Chambers Association [1893] 1 Ch 116 CA
Key Facts
The defendants had agreed to provide a porter for a block

of residential flats which they owned.
Key Law
A decree of specific performance was refused, because it

would involve constant supervision by the court.
13.4.1.2 Posner v Scott-Lewis [1987] Ch 25 HC
Key Facts
The defendants had covenanted to provide a residential

porter purely for maintenance and cleaning of the
property.
Key Law
This was enforceable by a decree of specific performance

because it did not require constant supervision in order to
be enforced and it was felt that the remedy of damages was
inadequate.
Mistake
13.4.2.2 Webster v Cecil (1861) 30 Beav 62 HC
Key Facts
A offered to sell B some property for £1,250. This was a

mistake as he had intended to sell at £2,250. B agreed to
buy at £1,250.
Key Law
The court refused to grant an order for specific perform-

ance and A was not compelled to sell at that price because
there had been a genuine mistake, known to the claimant.
Hardship
13.4.2.2 Patel v Ali [1984] Ch 283 HC
Key Facts
Mr and Mrs Ali had exchanged contracts with Mr and

Mrs Patel, agreeing to sell them their house. A series of
events, including the bankruptcy of Mr Ali and his subse-
quent imprisonment, Mrs Ali then contracting cancer
leading to the amputation of a leg just before the birth of
their second child and followed by the birth of a third child,
meant they could not complete.
Key Law
The court did not grant an order for specific performance

because of the hardship that it would cause them.
Index
acceptance: secret trusts 78–9 secret trusts 72–3

accessory liability 96–7 see also child beneficiaries
accounts, trustee duties to provide Benjamin orders 20, 35, 166
7, 174 breach of trust 208–37
Administration of Estates Act 1925
159 capacity to creat trust 15, 16
administrative unworkability 21, 39 certainty 15, 18–21
advancement definition of 26, 27
and maintenance, trustee of intention 18–19, 26, 26–7
powers of 187, 192–6, objections to non-charitable
197 purpose trusts 41–2
presumption of, and rebuttal of objects 20–1, 26, 35–40
104, 110–11 of subject matter 19–20, 26,
amateur sports trusts 150 31–5
animal maintenance trusts 43, 49–50 charitable trusts 11
animal welfare trusts 133–4, 150 audited accounts 174
Anton Piller orders 8 charitable objects 126, 129–35,
apportion, trustee duty to 173 143–51
armed forces/emergency services exclusivity of 136–7
trusts 134 essential requirements 128–9
arts trusts 149–50 failure see cy-près
ascertainable beneficiaries 42 history of 127–8, 142–3
asset collection, trustee duty to 166 and other trusts, difference
between 128
beneficiaries political element 135, 150–1
deemed to have given public benefit 126, 135–6,
considerations 65–6 148–9, 152–4
discretionary trusts 83 trustee choice of investment 172
express private trusts 15 wholly and exclusively charitable
failure to give consideration 66 126
general duties of trustees to 165, Charities Act 2011 129, 133, 140,
172–4 141
missing: fixed trusts 26, 35–6 chattels 19, 57, 59, 60
purpose trusts 42 tracing 211
232 Index
trustee power to sell 189 restrictive 6

child beneficiaries trusts of benefit of 66–7
maintenance duty of trustee Crown, as trustee 158

193–4 custodian trustee 158
variation of trusts 200 cy-près
children/minors cases 153–4
protection of interests 11 common law 137–9
trusteeship 158 initial failure 137–8, 139
capacity 16 non-chariable alternatives 139
clean hands 5, 12, 13 statutory 139, 140–1
clubs see unincorporated subsequent failure 139, 140
associations
co-ownership of land 11 damages 216
see also family home, trusts of death
communication: secret trusts 77–8 donatio mortis causa 59, 68–9
community, purposes beneficial to termination of trusteeship 161
133–5 trusts for saying masses 43, 50
constitution of trusts debentures 168
declaration of self as trustee 56, delay defeats equity 4, 12
58, 63–4 delegation of trustee powers 171,
enforcement 56, 58–9, 65–6 187, 191–2
exceptions to rule that equity disclaimer: termination of
will not assist volunteer trusteeship 160–1
56, 59–60, 66–9 discretionary trusts 20–1, 26,
formalities 56, 57, 60–2 36, 44
general 57 administrative unworkability
constructive trusts 85, 93–8, 103, 21, 39
113–14 exhaustive 84–5
general 93 interests of beneficiaries 83
implied co-ownership under operation of 83
101–2, 103, 115–16, 118 purpose of 82–3
involving strangers 96–8, discretions, trustee duty to exercise
109–10 167, 177
new model 98 dishonest assistance/accessory
remedial 103, 113 liability 96–7, 120–1
traditional categories 94–6 dispositions of existing equitable
trustee duties 93–4 interests 15, 17,
Contracts (Rights of Third Parties) 23–5
Act 1999 59 distribution
convert, trustee duty to 172–3 of funds, unincorporated
copyright transfer 57 associations 46
Court of Chancery 3–4 trustee duty 166–7
covenant donatio mortis causa 59, 68–9
Index 233
easements 6 Family Law Act 1996 100

educational trusts 130–1, 134, fiduciary duties 165, 174–7,
135–6, 146–8 182–6

and personal nexus rule 152–3 constructive trusts 94
emergency services/armed forces incidental (secret) profits 176–7,
trusts 134 181–2
enforcement of trusts 56, 58–9, as purchasers of trust property
64–6 175–6
equality, equity is 5 remuneration and
Equality Act 2010 91 reimbursement of
equitable interests 2, 6 trustees 174–5
dispositions of existing 15, 17, fixed trusts 20, 34–6
23–5 fraud, prevention of 5, 12, 13–14,
equitable maxims 1, 4–6, 12–13, 18 18, 22–3, 73, 76
equitable remedies 1, 7 freezing injunctions 8
see also specific remedies
equitable right, existing 5 gifts
equity certainty of objects test 21,
definitions of 4 37–9
history of 1, 2–8, 12 formalities 16
investment 168 of land vs personalty 22, 103,
scope for expansion and 109–10
development 8 made to unincorporated
ethical investments 172 associations 44–6
exhaustive discretionary trusts 84–5 health/life-saving trusts 148
express (private) trusts human rights trusts 150–1
capacity 15, 16
disposition of existing equitable improper motive 91–2
interests 15, 17, 23–5 in personam 4
failure of 88–9 information, trustee duty to provide
formalities 16 accounts and 7, 174,
and prevention of fraud 18, 180–1
22–3 injunctions
land trusts 16–17 damages in lieu of 216
valid formation 22 defences to claims for
see also certainty 215–16
freezing (Mareva) 8
fair apportionment principle 102 general rules in granting 214
family home, trusts of 86, 98–9 interim 214, 215
implied co-ownership 98–9 perpetual 214–15
constructive trust 101–2, types of 214
103, 115–16, 118 insure, trustee powers to 190
resulting trust 99–100 intangible property 32–4
234 Index
intention power of trustees to compound

certainty of 18–19, 26, 27–31 190–1
not form, equity looks to 4, 12, lien 6

18 loans 168
secret trusts 79–80 security for 10
interim injunctions 214, 215 Lord Chancellor 3
investment 165, 167–2, 178–81
basis of trustee’s duty 167 maintenance and advancement,
choice of 172 trustee powers of 187,
express powers 168–9 192–6, 197
statutory powers Mareva injunctions 8
development of 169 marriage settlement 58, 64–5
Trustee Act 2000 170–1 mental incapacity 16
types of 168 minors see children/minors
unauthorised 172, 173 missing beneficiaries: fixed trusts 26,
investment trusts 10, 168 34–5
mortgage redemption 6
judicial trustees 158 multiple trustees 58
mutual wills 94–5
killing, acquisition of property by 95
knowing receipt and dealing/ NHS trusts 10–11
recipient liability 97–8 nominees in property transfers 11
non-charitable purpose trusts 11,
land 40, 47–50
co-ownership of 11 exceptions to rule against 43
conveyance 57 general 41
investment 170 modern position 43–4
protection of minor’s interests objections to 41–2
11
vendor 95 objects, certainty of 20–1, 26, 36–40
vs personalty 22, 103, 109–10 old and disabled, trusts for 133
land trusts 15, 16–17 ostensible beneficiary 72–3
resulting 90
trustee powers 187, 189 partners of constructive trustee,
law, equity follows 6 liability of 98
Law of Property Act (LPA) 1925 16, pension funds 10
17, 90, 96, 158, 160 surplus funds 104
liability trustee duties 168, 174
for breach of trust 208, 209 perpetual injunctions 214–15
defences 210 Perpetuities and Accummulations
exclusions 210 Act 1964 139
constructive trusts involving perpetuity rule 42
strangers 96–8, 109–10 personal liability see liability
Index 235
personal nexus rule 153–4 restrictive covenants 6

personalty, land vs 22, 103, 109–10 resulting trusts 86, 87–92
policy: purpose trusts 42 automatic 88, 103, 105–6

political element: charitable trusts failure of express trust 88–9
135, 150–1 failure to dispose of entire
poverty relief trusts 129–30, 143–4 beneficial interest 89–90,
property 103, 107–8
intangible 32–4 general 87–8
ownership disputes 12 implied co-ownership under
tangible 32–3 99–100
trustee duties/powers 166–7, presumed 88, 103
177–8 presumption of
purchasing 175–6 advancement and rebuttal of
selling 189–90 104, 111–12
vesting 157, 160 purchase in name of others
proprietary estoppel 60 92, 112–13
protective trusts 11, 82, 84 rebuttal of 91–2, 104, 113
public benefit: charitable trusts 126, voluntary conveyances
135–6, 148–9, 152–3 90–2
Public Trustee 158 retirement of trustee 161
purpose trusts
objections to 40, 41–2 saying masses, trusts for 43, 50
see also non-charitable purpose search orders 8
trusts; unincorporated secret (incidental) profits 176–7,
associations 182
secret trusts 12
Quistclose case/trust 14, 88, 89 background 72
as constructive or express trusts
rebuttal of presumption see under 96
resulting trust fully 71, 72–3, 75, 76, 77, 78, 79,
receipts, trustee power to give 190 80, 81
recipient liability 97–8 general 71
recission 7, 218 half 71, 73, 75, 76, 77, 78, 80
Recreational Charities Act 1958 theoretical basis 71, 74–5
134–5 security for loans 10
rectification 7, 218 sham intention 30
religious trusts 131–2, 136, 147–8 shares 57, 62, 168
remedial constructive trusts 103, small charities 141
113 specific performance 7
remedy, no wrong without 5 principles and defences
removal of trustee 161 216–17
remuneration/reimbursement of sports/recreational facilities trusts
trustees 174–5 134, 149–50
236 Index
strangers, constructive trusts maintenance and advancement

involving 96–8, 109–10 187, 192–6, 197
subject matter, certainty of 19–20, trustees

26, 31–5 appointment 157, 159–60
declaration of self as 56, 58,
tangible property 32–3 63–4
tax exemptions 128 eligibility 157, 158–9
tax saving 12 number of 158
third party trustees 58, 61 personal remedy against
tombs and monuments, trusts for 209–10
43, 48 selection of 157, 160
tracing 7, 208 standard of care/conduct 157,
in common law 211–12 161–2, 163–4
in equity 212–13 termination of 157, 160–1
as proprietary remedy 211 vesting of trust property 157,
trade union funds 11 160
trust corporations 158 trusts
Trustee Act 2000 170–1 classification 1, 9–10
trustee duties context of 2, 10–12
to beneficiaries 165, 172–4 definition of 1, 8–9
to apportion 173 nature of 8
to convert 172–3 Trusts of Land and Appointment
to provide accounts and of Trustees Act 1996
information 7, 174, (TOLATA) 189
180–1
to property unauthorised investment 172, 173
asset collection 166 unconscionability 62
distribution 166–7 unincorporated associations 11, 40
exercise discretions 167, charitable 156
177–8 distribution of funds 46
see also fiduciary duties; funds held by 46
investment gifts made to 44–6
trustee powers 188 nature of 44
delegation 171, 187, 191–2 surplus funds 89–90
and duties, difference between unit trusts 10, 168
188
general 187, 189–91 variation of trusts
to compound liabilities court’s jurisdiction 198, 199, 203
190–1 need for 199, 202
to give receipts 190 purpose of 198
to insure 190 statutory powers 198, 199–200
to sell trust property 189–90 Variation of Trusts Act 1958 199,
land trusts 187, 189 200–1, 202–8
Index 237
vesting of trust property 157, 160 and non-volunteers,

voluntary arrangements with enforcement of trusts 56,
creditors 10 58–9, 65–7

volunteer(s)
equity will not assist 5 wealth preservation 12
exceptions 56, 59–60, 66–9 Wills Act 1837 16, 72, 73, 74

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KEY FACTS KEY CASES

Equity & Trusts

Titles in the series:

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KEY FACTS KEY CASES

Equity & Trusts

LONDON AND NEW YORK

First edition published 2014

ISBN: 978–0–415–83327–1 (pbk)

8.12 Statutory cy-près 140

BREACH OF TRUST AND REMEDIES 208

Key Facts – These are the basic facts of the case.

Key Law – This is the major principle of law in the case.

Key Judgment – This is an actual extract from a judgment made on

Key Comment – Inﬂuential or appropriate comments made on the

Key Problem – Apparent inconsistencies or difﬁculties in the

Key Link – This indicates other cases which should be considered

CC County Court CCA Court of Criminal Appeal

CCR Crown Cases Reserved CH Court of Chancery

ChDiv Chancery Division CJEU Court of Justice of the

C-MAC Court Martial Appeal CP Court of Probate

DC Divisional Court EAT Employment Appeal

ECHR European Court of ECJ European Court of

ET/IT Employment tribunal/ Exch Court of the Exchequer

HC High Court HL House of Lords

KBD King’s Bench Division NIRC National Industrial

PC Privy Council QBD Queen’s Bench Division

RC Rolls Court SC Supreme Court

The law is as I believe it to be on 1 May 2013.

Abbott Fund Trusts, Re [1900] 2 Ch 326 . . . . . . . . . . . . . . . . . . 89, 103, 107

Attorney-General of the Bahamas v Royal Trust Co [1986]

Baden’s Deed Trusts, Re (No 2) [1972] 2 All ER 81 . . . . . . . . . . . . . . . . . 21

Bennett v Bennett (1879) 10 Ch D 474, CA . . . . . . . . . . . . . . . . . . . 91, 104

Besterman Wills Trusts, Re (1980) The Times, 21 January . . . . . . . . . . . . 145

CL, Re [1969] 1 Ch 587, [1968] 1 All ER 1104 . . . . . . . . . . . . . . . . 198, 202

Cavendish-Browne’s Settlement Trusts, Re, Horner v

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D (a child) v O [2004] 3 All ER 780, HC . . . . . . . . . . . . . . . . . . . . . . . . 202

Danish Bacon Co Staff Pension Fund Trusts, Re [1971]

Eades, Re, Eades v Eades [1920] 2 Ch 353 . . . . . . . . . . . . . . . . . . . . . . . . 137

Ex parte Belchier; Ex parte Parsons; In the Matter of Parsons, Bankrupt

Eykyn’s Trusts, Re (1877) 6 Ch D 115, 37 LT 261 . . . . . . . . . . . . . . . . 86, 91

Factortame, see R v Secretary of State for Transport,

Gardner (No 1), Re, Huey v Cunnington [1920]

Gissing v Gissing [1969] 2 Ch 85, [1970] 2 All ER 780, [1971]

Golay (deceased), Re; Morris v Bridgewater and Others [1965]

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Harries and Others v Church Commissioners for England

Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 . . . . . . . . . 174

Incorporated Council of Law Reporting for England and

Inland Revenue Commissioners v City of Glasgow Police

ER 747, HL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134, 149–50

Jackson, Re, Jackson v Talbot (1882) 21 Ch D 786 . . . . . . . . . . . . . 198, 199

Kayford Ltd, Re [1975] 1 WLR 279, [1975]

Laing (JW) Trust, Re [1984] Ch 143 . . . . . . . . . . . . . . . . . . . . . . . . 139, 141

Law Society of England and Wales v Habitable Concepts Ltd

Le Cren Clarke, Re, Funnell v Stewart, sub nom

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McGovern v Attorney General [1982] Ch 321, [1981]

McGrath v Wallis [1995] 2 FLR 114, (1995) The Times,

Nant-y-glo and Blaina Ironworks Co v Grave (1878)

Neville Estates Ltd v Madden and Others [1962] Ch 832,