Valid Trust by Nominating Tilly

1. At issue is whether Alice has created a valid trust by nominating Tilly and Tessa as trustees, and her son Billy as a sole beneficiary of her house, Greenacre. As this involves land, it must comply with certain formalities for the trust to be legally enforceable.

Although trusts may be created either expressly or indirectly, when the trust involves land, it must be created expressly and comply with certain formalities, for the trust to be legally enforceable. Section 53(1)(b) of the Law and Property Act 1925 (“LPA”) sets forth these formalities and requires that “a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will”. As such, while the declaration of a trust of land can be made orally, it will only be valid if it can be “manifested and proved” in writing, and signed, with the exception of when there exists fraud. Alice did announce her intentions of the trust and by writing on the deed “This is for Billy” which should likely be sufficient for s53.

In addition to the requirements set forth by the LPA, other formalities exist with respect to deeds, which are often the best evidence of a declaration. The Law of Property Act (Miscellaneous Provisions) Act 1989 s1 simplified the law for deeds delivered after 31 July 1990. There is no date so I will assume that it is after 31 July 1990. The legitimacy of any deed post 30th July 1990 depends on it being signed, attested and delivered. Unfortunetly for Alice, wrinting requirements for 53(1)(b) does not need to be in the form of a deed so Alice’s written words on the title deed “this is for Billy” should likely be sufficient to satify s53 (1)(b).

The facts of the question at hand resemble those in Sen v Headley. In that case, a man declared on his death bed “The house is yours, Margaret. You have the keys. They are in your bag. The deeds are in the steel box.” Moreover, the property at issue in Sen v. Headley was unregistered, like Alice’s property. Importantly, the court determined that “title deeds are the essential indicia of title to unregistered land” which is a formaility requirement for a trust containing land. The court will accept the title deeds as evidence that Alice has a propretary right at the time of declaring the trust.

As it seems that Alice has created a valid trust, the only issue left to determine involves whether the trust is irrevocable. A crucial principle of the law on express trusts is that once a trust has been created it is irrevocable, unless the settlor stipulates a revocation clause. However, once an inter vivos trust has been validly created, the beneficiaries are permitted to enforce the trust as affirmed in the Paul v Paul. Jessel MR stated, “The fact of their being volunteers does not enable the trustees to part with it without the consent of their cestuis que trust.. As such, Alice will not be able to unravel the trust unless Billy consents to the following exception.

The exception is under the principle in Saunders v Vautier, which may terminate an enforceable trust. This rule allows beneficiaries to terminate the trust so that the settlor can recover the property, however, it will only pertain if the beneficiary entirely consents, and is of full capacity.. However there are no facts to suggest this has or will occur. Consequently, Alice will not be able to recover Greenacre house.

2. At issues is whether Alice has created a valid inter vivos express trust for personality by announcing Cathy as the sole beneficary and Tilly and Tessa as trustees. Writing will not be essential for this type of trust; orally created is perfectly acceptable in which the court will hold them enforceable, regardless of the value. However, it is preferable to have it in writing, as the existence of a trust will need to be confirmed and possibly proven. Alice has verbally announced the intended trust in front of witnesses, so her conduct should suffice.

Although Alice has not expressly used the word “trust” when attempted to create this trust for personality, this will not prevent the courts from concluding that the legal title has been vested in Tilly and Tessa, with the trust being created and fully constituted. Lord Jessel MR stated in Richards v Delbridge that “the settler need not use the words ‘I declare myself a trustee’ but he must do something which is equivalent to it and use expressions which have meaning”. For example, in Re Lillingston, the court determined that although the settlor did not use the words “trust,” she handed over the keys to a safety box, which was held to be sufficient delivery. In this case, Alice has clearly done “something which is equivalent,” namely, handing over the key for the safe were the jewellery is stored. Thus, Alice has created an immediate enforceable trust.

The words “my collection of jewellery” imply that she is transferring all her jewellery in the safe, which Tilly and Tessa have been given the keys to. Cathy her daughter is the sole beneficiary and will be able to enforce the trust under the “beneficiary principle”, which means that if required, the beneficiary can enforce the trust against the trustee.

3. :At issue here is if Alice’s outright gift will be enforceable and if so, will Alice be able to revoke it. Typically, a gift is not binding because it lacks consideration, and “equity will not assist a volunteer.” For example, in the case of Re Cole, a husband took his wife into a room and quoted “it’s all yours”, but this was not sufficient to be enforceable, as the gift lacked consideration. The court held that “oral words of gift, or even written words of gift not embodied in a deed or will, are not sufficient to make an effective gift unless there has been or is delivery of possession to the donee” . Consequently, unless Alice physically gave the art collection to Dolly, the attempted gift will fail. There are no facts to suggest that Alice physically delivered the art collection to Dolly.

Furthermore, the courts will not imply a trust simply to make good a gift which has not been validly made at common law. Therefore, the courts will not construe a failed gift as a trust, just because it appears morale and conscionable to do so. The exceptions in which a gift will be perfected are the rule in Strong v Bird, donatio mortis causa and proprietary estoppel. Pursuant to the doctrine of proprietary estoppel, there must be a promise, reliance and for it to be inequitable not to enforce the promise. Proprietary estoppel could be applicable to Alice if there was a previous promise between them and only if Dolly acted to her detriment relying on that promise. This is no mention of any prior promise or agreement with Dolly so I assume there isn’t any. Therefore I conclude that Alice will be able to keep her art collection as the gift is not legally binding.

4. Alice was attempting a disposition of her equitable interest in her shares. A disposition is a transfer of a pre-existing equitable interest. Such a disposition is subject to certain formalities.. A disposition of an equitable interest must be in writing as per s53(1)(c) of the LPA 1925 . In Grey v IRC it was held that a direction by a beneficiary to trustees to hold on trust for another is a disposition within LPA 1925 s53(1)(c), this principle reflects Alice’s position. The case of Grey v IRC confirmed the writing requirement which means Alice can recover the shares. An ingenious effort to circumvent the writing requirement in section LPA 1925 53(1)(c) is the case of Oughtred v IRC. In this case the parties attempted to avoid the writing requirements, relying on s53(2) which states LPA 1925 s53(1)(c) “does not affect the creation or operation of resulting, implied or constructive trusts”. The House of Lords held that the oral promise did not transfer the entire equitable interest, thus the attempt failed..

An exception was established in Vandervell v IRC , if both legal and equitable title pass concurrently from the trust to the same person then no writing will be necessary. This will not be applicable as Alice formerly intended two separate titles. A further formality with shares is that both the transfer form and certificate needs to be sent for registration. On the facts there is no evidence that this necessity has been carried out so there has been no enforceable inter vivos transfer of the legal title. Thus Alice will be able to keep her shares as the court will view the announcement as unenforceable..

5. The issue is whether Alice has validly created a disposition of her shares in Sky Airways for the benefit of her friend Flossy. For shares to be properly transferred there are formailities, in which the company needs to be informed of the new registration.

For courts, adhering to formalities are particular important. For example, in Milroy v Lord where , the court held that the shares were never transferred. Lord who had power of attorney was handed over the shares by the the settlor and was supposed to register the change of ownership, this was never carried out. The court held that the shares were never transferred. The court would not enforce the agreement just because it seemed just. Lord Turner LJ declared, “for there is no equity in this court to perfect an imperfect gift”. Pursuant to the courts decision in Milroy, Alice would be able to recover her Sky Airways shares, as there is no indication that her solicitor Simon has complied with the formality of registering the change of ownership.

However, the courts have retreated and moderated the strict rule in Milroy. In the case of RE Rose, shares were not registered due to a delay but the court held the transfer as effective as the transferor had done everything he could. . Subsequently judgments like, Mascall v Mascall and Pennington v Waine have followed the Re Rose principle, although the test was altered to require the transferor to have done everything in their power necessary to transfer title. In Mascall v Mascal l a father who intended to transfer land to his son and had completed everything required for him in his power, but then tried to cease the transfer before completion of the registration. The Court held that the transfer had been completed. Browne-Wilkinson LJ quoted “a gift is complete as soon as the settler or donor has done everything that the donor has to do, that is to say, as soon as the donee has within his control all those things necessary”. This case bears close resemblance to Alice’s situation.

As a result of these developments, an incomplete gift may possibly be treated as fully constituted, if it would be unconscionable to permit the donor or settler to change their mind. Although not explicitly cited, I am assuming that Simon her solicitor does have the responsibility of carrying out the task of completing the necessary formalities for the shares. It will be completely irrelevant that Flossy was not present at the dinner. By Alice announcing that she is giving her shares to Flossy and handing the completed share certificate to her solicitor Simon, it seems she has done everthing within her power to transfer the shares. Judging by the Mascall case, it is likely that Flossy will be able to enforce the trust.

6. At issue here is whether Alice has declared herself as a trustee and Gilly as the beneficiary. Alice has declared herself as the trustee, holding the legal title and her granddaughter Gilly as the sole beneficiary. The trust is fully constituted as “in relation to trusts of personality, there are no formailities to be complied with”. Alices words are very clear and precise so the court will construe them literally and will not try and deviate from their unadorned definition In Richards v Delbridge. the court stated that “It is not at liberty to construe words other than according to their proper meaning”. Gilly, if she is of full capacity will be able to enforce the trust as the sole beneficiary.