formalities

Question 1

Why are formalities important?

Answer 1

Pleshakov, Lord Sales: unilateral nature (by settlor for beneficiary) of creating a trust is the reason why it requires documentation for certainty and proof

Question 2

s53 LPA 1925

Answer 2

(1) Subject to the provision hereinafter contained with respect to the creation of interests in land by parol— …

• (b) 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;
• (c) 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 thereunto lawfully authorised in writing or by will.

(2) This section does not affect the creation or operation of resulting, implied or constructive trusts.

no special formalities required for creation of trusts of personal property (ie property other than land)

Question 3

s53(1)(b) LPA

Answer 3

• Transaction: Declaration of trust
• Property/ interest: Any land or any interest therein
• Rule: Must be manifested and proved by some writing signed by someperson who is able to declare such trust or by his will
• Effect of non-compliance: Unenforceable, not void

Question 4

s53(1)(c) LPA

Answer 4

• Transaction: Disposition
• Property/ interest: Equitable interest (in anythin) subsisting at the time of the disposition
• Rule: Must be in writing signed by the person disposing of the same, or by his agent, thereunto lawfully authorised in writing or by will
• Effect of non-compliance: void

Question 5

Declarations of trust of land

Answer 5

• Taylor v Taylor: Decleration of trust in land does not have to be made in writing, only evidenced in writing
• Ong v Ping: Letter showing her intent to create a trust was sufficient proof and manifestation as res was acknowledged
• Parker v Financial Conduct Authority: Equity will not permit a statute to be used as an instrument of fraud
• Rochefoucauld v Boustead: Equity will not permit a statute to be used as an instrument of fraud
  
  • Trust was found in favour of the victim of a fraud even when there is a lack of formalities
• Re Smith: Limit to Rochefoucauld doctrine, only works when its two parties to prevent fraud. When a 3rd party is involved doesn’t apply

Question 6

Disposition of equitable interests

Answer 6

• Grey v IRC: disposition has a broad and ordinary meaning. Does someone else now have what you once had
• Grainge v Wilberforce: if B is just a channel for the equitable interest, then it is a disposition (do they have meaningful duties or no?)
  
  • Sub-trust: where A was trustee for B, who was trustee for C, A holds in trust for C, and must convey as C directed
• Hudson v Hathway: wrote name in the bottom of the email, the signature is enough
  
  • substance of exchange also conveed intent
• Vandervell (No 1): s53(1)(c) not applicable to situations where a beneficiary directs his trustees, by way of his Saunders v Vautier right to do so, to transfer full legal and equitable ownership to someone else
• Akers v Samba: Extinction of beneficial interest when bona fide purchaser for value without notice (BFPVMN)

Question 7

s53(2) LPA 1925

Answer 7

• Vandervell (no 2)
  
  • Oral decleration to a bare trustee to transfer the trust property to a 3rd party absolutely for his own benefit is a valid disposition
  • However, Vandervell had not successfully divested himself of ownership (legal and equitable) in the shares, since the Trust Company had an option to purchase the shares back from the RCS
  • If the settlor does not divest himself adequately = resulting trust would operate
• Outghtred v IRC: a constructive trust arising from the oral agreement does transfer some proprietary interest, but not the full beneficial interest under a trust and thus does not amount to a ‘disposition’ under s53(1)(c)
• Neville v Wilson: an oral contract does not require writing under s53(1)(c) to transfer equitable interest in the subject of the contract
• LA Micro Group: no space for constructive turst to operate as beneficial interest holder also gained legal title = absolute ownership