© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
Express trusts
GENERAL
Relevance
- Questions not answered by statute (e.g. number of trusts) answered by general law of trusts
"[13] Section 43(2) supplies the definition of "settlement" to be applied in answering each of these questions. It should be noted that s 43 does not specifically address a numerical question: what is the number of relevant settlements existing in a particular inheritance tax situation? In the absence of specific statutory provisions the answer to the numerical question is to be found in the general law of trusts." (CIR v. Rysaffe Trustee Company (CI) Limited [2003] EWCA Civ 356, Mummery, Schiemann, Dyson LJJ)
Three certainties
- Summary
"[48] It is well established that an express trust will only arise where the "three certainties" essential for the creation of a trust are satisfied. First, there must be certainty of intention to create a trust. Secondly, there must be certainty as to the subject-matter of the trust. Thirdly, there must be certainty as to the beneficiaries of the trust." (Gill v. Thind [2023] EWCA Civ 1276, Arnold, Jackson, Asplin LJJ)
(1) CERTAINTY OF INTENTION TO CREATE TRUST
Nature of intention to be proven
- An intention to dispose of property so that somebody else acquired a beneficial interest in it
"[50] Scarman LJ, with whom Bridge and Cairns LJJ agreed, noted at 530C-D that "[n]o particular form of expression is necessary for the creation of a trust, if on the whole it can be gathered that a trust was intended". At 531G he accepted the following statement of principle propounded by counsel for the defendant:
"… there must be a clear declaration of trust and that means there must be clear evidence from what is said or done of an intention to create a trust — or, as [counsel] put it, 'an intention to dispose of a property or a fund so that somebody else to the exclusion of the disponent acquires the beneficial interest in it.'"" (Gill v. Thind [2023] EWCA Civ 1276, Arnold, Jackson, Asplin LJJ)
Means of proving intention
- From what is said or done
"There is no suggestion of a gift by transfer in the present case. The facts of the two cases do not, therefore, very much help the submission of Mr. Blythe but he was able to extract from them this principle: that there must be a clear declaration of trust and that means there must be clear evidence from what is said or done of an intention to create a trust -- or, as Mr. Blythe put it, "an intention to dispose of a property or a fund so that somebody else to the exclusion of the disponent acquires the beneficial interest in it." He submitted that there was no such evidence.
When one looks at the detailed evidence to see whether it goes as far as that -- and I think that the evidence does have to go as far as that -- one finds that from the time that the deceased received his damages right up to his death he was saying, on occasions, that the money was as much the plaintiff's as his. When they discussed the damages, how to invest them or what to do with them and when they discussed the bank account, he would say to her: "The money is as much yours as mine."" (Paul v. Constance [1976] EWCA Civ 2)
- Viewed in context and history of relationship
"[52] It can be seen from this reasoning that Scarman LJ regarded the issue as one of fact. It can also be seen that, in concluding that the judge was correct to decide as he did, Scarman LJ took into account not only the words used by Mr Constance, but also the character of Mr Constance, his relationship with the plaintiff during the relevant period and his conduct when opening the bank account and with respect to the bingo winnings." (Gill v. Thind [2023] EWCA Civ 1276, Arnold, Jackson, Asplin LJJ)
"The plaintiff gave evidence, which the judge accepted, that on frequent occasions the deceased told her that the money in his deposit account at Lloyds Bank was as much her money as his. In the last analysis, accordingly, the whole question in this case, as it seems to me, is whether the judge was right, construing those words according to their proper meaning and in the context in which the words were spoken as disclosed by the evidence, to conclude that, by using those words, the deceased had done something which was equivalent to declaring himself a trustee of the moneys in the account for himself and the plaintiff in equal shares." (Paul v. Constance [1976] EWCA Civ 2)
- Documentary declaration: whether document demonstrates intention is question of law
"[55] What must be proved is an intention to create a trust. If A asserts that a declaration of trust has been made by B in a document, the claim might be analysed in two stages. First, A would have to prove, on the balance of probabilities, that B had signed the document. Secondly, A would have to persuade the court that the document, properly interpreted, constituted a declaration of trust. In principle, a similar two-stage analysis applies if A asserts an oral declaration of trust by B. First, A has to prove, on the balance of probabilities, what B said. Secondly, A has to persuade the court that this demonstrated an intention to declare a trust.
[56] The principal difference between these scenarios is that, in the case of a documentary declaration, the first stage of the analysis involves a question of fact whereas the second stage is a question of law, and evidence as to B's subjective intentions and subsequent conduct is not admissible at that stage;..." (Gill v. Thind [2023] EWCA Civ 1276, Arnold, Jackson, Asplin LJJ)
- Oral declaration: what was said + intended questions of subjective fact, subjective intentions + subsequent conduct admissible
"[55] What must be proved is an intention to create a trust. If A asserts that a declaration of trust has been made by B in a document, the claim might be analysed in two stages. First, A would have to prove, on the balance of probabilities, that B had signed the document. Secondly, A would have to persuade the court that the document, properly interpreted, constituted a declaration of trust. In principle, a similar two-stage analysis applies if A asserts an oral declaration of trust by B. First, A has to prove, on the balance of probabilities, what B said. Secondly, A has to persuade the court that this demonstrated an intention to declare a trust.
[56] The principal difference between these scenarios is that, in the case of a documentary declaration, the first stage of the analysis involves a question of fact whereas the second stage is a question of law, and evidence as to B's subjective intentions and subsequent conduct is not admissible at that stage; whereas, in the case of an oral declaration, the questions of what was said and what was intended by it are both questions of fact, and evidence as to B's subjective intentions and subsequent conduct are admissible: compare the position concerning oral agreements (and agreements made partly in writing, partly orally and partly by conduct) as explained by Lord Hoffmann in Carmichael v National Power plc [1999] 1 WLR 2042 at 2049A-D and 2050H–2051C." (Gill v. Thind [2023] EWCA Civ 1276, Arnold, Jackson, Asplin LJJ)
- May not be possible make finding of exact words used for oral declaration
"[57] A secondary difference is that, in the case of an oral declaration, it may well not be possible for the court to make a finding as to the exact words used by B, and so the court may only be able to make a finding as to their gist. In those circumstances, there would be nothing wrong in the court running the two questions together and asking whether, on the balance of probabilities, B said words that were such as to demonstrate an intention to declare a trust." (Gill v. Thind [2023] EWCA Civ 1276, Arnold, Jackson, Asplin LJJ)
Timing of trust
- Statements on multiple occasions sufficient, but not easy to pin-point a specific declaration
"It might, however, be thought that this was a borderline case, since it is not easy to pin-point a specific moment of declaration, and one must exclude from one's mind any case built upon the existence of an implied or constructive trust, for this case was put forward at the trial and is now argued by the plaintiff as one of express declaration of trust. It was so pleaded and it is only as such that it may be considered in this court. The question, therefore, is whether, in all the circumstances, the use of those words on numerous occasions as between the deceased and the plaintiff constituted an express declaration of trust. The judge found that they did. For myself, I think that he was right so to find. I therefore would dismiss the appeal." (Paul v. Constance [1976] EWCA Civ 2)
Examples
- "The money is as much yours as mine" on multiple occasions by unsophisticated person gave rise to trust
"In this court the issue becomes: was there sufficient evidence to justify the judge in reaching that conclusion of fact? In submitting that there was, Mr. Wilson draws attention first and foremost to the words used. When one bears in mind the unsophisticated character of the deceased and his relationship with the plaintiff during the last few years or his life, Mr. Wilson submits that the words that he did use on more than one occasion, "This money is as much yours as mine," convey clearly a present declaration that the existing fund was as much the plaintiff's as his own. The judge accepted that conclusion. I think that he was well justified in doing so and, indeed, I think that he was right to do so. There are, as Mr. Wilson reminded us, other features in the history of the relationship between the plaintiff and the deceased which support the interpretation of those words as an express declaration of trust. I have already described the interview with the bank manager when the account was opened. I have mentioned also the putting of the "bingo" winnings into the account and the one withdrawal for the benefit of both of them." (Paul v. Constance [1976] EWCA Civ 2)
(2) CERTAINTY OF SUBJECT-MATTER OF TRUST
(3) CERTAINTY OF BENEFICIARIES