Paul v Constance

An express trust does not require technical language or use of the word trust. The question is whether, construed in its factual and social context, the owner’s words and conduct show a sufficiently clear present intention to hold identified property for another beneficially.

Repeated statements that money standing in the owner’s sole bank account was as much another person’s as his own may amount to a declaration that he held the fund for them equally. The court will assess the language in the circumstances in which it was used, rather than by reference to formal legal terminology.

The plaintiff and the deceased lived together for several years. A deposit account was opened in the deceased’s sole name after he received damages for a workplace injury. Further joint bingo winnings were paid into it, and a withdrawal was used for their joint benefit.

The plaintiff alleged that the deceased repeatedly said the money was as much hers as his, and that he thereby declared himself trustee of the account for them jointly. After the deceased died intestate, his wife and administratrix claimed that the entire balance formed part of his estate.

Judge Rawlins in Cheltenham County Court found an express trust and awarded the plaintiff one half of the fund. The administratrix appealed on the sole ground that the evidence did not establish an express declaration of trust.

1. Appeal dismissed. Lord Justice Scarman held that Judge Rawlins was entitled, and right, to find an express trust of the bank fund for the deceased and the plaintiff in equal shares. Lord Justice Bridge agreed for the reasons given by Lord Justice Scarman, and Lord Justice Cairns also agreed.

2. No particular form of words is required for an express declaration of trust. The essential question is whether the words and conduct, viewed as a whole and in their proper context, clearly show a present intention that the owner holds the property for another beneficially.

3. The court distinguished cases concerning an imperfect attempt to make a gift by transfer. Those authorities did not prevent a finding of a trust here, because the claim was founded on an express declaration and not an ineffective gift.

4. The deceased’s repeated statements that the money was as much the plaintiff’s as his own could properly be understood as a present declaration concerning the existing fund. That interpretation was reinforced by the circumstances in which the account was opened, the payment of joint bingo winnings into it, and the use of a withdrawal for their mutual benefit.

5. The court rejected any reliance on implied or constructive trust principles. The pleaded and decided issue was solely whether the evidence established an express declaration of trust. Costs were awarded in the Court of Appeal and below, subject to assessment under the Legal Aid and Advice Act in the county court.

• Court of Appeal: Dismissed the administratrix’s appeal and upheld the finding of an express trust.

• Cheltenham County Court: On 12 August 1975, Judge Rawlins found that the deceased had created an express trust for himself and the plaintiff jointly, and awarded the plaintiff £499.21, representing one half of the fund.