Duggan v HM Prison Full Sutton & Anor

Prison Rules 1999 do not impose a private-law trust merely because cash is paid into an account under the governor’s control and credited in the prison books. Cash is fungible, and possession and ownership ordinarily pass together. Once ownership passes, no separate equitable interest exists unless the circumstances justify imposing a trust. The account and crediting provisions are administrative and indicate a banker/customer, debtor/creditor relationship. The absence of separate accounts, or possible non-compliance with Government Accounting guidance, does not alter that construction. Any objection to the accounting practice is a public-law matter. The deprivation of access to cash was, on the concurring view, a proportionate interference with property rights.

The appellant, a life prisoner, sought a declaration that money received or held for him under rules 43 and 44 of the Prison Rules 1999 was held on trust. He claimed that the money should be invested and that an account should be taken of interest or profits. Mr Justice Hart dismissed the claim by order dated 28 February 2003, for the reasons in [2003] EWHC 361(Ch), reported at [2003] 2 All ER 678.

The appeal concerned whether rule 43(3), requiring cash to be paid into an account under the governor’s control and credited to the prisoner in the prison books, created a private-law trust. The Court also considered the effect of cash ownership, the prison’s mixed-account practice, and an alternative public-law analysis.

The appeal was dismissed unanimously. Chadwick LJ delivered the leading judgment. Keene LJ agreed. Peter Gibson LJ agreed and added observations.

1. The starting point was that imprisonment does not itself remove a convicted prisoner’s civil rights. A right remains unless expressly removed or unless its loss is an inevitable consequence of lawful detention, following Raymond v Honey [1983] AC 1 and R v Secretary of State for the Home Department, Ex parte Simms and another [1999] QB 349, recognised on appeal at [2000] 2 AC 115.
2. The appellant’s argument that he retained a beneficial interest in the cash was misconceived. Under Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, a person with full legal and beneficial ownership has no separate equitable interest merely because the legal title is later transferred. The relevant question was whether the circumstances imposed a new trust.
3. Rule 43(3) deprived the prisoner of possession of cash. Because cash is fungible, possession and ownership ordinarily pass together. This differed from rule 43(2), which concerned custody of non-cash property and could be analysed as bailment without transferring ownership.
4. No trust arose. The requirement to pay cash into an account was administrative. Crediting the prisoner in the prison books, read with the internal spending arrangements, pointed to a banker/customer relationship of debtor and creditor, not trustee and beneficiary, applying Joachimson v Swiss Bank Corporation [1921] 3 KB 110. There was no clear intention to impose a trust, no practical need for an investment trust, and no reason to imply obligations the rule-maker had not expressed. The mixed-account practice and Government Accounting guidance did not establish a trust; any challenge to that practice lay in public law.
5. Peter Gibson LJ considered that the interference with possessions under Article 1 of the First Protocol to the European Convention on Human Rights was justified and proportionate, given the need to control cash, the corresponding prison credit, and the ability to transfer credit to an external account. The alternative public-law relationship identified in Tito v Waddell (No. 2) [1977] Ch. 106 did not need to be decided.
6. The appellant was ordered to pay the respondents’ appeal costs, subject to the limitation and detailed-assessment provisions in section 11 of the Access to Justice Act 1999.

• Court of Appeal (Civil Division): Appeal dismissed. The Court held that rule 43(3) of the Prison Rules 1999 did not impose a private-law trust: [2004] EWCA Civ 78.
• High Court of Justice, Chancery Division: Mr Justice Hart dismissed the claim by order dated 28 February 2003: [2003] EWHC 361(Ch), reported at [2003] 2 All ER 678.
• Liverpool County Court: Proceedings were commenced by claim form on 23 November 2001 and transferred to the High Court on 28 February 2002.