Wright v Wright

A trust of land may be established by signed written evidence, including a later affidavit, where the evidence sufficiently identifies an existing beneficial interest. A matrimonial consent order transferring property takes effect according to its terms when decree absolute is pronounced. Any prior arrangement that the transferor will retain an interest, or that the parties will later reverse the order, is ineffective and may be contrary to public policy if it involves presenting a false picture to the court. A parent’s gratuitous transfer to a child is presumed to be an outright gift unless a contrary intention is proved. A trustee who charges trust property for personal purposes is liable to compensate the beneficiary.

The claimant sought declarations and equitable compensation concerning a property registered in his father’s name. He alleged that his father held the property on trust for him and had improperly charged it. The defendant denied the trust and counterclaimed for money transferred to the claimant from property-sale proceeds, a pension lump sum, a transferred property interest and furniture.

The court also considered whether assets transferred to the defendant’s former wife under a divorce consent order remained beneficially owned by the defendant, and whether later payments to the children were held for him. The central issues were the effect of the consent order, the character of the transfers, and the claimant’s entitlement to equitable compensation.

1. Wyndley Close. The defendant had declared a trust under which the entire beneficial interest in the property vested in the claimant at the time of purchase. The trust was formally valid because the defendant’s sworn affidavit supplied signed written evidence satisfying Law of Property Act 1925, section 53(1)(b). The claimant’s alternative constructive-trust case therefore did not require determination.
2. Rosemary Hill Road. On the making of the divorce consent order and pronouncement of decree absolute, the beneficial interest in property ordered to be transferred vested immediately in the transferee spouse under Matrimonial Causes Act 1973, section 24(3). The parties could not preserve the transferor’s beneficial interest by an earlier private agreement. Any later arrangement would have to satisfy ordinary legal principles and could not be founded solely on a pre-order understanding.
3. An agreement made before the order to procure a court order while intending that it should not have its ordinary legal effect would be unenforceable as contrary to public policy. The defendant had not proved any effective post-order trust, contract or other arrangement in his favour. The sums paid to the claimant from the sale proceeds were gifts from his mother and were not held for the defendant.
4. The transfer of the defendant’s interest in William Court and the pension monies were gifts to the claimant. The presumption of advancement was not rebutted by sufficient evidence of a loan or other enforceable obligation. The furniture claim also failed because no promise to repay was proved.
5. The defendant’s additional borrowing secured on the trust property was a breach of trust. The claimant was entitled to equitable compensation, subject to submissions on quantum and credit for the pension payment if appropriate. The separate claim concerning alleged obstruction of mortgage payments was not proved and was refused.
6. The court observed that a transaction intended to defeat creditors may be set aside under Insolvency Act 1986, section 423, if the evidence establishes the statutory case.