Iles v Iles

A trust of land may be sufficiently certain even where a schedule identifying the property is missing, if the intended subject matter can be established from the trust instrument and surrounding conveyancing documents. A later declaration cannot vary an existing trust for a minor beneficiary without the court’s approval or an applicable power of resettlement. A trustee who knows of a beneficiary’s entitlement must make reasonable enquiries and account for trust income. Relief may be available where the trustee’s failure occurred while another person exclusively managed the trust property and the trustee acted honestly and reasonably.

The claimant alleged that land at the Forge Industrial Estate was held on trust for her by her mother. The trust documentation included a 1983 declaration, a 1992 deed of exchange and a 1992 declaration of trust. The schedule identifying the property in the 1992 declaration had not been found.

The claimant sought a determination that the disputed land was held on trust and an account of rents received by the defendant after the death of the claimant’s father. The preliminary issues were whether the trust property was sufficiently certain and whether the defendant was liable to account for the rents.

1. Trust property. The disputed land was sufficiently identified. The 1992 declaration’s recitals, read with the 1983 transfer and the 1989 and 1992 deeds of exchange, showed that the intended trust property was the only land at the Forge held by the spouses as trustees. The missing schedule was therefore surplusage and did not prevent certainty of subject matter.
2. Effect of the 1992 declaration. The 1992 declaration supplied the trusts on which the central part of the disputed land had been transferred. Insofar as it purported to impose different trusts on the remainder, it was ineffective because the claimant was a minor, no court approval for variation had been obtained, and the 1983 declaration contained no power of resettlement. The differences between the 1983 and 1992 trusts did not affect the relief sought.
3. Knowledge and accounting duty. The defendant knew before her husband’s death that the claimant was to receive rents from the Forge from age 25 and knew that the entitlement arose under a trust. After the claimant reached 25, the defendant was required to ascertain the precise terms of the entitlement, including by obtaining advice and showing the trust document to the family’s solicitors. Paying only what she thought she could afford was not reasonable trustee conduct.
4. Relief from personal liability. Under section 61 of the Trustee Act 1925, the defendant was relieved from liability for the period before the claimant reached 25. During that period, the defendant had been misled into believing that she had inherited the land beneficially, had no business experience, and had acted honestly and reasonably in the circumstances. She remained liable to account for rents received from April 2004.
5. The claimant was entitled to a declaration that the disputed land was held on trust for her absolutely, an order for its transfer, an account of rents received or receivable from April 2004, and payment of the escrowed rents. Further directions were reserved.