Ong & Ors v Ping

An express trust of land may be declared without any prescribed form of words. The court must find objectively clear evidence, from what the alleged settlor said or did, of an intention to create a trust whose property is sufficiently identified.

The documents must be read against their relevant background. An executed settlement which did not name any property could therefore declare a trust of a house where the surrounding correspondence made the settlor’s intention objectively clear.

For section 53(1)(b) of the Law of Property Act 1925, a later signed letter may manifest and prove an earlier declaration. Extrinsic evidence may identify a trust instrument referred to in that letter.

Madam Lim bought a London house for occupation by members of her family. She later signed a discretionary settlement with her son, Ping, as co-trustee. Although its first schedule was left blank and it did not name the house, the preceding correspondence concerned the creation of a trust of that property for five family beneficiaries.

Morgan J held in [2015] EWHC 1742 (Ch) that Madam Lim had declared a trust of the house and that her declaration satisfied section 53(1)(b) of the Law of Property Act 1925. Ping appealed.

The issues were whether the execution of the settlement, construed against the correspondence, amounted to a valid declaration of trust of the house and, if so, whether signed writing manifested and proved that declaration.

1. Appeal dismissed. Sir Colin Rimer, with whom Underhill LJ and Sir Brian Leveson agreed, held that Madam Lim validly declared a trust of the house and that the declaration was manifested and proved by sufficient signed writing.

2. A declaration of trust requires objectively clear evidence of an intention to create a trust and sufficient identification of the trust property. No express oral formula is indispensable. As established in Paul v Constance [1977] 1 WLR 527, the intention may be shown by what the declarer said or did.

3. The signed settlement and the letter of 14 April 1986, if considered alone, left real doubt because the settlement’s schedule of initial property was blank. The proper assessment nevertheless included the correspondence which explained the transaction’s genesis and purpose. That correspondence consistently showed that Madam Lim intended to place the house, and no other asset, on trust for the five beneficiaries.

4. Madam Lim had been wrongly advised that she had acquired the house as trustee and that signing the settlement would govern a trust dating from the exchange of contracts. There was no evidence that she knew that advice was wrong. Objectively, she understood and intended that signing the settlement would make the house subject to its trusts. The blank schedule reflected her lack of understanding of the proposed monetary entry, not an intention to create elaborate trusts over no property.

5. The letter of 14 April 1986 might arguably have referred to the house only because it also addressed the land certificate. The later signed letter of 16 May 1988 was independently sufficient for section 53(1)(b) of the Law of Property Act 1925. It expressly linked the house with the trust and sought to cancel that trust. Extrinsic evidence could identify the trust instrument to which it referred. The letter thereby acknowledged that the house was already a trust asset and manifested and proved the prior declaration.

1. Court of Appeal (Civil Division): Dismissed Ping’s appeal and affirmed the declarations that the house and its proceeds were held upon the settlement trusts: [2017] EWCA Civ 2069.
2. High Court, Chancery Division: Morgan J held that Madam Lim had declared a trust of the house and that the declaration was manifested and proved in accordance with section 53(1)(b) of the Law of Property Act 1925: [2015] EWHC 1742 (Ch).
3. Permission to appeal: Morgan J and Davis LJ initially refused permission. Patten and David Richards LJJ granted permission following a renewed oral application.