Hilton v Cosnier

An oral statement creates a trust only where it provides clear evidence of an intention to create one. Words indicating that property is intended ultimately to pass to beneficiaries do not necessarily create an immediate trust in their favour. The court must construe the statement in its context, including subsequent conduct. A transfer of the property as though the transferor retained a beneficial interest may be inconsistent with an alleged prior trust. Where the transferor retains legal title, words describing a future disposition may amount only to an explanation of intended succession, rather than an imperative direction binding the transferor immediately.

The claimant appealed against an order of District Judge Lightman dismissing his claim for a declaration concerning a residential property. He contended that an oral statement made by Mr Walker in May 1994 created a trust giving Miss Overton a life interest and the grandchildren the remainder. The defendant, to whom Mr Walker later transferred the property, argued that the statement created no trust in favour of the grandchildren. The appeal was heard on the principal question whether the oral statement amounted to a declaration of trust.

1. Appeal dismissed. The court granted permission to appeal to the extent necessary. The further issues identified in relation to the district judge’s other findings did not arise.
2. The applicable test was whether there was a clear declaration of trust, supported by clear evidence from what was said or done of an intention to create a trust, as stated in Paul v Constance [1977] 1 WLR 527 at 531 F–H and relied on in Ong v Ping [2017] EWCA Civ 2069 at para 58. The context of an oral statement is relevant, and subsequent events may assist in construing it.
3. The statement that the property had been bought for Miss Overton to occupy for life, but was to go to the grandchildren, did not clearly declare an immediate trust in favour of the grandchildren. Its more realistic meaning was that Miss Overton would not own the property outright because Mr Walker intended that it should ultimately pass to the grandchildren.
4. Several contextual matters supported that conclusion: Mr Walker never told his solicitor, daughters or grandchildren that he had created such a trust; he later transferred the property to the defendant as though he were giving her something of value; and the statement served to explain Miss Overton’s right to occupy the property rather than to impose an immediate obligation on Mr Walker concerning its future disposition.
5. The court rejected the submission that, because a life interest was assumed to exist, the issue was merely the terms of an admitted trust. A commitment to Miss Overton did not necessarily amount to a commitment to the grandchildren. Although similar words might have created a trust if used on a transfer to an obvious trustee, they had a different effect while Mr Walker retained title.

1. High Court (Chancery Division): appeal from the order of District Judge Lightman dated 6 October 2016 dismissed.
2. County Court: claim for a declaration concerning the alleged trust dismissed.