Bowack & Anor v Saxton

A trust of an investment bond may be completely constituted even where the trust document omits the bond number, provided the property can be identified from the surrounding circumstances. A declaration of trust of a bond does not require execution as a deed. Where the bond-holder assigns it to intended co-trustees in signed writing, the assignment is effective without the signature of every trustee or an attesting witness for each signature. Even if that assignment fails, a settlor who intended to be one of the trustees may have completely constituted the trust by declaring the trust and retaining the property as trustee.

The claimants sought declarations concerning two investment bonds issued by AXA Isle of Man Ltd. They had signed standard discretionary trust forms under which they and the defendant, their daughter, were to be trustees. The forms left blank the effective date and bond numbers, and the defendant’s signatures were unwitnessed. The defendant supported the claim and the other notified parties did not oppose it.

The central questions were whether the trusts had been constituted and whether the bonds had been effectively assigned to the intended trustees. The court also considered an alternative constitution argument and rectification, although rectification ultimately did not arise.

1. Declarations. Valid and effective trusts of both bonds were created when the bonds were issued. There were simultaneous valid and effective assignments of the bonds to the three intended trustees in each case.
2. The omission of the effective date was not fatal. The evidence showed that the claimants intended the trusts to take effect as soon as the bonds were issued.
3. The omission of the bond numbers did not create uncertainty of subject-matter. The relevant bonds could be identified from the applications, their issue to the respective claimants, and the surrounding circumstances. The reasoning in Armstrong v Armstrong [2019] EWHC 2259 (Ch) was applied.
4. A trust of a bond, which is not land, may be declared orally or in writing and need not be made by deed. The unwitnessed signature of the defendant was therefore irrelevant to the assignment. Under section 136 of the Law of Property Act 1925, signed writing and written notice are sufficient for a legal assignment of the chose in action; the applicant’s witnessed signature supplied the necessary execution.
5. The court relied on Re Turcan (1888) 40 ChD 5 and Don King Productions Inc v Warren [2000] Ch. 291, CA, in recognising that restrictions on assignment do not necessarily prevent a declaration of trust.
6. Alternatively, even if the assignment to the co-trustees had failed, each applicant had executed the trust deed intending to become a trustee. Applying the principle in T Choithram International SA v Pagarani [2001] 1 WLR 1, the trust would have been completely constituted with the applicant as trustee, subject to any later appointment of the others.
7. Rectification did not arise because the trusts and assignments were already valid. An appropriate declaration was ordered.