Sharon Ann Morgan & Ors v The Estate of Terence David Morgan deceased & Ors

A trust of money need not be created or evidenced in writing where the case does not concern an interest in land. No particular words are required. The question is whether, in substance, the money was delivered on a clear understanding that the recipient could not treat it as his own and could use it only for a specified purpose.

The claimant must nevertheless prove both the source and beneficial ownership of the money, as well as the alleged trust arrangement, on the balance of probabilities. Physical delivery of money by a claimant does not establish beneficial ownership where the evidence shows that the money probably belonged to the recipient. Money withdrawn from a child’s account and advanced for a restricted purpose may remain beneficially owned by the child, requiring any recovery to be held on trust for the child.

The claimants alleged that Terence David Morgan had received £20,000 from his mother and £10,000 from his sister to hold on trust for the purchase of a property in which their mother would live. The money was deposited into a Santander account and transferred to a First Direct account bearing references including “house deposit”.

The defendants disputed the source and ownership of the funds and contended that they were Terence’s savings. The issue was whether either claimant had proved a trust and beneficial entitlement to money subsequently distributed from the account.

1. Nature of the arrangement. The money in the First Direct account had been set aside for the purchase of a property to be occupied by Mrs Morgan. Terence intended that the property would be his investment, with any benefit to his children, rather than property beneficially owned by Mrs Morgan.
2. Creation of a trust. A trust of money did not require writing, because the case did not concern a trust of an interest in land. The word “trust” and any particular form of words were unnecessary. It was sufficient in principle that money was delivered on the common understanding that it was not Terence’s to use as he wished, but was to be applied only towards the specified property purchase. If the purchase were abandoned, the money would have had to be returned.
3. Mrs Morgan’s claim. Although £20,000 had physically come from Mrs Morgan’s possession, she had not proved that she was its beneficial owner. Her explanation of how she had accumulated the cash was unpersuasive, and it was more likely that the cash belonged to Terence. Her claim was therefore dismissed.
4. Miss Msomi’s claim. On the balance of probabilities, £9,800 of the cash deposited with Santander had been withdrawn from an account in the name of Miss Msomi’s daughter, Khaya, and delivered by Miss Msomi to Terence for the restricted purpose. Terence accordingly held that sum on trust.
5. Relief. Miss Msomi’s claim succeeded to the extent of £9,800. Any money recovered by her was itself to be held on trust for Khaya. The precise form of relief, interest and costs were adjourned for a further hearing.