5.1.3 Express and Implied Trusts Lecture - Hands on Example
As you will have gathered, much of this subject area deals with the types of trusts within land, and how they are to be addressed in accordance with the usual requirements for putting arrangements into writing. The following questions are designed to test your knowledge on these most important aspects of trusts of land. The answers to the questions can be found at the bottom of the page, however you are encouraged to attempt to answer the questions first based on your own recall or notes of the topic before looking at the answers.
Always think about the facts, the relevant statutory provision, the cases that interpret that provision, and what the outcome will be based on how those principles and cases apply to the question. As you may have gathered, the LPA 1925 is especially important, in particular s.53, so be sure to highlight that section and have it to hand when you are dealing with questions relating to trusts of land. Although you would not be expected to give the full citations of cases you cite (just the names of the parties and the year is usually sufficient, the name of the judge giving the ratio is even better!), you will be expected to accurately cite the relevant sections and subsections of the LPA and TOLATA 1996. Simply reciting the name of the statute in your exam without the corresponding section and subsection will not be sufficient.
Q1. Alice agreed to sell her cottage home to Ben, her brother-in-law. The sale was at a lower than market value. Before they signed the papers for the conveyance, Alice asked if she could continue to live at the cottage. Ben said to Alice “You can live in the cottage for as long as you want.” Alice takes up the offer and continues to live at the cottage. Ben and Alice later fell out, and Ben initiated proceedings to evict Alice. Alice wants to stay in the cottage.
A1. This question is essentially a reprise of the facts in the case of Bannister v Bannister. As you will recall from that case, the court would find that the conscience of the legal owner had been compromised by reason of the Diplock formula: Alice and Ben had entered into a bargain regarding a beneficial entitlement to the estate on Alice’s part, and Alice had relied on this bargain to her detriment. When Ben decides to resile from their bargain, his conscience is thereby compromised.
Q2. Clarence is the freehold owner of Blackacre. She wishes to transfer her interest in Blackacre to her grandchild Diane, but does not want to deal with her family trying to talk her out of the arrangement. She therefore proposes to Eric that he be the named beneficiary in the testamentary disposition for Blackacre, but he would in fact be a trustee and responsible for transferring Blackacre to Diane. Eric agrees. Clarence and Eric write up the will as if he were the beneficiary as per their discussion. When Clarence dies, Eric attempts to keep Blackacre for himself. Diane discovers Eric’s deceit.
A2. Diane faces the problem that usually defeats a disposition, namely that an oral agreement to render her the beneficiary should fail for the lack of written evidence stating the same, as per s.53(1)(b) of the LPA 1925. However, as you will recall from Rochefoucauld v Boustead, the court would see that Eric’s conscience has been compromised, and that to uphold the trust as written - rather than as intended by Clarence - would be to use statute as an instrument of fraud. The court would therefore uphold the secret trust for the benefit of Diane.
Q3. Francis and Helen both live in Greenacre. Francis is the sole registered proprietor of Greenacre and paid the deposit. They agreed that Helen would paid most of the mortgage payments. She has also worked with Francis on renovating the property, both by contributions of money from her job as an associate solicitor and through her labour in her spare time. They never discuss her share of the property. Francis is trying to sell the property and keep the proceeds for himself.
A3. Helen has contributed money and labour since the property was acquired, both towards the mortgage and towards improvements of the property. These may constitute a change of position as per the doctrine of constructive trusts. Even though the parties never expressly discuss her share of the property, these facts should give rise to the notion that she is entitled to some share of the property.
Q4. Ira and her husband John purchase Whiteacre, making it their matrimonial home. They make the purchase with their own money and by way of a mortgage loan from Moneymakers plc. Ira and John decide to invite John’s parents, Karen and Laurence, to live with them at Whiteacre. Karen and Laurence agree, and start making weekly contributions towards the household’s expenses. They make these contributions over a significant period of time. Ira and John fall out however with Karen and Laurence and attempt to sell the property, in the course of which Karen and Laurence would have to be evicted in order for Whiteacre to have vacant possession. Karen and Laurence want to know if they can claim a resulting trust.
A4. This is a reflection of the facts in Hannaford v Selby, which as you will recall explained that such financial contributions, regardless of their regularity, cannot give rise to a resulting trust if they were made subsequent to the date of acquisition of the property. And here the contributions were made subsequent to the date of acquisition. You would be well-advised to point out that there is no question of the parents having made contributions towards the purchase price; Ira and John purchase it with their own money. As you will be addressing resulting trusts, point out that the lender, Moneymakers plc, cannot have a resulting trust precisely because they are a lender.
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