England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
THE COURT OP APPEAL
(Appeal of Defendant from Order of
His Honour Judge Rawlins,
Cheltenham County Court, August
12, 1975

		Royal Courts of Justice (Respondant - Plaintff) (Appellant – Defendant)
		8th July 1976

LORD JUSTICE CAIRNS: I will ask Scarman L.J. to deliver the first judgment.

LORD JUSTICE SCARMAN: The deceased, Dennis Albert Constance was a wage earner living in Cheltenham until he died on March 9, 1974. He was married to Bridget Frances Constance, the defendant in this action. But they parted in June 1965. In 1967 the deceased met Mrs. Doreen Grace Paul who is the plaintiff in this action. The two of them set up house together in December 1967 and they lived to all appearances as man and wife up to the date of the deceased's death. The house in which they lived was 42, Larput Place, St. Pauls, Cheltenham and it was the property of the plaintiff.

In August 1969, the deceased, who was employed as a fitter in or near Cheltenham, was injured at his work. He claimed damages against his employers and ultimately, in early 1973, after he had initiated legal proceedings, his claim was disposed of by the payment to him of a sum of £950. This money he received by cheque early in 1973. He discussed with the plaintiff what to do with the money, and the evidence is clear that they decided that it was to go into a bank account. The two of them went to see the manager of the St. George's Square branch of Lloyds Bank in Cheltenham, and there they had a discussion about opening a bank account. According to the notes of evidence which the judge made, the two of them had a discussion with the bank manager. He explained to them the different sorts of accounts which they could open and the decision was taken to open a deposit account. At that stage the deceased revealed that they were not married. It is perhaps of some significance in understanding this interview if one recalls the evidence that was given by a Mr. Thomas, a fellow employee of the deceased, who said that he knew that the deceased and the plaintiff were not married, but most people did not. After the deceased had told the manager that they were not married, the manager said, "Well, it will be in your name only then?" The deceased then said, "Yes," and asked the manager what was to happen if the plaintiff wanted to draw on the account, or if he wanted her to draw on it. The manager said that that could be done if the plaintiff used a note with the deceased's signature on it, authorising her to draw on the account.

The account that was opened on that day in February 1973 is at the very heart of this case. The account was maintained in the deceased's name from that date until the date of his death. Over the period between 1973 and his death, some 13 months later in 1974, further sums were paid into the account, including, in particular, some sums which represented "bingo" winnings. It is clear from the evidence that the deceased and the plaintiff did play "bingo" and they played it really as a joint venture. They did have winnings from time to time and at any rate three of such winnings, -- none of them very great -- were paid into the account. It is clear from the plaintiff's evidence that they thought of those winnings, as "their winnings": neither hers nor his alone, but theirs. Nevertheless, when the account was closed on the deceased's death, the ultimate balance, after the addition of interest, consisted largely of the initial sum of £950 representing the deceased's damages as a result of his injury at work. There was one withdrawal during this period, a sum of £150, and the evidence is that that money was divided between the two of them after part of it had been used for buying Christmas presents and some food.

The plaintiff began her action after the deceased's death against his lawful wife, the defendant, who took out letters of administration for his estate, since he died intestate. The plaintiff claims in the action that the hank account in the deceased's name, to which I have referred, was held by him on trust for the benefit of himself and the plaintiff jointly. She claims that it was an express trust declared orally by him on numerous occasions. The defendant, as administratrix, closed the account and she maintains that the whole fund contained in the account was the beneficial property of the deceased at the time of his death and, as such, became part of his estate after death.

The matter came on for trial before Judge Rawlins in August 1975 and on August 12 the judge found in favour of the plaintiff. He found the existence of an express trust, a trust for the benefit of the plaintiff and the deceased jointly, and he ordered that the sum of £499.21 be paid to the plaintiff as representing one half-share of the fund to which she was beneficially entitled.

A number of issues were canvassed at the trial, but the only point taken by the defendant on her appeal to this court goes to the question whether or not there was, in the circumstances of this case, an express declaration of trust. It is conceded that, if there was, the trust would be enforceable. The one question is whether there was an express declaration of trust.

The case has been argued with great skill and ability by counsel on both sides and I should like to express my appreciation for the way in which Mr. Blythe, for the defendant, opened the appeal and the way in which Mr. Wilson very shortly and vigorously, put his contentions on behalf of the plaintiff/respondant.

Mr. Blythe drew the attention of the court to the so-called three certainties that have to be established before the court can infer the creation of a trust. He referred us to 27th edition of Snell , page 111, in which the three certainties are set out. We are concerned only with the first of the three certainties and it is this: "The words" -- that is the words of the declaration relied on -- "must be so used that on the whole they ought to be construed as imperative ... No particular form of expression is necessary for the creation of a trust, if on the whole it can be gathered that a trust was intended. 'A trust may well be created, although there may be an absence of any expression of terms imposing confidence.' A trust may thus be created without using the word 'trust,' for what the court regards is the substance and effect of the words used."

Mr. Blythe has taken the court through the detailed evidence and submits that one cannot find anywhere in the history of events a declaration of trust in the sense of finding the deceased saying: "I am now disposing of my interest in this fund so that you, Mrs. Paul, now have a beneficial interest in it." Of course, the words which I have just used are stilted lawyers' language and Mr. Wilson, for the plaintiff, was right to remind the court that we are dealing with simple people, unaware of the subtleties of equity, but understanding very well indeed their own domestic situation. It is, of course, right that one should consider the various things that were said and done by the plaintiff and the deceased during their time together against their own background and in their own circumstances.

Mr. Blythe drew our attention to two cases, both of them well enough known, (at any rate in Lincoln's Inn, since they have been in the law reports for over 100 years), and he relies on them as showing that, though a man may say in clear and unmistakable terms that he intends to make a gift to some other person, for instance, his child or some other member of his family, yet that does not necessarily disclose a declaration of trust. Indeed, in the two cases to which we have been referred the court held that, though there was a plain intention to make a gift, it was not right to infer any intention to create a trust.

In the first of the two cases, Jones –v-. Lock (1 Ch. A. 25). Mr. Jones, returning home from a business trip to Birmingham, was scolded for not having brought anything back for his baby son. He went upstairs and came down with a cheque made out in his own name for £900 and said in the presence of his wife and the nurse: "Look you here, I give this to baby," and he then placed the cheque in the baby's hand. It was obvious that he was intending to make a gift of the cheque to his baby son, but it was clear, as Lord Cranworth held, that there was no effective gift then and there made of the cheque: it was in his name and had not been endorsed over to the baby. Other evidence showed that Mr. Jones had in mind to go and see his solicitor, Mr. Lock, to make proper provision for the baby boy, but unfortunately he died before he could do so. Jones –v-. Lock was a classic case where the intention to make a gift failed because the gift was imperfect. So an attempt was made to say: "Well, since the gift was imperfect, nevertheless, one clan infer the existence of a trust." But Lord Cranworth would have none of it.

In the second case to which Mr. Blythe referred us, Richards –v-. Delbridge (18 Equity Cases p. 11) the facts were that Mr. Richards, who employed a member of his family called Edward in his business, was minded to give the business to the young man. He evidenced his intention to make this gift by endorsing on the lease of the business premises a short memorandum to the effect: "This deed" -- that is the deed of leasehold -- "and all thereto belonging I give to Edward from this time forth with all the stock in trade."

Sir George Jessel, Master of the Rolls, who decided the case, said that there was in that case the intention to make a gift, but the gift failed because it was imperfect; and he refused to draw from the circumstances of the imperfect gift the inference of the existence of a declaration of trust or the intention to create one. The ratio decidendi appears clearly from the report. It is a short passage and because of its importance I quote it. Sir George Jessel said:

"In Milroy v. Lord (1862) 4 De G.F. & J. 264 Turner L.J. after referring to the two modes of making a voluntary settlement valid and effectual, adds these words: 'The cases, I think, go further, to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust.' It appears to me that that sentence contains the whole law on the subject."

There is no suggestion of a gift by transfer in the present case. The facts of the two cases do not, therefore, very much help the submission of Mr. Blythe but he was able to extract from them this principle: that there must be a clear declaration of trust and that means there must be clear evidence from what is said or done of an intention to create a trust -- or, as Mr. Blythe put it, "an intention to dispose of a property or a fund so that somebody else to the exclusion of the disponent acquires the beneficial interest in it." He submitted that there was no such evidence.

When one looks at the detailed evidence to see whether it goes as far as that -- and I think that the evidence does have to go as far as that -- one finds that from the time that the deceased received his damages right up to his death he was saying, on occasions, that the money was as much the plaintiff's as his. When they discussed the damages, how to invest them or what to do with them and when they discussed the bank account, he would say to her: "The money is as much yours as mine."

The learned judge, rightly treating the basic problem in the case as a question of fact, reached this conclusion. He said:

"I have read through my notes and I am quite satisfied that it was the intention of Mrs. Paul and Mr. Constance to create a trust in which both of them were interested."

In this court the issue becomes: was there sufficient evidence to justify the judge in reaching that conclusion of fact? In submitting that there was, Mr. Wilson draws attention first and foremost to the words used. When one bears in mind the unsophisticated character of the deceased and his relationship with the plaintiff during the last few years or his life, Mr. Wilson submits that the words that he did use on more than one occasion, "This money is as much yours as mine," convey clearly a present declaration that the existing fund was as much the plaintiff's as his own. The judge accepted that conclusion. I think that he was well justified in doing so and, indeed, I think that he was right to do so. There are, as Mr. Wilson reminded us, other features in the history of the relationship between the plaintiff and the deceased which support the interpretation of those words as an express declaration of trust. I have already described the interview with the bank manager when the account was opened. I have mentioned also the putting of the "bingo" winnings into the account and the one withdrawal for the benefit of both of them.

It might, however, be thought that this was a borderline case, since it is not easy to pin-point a specific moment of declaration, and one must exclude from one's mind any case built upon the existence of an implied or constructive trust, for this case was put forward at the trial and is now argued by the plaintiff as one of express declaration of trust. It was so pleaded and it is only as such that it may be considered in this court. The question, therefore, is whether, in all the circumstances, the use of those words on numerous occasions as between the deceased and the plaintiff constituted an express declaration of trust. The judge found that they did. For myself, I think that he was right so to find. I therefore would dismiss the appeal.

LORD JUSTICE BRIDGE: I agree. In delivering his judgment in Richards –v-. Delbridge (18 Equity Cases p. 11) Sir George Jessel, Master of the Rolls, discussing the requisities of a valid declaration of trust, said:

"It is true he need not use the words 'I declare myself a trustee,' but he must do something which is equivalent to it, and use expressions which have that meaning, for, however anxious the court may be to carry out a man's intentions, it is not at liberty to construe words otherwise than according to their proper meaning."

The plaintiff gave evidence, which the judge accepted, that on frequent occasions the deceased told her that the money in his deposit account at Lloyds Bank was as much her money as his. In the last analysis, accordingly, the whole question in this case, as it seems to me, is whether the judge was right, construing those words according to their proper meaning and in the context in which the words were spoken as disclosed by the evidence, to conclude that, by using those words, the deceased had done something which was equivalent to declaring himself a trustee of the moneys in the account for himself and the plaintiff in equal shares.

For the reasons given by Scarman L.J., I think that the judge was right in coming to that conclusion and I too would dismiss the appeal.

LORD JUSTICE CAIRNS: I agree.

(Appeal dismissed. Costs in Court of Appeal and below. Assessment under Legal Aid and Advice Act to be made in county court.)