Paul v Constance [1977] 1 WLR 527

Key point

  • There is no need for explicit words or even knowledge of the trust being created for there to be common intention to create a trust

Facts

  • T separated from his wife (D) and went to live with another woman, C
  • T deposited money including both his and C’s bingo winnings in an account in his name, from which C would also withdraw money
  • T told C that ‘the money is as much yours as mine’
  • When T died, D claimed that the money in the account passed to her by intestacy

Held (Court of Appeal)

  • T had created a trust over the account in favour of C

Scarman LJ

  • There must be 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
  • A trust may be created without using the word ‘trust’, for what the court regards is the substance and effect of the words used
  • Though T never used explicit words to create a trust, it should be remembered that they are simple people unaware of the subtleties of equity but are well aware of their own domestic situation
  • On the evidence, T viewed the money as much C’s as his, based on what he told C
  • Furthermore, the one withdrawal from the account was shared by both C and T

Commentary

  • T and C were unsophisticated people, hence the more lenient approach to finding an implied trust in this case