Proving Declaration of Trust and Effecting Disposition of Beneficiary’s Interest Essay Example for Free

Proving Declaration of Trust and Effecting Disposition of Beneficiarys Interest EssayProving resolving power of consider and effecting disposition of beneficiarys interest Proving resolving of trust In order to prove promulgation of trust all types of evidence are admissible. Exceptions a) Trust of land where the firmness of purpose has to be manifested and proved by some composition (Section 7 of Statute of Fraud make for 1677 Section 53(1)(b) of Law of Property Act 1925). The reason for this rule is to prevent fraud (Youdan). The written evidence behind antedates or postdate the declaration of trust. ) Testamentary trust/trust executed after death by will (will be discussed in the chapter of secret trust). Consequence of oral declaration in case of trust of land a)An oral declaration is perfectly valid because the share 53(1)(b) is an evidential fraction. b) But problem arises during litigation when the declaration is challenged. c) It is often express that, though mistakenly, without written evidence a declaration of trust is valid but unenforceable. d) This is based on an analogy with the section 40(1) of LPA 1925 but this section was repealed in 1989. ) There are two reasons for this analogy to be false i) Section 53(1)(b) is concerned about proof and section 40(1) was concerned about enforceability as spare from the phraseologys of the sections. ii) Section 40(1) had been overruled back in 1989. f) Subject guide is of the view that if a declaration of trust cannot be proved by evidence and so there is no trust at all, not a valid but unenforceable one. Exceptions to section 53(1)(b) a) Common Law expulsion Oral evidence can be admissible in order to prevent a fraud.For example, a trustee himself would commit a fraud if he were allowed to shelter behind the statutory provision and deny the declaration of trust (Rochefoucauld). b) This exception is nevertheless relevant in case of express trust. c) Statutory exception The section 53(1) (b) is not applicable in case of resulting, implied or constructive trust (section 8 of Statute of Fraud Act section 53(2) of LPA 1925). d) It is because, in case of constructive, resulting or implied trust no allegation is made as to the fact that a declaration of trust has been made and thus we subscribe to prove it.So, when there is no declaration of trust, the need to prove it cannot exist. e) Matrimonial homes cases such as Pettitt, Gissing, Rossett, Stack are express trusts of land (Rochefoucauld) even though it is been mentioned in these cases that they are Common Intention Constructive Trust. This is a misnomer to say them CICT because a CT arises for any reason other than intention to create a trust so there cannot be common intention constructive trust. Effecting Disposition of Beneficiarys Interest )Disposition of an faithful interest or trust subsisting at the time of disposition must be in writing signed by the person disposing the same or by his agent (Section 53(1)( c) LPA 1925). b) So there is no disposition until it is written and signed, the reason is section 53(1)(c) is a substantive section as apparent from the wording of the section. c) One can argue that as the wording of the predecessors of section 53(1)(b) and 53(1)(c) are similar (i. e. section 7 and 9 of Statute of Fraud Act), therefore, there should not be this difference between these two sections. ) However, the courts postulate taken this approach and we need to follow it. e) There is a question that whether section 53(1)(c) is only applicable in relation to trust of land. As per section 205(x) of LPA 1925 equitable interest means interest in or over land or in the proceeds of sale thereof. As such 53(1)(C) is only confined to trust of land. f) However, as significant cases like Grey, Oughtred and Vandervell were not cases of land but section 53(1)(c) was use there, therefore, the best way to solve this dilemma is to say that those cases were decided per incuriam of section 205( x).What transactions are dispositions or assignments and caught by section 53(1)(c)? a) Disposition has wider meaning than assignment though disposition included assignment. b) The key to check disposition is to understand that it only covers disposition of equitable interest. If somehow, there is no equitable interest to slope of or if both the legal and equitable interests are disposed of then there cannot be a disposition under section 53(1)(c). ) A direction of a beneficiary to his trustee to hold the rights on trust for a third party is disposition can caught by section 53(1)(c) (Grey v IRC). d) A direction by the beneficiary to the trustee to transfer the right to a third party then there is no need to comply with section 53(1)(c) as the direction is to transfer both the legal and equitable interest rather than equitable interest only (Vandervell v IRC) e) A self declaration of trust by the beneficiary for the whole or part is disposition and caught by section 53(1)(c) (Gra inge v Wilberforce). )A declaration of trust by the trustee for a third party with the consent of the be beneficiary is a disposition and should be caught by section 53(1)(c) provided estoppel does not officiate. If estoppel occurs as occurred in re Vandervell (No 2) and thus prevents the trustee to dispose of the equitable interest in favour of person, then section 53(1)(c) cannot operate (re Vandervell (No 2). g) A contract by the beneficiary to assign their rights does not fall into section 53(1)(c) (Oughtred v IRC Neville v Wilson). ) A surrender of a ripe interest is caught by section 53(1)(c) (IRC v Buchanan). i) Disclaimer of beneficial interest is not covered by section 53(1)(c) (re Paradise Motor Ltd). The rationale of 53(1)(c) a) The purpose of this section is to prevent fraud by way of protecting the trustee from false allegation by someone to be an assignee of the beneficiarys interest. If the trustee disposes the interest to that false assignee then he will be vulne rable to a claim of breach of trust. ) Therefore, in Vandervell v IRC, as the rights were no longer held in trust, therefore, there was no trustee to protect and as such the section had no work to do and inapplicable. c) Now, as in Grey, the trustee received the direction from the beneficiary himself and knew that it was genuine and no allegation by false assignee can deceive him, therefore, the section 53(1)(c) cannot apply there. It is because the trustee need not be saved against any false allegation here. In the light of this, Grey can be revisited.