Chapter 3 Formalities - CHAPTER 3 FORMALITIES OF A TRUST Intro The law imposes formalities for different purposes Firstly they are designed for the

Chapter 3 Formalities - CHAPTER 3 FORMALITIES OF A TRUST...

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C HAPTER 3: F ORMALITIES OF A T RUST Intro: The law imposes formalities for different purposes. Firstly, they are designed for the prevention of fraud since writing provides documentary evidence which make frauds more difficult. Secondly, for evidential purposes, in case of a trust, writings are useful to help the parties what they intended and ensures that a trustee does not act in breach of trust. I.) Declarations of Trusts of Land: No formalities are required to create a trust of personal property. However, to create a trust of land the formal requirement is that they must be manifested in writing as provided by S.53(1)(b) LPA 1925 . This requirement applies only to express trusts, and not to resulting, implied or constructive trusts as provided by S.53(2) LPA 1925 e.g. in “Tinsley v. Milligan” . It should be noted, however, that S.53(1)(b) does not require the declaration to be made in writing but only that it must be “ manifested and proved by some writing ”. The declaration should be manifested by the settlor himself and not by his agent. The reason for doing this is an ancient one as provided by S.7 Statute of Frauds 1677 . At the time of enactment of this statute, 300 years ago, the law of evidence was in a fairly primitive state, and it was therefore easy for fraudulent claims to succeed in court. For example, the claimant may fraudulently claim that the landowner had declared a self- declaratory trust of his land for the claimant and because of the unreliability of oral evidence the court would order the landowner to convey his interest to the claimant. By this method, many landowners had their land stolen from them. With the enactment of this Act, fraudulent allegations of self-declaration of trust were now far less likely to succeed. What if a trust of land is declared orally? An oral declaration of trust of land is unenforceable, not void i.e. if written evidence subsequently comes in then the trust will be enforceable as from the date of declaration. However, " Equity will not allow a statute to be used as an instrument of fraud ". Since, the problem with S.53(1)(b) is that it excludes both false and genuine testimonies, therefore, courts will even admit parol evidences for the prevention of a fraud. The leading case is “Rochefoucauld v. Boustead” , where the claimant was the mortgagor of some estates. They were sold by the mortgagee to the defendant, who had orally agreed to hold the estates on trust for the mortgagor subject to the repayment to the defendant of the purchase price. The defendant sold
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Formalities of a Trust 2 the land at a profit, but did not account to the mortgagor. The Court of Appeal refused to allow the Statute of Frauds to prevent the proof of fraud and held that a statute designed to prevent fraud could not be used to perpetrate a fraud, and admitted oral evidence on the ground that the trustee ” himself would commit a fraud if allowed to hide behind the statute and deny the trust.
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