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CHAPTER3: FORMALITIESOFATRUSTIntro:The law imposes formalities for different purposes. Firstly, they aredesigned for the prevention of fraud since writing provides documentaryevidence which make frauds more difficult.Secondly, for evidential purposes, in case of a trust, writings areuseful to help the parties what they intended and ensures that a trusteedoes not act in breach of trust.I.) Declarations of Trusts of Land:No formalities are required to create a trust of personalproperty.However, to create a trust of landthe formal requirement is that theymust be manifested in writing as provided by S.53(1)(b) LPA 1925. Thisrequirement applies only to express trusts, and not to resulting, implied orconstructive trusts as provided by S.53(2) LPA 1925e.g. in “Tinsley v.Milligan”. It should be noted, however, that S.53(1)(b) does not requirethe declaration to be made in writing but only that it must be “manifestedand proved by some writing”. The declaration should be manifested bythe settlor himself and not by his agent.The reason for doing this is an ancient one as provided by S.7Statute of Frauds 1677. At the time of enactment of this statute, 300years ago, the law of evidence was in a fairly primitive state, and it wastherefore easy for fraudulent claims to succeed in court. For example, theclaimant may fraudulently claim that the landowner had declared a self-declaratory trust of his land for the claimant and because of theunreliability of oral evidence the court would order the landowner toconvey his interest to the claimant. By this method, many landowners hadtheir land stolen from them. With the enactment of this Act, fraudulentallegations of self-declaration of trust were now far less likely to succeed.What if a trust of land is declared orally?An oral declaration oftrust of land is unenforceable, not void i.e. if written evidencesubsequently comes in then the trust will be enforceable as from the dateof declaration.However, "Equity will not allow a statute to be used as aninstrument of fraud". Since, the problem with S.53(1)(b) is that it excludesboth false and genuine testimonies, therefore, courts will even admit parolevidences for the prevention of a fraud. The leading case is“Rochefoucauld v. Boustead”, where the claimant was the mortgagorof some estates. They were sold by the mortgagee to the defendant, whohad orally agreed to hold the estates on trust for the mortgagor subject tothe repayment to the defendant of the purchase price. The defendant sold
Formalities of a Trust2the land at a profit, but did not account to the mortgagor. The Court ofAppeal refused to allow the Statute of Frauds to prevent the proof of fraudand held that a statute designed to prevent fraud could not be used toperpetrate a fraud, and admitted oral evidence on the ground that the“trustee” himself would commit a fraud if allowed to hide behind thestatute and deny the trust.