Paul v Constance
[1977] 1 WLR 527
Independent editorial summary โ not the official judgment. Read the full judgment via the source link.
Ratio Decidendi
An express declaration of trust over personalty (such as a bank account) requires no particular formalities and need not use technical language. It is sufficient that, looking at all the circumstances and the words used, a court can conclude that the owner manifested a clear present intention to hold the property on trust for the beneficiary. Informal words โ even colloquial phrases repeated over time โ may constitute a valid declaration of trust, provided they unambiguously reveal an intention to share the beneficial interest in identified property. A trust over personalty (as opposed to land) does not require written formalities under s.53(1)(b) LPA 1925.
Facts
Mr Constance received a personal injury award and placed it in a bank account in his sole name. He repeatedly told his partner, Mrs Paul, 'the money is as much yours as mine.' After his death, Mrs Paul claimed a share of the account.
Judgment Summary
The Court of Appeal (Scarman LJ, Cairns LJ, and Buckley LJ) dismissed the appeal and upheld Mrs Paul's claim to a half share of the balance. Mr Constance and Mrs Paul had lived together after the breakdown of his marriage. He was awarded damages for a personal injury and placed them in a bank account in his sole name because he was embarrassed to open a joint account given his existing marriage. On several occasions in the hearing of witnesses, he told Mrs Paul 'this money is as much yours as mine.' They also paid bingo winnings into the account and treated it as jointly theirs for various purposes. When Constance died, his estranged wife claimed the entire account as part of his estate. Mrs Paul claimed a beneficial half share. Scarman LJ held that, while the words used were imprecise and untechnical, they were sufficiently clear โ taken together with the conduct of the parties and the course of dealings with the account โ to amount to a declaration of trust. Constance had declared himself trustee of the account for both of them in equal shares. The court was satisfied that there was certainty of intention (despite informal language), certainty of subject matter (the account), and certainty of objects (Mrs Paul). The estate received only one half.
Key Quotes
"The court should look at the circumstances of the particular case and ask whether, in those circumstances, the words and conduct of the party alleged to have declared a trust amounted to such a declaration."
โ Scarman LJ at 531
"The fact that there was no technical language and no formal document does not prevent the words used from constituting a valid declaration of trust over the money in the account."
โ Scarman LJ at 532
"Looking at the evidence as a whole, the repeated statement that 'the money is as much yours as mine' โ coupled with the treatment of the account as a joint account in substance โ is sufficient to constitute a declaration of trust."
โ Scarman LJ at 532
Subsequent Treatment
Followed as leading authority on informal declarations of trust over personalty. Applied in Rowe v Prance [1999] 2 FLR 787, where the owner of a boat made statements to his partner that it was 'our boat' โ held to constitute a declaration of trust.
Applied in Goodman v Gallant [1986] Fam 106 in the context of distinguishing between implied and constructive trusts and express declarations; Paul v Constance illustrates the low formality threshold for an express declaration.
Considered in Re Kayford Ltd [1975] 1 WLR 279 and subsequent commercial trust cases, where the courts applied Paul v Constance's principle that words and conduct suffice for a declaration of trust without formal documentation.
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