Rochefoucauld v Boustead
[1897] 1 Ch 196
Independent editorial summary — not the official judgment. Read the full judgment via the source link.
Ratio Decidendi
The Statute of Frauds cannot be used as an instrument of fraud. Where a person acquires land on an oral understanding to hold it on trust for another, equity will enforce the trust despite the lack of written evidence.
Facts
The Comtesse de la Rochefoucauld owned coffee estates in Ceylon which were mortgaged. To help her, Boustead bought the estates from the mortgagee in his own name, on an oral agreement that he would hold them on trust for her subject to repayment of what he had advanced. There was no written declaration of trust as the Statute of Frauds required for land. Boustead later dealt with the estates as if they were his own and, when sued, denied the trust and claimed to own them absolutely.
Judgment Summary
The Court of Appeal held that Boustead held the estates on trust for the Comtesse, notwithstanding the absence of the writing that the Statute of Frauds required for a declaration of trust of land. Lindley LJ held that the statute, enacted to prevent fraud, cannot itself be used as an instrument of fraud: where land is conveyed to a person on the faith of an oral agreement that they will hold it on trust for another, it is a fraud for that person then to deny the trust and keep the land for themselves, and equity will enforce the trust despite the lack of written evidence. The court admitted oral evidence to prove the true agreement. The case is a leading authority for the maxim that equity will not allow a statute to be used as an engine of fraud, and for the enforcement of the trust that arises in such circumstances.
Key Quotes
"It is a fraud on the part of a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land as his own."
— Lindley LJ
Subsequent Treatment
Established that statute of frauds cannot be used as an engine of fraud.
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