Facts
- Dennis Constance and Doreen Paul cohabited for several years.
- Mr. Constance received £950 compensation from his employer and deposited the sum into a bank account solely in his name after consulting his bank manager.
- Mr. Constance regularly referred to the money in the account as “ours” when speaking to Ms. Paul.
- Additional joint bingo winnings were deposited into the same account, and the account was used for shared expenses.
- On Mr. Constance’s death, Ms. Paul asserted rights over the account, claiming a trust existed for her benefit.
- The administrator of Mr. Constance’s estate, his widow, contested Ms. Paul’s claim.
Issues
- Whether a trust over the bank account had been created in favour of Ms. Paul.
- Whether clear intention to create a trust can be inferred from words and conduct rather than formal declaration.
- Whether informal arrangements between parties can establish a trust.
Decision
- The Court of Appeal held that a trust had been created in favour of Ms. Paul, despite the absence of formal documentation.
- The Court considered Mr. Constance’s frequent references to the money as “ours” and the couple’s use of the account for joint purposes as evidence of intention.
- The Court ruled that language and behaviour can supply sufficient evidence of intention to create a trust.
Legal Principles
- A trust may be established by clear words and conduct, not solely by formal or explicit declarations.
- The intention to create a trust can be objectively assessed from the parties’ actions and communications.
- Informal or non-technical language is sufficient for trust creation when supported by clear conduct indicating intent.
- Equity prioritises the actual intention of the settlor over formalities in determining trust existence.
Conclusion
Paul v Constance established that trusts can arise through informal language and conduct if these demonstrate an intention to hold property for another, thereby influencing how courts approach evidence of trust creation in domestic and informal contexts.
