Paul v Constance [1977] 1 WLR 527 (CA)

Facts

• Mr. Constance, separated from his wife, lived with Ms. Paul in a cohabiting relationship.
• Mr. Constance and Ms. Paul jointly deposited funds, including wages and bingo winnings, into a bank account held in Mr. Constance’s sole name.
• Ms. Paul, with Mr. Constance’s consent, was able to withdraw money from this account.
• Mr. Constance frequently told Ms. Paul, “the money is as much yours as mine.”
• After Mr. Constance’s death, his estranged wife claimed the funds as part of his estate under intestacy rules.
• Ms. Paul claimed the funds were held on trust for her due to their shared arrangement and understanding with Mr. Constance.

Issues

1. Whether Mr. Constance intended to create a trust over the funds in the bank account for Ms. Paul’s benefit.
2. Whether the absence of formal trust language or technical knowledge precluded the establishment of an express trust.
3. Whether the court could infer a trust based on the conduct and statements of the parties rather than written or formal declarations.

Decision

• The Court of Appeal found in favour of Ms. Paul, holding that Mr. Constance had created a trust over the funds in the bank account for her benefit.
• The statement “the money is as much yours as mine” was considered a clear indication of trust intention.
• Evidence such as Ms. Paul’s ability to withdraw money and the shared use of the funds supported the existence of a trust arrangement.
• The court noted that formal understanding of trust law was not necessary for valid trust creation where intention was otherwise clear from words and conduct.

Legal Principles

• Certainty of intention to create a trust can be achieved through conduct and informal statements; formal language or legal technicality is not required.
• The absence of technical knowledge of trust law does not prevent the formation of an express trust, provided evidence shows a shared intent to benefit another.
• Courts will assess the substance and practical effect of the parties’ words and actions when determining if a trust exists.
• A clear declaration of trust is based on the parties’ objective conduct rather than the use of specific legal terms.

Conclusion

The Court of Appeal affirmed that an express trust may be created without formal language so long as the parties’ actions and words demonstrate a clear intention to benefit another. Paul v Constance remains a leading authority on establishing certainty of intention in trust law, emphasising the primacy of substance over form.