• A trust does not have to be declared by a trust deed alone: it can be created through correspondence which gives rise to an intention of a party. In this case, a revocation letter to a solicitor expressly linked a property with the trust was capable of being writing under s53 (1) (b) Law of Property Act 1925 (LPA 1925), such as to result in there being a trust.

Facts of the case:

  • Madam Lim had three children, and sought to create a trust for a property she owned for her children. She did so through expressing her intention in a letter to her solicitors and through a signed trust deed which did not state that the house was to be included within the trust
  • Shortly thereafter, Madam Lim wished to revoke the trust, and she wrote a letter to the solicitors explaining this. In this letter, she expressly linked the trust deed to the property.
  • The house was sold, and the claimants then sought to claim the money from the sale of the property.

Issue of the case:

  • The issue in this case was whether there was a valid trust: the trust deed in question did not specify the house.

Court of Appeal held:

  • There was a valid trust created with respect to the claimants, because under s53 (1) (b) LPA 1925, there was ‘some writing’ which specified the house was to be included in the trust. This writing being the revocation letter Madam Lim sent to her solicitor.

Sir Colin Rimer:

  • “Madam Lim could not have believed that the creation of a trust of the house on the terms of the settlement she executed would expose her to an immediate CTT liability. She was advised the opposite and there is no reason to assume other than that she accepted the advice as correct. There is, therefore, nothing in Mr Ham’s tax submission pointing away from a determination by Madam Lim to subject the house to a trust. The correspondence shows that that was and remained the aim of the transaction upon which Mr Hyde was advising her.” [48]
  • “I therefore conclude that the reasonable person would be satisfied that Madam Lim’s execution of the settlement in April 1986, read in light of the correspondence that had passed between her and Mr Hyde, evinced an intention by her to subject the house to the trusts of the settlement; and that she thereupon made a valid declaration of trust in respect of the house. The judge was correct so to hold.” [59]
  • “Given the requirements of section 53(1)(b) of the 1925 Act, it remained for the claimants to show that such declaration was ‘manifested and proved by some writing signed by some person who is able to declare such trust or by his will.’ The only candidates for such writing were Madam Lim’s letters of 14 April 1986 and/or 16 May 1988.” [60]
  • “I consider that Madam Lim’s later letter of 16 May 1988 anyway provided sufficient proof and manifestation for section 53(1)(b) purposes of the trust she had created. The judge (paragraph 76) also placed independent reliance on this letter. I agree with what he there said. The trust deed dated 14 December 1985 can be identified by extrinsic evidence. On its face, it created no trusts of anything. If Madam Lim had regarded that as all it did, a letter from Singapore to RG seeking to cancel it would not have been worth the candle. Her letter, however, expressly linked the house with the trust. What can she have thereby intended to acknowledge other than that the house was an asset of the trust?”