Facts
Dennis Constance separated from his wife and lived with Doreen Paul. He received £950 in damages for an injury at work. He and Mrs Paul went to the bank to open an account with it. Because they weren't married, the account was opened in his sole name.
Mr Constance told Mrs Paul on several occasions that "the money is as much yours as mine". They paid their joint bingo winnings into the account, and they made one withdrawal, which they divided between them. Mrs Paul had authority to draw on the account if she had his written permission.
Mr Constance died without a will. His estranged wife, as administratrix of his estate, claimed the money in the account. Mrs Paul argued that half of it was hers.
Issue
Had Mr Constance declared an express trust of the money in the account for himself and Mrs Paul, even though he never used the word "trust"?
Decision
The Court of Appeal held that there was an express trust of the account for Mr Constance and Mrs Paul in equal shares. Mrs Paul was entitled to half the balance. Scarman LJ gave the leading judgment.
Reasoning
No technical words needed. Scarman LJ said the court had to decide whether, in substance, there was a clear declaration of trust, meaning an intention to dispose of the property in a way that deprived the owner of all the beneficial interest in part of it. That can be shown by words and conduct, without any legal language.
Present intention. Mr Constance's words, "the money is as much yours as mine", repeated over time, showed a present intention that Mrs Paul should share in the money, not a promise of a future gift.
Conduct. The way they paid joint winnings into the account and shared the withdrawal supported that conclusion.
Scarman LJ acknowledged that it was a borderline case, but held that the judge was entitled to find an express declaration of trust on the evidence.
Why it matters
Paul v Constance is the leading modern case on certainty of intention in informal settings. It shows that the court looks at the reality of what people say and do, particularly where they aren't legally sophisticated.
It contrasts with:
- Jones v Lock (1865) LR 1 Ch App 25, where a father put a cheque in his baby's hand and said "I give this to baby". There was no gift, because the cheque wasn't endorsed, and no declaration of trust, because he hadn't intended to make himself a trustee.
- Re Kayford Ltd [1975] 1 WLR 279, where a company that put customers' prepayments into a separate account, to protect them, had created a trust.
- T Choithram International SA v Pagarani [2001] 1 WLR 1, where the Privy Council gave effect to words of gift to a foundation of which the donor was one of the trustees.
How it comes up in exams
In trust creation problems:
- Decide whether the owner tried to make an outright gift, a transfer to trustees, or a self-declaration of trust.
- For a self-declaration, look for words and conduct showing a present intention that someone else should have a beneficial interest (Paul v Constance).
- Check the formalities: writing is only required for declarations of trust over land (s 53(1)(b) of the Law of Property Act 1925).
- Work out the beneficial shares. Without other evidence, equal shares are likely.
Frequently asked questions
What was decided in Paul v Constance?
The Court of Appeal held that Mr Constance had declared himself trustee of the money in his bank account for himself and Mrs Paul in equal shares, through his words and conduct. She was entitled to half of the balance after his death.
Do you need to use the word "trust" to create a trust?
No. The court looks for an intention to create a trust, from the words and conduct as a whole. Unsophisticated people may not use legal language, but can still show the necessary intention.
What is the difference between a declaration of trust and an imperfect gift?
A declaration of trust means the owner keeps the legal title but holds it for someone else. An imperfect gift is a failed attempt to transfer property outright, and equity won't usually turn it into a declaration of trust (Milroy v Lord).
Does a declaration of trust over money need to be in writing?
No. Section 53(1)(b) of the Law of Property Act 1925 requires writing only for declarations of trust over land. A trust of money or other personal property can be declared orally or by conduct.