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A statutory exception to the formality requirement o Section 7 of the Statute of Frauds was qualified by s.8, which read as follows: Provided always, that where any conveyance shall be made of any lands or tenements by which a trust or confidence shall or may arise or result by the implication or construction of law, or be transferred or extinguished by an act or operation of law, then and in every such case such trust or confidence shall be of the like force and effect as the same would have been if this statute had not been made; any thing herein before contained to the contrary notwithstanding. o Section 8 was re-enacted as the much shorter s.53(2) of the Law of Property Act 1925: This section does not affect the creation or operation of resulting, implied or constructive trusts.
Sources: Hayton & Mitchell: Commentary and Cases on the Law of Trusts and Equitable Remedies, 13th edition; The law of trusts, J E PENNER, 8th edition; UOL Subject Guide 2014; UOL study pack. Page 2
The scope of the doctrine:1.A declares himself a trustee of Blackacre for B. The doctrine does not apply in this situation since it is restricted to situations where a person acquires property subject to a trust. 2.A conveys Blackacre to B to hold on trust for C. This is the clearest case where the Rochefoucauld doctrine does apply. Re Duke of Marlborough: The Duchess assigned a lease to Duke. It was expressed to be in consideration of love and affection and made no mention of any trust. After the Dukes death, the Duchess claimed that the assignment had only been made to enable the Duke to raise money by a mortgage of the lease (which he had done) and that it was part of the arrangement that he would re-assign the property to her. It was held that the Dukes obligations to re-assign could be enforced by the Duchess despite non-compliance with s7 of the Statute of Frauds. In the case like this, the Dukes estate would have been unjustly enriched by the acquisition of the lease if the obligation to re-assign had gone unenforced because of non-compliance of the statute. On the other hand, if the Duchesss allegation to re-assign was mistaken or false, the Duke (and his estate) would simply have failed to retain the gift. 3.A sells and conveys Blackacre to B on the terms that A is to retain a life interest in the property. Bannister v Bannister (1948) In this case, where a women sold 2 cottages to her brother-in-law on his oral undertaking that he would allow her to live in one of them rent free for the rest
Sources: Hayton & Mitchell: Commentary and Cases on the Law of Trusts and Equitable Remedies, 13th edition; The law of trusts, J E PENNER, 8th edition; UOL Subject Guide 2014; UOL study pack. Page 3
of her life. Subsequently, he repudiated this undertaking and sought to obtain possession of the cottage. The Court of Appeal held that the Rouchefoucauld doctrine applied, with the result that the man held the property on a constructive trust to give effect to his sister-in-laws interest in the property. The trial judge had found that the woman would not have sold the property without the mans undertaking and that the property was sold at substantially less than the market value of the property with vacant possession. This case made it clear that Rochefoucauld doctrine does not depend on the trustee having a fraudulent intention at the time of the conveyance, but it seems that the doctrine does depend on his having knowledge of the trust when he acquires the property. 4.B purchases Blackacre from D for 100,000. There is clearly some arrangement about this A and B. A says that B agreed to buy Blackacre on his behalf and that he promised to hold it on trust for him subject to a charge in Bs favour to secure repayment of the purchase price and expenses. B says that he never bound himself to do anything with Blackacre for A, although he did agree to consider re-selling it to A if A could find the money. B says, in the alternative, that he promised to re-sell the property to A for the original purchase price and expenses. It is now 2 years later and Blackacre is worth about 200,000. The most difficulty to apply Rouchefoucauld doctrine to this most problematic situation because they are extremely unlikely to have an idea of the distinction between the trust and contract agreement. There will often be great difficulty both in ascertaining the facts (and, of course, one or both parties may also be lying) and in appropriately conceptualizing the facts found. In situation (3), and (4), it might appear that injustice is no more likely to be caused by insistence on the requirements of s7 of the Statute of Fraud than by application of the Rochefoucauld doctrine. Moreover, s7 are particularly important in the context of situation (4) since a signed writing would out the court in a far better position to determine whether any binding arrangement was made, whether it was a trust or some other arrangement, and what it were its terms. Youdan said I do not, however, advocate the abandonment of the Rochefoucauld doctrine in these situations.
The type of trust enforced in Rochefoucauld:o What type of trust is enforced in a case such as Rochefoucauld v Boustead? Logically, it must be an express trust, for the event which triggers the finding that a trust exists is the now proved by evidence of declaration of trust. Indeed, this is exactly what the Court of Appeal (as part of the ratio of the case) there held. Other cases, however, have called it constructive (Bannister v Bannister [1948] 2 All ER 133; Paragon Finance v Thakarer [1998] EWCA Civ 1249; [1999] 1 All ER 400). This is wrong.
Sources: Hayton & Mitchell: Commentary and Cases on the Law of Trusts and Equitable Remedies, 13th edition; The law of trusts, J E PENNER, 8th edition; UOL Subject Guide 2014; UOL study pack. Page 4
A constructive trust, arises for a reason other than a declaration of trust on the part of a right-holder. The Rochefoucauld trust, by contrast, arose because of proof by evidence of a declaration of trust. Nor is it possible to say of such a case that the express trust failed and a resulting trust arose as a consequence. Though that might be correct were s.53(1)(b) a rule concerning enforceability (on the argument that though the oral evidence is inadmissible to enforce the trust, which therefore failed, it is admissible to prove the fact of such failure, thus giving rise to an automatic resulting trust), the subsection is, as we have seen, unlike the now repealed s.40 LPA 1925, only an evidential provision.
Sources: Hayton & Mitchell: Commentary and Cases on the Law of Trusts and Equitable Remedies, 13th edition; The law of trusts, J E PENNER, 8th edition; UOL Subject Guide 2014; UOL study pack. Page 5