Trust of land – Account of rents – Land held by father and mother on trust for daughter – Land transferred to sole name of mother on death of father – Mother claiming to have been unaware of trust and to have signed trust declaration at husband’s direction without understanding its nature – Claimant daughter bringing proceedings against defendant mother for breach of trust – Whether defendant obliged to account for rents to claimant – Whether appropriate to grant relief under section 61 of Trustee Act 1925 – Claim allowed in part
In 1983, the claimant’s father purchased an area of land on an industrial estate in Darlington, which was transferred into the names of himself and his wife, the defendant, on trust for their daughter the claimant. He also acquired other land on the estate in his own name. Following the service of a compulsory purchase order by the local council, the claimant’s parents gave up most of their existing holdings on the estate in a negotiated land exchange, by which they received other land elsewhere on the estate in return for that compulsorily acquired. Part of the replacement land was transferred to them as trustees. Since the trust land was fragmented under those arrangements, it was later decided to replace it with a coherent block carved out of the family holdings on the estate. A further deed of exchange of 1992 effected the necessary transfer of the relevant land into the joint names of the claimant’s father and the defendant as trustees. A declaration of trust later in 1992 stated that the trust land was to be held on the trust for the claimant until she reached the age of 25, and then for the claimant absolutely. It purported to identify the subject matter of the trust by reference to “the property described in the Schedule”, although no schedule was ever subsequently found.
The claimant’s father died in 2000. After his estate was administered, the defendant was registered as sole proprietor of the land on the industrial estate and received the rents from tenants. The claimant turned 25 in 2004. She asked the defendant for the rents from the trust land but the defendant paid only £200 per month, which she said was all she could afford.
The claimant later brought proceedings against the defendant for breach of the trust under the 1992 declaration. The defendant claimed that she had been unaware of any such trust until 2009 and that the 1992 declaration was one of many documents that she had signed over the years at the direction of the claimant’s father, without any understanding of their nature or meaning. Issues arose as to whether: (i) any sufficiently certain trust of the land, binding on the defendant, had arisen; and (ii) the defendant was liable to account to the claimant for the rents from the land.
Held: The claim was allowed in part.
(1) Assuming that there had never been any schedule to the 1992 declaration of trust, the intended subject matter of the trusts that it declared were none the less clear from the recitals. The only property at the industrial estate held by the claimant’s father and the defendant as trustees, both as a result of their holdings prior to 1989 and by the 1989 and 1992 deeds of exchange, was that currently in dispute. In that regard, the schedule was mere surplusage and would have identified the disputed land. At least from the date of execution of the 1992 declaration of trust, and until the death of the father, he and the defendant held the disputed land on trust for the claimant.
(2) The claimant had not disentitled herself from a full account of rent by accepting the £200 per month offered by the defendant. Not was her claim statute-barred since the rents from the disputed land were proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to her use, within he meaning of section 21(1)(b) of the Limitation Act 1980. However, the defendant should be granted relief, under section 61 of the Trustee Act 1925, for the period before the death of the claimant’s father, and after it up to 2004. During the fatherÕs lifetime, the whole of the management and administration of the estate land had lain in his hands to the exclusion of the defendant. On the evidence, the defendant had known that the claimant was to be entitled to part of the rents from the estate land on and from her 25th birthday. She knew that the claimant’s entitlement arose under some kind of trust, the terms of which were to be found in the 1992 declaration of trust of which she had a copy, but she was not aware of the precise terms of the trust or the extent of the trust land. She had been lulled into a false sense of security by her husband’s executors and allowed to think that she had inherited the disputed land from him as part of his residuary estate. In those circumstances, and given her lack of business experience, it was not unreasonable for her to do nothing by way of accounting for rents, or by way of enquiring more precisely as to the nature of her daughter’s forthcoming entitlement, prior to her daughter reaching 25.
However, the defendant was liable to account to the claimant for rents received from tenants of the disputed land from 2004, when the claimant reached 25 years of age. After the father’s death, and once the defendant had acknowledged the claimant’s entitlement and knew that it arose under a trust, it was incumbent on the defendant to ascertain the precise basis of that entitlement, if necessary by enquiring with the family’s solicitor. For that purpose, it was her duty to show the solicitor her copy of the 1992 declaration. It was not the act of a reasonable trustee simply to give to the claimant that part of the rent that she thought she could afford.
(3) Accordingly, the claimant was entitled to a declaration that the disputed land was held on trust by the defendant for her absolutely and to an order for it to be transferred to her. She was also entitled to an account in respect of rents received and receivable by the defendant in respect of the disputed land from April 2004.
Simon Goldberg (instructed by Punch Robson Solicitors, Middlesbrough) appeared for the claimant; Jonathan Rodger (instructed by Latimer Hinks Solicitors, of Darlington) appeared for the defendant.
Sally Dobson, barrister
