The case of Paul v Constance [1977] 1 WLR 527 is a landmark decision in English trust law, particularly on the principle of certainty of intention, one of the essential elements required to establish the existence of a valid trust.
The case was decided by the Court of Appeal and has become an important authority for recognising that a trust can arise from informal conduct and language, provided there is a clear indication of intention by the settlor.
This case demonstrates how the courts assess the words and actions of laypeople, often unfamiliar with legal terminology, in determining whether there has been a valid declaration of trust. The ruling in Paul v Constance continues to influence how modern courts approach questions of intention in trust disputes involving cohabiting, unmarried partners.
Background and Facts of Paul v Constance
In Paul v Constance, the dispute arose following the death of Mr Constance, who had been legally married but separated from his wife since 1965. Subsequently, he formed a long-term relationship with Ms Paul, the claimant. In 1967, Mr Constance moved in with Ms Paul and lived with her as though they were a couple. However, he never formally divorced his wife, the defendant in the case.
In 1973, Mr Constance received a sum of £950 as compensation from his employer due to a personal injury claim. After consulting with a bank manager, Mr Constance decided to deposit this money into a new bank account.
Because he and Ms Paul were not married, the bank recommended that the account be opened in his name only. Nonetheless, the bank informed them that Ms Paul could withdraw funds with a signed note from Mr Constance.
The relationship between Mr Constance and Ms Paul was one of shared domestic life. They discussed the money openly and treated it as belonging to both of them. On multiple occasions, Mr Constance told Ms Paul that “the money is as much yours as mine.
” Furthermore, the couple added three more deposits into the same account, all of which came from their joint bingo winnings. These winnings were considered a product of their shared activities and intentions.
There was one notable withdrawal from the account—a sum of £150, which the couple used jointly to purchase Christmas presents and food. This action was consistent with their treatment of the money as shared property.
In 1974, Mr Constance died intestate, i.e., without having made a will. His wife, as the legal administratrix of his estate, closed the account and claimed that the entire amount belonged to the estate of the deceased. In contrast, Ms Paul argued that the money was held on trust for both herself and Mr Constance and that she was therefore entitled to a beneficial share.
Legal Issue
The central issue in Paul v Constance was whether Mr Constance had created an express trust in favour of both himself and Ms Paul over the funds in the bank account. Specifically, the court had to determine whether his repeated statements and conduct amounted to a clear declaration of intention to create such a trust.
To establish a valid trust, three certainties are required:
- Certainty of intention
- Certainty of subject matter
- Certainty of objects
This case focused on the first of these — whether Mr Constance had the requisite intention to create a trust over the money in the bank account.
Paul v Constance Judgement
The Court of Appeal, comprising Scarman LJ, Bridge LJ, and Cairns LJ, held that there had indeed been an express declaration of trust. As a result, the claimant, Ms Paul, was entitled to the money in the account.
Scarman LJ’s Reasoning
Delivering the leading judgement, Lord Justice Scarman emphasised the importance of understanding the conduct and language of the parties in their own context. He noted that the court was dealing with people who were “unaware of the subtleties of equity, but understanding very well indeed their own domestic situation.”
Scarman LJ stated that when the words “the money is as much yours as mine” were considered alongside the facts — including the bank meeting, the bingo deposits, and the shared withdrawal — they clearly amounted to a present declaration of trust.
He held:
“When one bears in mind the unsophisticated character of the deceased and his relationship with the plaintiff during the last few years of his life, the words that he did use on more than one occasion, ‘This money is as much yours as mine,’ convey clearly a present declaration that the existing fund was as much the plaintiff’s as his own.”
Scarman LJ affirmed the trial judge’s view that these words indicated an intention to create a trust. The shared use and treatment of the funds over time supported this conclusion.
Bridge LJ’s Concurrence
Bridge LJ agreed with Scarman LJ and referred to the earlier case of Richards v Delbridge, where Sir George Jessel MR observed:
“It is true he need not use the words ‘I declare myself a trustee,’ but he must do something which is equivalent to it, and use expressions which have that meaning…”
Bridge LJ applied this principle to conclude that Mr Constance’s words and actions were sufficient to establish a trust in favour of Ms Paul.
Cairns LJ’s Concurrence
Cairns LJ also concurred with the reasoning and outcome of the other judges, reinforcing the decision that there had been an express declaration of trust.
Conclusion
In summary, Paul v Constance [1977] 1 WLR 527 established that words and actions of ordinary individuals, if indicating a clear intent to share beneficial ownership, may be sufficient to create an express trust. The Court of Appeal found that Mr Constance’s repeated assertion that the money was “as much yours as mine,” combined with the couple’s joint dealings with the funds, amounted to such a declaration.
The judgement highlights that equity pays attention to substance over form. Even without formal trust instruments, a trust may exist if the intention is clear. Paul v Constance remains a pivotal case in the development of English trust law, especially concerning how the courts interpret informal relationships and shared property ownership.
Through this case, the English courts reaffirmed their commitment to ensuring that the true intentions of individuals, particularly those without legal training, are honoured in matters involving property and trusts. The ruling in Paul v Constance stands as a strong statement that equity will not be hindered by the absence of technical language where the facts speak clearly.