[2025] EWCA Civ 1211

For the above reasons, I conclude as follows:

I am very grateful to Zacaroli LJ for his clear exposition and analysis of the issues. I agree with the conclusions he has reached on Ground 1 and Ground 2, but for the reasons I have set out below I am unable to agree with him on Ground 3, with the result that I would dismiss the appeal. On that approach it would be unnecessary to deal with the Respondent’s Notice. However, given the disagreement between us I should confirm that I agree with Zacaroli LJ’s rejection of Respondent’s Notice Points 2(a) and (b) for the reasons he gives. Respondent’s Notice Point 1 is addressed below.

I agree with Zacaroli LJ’s reasoning on Grounds 1 and 2, and only wish to draw out a few points by way of emphasis. All but the last of these points relate only to Ground 1.

First, both the Statute of Frauds and s.40 LPA 1925 (as enacted) indicate that Parliament made specific provision for signature by an agent where that was intended to be permitted. Section 40 (materially set out at §‎76 above and, like s.53, derived from the Statute of Frauds) is of particular relevance in demonstrating that the argument that the references to an agent authorised in writing in s.53(1)(a) and (c) are intended as limitations on the common law position that agents may sign on behalf of their principals cannot be correct. Section 40 permitted signature by a person “lawfully authorised”, with no requirement for that authorisation to be in writing. Further, the fact that s.53(1)(c), unlike its predecessor, includes an express reference to an agent, whereas no such reference was included in s.53(1)(b), is indicative of a deliberate choice by the legislature to permit signature by an agent (if authorised in writing) in the case of s.53(1)(c) but not to permit signature by an agent in the case of s.53(1)(b).

Secondly, the language in s.53(1)(b) which refers to a person “able” to declare a trust (“enabled” under s.7 of the Statute of Frauds) is not an obvious choice of language to denote authorisation of an agent. In contrast, both s.53(1)(a) and (c) use the more conventional term “authorised”, as did ss.3, 4 and 16 of the Statute of Frauds. Rather, the reference to “able” naturally applies to the ability (or capacity) of a person to declare a trust: see Tierney v Wood (§‎63 above).

Thirdly, as Zacaroli LJ explains, the most reasoned support for the appellants’ position on Ground 1 is found in the chapter provided by Charles Harpum in Elizabeth Cooke (ed): Modern Studies in Property Law, Vol 1, “Property in an Electronic Age” at p.12 (§‎43 above). I do not find that reasoning compelling. While s.53(1)(b) is an evidential requirement and in that respect is different from s.53(1)(a) and (c), I do not see why it is less important than those provisions for that reason. And the argument that the references to agents in those provisions is explained by the need for authorisation to be in writing is not consistent with s.40 LPA: see above.

Fourthly, I do not consider it to be particularly surprising that agents may be authorised to execute documents within s.53(1)(a) and (c) but not within s.53(1)(b). Section 53(1)(a) and (c) deal with conveyancing transactions that (certainly in the case of s.53(1)(a)) will generally be effected by formal legal documents. There is sense in including a provision that enables an agent to sign such a document on behalf of a principal who may not be available when the formal legal document has been prepared and is ready for execution. In contrast, declaring a trust does not involve formality and requires evidence of an intention to create a trust. It is not surprising that the law should insist on written evidence of that intention from the settlor or the trustee. Another policy choice would have been for s.53(1)(b) to have allowed signature by agents authorised in writing, as in s.53(1)(a) and (c), but as Zacaroli LJ points out at §‎84 an appropriate authorisation might well satisfy s.53(1)(b) itself, because it is not onerous. So there would be little practical utility in extending s.53(1)(b) in that way.

Fifthly, I agree with Zacaroli LJ’s response to Mr Thanki’s submissions that to exclude agents from s.53(1)(b) would be incoherent. Mr Thanki relied on the fact that it was common ground that an appropriately authorised agent could declare a trust, and submitted that an agent could also contract to do so within s.40 LPA. Declaration of a trust by an agent would certainly be unusual (as CGC submitted), as would a contract to declare a trust. I do not consider that the existence of these, in normal circumstances unlikely, possibilities outweighs the greater incoherence of landowners being bound by evidence of a trust from an agent who is not authorised in writing (with the attendant risk of fraud), whereas they would not be so bound by actions of such an agent under s.53(1)(a) or (c).

Finally, I would add an observation in relation to UBAF and the appellants’ argument that s.53(1)(b) must be construed as permitting a company to sign by an agent, since it cannot sign personally (relevant to both Ground 1 and Ground 2). As Zacaroli LJ has explained, UBAF predated the important changes made by the Companies Act 1989. Unsurprisingly in the context of the facts of that case, UBAF also did not explore the possibility of execution of a document in a formal manner using a company’s common seal. In the (relatively unusual) situation where a company intended to declare a trust, the obvious way to do so would have been by deed, which prior to 1989 could readily be executed through use of the company’s common seal. Thus it would have been perfectly possible for a trust to be declared by a company and evidenced in compliance with s.53(1)(b) without that provision being required to be interpreted as permitting signature by an agent. As explained in Hilmi, the 1989 Act dispensed with the need for a common seal and for the first time made specific provision for the execution of documents that were neither deeds nor contracts, allowing the alternative of use of a common seal or signature in accordance with s.36A(4) (see §‎96 above).

UBAF decided that signature by a duly authorised agent could fall within s.6 of the Statute of Frauds Amendment Act 1828. I do not consider that it binds us in respect of different legislation concerning trusts over land, legislation which must be applied in the light of the prevailing company law.

Ground 3 was expressed as follows:

“The Judge erred in law in finding that CGC is entitled to rely upon s. 53(1)(b) LPA 1925 to prevent NIOC and the Fund from relying upon the fact that, on the Judge’s findings, NIOC had validly declared or there otherwise arose a trust of NIOC House in favour of the Fund; the Fund is not attempting to enforce the trust against NIOC.”

This rather obscures the key issue which, as Zacaroli LJ points out, is whether the judge was correct to find that the Transfer amounted to a transaction at an undervalue for the purposes of s.423. There is no appeal against the judge’s conclusion that the Transfer was undertaken for the purpose of putting NIOC House beyond the reach of CGC, so s.423 would apply if the Transfer was either for no consideration or for a consideration the value of which, in money or money’s worth, was significantly less than the value, in money or money’s worth, of the consideration provided by NIOC: see s.423(1)(a) and (c). For ease of reference I will refer to these tests together as an “undervalue”.

NIOC is of course correct that the Fund is not seeking to enforce a trust against NIOC, and to point out that since August 2022 there has been no trust in existence which could be enforced. However, it would also be wrong to analyse the dispute as involving enforcement of the trust against CGC, so to that extent I would disagree with what the judge said at §212 (although I do not consider it to be material to his decision). CGC has applied for relief as a “victim” of the Transfer (that is, a person prejudiced or capable of being prejudiced by it: ss. 423(5) and 424) and – if an undervalue is shown to exist – has standing on that basis. The statutory question that the court must therefore answer is whether the Transfer was made at an undervalue. That question directs attention to the position as between NIOC and the Fund. Did NIOC receive something of significantly less value than it provided?

In answering that narrow question (as opposed to the question of purpose), the position of CGC is irrelevant. It is indeed the case that CGC relies on s.53(1)(b), but as the putative victim of the transaction it is entitled to do so if the effect of that provision is that the Transfer was in fact made at an undervalue. The objection under Ground 3 is that it was not so entitled. That objection is not made out in my view.

As Zacaroli LJ explains, the question whether NIOC received something of significantly less value than it provided is a factual one, and regard must be had to reality and common sense.

When asked to identify what consideration NIOC received in exchange for NIOC House, Mr Thanki relied on the “prior moral obligation under the unenforceable trust”, which he submitted NIOC as trustee could honour without offending insolvency legislation. The trust was binding on NIOC’s conscience, such that it could not have transferred NIOC House to anyone other than the Fund. NIOC received consideration in the form of a release from its obligations as trustee, and in any event the distribution of property to the beneficiary of a bare trust could not be characterised as being voluntary or at an undervalue. The Transfer perfected a valid trust, which was simply unenforceable by the Fund. CGC was not therefore a “victim”. Mr Thanki placed particular reliance on Gardner v Rowe.

The first difficulty I have with this is one of commercial reality and common sense.

The starting point is that it was common ground, and was expressly confirmed by Mr Thanki in oral submissions, that without evidence satisfying s.53(1)(b) a beneficiary of a trust over land which has been declared by its beneficial owner cannot enforce the trust. In my view Mr Thanki was correct to do so. Rochefoucauld v Boustead is limited to cases where property is transferred to a trustee (a “3-party case”) rather than cases where a trust is declared by the beneficial owner of property (a “self-declaration” case): see §‎152 and §‎153 above, with which I agree, and further below.

It follows that, absent evidence complying with s.53(1)(b), the beneficiary in a self-declaration case requires something from the trustee in order to enjoy the benefits of the trust. The trustee can choose to confer the benefits of the trust on the beneficiary but, without such evidence, they cannot be compelled to do so. And it is in the trustee’s “gift” as to whether to change that state of affairs, either by producing written evidence or – assuming for present purposes that the trust is a bare trust – by perfecting the trust through a transfer of the property to the beneficiary. I accept that evidence complying with s.53(1)(b) may be produced unwittingly, as Zacaroli LJ has described, but that does not mean that there is any certainty at all that it will in fact be produced. Most importantly, the trustee could not be forced to produce it.

Unless and until evidence complying with s.53(1)(b) is produced the beneficiary could not, for example, a) take legal action to obtain the income; b) require the asset to be transferred to him under the principle in Saunders v Vautier (1841) Cr. & Ph. 240; or c) obtain redress (or an injunction) if the trustee decided to deal with the property or diminish its value, for example by encumbering it to secure the trustee’s own borrowings. The beneficiary would also not realistically be able to turn their “rights” under the trust to account for their own benefit, for example by borrowing on the security of it, or by selling the beneficial interest for anything like the full value of the property, because the value of the beneficiary’s interest would depend entirely on the chance that the trustee would produce the requisite written evidence that would allow the trust to be enforced.

I accept that, if the requisite written evidence were produced, the effect would be that the court would treat the trust as having existed from the date it was declared (albeit that Mr McQuater did not concede that a breach of trust could be established for what might then be regarded as past defaults, an issue which does not arise in this case). However, whatever the position for the past, it seems to me that if the trustee does provide such evidence, or perfects the trust by transferring the property, they are in reality providing something of substantial value to the beneficiary. In the former case a right which could not previously have been enforced – and which the beneficiary could not realistically have exploited for his own benefit – is now one that can be both enforced and exploited. Where the trust is perfected the beneficiary has both the legal and beneficial title, so any complications caused by the trust arrangement are entirely at an end.

The Transfer was clearly a “transaction” within s.423 and the judge found that NIOC undertook it with the purpose of putting assets beyond CGC’s reach. Having failed on Ground 1 and Ground 2, NIOC’s only remaining defence to the application of s.423 is that NIOC’s “moral obligation” had the effect that there was no undervalue. But, as I have sought to explain, in the real world that obligation would be worth very considerably less than the value of NIOC House. The value of property is usually determined by reference to what it might be sold for. It would be extraordinary if the benefit of the “moral obligation” could be sold for a significant sum, or at least anything approaching the open market value of the property.

As Zacaroli LJ says at §‎133 above, the value of consideration is a question of fact (though, as in this case, it may also involve an issue of law: Phillips v Brewin Dolphin Bell at §20). Further, it must be assessed from the perspective of the debtor and as at the date of the transaction. Immediately prior to the Transfer the trust was unenforceable by the Fund. NIOC could, from its perspective, have retained the rent and otherwise dealt with NIOC House for its own benefit. However unlikely that would have been to occur in practice, the Fund would have had no legal remedy if NIOC had done so. That, in turn, must fundamentally affect the value of what the Fund can be regarded as having provided in exchange for the Transfer.

I therefore do not agree that the Transfer had “no effect on the availability or value of assets otherwise available to meet the claims of creditors” (El Husseiny v Invest Bank at §59). Rather, the Transfer had the effect of depleting or diminishing assets available for creditors (El Husseiny at §53). It is also worth noting the analysis of Lady Rose and Lord Richards in El Husseiny at §55, pointing out that s.423 is not in terms restricted to the debtor’s own property. Thus, even if the Fund was regarded as (at least “morally”) the beneficial owner of NIOC House, that would not by itself preclude the application of s.423.

So far, I have addressed what I see as a factual difficulty with NIOC’s position. That is not how the issue was approached by the judge. However, I do not consider that he was in error. This is because, in the absence of evidence complying with s.53(1)(b), the analysis which the judge adopted was legally correct.

As Zacaroli LJ has explained, the judge was responding to NIOC’s argument that s.53(1)(b) “went to the enforceability by a beneficiary of a declaration of trust in land”. In the absence of evidence existing by the date of the Transfer which complied with s.53(1)(b), the trust could indeed not have been enforced by the Fund as beneficiary. I would add that it could not be enforced by anyone else, but the critical point for the purposes of s.423 is the position as between NIOC as trustee and the Fund as beneficiary, not the position of anyone else: see above. As the judge held, the trust failed the requirement that it be “manifested and proved” by writing signed by NIOC. That meant that the court was obliged to treat NIOC as the beneficial owner as at the date of the Transfer. This is what the judge did at §213 and §224.

This approach does not require a trust to be treated as “invalid” or “void” in the absence of evidence complying with s.53(1)(b) (CGC’s Respondent’s Notice Point 1). On that, I agree with Zacaroli LJ’s analysis at §‎143 to §‎145 and §‎169 to §‎170. But it is important to note the effect of the cases to which he refers. The key point is that, if such evidence is produced, that will have the effect of proving the existence of the trust as from the date from which it was declared. It does not follow that, if such evidence has not been produced at any stage, the court must nonetheless analyse a transaction as though it had been. This may well be why Lord Diplock in Gissing v Gissing and Lord Bridge in Lloyds Bank v Rosset (see §‎166 above) referred to writing being required for a declaration of trust over land to be “valid”. Without it, the courts cannot treat a trust as existing.

Before turning to Gardner v Rowe, I should say a little more about Rochefoucauld v Boustead. With the caveat of what I say in the immediately preceding paragraph, I agree with Zacaroli LJ’s analysis of Rochefoucauld. However, I would elaborate a little further on what he says at §‎153. The reason why the trust was enforced in Rochefoucauld was that it was regarded as an equitable fraud, or in modern parlance unconscionable, for the defendant to receive property on the understanding that it would be held on trust and then to deny the trust: see on this Fancourt J’s discussion of Rochefoucauld in Archibald v Alexander [2020] EWHC 1621 (Ch); [2020] 2 FLR 1123 at §28 to §35, which in turn considers the Court of Appeal decision in De Bruyne v De Bruyne [2010] EWCA Civ 519, [2010] 2 FLR 1240. That discussion largely relates to constructive trusts, but the essential point is the same.

In contrast, there is no such unconscionability in a self-declaration case, where an application of the approach in Rochefoucauld would denude s.53(1)(b) of effect. It is important to bear this in mind when assessing the “moral obligation” on which Mr Thanki relies. Absent unconscionability or (perhaps) some form of detrimental reliance that would support a constructive trust, s.53(1)(b) should be applied in accordance with its terms.

I should add that I found the discussion by Professor Swadling in The Nature of the Trust in Rochefoucauld v Boustead (referred to at §‎149 above) illuminating. Professor Swadling makes the point that s.53(1)(b) is a rule about evidence, not enforceability as such (although non-enforceability is the consequence of an absence of evidence). In contrast, s.40 LPA stipulated that “no action may be brought”. In the case of s.40 the existence of a contract could be proved by oral (or other) evidence, and indeed has some effect in equity – see for example Dawson v Ellis (1820) 1 Jac. & W. 524, 525. It just could not be enforced. In the case of s.53(1)(b), evidence that does not comply with it is inadmissible to prove the existence of the trust.

As already indicated, the linchpin of Mr Thanki’s submissions under Ground 3 was Gardner v Rowe. I do not consider that it assists NIOC, for the following reasons.

First, in Gardner v Rowe a deed recording the trust had in fact been produced. As we have seen, it is of no moment that it was produced after the date on which the trust was declared. Once produced, evidence complying with s.53(1)(b) proved the existence of the trust from that date. With the benefit of the deed, therefore, there was a trust that could be proved to have existed prior to Wilkinson’s bankruptcy, such that the property did not pass to his assignees. The trust was indeed “valid” when the dispute came to court, but only because that crucial evidence had been produced. In this case it was not.

Secondly and relatedly, the Lord Chancellor described the “only question” as being “whether the declaration contained in the deed was founded upon a previous trust, or was altogether fraudulent”. That question had been decided by the jury. That was the critical issue. It does not arise here, because there is nothing equivalent to the deed.

Thirdly, we are concerned with the interpretation of s.423 of the Insolvency Act 1986. Gardner v Rowe does not bind us in relation to that question. It does not determine whether the action taken by Mr Wilkinson after his bankruptcy might now be regarded as falling foul of that provision, let alone whether a transfer of legal title such as the Transfer in this case does so.

Zacaroli LJ takes the view that the absence of writing does not affect the validity of the trust declared, and that CGC’s argument that, absent compliance with s.53(1)(b), the trust should not be capable of proof for any purpose is not consistent with a purposive construction. I have already addressed the question of “validity”. The straightforward meaning of s.53(1)(b) is that, without evidence complying with it, the court cannot recognise the existence of the trust. Section 53(1)(b) is mandatory (“must” be manifested and proved), and is not in terms limited to cases where the trustee denies the existence of the trust. If there is such evidence, the trust would be treated as validly made with effect from the date of its declaration.

The question that then arises is whether, notwithstanding the straightforward meaning of the words used, a purposive construction of s.53(1)(b) has the effect of confining it to a case where the trustee denies the existence of the trust. I do not consider that it does. It is true that the Statute of Frauds was enacted for the prevention of “fraudulent practices”, but that does not determine that s.53(1)(b) must be read as confined to preventing fraudulent claims by beneficiaries. The position is no different in principle to a vendor under a (genuine) oral contract for sale relying on what became s.40 LPA to avoid performing the contract, or a landowner or indeed anyone else relying on what is now s.53(1)(a) or (c) if the required formalities were not complied with. Neither would be regarded as outside the scope of the legislation. There is no requirement to prove fraud in order for those provisions to apply.

Rochefoucauld v Boustead shows that what is now s.53(1)(b) cannot be relied on in a “3-party” case because the Statute of Frauds “does not prevent the proof of fraud” (p.206). In contrast, in a self-declaration case there is no such “fraud” that would prevent a landowner from relying on s.53(1)(b) even if a trust has been declared: see above. I do not see this as a point about whether s.53(1)(b) was intended to provide protection for creditors (see §‎183 above), rather the application of a straightforward interpretation of the statute.

It is true that a landowner who was prepared to admit the existence of a trust could readily produce evidence complying with s.53(1)(b), including (at least under the law as it currently stands) after proceedings have commenced. But they could not be compelled to do so. Further, the facts of this case are different. The Transfer was made without any such evidence being produced (including in the Transfer itself, which made no reference to a trust), voluntarily and with the purpose of putting NIOC House beyond the reach of CGC.

I should add that I am not persuaded that s.53(1)(b) has no application if the trustee admits the trust in proceedings (§‎188 above, referring to Akhtar v Boland) or is otherwise confined to cases where the trustee does not wish to accept the existence of the trust (§‎198 above). I do not consider such an approach to be consistent with its mandatory terms. A trustee that wishes to confirm a trust over land can readily produce evidence that complies with the legislation, but in my view cannot be treated as having done so if the evidence has not in fact been produced.

Although the commentaries and authorities from the United States relied on by Mr Thanki and referred to by Zacaroli LJ at §‎192 also concern legislation derived from the Statute of Frauds, the legislation is nonetheless different, and more importantly they do not relate to any equivalent to s.423 of the Insolvency Act. CGC’s challenge to the Transfer is under s.423. That challenge is not inconsistent with the approach in the United States that a trustee under an unenforceable trust may choose to perform it without flouting legislation based on the Statute of Frauds. It is also worth noting that Scott and Ascher on Trusts, 6^th ed., to which we were also referred, makes the point at 6.14 that, if the statute has not been complied with, a person who succeeds to the trustee’s interest, including a purchaser with notice of the trust or a creditor or trustee in bankruptcy of the trustee, is entitled to take advantage of its unenforceability. In my opinion that rather illustrates the point that a trustee who perfects the trust does in fact confer value.

A further point that was the subject of discussion in post-hearing submissions was the judge’s decision that the appropriate order under s.423(2) was the transfer of the Property to CGC, rather than seeking to restore the Property to NIOC on terms that it remained subject to a previously declared trust.

The short answer to this point is that this is an appeal by NIOC (and, on Ground 1, the Fund), not by CGC. The challenge on appeal is whether the Transfer fell within s.423 as a result of the application of s.53(1)(b) LPA, not the judge’s exercise of discretion to order the relief that he did once he had concluded that s.423 applied. As I have sought to explain, the judge was also not wrong, in the absence of evidence complying with s.53(1)(b), to treat NIOC and not the Fund as the beneficial owner of the Property prior to the Transfer.

In summary on Ground 3:

Like Falk LJ, I agree with the clear and cogent analysis of Zacaroli LJ in his judgment in relation to Grounds 1 and 2 of the appeal and Respondent’s Notice Grounds 2 (a) and (b). I also agree with the additional points which Falk LJ makes in relation to Grounds 1 and 2 in her judgment. However, like her, I disagree with Zacaroli LJ in relation to Ground 3. It follows that, since a majority of the Court considers that Ground 3 must be dismissed, the appeal overall must be dismissed.

I consider that Falk LJ has set out in her judgment a compelling analysis as to why Ground 3 should be dismissed and I will only add a few points of my own to explain why I have reached this conclusion.

As Falk LJ points out, the critical question which Ground 3 raises is whether the Transfer in August 2022 was at an undervalue, which in turn focuses on whether, as between NIOC and the Fund, NIOC received something of significantly less value than it provided. The answer to that question must be in the affirmative if the trust is unenforceable because of the absence of evidence satisfying s.53(1)(b). I agree with Falk LJ that, in the absence of such evidence, the court has to proceed on the basis that the trust did not exist and accordingly NIOC remained the beneficial owner of NIOC House as at the date of the Transfer. The fact that if such evidence were produced the trust would be enforceable is nothing to the point.

Mr Thanki’s argument was that, even though the trust was unenforceable, NIOC was under a prior moral obligation binding on its conscience, to effect the Transfer. However, as he correctly accepted, in a self-declaration case such as the present, the beneficiary, the Fund, cannot compel the trustee, NIOC, to enforce the trust by transferring the property. I agree with Zacaroli LJ that the principle in Rochefoucauld v Boustead is limited to “3-party” cases for the reasons he gives at §‎153 above. Even if NIOC was under some moral obligation, by reason of a declaration of trust, to transfer NIOC House to the Fund, that obligation could not be enforced by the Fund whether through proceedings or otherwise. On the basis that the consideration which NIOC received on the Transfer was its release from that moral obligation, the value of the moral obligation was, as Falk LJ says, considerably less than the open market value of NIOC House, from which it must follow that the Transfer was a transaction at an undervalue for the purposes of s.423.

Although Mr Thanki sought to place considerable reliance on Gardner v Rowe, I agree with Falk LJ that that case does not, on analysis, assist NIOC’s case. It was a case where there was evidence complying with s.7 of the Statute of Frauds (and thus with s.53(1)(b)), albeit not produced until some time after the declaration of trust, which meant that the trust could be proved to have existed prior to Wilkinson’s bankruptcy. The case has nothing to say about what the position would have been if, as in the present case, there was no such evidence complying with s.53(1)(b). Also, as Falk LJ points out, nothing in that case has any bearing on the application of s.423 of the Insolvency Act 1986. There is nothing in the judgments at first instance or on appeal which determines whether the action taken by Wilkinson after his bankruptcy might now be regarded as contrary to that section.

Zacaroli LJ considers that, although the absence of evidence complying with s.53(1)(b) means that the trust is unenforceable, that does not affect its validity. I am unable to agree with that analysis. The subsection provides: “a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;” (my emphasis). It is thus in mandatory terms and if there is no evidence which complies with the subsection, then I agree with Falk LJ that the court cannot recognise the existence of the trust. There is equally no basis in the language of the subsection for limiting its application to cases where the trustee denies the existence of the trust.

It follows that I would dismiss Ground 3 and that I consider the appeal must be dismissed.