Terms & Conditions

[keithh]

2 things really . . .

Is the caselaw part of the site not working at the moment, or is it just my PC?

Does anyone have a copy of CH 0715 2006 that the could either put in a post or mail to me?

Google appears to deny it’s existence!!

Cheers, Keith

[Nicky]

Here you go:

Decision
1 The claimant’s appeal does not succeed. The decision given by Fox Court Appeal tribunal on 12 September 2005 contains no material error of law. Therefore that decision stands. The appellant is not entitled to housing benefit or council tax benefit under the claims made by him and dated 3 February 2005.
Background
2 The appellant is a former army officer who, at the date of his claim for benefit, was 89 years old. He and his wife, who is also in her eighties, live in sheltered accommodation provided by a housing association in the administrative area of the respondent, the Royal Borough of Kensington and Chelsea (“RBKC”).
3 In early February 2005, shortly after he completed his move to that accommodation, the appellant claimed housing benefit and council tax benefit from RBKC. On 30 March 2005, RBKC refused both those claims on the ground that the appellant had capital in excess of the prescribed limit of £16,000.
4 In due course, the appellant appealed against that decision. He requested that his appeal should be considered on the papers because his disabilities would prevent him from attending an oral hearing. On 12 September 2005, the tribunal decided the appeal on that basis. Its decision was to refuse the appeal and confirm the decision made by RBKC.
5 The appellant now appeals to the Commissioner against the tribunal’s decision, with the leave of Mr Commissioner Howell QC granted on 21 March 2006.
The Issue
6 At issue in this appeal is the beneficial ownership of the sums standing to the credit of a joint 30-day savings account held in the joint names of the appellant, his wife and his daughter, DF, at a bank in central London (“the Account”).
The evidence
7 That issue arises as follows:
(a) On 3 March 2005 the Account had a credit balance of £60,080.00.
(b) During the financial year 2003/2004, net interest of £1,026.12 had been paid on that account. That interest was received by the appellant and his wife.
(c) The appellant says that he is not the beneficial owner of the money in the Account. He says that he (together with the other signatories) hold that money upon trust for his 4 daughters, MC, DK, TF and DF.
(d) Specifically, he states (I quote from page 38 of the Commissioner’s bundle):
“In 1987 I decided that in order to avoid ANY legal expenses hassle, complications etc I would dispose of my worldly possessions instead of making a Will. This decision included the disposal of £60,000 to my children (as per details submitted) in a private legacy” (original emphasis).
(e) The tribunal also had evidence in the form of a written “certificate” signed by DF (who, it will be remembered, is a co-signatory on the account with her parents) and witnessed by her sister, MC. That certificate was in the following terms:
“This is to certify that I am the trustee of funds donated by my father [the appellant] in 1987 to his 4 daughters.
MF now (MC)
DK
TF
DF
The funds amounting to £60,000 (£15,000 each) are administered by me in my savings account No … with … branch of the … bank, and the donation is subject to the following conditions.
1. The method of investment is at the discretion of my father.
2. The interest will be paid direct to my father during his lifetime.
3. The sum of £10,000 may be withdrawn in the event of an unexpected emergency, but will be treated as a loan.”
(f) RBKC did not regard that evidence as sufficient for its purposes. It therefore pressed the appellant to provide any further documents such as bank statements that might substantiate the existence of the trust. The appellant’s response was in the following terms:
“The family trust set up almost 20 years ago was a purely private family affair and of no concern to anyone else. Consequently there was no need whatsoever to retain any paper record of it apart from mention of it in my latest will. At the same time it was pointless to retain any obsolete bank statements relating to the account, though in error two such statements … escaped being destroyed and proved that trustee [DF] has been an account holder of the funds for a number of years.”
(g) The two statements referred to (pages 67 and 70) show that, on 10 December 1996, a different account with the same bank in the joint names of the appellant, his wife and DF contained a balance of £80,246.58. Manuscript additions to the page explain that the figure of £80,246.58 comprised “£60,000 Family Trust. £20,246.58 personal”.
(h) The papers also contain statements of a third account that is also in the joint names of the appellant, his wife and DF. That account is an “instant access savings account” with the same branch of the same bank. It does not appear to contain trust money. Rather, it is used by the appellant and his wife to conduct routine personal financial transactions. For example:
i) the statement at page 35 of the Commissioner’s papers shows that the account is used to receive the various sources of income that are declared on the appellant’s claim form; and
ii) that at page 67 shows that the account is used to pay the appellant’s monthly rent to the housing association by standing order.
The tribunal’s decision
8 The tribunal’s stated reasons for its decision were as follows (omitting formal matters):
“2. [The appellant] does not dispute that £60,080 is held in a 30-day notice account with [the Bank] in the joint names of himself, his wife and his daughter [DF]. His case is that the sum is held in trust for his 4 daughters and that he is not the beneficial owner.
3. The tribunal finds that no legally enforceable trust has been set up, for the following reasons.
4. The legal owner of an asset is presumed to be the beneficial owner until the contrary is shown. The burden falls on [the appellant] to establish the existence of the trust on the balance of probability. It is trite law that a trust cannot exist unless the terms are certain.
5. [The appellant] has produced no contemporaneous evidence of the terms of the trust, said to be created in 1987, merely the “certificate”…from 22 February 2005. He has stated … that he disposed of the £60,000 “as a private legacy” to his children to avoid the trouble and expense of making a will, yet further states …that confirmation is contained “in my Will”, which, in any event, he declines to produce.
6. It is admitted that [the appellant] receives the income from the account and has access to a part at least of the capital for his own benefit if required. From the evidence before the tribunal, it is wholly unclear what the beneficial interests under the alleged trusts are and the tribunal holds that no trust has been established which a Court of Equity would enforce.
7. [The appellant] falls to be treated, with his wife, as the beneficial owner of a share in [the account] worth in excess of £16,000.”
The grounds for appeal
9 The grounds for the appeal to the Commissioner are set out in pages 82 and 86 of the appeal papers (read together with page 83). They may be summarised as follows:
(a) That “[i]t is established law that an account holder is not necessarily the owner of the money in the account” and that “in this particular instance there is not a shred of evidence to show that [the appellant is] the owner in possession.”
(b) That although no legally enforceable trust may have been set up, that “in no way makes the setting up of a private trust illegal or … inapplicable” and that when the trust was created he had no reason to suppose he would be obliged to claim social security benefits in England. There was therefore no reason why he “should go to the hassle and expense of legalising the trust.”
(c) That the tribunal had been perverse in relying upon his failure to produce a copy of his Will “which protocol demands should not be opened until after my death”.
(d) That DF was “so upset” at the tribunal’s ruling that she intended to withdraw the funds from the account and apply them “to the purpose for which they are intended”.
10 There is nothing in any of those grounds. The answers to the points made by the appellant are as follows:
(a) I accept that the signatory to a bank account, whilst being the legal owner of the funds in that account, is not necessarily also the beneficial owner. However, to say that in this particular case there is no evidence to show that the appellant is the beneficial owner is to misplace the burden of proof. As the tribunal correctly stated, it was for the appellant to establish on a balance of probabilities that he and his co-signatories held the funds in the account on trust, and not for RBKC to show that they did not. The tribunal decided that the evidence put forward by the appellant was insufficient to discharge that burden. The real issue in this appeal is whether it was legally correct to do so and I deal with that issue in greater detail below.
(b) The appellant’s apparent acceptance that “no legally enforceable trust has been set up” would, if taken at face value, provide a sufficient reason on its own for dismissing his appeal. Ownership is a legal matter. A “trust” that is not legally-enforceable is not a trust at all.
It is not in dispute that the appellant was both the legal and beneficial owner of the money before he set up the alleged trust. If he did not succeed in setting up a trust (i.e., a trust that the law would recognise and enforce) then, as a matter of law, he is still the legal and beneficial owner of that money.
If the appellant’s statement that the setting up of a private trust is not “illegal or … inapplicable” was intended to mean that making the sort of arrangement he claims he has made is not contrary to the criminal law, then that is true. However, the absence of criminality is not sufficient on its own to make the family arrangement he entered into effective to transfer the beneficial ownership of the money from him to his daughters. At the risk of labouring the point, the appellant’s evidence is that he intended to make a gift to his daughters. If he was succeeded in setting up a trust then he also succeeded in making that gift. If he did not, then no gift was made and he retains ownership of the money in the Account.
The issue is therefore, again, whether the appellant’s evidence has proved the existence of a trust.
(c) There is no legal principle that prevents contents of a person’s Will from being known before his death. I am also unaware of any “protocol” to that effect. Some people prefer to keep the contents of their Wills secret and others do not. If it is the case, as the appellant claims, that he was told by his legal adviser that it would be “highly irregular” for him to furnish RBKC with a copy of his Will, then I have to say directly that he has been wrongly advised: whether or not to produce the Will was a matter of personal preference, no more. The appellant relied upon the alleged reference in his Will to a family trust as a matter tending to support his version of events. The tribunal was entitled to take the view it did of his subsequent failure to produce the Will.
(d) The fact that DF and the other beneficiaries are upset by the tribunal’s decision does not make it wrong either in law or in fact. Any subsequent withdrawal of the funds by DF cannot affect the tribunal’s decision (which relates to circumstances as they stood in February and March 2005).
Moreover, I agree with RBKC that any such withdrawal would immediately raise issues as to whether the appellant had deprived himself of capital in order to obtain entitlement to benefit and might therefore not achieve the result that the appellant desires. The resolution of those issues is not a matter for me, but I would recommend that the appellant should seek independent advice before permitting his daughter to take such a step, particularly given her evidence that the investment of the disputed funds is a matter that is in the appellant’s discretion.
Did the evidence before the tribunal establish the existence of a trust?
11 Mr Howell gave the following reasons for granting leave to appeal to the Commissioner:
“I am granting leave to appeal although I agree with the tribunal that the evidence falls well short of what would be desirable to show the creation of an effective legally binding trust since 1987, as I think the chairman’s statement that “it is wholly unclear what the beneficial interest and the alleged trust are” is open to question. If one accepts the written statement signed by the two daughters as accurate … then the claimant had a life interest plus the power to obtain £10,000 capital for himself (albeit as a loan), and his daughters had a capital remainder in equal shares. But even if the chairman did misdirect himself about that, does it invalidate the conclusion that the evidence failed to establish the existence of a binding trust since 1987 as alleged?”
12 I have decided that, although the tribunal did misdirect itself in the respect identified by Mr Howell, that error was not material to its decision because the evidence was insufficient to establish the existence of the trust even though the intended beneficial interests may have been clear.
13 As this is not a case that involves land or an interest in land, it is possible for a trust to have come into existence in this case without being created or evidenced by any written document. However, before that can be the case, there must be evidence establishing the “three certainties” that are necessary for the existence of a trust. The three certainties are:
(a) Certainty of words: i.e., “whether in substance a sufficient intention to create a trust has been manifested” (per Megary J (as he then was) in Re Kayford Limited [1975] 1 W.L.R. 279 at 282.
(b) Certainty as to the subject matter of the trust.
(c) Certainty as to the beneficiaries of the trust and the beneficial interests they are to take.
14 For the reasons given by Mr Howell, the evidence in this case–if accepted–would have been sufficient to establish the third of those certainties. But it was not sufficient to establish the other two.
15 As to certainty of words, I am bound by authority, namely the reported decision of Mr Commissioner Rice in R(IS) 1/90, to approach the issue on the basis that:
“… I should be very slow to conclude that a person had in effect given away his property, either by direct transfer or by declaration of trust, in the absence of a clear indication to that effect. … No one should be treated as voluntarily given up a proprietary interest in property in the absence of the clearest indication that that was his intention.” (see paragraph 7 of R(IS) 1/90).
16 In this case, there is no evidence of the precise words used by the appellant to create the alleged trust. Moreover there is evidence that the appellant does not have a high regard for legal formalities and that he regarded the arrangements he entered into as being “a purely private family affair”. He accepts in his grounds of appeal that those arrangements may not have been legally enforceable. The fact that, by 1996, the alleged trust fund was held in an account in the joint names of the appellant, his wife and one of his daughters is not sufficient to manifest that intention, particularly given the evidence of funds that are not trust money but which were similarly held (see paragraph 7(h) above). On that basis, the evidence is not merely insufficient to discharge the appellant’s burden of proving that a “sufficient intention to create a trust [had] been manifested” in 1987. On the contrary it tends to show, on balance, that such an intention had not been manifested.
17 That conclusion is sufficient on its own to dismiss this appeal and uphold the tribunal’s decision. However, I should add for the sake of completeness that, in my judgment, the second certainty is not established either. The facts that
(a) the £60,000 that is alleged to have formed the trust fund was not always held separately but was mixed in the same account as money belonging personally to the appellant and his wife (see paragraph 7(g) above), and that
(b) it was so mixed 9 years after the trust is said to have been created,
affect the weight that can be given to the evidence in the “certificate” from DF that each daughter was to have a share of £15,000 as does the fact that that certificate was brought into existence after the claim for benefit had been made and was not contemporaneous with the events that it described. Taking the evidence as a whole, I am satisfied that the certificate accurately reflects the state of the private family arrangement in early 2005 but that is insufficient to establish the identity of the property subject to the alleged trust in 1987, which is the relevant date for the purposes of this appeal..
18 As only one of the three certainties has been established in this case, it follows that no trust has been created. The tribunal’s decision that the appellant and was beneficially entitled to a share of the money in the account that exceeded £16,000 was therefore correct. It follows that any error of law the tribunal may have made in reaching that conclusion was immaterial and no purpose would be served by my setting its decision aside.
Conclusion
19 I would add one thing by way of conclusion. The appellant has stated that RBKC have accused him and his daughters of lying and have cast aspersions on his integrity. Whilst I cannot speak for RBKC, I wish to make it clear that I make no such accusation and cast no such aspersions. I am satisfied that the appellant and his family entered into a private arrangement in 1987, that they believed (albeit incorrectly) that the legal word “trust” was apt to describe that arrangement and that in 2005 they also believed, as a result of the arrangement, that the appellant’s four daughters were, at least morally although possibly not legally, the owners of the money in the Account in equal shares.
20 That, however, is not the end of the matter. The law that governs entitlement to benefit is only concerned with legal ownership. As I have explained, that means that a private arrangement such as that made by the appellant will only have the effect of divesting him of beneficial ownership if it creates a Trust that the law recognises and will enforce. Although a Settlor’s intentions are an important factor to be taken into account when considering whether a trust has come into existence, the law requires—and requires for good reasons—that any person asserting the existence of a trust should be able to prove that those intentions were expressed with a sufficient level of certainty before it recognises that a trust has been created. In this case, the appellant either did not express his intentions in a sufficiently certain manner or has not retained the evidence that would enable him to prove that he did so.

The effect, as the tribunal correctly concluded, is that, again as a matter of law, the money in the disputed account continues to belong to the appellant. His belief to the contrary, though no doubt honestly held, is mistaken.

(Signed on the original) Richard Poynter
Deputy Commissioner
23 January 2007

[keithh]

Nicky…you’re a star!! 😀

[ghita]

Andy has just told me about the problem… and also the fact that emails are being bounced back .. I have been onto the webhosts who are dealing with this immediately. Please could people phone me if there are any more issues. 07890 527178

[Author]

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