on 08-Jul-2016 (Fri)

In this context, a stranger is someone not appointed a trustee.

Distinct from the trustee de son tort are strangers made personally liable to account to the beneficiary for a breach of trust because of some fault on their part.
Such a stranger may become liable to account in one of two ways:

1. They may knowingly receive or deal with the trust property in breach of trust; this is traditionally referred to as ‘knowing receipt’, though, as will be seen, nowadays, it may, perhaps, more accurately be regarded as dishonest or unconscionable dealing with received trust property in not returning the property to its rightful owner when aware that it should be returned; or
2. They may dishonestly assist or procure a breach of trust; this is traditionally referred to as ‘knowing assistance’; however, following the Privy Council decision in Royal Brunei Airlines v Philip Tan Kok Ming [1995] 2 AC 378 [1995] UKPC 22, it is perhaps more accurately referred to as ‘dishonest assistance’ though Lord Nicholls in that case referred to ‘accessory liability’.

In Mara v Browne [1895] 2 Ch 69, AL Smith LJ said:

If one, not being a trustee and not having authority from a trustee, takes upon himself to intermeddle with trust matters or to do acts characteristic of the office of trustee he may thereby make himself a trustee of his own wrong, i.e. a trustee de son tort, or as it is also termed, a constructive trustee.

the trustee de son tort assumes the office of trustee to act on behalf of beneficiaries. The do not purport to act on their own behalf in relation to the trust property. Their intermeddling with the trust property or other acts characteristic of a trustee do not, in themselves, amount to a breach of trust. The trustee de son tort, however, will be personally liable for any subsequent breach of trust in the same way as an expressly appointed trustee.

It was seen in Chapter 18 above that, where a person receives property misappropriated from a trust, the recipient (unless a bona fide purchaser for value without notice) will be obliged to return the property or its proceeds as soon as he becomes aware of the position. This liability to a proprietary claim arises even if the recipient had no notice, actual or constructive, of the breach of trust because they were an innocent volunteer, having no duty to ‘look a gift horse in the mouth’.

If the recipient dissipates the property (or its proceeds) in circumstances where they lack the requisite knowledge, their proprietary liability to return the property (or its proceeds) thereby ceases: Independent Trustee Services Ltd v GP Noble Trustees Ltd [2012] EWCA Civ 195 at [76],[84]. Moreover, they cannot be made personally liable for those innocent actions.

It must be appreciated that the ‘cold calculus’ of the doctrine of notice applies in the sphere of proprietary liability so as to protect property interests: equitable interests bind everyone but a bona fide purchaser of a legal interest without themself or their agent having actual or constructive notice (the agent’s notice being the imputed notice of his principal). If you have notice you have to return the property that should not have been your property, or if you received the property as a gift you have to return the property that should not have been your property.

A recipient of property, however, will be under a personal liability to account to the beneficiaries for the loss to the trust if they dissipated the trust property (or its proceeds) after becoming aware that it was trust property. Furthermore, a person who is liable for dishonestly assisting a breach of trust will be under a personal liability to account for losses, though they may never have received the trust property.

The classification of the stranger’s liability arising from knowing receipt or dishonest assistance is derived from Barnes v Addy (1874) LR 9 Ch App 244 at 251–252, where Lord Selborne LC said:

[S]trangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps, of which a court of equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees.

Knowledge, in this context, was divided into five types by Peter Gibson J in Baden, Delvaux and Lecuit v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA [1983] BCLC 325, as follows:

1. Actual knowledge;
2. Wilfully shutting one’s eyes to the obvious;
3. Wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make;
4. Knowledge of circumstances which would indicate the facts to an honest and reasonable man (but not a morally obtuse man); and
5. Knowledge of circumstances which would put an honest and reasonable man on inquiry.

According to the Baden case and Agip (Africa) Ltd v Jackson [1990] Ch 265, a person with knowledge in categories (ii) and (iii) ‘will be taken to have actual knowledge, while a person in categories (iv) or (v) has constructive notice only’

This was accepted in Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC where Lord Hoffmann surprisingly explained that the words used by him and Lord Hutton in Twinsectra did not have their apparent meaning of requiring a defendant subjectively appreciating that he was acting dishonestly intent but permitted a defendant to be liable if his actions were objectively dishonest in the eyes of honest reasonable persons.

Millett J, in Agip (above) said at 293 in relation to the Baden classification of knowledge that if a person ‘did suspect wrongdoing yet failed to make inquiries because ‘he did not want to know’ (category (ii)) or because he regarded it as ‘none of his business’ (category (iii)), that … is dishonest, and [he will be] treated as if [he] had actual knowledge.’ In contrast, if ‘a man does not draw the obvious inferences or make the obvious inquiries . . . because, however foolishly, he did not suspect wrongdoing or, having suspected it, had his suspicions allayed, however unreasonably’ (category (iv) or (v)), he would not be guilty of dishonest conduct.

the reality now is that any of categories (i) to (iv) suffice for personal liability for dishonest assistance in a breach of fiduciary position, as has also been held to be the case by the High Court of Australia in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007[ HCA 22, 230 CLR 89

The Court of Appeal, however, in Lipkin Gorman v Karpnale Ltd [1989] 1 WLR 1340 disapproved the cases which held that categories (iv)-(v) would suffice to make a stranger liable for 'knowing assistance'. Nothing less than knowledge in one of the first three Baden categories would do.

It is clear that, although the state of the accessory’s knowledge is no longer the crux of their liability, their knowledge of the circumstances is relevant in determining whether they acted honestly or not. In Tan, Lord Nicholls also said that account is taken of the personal attributes of the accessory, such as their experience and intelligence.

The subjective element was discussed by the House of Lords in Twinsectra Ltd v Yardley & Others [2002] 2 AC 164. Here Twinsectra had loaned Yardley £1 million, paying it to his solicitor, Sims, who gave a written undertaking to Twinsectra’s solicitors that the money was to be used solely for acquiring property (immovables) for Yardley and for no other purpose. Sims transferred the money to Yardley’s other solicitor, Leach, who knew of Sims’ undertaking but yet used the money on Yardley’s instructions for other purposes. Leach knew that he was using the money for an unauthorised purpose, but thought that Sims was merely under a contractual obligation to Twinsectra not a Quistclose purpose trust obligation. The House of Lords held that the money was held on trust only to be used for acquiring property but (Lord Millett dissenting) appeared to hold that since Leach was not himself subjectively aware that what he was doing was something that the ordinary reasonable person would think was dishonest, he had rightfully had the case against him dismissed by the trial judge, whom the Court of Appeal had reversed, Lord Millett applied an objective test. Leach, a solicitor, had knowingly participated in arrangements which he knew to be an unauthorised use of the money in breach of Sims’ undertaking as a solicitor to Twinsectra’s solicitors. Leach was liable, regardless of whether or not he appreciated that the ordinary reasonable person would consider his knowing mishandling of the money (at the very least in breach of Sims’ contractual undertaking) as dishonest. The majority, whilst expressing approval for the Privy Council’s advice in Tan, appeared to have changed the test for dishonesty to the more subjective criminal test, so that not only must the defendant have done something that right- thinking people would consider dishonest, he must have been aware that they would so view his conduct. Lord Millett strongly dissented.

The Privy Council gave further consideration to this in Barlow Clowes International v Eurotrust International Ltd [2005] UKPC 37, [2005] 1 WLR 1476, where Lord Hoffmann, delivering the advice of the Privy Council, said: …the principles of liability for dishonest assistance which had been laid down in Twinsectra … were no different from the principles stated in Royal Brunei Airlines v Tan.

Lord Hoffmann at [10] stated, ‘If by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards’ e.g. if ‘morally obtuse’ in believing it proper always to obey instructions of his client unless clearly criminal.

The matter can now be regarded as settled. In Abou-Rahmah v Abacha [2006] EWCA Civ 1492 at [59] and [69]. Arden LJ affirmed that the test for dishonesty was primarily an objective one. ‘It is unnecessary to show subjective dishonesty in the sense of consciousness that the transaction is dishonest. It is sufficient if the defendant knows of the elements of the transaction which make it dishonest according to normally accepted standards of behaviour.’ In Eurotrust, the Privy Council had explained and corrected any misconceptions about the nature of the test as it had been set out in Twinsectra.

This test has subsequently been applied in Aerostar Mauntenance International Ltd v Wilson [2010] EWHC 2032 (Ch) at [183] ,[198] and endorsed by by the Court of Appeal in Starglade Properties Ltd v Nash [2010] EWCA Civ 1314 at [30]. An important clarification came about in Starglade, where Morritt C at [31] confirmed that the standard of behaviour is that of the ordinary honest person, not that of the most scrupulous honest person or the lowest common denominator of what ordinary people would consider as dishonest:

The relevant standard… is the ordinary standard of honest behaviour. Just as the subjective understanding of the person concerned as to whether his conduct is dishonest is irrelevant so also is it irrelevant that there may be a body of opinion which regards the ordinary standard of honest behaviour as being set too high.

The second requirement in finding liability under this head is to find that the defendant assisted with the breach of trust or fiduciary duty. In essence, to find there has been assistance means that we need to find some form of causative link between the breach and the acts of the defendant.

However, this causal link is not related purely to any loss suffered by the claimant. Therefore, as the Court of Appeal held in Grupo Torras SA v Al-Sabah (No 5) [1999] CLC 1469:

The starting point… is that the requirement of dishonest assistance relates not to any loss or damage which may be suffered, but to the breach of trust or fiduciary duty. The relevant enquiry is … what loss or damage resulted from the breach of trust or fiduciary duty which has been dishonestly assisted. Per Mance LJ

The key point of this is that there is no need for a direct causal link between the defendant’s actions and the claimant’s loss for a dishonest assistance claim to succeed. The gist of Mance LJ’s sentiments were reaffirmed and clarified by the subsequent Court of Appeal case of Casio Computer Ltd v Sayo [2001] EWCA Civ 661: Grupo Torras… establishes that in a claim for dishonest assistance it is not necessary to show a precise causal link between the assistance and the loss…[but that] loss caused by the breach of fiduciary duty is recoverable from the accessory. Per Tuckey LJ.

Whilst the causation threshold is quite low, there still has to be some form of causative impact between the breach and the assistance. A defendant cannot be held liable for dishonest assistance where their actions have no connection at all to the breach, or actually hampered the trustee or fiduciary.

Peter Gibson’s ruling in Baden, Delvaux and Lecuit v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA [1983] BCLC 325 in that the claimant does not have to show that the defendant’s actions ‘inevitably had the consequence that a loss was suffered’.

Furthermore, it is not a defence, as held in Balfron Trustees Ltd v Peterson [2001] IRLR 758, to state that the acts would have occurred anyway even if the defendant had not taken part.

The key elements for assistance were made clear by Lewison J in Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638 (Ch). The defendant does not need to know precisely the nature of the breach of fiduciary duty, so long as they have some appreciation that they are helping someone who is up to no good (at [1505-6]). If a defendant has somehow made the planning of the breach, the actual breach or the subsequent cover-up easier than it otherwise would have been, then the defendant has assisted. Acts that come within this notion of assistance should be widely interpreted. However, if the defendant’s actions have only taken place after the breach and subsequent cover-up have been fully implemented, then the defendant cannot have assisted in the breach at all.

Except where the fiduciary and the assistant were acting in a joint venture, the accessory is not liable for profit made by the fiduciary: they are only liable for any profit that they made. In Ultraframe at [1600] (followed in Aerostar) Lewison J stated, ‘I can see that it makes sense for a dishonest assistant to be jointly and severally liable for any loss which the beneficiary suffers as a result of a breach of trust. I can also see it makes sense for a dishonest assistant to be liable to disgorge any profit which he has made as a result of the breach. However, I cannot take the next step to the conclusion that the dishonest assistant is also liable to pay to the beneficiary an amount equal to a profit which he did not make and which has produced no corresponding loss to the beneficiary.’

In El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 at 700 Hoffmann LJ identified three requisite elements of a ‘knowing receipt’ claim.

1. A disposal in breach of fiduciary duty.
2. The beneficial receipt by the defendant of assets which are traceable assets of the claimant.
3. Knowledge on the part of the defendant that the assets are traceable to a breach of fiduciary duty.

where receipt was not beneficial but in a ministerial capacity (e.g. as banker or solicitor) on behalf of a client to pass it on as directed by the client there can be no liability for knowing receipt if they pass it on, only for dishonest assistance (as alleged for the solicitor defendant in Twinsectra). If, however, an agent lawfully receives property but then deals with it for his own benefit knowing this to be inconsistent with the relevant fiduciary duty, he can be personally liable.

An equitable proprietary interest binds this donee as soon as they receive title to the gifted property, so some judges regard them forthwith as a ‘constructive trustee’ of the property unknowingly holding it for the beneficiaries of an express trust or other fiduciary relationship. It is, however, necessary to understand that as their conscience is not affected they cannot be personally liable until they have the requisite sort of knowledge that another person has a better right to the property. Until that point in time, they can deal freely with the property as if it is their own, so that they cannot be liable in any way if they no longer have the property or its traceable substitute: Independent Trustee Services Ltd v GP Noble Trustees Ltd [2012] EWCA Civ 195 at [76] onwards; Re Montagu’s ST [1987] Ch 264. After that point in time, they are under duties to restore the property to its rightful owner and not use it to profit themself. Thus, some judges regard them only from that time as a ‘constructive trustee’ personally accountable for losses and for any profits. If they give away the property or sell it and dissipate the proceeds, they will be liable for its full value. It is not receipt of the property that makes them personally liable (as a constructive trustee) but their subsequent dishonest dealing with it, dishonesty covering types (i) to (iv) of Baden.

Satisfaction of the requirement of ‘knowledge’ was described as ‘problematic’ by Nourse LJ in the Court of Appeal in Bank of Credit and Commerce International (Overseas) Ltd and another v Akindele [2000] 4 All ER 221. Therefore the court developed the current test: that a defendant will be personally liable for ‘knowing receipt’ where it would be ‘unconscionable’ for them not to be so liable, so that they can be liable when not dishonest, seemingly, in the sense of not having type (i), (ii) or (iii) knowledge. Since then the above cases dealing with type (iv) knowledge indicate that type (iv) knowledge will suffice for liability, but that negligent conduct of type (v) cannot give rise to liability. Nourse LJ deprecated use of the five technical types believing it easier to replace them by the ‘unconscionability’ test, despite the uncertainty that this causes.

In Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393, three companies comprising a company and its subsidiary company and that company’s subsidiary company were, via their common chairman (with a conflict of interest), involved in a conspiracy to bring about a situation that contravened the Companies Act, s 54, so that a company’s money was used to help its shares be purchased. The company that ended up with most of the money was held liable as a constructive trustee thereof for knowingly receiving property in breach of fiduciary duty. The chairman knew all of the facts giving rise to the trust but did not act ‘dishonestly’ (seemingly within types (i) to (iii)), though acting speculatively with very sanguine expectations. Nevertheless his company was found liable as constructive trustee.

In Re Montagu’s Settlement [1987] 1 Ch 264, the tenth Duke was a beneficiary of a trust and, in the late 1940’s, disposed of certain settled chattels. He died in 1977 and the eleventh Duke, now entitled to the chattels, sued the executors of the tenth Duke on the basis that the tenth Duke was a constructive trustee of those chattels. The tenth Duke believed that he had the right to dispose of the chattels. According to Megarry V-C, ‘There was no suggestion that anyone concerned in the matter was dishonest. There was a muddle, but however careless it was, it was an honest muddle’.

The test for knowing receipt outlined in Akindele has since been confirmed by the Court of Appeal in City Index v Gawler [2007] EWCA Civ 1382 and applied most recently in Armstrong v Winnington Networks [2012] EWHC 10 (Ch) at [130]-[132] though referring to Baden types of knowledge, and by the Privy Council in Arthur v A-G of the Turks and Caicos Islands [2012] UKPC 30. However, without a clear definition of what unconscionability is, there is the risk of it being misinterpreted and misapplied by judges in future decisions. In Arthur the Privy Council held that unconscionability is ‘conduct amounting to equitable fraud’ (at [40]) but this is no less imprecise a concept.

Pursuant to the use of the unconscionability test, N Strauss QC in Starglade Properties Limited v Roland Nash [2009] EWHC 148 (Ch) held that the test was a flexible one that was of a lower standard than dishonesty in dishonest assistance.

Such sentiments were expressed by Lord Millett in Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 at [87]:

Dishonest receipt gives rise to concurrent liability, since the claim can be based on the defendant's dishonesty, treating the receipt itself as incidental, being merely the particular form taken by the defendant's participation in the breach of fiduciary duty; but it can also be based simply on the receipt, treating it as a restitutionary claim independent of any wrongdoing…

statutory conspiracy contrary to the Criminal Law Act 1977, s 1

The Criminal Law Act 1977 (CLA 1977) provides: 'Subject to the following provisions of this part of the Act, if a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, either—

1. will necessarily amount to or involve the commission of any offence, or
2. would do so but for the existence of facts which render the commission of the offence or any of the offences impossible, he is guilty of conspiracy to commit the offence or offences in question.'

Following DPP v Nock [1978] AC 979, the defendant need not have settled all the details of the offence in question but must have gone beyond merely discussing the offence and actually agreed to commit it.

Certain people are excluded from falling within the ambit of conspiracy: CLA 1977, s 2(2).

1. An accused cannot conspire with a person who is his spouse at the time of the agreement.
2. An accused cannot conspire with a child under ten years old.
3. An accused cannot conspire with an intended victim of the crime.

R v McPhillips [1990] 6 BNIL (NICA)
FACTS: D had joined in a conspiracy to plant a bomb, timed to explode on the roof of a hall at 1am when a disco would be at its height. He claimed that, unknown to his accomplices, he intended to give a warning enabling the hall to be cleared.
HELD: The Court of Appeal of Northern Ireland held per Lowry LJ:

'In regard to the offence of statutory conspiracy s 1(1) assumes the existence of an intention of the parties to carry out the agreement. But on the facts found here, this result [murder] would not have been in accordance with the intention of the appellant. Therefore he was not guilty of conspiracy to murder.'

R v Edwards [1991] Crim LR 45
FACTS: D agreed to supply amphetamine but it may have been that he did not intend to carry out the agreement.
HELD: It was held that the judge had rightly directed the jury that D could not be convicted of conspiracy to supply amphetamine unless he intended to carry out the agreement to do so.

R v Ashton [1992] Crim LR 667
FACTS: A and W were charged with conspiracy to murder. W recruited A to find someone to kill C. The person that A found went to the police and subsequently recorded conversations with both A and W using a concealed tape recorder. A said that although there was an ostensible agreement to kill C, he was motivated by friendship for W and he did not intend to carry out the agreement and was keeping everything under his control.
HELD: The court held that A was not guilty of conspiracy without giving reasons.

Although for the time being Anderson represents the law, it is thought unlikely that it would be followed by a future House of Lords. It is also worth noting that the Draft Criminal Code reasserts the traditional view of conspiracy in clause 48, which specifically requires proof that a person charged with conspiracy, and at least one other party to the agreement, must have intended the offence to be committed.

R v Siracusa (1990) 90 Cr App R 340:

'We think it obvious that Lord Bridge cannot have been intending that the organiser of a crime who recruited others to carry it out would not himself be guilty of conspiracy unless it could be proved that he intended to play some active part himself thereafter. The nub of the offence of conspiracy consists of the agreement to do the unlawful act, and that may mean that you are doing it yourself actively or that you are agreeing that somebody else should do it actively. In either event, you are guilty of conspiracy.' (Per O'Connor LJ.)

The question of whether the actions of the accused are more than merely preparatory is one of fact to be decided by the jury, providing the judge is satisfied that the actions are capable of being more than merely preparatory: CAA 1981, s 4(3).

In R Gullefer, Lord Lane CJ stated:

'An attempt begins when the merely preparatory acts come to an end and the defendant embarks on the crime proper or the actual commission of the offence.'

The accused must intend to bring about the consequences required for the full offence. This can be illustrated by the case of R v Whybrow. Here, the charge was attempted murder and therefore it was necessary to prove that the defendant intended to kill, not merely to cause GBH.

R v Toole HELD: If the substantive offence has the mens rea of either intention or recklessness as to the actus reus, to convict of the attempted offence proof of intention is required.

R v Walker & Hayles FACTS: This case was on attempted murder. The appellants threw the victim from a third floor balcony. HELD: The court held that the jury may (but do not necessarily have to) infer intention where they are satisfied that the defendant foresaw the result as a virtual certainly.

But what if the mens rea of the offence includes an element which does not relate to the actus reus? The mens rea for an attempt to commit this offence is then an intention to achieve that what is missing from the actus reus, plus the mens rea for the full offence. Att-Gen's Ref (No 3 of 1992)
FACTS: The respondents were in a moving car from which a lighted petrol bomb was thrown at an occupied car, beside a pavement on which persons were standing. The bomb passed over the car and hit a wall adjacent to the pavement. The wall was not damaged. They were charged with attempted aggravated arson contrary the Criminal Damage Act 1971, s 1(2). The mens rea for the full offence is: (a) intention or recklessness as to damaging property; and (b) intention or recklessness as to endangering life. The actus reus of this offence is damaging property. There is no need for life to be endangered (see Chapter 11). The trial judge ruled that there was no evidence on which the jury could find an intent to endanger life so the respondents were not liable.
HELD: The Court of Appeal held that for an attempt to commit aggravated arson (Criminal Damage Act 1971, s 1(2)), it was only necessary to prove an intent to achieve what was missing from the full offence, together with the other mens rea required for the offence. In the present case, what was missing to prevent a conviction for the completed offence was damage to the property. Therefore for an attempt it must be shown that D had an intention to damage propertyand the remaining state of mind required for the offence of aggravated arson – that is recklessness as to whether life was thereby endangered. It was said that another way of putting it is that the defendant had the state of mind for the full offence and he intended to do the physical element which was missing.

A conditional intention counts as an intention. So where a defendant only intends to commit an offence subject to certain condition(s), the defendant will still have the sufficient mens rea for an attempt, A-G's Ref (Nos 1 & 2 of 1979). An example of this type of intention is where D picks up a bag and looks through it but decides that there is nothing worth taking. He could be convicted of attempted theft as he has the intention to steal.

Impossibility through inadequacy arises where the crime itself is perfectly feasible, but the defendants adopt, or seek to adopt, a method that cannot work, e.g. 'poisoning' someone with a substance that, unknown to them his harmless, or trying to open a bombproof safe with explosives which cannot blow it open. Logic clearly shows that such an argument cannot succeed in any situation: a defendant who sets out to kill should not get off simply because they choose a method that is doomed to fail. Such a defendant will be convicted of an appropriate inchoate offence. However, this type of factual impossibility may provide a defence in extreme cases, such as where D tries to bring down a passenger jet by firing at it with a child's water pistol, because this type of act could not be regarded as ever preparation, let alone an act that has gone beyond preparation.

The Criminal Law Act 1977, s 1(1)(b) (in relation to statutory conspiracy) and the Criminal Attempts Act 1981, s 1(2) & (3) (in relation to statutory attempt) have reversed the common law position on impossibility in fact. This is now no longer a defence to attempt or conspiracy. So, for example, if X and Y agree that Y will stab V. Y stabs V, but V is already dead, then X and Y will be guilty of conspiracy to murder and Y will be guilty of attempted murder. This is illustrated for attempt in the House of Lords case of R v Shivpuri.

R v Shivpuri [1987] AC 1 FACTS: D was arrested with a suitcase. He admitted that it contained illegal drugs. It turned out that the contents of the suitcase were not drugs. HELD: He was convicted of attempting to knowingly be concerned in dealing with a prohibited drug contrary to s1(1) Criminal Attempts Act. The conviction was upheld by the House of Lords and the case of Anderton v Ryan was overturned.

Except where a person dies intestate in reliance on their next of kin agreeing to hold what is inherited on trust for B, to create a valid gift/trust to take effect on death, the Wills Act 1837, s 9 must be complied with.

By the Wills Act 1837, s 9 ‘no will shall be valid unless:

1. It is in writing, and signed by the testator, or by some other person in his presence and by his direction; and
2. It appears that the testator intended by his signature to give effect to the will: and
3. The signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time; and
4. Each witness either:
   1. Attests and signs the will; or
   2. Acknowledges his signature, in the presence of the testator (but not necessarily in the presence of any other witness), but no form of attestation shall be necessary.

Any gift/trust which is to take effect on death must normally comply with the formalities of the Wills Act 1837, s 9

A document that does not comply with the Wills Act can be incorporated by reference into a will, provided it is in existence when the will is executed and is referred to in the will as being then in existence. However, if this is done, the document is treated as part of the will and becomes public. This would defeat the object, namely secrecy, so, can there be a valid trust based on informal instructions to the intended secret trustee? The courts have recognised such trusts as valid provided certain criteria are fulfilled but there is some disagreement about the rationale behind this and the exact status of the trusts.

The onus is on the person claiming that a trust exists. The standard of proof for establishing the trust is the normal civil standard, namely proof on a balance of probabilities (Re Snowden [1979] Ch 528).

According to Kasperbauer v Griffith [2000] WTLR 333 the requirements for the trust to be enforced are:

1. An intention by the testator, or a person prepared to die intestate, to create a trust binding an inheritor of their property;
2. Communication of the trust to the intended trustee; and
3. Acceptance of the trust by the trustee.

The testator or intestate then relies on that acceptance by making a will, leaving a will unrevoked or not making a will at all.

Secret trusts, like any other form of express trust, must satisfy the three certainties of intention, subject-matter and objects (see Chapter 3). In particular, it must be clear that the person setting up the trust intended to impose a binding legal obligation on the trustee, not merely a moral or family obligation.

In Kasperbauer v Griffith the testator’s statement that his wife ‘knows what she has to do’ with the house was held to be too vague to create an enforceable legal obligation on the wife to hold the house on a secret trust.

Similarly, in Margulies v Margulies (1999-2000) 2 ITELR 641, a father’s ambiguous statements about the claimant’s older brother ‘knowing his wishes’ and ‘giving what’s appropriate’ were held not to create a binding legal obligation. A further argument that the father left these statements deliberately vague for tax reasons was also rejected by the court.

A fully secret trust can arise where someone dies intestate or where there is no indication on the face of the deceased’s will that a trust exists but the deceased intended the inheritor of his property to hold it on trust for someone else. There is apparently an absolute gift to the recipient. Unless a valid secret trust is established, the person inheriting will take the property beneficially. If there is no communication by the deceased to the fully secret trustee or no acceptance by the fully secret trustee, then the legatee’s conscience is clear and there is no question of using the statute as an instrument of fraud (see below), so they may take the legacy absolutely.

With a fully secret trust, communication must take place before death, whether before or after the signing of the will (if any): Wallgrave v Tebbs (1855) 2 K & J 313.

Wallgrave v Tebbs (1855) 2 K & J 313. Instructions to hold on charitable trusts were not communicated to legatees who took absolutely on the face of will, but the instructions were found amongst the testator’s papers after his death. Held: no valid trust; the legatees had not been informed of the testator’s intentions during his lifetime, so they could take free of the trust.

What must be communicated?

1. Existence of the trust
2. Terms of the Trust
3. Property subject to the trust

If a trust is to be enforced against an apparent absolute legatee, then there must be communication of the fact of the trust (i.e. its existence) Wallgrave v Tebbs (above). If the fact of the trust is communicated inter vivos, the legatee cannot take beneficially as his conscience is bound.

If the trust is to be enforced, its terms as well as its existence must be communicated inter vivos. If the trust is communicated but not its terms, the property is held on resulting trust for the deceased’s estate.

In Re Boyes (1884) 26 Ch D 531, property was left to the testator’s solicitor, who had agreed to hold the property on the terms he would receive. The testator did not, as promised, give instructions to the solicitor on how the property was to be held. Details of the intended trust were found after the testator’s death in two unattested documents. The Court of Appeal held that there was a resulting trust to the testator’s estate as the trust had not been properly communicated; per Kay J: ‘The essence of all these decisions is that the devisee or legatee accepts a particular trust which thereupon becomes binding upon him, and which it would be a fraud in him not to carry into effect’.

The deceased must have communicated details of the property subject to the trust: Re Colin Cooper [1939] Ch 580. The testator left £5,000 to two people and communicated the terms of the trust to them. By a later codicil, he increased the sum to £10,000. The addition was not communicated to the intended trustees. Held: the first £5,000 was subject to the trusts; the other £5,000 was held on a resulting trust. This was a half-secret trust case, the fact (but not the terms) of a trust appearing on the face of the will, but the principle applies equally to fully secret trusts.

Communication can generally be oral or in writing (but see below where land is involved).

It seems there will be sufficient communication if the terms are given to the intended trustee, during the testator’s lifetime, enclosed in a sealed envelope, to be opened after the testator has died. It was considered in Re Keen [1937] Ch 236 that this would suffice, provided the trustee is aware that the envelope contains the terms of the trust and he accepts it on that basis; per Lord Wright MR, ‘a ship which sails under sealed orders, is sailing under orders though the exact terms are not ascertained by the captain until later’.

Re Stead [1900] 1 Ch 237 If the testator communicates the trust to one of several trustees, but not to all of them, are they all bound by the trust?

1. General rule: only those to whom communication is made are bound by the trust (since only their consciences are affected);
2. Exception: if the gift is to joint tenants, as opposed to tenants in common, all are bound if communication took place before the execution of the will (but not if it took place after).

It does not apply to half-secret trusts if the will permits communication to be made to only one of the intended half- secret trustees when such communication is effective if made before or at the time of executing the will: Re Gardom [1914] 1 Ch 662 at 673.

Acceptance of the trust is necessary in order to bind the secret trustee. It can be express or inferred and silence may count as acquiescence: Moss v Cooper (1861) 1 J & H 352 per Wood V-C ‘Acquiescence either by words of consent or by silence’. What is vital is that the testator must reasonably believe that the trust has been accepted.

In reliance on the acceptance or acquiescence, the gift is made, or is left unrevoked (Moss v Cooper) or the deceased refrained from making a will (Stickland v Aldridge (1804) 9 Ves 516, where there was a failure to make a will, on the strength of an undertaking of the deceased’s next of kin).

In most cases, the obligation is to make some inter vivos transfer of property but in Ottaway v Norman [1972] Ch 698, the doctrine was held to apply equally to an obligation to make a will in favour of the secret beneficiary. The testator left his freehold bungalow to his housekeeper. It was agreed between them that she would devise the bungalow by her will to the testator’s son, which she failed to do. The court held that the son was entitled to the bungalow on the basis that the obligation was imposed and accepted and the means of carrying out the obligation was immaterial. Brightman J said:

I am informed that there is no recent reported case where the obligation imposed on the primary donee is an obligation to make a will in favour of the secondary donee as distinct from some inter vivos transfer. But it does not seem to me that that can really be a distinction which can validly be drawn on behalf of the defendant in the present case. The basis of the doctrine of a secret trust is the obligation imposed on the conscience of the primary donee and it does not seem to me that there is any materiality in the machinery by which the donor intends that obligation shall be carried out . . .

If there is a clear intention to create a trust but the half-secret trust is not valid, there will be a resulting trust for the testator’s estate.

This type of trust arises where it is clear from the face of the will that the property is left on trust but the will does not contain the terms of the trust, e.g. the will provides: ‘£10,000 to X on trust’ or ‘£10,000 to Y on the trusts I have communicated to him’ or ‘£100,000 to Y and Z to be dealt with as I have ordered one or other of them’ .

Hence the courts had to find some other justification for enforcing half-secret trusts. Their validity was not firmly established until the decision of the House of Lords in Blackwell v Blackwell [1929] AC 318. By codicil, £12,000 was left to five people to be applied ‘for the purposes indicated by me to them’. The terms of the trust were communicated before the codicil was executed. The House of Lords held that the trust was enforceable.

However, he also made reference, obiter, to limits, namely that a testator should not be able to give the go-by to the requirements of the Wills Act because they did not choose to comply with them:

A testator cannot reserve to himself a power of making future unwitnessed dispositions by merely naming a trustee and leaving the purposes of the trust to be supplied afterwards.

These obiter comments have been picked up in subsequent cases and used to support the view that, in the case of half-secret trusts, communication of the trust and its terms must take place before or contemporaneously with the execution of the will (contrast fully secret trusts, which are valid provided communication takes place before death, whether it occurs before or after the will).

In Re Keen [1937] Ch 236, property was left to two people to dispose of ‘as may be notified by me to them’ or either of them ‘during my lifetime’.
A sealed envelope containing the terms of the trust was given to one of the trustees before the will was executed. The Court of Appeal held that the trust failed because:

1. The will referred to a future communication, which was inconsistent with a communication already made, so the trust would fail for inconsistency with the will;
2. There was a reference to future communication, which was not permissible.

In Re Keen (above), the court referred to obiter statements in the speeches in Blackwell v Blackwell and went on to hold that, in half-secret trusts, communication cannot take place after the will. Lord Wright MR said that this ‘would involve a power to change a testamentary disposition by an unexecuted codicil and would violate s 9 of the Wills Act’.

In Re Bateman’s Will Trusts [1970] 1 WLR 1463, the testator’s will stated that income was to be paid ‘to such persons and in such proportions as shall be stated by me in a sealed letter . . . addressed to my trustees’. The court held that the trust was invalid. Pennycuick V-C said that the words:

…import that the testator may, in the future, after the date of the will, give a sealed envelope to his trustees. It is impossible to confine the words to a sealed letter already so given. If that is the true construction of the wording, it is not in dispute that the direction is invalid . . . as an attempt to dispose of the estate by a non-testamentary instrument.

It would seem from this that, whenever the trust is communicated, it will fail if the will allows for future communication.

The Wills Act 1837, s 15 provides that a witness to a will cannot benefit under it. If a half- secret trustee were to witness the will, that should not defeat the trust as the will shows that he is a trustee and s 15 provides that any benefit to a witness is void.

It is less clear what the position would be if a fully secret trustee were to witness the will. As the gift appears to be an outright beneficial gift, it would appear that they lose the gift and no trust property will come to them to be available for the secret beneficiary. It is submitted, however, that, as the intended trustee does not take the legacy beneficially and is alive to prove this, s 15 Wills Act should not defeat the trust.

If the secret beneficiary under either type of secret trust witnessed the will one would expect that they would not be allowed to obtain any benefit. In Re Young [1951] Ch 344, however, Danckwerts J held that the beneficiary under a half-secret trust could benefit on the basis that the beneficiary takes by virtue of arrangements made outside the terms of the will and so which should be unaffected by the Wills Act.

One would expect that just as a gift by will to B or to T expressly on trust for B will lapse if B predeceases the testator (if B is not the testator’s child leaving surviving issue of their own) so also a gift will lapse if to X on a secret trust for B who predeceases the testator. Surprisingly, such a gift to a secret predeceasing beneficiary was held not to lapse in Re Gardner (No 2) [1923] 2 Ch 230. Romer J erroneously assumed that B acquired a proprietary interest as if the secret trustee, T, on accepting the testator’s directions, had declared a trust for B of whatever the testator was bequeathing to T for B. Such a trust of a hope is, however, ineffective as it is not a trust of existing property. His decision ought not to be followed

Where a trustee of a half-secret trust dies the trust still subsists because ‘equity will not allow a trust to fail for want of a trustee’, so the executor will carry out the trust if it is possible to prove the terms of the trust despite the trustee’s death. Where, however, a fully secret trustee dies apparently absolutely beneficially entitled on the face of the will, quite apart from the possibility that the terms of the trust may well be lost by their death, it seems that as the will cannot operate to vest property in someone according to its terms, there can be no trust.

It was said obiter in the Court of Appeal in Re Maddock [1902] 2 Ch 220 (which concerned a fully secret trust) that the trust will fail if the secret trustee predeceases the testator or disclaims the gift. (In the case of an ordinary gift by will to a person who predeceases the testator, the gift normally lapses, i.e. fails.)

However, in Blackwell v Blackwell (which concerned a half-secret trust), it was said, also obiter, in the House of Lords that the trustee of a fully secret trust will not be allowed to defeat the testator’s purpose by renouncing the legacy. The latter view seems right in principle.

It is clearly possible for an intended trustee fraudulently to keep the property, where there is nothing in the will to indicate that they hold on trust. Equity, however, will not permit them to use the requirements of the Wills Act to keep the property, but will ensure that they hold it on trust: McCormick v Grogan (1869) LR 4 HL 82.

Blackwell v Blackwell [1929] AC 318 suggests that secret trusts operate outside (dehors) the will and are therefore not subject to the Wills Act. It would appear that communication and acceptance create the trust inter vivos. The will does not create the trust, it is merely the device for constituting it by transferring the property to the trustees. The trust is thus ‘dehors’ or outside the will. If this is correct, it would seem to apply to both fully and half-secret trusts, which makes it illogical in the case of half-secret trusts not to allow communication after the date of the will but before the testator’s death, claiming that otherwise the Wills Act would be avoided.

Re Gardner (No 2) [1923] 2 Ch 230, where the secret beneficiary predeceased the testator. The normal rule is that a gift under a will lapses (fails) if the beneficiary predeceases. The court held that the beneficiary’s interest arose as soon as the trusts were communicated and accepted, as the interest was created by agreement, not by the will. Accordingly, the beneficiary’s share did not lapse. This decision, as we have seen, is regarded as very dubious indeed because, until the testator’s death, the trust is incompletely constituted, the beneficiary only having a hope that the trust will take effect when the testator dies, hopefully solvent and not having changed his mind by leaving the property to someone else.

In Re Young [1951] Ch 344, a secret trust benefited the testator’s chauffeur, who had witnessed the will. The Wills Act, s 15 provides that a witness to a will cannot benefit under that will. The court held that the chauffeur was entitled under an oral trust declared inter vivos. Danckwerts J said:

a beneficiary under a secret trust does not take under the will, and … he is not, therefore, affected by s15 of the Wills Act 1837.

He was, therefore, entitled to benefit.

Re Baillie (1886) 2 TLR 660 suggested that a half-secret trust of land (so that the devisee could not retain the land for himself) was not enforceable without written evidence (although this case was decided before the validity of half-secret trusts was firmly established in Blackwell v Blackwell).

A key point is that an express testamentary trust arises without the need for the trustee named in the will to know of the trust let alone to agree to act as trustee, whereas a secret trust can only arise if the trustee has agreed with the testator to act as trustee. It is their reneging on this agreement after the testator’s death that is fraudulent or unconscionable conduct justifying compelling them to give effect to the agreement through the imposition of a constructive trust. There is support for this in judge and counsel ignoring the LPA, s 53(1)(b) in Ottaway v Norman (above) and in Kasperbauer v Griffith [2000] WTLR 333, where the Court of Appeal took the view (agreeing with Nourse J in Re Cleaver [1981] 1 WLR 931 at 947 that a constructive trust would be imposed to compel a secret trustee to hold trust property as had been agreed with the testator. However, as no trust was found in that case, this is only obiter dicta.

Another example: in Davies v HMRC [2009] UKFTT 138 (TC), on the death of Mrs Goodman, her estate was assessed by HMRC as chargeable to inheritance tax. Her daughters argued that part of the estate was not chargeable as it had been given to Mrs Goodman on their father's death on fully secret trust, and thus did not form part of her estate. The judge acknowledged that in principle a secret trust could be imposed in such circumstances, but found that in this particular case, no duties of trusteeship had been imposed upon Mrs Goodman. She may have wanted to benefit her daughters, but this did not arise from any legally enforceable secret trust arrangement.

The current definition of recklessness comes from the case of R v G and another [2003] UKHL 50 and was given in the context of criminal damage. Lord Bingham, with whom the other judges agreed, approved the following definition of recklessness laid down in Clause 18 of the Law Commission's Draft Criminal Code (1989):

'A person acts recklessly within the meaning of section 1 of the Criminal Damage Act 1971 with respect to –

1. a circumstance when he is aware of a risk that it exists or will exist;
2. a result when he is aware of a risk that it will occur; and it is, in the circumstances known to him, unreasonable to take the risk.'

In respect of the second part of the test, that the risk must have been objectively unreasonable, it is clear that the risk under consideration is the risk seen by the defendant. In R v G the Lords emphasised that the jury should not take into consideration circumstances not known to the accused at the time he committed the offence.

In deciding whether the risk is a reasonable one to take, the jury will consider the social utility of what the defendant is doing. If there is no social utility at all, then the jury will probably decide that even a tiny risk is unjustified.

In R v Bateman (1925) 19 Cr App R 8 (CCA), the distinction between gross negligence and civil negligence was described:

'… in order to establish criminal liability the facts must be such that, in the opinion of the jury, the negligence of the accused went beyond a mere matter of compensation between subjects and showed such disregard for the life and safety of others as to amount to a crime against the state and conduct deserving punishment.'

The doctrine of transferred malice operates to allow the mens rea against X to be transferred and joined with the actus reus that causes the prohibited harm to Y. The 'malice'’ (or mens rea) is transferred from the intended harm to the actual harm. Therefore in the above example, D's intended harm against X can be transferred to the unintended victim, Y, and D will still be guilty of the crime, even if he didn't even know that Y existed.
In R v Latimer (1886) LR 17 QBD 359, L aimed a blow at C with a belt, striking C slightly. The belt then recoiled, hitting V in the face and wounding her severely. L's appeal against his conviction under the Offences Against the Person Act 1861, s 20 was dismissed. The court held that his intention to injure C could be transferred to V.

However, it is important to note that the defendant must have the mens rea for the crime charged. It is not possible to mix and match the mens rea of different crimes. This is illustrated by the case of R v Pembliton (1874) LR 2 CCR 119. The accused threw a stone at a crowd of people. He missed them but broke a glass window behind them. It was found that he intended to hit the people but not the window. Had he injured someone, he could have been convicted under the Offences Against the Person Act 1861, s 20, but the court quashed his conviction for criminal damage since that was an offence with a different mens rea. To be liable for criminal damage, the accused must have intended to damage property or being reckless to the same. An intention to injure a person was insufficient. Therefore, transferred malice will not assist where the defendant has the mens rea for one crime and the actus reus for another.

As a general rule, the defendant must have the relevant mens rea for the offence at the precise moment when he commits the actus reus. This is known as the requirement for coincidence of actus reus and mens rea.

Fagan v Metropolitan Police Commissioner [1969] 1QB 439 FACTS: Fagan accidentally drove onto a policeman's foot. The policeman asked him to move off his foot, but Fagan put the handbrake on and refused to do so. He was charged with assaulting a police officer in the execution of his duty. At the time of driving onto the foot, which was the actus reus of the crime, he did not have the mens rea. HELD: However, the Divisional Court held that the assault involved a battery (see section.6.2) and this battery continued after the car came to rest. The actus reus was a continuing act, and it was enough that Fagan had the mens rea at some time during its continuance.

Thabo Meli [1954] 1 All ER 373 PC FACTS: The appellants hit V over the head with intent to kill him. Thinking that they had killed him, they rolled his body over the cliff to make his death appear accidental. It was later discovered that V died from exposure at the foot of the cliff. HELD: The appellants had the mens rea for murder when they hit V, but not when they did the act that caused his death, as they thought he was already dead at this point. The Privy Council said that because the appellants' acts were performed in pursuance of an antecedent plan to kill the victim, the series of acts could not be divided up. They formed one transaction and it was enough that the mens rea existed at some point during that transaction. Lord Reid said:

'It appears to their Lordships impossible to divide up what was really one series of acts in this way. There is no doubt that the accused set out to do all these acts in order to achieve their plan, and as part of their plan; and it is much too refined an argument to say that, because they were under a misapprehension at one stage and thought that their guilty purpose had been achieved before, in fact, it was achieved, therefore they are to escape the penalties of the law.'

In R v Le Brun [1992] QB 61, D assaulted his wife, hitting her on the jaw and knocking her unconscious. He then attempted to drag her home, and in doing so he accidentally dropped her and she fractured her skull on the pavement. She died from the fracture to the skull. D was convicted of manslaughter and the conviction was upheld. The court said that the unlawful act and the act causing death were all part of the 'same transaction'. Lord Lane stated that it did not matter that there was no preconceived plan and that the defendant knew that his wife was still alive. He said that the transaction continued as long as the defendant was trying to cover up the crime he believed he had committed.

In such cases, the defendant must have the mens rea for the relevant crime when he does each of the acts that could constitute the actus reus. An example of this was seen in the case of AG's Ref (No 4 of 1980) [1981] 1 WLR 705. D pushed V down some stairs. He then pulled V back up the stairs by using rope tied around her neck. He also cut her throat. It was unclear whether she had died from strangulation or the stabbing. The court said that it was unnecessary to prove which act caused the death:

'... if an accused kills another by one or other of two or more different acts each of which, if it caused the death, is a sufficient act to establish manslaughter, is it necessary in order to found a conviction to prove which act caused the death? The answer to that question is no, it is not necessary to found a conviction to prove which act caused the death.'

If the defendant does not know he is breaking the law, his mistake will not help him avoid liability. Hence, the saying 'Ignorance of the law is no excuse'. This is the case even if D's ignorance is quite reasonable, and even if it were impossible for him to know of the prohibition in question. In R v Bailey (1800) Russ & Ry 1 D was convicted of an offence created by a statute when he was on the high seas. He committed it before the end of his voyage when he could not possibly have known of the statute.

On rare occasions, a mistake of criminal law could also have the effect of preventing the defendant from forming the mens rea as in Secretary of State for Trade and Industry v Hart [1982] 1 WLR 481.

There is no general duty to act to prevent harm – R v Smith (William) (1826) 2 C&P 449

However, in order to secure a conviction based upon a failure to act, the prosecution must prove that:

1. the accused was under a legal duty to act;
2. the accused breached that duty;
3. the breach caused the actus reus of the offence to occur;
4. should the offence so require, that the accused had the requisite mens rea; and 5 the crime is one which is capable of being committed by an omission. Some offences can only be committed by an act, e.g. unlawful act manslaughter.

R v Gibbons & Proctor (1918) 13 Cr App R 134 FACTS: Gibbons lived with his girlfriend, Proctor, together with his child, Nelly, and Proctor's children from a previous relationship. Gibbons gave Proctor money for food for the family.. Proctor deliberately starved Nelly to death. HELD: The Court of Appeal noted that Gibbons was living in the same house as Nelly. It said he must have been aware of the condition of his daughter, who was little more than a skeleton when she died. If he did not see her, then that is evidence from which the jury could have decided he did not care what was happening to her and had the mens rea for murder. Gibbons was convicted of his daughter's murder based on breach of his duty as a father not to neglect her. Proctor was convicted on the basis that she had a duty to look after Nelly as she had accepted charge of her.

R v Hood [2004] 1 Cr App R (S) 431 HELD: D was held to be liable for the manslaughter of his wife who died as a result of broken bones suffered three weeks earlier after a fall. D had failed to summon medical assistance to assist her. The basis of his liability, it seems, stemmed from his relationship with her, based on marriage.

In Re A (Children) (Conjoined Twins) [2000] 4 All ER 961 (CA), both children were certain to die in the absence of a surgical procedure to separate them. The operation would save one twin, but the parents would not give their consent. The judge observed that the parents had a legal duty to the twin that could be saved. By denying that twin the chance to live, they might be guilty of killing her under the principle in Gibbons and Proctor.

R v Stone and Dobinson [1977] QB 354 FACTS: Stone lived with his mistress Dobinson. They were both of low intelligence and described as ‘inadequate’. They both accepted into their home Stone's elderly, weak and anorexic sister,Fanny. They tried to make her eat but gave up. Eventually Fanny was confined to her bed and Stone and Dobinson failed to get medical assistance.As a result Fanny died. HELD: Stone and Dobinson were convicted of her manslaughter, and their convictions were upheld, on the basis that, although neither was under a duty imposed by law to care for an ailing relative, they had voluntarily assumed this duty upon themselves.

judicial review is concerned with checking the exercise of public power. From a constitutional perspective, the courts should not be concerned with the merits of a decision, but rather with whether such a decision has been correctly made according to law. It is very important to appreciate that judicial review is not the same as appeal. The courts do not substitute their own decision for that of the decision-maker but can direct, for example, that the decision be made again in the correct manner. However, in certain cases, the findings of the judges arguably do come close to a criticism of the actual substantive merits of the decision under scrutiny.

There are a number of limitations on the availability of judicial review. There are five main preliminary issues that are relevant considerations before a judicial review claim can be pursued:

1. amenability;
2. procedural exclusivity;
3. standing;
4. time limits;
5. the possible presence of an ouster clause.

As a general rule, only 'public law decisions' are amenable to judicial review. The typical situation in which judicial review is the appropriate legal course of action is when a public body is carrying out a public function, almost always though the exercise of some form of statutory power.

In Datafin Lloyd LJ stated:

'If the source of power is a statute, or subordinate legislation under a statute, then clearly the body in question will be subject to judicial review ... if the body is exercising a public law function, or if the exercise of its functions have public law consequences, then that may be sufficient to bring the body within the reach of judicial review.'

This has been reinforced more recently by the Civil Procedure Rules Part 54.1(2)(a)(ii) which defines judicial review in terms of a claim to review the lawfulness of a decision or action 'in relation to the exercise of a public function'.

Regulatory authorities are generally found to be exercising public functions. For example, the decisions of the Advertising Standards Authority (R v Advertising Standards Authority Ltd, ex parte Insurance Services plc (1989) 9 Tr LR 169) and the Bar Council (R v Bar Council, ex parte Percival [1990] 3 All ER 137) have been reviewed by the courts. In both these cases, it was considered that, had there not been a self-regulatory authority in existence, Parliament would almost certainly have needed to intervene and regulate the activity in question.

However, some regulatory authorities have proved more problematic. In R v Football Association, ex parte Football League [1993] 2 All ER 833, even though the F.A. appeared to be carrying out a public function (and it also exercised a monopoly in which membership was compulsory), it was deemed not to be subject to judicial review.

R v Servite Houses & London Borough of Wandsworth, ex parte Goldsmith [2001] LGR 55 and R (on the application of A) v Partnerships In Care [2002] EWHC (Admin) 529 both concerned contracting-out provisions. In Goldsmith, the respondent company was found not to be exercising a public function in the provision of residential accommodation for the elderly. In Partnerships in Care, however, the managers of a private psychiatric hospital were deemed to be exercising a public function when they changed the focus of one of its wards from providing psychotherapeutic services to one primarily designed to treat patients with mental illness.

Technically speaking, although the tests for ‘public authorities’ (in human rights law) and ‘public bodies’y (judicial review) are separate, in reality there is a large degree of overlap. In Aston Cantlow and Wilmcote with Billesley Parochial Church Council v Wallbank and Another [2003] UKHL 37, Lord Hope stated that cases concerning the amenability of bodies to judicial review could not be regarded as determinative for defining a public authority under the HRA 1998, as they have different rationales. However, they could provide assistance.

In Cocks v Thanet DC, the local authority had a duty to house homeless people. The House of Lords decided that this duty could be separated into two issues. The first was a public law duty to act lawfully and apply the relevant statutory provisions correctly. Once the authority had done this, the second duty, concerning private rights, arose. The court decided that, where private rights depended upon prior public law decisions, the judicial review process should ordinarily be used. It would be an abuse of court process to allow Cocks to seek relief in respect of his claim otherwise than by an application for judicial review.

One of the most important decisions in this area is Roy v Kensington and Chelsea and Westminster Family Practitioner Committee (FPC) [1992] 1 AC 624. Dr Roy was a GP carrying out work for the NHS. Payment for his services was provided for under statutory regulations. The FPC was entitled to reduce the amount of payment if they considered that a GP was not devoting a substantial amount of time to his NHS work. The FPC took the view that Dr Roy was not doing so and therefore reduced his practice allowance by 20 percent. Dr Roy brought a private action against the FPC claiming inter alia that the Committee was in breach of contract. The FPC applied to strike out his claim as an abuse of process. According to the FPC, the correct procedure for challenging their decision was by way of an application for judicial review.

In The Trustees of Dennis Rye Pension Fund v Sheffield City Council [1998] 1 WLR 840, the Court of Appeal also made an attempt to clarify the approach the courts should adopt when considering this issue. The case involved a civil action by the plaintiff to recover money owed for repairs carried out under a building contract. Lord Woolf, applying Roy, stated that the courts should try to avoid technical arguments involving public and private law issues and should instead focus on the practical consequences of pursuing each course of action. Lord Woolf made a number of suggestions. If an applicant was uncertain as to which procedure to adopt, then judicial review should be favoured. He also suggested that consideration should be given to any interests the judicial review procedure is designed to protect, and he stressed that the courts always have the power to transfer a case, if deemed necessary.

The Senior Courts Act 1981, s 31(3) stipulates that:

'No application for judicial review shall be made unless the leave of the High Court has been obtained in accordance with the rules of court …'

Furthermore, it provides that:

'… the court shall not grant leave unless it considers that the applicant has sufficient interest in the matter to which the application relates.'

In spite of this call for a more liberal approach, a restrictive view was adopted in the High Court in R v Secretary of State for the Environment, ex parte Rose Theatre Trust Co Ltd [1990] 1 QB 504. The Rose Theatre Trust Co Ltd was formed to act as an interest group, campaigning to have an archaeological site 'listed' and protected by the government as an ancient monument. The relevant minister had refused to do so. The group consisted of people with expertise in archaeology, the theatre, literature, and other fields, and also included local councillors and an MP. Schiemann J distilled eight propositions from the Fleet Street Casuals case and held that an individual will only have standing if the statute gives the individual, expressly or impliedly, a greater right or expectation than any other citizen to have that decision taken lawfully. None of the members of the company had this in his view. Individuals who did not have standing would not gain it just because they formed themselves into a group or a company. Therefore, the company was not given standing to challenge the minister's refusal to grant the listing.

R v Secretary of State for the Environment, ex parte Greenpeace Ltd (No 2) [1994] Env LR 76. Here the environmental pressure group, Greenpeace, was held to have standing to challenge a variation of a nuclear processing licence for the reprocessing plant at Sellafield in Cumbria. In arriving at the conclusion, Otton J took into account the national and international standing of Greenpeace; its genuine concern for the environment; and the fact that it had 2,500 supporters in Cumbria. Without Greepeace's involvement, he thought that those people it represented might not have had an effective way to bring the disputed issues to court. It would have required an application by an employee of BNFL, or someone living very close to Sellafield, who might well not have had the same degree of expertise as Greenpeace, resulting in a far less well-informed challenge. Standing was therefore accepted.

Further liberalisation of the standing requirement was seen in R v Secretary of State for Foreign and Commonwealth Affairs, ex parte World Development Movement Ltd [1995] 1 WLR 386. World Development Movement Ltd (WDM) sought judicial review of a decision by the Foreign Secretary to make a substantial grant to the government of Malaysia towards the construction of a hydro-electric project on the Pergau Dam using powers in the Overseas Development and Co-operation Act 1980. In granting WDM standing, Rose LJ stated that there were a number of significant factors in the case that contributed to the decision. These included: the importance of vindicating the rule of law; the likely absence of any other responsible challenger; the nature of the breach of duty against which relief was sought; and the prominent role of the applicants in giving advice, guidance, and assistance on overseas aid.

Similarly, in the case of R (on the application of Corner House Research and another) v Director of the Serious Fraud Office [2008] EWHC 714 (Admin), the High Court was quite content to give standing to two campaigning organisations in order to allow them to challenge the legality of the Director's decision to halt investigations into allegations of bribery in relation to arms contracts with Saudi Arabia. These organisations were Corner House Research, which conducts research and campaign work in relation to environmental and social justice, and the Campaign Against the Arms Trade, arguably a more overtly political lobbying group.

This liberalising trend has also been reflected in the approach to individuals who seek to challenge administrative decisions, not so much because their own interests are directly impacted but because of their concern, as a citizen, about a particular public issue. For example, in R v Secretary of State for Foreign and Commonwealth Affairs, ex parte Rees- Mogg [1995] 1 W.L.R. 386, a former editor of The Times newspaper, who had frequently written about EU membership, was held to have standing to challenge the signing of the Treaty of European Union ('the Maastricht Treaty') because of his 'sincere concern for constitutional issues'.

In R v Somerset County Council and Another, ex parte Dixon [1998] Env LR 111, Sedley J disagreed with the test used in Rose Theatre. In his view, it was not necessary for a claimant to establish that he had a greater right or expectation than any other citizen in order to be granted leave. Judicial review was not about rights: it was about wrongs, in the context of the misuse of public power. He concluded that Dixon, who wished to challenge planning permission to extend a limestone quarry, was not a busybody or a trouble maker. He was perfectly entitled to be concerned about illegality in the planning permission process; he should not be refused leave for lack of standing.

Lord Reed commented on the balance of considerations to be taken into account by the court as follows:

'In many contexts it will be necessary for a person to demonstrate some particular interest in order to demonstrate that he is not a mere busybody. Not every member of the public can complain of every potential breach of duty by a public body. But there may also be cases in which any individual, simply as a citizen, will have sufficient interest to bring a public authority's violation of the law to the attention of the court, without having to demonstrate any greater impact upon himself than upon other members of the public. The rule of law would not be maintained if, because everyone was equally affected by an unlawful act, no one was able to bring proceedings to challenge it.'

In more recent discussion of standing by the higher courts, the judiciary has been keen to emphasise the importance to the rule of law of allowing public law decisions to be challenged, even if the connection between the individual and the issue is not a personal or immediate one. Following similar principles set out in AXA General Insurance Ltd v Lord Advocate [2011] UKSC 46, the Supreme Court in Walton v Scottish Ministers [2012] UKSC 44 stressed that it was important that Mr Walton should have standing to challenge a proposed road scheme on environmental grounds, as he was the chair of a local organisation that had been formed specifically to oppose the road scheme and had appeared at the relevant inquiry.

Nevertheless, this does not mean that individuals with a genuine concern for the matter under challenge will always be granted standing. To illustrate this, it is useful to contrast two cases concerning the sentencing of the child murderers of James Bulger. On the one hand, it was entirely clear that the convicted murderers themselves had standing, in R v Secretary of State for Home Department, ex parte Venables, [1998] AC 407 to challenge the tariff sentence set by the Home Secretary, as they were directly impacted by it. (Indeed, standing was never an issue in this case.) However, in R v Secretary of State for the Home Department, ex parte Bulger, [2001] 3 All ER 449 the application of the father of the murder victim to challenge the setting of the tariff sentence given to the two defendants was dismissed for lack of standing. The Divisional Court held that, in criminal cases, the only two parties with an interest are the Crown and the defendant, and therefore a third party does not have a right to intervene in this context.

The Human Rights Act 1998, s 6(1) creates a new head of illegality, which can be used in a judicial review action. When using this 'head', the criteria for standing is not the traditional judicial review test discussed above but the test for a 'victim' under the HRA 1998, s 7.

In Director General of Fair Trading v Propriety Association of Great Britain, [2001] EWCA Civ 217, the trade association for manufacturers in the pharmaceutical industry was held not to be a victim under the HRA 1998 but was granted standing for judicial review proceedings.

The time limit for a judicial review application is short. CPR Part 54.5(1) states that:

'a claim must be filed (a) promptly and (b) in any event no later than 3 months after the grounds to make the claim first arose'.

However, the Senior Courts Act 1981, s 31(6) makes it clear that, where there has been undue delay, judicial review can be refused if the court 'considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration'.

A total ouster clause is one that appears completely to exclude judicial review. The courts are generally hostile to total ouster clauses as they are seen, in constitutional terms,to represent a challenge to the rule of law. Judicial review is seen as a basic right of all citizens. The modern judiciary has responded by developing an extremely strong presumption of statutory interpretation that Parliament does not intend to exclude judicial review. Almost invariably, therefore, the courts will hold that judicial review was not intended to be excluded.

A partial or time limit ouster clause is a legislative provision that, on the face of it, appears to exclude the jurisdiction of the court once a time limit has expired.

It was noted above that the European Convention on Human Rights, art 6(1) has been interpreted by the European Court of Human Rights as providing a right of effective access to a court which can only be restricted if it pursues a legitimate aim and is proportionate. In Matthews v Secretary of State for Environment, Transport and the Regions [2001] EWHC Admin 851, a six-week time limit on appeals against the decision of a planning inspector was held to satisfy these requirements. It pursued the legitimate aim of certainty and finality and was not so short as to deprive appellants of a reasonable opportunity to challenge a decision.

As the House of Lords observed in R v Inland Revenue Commissioners, ex parte Preston [1985] AC 835, judicial review will not normally be granted where an alternative remedy is available. In most cases, the remedy of a taxpayer lies in the appeal procedures provided by the tax statutes. The taxpayer will be expected to use the appeal procedure rather than resort to judicial review. Preston was able to bring a judicial review because the appeal procedure did not operate in circumstances of his case.

In contrast, the claimants in R (Cowl) v Plymouth City Council (Practice Notice) [2002] 1 WLR 803 did have an alternative mechanism available to them. The Council had offered to put their grievance before a statutory complaints panel but the claimants had still sought judicial review. The Court of Appeal observed that insufficient attention has been paid to the paramount importance of avoiding litigation wherever possible and emphasised that, unless there is good reason, the courts should not permit proceedings for judicial review to proceed if a significant part of the issues between the parties could be resolved outside the litigation process.

An applicant for judicial review may seek one or more of the following remedies: (a) A 'quashing order' (formerly certiorari), quashing the impugned decision; (b) A 'prohibitory order' (formerly prohibition), preventing a public body from acting or continuing to act ultra vires or unreasonably or unfairly; (c) A 'mandatory order' (formerly mandamus), compelling the public body to perform a public law duty imposed by law; (d) A declaration, which is a statement of the legal position. This does not question the exercise of the power; (e) An injunction, ordering a party to perform, or refrain from performing, a specific act.

An applicant for judicial review may seek one or more of the following remedies:

1. A 'quashing order' (formerly certiorari), quashing the impugned decision;
2. A 'prohibitory order' (formerly prohibition), preventing a public body from acting or continuing to act ultra vires or unreasonably or unfairly;
3. A 'mandatory order' (formerly mandamus), compelling the public body to perform a public law duty imposed by law;
4. A declaration, which is a statement of the legal position. This does not question the exercise of the power;
5. An injunction, ordering a party to perform, or refrain from performing, a specific act.

If a settlor (S) wishes to give the benefit of his property (Blackacre) to someone (B), there are three basic methods of doing so (all mentioned in Milroy v Lord (1862) 31 LJ Ch, discussed in Chapter 5):

1. In the most straightforward case, S as legal beneficial owner of property may make an outright gift to B, by transferring the legal title to B, the beneficial interest passing with it to B;
2. S may transfer the legal title to trustees (TT) and declare that they are to hold on trust for B; TT will hold legal title and B will be the equitable owner. This method combines features of 1 and 3;
3. S may retain the legal title but declare that henceforth he holds Blackacre on trust for B. S has declared himself trustee of the property for the benefit of B, who is now the equitable (but not legal) owner of Blackacre.

It is noteworthy that to prevent formalities requirements causing unjust results the requirements set out below in the Law of Property Act 1925, s 53(1) do not affect the creation or operation of resulting or constructive trusts which necessarily arise informally: see s 53(2).

If a person wishes to create a trust on death, they must comply with the Wills Act 1837, s 9. All testamentary dispositions (including trusts) must be in writing, signed by the testator in the presence of two witnesses present at the same time who must attest their witnessing of the signature.

Lifetime (or inter vivos) trusts may be declared informally (orally or even by conduct -– see Paul v Constance [1977] 1 WLR 527, in Chapter 3) unless there is a specific requirement for them to be declared in writing.

Under the Law of Property Act 1925, s 53(1)(b) ‘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.’

Section 53(1)(b) applies to express trusts; LPA 1925, s 53(2) provides that the requirements of s 53(1) do not affect the creation or operation of implied, resulting and constructive trusts. Section 53(2) exempts these trusts from the need for writing. A good example of the operation of s 53(2) is the case of Hodgson v Marks [1971] Ch 892.

The Law of Property Act 1925, s 53(1)(c) sets out the formalities for the disposition of a subsisting (or pre-existing) equitable interest, whether in land or pure personalty. The interest is subsisting in the sense that, before the disposition in question, legal and equitable ownership have been separated. Section 53(1)(c) states ‘A disposition of an equitable interest subsisting at the time of the disposition must be in writing signed by the person disposing of the same or by his agent lawfully authorised in writing or by will.’ Failure to comply with s 53(1)(c) makes the disposition void.

Section 53(1)(c) applies to dispositions of subsisting equitable interests in land and pure personalty. On the first declaration of a trust of Blackacre, the settlor must comply with s 53(1)(b) but not s 53(1)(c) (i.e. when originally setting up the trust). At this point, legal and equitable ownership become separated (i.e. they are no longer in one and the same person, the settlor). If one of the beneficiaries of the trust of Blackacre later wishes to assign his interest, the assignment must comply with s 53(1)(c), not s 53(1)(b).

Unlike s 53(1)(b), s 53(1)(c) requires the disposition to be in writing (not merely evidenced in writing). The effect of non-compliance is that the purported disposition is void.

Section 53(1)(c) allows for signature by an agent but only if they have been given written authorisation for this.

In Timpson’s Executors v Yerbury [1936] 20 TC 155 Romer LJ said at 182:

Now the equitable interest in property in the hands of a trustee can be disposed of by the person entitled to it in favour of a third party in any one of four different ways. The person entitled to it:

1. Can assign it to the third party directly;
2. Can direct the trustees to hold the property in trust for the third party (see per Sargant J in Re Chrimes [1917] Ch 30 at 36);
3. Can contract for valuable consideration to assign the equitable interest to him; or
4. Can declare himself to be a trustee for him of such interest.

See the case of Zeital v Kaye [2010] EWCA Civ 159, where the Court of Appeal refused to construe an imperfect transfer of legal title to shares as an assignment of the equitable interest within s 53 (1) (c), as that was not what was intended, and also the document had not been signed by the equitable owner; it had been signed by their trustee, but the trustee had not been authorised as an agent for the purpose of s 53 (1) (c).

In Grey v IRC Mr Hunter had intended that the value in the shares should pass from himself to the beneficiaries of the six separate settlements by virtue of the oral direction to the trustees to hold the shares on the trusts of the settlement (step 3). It was argued that the term ‘disposition’ was limited in its meaning to ‘grants and assignments’, so that the oral direction was not a ‘disposition’ within s 53(1)(c) and hence did not need to be in writing. The House of Lords took the view that the oral direction was an attempted disposition of subsisting equitable interests and was ineffective since it was not in writing as required by LPA 1925, s 53(1)(c). Accordingly, the disposition of the subsisting equitable interests had been made by virtue of the confirmatory deed executed by Mr Hunter. That being a document which passes value, ad valorem stamp duty was leviable thereon. In the House of Lords, Lord Radcliffe said that the word ‘disposition’ in s 53(1)(c) covered all means and devices whereby an equitable owner effectively transfers an interest to someone else. Although it seems reasonably clear that the oral direction was a ‘disposition’ within the meaning of s 53(1)(c), it is less clear why the House of Lords levied duty on the deed. If the parties intended the deed merely to confirm a state of affairs, it does not follow that, if that state of affairs had failed to come about, the deed – intended to be confirmatory – should bring about that state of affairs. The deed, however, may well have been intended as a fallback to oust surtax payable by Mr Hunter if the shares had throughout remained beneficially owned by him.

On the face of it, a contract to assign a subsisting equitable interest cannot itself also be a disposition of such an interest: one precedes the other. Where, however, the contract is specifically enforceable, e.g. because involving shares in a private company, the equitable interest forthwith automatically passes to the purchaser by virtue of the vendor holding the interest on constructive trust for the purchaser (subject to the price being paid).

In Neville v Wilson [1996] 3 All ER 171, CA held that a contract for valuable consideration to assign an equitable interest in shares in a private company operated to transfer the interest, despite the absence of writing required by s53(1)(c) LPA 1925. The making of a specifically enforceable contract creates a constructive trust in favour of the transferee, so the s 53(2 exception for ‘the creation and operation of resulting or constructive trusts’ applies and dispenses with the requirement for writing under s53(1)(c).

Where a beneficiary (B) under an existing trust declares himself as trustee of his equitable interest for X, B is in effect creating a sub-trust but the position on the application of s 53(1)(c) is uncertain. Section 53(1)(c) does not apply to the creation of new trusts (the relevant provision is s53(1)(b), which applies only if the trust relates to land); BUT, if the sub-trust is a ‘bare’ trust, where B has no active duties, B would effectively ‘drop out’ of the picture and the original trustee would hold on trust directly for X – Grainge v Wilberforce (1889) 5 TLR 436 and Re Lashmar [1891] 1 Ch 258.

If, on the other hand, B has active duties (e.g. the sub-trust is a discretionary trust) or B declares a trust of only part of his interest (e.g. declares that he holds his equitable interest on trust for himself for life, remainder to X), it would appear that s 53(1)(c) would not apply as this would be the creation of a new trust.