The history of this case is as follows: clients mother drew up a will leaving her home to her son. The son sold the property and after costs, £24,000 + was left. He has stated that it was the intention of his mother to ensure that any money made from the sale of the property, was to go to her great gardaughter, as she is severely disabled, to improve her quality of life. This however is not stated in the will or other writings. The client states that his mother had been hospitalised for a number of years and was not up to making any changes to the will. The Benefits Agency, through cross matching, discoverd that the client has additional income. He stated that he declared no savings on his IS claim, as the monies were not his. The problem is that the money has lain in his account for 4 years. He has said that he did not trust his daughter to properly spend the money on his grandaughter, but he kept requesting she look for equipment or holidays for his grandaughter and he would pay this out of the funds. This was never done, so the money remained. The Benefits Agency decided that this was not plausable and because he had no proof of his mothers intentions as far as the money to her great grandaughter, his IS was stopped. He then put the funds into an account in his grandaughters name. He applied for IS again, but was refused on the basis, that the money was still his and he only took this action to claim benefit. During the period when the money was in his account, the client took out a substantial loan with the bank to pay for home improvements, this he would not have done, if he thought the money was his. Sorry this thread is so long, any help or guidance would be appreciated.

Hmmm - tough case, Willie. If your man is truthful, then all the time that he had the will money in his account he was the legal owner of it. The question is, was he also the beneficial owner? If his mum wasn't fit enough to tackle changing her will in favour of the great-granddaughter, she could nevertheless have charged her son verbally with the responsibility of spending the cash on the girl. This would have created a trust in favour of her, so that all along she has been the beneficial owner of the money. Switching the holding account to her name wouldn't be deprivation, because the money wouldn't be grandpa's in the first place. It would merely be making the girl legal owner as well as beneficial owner.

So, it all comes down to whether it should be accepted that such a trust existed. It may be the case that there's no written evidence of or even witnesses to the deceased's expressed wish, but that doesn't mean that grandpa's story should be rejected for lack of evidence. His own evidence should be given weight in the light of his past record and actions, as a test of credibility. The girl's mother may be able to witness his attempts to get her to commit money to her daughter's betterment, for example. And, crucially, he raised a loan for his own needs instead of dipping into the girl's cash. I'll bet he can show that the interest he pays on that loan is higher than the pro rata investment income from the girl's money !

One small down side - it would have been better to declare the grand-daughter's cash on his claim form and explain it then, rather than later !

Jim

the commentary in mesher is useful on implied trusts and beneficial ownership, and points out some case law.

i've had a few beneficial ownership cases - they are difficult, but not hopeless.

in some of these cases, there is little option other than to put cards face up on the table and throw client to the mercy and wisdom of the tribunal! i find it helps to draw up a comprehensive statement by the client, submitted with any supporting arguments eg the unlikelihood of borrowing money if he had capital, so that they understand exactly what his case is before the hearing.

in the absence of strong corroborative evidence, your client's credibility is crucial and he can expect his account to be critically questioned. it's advisable to anticipate the likely areas for scepticism and address them in the statement if possible. eg, your client's relationship with daughter, communication between them about the capital? conversations with mother re capital? witnesses?

the tribunal will test the plausibility of his account, test that the statement is his account not yours, assess his credibility, and consider possible sources which might refute his account - eg has he given a different explanation of the capital elsewhere - eg tax return?

hope this is some help.

jj

If you're suffering from insomnia there's an article on secret trusts at http://www.spr-consilio.com/Forum/app_masteradl.cfm?PostNum=792&action=detail which may interest or appall you (or both). Also see para 23 of CJSA/1395/2002 and CSB/989/1985 and R(SB) 53/83.

One way around this although it may take time and specialised legal advice will have to be sought is for the beneficiary (the granddaughter) to attempt to enforce the trust. Disputes over trusts are usually settled in the court of chancery.

A trust not involving land does not have to be in writing and if a court decides that a trust exists then your client's hand will be somewhat strengthened. I would like to see a decision maker/tribunal argue with the findings of a specialised divisional court.

To be honest I can't remember the exact details but I've had two similar cases some years ago and sought advice from the Public Law Project. They were extremely helpful and put together a challenge based on proprietary estoppel. Both appeals were upheld. PLP have an advice line for agencies and solicitors. Their website is www.publiclawproject.org.uk

I dont think the doctrine of proprietary estoppel is applicable here, for two reasons.

First, proprietary estoppel only applies to land (or real property). From the posting it would seem that it is not the house that maybe the subject of a trust but the cash proceeds from the sale of the house.

Second, in order for proprietary estoppel to apply there must be three elements present.

1. There must be a representation by A, such as " I give house(H) to B".

2. There must be a reliance by B on the representation by A, or a change of position by B, such as giving up home to move into H.

3. B must suffer a detriment by reliance on A's representation and A then resiling from that representation, i.e A denying that he gave the house to B, and, taking it back.

The court then would use proprietary estoppel to prevent A acting as such and in such a case would probably grant B a life tenancy in H as an equitable remedy.

I think that if the claimant can evidence, by his past and present conduct, an intention to apply the money for the granddaughter's benefit (i.e bank statements to show that the cash sum has remained in the bank intact in the intervening years; witness statements, say from his daughter)then a court may confirm that on the balance of probabilities, a trust does exist.

I think specific legal advice should definitely be sought on this one.

Regards
Paul