ROCHEFOUCAULD v BOUSTEAD

Does the creation of a trust rely upon written acknowledgement, or can the verbal promises of another to act in many respects as a fiduciary, provide evidence enough of an intention to serve as a trustee?

In an unusual arrangement between a lady of nobility and her business associate, the latter was asked to purchase an estate that she might otherwise lose through the rigours of her recent divorce.

While once a thriving coffee plantation, the land in question was by all accounts operational but subject to increased crop damage; yet without the revenue historically provided, there was little chance that the appellant could continue to live within means accustomed to.

This led to her asking her colleague to secure a conveyance of the property from the mortgagees on the proviso that she would over time, reimburse him for the cost of the purchase and any additional costs incurred during the management and administration of the business. 

Although not expressly stated in any official correspondence at the time, this verbal arrangement served to create a settlor and trustee relationship that benefitted both parties, albeit with overall beneficial interest remaining in the hands of the appellant.

After a number of years, the company deteriorated into insolvency, whereupon the appellant made claim for her beneficial title to avoid any loss to creditors.

It was then argued that the mortgage had enabled the respondent full legal title to the land (upon which he had previously mortgaged out portions for personal profit), and that this deed protected any claim to the contrary.

The right was claimed in addition to the twelve years where no legal proceedings were instigated by the appellant; a delay which  was ultimately denied through the statute of limitations and the estoppel of laches.

When first heard, the judge awarded in favour of the defendant with little investigation of the collected evidence; and so, when taken to appeal, the Court was more diligent when reaching a verdict.

Having looked closely at the correspondence both before and after the initial conveyance, it became clear that while nothing had been set to paper, there was never any indication that anything less than a trust/trustee arrangement had been effected, and that the appellant’s beneficial interest was never held in question.

Adding to the fact that the respondent had acted in a clandestine manner when selling land for gain before destroying the business accounts, there was little upon which he could rely when claiming ‘reasonable’ behaviour.

With collective agreement that the appellant did have a right to claim legal title upon grounds of an express trust, the only stumbling block was the length of time in which it took her to seek remedy.

Having then explained that financial difficulties, faith in the defendant’s honesty and conflicting legal advice had dissuaded her from pursuing it in the courts, the judges concluded that there was nothing justiciable to prevent her from recovery of the estate; and so, reversed the previous judgment and awarded in her favour, while the court reminded the parties that:

“[I]t is a fraud on the part of a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land himself.”