Hasham v Zenab (1960)

English Equity & Trusts

Hasham v Zenab
‘Palace Gate, Udaiper’ by Colin Campbell Cooper

Specific performance and cessation of contract on grounds of mistake, are both viable arguments for either continuation of contractual obligations, or the cessation of a transaction for reasons non-detrimental to both contractees. However, both approaches rely upon the honesty and accountability of at least one party should the courts take a view to upholding either of them.

In this instance, a Gujarati widower entered into an agreement to convey a determinate plot of land for an agreed sum, yet immediately after signing the disposition, she tore up the document and refused to continue with the transaction on grounds that she had been misled as to (i) the size of the plot, and (ii) the identity of the individual to whom the purchaser was planning to sell it to.

During initial litigation in the Supreme Court of Kenya, her argument for the fraudulent misrepresentation was based upon her limited grasp of the English language, and so she had elected a representative to be present with her at the time of signing. However, it was also argued that no mention had been given of the size of the plot, which in the first instance was alleged to be half an acre, and not the two acres contained within the conveyance, a fact discovered only after the signing.

When cross-examined, the respondent was proven to have falsified the statement, and thus her witness was accused of perjury, whereas contrastingly, the appellant contested that during preliminary talks, the proposed plot was described as two acres, and not the half-acre suggested.

The contract itself was signed in the presence of a third party, however the respondent also relied upon the contention that at no point during an earlier meeting did anybody translate the contents of the contract, despite the appellant claiming that not only did he explain it, but that the respondent’s cousin had also clarified its contents to her.

It was likewise argued by the appellant that the respondent tore up the contract, not because of the plot variation, but upon the knowledge that the land was to be resold to an individual she disliked, however this was also proven to be untrue after lengthy cross-examination and questioning of oral evidence.

Upon summation, the trial judge awarded in favour of the appellant, despite reservations around the integrity of both parties, and so when presented to the Court of Appeal of East Africa, the Court took issue with the reliability of the appellant’s statements and proceeded to reexamine the facts, before reaching the same conclusion as the lower court.

Take finally to the House of Lords, it was noted that vol. 2 of ‘Williams on Vendor and Purchaser’ clearly illustrated that:

“[A]s a rule, either party to a contract to sell land is entitled to sue in equity for specific performance of the agreement. This right is, in general, founded on a breach of the contract, but not in the same manner as the right to sue at law. The court has no jurisdiction to award damages at law except in case of a breach of the contract; while the equitable jurisdiction to order an agreement to be specifically performed is not limited to the cases in which at law damages could be recoverable.”

Which translated that when contracting parties hold a good account of themselves throughout their dealings, equity would provide sufficient weight as to instigate specific performance; yet on this occasion, neither party had been anywhere near as truthful as a court would rightfully expect, and so on this principle it was impossible to uphold the appeal, nor enforce the equitable rights of the appellant, or those forwarded by the respondent, thus the appeal was dismissed while the House held that:

“In equity all that is required is to show circumstances which will justify the intervention by a court of equity.”

Blackwell v Blackwell (1929)

English Equity & Trusts

Blackwell v Blackwell
‘The Artist’s Mistress’ by Charles Sims

Verbal instructions that are then attested and complied with by the named trustees before the death of a testator, fall neatly between the rules of wills and probate and the equitable field of trust law. On this occasion, the wish of a dying man was such that a large sum of money was to be held upon trust for a party outside of his marriage while unknown to his widow.

Having long agonised over his duty to make provisions for a mother and a child borne out of wedlock, it was decided by the testator to set aside several thousand pounds in the wish that five of his closest friends would act as trustees with the express purpose of investing the funds for the benefit of the two named parties, until such time that the trustees elected to provide them with two thirds of the initial sum, before placing the remaining third back into the residuary estate of his final will.

Upon his death, his widow discovered the bequest, and looked to dismiss its validity upon grounds of fraud and contradiction to the terms of the will where his widow and their son were to benefit from his entire estate. As was common to domestic legislation, s.9 of the Wills Act 1837 read that no will (or codicil) shall be valid unless set in writing and signed by the testator in accordance with statute. On this occasion, the instructions given by the deceased were initially verbal, and only put to writing by means of a memorandum drafted by his solicitor, who himself signed as a trustee and submitted it in support of the codicil.

Using the terms contained within the 1837 Act, it was argued that while the trust memorandum was written, the execution of the codicil was oral, and therefore fell outside the powers granted beneficiaries, unless it was in effect, designed to stand for the sole benefit of the widow through the residual estate; in which case the trustees would be acting in fraud should they look to enforce the terms of the codicil.

While decided twice in favour of the trustees, it was later put before the House of Lords, where the rules of equity were scrutinised in conjunction with proven case law. Having examined the principle that ‘equity will not permit statute to be used as a cloak for fraud’, it was found that where a testator propounds a desire to execute a trust, and then proceeds to provide explicit instruction as to its use, any argument that seeks to undermine the intentions of that person through the use of legislation, must then find themselves party to fraud if they would instead stand to benefit from the funds expressly requested for the enjoyment of another.

In circumstances such as these, it was historically preferred that equity imputes the same responsibility as that agreed to by the original trustee, so that they would then act under the same instructions so as to permit the objective of the deceased to be realised, while this transference effectively circumvents the fraud and makes right, that which is prima facie claimed wrong.

Resting upon this proven application of jurisprudence, the presiding Lords established that far from looking to dissect the flaws proposed by the appellants, it was clear that any conflict arising from a lack of signatory validation, was insufficient when looking to overrule the will of the testator against a trust that by all accounts, left no illusions as to its purpose and means of delivery, and so awarded for the trustees while holding that:

“[V]erbal or written instructions communicated by a testator to a legatee and assented to by him create an enforceable trust…”