In Rochefoucauld v Boustead (1897), Lindley LJ said ‘that the Statute of Frauds does not prevent the proof of a fraud; and that it is a fraud on the part of the person to whom the land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land himself’.

Section 53(1)(b) of the Law of Property Act 1925 provides that ‘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’. S53(1)(b) indicates that in cases where there is a

purported oral declaration of trust, it is not void without the element of writing,

but merely unenforceable against the trustee. This requirement of formality

can be traced to the forerunner of s53(1)(b); s7 of the Statute of Frauds 1677.

It is a ‘proof’, not a ‘validity’ formality; so the declaration renders the express

trust into existence and binds parties to it, however, since the beneficiary

cannot prove that the trust exists, there is no way for them to force the

trustee to carry it out (Penner, Law of Trusts).

However, in Rochefoucauld v Boustead, an oral express trust was

enforced against the trustee without fulfilling the writing requirement. The

Court of Appeal upheld that ‘equity will not allow a statute enacted to prevent

fraud to be used as an instrument of fraud’. Therefore, in order to prove the

express trust, parole evidence was included, despite the statutory requirement

of written evidence in s53(1)(b) (Penner, Law of Trusts). This is known as the

‘doctrine of Rochefoucauld v Boustead and it is reflected in this quote given by

Lindley LJ. He is essentially declaring that equity abhors the use of statute as

an instrument of fraud. The core function of the statutory formality rule is to

prevent fraud being practised upon a trustee by those who fabricate

allegations of trust. But, as Lindley LJ points out in this case, the insistence on

formality is not pursued to the degree that reliance upon the lack of writing is

allowed to facilitate fraud by the trustee himself. Therefore, by making an

express oral declaration that from the moment of acquisition Mr. Boustead will

hold the land on trust for Mrs. Rochefoucauld; it would be fraud in equity if he

were to rely on the absence of writing in order to deny the trust, which allowed

him to acquire title in the first place. Thus it was decided in this case, that Mrs.

Rochefoucauld was beneficially entitled to the surplus of the proceeds from

the sale of the land, after the deduction of the purchase price and expenses

incurred by the trustee (as per their agreed condition when the express trust

was declared) (Gray & Gray, Land Law).

S53(2) of the Law of Property Act provides that the documentary formality

requirement does not affect the creation or operation of resulting, implied or

constructive trusts. I will now discuss how the imposition of these trusts

uphold the doctrine of Rochefoucauld v Boustead (that statute will not be used

as an instrument of fraud) and prevent fraud without contravening statute by

enforcing a declaration of express trust.

In Hodgson v Marks, a resultin3g trust was imposed where the intentions

of the transferor were not upheld. The court held that although Mrs. Hodgson

could not have claimed an oral express trust due to s53(1)(b), the oral

agreement did prove that she did not intend to transfer the whole of her

equitable interest and therefore formed a resulting trust of the beneficial

interest to her, which would not be affected by s53(1). However, Hodgson

does not fit comfortably with the categories of the resulting trust. Swadling

argues that Russell LJ’s statement about resulting trusts is obiter and contends

that Hodgson is based on the doctrine of Rochefoucauld v Boustead, and since

Rochefoucauld upheld the oral express trust despite s 53(1)(b), Swadling

argues that Hodgson v Marks should have followed suit.

A more convincing argument is that Hodgson v Marks should be covered

by a constructive trust since the case fits more comfortably with a

constructive trust; there is no non-compliance of any statutory requirements

(s53(2) LPA 1925) (although many commentators agree with this point, it is

regarded as fallacious in Penner’s ‘Law of Trusts’ which claims that it is not

possible to give effect to an express declaration of trust for the reason that not

to do so would give rise to a fraud, and then say that the trust is constructive

arising by operation of law); and it would benefit from the underlying aim of

the constructive trust to do justice on a broad scale (Hudson, Equity & Trusts).

Equity enforces a constructive trust where someone has conducted

themselves in such a way that it would be inequitable to allow the to deny the

other party a beneficial interest in the land (Gissing v Gissing). The imposition

of a constructive trust requires: a bargain or common intention; a change of

position or detrimental reliance and equitable fraud or an unconscionable

denial of rights.

The rise of the constructive trust has obscured the principle of enforcing

the oral express trust despite the statutory formality provision (Penner, Law of

Trusts). This can be seen clearly in the case of Bannister v Bannister, which is

similar to Rochefoucauld as the fraud consisted of relying upon the lack of

writing. However, Scott LJ described the trust as a constructive trust rather

than the oral express trust, which he was clearly enforcing despite s53(1)(b).

Although he does not give a reason for doing so, academics believe that it is

because constructive trusts do not disregard statutory formalities. However,

this is deemed fallacious reasoning in Penner’s ‘Law of Trusts’ which claims

that it is not possible to give effect to an express declaration of trust for the

reason that not to do so would give rise to a fraud, and then say that the trust

is constructive arising by operation of law. The possibility of a constructive

trust arsing in Rochefoucauld v Boustead is commonly debated as this would

prevent the use of the statute as an instrument of fraud as well.

In Yaxley v Gotts, fraudulent behaviour relating to the reliance on s2 of

the Law of Property (Miscellaneous Provisions) Act 1989 to avoid an oral

agreement being effective led to the determination that the claimant was

entitled to relief under the doctrine of proprietary estoppel, which was not

necessarily invalidated by s2 of the 1989 Act. The appellants argued that the

doctrine could not validate an agreement rendered void by s3 of the 1989 Act.

The principle in Halsbury’s laws, which essentially states that the doctrine

could not validate an agreement rendered void by s2 of the 1989 Act, was

relied on. It was held, however, that the doctrine was not invalidated by the

Act, because it would be absurd if a constructive trust, which is very similar to

the doctrine of proprietary estoppel, could provide a proprietary remedy and

the doctrine could not. Additionally, it was held that since Parliament did not

view a constructive trust as undermining any policy that led to the creation of

the Act; the same should be true of the doctrine of proprietary estoppel where

the facts could equally support a constructive trust. Therefore, there is scope

for the application of the doctrine of proprietary estoppel in preventing statute

from being used as an instrument of fraud.

In three-party cases, where A transfers land to B upon trust for C; the

constructive trust approach may be used in ways which most justify the

circumstances. For example, in some cases the constructive trust could be a

bare trust for A which prevents B’s unjust enrichment; in others it could carry

out A’s intention by including the terms of the unenforceable express trust.

The former is preferable because as well as the bare trust complying with

statute, it does not enforce the express trust and B’s fraud is prevented. A

constructive trust in favour of C can be found when C has relied to his

detriment either because of a representation by A or because B has acted to

carry out the trust. This is particularly relevant where A makes a self-

declaration of trust for C, because A cannot defraud himself. This justifies

Rochefoucauld, which itself is a self-declaration case. By gratuitously

promising to buy the estates for Rochefoucauld, Boustead could be held a

settlor of the trust; and the cautionary purpose would allow him the finding of

a non-existent trust, because it would not be fraud upon Rochefoucauld if a

gratuitous promise had not been fulfilled. However, the courts finding that

Boustead had been giving effect to the express trust which Rochefoucauld had

relied upon in some way, shows that the decision made to enforce the

declaration of express trust and the doctrine resulting from it are correct.

(Penner,Law of Trusts).