Midland Bank plc v Wyatt
A declaration of trust that was never intended to take effect, and was made only to protect property from creditors, is a sham and is void.
Facts
Mr Wyatt and his wife owned their home jointly. Mr Wyatt executed a declaration of trust stating that the house was held on trust for his wife and daughters, but he kept the document in a safe and did not tell anyone about it. He later set up a business, and gave the bank a charge over his interest in the house to secure the business's debts. When the business failed, the bank sought to enforce the charge, and Mr Wyatt relied on the declaration of trust to argue that he had no interest in the house.
Legal principle
The court held that the declaration of trust was a sham and was void. Mr Wyatt had never intended the trust to take effect, and had executed the document only as a safeguard, to protect the house from his creditors if his business failed. He had continued to treat the house as his own, and had charged it to the bank. A document that the parties do not intend to create the legal rights and obligations that it appears to create will not be given effect.
Related cases on certainty of intention and subject matter
- Re Adams and the Kensington Vestry (1884) 27 Ch D 394
- Boyce v Boyce (1849) 16 Sim 476
- Comiskey v Bowring-Hanbury [1905] AC 84
- Re Golay's Will Trusts [1965] 1 WLR 969
- Re Goldcorp Exchange Ltd [1995] 1 AC 74
- Hunter v Moss [1994] 1 WLR 452
- Jones v Lock (1865) LR 1 Ch App 25
- Re Kayford Ltd [1975] 1 WLR 279
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