Paul v Constance [1977]

Facts

• After separating from his wife, Constance moved in with Ms. Paul.

• Constance opened a bank account in his name, into which both he and Ms. Paul deposited money, including winnings from bingo.

• Upon Constance's death, Ms. Paul sought to claim part of the money in the account.

• Ms. Paul had no legal claim because they were not married, but argued that the money was shared.

• Constance had frequently stated, "the money is as much yours as it is mine," indicating an intention to treat the money as joint property.

Outcome

• The court ruled in favour of Ms. Paul, recognising the money as being held on trust for both parties.

• Despite Constance holding the legal title to the account, the court determined that the money was shared between them, based on their actions and Constance's verbal statements.

• The ruling emphasised that the use of formal legal terms or the word "trust" was not necessary to create a trust.

Impact and Analysis

• The case established that a trust can arise based on the substance of the relationship and intention, even without formal language.

• Lord Scarman acknowledged that the case was "borderline" and lacked a single, clear event marking the declaration of the trust.

• The decision reinforced that verbal statements and actions can demonstrate an intention to create a trust, overriding the need for formal legal documentation.

• This case is key in understanding informal or implied trusts, particularly when it comes to sharing property without formal agreements.