191:, which it had declared to its shareholders on 2 July 1964. Quistclose Investments Ltd agreed to a loan of ÂŁ209,719 8s 6d on the conditions that the dividend would be paid with it and the money would be put in a separate account (also with Barclays Bank). The money was paid into the account, but before the dividend was distributed, Rolls Razor Ltd went into voluntary liquidation. Quistclose sought to recover the money, contending that its agreement meant Rolls Razor Ltd held the money on trust. Barclays contended that the account was part of the general assets of the company and that it was entitled to exercise a
28:
207:) unanimously held that the money was held by Rolls Razor on trust for the payment of the dividends; that purpose having failed, the money was held on trust for Quistclose. The fact that the transaction was a loan did not exclude the implication of a trust. The legal rights (to call for repayment) and equitable rights (to claim title) could co-exist. Barclays, having
384:, Lord Millett spent some time considering the necessary intention. It has long been settled law that a person need not have a specific intention to create an express trust so long as the court can determine from the person's intention that a beneficial entitlement should be conferred which the law (or equity) will enforce. Thus, in
163:
If a debtor undertakes to use the loan in a particular way and segregates the creditor's money from his general assets, and the debtor becomes insolvent, the creditor's money is refundable and is not available to pay the debtor's other creditors. If the trust fails (because the purpose is not or
270:
The key issue, according to Lord
Millett, in upholding the trust concept is ascertaining where the beneficial interest in the money lies. Lord Millett suggests that there are four possible answers: (1) the lender, (2) the borrower, (3) the ultimate purpose and (4) no one in the sense that the
332:
trust from other trusts is the existence of the specific purpose for which the sums on credit must be applied and the failure of which gives rise to the trust. It must also be clear that if that specific purpose fails, the sums will revert to the person who originally advanced them.
286:
as the beneficial interest never 'results back' to the lender; it was with him all the time. However, others point out that there are many resulting trusts whose beneficial interest never leaves the donor, such as the classic example of a trust failing for uncertain objects.
271:
beneficial interest remains "in suspense". Lord
Millett then analysed all of the foregoing, and determined that the beneficial interest remains with the lender until the purpose for which the funds are lent is fulfilled. The only other reasoned decision was
319:
that it was in fact a 'quasi-trust', which is not required to satisfy "the usually strict requirements for a valid trust so far as 'certainty of object' is concerned. However, the House of Lords, on appeal, declined to endorse those comments.
361:
trusts is how narrowly the purpose has to be defined. Suggestions have been made to the effect that the general law in relation to powers would apply (such that if the purpose is sufficiently well defined to be a power, a
253:, written by Peter Millett QC, suggesting how the traditional trust need for certainty of objects (beneficiary) could be squared with the decision of the House of Lords and the refusal to accept new categories of
582:
370:
suggested that the purpose must be sufficiently well defined, but Lord
Millett distanced himself from that position by claiming that "uncertainty works in favour of the lender, not the borrower".
1040:
For a description (in French) from a civil lawyer point of view, see "Le controle de l'entreprise par ses fournisseurs de credit dans les droits francais et anglais", These,
160:" arises when an asset is given to somebody for a specific purpose and if, for whatever reason, the purpose for the transfer fails, the transferor may take back the asset.
608:
596:
782:
396:, where loans were made for a specific purpose, this may also amount to sufficient intention. If a loan is advanced for the borrower to use as he will, no
366:
trust may arise), but others have argued that to take tests from one branch of the law and apply it to another may not be appropriate. The lower courts in
429:
However, more recently, criticism has been mounted that giving a proprietary claim to a lender that enables the lender to reclaim the loan ahead of
685:
1057:
388:, where there was a solicitor's undertaking that the money should be used for only one purpose, that was held to be sufficient intent. In
488:
459:). However, should the courts start finding them with increasing frequency, it may be that regulation, or judicial revision, follows.
812:
752:
220:
75:
1082:
441:
against the borrower (and thus meaning that other creditors would not be aware of the preferential status of the lender's claim).
768:
517:
204:
87:
678:
304:
555:
215:
of Rolls Razor could not claim title to the money, as the assets did not form part the beneficial estate of Rolls Razor.
1062:
299:
trusts are not a separate species of trust at all but merely a simple trust that has certain characteristics. However,
168:
in favour of the person who originally advanced the credit and the person to whom the sums were advanced holds them as
1035:
1067:
272:
240:
157:
112:
1072:
988:
1 WLR 527, where one party said "this money is as much yours as mine", that was held to amount to a trust at law.
842:
671:
529:
481:
165:
908:
224:
79:
447:
trusts still remain relatively uncommon, and as yet, there has been no clamour for legislation or regulation (
1077:
254:
1087:
264:
1041:
1001:, bank loan documents in England began to include clauses covenanted to use the loan for a stated purpose.
267:, whose judicial analysis unsurprisingly closely mirrored what he had suggested twenty years previously.
228:
83:
798:
620:
474:
541:
828:
701:
309:
259:
275:, who agreed with Lord Millett but disagreed as to whether it was an express or resulting trust.
216:
71:
195:
of the money in the account against the debts that Rolls Razor owed with respect of
Barclays.
249:
trusts was the source of some debate. Shortly after the decision, an article appeared in the
635:
380:
145:
8:
853:
456:
742:
724:
505:
430:
419:
153:
772:
1031:
858:
650:
438:
184:
149:
640:
625:
984:
832:
802:
788:
572:
434:
212:
137:
818:
758:
728:
54:
1011:
712:
283:
180:
120:
654:
211:
of the trust, could not retain the money as against
Quistclose. Similarly, the
156:
case, which invented a new species of proprietary interest in
English law. A "
1051:
738:
423:
315:
263:, the House of Lords reviewed the law, and the leading judgment was given by
192:
422:
for customers' money to be placed in to guard against the insolvency of the
863:
357:
One issue that has to date escaped notice in the judicial consideration of
663:
452:
466:
350:
sums advanced on the basis of an undertaking for a specific project; and
414:
340:
trusts have been upheld are varied. They have been upheld in cases of:
412:
trust, it was suggested that the concept was unambiguously good. In
353:
advance payments made on credit for the purchase of specific goods.
188:
169:
303:
trusts are often regarded as somewhat special and distinct. The
208:
27:
203:
The House of Lords (with the leading judgment being given by
969:
Implying that a lack of certainty over the purpose makes it
973:
likely that a trust will be found in favour of the lender.
433:
has the effect of putting the lender in the position of a
231:
all agreed with the judgment that Lord
Wilberforce gave.
347:
sums advanced for the specific payment of a creditor;
344:
sums advanced for the specific payment of a dividend;
784:
Westdeutsche
Landesbank Girozentrale v Islington LBC
164:cannot be fulfilled), the sums become subject to a
1010:For example, in the way that judicial findings of
1049:
455:when the insolvency law was last revised in the
282:trust is indubitably a trust but would not be a
133:Barclays Bank Ltd v Quistclose Investments Ltd
21:Barclays Bank Ltd v Quistclose Investments Ltd
679:
482:
931:Carreras Rothmans v Freeman Mathews Treasure
584:British Eagle Ltd v Cie Nationale Air France
394:Carreras Rothmans v Freeman Mathews Treasure
142:Quistclose Investments Ltd v Rolls Razor Ltd
693:
686:
672:
489:
475:
426:was a proper and responsible thing to do.
408:In the early stages of development of the
26:
814:Barclays Bank Ltd v Quistclose Invest Ltd
754:Vandervell v Inland Revenue Commissioners
496:
373:
543:Re Yorkshire Woolcombers Association Ltd
518:British India Steam Navigation Co v IRC
437:, but without the need to register any
1058:Wills and trusts in the United Kingdom
1050:
920:Barclays Bank v Quistclose Investments
187:. It still needed more money to pay a
1014:became prevalent in mortgage lending.
667:
470:
451:trusts were not even addressed under
245:The conceptual analysis underpinning
597:Aluminium BV v Romalpa Aluminium Ltd
982:The most commonly cited example is
769:Re Vandervell’s Trustees Ltd (No 2)
556:National Provincial Bank v Charnley
13:
997:Not by coincidence, shortly after
568:Barclays Bank Ltd v Quistclose Ltd
14:
1099:
328:However, what differentiates the
530:Salomon v A Salomon & Co Ltd
241:Quistclose trusts in English law
1083:1968 in United Kingdom case law
1004:
991:
976:
843:Resulting trusts in English law
290:
234:
963:
947:
936:
924:
913:
902:
893:
884:
875:
1:
1020:
403:
295:It is sometimes argued that
7:
954:Re Kayford (in liquidation)
462:
313:Lloyd's Rep 438, suggested
278:Some have suggested that a
221:Lord Morris of Borth-Y-Gest
198:
76:Lord Morris of Borth-Y-Gest
10:
1104:
799:Air Jamaica Ltd v Charlton
621:Re Brumark Investments Ltd
418:, it was suggested that a
323:
238:
1063:English property case law
1042:Panthéon-Assas University
839:
825:
809:
795:
779:
765:
749:
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721:
709:
699:
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108:
103:
98:
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67:
62:
50:
42:
34:
25:
20:
869:
829:Twinsectra Ltd v Yardley
702:Law of Property Act 1925
336:The situations in which
310:Twinsectra Ltd v Yardley
260:Twinsectra Ltd v Yardley
175:
1068:English trusts case law
1026:William Swadling, "The
716:(1875) LR 10 Ch App 343
305:English Court of Appeal
1073:Lord Wilberforce cases
694:Resulting trusts cases
641:[2005] UKHL 41
626:[2001] UKPC 28
374:Certainty of intention
704:ss 53(1)(c) and 60(3)
573:[1968] UKHL 4
497:Cases on secured debt
138:[1968] UKHL 4
1078:House of Lords cases
943:Twinsectra v Yardley
636:Re Spectrum Plus Ltd
381:Twinsectra v Yardley
251:Law Quarterly Review
1088:Barclays litigation
854:Beneficial interest
457:Enterprise Act 2002
431:unsecured creditors
899:(1985) 101 LQR 269
725:Tinsley v Milligan
506:Holroyd v Marshall
420:segregated account
859:Spendthrift trust
849:
848:
661:
660:
651:Security interest
609:Re BCCI SA (No 8)
509:(1862) 10 HLC 191
439:security interest
400:trust can arise.
185:Barclays Bank Ltd
183:owed ÂŁ484,000 to
150:unjust enrichment
129:
128:
1095:
1015:
1008:
1002:
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989:
985:Paul v Constance
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521:(1881) 7 QBD 165
491:
484:
477:
468:
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435:secured creditor
205:Lord Wilberforce
158:Quistclose trust
99:Lord Wilberforce
88:Lord Wilberforce
63:Court membership
30:
18:
17:
1103:
1102:
1098:
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1093:
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1018:
1012:undue influence
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890:AC 567, 580-582
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845:
835:
821:
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713:Fowkes v Pascoe
705:
695:
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583:
575:
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548:
542:
534:
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406:
376:
326:
293:
284:resulting trust
243:
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201:
181:Rolls Razor Ltd
178:
166:resulting trust
144:) is a leading
125:
121:resulting trust
86:
82:
78:
74:
57:
46:31 October 1968
12:
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5:
1101:
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1038:
1030:trust" (2004)
1022:
1019:
1017:
1016:
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990:
975:
962:
956:1 WLR 279 and
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655:UK company law
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392:itself and in
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257:in equity. In
239:Main article:
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68:Judges sitting
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38:House of Lords
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23:
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1036:1-84113-412-0
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739:Tribe v Tribe
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316:obiter dictum
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273:Lord Hoffmann
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255:purpose trust
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94:Case opinions
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37:
33:
29:
24:
19:
16:
1027:
1006:
998:
993:
983:
978:
970:
965:
958:Re EVTR Ltd.
957:
953:
949:
942:
938:
930:
926:
919:
915:
904:
895:
886:
877:
864:Totten trust
827:
811:
797:
781:
767:
751:
737:
723:
711:
634:
619:
607:
595:
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567:
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528:
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296:
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291:Requirements
279:
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269:
265:Lord Millett
258:
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246:
244:
235:Significance
202:
179:
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141:
132:
131:
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113:
15:
881:AC 567, 568
743:EWCA Civ 20
453:English law
229:Lord Pearce
84:Lord Pearce
1052:Categories
1028:Quistclose
1021:References
999:Quistclose
773:EWCA Civ 7
449:Quistclose
445:Quistclose
415:Re Kayford
410:Quistclose
404:Criticisms
398:Quistclose
390:Quistclose
386:Twinsectra
368:Twinsectra
364:Quistclose
359:Quistclose
338:Quistclose
330:Quistclose
301:Quistclose
297:Quistclose
280:Quistclose
247:Quistclose
225:Lord Guest
213:liquidator
114:Quistclose
80:Lord Guest
600:1 WLR 676
588:1 WLR 758
217:Lord Reid
140:(sub nom
72:Lord Reid
51:Citations
960:BCLC 647
559:1 KB 431
547:2 Ch 284
463:See also
199:Judgment
189:dividend
146:property
104:Keywords
909:UKHL 12
833:UKHL 12
803:UKHL 20
789:UKHL 12
424:company
324:Purpose
193:set-off
170:trustee
43:Decided
1044:, 2007
1034:
933:Ch 207
819:UKHL 4
759:UKHL 3
729:UKHL 3
612:AC 214
209:notice
154:trusts
58:AC 567
55:UKHL 4
870:Notes
639:
624:
571:
533:AC 22
307:, in
176:Facts
136:
116:trust
35:Court
1032:ISBN
971:more
841:see
649:see
227:and
152:and
653:in
378:In
1054::
223:,
219:,
172:.
148:,
687:e
680:t
673:v
490:e
483:t
476:v
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