Paul v Constance [1976]

Paul v Constance [1977] 1 WLR 527 (CA) is a leading authority on the requirement of certainty of intention in the law of trusts. The case establishes that a trust may be created without formal or technical language, provided the settlor’s words and conduct, viewed objectively, demonstrate a clear intention to hold property for the benefit of another. It confirms that equity looks to substance rather than form and will recognise a trust even where the parties are informal or unaware of legal terminology.

The facts arose out of a domestic relationship. After his marriage broke down, Mr Constance lived with Ms Paul. Following a workplace accident, he received compensation of £950 and opened a bank account in his own name, since the couple were not married. Although the account was legally his alone, he repeatedly told Ms Paul that “the money is as much yours as mine”. The couple treated the account as shared: they paid in joint bingo winnings and made withdrawals for their mutual benefit. When Mr Constance died intestate about a year later, both Ms Paul and his estranged wife claimed entitlement to the money. The dispute turned on whether the account was held solely for Mr Constance or on trust for both of them.

The Court of Appeal held that a trust had been created in favour of Ms Paul. Scarman LJ emphasised that the court must consider the words and actions of ordinary people in their everyday context rather than expecting technical legal expressions. Although Mr Constance had not used formal trust language, his repeated statements that the money was “as much yours as mine”, together with the way the account was operated in practice, showed a clear intention that Ms Paul should have a beneficial interest. This amounted to an effective declaration that he held the money on trust for them jointly.

The significance of the decision lies in its clarification of the first of the three certainties, certainty of intention. It demonstrates that an express declaration of trust does not require special words such as “trust” or “trustee”. What matters is whether the settlor’s language and conduct, assessed objectively, reveal an intention to create enforceable equitable rights. The case therefore reflects equity’s pragmatic approach and is frequently cited as authority that intention can be inferred from informal dealings and everyday speech.