Rochefoucauld v Boustead [1898]

Rochefoucauld v Boustead [1898] 1 Ch. 550

Trust law – Breach of trust – Mortgages

Facts

The Court of Appeal had given an initial decision that found that B had purchased an estate, the Delmar Estates, as a trustee of R. B had owned his own portfolio of properties and had borrowed large sums of money from the mortgage company to secure the properties. The land was transferred on this basis but this was never written in the documentation. B proceeded to place a mortgage on the property and a declaration was sought by R that the property was owned by him by way of the trust. B argued that the trust, in this case, could not be enforced as it had not been written and appealed the original decision of the Court of Appeal.

Issue

The court was required to decide whether, on the facts, B had purchased the estate for his own personal use or, whether he held the property for the benefit and in trust for R. It was important to look at the nature of the agreement between the parties, on what basis that B had raised the mortgage (against which properties), and the wider circumstances regarding the purchase of the estate. 

Decision/Outcome

The court held that the trust in this situation could be evidenced by the oral agreements that were produced during the case. Lindley LJ held that equity, and the court, would not allow the statute to be used to create a fraudulent situation. On this basis, the appeal of R was allowed and B was required to pay the costs of the hearing.