Tito v Waddell (No 2) [1977] Ch 106

Payments held ‘on trust’ for islanders following compulsory acquisition; whether trust enforceable


Banaba island was a British settlement and the land was owned by individual Banabans. The Crown granted a license to a British company to mine the phosphate which had been discovered there. The Banabans refused to sell or lease further land and the Crown compulsorily acquired it. Monies paid were to be held ‘on trust’ for the Banabans and the land was to be replanted to its former state after the mining. Some funds purchased another island and the Banabans were relocated. They sought damages for the ‘true’ value of the land, and an order for specific performance for its restoration.


The Banabans contended the Crown stood in a fiduciary position, and the figures paid for the land were substantially less than they should have been. They had not appreciated the value of the land, had received no legal advice and sought damages to the amount that ought to have been paid. Since the Crown was a fiduciary, they were under a duty to give full disclosure to the Banabans as to the land’s value, to give full commercial value to them, or to ensure they obtained appropriate advice. The Crown argued there was no trust in the truest sense and, therefore, there were no fiduciary obligations incumbent upon them. They further contended any claim for specific performance was time barred.


The Banabans were unsuccessful in their claim. Although the word ‘trust’ was used within the agreements, there was no trust in the sense of imposing fiduciary duties enforceable in the courts. The agreements imposed governmental obligations upon the Crown which were unenforceable by the courts. The order for specific performance was not granted because the relevant landowners did not appear before the court.