National Iranian Oil Company v Retirement, Savings and Welfare Fund of Oil Industry Workers v Crescent Gas Corporation Limited [2025] EWCA Civ 211 and Its Implications for TLATA Cases

Synopsis

The Court of Appeal upheld a judgment from the King’s Bench Division of the High Court (Business and Property Courts). The case confirms that s 53(1)(b) of the Law of Property Act 1925 (‘the LPA 1925’) – a declaration of trust respecting land or any interest therein must be in signed writing – requires the personal signature of the settlor, not a signature of an agent or other third party acting on their behalf. Further, where s 53(1)(b) of the LPA 1925 has not been complied with, the court cannot recognise the existence of the trust (Zacaroli LJ dissenting). The decision has implications for cases where it is alleged a trust of land has arisen by virtue of an express declaration of trust.

Background

In 2001, Crescent Gas Corporation (‘CGC’) entered into an agreement with the National Iranian Oil Company (‘NIOC’) to purchase gas. NIOC breached that agreement as no gas was ever supplied. CGC subsequently commenced arbitration proceedings in July 2009 which led to an award of just under $2.5 billion in their favour. In August 2022, Knowles J granted CGC permission to enforce their award and CGC subsequently sought to register an interim charging order against a property in London which NIOC had purchased in 1975. It later transpired that NIOC had transferred this property into the names of the second appellant within weeks of Knowles J’s order granting permission to enforce the arbitral award.

CGC subsequently issued a claim under s 423 of the Insolvency Act 1986 on the basis that the transfer of the property was at an undervalue with the purpose of putting assets beyond their reach. NIOC defended the claim on the basis that the transfer did not fall within s 423 pursuant to a concept of Iranian law and, as a secondary position, that NIOC had on various occasions declared a trust of the property in favour of the second appellant.

The matter came before Sir Nigel Teare (sitting as a High Court judge) who found for CGC.

NIOC was subsequently granted permission to appeal on three grounds:

1. That the judge was wrong to conclude that a document signed by an agent cannot satisfy the requirements of s 53(1)(b) of the LPA 1925.
2. That even if the judge was right in his interpretation of s 53(1)(b), he was wrong to conclude that the documents were not signed by NIOC.
3. That even if there was no document which satisfied the requirements of s 53(1)(b), he was wrong to find that the consequence was that the fund could not rely on the trust.

Ground 1 in particular has relevance for cases where a cohabitant or former cohabitant relies on a declaration of trust in relation to a property. It was common ground that there is no case that has authoritatively determined this point.

The Court of Appeal’s decision

The Court of Appeal upheld the trial judge’s finding that a signature by an agent was insufficient to satisfy the requirements of s 53(1)(b) LPA 1925. The majority (Falk LJ and Sir Julian Flaux, Chancellor of the High Court) found that the fact s 53(1)(b) is expressed in mandatory terms – i.e. ‘a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will’ – means that if there is no evidence which complies with the subsection, the court cannot recognise the existence of the trust. The trust was unenforceable and could not be relied upon due to the failure to comply with s 53(1)(b), the documents not having been signed by NIOC, but by its agent.

The implications for Trusts of Land cases

Section 53(1)(b) LPA 1925 provides that a declaration of trust must be ‘manifested and proved by some writing signed by some person who is able to declare such trust or by his will’. This case determines for the first time that s 53(1)(b) does not permit signature by an agent. The Court of Appeal noted that s 53(1)(a) (which deals with creating or disposing of an interest of land) and s 53(1)(c) (which deals with the disposition of an equitable interest or trust) both contain express provisions allowing an agent who is ‘lawfully authorised’ to sign on behalf of the person holding the interest in land. The case establishes that the omission of these words from s 53(1)(b) is deliberate as it sits in a different category since declaring a trust requires specific evidence of intention, which must be satisfied by the signature of the property owner(s).

Consequently, for a declaration of trust to bind it must be signed by the property owner personally; a declaration signed by a solicitor, property manager or other third party will not be binding, even if that person signed under a properly executed power of attorney. If the property that is subject to the declaration of trust is a company, the declaration must be executed in accordance with s 44 of the Companies Act 2006 by affixing a common seal or by ensuring that the declaration is signed by two authorised signatories or one director attested by a witness.

In the absence of proper compliance with s 53(1)(b) the court cannot recognise the existence of the trust, and the settlor will remain the beneficial owner, subject to potential arguments about unconscionability or the imposition of a common intention constructive trust in a family context.