It’s a matter of trust

In this, the 100^th anniversary year of the Law of Property Act 1925, the Court of Appeal has resolved a question under s. 53(1)(b) of the 1925 Act that has gone unanswered for all 100 of those years, at least at appellate level. Indeed, the same question arose under s. 7 of the Statute of Frauds 1677. So, it has awaited a clear answer for 348 years.

1. 53(1(b) of the 1925 Act reads as follow:

“(b) 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.”

The question that has taken so long to be authoritatively determined is whether a document signed by the settlor’s agent with the settlor’s authority is sufficient to prove a declaration of trust for the purposes of s. 53(1)(b). That issue was key to the decision in National Iranian Oil Company and another v Crescent Gas Corporation [2025] EWCA Civ 1211 in which the Court of Appeal handed down judgment on 30 September 2025. In short, it was decided that signature by an agent on behalf of a trustee was not sufficient compliance with s. 53(1)(b). Do read on, though, as there is more to the decision than is encapsulated in the previous sentence.

The Facts

National Iranian Oil Company (“NIOC”) is the Iranian state-owned oil and gas company.  In 2001 it entered into a contract with Crescent Petroleum Company International Ltd to supply it with gas. No gas was supplied. Crescent Petroleum Company International Ltd assigned its rights under the contract to its subsidiary, Crescent Gas Corporation (“CGC”), which commenced an arbitration leading to an award of US $2.4 billion in favour of CGC. CGC sought a charging order over NIOC House, commercial premises in London with a value of the order of £100m, by way of partially enforcing the award.

NIOC House had been registered at the Land Registry in the name of NIOC but by the time of the application for a charging order NIOC had transferred it to an associated body, the Retirement, Savings and Welfare Fund of Oil Industry Workers Fund (“the Fund”), an Iranian pension fund. CGC brought a claim in the High Court for relief under s. 423 of the Insolvency Act 1986 on the ground that the transfer was a transaction at an undervalue.

Insofar as relevant to this article, NIOC and the Fund resisted the claim on the basis that NIOC held NIOC House on trust for the Fund, so that the transfer effected no change of beneficial ownership and hence was not at an undervalue. At first instance, before Sir Nigel Teare sitting as a High Court Judge, it was held that three documents entered into between NIOC and the Fund prior to the transfer had contained declarations of trust by NIOC in favour of the Fund, but they were signed by agents on behalf of NIOC. The Judge held that the documents were not effective to create an enforceable trust because they were not signed by NIOC itself. The Judge decided that signature by an agent was not sufficient to comply with s. 53(1)(b). So, at first instance it was held that there had been a transaction at an undervalue.

The decision on appeal

NIOC were granted permission to appeal on three grounds:

1. The judge was wrong to conclude that a document signed by an agent was insufficient to prove a declaration of trust.
2. On the facts, the Judge was wrong to conclude that NIOC had not signed the documents in question.
3. If the Judge was right on (1) and (2), NIOC could still rely on the trust which the Judge had found to be declared, albeit not evidenced in accordance with s. 53(1)(b).

On the first two grounds, the three members of the Court, Sir Julian Flaux, the Chancellor, Zacaroli LJ and Falk LJ agreed that the appeal should be dismissed. On the third issue, Zacaroli LJ would have allowed the appeal but he was in a dissenting minority.

Zacaroli LJ gave the leading judgment on the first two issues. His reasoning and conclusions on those issues can be summarised as follows:

• 53(1)(a) and s. 53(1)(c) of the 1925, expressly permit signature by an agent of, respectively an instrument creating or disposing of an interest in and an instrument disposing of an equitable interest or trust subsisting at the time of the disposition.
• In contrast, s. 53(1)(b) makes no mention of an agent and requires a declaration of trust to be evidenced by a document signed by “by some person who is able to declare such trust”.
• No previous decision had authoritatively decided whether an agent’s signature complied with s. 53(1)(b) or with its predecessor, s. 7 of the Statute of Frauds.
• Although not unanimous, the preponderance of the opinions expressed in textbooks considering s. 53(1)(b) of the 1925 Act or s. 7 of the Statute of Frauds favoured the view that signature by an agent was insufficient for those sections.
• 3 of the Statute of Frauds, the precursor to s. 53(1)(a), expressly referred to signature by an agent. In contrast, ss. 7 and 9, the precursors to s. 53(1)(b) and (c) respectively, did not. That was a strong indication that signature by an agent was not intended to be sufficient under ss. 7 and 9.
• In Zacaroli LJ’s view, the contrast between s. 3 of the Statute of Frauds (and sections 4 and 16 which also referred to signature by an agent) and s. 7 of the Statute of Frauds indicated that s. 7 did not permit signature by an agent.
• 53(1)(b) of the 1925 Act was not intended to expand the class of persons who can sign a document evidencing a declaration of trust permitted by s 7 of the Statute of Frauds (in contrast to s. 53(1)(c) which includes a reference to agents that is not present in s. 9 of the Statute of Frauds).
• Consequently, in relation to natural persons, “s.53(1)(b) requires written evidence of the declaration of a trust over land to be signed personally by the settlor or, if relevant, the person holding the relevant interest which is the subject matter of the trust, and not by their agent.”
• Even for companies, which necessarily can only act though human agents, a declaration of trust must be evidenced by a document that bears the signature of the company, not a signature made on behalf of the company by an agent.
• For the purposes of s. 53(1)(b) a document bears the signature of an English or Welsh company if it is executed in one of the ways permitted by s. 44 of the Companies Act 2006 (affixing the company’s common seal, signature by two directors or a director and the secretary or signature of one director in the presence of an attesting witness). For overseas companies such as NIOC, execution in compliance with regulation 4 of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 amounts to signing by the company.
• The Court of Appeal’s decision in UBAF Ltd v European American Banking [1984] QB 713 which suggested that a company could sign a document through an authorised agent was distinguishable because the law regarding execution of documents by companies was moved on by s. 36A of the Companies Act 1985 and later by s. 44 of the 2006 Act.
• On the facts of the case, there was no declaration of trust signed as required by reg. 4 of the 2009 Regulations and so no document evidencing the declarations of trust as required by s. 53(1)(b).

It is important to remember that s. 53(1)(b) does not require an express declaration of trust regarding land or an interest in land to be made in writing. It requires the declaration of trust to be evidenced by signed writing.

So, an oral declaration of trust is valid and will be enforceable as an express trust if on a later date the trustee signs a document which evidences the trust. The later signed document has retrospective effect in rendering the trust enforceable; see Rochefoucauld v Boustead [1897] 1 Ch 196 and Taylor v Taylor [2017] EWHC 1080 (Ch) at [50].

This principle gave rise to a difference in opinion between Zacaroli LJ on the one hand and the Chancellor and Falk LJ on the other regarding the third issue. Zacaroli LJ would have allowed the appeal on the basis that the court below had held that there were declarations of trust in favour of the Fund, albeit not evidenced by writing signed by NIOC as s. 53(1)(b) required, and since there was a valid trust, there was no transaction at an undervalue when NIOC House was transferred from the trustee to the beneficiary of the trust.

The Chancellor and Falk LJ did not go so far as to depart from the conventional view that the lack of writing complying with s. 53(1)(b) does not renders an express trust invalid as such, although the Chancellor might be said to have come close. Rather, they held that without evidence complying with s. 53(1)(b), the court cannot recognise the existence of the trust unless and until there is a document signed by the trustee evidencing the declaration of trust. Since there was no such document on the evidence in the case, the court had to treat NIOC as the beneficial owner of NIOC House when it was transferred to the Fund, rendering the transfer a transaction at an undervalue.

Commentary

The Court of Appeal’s decision may not be the last we hear of this case. With ownership of such a valuable property at stake and a split decision of the Court of Appeal on one of the grounds of appeal, the Supreme Court may be asked to consider that ground (full disclosure: the author has no inside knowledge about whether an application for permission to appeal is to be made). After all, there is something counterintuitive about the proposition that (a) a property is held on a valid trust but (b) the court cannot recognise the validity of the trust. A non-lawyer might reasonably consider that to be a rather strange place for the law to end up.

Article by Daniel Gatty