Agent signatures fail for trust declarations

A declaration of trust is a formal written document that sets out who owns what share of a property. It can also deal with practical matters such as who pays the mortgage, how renovation costs are split, who gets to occupy the property, and when and how it should be sold. 

These agreements are especially useful when: 

• two or more people buy a property together;

• one person contributes more to the purchase price than the other; or

• a property is held by the legal owner(s) for someone else’s benefit.

By clearly recording beneficial ownership and related obligations, declarations of trust can help prevent disputes and provide certainty for all parties involved. However, they are subject to formality requirements under statute.

The legal formalities

Under section 53(1)(b) of Law of Property Act 1925, a declaration of trust over land must be “manifested and proved by some writing signed by some person who is able to declare such trust or by his will”. A century after the 1925 Act came into force, the Court of Appeal has considered the provision in some detail in its decision of National Iranian Oil Co v Crescent Gas Corp Ltd [2025] EWCA Civ 1211. 

The central questions in the case was whether a declaration of trust signed by an agent, acting with the authority of the settlor, satisfies the formality requirements under section 53(1)(b).

The facts of the case

The dispute arose against the backdrop of a long-running commercial relationship between the parties:

• Crescent Gas Corporation Limited (CGC) was owed over $2.4 billion by the National Iranian Oil Company (NIOC) following an arbitration award for breach of a gas supply contract.

• CGC sought to secure its debt by registering a charging order over NIOC’s property.

• However, NIOC had already transferred that property – for nil consideration – to a pension fund: the Retirement, Savings and Welfare Fund of Oil Industry Workers (the “Fund”).

• CGC argued this transfer was a transaction at an undervalue under the Insolvency Act 1986, designed to keep the property out of reach of creditors.

• NIOC and the Fund disagreed. They claimed the Fund already owned the beneficial interest in the property pursuant to declarations of trust contained within a mortgage and a certificate of title. Therefore, transferring the legal title hadn’t changed the underlying ownership.

The difficulty was that the mortgage documents had been signed by an agent for NIOC, not by NIOC itself. This raised the question: did those documents meet the requirements of section 53(1)(b)?

The Court of Appeal decision

The Court of Appeal unanimously confirmed that a signature by an agent is not sufficient to meet the formalities of section 53(1)(b). The reasoning was rooted in the structure of section 53. Sections 53(a) and 53(c) of the Law of Property Act 1925 – concerning transfers of interests in land and equitable interests – both expressly permit signing by the person creating the interest or their agent. In contrast, section 53(b) contains no reference to signature by an agent. The Court of Appeal therefore concluded that section 53(1)(b) had not been drafted by Parliament with the intention of permitting an agent to sign declarations of trust on someone else’s behalf: the legislative intention of section 53(1)(b) was to protect landowners from the risk of another person falsely claiming that land (or an interest in it) had been transferred to them. 

As a result, the court held that:

• For individuals, a declaration of trust must be personally signed by the settlor or, where relevant, the person holding the interest that is the subject matter of the trust. Signature by an agent is not sufficient.
• For companies, a declaration of trust must be signed in accordance with company law. For UK companies, this means execution under section 44 of the Companies Act 2006. For overseas companies, execution in accordance with regulation 4 of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 constitutes signature by the company.

Consequences of non-compliance

The Court of Appeal also considered the consequences of non-compliance with section 53(1)(b). On this issue the judges were divided.  

Section 53(1)(b) does not require an express declaration of trust over land to be made in writing; rather, it provides that the declaration must be “manifested and proved” by signed writing. This provision therefore concerns evidencing a trust rather than its validity. Accordingly, an oral declaration of trust remains valid and can be enforced as an express trust if it is subsequently evidenced in signed writing in accordance with section 53(1)(b).

On this basis, Lord Justice Zacaroli, dissenting, said he would have allowed the appeal. He noted that the lower court had found declarations of trust in favour of the Fund, albeit not evidenced in writing as required by section 53(1)(b). In his judgment, Lord Justice Zacaroli reviewed the authorities, including Rochefoucauld v Boustead and Gardner v Rowe, and concluded that the absence of written evidence did not affect the validity of the trust and therefore, since a valid trust existed, there was no transfer at an undervalue when the property was conveyed.

By contrast, the majority distinguished those authorities and found that failure to comply with section 53(1)(b) prevented the court from recognising the trust, such that it was not enforceable. Consequently, the Fund did not hold a beneficial interest in the property before the transfer, and the transaction constituted a transfer at an undervalue.

Practical implication for practitioners

This case is significant as the first authoritative ruling on the implications of agent-signed declarations of trust under section 53(1)(b). It serves as a clear reminder of the importance of ensuring declarations of trust are correctly signed and highlights the risk that a declaration may be unenforceable if the statutory formalities are not met.

For practitioners, the key takeaway is to check execution carefully. For individuals, ensure the settlor signs personally. For companies, verify compliance with section 44 of the Companies Act 2006 or the relevant overseas execution provisions. Do not assume agency authority suffices: even if an agent acts with full authority, their signature will not satisfy section 53(1)(b).

The Court of Appeal has granted NIOC and the Fund permission to appeal to the Supreme Court, so this may not be the final word. Until then, practitioners should proceed with caution and ensure strict compliance with statutory requirements.