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At [2002] 2 WLR 806 Lord Hoffman writes:

"[I]f Mr Yardley went bankrupt before the money had been so applied, it would not have formed part of his estate, as it would have done if Sims had held it in trust for him absolutely. The undertaking would have ensured that Twinsectra could get it back. It follows that Sims held the money in trust for Twinsectra, but subject to a power to apply it by way of loan to Mr Yardley in accordance with the undertaking."

At [2002] 2 WLR 830 Lord Millett writes:

"Contrary to the opinion of the Court of Appeal, it is the borrower who has a very limited use of the money, being obliged to apply it for the stated purpose or return it. He has no beneficial interest in the money, which remains throughout in the lender subject only to the borrower's power or duty to apply the money in accordance with the lender's instructions".

When compared in this way, Lord Hoffman and Lord Millett appear to have characterised the trust in similar, rather than fundamentally different, terms. Lord Hutton's expression of approval for the reasoning of both Lord Millett and Lord Hoffman then makes perfect sense.

David Thomas
Mallesons Stephen Jaques
Sydney
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-----Original Message-----

From: Eoin O'Dell
Sent: 09 July 2002 00:26
To: ENRICHMENT@LISTS.MCGILL.CA
Subject: [RDG:] Twinsectra and Quistclose

Hello all,

I have just read Alistair Speirs "Escape from the Tangled Web" casenote on the House of Lords judgment in Twinsectra v Yardley [2002] UKHL 12.

Alistair writes that their lordships "were unanimous in holding that the Court of Appeal was correct to reverse Carnwath J on the question of whether the loan, coupled with Sims' undertaking, created a trust. The only speech to provide a detailed analysis of this question was that of Lord Millett (HL, paras. 68-103) ... Lord Hoffmann's less detailed analysis reached the same conclusions as Lord Millett's and is in no way inconsistent with it (see HL, para. 13)".

To the extent that Alistair is arguing here that Millett wrote for a unanimous House on the issue of the Quistclose trust, I don't think that I can agree. In particular, I think that Millett and Hoffmann were doing very different things.

I agree with Alistair that Millett chose to treat the trust as a Quistclose trust, and that he took an essentially intentionalist approach to it which he then undercut it all by insisting that it is resulting on Chambers pattern.

However - as I read Twinsectra, and here I would differ from Alistair - I think that _only_ Millett chose to treat it as a Quistclose trust. In my view, Hoffmann treated the relevant trust simply as express (see paras 13-17; for example, according to Hoffmann in para 13, in a classic express trust comment, everything turned on the terms of the undertaking) and, as Alistair himself observes, in this Slynn and Steyn concurred (see paras 2 and 7). I think that what Hoffmann did is to say that the kind of trust which arose in the case itself is an express trust. Now, this means either that he didn't really direct his mind to or enter onto the Quistclose debate or that he thought that that the Quistclose trust is an express trust. I think the first explanation is the more plausible. Either way, his approach is fundamentally different from Millett's resulting trust approach. Confusingly, Hutton agreed with the reasons of both Hoffmann and Millett (para 25), but since their approaches are so different, I can get nothing from this. If this is right, then Millett's views do not form part of the ratio of Twinsectra. Consequently, the Court of Appeal in the subsequent Carlton v Goodman [2002] EWCA Civ 545 was quite right to treat the whole thing as an open question.

I'd like to know what others think on this issue.