The High Commissioner for Pakistan in the United Kingdom v. Prince Muffakham jah

United Kingdom

02.10.2019

Civil

There must be certainty of intention to create a trust on part of settler in relation to the subject-matter of trust and as to the beneficiary of the trust

On 20 September 1948, Nawab Moin Nawaz Jung (Moin) caused the sum of £1 million to be transferred from an account of the Government of Hyderabad held at Westminster Bank (the Bank2 ) to an account in the name of Habib Ibrahim Rahimtoola (Rahimtoola), also at the Bank. The Fund had been held in the account of the High Commissioner of Pakistan to the UK Rahimtoola since September 1948. It had been the subject of earlier proceedings in 1950s in which the UK House of Lords set aside proceedings brought by the 7th Nizam of Hyderabad claiming the Fund as Pakistan invoked state immunity. In 2013, Pakistan commenced proceedings, thereby waiving state immunity. A subsequent attempt by Pakistan to discontinue the proceedings was rejected as an abuse of process by the UK Court.

The question before the Court is whether it is Pakistan or the late Nizam VII who was, in 1948, entitled to the Fund. Pakistan claims through her High Commissioner for Pakistan in the United Kingdom, who is the party formally named in the proceedings. Pakistan contends that, it is the person occupying the office of High Commissioner at the relevant time who holds legal and beneficial title to the Fund.

An express trust will arise where the “three certainties” essential for the creation of a trust are met: (1) there must be certainty of intention to create a trust on the part of the settlor. It is the intention of the settlor that counts, and the intention of the trustee in accepting the trust is irrelevant. The trustee can, of course, refuse to accept the role of trustee, but that is not a point that goes to the necessary intention to create a trust. (2) There must be certainty in relation to the subject-matter of the trust. (3) There must be certainty as to the beneficiary of the trust.

India is indeed correct in her assertion that, the question of illegality is “analytically irrelevant” to the claim to the Fund advanced by India. Even if the question of illegality were relevant to India’s claims, the Settlement between the Princes and India has rendered the issue irrelevant because the rival claims to the Fund of the Princes and India have validly been compromised, such that the question of illegality is no longer before the Court. There is no illegality alleged that is sufficient to cause this Court to prevent the Princes and India – specifically, India – from asserting her claim to the Fund.

The Fund was held by Pakistan through her High Commissioner in the United Kingdom on trust for Nizam VII and his successors in title. The Fund was not held by Rahimtoola personally, nor did either Pakistan or Rahimtoola have any beneficial interest in the Fund. The trust was either a constructive trust in favour of Nizam VII or a resulting trust in favour of Nizam VII. It was not an express trust because, Nizam VII did not communicate to Moin any authority to effect the Transfer and create a trust. However, Moin’s conduct was consistent with the unexpressed wishes of Nizam VII. Both Moin and Rahimtoola intended that, an express trust should arise and – had there been a communication of authority by Nizam VII to Moin – an express trust would have arisen.

There is nothing in the involvement of Pakistan, India, Hyderabad or Nizam VII as sovereign states or rulers of sovereign states to prevent a trust (whether express, constructive or resulting) from arising. It is appropriate to record that, the Nizam’s successor in title can be no-one other than the Princes or India. Nizam VII was beneficially entitled to the Fund and those claiming in right of Nizam VII – the Princes and India – are entitled to have the sum paid out to their order.

Tags : Transfer Fund Entitlement

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