More about illusory trusts: is “tantamount” to ownership the same as “ownership”? The Privy Council takes a step too far

Abstract

Abstract In Webb v. Webb,1 a decision of the Privy Council on appeal from the Cook Islands, the Board2 had to consider a number of issues arising from matrimonial proceedings. One of the issues was whether Mr Webb had created a valid trust or whether he had retained such extensive powers in relation to the trust that the trust was an “illusion”. The Board held that the trust was invalid. In doing so, the Board purported to follow the reasoning of the New Zealand Supreme Court in another matrimonial decision, Clayton v. Clayton,3 about which I have written before.4 But, for the reasons discussed below, in my opinion, the Board in Webb went beyond what the Supreme Court decided in Clayton. I believe that the Board has taken a step too far in its reasoning.