We are no longer talking about express trusts, but rather, implied trusts; these are not trusts that arise because it was the express intention of the testator to create a trust and are created through operation of law and are somewhat based on what the law presumes the intention of the settlor or testator to have been
• Implied trusts aren’t declared and are expressed as existing through the court
• Resulting trusts are a branch of implied trusts along with constructive trusts What is a resulting trusts?
Resulting trusts ‘’are imposed where one party transfers legal title to property to another, and receives nothing in exchange; in these circumstances a trust is imposed on the
property for the transferor unless the transferee can prove that he intended to make a gift. The word ‘’resulting’’ derives from the latinresalire, meaning to ‘’jump back’’, and described the movement of beneficial ownership of the property back to the transferor from the transferee.’’ According to Mitchell.
• Where one person has contributed to the purchase price of something but the title of the property has not been clearly allocated
• Where the court finds the trust (implies, constructs or results it) then it will not be subject to the same formalities as required by an express trust
When talking about property being held on resulting trust we talk about title being held but not the whole interest being vested in them
• Doctrine of resulting trusts operates to resolve those questions of ownership
• Classic example is the case of Vandervell (No 2) where trustees got royal college of surgeons to sign an option agreement to ensure he got his interest back
• Option to buy back shares was problem in the context of resulting trusts; indecision led HoL to declare the option to be an unspecified trusts and because equity abhors a vacuum the beneficial interest in the shares had to, by law, result back to
MrVandervell as it couldn’t remain unspecified
Professor Birks feels that resulting trust, in its literal origins, stems from the notion that the equitable interest in property ‘’jumps back’’ to its original beneficial owner
A resulting trust arises where property has been transferred to the defendant and a recognised trigger for the trust occurs, which might arise at the time of transfer or subsequently so that the property is then held by the defendant on trust for the claimant
• ‘’Results’’ back in equity to the person who transferred the property in the first place
When will a resulting trust arise?
Megarry J in the case of Vandervell (no 2) sets out 2 categories of resulting trust: the failed trust and the apparent gift:
1) Automatic resulting trusts: transfer of property leaves some or all of the beneficial interest undisposed of
o Leaves some or all of the beneficial interest indisposed off
o Arises automatically on the happening of a suitable set of circumstances o Where property has been transferred to the defendant to be held on an
express trust that fails. Either initially or subsequently, that property will be held on resulting trust for the settlor or those entitled to a testator’s residuary estate
o For example, if one transfers their house to their sister for life and
remainder to her children, and if the sister dies without children then the beneficial interest will result back to the person automatically
o Operates on the notion that equity abhors a vacuum, and property rights must belong to some person and cannot exist in such a vacuum. Where there is no other equitable owner, those equitable rights are deemed to result automatically to the settlor
2) Presumed resulting trusts: property is transferred from A to B, in circumstances where it is appropriate to presume that B is a trustee
o What equity is saying is when you transfer that property, equity will
presume that you never intended to part out and out with the property and if the purpose for which it was given cannot hold it anymore then equity presumes it comes back to you
o Claimant doesn’t receive any consideration for this transaction then it will be presumed that the defendant holds the property on resulting trust for the claimant
o Presumed resulting trusts constitute a means by which equity will
supplement unclear factual circumstances by presuming that the equitable interest in property results to its previous owner
o The beneficial owner has failed to dispose of everything in these
circumstances and so the law presumes that where there is no evidence to suggest the settlor wanted to part out and out with the property then it will result back
▪ Equity will presume one is holding the property on legal trust for themselves
▪ For example, in a case where the evidence adduced by the witnesses will not conclusively support one or other of the parties such that the court cannot know which party to believe, the court will rely on one of its case law presumptions to imply an answer
o But because it is a presumption, it is prone to rebuttal; if there is evidence that one intended to give the property outright to the other then the resulting trust presumption will be rebutted
o Presumption of the resulting trust can be rebutted where there is evidence to suggest otherwise
o In Dyer v Dyer A bought property but put it in the name of B
▪ Established doctrine of court of equity that doctrine of resulting trust may be rebutted
▪ Merely a presumption that may be rebutted
In Westdeutsche v Islington LBC Lord Browne-Wilkinson casts doubt on the rationale of Megarry J who said that ‘’both types of resulting trust are traditionally regarded as examples giving effect to the common intention of the parties. A resulting trust isn’t imposed by law against the intentions of the trustee but gives effect to his presumed intention’’
• Equity operates on the conscience of the person with the legal interest
• In this speech, Lord Browne-Wilkinson doubted the division set out by Megarry J between automatic and presumed resulting trusts to be correct in all
circumstances
• Since the equitable jurisdictions to enforce trusts depends on conscience of person being affected, one cannot be a trustee of the property if they are ignorant of the facts alleging to affect his conscience
o However vast amount of previous cases say otherwise
• Must be identifiable trust property
• He says once a trust is established, the beneficiary has in equity, a proprietary interest in the property from that date
• Under existing law a resulting trust arises in 2 circumstances:
o Both are traditionally regarded as examples of trusts giving effect to the common intentions of the parties; needs to be intentions of both parties, those making and receiving must commonly intend for this trust to arise
• Resulting trust is not imposed by law against the intentions of the trustee but gives effect to its presumed intention
o Says Megarry J in Vandervell in regard to presumed resulting trust was wrong
• Also doesn’t agree with automatic resulting approach in result to property; feels it is ownerless and will go to the crown bona vacantia
o His Lordship feels that where the settlor has sought to divest himself absolutely of his right, there should not be a resulting trust in favour of the settlor
▪ This is wrong arguably; English law has never expressly recognised the possibility of abandoning rights in property
▪ Also, it is not justifiable as to why the rights should revert to the crown in preference to the original titleholder; is such an approach justified purely on the basis of convenience
o Peyton feels this reasoning doesn’t account for certain cases o Graham Virgo felt this was a confused approach
What is the role of intention?
Does a resulting trust arise automatically where there is a gap in the beneficial interest or is it based on the presumed intention of the settlor/contributor? Or is it based on the common intention of the parties?
Megarry in Vandervell felt the resulting trust was not based on intention, but rather on the law
• Identified two classification of resulting trusts: those which arise automatically and those arising from the presumed intention of the parties
• An intention can be inferred having regard to all the circumstances
• Didn’t intend for it to come back to him but it nevertheless did through Megarry J’s expression
o ‘’The mere existence of some unexpressed intention in the breast of the owner of the property does nothing: there must at least be some expression of that intention before it can effect any result.’’
o This can be deduced from the evidence
Lord Browne-Wilkinson in Westdeutsche v Islington refers to the ‘’common intention of the parties’’ and resulting trusts in his opinion were dependant on the intention of the
transferor
• Resulting trust arises as a result of a common intention between the transferor and the transferee having to intend the trust to arise
• Lord B-W suggested, Obiter, that all resulting trusts should be considered to be presumed trusts
o ‘’a resulting trust isnt imposed by law against the intentions of the trustee but gives effect to his presumed intention’’
• Disagrees with Megarry J, but nevertheless if he is correct, it doesn’t account for how the trust arose in Vandervell and other similar situations
• Is he confusing resulting trusts with constructive trusts though?
What is the solution to this question? Hayton suggests that the issue is whether the
transferor intended to make a gift. If no gift was intended then the property results back;
essentially feels Lord B-W was misled from the information presented to him
• Orthodox view is that the transferee’s intention is irrelevant; not relevant that both parties intentions should be taken into account
• The question to ask is whether or not the person who transferred the property originally intended to give the property away outright; if there is such an intention and evidence, then the property is gone and is a gift, but in the absence of such an intention it results back
In Air Jamaica Lord Millett’s reasoning was not so different from Hayton; intention not to give your property away as opposed to retaining it. Felt resulting trusts to be the response
‘’to the absence of any intention on the settlor’s part to pass a beneficial interest to the recipient’’
• ‘’A resulting trust gives effect to intention.’’ But it arises whether or not the transferor intended to retain a beneficial interest
• May simply be sufficient to show that the transferor didn’t intend the recipient to benefit from the receipt of the property
• Not looking to see if they intended to keep their beneficial interest; resulting trust arises out of an absence of an intention to part with it
• Goes on to say a resulting trust will not be defeated by evidence that the
transferor intended to part with the beneficial interest if they did not in fact do so
• ‘’A man doesn’t cease to own property simply by saying he does not want it. If he tries to give it away, the question must be if he succeeded’’
• Question must always be if one has done everything to rid himself of the property
Failing trusts
When an express trust has failed for some reason
First situation in which a resulting trust will arise is the failure of an express trust where someone tries to create a trust but for one reason or another that trust fails and the interest they tried to get rid of will result back to them
• Automatic resulting trust will only arise where property has been transferred on an express trust that has failed
• Where a trust fails for any reason, the equitable interests purportedly allocated by the failed trust must pass to someone, once again following the idea that equity abhors a vacuum
• In consequence it can be seen that where the trust fails for any reason, the
property intended to be held on trust will be held by the trustees on resulting trust instead
Uncertainty:
• Vandervell failed for lack of a beneficiary and so resulted back to the settlor Lack of formalities:
• If you havent done all that is necessary to transfer the property to a person, then no trust will come into existence and the property results back to the person
• For example section 53(1)(b) LPA Failure of a condition precedent:
• Idea that this trust will come into existence when they reach/conform to certain conditions, where it is not met or fulfilled then the interest will result back to the person who first settled the property
• In Re Cochrane’s ST the lady got married and brought a trust fund with her to the marriage and her husband also did this with property. There were terms with this settlement
o Entitled to the trust fund as long as she conformed to the terms
o In the event of either of them dying, the survivor acquired all the beneficial interest in the property
o Wife left husband and husband died and so question was if she was entitled to the entirety of the trust
o Her part results back to her but her husband’s part will be distributed in the way he envisaged
When a surplus of trust property remains
Second instance in where a resulting trust may arise is where there is a surplus of trust property
General rule is that such property will be held on resulting trust for the settlor, unless the court can find an intention to benefit specific individuals instead
Starting point is where you particularly give it for a purpose, and if that purpose ceases to exist, then equity will presume that you intended to get whatever is left back
In Re Abbott the fund to support deaf/dumb women was given by subscribers. High court held that trust property remaining undistributed at the time of death will go back to the subscribers
• Aim underlying the trust was not fully performed before the two ladies died. It was held that the trust property remaining undistributed at the time of death should be held on resulting trust for the subscribers
• If there was evidence that people were giving money away so that they could do whatever they liked with it, there would be no resulting trust. However in this case they gave money so as to support the sisters and so they retained their beneficial interest
• Money given for the purpose of support and maintenance so that when the purpose was concluded, the money resulted back to the subscribers
A similar line of reasoning was employed in Re Gillingham where money raised was
overwhelmingly given anonymously; law will distinguish between small amounts of money donated in a pot (where they did intend to part out an out with your money) but where there were large sums of money given by identifiable donors then there would be a presumed intention that they didn’t part out an out with their beneficial interest
• Problems arise with a resulting trust approach when there is a large number of mostly anonymous subscribers
• The victims of the crash didn’t require all of the money raised and the issue arose as to the treatment of the surplus money raised from the public but not needed by the victims of the disaster.
• Court held that the surplus should be held on resulting trust for the subscribers
• Court is free to decide that when you gave your money you did intend to part out and out with it
In Re Andrews there was a trust fund for the education of Children of a deceased clergymen but wasn’t given to a specific child but was a fund specifically for their education; when they finished there was still a surplus
• Judge held that the education/purpose wasn’t confined to their formal education and treated the fund as being for the purpose of the boys generally
• Was an intention to give it to them outright and therefore did not result back to the subscribers
• Need to distinguish between a ‘’purpose’’ and ‘’motive’’
• Distinguished this from Re Abbott as the boys were not dead and could still benefit from the trust
Apparent gifts
When A has transferred property to B voluntarily
Third situation in which a resulting trust will arise is where there is a voluntary transfer of property from A to B, and A (who holds the property) voluntarily transfers it to another person
• By volunteer, it refers to someone who hasn’t given consideration
• Therefore, a voluntary transfer is a transfer of property for which nothing has been given in return
• In what circumstances will that property result back
• Where there is evidence that one intended to give the property then there will be no resulting trust
There are a variety of presumptions, such as that of advancement whereby if A transfers property to B and B is the wife/female fiance/child of A, then up comes the presumption of advancement which rebuts the presumption of the resulting trust
• The situations in which a presumption is important are those cases in which neither party is able to prove to the court’s satisfaction what their true intentions were
o For these situations equity has developed presumptions as to what the parties intended, meaning that if neither party can prove conclusively what was intended, the court will go back to its presumption and deem that that is what happened
• Lord Upjohn, in Vandervell v IRC for example held that ‘’in reality the so-called presumption of a resulting trust is no more than a long-stop to provide an answer where the relevant facts and circumstances fail to reach a solution
• Advancement says that where such a transfer is enacted he did intend to give it away so as to advance the station of the female etc
• An old presumption which has technically been abolished under the equalities act but the section itself is still intact
First thing to do when looking at voluntary transfer is to look at the type of property as the rules are different if the property is real or personal
Land
Section 60(3) LPA 1925 which seems to be at odds with Lord B-W view of when a resulting trust will arise
• “In a voluntary conveyance a resulting trust for the grantor shall not be implied merely by reason that the property is not expressed to be conveyed for the use or benefit of the grantee.”
• No presumption of resulting trust under this section 60(3)
o Before s60(3), failure to specify a particular use of land, that the land was for the benefit of a particular person meant that the conveyance failed = resulting trust for transferor
• Effect of this provision might be to disapply a presumption of resulting trust where land is conveyed to the defendant (grantee) for no consideration simply because the conveyance didn’t state that the property was conveyed for the defendant’s use or benefit
o S60(3) precludes Automatic Resulting Trusts, but not Presumed Resulting Trusts
In Lohia v Lohia both contributed to the purchase price of legal shares which is put in the
In Lohia v Lohia both contributed to the purchase price of legal shares which is put in the