Implied Trusts

Resulting trusts

Implied where a person transfers property or money to another in circumstances where it is or becomes unclear who owns the beneficial interest

Westdeutsche Landesbank Girozentrale v Islington London Borough Council (1996)

Two situations that create resulting trusts, incomplete disposal of the trust’s equitable interests leads to a trust to finish the disposal

Incomplete disposal of the trust’s equitable interests leads to a trust to finish the disposal

• Lord Browne-Wilkinson, “where A makes a voluntary transfer to B or pays (wholly or in part) for the purchase of property which is vested in either B alone or in the joint names of A and B.”

  • Presumption can be rebutted with counter-presumption of advancement as evidence of A’s intention to make an outright transfer

Incomplete disposal of a trust’s equitable interest

• Trustees will hold the property on a resulting trust for the settlor

• Situations where this happens:

  • Not every part of the trust property is clearly described

  • Beneficial interest not clearly defined with certainty

  • Issues with administrative workability, certainty of objects or capriciousness

  • Issues with perpetuity

• Held for settlor as this is the presumed intention if the earlier trust failed

• Also happens if there are no beneficiaries with a vested interest in the trust property

Vandervell v IRC (1967)

Claimant gave 100,000 shares of family business to the Royal College of Surgeons until the shares generated £150k in dividends, found to be incomplete as V didn’t tell the trustees who to hold the shares for once they have been bought, V was liable for tax on the dividends

Voluntary transfers

No consideration or evidence of intention, so it is presumed to be held on trust

Re Vinogradoff (1935)

Jointly held bonds on trust by other owner for deceased’s estate

Limitations

• Evidence of intention to transfer

• Presumption is successfully rebutted

• Less likely to apply if there is land involved (s60(3) of LPA 1925 and Khan v Ali (2002))

• If there is a moral obligation for Y’s welfare, then it will likely be viewed as a gift

Abraham v Trustee in Bankruptcy of Abrahams (1999)

Claim for lottery syndicate failed because it was his estranged wife who owned the share and she paid for it

Parrott v Parkin (2007)

In MP’s name, but 55% of the money for the boat came from LP, found that MP held the yacht on resulting trust as to 55% for LP

Curley v Parkes (2004)

Payment must be of part of the purchase price and it must be made at the time of initial purchase

Stack v Dowden (2007)

Baroness Hale, too much emphasis placed on finances alone

Laskar v Laskar (2008)

Resulting trusts still important for joint investments

Presumption of advancement

• Applies in certain situations

  • Father to child (Bennet v Bennet (1879)) but not mother to child (Sekhon v Alissa)

  • Loco parentis (sometimes includes mothers, Re Cameron (deceased) (1999))

  • Husband to wife (Pettitt v Pettitt (1970)) but not wife to husband (Abrahams)

  • Fiance to fiancee

Evidence to rebut the presumption

• Surrounding circumstances count as does additional written evidence (Warren v Gurney (1994))

• Statements made at the time of purchase (Loosemore v McDonnell (2007))

• More likely to be found between strangers rather than family (Fowkes v Pascoe (1875))

• McGrath v Wallis (1995), presumption of advancement not granted to son as father’s legal exclusion was down to a technicality

• Shephard v Cartwright (1955), subsequent statements don’t count

Constructive trusts

Lord Millett in Paragon Finance v DB Thakerer & Co (1999), “a constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property to assert his beneficial interest in the property.”

Stack v Dowden (2007)

If there is no declaration, party looking to disprove equity must prove common intention for different interests. To determine this, the parties’ “whole course of conduct in relation to the property” should be considered. Unless there is written evidence otherwise, it is presumed that a sole legal owner of a property also owns the equitable interest.

Express common intention constructive trust

• Trust will exist where an agreement, arrangement or understanding was reached between the parties at the time the property was purchased that the property was to be shared between them

• Cases

  • Eves (1975), discussions of age doomed claimant’s case

  • Grant v Edwards (1986), would have been joint were it not for divorce proceedings

  • Curran v Collins (2015), not all excuses are permissible when determining common intention

Henderson LJ in O’Neill v Holland (2020)

Claimant must show that they significantly changed their legal position due to the believed agreement

Inferred common intention constructive trust

• Looks at monetary contributions to purchase, mortgage and sometimes household expenses

• Household expenses can count if they are significant

• Le Foe (2001), trust found as significant finances split between the couple

• Non-financial acts will not count

Midland Bank v Cooke (1995)

Court will look at the whole course of dealings to determine values

Callarotti v Sebastianelli (2012)

Found that after initial 50-50 agreement ended, shares reflected monetary contributions to the flat