11- RESULTING TRUSTS

A resulting trust usually means

A transfers property to B

B holds it on TRUST for A

“to jump back”

legal ownership stays with B

A gains a new equitable interest as beneficiary

Big controversy – WHY do resulting trusts arise?

There is serious academic disagreement about why resulting trusts exist:

Main views:

• Presumption that A declared a trust for themselves

• Presumption that A intended to create a trust for themselves

• Law responds to absence of intention to benefit B

• No single explanation – different types arise for different reasons

Resulting trusts usually arise where:

A did not intend B to take the property beneficially

BUT one major exception:

BUT one major exception:

Purchase-money resulting trusts (A pays, B receives title)

Resulting trusts do NOT fit neatly with express / constructive trusts:

When do resulting trusts arise? (Overview)

There are three main situations:

1. Voluntary conveyance resulting trusts

2. Purchase-money resulting trusts → together called Presumed Resulting Trusts (PRTs)

3. Failed trust resulting trusts → called Automatic Resulting Trusts (ARTs)

• Quistclose trusts are usually treated as a type of resulting trust

Voluntary conveyance resulting trusts

Typical situation:

• A transfers property to B for free

• A later claims it was not a gift

Voluntary conveyance resulting trusts

RULE AND KEY LIMITS-

• If A proves a gratuitous inter vivos transfer → presumption of resulting trust

• B holds on trust for A unless rebutted

Does NOT apply to:

• Testamentary transfers

• Transfers for value

Rebutting the presumption (important)

• The presumption is very weak

• Any evidence of actual intention to gift defeats it

No resulting trust if:

• Evidence of gift

• Evidence of loan

Presumption of advancement

Instead of a resulting trust, gift is presumed where:

• Father → child

• Husband → wife

• Person in loco parentis

Presumption of advancement

• WHY?

• Historical moral duty to advance dependants

Key points:

• This presumption is:

  • Controversial

  • Weak

  • Rebuttable

Family home exception

• If property is the family home:

• resulting trust usually does NOT apply

FAMILY HOME EXCEPTION-

• CASES

• Stacl v Dowden

• Jones v Kernott

Land and s.60(3) LPA 1925

• s.60(3) says voluntary conveyance does not automatically imply a trust

Conflicting views:

• Lohia v Lohia (obiter): presumption abolished for land

• NCA v Dong (2017): presumption still exists

Exam tip:

• State uncertainty and prefer Dong reasoning

Purchase-money resulting trusts

Two situations:

• A pays seller → title in B

• A and B both contribute → title in B alone

Purchase-money resulting trusts

RULE-

B holds on trust for contributors in proportion to contributions

THE VENTURE 1908

• Two brothers contributed to ship purchase

• Title in one brother

• No evidence of gift or loan

THE VENTURE 1908

• HELD

• presumption of resulting trust

• ownership split proportionally

Failed trust resulting trusts (ARTs)

Arise where:

• Express trust fails initially

• Or later fails

• Or does not exhaust beneficial interest

Example:

• Morice v Bishop of Durham

Key features of failed trust RTs

• Do NOT rely on presumptions

• Arise by operation of law

• Apply to inter vivos and testamentary trusts

Exception – surplus cases

• If trust fully performed but surplus remains:

  • Trustee may keep surplus if gift intended

Cases:

• Re Foord

• Cook v Hutchinson

Rebuttal of presumptions (again)

• Evidence of intention defeats presumptions

Key case:

• Fowkes v Pascoe

  • Court rejected artificial presumption

  • Looked at real-life context

Westdeutsche Landesbank

• Bank paid money under ultra vires contract

• Argued resulting trust

WESTDEUTSCHE LANDESBANK

• HELD

• No resulting trust

• Evidence showed intention to transfer outright

Important:

• Mistake ≠ trust automatically

Presumption of advancement today

• Equality Act 2010 s.199 would abolish it

• Not yet in force

Still:

• Applies only rarely

• Easily rebutted

Warren v Gurney

• Father bought land in daughter’s name

• Retained title deeds

Held:

• Presumption of advancement rebutted

• Resulting trust arose

Academic debate begins

Main theorists:

• Lord Browne-Wilkinson

• Lord Millett

• Swadling

• Chambers

Big question:

• Is there one explanation or many?

Lord Browne-Wilkinson (Westdeutsche)

View:

• All resulting trusts arise from presumed intention to create trust

Problem:

• Cannot explain failed trust cases like Vandervell

Lord Millett

View:

• Resulting trusts respond to absence of intention to benefit recipient

Applied in:

• Air Jamaica v Charlton

• von Westenholtz v Gregson

Swadling

View:

• Presumption proves declaration of trust

• Resulting trusts are really express trusts

Criticism:

• Does not fit many cases

Chambers (modern view)

• Evidence usually enough

• Presumptions rarely needed

• Resulting trust arises where benefit was not intended

Illegality and presumptions

Old law:

Tinsley v Milligan - rigid reliance on presumptions

Illegality and presumptions

• New law and effect

• Patel v Mirza → flexible approach

• Evidence now admissible

Effect:

• Presumptions less important

Final summary

Three resulting trusts:

• Voluntary conveyance

• Purchase money

• Failed trust

SUMMARY

• PRESUMPTIONS

1- WEAK

2- REBUTTABLE

RARELY DECISIVE TODAY

Vandervell v IRC [1967]

Shares transferred to charity but option left unallocated

Resulting trust arose

Where beneficial interest is not disposed of, it results back

Foundational automatic resulting trust case

RE VANDERVELL’S TRUSTS NO.2 1974

• Later disposition of option

• resulting trust ended

• resulting trust can be displaced by later intention

• clarifies Vandervell consequences

PRESUMED RESULTING TRUSTS – VOLUNTARY CONVEYANCE

• HODGSON V MARKS 1971

• House transferred to friend to avoid creditors

• resulting trust

• voluntary transfer— presumption of RT

• Classic voluntary conveyance authority

PRESUMED RESULTING TRUSTS – VOLUNTARY CONVEYANCE

• FOWKES V PASCOE 1875

• Elderly woman transferred assets to grandson

• No resulting trust

• Evidence of gift rebuts presumption

• Shows presumption is weak

PRESUMED RESULTING TRUSTS – VOLUNTARY CONVEYANCE

• WESTDEUTSCHE LANDESBANK V ISLINGTON LBC 1996

• money paid under void contract

• no resulting trust

• intention to transfer outright defeats RT

• key on intention and conscience

PRESUMPTION OF ADVANCEMENT

• WARREN V GURNEY 1944

• father bought house in daughter’s name

• resulting trust (decision)

• advancement rebutted by evidence

• shows presumption is weak

PRESUMPTION OF ADVANCEMENT

• TINSLEY V MILLIGAN 1994

• Property put in partner’s name for benefit fraud

• resulting trust (decision)

• presumptions applied without evidence

• old illegality approach

PURCHASE-MONEY RESULTING TRUSTS

• THE VENTURE 1908

• Two contributors, title in one

• Resulting trust (decision)

• Shares proportional to contribution

• core-purchase money case

PURCHASE-MONEY RESULTING TRUSTS

• DYER V DYER 1788

• purchase in another’s name

• resulting trust (decision)

• contribution=beneficial interest

• foundational principle

AUTOMATIC RESULTING TRUSTS- FAILED TRUSTS

• MORICE V BISHOP OF DURHAM 1805

• trust failed for uncertainty of objects

• resulting trust (decision)

• failure of express trust— ART

AUTOMATIC RESULTING TRUSTS- FAILED TRUSTS

• RE FOORD 1922

• Surplus remained after trust

• trustee kept surplus

• no RT if gift intended

• important exception

THEORETICAL AND MODERN DEVELOPMENTS

• PATEL V MIRZA

• Illegal contract

• evidence allowed

• flexible illegality test

• weakens role of presumption

VON WESTENHOLTZ V GREGSON 2022

• Share transfer

• resulting trust

• no intention to benefit recipient

• modern affirmation of Millett

ONE-LINE EXAM MEMORY - CASES

• Vandervell - undisposed interest results back

• Hodgson v Marks - voluntary transfer = presumed RT

• Fowkes v Pascoe -presumption easily rebutted

• The Venture - money = proportion

• Morice - failed trust = automatic RT

• Patel v Mirza - evidence over presumptions

EXAM PARAGRPAH-

• Identify type (PRT or ART)

• Apply presumptions (if relevant)

• Consider rebuttal evidence

• Discuss theory (Millett vs Browne-Wilkinson)