Law of Trusts: Presumed Intention Resulting Trusts (Lecture #9)

Presumed Intention Resulting Trusts

  • uncertainty where parties do not make their intentions clear as to ownership of the beneficial interest in property

  • arises on...
    – transfer of property (without consideration)
    – contribution to the purchase price but no legal ownership and ownership of the beneficial interest in property is not made clear

  • starting point: no one gives anything away for free! - equity is cynical

  • rebuttable presumption that transferor (the person making the transfer) intended:

  • to retain a beneficial interest in the property they gave away;

  • to gain a beneficial interest in the property they contributed towards

  • in other words... even though they’ve given the property away, they remain beneficial owner – it’s held on resulting trust for them

‘Intention‘

  • based on the transferor's unexpressed, presumed intentions

  • "'Intention' is meant in a specialised sense. It does not mean necessarily that the parties consciously intended to create a resulting trust, because they might well never have heard of resulting trusts or might not have expected events to turn out as they did. ' Presumed intention' means what they would have intended had they
    thought about it." — Richard Clements and Ademola Abass, Complete Equity and Trust, (5th edn, OUP, (2018))

In the Case of Uncertainty

  • the law will PRESUME an intention to retain / to gain a beneficial interest...

Voluntary Transfer

  • where transferee (receiving party) has not provided any consideration

Contribution to Purchase Price

  • Person A makes contribution to purchase of property —> property put solely in the name of B

Voluntary Transfer

  • presumption arises where there has been
    – no consideration from transferee
    – no confirmation from transferor of who is entitled to beneficial interest (that the property is not a gift)

  • presumption = transferor intended to retain a beneficial interest in the property

Re Vinogradoff [1935] WN 68

Facts

  • a grandmother transferred £800 worth of War Loan stock into the joint names of herself and her granddaughter (aged 4)

  • due to the lack of consideration it was considereed a voluntary transfer

  • the grandmother continued to receive the interest from the stock during her lifetime

  • on her death, the question arose: did the granddaughter take the stock beneficially, or was it held on trust?

Legal Issue

  • who held the beneficial interest in the stock?

  • as the transfer intended as an outright gift to the granddaughter, or did it create a trust?

  • could a minor (aged 4) be considered a trustee if the arrangement was not a gift?

Outcome

  • presumed resulting trust in favour of grandmother's estate

  • the grandmother didn’t clarify who was entitled to the beneficial interest 

  • therefore, the arrangement did not amount to a gift

  • instead, the granddaughter held the property on trust for the grandmother’s estate

  • the beneficial interest remained with the grandmother, and the granddaughter was treated as a trustee, despite her age

  • no evidence to rebut the presumption to retain beneficial interest

Ratio Decidendi

  • resulting trusts arise where there is no evidence of an intention to make a gift

  • transfer into joint names, without clear intention of a gift, creates a resulting trust

  • even a minor can be a trustee, though they cannot practically perform trustee duties until adulthood

  • the case illustrates the principle that equity looks to intention: if there is no intention to benefit the transferee, the property remains held on trust

Prest v Petrodel Resources Ltd [2013] 3 WLR 1

Facts

  • Mr Prest was dishonest about his finances (he hid his 7 London house to retain after divorce)

  • he did this by transferring them to Petrodel Resources Ltd for no consideration 

Legal Issue

Outcome

  • Court held that the properties were held on trust for Mr Prest and he still had equitable interest 

  • because they were still considered Mr Prest’s property, they could be taken into account on the divorce 

Ratio Decidendi

  • equity’s presumption was applied and it was presumed Mr Prest wanted to retain beneficiary interest in the properties 

  • the homes were therefore considered to be held in a resulting trust on Mr Prest’s behalf 

Dictum(s)

  • 'Since no explanation has been forthcoming for the gratuitous transfer of these properties to PRL, there is nothing to rebut the ordinary presumption of equity that PRL was not intended to acquire a beneficial interest in them' — Lord Sumption at 28

Contribution to Purchase Price

  • when 2 people contribute to the purchase price but only 1 party gets legal propietorship, equity’s cynicism kicks in 

  • equity will presume the other party didn’t give the property away for free 

  • it will be presumed the other party wished to have beneficial interest in the property

  • beneficial interest is limited to proportion contributed, at the date of acquisition
    proportion contributed...

  • property should be divided as to the proportion contributed by each party 

Dyer v Dyer (1788) 2 Eq Cas 92, 93

  • ‘The clear result of all cases, without a single exception, is that the trust of a legal estate…results to the [person] who advances the purchase money‘ 

Implied Trusts & the Family Home

  • domestic context = constructive trust (Stack v Dowden)

  • commercial context = resulting trust (Laskar v Laskar [2008] 1 WLR 2695)

  • 'In Laskar v Laskar, Stack was distinguished on the basis that the normal presumption
    of a resulting trust applies where land is acquired for a commercial venture, even
    between families... -– Gary Watt, Equity & Trusts Law (8th edn, OUP, 2025), 407.

  • BUT: Marr v Collie [2017] UKPC 17:

  • commercial context + no personal relationship = resulting trust

  • position for commercial context + personal relationship is unclear

  • let’s proceed on the basis of a resulting trust...

Walker v Hall [1984] FamLaw 21

  • at the date of acquisition...

  • payments after the date of acquisition cannot be taken into account

  • Curley v Parkes [2004] EWCA Civ 1515


Presumption

  • if presumption stands:

  • voluntary transfer: the property transferred is held on presumed intention resulting trust for the transferor

  • contribution to purchase price: the property contributed towards is held on presumed
    intention resulting trust for Person A


Rebutting the Presumption

  • counter presumption

  • which will rebut the original presumption

  • applies to certain types of relationship

  • presumption of advancement —> a gift was made

  • rebuttal of presumption of advancement —> no gift


Presumption of Advancement: Type of Relationship

  • father —> child

  • husband —> wife 

  • Bennett v Bennett (1879) 10 Ch D 474: '...the father is under an obligation...from the mere fact of his being the father' at 477-478 (Jessel MR)

  • Equality Act 2010, s198 and s199: abolishes maintenance of wife and presumption of advancement respectively (NOT IN FORCE)

Rebutting the Presumption of Advancement: Cases

Re Gooch (1890) 62 LT 384

  • father transferred shares to son so that he could be a Director of the companies.

  • Father continued to take dividends

  • Evidence suggested gift not intended

  • Presumption of advancement rebutted

McGrath v Wallis [1995] 2 FLR 114

  • Father and son purchased property - father with largest contribution

  • Property put in son's sole name

  • Unsigned declaration of trust detailing the respective shares = evidence to rebut presumption of advancement

Lavelle v Lavelle [2004] EWCA Civ 223 (CA)

  • Inheritance tax reason

Evidence of Gift

  • evidence that transfer or contribution was intended a GIFT

  • therefore, no intention to retain or gain beneficial interest

  • they actually did intend to give something away for free (no intention to retain / gain a beneficial interest)

  • wider than Presumption of Advancement – applies to more relationships

  • evidence of gift —> gift

Fowkes v Pascoe [1875] LR 10 Ch App 343

  • investments transferred from Sarah Baker to joint names of herself and John (her late son's widow's child from a second marriage);

  • no money (consideration) paid by John for investments;

  • was it a gift?

  • there was evidence of wealth and fondness for John

  • '…to my mind… the evidence in favour of a gift and against a trust is absolutely
    conclusive' at 348 (James LJ

Loan Type Scenario

  • they didn’t intend to give something away from free – they intended a loan

  • relationship of creditor / debtor

  • contractual relationship - remedy for non-payment in contract not equity

  • loan type scenario —> contractual relationship (no trust)

Re Sharpe (A Bankrupt) [1980] 1 WLR 219

  • 'moneys are advanced by way of loan there can be no question of the lender being entitled to an interest in the property under a resulting trust. If he were to take such an interest, he would get his money twice: once on repayment of the loan and once
    on taking his share of the proceeds of sale of the property.' at 223 — (Browne-Wilkinson J)

Vajpeyi v Yusaf [2003] All ER (D) 128 (Sep)

  • claimant give defendant money to buy a house

  • court found that there was a loan which defendant had paid back

  • no resulting trust.