Implied Trusts Flashcards
Re Vandervell’s Trusts (No 2) [1974]
Types of Resulting Trusts
Implied Trusts
- ‘Presumed Resulting Trusts’ – where there is a rebuttable presumption of resulting trust because property is put in the name of another.
- ‘Automatic Resulting Trusts’ – where the resulting trust is an automatic consequence of a failure to dispose all of the beneficial interest (as in Vandervell v IRC)
Reasons for Resulting Trusts
No Valid Trusts Declared
Situations Resulting Trust may be Implied
Implied Trusts
Where an express trust is not validly declared for one of the following reasons:
- Lack of Proper Formalities – s53(1) LPA 1925
- Lack of Certainty, particularly certainty of objects and their shares
- Breach of the Rule Against Perpetuities
- Failure to create an intended charitable trust, which will then generally be void as a private ‘purpose’ trust, e.g. Morice v Bishop of Durham
A resulting trust is imposed to fill the gap
Valid Declaration but Trust Fails
Situations Resulting Trust may be Implied
Implied Trusts
Where a trust fails, potentially for the following reasons:
- Trust void for uncertainty of objects
-
To X for life. X dies.
- Part of a successive income trust. Entitled to property until they die. In this type of trust, normally a remainderman so income from property transfers. Here, no remainderman specified so nowhere for equitable title to go and so has to return to original source under automatic resulting trust.
-
A precondition is not met
- Essery v Cowlard [1884] – trust failed as marriage never took place and so trustees held on resulting trust for settlor
A resulting trust is implied to fill the gap
Incomplete Disposal of Beneficial Interests
Situations Resulting Trust may be Implied
Implied Trusts
Where a disposal of beneficial interests cannot be completed, because of potentially:
-
A failure to provide for a situation
- E.g. a gift to a donee for life, with no gift over specified
-
A failure to foresee a possible situation
- E.g Re Cochrane’s Settlement Trust - both life interests ended during the life of the survivor so income returned on resulting trust to survivor until life interest died.
A resulting trust will be implied.
Barclays Bank v Quistclose Investments [1970]
Quistclose Trusts
Situations Resulting Trust may be Implied
Implied Trusts
Where a loan is provided for a specific purpose and kept separate from the loanee’s other assets, the loan money is held on resulting trust in the event that the loanee goes bankrupt, and doesn’t use the money for the purpose intended.
Re Abbott Fund
Unused Surpluses
Situations Resulting Trust may be Implied
Implied Trusts
In situations where donors donate money for a particular cause, unused surpluses are held on resulting trust for the contributors.
Re Osoba
Unused Surpluses
Situations Resulting Trust may be Implied
Implied Trusts
Where money has been provided as a gift for a particular purpose, you have to consider the motive when deciding what happens to unused surpluses
Money given to Osoba for university education. Completed university and had an unused surplus. Was held she could keep it as the motive for the money was to give her a head start in life.
Re Gillingham Bus Disaster
Anonymous Donations
Unused Surpluses
Situations Resulting Trust may be Implied
Implied Trusts
- Surplus should still go back to contributors on a resulting trust where they can be identified
UNLIKELY TO BE FOLLOWED
Re West Sussex
Anonymous Donations
Unused Surpluses
Situations Resulting Trust may be Implied
Implied Trusts
Unused surplus will go bona vacantia to the Crown
LIKELY TO BE FOLLOWED
Situations where the Presumption of a Resulting Trust can be Rebutted
Implied Trusts
- The presumption can be rebutted by:
- The presumption of advancement (e.g in favour of the transferor’s children)
- Evidence that a gift was intended
- Evidence that a loan was intended
Situations where the Presumed Resulting Trusts can Apply
Implied Trusts
- A presumed resulting trust can arise in 2 types of circumstances:
- Voluntary transfer of property from one party to another
- Provision of purchase money for property put in another’s name or in joint-names
Fowkes v Pascoe
Rebutting the presumption of a resulting trust
Gift
Implied Trusts
If you can demonstrate property is supposed to be a gift, the presumption of a resulting trust can be rebutted
Re Sharpe
Rebutting the presumption of a resulting trust
Loan
Implied Trusts
If you can demonstrate money was provided for a loan, you can rebut the presumption
Presumption of Advancement
Rebutting the presumption of a resulting trust
Implied Trusts
- When transfer of property is made from husband to wife or father to child, presumption is not that property is held on resulting trust, but as a gift.
- Presumption of advancement in favour of a wife is less strong than it once was.
- Equality Act 2010 s199 - Discussion of Abolition of the presumption of advancement, but this section is not law yet. Therefore, rule still applies today.
Mossop v Mossop [1989]
Presumption of Advancement
Rebutting the presumption of a resulting trust
Implied Trusts
Transfer of property to fiancée is also presumed to be a gift.
Close Invoice Finance Ltd v Abaowa [2010]
Presumption of Advancement
Rebutting the presumption of a resulting trust
Implied Trusts
Presumption of advancement applies between mother and child.
Re Vinogradoff [1935]
Voluntary Transfers of Property
Presumed Resulting Trusts
Implied Trusts
- When property is transferred to another for no consideration and in circumstances where the presumption of advancement does not apply, it is presumed that the recipient holds it on a resulting trust for donor
- Grandmother transferred legal title of WW1 war bonds into her and her granddaughter’s name so she would inherit them when she dies. Held she was a trustee for her grandmother’s estate.
S60(3) LPA 1925
Voluntary Transfers of Land
Presumed Resulting Trusts
Implied Trusts
- 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.
Lohia v Lohia [2001]
Voluntary Transfers of Land
Presumed Resulting Trusts
Implied Trusts
Held that s60(3) LPA 1925 had abolished the presumption of a resulting trust arising from a voluntary conveyance of land..
Hodgson v Marks
Voluntary Transfers of Land
Presumed Resulting Trusts
Implied Trusts
Can rebut the presumption that s60(3) LPA 1925 had abolished the presumption of a resulting trust arising from a voluntary conveyance of land by providing evidence that a resulting trust was in place.
Westdeutsche Landesbank v Islington LBC [1996]
Purchase Money Resulting Trusts
Implied Trusts
- Confirmed decision in Dyer v Dyer [1788] – If there is:
- A purchase in the name of another who does not give consideration
- OR
- A joint purchase in the name of both
- A presumed resulting trust can arise creating an equitable interest in proportion to the purchase price paid.
Re Sharpe [1980]
Purchase in the Name of Another
Purchase Money Resulting Trusts
Implied Trusts
Where a person provides money to purchase property but instructs the seller to transfer it into a third party’s name, then that third party is presumed to hold on resulting trust for the provider of the purchase money
Fowkes v Pascoe [1875]
Purchase in Joint Names
Purchase Money Resulting Trusts
Implied Trusts
- If property is purchased in the name of A and B, with money provided solely by A, then A and B hold the legal estate on resulting trust for A.
- Mrs Baker bought stock in the name of herself and John Pascoe, son of her widowed daughter-in-law (falling outside presumption of advancement). Pascoe claimed the stock on her death. Pascoe was entitled to the stock as evidence of Mrs Baker’s intention to make a gift rebutted the presumption of resulting trust.
Elithorn v Poulter [2008]
Purchase in Joint Names
Purchase Money Resulting Trusts
Implied Trusts
Property bought in joint-names of the defendant and the deceased, but the purchase was funded entirely by cash from the deceased
Deceased had lent defendant half the money for the property so on completion of the purchase he was joint purchaser and therefore acquired a beneficial half share in the property under a resulting trust.
Constructive Trusts
Implied Trusts
- Imposed by court due to unconscionable conduct, regardless of intention
- The courts have recognized constructive trusts in a variety of cases, but there are no boundary limits for the range of circumstances where constructive trusts can be imposed
Situations where Constructive Trusts can arise
- Keech v Sandford [1726] - Unauthorised profits made by a trustee from being the owner of a trust property must be held on constructive trust for the beneficiary.
- Third party receipt?
- Specifically enforceable contract
- Purchaser’s undertaking
- Common intention constructive trusts of land
- Other situations: joint ventures, secret trusts, mutual wills, acquisition by killing
Common intention constructive trusts of land
Implied Trusts
Where owner and claimant have a common but unenforceable intention (due to non compliance with formalities) that the claimant is to have beneficial interest in the property and claimant acts to their detriment in reliance thereon, a constructive trust will arise from the date of the detriment.
