Implied Trusts

Question 1

Re Vandervell’s Trusts (No 2) [1974]

Types of Resulting Trusts

Implied Trusts

Answer 1

• ‘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)

Question 2

Reasons for Resulting Trusts

Answer 2

Question 3

No Valid Trusts Declared

Situations Resulting Trust may be Implied

Implied Trusts

Answer 3

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

Question 4

Valid Declaration but Trust Fails

Situations Resulting Trust may be Implied

Implied Trusts

Answer 4

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

Question 5

Incomplete Disposal of Beneficial Interests

Situations Resulting Trust may be Implied

Implied Trusts

Answer 5

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.

Question 6

Barclays Bank v Quistclose Investments [1970]

Quistclose Trusts

Situations Resulting Trust may be Implied

Implied Trusts

Answer 6

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.

Question 7

Re Abbott Fund

Unused Surpluses

Situations Resulting Trust may be Implied

Implied Trusts

Answer 7

In situations where donors donate money for a particular cause, unused surpluses are held on resulting trust for the contributors.

Question 8

Re Osoba

Unused Surpluses

Situations Resulting Trust may be Implied

Implied Trusts

Answer 8

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.

Question 9

Re Gillingham Bus Disaster

Anonymous Donations

Unused Surpluses

Situations Resulting Trust may be Implied

Implied Trusts

Answer 9

• Surplus should still go back to contributors on a resulting trust where they can be identified

UNLIKELY TO BE FOLLOWED

Question 10

Re West Sussex

Anonymous Donations

Unused Surpluses

Situations Resulting Trust may be Implied

Implied Trusts

Answer 10

Unused surplus will go bona vacantia to the Crown

LIKELY TO BE FOLLOWED

Question 11

Situations where the Presumption of a Resulting Trust can be Rebutted

Implied Trusts

Answer 11

• 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

Question 12

Situations where the Presumed Resulting Trusts can Apply

Implied Trusts

Answer 12

• 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

Question 13

Fowkes v Pascoe

Rebutting the presumption of a resulting trust

Gift

Implied Trusts

Answer 13

If you can demonstrate property is supposed to be a gift, the presumption of a resulting trust can be rebutted

Question 14

Re Sharpe

Rebutting the presumption of a resulting trust

Loan

Implied Trusts

Answer 14

If you can demonstrate money was provided for a loan, you can rebut the presumption

Question 15

Presumption of Advancement

Rebutting the presumption of a resulting trust

Implied Trusts

Answer 15

• 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.

Question 16

Mossop v Mossop [1989]

Presumption of Advancement

Rebutting the presumption of a resulting trust

Implied Trusts

Answer 16

Transfer of property to fiancée is also presumed to be a gift.

Question 17

Close Invoice Finance Ltd v Abaowa [2010]

Presumption of Advancement

Rebutting the presumption of a resulting trust

Implied Trusts

Answer 17

Presumption of advancement applies between mother and child.

Question 18

Re Vinogradoff [1935]

Voluntary Transfers of Property

Presumed Resulting Trusts

Implied Trusts

Answer 18

• 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.

Question 19

S60(3) LPA 1925

Voluntary Transfers of Land

Presumed Resulting Trusts

Implied Trusts

Answer 19

• 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.

Question 20

Lohia v Lohia [2001]

Voluntary Transfers of Land

Presumed Resulting Trusts

Implied Trusts

Answer 20

Held that s60(3) LPA 1925 had abolished the presumption of a resulting trust arising from a voluntary conveyance of land..

Question 21

Hodgson v Marks

Voluntary Transfers of Land

Presumed Resulting Trusts

Implied Trusts

Answer 21

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.

Question 22

Westdeutsche Landesbank v Islington LBC [1996]

Purchase Money Resulting Trusts

Implied Trusts

Answer 22

• 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.

Question 23

Re Sharpe [1980]

Purchase in the Name of Another

Purchase Money Resulting Trusts

Implied Trusts

Answer 23

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

Question 24

Fowkes v Pascoe [1875]

Purchase in Joint Names

Purchase Money Resulting Trusts

Implied Trusts

Answer 24

• 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.

Question 25

Elithorn v Poulter [2008]

Purchase in Joint Names

Purchase Money Resulting Trusts

Implied Trusts

Answer 25

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.

Question 26

Constructive Trusts

Implied Trusts

Answer 26

• 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

Question 27

Situations where Constructive Trusts can arise

Answer 27

• 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

Question 28

Common intention constructive trusts of land

Implied Trusts

Answer 28

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.