Resulting Trust Creation

Question 1

What are the Two Types of Resulting Trusts?

Answer 1

• Presumed Resulting Trusts.
• Automatic Resulting Trusts.

Question 2

When does a Presumed Resulting Trust arise?

Answer 2

When someone, without evidence of Intending to make a Gift:

• Gratuitously transfers Property to another; or
• Pays all or part of an Asset’s Purchase Price.

This Presumption is Rebuttable.

Question 3

When does an Automatic Resulting Trust arise?

Answer 3

A Settlor transfers Property on Trust to the Trustee, but the Trust fails for some reason.

This gives the Settlor Sanders v Vautier Rights, allowing them to collapose the Resulting Trust and reclaim Title in the Property.

Question 4

When will a Failed Trust not create an Automatic Resulting Trust over Transferred Property?

Answer 4

• The Trust is Testemenatry or Self-Declaratory.
• The Trust failed due to improper Constitution; in which case
  • A Constructive Trust will arise to Perfect the Failed Trust.

Question 5

What are the Elements of Common Intention Constructive Trust (“CICT”)?

Answer 5

1 —Starting Presumption:

• Equitable Title reflects Legal Title.

2.1 — Elements in Cases of Sole Legal Ownership:

• The Claimant must prove:
  • A Common Intention that it have a Beneficial Interest in the Property; and
  • Detrimental Reliance thereupon.

2.2 — Elements in Cases of Joint Legal Ownership:

• The Claimant must prove:
  • A Common Intention not to hold Equitable Title as Joint Tenants; and
  • Detrimental Reliance thereupon.
• This Presumption is exceptionally difficult to rebut.

3 —Proving Common Intention:

• Common Intention can be Express or Implied.
• Although Express Intention is weighted most heavily, the Court evaluates the Parties’ whole course conduct.
• Common Intention can change over time, meaning a Claimant can rebut the Presumption or establish a Beneficial interest after Acquisition.

4 —Quantification of Interests:

• The Court will give effect to any Express Intention as to Quantification.
• Failing that, the Court will attempt to Infer a distribution based on the Parties’ conduct.
• Failing that, the Court will Impute an Intention based on what would be fair and reasonable in that case.
  • Imputation is only permissible at Quantification.

Question 6

Which Factors may the Court consider when determining Common Intention?

Answer 6

• The Relationship’s nature.
• How the Purchase was financed.
• Whether the Parties have children.
• Why the Parties purchased the Home.
• Why Legal Title was Registered under certain names.
• How the Parties divided other financial and household responsibilites.
• Advice received or conversations had which may indicate a Common Intention.
• Whether a Party made substantial improvements which significantly increased the Property’s value.

This list is non-exhaustive.

Financial factors are weighted slightly heavier, but even then, they are not enough alone.

Question 7

Regarding Common Intention Constructive Trusts, what are Examples of Statements sufficient to Evince an Express Common Intention?

Answer 7

Sufficient — Clear Comments on Shared Ownership:

• “50:50”.
• “Half yours”.

Insufficient — Vague Comments without Refernce to Shared Ownership:

• “Family Home”.
• “Benefit both of us”.
• “You will be looked after”.

Question 8

Regarding Common Intention Constructive Trusts, when may an Excuse be sufficient to Evince an Express Common Intention?

Answer 8

• When it shows a general intention to share Ownership but for a particular factor.
• The Court is slightly reluctant to infer Intention from Excuses, especially if they are made to avoid conflict.

Question 9

Are Domestic Duties Sufficient to Evince Detrimental Reliance?

Answer 9

No.

Question 10

Upon Divorce or Dissolution, how is Ownership of a Family Home allocated?

Answer 10

At the Court’s discretion, based on what it considers fair.