Resulting trusts Flashcards
Overview of resulting trusts
They are given effect by implication
done in the unexpressed intention of the settlor
Resulting: Goes back to the original purchasor
Not subject to formalities requirement
What case set out what types of resulting trusts there are and what are the types
VAndervalls will trusts
MeGarry J said there were 2 types:
Automatic resulting: Where the beneficial interest fails/ not all beneficial interest is disposed of
Presumed resulting: Where property is conveyed / transferred w no consideration or bought in someone else’s name
Presumption can be rebutted
Qualification to Vanderval
Westdeutch
All resulting trusts are presumed resulting trusts
When will automatic resulting trusts arise?
- When all beneficial interest fails
- Where the deed defining scope of will is lost
- Where half secret trust fails
- Uncertainty of objects/subject matter as to the shares
- Failure to qualify for charitable status
Name Cases on automatic resulting trusts
Vandervall v IRC
Re Abbotts fund
Re Andrews Trust
Vandervall v IRC
Concerned t who wanted to benefit a college but then said there would be an option to buy back shares
Held: Hadnt completely divested himself of the shares so automatic resulting trust arose
Cant leave shares up open in the air
Re Abbott fund
Facts: Concerned a trust that was set up to maintain 2 elderly ladies. However, when the instrument was drawn up no provision was made for what was to happen to the trust when they were to die.
Held: On the death of survivors, the balance of funds should be held on a resulting trust for the subscribers.
Re Andrew’s Trust
Facts: Concerned a trust made for the children of a deceased clergyman for the purpose of keeping them educated.
Issue: Once the children complete their education, do they keep the money or is there an automti’c resulting trust?
Held: No resulting trust, the trust should be divided equally amongst the children. Treated as a trust for the benefit of individuals with a special reference to a purpose.
What are presumed resulting trusts and when will they arise
Presumed to go back to the purchaser where:
Conveyance or transfer made w out consideration
Land bought in the name of another
How can presumption of resulting trust be rebutted
Showing donors intention to benefit the individual
Presumption of advancement: being gift in wives name
Voluntary conveyance /transfer of a freehold estate
Traditionally, before leg presumed resulting trust
Irish leg on voluntary conveyance /transfer of a freehold estate
Section 62(3) of LCLRA 2009
Expressed conveyance, won’t arise in resulting trust unless contrary proven
English leg on voluntary conveyance /transfer of a freehold estate
S60(3) of Law of property act
Presumed resulting trust unless otherwise proven
Voluntary conveyance/ transfer of personal property
State case
Onus on person receiving the property, must prove contrary evidence to rebut preusmption of resulting
Standing v Bowring
Standing v Bowring
Facts: The plaintiff was a widow who transferred stock into joint names of her and the defendant. Warned that she couldn’t change her mind but later claimed that there was a presumption of resulting trust in her favour.
Held: There was ample evidence at the time of transfer that she did intend to benefit the defendant so the presumption of resulting was rebutted.
Joint deposit accounts
State cases
Property transferred into the name of someone who hasn’t given any consideration.
Main question: What happens to the money when the depositor dies, is there a resulting trust or does the co-depositor keep the property?
Owens v Greene
Russel v Scott
Owens v Green
Facts: Concerned a joint deposit account, the deceased deposited in account in the name of him and his nephew and another account between him and a distant relative.
Made it clear that he wanted to retain control of the money during his lifetime and when he died it would go to co-depositees.
Held: SC stated that the people were volunteers and had failed to rebut the presumption of resulting trust.
This could only be done by establishing that it was the deceased’s intention when putting the money in the accounts to give to the plaintiffs ‘then and there’.
Russell v Scott
Facts: Concerned an elderly lady with a joint account in the name of her and her nephew and didn’t intend for them to benefit during her lifetime.
Held: After her death, the HC said that she did give a present right of survivorship to her nephew.
Immediate beneficial interest did not fall into possession until after her death
Australian HC came up with a formula that solved the problem in Owens.
Policy issues w joint deposit accounts
state cases
Resulting trusts are supposed to give effect to the presumed intention.
No question that the presumed intention was to leave money for the co-depositors after death.
Arguably that insistence on strict compliance with statutory provisions designed to prevent fraud is not necessary or even desirable:
- Where no danger of fraud would arise in bypassing their requirements, and
- Where such an approach gives effect to a donor’s real intentions about the disposition of his property on his death
Lynch v Burke
O’Meara v Bank of Scotland
Lynch v Burke
Facts: The deceased opened a joint account for herself and her niece. The niece was involved at all stages and signed all necessary documentation. Party to contract from the outset.
She was not entitled to any money during the aunt’s lifetime, but after she died.
HC: O’Hanlon J stated that although the deceased might of intended that the niece get money, the courts were obliged to follow the authority in Owens.
SC: Overruled Owens.
Flaherty J stated that it would be paradoxical if the doctrine of presumed resulting trusts was allowed to defeat the clear intention of the donor.
O’Meara v Bank of Scotland
Facts: Concerned a married couple, the man was in serious debt with the bank. The wife was an owner in equity. 2 separate bank accounts in joint names.
Held:
First bank account: Laffoy J held that the presumption of advancement rebutted the presumption of resulting and used Lynch to support this as there was a contractual basis.
Second bank account: No contractual relationship at all between the plaintiff and the bank because she wasn’t a party to it at any time.
Controversy: Lynch’s authority may be too narrow in scope, and may only be confined to a contractual basis.
Summary of formalities
The courts seem reluctant to disregard formalities where dispositions are regarded as ‘testamentary’
In the case of both secret trusts and joint deposit accounts, the reasoning employed appears to no longer regard them as such.
Secret trusts: Regarded as arising outside of the scope of the will.
Joint deposit accounts: By treating the disposition as giving an immediate beneficial interest which did not fall into possession until death-
When property is bought in the name of another
State case
Dyer v Dyer
Held: Where someone buys the property and puts it in the name of someone else or where they buy the property and put it into the name of themselves and another person jointly, resulting trust will arise in favour of the person who provided the purchase money.
Rebutting the preusmpton in Dyer
State cases
Standing v Bowring
Stanley v Kieran
Standing v bowring
may be rebutted if there’s evidence that the purchaser intended to benefit the other party or if there is a presumption of advancement.
Stanley v Kieran
The plaintiff was looking for a declaration that he was the beneficial owner of a property, but just for convenience he put it in the defendant’s name. The plaintiff had provided all the money for it.
Held:
HC: As a matter of probability the plaintiff intended to benefit the defendant and the plaintiff’s claim was dismissed
SC: The presumption was not rebutted on the evidence and the plaintiff was entitled to the property.
Denman J was satisfied that the property was held on a resulting trust to the plaintiff.
Illegal purpose
state traditional approach and state cases
Traditional approach: Even where the property is transferred for an illegal purpose, this does not prevent a resulting trust from arising where a claim could be made without relying on the illegal purpose.
Tinsley v Milligan
Parkes v PArkes
PAtel v Mirza
Tinsley v Milligan
Held: HoL held that a party to illegality can still claim an interest in the property as long as they can establish a claim without relying on that illegality.
Wilson: Different when the presumption of advancement arises.
PArkes v Parkes
Held: To rebut the presumption of advancement in the wife’s favour the plaintiff would’ve had to admit to illegality.
Patel v Mirza
Majority: Moved away from the illegality principle and favoured a more flexible, policy-based approach.
Purposive Approach: What the proportionate response would be regardless of the relationship between the 2 parties.
Position in ireland
State case and explain
Quinn v IRBC
Held: Clarke J took a similar approach to Patel.
The clear consideration is public policy and whether the unenforceability would be disproportionate to the unlawful conduct.
Summary of illegality
The traditional reliance principle in Tinsley leads to arbitrary outcomes.
Patel’s approach is preferable by looking at the proportionate approach and is supported by Clark J in Quinn.
Whats presumption of advancement
state case
Arises where because of the relationship between the parties, the donor is under an obligation to provide for the person to whom they have given the property.
This can be rebutted by evidence that shows that the donor did not intend to make a gift.
The presumption of advancement arises when a husband transfers property into his wife’s name.
Shephard v Cartwright
Shephard v Cartwright
If someone buys shares and puts them into the name of someone else, a stranger, there’s a presumed resulting trust in favour of the purchaser.
But if they put it into the name of someone they are related to, the presumption of advancement replaces the presumption of resulting trust.
Husband and Wife state case and explain
RF v MF
Facts: Concerned a wife who refused to live with her husband, agreed that she would live with him if he bought a house and put it in their joint names. After he did this, she still refused and they split up and the wife claimed a 50% beneficial interest in the house.
Issue: Is there a presumption of resulting trust for the husband, but also is it displaced by the presumption of advancement?
Held: Hunch J held that the presumption of advancement was rebutted by evidence of the circumstances.
The presumption of resulting existed but was then displaced by the presumption of advancement which was then rebutted.
Fundamental rule: A person seeking benefit from an equitable doctrine should be denied if it would lead to a person who was acting inequitably to benefit.
Father and child
State controversy and name case
Only applied ti father
Dowling: Social attitudes have changed and the distinctions drawn in this context between what a father and mother do shouldn’t apply.
O’Malley v Breen
O’Malley v Breen
Facts: Concerned a husband who split up with his wife and and bought property as an investment, instead of paying maintenance for a child in a previous relationship.
He put the property in his former wife and child’s name.
Issue: Were they entitled to 50% beneficial interest?
HC: The presumption would not apply as they had been separated for years and the husband was already in a new relationship.
Obiter: The presumption is limited and dubious.
SC: The wife is entitled to a 50% share because of the arrangement and how the property was intended to be used, not because the presumption of advancement should apply.
Obiter: In the UK the presumption is relatively weak and could be rebutted with slight evidence.
Ways in which preusmption of advancement can be rebutted
- Donor didnt intend gift- RF v MF
- Overall circumstances- ANSON v ANSON
RF v MF
The presumption of advancement can be rebutted where evidence is shown that no gift was intended by the donor.
Anson v Anson
Facts: The husband guaranteed his wife’s bank account and ended up having to pay money to the bank on foot of the guarantee and he could get money back from his wife.
Held: It was clear that because of their circumstances, he hadn’t intended to make a present of this to the wife, he was merely guaranteeing the loan to get her out of a difficult situation.
Cannot be presumed to be an advancement unless the donor makes it clear to donee at the time of making the guarantee that he does not expect to be reimbursed
Summary of presumptions
Presumptions of a resulting trust and advancement may be rebutted – they often are in practice.
Evidence of the donor/transferor’s intention is likely to be decisive.
The question of whether a presumption applies will affect where the onus of proof lies.
The onus of rebutting the presumption will lie on the party asserting that it does not apply.
What are trusts of family property?
when property is bought in a family name/joint name.
What leg interferes with equity in this circumstance?
Family Law/Divorce/Civil Partnership Acts: Contributions made by individuals towards the purchase of property may be taken into account where there has been a breakdown of a relationship- equitable principles play a much more limited role.
When will equity be able to interfere
1.Where spouses separate without divorce or judicial separation.
This is unlikely when the property is involved.
- Where cohabitees do not come within the scope of the 2010 Act.
When they live together for less than 5 years/ less than 2 years with children. - Where one spouse/partner dies.
- Where one spouse/partner is bankrupt.
- Where judgment mortgage is registered against the interest of one spouse or partner
Whats the position in relation to direct contribution in Ireland?
State cases
C v C
W v W
C v C
Kenny J held that the correct approach was the apply the concept of a trust, she should be entitled to a beneficial share that was proportionate to her contribution.
W v W
in the absence of an inconsistent agreement, she is entitled to a share approximately proportionate to the contribution.
Indirect contributions
state cases
W v W
Mc C v Mc C
w v W
If one partner is working full time and the other is staying home looking after the children and may pay certain bills to maintain the upkeep of the house, in the absence of proof of an inconsistent arrangement, they will be entitled to an equitable share in the property.
Mc C v Mc C
They had a previous home and her indirect contribution was buying furniture for the new house.
Held: She was not entitled to a beneficial share in the new house.
Obiter: SC held that the wife should be entitled to a beneficial interest proportionate to the extent of her indirect contributions ‘in the absence of proof of an inconsistent agreement or arrangement’.- mirrored W v W
Improvments
State cases
W v W
NAD v TD
EN v RN
CF v JDF
W v W
if a wife spends money and carries out work improving the property and the legal ownership is vested solely in another, they will have no claim to the contribution.
Unless there was an agreement that the improvement was to be recompensed.
NAD v TD
Facts: Concerned a house that was built on solely owned land. The wife had contributed 1/3 of the building costs.
Held: She was not entitled to any beneficial share in the finished house.
Barron J stated that this was a contribution to the improvement and if there was no agreement to be recompensed, no claim would be successful.
EN v RN
Facts: The plaintiff was a widow claiming a beneficial interest in a family home.
She had contributed to the repayment of the mortgage. There were 5 mortgages and one was taken out to make an extension to the property.
Issue: Was she entitled to a beneficial share for the repayments of the mortgage?
Held: A direct contribution, even if it’s in the form of money, to an improvement made on a family home by a wife, where the husband is the sole owner of it, cannot, in the absence of express or readily implied agreement, constitute a claim for a beneficial interest in it.
CF v JDF
Held: McGuiness J held that the making of improvements to a property cannot establish any form of beneficial title.
Even if you can show an agreement, you cannot get any beneficial interest.
Only entitled to be recompensed.
What are th other forms of contributon?
Working in the home
BL v ML
EN v RN
Exception
O’Malley v BReen
Working in lEgal business owner
EN v RN
BL v ML
Facts: The claimant contributed a lot by staying at home and looking after the family, but no financial contribution.
Held: At first instance, he was sympathetic, the claimant was entitled to a 50% beneficial share.
SC: Finlay CJ said that legislation needed to intervene if the law is to develop any further.
To allow the courts to extend the existing principles, ie. to allow one that has not made any direct or indirect financial contribution to gain a beneficial interest, would involve the creation of an entirely new right.
If it wasn’t in the Constitution, it cannot be up to the courts to determine.
En v RN
Held: Work in the home shouldn’t give rise to a beneficial share.
O’Malley v Breen
Held: Haughton J said that when all the circumstances were taken into account, the courts inferred that it was intended that a wife could have a legal and beneficial share.
She gave up all her earning opportunities and stayed at home looking after the children.
EN v RN
EN v RN 1990
Facts: Dispute between a widow who didn’t have legal ownership of a property and the husband’s creditors after he died. The couple renovated and made it a bedsit and she was in charge of managing it.
Held: The bedsit was regarded as work in the legal owner business, she was a manager and this gave them a mechanism to recognise her contribution.
Constuctive trust
state case
Constructive trust can be used as a device to provide a remedy where justice and good conscience demand it.
Murray v Murray 1996
Held: Can’t invoke resulting trust as there was sufficient evidence to rebut it. Made a constructive trust because it would be unfair for the defendant to be entitled to the entire beneficial ownership when the sister paid 75%.
Whats the position in england?
The law in England used to be much more restrictive but now is much more flexible.
Common intention constructive trust: The share is measured by the intentions and any other contributions made.
What was the traditional case
Lloyds bank v Rosset
Held: The triggers for a common intention constructive trust:
Agreement based on discussions plus evidence of detriment or…
Direct contributions to the purchase price will readily justify the inference necessary for the creation of a constructive trust.
Quantum: the whole course of dealings of the parties can be assessed.
Does it change when legal owners have made unequal contributions?
Name cases
Stack v Dowden
Jones v Kernott
Stack v Dowden
Held: The law has moved on from the strict approach in Lloyds.
When there are joint legal owners, there is likely a common intention to share the property, and that is enough to satisfy the initial trigger.
In most cases, it’s unusual that equitable interest would differ from the legal interest.
To prove that they have differed the courts will take into account:
Contributions.
Discussions that were made at the time of the purchase.
How the property was financed.
Jones v Kernott
Held: The courts will find the actual shared intention though expressed/ inferred from conduct.
But when there is clear evidence as to the beneficial interest but it is impossible to work out the common intention as to the proportions, the courts may impute intention.
Mee 2012
Imputation should be confined to assessing quantum.
One cannot impute an intention as to the shares, this has to be based on hard evidence.
But when deciding on what extent is to be shared, then imputation can be used.
Is detrimental reliance still required? State case and explain.
Hudson v Hathway
Held: Yes, neither Stack nor Jones changes the law.
Detrimental reliance is still a prerequisite if you want to succeed in getting a beneficial share in England.
Is constucive trus confined to domestic setting
state case and explain.
Marr v Collie
Facts: Concerned 2 partners who bought investment property but decided to buy property other than a home.
Held: Common intention constructive trust is not confined to a domestic setting.
In Jones, it wasn’t intended that the principles be confined exclusively to a domestic setting.
Lord Kerr: There is no reason to doubt it should be applied to a property purchased by a couple in an enterprise reflecting their joint commercial and personal commitments.
Summary of english position
1. Is there a common intention to share the beneficial interest?
The common intention may be expressed or inferred from conduct.
Where a property is in a joint name, this is enough to trigger an intention to share a beneficial interest.
But a very heavy onus is on the person who seeks to show the beneficial interest is different from the legal one.
- Issue of Quantification
This involves a survey of the whole course of dealings which clarifies the shares intended.
It’s based on expressed or inferred intention.
Where it’s impossible to find a common intention as to the proportion, the court may impute intention.
Controversy: The Courts are stepping in and deciding what the parties would’ve agreed on if they had thought about the issue.
Virgo
Imputed intention can’t be justified doctrinally and should be rejected.
It gives the court to make a factitious belief over what the parties would have intended.
Quntificaion
Appears that in England, imputation is on the way out and going back to what the fair result is preferable.
Will have regard to what is fair based on the whole course of dealings concerning the property.
This will lead to a proportionate examination of what was contributed.
Engaldn v Irland
England allows any contributions to be taken into account.
This has the advantage of having regard to a greater range of contributions, rather than what Ireland would allow for.
