Resulting Trusts Flashcards
What is a resulting trust?
An implied trust that arises when property is transferred to a person and a recognised trigger for the trust occurs so that the transferee is then deemed to hold the property on trust for the transferor who becomes the settlor
‘Beneficial interest jumps back to the person who transferred it’
3 types of resulting trusts
- presumed intention
- automatic
Highlighted in vandervell v IRC - quistclose trust
Established in Barclays Bank ltd v quistclose
Presumed intention resulting trust
- in some circumstances, equity presumes the transferor of the property intended to create a trust even though not expressly declared
- usually arises when property is transferred for no consideration
- only applies in the absence of an express intention that it was intended as a gift
- so this presumption can be rebutted by evidence
- burden to prove this is on the transferee
- arise in 2 circumstances: voluntary conveyance of property without consideration and purchase money contribution
Presumed intention: voluntary conveyance
Where property is transferred for no consideration there is a rebuttable presumption that the transferee holds the property on a resulting trust for the transferor
- established by lord Neuberger in Chen v ng Chen v ng
Re Vinogradoff
S60.3 LPA 1925 appeared to abolish the application of the presumption concerning land however UKSC in prest v petrodel affirmed it applied to land too
Presumed intention: purchase money contribution
- where A buys property in the name of B, it is presumed that the property will be held by B on a resulting trust for A- dyer v dyer
- proportionate to contribution to purchase price
- principle confirmed by HOL in westdeutsche landesbank girozentrale v Islington
Laskar v laskar
Abrahams v trustee in bankruptcy of Abraham’s
- arise at the moment of purchase of the property and subsequent contributions don’t count
- has to be a direct financial contribution
- household bills will not suffice- gissing v gissing
- doesnt apply in domestic cases involving intimate relationships- UKSC in stack v dowden
Presumed intention: rebutting the presumption
Presumption of presumed intent can be rebutted be evidence to the contrary indicating a transfer of a gift.
Two types- presumption of advancement and evidence of rebuttal
Presumption of advancement
- courts presume any transfer from husband to wife or father to child is deemed to be a gift in the absence of evidence to the contrary- Shepard v Cartwright
- Tinsley v Morgan affirmed it and accepted loco parentis
- doesn’t apply to wives and mothers- laskar v laskar
- s199 equality act 2010 abolishes it yet it hasn’t come into force
Evidence of rebuttal
- where presumption doesn’t apply, the transferee can adduce any other form of evidence to show that the presumption does not apply and instead the transferor intended the transfer as a gift
- limitation: cant rely on evidence of illegality- tribe v tribe
- however you can if they repent from the illegal conduct- locus poenitentiae- Tinsley v Morgan
UKSC reversed this in Patel v mizra and replaced with ‘public interest’ testy.
Thus, the law as it stands is that the party cannot rely on illegal conduct to rebut the presumption.
Automatic resulting trust
Arises by operation of law where the transferor has attempted to create an express trust but fails to do so for several reasons
Automatic resulting trust cannot be rebutted
3 circumstances:
- failure of condition
- invalidity of trust
- subsequent failure
Automatic resulting trust: failure of condition
- where express trust is subject to a specific condition, the failure of that condition will cause an automatic resulting trust- re Ames settlement
- only applies to inter-vivos trust
Automatic resulting trust: invalidity of trust
Where an express trust fails for certainty of objects, beneficiary principle or the rule against perpetuity
- failure of certainty of objects- re leek
- failure to meet beneficiary principle- vandervell v inland revenue commissioners
- failing the rule against perpetuity- air Jamaica v Charlton
Automatic resulting trust: subsequent failure of trust
Where its initially valid but subsequent events lead to failure of the trust because it becomes impossible to perform
Re trusts of the Abbott fund- any surplus of an express trust that subsequently fails due to impossibility will be held on a resulting trust for the settlor
Only applies where donors are identifiable or else becomes bona vacantia
Quistclose trust
Where money is transferred for a specific reason it must be used for that reason or transferee holds the property on a resulting trust for the transferor
Established in the case of Barclays Bank ltd v quistclose investments and reaffirmed in twinsectra v Yardley
Fundamental condition= must be an initial agreement that the property is to be used exclusively for the stated purpose
