Resulting Trusts

Question 1

s.53(1)(b) LPA 1925

Answer 1

This provides that for an express declaration of trust for land or any interest therein, the trust must be manifested by some signed writing - so needs to be some signed writing generally to evidence the creation of the trust over land.

Question 2

s.53(2) LPA 1925

Answer 2

This provides that s.53(1)(b) LPA 1925 does NOT affect the creation of resulting trusts or constructive trusts.

These are both different types of trusts imposed by law - they do not respond to S’s unilateral, properly manifested intention to create a trust.

Question 3

Westdeutsche Landesbank v Islington LBC

Answer 3

Lord B-W categorised the two main types of resulting trusts:

1) Apparent gifts
2) Failing trusts

These were further sub-categorised by Lord Millet writing extra-judicially, where he argued that there are two different types of apparent gifts. 1. Voluntary conveyance or transfer of property. 2) Purchase of property in the name of another.

Question 4

Dyer v Dyer

Answer 4

Where A makes a purchase in B’s name and there is no evidence to demonstrate why A did this, then there is a presumption of a resulting trust in A’s favour

Question 5

Huntingford v Hobbs

Answer 5

Resulting trust is determined at the time of purchase, which means that subsequent mortgage repayments etc. made by B are not taken into account when determining A and B’s respective beneficial interests in the property.

However, note that this only applies where the scope of RT analysis still applies - CTs now apply in the family home context per Stack v Dowden.

Question 6

Re Vinogadroff

Answer 6

Where A makes a voluntary payment or transfer of PERSONAL property to B, and there is no evidence to explain why A did this, then the court also presumes that there is a resulting trust in A’s favour.

Grandmother transferred shares to granddaughter, but then she died and there was no evidence to explain what her motive was in this voluntary transfer of property. So court held that the granddaughter held the shares on RT for the grandmother’s estate.

Note that this does NOT apply to voluntary conveyances of land - law is different here. And secondly, there must be no evidence to explain A’s intention for the presumption of RT to apply.

Question 7

Re Vandervell Trustees (No 2) - PRESUMPTIONS

Answer 7

Megarry J identified the principle of using a presumption of a RT in A’s favour where there is NO evidence to explain what A’s intentions were when they made the voluntary transfer of personal property.

Question 8

Westdeustche Landesbank v Islington LBC

Answer 8

Lord B-W explained that the presumptions that apply to the two types of apparent gifts (voluntary transfers or conveyances and purchase in the name of another) can be rebutted by evidence of ANY intention to the contrary - so once evidence is produced, then the presumption of RT in A’s favour no longer applies.

Question 9

Presumption of Advancement

Answer 9

This is the opposite presumption of the normal presumption of RT in the transferor/purchaser’s favour where there is no evidence to explain why they made the apparent gift - only applies in certain relationships.

The presumption here is that A intended to make an absolute gift to B in the absence of any evidence to explain A’s intentions in making the apparent gift.

Question 10

Hepworth v Hepworth

Answer 10

Presumption of advancement applies where A is the father or B, or stands in loco parentis to B

Question 11

Re Curtis

Answer 11

Presumption of advancement does NOT apply where A is the wife of B - this shows how sexist and outdated the presumption of advancement is, but it technically still applies in these relationships in the absence of ANY evidence to the contrary.

Question 12

Tinker v Tinker

Answer 12

Presumption of advancement DOES apply where A is the husband of B.

Question 13

s.199(1) Equality Act 2010

Answer 13

This provides that the presumption of advancement is to be abolished, but note that it has not yet come into legal force.

This shows that Parliament has a negative conception of the presumption of advancement, which the courts have also noted in explaining how it can be rebutted very easily if ANY evidence is produced to the contrary.

Negative view of the presumption of adv. by Parliament and the courts shows that it is easy to displace!

Question 14

Laskar v Laskar

Answer 14

Lord Neuberger stated that the presumption of advancement can be rebutted on “comparatively slight evidence” - so the presumption of advancement is even easier to rebut than the ordinary presumption of RT.

Question 15

s.60(3) LPA 1925

Answer 15

This provides that for a voluntary conveyance of land, a RT for the grantor should NOT be implied simply because there is an absence of evidence which expresses that the property was intended to be for the grantee’s benefit.

I.e. this prima facie appears to abolish the presumption of RT in A’s favour for the voluntary conveyance of LAND (law still has presumption of RT for voluntary transfer of personal property e.g. shares - Re Vinogadroff). However, the courts have NOT fully clarified whether s.60(3) does definitively abolish the presumption of RT for voluntary conveyances of land - law is currently unclear on this.

Question 16

Lohia v Lohia

Answer 16

Mummery LJ said that an appellate court would have to hear a full argument before deciding whether the presumption of RT for voluntary conveyance of land is definitely abolished by s.60(3) LPA 1925, thereby refraining from answering the question. This means that it is not definite that s.60(3) does in fact abolish the presumption, even though prima facie it seems to.

Question 17

Prest v Petrodel Resources

Answer 17

This was a recent case in which the SC simply avoided discussion of whether s.60(3) abolishes the presumption of RT for voluntary conveyances of land at all, so law is currently not fully clear on this issue.

Question 18

Tinsley v Milligan

Answer 18

A cannot rely on evidence relating improper or illegal purpose to rebut the presumption of a resulting trust.

Question 19

Tribe v Tribe

Answer 19

A party may be able to rely on evidence relating to an improper/illegal purpose where that improper purpose was never carried out. 3 elements to this exception to Tinsley v Milligan

1) Genuine repentance is NOT required
2) Party must have voluntarily refrained from carrying out the improper purpose
3) It does NOT apply where the party withdrew because the improper purpose was discovered

Question 20

Bilta v Nazir

Answer 20

Lord Toulson and Lord Hodge said that the majority CA approach in Tinsley should be adopted for what constitutes an illegal or improper purpose - if it would be an affront to the public conscience to grant relief, then the presumption CANNOT be relied upon.

Question 21

Les Laboratories Servier v Apotex

Answer 21

SC affirmed the rule in Tinsley that B cannot rely on evidence relating to an improper purpose to rebut the presumption of a RT. However, Lord Sumption said that this rule could have “draconian consequences” if applied too widely, and therefore suggested that it does have some limits in terms of scope.

Question 22

Stack v Dowden

Answer 22

Courts no longer use the analysis of RTs to determine shares of beneficial interests in homes - so does not matter that A paid the purchase price and B undertook mortgage repayments/other contributions etc. - courts use a CT here to determine the beneficial interests of the property.

Note that this only applies in the family home context. Lady Hale held that this typically applies with couples/parents and children purchasing property for domestic context, but couples do NOT need to be married etc.

Lord Walker took a different approach and said it should only apply in matrimonial/quasi-matrimonial situations.

Question 23

Laskar v Laskar

Answer 23

Stack v Dowden family home CT analysis does NOT apply where there is a family context, but the purchase was made was an investment, rather than as a dwelling. So RT analysis still applies where purchase was made as an investment - RT determined at the point of purchase, so shares are not taken into account in relation to mortgage repayments etc.

Question 24

Vandervell v IRC

Answer 24

Where the equitable interest in the property is not properly exhausted, the express trust fails and the property is held on RT for S.

V paid RCS through granting shares in company and paying dividends, and had the shares repurchased at a nominal price to reduce tax liability by Vandervell Trustees. BUT, it was never stated where the shares should go after repurchasing by VT - company cannot hold shares for itself, so the beneficial interest was not properly exhausted and thus there was a RT for V as the settlor.

Question 25

Re Shaw

Answer 25

RT arises where S fails to create a valid express trust, e.g. because doing so would create a private purpose trust which is NOT valid under English law. So S’s attempt to create a testamentary trust for the purpose of researching a 40 letter alphabet failed due to being non-charitable private purpose trust, thus RT in favour of S’s estate.

Question 26

Re Foord

Answer 26

There is no RT for A on the failure of an express trust if the trustee is expressly intended to take the property for herself beneficially, subject to a charge for some purpose.

So this applies where A creates an express trust for some purpose which the trustee must exercise it (e.g. making annual payments to A’s widow), and then the trustee takes the remainder as an absolute gift.

Question 27

Air Jamaica v Charlton

Answer 27

$400m surplus from company pension fund - trust instrument explicitly stated that any surplus money was not to go back to the company.

However, PC held that where the trust purpose has been achieved and there is a surplus, then the property is held on RT in favour of those who contributed to it - so RT here in favour of the company (even though the trust deed said this should not occur) proportionate to their contributions, and in favour of the employees proportionate to their contributions.