Resulting Trusts Flashcards

Question

*Tinsley v Milligan [1994] Held

Answer 1

Held: Majority upheld the presumption (Keith, Goff dissenting) because a claim is entitled to succeed if he could establish his title without relying on his illegality. Jauncey: - Distinguish between enforcement of executor provisions arising under illegal contract, and enforcement of rights already acquired under such a contract o Trite law that the first is unenforceable o Also a party is not entitled to rely on his own fraud/illegality to assist a claim or rebut a presumption - HOWEVER a completely executed transfer in pursuance of an unlawful agreement is VALID and court will protect transferee’s interest provided he doesn’t require to found on the unlawful agreement - Question: whether R is seeking to enforce unperformed provisions of an unlawful transaction or simply relying on an equitable proprietary interest she already acquired - The agreement was that they would both provide funds for the house but it would be registered under A’s name only to deceive the Department of Social Security. If agreement hasn’t been performed, neither party could enforce it; however, as soon as it was performed (sale of house) A became trustee and R could rely on equitable proprietary interest Browne-Wilkinson: - Where presumption of resulting trust is engaged, C claiming under the resulting trust does NOT have to rely on the underlying illegality - Contrast: where presumption of advancement engaged and C has to rebut it, then he usually has to plead and give evidence of underlying illegal purpose (most authorities involve PoA and C hasn’t been allowed to plead illegal purpose) - Reason why we depart from the resolute rule against pleading illegal purposes is that court will enforce the Bowmakers rule: A party to an illegality can recover by virtue of a legal or equitable property interest if, and only if, he can establish his title without relying on his own illegality Keith (dissenting): - Public conscience test raised by majority is undesirable because it replaces the strict but clear rules governing present law with a balancing exercise - The principle argued by A (that if A transfers property to B in order to disguise A’s interest in it, then he shouldn’t profit from the illegal act) has been applied for two centuries and the Court shouldn’t depart from it now - Indeed this rule causes much hardship for R but there is no evidence that the public conscience test is more desirable

Answer 2

recommended replacing Tinsley v Milligan with a statutory discretion taking into account: - Seriousness of illegality - Knowledge and intention of party seeking to recover benefits - Whether refusing to allow standard rights and remedies would: o Deter illegality o Further the purpose of the rule rendering the transaction illegal o Be proportionate to the illegality involve

Answer 3

In a clear attempt to limit the application of Tinsley because it is seen as contrary to public policy (PoA is falling into disfavour and shouldn’t be elevated to a decisive status; the distinction shouldn’t rest on arbitrary factors like whether it’s a father or uncle or mother), what the CoA did here was introduce even more arbitrary distinctions into the law of illegality – now title depends on whether, out of the control of the defendant, the illegal purpose has been achieved (perhaps change it to repentance?)

Answer 4

Father transferred shares to son to conceal them from creditors (illegal purpose); once threat passed he demanded the shares back but son refused arguing PoA irrebuttable by evidence of illegal purpose.

Answer 5

Held: Since the creditors weren’t aware of the transfer no part of the illegal purpose had been carried into effect so father could rely on his purpose to rebut presumption. Nourse LJ: - In both this case and Tinsley A transferred property to B with mutual purpose being to conceal his interest in the property for fraudulent/illegal purpose - Before Tinsley principle that A couldn’t recover property was consistently applied regardless of whether PoA arose - But now there is a distinction: if PoA doesn’t arise then the general rule doesn’t apply; if PoA does arise then D won’t be allowed to plead illegal purpose - Criticism: Judge Weeks QC – this distinction shouldn’t depend to such a great extent on arbitrary factors, such as whether the claim was brought by a father against son, or mother against son - Nourse agrees – also at this time the PoA for other purposes is falling into disfavour, and in illegality shouldn’t be elevated to a decisive status - However we are bound by Tinsley which decided that if PoA is engaged the general rule applies, but it didn’t decide that there wasn’t an exception where the illegal purpose had not been carried out Millett LJ: - Authorities support view that someone can plead his dishonest intentions as long as he has withdrawn from the transaction before the illegal purpose has been carried out. - This is a question of policy – refusing to lend assistance to those who found their cause of action on illegal or immoral acts often leads to a denial of justice (justification is that it’s not a matter of justice but rather one of policy) - Thus locus poenitentiae serves to mitigate the harshness of the primary rule by enabling C to give evidence of his own dishonest intent, but only if he withdrew from the transaction while his dishonesty still lay in intention only - One must hesitate before introducing an exception to a primary rule but the one in Tinsley isn’t one based on any discernible moral principle but is rather procedural in nature and depends on the adventitious location of the burden of proof in any case “Genuine repentance is not required. Justice is not a reward for merit; restitution should not be confined to the penitent. Voluntary withdrawal from an illegal transaction when it has ceased to be needed is sufficient

Answer 6

A resulting trust is where the transferee holds property on trust for the transferor. A conveys to B, who holds the trust property for A. The beneficial interest results (comes back) to the transferor (or the party who provided the purchase money). NB: the metaphor of ‘springing back’ associated with RTs is misleading. In truth, the RT is a new interest which is created.

Answer 7

• The role of intention. When does an RT arise? While an express trust gives effect to intention and CTs respond to unjust enrichment / wrongs, RTs only tell you about the structure of the trust, not the reasons. • Whether the beneficial interest remains with the transferor, or is returned to him. Two views here: o View 1: the transferor starts with both legal and beneficial interest, the beneficial interest remains with him when he passes the legal interest to the transferee. Lord Reid in Vandervell: “the beneficial interest must belong to or be held by someone. So, if it is not to belong to the donee/trustee, then it must remain with the donor.” o View 2: the transferor starts with absolute ownership, rather than a title consisting of legal and beneficial interest. Beneficial interest is then created when he tries to pass legal title to the transferee, and the RT returns the beneficial interest to him (i.e. he gains a new interest). Lord B-W in Wesdeutche and Birks take this view.

Answer 8

The division is false for two reasons (Swadling) 1. Presumed and automatic are not opposing terms: they are each answering questions. ‘presumed’ tells us how the fact triggering the trust is proved in litigation (procedure), while ‘automatic’ tells us that the fact triggering the trust is not a declaration of trust (substance). As a matter of logic, therefore, a RT can be both presumed and automatic. 2. RTs do not fit into the overall taxonomy of trusts: if a declaration of trust is proved, then presumptive trusts are express, if not they are constrictive. Automatic RTs are constructive.

Answer 9

it is a method of proof. Saying there is a presumption only tells us how the fact is proved, not what it is. Yet, it is the substance (what is presumed) that is important. An evidential presumption is the most likely inference we can draw from the evidence of the primary fact.

Answer 10

There are two main situations in which a presumed RT arises: (i) voluntary conveyance of property to another; (ii) the purchase of property in the name of another.

Answer 11

The presumption of resulting trust used to apply to land in the same manner as personality, but s60(3) LPA now governs the presumption of resulting trust on voluntary conveyance of land. • 60(3): “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” o Broad interpretation: Virgo: s60(3) means that a voluntary conveyance of land takes effect as expressed, unless there’s evidence of contrary intention. I.e. s.60(3) abolishes the presumed RT for voluntary conveyances of land. o Narrow interpretation: Swadling: s.60(3) is merely a word saving provision that did not alter substantive law — under the Statute of Uses 1536 it had been necessary to use the words ‘unto and for the use of’, but this section is simply a reminder to conveyancers that such words are no longer needed. s.60(3) does not prevent a presumed RT arising in cases of gratuitous transfer of land, it just means an RT will not arise merely because the words are absent.

Answer 12

• first instance judge adopted the broad interpretation, but Mummery LJ in the CA seemed to adopt the narrow interpretation — he did not, however, come to a clear conclusion as to which was correct. o Mummery LJ: from the language of s.60(3), it is clear that: (i) there can be no presumption of RT “merely from the absence of the words ‘unto and the use of’”; (ii) nothing in the subsection “precludes the implication of a trust … [in] circumstances other than the omission of the words ‘unto and to the use of’.”

Answer 13

• suggests that there is no presumption of a RT in the family home context in cases of conveyance in joint names. Instead, the presumption is that the registered owner owns the property – the non-owner is required to produce evidence that the parties intended differently, creating a constructive trust.

Answer 14

When a purchaser buys property in the name of a third party, it is presumed that the property is held on RT for the purchaser, proportionate to the purchaser’s contribution to the purchase price. This applies to both land and personal property. * Dyer v Dyer [1788] H&W purchased land in their joint names. The purchase money was provided entirely by H. Eyre CJ: “The trust of a legal estate…results to the man who advances the purchase money.” Unless contrary evidence rebuts this presumption. * Fowkes v Pascoe [1875]: A purchased an annuity in B’s name. A presumption of RT arose on A’s favour.

Answer 15

NB: s.60(3) does not apply because the conveyance is not voluntary.

Answer 16

Primary facts: (i) A conveys to B (voluntary conveyance); (ii) A pays C to covey to B (purchase money). We know that primary fact + secondary fact = B holds on trust for A. What is the secondary fact?

Answer 17

E.g. Swadling * Used by Lord Nottingham in Cook v Fountain [1676]. He notes that there are two types of trust: (i) express; and (ii) constructive. Express trusts can either be declared by direct and manifest proof, or violent and necessary presumption.” These ‘presumptive trusts’ arise when “the Court, upon consideration of all circumstances presumes there was a declaration, either by word or writing, though the plain and direct proof thereof be not extant.” * Thus the ‘presumed secondary fact’ is the transferor’s declaration of trust.

Answer 18

E.g. Mee * Different from the above, as the intention is unexpressed. * Vandervell (No. 2): “In the first category, subject to any provisions in the instrument, the matter is one of intention, with the rebuttable presumption of a RT applying if the intention is not made manifest.” * However, this seems at odds with the operation of presumptions. Presumptions operate to draw the most likely inference from primary facts. This is not the most likely inference — people do not transfer rights without expressing intention to do so.

Answer 19

``` • Birks and Chambers: “equity tends to be suspicious of gifts and often asks the recipient of an apparent gift to prove that it was intended as a gift. The failure to do so means that it will be held on trust for the apparent donor.” In other words, equity is suspicious of gifts, so presumes that there is no gift, leading to a presumption of non-beneficial transfer (a trust) in favour of transferor. • Birks’ theory was rejected in Westdeutsche [1996]: o Facts: Local Authority entered into an ultra-vires agreement with Westdeutche to bet on interest rate fluctuations. Under the agreement W had paid out money to the LA in the mistaken belief that the agreement was valid (i.e. that the LA had authority to enter into it). W sought resolution from the HL that money was held on RT (so LA would owe fiduciary duties as a trustee and W could claim compound interest). o HL (Lord B-W): no RT arose (LA just had to make restitution for unjust enrichment — only simple interest). The fact presumed in presumed RT cases is the transferor’s positive intention to create a trust, not the absence of intention to benefit the transferee. In reaching his decision, Lord B-W relied upon Swadling’s statement that: “the presumption of resulting trust is rebutted by evidence of any intention inconsistent with such a trust, not only by evidence of an intention to make a gift. In other words, such trusts are based on intention.” ♣ Inconsistent with Birks’ theory: if the fact presumed were a lack of intention to benefit, then it could only be rebutted by evidence that the transferor intended to confer a benefit. • However, Chambers argues that the lack of intention to benefit theory gains support from Air Jamaica v Charlton: o Millett (obiter): “a RT arises by operation of law, though unlike a CT it gives effect to intention. But it arises whether or not the transferor intended to retain a beneficial interest — he almost always does not — since it responds to the absence of intention on his part to pass a beneficial interest to the recipient. It may arise even where the transferor positively wished to part with the beneficial interest, as in Vandervell v IRC.” o Swadling: Air Jamaica does not really support Chambers’ view. The case concerned an automatic (incomplete disposal) RT and involved an unremarkable application of Vandervell v IRC; it did not intend to say anything new about presumed RTs. ```

Answer 20

o Presumption has changed: Birks/Chambers acknowledge Lord Nottingham’s presumption was initially correct, but can’t point to a time when it changed. o Wrong to say that equity is suspicious of gifts: e.g. it is not suspicious of: (i) gifts of life estates; (ii) post-mortem gifts. In any case, the ‘lack of intention to benefit B’ is not a fact capable of being presumed — it confuses an inference of fact and an inference of law — the idea of ‘not a gift’ is a legal, not factual, conclusion. Finally, there is no reason this should be the fact presumed — it is “hardly the most likely inference of fact to be drawn in the absence of intention to the contrary.”

Answer 21

* Swadling argues there is no presumption here — there has been no change in the burden of proof. A son would not win because of the benefit of the presumption, but because the father fails to discharge the burden of proof to prove there was no gift. I.e. it’s just a disapplication of the RT presumption. * Martin v Martin: (Australia) – “it is called a presumption of advancement but it is rather the absence of any reasons for assuming that a trust arose.” * s.199 Equality Act 2010: abolishes the presumption of advancement (but will not apply to any “obligation incurred before the commencement of this section”). Note, the effect of abolishing a non-existent presumption could be to expand application of the presumption that triggers an RT.

Answer 22

• Facts: H gratuitously offered to transfer the freehold title of her house to her lodger, under an oral agreement that H would retain a beneficial interest in the property. The lodger was registered as a sole owner and sold it to M. • CA (Russell LJ): the express trust could not take effect as intended due to the operation of s.53(1)(b) LPA (trusts of land must be made in writing). However, an RT arose in favour of C. Although s.60(3) means a presumed RT could not operate, an automatic RT could. o M argued that a RT is based on implied intention, and so where an express trust for the transferor was intended and declared, albeit ineffectively, there is no room for implication of the intention of the intention needed for a resulting trust. This is incorrect: “If an attempted express trust fails, that seems to be just the occasion for implication of a resulting trust, whether the failure be due to uncertainty, or perpetuity, or lack of form.”

Answer 23

someone has to have the beneficial interest, and, given that trustees were clearly not supposed to take the shares beneficially, and V didn’t make clear any intention to benefit the children’s trusts, the interest must have resulted to settlor under an RT. (supports Garnder's property inertia theory)

Answer 24

• Presumed RTs o Argues that the presumption of a resulting trust derives from the intention to create a trust. This is an active intention to benefit, rather than the unjust enrichment view of ‘no intention to benefit’ (the inverse). o See above for his opposition to Birks/Chambers – considers the only reasonable conclusion is that the secondary fact is an intention to benefit (from Lord Nottingham). However, overall thinks the RT should be abolished. • Considers automatic resulting trusts as anomalous to his theory. o Lord Browne-Wilkinson considered these explainable by the operation of a presumption of intent to create a trust. ♣ However, this is wrong, as there is no secondary fact (presumption) at all – these are merely automatic. o Argues that Vandervell v IRC explanation of why automatic RTs arise is wrong. ♣ Here, the equitable and legal interest is separated, because the equitable title remains in the transferor, the transferee becomes a trustee. ♣ This does not have logical support and was overruled in Westdeutsche. o He attacks Birks/Chambers conclusion that such trusts could arise from unjust enrichment, particularly in relation to proprietary overkill. ♣ If the desired result is to remove unjust enrichment, then a personal right is sufficient – no need to award a proprietary right. ♣ In fact, the result may be unfair, giving priority over other creditors. o Chase Manhattan can be considered support of this, where a CT was awarded (rather than an RT), where there was no intention to benefit. ♣ Under the Birks/Chambers view, an RT would have arisen. ♣ However, many believe that an RT should have arisen.

Answer 25

• He also considers the basis of RTs to be intention, but adds an additional step that the conscience of the transferee must be affected, by realising that they have received property not intended for their benefit. o Though it is unusual for a person to unknowingly become trustee, this takes it too far. o Birks: conscience would be a ‘fifth wheel on the coach’. • Where there is no intention to create a trust, the subject matter of the trust simply goes bona vacantia. o No automatic RTs. • Considers the presumption of intention to create a trust as sufficient to explain failed trust RTs. o Swadling disagrees – there is no presumption, just an automatic RT, which he cannot explain. o Hard to construe intention in this way – was directed quite differently. • Reasoning seen in Westdeutsche. Problems. • Cases such as Hodgson v Marks have given rise to a RT on the basis that there was no intention to benefit, supporting the view below. o Swadling argues that this should have just been an express trust. • In Vandervell and Air Jamaica, there was explicit intention not to create a trust. o Thus, it seems difficult to construe these cases under the Swadling theory – trusts were the last thing intended. o He argues that these cases are wrong, since the judges are working under a false assumption about the separation of legal and equitable interests. ♣ Equitable right is the consequence, not the product, of the trust.

Answer 26

• This theory is based on unjust enrichment – rather than a positive intention to create a trust forming the presumption, it is the absence of intention to give beneficially. o Vandervell v IRC and Air Jamaica seem to support this view, though the reasoning is based on a separation of legal and equitable title, which has been overruled in Westdeutsche. • Birks argues that, though the CT is the usual vehicle of proprietary restitution, RTs should be used as a route to restitution too. o His argument seems to be mainly that this would prevent anything falling through the net – leaves him quite susceptible to the proprietary overkill argument. • Birks further argues that the line between a CT and RT is of little importance, and a new classification of unjust enrichment trusts would be better. o At present, CTs and RTs rather sporadically give effect to unjust enrichment – should leave it to RTs to prevent ‘constructing two tunnels through the same hill’. • Chambers supports the creation of differing roles for RTs and CTs. o This would clearly be beneficial and perhaps suggests that the disagreement derives largely from the unclear structure of trusts law. o Unjust enrichment under RTs, because: ♣ To label them differently implies a meaningful difference between RTs and CTs arising from unjust enrichment. ♣ CTs arise for other reasons (such as to perfect intention o benefit others and to effect restitution for wrongs). • This theory can accommodate automatic resulting trusts, since they derive from ‘no intention to benefit’. o This is of vital importance – though Swadling’s theory received a big boost in Westdeutsche, his inability to explain automatic RTs prevents the argument going redundant. o Although, this is not a secondary fact. o Instead, it leaves Swadling largely normative – what should be the law. At present, there is clearly a mix and inconsistency in the case law, with unjust enrichment explaining automatic RTs.

Answer 27

• Proprietary overkill. o Gives a settlor priority over a creditor, with proprietary rights – why should we benefit someone what has made a mistake in this way? o Counter-arguments: ♣ Creditors run the risk of insolvency (though not all have a choice over who they give credit to); ♣ Birks: someone must suffer. • Fine tuning. o The common law of restitution has been fine-tuned to provide a balance between too much and sufficiently protecting the transferee’s legitimate interest in the security of his receipt. This theory would destroy the fine lines.

Answer 28

Mee – presumed resulting trusts arise in response to the transferor’s presumed unexpressed intention to create a trust for himself.

Answer 29

Chambers: this cannot explain cases where the transferor’s intention to create a trust for himself was impossible / improbable / unenforceable (e.g. Re Vinogradoff, where the transferee was a child and therefore it was highly unlikely the transferor intended her to be a trustee, or Hodgson v Marks, where the express trust was unenforceable due to s.53(1)(b) LPA (though this is not a problem if we want to explain automatic resulting trusts differently but is if we want a unified theory) , or cases where the transferor lacks the mental capacity to consent to the transfer / where the property was transferred by mistake). He argues RTs are imposed in all these cases in response to the transferor’s lack of intention to benefit the transferee, not the impossible / improbably / unenforceable intention to create a trust for himself. Chambers – there is no reason why the transferor’s presumed intention to create a trust should be effective to do so: Re Schebsman imposed a strict test for certainty of intention and the formalities must also be satisfied for an intention to create a trust to be effective in doing so.

Answer 30

Mee responds to this: transferee only becomes bare trustee not subject to full duties of express trustee so transferor in Vinogradoff may have intended transferee to be bare trustee. But this does not cover cases Chambers points out where impossible for transferor to have intended to create a trust e.g. cases where property has been transferred to the transferee without the knowledge of the beneficial owner of the property, or where transferor lacks mental or legal capacity to create a trust; a resulting trust arises in these situations but cannot be explained on Mee’s analysis.

Answer 31

presumed RTs arise in response to the transferor’s absence of intention to benefit the transferor. Supported by Re Vinogradoff and Hodgson v Marks and also Air Jamaica but conflicts Lord Browne-Wilkinson in Westdeutsche

Answer 32

1. Swadling – Air Jamaica does not really support Chambers’ view, it was only an unremarkable application of Vandervell v IRC, did not intend to say anything new about resulting trusts, and only an incomplete disposal resulting trust was in issue, so the case says nothing about presumed resulting trusts 2. Swadling – Chambers’ states that gratuitous transfers are apparent gifts but equity is suspicious of this and so presumes no intention to benefit transferee. But gratuitous transfers are merely ambiguous transfers, equity could just as well resolve this ambiguity by holding that the gratuitous transfer is an apparent trust rather than an apparent gift, court could respond to the ambiguous gratuitous transfer by assuming that the transferor intended a trust for himself. 3. Swadling – Chambers argues that in presumed resulting trust cases, the fact that the transfer was gratuitous leads the courts to presume that the transfer was a “non-beneficial transfer”. But there is no such thing as a “non-beneficial transfer”. Rights can be transferred either outright, on trust, or as security. To say that a person holds a right beneficially only means that he does not hold it on trust of as security. There are only legal and equitable interests in property; but Chambers seems to think that there is a separate third category of “beneficial” interest in property such that the “non-beneficial transfer” in presumed resulting trust cases means that the transferee was not intended to take this separate “beneficial” interest in the transferred property. But there is no such separate beneficial interest, so Chambers’ analysis must be rejected.

Answer 33

1. Authority is not determinative, Lord B-W’s view is flawed. 2. But this doesn’t work, mere intention, proved or presumed, does not create an express trust for the transferor, equity cannot respond to the ambiguous gratuitous transaction by assuming that transferor intended to create a trust for himself and hold that that presumed intention actually creates a trust for himself because express trust requirements e.g. certainty of intention will not be satisfied, Penner. 3. But Chambers only argues that there must be a “beneficial” interest separate from legal and equitable interests in the transferred property to support his full subsequent argument that resulting trusts can be used to remedy all unjust enrichment cases. In mistaken payment cases e.g. Chase Manhattan and Westdeutsche, the transferor did intend to give both the legal and equitable interest in the transferred property to the transferee at the time of making the mistaken payment, so Chambers is forced to argue that there is a separate “beneficial” interest which the transferor did not intend the transferee to have. Swadling therefore rejects this second stage of Chambers argument that resulting trusts can be used to remedy all cases of unjust enrichment. But this second stage can be separated from the first stage of Chambers’ argument that the presumed resulting trust arises from transferor’s lack of intention to benefit the transferee. In this context, “lack of intention to benefit the transferee” = “lack of intention to give the equitable interest in the transferred property to the transferee”, no need for there to be a separate “beneficial” interest. This first stage of Chambers’ analysis was applied without the second stage in Air Jamaica: the employer who paid into the pension fund did not intend to give the equitable interest in that money to the legal owner of the pension fund so the resulting trust arose. Chambers’ argument that resulting trusts should be extended to apply to all cases of unjust enrichment though use of a separate “beneficial interest” can be rejected as Swadling suggests but we can still at the same time accept Chambers’ argument that resulting trusts (outside of mistaken payment cases) respond to absence of intention by transferor to give beneficial/equitable interest in the property to the transferee. Penner argues that Chambers’ theory should be separated in this way, see below

Answer 34

Penner rejects Chambers’ conclusion that resulting trusts can be used to remedy all unjust enrichment cases. Resulting trusts cannot be used to remedy all unjust enrichment cases because, in mistaken payment cases, the transferor clearly did intend to confer both the legal and equitable/beneficial interest in the payment money to the transferee at the time of the transfer, no absence of intention to benefit the transferee.

Answer 35

This approach should be accepted, we should accept that resulting trusts arise in response to transferor’s absence to give transferee beneficial i.e. equitable interest in the property but reject Chambers’ view that they can apply to correct unjust enrichment in mistaken payment cases.

Answer 36

presumed resulting trusts are in fact express trusts because what is being presumed is that the transferor made a declaration of express trust for himself; the transferor’s declaration to create an express trust for himself is proved by an evidentiary presumption and so an express trust arises based on this presumed declaration of express trust.

Answer 37

1. Penner - Transferor’s mere intention to create a trust for himself is not enough to create an express trust; that intention must comply with the requirements for creation of an express trust e.g. certainty of intention. To establish his theory, Swadling therefore has to show that the content of the presumption is not merely that the transferor intended to create a trust for herself but that she effectively created one in compliance with the rules for the creation of an express trust. But none of the cases relied on by Swadling are sufficient to establish that this is the content of the presumption. Westdeutsche points the other way: no judge or lawyer argued that the presumption was that the bank had effectively declared an express trust over the money in its favour. 2. Penner – Re Vinogradof further undermines Swadling’s argument in that a presumed resulting trust arose even though an effective declaration of express trust for herself by the transferor was impossible because the transferee, the granddaughter, was only four years old (child cannot be an express trustee). 3. Penner – Presumed resulting trusts in family homes cases (Presumed resulting trusts in family homes cases (Lloyds Bank v Rossett) further undermine Swadling’s conclusion because the whole point in these cases is that the parties do not discuss the ownership of their home so it cannot be argued that the fact presumed to be proven in family home presumed resulting trust cases is that the bigger contributor made an effective declaration of express trust for himself.

Answer 38

When a court deals with a resulting trust of land, it is dealing with a trust exempted from LPA 1925 s53(1) formality requirements by s53(2), so the resulting trust must arise by operation of law and not because of a transferor’s presumed intention to create an express trust for himself in order to fall under s53(2). If the court accepted that the presumption in presumed resulting trusts is that the transferor intended to create an express trust for himself such that the trust is actually express not resulting, then the s53(1) formality requirements would have to be complied with for that trust to be valid, shown in Hodgson v Marks.

Answer 39

Mee – The case law makes it absolutely clear that the presumption of resulting trust is about the transferor’s intention e.g. Jones v Kernott, Stack v Dowden, Westdeutsche. None of these cases are consistent with Swadling’s view that what is presumed is an express declaration of trust for the transferor, rather than the transferor’s intention to create a trust for himself. If, as Swadling argues, the courts are presuming that there has been an express declaration of trust, it is difficult to see why they would never have said so explicitly in any of the resulting trust cases. Swadling can show little or no authority for his position. Mee – Swadling’s argument that what is being presumed is an express declaration of trust for himself by the transferor cannot explain purchase money resulting trusts. Where A transfers property to B but C provides the consideration for that transfer, a presumed resulting trust arises, but the court cannot be assuming that C made an express declaration of trust of the property for herself because she never owned the property so it would be impossible for her to declare such a trust. The better argument is that, in purchase money cases, the resulting trust arises in response to C’s presumed intention that the property for which she has paid should be held on trust for her, equity treats C as the “real” purchaser so responds to her intention.

Answer 40

Mee’s view may be more firmly rooted in the history and the case law than Chambers’ but it is less normatively attractive than Chambers’. It involves the courts presuming an intention (that the transferor had an unexpressed intention the transferred property to be held by the transferee on trust for the transferor) which it may have in fact been impossible for the transferor to have because she did not know what a trust was e.g. cases such as Tinsley, family homes presumed resulting trust cases. The court is imputing not presuming intentions; if the transferor did not really know what a trust was, the court cannot presume that she intended to create one, yet a resulting trust will still arise in this situation. By contrast, Chambers’ view is more realistic; the court merely assumes that the transferor did not intend to benefit the transferee through the transaction, no need to impute understanding of trusts law to the trustee. Or even better, Chambers’ new view that the trust arises in response to the absence of a reason for the transaction where the transferor did not intend the transfer to be a gift to the transferee. Chambers’ view is also more attractive in that it presents a unified view of resulting trusts, sees them all as arising in response to the same stimulus, more attractive than Mee’s argument that presumed resulting trusts arise because of transferor’s presumed unexpressed intention to create a trust of the transferred property for himself whereas automatic resulting trusts arise because transferor reposed trust in the transferee and the resulting trust arises to give the transferor another chance to create the trusts that he intended.

Answer 41

Swadling rejects the unexpressed intention to create a trust model argued by Mee because, in order to create a trust the settlor’s intention to do so must be mediated through an express declaration of trust, unexpressed intention to create a trust for himself cannot create a trust.

Answer 42

Mee – It is true that, when a person owns property, he cannot make himself a trustee of that property just based on an unexpressed intention to do so; he must expressly declare that he now holds that property on trust. But this self-declaration of trust situation is different to that where the owner of property transfers it to another with the intention of making that other a trustee of it to hold it on trust for him. The rules in the former situation do not apply to the latter situation. This is because, in the self-declaration of trust situation, the beneficial interest in the owner’s property is moving away from the owner, so the law protects the owner by requiring an express declaration of trust before that trust is effective. By contrast, in resulting trust situations, the owner/transferor is merely intending that he retains a beneficial interest in the property despite the transfer, so he does not need the protection conferred by the requirement of an express declaration of trust as in self-declaration cases.

Answer 43

these trusts “defy explanation”.

Answer 44

Swadling’s conclusion seems odd given that the incomplete disposal resulting trust is such a sensible solution in this type of case, it allows the transferor to make a renewed attempt to dispose of the beneficial interest in the transferred property as he intended. This implies that these resulting trusts should be abolished, and this is undesirable because of the benefits of these trusts as pointed out by Mee.

Answer 45

these trusts arise automatically as the automatic redirection of the failed express trust to return any remaining trust property to transferor. This is based on retention theory, see below.

Answer 46

Chambers – Megarry argues that resulting trusts arise in entirely different ways depending on whether or not the transfer is made on trust. Acceptance of this distinction would introduced an untenable propositions into the law: • That a presumed resulting trust in voluntary conveyance or purchase money cases arises because of transferor’s presumed intention to create that trust for himself, but if that presumed intention is proven to exist but fails to create a valid express trust for the transferor as in Hodgson v Marks then entirely different principles apply, i.e. those for “automatic” incomplete disposal cases based on retention theory.

Answer 47

both types of trust arise in response to the “common intentions of the parties”, unclear but seems to be suggesting that the trust arises in response to transferor’s unexpressed intention to create a trust for himself if the express trust fails.

Answer 48

1. an unexpressed intention is never enough to create a trust, and the House of Lords has forbidden courts from creating trusts based on speculative intent. 2. if incomplete disposal resulting trusts were explained by a presumption that a trust was declared in the transferor’s favour as Lord B-W suggests, this presumption would be irrebuttable in that the construction process establishing the presumption has already indicated that the transferee was not intended to take the property outright. There are no further facts capable of rebutting the presumption and an irrebuttable presumption of fact is not a valid presumption.

Answer 49

But this cannot explain Vandervell v IRC, V clearly did not intend to have any beneficial interest in the option, this would defeat the purpose of his scheme. Such an intention could not give rise to a trust for the transferor because the formality requirements for turning his intention to create a trust for himself into an actual trust are not satisfied, see Penner and Chambers criticisms of Swadling

Answer 50

Two stages, i) the creation of a trust through giving property to a trustee/transferee to be held on trust, thereby reposing trust in him, and ii) the transferor’s declaration of the particular express trusts under which the trustee is to hold the property. Once property has been conveyed to a transferee/trustee in whom the transferor has reposed trust to hold it according to the transferor’s instructions under i), the trust will not “fail” even when no particular express trusts are declared or those declarations fail under ii). A trust has been brought into existence by the conveyance to the transferee on trust, so someone must be beneficially entitled to the beneficial interest under that trust, so the transferor should take that unallocated beneficial interest on resulting trust to allow him correctly to declare other express trusts of the property in the future.

Answer 51

arose in cases in which it was impossible or highly improbable that the transferor had any intention to repose trust in the transferee as pointed out by Chambers e.g. Re Vinogradoff, cases where property has been transferred to the transferee without the knowledge of the beneficial owner of the property, or where the transferor lacks legal or mental capacity to consent to the transfer, or where the property was transferred by mistake. Mee’s theory can only adequately explain incomplete disposal resulting trusts, not presumed resulting trusts; Chambers’ theory is preferable because it explains all types of resulting trusts in a coherent and unified way.

Answer 52

Mee's argument means that resulting trusts arise in entirely different ways depending on whether or not the transfer is made on trust. This would introduce an untenable proposition into the law: on Mee's theory, in gratuitous transfer and purchase money presumed resulting trust cases, the courts presume that the transferor intended to create a trust for himself and the presumed resulting trust arises in response to that presumed intention. But when there is clear evidence that this presumed intention existed i.e. that the transferor intended to create a trust for himself but the rules for an express trust have not been satisfied so he failed to do so, as in Hodgson v Marks, then the resulting trust arises on the completely different basis of reposal of trust.

Answer 53

incomplete disposal trusts arise in response to transferor’s intention not to benefit the transferee, as proven by fact that transferor transferred the property to the transferee on trust.

Answer 54

Swadling – there is no reason why the law should respond to the transferor’s lack of intention to benefit the transferee by raising a trust. If the desire is to prevent unjust enrichment to the transferee as Chambers suggests, this can be resolved by giving the transferor a personal claim to recover the transferred property when the transferor’s intended express trust fails. Such a personal claim would be better than giving the transferor a proprietary claim to the transferred property through a resulting trust because a personal claim avoids unjustified prioritisation of transferor on transferee’s insolvency

Answer 55

This is the strongest argument against Chambers’ theory. But it can be responded that a resulting trust rather than a personal remedy is the desirable response to the failure of the intended express trusts because it ensures that the transferor can get his property back in order to have another attempt at disposing of the beneficial interest in the property on the express trusts that he originally intended. The transferor should be able to get the property back in this way even if the transferee goes insolvent: the transferee was never intended to have the benefit of the transferred property so there is no reason why his creditors should be able to do so. The transferor's ability to make his intended dispositions should not be defeated by the fact of the transferee's insolvency, which is a mere coincidence which was entirely beyond the transferor's control. The resulting trust in incomplete disposal cases should arise in response to the transferor's absence of intention to benefit the transferee in order to ensure that the transferor retains his ability to dispose of his property as he intended, and he should retain that ability regardless of the transferee's subsequent insolvency.

Answer 56

Chambers’ theory is best way to explain why both presumed resulting trusts and incomplete disposal resulting trusts arise. But as Swadling, Mee and Penner point out, Chambers’ argument that resulting trusts should apply to all unjust enrichment cases is flawed as it involves reliance on a conception of a “beneficial interest” which is separate from legal and equitable interests in the transferred property to explain how a resulting trust can arise in mistaken payment cases where the transferor does intend to transfer both the legal and equitable interest in the property to the transferee at the time of payment (as in Westdeutsche). But, as Penner argues, this broader aspect of Chambers’ theory can be severed from his former point that resulting trusts arise in response to transferor’s absence of intention to pass the beneficial/equitable interest in the transferred property to the transferee (presumed in voluntary conveyance and purchase money cases, proved in incomplete disposal cases).

Answer 57

Chambers reformulated his theory in light of Swadling’s criticisms in 2010: Chambers argued that the resulting trust does not arise in response to transferor’s lack of intention to benefit the transferee but in response to the absence of a reason for the transaction. In gratuitous conveyance and purchase money resulting trusts, the transferee has not provided consideration so there is no reason for the transaction. In incomplete disposal cases, the transferor’s express trusts have failed so there is also no reason for the transaction. It is presumed or proved by evidence that the transferor did not intend the beneficial/equitable interest in the transferred property to go to the transferee as a gift, so the beneficial/equitable interest is held on trust for the transferor to avoid unjust enrichment to the transferee in the absence of another reason for the transaction. In gratuitous transfer and purchase money resulting trust situations, the gratuitous transfer means that there is no evidence of a reason for the transaction, and so the court presumes that a resulting trust arises in response to the lack of reason unless the presumption is rebutted by the transferee proving a reason for the transaction e.g. that it was intended as a gift. In failed trust resulting trust situations, it is proven that there is no reason for the transfer: the reason for the transfer was to constitute the express trusts but those trusts have failed so there is now no reason for the transfer. But the reasons for which each of the three resulting trusts arise is the same: the resulting trust responds to the absence of a reason for the transaction. This analysis should be adopted. It is advantageous in that it provides an adequate explanation for all resulting trusts as they are used in the case law and presents a unified, coherent picture of resulting trusts (advantageous to Mee’s theory which can only explain incomplete disposal resulting trusts and presumed resulting trusts separately). It explains the result in Vandervell v IRC: V clearly did not intend VTC to have the beneficial interest in the option but V did not specify his intended express trusts so the beneficial interest in the option could not be held by express beneficiaries. There was therefore no reason for the transaction, and so a resulting trust for V arose in response to this absence of reason to avoid unjust enrichment to VTC. It also explains why no trust was imposed in Westdeutsche – there was a clear reason for the transfer in that case, i.e. the interest rate swap contract.

Answer 58

Megarry J’s automatic theory of incomplete disposal resulting trusts rests on the idea that the trust in such cases arises automatically on the failure of the express trusts because the beneficial interest in the transferred property has remained with the transferor throughout. “The resulting trust does not establish the trust but merely carries back to A the beneficial interest that has not been disposed of”. I.e. the automatic resulting trust arises because A retains his beneficial interest in the transferred property throughout the transaction. A never intended the beneficial interest to go to B and his intended express trusts failed so the beneficial interest in the property never left him, he retained it throughout the transaction, so B takes the property subject to A’s retained interest and so B holds it on resulting trust for A.

Answer 59

Megarry J’s retention theory is based on a theory that absolute ownership of property = legal + beneficial ownership, so when the transferor transfers property but his express trusts fail, he transfers legal title to the property to the transferee but he retains his beneficial title throughout. But this is an incorrect understanding of absolute ownership: “A person solely entitled to the full beneficial ownership of money or property, both at law and in equity, does not enjoy an equitable interest in that property. The legal title carries with it all the rights. Unless and until there is a separation of the legal and equitable estates, there is no separate equitable title. Therefore to talk about the [transferor] “retaining” its equitable interest is meaningless. The only question is whether the circumstances under which money was paid were such as, in equity, to impose a trust on [the transferee]. If so, an equitable interest [held by the transferor] arose for the first time under that trust”. Prior to the transfer, the transferor had no equitable interest in the transferred property to retain. He only acquires an equitable interest for the first time when the resulting trust arises. The transferor acquires equitable title to the property because a resulting trust arises, rather than the resulting trust arising in response to his retained equitable title as Megarry argues. Retention theory is inconsistent with the proper understanding of absolute ownership of property.

Answer 60

the beneficial interest which the transferor has in the transferred property after the resulting trust has arisen is different to his absolute ownership of that property before the transfer. The absolute owner of property does not have an equitable interest in her own property; a person cannot be a trustee solely for her own benefit. The transferor/legal owner does not have an equitable interest in the transferred property prior to the transfer so cannot retain an equitable interest in it throughout the transfer, as confirmed in Westdeutsche, no equitable interest can be held in absolutely owned property until an event occurs which separates the legal and equitable interests e.g. a transfer of the property giving rise to a resulting trust. Where the transferor/legal owner transfers the property to the transferee on trust which fail completely to dispose of the beneficial interest in the property, the transferee acquires legal ownership of the property and, at the same time, the transferee comes under equitable obligations to hold the property for the beneficiaries of the transferor’s express trust. As that express trust fails and the transferee was not intended to enjoy beneficial ownership of the property, the resulting trust arises. The transferor’s beneficial interest as the beneficiary of the incomplete disposal resulting trust is a new interest which did not exist before the transfer of the property to the transferee.

Answer 61

It is perfectly sensible and correct in law to conceive of different sorts of titles to property, different formal or technical ways of holding what is in substance the same interest. E.g. if A transfers his painting to B to hold on bare trust for him, A now holds his beneficial interest in the painting in a different way to before the transfer, and his beneficial interest is now secured by a title with different incidents, but it would be absurd to say that A has not held the beneficial interest in the painting throughout. It cannot be argued that A simultaneously destroyed and created his beneficial interest in the painting when he transferred it on trust as Swadling and Chambers suggest. Transferor has an equitable/beneficial interest in the property as its absolute owner before the transfer and retains it after the transfer. After the transfer, he holds his beneficial interest in a different way, behind a resulting trust rather than as part of absolute ownership, but the interest is the same in substance. Retention theory is correct.

Answer 62

Even if it is accepted that an absolute owner of property can be said to have an interest in that property which is substantively if not formally equivalent to beneficial ownership behind a resulting trust, it is submitted that this is not enough to establish retention theory as providing the reasons why all resulting trusts arise because form is important in property law and cannot be ignored. An absolute owner of property cannot hold the property on trust for himself, and so his rights as a beneficiary of a resulting trust will be fundamentally different from the rights which he held as absolute owner, in that as a trust beneficiary he has personal rights against the trustee in relation to the use of exploitation of the trust property, which he does not have as absolute owner. Further, the transferor as a trust beneficiary will have curtailed proprietary rights over the transferred property compared to his rights as absolute owner because, if the transferee/trustee transfers the property to a bona fide purchaser, the transferor/beneficiary will be unable to recover his property. While there may be substantive similarities between the transferor’s interest in the property as absolute owner and his beneficial interest behind a resulting trust, those interests are fundamentally different, and so it cannot be said that the transferor retains the same interest in the property throughout, as Penner argues.

Answer 63

• Disagrees with Birks/chambers theory of resulting trust of unjust enrichment • RT is based on ‘old fiction’ of retention of title o Owner is regarded as holding a beneficial interest which may be retained when the legal ownership has been transferred to another person o Not doctrinally satisfying • Rather than dispensing with presumed resulting trust, the purchase-money RT has been made irrelevant by the common-intention CT • Article argues for continued existence of automatic RT because an alternative justification can be identified for such trusts

Answer 64

1. Theory based on perceived pattern of RT arising on ‘absence of intention’ - Mee says they fail to account for the retention theory influencing the language employed by the court, such that it is occasionally formulated in negative terms (not intending to pass beneficial ownership) o Often judges use the negative and positive formulation interchangeably o E.g. Lavelle v Lavelle: Lord Phillips MR described the presumption of RT in negative terms ‘a presumption that C does not intend to part with the beneficial interest in the property’ and prior to that stated that the effect of a voluntary transfer by A depends on the intentions of A o This pattern does not exist – so appeal to nature of RTs cannot advance their argument 2. Also fails to adequately answer the Q: why should a proprietary remedy arise rather than a personal one? (Swadling stresses this) 3. Even normative argument (proprietary response to unjust enrichment rather than personal claim) undesirable - Virgo and Swadling write at length about the issues with extending RT on this unjust enrichment - in addition to the doctrinal question of how does a personal right transform into a proprietary one and what renders a particular claimant distinct from other unsecured creditors, there is a policy consideration of uncertainty in commercial law. Chan argues that we should adopt chambers' theory to get an edge over continental counterparts, but misattributes economic edge - in reality it is certainty - the very thing that would be compromised 4. The thesis would cover some scenarios where the creation of a RT would be wrong in principle o A enters into a voluntary transaction proposed by advisers and chooses not to read the relevant documentation believing the advisors to have her best interest at heart; o Person fails to address their mind to the consequences of a transaction because they are lazy Seems contrary to principle that A should have unjust enrichment/proprietary remedy

Answer 65

• Much of RT doctrine should be ‘jettisoned’ o Common intention constructive trust has displaced purchase money RT o We could dispense with voluntary transfer PRT o Gap filling trust makes sense alone – settlor has expressly stipulated that D is not to take beneficially So, favours reducing the scope of RTs and not their complete elimination

Answer 66

Retention not doctrinally satisfying • In reality, the interest which C holds under RT is not one they previously held o Previously could sue anyone who interfered with property + could transfer to whomever he/she chooses o Now can compel the trustee to sue anyone who interferes with the property + for them to transfer it to whomever they choose o These rights are different in nature and not ‘part of’ the legal title he or she held before • Lord Browne-Wilkinson makes this point in Westdeutsche o ‘fallacious’ argument that bank ‘retained’ equitable ownership o Arguably, he overlooks that case law rested on this fiction • Penner’s approach: o Objections to retention model are ‘very theoretical’ + explanation can be defended if one is willing ‘to maintain a distinction between form and substance’ ♣ Response: what is the normative justification for ignoring the strict legal position? ♣ If one concedes that the settlor is obtaining new rights then the retention idea loses its essential point (settlor’s continued ownership is simply an expression of his pre-existing property rights)

Answer 67

* Jones argues the deficiency leaves automatic resulting trusts as ‘a rule in search of a rationale’ * Also has implications for PRT * Argues historical context explains the existence of the presumption of RT but also the nature (why it’s a presumption of an intention rather than declaration of a trust) * Reiterates theses: discard PRT but keep ART

Answer 68

• Chambers changed his theory o Because Swadling criticised that chambers did not understand how presumptions of law operate: ♣ In the absence of rebutting evidence, ‘proof by evidence of one fact, the ‘primary fact’ gives one party to the litigation the benefit of another fact, the secondary fact, without any need to adduce evidence in proof. The secondary fact presumed cannot be as Chambers requires that C had ‘no intention to benefit’ because that is a ‘legal inference from facts proved by evidence, not the proof of an additional fact through the operation of a presumption.’ o He now argues that the presumption of RTs is not a true presumption but where there is no apparent reason for the transfer of assets to the recipient at the expense of another • Criticisms of modified theory: o Swadling accepts that there are other senses of a presumption but Chambers does not fit his understanding into any other category o He also does not engage with explicit statements in the case law to the effect that the presumption of resulting trusts is indeed a conventional presumption E.g. Stack v Dowden Lord Neuberger stated that the resulting trust is ‘no more than a presumption’ explaining it as a ‘descriptive of a shift in the evidential onus on a question of fact’

Answer 69

• Majority in Stack held that each party entitled to share which the court considers fair having regard to the whole course of dealing between them in relation to the property • Neuberger took the view that where the only additional relevant evidence to the fact that the property has been acquired in joint names in the extent of each party’s contribution to the purchase price, the beneficial ownership at the time of the acquisition will he held… in the same proportions as the contribution to the purchase price.’ o This solution is no more than a presumption which can be rebutted o Thus, contribution to purchase price raises the presumption of RT reflecting parties’ contributions unless presumption rebutted by evidence that shows the parties had a common intention in favour of a specific alternative division of beneficial interests, which would lead to a constructive trust instead * Majority limited their approach to domestic consumer context so Neuberger’s approach is probably better outside this context * Privy council decision Marr v Collie suggests majority approach in Stack not limited to domestic consumer context – encompasses a commercial investment made by a couple in an intimate personal relationship (domestic non-consumer context) • Mee says presumption of RT cannot apply where there is no gap to fill (i.e. there is available evidence) o Lamm J in Mackowik v Kansas city: ‘presumptions may be looked on as bats of the law, flitting in the twilight by disappearing in the sunshine of actual facts’. o There is scope for the rule in the PRT without the RT, i.e. default position is the shares should be quantified with respects to the financial contributions to the purchase price • What if there is no common intention such that it would give rise to a purchase money constructive trust? o Fowler v Barron CA rejected claim of cohabitant who provided all the purchase money for the property that was conveyed in joint names of the parties; Arden LJ held emphasis was on common intention so any secret intention should not be counted o Nb this arose in context of domestic dispute • No indication in the leading authorities of Stack and Jones that different substantive rules of law apply to disputes in domestic context as compared with othr contexts o Hale suggested in Stack that ‘the presumption of RT is not a rule of law’ o Briggs LJ writing extra-judicially has held that ‘the doctrine of RT is not really a rule of law at all, but an aspect of the evidential rules about burden of proof.’ o Thus, key point seems to be that different contexts merit different burdens of proof rather than different legal rules • Thus, the common intention CT could incorporate the presumption of quantification without the retaining RT • Lord Kerr in Marr v Collie points the other way! o On the one hand, the judgment focuses on the common intention of the parties but on the other hand Lord Kerr commented that it ‘may’ be appropriate to apply the RT solution where the parties ‘have not formed any intention as to the beneficial ownership but had, for instance, accepted advice that the property be acquired in joint names, without considering or being aware of the possible consequences of that’ o But, the issue is not that they formed no intention as to the beneficial ownership; unless they specifically thought about some divergence they would have believed in joint beneficial ownership; they may have failed to consider the possibility of the relationship failing and the practical consequences. * RT should not make random appearances but court must make the doctrine of common intention CT clearer! * Says voluntary transfer RT should also be discarded for its outdated rationale but no space to discuss in detail * Where there is unjust enrichment, personal remedy will suffice

Answer 70

One advantage of the RT is that the presumption of a beneficial interest corresponding with contribution is clear. There is minimal discretion. Discretion is not in and of itself bad. In the context of family homes, where legal certainty is less central to the concerns of the parties than in a commercial case, discretion may be a useful judicial tool in light of how different family dynamics may be! In commercial cases, this possibility for discretion is problematic. Mee seeks to address this by working in a default rule will reflect contributions. Yet, on what basis does this rule exist if not a presumption? It may be evidentially impossible to prove the actual intentions of commercial parties since there may be numerous strategic factors which contributed to the intention, of which parties may be unwilling to share. An imputed intention seems even more out of place - which begs the question - why supplant the PRT with what is in effect the same thing, albeit with scope for greater discretion (a contextually bad thing!) One possibility is that the judges's discretion would be fettered. Case law and facts could steer that discretion.

Answer 71

• C has expressly stipulated that the recipient is to take on trust • Law grants a trust so settlor/beneficiaries can trace/protected in case of trustee’s bankruptcy – origins lies in trustee’s duties to the settlor. • Where there is no beneficiary, the issues is still that the trustee has acted unconscionably and settlor would be wrongs so law makes trustee hold on trust for the settlor – trustee not intended to take beneficially o Mee argues that the resulting trust should be downgraded in the hierarchy of trusts o He says it may be logical to categorise it as an express trust given its close relationship between gap-filling resulting trusts and the express trust, and not constructive trust

Answer 72

• 3 conceptual reasons given by Lord Browne-Wilkinson: o (1) trust interests could not arise in relation to restitutionary concept of ‘value transferred’ but only in relation to defined property o (2) trust would only arise at the moment a D received payment if he was aware of the circumstances alleged to give rise to a trust. Since recipient of a payment subsequently found void for mistake or failure of consideration was not aware the conscious could not have been affected o (3) thesis was flawed by having to artificially exclude cases of partial failure to perform a contract despite fact that the wider concept logically led to a RT in such cases • 3 practical objections were also given: o (1) unacceptable consequences for third parties – even though they did not know about the transaction, they would be bound o (2) commercial uncertainty • But, doesn’t mean trust can’t arise from unjust enrichment: ‘the remedial constructive trust, if introduced into English law, may provide a more satisfactory road forward’

Answer 73

• Semantically, a ‘resulting’ trust is a trust whose beneficiary is also the person from whom the trustee acquired the trust property: a beneficial interest ‘results’, ie jumps back, to him. o In Re Printers and Transferrers Amalgamated Trades Protection Society [1899] Ch 184 a trust in favour of persons other than the provider of the trust property was described as a ‘resulting trust’, but this usage is incorrect • Conventionally, however, the term ‘resulting trust’ is not used to describe every trust of this pattern. Normal usage of the term excludes the case where the trust arises because of this person’s own stipulation that it should, ie is an express trust to this effect, he being its settlor. o Such as arises in the context of a pension fund trust, or of the arrangement under which the lender of money has the borrower hold it on trust for him, with a right or duty to expend it in a particular way (Barclay’s Bank Ltd v Quistclose Investments Ltd [1970] AC 567). Smith v Cooke [1891] AC 297, 299, however, supports the inclusion of such trusts. • S. 53(2) LPA 1952 exempts resulting trusts, as well as constructive trusts because it is not possible to know comply with the formality rules where no one knows of the trusts’ existence o Nb if the term ‘resulting trust’ extended to trusts arising from the settlor’s own stipulation, it would also include cases where s.53(1) could perfectly well be complied with o Gardner notes that resulting trust ‘is any constructive trust whose beneficiary happens also to be the source of the trust property’. • This vision is at odds with LBW in Westdeutsche

Answer 74

• i.e. the transferor does not intend to transfer the property, but the transfer is impermissible/or where he does intend but there is something wrong with that intention i.e. duress. o Such trusts would not be resulting but constructive trusts according to LBW (citing Chase Manhattan); Collins v Lee recently where a registration of land, obtained by fraud, was reversed by the imposition of a trust in favour of the previous owner, the judge asserting that ‘whether the trust should be characterised as implied, resulting or constructive is a matter of no importance.’

Answer 75

• LBW argues that RT arise in effectuation of the common intention of transferor and transferee o His judgment differentiates RT from CTs which do not arise to effectuate the common intentions ♣ Though the common intention constructive trust does o LBW’s view also fails to capture the gratuitous transfer and incomplete express trust cases * Must be presumed intention (he does call it as such!) as if expressed would be captured by 53 LPA * Cannot be correct to refer to the transferee’s intention – why would they wish to part with the trust property? * Even claim that transferor intends is questionable – as in Vandervell settlor did not intend! • Notes different approaches to what is presumed o Swadling presumed express declaration (so would give effect to intention) o Chambers presumed want of intention (so would not give effect to intention) • Summary of criticisms of LBW: o (1) reference to transferee is unsupportable o (2) reference to transferor might have mapped onto incomplete express trust and gratuitous transfer cases while excluding unsatisfactory transfer case ♣ But on examination his reference to transferor is untenable in incomplete express trust o (3) If LBW is right, then it is difficult to differential express trusts from resulting trusts in light of formality requirements

Answer 76

• Gardner reasons that RTs are in fact a species of constructive trust after all, arising die to ‘other legally significant circumstances’ • What circumstances generate RTs? • Transferee of some property should hold it on trust for transferor, aside from where the transferor so stipulates, whenever the transferor has not demonstrably chosen to give his property away and succeeded in doing so. o Idea hinges in property inertia = liberal vision of the institution of property – to give maximum freedom in the disposition of his assets, it is necessary to maximally treat them as for him alone to dispose of

Answer 77

• Incomplete express trust: to the extent of the incompleteness, property held on RT - quite easy to explain on this basis • Gratuitous transfer: ‘more problematic’ o it works for Chambers’ view since there is no intention to give property away o Chambers’ revised view there is no discoverable intention and no reason for doing so; therefore no reason to transfer the legal title o But Swadling’s view is more difficult because the actions are fully accounted for, leaving no space within which to say A has not chosen to give their property away and so the trust is not a product of proprietary inertia • Gardner notes that each of the three positions have support in the case law! o See Swadling, Chambers and Penner o ‘Rather than trying to adjudicate between them on that score, then, we should consider their sustainability in principle. Unfortunately, they all present difficulties.’

Answer 78

• ) Swadling’s view: o Reflects historical authentic – reflecting commonest intention actually held by those making gratuitous transfers, generally land in the middle Ages o But today, the intention it presumed no longer rings true! ♣ A gratuitous transfer is overwhelmingly likely to be meant as a gift ♣ We must also presume the expression of that intention, alongside the transfer: an unexpressed intention cannot generate a trust. Yet, it will always be possible to disprove that there was such an expression because otherwise there would be no RT in the first place. ♣ Plus, why would it merit special treatment as per s. 53(2) LPA? o Therefore, justified in rejecting this view

Answer 79

o escapes the latter objections but is even less plausible o it is certainly possible that someone gratuitously transferring property to another with no successful intentions at all as to its beneficial destination ♣ Incomplete express trusts involve such a state of affairs o Does seem extraordinary to presume this characterisation of gratuitous transfers, because they are in fact generally gifts and because the state of mind proposed is so nihilistic ♣ Arguably, the presumption might reflect not a really intention but some non-facilitative predilection like paternalism. Thus, the trust would not be express however there is scant modern reason to accept it all

Answer 80

o escapes previous objections because there is no presumption at all as to the transferor’s intentions o Rather than claiming that in making a gratuitous transfer I had no intentions as to the transfer’s purport, it merely states the obvious: in the event that no successful intentions can be found on my part concerning the purport of my transfer, I must be taken to have made the transfer without any purport. o Although this argument is saved from the objections of the other two, it is unclear why it is a presumption at all o Gardner argues that the proposed reconciliation is that the ‘presumption’ is not of an intention on the part of the transferor at all, as the first and second view take, but of the trust that arises in the event of a purport-less gratuitous transfer itself ♣ When we say that the trust is presumed, we simply mean that in the relevant circumstances, it is imposed by the law ♣ Although this is not a very satisfactory use of the word ‘presumed’, it is not impossible and it does correspond to the way the judges themselves sometimes use it (Re Vacndervell’s Trusts (No 2) (294)

Answer 81

• Third view is therefore the best of a bad lot o It allows the trust to be seen as the product of property inertia: if I gratuitously transfer property to you without known purport, I obviously have not demonstrably chosen to give my property away and succeeded in doing so. So, both the two most familiar types of resulting trusts, those arising in case of incomplete express trust and of gratuitous transfer that cannot be shown to have any other purport – can be understood in terms of the proprietary intertia analysis • This analysis suggests that we have a resulting trust in cases of unsatisfactory transfer cases which LBW declines o Such trusts arose where the law treats me as having transferred property to you despite my having no intention to do so, as where my land is, without my knowledge, re-registered in your name; where I do intend to transfer the property, but the transfer is impermissible; and to the same extent also where I intentionally transfer property to you, but my intention is impaired by mistake, duress, misrep etc. o Did not successfully intend/transfer property so property inertia means there will be RT o Gardner postpones discussions of CT

Answer 82

• Developed from two other suggestions as to the basis of the RT which had problems (1) ‘proprietary arithmetic’ thesis developed by Hackney o RT arise because a transferor of property necessarily retains so much of the beneficial entitlement to it as he has not given it away o Issues: treats beneficial interest as existing in the settlor’s hands even before the transfer i.e. at the time when he was absolute legal owner o The contrary view, that beneficial interest exist as correlative of trustees’ duties and so cannot exist before the transfer to the resultant trustee, is more generally favoured (Westdeutsche) o Proprietary intertia avoids this problem because it is indifferent whether the legal modalities aimed at achieving this conceive me as remaining beneficial owner throughout, or in accordance with the prevailing view, as newly becoming beneficial owner when the occasion arises o Mee objects to the proprietary arithmetic thesis in a more subtle way: ♣ The transferor has traditionally been portrayed as ‘retaining’ his pre-transfer interest, as proposed by the PAT, he points out that this interest differs in certain details from his interest as a beneficiary of a RT, on account of how trusts operate • Resonates with Nelson v Greening & Sykes (Builders) Ltd [48]-[58] ♣ PI does not suffer from this criticism because if A does not intentionally give away property, it ought to remain theirs; if the law nonetheless passes it to you, a RT arises so as to bring about strictly speaking as close as the trust device allows to bringing about – that it does so (2) lack of intention thesis by Chambers o which portrays RTs as being generated by a lack of intention of the part of the transferor that the transferee should have the benefit the property transferred (view adopted by Privy council in Air Jamaica and CA in Twinsectra Ltd v Yardley and might be considered to represent the law; but those decisions made no reference to the position taken by the House of Lords in Westdeutsche so cannot be regarded as authoritative) o clear similarly between proprietary intertia view and Garnder’s ♣ the former talks of ‘not intending the transferee to have the benefit’ ♣ the latter talks of the owner of property ‘not voluntarily conferring the benefit’ of it in another quarter

Answer 83

o (1) more explicit about why this situation should generate a resulting trust (to the extent that owner has not conferred benefit of the property elsewhere it should remain his) and about the basis upon which we should agree that it be the case (liberal vision of property) o (2) Chambers’ thesis seems to demand a RT where A transfers to B via ET property for some other person or purpose because clearly don’t intend B to take beneficially ♣ Unfortunately following the literal terms of the account, the Privy Council has asserted that there is a RT for me whenever I transfer property to you and do not intend you to have it, even despite an intention on my part to abandon my interest, i.e. to relinquish it as bona vacantia to the Crown • Air Jamaica: to justify its finding that the transferor had an interest under a resulting trust at the date of the claim, the PC must have assumed that such an interest cannot be given away before it has arisen; this assumption is contradicted by Re Vandervell’s Trusts (No 2), where though there was a difficulty about formality, there was a successful disposition of an existing resulting trust interest ♣ Assuming I can legally abandon my interest (authority Re west Sussex Constabulary’s Widow holds that I am but Chambers holds that I am not) the proprietary intertia analysis produces the opposite conclusion: since I intended to conger the beneFit in some other quarter, there is no RT

Answer 84

PRT He says the extensive LBW judgment in Westedeutsche on ‘common intention’ are misleading o RTs may arise before the trustee realises that there is a trust o Only the settlor’s intention should be relevant, not the trustees! o A trustee’s conscience does not need to be affected for a resulting trust – as opposed to a constructive trust - if trustee is not aware then unlikely to owe fiduciary duties However, LBW’s preference for positive intention is appropriate in explaining PRT – it also ensures ambit of RT is limited (criticises Chambers' view - e.g. Why should they have better claim than unsecured creditor when they’re the ones who made the mistake?) ART Notes Vandervell cannot be explained by presumed intention and in Air Jamaica there was no positive intention. NB notes the facts of both!! In Vandervell outright intended to get rid of it to circumvent taxation and in Air Jamaica, clause 4 of the trust deed provied that 'no money at which time have been contributed by the company under the terms hereof shall in any circumstances be repayable to the company'. Clearly no express trust and upholding the trust would be contrary to the intentions of the parties! Confusingly, Virgo just says that the account of ART being based upon the presumed intention of the settlor is theoretically justifiable, consistent with authority and should be maintained - one possible rationalisation is if we break it down into primary and secondary intention. In Air Jamaica, intention was to put money into the pension scheme; the secondary intention is what should happen if the primary intention fails - a sort of reasonableness test. But, this would still contravene the intention in both the aforementioned cases so intention is not important

Answer 85

Without evidence of actual intention, therefore, the law must fill this evidential lacuna with a presumption as to what was the most likely to have been intended by the transferor… the presumption that the settlor would have wanted to retain the benefit was sensible in the 16th century and remains sensible today o Alternative solution is for it to pass to the crown o This approach is a ‘judicious approach to determining the intention of the transferor or settlor’ and will give way to clear evidence to the contrary