Resulting Trusts - Automatic Resulting Trust

Question 1

What are the two types of resulting trusts

Answer 1

1. Automatic Resulting Trust

2. Presumed intention resulting trust

Question 2

How does an automatic resulting trust arise?

Answer 2

Through operation of the law - ‘it appears automatic’

The beneficial interest automatically jumps back to the original owner

Question 3

What case gives justification for a automatic resulting trust?

Answer 3

Westdeutsche Landesbank Girozentrale v Islington LBC

Question 4

What are the four ways a resulting trust can arise?

Answer 4

1. failure of condition
2. failure of certainty of object
3. surplus funds
4. quistclose trust

Question 5

Give two cases which show an automatic resulting trust arising due to failure of condtion

Answer 5

1. Re Ames Settlement

2. Essery v Cowlard

Question 6

What case shows automatic resulting trusts can arise due to a failure of formalities?

Answer 6

Hodgson v Marks

Question 7

What is failure of certainty of objects?

Answer 7

Where the trustee does not know who they are holding the property on trust for. The equitable interest is automatically held on resulting trust for the settlor

Question 8

What case shows failure of certainty of objects?

Answer 8

Vandervell v IRC

Question 9

What is the general rule for surplus funds?

Answer 9

If the purpose of the trust has been fulfilled, but there is a surplus, then the surplus is held on trust for the donor (the person who put money into the trust)

Question 10

Re Trusts of Abbott Fund [1900]

Answer 10

Trust was set up for 2 elderly disabled ladies. Surplus funds remained after their death. The money was held to be on resulting trust for the donors - nothing to show it was meant to be an absolute gift.

Question 11

Re Gillingham Bus Disaster Fund [1958]

Answer 11

A trust fund was created after a road accident. The other party then accepted liabile, so the money was held on resulting trust for the donors. The donors who gave money could not be identified. After 40 years, no donors came forward to claim the money so it was used to build a memorial.

Question 12

West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund Trusts [1971]

Answer 12

Shows that where there is surplus funds, what happens with the money depends on how to donors paid into the fund

Question 13

Surplus funds - where donors paid by subscriptions

Answer 13

contractual relationship - donors have already received the benefit of subscription membership so no resulting trust

Question 14

Surplus funds - where donors paid in return for raffles sweepstake /entertainment

Answer 14

there is a contractual relationship between fund and those who bought tickets - so no resulting trust

Question 15

Surplus funds - where donors paid using collection boxes

Answer 15

no resulting trust - the donors will not be able to be identified

Question 16

Surplus funds - where donors gave by donations/ legacies (and can be identified)

Answer 16

a resulting trust is created in favour of the donors

Question 17

Air Jamacia v Charlton

Answer 17

The surplus funds were held on resulting trust. They were held in proportion to their contributions

Question 18

What case shows that surplus funds apply where there is indirect beneficiaries?

Answer 18

Re Denley

Question 19

What does the case of Re Denley show?

Answer 19

That surplus funds trusts apply where there are indirect beneficiaries

Question 20

What 5 cases need to be mentioned when discussing surplus funds?

Answer 20

1. Air Jamaica v Charlton
2. West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund Trusts [1971]
3. Re Gillingham Bus Disaster Fund [1958]
4. Re Trusts of the Abbott Fund [1900]
5. Re Denley

Question 21

When does a quitsclose trust arise?

Answer 21

Where the lender provides money for a specific purpose - the borrower is deemed to be holding that money on automatic resulting trust for the lender until the specific purpose is carried out

Question 22

What case shows a quistclose trust?

Answer 22

Barclays Bank v Quistclose Investments Ltd [1970]

Question 23

Twinsectra Ltd v Yardley [2002]

Answer 23

confirms the use of a Quistclose trust - will arise where money needs to be used for a specific purpose