Resulting Trusts - Automatic Resulting Trust Flashcards
What are the two types of resulting trusts
- Automatic Resulting Trust
2. Presumed intention resulting trust
How does an automatic resulting trust arise?
Through operation of the law - ‘it appears automatic’
The beneficial interest automatically jumps back to the original owner
What case gives justification for a automatic resulting trust?
Westdeutsche Landesbank Girozentrale v Islington LBC
What are the four ways a resulting trust can arise?
- failure of condition
- failure of certainty of object
- surplus funds
- quistclose trust
Give two cases which show an automatic resulting trust arising due to failure of condtion
- Re Ames Settlement
2. Essery v Cowlard
What case shows automatic resulting trusts can arise due to a failure of formalities?
Hodgson v Marks
What is failure of certainty of objects?
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
What case shows failure of certainty of objects?
Vandervell v IRC
What is the general rule for surplus funds?
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)
Re Trusts of Abbott Fund [1900]
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.
Re Gillingham Bus Disaster Fund [1958]
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.
West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund Trusts [1971]
Shows that where there is surplus funds, what happens with the money depends on how to donors paid into the fund
Surplus funds - where donors paid by subscriptions
contractual relationship - donors have already received the benefit of subscription membership so no resulting trust
Surplus funds - where donors paid in return for raffles sweepstake /entertainment
there is a contractual relationship between fund and those who bought tickets - so no resulting trust
Surplus funds - where donors paid using collection boxes
no resulting trust - the donors will not be able to be identified
Surplus funds - where donors gave by donations/ legacies (and can be identified)
a resulting trust is created in favour of the donors
Air Jamacia v Charlton
The surplus funds were held on resulting trust. They were held in proportion to their contributions
What case shows that surplus funds apply where there is indirect beneficiaries?
Re Denley
What does the case of Re Denley show?
That surplus funds trusts apply where there are indirect beneficiaries
What 5 cases need to be mentioned when discussing surplus funds?
- Air Jamaica v Charlton
- West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund Trusts [1971]
- Re Gillingham Bus Disaster Fund [1958]
- Re Trusts of the Abbott Fund [1900]
- Re Denley
When does a quitsclose trust arise?
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
What case shows a quistclose trust?
Barclays Bank v Quistclose Investments Ltd [1970]
Twinsectra Ltd v Yardley [2002]
confirms the use of a Quistclose trust - will arise where money needs to be used for a specific purpose
