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GDL Law Notes GDL Equity and Trusts Notes

Resulting Trusts Notes

Updated Resulting Trusts Notes

GDL Equity and Trusts Notes

GDL Equity and Trusts

Approximately 631 pages

A collection of the best GDL notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through many applications from mostly first class students and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor". In short these are what we believe to be the strongest set of GDL notes available in the UK this year. You'll notice that we include several different authors' worth of notes. The first is our 2017 author...

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  • Introduction

    - Express vs. implied trusts.

    • express trust: settlor expressly transfers property to hold on declared trust, or declares self trustee.

    • implied trust: arise by operation of law.

      • [Underhill and Hayton]: imposed by implication of a court of equity where the legal title to property is in one person, and the equitable right to the beneficial enjoyment thereof is in another.

        • encompasses: resulting trusts + constructive trusts.

    - Resulting trusts: property deemed to return (‘result’) to settlor.

    • no express declaration, so different rules: e.g. s53(2) LPA 1925: s53(1) LPA 1925 (writing requirements) does not apply.

    • arise in many + miscellaneous set of circumstances:

      • a. transferor has not parted with whole of beneficial interest.

      • b. voluntary conveyance into another’s name.

      • c. purchaser conveys property into name of another.

    Types of Resulting Trusts

    - Automatic vs. presumed resulting trusts: division by [Megarry J] in Re Vandervell’s Trusts (No. 2) [1974].

    • automatic resulting trusts: RT automatic consequence of failure to dispose of all the beneficial interest – e.g. Vandervell v IRC.

      • [Megarry J]: do not depend on intention – but: [Ld Browne-Wilkinson] in Westdeutsche Landesbank Girozentrale v Islington LBC [1996]: they are.

      • where no alternative: e.g. A tells B to hold on trust, but does not nominate beneficiaries.

    • presumed resulting trusts: rebuttable presumption of RT because property put in name of another.

      • where settlor’s intention unclear: could have intended transferee to hold absolutely, on trusts validly declared, or for settlor.

      • rebuttable presumption: need evidence to suggest a contrary intention.

Automatic Presumed
  • Trust fails

Voluntary transfer:

… Personalty

… Land

  • Quistclose trusts

Purchase money RTs:

… In another’s name

… In joint names

… In one name only

Unused surpluses
No valid declaration
  • Automatic Resulting Trusts

    - Introduction.

    • e.g. Vandervell v IRC [1967]: documentation did not state beneficiaries of option held on trust RT.

      • need careful drafting: failure to declare all beneficial interests tax charge because of RT.

    • 3 reasons automatic RT arise:

      • 1. no (valid) declaration of trust

      • 2. valid declaration but trust fails

      • 3. beneficial interests not completely disposed of (inc. surpluses).

    - No (valid) declaration of trust: possible reasons…

    • 1. no trusts declared – e.g Vandervell v IRC. (N.B. trust interests tenacious: RT despite desire of settlor).

    • 2. lack of proper formalities – s53(1) LPA 1925.

    • 3. lack of certainty: esp. certainty of objects + their shares.

    • 4. perpetuities rule breach.

    • 5. failure to create intended charitable trust void as private purpose trust.

      • e.g. Morice v Bishop of Durham [1804]; Chichester Diocesan Fund and Board of Finance (Inc) v Simpson [1944].

    - Valid declaration but trust fails: possible reasons…

    • 1. trust becomes impossible: e.g. intended beneficiary dies; body intended to benefit ceases to exist (e.g. Re Recher’s WT [1972]: anti-vivisection society); trust/purpose becomes impossible.

    • 2. pre-condition not met: often re marriage settlements.

      • e.g. Essery v Cowlard [1884]: marriage never took place RT.

    - Incomplete disposal of beneficial interests: possible reasons…

    • 1. failure to provide for a situation: e.g. gift for life, with no gift over.

    • 2. failure to foresee possible situation:

      • Re Cochrane’s ST [1955]: life interest to wife for as long as she lives with her husband, then life interest to husband, then gift over to children appointed by survivor (or equally at age of 21) – but: wife ceased living with husband + husband died first both life interests ended during life of survivor – ‘gap’: RT of income to settlor until wife’s death.

    • 3. creation of a Quistclose trust: v. important commercially.

      • asset protection: loan moneys held on trust by borrower for specified purpose ring-fenced: lender protected against borrower’s insolvency (purpose fails RT).

      • Barclays Bank Ltd v Quistclose Investments Ltd [1970]: John Bloom, owner of struggling Rolls Razer, uses Quistclose (sister co.) to lend 210k for purpose of paying dividend to RR investors; Barclays aware of purpose + agree; 210k kept in special RR account RR in liquidation (general a/c 484k overdrawn), Barclays try to claim 210k in special account not allowed: 210k only to be used for specific purpose, now impossible RT to Quistclose.

        • rationale: [Ld Wilberforce]: 2 trusts – 1st for purpose; when impossible: 2nd RT.

        • but: dubious analysis – purpose trusts should fail.

      • Twinsectra v Yardley [2002]: Y. (property developer) wants to borrow 1m to develop property; T. transfer 1m to Y’s solicitor’s (Simms) a/c only to be transferred to Y. if he finds property to buy; S. uncomfortable, transfers money to new solicitor (Leach); L. ignores S’s undertaking + transfers money to Y. in breach of purpose; Y. able to claim money back.

        • better rationale: [Ld Millett]: moneys on RT for lender as soon as lender transfers money; borrower has power to use money for specified purpose.

        • but: analysis does not explain how power attached to automatic RT.

      • requirements for Quistclose trust:

        • [Ld Wilberforce]: loan; only specified purpose; segregation of loan moneys.

          • but: have been partly deviated from in later cases.

        • [Ld Millett]: dep. on facts of case (para 99: wide-ranging scenarios possible).

    • 4. Unused ‘surpluses’.

      • surplus: gift for stated purpose, achieved without using all money.

        • e.g. police benevolent funds on amalgamation of forces.

      • various outcomes:

        • gift construed as limited: surplus on RT – e.g. Re Abbott.

        • gift construed as absolute:

          • to provide for beneficiaries: goes to beneficiaries – e.g. Re Andrew’s Trusts; Re Osoba.

          • to unincorporated association: goes to members – e.g. Re Recher; Re Bucks Constabulary.

      • resulting trust to contributors:

        • Re The Trusts of the Abbott Fund [1900]: money to support 2 deaf + dumb women, no provision for after their death

          • [Stirling J] construed as limited...

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