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Implied Trusts Notes

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Implied Trusts 'Implied Trusts': Arise without the express declaration of trust by the settlor. Implied trusts fall outside the requirement for formalities required by s.53 LPA 1925. S.53(2) LPA 1925: 'This section does not affect the creation or operation of resulting, implied or constructive trusts'. There are two types of implied trusts:

1. Resulting trusts - automatic or presumed

2. Constructive trusts
---------------------------------------------------------------------------------------------------------------------------------------------1. Resulting Trusts 'Resulting Trusts': Operate independently of the intention of the party, but this is not an absolute. The 'settlor' may not intend to create a trust but they may still intend to benefit another person with the property. The courts look at the intention to benefit another person rather than the intention to create a trust (Twinsectra v. Yardley [2002]). Traditional Analysis: Two types of resulting trust
- Vandervell v. IRC [1967]; Per Lord Upjohn at pp. 312-313: "Where A transfers, or directs a trustee for him to transfer, the legal estate in property to B otherwise than for valuable consideration it is a question of the intention of A in making the transfer whether B is to take beneficially or on trust and, if the latter, on what trusts. If, as a matter of construction of the document transferring the legal estate, it is possible to discern A's intentions, that is the end of the matter...If, however, the document is silent, then there is said to arise a resulting trust in favour of A; but this is only a presumption and is easily rebutted..." "The doctrine of resulting trust, however, plays another very important part in our law... If A intends to give away all his beneficial interest in a piece of property and thinks that he has done so, but, by some mistake or accident or failure to comply with the requirements of the law, has failed to do so, either wholly or partially, there will, by operation of law, be a resulting trust for him of the beneficial interest which he has failed effectively to dispose of." Per Megarry J at p.64: "The distinction between the two categories of resulting trusts is important because they operate in different ways. Putting it shortly, in the first category, subject to any provisions in the instrument, the matter is one of intention, with the rebuttable presumption of a resulting trust applying if the intention is not made manifest. For the second category, there is no mention of any expression of intention in any instrument, or of any presumption of a resulting trust: the resulting trust takes effect by operation of law, and so appears to be automatic. What a man fails effectively to dispose of remains vested in him, and no question of any mere presumption can arise. The two categories are thus of presumed resulting trusts and automatic resulting trusts."

Issue: Megarry J's description of the second category of resulting trust as 'automatic', and independent of the intention of the parties, has been questioned by Lord Browne-Wilkinson in Westdeutsche Landesbank v Islington LBC

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