This is an extract of our Resulting Trusts document, which we sell as part of our Trusts and Equity Notes collection written by the top tier of Oxford students.
The following is a more accessble plain text extract of the PDF sample above, taken from our Trusts and Equity Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
1. RESULTING TRUSTS
Nature of resulting trusts
Definition: property transferred to D and a recognized trigger occurs at time of transfer or subsequently, so the property is then held by D for C
o Beneficial interest returns to person who transferred the property
Significant because beneficiary can claim even if trustee wasn't aware of existence of the trust and passed property onto third party, and if insolvent beneficiary's claim is greater than creditors'
Presumed resulting trust - where C transfers property to D and doesn't receive any consideration for the transfer, a presumption of resulting trust for C arises
Automatic resulting trust - where property transferred to D to be held on express trust that fails
Others - more controversially courts have recognized resulting trusts in property transferred pursuant to rescinded contracts, and for a failed purpose
Significance of Intention-
Westdeutsche: founded distinction between presumed and automatic RTs, and Lord
Browne-Wilkinson said that both types re trusts giving effect to the common intention of the parties and the presumed intention of the trustee
Transferer's intention that trustee hold property on trust for transferer established in five ways:
o Express intention
Inferred intention: inferred with regards to all the circumstances of the case and can be deduced from evidence
-Re Vandervell's Trusts (II): Megarry J - existence of some unexpressed intention is not enough; there must be some expression of that intention
Imputed intention: what transferer would have intended had he thought about the consequences of the transfer (eg. that it might fail). No need for this to be actual intention.
-Jones v Kernott: there is a conceptual difference between inference and imputation but practical difference is slight
Presumed Intention: like an imputed intention but rebuttable, presumed because it reflects common experience and judicial consensus. Proof of a particular type of transfer (eg. voluntary transfer) sufficient for presumed intention.
-NB probably the best theory
Absence of intention that the recipient benefit from receipt ?Air Jamaica v Charlton: Lord Millett - Resulting trusts arise whether or not transferer intended to retain a beneficial interest; it "responds to the absence of any intention on his part to pass a beneficial interest to the recipient"
Twinsectra v Yardley: Per Potter LJ - express trusts are fundamentally dependent on intention of parties, but role of intention in resulting trusts is negative (lack of intention to benefit recipient)
-NB absence of intention theory inconsistent with Lord BrowneWilkinson and Goff's analysis in Westdeutsche and Air Jamaica is a PC case while Potter LJ's dictum is in the CoA (Millett in HL
in same case referred to absence of intent theory but no other
Presumed Resulting Trusts-Justification: equity presumes that people don't act altruistically
Easily rebutted by Te proving that he was intended to benefit (eg. proving intention of absolute gift), an intention that is automatically assumed where the relationship between Tr and Te is such that Tr bears responsibility over Te
(presumption of advancement)
o Tr can rebut this by proving that no gift was intended
Effect: allocation of proof
Effect of voluntary transfer of property depends on type of property
Land: no presumption of resulting trust per S60(3) LPA 1925 depending on the interpretation (some interpret it as a reminder to conveyancers but doesn't apply to transfers from Tr to Te
Personalty (shares, money): can lead to a resulting trust - three principles
1. C asserts intention that D take property beneficially: no trust and presumption is not engaged
2. C doesn't assert: presumed resulting trust unless relationship triggers presumption of advancement
3. Where presumption is engaged, D can rebut by adducing evidence that C
intended D to take property beneficially a. Arcos v Coutts and Co: applied the three principles and acknowledged that presumption is easily rebutted. A father had allowed his children to withdraw money from his bank account but following argument withdrew all the money and put it in a joint account with his nephew. When father died children argued that the money had been on presumed resulting trust because nephew didn't provide consideration but nephew was able to rebut it relying on the mandate form expressing an intention to confer beneficial interest b. Re Vinogradoff: Grandmother who transferred money into her own name and that of her granddaughter (4yo) held not to have rebutted presumption. Case difficult to defend because even if presumption applied she should be able to defend it on her youth
(grandmother couldn't have intended granddaughter to hold property on trust for her)
Purchases in the name of C raises presumption of resulting trust for C; where C
contributed to purchase in D's name property presumed to be held on resulting trust for
C in shares proportional to contribution Sometimes difficult to rebut (eg. investing in name of solicitor) but sometimes relationships insufficient to establish presumption of advancement will be enough to suggest gift more likely intended
-Fowkes v Pascoe: Mother purchased annuities in joint name of herself and daughter-in-law's son. Presumption rebutted by fact that she was wealthy, he lived in her house and she provided for him financially
Presumption of advancement: if Tr is husband, fiance, father or person standing in loco parentis of recipient, a gift is presumed (but not when wife purchases for husband or mother for child)
o Increasingly difficult to justify in general application and gender discrimination
Abolished by S199 Equality Act 2010 (provision not yet in force)
o Can only be rebutted by declarations before, during or immediately after transfer, or acts (declarations after transfer can still be used but only against interests of the person making the declaration - otherwise would be easy to manufacture evidence)
-Shephard v Cartwright: Father purchased shares registered in names of children - presumption of advancement engaged. Five years later father got children to sign consent enabling him to withdraw money from the account and since this was after the fact (not of original transaction) it could only act against children (evidence that children admitted it wasn't a gift). However it failed because the children weren't aware of what they were signing.
-Warren v Gurney: Father purchased house and conveyed to daughter;
presumption of advancement rebutted by contemporaneous declaration that it wasn't a gift, and fact that father retained title deeds to property
-McGrath v Wallis: Father purchased home in name of son since son was the only eligible mortgager. At time of transfer a declaration of trust granting father 80% beneficial interest and son 20% had been drafted but not signed; this was enough to rebut presumption of advancement
Presumptions and illegal purposes
Where property is transferred illegally (criminal activity, contrary to public policy, hide from creditors/ex-spouses, tax evasion, benefit fraud) the presumptions can be engaged but the other party cannot plead their illegal purpose to rebut it
Thus husband transferring property to wife to hide from creditors will engage presumption of advancement and he can't plead the illegal purpose to rebut;
wife transferring property to husband for same reason will engage presumption of resulting trust and husband can't rebut it
-Tinsley v Milligan: recognizes the presumption of resulting trust will apply even if illegal transaction. D and C in lesbian relationship and both contributed to purchase of a house but registered under C solely with understanding that both had beneficial interest (intention was so
D could be a lodger and claim benefits). Relationship ended and C
claimed the house; held that D had beneficial interest because she didn't need to rely on her illegal conduct to trigger presumption.
-Lowson v Coombes: C transferred property to mistress to hide it from wife (illegal). Could still rely on presumption of resulting trust.
-Silverwood v Silverwood: can rely on illegal transaction to prevent an attempt at rebutting presumption. Grandmother transferred money to o- ?
grandchildren engaging presumption of resulting trust but grandchildren sought to rebut it by arguing it was a gift. Grandmother was allowed to rebut this with purpose being to perpetrate fraud. (Can this be reconciled with Tinsley? Which is right?)
Tribe v Tribe: C entitled to plead illegal purpose to rebut presumption of advancement if he has withdrawn from the illegal transaction before any part of the illegal purpose had been fulfilled. Father transferred shares to son to conceal them from creditors; once threat passed he demanded they be transferred back but son refused and argued PoA
that couldn't be rebutted by illegal activity. Held that father could rely on it because none of the creditors had been aware of transfer and were thus not deceived.
Automatic Resulting Trust-Arises where a trust is made to B leaving some or all beneficial interest undisposed of,
then B automatically holds property on resulting trust for A (basically an express trust failing)
o Prevent unjust enrichment of trustee
Settlor retains beneficial interest after failure to create express trust
-Westdeutsche v Islington: Lord Browne-Wilkinson - resulting trust arises because of the failure to exhaust C's beneficial interest in the express trust
Hybrid trust (Mee); where express trust fails eg. because of failure to identify beneficiaries, it won't have completely failed because settlor will have successfully created a trust by transferring property to trustee. If no beneficiaries are identified, Equity defaults to trustee holding it on trust for settlor (like an implied term)
o Imputed/Presumed intention: if an express trust fails, it is appropriate for
Equity to recognize that recipient of property was intended to be trustee
How an express trust might fail:
o Initial failure
Invalidity (eg. charitable trust might fail because purpose is not entirely charitable
-Air Jamaica v Charlton: Pension fund express trust failed because it infringed the perpetuity rule; resulting trust for contributors formed
-Hodgson v Marks: Resulting trust forms where express trust fails through failure to comply with formalities. Widow transferred house to lodger under unenforceable oral agreement that she would retain beneficial interest and received no consideration. Held that widow hadn't intended to transfer house as gift so it was held on resulting trust. Difficult because a presumed resulting trust could have arisen (no consideration) but PRTs for land could have been removed by statute.
Also the trust was valid just unenforceable, so to justify decision would have to hold that ART includes not only invalid but also unenforceable trusts
-Vandervell v IRC: ART arises when ET fails because title has been transferred to trustee but no beneficiaries identified. C made a gift to
Royal College of Surgeons but in a tax-efficient way so went through complicated steps...
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