Someone recently bought our

students are currently browsing our notes.

X

Resulting Trusts Notes

Law Notes > Trusts and Equity Notes

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:

Resulting trusts
Resulting trust: A transfers property to B  B holds that property on trust for A.

'Resulting' means 'jumping back'  the beneficial interest 'jumps back' to A.
NB: Not all trusts that follow this pattern are resulting trusts - an express trust might create the same arrangement.

The law:

1. PRESUMED resulting trusts arise where:
a. Transfer without consideration (Dyer v Dyer, Westdeutsche)
i. That is, where A makes a voluntary conveyance of property / pays all of the purchase price b. Monetary contribution (The Venture, Westdeutsche)
i. That is, where A has made a monetary contribution to the purchase of property for B
BUT: The presumption can be rebutted by:
i. The contrary presumption of advancement (Westdeutsche)
ii. Evidence that A intended to make a gift (Fowkes v Pascoe,
Westdeutsche)

1. NB: See discussion below on Westdeutsche v Islington BC,
which held that all resulting trusts are based on a presumption of the parties' common intentions.
NB: Whether D should be able to rely on his illegal conduct to establish his interest in the property depends on whether the public interest would be harmed by enforcement of the illegal agreement (Patel v Mirza).

2. AUTOMATIC resulting trusts arise where:
a. Express trust is ineffective (Hodgson v Marks)
i. The trust may fail "due to uncertainty, or perpetuity, or lack of form" such as failing to have writing as required by s53(1) LPA.

1. This was affirmed by Vandervell v IRC, where Lords Upjohn
(with Lord Pearce's approval) and Wilberforce stressed:
a. This was NOT a resulting trust arising from a presumption  it could not be 'rebutted'.
b. The resulting trust arose because it was a necessary consequence of the express trust failing (the beneficial interest "cannot remain in the air").

2. Megarry J in Re Vandervell (No 2) agreed. The trust "does not depend on any intentions or presumptions, but it is the automatic consequence of A's failure to dispose of what is vested in him".
b. The (express) trust declared does not exhaust the whole beneficial interest (Westdeutsche v Islington BC). NB: s60(3): "In a voluntary conveyance a resulting trust for the grantor shall not be implied merely by reason that the property is not expressed to be conveyed for the use or benefit of the grantee."

1. Lohia v Lohia - The judge below in the EWHC held that, on a plain reading of s60(3), the presumption of resulting trust over land has been abolished.
a. BUT: CoA in that case did not agree  not authoritative.

2. National Crime Agency v Dong - The EWHC took a contextual analysis of s60(3),
holding that the presumption of resulting trust over land has NOT been abolished.
He held that the presumption should still be able to arise - it is simply that failure to use specific words is not a necessary nor sufficient circumstance to give rise to the presumption.
a. BUT: Marsh CM acknowledged that the deputy judge in Lohia heard more discussion on the issue and came to the opposite conclusion.

ORTHODOXY: Resulting trusts arise in two types of case (Lord B-W at 708 of Westdeutsche v
Islington BC, who actually rejected the labels usually assigned to each):

1. Presumed resulting trusts a. "Where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of
A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption,
which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A's intention to make an outright transfer."

2. Automatic resulting trusts a. "Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest."

Presumed resulting trusts
When is a resulting trust presumed?

1. Presumed resulting trusts arise where there is a gratuitous transfer of property.
Either:
a. A transfers property to B, with B giving nothing in return, OR b. A pays some or all of the purchase price for property which is put into B's name

2. In both cases, B holds the property on trust for A
a. Transfer without consideration. If A was the sole owner of the property transferred or provided all of the purchase money, A will be the sole beneficiary of the trust (Dyer v Dyer)
b. Monetary contribution. If the property was initially co-owned or he provided only some of the purchase money, A's beneficial interest will be proportionate to his contribution (The Venture)

3. Resulting trusts over land. The application of resulting trusts to transfers of land is unclear by virtue of s60(3) LPA 1925: "In a voluntary conveyance a resulting trust for the grantor shall not be implied merely by reason that the property is not expressed to be conveyed for the use or benefit of the grantee."
a. On its face, this abolishes resulting trusts which would otherwise arise where
A conveys his land to B gratuitously, but it would have no impact on resulting trusts arising where A pays for land which is put in B's name b. That this is the effect of s60(3) was supported by Nicholas Strauss QC in the
High Court in Lohia v Lohia (but not the CoA).
i. This was in turn supported by the CoA in Ali v Khan, where the CoA
held that Lohia v Lohia had established that the presumption of resulting trust had indeed been abolished in relation to conveyances of land by s60(3).

1. BUT: This does not prevent A from proving that a trust was in fact intended, though this would likely be an express, not resulting, trust.
ii. NOT THE CASE ANY MORE - SEE National Crime Agency V DONG,
above c. Moreover, the presumption of resulting trust has been abandoned in cases where A and B (or indeed A alone) buy land, which is to be their home and registered in their joint names (Stack v Dowden - presumption that equity follows the law  joint equitable ownership). In such cases, the courts will not presume that their equitable interests will be proportionate to their contributions - the presumption will be that they are also JTs in equity, with equal equitable interests. [presumption that equity follows the law in the cohabitation context; but PRT arises in commercial context]
There are two ways to rebut this presumption of a resulting trust:

1. Intention to make a gift. If, on the balance of probabilities, there is evidence that A
positively intended to make a gift of the property to B  then there is no resulting trust, and B will take the property absolutely, e.g. Fowkes v Pascoe.

2. Presumption of advancement. The presumption of advancement effectively reverses the presumption of a resulting trust - equity presumes that a gratuitous transfer from A to B takes effect as a gift to B rather than as a trust for A. a. The presumption of advancement applies to transfer made by husband-towife and by fathers-to-children, but traditionally NOT to transfers made by mothers-to-children (though see now Antoni v Antoni (where the presumption of advancement was held to apply as between parent (not only father) and child) and Close Invoice v Abaowa) nor by wife-to-husband.
b. This presumption can also be rebutted.
c. Is it actually a presumption? Is it an accurate presumption (in term so an inference of fact based on the most likely factual scenario)?
d. NB: Parliament has passed legislation to abolish the presumption of advancement, but it is not yet in force and it is doubtful if it ever will be. It will only act prospectively, so the current law is still important. The relevant provision is s199(1) Equality Act 2010.

3. Note: Illegality.
a. The case of Tinsley v Milligan (OLD LAW) held that "[a] party to an illegality can recover by virtue of a legal or equitable property interest if, but only if,
he can establish his title without relying on his own illegality". Thus, D cannot rely on his illegality to rebut the presumption of resulting trust. On the facts, T would have had to rely on the illegality of the fraudulent transaction from M to T in order to rebut the presumption.
i. BUT: The rule could operate arbitrarily, e.g. had T and M been husband and wife, the presumption of advancement would produce the opposite result. The Tinsley rule failed to engage with the key feature of cases of illegal transfers - the fact that C was engaged in unlawful conduct - instead, relying on (unreliable) presumptions and shutting out evidence of the parties' true intentions.

1. NB: The later case of Tribe v Tribe held that D could rely on his illegality to rebut the presumption of advancement so long as the scheme had not been carried out.
ii. THUS: Tinsley v Milligan was REJECTED by the UKSC in Patel v Mirza.
The majority held that the Tinsley rule failed to properly address the policy reasons behind the doctrine of illegality: namely, stopping people from profiting from their wrongdoing and seeing that the law is coherent and not self-defeating. The correct approach is for the court to ask directly whether the public interest would be harmed were the claim to be allowed, in light of the policies behind the doctrine of illegality. The court must consider:

1. The underlying purpose of the legal rule that has been broken by one or other of the parties

2. Any other relevant public policy which might be affected by denying the claim

3. Whether denial of the claim would be a proportionate response to the illegality, particularly as punishment is a matter for the criminal courts (see [120] per Lord Toulson JSC). iii. The current law thus gives the courts a discretion in cases of illegality,
but the majority in Patel v Mirza considered it gave rise to no greater uncertainty which previously resulted from the rule in Tinsley, and it had the merits of confronting the relevant policy concerns head on.

1. The result is that D can give evidence of his illegality, such that the courts will not need to rely on the presumptions to dispose of such cases.
The role and significance of presumptions

1. A presumption is simply a standardised legal inference. It is an inference of a certain material fact from the presence of other facts or circumstances. The presumption can therefore be rebutted by evidence to the contrary. If it is not rebutted, the presumed fact is treated as proved.
a. A presumption can thus only be justified if it is accurate.
i. The presumption of advancement is often criticised for not applying when A is a woman. It is simply not true that the intentions of fathers and mothers typically differ when it comes to transferring property to their children, or that husbands and wives typically intend different things when transferring property to one another  the abolition of the presumption of advancement is good in that it will stop the arbitrarily different treatment of the sexes.

1. BUT: It gives more scope to the presumption of a resulting trust, which is unlikely to mirror the actual intentions of the vast majority of those who make gratuitous transfers of property.
b. A presumption is only useful if it is, at least sometimes, determinative of cases.
i. In reality, presumptions are not so much starting points but rather evidential longstops (e.g. Lord Upjohn at p313 of Vandervell v IRC),
which will be determinative of the case only if there is no other information for the court to go on. Almost always there will be further evidence beyond the mere facts of the transfer and the parties'
relationship.
ii. When the court clings to presumptions too tightly, the ruling can fly in the face of reality (e.g. Re Vinogradoff, where the transferor was presumed to have intended the 4-year-old recipient to be a trustee).
Such cases are now downplayed as anomalies, though.
The content of the presumption

1. The content of the presumption is important because the presumption can be rebutted by evidence which is inconsistent with it  we can only determine what is inconsistent with the presumption if we know what facts are presumed.

Buy the full version of these notes or essay plans and more in our Trusts and Equity Notes.

More Trusts And Equity Samples