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Question 3:

Resulting Trusts

Introduction
What is a resulting trust?
Resulting trusts comes from the Latin verb ‘resalire’ which means to ‘jump back’: the beneficial interest is
thought to ‘jump back’ to A
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Martin, Modern Equity
19th ed
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g
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e
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Court will ask for a full statement of what you own
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What he did is
transferred a number of properties to a company, so when he gave the form in, the property was not on the
form
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In
law, the legal title had passed but the wife had argued that really he still had access to the property
Held: Company unable to show evidence that there was a valid transaction for value of the properties
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Piercing the corporate veil
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53 (2) explains that “this section does not affect the creation or operation of resulting, implied or
constructive trusts”
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So we are
normally looking at the oral evidence - what someone said
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Money went back to grandchild
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Held: Because there was no
evidence that she intended to give a gift it was in fact held that all the property resulted back to the grandmother
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Decision showed that even a
child can be a resulting trustee

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When do they occur?
(i) Automatic resulting trusts’ or ‘ARTs’: Where an express trust fails
(ii) Presumed resulting trusts’ or ‘PIRTs’: Where property is transferred to a volunteer or purchased in the
name of another person
(iii) Quistclose trusts are a third, discrete category that will be looked at later - in overview only
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Essery v Cowlard: She never actually married Francis
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She claimed that the trustees should transfer the
property back to her- it resulted back to her because the trust had failed
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(ii) Presumed resulting trusts’ or ‘PIRTs’:
Where property is transferred for no consideration, there is a rebuttable presumption that the transferee holds on a
resulting trust for the transferor (unless such a presumption of advancement arises)
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On Mrs V’s death, Farewell J held that a presumption of resulting trust arose
such that: “the stock was not the property of the infant, but formed part of the estate of the testatrix”
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This case shows the courts are willing to apply the presumption of resulting trust to any gift
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Difficulties and Controversies
“the resulting trusts is notoriously difficult” - M Haley & L McMurtry (2011)
I
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II
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2): gives traditional distinction between intention / starting point for the role of
intention
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So
according to this view there are two categories of intention of a Resulting Trust:
• PIRTs: A gives away property but it is presumed that at some point the benefit will go back to them
• ARTs: Where something goes wrong with the mechanics
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Lord Browne-Wilkinson in talking about Megarry J suggesting that resulting trust could operate automatically,
believes this is not convincing
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Following on from this, a new approach emerged: Absence of Intention to Benefit
The Birks/Chambers theory
R Chambers, Resulting Trusts (Oxford, Clarendon Press, 1997), p
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252
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He believed that
the absence of intention is not the prevailing view
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Virgo reverts back to the traditional classification of PIRTs and ARTs categories DIG! DO NOT JUST SAY THERE ARE TWO
CLASSIFICATIONS
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It is what the objective person thought the person intended
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The equitable title has to bounce back
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Lord Reid stated “the beneficial interest must belong to or be held for somebody: so if it was not to belong to
the donee or to be held by him in trust for somebody it must remain with the donor”
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Equitable title does not exist until it is separates from the legal title
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The role of the transferee
The transferee needs to be aware that she/he holds the property on trust in order for the resulting trust to
arise
Lord Browne-Wilkinson in Westdeutsche Landesbank v Islington BC stated “there are cases where
property has been put into the name of X without X’s knowledge but inc circumstances where no gift to X
was intended
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These cases are explicable on the ground that, by the time action was brought, X or his successors in title
have become aware of the facts which gave rise to a resulting trust; his conscience was affected as from the
time of such discovery and thereafter he held on a resulting trust under which the property was recovered by
him”
NO: R Chambers, Resulting Trusts p
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the resulting trusts arises as soon as the property is
transferred but the transferee does not become subject to fiduciary duties and liability for breach of trust until
he is aware of the position”

Descriptive Categorisation: Situations in which Resulting Trusts arise
i
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Failure of an intended express trust
B
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Failure to declare a trust
Failure of an intended express trust

Essery v Cowlard
Re Ames’ Settlement: Father of the groom created a trust for the benefit of the son, the son’s wife and
children
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In 1926 the wife petitioned to have the marriage declared void - void from the date
of the marriage (void ab initio)
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So if
you settle money and something goes wrong, it comes back to you
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Wife left husband and
husband died
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The money went back to the settlor
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: Left money for the benefit of
family He had two sisters who had hearing and speaking impediments
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Something went wrong and the money had gone
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He put the money in a bank account called the Abbot Fund
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These people were who
Abbot knew - so could identify the people
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Cadets in accident involving bus
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People contributed
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There was a significant amount of money
left in the fundraiser
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Held no charitable trust
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They gave money away for a
reason and because the money was no longer necessary, the money should go back to the people
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The money should go to the crown
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The west sussex police force changed so it made it necessary to wind up the fund
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However unlike Re Gillingham Bus Disaster Fund [1959] the courts took much of a contractual
approach
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Failure to declare a trust

Lord Wilberforce in Vandervell v IRC stated “the option was vested in the trustee as a trustee on trusts, not
defined at the time, possibly to be defined later
...
”
Re Vandervell’s Trusts No
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Mr V chose to give surgeons money
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What he did, instead of sending cash, he transferred 100,000
shares to the Vandervell trustees Ltd to the college
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The college received the shared but what he required the
college to do is grant the trustees company was an option to buy back the shares
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If you have the
option to buy the shares whenever you want, it is a benefit
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Mr V does
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e
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They do that by using
money from the child’s settlement
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Court of appeal stated the trustee company in exercising the option
amounted to a declaration of trust in favour of the children
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The situation differs slightly in respect of voluntary transfer of land
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This presumption applies both to personalty and to
land
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This is a general proposition
support dby all the cases, and there is nothing to contradict it…”
Cowcher v Cowcher: “A resulting trust arises where a person acquires a legal estate but has not provided
the consideration or the whole of the consideration for its acquisition, unless a contrary intention is provided”
Gifts: In Chambers p
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The failure to do so means that it will be held in trust for
its provider
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”

The distinction between land and personalty in voluntary trusts
Personalty
Fowkes v Pascoe: Woman bought x and purchased in her own name and pascoe
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She had effectively transferred property into his name
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Did the investment bounce back? Pascoe showed evidence that he lived in her own; he
was financially dependent on him and she was very wealthy
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Re Vinograndoff: Granddaughter did not show evidence…
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60(3), Law of Property Act 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”
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She bought a house
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He developed a good relationship with landlady
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He told her he
was in the insurance business and can trust him with financial matterS
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He then sold the house to a third party and the third party tried to evict the woman Held: Because of the
way he dealt with the property, although the transfer was made, he held the property on resulting trust for
her
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60
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60
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In fact the high court stated they did not
have to give a definitive view of s
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J
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He states an oral trust can be used
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Presumption of advancement
Where there is a special relationship between the transferor and transferee, the presumption of a resulting
trust is (or may be) reversed: the transferor will be presumed to have intended that the recipient take
beneficially (i
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intended to advance the recipients’s position)/ it is presumed that a gift was intended
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Transfer from Husband to Wife:
Re Eykyn’s Trust: “the operation of the presumption in this context reflects a nineteenth-century social
understanding of a husband’s obligation to provide for his wife
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Tinker v Tinker [1970]
Not Wife to Husband:
Heseltine v Heseltine: The presumption of advancement does not apply where a wife purchases property
for her husband
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Nelson v Nelson: The presumption was applied in Australia
Laskar v Laskar: Lord Neuberger stated “the presumption of advancement still exists, although it was said
as long ago as 1970 to be a relatively week presumption which can be rebutted on comparatively slight
evidence… I would ass that it is even weaker where, as here, the child was over 18 years old and managed
her own affairs at the time of the transaction
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However there is no precedence, these were simply
comments made by the lordships
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Criticisms of the Presumption of Advancement

- Out of date (even in the 1970s - see Pettit v Pettit [1970]
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- “Anachronistic and offensive” - G Andrews (2007) ‘The presumption of advancement: equity, equality and
human rights’
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This Article shall not prevent States from taking such
measures as are necessary in the interests of the children”

Reform
ss 198-199, Equalities Act 2010: The statute received Royal Assent on 8 April 2010 but the sections are not
yet in force
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198: The rule of common law that a husband must maintain his wife is abolished
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199: Abolition of presumption of advancement
(1) The presumption of advancement (by which, for example, a husband is presumed to be making a gift to
this wife if he transfers property to her, or purchases property in her name) is abolished
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Anything done before the commencement of this section, or
B
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Necessary?
Glister J (2010)
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199 of the Equality Act 2010: How not to abolish the presumption of advancement
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For reasons of public policy, it is
not possible to plead an illegal purpose
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Where a husband transfers property to his wife
to hide it from his creditors, it will be presumed that he had intended to make a gift of the property to her, by
virtue of the application of the presumption of advancement
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However Tinsley v Milligan and the ‘reliance principle’: the House of Lords held that the presumption of
resulting trust will apply despite a claimants involvement in an illegal transaction
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They had both contributed to the purchase of a house, but it was registered in
the sole name of Tinsley on the understanding that they would have joint beneficial interests in it
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Both parties had participated in the fraud and benefitted from
it
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Milligan counterclaimed that she had a beneficial interest in the
property because the nature of their relationship was such that a resulting trust could be presumed
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Held: Milligans counterclaim should succeed, because she did not need to rely on
her illegal conduct to assert her beneficial interest: to trigger the presumption of resulting trust, she simply
needed to show that she had contributed to the purchase price and she did not need to refer to the illegal
purpose to show this
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But Tinsley could not establish this because it would have involved her pleading that the transaction
was intended to effect an illegal purpose
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This principle was applied in Lowson v Coombes
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This was an illegal purpose
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Reliance principle: a claimant can rely on a transaction to establish a beneficial interest in property even
though it was trained by an illegal purpose, but only as long as the claimant does not need to plead the
illegality specifically
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Money was given by a grandmother to two of her grandchildren
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The grandchildren sought to rebut this presumption by pleading
that the grandmother had intended the transfer of the money to be a gift
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Here the illegal purpose was being pleaded to defeat an attempt to rebut a presumption rather than to rebut
a presumption of resulting trust
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Tribe v Tribe and the ‘withdrawal exception’ - Held that the claimant is entitled to please an illegal purpose to
rebut the presumption of advancement where he or she was withdrawn from illegal transaction before any
part of the illegal purpose has been fulfilled
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The House of Lords stated:
'By an extension of those principles, it was equally open to a claimant to rely on a wholly unperformed illegal
agreement to justify his entitlement to recovery of money advanced under it…
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The Law Commission’s Response
Law Commission The Illegality Defence (2010): Recommended statutory reform to “make provisions
about cases where arrangements in respect of property have been made, or continued, as to enable an
equitable interest in the property to be concealed in connection with the commission of an offence”

- Abolition of the reliance principle in defined circumstances
- Applies where a trust has been created to conceal a beneficiary’s interest for criminal purposes
- Court given discretionary power as to the appropriate result where a trust has been created to conceal the
beneficiary’s interest in connection with a criminal offence
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They stated that they “Are minded
not to implement the Commission’s proposals”
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Barclays Bank v Quitclose Investments ltd: Company were in debt to Barclays Bank
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Quitclose paid money into a new barclays account and that money would be used to pay the debt
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Before the company could pay the company, they were unable
to trade
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Quitclose stated that
the money was on resulting trust for them
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Chambers’ view: money transferred on loan and it is an outright transfer but as soon as the reason of the
loan becomes impossible, the loan bounces back

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