THE LAW OF TRUSTS (UK 3083)

RESULTING TRUSTRESULTING TRUST

ESSENCE OF RESULTING TRUST

A settlor has A settlor has transferred transferred property to other property to other persons, but, in the persons, but, in the event, the event, the beneficial interest beneficial interest returns to him returns to him (settlor).(settlor).

Eg: where the transfer of Eg: where the transfer of property is made subject property is made subject to a condition precedent. to a condition precedent. Then the trustee will hold Then the trustee will hold the property for the the property for the settlor. In other words, settlor. In other words, the property returns back the property returns back to the settlor - RTto the settlor - RT

DEFINITION

““A RT is one which arises in A RT is one which arises in circumstances where the circumstances where the beneficial interest in the beneficial interest in the property ‘comes back’ or property ‘comes back’ or ‘Resultare = spring back’ to the ‘Resultare = spring back’ to the person or his representative who person or his representative who transferred the property to the transferred the property to the trustee or who provided the trustee or who provided the means of obtaining that means of obtaining that property.property.

Eg: X transfers Eg: X transfers funds to Y in funds to Y in contemplation of contemplation of their marriage. their marriage. The marriage The marriage never took place. never took place. There is a RT in There is a RT in favour of X. Y favour of X. Y holds the funds holds the funds as trustee.as trustee.

TYPES OF RESULTING TRUST

1.1. AUTOMATIC RESULTING TRUST;AUTOMATIC RESULTING TRUST;

2.2. PRESUMED RESULTING TRUST.PRESUMED RESULTING TRUST.

AUTOMATIC RESULTING TRUST

a.a. Takes effect by ‘operation of law’ and “so Takes effect by ‘operation of law’ and “so appears to be automatic” (Re Vandervell’s Trust appears to be automatic” (Re Vandervell’s Trust No.2);No.2);

b.b. Eg: arises in the following circumstances:Eg: arises in the following circumstances: Where a trust is established and fails later, as Where a trust is established and fails later, as

where a settlement is created in contemplation of where a settlement is created in contemplation of an arranged marriage which, in the event does an arranged marriage which, in the event does not take place later (Bond v. Walford) (1886)not take place later (Bond v. Walford) (1886)

Where surplus funds have to be distributed Where surplus funds have to be distributed when an association to which individuals when an association to which individuals have subscribed is wound up.have subscribed is wound up.

Eg:Eg: Re Private Protection Socirty (1899);Re Private Protection Socirty (1899);

Re Hobourn Distress fund (1946).Re Hobourn Distress fund (1946). Where there is a failure to dispose totally of Where there is a failure to dispose totally of

a beneficial interest.a beneficial interest.

Eg:Eg: Re Abbott Fund Trust (1890);Re Abbott Fund Trust (1890);

Re Gillingham Bus Disaster Fund (1985).Re Gillingham Bus Disaster Fund (1985).

PRESUMED RESULTING TRUST

Arises where the transferor had no intention Arises where the transferor had no intention of disposing his beneficial interest in that of disposing his beneficial interest in that property.property.

PRESUMED RESULTING TRUST

DYER V. DYER (1788)DYER V. DYER (1788)

‘… ‘… the trust of a legal estate, whether freehold, the trust of a legal estate, whether freehold, copyhold or leasehold; whether taken in the names copyhold or leasehold; whether taken in the names of the purchasers and others jointly, or in the of the purchasers and others jointly, or in the names of others without that of the purchaser; names of others without that of the purchaser; whether in one name or several; whether jointly or whether in one name or several; whether jointly or successive, results to the man who advances the successive, results to the man who advances the purchase money…’purchase money…’

EXAMPLES:

Gascoigne v. Thwing Gascoigne v. Thwing (1686) (1686)

A purchased real or A purchased real or personal property in personal property in B’s name; B will be B’s name; B will be presumed in equity to presumed in equity to hold for A on a hold for A on a resulting trust.resulting trust.

Wray v. Steel (1814); Wray v. Steel (1814); Burns v. Burns (1984)Burns v. Burns (1984)

A and B purchased real A and B purchased real or personal property in or personal property in B’s name. A resulting B’s name. A resulting trust arises in favour trust arises in favour of A as a proportionate of A as a proportionate beneficiary.beneficiary.

Rebutting the Presumption of Resulting Trust Loan TransactionLoan Transaction Contrary to Law or Public PolicyContrary to Law or Public Policy Intention to benefitIntention to benefit Joint Banking AccountsJoint Banking Accounts Presumption of Advancement and loco Presumption of Advancement and loco

parentisparentis

LOAN TRANSACTION

There will be no resulting trust where the There will be no resulting trust where the person who gave the money did so in the person who gave the money did so in the capacity of a lender and not as a purchasercapacity of a lender and not as a purchaser

Contrary To Law or Public Policy

Palaniappa Chettiar v. Arunasalam Chettiar Palaniappa Chettiar v. Arunasalam Chettiar – there is no resulting trust as it was – there is no resulting trust as it was contrary to law or public policy to allow the contrary to law or public policy to allow the presumption to arise.presumption to arise.

Intention To Benefit

Where it can be proven that there was an intention to Where it can be proven that there was an intention to benefit the donee, no resulting trust can arise. it.benefit the donee, no resulting trust can arise. it.

Standing v. Bowring (1885) : X transferred stock into the Standing v. Bowring (1885) : X transferred stock into the joint names of herself and Y, her godson, with the express joint names of herself and Y, her godson, with the express intention that Y, should he survive her, was to have the intention that Y, should he survive her, was to have the stock, but that, during her life, he should retain the stock, but that, during her life, he should retain the dividends. Held : Presumption of RT had been rebutted dividends. Held : Presumption of RT had been rebutted effectively.effectively.

Dewar v. Dewar : the presumption of a resulting trust in Dewar v. Dewar : the presumption of a resulting trust in favour of a mother who had made contribution to the favour of a mother who had made contribution to the purchase of property in her son’s name was rebutted by purchase of property in her son’s name was rebutted by evidence of her intention to make a gift.evidence of her intention to make a gift.

Joint Accounts

Intention to benefit has been presumed in Intention to benefit has been presumed in cases where a bank balance has been cases where a bank balance has been transferred into joint names.transferred into joint names.

Marshall v. Crutwell : the presumption of Marshall v. Crutwell : the presumption of advancement was rebutted on the ground advancement was rebutted on the ground that the joint account was opened for that the joint account was opened for convenience.convenience.

PRESUMPTION OF ADVANCEMENT

General Principle:General Principle:

Where a voluntary Where a voluntary conveyance has been conveyance has been made to the wife or child made to the wife or child of the donor or to a person of the donor or to a person to whom he stands in loco to whom he stands in loco parentis, there will arise a parentis, there will arise a presumption that a gift presumption that a gift was intended.was intended.

PRESUMPTION IN RELATION TO A WIFE

If a husband buys property If a husband buys property in his wife’s name, it is in his wife’s name, it is considered prima facie as considered prima facie as a gift to the wife;a gift to the wife;

If a husband buys property If a husband buys property in the names of both in the names of both himself and his wife himself and his wife jointly, it is prima facie jointly, it is prima facie that they stand as that they stand as beneficial joint tenants to beneficial joint tenants to the property.the property.

PRESUMPTION IN RELATION TO A WIFE An intending husband An intending husband

buys property in his buys property in his intended wife’s name, intended wife’s name, then the presumption then the presumption of a gift arise if the of a gift arise if the marriage takes place;marriage takes place;

There is no POA in There is no POA in the case of a wife to a the case of a wife to a husband – Pettitt v. husband – Pettitt v. PettittPettitt

PRESUMPTION IN RELATION TO A CHILD General Principle:General Principle:

Where property is Where property is purchased by a father purchased by a father in the name of his in the name of his child, then prima facie child, then prima facie it is a gift to the child.it is a gift to the child.

(Dyer v. Dyer)(Dyer v. Dyer)

BUT:BUT:

No such presumption if No such presumption if property is purchased property is purchased by child in the name by child in the name of the father.of the father.

PRESUMPTION IN RELATION TO A PERSON IN LOCO PARENTIS

A person in loco parentis – one who has A person in loco parentis – one who has taken on responsibilities for providing for a taken on responsibilities for providing for a child in the way a parent would provide.child in the way a parent would provide.

““I cannot put the doctrine so high as to hold I cannot put the doctrine so high as to hold that if a person educates a child to whom he that if a person educates a child to whom he is under no obligation either morally or is under no obligation either morally or legally the child is therefore to be provided legally the child is therefore to be provided for at his expense.” (Tucker v. Burrow) for at his expense.” (Tucker v. Burrow)

Rebutting the Presumption of Advancement By evidence of actual intention.By evidence of actual intention. Shephard v. Cartwright (1955);Shephard v. Cartwright (1955); McGrath v. Wallis (1995).McGrath v. Wallis (1995).• May NOT be rebutted if the transfer in May NOT be rebutted if the transfer in

question was made for a fraudulent or question was made for a fraudulent or illegal purpose.illegal purpose.

Re Emery’s Investment Trust (1959);Re Emery’s Investment Trust (1959); Gascoigne v. Gascoigne (1918).Gascoigne v. Gascoigne (1918).