RESULTING TRUSTS

AREA
CATEGORIE
S OF
RESULTING
TRUSTS

ROLE OF
INTENTION

CASE
Re Vandervells Trusts (No. 2):
Megarry J divided resulting trusts into two main categories:
1) Those arising automatically as a consequence of the transferors failure to dispose of the
entirety of the beneficial interest irrespective of any intention on the part of the T (presumed or
otherwise) (ARTs)
2) those based on Presumed Intention - where is presumed that the transferor intended the
beneficial interest to return to him when certain events took place (PIRTs)
Landesbank v Islington:
Lord Browne Wilkinson
Clarified the circumstances in which the resulting trust arises:
"(A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of
property which is vested 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
(B) where A transfers property to B on express trusts, but the trusts do not exhaust the whole
of the beneficial interest"
He illustrated that the so called automatic resulting trust was not irrebuttable in the manner
that Megarry J appeared to suggest.
In addition he hailed as a general feature of the resulting trust that it gave effect to the
common intentions of the parties.
The Birks/Chambers theory - R Chambers, Resulting Trusts (Oxford, Clarendon Press, 1997),
at p. 41
It is suggested with great respect that the categories of presumed and automatic resulting
trusts should be abandoned because there is no real distinction between the two. In both
situations, the resulting trust arises by operation of law because the provider of the property
did not intend to benefit the recipient

NEW
APPROACH

ROLE OF
TRANSFERE
E

FAILURE TO
DECLARE A
TRUST

Air Jamaica v Charlton [1999] 1 WLR 1399 (Privy Council) Per Lord Millet (at 1412)
Like a constructive trust, a resulting trust arises by operation of law, though unlike a
constructive trust it gives effect to intention. But it arises whether or not the transferor
intended to retain a beneficial interest - he almost always does not - since it responds to the
absence of any intention on his part to pass a beneficial interest to the recipient.
Twinsectra Ltd v Yardley [1999] Lloyd's Rep Bank 438 (CA)
Per Potter LJ (at 457)
"Express trusts are fundamentally dependent upon the intention of the parties, whereas the
role of intention in resulting trusts is a negative one, the essential question being whether or
not the provider intended to benefit the recipient and not whether he or she intended to create
a trust. The latter question is relevant to whether the provider succeeded in creating an
express trust, but its relevance to the resulting trust is only as an indication of lack of intention
to benefit the recipient."
..the resulting trust 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 she is aware of the
position Hanbury & Martin (20th Edition) at 11-002.
Vandervell v IRC
FACTS: Shares were to be transferred subject to the option to repurchase in favour of
Vandervell Trustees Ltd, a company administering trusts connected to Vandervells family and
business enterprises. Once the dividends were paid, the shares could be retrieved by
Vandervell Trustees Ltd. Vandervell was sure that if the option was not vested in him he could
avoid any liability for tax. The IRC sought to claim surtax on the dividends, arguing that
Vandervell had failed to divest himself absolutely of the beneficial interest in the shares. The
basis of this view was that, on the failure to declare a trust of the option, its benefit must be
held on resulting trust for Vandervell. IRC was successful. As no trust for the option had been
declared, the option was held on resulting trust.
Lord Reid: 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
Lord Wilberforce: The conclusion, on the facts found, is simply that the option was vested
in the trustee co as a trustee on trusts, not defined at the time, possibly to be defined later.
But the equitable, or beneficial interest, cannot remain in the air: the consequence in law must
be that it remains in the settlor.

Re Vandervells Trusts (No. 2) CA concluded that the resulting trust terminated when the
option was exercised.

FAILURE OF
THE TRUST

ABSOLUTE
GIFT

CHARITABL
E TRUSTS

*WHERE A TRANSFER IS MADE ON TRUSTS WHICH LEAVE SOME OR ALL OF THE BENEFICIAL
INTEREST UNDISPOSED OF, THE TRANFEREE HOLDS ON RESULTING TRUST FOR THE
TRANSFEROR TO THE EXTENT THAT THE BENEFICIAL ITERST HAS NOT BEEN CARRIED TO HIM
OR OTHERS. THE RESULTING TRUST FUNCTIONS TO FILL IN EVIDENTIAL LACUNAE AS TO THE
LOCATION OF THE BENEFICIAL INTEREST
A) A RT can arise where a trust fails for a lack of certainty of beneficial interest or
certainty of objects. Provided that a trust was intended there is no possibility that a trustee
can take the property as an absolute gift.
-Boyce v Boyce
-Re Atkinsons Will Trusts
B) When a transfer of property is made subject to a condition (condition precedent
or condition subsequent) which is not achieved the RT effects a return of the
property to the transferor:
-Essery v Cowlard a settlement was executed in 1877 in consideration of a then intended
marriage. The intended wife transferred property to trustees to be held on trust for the benefit
of herself, he intended husband and any children resulting from their marriage. Although the
couple cohabited and had children, no marriage took place. In 1883, an action was brought
against the trustees to recover the property. Pearson J was confident that the contract to marry
had been definitely and absolutely put an end to and ordered that the property be transferred
back to the woman. As the property was held on the terms of a marriage that never took place
the condition precedent had not been achieved and, accordingly the property moved back
under a RT.
-Re Ames Settlement
-Re Cochrane
Adams and Kensington Vestry no resulting trust can arise where property is deemed to
be the subject of an absolute gift. testator left his estate to his wife, in full confidence that
she would do what was right as to the disposal thereof between my children, either in her
lifetime, or by will after her decease. No trust arose to which the widow was subject and it
was held that she was entitled to retain the property as an absolute gift to herself.
Morice v Bishop of Durham a purported charitable trust will fail, for example, where the
purposes described are not exclusively charitable.
Destination of property in the event that a trust has been performed and a surplus remains.
It is merely a general principle that where money is held on trust, and the trusts declared do
not exhaust the fund, the surplus will revert back to the settlor under a RT.

UNEXHAUS
TED
BENEFICIAL
INTEREST

MAINTENANCE CASES
-Re Trusts of the Abbott Fund Dr Fawcett collected a sum of money, raising subscriptions
from the public, and set up a fund to be applied for the relief of two ladies who were deaf and
dumb. No provision was made as to the disposal of the ultimate surplus. It was argued that the
balance of the fund belonged to the survivor of the two ladies, because the subscriptions were
in the form of absolute gifts and the donors could never have intended a return of any unused
funds.
-Stirling J could not believe that the subscriptions were, ever intended to be an absolute gift to
the ladies. He denied that they would have been in a position to demand a transfer of the
property to themselves or that in the case of bankruptcy, for example, such sums could be
claimed by the trustee in bankruptcy. He upheld a RT to the subscribers of the Abbott Fund.
-Re Andrews Trust
-Re Osoba
DISASTER APPEALS
Re Gillingham Bus Disaster Fund court upheld a RT. An appeal was raised in 1951 in
response to a road traffic accident in which 24 Royal Marine Cadets were killed, with a number
of others suffering serious injuries. Publishing the appeal in a newspaper, the mayors of the
surrounding towns avowed that the memorial fund would be devoted, to defraying the funeral
expenses, caring for the boys who may be disabled, and then to such worthy causes in memory
of the boys who lost their lives, as the Mayors may determine. A sum of nearly 9.000 was
collected. The trustees spent 2,368 on the stated purposes and then sought guidance from the
court as to how the surplus should be applied RT upheld.
-Harman J explained that the settlor or the donor did not intend to part with his money out and
out, but only to the extent that his wishes could be carried into effect.

1) He deemed there to be no intention on the part of donors to contribute their money out and
out.
2) Drew no distinction between different categories of donation Rejected in Re West Sussex
Constabulary Fund in that case Goff J held that people who contribute to collection boxes
make their contributions out and out. This excluded the possibility of a RT and entitled the
Crown to the money as bona vacantia on a failure of the trusts.
3) Failed to make explicit whether there is a distinction between the proceeds of entertainment
and donations by collection tin or otherwise. Goff J in Re West Sussex claimed it to be
impossible to apply the doctrine of RT to the proceeds of entertainment and sweep-stakes.
The relationship is one of contract and not of trust in that the purchaser of a ticket may have
the motive of aiding the cause or he may not; he may purchase the ticket merely because he
wishes to attend the particular entertainment or to try for the prize, but whichever it be, he
pays his money as the price of what is offered and what he receives;
UNINCORPORATED ASSOCIATIONS
Re West Sussex Constabulary Fund concerned a fund set up to benefit the widows and
dependants of deceased members of the West Sussex Constabulary, an unincorporated
association.
a) Resulting Trust Re Printers and Transferrers Amalgamated Trades Protection
Society
b) Bona Vacantia approved by CA in Cunnack v Edwards
c) Contract Holding Theory Re Bucks Constabulary Fund (No. 2)

THE APPARENT GIFT CASES

Category contains those RT that arise where there has been a contribution to the purchase price of
property, but the property is held in the name of another or in joint names or where a voluntary transfer of
property has been made into the name of another.
AREA

PURCHASE
IN THE
NAME OF
ANOTHER

CASE
Dyer v Dyer Eyre CB stated:
"the trust of a legal estate, whether freehold, copyhold or leasehold; whether taken in the
names of the purchasers or others jointly, or in the names of others without that of the
purchaser; whether one name or several; whether jointly or successive, results to the man
who advances the purchase-money. This is a general proposition supported by all the
cases, and there is nothing to contradict it"
Cowcher v Cowcher Bagnall J:
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
proved
SHARED LEGAL OWNERSHIP approach of the courts has been that where the purchase
money for property acquired by two or more persons in their joint names has been provided by
those persons in unequal amounts, they will be beneficially entitled as between themselves in
the proportions in which they provided the purchase money. (Walker v Hall)
IN the context of the family home, however, this approach no longer applies! Following the
HOUSE OF LORDS decision in Stack v Dowden there is a strong presumption that equity
follows the law and that equitable ownership, like legal ownership is jointly held.

VOLUNTARY
CONVEYANC
E OR
TRANSFER
OF

Jones v Kernott Lord Walker and Lady Hale: in the case of the purchase of a house or
flat in joint names for joint occupation by a married or unmarried couple, where both are
responsible for any mortgage, there is no presumption of a resulting trust arising from their
having contributed to the deposit (or indeed the rest of the purchase) in unequal shares. The
presumption is that the parties intended a joint tenancy both in law and in equity.
Necessary to take on board the effect of s.60 (3) of LPA 1925 Distinction is drawn
between a voluntary transfer of land and of personalty.
A) LAND
The subsection provides that: "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".
The subsection therefore acts to prevent a resulting trust arising just because certain words
of benefit have been omitted. There is however nothing to prevent the resulting trust where
there is other evidence to support it.

PROPERTY

s.60 (3) merely ousts the presumption of resulting trust.

Thus, in Ali v Khan Morrit VC emphasized that there is nothing to inhibit reliance on
extrinsic evidence from which a resulting trust may be inferred.
B) PERSONALTY
-Fowkes v Pascoe It has long been established that a gratuitous transfer of personal
property into the hands of a transferee gives rise to a resulting trust in the transferors favour.
-Re Vinogradoff a grand-mother transferred a bond into the joint names of herself and her
granddaughter. Although the evidence was unclear as to her intentions, she continued to
receive dividends until her death. Farwell J held that the property was held on RT for the
grandmothers estate.

PRESUMPTI
ON OF
ADVANCEME
NT

The 19th century counter-presumption of advancement arises in the context of specific

relationships wherein equity recognises that there is an obligation of conscience owed by the
transferor to advance or to support the welfare of the transferee. In such narrow confines,
there is no presumption of resulting trust because the transferor is presumed to transfer the
property freely to the transferee on account of the relationship of obligation. The transferor is
deemed to intent, as Spence J explains, to make a gift of the subject matter of the transfer to
the transferee. Burden of proving equitable ownership shifts in the absence of declared
intention.
CRITICISM:
Operation and rationale of the presumption of advancement has the propensity to produce
diverse outcomes and, furthermore, it reflects the prevailing moral and socio-economic values
of by-gone days.
McHugh J, the presumption arises, where the relationship between the parties falls into a
class where dependency, past, present or future, commonly exists or, at all events, commonly
existed in the nineteenth century.
Lord Diplock attacked its contemporary relevance in Pettitt v Pettitt: it would in my view,
be an abuse of the legal technique for ascertaining or imputing intention to apply to
transactions between the post-war generation of married couples presumptions which are
based upon inferences of fact which an earlier generation of judges drew as the most likely
intentions of earlier generations of spouses belonging to the propertied classes of a different
social era.

Should s.199 of the Equality Act 2010 come into force, this will lead to the abolition of
the presumption of advancement.
The desire for legislative change stems from the recognition that the presumption is
outdated, weak and has much scope for unfairness. In addition, it is, as it currently operates,
arguably incompatible with Art. 5 of the 7 th Protocol to the ECHR: Spouses shall enjoy equality
of rights and responsibilities of a private law character between them, and in their relations
with their children, as to marriage, during marriage and in the event of its dissolution
S.199 is not yet in force. Unless and until the provision comes into force, modern courts will
continue to grapple with parameters of advancement.

PRESUMPTI
ON OF
ADVANCEME
NT

A) HUSBAND AND WIFE

-Re Eykyns Trusts Malins VC declared in the latter part of the nineteenth century: The
law of this court is perfectly settled that where a husband transfers money or other property
into the name of his wife only, then the presumption is, that it is intended as a gift or
advancement to the wife absolutely at once
-PoA will not apply where:
-the transfer is from wife to husband (Heseltine v Heseltine)
-as between co-habiting spouses or
-from a man to his mistress (Diwell v Farnes)
B) FATHER AND CHILD
-Bennet v Bennet Sir George Jessel MR: the father is under that obligation from the mere
fact of his being the father, and therefore no evidence is necessary to shew the obligation to
provide for his child. In the case of a father, you only have to prove that he is the father, and
when you have done that the obligation at once arises.

-Crabb v Crabb
- Re Roberts
C) MOTHER AND CHILD
Equity has rarely construed that relationship as bestowing on the mother an obligation to
advance her child either:
-Financially (Re De Visme) or
-Morally (Bennet v Bennet).
This is apparent even in cases where the father has died (Bennet v Bennet) or where the
mother is the primary earner.
CRITICISM:
-Grays: the application of presumed advancement has become hopelessly out of touch with
the egalitarian nature of contemporary society and fails, moreover, to reflect the fact that both
parents, if married to each other, are nowadays statutorily burdened with parental
responsibility for their minor childrenToday it seems highly impossible that the presumption
can survive, in the parental context, in its discriminatory form.
-Kodilinye agrees:
moral obligation to
such a distinction
inappropriate in the

it is based on the absurd notion that a mother, unlike a father, has no

advance her child. Even in the context of Victorian custom and morality
between a mother and a father seems curious, but it is completely
conditions of the modern family.

-Nelson v Nelson HC in Australia the presumption was deemed equally applicable to

fathers and mothers.
-Endorsed in Close Invoice Finance Ltd v Abaowa by Mr Simon Picken QC.
D) IN LOCO PARENTIS
Courts will look for evidence that the donor stands in loco parentis to the transferee.
-Illegitimate child (Beckford v Beckford)
-Adopted child (Standing v Bowring)
-Common for relatives such as uncles, aunts, or grandparents to act in loco parentis where
circumstances demand. (Ebrand v Dancer)
Comes down to issues of evidence.

REBUTTING
THE
PRESUMPTI
ON OF
ADVANCEME
NT

A) ILLEGALITY DEFENCE
He who comes to equity must come with clean hands continues to resonate in the context of
illegality and RTs.
The PoA cannot be rebutted by adducing evidence of illegality or fraudulent activity (rule of
policy)
Law Commission 2010 Report (The Illegality Defence): if the courts accept the illegality
defence, it often involves granting an unjustified windfall to the defendant, who may be
equally implicated in the illegality. However, if the courts refuse, they may be seen to be
helping a claimant who has behaved illegally.

-Gascoigne v Gascoigne property was transferred from husband to wife in order to put
that property beyond the reach of the husbands creditors. In the light that, as between
husband and wife, the PoA arose, it was necessary for the husband to adduce evidence of his
fraudulent activities to show that a gift was unintended and establish his entitlement under a
resulting trust. The clear adjudication of the court was that he was not entitled to rely upon his
own illegality to assert his claim and to rebut the presumption of advancement.
-Tinker v Tinker a husband purchased a house and a garage in Cornwall. To safeguard
himself from the claims of creditors in the event that his business should fail, he purchased the
house in the sole name of his wife. On the breakdown of their relationship, the husband sought
to recover the property from the wife. The outcome illustrates the effect of the PoA. As lord
Denning MR explained, the husband had, simply found himself on the horns of a dilemma in
that, as between himself and his wife, he wished to say that the property belonged to him
whereas, as between himself and his creditors, he wished to say that it belonged to her.
B) RELIANCE PRINCIPLE - Tinsley v Milligan

REBUTTING
THE
PRESUMPTI
ON OF
ADVANCEME
NT

HOUSE OF LORDS: concerned the joint purchase of a home for two women as co-habiting
lovers. By mutual agreement, the property was registered in Ms Tinsleys name as the sole
proprietor so as to enable Ms Milligan to make false social security claims, thereby benefiting
both parties. On the breakdown of their relationship, Ms Tinsley moved out and claimed
possession of the house as its legal owner. Ms Milligan counterclaimed for an order for sale
claiming that the house was held on trust for the both of them equally. As between the ending
of their relationship and Ms Tinsleys claim to possession, Ms Milligan had discontinued her
fraudulent activity and had settled the matter with the relevant authorities. Although illegality
had been raised by Ms Tinsley in an effort to rebut the presumption of resulting trust in Ms
Milligans favour, it was by the latters direct contribution to the purchase price that she
acquired an equitable proprietary interest. Consequently, it was unnecessary to adduce
evidence of the illegal purpose that had driven her to consent to the conveyance of legal title
into the sole name of her lover. Neither was she subject to the clean hands principle.
Lord Browne Wilkinson dismissed out of hand that the consequences of being a party to an
illegal transaction could depend, on such an imponderable factor as the extent to which the
public conscience would be affronted by recognising rights created by illegal transactions.
By a majority the HL determined that a resulting trust could be upheld where it was not
necessary to rely on illegality as the basis of the claim.
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.
Hence, where it is unnecessary to adduce evidence of illegality in order to establish a
proprietary interest, the presence of illegality will not preclude the availability of equitable
relief.
-Lowson v Coombes: where a man and his mistress contributed to the purchase price of a
number of properties, each of which was held in the sole name of the mistress to prevent any
claim from the mans estranged wife. (Illegal purpose under the Matrimonial Causes Act 1973).
In reliance on the presumption of resulting trust and, without the need to adduce evidence of
illegality, the man was entitled to recover.
-Silverwood v Silverwood: a testatrix places her assets in the names of her grandchildren in
order to facilitate a claim for income support from the Department of Social Security. Albeit
with some reluctance, Nourse LJ held that her executor was entitled to recover the assets on
the basis of a resulting trust that arose in her favour. Introduction of evidence of an illegal
purpose was unnecessary because the PoA did not operate in the context of
grandparent/grandchild relationship.
C) THE WITHDRAWAL EXCEPTION Tribe v Tribe
The question arose as to whether the transferor could rebut the presumption of advancement
by adducing evidence of an illegal purpose that was never carried into effect. The CA held that,
as the father had not carried out his illegal purpose, he was able to adduce evidence of it to
rebut the presumption of advancement.