REVISION NOTES W301 LAW: OWNERSHIP & TRUSTEESHIP – RIGHTS &
RESPONSIBILITIES
OBJECTIVES NOTES: UNIT 11: RESULTING TRUSTS
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How resulting trusts (restrust) arise
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Express/ restrusts differences
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By Westdeutsche Landesbank Girozentrale v Islington LB [1996], A: Where A
makes voluntary payment to B or pays (even if part only) for property vested
in B’s/ joint names, presumption = A didn’t intend to make gift to B but
property is either held on trust for A or, in shares according to contribution but
such presumption rebuttable by either direct evidence that A intended outright
transfer or by counter-presumption of advancement; or B: where A transfers
property on express trusts which do not exhaust entire beneficial interest (e.g.
Vandervell & Quistclose).
Restrusts not expressly declared by settlors but implied in certain
circumstances where A transfers property to B which B holds on restrust for A
&, in regard to formalities, s.53(1)(b) LPA 25 provides, re declarations of trust
concerning land, that they must be in writing & signed by settlor but s.53(2)
exempts restrusts from the provision so such trusts can be validly created
informally.
Where restrusts arise on failure of express trusts
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Restrusts arise where settlor transfer property to trustees but fails to dispose of
all/ part of equitable interest (e.g. trusts either void or don’t exhaust fund) &
where trusts fail through failure to meet three certainties, benprinc &/or rules
against perps, beneficial interests not disposed of & trustees hold property on
restrust for settlor (or estate if trusts testamentary).
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Distinguishing contractual payments, outright gifts, money given to effect purpose &
whether which, if any, create restrust re surplus
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Where party seeks to recover/ claim contractual payments, common law offers
personal remedies (e.g. damages) rather than proprietary rights so these are not
trust situations & such claimants are on par with all other creditors;
Where there is outright gift, donors do not expect to get money back since have
parted with it out & out so no restrust (Re West Sussex Constabulary’s
Benevolent Fund [1970]) but where money given for purpose, donors expect to
get back if trust fails or there is surplus, so restrust in their favour arises (Re
West Sussex).
Distribution of NCUA Funds on NCUA dissolution
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By Re Bucks Constabulary Fund Friendly Society (No. 2) [1979], where NCUA
rules make provision for distribution on dissolution, such rules apply but where
silent (i) unless rules otherwise suggest, funds divided equally between members
at date, irrespective of length of membership or amounts paid in; & (ii) past
members no claim – on death/ resignation, interest ceases but where NCUA
moribund or defunct (e.g. all members deceased or only one surviving),
property is bona vacantia;
Provisions apply to all property part of NCUA’s contractual funds (e.g. subs,
from fund-raising activities), outright gifts (e.g. collection box money) & gifts to
members as fund accretions but not donations given as trusts for NCUA’s
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REVISION NOTES W301 LAW: OWNERSHIP & TRUSTEESHIP – RIGHTS &
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purposes which are regarded as restrusts for settlor, & provisions apply
irrespective of whether NCUA inward or outward looking provided rules enable
members to distribute funds amongst themselves.
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Whether restrusts from express trusts failure based on transferor’s intention
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When restrust presumption arises
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Re Venderwell’s held restrusts arose either (i) automatically where settlors fail
to dispose of beneficial interests entirely; or (ii) by presumption in gratuitous
transactions, in both cases irrespective of settlor’s intentions but arguably they
are intended since equity presumes property should revert to settlor, albeit such
presumption can be rebutted (Westdeutsche) & where settlor expressly or
impliedly abandons all interest no restrust & property becomes bona vacantia
(Re West Sussex);
Alternatively, Air Jamaica Ltd v Charlton [1999] held restrusts give effect to
intention but arise, irrespective of intention to retain beneficial interest, from
absence of settlor’s intention to pass on any beneficial interest to actual
transferee.
Voluntary transfers: with gratuitous transfers of personalty by A to B,
presumption = B holds on trust for A & stronger re shares etc than chattels, cash
etc where presumption more easily rebutted but with gratuitous land transfers.
no such presumption due to s.60(3) LPA 25 but not excluded if A can show
intended B to hold on restrust, albeit this express rather than implied restrust;
Purchase money transfers apply to both land & personalty & where A provides
% of purchase money but property in B’s name solely, presumption = B holds
for both parties, each having equitable interests in proportion to contribution to
purchase but can be rebutted if B adduces evidence A intended money as a gift
& displaced where advancement presumption relevant;
Where B provides money & property in both names, presumption = A & B hold
on trust for A, again can be rebutted or displaced but if A lends B money to buy
property in B’s name, no restrust since loans not give lenders equitable interests
but, rather, contractual right to repayment normally secured on mortgage.
Evidence which rebuts restrust presumption
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Evidence must relate to settlor’s intention at time of transaction, subsequent
acts/ words relevant to extent indicate such intention; & strength of
presumption depends on circumstances being weakest where inter-party
relationship is such that gift was probably intended & strongest with
professional advisor relationship where very strong evidence needed to rebut
the presumption, solicitor’s own evidence being unlikely to suffice (Fowkes v
Pascoe (1875)) & acts/ declarations post-transfer aren’t admissible where they
seek to support rebuttal (Shephard v Cartwright [1955]);
Where property bought in joint names of wife & husband, presumption weak
since not uncommon for W to make gift to H so comparatively weak evidence
may suffice such as where W holds shares already in own name, often no
reason why would want them to be on restrust for herself & transaction likely
to be gift.
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REVISION NOTES W301 LAW: OWNERSHIP & TRUSTEESHIP – RIGHTS &
RESPONSIBILITIES
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Advancement presumption & evidence to rebut
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Restrust presumption may be displaced by opposite presumption of
advancement – that A intended a gift to B in respect of (i) father to child
(irrespective of child being minor); (ii) person loco parentis re child (again
irrespective of child’s age); (iii) husband to wife; & (v) fiancé to fiancée &
whilst argued that presumption also applies mother to child, recent cases
indicate not so (Gross v French 1976]), although widowed mum/ single parent
may be in loco parentis re child giving rise to presumption;
Husband to wife presumption weak & rebuttable by slight evidence H didn’t so
intend &, in Pettitt v Pettitt [1970], Lords acknowledged it more appropriate to
past ages where wives were financially dependent on husbands & also weak re
father to child (McGrath v Wallis [1995]), being rebuttable by weak evidence &
only holding fort in absence of any contrary evidence;
Can be rebutted by evidence of no intention to gift but rule in Shephard applies –
where dad carried out voluntary transaction, cannot rely on later acts/ decs in
rebuttal &, as examples, A may place property in B’s name without intending
gift where (i) intention is for B to obtain post/ benefit (Re Gooch (1890)); (ii) A
intended to loan money, does not intend a gift, rebutting presumption (Warren v
Gurney [1944]); (iii) A transfers property to adult child who is professional
adviser to manage for him, presumption is rebutted since clearly commercial
transaction; (iv) A transfers property to B for convenience (Marshal v Crutwell
(1875)); & (v) A transfers to B to deceive but evidence of illegal intent not
admissible in rebuttal;
And, evidence of intention not to gift may be found where (i) A retains
documentary title evidence (Warren v Gurney) but persuasive rather than
conclusive; (ii) A provides decs to contrary subject to Shephard admissibility &
where solicitor declares that B holds on trust for A, even if unsigned by parties
(McGrath v Wallis); & (iii) A puts property in B’s name but A continues to
receive income therefrom, although again not conclusive.
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Illegal purposes
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Where A places property in B’s name to further illegal purposes (e.g. to place
assets beyond his creditors), courts will not permit action to succeed on
evidence of illegal purpose but where claim established without having to
disclose why property was in another’s name, thereby revealing illegality, it
didn’t form part of claimant’s argument & he entitled to rely on restrust
presumption (Tinsley v Milligan [1994]);
If advancement presumption applies, can’t generally be rebutted by illegal
purpose evidence (Gascoigne v Gascoigne [1918]) except where such purpose
had not been carried out (Tribe v Tribe [1995]) so where (i) illegal purpose
not carried out, transferor can introduce evidence of such intent to rebut
advancement presumption & create restrust; but (ii) post-carrying out
purpose, too late to so rebut, but difficulty = when has illegal purpose been
carried out & Tribe suggests it has been when, say, 3rd party was deceived
but also arguable placing of property in another’s name dishonestly is itself
illegal purpose so such event will always be found & (i) intention to deceive
is not intention to create restrust, rather it’s A’s intention to divest himself of
property to meet 3rd party’s claims so is evidence of intention to gift; & (ii)
unjust if A can benefit from illegal intent simply because was lucky (e.g.
purely fortuitous that purpose not carried out) rather than he withdrew
through voluntary act of repentance;
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Principal concern = courts may not look at case merits but, where
presumptions aren’t rebutted, transferors implicated in illegality may retain
property, despite this never being intention & seriousness of illegality not
considered so A may be doubly punished re statutory penalty since, in
addition, may also lose property;
But there are alternatives (i) absolute rule that transferor can’t recover
property transferred for illegal purposes would be certain but unjust; (ii) in
Nelson v Nelson [1995], Australian High Court said policy considerations
must be taken into account & courts should decide whether policy offended
by permitting equitable interests to have effect; & (iii) widening this, courts
could further take into account all relevant circumstances.
Restrusts & unjust enrichment
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Where B unjustly enriched at A’s expense, A can claim restitution at common
law so if claims had proprietary interest, could create restrusts enabling
priority over other creditors but restrusts are rebutted by evidence of intention
of outright gift (Vandervell)& can’t be extended to cover situations where
transfers were by mistake or where consid failed since (i) property must be
capable of precise definition & such property may fail such test; (ii) trust can’t
arise until trustee is aware of facts giving rise to it; & (iii) if mistake/ consid
failure fell within restrust presumption, so should non-performance & such
widening would give claimants unfair priority over creditors (Westdeutsche)..
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