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THE LAW OF TRUSTS (UK 3083)

RESULTING TRUST

ESSENCE OF RESULTING TRUST


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

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

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

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

TYPES OF RESULTING TRUST


1. 2.

AUTOMATIC RESULTING TRUST; PRESUMED RESULTING TRUST.

AUTOMATIC RESULTING TRUST


a.

b.

Takes effect by operation of law and so appears to be automatic (Re Vandervells Trust No.2); Eg: arises in the following circumstances: Where a trust is established and fails later, as where a settlement is created in contemplation of an arranged marriage which, in the event does not take place later (Bond v. Walford) (1886)

Where surplus funds have to be distributed when an association to which individuals have subscribed is wound up. Eg: Re Private Protection Socirty (1899); Re Hobourn Distress fund (1946). Where there is a failure to dispose totally of a beneficial interest. Eg: Re Abbott Fund Trust (1890); Re Gillingham Bus Disaster Fund (1985).

PRESUMED RESULTING TRUST


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

PRESUMED RESULTING TRUST


DYER V. DYER (1788) the trust of a legal estate, whether freehold, copyhold or leasehold; whether taken in the names of the purchasers and others jointly, or in the names of others without that of the purchaser; whether in one name or several; whether jointly or successive, results to the man who advances the purchase money

EXAMPLES:
Gascoigne v. Thwing (1686) A purchased real or personal property in Bs name; B will be presumed in equity to hold for A on a resulting trust.

Wray v. Steel (1814); Burns v. Burns (1984) A and B purchased real or personal property in Bs name. A resulting trust arises in favour of A as a proportionate beneficiary.

Rebutting the Presumption of Resulting Trust


Loan Transaction Contrary to Law or Public Policy Intention to benefit Joint Banking Accounts Presumption of Advancement and loco parentis

LOAN TRANSACTION

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

Contrary To Law or Public Policy

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

Intention To Benefit

Where it can be proven that there was an intention to benefit the donee, no resulting trust can arise. it. Standing v. Bowring (1885) : X transferred stock into the joint names of herself and Y, her godson, with the express intention that Y, should he survive her, was to have the stock, but that, during her life, he should retain the dividends. Held : Presumption of RT had been rebutted effectively. Dewar v. Dewar : the presumption of a resulting trust in favour of a mother who had made contribution to the purchase of property in her sons name was rebutted by evidence of her intention to make a gift.

Joint Accounts
Intention to benefit has been presumed in cases where a bank balance has been transferred into joint names. Marshall v. Crutwell : the presumption of advancement was rebutted on the ground that the joint account was opened for convenience.

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

PRESUMPTION IN RELATION TO A WIFE

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

PRESUMPTION IN RELATION TO A WIFE

An intending husband buys property in his intended wifes name, then the presumption of a gift arise if the marriage takes place; There is no POA in the case of a wife to a husband Pettitt v. Pettitt

PRESUMPTION IN RELATION TO A CHILD


General Principle: Where property is purchased by a father in the name of his child, then prima facie it is a gift to the child. (Dyer v. Dyer)

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

PRESUMPTION IN RELATION TO A PERSON IN LOCO PARENTIS A person in loco parentis one who has taken on responsibilities for providing for a child in the way a parent would provide. I cannot put the doctrine so high as to hold that if a person educates a child to whom he is under no obligation either morally or legally the child is therefore to be provided for at his expense. (Tucker v. Burrow)

Rebutting the Presumption of Advancement


By evidence of actual intention. Shephard v. Cartwright (1955); McGrath v. Wallis (1995). May NOT be rebutted if the transfer in question was made for a fraudulent or illegal purpose. Re Emerys Investment Trust (1959); Gascoigne v. Gascoigne (1918).