Resulting trusts

TR.05 — Resulting Trusts

A resulting trust arises by operation of law: the beneficial interest "results" (jumps back) to the person who provided it. No writing is needed — s.53(2) LPA 1925 exempts resulting, implied and constructive trusts from the s.53(1)(b) signed-writing requirement.

The two categories (Megarry J, Re Vandervell's Trusts (No 2) [1974]):

• Automatic resulting trust — an express trust fails or doesn't exhaust the beneficial interest, so the surplus results to the settlor. Triggers: failed trust (uncertainty, no valid object), failure of a condition, surplus after the purpose is met. Vandervell v IRC [1967]: an undisposed-of option resulted to Vandervell, defeating his tax planning.

• Presumed resulting trust — equity presumes the provider did not intend a gift. Two situations:

  1. Voluntary transfer of property into another's name (real or personal property). For personalty the presumption applies. For land, s.60(3) LPA 1925 may rebut it (debated — arguably no resulting trust presumed on a voluntary conveyance of land).
  2. Purchase money contribution — A pays (wholly/partly) for property vested in B's name; B holds for A in proportion to the contribution (Dyer v Dyer (1788)).

Rebutting the presumption — evidence of intention: the resulting-trust presumption is weak and easily displaced by evidence of a gift or loan.

Presumption of advancement (counter-presumption): where the relationship implies a gift — father→child, husband→wife (and persons in loco parentis). It does NOT run wife→husband, mother→child historically, or between cohabitants. Now weak (Pettitt v Pettitt; Stack v Dowden) and due for abolition by s.199 Equality Act 2010 — not yet in force, so still cite it.

Key traps:

• Stack v Dowden [2007] / Jones v Kernott [2011]: for the family home in joint names, the common intention constructive trust governs, not the resulting trust. Don't apply purchase-money resulting trusts to domestic joint ownership.
• Illegality: post-Patel v Mirza [2016] a claimant can rely on a resulting trust despite an illegal purpose, applying the range-of-factors test (overruling Tinsley v Milligan's reliance principle).
• Resulting trusts respond to absence of intention to benefit, not unjust enrichment (Westdeutsche Landesbank [1996]).
• A failed charitable gift may pass cy-près instead of resulting if a general charitable intention exists.