Introduction, "automatic" resulting trusts, presumed resulting trusts (presumed not yet ready).
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These notes were last updated on 03 Jan 98.
SLAPNT@cf.ac.ukA resulting trust arises where although legal title is vested in a trustee, equitable title becomes vested in the settlor.
Westdeutsche v Islington BC [1996] 2 All ER 961 suggests that it is not correct to talk in terms of equitable title remaining with the settlor (although previous analyses had often been in these terms).
There are two main categories of resulting trust. In Re Vandervell's Trusts (No. 2) [1974] Ch. 269, Megarry J. distinguished between automatic and presumed resulting trusts, as follows:
"(a) The first class of case is where the transfer to B is not made on any trust ... there is a rebuttable presumption that B holds on resulting trust for A. The question is not one of the automatic consequences of a dispositive failure by A, but one of presumption: the property has been carried to B, and from the absence of consideration and any presumption of advancement B is presumed not only to hold the entire interest on trust, but also to hold the beneficial interest for A absolutely. The presumption thus establishes both that B is to take on trust and also what that trust is. Such resulting trusts may be called "presumed resulting trusts".
(b) The second class of case is where the transfer to B is made on trusts which leave some or all of the beneficial interest undisposed of. Here B automatically holds on resulting trust for A to the extent that the beneficial interest has not been carried to him or others. The resulting trust here does not depend on any intentions or presumptions, but is the automatic consequence of A's failure to dispose of what is vested in him. Since ex hypothesi the transfer is on trust, the resulting trust does not establish the trust but merely carries back to A the beneficial interest that has not been disposed of. Such resulting trusts may be called "automatic resulting trusts".
Megarry J. was reversed in the Court of Appeal on a
formalities point, but no doubt was cast on this analysis, which
had long been thought to be definitive.
Lord
Browne-Wilkinson’s classification in Westdeutsche v Islington
BC [1996] 2 All ER 961 is similar, but not identical, to
Megarry J.'s. It is in fact narrower than Vandervell, and if it
is correct (I do not think it is part of the ratio), has the
following effects:
(a) Only voluntary transfers of money come within category (A). This makes it impossible to explain Hodgson v. Marks [1971] Ch. 892 as a category (A) case. It must be a category (B) case, but this explanation is more difficult.
(b) Any reasoning, such as that of Harman J in Re Gillingham Bus Disaster Fund [1958] Ch 300, which depends on resulting trusts operating independently of intention, must be rejected. So must “automatic” resulting trust terminology.
(c) The reason that there was no resulting trust of the unidentifiable contributions in Re West Sussex Constabulary's Widows, Children and Benevolent (1930) Fund Trusts [1971] 1 Ch 1 was that the donors did not so intend.
(d) The resulting trust reasoning (of the identifiable donations) in Re West Sussex Constabulary's Widows, Children and Benevolent (1930) Fund Trusts [1971] 1 Ch 1 is wrong, since no express trusts were declared, and the case does not therefore come within category (B).
(e) The decision in Westdeutsche suggests that there is an overriding conscience requirement (since otherwise the bank could (possibly) have argued category (A)). This does not affect category (B), since express trusts must have been declared, but it suggests an additional requirement for category (A), that the conscience of the recipient is affected.
These notes were last updated on 03 Jan 98.
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SLAPNT@cf.ac.ukWhat used to be called "automatic" resulting trusts arise where although legal title is transferred to trustees, there is a failure to dispose of equitable title. This can arise because of a failure to satisfy a legal requirement, such as certainty or formality, but can also be the consequence of a straightforward failure by the settlor to dispose of the beneficial interest, as in Vandervell v IRC, Essery v Coulard (1884) 26 Ch.D. 191, Re Ames (which was distinguished in Westdeutsche), Re Cochrane or Re Abbott. Another possibility is where the recipient body does not exist, or no longer exists at the time of the gift, as in e.g., Recher or Grant. The gift fails (and there is a resulting trust) unless there is a paramount charitable intention (in which case a cy-pres scheme will be put into effect). Yet another possibility is where a supervening event occurs rendering continuation of the trust impossible, as in Re Gillingham Bus Disaster Fund, and West Sussex (regarding the identifiable outside donations).
All this presupposes that the beneficial interest has not bee properly disposed of. Another inference might be that the recipient has parted with the entirety of his or her interest out and out, to the recipient as in Westdeutsche, or otherwise as in West Sussex (unidentifiable donations, criticising the reasoning in Gillingham, but why could there not have been an out and out disposition there to the recipients, i.e., the members of the association?). The inference that anonymous donations have been made out-and-out, with the donor retaining no interest, has also been made in charity cases, such as the Welsh Hospital and North Devon and West Somerset cases.
These notes were last updated on 03 Jan 98.
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SLAPNT@cf.ac.ukThese notes are not yet ready. Some aspects of this will in any case be dealt with under beneficial interests in shared homes.
These notes were last updated on 03 Jan 98.
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