Resulting Trusts
Automatic Resulting Trusts:
1. Retention:
Lord Upjohn in Vandervell v IRC –
Do something wrong – tried to give away beneficial interest but failed, what
you fail to give away you keep.
BUT – Lord Browne-Wilkinson in Westdeutsche
2. Lord Browne-Wilkinson’s view:
Expressed in Westdeutsche –
Arises because of a presumption.
The fact proved is that there was intention to create a trust if failed –
intention actually had.
Common intention of the parties.
Fact proved is that transferor didn’t have intention but if known that
failed, would have intended.
BUT –
There is no room for presumptions.
Presumptions fill gaps in the facts but there are no gaps to fill with
regard to automatic resulting trusts.
Lord Wilberforce in Vandervell v IRC – stated that all facts were
found on evidence, therefore no room for presumption.
Even if there was room for presumption, there are cases where there is
contrary intention.
Vandervell v IRC – V wanted to make donation to RCS but didn’t
want to pay stamp duty so had his bank transfer title to shares to RCS
with dividend. This included an option to purchase but V didn’t
declare who the trustee(s) should be.
If found to be held on trust, the IRC can tax V on the
dividend as if it was his income even though it was going to
RSC.
V did not intend this trust – cannot sensibly be said that he
did/would.
Therefore, goes against any explanation based on transferor’s
intention.
Two interpretations of Vandervell v IRC:
V said to V Ltd hold on trust but didn’t say for whom – he has no
intention.
Means we have a trust that fails for want of certainty of
objects – has genuinely no thoughts on how being held –
contrary to his intention.
V said to V Ltd – I’ll tell you later on what trusts – hold to my
direction.
Trust arises because he intends it to arise.
What does he want?
Definitely does not want beneficial interest in shares,
because if he does, he will be taxed, but wants option to be
held to his sole direction.
He cannot have both.
If he genuinely intended not to have any interest in the property – if he said
hold for anyone but me, then if Lord Browne-Wilkinson is right, then the
outcome would be that he is holding for the crown.
BUT – test against Air Jamaica – PC so not binding but does have
advantage of directly confronting this argument.
Automatic Resulting Trusts:
1. Retention:
Lord Upjohn in Vandervell v IRC –
Do something wrong – tried to give away beneficial interest but failed, what
you fail to give away you keep.
BUT – Lord Browne-Wilkinson in Westdeutsche
2. Lord Browne-Wilkinson’s view:
Expressed in Westdeutsche –
Arises because of a presumption.
The fact proved is that there was intention to create a trust if failed –
intention actually had.
Common intention of the parties.
Fact proved is that transferor didn’t have intention but if known that
failed, would have intended.
BUT –
There is no room for presumptions.
Presumptions fill gaps in the facts but there are no gaps to fill with
regard to automatic resulting trusts.
Lord Wilberforce in Vandervell v IRC – stated that all facts were
found on evidence, therefore no room for presumption.
Even if there was room for presumption, there are cases where there is
contrary intention.
Vandervell v IRC – V wanted to make donation to RCS but didn’t
want to pay stamp duty so had his bank transfer title to shares to RCS
with dividend. This included an option to purchase but V didn’t
declare who the trustee(s) should be.
If found to be held on trust, the IRC can tax V on the
dividend as if it was his income even though it was going to
RSC.
V did not intend this trust – cannot sensibly be said that he
did/would.
Therefore, goes against any explanation based on transferor’s
intention.
Two interpretations of Vandervell v IRC:
V said to V Ltd hold on trust but didn’t say for whom – he has no
intention.
Means we have a trust that fails for want of certainty of
objects – has genuinely no thoughts on how being held –
contrary to his intention.
V said to V Ltd – I’ll tell you later on what trusts – hold to my
direction.
Trust arises because he intends it to arise.
What does he want?
Definitely does not want beneficial interest in shares,
because if he does, he will be taxed, but wants option to be
held to his sole direction.
He cannot have both.
If he genuinely intended not to have any interest in the property – if he said
hold for anyone but me, then if Lord Browne-Wilkinson is right, then the
outcome would be that he is holding for the crown.
BUT – test against Air Jamaica – PC so not binding but does have
advantage of directly confronting this argument.
