Equity supervision 8 review (resulting and Quistclose trusts)
Express trusts respond to the settlor’s intention to create a trust
Non-express trusts arise by operation of law:
● Constructive trusts; the general idea is that they arise in order to prevent unconscionable
conduct; e.g., the unconscionable retention of property which the defendant knows is not
theirs to keep
● Resulting trusts; the rationale is still a matter of debate
Academics and judges disagree as to whether resulting trusts respond to A’s intention to create a trust
in his own favour, or alternatively, his lack of intention to benefit B (unjust enrichment)
CLASSIFICATION OF RESULTING TRUSTS:
a) Presumed resulting trusts
b) Automatic resulting trusts
See Westdeutsche (more specifically Lord Browne-Wilkinson’s judgement)
Lord Browne-Wilkinson doubted whether the labels were in fact useful; the two types of case in
which resulting trusts can arise are not that different at all
Presumed resulting trusts
● Arises where there has been a gratuitous transfer of property (voluntary transfers of assets)
Chen v Ng: ‘where an asset or money is transferred for no consideration, there is a rebuttable
presumption that the transferee holds the asset or money on trust for the transferor’
A’s actual intentions will govern the matter where such intention can be made out
Where there is no evidence as to what was intended, equity presumes that a resulting trust arises in
favour of A
IMPORTANTLY the presumption is rebuttable and can be displaced by evidence of a contrary
intention on A’s part
Re Vinogradoff:
A grandmother transferred legal title to a government war loan bond into the joint names of herself
and her four-year-old granddaughter; the evidence was unclear as to whether she intended to make a
gift of some or all of the property to the granddaughter
During her lifetime, the grandmother received payments as they fell due on the bond
It was held that because the transfer of the bond into the joint names was gratuitous, a presumption of
resulting trust arose, which had not been rebutted
,The bond was held by the grandmother and the granddaughter as joint legal owners, on resulting trust
(in equity) for the grandmother’s estate
The specific context of land:
s.60(3) Law of Property Act 1925:
‘In a voluntary conveyance, a resulting trust for the grantor shall not be implied merely by reason that
the property is not expressed to be conveyed for the use or benefit of the grantee’
Does this abolish the presumption of resulting trust in the context of voluntary transfers of land?
CONSEQUENCE: no resulting trust will arise in favour of A unless there is positive evidence that A
intended to create one
Supported by obiter dicta in Lohia v Lohia
BUT the matter remains to be settled
For the view that s.60(3) should not be regarded as abolishing the presumption of resulting trust see
Prest v Petrodel Resources where Lord Sumption assumed without discussion that a presumption of
resulting trust could arise in relation to land
No mention of s.60(3) at all
If s.60(3) does abolish the presumption in relation to land, this would create inconsistencies with the
treatment of personal property; personal and real property would be treated differently
Mee suggests that these inconsistencies can be justified; land is commonly regarded as an especially
valuable commodity; the law treats land differently to chattels
● Where A pays (wholly or in part) for the purchase of property, legal title of which is vested in
B alone or in the joint names of A and B (purchase money resulting trusts)
Equity presumes that there is no intention to make a gift; a resulting trust arises by operation of law in
A’s favour
e.g., B purchases a house for £500,000; A contributes £250,000 to the purchase price; a presumed
resulting trust arises in A’s favour in proportion to her contribution
Only financial contributions count
Key date: the date on which the property is acquired
This has implications if the contributions made by A are made after the date of acquisition
If A is a mortgagor (i.e., she has borrowed money under a mortgage loan) and is liable for mortgage
repayments, her contributions will count
Treated as having provided whatever part of the purchase price is covered by the loan
See Curley v Parkes
Other subsequent contributions may not be relevant;
, The importance of context:
In Stack v Dowden and Jones v Kernott, the HOL and the SC (respectively) seemed to suggest that the
resulting trust analysis is an inapt method of resolving property disputes between unmarried
cohabitants
The courts have apparently rejected the resulting trust analysis in favour of the common intention
constructive trust in a domestic context
The starting point: in the case of a cohabiting couple who are joint legal owners and are jointly
responsible for a mortgage, equity presumes that they had intended a joint tenancy
If either wish to argue otherwise, they have to point to a common intention to the contrary
The idea was that the common intention constructive analysis would give the courts more leeway to
arrive at a fair solution, in light of all the circumstances, including the parties’ shared intentions and
non-financial contributions
BUT see a contrasting approach in Laskar v Laskar, where a mother and daughter were joint legal
owners of a house, which they had bought as an investment and rented out to tenants
The mother and daughter were also joint mortgagors; they funded the mortgage payments from the
rent from the tenants
The pair did not agree on how to allocate the beneficial interest- no express trust
Lord Neuberger distinguishes Stack, on the basis that a resulting trust analysis was appropriate
The mother and daughter were each to hold a beneficial interest in proportion to their contribution
Cf Marr v Collie:
A cohabiting couple who purchased several properties as investments in their joint names
Did not agree on how to allocate equitable ownership- no express declaration of trust
Mr. Marr provided all the purchase money; when the parties split up, he claimed sole beneficial
ownership
The PC held that Laskar was not authority for the proposition that the Stack v Dowden starting point
of joint beneficial ownership could only apply in family home cases
Lord Kerr held that the answer depends on whether there was evidence that the couple intended for
the beneficial interest to be shared equally between them, despite having contributed differently to the
purchase price
Neither the Stack (common intention constructive trust) presumption, nor the Laskar presumption,
should determine the outcome, since evidence of the parties’ actual intentions in respect of the
properties available
Express trusts respond to the settlor’s intention to create a trust
Non-express trusts arise by operation of law:
● Constructive trusts; the general idea is that they arise in order to prevent unconscionable
conduct; e.g., the unconscionable retention of property which the defendant knows is not
theirs to keep
● Resulting trusts; the rationale is still a matter of debate
Academics and judges disagree as to whether resulting trusts respond to A’s intention to create a trust
in his own favour, or alternatively, his lack of intention to benefit B (unjust enrichment)
CLASSIFICATION OF RESULTING TRUSTS:
a) Presumed resulting trusts
b) Automatic resulting trusts
See Westdeutsche (more specifically Lord Browne-Wilkinson’s judgement)
Lord Browne-Wilkinson doubted whether the labels were in fact useful; the two types of case in
which resulting trusts can arise are not that different at all
Presumed resulting trusts
● Arises where there has been a gratuitous transfer of property (voluntary transfers of assets)
Chen v Ng: ‘where an asset or money is transferred for no consideration, there is a rebuttable
presumption that the transferee holds the asset or money on trust for the transferor’
A’s actual intentions will govern the matter where such intention can be made out
Where there is no evidence as to what was intended, equity presumes that a resulting trust arises in
favour of A
IMPORTANTLY the presumption is rebuttable and can be displaced by evidence of a contrary
intention on A’s part
Re Vinogradoff:
A grandmother transferred legal title to a government war loan bond into the joint names of herself
and her four-year-old granddaughter; the evidence was unclear as to whether she intended to make a
gift of some or all of the property to the granddaughter
During her lifetime, the grandmother received payments as they fell due on the bond
It was held that because the transfer of the bond into the joint names was gratuitous, a presumption of
resulting trust arose, which had not been rebutted
,The bond was held by the grandmother and the granddaughter as joint legal owners, on resulting trust
(in equity) for the grandmother’s estate
The specific context of land:
s.60(3) Law of Property Act 1925:
‘In a voluntary conveyance, a resulting trust for the grantor shall not be implied merely by reason that
the property is not expressed to be conveyed for the use or benefit of the grantee’
Does this abolish the presumption of resulting trust in the context of voluntary transfers of land?
CONSEQUENCE: no resulting trust will arise in favour of A unless there is positive evidence that A
intended to create one
Supported by obiter dicta in Lohia v Lohia
BUT the matter remains to be settled
For the view that s.60(3) should not be regarded as abolishing the presumption of resulting trust see
Prest v Petrodel Resources where Lord Sumption assumed without discussion that a presumption of
resulting trust could arise in relation to land
No mention of s.60(3) at all
If s.60(3) does abolish the presumption in relation to land, this would create inconsistencies with the
treatment of personal property; personal and real property would be treated differently
Mee suggests that these inconsistencies can be justified; land is commonly regarded as an especially
valuable commodity; the law treats land differently to chattels
● Where A pays (wholly or in part) for the purchase of property, legal title of which is vested in
B alone or in the joint names of A and B (purchase money resulting trusts)
Equity presumes that there is no intention to make a gift; a resulting trust arises by operation of law in
A’s favour
e.g., B purchases a house for £500,000; A contributes £250,000 to the purchase price; a presumed
resulting trust arises in A’s favour in proportion to her contribution
Only financial contributions count
Key date: the date on which the property is acquired
This has implications if the contributions made by A are made after the date of acquisition
If A is a mortgagor (i.e., she has borrowed money under a mortgage loan) and is liable for mortgage
repayments, her contributions will count
Treated as having provided whatever part of the purchase price is covered by the loan
See Curley v Parkes
Other subsequent contributions may not be relevant;
, The importance of context:
In Stack v Dowden and Jones v Kernott, the HOL and the SC (respectively) seemed to suggest that the
resulting trust analysis is an inapt method of resolving property disputes between unmarried
cohabitants
The courts have apparently rejected the resulting trust analysis in favour of the common intention
constructive trust in a domestic context
The starting point: in the case of a cohabiting couple who are joint legal owners and are jointly
responsible for a mortgage, equity presumes that they had intended a joint tenancy
If either wish to argue otherwise, they have to point to a common intention to the contrary
The idea was that the common intention constructive analysis would give the courts more leeway to
arrive at a fair solution, in light of all the circumstances, including the parties’ shared intentions and
non-financial contributions
BUT see a contrasting approach in Laskar v Laskar, where a mother and daughter were joint legal
owners of a house, which they had bought as an investment and rented out to tenants
The mother and daughter were also joint mortgagors; they funded the mortgage payments from the
rent from the tenants
The pair did not agree on how to allocate the beneficial interest- no express trust
Lord Neuberger distinguishes Stack, on the basis that a resulting trust analysis was appropriate
The mother and daughter were each to hold a beneficial interest in proportion to their contribution
Cf Marr v Collie:
A cohabiting couple who purchased several properties as investments in their joint names
Did not agree on how to allocate equitable ownership- no express declaration of trust
Mr. Marr provided all the purchase money; when the parties split up, he claimed sole beneficial
ownership
The PC held that Laskar was not authority for the proposition that the Stack v Dowden starting point
of joint beneficial ownership could only apply in family home cases
Lord Kerr held that the answer depends on whether there was evidence that the couple intended for
the beneficial interest to be shared equally between them, despite having contributed differently to the
purchase price
Neither the Stack (common intention constructive trust) presumption, nor the Laskar presumption,
should determine the outcome, since evidence of the parties’ actual intentions in respect of the
properties available
