Resulting Trusts
A resulting trust causes the assets in question to be given back to the settlor or apparent donorand happens in the event that the intended donee cannot receive the assets the trustee is supposed to hand over. Like a constructive trust it arises by operation of law, unlike a constructive trust it gives effect to intention.
y
Chambers
thinks they arise for the same reason, Swalding strongly disagrees, either way,
they arise in two main situations a) When an express trust fails to dispose of all the trust assets (failed express trusts) Or an automatic resulting trust. Express trusts can fail in whole or in part for a variety of different reasons. The simplest example to illustrate (what happens when trust assets are conveyed to trustees but the trust fails to dispose of the entire beneficial interest in those assets and the trustees being left with a surplus which they are normally not entitled to would be) a transfer of land from S to T in trust for B for life. In the event of Bs death the normal legal response would be a resulting trust of the remainder for S. The reasoning for this is that the settlor or donor did not part with their money out and out but only sub modo, to the intent that his wishes are declared by the declaration of trust should be carried into effect. This type of resulting trust has been upheld in a number of cases, including Re Gillingham Bus Disaster where donations to a charity, in addition to compensation won by the dead or injured cadets, was great and the memorial fund had surplus funds. The court ordered that the surplus be returned to the ascertainable donors (as many remained anonymous (street collections, willingly etc)) though at the end of it the fund sat in the court for 35 years before parliament legislated in the charities act s 14. Air Jamaica Ltd v Charlton presents another scenario where the surplus is held on a resulting trust for those who provided it, in this case where a pension plan (trust = workers give money to company to hold on trust for their pension scheme) was cancelled. The case also states that neither the company nor the members could take any part in the surplus which had reverted to the crown as bona vacantia because the members recovered everything they were entitled to and clause 4 of the pension fund trust deed precluded the company from recovering it, no moneys which at any time have been contributed by the company under the terms hereof shall in any circumstances be repayable to the company though this doesnt negative the possibility of implying a resulting trust. Vandervell v Inland Revenue demonstrates that the mere intention to not have a resulting trust (for example, to avoid taxes) does not make it so. In Re Foord an engineer in China (1922) dictated his will to his servant. He left a lot to his sister, and of that, he asked her to hold on trust to pay his wife £400 a year, 300 with income tax. Was the gift to the testators sister is a gift merely for the particular purpose of providing an annuity for the testators wife? In this case there is a resulting trust of the balance of the estate for the testators
next of kin. Or was it a gift to the testators sister in which case the balance of the estate would belong to her beneficially?The judge determined that the language in the will indicated that it was a gift to the testators sister. In Hodgson v Marks an oral arrangement where an elderly widow transferred her house to her lodger in order to prevent her nephew evicting him was undermined by the lodger who sold the house to an innocent man. The lodger was deemed that the lodger was holding the property on trust for the widow and her interest in the land was overriding because of her occupation of it. Cook
v Hutchinson is a case where a father transferred property to his son on trusts which did not
exhaust the property. establishes that a resulting trust may be rebutted and certainly cannot take effect where a contrary intention is indicated by the grantor.
b) When it is established that an apparent gift was not intended as such.(apparent gifts) Or a presumed resulting trust, here the resulting trust arises where there is no express trust but an apparent gift where A either directly transfers an asset to B or A pays all or part of the purchase price of an asset for B. These cases are dominated by 2 presumptions, the presumption of resulting trusts and the presumption of advancement. The basic presumption of resulting trust is stated in Dyer v Dyer, the trust of a legal estate... results to the man who advances the purchase money... [this goes] on a strict analogy to the rule of the common law, that where a feoffment is made without consideration, the use results to the feoffor though this presumption does not apply where A is Bs father, in which case, the presumption for advancement applies instead. This presumption of advancement has been extended to persons standing in loco parentis and in Australia and Canada to mothers (this is arguably the case in England as well as of Article 5 of the European Convention on Human Rights). The presumptions are no longer as strong as they once were and most cases are decided based on the evidence and not on a presumption. When a presumption does apply, it is easily displaced by circumstantial evidence of what the apparent donor intended as in Lohia v Lohia where following the death of their father, two brothers agreed to make themselves tenants in common at equity, though the agreement that was made was silent on the size of the brothers respective beneficial interests. When the respondent moved out, relations between himself and his brother deteriorated andhe was locked out. He won the judgement that he should be entitled to an occupation rent as he believed they possessed equal shares as tenants in common. The appellant appealed that, arguing that he was entitled to 75% of the shares as tenant in common. Firstly, he questioned the finding that the decision (pre-dating the facts Ive already stated) to transfer the property from coownership by the appellant and the father to the father was a family decision, arguing that this was unsubstantiated speculation and that the judge ought to have held that the appellant and his father continued to hold the property until the father's death as tenants in common with equal shares as established on the acquisition of the property. There was no change in that position at any time.This was dismissed by the appeal judge who upheld the initial decision saying that in lieu of solid evidence the judge had to decide on the balance of probability which he did fairly. The judge's finding as to a family arrangement under which the property was transferred to the father is also
sufficient to rebut any presumption of resulting trust to the appellant which might arise from the voluntary nature of the transfer. Therefore the question, what would explain the eldest son giving up his interest to his father when they bought it together remained, the presumption of advancement was not rebutted. In Antoni v Antoni as the sole beneficiary of Dr Antonis will, his second wife Lena claimed that the 3 of 5 shares (the other 2 belonging to Dr Antoni) given to each of his children the year prior to his death (1 being held on trust for the third child by a legal secretary from the eldest childs law firm) should be hers through resulting trust as they were being held by the children for Dr Antoni. The presumption of advancement was applied as it should have been according to the court in a case when a parent places assets in the name of a child and assumes that the parent intends to make a gift to the child. It is a rebuttable evidentiary presumption but in this case, even though Dr Antonis will indicated that he believed he was the beneficial owner of all the 5 issued shares in the company, it was determined that Dr Antonis intentions at the time of the transactions towards making the shares a gift for his children (eg share on trust for youngest child Blair) and allowed for the presumption of advancement. The above shows that the presumptions are only important where evidence of intention is inadmissible. Where the intention is an illegal act, such as in Tinsley v Milligan and Tribe v Tribe, the presumption of advancement may not be rebuttable. It was rebuttable in Tribe (shares reclaimed from son) as the fraud hadnt been carried out but as is made clear in Tinsley; if the fraud had been carried out the presumption of advancement would not have been rebuttable
