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Resulting Trust Essay plan

Why does a resulting trust arise? Why should it?

Van 2: two types of resulting trusts  Automatic and Presumed

 Automatic: Nothing to do with the settlors intentions (e.g. where there is no
certainty of objects)
 Presumed: Where property is transferred to another for no consideration
(nothing given or promised in return) but no words of gift used.

Chambers 1997:
 All RTs should be considered as arising from the presumption of the back of
any intention by the transferor to pass any beneficial interest to the
transferee. That is, the transferor did not intend to benefit the transferee. The
RT arises to prevent the unjust enrichment of the transferee.
 Swadling: Chambers’ view is wrong

 Arise on the failure of ET, independent (controversial) of any intention of the
 Van (2?) (Megarry): where ben interest not dealt with it will result back to the
o Even though he explicitly wanted to not keep any interest (ben interest
cannot remain ‘up in the air’)
 Doubted in Westdeusche (L B-W): where settlor has abandoned
any ben interest in property, no RT, prop bona vacantia
 B-W: in both ART and PIRT, trust imposed because we presume
that is what parties intended (no consistent with ART in Van)
 B&C view: Unjust enrichment
o ART not when ben interest up in air, but when A does not wish to
enrich B
o Swadling concedes that it may explain ARTs.
 Westdeusche: PIRT when gratuitous transfer without presumption of
advancement. Can be rebutted. ART when trust fails.

 B&C: unjust enrichment  merge PIRT and ART

o Penner: merging may not be a good thing. PIRT is a rule of evidence
and can be abolished tomorrow, ART not
 RT arises when
o A transfers prop or contributes value to purchase
o For no consideration
o And without intention to confer ben on B
 Problems:
o Rejected in Westdeutsche (for PIRT or both?)
 Trust can’t arise before D’s conscience affected
 Extension of proprietary interests  commercial uncertainty
and TP liability
o Normal remedy for unjust enrichment is personal (LPA s 60 applies
oso?), this will expand to scope of proprietary remedy to the detriment
of TPs
o Chambers: this can be resolved by making a distinction based on time
lapsed b/w receipt and the basis of failure of C’s payment (if failed
immediately, then D never owned property hence okay to give
proprietary interest)
 Regards RT as a restitutionary trust – a trust which always arises by
operation of law, and does so by using UE principles
o Restitutionary reasoning not used in this part of law that much

 Can arise in cases where the property is jointly or solely vested in the Trustee,
the beneficiaries of the purchasers (again, can be single or joint). Gratuitous
transfer or joint purchase cases.
o In voluntary transfer cases, S 60 (3) means no presumption of trust
o Limited to land (Lohia v Lohia 2001)
 This presumption can be rebutted in two ways
o Via a presumption of advancement: reversing the burden of Proof
o Normally
 Wesdeutsche 1996: The RT arises not on the date of transfer if transferee
ignorant of facts but when the transferee’s conscience becomes affected
 Normally
o Fowkes v Pascoe 1875: Purchased stock in joint names
o Strength of the presumption varies according to context
 In present case, only rational inference that of gift
 Such a gift does not infringe the Wills Act
 P of Advancement
 Father-child, husband-wife  yes; mother-child  possibly (Re Vinogradoff
o Held no); wife-husband  no
 Presumption not of trust but of evidence that leads to trust. Van: ‘evidential
What is the court presuming?
 Swadling: The presumption is that A intended B to hold the property on trust
 Chambers: The presumption is that A did not intend B to take the property
 Different outcomes when mistaken transfer.
o Swadling: No RT
o Chambers: RT created
 Westdeutsche 1996: Supports Swadling (mistaken payment by bank)
 Air Jamaica (PC): Supports Birks and Chambers
o RT arises by operation of law
o Responds to absence of any intention to pass the beneficial interest
 Swadling: PIRT depends not on the absence of intention to make a gift, but on
presumed intention to make a trust.
o Any contrary evidence  No PIRT
o No trust in case of mistaken payment
o In many cases settlor doesn’t bring mind to topic: no trust
o Can’t explain ART or Van 1

 ART v PRT:
o ART not confined to inter vivos transfers
o No presumption of advancement in ARTs

 P of Advancement
 Pettitt/Gissing: presumption based in a different era/would hardly play a
role/ easily refuted
 Tinker v Tinker 1970: If A transferred money to defeat creditors, then
presumption only strengthened right?
 Tribe v Tribe 1996: A can rely on such evidence if his creditors where not
actually deceived.
o If no presumption applies, then A can show that he transferred prop
without consideration, and B will have to prove intention of gift. B
can’t prove this cos A’s intention was deception, hence A will be able to
recover (not ideal but required by Tinsley v Milligan 1994)
o So A cannot recover property if his creditors were deceived if
Presumption applies, but can if presumption doesn’t. Arbitrary!
o Minority in Tinsley equity won’t assist a claimant who doesn’t come
with clean hands
o Law Comm 1999  recommended a structured discretion to decide
effects of illegality on RTs, considering factors like seriousness of
illegality, knowledge and intent of ben, whether invalidity would deter
illegality/ be prop response.