Post by congregatio on Apr 30, 2016 1:49:23 GMT 4
Resulting Trusts
Resulting trusts arise in the absence of an express declaration where a person holds legal title in circumstances where they can not be taken to have full equitable ownership. According to Re Vandervell's Trusts (no 2) [1974] Ch 269 There are two categories of resulting trusts:
Automatic resulting trust
Presumed resulting trust
"Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention". per Lord Brown Wilkinson Westdeutsche Landesbank Girocentrale v Islington LBC [1996] 2 WLR 802 (http://www.bailii.org/uk/cases/UKHL/1996/12.html)
1. Automatic resulting trust
An automatic resulting trust will arise where the settlor transfers property to the intended trustee but the trust has failed for some reason. The trustee holds the legal title of the property on trust. The beneficial or equitable ownership is retained by the settlor.
2. Presumed resulting trust
Presumed resulting trusts arise either from voluntary transfer of the legal estate or by contribution to the purchase price. In these situations it is presumed that the person did not intend to make a gift of the property or money unless there is a clear intention that they did so intend. In such circumstances a resulting trust arises and the transferor or the person making the contribution retains or takes a share in the beneficial interest. However, in some relationships there is a counter presumption that a gift was intended. This is known as the presumption of advancement.
Requirements of presumed resulting trust
Voluntary conveyance
Outside of land law, where a person transfers property to a third party who does not provide any consideration, there is a presumption of resulting trust, unless the relationship is one which gives rise to the presumption of advancement. However, S.60(3) Law of Property Act 1925 (http://www.legislation.gov.uk/ukpga/Geo5/15-16/20/section/60) cast doubt as to whether this would apply to the transfer of land.
S.60(3) did not prevent a resulting trust being imposed in:
Hodgson v Marks [1971] Ch 892 www.bailii.org/ew/cases/EWCA/Civ/1971/8.html
However, in the following two cases it was suggested that s.60(3) had a more reaching impact:
Tinsley v Milligan [1993] 3 All ER 65 www.bailii.org/uk/cases/UKHL/1993/3.html
Lohia v Lohia [2001] WTR 101 www.bailii.org/ew/cases/EWCA/Civ/2001/1691.html
Contribution to purchase price
A contribution to the purchase price will give rise to a presumption of resulting trust meaning the person that makes the contribution will take a share in the equitable ownership of the property in proportion to their contribution :
Dyer v Dyer (1788) 2 Cox Eq Cas 92 www.bailii.org/ew/cases/EWHC/Exch/1788/J8.html
Gissing v Gissing [1971] AC 886 www.bailii.org/uk/cases/UKHL/1970/3.html
Co-habitees
Where the contribution to the purchase price comes from a cohabiting couple to purchase the family home, the Supreme Court has held that where the property is in joint names there is an intention to hold the property jointly in equity and thus there is no room for a presumption of resulting trust. The proportion of contribution is therefore irrelevant:
Jones v Kernott [2011] UKSC 53 www.bailii.org/uk/cases/UKSC/2011/53.html
Stack v Dowden [2007] 2 AC 432 www.bailii.org/uk/cases/UKHL/2007/17.html
What will constitute contribution to purchase price
Generally it is considered only a direct contribution to the purchase price will suffice.
Tinsley v Milligan [1993] 3 All ER 65 www.bailii.org/uk/cases/UKHL/1993/3.html
Mortgage payments may also count. However opinions differ:
Cowcher v Cowcher [1972] WLR 425
Curley v Parkes [2004] EWCA Civ 1515
Stack v Dowden [2007] 2 AC 432 www.bailii.org/uk/cases/UKHL/2007/17.html
Discount on purchase price - if a person qualifies for a discount on purchase price eg by being a long term tenant, this will qualify as a contribution to the purchase price:
Marsh v Von Sternberg [1986] 1 FLR 526
Springette v Defoe [1992] 2 FLR 388 e-lawresources.co.uk/Land/Springette-v-Defoe.php
A gift from a third party may constitute a contribution to the purchase price:
Midland Bank v Cooke [1995] 4 All ER 562 e-lawresources.co.uk/Land/Midland-Bank-v-Cooke.php
Payment of household bills, providing furnishings, DIY and home improvements will not count:
Burns v Burns [1984] Ch 317
Pettitt v Pettitt [1970] AC 777 e-lawresources.co.uk/Land/Pettitt-v-Pettitt.php
Illegal purpose
It is a maxim of equity that he who comes to equity must do so with clean hands; therefore equity will not assist a person who has acted for an illegal purpose. However, if the claimant is not required to plead or rely on the illegal conduct they are still able to claim a resulting trust:
Tinsley v Milligan [1993] 3 All ER 65 www.bailii.org/uk/cases/UKHL/1993/3.html
Lowson v Coombes [1999] 2 WLR 720 www.bailii.org/ew/cases/EWCA/Civ/1998/1849.html
Rebuttal of presumption of resulting trust
If there exists evidence that a gift was intended, this will rebut the presumption of resulting trust and the transferee will be absolutely entitled to the property and the transferor will not be entitled to any share in the beneficial ownership:
Fowkes v Pascoe (1875) 10 Ch App 343
The same principle applies where the money advanced for the purchase price was intended to be a loan:
Re Sharpe (A bankrupt) [1980] 1 WLR 219
Presumption of advancement
In certain relationships it is presumed that a gift was intended unless there is evidence that the transferor intended to retain an interest.
This includes the relationship of father and child:
Re Roberts [1946] Ch 1
Antoni v Antoni [2007] UKPC 10 www.bailii.org/uk/cases/UKPC/2007/10.html
Warren v Gurney [1944] 2 All ER 472
Tribe v Tribe [1995] 4 All ER 236 e-lawresources.co.uk/Land/Tribe-v-Tribe.php
There is no presumption between mother and child:
Re de Visme (1863) 2 de GJ & Sm 17
Bennet v Bennet (1879) 10 Ch D 474
Nor with sisters:
Noack v Noack [1959] VR 137
Gorog v Kiss (1977) 78 DLR 690
The presumption exists with regards to husband to wife transfers:
Re Eykyn's Trusts (1877) 6 ChD 115
Silver v Silver [1958] 1 All ER 523
Gascoigne v Gascoigne [1918] 1 KB 223 e-lawresources.co.uk/Land/Gascoigne-v-Gascoigne.php
However, this has been criticised as having no application in modern times:
Pettitt v Pettitt [1970] AC 777 e-lawresources.co.uk/Land/Pettitt-v-Pettitt.php
The presumption also applies from a man to his fiancee:
Moate v Moate [1948] 2 All ER 486
Tinker v Tinker [1970] 1 All ER 540 e-lawresources.co.uk/Land/Tinker-v-Tinker.php
Mossop v Mossop [1988] 2 All ER 202
There is no presumption between a man and his mistress:
Diwell v Farnes [1959] 1 WLR 624
Lowson v Coombes [1999] 2 WLR 720 www.bailii.org/ew/cases/EWCA/Civ/1998/1849.html
No presumption operates from a wife to her husband:
Re Curtis (1885) 52 LT 244
Heseltine v Heseltine [1971] 1 WLR 342
There is no presumption with co-habitants:
Rider v Kidder (1805) 10 Ves 360
Rebutting the presumption of advancement
The presumption of advancement may be displaced if there is evidence that no gift was intended.
This could be through retention of the title deeds:
Warren v Gurney [1944] 2 All ER 472
Or an ineffective declaration of trust:
McGrath v Wallace The Times April 13th 1995
A person can not rely on evidence of his own illegal conduct to rebut a presumption of advancement:
Gascoigne v Gascoigne [1918] 1 KB 223 e-lawresources.co.uk/Land/Gascoigne-v-Gascoigne.php
Tinker v Tinker [1970] 1 All ER 540
Unless the illegal purpose had not yet been carried out
Tribe v Tribe [1995] 4 All ER 236
Future of presumption of advancement
The presumption of advancement is largely based on outdated views and has a gender bias which may infringe Art 5 of the 7th Protocol of the European Convention of Human Rights. S.199 of the Equality Act 2010 (http://www.legislation.gov.uk/ukpga/2010/15/section/199) sought to abolish the presumption of advancement. However, this provision has not been implemented and it is doubtful as to whether it will be implemented.
Resulting trusts arise in the absence of an express declaration where a person holds legal title in circumstances where they can not be taken to have full equitable ownership. According to Re Vandervell's Trusts (no 2) [1974] Ch 269 There are two categories of resulting trusts:
Automatic resulting trust
Presumed resulting trust
"Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention". per Lord Brown Wilkinson Westdeutsche Landesbank Girocentrale v Islington LBC [1996] 2 WLR 802 (http://www.bailii.org/uk/cases/UKHL/1996/12.html)
1. Automatic resulting trust
An automatic resulting trust will arise where the settlor transfers property to the intended trustee but the trust has failed for some reason. The trustee holds the legal title of the property on trust. The beneficial or equitable ownership is retained by the settlor.
2. Presumed resulting trust
Presumed resulting trusts arise either from voluntary transfer of the legal estate or by contribution to the purchase price. In these situations it is presumed that the person did not intend to make a gift of the property or money unless there is a clear intention that they did so intend. In such circumstances a resulting trust arises and the transferor or the person making the contribution retains or takes a share in the beneficial interest. However, in some relationships there is a counter presumption that a gift was intended. This is known as the presumption of advancement.
Requirements of presumed resulting trust
Voluntary conveyance
Outside of land law, where a person transfers property to a third party who does not provide any consideration, there is a presumption of resulting trust, unless the relationship is one which gives rise to the presumption of advancement. However, S.60(3) Law of Property Act 1925 (http://www.legislation.gov.uk/ukpga/Geo5/15-16/20/section/60) cast doubt as to whether this would apply to the transfer of land.
S.60(3) did not prevent a resulting trust being imposed in:
Hodgson v Marks [1971] Ch 892 www.bailii.org/ew/cases/EWCA/Civ/1971/8.html
However, in the following two cases it was suggested that s.60(3) had a more reaching impact:
Tinsley v Milligan [1993] 3 All ER 65 www.bailii.org/uk/cases/UKHL/1993/3.html
Lohia v Lohia [2001] WTR 101 www.bailii.org/ew/cases/EWCA/Civ/2001/1691.html
Contribution to purchase price
A contribution to the purchase price will give rise to a presumption of resulting trust meaning the person that makes the contribution will take a share in the equitable ownership of the property in proportion to their contribution :
Dyer v Dyer (1788) 2 Cox Eq Cas 92 www.bailii.org/ew/cases/EWHC/Exch/1788/J8.html
Gissing v Gissing [1971] AC 886 www.bailii.org/uk/cases/UKHL/1970/3.html
Co-habitees
Where the contribution to the purchase price comes from a cohabiting couple to purchase the family home, the Supreme Court has held that where the property is in joint names there is an intention to hold the property jointly in equity and thus there is no room for a presumption of resulting trust. The proportion of contribution is therefore irrelevant:
Jones v Kernott [2011] UKSC 53 www.bailii.org/uk/cases/UKSC/2011/53.html
Stack v Dowden [2007] 2 AC 432 www.bailii.org/uk/cases/UKHL/2007/17.html
What will constitute contribution to purchase price
Generally it is considered only a direct contribution to the purchase price will suffice.
Tinsley v Milligan [1993] 3 All ER 65 www.bailii.org/uk/cases/UKHL/1993/3.html
Mortgage payments may also count. However opinions differ:
Cowcher v Cowcher [1972] WLR 425
Curley v Parkes [2004] EWCA Civ 1515
Stack v Dowden [2007] 2 AC 432 www.bailii.org/uk/cases/UKHL/2007/17.html
Discount on purchase price - if a person qualifies for a discount on purchase price eg by being a long term tenant, this will qualify as a contribution to the purchase price:
Marsh v Von Sternberg [1986] 1 FLR 526
Springette v Defoe [1992] 2 FLR 388 e-lawresources.co.uk/Land/Springette-v-Defoe.php
A gift from a third party may constitute a contribution to the purchase price:
Midland Bank v Cooke [1995] 4 All ER 562 e-lawresources.co.uk/Land/Midland-Bank-v-Cooke.php
Payment of household bills, providing furnishings, DIY and home improvements will not count:
Burns v Burns [1984] Ch 317
Pettitt v Pettitt [1970] AC 777 e-lawresources.co.uk/Land/Pettitt-v-Pettitt.php
Illegal purpose
It is a maxim of equity that he who comes to equity must do so with clean hands; therefore equity will not assist a person who has acted for an illegal purpose. However, if the claimant is not required to plead or rely on the illegal conduct they are still able to claim a resulting trust:
Tinsley v Milligan [1993] 3 All ER 65 www.bailii.org/uk/cases/UKHL/1993/3.html
Lowson v Coombes [1999] 2 WLR 720 www.bailii.org/ew/cases/EWCA/Civ/1998/1849.html
Rebuttal of presumption of resulting trust
If there exists evidence that a gift was intended, this will rebut the presumption of resulting trust and the transferee will be absolutely entitled to the property and the transferor will not be entitled to any share in the beneficial ownership:
Fowkes v Pascoe (1875) 10 Ch App 343
The same principle applies where the money advanced for the purchase price was intended to be a loan:
Re Sharpe (A bankrupt) [1980] 1 WLR 219
Presumption of advancement
In certain relationships it is presumed that a gift was intended unless there is evidence that the transferor intended to retain an interest.
This includes the relationship of father and child:
Re Roberts [1946] Ch 1
Antoni v Antoni [2007] UKPC 10 www.bailii.org/uk/cases/UKPC/2007/10.html
Warren v Gurney [1944] 2 All ER 472
Tribe v Tribe [1995] 4 All ER 236 e-lawresources.co.uk/Land/Tribe-v-Tribe.php
There is no presumption between mother and child:
Re de Visme (1863) 2 de GJ & Sm 17
Bennet v Bennet (1879) 10 Ch D 474
Nor with sisters:
Noack v Noack [1959] VR 137
Gorog v Kiss (1977) 78 DLR 690
The presumption exists with regards to husband to wife transfers:
Re Eykyn's Trusts (1877) 6 ChD 115
Silver v Silver [1958] 1 All ER 523
Gascoigne v Gascoigne [1918] 1 KB 223 e-lawresources.co.uk/Land/Gascoigne-v-Gascoigne.php
However, this has been criticised as having no application in modern times:
Pettitt v Pettitt [1970] AC 777 e-lawresources.co.uk/Land/Pettitt-v-Pettitt.php
The presumption also applies from a man to his fiancee:
Moate v Moate [1948] 2 All ER 486
Tinker v Tinker [1970] 1 All ER 540 e-lawresources.co.uk/Land/Tinker-v-Tinker.php
Mossop v Mossop [1988] 2 All ER 202
There is no presumption between a man and his mistress:
Diwell v Farnes [1959] 1 WLR 624
Lowson v Coombes [1999] 2 WLR 720 www.bailii.org/ew/cases/EWCA/Civ/1998/1849.html
No presumption operates from a wife to her husband:
Re Curtis (1885) 52 LT 244
Heseltine v Heseltine [1971] 1 WLR 342
There is no presumption with co-habitants:
Rider v Kidder (1805) 10 Ves 360
Rebutting the presumption of advancement
The presumption of advancement may be displaced if there is evidence that no gift was intended.
This could be through retention of the title deeds:
Warren v Gurney [1944] 2 All ER 472
Or an ineffective declaration of trust:
McGrath v Wallace The Times April 13th 1995
A person can not rely on evidence of his own illegal conduct to rebut a presumption of advancement:
Gascoigne v Gascoigne [1918] 1 KB 223 e-lawresources.co.uk/Land/Gascoigne-v-Gascoigne.php
Tinker v Tinker [1970] 1 All ER 540
Unless the illegal purpose had not yet been carried out
Tribe v Tribe [1995] 4 All ER 236
Future of presumption of advancement
The presumption of advancement is largely based on outdated views and has a gender bias which may infringe Art 5 of the 7th Protocol of the European Convention of Human Rights. S.199 of the Equality Act 2010 (http://www.legislation.gov.uk/ukpga/2010/15/section/199) sought to abolish the presumption of advancement. However, this provision has not been implemented and it is doubtful as to whether it will be implemented.