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Why RTS Arise

1. There are two types of resulting trusts: presumed intention resulting trusts and automatic resulting trusts. 2. For presumed intention resulting trusts, a trust is presumed to have been intended for the benefit of the settlor in the absence of evidence to the contrary. 3. For automatic resulting trusts, the legal system imposes a resulting trust on the trustee in favor of the settlor when an express trust fails or is uncertain. Scholars disagree on the underlying reasons and mechanisms for how resulting trusts arise.
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0% found this document useful (0 votes)
18 views

Why RTS Arise

1. There are two types of resulting trusts: presumed intention resulting trusts and automatic resulting trusts. 2. For presumed intention resulting trusts, a trust is presumed to have been intended for the benefit of the settlor in the absence of evidence to the contrary. 3. For automatic resulting trusts, the legal system imposes a resulting trust on the trustee in favor of the settlor when an express trust fails or is uncertain. Scholars disagree on the underlying reasons and mechanisms for how resulting trusts arise.
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The resulting trust is created by equity returning ownership of the

property to the donor, and the law governing this ( resulting) trust
provides for retention of equity. Several legal perspectives have
been proposed to explain the reasons for the resulting trust. One
of them is McGrary Vcs (Revandervell #2), according to which RT
he can be divided into two categories.
Presumed Intention resulting Trust and Automatic resulting Trust.
The most prior case relates to the settlor`s intent with respect to
the resulting trust. In this RT. presumption of intent arosen in
backing of the transferor based on (mehta estate vs.
mehtaestate) ,for the purpose of returning trust property
ownership to the transferor. It Always help the transferor, onus on
the transferee to rebut.
Two types of trusts, voluntary convince (VC) and purchase
money/contribution (PM) R.T., arise to the intent of a resultant
trust:
In the
VCRT creates a resulting trust in favor of the transferor, but after
1926, S.60(3) LPA 1925 removed the implied R.T (involves
subject matter of
land) if there is no express proof that the property was intended to
be use for benefit of donee.
This provision may be used to establish that R.T. cannot exist on
a property because of its VC.
(Lohia v. Lohia) presented an argument along these lines, althoug
h the case was ultimately dismissed for different reasons.
However, in Pret v. Pertrodel, an RT did emerge in VC of land, bu
t because this case did not reference S.60(3), it cannot be treated
as law. This is in contrast to Ali v. Khan, in which Morrit VC, citing
Lohia v. Lohia, found that S.60(3) completely prohibited the arisin
g of RT in situations of VC of land.
Whereas, the RT still emerges in situations involving personal
property as per (Re Vingadoff), but the emergence of resultant
trust may be rebutted by even the tiniest opposite evidence,
including evidence of surrounding and common sense, as in
(Fowkes v. Pascoe).
Penner remarked that the result would be argued differently if
(Fowkes) were stated, and dubbed the ruling a "atrocity of a
decision" in response to the case (Re Vingadoff).
In addition, Lord Upjohn suggested RT as a possible response in
the absence of relevant facts and circumstances in the case of
(Vendervell v IRC). Therefore, the presumption would emerge in
situations involving personal property, but it may be rebutted by
the presence of even circumstantial proof.
In the context of Purchase money contribution R.T., it is
established that the register owner assumes an R.T. for the
contributor of purchase money (Laskar v. Laskar) in the event that
money or money's worth (Springette v. Defoe) is utilized in the
acquisition of property. In addition, like with Sringette, a discount
may be considered a contribution toward the acquisition cost.
In the event of a mortgage involving many parties, the funds in
question will form joint obligation borne by those parties, rather
than the precise amount of mortgage repayment, as Cowncher V
Cowcher.
Transferring ownership to one party if one or both parties
contributed money to the transaction might give rise to PMRT
under the precedent set by Dyer v. Dyer.
Furthermore, the judicial cases of Stack v. Dowden and Jones v.
Kernott demonstrated that when a trust is put on a family home,
the resulting trust often does not come into effect.

additionally,it possible to
rebutt ;Foaks v. Pasco established that evidence showing the tran
sferor's intent to make a gift can be used to rebut voluntary conve
yance (VC) and (PMRT).
The transfer may have been a loan instead, as suggested by Vent
ure and Levi v. Levi.
As in the case of Westutsche v. Islington, a transferor's good faith
effort to execute a contractual commitment that was invalid but
assumed valid. Finally, it may be possible to demonstrate that the
transfer was subject to an express trust.
Furthermore, in the case of VC by person , .According to Roberts,
Eversheds J, a father's vc to his son is considered to be beneficial
for the son. B v B (Canadian).It is encouraging to note that in
Bennet, Jessel MR recognised that a non-father can act as "loco
parentis" and provide for the child.
Re-Eyken's Trust case highlights how 19th-century society
recognised a husband's responsibility to support his wife. HOL in
Pettitt recognised the reduced significance of such a
presupposition, which is a positive development. The Equality Act
2010 proposes eliminating such a presumption and it may be
implemented in the future. There is still a possibility of
presumption in husband-wife situations,SO for husband wife RT
would arise now.
A PoA will not develop in the following situations: mother-child
(Jessel MR, in Bennet) unless mother is widow Cps v malik; wife-
husband (HOLs, in Pettitt, criticizing Abrahams case); co-habiting
couples.
Penner called the POA extremely sexist.
In the event of a resulting trust that has failed, Megarry J in Re Va
ndervell (No 2) referred to it as an Automatic resulting trust
In the event of an express trust's failure, a resulting trust will auto
matically arise by operation of law. This occurs even when the set
tlor explicitly states that they do not wish to reclaim their property.
As established in Vendervell v IRC and Air Jamaica v Chariton, t
he property will be transferred back to the settlor.
n situations where an express trust may fail, a resulting trust woul
d arise in the event of a failed trust.
The subject matter's uncertainty, a Palmer v Simmonds, and the u
ncertainty of objects, Re Wright, are both significant issues in trus
t law. Additionally, trust is often regarded as capricious and admin
istratively unworkable,
Trust in RT has been discussed, and now this essay will examine
the various judicial perspectives on how RT arises and why it is
necessary.
Lord Brown Wilkinson's theory from (Westdeutsche v. Islington) is
the first to be discussed here.
All trusts that come from a settlor's desire for a trust in his favour
are the product of that settlor's intent, as stated by Lord Brown
Wilkinson and his colleagues in an obiter dicta. While this trust
effectively clarifies arising of voluntary C and purchase money
contribution in rt, it does not explain circumstances involving failed
trust resulting trusts when the settlor's aim was plainly to form a
trust in benefit of anyone other than himself.
In contrast, Lord Brown Wilkinson stated in a speech at
Birmingham University that the resulting trust would be presumed
in the event that the property was not disposed of, as the settlor
would be entitled to recover the property in such a scenario.
However, in the instance of (Gissing v. Gissing), the court refused
to establish a trust on the basis of speculative purpose,
suggesting that this idea of Brown Wilkinson's may be embraced
owing to an Economist Fiction as per Swadling. Furthermore, if
the court presumed intention in such a case, there would be no
way to rebut those presumption, as the only rebuttal that the court
has intended the property for someone else other than himself
has been disregarded by courts, which is why Swadling calls it
"insurmountable difficulties."
McGarry J found similarities between the various types of
resulting trusts and hence classified them as either
presumed intention resulting trusts or automatic resulting trusts in
the context of (Vanderwell VC).
In the absence of proof to the contrary, a trust is considered to
have been intended for the benefit of the settlor in a
presumed intention resulting trust.
In the absence of evidence to the contrary, McGarry J has held
that a presumption arises in the case of a purchase contribution
resulting trust or a voluntary convince resulting trust that the
settlor intended to create a trust for himself.
Given the lack of evidence as to why the property was being trans
ferred, Penner argues that a presumption emerges in favour of th
e settlor to fill that gap.

In the context of automatic resulting trust, the legal system


imposes a resulting trust upon the trustee in favour of the settlor.
Penner contends that the recipient possessed prior knowledge
that they were holding the property in trust, and that the law solely
stipulated the identity of the beneficiary.
According to the views expressed by Lord Wilberforce and Lord
Upjohn, the emergence of automatic resulting trust can be
attributed to the fact that the settlor retains the equitable interest,
thereby leading to the establishment of a trust. However, Lord
Brown Wilkinson criticised this notion in his critique of Chase
Manhattan, arguing that there was no prior equitable intention
before the trust was created, thus raising doubts about the
possibility of the settlor retaining the interest.
Furthermore, Swadling has argued that the term "automatic" used
to describe the emergence of a trust in a failed trust resulting trust
is misleading, as the term implies a self-acting process, whereas
in law, there is no such thing as an automatic process.
Swadling shares Lord Brown Wilkinson's perspective that an
equitable interest does not exist prior to the establishment of a
trust, despite Lord Wilberforce's argument that the settlor retains
such an interest.
Birks and Chamber espoused a distinct perspective regarding the
origin of RT, positing that all instances of RT stem from a transfer
that does not confer benefits. Likewise, in the context of (PIRT),
(RT) is triggered by the transferrer's intention to confer a benefit
upon the transferee.
When shedding light on the case of
re Vanderwell within this framework, it becomes apparent that the
resulting trust does not arise from the settlor's desire to establish
a trust in their own favour, but rather from their intention to withhol
d benefits from the transferee.
Additionally, Lord Millet, in his analysis of the Air Jamaica case, s
hares a comparable perspective but does not advocate for an exp
anded role of the RT that encompasses cases involving mistaken
payments, Chase Manhattan case.
Chamber's perspective posits that every instance of resulting trust
ought to stem from unjust enrichment, and therefore, Chamber
views all examples of resulting trust as having arisen from unjust
enrichment. Penner posits that in both purchase contribution and
voluntary conveyance, the transferee would be deemed enriched
at the transferor's expense. However, Penner diverges from this
view in the context of a resulting trust, contending that other
common law remedies, such as restitution, preclude the
emergence of a resulting trust solely on the basis of unjust
enrichment. Notably, this perspective has not been endorsed by
the courts, as evidenced by the unanimous adoption of
Swadling's position in the (Westdeutsche) case.
Swadling contended that the notion of a "non-beneficial transfer"
lacks legal basis and that there is no persuasive rationale for
courts to establish a trust for the transferor in response to
evidence. This critique was directed towards Berks and the
chamber.
As per Lord Millett, resulting trust (RT) is a legal construct that op
erates similarly to a constructive trust. However, unlike the latter,
RT is designed to give effect to the transferor's intention of not co
nferring any benefit upon the transferee. Lord Millett's perspective
diverges from that of Chamber, as he advocates for a more limite
d application of RT, restricting it to cases where there is no intenti
on to benefit the transferee. He also disagrees with the decision in
Chase Manhattan, which he believes was incorrectly decided. In
conclusion, Swadling's analysis suggests that a presumption of int
ention may arise in cases involving PMRT and VCRT, indicating t
hat the settlor intended to create a trust for their own benefit, whic
h aligns with Lord Brown Wilkinson's perspective. However, Swad
ling's analysis does not extend to FTRT.
Swadling posited that Birks and Chamber's argument was founde
d on several misconceptions. Additionally, Swadling dissented fro
m Brown Wilkinson's FTRT argument, contending that it was also
predicated on a presumption. Furthermore, Swadling rejected Van
dervell's argument on the grounds that it was ineffective.
Swadling proposes that when trust is lost due to the absence of a
beneficiary, a resulting trust should not be applied and the transfe
ror may instead argue for unjust enrichment.
Lord Diplock, in the case of Pettit v Pettit, expressed the view that
(PIRT) is outdated and referred to it as anachronistic. However, d
espite this criticism, the court has recently utilised PIRT in situatio
ns where there is insufficient evidence.

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