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Resulting trust – Problem Answer (1500 words)

Summary + Intro: (slight moderation) 200

We observe from the facts of the given case that ....

Following the recent demise of ABC, it is noteworthy that PQR has emerged as the sole
beneficiary of his estate, thereby asserting her interest in relation to those (property). As per
the authoritative opinion of Lord Browne-Wilkinson in the landmark case of Westdeutsche
(1996), it is firmly established that an equitable interest can be acquired in a property solely
through the establishment of a trust. Therefore, the determination of whether a Resulting
Trust has indeed arisen in JKL’s favor will play a pivotal role in resolving the matter at hand.

In order to ascertain the existence of a Resulting Trust (RT) in the present case, our analysis will
proceed as follows. Firstly, we will outline the various types of RT that can arise in different
scenarios. This will allow us to identify the specific type of RT that may be applicable to each
transaction under consideration. Subsequently, we will delve into the presumptions associated
with RT,

Through this comprehensive analysis, we aim to determine the nature and extent of any
potential RT in favor of JKL and its implications for PQR’s claim. Therefore, we shall discuss each
transaction / case separately.

Law (no moderation): 130

Resulting trust, an equitable doctrine established by the courts, serves to restore the beneficial
interest or equitable ownership of a property to its original transferor. This principle allows for
the reversion of rights in situations where the legal title is held by one party, but the underlying
equitable interest rightfully belongs to another.

As categorized in the case of Venderwell-No.2 (1974), resulting trusts can be classified into two
main categories: presumed resulting trusts (PRTs) and automatic resulting trusts (ARTs).
Under the category of PRTs, there are two subcategories: voluntary conveyance resulting
trusts (VCRTs) and purchase money resulting trusts (PMRTs). On the other hand, ARTs is also
known as failed trust resulting trusts (FTRTs). These classifications provide a framework for
understanding the different scenarios in which resulting trusts may arise.

VCRT movable property (no moderation): 140

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The legal principles governing the creation of Resulting Trusts (RT) in relation to movable
property without consideration were elucidated in the case of Re Vinogradoff (1953). In this
case, Farewell J. addressed the issue of unclear intentions in a transfer of stocks and held that
in the instance, the stocks would belong to the settlor. The court's decision established the
general rule that when movable property is conveyed without consideration, a presumption of
Voluntary Conveyance Resulting Trust (VCRT) arises.

The significance of clear intention in the transfer of beneficial interests was reiterated in the
case of Thavorn v BCCI (1985). In this case, Lloyd J. emphasized the importance of providing
concrete evidence regarding the transfer of beneficial interest. The court held that in the
absence of even the slightest evidence indicating a transfer of beneficial interest, a resulting
trust would be created.

Rebutting movable Property: (No moderation) 65

Thus, in cases involving movable property conveyed without consideration, the burden of
proof rests on the transferee to rebut the presumption of VCRT by providing evidence that the
transfer was intended as a gift or the establishment of a trust. An example was set out in
Arosso v Coutts 2002 where the evidence of gift rebutted the presumption and no resulting
trust had been created.
VCRT immovable property (no moderation): 100

The enactment of Section 60(3) of the Law of Property Act (LPA) has brought about a
significant change in the common law position concerning resulting trusts for immovable
properties. The courts now adhere to the literal approach prescribed by this provision, as
emphasized by Lord Browne-Wilkinson.

Under Section 60(3) of the LPA, the absence of an express statement in the transfer documents
regarding the purpose of the transfer does not automatically give rise to a resulting trust. The
courts no longer rely solely on the absence of an express provision to infer the existence of a
resulting trust.

Rebutting Immovable Property: (No moderation) 130

A notable case illustrating this principle is Lohia v Lohia (2001), where the court declined to
create a resulting trust when a son transferred his share to his father. In that case, the court
emphasized that the evidence required to rebut the presumption of gift must be particularly
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strong. It was highlighted that if the shares had been transferred to a stranger, it would have
constituted stronger evidence supporting the existence of a resulting trust.

This approach was reaffirmed by J Chief Master Marsh in the case of NCA v Dong (2017). The
courts consistently maintain the view that the standard of proof for rebutting the presumption
of gift in immovable property transfers should be high, ensuring that the intentions of the
parties are clear and unequivocal.

Purchase Money Resulting Trust (PMRT), (add cases from notes): 60

Another significant presumption in the context of resulting trusts is the Presumption of

Purchase Money Resulting Trust (PMRT), which arises in favor of the person who contributes
towards the payment of the purchase price of the property. Under this presumption, the
interest in the property is directly proportional to the proportion of money contributed by the
individual.
Rebutting PMRT: (No moderation) 75

However, it is important to note that this presumption can be rebutted by providing strong
evidence that demonstrates a different intention behind the contribution of money. The courts
have established that a high threshold of evidence must be met in order to rebut the
presumption. Such evidence may include demonstrating that the money was contributed with
the intention of making a gift, providing a loan, or creating a trust in favor of a third party.

Presumption of Advancement (add cases from notes): 180

The third presumption in the context of resulting trusts is the Presumption of Advancement,
which sets it apart from the other presumptions. Unlike the other presumptions, the
Presumption of Advancement does not serve to revert the equitable interest back to the
transferor, but rather operates on the presumption that the transfer was intended as a gift,
unless compelling evidence is presented to rebut this presumption.

It is important to note that the Presumption of Advancement only arises in specific

relationships, typically between husband and wife or father and child. This presumption
reflects a historical understanding from the 19th century, where there was a belief that certain
transfers between family members should be presumed as gifts rather than resulting trusts.

However, it is crucial to recognize that the Presumption of Advancement has faced

considerable criticism in modern times. Critics argue that this presumption is no longer aligned
with contemporary concepts of family responsibility and fails to reflect the changing dynamics
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of familial relationships. As a result, there have been calls for the abolition or revision of this
presumption to better align with current societal expectations.

Illegality: (no moderation) 150

Evidence of illegality in resulting trusts has undergone a nuanced development within the legal
framework. Previously, the courts generally considered such evidence to be inadmissible, as
exemplified in the cases of Gascoigne (1919) and Tinsley (1994). However, over time, there has
been a shift in the courts' approach, allowing for greater leniency in admitting such evidence,
as evidenced in the case of Tribe (1995), where the claimant had withdrawn from the
wrongdoing and demonstrated locus poenitentiae.

Nevertheless, a significant turning point occurred in the case of Patel (2017), where the courts
overturned the decisions in Tinsley (1994) and Tribe (1995) and admitted evidence of illegality.
This decision marked a notable shift in the courts' stance, signaling a departure from the
previous approach. It is important to note that the admissibility of evidence of illegality in
resulting trusts is now subject to the specific circumstances of each case and the principles of
public policy.

Automatic or Failed Resulting Trust (no moderation): 220

An additional category of resulting trust is the Automatic or Failed Resulting Trust, which may
arise in favor of the settlor when an express trust fails. This type of trust is automatically
created by operation of law. Several situations can give rise to an Automatic Resulting Trust, as
illustrated in various cases.
One such situation is when there is uncertainty regarding the subject matter of the trust, as
seen in the case of Palmer v Simmonds. Similarly, the uncertainty of the object matter can also
lead to the failure of an express trust and the subsequent creation of an Automatic Resulting
Trust. This was evident in the case of Re Wright. In some cases, a Half Secret Trust may fail if it
was communicated after the making of the will, as demonstrated in the case of Re Keen.
Moreover, in the case of Morice v Bishop, the court determined that the trust, intended for a
private purpose, was invalid, leading to the creation of a resulting trust.
Furthermore, an Automatic Resulting Trust may come into effect when a trust becomes
impractical to administer, capricious, or in violation of the rules governing perpetuity. In these
circumstances, the courts will intervene to rectify situations where a trust has become
unworkable or fails to meet legal requirements, ensuring that the settlor's interests are
protected.