TUTORIAL 5
RESULTING &
CONSTRUCTIVE TRUSTS
1
, RESULTING & CONSTRUCTIVE TRUSTS
A. Introduction
No need for formalities for their creation: LPA 1925 s 53(2).
Is there a difference between express & implied trusts once created?
Types of intention –
Express: Actual intention.
- Which the parties have made clear
Implied / Inferred: Intention as it appears from the circumstances, including the words &
conduct of the relevant parties; An objective / apparent intention.
- Must be supported by evidence
- Often taken to be the parties’ actual intention, but it may not, in fact, be so
Imputed: What a person would have (/ should have) intended had he/she thought about it.
- There may not be evidence to support the view
- In practice, a very narrow line divides between implied / inferred intention & imputed
intention
Presumed: From common experience the most likely intention in the circumstances;
Rebuttable by evidence of actual intention.
- Similar to imputed intention Difference: May be rebutted by evidence to the contrary
- The starting point should be what the parties’ intentions were (Marr v Collie)
- Express trusts arise to give effect to the actual intention of the owner
- Presumed resulting trusts are used to give effect to the implied / inferred intentions of the
owner Help to interpret ambiguous transactions
- Automatic resulting trusts are used to explain gaps in beneficial ownership
- Constructive trusts are imposed by the court as a consequence of the conduct of the party
who becomes a trustee
B. Resulting trusts
The effect of a resulting trust is that on the transfer of property the beneficial interest in that
property, / part of it, will “result” back to the transferor.
- Where the transferor, having apparently given away the legal ownership, actually acquires
some / all of the beneficial ownership
A resulting trust may arise where there is a transfer of property but the transferor’s intentions
as to the disposal of the equitable interest are unclear, at least in part. Alternatively, there
may in those circumstances be the presumption of a gift of the beneficial ownership under the
presumption of advancement. Note also the presumption of an equitable joint tenancy – where
there is a purchase of a family home in the joint names of the couple (discussed later).
- Where there is no evidence of the parties’ actual intentions, the court may find a resulting
trust, either because by inference from all the circumstances the parties intended it (Gallarotti
v Sebastianelli) / as a last resort (NRC Holding Ltd)
- Rationale of resulting trusts
Presumed intention of the parties
Intention of the transferor
Lack of intention to make a gift
Retention of ownership
2
, Unjust enrichment
Automatic resulting trusts
1. Circumstances giving rise to a possible resulting trust
A resulting trust may arise in 3 situations:
(1) Property is transferred from settlor to trustees on an express trust but some / all of the
equitable interest in the property is not disposed of.
- As where there has been a failure to validly create a trust (failed formalities trust)
e.g. Vandervell v IRC, Megarry J
- There was the grant of an option to repurchase shares V had not decided who should be the
owner of that option There was a resulting trust in his favour
- There had been no decided beneficiary at all
The resulting trust may be automatic / presumed.
- Difference: Automatic – end of story; Presumed – may be rebutted
(2) A voluntary transfer of property from one person to another / into the joint names of the
transferor & another.
Presumed resulting trust.
Does it apply to a voluntary transfer of land?
LPA 1925 s 60(3)
60 Abolition of technicalities in regard to conveyances and deeds.
(3) In a voluntary conveyance a resulting trust for the grantor shall not be implied merely
by reason that the property is not expressed to be conveyed for the use or benefit of the
grantee.
- Conflicting interpretations
Both cases are 1st instance decisions The position remains unsettled:
Lohia v Lohia [2001] Wills & Trusts LR 110
- Held that you cannot presume a resulting trust where there is a voluntary transfer of land
National Crime Agency v Dong [2017] EWHC 3116
- Held that you can LPA 1925 was not intended to make substantive changes to the law &
there is no justification for a distinction between land & other types of property
(3) A person contributes all / part of the purchase price of property & title to that property is put
in the name of another / into their joint names.
“Purchase money resulting trust” – resulting trust presumed.
In theory there seems to be no reason why a resulting trust cannot arise because of an actual,
rather than presumed, intention to that effect. There is support for this in Hodgson v Marks
[1971] Ch 892, CA.
2. Presumption of advancement
- Rather sexist
- Often regarded as quite weak & easily rebutted
- Subject to a great deal of criticisms
3
, - Nature of the presumption
Where the nature of the relationship between the transferor & transferee gives rise to
an opposite presumption, that the transferor did intend to benefit the transferee, in
which case the presumption of a gift is rebutted there will be no resulting trust
The nature of the relationship is such that the transferor is regarded as morally obliged
to provide for the person benefiting (Murless v Franklin)
Reflects a 19 th century understanding of family responsibility
Even where applicable, the presumption carries very little weight & can be displaced by
evidence of the parties’ actual intentions
Arises in 2 situations:
(a) Transfer from a father to his child / someone to whom he is in loco parentis;
Wood v Watkin [2019] EWHC 1311
- The presumption has to be made clear by evidence
- The presumption can apply even if the child is > 18, although the presumption of a gift to an
older child is weaker & so more easily rebutted, particularly if that child has become independent
Laskar v Laskar [2008] EWCA Civ 347, [2008] 2 FLR 589
- The presumption can apply even if the child is > 18, although the presumption of a gift to an
older child is weaker & so more easily rebutted, particularly if that child has become independent
(b) Transfer from a husband to his wife.
Law Reform (Miscellaneous Provisions) Act 1970 s 2(1)
Mossop v Mossop [1988] 2 WLR 1255
- Has been extended to engaged couples (fiancées)
Pettitt v Pettitt [1970] AC 777
- The presumption is weak & quite easy to rebut, particularly in the case of a joint purchase of a
home
- When the presumption does not apply
Mother & child (Bennet v Bennet)
Wife & husband (Re Curtis)
Same-sex marriages: No actual case, but inconceivable that any presumption could
apply
Cohabiting partners, whether heterosexual / homesexual (Calverly v Green) Includes
mistresses (Diwell v Farnes)
Other family relationships (Gorog v Kiss – Siblings; Knight v Biss – Son-in-law; Russell
v Scott – Nephew)
Equality Act 2010 s 199: Prospective abolition of the presumption of advancement, not yet in
force.
- Motivated not by the concern that the presumption is seen as outdated, but by the
suggestion that it is in breach of ECHR Art 5 Protocol 7
- The need for the provision has been questioned, & there has also been such a long delay in
implementing it that it is an open question when, if ever, it will come into force
- Inferences of intention
It is possible for judges to rely on the circumstances of a transaction to find an
explanation that does not require the use of any presumption, & the relationship of the
parties is 1 of those circumstances (Bennet v Bennet; Lavelle v Lavelle)
- Alternative explanations
The presumption will be rebutted by evidence that the transferor did not intend to
4
RESULTING &
CONSTRUCTIVE TRUSTS
1
, RESULTING & CONSTRUCTIVE TRUSTS
A. Introduction
No need for formalities for their creation: LPA 1925 s 53(2).
Is there a difference between express & implied trusts once created?
Types of intention –
Express: Actual intention.
- Which the parties have made clear
Implied / Inferred: Intention as it appears from the circumstances, including the words &
conduct of the relevant parties; An objective / apparent intention.
- Must be supported by evidence
- Often taken to be the parties’ actual intention, but it may not, in fact, be so
Imputed: What a person would have (/ should have) intended had he/she thought about it.
- There may not be evidence to support the view
- In practice, a very narrow line divides between implied / inferred intention & imputed
intention
Presumed: From common experience the most likely intention in the circumstances;
Rebuttable by evidence of actual intention.
- Similar to imputed intention Difference: May be rebutted by evidence to the contrary
- The starting point should be what the parties’ intentions were (Marr v Collie)
- Express trusts arise to give effect to the actual intention of the owner
- Presumed resulting trusts are used to give effect to the implied / inferred intentions of the
owner Help to interpret ambiguous transactions
- Automatic resulting trusts are used to explain gaps in beneficial ownership
- Constructive trusts are imposed by the court as a consequence of the conduct of the party
who becomes a trustee
B. Resulting trusts
The effect of a resulting trust is that on the transfer of property the beneficial interest in that
property, / part of it, will “result” back to the transferor.
- Where the transferor, having apparently given away the legal ownership, actually acquires
some / all of the beneficial ownership
A resulting trust may arise where there is a transfer of property but the transferor’s intentions
as to the disposal of the equitable interest are unclear, at least in part. Alternatively, there
may in those circumstances be the presumption of a gift of the beneficial ownership under the
presumption of advancement. Note also the presumption of an equitable joint tenancy – where
there is a purchase of a family home in the joint names of the couple (discussed later).
- Where there is no evidence of the parties’ actual intentions, the court may find a resulting
trust, either because by inference from all the circumstances the parties intended it (Gallarotti
v Sebastianelli) / as a last resort (NRC Holding Ltd)
- Rationale of resulting trusts
Presumed intention of the parties
Intention of the transferor
Lack of intention to make a gift
Retention of ownership
2
, Unjust enrichment
Automatic resulting trusts
1. Circumstances giving rise to a possible resulting trust
A resulting trust may arise in 3 situations:
(1) Property is transferred from settlor to trustees on an express trust but some / all of the
equitable interest in the property is not disposed of.
- As where there has been a failure to validly create a trust (failed formalities trust)
e.g. Vandervell v IRC, Megarry J
- There was the grant of an option to repurchase shares V had not decided who should be the
owner of that option There was a resulting trust in his favour
- There had been no decided beneficiary at all
The resulting trust may be automatic / presumed.
- Difference: Automatic – end of story; Presumed – may be rebutted
(2) A voluntary transfer of property from one person to another / into the joint names of the
transferor & another.
Presumed resulting trust.
Does it apply to a voluntary transfer of land?
LPA 1925 s 60(3)
60 Abolition of technicalities in regard to conveyances and deeds.
(3) In a voluntary conveyance a resulting trust for the grantor shall not be implied merely
by reason that the property is not expressed to be conveyed for the use or benefit of the
grantee.
- Conflicting interpretations
Both cases are 1st instance decisions The position remains unsettled:
Lohia v Lohia [2001] Wills & Trusts LR 110
- Held that you cannot presume a resulting trust where there is a voluntary transfer of land
National Crime Agency v Dong [2017] EWHC 3116
- Held that you can LPA 1925 was not intended to make substantive changes to the law &
there is no justification for a distinction between land & other types of property
(3) A person contributes all / part of the purchase price of property & title to that property is put
in the name of another / into their joint names.
“Purchase money resulting trust” – resulting trust presumed.
In theory there seems to be no reason why a resulting trust cannot arise because of an actual,
rather than presumed, intention to that effect. There is support for this in Hodgson v Marks
[1971] Ch 892, CA.
2. Presumption of advancement
- Rather sexist
- Often regarded as quite weak & easily rebutted
- Subject to a great deal of criticisms
3
, - Nature of the presumption
Where the nature of the relationship between the transferor & transferee gives rise to
an opposite presumption, that the transferor did intend to benefit the transferee, in
which case the presumption of a gift is rebutted there will be no resulting trust
The nature of the relationship is such that the transferor is regarded as morally obliged
to provide for the person benefiting (Murless v Franklin)
Reflects a 19 th century understanding of family responsibility
Even where applicable, the presumption carries very little weight & can be displaced by
evidence of the parties’ actual intentions
Arises in 2 situations:
(a) Transfer from a father to his child / someone to whom he is in loco parentis;
Wood v Watkin [2019] EWHC 1311
- The presumption has to be made clear by evidence
- The presumption can apply even if the child is > 18, although the presumption of a gift to an
older child is weaker & so more easily rebutted, particularly if that child has become independent
Laskar v Laskar [2008] EWCA Civ 347, [2008] 2 FLR 589
- The presumption can apply even if the child is > 18, although the presumption of a gift to an
older child is weaker & so more easily rebutted, particularly if that child has become independent
(b) Transfer from a husband to his wife.
Law Reform (Miscellaneous Provisions) Act 1970 s 2(1)
Mossop v Mossop [1988] 2 WLR 1255
- Has been extended to engaged couples (fiancées)
Pettitt v Pettitt [1970] AC 777
- The presumption is weak & quite easy to rebut, particularly in the case of a joint purchase of a
home
- When the presumption does not apply
Mother & child (Bennet v Bennet)
Wife & husband (Re Curtis)
Same-sex marriages: No actual case, but inconceivable that any presumption could
apply
Cohabiting partners, whether heterosexual / homesexual (Calverly v Green) Includes
mistresses (Diwell v Farnes)
Other family relationships (Gorog v Kiss – Siblings; Knight v Biss – Son-in-law; Russell
v Scott – Nephew)
Equality Act 2010 s 199: Prospective abolition of the presumption of advancement, not yet in
force.
- Motivated not by the concern that the presumption is seen as outdated, but by the
suggestion that it is in breach of ECHR Art 5 Protocol 7
- The need for the provision has been questioned, & there has also been such a long delay in
implementing it that it is an open question when, if ever, it will come into force
- Inferences of intention
It is possible for judges to rely on the circumstances of a transaction to find an
explanation that does not require the use of any presumption, & the relationship of the
parties is 1 of those circumstances (Bennet v Bennet; Lavelle v Lavelle)
- Alternative explanations
The presumption will be rebutted by evidence that the transferor did not intend to
4
