13. Resulting trusts

The two situations

Lord Browne-Wilkinson in Westdeutsche Landesbank v Islington said resulting trusts arise in two cases.

Presumed resulting trust: A pays for property put in B's name, or in their joint names, or A makes a voluntary payment to B. Equity presumes A did not mean a gift. B holds on trust for A, or, where both paid, in proportion to what each paid. The presumption can be rebutted.

Automatic resulting trust: A transfers property to B on an express trust that does not use up the whole beneficial interest. What is left results to A. For example, property is left on trust for A for life and then for X if X reaches 21. If X dies under 21 in A's lifetime, the property returns to the settlor's estate after A dies.

Resulting and constructive trusts compared

A constructive trust is imposed because of the trustee's conduct. A resulting trust responds to the presumed or implied intention of the person who provided the property. A resulting trust can arise even if the recipient did not know of the transfer. In Vandervell v IRC Lord Upjohn said that where it appears the donor did not intend the donee to take beneficially, there is a resulting trust for the donor.

The presumption of resulting trust

Dyer v Dyer is the classic statement: the trust of a legal estate, in whoever's name it is taken, results to the person who paid the purchase money. A part contributor takes a proportionate share.

In Re Vinogradoff a grandmother transferred war loan stock into the joint names of herself and her granddaughter, who was a child. The stock was held on resulting trust for the grandmother, and passed with her estate.

Rebutting the presumption

The presumption is rebutted by evidence of what the provider really intended.

Gift intended: in Fowkes v Pascoe a woman bought stock in the joint names of herself and the son of her daughter-in-law, while holding much other stock in her own name. The court held that a gift was intended.

Loan intended: in Re Sharpe an aunt paid much of the price of a house in her nephew's name. The money was a loan, so there was no resulting trust, though she was protected by an estoppel licence against the trustee in bankruptcy.

The presumption of advancement

In some relationships equity presumed a gift instead. This is the presumption of advancement.

Father and child: a father was presumed to intend a gift to his child. Re Roberts applied it to a father paying premiums on a policy on his son's life.

A person in loco parentis: someone who has put himself in the place of a parent to the child. Bennet v Bennet explains why: a father, or one in his place, has a duty to provide for the child. A mother did not, in nineteenth-century equity.

Husband and wife: a husband was presumed to intend a gift to his wife, but not the reverse.

These presumptions reflect old ideas about family life. In Pettitt v Pettitt the House of Lords said the presumption between spouses was now weak. Stack v Dowden now deals with family homes in joint names by presuming that beneficial ownership follows legal ownership. In England section 199 of the Equality Act 2010 abolishes the presumption of advancement, but that section has not been brought into force, and the Act does not apply in Sierra Leone.

There is no presumption of advancement from mother to child under the old cases, nor from wife to husband, nor between cohabitants. A resulting trust is presumed instead, unless family home cases point another way.

Illegality

In Tinsley v Milligan two women bought a house in Tinsley's name, so that Milligan could falsely claim social security. The House of Lords let Milligan claim her share, because she could rely on the presumption of resulting trust without relying on the illegal purpose. That reliance test was replaced in England by Patel v Mirza, where the Supreme Court said the court should look at the purpose of the rule broken, other relevant policies, and proportionality.