Resulting Trusts

Introduction

A **resulting trust** arises, in the absence of any express declaration, where a person holds **legal title** in circumstances in which they cannot be taken to enjoy the full **equitable (beneficial) ownership** — so the beneficial interest 'results back' (from the Latin *resalire*, 'to jump back') to the person who provided it. This chapter examines the **two recognised categories** identified in **Re Vandervell (No 2) [1974] Ch 269** — the **automatic resulting trust** and the **presumed resulting trust** — and the situations in which equity presumes a resulting trust: **voluntary conveyances**, **contributions to the purchase price**, and the failure of an express trust. It also covers the **presumption of advancement** that displaces the resulting-trust presumption in certain relationships, the **rebuttal** of these presumptions, and the modern approach to **illegality** following **Patel v Mirza [2016] UKSC 42**.

Assessment focus

For SQE1 FLK1 you must be able to **identify** when a resulting trust arises and **apply** the presumptions to a realistic client scenario. Examiners frequently test the distinction between an **automatic** resulting trust (express trust fails or does not exhaust the beneficial interest) and a **presumed** resulting trust (voluntary transfer or purchase-money contribution for no consideration). You must know the **presumption of advancement** — to whom it applies (father→child, husband/fiancé→wife, person in *loco parentis*→child) and that it is **weak in modern conditions** (Pettitt v Pettitt [1970] AC 777). Be ready to apply the **family-home** rule in **Stack v Dowden** and **Jones v Kernott** (joint legal owners: presumption of joint beneficial ownership, not resulting trust). Questions are **single best answer** (SBAQ); this is a **closed-book** assessment, so memorise the categories, presumptions and leading cases.

Study tips

1) Lock down the **two categories** (Re Vandervell (No 2)): **automatic** (failure / non-exhaustion of beneficial interest) and **presumed** (voluntary transfer or purchase money for no consideration). 2) Remember a resulting trust **gives effect to presumed intention** — it is **not** imposed against the trustee's will (contrast the **constructive trust**): Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669. 3) Contributions must be to the **purchase price** at or before acquisition — **not** later improvements, mortgage 'help' or payment of bills. 4) For the **family home in JOINT names**, apply **Stack v Dowden / Jones v Kernott**, not the resulting-trust presumption. 5) The **presumption of advancement** survives but is weak; note that **s199 Equality Act 2010** (which would abolish it) has **never been brought into force**. 6) On **illegality**, apply the **Patel v Mirza** range-of-factors test — the old **reliance principle** in Tinsley v Milligan is **no longer good law**.