Development of the Resulting Trust Essay

A resulting desire is defined and described as a situation in which a ecstasyee is required by equity to throw away property on trust for the transferor or for the person who provided the purchase money for the transfer (Martin 1993, p. 233). Thus, a resulting trust arises when a person holds a property for some new(prenominal) notwithstanding the fact that the former has the legal title in his name but holds the property as fiduciary for the benefit of the original title possessor of the one who gave value on that pointfore.Robert Chambers (1997, p. 9) classifies the situations chthonic which a resulting trust may arise as, i. e. app arent applys, trusts which fail and quistclose trust which shall be discussed at length in the next section. Apparent gifts diagnose to properties which are transferred gratuitously in favor of another or consideration for its transfer and there is harm on the interrupt of the recipient to prove that utter property is wedded as a gift. Su ch failure creates a presumption that the recipient holds it in trust for the transferor (Chambers 1997, p. b11).This presumption, save does not apply in cases where properties are provided by the father to his children or husbands in favor of their wives. In this case, the presumption of packaging will have to apply, olibanum the recipient shall have the right to enjoy the property unless it is proven by evidence that the property was not given or transferred as a gift (Chambers 1997, p. 11). Trusts which fail doctor to express trusts that have failed.This category is further classified depending on whether the transfer was made on trust, into 1) presumed and 2) automatic (Chambers 1997, p. 40). It is considered as automatic when the transfer is made on trust but some or all the near delight has not yet been disposed of and presumed when it is not made on trust. There is a presumption of advancement that is created for one to hold the property in trust including the beneficia l interestingness in favor of the other (Chambers 1997, p. 40). The ordinal classification is quistclose trust.This term originated from the case Barclays bank building Ltd. v. Quistclose Investments Ltd. The case involved money that was loaned for a specified goal was held in trust for the benefit of the loaner when it became unthinkable to fulfill the obligation Barclays Bank Ltd. v. Quistclose Investments Ltd. , (1970) A. C. 567. Discussion As previously discussed, gifts which were not proven as such are considered apparent gifts which gives rise to application of the presumptions of resulting trust or advancement.Both of these presumptions are presumptions of facts, that fact being the intention of the person who has provided property to another (Chambers 1997, p. 11). In explaining the presumptions, Lord Diplock in the case of Pettitt v. Pettitt, clarified that the presumptions are the courts manner of imputing intent when it is relevant and important as it affects legal outcome and there is no evidence from which to infer intent Pettitt v. Pettitt (1969) UKHL 5. These presumptions are but a consensus of judicial opinion and are susceptible to change.The rule is that based on indigenous set of facts, the presumptions will apply and from the set of supplementary facts, court fecal matter now presume the intent of parties (Chambers 1997, p. 11). In the Pettitt case, the legal title to the spot belongs to the wife alone. Lord Upjohn stressed that any conveyance of a property when placed under the name of one spouse is considered also conveying beneficial title oer it to the named spouse Pettitt v. Pettitt (1969) UKHL 5. Any improvements made by the husband did not give rise to interest in the absence of any agreement.He dismissed the application of the doctrine of resulting trust by applying the principles in the case of Dyer v. Dyer (citing 2 Cox 92 set out in full in White and Tudors Leading Cases in beauteousness 9th edition Vol. II page 749) w here the doctrine was rebutted by the fact that the nominee was a child. There is a presumption of advancement which means that it is presumed to have been given as a gift because of the parties relationship. The presumptions can only come into play in the absence of evidence from which intentions of the parties can be inferred from and absence of consideration.He argues that similarly, this refuter must apply in the case of a wife Pettitt v. Pettitt (1969) UKHL 5. Barry and Cassell (1999, p. 1) summarized the possible situations relative to family home into 1) where property is paid for by two or more than people, but is conveyed into the name of one of themin this case there is a presumption which is created to the way out that the registered owner holds the property in trust for those contributed by pay the purchase price or mortgage recompenses of the property. Thus, a resulting trust arises.As enunciated in a landmark case of Lloyds Bank Ltd v Rosset (1991) a birdsong of interest would mean payments that should have been made are for the part of the purchase price or mortgage payment. Any other contribution is not deemed by law as a claim to interest except in cases of divorce or separation, where substantial contributions have been made pursuant to section 37 Matrimonial Proceedings and Property Act 1970 Lloyds Bank Ltd v Rosset (1991), 1 AC 107. The sanction situation would be when an owner of a property transfers utter property to another.The latter therefore is presumed to hold it in trust for the former. This, however is a refutable presumption and may admit of proof of to the contrary (Barry and Cassell 1999, p. 1). The second type of resulting trust is an express trust which failed. The categories of this type were distinguished in the case of Re Vandervells Trusts by Megarry, J. as presumed and automatic (Chambers 1997, p. 40). Presumed resulting trust refer to a situation where a property is transferred by A to B. However, the transfer wa s not made on trust.In this case, there arises a presumption, considering the failure for a provision, the absence of consideration and any presumption of advancement, which B holds on resulting trust in favor of A (Todd 1998, p. 1). On the other hand, automatic resulting trust refer to transfer to B is made on trusts which leave some or all of the beneficial interest undisposed of (Todd 1998, p. 1). The automatic trust is automatically created by the failure to dispose the beneficial interest, in whole or in part to A. This does not require presumptions or intent.Another classification was devised in the case of Westdeutsche Landesbank Girozentrale v Islington London Borough Council Westdeutsche v. Islington BC(1996) A. C. 669, as follows a) in cases where a total or partial payment is made by A to B of a property in the name of B or in both A and B. A rebuttable presumption arises that the property or money is a resulting trust held for A or if property is under the names of both A and B, then in shares equivalent to the amount they have contributed. (Wilson 2007, p. 151).This presumption can be refuted by a presumption of advancement or evidence that A actually think ofed a transfer and b) when by virtue of an express trusts the entire beneficial interest is not conveyed or transferred (Wilson 2007, p. 151). According to Megarry J. in the case of Re Vandervells Trusts (No. 2), the second type is an automatic resulting trust. However, it is should be stressed that resulting trusts are presumptions which arise collectible the absence of intentions and not imposed by law which in effect are constructive trusts (Wilson 2007, p. 151).For instance in the case of Re West Sus excite laws Widows, Children and Benevolent Fund Trusts, it was ruled that should the person abandons his beneficial interest in a trust property, the beneficial interest over the portion which was undisposed wantfully belongs to the Crown as bona vacantia Re West Sussex Constabularys Wido ws, Children and Benevolent Fund Trusts (1971) Ch 1. The third type of resulting trusts is quistclose trust. The name originated from the case Barclays Bank Ltd. v. Quistclose Investments Ltd. (1968) UKHL 4, (1970) A. C. 567.Rolls Razor could not tinge the dividend payment so it borrowed money from Quistclose Investments. This borrowed money was placed in a separate account at Barclays Bank which was opened specifically for the part of dividend payment. This dividend payment was not made and thereafter, Rolls Razor filed for voluntary liquidation. Both Barclays and Quistclose Investments filed a claim. The House of Lords ruled that the amount of money in the special account belonged to Quistclose because it was in the nature of a resulting trust Barclays Bank Ltd.v. Quistclose Investments Ltd. (1968) UKHL 4, (1970) A. C. 567. The requisites for a quistclose trust to exist the loan is for a specified purpose and does not create a trust in favor of the recipient and the lender does not retain full equitable ownership of it because it is transferred to the recipient upon the condition that it shall be used only for the specified purpose should the purpose fail, a resulting trust is created in favor of the lender and, (Chambers 1997, p. 68).There are two level of trusts structure, i. e. primary which refers to the payment of the loan for the specified purpose and the secondary trust level which refers to the trust in favor of the lender should the loan be not used according to the specified purpose Barclays Bank Ltd. v. Quistclose Investments Ltd. (1968) UKHL 4, (1970) A. C. 567. Another case to illustrate the point is Twinsectra v Yardley, the moneys borrowed from Twinsectra for Yardley with an undertaking of the solicitor of Yardley was for the purpose of purchasing a property but the moneys were not applied to said purpose and thereafter Twinsectra sought to recover the loss.Lord Millett made a lengthy discussion of the quistclose trust that it is not castr ateual but fiduciary. It creates a primary and secondary trust. The lender acquires beneficial interest over the money subject to the condition that it shall be applied for the specified purpose Twinsectra v Yardley (2002) UKHL 12. Analysis & termination The presumptions described above arise when there is no evidence from which the intentions of the parties can be inferred. These presumptions have been criticized as being outmoded and not in tutelage with the realities of the times.One of the criticisms is the use and application of imputed in intention. In the Pettitt case as well as in Gissing v. Gissing, a majority expressed dissent and rejection over the use of imputation and suggested the use of inference Stack v. Dowden (2007) UKHL 17, (2005) EWCA Civ 857, s. 125. Inference refers to an objective deduction of the actual intent of parties given the acts and circumstances while an imputed intention is one which is attributed to the parties, even though no such actual intentio n can be deduced from their actions and statements, and even though they had no such intention.Imputation involves concluding what the parties would have intended, whereas inference involves concluding what they did intend Stack v. Dowden (2007) UKHL 17, (2005) EWCA Civ 857, s. 126. The presumption of advancement has been criticized as being anachronistic and weak Pettitt v. Pettitt (1970) AC 777 p. 824. Lord Diplock explained that it no longer finds relevance in the modern genre as it can only find application during the 19th century of the propertied classes while Lord Hodson opined that it may only be of some use when there are no living witnesses from which inferences can be made of the intent of the parties Pettitt v.Pettitt (1970) AC 777 p. 811. It also has been rejected as one which is gender biased. The presumption of advancement is grounded on situation where gifts are transferred by the father, fiance (male to the daughters, wives (female) and does not provide the reverse but possible situations. In fact, it was further criticized as being in contravention of the Seventh Protocol to the European Convention on Human Rights relative to equality of rights and responsibilities between spouses and their children including the enjoyment of these rights without discrimination based on sex (Law thrill 2008, p.2-3).There have been moves made by the UK government to abolish the presumption but the proposed bill did not get to the second reading (Law Commission 2008, p. 3). The presumption of advancement was also criticized for perpetuating illegal transactions. As in the case of Tinsley v Milligan, where spouses jointly bought a house but the title was placed under the name of one of them so that the other can collect social security benefits.When both separated, the House of Lords applied the presumption of resulting trust Tinsley v Milligan (1994) 1 AC 340. Another issue is the beneficial interest. Dr. Chambers, in his book Resulting Trusts believes that be neficial interest is in the borrower because the lender has neither intention to transfer the entire beneficial interest nor the intention to retain it and considering that the transfer of beneficial interest is not in its entirety, the resulting trust is the default trust Twinsectra v Yardley (2002) UKHL 12.The Court of Appeal in the Twinsectra case holds the belief that the beneficial interest is in suspense. Both analyses cannot however explain the reason why the Court of Appeal allowed proprietary relief/ amends against the recipient of the misapplied funds unless the funds belonged to Twinsectra even before the misapplication otherwise, there is no logical explanation for allowing remedy in favor of the third parties Twinsectra v Yardley (2002) UKHL 12.An analysis of the explanation of Wilberforce L. in the Barclays case of primary and seconday trusts reveals that the resulting trust will arise only after the moneys have been used for another purpose other than the one specifie d and consequently, the lenders interest to secure the moneys will be after the breach of contract. Therefore, it can be said that the interest of the lender to secure the moneys would be too late for certain circumstances. The resulting trust only arises when the loan is misapplied or paid for a purpose other than the specified purpose. However, insolvency can be possible to occur and pre date this breach of contract.By following Wilberforces interpretation, the lender cannot make a claim of resulting trust because his security interest has not yet arisen (Hudson 200 p. 6). On the other hand, the Twinsectra case, Millets L. version is that equitable interest is retained through out the period of the contract of loan. This is incisively an express trust where the lender retains equitable interest from the time the loan is entered into therefore he has security of interest even before the breach of the contract (Hudson 200 p. 6). This however, involves retention of title which destr oys the essence of a resulting trust.The preferred analysis would be that it should be an express trust. However, the UK judicial system has not enunciated this principle in a case before it. It was only in Australia that this was made (Hudson 200 p. 8). Much is to be desired in the reform of resulting trusts that the Law Reform would need to address in terms of legislation and its effects on other cases. Reference List Barclays Bank Ltd. v. Quistclose Investments Ltd. (1968) UKHL 4, (1970) A. C. 567, viewed 23 March 2008, Barry, R and Cassell, E 1999, Trusts and family home resulting trusts.University of Essex, viewed 21 March 2008, http//www. luiss. it/erasmuslaw/uk/Ingh5. html Chambers, R 1997 Resulting trusts, Oxford University, Clarendon Press, pp. 1-45. Hudson, A 2006 Fundamental of quistclose trusts, viewed on 24 March 2008, Law Commission 2008, Presumption of advancement does it have any effect in practice? Law Commission Law Reform UK web site, viewed on 23 March 2008, http//www. lawcom. gov. uk/docs/presumption_of_advancement. pdf. Lloyds Bank Ltd v Rosset (1991), 1 AC 107, viewed on 21 March 2008, http//www.bailii. org/uk/cases/UKHL/1990/4. html Martin, J 1993, Hanbury and Martin Modern equity, 17th edn, London, Oxford University, pp. 1-226. Pettitt v. Pettitt, 1969 UKHL 5 (23 April 1969), viewed on 21 March 2008, http//www. bailii. org/cgi-bin/markup. cgi? doc=/uk/cases/UKHL/1969/5. html Stack v. Dowden (2007) UKHL 17, (2005) EWCA Civ 857, viewed on 23 March 2008, http//business. timesonline. co. uk/tol/business/law/article1704361. ece Tinsley v Milligan (1994) 1 AC 340, (1993) UKHL 3, viewed on 23 March 2008, http//www. bailii. org/cgi-bin/markup. cgi? doc=/uk/cases/UKHL/1993/3. htmlTodd, P 1998, Introduction resulting trusts. Our World web site, viewed on 21 March 2008, http//ourworld. compuserve. com/homepages/pntodd/trusts/informal/res_tr. htm Twinsectra v Yardley (2002) UKHL 12 UK Parliament web site, viewed on 23 March 2008 http//www. p ublications. parliament. uk/pa/ld200102/ldjudgmt/jd020321/yardle-1. htm Wilson, S 2007, Todd & Wilsons Textbook on Trusts, Eighth edn. , London, Oxford University Press, pp. 150-152. Westdeutsche Landesbank Girozentrale v Islington London Borough Council (1996) A. C. 669, (1996) UKHL 12, viewed on 24 March 2008, http//www. bailii. org/uk/cases/UKHL/1996/12. html