Resulting Trusts Flashcards
(15 cards)
Two types of presumed RT
Voluntary transfer RT and Purchase money RT
Voluntary transfer RT + s60(3) and Lohia
A transfers property to B, causing a presumption that B holds the property for A on trust.
s60(3) LPA: RT not implied in voluntary conveyances just because the property is not expressed to be conveyed for use or benefit of grantee.
This means no presumption where land transfers - although court may still decide to find a resulting trust after hearing evidence.
Lohia v Lohia - endorses this.
Purchase money RT (Dyer)
Dyer v Dyer - Where two people contribute money toward purchase of money, and it is held in one person’s name, legal owner holds property on RT for both contributors, proportionate to their contribution.
Hodgson v Marks - Vol Transfer and fraud
Elderly woman (H) tricked by E to transfer him house on express trust. E sold land to innocent buyer (M), who mortgaged it.
Held:
If on trust for H, she takes priority over M since H remained in actual occupation. Although express trusts need writing, s53 doesn’t prevent operation of resulting trusts.
Held - It is clear that the transfer was not intended to be a gift, so there should be an RT which is not affected by s53.
Advancement
Applies to apparent gifts from fathers to their children or their wives.
He is presumed to be making a gift for his son - no presumed RT.
Bit dodgy that it only includes men making gifts.
Illegal transfers - standard rule?
We know the recipient can rebut the presumption of RT with evidence, however the standard rule is it is impossible to rely on evidence which points to illegality
Patel v Mirza
Insider info agreement failed, but money was already paid. Transferor argued it was on PRT for himself.
Held: Transferor’s claim can succeed despite illegality, if 3 factors point to a public interest that his claim should be heard:
(1) The reason for the prohibition and whether that would be furthered by denial of the claim - on the facts no.
(2) Any other public policy considerations
(3) Proportionality of denial
Conclusion: For public interest, would not bode well to allow an ‘insider’ to keep money made out of an illicit deal which he never respected.
Applying Mirza: Stoffel v Grondona
Ms G was conducting mortgage fraud, S (Solicitors) negligently failed to register property.
She defaulted, building society brought proceedings, she brought proceedings against S, claiming breach of duty.
S admitted negligence but relied on illegality defence.
Held: Applying Mirza:
(1) Denying recovery will not promote purpose of preventing mortgage fraud.
(2) Allowing recovery will promote policy of protecting victims of solicitors’ negligence
(3) Proportionality need only be analysed where the defence survived considerations 1 and 2.
Held: No illegality defence for solicitors.
Applying Mirza 2: Majid Ali - negligent driving + no MOT
D lorry negligently drove into C’s car. MOT over car expired, so driving it around was an offence.
Lorry driver argued the car owner suffered no loss, as he had no vehicle he could lawfully use on the roads.
Held: This is illegality, not causation.
Harm to integrity very minor, disproportionate result (since loss much bigger than potential fine of 1000 for not having valid MOT), and public policy - accepting causation defence would skew market in favour of insurance companies.
Automatic resulting trusts - when do they arise?
Arise from failures of trusts, filling gap in equitable ownership by resulting the property back to settlor.
- Trust instrument fails to set out the trusts
- 3 certainties not satisfied
- Formalities not satisfied
- Breach of rule against perpetuities
- Trust instrument tries, but fails to make a valid charitable trust
- Valid declaration, but trust fails
- Entire beneficial interest not disposed of.
Westdeuche - simple or compound interest upon failure?
Westdeuche paid Islington Money as part of an interest swap agreement, but these agreements had been held to be void.
Held: Westdeuche could only recover through simple interest, since they had no proprietary claim under an RT. Council did not know it would be void, and the bank intended the transferee to become owner.
Re Vandervell (No 2) - expiry of an ART?
Reminder: Failure to divest oneself of beneficial interest = ART.
First Vandervell - he had retained the beneficial interests, as he reserved option to buy-back shares.
Here, IRS and V’s heir argued he still held the beneficial interest under the RT.
Held: The RT for V ended once the option was exercised, creating a trust for his children. He had clear intention to benefit the children - so his RT expired and no new one was created.
Air Jamaica - role of intention in ARTs?
ART is not based on any presumed intention - RT arises whether the contributors intended to see their money again or not.
Each individual employee’s pension fund was a separate trust, and when they failed for perpetuity, they each failed, so the accumulated contributions were on trust for the settlors.
Henderson v Dorset
Woman killed mother, claimed against the mental health trust who cared or her.
Held: Applying Mirza, the policy reasons which supported denial of the claim included need to avoid inconsistency between crim and civ law, effect on public confidence, gravity of the criminal offence, public interest in NHS resources, and public interest in condemning unlawful killing.
Lohia v Lohia
s60(3) means no need for formal language to prevent implication of RT.
However, no definitive ruling on whether the presumed RT for land was abolished by s60
