Sem B - Tutorial 1 - Resulting Trusts Flashcards
Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72
Main Arguments:
Resulting Trusts Are Not Based on Intention – Swadling challenges the conventional view that resulting trusts arise due to the transferor’s presumed intention. Instead, he argues that resulting trusts should be seen as a judicial response to a failure of transfer, rather than arising from any inferred intent.
Lack of a Satisfactory Justification for Presumed Intention – He critiques the idea that courts can presume intention in cases where no express intention is given, suggesting that this reasoning is conceptually weak.
Legal and Equitable Ownership Must Be Distinguished – He argues that legal title should not automatically determine equitable ownership, and that resulting trusts should be understood in a way that does not rely on vague notions of presumed intention.
Mee, ‘Presumed Resulting Trusts, Intention and Declaration’ (2014) 73 CLJ 86
Main Arguments:
Defending the Role of Presumed Intention – Mee supports the traditional view that presumed resulting trusts reflect an inferred intention of the transferor, particularly in voluntary transfers and purchase price contributions.
Criticism of Swadling’s Analysis – Mee argues that Swadling’s rejection of presumed intention is too extreme and does not align with the way courts actually decide cases. Courts do presume intention in many scenarios, and this is a practical and workable doctrine.
Importance of Context in Presuming Intention – He emphasizes that courts consider context when inferring intention, making the presumption more than just an artificial legal fiction.
Vandervell v IRC (No. 1) [1967] 2 AC 291
📌 Principle: If a person transfers legal title but leaves equitable title unclear, a resulting trust arises unless s.53(1)(c) LPA 1925 is complied with.
💡 Key Point: You can’t give away what you don’t properly dispose of!
🔑 Memory Aid: “Vandervell’s Vanishing Title” – If you give away the legal title but forget to deal with the equitable title, it boomerangs back as a resulting trust (like a vanishing magic trick gone wrong).
📝 Case Facts: Vandervell transferred shares to a charity without stating who should own the future option rights. The court ruled that a resulting trust arose, which triggered an unexpected tax liability.
Tinsley v Milligan [1994] 1 AC 340
📌 Principle: The reliance rule—if you don’t need to rely on an illegal act to prove your claim, you can still recover property.
💡 Key Point: Illegality doesn’t always ruin your case—just don’t mention it!
🔑 Memory Aid: “Tinsley’s Trick – Lie Low and Win” – If you can establish your case without mentioning the illegal scheme, you can still succeed. Like winning hide-and-seek by staying quiet!
📝 Case Facts: Tinsley and Milligan put a house in Tinsley’s name to fraudulently claim benefits. When Milligan claimed an interest, the court ruled that because she could rely on a resulting trust (without mentioning the fraud), she could recover her share.
Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669
📌 Principle: A resulting trust requires intention. If a contract is void, that does not automatically create a trust—only personal restitution is available.
💡 Key Point: No trust without intention—equity isn’t magic!
🔑 Memory Aid: “Westdeutsche Wants Willingness” – The bank wanted a resulting trust, but the court said, “No intention, no trust!” Like ordering a pizza but forgetting to actually place the order!
📝 Case Facts: A bank paid money to a local authority under a contract later ruled ultra vires. The bank wanted its money back via a resulting trust, but the court ruled that no trust arose because there was no intention to create one.
- Patel v Mirza [2016] UKSC 42
📌 Principle: Overruled the reliance rule! Instead of rigid rules, courts now use a policy-based test to decide whether illegality bars a claim.
💡 Key Point: Courts now balance fairness, proportionality, and public policy instead of applying a blanket ban on claims involving illegality.
🔑 Memory Aid: “Patel’s Policy Pivot” – Patel pivoted away from Tinsley’s strict rule. Instead of blindly rejecting claims based on illegality, courts now weigh fairness and public interest.
📝 Case Facts: Patel paid Mirza for insider trading, but the scheme failed. When Mirza refused to return the money, Patel sued. The Supreme Court ruled in Patel’s favor, rejecting the reliance rule and instead applying a three-stage test considering policy and fairness.
