RESULTING

TRUST

LEARNING OUTCOMES

AUTOMATIC PRESUMED
RESULTING RESULTING
TRUST TRUST

RESULTING TRUST Definition and Conveyance To

Why Strangers

Presumptiom In
Types/Category Favour
Of Purchasers

Other Presumption Of
circumstances Advancement

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Definition
What is Resulting Trust?
• Handbury & Martin: Modern Equity;
• Resulting ; Latin word of ‘resultare’ = spring back
A situation in which a transferee is required by equity to
• To result means literally ‘to jump, returning, ends up or revert. hold property on trust for the transferor or for the
• Also known as implied trust person who provided the purchase money for transfer.
• Formal definition : where the settlor has transferred property to
other person but the beneficial interest returns or results back to
the settlor.

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Cont Essential characteristic

Prof Waters;
‘Broadly speaking a resulting trust arises whenever legal
or equitable title to property is in one party’s name, but
that party because he is under a fiduciary or gave no
value for the property, is under an obligation to return it
to the original title owner or to the person who did give
value for it.’
• ‘the person in whose favour the trust arises is the
person who provided the property or equitable
interest vested in the person bound by the trust,
• (Baird v Columbia Trust Co. (1915) 22 D.L.R 150 at 151
per Morrison J)

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 Types
Vandervell v I.R.C [1967] 2 AC 291 at 307 • Two types of Resulting Trust (based on the classification made
by Megarry J in Re Vandervell( No 2)[1974] 3 All ER 205.
Per Lord Reid;

• “The beneficial interest must belong to or be held for somebody; a) Automatic Resulting Trust
so if it was not to belong to the donee or be held in trust by him b) Presumed Resulting Trust
for somebody, it must remain with the donor.‘’

• beneficial interest: right to receive benefits on assets

held by another party.

• beneficial interest = equitable interest

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AUTOMATIC RESULTING TRUST RE VANDERVELL’S TRUST(NO 2) [1974] CH

• Automatic Resulting trust arises automatically whenever some or all of
the beneficial interest has not been effectively exhausted by express
trust.
• the property is transferred on trust for a purpose. Either that purpose
failed OR;
• That purpose is satisfied by there’s an excess left. In this the there’s an
ART back to the donor/contributor
269.
• “..The second class of case is where the transfer to B is made on trusts
which leave some or all of the beneficial interest undisposed of. Here B
automatically holds on resulting trust for A to the extent that the
beneficial interest has not been carried to him or others. The resulting
trust here does not depend on any intentions or presumptions, but is
automatic consequence of A’s failure to dispose what is vested in him.
Since ex hypothesi the transfer is on trust, the resulting trust does not
establish the trust but merely carries back the beneficial interest that has
not been disposed of. Such resulting trust may be called ‘automatic
resulting trust’..”

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Situations
Quistclose Invesments Ltd v Rolls Razor Ltd a) Express Trust Fail
[1970] AC 567 - No declaration of Trust
- Equitable interest undefined
- Necessary pre-condition absent

• “where A transfers the property to B on b) Incomplete Disposal of Beneficial/Equitable Interest

express trusts but the trusts declared did not

c) Other Reasons
exhaust the whole beneficial interest.” - Anonymous subscription to fund (e.g: someone give money to the fund, but
for some reason the fund is not needed (not being used) )

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 a) Express Trust Failed
No Declaration of Trust
• Failure to comply with one of the three certainties,
intention, property , beneficial interest or subject matter
• Technical reasons (e.g: the language used in the trust) • Where property is conveyed to persons in circumstances in which
• Public policy/regulation reasons (Cleaver v Mutual Reserve they are intended to take as trustee no beneficial interests are
Fund Life Association [1892] 1 QB 147: declared.
– Court; a woman who had been convicted for murdering her husband • The trustee will hold the property on resulting trust for the
could not claim the proceeds of her husband's insurance policy. grantor.

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Cases:
• VANDERVELL V INLAND REVENUE COMMISSIONER. (1967) 1 All ER 1
• RE VANDERVELL’S TRUST(NO 2) [1974] CH 269.
– An automatic resulting trust will arise where the settlor transfers property to the
Incomplete Disposal of Beneficial Interest
intended trustee but the trust has failed for some reason. The trustee holds the legal
title of the property on trust. The beneficial or equitable ownership is retained by the
settlor.
• Failure to dispose of the entire beneficial interest.
• also known as resulting trust of surplus fund.
• WESTDEUTSCHE LANDESBANK GIROZENTRALE V ISLINGTON B.C [1996] 2
All ER 961 (HOL) • Surplus : amount left over after one had used all one’s needs.
– Court held; such a trust (ART) must be intended, or must be able to be presumed to have • Eg : A public collection to help natural
been intended.
disasters/earthquake/accident victims
– In the view of the majority of the House of Lords, the presumed intention is to reflect
what is conscionable (fair and just) • Surplus fund on Dissolution of Unincorporated Association

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Resulting trust for the settlor/donor : Cases

RE COCHRANE (1965) Ch 309
Facts : Marriage settlement was created : funds to be held on trust for :
Other reasons& ctc - the wife during her lifetime as long as she shall continue to reside with
Mr.Cochrane
• Unskillful draftsmanship : draft of the trust deeds was not properly made - After her death for Mr. Cochrane during his lifetime

- Failure to anticipate future events - After the death of survivor of them, in trust for such of their issue as they
should jointly or as survivor of them should appoint
- in default of appointment the issue shall get the property equally at the age
of 21 years or in the case of daughter’s earlier marriage.

• The wife ceased to reside with the husband. Her interest was terminated and
the income was paid to the husband.
• Husband died and no appointment had been made in favour of the children

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 - Issues
a) To whom the trust should be given?
• Whether the claim for the children was accelerated,
OR;
• Whether the fund was held on resulting trust to the
wife during the gap in the beneficial limitation
following the husband’s death.
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- Cont’d
• The fund can still be distributed so long as the power of appointment still
belong to the survivor of the two spouses.
• “Resulting trust was the last resort to which the law has recourse when
the draftsmen has made a blunder or failed to dispose the property
which he has set to dispose.”
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• Harman J ; “The general principle must be that where money is held upon trust and
the trusts declared do not exhaust the fund it will revert to the donor or settlor
under what is called a resulting trust. The reasoning behind this is that the settlor or
donor do not part with his money absolutely out but only sub modo (subject to
modification) to the extent that his wishes as declared by the declaration of trust
should be carried into effect. When therefore, this has been done any surplus still
belongs to him.
• This doctrine does not, in my judgment, rest on any evidence of the state of mind of
the settlor, for in the vast of majority of cases no doubt that he does not expect to
see his money back; he has created a trust in which so far as he can see will absorb
the whole of it. The resulting trust arises where that expectation is for some
unforseen reason cheated of fruition and is an inference of law based on after-
knowledge of the event.”
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Judgment : Harman J
• A resulting trust arose.
• “There is a power for the spouses to appoint the issue. Now it is clear
and conceded that the wife notwithstanding that she forfeited her
interest in her husband’s lifetime, still for the rest of her life . . had after
her husband’s death, the power to dispose fund as the survivor of the
two either by deed or by will. The power clearly did not stop with the
ceaser of her interest, so that she could alter the beneficial trust by
appointing away from the children in favour of the grandchildren or by
making an unequal division between her daughters”
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RE GILLINGHAM DISASTER FUND (1958) Ch. 300
• Accident- killed 24 royal marine cadets & injured others
• Public raised £9,000 but only £2,500 used.
• The terms : “such worthly cause or causes in the memory of the
boys who lost their lives as the mayors… may determine.”
• Question : In which manner such surplus fund ought to be dealt?
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ABSOLUTE GIFT TO DONEE
• RE OSOBA (1979) 1 WLR 247
Facts: The testator left his property to his widow on the trust “for the
maintenance and for the training of my daughter up to university and for
the maintenance of my mother.” The mother predeceased the testator.
The testator died in 1970 & the daughter completed her university
education in 1975.
(means; the purpose of which the trust in this case has been created has been
exhausted when her daughter finished her studies.)
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The testator’s children from previous marriage claimed the surplus.
• Court : The testator’s intention was to make absolute gift to the
beneficiaries. The reference to maintenance and education were
only expressions of motive.
Buckley J :
• Widow and daughter took as joint tenants.
• The daughter was entitled to all the surplus after the widow’s
death.
The decision is a slight deviation from the standard principle of automatic resulting
trust (based on the interpretation of the court of the testator’s intention in this case)
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• “two or more persons bound together for one or more common
purposes not, being business purposes, by mutual undertakings
each having mutual duties and obligations in an organization,
which has rules which identity in whom control of it and it’s fund
rests and upon what terms and which can be joined or left at will.
The bond of union between the members of an incorporated
association had to be contractual.”
• Run the company via election of few people
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Surplus in Unicorporated Associations
• Two possible solutions:
a) Surplus will be reverted back to the contributors under
Resulting Trust.
b) Surplus could be distributed based on contractual basis. (if
there’s a contract governing the association/club)
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Surplus Funds on Dissolution of
Unincorporated Association
• Meaning of unincorporated association :
• CONSERVATIVE AND UNIONIST CENTRAL v BURREL [1982] 1 WLR 522 :
Lawton LJ defined ‘unincorporated associations for the purpose of
revenue law.
• E.g; clubs & associations (Not a company since they are not
incorporated, thus lacking the legal personality as compared to
corporations)
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Criteria of unincorporated association.
• Lack of separate and distinct legal personality from members.
• It conducts its affair through a committee of its member which
may also hold its assets on trust for benefit of the members
• It regulated certain rules which may provide the distribution of
surplus on a dissolution.
• It’s either contractual, or on trust basis or a mixture of both
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Reverting the surplus to the contributors under
Resulting Trust.
• RE HOBOURN AERO COMPONENTS LIMITED’S AIR RAID
DISTRESS FUND [1946] Ch 86.
Held : The surplus was held on Resulting Trust for all
members, past or present, who contributed to the fund in
proportion to their contributions but subject to adjustment
for any benefit they may have received form the fund.
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 Reverting the surplus to the contributors
under Resulting Trust.
CONTRACTUAL BASIS
• RE PRINTERS AND TRANSFERER AMALGAMATED TRADES • Where the rights pf the members are governed by the
PROTECTION SOCIETY [1899] 2 Ch 184. rules of the society, the preferred method of
distribution is on a contractual basis – in accordance
Bryne J : Surplus was to be held on a Resulting Trust for the with the terms of contract.
existing members in proportion according to their contribution.

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CUNNACK V EDWARDS [1896] 2 Ch 679

RE WEST SUSSEX CONSTABULARY’S WIDOWS,
CHILDREN AND BENOVOLENT (1930) FUND
• Society’s fund included subscriptions, fines and forfeitures of its members
to provide annuities (yearly payment) for the widows of its members.
TRUST (1970) 1 All ER 545.
• The last member had received the annuity and there was a surplus of
£1250. • Facts : A fund was set up in 1930 for the widows and orphans of the
• A contractual solution was imposed to the exclusion of a Resulting Trust. deceased members of West Susex Constabulary.
• Since all members had obtained full benefit under the contract, the surplus
went to the Crown as bona vacantia (free estate/ownerless estate). • In 1969 the West Susex Constabulary was amalgamated with other
forces.

• How would the court dealt with 1930’s fund which came from
contributions of past and present members, entertainments, raffles
and sweepstakes, donations and legacies?

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Goff J;
a) Members subscriptions : since members had received all they had bargained for, they RE BUCKS CONSTABULARY WIDOWS AND ORPHANS’ FUND
are not entitled to the surplus as there was no resulting trust since relationship was
governed by contract.
FRIENDLY [1979] 1 WLR 936.
b) Proceeds from collection boxes : to the Crown as bona vacantia
c) Proceeds form Collection boxes : to the Crown as bona vacantia

• The Bucks Constabulary Fund Friendly Society was set up to give

d) Donations and legacies (gift by will) : Since these were not given on a contractual basis,
the surplus will be held on a resulting trust in favour of contributors. relief to widows and orphans of deceased members. It was an
unincorporated association registered under the Friendly
Societies Act 1896. It had no rules for how assets should be
distributed if it was wound up.
• It was disputed whether surplus assets should go to the Crown as
bona vacantia, or be distributed among the members equally on a
per capita, or another basis.

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• An undesirable consequence of the application of contract
solution in West Sussex case is that most surplus passed to the
Crown with the members received nothing.
• In Re Bucks Constabulary, on similar facts, Walton J adopted the
contractual solution but with different consequence.
• Court; there was implied contract between all the members inter
se governed by the rules of society and that, as on dissolution
that were members in existence, its asset should be held on trust
for such members to the total exclusion of any claim on behalf of
the crown.
Hanchett‐Stamford v Attorney‐General
[2008] EWHC 330 (Ch)
• Issues regarding the destination of property that is
held by unincorporated associations when they wind
up.
• The High Court applied the view that money is held
according to the terms of the association contract
while the association exists, and when the
association ends any surplus funds go to the member
of the association.

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THANK YOU

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