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Equity & Trusts - Resulting Trusts

The term resulting trusts comes from the Latin term "resalire" meaning to jump back and we will see how this applies to property. In Westdeutsche Landesbank v Islington LBC [1996] Lord Browne-Wilkinson identified two examples of resulting trusts: 1) Where a settlor attempts to create a trust for an unknown beneficiary and the property results back because equity abhors a vacuum. 2) Where individuals contribute to the purchase price of property. The best way to categorise resulting trusts was derived from Megarry VC in Re. Vandervell (No. 2) [1974]. Where a trust fails the equitable interest results back to the settlor and this covers automatic resulting trusts. A trust may fail for uncertainty of objects but also because of a condition precedent or condition subsequent. Surplus property is also subject to a resulting trust (Re. Trusts of the Abbott Fund [1900]) although there are exceptions in the following areas: For charitable trusts the property is applied cy-pres Beneficiary claim under Saunders v Vautier [1841] Property is distributed amongst members of unincorporated associations; Re. Bucks Constabulary Benevolent Fund [1978] Another form of resulting trusts are Quistclose trusts under Barclays Bank Ltd v Quistclose Investments Ltd [1970] whereby loan money intended for a certain purpose exists as a resulting trust. Presumed resulting trusts allow property to be transferred where there are certain relationships identified by case law. Voluntary gifts are also subject to presumed resulting trusts (Re Vinogradoff [1935]) although land is more suited towards constructive trusts (Hodgson v Marks [1971]). This category also covers contributions to the purchase price of property or to a mortgage (Lloyds Bank v Rosset [1990]) but the money must be directed towards acquisition (Winkworth v Edward Barron [1987]). The presumption in these cases can be rebutted by examining things like the factual circumstances to discover intention (Young v Sealey [1949]). Resulting trusts may also be found to exist where attempts are made a tax avoidance (Sekhon v Alissa [1989]). It is illegal to transfer property to avoid tax and generally the presence of illegality would have precluded a resulting trust (Gascoigne v Gascoigne [1918]) before Patel v Mirza [2016] that looks more towards public policy before coming to a decision on whether a resulting trust can be used. s. 423 Insolvency Act 1986 is also another important weapon at the disposal of the courts. In cases of mistake a resulting trust can be instituted where the transferee knew of the mistake; El Ajou v Dollar Land Holdings [1993].