Resulting trusts in English law

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James LJ, who set the standard rule for the rebuttal of presumptions in Fowkes v Pascoe . William M James the judge.jpg
James LJ, who set the standard rule for the rebuttal of presumptions in Fowkes v Pascoe .

Resulting trusts in English law are trusts created where property is not properly disposed of. It comes from the Latin resultare, meaning to spring back, and was defined by Megarry VC as "essentially a property concept; any property that a man does not effectually dispose of remains his own". [1] These trusts come in two forms: automatic resulting trusts, and presumed resulting trusts. Automatic resulting trusts arise from a "gap" in the equitable title of property. The equitable maxim "equity abhors a vacuum" is followed: it is against principle for a piece of property to have no owner. As such, the courts assign the property to somebody in a resulting trust to avoid this becoming an issue. They occur in one of four situations: where there is no declaration of trust, where an express trust fails, where there is surplus property, or upon the dissolution of an unincorporated association. Rules differ depending on the situation and the type of original trust under dispute; failed charitable trusts, for example, have the property reapplied in a different way from other forms of trust.

Sir Robert Edgar Megarry, FBA was an eminent British lawyer and judge.

Charitable trusts in English law Express trusts dedicated to charitable goals in English law

Charitable trusts in English law are a form of express trust dedicated to charitable goals. There are a variety of advantages to charitable trust status, including exception from most forms of tax and freedom for the trustees not found in other types of English trust. To be a valid charitable trust, the organisation must demonstrate both a charitable purpose and a public benefit. Applicable charitable purposes are normally divided into categories for public benefit including the relief of poverty, the promotion of education, the advancement of health and saving of lives, promotion of religion and all other types of trust recognised by the law. There is also a requirement that the trust's purposes benefit the public, and not simply a group of private individuals.

Contents

Where property passes between individuals, English law presumes that the relationship between them makes it an outright gift, and thus not subject to a resulting trust in the event of failure; this is the "presumption of advancement". A presumed resulting trust occurs where the transfer fails, and there is no reason to assume it was intended as an outright gift. With some relationships, such as property transfers between father and son and husband and wife, this presumption of advancement is applied by default, and requires strong evidence for it to be rebutted. Presumed resulting trusts do arise, however, in one of three situations: where it is a voluntary gift, where there is a contribution to purchase price, and where the presumption that it was an outright gift can be rebutted. Rules differ for transfers and gifts of personal property and land; while personal property is assumed by default to create a resulting trust, Section 60(3) of the Law of Property Act 1925 prevents the creation of automatic resulting trusts. It does not comment on presumed resulting trusts, and while later law has seemingly permitted such trusts, there is some disagreement.

The presumption of advancement is a legal presumption which arises in various common law jurisdictions in relation to the transfers of money or other property. Broadly, the presumption states that where a husband transfers property to his wife, or a father to his child or someone to whom he has assumed parental responsibility, then in the absence of other evidence the court will presume that the transfer was by way of gift. In Australia it has also been held to apply to transfers from a male fiancé to a female fiancée. In Hong Kong it has been suggested that it may also apply to an official concubine.

Law of Property Act 1925

The Law of Property Act 1925 is a statute of the United Kingdom Parliament. It forms part of an interrelated programme of legislation introduced by Lord Chancellor Lord Birkenhead between 1922 and 1925. The programme was intended to modernise the English law of real property. The Act deals principally with the transfer of freehold or leasehold land by deed.

Definition

The name resulting trust comes from the Latin resultare, meaning to spring back. It was defined in Re Sick and Funeral Society of St John's Sunday School, Golcar , [2] where Megarry VC stated that "A resulting trust is essentially a property concept; any property that a man does not effectually dispose of remains his own". [1] In Re Vandervell's Trusts (No 2) , [3] he divided them into two categories; presumed resulting trusts, which are created by the presumed intention of the transferor of property, and automatic resulting trusts, which arise regardless of the transferor's intention whenever he has failed to dispose of the beneficial interest. [4] Lord Browne-Wilkinson, in Westdeutsche Landesbank v Islington London Borough Council , [5] disagreed with Megarry's classification. While he agreed there were two categories, he felt the dividing line was not based on intention, and the classes were "where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B" and "Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest", with both involving a presumption of intention. It is possible to argue that Quistclose trusts are also a category of resulting trusts, but their classification is the subject of much debate and remains ambiguous. [6]

A Quistclose trust is a trust created where a creditor has lent money to a debtor for a particular purpose. In the event that the debtor uses the money for any other purpose, it is held on trust for the creditor. Any inappropriately spent money can then be traced, and returned to the creditors. The name and trust comes from the House of Lords decision in Barclays Bank Ltd v Quistclose Investments Ltd (1970), although the underlying principles can be traced back further. There has been much academic debate over the classification of Quistclose trusts in existing trusts law: whether they are resulting trusts, express trusts, constructive trusts or, as Lord Millett said in Twinsectra Ltd v Yardley, illusory trusts.

The theoretical justification for resolving trusts was discussed by the Privy Council, in Air Jamaica v Charlton , [7] where Lord Millet said that "Like a constructive trust, a resulting trust arises by operation of law, though unlike a constructive trust it gives effect to intention. But it arises whether or not the transferor intended to retain a beneficial interest - he almost always does not - since it responds to the absence of any intention on his part to pass a beneficial interest to the recipient". Resulting trusts were intended to fill in the gap left by a veiled transfer, obeying the equitable maxim that "equity will not suffer a wrong to be without a remedy". [8] In Westdeutsche Landesbank, Browne-Wilkinson stated that resulting trusts "are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as in a constructive trust) but gives effect to his presumed intention". Alastair Hudson, Professor of Equity and Law at Queen Mary, University of London, argues that Browne-Wilkinson's theory is flawed, primarily because if the trust can not be enforced against the trustee's wishes, it is a form of constructive trust. [9] Much of the case law is instead based on Megarry's classification. [10]

Judicial Committee of the Privy Council judicial body in the United Kingdom

The Judicial Committee of the Privy Council (JCPC) is the highest court of appeal for certain British territories and Commonwealth countries. Established on 13 August 1833 to hear appeals formerly heard by the King-in-Council, the Privy Council formerly acted as the court of last resort for the entire British Empire, and continues to act as the highest court of appeal for several independent Commonwealth nations, the Crown Dependencies, and the British Overseas Territories.

Peter Millett, Baron Millett British judge

Peter Julian Millett, Baron Millett, GBS, PC, is a non-permanent judge of the Hong Kong Court of Final Appeal and a former Lord of Appeal in Ordinary and barrister of the United Kingdom.

Alastair Hudson, FHEA, FRSA, is an English barrister and academic. He is, in 2017/18, employed at the University of Strathclyde, Glasgow and is also Visiting Professor of Law at the University of Portsmouth. He has worked on the University of London International Programmes LLM programme since 2004. He was formerly Professor of Equity and Finance Law at The University of Exeter, having previously been Professor of Equity and Finance Law at The University of Southampton and, prior to that, Professor of Equity and Law at Queen Mary, University of London. He was appointed a National Teaching Fellow in 2008, a Fellow of the Higher Education Academy, and a Fellow of the Royal Society of Arts. He was voted UK Law Teacher of the Year in 2008. He was awarded the Excellence in Teaching Award 2014 by the University of Southampton Students' Union for "Overall Outstanding Lecturer".

Resulting trusts work on a principle of "common intention". This is the idea that a resulting trust is a mix of the settlor's intention, and the trustee's knowledge that he is not intended to be the beneficiary. In Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd , [11] Gibson J expressed the principle as:

The principle in all these cases is that the equity fastens on the conscience of the person who receives from another property transferred for a specific purpose only and not, therefore, for the recipient's own purposes, so that such a person will not be permitted to treat the property as his own or to use it for other than the stated purpose...if the common intention is that property is transferred for a specific purpose and not so as to become the property of the transferee, the transferee cannot keep the property if for any reason that purpose cannot be fulfilled. [12]

Types

Automatic resulting trusts

Automatic resulting trusts arise from a "gap" in the equitable title of property. The equitable maxim "equity abhors a vacuum" is followed; it is against principle for a piece of property to have no owner. [13] As such, the courts assign the property to somebody in a resulting trust to avoid this becoming an issue. [13] Automatic resulting trusts occur where an express trust fails. This includes where there is no valid declaration of trust, where there is surplus property, or upon the dissolution of an unincorporated association. Whatever the reason, when a trust fails the property must be passed to someone. [14] This is an application of the equitable maxim that "equity abhors a vacuum". [15]

No declaration of trust is the most straightforward form of resulting trust, and is created when a trust is created, but the settlor does not give the form in which the property is to be held. For example, the settlor might give property to the beneficiary to hold for life, but fail to explain what is to happen to the property when the holder dies. [16] When this occurs, the property is held on resulting trust for the settlor, as in Vandervell v IRC . [17] This also occurs where a trust is formed over property which requires formality, but is improperly created (for example, a land transfer that does not adhere to the Law of Property Act 1925). [18]

Upon the failure of a charitable trust, the gift may be held on resulting trust for the donor, as in Chichester Diocesan Fund v Simpson , [19] or submitted to variation under the cy-près doctrine. As in Simpson v Simpson , [20] if property is given to somebody who is incapable of acting, it will also be held on resulting trust for the donor. [21]

A resulting trust will also be found where the purposes of a trust have been completed, but there is excess property left over; for example, a trust by a settlor to provide for his children's university education. [22] Judges and academics disagree over what should happen to the property; possibilities are that it should be held for the donors, that it should be held for the beneficiaries (as the donors intended to make an irrevocable gift) or that it should be given to the Crown as bona vacantia . A fourth suggestion is that the trustees take the surplus, as in Re Foord . [23] The general rule was set out in Re Trusts of the Abbot Fund , [24] where it was decided that excess funds will be held on resulting trust for the settlor. There are exceptions to this rule; the general rule is put aside if the court can find intention to benefit specific individuals, as in Re Osoba . [25] [26]

Linked to this category is the problem of unincorporated associations. Unincorporated associations cannot hold rights (chattels or land) on their own account. [27] When they dissolve, the question is then what to do with property that has been transferred to the association. [28] The traditional view, as laid out in Re West Sussex Constabulary's Widows, Children and Benevolent (1930) Fund Trusts , [29] is that the members of the association hold these rights on purpose trust. Where the money was raised from identified individuals, the property should be held on resulting trust for donors upon the failure of the purpose trust. Where it is impossible or impractical, the property should be passed to the Crown as bona vacantia. [30] The more modern view developed from Walton J's judgment in Re Bucks Constabulary Benevolent Fund . [31] This is that dissolving a society and distributing property to its members is a matter of contract, not trusts law. As such, the contract between the association's members should be the deciding factor in how the property is to be distributed, and there is no need to involve resulting trusts. [32] If the contractual provisions identify how to distribute property, they will be followed; if not, the property will be distributed according to an implied term, usually in equal shares. [33] [34]

Presumed resulting trusts

Where property passes between individuals, English law presumes that the relationship between them makes it an outright gift, and thus not subject to a resulting trust in the event of failure; this is the "presumption of advancement". A presumed resulting trust is where the transfer fails, and there is no reason to assume it was intended as an outright gift. [35] There are several types of relationship where it is automatically presumed to be a gift. Where a father transfers property to a child, it is presumed that the property was an outright gift, as in Bennet v Bennet . [36] There is no similar recognition for a transfer from a mother, something recognised as a gift in Australia. A similar presumption exists where a transfer is made from a husband to a wife, as in Tinker v Tinker . [37] [38]

Presumed resulting trusts do arise, however, in one of three situations; where it is a voluntary gift, where there is a contribution to purchase price, and where the presumption that it was an outright gift can be rebutted. Where a gift is voluntary, the assumption for personal property is that it creates a resulting trust on failure, as in Re Vinogradoff . [39] For real property, Section 60(3) of the Law of Property Act 1925 prevents the creation of automatic resulting trusts, but does not comment on presumed trusts. In Hodgson v Marks , [40] it is generally agreed that a presumed resulting trust was created over a transfer of real property, although there is some dispute. [41] Where a person contributed to the price of a piece of property, they are presumed to take an equivalent equitable interest in that property; this is the "clearest form of presumed resulting trust", and was recognised by both Browne-Wilkinson in Westdeutsche Landesbank and Megarry in Vandervell (No. 2). [42] These principles originated with Eyre CB's judgment in Dyer v Dyer, [43] where he said that:

The clearest result of all the cases, without a single exception, is that the trust of a legal estate, whether freehold, copyhold or leasehold; whether taken in the names of the purchasers and others jointly, or in the names of other without that of the purchaser; whether in one name or several; whether jointly or successive - results to the man who advances the purchase money. [44]

Thus, where a person contributes to the purchase of the property, they will receive an equivalent equitable interest in any resulting trust that arises. For trusts over homes, a distinct set of rules have arisen that do not apply to other land, because of the additional concerns. [44] For example, while contributing to the mortgage will create an equitable interest, as in Lloyds Bank v Rosset , [45] contributing to domestic expenses will not, as in Burns v Burns . [46] It must also be demonstrated that the contribution was not made for any purpose other than acquiring an equitable interest; in Sekhon v Alissa , [47] for example, a mother transferred a house into her daughter's name to avoid capital gains tax. The court ruled that this created a resulting trust; because tax avoidance was the main objective, the mother could not possibly have intended it to be an outright gift. [44]

The last situation where a presumed resulting trust is created is if the court can rebut the presumption of an outright gift. The general philosophy here was set out by James LJ in Fowkes v Pascoe , [48] and is that the judge should base his decision on "[the] story as to how I came to have [the property], and judge that story with reference to the surrounding facts and circumstances". [49] Where the property is money held in a joint bank account, the presumption is that it is a joint tenancy of that account. As such, when one dies the property is passed absolutely to the other, as in Marshall v Crutwell . [50] This presumption can be rebutted in several situations. It will be rebutted when the account, while in the name of both the husband and wife, is used exclusively for the husband's personal use, as in Young v Sealey , [51] or where the joint account exists solely so the husband can guarantee the wife's account, as in Anson v Anson . [52] Tax avoidance (which is legal, as opposed to tax evasion) frequently involves transferring property to a family member to avoid tax. Where the family member refuses to transfer it back, the taxpayer can come to court and argue it was a resulting trust. [53]

Illegality

Traditionally, when a person sought to rebut presumptions but was required to rely on an illegal act to prove that a resulting trust was intended, the equitable maxim that "he who comes to equity must come with clean hands" was applied; the presumption would take effect, and no resulting trust would be created, as in Mucklestone v Brown . [54] In addition, as in Gascoigne v Gascoigne , [55] where the purpose of the transfer involves illegality, the courts will not uphold it as a resulting trust. This rule was subtly modified by the House of Lords decision in Tinsley v Milligan . [56] Tinsley and Milligan had jointly purchased a house to run as a business, and both accepted that it had been bought to own jointly. Only Tinsley was registered as the owner, however, so that Milligan (with Tinsley's knowledge) could claim state benefits. The House of Lords decided that Milligan could claim an equitable interest, since it was the contribution to the purchase price (a lawful act) which she was relying on, not the associated fraud (an illegal act). [57] Although the purpose of the initial registration had been illegal, the purpose of the purchase itself had not. [58]

Since Tinsley, the courts have been more willing to examine the intention of the parties rather than relying on the strict maxim that "he who comes to equity must come with clean hands". The standard law on this was set out by Millett LJ in Tribe v Tribe : [59]

(1) Title to property passes both at law and in equity even if the transfer is made for an illegal purpose. The fact that title has passed to the transferee does not preclude the transferor from bringing an action for restitution.
(2) The transferor's action will fail if it would be illegal for him to retain any interest in the property
(3) Subject to (2) the transferor can recover the property if he can do so without relying on the illegal purpose. This will normally be the case where the property was transferred without consideration in circumstances where the transferor can rely on an express declaration of trust or as a resulting trust in his favour.
(4) It will almost invariably be so where the illegal purpose has not been carried out. It may be otherwise where the illegal purpose has been carried out and the transferee can rely on the transferor's conduct as inconsistent with his retention of a beneficial interest.
(5) The transferor can lead evidence of the illegal purpose whenever it is necessary for him to do so provided that he has withdrawn from the transaction before the illegal purpose has been wholly or partly carried into effect. It will be necessary for him to do so (i) if he brings an action at law or (ii) if he brings proceedings in equity and needs to rebut the presumption of advancement.
(6) The only way in which a man can protect his property from his creditors is by divesting himself of all beneficial interest in it. Evidence that he transferred the property in order to protect it from his creditors, therefore, does nothing by itself to rebut the presumption of advancement; it reinforces it. To rebut the presumption it is necessary to show that he intended to retain a beneficial interest and conceal it from his creditors.
(7) The court should not conclude that this was his intention without compelling circumstantial evidence to this effect. The identity of the transferee and the circumstances in which the transfer was made would be highly relevant. It is unlikely that the court would reach such a conclusion where the transfer was made in the absence of an imminent and perceived threat from known creditors. [60]

As seen in Tribe v Tribe, a common form of illegality is where the transferor is worried about bankruptcy or insolvency, and transfers the property to avoid having to pay his creditors. Section 423 of the Insolvency Act 1986 empowers to the courts to reverse any transfer which removes assets from creditors with the intention to avoid their claims. [61] These creditors do not have to be creditors at the time of the transfer; it is enough that they be creditors after the transfer or sale, as in Midland Bank v Wyatt . [62] [63]

Related Research Articles

Trust law three-party fiduciary relationship

A trust is a three-party fiduciary relationship in which the first party, the trustor or settlor, transfers ("settles") a property upon the second party for the benefit of the third party, the beneficiary.

A resulting trust is the creation of an implied trust by operation of law, where property is transferred to someone who pays nothing for it; and then is implied to have held the property for benefit of another person. The trust property is said to "result" back to the transferor. In this instance, the word 'result' means "in the result, remains with", or something similar to "revert" except that in the result the beneficial interest is held on trust for the settlor. Not all trusts whose beneficiary is also the settlor can be called resulting trusts. In common law systems, the resulting trust refers to a subset of trusts which have such outcome; express trusts which stipulate that the settlor is to be the beneficiary are not normally considered resulting trusts.

Undue influence an equitable doctrine that involves one person taking advantage of a position of power over another person

In jurisprudence, undue influence is an equitable doctrine that involves one person taking advantage of a position of power over another person. This inequity in power between the parties can vitiate one party's consent as they are unable to freely exercise their independent will.

Express trust

An express trust is a trust created "in express terms, and usually in writing, as distinguished from one inferred by the law from the conduct or dealings of the parties." Property is transferred by a person to a transferee, who holds the property for the benefit of one or more persons, called beneficiaries. The trustee may distribute the property, or the income from that property, to the beneficiaries. Express trusts are frequently used in common law jurisdictions as methods of wealth preservation or enhancement.

Security interest legal concept

A security interest is a legal right granted by a debtor to a creditor over the debtor's property which enables the creditor to have recourse to the property if the debtor defaults in making payment or otherwise performing the secured obligations. One of the most common examples of a security interest is a mortgage: When person, by the action of an expressed conveyance, pledges by a promise to pay a certain sum of money, with certain conditions, on a said date or dates for a said period, that action on the page with wet ink applied on the part of the one wishing the exchange creates the original funds and negotiable Instrument. That action of pledging conveys a promise binding upon the mortgagee which creates a face value upon the Instrument of the amount of currency being asked for in exchange. It is therein in good faith offered to the Bank in exchange for local currency from the Bank to buy a house. The particular country's Bank Acts usually requires the Banks to deliver such fund bearing negotiable instruments to the Countries Main Bank such as is the case in Canada. This creates a security interest in the land the house sits on for the Bank and they file a caveat at land titles on the house as evidence of that security interest. If the mortgagee fails to pay defaulting in his promise to repay the exchange, the bank then applies to the court to for-close on your property to eventually sell the house and apply the proceeds to the outstanding exchange.

<i>Barclays Bank Ltd v Quistclose Investments Ltd</i>

Barclays Bank Ltd v Quistclose Investments Ltd[1968] UKHL 4 is a leading property, unjust enrichment and trusts case, which invented a new species of proprietary interest in English law. A "Quistclose trust" arises when an asset is given to somebody for a specific purpose and if, for whatever reason, the purpose for the transfer fails, the transferor may take back the asset.

English trust law creation and protection of asset funds

English trust law concerns the creation and protection of asset funds, which are usually held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, but also share a history with countries across the Commonwealth and the United States. Trusts developed when claimants in property disputes were dissatisfied with the common law courts and petitioned the King for a just and equitable result. On the King's behalf, the Lord Chancellor developed a parallel justice system in the Court of Chancery, commonly referred as equity. Historically, trusts were mostly used where people left money in a will, created family settlements, created charities, or some types of business venture. After the Judicature Act 1873, England's courts of equity and common law were merged, and equitable principles took precedence. Today, trusts play an important role in financial investments, especially in unit trusts and pension trusts, where trustees and fund managers usually invest assets for people who wish to save for retirement. Although people are generally free to write trusts in any way they like, an increasing number of statutes are designed to protect beneficiaries, or regulate the trust relationship, including the Trustee Act 1925, Trustee Investments Act 1961, Recognition of Trusts Act 1987, Financial Services and Markets Act 2000, Trustee Act 2000, Pensions Act 1995, Pensions Act 2004 and the Charities Act 2011.

Three certainties

The three certainties refer to a rule within English trusts law on the creation of express trusts that, to be valid, the trust instrument must show certainty of intention, subject matter and object. "Certainty of intention" means that it must be clear that the donor or testator wishes to create a trust; this is not dependent on any particular language used, and a trust can be created without the word "trust" being used, or even the donor knowing he is creating a trust. Since the 1950s, the courts have been more willing to conclude that there was intention to create a trust, rather than hold that the trust is void. "Certainty of subject matter" means that it must be clear what property is part of the trust. Historically the property must have been segregated from non-trust property; more recently, the courts have drawn a line between tangible and intangible assets, holding that with intangible assets there is not always a need for segregation. "Certainty of objects" means that it must be clear who the beneficiaries, or objects, are. The test for determining this differs depending on the type of trust; it can be that all beneficiaries must be individually identified, or that the trustees must be able to say with certainty, if a claimant comes before them, whether he is or is not a beneficiary.

<i>Twinsectra Ltd v Yardley</i>

Twinsectra Ltd v Yardley[2002] UKHL 12 is a leading case in English trusts law. It provides authoritative rulings in the areas of Quistclose trusts and dishonest assistance.

<i>Re Vandervell Trustees Ltd (No 2)</i>

Re Vandervell Trustees Ltd [1974] EWCA Civ 7 is a leading English trusts law case, concerning resulting trusts.

The creation of express trusts in English law must involve four elements for the trust to be valid: capacity, certainty, constitution and formality. Capacity refers to the settlor's ability to create a trust in the first place; generally speaking, anyone capable of holding property can create a trust. There are exceptions for statutory bodies and corporations, and minors who usually cannot hold property can, in some circumstances, create trusts. Certainty refers to the three certainties required for a trust to be valid. The trust instrument must show certainty of intention to create a trust, certainty of what the subject matter of the trust is, and certainty of who the beneficiaries are. Where there is uncertainty for whatever reason, the trust will fail, although the courts have developed ways around this. Constitution means that for the trust to be valid, the property must have been transferred from the settlor to the trustees.

In English law, secret trusts are a class of trust defined as an arrangement between a testator and a trustee, made to come into force after death, that aims to benefit a person without having been written in a formal will. The property is given to the trustee in the will, and he would then be expected to pass it on to the real beneficiary. For these to be valid, the person seeking to enforce the trust must prove that the testator intended to form a trust, that this intention was communicated to the trustee, and that the trustee accepted his office. There are two types of secret trust — fully secret and half-secret. A fully secret trust is one with no mention in the will whatsoever. In the case of a half-secret trust, the face of the will names the trustee as trustee, but does not give the trust's terms, including the beneficiary. The most important difference lies in communication of the trust: the terms of a half-secret trust must be communicated to the trustee before the execution of the will, whereas in the case of a fully secret trust the terms may be communicated after the execution of the will, as long as this is before the testator's death.

Constructive trusts in English law are a form of trust created by the English law courts primarily where the defendant has dealt with property in an "unconscionable manner"—but also in other circumstances. The property is held in "constructive trust" for the harmed party, obliging the defendant to look after it. The main factors that lead to a constructive trust are unconscionable dealings with property, profits from unlawful acts, and unauthorised profits by a fiduciary. Where the owner of a property deals with it in a way that denies or impedes the rights of some other person over that property, the courts may order that owner to hold it in constructive trust. Where someone profits from unlawful acts, such as murder, fraud, or bribery, these profits may also be held in constructive trust. The most common of these is bribery, which requires that the person be in a fiduciary office. Certain offices, such as those of trustee and company director, are always fiduciary offices. Courts may recognise others where the circumstances demand it. Where someone in a fiduciary office makes profits from their duties without the authorisation of that office's beneficiaries, a constructive trust may be imposed on those profits; there is a defence where the beneficiaries have authorised such profits. The justification here is that a person in such an office must avoid conflicts of interest, and be held to account should he fail to do so.

Tracing in English law is a procedure to identify property that has been taken from the claimant involuntarily. It is not in itself a way to recover the property, but rather to identify it so that the courts can decide what remedy to apply. The procedure is used in several situations, broadly demarcated by whether the property has been transferred because of theft, breach of trust, or mistake.

Discretionary trusts and powers in English law are elements of the English law of trusts, specifically of express trusts. Express trusts are trusts expressly declared by the settlor; normally this is intended, although there are situations where the settlor's intentions create a trust accidentally. Normal express trusts are described as "fixed" trusts; the trustees are obliged to distribute property, with no discretion, to the fixed number of beneficiaries. Discretionary trusts, however, are where the trustee has discretion over his actions, although he is obliged to act. The advantages of discretionary trusts are that they provide flexibility, and that the beneficiaries hold no claim to the property; as such, they cannot seek to control it, and it cannot be claimed for their debts. A power, or "mere power", on the other hand, is where not only does the holder have discretion over his actions, he has discretion over whether to act in the first place.

<i>Westdeutsche Landesbank Girozentrale v Islington LBC</i>

Westdeutsche Landesbank Girozentrale v Islington LBC[1996] UKHL 12 is a leading English trusts law case concerning the circumstances under which a resulting trust arises. It held that such a trust must be intended, or must be able to be presumed to have been intended. In the view of the majority of the House of Lords, presumed intention to reflect what is conscionable underlies all resulting and constructive trusts.

<i>Tinsley v Milligan</i>

Tinsley v Milligan[1993] UKHL 3 is an English trusts law case, concerning resulting trusts, the presumption of advancement and illegality.

<i>Air Jamaica Ltd v Charlton</i>

Air Jamaica Ltd v Charlton [1999] UKPC 20 is an English trusts law case, concerning resulting trusts. In it Lord Millett expressed the view that a resulting trust arises because of the absence of intention to benefit a recipient of money.

References

  1. 1 2 Edwards (2007) p.254
  2. ↑ [1972] 2 All ER 439
  3. ↑ [1974] 3 All ER 205
  4. ↑ Edwards (2007) p.255
  5. ↑ [1996] 2 All ER 961
  6. ↑ Edwards (2007) p.256
  7. ↑ [1999] 1 WLR 1399
  8. ↑ Edwards (2007) p.257
  9. ↑ Hudson (2009) p.457
  10. ↑ Hudson (2009) p.459
  11. ↑ [1985] Ch 207
  12. ↑ Hudson (2009) p.458
  13. 1 2 Hudson (2009) p.456
  14. ↑ Hudson (2009) p.463
  15. ↑ Edwards (2007) p.260
  16. ↑ Edwards (2007) p.259
  17. ↑ [1966] Ch 267
  18. ↑ Hudson (2009) p.462
  19. ↑ [1944] AC 341
  20. ↑ [1992] 1 FLR 601
  21. ↑ Hudson (2009) p.464
  22. ↑ Edwards (2007) p.260
  23. ↑ [1922] 2 Ch 519
  24. ↑ [1900] Ch 326
  25. ↑ [1979] 2 All ER 393
  26. ↑ Hudson (2009) p.465
  27. ↑ Green (1980). p. 627.
  28. ↑ Edwards (2007) p.263
  29. ↑ [1971] Ch 1
  30. ↑ Gardner (1992). p. 42.
  31. ↑ [1978] 1 WLR 641
  32. ↑ Hudson (2009) p.466
  33. ↑ Hudson (2009) p.467
  34. ↑ Gardner (1992). pp. 47–48.
  35. ↑ Hudson (2009) p.471
  36. ↑ (1879) 10 Ch D 474
  37. ↑ [1970] P 136
  38. ↑ Hudson (2009) p.473
  39. ↑ [1935] W N 68
  40. ↑ [1971] Ch 892
  41. ↑ Hudson (2009) p.476
  42. ↑ Hudson (2009) p.477
  43. ↑ (1788) 2 Cos Eq Cas 92
  44. 1 2 3 Hudson (2009) p.478
  45. ↑ [1990] 1 All ER 1111
  46. ↑ [1984] 1 All ER 244
  47. ↑ [1989] 2 FLR 94
  48. ↑ (1875) 10 Ch App Cas 343
  49. ↑ Hudson (2009) p.479
  50. ↑ (1875) LR 20 Eq 328
  51. ↑ [1949] Ch 278
  52. ↑ [1953] 1 QB 636
  53. ↑ Hudson (2009) p.481
  54. ↑ (1801) 6 Ves 52
  55. ↑ [1918] 1 KB 223
  56. ↑ [1994] 1 AC 340
  57. ↑ Hudson (2009) p.483
  58. ↑ Hudson (2009) p.484
  59. ↑ [1995] 4 All ER 236
  60. ↑ Hudson (2009) p.487
  61. ↑ Hudson (2009) p.488
  62. ↑ [1995] 1 FLR 697
  63. ↑ Hudson (2009) p.489

Bibliography

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