Essay question
'The resulting trust is an anachronism in the modern law of trusts. It should be abolished and replaced by a general doctrine of unjust enrichment.' Discuss.
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Model answer
The resulting trust is one of the three institutional forms of trust recognised in English equity. It arises by operation of law when beneficial ownership is not exhausted or when property is transferred without the transferor intending the transferee to take beneficially. The proposition that the resulting trust is an anachronism and ought to be replaced by a doctrine of unjust enrichment reflects a substantive academic debate about the conceptual foundations and continued utility of the resulting trust. This essay will argue that, while the resulting trust has been significantly reformed and its scope curtailed in the domestic context, it retains an important role in commercial and proprietary contexts and cannot easily be subsumed within the law of unjust enrichment.
The two categories of resulting trust
Following Megarry J in Re Vandervell's Trusts (No 2) [1974] Ch 269, resulting trusts are conventionally divided into automatic and presumed resulting trusts. An automatic resulting trust arises where there is a gap in beneficial ownership—for example, where an express trust fails for uncertainty or where property is conveyed on trusts that do not exhaust the beneficial interest. A presumed resulting trust arises where A purchases property in the name of B or contributes to the purchase, and there is no evidence of gift; equity presumes a trust for A. In both cases, the beneficial interest 'results' to the transferor.
This classification has been criticised by Lord Millett and others as misleading, because it suggests two distinct legal phenomena when in truth both categories rest on the same principle: the transferor did not intend to part with the beneficial interest. Nonetheless, the taxonomy remains widely accepted by the courts.
Intention or unjust enrichment?
The central theoretical question is whether the resulting trust gives effect to the transferor's (presumed) intention or whether it is a response to unjust enrichment. Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 endorsed the intention-based account. He stated that a resulting trust arises when property is transferred without the transferor intending the transferee to receive the beneficial interest. His Lordship further insisted that a trust cannot arise unless the transferee's conscience is affected by knowledge of the facts that give rise to the trust.
This analysis was sharply criticised by academic commentators, most notably Robert Chambers, who argued in Resulting Trusts (1997) that the trust is better explained as a proprietary response to unjust enrichment. On Chambers's view, the transferee is unjustly enriched where the basis for the transfer fails or where the transferor did not intend to benefit the transferee, and the resulting trust is the proprietary remedy for that enrichment. This account has the advantage of unifying resulting trusts with the general law of restitution and avoiding the artificiality of imputing an 'intention' to the transferor in cases where no such intention existed.
However, the unjust enrichment analysis faces serious difficulties. First, it requires identification of an unjust factor—such as mistake, failure of consideration, or absence of basis—which may not always be present. Secondly, the unjust enrichment analysis treats the resulting trust as a remedy, but English law has traditionally classified the resulting trust as an institution, arising by operation of law regardless of whether a claimant seeks a remedy. Thirdly, as Lord Browne-Wilkinson observed in Westdeutsche, the unjust enrichment analysis cannot accommodate the requirement of knowledge: if the trust is simply a response to enrichment, it should arise immediately upon transfer, yet his Lordship held that it arises only when the defendant's conscience is affected.
The marginalisation of the resulting trust in domestic property disputes
One reason the resulting trust may be thought anachronistic is that its role in domestic property disputes has been dramatically curtailed since Stack v Dowden [2007] UKHL 17. Baroness Hale held that where a family home is purchased in joint names, the presumption is that the parties are joint beneficial owners, and the resulting trust is not the appropriate framework. Instead, the court should seek to ascertain the parties' common intention from the whole course of dealing. This approach was confirmed in Jones v Kernott [2011] UKSC 53, in which the Supreme Court held that the court may even impute an intention where the actual intention cannot be discerned.
The effect of Stack v Dowden is that financial contributions, while relevant, are no longer determinative. The court will consider factors such as the parties' discussions, the purpose of the acquisition, how the household expenses were borne, and the nature of the relationship. This departure from the mechanical contributions-based resulting trust has been welcomed by many as producing fairer outcomes, particularly for women who contribute indirectly to the acquisition of property through unpaid domestic labour.
However, the resulting trust retains its force in the commercial context. In Laskar v Laskar [2008] EWCA Civ 347, a mother and daughter purchased an investment property to be let to a housing association. The Court of Appeal applied a resulting trust analysis, holding that Stack v Dowden did not apply outside the domestic consumer context. This bifurcation of the law—resulting trusts for commercial property, common intention constructive trusts for the family home—creates a boundary problem and potential for confusion, but it also reflects a sensible recognition that different contexts call for different legal responses.
The Quistclose trust and commercial utility
The Quistclose trust, established in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 and refined by Lord Millett in Twinsectra Ltd v Yardley [2002] UKHL 12, is a subspecies of resulting trust with significant commercial importance. It enables a lender to secure priority in the borrower's insolvency by ensuring that money advanced for a specific purpose is held on trust if that purpose fails. The trust gives the lender a proprietary interest, ranking ahead of unsecured creditors.
It is difficult to see how the Quistclose trust could be replaced by a general doctrine of unjust enrichment. Unjust enrichment gives rise to a personal claim for restitution, not a proprietary interest. If the borrower is insolvent, a personal claim is worth very little. The Quistclose trust, by contrast, secures proprietary protection. For this reason, commercial parties continue to structure transactions so as to attract Quistclose protection, and the courts have repeatedly affirmed the doctrine.
Formalities and the role of section 53(2) LPA 1925
Another reason the resulting trust remains indispensable is its exemption from formality requirements. Section 53(1)(b) of the Law of Property Act 1925 requires declarations of trust of land to be evidenced in writing, but section 53(2) exempts resulting (and constructive) trusts from this requirement. This exemption enables claimants to assert equitable proprietary interests in land without having to produce a signed declaration of trust. Abolishing the resulting trust and replacing it with a general doctrine of unjust enrichment would deprive claimants of this procedural advantage, because unjust enrichment claims are personal, not proprietary, and would not be exempt from formality rules.
Conclusion
The resulting trust is not an anachronism. While its role in the domestic sphere has been substantially reformed by Stack v Dowden and Jones v Kernott, it retains critical importance in commercial contexts, particularly in the form of the Quistclose trust. It also remains the appropriate framework for purchase-money disputes involving strangers or investment properties, as confirmed in Laskar v Laskar. The resulting trust cannot be replaced by a general doctrine of unjust enrichment, because it provides proprietary protection where unjust enrichment would provide only a personal claim. Moreover, the theoretical debate between intention-based and unjust enrichment accounts of the resulting trust is not resolved, and it is not obvious that unjust enrichment provides a superior or more coherent explanation of the trust's operation. For these reasons, the resulting trust remains a valuable and necessary feature of the modern law of equity.
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Comment
This essay engages seriously with the theoretical literature (Chambers, Millett, Lord Browne-Wilkinson) and demonstrates a strong command of the leading cases (Westdeutsche, Stack v Dowden, Quistclose, Laskar). It takes a clear position (that the resulting trust is not an anachronism) and defends it with reference to doctrinal, commercial, and procedural considerations. It also recognises the marginalisation of the resulting trust in the domestic sphere while arguing that this does not undermine its continued utility elsewhere. A first-class answer.