Categories of Resulting Trust
Lord Browne-Wilkinson in Westdeutsche Landesbank v Islington LBC [1996] identified two categories:
- Automatic resulting trust — arises where an express trust fails wholly or in part (e.g., uncertainty, failure of purpose), leaving a beneficial interest to result back to the settlor.
- Presumed resulting trust — arises from the voluntary transfer of property, or contribution to the purchase price, in circumstances raising a presumption that the transferor did not intend to pass the beneficial interest.
Presumption of Resulting Trust
- Where A voluntarily transfers property to B, equity presumes a resulting trust in A's favour (B holds on trust for A).
- Where A contributes to the purchase price of property placed in B's name, a resulting trust arises proportionate to A's contribution.
- The presumption is rebuttable by evidence of a contrary intention to make an outright gift.
Presumption of Advancement
- Counters the presumption of resulting trust in certain relationships: historically, father to child, and husband to wife.
- The presumption of advancement is weakened in modern law and easily rebutted by evidence.
- Note: s.199 Equality Act 2010 (which would have abolished the presumption of advancement) has not been brought into force — the common law presumption still applies.
Purchase Price Resulting Trusts and the Family Home
- Direct contributions to the purchase price (including mortgage capital) can give rise to a resulting trust proportionate to contribution.
- However, in the domestic/family home context, courts now prefer the common intention constructive trust analysis (Stack v Dowden [2007]; Jones v Kernott [2011]) over resulting trust.
Common Traps
- Applying resulting trust analysis to the family home — the preferred route is constructive trust after Stack v Dowden.
- Thinking the presumption of advancement has been abolished — it has not.
- Forgetting that resulting trusts arise by operation of law and are exempt from s.53(1)(b) formality: s.53(2) LPA 1925.
Exam tip: In family home questions, always lead with common intention constructive trust, not resulting trust.