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Resulting Trusts Notes

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Resulting Trusts Revision

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Resulting Trusts

Re Vandervell's Trusts no.2 (CA)
 For the principles of resulting trusts to come into play there must be some effective
transfer of property or creation of an interest therein.
 Where there is a transfer of property from A to B without consideration or presumption
or advancement, then it is presumed that B is to hold the property on trust for the benefit
of A.
 Where A transfers property to B to be held on trust with part or all of the beneficial
interest undisposed of, the undisposed part results to A.
 This also applies where the trustees of a property held on trust for A transfer the property
at A's direction to B.

Automatically Resulting Trusts Failure of the trust
 Vandervell v Inland Revenue Commissioners (HL) - If the beneficial interest is left
undefined it is presumed to result to the settlor Failure to exhaust beneficial interest
 Re Trusts of the Abbott Fund
 Contributions were made to a fund to be used for the maintenance of two distressed
ladies.
 No provision had been made for the disposal of the fund on the death of the survivor.
 Held that, where the specified purpose can be regarded as merely the motive for making
the gift, the donee will be permitted to retain the property, which is difficult to prove
when it is donee's estate rather than them personally who are to benefit.
 In this case, the trust results to the fund's subscribers.
 Re Andrews Trust (Ch D) - If property which is the subject matter of a trust is meant to be
given in its entirety to the beneficiaries, with a specific purpose assigned to it, the purpose is
considered to be the motive of the gift, rather a limitation of its use. Presumed Resulting Trusts Voluntary Conveyance
 Re Vinogradoff
 A testatrix had transferred an £800 war loan into the joint names of herself and her four
year old granddaughter but continued to receive the dividends herself until her death.
 Held that, a voluntary transfer of conveyance will give rise to a presumption that the
transferee is to hold the property on a resulting trust for the transferor and the
granddaughter held the loan on a resulting trust for the testatrix's estate.
 Standing v Bowring
 The plaintiff widow transferred stock into the joint names of herself and her godson, the
defendant, having been warned that she would not be able to revoke the tranfer after
making it.
 Held that, the presumption of a resulting trust can be rebutted by evidence showing that
the transferor intended a benefit to the tranferee.
 In this case, the evidence showed that the plaintiff had intended to benefit the defendant.
 In the case of a voluntary conveyance, there is a presumption that the property was to be
held on a resulting trust for the donor. This is rebuttable where a presumption of
advancement arises out of the relationship of the parties or there is evidence to show that the
donor meant to benefit the donee. Stanley v Kieran (HC)

Joint Deposit Accounts
 Owens v Greene (SC)
 The deceased kept sums of money on deposit in the joint names of himself and a nephew
and a distant relative.
 He retained control over these funds during his lifetime, but made it clear that he wished
to benefit his co­depositors with it on his death.
 Held that, the co­depositors were volunteers and had failed to rebut the presumption of a
resulting trust.
 In a case such as this, the presumption could only be rebutted by evidence that the
deceased's intention when making deposits was to make the plaintiffs' immediately
entitled to the money.
 It is not sufficient to show a testamentary intention, as such a disposition can only be
made by will.
 Lynch v Burke (HC, SC)
 The first defendant was the niece of a deceased woman, with whom she had jointly
opened a bank account.
 High court judgment
■ Equity presumes that the survivor of two joint depositors holds the property on a
resulting trust for the deceased's estate.
■ This can be rebutted by evidence of an intention by the deceased, that the survivor is
to take the property as beneficial owner.
■ However, where the deceased can deal with the funds during her lifetime without the
co­owner's consent, then the transaction must be presumed to be an attempt to avoid
a testamentary disposition and thus regarded as held on a resulting trust for her
estate.
 Supreme court judgment
■ The niece had either A) a legal interest in the money by reason of the contractual
relationship between herself and the bank or B) a conditional gift, the condition
being the death of the aunt.
■ The purpose of an implied or resulting trust is to prevent fraudulent or improvident
transactions on the part of the donor - it should not defeat her clear intentions.
■ Owens v Greene, the precedent relied on by the High Court, overruled.
 AIB Finance v Sligo County Council (HC)
 The deceased, a priest, had lodged monies in the names of himself and the defendants
with the intention that the money be used for a specific purpose in order to carry out an
urban renewal scheme.
 There was evidence that although the priest intended to benefit the County Council after
his death, he maintained control over the funds during his lifetime.
 Dissatisfaction of the High Court in Lynch v Burke approved
 Held that, there was at most in this case an incomplete gift, and the relationship of
trustee and beneficiary nevery arose between the deceased and the County Council.
 Russell v Scott (Aus HC)
 An elderly lady transferred money into an account in the joint names of herself and her
nephew.
 Held that, the actions of the lady had immediately created a right of survivorship for the
benefit of her nephew - i.e. both parties were entitled at common law to a chose in
action consisting of their contractual right against the bank, which could accrue to the
survivor.

Brady,1990 DULJ

 Where A purports to set up a deposit account for himself and B, B cannot be shown to be
a creditor for the bank unless A is acting as his agent (privity of contract)
 Also, the presumption of a resulting trust should not arise in cases where A reserves to

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