Resulting Trusts - Irish Equity

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 co-depositors with it on his death.

  • Held that, the co-depositors 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 co-owner'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 himself the right to do with the money what he pleases, as B does not acquire any rights from this transaction. However, it is likely that the role of resulting trusts in such cases is too entrenched for argument to change the law.

  • The policy rationale in favour of restricting nuncupative wills do not stand scrutiny in this case – such formalities as are required by wills are designed to ensure that the testator's wishes are complied with, thus in cases such Lynch v Burke, where the testator's intentions are manifestly clear they bear no weight.

• Capper, 1996 NILQ

  • There are no policy objections for trying to clamp down on these accounts for their failure to meet testamentary formalities.

  • The gift theory is flawed because, unlike the purchase of property in joint names, the account is created, not assigned by the contract with the bank – A must not only create the account, but also assign an interest for B in order for rights to accrue to B.

  • A contractual analysis is preferable – where both parties contract with the bank, consideration from one will suffice to bind the bank to both. Whether any further deposits paid into the account result in rights accruing to B depend on the intention of A.

• Woods, 2002 Ir Jur

  • Disapproves of the contractual approach – the presumption of a resulting trust cannot be rebutted by proof on an intention to create a right of survivorship because such a right only exists in respect of a joint tenancy which requires the four unities.

  • There is plenty of precedent for the conditional gift theory – this involves the account being gifted to B subject to a condition, while vesting the legal property in A and B on trust for A.

  • The wording of the deposit receipt can be construed as effecting an assignment of the account to A and B to be held on trust for A until the condition precedent to the gift is satisfied and B becomes entitled to the beneficial interest.

Purchase money paid by a third party

• Where one individual pays the entire purchase price for property to be held by other individuals there is a presumed resulting trust in his favour. Dyer v Dyer

Presumption of Advancement

• Shephard v Cartwright

  • Where, by virtue of the relationship that exists between the parties, one of them is under an equitable obligtation to provide for the other, a presumption of advancement exists in respect of the property (e.g. where shares are registered in the name of a child to whom the purchaser stands in loco parentis)

  • Like the presumption of a resulting trust, this presumption can be rebutted but it should not give way to slight circumstances.

• RF v MF (SC)

  • Where a husband (at least where the circumstances show that he is expected to provide for his wife) purchases property and has it conveyed into his and his wife's name jointly there is a presumption that the wife's paper title gives her a beneficial interest or estate in the property.

  • The husband can rebut this presumption by pointing to circumstances which indicate that he did not inted such a beneficial interest to pass to his wife.

  • Acts or statements subsequent to the purchase can only be admitted against the party who made them.

  • In this case the presumption was rebutted – the husband bought the house as his wife had promised to live there with him and had failed entirely to do so.

• Malone v McQuaid (HC)

  • The presumption in a father/child relationship is that the presumption...