A resulting trust arises where a person transfers property to another but does not intend that person to have the beneficial interest in it. The trustee holds the property on trust and the beneficial interest "results back" to the transferor. The word "resulting" reflects this idea: the beneficial interest returns or results back to the person who provided the property or purchase money.
Resulting trusts typically arise in two situations. First, where property is voluntarily transferred to another person without payment and there is no evidence of an intention to make a gift. Second, where a person provides the purchase money for property but the property is put into the name of another person. In both cases, the law presumes that the person who provided the property or money did not intend to give away the beneficial interest.
Resulting trusts are divided into two categories. Presumed (or "rebuttable") resulting trusts arise by operation of presumptions of law based on the circumstances of the transfer. Automatic resulting trusts arise independently of the parties' intentions, typically when a trust fails or there is surplus trust property. The automatic resulting trust is concerned with what happens to property on the failure of an express trust, whereas the presumed resulting trust is concerned with the parties' intentions.
| Feature | Resulting Trust | Constructive Trust |
|---|---|---|
| Basis | Gives effect to presumed intention of transferor | Gives effect to common intention or prevents unconscionable conduct |
| Source | Presumption of law (or operation of law) | Imposed by the court as a remedy |
| Focus | Intention of the parties | Conscience of the defendant / common intention |
| Typical scenario | Voluntary transfer without gift; purchase in another's name | Common intention constructive trust; proprietary estoppel |
| Key case | Dyer v Dyer (1788) | Westdeutsche Landesbank v Islington LBC (1996) |
The key distinction is intention. Resulting trusts are based on what the transferor is presumed to have intended. Constructive trusts are imposed regardless of (or even contrary to) the transferor's actual intention, typically to prevent unjust enrichment or unconscionable conduct. If the question asks about presumed intention, think resulting trust. If it asks about what is fair or unconscionable, think constructive trust.
Where one person voluntarily transfers property to another without receiving payment, the law presumes that the transferee holds the property on resulting trust for the transferor. This presumption reflects the ordinary assumption that people do not make gifts of valuable property without clear evidence of an intention to do so. The presumption is rebuttable: it can be displaced by evidence that the transferor intended to make a gift.
In Dyer v Dyer, Eyre CB stated the foundational principle: "the trust of a legal estate for the first time, whether voluntarily, or by conveyance of a bargain and sale to a third person, or by way of mortgage, without any consideration of blood, or money, or consideration of marriage, can only be created or transferred by express words or by direct or indirect implications arising from the words." This establishes that in the absence of consideration or relationship-based presumption, a resulting trust is presumed.
The presumption of resulting trust can be rebutted by evidence of donative intent. This may include express statements by the transferor that they intended to make a gift, the circumstances surrounding the transfer (such as the relationship between the parties), and the conduct of the parties after the transfer. The burden of proof lies on the person asserting that a gift was intended. The standard of proof is the ordinary civil standard: balance of probabilities.
Do not assume that every voluntary transfer gives rise to a resulting trust. The presumption of resulting trust is only the starting point. If there is clear evidence that the transferor intended to make a gift, the presumption is rebutted and no resulting trust arises. Always consider whether the transferor's intention can be inferred from the circumstances, not just from express statements.
The presumption of advancement is the mirror image of the presumption of resulting trust. Where it applies, a voluntary transfer is presumed to be a gift (an "advancement") rather than held on resulting trust. The presumption therefore rebuts the presumption of resulting trust. It applies only in certain recognised relationships and reflects historical assumptions about the natural obligations of those relationships.
In Pettitt v Pettitt, a husband transferred property into his wife's sole name. The House of Lords held that the presumption of advancement could apply between husband and wife, but it was only a presumption and could be rebutted by evidence of the parties' actual intentions. The case also confirmed that between siblings and other family members, the presumption of resulting trust (not advancement) applies.
In Stack v Dowden, the House of Lords (now Supreme Court) significantly weakened the presumption of advancement between married couples and civil partners. Baroness Hale stated that the presumption of advancement is "a presumption of very limited application" in modern conditions. Where a property is transferred into the joint names of a cohabiting couple, the court will start by looking at the whole course of dealing between the parties to determine their shared intentions, rather than automatically applying presumptions. The presumptions of resulting trust and advancement play only a marginal role.
In modern law, particularly following Stack v Dowden and Jones v Kernott [2011], the presumptions of resulting trust and advancement play a much reduced role in disputes between cohabiting couples. The court now focuses primarily on imputing or inferring the parties' actual intentions from their whole course of dealing. Only raise the presumptions where there is no other evidence of intention, and note that the presumption of advancement between husband and wife is now of limited significance.
| Transfer From | Transfer To | Presumption | Can Be Rebutted? |
|---|---|---|---|
| Husband | Wife | Advancement (gift) | Yes |
| Father | Child | Advancement (gift) | Yes |
| Mother | Child | Advancement (gift) | Yes |
| Brother | Sister | Resulting trust | Yes |
| Friend | Friend | Resulting trust | Yes |
| Cohabitant | Cohabitant | No presumption (whole course of dealing) | N/A |
Where person A provides the purchase money for property but the property is put into the name of person B, a resulting trust arises in favour of A to the extent of A's contribution. This is sometimes called the "purchase money resulting trust." The principle is that equity regards as done that which ought to be done, and it would be unconscionable for B to retain the full beneficial interest when A provided the funds.
The beneficial interest under a purchase money resulting trust is generally proportional to the contribution made. If A provides 60% of the purchase price and B provides 40%, but the property is in B's name alone, A is entitled to a 60% beneficial interest on resulting trust. Where there is a mortgage, the court looks at the total contribution to the acquisition, including both the deposit and the mortgage payments. Direct contributions to the purchase price are the most straightforward basis for a resulting trust claim.
Payments towards the mortgage can also give rise to a resulting trust interest, but this is more complex. The courts have been inconsistent on whether mortgage payments count as contributions to "purchase money." Some cases treat regular mortgage payments as creating an inferred common intention constructive trust rather than a resulting trust. The safer approach for exam purposes is to argue that direct contributions to the purchase price give rise to a resulting trust, while indirect contributions (such as paying household bills) do not.
When analysing a property dispute, work through these steps: (1) Identify who provided the purchase money and in what proportions. (2) Check whose name the property is registered in. (3) Consider whether any presumption applies (advancement or resulting trust). (4) Look for evidence of the parties' actual intentions. (5) Apply Stack v Dowden and Jones v Kernott if the parties are cohabitants. (6) Conclude on the beneficial ownership.
In Quistclose, a company (Rolls Razor) borrowed money from Quistclose to pay a dividend to its shareholders. The money was paid into a separate bank account at Barclays Bank. Before the dividend was paid, the company went into liquidation. The House of Lords held that the money was held on trust for Quistclose (the lender) because the primary purpose of the loan (paying the dividend) had failed. The money could not form part of the company's general assets available to other creditors.
The Quistclose trust operates in two stages. First, there is a primary trust: the borrower holds the money on trust for the purpose for which it was lent (e.g., to pay a dividend). Second, if the primary purpose fails (e.g., the company goes insolvent before paying), a secondary resulting trust arises in favour of the lender. The secondary trust is classified as a resulting trust because the beneficial interest "results back" to the person who provided the money (the lender).
The rationale for the Quistclose trust is to prevent the borrower from using the money for a purpose other than that for which it was lent. By imposing a trust, the lender's money is protected from the borrower's general creditors. The trust arises because it would be unconscionable for the borrower to use the money for an unauthorised purpose. This blends elements of resulting and constructive trust reasoning, and academic debate continues about whether the Quistclose trust is truly a resulting trust or a type of constructive trust.
In Re Kayford, a mail order company that was about to go into liquidation separated customers' prepaid money into a separate bank account "in trust" for customers. Megarry J held that the company held the money on trust for the customers. This case extends the Quistclose principle by showing that purpose-based trusts can arise even outside the lending context, wherever money is transferred for a specific purpose and that purpose can still be fulfilled.
In Twinsectra v Yardley, the House of Lords considered a Quistclose-type situation involving solicitors' client account. Money was provided on the basis that it would only be used for a specific purpose. The House of Lords confirmed that a Quistclose trust arises where money is advanced for a specific purpose, and the primary purpose fails. Lord Millett described the Quistclose trust as a resulting trust that arises because the lender did not intend to part with the beneficial interest in the money unless the specified purpose was carried out.
In an exam question involving a Quistclose trust, identify: (1) Who lent the money and to whom? (2) What was the specified purpose for the loan? (3) Has the primary purpose failed? (4) If so, a secondary resulting trust arises in favour of the lender. Remember to explain both the primary and secondary stages of the trust. Cite Barclays Bank v Quistclose and Twinsectra v Yardley as authority.
The most straightforward situation where no resulting trust arises is where the transferor expressly intended to make a gift. If there is clear evidence of donative intent, the presumption of resulting trust is fully rebutted. Evidence of gift may include a written declaration, verbal assurances, the circumstances of the transfer (such as a birthday or wedding present), and the parties' subsequent conduct consistent with a gift having been made.
As discussed above, where the presumption of advancement applies (e.g., transfer from father to child), the transfer is presumed to be a gift rather than held on resulting trust. The presumption of advancement therefore displaces the presumption of resulting trust entirely in those recognised relationships. However, remember that the presumption of advancement is itself rebuttable by evidence that no gift was intended.
In disputes between cohabiting couples, the court examines the whole course of dealing between the parties to determine their shared intentions about beneficial ownership. Where the property is in joint names, the starting point is that the beneficial interest follows the legal title (i.e., joint ownership), unless there is evidence to the contrary. The presumptions of resulting trust and advancement are generally displaced by this holistic approach to ascertaining intention.
Step 1: Identify who transferred the property and to whom
Step 2: Was the transfer voluntary (no consideration)?
Step 3: What is the relationship between the parties?
Step 4: Does the presumption of advancement apply? (husband to wife, parent to child)
Step 5: If not, does the presumption of resulting trust apply?
Step 6: Is there evidence to rebut the presumption? (express gift, conduct, circumstances)
Step 7: Are the parties cohabitants? If so, apply Stack v Dowden / Jones v Kernott
Step 8: Conclude on the beneficial ownership and quantify any resulting trust share
An automatic resulting trust arises where an express trust fails, either completely or partially. If a settlor creates a trust but the trust purposes cannot be carried out (for example, because the beneficiaries cannot be identified or the purpose is impossible), the trust property returns to the settlor on a resulting trust. This is "automatic" because it arises by operation of law regardless of the settlor's intentions.
Where a trust is created and there is surplus property after the trust purposes have been fulfilled, the surplus is held on resulting trust for the settlor. For example, if a settlor transfers property to trustees to pay for the education of named beneficiaries, and the beneficiaries' education is fully paid for with money left over, the surplus results back to the settlor.
In Vandervell v IRC, Vandervell transferred shares to the Royal College of Surgeons with the intention that they would hold the shares on trust for him and that the dividends would be used to fund student scholarships. Due to tax complications, the college became the absolute legal owner. The House of Lords held that a resulting trust arose in Vandervell's favour because the purpose for which the shares were given (the scholarship scheme) had been carried out, and Vandervell had not intended to make a gift of the shares themselves. This case illustrates how automatic resulting trusts operate where the purpose for which property was transferred has been exhausted.
In Re Gillingham Bus Disaster Fund, a fund was set up for the dependants of victims of a bus crash. After all dependants had been compensated, there was a surplus. The court held that the surplus was held on resulting trust for the original subscribers to the fund, as they had not intended to benefit anyone other than the dependants. This case demonstrates the automatic resulting trust arising on the failure or exhaustion of a purpose trust.
Do not confuse automatic and presumed resulting trusts. Presumed resulting trusts are based on the presumed intention of the transferor and can be rebutted by evidence of a contrary intention. Automatic resulting trusts arise by operation of law on the failure of a trust or purpose, and the settlor's actual intention is irrelevant. In an exam, clearly identify which type of resulting trust you are discussing, as the analysis differs significantly.