Property Law: Principles of Resulting Trusts

LAWS 111010 & 20110 Property Law 1
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LAWS 111010 & 20110 Property Law 1
Part A: Chosen Question 2
Word Count:1507
'It is very unfortunate that resulting trust principles are no longer applied to determine interests in the family home. They had the great advantage of being certain. In contrast, the common intention constructive trust makes the determination of interests in the family home entirely dependent on the court's view of fair distribution.'
The doctrine of resulting trust acts as one of the legal precursors essential in shaping trust relationships concerning the individual property and the transfer of the same to persons who hold it for a beneficiary's interests (Hudson, 2016). Notably, the doctrine is an equitable reversion that, by operation of law, automatically revert to the transferor in situations where the relationship was expressly conditioned on an intentional trust and the same has not attached to the transfer or later management of the property. Where the express trust fails, thus making it legally difficult to dispose of the property completely, a resulting trust arises to cover the gap in the property's title. Through practice and framing up of advanced laws that are at par with the economic and social trends, the courts have established that the trust could be one that in its implicit nature, automatically arises from the conditioning in the relationship or the courts presume their existence, as was held in Re Vandervell Trustees Ltd [1974]. The underlying requirement is that both categories should be by operation of law. The person to whom the trust favors must have provided the property, which is the subject or holds an equitable interest that binds on them by the trust's existence.
Megarry VC in Re Sick and Funeral Society of St John's Sunday School, Golcar stated that resulting trust with their basic characteristic of springing back should follow the ideology that any property that a man cannot or fails to dispose of remains as his own. Following the origin of trusts as a mitigating factor that arose to enhance property management against the rigid and unfair common law rules, the subject has continued advancing to accommodate emerging societal issues. One of the advancements s the requirement that resulting trust principles cease to apply determining interests associated with the family home, a residential location for either the property owner or the beneficiary with equitable interests in its portion. Just like in Marshall V Cruttwell, where the court found that upon a person's death, the ownership of their property must pass to another person unless it was owned in a joint account for matrimonial properties, as was the case in Young v Sealey, the same rule applies for family homes. Resulting trust often arises in a family home context when the relationship was made without express declarations. The primary declaration in this context is the situation where one holds legal title without the equitable ownership of the family home.
Principles of Resulting Trusts
It is helpful to understand the presuppositions associated with the principles of resulting trusts to understand the disconnection with the interests. The most notable focus established in Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd was the common intention. In this case, Justice Gibson highlighted that there must be a mixture of intentions where the settlor intends to pass the property to the trustee but not as the beneficiary, and the trustee has adequate knowledge of the intention. Therefore, in such transfers, the equity laws rely on the parties' conscience, where a property transfer is for specific purposes and not for the receiver's purposes. Where such intentions are clear, and the transferee fails to manage the property as per the specified purposes rather than making it their property, resulting trusts require that the transferee cannot keep the property because the purpose of the property failed (Atkins, 2021).
The Principles and Family Home Interests
The practice finds it appropriate for the law to treat residential places like property, even without an express purpose or entitlement of a family home, because of the presumptions that such properties should have some confidential commonness. For instance, where a couple lives together and contributes to the family home, the law deems that by dint of each partner's contribution, they are entitled to some shares in the property. Thus, if any of them dies, the surviving couple owns the property. The Supreme Court in Jones V Kernott [2011] concerned itself with determining the beneficial interests in the case where an unmarried couple had jointly acquired a residence, which they intended to make their family home. In the aforementioned case, Lady Hale opined that the courts should be keen and cautious while attaching intentions to family homes regardless of their sole or joint ownership, especially for family disputes, couples often tend to split up with strong feelings.
The above situation makes it difficult and susceptible to prejudice if the court fails to cautiously analyze the evidence furnished before it and consider principles guiding the determination (Hudson, 2016). Therefore, the court found that in situations where the subject is a family home jointly held between the couple despite a declaration of trust, the standard provision guiding the ownership aligns to the ethical and legal expectation that the survivor gives a good receipt. Additionally, the court relied on the decision in Stack v Dowden [2007] in holding that there shall be no room for presuming a resulting trust when determining the beneficial interests in a family home, thus making such factors as contributions, if there were any, irrelevant.
Certainty in Resulting Trusts
Admittedly, resulting trusts have great certainty because the underlying principle is that if the purpose that the settlor intended for the property while transferring it fails, then the ownership o0f the subject matter is presumed as having sprung back. The law of trust requires that for an express trust to be valid, it must exhibit three types of certainty: intention, subject matter, and objects. In a family context, determining the equitable interests attaching to the subject relies on the settlor's intention. The rationale behind this presupposition originates from the ideology that certainty enhances proper control and enforcement of the subject (Hudson, 2016). Unfortunately, the requirement that determination of beneficial interests shall exclude resulting trusts principle of analyzing the legal presumption in effecting the settlor's intention manifests as a blow to the certainty that these types of trusts are attached to the dissolution of such disputes.
Common Intention
In Gissing V Gissing [1971], Lord Diplock pointed out that the courts must ensure a fair share of the subject matter if satisfied that the parties commonly had an interest that sharing of the beneficial interests was to follow some proportion. The rationale behind the holding was that courts in the determination capacity should appreciate the preceding dealings between the parties concerning the property. Therefore, the courts should impute common interests between the parties, which automatically impresses a constructive trust regarding legal ownership of the family home (Maniscalco, 2020). In contrast, whereas courts consider interests in both trusts, constructive trusts act as equitable remedies in situations where a party would prejudice the other if the court disregards the other party's conscience in holding onto the property. On the other hand, resulting trusts affect the intentions by operation of law, providing that the court should rely on the conditions of transferring the property, which if they fail, then the property's ownership must bounce back. Peter Gibson LJ explained in Drake V Whipp that constructive trusts depend on the shared intentions while resulting trusts rely on what the law presumes in effecting the intention of the party transferring the property to the trustee.
Conclusion
From the preceding discussion, it is safer to conclude that determining beneficial interests in disputes concerning family homes heavily relies on the principle of common interest has harnessed within the framework of a constructive trust (Maniscalco, 2020). Besides wavering the certainty associated with resulting trusts, an analysis of the common interests shared between the parties in the trust relationship further complicates the dispute. The reasoning behind this statement relies on the tilting that constructive trust shifts the determination towards a factual analysis, thus prioritizing it as a question of fact rather than that of law. Atkins (2021) highlights that just like in other disputes, despite the concept that is adopting factual questioning as an approach towards determining an interest playing a crucial role, legal considerations are inevitably essential in ensuring consistency and restriction within a certain framework as guided by the prevailing laws. Theref...