Implied Trusts

Implied Trusts

1. A Definition: Arise through operation of law i.e. equity decides a trust should apply. Two main types of implied trust: Resulting and Constructive.

   • The Resulting Trust
     • Equitable interest jumps back to S instead of remaining with B
       • Settlor becomes both S and B
     • Westdeutsche Landesbank Girozentrale v Islington LBC = resulting trust would arise in two circumstances (A and B)
       • Category A = A makes a voluntary payment to B who pays for property which is vested in B or A and B
         • Equity presumes A didn't intend to make a gift and wanted to retain some interest - Re Vinogradoff
           • Equity will not assist a volunteer
         • The presumption can be overturned or rebutted (see presumption of advancement)
         • Vandervell v IRC = This presumption provides an answer where facts and circumstances fail to yield a solution
         • If A intended to benefit B, the gift will stand
         • Presumption of Advancement
           • Where A and B enjoyed a certain type of relationship, a gift of property would be seen by equity as being a true gift
             • Relationships include: husband and wife & father and child
             • Moate v Moate = applied to a gift between fiancé and fiancée when they were later married
             • Bennet v Bennet = would not apply as of right between Mother and child
           • Paternalistic in it's application
           • Due to be abolished but explicitly preserved for anything done before s199 of the Equality Act 2010 comes into effect
       • Category B = A transfers property to B on express trusts, but does not exhaust the whole beneficial interest
         • Basically where A has made a mistake in creating express trust for only part of the property
         • Equity abhors a vacuum so the remaining part cannot be left in limbo
         • The entire equitable interest will be held on resulting trust for S
         • Westdeutsche Landesbank divided this into 2 further categories
           • Where S makes an error
             • Vandervell = Mr V allowed himself a buy back clause so was never fully rid of control over the shares.
           • Where a condition to the operation of the trust has come to an end
             • Barclays Bank LTD v Quistclose Investments Ltd = If a trust is created with a particular condition and that condition is not met, the property will jump back to the original owner.