RESULTING TRUST

Type of trust that arises in the absence of any express intention to create it.

Where the settlor has transferred property to other person but the beneficial interest returns or results to the settlors.

HANDBURY & MARTIN;

‘A situation in which a transferee is required by equity to hold property on trust for the transferor.

Types

1. Automatic Resulting Trust2. Presumed Resulting Trust

AUTOMATIC RESULTING TRUST

Automatic Resulting trust arises automatically whenever some or all of the beneficial interest has not been effectively exhausted by express trust.

RE VANDERVELL’S TRUST

Rolls Razor Ltd [1970] AC 567

“where A transfers property to B on express trusts but the trusts declared do not exhaust the whole beneficial interest.”

Adopted in Westdeutche Landesbank

SITUATIONS.

1. Express Trust Fail

Failure to comply with one of the three certainties, intention, property , beneficial interest or subject matter

• Technical reasons• Public policy reasons • No Declaration of Trust

Where property is conveyed to persons in circumstances in which they are intended to take as

trustee no beneficial interests are declared. The trustee will hold the property on resulting trust for the grantor.

Case: RE VANDERVELL’S TRUST

2. Incomplete Disposal of Beneficial Interest

Failure to dispose of the entire beneficial interest.

It is also known as resulting trust of surplus fund.

Eg : A public collection to help natural disasters/earthquake/accident victims

Surplus fund on Dissolution of Unincorporated Association

3. Other reasons& ctc

Unskillful draftsmanship : draft of the trust deeds was not properly made

Failure to anticipate future events

RE GILLINGHAM DISASTER FUND (1958) Ch. 300

Accident- killed 24 royal marine cadets & injured others. Public raised £9,000 but only £2,500 used.

The terms : “such worthly cause or causes in the memory of the boys who lost their lives as the mayors… may determine.”

Question : In which manner such surplus fund ought to be dealt

Held: The general principle is that where money is held upon trust and the trusts declared do not exhaust the fund, it will revert to the donor or settlor under what is called a resulting trust.

ABSOLUTE GIFT TO DONEE

RE OSOBA (1979) 1 WLR 247

Facts: The testator left his property to his widow on the trust “for the maintenance and for the training of my daughter up to university and for the maintenance of my mother.” The mother predeceased the testator.

The testator died in 1970 & the daughter completed her university education in 1975.

The testator’s children from previous marriage claimed the surplus.

Court : The testator’s intention was to make absolute gift to the beneficiaries. The reference to maintenance and education were only expressions of motive.

Buckley J : The daughter was entitled to all the surplus after the widow’s death.

Surplus in Unicorporated Associations

Two possible solutions:

1. Surplus will be revert back to the contributors under Resulting Trust.

2. Surplus could be distributed based on contractual basis.

1. REVERT BACK

RE PRINTERS AND TRANSFERER AMALGAMATED TRADES PROTECTION SOCIETY [1899] 2 Ch 184.

Bryne J : Surplus was to be held on a Resulting Trust for the existing members in proportion according to their contribution.

RE HOBOURN AERO COMPONENTS LIMITED’S AIR RAID DISTRESS FUND [1946] Ch 86.

Held : The surplus was held on Resulting Trust for all members, past or present, who contributed to the fund in proportion to their contributions but subject to adjustment for any benefit they may have received form the fund.

Reverting the surplus to the contributors under Resulting Trust.

CONTRACTUAL BASIS

Where the rights of the members are governed by the rules of the society, the preferred method of

distribution is on a contractual basis – in accordance with the terms of contract.

CUNNACK V EDWARDS [1896] 2 Ch 679

Society’s fund included subscriptions, fines and forfeitures of its members to provide annuities for the widows of its members.

Last member had received the annuity and there was a surplus of £1250

A contractual solution was imposed to the exclusion of a Resulting Trust.

Since all members had obtained full benefit under the contract, the surplus went to the Crown as bon vacantia.

RE WEST SUSSEX CONSTABULARY’S WIDOWS, CHILDREN AND BENOVOLENT (1930) FUND TRUST (1970) 1 All ER 545.

Facts : A fund was set up in 1930 for the widows and orphans of the deceased members of West Susex Constabulary.

In 1969 the West Susex Constabulary was amalgamated with other forces.

How would the court dealt with 1930’s fund which came from contributions of past and present members, entertaiments, raffles and sweeptakes, donations and legacies

HELD: It will go to the bona vacantia i.e the Crown.

Goff J:

a) Members subscriptions : since members had received all they had bargained for, they are not entitled to the surplus as there was no resulting trust since relationship was governed by contract.

b) Proceeds from collection boxes : to the Crown

C) Donations and legacies : Since these were not given on a contractual basis, the surplus will be held on a resulting trust in favour of contributors.