Implied Trusts

Implied Trusts

A Definition: Arise through operation of law i.e. equity decides a trust should apply. Two main types of implied trust: Resulting and Constructive.
1. The Resulting Trust
  1. Equitable interest jumps back to S instead of remaining with B
    1. Settlor becomes both S and B
  2. Westdeutsche Landesbank Girozentrale v Islington LBC = resulting trust would arise in two circumstances (A and B)
    1. Category A = A makes a voluntary payment to B who pays for property which is vested in B or A and B
      1. Equity presumes A didn't intend to make a gift and wanted to retain some interest - Re Vinogradoff
        Equity will not assist a volunteer
      2. The presumption can be overturned or rebutted (see presumption of advancement)
      3. Vandervell v IRC = This presumption provides an answer where facts and circumstances fail to yield a solution
      4. If A intended to benefit B, the gift will stand
      5. 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
    2. Category B = A transfers property to B on express trusts, but does not exhaust the whole beneficial interest
      1. Basically where A has made a mistake in creating express trust for only part of the property
      2. Equity abhors a vacuum so the remaining part cannot be left in limbo
      3. The entire equitable interest will be held on resulting trust for S
      4. 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.

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