Self-test questions: Resulting Trusts

. According to Lord Browne-Wilkinson's judgment in Westdeutsche Landesbank v Islington LBC, in how many circumstances will a resulting trust arise?

1

2

3

4

. What titles did Megarry J in Re Vandervell Trusts (no2) ascribe to the circumstances in which the resulting trust would arise?

Auto and inferred

Automatic and presumed

Mechanical and expected

Automated and speculative

. The resulting trust arises as a consequence of which of the following factors?

The parties' express intentions

The unconscionable conduct of the party now possessing the property

The presumed intentions of the party transferring the property

The presumed intentions of the party receiving the property

. In which of the following scenarios does an automatic resulting trust arise?

When an express trust fails

When a charitable purpose fails

When an express trust does not exhaust its assets

Breach of contract

. Which two presumptions underpin presumed resulting trusts?

The presumption in favour of gifts; the presumption that parties who do not provide the purchase moneys will hold on trust for the provider of the purchase moneys

The presumption of loans; the presumption that the provider of the purchase moneys does not intend to retain a beneficial interest

The presumption against loans; the presumption that parties who do not provide the purchase moneys will hold on trust for the provider.

The presumption against gifts; the presumption that parties who do not provide the purchase money will hold on trust for the provider of the purchase moneys

. Which of the following descriptions best summarise how a voluntary transfer resulting trust operates?

When personal property is transferred in the absence of consideration there will be a presumption of resulting trust

When land is transferred in the absence of consideration there will likely be a presumption of resulting trust

When land is transferred in the absence of consideration it is unlikely that there will be a presumption of resulting trust

When personal property is transferred in the absence of consideration there will not be a presumption of resulting trust

. Purchase money resulting trusts arise in which of the following circumstances?

The purchase of personal property

Contributions to mortgages

The purchase of land

Contributions to life insurance policies

. What evidence will rebut the presumption of resulting trust?

A gift or loan

A loan or gift to take effect on death

A gift, loan or gift to take effect on death

An illegal purpose

. Does the presumption of advancement apply only between father/child and not between mother/child?

True

False

. According to Lord Millett's judgment in Twinsectra v Yardley, the Quistclose trust is what form of trust?

Two express trusts

A resulting trust

An institutional constructive trust

A remedial constructive trust

. What is the reason for the difficulty in explaining why resulting trusts arise?

The courts have provided no guidance on why they arise

The courts use the terms resulting and constructive interchangeably

The now regularly utilise proprietary estoppel instead

Because the Law of Property Act 1925 is silent on the issue

. When analysing the location of the beneficial interest in a property transfer, what is the correct starting point for the courts according to Privy Council in Marr v Collie?

The presumption of resulting trust

How the reasonable man would interpret the transaction

The intentions of the parties

The court's subjective conclusion

. What is the primary issue with Lord Brown-Wilkinson's formulation of the resulting trust in Westdeutsche Landesbank?

It is impossible to determine what the parties intended

There is no presumption of resulting trust

Resulting trusts should be founded on a lack of intention

It is highly unlikely the recipient would intend for the transferor to retain the beneficial interest

. Can resulting trusts be explained by reference to unjust enrichment?

Yes

No

. Heinrich, on news that his sister had just given birth to a baby boy, decided to open a savings account with his local bank. In the account he placed £5,000 and informed the bank manager that the moneys were to be for his new nephew. However, he also informed the bank manager that he was to have complete control over the account and no-one else, especially his nephew, should be allowed to withdraw the moneys. Which statement best describes the current status of the £5,000?

They are held on a voluntary transfer resulting trust for the nephew

They are an outright gift to the nephew

They are held on a voluntary transfer resulting trust for Heinrich

They are held on automatic resulting trust for Heinrich

. In 2017, Theodora, without explanation, decided to transfer her Victorian grandfather clock into the possession of her son, Justin. She knew that Justin liked it, and he decided not to question why his mother had given him the clock. In 2020, Theodora turned up at Justin's house demanding the return of the clock. Which statement best describes the current status of the clock?

It is held on a voluntary transfer resulting trust for Theodora as there is evidence to indicate it was a gift

It is held on a purchase price resulting trust for Theodora due to the doctrine of advancement

It is held on a voluntary transfer resulting trust for Theodora as there is evidence to indicate it was a loan

It is held on a voluntary transfer resulting trust for Theodora as there is no evidence to indicate it was a gift or loan

. In 2016, Pascal purchased a house in rural Lincolnshire. He intended to rent it out as a holiday home, but fell into financial difficulties. To ensure he did not lose the house, his girlfriend, Clementine, paid some of the mortgage payments and also funded three-quarters of the renovation costs. In 2020 their relationship ended, and Clementine is now demanding a share of the holiday home. Which statements best describe Clementine's interest in the property? Select all that are applicable.

She cannot claim a beneficial share through the mortgage payments as this merely reduces an already existing debt

She can claim a beneficial share through the mortgage payments as the holiday home was a commercial investment

She can possibly claim a beneficial interest through contributing towards the renovations

She cannot claim a beneficial interest through contributing towards the renovations

. Ardip is a client of Jasmine, a solicitor. In January, Ardip transferred £45,000 to Jasmine as proof of funds for a potential business deal. However, rather than keeping the moneys in the client account, she decided to buy £60,000 of premium bonds, using both Ardip's and her own money. Ardip has just found out about this misappropriation, and the premium bonds have won, paying out £80,000. Which statement best describes Ardip's rights over the £80,000?

Ardip is entitled to a proportionate share of the £80,000 through a purchase money resulting trust

Ardip is not entitled to a proportionate share of the £80,000 through a purchase money resulting trust

Ardip is entitled to a proportionate share of the £80,000 through a gratuitous transfer money resulting trust

Adrip is entitled to all of the £80,000 through a Quistclose trust

. TFH Ltd is a company that has recently encountered financial difficulties, and so sought a loan from WVH Bank. The loan was to enable them to modernise their stores and attract new customers, and this is the only purpose the moneys could be used for. The loan was for £250,000, and the loan moneys were to be placed in a specific bank account. Although the loan moneys were transferred to the bank account, TFH Ltd were declared insolvent before they could start the modernisation work. WVH Bank have been informed they could recover the money through a Quistclose trust. Is this advice true or false?

True

False

. Maria transferred £10,000 into her sister's bank account with the transfer message reading 'Happy Birthday! XoX'. Maria is informed that the presumption of a voluntary transfer resulting trust will be rebutted over this transfer as it is a gift. Is this advice true or false?

True

False

. In 2014, Abdullah and Stephanie bought a house. However, as they could not quite afford the full purchase price, Abdullah's grandmother, Sonia, provided 30% of the purchase price. It was agreed that Abdullah and Stephanie would eventually repay Sonia when they had the money, and that in the meantime Sonia would live with them in lieu of charging interest. Which statement best summarises Sonia's interest in the house?

Sonia will not have a beneficial interest in the property as the presumption of a purchase money resulting trust has been rebutted owing to the moneys being advanced as a loan

Sonia will have a beneficial interest in the property as the presumption of a purchase money resulting trust has not been rebutted owing to the moneys not being advanced as either a loan or gift

. Sebastian is the uncle of Daoning, and is his guardian following the death of Daoning's parents. Sebastian has given Daoning £10,000, but has not disclosed for what purpose the moneys have been given. Daoning has been informed by a friend that he can treat the moneys as his own because of the doctrine of advancement. Is this advice true or false?

True

False

. In 2019, Jennifer won the lottery, and received £56 million. Feeling generous, she gave £4 million to her husband and £1,000 to her eldest son. Both her husband and son were not informed why the moneys were given to them, but have been told by a family friend that the doctrine of advancement means they can keep the moneys for themselves. Is this advice true or false?

True

False

. PK Ltd recently sought a loan from their bank, Fifo Bank, for £75,000. They wished to use the moneys to help improve the business, but had not decided how this was to be done. Fifo Bank agreed to lend the moneys, and did not demand that the loan moneys be placed into a separate bank account. PK Ltd were recently made insolvent, and Fifo Bank now what the loan moneys back as they have yet to be spent. Can Fifo Bank reclaim the moneys through a Quistclose trust?

No – because there was no specific purpose, although there was a requirement to segregate the loan moneys

Yes, because there was a specific purpose and there was a requirement to segregate the loan moneys

Yes, because there was a specific purpose and the requirement to segregate is not necessary

No, because there was no specific purpose and there was no requirement to segregate the loan moneys.

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