Resulting Trust

KEY DEFINITION A resulting trust (on the basis of law, на основании закона)is presumed to arise when A contributes to the purchase price of a piece of property which is put into B's name; or A transfers property to B, receiving nothing in return. In these cases it is presumed that B holds on trust for A. This presumption can be rebutted if there is evidence that the parties did not intend to create a trust.

KEY DEFINITION A presumption of advancementoccurs where a husband transfers property to his wife or a father to his child, the presumption is of a gift. This presumption can be rebutted if there is evidence that he wanted to create a trust.

Reading: A resulting trust was established in the case of Sekhon v. Alissa [1989]. Here the house had been bought in the name of the defendant daughter. She had contributed to the purchase price, but her mother had paid the balance. The mother claimed a share in the house under a resulting trust, arguing that, although it was bought in her daughter's name, it was purchased as a joint commercial venture and that they both intended to own it in propor­tion to their respective financial contributions. The daughter attempted to rebut the presumption of resulting trust by arguing that her mother's financial con­tribution was intended as a gift or a loan. The court therefore had to decide what was the actual or presumed intention of the parties at the time of the con­veyance. Was the mother's financial contribution a gift or an unsecured loan, or was the mother intended to have a beneficial interest in the property? The Court of Appeal held that the law presumed a resulting trust in the mother's favour, and on the facts the presumption was not rebutted by the daughter's allegation that the money was a gift or a loan.

Another case where a claim was made under a resulting trust was Springette v. Defoe [1992]. In this case the parties, two elderly cohabitants, had bought their house, but there was nothing in the registered transfer quantifying their respective beneficial interests in the property. Each party had paid half the mortgage instalments, but the plaintiff had paid most of the balance of the purchase price. When the relationship broke down, Miss Springette issued an originating summons claiming she was entitled to 75 per cent of the proceeds of sale, as this represented her contribution to the purchase. At first instance, the trial judge granted them an equal share of the beneficial interest, on the basis that it was their uncommunicated belief or intention that they were to share the property equally. However, the Court of Appeal allowed Miss Springette's appeal, holding that as there was no discussion between the parties at to their respective beneficial interests, there was no evidence to rebut the pre­sumption that she was entitled to a 75 per cent of the beneficial interest under a resulting trust.