Restitution and Equity Volume 1: Resulting Trusts and Equitable Compensation

Peter Birks, Francis Rose, Peter Birks, Francis Rose

• Publisher: Informa Law from Routledge
• Year: 2020
• Print ISBN: 9781859785676
• eBook ISBN: 9781000288131
• Topic: Law
• Subtopic: Commercial Law
• Index: Law

The first part of this volume collates papers from the Second Mansfield Symposium, which examined the areas of equity, trusts and restitution. The second part addresses the emerging field of equitable compensation and its implications.

PART I

RESULTING TRUSTS

CHAPTER 1

ON THE NATURE OF RESULTING TRUSTS: THE VANDERVELL LITIGATION REVISITED

Edwin Simpson*

INTRODUCTION

Despite recent claims to the contrary, the law of resulting trusts is in a state of considerable confusion.¹ Perhaps not the sort of confusion to trouble the layperson, or even on many occasions the practitioner, but very much a confusion to trouble the appellate judge or the theorist. The collection of essays in the first part of this book grew out of a symposium held at St John’s College, Cambridge in 1998 to discuss the powerful contribution recently made to the subject by Dr Chambers.² It might have been reasonable to expect that the subject would have settled down after such an occasion: that the thesis would have been generally accepted, or shown to have been clearly flawed, and that a consensus of some sort might have emerged. But that is not quite what has happened. Judges and critics remain unable to agree on the most basic premises of the subject, and a chapter serving as an introduction to the essays to follow must begin with the uncomfortable task of examining differences, rather than the more straightforward one of confirming commonly-held legal assumptions. At least when the differences have been set out the reader may feel properly armed for the fight.

At the centre of the present debate lies a question apparently of mere categorisation. Can it be said that the many situations in which a transferee has been found to hold transferred property on trust for the transferor constitute a single category of legal response?³ Or is it possible—and so necessary—to subdivide them further. It has been recognised for a long time⁴ that such “resulting”⁵ trusts arise primarily in response to two distinct factual circumstances: first, where there has been an apparent gift of property⁶; and secondly, where an express trust has failed to dispose of all of the trust property.⁷ But whether a single justificatory principle can be found to unify these apparently distinct circumstances remains controversial.

* Student of Christ Church, Oxford.

1. “The law with regard to resulting trusts is not in doubt”: Vandervell v IRC [1967] 2 AC 291, 307, per Lord Reid (dissenting). See R Chambers, Resulting Trusts (Oxford, 1997), 1, n 2, for further instances of misplaced confidence.

2. R Chambers, Resulting Trusts (Oxford, 1997). The papers collected here include a report of the symposium: Harpum, “Resulting Trusts: Reporter’s Note” infra, chapter 9.

3. It may be that an events-based classification of law (that is, one which classifies by categories of events giving rise to legal responses, rather than the other way around) is ultimately a more useful one than a response-based analysis, but trusts law remains primarily understood in terms of the responses of express, resulting and constructive trusts. On developing an adequate events-based account of trusts law, see McBride, “On the Classification of Trusts” infra, chapter 2. I use the idea here of a “single category of legal response” in the same way he would use it, ie as a category responding to “irreducibly dissimilar events”.

In very broad terms, there are two competing unifying theories, and a third point of view that no unifying theory is possible. One proposed unifying theory is that all resulting trusts give effect to the presumed intention of the transferor of property.⁸ The other, that they arise because the transferor had no actual intention to benefit its recipient.⁹ The third stance, that there can be no unifying theory at all, holds that the “apparent gift” instances depend upon a presumed intention, whilst the “failed disposition” cases arise automatically, or, as that is sometimes put, by operation of law.¹⁰

That is the central issue, but the view taken of it has repercussions for a considerable range of wider questions, perhaps most obviously questions addressing how resulting trusts fit within trusts law more generally. To use the existing categorisation of the subject (although an adequate analysis may require its rejection) this calls for an examination of how resulting trusts are similar to, and how they are different from, express and constructive trusts. The appropriate model at first seems to be a spectrum of some sort, running from express trusts (those trusts brought into being by a declaration of the legal owner) at one end, to constructive trusts (those trusts arising by operation of law, even against the wishes of the legal owner) at the other; and with resulting trusts to be located somewhere in between. But even this apparent spectrum is far from straightforward, complicated as it is by possible intermediate categories of “precatory”, “implied” and “presumed”, as well as “resulting” trusts. An adequate account of the key features of resulting trusts seems, after only very little thought, to require reference to a clearer conceptual framework than trusts law alone is able to provide. Whether appeal is necessary to wider principles of equity (such as the concern to prevent unconscionability),¹¹ or of the law of obligations (such as the concern to reverse unjust enrichment),¹² or simply of general property law (providing default rules for the location of beneficial interests)¹³ is very much a matter for debate.

4. See Lloyd v Spillet (1740) 2 Atk 148, 150 for an early instance; Vandervell v IRC [1967] 2 AC 291, 312–313, per Lord Upjohn; Re Vandervell’s Trusts (No 2) [1974] Ch 269, 294, per Megarry J; Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, 708, per Lord Browne-Wilkinson, each of which is discussed further below, for recent restatements. Rickett and Grantham, “Resulting Trusts—A Rather Limited Doctrine” infra, chapter 3 at p 5 prefer a threefold categorisation: voluntary conveyance, purchase in the name of another, and incomplete disposal of the beneficial interest.

5. From the Latin, resalire, meaning “to jump back”. Nothing of any significance is said in this chapter about the appropriateness of this terminology; but see infra, note 23 for reference to discussion elsewhere.

6. See, for example, Dyer v Dyer (1788) 2 Cox Eq Cas 92; Fowkes v Pascoe (1875) 10 Ch App 343. This formulation is a considerable simplification as such apparent gifts can take more than one form, whether by direct transfer, transfer from a third party but funded by the giver, or transfer from a third party, paid for by the transferee, but funded by the giver.

7. See, for example, Re The Trusts of the Abbott Fund [1900] 2 Ch 326; Re Andrew’s Trust [1905] 2 Ch 48; Re Ames’ Settlement [1946] Ch 217; Re Cochrane [1955] Ch 309; Re Osoba [1979] 1 WLR 247. This, too, is a deliberately brief description; fuller formulations of the two categories are considered below.

8. This can reasonably be called the orthodox view, and continues to be held by Lord Browne-Wilkinson, see Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, 708. In this volume, see generally Swadling, “A Hard Look at Hodgson v Marks” infra, chapter 4; Rickett and Grantham, “Resulting Trusts—A Rather Limited Doctrine” infra, chapter 3; Payne, “Quistclose and Resulting Trusts” infra, chapter 5.

9. This can reasonably be called the restitutionary view, and is held by Professor Birks, Dr Chambers and others. In this volume, see generally Nolan, “Dispositions Involving Fiduciaries: The Equity to Rescind and the Resulting Trust” infra, chapter 7; Virgo and O’Sullivan, “Resulting Trusts and Illegality” infra, chapter 6. It would seem that the necessary fact, even on this account, is sometimes said to be “presumed”: see further infra, note 80.

10. This is the view associated with the judgment of Megarry J in Re Vandervell Trusts (No 2) [1974] Ch 269.

This deficiency of our existing categorisation of trusts law prompts a further set of questions, which look beyond trust law, rather than within it, to consider the appropriate range of operation of properly-understood resulting trusts. Once their justificatory basis (or bases) has been settled, it becomes possible to consider whether there is any convincing reason to confine their operation to the two, supposedly defining, factual circumstances of “apparent gifts” and “failed trusts”. It may be that the properly-understood resulting trust, given the justificatory principle(s) at its core, should be allowed to range more widely than has until now been appreciated. If such expansionist tendencies are to be properly managed, then much work remains to be done identifying factual situations where the resulting trust can properly extend and undertaking their re-examination in resulting trust terms.¹⁴

The final point of difference is a consequence of the very important relationship between theoretical and practical disagreement. The views taken on the broad theoretical issues of internal categorisation and external relations inevitably affect and reflect the proper analysis to be made of particular cases; and will have implications for those arguing, deciding and criticising cases to be heard in the future. Two of the following chapters begin by adopting the apparently narrower focus of discussing in detail the significance of a particular controversial decision¹⁵; but, of course, whatever reading is proposed quickly has consequences for the wider theoretical points of view.

From whichever theoretical level of entry individual chapters may begin, the book includes contributions advocating most possible shades of opinion. This chapter, apart from serving as an introduction, aims to establish a single proposition around which a good number of the disputants might be prepared to assemble: the proposition that both established categories of resulting trust arise by op...

Table of contents

• Cover
• Half Title
• Copyright Page
• Title Page
• Foreword
• Preface
• Table of Contents
• Table of Cases
• Table of Legislation
• Part I Resulting Trusts
• Part II Equitable Compensation
• Epilogue
• Appendices
• Index