Explanation of express and non express trusts

Introduction

Mr Gardner describes trust as ‘a situation in which property is vested in someone (a trustee), who is under an obligation to handle it in a certain way.’ [1] More precisely, a trust is created where the absolute owner of property, the settlor or testator, [2] transfers the legal title of the property to a trustee to hold it on trust for the benefit of a beneficiary in accordance with terms laid down by the settlor. [3] 

Trusts could, on the basis of the settlor’s intention, be divided into two categories: express and non-express trusts. Accordingly, express trusts are trusts which are expressly defined by the settlor and they are governed by three elements: intention, subject matter and the object (the three certainties). [4] Express trusts are also governed by the equity maxim ‘certum est quod certum redid potest’ (‘that is certain which can be made certain’) because they give effect to the expressed intention of the settlor.

Non-express trusts on the other hand, could be consequently divided into constructive trusts (CTs) and resulting trusts (RTs). [5] However, this approach is not straightforward because of uncertainty on the nature of RTs. The difficulty of determining the nature of RTs is basically the variance of academic opinion on the fundamental question of whether a RT arises by operation of law or depends on the presumed intention to create a trust. [6] This question, as well as the nature of both types of non-express trusts will be considered below.

Constructive trusts

Ti einai, cases ?

Resultive trusts

Pearce and Stevens

For Pearce & Stevens, the term ‘constructive trust’, simply describes the circumstances in which property becomes the subject of a trust by operation of law. [7] Sir Peter Millet has said about the terminology of constructive trusts that ‘the use of the language of constructive trust has become such a fertile source of confusion that it would be better if it were abandoned. [8] 

A resulting trust comes into being solely in consequence of the express intention of the settlor – a constructive trust does not. A resulting trust is the product of an implied intention – a constructive trust is not.

In Westdeutsche Lord Browne-Wilkinson described a CT as a trust ‘which the law imposed on [the trustee] by reason of his unconscionable conduct’ [9] 

A major conceptual distinction of CTs that has emerged in the common law jurisdictions is between two types of CTs: ‘institutional’ and ‘remedial’ CTs. The ‘institutional’ constructive trust is a trust which comes to existence due to the occurrence of specified events and not because of the court; therefore the trust exists from the moment the relevant events took place. As a result, the court is not necessary in imposing a trust, but merely in recognising it. The ‘remedial’ constructive trust gives effect to restitution for unjust enrichment. It is imposed by the court – therefore it arises from the date of the court’s judgment – in order to prevent the defendant from being unjustly enriched at the expense of the plaintiff. For the moment, English law has not accepted the ‘remedial’ CT though its main characteristic – restitution – was recognised by Slade LJ in Metall and Rohstoff AG v Donaldson Lufkin & Jenerette Inc where he stated that “the court imposes a CT... as a means of granting equitable relief in a case where it considers it just that restitution should be made." [10] In the more recent case Re Polly Peck Nourse LJ defined a remedial CT as “an order of the court granting, by way of remedy, a proprietary right to someone who, beforehand, had no proprietary right." [11] 

Lord Denning, quoting the words of an American judge, stated that “a constructive trust is the formula through which the conscience of equity finds expression" [12] 

Like all trusts, CTs create equitable proprietary interests in favour of identifiable beneficiaries.

Both RTs and CTs provide a means by which a person can obtain a share of the beneficial ownership where no formal declaration of trust has been made in their favour.

CTs also operate to preserve an equitable interest in cases where the legal title to the property is wrongly transferred by the trustee (‘bona fide purchaser’, who will not be able to treat the property as if he were the absolute owner) [13] 

Misappropriated property , when fiduciary receives unauthorised profit in breach of the duty of loyalty, personal liability to account as a constructive trustee

Chambers

Though it is in general believed that equity’s weapon against unjust enrichment is the CT, R.Chambers submits that imposition of RTs may as well constitute equity’s principal contribution to reversing unjust enrichment.

Resulting Trusts

In Hanbury and Martin’s Modern Equity, the RT is described as ‘a situation in which a transferee is required by equity to hold property on trust for the transferor; or for the person who provided the purchase money for the transfer’. Similarly, it is described by Professor Waters as arising ‘whenever legal or equitable title to property is in one party’s name, but one party, because he is a fiduciary or gave no value for the property, is under no obligation to return it to the original title owner, or the person who did gave value for it’ [14] Both definitions are broad but nevertheless attribute a common characteristic to the RTs: the RT that arises is held in favour of the person ‘who provided the property or equitable interest vested in the person bound by the trust.’ [15] 

Most RTs arise either where there has been an apparent gift of property or where an express trust has failed to dispose of all of the trust property. Equity will assume in both cases that the owner was not intended to receive the benefit of the property and raises a RT in favour of the provider of that property. [16] 

In Re Vandervell’s Trusts (no2) Megarry J concluded that the RT operated on different principles in each of these two situations. His lordship classified the RT of an apparent gift as ‘presumed’ and the RT on the failure of an express trust as ‘automatic’. The presumed RT was said to be based on the presumed intention of the provider of the property to create it and could be rebutted by evidence to the contrary. The automatic RT arose independently of intention and was irrebuttable.

RTs do not depend on an implied intention to create a trust, but they do not arise completely independently of intention either. All resulting trusts come into being because the provider of property did not intend to benefit the recipient.

The express trust is the product of intention, while the constructive trust is created by operation of law. [17] 

Academic uncertainty leaves RT in a limbo between ET and CT: some prefer to see the RT as dependent on an implied intention to create a trust, others as a trust arising by operation of law, others as a bit of both. R.Chambers supports that RTs arise by operation of law. Equity imposes a RT in cases where property has been transferred to another and the provider of the property did not intend to benefit the recipient.

An ET is created by an intention to create a trust whereas a RT arises because of a lack of intention to benefit the recipient – a view held by Professor Scott [18] 

Distinction between positive intention to create a trust and an absence of intention to benefit the recipient

Professor Birks has said: “There is a fine but important distinction between intent conceived as creative of rights, as in an ET or a contract, and intent conceived as a fact which along with others, calls for the creation of rights by operation of law" [19] The lack of intention to benefit the recipient is a fact which calls for the equitable response of a rt. RTs are not created by the implied intention of the transferor.

Me liga logia: ta RT einai CT:

Chambers expresses this doubt between the nature of RT and CTs in the question: if both types of trusts arise by operation of law, does it matter whether we call them resulting or constructive? He further wonders whether a RT is simply a CT which happens to restore property to the person who provided it in the first place. Chambers uses Birks words to establish that the answer does not lie in the origin of the RT but rather on its function:

The term ‘resulting trust’ is capable of bearing two meanings. In the first it identifies a feature which has nothing to do with the trust’s origin: the trust is resulting (from the Latin resalire, to jump back) if the interest arising under it is carried back to the settlor. This can happen however the trust originates, whether by expressed intention, implied intention, presumed intention, or irrespective of intention (constructive). In trusts created in all these ways the beneficial interest can ‘jump back’. So the term ‘resulting’ in this wide sense cuts across other classifications. [20] 

It had always been a firm suggestion of Birks that RT should be considered as ‘constructive in origin’ and ‘resulting in pattern’ [21] However, such an idea destroys the distinction of non-express trusts in constructive and RT, which exists because of various reasons. [22] 

The definition of CTs (i opoia btw den einai kai poly certain) does not exclude the RT; on the other hand, the definition of a RT leaves outside the majority of CTs.

Meta mila gia restitution, leipei mou i selida, anw en me koftei giati ginetai prixtis.

Watt

A RT arises whenever there is an ineffective disposition of benefit, [23] 

An ET gives effect to a settlor’s expressed intention

A RT gives effect to a settlor’s presumed intention

As G. Watt states ‘all resulting trusts arise in an automatic consequence of a transferor’s failure effectively to dispose of beneficial ownership in the asset purpodetly transferred.’

In Westdeutsche, Lord Browne-Wilkinson identified two sets of factual circumstances when a RT will arise. The first includes cases where A makes a voluntary payment to B or pays for the purchase of property which is vested wither to B or pays for the purchase of property which is vested either in B alone or in joint names of A and B, there is a presumption that A did not intent to make a gift to B. The second way is where A transfers property to B on express trusts but the trust declared does not exhaust the whole beneficiary interest. This was the case in Vandervell v IRC.

A RT arises also in cases where an express trust was successful but left a surplus of funds.

Property passes to the Crown (as bona vacantia) [24] 

The presumption of a RT is easily rebutted by evidence which show that the transferor intended to make a gift or by evidence raising the ‘presumption of advancement’ sel 154

Re Gillingham was rejected in Re West Sussex

The Quistclose trust: example of a resulting trust

Vivlio Mars

Martin has described the resulting trusts as ‘a situation in which a transferee is required by equity to hold property on trust for the transferor; or for the person who provided the purchase money for the transfer’ [25]