Class notes
Quistclose Trusts + Presumed Resulting Trusts
- Course
- Institution
This is part of a bundle for Equity and Trusts Term 2. Includes: - Maxims - Implied Trusts - Constructive Trusts - Illegality - Presumption of Advancement
[Show more]
Seller
Follow
graceochieng950
Content preview
Equity and Trusts 2 Lecture 4Learning Objectives
• Consider Quistclose trusts
• Explore presumed* resulting trusts:
Voluntary transfer: land
(Purchase in the name of another)
• Questions
Recap:
• Idea of a resulting trust is that property ‘results back’ to original/rightful owner/settlor
• A type of implied trust
• Arises in a variety of situations e.g. surplus funds
• Focused on automatic RTs
Perhaps 3 theories of RTs:
• Megarry J, Vandervell’s Trusts (No 2) 1974: 2 types, automatic & presumed
• Lord Browne-Wilkinson Westdeutsche LB Girozentrale v Islington LBC, 1996: all types of RT
are based on intention (of both parties)
• Lord Millett Air Jamaica v Joy Charlton, 1999: absence of intention from original owner to
transfer the property, returns, subject to contractual rights in the property but issue is that
interests need to be disposed of to jump back.
Quistclose-type trusts – read virgo
A special type of trust, hard to categorise. When thinking about trusts, remember the following:
• Easy to declare a trust (no formalities, except land)
• If trust fails, then a RT arises & current owner holds on trust for original owner so it bounces
back
• KEY: Property on trusts is protected from creditors – must be held by the trustees (in
bankruptcy) for the beneficiaries(creditors)
, Barclays Bank v Quistclose Investments [1970} AC 567 - check
Rolls Razor Ltd owed £484,000 to Barclays. It needed money to pay a dividend to its shareholders
Quistclose agreed to lend £209,719 on condition that the dividend be paid with it and placed in a
separate account. Before the dividend was paid RR went into liquidation. Q sought to recover the
money, B contended that it was part of the assets of the company and should be used to pay its
debts.
- Was there a trust? Yes, so the money was protected and so Barclays
couldn’t use it to pay back the debts.
- Did Barclays know about the trust?Yes.
- Has Quistclose got a proprietary interest in the money
HELD: Lord Wilberforce that the purpose having failed (primary, express trust), the money was held
on resulting trust for Q i.e. gained priority over the claims of Barclays (contractual claim – debt)
- The secondary trust is a resulting trust because the primary trust failed.
- Primary and secondary trust are the twp limbs of the same trust
- The beneficial interest remains with the lender throughout but the borrower
takes the money subject to a power or trust.
- Rr receives all the beneficial interest in the money but Quisclost
Twinsectra Ltd v Yardley [2002] 2 All ER 377 - CHECK
T lent £1m to Y to buy land. Y spent £357,720 elsewhere on Mr Sims. Sims gave an undertaking to
Twinsectra (legal promise) that the money would be used solely for the acquisition of the property.
In breach of his undertaking Sims passed onto leach, leach passed onto solicitor and he used it for
another purpose/ T sued for return. £1m had →Y’s solicitor Mr Sims (undertaking re purpose). Was
this a trust?
Lord Millett: A lender will often will enquire into the purpose
Problems with the Quistclose 2 trusts analysis at [187]
“formidable difficulties in this analysis, which has little academic support….”
Twinsectra Ltd v Yardley [2002] 2 All ER 377
“…..What if the primary trust is not for identifiable persons, but as in the present case to carry out an
abstract purpose? Where in such a case is the beneficial interest pending the application for the
stated purpose of the failure of the purpose?”
Conclusion: beneficiary must be the lender from the start (certainty of objects). A resulting trust,
with borrower having a ‘mere power’ ‘to apply the money for a stated purpose’
Millett took same approach in Air Jamaica (pension surplus)
But issues with this approach:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller graceochieng950. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.03. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
62774 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 15 years now