Deck 6: Resulting Trusts

Question 1

Which of the following statements most accurately describes the role of intention in finding that a resulting trust over defined property exists in equity?

A) Resulting trusts give effect to the actual intentions of the owner of property.
B) Resulting trusts are imposed on the basis of the conduct of the person who becomes trustee of the property concerned.
C) Resulting trusts arise to give effect to the implied intentions of the owner.
D) Resulting trusts are imposed whenever the court decides they should arise, irrespective of the intentions of the owner or the would-be trustee.

Answer 1

C

Question 2

Which of the following statements explains why Mrs Prest was entitled to the assets of Mr Prest on divorce in the Supreme Court case of Prest v Pertrodel Resources Ltd [2013] UKSC 34?

A) Mr Prest owned the assets outright and Mrs Prest was therefore entitled through the divorce proceedings under the Matrimonial Causes Act 1973.
B) The Supreme Court allowed the company assets to be identified as the personal assets of Mr Prest by providing that special rules existed in divorce proceedings to look behind the corporate structures.
C) The company assets were held on resulting trust for Mr Prest as the properties had been transferred into company ownership purely to defeat Mrs Prest's claim to the assets on divorce.
D) The company assets were held on resulting trust for Mr Prest, as the assets in question had either been purchased with money provided by Mr Prest directly or by selling the properties to the companies concerned at an undervalue.

Answer 2

D

Question 3

Which of the following most accurately explains the rationale behind resulting trusts? (Think carefully before answering).

A) Resulting trusts arise to give effect to simple property rules that a person remains owner of property that has not properly been transferred to someone else.
B) Resulting trusts arise to remedy defects in relation to the beneficial ownership of property.
C) Resulting trusts arise to give effect to the presumed or common intention of the parties involved.
D) Resulting trusts arise in response to the absence of intention on the part of the transferor to pass a beneficial interest to the transferee.

Answer 3

D

Question 4

Which of the following statements is false in relation to the operation of presumed resulting trusts?

A) In the absence of a clear intention to make a gift, a rebuttable presumption of resulting trust arises on a voluntary transfer of personal property without consideration.
B) A purchase money resulting trust will arise in relation to land on the basis of any direct or indirect contributions to the purchase of the land.
C) Resulting Trusts arise on the basis of two rebuttable presumptions - a presumption against gifts and a presumption in favour of the provider of the purchase money
D) The presumption of a purchase money resulting trust may be rebutted by admission of evidence that the payment was advanced as a loan.

Question 5

Which of the following statements is true in relation to using evidence to rebut a presumption of resulting trust? (Think carefully before answering).

A) A party will only be allowed to rebut the presumption of resulting trust on evidence tainted by illegality, where the claimant does not need to rely on the illegality to establish their claim.
B) A claimant will not be permitted to rely on evidence of his or her own illegal purpose to rebut a presumption of resulting trust.
C) Evidence of an illegal purpose to rebut a presumption of resulting trust is no longer an automatic bar to success.
D) Evidence of an illegal purpose may only be admitted to rebut a presumption of resulting trust if the illegal purpose has not been carried into effect.

Question 6

Which of the following statements is true in relation to the presumption of advancement?

A) The presumption of advancement arises in transfers made between mothers and children.
B) The presumption of advancement applies to gifts made between wifes and husbands.
C) The presumption of advancement does not arise between cohabiting couples.
D) The presumption of advancement applies only to male parents of children, not those standing in loco parentis to the child.

Question 7

Which of the following has not been considered good evidence to rebut the presumption of advancement? (You need to be aware of the case law in this area before answering)

A) The receipt of rents or profits on a lease purchased by a father in the name of his son.
B) Where a husband guaranteed an overdraft on a bank account on his wife's account to solve an immediate banking emergency.
C) Where shares are transferred by a father to his son to qualify a son to become a director of a company.
D) Where a husband, through reasons of ill health, opened a joint bank account with his wife, so that she may draw cheques on the account for him.

Question 8

Which of the following statements is false in relation to the relationship between resulting trusts and an action in restitution for unjust enrichment

A) A restitutionary resulting trust arises where a party receives unjust enrichment from a contract which fails for lack of consideration or under a mistake.
B) Resulting trusts do not arise in situations of unjust enrichment through mistake since the conscience of the recipient of the payment would not have been affected at the time of the transaction, as they would have been unware of the mistake.
C) Resulting trusts do not arise in relation to claims for unjust enrichment as it would provide unwarranted proprietary entitlements to the claimants.
D) Resulting trusts and unjust enrichment are separate actions, but can be pleaded together on the same set of facts.

Question 9

Which of the following is not considered a situation where a resulting trust will arise to fill a gap in beneficial ownership?

A) A transfers property to B upon trust without effectively declaring the objects of the trust.
B)A purports to transfer property to create a charitable trust, but the trust fails for having non-charitable objects.
C) A has distributed trust funds to deal with a disaster appeal, and a surplus remains.
D) A seeks to make a trust in favour of members of company B. Company B does not exist and no transfer of legal title has taken place.

Question 10

Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 is authority that a loan given for a particular purpose which is not carried out may be held on resulting trust for the lender. Which of the following is not an essential criterion to established a 'Quistclose trust'?

A) A Quistclose trust will only arise if it is compatible with the terms of business.
B) The money must have been advanced exclusively for a specific purpose.
C) The money advanced must be restricted to a specific purpose, and not at the free disposal of the recipient,.
D) The money advanced must be kept in a separate bank account.