Equity and Trusts: Resulting and Constructive Trusts

Not every trust is expressly created. Resulting and constructive trusts are imposed by operation of law, often to reflect the parties' presumed intentions or to prevent unconscionable conduct. They are most heavily examined in disputes over the family home.

1. Resulting Trusts

A resulting trust returns the beneficial interest to the person who provided it. The two recognised situations are an automatic resulting trust, where an express trust fails or does not exhaust the property, and a presumed resulting trust, which arises from a voluntary transfer or a contribution to the purchase price, where the law presumes the contributor intended to keep a beneficial share.

2. Constructive Trusts

A constructive trust is imposed where it would be unconscionable for the legal owner to deny the claimant a beneficial interest. In the family home, the key vehicle is the common intention constructive trust.

Where legal title is in one name, the claimant must show a common intention, by express agreement or inferred from conduct, that they would share beneficially, and detrimental reliance on it (Lloyds Bank v Rosset).

3. Quantifying the Shares

Where the home is in joint names, the modern starting point is a presumption that equity follows the law, so the parties are joint beneficial owners.

4. Worked Example

Starting point: joint names raise a presumption of equal beneficial shares (Stack). Rebuttal: the unequal contributions and rigorously separate finances may, as in Stack v Dowden itself, show a common intention to hold in unequal shares. Quantification: if intention as to shares cannot be deduced, the court imputes a fair share on the whole course of dealing (Jones v Kernott).

Examiner Insights

Conclusion

Resulting and constructive trusts are how equity allocates beneficial ownership where no one wrote it down. Separate resulting from constructive, then, for the family home, separate whether an interest exists from how big it is, anchoring each step to Rosset, Stack and Jones v Kernott.