the resulting trust must be explained either in terms of INTENTION (i.e. intention to retain an interest/not to transfer an interest BUT NOT in terms of presumed declarations of trust) OR in terms of some more GENERAL PRINCIPLE (e.g. return on an investment of property ought to receive proprietary protection).- Alistair Hudson, Equity and Trusts, 8thed (Routledge, 2015)- Resulting trust cases arise where the owner of property isunknown (due to failed/incomplete transfer of property or multiple people have contributed to acquisition of property without locating title) and the automatic/presumed resulting trusts simply help resolve the practical issue faced - resulting trusts limited to those specific circumstances and are used merely as a means of resolving practical difficulties.3. QUISTCLOSE TRUSTS3.1 The Quistclose CaseBarclays Bank Ltd v Quistclose Investments Ltd - Quistclose Trusts- Means of making a loan to a failing company for a particular purpose - if the loan money used for thatpurpose then no issue arises and lender has personal debt claim to recover money lent - if money not used for the specified purpose then the lender can assert a resulting trust = equitable proprietary interest.- Q lent to RR in order to allow it pay dividends so that market would not realise the financial difficulties faced by RR - dividends not paid and RR became insolvent - money paid into a separate bank account and clear that a special arrangementlike this was intended.House of Lords: Lord Wilberforce- Once RR became insolvent Q became a beneficiary under a resulting trust with the money lent being held on resulting trust for the benefit of Q.- Whether such a trust arises in a particular situation depended on the facts of the case.- Mutual intention was that the money advanced should not become part of the assets of RR but should used exclusively forthe payment of the payment of the dividend.- Primary trust for the payment of the dividend and if this failed the secondary resulting trust arises for the benefit of the lender.- Primary/Secondary Trust- Some kind of express trust which, if it fails, causes an automatic resulting trust in favour of the settlor BUT if a secondary purpose has been agreed this appears to be two primary trusts both driven by parties' 6
intention.- Westdeutsche Landesbank v Islington LBC (1996): Lord Browne-Wilkinson- Misled by Quistclose (1970) to base resulting trusts purely on the intentions of the parties.- Problems- What is the object of the primary trust - can't be a purpose - who is the beneficiary (lender of borrower) - is the beneficial interest in the primary trust in suspense?- Primary trust for the borrower BUT confined for a particular purpose?- When does the primary trust fail - has it failed even when there is liquidation of the borrowing company?3.2 Further examples- Twinsectra v Yardley: Lord Millett (Minority)- Purpose of the acquisition of property had not been carried out and therefore there ought to be a resulting trust - argues that the Quistclose trust arises immediately at the point when loan
You've reached the end of your free preview.
Want to read all 8 pages?
- Fall '19
- Wills and trusts, Trust law, Primary Trust