Illegality, Resulting Trusts and Twin Presumptions: Antiquated Law Meets Modern Society

AuthorOlivia Carpenter
PositionL.L.B candidate, Swansea University
[2013] COLR
Olivia Carpenter*
This article examines the clash between out-dated principles and contemporar y societal
ideals in the context of trusts and illegality. The operation of the presumptions of r esulting
trust and advancement in relation to the jurisdictions of the United Kingdom, Republic of
Ireland, and Austra lia will be analysed. The cross-jurisdictional trend has been in favour of
taking steps to accommodate modern viewpoints in order to counteract discriminatory
distinctions such as those created in Tinsley v Milligan. The orthodox model of the
presumption of advancement is incompatible with both Article 5 P rotocol 7 of the European
Convention on Human Rights and the equality guar antee in the Irish Constitution, and as a
result Northern Ireland, Austra lia and the United Kingdom have taken positive steps towards
effectuating its abolition. It is hoped that in time, calls for change in the Republic of Ireland
will serve as the impetus for the implementation of equally strong measur es. Ultimately, in
light of these issues, it shall be shown that the abolition of the presumption of advancement
on a cross-jurisdictional scale is a welcome development for human rights and equality.
Illegality in the law of trusts presents us with a myriad of complex dilemmas. The modern
law is lacking, due to fundamentally out-dated legal precedence. The aftermath of Tinsley v
1 caused a re-evaluation of the established principles of illegality in the law of trusts.
Enonchong has highlighted that the ruling in Tinsley, when juxtaposed with the anachronistic
presumption of advancement, and the principles of presumed resulting trusts, has created
conflict with this twin relationship in this area of law.2 In the United Kingdom, the Law
Commission has turned to address these conflicts, and after succinct analysis has proposed a
series of reforms. The response to these proposals has been inadequate, and Davies argues
that the outcome of the limited reform is disappointing, and hardly a surprise,3 due to the fact
that the Courts are reluctant to stray too far from the established path. Through the cross-
jurisdictional examination of the effect of these issues, this article shall argue ultimately that
*L.L.B candidate, Swansea University.
2 Nelson Enonchong, ‘Effects of Illegality: A Comparative Study in French and English Law’ [1995] 44( 1) The
International and Comparative Law Quarterly 196, 197.
3 Paul Davies, ‘The Illegality Defence: Turning Back the Clock’ [2010] Conv 282, 282.
[2013] COLR
judicial attempts to align conflicting relationships and policies have ‘left the English law on
the effects of illegality in a confused and unsatisfactory state”’.
In the United Kingdom, resulting trusts are distinguished from express trusts because the
Court instigates them. Swadling describes the presumption of resulting trust as ‘a legal
presumption that a trust was declared by the transferor in his own favour’.5 The general
principle of the presumption of resulting trust is set out in Dyer v Dyer,6 which states that the
presumption will arise in favour of a person who has paid a contribution to the purchase price
of a property for a transfer of property.7 The presumption operates with regard to personalty,
legal estates, and equitable interests. Chambers emphasises that the fundamental components
of the resulting trust are ‘the lack of the provider’s intention to benefit the recipient of the
property’,8 as well as an absence of the recipient’s consideration.9 According to Browne-
Wilkinson LJ, resulting trusts ‘arise because of a presumption that the transferor intended
them so to do.’10 At law, two vital resulting trust types surround the intention of property
owners, which are voluntary conveyance and purchase-money trusts. These circumstances
are ‘universally accepted as resting on a presumption’,11 and the issue with both is that it
‘appears that one person has been enriched at the expense of another’.12 The presumption is
rebuttable depending upon whether the transferor intends to make a gift of the property. Dyer
expands upon this principle, which states, ‘it is the established doctrine of a court of equity
that this resulting trust may be rebutted by circumstances in evidence’.13 If the presumption is
not rebutted, the transferee will hold the property on resulting trust for the transferor.14
4 Enonchong (n 2) 197, citing Bedford Insura nce Co. v Institutio de Resseguros do Brasil [1985] QB 966, 983
(Parker J).
5 Robert Chambers, ‘Is There A Presumption of Resulting Trusts?’ in Charles Mitchell (ed s), Constructive and
Resulting Trusts (Hart Publishing 2010) 267.
6 [1788] 2 Cox Eq Cas 92.
7 Chambers (n 5) 12.
8 ibid 26.
9 ibid 12; ‘Lack of consideration required for the presumption is not a requirement for the presumption of
resulting trust.’ See Chambers (n 5) 23; Bar clays Bank Ltd. v Quistclose Investments Ltd. [1970] AC 567.
10 Westdeutsche Landesba nk Giroentr ale v Islington LBC [1970] AC 567 [708] William Swadling, ‘Explaining
Resulting Trusts’ [2008] 124 Law Quarterly Review 72, 72.
11 Swadling (n 10) 77.
12 Chambers (n 5) 268.
13 Dyer v Dyer (n 6), [93] Swadling (n 10) 8.
14 Robert Pearce, John Stevens & Warren Barr, The Law of Trusts and Equitable Obliga tions (5th edn, Oxford
University Press 2010) 269.

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