Tutorial 4 Resulting Trusts PDF

Preview

Summary

Answers based on previous exam questions...

Description

Tutorial 4 Resulting Trusts (Answers) Question 1 Brian Elderfield lived in Hamilton although he had plans to move to Wellington to retire in a few years. His son Joshua lived in Wellington and so Brian provided funds for his son to buy a house in Wellington with the intention that Brian would eventually move in to the house on his retirement. Brian did however state that Joshua could occupy the house until such times as Brian wished to move in. The house was purchased with the funds provided by Brian, and Joshua registered the property in his own name. After a couple of years, Joshua fell out with his father, sold the property and retained the proceeds of the sale. Brian tried to talk to his son about this matter but Joshua stated that because the house was registered in his, Joshua’s, name, he was perfectly entitled to do whatever he wished with the property, including selling it and retaining the profit. Utilising relevant authorities, advise Brian as to whether Joshua is correct in his assertions.    



Brian is presumed to retain his beneficial interest. Joshua is not correct in his assertions unless he can successfully rebut the presumption of a resulting trust through presumption of advancement. This case is analogous to Teng v Teng It is presumed at law that the intention of the person who contributed to the purchase price of the property has an intention to keep that property on trust for their beneficial interest, as noted in Tinsley v Milligan. On the facts there is a clear intention by Brian that he intended the property to be of his beneficial interest ultimately, by advancing the finance to his son so that he could move in on retirement while allowing Josh only to Occupy the house until that time. In Teng v Teng, it was held that the presumption of advancement would not succeed where the behaviour of the trustee suggests against a clear intention of the beneficiary. Joshua would fail in using the presumption of advancement because there is no intention by Brian to allow JOshua to sell the house; it goes against the direct intention of Brian, intending to move in upon retirement.

There is nothing on the facts to determine that Joshua was to receive the house under advancement. His behaviour suggests is against the clear intentions of Brian’s wishes, analogous to Teng v Teng and so the property will result back to Brian. Question 2 Set out the reasons as to why the Courts in Re Trusts of the Abbott Fund and Re Gillingham Bus Disaster Fund held that the gifts were resulting trusts. The gifts were held to be resulting trusts because they were for specific purposes that had either been fulfilled or ceased to exist. In these situations, it is presumed to be a resulting trust in which the amounts must result back to the donors. In Abbot the purpose of the trust ceased to exist and there were funds left in the trust. The most appropriate course of action was to result the money paid into the trust back to those

who had provided it, which was relatively easy because the contributors had responded to a message asking for funds. Harman J notes at 310 of the Gillingham judgment that the donations were made for the purpose declared by the trust and when that purpose no longer exists or has been completed, the money will go back to the settlor. They create a trust that they expect will absorb the whole of the money provided and if for any reason the trusts ceases to exist, the money must go back to the settlor. Because the donations were made in several ways which made it unattainable for identity, the funds went bona vocantia, and people who could prove they donated were able to make a claim for a proportionate amount. (In comparison to Re Andrews, which had a broad application. The special purpose of the gift had not ceased; the children were still living and education did not just apply to a particular type of education, that being university – therefore, the amount could be shared between the daughters.)...