The term resulting trusts comes from the Latin term “resalire” 1 meaning to jump back.

In Westdeutsche
Landesbank v Islington2 Lord Browne-Wilkinson identified two examples of resulting trusts:

1) Where a settlor attempts to create a trust for an unknown beneficiary and the property results back
because equity abhors a vacuum.

2) Where individuals contribute to the purchase price of property.

Resulting trust is an equitable reversion that arises by operation of law whenever a person has created
an express intentional trust, but the express trust fails or does not completely dispose of the trust
property. When the trust fails or does not completely dispose of the trust property, the undisposed
property goes back to the settlor in a resulting trust.

Resulting trusts arise in two different contexts either:

To restore the equitable interest in property to its original beneficial owner in circumstances in which a
transfer of that property has failed. (Vanderwell v IRC)3

To recognize the equitable proprietary rights of someone who has contributed to the purchase price of
property with an intention that she take some property rights in that property See Dyer v Dyer 4

Resulting trusts arise in the absence of an express declaration where a person holds legal title in
circumstances where they can not be taken to have full equitable ownership.

There are two categories of resulting trusts:

1. Automatic resulting trust

2. Presumed resulting trust

Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common
intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is
a constructive trust) but gives effect to his presumed intention.

Automatic Resulting Trust

An automatic resulting trust will arise where the settlor transfers property to the intended trustee but
the trust has failed for some reason. The trustee holds the legal title of the property on trust. The
beneficial or equitable ownership is retained by the settlor.

In general, an automatic resulting trust arises when a settlor transfers property to another to be held on
trust, but, for some reason or other, the beneficial interest cannot be assigned properly to the
beneficiaries. The beneficial interest, therefore ‘rebounds’ or ‘results back’ to the settlor, there is no
other object to which it may be assigned.

Presumed Resulting Trust

1
Mlcleaver. 2018. Equity and Trust – Resulting Trust. UK Law Weekly. http://uklawweekly.com/resulting-trusts/
accessed on May 09, 2023.
2
Westdeutsche Landesbank v Islington LBC [1996]
3
Vanderwell v IRC [1967] 2 AC 291
4
Dyer v Dyer (1788) 2 Cox Eq Cas 92
Presumed resulting trusts are formed either through the voluntary transfer of the legal estate or by
contributions to the purchase price. In these cases, it is assumed that the person did not intend to make
a gift of property or money unless there is clear evidence that they did. In such cases, a resultant trust is
formed, and the transferor or contributor keeps or receives a share of the beneficial interest. In other
situations, however, there is a counter-presumption that a gift was meant. This is referred to as the
presumption of advancement.

EQUITY ABHORS A VACCUM

Meaning of this Maxim

To 'abhor' means to regard something with hatred; to loathe, to detest etc. Clearly, it is to feel very
negatively about something.

A 'vacuum' has many meanings. But in this context, it refers to 'a space that is empty of matter; vacant
or void.

Dyer v. Dyer 5

Dyer paid the purchase-money for certain property, and took the conveyance to himself, his wife Mary,
and a son William, jointly. Dyer survived his wife, and then died, devising all his interest in these
premises to the plaintiff, who filed his bill against the son William, insisting that as the purchase-money
was all paid by Dyer, his son William, the defendant, was but a trustee.

Held, that though if no relationship existed there would be a resulting trust in favour of the person
paying the purchase-money, yet the circumstance of the nominee being the child of the purchaser
operated to rebut the resulting trust, and the defendant took the property beneficially as an
advancement from his father.

A further example might be seen in the case of a charitable gift which has failed because the charity has
ceased to exist before the gift to that charity was completed. In such circumstances, the doctrine of cy-
près will be applied, and the property will go to another charity with similar objective.

The idea behind this maxim is that it goes against the principle of the court of equity for a piece
of property to be left with no beneficial owner. This maxim has been applied to explain the concept of
resulting trusts. Resulting trusts are trusts created where property is not properly disposed
of. Megarry VC defined a resulting trust as "essentially a property concept; any property that a man
does not effectually dispose of remains his own”. One of the scenarios in which a resulting trust
will arise is where property has not been properly disposed of. This might be because a
trust has failed due to the identity of the beneficiaries not being ascertainable, or in
situations where there is surplus property left over after the trust has come to an end. In such
circumstances, the trustees are unable to keep the property for their own benefit, and so the property
in the trust ‘results’ or returns (in most cases) to the original owner of the property, leaving the trustees
holding the property on trust for them. This solves the problem of the property being left with no one to
benefit from it.

Reference.

5
Supra
1. Mlcleaver. 2018. Equity and Trust – Resulting Trust. UK Law Weekly. http://uklawweekly.com/resulting-
trusts/ accessed on May 09, 2023.
2. Resulting Trust. Cornel Law School https://www.law.cornell.edu/wex/resulting_trust accessed
on May 09, 2023.
3. Automatic Resulting Trust. Payroll Heaven. 2022. https://payrollheaven.com/define/automatic-
resulting-trust accessed on May 09, 2023.
4. Makelele University. 2019. Studocu.com, Equity and Trust (LAW2105)
https://www.studocu.com/row/document/makerere-university/equity-and-trusts/trusts-
coursework-2019-final/6481016 accessed on May 09, 2023.
5. Wesley N. 2016. EQUITY ABHORS A VACUUM. Preview.com Prezi.com
https://prezi.com/ykcg7t04i2pc/equity-abhors-a-vaccum/?fallback=1 accessed on May 09, 2023.