The Law To Know

Trusts and equity · United Kingdom · about 4 minutes

Resulting and constructive trusts

The boomerang and the referee’s whistle

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In one breath

A resulting trust sends the benefit of property back to the person who provided it, where the law presumes they did not mean to give it away. A constructive trust is imposed by the court, whatever the parties intended, where it would be unconscionable for the legal owner to deny another person’s interest.

The picture

The boomerang and the referee’s whistle

Throw a boomerang and, unless something stops it, it returns to the thrower. A resulting trust works like that. When someone pays for a house in another person’s name, or hands over property with nothing said about a gift, the benefit swings back to the person who supplied the money, because nobody is taken to have meant to give it away.

Now picture a referee who blows the whistle and awards the ball, not because the players agreed anything, but because what happened on the pitch makes it unfair to leave it where it lies. A constructive trust is that whistle. A trustee or other fiduciary who makes a profit from the position holds it for the beneficiary (Keech v Sandford; Boardman v Phipps). In the family home, a person who shared a common intention about ownership and relied on it to their detriment may hold an interest (Gissing v Gissing; Lloyds Bank v Rosset). Where title is held jointly, the starting point is equal shares, unless the evidence shows the parties intended otherwise (Stack v Dowden; Jones v Kernott).

Where the picture stops working

These are two pictures for different situations, and the law of the family home is fact-heavy and judge-made, so outcomes are hard to predict. Scots law does not generally use the English constructive trust and approaches such cases through unjustified enrichment and its own rules of property and trusts.

How it really works

  1. 1Ask who holds the legal title and who supplied the money or other value.
  2. 2For a purchase in another’s name, or a voluntary transfer with no explanation, consider a presumed resulting trust: unless there is evidence of a gift, the benefit results back to the provider.
  3. 3Where an express trust fails or leaves some benefit undisposed of, the property can result back to the person who gave it.
  4. 4For a constructive trust, ask whether a fiduciary has profited from the position (Keech; Boardman), or whether it would be unconscionable for the legal owner to deny another’s interest.
  5. 5In the family home, look for a common intention about ownership, shown by words or conduct, and detrimental reliance. With joint legal title, equal shares are the starting point (Stack v Dowden; Jones v Kernott).

Why people get it wrong

  • Treating the two as the same. A resulting trust follows the presumed intention to keep the benefit; a constructive trust is imposed by law whether or not anyone intended a trust.
  • Thinking that paying household bills creates a share in the home. Courts usually look for a contribution to the purchase or a shared agreement (Lloyds Bank v Rosset).
  • Assuming unmarried partners automatically have equal shares. Equal shares are the starting point only where the legal title is joint, and the parties’ real intentions can displace them.
  • Overlooking that a fiduciary holds a profit on constructive trust even when the beneficiary has suffered no loss (Boardman v Phipps).

A worked example

The facts are invented

Neha pays the whole price of a flat, which is registered in the name of her friend Omar. Nothing is said. Omar holds the flat on a resulting trust for Neha, unless he can show she meant it as a gift.

Piet and Quinn buy a house in joint names, with Piet paying most of the deposit and no written declaration. The starting point is equal shares, and Piet must persuade the court, from the whole course of dealing, that they meant something different. Ruth, a trustee of a shop lease, buys the freehold herself and makes a profit. She holds the profit on constructive trust for the beneficiaries.

Try it

A woman pays the entire price of a flat that is registered in her friend’s sole name. Nothing is said, and the friend later claims the flat was a gift. What is the likely starting position?

Landmark authorities

Read the sources themselves; this list is a starting point.

  • Keech v Sandford, (1726) Sel Cas t King 61
  • Boardman v Phipps, [1967] 2 AC 46
  • Gissing v Gissing, [1971] AC 886
  • Lloyds Bank plc v Rosset, [1991] 1 AC 107
  • Stack v Dowden, [2007] UKHL 17, [2007] 2 AC 432
  • Jones v Kernott, [2011] UKSC 53, [2012] 1 AC 776

Where to go next

More hard concepts in United Kingdom law

This page is an educational overview. It is not legal advice and not a substitute for the sources: the statute, the rule, the case itself. The United Kingdom has three legal systems: England and Wales, Scotland, and Northern Ireland. These pages mostly describe the law of England and Wales and say where Scots law differs when it clearly does; Northern Ireland law is often similar to English law but is not covered separately. Parliament is sovereign, but the devolved legislatures also make law within their powers. Each page states the usual formulation of the rule and names landmark decisions; check the primary sources before relying on any rule.