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A resulting trust is an implied trust that comes into existence by operation of law, where property is transferred to someone who pays nothing for it; and then is implied to hold the property for the benefit of another person. The trust property is said to "result" or revert to the transferor (as an implied settlor).
The Court of Appeal held that the father could demand return of the shares, because his illegal scheme had not in fact been carried into effect. Millett LJ said it was true that an illegal purpose cannot rebut the presumption of advancement, but because the illegal purpose had not been carried out, the father was not precluded of pleading the purpose to claim a resulting trust.
It ceases to exist whenever that gap is filled by someone becoming beneficially entitled. As soon as the gap is filled by the creation or declaration of a valid trust, the resulting trust comes to an end. In this case, before the option was exercised, there was a gap in the beneficial ownership. So there was a resulting trust for Mr Vandervell.
In my view that is the position here. As it was a loan, I think it is quite inconsistent with that to say that it could create a resulting trust at the same time. I accept as a correct statement of law the short passage in Underhill's Law of Trusts and Trustees, 12th ed. (1970), p. 210, in these words: [2]
Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 is a leading English trusts law case, concerning resulting trusts. It demonstrates that the mere intention to not have a resulting trust (for example, to avoid taxes) does not make it so. This case was the first in a series of decisions involving Tony Vandervell's trusts and his tax ...
The council contended that on traditional trust law principles there could be no resulting trust (and therefore no property right, and compound interest) because the council's conscience could not be affected when it could not know (before the judgment in Hazell) that the contract was void. A resulting trust needed to be linked to a deemed ...
[10] Resulting trusts work on a principle of "common intention". This is the idea that a resulting trust is a mix of the settlor's intention, and the trustee's knowledge that he is not intended to be the beneficiary. In Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd, [11] Gibson J expressed the principle as:
Piercing the corporate veil, resulting trust, bare trust, Matrimonial Causes Act 1973 Prest v Petrodel Resources Ltd [2013] UKSC 34 , [2013] 2 AC 415 is a leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil , resulting trusts and equitable proprietary remedies in the ...