McGILL LAW JOURNAL
Volume 16
Montreal
1970
Number 2
The Doctrine of Resulting Trusts in Common Law Canada
Donovan W.M. Waters*
THE TERM ‘RESULTING TRUST’ . …………………………………………………………….
…………………………………………………..
THE RESULTING TRUST SITUATIONS
(1) Purchase in the name of another, or in the names of the purchaser
Page
189
191
and another ………………………………………………………………………………………………
194
(2) Voluntary transfer into the name of another, or into the joint names
of the transferor and another ……………………………………………………………….
(a) Rebutting the resulting trust …………………………………………………………..
(b) The presumption of advancement …………………………………………………….
199
202
205
What evidence rebuts the presumption?
Is
claimant to a resulting trust?
intent to perpetrate an illegality enough to defeat the
(i) Joint bank accounts …………………………………………………………………..
217
On what theoretical basis does the volunteer acquire his
rights ?
What is the effect of the account holder’s agreement with
the bank?
When does the volunteer hold his rights on resulting trust
for the payor into the account?
When does the right of survivorship vest?
Reform?
(ii) The presumption of advancement and matrimonial disputes 234
Pettitt v. Pettitt
The law “has not developed in the same way in the common
law provinces of Canada”
Whither reform ?
(3) Exhaustion or failure of express trust objects ……………………………………..
(a) Failure of settlor of express trust to dispose of the whole equitable
interest ………………………………………………………………………………………………
(b) The express trust fails totally or partially to take effect …………….
Mistake, fraud, uncertainty
Where objects have ceased to exist, or purposes become im-
possible
Improvidence, rules of law
(c) The rule in H ancock V. W atson ………………………………………………………..
C O N CLU SIO N ………………………………………………………………………………………………….
246
248
252
258
261
* B.CL. (Oxford), M.A. (Oxford), Ph.D. (London). Pxofessor, Faculty of Law,
McGill University.
McGILL LAW JOURNAL
[Vol. 16
The resulting trust is a term of art which is to be found in court
decisions and statutes covering a wide and varying range of subject-
matter. It is a term which most common lawyers feel they understand
at sight, and it is most commonly used to mean merely that A is
under an obligation to return property to B. The similarity of this
obligation to the restitution object of the American constructive
trust is evident, and partly because Equity lawyers, both in the
courts and in the treatises, have not themselves been exact in the
use of the term, considerable confusion occurs as between implied
trusts, resulting trusts, and constructive trusts.
In the common law jurisdictions of Canada, moreover, the body
of English Equity has been received, one sometimes suspects, like
some kind of biblical text, about which we all have a notion, but
which on demand few of us can quote. And such a reception is
understandable. English Equity is like a folklore. It is often couched
in quaint judicial language with heavy sentence constructions, and
equally often its case authorities seem to involve situations that
Trollope would have enjoyed, people with marriage settlement prob-
lems who reside in mansion houses at places like Barnby-in-the-
Willows. It all has a certain warming charm, yet its very remoteness
can lead to a partial understanding in the overseas reader, and a
consequent happy laxity in the use of its terms.
Aside from the use of the term, much has been happening in
two broad areas covered by the resulting trust. The presumptions of
resulting trust and of advancement have come under attack as no
longer being an adequate instrument for handling of family property
disputes, and the law of joint accounts has possibly been remoulded
by several recent decisions. Moreover, it was evident after T andervell
V. I.R.C.’ that the lawyer who cannot recognise a resulting trust
when he sees one may land his client with a frightening tax demand.
A student recently commented in a paper he prepared for me
that the resulting trust was born of an historical accident, and now
represents some unknown quantity vaguely related to the con-
structive trust, which itself is vaguely related in traditional English
and Canadian thinking to the express trust. If he was hoping to
provoke me, he has succeeded. This paper has the modest aim of
1 Vandervell v. I.B.C., [1067] 2 A.C. 291, [1065] 2 All E.R. 37. An option to
purchase shares was granted to a trustee company, but the grant did not make
it clear whether the option was to be taken beneficially by the company or on
trust. As a consequence a resulting trust arose in favour of the grantor (see
Lord Upjohn’s judgment on this point at [1967] 2 A.C. 291, at pp. 314, 315), and
he became subject to surtax on a considerable sum of money arising by way of
dividends which in fact he had donated to a charity.
No. 2]
DOCTRINE OF RESULTING TRUSTS
examining the resulting trust in its setting of the law of trusts and
in particular against the background of the Canadian authorities.
THE TERM, ‘RESULTING TRUST’
Broadly speaking, a resulting trust arises whenever legal or
equitable title to property is in one party’s name, but that party,
because he is a fiduciary or gave no value for the property, is under
an obligation to return it to the original title owner, or to the person
who did give value for it.
The courts and the various legislatures of the common law world
have used interchangeably the terms ‘implied trust’, ‘resulting trust’
and ‘constructive trust’, and the terminology is therefore somewhat
confusing. But essentially, while express trusts are those which come
into existence because settlors have expressed their intention to that
effect, constructive trusts arise not because of anyone’s expression
of trust intent but because B ought to surrender property to A and
this is the machinery the court employs in order to get B to do that.
In between the express trust, a product of the settlor’s intention,
and the constructive trust, a machinery imposed by law, are the
implied trust and the resulting trust.
The term ‘implied trust’ is commonly used for two situations.
First, where the intention to create a trust is not clearly expressed,
but has to be discovered from indirect and ambiguous language.
This is all that distinguishes such an implied trust from the express
trust. Secondly, where one person has gratuitously transferred his
property to another, or paid for property and had the property put
into another’s name. The intention of the transferor or purchaser
is implied to be that the transferee is to hold the property on trust
for the transferor or purchaser. The implication arises out of the
fact that Equity assumes bargains, not gifts,2 and requires the donee
to prove gift was intended.
The term ‘resulting trust’, on the other hand, does not allude in
any way to intention; it describes what happens to the property in
question. It results or goes back to the person who, for reasons we
shall examine, is entitled to call for the property. For example,
because Equity does not assume gifts, the transferee holds title for
the transferor or purchaser. In other words, in this ‘implied trust’
2 This old tag probably arose from the desire that the person alleging he took
as donee should have to prove that he was not an agent of the transferor or
purchaser. However, the tag may have been a seventeenth century rationalisation
of the resulting trust that Courts of Equity inferred by analogy with the then
well-established doctrine of resulting use. See, infra, pp. 109, 200.
McGILL LAW JOURNAL
[Vol. 16
situation the property results or goes back to the transferor or
purchaser. However, is it correct to describe this resulting trust
as one which arises out of implied intent, when it seems more to
come about because of the rule of law that Equity does not assume
gifts? The view is held that this resulting trust, like all resulting
trust situations, arises by operation of law.3 Such an explanation can
clearly be given of the resulting trust which arises when for any
reason the objects of an express trust fail. Since the trustee cannot
take beneficially, the property results to the settlor or his estate.
This outcome could also be said to be the implied intention of the
settlor, and sometimes the courts have said as much, but commonly
this is regarded as a resulting back by operation of law.4 As we
shall see,5 the Statute of Frauds explicitly envisages the resulting
trust, like the constructive trust, as one which arises by operation
of law.
Distinguishing the resulting trust from the constructive trust
is also not easy, because the lines have been blurred. In Rupar V.
Rupar,G for example, where a mother had assisted her son in the
purchase of a house taken in the son’s name, the trial judge said
that the mother’s claim was based “upon implied or constructive
trust”. The situation clearly gave rise to a resulting trust, but the
court saw all trusts arising by operation of law as coming within
the ambit of constructive trust.7 The distinction between resulting
and constructive trusts is perhaps best put in this way that, while
constructive trusts have nothing to do with intention, express or
implied, resulting trusts can be explained either on the basis of
3 However, since the whole operation of the presumptions of resulting trust
and of advancement presumes a search for the intent of the transferor or pur-
chaser, this paper proceeds on the basis that what the courts are concerned
with is the intent of the transferor or purchaser. That Equity puts the initial
burden of proof on the transferee to prove a gift is undeniable, but it only gives
rise to the search for intent.
4 In Goodfellow v. Robertson, (1871), 18 Gr. 572, A bought land with money of
his own, and money received on behalf of R, who was insane. The Court held
that because a resulting trust arose by operation of law, no evidence as to any
intention of R was necessary.
5 Infra, p. 193.
6 (1964), 49 W.W.R. 226 at p. 233 (B.C.). Implied was taken as synonymous
with constructive.
7 E.g., Taylor v. Wallbridge, [18lS4] S.C.R. 616 at p. 680, per Henry, J. that
where A and B purchase in the name of B, a constructive trust arises in favor
of A. Cited with approval in Jones v. Lucas, [1053] 2 D.LR. 225 at p. 229 (N.S.).
In the latter case Isley, C.J. (at p. 2,0) would consequently have been prepared
to apply Bannister v. Bannister, [1948] 2 All E.R. 133, ia clear constructive trust
authority, had the facts enabled him so to do.
No. 2″]
DOCTRINE OF RESULTING TRUSTS
intention or imposition of law. A good example of both a typical
constructive trust and a resulting trust occurring on the same set
of facts can be seen in Denny v. Lithgow.8 An infant and his mother
claimed that certain -land, bought by the defendant in his own name,
had in fact been bought on behalf of D, father and husband re-
spectively of the plaintiffs. D had paid part of the price, and for
many years prior to his death had had possession of the land. Spragge,
V.C. found that the defendant had indeed bought the land on behalf
of D. This meant that the defendant had acted in the purchase as
an agent, and, as an agent withholding property from his principal,
he became a constructive trustee for D’s estate. In so far, however,
as he took property in his own name which had partly been paid
for by another, he was a resulting trustee for D’s estate. 9
THE RESULTING TRUST SITUATIONS
These situations can be divided into two groups. First, if property
is purchased by A, and conveyance or transfer is taken in the name
of B, or in the names of both A and B, B becomes a resulting
trustee of his interest for A. Similarly, if A voluntarily transfers
property into the name of B or the names of himself and B, B
becomes a resulting trustee of his interest. The second group deals
with the situation consequent on the failure of an express trust.
If a settlor has failed to dispose of the whole beneficial interest,
either because he has created only limited interests in the trust
property or the trust objects do not exhaust the trust fund, the
trustees – who cannot, of course, take beneficially –
hold on re-
sulting trust for the settlor or his estate. Similarly, if an express trust
fails for uncertainty or failure of the trust objects, mistake, fraud,
duress or undue influence, or contravention of the perpetuity rules,
the trustees again hold on resulting trust for the settlor or his estate.”0
The essential characteristic of all resulting trust situations is
that the trustee has title to the property in question. The claimant
to the property seeks to have that title vested in himself. The claim
must fail if title cannot be shown to be in the alleged trustee. In
Wilson v. Owen,” the plaintiff bought ‘land from his solicitor, but
8 (1869), 16 Gr. 619.
0 The plaintiffs were ordered to reimburse the defendant for the moneys he
had put into the purchase of the property, and for the taxes on the property
which he had paid.
10 Illegality of trust objects, or a voluntary transfer for illegal purposes, will
not prevent a resulting trust arising, but the Courts will not enforce it.
11 (1878), 26 Gr. 27.
MCGILL LAW JOURNAL
[Vol. 16
later required the solicitor to strike out the plaintiff’s name as
grantee and enter on the deed the name of the plaintiff’s sister.
Possession throughout had remained in the solicitor, and the de-
fendant, the sister, then went into possession where she remained.
The plaintiff later sought to recover the land, asserting that the
defendant was a resulting trustee. During the action it was estab-
lished that the striking out of the plaintiff’s name from the deed,
and the insertion of the defendant’s name, were insufficient to divest
the plaintiff of title. Consequently what should have been brought
was not a resulting trust action, but a bill of ejectment. However,
the resulting trust does not require the trustee to have a legal estate
or title. In the great majority of cases what the trustee has in fact,
is the legal title, but the principle of the resulting trust operates
even if the title to the property is only equitable.1 2 If, for example,
A voluntarily assigns his remainder interest under a trust while the
life tenant is living, the assignee becomes a resulting trustee of
that interest for A.
A second essential characteristic is that the claimant (the would-
be resulting trust beneficiary) must have “provided the property
or equitable interest vested in the person bound by the trust”, as
Morrison, J. put it in Baird v. The Columbia Trust Co.’ 3 This means
that either the claimant originally transferred the property in question
to the alleged resulting trustee or that the claimant supplied the
whole or part of the purchase price when the property was bought
from a third party and transferred into the alleged resulting trustee’s
name. The necessity that this characteristic be present proved fatal
to the plaintiff’s claim in Baird v. The Columbia Trust Co. The
plaintiff was claiming from the defendant commission and salary,
and by way of making the claim, he asserted that the defendant
was a resulting trustee for him of a building, which was owned by
the defendant or a third party, but which certainly had never been
owned, legally or equitably, by the plaintiff.
Moreover, because a resulting trust arises when A voluntarily
transfers to B or requires a vendor to transfer to B, such a trust
can arise in a variety of circumstances otherwise having nothing
12 Carter v. Carter, (109,), 70 W.WR. 237 (B.C.). The defendant may be a
purchaser under an unregistered agreement for sale of land. As such he has a
mere personal right against the vendor; he has no estate or interest in the land.
However, because the purchaser upon payment may convert his “equitable in-
terest” (p. 240) into a legal title, a claimant to a half-share in the land may
claim as a beneficiary under a resulting trust for that share.
13 (1915), 22 D.L.R. 150 at p. 151 (B.C.).
No. 2]
DOCTRINE OF RESULTING TRUSTS
to do with the law of trusts. In Ferguson v. Toronto,14 a municipal
authority under its statutory powers had levied a tax for local high-
way improvements, assessing the local property owners in question
on the basis of their frontages on the highway. After the work was
completed, excess moneys remained and these moneys the municipality
proposed to use for other purposes, thus reducing taxes to the whole
body of municipal tax-payers. The Ontario Court of Appeal held
that the excess moneys were held on resulting trust for the payors
of the levy, and that those who had paid were entitled to a pro rata
share in the fund. Indeed, it is this kind of situation which associates
the resulting trust with the constructive trust.15
On the other hand a court may find that a resulting trust arises
in what is an express trust situation. The object, or at least the
effect, of this may be to avoid the Statute of Frauds provisions.16
Under that Statute, it will be recalled, written evidence is required
of a trust of land, but resulting trusts which arise by operation of
law are excluded from the Act.17 In Page v. Chambers,” B conveyed
land to the defendant in consideration of and as security for the
defendant’s discharge of one of B’s creditors. It was found as a fact
that B’s other creditors agreed not to press their demands for the
three years during which, under the agreement, B had to pay the
defendant. The purpose of this agreement between B, the defendant,
and the other creditors was in order that B should have more time
in which to pay his creditors. This agreement was found by James
J. to create a parol trust, under which, if B defaulted, the defendant
14 [1044] O.R. 885, [1944] 3 D.L.R. 317 (C.A.). See also Marshall V. Hett &
Sibbald Ltd., [1932] 1 W.W.R. 520 (Sask. C.A.).
‘5 Here the resulting -trust merely explains the return of property to the
subscribers. The reason for the court order was that the subscribers were entitled
to restitution, which is the essence of a constructive trust order.
lIn Wilde v. Wilde, (1879), 20 Gr. 521 (C.A.), a faher claimed that a farm
was bought by a son in his own name as express trustee for the family. The
farm would be worked by all the family, and on the father’s death be divided
among all his sons. Evidence was inadmissible of any such oral express trust,
and a claim to a resulting trust, arising out of the allegation that the son held
for the father absolutely, was refused. The terms of the resulting trust were
incompatible with the terms of the alleged express trust. Suppose the father had
alleged not only that he had provided the purchase money, but that there was
an express oral trust that the son would hold for the father absolutely. Could
the father avoid the Statute of Frauds by pleading a resulting -trust?
17Each common law province has expressly enacted the Statute into its own
law, though British Columbia has shortened and modernised the language of
the 1677 English original.
‘8 (1879), 14 N.S.R. 232 (C.A.) upholding James, J. at first instance. Cf. Briggs
v. Newswander, (1902), 32 S.C.R. 405 (on appeal from B.C.), at p. 4l.
McGILL LAW JOURNAL
[Vol. 16
would meet his own loan out of the secured land, and then surrender
the remainder to the other creditors. B assigned his interest in the
land to the plaintiff, who offered the defendant the $600 owed him by
B, and asserted that he was entitled to a conveyance of the land.
The defendant was in fact a trustee under the express parol trust,
and it would have been breach of trust for him to act as the
plaintiff wished. However, the trust was not in writing signed by
the defendant as the declarant of the trust, and therefore was un-
enforceable. 19 James J. was able to overcome that difficulty by means
of the resulting trust. Since in the learned judge’s view the defendant
and the other creditors had given consideration to B for the con-
veyance, he was prepared to treat the situation as if the defendant
and the other creditors had actually purchased the land for the
amount of their respective debts. In this way the defendant, as title
holder to the land, became a resulting trustee for the remaining
creditors, once his own claim against the debtor was satisfied. That
trust being excluded from the Statute, parol evidence was ‘adducible,
and the plaintiff lost his action.20
(1)
Purchase in the name of another, or in the names
of the purchaser and another
The principle has been established since the early eighteenth
century that if one man buys property, but has it conveyed into
another’s name, or into the joint names of himself and another, that
other becomes a resulting trustee for the purchaser of all the interest
taken by that other. The best-known statement of the principle, cited
and quoted in many Canadian cases, is that of Chief Baron Eyre in
Dyer v. Dyer:
The clear result of all the cases, without a single exception, is that the
trust of a legal estate, whether freehold, copyhold, or leasehold; whether
taken in the names of the purchasers and others jointly, or in the names
of others without that of the purchaser; whether in one name or several;
whether jointly or successive, results to the man who advances the purchase-
money. 21
19The Statute of Frauds, R.S.N.S. 1873, c. 83, s. 6, speaks of “the party entitled
to declare or create the trust”. Who was the deelarant in this case ? Was it B
as the grantor conveying on trust, or was it the defendant, as the person who
agreed to hold on trust for others, after his own interest was satisfied ? James, J.
assumed it was the latter. This result invalidated the express trust under the
Statute because, though there was a trust deed (ibid., at p. 240), it was agreed
to by B and the remaining creditors only.
2 0 This case provides an interesting study in how the courts will refuse evidence
of an express oral trust of land at the front door, and let it in as constituting
a resulting trust at the back door.
212 Cox 92, 30 E.R. 42 at p. 43.
No. 2]
DOCTRINE OF RESULTING TRUSTS
Dyer v. Dyer concerned land, but the principle is clearly applicable
to all forms of property, and there has never been any question of
its general application. 22
In order to take advantage of the principle, the claimant must
first show that it was he who advanced the purchase money. Because
the resulting trust is excepted from the Statute of Frauds, parol
evidence is admissible for this purpose, even if the property purchased
is laind.23 Circumstantial evidence is also admissible; in Vasenelak
v. Vaselenak,24 the impecuniosity of the transferee of title proved
the major factor in establishing the claimant’s case. This apparent
facility to the claimant that he can introduce such informal evidence
is not enough, however, to prevent many such claimants from failing
at this stage. Where the claimant and the transferee are members
of a common household, as is so often the case, the source of the
purchase moneys can easily remain in doubt, though it be established
that the moneys were handed to the vendor by the claimant.
Though the claimant can establish that he owned and paid over
the purchase money, he must also prove that he acted throughout
as a purchaser. If in fact he was lending the money to the transferee,
then his relationship with the transferee is that of a creditor with
a debtor. It is not open to him to argue that he advanced the money
which facilitated the purchase of the property, advantageous though
such a position might be to the claimant in the event of the
transferee’s bankruptcy. Clark v. MacInnis2 5 provides the object
22 Hudson Bay v. Hosie, [1926] Z W.W.R. 730, [1026] 4 D.L.R. 489 (Sask.
C.A.) (shares). Where A contracts with B to confer a benefit upon C, Professor
G. Williams has asserted that no resulting trust should arise in favour of A,
the promisee, over any property acquired by C from B. See (1944), 7 M.L.R. 123
at p. 126. He would like to see a legislative change, should there be such a trust
arising. The present writer cannot see the force of this argument if it does not
attack all resulting trusts, which is a more defensible argument (see p. ?).
Surely if a contract intends ‘to confer a benefit’ upon C, the evidence demon-
strating that intent will rebut the presumption of resulting trust.
23 In Morris v. Morris, [1931] 3 W.W.R. 427 (B.C.), a husband bought land
with his wife’s money, and had it registered in his own name. Fisher, J. held
that a creditor of the husband was entitled to rely on the Land Register as to what
charges were upon the title, and the resulting trust in the wife’s favour, which
was not shown on the Register, did not therefore take precedence.
24 [1921] 1 W.W.R. 889, -16 Alta. L.R. 256, 57 D.L R. 370 (C.A.).
25 [105S] O.W.N. 551. In Mackenzie v. Ross, (1900), 33 N.S.R. 252 (C.A.)
it
was particularly difficult to determine whether the transferee bought in his
own name with moneys loaned to him by the claimant
(whose -trustee in
bankruptcy was now suing) or had bought as an agent of the bankrupt. The
transferee had entered the bankrupt’s business, many years before the bank-
ruptcy, as an employee and son-in-law. As the bankrupt’s health deteriorated,
McGILL LAW JOURNAL
[Vol. 16
lesson. The claimant merely asserted that he was entitled to a
reconveyance of a certain house from the defendant, and was prepared
to prove that he had made the down payment. His statement of
claim was struck out with costs. He had not shown an express trust,
nor any other basis upon which the transferee was to hold the house,
and as there was not even a statement that he had made the down
payment as a purchaser, there could be no resulting trust. Nor was
the court prepared to accept an allegation that because the claimant
had agreed to sell the house to the transferee, a resulting trust was
established in the claimant’s favour. Was the claimant lending the
transferee the down payment?
If the claimant is lending money and takes title in the transferee’s
name, then he is merely acting as an agent for the transferee. 26 But
a man is also acting as an agent if, on another’s behalf, he uses his
own money to buy property, and takes title in his own name. In
those circumstances the payor has lent the purchase money to
another, and holds the property as security. Such a man is a resulting
trustee of the property for the other. If, however, the payor had
bought the property for himself, and had agreed with another that
on the other paying him the price, he would transfer to the other,
the payor is not a resulting trustee. The relationship between the
payor and the other is purely contractual; the property may have
been bought by the payor with the idea of fulfilling the agreement
to sell after he himself had bought, but the property was not bought
on behalf of the other. This distinction is well brought out in the
case of Brown v. Storoschuk.27
Again, if A agrees with B to purchase land for B, paying the
price with B’s money, but enters into a binding contract with a vendor
the transferee came to be the controller of the business. The land purchases
were made with moneys coming from the business, but with the bankrupt’s
consent. Both trial judge and appeal court found that the moneys were in
fact loaned to the transferee for him to buy in his own name, though the
purchased lands were later mortgaged and the proceeds of the mortgage paid
into the business. Consequently no resuling trust arose in favour of the
bankrup*s creditors. A crucial point was that the transferee negotiated the
purchases, the bankrupt on one occasion even refusing to be a purchaser.
26 It involves a nice point where the claimant alleges that money the transferee
acquired from a third party, so that the purchase might be made, was acquired
by the transferee as an agent for the claimant. See Henry v. Vukasha, (1057),
21 W.W.R. 409 (Sask.).
27 [1946] 8 W.W.R. 641 (B.C.C.A-). That which rests in contract cannot give
rise to a resulting trust. If A agrees to sell land to B for a certain sum, and
transfers title to B before he has been paid, A retains an equitable lien against
the land, but, if B fails to pay, A cannot assert that B is a Tesulting trustee
of the land: Taylor v. Wallbridge, [187a] 2 S.C.R. 616 at p. 674.
No. 2]
DOCTRINE OF RESULTING TRUSTS
in his own name, A thereupon becomes a resulting trustee of the
chose in action for B. Stuart J. came somewhat reluctantly to this
conclusion in Vaselent k v. Vaselenack; 28 he preferred to see B seek
a. declaration of agency. In Boulter-Waugh & Co. v. Phillips, Lamont,
J.A. said:
The same result, in my opinion, follows where a person takes title in his
own name to land which he agreed to purchase, but which, prior to obtaining
title, he had assigned to another.29
That is to say, the assignor becomes a resulting trustee for the
assignee.
What is the position if two persons advance the money for the
purchase of certain property, which is taken in the name of one of
them? If the amount subscribed by each is determinable, it is clear
that the transferee holds on a proportionate resulting trust. But what
if it proves impossible to determine how much was subscribed by
each? Suppose the parties have kept their savings in a shared
strong box, and from those savings a house is bought, in the name,
as it happens, of one of the parties. In Wilde v. Wilde,3 0 it was
said by Strong, V.C. that in those circumstances no resulting trust
could arise. This result seems obviously unsatisfactory, and yet it is
clear that the resulting trust can only cause a resulting to the
deprived party of what is his own, albeit, in a converted form, as
when a house has been purchased. However, there is a further
anomaly. In Eppler v. Szcepkowski,3 1 it was pointed out that Strong,
V.C.’s words could conflict with Lupton v. White.32 The latter case
established that, if A undertakes to keep the property of B distinct,
but mixes it with his own, the whole must be taken to be the property
of B. This situation would occur, for example, where B requests
A to keep a record of B’s savings handed to A, but consents to the
savings of both parties being kept in the same strong box. A does
not keep a record of B’s money. Alternatively, A may have kept the
savings distinct, but have drawn indiscriminately and without record
from the box when the parties needed money.
Most cases of this kind, where it is impossible to determine how
much each party contributed to a purchase taken in the name of
one of them, will occur where there has been some pooling of
28 [1.921] 1 W.W.R. 889, 16 Alta. L.R. 56, 57 D.L.R. 370 (C.A.).
29 [1918] 3 W.W.R. 27 at ,p. 83, 1 Sask. L.R. 297, 42 D.L.R. 548, reserved
on other grounds [1010] 1 W.W.R. 1,046, 58 S.C.R. 385, 46 D.L.R. 41.
30 (1873), 20 Gr. 521 (C.A.). See also Taylor v. Wallbridge, [1879] 2, S.C.R.
616 at p. 68a, per Henry, J.
31 [1045] O.R. 149, [1045] 1 D.L.R. 657, aff’d [1,946] 3 D.L.R. 641.
32 (1808), 15 Ves. 432.
McGILL LAW JOURNAL
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resources, and in S. v. S.33 in Manitoba, Campbell, J. refused to follow
the statement of Strong, V.C. in Wilde v. Wilde. He preferred to
follow the recent English authority of Jones v. Maynard, 4 and to
hold that the transferee held the property jointly for himself and
the other. An equal division is at least more equitable, if arbitrary.
S. v S. was in fact a ease of husband and wife, as was Jones V.
Maynard, and here the English authorities have found it easier to
justify such a division. As we shall see, 35 there has been a more
recent turning away from the post-World War II English authorities
on this point, and S. v. S. may not now represent the Canadian
solution.
Care should be taken to see what is meant when property is
purchased in the “joint names” of two parties, or where, as in
S. v. S., property is deemed to be held by the title holder for himself
and another “jointly”. When property is bought by one person and
title taken in joint names, a joint tenancy will arise which confers
upon each party an equal share in the property upon partition, and
a right of survivorship. This right will cause the whole property to
vest in possession in the survivor should the tenancy not be par-
titioned before the time when only one joint tenant remains alive.
If A supplies the purchase money and conveyance is taken in the
joint names of A and B, B on a partition will hold his interest for
A and also hold his right of survivorship –
again by way of a
resulting trust –
for A’s estate. There is then a twofold resulting
trust. However, evidence may show that, while A intended B to
hold his income rights for A during the joint lives, it was also A’s
intention that, should he (A) predecease, B should take the right
of survivorship as a gift. The resulting trust of the right of survi-
vorship would then be rebutted.
However, A may supply the purchase money and title be taken
in the names of A and B as tenants in common. In this case, A and
B each has an inheritable undivided half interest, but B will hold
his interest on resulting trust for A. All B’s interest is then subject
to this one resulting trust.30 Where, however, both parties contribute
33 [1M52] 5 W.W.R. 523 (Man.). Campbell, J. said (at p. 527)
that Wilde
v. Wilde had “no application to the instant case”, and he refused to follow
Dudgeon v. Dudgeon, [1907] 6 W.W.R. 346, 13 B.C.R. 179, in which there is
a favourable reference to Wilde v. Wilde.
34 [1051] Ch. 572, [1951] 1 All E.R. 802. Campbell, J. thought the facts of
the instant case more compelling than Jones v. Maynard, supra, that a joint
interest was intended.
35 Infra. pp. 234 s.
3 6Ballard v. Stover, (,167), 14 O.R. 153 at p. 156 (C.A.), per Armour, J.
No. 2]
DOCTRINE OF RESULTING TRUSTS
to the purchase money, and title is taken in the name of one party,
the other party is entitled to a resulting trust order in his favour
proportionate to the amount he contributed. The result will be secured
by declaring that the title holder holds on resulting trust for both
parties in proportionate shares as tenants in common. 37 This would
be an appropriate result where one partner has used partnership
moneys and taken title in his own name or in the name of a volunteer
third party. A resulting trust in favour of all the partners in equal
or proportionate shares as tenants in common would then come into
existence.
38
(2) Voluntary transfer into the name of another,
or into the joint names of the transferor and another
Where a person transfers his property into another’s name, or
into the names of himself and another, and does so gratuitously, the
principle underlying Dyer V. Dyer 39 would seem logically to apply
to this situation also. Since Equity assumes bargains, and not gifts,
he who has title gratuitously put into his name must prove that a
gift was intended. In the case of purchase by one person taking title
in the name of another, the resulting trust produces this effect,
namely, of putting the onus of proof of a gift upon the transferee.
It is not enough for the transferee to show that the transfer was
‘complete and perfect’, in the sense that the transferee is fully
vested with title to the property, he must also show that a gift was
intended.
On occasions, however, the courts have shown themselves not
entirely satisfied with this presumption of a resulting trust. They
have not said in any case that they will ignore the presumption,
and require the claimant to property which he has had put into
another’s name to prove that he did not intend a gift, but they have
been inclined to play down the presumption by saying that they will
look at the evidence (with an open mind?) and, weighing everything,
37 Nasmith V. Nasmith, (1019), 16 O.W.N. 298, where title to a house was taken
in the wife’s name, but, since both husband and wife had contributed to the
purchase money, and the presumption of advancement was rebutted, the wife
held on resulting trust for her husband and herself in equal shares as tenants
in common.
3 8Sharp v. McNeil, (1013), 47 N.S.R. 406, 13 E.L.R, 425, 15 D.LR. 7S, aff’d
.1 Cr. 239 (C.A.).
62 S.C.R. 504, 70 D.L.R. 740. McFadden v. Stewart, (1,865),
Wright v. Kyle, [1039] O.W.N. 464.
3) 2 Cox 92, 30 E.R. 42.
McGILL LAW JOURNAL
[Vol. 16
determine what it was in each case that the parties intended. 40 As
a consequence, it is only in the relatively rare case where all the
evidence is completely ambiguous, that the presumption of a resulting
trust has real significance.
Something of this desire to let the evidence tell its own tale has
undoubtedly affected the courts’ handling of the presumption of a
resulting trust in cases of voluntary transfer. Due to an accident
of history, whether there is a resulting trust in these circumstances,
has never been firmly established.
Before the Statute of Uses, 1535, if A conveyed the fee simple of
land to B without consideration, and B were a stranger in blood, it
was held by Chancery that B held on a resulting use for A. It was
customary for transferors to convey to others to the use of them-
selves, and because trusts were difficult to prove, while purchases,
being overt, could easily be proved, Chancery put the burden of
proof on the transferee to prove that he had given value. If value
had been given, the parties clearly did not intend that the transferee
should hold to the use of the transferor. 4′ However, the Statute
executed passive uses by puting the legal title in the cestui que
use, and as a consequence a conveyance by A to B accomplished
nothing, for the resulting use was executed and the legal title
remained in the grantor. The only way to avoid this result was for
B to give consideration, or for the conveyance to declare a use in
favour of B. To achieve the latter the conveyance would be worded,
‘unto and to the use of B’. Since there was now a specific use in
favour of B, there would be no resulting use to A.
In the seventeenth century, however, trusts were introduced and
the question than was whether, by analogy to the resulting use, B
held his title on behalf of A. In other words, the question became,
though A conveyed ‘unto and to the use of B’, did B nevertheless
hold on resulting trust for A.
Curiously enough, this question has never been resolved in the
English courts, perhaps because whenever this issue came before
the courts there was always evidence of whether or not gift was
intended. When it has been discussed, judges are found to be in
disagreement, 42 and treatise writers of the nineteenth century were
40 The weakening of the presumption has been more particularly indicated
since 1045.
41 Hldsworth, History of English Law, VoL IV, at pp. 4 23, 424.
42 Dord Hardwicke and James, L.J. thought no xesulting trust arose. Lord
Nottingham and Somers, L.K. thought to the contrary. See Neazor v. Hoyle,
(1962), 37 W.W.R. 104 at pp. 112, 1c13, quoting Maitland on Equity, (1932), at
p. 413.
No. 2]
DOCTRINE OF RESULTING TRUSTS
also divided. 43 Following Maitland, the preponderance of view in
1925, after which time the Law of Property Act made the issue
largely academic, 44 was that a resulting trust did arise.
In Canada, where the particular provision of the English Law
of Property Act has not been introduced, the courts have trodden
warily. 45 In 1933 the Supreme Court had reason to examine the
matter, but concluded only that “all the circumstances are to be
looked at, and if the conclusion is that, in view of all the circum-
stances, no resulting trust was intended, then no resulting trust
arises.” 46 With this truism the subject rested until in 1947 in Niles
V. Lake 47 both Kerwin, J. and Taschereau, J. gave it as their obiter
opinion that a resulting trust did arise upon a voluntary transfer,
and gave Maitland’s reason for this, namely, the close analogy between
resulting uses and resulting trusts. Finally, in 1962 in Neazor v.
Hoyle, the dispute was fully examined by Macdonald, J.A. for the
Alberta Court of Appeal, and he concluded:
I think that by reason of the voluntary transfer by the deceased to the
appellant [his sister], there could well be a presumption of a resulting trust
in favour of the donor and, if so, that the burden is on the appellant to
establish as a fact that she received the beneficial interest in the lands
,so transferred.48
4 3 Sanders on Trusts and Wiliams, Personal Property, in its earlier editions,
as did Lewin in its early editions, thought no trust arose. Maitland, and the
later Williams and Lewin, as well as Underhill, disagreed.
44 Law of Property Act, 1925, s. 60(g).
451n Federal Bank of Canada V. Canadian Bank of Commerce, (1886), 13
S.C.R. 384 at pp. 394, 395, Strong, J. for the Court conceded that the resulting
trustaxose in common law conveyances, but considered it did not arise in the case
of deeds operating under the St. of Uses, or in mere equitable conveyances.
This was the minority view of Lord Hardwicke, and of Sanders on Trusts.
46 M.D. Donald Ltd. V. Brown, E1083] S.C.R. 411, [1933] 4 D.L.R. 145 at -pp. 146,
147, per Duff, C.J.C. Appellant had conveyed land for a nominal consideration to
A, B, and C, and these parties had sold the land for $77,000. Was this income
of the appellant, and therefore taxable? S.C.C.. said no. The conveyance to
A, B, and C was intended to pass the full beneficial or equitable interest, as
well as the legal interest. Duff, C.J.C.’s statement was cited in Kobylanski v.
Public Trustee of Alberta, (1058), 15 D.L.R. (24) 108 at p. 203 (Alt. C.A.)
by Clinton, J. Ford, J.A., but, as Ford, J.A. noted, both in the instant ease and
D.LR. 664, 61 B.C.R.
the earlier B.C. case of Clelland v. Clelland, [19451
426, where the question of the presumption arose, the evidence clearly showed
no intention to make a gift.
47 [1947] S.C.R. 291, [10417] 2 D.L.R. 248, at pp. 253 and 256.
48 (162), 37 W.W.R. 104, (’19n), 32 D.:L.R. (2d) 11 at p. 141. Macdonald,
J,A. felt no need to discuss sections from the Land Titles Act and the Transfer
and Descent of Land Act (Alta.), which lay down that a (registration or instru-
ment transferring land convey all the xights the grantor had. Does this language
really leave room for the resulting trust?
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This means that, while the courts lean towards the view that
there is a resulting trust on a voluntary transfer, the more modern
desire to look at the evidence with an open mind is given greater
scope because of the existence of the dispute as to whether there
is a presumption at all.
There is surprisingly little authority on whether a resulting
trust arises when the property transferred is not land, which we
have been discussing, but pure personalty. English authority leaves
no doubt that such a trust arises, 49 but in Canada cases of transfer
seem only to have occurred between husband and wife, or father
and child, where the question was whether the presumption of
advancement was rebutted. If that presumption is rebutted, then
the wife or child, as the case may be, holds on resulting trust for
the husband or father. But whether that means that there is an
initial presumption of a resulting trust in such cases is a moot point.
Certainly one of the English authorities, Standing V. Bowring,50 has
been followed in Canada, 51 so it is likely that Canadian courts would
agree that there is a presumption of resulting trust where pure
personalty is voluntarily transferred.
(a) Rebutting the resulting trust.
Whether the resulting trust, which arises when A purchases in the
name of another, or in the names of himself and another, and when
A voluntarily transfers inter vivos to another or into the names
of himself and another, should be described as a trust of presumed
intent or a trust arising by operation of law, it is beyond question
that that trust may be rebutted by evidence showing that what A
had in mind was a gift.
As we saw earlier, any evidence, written or parol, may be adduced
to rebut the resulting trust, including circumstantial evidence. The
latter might take the form that the transferee on a purchase had
at the time such slender means that he could not have supplied the
purchase money. But what standard of proof is required to rebut
the resulting trust? Quoting Lewin on Trusts, 52 Stuart, J. said in
Vaselenalk V. Vaselenak 53 that the evidence must prove the fact of
gift “very clearly”. However, the very weakness of A’s case, the
40 Vandervell v. LR.C., [M,67] 2 A.C. 291, [19,65] 2 All E.R. 37.
50 (1896), 31 Ch. D. 282.
5I E.g., in Home v. Huston and Merchants Bank of Canada, (l11), 16 O.W.N.
52 12th ed., at p. 188.
53 [ 1921] 1 W.W.R. 889 at p. 89, 16 Alta. L.R. 256, 57 D.L.R. 370 (C.A.).
173, aff’d 17 O.W.N. 2 (C.A.).
No. 2]
DOCTRINE OF RESULTING TRUSTS
person who claims the benefit of a resulting trust, may result
in the rebutting of the trust. In Hutchison V. Hutchison,54 for ex-
ample, where A alleged that he paid the purchase price of land,
though the deed of conveyance was taken in the joint names of
himself and B, not only was A unable to show that he had in fact
paid the whole of the purchase price, but he was unable to explain
why it was that not only the conveyance, but the mortgage and the
receipts for the down payment were in the joint names of himself
and B. Unable therefore to see what the parties had had in mind,
Spragge, V.C. refused to disturb the title. On the other hand, the
claimant to a resulting trust may find that it is his relationship
to the transferee which makes it hard for him to prevent the rebuttal.
This was the situation in Street v. Hallett.r5 B, who was a married
man, went through a ceremony of marriage with A, she being
ignorant of his status. House property was bought in B’s name, at
his insistence, though paid for by A, and on B’s death his heirs
claimed the property. Blake, V.C. refused to find a resulting trust
in A’s favour. To the learned judge’s mind, it was conclusive, since
she had not resisted B’s demand that the property should be in his
name, and had continued to make payments towards the full price
after she knew of his married status,r6 that A had intended to make
a gift to B.
Evidence introduced to support the resulting trust or to rebut it
may only concern the intention of the parties at the date of the
purchase or transfer.57 It is clearly not open to A to support his
claim of a resulting trust by showing that at some later date he
intended a resulting trust. Even the donor cannot retract from his
gift, if he enabled the donee to acquire title and intended at that time
to make a gift. As Viscount Simonds put it in Shephard v. Cart-
wright, quoting Snel’s Principles of Equity,
The acts and declarations of the parties before or at the time of -the purchase
[or of the voluntary transfer], or so immediately after it as to constitute
a part of the transaction, are admissible in evidence either for or against
But subsequent decla-
the party who did the act or made the declaration.
54 (1856), 6 Gr. 111
55 (1874), 21 Gr. 255.
56These acts were admissible, though subsequent to the purchase, as acts
(C.A.).
against interest.
5 7 Though the parties are in no way related by blood or family ties, in
determining intent -the court may well be swayed by the degree of friendship
between the parties and the circumstances surrounding the transaction. See
Thornley v. Royal Trust Co., (1932), 41 O.W.N. 470 (doctor and a long-serving,
faithful secretary).
McGILL LAW JOURNAL
[Vol. 16
rations are admissible as evidence only against the party who made them,
and not in favour.58
That it is the intention of the parties at the date of the purchase
or transfer which is important is well brought out by Taylor V.
Wallbridge 69 in the Supreme Court. A was the assignee of an interest
arising out of a contract of purchase of certain land. As he was
leaving Canada, he assigned his interest to his brother, B, who
without authorization paid the remainder of the purchase price,
and took a conveyance. Later B reconveyed the interest to A, and
A was persuaded to give a power of attorney to B to sell the land.
Thereupon B allegedly sold the land to X for a nominal sum, and
X reconveyed half the land to B for a much smaller sum. On re-
turning to Canada, A sought to set aside these transactions. B
argued that as he had paid part of the purchase price a resulting
trust arose in his favour. Henry, J. conceded that in principle a
resulting trust did arise, but he pointed out that the claimant to a
resulting trust must have paid or come under an obligation to
pay at the time of the contract of purchase. The purchase price
did not have to be paid at the time of the conveyance, but the re-
sulting trust argument was defeated if it could be shown that the
price was paid in pursuance of the contract by which the purchase
was made. B could not insert himself by paying the price, or part
of it, some ten years after the contract was made.
It is interesting to note that B might have succeeded in this
case if he could have shown that A authorized him to pay the
remainder of the price, and by that authorization intended to make
a gift of his interest in the land to B. But this was the very thing
B could not show. The operative time therefore was the date of the
contract of purchase, and the obligation to pay under this contract
had been assumed by A in the assignment which he had taken.
The later assignment to B was only for the purposes of agency.
Can the claimant to a resulting trust bring his claim long after
title has become vested in the other? The resulting trust will not
be rebutted by the passage of time,0 but, as was said in Taylor v.
Wallbridge,c’ the court will examine the facts very critically in these
58 [1955] A.C. 431 at p. 445; [1954] 3 All E.R. 649 at p. 652.
59 (1979), 2 S.C.R. 616. See also McKercher v. Sanderson, (1889), 15 S.C.R. 296,
esp. per Strong, J. at pp. 298, 299. The latter authority was followed in Wood
v. Strange, [1946] O.R. 189, [1,946] 2 D.L.R. 74
(the case of the seven spinster
sistera), and in Jones v. Lucas, [,1953] 2 D.L.R. 225, at p. 229 (N.S.). Also see
King v. Thompson, (1005), 6 Terr. L.R. 204 (C.A.).
0o Briggs v. Wilson, (1897), 24 O.A.R. 521 at p. 525, per Boyd, C.
61 [1817-9] 2 S.C.R. 616 at pp. 656 et seq., 687 ‘et seq.
No. 2]
DOCTRINE OF RESULTING TRUSTS
circumstances. Laches will certainly defeat the claimant, as it did
in Fonseca V. Jones,62 and the reason for this is that the claimant
by his delay has effectively acquiesced in the defendant’s title.
Of course, if the claimant has earlier waived his claim, that will
also defeat him. In Hoig v. Gordon,63 a
laim to dower in land
subject to a resulting trust was rejected because of waiver by
conduct. A married man and a woman were living together as
husband and wife, and the woman bought property in the man’s
name. Later, in a declaration of trust of the property, the parties
reserved to themselves powers of sale and appointment. Acting
under these powers the property was sold to the plaintiff. After
the deaths of the man and the woman, the wife of the man, who
had condoned the living together and remained on friendly terms
with the two until their deaths, claimed dower in the land. Mowat,
V.C. rejected the claim, not only because he was of the view that
the man held the property on resulting trust for the woman, but
because the wife had allowed her husband and the woman to hold
themselves out as man and wife, even receiving support from them,
and was thus precluded from setting up her claim against the
plaintiff.
(b) The presumption of advancement
If A is able to establish that he purchased property and had it
conveyed into B’s name, or that he voluntarily transferred property
to B, there is commonly said then to be a presumption of a resulting
trust in A’s favour. But that presumption, which puts the burden
of proof on B to prove A intended a gift, will not arise where B
is a child or wife of A. In such cases there is a presumption that
A intended to make a gift, and it is for A to prove that he had
no such intention. 4 The word ‘advancement’ is now rather archaic,
but it means that the person who stands in the position of a hus-
band or father is assumed to be making over a portion of his
assets to one who by marriage or parent-child relationship is in
some degree financially dependent upon him and might reasonably
62 (1910), 14 W.L.R. ‘148, 21 Man. R. 168, aff’d 18 W.L.R. 259, 21 Man. R.
168 (C.A.).
63 (1871), 1’ Gr. 599.
64 “Where a conveyance of land is made by a husband to his wife, the
relationship implies a consideration and the law presumes that the conveyance
was intended as an advancement by him”; Hyman v. Hyman, [1934] 4 D.L.R.
(,S.C.C.), citing Johnson v. Johnson, (1026), 31 O.W.N. 316. The
532 at p. 53
presumption of advancement displaces the presumption of a resulting trust;
Cole v. Cole, [1-943] 3 W.W.R. 532 at p. 551 (B.C.C.A.), per Robentsan, J.A.
McGILL LAW JOURNAL
[Vol. 16
expect to share in the assets of the transferor on his death. 5 In
that sense the transfer of property is an ‘advance’ of what might
be expected on the transferor’s death. 6 As far as children are con-
cerned, an ‘advancement’ also implies a donation to assist the child
in establishing himself in life.
The origin of this presumption is in the eighteenth century,
and, prior to the First World War in particular, it reflected very
much the course of affairs in the average middle class or aristo-
cratic family. In relation to wives, Lord Reid has’ recently said:
I do not know how this presumption first arose, but it would seem that
the judges who first gave effect to it must have thought either that husbands
so commonly intended to make gifts in the circumstances
in which the
presumption arises that it was proper to assume this where there was no
evidence, or that wives’ economic dependence on their husbands made it
necessary as a matter of public policy to give them this advantage. I can
see no other reasonable basis for the presumption.67
As for children, the presumption primarily arises between father
and child,08 but it also arises whenever one person, male or female,
places himself in loco pcrentis to another. That is to say, if A acts
in relation to B as if he were the parent of B, in some degree
financing his needs and showing the love and affection of a parent,
A will be presumed to be making a gift of property put in the child’s
name.0 9 In Young v. Young,70 the British Columbia Court of Appeal
had no difficulty in imposing such a presumption where a man and
65 “It is really inaccurate to speak of an advancement of the entire property
of a husband to his wife; an advancement is essentially a share, and here the
transfers were in substance of an entire establishment”; Pahara v. Pahara,
[1946] S.C.R. 89 at p. 95. (italics supplied).
06 As such, it may constitute a ‘portion’, which must be taken into account
on the donor’s death if the donor makes a class gift including the inter vivos
donee. See Miller v. Miller, (1:L0), 8 E.L.R. 161 (P.E.I.; Fitzgerald, V.0.).
67 Pettitt v. Pettitt, [1.969] 2 W.L.R. 966 at p. 971, [196a] 2 All E.R. 385
at pp. 388, 389.
68 See, e~g., Eldridge V. Royal Trust Co., [1922] 2 W.W.R. 1068; [1923] 2
W.W.R. 67 (S.C.C.), and Northern Canadian Trust Co. V. Smith, [1947] 1
W.W.R. 497, aff’d [1947] 1 W.W.R. 765, [1947] 3 D.L.R. 135 (Man. C.A.).
This means a father and his legitimate child. Even though such a child does
not live with his father, a inansfer into the child’s name would cause the
presumption to arise. Whether this would be so in the case of a natural child
is more difficult to say. Yet it seems strange that such a child should have
to prove his father stood in loo parentis towards his own child.
0 0Larondeau v. Laurendeau, [1954] O.W.N. 722 at p. 724,
[1054] 4 D.L.R.
293. See also O’Brien v. Bean and Bean, (1957), 7 D.L.R. (2d) 332 (B.C.):
brother and sister; brother had a certain fatherly interest in his sister, but
he was not in loco parentis towards her.
70 (1059), 15 D.L.R. (2d) 13.
No. 2]
DOCTRINE OF RESULTING TRUSTS
a woman, the latter of whom had an infant son, had been living
as husband and wife. The child lived in the household as if he were
the son of the couple, and those living in the area regarded the man
as being the stepfather of the boy. The Court therefore held that
the man stood in loco parentis to the boy, and a presumption of
advancement arose when the man bought a farm in the joint names
of himself and the boy.
The mother and child relationship is said not to give rise to the
presumption.7 1 Historically, this was probably the case because the
mother in any event did not have the financial resources of her
husband, and could not therefore be presumed to be making an
‘advance’ of future expectations to her child. In Main v. Main (No.
2 however, where Adamson, J. adopted Lewin7 3 to the effect
2),7
that there is no presumption, he also said that over and above the
mother and child relationship little additional motive for the making
of a gift would need to be proved.7 4 Yet the burden of proof re-
mains on the child who must show “by clear evidence” 75 that a gift
was intended. On the other hand, in Rupar v. Rupar 76 in the British
Columbia Courts, McFarlane, J. seems to have assumed there was
a presumption of ‘advancement’ between mother and son. The son
in question was at or near his maturity when a house was bought
in the son’s name, and at that time he was effective head of the
family. Yet the learned judge considered the evidence to be insuf-
ficiently cogent “to rebut the presumption”.7 7
The presumption that arises when a husband transfers, or has
property transferred into his wife’s name, or into the joint names
of himself and his wife, does not extend to the situation where man
and woman are living together as husband and wife. In Derhak v.
Dandenault,7 8 this proved very important, for the existence of a
7′ Edwards v. Bradley, [1057] S.C.R. 599, 9 D.L.R.
(.2d) 673 at p. 678, per
Cartwright, J.
72 [.1939] 1 W.W.R. 7, 47 Man. R. 199, [1-939] 1 D.L.R. 723.
73 13th ed., at p. 190.
74 In Hewitson V. Johnston, [i954] O.W.N. 795 at p. 796, Barlow, J. said
there was no presumption of advancement between mother and daughter,
“although such a presumption might be shown by evidence in a case where a
daughter was unmarried and dependant upon her mother for support.”
75 [1939] 1 W.W.R. 7 at p. 10.
76 (19.64), 49 W.W.R. 226.
77 Ibid., at p. 234. On the standard of proof, see also Re Harvey’s Application,
(1969), 66 W.W.R. 254 at p. 256, where a remark of Moss, J. in McManus
v. McManus, (1876), 24 Gr. 1l8 at ,p. 124, is cited, namely, that “clear, distinct,
and precise testimony is required.”
78 (1954), 1 W.W.R. .7, 62 Man. R. 16. See also Stagg V. Ward, (.1921), 30
B.C.R. 385.
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presumption would have put the onus of proof upon the man to the
woman’s clear advantage. The woman’s case had much equity in
its favour, and such a situation causes one to reflect on the justi-
fication for the denial. Given that there is a, presumption of ad-
vancement between husband and wife, there is something archaic
in withholding the presumption when parties live together without
wedlock. The presumption expresses the view that the relationship
between husband and wife is so close that it would be incorrect to
treat them as if they were strangers vis-A-vis each other. Not to
apply this conclusion to man and woman, cohabiting as if man and
wife, even where the parties cannot marry because one party is
already married, would suggest that the law is not concerned with
intention, but with disapproving of what has traditionally been
regarded as immoral conduct.7 9
In mainy of these cases either husband or wife, or both, are dead,
and the presumption of advancement has the effect of allowing an
assumption as to intention in the absence of evidence in court from
the crucial party. Is there a presumption of advancement between
husband and wife when both parties are alive and give evidence
to the court? In Ex parte Cooper, Lindley, L.J. said:
When the parties to such a transaction are alive, and give evidence, there
is no occasion to resort to any presumption; the question is one of fact.80
And in Ontario in 1891, in the case of Gibsons V. Tomlinson,”‘ Rose,
J. cited and adopted this statement as a rule. More rencently, how-
ever, in Walsh v. Walsh,82 Schroeder, J. refused to accept either
Lindley, L.J.’s statement or Rose, J.’s adoption of it. The learned
judge noted, first, that Ex parte Cooper was a decision in the Bank-
ruptcy Court, the report not giving the facts, and that, secondly,
the later and higher authority of HVman v. Hyman 8 3 and of lar-
rington v. Harrington 84 had laid down that in these circumstances
79 Counsel argued in Mason v. Hayes, (1924), 51 N.B.R. 187, that a presumption
of advancement aaises whenever the purchaser
in another’s name or the
transferor is under “a legal, moral, or natural obligation”
to provide for
the transferee. Hazen, C.J. merely found on the facts .there was no presumption,
and did not take up this argument. It is regrettable that a rationale of the
presumption along these lines has not developed.
0 [1882] W.N. 96.
81 (189,1), 21 0..
82 [1948] O.R. 81, [1948] 1 D.L.R. 630, aff’d [1948] O.W.N. 668, [1048] 4
489 at p. 493.
D.L.R. 876 (C.A.).
83 [1,934] 4 D.L.R. 53
84 56 O.L.R. 568 at p. 574, [1925] 2 D.L.R. 849 (C.A,). Both this case, and
Hyman v. Hyman, involved plaintiff and defendant who where husband and wife.
(S.C.C.).
No. 2]
DOCTRINE OF RESULTING TRUSTS
there is a presumption, as a “circumstance in evidence”, and that
the onus of proof is therefore on the husband. 85
What evidence rebuts this presumption of advancement? Like
the presumption of a resulting trust, it is an evidentiary presump-
tion, and can be rebutted in the same way, that is, by written or
parol, 8 direct or circumstancial evidence, but evidence only which
satisfies the rule in Shephard v. Cartwright.87 And the burden of
proof is of the same weight; the person making what is presumed
to be an advance must prove his case that there was no gift,
“at least within a reasonable probability”. 88 Yet more recently to that
expression, Thompson, J. said in Re Ingersoll v. Nettleton and
Fonagy that,
… Where the written instrument of creation clearly indicates the transfer
of an estate which ipso facto or as legal incident conveys both the legal
and beneficial interest, it would take very clear, cogent and convincing
evidence ‘of intention to cut down the interest of apparent, expressed intent.8 9
The question is merely as to whether the person who transferred
or caused transfer of the property and who is presumed to have
intended a gift, in fact intended not to make the presumed gift. It
may have been improvident of the transferor to make the gift, but,
85 aogically Lindley, L.J. must have been wrong, because the presumption
grows out of the relationship; it is not concerned with the donor’s presence
in, or absence from, the court. Moreover, facts may leave the court with a
genuine indecision as to what were the alleged donor’s intentions, whether
he is absent from -the court or gives evidence. On the other hand, was it
traditionalism or an appraisal of the value of the presumptions
in these
circumstances which led the Supreme Court in these cases to decide there
was a presumption?
80 Barr V. Barr, (1868), 15 Gr. 27 at p. 28; Owen v. Kennedy, (1873), 20 Cr. 13
at p. 166 (C.A.). Whether the problem arises over -an inter vivos dispute, or
as to whether property passes under a will, the question is the significance
of the purchase in another’s name, or voluntary transfer to another, at the
time during the lifetime of the purchaser or transferor when that act took
place. Was it his intention then to make a gift?
87 [1955] A.C. 431, [154] 8 All E.R. 649. See Rupar V. Rupar, (1064), 49
W.W.R. 226; Larondeau v. Laurendeau, [1954] O.W.N. 7012,
[1954] 4 D.L.R.
293; Owen v. Kennedy, (1876), 20 Cr. 163 at p. 166; Gordon v, Warren, (1897), 24
O.A.R. 44 at p. 51 (C.A.).
88 Walsh v. Walsh, [1048] 1 D.L.R. 680 at p. 649, per Schroeder, J. In
Vaselenak v. Vaselenak, [102A] 1 W.W.R. 889 at p. 892; 57 DL.R. 370, Stuart, J.
said the evidence to rebut the resulting trust must do so “very clearly”. The
difficulty of arriving at an agreed word formula to express what standard
of evidence is required has always proved considerable, in this field as elsewhere.
89 [1956] O.W.N. 7S8 at p. 741.
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if intention to give cannot be disproved, a gift it is. Whether the
courts will set aside the gift for improvidence is another and inde-
pendent issue.90 As Riddell, J. put it in Empey v. Fick, “the law
does not put it upon the child to prove the reasonableness of the
gift.. .”.91
Evidence which rebuts or fails to rebut the presumption of
advancement can take many forms, as of course is also the case
with the presumption of resulting trust. In many cases the husband
fails to satisfy the court that he was the person who advanced the
purchase price, a fact which would prevent him from establishing
a resulting trust situation. Alternatively, whether husband or father,
he fails to show that he had some limited object in mind and not
a gift, which means he fails to rebut the presumption of advance-
ment. Barr v. Barr 92 and Knox v. Traver 93 constitute two useful
examples of such cases where presumption of advancement in favour
of a son was argued. Evidence introduced to rebut the presumption
was successful in the first case, and unsuccessful in the other.
In Barr v. Barr, a father who was a mortgagee purchased a
prior mortgage, but on the advice of his solicitor had it conveyed
into the name of his son. The son, who was 32, was to be a trustee
of the mortgage. Upon foreclosure of this mortgage, title was taken
in the name of the son, again on the advice of the solicitor, but the
deed did not contain any reference to the trust. The deed was re-
tained by the father, who continued to deal with the property as
if he were beneficially entitled. With the knowledge of the son, the
father had received interest payments from the mortgagor for his
own use, but the son only learned through a third party that the
deed was in his own name. He thereupon demanded possession from
the tenants on the -land, and purported to convey the property to
another. It was shown, in addition to these facts, that the father
had already made some provision for the son. Mowat, V.C. concluded
that the clear intention of the father was to use the son’s name
“as a mere matter of supposed convenience to the father, and for
90 As a general rule the courts will not set aside a trust on these grounds.
91 (1907), 15 O.L.R. 10 ait p. .29 (C.A.), cited in Northern Canadian Trust Co. V.
Smith, [1947] 1 W.W.R. 497 (Man.), per Williams, C.J.K.B.
92 (1,863), 15 Gr. 27.
93 (1877), 24 Gr. 477 (C.A.).
No. 2]
DOCTRINE OF RESULTING TRUSTS
In Knox v. Traver,9
the father’s use…”.94 The presumption of advancement was thereby
rebutted; the evidence was “quite sufficient to establish the trust”.0 5
the presumption was not rebutted. A son
purchased land with money provided by his father, who had bor-
rowed the money for that purpose from third parties. The son had
stood surety to the third parties for the repayment of the money,
and the father argued that this showed that the son was merely
acting to facilitate his father’s purchase. The court was agreed that
the son was bound by his suretyship, but held that this did not
establish his indebtedness to his father, even though the father
alleged that his reason for having the land put in the son’s name
was to qualify the son to vote at elections.
It is well established, on principles common to law and equity,
that the transferor may not set up his own illegality or fraud to
defeat the presumption of advancement. For example, to take the
familiar situation, a husband transfers property into his wife’s
name with the intention of defeating his creditors’ claims against
the property. Later, attempting to recover the property from his
wife, he seeks to introduce evidence of his intention in order to
rebut the presumption of advancement. To defeat one’s creditors in
this way is illegal, and therefore the husband will be refused the
right to introduce evidence of this illegality. However, for this rule
to operate, two things must be established. First, the disposition
itself must be illegal or fraudulent. In
the English case of Re
Emery’s Investment Trusts, 0
the husband registered certain secu-
rities in the name of his wife, intending to retain a one-half bene-
ficial interest for himself. However, the interest was not disclosed
to the American federal taxing authorities, the intention of the
husband being to avoid American withholding tax. This action was
in contravention of American law, and was not permitted to be
pleaded. In Re Harvey’s Application,9 on the other hand, the hus-
94 (1868), 15 Gr. 27 at p. 28.
05 Ibid. Could evidence of the express trust be admitted, since it was in parol
form? The St. of Frauds excludes such evidence, but, even though that is so,
the effect of the successful rebuttal of the presumption of advancement was
that the son held on resulting trust for his father. In that way the object of
the express trust was secured. However, Mowat, V.C. in this Temark must
have been referring to the resulting trust, for the Statute permits the admissibility
of parol evidence to establish constructive and resulting trusts only.
96 Supra, n. 93.
97 [1959] Ch. 410, [1,959] 1 All E.R. 577. Followed most recently in Tinker
v. Tinker, [19-70] 2 W.L.R. 31.
08 (1,969), 66 W.W.R. 254 (B.C.). Re Emery’s Investment Trusts, supra, was
discussed by the learned judge.
McGILL LAW JOURNAL
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band’s intention in registering in his wife’s name certain land which
he had just purchased, and which was adjacent to land already
owned by him, was to avoid the adjacent lands having a, common
owner and thereby attracting higher assessed values for taxation
purposes. Seaton, J. held that this scheme was not improper, and
could be pleaded in evidence. 9
Secondly, the evidence of illegality seeking to rebut the pre-
sumption must be central to the case of the claimant. If such a
person reveals an illegal or fraudulent motive, which a more skilful
person could have concealed, he may yet recover if “the untainted
part of his story [is] enough to entitle him to succeed without re-
liance upon that which was either illegal or immoral”. This point
is made by Idington, J. in Scheuerman v. Scheuerman.00 It
is
always for the particular court to decide, once evidence of this kind
emerges, whether the claimant relies upon the evidence of illegality
to establish his claim.101 In Northern Canadian Trust Co. V. Smith, 0 2
for example, Williams, C.J.K.B. found that he did not need to con-
sider the applicaton of Idington, J.’s distinction because the very
pleadings in the Northern case alleged an intent to achieve what
was in fact an illegal object, and actually made that object the only
basis of the claim. In Krys v. Krys, 03 on the other hand, the trial
judge drew an inference of illegal intent from the evidence, namely,
that the claimant aasigned to his son in order to avoid his wife’s
claims to homestead rights. The Supreme Court of Canada refused
to draw such an inference. The intent to defraud had neither been
pleaded nor proved; indeed, the question was not raised nor sug-
gested at the trial.
The leading case on the effect of illegality or fraud is Scheuer-
man v. Scheuerman,04 but the difficulty which arises from this case
99The evidence was held -to be ambiguous, however, and not enough to rebut
the presumption.
100 (19116), 10 W.W.R. 370 at p. 381; 52 S.C.R. 625 at p. 629;
(1915), 21
D.L.R. 593 (Afta.).
101 It may not be the claimant whose evidence is excluded because of this
rule. In Spurgeon v. Aasen, (M1665),
52 W.W.R. 641, a man conveyed property
to his mistress, but took from her a -promissory note for the value of the
property. The man sued
the property, the promissory note not
having been met, but the woman claimed that the note was intented by both
parties as a sham. The man was to forgive $4,000 each year, and thus the
parties would avoid gift tax. It was the woman who relied on this evidence,
and the exclusion of the evidence left her liable on the promissory note.
to recover
102 [11047] 1 W.W.R. 49.7, 55 Man. R. 123.
103 [-1929] S.C.R. 153.
‘o4 Supra, n. 100.
No. 2]
DOCTRINE OF RESULTING TRUSTS
is whether the intent to commit illegality or fraud is enough. Must
it also be shown, if the claimant’s evidence is to be rejected, that
the illegal or fraudulent act was actually carried out to the injury
of another? In Scheuerman v. Seheuerman the Supreme Court of
Canada was divided on this question. Fitzpatrick, C.J., Idington and
Brodeur, JJ. considered that intent alone was sufficient, and Duff, J.
appears to have shared this view. However, he expressly found that
the burden of proof was on the claimant to prove that the intent
had not actually achieved its purpose, and he did not consider that
that burden had been discharged. Anglin, J. was of the opinion that
intent was not enough; the illegal purpose must have been carried
out. In light of the facts, as he found them, he therefore dissented.
The facts were that a husband bought land and had it conveyed
to his wife, and on the land he built the homestead. The wife later
sold the house for an enhanced sum, and the husband claimed that
sum. The reason for having the land conveyed to the wife, allegedly
on trust for the husband, was so that the husband could avoid a
claim by a third party who was his judgment creditor. In fact the
debt was later paid, and it was long after this payment that the
house was sold. Under Alberta law of this time, however, homestead
property to the value of $1500 was exempt from creditors’ claims,
and the majority Supreme Court judgments ‘do not decide whether
the property was ever worth more than this sum before the debt
was paid, ‘and whether, if it was, the creditor was actually delayed. 10 5
On this point of whether intent is enough, Scheuerman v. Scheuer-
man has had an uncertain career. In Krys v. Krys, the Supreme
Court said of it, “there does not seem to be that unanimity in its
reasons handed down by the judges constituting the majority that
is necessary for a ruling case”. 06 But it has survived as authority
for the proposition that intent alone is sufficient. In Northern
Canadian Trust Co. v. Smith the precedents and the career of
Scheuerman’s case were fully examined, and Williams, C.J.K.B. con-
105 Elford v. Elford, [1022] 3 W.W.R. 339, 64 S.C.R. 125, is often coupled
with Scheuerman v. Scheuerman, but in Elford’s case the intent had certainly
been carried into fraudulent act (see [1922] 3 W.W.R. = at p. 942).
106 [1029] S.C.R. 153 at p. 164. This is a curious remark. Newcombe, J. for
the Court also said the facts of Scheuerman were “special”, and that the decision
depended on its own facts (at p. 164). The reasons for this attack are not
given, nor were these criticisms expanded. As the Court found no intention to
defeat, hinder or delay creditors, it is also not clear why Scheuerman needed
to be attacked. The Court did appear to consider that the particular claimant
had a strong claim.
McGILL LAW JOURNAL
[Vol. 16
eluded that “in a case such as this” Scheuerman was still good law.’ 07
The following year, 1948, Schroeder, J. tried Walsh v. Walsh, 08 his
judgment being later upheld by the Ontario Court of Appeal. In
that case a husband had conveyed his undivided one-fifth interest
in certain property into his wife’s name, being at that time under
pressure from more than one creditor. The debts were subsequently
paid off. The husband later alleged that the wife was only to hold
the interest for himself, and he sued to recover it. Schroeder, J. first
dealt with the argument that it was not the husband, but the wife,
who had raised the issue of illegal motive as explanation of the
conveyance, an allegation which the husband strenuously resisted.
Did the evidence of such motive serve to defeat the husband’s attempt
to rebut the presumption of advancement? The learned judge held
that it did. Following Toohey v. Toohey,10 9 he held that the essence
of the husband’s claim was that he had made a conveyance to his
wife. If in fact that conveyance was shown by the evidence to have
been with the intent to perpetrate an illegality, the court had to take
account of the motive when it was brought to the attention of the
court. Secondly, Schroeder, J. was firmly of the view that the illegal
purpose need not have been carried out; intent was enough. In
saying
to the
opposite effect, and a decision of the Privy Council in an appeal
to the Board from India.”‘ He considered the latter decision to be
“out of harmony with the whole trend of English and Canadian
cases,… particularly the decision of the Supreme Court of Canada
2 Here again, however, as in Scheuer-
in Scheuerman v. Scheuerman”.
man itself, the illegal purpose may have been carried out. The learned
judge considered that, even had intent not been enough, the husband
this, he rejected a statement of Halsbury 110
?
107 [1,947] 1 W.W.R. 497 at p. 517. The father was found not to have paid
for the property put into the son’s name, but to have used the son’s assets.
As an alternative finding Williams, C.J.K.B. then considered what the position
would have been had the father’s evidence been correct. In an earlier action by
the wife for maintenance, no order had been made when the father pleaded
he had no property, but Williams, C.J.K.B. appears to have proceeded on
the basis that the intent to avoid his legal liability to support was enough.
[1948]
108 [1948] O.R. 81, [1948] 1 D.L.R. 630, aff’d [1948] O.W.N. 668,
4 D.L.R. 876 (C.A.).
109 [1041] O.W.N. 149 at p. 182, [1941] 2 D.L.R. 520 at p. 524.
110 2nd edition, 1939, p. 148, para. 248.
“‘Petherpermal Chetty v. Muniandy Servai, (1908), 24 T.L.R. 462. In Cole
v. Cole, [1.943] 3 W.W.R. 5&2, McDonald, C.J.B. found it unnecessary to decide
whether this decision could be reconcilied with Scheuerman v. Scheuerman and
Elford v. Elford, [1922] 3 W.W.R. 839, 64 S.C.R. 125.
112 [1948] 1 D.L.R. 630 at p. 647.
No. 2]
DOCTRINE OF RESULTING TRUSTS
had not discharged the onus of proof upon him to show that no
creditors had actually been prejudiced.”13
One has in fact to go back to the case of Harington V. Harring-
ton,”1 4 heard in the Appeal Court of Ontario in 1925, to find a
situation where Scheuermn was regarded as good authority, but no
illegal purpose was actually carried out. The claimant, a husband
who had had land transferred into his wife’s name, was denied the
right to a resulting trust because “he was endeavouring to protect
this property from claims which he seemed to anticipate”. The in-
tent seems barely to have been proved, let alone any act in further-
ance of that intent.115 There was no evidence of creditors, and the
husband said merely that the property was the only substantial asset
he had at the time of transfer.
It has sometimes been said that, if the courts exclude evidence
of illegality or fraud, thus giving no assistance to the claimant and
allowing the property to remain where it lies, the most equitable
result is not produced where the parties, normally husband and
wife, colluded in the scheme to defraud. The object of the rule is
to prevent the courts from being asked to further the aims of a
person, whose intent was to carry out an illegal act, but, as we have
seen, the rule takes the form that it denies the assistance of the
court to any person who must rely on his illegal purpose to sub-
stantiate his claim to property. This judicial approach works well
when only one party acted wrongfully, but it is at least question-
able whether that approach is appropriate when there existed a
collusive scheme. The typical situation is when husband and wife
113 In Copkan V. Coplan, (1958), 12 D.L.R. (2d) 460 (Ont.)
the fraudulent
intent was to deceive the M.N.R. as to the extent of liability of the parties for
income tax. However, the parties had been wrongly advised as to their liability,
and therefore the M.N.R. had not been defrauded of tax. McLennan, J. held
nevertheless that the making of false representations -to the M.N.R. was an
illegal act. Scheuerman v. Scheuerman, as an authority where there exists
fraudulent intent alone, did not therefore have to be relied upon. See also
Jackson v. Jackson, (19,61), 34 W.W.R. 4W1, 26 D.L.R.
(2d) 686 (B.C.) and
Spurgeon V. Aasen, (1965), 52 W.W.R. ;641
in both of which cases
Scheuerman was followed where the Revenue authorities had been defrauded
by schemes which were designed to avoid gift tax, and, apparently, in each
case had succeeded.
(B.C.),
“14 (1,925), 56 O.L.R. 568 at p. 575; [1925] 2 D.L.R. 849 at p. 855.
1″5 In Cole v. Cole, [1943] 3 W.W.R. 532 (B.C.C.A.) aff’d [1044] S.CJR. 166,
McDonald, C.J.B.C. (at p. 535) refused to accept that because a husband was
under heavy liabilities and “fighting off bankTuptcy”, the mere suspicion, at
most, which attached to the transfer to his wife, attracted the rule concerning
evidence of illegality.
McGILL LAW JOURNAL
[Vol. 16
arrange their affairs with the object of defrauding the Revenue
authorities or the husband’s creditors.
Such a situation led to the dissent of Idington and Brodeur, JJ.
in Elford v. Elford.116 Husband and wife agreed that, in order for
the husband to defeat his creditors’ claims, certain land should be
transferred into the wife’s name. This done, the wife gave a power
of attorney to the husband so that he could deal with the land. The
one thing the power did not allow him to do, for obvious reasons,
was to execute a conveyance in his own favour. Subsequently rela-
tions between the parties deteriorated, and without the wife’s con-
sent the husband did have the land re-conveyed and registered in
his own name. Creditors had already been defeated by the first con-
veyance, and later creditors had registered claims against the land
since it was registered in the husband’s name. The wife now claimed
that the husband held the property on a resulting trust for herself.
In order to succeed the wife had only to establish the original con-
veyance, and the terms of the power of attorney; the husband for
his part had to show the object of that original conveyance, which
would in turn explain the object of the power of attorney, namely,
to enable him to continue dealing with the property. The majority
in the Supreme Court held in favour of the wife; it was a straight-
forward case where the husband could not plead the illegal object,
and he had acted in fraud of the power. The dissenting judges were
concerned by the wife’s connivance in the scheme, and, ironically
enough, they would have done exactly what the conception of the
rule envisaged, that is, keep the court out of the whole thing, and
allow the property to remain where it lay –
in the husband’s name!
In an era when collusive schemes to defraud the Revenue au-
thorities are not uncommon, an increase fostered by the public
reaction to high taxes, the approach of the majority in Elford v.
Elford, when the rule resulted in the court actively assisting a
person who was a party to a fraudulent scheme, may need re-
examination. 1 7 The result in Spurgeon and Public Trustee v. Aa-
sen,1 s also, has little to commend it, and that case, contrasted with
116 [1022] 3 W.W.R. 339, 64 S.C.R. 125.
117 1n Doty v. Marks, 55 O.L.R. 147, [,1024] 3 D.L.R. 687 (C.A.), where the
husband took title in his wife’s name, the court found that the wife knew
at that time that the husband owed money to creditors. She therefore was
compelled to hold the legal estate subject to the claims of the creditors. Of
course, this Tesult where neither colluding party wins can only occur when
there is a third pairty claim.
118 (19.65), 52 W.W.R. 641 (B.C.).
No. 2]
DOCTRINE OF RESULTING TRUSTS
Re Harvey’s Application,”i 9 also demonstrates the nice distinction,
which may prove all important, between tax avoidance, which is not
illegal, and tax evasion, which is.
(i) Joint bank accounts.
Since the Second World War in particular, the resulting trust
and the presumption of advancement have arisen most often in the
context of matrimonial property disputes, and in connection with
joint accounts. To the latter of these topics we now turn.
A joint account comes into being when an account at a bank is
opened in the names of two or more persons. The legal effect of
this action, as commonly understood, is that, while the bank and
the account holders stand respectively in the position of debtor and
creditor, each of the account holders has a legal title to the monies
in the account. If the holders are joint tenants, as is most often the
case with current and savings accounts, each holder has a legal title
to the whole sum at the bank at any one time, and each has a right of
survivorship. That is, since each owns the whole, none has any in-
heritable interest, and on his death his interest is extinguished,
leaving title in the survivors. When the penultimate life falls, the
final survivor then takes the fund absolutely. If the holders are
tenants in common, as is most often the case when they lease from
the bank a safety deposit box, each is entitled to an undivided equal
share. But such tenants do not hold “jointly”. In this case the share
is inheritable, and therefore there is no right of survivorship.
When two persons open a joint account, and each pays in an
ascertainable share, there is no difficulty in determining how much
each is entitled to while the parties are alive. Their respective legal
titles imply that each is entitled to a proportionate share on a winding
up of the account. But should one party die, the other will take the
whole fund by right of survivorship, and then the question will
arise as to whether it was the intention of the deceased to make
such a gift of his interest to the other. In other words, is the survivor
a resulting trustee of one half of the fund for the deceased’s estate?
In such a case, then, it is clear that the parties are entitled to share
the income arising from the fund during their joint lives, and the
presumption of resulting trust concerns only the capital rights upon
the death of the first to die. If the survivor is the widow of the
deceased, there will be a rebuttable presumption that the widow
was intended to take all the capital rights by way of advancement.
119 (1969), 66 W.WR. C54 (B.C.).
McGILL LAW JOURNAL
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However, when one party opens a joint account in the name of
himself and another, and his money alone is paid into the account
during the joint lives, there arises a question of resulting trust not
only in relation to the capital monies, should the payor die first,
but also in relation to the income paid to the volunteer during the
joint lives. A presumption of advancement may now arise in con-
nection with the income received, as well as with the capital rights.
The question before the court will be whether he who alone paid
into the joint account intended to make a gift of any monies with-
drawn by the volunteer during the joint lives, and another gift of
the entire monies in the account, should the sole payor die before
the volunteer.
Before we examine how the presumptions operate, however, it
is important to observe how the volunteer acquires rights to withdraw
monies from a joint account, and to take by survivorship. If A
hands the bank clerk $1,000, and asks for an account to be opened
in the joint names of himself and B, what rights does B acquire?
As between A and the bank a chose in action comes into existence
to the value of $1,000, and the contract which exists between A
and the bank permits A to demand the $1,000 at any time. What
is B’s position? First, by instructing the bank to make payments
to himself or B, A thereby gives a discharge to the bank for any
sums paid out of the account to B. A and the bank are in a creditor-
debtor relationship, and, as creditor, A has instructed the bank to
discharge the debt either to himself or B. Difficulty arises, however,
as to the rights which B has as against the bank. Can B demand
payment from the bank? As a stranger to the contract between A
and the bank, the rule in Tweddle V. Atkinson 120 would seem to
deny B any action on that contract, though B is named as a bene-
ficiary to that contract. As between A and B, joint ownership
means that A and B each has a legal right of ownership over all
the sums in the account at any one time, and that the survivor
takes the balance absolutely. But how do these rights pass to B
when A opens an account in his own and B’s name?
Various theories have been put forward to explain how these
rights pass to B. Lord Atkin in McEvoy V. The Belfast Banking
Co. Ltd.,’2 i said that when A opens such an account with the bank
he acts, as an agent for B, an agency which B as principal can
ratify. On this approach B would ratify the agency when he presents
a cheque to the bank demanding payment on the account. Another
120 (1861), 1 B. & S. 393, 30 L.J.Q.B. 265 (C.A.).
121 [1935] A.C. 24.
No. 2]
DOCTRINE OF RESULTING TRUSTS
view is that when A makes the deposit he is constituting the bank
a trustee for himself and B as beneficiaries of the ‘trust. B would
then present his cheque as a trust beneficiary. The chose in action
would be the trust property. Yet a third view is that a joint account
takes effect as a transfer of stock into the joint names of A and B.
All these theories have been variously criticized, and Professor Willis
has put forward the view that, if A gives written instructions to
the bank to open the joint account, all the elements of a statutory
assignment are present.122 In other words, A has assigned his con-
tractual rights to the chose in action to himself and B jointly.
Recently, however, this last rationale came under severe attack,
and indeed rejection, in the Australian High Court case of Coulls V.
Bagot’s Executor and Trustee Co. Ltd.,123 a decision which may
prove of far-reaching importance for the law of joint accounts. A
agreed with X Co. that the latter should have the right to quarry
on A’s land. A and the company then entered into a contract to
that effect under which royalties and agreed compensation for stone
excavated were to be paid by the company to A and B (his wife)
as joint tenants, and to the survivor on A or B’s death. The contract
was signed by an officer of the company for the company, and by A.
B’s signature also was appended. On A’s death the question arose
as to B’s rights to the payments. Was X Co. entitled to make future
payments to B alone; could she demand payments from the company?
Was B an assignee of A’s rights to receive payment and royalties?
If payment had to be made to A’s executors, on behalf of whom
did they hold the money?
The members of the High Court agreed that on a true con-
struction the contract was neither expressed as a transaction between
A and his wife, nor did it take effect as an assignment to her and
A jointly of A’s rights under the contract. There was no evidence
of intention that the contract should constitute an assignment. More-
over, as a statutory assignment it also failed in McTiernan, J.’s
view because it was not an absolute transfer of the chose in action.
The immediate transfer to B was not of A’s entire interest; the
transfer of the entire interest was contingent on the wife surviving
122 (1 36.), 14 C.B.R. 457.
123 (1966-67), 40 A.L.J.R. 471.
McGILL LAW JOURNAL
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her husband. 124 As an equitable assignment of a legal chose, it failed
because of the nature of the chose. And this factor would also have
prevented the transaction from being a statutory assignment. In
MeTiernan, J.’s judgment the chose in question was not legal, not
“specific debts”, but a “part interest in future debts.” 125 At this point,
therefore, if the wife could not establish that she herself had a
right of action against the company on the contract, she failed to
establish any claim to payments after A’s death. In the view of
the majority she did indeed fail. 26
McTiernan, J. took the view that the contract between A and
the company merely gave rise to a revocable mandate by A, requiring
the company to pay himself and his wife, and he also considered that in
respect of any future payment that mandate was terminated by
the death of the creditor, A. Owen and Taylor, JJ. in a joint judgment
held with McTiernan, J. that on a true construction of the contract
the wife was not a party to the contract, and so had no right to
sue on it.127 They did go on to say, however, that had they been
able to find that the wife was a party to the contract, she would
have been able to sue on it. In their view if A and B contract with
X that X shall perform certain acts of benefit for A and B, but
consideration moves only from A, that is enough to permit B to
sue on the contract. It is not necessary that consideration shall
move from both parties to the contract (A and B); as long as
consideration moves from one of them, that is enough.
124 Professor Willis, supra, n. 1i22, had addressed his mind to a joint account
where the volunteer (B) is given immediate right of withdrawal. Willis saw
opening of a joint account as transferring a joint creditorship to A and B.
McTiernan, J. seems to be rejecting this view. However, there is the added
difficulty with Willis’ theory that the joint creditorship may only exist over
the moneys in the account when it is opened. Future deposits would constitute
future property. Or is there a continuing joint creditorship ?
125 40 A.L.J.R. 471 at p. 479.
126 Lord Atkin’s principal and agency theory was not discussed, and A and
the company had clearly not intended to create a trust of the payments and
royalties. MeTiernan, J. drew attention to the fact that the issue concerned
payments in the future by the company, and in his views any trust was therefore
incompletely constituted. But if there were a trust, A’s executors, as trustees
of the chose in action, would have an action on the contract, and MeTiernun, J.
is only right thereafter if Fletcher v. Fletcter, (.1844), 4 Hare 67; 14 L.J. Ch. 6
is wrongly decided. Nor was the analogy of transfer of stock into joint names
discussed.
‘ 27 M cTiernan, J. does not consider this point, but, since he makes his decision
(that the wife was not a party to the contract) by construing the particular
contract, the inference at least is that he would not have disagreed with this
view of Owen and Taylor, JJ.
No. 2]
DOCTRINE OF RESULTING TRUSTS
Barwick, C.J. and Windeyer, J. dissented, and would have found
in favour of the wife. Barwick, C.J. agreed with Owen and Taylor, JJ.
that provided consideration is supplied, it need not have come from
both co-promisees. But he also found that on a proper construction
of the contract B was privy to that contract. 128 He avoids mention
of whether she was a party to it, though the effect may be the
same. Windeyer, J. agreed with the three of his brother judges that
consideration need only move from one of the co-promisees, and he
found that the wife was a party to the contract. Pausing here, it
is interesting to note that both Barwick, C.J. and Windeyer, J. prefer
to look at the contract more from the company’s position. The
company had promised to make payments to A and B jointly, and
A would need to join B in order to sue the company for performance
or damages. In Barwick, C.J.’s view, A could not unilaterally revoke
his instructions to the company, nor could A’s executors demand
payment to themselves. In their shared view the company was
obligated to pay the survivor, and the widow could bring an action
on that contract to compel the company to do so.’29
No Canadian court has had reason in any reported case to
examine the validity of these arguments and the outcome of this
particular case, but the decision and the disagreement of judicial
opinion, both in the High Court and in the courts below, must
throw into doubt much of the common law position as to joint
accounts. Does the case turn on general principles governing every
situation where A for value joined by B, contracts with X to the
effect that X will make payments to A and B jointly, or is it in
fact a decision on the language of the particular contract between
the company on the one side and Coulls and his wife on the other?
It is probably a decision on general principles, determining that a
volunteer’s right to sue on the contract is a matter of construction
of the contract. If this is so, McTiernan, J.’s judgment leaves one
with the impression that he would find a volunteer joint account
holder has no action against the bank, certainly after the payor’s
12 8Windeyer, J. (at p. 482) considered the signature by B a significant factor
in showing that X promised payment to A and B jointly and to the survivor,
but Taylor and Owen, JJ. did not consider (at p. 481) that this made B a party
to the contract.
12 9 Approaching the problem from the angle that the wife was a stranger to
the contract, and therefore brought within (the rule in Tweddle v. A tkinson, (.1861),
1 B. & S. 393, Windeyer, J. is not prepared to say that that rule is not binding
law. However, with the aid of Beswick V. Beswiok, [19.66] Ch. 538 (C.A.)
the
House of Lords’ hearing had not taken place at the time –
he is able to say
the wife can derive benefits from the contract. He is noticeably hesitant about
the widow’s right to sue, however.
–
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[Vol. 16
death.130 But for the remaining judges two would say that everything
hangs upon whether the volunteer is a party to the contract, and
two others would agree but with a seemingly greater willingness to
find that the volunteer is a party, or privy, as Barwick, C.J. prefers
to put it. 131 For the majority in the Australian court, therefore,
the crucial matter to a greater or lesser degree would probably
be the language of the contract between the bank and the joint
account holders. Even if the volunteer signs a document to which
the party making the deposit and the bank are party, this may
not be enough to make the volunteer party or privy to the contract.
And if he signs nothing, the depositor making an oral contract with
the bank, the volunteer’s chances of being able to sue the bank,
certainly after the depositor’s death, must be small.
As to the law in Canada, therefore, the primary question must
be, what view have Canadian courts taken as to the ability of the
volunteer joint account holder to sue the bank? In other words,
does the agreement with the bank confer a joint legal ownership
upon the volunteer, and ownership of the entire legal interest should
he survive the other joint tenant? Thereafter, assuming that the
volunteer does acquire rights, we turn to the principal question
with which the Canadian courts have been concerned, namely, when
does the volunteer hold his legal joint interest on resulting trust
as to the beneficial interest for the other party to the joint account,
who alone paid into the account, and, if a gift was intended, at
what moment of time does a gift of the right of survivorship arise?
It is customary banking practice to require a depositor, when
he seeks to open an account in his own and another’s name, to
require both would-be parties to the joint account to enter into a
written agreement with the bank. This document, signed by both
account holders, may take slightly varying forms according to
the bank, or district of the banking operation in question, but its
terms always authorize the bank to make payments out of the
account, from whichever party the deposits came, to either of the
account holders, and to the survivor. Al cheques on the account,
receipts or other vouchers may be signed by either party, or by
130 It is true that McTiernan, J. said of the contract in Coull’s case (at p. 479),
“It is not stated expressly with whom the agreement is made or to whom the
company agrees to pay the royalties.” But the present writer feels that his
Lordship’s view on the requirements for a valid statutory or equitable assign-
ment leaves little room for the validity of the typical joint account agreement.
131 Can a party to a contract acquire only rights and no liabilities ? In the
case of a joint account, the bank can surely sue both account holders for recovery
if it has allowed the account to accumulate a considerable overdraft.
No. 2]
DOCTRINE OF RESULTING TRUSTS
the survivor, the agreement will recite, and the bank be given a
full discharge thereby. If the volunteer is not a, party or privy to
this agreement, Coulls v. Bagot’s Executor and Trustee Co. Ltd.
would suggest that all the joint account creates is an incompletely
constituted gift, while the volunteer has no equity to compel com-
pletion. Who then is a party to a contract? Who is privy to it? If
the answer is not, ‘He who has supplied consideration’, and four
out of five of the High Court said this was indeed not the answer,
it must be a matter of evidence. Was the particular volunteer so
closely associated in the agreement with the person who supplied
the consideration that it could be said that both of them, acting as
if they were one, entered into the contract with the party on the
other side? On that test Mrs. Coulls lost her action. What would
be the outcome on that test of bankers’ joint deposit account agree-
ments? The shortcoming of Coulls’ case is that it makes this
important issue of the volunteer’s rights a matter of construction,
so that only a conjecture can be made of how the courts will react
to joint account agreements. It seems to the writer that the language
of the documents of agreement that have come before the Canadian
courts, and at least five cases have been concerned with these docu-
ments, 132 justifies the conclusion that the volunteer does satisfy the
test. Each document before the courts has spoken throughout of
“we” in relation to the account holders, and in particular it is “we”p
who give a discharge to the bank for actions done both during
the joint lives and during survivorship. If this view is correct, the
volunteer under a joint account agreement can enforce his rights
against the bank, joining his joint tenant during joint lives but
suing in his own name only should he (the volunteer) survive.
One must mention, however, two decisions of the Supreme Court
of Canada which for a time left in doubt whether any rights of
legal ownership arose out of the creation of a joint account, A
depositing and joining B’s name. In Re Mailman 133 in 1941 the
Supreme Court was asked to decide whether A intended to confer
a gift of the survivorship upon B, and, unhappily, the question
132 ,Niles V. Lake, [1947] S.C.R. 291,
[.1.947] 2 D.L.R. 248 (Royal Bank of
Canada); Re Mailman, [1941] S.CR. 368, [,1941] 3 D.L.R. 449 (Bank of Nova
Scotia); French V. French, [1952] O.R. 889 (Bank of Montreal); Re Kettle, (1965)
51 M.P.R. 1 (Nfld.) (Bank of Nova Scotia); Edwards v. Bradley, [1056] OR.
225, [1956] 2 D.L.R. (2d) 382 (Ont. C.A.), Teversed on another point [1957]
S.C.R. 599, (1057) 9 D.L.R. (2d) 675 (Royal Bank of Canada); Benjamins v.
Chartered Trust Co., [-1065] S.C.R. 251, (1065), 49 D.LR. (2d) 1 (Swiss Bank
Corp., Zurich).
133 [1941] S.C.R. 368.
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[Vol. 16
of the legal rights created by the opening of a joint account was
confused with the question of the beneficial or equitable rights, which
is a matter of the intention of A. The question posed should have
been: (1) what legal rights were created by the mere fact of A’s
opening an account in his own and B’s name, and what, if any,
additional legal rights were created between A and B by the joint
account agreement with the bank. If B acquired legal joint owner-
ship by one or both of those occurrences, the next question should
have been: (2) did B hold his legal title on trust as to the beneficial
interest for A.
The majority judgment was given by Crocket, J. He took the view
that a joint tenancy or ownership could only come into existence
if B was to retain for himself a share of the beneficial interest.
This fusion of the two principal ‘questions suggested that, as far
as B was concerned, he was made a gift or took no title at all. The
question of A’s intention was dominant, and excluded all meaningful
discussion of the first question. It follows that the effect of an
account in joint names and the effect of the agreement with the
bank were not properly distinguished. The ‘learned judge merely let
drop these words: “No doubt had the letter of instructions to
the bank not contained this provision [that the survivor could with-
draw the balance],
[B’s] right to withdraw any money from the
deposit account would have ended with [A’s] death.” 134 Since A’s
mandate to the bank must lapse with A’s death, does this mean
that it is the agreement with the bank that creates an assignment
and confers rights upon B? If an assignment is created, what rights
does this confer upon B? If it is not an assignment, upon what basis
is it that B can withdraw any money after A’s death?
This thoroughly unsatisfactory judgment was re-echoed in Rand,
J.’s judgment in Niles v. Lake. 3 He, too, considered that a joint
tenancy was “a title characterized by an immediate beneficial interest
of a moiety of ownership”,136 but he added that, if the evidence
showed B was not made a gift of the beneficial interest, no one had
yet suggested what “category of ownership”‘ 137 was set up when
rights were conferred upon B by the ,agreement with the bank.
In this same case, however, Taschereau, Kellock, and Kerwin, JJ.
each said that B acquired a legal interest, and the true question
was whether he held that legal interest on resulting trust for A.
134 Ibid., at p. 456.
135 [1047] S.C.R. 291, [1047] 2 D.L.R. 248.
136 [1947] 2 D.L.R. 248 at p. 261.
137 Ibid.
No. 2]
DOCTRINE OF RESULTING TRUSTS
So the situation was at least initially clarified, and this distinction
between the legal and the beneficial interest has been firmly
established ever since. However, it is largely because of that early
confusion that Canadian courts have never come to grips with the
questions posed in Coulls’ case. If a joint ‘account were to be opened
without an agreement of the familiar kind with the bank, what
legal rights of ownership (if any) would B, the volunteer, acquire?
Canadian courts have been content to assume the banking practice
of requiring the completion by A and B of a standard agreement
form. Typical is this statement of F.G. MacKay, J.A. in Edwards v.
Bradley:
The right of the depositor is the right to withdraw or demand payment of
the money from the bank. It is a chose in action that may be assigned and
by the terms of the joint deposit agreement with the bank, signed by both
A and B, A assigns the legal right to withdraw the money to himself and B
jointly, with the right to the survivor to withdraw the balance in the event
of the death of A or B …. The title to the chose in action being vested in
A and B jointly on the execution of the agreement with the bank, each,
under the terms of the agreement, has a legal right [to withdraw during
the joint lives and as survivor] l 18
The Ontario Court of Appeal, upon which F.G. MacKay, J.A. sat,
was reversed by the Supreme Court, but on another point, and
in
Cowan, C.J.T.D. was right, one would respectfully suggest,
deciding in Re Cameron 139 that MacKay, J.A.’s statement survived
the reversal.140 Whether the fact of A opening a joint account confers
rights of withdrawal during joint lives and of survivorship upon
B, and whether all standard joint account agreements would constitute
an assignment of those rights to B, are questions which Canadian
courts have not yet considered.’ 4 ‘
138 [1956] 2 D.L.R. (2d) 382 at p. 387.
139 (1967), 53 M.P.R. 214, (1967), 62 D.L.R. (2d) 389.
140 In Re Kong Chee Ming Estate, (1069), 69 W.W.R. 759 (B.C.) Macdonald, J.
agreed with Cowan, C.J.T.D., and adopted MacKay, J.A.’s words, set out here.
141 The fullest standard joint account agreement form which has yet come
before the courts was that of the Royal Bank of Canada in Niles V. Lake. This
included the sentence, “the undersigned [A] in order effectually to constitute
the said joint deposit account hereby assigns or transfers to all of the under-
signed [A and B] jointly and to the survivor or survivor of them any and all
moneys which may have been heretofore or may now or hereafter be deposited
to the credit of the said account together with all interest…”. Those repre-
senting A did not challenge that this constituted an effective assignment to B
of the survivor’s rights. Later cases, with different agreement forms from other
banks, have accepted Niles v. Lake as the tauthority, together with Re Mailman,
on this point. In Conway Estate V. M.N.R., (1165), 65 D.T.C. 5169 at r. 5173,
Thurlow, J. took certain remarks of Kellock, J. in Niles v. Lake, and of Orocket,
McGILL LAW JOURNAL
[Vol. 16
But, if the fact of an account in joint names or the assignment
said to be embodied in agreements establishes rights in B, this gets
the volunteer (B) only half the way home. Though he can enforce
his rights against the bank, he now becomes subject to the rule that
if A transfers his property into the joint names of A and B, B holds
on resulting trust for A.
In other words, the rights over the chose in action between the
joint account holders themselves must now be established. These
rights can be divided; the right of drawing moneys and signing on
behalf of the account holders during the joint lives, and, secondly,
the right of survivorship. Prima facie, as we have seen, the volunteer
holds his share of the beneficial rights on resulting trust for the
actual depositor, unless a presumption of advancement arises in the
volunteer’s favour. Any moneys drawn from the account by the
volunteer during the joint lives, and the right of the survivor to
take the balance, are subject to a resulting trust. Because the rights
are divisible into joint lives and survivorship, there will be a prima
facie resulting trust as to the right of survivorship when two persons
pay equally into their joint account. 142 Were it otherwise, said
Schroeder, J.A. in Frosch v. Dadd, a joint tenancy of the beneficial
interest could be created by inadvertance1 43 The opening of a joint
account gives each account holder a legal interest in the moneys
credited to the account at any one time, and the right of survivorship
arises by operation of law as part of the legal concept of joint
tenancy. But whether the survivor may take the balance depends
upon whether the deceased intended to make such a gift of his
share. The Prima facie resulting trust therefore compels the survivor,
who has contributed equally to the moneys in the account, to hold
the deceased’s share on trust for his estate. In equity, that is, the
survivor is a tenant in common. The only time when the survivor
would not hold the deceased’s share on a resulting trust would be
when the moneys in the account were a gift to the two joint tenants
by a third person. Between husband and wife as joint account holders
there is often no reliable evidence as to the source of the moneys
in the account, moneys of both parties having been paid into the
account without record kept of the source. In these circumstances
the moneys are prima facie taken to belong to both account holders
J. in Re Mailman to mean that as soon as joint ownership is created over personal
property full rights of withdrawal and of survivorship arise in each party. But,
as we have seen, standard joint account agreements were involved in both those
cases.
142 Fr’osch v. Dadd, [1960] O.R. 435 (C.A.).
143 Ibid., at p. 452.
No. 2]
DOCTRINE OF RESULTING TRUSTS
equally, 144 and the presumptions will come into operation, as in
Prosch V. Dadd, to aid in determining whether the survivor takes
the balance beneficially.
Before evidence is introduced as to the intention of the originating
account holder either as to rights between the account holders during
the joint lives, or as to the survivorship, it must be determined
what was to be the subject-matter of the alleged gift. In O’Brien
V. Bean and Bean,145 this question proved the undoing of the claiming
joint account holder. A, the sole depositor, had opened a joint account
in the names of himself and B, his sister. During their joint lives
B claimed that a half share in the moneys deposited were a gift
to herself. A alleged that the purpose of the joint account was
merely to permit B in the interests of family concord to oversee
the handling of these finances, but this led him to admit that the
moneys in the account were to be used for the purchase of a house
in which he had promised B an interest. Ruttan, J. concluded that
the gift was not to be of money, but of an interest in a house, and
this effectively decided the case because, since no house had yet
been bought with the moneys, the gift was incomplete. B as a
volunteer had no means of securing completion.
Whether A intended to make a gift to B when the joint account
was opened by him in the names of A and B is dealt with, of course,
by the presumptions of resulting trust and of advancement. As to
whether A intended to make a gift to B, much attention was given
in the earlier cases to the terms of the agreement with the bank.
In Re Mailman,’4″ where an agreement form of the Bank of Nova
Scotia was under consideration, the Supreme Court divided as to
whether the agreement revealed any intention on the part of A.
The majority considered the document as concerned only to establish
the relation of the joint account holders with the bank, 14 7 while
the minority found in it a desire to create a joint tenancy of the
beneficial interest. In the later case of Niles v. Lake,14 however,
all but one member of the Supreme Court was prepared to agree
that B acquired a joint legal interest on the opening of the account,
144 Benjamins V. Chartered Trust Co., (1965), 49 D.L.R. (2d) 1 (S.C.C.); Re
Cameron, (1967), 53 M.P.R. 214, (.1967), 62 D.L.R. (2d) 389 (beazer bonds and
debentures in two safe deposit boxes).
145 (1957), 7 D.L.R, (2d) 332 (B.C.).
146 [1041] S.C.R. 368, [1941] 3 D.L.R. 449.
147 Crocket, J. for the majority said ([1941] 3 D.L.R. 449, at p. 456) -the agree-
ment made no reference to ownership between the account holders, and con-
tained no evidence of a previous agreement.
148 [1947] S.C.R. 291, [1947] 3 D.L.R. 248.
McGILL LAW JOURNAL
[Vol. 16
and so the real question of A’s intent became much more clear.
Did B hold his legal interest in trust for A? In other words, did a
resulting trust arise in favour of A? If it did, then A retained the
equitable or beneficial interest in all the moneys in the account at
any one time. To the question of whether the agreement contained
any evidence of A’s intent, each member of the Court had no doubt.
It contained none. As Kedwin, J. put it, the standard form agreement
was “prepared by a bank for its own protection”. As to evidence
of intent, “the language is no more absolute or unequivocal than
in a deed of land or a transfer of shares or stock by the owner
to the joint names of the transferor and transferee”. 149 The agreement
form in that case, used by the Royal Bank of Canada, was particularly
comprehensive in the relation which it spelled out between the
account holders and the bank, and this decision seems to have
concluded the issue as to whether such documents as a class contain
any evidence as to intention of the parties inter se. Indeed, in
Edwards v. Bradley in 1957 Kerwin, C.J.C. said, “It has been
pointed out in Re Mailman and Niles v. Lake that documents of
this nature are drawn by the bank and cannot affect the resulting
trust.” 150
However, assuming that other available and admissible evidence
either rebuts the presumption of resulting trust or proves insufficient
to rebut the presumption of advancement, so that in both situations
A is found to have been making a gift to B, B may yet fail. This
happens because a joint account involves the two sets of rights;
the right to withdraw moneys during the joint lives, and the right
to take the balance on survivorship. What moneys B, the volunteer,
draws during the joint lives he will take as a gift (he has a joint
legal interest, and he has been able to show that A intended him
to have a joint beneficial interest as well), but it is debatable at
what time the right of survivorship passes to B. When A opens the
joint account, the bank agreement form is jointly signed, and B
acquires a joint legal interest, including a legal interest in the right
of survivorship, does the beneficial or equitable interest in that
right pass to B at the same time? If so, there is a gift inter -vivos
149 [1947] 2 D.L.R. 248 at p. 253.
150 [1957] S.C.R. 599 at p. 600 in Be Cameron, (1967), 53 M.P.R. 214, (1967)
62 D.L.R. (2d) 389 (N.S.), Cowan, C.J.T.D. seems to leave the matter open.
The Bank of Nova Zcotia agreement before him, he said
((,1067), 62 D.LR.
(2d) 389, at p. 399) was “in a form substantially the same” as that before
the court in Niles v. Lake. He was therefore prepared to follow Niles’ conclusion.
In the most recent case, Re Armstrong, (1970), 7 D.LR. (Sd) 36 at p. 59,
Cowan, C.J.T.D. again followed Niles v. Lake.
No. 2]
DOCTRINE OF RESULTING TRUSTS
of both legal and equitable interest in the right of survivorship. A
second argument is that, even though the legal and equitable interests
pass at the time of the account being opened, the ability of A to
exhaust the account in his lifetime is tantamount to a power of
revocation. If he does not exercise that power, B will take over
the moneys remaining in the account. This acquisition seems to
have more of the character of the donatio mortis causa.151 A third
argument is that, insofar as the beneficial or equitable interest seems
contingent on survivorship, the volunteer survivor acquires his
beneficial interest only at the moment of the decease of A. If A
is in fact the first to die, then A has made a testamentary gift to
B which must be in proper testamentary form in order to be valid.
The issue has been before the Canadian courts over a number
of decades, and only fairly recently has judicial opinion settled in
favour of the first alternative, namely, that rights of survivorship,
both legal and equitable, vest when the joint account is opened, so
that the gift of those rights is inter vivos. The Supreme Court has
still to give a judgment on the matter, however, and much may turn
upon whether B has the right to make withdrawals on the fund
during the joint lives.
In Hill v. Hill,152 for example, a father had $400 in a bank account,
and he procured a deposit receipt for this sum “payable to himself
[A] and [B], his son, or either, or the survivor.” His proved intention
was that, while he would retain complete control over the sum during
his lifetime, whatever was left should belong to B. And he retained
the receipt in his papers. Anglin, J. had little doubt as to whether
this gift was valid.
The father retaining exclusive control and disposing power over the $400
during his lifetime, the rights of the son were intended to arise only upon
and after his father’s death. This is, in substance and in fact, a testamentary
disposition of the money, and, as such, ineffectual. 5 3
151 For this doctrine to operate A would have to be in extremis at the time
of opening the joint account. The likelihood of this doctrine arising on the
facts must be small.
152 (1904), 8 O.L.R. 710.
153 Ibid., at p. 711. Anglin, J. also said, but gave no reason, that he could not
regard this as a voluntary settlement, reserving to the settlor a life interest
with a power of revocation. Because he could find no evidence of an intention
to create a trust ? Such a solution, of course, would have changed the result
of the case. The son would have acquired a vested interest when the deposit
receipt was taken Irom the bank. Was this a case of mandate? See Coulls V.
Bagot?’s Executor, (1066-67), 40 A.L.J.R. 471.
McGILL LAW JOURNAL
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Danis, J. followed that decision on very similar facts in Larondeau V.
Laurendeau.5 4
One of the earlier cases in which A and B had agreed that A
alone should exercise drawing rights during A’s lifetime was Re
Reid,155 heard in the Ontario Court of Appeal. A son, A, had opened
a joint account with his own moneys in the names of himself and
B, his father. Did B take the balance for himself on A’s death, or
did his interest in that prospective balance arise when the joint
account was opened? Meredith, C.J.O. thought the answer was the
latter. In the earlier words of Boyd, C. in Weese v. Weese,’5 Meredith,
C.J.O. seems to be saying that the opening of the joint account
was “a voluntary bestowment in joint tenancy”, and, though B’s
legal title to the fund became vested in possession on A’s death, it
vested in interest at the time of the joint tenancy creation. But
it is a confusing judgment, and it is not clear whether the learned
judge was thinking in terms of a gift inter vivos or a donatio mortis
causa.157 There is no doubt in Ferguson, J.A.’s mind. At the moment
the joint account was opened, there was a complete and perfect gift
of a joint title in the money which, by operation of law as well as
by expressed intention and agreement, carried with it a right to
title by survivorship. In his view the agreement between A and B
did not act so as to prevent dominion and control from passing
from A to B, nor did it act as a power of revocation. All it did was
give A a right and power to defeat in whole or in part (by with-
drawals from the account) the purpose of the gift. Because A could
withdraw the total funds in his lifetime, Ferguson, J.A. thought
it might have been possible to describe this as a donatio mortis
causa, but he preferred to see this situation as a “gift inter vivos
of a joint interest”. 5 IHdgins, J.A. dissented because he felt that
A’s ability to withdraw what he wanted during his own lifetime
must mean that B took ownership of nothing till A’s death. Since
no dominion or control of the moneys passed to B in A’s lifetime,
there could be no donatio mortis causa, and the consequence was that
this was a gift on death not in proper testamentary form which
therefore failed.
154 [1954] O.W.N. 722. In this case the child was to have the balance left at
the father’s death, after the child, now an adult, had paid off the father’s debts.
155 (.011), 50 O.L.R. 595, (122), 64 D.L.R. 598.
156 (1916), 37 O.L.R. 649 at p. 651.
157 Or why, indeed, the gift was not testamentary. He clearly had decided it
was not testamentary; that is all that emerges with clarity.
158Ibid., at p. 608.
No. 2]
DOCTRINE OF RESULTING TRUSTS
The majority view of Re Reid, effectively expressed in Ferguson,
in the English case of
J.’s judgment, was adopted by Romer, J.
Young v. Sealy,5 9 and the able arguments of the members of the
High Court of Australia in Russell v. Scott 160
in 1936 gave con-
siderable support to the gift inter vies view. Both these cases
enhance the judgment which was given by MacKay, J.A. in Edwards
v. Bradley in the Ontario Court of Appeal. He drew attention to the
fact that Hill v. Hill and Larondeau v. Laurendeau were decisions
of the trial court, and expressed the relevant principles of law in
this way:
The legal right to take the balance in the account if A predeceases him being
vested in B on the opening of the account, it cannot be the subject of a
testamentary disposition. If A’s intention was that B should also have the
beneficial interest, B already has the legal title and there is nothing further
to be done to complete the gift of -the beneficial interest. If A’s intention
was that B should not take the beneficial interest, it belongs to A or his
estate and he is not attempting to dispose of it by means of the joint account.
In either event B has the aegal title and the only question that can axise
on A’s death is whether B is entitled to keep any money that may be in
the account on A’s death or whether he holds it as a trustee under a resulting
trust for A’s estate. 161
It made no difference in MacKay, J.A.’s view whether A could defeat
B’s interest by drawing all the money out of the account; A could
not divest B of his legal title without B’s consent. Only B’s predecease
brought his legal title to a close. It was an obiter comment to the
facts of Edwards V. Bradley but the learned judge considered that
his statement of the law was not affected whether A intended to
make a gift both of withdrawal rights -during joint lives and of
survivorship, or of either alone.
However, in the Supreme Court this question of whether the
gift was testamentary did not need to be decided, since the Court
found no evidence of an intent to make a gift, and, aside from
noting the decisions in various jurisdictions on the question, Cart-
wright, J. left the matter there.
It is unfortunate that the Court did not give an opinion on
this point, because it is of some importance in practice, as a twist
on the facts of Conway Estate V. M.N.R.162 will show. The Minister
was there claiming estate tax not over half, but over the whole
of the balance left in a joint account on the death of Mr. Conway.
159 [1949] Ch. 278, [1949] 1 All E.R. 92.
160 (1936), 55 C.L.R. 440.
161 (1056), 2 D.L.R. (2d) 382 at pp. 387, 888.
162 (1,965), 65 D.T.C. 5169. Followed in Goeglii v. M.N.R.,
5271.
(1968), 68 D.T.C.
McGILL LAW JOURNAL
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in the capital balance when a
Mrs. Conway argued that, unless the presumption of advancement
was rebutted, immediately upon the opening of the account she
acquired as a gift inter vivos a half interest in both income and
capital balance. 1 3 Thurlow, J. commenced his judgment by asldng
what rights are acquired
joint
ownership
is created, and he held that the wife was entitled
to an undivided interest in the balance as soon as the account was
opened. In other words, the joint tenant has a legal interest in
the property during the joint lives. As to the capital, therefore, that
interest took effect as from the opening of the account, and on this
point the learned judge saw no reason for distinguishing between
capital and income. The next question was whether the equitable
or beneficial interest followed the wife’s legal interest; that is,
whether the presumption of advancement was rebutted “that an
immediate gift of an undivided interest in the balance in the account
was intended.” 16 As a finding of fact, Thurlow, J. concluded that
at the time the account was opened the wife was intended to have
“a present gift” 1c5 of a joint interest in the income and the capital
balance. The wife had not made any withdrawals during the joint
lives, but from the moment the account was opened the pass books
were always kept in a place to which she had access, and she had
not been excluded by prohibition of her ‘husband, or an agreement
between them from making withdrawals during the joint lives. This
finding, the learning judge said, and the reader should note this,
made Larondeau V. Laurendeau and Hill v. Hill irrelevant. He con-
cluded :
The case is thus in my opinion not one of an intended testamentary disposition
which is ineffective because of failure to comply with the formalities involved
in making such a disposition and I am further of the opinion that there
is nothing in the material before me which rebuts the presumption insofar
as the capital is concerned. 166
Thurlow, J.’s conclusion as to the presumption of advancement is
clearly justifiable on the facts of the case, but let us change the
163 Under the Estate Tax Act, S.C. 1953, c. 29, s. 3 (1) (f) [still in force] taxable
property includes “property held jointly by the deceased and one or more other
persons, to the extent of the beneficial interest therein arising or accruing by
survivorship or otherwise on the death of the deceased.” Presumably this para-
graph was thought to close off the possibility of arguing in the Conway Estate
case the Russell v. Scott, Edwards v. Bradley conclusion that survivorship rights
over the whole of any future balance vest legally and equitably when the account
is opened; that at that monent the gift is completed, if there is of no evidence
of a contrary intent in the donor.
i’4 Ibid., at p. 5174.
165 Ibid., at p. 5175.
166 Ibid.
No. 2]
DOCTRINE OF RESULTING TRUSTS
facts a little. Suppose the presumption of advancement was rebutted
that the wife was to have a beneficial interest during joint lives.
Suppose, that is to say, that Mr. Conway had made it clear to his
wife that she was not to touch the account while he was alive, but
that he wanted to make a gift to her of the balance remaining at
his death.0 7 Could it then have been decided that, though the legal
balance passed to the wife on the opening of the account, the denial
of withdrawal rights while her husband was alive, meant that the
beneficial interest in the capital balance passed only on his death? 168
In other words, in Canadian courts how far does the issue dealt with
by MacKay, J.A. remain open? 169
The joint bank account is a popular device, particularly among
married people, and it has long been recognised by banking practice.
That doubts should still exist as the rights of the volunteer
against the bank, and to the rights inter se of the joint account
holders, is really indefensible. Messrs. Sheard and Hull feel com-
0
pelled to warn practitioners in their Canadian Forms of Wills 37
that “such accounts are a prolific source of litigation”, and that
“with the passing of years the difficulties.., have certainly not
decreased.” We have the 30-years-old merry-go-round of stock
transfer, agency, express trust, and assignment as possible rational-
isations of the judicially assumed rights of the volunteer against
the bank. Federal legislation should be introduced to clarify the
obligations of the bank. And then there is the need to clarify the
law governing the rights of the joint account holders inter se.
Assuming that it is appropriate to question whether the volunteer
is to take his joint ownership as a gift or on behalf of the payor,
167 This is a common occurrence. The husband is using the account in connection
with his business, but he wants his widow to have money available immediately
upon his sudden incapacity or his death, both for her needs and, possibly, to
meet any emergency call of the business. Alternatively, the husband has always
managed the couple’s financial affairs, but his aim is to make provision so that
his wife has drawing rights in the event of his incapacity or death. In either
case it is very likely he has not taken legal advice.
168 It is possible that the very fact of a husband opening a joint account means
that he intends to make a present gift to his wife of the balance remaining at
his death. But control passes on his death, and the contingency of her survival
must be satisfied and that can only occur on his death. Is it enough to say that
at his death the husband needed to do no more to convey legal and beneficial
interest to his wife? How far does -a husband make a gift inter vivos when for
tax purposes he puts his business bank account into joint names ?
109 For a valuable analytical study of the problems associated with joint
(1969),
accounts, see Cullity, M.C., “Joint Bank Accounts with Volunteers”,
85 L.Q.R. 530.
170 3rd ed., 1970 at p. 310.
McGILL LAW JOURNAL
[vol. 16
and that the presumptions assist in the handling of this question,’1 ‘
there could be doctrinal clarification. In view of the trend of the
cases, the expense to the parties of construction actions could be
avoided by laying down that documents signed with banks can have
no effect or be construed as containing any evidence on the rights
inter se of the account holders. Such documents are not originated
for that purpose, and insofar as one party to the “agreement”, the
bank, is not interested in the matter, they are not an appropriate
vehicle for such evidence. Moreover, it should be laid down when
a survivorship interest vests legally and beneficiallyY 2 If MacKay,
J.A. is right in Edwards v. Bradley or his solution is preferable, it
should not need another appeal to the Supreme Court to establish
the point. The problem is already too hoary, and the solution by
statute too obviously needed.
The Uniformity Commissioners might draft a bill which would
clarify the position as to inter se rights. Failing the Commissioners,
the provincial law reform agencies should take up the matter. Hope-
fully, liaison between these agencies would result in uniform legis-
lation, which by its uniformity would commend itself to the remaining
common law provinces.
(ii) The presumption of advancement and matrimonial disputes.
In recent years in Canada, as we noted earlier, there has been
evidence of some judicial desire to approach the facts of each case
with an open mind and to weigh the evidence before the court as the
preferable means of deciding what was the intention of the parties.
In cases concerning matrimonial disputes over property the disin-
clination in some English quarters to accept the value of the pre-
sumptions of resulting trust and of advancement is marked, and
this concern was given forcible expression at the highest appellate
level in Pettitt v. Pettitt,173 where the House of Lords examined the
presumptions closely. Such a development is significant, for Canadian
courts have traditionally relied upon English authority.
7 1 See Re Figgis, [1969] Ch. 1.23 at p. 149, for the difficulty of applying the
1
presumption of advancement to a joint account.
172 Megarry, J. (ibid.) suggested the interest is “an immediate gift of a
fluctuating and defeasible asset consisting of the chose in action for the time
being constituting the balance in the bank account”. He thought this a subject
“worthy of academic disputation”, and was happy it was not a problem he needed
to solve for the purpose of the case. He concluded, however, that payments by
the particular husband into the joint account were not “gifts made by me during
my lifetime”, as the will required.
’73 [1969] 2 W.L.R. 966, [1969] 2 All E.R. 385. See for a note, (1969), 32 M.L.R.
570 (S. Cretney).
No. 2]
DOCTRINE OF RESULTING TRUSTS
The issue in Pettitt’s case arose because the wife had bought a
house with her own resources, and the husband had done work both
outside and inside the house. On the breakdown of the marriage
the husband claimed that he was entitled to a share in the proceeds
of sale of the property because of the work he had done. Lord Reid,
like other members of the Court, thought it first necessary to examine
the ways in which many a modern family acquires property. The
probabilities are these. Each party enters the marriage with little
property, the wife works and thus helps finance the needs of them
both, and when children come along the husband earns the salary
which keeps the family while the wife maintains the house and
tends to the children. If she has money of her own, or earns any-
thing during the marriage, it is probable that that money will be
spent in a number of ways. She may contribute towards the house-
keeping, or clothing the family; she may help in meeting mortgage
repayments on the house, or in buying furnishings or labour-saving
equipment. Lord Reid thought that the presumptions of resulting
trust and of advancement, if they were still applicable at all to
such situations as these, were surely much diminished today. Lord
Diplock agreed with this view. He felt that the presumptions were
fashioned by the judges of the nineteenth century and reflected an
era when the propertied middle class made marriage settlements,
the husband’s income and capital would otherwise finance the
family, and it was unusual for the wife to earn an income which
was used to assist that financing. The social and economic change
since the Second World War had brought new situations before the
courts, and Lord Diplock felt that it was better today, in the absence of
an agreement between them, to impute to the modern couple a cons-
tructive common intention that would have been formed by reasonable
spouses. Most spouses would have agreed to share their assets. Indeed,
he pointed out that whether the matrimonial house was in the name
of the husband, or the wife, or both jointly, was often influenced
not by their intentions so much as by the requirements of the
mortgage corporation. Lord Morris saw the problem created by the
outdated character of the presumptions, but thought that legislation
was needed to make any change of substance in the legal approach
to property disputes. Lord Hodson was of the opinion that, if evidence
were adduced, the presumptions today would seldom have decisive
effect.
Only Lord Upjohn went so far as to say that the presumptions
remain as valid today as they have ever been. They were designed,
he said, to deal with situations where there was no available evidence
as to the intention of the parties, and that task the presumptions
McGILL LAW JOURNAL
[Vol. 16
still perform. “They have been criticized as being out of touch
with the realities of today but when properly understood and
properly applied to the circumstances of today I remain of the
opinion that they remain as useful as ever in solving questions of
title.”‘174 It is noticeable, however, that his Lordship did not go
through with all that that statement implied. With reference to
the presumption of a resulting trust and assuming the absence of any
evidence as to the parties’ intent, he said: “If a wife puts property
into their joint names I would myself think that a joint beneficial
tenancy was intended, for I can see no other reason for it.””1
Formerly, it has been thought that evidence as to intention cannot
be construed from the fact that ownership of the property is in one
name as opposed to another, or in joint names. All that could be
said in the case of the transfer into joint names, the transferor
being one, is that the presumption of resulting trust might be some-
what easier to rebut.170
Pettitt v. Pettitt is the latest and the most authoritative state-
men of the judicial approach in England to matrimonial property
problems.’ 77 If the parties have agreed as to the ownership of their
assets, then the courts will enforce that agreement. But, if there
is no evidence of an agreement, it is a question of deducing their
intentions from what evidence there is available. There is, as we
have seen, some difference of opinion as to the weight that should
today be given to the presumptions. Some would say they are of little
or no value. Lord Denning, M.R., and Lord Diplock, who are of this
view, think it more realistic to say that when the parties have entered
their marriage with little property, and have laboured together to
build up their hame and its chattel assets without taking account
174 [1969] 2 W.L.R. 966 at p. 990.
175 Ibid., at p. 991.
176 However, there has been a marked trend in England during the last ten
years for the lower courts to accept a conveyance by either husband or wife into
their joint names as conclusive evidence of an intention that they should have
equal beneficial shares. To the present writer’s mind this is part of the move,
noted by Lord Diplock, for the lower courts to recognize increasingly an equal
sharing of assets between husband and wife. In Canada there is evidence that,
while the courts have been more conservative, they are prepared to regard joint
tenancies as strong evidence of an dntention to share equally. See Re Osachuk
and Osachuk, (1970), 10 D.L.R. (Sd) 81 (Man.), and Kearney v. Kearney, (11970),
10 D.L.R. (3d) 19 (Ont. C.A.). In the Kearney case the court cited Lord Up-
john’s’words with approval.
177 For the English Court of Appeal’s interpretation of this case, see Chapman
All E.R. 476, and Nixon V. Nixon,
v. Chapman, [1969] 1 W.L.R. 1376, [1,969K]
[1969] 1 W.L.R. 1676, [19.69] 3 All E.R. 1.1133.
No. 2]
DOCTRINE OF RESULTING TRUSTS
of whose earnings went where, they should be assumed to have
pooled their resources in the acquisition of ‘family assets’, the owner-
ship of which they share equally. Lord Diplock said in Pettitt’s case
that in his view this approach had represented the broad consensus
of judicial opinion in the lower courts since the Second World War.
Others would prefer to say merely that the presumptions are more
easily rebutted than they would have been twenty-five years ago.
In the view of this school, and Lords Morris, Hodson, and Upjohn
each supported it in Pettitt’s ease, if there is no evidence of an
agreement between the parties, the courts start from where they
find title to be. There the presumptions come in. Only if the parties
each contributed to the purchase of a disputed asset, normally the
matrimonial home, may the court properly find, regardless of in
whose name or names the property stood, that the common intention
or the most reasonable outcome is equal beneficial ownership. And
in such cases the contribution of each party must probably be
substantial. In this sense Lord Upjohn, for example, interpreted
and agreed with Rimmer V. Rimzmer.”‘8
Only in Appleton v. Appleton 19 and Gissing v. Gissing o80 has
a court presumed a joint tenancy interest in house or chattels
where one of the married parties contributed nothing in monetary
terms towards the purchase or cost of that asset. Work done by
the husband on a house in the wife’s name may constitute an advance-
ment, but certainly if it is the kind of reasonable upkeep that might
be expected of a husband living in a shared home, the House of
Lords has now decided that it does not entitle the husband to a
share in the proceeds of sale.’ 8′ Appleton v. Appleton has therefore
been held by the House to have been wrongly decided. It now also
seems likely that the same fate awaits Gissing v. Gissing.1Sla There
the wife’s earnings had been used not to make any down payment
178 [1953] 1 Q.B. 63, [1052] 2 All E.R. 863. His Lordship’s remarks on this
point aTre reported, supra, at pp. 991, 992. He also approved of Ulrich v. Ulrich
and Fenton, [1968] 1 W.L.R. 180, [1968] 1 All E.R. 67 (G.A.), where the wife
contributed 500 as the down payment, and the husband undertook to pay mort-
gagees the balance of 2,000, which balance (because the mortgage was later
increased) remained when the action was before the Court.
i79 [1065] .1 W.L.R. 25, [,1965] 1 All E.R. 44 (C.A.).
180 [,1069] 2 W.L.R. 525, [1969] 1 All E.R. 1043 (C.A.). A husbaad and wife
partnership clearly constitutes a situation where each spouse has contributed
in terms of value to an asset which is in one spouse’s name. See Nixon v. Nixon,
[1069] 1 W.L.R. 1676 (CA.),and Muetzel v. Muetzel, [1070] 1 W.L.R. 188 (C.A.).
8 l Pettitt v. Pettitt, where the husband’s claim accordingly failed.
sla The fact situation seems to be outside ithe recently enacted Matrimonial
Proceedings and Property Act, 1070, s. 37. See infra, n. 183.
McGILL LAW JOURNAL
(Vol. 16
or mortgage repayment on the matrimonial home, the property in
dispute, but to lay out a lawn, buy furniture, and purchase clothes
for herself and the child of the family. On this basis the Court of
Appeal decided that the purchase of the house was a joint enterprise
intended to create a ‘family asset’.
As some members of the House of Lords have themselves pointed
out, the rule that a wife shall only share in the matrimonial home
if she has herself contributed to meeting the cost of that home
is not satisfactory. Such a rule appears to recognize the need for
equity, but restricts the situations in which equity can be done.
The Lords in Pettitt’s case were divided merely as to whether, when
the husband and wife have pooled their resources and effort and
there is no evidence as to their intentions, the courts can bring
about a change to a presumption of common ownership, or whether
any such property allocation should be left to the legislature. Lord
Morris warmly endorsed recent legislation in New Zealand,182 which
empowers the trial judge in the absence of a common intention
between the married pair to make such order as appears just, not-
withstanding that the property in question is in one name or the
other or both.183 However, he, like others of the Court, found the
notion of ‘family assets’ resulting from joint venture, incorrect. It
was the task of the court to determine where ownership lay as to
disputed assets; it was not its role to distribute those assets in a
182 Matrimonial Property Act, 19.63, c. 72, ss. 5, 6. As Lord Morris also points
out, s. 6(1) lays down that the court “shall, where the application [for an order]
relates to a matrimonial home or to the division of the proceeds of the sale
of a matrimonial home, and may in any other case, have regard to the respective
contributions of the husband and wife to the property in dispute (whether in the
form of money payments, services, prudent management, or otherwise howso-
ever).” The Act is concerned with a situation where the marriage is still in being
(s. 5(1)).
183 Under the Matrimonial Proceedings and Property Act, 1070, c. 45, (England),
Section 37 enables the court, in default of agreement between the parties, to
determine the existence or extent of the beneficial interest of each party “as
may seem in all the circumstances just”. However, the section is specifically
concerned only with cases “where a husband or wife contributes in money or
money’s worth to the improvement of real or (personal property in which or in the
proceeds of sale of which either or both of them has or have a beneficial interest”
(Italics supplied). The Act adopts the recommendations of the English Law
Commission (LAW COM. No. 25), and the above section is intended to apply
only in actions to determine title to proprietary interests while the marriage
subsists and there has been no order of judicial separation. The section came into
force on August 1, 1070 (s. 43(2) ). Section 4 of the act (see footnote 208, post)
extends the existing powers of English courts to distribute the property equitably
once divorce, nullity, or judicial separation is being granted.
No. 2]
DOCTRINE OF RESULTING TRUSTS
manner which to the court seemed equitable having regard to the
mode of living of the married pair. Only legislation could empower
the courts to do that.
In Canada the view has not taken root that, where the mar-
ried pair have pooled their resources in financing their matri-
monial needs and there is no evidence of an agreement between
them, a common intention should be inferred to share ownership in
the disputed asset. This is laxgely due to the decision of the Supreme
Court in Thompson v. Thompson.184 Prior to that decision the lower
courts were undoubtedly accepting the authority of Rimmer V. Rim-
mer. 18 In Mitchelson v. Mitchelson,5 6 the house was in the husband’s
name, but DuVal, J. was able to infer that the wife’s “time, labour
and earnings” put into the home constituted evidence in itself that
she did not intend to make a gift, but rather to provide a common
home. What earnings there were in that case is not clear, and the
inference is that DuVal, J. was more impressed by the fact that the
marriage was a joint venture than that, by reason of the earnings,
Rimmer V. Rimmer became relevant. In Sopow v. Sopow, 187 however,
Lord, J. specifically followed Rimmer v. Rimmer and Fibrance v.
Fibrance.5 5 The house was in the wife’s name, but in his view the
combined efforts and resources rebutted the presumption of ad-
vancement and revealed an intention of joint ownership.
If the ‘family assests”8 19 idea was going to catch on in Canada,
it was first essential that Canadian courts accept the Rimner V.
Rimmer notion that where both parties have contributed to the
184 [1961] S.C.R. 3, (1961), 26 D.L.R. (2d) 1, reversing (1959), 22 D.L.R. (2d)
504 (Ont.).
185 [1953] 1 Q.B. 63, [1952] 2 All E.R. 863.
186 (1953), 9 W.W.R. 316 (Man.).
187 (1959), 15 D.L.R. (2d) 57 (B.C.).
188 [1957] 1 W.L.R. 384, [1957] 1 All E.R. 357.
180 That is to say, property, like a house, furnishings, and a car, which is to
be commonly enjoyed by the husband and wife. The majority of the Lords in
Pettitt v. Pettitt disapproved of the phrase, “family assets”. Lord Upjohn said,
([1969] 2 W.L.R. 966, at p. 993), “in my opinion the expression ‘family assets’ is
devoid of legal meaning and its use can define no legal rights or obligations. Of
course, if it appears from the evidence that the parties in fact did agree to pool
their assets into one jointly owned fund, that is a different matter, but that must
be a question of fact in each case”. His Lordship was unwilling to imply such an
agreement. Lord Reid (at p. 972), Lord Morris (at p. 978), and Lord Hodson
(at pp. 986, 987) spoke to the same effect. It has been argued that the doctrine
of “family assets” is no more than an inference as to intention, as the nine-
teenth century presumptions of resulting trust and of advancement were judicial
inferences against the background of the then marriage relationships. See (1970),
86 L.Q.R. 98 (J.G. Miller).
McGILL LAW JOURNAL
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purchase of the matrimonial home, whether in ascertainable or
unascertainable amounts, and there is no evidence of agreement,
it is reasonable to infer a common intention to share ownership
or to follow the maxim that equity is equality. This notion was
approved in Pettitt v. Pettitt. But in 1961 in Thompson v. Thomp-
son the members of the Supreme Court felt that where the amounts
were ascertainable those amounts should determine the proportions of
joint ownership. The principle judgment on this matter came from
Judson, J., and, starting from the proposition which was later to
commend itself to Lord Upjohn in Pettitt’s case that one first looks
to see in whose name or names title stands and then applies the
presumptions of resulting trust and advancement, he came to the
view that Rimmer v. Rimmer was an English development which
should not be followed in Canada, and indeed had not been followed
in the Supreme Court. He pointed to the earlier decision of Jackman
V. Jackman 190 where the home was taken in the name of the wife,
and the husband had made the substantial contribution of $10,000
towards the purchase price. The Court had been unable to find that
the presumption of advancement was rebutted, he said, though in view
of the substantial contribution “it should not have been difficult to
draw an inference of a joint interest in the matrimonial home”.01
Supposedly, the Supreme Court would also have held that the pre-
sumptions determined the outcome of the case, if there had been
a substantial, but in terms of amount, an unascertainable contri-
bution.
The unsatisfactory aspect of this decision stems from Judson, J.’s
view that it is the English judicial assumption of a discretionary
power which makes Rimmer v. Rimmer unacceptable in Canada. In
his own words, “The judicial use of the discretionary power under
section 12 of The Married Women’s Property Act, R.S.O. 1950, c.
233, in property disputes between husband and wife has not de-
veloped in the same way in the common law provinces of Canada
as it has in England”. 192 In Pettitt v. Pettitt, however, the House of
Lords has now agreed that section 17 of the Married Women’s
Property Act, 1882,193 does not confer a discretionary power upon
the court to allocate property between the spouses as seems to the
court desirable. Yet the House upheld Rimmer v. Rimmer. And it
did so, surely, because in the circumstances of the case the very
190 [1959] S.C.R. 702, (1959), 19 D.L.R. 317.
191 [1961] S.C.R. 3 at p. 14.
192 bid.
193 The English counterpart of the Ontario Legislation.
No. 2]
DOCTRINE OF RESULTING TRUSTS
fact of substantial contribution by one party made it reasonable
to infer a common intention to share ownership. That inference,
the House pointed out, also did equity as between the parties. 4
It seems to follow from Thompson’s case, however, that a Canadian
court should draw no such inference. Yet a Canadian court may
now take the view in the light of Pettitt v. Pettitt that Judson, J.
drew wrong conclusions from his determination that there is no
judicial discretion under the equivalent Ontario section. 19 5 A future
Canadian court may find, that is, that a substantial contribution
leads to the inference of a common intention to share ownership;
a result which also does equity as between the parties.
The other objection which Judson, J. had to Rimmer v. Rimmer
was the powerful one that, if a financial contribution is enough to
justify an equal division between husband and wife, why should
financial contribution be the only factor which brings about this
result. If such a contribution is absent or miniscule, and the “other
attributes of matrimonial partnership”‘ 9 6 are present, such as con-
tributing in other ways to household needs and by labour within
or upon the home, why should those factors not also justify an equal
division? For him therefore both Rimmer v. Rimmer and the doc-
trine of ‘family assets’ led to this conclusion:
If a presumption of joint assets is to be built up in these matrimonial cases,
it seems to me that the better course would be to attain this object by
legislation rather than by the exercise of an immeasurable judicial discretion
under section 12 of the Married Women’s Property ACt.19
Subsequent Canadian decisions have reflected Thompson’s dis-
approval of the Rimmer v. Rimmer development,19 8 and indeed have
194 Lord Morris ([1969] 2 W.L.R. 966, at p. 980) put it this way: “There will be
cases in which a court is satisfied that both the parties have a beneficial interest,
and a substantial beneficial interest but in which it is not possible to be entirely
precisg in calculating their respective shares. In such circumstances, as Lord
Evershed, M.R. said in Rimmer v. Rimmer…, ‘equality, I think, almost neces-
sarily follows’.” See the post–Pettitt case of Chapman v. Chapman, [10 69] 1
W.L.R. 167, [1969] 8 All E.R. 476 (C.A.).
195 Judson, J.’s words concerning Rimmer v. Rimmer were obiter, because the
wife was repaying the husband money borrowed, not making a contribution.
198 [101] S.C.R. 3 at ip. 14.
197 Ibid.
198In Re Sfajcer, (191), 84 W.W;R. 424 (B.C.) Wilson, J. followed Thompson
v. Thompson, and held that contribution during coverture by a wife firom her
wages toward housekeeping money used for food and clothing for herself and
her children was no basis for a claim upon the matrimonial home. In Spurgeon
(B.C.) Verchere, J. also
and Pub~ic Trustee V. Aasen, (1965), 52 W.W.R. 64
followed Thompson’s case, where a wife claimed a share in furniture and fur-
McGILL LAW JOURNAL
[Vol. 16
often adopted the sentiments of Judson, J. Moreover, the similar
words of MacKay, J.A., 99 who dissented in the Ontario Court of
Appeal hearing of Thompson v. Thompson, have also found sup-
port. 200 MacKay, J.A. considered that Rimmer V. Rimmer would lead
to uncertainties of title to property, and he pointed out, in attempt-
ing to restrict the scope of that case, that it did not apply to chattels
nor to real property in general, but only to the matrimonial home.
This excites the comment that, if Rimmer v. Rimmer is valid at all,
such a restriction upon the principle which it contains is completely
illogical.
Nevertheless, the outcome of cases in Canada may still be along
the lines of Rimnmer v. Rimmer, curious as that may seem. In Ne-
meth v. Nemeth,20 1 husband and wife were engaged in a vineyard
business. The husband, who had bought in his own name the two
vineyards which they worked, had put considerable effort into
building up the business, and the wife had helped from time to time
when she was not engaged in the home with young children. She
had also earned occasional sums which were paid into the husband’s
bank account. On the breakdown of the marriage she claimed a
half share in both vineyards. Macdonald, J. drew attention to the
fact that the Rimmer v. Rimmer cases, particularly “the wide dis-
cretionary power exercised under [that] line of cases”, seemed to
have been extinguished almost totally by Thompson’s case.202 There-
fore, as to the land upon which the matrimonial home stood, since
the wife had made no contribution towards its purchase (as was
the case), she clearly had no claim to a share in the proceeds of
its sale. The position concerning the other axea of land, however,
was different. There her contribution had gone towards purchase,
and Macdonald, J. decided the wife was entitled to an equal share.
But, one would ask, if Rimmer v. Rimmer is rejected, why should
it have been an equal share? Though the sums the wife had earned
were ascertained, the amount used in the purchase was not ascer-
nishings. See also Dubinsky, J. in Stevens v. Brown, (1069), 2 D.L.R. (3d) 687
(N.S.), though -the wife in that case was found to have made no financial con-
tribution.
109 (1960), 22 D.L.R. (2d) 504 at p. 525.
20 0 Spurgeon v. Aasen, (1965), 52 W.W.R. 641 at p. 646.
201 (1967), 64 D.L.R. (2d) 377 (B.C.), following Kropielnicki v. Kropielnicki,
[1935] 1 W.W.R. 249, [1035] 2 D.L.R. 100 (Man. C.A.) where a wife regularly
handed over her earnings to her husband, and was held to have an undivided
half interest in property which he bought out of moneys of the wife and of
himself, but in his own name.
202 Ibid., at p. 381.
No. 2]
DOCTRINE OF RESULTING TRUSTS
tainable, and presumably it was this latter fact which led the judge
to find that that land was owned in equal shares. Yet, if this is
not the result which the Court of Appeal thought appropriate in
Rimmer V. Rimmer, and the House of Lords approved in Pettitt v.
Pettitt, the writer for one cannot see the distinction.20 3 Nemeth v.
Nemeth surely establishes that Rimmer v. Rimmer itself was a
result which could be reached either on the basis of an assumed
common intention or that equity is equality.204 The discretionary
power is a separable issue. Indeed, one is led to think that had the
lower English courts framed the proposition that an equal’ division
is often appropriate not in terms of a discretion, but in terms of
(when it is
the evidence rebuffing the appropriate presumption
shown the parties pooled their resources), it is possible that neither
the House of Lords nor the Supreme Court in Canada would have
got themselves into such a fine drawing of lines as to when the
courts have, and when they have not statutory power under the
Married Women’s Property Acts. They would merely have been
deciding, as in every case, where the equitable title to property lay.
The solution to the problem of Thompson v. Thompson originally
proposed by the Baxter Committee to the Ontario Law Reform Com-
mission was that there be a statutory introduction of a presumption
that husband and wife own the matrimonial home jointly in all
questions of title or possession.20 5 But, according to one’s conception
of the role of the Married Women’s Property Act power, this may
indeed not be the answer. In Nemeth v. Nemeth, for example, Mac-
203 In Stevens v. Brown, (1969), 2 D.L.R. (3d) 687 at p. 696, Dubinsky, J.
quoted Thompson v. Thompson extensively, but also quoted with approval the
headnote of Nemeth v. Nemeth where the decision as to equal shares is speci-
fically spelled out.
20 4 ee Germain v. Germain, (1969), 70 W.W.R. 120 (Man.) where Rimmer v.
Rimmer was followed for reasons that can be rationalized in either of these
ways. In Klutz v. Klutz, (1069), 2 D.L.R. (3d) S-32 (Sask.) MacDonald, J. sug-
gests that where “any [financial] contribution” (p. 337) has been made by the
wife she would be entitled to a 50% shar;e He thinks this Tesult is possible after
the Thompson decision, and he quotes favourably both Rimmer v. Rimmer and
Lord J.’s adoption of Rimmer’s reasoning in Sopow V. Sopow, (1959), 15 D.L.R.
(2d) 57 (B.C.).
205 Vol. I, p. 104. The Committee now proposes (Vol. III, Pt. IV, ch. 3 (revised))
a Legal Regime under which in outline all assets acquired during marriage,
except gifts by third parties to either the husband or wife as an individual, be
equally divided between the parties at the end of the marriage. However, parties
might opt out of the Legal Regime, by a Contractual Regime which in its simplest
form would constitute in effect the present law as to separation of property.
The Legal Regime would do away with the presumptions of resulting trust, and
of advancement.
McGILL LAW JOURNAL
[Vol. 16
donald, J. said in reference to the vineyard upon which the matri-
monial home stood, but to the purchase of which land the wife had
made no financial contribution, that even if he had had wide power
to do that which was fair and just, and “if the Rimmer v. Rimmer
line of authorities remains applicable in Canada”, 206 he would have
given the wife in that case no interest. In his view the wife had
been less than faithful to her husband, given only occasional help
in the business, and latterly spent relatively long periods away from
the home without justifiable cause. To come to a just solution in
these circumstances would have involved overcoming the difficulty
of a presumed joint ownership. In any case what circumstances
would be necessary in order to give rise to the statutory presump-
tion of joint ownership? The fact of marriage, and the acquisition
of a matrimonial home after the marriage? Is this enough ? 207
The urgent need for legislation throughout common law Canada
is widely recognised, and with the Supreme Court having taken
such a conservative line as it did in Thompson v. Thompson the
need is even greater in Canada than in England. Unfortunately, it
is clearly beyond the scope of this paper to assess the various pos-
sible solutions to the problem of matrimonial property, but one or
two thoughts may be in order.
The division of opinion in the House of Lords in Pettitt V. Pettitt
as to the value of the existing presumptions reflects the desire of
the courts to do two things. First, the courts wish it to be under-
stood that under the Married Women’s Property Acts they are merely
206 (1967), 64 D.L.R. (2d) 37q at p. 386. Of course, rhose authorities would
not have applied in any case since no contribution had been made by the wife.
For the same reason Judson, J.’s comments in Thompson v. Thompson on Rimmer
v. Rimmer were obiter. The wife in that case, as we have seen, was found to
be Tepaying a debt to her husband, not making a contribution towards house
purchase from her own resources.
207 It
is disturbing to find a court avoiding joint ownership on technical
grounds. In Re Bishop, [1965] Ch. 450, [1965] 1 All E.R. M49, Stamp, J. con-
sidered that when a joint account holder bought investments in his own name
with moneys from the account, no presumption of resulting trust as to one moiety
arose in favour of the other joint account holder. The learned judge considered
the latter had no equity to displace the legal ownership in the purchaser; each
joint tenant has given the other authority to draw on the account. The recon-
ciliation of this case with Jones V. Maynard, [1951] Ch. 572, [1051] 1 All E.R.
802, is not altogether convincing, and Macdonald, J. refused to accept Re Bishop
in Warm v. Warm, (1169), 70 W.W.R. 201 (B.C.). Cartwright, J.’s reasoning in
Thompson V. Thompson was preferred; purchase with joint account moneys
gives rise in the normal way to the presumptions of resulting trust and of
advancement.
No. 2]
DOCTRINE OF RESULTING TRUSTS
deciding who owns what prior to the marriage being ended or the
parties judicially separated. Secondly, they want to look at the
modus vivendi of modern married couples when, as is normally the
case, the particular couple had no clear intentions as to ownership
when assets were acquired. One wonders, however, how many mar-
riages are not on the verge of breakdown when such an order is
sought. In other words, in view of the somewhat arbitrary decisions
the courts have to make in determining intent in such cases, should
the parties be able to secure such an order prior to the courts
making a suitable property order when the marriage is subsequently
ended or the parties judicially separated? It seems a cumbersome
and undesirable operation. Yet on the other hand no one wants to
rush the parties into the divorce court over property disputes, if
the marriage can be saved. Given adequate homestead and dependants’
relief legislation, it may be that conferring upon the courts the
discretion, which appears in the English Matrimonial Proceedings
and Property Act, 1970,208 or, ‘better, the New Zealand Matrimonial
Property Act, 1963, is about the best that can be done. Given the
traditionally pragmatic approach of the common law, there is much
good sense in this, and the courts have handled this kind of discretion
well.
Community of property legislation, as proposed by the Baxter
Committee, is more of a final solution, but even in Quebec where
the population has always been accustomed to such a doctrine it is
noteworthy that the great majority of middle income group married
couples have traditionally contracted out of the legal regime into
separation of property. Indeed, between 1963 and 1968, 70% of
persons marrying in Quebec contracted out.2 09 This may be -a re-
flection of the unpopularity of the former legal regime, which was
abolished as of July 1, 1970, but the causes of unpopularity may
go deeper. The Act making -the change 210 introduced a new legall
regime which deliberately seeks to meet the objections to the former
208 For section 37 (extending the Court’s power under the Married Women’s
Progerty Act and to all other actions, whether or not involving third parties,
see n. 183, supra. Section 4(a) enables the court on granting n decree of divorce,
of nullity, or of judicial separation, to make “an order that a party to the mar-
riage shall transfer to the other party, to any child of the family or to such
person as may be specified in the order for the benefit of such a child such
property as may be so specified, being property to which the first-mentioned
party is entitled, either in possession or reversion.” The court may order the
settlement of property, vary existing settlements, and reduce or extinguish the
interest of either party to ‘the marriage under such settlements.
209 Civil Code Revision Office: Report on Matrimonial Regimes, 1968, at p. 7.
210 Statutes of Quebec, 1969, c. 77.
McGILL LAW JOURNAL
[Vol. 16
legal regime, but in the writer’s experience on the island of Montreal
many practitioners are hesitant to say that they are recommending
it to their clients. They welcome the fact that spouses are now free
to change their regime, that gifts between husband and wife are
possible, and that the wife is able to borrow money on property in
her name and with those monies make loans to her husband. But,
they say, there are all the book-keeping requirements associated
with the new legal regime of partnership of acquests, and other
technical requirements that those separate as to property will avoid.
Certainly, few practitioners foresee themselves advising couples to
take the new legal regime if either has, or both have, property on
entering marriage. Time alone will tell how much real difference in
practice is produced by the new Act.
In common law provinces where community of property is un-
familiar, and in the eyes of many judges and practitioners a ‘foreign’
concept, contracting out of a legal regime in favour of the known
and tried separation of property system might become as familiar as
has been the case in Quebec. In any event there is bound to be a transi-
tional period of hesitantcy and of settling for the old order of
things. In these circumstances provision along the lines of the
New Zealand legislation may commend itself to the common law
provinces. If such a provision were tied in as a legal consequence
of contracting out of the legal regime, it would ease the introduc-
tion of community of property, and also provide more adequately
for that inevitable transition period.
(3) Exhaustion or failure of express trust objects.
We come now to the second group of resulting trust situations.
A resulting trust will arise when for some reason an express
trust fails, and the trustees are left holding the trust property.
Clearly the trustees cannot as trustees take the property benefi-
cially, and the question is what they are to do with it. In these
circumstances the property could either pass to the Crown as escheat
or bona vacantia, or be returned to the settlor. Equity decided in
the seventeenth century, and the rule has prevailed unchallenged,
that the property should be returned, or in technical language result,
to the settlor. As with the resulting trusts we have been discussing,
this outcome could have been said and has been said to be the im-
plied intention of the settlor on the failure of his express trust, but
it is now generally accepted that this resulting trust arises by oper-
ation of law. That is to say, the law -decrees that the property shall
be returned to the settlor, or, if he is dead when his trust fails, to
his estate.
No. 2]
DOCTRINE OF RESULTING TRUSTS
From one point of view this resulting to the settlor may seem
curious. The trust, we have said, is a mode of alienating property,
of transferring it from the settlor to others. But it will be asked,
if it is alienated, how can it return to the alienor? The explanation
is really quite simple. If I contract to sell you my house, and the
house is conveyed to you on your paying the purchase price, I am
in no way entitled to call for the house on your dying intestate
without heirs. The property is yours, and, as there is no one to
whom it can pass, it falls to the Crown as escheat or bona vacantia.
Similarly, if I decide to make a gift to you of my shares in the
XYZ Co., and I do so by having the shares transferred into your
name in the company’s books, I have no claim to them if you die
intestate without heirs. Moreover, if I decide to make my gift by
way of trust, and transfer the shares to A and B in trust for you,
I also have no claim on your dying intestate without heirs. The
full beneficial interest is vested in you, and on your death your
administrator is entitled to call upon the trustees for the property,
which will then pass to the Crown as escheat or bona vacntia.
The reason why a resulting trust sometimes occurs is because the
settlor has either failed to dispose of the whole beneficial interest,
or because his express trust fails to take effect. The first situation
would occur, for example, when the settlor by will transfers prop-
erty to trustees for A for life, and does not say who is to have
the property on A’s death. The settlor has therefore disposed of
only a part beneficial interest in the property. The second situation
would occur, for example, where the settlor sets up an inter vivos
trust of property and requires the trustees to further by appropriate
methods good journalism and the continued independence of the press.
The objects of the trust will fail because they are not charitable, and
not within the limited number of recognized non charitable purposes. 211
The settlor’s trust device has therefore failed, as the gift by
way of direct transfer fails when the donor does not effectively
deliver the property to the donee. In each case the mode of transfer
having failed, the donor retains his property. The difference be-
tween the two situations is that, though the trust has failed, the
trustees have title to the property. In the case of a straight transfer
to the intended donee, the failure of the transfer simply leaves the
property in the donor’s name. In the case of gift by way of transfer
to trustees equity brings about the same result by decreeing that
the trustees hold the property of the failed trust on resulting trust
for the settlor.
211 Re Astor’s Settlement Trusts, [1052] Oh. 534; [1952] 1 All E.R. 1067.
McGILL LAW JOURNAL
[Vol. 16
(a) Failure of settlor of express trust to dispose of
the whole equitable interest.
Such a failure may occur in a number of ways, but the common
theme is that the limited interests which the settlor has created do
not exhaust the extent of beneficial ownership in the property which
the settlor has transferred to the trustees. The primary task of the
court, therefore, is to examine as a matter of construction in each
case whether the settlor has in fact not disposed of the whole equi-
table or beneficial interest. A proper construction may show that
the settlor intended the trustees to take the absolute interest for
themselves after the prior limited interests had run their course.
The character of the trustees themselves may assist in this con-
struction problem. If there is a bequest of property to a wife, for
example, requiring her to employ the property for certain purposes,
and property remains after the completion of those purposes, it
may be apparent that what the testator had in mind was not a
trust, but a conditional gift.212
This construction problem, classically stated by Lord Eldon in
King v. Denison,21 3 is one which can arise from u deed as well as
a will,214 and in either kind of document it can lead to some very
fine distinctions in the interpretation of meaning which should be put
upon language. It is worth recalling at this point that, though the
entire document can be looked at in construing meaning, extrinsic
evidence is only admissible to clarify a patent ambiguity. If the
document, once construed, reveals that a person takes as a trustee,
and only as a trustee, doubts may not be created by any extrinsic
evidence, which is therefore inadmissible. 215 Tied to the documentary
language, the courts have attached different significance to the
slightest factors. In Re Barrett,2 16 for example, Middleton, J. and
the Ontario Court of Appeal disagreed on the significance to be
attached to the size of the legacy in question. A testator gave to
his daughter whatever sums might at his death be credited to any
212 E.g., “I leave the balance in my bank savings deposit account to my wife,
Georgina, -so -that she can maintain my father for the Test of his days.” Moral
obligation, or conditional gift, or trust?
213 (1813), 1 Ves. & Bea 260 at p. 272.
214 Moffit V. Moffit, (1954), 13 W.W.R. 145, [d954] 2 DiL.R. 841 (B.C.).
215 Similarly, if a proper construction shows that a resulting trust was intended,
extrinsic evidence may not be admnited to disprove that resulting trust: BaUard
v. Stover, (1887), 14 O.R 153 (C.A.), per Wilson, C.J., at p. 166, quoting Lalig-
ham V. Sandford, 17 Ves. 443, 1 Ves. 641.
216 (1914), 5 O.W.N. 805, (1914), 6 O.W.N. 267 (C.A.).
No. 2]
DOCTRINE OF RESULTING TRUSTS
bank account of his, be on his person, or belong to him within his
domicile, “for the purpose of enabling my said daughter to meet
the immediate current expenses in connection with housekeeping”.
The total bequest turned out to be $17,200. Middleton, J. took the
view that, the daughter having lived with the testator, it was his
wish that she should keep the family together after his death until
new arrangements could be made. This was not therefore a case of
an absolute gift, he thought. What was intended was a trust for
the specific purpose, the moneys remaining to result to the testator’s
estate. The Court of Appeal considered that it was an absolute gift.
Two English courts had similarly construed the meaning of language
such as this, and the Court of Appeal considered it was concerned
in this case with the meaning of language. Whether the sum in
question was $17,200 or a mere $500 did not alter the construction.
In view of the fact that decisions on construction are not binding
on later courts, and that no canons of construction were breached
by Middleton, J., it is instructive to see that the Court of Appeal
thought fit nevertheless to reverse the trial judge. Meredith, C.J.0.
thought that “very probably”2 1
the testator would have made a
different disposition of the property had he realised how large a
sum would be available, but that that was no reason for putting
a different construction on the language. Was it a different ap-
proach to this factor by the Court of Appeal which tipped the
scales the other way?
What kind of factors affect the courts’ interpretation was well
brought out in the earlier decision of the Ontario Court of Appeal
in Ballard v. Stover.2 1 8 A testator had left an estate consisting chiefly
of mortgages, which amounted to at least $40,000, producing a yearly
revenue of some $2,400, to four nephews and a grand-nephew, their
survivors, heirs and assigns, share and share alike, on trust to keep
his widow in the condition in which she had been kept by the testator
during his lifetime. The widow in fact predeceased the testator, and
the question was whether the estate passed beneficially to the five
legatees, or as on intestacy. Armour, J. attached importance to the
fact that the words suggesting beneficial interest, “share and share
alike”, were followed by the words “on trust for”, and he also
noted that skilled counsel had drafted this will incorporating trust
language. He therefore concluded in favour of a resulting trust to
the testator’s estate. Wilson, C.J. for the majority disagreed. The
widow had been old and senile, and maintained very frugally at
217 (1914), 6 O.W.N. 267 at p. 268.
218 (1887), 14 O.R. 153 (C.A.).
McGILL LAW JOURNAL
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a yearly cost not exceeding $100.219 Secondly, the inclusion of “as-
signs” was significant because trustees may not alienate the trust
property. The fact that words of trust followed words of apparent
beneficial interest was of great force,220 but this was the only fac-
tor pointing to a resulting trust. The relationship between the
testator and the legatee or devisee might show that the testator
meant the property to be taken beneficially. The same was true
when the testator had taken a special interest in the legatee or
devisee. Lastly, it was important to note that, if one or more of
the tenants in common here had -died in the widow’s lifetime and
after the testator’s death, his or their shares of the capital would
have been taken out of the trust fund, thereby possibly defeating
the trust.221 In sum, Wilson, C.J. was led to the conclusion that a
beneficial interest was indeed intended, but on the lines that the
five persons should take a joint estate during the trust period, and
afterwards an estate in severalty, share and share alike.
Once it has been decided that the deed or will does not dispose
of the whole beneficial interest either in favour of third parties or
the legatee or devisee himself, the property results to the settlor.
It is commonly said that when the whole beneficial interest has
not been transferred away by the settlor, the undisposed of interest
remains in him. In other words, when the trust confers a life in-
terest upon A, a remainder life interest upon B, and leaves the
capital of the gift to return to the settlor, there is a reverter in
the settlor.22 2 But this resulting trust may occur in other ways. If
a testator bequeaths $10,000 on trust for A at 21, he has not dis-
posed of the income which will arise and accumulate during the
minority. If the settlor confers a life interest upon W while she is
219 Would evidence of actual housekeeping costs in the testator’s lifetime have
assisted the court in Re Barrett? Did the testator realize in Ballard v. Stover
how large his estate was? –
there was no evidence of this; it was the Court
which did the calculation. Yet in making the point about the cost of maintaining
the wife, Wilson, O.J. assumes that he realized the situation.
22 0 These words were entirely absent from Re Barrett.
221 Would not the survivor have taken as a trustee? If so, did the observation
point in any direction as to the testator’s intent?
2 2 2 In Krisman V. Montreal Trust Co., (1959), 29 W.W.R. 299 (B.C.)
it was
held possible for a life insured under Insurance Act, R.S.B.C. 1948, c. 164, s.
110, to direct the trustees to make annual payments to the beneficiary until the
capital and accumulated interest were exhausted. Consequently, when the bene-
ficiary died after receiving only one annual payment, the remainder of the fund
fell into the insured’s estate. Brown, J. noted that the resulting trust was not
a matter of intent; the purposes did not exhaust the fund, an outcome which
was probably not foreseen.
No. 2]
DOCTRINE OF RESULTING TRUSTS
living with H, remainder on her death to her children, and W leaves
H, the income of the trust fund will be payable to the settlor be-
tween the time that W leaves and her death.
A more common situation where the settlor fails to dispose of
the whole beneficial interest is when he has set up a trust for the
accomplishment of certain purposes, and the carrying out of those
purposes does not exhaust the fund. In the case of charitable pur-
poses the courts have the power to apply the residual sum cy-pris,
but where the purpose is non-charitable, that sum must revert to
the settlor. This situation occurred in Boyd v. McLaurin.2 3 The
plaintiff mortgagee was persuaded by the defendant solicitor to
assist the mortgagor after the plaintiff had foreclosed on the mort-
gagor’s property. It was arranged that the plaintiff would settle
part of the sale value of the property upon the defendant, as trus-
tee, for the mortgagor’s maintenance. Payments were to be made
to her from time to time, as the defendant thought fit. The trust
document took care to provide that title in the trust fund should
not become part of the mortgagor’s assets, and neither she nor her
creditors could claim the trust fund. However, no provision was
made for any moneys that might remain after the mortgagor’s
death. Consequently, since the mortgagor was never told of the
trust nor were any payments made to her, the plaintiff succeeded
in his claim that there was a resulting trust to him of the whole
trust fund. He would also have succeeded if payments had been
made, but the fund was not exhausted. The excess would have been
his by resulting trust.
In the well-known case of Re Gillinghamn Bus Disaster Fund,224
where the mayors of three English towns had opened a fund to
defray the funeral expenses of certain boy cadets killed in a road
accident, to assist the injured boys, and to subscribe to worthy causes
connected with boy cadets, the gift was non-charitable. As a conse-
quence, when a large sum remained after all possible assistance to
the boys and their parents had been given, the money had to revert
to the people who had responded to the appeal. Many were of course
untraceable, because their offerings had been made anonymously, and
223 (1926), 30 O.W.N. 247.
224 [1958] Ch. 300, [1958] 1 All E.R. 37, aff’d [1959] Ch. 62, [1958] 2 All E.R.
749 (C.A.).
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the outcome was that those moneys remained in court, where they
still are today.225
(b) The express trust fails totally or partially to take effect.
An express trust may fail because the settlor was fundamentally
mistaken as to what objects he was thereby benefiting, or because
fraud, duress, or undue influence was practiced upon him. In certain
situations the court may set aside the trust because it is improvident.
The trust may also fail because there is uncertainty as to what
are the trust objects. The objects may also be illegal or contrary
to public policy, or a limitation to a beneficiary of an interest in
ascertained property may fail because the limitation contravenes the
perpetuity rule. As we have seen, the Statute of Frauds lays down
that no trust shall be enforceable if the property is land and the trust
is not evidenced in writing.
In each of these cases, except possibly in all cases of illegal
objects, the property returns to the settlor by way of a resulting
trust. Where the settlor knew that his purposes were illegal when
he set up the trust, or learned of the illegality before it took effect,
the court may take the view that the loss should lie where it falls.
In England, it seems, the settlor is only in pari delicto if some part
of the illegality has actually been carried out, but in Canada as a
result of Scheuerman v. Scheuerman 226 as we have seen, it appears
the mere intent to commit illegality is enough.
A trust is void if the settlor was fundamentally mistaken as to
what he was doing, but if the trust is attacked by the settlor on
the grounds of misrepresentation, fraud, duress, undue influence,
or improvidence, it is voidable. The distinction is important as to
benefits acquired by others after the trust nominally takes effect.
If the trust is void, no proprietary benefits can be retained against
the settlor. No property passed. But if it is voidable, title to such
benefits may pass provided the trust has not yet been set aside.
If A is fraudulently induced by B to settle property on trust for
B for life, remainder to B’s son, C, absolutely, and C, innocent of
the fraud, assigns his interest to D for value, D will take a good
title. If A, on discovering the fraud, sues to have the trust set aside,
a problem arises. It is clearly wrong for B to resist the setting aside,
225 Similarly if express trustees purchase land with moneys supplied for that
purpose by members of the public, and the purpose of the trust fails or cannot
take further effect, the land or the sale monies will be held by the express
trustees on resulting trust for the contributing members of the public: Re St.
John’s Church, (1927), 60 O.L.R. 491, [1927] 3 D.L.R. 535.
226 (1915), 10 W.W.R. 379, 52 S.C.R. 625, 28 D.L.R. 223.
No. 2]
DOCTRINE OF RESULTING TRUSTS
but what of C’s and D’s positions? C is innocent, but a volunteer;
D is innocent, but gave value. Clearly A ought to have the trust
set aside, but this will not assist him as against D who is a bona fide
purchaser for value, and therefore beyond the limit to which A
can trace his property. A may well be able to trace against the
sale price in C’s hands, on the principles set out in Re Diplolc. 22 7
However, this would be a fairly unusual situation. In most cases
it
is the beneficiary of the trust who has employed the misre-
presentation, fraud, or undue influence which brought the trust
about and he is still in possession of his interest. The setting aside
of the trust will then have the same effect as if the trust had been
declared void. If as between parties to the action there cannot be a
restitutio in integrum, then the court may still refuse to set aside
the trust, but make damages satisfy the plaintiff.
If a trust fails for uncertainty, a resulting trust can only occur
if the uncertainty concerns the objects or purposes of the trust. If
there is uncertainty of intention, then no trust comes into existence,
and if there is uncertainty of subject-matter the trust cannot come
into existence because it is not possible to determine what the trustees
are to hold as the trust property. And, if it is not possible to
determine what is to be held on trust, it follows that there cannot
be a resulting trust. When there is uncertainty of objects or purposes,
however, the trustees are left holding property with no use to which
it can be put. This is when the resulting trust arises. In Roberts v.
Roberts,228 for example, a son transferred his mining claim to his
father on the latter promising to secure a Crown grant, and, if
the claim proved valuable, to give his son a share. The father secured
a grant, and the claim was proved to be worth a large sum. Murphy,
J. decided that an express trust had been created, and that it seemed
the father had undertaken as a trustee to secure a grant and hold
the property until a sale could be affected. However, he said, if the
trust was so indefinite that its terms could not be determined, there
was a resulting trust to the creator of the trust.
The objects or purposes may be certain, but events turn out in
such a way that objects cease to exist or purposes become impossible.
An obvious example of objects ceasing to exist is when a testator
dies leaving a will trust in favour of persons who have predeceased
him. And a purpose is impossible when, for example, a father makes
an ante-nuptial settlement upon his son, the future wife, and the
227 [1,948] Ch. 465, [148] 2 All E.R. 31., aff’d sub noma. Ministry of Health
v. Simpson, [1951] A.C. 251, [1050] 2 All E.R. ,1 31.
228 [102a]
, W.W.R. 137 (B.C.).
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issue of the marriage, only to find that the marriage plans are
later cancelled.
There are a number of ways in which objects may cease to exist
or purposes become impossible, and the problem then takes the form
of discovering when such a situation has occurred. If
it has
occurred, and there is no gift over, there must be a resulting trust.
The following four cases show how the problem can arise. In Gamble
v. Lee,229 the further carrying out of the express trust had reached
a stalemate. A cheque had been drawn on the trust by the trustees’
agent in favour of the beneficiary, but when the beneficiary presented
the cheque to the bank there were no funds to meet it. Consequently,
the plaintiff paid $1500 into the trust account towards meeting the
cheque. However, as the cheque was never again presented, and the
trustees had no authority to use the sum for any other purpose,
the question was what to do now. Spragge, C. decided that the
plaintiff’s purpose in settling the money had failed, and that
therefore the trustees “became dry trustees of the money” 230 for him.
The second case, Poirier v. Brulg,231 demonstrates that a trust
limitation may fail because it is subject to a condition precedent
which is not satisfied, as the trust terms require, during the sub-
sistence of the precedent estate. In such circumstances it is known
during the time of the precedent estate that the limitation over
can never take effect. Elderly A conveyed his land to trustees on
the terms that should he survive B the land should be reconveyed
to himself, but that if B survived A and A’s wife and shall have
supported and provided for the elderly couple during their lives,
the land plus certain chattels and stock should be conveyed to B.
A asked the court to set aside the trust or rectify the deed, because
no provision had been made as to what should happen should B fail
to support or provide for the elderly couple, as had in fact happened.
The Supreme Court refused rectification because of the lapse of time
since A, the settlor, first had grounds for complaint, but awarded
setting aside of the trust. “By reason of [B’s] failure and neglect
to perform his convenants the contingent trust limited in his favour
in the event of his surviving [A] has failed and cannot possibly
arise.” 232 These were the words of Strong, J., who noted that “the
only remaining trusts are in favour of [A] himself, and these he
is at liberty to put an end to at his option and to call on the trustee
229 (1878), 25 Gr. 326.
230 Ibid., at p. 327.
231 (1891), 20 S.C.R. 97.
232 Ibid., at p. 102.
No. 2]
DOCTRINE OF RESULTING TRUSTS
to convey.” 3 Here was a situation, then, where the settlor retained
a life interest for himself, but gave a remainder interest to another
contingent on the occurrence of a condition precedent. The remainder
having failed, the settlor’s underlying ownership prevailed; if the
donee does not qualify for receipt, the donor retains his title.
Poirier v. Brul6, however, arose out of an agreement, and B failed
to supply the consideration which was outlined in the condition
precedent. The trust deed was in furtherance of the agreement. The
third case shows that, before the settlor can argue that a resulting
trust arises in his favour, he must prove that, if there was an
agreement, the consideration coming from the other party has in
fact not been supplied. This he failed to do in Powell v. City of
Vancouver.234 The plaintiff conveyed land to the city in consideration
that the corporation would build a town hall on the site. The city
did in fact build a town hall, which was used as such for a number
of years. However, when the city decided to build a new town hall
elsewhere, and to use the existent building for other purposes, the
plaintiff sought return of the land by way of resulting trust. His
difficulty was that the deed did not contain a condition subsequent
nor was the fee simple made determinable. As Irving, J.A. said “5
for the British Columbia Court of Appeal, if a resulting trust was
desired, the words ‘for all time’ should have been added in the deed.
As the agreement and the deed stood, the consideration had been
performed by the city.
The final case shows that an express trust may be construed
from the duty of the recipient of property to sell and hand over
the proceeds, and a resulting trust rationale be given to the obligation
of the recipient to hand over those proceeds. In other words, the
express trust and the resulting trust concepts may be employed
in circumstances where a decision on the grounds of simple contractual
obligations would have sufficed. In Anderson, Greene & Co. V.
Kickley 236 the respondent, president of G. Co., handed shares to
the appellants for sale, the proceeds of sale to be paid to the re-
spondent. The appellants claimed that the respondent was acting
on behalf of his company, and they consequently asserted a right
as a creditor of the company to retain these proceeds of sale in
satisfaction of the debt. It was the respondent’s intention, however,
233 Ibid.
234 (1912), 3 W.W.R. 108, (1912), 8 D.L.R. 24 (B.C.C.A.).
235 (1912), 3 W.W.R. 108 at p. 109.
236 [.1924] S.C.R. 388, [1 4 3 D.L.R. 787.
237 [1934] S.C.R. 388 at (p. 402.
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known to the appellants, to purchase shares in G. Co. with the
proceeds of the sale, and, due to the retention by the appellants of
those moneys, this intention could not be fulfilled because in the
interim, before the respondent brought action, G. Co. went into
liquidation. The Supreme Court handled this action in what was a
surely over-complex manner by holding that the sale moneys in the
appellants’ hands “were impressed with a trust, which, in that sense,
was a trust in favour of the respondent.” 237 Duff, C.J. for the Court
went on :
The legal result is beyond controversy. The object of the original trust has
failed in consequence of repudiation by the trustee, and present impossibility
of performance; a resulting trust, therefore, attaches to the proceeds of
the sale of the respondent’s property, in favour of the respondent.238
Improvidence is a rare ground upon which the courts will set
aside a trust, thereby causing a resulting trust to the settlor. The
Courts will not intervene merely because a person was foolish to
settle property as he did, and, provided the donor understands the
nature and effect of the trust deed and acted as a free agent, the
courts see no justification for interference. An allegation of im-
providence will cause the court to examine closely the circumstances
prevailing when the trust was made. In Fonseca V. Jones,-30 for
example, where these points were reiterated, the trust deed taken
on its own was improvident, but against the background of circum-
stances prevailing when the deed was executed, it was not. A husband
had built up a successful business, but was faced with the forbidding
prospect of distributing his assets after his death among a large
family and a wife who was over-indulgent to her children. Four of
the sons were wasters, and, though of age, their constant aim was
to obtain all the property from their parents that could be got. The
inter vivos trust, executed by the husband and wife, therefore tied
up the capital in such a way that the mother could not touch it,
and no power of revocation was reserved. After the husband’s death
the sons sought to get at the capital by an action, undertaken by
the mother, to set the trust aside. As nominal co-settlor the wife
had participated in the creation of a trust which as to its terms was
clearly improvident, but against the background of the needs and
personalities equally clearly was not.
If trust limitations fail because of rules of law, the property
must result to the settlor. This will always be so when a trust of
238 Ibid., at p. 403.
239 (1910), 14 W.L.R. 148, 21 Man. R. 168, aff’d 18 W.L.R. 259, 21 Man. R.
193 (C.A.).
No. 2]
DOCTRINE OF RESULTING TRUSTS
land is orally created and not evidenced in writing, or where the
grant or assignment of an equitable interest arising under a trust
is not in writing.240 For such reason a declaration of trust enumerating
the objects of an express trust of land could not take effect in
Fleming v. Royal Trust Co.21 On the other hand, however, the
court may refuse to strike down the oral evidence of it believes the
Statute was being used an instrument of fraud. In Roberts V.
Roberts, 242 for example, the father was not permitted to plead the
Statute against his son, and therefore the express trust with indefinite
objects was free to take effect. Since the objects were indefinite,
seemingly a resulting trust to the son arose, but Murphy, J. decided
that the objects were not so indefinite that he could not see that
both father and son were to take some share in the mining grant.
In these circumstances he followed Briggs v. Newswander 243 and
Wells v. Petty,244 and on the basis that equity is equality divided
the property equally between father and son.
Another familiar rule of law which may invalidate trust terms
is the rule against perpetuities and accumulations. If a remainder
absolute is struck out by this rule, the property ‘results back’ to
the settlor.
The notion of resulting trust is used liberally by the courts, not
only to describe any liability to restore property to the person from
whom title passed, 245 but even to describe the obligations upon an
express trustee successfully sued for breach of trust. This unnecessary
and inexact usage is not a happy development. Moreover, this liberal
usage is not a fault of which only trial courts are guilty. Briggs V.
Newswander 245 was decided in the Supreme Court of Canada. The
plaintiff had agreed with the defendant to sell certain mining claims
to him for a consideration of $500 on the terms that the defendant
form a company to own and work the claims and that he allot the
plaintiff a “reasonable” amount of stock in the company. The plaintiff
240 Statute of Frauds.
241 (1920), 18 O.W.N. 386.
242 [192 3] 2 W.W.R. 137 (B.C.). See also Sutherland v. McKay (1898), 40
N.S.R. 223.
243 (1902), 32 S.C.R. 405.
2A4 (1897), 5 B.C.R. 353, 1 M.M.C. 147 (C.A.).
245 E.g., Ferguson v. Toronto, [1944] O.R. 385, [1944] 3 D.L.R. 817, where
no express trust already existed, and Powell v. City of Vaticouver, (1912), 3
W.W.R. 108,
(1912), 8 D.L.R. 24, where such a trust did exist. It will be
observed that in
resulting trust would have existed
over the specific property originally conveyed. Ferguson V. Toronto was a
money claim.
the latter case
the
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sued for specific performance when the defendant did not form a
company, and in the two lower courts the defendant won on the
ground that the agreement was too vague to enforce. The Supreme
Court, however, was of the view that this agreement gave rise
to an express trust,246 and that any vagueness of purposes redounded
not to the defendant’s, but to the plaintiff settlor’s, benefit; the
trust would fail, it at all, for uncertainty. However, the Court did
not find such uncertainty. The trust was effective, and the defendant
was in breach of trust for not forming the company. Sedgewick, J.
for the Court went on, 248 “The first effect of that breach of trust
was that a resulting trust in favour of the Plaintiff… was at once
created,” and the breach was aggravated by the defendant taking
the properties into his own name.
The questions that arise are several. Given that property passed
from plaintiff to defendant, what evidence was there that the parties
intended a trust? Why did breach of trust lead to restitution of the
property to the plaintiff ? Was not restitution secured by a con-
structive trust order? If it was indeed a resulting trust, which of the
resulting trust situations existed on these facts ? –
failure of the
trust purposes ?
In the outcome the Court did not order a reconveyance of the
properties with a refunding of the defendant’s expenses, but in the
pursuit of equity adopted partnership principles and awarded the
plaintiff a quarter share in the properties. As we saw with Roberts
v. Roberts, the resulting trust is a right in the settlor or conveyor
attendant upon a trust purpose which fails, but that right is subject
to the discretion of the court to do equity as between the parties
affected.
(c) The Rule in Hancock v. Watson 249
What is the position if A makes a testamentary bequest in favour
of B, but imposes upon that property a number of obligations which
B is to carry out, and those obligations fail for uncertainty, illegality,
lapse, or any such reason? Does the property released from the
obligations result back to the testator’s estate, or does B take
absolutely and free from the obligations? The rule has been estab-
246 (1902), 32 S.C.R. 405.
247 The Court considered the $500 a mere nominal consideration. The formation
of the company, and the allocation of a share of stock to the plaintiff, were
the real items -of consideration.
248 Ibid., at p. 41.1.
249 [1002] A.C. 14.
250 (1820), 2 Jac. & W. 279.
No. 2]
DOCTRINE OF RESULTING TRUSTS
lished for over 150 years that, provided the gift to B is absolute,
the failure of the trust engrafted or imposed on that absolute interest
will cause the absolute gift to be free of the trust. The testator’s
residuary legatee or next-of-kin will take nothing, since no resulting
trust arises. The absolute gift is interposed between the testator’s
estate and the failed trust, and it is the grafting of the trust on the
absolute gift itself which prevents the property freed from the trust
from falling back into the estate.
The rule was being applied as early as 1820 in the case of Whittell
V. Dudin250 and in Lord Cottenham’s judgment in Lassence v.
Tielney 251 it was elaborated and clarified, to be restated and affirmed
by Lord Davey in the House of Lords in Hancock v. Watson. The
rule has also been applied and discussed in Canada in two cases
which afford us an opportunity of seeing the rule in operation.
As Masten, J. pointed out in Re Goodhue Trusts, 25 2 the problem
in these cases is to discover what interests the testator has given.
He may have made an absolute gift upon which a trust has been
imposed, or the apparent absolute gift on a proper construction may
turn out to be a limited gift, and the subsequent apparent trust
terms to be part of, or successive to, that limited gift. Only in the
latter case can there be a resulting trust. In Re Goodhue Trusts25 3
the testatrix had a life interest in $30,000 arising out of a marriage
settlement, and a power of appointment over that sum as to the
remainder interest in favour of and among her issue. Five children
were born to her of the marriage, one of whom was dead when she
made her will. In her will the testatrix purported to make the
$30,000 subject to the terms of her will disposing of her residuary
estate. Secondly, she divided the residue 253 including the $30,000
among her four living children, but she also gave survivorship
interests in the property to the spouses of those children, and expressly
conferred upon the children permission to donate a specific proportion
of their shares to charity. Finally she empowered her children to
determine by their respective last wills the amounts which the
children of each such child should take in the parent’s share of
the testatrix’s residuary estate. These three provisions in the will
suggested that the ‘division’ of the $30,000 was not a division of
the capital so as to create four absolute interests, but rather to
create four life interests, survivorship interests for life in spouses,
251 (1849), 1 Mac. & G. 551.
252 (1920), 47 O.L.R. 178 at p. 186.
253With the exception of certain life insurance monies, which were divided
among the four living children and the children of a deceased fifth child.
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and a power of appointment in each case among grandchildren. The
testatrix’s gift to the spouses and the grandchildren failed; an
appointment to non-objects of the power is invalid, and the power
given to children to appoint among their children was void as in
breach of the perpetuity rule. These failings gave an opening to
the children of the deceased child, who were able to argue that the
clause in the testatrix’s marriage settlement, giving an equal interest
to all the testatrix’s children in default of appointment, had thereby
come into effect. In this way the grandchildren excluded by the
testatrix would take a share in her estate. To succeed they had to
argue that the testatrix had only given life interests to the four
living children, and that all the subsequent limitations were remainder
interests. Since these limitations failed, it was said, a quarter share
of the estate became divisible into five parts on the dropping of
each tenant in common’s life. The four surviving children argued
per contra that the testatrix had given them each absolute interests,
and then had gone on in such a way as to attempt to limit in each
case the extent of enjoyment.
This was a classic Hancock v. Watson situation, and the occasion
was taken by Masten, J. to discuss fully the meaning and authority
of the rule. On a construction of the testatrix’s will the court decided
in this case that the argument of the living children was correct,
and that they took absolute interests, now free of the limitations
on the extent of enjoyment. There was therefore nothing of the
residue, including the $30,000, to pass on a resulting trust to the
testatrix’s estate.
In Ankcorn v. Stewart 254 the rule became relevant because a
will was ambiguous as to whether a certain legatee had a vested
or contingent interest. The testator bequeathed two tenths of his
residue to each of his three daughters, and required that payment
should be made to each when the youngest daughter attained her
majority. But the testator also added that, if any of his daughters
should be married at that time, his executors should have the power
not to pay any share in full if in their opinion the daughter in question
was at that time in comfortable circumstances. One daughter married
just before the testator’s death, and died shortly afterwards before
the youngest had attained her majority. When that majority occurred,
therefore, the executors considered that the deceased daughter had
failed to qualify for a share of the estate, and proceeded accordingly.
The deceased daughter’s child later contested this interpretation.
254 (1920), 47 O.L.R. 478.
No. 2]
DOCTRINE OF RESULTING TRUSTS
The issue in this case, then, was whether the testator had given
an interest which vested on the testator’s death, subject to the
right of the executors to reduce the actual payment at the later
date, or whether the share was contingent on the daughter living
till the majority attainment took place when the executors had to
exercise their discretion. The Court of Appeal overruled Kelly, J., 255
and held that the share did indeed vest on the testator’s death,
and, since he had made no provision for a daughter dying before the
youngest attained majority, the deceased daughter took her share
free of any reduction which the executors might have made at the
later date. The rule in Hancock v. Watson therefore applied in this
sense that the testator had made an absolute gift upon which he had
grafted the executors’ discretion later to reduce the amount to be
paid. The failure of that grafted discretion meant that the absolute
gift remained irreducible in size. 256
CONCLUSION
The resulting trust touches such a variety of areas of substantive
law that it readily appears to be no more than a device for the
restoring of property to the person with the best claim. In this
popular sense it comes very close to the restitutionary character of
the constructive trust which itself in its turn has historically been
presented as something other than a restitutionary remedy. Perhaps
the law is moving towards the time when the two types of trust
will coincide, but this can only occur when Restitution is commonly
recognized as less a description of assorted existing obligations and
more a head of obligation. ‘Reversion’ or ‘resulting’ will then be a
description of what happens when those restitution obligations occur.
In the meantime a resulting trust is a distinct term of art, applicable
in specific situations when property remains in, or reverts to, the
original transferor.
The distinction between the two types of trust is emphasised in
the recent decision of the Ontario Court of Appeal in Re Bank of
Western Canada.25 The appellants could only succeed under a result-
ing trust if they could show that the respondent company held
certain assets, Bank of Western Canada shares, on express trust for
255 Ibid., at p. 479.
256 In this case, however, there could not have been a resulting trust to the
testator’s estate because the testator had provided that any sums withheld
from a daughter should be added to the shares to be divided among the remaining
daughters.
257 (1970), 8 D.L.R. (3d) 593.
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the appellants, and that that trust had failed. If no express trust
existed, the claim of the appellants, if any, was personal only, and
they could not circumvent the difficulty by the argument that “a
resulting trust may be founded on a frustrated contract”. 258 Nor
could the personal claim be avoided by the argument that the re-
spondent had been unjustly enriched when the Bank declared a
dividend on its shares and payment was made to the respondent.
The respondent could not be held liable as a constructive trustee to
remedy that alleged unjust enrichment because on the facts the
appellants had obtained other agreed consideration for the money
they had paid over, the value of which was in the respondent’s name.
trust are both proprietary
remedies, but at the moment the rationale of each trust is still quite
distinct from the other. How long this will remain so, and how they
will ultimately be joined in a common rationale, are nice matters
for seminar discussion. The key may lie in the significance the
courts continue to give to intent in the law of resulting trusts.
Resulting trust and constructive
25s Ibid., at p. 605.
