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44-454: Barclays Bank Ltd v Quistclose Investments Ltd [1968] UKHL 4 (sub nom Quistclose Investments Ltd v Rolls Razor Ltd ) is a leading property , unjust enrichment and trusts case, which invented a new species of proprietary interest in English law. A " Quistclose trust " arises when an asset is given to somebody for a specific purpose and if, for whatever reason, the purpose for

88-437: A resulting trust in favour of the person who originally advanced the credit and the person to whom the sums were advanced holds them as trustee . Rolls Razor Ltd owed £484,000 to Barclays Bank Ltd . It still needed more money to pay a dividend , which it had declared to its shareholders on 2 July 1964. Quistclose Investments Ltd agreed to a loan of £209,719 8s 6d on the conditions that the dividend would be paid with it and

132-458: A great measure the division into immovable and movable incidentally recognized in Roman law and generally adopted since. "Things personal," according to Blackstone , "are goods, money, and all other movables which may attend the owner's person wherever he thinks proper to go". This identification of things personal with movables, though logical in theory, does not, as will be seen, perfectly express

176-514: A resulting trust arises due to a legal "presumed intention to create a trust in favor of the settlor". - It's also suggested that the trust arises from a "lack of intention to benefit the recipient". This could be referred to as the Chambers Model of intention, where the settlor intends to retain the beneficial interest in the property but transfers the legal title. Differentiating between a positive intention to retain beneficial interest and

220-492: A resulting trust implied by operation of law. The law presumes that transferring property to a family member, particularly for supporting a relative, is legitimate. However, when an unrelated party receives substantial value without providing consideration , it's usually presumed that they hold the property in trust for the transferor, unless proven as a gift. This presumption of gift applies to transfers between siblings, uncles, aunts, children, and grandchildren. An exception to

264-425: A resulting trust is an equitable creation, rather than a common law concept. Consequently, equitable defenses like laches , unclean hands , and the duty to do equity may be recognized in some jurisdictions. For instance, if a transferor conveys property for an unlawful purpose and benefits from it, a court might rule that the transferor has waived the right to claim a resulting trust. Courts in these situations balance

308-515: A valid trust so far as 'certainty of object[s]' is concerned. However, the House of Lords, on appeal, declined to endorse those comments. However, what differentiates the Quistclose trust from other trusts is the existence of the specific purpose for which the sums on credit must be applied and the failure of which gives rise to the trust. It must also be clear that if that specific purpose fails,

352-500: Is an estate pur autre vie , which, since 1740, is distributable as personal property in the absence of a special occupant. Examples of property prima facie personal which is treated as real are fixtures , heirlooms , such as deeds and family portraits, and shares in some of the older companies, as the New River Company, which are real estate by statute. In ordinary cases shares in companies are personal property, unless

396-716: Is considered as purely personal, in others it has been held to be a fixture, and so to partake of the nature of real property. Shares in some of the early American corporations were, like New River shares in England, made real estate by statute, as in the case of the Cape Sable Company in Maryland. In Louisiana animals employed in husbandry are, and slaves were, regarded as immovables. Pews in churches are generally real property, but in some states they are made personal property by statute. The assignment of choses in action

440-491: Is generally permitted, and is in most states regulated by statute. U. W.) The law relating to trusts of land was adjusted by the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) which came into force in 1997. This had a significant impact, particularly in relation to bankruptcy and the associated importance of the family home - see " Re Shaire " 2001 . There have also been discussions in relation to trusts of land and

484-537: Is in England, owing to the operation of the Registration Acts. Long terms in some states have annexed to them the properties of freehold estates . In some states estates pur autre vie descend like real property; in others an estate pur autre vie is deemed a freehold only during the life of the grantee; after his death it becomes a chattel real. In yet other states the heir has a scintilla of interest as special occupant. In some states railway rolling stock

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528-428: Is only coextensive with detention. Personal property may be acquired by occupancy (including the accessio , commixtio , and confusio of Roman law), by invention, as patent and copyright , or by transfer, either by the act of the law (as in bankruptcy , judgment and intestacy ), or by the act of the party (as in gift , contract and will ). There are several cases in which, by statute or otherwise, property

572-513: Is sometimes argued that Quistclose trusts are not a separate species of trust at all but merely a simple trust that has certain characteristics. However, Quistclose trusts are often regarded as somewhat special and distinct. The English Court of Appeal , in Twinsectra Ltd v Yardley [1999] Lloyd's Rep 438, suggested obiter dictum that it was in fact a 'quasi-trust', which is not required to satisfy "the usually strict requirements for

616-405: Is taken out of the class of real or personal to which it seems naturally to belong. By the operation of the equitable doctrine of conversion money directed to be employed in the purchase of land, or land directed to be turned into money, is in general regarded as that species of property into which it is directed to be converted. An example of property prima facie real which is treated as personal

660-479: Is the domain of the law of real property . The law of personal property is particularly important for commercial law and insolvency . Trusts affect everything in English property law . Intellectual property is also an important branch of the law of property. For unregistered land see Unregistered land in English law . Land law, or the law of "real" property, is the most significant area of property law that

704-412: Is typically compulsory on university courses. Although capital, often held in corporations and trusts , has displaced land as the dominant repository of social wealth, land law still determines the quality and cost of people's home life, where businesses and industry can be run, and where agriculture, forestry or water resources are managed. The division of property into real and personal represents in

748-494: The Human Rights Act 1998 . Resulting trust The trust property is said to "result" or revert to the transferor (as an implied settlor ). This use of "result" means spring back : on the face of it the property in question has been transferred to the recipient (and indeed it has come into the recipient's legal ownership ), but the legal owner is not permitted to benefit from it, and so beneficial ownership of

792-630: The Law of Property Act 1925 s.60(3). However, the court can still consider extrinsic evidence to establish the creation of a trust. These trusts take effect by operation of law and are automatic. They can arise when a settlor sets up a trust for a third party, but there's an initial failure due to the lack of defined beneficiaries or changing objectives. For example, when the settlor names beneficiaries who can't be defined, as in Morice v Bishop of Durham , or when trust objectives become impossible or irrelevant by

836-405: The Quistclose trust, it was suggested that the concept was unambiguously good. In Re Kayford , it was suggested that a segregated account for customers' money to be placed in to guard against the insolvency of the company was a proper and responsible thing to do. However, more recently, criticism has been mounted that giving a proprietary claim to a lender that enables the lender to reclaim

880-476: The English law, owing to the somewhat anomalous position of chattels real. In England real property is supposed to be superior in dignity to personal property, which was originally of little importance from a legal point of view. This view is the result of feudal ideas, and had no place in the Roman system, in which immovables and movables were dealt with as far as possible in the same manner, and descended according to

924-413: The House of Lords reviewed the law, and the leading judgment was given by Lord Millett , whose judicial analysis unsurprisingly closely mirrored what he had suggested twenty years previously. The key issue, according to Lord Millett, in upholding the trust concept is ascertaining where the beneficial interest in the money lies. Lord Millett suggests that there are four possible answers: (1) the lender, (2)

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968-410: The borrower, (3) the ultimate purpose and (4) no one in the sense that the beneficial interest remains "in suspense". Lord Millett then analysed all of the foregoing, and determined that the beneficial interest remains with the lender until the purpose for which the funds are lent is fulfilled. The only other reasoned decision was Lord Hoffmann , who agreed with Lord Millett but disagreed as to whether it

1012-447: The case of Vandervell v Inland Revenue Commissioners [1967], where the beneficial interest vanishes while the beneficiary interest remains. Sections Contest Property disposition Common types Other types Governing doctrines Some jurisdictions might establish a rebuttable presumption of gift for property transfers between relatives. This presumption could serve as an affirmative defense in petitions to establish

1056-694: The insolvency law was last revised in the Enterprise Act 2002 ). However, should the courts start finding them with increasing frequency, it may be that regulation, or judicial revision, follows. English property law English property law is the law of acquisition, sharing and protection of valuable assets in England and Wales . While part of the United Kingdom, many elements of Scots property law are different. In England, property law encompasses four main topics: Property in land

1100-551: The judgment that Lord Wilberforce gave. The conceptual analysis underpinning Quistclose trusts was the source of some debate. Shortly after the decision, an article appeared in the Law Quarterly Review , written by Peter Millett QC, suggesting how the traditional trust need for certainty of objects (beneficiary) could be squared with the decision of the House of Lords and the refusal to accept new categories of purpose trust in equity. In Twinsectra Ltd v Yardley ,

1144-478: The lender, not the borrower". In Twinsectra v Yardley , Lord Millett spent some time considering the necessary intention. It has long been settled law that a person need not have a specific intention to create an express trust so long as the court can determine from the person's intention that a beneficial entitlement should be conferred which the law (or equity) will enforce. Thus, in Twinsectra , where there

1188-498: The loan ahead of unsecured creditors has the effect of putting the lender in the position of a secured creditor , but without the need to register any security interest against the borrower (and thus meaning that other creditors would not be aware of the preferential status of the lender's claim). Quistclose trusts still remain relatively uncommon, and as yet, there has been no clamour for legislation or regulation ( Quistclose trusts were not even addressed under English law when

1232-409: The money would be put in a separate account (also with Barclays Bank). The money was paid into the account, but before the dividend was distributed, Rolls Razor Ltd went into voluntary liquidation. Quistclose sought to recover the money, contending that its agreement meant Rolls Razor Ltd held the money on trust. Barclays contended that the account was part of the general assets of the company and that it

1276-503: The other. An attempt to classify resulting trusts was made by Megarry J in Re Vandervell's Trusts (No. 2) [1974] Ch 269. According to Megarry J, there are two sorts of resulting trusts in English law. These trusts arise when A transfers property to B, and the law creates a rebuttable presumption of a resulting trust if A's intention is unclear (absence of written evidence). For instance, if A transfers property to B, except when

1320-449: The presumption of gift is property transfers between spouses. This exception arises from the fiduciary duty spouses owe each other, based on a special trusted relationship implying utmost good faith and fair dealing. Spouses are generally incapable of transmuting property, except under specific circumstances where they make an EXPRESS DECLARATION of transmutation through a clear statement in a dignified document. In common law jurisdictions,

1364-399: The property springs back to the settlor. Not all trusts where the settlor is also the beneficiary are resulting trusts. In common law systems, express trusts that clearly state the settlor as the beneficiary are typically not considered resulting trusts. The beneficial interest results to the settlor, or if the settlor has died, to the settlor's estate . This concept is illustrated in

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1408-403: The purpose is sufficiently well defined to be a power, a Quistclose trust may arise), but others have argued that to take tests from one branch of the law and apply it to another may not be appropriate. The lower courts in Twinsectra suggested that the purpose must be sufficiently well defined, but Lord Millett distanced himself from that position by claiming that "uncertainty works in favour of

1452-437: The same rules. The main differences between real and personal property which still exist in England are: Personal estate is divided in English law into chattels real and chattels personal; the latter are again divided into choses in possession and choses in action (see Chattel; Chose ). Interest in personal property may be either absolute or qualified. The latter case is illustrated by animals ferae naturae , in which property

1496-472: The shareholders have individually some interest in the land as land. The terms heritable and movable of Scots law to a great extent correspond with the real and personal of English law. The main points of difference are: The law in the United States agrees in most respects with that of England. Heirlooms are unknown, one reason being, no doubt, that the importance of title-deeds is much less than it

1540-428: The sums will revert to the person who originally advanced them. The situations in which Quistclose trusts have been upheld are varied. They have been upheld in cases of: One issue that has to date escaped notice in the judicial consideration of Quistclose trusts is how narrowly the purpose has to be defined. Suggestions have been made to the effect that the general law in relation to powers would apply (such that if

1584-561: The time of the transfer, as in Re Gillingham Bus Disaster Fund . Some academics suggest automatic resulting trusts arise only when a property has been transferred to a trustee on an express trust, where the trustee has legal title to the property, to be held on trust for the settlor. In relation to automatic resulting trusts, there's some difference in expressing the nature of the settlor's intention: - According to Westdeutsche , Lord Browne-Wilkinson stated that

1628-407: The transfer fails, the transferor may take back the asset. If a debtor undertakes to use the loan in a particular way and segregates the creditor's money from his general assets, and the debtor becomes insolvent, the creditor's money is refundable and is not available to pay the debtor's other creditors. If the trust fails (because the purpose is not or cannot be fulfilled), the sums become subject to

1672-532: The transfer is between parents and children or spouses, the law presumes a resulting trust for A in the absence of evidence to the contrary (unless A provides evidence that the property is actually owned by B). The main categories of fact situations giving rise to a presumption of a resulting trust are: - A voluntary conveyance of property by A to B - A monetary contribution by A to purchase property for B (The Venture, [1908] P 218, (1907) 77 L.J.P. 105.) These presumptions are rebuttable. In Fowkes v Pascoe , evidence

1716-488: The transferee's unjust enrichment against enabling cheating by the transferor. Allowing a cheater to gain from such transactions would undermine the court's integrity. Other jurisdictions might disregard an unlawful purpose. In scenarios involving illegality, distinguishing the implementation of a resulting trust theory (implied by operation of law) from an oral express trust (implied by facts) can become difficult. A transferor failing under one theory might still succeed under

1760-479: Was a loan did not exclude the implication of a trust. The legal rights (to call for repayment) and equitable rights (to claim title) could co-exist. Barclays, having notice of the trust, could not retain the money as against Quistclose. Similarly, the liquidator of Rolls Razor could not claim title to the money, as the assets did not form part the beneficial estate of Rolls Razor. Lord Reid , Lord Morris of Borth-Y-Gest , Lord Guest and Lord Pearce all agreed with

1804-488: Was a solicitor's undertaking that the money should be used for only one purpose, that was held to be sufficient intent. In Quistclose itself and in Carreras Rothmans v Freeman Mathews Treasure , where loans were made for a specific purpose, this may also amount to sufficient intention. If a loan is advanced for the borrower to use as he will, no Quistclose trust can arise. In the early stages of development of

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1848-423: Was an express or resulting trust. Some have suggested that a Quistclose trust is indubitably a trust but would not be a resulting trust as the beneficial interest never 'results back' to the lender; it was with him all the time. However, others point out that there are many resulting trusts whose beneficial interest never leaves the donor, such as the classic example of a trust failing for uncertain objects. It

1892-414: Was entitled to exercise a set-off of the money in the account against the debts that Rolls Razor owed with respect of Barclays. The House of Lords (with the leading judgment being given by Lord Wilberforce ) unanimously held that the money was held by Rolls Razor on trust for the payment of the dividends; that purpose having failed, the money was held on trust for Quistclose. The fact that the transaction

1936-495: Was presented that a woman had purchased stock in the names of herself and her grandson; the grandson and granddaughter-in-law's evidence that this was a gift was admissible. However, the presumption only considers an intention to create a trust, not ulterior motives. Tinsley v Milligan exemplifies this, where fraudulent intent didn't defeat the presumption of a resulting trust. Despite the general presumption of resulting trust, this doesn't apply to voluntary transfers of land due to

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