5.1.2 Express and Implied Trusts Lecture


Express trusts are a device of disposition which, in land, creates a purely nominal (‘legal’) title that vests in the person named by the testator as the trustee. The title is purely nominal in that the property vested in them is not for their benefit, but is instead for the benefit of another, namely the beneficiary. These terms of trusteeship are made explicit in the testamentary disposition of the land in question, and so the trustee must act according to those terms. A breach of those terms is regarded as an affront to the conscience of the court of equity, and therefore a trustee can be required by the court to comply with the express terms of the trust.

Such a trust does not have to be articulated in any particular form, so long as the words plainly express and evidence an intention. Speaking clearly such that the words give rise to an objective intention ‘create a trust…without knowing it’ (Re Schebsman, deceased [1944] Ch. 83).

Formalities for creating equitable rights

Given that a trust can therefore be (potentially) created so easily, the recognition of equitable rights in trusts of land is coupled with a requirement for formality. The requirement of formality stems from the Statute of Frauds 1677 and two related policy considerations. The first is that it reduces the likelihood of controversy arising from allegations of fraud or mistake; the second is it is consistent with the English legal system’s preference for formal methods of creations of interests in land.

With such rights, a central rule is that a declaration of trust relating to land is enforceable only if it is ‘manifested and proved’ by some writing signed by the declarant (Law of Property Act 1925, s.53(1)(b)). The failure of documentary formality, as a consequence, results in a ‘merely voluntary declaration of trust… unenforceable for want of writing’ (Gissing v Gissing [1971] A.C. 886 per Lord Diplock). Without the evidence of a trust being in writing, a trust ‘does not come into being merely from a gratuitous intention to transfer or create a beneficial interest’ (Austin v Keele(1987) 10 NSWLR 283, PC per Lord Oliver of Aylmerton).

Formalities and equity

That being said, there are limited situations in which the statutory requirement for formality is circumvented by the court exercising its equitable jurisdiction. The court will exercise that jurisdiction where there is a concern about the statute being used in a manner that is contrary to the intentions of the testator. This, as you will recall from your revision in Equity and Trusts, is a reference to ‘secret trusts.’ The court when faced with these situations intends to avoid allowing statute being used as an instrument for committing or abetting a fraud. The Law of Property Act 1925 was not intended to replace one form of fraud (i.e. the alleged beneficiary claiming the existence of a trust) with another (i.e. the reliance by the trustee themselves on a technical fault in the trust to avoid being rendered as the trustee).


Although there is an insistence on the need to uphold formalities and avoid complications following informal creation of trusts of land, nevertheless there are exceptions to the need to comply in an unyielding manner to ensuring all trusts are put in writing. Hence, unlike with express trusts of land, implied trusts of land are not required to be evidenced in writing and do not require the signature of the settlor (Law of Property Act 1925, s.53(2)).

In the context of implied trusts, there are two types of trusts: resulting trusts and constructive trusts.

Resulting Trusts

Dealing first with resulting trusts, the presumption at the heart of such trusts is ‘no more than a consensus of judicial opinion disclosed by reported cases as to the most likely inference of fact to be drawn in the absence of any evidence to the contrary’ (Pettitt v Pettitt [1970] per Lord Upjohn). According to this doctrine, the “nominal”purchaser (A) of some land, where they purchase the land using money provided by another (B), is deemed by equity to be holding the land on a trust that ‘results’ back to B, the “real” purchaser. This is an application of the principle as stated by Eyre CB: ‘A trust of a legal estate… results to the man who advances the purchase-money’ (Dyer v Dyer (1788) 2 Cox Eq. Cas. 92).

This rule serves to displace the usual rule, namely that equitable ownership follows legal title. According to this rationale, given that A is the named purchaser of the land, they must also be the beneficial owner of the land. With resulting trusts, equity is recognising a truism that if B advances a large portion of money to A for the purpose of purchasing land, the advance of money is more likely to be part of a bargain, and not a gift; the so-called ‘solid tug of money’ (Hofman v Hofman [1965] NZLR 795 per Woodhouse J). Resulting trusts recognise that B had anticipated, and A had agreed to, there being something given to B in return.

Resulting Trusts and Inequity

Controversially, a resulting trust is still held to apply, and the moral obligation owed by A to B, is no less diminished even where B has acted according to motives that would otherwise offend the conscience of the court of equity. In the case of Tinsley v Milligan [1994] 1 AC 340, the House of Lords held that A was subject to a resulting trust for the benefit of B, even though B’s contribution was made because of their intent to defraud the Department of Social Security.

Date of acquisition

It is said that resulting trusts come into being at the date of acquisition of the property by A: the exact distribution of beneficial entitlement between A and B (i.e. the respective beneficial share of each party over the land) is said to ‘crystallise’ at the date of acquisition (Bernard v Josephs [1982] Ch. 391). In other words, according to the classic idea of resulting trusts, the only intentions which are relevant are those which existed at the time of the taking of title by A (Gissing v Gissing [1971]).Therefore, per this classic condition of resulting trusts, any contributions that are subsequent to the date of purchase ought not to be declared relevant for the purposes of a trust (Curley v Parkes [2005] 1 P. & C.R. DG15).


Resulting trusts, as mentioned, depend on a presumption: namely, that because B has advanced some or all of the purchase-money for the land by the date of acquisition, B is presumed to hold a beneficial interest via resulting trust. But this presumption is rebuttable: if evidence can be provided which definitively demonstrates that B never intended to hold a beneficial interest over the land, then a resulting trust will not apply. Again, it is the default position that the advance of purchase money from B to A, so that A may purchase the land, will establish a resulting trust in favour of B.

Further, although resulting trusts depend on a truism that an advance of significant portions of money for purchase of land is a bargain and not a gift, there are occasions in which equity will recognise that portions of money alleged to be gifts are exactly that: gifts.

Presumption of Advancement

Resulting trusts can also be displaced by another, contrary presumption: the ‘presumption of advancement.’ Under this latter presumption, an inference arises of intent to donate money towards the purchase of a legal estate: the donor wished to ‘advance’ (that is, make a gift to) the nominal purchaser of the legal estate. This presumption has tended to operate in the family context where, contrary to the centrality of bargains over altruism, instead there may be altruistic motives on the part of the donor towards the donee. There is a ‘moral obligation to give’ (Bennet v Bennet(1879) 10 Ch. D. 474 per Jessel MR).

Case in focus: Hannaford v Selby(1976) 239 E.G. 811


Loans are of a different nature: a lender does not advance money in the same manner as B does in the scenario described above. The lender does not therefore take on any beneficial entitlement under a resulting trust. Otherwise, lenders and building societies would be able to take almost absolute beneficial entitlement to all properties for which they provide loans. Instead, the lender’s entitlement to the property rests solely on their contractual entitlement to payment of the capital plus interest. Breach of that entitlement gives rise to powers of sale and repossession, otherwise the lender has no beneficial entitlement to the property.

Case in focus: Re Sharpe (A Bankrupt) [1980] 1 W.L.R. 219

Further difficulties

One persistent difficulty within resulting trusts is the ability to ascertain the contours of “purchase money”: in other words, it has been a problem for resulting trusts doctrine to identify which financial contributions are contributions towards the purchase and those which are not, meaning which contributions are ‘referable’ to A’s acquisition of title (Burns v Burns [1984] Ch 317, CA per Fox LJ). This problem is especially pertinent to those contributions which may have been made after the date of the acquisition of the land, and yet relate to the land. These can be, for example, payments for improvements of the land, or even full satisfaction of the purchase price (Winkworth v Edward Baron Development Co Ltd [1986] 1 W.L.R. 1512).

Given the advent of constructive trusts, resulting trusts are now usually reserved for straightforward, though now atypical, cases where contributions towards the purchase money are made prior to the date of acquisition (Curley v Parkes [2005]). More broadly, the law on trusts of land has ‘moved on’ from the rigid and limited application of resulting trusts to the wider doctrine of constructive trusts (Stack v Dowden [2007] per Lord Walker and Baroness Hale).

Constructive Trusts

The starting point is that, as mentioned already, land law tends not to recognise rights creation where simply done orally; land law will usually require the creation of rights to be done by written instruments (Law of Property Act 1925, s.53(1)(b)-(c)). However, equity may be prepared to impose a trust where it sees that an estate owner has behaved unconscionably within the context of a bargain. Where an owner of a legal enters into a bargain with another person to allocate or share beneficial ownership of the land with the other person, and that bargain has been acted upon in some manner, equity will prevent the estate owner from avoiding that agreement; the court acts to ‘construct a trust’ to give effect to that bargain (Grant v Edwards [1986] Ch. 638 per Nourse LJ).

The constructive trust provides ‘the formula through which the conscience of equity finds expression’ (Beatty v Guggenheim Exploration Co.225 NY 380 (1919). The court seeks to construct the trust on the basis of a given bargain which renders the legal owner’s subsequent assertion of an absolute beneficial title unconscionable (Banner Home Groups plc v Luff Developments Ltd [2000] Ch 372, CA).


The classic definition of a constructive trust was posited by Lord Diplock, in which His Lordship stated that equity enforces or ‘constructs’ a trust in circumstances where ‘[The legal owner] has so conducted himself that it would be inequitable to allow him to deny to [the alleged beneficial owner] a beneficial interest in the land.’ Lord Diplock sought to limit the reach and breadth of this statement by a qualifying statement: an inequitable outcome will be prevented only if ‘[the legal owner] by his words or conduct has induced [the alleged beneficial owner] to act to [the alleged beneficial owner’s] own detriment in the reasonable belief that by so acting [the alleged beneficial owner] was acquiring a beneficial interest in the land.’ As mentioned at the outset regarding implied trusts, a constructive trust is fully enforceable because it is not required to be in writing (Law of Property Act 1925 s.53(2)). When enforced, the constructive trust takes effect as a ‘trust of land’ as per the Trusts of Land and Appointment of Trustees Act 1996.


There are three essential elements, according to the Diplock formula:

  1. The bargain,
  2. Change of position (the so-called ‘acting to their detriment’), and
  3. Equitable fraud (the unconscionable disclaiming of the bargain).
  1. Bargain

The Court of Appeal in Oxley v Hiscock [2005] Fam. 211 identified as the first issue in any constructive trust claim to be whether there was any common intention on the part of A and B that each should have a beneficial interest in the land. So long as there was some manner of agreement of shared beneficial entitlement to the estate, such an agreement can give rise to a constructive trust. In short, Oxley asks whether there was a bargain. The second issue is a matter of how much; that is, the amount of the beneficial entitlements as they are shared between A and B. The House of Lords in Stack v Dowden [2007] 2 A.C. 432 said the court can settle this question of how much by reference to what the parties ‘must, in the light of their conduct, be taken to have intended.’ The timing of the bargain, unlike with resulting trusts, is a much less critical question (James v Thomas [2007] EWCA Civ 1212 per Sir John Chadwick).

  1. Change of position

It is essential that the person claiming a beneficial entitlement under a constructive trust must show they have ‘altered her position in reliance on the agreement’, thereby acquiring ‘an enforceable interest… by way either of a constructive trust or of a proprietary estoppel’ (Lloyds Bank v Rosset [1991] 1 A.C. 107 per Lord Bridge). There must exist a causal link between the agreement and the detriment taken on by the alleged beneficial owner.

As to what facts might constitute a change of position, this can include contributions of finance and the attention of one’s labour to a joint venture between themselves and the legal owner (Chan Pui Chun v Leung Kam Ho [2003] 1 P. & C.R. DG2 per Jonathan Parker LJ).

  1. Equitable fraud

According to this final element, what constitutes the equitable fraud is the legal owner’s disclaimer of the bargain between themselves and the alleged beneficial owner. The legal owner’s attempt to deny the existence and application of the agreement amounts to a form of cheating, and thus the legal owner is penalised by the imposition of the constructive trust.

Case in focus: Bannister v Bannister [1948] 2 All ER 133, CA

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