Trusts can generally be classified for trust purpsoes as express, constructive and resulting.  A resulting trust arises it two circumstances.  The first is when a voluntary payment is made that cannot be characterised as a gift; and the second is when a trust fails.

Voluntary payment

In the first circumstance where a resulting trust can arise voluntary payments are made by A to B, or for the purchase of property in the name of B or in B’s and A’s joint names.  Provided there is no presumption of advancement or evidence of A’s intention to make a gift to B a resulting trust arises whereby even if B is the owner of the property, B holds the money or property on trust for A.

Failure of a trust in whole or in part

In the second circumstance property transferred to B by A on an express trust does not exhaust the whole beneficial interest. Such a trust will in due course fail to the extent that there is no beneficial owner and the trust will result back to A.

Application of resulting trust as a remedy

The recent decision in Crampton-Smith v Crampton-Smith demonstrates the application of the remedy of resulting trust and the factors that need to be taken into account when applying a presumption of resulting trust.

See Crampton-Smith v Crampton-Smith

References:

• Crampton-Smith v Crampton-Smith [2011] NZCA 308
• Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 708