Inmost cases, the presumption of advancement will apply.
It will usually arisewhere a purchaser is the parent or husband of the person the property is beingtransferred to. In such cases, various rationales have been provided for theactuality of the presumption of advancement and for the specific relationshipsto which it applies. The gender prejudice of the presumption was very likely toinfringe the European Convention on Human Rights and resulted in the abolitionof the presumption in s.199(1) of theEquality Act 2010.
1The first situation the presumption of advancement will apply, is where thehusband makes a transfer to his wife as stated by Malins VC in Re Eykyn’s Trusts.2 Hementions that where a husband transfers money or other property into the nameof only his wife, then the presumption will be that it was either intended as agift or advancement to the wife completely at once. An example of this is in Petitt v Petitt.3This case concerned Mrs. Petitt who inherited a cottage and was the solelegal owner. He claimed that he was entitled a beneficial interest in thecottage due to the improvements he created and brought an action under s17Married Woman’s Property Act 1882.4 TheHouse of Lords held that Mr.
Petitt would not be entitled to receive anythingas they were unable to conclude any common intention from his behavior. Thesecond traditional approach of the presumption of advancement is said to applyonly when transfers made by fathers to their children and not to transfers madeby mothers to their children. In Bennet vBennet, Sir George Jessel MR explained that the father is under anobligation to provide for his child and in this case, you would only need toshow that he is the father and the obligation will arise.5 Accordingly,the presumption of advancement is still founded on the presumed intention ofthe parties. The intention of the settlor will be enforced on the basis thatthe courts are able to identify intention. Thereis also another category which is categorized as ‘Express Resulting Trusts’.This occurs when the settler has intended the property to stay on trust for himuntil a specific event has transpired.6The main authority for this occurred in BarclaysBank Ltd v Quistclose Investments Ltd, where money was lent to the beneficiary for a particular purpose whichwas to pay dividends to shareholders.
7In the leading judgment, Lord Wilberforce stated that the fact there had been aloan agreement did not constitute a trust. The liability to pay interest wouldresult when the money had been used for the purpose to pay the dividends andthe relationship was contractual, but if a failure existed then it would be aresulting trust for the lender. As a matter of trusts, trusts need threecertainties or they will fail. In this case, the subject matter of the trustwould be the money lent for the purpose, which is usually not difficult. The intention to create a trust was not apparentby the facts but one way that many cases have contemplated the intention to beobvious is the separation of money into a separate account as in Re Kayford.8Another leading authority in the area of Quistclose trusts is Twinsectra Ltd v Yardly.9In this case, money had been loaned to purchase land. The solicitors decidedthat the money would only be used towards buying land.
The money was passedbetween solicitors and was then released to a borrower without imposing thepurpose to obtain land. Lord Mustill in the Court of Appeal stated that what isnecessary is a mutual intention that the money does not contribute to thegeneral funds of the donee’s assets but should be used for a specific purpose.However, in terms of common intention this leaves doubt as to the identity ofthe settlor but whoever is considered the settlor, there should be certainty ofintention to create a trust.
The certainty of intention must not only be adeclaration expressing that the loan money is to be utilized for a specificpurpose but there must be an extra indication stating that the money is to beheld on trust.