Equity Assignment

Discuss the extent to which it can be said that resulting trusts operate to support the equitable
maxim that "equity abhors a beneficial vacuum".

INTRODUCTION
Lord Wilberforce said in Vandervell v IRC [1967]), "Equity abhors a beneficial vacuum"i.e. if there
is no beneficial owner of property, equity will find an owner (usually under a resulting trust, to the
original owner).

An implied trust is founded upon the unexpressed but presumed intention of the settlor. This type of
trust arises where equity regards a settlor or testator as being entitled to the beneficial interest in the
trust property transferred to the trustee by him. They are called "resulting" trusts because in them the
beneficial interest "results" i.e goes back to the donor.

A resulting trust is an equitable reversion that arises by operation of law whenever a person has
created an express intentional trust, but the express trust fails or does not completely dispose of the
trust property. When the trust fails or does not completely dispose of the trust property, the
undisposed property goes back to the settlor in a resulting trust.
In re Vandervell’s Trusts (No 2), Megarry J explained resulting trusts, drawing a distinction
between presumed resulting trusts and automatic resulting trusts:
Where we have a transfer where there is an intention to retain beneficial title then on the basis of that
presumption beneficial title remains with the original owner (presumed Resulting Trust); on the other
hand, automatic Resulting Trusts arise by operation of law.

In Vandervell v IRC [1967] 2 AC 291, the House of Lords decided that the equitable interest in the
option to purchase shares was vested in Mr Vandervell by way of a resulting trust. It was held that, ‘If
A intends to give away all his beneficial interest in a piece of property and thinks he has done so but,
by some mistake or accident or failure to comply with the requirements of the law, he has failed to do
so, either wholly or partially, there will, by operation of law, be a resulting trust for him of the
beneficial interest of which he had failed effectually to dispose. If the beneficial interest was in A and
he fails to give it away effectively to another or others or on charitable trusts it must remain in him.
Early references to equity, like nature, abhorring a vacuum, are delightful but unnecessary.’

This judgment speaks to the court's stand that whereby a mistake, accident or failure to comply with
the requirements of law while creating a trust, and a beneficial interest is created without a party to
receive it, the court will not leave such a vaccine. Instead a resulting trust will be created.

CONCLUSION.

In conclusion, the court of equity will not leave a beneficial interest in the air. If a party can benefit
from it legally, the court will see that it rests on someone. Leaving such a vacuum negates the point of
equity in the first place and the court will not stand for that.
Therefore, where by any chance a beneficial interest is created without a party to actually benefit from
it, the court will either return it to the original settlor or hold on to the property as the courts'.
However, the equity will not leave such a vacuum be, for equity abhors a beneficial vacuum.