Hodgson v Marks [1971] Ch 892

Key point

An automatic resulting trust arises where an express trust fails for lack of formality.

Mrs Hodgson (C) executed a voluntary transfer of the freehold of her house to her lodger for free.
The lodger was registered as proprietor of the house though it was orally agreed that beneficial interest remained with C.
The lodger sold the house to Mr Marks (D1), who then as the newly registered proprietor, executed a charge on the house in favour of a building society (D2).
C sought a declaration that D1 was to transfer the house to her free from the charge, on the basis that the lodger held the house on trust for her and the trust bound D1 and D2.

If an express trust was not effective as a result of s53(1)(b) LPA 1925 due to lack of writing, a resulting trust arises.
‘If an attempted express trust fails, that seems to me just the occasion for implication of a resulting trust, whether the failure be due to uncertainty, or perpetuity, or lack of form.’

‘On the above footing it matters not whether Marks was or was not debarred from relying upon section 53(1) by the principle that the section is not to be used as an instrument for fraud. Marks was in fact ignorant of her interest and it is forcefully argued that there is nothing fraudulent in his taking advantage of the section’

D1’s registered title was subject to C’s overriding interest under the resulting trust of the house as she was in actual occupation when D1 registered his title.

There are have been 3 different judicial approaches to protecting persons who transferred their land upon some oral agreement with the that they will continue to retain some right in the land:
1. Hodgson v Marks: the transferor made an oral declaration of an express trust fails for lack of formality, thus a resulting trust arises.
2. Bannister v Bannister: the transferee holds the property on constructive trust.
3. Rochefoucauld v Boustead: where the trust can be proven by some extrinsic evidence in writing, an express trust arises despite the lack of writing as (1) the writing requirement cannot be used to enforce a fraud and (2) the writing requirement is merely an evidential rule – Russell LJ in Hodgson v Marks did not endorse this line of reasoning, as seen above.