Hodgson v Marks [1971] Ch 892

Facts

  • Mrs. Hodgson, an elderly widow, transferred the legal title of her home to her lodger, Mr. Evans, believing he would manage it for her benefit.
  • Mrs. Hodgson retained possession of and continued to live in the property after the transfer.
  • Mr. Evans subsequently sold the property to Mr. Marks, who asserted he was a bona fide purchaser for value without notice of Mrs. Hodgson's equitable interest.
  • The dispute centered on whether Mrs. Hodgson retained an equitable interest in the property post-transfer and whether a resulting trust arose in her favor.
  • The relationship between Mrs. Hodgson and Mr. Evans involved trust, with Mr. Evans acting in a position of responsibility toward Mrs. Hodgson.

Issues

  1. Whether Mrs. Hodgson retained an equitable interest in the property despite transferring legal title to Mr. Evans.
  2. Whether a resulting trust arose in favor of Mrs. Hodgson due to the absence of an intention to benefit Mr. Evans.
  3. Whether Mr. Marks could rely upon being a bona fide purchaser for value without notice to defeat Mrs. Hodgson's equitable interest.

Decision

  • The court found that Mrs. Hodgson did not intend to confer a beneficial interest on Mr. Evans; her transfer of legal title was not a gift.
  • A resulting trust was established in favor of Mrs. Hodgson because the transfer was intended solely to facilitate management, not to transfer beneficial ownership.
  • The sale to Mr. Marks did not defeat Mrs. Hodgson's equitable interest, as the court determined Mr. Marks was not a bona fide purchaser for value without notice of her rights.
  • Mrs. Hodgson's equitable interest in the property was preserved despite the subsequent transfer of the legal title.

Legal Principles

  • A resulting trust arises when property is transferred under circumstances indicating no intention to confer a beneficial interest on the transferee.
  • The transferor's intention is essential in determining whether a resulting trust exists; a lack of intention to gift or benefit the transferee triggers this equitable remedy.
  • Equitable interests may be protected against third-party claims, especially when legal title is transferred in breach of trust or under questionable circumstances.
  • Courts look beyond formalities to ascertain the true intentions of the parties and prevent unjust deprivation of property rights.

Conclusion

Hodgson v Marks reaffirms the principle that a resulting trust arises where the transferor does not intend to benefit the transferee, ensuring that equitable interests are protected even in the event of ineffective transfers of legal title. The court preserved Mrs. Hodgson's equitable interest in the property, emphasizing the significance of true intention and the protection of equitable rights in property law.

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