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Quistclose trust is still the subject of academic debate. This chapter looks at resulting trusts which arise when property has been transferred to be utilized for certain purposes and those purposes become incapable of fulfillment. Three propositions are presented. One, the loan of money to be used for a particular purpose does not generate a trust for the benefit of the intended recipients of the money and nor does the lender retain full equitable ownership of it. The borrower receiving the entire beneficial ownership of the money is subjected to the lender's right to prevent it being used for any other purpose. Two, if the purpose fails, there is a resulting trust in favour of the lender. Last, the Quistclose trust is not restricted to loans for the purposes of paying other creditors of the borrower.

This chapter deals with a special type of trust, usually referred to as Quistclose trust after the House of Lords decision in Barclays Bank Ltd v Quistclose Investments Ltd. Unlike the majority of trusts discussed in this book, a Quistclose trust is not an express trust created by a settlement of property wth the intention to benefit certain objects. It is an implied trust, where the trust relationship is recognized by a court based on the facts and the intention of the concerned parties.

This chapter considers how proprietary interests are created or transferred by implied intention or by presumed intention. As previously explained, implied or proprietary interests are much more common in equity than at common law, and this chapter is therefore mainly concerned with the creation of equitable proprietary interests. The factors which are used by the courts to find an intention to create a proprietary interest are identified. Examples of using implied agreement to obtain a proprietary interest include where one person sells another’s asset, where money is paid for an investment and where assets are set aside by one person for another. This chapter discusses the Quistclose trust, family homes, and the different rules which apply to commercial and family arrangements.

Preference laws have long played a part in maintaining creditor entitlements in the period leading up to the commencement of formal insolvency proceedings. The general rationale of the preference provisions of the Insolvency Act 1986 is that if in the period leading up to insolvency proceedings the debtor.