I quote Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] UKHL 12.

(B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest [emphasis mine]: ibid. and Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567.

I quote Lord Millett in Twinsectra Limited v Yardley and Others [2002] UKHL 12.

  1. [. . .] Insofar as the transfer does not exhaust the entire beneficial interest, the resulting trust is a default trust which fills the gap and leaves no room for any part to be in suspense.
  1. [. . .] Like all resulting trusts, the trust in favour of the lender arises when the lender parts with the money on terms which do not exhaust the beneficial interest.

Please explain the meaning of 'do not exhaust the beneficial interest' with a picture, which is worth thousand words?
How can you redraw the diagrams below to pictorialize "not exhausting the whole beneficial interest"?

First diagram. Second. Third. Bottom

  • -1 for screenreader inaccessibility.
    – Trish
    Mar 25 at 14:07
  • 1
    Downvoted for shallow thinking before asking.
    – ohwilleke
    Mar 25 at 20:46
  • @ohwilleke What do you mean by "shallow thinking" ? I am not a lawyer like you. It's unfair to judge a tenderfoot, learning the law for fun, to the standard of a practising lawyer.
    – user49181
    Mar 29 at 4:48

1 Answer 1


When person A transfers property to B, and creates an express trust in favour of C, the terms of that express trust might not deal with all of the property.

For the property that is dealt with in the terms of the express trust, its beneficial interest lies with C.

But if all the property is not dealt with by express terms, then the express trust does not exhaust all of the beneficial interest. Some might be left with the holder of the legal interest (B in my example), or there might be what is called a "resulting trust" that puts the remainder beneficial interest back with A.

For example, A might create a trust in an investment where C gets the proceeds up to $5,000 pa. What happens in the years where the investment delivers more than $5,000? The entire beneficial interest is not exhausted in those years.

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