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- Sydney Uni 2005-2006
- Topic 9 - Resulting Trusts
Topic 9 - Resulting Trusts
- By Student at Law
- Published 29/05/2007
- Sydney Uni 2005-2006
- Unrated
(C) Presumed Resulting Trusts
“Presumed” Resulting Trusts
The Presumption of Resulting Trust v the Presumption of Advancement
• The presumption of resulting trust refers to an assumption that a person who pays for property intends to own that property beneficially, even if they authorise another person to take legal title to the property
• The presumption of advancement refers to an assumption that fathers and husbands intend to make outright gifts to their children and wives when they provide the money for the purchase of property
• Both presumptions can be rebutted by evidence
• The presumption of advancement overrides the presumption of resulting trust
Do these presumptions apply today?
Calverley v Green (1984) 155 CLR 242
Facts: A de facto couple bought a house in joint names. He paid a deposit. The remainder of the purchase price was borrowed on a mortgage, also in joint names. He alone made repayments of the loan. They spit up. Legally, it is a jointly owned house (50:50 split). What conclusion will equity reach regarding who owns the property?
If they were married, there would be a presumption of advancement, so the wife would have had a half interest in the house. However, there is no presumption here, as they are de facto.
Held: The man does not get the whole house.
First, the presumption of resulting trust says that he who pays owns. He has paid a deposit (say 10%). The balance is paid by both of them, because the loan itself is in both names (and she was jointly liable for that). He would get the proportion of property equating to the deposit plus half the remaining balance (55%), and she would get 45%.
The fact that he had made the repayments was a matter of accounting between them separately, and did not go to who owned the property (he would have to claim restitutionary damages for unjust enrichment or find that it was a partnership).The resulting trust reasoning does not resolve these problems. It only looks at who paid the money up front on day one.
Russell v Scott (1936) 55 CLR 440
Facts: An aunt and nephew held a joint bank account, which she alone operated during her life (she alone deposited funds into the account, and she alone withdrew funds). She intended the nephew to have the account by right of survivorship on her death. When she died, her estate claimed that fund belonged to the her on a resulting trust.
There is no presumption of advancement between an aunt and nephew. Hence, the nephew had to prove his case, even though he was the legal owner.
Held: There is a presumption of a resulting trust. However, here, that presumption was overridden by clear implications of her behaviour all the way through. It was clear that she intended that she should have the benefit of the money while she lived, but that he should have it when she died.
Hence, you can disprove the presumption of resulting trust on the facts of the case.
(D) Resulting Trusts and Illegality
Illegality
• The question is whether you can you plead the existence of a resulting trust, if to do so, you must confess to some illegality (equity demands “clean hands”)
Nelson v Nelson (1995) 184 CLR 538
Facts: A mother paid the purchase price for a house, but registered it in the names of her son and daughter to take advantage of a benefit she was not entitled to (a subsidised loan under the Defence Service Homes Act 1918 to buy another home). She received a subsidised loan on the basis of an application in which she declared that she did not own or have a financial interest in any other house.
The first house was sold. The daughter claimed her share of the deal. The mother (supported by the son) claimed the whole price on the basis of a resulting trust. The daughter argued for a presumption of advancement, and also that her mother committed an illegality
Held:
(1) There is a presumption of advancement in gifts from mothers (and not only fathers) to children.
However, the presumption was rebutted by evidence in this case that the mother only registered the house in the names of her son and daughter to take advantage of the subsidised loan
(2) Equity does NOT let the loss lie where it falls in a case involving illegality (Tinsley v Milligan was not followed)
To prove what the mother’s intentions were, the mother had to plead an illegal purpose. The court said that this did not matter. The mother could still plead her case
(3) The mother was declared to have a beneficial interest in the proceeds of sale. Three of the five judges held that this declaration should be subject to a requirement that she restore the subsidy to the Commonwealth.
• This case demonstrates how illegality will be treated in an Australian court. You can plead the existence of a resulting trust, even if you have to confess to some illegal act
Note: Tinsley v Milligan involved two women who formed a joint venture to run a boarding house. They purchased a house in the plaintiff’s name, so that the defendant could receive social security payments, which went into their joint household kitty. Subsequently, they quarreled, the plaintiff moved out, and then served notice on the defendant to quit the house, and brought an action for possession, claiming that she (the plaintiff) was the sole legal owner.
The defendant counter-claimed for a sale of the property and sharing of the proceeds, on the basis that it was held on a resulting trust.
The defendant succeeded on all levels. By majority, the HOL held that the illegality did not defeat the defendant’s claim, because she did not have to bring evidence of the illegal purpose to succeed.
“Presumed” Resulting Trusts
The Presumption of Resulting Trust v the Presumption of Advancement
• The presumption of resulting trust refers to an assumption that a person who pays for property intends to own that property beneficially, even if they authorise another person to take legal title to the property
• The presumption of advancement refers to an assumption that fathers and husbands intend to make outright gifts to their children and wives when they provide the money for the purchase of property
• Both presumptions can be rebutted by evidence
• The presumption of advancement overrides the presumption of resulting trust
Do these presumptions apply today?
Calverley v Green (1984) 155 CLR 242
Facts: A de facto couple bought a house in joint names. He paid a deposit. The remainder of the purchase price was borrowed on a mortgage, also in joint names. He alone made repayments of the loan. They spit up. Legally, it is a jointly owned house (50:50 split). What conclusion will equity reach regarding who owns the property?
If they were married, there would be a presumption of advancement, so the wife would have had a half interest in the house. However, there is no presumption here, as they are de facto.
Held: The man does not get the whole house.
First, the presumption of resulting trust says that he who pays owns. He has paid a deposit (say 10%). The balance is paid by both of them, because the loan itself is in both names (and she was jointly liable for that). He would get the proportion of property equating to the deposit plus half the remaining balance (55%), and she would get 45%.
The fact that he had made the repayments was a matter of accounting between them separately, and did not go to who owned the property (he would have to claim restitutionary damages for unjust enrichment or find that it was a partnership).The resulting trust reasoning does not resolve these problems. It only looks at who paid the money up front on day one.
Russell v Scott (1936) 55 CLR 440
Facts: An aunt and nephew held a joint bank account, which she alone operated during her life (she alone deposited funds into the account, and she alone withdrew funds). She intended the nephew to have the account by right of survivorship on her death. When she died, her estate claimed that fund belonged to the her on a resulting trust.
There is no presumption of advancement between an aunt and nephew. Hence, the nephew had to prove his case, even though he was the legal owner.
Held: There is a presumption of a resulting trust. However, here, that presumption was overridden by clear implications of her behaviour all the way through. It was clear that she intended that she should have the benefit of the money while she lived, but that he should have it when she died.
Hence, you can disprove the presumption of resulting trust on the facts of the case.
(D) Resulting Trusts and Illegality
Illegality
• The question is whether you can you plead the existence of a resulting trust, if to do so, you must confess to some illegality (equity demands “clean hands”)
Nelson v Nelson (1995) 184 CLR 538
Facts: A mother paid the purchase price for a house, but registered it in the names of her son and daughter to take advantage of a benefit she was not entitled to (a subsidised loan under the Defence Service Homes Act 1918 to buy another home). She received a subsidised loan on the basis of an application in which she declared that she did not own or have a financial interest in any other house.
The first house was sold. The daughter claimed her share of the deal. The mother (supported by the son) claimed the whole price on the basis of a resulting trust. The daughter argued for a presumption of advancement, and also that her mother committed an illegality
Held:
(1) There is a presumption of advancement in gifts from mothers (and not only fathers) to children.
However, the presumption was rebutted by evidence in this case that the mother only registered the house in the names of her son and daughter to take advantage of the subsidised loan
(2) Equity does NOT let the loss lie where it falls in a case involving illegality (Tinsley v Milligan was not followed)
To prove what the mother’s intentions were, the mother had to plead an illegal purpose. The court said that this did not matter. The mother could still plead her case
(3) The mother was declared to have a beneficial interest in the proceeds of sale. Three of the five judges held that this declaration should be subject to a requirement that she restore the subsidy to the Commonwealth.
• This case demonstrates how illegality will be treated in an Australian court. You can plead the existence of a resulting trust, even if you have to confess to some illegal act
Note: Tinsley v Milligan involved two women who formed a joint venture to run a boarding house. They purchased a house in the plaintiff’s name, so that the defendant could receive social security payments, which went into their joint household kitty. Subsequently, they quarreled, the plaintiff moved out, and then served notice on the defendant to quit the house, and brought an action for possession, claiming that she (the plaintiff) was the sole legal owner.
The defendant counter-claimed for a sale of the property and sharing of the proceeds, on the basis that it was held on a resulting trust.
The defendant succeeded on all levels. By majority, the HOL held that the illegality did not defeat the defendant’s claim, because she did not have to bring evidence of the illegal purpose to succeed.
