Resulting Trusts
Professor Cameron Stewart
Definition
• A resulting trust is a trust that arises because
equity presumes an intention to create a trust.
• They are often referred to as ‘implied’ trusts,
although they should not be confused with
express trusts where an intention to create
the trust is implied from wording or
surrounding circumstances.
Automatic resulting trusts
• Westdeutsche Landesbank Girozentrale v Islington
Borough Council
• Resulting trusts which arise when there has been a
failure of an express trust, or, alternatively, where
there is a surplus of trust property after a trust has
been terminated. In these situations the remaining
trust property is held on resulting trust for the
creator of the trust because it is presumed that the
creator intended to receive any leftover beneficial
interest
Presumed resulting trust
• Resulting trusts which arise because
contributions have been made to the
purchase of property but the contributor has
not been given a legal title that is equivalent
to that contribution. In such a transaction,
equity presumes that the equivalent legal title
is held on trust for the contributor
An institutional trust
• Any presumption that equity makes about a
person’s intention can be rebutted by
evidence of actual intention
• A resulting trust comes into existence from
the date of the circumstances giving rise to its
presumption
• The resulting trust is a property institution like
an express trust, rather than a remedy
An institutional trust
• Rickett and Grantham (2000) at 19:
• The resulting trust and its foundational
presumptions operate as part of the law of
property, simply as a series of default rules
locating the beneficial interest in property
when the transfer of the property is itself
ambiguous as to the location of that interest,
or ineffective to dispose of that interest
An institutional trust
• Some scholars, like Chambers (1997), have
argued that beyond this basic but
fundamental role, lies an attempt by equity to
prevent or reverse unjust enrichment on the
part of those who have received legal title
where there was no intention for them to
obtain a beneficial interest.
Incomplete disposition of a beneficial
interest
• A resulting trust will be imposed when there
has been an incomplete disposition of a
beneficial interest in a trust. This can occur
when an express trust fails, when the purpose
of a trust fails or when a trust surplus exists
after satisfaction of the purpose of a trust.
Failure of an express trust
• After an express trust fails, equity imposes a
resulting trust by presuming an intention on
the part of the creator for the trust property
to revert back to the creator.
Hodgson v Marks [1971] Ch 892
• A, the owner of a house, voluntarily transferred it to B,
who in turn orally declared that the beneficial interest
in the house remained with A.
• B subsequently sold the house to C.
• Who gets the house?
• Court of Appeal – no express trust because the the
statutory requirement of writing set out in the s
53(1)(b) of the Law of Property Act 1925 was not
satisfied
• Failed express trust so resulting trust arose
• No need for writing
Hodgson v Marks [1971] Ch 892
• Russell LJ, at 933, said:
• [T]he evidence is clear that [A’s] transfer was not intended
to operate as a gift, and, in those circumstances, I do not
see why there was not a resulting trust of the beneficial
interest to [A], which would not, of course, be affected by
section 53(1). It was argued that a resulting trust is based
upon implied intention, and that where there is an express
trust for the transferor intended and declared – albeit
ineffectively – there is no reason for such an implication. I
do not accept that. 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.
Illegality
• If a trust fails for illegality, equity looks at the
specific circumstances of the case and the
particular policy behind the law that had been
breached, before determining whether a
resulting trust should be applied: Nelson v
Nelson
Failure of the purpose of a loan
• Quistclose trusts
• This trust has been classified by Lord Millet in
Twinsectra Ltd v Yardley [2002] 2 AC 164;
[2002] 2 All ER 377, as a resulting trust
• Salvo v New Tel Ltd [2005] NSWCA 281: the
majority (Spigelman CJ and Young CJ in Eq)
favoured an express trust treatment
Trust surpluses after satisfaction of the
purpose of a trust
• A trust surplus might exist after the
beneficiaries in a fixed trust have taken all
their entitlements or have died. In such cases
there will be a resulting trust of the surplus
back to the creator of the trust : Smith v Cooke
[1891] AC 297.
Trust surpluses after satisfaction of
the purpose of a trust
• Charitable trusts that experience a trust
surplus can often be saved cy-près with the
surplus being employed for purposes as near
as possible to that envisaged by the creator.
• However, cy-près schemes are dependent on
the existence of a general charitable intention
• What if there is no general intention?
Trust surpluses after satisfaction of
the purpose of a trust
• If the trust lacks a general charitable intention
any trust surplus will be held on resulting trust
for the creator: Re Abbott Fund Trust [1900] 2
Ch 326.
Re Gillingham Bus Disaster Fund
[1958] Ch 300
• In 1951, there was a bus crash which killed 24 Royal
Marines cadets and injured several more.
• The local mayors of Gillingham, Rochester and Chatham
wrote a letter to a daily newspaper which asked the public
to contribute to a fund which was to be used to pay for the
funeral expenses, the care expenses of the surviving cadets,
and ‘then to such worthy cause or causes in memory of the
boys who lost their lives, as the Mayors may determine’.
• Nearly £9000 was collected from known donors and
anonymous donors. The trustees spent £2368 in defraying
funeral expenses and caring for the surviving cadets with
disabilities but the trustees were unsure about what to do
with the surplus.
Re Gillingham Bus Disaster Fund
[1958] Ch 300
• The issue was what the trustees should do
with the surplus.
• If the trust was charitable the surplus might
be able to be used under a cy-près scheme.
• If not, the funds may have to be repaid to the
donors under a resulting trust or be given to
the Crown as bona vacantia.
Re Gillingham Bus Disaster Fund
[1958] Ch 300
• Harman J found that the trust was not charitable. The
funeral and care expenses of this particular group of
boys was not a charitable use. Nor was the idea that
the Mayors could use the funds for ‘worthy causes’ as
this could include both charitable and non-charitable
objects. Given the trust was not charitable it was not
possible to order a cy-près scheme.
• Harman J then found that a resulting trust arose, given
that the purpose of the trust had failed. The resulting
trust would mean that the surplus would be held on
trust by the trustees for the donors. The fact that it
would be difficult to identify the donors did not
prevent the resulting trust from arising.
Purchase of property in another person’s
name
• If a purchaser buys property and voluntarily
directs the transfer of the property into the
name of another person, equity presumes
that the owner holds that property on
resulting trust for the purchaser: Napier v
Public Trustee (WA)
• For example, if A purchases property from B,
and directs that B transfer the title into C’s
name, equity presumes that C holds the
property on trust for A.
Buffrey v Buffrey [2006] NSWSC
1349
• Palmer J at [14] :
• [I]f a presumption of resulting trust or a
presumption of advancement arises where
one party has contributed the whole of the
acquisition cost of the property but the title to
the property is placed in the name of another
party:
Buffrey v Buffrey [2006] NSWSC
1349
• (a) whether either presumption is rebutted
depends upon the intention solely of the party
who provided the money because the
question is whether that person intended to
make a gift of an interest in the property to
the person who did not contribute to its
acquisition;
Buffrey v Buffrey [2006] NSWSC
1349
• (b) evidence by the person making the
payment as to his or her intentions at the time
of the transaction is admissible but the Court
will treat that evidence with caution as the
evidence of an interested party;
Buffrey v Buffrey [2006] NSWSC
1349
• (c) the Court is more assisted in determining
the subjective intention of the person making
the payment by evidence of that person’s
contemporaneous statements of intention,
subsequent admissions against interest,
subsequent dealings with the property, and by
evidence of other relevant surrounding
circumstances.
Purchase of property in another
person’s name
• The presumption applies to both real and
personal property
Russell v Scott (1936) 55 CLR 440
• An aunt opened a joint account with her
nephew. She supplied all of the funds for the
account and during her lifetime the account
was used solely for her support.
• When the account was opened, the aunt had
told the nephew and others that the balance
remaining in the account at her death would
belong to him.
Russell v Scott (1936) 55 CLR 440
• The High Court found that the aunt intended the
nephew to take beneficially whatever remained
in the account at the date of her death.
• The High Court held that the aunt had, during her
lifetime, vested the legal right to the debt in the
nephew including the legal right to take by
survivorship on her death. Since however, she
had provided all of the funds for the account,
there arose a presumption of resulting trust in
her favour. The real question was whether the
presumption had been rebutted.
Russell v Scott (1936) 55 CLR 440
• The High Court held that, in relation to the
balance of the account at her death, the
presumption of resulting trust was rebutted
and that, upon the aunt’s death, the principle
of survivorship meant that the whole of the
beneficial interest in the account passed to
the nephew.
Russell v Scott (1936) 55 CLR 440
• Dixon and Evatt JJ, at 451, said:
• The right at law to the balance standing at the credit of the account
on the death of the aunt was thus vested in the nephew. The claim
that it forms part of her estate must depend upon equity. It must
depend upon the existence of an equitable obligation making him a
trustee for the estate. What makes him a trustee of the legal right
which survives to him? It is true a presumption that he is a trustee
is raised by the fact of his aunt’s supplying the money that gave the
legal right a value. As the relationship between them was not such
as to raise a presumption of advancement, prima facie there is a
resulting trust. But that is a mere question of onus of proof. The
presumption of resulting trust does no more than call for proof of
an intention to confer beneficial ownership; and in the present case
satisfactory proof is forthcoming that one purpose of the
transaction was to confer upon the nephew the beneficial
ownership of the sum standing at the credit of the account when
the aunt died.
Russell v Scott (1936) 55 CLR 440
Continuing at 454–4::
• Doubtless a trustee [the nephew] was during her
life-time, but the resulting trust upon which he
held did not extend further than the donor
intended; it did not exhaust the entire legal
interest in every contingency. In the contingency
of his surviving the donor and of the account
then containing money, his legal interest was
allowed to take effect unfettered by a trust. In
respect of his jus accescendi his conscience could
not be bound. For the resulting trust would be
inconsistent with the true intention of that
person whose presumed purpose it must depend.
Purchase of property in another
person’s name
• The presumption of resulting trust will not
arise in cases where the purchase monies
have been provided as a loan. The
presumption only applies when the provider
of the monies acts as a purchaser or directs
that the purchase take place
Contributions to the purchase of
property
• In cases where the purchase money is
provided by two or more parties jointly, and
the property is put into the name of one of
the parties, equity will presume a resulting
trust in favour of the other party or parties
Contributions to the purchase of
property
• Neilson v Letch (No 2) [2006] NSWCA 254,
• Mason P at [25]:
Where two or more persons have contributed the
purchase money in unequal shares and the property
is purchased in joint names, there is, in the absence
of a relationship that gives rise to a presumption of
advancement, a presumption that the property is
held by the purchasers in trust for themselves as
tenants in common in the proportions in which they
contributed the purchase money
Buffrey v Buffrey [2006] NSWSC
1349
• Buffrey v Buffrey at [14], Palmer J said:
• [I]f the presumption of resulting trust arises
where the joint tenants have made unequal
contributions to the acquisition cost:
• (a) the presumption may be rebutted by
evidence showing that the common intention
of the parties at the time of acquisition was
for equality of interests despite inequality of
contributions; …
Buffrey v Buffrey [2006] NSWSC
1349
• (b) evidence of the subjective and
uncommunicated intention of one of the parties
is inadmissible as going to prove the common
intention;
• (c) the common intention of the parties may be
ascertained from the evidence as to their
contemporaneous communicated statements of
intention, subsequent admissions against
interest, subsequent mutual dealings with the
property, and from evidence as to other relevant
surrounding circumstances.
Contributions to the purchase of
property
• For the presumption of resulting trust to arise,
contributions that are made by the parties
must go towards the purchase price of the
property. Importantly, equity determines this
by looking at what was provided by the parties
at the date of purchase
Contributions to the purchase of
property
• Several types of contribution can be recognised
as contributions to purchase price. Obviously,
direct payment of money towards purchase will
be included, as will be legal fees, stamp duty and
incidental costs associated with the costs of
acquisition
Legal fees?
• In Sivritas v Sivritas [2008] VSC 374, Kyrou J opined that
legal costs should only be accounted or if they were a
necessary condition of obtaining registered ownership
of the property. Kyrou J, at [126], said:
• On this basis, stamp duty and registration fees would
be included but legal fees and bank fees would not be.
Although legal fees and bank fees are normally
incurred in the purchase of property, they are not
always incurred, and where they are incurred, their
amounts may vary significantly depending on the
purchaser’s circumstances and, more importantly, they
may be incurred as debts that are paid after the
registration of the interest which is to be held on trust.
Mortgage Liability
• If a party has incurred a mortgage liability to
provide contributions to the purchase price, that
mortgage liability counts as a contribution:
Fedorow v Federow [2011] ACTCA 10 at [27];
Schweitzer v Schweitzer [2010] VSC 543 at [26];
Brennan v Duncan [2006] NSWSC 674 at [8];
Bloch v Bloch (1981) 180 CLR 390.
• Joint mortgage liability is treated as equal
contribution: Dinsdale v Arthur [2006] NSWSC
809 at [14]; Buffrey v Buffrey at [14].
Contributions to the purchase of
property
• Because equity looks at contributions that are
made at the date of purchase, the presumption
of resulting trust will not arise when payments
are made towards costs incurred after the
property has been acquired
• Australian courts have refused to recognise
payments of mortgage instalments as contributions if they are made by a party who incurred
no mortgage liability at the date of purchase
Contributions to the purchase of
property
• in England the courts have recognised that some
indirect financial contributions, which occur after
purchase, may be considered in the calculation of the
beneficial interests
• In Midlands Bank v Cooke, the Court of Appeal found
that once some direct financial contribution had
been made it was then open to the court to calculate
the beneficial interests on the basis of all
contributions, whether direct or indirect, whether
prior to or after purchase
Contributions to the purchase of
property
• Upgrades and maintenance will not be
considered as contributions unless there was a
common intention or agreement between the
parties that is enforceable or gives rise to an
estoppel
Purchased in stages?
• In Trustees of the Property of Cummins (a
bankrupt) v Cummins (2006) 227 CLR 278; 224
ALR 280, the High Court allowed amounts to be
accounted for in a resulting trust where
undeveloped land had been purchased and then
built upon. The High Court found that there was a
single ‘transaction’ which included both the
purchase of the land and the construction of the
house on that land, so that contributions to both
could be taken into account.
The nature of co-ownership in
resulting trusts
• Ordinarily equity’s presumption of resulting
trust is based on the co-owners holding their
shares as tenants in common
• However, in cases where the parties made
equal contributions, equity presumed that the
interests were held as joint tenants and not as
tenants in common.
The nature of co-ownership in
resulting trusts
• Why did equity prefer joint tenancy when the
contributions were equal? In such circumstances it
was said that ‘equity followed the law’ and the
common law always presumed that co-owners took
as joint tenants in the absence of an express
declaration of tenancy in common
• Statutory reforms have reversed the common law
presumption of joint tenancy in some jurisdictions
and imposed a presumption of tenancy in common
The nature of co-ownership in
resulting trusts
• In Delehunt v Carmody (1986) 161 CLR 464;
68 ALR 253, the High Court found that equity
still followed the law in these jurisdictions
and, given that the law had changed, equity
would now presume tenancy in common
when the parties make equal contributions to
purchase price.
Rebutting the presumption of resulting
trust
• When the presumption of resulting trusts arises,
evidence can be admitted of the actual intention of
the parties to prove that no such trust was intended
• Intention remains paramount in resulting trusts and
evidence of the circumstances surrounding the
transfers is admissible, whether it be written or parol
evidence. However, it is important to note that the
evidence must relate to the intention of the parties
at the time that the interests were created
Charles Marshall Pty Ltd v Grimsley
(1956) 95 CLR 353
• At 365–6, the High Court said
• The presumption can be rebutted or qualified by evidence
which manifests an intention to the contrary. Apart from
admissions, the only evidence that is relevant and
admissible comprises the acts and declarations of the
parties before or at the time of the purchase … or so
immediately thereafter as to constitute a part of the
transaction … Subsequent statements or acts by the donor
could only be evidence not for but against him so far as
they were admissions that the plaintiffs were the beneficial
owners of the shares. Subsequent statements or acts by the
plaintiffs could only be evidence not for but against them
so far as they were admissions that the shares were
allotted to them as trustees for their father.
Wilkins v Wilkins [2007] VSC 100
• Kaye J : [E]vidence of subsequent declarations as to intention
by the donor, unconnected in time with the purchase of the
property, is inadmissible if it is adduced to prove the truth of
those declarations. Of course, such evidence may be
admissible on other bases, for example, to rebut evidence
adduced by the party holding the legal interest and which
opposes the implication of a resulting trust. Thus for example
where, in a case such as this, the party claiming to own the
property absolutely has adduced evidence as to acts or
conduct of the purchaser which are said to be inconsistent
with the existence of a resulting trust, the donor (or his or her
representatives) is entitled to adduce evidence to rebut that
testimony
Australian Building and Technical Solutions
Pty Ltd v Boumelhem [2009] NSWSC 460
• Ward J at [133] : Evidence of the acts or statements … prior to or at
the time of the transaction may be used to rebut the presumption.
There is some authority to suggest that evidence of subsequent
acts or statements may only be used to support the presumption
(essentially as admissions) (eg La Housse v Counsel [2008] WASCA
207). However, it is clear from the authorities extracted below that
testimonial evidence by the party of his or her intention at the time
of the transaction is admissible, though generally viewed with
caution. Given that there are no especial rules governing
admissibility in matters of the present kind (Damberg at [45]) (and
though there is no question of such evidence in the present case)
there appears no compelling reason why other evidence of
subsequent acts or statements will necessarily be inadmissible
unless against interest, though such evidence also would likely be
viewed with caution.
The presumption of advancement
• In some cases equity refuses to presume an
intention to create a resulting trust and instead
presumes that any purchase or contribution was
intended to be a gift by way of advancement.
• This presumption of advancement only arises in
cases where purchase monies or contributions are
provided by a husband to a wife or by a parent to a
child (not necessarily biological children but
someone to whom the provider of funds stands in
the position of a parent).
The presumption of advancement
• It does not arise in other fiduciary
relationships, like those between companies
and directors: SCE Building Constructions Pty
Ltd (in liq) v Saad [2003] NSWSC 796
• The effect of a presumption of advancement is
to override the presumption of resulting trust
with the result that the legal and equitable
estates will stay where they lie
True presumption?
• In Wirth v Wirth, Dixon CJ quoted from Sir William Page Wood VC to
the effect that the presumption of advancement was ‘to preclude a
resulting trust from arising for the purchaser’
• In Martin v Martin – HC says ‘is called a presumption of
advancement but it is rather the absence of any reason for
assuming that a trust arose’
• In Calverly v Green - Murphy J said that ‘[t]he presumption of
advancement, supposed to be an exception to the presumption of
resulting trust, has always been a misuse of the term presumption,
and is unnecessary’.
• Deane J -[T]he ‘presumption of advancement’, is not, if viewed in
isolation, strictly a presumption at all. It is simply that there are
certain relationships in which equity infers that … there is an
‘absence of any reason for assuming [presuming] that a trust arose.
• Anderson v McPherson (No 2) – Edelman J- not a presumption
The presumption of advancement
• The presumption of advancement, like the
presumption of resulting trust, can be
rebutted by evidence of the intention of the
parties at the time of the transfer. If it is
shown that there was no actual intention to
confer a beneficial interest on the legal title
holder the presumption will not be effective
and the normal presumption of resulting trust
will apply
The presumption of advancement
• The presumption of advancement arises when a
husband either provides the purchase price or makes
contributions to the purchase price of property in
which the wife is given a legal interest
• It does not arise in cases of transfers from a wife to
her husband: March v March (1945) 62 WN(NSW)
111. In the past it has been assumed that the
husband had a natural duty to provide for his wife
(and children) and this gave rise to the presumption
The presumption of advancement
• In Scott v Pauly (1917) 24 CLR 274 at 282, Isaacs J
stated that the presumption of advancement,
– … is an inference which the courts of equity in practice
drew from the mere fact of the purchaser being the father,
and the head of the family, under the primary moral
obligation to provide for the children of the marriage, and
in that respect differing from the mother.
The presumption of advancement
• In Calverley v Green (1984) 155 CLR 242 at
268; (1984) 56 ALR 483 at 501, Deane J
advocated an adjustment of the doctrine to
‘reflect modern conceptions of equality in
status and obligations of a wife vis-a-vis a
husband’.
The presumption of advancement
• The presumption can also arise in cases where a
transfer occurs between a man and his intended wife
or fiancee: Wirth v Wirth (1956) 98 CLR 228; Bertei v
Feher [2000] WASCA 165. Such a transfer is considered to be a gift in contemplation of marriage. If the
marriage does not occur the gift should be returned.
If the gift is not returned it will be then held on
resulting trust: Jenkins v Wynen [1992] 1 Qd R 40
Calverley v Green (1984) 155 CLR
242
• Arthur Calverley and Dianne Green had been in a
longstanding de facto relationship and lived as
husband and wife for more than 10 years.
• In the early years of the relationship they lived in
Arthur’s house but they eventually decided to
buy a new house to live in.
• Arthur had difficulty in obtaining finance on his
own, but finance was eventually approved on the
basis that he and Dianne would be jointly and
severally liable under a mortgage.
Calverley v Green (1984) 155 CLR
242
• However, it was agreed that the repayments of that
mortgage would be made by Arthur. A deposit of
$9000 was paid by Arthur from the proceeds of the
sale of his house and the balance was raised from the
mortgage. The parties were registered as joint tenants.
• On dissolution of the relationship, Dianne claimed her
half share in the house.
• At trial - she had no beneficial interest in the property
because the sole reason for naming her a joint tenant
was to obtain finance.
• The Court of Appeal reversed that decision and found
that the parties were joint owners in both law and
equity.
Calverley v Green (1984) 155 CLR
242
• The issue was whether the property should
be split 50:50 as a reflection of their legal
interests as joint tenants or whether a
resulting trust should arise which would
reflect their contributions to the purchase
price. Another issue arose in relation to the
presumption of advancement and whether
that presumption should be applied to de
facto relationships.
Calverley v Green (1984) 155 CLR
242
• A majority of the High Court (Gibbs CJ, Mason, Brennan
and Deane JJ; Murphy J dissenting) found that the
woman’s liability under the mortgage was a
contribution to the purchase price of the house.
• A resulting trust was presumed which reflected the
respective contributions of the parties to the purchase
price.
• Within the majority Mason, Brennan and Deane JJ
found that there was no presumption of advancement
that operated in the context of de facto relationships.
• Gibbs CJ felt that the presumption could arise in de
facto relationships but that it had been rebutted by the
actual intentions of the parties
Calverley v Green (1984) 155 CLR
242
• Mason and Brennan JJ stated at CLR 260 that:
– The term ‘de facto husband and wife’ embraces a wide
variety of hetero sexual relationships; it is a term
obfuscatory of any legal principle except in distinguishing
the relationship from that of husband and wife. It would
be wrong to apply … the presumption of advancement …
Trustees of the Property of John Daniel
Cummins v Cummins [2006] HCA 6
• Mr Cummins, a barrister, had become bankrupt after
failing to pay income tax for nearly 45 years.
• He and his wife had purchased a house in 1970. Mr
Cummins had contributed 23.7 per cent to the
purchase price and Mrs Cummins had contributed 76.3
per cent.
• In 1987 Mr Cummins transferred his legal and
beneficial interests in the matrimonial home to his
wife.
• No consideration had been paid for by Mrs Cummins,
although there was a contract, stamp duty had been
paid and a valuer’s report had been paid for by her.
Trustees of the Property of John Daniel
Cummins v Cummins [2006] HCA 6
• Mr Cummins argued that the main purpose
for doing this was to limit his exposure to
professional negligence liability, as he claimed
to fear the possibility that barristers would
lose their immunity from negligence.
• The trustee in bankruptcy argued that the
main purpose in transferring the home was to
avoid the Commonwealth Government’s
considerable claims for unpaid income tax.
Trustees of the Property of John Daniel
Cummins v Cummins [2006] HCA 6
• The High Court found that the transaction was
void as its main purpose was to avoid creditors.
• The High Court found that where a husband and
a wife purchase a matrimonial property it will
generally be inferred that the property will be
held equally between them irrespective of the
contributions that were made.
• Equally, if the property has been registered in
joint names, equity will not interfere with that
joint tenancy by creating disproportionate shares
reflecting their contributions.
At [71]
• There is no occasion for equity to fasten upon the
registered interest held by the joint tenants a trust
obligation representing differently proportionate interests
as tenants in common. The subsistence of the matrimonial
relationship, as Mason and Brennan JJ emphasised in
Calverley v Green[86], supports the choice of joint tenancy
with the prospect of survivorship. That answers one of the
two concerns of equity, indicated by Deane J in Corin v
Patton[87], which founds a presumed intention in favour of
tenancy in common. The range of financial considerations
and accidental circumstances in the matrimonial
relationship referred to by Professor Scott answers the
second concern of equity, namely the disproportion
between quantum of beneficial ownership and contribution
to the acquisition of the matrimonial home.
Perpetual Trustees Victoria Limited v Peter
Van den Heuval No 2 [2009] NSWSC 483
• Claim under the Torrens Assurance Fund
• Husband and wife had been joint tenants but
• Fraud by husband – what did the woman have
under Torrens?
• One half in joint tenancy
Sui Mei Huen v Official Receiver for Official
Trustee in Bankruptcy (2008) 248 ALR 1
• Divorced couple where the ex-husband had become
bankrupt.
• Prior to the bankruptcy, the couple had owned a home as
joint tenants, subject to a mortgage under which both parties
were jointly liable.
• Due to marital difficulties the man had moved out of the
home and later signed an agreement which stated that the
whole property belonged to the wife.
• The surrender of his interest was on the condition that the
wife paid all future outgoings, indemnified the husband
against any liability in relation to the mortgage, and made no
further claim on him under the Family Law Act 1975 (Cth) or
for maintenance and support.
Sui Mei Huen v Official Receiver for Official
Trustee in Bankruptcy (2008) 248 ALR 1
• The husband was later made bankrupt and
the trustee in bankruptcy challenged the
agreement concerning ownership of the
house.
• A federal magistrate found that the agreement
was invalid as it was voluntary and that the
husband retained his interest in the house as
per the presumed Cummins joint tenancy.
Sui Mei Huen v Official Receiver for Official
Trustee in Bankruptcy (2008) 248 ALR 1
• The Full Federal Court overturned the federal magistrate’s
findings. They found that the Cummins presumption of joint
tenancy was not irrebuttable.
• It could be displaced by an express or constructive agreement
between a husband and wife concerning their interests.
• In this case the agreement between the parties had created a
constructive trust of the husband’s legal half-interest in the
property in favour of the wife, which was conditional on the
wife’s obligations to pay the mortgage and to forbear from
suing for maintenance.
• To that extent the Cummins presumption of joint tenancy had
been rebutted and the agreement was enforceable against
the ex-husband and, consequently, the trustee in bankruptcy.
English position
• Stack v Dowden [2007] UKHL 17
• Presumptions have been jettisoned for
domestic relationships
• Start with a presumption of 50% if in joint
names and then displace with evidence of
contrary intention
The presumption of advancement
• There is a presumption of advancement when
purchase money is provided by a parent and the
legal title is taken by a child
• The key requirement is that the purchase price be
provided by someone in loco parentis (in the position
of a parent). As such the presumption can also apply
to illegitimate and adopted children, as well as to
other forms of familial relationship, as long as one
party has acted as the parent for the other
The presumption of advancement
• There is a presumption of advancement when
purchase money is provided by a parent and the
legal title is taken by a child
• The key requirement is that the purchase price be
provided by someone in loco parentis (in the position
of a parent). As such the presumption can also apply
to illegitimate and adopted children, as well as to
other forms of familial relationship, as long as one
party has acted as the parent for the other
The presumption of advancement
• Traditionally, it was thought that the
presumption of advancement would only arise
when a father provided funds for the purchase
of property for his children: Scott v Pauly
(1917) 24 CLR 274 at 282, per Isaacs J.
However, in more recent cases the
presumption has been recognised as arising
between a mother and her children: Brown v
Brown (1993) 31 NSWLR 582
Anderson v McPherson (No 2)
[2012] WASC 19
• Bruce and Carolyn Anderson provided the
majority of the purchase price on a property that
was put into their names (for one half-share) and
into the names of their son,Troy, and daughter–
in-law, Stephannie (for the other half-share).
• This was done on the basis of an express
agreement that Bruce and Carol would be able to
live at the property with Troy and Stephannie,
and that Troy and Stephannie would make all the
mortgage repayments on the property and that
other expenses would be shared.
Anderson v McPherson (No 2)
[2012] WASC 19
• Troy and Stephannie later separated, and
Bruce and Carol claimed that the legal half
share held by Troy and Stephannie was held
on resulting trust.
• Stephannie countered by arguing that the half
share was subject to the presumption of
advancement.
• Troy did not contest the proceedings.
Anderson v McPherson (No 2)
[2012] WASC 19
• Edelman J – no advancement • [144] Stephannie asserted that her relationship with Bruce and
Carol was one where they were in loco parentis. It has long been
recognised that the ‘presumption of advancement’ canbeen
extended beyond a situation of parent and child to instances where
the relationship is akin to parent and child because one person acts
in loco parentis (in place of a parent) to the other…
• [151] But the relationship between Stephannie and her parents in
law, although close and warm, was not a parent-child relationship.
Bruce and Carol were, and are, generous, warm and welcoming
people. Ms Gallagher’s evidence was that their kindness extended
beyond Stephannie to other friends … As she was their daughter-inlaw, Stephannie was treated with even greater kindness and
warmth. But even though Stephannie was partly estranged from
her mother and father, Bruce and Carol did not take the place of her
parents
Anderson v McPherson (No 2)
[2012] WASC 19
• Edelman J – no presumption of resulting trust
either
• The evidence showed an intention that the
legal title was intended to reflect the
ownership of the parties
The presumption and adultchildren
• The presumption applies to adult children:
Brown v Brown; Sellers v Siemianowski [2008]
NSWSC 538; Sleboda v Sleboda [2008] NSWCA
122; Dearing v Dearing [2009] NSWSC 1394 at
[32]. English authority suggests that the
presumption gets weaker as the child gains
more independence.
Lasker v Lasker [2008] 1 WLR 2695
• Lord Neuberger at 2700:
• The presumption of advancement still exists,
although it was said as long ago as 1970 to be
a relatively weak presumption which can be
rebutted on comparatively slight evidence:
see per Lord Upjohn in Pettit v Pettit [1970] AC
777 at 814. I would add that it is even weaker
where, as here, the child was over 18 years of
age and managed her own affairs at the time
of the transaction.
Canadian position
• Canadian courts have for some time not applied the
presumption of advancement to independent adult
children: McLear v McLear Estate (2000) 33 ETR (2d) 272
(Ont SCJ); Cooper v Cooper Estate (1999) 27 ETR (2d) 170
(Sask QB). T
• The Supreme Court of Canada has followed these cases
but found further that, in transfers of property from
parents to adult children, there should therefore be a
rebuttable presumption that the adult child is holding
the property in trust for the ageing parent to facilitate
the free and efficient management of that parent’s
affairs: Pecore v Pecore [2007] 1 SCR 795
Gifts and resulting trusts
• Presumptions of resulting trust and of
advancement can also arise in gifts (voluntary
transfers of property). For example, if A makes
a gift of property to B, a presumption of
resulting trust may arise that B holds the
property on trust for A
Gifts and resulting trusts
• Equity treats gifts of realty differently to gifts
of personalty. Unfortunately the operation of
the presumptions in gifts of land has been
made problematic because of the operation of
the Statute of Uses 1535. Prior to that statute,
equity presumed that any interest in land
given without consideration to a stranger
(meaning someone to whom a presumption of
advancement would not arise) was held on
resulting use
Gifts and resulting trusts
• After the statute the use was executed and the
ownership reverted back to the grantor, leaving the
transfer ineffectual
• To enable people to make gifts of realty, the courts
recognised the voluntary transfers if they were
expressed to be given ‘unto and to the use of’ the
stranger
• Legislation provides that no presumption of resulting
trust will arise in a voluntary transfer of realty, unless
the transferor expresses an intention to create a use
or a trust: Conveyancing Act 1919 (NSW), s 44
Torrens land?
• In Newcastle City Council v Kern Land Pty Ltd (1997)
42 NSWLR 273, Windeyer J found that s 44 did apply
to registered Torrens dealings as they were
conveyances within the meaning of the section.
• However, in Ryan v Hopkinson (1990) 14 Fam LR 151
at 155, Bryson J, in ruling that s 44(1) did not so
apply
• Later cases have preferred the views expressed by
Windeyer J: Bhana v Bhana [2002] NSWSC 117; Singh
v Singh [2004] NSWSC 109 at [34]–[35]; Drayson v
Drayson [2011] NSWSC 965 at [59].
Gifts and resulting trusts
• With regards to personalty, if a gift is made to
a stranger of personalty which can produce
income, then a resulting trust will be
presumed: Hendry v E F Hendry Pty Ltd [2003]
SASC 157. Otherwise, gifts of personalty will
not give rise to a resulting trust.
Problem
• Han and Leia entered into a de facto relationship
in 1975. In 1976 they had a child named Luke. In
1987 they purchased a house in Lucastown for
$150,000. The purchase price was paid by Han;
the money coming to Han as an inheritance from
the estate of his late uncle. At the time of
purchase, Han decided to have the property
registered in his, Leia’s and Luke’s names as
tenants in common and in equal shares.
Problem
• In 1994, when Luke reached his majority age,
with the Yavin Bank Ltd in the joint names of
Han and Luke. Han told Luke that he would be
making all the deposits into the account and
would withdraw from the account whenever it
may become necessary. However, he also said
that if anything should ever happen to him (ie
Han) the money then in the account would
belong to Luke.
Problem
• Two weeks ago Han and Leia died in a car
accident. In his will Han left his entire estate
to Beru, his daughter that he had fathered in
1972 before he had met Leia. In her will Leia
left her entire estate to Luke. At the time of
their deaths the Lucastown property was
worth $300,000, and the bank account at
Yavin Bank Ltd had a balance of $5000
Problem
• Beru seeks your advice as to whether she has
any entitlements in the Lucastown property
and the bank account, and if not who is
entitled and to what extent.
Solution
• Given that the problem concerns parties who
are deceased, it is not subject to any of the
legislative regimes controlling de facto
relationships and must be dealt with using
equity
Solution
• Dealing first with the interests in the property at
Lucastown, Han, Luke and Leia each owned an
equivalent tenancy in common equalling one-third of
the value of the property. Tenancies in common
contain no right of survivorship so at law the
interests that will pass through Han’s will to Beru are
her father’s one-third interest in the house. Similarly
Luke will receive Leia’s one-third interest, leaving him
with a two-thirds interest at common law. However,
it is open to equity to adjust the beneficial interests
of the parties and whatever interests equity believes
were beneficially owned by Han at the time of his
death will pass to Beru, via Han’s will. Similarly, any
beneficial interests held by Leia will pass to Luke, via
Solution
• Given that Han provided the entirety of the
purchase price, a presumption of resulting
trust is raised in Han’s favour over both Leia’s
one-third interest and Luke’s one-third
interest
• There is no presumption of advancement in
favour of Leia that will override the
presumption of resulting trust. She is a de
facto partner and, as such, no presumption of
advancement can be raised in her favour
Solution
• There does not appear to be any evidence
of Han’s actual intention to rebut this
presumption. The beneficial interest
therefore belonged to Han and passes to
Beru in his will
• A presumption of advancement can be
successfully raised in Luke’s favour
• It matters not that Luke was born out of
wedlock
• Therefore his interest is not held on
resulting trust and one-third legal title stays
Solution
• In relation to the bank account, it should be
noted that the presumptions arise over
transfers of both real and personal property
• The presumptions of resulting trust and
advancement apply to joint bank accounts
where one party provides all the funds for
that account: Russell v Scott (1936) 55 CLR 440
Solution
• The presumption of advancement is obviously
paramount here, given the relationship
between Han and Luke. It does not matter
that Luke was an adult when the bank account
was opened: Brown v Brown (1993) 31 NSWLR
582. There is no evidence of actual intention
that rebuts the presumption of advancement.
Therefore the beneficial interest remains with
Luke.