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ANSWER GUIDE TO RESULTING TRUST

A) INTRO: What is a resulting trust? •

A Resulting trust arises in the absence of any evidence of the parties’ intention in the case, then a particular presumption is applicable, i.e.: –

Premised on settlor’s presumed intention not to pass beneficial interest to recipient, but instead for the receiver to hold it on trust for settlor.

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This presumption can be rebutted.

There are two types of resulting trusts. A. Automatic RT: arise where there has been a failure of an express trust, or, alternatively, where there is a surplus of trust pty after a trust has been terminated. B. Presumed RT: arise where a purchaser makes contributions to the purchase of pty, but the purchaser has not been given legal title that is equivalent to their contribution. This can occur in two ways:  Purchase money RT: where X purchases pty in the name of Y or jointly in the name of X & Y. Equity presumes Y holds pty on resulting trust for X. (Here because he buy property for the other party, its presumed the other party just holding it on trust)  Voluntary transfer RT: where X voluntarily transfers pty to Y or jointly in the name of X & Y; and Y has not provided valuable consideration. Equity presumes Y holds pty on resulting trust for X.( If he xfer and the other party never give consideration considered resulting trust also, presumably). Definition per Lord Browne-Wilkinson: Where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. [Lord Browne-Wilkinson in London Borough Council [1996]

In both cases it is a question of whether X’s intention is that B take the pty beneficially or on trust? If there is no evidence as to the intention of the transferor (X) (and in the absence of consideration & presumption of advancement) a rebuttable presumption of resulting trust arises.

B) VOLUNTARY TRANSFER: RULE: Where a purchaser of pty pays the vendor and directs him to transfer the property into the name of another person without consideration passing from that person, there is a presumption that the transferee holds the property upon trust for the purchaser. – Napier v Public Trustee (WA) (1980) 32 ALR 153 at 158 per Aickin J •

Maxim: Equity presumes a bargain and never a gift.

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The presumption may be rebutted by evidence that no trust was intended.

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E.g. by showing that a gift or loan was intended; or by raising a presumption of advancement.

Equity treats voluntary gifts of realty differently to gifts of personalty •

With regards to personalty: o

Resulting trusts will be presumed for voluntary gifts of personalty that is capable of producing income or those which title does not pass on delivery (e.g. shares or annuities). Fowkes v Pascoe (1875) LR 10 Ch Ap p 343 at 348; Russell v Scott (1936) 56 CLR 440.

ANSWER GUIDE TO RESULTING TRUST o

BUT Not in other cases – e.g. money and chattels, which pass by delivery. Heydon v Perpetual Executors, Trustees and Agency Co (1930) 45 CLR 111 at 112 – 3.

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The onus is on the transferor to prove that the transfer was made on trust as opposed to gift

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With regards to realty

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With Torrens title land, Property Law Act 1969 (WA), s.38 dictates that no presumption of resulting trust will arise in a voluntary conveyance of realty, unless the transferor expresses an intention to create a use or a trust: –

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i.e. a resulting trust will not be presumed on a voluntary transfer of realty without consideration, unless the transferor actually indicates an intention that the transferee is not to take it beneficially.

However, presumption of resulting trust will arise in situations of voluntary transfer of general law titles.

C) PURCHASE MONEY Gibbs CJ defined resulting trust arising from purchase money as ‘Where pty is purchased in the name of another, equity will presume that the pty is held on trust for the contributor/s of the purchase money in the proportion to which they contributed to the purchase money’: Calverley v Green (1984)

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Man (Calverley) and woman (Green) had been in a de facto relationship since 1968. In 1973, they purchased a house and put it in their joint names. Calverley paid the $9250 deposit. The balance of the purchase price was paid by way of a $18,000 loan under their joint names, and land was transferred to them as joint tenants. [Total purchase price = $27,250] BUT Calverley made all of the repayments. Green paid all of the household expenses. On dissolution of the relationship, Green claimed her half share in the house. Calverley cross-claimed arguing that Green held her share on resulting trust for him, because he had paid all the repayments.

Held: Mason and Brennan JJ (at p258): “When two or more purchasers contribute to the purchase of property and the property is conveyed to them as joint tenants the equitable presumption is that they hold the legal estate in trust for themselves as tenants in common in shares proportionate to their contributions …” • Therefore, the couple held the pty as tenants in common with shares proportionate to their contributions to the purchase price. • Green’s liability under the mortgage amounted to her contribution to the purchase price of the house. Since she was jointly liable to repay the mortgage, equity recognized her liability under the mortgage (i.e. 1/2 share of the mortgage) as contribution = $9000. • Green’s interest was proportionate to $9000/27,250 (33.03%) and Calverley’s was proportionate to 18,250/27,250 (66.97%). • This meant as a joint tenant ($13,625/27,250) Green held her proportion of $4,625/27,250 on resulting trust for Calverley. • NB: No credit given for her contribution to household expenses. • ** No presumption of advancement that operated in the context of de facto relationships.

ANSWER GUIDE TO RESULTING TRUST

My singlish explanation: in short the deposit and half loan percentage from total, belong to the guy who pay deposit. The one never pays deposit only entitled half the loan percentage from total. Even if they never repay loan.

That is why above, Green still had $9000 even though she didn’t make repayment. Calverley repayment did not constitute contribution to purchase price. Chen v Liu [2017] NSWSC 1767 • • • • •

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Dispute as to whether or not the Apartment was held by the plaintiff and the defendant on trust in the proportions in which they contributed to the purchase price. The total price paid for the Apartment was $826,225 which was funded as to $326,225 by the plaintiff and the balance of $500,000 by way of a joint loan by both defendant and plaintiff. Apartment was later sold for $1,050,450. From this amount The loan of $500,000 made by Westpac was repaid. Issue: how was the balance of the sales to be split. Held: the plaintiff contributed 69.87% of the total purchase price and the defendant contributed 30.13% of the total purchase price. That determined their respective interests in the Apartment. The fact that the contribution by the defendant was by means of the joint loan from Westpac and part of the contribution by the plaintiff was by means of the joint loan from Westpac did not alter the conclusion that the Apartment was held in those proportions. Thus, 69.87% of the proceeds belonged to the plaintiff and 30.13% of the proceeds belonged to the defendant.

ANSWER GUIDE TO RESULTING TRUST

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Beneficial interests of the parties that arose by reason of the resulting trust must be determined at the time when the Apartment was purchased. The entitlements under the resulting trust would not be affected by later contributions, or want of contributions, to the repayment of the loan. Payments made in relation to the loan from Westpac, whether equally or otherwise, made no alteration to the respective interests that they acquired on completion of the sale, although it may be relevant on an equitable accounting between the parties

My singlish explanation: in short the deposit and half loan percentage from total, belong to the guy who pay deposit. The one never pays deposit only entitled half the loan percentage from total. Even if they never repay loan.

Presumption of Resulting Trust in Marriage Relationships

Section 79 Family Law Act 1975 (Cth) grants the Family Court discretionary powers to alter parties’ pty interests on divorce or termination of de facto relationships and also order either one or both parties to make settlements or transfer pty as the Ct deems fit. s79 and it’s equivalent section under the Family Court Act 1997 (WA) have diminished the importance of the equitable presumptions of resulting trust and presumption of advancement in the context of pty of matrimonial or de facto relationships. • All other states referred their relevant legislative powers to the Cth, in WA s.205ZG of Family Court Act 1997 (WA) empowers the Family Court of WA to make orders on pty interest for de facto partners separating. [The meaning of de facto partners includes same-sex partners per s13A (3) of the Interpretation Act 1984 (WA) ]. • However, the presumption still applies to marriages and domestic relationships when it comes to matters of succession (where relationship is terminated by death) and bankruptcy proceedings. •

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ANSWER GUIDE TO RESULTING TRUST

D) REBUTTING THE PRESUMPTION (after u talk about each of the trust, usually will be presumptions, talk about how they can be rebutted. Usually got PM and VT, so after each see if any rebuttal fits and conclude. ) i.

Contrary Evidence

A presumption of resulting trusts can be admitted by evidence of parties actual intention – proving that no such trust was intended. – Only the actual intention of the parties before or at the time of the transaction, or so immediately after it as to constitute part of the transaction – is admissible. Calverley v Green (1984) 155 CLR 242 (at 251; 262); Muschinski v Dodds (1986) 160 CLR 583 (at 589-590). – Intention is ascertained from the acts and declarations, and words and conduct of the parties, and the relationship between the parties. Calverley v Green (1984) 155 CLR 242 (p261;269-270). • Contrary evidence that will rebut the presumption could include: o Evidence of intention to gift or loan the pty in question: Aveling v Knipe (1815) 34 ER 80 o Evidence of an intention to create an express trust: Gough v Fraser [1977] 1 NZLR 279 at 283. o Evidence that consideration was given for the pty: Re Bulankoff [1986] 1 Qd R 366. •

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Presumption of Advancement •

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Presumption of advancement: if a voluntary transfer occurs between parties in ‘certain relationships’, a court will presume that there was an intention to gift the pty. o Presumption of resulting trust may be displaced. ‘Certain relationships’ = relships where the transferor is under a “natural obligation to provide” for the transferee, the law presumes that the transferor intends to make a gift/ make a financial provision intended to advance the recipient’s station in life. Relationships giving rise to the presumption of advancement include: o Transfer from husband to wife: Russell v Scott (1936) 55 CLR 440  But does not apply to transfers from wife to husband: March v March (1945) or de facto couple: Calverley v Green (1984)  A transfer after separation will not attract the presumption: Cossey v Bach [1992] 3 NZLR 612 at 630; Wilson v Wilson [1963] All ER 447 at 454 per Russell LJ. o Transfer from man to fiancée: Wirth v Wirth (1956) 98 CLR 228  But if the marriage does not take place a resulting trust arises [Davies v Messner (1975) 12 SASR 333] Allen v Snyder. a) Transfer from father to child is presumed to have been made by way of advancement. Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 364 b) Transfers from mother to child: Nelson v Nelson (1995) 132 ALR 133 (at 141;162-163;169171;183-184); Brown v Brown (1993) 31 NSWLR 582 (at 598-599 per Kirby J). c) Transfers from any person who in equity is treated as being in loco parentis (“in the place of a parent”): Calverley v Green (1984) 155 CLR 242 (at 247 per Gibbs CJ).  Extends to transfer in favour of an illegitimate child [National Trustees Executors and Agency Co of Australasia Ltd v Fenn [1924] SASR 470.

ANSWER GUIDE TO RESULTING TRUST

 But does not automatically extend to dispositions from stepfather to stepchild or parent-in-law to son-in-law where loco parentis is absent d) Presumption of advancement may be rebutted either partially or completely, by evidence that at the time of the transfer no gift was intended. Shepherd v Cartwright [1955]AC 431 (at 445). a) Evidence of acts and declarations made before or at time of purchase, or so immediately after it as to form part of the transaction = admissible evidence e) Burden of rebutting the presumption of advancement lies upon the person asserting the existence of a trust: Martin v Martin (1959) 110 CLR 297; Calverley v Green (1984) 155 CLR 242. f) Evidence will be permissible to rebut the presumption of advancement even if the evidence amounts to a disclosure of an illegal or immoral purpose. a) (E.g. illegal purpose cases) Nelson v Nelson (1995) 132 ALR 133 – case covered in Vitiating Factors topic.

Automatic Resulting Trust • Resulting trusts arise where, for any reason, a settlor fails to dispose of some or all of the beneficial interest in the trust property. • The trustee holds property on a resulting trust for the settlor to the extent that the beneficial interest has not been carried to him or others. • Automatic RT arise in situations where there is: i. Failure of express trust: Trustee will hold for settlor or settlor’s personal representatives. Express trust may fail because: - It is void for uncertainty, perpetuity or illegality (Nelson v Nelson) - It is unenforceable – because of failure to comply with formal requirements for complete constitution (Vandervell v IRC) The intended beneficiary predeceases the testator. ii. Failure to set out the trust or dispose of the whole beneficial interest- Usually a result of incorrect drafting. - E.g. a settlor transfers land to Y “on trust” but doesn’t refer to beneficial interest; or part only of an estate is disposed of to named beneficiaries – residue will be held by trustee for benefit of settlor or settlor’s personal representatives. iii. Property conveyed on trust for certain purposes exceeds that required - Where money is raised for a specific purpose and that purpose is fulfilled but there is some surplus money left. If the trust was charitable, the surplus will be held on resulting trust for contributors, used under a cy-près scheme (any other closely related charitable purpose, unless trust specifies otherwise (Re Gillingham Bus Disaster Fund). 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) iv. Property conveyed for a specific purpose which fails - Quistclose Trust : Where money lent for a specific purpose which fails may be characterised as trust property, and thereby stand outside the pool of assets available to the borrower’s creditors upon the latter’s insolvency, therefore it should be returned back as a resulting trust(Barclays Bank Ltd v Quistclose Investments Ltd)

ANSWER GUIDE TO RESULTING TRUST

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However, the High Court of Australia has not considered the status of quistclose trust and there is still debate as to whether such a trust is an express or resulting trust. Majority of the authority lean towards viewing it as express and not resulting (Salvo v New Tel Ltd)....