Topic 1: Resulting trusts

Question 0

What are the two types of resulting trusts?

Answer 0

1. Automatic resulting trusts

2. Presumed resulting trusts

Question 1

What is a resulting trust?

Answer 1

It is a trust that is implied by the law and is not a product of any of the parties’ intention

Question 2

What are Automatic Resulting Trusts?

Answer 2

This arises where the settlor intends to create a trust but fails to fully dispose of the beneficial ownership in the asset.
There is no intention how the beneficial ownership should be dealt with should the trust fail.

Question 3

What are four situations where an automatic resulting trust arises?

Answer 3

1. Trust is void or unenforceable
2. Trust does not refer to beneficial interest
3. Failure of purpose of trust
4. Surplus of trust property

Question 4

Automatic Resulting Trust: What case can we use for failure of purpose?

Answer 4

Barclays Bank v Quistclose Investments

Question 5

Automatic Resulting Trust: What are the facts of Barclays Bank v Quistclose Investments?

Answer 5

Rolls razor borrowed money from Quistclose on the condition that they use it to pay dividends to shareholders.
RR went into liquidation before they could pay dividends.
Courts held:
1. Rolls Razor held money on trust for shareholders to pay dividends.
Because the purpose of the trust had failed, the money was a resulting trust back to the settlors, i.e. Quistclose Investments.

Question 6

Automatic Resulting Trust: What is a case for surplus of property?

Answer 6

Re Gillingham Bus Disaster Fund

Question 7

Automatic resulting trust: What are the facts of Re Gillingham Bus Disaster Fund?

Answer 7

A trust was set up for the widows and dependents of dead cadets in a bus accident. In the event of surplus, the funds were to be distributed as the mayor determined. This was not charitable.
The money was raised by cheques from people and donations into tins.
1/4 of the money was sufficient to cover the expenses.
Question arose as to what to do with surplus funds.
Government claimed bona vacantia on funds.

Court held:
No claim for bona vacantia, can’t presume people abandoned money and intended it to go to Crown.
Presumed resulting trust back to settlors. It would go back to identifiable donors who gave cheques.
Rest of surplus given to court. Court would advertise it to find people who donated anonymously.

Question 8

Automatic Resulting Trusts: What is the relevance of Re West Sussex Constabularies?

Answer 8

It is an example of where the donators were held to have abandoned their donations.

Question 9

What is a Presumed Resulting Trust? Presumed Resulting Trust

Answer 9

This is where there is a transfer of absolute ownership in property to another party.
Equity presumes the transferor did not intend that the transferee would have beneficial title and holds it on trust for the transferor.

Question 10

Presumed Resulting Trust: What are two situations this can arise?

Answer 10

1. Where there is unequal contributions to the purchase price
2. Transfer to a volunteer.

• Calverley v Green

Question 11

What is the presumption where the transfer is to a volunteer?

Answer 11

Equity presumes where the transferor who provided the entire purchase price but transfers it to himself or jointly to another, the transferee holds the property on trust for the transferor who paid the entire purchase money.

Question 12

Can the volunteer presumption be rebutted?

Answer 12

Yes by evidence of actual intention that it was intended to be a gift.

Question 13

What is the issue with unequal contributions to the purchase price?

Answer 13

The legal title is shared equally, but there is no intention as to how the beneficial title is to be shared.

Question 14

What is the presumption in equity regarding unequal contributions?

Answer 14

Equity presumes that the parties hold the beneficial title in proportion to their INITIAL contributions

Question 15

Can the presumption of proportionate beneficial title be rebutted?

Answer 15

Yes, by the presumption of advancement.

Question 16

What are the facts of Calverley v Green?

Answer 16

A de facto couple purchased house together.
C provided a deposit and obtained a loan together with G. They represented themselves as married to obtain the loan as that way the bank could ensure payment.
They were both legally liable under the mortgage.
The parties entered into a private agreement that C was to pay back the loan while G would use her earnings to upkeep the household.
The relationship eventually ended.
Question as to how much each party gets from proceeds of sale.

Court held:
Both legally liable to pay loan, therefore can deem them to contribute equally to the mortgage. Therefore C in addition to his deposit, had paid another 9,000. G deemed to have paid 9,000 (half of mortgage)
Presumption is that they get according to their proportions.
C gets 73/100
G gets 26/100
It was inappropriate to apply the presumption of advancement as they were in a de facto relationship

Question 17

What is the presumption of advancement?

Answer 17

Because of the nature of the relationship, equity presumes one party would want to have passed the further equitable title to the other party, i.e. as a gift.

Question 18

What are the categories in presumption of advancement?

Answer 18

1. Father to child
2. Mother to child
3. Other

Question 19

What is the relevance of Nelson v Nelson?

Answer 19

The presumption of advancement was applied to a mother child relationship

Question 20

What are the facts of Nelson v Nelson?

Answer 20

• The mother provided purchase price for a house and gave legal title to son.
• Mother had ulterior motive because son would get benefit under defence force which the son was a part of

Court held:
No compelling reason to restrict presumption of advancement to father child only. It also applies to mother child.

Question 21

What is the relevance of National Australia Bank v Maher?

Answer 21

The onus of proof when arguing a presumption of advancement, it is for the person denying it was a gift to prove there was no presumption.

Question 22

How to rebut the presumption of advancement?

Answer 22

Evidence of actual intention - Calverley v Green

Question 23

How was the presumption of advancement rebutted in Calverley v Green?

Answer 23

• They had private agreement that C was to make loans, so tends to show C’s intention to be beneficial owner.
• Their willingness to be joint parties was for the sole purpose of facilitating the loan.
• There was no intention for them to hold in equal parts.
• C was the intended beneficial owner and G only put her name down for facilitating the loan

Question 24

What is a case where the presumption was rebutted?

Answer 24

Muschinski v Dodds

Question 25

What are the facts of Muschinski v Dodds?

Answer 25

• Parties in a de facto relationship. They purchased a block of land and wanted to build a house on land.
• M provided the full purchase price as she had money from her divorce settlement.
• They had understanding that D was to pay his share later on.
• They acquired in tenants in common in equal shares. M So M transferred one half to D.
• Eventually split up and M sought declaration she was beneficial owner

Court held:

• Presumption of resulting trust arises because unequal contribution amounts. Presumed D hold his one half interest on resulting trust for M.
• Presumption of advancement can’t arise because it’s de facto relationship.
• However, different from Calverley v Green because only one party provided purchase price. Therefore focus on M’s intention at time of acquisition.
• She was happy to let D hold in equal shares as it was a joint endeavour, furthermore, conferral of his interest was not depended on him contributing later down the track.
• M didn’t turn her mind to if the relationship failed.
• She had actual intention to share beneficial ownership with D.
• SO because actual intention shown, resulting trust presumption was rebutted.

Courts granted constructive trust.

• The interest was onferred upon D for the joint endeavour.
• Since the joint endeavour was no longer in existence, unconscionable to let D retain his interest.

Question 26

What are the types of constructive trust?

Answer 26

1. Institutional constructive trust - where the trust is already in existence, the court just has to declare it
2. Remedial constructive trust - where the court has a discretion to impose it

Question 27

What are the two forms of constructive trust?

Answer 27

1. Common intention constructive trust

2. Muschinski v Dodds style constructive trust

Question 28

What is the Common Intention Constructive Trust?

Answer 28

This is where the parties hold in different proportions, the courts refer to circumstances.
Requirements:
1. Common intention between the parties; and
2. One party acted on the faith of that intention to their detriment.

Question 29

What is a Muschinski v Doods Constructive trust?

Answer 29

Where there is different contributions, but no intention and they enter into a joint enterprise.

Question 30

What are the factors to take into account of a Muschinski v Dodds Constructive Trust?

Answer 30

1. Not only initial contributions, but subsequent contributions that need not be financial
2. Failure of relationship without fault to the party seeking relief
3. Infer intention from circumstances; and
4. Must be unconscionable to allow the other half to retain their share

Question 31

What is the relevance of Baumgartner v Baumgartner?

Answer 31

It applies the Muschinski v Dodds Constructive Trust

Question 32

What are the facts of Baumgartner v Baumgartner?

Answer 32

• They are in a de facto relationship.
• Mr B purchased land in Sydney, paid the full purchase price, he was the sole legal owner
• the couple built a house together and moved in, for which he also paid
• Land was mortgaged, the loan was also in his name only.
• During relationship, Ms B gave her wages to put into joint bank account with Mr B.
• Mortgage repayments used from funds in the joint account.
• parties then separated, Ms B sought declaration that Mr B held one half interest in property on trust for her.

High Court held:

• Constructive trust
• Resulting Trust didn’t arise because only one person provided purchase price.
• Joint endeavour caused them to pool their resources.
• Ms B contributed 45%, Mr B contribute 55%
• held Mr B held 45% on constructive trust for Ms B.

Question 33

What is the impact of Baumgartner v Baumgartner on Statute law?

Answer 33

The Family Law Act provisions sought to address problem of direct financial contributions as the sole consideration. When parties separate, what they take away should include non financial contributions and indirect contributions.