#7154 - Equitable Interests Problem - Property B

... has the legal interest in the property, since he/she is [registered proprietor etc]; this interest is conferred by the act of registration (Breskvar).

Here, circumstances suggest that the position in equity differs from that in law.

1. A declaration of the trust (eg ‘I declare that I my land on trust for Y’). This must be in writing: PLA s 53(1)(b).

2. Transfer (eg ‘I transfer my land to X to hold on trust for Y’). This must be in writing: PLA s 53(1)(a).

... may argue there is a RT, where equity presumes a party conferring a property interest did not intend to transfer his/her beneficial interest. RTs do not need to be in writing: PLA s 53(2).

There is a presumption of a resulting trust if…

1. [Voluntary transfer] …the owner of property transfers a whole/part interest to a volunteer, or buys property for a volunteer.

2. [Unequal contributions] …there are unequal contributions to the purchase price not reflected in the legal title. A presumption that the parties hold the properties on trust for themselves in shares proportionate to their contributions then arises (Cummins). This is a ‘purchase money’ resulting trust.

   1. Is Y’s contribution a contribution to purchase price?

      1. A contribution directly to the purchase price at the time of purchase clearly is.

         1. Purchase of land and later building of a house on the land may be considered a single, composite transaction: Cummins (possibly inconsistent with Calverley)

      2. A contribution to incidental costs (stamp duty, legal costs, bank charges, registration fees) is a contribution to the purchase price: Boumelhelm

      3. …an assumption of liability under a mortgage loan used to fund the purchase, which is a contribution to the purchase price (regardless of whether the person assuming liability pays off the loan): Calverley

         1. The parties are taken to have made contributions reflecting their shares of the liability: Calverley

         2. … a mortgage repayment, which is not a contribution to the purchase price, but rather a payment to secure release of the charge: Calverley

            1. However, the court might deal with this by equitable accounting principles (such as by an equitable lien) if a person was unjustly enriched by mortgage payments made for him/her: Calverley

The presumption of a RT may be rebutted (the onus of proving this is on the person seeking to rebut) if…

… a presumption of advancement operates: this presumes the transferor intended to give the other a beneficial interest due to their special relationship.

1. The presumption of advancement will operate in cases of transfers from…

   1. …husband to wife

   2. …fiancé to fiancée

   3. …parent (of either sex) to child

      1. It is now likely to apply from mother to child: Nelson v Nelson (HCA), Brown (NSWCA 1993)

2. However, the presumption will not operate in cases of transfers from…

   1. … one de facto partner to another

   2. …wife to husband (Cummins)

3. However, a presumption of advancement can be rebutted by evidence of actual intention to the contrary at the time of the transfer or purchase.

…there is evidence of actual intention (express or inferred from words or conduct) to pass a beneficial interest: Cummins.

1. The intention is that of the parties (and particularly that of the person passing the interest) at the time of the transfer or directly before, and can be evidenced by their acts, words and conduct at that time.

   1. Unusually, in Cummins the High Court accepted evidence of intention demonstrated after purchase. It is unclear whether this was seen as later evidence of an intention arising at the time of purchase, or if intention after purchase is relevant.

      1. Cummins: a much-later transfer framed as a transfer of 50% of the value of the property was taken as evidence that the parties considered themselves to hold 50% interests each rather than 76-24% interests per their contributions

   2. Commercial setting: the presumption of a RT will be stronger in a commercial/corporate setting, as in such setting it is unlikely that a voluntary transfer would occur. Evidence to the contrary would need to be strong.

   3. Family setting: the presumption of a RT may be weaker in a family setting, as it is more likely that out of love and affection one family member might confer a beneficial interest on another.

      1. Evidence that the parties are married and registered as joint tenants (with the right of survivorship) may rebut the presumption of a RT: Cummins. However, this is not determinative where there is evidence the presumption should stand: Buffrey v Buffrey.

… the transaction is permeated by illegality. Although the law is unclear, in Nelson v Nelson the High Court held that the presumption of a RT will be rebutted only where to allow enforcement of a RT would destroy the object of the Act breached (Nelson v Nelson).

Eg a transfer to a family member to make oneself eligible for a pension; s 121 of the Bankruptcy Act provides a transfer to defeat one’s creditors is void against the trustee in the transferor’s bankruptcy.

• If not made out: ... will hold the property as is stated on the register and ... will have no interest in equity under a RT. [Consider if another trust or estoppel can be made out]

• [if volunteer made out] ... has an equitable estate in the property as beneficiary with ... as trustee.

• [if purchase money RT made out]The parties will hold the property in shares equal to their contributions.

Here, ... may argue there is a CICT per Ogilvie. CICTs need not be in writing: PLA s 53(2).

… must show three elements per Ogilvie.

1. There must be a common intention (a ‘meeting of the minds’) that … was to have a beneficial interest in property (Ogilvie).

   1. Intention must be actual, not imputed (Allen v Snyder).

   2. There is no requirement of an enforceable contract (Ogilvie).

   3. Conduct of the parties occurring subsequent to acquisition of a property interest can be considered in deciding whether a CI did exist at the time of acquisition (Vedejs).

2. The claimant must have acted to his/her detriment in reliance on the common intention (Ogilvie)

   1. Even if no financial loss is suffered, the loss of a bargain is enough to show detriment: Ogilvie.

3. It must be unconscionable in the circumstances for the legal owner to deny the other the interest claimed (Ogilvie)

   1. Denial of the interest it was understood the other would have in return for benefits to be provided by, and which were in fact obtained from, the other will be unconscionable (Ogilvie).

Here, it is likely/unlikely that a CICT is made out for the reasons above.

If made out: A CICT is an institutional trust which arises when all elements do (Parsons). The remedy is discretionary but courts will generally make good the common intention (Ogilvie).

If not made out: ... will hold the property in equity the same as is stated on the register and ... will have no interest in equity under a CICT.

... may argue there is a JVCT per Baumgartner/Muschinski. JVCTs need not be in writing: PLA s 53(2). All elements must be shown.

1. There must be a joint venture

   1. Ongoing relationship and/or business enterprise (Deane J in Muschinski)

   2. Investment venture, such as property development/building (Boumelhelm)

   3. Ongoing family relationship (Baumgartner)

2. The parties must have pooled resources for the purpose and to the benefit of the relationship or endeavour (Baumgartner).

   1. ‘Resources’ include…

      1. …direct financial contributions(Muschinski/Baumgartner) buying a home, paying off a mortgage, contributing to everyday household expenses

      2. …indirect financial contributions (Baumgartner) where one partner takes time off work to care for children courts may credit the amount which would have been earned during that period to their contribution

      3. Non-financial contributions:

         1. Taking time off work after childbirth to care for a child (Baumgartner); however housework and child-rearing at other times were not considered to contribute in Baumgartner

         2. work done renovating a house (Miller v Sutherland)

3. The joint venture must break down without attributable blame (Deane J in Muschinski)

   1. In Boumelhelm Ward J held that this element would only be relevant where blame lies with the person seeking imposition of the trust.

   2. Courts may not assign blame in family situations, due to the family law doctrine of ‘no fault’ divorce (Baumgartner).

4. It must be unconscionable in the circumstances for the legal owner to retain the benefit of the contributions made by the other after termination of the relationship (Muschinski).

   1. Though it is circular reasoning, courts hold that a refusal to recognise the existence of an equitable interest amounts to unconscionable conduct (Baumgartner)

   2. If it would have been unconscionable for a bankrupt or deceased party to deny the claimant an interest, it will be unconscionable for his/her executor or trustee in bankruptcy to do so (Boumelhelm).

If not made out: ... will hold the property in equity as well as in law and ... will have no interest.

If elements made out: Here it appears that the elements of a JVCT are made out.

1. Donis indicates that a JVCT will arise as soon...