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(RESULTING, CONSTRUCTIVE) - Coggle Diagram

- - - - WHERE AN EXPRESS TRUST FAILS
        
        Q -- Where property is transferred to be held in an express trust, but the express trust fails, what happens to the property?= The trustee will hold the legal title, however, it was never intended that the beneficial ownership would pass to the trustee. A – the trustee will hold the property on trust, but the trust will be for the settlor. If the settlor is dead, the property will be held on trust for their estate. May occur, for example, where there is a requirement that the trust be created in writing which was not fulfilled, or where the beneficiaries are uncertain, or where the trust is contrary to public policy. May also arise where the purpose of an express trust fails or it has been carried out and there is surplus property.
      - CONTRIBUTION TO PURCHASE
        
        Transfer of property is ordinarily a conveyance of both legal and equitable rights, unless equity intervenes: Duggan v Governor of Full Sutton Prison [2004] 1 WLR 1010. Equity may create a resulting trust where contributions to the purchase price of property are not reflected on title. Question will be whether the transaction should give rise to a resulting trust, or whether it is a gift. In most relationships, presumed no gift was intended. This presumption of resulting trust can be rebutted by evidence a gift was intended.
        
        The Nature of Co-ownership Where two or more persons contribute to the purchase price, equity may recognize co-ownership in equity. Co-ownership may be as: Tenants in common, where each owner has a share and can transfer share or leave it in a will, or Joint tenancy, the owners hold the property jointly, and on death, the surviving joint tenant(s) take their share. Wills are ineffective, and portion cannot be transferred without severing the joint tenancy. Per s. 26 of the Conveyancing Act, property is usually presumed to be held in tenancy in common unless there is evidence of intention to the contrary.
        
        Delehunt v Carmody (1986) 161 CLR 464Facts: Mr Carmody and Ms Delehunt lived together for 31 years in Torrens property registered in his name. They had contributed equally to the purchase. They had an oral agreement that they were co-owners and the property would be put in both names.Carmody died without a will. His wife inherited his estate under intestacy rules. No issue that the beneficial interest was co-owned by Carmody and Delehunt. Question was whether ownership of the beneficial estate was tenancy in common or joint tenancy. If tenancy in common, Mrs. Carmody and Ms. Delehunt would hold half interests in equity. CA s 26 (creating a presumption of tenancy in common) did not directly apply as there was no instrument. Gibbs found: The previous rule was created to follow the law. Law had changed (via s. 26). Equity should have the same result as if property had been conveyed to owners at law in a document silent as to the nature of the co-ownership. Therefore Ms. Delehunt and Mr. Carmody held in equity as tenants in common. Mrs. Carmody inherited the entire legal interest, but held half on trust for Ms Delehunt.
        
        Owned 100% of property at law, in equity mr carmody and Ms Delehunt owened 50% equally BUT if the property was a joint tenancy in equity, Mr Carmody would have had no share left on his death and Ms. Delehunt would have been the sole owner in equity
        
        Claverley v Green (1984) 155 CLR 242.A couple in a de facto relationship purchased property, which was registered in both names. The purchase price was $27,250. Claverley contributed $9,250. The remainder of the purchase price was funded by a mortgage ($18,000). The mortgage was in both names and they were jointly and severally liable. The High Court considered Green’s liability on the mortgage to be her contribution to the purchase price. Result: in equity, property was held in shares of 9,000/27,250 (Green) and 18,750/27,250 (Calverley). Green held 4625/27250 of her ½ legal interest on trust for Claverley. This determination is based on financial contributions made at the time of purchase, not subsequent contributions. (These can be accounted for in equity – see ie Callow v Rupchev read in Property law).
        
        Rebutting the presumption of reuslting trusts
        
        The presumption can be rebutted by proving contrary intention of the parties. The relevant intention is at the time of the transfer.Courts will look at all the evidence, weight of factors will vary depending on circumstances. Courts will be cautious re evidence of parties about their own intention, when self-serving. Traditional approach: statements of intention after the transfer and purported creation of the trust are usually not admissible. Some authorities – such statements may be admissible, but will be treated with caution: see ie Australian Building and Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460.
        
        relationship where advancement presumed
        
        In some relationships the presumption is reversed. It is presumed that the intention was to make a gift. Called the presumption of advancement. Imposed where there is considered to be a “natural obligation to provide.” Two categories – husband to wife, and parent to child. Can be rebutted by showing intention to the contrary. The relevant intention is at the time of transfer.
        
        Brown v Brown (1993) 31 NSWLR 582 Facts: In 1958 Mrs. Brown bought property with her adult children, two sons and two daughters. She contributed half the purchase price. She was 58 at the time of purchase. Without her knowledge, the property was registered in the names of the sons alone. She lived in the house for thirty years, by the end with one of the sons and his family. In 1987, she discovered she was not on title to the property. The action commenced, and she died several months later. The evidence of all family members was contradictory about what had happened in 1958, and there did not appear to have been any agreement or common understanding re title at the time. Result: The presumption of advancement was found to apply. Traditionally, it had applied to gifts from fathers to children, but not to mothers. Given social/economic conditions changing, it was extended to mothers. BUT, on the facts of the case, the presumption of advancement was rebutted in the circumstances. Mrs. Brown needed a home, and could not be found to intend to gift her main asset, the capital in her previous home, to her sons. As the presumption of advancement was rebutted, the ordinary presumption applied. A resulting trust was found.
        
        married couple
        
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- - - - INSTITUION OR REMEDY
        
        Express and resulting trusts are property institutions. Created by the conduct of the parties. Q of whether a constructive trust is an institution or, instead, a remedy. If it is considered a remedy: Time of coming into effect – does it exist from time order of court made, or is it retroactive?. Discretionary? If so, court can refuse to order it.Muschinksi v Dodds – Per Deane J, the constructive trust is a “remedial institution”
      - WHEN DOES IT COME INTO EXISTENCE
        
        Q of when the constructive trust comes into effect important for priorities, and for interests of third parties. Similar issues can arise from resulting trusts. But the resulting trust arises in relatively defined circumstances. Not true for constructive trusts. Courts can chose when constructive trust arises, may impose retroactively.
        
        Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567. Rolls Razor Ltd. borrowed money to pay dividends. The loan agreement stated the loan was made for the purpose of paying that dividend. The money was placed in a bank account separate from the company’s ordinary bank account. The bank knew of the purpose of the money. When Rolls Razor went into liquidation, the bank attempted to seize the money in the account to cover overdrafts. HL found that the loan made for a purpose, if that purpose could not be carried out, then the money was held on trust for the lender. The form of trust is called the Quistclose trust
        
        Quistclose trust
        
        Requires a mutual intention between borrower and lender that the money be used for a specific purpose. Courts will consider dealings between parties in finding that a trust was created rather than an ordinary debt. A Quistclose trust may not be established if money is paid into a general rather than separate bank account: Gliderol International v Hall (2001) 80 SASR 541. However, it may be found where the payment was into a general account but careful records have been kept: Cook v Alto Prestige Pty Ltd.
        
        nature
        
        Only legal ownership of the property transfers, the lender retains beneficial ownership until the property is used for the intended purpose: Australian Conference Association v Mainline Constructions (1978) 141 CLR 335.The nature of a Quistclose trust has been disputed, but it has been called a form of resulting trust. Some judges and scholars have argued it is either an express trust or a form of constructive trust
        
        Quistclose v charitable trusts
        
        Sometimes confused by students as both involve the concept of purpose. A Quistclose trust and a charitable trust are two different things. A charitable trust is a trust for a charitable purpose (ie relief of poverty). A Quistclose trust arises from a failure of purpose underlying a loan. The purpose does not need to be charitable. For a charitable trust, it is the purpose of the trust that is relevant. In determining if a Quistclose trust has arisen, we look to the purpose of the loan.