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Week 7 Resulting Trusts and Constructive trusts - Coggle Diagram
Week 7
Resulting Trusts and Constructive trusts
Resulting Trusts
Presumed/implied intention of the settlor:
failure of an express trust,
surplus of trust property after the trust is terminated,
or a contribution to the purchase price of a property is not reflected in the legal title
Traditionally two categories
Westdeutche Landesbank Girozentrale
automatic
either a failure of an express trust; surplus of trust property; Quitclose - failure of purpose of a loan; illegality:
Nelson v Nelson
examples
Failure Of An Express Trust
: Hodgson v Marks [1971] Ch 892; Nelson v Nelson (1995) 184 CLR 538
Failure of a Purpose of a Loan
: Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567
Surplus after satisfaction of the purpose of the trust
: Smith v Cook; Australian Incentive Plan v Babcock
: Smith v Cook; Australian Incentive Plan v Babcock
presumed
Either
circumstances in which property is voluntarily transferred without consideration passing.
Resulting Trust: Purchase Price: Voluntary Transfer Example
Scenario A;
Either
(Note:No consideration passes from party B to party A)
Party A voluntarily transfers part of the property to party B:
1 more item...
Party A voluntarily transfers whole of property to party B: or
Resulting Trust: Purchase Price Contribution
Scenario B
Party A contributes to the purchase price of a property, though does not have legal title equivalent to her contribution
Calverley v Green
(1984) 155 CLR 244
Meaning of Purchase Price
Principles on the meaning of ‘
purchase price’
Calverley v Green
The contribution must be to the purchase of the property, e.g., a financial contribution or other purchase related costs
Assuming mortgage liability – yes - included:
Calverley v Green
Making mortgage payments after the purchase is not included:
Calverley v Green
(
but note - this is considered for constructive trusts)
a contribution made to the purchase of a property, but the contributor has not been given legal title equivalent to his or her contribution.
Rebutting the Presumption of a Resulting Trust
Evidence there is a clear (actual) intention to create some other arrangement
The evidence must related to just before, or at the time of the purchase – anything that constitutes part of the transaction
Lee v Chai
is a good case for some details on rebutting the presumption of a resulting trust - see hard copy with notes
Presumption of Advancement
The presumption of a resulting trust will not arise
if the presumption of advancement applies i.e the scenario concerns the transfer from:
a parent to a child; or
husband to wife.
de facto – unclear whether it applies
Equity will assume the transfer is a gift.
Rebut the presumption of advancement – same principles as for presumption of resulting trust.
Constructive Trusts
three major differences between constructive trusts versus resulting and express trusts
Intention is not a necessary element;
A constructive trustee is not required to fill the whole gamut of fiduciary duties; and
Lonrho v Fayed
Some constructive trusts create a personal liability rather than a proprietary interest:
Giumelli v Giumelli
Constructive Trusts: Institutional or Remedial
Remedial
: arises at the time of the court order:
Re Polly Peck International
Imposed by the court: ‘where parties have entered into a relationship with a common intention that the property is to be held between them in a particular way’:
Allen v Snyder
Must show
Common intention as to ownership of the equitable/beneficial interest:
Shepherd v Doolan [2005] NSWSC 42.
Party claiming the interest must show she has acted to her detriment.
It would be fraud for the trustee/owner to deny the interest.
Remedial Constructive Trust: Unconscionability
Imposed by the court: to remedy unconscionable behaviour: Muschinki v Dodds; Baumgartner v Baumgartner
Must show:
A joint venture
Valuable contributions by the plaintiff
Unconscionable for the contributions to be retained by the legal title holder
Institutional
: comes into existence upon ‘the parties engaging in certain forms of conduct’:
Westdeutsche Landesbank Girozentrale
An institutional CT may arise where there is
An incomplete contract for the sale of property;
Lysaght v Edwards (1876) 2 ChD 499, 506
Equitable Estoppel:
McNab v Graham [2017] VSCA 352
Breach of Confidence
Breach of fiduciary or trustee duties; or
Third party liability connected to a breach of trustee/fiduciary duty: Barnes v Addy
In Barnes v Addy, Lord Selbourne stated that third parties (‘strangers’ to a trust) can be made constructive trustees in three ways
By acting as a trustee without authority (trustee de son tort); (this was not in the
Barnes v Addy
case
Through knowing receipt of trust property (first limb of Barnes v Addy);
Through knowingly assisting in a breach of trust (second limb of Barnes v Addy).
Effect of legislative amendments on resulting and constructive trusts
The way property interests, and equitable title, is determined in the context of former spouses and de facto relationships has been affected by amendments to the Family Law Act 1975 (Cth).
Equity still has a role in adjudicating disputes relating to domestic assets and circumstances outside the scope of the statute e.g., succession matters and bankruptcy: