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1 Is There a Presumption of Advancement? Jamie Glister * Abstract Resulting trusts developed from resulting uses, and a resulting use was only raised if there was no consideration and no declaration of use. Natural love and affection was good consideration and so would prevent a resulting use. Yet now it seems that the presumption of advancement merely rebuts a presumption of resulting trust, rather than preventing it from arising in the first place. The difference is important because it informs the way in which evidence is used by the party seeking to rebut the presumption. The theoretical point is also interesting, given equity s position as a supplementary jurisdiction. This article argues that a return to the original position would be accurate as a matter of history, desirable as a matter of principle, and available as a matter of practice. I Introduction When a donor purchases property in the name of a recipient, or transfers property to a recipient, equity usually applies a presumption of resulting trust. 1 This means that the default position involves the recipient holding on trust for the donor. Sometimes the relationship of the parties means that a presumption of advancement applies and the recipient is assumed to be the full legal owner rather than a trustee. Both presumptions can be rebutted, or reinforced so as to become redundant, by the calling of evidence. However, when a donor seeks to rebut a presumption of advancement there is doubt over the exact point to which that evidence must be directed: must the donor show that they intended a different arrangement, or is it enough to show only a lack of intention to make a gift? Is the presumption of advancement simply a description of when the presumption of resulting trust does not apply, or does the presumption of advancement rebut a presumption of resulting trust? This is an important question because it can affect the results of cases. If a donor wants to recover property from a recipient to whom they stand in an advancement relationship then the burden of proof is against them. They have to * 1 Lecturer, Faculty of Law, The University of Sydney. I would like to thank Mark Leeming SC, Sarah Williams and the two referees for their helpful comments on earlier drafts. The usual caveat applies. The title is a nod to a recent article by Professor Chambers, Is There a Presumption of Resulting Trust? in Charles Mitchell (ed), Constructive and Resulting Trusts (Hart Publishing, 2010) 267. This is stating the position too simply but it will be sufficient for this article. See J D Heydon and M J Leeming, Jacobs Law of Trusts in Australia (LexisNexis Butterworths, 7 th ed, 2006) ( Jacobs ) [1220] [1221]. In addition to the authorities discussed there, see Lohia v Lohia [2001] WTLR 101, (Nicholas Strauss QC); [2001] EWCA Civ 1691, [25] [26]; Ali v Khan [2002] EWCA Civ 974, [24].
2 40 SYDNEY LAW REVIEW [VOL 33:39 establish that they did not intend to make a gift. If the recipient is seen as fully entitled, with no presumption of resulting trust in the background, then a donor will have to prove by evidence that they intended a different arrangement. In most cases they will need to show that the transfer was made on trust. However, if the existence of the advancement relationship simply means that the law presumes an intention to give, then the donor merely has to rebut that presumption of intention. They can introduce any evidence that is inconsistent with that presumed intention to give; they are not restricted to evidence that establishes an intention to do something else. This article starts by describing the contemporary presumption of advancement and explaining when that presumption applies. It then outlines the relationship between the presumptions of resulting trust and advancement and identifies two views, signalled above, on how those presumptions may interact: the absence model and the sub-rule model. The article then discusses the history of resulting trusts, the standard of proof needed to rebut the presumption of advancement, the nature and name of the trust that arises on rebuttal, and the question of what kind of intention the donor must show they had in respect of the property. In conclusion it is suggested that both models have history on their side: the absence model is what the presumption of advancement should have become, given the law on resulting uses, whereas the sub-rule model is what judges think it actually is. However, notwithstanding judicial comments in support of the sub-rule model, it is argued that the absence model can still be adopted without fear of disturbing settled decisions or causing similar cases to be decided differently in future. II Presumptions of Advancement and Resulting Trust The presumption of advancement only applies to transfers and purchases made by people who stand in particular relationships, and the number of these advancement relationships is very small. In Australia the presumption only applies to transfers from husbands to their wives, 2 from male fiancés to their female fiancées, 3 and from parents to their children. 4 The position is similar in most Commonwealth jurisdictions, although some differences have emerged: in Canada the presumption no longer applies when property is transferred from a parent to an adult child; 5 in New Zealand both presumptions have been abolished in relation to spouses; 6 in Hong Kong it may apply in relation to concubines; 7 and Re Eykyn s Trusts (1877) 6 Ch D 115, cited in Nelson v Nelson (1995) 184 CLR 538, 600 (McHugh J). Not de facto spouses: Calverley v Green (1984) 155 CLR 242. Wirth v Wirth (1956) 98 CLR 228. Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353; Nelson v Nelson (1995) 184 CLR 538; Brown v Brown (1993) 31 NSWLR 582. Unlike de facto spouses, the parental presumption does include those in loco parentis. Pecore v Pecore [2007] 1 SCR 795. Section 4 of the Property (Relationships) Act 1976 (NZ) abolishes both presumptions in relation to the transfer of property between spouses or partners. Under Part 4 of that Act each partner is entitled to share relationship property equally, unless the relationship is of short duration or there are extraordinary circumstances that make equal sharing repugnant to justice. Cheung v Worldcup Investments Inc [2008] HKCFA 78.
3 2011] PRESUMPTION OF ADVANCEMENT? 41 it is not certain that English courts will apply the presumption between a mother and her children. 8 The cases are not settled on the reason why equity presumes that a gift was intended. 9 Suggested justifications include an equitable obligation to advance the recipient, 10 recognition of legal duties to maintain, 11 natural love and affection between the parties, 12 and simple probability of intention. 13 Of course, in most cases it is unnecessary to identify the underlying principle because it will not affect the way the presumption actually applies. 14 Indeed, and whatever the reason for having the presumption of advancement might be, it seems clear that the number of advancement relationships will remain very small. In recent Australian cases involving transfers between siblings, 15 and transfers from parents to their childrenin-law, 16 the presumption of resulting trust was applied apparently without argument. In Calverley v Green, a 1984 case about de facto couples, Deane J commented that any change in the advancement relationships must be made by reference to logical necessity and analogy and not by reference to idiosyncratic notions of what is fair and appropriate. 17 In that case the High Court found by a majority that the presumption did not apply between a man and his de facto wife. 18 While they can generally be regarded as opposites, it should be noted that the two presumptions of resulting trust and advancement are not quite mirror images of each other. Although the presumption of resulting trust assumes that the recipient was not meant to receive the property beneficially, 19 the presumption of Bennet v Bennet (1879) 10 Ch D 474; Sekhon v Alissa [1989] 2 FLR 94, but see Laskar v Laskar [2008] 1 WLR 2695, [20] [21]. For discussion see Jamie Glister, The Presumption of Advancement in Charles Mitchell (ed), Constructive and Resulting Trusts (Hart Publishing, 2010). Bennet v Bennet (1879) 10 Ch D 474. Pecore v Pecore [2007] 1 SCR 795. Sayre v Hughes (1868) LR 5 Eq 376. Wirth v Wirth (1956) 98 CLR 228, 237. This is not always the case. In Pecore v Pecore [2007] 1 SCR 795, [89], Abella J thought that affection rather than obligation grounded the presumption and so, in contrast to the majority of the Supreme Court of Canada, would not have limited the presumption to gifts to infant children. McGregor v Nicol [2003] NSWSC 332. Z & Z (2005) 34 Fam LR 296; (2005) FLC ; [2005] FamCA 996, [143] [146] (Coleman and Boland JJ). Finn J reserved her position on the presumption of advancement at [32]. Calverley v Green (1984) 155 CLR 242, 268. The majority consisted of Mason, Brennan and Deane JJ. Gibbs CJ would have applied the presumption of advancement while Murphy J preferred to abolish all presumptions. Mason and Brennan JJ commented pithily that the term de facto husband and wife is a term obfuscatory of any legal principle except in distinguishing the relationship from that of husband and wife : ibid 260. It may be noted that de facto status is certainly not obfuscatory in respect of probability of intention, and that in loco parentis is an accepted advancement category. On any view this statement is true, but academic views differ on whether the presumption of resulting trust is a presumption that the donor declared a trust for himself or herself, or whether it is a presumption that the donor did not intend to pass a beneficial interest to the recipient. For the former view, see William Swadling, A New Role for Resulting Trusts? (1996) 16 Legal Studies 110, and, by the same author, Explaining Resulting Trusts (2008) 124 Law Quarterly Review 72; for the latter view, see Peter Birks, Restitution and Resulting Trusts in S Goldstein (ed), Equity and Contemporary Legal Developments (Hamaccabi Press, 1992) 335; Robert Chambers, Resulting Trusts (Clarendon Press, 1997). For analysis of both views, and a suggestion that the presumption in fact remedies the failure of the donor to make their intention sufficiently explicit, see James Penner, Resulting Trusts and Unjust Enrichment: Three Controversies in Charles Mitchell (ed),
4 42 SYDNEY LAW REVIEW [VOL 33:39 advancement does not just assume that beneficial title was indeed intended to pass in fact it goes further and presumes that an outright gift was intended. 20 This means that, for example, both presumptions are rebutted by evidence that the donor actually intended to make a loan to the recipient. 21 The relationship between the two presumptions is more complicated that it might first appear. III Relationship of the Presumptions They are generally thought of as opposites or alternatives, but there are different views on how the two presumptions interact. In his lectures on equity, Maitland described the presumption of advancement as a sub-rule of the general presumption of resulting trust, 22 by which he meant that the advancement presumption was just one way of rebutting the overarching presumption of resulting trust. In contrast, Ashburner did not see the presumption of advancement as a presumption at all and said that in advancement cases equity simply had no reason to second guess the legal outcome: here there is, strictly speaking, no presumption of advancement. The child or wife has the legal title. The fact of his being a child or wife of the purchaser prevents any equitable presumption from arising. 23 For Ashburner there should be no presumption of resulting trust at all in cases where a presumption of advancement applies. A Sub-rule and Absence Models Under the sub-rule model the presumption of advancement is simply one of the means by which the overarching presumption of resulting trust can be rebutted. The presumption of resulting trust may be rebutted by evidence of an intention to make a gift, and in advancement cases that intention to make a gift is simply presumed by law. 24 An advancement recipient therefore has the burden of proof on his or her side and, rather than needing to prove a gift by evidence, can rely on Constructive and Resulting Trusts (Hart Publishing, 2010) 249, All sides appear to accept that the presumption is now outdated: see Swadling, Explaining Resulting Trusts, 84; Robert Chambers, Is There a Presumption of Resulting Trust? in Charles Mitchell (ed), Constructive and Resulting Trusts (Hart Publishing, 2010) 267. Strictly speaking a revocable gift would also rebut the presumption of advancement, as the presumption is that the gift is free. However, if it was only revocable in the donor s lifetime and had not been revoked by the donor s death then the result would be the same as if the presumption of advancement had not been rebutted. See Kauter v Hilton (1953) 90 CLR 86, 100: The fact that the depositor reserved a right to revoke the trust would not prevent an immediate trust arising and if the trust was not revoked by the depositor in his lifetime the beneficiary would be just as much entitled to the money as a beneficiary under an irrevocable trust. In Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 the Court seemed to assume that any licence to revoke would lapse on the donor s death, although it is not certain why this should automatically be the case. As happened in Bennet v Bennet (1879) 10 Ch D 474, where a presumption of resulting trust was rebutted by evidence of an intended loan. A presumption of advancement would have been similarly rebutted. F W Maitland, Equity (Cambridge University Press, 1910) W Ashburner, Principles of Equity (Butterworth, 1902) 148 9, note (u). The same appears at 110, n 2, of the second edition: Denis Browne, Ashburner s Principles of Equity (Butterworth, 2 nd ed, first published 1933, 1983 ed). Russell v Scott (1936) 55 CLR 440, 453 (Dixon and Evatt JJ): In a case where there is no presumption of advancement, satisfactory affirmative proof of an intention to confer a beneficial interest supplies the place of the presumption.
5 2011] PRESUMPTION OF ADVANCEMENT? 43 the presumption of advancement to rebut the presumption of resulting trust. It would then fall to the donor to rebut the presumption of advancement and, if necessary, 25 reinstate the presumption of resulting trust. Two points can immediately be made in relation to the sub-rule approach. First, the recipient s legal title is not accorded any special significance under this model. Assuming that the fact of a transfer or purchase has been established, the analysis begins with the usual presumption of resulting trust, which is then provisionally rebutted by the presumption of advancement. At this point the evidence is brought into play. The second point is that, under this sub-rule approach, it is accurate to describe equity s assumption that a gift was intended as a presumption. Specifically, it is a rebuttable presumption of law. On proof of the basic fact (the relationship between the parties), the existence of the presumed fact (the intention to make a gift), is concluded in the absence of evidence to the contrary. 26 Absent such evidence, the outcome given the location of the legal title and the presumed donative intent will be that the recipient is the full legal owner. It follows that, under the sub-rule approach, rebuttal of the presumption of advancement only requires a donor to show that they formed no intention to make a gift to the recipient. 27 If the task is simply the rebuttal of a presumption then it is correct that the presumption may be rebutted by any evidence that is inconsistent with what is presumed. Evidence of a lack of intention to give is inconsistent with, and will therefore rebut, a presumed intention to give. Crucially for this article, this evidence point can also be turned on its head. If cases establish that the presumption of advancement can be rebutted by evidence that the donor formed no intention to give then the sub-rule model must be correct. The sub-rule analysis can be contrasted with the absence model. According to this model the presumption of advancement is not a counterpart or a sub-rule of the presumption of resulting trust but is instead the absence of that presumption. The special relationship of the parties means that equity does not presume against a full legal title, so the donor must prove by evidence rather than by presumption that the legal title of the recipient is incomplete. This approach sounds attractive, not least because it seems to pay due regard to the legal result. If equity is not going to apply a presumption then it ought not to do so: it should certainly not apply two presumptions when none will do. However, the logic should be followed through: under the absence model the presumption of advancement is not really a presumption at all. It is a position that might be departed from on proof by evidence of a contrary intention, but that would require the donor to establish that contrary intention and it would require the contrary intention to be legally-realisable. Indeed, under the absence model we should not really speak of rebutting the presumption of advancement at all: instead we should make a donor show that he or she intended another arrangement, such as a trust Examination of this if necessary caveat is a major point of this article. See J D Heydon, Cross on Evidence (LexisNexis, 8 th Australian ed, 2009) [7240], [7270]. Of course, a fortiori a sub-rule presumption could also be rebutted by evidence that something other than a gift was intended.
6 44 SYDNEY LAW REVIEW [VOL 33:39 B When it Matters Most cases will be decided on the basis of the parties actual intentions, so the sub-rule and absence models will often yield the same result. Whenever a court gives effect to an alternative arrangement that parties intend then the evidence of that intention is both (a) inconsistent with a presumed intention to give under the sub-rule model, and (b) good reason to depart from the full legal title under the absence model. There will therefore be no difference to the outcome. The result will also be the same in the rare cases where a finding of intention is not possible. If the relevant parties to the transaction are all dead, 28 or if evidence on both sides is thought to be wholly unreliable or otherwise inadmissible, 29 then there will be no evidence for the court to weigh and so the presumption of advancement will be determinative. The absence model would say that there was no reason to depart from the recipient s full legal title, whereas the sub-rule model would say that the presumption of resulting trust was rebutted by the presumption of advancement, but either way the outcome would be the same. However, there are two occasions where the sub-rule / absence distinction is important: first, where the donor s intention is impossible to effectuate; second, where the donor has simply failed to form any view as to what should happen to the property. In these two cases the outcome will be different depending on whether the absence or sub-rule model is used. For example, consider a donor who lacks the intention to make a gift but who also lacks the intention to do anything else. Such evidence would be enough to rebut under the sub-rule model because an evidential lack of intention to give is inconsistent with a presumed intention to give. But it would not rebut under the absence model because there would be no evidence that the donor intended a different result from that which the legal title indicated. Similarly if the donor intended something ineffective: the evidence of this intention would rebut under the sub-rule model, but the ineffective intention would not affect the full legal title under the absence model. So a lack of intention and an ineffective intention will both rebut under the sub-rule model but not the absence model. What does that rebuttal leave? In most instances a rebuttal will leave whatever other arrangement was intended a loan, for example but this is clearly impossible in cases where nothing was intended or where the alternative arrangement cannot be effectuated. Instead the sub-rule advancement presumption would be rebutted, the general resulting trust Hepworth v Hepworth (1870) LR 11 Eq 10; Re a Policy No of the Scottish Equitable Life Assurance Society [1902] 1 Ch 282. In Re Kerrigan; Ex parte Jones (1946) 47 SR (NSW) 76 the donor father died without telling his children that he had caused mortgage securities to be registered in their names. Both Jordan CJ and Davidson J just found it possible to make an actual finding of intention, but they both described the evidence as meagre (at 83, 88). In contrast, Street J (at 89) found it abundantly clear that the father had intended to reserve a life interest. In England evidence may be inadmissible because of illegality: see Tinsley v Milligan [1994] 1 AC 340 (House of Lords), where the defendant won because a presumption of resulting trust applied to the transaction, but where she would have lost if she had been required to rebut a presumption of advancement. A more flexible approach is taken in Australia: see Nelson v Nelson (1995) 184 CLR 538. Of course, Australian judges may still take the view that both parties are self-serving, untruthful and unreliable.
7 2011] PRESUMPTION OF ADVANCEMENT? 45 presumption would spring back up, 30 nothing would be available to rebut that presumption, and so the outcome would be a resulting trust for the donor. (Of course, under the absence model the outcome would be a fully entitled recipient.) C History and Authority Absent consideration or a declaration of use, a feoffment to a stranger raised a resulting use to the feoffor. A feoffment to a son, on the other hand, settled the use in the son because the natural love and affection supplied the consideration. 31 There was no need for any resulting use to the father. That is, there was not a resulting use to the father that was then rebutted by the evidence of the kinship; instead there was simply no resulting use at all. In one of the very early cases, Grey v Grey, Lord Nottingham thought that no presumption of resulting trust should apply in advancement cases: [T]he law will best appear by these steps. 1. Generally and prima facie, as they say, a purchase in the name of a stranger is a trust, for want of a consideration, but a purchase in the name of a son is no trust, for the consideration is apparent. 2. But yet it may be a trust, if it be so declared antecedently or subsequently, under the hand and seal of both parties. 3. Nay, it may be a trust, if it be so declared by parol, and both parties uniformly concur in that declaration. 4. The parol declarations in this case are both ways; the father and son sometimes declaring for, and sometimes against, themselves. 5. Ergo, there being no certain proof to rest on as to parol declarations, the matter is left to construction and interpretation of law. 6. And herein the great question is, whether the law It should be noted that there are several instances where the presumption of resulting trust has been said to spring back up (or words to that effect). For example Brown v Brown (1993) 31 NSWLR 582, 589 (Gleeson CJ): [if] there is no presumption of advancement or the presumption of advancement is rebutted in evidence, then the exception does not apply and the basic presumption operates. Halsbury s also provides that [i]f, in a given case, the presumption of advancement is rebutted, then the basic presumption of resulting trust applies : LexisNexis, Halsbury s Laws of Australia (at 22 Feb 2011) 430 Trusts, IV The Presumption of Advancement [ ]. But compare Chambers, Resulting Trusts, above n 19, 32 3; discussed below n 44. As authority Halsbury s cites the above passage from Gleeson CJ in Brown v Brown, Nelson v Nelson (1995) 184 CLR 538, (Deane and Gummow JJ), and National Australia Bank Ltd v Maher [1995] 1 VR 318, 321 (Fullagar J) (Court of Appeal). With respect, Deane and Gummow JJ did not say this; they simply said that the trust that is enforced on rebuttal is a resulting trust. As regards NAB v Maher, at 321 Fullagar J made a similar comment to Gleeson CJ: Where the presumption of advancement is inapplicable or negatived [the presumption of resulting trust applies]. However, unlike Brown v Brown, the case of NAB v Maher did not involve a presumption of advancement. Of course, any springing-back could only be the case under a sub-rule approach, so the comments do provide support for that sub-rule position. However, the comments should be treated with caution because it is only in cases where the donor s intention is impossible to effectuate or where he or she formed no view at all that the presumption of resulting trust would ever need to spring back up. All other cases could just as easily be decided on the basis that either (1) the presumption of advancement was not rebutted because of a lack of evidence, or (2) an evidential finding of intention was made and effectuated by the judge. It is only in cases with no intention, or ineffective intention, where references to the resulting trust presumption springing back would be necessary to decide the case. See, for example, Sir Jeffrey Gilbert, The Law of Uses and Trusts (R Gosling, 1734) 45 8, 250 3; Harlan F Stone, Resulting Trusts and the Statute of Frauds (1906) 6 Columbia Law Review 326, 328 9; DEC Yale (ed), Lord Nottingham s Manual of Chancery Practice and Prolegomena of Chancery and Equity (Cambridge University Press, first published 1965, 1986 ed)
8 46 SYDNEY LAW REVIEW [VOL 33:39 will admit of any constructive trust at all between father and son? [T]he father who would check and control the appearance of nature, ought to provide for himself by some instrument, or some clear proof of a declaration of trust, and not depend upon any implication of law; for there is no necessity to give way to constructive trusts, but great justice and conscience in restraining such constructions. 32 However, other early cases take a sub-rule approach. A century or so after Grey v Grey, Eyre CB might have preferred an absence model. Nevertheless, he thought that an advancement relationship was merely evidence that would rebut a presumption of resulting trust: It is the established Doctrine of a Court of equity, that this resulting trust may be rebutted by circumstances in evidence. The cases go one step further, and prove that the circumstance of one or more of the nominees being a child or children of the purchaser, is to operate by rebutting the resulting trust; and it has been determined in so many cases that the nominee being a child shall have such operation as a circumstance of evidence, that we should be disturbing land-marks if we suffered either of these propositions to be called in question, namely, that such circumstance shall rebut the resulting trust, and that it shall do so as a circumstance of evidence. I think it would have been a more simple doctrine, if the children had been considered as purchasers for a valuable consideration. Natural love and affection raised a use at common law; surely then it will rebut a trust resulting to the father. 33 It seems that at some point between 1677 and 1788 the use analogy became imperfect. As Costigan wrote: Without noticing that this presumption of gift was on principle the only presumption where C was A s wife, the chancery judges regarded the presumption of a trust as the first one entertained and as rebutted by proof of the relationship of the parties, with the consequent presumption of fact of a gift. Then when that presumption of fact of a gift was itself rebutted... the equity courts regarded the original presumption of fact of a trust as remaining in undisputed control of the field (1677) 2 Swans 594, 597 8; 36 ER 742, 743. See also the report in DEC Yale (ed), Lord Nottingham s Chancery Cases (Selden Society, vol i, 1957; vol ii, 1961), case 643. Dyer v Dyer (1788) 2 Cox 92, 93 4; 30 ER 42, 43 (emphasis in original). George P Costigan, The Classification of Trusts as Express, Resulting, and Constructive ( ) 27 Harvard Law Review 437, 457. See also Austin Wakeman Scott, Resulting Trusts Arising upon the Purchase of Land ( ) 40 Harvard Law Review 669, 684, who calls the sub-rule model somewhat artificial, and points out that the trusts enforced when land was bought in the name of relative, and when evidence showed an intention to create a trust, were simply called resulting trusts before the Statute of Frauds. That is, they were resulting in pattern (see below, text to nn 65 6), but otherwise were what we would now call express trusts in the sense that the trust was established by evidence. Given that there was no particular need to distinguish between these trusts before the Statute of Frauds, it is not surprising that trusts where the beneficial interest remained in/returned to the advancement donor were called resulting trusts. On trusts in Lord Nottingham s time generally see Cook v Fountain (1676) in Yale, Lord Nottingham s Chancery Cases, above n 32, case 500; M Macnair, The Conceptual Basis of Trusts in the Later 17 th and Early 18 th Centuries in Richard Helmholz and Reinhard Zimmerman (eds), Itinera Fiduciae (Duncker & Humblot, 1998) 207.
9 2011] PRESUMPTION OF ADVANCEMENT? 47 There is modern Australian authority in favour of both models. 35 In a passage that has been referred to and approved many times, 36 the High Court in Martin v Martin appeared to adopt Ashburner s view: As she was his wife the fact that he found the purchase money for the land raised no presumption in his favour of a resulting trust as it would or might have done had she been a stranger. The presumption is in her case that the beneficial ownership went with the legal title. It is called a presumption of advancement but it is rather the absence of any reason for assuming that a trust arose or in other words that the equitable right is not at home with the legal title. 37 However, there is also considerable authority for the sub-rule position. In Scott v Pauly, Isaacs J and Gavan Duffy J thought that the presumption of advancement was just one way in which the presumption of resulting trust could be rebutted. 38 So did Jordan CJ in Re Kerrigan; Ex parte Jones, 39 Hope JA in Dullow v Dullow, 40 and Gleeson CJ in Brown v Brown. 41 Indeed, judges have even taken the view that there is no difference between an absence and a sub-rule approach. In Calverley v Green, Gibbs CJ took what is respectfully argued to be a contradictory position: [The presumption of resulting trust] is subject to the exception created by the presumption of advancement. It is called a presumption of advancement but it is rather the absence of any reason for assuming that a trust arose or in other words that the equitable right is not at home with the legal title : Martin v Martin; in other words, it is no more than a circumstance of evidence which may rebut the presumption of resulting trust : Pettitt v Pettitt. 42 Of course, having said that this position is contradictory, it is undoubtedly true that in any case where the judge can find and give effect to evidential intention it does not matter which model is used. Most cases fall into this category, which means that the exact relationship between the presumptions is not central to the Jacobs says that there is no presumption of resulting trust in advancement cases: Heydon and Leeming, above n 1, [1212], and this also appears to be the view taken in H A J Ford, Ford and Lee: Principles of The Law of Trusts (Law Book, 2nd ed, 1990) [2107] nn Halsbury s says that there is a default presumption of resulting trust: above n 30, [ ]. The Laws of Australia provides both views: Lawbook, The Laws of Australia (at 22 Feb 2011) 15 Equity, 13 Trusts [ ] nn 2 3. Jacobs even calls the presumption of advancement the the presumption against a resulting trust : Heydon and Leeming, above n 1, [1213]. The passage has been approved by the High Court in Calverley v Green (1984) 155 CLR 242, 247 (Gibbs CJ, although see below, text following n 42), 256 (Mason and Brennan JJ), (Deane J, where his Honour placed every reference to the presumption inside inverted commas); Nelson v Nelson (1995) 184 CLR 538, 547 (Deane and Gummow JJ); Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278, (the Court). Martin v Martin (1959) 110 CLR 297, 303 (Dixon CJ, McTiernan, Fullagar and Windeyer JJ). In the next two lines of the judgment the High Court specifically quoted Ashburner. (1917) 24 CLR 274, (Isaacs J), 285 (Gavan Duffy J). Gavan Duffy J and Rich J thought that the case could be decided without recourse to presumptions, but Gavan Duffy J clearly thought that if a presumption of advancement had arisen it would merely have served to rebut a presumption of resulting trust. (1946) 47 SR (NSW) 76, (1985) 3 NSWLR 531, 534. (1993) 31 NSWLR 582, 589. See also Malsbury v Malsbury [1982] 1 NSWLR 226, 229 (Needham J). (1984) 155 CLR 242, 247 (citations omitted).
10 48 SYDNEY LAW REVIEW [VOL 33:39 decision. It follows that any judicial comments made in that direction should be treated with caution because they will not have been part of the ratio of the case and because the point is unlikely to have been fully argued. This, together with the fact that there are dicta on both sides of the argument, means that judicial comments alone should not be given undue weight. Rather than looking at obiter dicta in cases where the point was not argued, a stronger conclusion might be reached by examining what actually happens. If there are cases where the presumption has been rebutted with evidence of a lack of any intention, or if an ineffective intention has produced a trust for the donor, then it must follow that the sub-rule approach is correct. On the other hand, if demonstrating a mere lack of intention to give is not enough to rebut, or if the donor s ineffective intention simply leaves a fully entitled recipient, then the absence model will still be available. D Rebuttal of the Presumption In the section on presumptions, Cross on Evidence provides: In the first place, a presumption sometimes means nothing more than a conclusion which must be drawn until the contrary is proved; secondly, and more frequently, it denotes a conclusion that a fact (conveniently called the presumed fact ) exists which may or must be drawn if some other fact (conveniently called the basic fact ) is proved or admitted. 43 The presumption of resulting trust is generally thought to be one of the second type. The underlying type-1 presumption is a full legal title, and equity applies a type-2 presumption of resulting trust on top. 44 Importantly for this article, the presumption of advancement is either a description of when that type-2 presumption of resulting trust is not applied and the underlying type-1 presumption operates (the absence model), or it is a second type-2 presumption that operates on top of the presumption of resulting trust (the sub-rule model). The presumption of advancement is always called a presumption, even though this term would be inaccurate under the absence model. Type-1 presumptions are not really presumptions at all: as the author of Cross on Evidence says, they are conclusions that must be drawn until the contrary is proved. Correspondingly, when a donor tries to change the effect of the presumption of advancement they are always said to rebut it. Again the expression would not be Heydon, Cross on Evidence, above n 26, [7240]. The author provides that the terms presumed fact and basic fact are taken from the American Law Institute s Model Code of Evidence r 701. That type-2 presumption may be a presumption that the donor declared a trust for himself or herself, or it may be a presumption that the donor did not intend to pass a beneficial interest in the property, or the presumption may operate to remedy the donor s failure effectively to declare a trust that he or she did intend: see above n 19. Recently, Chambers has argued that the presumption of resulting trust is actually a type-1 presumption; ie that the existence of a resulting trust is the conclusion that must be drawn until the contrary is proved: Chambers, Is There a Presumption of Resulting Trust?, above n 19. However, it should be noted that even in Resulting Trusts Chambers did not rely on the springing-back of a presumption to establish the resulting trusts found on rebuttal of a presumption of advancement: see above n 19, That is, in his view those trusts are found on evidential proof of a lack of intention to benefit, which itself establishes a resulting trust. Chambers view is therefore subtly different from the sub-rule model.
11 2011] PRESUMPTION OF ADVANCEMENT? 49 correct on the absence model, but it is the one that is invariably used. 45 Simply for consistency of usage, the words presumption and rebuttal are used throughout this article. However, my aim is to find either a reason to dispense with those labels or a stronger reason to keep using them. E Abolition? Some judges have questioned whether the presumptions should exist at all. For example, in Dullow v Dullow, Hope JA called the presumption of resulting trust completely anachronistic and said that reform was overdue. 46 Abolition of both presumptions would involve equity deferring to the legal result unless there were good reasons to the contrary, 47 which is essentially the same position as an absence model applied to all transactions between all parties whatever their relationship. This abolitionist view commands much judicial and academic support, 48 but in practice judges have not felt able to overthrow the presumptions. Instead those presumptions have been described as entrenched landmarks in the law of property. 49 It is therefore argued that in Australia the presumptions are here to stay, 50 at least for the moment, and so are still worthy of comment. IV Standard of Proof for Rebuttal The first issue to consider in analysing the presumption models is the standard of proof needed to rebut the presumption. Older authority suggests that a presumption of advancement might be comparatively easy or comparatively difficult to rebut, either of which would be rather odd if, as the absence model dictates, the starting point is a full legal owner and the donor s task is to show that another arrangement was intended. Under that model there is really no presumption at all, so the donor has the legal burden of proof to discharge and must do so according to the normal civil standard. On the other hand, a variable Although we talk about the presumption of innocence (another type-1 presumption) we do not talk about rebutting it: we talk about proving guilt. (1985) 3 NSWLR 531, (Hope JA, with whom Kirby P and McHugh JA agreed). See also Calverley v Green (1984) 155 CLR 242, 264 (Murphy J); Brown v Brown (1993) 31 NSWLR 582, 595 (Kirby P); Nelson v Nelson (1995) 184 CLR 538, 602 (McHugh J). Of course property rights may still be altered for independent reasons, as they are on divorce. For judicial support see above n 46. For academic support see Chambers, Is There a Presumption of Resulting Trust?, above n 19, and Swadling, Explaining Resulting Trusts, above n 19. See Dyer v Dyer (1788) 2 Cox 92, 98; 30 ER 42, 46 (Eyre CB): so well established as to become a land-mark. The same or a very similar description has been used in Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353, 364; Calverley v Green (1984) 155 CLR 242, 266; Dullow v Dullow (1985) 3 NSWLR 531, 536; Brown v Brown (1993) 31 NSWLR 582, 588, 595; Nelson v Nelson (1995) 184 CLR 538, 548, 584, 602. Section 199 of the Equality Act 2010 (UK), which at the time of writing has not been brought into force, provides for the complete abolition of the presumption of advancement (it apparently being assumed that the presumption of resulting trust will thereafter apply to all transfers). The reason for the legislation was a misguided belief that the presumption of advancement prevented UK accession to an optional protocol of the European Convention on Human Rights: see Jamie Glister, Section 199 of the Equality Act 2010 (2010) 73 Modern Law Review 807. The legislation will only affect property dealings that take place after commencement.
12 50 SYDNEY LAW REVIEW [VOL 33:39 standard would fit with the sub-rule model because rebuttable presumptions of law can require different amounts of evidence before they will be rebutted. 51 In Shephard v Cartwright, Viscount Simonds commented that the presumption should not give way to slight circumstances, 52 and this was seen as a correct statement of the law by the High Court in Charles Marshall Pty Ltd v Grimsley. 53 In contrast, more recent English authority suggests that in fact weaker evidence may rebut a presumption of advancement: in Pettitt v Pettitt, Lord Upjohn commented that either presumption could be rebutted by comparatively slight evidence. 54 This passage was cited in the Court of Appeal case of McGrath v Wallis, 55 and Laskar v Laskar seems to confirm that a presumption of advancement between parent and child may be rebutted with slight evidence. 56 Needless to say, if the absence argument is correct then equity ought not to find a legal title to be encumbered on the basis of slight evidence. That said, the three English cases all involved shared homes, and it could be that the slight evidence requirement is actually a reflection of the general English judicial dislike for both presumptions in shared home cases. 57 This is an area where English and Australian jurisprudence are at very different points. In 2006, Palmer J in the Supreme Court of New South Wales provided a comprehensive summary of the principles applicable to such cases that was entirely concerned with the interrelationship of the presumptions of resulting and trust and advancement. 58 Such an analysis is in stark contrast to the view expressed by Lord Walker in the 2007 case of Stack v Dowden: in a case about beneficial ownership of a matrimonial or quasi-matrimonial home (whether registered in the name of one or two legal owners) the resulting trust should not in my opinion operate as a legal presumption. 59 Moreover, recent authority suggests that the normal civil standard should apply in respect of rebutting the presumptions. This was the position taken by the New South Wales Court of Appeal in Damberg v Damberg, 60 the English Court of By this I mean that different presumptions can require different levels; ie, that not all presumptions are rebutted according to the preponderance of the evidence. But it is clear that even the same presumptions have been said to require different levels of evidence: see Heydon, Cross on Evidence, above n 26, [7290]. In Fowkes v Pascoe it was said that the presumption of resulting trust must, beyond all question, be of very different weight in different cases : (1874 5) LR 10 Ch App 343, 352. Fowkes v Pascoe was cited on this point by Mason and Brennan JJ in Calverley v Green (1984) 155 CLR 242, 255. [1955] AC 431, 445. (1956) 95 CLR 353, 364. [1970] AC 777, 814 (Lord Upjohn). [1995] 2 FLR 114, 122. [2008] 1 WLR 2695 [20]. See also Kyriakides v Pippas [2004] EWHC 646 (Ch) [76]. For a recent example see Stack v Dowden [2007] 2 AC 432; [2007] UKHL 17 [3] (Lord Hope), [31] (Lord Walker), [59] [60] (Baroness Hale, with whom Lord Hoffmann agreed). Contrast Lord Neuberger at [110]. Buffrey v Buffrey [2006] NSWSC 1349 [14]. The case provides a good example of how these principles of trusts law can still be relevant where property is held in joint names by a married couple: a freezing order had been made over the wife s assets. Palmer J s summary was applied in Bilson v Rogers [2008] NSWSC 469. [2007] 2 AC 432; [2007] UKHL 17 [31]. Lord Walker thought that the doctrine of resulting trusts could only remain useful in a commercial or arms-length venture. [2001] NSWCA 87 [42] [44], quoting Austin Wakeman Scott and William Franklin Fratcher, The Law of Trusts (Little, Brown, 4 th ed, 1989) [443], and R P Meagher and W M C Gummow, Jacobs Law of Trusts in Australia (Butterworths, 6 th ed, 1997) [1216]. Damberg v Damberg was followed
13 2011] PRESUMPTION OF ADVANCEMENT? 51 Appeal in Lohia v Lohia, 61 and the Supreme Court of Canada in Pecore v Pecore. 62 However, in truth all this does is remove an unnecessary and complicating factor. The presumption is obviously susceptible to rebuttal and beyond that it is futile to spend much time considering its weight: apart from the fact that to formulate a presumption is to place a burden of proof, once evidence is called the presumption has no inherent superadded weight. 63 And as Rothstein J said in Pecore v Pecore, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor s actual intention. 64 For this article the real question is: exactly what must the transferor prove? This will be considered in the sections on positive intention and lack of intention below. V Express or Resulting Trusts? The second issue concerns the trust that may be found when a donor successfully rebuts the presumption of advancement. In such cases the recipient is often said to hold on a resulting trust for the donor, 65 yet if a trust relationship had actually been intended it would seem more appropriate for the outcome to be an express trust. This would certainly be the case under the absence model because according to that analysis the trust would only exist if it had been proved by evidence. This means that a trust arising on rebuttal of a presumption of advancement should either be an express trust or, perhaps if the objects of that trust were uncertain, an automatic resulting trust. 66 However, the remaining trust on this point in Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460 [129]. Damberg v Damberg, which mainly concerns private international law, is reported at 52 NSWLR 492 but the sections relating to the presumption of advancement are omitted. [2001] EWCA Civ 1691 [19] [21]. [2007] 1 SCR 795 [42] [44]. Heydon, Cross on Evidence, above n 26, [7280], quoting Lamm J s well-known passage about presumptions being the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts : Mackowik v Kansas City 94 SW 256 (1906) 262. [2007] 1 SCR 795 [44]. Soar v Foster (1858) 4 K & J 152, 160; 70 ER 64, 67; Harrods Ltd v Tester [1937] 2 All ER 236, 239; Drever v Drever [1936] ALR 446, 450 (High Court); Re Kerrigan; Ex parte Jones (1946) 47 SR (NSW) 76, 83, 87, 90; Martin v Martin (1959) 110 CLR 297, 298; Nelson v Nelson (1995) 184 CLR 538, 547; Damberg v Damberg [2001] NSWCA 87 [35]; Antoni v Antoni [2007] UKPC 10 [21]. In Brown v Brown (1993) 31 NSWLR 582 the New South Wales Court of Appeal dismissed an appeal from the judgment of Bryson J, who had found that the recipients held on resulting trust for the donor. However, although the Court of Appeal found that a presumption of advancement had been rebutted, the case had been argued before Bryson J as one where the presumption of advancement did not apply. The classic exposition of the presumed/automatic distinction is found in the judgment of Megarry J in Re Vandervell s Trusts (No 2) [1974] Ch 269, 289ff. Megarry J s distinction has been accepted by Australian judges in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, 460 (Mason J); Jabetin Pty Ltd v Liquor Administration Board (2005) 63 NSWLR 602; [2005] NSWCA 92 [68] (the Court); Knudsen v Kara Kar [2000] NSWSC 715 [49] (Austin J). The same distinction was also accepted, although Megarry J was not cited, by Deane and Gummow JJ in Nelson v Nelson (1995) 184 CLR 538, 546. See also Heydon and Leeming, Jacobs, above n 1, [1201]. The reason why automatic resulting trusts occur is the subject of much debate and is outside the scope of this article. Together with Megarry J s original discussion in Re Vandervell s Trusts (No 2), see: Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC
14 52 SYDNEY LAW REVIEW [VOL 33:39 should not be a presumed resulting trust because, so the absence argument goes, equity does not presume the intention. 67 The intention, if it exists, must be proved by evidence. 68 The name of the trust would therefore seem to support the sub-rule model, since that analysis permits a presumption of resulting trust to remain once the advancement presumption is rebutted. However, it would be a mistake automatically to connect the resulting trust that can arise on rebuttal to the presumption of resulting trust that might spring back up. That is, it would be wrong to think that the trusts depended on the donor s presumed intention. Imagine a case where a presumption of advancement was rebutted by evidence of a declared trust for a third party: father A transfers property to son B to hold on trust for third-party C. 69 There is obviously no room for any presumed resulting trust here, 70 so why should it be any different if father A transfers property to son B to hold on trust for father A? It is true that such a trust would be resulting in pattern, 71 but A would be entitled because he had shown by evidence that he was the intended beneficiary, not because of any presumption of intention or other operation of law. 72 Put simply: if it is shown that a trust for A was intended then that does not depend on any presumption of intention, even if the trust is (perhaps mistakenly) then called a resulting trust. So the real question is how such trusts are proved, not what they are called. And there is authority to support the absence model position that such trusts must be positively intended by the donor, even though the language may be of rebuttal and resulting trusts rather than of declarations and express trusts. In Damberg v Damberg, Heydon JA said that a definite intention to retain beneficial title was required to rebut a presumption of advancement. 73 His Honour framed this as the , (Lord Browne-Wilkinson); Air Jamaica v Charlton [1999] 1 WLR 1399, (Lord Millett); Swadling, Explaining Resulting Trusts, above n 19, 94; Chambers, Resulting Trusts, above n 19, 50 6; John Mee, Automatic Resulting Trusts: Retention, Restitution, or Reposing Trust? in Charles Mitchell (ed), Constructive and Resulting Trusts (Hart Publishing, 2010) 207. There is also a short discussion in Yard v Yardoo Pty Ltd [2006] VSC 109 [296] [300] (Cummins J). Nelson v Nelson (1995) 184 CLR 538, 547 (Deane and Gummow JJ): there is an absence of any reason for assuming that a trust arose. As Lord Langdale said in Sidmouth v Sidmouth (1840) 2 Beav 447, 454; 48 ER 1254, 1257; quoted in Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353, 366. In this context the most recent American Restatement provides that [i]f the intention of the payor to create the express trust is not properly manifested, however, and the transferee refuses to perform the trust or to make a binding commitment to perform it, there is neither evidence nor a presumption (the presumption being one of gift) to support a resulting trust : Restatement (Third) of Trusts 9 comt. c (2003). On a sub-rule analysis there clearly is evidence inconsistent with a presumed intention to give, so the presumption of resulting trust should spring back up. So the comment might support the absence model. However, it should be treated with caution because on one reading it is far too wide: it could be read as saying that the presumption of advancement operates to oust automatic resulting trusts that would normally arise on the failure of an express trust. Of course, there would be room for an automatic resulting trust if C was poorly-defined, or already dead, or if the trust was void for perpetuity reasons. See Peter Birks, An Introduction to the Law of Restitution (Clarendon Press, 1992) 62. Penner calls such a trust prosulting : J E Penner, The Law of Trusts (Oxford University Press, 6 th ed, 2008) [4.50]. [2001] NSWCA 87 [44], citing Drever v Drever [1936] ALR 446, 450 (Dixon J, dissenting but not on this point). Both Drever v Drever and Damberg v Damberg were recently applied by Ward J in Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460 [129] [132]. It should be noted that the original quote from Drever v Drever refers to the donor establishing that
15 2011] PRESUMPTION OF ADVANCEMENT? 53 standard of proof required to rebut a presumption, but such a definite intention would be certain enough to create an express trust. 74 Similarly, in Wilkins v Wilkins Kaye J applied an absence model and spoke of the need to prove that the donor intended the recipient to hold on trust. This is the language of express trusts and evidential proof, which would fit with the absence argument, even though Kaye J then referred to the resulting trust. 75 Express trusts would be a better fit for the absence model, but as long as the rebuttal trusts do indeed require evidential proof of an intended trust (a point which is discussed below) then their name is immaterial for the purposes of the subrule/absence question. Of course, many of the relevant cases involve land and in such cases a declaration of trust would be subject to formality requirements. It might be possible for a donor to demonstrate by evidence of contemporaneous conversations that he or she both intended and declared the transfer to be on trust, but, unlike in the case of personal property where there are generally no formal requirements, in the case of land there must be written evidence of a declared trust. Calling the trust a resulting trust has the advantage of subtly bypassing these requirements. The advancement donor, who starts with the burden of proof against them and who therefore ought to bring in evidence that is consistent with the Statute of Frauds, 76 apparently takes advantage of the position of the nonadvancement donor, to whom the Statute of Frauds does not apply. This conclusion might derive support from the judgment of Deane and Gummow JJ in Nelson v Nelson. In that case their Honours commented that the presumption of advancement was not strictly a presumption at all, approved the absence model, yet still went on to say that the trust which is then enforced is a resulting trust, not an express trust. 77 Their Honours noted that such a trust would be outside the modern versions of the Statute of Frauds writing requirements and quoted the following passage from Scott with approval: This reasoning is somewhat artificial; but trusts arising where the evidence shows an intention to create a trust when land is purchased in the name of a a definite intention existed in his mind at the time of the transfer. Of course, if an express trust is to be established then that intention must have found voice in some way. As Megarry J said in Re Vandervell s Trusts (No 2) [1974] Ch 269, 294, unexpressed intention in the breast of the owner of the property does nothing. It must therefore be conceded that if an unmanifested (in the sense of undeclared) intention is sufficient to rebut a presumption of advancement then the absence model must be wrong. However, on a practical level, if evidence is successfully used to show the donor s intention to retain a benefit then that evidence will normally also establish that the donor actually declared the intended trust, albeit it an informal way. Nonetheless it is fair to say that my analysis ascribes a lot of importance to informally-expressed, declared trusts. See discussion and authorities in Jacobs, where it is said that [a] trust will be created, whether or not the creator thereof is precisely aware of so doing, provided that in substance [he] intends that his actions should have the legal effect of creating the relationship which is known in law as a trust : Heydon and Leeming, above n 1, [501]. [2007] VSC 100 [9]: [A]s a result of the application of the presumption of advancement, it is presumed that the equitable title to Killingworth is at home with the legal title. Accordingly, the defendant bears the burden of proving that in 1976 Norma and William Wilkins intended that the plaintiff would hold the legal interest in Killingworth on trust. The same express trust language is used in Kaye J s conclusion at [78], but at [15] [16] his Honour referred to the resulting trust. Of course, if it can be proved that the recipient took on an oral express trust then the doctrine in Rochefoucauld v Boustead [1897] 1 Ch 196 can apply. See below n 97 and associated text. (1995) 184 CLR 538, 547.
16 54 SYDNEY LAW REVIEW [VOL 33:39 relative were considered to be resulting trusts before the enactment of the Statute of Frauds, and that statute expressly excepts resulting trusts from its operation. 78 For Deane and Gummow JJ there was no necessary conflict between an absence model and a resulting trust. The real question is not the name but rather how those trusts are instituted, and whether they require the donor to show an intention to create a trust. A Partial or Conditional Rebuttals It is said that the presumption of resulting trust can be partially rebutted. 79 This means either that the recipient was only intended to take beneficially on the donor s death, or that the recipient was intended to take a life interest but not the remainder. An example of the first type of case is Dullow v Dullow, 80 where a mother purchased property in the name of her two sons (at the time a presumption of advancement did not apply to maternal transfers). It was found that she intended her sons to take the property completely when she died, but that she remained beneficially entitled during her lifetime. This might be seen as a partial rebuttal of the presumption of resulting trust in respect of the remainder interest, but that would imply that the presumption of resulting trust decided the location of the life interest. In fact Hope JA said that Mrs Dullow established an intention to retain an interest during her life: I have reached a conclusion that this is how the plaintiff saw her position at the relevant times, that is, when the two properties were purchased, and that, confused though her understanding of the system of trusts was, the intention which she held can best be translated into legal terms in the way I have indicated. 81 It might be said that the presumption of resulting trust was partially rebutted, but it is certainly not necessary to put it like this. That would imply that the presumption determined the location of the life interest, and yet Hope JA found Scott and Fratcher, The Law of Trusts, above n 60, [443], quoted in Nelson v Nelson (1995) 184 CLR 538, 548. The same passage can be found in Scott, Resulting Trusts Arising upon the Purchase of Land, above n 34, 684. In fact this view is somewhat contradicted by a comment in Elliot v Elliot (1677), reported in Yale, Lord Nottingham s Chancery Cases, above n 32, case 751. There, Lord Nottingham seemed to think that trusts found when land was transferred to a child would require written evidence under the new Statute of Frauds. This is not as inexplicable as it appears: Grey v Grey, where Nottingham said [n]ay, it may be a trust, if it be so declared by parol, and both parties uniformly concur in that declaration (above n 32) was decided on 26 March 1677 before the statute was passed in April and came into force in June. Elliot v Elliot, on the other hand, was decided in November All of this would only strengthen the argument in favour of the absence model, and the law might have taken a very different course if the relevant passage from Elliot had been available before Mr Yale published his collection of reports, taken from Lord Nottingham s MS, in Instead it has always been thought that a rebutting advancement donor does not need to adduce written evidence of any trust of land. (Elliot v Elliot is reported at (1677) 2 Chan Cas 231; 22 ER 922, but this concerns the preliminary hearing from July 1677, not the final decision from November, and the relevant comment is omitted. On the passage of the Statute of Frauds see George P Costigan, The Date and Authorship of the Statute of Frauds ( ) 26 Harvard Law Review 329.) For example The Laws of Australia, above n 35, [ ]; Heydon and Leeming, Jacobs, above n 1, [1216]; Ford, Ford and Lee: Principles of The Law of Trusts, above n 35, [2115]. (1985) 3 NSWLR 531. Ibid 541.
17 2011] PRESUMPTION OF ADVANCEMENT? 55 that a trust for the mother was actually, if informally, intended. This means that the presumption of resulting trust was redundant. 82 In truth Dullow v Dullow is simply a case where the Court gave effect to an intended life tenancy and remainder interest arrangement. Napier v Public Trustee (WA) is a similar case. 83 There, a man transferred property to his de facto spouse on the understanding that, on the woman s death, the property would revert to the man s estate. Again this has been seen as the partial rebuttal of a presumption of resulting trust, but, since the intention was always that the remainder interest should revert to the man, it is not a case where a presumption decided anything. The woman s estate held the remainder on trust for the man s estate, but this was because that was intended, not because of any presumption. Indeed, even if the parties had always been silent about what should happen to the remainder it still would have returned to the man on automatic resulting trust. In short, there was really no need to say that the presumption had only been partially rebutted and was still somehow at work. It must be admitted that Aickin J, speaking for the Court on this point, did expressly say that the presumption of resulting trust could be rebutted in respect of a life interest for the recipient yet still operate in respect of the remainder. His Honour went on to say that Napier was a case in which unaided by evidence of actual intention there would be a resulting trust in favour of the appellant. 84 But why should it still operate in respect of the remainder? If X transfers property to Y, giving a life interest to Y or someone else, but remaining silent on the remainder interest, then it has long been settled that Y will hold the remainder on automatic resulting trust for X. And if the remainder interest is actually intended to be retained by X then the analysis is even simpler: X transfers property to Y to hold on trust for Y for life remainder to X. Despite his Honour s comments it is respectfully submitted that there is no need for the presumption in either instance. In Russell v Scott a bank account was opened in the joint names of Miss Katie Russell and her nephew Mr Percy Russell. 85 Only Miss Russell contributed funds and the arrangement was made simply to allow Mr Russell to help Miss Russell in the management of her affairs. It was clear that the money was intended to be hers while she was alive, although the High Court did find that Mr Russell became entitled on his aunt s death. Dixon and Evatt JJ referred to Miss Russell acting with the intention of conferring a beneficial interest upon the survivor in the balance left at her death but not otherwise, and of retaining in the meantime the right to use in any manner the moneys deposited. 86 Clearly real intention is in play here. Their Honours said later that Mr Russell was doubtless a trustee during his aunt s lifetime, but that the resulting trust upon which he held did not extend further than the donor intended. 87 Yet it had already been shown by evidence that Miss Russell intended to retain the usage rights in her lifetime. Really this case Of course judges should still consider evidence that supports a presumption, but the point is that in such cases the presumption then becomes unnecessary to decide the result. (1980) 32 ALR 153. (1980) 32 ALR 153, 159, referring to Re Kerrigan; Ex parte Jones (1946) 47 SR (NSW) (1936) 55 CLR 440. Ibid 450. Ibid
18 56 SYDNEY LAW REVIEW [VOL 33:39 concerned a trust for Miss Russell during her lifetime coupled with a remainder interest for Mr Russell on her death. The Court found that such an arrangement had been intended, so once more there is no need for the presumption of resulting trust. The same principles apply to the presumption of advancement. 88 In Re Kerrigan; Ex parte Jones, 89 a father lent several sums of money and placed the mortgage securities in the names of his sons. The mortgage interest payments were collected by the father s solicitor and were generally paid to the father rather than to his children. The Court found that the legal title to the mortgage debts was held by the children on trust for the father during his life, remainder to themselves. Jordan CJ actually found that Mr Kerrigan intended that the legal title which he had vested in his children, should be held by them upon resulting trusts to him. 90 Again this is the language of express trusts but the finding of a resulting one, and again there is no need for any discussion of presumptions. The case that comes closest to shedding light on the matter is Jobson v Beckingham, where the presumption of resulting trust was rebutted conditionally. 91 In that case a man and a woman bought a house in joint names in anticipation of marriage. The man provided the whole of the purchase money but the relationship fell apart and no marriage ever occurred. McLelland J accepted the man s evidence that he had only bought the property in joint names because of the planned marriage: I wasn t giving [her a] gift. It was just because we were going to get married. 92 Since the condition of marriage had failed, McLelland J found that the presumption of resulting trust for the man remained. The case is significant because the man s intention at the time of the purchase was clearly to confer a beneficial interest on the woman, although McLelland J found that this intention was conditional on marriage and so in the event did not operate. It followed, given the now-unrebutted presumption of resulting trust that applied to the purchase, that it was unnecessary to address the question of what the man s intention then was In Ford, Ford and Lee: Principles of The Law of Trusts, above n 35, [2117] the author discusses Forrest v Forrest (1865) 11 Jur NS 317 and McKie v McKie (1898) 23 VLR 489, both of which suggest that in fact a presumption of advancement cannot be partially rebutted: ie, that if the presumption is rebutted in respect of any limited interest then it is rebutted completely. This was indeed the basis of McKie v McKie, a problematic case where the defendant legal owner, whom even the plaintiff agreed was intended to have a remainder interest after the plaintiff s death, ended up with nothing at all. Forrest v Forrest is also difficult: Stuart VC said that a presumption of advancement would be rebutted if the recipient was not intended to benefit immediately, but the comment was not made in the context of life interests and remainders. The case is also odd because the recipient seems to have accidentally rebutted the presumption of advancement himself by arguing that, in the alternative, the donor released the trust at a later date. This is rather harsh because the recipient was the donor s younger brother and so had to establish an in loco parentis relationship before the presumption of advancement would apply in the first place. It could hardly be assumed that the judge would agree, so it was sensible for the recipient to make an argument in the alternative. Ultimately the case was decided on the highly unsatisfactory grounds that a release to a trustee is only effective in respect of property that is then physically delivered to the trustee. In Re Kerrigan; Ex parte Jones (1946) 47 SR (NSW) 76, 82, Jordan CJ expressly disapproved of McKie v McKie. (1946) 47 SR (NSW) 76. Ibid 83. (1983) 9 Fam LR 169 (SC(NSW))). Although the parties were engaged, McLelland J found that the fiancé-fiancée presumption of advancement only applied to property dealings that occurred before a duly solemnised marriage. No marriage actually took place in Jobson v Beckingham. Ibid 172.
19 2011] PRESUMPTION OF ADVANCEMENT? 57 Jobson v Beckingham did not concern a presumption of advancement but it would be instructive to see a case where a conditional advance had been made by a father or husband. Perhaps McLelland J would have decided such a case by finding the presumption of advancement rebutted and leaving the unrebutted default presumption of resulting trust. Of course, such analysis would be incompatible with an absence model. However, although McLelland J did not find it necessary expressly to decide what the man s intention was on the failure of the condition, it might be argued that his Honour must have addressed the point implicitly. This is because it is difficult to see something as truly a condition unless one contemplates what will happen in the event that the condition is not satisfied. McLelland J found that the marriage was not merely the basis or reason for the advance, but further that the advance was conditional upon the marriage. 93 The difference between condition and basis is the difference between only and because, and one can only really mean only if one has considered the and if not alternative. It would follow that Mr Jobson must in truth have had some intention with respect to the property: an intention to keep it if the marriage did not go ahead. Applied to our hypothetical presumption of advancement case, this would mean that the donor did in fact intend something else in the event that the condition was not satisfied. Once again, there would be no reason for a presumption of resulting trust to spring back up. B Section 7 of the Statute of Frauds 1677 In the case of an oral trust of land there are two ways to get around the problem of a lack of writing. The first is to argue that section 7 should not apply because to allow the trustee to rely on it would constitute fraud. 94 This might be called the doctrine in Rochefoucauld v Boustead, 95 although it can also be seen in earlier cases. 96 The second is to say that, even if an express trust cannot be relied on because of section 7, this does not prevent a resulting trust from being established (and resulting trusts are exempt from section 7 by virtue of section 8). Both methods are controversial; 97 moreover, they do not quite yield the same result. If the statute is simply disapplied then the trust enforced will be express, 98 whereas Ibid 170: [the intention] was in contemplation of, and conditional upon, their subsequent marriage. The relevant contemporary equivalents of section 7 are: Conveyancing Act 1919 (NSW) s23c(1)(b); Property Law Act 1974 (Qld) s 11(1)(b); Law of Property Act 1936 (SA) s 29(1)(b); s 60(2)(b) Conveyancing and Law of Property Act 1884 (Tas) s 60(2)(b); Property Law Act 1958 (Vic) s 53(1)(b); Property Law Act 1969 (WA) s 34(1)(b); Law of Property Act 1925 (Eng) s 53(1)(b). [1897] 1 Ch 196. See Cadd v Cadd (1909) 9 CLR 171, 187 (Isaacs J). For example Lincoln v Wright (1859) 4 De G & J 16, 22; 45 ER 6, 9. See R P Meagher, J D Heydon and M J Leeming, Meagher, Gummow and Lehane s Equity Doctrines & Remedies (LexisNexis Butterworths, 4 th ed, 2002) [12 130], where the authors conclude that the doctrine in Rochefoucauld v Boustead involves a blunt refusal to follow legislation which in its terms applies to the facts at hand; this is no less than the exercise by equity of a suspending or dispensing power denied the executive branch of government since the Bill of Rights For argument against a resulting trust being available in this context see William Swadling, A Hard Look at Hodgson v Marks in Peter Birks and Francis Rose (eds), Restitution and Equity Volume One: Resulting Trusts and Equitable Compensation (Mansfield Press, 2000). The trust is said to be express in Allen v Snyder [1977] 2 NSWLR 685, 689. Also see William Swadling, The Nature of the Trust in Rochefoucauld v Boustead in Charles Mitchell (ed), Constructive and Resulting Trusts (Hart Publishing, 2010) 95; but compare Simon Gardner,
20 58 SYDNEY LAW REVIEW [VOL 33:39 the section 8 exception only applies to what can for these purposes be called resulting trusts. 99 This discussion is relevant because of the case of Bloch v Bloch, 100 where a father bought land in the name of his son. The father provided one-third of the purchase price; the son two-thirds. The son sold the land but refused to give any of the proceeds to the father. The father sought a declaration that the son held the proceeds of the sale of the land on trust, but he could show no relevant writing. Nevertheless, the father won because the son was found to hold the proceeds on a resulting trust. The trial judge held that no express trust had been established and stated that the parties did not give any consideration to the effect of the legal arrangements. However, his Honour also found that both father and son had agreed that whatever we put in, that is what we will receive in the proceeds from the flats we will separate it correctly. 101 Indeed, the judge felt able to refer to this as a clear understanding, albeit it expressed in imprecise language. This evidence was seen as insufficient to establish an express trust, but it was enough to rebut a presumption of advancement with the consequence that a resulting trust was found. This means that Bloch v Bloch is problematic for the absence model because it appears that a resulting trust arose without any initial transfer on trust 102 and in circumstances where the trust cannot be explained away as being an express trust by another name. It therefore looks like the presumption of resulting trust sprang back up on rebuttal of the presumption of advancement. That said, Bloch v Bloch certainly has its problems. Although the trial judge and Wilson J in the High Court said that there was no expression of certainty of intention to create an express trust, this does not sit well with the finding that the son was always aware of a clear understanding that he and his father would share in the proceeds of the property. It is true, as Wilson J noted, that this understanding was formed some time before the relevant purchase and before the land had been chosen. But if the understanding was continuing this should not be fatal to a finding that the son took the father s contribution on trust Reliance-Based Constructive Trusts in Charles Mitchell (ed), Constructive and Resulting Trusts (Hart Publishing, 2010) 63, It should be noted here that the labels resulting and express might just describe different ways that a trust can be established. Swadling argues that presumed resulting trusts are proved by presumption whereas express trusts are proved by evidence. This explains his view that Hodgson v Marks trusts are really express trusts. Others, notably Birks, Chambers and Millett, see the two as completely different devices: one arising because the owner validly exercised their power to create a trust, the other because the owner passed legal title without the intention to pass beneficial title. See Swadling, Explaining Resulting Trusts, above n 19; Chambers, above n 19; and Birks, Restitution and Resulting Trusts, above n 19; Birks, An Introduction to the Law of Restitution, above n 71; Sir Peter Millett, Restitution and Constructive Trusts (1998) 114 Law Quarterly Review 399. (1981) 180 CLR 390. Ibid 394. This proportionate agreement was made before the purchase of the relevant property, but the size of those proportions was only determined after the purchase. This had to be the case because at the time of the agreement to purchase the father did not know how much he was going to realise from the sale of another property. This means that the resulting trust cannot be an automatic one, unlike the trust in Hodgson v Marks [1971] Ch 892 (although note Swadling s view that in such a case no automatic resulting trust can arise because it cannot be known that the transfer was only intended to be on trust: Swadling, A Hard Look at Hodgson v Marks, above n 97, 72.
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