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7. Resulting & Voidable trusts

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R ESULTING T RUSTS • Arise as a presumption of law, which are based on the presumed intention of the settlor o Cf a constructive trust—arises by operation of law because of unconscionability • Effect: transferee takes legal interest | beneficial interest going to the person who contributed to the purchase price • Not subject to writing requirements: s11(2) PLA Creating resulting trusts • 2 classifications— o Automatic resulting trusts: legal interest transferred but beneficial interest remains with settlor  Examples— • Failure of disposal of beneficial interest • Life estate with no remainder o Effective disposition and the benefit results back: disposition effective, but ‘truly’ the benefit results back  Eg: providing purchase money for a property, in the name of another Presumptions [X $→ Y  Y=T ← X=B] Contributing to purchase price of property: Calverley v Green (C—$18k | G—$9k  resulting trust) X Contributes to purchase price of land bought by Y or X&Y ↓ Resulting trust presumed to the proportionate value of contribution • Will not arise merely because of money being spent on the home (constructive trust may arise for failed joint venture): Baumgartner v Baumgartner; Muschinski v Dodds Money in bank accounts: Re Howes (money put in account in name of niece  resulting trust to settlor) X puts money put bank account of Y or X&Y ↓ Resulting trust presumed to the proportionate value of contributions • Rebutted where— o Joint bank account of husband & wife → presumption of advancement o Contrary intention: Russell v Scott (A → N | for care of N, balance for A on N’s death  presumption of resulting trust → rebutted by contrary intention) • Money lent in consideration for promise—not fulfilled → constructive trust: Re Bulankoff [1986] (M provides purchase money to S for promise to work on land—S disappears  constructive trust—M able to give to step-son) Rebutting the presumptions [X $→ Y  Y=O] Contrary Intention [→ no resulting trust | interest fully vested in Y] • Actual intention of the contributor that person to whom money lended have beneficial ownership: Calverley v Green  eg loan or gift Andrew Trotter LWB241 Trusts o If two or more contributors → common intention required o However, if one contributes the bulk of the money, may only need that party’s intention: Calverley v Green • Determined at the time of purchase: Calverley v Green (1984) (mortgage repayments after the date of purchase not relevant) o Look to words and conduct of the parties at or before purchase • Onus: on person who gets the property if presumption rebutted Presumption of advancement [→ no resulting trust | interest fully vested in Y] In cases of family members, intention to benefit is presumed: Bennet v Bennet (1879) • Husband → wife : Martin v Martin o wife → husband  : Moore v Whyte  although may apply as categories not closed—changing social circumstances: Calverley v Green  Discriminatory: Browne v Browne o unmarried partners : Calverley v Green (1984)  Engaged : Wirth v Wirth (man buying in name of fiancée) • Parent → child  o Parent → adult children   Limited to minors in Canada: Pakora v Pakora; Nasdem Estate v Schneider (not yet adopted in Australia) o Step-parent → step-children : Re Bulankoff [1986]; Malsbury v Malbury o Mothers → children : Nelson v Nelson (1995) (Mother → son & daughter  resulting trust for both) • Probably no presumption for siblings • Categories of advancement are not closed—extend to follow social circumstances: Calverley v Green o New categories may arise if relationship where one naturally provides for another: Wirth v Wirth per Dixon J (man → fiancée ) Rebutting the presumption [→ resulting trust in favour of X] • Actual contrary intention • Onus on person who provided the money (who will get property if presumption rebutted): Buchanan v Buchanan; Miller v Miller Reform • The presumptions are not going to be removed soon by the courts: Nelson v Nelson. o so entrenched that they cannot be discarded by judicial decision: Dullow v Dullow (to occur in legislature) • The court may be willing to modify the weight of presumptions: Calverley v Green (1984) per Deane J • Most likely—not discarded but expanded to conform with modern ideals Andrew Trotter LWB241 Trusts VOID AND V OIDABLE T RUSTS Even if trust has the 3 certainties—can still be void or voidable if— • Statutory illegality; • Public policy illegality. Statutory illegality → void • Certain voluntary settlements (upon application of the trustee in bankruptcy), within 2 years of bankruptcy: s121 Bankruptcy Act • Trade Practices Act • Income Tax Assessment Act • Defence Services homes Act 1918 Public policy illegality → void • Trusts created for fraudulent and illegal purposes under the general law • Trusts which create restrictions on the alienation of property Fraudulent and illegal purposes under the general law • Where trust has been created for an illegal or fraudulent purpose, courts will refuse to assist— o Putting property in other’s names to cheat creditors: Perpetual v Wright; Gascoy v Gascoy (Husband buys property in wife’s name to cheat creditors— H&W separated—W has presumption of advancement—H has evidence of illegal purpose to rebut presumption  evidence of illegal purpose not admissible → husband could not recover property) [→Statutory illegality]  Disposition
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