W10 | Non Consensual Trusts, Resulting and Constructive Trusts

Resulting Trusts and Illegality

• It is common for people to put property in other's names to avoid taxation or receive benefits, e.g., parents buying property and registering it in a child's name to get a first homeowner grant.
• A person cannot rely on their own illegal actions to claim ownership of property, e.g., if they put property in someone else's name to avoid tax, they cannot use that illegality to argue they have a resulting trust over the property.

Nelson v Nelson

• A mother registered property in her son and daughter's names to obtain a Department of Defense benefit for another property.
• The mother had to claim she had no interest in any other property to get the benefit, which was fraudulent.
• The first property was sold, and the daughter claimed 50% of the proceeds.
• The question is whether the mother could rely on her own illegality to rebut the presumption of advancement.

Constructive Trusts

• Constructive trusts and equitable estoppel can both be used to prove an equitable interest in land.
• In family or relationship cases, it is difficult to prove a contractual agreement for an interest in land.

Giumelli v Giumelli

• Brothers worked on their parents' farm for little or no wages.
• Parents promised to give one brother a lot of land after subdividing it.
• The brother built a house and orchard on the promised lot but left when his parents disapproved of his wife.
• The brother sued his parents, arguing that they held the property on constructive trust for him or that they were estopped from denying his interest in the land.
• The court held that the parents held the lot on constructive trust for the brother, but he was not entitled to the legal title.

The Baumgartener Case

• Recognizes financial and non-financial contributions to the pooling of resources in relationship-based property ownership.
• It can be unconscionable to allow only one person in the relationship to hold the property while the other has no entitlements.

Resulting Trusts Cont.

• Only apply to initial financial contributions to property, such as cash and mortgage liability.
• They don't apply to subsequent mortgage payments or non-financial work like care.
• Constructive trusts cover these situations.
• Resulting trusts protect the interests of people who have provided money and are liable for a mortgage.

Calverley Green

• Two partners in a de facto relationship bought a house.
• One partner contributed the deposit and made all mortgage repayments, while they were both jointly liable for the loan.
• When the partners separated, one partner argued that they owned the property as joint tenants, resulting in a 50/50 share of the sale proceeds.
• The other partner argued that, in equity, their contributions gave them a larger share of the property.
• The court agreed with the latter, finding that the partner who made the larger financial contributions had a greater interest in the property.

Test your understanding of resulting trusts, their relation to illegality, and key cases like Nelson v Nelson. Explore how illegal actions affect property claims and equitable principles such as constructive trusts. This quiz examines practical implications of these legal concepts.