FEDERAL CIRCUIT COURT OF AUSTRALIA
| WESTON v McAULEY | [2017] FCCA 1 |
| Catchwords: EQUITY – Claimed presumption of a trust in favour of the bankrupt – rebuttal of the presumption by evidence or the presumption of advancement. |
| Legislation: Bankruptcy Act 1966 (Cth) Family Law Act 1975 (Cth), s.79 |
| Cases cited: Baumgartner v Baumgarnter (1987) 164 CLR 137 Sharkey v Nissi [2015] NSWSC 1266 Thwaites v Ryan [1984] VR 65 |
| Applicant: | PAUL WESTON |
| Respondent: | DIANNE MCAULEY |
| File Number: | SYG 2182 of 2015 |
| Judgment of: | Judge Driver |
| Hearing date: | 28 November 2016 |
| Delivered at: | Sydney |
| Delivered on: | 23 February 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr R Marshall SC, with Ms I Hoskinson |
| Solicitors for the Applicant: | Mills Oakley |
| Counsel for the Respondent: | Mr D Cook SC, with Mr S Lipp |
| Solicitors for the Respondent: | DPR Legal |
ORDERS
The application as amended on 19 April 2016 is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2182 of 2015
| PAUL WESTON |
Applicant
And
| DIANNE McAULEY |
Respondent
REASONS FOR JUDGMENT
Introduction and background
The applicant is Paul Weston (trustee), who is the trustee of the bankrupt estate of John McDonald McAuley (bankrupt), the husband of the respondent, Dianne McAuley. By his amended application and amended statement of claim filed on 19 April 2016, the trustee sought relief in relation to two separate sums. The first sum, $385,578 is the amount equal to half the proceeds of the sale of a property at 11 Westminster Drive, Castle Hill, New South Wales (property), which was the former matrimonial home of the bankrupt and Mrs McAuley. The trustee claims that that sum vests in him as trustee of the bankrupt estate.
The trustee also sought a second sum, $185,625, which represents what the trustee contended was Mrs McAuley’s required contribution to the payment of mortgage instalments on a home loan over the property. The trustee had claimed that Mrs McAuley had paid nothing on the loan but that claim was abandoned at the trial of this matter.
There remains a single issue to resolve which is the proper characterisation of the proprietary interest in the former matrimonial home and accordingly, the entitlement of the parties to the proceeds of the sale of it. The trustee claims that the bankrupt estate has an equitable interest in 50 per cent of those proceeds of sale. The trustee’s position is based on the fact of a…
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- AGLC
- Weston v McAuley [2017] FCCA 1
- Case
- [2017] FCCA 1
- Decision Date
CaseChat Overview and Summary
This case concerned a claim by a trustee in bankruptcy for a 50% share of the proceeds from the sale of a former matrimonial home. The dispute arose between the trustee, representing the bankrupt husband, and the bankrupt's wife, who claimed a greater entitlement to the proceeds. The matter was heard by Judge Driver.
The court was required to determine the proper characterisation of the bankrupt's proprietary interest in the former matrimonial home and, consequently, the respective entitlements of the trustee and the wife to the sale proceeds. This involved considering whether a presumption of a resulting trust in favour of the bankrupt arose, and if so, whether that presumption could be rebutted by evidence or the presumption of advancement.
Judge Driver reasoned that the High Court's decision in *Calverley v Green* remained relevant, particularly concerning the presumption of advancement. The judge noted that where two or more persons contribute unequal shares to the purchase of property held in joint names, a presumption arises that the property is held on trust for them as tenants in common in proportion to their contributions, unless a relationship giving rise to a presumption of advancement exists. The presumption of advancement typically applies to purchases by a husband in his wife's name, or a father in a child's name. The judge found that this presumption could be displaced by evidence demonstrating a common intention for the parties to share an equal interest, or that the disproportionate contributor intended an equal interest despite their contribution. The court also considered that the relevant intention is an objective, manifest intention inferred from the parties' words and conduct, rather than an uncommunicated subjective intention. The judge distinguished the present case from *Cummins* on two bases: the presumption of advancement and the actual intention of the parties.
The court was required to determine the proper characterisation of the bankrupt's proprietary interest in the former matrimonial home and, consequently, the respective entitlements of the trustee and the wife to the sale proceeds. This involved considering whether a presumption of a resulting trust in favour of the bankrupt arose, and if so, whether that presumption could be rebutted by evidence or the presumption of advancement.
Judge Driver reasoned that the High Court's decision in *Calverley v Green* remained relevant, particularly concerning the presumption of advancement. The judge noted that where two or more persons contribute unequal shares to the purchase of property held in joint names, a presumption arises that the property is held on trust for them as tenants in common in proportion to their contributions, unless a relationship giving rise to a presumption of advancement exists. The presumption of advancement typically applies to purchases by a husband in his wife's name, or a father in a child's name. The judge found that this presumption could be displaced by evidence demonstrating a common intention for the parties to share an equal interest, or that the disproportionate contributor intended an equal interest despite their contribution. The court also considered that the relevant intention is an objective, manifest intention inferred from the parties' words and conduct, rather than an uncommunicated subjective intention. The judge distinguished the present case from *Cummins* on two bases: the presumption of advancement and the actual intention of the parties.
Orders
Orders of the court
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Background
Background to the litigation
The NSW Court of Appeal explained the position in Neilson v Letch (No 2)[18] at [25]-[28]:[18] [2006] NSWCA 254Where two or more persons have contributed the purchase money in unequal shares and the property is purchased in joint names, there is, in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money (Trustees of the Property of Cummins (a bankrupt) v Cummins [2006] HCA 6 at 224 ALR 280, 80 ALJR 589 at [55]). Calverley held that the presumption of advancement does not apply to a de facto relationship.The resulting trust that is presumed in the circumstances referred to in the previous paragraph is itself capable of being displaced by evidence showing that the parties had a common intention to share an equal interest in the property and/or that the party making the disproportionate contribution intended that the parties would have an equal interest in the property notwithstanding. As an American judge (Lamm J) stated in Mackowik v Kansas City St J & C B R Co 94 SW 256, 262 (1906) :Presumptions … may be looked on as the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts. Lord Upjohn said in Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 at 313:In reality the so-called presumption of a resulting trust is no more than a long stop to provide the answer when the relevant facts and circumstances fail to yield a solution. Evidence of the intention of the relevant party or parties may be drawn from contemporaneous statements of intention, subsequent admissions or inferred from the “facts as to subsequent dealings and of surrounding circumstances of the transaction” (Cummins at [65]). In Calverley, Mason and Brennan JJ (at 261) cited with approval Lord Diplock’s statement in Gissing v Gissing [1971] AC 886 at 906:As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party. On the other hand, he is not bound by any inference which the other party draws as to his intention unless that inference is one which can reasonably be drawn from his words or conduct. (counsel’s emphasis retained) Recently, Robb J in Sharkey v Nissi[19] explained: [19] [2015] NSWSC 1266 at [373]–[376]I have already set out above an extract from the judgment of Mason P in Nielsen v Letch (No 2) at [28], where his Honour referred to the citation by Mason and Brennan JJ (as their Honours then were) in Calverley v Green (at 261), with approval, of Lord Diplock’s statement in Gissing v Gissing [1971] AC 886 at 906 that “ … the relevant intention of each party is the intention which was reasonably understood by the other to be manifested by that other party’s words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party“.In Anderson v McPherson (No 2) [2012] WASC 19 ; (2012) 8 ASTLR 321 Edelman J said:[155] The presumption of resulting trust can be rebutted by evidence which shows that the intention of Bruce and Carol at the time of the purchase of the Anstey Road property was that Troy and Stephannie would be entitled to the use and enjoyment of their legal title for their own benefit: Calverley v Green (251) (Gibbs CJ), (269) (Deane J).[156] The references to “intention” in the paragraph above, and generally in this judgment, are references to objective, or manifest, intention. As I have explained at [98], the intention is not a subjective, uncommunicated intention but it “is to be inferred from what the parties do or say: Calverley v Green (261) (Mason & Brennan JJ), (270) (Deane J).Further, in Ryan v Ryan [2012] NSWSC 636 Ward J (as her Honour then was) said:[75] As to the possibility in the present case that the presumption of resulting trust might be rebutted by evidence as to the objective intentions of the parties at the time of the acquisition of the property, in Calverley v Green, Deane J noted that “[r]egardless of whether the circumstances are such as to bring the case into one of the categories of advancement, evidence of the relationship — both legal and factual — between the parties will always be admissible” and went on to say:More importantly, the subsequent judgment of Dixon CJ, McTiernan, Fullagar and Windeyer JJ in Martin (at 303–5) accepted, as correct, statements of Stuart VC and Cussen J to the effect that, in a case where the subjective intention of a person is relevant, the evidence of that person of his intention at the time of the purchase is admissible notwithstanding that “it must in every case be liable to observations which tend to diminish its weight” (see also Devoy v Devoy(1857) 3 Sm & G 403 at 406 ; 65 ER 713 at 714; Fowkes v Pascoe (1875) 10 Ch App 343 at 349).[76] In Anderson, Edelman J noted at [98] that the intention to be discerned in a resulting trust is an objective, manifest intention (not an unexpressed subjective intention) referring to Calverley v Green; Byrnes v Kendle [2011] HCA 26 ; (2011) 243 CLR 253; and Re Vandervell’s Trusts (No 2)[1974] Ch 269 at 294.These authorities establish that the relevant intention of the purchaser in Mr Sharkey’s position is “an objective, manifest intention (not an unexpressed subjective intention)”. (counsel’s emphasis retained)
Evidence
Evidence Before The Court
In my opinion, however, Cummins can be distinguished on two bases, first in respect of the presumption of advancement and secondly on the basis of the actual intention of the parties in this case. First, in relation to the presumption of advancement I accept the submission of Mrs McAuley that the High Court’s judgment in Calverley v Green remains relevant. I refer in particular to the principle set out at page 246-247:Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, ie, a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly and the property is put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such — not, for example, as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money: Robinson v Preston (1858) 4 K & J 505 at 510 ; 70 ER 211 at 213 ; Ingram v Ingram [1941] VLR 95 and Crisp v Mullings [1976] EGD 730 (a decision of the English Court of Appeal).As I have indicated, the general rule that in the situations mentioned it is presumed that a resulting trust arises in favour of the purchaser, or in favour of two purchasers in the proportions in which they contributed the purchase money, 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 (1959) 110 CLR 297 at 303 ; in other words, it is “no more than a circumstance of evidence which may rebut the presumption of resulting trust”: Pettitt v Pettitt [1970] AC 777 at 814 ; [1969] 2 All ER 385 . The presumption arises when a husband makes a purchase in the name of his wife, or a father in the name of his child or other person to whom he stands in loco parentis. (counsel’s emphasis retained)
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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