Intra-family wealth transfers: The presumption or the ‘presumption’ of advancement?

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DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author(s).

Notes

1 For example, a creditor of a person who contributed to the purchase price may argue that a resulting trust has arisen in favour of the contributor. See eg two recent Australian cases: Trustees of the Property of Cummins v Cummins [2006] HCA 6; (2006) 227 CLR 278; Bosanac v Commissioner of Taxation [2022] HCA 34; (2022) 275 CLR 37.

2 As in the cases cited in the previous footnote.

3 Situations where the evidence is in equipoise may not be all that rare, given that decision-makers do not operate on the basis of an infinitely graduated scale of certainty but are able to distinguish only a limited number of levels of certainty. See Kevin M Clermont, ‘Procedure’s Magical Number Three: Psychological Bases For Standards Of Decision’ (1986–87) 72 Cornell Law Review 1115, 1156.

4 See eg Gany Holdings (PTC) SA v Khan [2018] UKPC 21 [17] (Lord Briggs): the presumptions ‘a last resort’ (and note also the discussion in Paul Matthews, Charles Mitchell, Jonathan Harris, Sinéad Agnew Underhill and Hayton: Law of Trusts and Trustees (20th edn, 2022) [26.36]-[26.41]).

5 Note eg Pettitt v Pettitt [1969] AC 777, 824 (Lord Diplock); Dullow v Dullow (1985) 3 NSWLR 531, 535 (Hope JA).

6 See note 26 below.

7 Note eg the minority view of Gibbs CJ in Calverley v Green (1984) 155 CLR 242, favouring extending the presumption of advancement to cohabitants, and the comments of Kiefel CJ and Gleeson J in Bosanac v Commissioner of Taxation [2022] HCA 34 [17].

8 Charles M Yablon ‘A Theory of Presumptions’ (2003) 2 Law, Probability and Risk 227, 228.

9 ibid.

10 ibid, 234. On the practical significance of the presumptions, see further John Mee ‘“So How Should I Presume?”: Loan, Resulting Trust, or Discharge of a Prior Obligation’ in Ben McFarlane and Sinéad Agnew (eds) Modern Studies in Property Law Vol 10 (Hart Publishing 2019) 322–23.

11 [2022] HCA 34.

12 ibid, [65] (Gageler J).

13 ibid, [112] (Gordon and Edelman JJ).

14 See eg Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, 708B (Lord Browne-Wilkinson); Bosanac v Commissioner of Taxation [2022] HCA 34 [52], [53], [54], [56], [57], [58], [60], [61], [62], [65], [67] (Gageler J). It is not easy to identify other examples of a counter-presumption in the law of evidence, whether at common law or in equity. The term is not used at all, for example, in the relevant chapter of Roderick Munday Cross and Tapper on Evidence (13^th ed, 2018), Chapter 3 ‘Burdens and Proof’ or in the discussion of presumptions in Richard Glover Murphy on Evidence (15^th ed, 2017) 152–162.

15 Murphy on Evidence, note 14 above, 153.

16 Calverley v Green (1984) 155 CLR 242, 264 (Murphy J).

17 ‘Is There a Presumption of Advancement?’ (2011) 33 Sydney Law Review 39.

18 ‘Legislating in Vain’ in Andrew Burrows, David Johnston and Reinhard Zimmerman (eds) Judge and Jurist: Essays in Memory of Lord Rodger of Earlsferry (Oxford 2013).

19 See John Mee ‘“Automatic” Resulting Trusts: Retention, Restitution, or Reposing Trust?’ in Charles Mitchell (ed) Constructive and Resulting Trusts (Hart Publishing, 2010) 214–19; John Mee ‘Presumed Resulting Trusts, Intention and Declaration’ (2014) 73 CLJ 86, 94–97; Neil Jones ‘Uses and “Automatic” Resulting Trusts of Freehold’ (2013) 72 CLJ 91; John Mee ‘The Past, Present, and Future of Resulting Trusts’ (2017) 70 CLP 189, 194–200.

20 See AWB Simpson A History of the Common Law of Contract (2^nd ed, OUP 1987) 327–74; John Mee ‘Presumed Resulting Trusts’ note 19 above, 95–96; David Fox ‘Purchaser for Value Without Notice’ in Paul S Davies, Simon Douglas, James Goudkamp (eds) Defences in Equity (Hart Publishing 2018) 57ff.

21 For textbook treatments of presumed resulting trusts, see Lynton Tucker, Nicholas Le Poidevin, James Brightwell Lewin on Trusts (20th edn, 2020) Vol 1, ch 10; JD Heydon and MJ Leeming Jacobs’ Law of Trusts in Australia (8^th edn, 2016) [12.10]–[12-21].

22 See Wirth v Wirth (1956) 98 CLR 228, 235–237 (Dixon CJ); 240–241 (McTiernan J); 244–245 (Taylor J); Mee ‘So How Should I Presume?’ note 10 above, 326–30.

23 (1985) 3 NSWLR 531.

24 ibid, 534 (Hope JA; Kirby P and McHugh JA concurring). See also Re Kerrigan (1946) 47 SR (NSW) 76, 81 (Jordan CJ).

25 See John Mee ‘Presumed Resulting Trusts’ note 19 above, 102–104 (discussing, inter alia, Nelson v Nelson (1995) 184 CLR 538); John Mee ‘Past, Present, and Future’ note 19 above, 203–6.

26 The situation where S is the mother (rather than the father) of D now seems clearly covered by the presumption of advancement in Australia (see Jacobs note 21 above, [12.12]). It is also probably covered in England and Wales: see Underhill and Hayton note 4 above, [26.19]–[26.23]; Lewin note 21 above [10.19].

27 For a statement of this basic point, see eg Dunbar v Dunbar [1909] 2 Ch 639, 645.

28 [1971] AC 886.

29 2011 SCC 10; [2011] 1 SCR 269.

30 ibid, [25] (Cromwell J; McLachlin CJ and Binnie, LeBel, Abella, Charron and Rothstein JJ concurring).

31 ibid.

32 See eg Jones v Kernott [2011] UKSC 53; [2012] AC 776 [8], [17], [24] (Lord Walker and Baroness Hale); [78] (Lord Wilson).

33 (1984) 155 CLR 242.

34 See Jacobs on Trusts note 21 above, [12.15].

35 See [2022] HCA 34 [104]. They attempted to reconcile their position with the previous case law by emphasising the idea of ‘objective intention’: see eg ibid [95]. Gageler J appeared to support this position, albeit much more briefly: [2022] HCA 34 [44]. Kiefel CJ and Gleeson J were more ambivalent on the point: see ibid, [32]-[33].

36 [2012] WASC 19, [106]-[116].

37 ‘Explaining Resulting Trusts’ (2008) 124 LQR 72.

38 Mee ‘Presumed Resulting Trusts’ note 19 above, 90–94. For an example of an Australian authority inconsistent with the position in question, note Damberg v Damberg [2001] NSWCA 87, [76] (Heydon JA; Spigelman CJ and Sheller JA concurring): “the children submitted that there was no evidence that the husband had ever told anyone – either child, the wife or Mr Stiegler [his accountant] – that he intended to retain the beneficial interest. The husband did not dispute that submission”. Nonetheless, on the basis of the husband’s explanation of his intention at the time of the relevant transactions, the presumption of advancement was held to be rebutted and a resulting trust arose (despite the fact that this trust had never been declared).

39 See the argument in the paragraph of text accompanying notes 111–112 below.

40 (1959) 110 CLR 297.

41 Dixon CJ; McTiernan, Fullagar and Windeyer JJ.

42 (1959) 110 CLR 297, 303.

43 ibid, 303-304.

44 Walter Ashburner and Denis Browne Ashburner’s Principles of Equity (Butterworth & Co, 2nd edn, 1933), 110n. The same comment appeared, also in a footnote, in the first edition: Walter Ashburner Principles of Equity (Butterworth & Co, 1902) 148–49.

45 Note, however, Hepworth v Hepworth (1963) 110 CLR 309, 317 (Windeyer J).

46 (1984) 155 CLR 242.

47 ibid, 247.

48 ibid, 256.

49 ibid, 267.

50 (1959) 110 CLR 297, 303.

51 (1984) 155 CLR 242, 265.

52 (1995) 184 CLR 538.

53 ibid, 547.

54 (1995) 184 CLR 538, 583–84, quoting Murphy J in Calverley (1984) 155 CLR 242, 265 and Gibbs CJ ibid, 247. Note also Trustees of the Property of Cummins v Cummins [2006] HCA 6 [55] (Gleeson CJ; Gummow, Hayne, Heydon and Crennan JJ).

55 [2022] HCA 34.

56 ibid, [15] (footnotes omitted). See also ibid, [8] and [14], where these judges described the presumption in terms consistent with its operation as a true presumption.

57 ibid, [65].

58 On two occasions, they added the word ‘so-called’: ibid, [80] and [112]. Note also the views expressed by Edelman J in Anderson v McPherson (No 2) [2012] WASC 19 [133]-[138].

59 [2022] HCA 34 [115] (footnote omitted).

60 Note also the remarks by Ward CJ in Equity in a number of New South Wales cases decided prior to Bosanac: Cong v Shen (No 3) [2021] NSWSC 947 [1713]: ‘an interesting debate … but not necessary here to explore’; Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 [230]–[231]; Abdi v Abdi [2022] NSWSC 423 [173].

61 ‘Is There a Presumption of Advancement?’ (2011) 33 Sydney Law Review 39, cited eg in Anderson v McPherson (No 2) [2012] WASC 19 [135] (Edelman J); Bosanac v Commissioner of Taxation [2022] HCA 34 [65] (Gageler J).

62 (1677) 2 Swan 594.

63 ‘Is There a Presumption of Advancement?’ (2011) 33 Sydney Law Review 39, 45.

64 (1677) 2 Swan 594, 597.

65 (2011) 33 Sydney Law Review 39, 45.

66 ibid, 43.

67 ibid, 40.

68 ibid.

69 ibid.

70 ibid, 66.

71 ibid, 39.

72 (1788) 2 Cox Eq Cases 92.

73 ibid, 93.

74 ibid, 93–94 (italics in original).

75 Professor Glister regarded the practical difference between the absence and sub-rule models as lying elsewhere. He argued ((2011) 33 Sydney Law Review 39, 64) that ‘[t]he distinction between the absence model and the sub-rule model is important where the donor’s intention is impossible to effectuate and where the donor simply has no intention in respect of the property’. However, the practical significance of these scenarios is, at best, marginal (though the ‘no intention’ scenario features prominently in the theoretical argument made by Professor Robert Chambers in Resulting Trusts (Oxford 1997) that resulting trusts are restitutionary in nature). See further John Mee ‘Presumed Resulting Trusts’ note 19 above, 98 and John Mee ‘Past, Present, and Future’ note 19 above, 208.

76 See Dyer v Dyer (1788) 2 Cox Eq Cases 92, 94 (Eyre CB), explaining the relevant approach as involving treating ‘the children … as purchasers for a valuable consideration’.

77 (1677) 2 Swan 594.

78 ibid, 597.

79 Note that Lord Nottingham mitigated the severity of his approach by taking the view (which is not part of the modern law) that there would be no presumption of advancement in favour of a child who had already been ‘fully advanced’: Elliot v Elliot (1677), DEC Yale (ed), Lord Nottingham’s Chancery Cases, vol.2, 566, 568.

80 Although one might not have expected there to be modern authority dealing with the point, Xiao Hui Ying v Perpetual Trustees Victoria Ltd [2015] VSCA 124 [30], [39]–[40] (Beach and McLeish JJA, and Dixon AJA) explicitly holds that the modern law does not proceed on the basis that the existence of the relationship of advancement means that D has supplied consideration so as to render irrelevant the normal resulting trust inquiry into the intention of S.

81 Jamie Glister ‘Lifetime Wealth Transfers and the Equitable Presumptions of Resulting Trust and Gift’ (2018) 103 Iowa Law Review 1971.

82 ibid, 1982.

83 ibid, 1979-1982.

84 (2011) 33 Sydney Law Review 39, 43.

85 Anderson v McPherson (No 2) [2012] WASC 19 [134] (Edelman).

86 Note also the situation where S was, at the time of the transaction, engaged to D (S being male and D being female).

87 ‘Legislating in Vain’ note 18 above, 657.

88 ibid, 659.

89 ibid, 664.

90 Commissioner of Taxation v Bosanac [2021] FCAFC 158 [11] (Kenny, Davies and Thawley JJ).

91 Oliveri v Oliveri (1993) 38 NSWLR 665, 678 (Powell J). Other references to the presumption of resulting trust being rebutted by the presumption of advancement include Re Kerrigan (1946) 47 SR (NSW) 76, 82 (Jordan CJ); Dullow v Dullow (1985) 3 NSWLR 531, 534F-G (Hope JA); Brown v Brown (1993) 31 NSWLR 582, 589. See also Rider v Kidder (1805) 10 Ves 360, 367; Dunbar v Dunbar [1909] 2 Ch 639, 645.

92 (1865) 2 Dr & Sm 431.

93 ibid, 435.

94 The same approach was taken in the more recent English case of Sansom v Gardner [2009] EWHC 3369 (QB) [5], [99] (Michael Harvey QC). There are multiple New Zealand cases to the same effect. See eg In re Lloyd [1960] NZLR 947, 951 (Shortland J): “The burden of proving that the mother was in loco parentis … falls upon those who seek to raise the presumption”. Note also Pickens v Metcalf [1932] NZLR 1278, 1280, 1283-84; Honeyfield v Honeyfield [1933] NZLR 183, 183; Irvin v Brookes [1937] NZLR 73, 73; Knight v Biss [1954] NZLR 55, 57; Nelson v Meier [2016] NZHC 787 [59]; Erni v Brooky [2020] NZHC 3116, [87].

95 (1933) 48 CLR 683.

96 ibid, 689.

97 ibid, 691.

98 [2017] NSWSC 1495. See also Jagoda v Jagoda [2017] FamCA 1037 [389] (Le Poer Trench J).

99 [2017] NSWSC 1495 [232].

100 Jain v Amit Laundry Pty Ltd [2019] NSWCA 20.

101 ibid, [10] (Beazley P).

102 [2012] WASC 19.

103 ibid, [133]-[138].

104 ibid, [144].

105 ibid, [146].

106 ibid, [153].

107 Professor Swadling does not argue that the presumption of resulting trust should continue to be part of the law: ‘Explaining Resulting Trusts’ note 37 above, 84.

108 See the two paragraphs of text accompanying notes 113–21 below.

109 This argument seems consistent with the approach of Edelman J in Anderson [2012] WASC 19 and of Gordon and Edelman JJ in Bosanac. Note also the reference by Kiefel CJ and Gleeson J in Bosanac to the possible view that the presumption of advancement serves to ‘prevent’ the presumption of resulting trust from arising: [2022] HCA 34 [15].

110 As demonstrated in the previous Part of this article.

111 Compare Commissioner of Taxation v Bosanac (No 7) [2021] FCA 249 [85] (McKerracher J): S is ‘taken not to have declared a trust in his favour over the property’. There does not appear to be any reason why the fact proven by means of a presumption cannot involve a fact which is expressed in negative terms. After all, on the understanding of the presumption of resulting trust under discussion, in cases where there is no relationship of advancement between the parties, D will be obliged to prove by evidence the same negative proposition, i.e. that S did not declare a trust in his or her own favour. It is difficult to see any reason why this work, in terms of proof, cannot be done by means of a presumption. On the philosophical questions associated with negative facts, see Stephen Barker and Mark Jago ‘Being Positive About Negative Facts’ (2012) 85 Philosophy and Phenomenological Research 117.

112 The relevant presumption would no longer quite fit the label of presumption of ‘advancement’ because it would encompass the situation where S intended to create a trust for himself or herself but had failed to declare that trust. This simply highlights the unorthodoxy of the view of the presumption of resulting trust under discussion.

113 Note the discussion in Glister ‘Lifetime Wealth Transfers and the Equitable Presumptions’ note 81 above, 1980–1982.

114 Note that in Anderson [2012] WASC 19, [135] Edelman J commented that statements of the orthodox view ‘presuppose a confused evidentiary process where the presumption of advancement would need to be rebutted by the transferor, which would then reinstate a presumption of a declaration of trust in favour of the transferor, which the recipient would then need to rebut’ (my emphasis). However, on the orthodox approach, all the evidence relevant to intention is considered and that evidence either confirms the presumption of advancement (no trust) or else it rebuts the presumption of advancement, therefore confirming the presumption of resulting trust (leading to a trust). There is no further step, after the rebuttal of the presumption of advancement, whereby D might rebut a reinstated presumption of resulting trust.

115 (1995) 184 CLR 538.

116 ibid, 548.

117 (1963) 110 CLR 297, 304. See also Devoy v Devoy (1857) 3 Sm & Giff 403; Dumper v. Dumper (1862) 3 Giff 583.

118 Law of Property Act, s 53(1)(b).

119 For example, the relevant provision in Bosanac was s 34 of the Property Law Act 1969 (WA).

120 Such as the one that was relevant in Bosanac, s.34(2) of the Property Law Act 1969 (WA).

121 ‘Property: General Principles’ in Andrew Burrows (ed) English Private Law (3rd edn, 2013) 229.

122 [2022] HCA 34 [56] (Gageler J), referring to Dullow v Dullow (1985) 3 NSWLR 531, 535 (Hope JA).

123 Nelson v Nelson (1995) 184 CLR 538, 548 (Deane and Gummow JJ), referring to Calverley v Green (1984) 155 CLR 242, 266 (Deane J), in turn quoting Dyer v Dyer (1788) 2 Cox 92, 99 (Eyre CB).

124 Nelson v Nelson (1995) 184 CLR 538, 602 (McHugh J), referred to with approval by Kiefel CJ and Gleeson J in Bosanac [2022] HCA 34 [30]-[31].