Session 9_DN

Emily transferred shares worth $50,000 to her friend David to hold in his bank account. There is no record or mention of any intention to gift or entrust the funds to David permanently. Several years later, David has not used any of the money and seeks clarification on the ownership of the funds. What kind of resulting trust would occur in this situation?

• Automatic resulting trust

• Presumed resulting trust

Emma, the settlor, transfers a sum of money to a trustee, with the instruction to hold the funds in trust for her friend, John. The terms of the trust specify that John is to receive the trust property upon reaching the age of 25. However, John tragically passes away before attaining the age of 25. The trust instrument does not contain any alternative provisions or instructions regarding the disposition of the trust property in the event of John’s premature death. What legal principles and doctrines would govern the distribution of the trust property under these circumstances?

• Automatic resulting trust

• Presumed resulting trust

John, a wealthy individual, gives his nephew, Alex, $50,000 in cash during a family gathering, with no written documentation or verbal instructions regarding the purpose of the cash. Alex uses the money to buy a new car and pay off personal debts. Later, a family dispute arises over whether the $50,000 was intended to be held in trust for John’s benefit or as an outright gift to Alex. What will be the prima facie judicial position in this scenario?

• A presumed resulting trust will arise because there was no evidence to suggest an outright gift

• An automatic resulting trust will arise because there was no evidence to suggest an outright gift

• The cash will be interpreted as an outright gift because there were no instructions indicating otherwise

Emily, a wealthy art collector, creates a trust to preserve her art collection for future generations. She transfers ownership of the artworks to her close friend, Liam, instructing him to hold them in trust for her nieces and nephews. However, Emily’s instructions regarding the trust’s operation and the beneficiaries’ description are vague and incomplete, rendering the trust unadministrable. What is the potential legal consequence in this situation?

• Liam becomes the owner of the art pieces outright, with no obligation to the nieces and nephews

• A court will likely impose an automatic resulting trust, with Liam holding the art pieces in trust for Emily's estate 

• A court will likely impose a presumed resulting trust, with Liam holding the art pieces in trust for Emily's estate

• Emily's nieces and nephews will receive the art pieces directly owing to the failure of the express trust

Three years ago, Francis enrolled in a Law program at Murdoch University, prompting him to move from Melbourne to Perth. To support his full-time studies, Harriet transferred the title of her one-bedroom apartment in Kardinya to Francis, registering him as the official owner. Harriet did not disclose any specific purpose for the transfer at that time. Recently, however, Francis decided to withdraw from his degree program to pursue a career in acting. Now disappointed with his change of plans, Harriet seeks the return of the apartment title. Advise both Francis and Harriet on their equitable entitlements to the property. Which of the following statements is correct regarding the equitable entitlements to the apartment?

• A presumed resulting trust will arise because Harriet did not intend to make a gift of the apartment to Francis

• A presumed resulting trust will not arise because the transfer of the apartment was a gift of realty

• Harriet can claim the apartment back because Francis did not fulfill the purpose for which the apartment was transferred

Answer explanation

s 38, Property Law Act 1969 (WA)

Alice and Bob, as friends, decide to buy a property together for a total of $300,000. Alice makes a down payment of $50,000, while Bob takes on a $250,000 mortgage in his name. Over the years, Bob experiences financial difficulties and is only able to pay $150,000 towards the mortgage, forcing Alice to pay off the $100,000 balance from her own funds. Eventually, they sell the property for $450,000. Based on the principle of purchase money resulting trust, what would be Alice and Bob’s respective shares in the proceeds?

• Alice $225,000, Bob $225,000

• Alice 175,000, Bob $275,000

• Alice $75,000, Bob $375,000

Answer explanation

Calverley v Green (1984) 155 CLR 242

David, a successful entrepreneur, decides to purchase a luxury car. To avoid potential tax implications, he registers the car in the name of his adult daughter, Emma. David provides all the funds for the purchase. Years later, David and Emma have a disagreement, and David demands that Emma transfer the car back to him. Emma refuses, claiming that the car was a gift to her. There is no further evidence regarding the intention behind the transfer. Who is prima facie likely to be considered the beneficial owner of the car?

• David - given that he provided all the funds for the purchase, there arises a legal presumption of a resulting trust in his favour

• Emma - under the presumption of advancement, it is assumed that David intended to gift the car to her

Answer explanation

Nelson v Nelson (1995) 132 ALR 133

Alex, a successful entrepreneur, bought a house and had it registered in his daughter, Zoe’s, name. Alex made the purchase to avoid creditors. Years later, when Alex’s financial situation stabilised, he sought to have the property transferred back to his name. Zoe contested, claiming the house was a gift from her father. Alex argued it was never intended as a gift, but rather a procedural strategy to safeguard his assets. Which of the following best describes how the court might resolve this dispute?

• The court will consider the presumption of advancement, but Alex can present evidence to rebut it and argue for a resulting trust in his favour

• The presumption of advancement applies, so Zoe's claim to the house stands unless Alex can prove fraud beyond a reasonable doubt

• The court will assume the house is a gift to Zoe because it was registered in her name, and Alex cannot challenge this due to the presumption of advancement