The general rule is that where the legal interest of two or more parties in land does not reflect the contributions of the parties to the purchase of the land, a resulting trust will arise to the extent of the difference. An exception to this rule is the presumption of advancement.
In the matter of Calverley v Greeen (1984) 155 CLR 242, Chief Justice Gibbs identified three important principals in relation to the presumption of advancement:
- Where one party purchases property in the name of the other, it will be presumed that the first party did not intend the other to take a beneficial interest unless there is such a relationship between the parties as gives rise to a presumption of advancement.
- The sort of relationship where the presumption will arise is where the relationship is such that it is more probably than not that a beneficial interest was intended to be conferred.
- The presumption of advancement may be rebutted by evidence of the actual intention of the purchaser at the time of purchase. If two parties have contributed to the purchase and the legal interest does not reflect the proportions of their contributions, the intentions of both parties at the time of purchase are important.
In family law, the relationship between a parent and a child gives rise to a presumption of advancement. The presumption will also apply to transfers from husband to wives and from male fiancés to their female fiancées.
In the matter of Vadisanis & Vadisanis and Anor [2014] FamCAFC 97, it was common ground that the Husband had received $100,000 in cash from his mother. The Husband and his mother argued that this was a loan. The Wife argued that it was a gift, and argued in support of that contention that the Husband’s sister had received an equal sum by way of a gift. It was held that there was insufficient evidence to hold that the presumption of advancement had been rebutted in relation to this advance.
In the matter of Maddock & Anor (No 2) [2011] FMCAfam 1340, the father claimed he loaned the parties the sum of $240,000 so that they could purchase and build a property. No formal agreement was ever drafted and signed and accordingly the Court found that the sum constituted a gift and not a loan. In coming to its conclusion, the Court noted the fact that there was no formality, no terms of repayment and there had never been any demand for repayment of the loan until the parties’ had separated. The Court was of the opinion that if the parties had not separated, the father would have never called on the money to be repaid and as such considered the money a gift and not a loan.
Written by Alexandra Finemore, Associate
