• Subject Name : Law

Property Law

Introduction to Claverley v. Green Case Study

Over the past 40 years, Australia has witnessed many legislative reforms on diverse legal property issues that arise between separating couples in the country.[1] Various impartial doctrines, for example, the doctrine of resulting trust, which used to decide results between divorcing couples where there was no appropriate legal system, have now proved to be insignificant for deciding such property disputes. However, these impartial doctrines do apply and will continue to apply where a claim is made by any third party against the property belonging to either one of the parties in a relationship.[2] In these cases, it is significant to answer a question as to who owns what in a legal relationship. There are very few norms or doctrines available to the courts to resolve property disputes before them. In this category fall those cases of property disputes of de facto spouses. In these cases where there are not enough norms or doctrines, the Judges look for the parliament as the Judges feel constrained to apply the relevant law even when the merits of the case prove otherwise. The judges then have to request the parliament to intervene for the benefit of the parties.[3] Due to such deficiencies in law, mediation proceedings have been started in New South Wales and Victoria.[4]

Resulting Trust

Resulting trust is when transfer of property has occurred and there is no intention (presumption of no intention) of the transferor to confer a beneficial interest on the transferee. In other words, Resulting Trust is a situation when a property is disposed of and the transferor of the property does not wish to or intend to benefit the transferee. The transferee holds the property in trust for the transferor. Such an act makes a new equitable interest in favour of the transferor, when the property is transferred to the transferee. Resulting trust is said to give effect to the negative intention of the transferor. Resulting Trust is always ‘presumed’. This presumption can be invalidated by giving evidence that no trust was created but rather the transferor was intending to give the property to the transferee.

For example:

  • X transfers the legal title if the property to another person, say Y. X does not intend to confer an equitable interest in the property upon Y. In such a case, Y is said to hold the property on a resulting trust for X, where X retains an equitable interest in the property as well.
  • A person H purchased a property in the name of another person, U. In this case, it is presumed that U holds the property on a resulting trust for P.

When Does the Presumption Arise?

There are three situations for a resulting trust:[5]

  1. Voluntary Transfer of Property: If the transferor transfers the property for no consideration in favour of transferee, the transferee is said to hold that property in resulting trust for transferor. Though this can be refuted in the Act of presenting a gift.
  2. Purchase in the name of another: If the transferor has made any contributions in the purchase of the property, which is in the name of transferee, transferee is said to hold that property in the resulting trust for the transferor, to the extent of transferor’s contribution in the purchase.
  3. Failure of an Express Trust: In case an express trust fails, the property will go back to the original owner of the property, irrespective of the beneficiary, or the transferor’s intention for the transferee.

Resulting Trust and Right to Contribution

Perhaps the significant centrality of Calverley v Green has been to explain what role does resulting trust plays in property cases in Australia. It also clarifies the position of the courts to manage the installments of mortgage payment in establishing the extent of the parties to which they would be liable when the impartial doctrine of resulting trusts in applied.

In the instant case, both the plaintiff as well as the defendant lived in a de facto relationship. In the year 1973, they purchased a property in the suburbs of outer Sydeney. Out of the total amount of $27,250, Mr. Claverley deposited $9,250 and the rest of the amount was borrowed as a mortgage loan. To repay the same, Mr. Calverley took help from Ms. Green. She also provided her signatures for obtaining the loan and eventually they together took a loan in their joint names by execution of which they were jointly and severally liable for all the mortgage payment. But unfortunately in the year 1978, Ms. Green left the house and subsequently claimed her portion of the property. Finally, the case went to the High Court where it was concluded that both the parties have their share in the property according to the proportions of their share in the price of the property.

Two types of obligations became relevant for drawing conclusion in this regard. The first obligation was the payment of mortgage amount made by Ms. Green. In this regard, J. Bricklayer and J. Brennan observed and explained the use of the doctrine of contribution. By any chance if installments for mortgage were made by Mr Calverley without giving any advantage to Miss Green, then at that point he could have paid from her contribution of share of her property and also could have secured the creation of that obligation by use of impartial doctrines.[6]

The other obligation arose from Mr Calverley's commitment of paying the occupation rent.[7] Since Ms. Green had left, Mr. Claverly had been living in the house alone. In the property in which Mr. Claverley had been living has 33 percent interest of Ms. Green. It was apparent that Mr. Claverley used her one-third portion of the property for which he should pay rent to her.[8] Gibbs CJ expressed his opinion that the issue could be resolved without any further discussion on the case.

Such application of norm is hard to perceive as a resulting trust juridically. The basic factor to determine resulting trust is the share or the contribution made by the party in payment of loan taken or cost paid to the party. The extent to which contribution is made to the purchase price of the property determines the beneficial interest of the parties under the doctrine of resulting trusts according to Griffith LJ. According to him, the contributions are merely a guide to know the intention of the parties. It is hard to accommodate this in other various regards with the traditional understanding of resulting trusts dependent on the immediate outfitting of an entire or part of the price tag at the hour of procurement. The doctrine of resulting trust is as well as the doctrine of contribution is consistent with impartial principle and it is more detailed and analysed principle than the English approach.[9] The incorporation of installments of loan as the contribution of payment of purchase price creates a problem of how contributions will be measured. The most important thing to be considered in this regard is the payment of interest to the lender.

The Dissenting Opinion in The Case of Claverley v. Green[10]

In the instant case one Murphy J. had a dissenting opinion.[11]

He recommended that all the equitable presumptions need to be abolished. He said that the equitable title should follow the legal title by registration. In his view, no presumption of advancement arises which is in favour of a de facto wife.

He was of the opinion that presumptions arise out of common experience. The law operates on the fact that when one fact is proved, another fact is presumed. This process is of standardized inference. According to him, the law on presumptions of resulting trusts is not appropriate to our times. He added that such laws are against the rational evaluation of the property cases which arise out of personal relation. There has been much new legislation which somehow deal with de facto relations. Murphy J. is of the opinion that if such legislations are absent, the previous presumptions will not be sustainable by common experience and thus, it should not be applied.

According to Murphy, the general presumption of resulting trust should have been discarded along with the presumption of unequal contributions. The presumption of advancement, which is said to be an exception to the presumption of the resulting trust, is not necessary and always has been a misuse to the word ‘presumption.’

The transfer of property, either wholly or partially, is of great importance to the people. Such a doctrine of resulting trust should not be acceptable to an ordinary person. When such presumptions are absent, the legal title reveals the interest of the parties in such a property. The false presumptions which have the ability to override the registered title are not aligned with the Torrens Title System, and hence this makes it damaging for any state. The Torrens Title system allows the protection of interests by using caveats. When this happens, the registered title will reflect the true position and also, makes the Torrens Title System simple and easy.

In Claverley v. Green, the title of the property is jointly in the parties, cannot be replaced under any given situation. The situations where the contributions for the purchase was unequal, or the arrangement made where Mr. Calverley while living with Ms. Greens was paying the mortgage and Ms. Green paying all the household expenses, raises no justice. The decision that no presumption which diverted from the legal title should not be changed.

The Future of Presumption of Resulting Trust

In the legal parlance, it is noted that the birth of this principle matches the standardized establishment of the settlor and his claim. The most significant distinction between making a individual remedy accessible for enrichment in an unjust way and an acknowledgment of a trust is that the trust property cannot ever become a part of patrimony of the trustee and can be influenced. This is considered as an impact which the settlor purposely acted to achieve, by making an exchange 'on trust'.

This becomes a determination by the settlor that the basic premise on which the property was given to the trustee was that the individual person could not utilize it for their own advantage and that it would not frame part of their patrimony. As Maitland put it, 'I have made An a trustee for someone, and a trustee he should be—in the event that for nobody else, at that point for me or my representatives.

Resulting Trusts arise only in those situations where a defendant is made a trustee by the Claimant. According to the case of Claverley vs. Green, presumption of resulting trust is the only presumption by which the claimant makes the defendant a trustee or he did not plan to give him an advantage over that person or does not want to provide any advantageous position to the trustee. This principle has become an outdated principle and holds no value in the present world where the property law has evolved to an extent that such issues are benevolently handled by the Court without the intervention of the Parliament.

[1] For the most recent legislative change, see Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth), amending the Family Law Act 1975 (Cth) to permit the Family Court to make orders adjusting the property interests of those who were in a de facto relationship, regardless of the gender of the parties.

[2] Such third-party claims may, for example, involve claims by creditors, the trustee in bankruptcy or bene­ficiaries of the deceased estate of a deceased member of a couple: see, eg, Bryson v Bryant (1992) 29 NSWLR 188.

[3] Eg Muschinski v Dodds (1982) 8 Fam LR 622, 629 (CA) per Samuels JA; Burns v Burns [1984] Ch 317, 332, per Fox LJ, 345, per May LJ.

[4] Property Law (Amendment) Act 1988. This differs from the New South Wales legislation in that it is confined to alterations of the parties' interests in real property.

[5] https://www.jaani.net/resources/law_notes/equity_and_trusts/06_Resulting_trusts.pdf

[6] Ibid 119. Ingram v Ingram [1941] VLR 95,102 is cited for the proposition that a charge is available in support of the right of contribution. No authority is given in that case, and it is unclear why a proprietary remedy should be available in this situation, unless indeed it falls within the principles enunciated in Hewett v Court (1982) 149 CLR 639, 645-650 per Gibbs CJ, 667-670 per Deane J.

[7] Ibid 115 per Gibbs CJ, and 120 per Murphy J

[8] Bernard v Josephs [1982] Ch 391

[9] In one respect, the High Court muddied the waters in Calverley. A previous decision, Bloch v Bloch (1981) 55 ALJR 701 did treat mortgage payments as contributions to the purchase price under a resulting trust. See the analysis in Hardingham and Neave, Australian Family Property Law (1984) 638-644. Mason and Brennan JJ felt the need to distinguish Bloch by saying that the property in that case was bought as a mortgagefree investment, and that justified the inclusion of mortgage instalments. By contrast, where the home is 'to live in', then mortgage instalments should not be taken into account. Calverley v Green (1984) 59 ALJR 111, 119. Apart from the difficulty of drawing the distinction, it has no basis in equitable principle. The shares in the property under an express or resulting trust must be quantified at the time of conveyance.

[10] Claverley vs. Greens (1984) 155 CLR 242

[11] https://pinpoint.cch.com.au/document/legauUio594817sl18898313/calverley-a-g-v-green-d-l

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