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Module 9 · Resulting trusts and advancement

What this module covers and why it matters. This module covers the purchase money resulting trust, the trust that arises by operation of law to give a person who paid for property a beneficial share in it even though the legal title says otherwise. It matters because it is the main tool for deciding who really owns a family home, and the fight is almost always between a trustee in bankruptcy and a family member trying to keep a share out of the creditors' reach. It sits among the trusts that arise by operation of law and it pairs directly with Module 10 on constructive trusts, because a resulting trust responds to direct financial contributions only and everything else is pushed across to a constructive trust.

How to use this guide. The five-step sequence below is a scaffold you can carry straight into a problem answer. Work the steps in order every time. The worked Calverley arithmetic table is the spine of the module and shows how the fractions are built. Read the guide once to learn the sequence and then revise from the table and the closing examiner section.

Cases at a glance

Case	In a line
Calverley v Green	Purchase money resulting trust: contributions are measured at acquisition and include mortgage liability; later repayments are equitable accounting, not contributions
Bosanac v Commissioner of Taxation	Evidence of actual intention is considered before the presumptions; a clear intention displaces them
Trustees of the Property of Cummins v Cummins	For a matrimonial home the court may infer joint beneficial ownership despite unequal contributions; and later self-serving acts may be admissible
Nelson v Nelson	Illegality does not automatically bar a resulting trust; the court may grant relief on conditions
Westdeutsche Landesbank v Islington LBC	The automatic resulting trust: a beneficial interest returns to the transferor where a trust fails or does not exhaust it

The five-step resulting trust sequence

Use this fixed order whenever a problem asks who beneficially owns a shared property.

The sequence. Work a purchase money resulting trust in this order.

Assess the contributions. Measure what each party contributed to the purchase price at acquisition, counting the deposit and the mortgage liability assumed (Calverley). Later repayments are not contributions at this stage.
Look for objective evidence of an actual intention that displaces the presumptions (Bosanac).
Apply the presumptions in order: the presumption of resulting trust, then the presumption of advancement where a category applies, then the Cummins inference of joint ownership for a matrimonial home.
Address illegality. Ask whether an illegal purpose bars or conditions relief (Nelson).
Conclude in fractions, then on standing. State the beneficial interests as shares and conclude on who takes against the trustee in bankruptcy.

Having set out the sequence we take each step in turn.

Step 1: assessing the contributions

What this step covers and why it matters. The size of each party's share is fixed at the moment the property is bought and it is fixed by what each of them put into the price. Get this step right and the arithmetic in the rest of the answer follows. Get it wrong and every fraction after it is wrong too.

RULE. twistA purchase money resulting trust presumes that a person who contributes to the price takes a beneficial interest in that proportion. Contributions are measured at acquisition and include the deposit and the mortgage liability assumed, whether or not that party later makes the repayments (Calverley v Green, Gibbs CJ).

The point that catches students is the mortgage. The liability assumed under the mortgage at the time of purchase is a contribution to the price, so a party who goes on the loan buys a share of the property even before a single repayment is made. Repayments made after acquisition are not contributions. They feed a separate exercise called equitable accounting, which adjusts the money owing between the parties later and does not change the initial beneficial fractions.

There is a trap here worth naming early. A resulting trust responds to direct financial contributions and to those alone. Renovation, physical labour and homemaking are non-financial contributions and they cannot found a resulting trust. If the facts turn on that kind of effort you must move the analysis to a constructive trust in Module 10.

Worked example. Ada and Ben buy a house for 800,000 dollars. Ada pays the 200,000 dollar deposit from her savings and the pair take a joint mortgage for the remaining 600,000 dollars. At acquisition Ada has contributed the deposit plus half the mortgage liability, which is 200,000 plus 300,000 for 500,000 in all, and Ben has contributed half the mortgage liability, which is 300,000. The presumptive shares are five eighths to Ada and three eighths to Ben. That Ben later makes most of the monthly repayments does not enlarge his share. It is dealt with by equitable accounting.

Step 2: objective evidence of intention

What this step covers and why it matters. Before the presumptions do any work you must ask whether the parties actually said or showed what they intended. The presumptions are only a fallback. They decide the case when the evidence runs out, not before.

RULE. staircaseEvidence of the parties' actual intention is considered before the presumptions, and a clear intention as to beneficial ownership displaces them. Only where the evidence is equivocal do the presumptions decide the case (Bosanac v Commissioner of Taxation).

Open this step with a single question. Is there evidence that the parties intended a beneficial arrangement different from what the register shows? Where a clear intention appears it governs and the presumptions never arise. Where the evidence is equivocal you climb to Step 3 and let the presumptions decide.

Step 3: the presumptions

What this step covers and why it matters. This is where an equivocal case is resolved. Three presumptions run in a fixed order, and the order matters because a later one can reverse the result the first would reach.

RULE. arrowtwistAbsent displacing evidence, the presumption of resulting trust gives each contributor a beneficial share proportionate to their contribution. Where the contributor stands in a recognised advancement relationship to the title holder, the presumption of advancement instead treats the contribution as a gift (Calverley v Green).

RULE. arrowtwistThe presumption of advancement is retained in Australia and covers a parent to a child and a husband to a wife. It does not apply between de facto partners, and Bosanac reconsiders its scope without abolishing it (Calverley v Green; Bosanac v Commissioner of Taxation).

Apply the presumption of resulting trust first. It simply says each contributor takes a share in proportion to what they paid. Then ask whether an advancement relationship reverses it. The presumption of advancement is retained in Australia. Where a parent contributes for a child, or a husband for a wife, the law presumes a gift rather than a trust, so the contributor keeps no beneficial interest. It does not run between de facto partners, so in an unmarried couple the resulting trust presumption stands.

RULE. arrowtwistFor a matrimonial home to which both spouses have contributed, the court may infer an intention of joint beneficial ownership regardless of unequal contributions (Trustees of the Property of Cummins v Cummins).

The Cummins inference is the third and it can override the arithmetic. For a matrimonial home the court may infer that the spouses intended to own the home jointly whatever their unequal contributions, so a strict Calverley split does not always survive where a married couple is involved.

Worked example. A father provides the whole deposit on a flat bought in his adult daughter's name and she takes out the mortgage. If the evidence is equivocal the presumption of resulting trust would give the father a share for his contribution. The advancement relationship reverses that. Because he is her parent the contribution is presumed a gift, so the daughter holds the flat beneficially and the father keeps nothing, unless the presumption of advancement is itself rebutted by evidence that no gift was intended.

Step 4: illegality

What this step covers and why it matters. Family property is often put in one name for a reason the law frowns on, such as hiding an asset from creditors or preserving a means-tested benefit. A student's instinct is that illegality kills the claim. In Australia it does not.

RULE. scalesAn illegal purpose behind a transfer does not automatically bar a resulting trust claim. The court may grant relief on conditions, weighing the policy of the statute breached against the injustice of denying the interest (Nelson v Nelson).

The recurring configuration is title arranged to protect a social security payment or to keep property away from creditors. Run Nelson rather than refusing relief outright. The court weighs the policy of the statute that was breached against the injustice of leaving the contributor with nothing, and it may grant the interest on conditions such as repaying the benefit wrongly obtained.

The evidence rules

What this step covers and why it matters. Step 2 asks whether there is evidence of intention. This section tells you which evidence counts. Family-property problems are salted with later statements such as a dinner-party boast or a birthday speech, and knowing which are admissible is where fast marks are won and lost.

RULE. arrowtwistEvidence of intention arising after the acquisition is generally inadmissible under the no subsequent evidence rule. A statement made before, or so soon after acquisition as to form part of it, counts as acquisition evidence, a later statement against the maker's interest is admissible, and later self-serving acts may be admissible (Cummins).

Work the statements in this order.

Contemporaneity comes first. A statement made before the purchase, or so immediately after it as to form part of the acquisition, is acquisition evidence. It is not caught by the exclusion at all and is weighed with the rest of the acquisition material. Fix this before anything else.
The no subsequent evidence rule. A statement made later than that is generally inadmissible, so a self-serving remark like calling the house "my place" years afterward cannot be used to claim a larger share.
The against-interest exception. A later statement against the maker's own interest is admissible, so a remark such as "it has never really belonged to me" can be used against the person who said it.
The Cummins qualification. Later self-serving acts, as distinct from statements, may be admissible as evidence of intention. One party making all the loan repayments is an act of this kind and may be received even though a self-serving statement to the same effect would be excluded.

Worked example. After a couple separate one partner says at a dinner party that the apartment "was always going to be ours together". The statement is self-serving and was made years after acquisition, so the no subsequent evidence rule excludes it. Had the same partner instead said "the flat was really always yours", that statement is against their own interest and could be used against them.

The worked Calverley arithmetic

This table is the model to reproduce. It builds the fractions the way an examiner wants to see them built, and every problem answer follows the same three moves before the presumptions are applied.

Step	Worked example
Deposit	A pays one half (four eighths); B pays one quarter (two eighths)
Mortgage liability	Joint liability for the remaining quarter (two eighths), split as an extra one eighth each
Presumptive shares	A five eighths, B three eighths
Then	Displaced only by evidence of a different intention (Bosanac); repayments handled by equitable accounting

Read down the table and you have the method. Total the deposit shares, add each party's share of the mortgage liability assumed at acquisition, state the presumptive fractions, and only then ask whether evidence or a presumption shifts them.

Automatic resulting trusts in brief

What this section covers and why it matters. The purchase money resulting trust is one of two branches. The other, the automatic resulting trust, is a short but examinable point that catches property left stranded when a trust does not work as planned.

RULE. arrowAn automatic resulting trust arises where property is transferred on a trust that fails or does not exhaust the beneficial interest, returning the interest to the transferor (Westdeutsche Landesbank v Islington LBC).

Where a trust fails at the outset, or where it disposes of only part of the beneficial interest, the undisposed interest comes back to the person who provided the property. Whether the automatic resulting trust should be understood more broadly as a response to unjust enrichment is a live academic debate, with Chambers arguing for that broader role and Swadling against it. That contest is essay material rather than problem material.

How the examiners test this

Resulting trusts and advancement appear every year, always inside the family-property structure and almost always ending in one party's bankruptcy. The examiner wants a conclusion in fractions and then a conclusion on who takes those fractions against the creditors, so never stop at the shares alone.

Two mistakes lose marks fast. The first is running non-financial contributions as a resulting trust. Renovation, labour and homemaking do not found a resulting trust and belong in the constructive trust analysis of Module 10, so send them there without hesitation. The second is admitting a self-serving later statement, when the no subsequent evidence rule excludes it unless it is contemporaneous, against interest, or a Cummins self-serving act.

Two things earn marks just as fast. The first is the Calverley mortgage-liability arithmetic done cleanly, counting the liability assumed at acquisition rather than the repayments. The second is the correct handling of the evidence rules, fixing contemporaneity first and then working through the exclusion and its exceptions in order. Advancement also surfaces as an essay theme, where the question is whether the presumption is a discriminatory relic. Note the reformist reading that the categories should be expanded rather than abolished.

Consolidation. The resulting trust follows the money. Measure contributions at acquisition and include the mortgage liability, look for actual intention before reaching for the presumptions, run the presumptions of resulting trust, advancement and the Cummins matrimonial-home inference in that order, and treat illegality under Nelson rather than as a bar. Filter the evidence for contemporaneity first. Then state the fractions and say who keeps them when the trustee in bankruptcy comes calling.

Take it to the practice bank

This module is drilled in the Equity and Trusts practice bank. Every problem there carries a realistic Pass answer, an H1 model answer, and an examiner's comment explaining the decisive fact and where the marks are lost.

Check your understanding

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