QUESTION The presumptions of resulting trusts and advancement have become defunct in this modern age and should

be abolished. Discuss the above statement with reference to decided cases. (30 words)

1. The presumption of resulting trust Before an in-depth discussion of whether the presumption of resulting trusts (PRT) and the presumption of advancement (PoA) have become defunct in the modern ages, perhaps it is important to first outline the concept and the operation of both. As stated by Lord Browne-Wilkinson in Westdeutsche 1 , a PRT arises when A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in joint names of A and B, there is a presumption that A did not intend to make a gift to B; the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchaser by A and B in shares proportionate to their contributions2. However, such presumption is rebuttable either by the counter presumption of advancement3 or evidence of the donors intention to make an outright transfer4. Thus, a PRT arises at the moment when B acquires the property in the name of A 5 . Unless the presumption is rebutted, it is presumed that B will hold the property on resulting trust for A, as to defeat potentially misappropriation of property or fraudulent transactions6. In Hodgson v Marks7, Hodgson transferred her house into the sole name of her lodger, Evans. Despite absence of written evidence, based on the oral agreement evidence, the Court of Appeal held that there was a resulting trust, and Evans had held the house on trust in Hodgsons favour. In Re Vinogradoff8, a grandmother bought war-loan stock in the joint name of herself and her granddaughter. When the grandmother passed away, the court held the PRT applied and the granddaughter had held the stock on trust in grandmother testatrixs favour. It is noted the presumption is described to be weak and easily rebutted9 by evidence such as a gift or loan. In Vajpeyi v Yusaf10, the claimant, failed in her claim to recover the house under resulting trust since the court held the money given to purchase the house was a loan. 2. The presumption of advancement The presumption of advancement works as an exception from the PRT. The PoA arises automatically to rebut the PRT that arose initially and it occur(s) where the relationship between the parties is such as to impose a moral obligation upon one to provide for the other11. The presumption is a narrow one, it only applies to gifts by husband to wife, fiancs, and father to his legitimate child. In certain cases, the presumption also works on 3rd party, provided that the donor is in a role of loco parentis. However, the presumption does not apply to gifts by wives12, mother13, grandchildren14 or co-habitants15.
1 2

Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 Ibid at pxxxxxxx 3 Ibid at pxxxxxxx 4 Ibid at pxxxxxxx 5 Curley v Parkes [2004] EWCA Civ 1515, (CA) 6 Lynch v Burke *1995+ 2 IR 159, per OFlaherty J. 7 Hodgson v Marks [1971] EWCA Civ 8 8 Re Vinogradoff [1935] WN 68 (CA) 9 Todd & Watt's Cases and Materials on Equity and Trusts. Eighth Edition, Oxford University Press, Gary Watt p.135 10 Vajpeyi v Yusaf - [2003] All ER (D) 128 (Sep) 11 Todd & Watt's Cases and Materials on Equity and Trusts. Eighth Edition, Oxford University Press, Gary Watt p.136 12 Mercier v Mercier [1903] 2 Ch 98

In Pettitt v Pettitt16, Lord Diplock commented that the principle of PoA was weak, as it only applies in the absence of admissible evidence about the transferors actual intention. His lordship also commented such presumption was outdated, as it was based on the values of a different social era. 17 In fact, the classical application of PoA is limited and this author has not noted any extension of this doctrine in the modern English law. However, developments have been taken to this gender discriminatory principle in other jurisdictions. For example, a recent Singaporean case of Lau Siew Kim v Terence Yeo Guan Chye18 has illustrates the development. In Lau v Yeo19, two estranged sons sought to claim an interest in the properties of their father (Yeo) who had died intestate, arguing that their step-mother (Lau), who is the 3rd wife of their father, was holding properties on resulting trust for Leo. The properties were registered in joint tenancy with Yaos name and Laus name. Upon Yeo dead, by the rule of survivorship, Lau became the sole registered owner of the properties. In the first instance court, it was held that an unrebutted presumption of resulting trust arose and Lau held the properties on trust in favour for both herself and the deceased. Lau objected with the decision and appealed. In the Court of Appeal, it was held that Lau, the step mother, should have the absolute ownership of the properties.

following the Canadian Court and the High Court of Australia, the Singapore Court of Appeal accepted that the PoA applies to gratuitous transfers by both mothers and fathers. It also suggested that PoA could extend to couples who were engaged to be married. However, it should not be applied to cohabiting couples who were not engaged.

As said, the PoA will rebut the PRT, so that a husband or father will be presumed to have intended a gift, both presumptions are rules of evidence and the starting point in deciding the beneficial ownership of the property. It is open to the parties to bring evidence to show their true intention on the basis of balance probability. In Skehon v Alissa20, the PoA was rebutted, where the daughter bought a house and later conveyed into her sole name. From evidence, it was found that the daughter only contributed 15,000 out of 37,500, in which the remaining was contributed by her mother with the purpose of capital gains. It was held that the mother did not intend to convey her part of ownership to her daughter, and thus a resulting trust aroused. 3. Presumptions of advancement is decisive in illegal transactions The presumptions are also become important when evidence of intention is inadmissible due to illegality21. In Gascoigne v Gascoigne22, a husband conveyed his house to his wifes name with the purpose of defeating his creditors. Later, the husband claimed his house was held on resulting trust by his wife in his favour. The court held that his claim was deemed to fail under the maxim of he who comes to equity must come with clean hands. Thus, Gascoigne could not rely on his illegality to rebut the PoA, and the house remained under his wifes ownership.

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Bennet v Bennet (1879) 10 Ch D 474 where Jessel MR said there being very little to induce a mother to make a gift to her child Silverwood v Silverwood (1997) 74 P&CR 453 15 Lowson v Coombes [1999] Ch 373 16 Pettitt v Pettitt [1970] AC 777 17 Above, at p824 18 Yeo Guan Chye Terence and Another v Lau Siew Kim [2007] 2 SLR 1 [2007] SGHC 7 19 Ibid 20 Sekhon v Alissa [1989] 2 FLR 94 21 Todd & Watt's Cases and Materials on Equity and Trusts. Eighth Edition, Oxford University Press, Gary Watt p.137 22 Gascoigne v Gascoigne [1918] 1 KB 223

However, in Tinsley v Milligan 23 , by reserving the judgment of appeal court, the House of Lords reversed the decision on a 3:2 majority, by relying on the reliance principle, as Milligan could prove her interest without the illegality. She could achieve this because her resulting trust claim was arisen by presumption, and she did not need to rely on her illegality. It was further stated that the only person who had to plead the illegality was Tinsley if she wished to rebut such presumption and to defeat Milligans claim. It was noted Lord Goff dissented in the judgment and preferred the orthodox approach which stated that if Milligan has deceived the authority (despite she owned up and repaid the money), she should not pled. It is noted in here, such PRT is important, because if the case was relied on the PoA, it was unlikely her claim would be success, as evidence of the illegality would be required in order to show a contrary intention. It is submitted that following the doctrine of locus poenitentiae, it seems the court is offering an incentive to claimant to change their minds and resolve their problem within the law. As Lord BrowneWilkinson stated if the plaintiff had repented before the illegal purpose was carried through, he could recover his property.24 4. Should PRT be abolished ? Before turning to discuss whether PRT should be abolished, it is important to firstly, recognize its importance and value to our society. The PRTs primary function is to protect those who have made a financial contribution to the acquisition of the property, and without other evidence, the PRT places the burden of proof to the recipient to prove that it is an outright gift. In Hodgson, it provides protection to the weaker party who has been defrauded of their rights, as it is the equity principle that assumes bargains, and not gifts25. Even when the donor did not intend to benefit, the mechanism of PRT allows presumption to be overridden by other evidence, such as a declaration of trust26 or other conduct or words. The PRT is also important in the case of a couple cohabit in a property which was registered in a sole name, but purchased together. The PRT allows the court to allocate propertys share to the other party, and avoid unjust enrichment. It is noted the current law does not recognize unmarried couples right as equal to married couples on divorce and separation, and therefore the PRT remains its important. As stated in the judgment of Peacore by the Supreme Court of Canada, the PRT remains to be useful, especially in the situation when there is no other evidence to determine transferors intent, as it provides certainty and predictability. However, as Low postulates to abolish the PRT, he argued27, given the increasing diversity of the modern society, the suitability of any blanket presumptions based on certain familial relations questionable. This author also notices with the globalization and the rising trend of respect of human right, the society has become less homogeneous and it is difficult for the court to infer presumption. 5. Should PoA be abolished? In terms of PoA, historically, this presumption has been useful to widows or wives, who wished to establish absolute ownership of property transferred from their husbands. However, with the change of time and the development of society, it has been described as a legal anachronism. In modern times, wives tend to work and acquire their own assets, and children are encouraged to be financially

23 24

Tinsley v Milligan [1994] 1 AC 340 Tinsley v Milligan [1994] 1 AC 340 25 per Spence J (Supreme Court of Canada) in Goodfriend v Goodfriend (1972)22 DLR (3d) 699 at 703 quoting from The Doctrine of Resulting Trusts in Common Law Canada(1970) 16 McGill LJ 187 at 199. Prof DonovanWaters 26 Goodman v Gallant [1986] 2 WLR 236 27 The Presumptionof Advancement: A Renaissance? (2007) 123 LQR 347

independent from their parents. As commented by Andrews28, the gender bias is no longer acceptable, and possibly contravene Article 5 of Protocol 7 of the European Convention on Human Rights (similar content has also incorporated in the Hong Kong Bill of Rights Ordinance). It is submitted that with these criticisms, it is true that the classical application of PoA is outdated. However, as commented by V K Rajah JA in Lau v Yeo, the application of the presumption must not remain stagnant, . necessarily change with time as behaviour, lifestyle .29

Pecore. In fact, in Sekhon v Alissa, it was decided on the basis that the PRT between mother and daughter had not been rebutted, despite PoA not being mentioned.30 This author also noted that with the commencement of s.199 of Equality Act 2010, the PoA has be abolished in UK due to its discriminatory nature. Glister31 argued that this reform is unnecessary as the presumption is already practically defunct due to the Human Rights Act 1998. Instead of making unnecessary reform, this author argues that the British parliament should allow the law to be obsoleted and it is not the authors view to abolish PoA. For illegality, it is understood that the current courts view is that it allows parties to recover their property, only if such could be done without pleading illegality. This author agrees this approach as it has the function of encouraging parties to repent their illegal or unethical conduct. However, the drawback is arbitrary and it has been criticized for failing to conform discernible moral principle. The reliance approach have two problems, first there maybe occasions when the court is required to enforce the trusts, despite existence of serious illegality. On the contrary, there might be cases where the claimant will not be able to enforce his equitable interest, despite the illegality is minor. As Lord Goff pointed out in Tinsley, it seemed harsh to deprive claimant interest merely with her minor fraud merits.32 To sum up, this author is of the view that despite the PRT and PoA had been described as legal anachronism and enshrines outdated values. With the evolving nature of common law. Both presumptions should not be abolished and we should let the law evolves in the hands of judiciary.

28 29

Georgina, The Presumption of Advancement: Equity, Equality and Human Rights Conveyancer and Property Lawyer 2007 at 343 At 37 30 Find out 31 J Glister, Section 199 of the Equality Act 2010: How not to abolish the Presumption of Advancement (2010) 73(5) MLR 807 32 Law Commission Report (Reference No. LC320): The Illegality Defence http://www.justice.gov.uk/lawcommission/publications/the-illegality-defence.htm [accessed 4 Oct 2011]