A Resulting Trust or a Gift of Property?

A recent supreme court decision in NSW (Daire v Haley (No 2) [2024] NSWSC 161) highlighted how conduct and representations are important when considering intention to transfer property as a gift as opposed to the presumption of a resulting trust. The presumption arises where a person purchases property, but directs the vendor to transfer the title to another party. The presumption is that the transferee holds the legal title to the property on resulting trust for the purchaser.

This case primarily dealt with whether the property was in fact a gift or held on trust for the purchaser.

Facts: A Father who was facing bankruptcy proceedings purchased a property in the names of his adult daughters (unbeknownst to them). The Father paid the deposit and serviced the vendor loan. The daughters were unaware of the property until receiving correspondence from their Father and an email regarding rates owed on the property, of which they paid. They sought to have a caveat removed that was lodged by their Father claiming a beneficial ownership in the property. They wished to sell the property.

Findings: The court found that there was enough evidence to prove that the property was intended as a gift. In the circumstances they found that:

(a) the Father had not told his daughters about the property largely because his contact was restricted by court orders, not because he didn't intend to gift it to them; and

(b) the Father's claim that he used his daughter's birth names as an "alias" on the property documentation, rather than their legal names was not accepted;

(c) there was correspondence directly from the Father but also via his solicitors that "unambiguously states that the plaintiffs are the legal owners of the Property. He does not identify any entitlement he has to retain possession or a proprietary interest."

Key outtakes: If you intend to transfer ownership of property under a trust arrangement, this should be documented correctly, or at the very least claiming a beneficial interest in writing. Moreover any presumption of a resulting trust will turn on the facts, and where necessary can be rebutted by the presumption of advancement (the purchaser is a father who places the property in the name of his children. In such cases, it will be presumed to have been made for the benefit of the legal owner of the property).