MOTHER SEEKS FOR THE COURT’S DECLARATION THAT SHE HAS A BENEFICIAL INTEREST OVER A PROPERTY THAT IS UNDER HER DAUGHTER’S NAME
Hansen v Noble [2021] NSWSC 138 (24 February 2021)
This case involves a mother claiming that her payments or contribution to the property named under her daughter results in a trust which entitles her a beneficial interest over the property.
Facts:
The plaintiff, Gloria Ann Hansen, sues her daughter, Tracey Lee Noble, for equitable relief arising out of the circumstances in which the defendant acquired an interest in two residential properties.
The first property, a home at an address in Wattle Grove Sydney, was transferred to the defendant on 24 June 2005 by the plaintiff and her brother as executors of the estate of their mother. The second property is land and a residence at Lakesland in Western Sydney, which the defendant purchased with her husband, Murray Stuart Noble, in 2006.
Gloria applied her one-third share in her deceased mother's estate, plus funds that she had accumulated in a bank account in the name of Tracey, towards the purchase of the Wattle Grove property in the name of Tracey. For that purpose, Tracey had to borrow $150,000 in her own name on first mortgage security over the Wattle Grove property.
Gloria's case is that she also agreed to make mortgage payments from her own funds. Gloria's submitted is that it was agreed between herself and Tracey that, notwithstanding that the Wattle Grove property would be transferred into Tracey's name, it would not be her property until she had entirely repaid Gloria.
In 2006, Tracey and Murray purchased the Lakesland property on the security of mortgages over the Lakesland property and the Wattle Grove property. The deposit was initially financed by a drawdown on the Wattle Grove mortgage.
Gloria seeks a declaration that Tracey holds the Wattle Grove property subject to a constructive trust in favour of Gloria The effect of such prayer is that iif Gloria succeeds, Tracey will enjoy the benefit of her legal ownership of the Wattle Grove property provided that Gloria receives the money to which she is entitled.
Gloria's claim that she reached an arrangement with Tracey that Tracey would hold the title to the Wattle Grove property on trust for Gloria until Tracey had reimbursed Gloria for Gloria's contribution to the purchase of the Wattle Grove property and the mortgage repayments. The alternative is that Gloria made a gift of these funds to Tracey.
Issue: Is Gloria entitled to a declaration that she has benefecial interest the Wattle Grove property in the nature of a resulting or constructive trust?
Law:
- Conveyancing Act 1919 S.23(C), 66(G)
Analysis:
Gloria's initial entitlement to a beneficial interest in the Wattle Grove property arose out of both the expressed intentions of the parties at the time it was acquired and the circumstance that Gloria contributed a substantial amount to the purchase price, and then, in accordance with the arrangement, contributed a significant amount by way of mortgage repayments.
Initially, at the time the Wattle Grove property was transferred to Tracey, Tracey held the property on a resulting trust for Gloria. That resulting trust was of the special type considered by his Honour whereby, because of their intention at the time of transfer that Gloria would pay the mortgage, the quantum of Gloria’s interest in the property would increase in the future in conformity with the mortgage payments.
The same result could be justified on the principles that govern the creation of constructive trusts based upon the common intention of the parties where property is acquired on the basis that the beneficial interests in the property will not conform with the legal interest because of differential contributions to the acquisition and maintenance of the property.
Conclusion: Gloria is entitled to a declaration that she has a beneficial interest in the Wattle Grove property in the nature of a resulting or constructive trust that has value equal to the amount of the total contribution towards the acquisition by Tracey or Tracey and Murray of the Wattle Grove property and the Lakesland property, including loan repayments and outgoings.
