Trustees of the Property of Cummins (A Bankrupt) v Cummins

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Citation: Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278. This information can be found in the Textbook: Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008, pp. 356-60 [4.95].

Contents

Background facts

  • Cummins was a prominent barrister who had not paid income tax his whole life.
  • Due to his tax debts, he became bankrupt and his estate was administered to the Appellants [Trustees of the Property of Cummins] as trustees.
  • Prior to this, Cummins had transferred his joint tenancy in land to his wife, the Respondent [Cummins].

Arguments

  • The Respondent argued that even in the case that the transfer of the joint-tenancy failed, she held the majority of the property because she originally paid for most of it, and thus her husband's share in the joint tenancy is held on a resulting trust for her.
  • The Appellants sought a declaration that Cummins’ transfer to the Respondent was void against them in bankruptcy.
  • Also, any presumption of a resulting trust was rebutted, as Cummins clearly intended to hold the land as a joint tenant with the Respondent.

Legal issues

  • Resulting Trusts
    • Whether title had vested with the Respondent under a resulting trust, or Cummins remained a joint tenant, rebutting the presumption of advancement.

Judgement

  • First of all, the attempt to sever the joint tenancy and transfer the property to the Respondent was in violation of s 121 of the Bankruptcy Act and therefore void. This means there was still a joint tenancy.
  • Usually, unequal contribution does indeed mean that a resulting trust will arise. Relying on Calverley v Green:[1]
    • When 2 people have purchased in unequal shares and the property is in there joint names, there is a presumption that they hold the property in proportions in which they contributed.
  • However, when its a husband and wife, the contributions are less relevant and instead it can be assumed that each are a joint-tenant (owning equal share) rather than tenants in common (each owning as per their contribution).
  • It seems clear that Cummins saw himself as joint tenant (and only tried to change for the purposes of avoiding tax).
  • There is no reason here why equity should intervene (with a resulting trust) to disturb the legal title shown in the registry (ie, that they are both joint-tenants).
    • 'There is no occasion for equity to fasten upon the registered interest held by the joint tenants a trust obligation representing differently proportionate interests as tenants in common. The subsistence of the matrimonial relationship...supports the choice of joint tenancy with the prospect of survivorship...'
  • The Appellants win.

References

  1. ↑ (1984) 155 CLR 242
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