Presumption in Trusts - Term Paper Example

Presumption in Trusts Introduction: “If the presumptions do not reflect common experience today they may defeat the expectations of those who are unaware of them.”1 This statement of McHugh highlights the fact that it is the underlying principle of presumption that underlies the formulation of resulting trusts, where the automatic assumption that has historically been made is that a resulting trust arises where a beneficial interest has not been transferred and the transferee was only meant to hold the property for the original owner. However, this position does not hold good in the present time and has been challenged2, especially from a feminist perspective - therefore such presumptions must reflect current situations rather than the position they have historically occupied. Presumption and the resulting trust: As pointed out by Swadling3, the argument underlying such presumption is the principle that where land is transferred voluntarily without any consideration, then the intent of the parties is to create a trust. Unless and until it can be clearly shown that such a transfer of property was intended as a clear and unambiguous gift, a resulting trust will issue. Moreover, where an express trust fails to establish the certainties of intention4, subject matter and the beneficial interest, it will automatically be construed to be a resulting trust. The three conditions mentioned above have evolved, as laid out by Lord Langdale in the case of Knight v Knight5 because the Courts are unwilling to deprive another person of his or her property or to direct how the property should be disposed unless there is certainty of the intent of the testator and that the formality requirements have been adhered to as much as possible. As also pointed out by James LJ in the case of Lambe v Eames6 the use of precatory words to construe establishment of a trust could be equivalent to imposing a trust where such was not the intent of the testator. Lord Diplock in the case of Gissing v Gissing7 stated that any beneficial interest in a trust or a gift, in order to be deemed to be valid, must constitute a cestui que trust and the intention of the testator must be firmly established in order to give effect to it. Therefore, the presumption that is made is that the transferor did not intend to transfer the beneficial interest on the property. Creighton has argued that although there is no Australian High Court authority to support the creation of an express trust through the certainty of object, the principle laid out in McPhail v Doulton is also applicable in Australia8, whereby the element of uncertainty in one clause, then the entire trust becomes uncertain and a resulting trust may ensue, unless the trust is for a charitable purpose, in which case it may be re-assigned to another similar charitable purpose. However, he also concludes that overall, the Australian courts have been willing to relax the requirement of certainty of object, so that a resulting trust does not ensue. This would appear to support the statement of McHugh in the Nelson case indicating that there is a need for flexibility in application of the presumption of the resulting trust in order to conform to the circumstances and facts of a particular case. Presumption of Advancement: If A has paid the purchase price of the property but B holds the legal title, then the presumption in this case will be that B holds the property in a resulting trust for A, to the extent that A has contributed to the purchase price. This presumption can be rebutted only if it may be clearly shown that the property was intended to be a gift, or if there is a presumption of advancement in so far as the purchaser of the property intended to advance themselves by virtue of the relationship between A and B. Therefore, the presumption of a resulting trust may be rebutted if the facts show that a contrary intention existed or if the presumption can be overcome through showing the existence of the presumption of advancement. The presumption of advancement as it has existed has been such that only certain categories of relationships could avail of the rebuttal of a resulting trust through the presumption of a gift and therefore the advancement of the person to whom the property is transferred. The need for flexibility in presumption which has been outlined by McHugh is especially relevant in the context of the hitherto existing traditional presumptions, whereby the presumption of advancement was said to exist only when there was a transfer of property from father to children, or from the husband to the wife. The Feminist perspective: According to Janet Rifkin, “In the end, patriarchy as a form of power and social order will not be eliminated unless the male power paradigm of law is challenged and transformed.”9 Jurisprudence has remained a traditional male bastion with existing legal theories conditioned upon the premise of the “individual” as the philosophical basis for the legal system. For example, MacLaughlin points out that the liberal perspectives of law as a fair and just system that protects is rights of all individuals is based upon treating all persons indiscriminately – but how can such a universal standard be defined in the context of differing constituencies and differing conceptions?10 McLaughlin also details Rawls’ view that there is an original position in which societies has a varying conception of good that is different for different people - however, a common area may be derived neutral area may be derived through the incorporation of what he terms as a “veil of ignorance” wherein the law will be blind to race, gender status or values in favor of an impartial application of the law in a manner so that social and economic equality may be assured to all11. However, the question of whether the presumption of advancement would fit into this neutral area is debatable, since the position of men and women before the law cannot be said to be truly equal, so as to justify the application of one uniform neutral standard in application of the law. Popular ethical theories such as utilitarianism and deontology are focused upon a universal standard of morality and ethical values, which are conditioned through a more rational and impartial approach which feminists refer to as a “justice view’ of morality. However, Carol Gilligan was the main proponent of a different approach to ethics, in which she disagreed with her teacher Kohlberg that the differences in the male and female answers on morality is the result of differences in the stages at which men and women were on the scale of moral and ethical development.12 She proposed that the gender differences had arisen because there was no universal standard of judgment and a universal standard of morality was no longer maintainable.13 She believes that a person’s moral orientation varies according to the gender – while men are oriented towards the value of justice, women are oriented towards the value of care. Therefore, the presumption of advancement cannot be applied on a uniform basis to both men and women, according to the precedent set in the Brown case, it may be necessary to refine the criteria as McHugh has suggested, in order to incorporate a more realistic scenario taking into account the differing standards of morality of men and women. Schikwert’s has highlighted the inter relation between the male ethics of justice and the female ethics of care and she argues that there is a reciprocal co-responsibility between both standards of morality, with both teleological and deontological theories being relevant in establishing the relationship between them.14 Her primary argument is that a normative standard of ethics needs to be developed which can incorporate the differing male and female ethical modes of thought. In the case of Brown v Brown15, the presumption of advancement was said to hold good for the relationship of a mother to her child, therefore this was also applicable in the case of Nelson.16 In the case of Brown, the approach adopted by Kirby P and the Court was that presumption should be accorded a gender neutral perspective, and the underlying assumption appears to be that gender equality has already been achieved, as a result of which they merit identical treatment before the law. Application of the feminist perspective to presumption: However, the feminist views as detailed above would appear to contradict the proposition that one uniform standard can be applied for both men and women. Sarmas has also contested the hitherto existing gender biased presumption in the application of resulting trusts17. She argues that such traditional presumptions are legally flawed, because irrespective of the fact that morality differences make a significant difference in the application of the law, such traditional presumptions also ignore the substantial financial contributions made by women in the care of children. They are relegated to the role of dependants and their contributions to the household are not acknowledged because they are non financial. Traditional presumptions are based upon the belief that there is a natural obligation for a man to provide for the welfare of the woman who is the dependent. However, her views are also in accordance with the prevailing feminist view of jurisprudence that views gender neutral laws as being inadequate in terms of ignoring the differences that exist in legal perspectives that must be applied in the case of men vis a vis women. She argues that the position adopted by the court in the case of Brown18 is that social equality has already been achieved and that a gender neutral perspective can be applied in the case of presumption, while in reality this is not the case and the widespread acceptance of a gender neutral presumption is only likely to result in more women becoming dispossessed. Moreover, the adoption of the gender neutral perspective also strengthens the role of presumptions, when their applicability itself is questionable. Sarmas recommends that a new approach should be adopted in the matter of trusts, by addressing the issues related to property disputes in a fair manner and such an approach needs to ignore the presumed intentions of the parties, if it is to be an equitable system. This view is also in line with the views of MacKinnon, whose approach is derived from a Marxist base and feminists have argued that feminism could replace Marxism as a wave of thought, that could rise in opposition to the liberalism that has formed the foundation of legal thought19. The principle of Marxism is based upon the foundation of economic equality where all the citizens are placed on par through the restriction of the rights of rich people to achieve an economic excess at the expense of the poor, by empowering the masses. In a similar way, MacKinnon also based her theory upon the restriction of the rights of the men who dominate society, through the empowerment of the minorities and the women in order to achieve a state of equality that would allow the rights of the oppressed also to thrive. In the case of Equal Opportunities Commissioner v Birmingham City Council 20 it was stated: “There is discrimination under the statute if there was less favorable treatment on the ground of sex….”. Conclusion: Sarmas contends that applying presumption in fact disadvantages women since they are already economically disadvantaged. Therefore, the application of a uniform law of presumption or presumption of advancement in the case of resulting trusts corroborates McHugh’s view that it is not one that reflects the current position as it exists. The most significant contribution that has been made by feminist theories is in highlighting the need for the law to become more flexible and adaptable in incorporating multiple perspectives. The feminist movement has also highlighted the fact that the law must move from an impartial, autonomous framework into one that reflects the connection that exists between human beings. Truly achieving human rights would mean a great deal more than merely providing formal equality it must also be procedural and must be modified as and when necessary to incorporate the needs of a changing community framework. Unless a system of law has input from several elements comprising society, notably women who are in a significant majority – there can be no true equality that is provided by the law and the very framework of the law must indeed be questioned. Therefore, in applying the statement of McHugh to the question of presumption of advancement and the application of a gender neutral role, it must be concluded that McHugh has raised a valid point about such presumptions not reflecting the common experiences of the present day. By adopting a gender neutral role in the issue of presumption of advancement, the expectations of women are unlikely to be satisfied and the feminist view of jurisprudence also appears to support this position. Bibliography Cases: * Adams v Kensington Vestry (1884) 27 Ch D 394 COA * Brown v Brown (1993) NSWCA * Calverley v Green (1984) 155 CLR 242 * Equal Opportunities Commissioner v Birmingham City Council (1989) 1 All ER 769 at 744 * Gissing v Gissing (1971) AC 886 * Jones v Lock (1865) 1 Ch 25 * Knight v Knight (1840) 3 Beav 148 * Lambe v Eames (1871) 6 Ch App 597 COA * Nelson v Nelson (1995) 184 CLR 538 at 602 Articles/Books: * Creighton, Peter, 2000. “Certainty of Objects of trusts and Powers: the impact of McPhail v Doulton in Australia.” 22, Sydney Law review, 93 * Gilligan, Carol, 1982. In a different voice: Psychological theory and women’s development Cambridge: Harvard University Press * Kohlberg, Lawrence, 1981. Essays on moral development, Vol I: The philosophy of Moral development: Moral Stages and the idea of justice San Fransisco: Harper Collins * MacKinnon, Catherine,.1989. Toward a feminist Theory of State Cambridge: Harvard University Press * McLaughlin, Janice, 2003. Feminist Social and Political Theory Sweet and Maxwell, pp 26-41 * Rifkin, Janet, 1980. Toward a theory of law and patriarchy 3, Harvard Women’s Law Journal 83 at 87 * Sarmas, Lisa, “A step in the wrong direction: The emergence of gender neutrality in the Equitable presumption of Advancement.” 19 Melbourne University Law Review 758 * Schwikert, Eva Maria, 2005. Gender, Morality and Ethics of responsibility: Complementing teleological and deontological ethics Hypatia , 20(2), pp 164-188 * Swadling, W, 1996. “A new role for Resulting Trusts?” 16, Legal Studies, 110 Read More