23 April 2008

Buffrey v. Buffrey and Another [2006] 9 ITELR 455

Facts of the Case

Mr and Mrs Buffrey had been married for 36 years.  In 1993, Mr Buffrey suffered an accident at work for which he received a significant sum in compensation and damages.  In 1998 he used the money to buy a property (the ‘Property’) to provide for his future.  Approximately 75% of the Property was paid for from the compensation money.  The rest was provided by way of mortgage in the joint names of Mr Buffrey and his wife, as Mr Buffrey was unemployed at the time and therefore the mortgagee required that Mrs Buffrey appeared as co-mortgagor.  The Property was registered in Mr and Mrs Buffrey’s joint names.  Rental income from the Property was paid into an account in the joint names of Mr and Mrs Buffrey and the mortgage payments were deducted from the joint account.  Mr and Mrs Buffrey’s tax returns showed each having an equal share of rental income from the Property.

In 2004, Mrs Buffey was accused of defrauding her employer, ORIX Australia Corporation Ltd (‘ORIX’) of a large sum of money.  ORIX obtained an asset freezing order which affected the Property. Mr Buffrey was advised to protect his interest and commenced proceedings against Mrs Buffrey for a declaration that Mrs Buffrey held her interest in the Property on resulting trust for Mr Buffrey and an order that she convey her interest accordingly.

The Decision

The Judge found that Mr and Mrs Buffrey were co-contributors to the purchase price of the Property, Mrs Buffrey’s contribution being half of the principle borrowed under the mortgage.  By reason of the unequal contributions of Mr and Mrs Buffrey to the acquisition cost of the Property, a presumption of resulting trust arose. ORIX was not able to rebut the presumption on the basis that the tax returns of Mr and Mrs Buffrey showed each as having an equal share of rental income or that the rent was placed in a joint account.  The evidence of common intention was equivocal at best and not enough to displace the presumption of a resulting trust.  Mr Buffrey successfully rebutted the presumption of advancement.  The judge found that he intended the Property to represent his own superannuation fund and that the Property had only been in joint names at the insistence of the mortgagee, as Mr Buffrey had been unemployed when the loan was made.  Mr Buffrey had educational difficulties such that he was found to be incapable of sustained dissembling and would not have understood the significance of the tax returns and the joint account as indicating an intention to make a gift to Mrs Buffrey of a half interest in the Property. 

Points of Interest

The Australian case provides a useful restatement of the principles on which a court proceeds where the presumptions of resulting trust and advancement are at issue where property is held in joint names following unequal contributions to acquisition cost.

Category: Article