Tim McGrath, Partner Melanie Husband, Senior Associate 24 July 2014 Miller Harris in Business
Dec 16, 2015
Looking below the surface: home ownership
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Constructive trusts Resulting trusts Exoneration Equitable accounting Occupation rent Bankruptcy Act
Constructive trusts
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Remedial in nature; what is required to do justice between the parties?
Muschinski v Dodds Calverley v Green
Here is how the trust worked:
Her $ contribution
His $ contribution His ½ share
property
Her ½ share property
He must account to her for this
He retains this equity
She retains this equity
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Farrugia: trustee’s claim
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Item Sum
Sale price $41,000
Less “acquisition” finance ($12,500)
Sub‑total $28,500
Less “business” finance ($10,500)
Net proceeds $18,000
BANKRUPT’S ESTATE $9,000
WIFE’S SHARE $9,000
Mrs Farrugia’s figures
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Item Sum
Sale price $41,000
Less “acquisition” finance ($12,500)
Sub‑total $28,500
Bankrupt’s share $14,250
Less “business” finance ($10,500)
BANKRUPT’S ESTATE $3,750
WIFE’S SHARE $14,250
Shortfall scenario
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Item Sum
Sale price $30,000
Less “acquisition” finance ($12,500)
Sub‑total $17,500
Bankrupt’s share $8,750
Less “business” finance ($8,750)
BANKRUPT’S ESTATE NIL
Wife’s interest $8,750
Less “business” finance ($1,750)
WIFE’S SHARE $7,000
Div 4B Bankruptcy Act
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The Edelsten factor; income diverted from the bankrupt to a third party
What about the PPSA?
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No application to land No application to equitable interests No application to Bankruptcy Act recovery