Answer

Consideration in the form of Natural Love and affection and Court’s Intervention in Matters of Resulting Trust

In the Australian contract law, a consideration needs to be sufficient and not necessarily adequate in the formation of a contract. A sufficient consideration, in the present times, can include even abstract exchanges such as love and affection.^[1] Notably, the courts in Australia have assumed a resulting trust over a gift when an asset is transferred from one party to the other even in the absence of consideration.^[2] However, the presumption of resulting trust is overcome by the production of evidence of love and affection.^[3] The notion of the presumption of advancement has been used by courts in Australia in finding a resulting trust due to biological/natural love and affection that parents have for their children and due to the obligation to support such children. Recently, the presence of consideration in the form of natural love and affection has been made sufficient to invoke the court’s intervention when it comes to matters of resulting trust.

            The determination of whether natural love and affection is a sufficient consideration is a matter that the courts have been called upon to determine because the issue is not well settled. Notably, the general rule is that a consideration must confer a real, as opposed to a nominal, benefit on the promisor. Also, it has for long been held that moral obligation is not in itself a sufficient consideration, which can support a promise. The efficacy of natural love and affection as well as matrimonial obligation as constituting a consideration is a matter that the courts must always come in and determine. In Director of Public Prosecutions for Victoria v Phan Thi Le^[4] (DPP v Le), the High Court of Australia was called upon to make a determination as to whether natural love and affection in the context of the provisions of the Confiscation Act would constitute to sufficient consideration. The Court expressed divergent opinions and set out various grounds which implies that natural love and affection is not prima facia a sufficient consideration unless the courts intervene and make a such a determination. It is critical to examine why a court’s intervention is necessary when it comes to resulting trust arising from a consideration in the form of natural love and affection.

            In DPP v Le^[5], the court was clear that natural love and affection can only be said to constitute sufficient consideration in limited circumstances. Notably, in this case, the DPP in Victoria sought to confiscate the defendant’s property on the basis that they were proceeds of crime. The DPP relied on the provisions of the Confiscation Act^[6]. This particular section holds that the grant of an exclusion order for forfeiture is only when the applicant demonstrates that property was acquired directly or indirectly from the accused for sufficient consideration. The decision of the High Court in affirming that natural love and affection constituted a sufficient consideration was that the sufficiency of such a consideration in the context of conveyancing law was different compared to other contexts in the law of contract. The reasoning by the judges, in this case, was based on their use of the rules of statutory interpretation, especially considering the fact that the Act did not have a specific definition of statutory consideration.^[7] Although the judgments were unanimous that natural love and affection can be recognized as sufficient consideration for the purpose of conveyancing, some judges differed as to whether the respondent, in this case, provided sufficient consideration for the purposes of the act.

The need for court’s intention when it comes to matters of resulting trust arising from consideration in the form of natural love and affection is further demonstrated in Xiao Hui Ying v Perpetual Trustees Victoria Ltd^[8]. In this case, the Court was inter alia required to determine whether natural love and affection constituted a valuable consideration and whether presumption of resultant trust arose. The Supreme Court of Victoria held that natural love and affection can be said to be sufficient and a good consideration. Specifically, it was the decision of the Court that the transfer was made for valuable consideration in the form of care for Fitzgerald’s mother and sister. However, the Court also noted that as  matter of general rule, it is well established that a transfer for natural love and affection is a transfer for good as opposed to a transfer for valuable consideration. In this case, the Court made no attempt to make a difference between the two. However, it stated that if it is determined that a transfer was not for valuable consideration, then it is important to look into the intention of transferring the property in question. The presumption of resulting trust and advancement is concerned with relationships that afford good consideration as opposed to valuable consideration. The Court, in this matter, made it clear that the determination whether natural love and affection can be said to be a sufficient consideration is a matter that the courts must interpret.

In Craig v Craig^[9], the District Court of South Australia reaffirmed the importance of the Court’s intervention in the interpretation of whether natural love and affection constitutes a sufficient consideration for the inference of advancement. In this case, His Honor Judge Slattery held that it is crucial to make a distinction between matters of usual love and affection which arise between family members, and the background matters of a case, which inform the arrangements that people make in transactions. In his view, the love and affection between family members is central to the formation of family relationships, especially where elderly and infirmed parents are given a high level of care by their children as well as extended families. According to the judge, the provision of care for elderly and infirmed persons would not unusually displace the presumption of resulting trust or contra indicate the declaration of constructive trust. However, background information, which inform arrangements between people involve family members being involved in particular transactions with a fixated intention and purpose in mind. In this case, the Court has to come in and determine whether the love and affection in question is a usual one involving family members or forms a critical background to infer resulting trust and advancement.

The question of the difference between valuable consideration and natural love and affection as a good consideration and the importance of court’s intervention in such a regard is demonstrated Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc^[10]. In this case, the Court held that the presumption of advancement does not arose in case where there exists a relationship of which there is a natural obligation to provide. As such, the presence of natural love and affection was found to be one of the good considerations which can lead to an inference of a contract formation. However, the Court, in this case, as in other cases discussed in this paper, made an interpretation of its own about what the difference between natural love and affection being a good consideration as opposed to being a valuable consideration. However, since there is no settled legislative framework in Australia which differentiates between the two. The courts are called upon to intervene and provide interpretations of situations where love and affection is considered to be a valuable and sufficient consideration for the formation of a contract.

Conclusion

The presence of a consideration in the form of natural love and affection has made it necessary for the court to intervene to matters of resulting trust because existing laws do not provide a clear legal position on the matter. The cases discussed in this paper have demonstrated that in limited cases, natural love and affection can be considered to be a valuable consideration. However, in a majority of cases, the courts have held that love and affection constitutes a good consideration as opposed to a valuable consideration. Nevertheless, since consideration does not need to be adequate but sufficient, then love and affection has been found to be sufficient to infer the existence of a contract. The cases and materials explored have demonstrated that the courts intervene and use different rules of statutory interpretation to determine whether love and affection is a consideration or just a usual relationship between family members.

[1] Chevalier-Watts, Juliet. “The Presumption of Advancement: Is It Time to Relegate This Doctrine to the Annals of History (2016): 28.” Lakehead LJ 2.

[2] Dal Pont, Gino Evan. Equity and Trusts: Commentaries and Materials (Thomson Reuters, 7th ed, 2019): Chap.26.

[3] Ibid 30.

[4] Director of Public Prosecutions for Victoria v Phan Thi Le [2007] HCA 52; 232 CLR 562.

[5] Ibid.

[6] See Confiscation Act, 1997, s.35.

[7] Skead, Natalie. “Crime-Used Property Confiscation in Western Australia and the Northern Territory: Laws Befitting Draco’s Axones.” 41 (2016): 67 UW Austl. L. Rev. 

[8] Xiao Hui Ying v Perpetual Trustees Victoria Ltd [2015] VSCA 124.

[9] Craig v Craig [2015] SADC 109.

[10] Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc. [2018] VSC 413.