Xiao v Perpetual Trustees Victoria [2015] VSCA 124

A husband obtained finance by transferring his home to his wife and applying for the loan in his wife’s name, forging her signature.

The trial judge found lender was unable to rely on its mortgage (as it was a forgery) but found that the home was held on trust for the husband and ordered its sale to satisfy the husband’s judgment debt to the lender. Click here for our case note on the trial decision.

On appeal the wife argued that she provided valuable consideration for the transfer in the form of care for her husband’s mother and sister and natural love and affection as between a husband and wife.

The Court of Appeal found that natural love and affection in a transfer between husband and wife can provide good rather than valuable consideration and may rebut a presumption of a resulting trust and justify instead the presumption of advancement, but good as opposed to valuable does not mean that a trust may not ultimately be established and the presumption of advancement rebutted.

This is because if the transfer was not for valuable consideration, the intention of the husband in transferring the land is the ultimate issue – whether it was intended as a gift or that the wife should be a trustee of the property for the husband’s benefit. 

The Court of Appeal noted that the lower court found the latter. The Court noted that the husband’s fraud involved creating an impression that the beneficial interest was held by his wife solely to obtain finance. The wife lost.

Click here to read the full judgment

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