Falloon v Madden [2012] NSWSC 652

A wife died leaving her estate to her husband and two children from a previous marriage. Her husband claimed that he had paid for the house and the estate held it on resulting trust for him solely and claimed reimbursement of mortgage instalments and improvements to the house.

The court did not believe the husband and found that the house was held by the husband and wife roughly equally as tenants in common. The court found that the husband’s share was held by the estate on a resulting trust for his benefit. However as the husband was a bankrupt when the trust arose on the purchase of the house, his equitable interest vested in the Official Trustee as “after-acquired” property. The court also found that the husband paid the council rates, a mortgage debt and the wife’s tax liabilities and was entitled to recover these sums from the estate but not improvements since they did not increase the property’s value. However the court found that the husband must “do equity” and pay an occupation fee to the estate since he had lived in the house rent free.

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