Who should care: People buying property using other people's money.
The Case: Birney v Birney [2024] NSWSC 591
Link to case: https://jade.io/article/1075407
Case Summary:
Issue: The central issue in Birney v Birney revolves around the ownership of a property in Nowra, purchased with lottery winnings. The plaintiff, Chris, claims the property was bought with his money and is held on trust for him by the first defendant, his brother David.
Rule: The legal principles applied include the presumption of resulting trust when property is purchased in one person’s name with another’s funds, and the onus on the trustee to rebut this presumption.
Application: The court examined the evidence, including the circumstances under which the Keno Account and property purchase were made, the conduct of the parties, and corroborating testimonies. It found the plaintiff’s account plausible and supported by independent witnesses, while the defendants’ version was deemed implausible and inconsistent with their subsequent conduct.
Conclusion: The court declared that David holds the property on trust for Chris and ordered the transfer of the property to the plaintiff. It also ordered the defendants to vacate the property and pay the plaintiff’s costs. Judgement was also forwarded to the Child Support Agency for consideration of any misleading conduct by the plaintiff.
Extra Tidbits:
The money to buy the property came from Chris' share of a jackpot on an electronic lottery game named Keno. The winning ticket was bought by Chris and a friend of his, in December 2014. The jackpot was approximately $2 million. It was agreed between the friend and Chris that the cheque for the winnings would be issued to the friend, and the friend would pay approximately half to Chris as his share.
Before receipt of the moneys Chris and David established an account in David's name for Chris’ share of the Keno winnings to be paid into (the Keno Account).
Chris ceased work and the moneys in the Account were used by him to pay his living and entertainment expenses. Other moneys were used to pay debts and buy an expensive car. Chris also made gifts to members of his family.
The property was purchased in David's name using funds from the Keno Account for a purchase price of $418,000.
Chris, David and their sister moved into the property to live in.
As the property was in David's name, Chris was asked to leave from the property due to disputes between family members.
There was an argument that Chris' share represented the pooling of money between Chris, David and their sister via a form of 'gambling syndicate'. If true, it would argue the property is held by the three of them rather than Chris on his own.
Court noted:
David is known within the family as 'the Reverend" and the fact he would contribute to some form of gambling syndicate is absurd.
David and the sister's account is inconsistent with their conduct which allowed Chris unfettered access to draw on the Keno Account (including making gifts from the Keno Account, David updating his Will to gift the property to Chris and Chris living in the master bedroom).
Plausible that Chris had winnings and property held in David's name to avoid the Child Support Agency.
Chris' evidence corroborated by other witnesses.
Takeaway:
Think long and hard before having a property legally owned by another person purchased using your own money.
If still going ahead, consider appropriate documentation being entered into.
Failing any formal documentation, ensure appropriate records are retained and contemporaneous evidence.
Beware that dishonest reasons for entering into arrangements will often come to light when disputes arise (with reference to the fact that the judgement will be provided to the Child Support Agency to look into whether there are any issues with Chris hiding the money and property from them).