Nelson v Nelson
[1995] HCA 25(Judgment by: Toohey J)
Nelson
vNelson
Judges:
Deane J
Dawson J
Toohey JMchugh J
Gummow J
Legislative References:
Defence Service Homes Act 1918 (Cth) - s 4(1); The Act
Real Property Act 1900 (NSW) - The Act
Defence Service Homes Amendment Act 1988 (Cth) - The Act
Land Act 1962 - s 91; s 296
Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) - s 19
Life Assurance Act 1774 (UK) - The Act
Crimes Act 1914 (Cth) - The Act
Banking Act 1959 (Cth) - The Act
Family Law Act 1975 (Cth) - Section 66B(1); The Act
Statutory Declarations Act 1959 (Cth) - s 11; The Act
Banking Act 1959 (Cth) - s 8
Case References:
-
Judgment date: 9 November 1995
Sydney
Judgment by:
Toohey J
The circumstances giving rise to this appeal are detailed in the reasons for judgment of Deane and Gummow JJ. I shall avoid unnecessary duplication.
2. The judgment upheld by the Court of Appeal was of Master Macready who found as follows:
1. Elizabeth Nelson was entitled to one half of the proceeds of the sale of the Bent Street property after deduction of any selling expenses and agent's commission.
2. Her half share of the proceeds of sale was $195,500.
3. She was entitled to the same proportion of the interest earned from the proceeds as the amount of $195,500 bore to $232,509.38.
4. Mrs Nelson was the beneficial owner of the Kidman Lane property.
The background
3. The appellants, Mrs Nelson and her son Peter Nelson, contend that Elizabeth Nelson had no beneficial interest in the Bent Street property ("Bent Street") or in the proceeds of its sale. They seek a declaration that Peter Nelson and his sister Elizabeth held Bent Street in trust for Mrs Nelson and that the second respondents, who are Elizabeth's solicitors, hold the proceeds of sale upon trust for Mrs Nelson. It is apparent from Peter Nelson's role as an appellant that he supports his mother's claim.
4. On 10 August 1987, Peter and Elizabeth Nelson entered into a contract to buy Bent Street for $145,000. The deposit and balance of the purchase price came from a joint banking account held by Mrs Nelson and her late husband. Mr Nelson died on 4 November 1987; Mrs Nelson was the beneficiary of his estate. The purchase of Bent Street was completed that day.
5. Although there is no issue between the parties as to Mrs Nelson's beneficial ownership of the Kidman Lane property ("Kidman Lane"), the circumstances surrounding the purchase of that property are germane to the dispute over Bent Street. The connection between the two arises in the following way. In order to effect the purchase of Kidman Lane, Mrs Nelson obtained a loan from her bank and as well a subsidised advance under the provisions of the Defence Service Homes Act 1918 (Cth) ("the Act") as it then stood. This required completion of a Subsidy Application. The form itself was completed by Peter Nelson on behalf of his mother. One question asked on the form was:
"Do you or your spouse own or have a financial interest in a house or dwelling other than the one for which a subsidy is sought?"
The box on the form beside the word "No" was ticked, presumably by Peter Nelson. Thereafter Mrs Nelson completed a statutory declaration on the form, verifying the accuracy of the information contained in it. The answer was false in that Mrs Nelson claimed to have the beneficial interest in Bent Street at the time. After an unsuccessful auction in April 1990, Bent Street was sold in October that year.
6. The first question which arises is whether a presumption of advancement operated in respect of Bent Street. If it did, a further question is whether that presumption was rebutted by the evidence. If no presumption of advancement applies to the relationship of a mother and her children, in this case adult children, the situation would be that Peter and Elizabeth Nelson held Bent Street upon trust for Mrs Nelson because she provided the purchase price. In that event Mrs Nelson would be entitled to the proceeds of the sale of Bent Street unless the defence of illegality raised by Elizabeth Nelson is upheld.
Presumption of advancement
7. Master Macready held that the relationship between the parties gave rise to a presumption of advancement. Before the Court of Appeal the appellants contended that there was no presumption of advancement between mother and adult children. But as there was a recent decision of that Court directly against them on the point [153] , the appellants concentrated on the argument that the presumption had been rebutted. The Court of Appeal proceeded "on the basis that the relationship between Mrs Nelson and Elizabeth was such as could give rise to the presumption of advancement" [154] .
8. In Calverley v Green [155] Murphy J was of the view that the presumptions of resulting trusts "are inappropriate to our times, and are opposed to a rational evaluation of property cases arising out of personal relationships" and that the presumption of advancement "has always been a misuse of the term presumption, and is unnecessary". In this appeal it is the existence of a presumption of advancement in the particular relationship that is under challenge, not presumptions of resulting trusts at large. Those presumptions are well entrenched [156] .
9. The relationship between a resulting trust and a presumption of advancement was explained by Gibbs CJ in Calverley v Green [157] by reference to what had been said in Martin v Martin [158] :
"It is called a presumption of advancement but it is rather the absence of any reason for assuming that a trust arose or in other words that the equitable right is not at home with the legal title."
Or, as was said in Pettitt v Pettitt [159] :
"it is no more than a circumstance of evidence which may rebut the presumption of resulting trust".
10. While the presumption of advancement between father and child remains intact, its existence in the case of mother and child and particularly in the case of mother and adult child has been questioned over many years. In Scott v Paulym [160] Isaacs J assumed the correctness of the decision in Bennet v Bennet [161] that when a mother makes a purchase in the name of her child that does not of itself afford the presumption of advancement; in such a case, it was said, the intention to advance is a question of evidence. Underlying the decision was the notion that, according to the rules of equity, there was no obligation on a mother to make provision for her child. Isaacs J observed [162] :
"That case, drawing a distinction between father and mother, has not, so far as I am aware, been judicially doubted".
11. In Calverley v Green Gibbs CJ said of these and other authorities [163] :
"The principle upon which the presumption of advancement rests does not seem to me to have been convincingly expounded in the earlier authorities".
Referring to the categories of relationships which have given rise to a presumption of advancement, Deane J said [164] :
"It is arguable that they should be adjusted to reflect modern concepts of the equality in status and obligations of ... a mother vis-a-vis a father".
In Dullow v Dullow [165] Hope JA, with whom Kirby P and McHugh JA agreed, found it unnecessary to consider what the correct principle is as to any presumption of advancement when a mother places property in the name of a child. But his Honour continued [166] :
"as at present advised, I think that if the law is to be left constrained by presumptions, the same presumption should apply to gifts to children by both mother and father".
In Brown v Brown [167] Gleeson CJ thought that at the present time the drawing of any rigid distinction between parents "may be accepted to be inappropriate". And Kirby P supported the principle that the presumption of advancement, if it is still to be applied, "must be applied equally to gifts by mothers ... as by fathers" [168] .
12. It is possible to determine this appeal on the footing that there is no applicable presumption of advancement or that there is such a presumption but that it is rebutted by the circumstances. In either case the result would be to uphold Mrs Nelson's claim to beneficial ownership of Bent Street and the proceeds of its sale, subject of course to the argument of Elizabeth Nelson based on illegality. Given the somewhat uncertain state of the authorities, it is desirable that this Court resolve the issue of advancement. But if it does so, it is in the context that it is neither necessary nor desirable to review the law relating to resulting trusts generally.
13. So long as the presumption of advancement has a part to play, there is no compelling reason for making a distinction between mothers and fathers in relation to their children and every reason, in the present social context, for treating the situations alike. The rationale underlying the presumption of advancement has varied. Some have expressed it in terms of the obligation of the grantor to support the grantee [169] . Others have seen it as arising from established categories of lifetime relationships [170] . In Calverley v Green, Gibbs CJ said that the presumption should be raised "when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred, whether or not the purchaser owed the other a legal or moral duty of support" [171] . Such an approach tends to be open ended as the Chief Justice recognised when he said that to regard reconsideration of the correctness of the actual results reached in earlier cases as a barrier to acceptance of the principle he enunciated "would be to treat the established categories as frozen in time". That, he added, citing Dixon CJ, "would not be characteristic of the doctrines of equity". At the same time the approach taken by Gibbs CJ does have a question begging aspect and the uncertainty it generates is perhaps evidenced by the fact that in Calverley v Green only the Chief Justice held that the presumption of advancement applied to a de facto relationship.
14. But again, it should be stressed that what the Court is concerned with in the present appeal is the very clear relationship of mother and children, albeit adult children. And whether the governing consideration is said to be a duty to support or a lifetime relationship, the result is that the presumption of advancement should apply. Section 66B(1) of the Family Law Act 1975 (Cth) imposes on the parents of a child "the primary duty to maintain the child". No distinction is made between father and mother; the particular objects of Div 6 of Pt VII of that Act, in which s 66B appears, include ensuring "that parents share equitably in the support of their children" [172] . In Pt VII the definition of "child" is not geared to any particular age [173] , though "the income, earning capacity, property and financial resources of the child" must be taken into account [174] .
15. While, in the case of many adult children, the statutory obligation cast on parents may have no practical consequences, the obligation is there. In so far as the presumption of advancement derives from an obligation of support, its application to mothers who fund the purchase of property by their children is logical. In so far as the presumption operating in the case of a father and his children derives from their lifetime relationship, the same is no less true of a mother and her children. The "egalitarian nature of modern Australian society, including as between the sexes" [175] demands no less. The point is highlighted in the present case by the fact that the cheques for the purchase price of Bent Street were drawn on the joint account of Mr and Mrs Nelson just before the former's death and were presented just after his death. To draw a distinction between them in terms of the presumption would be quite unreal.
The presumption rebutted
16. However, the presumption of advancement, in whatever circumstances it arises, can be rebutted by evidence of the actual intention of the grantor at the time of the grant. Master Macready made an express finding that "there was no intention of Mrs Nelson to confer any beneficial interest on Elizabeth". Of course, Peter Nelson made no claim of beneficial interest for himself. The Master further concluded that "a purpose for putting the property in the name of the children was to preserve entitlement of Mrs Nelson to apply for a Defence Service's home loan". While these findings, which were not disturbed by the Court of Appeal, are more than sufficient to rebut the presumption of advancement, they shift the focus of attention to the implications of putting the property in the names of Peter and Elizabeth Nelson so as to make it possible for their mother to obtain such a loan.
Illegality
17. What then is the illegality which is said to preclude Mrs Nelson from asserting beneficial ownership of Bent Street? Master Macready set out in his judgment "the broad basis of the claims made by each of the parties and the defences raised in respect of those claims". As to Mrs Nelson's claim that there was a resulting trust in her favour in respect of Bent Street and the proceeds of its sale, the Master identified the relevant defence as follows:
"There was an illegal purpose namely an intention to acquire a subsidy under the Defence Service Homes Act (Cmth) in breach of s 18 of that Act."
18. Thus the purpose which is said to preclude Mrs Nelson's claim was identified, and necessarily had to be identified, as a purpose existing at the time Bent Street was acquired [176] . Clearly enough, in order to affect the ownership of Bent Street, any illegal purpose must relate to the circumstances in which that property was acquired. The acquisition by Mrs Nelson of Kidman Lane and the completion of the Subsidy Application have relevance only in so far as they throw light on the purchase of Bent Street in the name of someone other than Mrs Nelson. To put it in terms of the approach taken by the courts below, once the illegal purpose was carried out, was Mrs Nelson's equitable interest thereby destroyed?
19. But it is necessary to identify with some precision the "illegality" said to attach to the transaction in which the parties were involved. This in turn involves trying to get a clear picture of what took place, including the timing of events. At the time of the purchase of Bent Street there had been no application by Mrs Nelson for a Defence Service Home loan. The purchase of that property was completed on 4 November 1987 and a transfer registered on 18 November. The Subsidy Application in connection with the purchase of Kidman Street was lodged on 25 July 1989. The purchase of Kidman Street was completed on 31 August 1989.
20. Master Macready's judgment contains the following passage:
"It is notable that at the time of purchase of Bent Street there was no application for a subsidy. Mrs Nelson concedes that she was aware at that stage that she was entitled to the subsidy and it was also her understanding that she might be precluded from getting a War Service Loan in due course if she already owned a house, in her name. It was also Mr Peter Nelson's intention at the time that Bent Street was purchased that in due course an application would be made for a War Service Loan."
It is not clear beyond argument what exactly was in contemplation so far as a Defence Service Home loan was concerned. Master Macready said:
"It seems tolerably clear from the affidavits that Mrs Nelson, Peter Nelson and the deceased knew that a person cannot apply for a Defence Services Homes subsidy if they were the owner of a house."
Apparently Mr Nelson had earlier missed out on a loan under the Act for this reason. He told Elizabeth Nelson that her name would appear on the title to Bent Street because Mrs Nelson, in order to obtain such a loan, "was not meant to have a home". Mrs Nelson was eligible for a loan but did not seek one in respect of the purchase of Bent Street. It seems that the family had in mind that Bent Street would be sold at a later date and a permanent home found for Mrs Nelson. Bent Street might be sold before the purchase of another home. If a home was found before Bent Street could be sold, the existence of a title to that property in the names of Peter and Elizabeth Nelson would ensure that there was no impediment to Mrs Nelson obtaining a Defence Service Home loan in connection with the purchase of the new home. Since the maximum benefit was a loan of $25,000 on beneficial terms [177] , one might question the extent of the advantage hoped to be gained by this artificial arrangement. But the evidence referred to in the judgments admits of no other conclusion than that Bent Street was put in the names of Peter and Elizabeth Nelson so that Mrs Nelson might benefit from the Act at some later time if the need arose.
21. Referring to the purpose of putting Bent Street in the names of the children, Master Macready said:
"That proposed purpose of itself is not illegal but when the application was made for the certificate of entitlement (that is, entitlement to a loan under the Act) it was consummated."
This emphasis on consummation of purpose appears also in the judgment of Sheller JA, where his Honour said [178] :
"In my opinion the appellants' claim fails because the unlawful purpose of obtaining a loan under the War Service Loan legislation for the purchase of Kidman Lane by concealing Mrs Nelson's interest in Bent Street was carried out. I do not think this result is avoided by the appellants' attempt to show that the intention of Mr and Mrs Nelson not to benefit Peter and Elizabeth by the transfer of Bent Street into their names could have been proved without the need to refer to the illegal purpose. This matters not, once the illegal purpose is carried into effect."
22. Although the "unlawful purpose" related only to the obtaining of a Defence Service Home loan, the consequence of the judgments below was that Mrs Nelson failed to make good any part of her claim to the proceeds of the sale of Bent Street.
Defence Services Homes Act
23. The Act was substantially amended by the Defence Service Homes Amendment Act 1988 (Cth) ("the Amendment Act"). The Amendment Act took effect from 19 December 1988 so that the purchase of Bent Street preceded it. The purchase of Kidman Lane and the completion of the Subsidy Application took place after the Amendment Act came into force.
24. The Amendment Act repealed Pts III, IV, V and VI of the Act. Part V was headed: "Advances on mortgage for purposes of homes". It empowered the Defence Service Homes Corporation ("the Corporation") to make an advance to an "eligible person" for the purpose inter alia of purchasing a dwelling-house [179] . Mrs Nelson qualified as an eligible person. The maximum advance was $25,000 [180] . No advance was to be made unless the Corporation was satisfied that the dwelling-house was intended to be used by the applicant as a home for himself and his dependants and that neither the applicant nor the wife or husband (if any) of that person was the owner of any other dwelling-house [181] . The term "owner" was defined in s 4 of the Act to include, in the case of a dwelling-house, "any person who has purchased or contracted to purchase a dwelling-house". Because the definition was inclusive, "owner" would include equitable as well as legal ownership. The sanction for a false declaration as to ownership lay in the power of the Corporation to call up the whole of the moneys secured by mortgage to give effect to the advance [182] . No penalty was prescribed for a breach of the Act.
The Amendment Act
25. The Amendment Act introduced the language of subsidy. It did so in the context of an agreement made between the Commonwealth of Australia and Westpac Banking Corporation ("Westpac") whereby the Commonwealth agreed to pay to Westpac an interest subsidy in connection with a subsidised advance by Westpac to an eligible person [183] . Under Pt III of the Act as amended by the Amendment Act: "Notices of Eligibility and Certificates of Entitlement", a person may apply to the Secretary of the Department of Veterans' Affairs for a notice of eligibility and certificate of entitlement [184] . Mrs Nelson qualified as an "eligible person" under the revised definition in s 4(1). The Secretary shall not issue a certificate of entitlement unless satisfied inter alia that the person is not the owner of any dwelling-house "other than the dwelling-house ... in respect of which the advance is payable" [185] .
26. Where the Secretary is satisfied that a certificate of entitlement was issued as a result of a false statement by the person or that the person was not entitled to the certificate, the Secretary may cancel the subsidy [186] . The Secretary may then require payment to the Commonwealth of the subsidy or part thereof "as the Secretary determines to be reasonable" [187] . The amount specified may be recovered as a debt due to the Commonwealth [188] but the Secretary may write off the amount, waive the right of recovery or allow the person to pay the amount by instalments [189] . Again, there is no penalty imposed for a breach of the Act.
27. Whether any of the provisions of the Crimes Act 1914 (Cth) would be applicable in the circumstances it is unnecessary to determine. It is enough to note the existence of various sections in that Act dealing with false pretences, defrauding the Commonwealth or a public authority under the Commonwealth and conspiracy [190] . The point is that the Crimes Act itself contains sanctions against conduct aimed at securing a financial advantage at the expense of the Commonwealth. Reference may also be made to s 11 of the Statutory Declarations Act 1959 (Cth) which makes it an offence wilfully to make a false statement in a statutory declaration. There is no compulsion to look for an additional sanction arising from the Act, other than the right of recovery of the subsidy for which express provision is made. This is an echo of what was said by Mason J (with whom Aickin J agreed) in Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd [191] :
"There is much to be said for the view that once a statutory penalty has been provided for an offence the rule (sic) of the common law in determining the legal consequences of commission of the offence is thereby diminished".
It is true that the Act itself carries no penalty; nevertheless there is a range of provisions apt to catch conduct aimed at defrauding the Commonwealth and making false declarations.
Tinsley v Milligan
28. The appellants submitted that the question of illegality did not truly arise because Mrs Nelson did not need to rely on any illegal purpose in order to rebut the presumption of advancement. The decision of the House of Lords in Tinsley v Milligan [192] was urged in support of this view. The approach of the majority (Lord Jauncey of Tullichettle, Lord Lowry and Lord Browne-Wilkinson; Lord Keith of Kinkel and Lord Goff of Chieveley dissenting) was that a claimant to an interest in property was entitled to recover if not forced to plead or rely on an illegal transaction in the course of which the property was acquired; that, in the circumstances, by showing that she had contributed to the purchase price of the property and that there was a common understanding between the parties that they owned the property equally, the defendant had established a resulting trust; and that there was no necessity to prove the reason for the conveyance into the sole name of the plaintiff. The reason was to assist in the perpetration of frauds on the Department of Social Security.
29. Master Macready distinguished Tinsley v Milligan on the ground that in the present case a presumption of advancement applied and that it was necessary for the appellants to rebut that presumption. While Handley JA in the Court of Appeal did not refer to Tinsley v Milligan (as mentioned earlier, his Honour agreed generally with Sheller JA), he did say [193] :
"Any attempt by a disponor to rebut the presumption (of advancement) involves an inquiry as to his or her real intention before and at the time of the disposition. This cannot be a limited or artificial inquiry. The court must determine what the real intention of the disponor was in the light of the whole of the evidence which is admissible for that purpose."
Sheller JA referred to Tinsley v Milligan but said that even on the approach taken there it was still necessary to consider why Bent Street was not registered in the name of Mrs Nelson and "(a)t that point the purpose of obtaining a subsidised loan by concealment is revealed" [194] .
30. The approach taken by the Master and by the Court of Appeal must be considered in the light of what was said by Lord Lowry in Tinsley v Milligan [195] :
"The advancement cases belong to a class in relation to which the rule seems to me to conform with equitable principles. The ostensible donor makes a gift with a fraudulent purpose in view; when he tries to assert his equitable title, he is obliged to rely on his own fraud in order to rebut the presumption of advancement. Equity, through the mouth of the court, then says, 'We will not assist you to recover your property, because you have to give evidence of your own wrongdoing in order to succeed.' On the other hand, under the wide principle, someone in the position of Miss Milligan, who has only to show a trust, resulting from the fact (which he must prove or which may be admitted) that the property was acquired wholly or partly by the use of his money, is said to be defeated by the maxim that he who comes into equity must come with clean hands, on the ground that the original transaction was undertaken for a fraudulent purpose. But in the latter case the claimant is not relying on his own fraud in order to succeed and is merely said to be defeated by a rule of policy, despite the fact that he already has an equitable interest, as the locus poenitentiae rule confirms."
In putting the matter that way his Lordship was impliedly accepting the distinction made expressly by Lord Jauncey [196] "between the enforcement of executory provisions arising under an illegal contract or other transaction and the enforcement of rights already acquired under the completed provisions of such a contract or transaction".
31. The distinction is well recognised in the authorities. At the same time there is an artificiality in the view taken by the majority in Tinsley v Milligan that, in cases where the presumption of advancement does not apply, a plaintiff can establish his or her equitable interest "without relying in any way on the underlying illegal transaction" [197] . This approach follows that taken in Alexander v Rayson [198] and in Bowmakers Ltd v Barnet Instruments Ltd [199] which allows a party to an illegality to recover by reason of a legal or equitable interest in property if he can establish the claim without relying on his own illegality. Thus, in Tinsley v Milligan the respondent had to do no more than establish a resulting trust without proving why the house was conveyed into the name of the appellant alone, namely, to defraud the Department of Social Security. This approach is open to the criticism that it represents a triumph of procedure over substance. It pays no regard to the nature or seriousness of the illegality.
32. A different view was taken by Lord Goff (with whom Lord Keith agreed) that [200] :
"once it comes to the attention of a court of equity that the claimant has not come to the court with clean hands, the court will refuse to assist the claimant, even though the claimant can prima facie establish his claim without recourse to the underlying fraudulent or illegal purpose".
This approach too is open to criticism. It carries automatic refusal of relief and therefore, as Lord Goff recognised [201] , its "application is indiscriminate and so can lead to unfair consequences as between the parties to litigation".
Illegality and public policy
33. The illegality upon which Elizabeth Nelson relies is contravention of a statutory provision. A statute may contain an express prohibition against the making of a contract. Or it may prohibit the doing of a particular act. An agreement that the act be done may, in the circumstances, be impliedly prohibited. On the other hand, a contract in furtherance of an illegal purpose may not be directly contrary to the provisions of the statute by reason of any prohibition, express or implied [202] . In asking where is the illegality that precludes Mrs Nelson from asserting beneficial ownership of Bent Street, it is necessary to identify the policy which underlies the relevant provisions of the Act, bearing in mind the amendments made to the Act and the chronology of events.
34. The policy of the Act may be discerned from its long title: "An Act relating to the provision of assistance to members of the Defence Force and certain other persons to acquire homes". It is clear from the sections already mentioned that assistance, whether in the form of secured loan as before or a subsidy as now, is to be given to those who do not own another dwelling-house. Ownership of another dwelling-house precluded eligibility for a loan and now precludes eligibility for a subsidy. No penalty is imposed for a breach of the Act, in its original or amended form. The remedy of the Commonwealth is recovery of the subsidy obtained by reason of a false statement regarding ownership of another dwelling-house. That is the consequence of a false statement. There is nothing in the Act which in any way purports to affect the ownership of a dwelling-house wrongly obtained through the use of a subsidy; the Act has nothing to say about that matter. There was no statutory bar to the transaction whereby Mrs Nelson acquired the beneficial ownership of Bent Street; there was nothing in that transaction which offended against any provision of the Act.
35. In those circumstances the approach to be taken was indicated by Mason J in Yango when he said [203] :
"It is perhaps more accurate to say that the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction and that the principle to which I have referred does no more than enunciate the ordinary rule which will be applied when the statute itself is silent upon the question. Primarily, then, it is a matter of construing the statute and in construing the statute the court will have regard not only to its language, which may or may not touch upon the question, but also to the scope and purpose of the statute from which inferences may be drawn as to the legislative intention regarding the extent and the effect of the prohibition which the statute contains."
36. The Act expressly prohibits the making of a false declaration as to ownership of another dwelling-house. It provides for the recovery of a subsidy obtained through such a false declaration. But the Act does not prohibit the purchase of a dwelling-house with the aid of a subsidy obtained by making a false statutory declaration. It says nothing about such a purchase. If there is any such prohibition, "that prohibition must be ascertained or identified by a process of implication" [204] . But no such implication can be drawn. And it would be an extraordinary consequence if the implication were drawn. Take the case of a purchaser of a dwelling-house, taking the title in his or her own name, who makes a false declaration under the Act as to ownership of another dwelling-house. Could the seller refuse to complete the sale if the existence of the false declaration became known? The answer must surely be no. There is nothing "illegal" in the transaction between the parties. The source of a purchase price is a matter between the purchaser and anyone who provides assistance for the purchaser. When one of those persons is the Corporation, the Corporation's remedies are to be found in the Act. Thus in Orr v Ford [205] liability to forfeiture of leasehold acquired in breach of the Land Act 1962 (Q) was held not to render illegal a trust of land so acquired.
37. It is true that there is a distinction between statutory prohibition of a contract and consequential invalidity, on the one hand, and the court's refusal to enforce the contract, on the other hand. "The former is a matter of statutory construction ... the latter is a matter of public policy" [206] . It was therefore argued that even if the Act does not expressly or impliedly prohibit the arrangement by which Bent Street was acquired in the names of Peter and Elizabeth Nelson, nevertheless the court will not permit the parties to give effect to that arrangement.
38. If that argument is upheld, it means that the court will not permit Mrs Nelson to assert beneficial ownership of Bent Street because the parties contemplated that the legal estate in her name would constitute a barrier to obtaining a Defence Service Home loan. The Court of Appeal did not say that the arrangement was thereby illegal and unenforceable. Those attributes were held to attach once "the unlawful purpose ... was carried out".
39. When a contract is not itself the subject of an express or implied statutory prohibition but is associated with or is in furtherance of an illegal purpose, the "refusal of the courts to regard such contracts as enforceable stems not from a legislative prohibition but from the policy of the law, commonly called public policy" [207] . Even then it is necessary to ask what public policy of the law would be served by declining to enforce the contract. The rule of law expressed in the maxim ex turpi causa non oritur actio is one of public policy to discourage breaking the law. The underlying policy is that "(n)o court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act" [208] . But a universal application of this rigid rule will often lead to unjust and capricious results. As was said by Nicholls LJ in Saunders v Edwards [209] , "public policy is not a blunt, inflexible instrument".
40. Once we are in the realm of public policy we are in a rather shadowy world. It is perhaps the more shadowy here because Mrs Nelson is not asking the court to enforce a contract but rather to give effect to the resulting trust which would ordinarily arise once the presumption of advancement has been rebutted. The rule of law expressed in the Latin maxim is, as Diplock LJ said in Hardy v Motor Insurers' Bureau [210] :
"concerned not specifically with the lawfulness of contracts but generally with the enforcement of rights by the courts, whether or not such rights arise under contract. All that the rule means is that the courts will not enforce a right which would otherwise be enforceable if the right arises out of an act committed by the person asserting the right ... which is regarded by the court as sufficiently anti-social to justify the court's refusing to enforce that right."
41. From this formulation of the rule, certain consequences follow. Relevantly, in the view of his Lordship [211] :
"The court's refusal to assert a right, even against the person who has committed the anti-social act, will depend not only on the nature of the anti-social act but also on the nature of the right asserted. The court has to weigh the gravity of the anti-social act and the extent to which it will be encouraged by enforcing the right sought to be asserted against the social harm which will be caused if the right is not enforced."
42. This in effect was the approach taken by Nicholls LJ in the Court of Appeal in Tinsley v Milligan [212] . Nicholls LJ and Lloyd LJ were in the majority; Ralph Gibson LJ dissented. It was an approach which did not find favour with the minority in the House of Lords or indeed with the majority [213] .
43. Referring to recent decisions of the Court of Appeal [214] , Nicholls LJ said that these authorities established that "the underlying principle is the so-called public conscience test" [215] . That test required the court to weigh the adverse consequences of granting relief against the adverse consequences of refusing relief. It called for a value judgment. In answer to the contention that the public conscience test had no place where property was conveyed into the name of one party for a fraudulent purpose, Nicholls LJ examined a line of authority that begins with the decision of Lord Eldon LC in Cottington v Fletcher [216] . But, as he observed, these cases lie uneasily with the notion of public policy which eschews an inflexible approach. And as has been pointed out [217] , in Bowmakers the Court of Appeal allowed the plaintiff's claim only because it was "satisfied that no rule of law, and no considerations of public policy, compel the court to dismiss the plaintiffs' claim in the case before us" [218] .
44. To inquire into the circumstances in which the illegality occurred is not at odds with the courts' approach to questions of public policy. In Vita Food Products Inc v Unus Shipping Co, Lord Wright, delivering the judgment of the Privy Council, said [219] :
"Nor must it be forgotten that the rule by which contracts not expressly forbidden by statute or declared to be void are in proper cases nullified for disobedience to a statute is a rule of public policy only, and public policy understood in a wider sense may at times be better served by refusing to nullify a bargain save on serious and sufficient grounds."
To allow the result in such a situation to be determined by the procedural aspects of a claim for relief is at odds with the broad considerations necessarily involved in questions of public policy.
45. Although the public policy in discouraging unlawful acts and refusing them judicial approval is important, it is not the only relevant policy consideration. There is also the consideration of preventing injustice and the enrichment of one party at the expense of the other [220] . In the present case there was an arrangement, to which the members of the family were party, that Bent Street be acquired in the names of Peter and Elizabeth Nelson. Their purpose was to enable Mrs Nelson to obtain a Defence Service Home loan if the occasion arose. Such a loan involved favourable terms to the borrower; the loan itself of course was in any event repayable. To that limited extent there would be a benefit to Mrs Nelson at some later date by making a false statement as to ownership of another dwelling. On the other hand, to refuse Mrs Nelson's claim is to give Elizabeth Nelson a "windfall gain" [221] of nearly $200,000 with a corresponding detriment to Mrs Nelson. In those circumstances there is no rule of public policy that demands that relief to Mrs Nelson must be refused [222] . In particular there is no such rule that precludes giving effect to a resulting trust in her favour.
Conclusion
46. The appeal should therefore be allowed. In so far as there has been a breach of the Act, the remedy is in the hands of the Commonwealth. The Secretary may cancel the subsidy and thereafter require payment of the subsidy or part thereof or may write off the amount, waive the right of recovery or allow Mrs Nelson to pay the amount by instalments. There is no obvious reason why the Secretary would not cancel the subsidy and require its repayment. But that is a matter for the Secretary. Once it appears that any illegality or unlawful purpose associated with the purchase of Bent Street does not preclude Mrs Nelson from asserting a beneficial interest in that property, her position vis-a-vis the Corporation is a matter between her and that body. To require Mrs Nelson, as a condition of obtaining a declaration of beneficial interest in the property or the proceeds of its sale, to pay to the Commonwealth an amount equal to the subsidy is to require more than that a plaintiff do equity between the parties. Clearly though the Corporation should be told, if it has not already been told, of the situation at the time Mrs Nelson made her statutory declaration.
47. I would allow the appeal, set aside the orders of the Court of Appeal, allow the appeal to that Court and set aside declarations 1, 2 and 3 made by the Master on 10 January 1994. There should be declarations to the effect that Peter and Elizabeth Nelson held Bent Street in trust for Mrs Nelson and to the further effect that the second respondents hold the balance of the proceeds of the sale of Bent Street in trust for Mrs Nelson. The parties should have an opportunity to file an agreed minute of orders to give effect to this judgment including the question of costs. In the event of disagreement they should file written submissions as to the appropriate orders to be made.