Equity & Trusts

Nelson v Nelson (1995) 184 CLR 538

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Facts
  • A woman built a house but put it in the name of her daughter and son so she could obtain a low interest loan as she had no other property
  • Daughter tried to claim her half of the property.
  • She knew it had been made for an illegal purpose.
Issue
  • Did the mother have an interest? Is she precluded because of the illegal arrangement?
Held
  • The attitude of the CL is contained in the principle that the court won’t enforce a cause of action that is founded upon an illegal act
  • Having achieved an illegal end, the transferor can’t then repudiate
  • However this was not a breach of the act, it was fraud for obtaining benefit on a false basis
  • Also need to prevent injustice etc
  • Therefore, recognized equitable interest due to her intention, even though it was illegal

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