Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538 (9 November 1995)

HIGH COURT OF AUSTRALIA

BETTIE JUNE NELSON AND PETER JOHN NELSON v ELIZABETH ANNE NELSON, RUSSELL HODGE, STEPHEN LANCKEN, STEPHEN FULLER, SHARON BOWLES, MICHELE WORNER AND ANTHONY HATZIS TRADING AS OWEN HODGE AND SONS WITH FORREST DUFTY AND CO
F.C. 95/046
Number of pages - 78
(1995) 184 CLR 538

HIGH COURT OF AUSTRALIA
DEANE(1), DAWSON(2), TOOHEY(3), McHUGH(4) AND GUMMOW(1) JJ

CATCHWORDS

HEARING

CANBERRA, 10 May 1995
9:11:1995, SYDNEY

ORDER

1. Appeal allowed.
2. Orders of the Court of Appeal set aside and in place thereof order that:

(ii) declarations 1, 2 and 3 made by Master Macready set aside;
(iii) it be declared that if on or before 9 January 1996 the first appellant

shall have paid to the Commonwealth of Australia the amount ("the Benefit Sum") agreed by the solicitors for the first appellant and for the first respondent to be the present value, over the term of the loan agreement dated 30 August 1989 and for the advance by Westpac Banking Corporation ("the Bank") to the first appellant of $25,000, of the difference between the subsidised rate which applied pursuant to the Defence Service Homes Act 1918 (Cth) and that rate which, upon its usual terms, the Bank would have charged the first appellant on an advance of $25,000 over the same period and for the same purpose, the second respondents then hold the whole of the balance of the proceeds of the sale of the property known as 5 Bent Street, Petersham, New South Wales, together with any interest earned thereon, upon trust for the first appellant;
(iv) moneys which became held by the second respondents upon trust for the first appellant as provided in the declaration in order (iii) be paid by the second respondents to the first appellant or as she may direct;
(v) it be declared that if the Benefit Sum has been ascertained as aforesaid but the first appellant has not paid it to the Commonwealth, as provided in order (iii) hereof, on or before 9 January 1996, the second respondents then hold the balance of the proceeds of the sale specified in that declaration, as to the Benefit Sum upon trust for the first respondent and as to the remainder (including interest earned upon the whole of the said balance) upon trust for the first appellant;
(vi) any moneys which become held by the second respondents upon trust for the first respondent and the first appellant respectively as provided in the declaration in order (v) be paid by the second respondents to those parties or as respectively directed;
(vii) the first respondent pay the costs of the appellants and the second respondents of the proceeding at first instance and in the Court of Appeal.
3. There be liberty to any party to apply to this Court if, on or before 30 November 1995, the solicitors for the first appellant and for the first respondent shall not have agreed the amount of the Benefit Sum as provided in order 2 hereof.
4. The first respondent pay the costs of the appeal of the appellants and the second respondents.

DECISION

The Facts
DEANE AND GUMMOW JJ. The first appellant, Mrs B J Nelson, is the widow of Mr J W Nelson, who died on 4 November 1987 at the age of 73. Mrs Nelson was then aged 66. Mr Nelson was a retired Master Mariner and as a result of his war service he had been an "eligible person" within the meaning of the definition in s 4(1) in the Defence Service Homes Act 1918 (Cth) ("the Act"). As his widow, Mrs Nelson was also an "eligible person" within that definition.

2. There were two children of the marriage, the second appellant, Peter Nelson, and the first respondent, Elizabeth Nelson. At the time of their father's death, Peter was aged 37 and his sister 33 years.

3. The property known as 5 Bent Street, Petersham, Sydney ("the Bent Street property") is land under the provisions of the Real Property Act 1900 (NSW). On 10 August 1987, Peter Nelson and Elizabeth Nelson entered into a contract to purchase as joint tenants the Bent Street property for $145,000. The purchase was completed on 4 November 1987 and a transfer registered on 18 November 1987. Peter Nelson and Elizabeth Nelson were registered as proprietors of the Bent Street property as joint tenants. Mrs Nelson did not appear on the title. Three years later, on 23 October 1990, Peter Nelson and Elizabeth Nelson entered into a contract to sell the Bent Street property for $400,000. In the meantime, and relevantly with effect from 19 December 1988, the Act had been considerably amended by the Defence Service Homes Amendment Act 1988 (Cth) ("the Amendment Act").

4. The sale of Bent Street was completed on 29 November 1990. Of the settlement moneys, $127,302.24 was paid to Westpac Banking Corporation ("the Bank") to discharge a mortgage over the Bent Street property. After allowing for adjustments, there was a balance of $232,509.83. This sum is invested in an interest bearing trust account in the name of the second respondents, who are Elizabeth Nelson's solicitors, to await the resolution of a dispute between the parties as to the ownership of that fund. It is this dispute which has led to the present appeal.

5. By proceeding commenced in the Equity Division of the Supreme Court of New South Wales on 24 December 1991, Mrs Nelson and Peter Nelson as plaintiffs sought a declaration that the second defendants held the balance of the proceeds of sale of the Bent Street property on trust for Mrs Nelson, and an order that those proceeds, together with interest, be paid to Mrs Nelson. By her cross-claim, Elizabeth Nelson sought various relief against her brother and mother, including a declaration that she had a beneficial interest in the proceeds of sale. The solicitors were joined as respondents so that they might be bound by any decision as to the ownership of the proceeds of sale. They have taken no active part in the litigation.

6. The issues in the Supreme Court extended to further matters arising from property dealings of the family, including the properties at 6 Yasmar Avenue, Haberfield, Sydney ("the Yasmar Avenue property") and 129 Windsor Street, Paddington, Sydney ("the Windsor Street property"). It is necessary to refer briefly to these matters, and to retrace steps to the period before the death of Mr Nelson. The Yasmar Avenue property was sold in January 1986 for $165,000 and the Windsor Street property in August 1986 for $188,500. The registered proprietor of both properties had been Mr Nelson, although, in circumstances not presently material, in March 1986 he had transferred the Windsor Street property to Peter Nelson and a Mr Hans Bendler.

7. Of the proceeds of sale of the Windsor Street property in August 1986, $124,000 was paid into an account with Hambro Australia Limited ("Hambro") in the name of Mrs Nelson. The sum of $59,900 was paid into an account with Hambro held by Peter Nelson. These payments to the Hambro accounts were made in November 1986.

8. By this time, Mr Nelson had been diagnosed as suffering the disease which a year later caused his death. There were discussions between Mr and Mrs Nelson and their son as to the use of the proceeds of sale to buy a new property. This led to the exchange of contracts on 10 August 1987 to purchase the Bent Street property for $145,000. As we have indicated, the purchasers of the Bent Street property were Peter Nelson and Elizabeth Nelson. However, both the deposit and the balance of the purchase price were provided from a joint account of Mr and Mrs Nelson. A sum of $160,991.66 was transferred into that account from Mrs Nelson's account with Hambro. These funds, as to $124,000, represented the proceeds of sale of the Windsor Street property.

9. On 3 November 1987, in anticipation of settlement the next day, three cheques were drawn on the joint account in the total of $130,782.06. By then, Mr Nelson had been in hospital for a month. He died in the early hours of 4 November. Later that day, the purchase was completed with cheques drawn as described, and the transfer was taken in the names of Peter Nelson and Elizabeth Nelson, as joint tenants. Mrs Nelson was the sole executrix of and beneficiary under the will of her husband. Probate was granted to her on 5 November 1991. This was shortly before Mrs Nelson instituted the present litigation.

10. After settlement, Peter Nelson organised renovations of the Bent Street property. These were completed in June 1988. Some of the moneys for the renovations were supplied by Mrs Nelson and others came from the account of Peter Nelson with Hambro and thus were derived from the proceeds of sale of the Windsor Street property. In March or April 1988, Mrs Nelson and her son moved into occupation of the Bent Street property. Mrs Nelson thought that the property was too large for a family home. She then purchased in her name a property at 3 Kidman Lane, Paddington, Sydney ("the Kidman Lane property"). The Bent Street property subsequently was sold in the manner already outlined.

11. The issues on the appeal to this Court concern the ownership of the fund held by the second respondents, representing the remaining proceeds of sale of the Bent Street property. A claim by Mrs Nelson that Elizabeth was liable to compensate her for breach of trust was abandoned during oral submissions. No issue as to ownership arises with respect to the Kidman Lane property. However, some understanding of the interrelation of the dealings affecting both properties is necessary.

12. The purchase of the Kidman Lane property was completed on 31 August 1989. By loan agreement dated 30 August 1989 between Mrs Nelson, her two children and the Bank, an advance of $150,000 was made, subject to the provision of a mortgage by Peter Nelson and Elizabeth Nelson over the Bent Street property. This security was provided to the Bank. It was intended to demolish the house on the Kidman Lane property and to erect a new dwelling.

13. In addition to the advance of $150,000 raised from the Bank by loan agreement also dated 30 August 1989, Mrs Nelson obtained from the Bank $25,000 as a subsidised advance at a low rate of interest pursuant to the provisions of the Act as it by then stood. A form entitled "Subsidy Application" had been completed by Peter Nelson for his mother and lodged on 25 July 1989. In response to the question "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?", a tick was placed in the box beside the word "No". Mrs Nelson completed a statutory declaration on the form, verifying the accuracy of the information supplied in it.

14. Elizabeth Nelson was the only one in the family with a regular income. The loan agreement with the Bank had provided that the advance of $150,000 be made into a joint account in the names of the three Nelsons. Elizabeth undertook to contribute her wages into the account to meet the cost of the finance. She commenced to do so on 7 September 1989. The relationship between the parties broke down. Elizabeth Nelson made no further deposits after May 1990, some six months before the Bent Street property was sold. Mrs Nelson still holds the Kidman Lane property.

The decisions in the Supreme Court
15. Various issues were dealt with by a Master in the Equity Division of the Supreme Court. The Master held that Mrs Nelson was the beneficial owner of the Kidman Lane property. The Master granted declaratory relief as to ownership of the proceeds of sale of Bent Street. Elizabeth Nelson had sought a declaration as to the extent of her beneficial interests in the proceeds. Declarations were made that:

(i) Elizabeth Nelson was entitled to one-half of the net

proceeds of sale, that one-half share at the time of completion being $195,500; and

(ii) she also was entitled to the same proportion of the

interest earned by the fund as that amount bore to $232,509.83.

An appeal to the Court of Appeal was dismissed (1).
16. The Master also considered the state of accounting between Elizabeth Nelson and Mrs Nelson in respect of other family financial dealings. As we have indicated, Elizabeth made payments into the joint account from which the loan from the Bank for Kidman Lane was serviced. However, on the other side of the accounting, Elizabeth had drawn cheques on her father's account. The result was a balance of $408.93 in favour of Mrs Nelson and the Master ordered Elizabeth to pay that sum to her mother. This order has not been challenged.

17. By her cross-claim, Elizabeth Nelson had contended that the provision by her parents of funds to pay for the purchase of Bent Street was an advancement for herself and her brother and succeeded in obtaining relief. Before this Court, Mrs Nelson again presses the submission, which failed in both Courts below, that she should have a declaration that the proceeds of sale are held in trust for her, on the footing that there was a resulting trust in her favour of the Bent Street property. The resulting trust is said to arise by reason of the provision of all of the purchase moneys by Mrs Nelson on her own behalf or as executrix and sole beneficiary of the estate of her husband.

18. The Master held that the relationship between a mother, as well as a father, and adult children may give rise to a presumption of advancement. Evidence was led to rebut the presumption. The Master found that Mrs Nelson had no intention to confer any beneficial interest in Bent Street or in the proceeds of sale thereof on her children, and that Bent Street was purchased in the names of Peter and Elizabeth to preserve Mrs Nelson's entitlement as an "eligible person" under the Act, an entitlement which would have been lost or prejudiced if her name was on the legal title. He also held that Mrs Nelson and Peter Nelson had knowledge of the illegality involved in the application for subsidy in respect of the Kidman Lane property, and intentionally went ahead with that application.

19. The Master found that the purpose at the time of the acquisition of the Bent Street property of preserving Mrs Nelson's entitlement by keeping her name off the registered title "of itself is not illegal". However, he went on to conclude that, when the application for subsidy was made in respect of the Kidman Lane property and the subsidy was obtained, that purpose was achieved by concealment of the then subsisting beneficial ownership by Mrs Nelson of the Bent Street property. The making of the false statement was said to be sufficient for the purpose of showing illegality.

20. On this basis, the Master held that Mrs Nelson's case to rebut the presumption of advancement failed. It should be noted that the case failed not only as to the amount of the subsidy in respect of the loan for the Kidman Lane property but as to the whole of the fund representing the proceeds of sale of the Bent Street property. The result was the declaratory relief in favour of Elizabeth Nelson. She had been found to have had no part in applying for the subsidy.

21. In dismissing the appeal by Mrs Nelson, the Court of Appeal held that:

(i) the presumption of advancement should be regarded as

applying to the relationship of mother and adult child;

(ii) if a party who has put property in the name of

another for an illegal purpose seeks to rebut the presumption of advancement, once the illegal purpose has been carried out it is no answer that the intention not to benefit the donee could have been proved without reference to the illegal purpose;

(iii) the obtaining of the subsidy on the purchase of the

Kidman Lane property involved the carrying out by Mrs Nelson of an illegal purpose; and

(iv) that illegal purpose could not be relied upon to

rebut the presumption of advancement in respect of the Bent Street property.

The issues
22. The basic questions which arise on the appeal to this Court may now be stated. The fund in contention represents the proceeds of sale of real property, the registered title to which was in the names of Mrs Nelson's children, Peter and Elizabeth Nelson, as joint tenants. The issue then is whether equity requires the second respondents, who hold the fund, to account for a portion of it to Elizabeth Nelson on the footing that it derives from and represents a beneficial interest she had in the Bent Street property, even though the purchase moneys for that property had been provided by her mother.

23. There is an interplay of three doctrines or principles. They are that concerned with the imputation or presumption of a resulting trust in favour of Mrs Nelson as the source of the purchase moneys, the countervailing presumption of advancement which would leave the equitable title to Bent Street at home with the legal title, and the effect of what was classified as the illegal purpose in the later concealment by Mrs Nelson, to obtain the subsidy for the Kidman Lane property, of what she was found always to have intended to be her beneficial ownership of the Bent Street property. Do the circumstances of the case, as disclosed by the findings on the evidence, supply sufficient reason for concluding that the equitable title to Bent Street was not at home with the legal title when Bent Street was sold?

24. Where an express trust fails as a whole, or as to part only, the question arises whether a resulting trust as to the balance is to be enforced in favour of the settlor. This case is not concerned with the law of resulting trusts as it operates in that situation.

25. In the Court of Appeal (2), it was said that "what matters" was "the actual intention" in having the Bent Street property transferred into the names of Peter and Elizabeth and that this involved the question of why it was not merely registered in the name of Mrs Nelson. The purpose was described as that of "obtaining a subsidised loan by concealment". The Court of Appeal held this to have been carried out by concealing the interest of Mrs Nelson in the Bent Street property when the Kidman Lane property was purchased. In this analysis, there appears to have been no consideration of the question whether public policy, deriving ultimately from the provisions of the Act, before and after the Amendment Act, required that transactions other than those provided for in the statute itself, should be impugned by denying the operation of the resulting trust that would otherwise arise in favour of Mrs Nelson as provider of the purchase moneys for the Bent Street property.

26. We turn first to consider the role of the presumptions and then what was identified below as the "illegal purpose".

The presumptions
27. The presumptions operate to place the burden of proof, if there be a paucity of evidence bearing upon such a relevant matter as the intention of the party who provided the funds for the purchase. The first presumption is that where a person in the position of Mrs Nelson paid the purchase price for the Bent Street property and caused it to be transferred to other persons, they hold the property upon trust for the person who provided the purchase money. The other presumption, that of advancement, is perhaps not strictly a presumption at all. Rather, the position is that there are certain relationships from which equity infers that any benefit provided for one party at the cost of the other has been provided by way of "advancement". The consequence is that the equitable estate follows the legal estate and is at home with the legal title; there is an absence of any reason for assuming that a trust arose (3).

28. The operation of the presumption of advancement may be rebutted by evidence of the actual intention, at the time of the purchase, of the parent or other person who provided the purchase money (4). Evidence also may be given to support the presumption of advancement ()5).

29. Where the presumption of advancement is rebutted, the trust which then is enforced is a resulting trust, not an express trust. The trust thus is outside the operation of the requirement for writing in s 7 of the Statute of Frauds 1677 (Eng) and its modern Australian equivalents (6). Accordingly, oral evidence is admissible to rebut the presumption of gift and thus to affirm the operation of the presumption of resulting trust. Professor Scott deals with the matter as follows (7):

"This reasoning is somewhat artificial; but trusts arising

where the evidence shows an intention to create a trust when land is purchased in the name of a relative were considered to be resulting trusts before the enactment of the Statute of Frauds (8), and that statute expressly excepts resulting trusts from its operation."

30. The present case was determined in the Supreme Court on the footing that the presumption of advancement operated in respect of dealings by mothers in favour of children and was not limited to those by fathers in favour of children. In the last century, the view had been taken in England that, when a mother takes title in the name of a child, a resulting trust rather than a gift is to be presumed. In Bennet v Bennet (9), Sir George Jessel MR pointed to the general law obligation of a father and one in loco parentis to provide for the child and to the absence of such a recognition in equity of a duty imposed upon a mother. Caution in accepting Bennet v Bennet was expressed by Isaacs J in Scott v Pauly (10). In Brown v Brown (11), Gleeson CJ (with whom Cripps JA agreed) was dealing in 1993 with a transaction that occurred in 1958 and his Honour preferred not to decide the case upon the basis that, Mrs Brown being a mother rather than a father, the presumption of advancement had not applied.

31. The appellants submit that there is no compelling reason why the presumption of advancement should be extended to dealings by mothers in favour of children. They contend that, if anything, the presumption in the case of a father and child should be given a more restricted operation.

32. These presumptions are interrelated and entrenched "land-marks" in the law of property (12). Many disputes have been resolved and transactions effected on that foundation. We prefer to approach this appeal on the footing that the existence of a presumption of advancement of her children by Mrs Nelson was properly accepted in the Supreme Court.

33. In a case such as the present, the presumption of advancement may be of practical importance only if the evidence, including that of the actual relationship between the parties, does not enable the court to make a positive finding of intention (13). Here, such a finding of intention was made, namely that Mrs Nelson had no intention to confer on her children any beneficial interest in the Bent Street property or in the proceeds of sale. Yet Mrs Nelson failed to make good her claim to the sale proceeds held by the second respondents.

34. It is here that it becomes crucial to consider the impact of what was classified as the "illegal purpose".

Illegality - the submissions
35. The claim of illegality in the present case presents two distinctive features. First, the rights which Mrs Nelson asserts and the remedies she seeks are equitable. Secondly, the source of the alleged illegal purpose is in statute.

36. This is not a case where, independently of statute, the creation or performance of a trust or the observance of any condition imposed by the terms of the trust is said to offend a head of public policy. Nor is it a case of a contract to create an express trust where it is contended that the constitution of the trust by the conveyance of the legal title from the settlor to the trustee would be illegal.

37. Rather, the question is whether a joint owner of the legal title to land is able to resist, by reason of illegality, the assertion of a beneficial title arising as a resulting trust.

38. The accounting by the second respondents to the first appellant, Mrs Nelson, of the proceeds of sale as Mrs Nelson's beneficial entitlement on its face does not involve the doing of any illegal act. Nevertheless, a source of "illegality" may be public policy as to acts associated with or in furtherance of illegal purposes. In turn, this may involve consideration of the purposes a statute seeks to serve. Accordingly, there is a large and miscellaneous class of trusts which are held invalid on the ground that their enforcement would be against public policy, even though enforcement would not involve any criminal act by the trustee; likewise, provisions contained in an express trust may be illegal on the same grounds even though the trust itself does not fail for illegality.

39. The first respondent, the joint holder of the legal title, submits that (i) a court of equity will never enforce an equitable proprietary interest at the suit of a party to an illegality, rather, it will let the loss lie where it falls; (ii) further, the claimant must fail if the making good of the claimant's case necessarily involves disclosure of the illegal purpose; (iii) in this case rebuttal of the presumption of advancement requires disclosure of an unlawful purpose, thus precluding the setting up by Mrs Nelson of the resulting trust in her favour; and (iv) the only relevant recognised exception to the operation of these principles applies where the claimant has not carried the illegal purpose into effect, whereas in the present case the purpose was carried into effect with the purchase of the Kidman Lane property. As we will endeavour to explain, these submissions should not be accepted.

40. Counsel for the appellants contends that the Act, both before and after the 1988 amendments, did not expressly or impliedly prohibit the transaction the subject of the present action, namely the purchase by Mrs Nelson of the Bent Street property in the names of her children. Still less did it expressly or impliedly prohibit the enforcement by Mrs Nelson of what she maintains is the trust in her favour over the proceeds of sale. Therefore, it is submitted, the issue of illegality must depend upon a refusal to enforce the resulting trust on a ground of public policy derived from the statute. The appellants deny there is such a policy which operates in this way.

Illegality and statute
41. In a case where principles of illegality operate, the result is to impugn the plaintiff's rights, legal and equitable. It is true that, on occasion, the courts, in refusing to order reconveyance to the plaintiff of property transferred to further a purpose forbidden by statute, have said that the plaintiff lacks clean hands. An example is Groves v Groves (14) where land had been so conveyed to give a property qualification to the transferee; but Alexander CB also said that the illegal object of the conveyance required refusal to interfere "consistently with law and equity". In some cases the doctrine as to parties in pari delicto has been treated as the common law "counterpart" to the equity maxim, so that the two concepts are interchangeable (15).

42. However, in cases of illegality, it is not merely a question, as is involved with the operation of the maxim that he who comes to equity must come with clean hands, of denying the plaintiff equitable remedies, for example, specific performance of a contract, whilst leaving the plaintiff to the remedy at law, for example, damages for breach of contract. The distinction between the operation of the equity maxim, as a discretionary defence to a claim to equitable relief, and the notion of illegality has been drawn by Professor Pettit. Writing as contributor to the title "Equity" in Halsbury and with citation of much authority, he says (16):

"Where the transaction is itself unlawful it is not

necessary to have recourse to this principle. In equity, just as at law, no suit lies in general in respect of an illegal transaction, but this is on the ground of its illegality, not by reason of the plaintiff's demerits."
In the United States, the same point is expressed by Professor Dobbs in his work Law of Remedies (17):

"The first step in analysis of a putative unclean hands

defense is to determine whether the defense really appeals to (or seeks to generate) a rule of law grounded in legal policy and applicable to a describable class of cases. For example, the defense might really be the defense that the plaintiff is attempting to enforce an illegal contract. If this is the case, the term 'unclean hands' should be dropped altogether and the analysis should proceed on the basis of the rule of law in issue."
In Loughran v Loughran (18), Brandeis J distinguished between illegality, "a substantive defence", and the equitable "doctrine of clean hands" (19).

43. It is well settled that, in a case where the contention is that an express trust fails for illegality because performance of the trust or of a provision thereof involves commission of an act rendered illegal by statute, the extent of the illegality and its consequences turn upon construction of the statute.

44. In Orr v Ford (20), ss 91 and 296 of the Land Act 1962 (Q) were interpreted as rendering certain selections held by a trustee liable to forfeiture by the Minister but as not touching the lawfulness or enforceability of the equitable interest of the beneficiary of a trust of the selection unless and until there was a forfeiture. That was not to deny that the policy of the statute was directed against the holding of selections on trust.

45. Difficult questions may arise in relating the alleged illegality in the constitution or performance of the trust to what, upon its true construction, is the operation of the statute in question. Authorities in contract law such as Vita Food Products, Inc v Unus Shipping Co (21) and Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (22) suggest the drawing of a distinction between (i) an express statutory provision against the making of a contract or creation or implication of a trust by fastening upon some act which is essential to its formation, whether or not the prohibition be absolute or subject to some qualification such as the issue of a licence; (ii) an express statutory prohibition, not of the formation of a contract or creation or implication of a trust, but of the doing of a particular act; an agreement that the act be done is treated as impliedly prohibited by the statute and illegal; and (iii) contracts and trusts not directly contrary to the provisions of the statute by reason of any express or implied prohibition in the statute but which are "associated with or in furtherance of illegal purposes". The phrase is that of Jacobs J in Yango (23).

46. Examples in the third category include cases where the mode of performance adopted by the party carrying out the contract contravenes statute, although the contract was capable of performance without such contravention (24).

47. In this last class of case, the courts act not in response to a direct legislative prohibition but, as it is said, from "the policy of the law". The finding of such policy involves consideration of the scope and purpose of the particular statute. The formulation of the appropriate public policy in this class of case may more readily accommodate equitable doctrines and remedies and restitutionary money claims than is possible where the making of the contract offends an express or implied statutory prohibition (25).

48. In earlier times, effect was given to what the courts perceived to be "the equity of the statute" (26). This doctrine had the support of the common law judges led by Sir Edward Coke, who looked back to a time before the rise of the doctrine of parliamentary sovereignty and the subjection to it of the common law (27). The notion of the equity of the statute operated in two ways. First, the policy of the statute, as so perceived, might operate upon additional facts, matters and circumstances beyond the apparent reach of the terms of the statute. In addition, cases within the terms of the statute but not within its mischief might be placed outside its operation. Bentham gave the following, ironical description of this development (28):

"The best-imagined provision might perhaps have done more

mischief than good unless moulded into form by the prudence of the judge. On the one hand, the obligative part was not wide enough to embrace the mischief: on the other hand, the qualificative parts were not wide enough to yield shelter to innocence or to afford the necessary range to power."

49. Further, it was said that, although courts of equity did not differ from those of law in the exposition of statutes, they did so in the remedies given and the manner of applying them (29). Thus, as was pointed out in Fonblanque (30), the Chancellors devised the principle (still familiar (31)) that equity will not allow a statute made for the prevention of fraud to be converted into the instrument of fraud, and also developed the doctrine of part performance. Again, Chancery would order delivery up of a security given for a usurious and thus illegal consideration only upon terms that the plaintiff pay the defendant what was bona fide due to the defendant. It will be necessary to refer again to the usury cases later in these reasons.

50. The doctrine of the equity of the statute has analogies in civil law systems. It is said that the search for the statute's equity "has become indispensable for civil code readers" (32). However, the doctrine of the equity of the statute attracted the ire of Bentham. He described it as a further branch of customary law which struck its roots into the substance of the statute law and infected statute law "with its own characteristic obscurity, uncertainty and confusion" (33). The doctrine fell deeply into disfavour in England and the United States, with the rise of legal positivism in the last century (34). Nevertheless, the doctrines developed in equity survived. In the legal system as a whole there remained, and indeed entered the statute law itself, particular applications, developed by the 18th century judges, of the broader concept of the equity of the statute. One such instance in the modern law of bankruptcy is the avoidance of preferences. This was first devised by Lord Mansfield, as it was said, "without any positive enactment" (35) and as a protection or furtherance of the policy disclosed by the existing statute law.

51. The third class of illegality, represented by many modern authorities, may be seen as a survival of an earlier school of statutory interpretation. Further, various decisions of Lord Mansfield and Lord Eldon (36), to which reference is still made in contemporary authorities and to which it will be necessary to refer in these reasons, must be understood with this background in mind.

52. A fundamental principle of the common law has been said to be that a court will not lend its aid to a plaintiff who founds a course of action upon an immoral or illegal act, particularly where both parties are equally in fault. These propositions are generally treated as following from the judgment of Lord Mansfield in Holman v Johnson (37). One issue which underlies various submissions in the present case is the extent to which those propositions, with the qualifications to them which have developed in the law of contract, apply to a plaintiff who comes to equity seeking to enforce a resulting trust.

53. It should be noted that Holman v Johnson was a case in which the making and performance of the contract in question appears not to have been directly contrary to the provisions of statute. The allegation was that the contract was associated with or in furtherance of illegal purposes in the sense of the phrase later used by Jacobs J in Yango. The case came before the King's Bench in banc on a rule to show cause why a new trial should not be granted. The rule was discharged. The buyer was sued for the price of tea under a contract made in France for sale and delivery in that country. The buyer's defence was that the tea was to be smuggled into England without payment of duty and that the seller had been aware of this. It was held that there had been no contravention of the relevant English revenue laws. The seller had no concern in the smuggling scheme and the circumstance that the seller had knowledge of the illegal purpose of the defendant in buying the tea from him did not render the contract sufficiently associated with or in furtherance of that illegal purpose (38). What has largely gone unnoticed in the later decisions is that Lord Mansfield held that the facts of Holman v Johnson did not fall within the principles as to illegality which he propounded, so that recovery in fact was allowed to the seller (39).

54. The importance in a case such as this of ascertaining what two Canadian scholars have called "the underlying purpose" of relevant legislation (40) is borne out by the course of authority dealing with both express and implied or resulting trusts. Brief mention should be made of express trusts.

55. Upon its true construction a statute itself may prohibit the creation of an express trust. It may do so in direct terms or by forbidding the taking of a step necessary for the formation of such a trust, such as a transfer of the legal title. The prohibition may be absolute (41), or subject to a condition or approval. An example of the latter (42) is provided by s 19 of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth), which imposes special requirements upon dealings by a Land Trust with any estate or interest in land vested in it.

56. Another example, closer to the present litigation whilst not involved in it, was provided by s 35 of the Act. This was included in Pt VI (ss 28-38B). Part VI, together with Pt III (ss 16A-18A), Pt IV (ss 19-19B) and Pt V (ss 20-27B), were repealed, with effect from 19 December 1988, by s 10 of the Amendment Act. These provisions thus were in force at the time of the acquisition of the Bent Street property in 1987. Section 25 forbade the making of advances by the Defence Service Homes Corporation ("the Corporation") except upon the security of a mortgage to the Corporation of the interest in the property of the borrower. Section 35(1) provided that, so long as any land was subject to a mortgage in accordance with the statute, a transfer of the land "or of any estate or interest therein" would not "have any force or effect" unless made with the consent in writing of the Corporation.

57. It was held that the creation of an express trust was a transfer within the meaning of the provision (43). However, in a series of decisions it also was held that, if the property in question had been sold and the rights of the Corporation fully satisfied, there was nothing in the statute which prevented the trust, the operation of which had been temporarily denied by it, attaching to the proceeds of sale (44), and that upon discharge of the mortgage held by the Corporation a trust previously denied force and effect might bind the land itself (45). These decisions were upon the old s 35, contravention of which was not alleged in this case. However, they also are consistent with the broader proposition that, as the statute then stood, the interest which it sought to protect was that of the Corporation in the moneys advanced. It will be necessary to return to that proposition later in these reasons when consideration has been given to other provisions of the Act.

Contract and trust
58. Counsel for the first respondent, Elizabeth Nelson, contend that what they identified as the principles of property law applicable in the present case are not displaced or qualified by principles of illegality discerned from the underlying purpose or policy of the statute in question. Rather, counsel submits, the position as regards trusts was simpler than that in contract. Equity would never enforce an equitable proprietary interest at the suit of a party to an illegality, and Mrs Nelson was such a party. Further, the unlawful purpose had been carried into effect and Mrs Nelson could not displace the presumption of advancement in favour of her daughter unless that illegal purpose was disclosed. The result, on the submissions, would be that equity would leave the loss to lie where it fell, upon Mrs Nelson.

59. These submissions seek to draw a false line between the legal institutions of contract and trust. Lord Wilberforce observed that there was surely no difficulty in recognising the co-existence in the one transaction of legal and equitable rights and remedies (46). In Gosper v Sawyer (47), Mason and Deane JJ said:

"The origins and nature of contract and trust are, of

course, quite different. There is however no dichotomy between the two. The contractual relationship provides one of the most common bases for the establishment or implication and for the definition of a trust. Conversely, the trust, particularly the resulting and constructive trust, represents one of the most important means of protecting parties in a contractual relationship and of vindicating contractual rights."
Further, many express trusts, particularly those created or manifested in writing, contain conditions, precedent or subsequent, to which the same principles of public policy apply whether perceived through the lens of contract or trust. Thus, in Permanent Trustee Company v Dougall (48), Harvey CJ in Eq held that a condition in a will aimed at preventing any beneficiary becoming a lessee or licensee of a hotel was invalid on the ground of public policy, being a condition absolutely in restraint of trade (49).

60. However, that is not to say that the case is necessarily treated in the same fashion where, on the one hand, it is a question of recovery of moneys paid under, or damages for breach of, an illegal contract and, on the other, a particular equitable remedy is sought to give effect to an allegedly illegal trust.

61. The first respondent's submissions rely upon the apparently pervasive effect of the dictum of Lord Mansfield in Holman v Johnson (50) that: "(n)o Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act."
That dictum, as well as the proposition "let the estate lie where it falls", has been applied not only, for example, to actions in tort for damages for conversion as in Bowmakers Limited v Barnet Instruments Ltd (51), and for moneys had and received (52), but also in suits to enforce resulting trusts, as in Palaniappa Chettiar v Arunasalam Chettiar (53).

62. We turn to consider these propositions as the first respondent would have them apply to this appeal, commencing with that dealing with reliance upon illegality.

63. There are several difficulties with the acceptance of such a principle as determinative of a case such as the present. First, it has been held in England that the outcome turns upon whether what immediately is in issue is the rebuttal of a resulting trust by demonstrating that what was intended was a gift, or the rebuttal of a presumption of advancement by demonstrating that a gift was not intended. The distinction may be considered by an example where Blackacre is purchased with the money of A but transferred by the vendor on completion to B, who is the child of A. Authority in England, provided by Tinsley v Milligan (54), is that A cannot rely on evidence of his own illegality to rebut the presumption that a gift in favour of B was intended. On the other hand, if A purchases Blackacre in the name of B, the relationship between them being such that there is no presumption of advancement, A may enforce the resulting trust in A's favour because there is no necessity to prove the reason for the conveyance into the name of B and thus no need to rely on A's illegality (55).

64. These results depend on the form in which a particular legal proceeding is cast and, unusually for equity, are achieved at the expense of substance. Further, they may operate indiscriminately and thus lead to harsh consequences as between particular parties. It is true, as Lord Mansfield pointed out in Holman v Johnson (56) that:

"if the plaintiff and defendant were to change sides, and

the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it".
But that consideration only heightens the lack of attraction of such a proposition in the court of equity. Furthermore, it in turn encourages a quest for mitigation by the drawing of further fine distinctions and exceptions whereby recovery will be permitted.

65. A second approach to the matter is to let the loss lie where it falls, the policy being one to encourage observance of the law by threat of a sharp and broad sword. This view commended itself to the minority in Tinsley v Milligan. It was said, again with reference to Lord Mansfield in Holman v Johnson, that (57):

"(i)t is important to observe that, as Lord Mansfield made

clear, the principle is not a principle of justice; it is a principle of policy, whose application is indiscriminate and so can lead to unfair consequences as between the parties to litigation. Moreover the principle allows no room for the exercise of any discretion by the court in favour of one party or the other."
Reliance also was placed by the minority (58) upon what was seen as the authoritative source of principle in equity provided by the decision of Lord Eldon LC in Muckleston v Brown (59). It will be necessary further to consider this case, together with Cottington v Fletcher (60).

66. The outcome in Tinsley v Milligan indicates that adoption of one approach rather than the other may lead to opposite results. As we have indicated, on this appeal the first respondent relies upon both as operating in her favour. She submits (and the Court of Appeal so decided) that Mrs Nelson can only rebut the presumption of advancement by revealing her purpose of obtaining a subsidised loan by concealment and, further, that the loss should be left to fall upon Mrs Nelson.

67. In our view, neither of these approaches is to be adopted in the present case. Two factors are of paramount importance. First, as the appellants submit and we would accept, the question of illegality is bound up with the view taken of the underlying policy of the Act. To quote a United States scholar, "if illegality consists in the violation of a statute, courts will give or refuse relief depending upon the fundamental purpose of the statute" (61). Secondly, what is sought are equitable remedies in aid of an alleged trust and equity is equipped to attain a result which eschews harsh extremes.

68. The range and flexibility of equitable remedies assist in achieving an appropriate result in the particular case; this means, in the words of one commentator, "(t)he old common law idea of all or nothing will no longer have to apply" (62). Accordingly, unlike the common law, equity may impose terms upon a party seeking administration of equitable remedies. Further, equity has not subscribed to any absolute proposition that the consequence of illegality, particularly where what is involved is contravention of public policy manifested by statute, is that neither side may obtain any relief, so that the matter lies where it falls. Rather, in various instances equity has taken the view that it may intervene, albeit with the attachment of conditions, lest there be "no redress at all against the fraud nor any body to ask it" (63).

Let the loss lie where it falls?
69. Cottington v Fletcher and Muckleston v Brown require attention, given the reliance placed upon them for a general proposition that, in a case of illegality, equity lets the loss lie where it falls. In particular, remarks of Lord Eldon in Muckleston have been treated as controlling authority as to the attitude of equity to illegality in trust law (64).

70. One must begin with the decision of Lord Hardwicke LC in Cottington v Fletcher. The litigation arose at a time when there was in force extensive legislation which imposed serious civil disabilities upon those professing the Roman Catholic faith. The plaintiff held an advowson as patron, that is to say, he held, as an incorporeal hereditament, the right to present a priest to a particular church and benefice in the Church of England (65). However, the plaintiff was an adherent of the Roman Catholic faith. He assigned the advowson to the first defendant for the term of 99 years intending that the defendant hold the advowson on trust for him so as to avoid the operation of legislation (66) which vested in the Universities of Oxford and Cambridge the presentation of livings otherwise in the gift of Roman Catholics. The plaintiff then conformed to the Church of England and brought a bill in Chancery seeking reassignment by the first defendant of the balance of the term. In the meantime, the first defendant, upon the recommendation of the plaintiff, had presented the second defendant to the living. To the bill, the first defendant pleaded the Statute of Frauds, saying that there was no written declaration of trust. The first defendant also admitted that he had held as express trustee, but only to make the appointment of the second defendant. The consequence was an admission that there was a resulting trust for the plaintiff after the performance of that presentment.

71. Lord Hardwicke overruled the plea of the Statute of Frauds because it was coupled with these admissions. Furthermore, the trust which was so admitted was not rendered void by the legislation. This vested the interest in the two Universities only upon the purported presentment. The plaintiff had conformed to the Church of England before the presentment of the second defendant. The Lord Chancellor went on to say that the result might have been different if, rather than having made these admissions, the first defendant had demurred. For it would then simply have appeared from the bill itself that the plaintiff had assigned the advowson in trust for himself in order to avoid the operation of the legislation. The case thus turned upon the operation of statute upon express and resulting trusts.

72. In Muckleston v Brown Lord Eldon was dealing with an alleged testamentary secret trust of real estate for charitable purposes at a time when the Mortmain Act 1736 (67) assisted the interests of the heir at law by hampering, through a registration procedure, devises of land for charitable purposes. The heirs at law of the testator brought a bill contending that the testator had devised certain estates to the defendants on terms that they be held on an intended trust for charitable purposes. The defendants demurred to the discovery sought by the bill. Their objection was based upon the nature of the discovery sought, so that they were entitled to have the decision on the point in the first instance before the defendants were required to plead (68). The Lord Chancellor held that the plaintiffs were claiming entitlement under a resulting trust upon failure of the trust of the land for charitable purposes, a trust "against the policy of the law", and that the trustees were required to answer. In particular, it was no answer for the trustees to resist discovery on the footing that it exposed them to penalty or forfeiture. Primacy had to be given to the proposition that that which was liable to be forfeited was a trust against a policy of the law manifested by the Mortmain legislation (69).

73. Cottington was cited. Lord Eldon appeared to prefer the view that, in Cottington, even though the trust was admitted, the better view would have been that equity should have declined to interfere. The plaintiff had stated in the bill that he had been guilty of "a fraud upon the law", namely "to evade, to disappoint, the provision of the Legislature, to which he is bound to submit". He had come to equity to be relieved against the consequences of his own act, and the defendants were implicated in that dishonesty. In such circumstances, equity should say, "Let the estate lie, where it falls". However, Lord Eldon went on, that was not the case before him.

74. These authorities, when so understood, appear as responses to certain statutory regimes which controlled the litigation. They do not provide authority for any general proposition as to the attitude taken by equity in any case where an issue of illegality in relation to a trust arises by reason of a contravention of the policy of a particular statute. As one might expect from such situations, equity eschews any broad generalisations in favour of concentrating upon the specific situation which has arisen, in the light of the relevant statutory provisions.

Equitable relief and illegality
75. In Smith v Jenkins (70), Windeyer J declared that the maxim ex turpi causa non oritur actio should be confined to the law of contracts and conveyances. The decreasing significance of the maxim in the law of tort, especially negligence, may be traced in subsequent decisions of this Court (71).

76. Story (72) stated that, in general, although not universally, equity followed the rule of law as to participants in a common crime where parties were concerned in illegal transactions. However, Story continued:

"But in cases where the agreements or other transactions are

repudiated on account of their being against public policy, the circumstance that the relief is asked by a party who is particeps criminis is not in equity material. The reason is that the public interest requires that relief should be given, and it is given to the public through the party."

77. One such class of case, well recognised in this Court (73), was identified by Ashburner (74) as that of "repentance before anything done to carry out illegal purpose". Another concerns recovery of money or other property which, whilst tainted by illegality, was induced by fraud of one of the parties or was the product of a breach of fiduciary duty owed by one party to the other (75).

78. Ashburner also refers to a group of decisions identified as cases of public policy. He, like Pomeroy (76), refers to marriage brokage contracts and to the decisions holding that money paid thereunder may be recovered. Pomeroy and Story (77) discuss cases of borrowers coming to equity seeking relief against contracts declared void by the old statutes against usury (78), saying that equity would interfere but on terms that the plaintiff pay the defendant what was really and bona fide due, after deduction of the usurious interest; if the plaintiff did not make such an offer, the defendant might demur to the bill and it would be dismissed. Story goes on to say (79):

"The ground of this distinction is, that a Court of Equity

is not positively bound to interfere in such cases by an active exertion of its powers; but it has a discretion on the subject, and may prescribe the terms of its interference, and he who seeks equity at its hands may well be required to do equity. And it is against conscience that the party should have full relief, and at the same time pocket the money loaned, which may have been granted at his own mere solicitation. For then a statute made to prevent fraud and oppression would be made the instrument of fraud."

79. Of course, the usury laws are gone, and marriage brokage cases little heard of. But much modern regulatory legislation concerns financial dealings, and, in any event, what is of present importance are the fundamental reasons for, not the occasions of, equitable intervention. In that regard, reference should be made to the decision of Jacobs J in Money v Money (No 2) (80). His Honour referred (81) to the jurisdiction of equity to order delivery up of instruments, such as bonds, negotiable instruments or deeds, upon which a party otherwise could sue at law, where there was an illegal consideration and such consideration did not appear on the face of the document. Jacobs J went on to identify a further principle of equity that, even though a transaction might be tainted with illegality on the ground that its performance is contrary to public policy, equity will interfere on further grounds of public policy if the transaction ought not to be allowed to stand even where the plaintiff is particeps criminis. After referring to what is said on the subject by Story (82), his Honour continued (83):

"It seems to me that it is only by such a principle that the

cases in Equity on, for instance, marriage brokage contracts can be explained. In Hall v Potter (84), the House of Lords granted relief even though the marriage had actually taken place. In Hermann v Charlsworth (85), Collins MR referred (86) to the broader point of view of the Courts of Equity and dealt with many of the authorities. It would not seem that this approach is limited to marriage brokage contracts but it extends to other agreements such as those which involve a fraud upon the legislature: Vauxhall Bridge Co v Spencer (Earl) (87)".

80. But, in these cases, no doubt the operation of the particular statute will be critical. That is illustrated by the money lending legislation considered by the Privy Council in Kasumu v Baba-Egbe (88) and by this Court in Mayfair Trading Co Pty Ltd v Dreyer (89). These are best understood as cases in which the legislation precluded the money lender from recovering any compensation for the loan which had been made by it, with the result that it was not open for such compensation to be recoverable by means of the imposition of a term upon equitable relief sought by the borrower (90).

81. In Kasumu, the borrower brought an action seeking delivery under the mortgage documents and the Privy Council rejected the contention of the money lender that such relief, being equitable, should be granted only on terms that the principal amount of the mortgage be repaid. The money lender had failed to comply with the requirements of the relevant statute which had provided that, in those circumstances, the money lender "shall not be entitled to enforce any claim in respect of any transaction in relation to which the default shall have been made". Hence, the Privy Council held that the imposition of a requirement of repayment, as a condition of equitable relief, would constitute a claim in respect of a transaction within the very terms of the statutory prohibition.

82. As will become apparent, the scheme of the present Act is quite different. Its policy may be satisfied by the imposition of an appropriate term concerning the subsidy received by Mrs Nelson as the price for the relief she seeks to enforce by the resulting trust.

Resulting trusts and statutory illegality
83. The intersection between the institution of the resulting trust and the principles of illegality is identified by Scott as follows (91):

"Although a resulting trust ordinarily arises where A

purchases property and takes title in the name of B, A may be precluded from enforcing the resulting trust because of the illegality of his purpose. If A cannot recover the property, B keeps it and is thereby enriched. The question in each case is whether the policy against the unjust enrichment of the grantee is outweighed by the policy against giving relief to the payor who has entered into an illegal transaction."

84. However, where the illegality flows from statute, the matter is not at large in the manner suggested above. Rather it is a question of the impact of the statute itself upon the institution of the resulting trust. As the matter is put by White and Tudor (92) in their notes to Dyer v Dyer (93) :

"There will be no resulting trust if the policy of an Act of

Parliament would be thereby defeated."
The position was further explained by Griffith CJ in Garrett v L'Estrange (94), in giving the judgment of the Court:

"It was laid down by Lord Eldon a long time ago ... that

there can not be a resulting trust contrary to the provisions of an Act of Parliament. The suggestion of an implication of law contrary to a positive law is indeed a contradiction in terms. This contention is, therefore, negatived by the same considerations which negative the alleged express trust."
The decision of Lord Eldon to which the Chief Justice referred was Ex parte Houghton (95). This case and Lord Eldon's earlier decision in Ex parte Yallop (96) concerned resulting trusts said to arise by payment of purchase money where there was a device to avoid ship registry laws. In Yallop (97), the Lord Chancellor said:

"These two Acts of Parliament (stat 26 Geo III c 60; stat 34

Geo III c 68) were drawn upon this policy; that it is for the public interest to secure evidence of the title to a ship from her origin to the moment, in which you look back to her history; how far throughout her existence she has been British-built, and British-owned; and it is obvious, that, if, where the title arises by act of the parties, the doctrine of implied trust in this Court is to be applied, the whole policy of these Acts may be defeated; as neutrals may have interests in a ship, partly British-owned; and the means of enforcing the Navigation Laws depend upon knowing from time to time, who are the owners, and, whether the ship is British-owned, and British-built. Upon that the Legislature will not be content with any other evidence than the registry; and requires the great variety of things, prescribed by these Acts. They go so far as to declare, that notwithstanding any transfer, any sale, or any contract, if the purpose is not executed in the mode and form, prescribed by the Act, it shall be void to all intents and purposes. The consequence, established by positive and repeated decisions, is, that upon a contract for the purchase of a ship, which it may be supposed, might have been executed without public mischief, though by force of that contract and by operation of Law the purchaser would be the owner in Equity from the moment of the purchase, and the vendor from that moment would be devested (sic) of all interest, yet it is decided, that these Acts are so imperative, that, if they rest upon the contract, it cannot be said of a ship, as of an estate, that by operation of Law, and by force of the contract, the ownership is changed; and if the money had been paid, the decision would be upon the same principle; and it must be recovered by another form of proceeding." (emphasis added)

85. In Worthington v Curtis (98), a contract between a father and an insurance company for the issue of a policy on the life of his child was considered illegal and void under the Life Assurance Act 1774 (UK). The child died and the insurer paid the money assured by the policy to the father as administrator of the child's estate. It was held that, although as between the insurer and the company the policy was illegal and void, as between the father and the estate the father was entitled to retain the money for his own benefit, the presumption of advancement being rebutted by the evidence that the policy was effected for the benefit of the parent. Accordingly, the administrator of the estate could not resist the claim of the beneficiary to money in his hands, on the footing that the money was the product of a contract rendered illegal and void by statute. The question of title to the proceeds of the policy was insufficiently connected with that to which the legislation had been directed.

86. Recent United States decisions deal with legislation of a similar nature to that with which this appeal is concerned. They do so in a manner consistent with the older authorities. In re Torrez (99) concerned federal laws which limited the right to receipt of federally subsidised irrigation water to landowners of parcels not exceeding a particular acreage. If a farmer had a holding in excess of the acreage limitation, the result was loss of eligibility for irrigation water for the excess acreage. Mr and Mrs Torrez were already receiving their maximum allotment of subsidised water before they purchased additional land in the names of their son and daughter-in-law. The son and daughter-in-law wished to sell the property in order to finance a reorganisation of their affairs under Ch 11 of the federal bankruptcy law. The issue was whether they were at liberty to do so and, in particular, whether the illegality of the purpose of their parents in putting the property in their names was destructive of a resulting trust in favour of the parents. The Court of Appeals held that the resulting trust was enforceable. It referred to various relevant factors under the law of California, as follows (100):

"These factors include the completed nature of the

transaction, such that the public can no longer be protected by invocation of the rule that illegal agreements are not to be enforced; the absence of serious moral turpitude on the part of the party against whom the defense is asserted; the likelihood that invocation of the rule will permit the party asserting the illegality to be unjustly enriched at the expense of the other party; and disproportionality of forfeiture as weighed against the nature of the illegality."

87. Their Honours went on to refer to previous statements to the effect that one who takes title to land in the name of another "for the purpose of defrauding the government cannot enforce a resulting trust in his favour" (101). The Court of Appeals then referred to the decision of the California Court of Appeal in Hainey v Narigon (102). It had been held there that it was wrong to impose a resulting trust upon property purchased by the plaintiff in the name of the defendant pursuant to an agreement between them which permitted the plaintiff to subvert the loan requirements of the federal Veterans Administration legislation (103). The California Court of Appeal held that, because the agreement violated the federal statute and regulations governing loans to veterans and was contrary to public policy, the plaintiff was not entitled to enforce the trust; a lien was imposed on the property in favour of the plaintiff but only for the net amount of his financial investment in it.

88. In In re Torrez the Court of Appeals distinguished Hainey in the following passage (104):

"Essential to Hainey was the fact that the applicable

statutes and regulations explicitly prohibited assignment of benefits conferred upon a veteran in connection with the VA guarantee of home loans for veterans. ... Here, no prohibitions exist against the acquisition of excess land; instead, federal regulations provide merely for the loss of eligibility for receipt of water upon such acquisition. ... Similarly lacking in Hainey were the problems of disproportionality of forfeiture to illegality, given the court's grant of a lien to plaintiff in the amount of his investment in the property notwithstanding his illegal conduct."
The Court of Appeals then dealt with the public policy consideration that recognition of a resulting trust would give judicial sanction to a continuing fraudulent scheme against the federal government. The Court pointed out (105) that the government was entitled, under the legislation, to deny eligibility for subsidised water in respect of the excess acreage, saying that any public policy objections might adequately be addressed by administrative proceedings under those provisions.

89. Against the background traced above we accept the submission for the appellants that the crucial step is to identify the relevant public policy, beginning with the provisions of the Act, before and after the amendments made in 1988. The Bent Street property was purchased before the commencement of those amendments but it was after their commencement that the application for subsidy was lodged on 25 July 1989 and the subsidy towards the purchase of the Kidman Lane property was procured.

The scheme of the Act and the facts of the case
90. We have already referred to s 35 as it stood before its repeal. Nothing turns upon it directly for the purposes of this case. There was no "transfer", being the purported creation of a trust in respect of any property in which the Corporation already held an interest as described in the section.

91. As we have indicated, Pts III, IV, V and VI of the Act were repealed with effect from 19 December 1988. Part V (ss 20-27B) had been headed "Advances on mortgage for purposes of homes". Section 20 empowered the Corporation to make an advance to an eligible person on the prescribed security, to enable that person, among other things, to purchase a dwelling-house together with the land on which it was erected. The maximum advance was $25,000 (s 21). With an exception not presently relevant, no advance was to be made to any person unless the Corporation was satisfied that (i) the dwelling-house in question was intended to be used by the person as a home for himself and his dependents and (ii) neither the person nor the person's spouse was the owner of any other dwelling-house (s 23). If at any time, in the opinion of the Corporation, any money advanced had not been applied for the purpose for which it was advanced, the Corporation might, by notice in writing, call in the whole or part of that amount (s 27(1)) and remedies were given for the recovery of that amount by the Corporation (s 27(2)).

92. Section 32A empowered the Corporation to call up, by notice in writing, the whole of the moneys secured under the mortgage on the relevant property, making the moneys due and payable, if, at the time of the making of the advance, a person had declared "that the person was not the owner of any dwelling-house" or "that the wife or husband of the person was not the owner of any dwelling-house" other than the one to which the advance related and it subsequently had come to the knowledge of the Corporation that the declaration was untrue. In this way, ss 23 and 32A were linked.

93. The scheme of the Act changed in 1988 with the Amendment Act. This implemented an agreement ("the Agreement") made 9 November 1988 between the Commonwealth of Australia and the Bank (106). Section 16 of the Amendment Act inserted the Agreement as Sched 1 to the Act. Clause 11 of the Agreement provided for payment by the Commonwealth of an interest subsidy to the Bank upon "Subsidised Advances" made by the Bank. The term "Subsidised Advances" was defined in cl 1 of the Agreement as including an advance made by the Bank in accordance with a certificate of entitlement issued by the Commonwealth to an entitled applicant.

94. These provisions were implemented by amendments to the Act. In place of Pts III, IV, V and VI, new Pts III (ss 15-23), IV (ss 24-30), V (ss 31-37) and VI (ss 38-38H) were inserted. Section 15(1)(b) provides that a person may apply to the Secretary for a certificate of entitlement in relation to a subsidy on a subsidised advance that the person may seek from the Bank. The certificate of entitlement shall specify the maximum amount determined under s 25, in respect of which subsidy is payable, and the rate of interest payable on the advance (s 17). The rate of interest upon an initial advance is 6.85 per cent per year (s 31). Section 18(1)(b) obliges the Secretary not to issue a certificate of entitlement unless satisfied that the person is not the owner of any dwelling-house other than the dwelling-house in respect of which the advance is payable. The $25,000 received upon the Kidman Lane purchase was the maximum amount for which subsidy was payable.

95. The Secretary may, by notice of cancellation, cancel the subsidy from the date specified in the notice if the Secretary is satisfied that a certificate of entitlement in relation to the advance was issued as a result of a false statement made by the person to whom it was issued, or where the person was not entitled to the certificate (s 26(1)).

96. Where a subsidy has ceased to be payable under s 26 for either of the above reasons, the Secretary may, by notice in writing, require payment to the Commonwealth of the amount specified in the notice in the manner and within the period specified in the notice (s 29(1)). The amount in the notice might be the whole or such part of the amount of subsidy as the Secretary determined to be reasonable (s 29(2)). Where a person has failed to comply with a notice, the amount specified in the notice may be recovered from the person in a court of competent jurisdiction as a debt due to the Commonwealth (s 29(4)). Section 30 states:

"(1) The Secretary may, on behalf of the Commonwealth, by

instrument in writing:

(a) write off an amount that a person has been required to

pay to the Commonwealth under section 29;

(b) waive the right of the Commonwealth to recover from a

person the whole or part of an amount that the person has been required to pay to the Commonwealth under that section; or

(c) allow a person who has been required to pay an amount to

the Commonwealth under section 29 to pay that amount by such instalments as are specified in the instrument.

(2) A decision under subsection (1) takes effect:
(a) on the day specified in the notice, being the day on

which the decision is made or any day before or after that day; or

(b) if no day is so specified - on the day on which the

decision is made."

97. Decisions under s 26, and those requiring payment under s 29, are "reviewable decisions" within the meaning of the definition in s 4. The consequence is that they attract the operation of the system of internal review and review by the Administrative Appeals Tribunal pursuant to ss 43 and 44 of the Act.

98. Reference also should be made to certain provisions of the Crimes Act 1914 (Cth) which were in force at all material times. It is not suggested by counsel for the first respondent that any of the parties to the litigation had rendered themselves liable for prosecution under those provisions. Rather, he draws attention to them in connection with what he describes as the wide operation of the Act itself. He submits that these provisions showed that the legislature had not left the Act without attendant criminal sanctions for contravention.

99. The provisions in question are ss 29A, 29B, 29D and 86. Section 86 creates conspiracy offences, s 29A deals with false pretences and s 29D defrauding the Commonwealth or a public authority under the Commonwealth. Section 29B should be set out in full. It states:

"Any person who imposes or endeavours to impose upon the

Commonwealth or any public authority under the Commonwealth by any untrue representation, made in any manner whatsoever, with a view to obtain (sic) money or any other benefit or advantage, shall be guilty of an offence.
Penalty: Imprisonment for 2 years."

100. On the other hand, counsel for the appellants points to these provisions in support of the proposition that the purpose of the Act is sufficiently served by such penalties and that the denial of the resulting trust would cause prejudice to a person in the position of Mrs Nelson without furthering the objects of the legislation. Reference is made to the statement in Archbolds (Freightage) Ltd v S Spanglett Ltd (107), adopted by Jacobs J in Yango (108), that the purpose of a statute may sufficiently be served by the penalties prescribed for the offender (109). It then is submitted that the imposition of the additional sanction, the inability of the first appellant to enjoy the proceeds of what otherwise is her beneficial ownership of the Bent Street property, would not be an appropriate adjunct to the scheme for which the Act provides.

101. That submission should be accepted. Further, the relevant provisions of the legislation, before and after the Amendment Act, show its purpose to be the provision of public moneys to facilitate the purchase of housing by eligible persons, but on the footing that the eligible person not own another dwelling. The means by which that purpose has been effected have changed from secured loan to interest subsidy in respect of an advance by the Bank. But it has consistently been the scheme of the legislation that, if the public moneys are misapplied, they are made recoverable by the Corporation or the Commonwealth. However, as the cases on the former s 35 demonstrate, the interest of the Corporation or the Commonwealth in the dwelling or proceeds of sale thereof is co-extensive with the funds provided by it; if they be restored then effect may be given to a trust in respect of the balance of the equitable interest in the dwelling or the proceeds of sale thereof.

102. A question in the present case thus arises as to whether the trust in respect of the proceeds of sale which Mrs Nelson asserts in her favour is tainted by illegality because of its association with or furtherance of a purpose which is contrary to the policy of the law as indicated by the scheme of the Act. If that be so, the question then is whether the consequence is that (i) no relief is available to Mrs Nelson, or (ii) relief may be granted but upon terms apt to make good the concern of the Commonwealth which was denied by the grant of the subsidy in respect of Kidman Lane whilst, as she always intended, Mrs Nelson was beneficial owner of the Bent Street property.

103. In our view, the answer to the first question is in the affirmative. The findings in the Supreme Court show that the title to Bent Street was taken in the name of the children, with the intention that Mrs Nelson be the beneficial owner so as to put her in an advantageous position later to obtain, if she so wished, financial assistance under the Act by concealing the true state of affairs.

104. It may have been that a change of heart upon which she had acted before she sought to enforce the resulting trust may have meant that the trust was never more than incipiently illegal. But that issue does not arise. The purpose was implemented with the obtaining of the subsidy for the Kidman Lane purchase. Mrs Nelson still holds this property. The litigation concerns ownership of the fund from the later sale of the Bent Street property. Given this state of affairs, the question remains as to what are the limitations upon the relief obtainable by Mrs Nelson.

105. In our view, as the price of obtaining the relief she seeks for the recognition and enforcement of a resulting trust in respect of the whole of the balance of the proceeds of sale of the Bent Street property, Mrs Nelson must be prepared to do equity according to the requirements of good conscience. That may involve consideration of more than the interests of the parties to the litigation. Here, good conscience calls for the taking by Mrs Nelson of steps sufficient to satisfy the demands of the underlying policy of the Act.

106. This requires denial to Mrs Nelson of the benefit in respect of the purchase of the Kidman Lane property which she has obtained by her unlawful conduct. This would appear to us to be a sum representing the present value of the difference, over the term of the loan agreement dated 30 August 1989, for the advance by the Bank to Mrs Nelson of $25,000, between the subsidised interest rate and that rate which, upon its usual terms, the Bank would have charged Mrs Nelson on an advance of $25,000 over the same period and for the same purpose.

107. That sum should be in the same amount as that which the Commonwealth might properly specify in a notice given to Mrs Nelson under s 29 of the Act.

108. If Mrs Nelson were to tender to the Commonwealth that amount which the Commonwealth might properly have specified in a notice given under s 29 of the Act, it is to be presumed that the Commonwealth would accept it. In particular, it is to be presumed that the amount would not be written off by the Commonwealth under par (a) of s 30(1) and that there would be no waiver under par (b) of the right of the Commonwealth to recover the amount of the subsidy.

109. The state of the record before this Court does not enable us to compute the sum we have mentioned ("the Benefit Sum"). The solicitors for the first appellant and for the first respondent should be given the opportunity to agree that amount, after such consultation with the Commonwealth and the Bank as they may be advised. If that agreement is not reached on or before 30 November 1995, any party should have liberty to apply to this court. It would appear, in that event, to be necessary to refer the proceeding to the Equity Division of the Supreme Court for a finding as to the amount of the Benefit Sum. The Judge or Master dealing with the matter then might admit such further evidence as might be necessary to dispose of the matter.

110. If the agreement mentioned is reached, then declarations made in this Court should take effect finally to dispose of the case without further litigation in the Supreme Court.

111. What is required is the formulation of, and acceptance by Mrs Nelson of, a term upon the relief to which she is otherwise entitled which denies to her the benefit she obtained by her unlawful conduct and provides for the payment to the Commonwealth of the Benefit Sum.

Conclusions
112. The appeal should be allowed with costs. The orders of the Court of Appeal entered 21 September 1994 should be set aside. The declarations 1, 2 and 3 as made by the Master and entered 10 January 1994 should be set aside. The first respondent should pay the costs of the appellants of the proceeding at first instance and in the Court of Appeal.

113. There should be a declaration to the effect that, if on or before 9 January 1996 Mrs Nelson has paid to the Commonwealth an amount equal to the Benefit Sum received in respect of the purchase by her of the Kidman Lane property, the second respondents hold the whole of the balance of the proceeds of sale of the Bent Street property, together with any interest earned thereon, upon trust for the first appellant. This should be accompanied by an order that any moneys so held by the second respondents be paid to the first appellant.

114. The making by Mrs Nelson of this payment to the Commonwealth should have the effect of discharging any liability to the Commonwealth under s 29 of the Act.

115. There should be a further declaration to the effect that, if the Benefit Sum has been ascertained but shall not have been paid by Mrs Nelson as provided in the first declaration, the second respondents hold the balance of the proceeds of sale of the Bent Street property, as to the Benefit Sum, upon trust for the first respondent, and as to the remainder (including interest earned upon the whole of the said balance) upon trust for the first appellant. Such a trust of the Benefit Sum would do no more than reflect the unavailability of equity to obtain for the first appellant the actual fruits of her unlawful conduct. There should also be orders that the moneys so held by the second respondents be paid respectively to the first respondent and first appellant.

116. The parties should have liberty to apply to this Court if, on or before 30 November 1995, the first appellant and the first respondent shall not have agreed the amount of the Benefit Sum.

DAWSON J. This is a case in which a mother provided the purchase money for a house which was transferred into the names of her son and daughter, both of whom were adults. The purpose of this arrangement was to enable the mother, should she subsequently wish to purchase another house for herself, to obtain a subsidised advance upon favourable terms under the Defence Service Homes Act 1918 (Cth). Under that Act, the mother would not have been eligible for the subsidised advance if she were the owner of another house.

2. More than a year and a half later the mother did purchase another house for herself. She applied for and received a subsidised advance under the Defence Service Homes Act, falsely declaring that she did not own or have a financial interest in a house other than the one for which the advance was sought. This declaration was false because the mother claimed, as she does in this litigation, that she was the beneficial owner of the house for which she had previously provided the purchase money.

3. In falsely declaring that she had no interest in another house, the mother may have committed offences under other legislation (110), but the Defence Service Homes Act did not make it an offence. It merely provided that the Commonwealth might recover as a debt the amount of the subsidy paid as the result of a false statement (111). It also provided that the Commonwealth might waive the debt or allow it to be paid by instalmentsm (112). However, the illegality involved was not a breach of the Defence Service Homes Act. It was the fraud involved in obtaining a subsidised advance upon a false basis. The illegality of that act was not dependent upon any policy revealed by the Defence Service Homes Act but arose from the nature of the act itself.

4. The house which was in the names of the son and daughter was sold and the mother claims to be entitled to the proceeds. The son concedes his mother's entitlement, but the daughter, having fallen out with her mother, claims half of those proceeds.

5. Two questions arise. The first is whether the presumption of advancement applies to the payment of the purchase price and the transfer of the house to the son and daughter. If it does not, the son and daughter hold the proceeds of sale upon a resulting trust in favour of their mother because she provided the purchase price. The other question is whether the mother is precluded from recovering the proceeds because of the illegal purpose of the arrangement whereby the house was placed in the names of the son and daughter.

6. This appeal is from the New South Wales Court of Appeal which applied a recent decision of its own (113) and held that a presumption of advancement now applies to a gift made by a mother to her children as it has applied in the past in the case of a gift made by a father to his children. The effect of the presumption is to displace any resulting trust with the inference that a transfer of the beneficial, as well as legal, ownership was intended.

7. The presumption of advancement can, like a resulting trust, be rebutted by evidence of actual intention, but in attempting to rebut the presumption in this case the mother was forced to reveal the true purpose of the arrangement between her and her children. That purpose, being to defraud the Commonwealth, was illegal and had been carried into effect. The Court of Appeal held that those circumstances precluded the mother from being granted relief.

8. In my view, the Court of Appeal was correct in concluding that, in accordance with its previous decision in Brown v Brown (114), the presumption of advancement should now be regarded as applying in the case of gifts by a mother, as well as a father, to a child. In Scott v Pauly (115), Isaacs J observed that the drawing of a distinction between a mother and a father in this regard had not been judicially doubted (116). Even then, apparently, some text writers doubted whether the presumption should have been viewed so narrowly. But circumstances have changed since Isaacs J made his observation. He viewed the presumption as being founded upon "an obligation in conscience to provide for a child" (117). Now, unlike then, the Family Law Act 1975 (Cth) imposes upon both parents "the primary duty to maintain the child", the object being to ensure "that parents share equitably in the support of their children" (118). Those provisions reflect the changed responsibility as between parents for the maintenance of their children and hence in their relationship with their children.

9. In Calverley v Green Gibbs CJ said (119):

"The principle upon which the presumption of advancement

rests does not seem to me to have been convincingly expounded in the earlier authorities, nor do the two presumptions, of a resulting trust and advancement, together always lead to a result which coincides with that which one would expect to occur in ordinary human experience. ... In Wirth v Wirth (120) Dixon CJ put the law on a more rational basis."

10. Wirth v Wirth was a case in which the presumption of advancement was extended in its application to a transfer of property by a prospective husband to his intended wife in contemplation of marriage. In that case Dixon CJ took a wider view of the basis for the presumption. He said (121):

"While the presumption of advancement doubtless in its

inception was concerned with relationships affording 'good' consideration, it has in the course of its growth obtained a foundation or justification in the greater prima facie probability of a beneficial interest being intended in the situations to which the presumption has been applied."
In modern society there is no reason to suppose that the probability of a parent intending to transfer a beneficial interest in property to a child is any the more or less in the case of a mother than in the case of a father.

11. In Calverley v Green Gibbs CJ thought that the presumption of advancement should be raised when the relationship between the parties is such that it is more probable than not that the transfer of a beneficial interest was intended, whether or not the purchaser owed the other a legal or moral duty of support. He was alone in this view, but not, I think, in the view that it would not be characteristic of the doctrines of equity "to treat established categories as frozen in time" (122). As Deane J pointed out (123) the categories of relationships giving rise to the presumption of advancement "are not ... finally settled or closed, at least in this Court" (124).

12. In my view, whether the basis for the presumption is a moral obligation to provide for a child or the reflection of actual probabilities, there is no longer any justification for maintaining the distinction between a father and a mother. In the United States the presumption of advancement applies alike to a mother as well as a father (125) and that should now be the situation in this country.

13. The mother in this case must, therefore, rebut the presumption of advancement to establish a beneficial entitlement to the proceeds of sale of the house. That is to say, in order for there to be a resulting trust in her favour, she must rebut the presumption of advancement, which is in reality an exception to the basic presumption that a resulting trust occurs where the legal title to property is vested in a person other than the person who provided the purchase price. In doing so she must, of necessity, explain why she did not intend to make a gift to her son and daughter and so reveal her illegal purpose.

14. The attitude of the common law towards illegality is contained in the principle that a court will not lend its aid in enforcing a cause of action which is founded upon an immoral or illegal act (126). It is expressed in the maxim ex turpi causa non oritur actio and is based upon public policy. Although a party to litigation cannot succeed if he has to rely upon his own illegality, the mere fact that a transaction is illegal does not prevent property from passing under it (127). As Lord Denning said in Singh v Ali (128):

"The reason is because the transferor, having fully achieved

his unworthy end, cannot be allowed to turn round and repudiate the means by which he did it - he cannot throw over the transfer. And the transferee, having obtained the property, can assert his title to it against all the world, not because he has any merit of his own, but because there is no one who can assert a better title to it." (129)
Thus in Bowmakers Ltd v Barnet Instruments Ltd the Court of Appeal said (130):

"In our opinion, a man's right to possess his own chattels

will as a general rule be enforced against one who, without any claim of right, is detaining them, or has converted them to his own use, even though it may appear either from the pleadings, or in the course of the trial, that the chattels in question came into the defendant's possession by reason of an illegal contract between himself and the plaintiff, provided that the plaintiff does not seek, and is not forced, either to found his claim on the illegal contract or to plead its illegality in order to support his claim."

15. In equity, however, the relevant principle is to be found, not in the common law maxim ex turpi causa, but in the maxim that he who comes to equity must come with clean hands (131). The related equitable principle has had a wider application than the common law maxim because, notwithstanding the existence of an equitable interest, equity has refused to lend its aid in enforcing it if it is the result of an illegal transaction or has been acquired for an illegal purpose. It has been considered that it is a sufficient bar to equitable relief that the person claiming the relief is tainted with the illegality. The principle was expressed by Lord Eldon in Muckleston v Brown (132):

"the Plaintiff stating, he had been guilty of a fraud upon

the law, to evade, to disappoint, the provision of the Legislature, to which he is bound to submit, and coming to equity to be relieved against his own act, and the defence being dishonest, between the two species of dishonesty the Court would not act; but would say, 'Let the estate lie, where it falls.'"

16. However, an illegal purpose will not prevent an equitable interest from arising, because the law recognises a locus poenitentiae and, if the illegal purpose has not been carried out, a court will uphold the interest (133). But there are cases which decide that if the illegal purpose has been carried out, a claimant will not be heard to assert a claim to the equitable interest notwithstanding that, because of the existence of a locus poenitentiae, that interest must have arisen.

17. That principle has been applied in a number of cases to defeat a claim of a resulting trust where the claimant has, in attempting to rebut the presumption of advancement, been forced to reveal an illegal purpose to the transaction. More recent examples are to be seen in Gascoigne v Gascoigne (134), In re Emery's Investments Trusts (135) and Palaniappa Chettiar v Arunasalam Chettiar (136).

18. In Tinsley v Milligan (137) a house was purchased by two single women using their joint funds. The house was placed in the name of one of the women, the plaintiff, to assist in the perpetration of frauds on the Department of Social Security. The plaintiff claimed beneficial ownership of the house. The other woman, the defendant, counterclaimed for a declaration that the house was held on trust for both of them in equal shares. The relationship between the two women raised no presumption of advancement and the only question was whether a resulting trust of the Gissing v Gissing (138) type arose because of the manner in which the purchase price was provided. The plaintiff, in answer to the defendant's counterclaim, revealed the illegal purpose for which the house was transferred to her alone.

19. The Court of Appeal held (139) by a majority (Nicholls and Lloyd LJJ; Ralph Gibson LJ dissenting) that even if there were in the past a rule of equity requiring a court to refuse relief where it appeared that property was transferred for an illegal purpose - a rule that the estate should lie where it fell - by analogy with cases at common law involving the maxim ex turpi causa, a more flexible approach should now be adopted. In several cases (140) there had evolved what became known as "the public conscience" test which required a court in the application of the maxim to balance the adverse consequences of granting relief against the adverse consequences of refusing relief. Applying that test in the case before them, the Court of Appeal held that there was no bar to a declaration of a resulting trust notwithstanding the revelation of the illegal purpose of the arrangement between the plaintiff and the defendant.

20. An appeal to the House of Lords was dismissed (Lord Keith of Kinkel and Lord Goff of Chieveley dissenting), but Lord Browne-Wilkinson, with whom Lord Jauncey of Tullichettle and Lord Lowry agreed, rejected a test depending "on such an imponderable factor as the extent to which the public conscience would be affronted by recognising rights created by illegal transactions" (141). He accepted, however, that the same rule ought to apply both at common law and in equity in relation to a property right acquired under an illegal transaction.

21. He concluded that at common law, property in chattels and land can pass under a contract that is illegal and therefore unenforceable; that a plaintiff can at law enforce property rights so acquired provided that he does not need to rely on the illegal contract for any purpose other than providing the basis of his claim to a property right; and that it is irrelevant that the illegality of the underlying agreement was either pleaded or emerged in evidence: if the plaintiff has acquired legal title under the illegal contract that is enough (142).

22. In order that the same rule should apply whether a claim is founded upon a legal or equitable title, the correct principle was said to be that a claimant is entitled to recover if he is not forced to plead or rely on the illegality, even if it emerges that the title on which he relies was acquired in the course of carrying out an illegal transaction (143). The recent cases which appeared to apply the wide principle laid down by Lord Eldon were explained as being in truth cases in which the presumption of advancement could not be rebutted without reliance upon the illegality.

23. Agreeing, as I do, that disconformity is undesirable in the rules relating to illegality at law and in equity, I find difficulty in accepting the distinction drawn in Tinsley v Milligan between a resulting trust established without the need to rebut the presumption of advancement and a resulting trust that can only be established by rebutting that presumption. In the former case, according to the decision, an illegal purpose does not preclude relief because the resulting trust will be presumed upon proof that the purchase price was paid by the party asserting the trust without any need for that party to place reliance upon the illegal purpose. In the latter case, however, where the presumption of advancement cannot be rebutted without revealing the illegal purpose, there can be no assertion of a resulting trust. The distinction can hardly be based upon a policy of discouraging the transfer of property for an illegal purpose because a knowledgable transferor would choose a transferee other than one who could take advantage of the presumption of advancement. Moreover, where a presumption of advancement applied, the distinction would be such as to lead the transferee to encourage the carrying out of the illegal purpose so as to acquire a benefit for himself. And, if the presumption of advancement cannot be rebutted because of the revelation of an illegal purpose, the result is a windfall gain to the transferee who may in fact share the illegal purpose.

24. Once it is recognised that Lord Eldon's broad rule exceeds the true scope of the equitable maxim that he who comes to equity must come with clean hands and that a party who the evidence reveals is tainted with illegality may nevertheless succeed, as in Tinsley v Milligan, in establishing a resulting trust, it seems to me to be unacceptable that a party, tainted by a similar illegality, cannot establish a resulting trust merely because evidence advanced to rebut the presumption of advancement reveals the illegality. The different result is entirely fortuitous being dependent upon the relationship between the parties and is wholly unjustifiable upon any policy ground. That the transfer of property by a husband to his wife for an illegal purpose and not intended as a gift should not give rise to a resulting trust whereas a similar transfer of property by a man to his de facto wife (144) for a similar illegal purpose should do so, because in the former instance the husband is required to rebut the presumption of advancement and cannot do so merely because he would reveal the illegal purpose, cannot, in my view, have any basis in principle. If, as it does, a locus poenitentiae exists, then there is an existing equitable interest in each instance (145). It is simply that in the former instance the husband will not be heard to assert its existence. In the words of Lord Browne-Wilkinson in Tinsley v Milligan (146) in each instance:

"The effect of illegality is not substantive but procedural.

The question therefore is, 'In what circumstances will equity refuse to enforce equitable rights which undoubtedly exist.'"

25. Nor, in my view, can it be said that a party seeking to rebut the presumption of advancement in the case of a transaction for an illegal purpose is forced to rely upon his own illegality. What must be established in order to rebut the presumption is that no gift was intended. There may be an illegal purpose for the transfer of the property and that may bear upon the question of intention (147), but it is the absence of any intention to make a gift upon which reliance must be placed to rebut the presumption of advancement. Intention is something different from a reason or motive. The illegal purpose may thus be evidentiary, but it is not the foundation of a claim to rebut the presumption of advancement (148). Both the presumption of a resulting trust and the presumption of advancement may be rebutted by showing the actual intention of the parties (149). Each presumption dictates where the evidentiary burden of doing so lies. But that affords no basis for drawing a distinction between the effect of an illegal purpose where the presumption of advancement applies and where it does not. Reliance is placed in each case upon the intention of the parties, whether aided by a presumption or not, and not upon the illegality.

26. Justification for the view that the presumption of advancement may be rebutted so as to allow a resulting trust to arise, notwithstanding that the rebuttal reveals that the transaction involved was for an illegal purpose, is to be found in the principle that illegal conduct on the part of a person claiming equitable relief does not in every instance disentitle that person to the relief. The illegality must have "an immediate and necessary relation to the equity sued for" (150). Where reliance is not placed upon the illegality - where the court is not asked to effectuate the illegal purpose but merely to recognise an interest admittedly in existence - there is not, in my view, an immediate and necessary relation between the illegality and the claim. The illegal purpose in those circumstances has been effectuated without any intervention by the court and the property right has passed. If there is to be a correspondence between the rules at common law and in equity, then the property right ought to be recognised notwithstanding that it is the result of an illegal transaction. The relevance of the illegal transaction is confined to explaining how the property right arose; to "providing the basis of (a) claim to a property right" (151).

27. In the present case, the purchase of the first house by the mother and the placing of it in the names of the son and daughter took place a considerable time before the failure of the mother to disclose her interest in her application for an advance. During the whole of that time the mother was in a position to rebut the presumption of advancement and to claim the beneficial interest in the house which had passed to her. Given the existence of that interest and the fact that, had it been a legal interest, it would have been recoverable withstanding the maxim ex turpi causa, I do not think that it should be concluded that the mother in her claim for equitable relief placed reliance upon her fraudulent conduct in any direct or necessary way. The purchase of the house did not of itself involve any fraud and the relevance of the illegal purpose, which was at the time of the purchase yet to be carried into effect, was at most to explain why the purchase did not constitute a gift to the children. The amount of the subsidy paid as a result of the mother's fraud is recoverable by the Commonwealth so that the mother cannot, without qualification, be said to be entitled to the benefit of having carried out her illegal purpose.

28. I would allow the appeal and make the declarations and order sought by the mother and son. The mother is, on the view which I have expressed, entitled to the relief which she seeks and I see no reason to place conditions upon granting it. The Commonwealth may or may not wish to recover the amount of the subsidy from the mother and to do so wholly or in part or upon terms. That is a matter for the Commonwealth and I do not think that it is any part of the Court's function to assist it in these proceedings to which it is not a party. As I have said, the illegality in this case arose from the fraudulent conduct of the mother upon which any policy revealed by the Defence Service Homes Act throws no light. It is not, in my view, a case which is comparable with cases such as Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (152) where the policy of the Banking Act 1959 (Cth), in making it illegal to carry on business as a banker without an authority, gave the answer to the question whether transactions carried out in the course of conducting an unauthorised banking business should or should not be viewed as illegal and void.

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.

McHUGH J. This appeal is brought by Mrs Bettie June Nelson ("Mrs Nelson") and her son, Peter John Nelson ("Peter"), against an order of the New South Wales Court of Appeal. That Court dismissed an appeal against an order made in the Equity Division of the Supreme Court by Master Macready. The Master held that Mrs Nelson had intended to retain the beneficial ownership of property that she purchased in the name of her children. However, he held that she was unable to rebut the presumption of advancement in favour of the children because the property was put in their names to facilitate a claim for a subsidy under the Defence Service Homes Act 1918 (Cth) ("the Act"), a subsidy which her ownership of the property prevented her from obtaining.

2. The appeal raises four questions:

(1) Does the presumption of advancement apply when a mother

conveys property to one of her children or when she provides the purchase price for a property that is conveyed to of one of her children?

(2) Does the law permit a presumption of advancement to be

rebutted when it is established that property was transferred to or money paid on behalf of another to further an illegal purpose or object?

(3) If so, upon what principles does a court act in

determining whether the presumption can be rebutted?

(4) Does the law permit a presumption of advancement to be

rebutted and a resulting trust enforced when it is established that property was transferred to or bought in the name of a another person for the purpose of obtaining a subsidy contrary to the provisions of the Act?

3. In my opinion, the appeal should be allowed. Although the presumption of advancement applies to transfers of property by a parent of either sex, the presumption is rebuttable. It may be rebutted even where the transfer was made for an illegal purpose unless the circumstances of the transfer are so injurious to the public interest that public policy requires otherwise. Nothing in the Act or its objects nor in the circumstances of this case provided any sound reason in public policy for the Supreme Court refusing to allow Mrs Nelson to rebut the presumption in this case. Consequently, her proven intention to retain the beneficial ownership of the property rebutted the presumption of advancement and gave rise to a resulting trust of the property in her favour.

The factual background
4. Mrs Nelson is the widow of John Wallace Nelson ("Mr Nelson"). They had two children, Elizabeth Nelson ("Elizabeth") and Peter. Prior to 1985 Mr and Mrs Nelson had lived in a property in Yasmar Avenue, Haberfield. In 1985 Mr Nelson bought a property in Windsor Street, Paddington with the intention of renovating and selling it. The Yasmar Avenue property was sold in early 1986 for $165,000. The Windsor Street property was sold in August 1986 for $188,500.

5. In August 1987, Peter and Elizabeth became the nominal purchasers as joint tenants of a property at 5 Bent Street, Petersham for $145,000. The purchase was completed on the day that Mr Nelson died, 4 November 1987, and the change of title was registered in their names on 18 November. The money for the deposit and the balance of the purchase price was drawn from the joint account of Mr and Mrs Nelson. The majority of this money came from proceeds of the sale of the Windsor Street property.

6. After the purchase of Bent Street, Peter arranged for the house to be renovated. Renovation was completed in June 1988. In about March or April of that year Mrs Nelson and Peter began to live in the house, but Mrs Nelson thought that the property was too large for a family home. In August 1989 she bought a property at Kidman Lane, Paddington in her own name. She intended to demolish the house on this land and build a new one. To fund the purchase, a loan of $150,000 was obtained. In addition, Mrs Nelson obtained another $25,000 as a subsidised loan pursuant to the provisions of the Act. To obtain that loan, Peter completed a form entitled "Subsidy Application" on his mother's behalf. In response to the question: "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?", a tick was placed in the box beside the word "No".

7. In October 1990, the Bent Street property was sold for $400,000. Upon settlement and after discharging the mortgage, an amount of $232,509.83 remained. This money is invested in an interest bearing trust account in the name of the second respondents, who are Elizabeth's solicitors.

8. Mrs Nelson is the executrix of and sole beneficiary of Mr Nelson's estate. Probate was granted to her on 5 November 1991. In December 1991, she commenced proceedings in the Supreme Court of New South Wales seeking a declaration that Peter and Elizabeth held the proceeds of the sale of Bent Street in trust for her. She claimed a resulting trust on the basis that she and Mr Nelson had provided all the money for its purchase. In her cross-claim, Elizabeth alleged that her parents provided the funds by way of advancement for Peter and herself. In the Supreme Court, Master Macready held that the relationship of mother and adult child gave rise to a presumption of advancement. The Master also found:

(1) Mrs Nelson had no intention to confer any beneficial

interest in Bent Street or the proceeds of its sale upon Elizabeth or Peter;

(2) one of the purposes of purchasing Bent Street in the

names of Peter and Elizabeth was to preserve Mrs Nelson's entitlement to apply for a defence service home loan which would have been jeopardised if she had retained the legal interest in Bent Street;

(3) the grant of a certificate of entitlement for the

defence service home loan in respect of the Kidman Lane property was achieved by concealing Mrs Nelson's interest in the Bent Street property;

(4) as a result, Mrs Nelson could not lawfully rebut the

presumption of advancement and Elizabeth was entitled to a declaration that she was entitled to one half of the proceeds of the sale of the Bent Street property plus interest.

The presumptions of resulting trust and advancement
9. When a person ("the transferor") transfers property without consideration or purchases property and directs the vendor to transfer the title to another person, equity presumes that the transferee holds the property on a resulting trust for the transferor (223). The presumption may be rebutted by evidence that the transferee received the property as a gift (224). A different presumption arises where the relationship between the parties falls into a class where dependency, past, present or future, commonly exists or, at all events, commonly existed in the nineteenth and earlier centuries. If such a relationship exists, the transfer is presumed to be made for the benefit of the transferee (225) although the transferor may rebut the presumption by direct evidence or by inferences drawn from the circumstances (226). Thus, a transfer of property without consideration by a father to a child (227), a husband to a wife (228), or an intending husband to an intending wife (229) is presumed to be made to advance the interests of the transferee. Until recently, however, the weight of authority favoured the conclusion that the presumption of advancement did not apply to transfers of property made without consideration by a mother to her child (230). Sir George Jessel MR once said (231) that the presumption of advancement "arises from the moral obligation to give". He explained (232) the reason for the distinction between a voluntary transfer by a father to a child and one by a mother to a child as resting on the lack of any moral obligation on the part of "a mother to provide for her child". This explanation for the distinction must seem strange to most persons living in the late twentieth century, but it accords with the then widely held conception of the role of a wife in a late nineteenth century household and with the then legal rule that, upon marriage, the property of the wife became the property of her husband.

10. While the presumption of advancement continues to apply to transfers of property between father and child, consistency of doctrine requires that the presumption should also apply to transfers of property by a mother to her child. If the presumption of advancement arises, as Sir George Jessel thought, from the obligation of a father to provide for his child, the mother as well as the father now has a legal obligation to support their child (233). But independently of any legal obligation of a mother, it would not accord with the reality of society today for the law to presume that only a father has a moral obligation to support or is in a position to advance the interests of a child of the marriage (234). Consequently, the New South Wales Court of Appeal was right to hold in Brown v Brown (235) that the presumption of advancement applied as between mother and child as well as between father and child. The real question is whether the courts should continue to hold that the presumption applies to either parent.

11. The presumption of advancement is a consequence of the equitable rule that, when a person transfers property without consideration or purchases property and directs the vendor to transfer the property into the name of another, the transferee is presumed to hold the property on a resulting trust for the transferor. No doubt in earlier centuries, the practices and modes of thought of the property owning classes made it more probable than not that, when a person transferred property in such circumstances, the transferor did not intend the transferee to have the beneficial as well as the legal interest in the property. But times change. To my mind - and, I think, to the minds of most people - it seems much more likely that, in the absence of an express declaration or special circumstances, the transfer of property without consideration was intended as a gift to the transferee. That being so, there is a strong case for examining whether the presumption of a resulting trust accords with the effect of contemporaneous practices and modes of thought. If that presumption goes, there is no compelling reason for a presumption of advancement in the case of transfers of property by parents to children. Indeed, the presumption of advancement itself may not accord with contemporaneous practices and modes of thought.

12. A presumption is a useful aid to decision making only when it accurately reflects the probability that a fact or state of affairs exists or has occurred. As Murphy J said in Calverley v Green (236) "(p)resumptions arise from common experience ... As standards of behaviour alter, so should presumptions". If the presumptions do not reflect common experience today, they may defeat the expectations of those who are unaware of them. Nevertheless, as Deane J pointed out in Calverley (237), the presumptions are "too well entrenched as 'landmarks' in the law of property ... to be simply discarded by judicial decision". Although the operation of the presumptions may sometimes defeat the expectations of transferors and transferees, it may be that many transfers of property have been made on the basis of the presumptions. If evidence was no longer available to confirm that property had been transferred to achieve a result in accord with the presumptions, serious injustice might be done to those who have dealt in the property. In the absence of knowledge as to what effect the abolition of the presumptions would have on existing entitlements, the better course is to leave reform of this branch of the law to the legislature which can, if it thinks fit, abolish or amend the presumptions prospectively.

13. The appellant contends that, if the presumption of advancement continues as a legal principle, it should be restricted to cases in which the inference of advancement would be drawn in the absence of evidence of intention. This is another way of suggesting that the presumption does not arise unless the circumstances surrounding the bare relationship of the parties are consistent with the presumption. It would mean that where, for example, "a widowed mother, of modest means, makes a payment of substantially the whole of her assets to contribute to the purchase of real estate, and legal title is vested in her adult, able-bodied sons" (238), no presumption of advancement would arise because the mother had no moral obligation to give her assets to her adult and able-bodied sons.

14. If the presumption of advancement could be displaced by the objective circumstances of the relationship, the appellant might be able to succeed without disclosing her illegal purpose, for the facts of her case closely resemble the facts of the above example. But to accept the appellant's contention would seriously undermine the operation of the presumption of advancement. It would allow it to operate only where the surrounding circumstances were consistent with the presumption. It would also substitute an inquiry into the circumstances of the case for the automatic operation of the rule, thus increasing the uncertainty of property titles and promoting litigation. As long as the presumption of advancement continues to apply to property dealings, it should apply whenever the parties stand in a relationship that has been held to give rise to the presumption. The circumstances surrounding a relationship may be used to rebut the presumption, but they cannot be used to prevent it from arising.

15. Master Macready and the Court of Appeal proceeded on the basis that the presumption of advancement applied to the acquisition of the Bent Street property and was not rebutted by inferences from the circumstances of the relationship between Mrs Nelson and her children. However, the Master found that "there was no intention of Mrs Nelson to confer any beneficial interest on Elizabeth". Later in his judgment, he said "it seems fairly clear that a purpose for putting the property in the name of the children was to preserve (the) entitlement of Mrs Nelson to apply for a Defence Service's home loan on the basis that she would not be shown on the title deed". Both Master Macready and the Court of Appeal found that this purpose was unlawful and that, because her intention arose out of that purpose, a court, exercising equitable jurisdiction, could not allow her to prove her intention for the purpose of rebutting the presumption of advancement. It is this unlawful purpose of Mrs Nelson which raises the remaining questions in this case. To those questions I now turn.

Equitable relief and the consequences of statutory illegality
16. Mr Coles QC, counsel for Elizabeth, contends that the Supreme Court was correct in refusing to declare that Mrs Nelson was the beneficial owner of the property because equity will not permit a person to rebut the presumption of advancement and set up a resulting trust in respect of property that was transferred to effectuate an illegal purpose (239). He asserts that this equitable rule is merely a particular application of a wider principle that a court of equity will not enforce an equitable proprietary interest arising from a transaction that had an illegal purpose and to which the claimant was a party (240). In my opinion, these contentions are erroneous.

17. The courts, including courts exercising equitable jurisdiction, will not enforce an unlawful agreement or trust and, frequently will not enforce an agreement or trust that has been entered into for an unlawful purpose. But these propositions do not lead to the conclusion that a person who participated in the making or execution of such an agreement or trust never has a curial remedy. A court that finds that an agreement is unlawful or has an unlawful purpose has merely set the stage for a further inquiry: are the circumstances surrounding the agreement such that the court should deny a relevant remedy to the party seeking the assistance of the court? Certainly, many cases contain statements that, stripped of their factual context and read in ignorance of other decisions, support the contentions of Mr Coles. But I doubt that the common law or equity ever maintained a doctrine of illegality as disabling as that for which he contends.

18. The argument for Elizabeth naturally relied on the famous dictum (241) of Lord Mansfield that "(n)o Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." (242) The principle contained in this dictum applies in both law and equity (243). But it is subject to exceptions which allow relief to be granted despite the presence of illegality (244). First, the courts will not refuse relief where the claimant was ignorant or mistaken as to the factual circumstances which render an agreement or arrangement illegal (245). Second, the courts will not refuse relief where the statutory scheme rendering a contract or arrangement illegal was enacted for the benefit of a class of which the claimant is a member (246). Third, the courts will not refuse relief where an illegal agreement was induced by the defendant's fraud, oppression or undue influence (247). Fourth, the courts will not refuse relief where the illegal purpose has not been carried into effect (248). But Mr Coles claims that, whatever the scope of these exceptions in the courts of common law, they do not apply where a claimant seeks an equitable remedy to recover property that he or she has transferred to effectuate an illegal purpose. In this area, says Mr Coles, the general principle formulated in Holman v Johnson (249) has hardened into a fixed rule "that he who has committed iniquity shall not have equity; and what is required to invoke the maxim is no more than that the alleged misconduct has 'an immediate and necessary relation to the equity sued for'" (250). Alternatively, Mr Coles contends that neither the common law courts nor the equity courts will assist a claimant who must rely on his or her unlawful purpose to make out a cause of action.

The wide principle
19. In Tinsley v Milligan (251), all members of the House of Lords accepted that in the nineteenth century there was a "wide principle" that a court exercising equitable jurisdiction would not assist a claimant to recover property that had been transferred to another person for an unlawful purpose. At the very beginning of the nineteenth century, Lord Eldon LC said (252) in a well known passage that "the Plaintiff stating, he had been guilty of a fraud upon the law, to evade, to disappoint, the provision of the Legislature, to which he is bound to submit, and coming to equity to be relieved against his own act, and the defence being dishonest, between the two species of dishonesty the Court would not act; but would say, 'Let the estate lie where it falls'." Lord Eldon went on to say (253) that "the law will not permit secret agreements to evade what upon grounds of public policy is established". Courts exercising equitable jurisdiction have frequently applied this principle (254). Thus, in Curtis v Perry (255) Lord Eldon refused to enforce a trust where partners had agreed that the ownership of certain ships should remain registered in the name of one partner to conceal the interest of the other partner who was a member of Parliament and liable to statutory penalties if the ships were employed under contracts with the government. The Lord Chancellor said (256):

"(T)he object of keeping the ships registered in the name of

Nantes, was, that a profit might be made by the employment of them in contracts with Government; and Chiswell was a Member of Parliament; who, the law says, shall not be a contractor. The moment the purpose to defeat the policy of the law by fraudulently concealing, that this was his property, is admitted, it is very clear, he ought not to be heard in this Court to say, that is his property."
In Gascoigne v Gascoigne (257), the Divisional Court refused to enforce a trust where a husband had expended money in building a house on land under a lease of land taken in his wife's name for the purpose of protecting his assets from his creditors. Similarly, in Palaniappa Chettiar v Arunasalam Chettiar (258), the Privy Council held that equity would not enforce a trust in respect of land transferred by a father to his son in order to defeat the operation of regulations governing the ownership of land on which rubber was grown. In giving the Advice of the Judicial Committee, Lord Denning applied Lord Mansfield's dictum.

20. In Tinsley, however, the House of Lords was divided as to whether the "wide principle" still represented the law.

Tinsley v Milligan
21. In Tinsley, the House held that the defendant was entitled to resist an ejectment action and obtain a declaration of part ownership in respect of property that had been purchased in the plaintiff's name to enable the defendant to claim social security benefits to which she was not entitled. The House held that, because the defendant did not need to plead or disclose her unlawful purpose in order to establish her case, she was entitled to equitable relief. Central to this question was whether the much criticised (259) decision of the Court of Appeal in Bowmakers Ltd v Barnet Instruments Ltd (260), a case at law, applied in equity. In Bowmakers, the plaintiff recovered damages for the conversion of machine tools that were subject to hire-purchase agreements made in breach of the Defence Regulations. The Court of Appeal held that, despite the illegality of the agreements, the plaintiff could succeed in its claim because it could do so without founding its cause of action on the illegal agreements or pleading their illegality. Du Parcq LJ giving the judgment of the court said (261):

"In our opinion, a man's right to possess his own chattels

will as a general rule be enforced against one who, without any claim of right, is detaining them, or has converted them to his own use, even though it may appear either from the pleadings, or in the course of the trial, that the chattels in question came into the defendant's possession by reason of an illegal contract between himself and the plaintiff, provided that the plaintiff does not seek, and is not forced, either to found his claim on the illegal contract or to plead its illegality in order to support his claim."

22. In Tinsley, the majority of the House held that this principle also applied in equity. Lord Keith of Kinkel and Lord Goff of Chieveley dissented. Lord Browne-Wilkinson, who gave the leading speech, said (262) that, while the "wide principle" had applied in equity in the early nineteenth century, the principles of the law of illegality had developed throughout the century. He thought that with one exception (263) "none of the English decisions are decided by simply applying that principle". Lord Browne-Wilkinson said that, with the fusion of law and equity, the same principles of illegality applied in law and equity and that, as a result, the Bowmakers rule was applicable to the circumstances of the case (264). This meant that the defendant succeeded in her counter-claim because the transfer of the property into the name of the plaintiff gave rise to a resulting trust in favour of the defendant and the plaintiff could not prove that the defendant had intended to transfer her beneficial interest in the property to the plaintiff. The defendant was therefore able to enforce the trust in equity because she did not have to plead or rely on the illegal purpose that motivated the conveyance.

23. Speaking for the minority, Lord Goff said that the reason that a court of equity would not assist a party to an illegality was "because he has not come to the court with clean hands" (265). Thus, although an equitable interest may have arisen, equity will not enforce it where the interest is tainted with illegality. In Lord Goff's view, it does not matter that the plaintiff does not need to rely on or plead the illegality in order to establish his or her case. By whatever means "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" (266). The minority, therefore, held that the Bowmakers rule is not applicable where equitable relief is sought.

The wide principle and the Bowmakers rule
24. I think that the majority speeches in the House of Lords in Tinsley were correct in denying the existence of the "wide principle". I doubt that Lord Eldon intended to lay down a rule to the effect that, if the purpose of a transaction was to defeat the operation of an Act of Parliament, equity would always refuse its remedies to a person who had participated in that transaction. It is true that, in Muckleston v Brown (267), Curtis v Perry (268), Cottington v Fletcher (269) and other cases, the judges of the Court of Chancery were dealing with trusts and agreements whose objects were to defeat the operation of Acts of Parliament and that they concluded that those trusts and agreements were not enforceable in equity. But that was obviously because, in the circumstances of those cases, the policy of the Acts required the courts to firmly suppress the use of trusts and agreements to avoid the operation of the legislation. Those decisions say nothing about legislation whose policy does not require such drastic remedies. Nor do they require a court of equity to disregard a circumstance that affects the real justice of the case and calls for the assistance of equitable remedies. It would be out of character for a court of equity to do so. In Lord Stowell's words: "A Court of Equity ... looks to every connected circumstance that ought to influence its determination upon the real justice of the case." (270)

25. With great respect to the view expressed by Lord Goff in Tinsley, I do not think that the clean hands doctrine constitutes or provides a sound basis for a special rule in equity. The illegality principle is one of general application; it is not limited to proceedings in equity. To say that in the equitable context it derives from the clean hands doctrine is to wrongly deny its conceptual links to the rule as it is applied in other areas. Further, it fails to recognise that the rationale for the two doctrines is distinct: the clean hands doctrine arises from the relationship between the parties to the proceedings, the illegality doctrine derives from public policy considerations. Accordingly, the majority of the House of Lords in Tinsley were correct in rejecting the "wide principle" as governing cases of illegality in equity. But that said, I do not think that this Court should adopt the majority's rule that a claimant cannot obtain relief in any court if that person must plead or rely on illegal conduct ("the Bowmakers rule").

The Bowmakers rule
26. A doctrine of illegality that depends upon the state of the pleadings or the need to rely on a transaction that has an unlawful purpose is neither satisfactory nor soundly based in legal policy. The results produced by such a doctrine are essentially random and produce windfall gains as well as losses, even when the parties are in pari delicto. To demonstrate the random nature of the assignment of substantive relief under the Bowmakers rule approved by the majority in Tinsley one has only to consider the application of that rule to the circumstances of the present case. If the rule were applied in this case, the determining factor would be whether a presumption of advancement arose. Only if it did, would Mrs Nelson need to answer the presumption of a resulting trust and rely on her illegal purpose. If the presumption of advancement did not arise, there would be no need to rely on the illegal purpose to rebut the presumption and the result would be the reverse. Thus, if Mrs Nelson had had the property placed in the name of a friend or relative - or anybody other than her children - she could recover the proceeds of the sale of the Bent Street property, notwithstanding her illegal purpose.

27. The Bowmakers rule has no regard to the legal and equitable rights of the parties, the merits of the case, the effect of the transaction in undermining the policy of the relevant legislation or the question whether the sanctions imposed by the legislation sufficiently protect the purpose of the legislation. Regard is had only to the procedural issue; and it is that issue and not the policy of the legislation or the merits of the parties which determines the outcome. Basing the grant of legal remedies on an essentially procedural criterion which has nothing to do with the equitable positions of the parties or the policy of the legislation is unsatisfactory, particularly when implementing a doctrine that is founded on public policy. In Tinsley, Lord Goff recognised the perverse nature of the rule adopted by the minority in that case in words that apply equally to the Bowmakers rule adopted by the majority judges. Lord Goff said (271):

"It is important to observe that ... the principle is not a

principle of justice; it is a principle of policy, whose application is indiscriminate and so can lead to unfair consequences as between the parties to litigation."
At least the position of the minority in Tinsley had the virtue that the indiscriminate nature of the rule which they adopted did not depend on procedural issues.

28. The policy justification for the rule adopted in the minority speeches in Tinsley is that the harsh and indiscriminate nature of the rule will deter people from entering into unlawful agreements and trusts because they know that the courts will not provide them with equitable relief. Whether the rule adopted by the minority would be an effective deterrent is debatable (272). However, the notion of deterrence seems a weak argument to justify the Bowmakers rule adopted by the majority in Tinsley. The defendant in Tinsley, for example, succeeded in recovering her property notwithstanding the unlawful purpose for which she transferred the property. Moreover, while the Bowmakers rule may impose severe losses on those who are forced to rely on the illegality, it also gives windfall gains to those who rely on the defence of illegality. In so far as the Bowmakers rule is a deterrent, it is also an incentive to illegality because it encourages those to whom property is conveyed to encourage transferors to carry out their unlawful purpose.

29. Furthermore, even if this random process of assigning losses and gains without regard to the substantive equities of a dispute is a disincentive to those who might enter illegal transactions, it does not follow that the Bowmakers rule is the most efficient rule to protect the community against the making of trusts and agreements for unlawful purposes. There are other rules that could achieve the same goals of legal policy through a less extreme and a more just process.

30. A final criticism of the Bowmakers rule adopted by the majority in Tinsley is that it may often defeat the intention of the legislature. Parliament almost invariably provides mechanisms for dealing with breaches of its laws. Those mechanisms sometimes include a provision that makes unlawful and unenforceable an agreement that defeats or evades the operation of the relevant law. If a particular enactment does not contain such a provision, the prima facie conclusion to be drawn is that Parliament regarded the sanctions and remedies contained in the enactment as sufficient to deter illegal conduct and saw no need to take the drastic step of making unenforceable an agreement or trust that defeats the purpose of the enactment (273).

The present need for the doctrine of illegality
31. The doctrine of illegality expounded in Holman was formulated in a society that was vastly different from that which exists today. It was a society that was much less regulated. With the rapid expansion of regulation, it is undeniable that the legal environment in which the doctrine of illegality operates has changed. The underlying policy of Holman is still valid today - the courts must not condone or assist a breach of statute, nor must they help to frustrate the operation of a statute. As Mason J put it in Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (274), the courts must not "be instrumental in offering an inducement to crime or removing a restraint to crime". However, the Holman rule, stated in the bald dictum: "No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act" (275) is too extreme and inflexible to represent sound legal policy in the late twentieth century even when account is taken of the recognised exceptions to this dictum.

32. One of the most significant reasons for adopting a less rigid approach to illegality than the bald dictum in Holman or, for that matter, the Bowmakers rule adopted in Tinsley is that statutory illegality can arise in a number of different ways (276). First, the statute may directly prohibit the contract or trust. Second, while the statute may not prohibit making the contract or trust, it may prohibit the doing of some particular act that is essential for carrying it out. Third, the statute may not expressly prohibit the contract or trust but the contract or trust may be associated with or made in furtherance of a purpose of frustrating the operation of the statute. Fourth, the statute may make unlawful the manner in which an otherwise lawful contract or trust is carried out. It would be surprising if sound legal policy required each of these forms of illegality to be treated in the same way. There is, for example, a vast difference between the performance of a contract for carriage of goods by ship that is overloaded in breach of the law and the making of a contract for the carriage of goods where the making of the contract is specifically prohibited (277).

33. It is worth noting the approach in the cases in the English Court of Appeal which preceded, and were rejected by, the decision in Tinsley v Milligan and which sought a less rigid and dogmatic approach to illegality than is found in the Holman dictum. Those cases included cases in equity (278), contract (279) and tort (280). The effect of the approach developed by the Court of Appeal in those cases was summarised in the decision of that Court in Tinsley by Nicholls LJ who said (281):

"These authorities seem to me to establish that when

applying the 'ex turpi causa' maxim in a case in which a defence of illegality has been raised, the court should keep in mind that the underlying principle is the so-called public conscience test. The court must weigh, or balance, the adverse consequences of granting relief against the adverse consequences of refusing relief. The ultimate decision calls for a value judgment. The detailed principles summarised by Kerr LJ in the Euro-Diam case (282), and distinctions such as that between causes of action which arise directly ex turpi causa and causes of action to which the unlawful conduct is incidental, are valuable as guidelines. But they are no more than guidelines. Their value and justification lie in the practical assistance they give to the courts by focusing attention on particular features which are material in carrying out the balancing exercise in different types of cases."

34. This approach confers a broad judicial discretion upon the judge to determine whether the grant of relief would affront "the public conscience". While it provides a ready means for a judge to do what he or she thinks is just in the circumstances of the particular case, it does so by means of an unstructured discretion. The so called "public conscience" test, although providing a flexible approach, leaves the matter at large. Greater certainty in the application of the illegality doctrine will be achieved if the courts apply principles instead of a vague standard such as the "public conscience". But what principles, consistent with the public policy underpinnings of the doctrine of illegality, should the courts apply?

35. If courts withhold relief because of an illegal transaction, they necessarily impose a sanction on one of the parties to that transaction, a sanction that will deprive one party of his or her property rights and effectively vest them in another person who will almost always be a willing participant in the illegality. Leaving aside cases where the statute makes rights arising out of the transaction unenforceable in all circumstances, such a sanction can only be justified if two conditions are met.

36. First, the sanction imposed should be proportionate to the seriousness (283) of the illegality involved. It is not in accord with contemporaneous notions of justice that the penalty for breaching a law or frustrating its policy should be disproportionate to the seriousness of the breach (284). The seriousness of the illegality must be judged by reference to the statute whose terms or policy is contravened. It cannot be assessed in a vacuum. The statute must always be the reference point for determining the seriousness of the illegality; otherwise the courts would embark on an assessment of moral turpitude independently of and potentially in conflict with the assessment made by the legislature.

37. Second, the imposition of the civil sanction must further the purpose of the statute and must not impose a further sanction for the unlawful conduct if Parliament has indicated that the sanctions imposed by the statute are sufficient to deal with conduct that breaches or evades the operation of the statute and its policies. In most cases, the statute will provide some guidance, express or inferred, as to the policy of the legislature in respect of a transaction that contravenes the statute or its purpose. It is this policy that must guide the courts in determining, consistent with their duty not to condone or encourage breaches of the statute, what the consequences of the illegality will be. Thus, the statute may disclose an intention, explicitly or implicitly, that a transaction contrary to its terms or its policy should be unenforceable. On the other hand, the statute may inferentially disclose an intention that the only sanctions for breach of the statute or its policy are to be those specifically provided for in the legislation (285).

38. Accordingly, in my opinion, even if a case does not come within one of the four exceptions to the Holman dictum to which I have referred, courts should not refuse to enforce legal or equitable rights simply because they arose out of or were associated with an unlawful purpose unless:

(a) the statute discloses an intention that those rights

should be unenforceable in all circumstances; or

(b) (i) the sanction of refusing to enforce those rights is

not disproportionate to the seriousness of the unlawful conduct;

(ii) the imposition of the sanction is necessary, having

regard to the terms of the statute, to protect its objects or policies; and

(iii) the statute does not disclose an intention that the

sanctions and remedies contained in the statute are to be the only legal consequences of a breach of the statute or the frustration of its policies (286).

39. The adoption of these principles accords with the approach of this Court in the leading case of Yango (287), particularly the judgment of Mason J. In Yango, the Court held that, although s 8 of the Banking Act 1959 (Cth) prohibited a body corporate from carrying on the business of banking without a licence, a mortgage and guarantees given to an unlicensed corporation in the course of carrying on that business were not void or unenforceable. The Court unanimously held that nothing in the statute made them void and that the separate question of illegal purpose should be determined by following the approach, suggested by Devlin J in St John Shipping Corporation v Joseph Rank Ltd (288), of examining the terms of the statute to determine the impact of illegality on the enforceability of the contract. Mason J said (289):

"The weighing of considerations of public policy in this

case and the decision in favour of enforcing the contract is influenced by the form of the particular legislation. In this case the Act, as I have mentioned, is to a large extent directed to aiding the Government in executing its fiscal policy rather than regulating the relationship between banker and customer per se, a feature which lends support for the view that the provision of a large recurrent penalty for offences against s 8 is Parliament's determination of the consequences of breach of the section and as the only legal consequences thereof. 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 - see my judgment in Jackson v Harrison (290). See also the suggestions that the principle cannot apply to all statutory offences (Beresford v Royal Insurance Co Ltd in the Court of Appeal (291), per Lord Wright; Marles v Philip Trant & Sons Ltd (292), per Denning LJ, and that it would be a curious thing if the offender is to be punished twice, civilly as well as criminally (St John Shipping Corporation v Joseph Rank Ltd (293), per Devlin J). The main considerations from which the principle ex turpi causa arose can be seen in the reluctance of the courts to be instrumental in offering an inducement to crime or removing a restraint to crime: Beresford's Case (294); Amicable Society v Bolland (Fauntleroy's Case (295))).

40. However, in the present case Parliament has provided a penalty which is a measure of the deterrent which it intends to operate in respect of non-compliance with s 8. In this case it is not for the court to hold that further consequences should flow, consequences which in financial terms could well far exceed the prescribed penalty and could even conceivably lead the plaintiff to insolvency with resultant loss to innocent lenders or investors."

The scheme of the Act
41. The Defence Service Homes Act 1918 provides assistance to members of the defence forces and certain other persons to acquire homes. The Act was substantially amended in 1988. The provisions of the Act both before and after the amendments are relevant because the contract to purchase the Bent Street property was entered into prior to the amendments although the illegal purpose of concealing Mrs Nelson's beneficial ownership of that property was only carried out after the amendments.

42. Prior to the amendments, s 20 empowered the Defence Service Homes Corporation to make a loan, referred to as an advance, to an eligible person to enable that person, inter alia, to purchase a home. Under s 21, the maximum advance available was $25,000. Subject to an irrelevant exception, an advance could not be made unless the Corporation was satisfied that the dwelling house was intended for use as a home for the applicant and the applicant's dependents and that neither the applicant nor the applicant's spouse was the owner of any other dwelling house (s 23). If the Corporation formed the opinion that money advanced under the Act had not been applied for the purposes for which it was advanced, the Corporation could call in the whole or part of the amount. The Act provided statutory remedies for the Corporation to recover that amount (s 27). Similarly, money advanced could be called up if, at the time of making the advance, the applicant had, falsely declared that neither the applicant nor the applicant's spouse was the owner of any dwelling house other than the one to which the advance related (s 32A).

43. In 1988 the scheme of the Act was altered following an agreement between Westpac Banking Corporation and the Commonwealth. Under that agreement, the Bank agreed to provide a loan, referred to as a subsidised advance, to a person whom the Commonwealth certified was entitled to such an advance and the Commonwealth agreed to provide a subsidy to the bank in respect of a subsidised advance. The legislative changes were achieved by the Defence Service Homes Amendment Act 1988 (Cth) which replaced Pts III-VI of the original Act.

44. Thus under the amended Act, applications can be made to the Secretary of the Corporation for a certificate of entitlement to a subsidised advance. The Secretary cannot issue such a certificate unless, relevantly, he or she is satisfied that the applicant does not own any dwelling house other than the house the subject of the application (s 18(1)(b)). Under the amending Act, the maximum advance upon which a subsidy is payable remains at $25,000. The amount received in relation to the Kidman Lane property was, therefore, the maximum possible advance.

45. If a certificate has been issued as a result of a false statement by the applicant or if that person was not entitled to a subsidy, the Secretary can cancel the subsidy (s 26). Where the subsidy has ceased to be payable, the Secretary may require the repayment to the Commonwealth of either the whole of the subsidy already paid, or such amount as the Secretary considers reasonable. If such a requirement is not complied with, the amount may be recovered as a debt due to the Commonwealth (s 29). The Secretary also has a discretionary power to write off the amount, waive the right of the Commonwealth to recover the amount or allow a person to repay the amount by instalments (s 30). Decisions under these provisions are reviewable both internally and by the Administrative Appeals Tribunal (ss 43-44).

46. In addition to the remedies within the Act itself, various provisions of the Crimes Act 1914 (Cth) impose criminal liabilities for conduct that infringes the Act. Relevant provisions are ss 29A, 29B, 29D and 86. Most relevant to the circumstances of this case is s 29B which provides:

"Any person who imposes or endeavours to impose upon the

Commonwealth or any public authority under the Commonwealth by any untrue representation, made in any manner whatsoever, with a view to obtain (sic) money or any other benefit or advantage, shall be guilty of an offence.
Penalty: Imprisonment for 2 years."

The result in this case
47. In this case, we are concerned with an agreement or transaction that was not, per se, illegal but which was entered into for an illegal purpose. If Mrs Nelson had never made the subsidy application, she would have fallen within the exception that is available when an illegal purpose is not carried out. It is only because a transaction, that was otherwise lawful, was carried out in order to achieve an unlawful purpose that the question of the impact of illegality arises.

48. As the examination of the Act has disclosed, it contains internal mechanisms for dealing with false declarations and applications by persons who are not entitled to subsidised advances. The Act recognises that ineligible persons may apply for subsidised advances and provides for recovery of the subsidy paid in relation to such persons. These provisions lend weight to the submission of the appellant that the policy of the Act will not be defeated if the Court enforces her equitable rights. They also suggest that the policy of the Act is not frustrated so long as there is recovery of the benefit given. This view is strengthened by the vesting of a discretionary power of waiver in the Secretary.

49. If the policy of the Act is not defeated by the Corporation waiving its right to recover a benefit wrongfully obtained, it is hard to see how the policy of the Act is defeated if a court exercising equitable jurisdiction enforced a resulting trust in favour of Mrs Nelson on terms that the benefit obtained under the Act must be repaid. The existence of criminal sanctions strengthens this analysis because the existence of a range of sanctions together with the omission of a provision that makes unenforceable any agreement made in breach of or to evade the Act is a powerful indication that no other sanctions are needed. Evidently, the federal Parliament saw the legislative sanctions and remedies as being sufficient to deal with unlawful conduct similar to that which has occurred in the present case. That being so, I can see no justification for the courts imposing a further sanction by refusing to enforce the legal or equitable rights of applicants under the Act, particularly when such a refusal may often result, as it does in this case, in a penalty out of all proportion to the seriousness of an applicant's conduct.

50. Of course, equity cannot condone Mrs Nelson's unlawful purpose or encourage it. So far as is possible, rights associated with or arising out of unlawful conduct should only be enforced on condition that the wrongdoer takes all lawful steps to overcome the consequences of that conduct. It will not always be possible for the claimant to do so or for the courts to impose terms designed to remedy the wrongdoing. For example, in Kasumu v Baba-Egbe (296), legislation specifically prevented a money lender from enforcing any claim where there had been a breach of the Act. To grant relief to the borrower on terms that he or she restore to the moneylender any benefits obtained from that person would be contrary to the policy of the legislation (297). In other situations, the inability of the court to mould appropriate terms may be a ground for refusing relief. For example, in Chettiar (298), the facts of which are analogous to this case, the father sought to rely on an intention associated with an unlawful purpose to overcome a presumption of advancement. It would have been difficult, if not impossible, to formulate a condition by which the father could be required to do equity in order to obtain equitable relief. For in that case, as a result of his unlawful conduct, the father had obtained the benefit for 15 years of having the permissible rubber production of his land determined by the local district officer rather than by the Assessment Committee constituted under the Malayan Rubber Regulations of 1934. In circumstances where the authority responsible for administering the regulations was not a party to the proceedings, it was virtually impossible to assess the benefit gained and the public harm done as a result of the illegality. Where the court cannot evaluate the benefit that the claimant has derived from his or her unlawful conduct, the sound exercise of discretion may sometimes require the court to refuse any relief to the claimant.

51. However there are no difficulties in this case comparable to those in Chettiar. The benefit obtained is readily ascertainable. Mrs Nelson's breach of the Act will not be condoned if the Court enforces her rights on the condition that she restores to the Commonwealth the benefit that she obtained by her unlawful conduct. That means that she should forthwith repay to the Commonwealth such sum as represents the value of the subsidy given in relation to her subsidised advance, in other words the difference between the bank's home lending rate of interest at the time of the advance and the rate of interest that was payable in respect of the subsidised advance for the period of the advance. If such a condition is imposed, the policy of the Act will not be frustrated and the Court will not be condoning or encouraging unlawful conduct.

Conclusion
52. I agree with the orders proposed by Deane and Gummow JJ.
1 (1994) 33 NSWLR 740.
2 (1994) 33 NSWLR 740 at 750.
3 Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 255-256, 265, 267.
4 Charles Marshall Pty Ltd v Grimsley [1956] HCA 28; (1956) 95 CLR 353 at 364-365.
5 Davies v The National Trustees Executors and Agency Co of Australasia Ltd (1912) VLR 397 at 401 per Cussen J, appd in Stewart Dawson & Co (Vict) Pty Ltd v Federal Commissioner of Taxation [1933] HCA 4; (1933) 48 CLR 683 at 690-691; Donaldson v Freeson [1934] HCA 13; (1934) 51 CLR 598 at 614-615.
6 Conveyancing and Law of Property Act 1884 (Tas), s 60; Conveyancing Act 1919 (NSW), s 23C; Law of Property Act 1936 (SA), s 29; Property Law Act 1958 (Vic), s 53; Property Law Act 1969 (WA), s 34; Property Law Act 1974 (Q), s 11.
7 Scott and Fratcher, The Law of Trusts, 4th ed (1989), par 443.
8 There is citation of the following authorities: Binion v Stone (1663) 2 Freeman 169 (22 ER 1135), Nels 68 (21 ER 791); Scroope v Scroope (1663) 2 Freeman 171 [1663] EngR 60; (22 ER 1138), 1 Ch Cas 27 (22 ER 677); Grey v Grey [1677] EngR 86; (1677) 2 Swanst 594 (36 ER 742), 1 Ch Cas 296 (22 ER 809); Elliot v Elliot [1677] EngR 91; (1677) 2 Ch Cas 231 (22 ER 922); Woodman v Morrel (1678) 2 Freeman 32 (22 ER 1040); Clark v Danvers [1679] EngR 55; (1679) 1 Ch Cas 310 (22 ER 815).
9 (1879) 10 Ch D 474 at 477-480.
10 [1917] HCA 60; (1917) 24 CLR 274 at 281-283.
11 (1993) 31 NSWLR 582 at 591.
12 Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 266, quoting Dyer v Dyer (1788) 2 Cox 92 at 99 (30 ER 42 at 43).
13 cf Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 270-271.
14 [1829] EngR 325; (1829) 3 Y & J 163 at 174 [1829] EngR 325; (148 ER 1136 at 1141).
15 Byron v Clay [1989] USCA7 108; (1989) 867 F 2d 1049 at 1052 (7th Cir); Dillon v Dean (1990) 551 NYS 2d 547 at 549; cf Tinsley v Milligan [1993] UKHL 3; [1993] UKHL 3; (1994) 1 AC 340 at 356-357.
16 Halsbury's Laws of England, 4th ed, (Reissue) vol 16, par 751. Professor Pettit also makes the point in his article, "He who comes into Equity must come with Clean Hands", (1990) 54 The Conveyancer and Property Lawyer 416 at 422.
17 2nd ed (1993), vol 1, par 2.4(2).
18 (1934) 292 US 216 at 228-229.
19 Other United States authorities which draw the distinction between illegality and unclean hands appear in In re Torrez [1987] USCA9 1696; (1987) 827 F 2d 1299 at 1301, fn 4 (9th Cir).
20 [1989] HCA 4; (1989) 167 CLR 316.
21 (1939) AC 277 at 293.
22 [1978] HCA 42; (1978) 139 CLR 410 at 429-430, 432-433. See also McCarthy Bros v Dairy Farmers Co (1945) 45 SR(NSW) 266; J C Scott Constructions v Mermaid Waters Tavern (1984) 2 Qd R 413; Buckland v Massey (1985) 1 Qd R 502 at 507; Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 445; Farrow Mortgage Services Pty Ltd (in liq) v Edgar (1993) 114 ALR 1.
23 [1978] HCA 42; (1978) 139 CLR 410 at 432; see also at 430 per Mason J.
24 St John Shipping Corporation v Joseph Rank Ltd (1957) 1 QB 267 at 282; Ashmore, Benson Ltd v Dawson Ltd (1973) 1 WLR 828 at 832-833; cf North v Marra Developments Ltd [1981] HCA 68; (1981) 148 CLR 42 at 59-60.
25 Farrow Mortgage Services (1993) 114 ALR 1 at 13.
26 Comyns, A Digest of the Laws of England, 4th ed (1800), vol 5, "Parliament", parR13, R15; Bacon, A New Abridgement of the Law, 7th ed (1832), in Gwillim and Dodd (eds), vol 7, "Statute" at 458-459; Wilberforce, Statute Law, (1881) at 238-243; Thorne, "The Equity of a Statute and Heydon's Case", (1936) 31 Illinois Law Review 202.
27 Postema, Bentham and the Common Law Tradition, (1986) at 17.
28 Bentham, Of Laws in General, Hart (ed), (1970), Ch 19 at 239.
29 Bosanquett v Dashwood (1734) Cas t Talbot 38 at 39-40 (25 ER 648 at 649).
30 A Treatise of Equity, 5th ed (1820), vol 1 at 25-26.
31 See, for example, Cadd v Cadd [1909] HCA 59; (1909) 9 CLR 171 at 187; Organ v Sandwell (1921) VLR 622 at 630; Wratten v Hunter (1978) 2 NSWLR 367 at 369-370.
32 Herman, "The 'Equity of the Statute' and Ratio Scripta: Legislative Interpretation among Legislative Agnostics and True Believers", (1994) 69 Tulane Law Review 535 at 538.
33 Bentham, Of Laws in General, Hart (ed), (1970), Ch 19 at 240. Other examples from Bentham's writings are collected in Sedgwick, A Treatise on the Rules which govern the Interpretation and Construction of Statutory and Constitutional Law, 2nd ed (1874) at 251.
34 Sedgwick, A Treatise on the Rules which govern the Interpretation and Construction of Statutory and Constitutional Law, 2nd ed (1874) at 263-265; Hardcastle, A Treatise on the Construction and Effect of Statute Law, 3rd ed (1901) at 113-115.
35 Humphery v McMullen (1868) 7 SCR(L) 84 at 89-90; Muntz v Smail [1909] HCA 13; (1909) 8 CLR 262 at 292-296; Weisberg, "Commercial Morality, the Merchant Character, and the History of the Voidable Preference", (1986) 39 Stanford Law Review 3 at 48-55.
36 Holman v Johnson [1775] EngR 58; (1775) 1 Cowp 341 (98 ER 1120); Muckleston v Brown [1801] EngR 241; (1801) 6 Ves Jun 52 (31 ER 934); Curtis v Perry [1802] EngR 125; (1802) 6 Ves Jun 739 (31 ER 1285); Ex parte Yallop [1808] EngR 152; (1808) 15 Ves Jun 60 (33 ER 677); Ex parte Houghton [1810] EngR 487; (1810) 17 Ves Jun 251 (34 ER 97).
37 [1775] EngR 58; (1775) 1 Cowp 341 (98 ER 1120).
38 cf Neal v Ayers (1940) 63 CLR 524 at 528-529, 532.
39 As Professor Palmer points out in The Law of Restitution, (1978), vol 2, par 8.4.
40 Maddaugh and McCamus, The Law of Restitution, (1990) at 345.
41 For example, Veterans' Entitlements Act 1986 (Cth), s 125; Superannuation Act 1990 (Cth), s 41; Social Security Act 1991 (Cth), ss 66, 128, 170, 220, 280, 339, 387, 571, 654, 724, 757, 806, 870, 976, 1052, 1061W.
42 See also reg 41 of the former Banking (Foreign Exchange) Regulations made under the Banking Act 1945 (Cth) and continued under the Banking Act 1959 (Cth). Regulation 41 was considered in Sykes v Stratton (1972) 1 NSWLR 145 at 157, 160.
43 Maurice v Lyons (1969) 1 NSWR 307 at 315.
44 Horton v Public Trustee (1977) 1 NSWLR 182.
45 Olsen v Olsen (1977) 1 NSWLR 189.
46 Barclays Bank Ltd v Quistclose Investments Ltd [1968] UKHL 4; (1970) AC 567 at 581.
47 [1985] HCA 19; (1985) 160 CLR 548 at 568-569.
48 (1931) 34 SR(NSW) 83 at 85.
49 See also Church Property Trustees, Diocese of Newcastle v Ebbeck [1960] HCA 88; (1960) 104 CLR 394.
50 [1775] EngR 58; (1775) 1 Cowp 341 at 343 [1775] EngR 58; (98 ER 1120 at 1121).
51 (1945) KB 65 at 70; see also Thomas Brown and Sons Ltd v Fazal Deen [1962] HCA 59; (1962) 108 CLR 391 at 411.
52 Kiriri Cotton Co Ltd v Dewani (1960) AC 192.
53 (1962) AC 294 at 303. See also Singh v Ali (1960) AC 167 at 177; Blackburn v YV Properties Pty Ltd (1980) VR 290 at 291, 299-300; Tinsley v Milligan [1993] UKHL 3; (1994) 1 AC 340 at 366, 367, 374-375; cf Payne v McDonald [1908] HCA 40; (1908) 6 CLR 208 at 211.
54 [1993] UKHL 3; (1994) 1 AC 340 at 366, 367, 374-375.
55 Tinsley v Milligan [1993] UKHL 3; (1994) 1 AC 340 at 367, 368-369, 375-376. The distinction is discussed in various commentaries upon Tinsley v Milligan, including Goo, "Let the Estate Lie Where It Falls", (1994) 45 Northern Ireland Legal Quarterly 378; Buckley, "Social Security Fraud as Illegality", (1994) 110 Law Quarterly Review 3; Cohen, "The Quiet Revolution in the Enforcement of Illegal Contracts", (1994) Lloyds Maritime and Commercial Law Quarterly 163; Stowe, "The 'Unruly Horse' has Bolted: Tinsley v Milligan", (1994) 57 Modern Law Review 441; Berg, "Illegality and Equitable Interests", (1993) Journal of Business Law 513. See also Enonchong, "llegality: The Fading Flame of Public Policy", (1994) 14 Oxford Journal of Legal Studies 295 at 299.
56 [1775] EngR 58; (1775) 1 Cowp 341 at 343 [1775] EngR 58; (98 ER 1120 at 1121).
57 [1993] UKHL 3; (1994) 1 AC 340 at 355.
58 [1993] UKHL 3; (1994) 1 AC 340 at 356.
59 [1801] EngR 241; (1801) 6 Ves Jun 52 (31 ER 934).
60 [1736] EngR 11; (1740) 2 Atk 155 (26 ER 498).
61 Clark, Equity, An Analysis and Discussion of Modern Equity Problems, (1928 reprint), par 401.
62 Wade, "Restitution of Benefits Acquired Through Illegal Transactions", (1945) 95 University of Pennsylvania Law Review 261 at 304.
63 Turton v Benson [1718] EngR 56; (1718) 1 P Wms 496 at 498 [1718] EngR 56; (24 ER 488 at 489).
64 Tinsley v Milligan [1993] UKHL 3; (1994) 1 AC 340 at 356, 365, 372, following Gascoigne v Gascoigne (1918) 1 KB 223 at 226-227. See also Singh v Ali (1960) AC 167 at 177; Preston v Preston (1960) NZLR 385 at 404; Blackburn v YV Properties Pty Ltd (1980) VR 290 at 296; Munro v Morrison (1980) VR 83 at 88.
65 See Halsbury's Laws of England, 4th ed, vol 14, "Ecclesiastical Law", par 776.
66 Including the Presentation of Benefices Act 1605 (Eng) and the Presentation of Benefices Act 1713 (UK).
67 9 Geo II c 36, repealed by the Mortmain and Charitable Uses Act 1888 (UK). The Mortmain Acts were never in force in Australia: Balfour v Public Trustee (1916) VLR 397 at 404-405.
68 Wigram, Points in the Law of Discovery, 2nd ed (1840) at 20-32.
69 [1801] EngR 241; (1801) 6 Ves Jun 52 at 69 [1801] EngR 241; (31 ER 934 at 942).
70 [1970] HCA 2; (1970) 119 CLR 397 at 411-414.
71 Jackson v Harrison [1978] HCA 17; (1978) 138 CLR 438; Gala v Preston [1991] HCA 18; (1991) 172 CLR 243; cf Thomas Brown & Sons Ltd v Fazal Deen [1962] HCA 59; (1962) 108 CLR 391 at 411. See also Hardy v Motor Insurers' Bureau (1964) 2 QB 745 at 767.
72 Equity Jurisprudence, 13th ed (1908) Bigelow (ed), vol 1, Ch 7, par 298.
73 The authorities in this Court are collected in Martin v Martin [1959] HCA 62; (1959) 110 CLR 297 at 305. The authorities include Payne v McDonald (1908) 6 CLR 208 and Perpetual Executors and Trustees Association of Australia Ltd v Wright [1917] HCA 27; (1917) 23 CLR 185, the reasoning in which was accepted by the English Court of Appeal in Tribe v Tribe, unreported, 26 July 1995.
74 Ashburner's Principles of Equity, 2nd ed (1933) at 472.
75 George v Greater Adelaide Land Development Co Ltd [1929] HCA 40; (1929) 43 CLR 91 at 99-100; Abdurahman v Field (1987) 8 NSWLR 158 at 162-163; Weston v Beaufils (No 2) (1994) 50 FCR 476 at 499-500.
76 Pomeroy's Equity Jurisprudence, 5th ed, vol 3, par 941. See also Wade, "Restitution of Benefits Acquired Through Illegal Transactions", (1945) 95 University of Pennsylvania Law Review 261 at 297-301; Maddaugh and McCamus, The Law of Restitution, (1990) at 354-355, 366-374.
77 Equity Jurisprudence, 13th ed (1908) Bigelow (ed), vol 1, Ch 7, par 301.
78 Repealed in 1854 by 17 & 18 Vict c 90. This repealed 11 statutes in force in England commencing 37 Hen VIII c 9 (1545) and ending with 13 and 14 Vict c 56 (1850). Collectively known as the usury laws, these forbade the exaction of interest above statutory rates.
79 Equity Jurisprudence, 13th ed (1908) Bigelow (ed), vol 1, Ch 7, par 301.
80 (1966) 1 NSWR 348.
81 (1966) 1 NSWR 348 at 351. See also Snell's Equity, 29th ed (1990), Baker and Langan (eds) at 32.
82 Equity Jurisprudence, 13th ed (1908) Bigelow (ed), vol 1, Ch 7, par 301.
83 (1966) 1 NSWR 348 at 352.
84 (1695) Show Parl Cas 76.
85 (1905) 2 KB 123.
86 (1905) 2 KB 123 at 133 et seq.
87 (1821) Jac 64 at 67 [1821] EngR 303; (37 ER 774 at 775).
88 (1956) AC 539.
89 [1958] HCA 55; (1958) 101 CLR 428.
90 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 at 226, 261-262, 269-270.
91 Scott and Fratcher, The Law of Trusts, 4th ed (1989) par 444.
92 Leading Cases in Equity, 9th ed (1928), vol 2 at 757.
93 (1788) 2 Cox 92 (30 ER 42).
94 [1911] HCA 67; (1911) 13 CLR 430 at 435. See also Preston v Preston (1960) NZLR 385 at 405; Orr v Ford (1989) 167 CLR 316 at 328.
95 [1810] EngR 487; (1810) 17 Ves Jun 251 (34 ER 97).
96 [1808] EngR 152; (1808) 15 Ves Jun 60 (33 ER 677).
97 [1808] EngR 152; (1808) 15 Ves Jun 60 at 66-67 [1808] EngR 152; (33 ER 677 at 680). In Curtis v Perry [1802] EngR 125; (1802) 6 Ves Jun 739 at 746 [1802] EngR 125; (31 ER 1285 at 1288), Lord Eldon had left open the question of the effect of these statutes upon implied trusts.
98 (1875) 1 Ch D 419.
99 [1987] USCA9 1696; (1987) 827 F 2d 1299 (9th Cir).
100 [1987] USCA9 1696; (1987) 827 F 2d 1299 at 1301 (9th Cir).
101 [1987] USCA9 1696; (1987) 827 F 2d 1299 at 1302 (9th Cir). Reference was made to the Restatement Second of Trusts, par444 at 405-406. See also Scott and Fratcher, The Law of Trusts, 4th ed (1989), par 444.
102 (1966) 55 Cal Rptr 638.
103 38 USCA par3704 as renumbered in 1991 by Pub L 102-83 par 5(a), (c)(1).
104 [1987] USCA9 1696; (1987) 827 F 2d 1299 at 1302. See also as to resulting trusts and the Veterans Administration housing laws, Johnson v Johnson (1987) 237 Cal Rptr 644.
105 [1987] USCA9 1696; (1987) 827 F 2d 1299 at 1302.
106 The agreement is analysed in Westpac Banking Corporation v Commissioner of Stamp Duties (1994) 2 Qd R 212 at 218-223.
107 (1961) 1 QB 374 at 390.
108 [1978] HCA 42; (1978) 139 CLR 410 at 432-433.
109 cf Bell, "Conceptions of Public Policy" in Cane and Stapleton (eds), Essays for Patrick Atiyah, (1991) 87 at 94-97.
110 See Crimes Act 1914 (Cth), ss 29A, 29B, 29D and 86; Statutory Declarations Act 1959 (Cth), s 11.
111 See s 29.
112 See s 30.
113 Brown v Brown (1993) 31 NSWLR 582.
114 (1993) 31 NSWLR 582.
115 [1917] HCA 60; (1917) 24 CLR 274 at 281-282.
116 See now Bennet v Bennet (1879) 10 Ch D 474; Re Orme; Evans v Maxwell (1883) 50 LT 51; Preston v Greene (1909) 1 IR 172; Pickens v Metcalf and Marr (1932) NZLR 1278; In re Lloyd (1960) NZLR 947.
117 Scott v Pauly [1917] HCA 60; (1917) 24 CLR 274 at 281.
118 See Family Law Act 1975 (Cth), ss 66A(2)(b), 66B(1).
119 [1984] HCA 81; (1984) 155 CLR 242 at 248-249.
120 [1956] HCA 71; (1956) 98 CLR 228.
121 [1956] HCA 71; (1956) 98 CLR 228 at 237.
122 Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 250 per Gibbs CJ; see Wirth v Wirth [1956] HCA 71; (1956) 98 CLR 228 at 238 per Dixon CJ.
123 Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 268.
124 See also Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 per Mason and Brennan JJ at 260.
125 See Scott on Trusts, 4th ed (1989), vol 5 at 181-182.
126 See Holman v Johnson [1775] EngR 58; (1775) 1 Cowp 341 at 343 [1775] EngR 58; (98 ER 1120 at 1121).
127 See Muckleston v Brown [1801] EngR 241; (1801) 6 Ves Jun 52 at 69 [1801] EngR 241; (31 ER 934 at 942).
128 (1960) AC 167 at 176-177.
129 See Muckleston v Brown [1801] EngR 241; (1801) 6 Ves Jun 52 at 69 [1801] EngR 241; (31 ER 934 at 942).
130 (1945) KB 65 at 71.
131 See Snell's Equity, 29th ed (1990) at 31-32; Tinker v Tinker (1970) P 136 at 143.
132 [1801] EngR 241; (1801) 6 Ves Jun 52 at 69 [1801] EngR 241; (31 ER 934 at 942). See also Curtis v Perry [1802] EngR 125; (1801) 6 Ves Jun 739 at 747 [1802] EngR 125; (31 ER 1285 at 1288); Cottington v Fletcher [1736] EngR 11; (1740) 2 Atk 155 (26 ER 498).
133 See Perpetual Executors and Trustees Association of Australia Ltd v Wright [1917] HCA 27; (1917) 23 CLR 185; Martin v Martin [1959] HCA 62; (1959) 110 CLR 297; Donaldson v Freeson [1934] HCA 13; (1934) 51 CLR 598 at 611, 616-617; Payne v McDonald [1908] HCA 40; [1908] HCA 40; (1908) 6 CLR 208 at 211; Symes v Hughes (1870) LR 9 Eq 475; Taylor v Bowers (1876) 1 QBD 291; cf In re Great Berlin Steamboat Company (1884) 26 Ch D 616.
134 (1918) 1 KB 223.
135 (1959) Ch 410.
136 (1962) AC 294. See also Tinker v Tinker (1970) P 136; Cantor v Cox (1976) 2 EG 105.
137 [1993] UKHL 3; (1994) 1 AC 340.
138 (1971) AC 886.
139 Tinsley v Milligan (1992) Ch D 310.
140 See Saunders v Edwards (1987) 1 WLR 1116; (1987) 2 All ER 651; Euro-Diam Ltd v Bathurst (1990) 1 QB 1; Pitts v Hunt [1990] EWCA Civ 17; (1991) 1 QB 24.
141 Tinsley v Milligan [1993] UKHL 3; (1994) 1 AC 340 at 369.
142 [1993] UKHL 3; (1994) 1 AC 340 at 370 per Lord Browne-Wilkinson.
143 [1993] UKHL 3; [1993] UKHL 3; (1994) 1 AC 340 at 376 per Lord Browne-Wilkinson.
144 See Calverley v Green [1984] HCA 81; (1984) 155 CLR 242.
145 See Tinsley v Milligan [1993] UKHL 3; (1994) 1 AC 340 at 374
146 [1993] UKHL 3; (1994) 1 AC 340 at 374
147 See Martin v Martin [1959] HCA 62; (1959) 110 CLR 297 at 305.
148 See Donaldson v Freeson [1934] HCA 13; (1934) 51 CLR 598 at 617 per McTiernan J.
149 See Martin v Martin [1959] HCA 62; (1959) 110 CLR 297 at 303-304.
150 See Dering v Earl of Winchelsea (1787) 1 Cox Eq 318 at 319 (29 ER 1184 at 1185).
151 See Tinsley v Milligan [1993] UKHL 3; (1994) 1 AC 340 at 370 per Lord Browne-Wilkinson.
152 (1978) 139 CLR 411.
153 Brown v Brown (1993) 31 NSWLR 582.
154 Nelson v Nelson (1994) 33 NSWLR 740 at 745 per Sheller JA.
155 [1984] HCA 81; (1984) 155 CLR 242 at 264-265.
156 Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 266; Dullow v Dullow (1985) 3 NSWLR 531 at 536. See also Charles Marshall Pty Ltd v Grimsley [1956] HCA 28; (1956) 95 CLR 353 at 364.
157 [1984] HCA 81; (1984) 155 CLR 242 at 247.
158 [1959] HCA 62; (1959) 110 CLR 297 at 303.
159 (1970) AC 777 at 814 per Lord Upjohn.
160 [1917] HCA 60; (1917) 24 CLR 274.
161 (1879) 10 Ch D 474.
162 Scott v Pauly [1917] HCA 60; (1917) 24 CLR 274 at 282.
163 (1984) 155 CLR 242 at 248.
164 [1984] HCA 81; (1984) 155 CLR 242 at 268.
165 (1985) 3 NSWLR 531.
166 (1985) 3 NSWLR 531 at 541.
167 (1993) 31 NSWLR 582 at 591.
168 (1993) 31 NSWLR 582 at 599.
169 Scott v Pauly [1917] HCA 60; (1917) 24 CLR 274 at 282 per Isaacs J; Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 268 per Deane J.
170 Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 259 per Mason and Brennan JJ; Nelson v Nelson (1994) 33 NSWLR 740 at 745.
171 [1984] HCA 81; (1984) 155 CLR 242 at 250.
172 s 66A(2).
173 See s 60.
174 s 66D(1).
175 Brown v Brown (1993) 31 NSWLR 582 at 600 per Kirby P. And see Dagle v Dagle Estate (1990) 70 DLR (4th) 201.
176 As a matter of terminology, the purpose could not have been to acquire a "subsidy" because subsidy is the language of the Defence Service Homes Amendment Act 1988 (Cth) which did not come into operation until after the purchase of Bent Street. This matter is discussed later in this judgment.
177 At the time Bent Street was purchased, the interest rate on a loan of $25,000 was on a sliding scale, culminating in 10% on the last $10,000: s 30(1) and (2)(b).
178 Nelson v Nelson (1994) 33 NSWLR 740 at 750.
179 s 20(1)(c).
180 s 21(1).
181 s 23.
182 s 32A.
183 At the time of the purchase of Kidman Street, the interest payable on a subsidised advance of $25,000 was 6.85%: s 31. There is a discussion of the arrangement between the Commonwealth and Westpac in Westpac Banking Corporation v Commissioner of Stamp Duties (1994) 2 Qd R 212.
184 s 15.
185 s 18(1)(b).
186 s 26(1).
187 s 29(1) and (2).
188 s 29(4).
189 s 30(1).
190 See ss 29A, 29B, 29D and 86 of the Crimes Act.
191 [1978] HCA 42; (1978) 139 CLR 410 at 429.
192 [1993] UKHL 3; (1994) 1 AC 340.
193 Nelson v Nelson (1994) 33 NSWLR 740 at 741-742.
194 (1994) 33 NSWLR 740 at 750.
195 [1993] UKHL 3; (1994) 1 AC 340 at 367-368.
196 [1993] UKHL 3; (1994) 1 AC 340 at 366; see also at 369 per Lord Browne-Wilkinson.
197 [1993] UKHL 3; [1993] UKHL 3; (1994) 1 AC 340 at 371 per Lord Browne-Wilkinson.
198 (1936) 1 KB 169.
199 (1945) KB 65.
200 [1993] UKHL 3; (1994) 1 AC 340 at 358.
201 [1993] UKHL 3; (1994) 1 AC 340 at 355.
202 See the discussion by the Full Court of the Federal Court in Farrow v Edgar (1993) 114 ALR 1 at 10-13.
203 [1978] HCA 42; (1978) 139 CLR 410 at 423.
204 Yango [1978] HCA 42; (1978) 139 CLR 410 at 423.
205 [1989] HCA 4; (1989) 167 CLR 316.
206 PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 654 per Giles J.
207 Yango [1978] HCA 42; (1978) 139 CLR 410 at 432 per Jacobs J.
208 Holman v Johnson [1775] EngR 58; (1775) 1 Cowp 341 at 343 [1775] EngR 58; (98 ER 1120 at 1121).
209 (1987) 1 WLR 1116 at 1132.
210 (1964) 2 QB 745 at 767.
211 (1964) 2 QB 745 at 767-768.
212 (1992) Ch 310.
213 [1993] UKHL 3; (1994) 1 AC 340 at 363 per Lord Goff; at 369 per Lord Browne-Wilkinson.
214 Saunders v Edwards (1987) 1 WLR 1116; Euro-Diam Ltd v Bathurst (1990) 1 QB 1; Howard v Shirlstar Ltd (1990) 1 WLR 1292; Pitts v Hunt [1990] EWCA Civ 17; (1991) 1 QB 24.
215 (1992) Ch 310 at 319.
216 [1736] EngR 11; (1740) 2 Atk 155 (26 ER 498).
217 Enonchong, "Illegality: The Fading Flame of Public Policy", (1994) 14 Oxford Journal of Legal Studies 295 at 301.
218 (1945) KB 65 at 72.
219 (1939) AC 277 at 293.
220 St John Shipping Corporation v Joseph Rank Ltd (1957) 1 QB 267 at 288-289 per Devlin J.
221 See Yango [1978] HCA 42; (1978) 139 CLR 410 at 428.
222 It has been suggested that as a result of Tinsley v Milligan: "The 'unruly horse' of public policy continues its blind gallop through the doctrinal forests of illegality.": Stowe, "The 'Unruly Horse' has Bolted: Tinsley v Milligan", (1994) 57 Modern Law Review 441 at 449.
223 Dyer v Dyer (1788) 2 Cox 92 at 93 (30 ER 42 at 43); Napier v Public Trustee (WA) (1980) 55 ALJR 1 at 3; 32 ALR 153 at 158; Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 246-247, 255, 266.
224 Russell v Scott [1936] HCA 34; (1936) 55 CLR 440 at 449, 451-453; Calverley [1984] HCA 81; (1984) 155 CLR 242 at 246, 255.
225 Calverley [1984] HCA 81; (1984) 155 CLR 242 at 267.
226 Martin v Martin [1959] HCA 62; (1959) 110 CLR 297 at 304.
227 Shephard v Cartwright [1954] UKHL 2; (1955) AC 431; Charles Marshall Pty Ltd v Grimsley [1956] HCA 28; (1956) 95 CLR 353.
228 In re Eykyn's Trusts (1877) 6 Ch D 115.
229 Wirth v Wirth (1956) 98 CLR 228.
230 Bennet v Bennet (1879) 10 Ch D 474; In re Ashton, Ingram v Papillon (1897) 2 Ch 574; Scott v Pauly [1917] HCA 60; (1917) 24 CLR 274 at 281-283.
231 Bennet (1879) 10 Ch D 474 at 477.
232 Bennet (1879) 10 Ch D 474 at 478.
233 Family Law Act 1975 (Cth), s 66B.
234 1. As a factual matter women are income earners to a much greater extent now than when the rule was developed. Participation rates of women in the workforce are around 50 per cent (in contrast to around 75 per cent for men): Castles, Year Book Australia 1995 at 145-147.
2. The rule as traditionally formulated ignores the unpaid work of women in the home as being a contribution to "providing for" children.
3. More importantly, the values of society have changed so that there is no longer a uniform expectation that only fathers will contribute financially to the assets of a marriage or de facto marriage or provide for the advancement of the children of the relationship. Such an expectation may still exist in some social groupings and relationships, but it is no longer the common expectation of Australian society.
235 (1993) 31 NSWLR 582.
236 [1984] HCA 81; (1984) 155 CLR 242 at 264.
237 [1984] HCA 81; (1984) 155 CLR 242 at 266.
238 Brown (1993) 31 NSWLR 582 at 591.
239 Donaldson v Freeson [1934] HCA 13; (1934) 51 CLR 598 at 610-611, 616-618; Martin [1959] HCA 62; (1959) 110 CLR 297 at 305; Palaniappa Chettiar v Arunasalam Chettiar [1962] UKPC 1; (1962) AC 294 at 301-303; Tinsley v Milligan [1993] UKHL 3; (1994) 1 AC 340 at 357-358, 366, 367, 371-375.
240 Cottington v Fletcher [1736] EngR 11; (1740) 2 Atk 155 (26 ER 498); Birch v Blagrave [1755] EngR 3; (1755) Amb 264 (27 ER 176); Muckleston v Brown [1801] EngR 241; (1801) 6 Ves Jun 52 (31 ER 934); Ex parte Yallop [1808] EngR 152; (1808) 15 Ves Jun 60 (33 ER 677); Groves v Groves [1829] EngR 325; (1829) 3 Y & J 163 (148 ER 1136); In re Great Berlin Steamboat Company (1884) 26 Ch D 616; Garrett v L'Estrange [1911] HCA 67; (1911) 13 CLR 430 at 435; Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 354-355, 367.
241 Holman v Johnson [1775] EngR 58; (1775) 1 Cowp 341 at 343 [1775] EngR 58; (98 ER 1120 at 1121).
242 See also Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 372-376 and cases cited therein.
243 See notes to Roberts v Roberts (1818) Dan 143 at 150 [1818] EngR 395; (159 ER 862 at 865); Ayerst v Jenkins (1873) LR 16 Eq 275 at 283; Chettiar [1962] UKPC 1; (1962) AC 294 at 303; Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 354-355, 375-376.
244 See McCamus, "Restitutionary recovery of benefits conferred under contracts in conflict with statutory policy - the new golden rule", (1987) 25 Osgoode Hall Law Journal 787 at 797-800; Wade, "Restitution of benefits acquired through illegal transactions", (1947) 95 University of Pennsylvania Law Review 261.
245 Oom v Bruce (1810) 12 East 225 (104 ER 87); Cowan v Milbourn [1848] EngR 492; (1867) LR 2 Ex 230; Branigan v Saba (1924) NZLR 481.
246 Kiriri Cotton Co Ltd v Dewani (1960) AC 192.
247 Clarke v Shee [1774] EngR 107; (1774) Cowp 197 (98 ER 1041); Smith v Cuff [1817] EngR 391; (1817) 6 M & S 160 (105 ER 1203); Williams v Bayley (1866) LR 1 HL 200; Goodfriend v Goodfriend (1972) SCR 640; Weston v Beaufils (No 2) (1994) 50 FCR 476 at 499; 122 ALR 240 at 266.
248 Payne v McDonald [1908] HCA 40; (1908) 6 CLR 208 at 211-212; Perpetual Executors and Trustees Association of Australia Ltd v Wright [1917] HCA 27; (1917) 23 CLR 185 at 193-194; Martin [1959] HCA 62; (1959) 110 CLR 297 at 305.
249 [1775] EngR 58; (1775) 1 Cowp 341 (98 ER 1120).
250 Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 362 per Lord Goff of Chieveley citing Dering v Earl of Winchelsea (1787) 1 Cox Eq 318 at 319-320 and Snell's Equity, 29th ed (1990) at 32.
251 [1993] UKHL 3; (1994) 1 AC 340.
252 Muckleston [1801] EngR 241; (1801) 6 Ves Jun 52 at 69 [1801] EngR 241; (31 ER 934 at 942). Lord Eldon did not purport to lay down any new principle. The quoted passage is a summary of the view of Lord Hardwicke in Cottington [1736] EngR 11; (1740) 2 Atk 155 (26 ER 498) as to how the Court of Chancery should approach the enforcement of a trust for an illegal purpose where the trust was not admitted and the illegality was established.
253 Muckleston [1801] EngR 241; (1801) 6 Ves Jun 52 at 69 [1801] EngR 241; (31 ER 934 at 942).
254 See, for example, Curtis v Perry [1802] EngR 125; (1802) 6 Ves Jun 739 (31 ER 1285); Ex parte Yallop [1808] EngR 152; (1808) 15 Ves Jun 60 (33 ER 677); Groves [1829] EngR 325; (1829) 3 Y & J 163 (148 ER 1136); In re Great Berlin Steamboat Company (1884) 26 Ch D 616.

255 [1802] EngR 125; (1802) 6 Ves Jun 739 (31 ER 1285).
256 [1802] EngR 125; (1802) 6 Ves Jun 739 at 747 [1802] EngR 125; (31 ER 1285 at 1288).
257 (1918) 1 KB 223.
258 (1962) AC 294.
259 Hamson, "Illegal Contracts and Limited Interests", (1949) 10 Cambridge Law Journal 249; Coote, "Another Look at Bowmakers v Barnet Instruments", (1972) 35 Modern Law Review 38; Stewart, "Contractual Illegality and the Recognition of Proprietary Interests", (1988) 1 Journal of Contract Law 134.
260 (1945) KB 65.
261 (1945) KB 65 at 71.
262 Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 372-374.
263 Cantor v Cox (1975) 239 EG 121.
264 Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 375-377.
265 Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 357.
266 Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 358.
267 [1801] EngR 241; (1801) 6 Ves Jun 52 (31 ER 934).
268 [1802] EngR 125; (1802) 6 Ves Jun 739 (31 ER 1285).
269 [1736] EngR 11; (1740) 2 Atk 155 (26 ER 498).
270 The "Juliana" [1822] EngR 235; (1822) 2 Dods 504 at 521 [1822] EngR 235; (165 ER 1560 at 1567).
271 Tinsley [1993] UKHL 3; (1994) 1 AC 340 at 355.
272 cf Tribe v Tribe unreported, English Court of Appeal (Civil Division), 26 July 1995:
"It is, of course, artificial to think that anyone would be dissuaded by the primary rule from entering into a proposed fraud, if only because such a person would be unlikely to be a studious reader of the law reports or to seek advice from a lawyer whom he has taken fully into his confidence." (per Millett LJ)
273 cf Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410 at 429.
274 [1978] HCA 42; (1978) 139 CLR 410 at 429.
275 Holman [1775] EngR 58; (1775) 1 Cowp 341 at 343 [1775] EngR 58; (98 ER 1120 at 1121).
276 See Yango [1978] HCA 42; (1978) 139 CLR 410 at 413.
277 cf St John Shipping Corporation v Joseph Rank Ltd (1957) 1 QB 267.
278 Tinsley v Milligan (1992) Ch 310.
279 Saunders v Edwards (1987) 1 WLR 1116; Howard v Shirlstar Ltd (1990) 1 WLR 1292; Euro-Diam Ltd v Bathurst (1990) 1 QB 1.
280 Pitts v Hunt [1990] EWCA Civ 17; (1991) 1 QB 24.
281 Tinsley v Milligan (1992) Ch 310 at 319-320.
282 (1990) 1 QB 1.
283 See, however, the reservations about the use of "seriousness" as the test for granting or withholding relief in Pitts [1990] EWCA Civ 17; (1991) 1 QB 24 at 56 (a tort case) quoting Jackson v Harrison [1978] HCA 17; (1978) 138 CLR 438 at 455.
284 In re Torrez [1987] USCA9 1696; (1987) 827 F 2d 1299 at 1301-1302.
285 cf Yango [1978] HCA 42; (1978) 139 CLR 410 at 429.
286 Elements (ii) and (iii) may often overlap.
287 [1978] HCA 42; (1978) 139 CLR 410.
288 (1957) 1 QB 267.
289 Yango [1978] HCA 42; (1978) 139 CLR 410 at 428-429.
290 (1978) 138 CLR 438 at 452.
291 (1937) 2 KB 197 at 220.
292 (1954) 1 QB 29 at 37.
293 (1957) 1 QB 267 at 292.
294 (1938) AC 586 at 599.
295 (1830) 4 Bligh (NS) 194 at 211 (5 ER 70 at 76).
296 (1956) AC 539.
297 cf Mayfair Trading Co Pty Ltd v Dreyer [1958] HCA 55; (1958) 101 CLR 428.
298 (1962) AC 294.