Rebutting a presumption of advancement

A presumption of advancement arises where it is presumed a gift has been made. For instance, if a parent gives money to their child who then uses it to buy a flat, it is presumed that this is a gift and not a loan. However, this presumption can be rebutted in some circumstances.

What evidence required to rebut a presumption of advancement?

A presumption of advancement may be rebutted by evidence that the transferor (or contributor) – ie. the person who gave the money or property – did not intend to make a gift, but wished to retain an interest in it. This could be the retention of legal documents (eg. title deeds).

For instance, in the 1995 case of McGrath v Wallis, a house was acquired for joint occupancy by a father and son in the sole name of the son. The purchase price was provided partly by proceeds of sale of the father’s previous house and partly with a mortgage. The Court of Appeal held that the presumption of advancement was rebutted by evidence that the father had intended to retain an interest in the ownership of the house, including an unsigned declaration of trust which would have shared the beneficial ownership in the proportions represented by the deposit and mortgage respectively.

Much older cases prove good examples: in Re Gooch (1890) Sir Daniel Gooch transferred shares into the name of his eldest son. The son paid the dividends from the shares to his father, who also retained the share certificates. Here, the court found that the presumption of advancement was rebutted by evidence that the shares had been transferred to qualify the son to become a director of the company, and that no gift had been intended.

In a later case Warren v Gurney (1944), a father purchased a house in his daughter’s name before her wedding, retaining the title deeds until his death. The Court of Appeal held that the presumption of advancement was rebutted by evidence that at the time of the transaction the father had intended her husband to repay the money (the retention of the title deeds a very significant fact).

However, the mere fact that any rents or profits generated from a property are returned to the purchaser or transferor will not conclusively rebut a presumption of advancement.

You cannot rely on your own illegal conduct to rebut the presumption of advancement.

That said, judicial opinion is that the presumption of advancement might be rebutted by the slightest of evidence. It’s therefore vital, when making any transfer of money or property which is not intended to be an outright gift, to record everything in writing at the time.