Secondly, in the absence of any express common intention, the House of Lords suggested that a common intention could be inferred from the conduct of the parties, such as the direct contributions to the purchase price by a party who is not the legal owner. This requirement for constructive trust to arise is well enshrined in the case of Midland Bank v Cooke. Nevertheless, it was said that it was “at least extremely doubtful whether anything less will do”. The denial of any interest to the claimant who has made substantial indirect contributions is ruthless and not supported by authority. In Gissing, it was emphasized that contributions must be ‘referable’ to the costs of acquisition. Besides that, it should be noted that for a common intention to be inferred from the parties’ conduct, it must be communicated between the parties. Conduct by one party which was not known by the other, as in Lightfoot v Lightfoot-Brown cannot be evidence of their common intention.
If there is no common intention, either express or implied, to found a constructive trust, the court should consider whether there is a resulting trust. Asking question in this order makes good sense, because the parties’ agreement should be given priority; but if there is no agreement, one can fall back on the resulting trust: where one party contributes part of the purchase money, there is a presumption of a resulting trust in equity under which the other, the legal owner, holds the property on trust for them both to the extent of their respective contributions. This presumption is rebuttable as long as the legal owner is able to manifest that the money given was by way of gift or loan. Ever since the case of Curley v Parkes was decided in the Court of Appeal, uncertainty crops up concerning the time of contribution by the non-legal owner. It was decided that resulting trust can arise only if payments are made at the time of the acquisition of the property, obviously, post-acquisition mortgage repayments are not of this character. Yet, cases before this have rather assumed that payment of mortgage installments would suffice: Carlton v Goodman and McKenzie v McKenzie.
On the other hand, Australia’s jurisdiction concerning the division of rights in the aspect of co-ownership in property seems to be different from the approach pertaining in England and Wales. In Australia, in domestic contexts, for example, the Family Law Act 1976 and amendments to various state Property Acts provide a separate regime to reallocate upon the disintegration a marriage or domestic relationship. If a particular relationship falls within the provisions of the legislation then the general legal and equitable principles of property law will not apply. However, where a de facto relationship dissolved prior to the introduction of the legislation, or concerns a same sex relationship, the legislation will not apply. Whilst in the concept of trust, financial contributions to the maintenance of the home or contributions assisting the mortgage to be paid are being taken into account by the courts. It was enunciated, in Parij v Parij, that the domestic activities of one party may be appropriately seen as contributing towards the acquisition of property by freeing the other party from domestic responsibilities so that he can work directly for financial reward. Cases such as Rolfe v Rolfe, Muschinski v Dodds, Baumgartner v Baumgartner and Bryson v Bryant would be the concrete substantiation to exemplify this approach. However, the courts have been reluctant to recognize domestic contributions as being sufficient to give rise to a constructive trust where they were made purely for reasons of “love and affection” instead of having regard to whether or not those efforts would entitle one to any equitable share in the property.
Besides that, a new species of constructive trust is imposed, regardless of the parties’ intentions, on the basis of unconscionability: it would be unconscionable not to take account of each party’s post-purchase contributions, therefore allowing the legal owner to deny the beneficial interests of the non-legal owner. Its foundation lies in Allen v Snyder. Mahoney’s J.A. reference to “contrary to justice and good conscience” is to be understood as “unconscionable”. As illustrated in Baumgartner, it was unconscionable for the husband to retain sole ownership of the property which the spouses acquired through pooling of their incomes. The court arrived at the same decision in a later case: Bryson v Bryant. The essential difference between unconscionability and resulting trusts is that the court is here looking not only to contributions at the time of purchase price, but contributions over time. Likewise, the difference between unconscionability and other trusts is that the court pays little heed to the parties’ actual intentions.
The Canadian law on property division falls under Family Relations Act (FRA) which applies only to married couples whereas unmarried couples can rely on the law of trusts or “unjust enrichment”. The Supreme Court of Canada was unhappy with the direction taken in England and Wales, where a constructive trust is based upon the ‘common intention’ of the parties. Hence, in Rathwell v Rathwell and Pettkus v Becker the Canadian court turned to “unjust enrichment” as a substitute. Dickson J. set out three requirements for finding of an unjust enrichment: there must be enrichment; a corresponding deprivation; and the absence of any juristic reason for the enrichment. In other words, when someone performs work for another, expecting reward, there might be an unjust enrichment if the recipient, who has taken advantage or feathered his nest with no lawful reason for it, fails to deliver an equitable recompense. The claimant's contribution may have taken the form of domestic services, from child care to unpaid work in the defendant's business, as in Sorochan v Sorochan and Rawluk v Rawluk. Later on, in Peter v Beblow, it does not only affirm that ordinary domestic work can ground a claim to unjust enrichment, it also gives rise to a constructive trust to be awarded as one of the remedies to unjust enrichment. In the view of the court, constructive trusts serve two functions: (i) to remedy unjust enrichment; and (ii) to hold parties to high standards of trust and probity so that they are not permitted to retain property which in “good conscience” they should not retain.
Deriving from both Australian and Canadian jurisdictions, the object of a constructive trust is to redress the position of “unconscionable” conduct and “unjust enrichment” respectively. An approach based on either unconscionable conduct or unjust enrichment may inevitably lead to the same outcome since neither approach necessarily calls for an accurate accounting of the contributions of the parties. The notion of unjust enrichment is as much at ease with the authorities and is as capable of ready and certain application as is the notion of unconscionable conduct. Both of these principles were not established in banana republics dealing in palm-tree justice. Each jurisdiction has developed remedies to resolve the problems presented by the break-up of unmarried couples. There is no discernible presumption of equality of asset allocation in their decisions, merely a generous willingness and flexibility to adjust property rights to reflect the parties' respective contributions.
Perhaps the English courts should now reconsider the parameters laid down in Burns owing to contemporary social changes. The Law Commission recommended that the courts adopt a wider view of the type of ‘contributions’ that would be acceptable to found a common intention. Indeed, indirect contribution to the mortgage has already received judicial approval in Le Foe albeit not at Court of Appeal level. The radical solution, conceivably, would be to tear up Burns, treat Rossett as being of historical interest only, and introduce a wider test for the triggering of a constructive trust.
By virtue of s.24 of Matrimonial Cause Act (MCA) 1973, the court is given the discretion to redistribute the spouses’ rights in their property and the family home on divorce.
Section 77 and Schedule 5 of the Civil Partnership Act 2004 make provision for financial relief, in connection with civil partnerships, that corresponds to provision made for financial relief in connection with marriage in Part 2 of the MCA 1973.
Grant v Edwards [1986] Ch 638 at 646, per Nourse LJ.
In both cases, it was held that contribution in kind should be precluded form obtaining an interest in the property.
[1984] 1 All ER 244. The claimant had made indirect contribution towards household expenses and caring for the children throughout the 19 years of cohabitation with the defendant.
[2001] 2 FLR 970. The husband would have to repay the mortgages and the wife would have to pay for the utility bills and household expenses.
[1975] 1 WLR 1338. It was said that the claimant was too young to have a legal estate in the property.
[1986] Ch 638. The new partner of the claimant thought that entering her name on the Register would have an effect on the amount that she would be entitled to in the divorce proceeding.
[2005] All ER 115. Repayment of mortgage by one party, not known to the other, was held not to be the evidence of common intention.
Cheshire and Burn’s Modern Land Law of Real Property (17th edition), Burn and Catwright.
For example, de facto relationship.
[1979] FLC 90-629, at p.78, 273. It is stated in this case that the wife as a homemaker and parent should be recognized “not in a token way but in a substantial way”.
[1985] 160 CLR 583. Deane J referred to “a need to take account of a practical equation between direct contributions in money and labour and indirect contributions in other forms such as support, homemaking and family care.”
[1988] 62 ALJR 29. The reasoning of Deane J was adopted by the majority of the High Court in this case.
[1992] 29 NSWLR 188. It has been said that contributions by the party as homemaker or parent should not be regarded as inferior.
Bryson v Bryant [1992] 29 NSWLR 188.
[1977] NSW SC. Mahoney J.A.: “A husband may pay for the matrimonial home and cause the legal title to be vested in the wife. The wife may earn money and use it in defraying household expenses, thus relieving the family budget and allowing the husband to pay mortgage installments on the home. It will be necessary, from time to time, to determine whether, in such situations, the failure to recognize that the one or the other has a proprietary interest in the home is so contrary to justice and good conscience that a trust or other equitable obligation should be imposed.”
[1988] 62 ALJR 29. It was held that the husband merely held the house on trust for the wife and himself.
There is no provision under the Canadian legislation, Divorce Act, to deal with property matters. The British Columbian legislation, FRA, is to be brought about in order to claim for division of property in a divorce proceeding.
Deane J, the English judge, noted in Pavey v Matthews Pty. Ltd. v Paul [1987] 162 CLR 221, at p.256, that unjust enrichment is at the very least “a unifying legal concept”.
[1980] 2 SCR 834. The wife claimed supported the husband and he saved to acquire a bee farm. She then worked with him side by side in the enterprise for 14 years.
The question of enrichment is an objective one. There is an enrichment when the defendant has gained something, improved his lot and bettered himself as a result of the claimant’s effort.
Cory J., in Peter v Beblow, created a new presumption that the enrichment of one party will result in the deprivation of the other.
“No juristic reason” would mean the same as “no lawful reason” or “not required by law”. Cory J. approves the previous definition in his judgment that when one is under no obligation contractual, statutory or otherwise to provide the work and services to the recipient, there will an absence of juristic reason for the enrichment.
Similarly, for example, where a bank mistakenly puts money in an account, or a merchant pays the wrong account, the recipient has no right to retain the windfall.
[1986] 2 SCR 38. The wife performed all the domestic duties, looked after the children and worked on the mixed farm operation, often maintaining sole responsibility for it, improving and preserving it.
[1990] 1 SCR 70. The wife played a major role in the business, actively assisted in the farm operation and assumed full responsibility for the home and care of their children.
Allen v Snyder [1977] NSW SC, Mahoney J.A.
Deconstructing the un-constructive constructions of the Supreme Court of Canada (2000), M.H. Ogilvie.
Baumgartner v Baumgartner [1988] 62 ALJR 29, Toohey J.
Statistics show that one in six adult men and women are cohabiting in opposite sex relationships – ‘Promises, Promises’, Burns v Burns Twenty Years On (2005), Allison Ball QC and Stephen Cobb QC.
Sharing Homes, Discussion Paper Law Com No. 278 (2002).
