A COMPARATIVE VIEW OF PROPERTY RIGHTS IN DE FACTO … · 2021. 2. 20. · 22 Gissing, supran3, 905;...

A COMPARATIVE VIEW OF PROPERTY RIGHTSIN DE FACTO RELATIONSHIPS:

ARE WE ALL DRIVING IN THE SAME DlRECTION?

N S PEART*

I INTRODUCTION

Property disputes between de facto spouses! have been the focus of muchattention in England, Australia, Canada and New Zealand. A great dealhas been written by learned authors in each of these countries2 and onemight be forgiven for questioning the justification for adding yet anotherarticle to the long list of publications. Generally though, these writingshave addressed the developments in a particular country. That is hardlysurprising in view of the fact that each country appears to have adopteda different approach. While the courts in all four countries use the trustto redistribute property, the grounds upon which these trusts are imposedseem to be different. In England the courts will impose a trust only if thereis evidence of an express or inferred common intention, 3 whereas in Canadaunjust enrichment is the accepted ground. 4 The Australian High Courtrecently decided that unconscionability would be the proper basis for theimposition of a trust in these types of disputes. 5 What the New Zealandposition is, is not so clear, because the Court of Appeal has not, as yet,made a clear choice between any of these grounds.

In Pasi v Kamana, 6 the President of the Court of Appeal suggested thatit might not be necessary to make a choice, because he doubted whetherthere was significant difference between any of the grounds: 7

I respectfully doubt whether there is any significant difference between the deemed,implied or inferred common intention spoken of by Lord Reid and Lord Diplock ...

* Drs (Leiden), LLM (Cape Town), Lecturer in Law, University of Otago. I am gratefulfor the valuable comments on an earlier draft which I received from Donna Buckinghamand Andrew Beck, and I am particularly indebted to Mindy Chen-Wishart for her constructive remarks.[Accepted for publication June 1989.]

For purposes of this article de facto spouses are defined as a man and a woman livingin a conjugal relationship as husband and wife. No attempt will be made to describethe nature or the incidents of such a relationship. This article is concerned solely withthe grounds for awarding interests in property to the non-owning de facto spouse.

2 The articles relevant to the English approach are listed in footnote 39, to the Canadianapproach in footnote 113, to the Australian approach in footnote 157 and to the NewZealand approach in footnote 204. One of the very few comparative articles is by HMDervan, "Quasi-Matrimonial Property Division and Judicial Alchemy" (1984-7) 5 AuckULR 1.

3 Gissing v Gissing [1971] AC 886.4 Sorochan v Sorochan (1986) 29 DLR (4th) 1.5 Baumgartner v Baumgartner (1988) 76 ALR 75.6 (1986) 4 NZFLR 417.7 At 419.

rProperty Rights in De Facto Relationships 101

and the unjust enrichment concept used by the Supreme Court of Canada. Unconscionability, constructive or equitable fraud, Lord Denning's "justice and good conscience" and "in all fairness": at bottom in this context these are probably differentformulae for the same idea ... I think that we are all driving in the same direction.

It was this suggestion which prompted me to compare the approachesadopted in each these countries.

The facts which most of these cases have in common involve a man anda woman who live together as husband and wife for a substantial periodof time without getting married. They acquire assets for their joint benefitbut, like many married couples, they do not consider the legal consequencesof their acquisitions. The disputes before the court usually involve a claimto a beneficial interest in the home shared by the couple during their relationship but legally owned by only one of the spouses. 8 While the spousesare living in conjugal bliss the issue of ownership seems of no importance,but on separation it raises its ugly head. If the spouses had been legallymarried, special matrimonial property laws would have afforded the nonowning spouse some protection by redistributing the property moreequitably between the spouses. 9 These provisions are based on the premisethat marriage is a partnership to which the spouses contribute both financially and in kind. 10 A de facto relationship, on the other hand, does notof itself give rise to proprietary consequences. ll Even if the relationshipis a marriage in substance, the fact that it is not one in form precludesthe courts from according it the status and consequences of a marriage.Although sympathetic to the plight of the growing number of de factospouses, the courts have, in the absence of legislation,12 been unwilling toconsider their property disputes from a matrimonial standpoint. 13 Instead

8 By contrast Fitness v Berridge (1986) 4 NZFLR 243 and Calverley v Green (1984) 155CLR 242 are examples of claims by one spouse for the full beneficial ownership of thehouse registered in the names of both spouses. In Murray v Murray (1986) 2 FRNZ134 a claim was made for a share of the business owned by one spouse.

9 Such as sll Matrimonial Property Act 1976 (NZ); s37 Matrimonial Proceedings andProperty Act 1970 (UK) in conjuction with s17 Married Women's Property Act 1882(UK); s 79 Family Law Act 1975 (Aus).

10 See, for example, the full title of the Matrimonial Property Act 1976, and to a lesserextent, s37 Matrimonial Proceedings and Property Act 1970 and s 17 Married Women'sProperty Act 1882 (UK).

11 For example, Lord Reid in Pettit v Pettit [1970] AC 777,795; Fox LJ and May LJ inBurns v Burns [1984] 1 All ER244, 255 and 256 respectively; Pasi v Kamana, supra n6.

12 Such as the De Facto Relationships Act 1984 of New South Wales and the PropertyLaw Amendment Act 1987 of Victoria. It is possible that New Zealand may also soonsee the introduction of legislation. The Report of the New Zealand Working Groupon Matrim-onial Property and Family Protection (Oct 1988) suggests that distributionof property between a man and a woman who lived together in a bona fide domesticrelationship should be based on contributions made by each party to the relationshipas a whole.

13 Fox LJ in Burns supra nIl, 255; Sullivan v Evans (1984) 3 NZFLR 449; Lord Morrisof Borth-y-Gest in Gissing supra n3, 898; Martland J in Pettkus v Becker (1981) 117DLR (3rd) 257,260; Staniforth v Minnet unreported, High Court, Napier, 19 August1985, A 47/84, Gallen J, 35-6; Lanyon v Fuller unreported, High Court, Hamilton,2 May 1988, CP 184/85, Anderson J, 11.

102 Otago Law Review (1989) Vol 7 No 1

they have tried to resolve these disputes by developing existing principlesof law. 14

In all four countries the courts have used the trust to rearrange theproperty rights of de facto spouses. Lord Diplock pointed out in.Gissingv Gissing15 that:

Any claim to a beneficial interest in land by a person, whether spouse or stranger,in whom the legal estate in the land is not vested must be based upon the propositionthat the person in wholn. the legal estate is vested holds it as trustee upon trust togive effect to the beneficial interest of the claimant as cestui que trust.

A variety of reasons has been given for the creation of a trust but broadlyspeaking the cases appear to fall into two groups. The first group consistsof cases decided on the basis of an express or presumed comnlon intention between de facto spouses to share the beneficial interest of the propertyin dispute. The courts in all four countries agree that a trust may be imposed if the spouses have acted in accordance with that common intention. 16 While this group will be discussed briefly, the purpose of this articleis to consider the cases which fall into the second group where no expressor presumed common intention can be found. Trusts have nevertheless beenimposed either on the basis of an inferred common intention,17 unconscionabilitY,18 unjust enrichment,19 or justice and good conscience. 2o Anexamination of the cases in this group will show that the English courtshave given common intention a rather technical meaning by requiringevidence of an implied agreement between the parties to share the property.While the courts in Canada, Australia and New Zealand also started bysearching for a common intention they used considerable leniency inestablishing its existence and did not require evidence of an agreement.A consideration of the caselaw in each of these jurisdictions will revealthat the courts gradually abandoned the search for a common intentionin favour of a broader approach based on equitable fraud. Despite thisapparent difference between England on the one hand, and Canada,Australia and New Zealand on the other hand, an overview of the variousapproaches will show that Cooke P was right when he opined that "weare all driving in the same direction",21 but as a result of an unnecessarilyconservative view, the English courts are in the slow lane.

14 Burns supra nIl, 257; Rathwell v Rathwell (1978) 83 DLR (3d) 289; Allen v Snyder[1977] 2 NSWLR 685, 689,701; Staniforth ibid, 35-6.

15 Supra n3, 904; see also Lord Reid at 896 and Viscount Dillhorne at 900; Allen v Snydersupra n14, 689.

16 See for example in England, Gissing supra n3; in Canada, Pettkus supra n13; in Australia,A lien supra n14, 690; and in New Zealand, Hayward v Giordani [1983] NZLR 140.

17 Gissing, supra n3.18 Baumgartner, supra n5.19 Sorochan, supra n4; Keogh v Gillies unreported, High Court, Rotorua, 21 December

1987, CP 6/86, Gallen J.20 Hall v Hall (1981) 3 FLR 379; Hussey v Palmer [1972] 1 WLR 1284.21 Per Cooke P in Pasi, supra n6, 419.

Property Rights in De Facto Relationships 103

II. GROUP 1: CONTRIBUTIONS MADE ON THE BASIS

OF AN EXPRESS OR PRESUMED COMMON INTENTION

1 Express Common Intention

There is consensus that where de facto spouses have acted in relianceon an express common intention to share the beneficial interest of theproperty in dispute, the court will override the legal rights of the titleholderby imposing a trust to give effect to the express intention of the parties. 22Such common intention may be evidenced by an oral agreement,23 whichin the absence of a written memorandum is not specifically enforceable. 24I f the court is satisfied that the parties applied their minds to the issueof ownership of the property and actually agreed that it was to be shared,a trust25 may be imposed to give effect to that agreement because equity willnot allow a statute to be used as an instrument of fraud. 26 On the otherhand, equity will not assist a volunteer. So the plaintiff will have to satisfythe court that he or she proved consideration for the beneficial interestclaimed. 27 If, for example, the non-owning spouse, in reliance upon theagreement, has contributed to the purchase price or assisted indirectly inthe acquisition of the property, for instance, by taking responsibility forthe household expenses, the court will give effect to the agreement by imposing a trust. 28

2 Presumed Common Intention

Proof of an oral agreement is not necessary if the non-owning spousehas contributed directly to the purchase of the property either by payingpart of the deposit or by sharing the responsibility for the mortgage

22 Gissing, supra n3, 905; Stanley v Stanley (1960) 23 DLR (2d); Eves v Eves [1975] 1 WLR1338.

23 In Eves ibid, the de facto husband told his wife that if she had been over the age of21 he would have had the house registered in their joint names. In Stanley ibid, thede facto spouses also discussed the ownership of the house and the husband assuredhis wife that the house was hers, although the title was in his name only.

24 Contracts Enforcement Act 1956, s2; Property Law Act 1956, s49A; Statute of Frauds,ss4 & 10 RSO 1980 Ch 481 (Ontario, Canada) for example; Conveyancing Act 1919,s23C (Australia); Law of Property Act 1925, s53 (UK).

25 There is a considerable amount of confusion in most jurisdictions as to the type oftrust which may be imposed. A failed express trust sometimes takes effect as a resultingtrust because it is based on the intention of the parties, but at other times a constructiveor implied trust has been imposed. One of the reasons for the confusion, particularlyin disputes between de facto spouses, is as a result of Lord Diplock's opinion that itwas unnecessary for these purposes to distinguish between these types of trust: Gissing,supra n 3, 905. It may be argued that a failed express trust should not take effect asa resulting trust, because it violates the Statute of Frauds as it has been implementedin the various countries (see ibid). At best a constructive trust could be imposed if therequirements for such a trust are met. See A Alston, "De Facto Spouses Property Dispute:Pasi v Kamana" [1987] NZLJ 75 on this point. But the courts have not drawn this distinction in this area of the law.

26 See, for example, Steadman v Steadman [1976] AC 536, 540. Viscount Dilhorne andLord Diplock reaffirm this in Gissing, supra n3, 900 and 905. See also Allen supra n14,699.

27 Lord Diplock in Gissing, ibid, 905; Allen, ibid, 691.28 For example Gough v Fraser [1977] 1 NZLR 279; Stanley, supra n22; Eves, supra n22,

particularly Brightman J at 1345.


repayments. In these circumstanc~s it is well established that a commonintention to share the beneficial ownership will be presumed, and a resultingtrust will be imposed in favour of the non-owning spouse. 29 Oddly enough,no such presumption arises if the financial contributions made by the nonowning spouse are of an indirect nature, such as the paying of householdexpenses, even if such contributions enabled the owner to acquire the asset. 30It seems, however, that this legal presumption is seldom relied upon byde facto spouses because of its limited application. A non-owning spouseoften claims on the basis of a variety of contibutions, only part of whichis the payment of a proportion of the purchase price. As some of thosecontributions will not bring the legal presumption into play, the non-ownermight do better to claim on the basis of unconscionability, unjust enrichment or an inferred common intention.

III GROUP 2: CONTRIBUTIONS MADE IN THE ABSENCE OF ANEXPRESS OR PRESUMED COMMON INTENTION

Generally de facto spouses do not enter into an express agreement regarding their property interests. More commonly, they will simply start livingtogether and during the course of their relationship accumulate assets fortheir joint use without considering the legal consequences of such acquisitions. 31 In the context of that relationship, the non-owning spouse maymake substantial contributions to property legally owned by the otherspouse, for example by making improvements,32 preventing deterioration; 33providing labour34 or by indirect financing. 35 It is in the absence of evidenceof an express common intention that the courts in the four countries appearto have disparate views as to whether a trust should be imposed and, ifso, on what ground.

29 Lord Upjohn in Pettit, supra nll, 815; Lords Reid, Pearson and Diplock in Gissing supran3, 896; Glass JA in Allen supra n14, 690. The same presumption applied in Calverley,supra n8, to award the claimant the full beneficial ownership of the property. See comments by L Wilmott, "Who Gets What? De Facto Relationships and Implied Trust"(1978) 3 QITLJ 61, 65.

30 Per Lord Reid, supra n3, 896.31 Per Lord Diplock in Pettit, supra nll, 822; per Lords Reid and Pearson in Gissing, supra

n3, 897 and 902, respectively.32 Brown v Stokes (1980) 1 NZCPR 209; Hayward, supra n16; Oliver v Bradley (1987)

4 NZFLR 449; Basher v Love (1987) 2 FRNZ 204; Keogh supra n19; Stratulatos vStratulatos unreported, High Court, Wellington, 30 August 1988, CP 399/86, McGeehanJ; Clarkson v Clarkson unreported, District Court, Auckland, 5 October 1988,FP004/243/86, Cartwright J; Edwards v Prewett unreported, High Court, Napier, 27October 1988, CP21/87, McGeehan J; Hopkins v Sturgess unreported, High Court,Auckland, 29 December 1988, MNo 670/86; Kiss vPalachik (1981) 130 DLR (3d) 246;Cooke v Head [1972] 1 WLR 518; Burns, supra nIl.

33 Sorochan, supra n4.34 Keogh supra n19; Lanyon v Fuller unreported, High Court, Hamilton, 2 May 1988,

CP 184/85, Anderson J; Murdoch vMurdoch (1974) 41 DLR (3d) 367; Rothwell, supran14; Pettkus supra n13; Murray vRoty (1983) 147 DLR (3d) 438; Sorochan, supra n4;Rawluk, (1986) 29 DLR (4th) 754; Eves, supra n22.

35 Mikoz v Roots unreported, High Court Dunedin November 1985, A 85/84, Williamson J; Lanyon supra n34; Edwards vPrewett supra n32; Hopkins supra n 32; Pettkussupra n13; Murray supra n34; Fibrance vFibrance [1957] 1WLR 384; Burns supra nll;Grant v Edwards [1986] 2 All ER 426; Maharaj v Chand [1986] 3 All ER 107;Baumgartner, supra n5.


1 England

(a) Traditional approach

The House of Lords first dealt with this issue in Pettit v Pettit. 36 Althoughthat case involved a property dispute between a husband and wife, therewas at the time no legislation which empowered the court to make property adjustments between spouses,37 because the Married Women's PropertyAct 1882 provided that the property rights of parties to a marriage wereseparate. This case thus raised the same sort of issues as the courts nowface in property disputes between de facto spouses. In Pettit the husbandclaimed a beneficial interest in the matrimonial home inherited by his wifeto which he had made some improvements. The House of Lordsunanimously rejected his claim, but the judges' reasoning differed quitesubstantially. The majority held that a claim to a share of the propertyhad to depend upon an agreement between the parties, concluded eitherat the time of its acquisition or thereafter. 38

While such an agreement could be made expressly or be presumed, itmight also be inferred from the conduct of the parties. This inference wouldbe appropriate if the parties acted in a manner which clearly conveyed theirintention to share the property. In other words, their conduct might indicate that the parties had applied their minds to the ownership of theproperty. The mere fact of making contributions to the property of anothercould not result in a beneficial interest unless it was clear that there wasan implied agreement to share the property. 39

Regrettably Pettit's case is not helpful in indicating the type of conductfrom which such an agreement might be inferred, because the court foundno evidence that the parties had ever considered the possibility that MrPettit should have some sort of title to his wife's house: 40

the husband did not assert that there was any kind of bargain or understanding between him and his wife that he should ever be to any extent reimbursed or rewarded.

So while the majority would have accepted something less formal thanan oral contract, there must be evidence of a meeting of the minds, the

36 Supra nIl.37 The Matrimonial Proceedings and Property Act 1970 only came into force on 1 January

1971.38 Lord Upjohn 813; Lord Morris of Borth-y-Gest 804 and Lord Hodson 810.39 Lord Morris of Borth-y-Gest 805. Some of the articles discussing the English approach

are: F Webb, "Trusts of Matrimonial Property" (1976) 92 LQR 489; K Gray, "The Lawof Trusts and the Quasi-Matrimonial Home" [1983] CLJ 30; J Brady, "Trusts, Law Reformand the Emancipation of Women" (1984) 6 Dublin ULJ 1; NV Lowe and A Smith, "TheCohabitant's Fate" (1984) 47 MLR 341; J Dewar, "Promises, Promises" (1984) 47 MLR735; R Ingleby, "Sledgehammer Solutions in Non-Marital Cohabitation" [1984] CLJ227; R Johnson, "Cohabitation Without Formal Marriage" (1986) 16 Fam Law 47; DHayton, "Equity and the Quasi-Matrimonial Home" [1986] CLJ 394; B Sufrin, "Intention and Detriment" (1987) 50 MLR 94; J Eekelaar, "A Woman's Place -A C{)nflictBetween Law and Social Values" [1987] Conv 93; J Warburton, "Wives and Cohabitees- A Small Victory" [1987] Conv 378; A Samuels, "Cohabitation Breakdown" (1988)132 So J 390; J Montgomery, "Back to the Future - QuantifYing the Cohabitee's Share"(1988) 18 Fam Law 72; SParker, Cohabitees (1981) 127.

40 Lord Morris of Borth-y-Gest 806.


absence of which precluded the court from awarding Mr Pettit a share inthe beneficial ownership of the property.

Lord Diplock and Lord Reid adopted a different reasoning. They wereof the opinion that it would frequently be impossible to prove that theparties had made an agreement regarding the ownership of the propertyacquired for their common enjoyment. 41 According to Lord Diplock:

In many cases, ... the true inference from the evidence is that at the time of itsacquisition or improvement the spouses formed no common intention as to their proprietary rights in the family asset. They gave no thought to the subject of proprietaryrights at all. 42

A more appropriate solution in Lord Diplock's view was for the court to impute a common intention to the parties in much the same way as is regularlydone in contractual situations. The court would have to decide what thecommon intention of reasonable spouses would have been if they hadaddressed their minds to their respective proprietary rights. 43 Even on thisreasoning, however, Mr Pettit failed to obtain a share of the matrimonialhome, because the improvements were done as part of his leisuretimedomestic activities which, in Lord Diplock's view, could not reasonablyjustify the imputation of a common intention. 44

The majority of the House of Lords disagreed with the reasoning ofLord Diplock and Lord Reid45 and in Gissing v Gissing, Lord Diplock hadto accept that a common intention could not be imputed. 46 At most,therefore, a common intention could be inferred from the conduct of theparties. But in Lord Diplock's opinion such an inference would beappropriate

if by his words or conduct [the trustee] has induced the cestui que trust to act to hisown detriment in the reasonable belief that by so acting he was acquiring a beneficialinterest in the land. 47

It is clear from his Lordship's judgment that he would still go further thanthe majority in Pettit's case was prepared to do, because this test wouldinclude not only cases where there was evidence of a meeting of the mindsin the form of an express or implied agreement,48 but also cases where therewas no evidence that the parties had ever considered their respective rightsin the property. A common intention could be inferred, for exalnple, fromthe practical arrangements made by the parties in respect of payment. 49

41 Lord Diplock 822 and Lord Reid 796.42 At 822.43 Lord Diplock 823 and Lord Reid 795.44 At 826.45 Lord Morris of Borth-y-Gest, Pettit, supra nIl, 806; Viscount Dilhorne in Gissing, supra

n3, 900. However, Waller LJ in Burns, supra nIl, 250 is one of the few judges who persisted in his view that a common intention could be imputed to the parties, as did LordReid in Gissing's case, supra n3, 897.

46 Supra n3, 904.47 At 905.48 Idem.49 At 906-8.


The non-owner might have contributed directly to the deposit or the mortgage repayments or indirectly by taking responsibility for household expenses to enable the owning spouse to pay the outgoings on the property.In both cases Lord Diplock suggested that the most probable explanationfor such contributions, in the absence of evidence to the contrary, was thatit was the parties' common intention that the contributing spouse shouldshare the beneficial ownership. 50 A common intention thus arrived at isnot an inference of the parties' subjective intention, as was suggested inPettit's case, because Lord Diplock would hold that the common intention existed despite the fact that the parties had never thought about theissue. 51 He would even find a common intention if one of the parties hadthought about it, but had manifested a different intention. 52 The commonintention which Lord Diplock would infer is thus in reality the court'sobjective assessment of the most probable explanation of the parties' conduct. That explanation is then imputed to the parties as their commonintention. Used in this sense the term "inferred common intention" takeson a different meaning from the one used by Lord Diplock in Pettit. Inthe latter case his Lordship used the term to denote an implied agreement, 53whereas in Gissing he includes cases where there is no evidence of an agreement, but where the conduct of parties can be reasonably explained onlyon the basis of a common intention which the court deduces they musthave had even though they never actually considered the matter.

To determine what the most probable explanation is, Lord Diplock's testsuggests that three requirements must be met: (i) detrimental conduct bythe claimant; (ii) inducement by the defendant; and (iii) a reasonable beliefon the part of the claimant that the detrimental conduct would result ina beneficial interest.

(i) Detriment

It is by now abundantly clear that a claimant will not succeed withoutproof of detriment which must be referrable to the property in dispute. 54What is not so clear, however, is what the precise nature of the detrimentmust be. The English courts have been very conservative in this regard.While financial contributions made directly or indirectly to the acquisition or the improvement of the property have merited the imposition ofa trust,55 contributions which have merely prevented deterioration, suchas the redecorating of a house or landscaping of a garden, have been condemned as ephemeral and insignificant. 56 Moreover, it is evident from

50 At 907.51 At 908.52 At 906.53 Supra nll, 822. See also the quotation accompanying n42 (supra).54 Gissing, supra n3; Pasi, supra n6; Lanyon, supra n34; Pettkus, supra n13; Sorochan,

supra n4; Allen, supra n14.55 Gissing, supra n3; Grant, supra n35; Burns, supra nIl; Falconer v Falconer [1970] 1

WLR 1333.56 Pettit, supra nIl; Gissing, supra n3; Burns, supra nIl.


Gissing57 and subsequent cases58 that the prevailing view in England is thatdomestic contributions, such as the running of a house and bringing upof children, are not sufficient to justify a share in the beneficial ownership of the house. 59

The Court of Appeal decision in Burns v Burns60 affords a good exampleof the conservative thinking of English judges. The de facto wife in thatcase spent about twelve years at home running the house and bringing upthe two children born of the relationship. When she took up employment,she used her earnings to contribute towards the housekeeping expenses andrates, to buy fixtures and appliances and to redecorate the house. Yet thecourt came to the surprising conclusion that she was not entitled to a shareof the house which she had lived in for 19 years, because she had made"no 'real' or 'substantial' financial contribution" towards the family expenses. 61 Clearly the judges took Lord Diplock's examples very literallyand did not appear to feel that they could be a little more imaginative inassessing Mrs Burn's undoubtedly considerable contributions over a longperiod of time.

It may be concluded, therefore, that in England a successful claimdepends on substantial contributions62 to the property which have beentraditionally assessed in financial terms and which have enabled the owning spouse to acquire or increase the value of the asset. Domestic servicesand contributions which make life more comfortable or pleasant are notsufficient to justify the imposition of a trust.

(ii) Inducement

The defending owner must have induced the claimant's detriment eitherby words or conduct. Any type of conduct may be relevant for this purpose. 63 Statements made by the owner may have encouraged the non-ownerto contribute in some way.64 Practical arrangements regarding family expenditure are particularly important. 65 The spouses may, for example, havearranged to use the woman's income for household expenses to enable them.an to pay for the outgoings on the house. Apart from such active formsof inducement, a non-owner could be passively induced if the owner con-

57 For example Lord Reid, supra n3. Lord Diplock uses only financial contributions inhis examples.

58 Grant, supra n35; Burns, supra nIl.59 For example in Burns. In Grant, supra n35, on the other hand, domestic contributions

were mentioned but the decision appears to be based only on the financial contributionsmade by the claimant. Lord Denning is the exception to this view.

60 Supra nIl. Not surprisingly this case has occasioned much comment. See, inter alia,Lowe and Smith, Dewar, Ingleby and Johnson, supra n 39.

61 May LJ 265; Fox LJ 252.62 Pettit, supra n11; Gissing, supra n3; Grant, supra n35; Burns, supra nIl. See also Eekelaar's

views on the woman's place, supra n 39.63 Burns, supra n11, 251.64 Eves, supra n22; Grant, supra n35.65 In Grant, ibid, 437, Sir Nicholas Browne-Wilkinson V-C said that the contributions made

by the spouses could be used in evidence for four purposes, namely (1) as evidence fromwhich the parties' intentions can be inferred; (2) as corroboration of direct evidenceof intention; (3) to show that the claimant has acted to his or her detriment in relianceon the common intention; (4) to quantify the extent of the beneficial interest.


tinued to accept the benefits freely and without question. 66 Whatever theconduct, the court has to determine what inferences might reasonably bedrawn from it. 67 The owner's actual intentions are quite irrelevant if theyconflict with the way they have been manifested. 68 The crucial questionis: how would a reasonable spouse have interpreted the other spouse's wordsor actions?

In Grant v Edwards, 69 for example, one of the few English cases in whicha trust was imposed, the defending owner told his de facto spouse thatthe only reason for not including her name on the title was because it wouldprejudice her matrimonial proceedings against her husband. A very plausible excuse but nevertheless an excuse, which she believed and acted onby making substantial contributions to the joint household expenses inaddition to housekeeping and bringing up the children. The court awardedher a share of the property because the defendant's statement manifestedan intention to share which a reasonable spouse would have believed. Ofcourse, this case fell within the scope of Lord Diplock's test and examples.On the other hand, if the court had held otherwise, it would have condoned dishonesty or fraud on the part of the defendant when he subsequently refused to share the beneficial ownership. It is this element ofimpropriety which the courts will not condone.

This does not mean that a successful claim depends on proof of actualdishonesty. The impropriety can take various forms. In the above case therewas an intention to cheat but even the continued free acceptance of contributions may be evidence of an impropriety if the recipient should haverealised that they were not intended as gifts. The impropriety may occurat any time. In the case of Grant v Edwards it was there from the outset,but it is more common on dissolution of the relationship when both partiesare less likely to recognise the value of each other's contributions. No matterhow or when it occurs, the inducements by the defending owner must resultin some form of impropriety.

(iii) The claimant's reasonable belief

Finally, the court must be satisfied that the claiming spouse reasonablybelieved that by so acting he or she would be acquiring a share in the property. This requirement is aimed at ensuring that the contributions were notintended as gifts or as consideration for board and lodging. 70 There aretwo components to this requirement. Not only does the court have to assesswhat the claimant believed he or she was achieving by making contributions- a subjective test of the claimant's intention - the court also has to deter-

66 In Falconer, supra n55, the wife accepted contributions to the mortgage repaymentsand the rates from her husband on a house which was legally hers.

67 Per Lord Diplock in Gissing, supra n3, 906.68 Eves, supra n22, 1342 where Lord Denning s'aid: "He should be judged by what he told

her - by what he had led her to believe - and not by his own intent which he keptto himself." See also Grant, supra n35.

69 Supra n35. See comments on this case by Hayton and Sufrin, supra n 39.70 In Thomas v Fuller Brown [1988] 1 FLR 237 the spouses had agreed that the man would

carry out improvements to the house in return for his keep. That was held to defeatthe existence of a common intention of shared ownership.


mine objectively whether that belief was reasonable. The size and natureof the contributions will again be important factors in deciding whetherthis requirement is met, for it is obvious that the more substantial the contribution the less likely it is to have been intended as a gift and the morelikely the non-owner's belief will be considered reasonable. Integral to thedecision that the belief was reasonable is also the extent to which the ownerinduced that belief. This, of course, takes us back to the second requirement and the importance of the defendant's conduct in relation to theclaimant's actions with respect to the property.

Without doubt, the single most important element in Lord Diplock'stest is the impropriety or dishonesty on the part of the defendant in denying the claimant an equitable interest in the property after having led theclaimant to believe that his or her contributions would result in a shareof the property. To use the term 'common intention' in this context isartificial and misleading. His Lordship's test is not aimed at enforcing theparties' common intention but rather at preventing dishonesty on the partof the owner, because if the non-owner's expectation of an entitlement wasreasonable "it would be inequitable to allow him [the owner, trustee] todeny to the cestui que trust a beneficial interest in the land acquired". 71

That denial is dishonest, fraudulent and will not be countenanced by acourt of equity.

By using the term 'common intention', however, Lord Diplock did notappear to be departing markedly from the already accepted view that atrust could be imposed on the basis of an express or implied agreement.His Lordship's judgment did not seem to extend the court's jurisdiction,but merely to indicate various ways in which a common intention couldbe found to exist. That this is how Lord Diplock's judgment has been interpreted is evident from the judgment of Goff J in Re Densham,72 forexample:

If the parties have not in fact agreed about the ownership, the court cannot makean agreement for them ... On the other hand, the court may infer from the circumstances and the conduct of the parties ... that there was an agreement, and ifit does the court will give effect to that agreement. 73

This narrow, rather technical interpretation of Lord Diplock's test has beenlabelled the traditional approach74 and appears to be the accepted basisfor property distribution between de facto spouses in England. The broaderand more realistic interpretation based on impropriety or fraud in the

71 Per Lord Diplock in Gissing, supra n3. See also Dodds, supra n39, 488.72 [1975] 1 WLR 1519, 1524.73 Other examples are Burns, supra nIl; Grant, supra n35, where Mustill LJ speaks of

"a bargain". See also Webb, supra n39, and D Hayton, "Remedial Constructive Trustsof Homes: An Overseas View" [1988] Conv 259,264. The English approach promptedGray's much quoted remark: "The day is surely coming when we no longer feel we haveto fashion phantoms of common intention in order to resolve the property relationsof disaffected parties." Supra n39, 33. Similar interpretations have been given in NewZealand in Brown, supra n32; Hayward, supra n16; Murray, supra n8; and in Australiain Allen, supra n14, 690.

74 Murray, supra n8, 137.


equitable sense was apparently lost on the English judges with the exception of Lord Denning who alone seems to have realised what Lord Diplockreally meant.

(b) Lord Denning's approach

The first case to come before his Lordship after Gissing was Falconerv Falconer, 75 another case involving a married couple. Lord Denning referred to the House of Lord's decision in some detail and was of the opinionthat Lord Diplock's test did not require evidence of an agreement eitherexpress or implied. Rather

[t]he law imputes to husband and wife an intention to create a trust ... by way ofinference from their conduct and the surrounding circumstances, even though the partiesthemselves made no agreement. 76

In subsequent cases Lord Denning did not use the term common intention but suggested instead that a trust should be imposed "whenever twoparties by their joint efforts acquire property to be used for their jointbenefit".77 His Lordship gave a variety of reasons for imposing a trust.In Eves, for example, the defendant's denial of a share was held to be "mostinequitable",78 whereas in Hall the trust was imposed "as a matter ofordinary common justice".79 At other times he used terms such as"fairness"8o or "justice and good conscience"81 as reasons for intervention.Lord Denning's use of these vague and ill-defined terms has been the causeof much criticism both in England and overseas. 82 A widely held view isthat Lord Denning was prepared to redistribute property in the interestsof fairness rather than justice. 83 In other words, he was being accused ofawarding a claimant a share of property where others would not have doneso. This requires a close examination not only of the grounds applied by

75 Supra n55. See also the comments of Brady on Lord Denning's approach, supra n39.76 Ibid 1336 (original emphasis). The line between inferring and imputing a common in

tention is very fine: D W McMorland, "Trusts and the Property Problems of the DeFacto Couples" (1985) 11 NZULR 275, 277. See also Webb supra n39.

77 Cooke, supra n32, 520; Eves supra n22, 1342. Lord Denning first used this test in amatrimonial context in Rimmer v Rimmer [1953] 1 QB 63, 74 where he held: "... whenthe parties by their joint efforts save money to buy a house, which is intended as a continuing provision for them both, then the proper presumption is that the beneficial interest belongs to them both jointly."

78 Supra n22, 1342.79 Supra n20.80 Eves, supra n22, 1342; Appleton v Appleton [1965] 1 WLR 25.81 Hussey, supra n20, 1290.82 Lord Hodson in Pettit, supra n11, 819 and Lord Diplock at 825; Turton v Turton [1987]

2 All ER 641; Rathwell, supra n14, 297; Glass JA in Allen, supra n14, 694; and SamuelsJA at 700; Deane J in Mushinski v Dodds (1985) 160 CLR 583, 615-6; Baufngartner,supra n5, 80; Avondale Printers and Stationers Ltd v Haggie [1979] 2 NZLR 124, 148and 153ff; Sullivan v Evans supra n13, 453. Cooke P, on the other hand, is a notableabsentee from the list of critics. In Brown, supra n32, 213, and Pasi, supra n6, 419, hisHonour did not reject Lord Denning's approach. The former case even suggested, tentatively, that Lord Denning's reasoning might be more in keeping with the needs andexpectations of modern society. See also Hayton, Eekelaar and Warburton, supra n39.

83 See Hayton, Eekelaar and Warburton, idem.


Lord Denning but also of the nature of the contributions which in his Lordship's view called for equitable intervention.

Grounds for Intervention

The factors which Lord Denning considered relevant to his decision indicate that he was looking at the same three criteria required for LordDiplock's test. All except one of the successful claims84 were based onevidence of a substantial detriment induced by the defendant which hadled the claimant to believe that he or she was acquiring a share in theproperty.

In most of those cases the claimants' detriment consisted of substantialfinancial contributions which had enabled the defendant to acquire or improve the property.85 Eves is the exception in this respect, because theclaimant contributed only labour. She stripped, painted and redecorateda very dilapidated house, landscaped a derelict garden and helped todemolish and put up a garden shed. In addition she gave birth and caredfor two children during her four and a half year relationship with thedefendant. 86 In Pettit contributions of a similar nature, though possiblynot of a similar size, were not considered sufficient to sustain a claim toa beneficial interest. 87 But then Mr Pettit had not been tricked as JanetEves had been. She was told by Mr Eves that the house could not beregistered in both names because she was under 21. Lord Denning foundthat Mr Eves had no intention of including his de facto wife's name onthe title, butshe had believed him and thought she was helping to improvea house in which she had an interest. 88 So there was evidence of improprietyfrom the outset which had caused the claimant to act to her detriment.It is therefore safe to conclude that Lord Diplock would have come to thesame conclusion as Lord Denning did in this case. The other judges agreedwith Lord Denning that Janet Eves should receive a share of the property,but they followed the traditional reasoning. They held that Mr Eves'statements to Janet had resulted in an understanding or bargain betweenthem and that Janet had acted in reliance upon an express or implied agreement. 89

In Eves the impropriety lay in Mr Eves' intention to cheat his de factowife out of her share of the property. In other cases the impropriety isnot as obvious. In Cooke v Head there was no actual trickery but thedefendant did make statements to the claimant and to others which indicated that he regarded the property as jointly owned. 90 In addition, theparties had planned, designed and built the house together. While LordDenning used these factors to substantiate his finding that the parties hadacquired the property by their efforts to be used for their joint benefit,

84 The exception was Hussey, supra n20, for reasons explained below.85 Falconer, supra n55; Cooke, supra n32; Hall, supra n20.86 Supra n22, 1340.87 Supra n11, 826.88 At 1342.89 At 1345.90 Supra n32, 519.


the same factors would fulfil the requirements of the Diplock test. The jointnature of their building venture, together with the statements made by thedefendant, would have been sufficient to constitute the necessary inducement which led the claimant to believe that she would share the beneficialownership of the property. Accordingly, there was once again an elementof impropriety in the defendant's subsequent denial, which justified theimposition of a trust.

In Halr1 and Falconer92 the claimants made substantial financial contributions without which the owners would not have been able to acquiretheir houses. As there was no evidence to suggest that the contributionswere a gift or a loan, Lord Diplock would have held that the only reasonableexplanation was that the claimants believed that their contributions wouldlead to a share of the beneficial ownership.93 That belief was never dispelled because the owners continued to accept the claimants' contributions.Thus Lord Denning held, the other judges concurring, that it was a matter of "ordinary common justice" that a trust be imposed. 94 Of course,these two cases fitted neatly into accepted categories of cases where trustsshould be imposed. In the past, the mere fact of making direct contributions to the purchase price would have raised the presumption of a resultingtrust. 95 Now it is more appropriate to say that they comply with LordDiplock's test.

The one case which does not meet all the requirements of Lord Diplock'stest is Hussey v Palmer. 96 This case does not deal with de facto spousesbut involes a family arrangement in which Mrs Hussey agreed to pay forthe cost of building an extra room on to her son-in-Iaw's house, in whichshe would live for the rest of her life. When the arrangement fell through,she successfully claimed a beneficial interest in the house proportionateto her contribution. Lord Denning held that the son-in-Iaw's denial of ashare was against justice and good conscience because, inter alia, he hadacknowledged that if he had sold the house during his mother-in-Iaw'slifetime, she would have been entitled to a share of the proceeds. 97 For thisreason Lord Denning declared the defendant a constructive trustee of thehouse in favour of Mrs Hussey proportionate to the value of her financialinput.

Phillimore LJ agreed that a trust should be imposed but he was of theopinion that a resulting trust was more appropriate in view of Mrs Hussey'sdirect financial contribution to the acquisition of the extension. 98 CairnsLJ dissented because he thought the evidence suggested that Mrs Husseyhad given the money as a loan without express terms as to repayment. 99

91 Supra n20.92 Supra n62.93 Gissing, supra n3, 907.94 Supra n20.95 See supra n28.96 Supra n20.97 At 1291.98 Idem. See comments by Webb on the difference between constructive and resulting trusts,

supra n39.99 At 1293.


That would not only rebut the presumption of a resulting trust but wouldalso negate Lord Diplock's otherwise probable explanation that the contribution was made in the reasonable belief that it would lead to a beneficialshare of the property.100

There is a lot of merit in the view that it was not a trust because, strictlyspeaking, it does not comply with Lord Diplock's test. Mrs Hussey didnot pay for the extension because she believed that by doing so she wouldacquire a beneficial interest in the house, but because she wanted somewhereto live for what remained of her life. When it became clear that she couldno longer live with her daughter and son-in-law, she moved out and sothe purpose of her investment failed. Regrettably the parties had not makeany contingency plans in case the arrangement· broke down. If they hadconsidered that possibility they would undoubtedly have agreed on someform of repayment dependent on the duration of Mrs Hussey's stay. Butthey didn't, and so two of the three judges decided that a trust should beimposed because the defendant could not in good conscience be allowedto retain the full benefit of the claimant's contribution.

While this case may not meet all the requirements of Lord Diplock'stest, it is nevertheless incorrect to say that Lord Denning imposed a trustmerely to achieve a fair result. It is well settled that equity will interveneif payment was made in anticipation of some enjoyment and circumstanceshave arisen so that the future enjoyment is denied. lol This principle hasbeen applied in cases where joint ventures, partnerships or relationshipshave failed through no fault of either party. 102 In Australia it has been usedto resolve a property dispute between de facto spouses. 103 In such circumstances the retention of the benefit by the recipient is held to be unconscionable. So even in this case the critics were wrong in their view thatLord Denning was moved by considerations of fairness rather than acceptedequitable principles and their criticisms are thus unfounded.

The Nature of the Contributions

Apart from the grounds used to impose a trust, Lord Denning has alsobeen criticised for his willingness to recognise domestic services, includingthe upbringing of children, as contributions referrable to the property indispute. 104 Unlike the House of Lords and the Court of Appeal in BurnsparticularlY,105 Lord Denning did not regard such services as insignificant. l06

100 Gissing, supra n3, 907.101 Atwood v Maude (1868) LR 3 eh App 369, 375.102 Mushinski, supra n82, 619.103 Per Mason and Deane 11 in Mushinski, ibid, 599 and 620.104 Cooke, supra n32; Eves, supra n22; Hall, supra n20. See also Eekelaar, supra n39.105 Supra nll and the House of Lords' decisions in Pettit, supra nll, and Gissing, supra

n3. See also Grant, supra n35, where there was evidence of domestic services, but theywere not mentioned as a reason for imposing a trust.

106 This is particularly evident from his Lordship's judgment in Eves, supra n22, 1342, wherehe said: "She did not make any financial contribution but she contributed in many otherways. She did much work in the house and garden. She looked after him and caredfor the children. It is clear that her contribution was such that if she had been a wifeshe would have had a good claim to have a share in it on a divorce." See also Cooke,supra n32, 521.


However, there were other contributions in each case in which Lord Denning took domestic services into account which made his decisions in favourof the claimants acceptable by any standard. l07 Nevertheless, Lord Denning should be commended for his more liberal and broadmindedapproach. English judges appear to be afraid that by regarding domesticservices as contributions to property, they might be equating de facto relationships with marriage. Traditionally, of course, domestic services havebeen regarded as contributions to the relationship rather than to particularproperty. Judges who adhere to this view do not recognise that a spousewho remains at home to run the house and look after the children leavesthe other spouse free to increase his or her assets without having to payfor child care or a housekeeper. Such contributions are therefore referrableto property and' easily assessable in monetary terms.

It is encouraging to note though that the courts in the other jurisdictionsare beginning to follow Lord Denning's lead. lOB But even the most liberalminded judge has not as yet held that domestic contributions would besufficient of themselves to warrant equitable intervention. l09 Lord Denning did not suggest that they should either, but he did take them intoaccount in his overall assessment of the share to be awarded to the successful claimants. 110 The criticisms in this respect are at most evidence ofa very conservative view of the value of particular contributions which isnot in keeping with modern thinking. While Lord Denning may haveaccorded greater significance to some contributions than other judges mighthave done, his basic reason for intervening did not deviate materially fromLord Diplock's test because he sought to do so only where there wasevidence of some impropriety on the defendant's part in denying theclaimant an equitable share of the property.

2 Canada

The current Canadian approach is quite different. Although the courtsdid initially require proof of a common intention, 111 which would give riseto a resulting trust,112 the courts are now prepared to impose a constructivetrust not founded on the parties' intentions, but on the basis of unjust

107 In Cooke and Eves the claimant's contributions were actively induced.108 In New Zealand, Lanyon, supra n34 affords a good example; see also Edlfards, supra

n32. Similar developments have taken place in Canada: Rathwell, supra n14; Sorochan,supra n4; Murray, supra n34. There is a tentative indication in the Australian High Courtdecision in Baumgartner, supra n5.

109 In all the cases where domestic services were taken into account, there were other con-tributions as well.

110 Eves, supra n22, 1342; Cooke, supra n32, 521; Hall, supra n20.111 Stanley, supra n22; Rathwell, supra n14; Murdoch, supra n34.112 The Canadian courts distinguish between resulting trusts, which are based on intention

and constructive trusts, which are imposed irrespective of the parties' intentions. Seefor example Rathwell, supra n14.


enrichment. 113 In contrast to the other jurisdictions, where the constructivetrust is a substantive institution, it has assumed a purely remedial characterin Canada to prevent unjust enrichment at the plaintiffs expense.

This ground was first introduced in the Supreme Court of Canada inMurdoch v Murdoch, 114 a case involving a married couple who had a ranchin Alberta registered in the husband's name. As in England, the matrimonialproperty law at the time did not allow the courts to redistribute propertybetween the spouses. llS Thus Mrs Murdoch had to resort to the court'sequitable jurisdiction, but her attempt to obtain a beneficial interest inthe ranch failed. The five judges who heard her appeal agreed that therewas no evidence of a common intention to share the beneficial ownershipof the ranch, because there was no evidence of direct financial contributionsby Mrs Murdoch to its acquisition. Nor could she prove that there wasan agreement that she should have a beneficial interest. 116 In consequence,the majority held that the wife's labour on the ranch did not entitle herto a share of the property.I17

Laskin J disagreed with this very narrow view of the law. In his dissenting judgment he opined that Mrs Murdoch's "extraordinary" physicallabour,118 particularly during her husband's annual five month absence,had earned her a share in the property "which it would be inequitable todeny and which, if denied, would result in the unjust enrichment of herhusband".119 Accordingly, Laskin J would have declared Mr Murdoch aconstructive trustee of his wife's beneficial interest in the property.

Laskin J's approach was adopted by two more judges in Rathwell vRathwell 120 another case involving a married couple, but this time therewas evidence of a common intention, because both spouses had contributedto the purchase of the farm which they had operated as a team. The courtwas unanimous in finding a common intention to share the property butthe variety of opinions expressed by the judges as regards the type of con-

113 Pettkus, supra n13; Murray, supra n34; Niederberger v Memnook (1981) 130 DLR (3d)353; Kshywieski v Kumka [1986] 3 WWR 472; Raw/uk, supra n34; Sorochan, supran4. Articles on the Canadian approach are: A J Oakley, "Has the Constructive TrustBecome a General Equitable Remedy?" [1973] 17; D Waters, "Matrimonial PropertyDisputes - Resulting and Constructive Trusts - Restitution" (1975) 53 CBR 366; AJ McClean, "Constructive and Resulting Trusts - Unjust Enrichment in a CommonLaw Relationship - Pettkus v Becker" (1982) 16 UBC L Rev 155; M M Litman, "TheEmergence of Unjust Enrichment as a Cause of Action and the Remedy of Constructive Trust" (1988) 26 Alta L Rev 407. An interesting comparative view of the commonlaw and civil law approaches in Canada may be found in an article by P Girard, "Concubines and Cohabitees: A Comparative Look at 'Living Together' "(1983) 28 McGill LJ977.

114 Supra n34.115 Section 12(1) Married Women's Property Act, RSO 1950, C223. The court (at 372)

adopted the interpretation given to a similar provision in Pettit's case.116 At 376 per Martland J and at 388 per Laskin J.117 The majority accepted the findings of the trial judge that her labour was no more than

what any ranch wife would do (376). The inference was that her labour was not sufficiently substantial to give her a share of the ranch.118 At 378; Laskin J also disagreed with the findings that Mrs Murdoch had made nofinancial contribution to the acquisition of the property: 381.

119 At 389.120 Supra n14.


duct from which such a common intention could be inferred, indicates theuncertainty with which this approach is plagued.

Two of the nine judges held that the financial contributions alone gaverise to a presumed common intention which merited the imposition of aresulting trust. 121 Four other judges followed Lord Diplock's reasoning andheld that a common intention could be inferred from the financial contributions as well as the substantial amount of labour put in by the wife. 122

The remaining judges, Dickson J, Laskin CJC and Spence J concurring,were of the opinion that a common intention existed only if there was proofof an agreement between the spouses or if the non-owning spouse had madedirect or indirect financial contributions to the acquisition or improvementof the property.123 In either case the court would be justified in imposinga resulting trust.

In the absence of either an agreement or financial contributions, it wouldnot be appropriate to infer a common intention. Dickson J explained thatif Mrs Rathwell had contributed only labour, that would in itself not provethe existence of a common intention and would thus not give rise to aresulting trust. 124 Yet her contributions helped to build up the farm. Bydenying his wife an equitable share, Mr Rathwell was, in the judge's view,unjustly enriched at Mrs Rathwell's expense, thus justifying the imposition of a constructive trust. 125 According to Dickson J such a trust wouldbe appropriate "whenever justice and good conscience required it", as LordDenning expressed it in Hussey v Palmer, 126 or "whenever the trustee hasso conducted himself that it would be inequitable to allow him to denyto the cestui que trust a beneficial interest in the land acquired", LordDiplock's much quoted statement from Gissing. 127 Dickson J thus agreedwith their Lordships' underlying reasons for the imposition of a constructivetrust. In a case such as Rathwell the trust could have been used

... to achieve a result consonant with good conscience ... [because] the Court willnot allow any man unjustly to appropriate to himself the value earned by the laboursof another. 128

To succeed, Dickson J suggested that the plaintiff would have to provethat the defendant had been enriched, that the plaintiff had been correspondingly deprived and that there was no juristic reason for the enrichment. 129 In addition, there had to be a casual link between the detriment

121 Per Ritchie J, 297, Pigeon J concurring.122 Per Martland J, 293, Judson, Beetz and de Grandpre concurring.123 At 304. Dickson J appears to suggest that a resulting trust may be presumed even where

the financial contributions are indirect. Traditionally, though only direct contributionsto the purchase price would give rise to this legal presumption. See Lord Reid in Gissing,supra n3, 896; Laskin J in Murdoch supra n34, 387. Dickson J quotes 19 Halsbury'sLaws of England (3rd ed) 841 § 1372 in support of his statement, but it is doubtfulwhether the quotes substantiate his argument.

124 At 310.125 At 305.126 Supra 020, 1289-90, as quoted by Dickson J at 306.127 Supra 03, 905.128 At 306.129 Idem.


and the asset claimed. 130 The enrichment and corresponding deprivationcould be proved by showing that the plaintiff had in some way enabledthe defendant to acquire the asset. In Rathwell's case, Mr Rathwell wasable to acquire the farm not only as a result of Mrs Rathwell's initial financial contribution, which justified the imposition of a resulting trust in anyevent, but also because of his wife's labour: 131

She looked after the garden and canned the produce; she milked the cows and soldthe cream; she drove machinery, bailed hay, provided meals and transportation forhired help, and kept the books and records of the farming operation. Often whileMr Rathwell worked the fields, she fulfilled his obligations under a contract to drivethe school bus. She raised and educated four children.

These services were clearly referrable132 to the acquisition of the propertyby Mr Rathwell and he was correspondingly enriched. 133

Whether an enrichment is unjust is more difficult to determine andcrucial to the scope of the remedy. When does the obligation to restorearise? Clearly not if there was a juristic reason for the enrichment, suchas a contract, donation or tort. 134 Nor can the absence of a juristic reasonin itself be sufficient to label the enrichment unjust, despite Dickson 1'stentative suggestion in Rathwell's case. If it were, then any person who addsto the property of another without a juristic reason would have a claimon· the property. It has been well settled that that is not the law betweenstrangers135 nor, in the past, between husband and wife. 136

It was not until the case of Pettkus v Becker137 that the Supreme Courtof Canada and, in particular, Dickson 1 had the opportunity to expoundon this issue at greater length. Mr Pettkus and Miss Becker had a de factorelationship for nineteen years. When they first started living together MissBecker paid for all their living expenses, while Mr Pettkus deposited hisentire salary into a savings account in his name. After some five years theybought a farm which was paid for out of Mr Pettkus' savings and registeredin his name. They set up an apiary business in which they both activelyengaged. Mr Pettkus handled all the finances and deposited receipts intohis account, while Miss Becker ran the honey extracting process. Theirbusiness was successful and they expanded by buying two more farms. Soon

130 Pettkus, supra n13.131 At 299 in conjuction with 310.132 The causal connection between the contributions and the disputed asset is a question

of fact and will depend on the circumstances of each case.133 It is quite possible that Lord Diplock would have inferred a common intention from

these services even without considering the financial contribution because they indicatethat the spouses regarded the farm as a joint venture.

134 At 306. See Litman on this point, supra n113, 431. The learned authors Lord Goff andG Jones in their book The Law ofRestitution (1986) use this negative approach in theirtheory on restitution: 29-51. In their view a defendant should be held to restore the benefitreceived at the plaintiffs expense unless there is a reason why restitution should be denied.An examination of the cases led the authors to conclude that there were six broad limitson restitution of which the existence of a juristic reason is the first.

135 Ramsden v Dyson (1865) tR. 1 HL 129; see also Pettkus, supra n13, 274.136 Campion v Cotton (1810) 17 Ves 263; see also Lord Upjohn in Pettit, supra nIl.137 Supra n13. See McClean's article on this case, supra n113.


after the last farm was bought, the relationship deteriorated and MissBecker left.

The trial judge found that there was no common intention to share theproperty, because there was no express or implied agreement to share theeconomic gains. 138 Her contributions to the household expenses were heldto be "in the nature of risk capital invested in the hope of seducing ayounger defendant into marriage". 139 They were not made with the intentionof acquiring a beneficial interest in the property. In view of tha.t finding,the majority140 of the Supreme Court of Canada held that Miss Becker'sclaim based on a resulting trust could not succeed. 141

Turning his attention to the possibility of unjust enrichment, DicksonJ had no difficulty with the first two requirements. Mr Pettkus was clearlyenriched at the expense of Miss Becker. Miss Becker had supported MrPettkus fully for five years while he saved, and had then worked on thefarm for fourteen years, for which she received no remuneration. 142 It isthe third requirement, that the enrichment be unjust, that entitles the person who suffered the detriment to restitution. In this regard Dickson Jheld that:

... [W]here one person in a relationship tantamount to spousal prejudices herselfin the reasonable expectation of receiving an interest in property and the other person in the relationship freely accepts benefits conferred by the first person in circumstances where he knows or ought to have known of that reasonable expectation,it would be unjust to allow the recipient of the benefit to retain it. 143

In applying this test to the facts of Pettkus, it was clear that the partieshad had a long relationship living as husband and wife in which their livesand economic well-being had been fully integrated. 144 The fact that MissBecker had supported Mr Pettkus for five years and then worked alongsidehim in the apiary business for fourteen years led Dickson J to the compelling inference that it was reasonable that Miss Becker should believethat she had an interest in the property. 145 Mr Pettkus had freely acceptedthe benefits bestowed on him without giving anything in return146 and,although not specifically mentioned, the judge obviously concluded that,in view of their lengthy relationship and Miss Becker's continuous substantial contributions, Mr Pettkus must have realised that Miss Becker expected to share in the property. Accordingly, the court held that a constructive trust should be imposed "in the interests of justice".147

138 At 271 and 273. See McClean's comments on this finding supra n113, 163.139 At 271.140 The minority, Ritchie, Marland and Beetz JJ, adhered to the traditional approach and

took the view that the findings of fact clearly showed that the assets had been acquiredby the joint efforts of the parties and that this justified the inference that they intendedto share the property. Accordingly, the judges would have imposed a resulting trust.

141 At 273.142 At 274.143 Idem.144 At 276.145 At 274.146 Idem.147 At 275.


Since this case, the Canadian courts have used unjust enrichment inpreference to the common intention approach. 148 On the face of it, thesetwo approaches appear to be quite different. Yet if one analyses the essentialelements of the Dickson test it is evident that they are remarkably similarto the requirements of Lord Diplock's test in Gissing.

The essential elements which the Canadian courts look for are, first,an enrichment on the part of the defendant which results in a correspondingdetriment for the claimant. The caselaw has shown that the enrichmentcan take the form of direct149 or indirect contributions to the disputed propertY,150 which result in its acquisition, improvement or even its maintenance,as, for example, in Sorochan. 151 Domestic services too have been held tobe relevant. 152 While the Canadian courts have been more liberal in thisrespect than the English judges generally have been,153 the need to provean enrichment is no different from Lord Diplock's requirement of a detriment, since both require contributions referrable to the property.154Secondly, those contributions must have been made in the reasonable expectation that they would result in a beneficial interest in the property.As in Lord Diplock's test, this requirement comprises two elements: theactual expectation of the claimant, subjectively determined, and theobjective assessment of the reasonableness of that expectation. 155 In thisrespect there is no difference whatsoever between the tests advocated byLord Diplock and Dickson J.

The third requirement relates to the free acceptance of the enrichmentby the defendant. This is intended to establish the purpose of the claimant'scontributions. If they were intended as a gift or a loan, then clearly thedefendant has not been unjustly enriched at the claimant's expense. 156 If,on the other hand, there is no juristic reason, then the defendant, by notquestioning the purpose of the contributions, may have passively inducedthe claimant to act to his or her detriment. That Dickson J thought someform of inducement was necessary is clear from the fourth requirement,which is that the defendant knew or ought to have known of the claimant'sexpectation of a share. The combination of these two elements constitutesan inducement which makes the defendant's subsequent denial dishonest.So in this respect also the Diplock and the Dickson tests are the same.

148 In Murray, supra n34, for example, there was sufficient evidence of a common intention and yet a constructive trust was imposed on the grounds of unjust enrichment.See also Rawluk, at supra n34.

149 Kiss, supra n32.150 Murray, supra n34; Rawluk, supra n34.151 Supra n4. Mrs Sorochan's claim was based on the fact that her labour on her de facto

husband's farm over a period of 42 years had preserved it and saved Mr Sorochan aconsiderable expenditure on labour.

152 Rothwell, supra n14, 299 per Dickson J; Murray, supra n34, 440; Sorochan, supra n4.153 See supra nn56-62 and accompanying text; Lord Denning was, of course, a notable ex

ception: see text accompanying nnl04-107 above. See also Litman supra n1l3, 437, whoargues that such services can be classified in restitutionary terms as an incontrovertiblebenefit to the defendant.

154 See supra n54.155 See supra n70 and accompanying text.156 Rothwell, supra n14, 306.


Finally, Dickson J limits his test to relationships tantamount to spousal,or de facto relationships. In this he is unique, but that does not mean thatit is irrelevant in Lord Diplock's test. On the contrary, all the cases examinethe relationship between the parties in detail, because it may reveal whythe contributions were made and what the expectations were. If the partieshad a relationship of trust and confidence, it is likely that the contributionswere made in a belief that the recipient would protect the contributor'sinterests. Whether Dickson J intended to exclude relationships which werenot tantamount to spousal is doubtful. Cases such as Hussey v Palmersuggest that this type of relief is availabl~ in cases not involving de factospouses, but where the parties had a relationship which prevented themfrom acting at arms length.

In conclusion, it is suggested that there is no significant difference between the Dickson and Diplock tests. Both tests seek to determine whetherin some way the defendant led the plaintiff to believe that his or her contributions would result in an equitable interest in the disputed property.If the answer is in the affirmative, then Lord Diplock would conclude thata common intention could be inferred between the parties, whereas theCanadian judges would hold that the defendant was enriched at the plaintiffs expense. When the defendant subsequently refuses to act in accordance with the plaintiffs reasonable expectation, the enrichment becomesunjust or, to put it in Lord Diplock's terms, the defendant's conductbecomes inequitable, because there is an element of impropriety in thedefendant's conduct which justifies the imposition of a trust. Whether oneapplies the Diplock or the Dickson test is, therefore, immaterial. The resultwill be the same. Even though the trust is different in nature, being eithera substantive institution or, as in Canada, purely a remedy, the reason forits imposition is the same. However, if the narrow interpretation of LordDiplock's test is applied, the result could be different, because it wouldrequire evidence of an agreement or, at the very least, financial contributions to the property in dispute. So, while the two tests are similar intheory, the courts have interpreted them differently and in consequencethe results are likely to be different.

If the English courts adopt the broader interpretation of Lord Diplock'stest, there may still be a difference in emphasis between the English andthe Canadian approaches. The Canadian courts look for an enrichment,while Lord Diplock's tests considers the conduct of the parties with a viewto imputing an unexpressed intention to the parties. But even if this difference in emphasis becomes apparent in the future, it should not lead todifferent results, because in both cases the underlying reason for intervening is still the same, namely equitable fraud.


3 Australia

The Australian law applicable to property disputes between de factospouses was uncertain until the recent judgment of the High Court ofAustralia in Baumgartner v Baumgartner. 157 Much of the judicial activityin this field of law has taken place in New South Wales. For some timethe leading case in that State was Allen v Snyder, 158 in which the majorityof the Court of Appeal followed the traditional approach and held thata beneficial interest would be awarded only if the plaintiff could prove thatthere was an actual understanding or reciprocal intention between theparties on the basis of which the non-owning spouse had made contributions to the acquisition of the property in dispute. 159 The trust was thenimposed because it would be inequitable to allow the owner to renege onthe agreement which the non-owner had relied on to his or her detriment. 160

In coming to this conclusion Glass and Samuels JJA purported to followLord Diplock's judgment in Gissing. 161 In their view, caselaw which hadsuggested that the required intention might be imputed or that propertymight be redistributed in accordance with fairness, as they thought LordDenning had suggested, had been overruled by the House of Lords in Pettitand Gissing and should therefore not be followed. 162 A trust could not ariseindependent of the actual intentions of the parties. 163

Mahoney JA disagreed with this restricted interpretation of LordDiplock's judgment. He was of the opinion that Lord Diplock had giventhe word "intention" a particular meaning. It was not to be limited to thesubjective intention of the parties but should include

the intention which the law attributed to a person because of what his words and conduct reasonably conveyed to the other party, 'notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some differentintention which he did not communicate to the other party'.164

The common intention which is found by this process of reasoning isnot "inferred" in the sense of finding an implied agreement between theparties, but rather imputed to the parties in circumstances where no agreement actually existed, because the parties never considered the issue. 165

157 Supra n5. Articles dealing principally with Australian law are: L Wilmott, "Who getsWhat? De Facto Relationships and Implied Trusts" (1987) 3 QITLJ 61; D Hayton,"Remedial Constructive Trusts of Homes: An Overseas View" [1988] Conv 259; J Dodds,"The New Constructive Trust: An Analysis of its Nature and Scope" (1988) 16 MULR482; P Parkinson, "Doing Equity Between De Facto Spouses: From Calverley v Greento Baumgartner" (1988) 11 Adel LR 370.

158 Supra n14.159 At 692-3, 695.160 At 694.161 At 690-5.162 At 694, 701.163 Glass JA (Samuels JA concurring) at 693.164 At 703.165 At 703-4.


Instead of employing a legal fiction to decide how the equitable interestsare held, Mahoney lA suggested that it would be less circuitous to use theconstructive trust for the purpose for which it was intended,166 namely "tosatisfy the demands of justice and good conscience". 167 Unfortunately, hisHonour did not provide a simple test to assist a court in determining whenjustice and good conscience would require the imposition of a constructivetrust. However, the circumstances from which Lord Diplock would infera common intention would, according to Mahoney lA, equally justify theimposition of a constructive trust. 168 The nature and size of the parties'contributions,169 as well as their conduct in relation to the propertY,170 wouldbe relevant factors to consider when deciding whether the failure torecognise a spouse's proprietary interest would be so contrary to justiceand good conscience that a trust should be imposed. l71

Mahoney lA's suggestion accords with Lord Denning's approach. Thelatter also preferred to use a constructive trust in the interests of justiceand good conscience rather than a resulting trust based upon a fictitiouscommon intention. 172 Yet Mahoney lA did not deal with his Lordship'sdecision in any detail other than to rej ect counsel's argument that a trustmight be imposed in the interests of "fairness". 173 Clearly his Honour required something more than mere unfairness to justify equitable intervention, but something less than an agreement. 174 What he did require wasleft in abeyance.

Although Mahoney lA's dissenting opinion was not referred to bythe High Court of Aqstralia in Mushinski v Dodds175 - in fact the courtexpressly approved the majority judgment in Allen v Snyder176 - the traditional approach did not provide satisfactory answers. In this case MrsMushinski and Mr Dodds had purchased a piece of property and registeredthe transfer in both names as tenants in common in equal shares. Theyhad agreed that Mrs Mushinski would pay the full purchase price and thatMr Dodds would make and pay for extensive improvements. When theyseparated only some of the improvements had been completed throughno fault of either party. In consequence Mrs Mushinski claimed that MrDodds held his half share of the property in trust for Mrs Mushinski eitheron the basis of a resulting trust or a constructive trust. Mr Dodds successfully rebutted the presumption of a resulting trust because the courtfound that there was a common intention, in the sense of an agreement,that Mr Dodds should share the beneficial ownership equally from the timeof purchase in exchange for his assurances that he would make the agreed

166 At 704.167 At 702, where his Honour quotes Snell's Principles of Equity (27th ed) 185.168 At 704.169 At 707.170 At 705.171 At 706.172 Lord Denning's view of what Lord Diplock really meant is quoted above: Falconer, supra

n55; see also Cooke, supra n32, Eves, supra n22, and Hussey, supra n20.173 Allen, supra n14, 705.174 At 705-7.175 Supra n82.176 At 595.


improvements. 177 His beneficial ownership was not conditional upon thefulfilment of these assurances. 178 As that left Mr Dodds with a half sharein an asset to which he had contributed very little, the court held that someform of equitable accounting was necessary.179 However, the case is notvery helpful in providing a legal basis for such an accounting, because themajority could not agree on the ratio decidendi. Gibbs J was of the opinionthat Mrs Mushinski should receive half the purchase price from Mr Doddsbecause the parties were jointly and severally liable under the purchasecontract. 180 Mason and Deane JJ disagreed because it was the parties'common intention that Mrs Mushinski should pay the purchase price. 181

Instead, their Honours resorted to equitable principles applied specificallyin cases where partnerships or joint ventures had failed, without faultattributable to either party, leaving one party with an unintended andunforeseen benefit at the expense of the other party. The courts had insuch circumstances granted equitable relief because the assertion orretention or the benefits would have been unconscionable. 182 In the opinionof Mason and Deane JJ, this was a case which called for the applicationof such equitable principles. The unforeseen and premature collapse ofthe joint venture, not due to the fault of either party, had left Mr Doddsas half-owner of the property in circumstances where it would have beenunconscionable for him to retain the full benefit of his ownership.183 Itwas only within these narrow confines that some of the judges wereprepared to impose a constructive trust, because in their view this reasoning avoided indulgence in "random notions of what is fair and just as amatter of abstract morality". 184

The uncertainty left by Mushinski v Dodds was largely removed two yearslater when the High Court of Australia gave judgment in Baumgartnerv Baumgartner. 185 The facts were as follows: Mr and Mrs Baumgartnerlived in a de facto relationship when Mr Baumgartner, in consultation withhis de facto wife, decided to buy some land and build a house on it. Titleto the property and the mortgage were registered in his name, but paymentswere made from a common pool to which Mr Baumgartner contributed55 percent and his de facto wife 45 percent. Although Mrs Baumgartnerhad on several occasions asked to have the property put in both names,Mr Baumgartner refused to do so until they were married, which he constantly delayed doing. When the parties separated, Mrs Baumgartner instituted proceedings claiming that her former de facto husband held theproperty in trust for her. She failed at first instance because the judge heldthat their conflicting evidence did not support a finding of a common in-

177 At 589, 598, 604, 612, 624.178 At 589. Brennan and Dawson JJ dissented on this point. They held that the assurances

gave rise to a personal obligation to fulfil the condition, failure of which would haveentitled the plaintiff to compensation if she had so claimed.

179 At 596.180 At 596-9.181 At 617.182 At 619.183 At 620.184 At 621.185 Supra n5. See also the comments on this case by Hayton, supra n157.


tention nor did the circumstances give rise to a constructive trust on thebasis of unconscionable conduct because she had no financial stake in herde facto husband's property when she moved in and when she left she didso of her own free will, taking a substantial quantity of furniture with her. 186

The Court of Appeal of New South Wales reversed the decision by holdingthat there was sufficient evidence of an implied agreement to create a trust.Although the evidence regarding the oral statements made during the relationship was conflicting, their conduct proved that the parties intendedthe property to be their family home. 187 This reference was inescapable,in the court's view, because of the financial contribution made weekly bythe claimant and freely accepted by the defendant as well as the fact thatthey inspected and chose the property together with a view to making ittheir home for the indefinite future. 188 In so holding, the court followedthe majority decision in Allen v Snyder, as it was bound to do. On appeal,however, the High Court of Australia was unanimous in concluding thatthe finding of an implied agreement could not be sustained in view of theconflicting evidence of the parties. 189

But that did not dispose of the appeal, as far as the High Court ofAustralia was concerned. It went on to consider whether a constructivetrust could be imposed. This time the court referred to Judge Mahoney'sdissenting judgment in Allen v Snyder with approval and held that it waspossible to impose a constructive trust in the absence of an agreement between the parties if the requirements of justice and good consciencedemanded equitable intervention. 190 This did not mean that property couldbe redistributed to achieve a fair result. It was justified only if there werecircumstances which made the refusal to recognise another person'sbeneficial interest in the property unconscionable. 191 Unconscionability wasthe foundation for the imposition of a constructive trust. In so holding,the High Court opted for the reasoning suggested by Mason and Deanein Mushinski but gave the unforeseen failed joint venture a broader interpretation to include a failed romance.

Although the court did not provide a test for unconscionability or adefinition, the circumstances which were considered relevant do indicatethe criteria necessary for the imposition of a constructive trust. Apart fromthe claimant's very substantial financial contributions to the common poolfrom which all the family outgoings were paid, the court carefully examinedthe evidence relating to the parties' conduct in respect of the property. Itfound that they had pooled their earnings for the purposes of their jointrelationship, part of which was to secure their accommodation both forthe present and the future.

The land at Leumeah was acquired and the house on it was built in the context andfor the purpose of that relationship. Together they planned the building of the house.

186 At 79.187 Idem.188 At 79-80.189 At 81-2.190 Baumgartner, supra n5, 86.191 At 83.


Together they inspected it in the course of its construction. Together they moved outinto it and made it their home after it was built. 192

In these circumstances the court held that it was unrealistic to say thatthe contributions were intended as a gift, nor had it been suggested thatthe claimant's financial input was intended to cover board and lodging.In consequence, the court concluded that the contributions, financial andotherwise, were for their joint benefit and that the defendant's assertionthat the property was his sole property amounted to unconscionable conduct. 193 Accordingly an order was made declaring Mr Baumgartner a constructive trustee of 45 percent of the property in favour of Mrs Baumgartner. 194

In adopting this approach, the High Court took equitable interventionbeyond the traditional English approach by no longer requiring proof ofa subjective common intention to share the property. On the other hand,it is very much in keeping with the broader interpretation of Lord Diplock'stest. Like Lord Diplock, the High Court of Australia sought to establishwhether Mrs Baumgartner had been led to believe that her contributionswould entitle her to a beneficial sharing of the property. Her detrimentwas obvious and while Mr Baumgartner may not have actively inducedher to contribute, he did do so passively. He freely accepted her entire paypacket in circumstances where he ought to have known that she thoughtshe was contributing to a home in which she had a share. That was theonly possible explanation once the court had ruled out the possibility ofa gift or compensation for board and lodging. In declaring the defendant'ssubsequent denial unconscionable, the court was censuring dishonesty orfraud in the equitable sense. Thus the High Court was looking for the sameelement of impropriety in the defendant's conduct as Lord Diplock was,but while the Australians call it unconscionable, Lord Diplock used theterm inequitable.

The court was careful to point out though that it rejected not only LordDenning's approach, 195 but also the Canadian approach. The majority viewwas that unjust enrichment did not, as yet, form part of Australian law,196a view which was not shared by Toohey J. He suggested that the doctrineof unjust enrichment, as explained by Dickson J in Pettkus, was as capableof ready and certain application as the notion of unconscionable conductand, thus, equally useful as a general doctrine. 197 In his opinion, the resultwould have been the same on either approach. 198

Having analysed the Canadian caselaw it is evident that Toohey J wascorrect. Dickson J's test to determine whether an enrichment is unjust isno different from Lord Diplock's test199 and thus the same as the Australianapproach. The latter two approaches merely parade under a different ban-.

192 At 84.193 Idem.194 At 85.195 At 82 and Mushinski, supra n82, 615 per Deane J.196 Mushinski, ibid, 617 per Deane J.197 At 87.198 At 88.199 Supra n39.


ner, more acceptable to traditional Anglo-Australasian principles of equity.In contrast to Canada, the courts in those countries seem reluctant torecognise a general doctrine of unjust enrichment and do not accept it asa unifying legal concept,200 despite encouragement from the occasionaljudge and such learned authors as Goff and Jones201 and Peter Birks. 202

Obviously "the case law is [not] sufficiently mature for the courts torecognise a generalised right to restitution" on the basis of unjust enrichment despite what Goff and Jones say.203

Whatever the state of play regarding unjust enrichment, the reason forintervening is the same no matter which test applies. They all seem to prevent the defendant from acting dishonestly by refusing to share thebeneficial ownership of the property after having led the claimant to believethat his other efforts would result in a beneficial entitlement. The testsuse the same criteria. They look for detriment on the part of the claimant,passive or active inducement by the defendant and a reasonable belief orexpectation by the claimant that his or her contribution will result in abeneficial interest in the property. If these three criteria are met, LordDiplock would hold that a common intention could be inferred; Lord Denning would find the defendant's retention of the benefits against justiceand good conscience; the Canadian judges would declare the defendantunjustly enriched at the expense of the claimant and the Australians wouldconclude that the defendant's conduct was unconscionable. In other words,they are different formulae for the same idea - the idea that nobody shouldbe allowed to retain full beneficial ownership of property if, in the circumstances, it would be dishonest to do so.

If there is any difference at all, it is one of emphasis. While the Canadianjudges are more likely to stress the enrichment aspect, the Australians willprobably emphasise the unconscionable conduct of the defendant. Inessence, though, these are merely different ways of looking at the sameproblem in order to determine whether equitable intervention is justified.

4 New Zealand

There is considerably less clarity in New Zealand, compared to the othercountries, as to the precise basis for equitable intervention in propertydisputes between de facto spouses. 204 All of the various approaches havebeen used but none predominates. The traditional English approach hasbeen applied but only in cases where there was evidence of an express or

200 Baumgartner, supra n5, 87; Avondale Printers, supra n 82,155; Orakpo v Manson In-vestments Ltd [1978] AC 95, 104.

201 The Law of Restitution (3rd ed 1986).202 Introduction to the Law of Restitution (1985).203 Supra n201, 15.204 New Zealand articles on this topic are: D W McMorland, "Trusts and the Property Prob

lem of De Facto Couples" (1985) 11 NZULR 275; J K Maxton, "De Facto Spouses andthe Presumption of Advancement" (1986) 12 NZULR 79; A Alston, "De Facto SpousesProperty Dispute: Pasi v Kamana" [1987] NZLJ 75; J K Maxton, "Property Rights andDe Facto Relationships" (1987) 4 BCB 94 and 181; W R Atkin, "De Factos EngagingOur Attention" [1988] NZLJ 12; M Slatter "Constructive Trust - Need for Case-byCase Approach" (1988) 5 BCB 32.


implied agreement. 205 In those cases the courts found that the parties hadconsidered the possibility of joint ownership but had decided to omit theclaimant's name from the title for practical reasons. In Brown v Stokes,for example, land was registered in the defendant's name because she alonewas eligible for the finance required to purchase the land. Yet the parties'discussions regarding ownership and their subsequent conduct left the courtin no doubt that the parties had agreed to share the property, on the strengthof which the claimant had acted by building a house on the land. 206 Noone would have disagreed with the court's decision that a trust had to beimposed when after termination of the relationship Mrs Brown sought torenege on the agreement by denying Mr Stokes an equitable share of theproperty. In such a case the inference of a common intention is entirelyappropriate because there is evidence that the parties addressed their mindsto the issue of ownership and reached either an express or implied agreement. When the owner fails to comply with the agreement, a court of equitywill give effect to it not by ordering specific performance, because theabsence of a written memorandum precludes that, but by imposing a trustbecause the defendant's non-compliance is dishonest. 207 So even in thesecases the reason for intervention is to prevent equitable fraud.

Where there has been no agreement between the parties the courts havenevertheless, on at least three occasions, found a common intention to shareby inference from the parties' conduct,208 as was suggested by Lord Diplockin Gissing. In both cases the claimants had contributed money as well aslabour which had enabled the defendants to acquire and improve the property in dispute. 209 Moreover, the court found in each case that the claimanthad made the contributions in the reasonable belief that they would resultin a beneficial entitlement. 210 These cases were, therefore, a direct application of the principle and examples laid down by Lord Diplock in Gissing'scase. 211 In neither case, however, was there any evidence that the partieshad ever considered their respective rights in the property, so it would havebeen more accurate to say that the common intention was objectively imputedrather than subjectively inferred. Aside from that, one cannot disputethe outcome because both cases met the requirements for the impositionof a trust. The claimants suffered a detriment which enriched the defendants, there was evidence of inducement because the defendants encouragedand expected the claimants to contribute particularly their labour and,finally, the court found in both cases that the claimants, believed their con-

205 The traditional reasoning, derived from Pettit and Gissing is outlined above. Gough,supra n28, is an example of an express agreement as to property distribution betweenthe parties. In Brown, supra n32, Hayward, supra n16, and Buddie v Russell (1985)3 NZFLR 506 there was evidence of an implied agreement.

206 Supra n32, 213.207 Supra n24 and n26.208 Murray, supra n8; Basher, supra n32; Hopkins, supra n32.209 In Murray, the claimant had put her matrimonial property settlement from a previous

marriage into her de facto husband's business to which she also rendered services. InBasher, the claimant converted a farm shed into a residence and made some contribution to the family expenses. In Hopkins, the claimant contributed to family expenses,helped to renovate the home and bought most of the furniture.

210 Murray, supra n8, 139; Basher, supra n32, 8; Hopkins, supra n32, 15.211 Supra n3, 905ff.


tribution would result in a beneficial interest in the property. In those circumstances the defendants' denials would have justified the imposition ofa trust on any test because the retention of the benefits acquired at theclaimants' expense would have been inequitable in Lord Diplock's view,unjust in Canada or unconscionable in Australia.

Generally, though, the courts have declined to intervene on the basisof a common intention where it would have been artificial or unrealisticto hold that a common intention existed. 212 Remedies have neverthelessbeen granted on a variety of grounds. At first, the Court of Appealappeared to favour the doctrine of unjust enrichment. 213 In Hayward vGiordani, Cooke J said, obiter, that if Mr Hayward had not been able toshow that he and his late de facto wife had a common intention, in thesense of an implied agreement, to share the cottage in which they had livedhappily for some five years, he would have imposed a constructive trustto prevent unjust enrichment. 214 The judgment of Dickson J in Pettkuswas referred to in some detail, but the requirements and their precise meaning were not canvassed. 215

The case of Pasi v Kamana216 did little to clarify the law on this point,because there was no evidence of either a common intention or unjustenrichment. The court found that the claimant had contributed no morethan would have been required for her own support. 217 Accordingly, shewas not entitled to a beneficial share of the property. The absence of anenrichment precluded the need to consider all the requirements of this doctrine and, in particular, the meaning of 'unjust' which is so crucial to theimposition of a constructive trust. 218 The most that can be derived fromPasi v Kamana is that the Court of Appeal appeared to endorse CookeP's suggestion in Hayward v Giordani. 219

The evolution of the doctrine has to some extent been hindered by thedecisions of Mahon J in early v Farrelly220 and Avondale Printers andStationers Ltd v Haggie,221 where he held that unjust enrichment, as ageneral doctrine, did not form part of New Zealand law. 222 His reason forsaying this was prompted by concern that a general doctrine of unjustenrichment might result in the adjustment of transactions upon considerations of mere fairness. 223 This was what he accused Lord Denning of doing

212 See, for example, Hayward, supra n16; Mikoz, supra n35; Keogh, supra n19; Candyv Smith, unreported,High Court, Auckland, 7 September 1988, Master Towle M1138/88;Hopkins, supra n32.

213 Hayward, supra n16; Pasi, supra n6. See also Staniforth, supra n13, on how Cooke P'sopinion in Hayward was received.

214 At 148.215 At 147-8.216 Supra n6.217 At 418.218 Pettkus, supra n13.219 McMullin J seemed to apply that test, 422.220 [1975] 1 NZLR 357.221 Supra n82.222 Carly, supra n220, 363; Avondale Printers, supra n82, 155. Easton, "Constructive Trusts

and Unjust Enrichment in New Zealand" (1982) 12 VUWLR 159 argues that unjust enrichment is still available as a cause of action in New Zealand.

223 Avondale Printers, supra n82, 148-50.


in cases such as Hussey v Palmer and Cooke v Head. 224 As has alreadybeen shown, this is an erroneous interpretation of Lord Denning's judgments. 225 The cases, in this area of the law at least, suggest that his Lordship would agree with Mahon J's view that equity should intervene onlyif it would be dishonest for the defendant to retain the benefit obtainedat the expense of the plaintiff. 226 There had to be a lack of probity. Tointervene for any lesser reason would be to scrap the basis of the commonlaw and to leave each case to the discretion of the judge.227 The resultinguncertainty would be unacceptable, according to Mahon J. On the otherhand, his Honour did not object to assembling the settled forms ofequitable relief under one general title and calling it unjust enrichment.

but the point of departure occurs when justice in its truly legal sense is supplantedby unfairness or misfortune, and when the maxim aequum et bonum succumbs byfree translation to mean subjective judicial opinion as to where the merits lie. 228

In Mahon J's opinion the connecting link running through all the casesin which a constructive trust has been imposed has been a finding of fraudin the equitable sense. 229 This does not require evidence of an intentionto cheat, but rather proof of breach of an obligation which the defendantought in good conscience to have been aware of. 230

This was exactly the sense in which Dickson J used the term unjust inPettkus. An enrichment demanded equitable intervention only if thedefendant had freely accepted the benefits in circumstances where he orshe ought to have known that they were reasonably expected to result ina beneficial interest in the property.231 In other words, the acceptancetogether with the knowledge of the contributor's expectations, creates anobligation either to restore the benefits received or to give effect to thecontributor's expectation. Failure to do either is a breach of an obligationwhich the defendant ought in good conscience to have been aware of andjustifies the imposition of a constructive trust. Thus Dickson J was notadvocating the imposition of a constructive trust merely to achieve a fairresult, but rather to avoid impropriety or equitable fraud on the part ofthe defendant. If "unjust" is used in this sense, then Mahon J's fears areunfounded. Yet there is no doubt that his Honour's judgments havehindered the development of the doctrine of unjust enrichment.

Some High Court Judges have nevertheless applied the doctrine. GallenJ did so in Keogh v Gillies. 232 Ms Gillies clearly had no intention of shar-

224 At 148, 152-3.225 See supra nn33-36.226 Avondale Printers, supra n82, 150.227 At 151.228 At 153.229 At 159.230 Mahon J referred for this purpose to Viscount Haldane's judgment in Nocton v Lord

Ashburton [1974] AC 932, 954.231 Pettkus, supra n13, 274.232 Supra n19. Wallace J also did so in Hopkins, supra n32, 16, but only in passing. His

judgment was based on Cooke P's test in Pasi, discussed below.


ing the equitable ownership of the house which she had financed partlywith her matrimonial property settlement. 233 During the course of theirrelationship, however, Mr Keogh made contributions both in money andin labour which substantially increased the value of the property. Althoughthe judge did not deal with the requirements of unjust enrichment in anydetail, he found that Ms Gillies was clearly enriched at Mr Keogh's expense. That this enrichment was also unjust in the circumstances was evidentin the judge's view from the sharing regime adopted by the parties duringtheir relationship. They pooled their resources from which they met alloutgoings including those on the house and the improvements. They workedtogether to improve the house and after selling it, selected a new housetogether. Ms Gillies also drew up a will giving Mr Keogh the option ofbuying the house at 60 percent of the market value. According to GallenJ's view these factors indicated that Ms Gillies must have accepted thatMr Keogh was entitled to a share of the property234 and her subsequentretention of the enrichment acquired at Mr Keogh's expense was accordingly unjust. 235

The result would have been the same on Dickson J's test because MsGillies freely accepted Mr Keogh's contributions in circumstances whereshe knew of his expectation to share the beneficial ownership of the property. A constructive trust was justified "to achieve a result consonant withgood conscience",236 because there was an element of impropriety in MsGillies' conduct after the way the parties had shared the responsibilitieswhich the property entailed.

The broad interpretation of Lord Diplock's test in Gissing would haveproduced the same result. By sharing the responsibilities in respect of thehouse, Mr Keogh was induced, at least passively, if not actively, to act tohis detriment in the reasonable belief of acquiring a beneficial interest inthe property. After hearing the evidence, Gallen J was clearly of the viewthat Mr Keogh's contributions were not intended as a gift or as compensation for board and lodging. Thus the only probable explanation was thathe believed he would share the beneficial interest of the propertY,237 whichGallen J obviously thought was reasonable. The traditional interpretationof Lord Diplock's test, on the other hand, would have precluded equitablerelief, because there was no evidence to support a finding of a commonintention, in the sense of an agreement.

In other cases unjust enrichment has been used to deny a claim becauseof a lack of enrichment and corresponding detriment. 238 In those casesthe focus was on the size and nature of the claimants' contributions.Generally such financial contributions as were made were small and did

233 At 22-3.234 At 22.235 At 25.236 Rathwell, supra n14, 306 per Dickson J.237 Gissing, supra n3, 907.238 Pasi, supra n6; Sullivan, supra n13; Staniforth,supra n13; Sutcliffe v Reid, unreported,

High Court, Hamilton, 16 December 1988, CP 17/88, Doogue J.


not enable the defendant to acquire or improve the property. 239 Moreover,they were usually found to be offset by the free accommodation enjoyedby the claimant. 24o In cases where the claimants had provided domesticservices the court adhered to the traditional view that they were not sufficient of themselves to warrant equitable intervention. To have held otherwise would have been to equate de facto relationships with legal marriages,which the courts have repeatedly declined to do. 241

Few people would argue with the results in most of these cases becausethere appeared to be no proprietary imbalance between the parties. Therewas therefore no impropriety which demanded equitable intervention, except possibly in Sutcliffe v Reid. 242 In that case Ms Sutcliffe contributednot only her domestic services and her income for household expenses,but she worked on the farm riding the horses which Mr Reid had brokenin. 243 There is no doubt that her unpaid labour saved Mr Reid the expenseof employing someone else to do that job. While many of her other contributions may have been compensated by the pleasant living surroundingsprovided for her and her three children, her work on the farm surely meritedsome award. The evidence in respect of an unwitnessed will drawn up byMr Reid in Ms Sutcliffe's favour, though conflicting, nevertheless suggeststhat there must have been some acknowledgement by Mr Reid that MsSutcliffe was entitled to a share of the property.244 Counsel for Mr Reidsubmitted that there was no enrichment because there was no increase inthe value. 245 If that is so, then Ms Sutcliffe's labour must have preventeda deterioration or loss in value, which is as much an enrichment to thedefendant as an increase in value would have been. 246 Her correspondingdetriment consisted of the lack of wages while the injustice lay in thedefendant's free acceptance of her labour in the knowledge that shereasonably expected to share in the property. The knowledge of thatexpectation was evident from all the communications about her rights inthe property which took place between various solicitors when a sale of

239 In Pasi the claimant borrowed $1000 from the Post Office to refinance a loan whichwas used to repay living expenses. In Sullivan, Mrs Sullivan paid for some landscapingand supplemented the housekeeping allowance she received from Mr Evans from herown resources. In Staniforth, Ms Staniforth paid for the groceries while Mr Minnet paidfor all outgoings on the house. Such extra expenditure as Ms Staniforth incurred inrespect of the house was repaid byMr Minnet out of the proceeds of sale. In Sutcliffe,Ms Sutcliffe paid for the household expenses but she and her three children were themain consumers. She also made a small cash contribution to the cost of improvementsto the cottage in which she took up residence after the parties had ceased to cohabit.

240 Sullivan, supra n13, 454; Pasi, supra n6, 422; Sutcliffe, supra n238, 33.241 Staniforth, supra n13, 34-5; Pasi, ibid 422; Sutcliffe ibid 28.242 Supra n238.243 At 6.244 Doogue J devoted a substantial part of his judgment to all the communications which

related to this will. Doogue J preferred the defendant's evidence that he was in a suicidalframe of mind when he wrote out his will:12. But there is no mention of any evidencewhich might substantiate the defendant's argument on this point.

245 At 31.246 Prevention of deterioration has been recognised as a valuable contribution in Lanyon,

supra n34, 8 and in the Canadian case Sorochan, supra n4.


the property was contemplated. 247 Mr Reid's retention of the benefits ofher unpaid labour thus amounted to an unjust enrichment at her expense,which the court should have prevented. The fact that Doogue J came toa different conclusion can only be explained on the basis of evidence heardbut not included in his judgment.

On the whole the New Zealand judges have been rather reluctant to applythe doctrine of unjust enrichment and have preferred using establishedequitable principles. In Fitness v Berridge, 248 for example, Barker J seemedat first to approve of the doctrine, but then concluded that as the Canadiancourts used it to circumvent unconscionable conduct or a lack of probity,the existing principles of equity already covered this situation, thus notnecessitating the adoption of a specific doctrine of unjust enrichment. 249

In Mikoz v Raats250 and Oliver v Bradley251 the courts used equitablefraud in preference to unjust enrichment. The High Court judges in bothcases referred with approval to Carl Zeiss Stiftung v Herbert Smith & Co(No 2)252 in which Edmund Davies LJ held that unjust enrichment wasbut one example of what he called "want of probity" which was the basisof all those cases in which the court had held a constructive trust to exist. 253

Cooke P expressed a similar opinion in Pasi v Kamana when he suggested that there was no significant difference between the various groundsused in these constructive trust cases. They were probably different formulae for the same idea which could be tested by asking "whether areasonable person in the shoes of the claimant would have understood thathis or her efforts would naturally result in an interest in the property". 254This very general test has been applied in all subsequent cases,255 but itis too general to be of any practical use without further explanation. Ithas to be read in the light of Cooke P's suggestion that the various formulae adopted in the United Kingdom, Canada and Australia are all basedon the same idea. The idea which has been found to run through the casesdecided in those countries is impropriety or equitable fraud in the defendant's refusal to share the beneficial ownership of the property in dispute.That is the idea which Cooke P must have been referring to and whichwill be present if the owner seeks to deny the claimant an interest whena reasonable preson would have understood the claimant's efforts naturallyto result in an interest. By employing an objective test, his Honour indicatedthat he would adopt a broad view of Lord Diplock's test and not restrictintervention to the finding of an agreement, as has been done in England. 256

247 At 14-17.248 Supra n8.249 At 253.250 Supra n35.251 The High Court decision may be found in (1986) 2 FRNZ 127.252 [1969] 2 Ch 276 referred to with approval in Mikoz, supra n35, 9, and in Oliver, supra

n251, 131.253 At 300 as quoted in Oliver, supra n251, 131.254 Supra n6, 419.255 The Court of Appeal decision in Oliver, supra n32; Lanyon, supra n34; Stratulatos,

supra n32; Clarkson, supra n32; Edwards, supra n32; Sutcliffe, supra n238; Candy, supran212; Hopkins, supra n32.

256 The difference between these two interpretations was outlined earlier: supra nn30-33.


Cooke P did not provide any criteria other than that the focus of a court'senquiry had to be on the direct or indirect contributions made by the claimant to the property in dispute. 257 But, obviously, contributions alone arenot enough to sustain a claim. The circumstances in which the contributions are made require close examination to determine whether the Idefendant's retention of those contributions would be fraudulent in the equitablesense.

This is how the courts have applied Cooke P's test in subsequent cases. 258

In each case where a trust was imposed the claimant had made substantialcontributions in the form of labour or cash and, in addition, in some casesby performing domestic services. 259 All the contributions were referrableto the acquisition or improvement of the property in dispute. But apartfrom these contributions, the court examined the relationship of the partiesto establish why the contributions were made and what the parties' expectations were. In Edwards v Prewett260 , for example, the court found thatthe claimant had paid for groceries as well as fittings and furnishings forthe house and had helped to upgrade the house and the garden, becauseshe expected the parties to marry, after which the property would be jointlyowned by virtue of the Matrimonial Property Act. 261 In other words, herhard work was induced by the prospect of marriage when she knew thelaw would uphold her entitlement to a share in the property. McGechanJ held that no reasonable person applying Cooke P's test would allow MrPrewett to have a windfall gain from all that Ms Edwards had done, becausethat would be unjust. 262 It could as easily be held to be inequitable on LordDiplock's test because there was evidence of a detriment, an inducementand a reasonable expectation that she was helping to acquire and improvea property in which she would have a beneficial interest.

In the other cases too the courts looked for an inducement whichprompted the claimant to make contributions and sought to establishwhether the claimant acted in the expectation of sharing the beneficial

257 Pasi, supra n6, 419.258 Supra n255.259 In Oliver, supra n32, the claimant paid all the outgoings on the house over a period

of years. In Lanyon, supra n34, the claimant had helped to run the piggery, contributedto the household expenses, performed domestic services and landscaped the garden.In Stratulatos, supra n32, there was evidence of very substantial financial contributionson all the outgoings on the house as well as labour in improving the property. In Clarkson,supra n32, Mrs Clarkson indirectly contributed 20 percent of the finance required forthe acquisition of the farmlet into which she also put a great deal of work. In Candy,supra n212, the applicant rendered substantial services to her de facto husband's company in addition to contributions to the development and improvement of the housethey lived in. In Hopkins, supra n32, the claimant helped to renovate the house, boughtmost of the furniture, contributed to the household expenses in excess to the defendant's contributions and provided domestic services.

260 Supra n32.261 At 9-10.262 At 10.


ownership of the property. 263 Where these elements were present the courtsheld that Cooke P's test was met. 264 This test is thus no different from LordDiplock's test on its broad interpretation, or the tests adopted in Canadaand Australia. Each one seeks to establish whether the claimant was induced in some way by the defendant to act to his or her detriment in thereasonable belief that by doing so he or she would receive an equitableshare of the property. If the answer is in the affirmative then the defendant'sretention to the benefits would be inequitable according to Lord Diplock,unjust in Canada or unconscionable in Australia. In New Zealand a mixtureof these terms had been used, but at heart they are all different formulaefor the same idea, which is to prevent equitable fraud.

IV OVERVIEW

It has been found that the various formulae adopted in the four countries under consideration are all premised upon the same equitable principle, namely to prevent equitable fraud. While there may be a differencein emphasis, it is nevertheless clear that each test seeks to determine whetherthe defendant has led the claimant reasonably to believe that his or hercontributions would result in a share of the beneficial ownership of theproperty in dispute. In applying these various tests, the courts' attentionhas been directed at three factors which, in view of their universalapplication, may properly be called requirements.

I Contributions

The claimant must have made direct or indirect contributions to the property in dispute. This satisfies the requirements of detriment and enrichment.

263 In Oliver, supra n251, 128, there was also an expectation of marriage. In Stratulatos,the claimant and her late husband had relied on statements made by the claimant'smother-in-law that the house would be theirs on marriage: supra n32, 15-18. In Clarksonthe married couple had worked as partners to build up the farm for their joint benefit:supra n32, 8. In Lanyon there was also evidence of a statement made by the defendantto the claimant to the effect that the property was jointly owned: supra n34, 8. In Candythe applicant sought an order that caveats, which she had lodged, should not lapse.The substantive issues were thus not considered in detail but the applicant did provethat there was an arguable case that a constructive trust should be imposed in her favour.She alleged that she had made the contributions in reliance upon a promise of marriage:supra n212, 3. In Hopkins, Wallace J considered the relationship more generally andheld that it was a stable de facto relationship in which the parties regarded the propertyas their home. That was sufficient to create a background against which de facto partnerswould normally expect that each would have an interest in the property: supra n32,14. His Honour appeared to suggest that the relationship per se might give rise to arebuttable presumption that the property should be shared.

264 Oliver, supra n32, 451; Lanyon, supra n34, 15; Stratulatos, supra n32, 23; Clarkson,supra n32, 14; Candy, supra n212, 10 to the extent necessary for such proceedings. InSutcliffe, the absence of these factors meant that the test was not met: supra n238, 33.In Hopkins supra n32, the claimant was awarded a share of the property in recognitionfor her contributions made during the earlier part of the relationship. Contributionsmade after she had been told that the defendant was leaving the house to his sons couldnot be held to have been made in the reasonable expectation of sharing the beneficialinterest.


2 Inducement

The defendant must have induced the claimant's contributions, eitherby actively encouraging them265 or by passively accepting them in the actualor constructive knowledge that they were intended to result in a beneficialentitlement. 266 What is relevant for this purpose is not the defendant's a9tualintentions, but rather the inferences which a reasonable person might drawfrom the defendant's manifested conduct. 267

3 Reasonable Belief or Expectation

The claimant must have reasonably believed or expected that the contribution would result in a beneficial sharing of the property. This thirdrequirement comprises two elements: the subjective determination of theclaimant's actual expectation and the objective assessment of thereasonableness of that expectation. The size of the claimant's contributionsand the nature of the defendant's inducement are particularly importantfactors in this regard. The larger the contribution, the more likely the claimant's expectation will be deemed reasonable. Conversely, the smaller thecontribution, the more the court will look to the defendant's conduct todetermine whether a beneficial interest ought to be awarded. The inducement does not require an intention to cheat, although there are cases wherethat occured. 268 The defendant may have merely encouraged, expected oreven freely accepted the claimant's contributions without questioning orconsidering their purpose. Yet this may be sufficient for the court to conclude that the defendant ought to have realised that those contributionswere not intended as gifts but were expected to result in a beneficial entitlement. 269 These forms of inducement thus create obligations for thedefendant either to restore the contributions or to recognise the contributor's equitable interest in the property. By refusing to do either, thedefendant is acting in breach of an obligation which he or she ought ingood conscience to have been aware of,270 thus justifying the impositionof a constructive trust.

The relationship of the parties may also shed light upon the purposeof the contributions. While in most countries it cannot of itself create pro-

265 As, for example, in Grant, supra n35; Cooke, supra n32; Eves, supra n22; Murdoch,supra n34; Murray, supra n34; Mushinski, supra n82; Baumgartner, supra n5; Brow11;"supra n32; Basher, supra n32; Edwards, supra n32; Stratulatos, supra n32; Clarkson,supra n32 and Lanyon, supra n34.

266 Falconer, supra n55; Hall, supra n20; Pettkus, supra n13; Sorochan, supra n4; Murray,supra n8; Keogh, supra n19; Pasi, supra n6 and I would suggest Sutcliffe, supra n238are examples of free acceptance of contributions.

267 Per Lord Diplock in Gissing, supra n3, 906; Grant, supra n35; Eves, supra n22.268 Per Mahon J in Avondale Printers, supra n 82. Examples of cases where the defendant

expected the claimant to make contributions without ever intending to recognise anequitable interest in the property are Grant, supra n35 and Eves, supra n22.

269 Per Lord Diplock in Gissing, supra n3, 907; Grant, supra n35, 433; Rathwell, supran14, 306; Baumgartner, supra n5, 84; Stratulatos, supra n32, 23.

270 This was the basis upon which a constructive trust could be imposed according to MahonJ in Avondale Printers, supra n82, 159.


perty interests,271 it may explain what prompted the claimant's detrimentalconduct. 272 Sometimes the parties rely on the relationship itself rather thantheir proprietary rights to secure to them an interest in property.273 AsMahoney JA pointed out: 274

Assuming that what is said and done is intended to have legal results, things whichare intended to indicate an attitude to proprietary rights as between strangers, whatwould be expected between strangers, if proprietary rights were intended to be created,will often be different from what takes place between, for example, husband and wife.There is, or used to be, a feeling amongst some in such a situation that to talk ofproperty matters at all indicates a distrust, or at least an attitude- inconsistent withthat which is appropriate amongst persons newly living together.

If it was a relationship of trust and confidence,275 then oral statementsregarding the ownership of the propertY,276 or practical arrangements suchas the pooling of resources277 or sharing of family expenses278 or even teamwork in a joint venture279 may lead the court to conclude that the claimant was induced to act to his or her detriment in the reasonable expectation of sharing the beneficial ownership of the property. A trust shouldthen be imposed because the retention of the benefits by the defendantwould be inequitable on Lord Diplock's test, contrary to justice and goodconscience according to Lord Denning, unjust in Canada, unconscionablein Australia and contrary to a reasonable person's understanding in NewZealand. In short, if the three requirements have been met, the defendant:is guilty of equitable fraud by refusing to share the beneficial ownershipof the property.

In England, however, a trust might be imposed only if the courts weresatisfied that the inducement and the claimant's expectation led to thereasonable inference that the parties had a common intention, in the senseof an agreement, to share the property.280 While the courts have been lenient

271 The cases in which this has been held are listed in footnote 13 above. Legislation hasbeen passed to resolve property disputes between de facto spouses in New South Walesand Victoria and there is a proposal that New Zealand should follow suit.

272 See n12 supra. Allen, supra n14, 705; Lanyon, supra n34, 15; Hopkins, supra n32, 13.273 Martin v Martin (1959) 110 CLR 297, 306.274 Allen, supra n14, 705.275 Such relationships are not restricted to de facto or legally married spouses. See, for

example, Hussey, supra n 20; Glouftsis v Glouftsis (1987) 44 SASR 298; Stratulatos,supra n32. All these cases involved family relationships. See also the views of L Anderson, "Property Rights of Same Sex Couples: Toward a New Definition of Family"(1987-88) 22 J Fam Law 357,372, where the comment is made that the courts will haveto "distrench themselves from previous inflexible attitudes about what constitutes afamily".

276 Murray, supra n34; Maharaj, supra n35; Grant, supra n35; Eves, supra n22; Hayward,supra n16; Mikoz, supra n35; Stratulatos, supra n32; Edwards, supra n32; Brown, supran32.

277 Rathwell, supra n14; Baumgartner, supra n5; Hayward, supra n16; Cooke, supra n32.278 Per Lora Diplock in Gissing, supra n3; Grant, supra n35; Falconer, supra n55; Hall,

supra n20; Maharaj, supra n35; Mikoz, supra n35; Edwards, supra n32.279 Pettkus, supra n13; Murray, supra n34; Sorochan, supra n4; Mushinski, supra n82; Pasi,

supra n6; Lanyon, supra n34; Clarkson, supra n32; Hopkins, supra n32 and I wouldsuggest Sutcliffe, supra n238.

280 Grant, supra n35; Burns, supranll; Re Densham, supra n72.


in drawing an inference of a common intention,281 they cannot do so ifthere is no evidence to support such a finding. In Keogh v Gillies,282 forexample, it would have been artificial to hold that the parties had agreedto share the property when the evidence clearly suggested that they had not.Yet the claimant contributed a great deal of labour to improve the property in the belief that by doing so he would share in the property. In anEnglish court, the absence of a common intention to share the propertywould have prevented Mr Keogh's claim from succeeding.

The conservatism of the English judges is also apparent in their assessment of the claimant's contributions. Compared to the courts in the otherjurisdictions, they appear to underestimate the real value of certain contributions. In Pettit,283 for example, the money and work spent on redecorating the matrimonial home and landscaping the garden were condemned as ephemeral and insignificant, not justifying the imposition ofa trust. In Edwards v Prewett284 on the other hand, the New Zealand courtawarded the claimant a share of the property on very similar facts. In thatcase the judge held that work on the house and in the garden, while small,was nevertheless a significant direct contribution to the property indispute. 285 It is evident from Eves286 that Lord Denning was of a similarview and that he did not share the conservative approach of his fellowjudges.

The same dichotomy between the English and other approaches is presentin the value attached to domestic services rendered by claimants. Whilesuch services, without more, have not as yet merited the imposition of atrust they are generally recognised in New Zealand,287 and Canada288 ashaving a value referrable to the property. McGechan J in Edwards v Prewett,for example, said that

... her housekeeping, by which I mean the usual cooking, washing, cleaning and caring

... freed him to earn money and ... to have time to carry out the upgrading workwhich he did. This contribution was small but not insignificant. It is very easy, particularly for men, to underestimate the value of such matters until from time to tImethey have to look after themselves. 289

There is also a tentative suggestion in Baumgartner that the High Courtof Australia may be moving in the same direction. 290 On the other hand,cases such as Burns v Burns, discussed above,291 make it clear that theEnglish judges are not prepared to accord such services any value for pur-

281 Cooke, supra n32, 520; Rothwell, supra n14, 297; Allen, supra n14, 704. See furtherthe criticism of Gray, supra n39.

282 Supra n19.283 Supra nIl.284 Supra n32.285 At 9. See also Hopkins, supra n32, where similar contributions were considered

significant.286 Supra n22 and see text accompanying nn104-107 (supra).287 Lanyon, supra n34, 13; Edwards, supra n32; Hopkins, supra n32. A notable exception

in this respect is Doogue J's judgment in Sutcliffe, supra n238.288 Rothwell, supra n14; Murray, supra n34; Sorochan, supra n4.289 Supra n32, 9.290 Supra n5, 85.291 Supra nll; see supra n60 and accompanying text.


poses of a claim to a beneficial interest. That case was no exception either,because in Grant v Edwards,292 where the claim was in part based upondomestic services, the Court of Appeal appeared to attach significanceonly to the financial contributions made by the claimant. If Edwards vPrewett had come before an English court, it is unlikely that the claimantwould have succeeded, since her contributions were largely"ephemeral" anddomestic in nature. In England, domestic services are obviously still regarded as contributions to the partnership and not to the property andclaimants in that country are therefore in a less favourable position.

V CONCLUSION

The purpose of this article was to determine the accuracy of Cooke P'sstatement that there was no significant difference between the variousgrounds adopted in the four jurisdictions in property disputes between defacto spouses. In comparing the relevant caselaw, it may be concluded thatwhile there is no difference in theory between the various approaches, thereis a difference in practice. The English courts are slower to intervene, havingadopted an unnecessarily narrow interpretation of Lord Diplock's test inGissing. The continued search for a phantom intention precludes thebroader approach based on equitable fraud, which is equally reconcilablewith Lord Diplock's test and, I would suggest, a more accurate reflectionof his Lordship's views. Lord Denning appears to be the only English judgewho has not followed the traditional approach and in consequence, hasreceived much unwarranted criticism.

Courts in the other jurisdictions have also applied Lord Diplock's test,but instead of using it to find a common intention, they have intervenedto prevent equitable fraud by the defendant. The caselaw suggests that thecourts consider three criteria: (1) the contributions made by the claimant;(2) the inducement by the defendant and (3) the claimant's reasonable expectation of a beneficial interest in the property. If those criteria are met,the Canadian judges would hold that the defendant was unjustifiablyenriched; the Australian judges would find the defendant guilty of unconscionable conduct; and the New Zealand judges would conclude that areasonable person would have understood the claimant's efforts naturallyto result in a beneficial share of the property. Lord Diplock would declarethe defendant's refusal to share the property inequitable. His test is notrestricted to a finding of common intention, nor should it be. Rather itwas directed at circumventing the defendant's inequitable conduct.

The problems facing de facto spouses in England have been further compounded by the conservative view of the value of some contributions.Domestic services and improvements to a house by means of redecorationand landscaping have not been accorded the value they deserve. They havegenerally been condemned as insignificant. The courts in the other jurisdictions, on the other hand, have been more lenient in this regard and haverecognised that such contributions are of value to the defendant and arereferrable to the property in dispute.

292 Supra n35.

140 Otago Law Review (1989) Vol 7 No 1.

Despite these differences, it may be concluded that Cooke P was rightwhen he opined that there were no significant differences between any ofthe approaches. In theory at least they are different formulae for the sameidea. In practice though the very narrow view of Lord Diplock's test combined with the conservative assessment of contributions has meant thata claimant is less likely to succeed in England than in any of the otherjurisdictions. In consequence the conclusion must be that while "we areall moving in the same direction", England is in the slow lane.

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