Calverley v Green

Calverley v Green - [1984] HCA 81 - HCA 1985 case summary — Zoe

For about ten years from 1968 the parties to this appeal lived in what is nowadays called a "de facto relationship" - i.e., although not married to each other, they lived together as though they were husband and wife. They first lived at Mount Pritchard, in a house owned by the appellant, Arthur George Calverley. He paid the respondent, Dianne Lea Green, $10 per week as a contribution to the cost of the provisions that she purchased for the household; although at first that sum represented about half that cost, as time went on it came to represent a much smaller proportion. The respondent had continued in her employment and she provided from her earnings the rest of the money necessary to pay for the household provisions. In 1972, in consequence of a disagreement, the respondent left the appellant, but after a few weeks there was a reconciliation and she returned to live with him again. Both parties then thought it wise to move to more congenial surroundings, and they jointly decided that they should move to Baulkham Hills if a house could be found there at a price that the appellant could afford. A house was found in about August 1973, but the appellant at first experienced difficulty in obtaining finance. Later he told the respondent that a loan had been approved, but that the finance company required the purchase to be in the joint names of the parties, and at his suggestion she joined with him in signing an application for finance in which she was represented to be his wife. Finance was approved and the house at Baulkham Hills was purchased for $27,250. The appellant paid the deposit, which is stated in the evidence to have been $9,000, from part of the proceeds of the sale of the house at Mount Pritchard. An amount of $18,000 was borrowed on a mortgage given by both parties and under which they were jointly and severally liable to pay the sum borrowed with interest. It does not appear from the evidence how the remaining amount of the purchase price, $250, was paid, but it appears to have been paid by the appellant. The land was transferred to the parties as joint tenants. They lived together in the house, under the same arrangements as before, until April 1978, when the respondent left.

[7]

As I have indicated, the general rule that in the situations mentioned it is presumed that a resulting trust arises in favour of the purchaser, or in favour of two purchasers in the proportions in which they contributed the purchase money, is subject to the exception created by the presumption of advancement. "It is called a presumption of advancement but it is rather the absence of any reason for assuming that a trust arose or in other words that the equitable right is not at home with the legal title": Martin v. Martin [4] ; in other words, it is "no more than a circumstance of evidence which may rebut the presumption of resulting trust": Pettitt v. Pettitt [5] . The presumption arises when a husband makes a purchase in the name of his wife, or a father in the name of his child or other person to whom he stands in loco parentis. The authorities have denied that it arises where a wife makes a purchase in the name of her husband (Mercier v. Mercier [6] ), or a mother in the name of her child (Bennet v. Bennet [7] ; Scott v. Pauly [8] ; Pickens v. Metcalf and Marr [9] ) or where the purchase is taken in the name of a sister (Noack v. Noack [10] ), nephew (Russell v. Scott [11] ), son-in-law (Knight v. Biss [12] ) or grandchild (Soar v. Foster [13] ), unless the purchaser is in loco parentis to the nominee. The principle on which these decisions have been rested is not altogether satisfactory. Lord Eldon said in Murless v. Franklin [14] that the presumption of advancement arises "where the purchaser is under a species of natural obligation to provide for the nominee". In Bennet v. Bennet [15] Jessel M.R. also said that the presumption arises from the existence of an obligation on the one person to make a provision for the other; he went on to say that "the presumption of gift arises from the moral obligation to give" [16] ; later he referred to it as a "moral legal obligation [an] obligation according to the rules of equity" [17] . Isaacs J. in Scott v. Pauly [18] , seems to have thought that in a case where the purchaser is the father the presumption of advancement "is an inference which the Courts of equity in practice drew from the mere fact of the purchaser being the father, and the head of the family, under the primary moral obligation to provide for the children of the marriage, and in that respect differing from the mother". However, Soar v. Foster is authority for the proposition that the existence of a moral obligation to support the person in whose name the purchase is taken is not enough to give rise to a presumption of advancement. In that case the purchaser had gone through a form of marriage with his deceased wife's sister after the passing of Lord Lyndhurst's Act which rendered null and void all marriages within the prohibited degrees of consanguinity or affinity; thereafter they cohabited together and treated each other as man and wife. It was submitted that if the purchaser had a moral obligation to provie for the other party, that could raise a presumption of advancement [19] . Page Wood V.-C. rejected the submission. He said [20] :

[11]

While the presumption of advancement doubtless in its inception was concerned with relationships affording "good" consideration, it has in the course of its growth obtained a foundation or justification in the greater prima facie probability of a beneficial interest being intended in the situations to which the presumption has been applied. He referred to Soar v. Foster [26] , but noted that in Murdock v. Aherne [27] , Molesworth J. seems to have regarded the relation between a man and a woman whom the man had bigamously married and who knew it as within the presumption of advancement. Dixon C.J. went on to say [28] : No doubt in Moate v. Moate Jenkins J. applied the presumption of advancement where it had not hitherto been applied. But the application was not inconsistent with any decided case and it accords with reason. To say that a transfer of property to an intended wife made in contemplation of the marriage raised a presumption of a resulting trust but a similar transfer made immediately after the celebration of the marriage raised a presumption of advancement involves almost a paradoxical distinction that does not accord with reason and can find a justification only on the ground that the doctrine depends in categories closed for historical reasons. That is not characteristic of doctrines of equity. Neither of the other members of the Court in that case found it necessary to decide whether there was a presumption of advancement when the property was transferred to the intended wife. However, the principle as stated by Dixon C.J. is intelligible and is likely to lead to a just result and should in my opinion be accepted. The presumption should be held to be raised when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred, whether or not the purchaser owed the other a legal or moral duty of support. It is true that this may require a reconsideration of the correctness of the actual results reached in some of the earlier cases, but to regard that as a barrier to acceptance of the principle would be to treat the established categories as frozen in time. As Dixon C.J. said, that would not be characteristic of the doctrines of equity. 1. (1956) 98 C.L.R. 228. 2. [1922] V.L.R. 67, at p. 78. 3. [1948] 2 All E.R. 486. 4. (1956) 98 C.L.R., at p. 237. 5. (1858) 4 K. & J. 152 [70 E.R. 64]. 6. (1878) 4 V.L.R. (E.) 244, at p. 249. 7. (1956) 98 C.L.R., at p. 238.

[12]

It then becomes necessary to apply the principle enunciated by Dixon C.J. in Wirth v. Wirth [29] to the case in which a man purchases property in the name of a woman with whom he is living in a de facto relationship. I do not regard Napier v. Public Trustee (W.A.) [30] as concluding the question in favour of the view that a presumption of advancement can never arise in such a case. In that case Aickin J. [31] , with whom Mason, Murphy and Wilson JJ. agreed, said that it is "well established that no presumption of advancement arises in favour of a de facto wife". However, the question was not argued in that case and it was not necessary to decide it for the purposes of the decision; I left the question open. The question is whether the relationship which exists between two persons living in a de facto relationship makes it more probable than not that a gift was intended when property was purchased by one in the name of the other. The answer that will be given to that question will not necessarily be the same as that which would be given if the question were asked concerning a man and his mistress who were not living in such a relationship. The relationship in question is one which has proved itself to have an apparent permanence, and in which the parties live together, and represent themselves to others, as man and wife. It is true that in some cases a person may maintain a de facto relationship for the very purpose of preventing the other party to the relationship from obtaining any right or claim to property, but the question now asked arises only when the party has taken the deliberate step of purchasing property in the name of the other. Once one rejects the test applied in Soar v. Foster as too narrow, and rejects any notion of moral disapproval, such as is suggested in Rider v. Kidder [32] , as inappropriate to the resolution of disputes as to property in the twentieth century, it seems natural to conclude that a man who puts property in the name of a woman with whom he is living in a de facto relationship does so because he intends her to have a beneficial interest, and that a presumption of advancement is raised. Cases such as Soar v. Foster , where the relationship was based on an invalid marriage ceremony, or Murdock v. Aherne, where the relationship was founded on a bigamous marriage, would be a fortiori. For these reasons I consider that there was a presumption of advancement in the present case.

[15]

The evidence does show that the appellant had no intention to confer a beneficial interest on the respondent - it rebuts the presumption of advancement. When a purchase was contemplated, the question was whether the appellant could afford it. The appellant made no suggestion that the property be put in joint names until he experienced difficulty in obtaining finance. When he made the suggestion, he said that the finance company required the purchase to be in the joint names. It can be concluded, on the balance of probabilities, that the appellant did not intend to confer any beneficial interest on the respondent. The presumption of advancement thus being rebutted, it is presumed that the respondent held her one-half interest in the property on a resulting trust in favour of the appellant, the extent of the trust being measured by the proportion of the purchase money which the appellant provided. Since the appellant already has a one-half legal interest in the property, the trust is in respect of so much of his proportionate beneficial interest as exceeds one-half - to that extent the respondent holds her legal one-half in trust for the appellant, so that the appellant has in all a beneficial interest in the proportion which his contribution bears to the total purchase price. The question, however, then arises whether the respondent holds any greater interest in trust for the appellant - that depends on whether when she took the legal title she intended to create a further trust in his favour. The evidence does not show that the respondent intended to confer any beneficial interest on the appellant. She may have regarded her signature to the mortgage documents as an empty formality, but if a bystander had asked her whether she intended that the appellant should own the land beneficially, even if he paid nothing under the mortgage, and she were obliged to pay the whole mortgage debt with interest, it is most unlikely that she would have replied in the affirmative. So far as the evidence shows, she formed no intention at all as to the beneficial ownership of the property, and it has not been established that she intended to hold any part of her interest in trust for the appellant.

[32]

The first question is whether the plaintiff was a contributor to the purchase price of the property, as the Court of Appeal found, or whether she was not, as Rath J. found. The defendant's payment of the instalments due under the memorandum of mortgage, in accordance with the arrangement made between the parties, may be thought to be, or to be the equivalent of, the provision pro tanto of the purchase price of the property. After all, the only moneys which were actually paid out of what the parties had owned before settlement of the contract for the purchase of the Baulkham Hills property or out of what they had earned thereafter had come out of the defendant's pocket. The property was purchased on the basis that the purchasers should pay it off over twenty years, a basis familiar to many home buyers. It is understandable but erroneous to regard the payment of mortgage instalments as payment of the purchase price of a home. The purchase price is what is paid in order to acquire the property; the mortgage instalments are paid to the lender from whom the money to pay some or all of the purchase price is borrowed. In this case, the price was $27,250, of which $18,000 was borrowed from the mortgagee by the plaintiff and defendant jointly. The balance was paid by the defendant out of his own funds, being part of the proceeds of the sale of the Mount Pritchard property. Thus the plaintiff and defendant both contributed to the purchase price of the Baulkham Hills property. They mortgaged that property to secure the performance of their joint and several obligation to repay principal and to pay interest. The payment of instalments under the mortgage was not a payment of the purchase price but a payment towards securing the release of the charge which the parties created over the property purchased. We would agree with the view expressed by the English Court of Appeal in Crisp v. Mullings [48] , a case in which the material facts are not distinguishable from the present:

[45]

The Court of Appeal correctly took the time of the acquisition of the Baulkham Hills property as the material time for determining the beneficial interests of the parties. The evidentiary material from which the court might have drawn an inference as to the intention of the parties included their acts and declarations before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction. Evidence of those acts and declarations were admissible either for or against the party who did the act or made the declaration, but any subsequent declarations would have been admissible only as admissions against interest: Shephard v. Cartwright [66] ; Charles Marshall Pty. Ltd. v. Grimsley [67] . In some cases it is possible to treat the concurrence of one party with the other's payment of the mortgage instalments as an admission of the former's exclusive interest, but the circumstance attending the payment of mortgage instalments is no more than one of the relevant facts. Another relevant fact is the relationship between the parties at the time. In the present case there was evidence of both of those facts. The Court of Appeal, having regard to those facts, inter alia, found that there was no common intention between the plaintiff and defendant that the plaintiff was to hold her interest in trust for the defendant. Nor did they find any other common intention. Their Honours held that the legal interests of the parties must prevail. The error in this approach is not in the refusal to find a common intention but in the failure first to apply the presumption that comes into play when the legal owners who are unequal contributors to the purchase price are not shown to have a common intention inconsistent with a tenancy in common in shares proportionate to their contributions. Applying the relevant presumption, the Court of Appeal should have held the parties to be equitable tenants in common in the Baulkham Hills property in proportion to the contribution each made to the purchase price. That proportion has not been precisely ascertained. The matter will have to be remitted to the Supreme Court to determine that proportion if the parties are unable to agree upon it.

[47]

As there was no agreement made after the purchase to alter the equitable interests acquired when the property was purchased, the payments made under the mortgage work no alteration in those interests. This case cannot be likened to Bloch v. Bloch [68] where the relevant property which the parties intended to acquire was seen to be not the title to land subject to mortgage but the land freed of the mortgage [69] . In such a case the price paid to free the land of mortgage as well as the price paid for the title to the land itself must be taken into account in determining the parties' beneficial interests. Mortgage payments may quantify the parties' interests under a resulting trust of a property acquired as a mortgage-free investment, but they would rarely quantify the interests of parties under a resulting trust of a house property acquired as a home to live in. If it is right to regard the payment of the mortgage instalments as having been made by the defendant out of his own funds and on his own account - that is, if he made those payments not intending the plaintiff ultimately to have the benefit of those payments - the defendant may be entitled to contribution from the plaintiff for her share of the payments and to an equitable charge to secure the making of her contribution: see Ingram v. Ingram [70] . That question was not argued on the appeal. Neither has any argument been raised to assert the existence of a beneficial interest under a constructive trust arising after the transaction of purchase was closed and overriding the beneficial interests then acquired. In Canada and in some cases in England, the device of the constructive trust has been invoked "to give relief to a wife who cannot prove a common intention or to a wife whose contribution to the acquisition of property is physical labour rather than purchase money": per Laskin J. (as he then was) in Murdoch v. Murdoch [71] ; and see Rathwell v. Rathwell [72] and Pettkus v. Becker [73] . It is unnecessary to consider whether in some future case the device of a constructive trust might be relied on where property beneficially owned in particular proportions is maintained or enhanced by work done or contributions made in different proportions. If such a question arises in a contest between parties to a marriage it may be necessary to consider the extent to which the device is available in the equitable jurisdiction when ss. 79 and 80 of the Family Law Act confer a statutory jurisdiction to alter proprietary interests and that jurisdiction may be exercised to give relief to a party to a marriage who has made a non-pecuniary contribution to the purchase of property.

[66]

The exceptional cases in which equity assumes an intention of "advancement" and thereby precludes a presumption of a resulting trust are defined by reference to recognized categories of relationships rather than by the actual presence of love or affection. Originally, those relationships were the ones which equity saw as involving obligations of support owed by the person providing the consideration to the person who would otherwise be presumed to hold upon implied resulting trust: a man to his child or other person to whom he stood in loco parentis; a husband to his wife. Those categories of relationships are not, however, finally settled or closed, at least in this Court: see, e.g., Wirth v. Wirth [82] where an intention of advancement of an "intended wife" was presumed and see the discussion in The Solicitors' Journal, vol. 119 (1975), pp. 108-109 and vol. 120 (1976), pp. 141-143. It is arguable that they should be adjusted to reflect modern concepts of the equality in status and obligations of a wife vis-à-vis a husband (cf. Moore v. Whyte [No. 2] [83] and Robinson v. Robinson [84] ) and of a mother vis-à-vis a father: see Scott v. Pauly [85] . Any adjustment of those relationships must however, be made by reference to logical necessity and analogy and not by reference to idiosyncratic notions of what is fair and appropriate. In their judgment in the present case, Mason and Brennan JJ. advance what seem to me to be convincing reasons for denying that either logic or analogy warrant the extension of those categories of relationships to encompass the relationship which existed between Mr. Calverley and Miss Green at the time of the purchase of the Baulkham Hills property. It is, however, unnecessary that I form a concluded view in that regard since the question has, as I see the matter, been resolved by recent decision of this Court. In Napier v. Public Trustee (W.A.) [1] , it was held by Aickin J., in a judgment with which Mason, Murphy and Wilson JJ. expressed general agreement, that "no presumption of advancement arises in favour of a de facto wife" to preclude the ordinary implication of resulting trust. That conclusion of Aickin J. provided the basis of his reasoning and of the decision of the Court that there was a resulting trust of an interest in remainder in the subject property in that case: see per Aickin J. [2] ; and also per Mason J. [3] .

[69]

The presumption can be rebutted or qualified by evidence which manifests an intention to the contrary. Apart from admissions the only evidence that is relevant and admissible comprises the acts and declarations of the parties before or at the time of the purchase or so immediately thereafter as to constitute a part of the transaction. This passage constitutes a guide to the evidence which will ordinarily be relevant and admissible to confirm or rebut a presumption of resulting trust or a "presumption" of advancement, namely, acts and declarations of the parties before or at the time of the vesting of the legal estate and admissions against interest. The passage should not, however, be accepted as good law to the extent that it purports to lay down that no evidence other than that mentioned will ever be admissible. Regardless of whether the circumstances are such as to bring the case into one of the categories of advancement, evidence of the relationship - both legal and factual - between the parties will always be admissible. More importantly, the subsequent judgment of Dixon C.J., McTiernan, Fullagar and Windeyer JJ. in Martin [5] accepted, as correct, statements of Stuart V.C. and Cussen J. to the effect that, in a case where the subjective intention of a person is relevant, the evidence of that person of his intention at the time of the purchase is admissible notwithstanding that "it must in every case be liable to observations which tend to diminish its weight": see also Devoy v. Devoy [6] ; Fowkes v. Pascoe [7] . It is unnecessary to pursue here the question, which was not argued on the appeal, of the relevance of evidence of subjective intention of either party in a case such as the present where the purchase price was provided by two different active parties to the transaction: cf. Gissing v. Gissing [8] . In such a case, the primary question will be whether there was any arrangement between the parties which precluded or modified the trust which would otherwise result from their respective contributions to the purchase price. If that be the only question, evidence of a subjective uncommunicated intention of either party will not be admissible. It is, however, conceivable that, in a case where there was no relevant arrangement between the parties, the critical question may be whether there was an actual intention on the part of the person who contributed the bulk of the purchase price to benefit the other party. In such a case, it is difficult to see why the direct evidence of that person of his actual intention is, as a matter of principle, inadmissible. 1. (1956) 95 C.L.R., at p. 365. 2. (1959) 110 C.L.R., at pp. 303-305. 3. (1857) 3 Sm. & G. 403, at p. 406 [65 E.R. 713, at p. 714]. 4. (1875) 10 Ch. App. 343, at p. 349. 5. [1971] A.C. 886, at p. 906.

At a glance

Court

Decision date

Before

Source

Judgment (73 paragraphs)

Parties