The Principles
48 One of the curious features of the law governing property relationships between married persons or de facto partners is that a dispute arising out of the same facts may produce different outcomes depending upon the procedural context in which the dispute is resolved. In a property dispute between husband and wife following the breakdown of their marriage, for example, the Family Court has a discretion to adjust the parties' property rights to reflect the parties' financial and non-financial contributions to the relationship: Family Law Act 1975 (Cth), s 79. So, too, legislation has conferred a discretionary power on courts to adjust the property rights of de facto partners in the event of a breakdown of their relationship: see, for example, Property (Relationships) Act 1984 (NSW), s 8. Upon the termination of a relationship by death, the surviving partner can invoke the court's discretion to alleviate injustice flowing from the legal and equitable principles determining the beneficial ownership of property: see, for example, Family Provision Act 1982 (NSW). But where one partner to a marriage or other relationship becomes bankrupt, any dispute between the remaining partner and the trustee in bankruptcy falls to be decided according to conventional legal and equitable principles. The remaining partner and, for that matter, the trustee in bankruptcy, cannot avail themselves of the "large discretions" that are applicable by statute in other circumstances: cf Bryson v Bryant (1992) 29 NSWLR 188, at 195, per Kirby P.
49 Australian law has resisted the idea that equitable relief is available whenever justice, fairness or good conscience requires it (Muschinski v Dodds (1985) 160 CLR 583, at 608, per Brennan J; at 615-616, per Deane J; Baumgartner v Baumgartner (1987) 164 CLR 137, at 148, per Mason CJ, Wilson and Deane JJ). It is therefore necessary to resort to doctrines such as the presumptions of resulting trust and advancement in order to determine the interests of the parties to the litigation.
50 The use of the presumptions has not gone unchallenged. In his dissenting judgment in Calverley v Green (1984) 155 CLR 242, at 264, Murphy J observed that:
"[p]resumptions arise from common experience.… If common experience is that when one fact exists, another fact also exists, the law sensibly operates on the basis that if the first is proved, the second is presumed. It is a process of standardized inference. As standards of behaviour alter, so should presumptions, otherwise the rationale for presumptions is lost, and instead of assisting the evaluation of evidence, they may detract from it."
His Honour considered that the old presumptions were not sustainable by common experience and should be discarded. See, too, Brown v Brown (1993) 31 NSWLR 582, at 595, per Kirby P.
51 There is in my view a great deal to be said for Murphy J's approach. It is hard to accept, for example, that the principle that the so-called presumption of advancement operates in favour of a wife, but not in favour of a husband, accords with current "common experience": cf Calverley v Green, at 247, per Gibbs CJ. Similarly, it is hard to accept that the application of the presumption of advancement to a wife, but not to the female partner in a long term de facto relationship, matches contemporary community expectations: cf Calverley v Green, at 257-261, per Mason and Brennan JJ. Nonetheless, it is authoritatively established that the presumptions are:
"too well entrenched as 'landmarks' in the law of property…to be simply discarded by judicial decision. Indeed, the law embodying them has been said…to be so clear that it 'can…no longer be the subject of argument'…".
Calverley v Green, at 266, per Deane J; Nelson v Nelson (1995) 184 CLR 538, at 548, per Deane and Gummow JJ; at 602, per McHugh J.
52 The parties in the present case were agreed that the extent of the respective beneficial interests of Mrs Cummins and the Bankrupt had to be determined at the time the Hunters Hill Property was purchased: Calverley v Green, at 252, per Gibbs CJ. No reliance was placed on conduct post-dating the acquisition of the Property in order, for example, to make out a case of unconscionable conduct by one of the parties to the relationship: cf Baumgartner v Baumgartner, at 148-149, per Mason CJ, Wilson and Deane JJ. Nor was any reliance placed on the post-acquisition conduct of Mrs Cummins and the Bankrupt (except for the form of the 1987 transaction) in order to shed light on their common intention at the time the Hunters Hill Property was acquired.
53 The starting point is the equitable presumption which arises where unequal contributions are made to the acquisition of an asset by parties to a marriage (or other relationship). The principle was that stated by Mason and Brennan JJ in Calverley v Green, at 258-259:
"[w]hen two or more purchasers contribute to the purchase of property and the property is conveyed to them as joint tenants the equitable presumption is that they hold the legal estate on trust for themselves as tenants in common in shares proportionate to their contributions unless their contributions are equal".
See, too, Calverley v Green, at 246-247, per Gibbs CJ; at 266-267, per Deane J; Official Trustee in Bankruptcy v Lopatinsky [2003] FCAFC 109, at [112], per Whitlam and Jacobson JJ. Mason and Brennan JJ went on to observe in Calverley v Green (at 259) that this "basic presumption" could be displaced in appropriate cases by the presumption of advancement or "perhaps" it could be qualified by an inference of the kind espoused by Lord Upjohn in Pettitt v Pettitt [1970] AC 777, at 815.
54 No issue arises in the present case about the presumption of advancement. However, the Trustees did rely on Lord Upjohn's remarks in Pettitt v Pettitt. There his Lordship said this (at 815-816):
"in the absence of all evidence, if a husband puts property into his wife's name he intends it to be a gift to her, but if he puts it into joint names, then (in the absence of all other evidence) the presumption is the same as a joint beneficial tenancy. If a wife puts property into her husband's name it may be that in the absence of all other evidence he is a trustee for her, but in practice there will in almost every case be some explanation (however slight) of this (today) rather unusual course. If a wife puts property into their joint names I would myself think that a joint beneficial tenancy was intended, for I can see no other reason for it.
But where both spouses contribute to the acquisition of a property, then my own view (of course in the absence of evidence) is that they intended to be joint beneficial owners and this is so whether the purchase be in the joint names or in the name of one. This is the result of an application of the presumption of resulting trust. Even if the property be put in the sole name of the wife, I would not myself treat that as a circumstance of evidence enabling the wife to claim an advancement to her, for it is against all the probabilities of the case unless the husband's contribution is very small.
Whether the spouses contributing to the purchase should be considered to be equal owners or in some other proportions must depend on the circumstances of each case: see Rimmer v Rimmer [1953] 1 Q.B. 63 and many other cases. But for [sic] very good reasons for treating the spouses on an equality when one puts up the deposit and the other assumes liability for the building society mortgage…".
55 After quoting the second paragraph from this extract, Mason and Brennan JJ in Calverley v Green pointed out (at 259) that, in some instances, the drawing of such an inference might work to the disadvantage of a wife who holds a legal interest in property greater than a joint tenancy and who would otherwise be entitled to rely on the presumption of advancement to assert as large a beneficial interest as the legal interest which she holds. Their Honours added this observation (at 259-260):
"It may be conceded that Lord Upjohn's inference reflects the notion that both spouses may contribute to the purchase of assets during the marriage (as they often do nowadays) and that they would wish those assets to be enjoyed together during their joint lives and to be enjoyed by the survivor when they are separated by death. Such an inference is appropriate only as between parties to a lifetime relationship (like the presumption of advancement of a wife: Carkeek v Tate-Jones [[1971] VR 691, at 695-696, per McInerney J]. The exclusive union for life which is undertaken by both spouses to a valid marriage, though defeasible and oftentimes defeated, remains the foundation of the legal institution of marriage…though it is no necessary element of the relationship of de facto husband and wife."
56 Mason and Brennan JJ appear to have understood Lord Upjohn to contemplate that where both spouses contribute to the acquisition of a property and place it in joint names, they may become equal beneficial owners in equity notwithstanding that their contributions are unequal. In particular, by referring to the presumption of a resulting trust as perhaps being "qualified" by Lord Upjohn's inference, their Honours seem to accept as a plausible view (without committing themselves) that if the parties both contribute to the acquisition of an asset they may be equal joint beneficial owners even if the wife contributes a greater proportion of the purchase price than the husband.
57 Deane J did not refer to the passage from Lord Upjohn's judgment quoted by Mason and Brennan JJ. In the course of his observations, he referred to the comment by Viscount Simonds LC in Shephard v Cartwright [1955] AC 431, at 445, adopted by the High Court in Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353, at 365, that
"the presumption [of resulting trust] may be rebutted but should not, as Lord Eldon said [in Finch v Finch (1808) 15 Ves Jun 43; 33 ER 671], give way to slight circumstances".
Deane J said this in Calverley v Green (at 270):
"The weight to be given to a presumption of a resulting trust in the resolution of what is essentially an issue of fact may vary in accordance with changing community attitudes and with the contemporary strength or weakness of the rationale of the rule embodying the presumption: see, e.g., Snell's Principles of Equity, 28th ed. (1982), p 183 and the cases there cited, and per Mahoney J., Doohan v Nelson [[1973] 2 NSWLR 320, at 325-326]. The generalization that a presumption of resulting trust 'should not give way to slight circumstances' [Shephard v Cartwright [1955] AC 431, at 445] can no longer properly be accepted as an unqualified rule. Indeed, in a case where a presumption of resulting trust or a 'presumption' of advancement applies in circumstances where the relationship between the parties does not, as a matter of modern experience, provide any firm rational basis for presuming either an intention to retain the beneficial interest or an intention to confer it on the other party, the presumption may be found to be of practical importance only in those cases where the evidence, including evidence of the actual relationship between the parties, does not enable the Court to make a positive finding of intention."
58 In Doohan v Nelson, to which Deane J referred, Mahoney JA (at 325-326) considered that it was not open to him to hold that there was no longer a presumption of advancement. He noted, however, following the observations of three of their Lordships in Pettitt v Pettitt (at 793, per Lord Reid; at 811, per Lord Hodson; at 824, per Lord Diplock), that
"the strength of the presumption and of the evidence required to rebut it will be less where the case concerns the ordinary matrimonial home".
59 I was not referred to any Australian case that has expressly applied the analysis of Lord Upjohn in Pettitt v Pettitt. But in Vedejs v Public Trustee [1985] VR 569, which was decided six days after Calverley v Green (but which did not refer to that case), Nicholson J held that the presumption of resulting trust did not apply in circumstances where the parties to a de facto relationship contributed unequally to the purchase price. His Honour identified (at 575) the principle underlying the presumption in favour of a tenancy in common as
"that the parties, by contributing unequally, have evinced a desire that they be treated as having a share in proportion to the amount so contributed".
However, his Honour did not regard the fact that there were unequal payments to be decisive. He observed (at 575) that
"If it is accepted, as I have found, that the relationship between the parties was a warm and loving one which bore all the facets of a happy marriage except the formalities associated therewith, it would, in the circumstances of this case, seem unthinkable that either party would have contemplated that their share would have gone other than to the other on their death."
60 On the present state of the authorities, it is clear that where the parties to a marriage contribute in unequal proportions to the purchase of real property, the presumption is that they hold the property beneficially in proportion to their respective contributions. As the judgment of Mason and Brennan JJ in Calverley v Green shows, this presumption of a resulting trust applies where the title to the property is placed in joint names. The presumption may be rebutted by circumstances attracting the counter-presumption of advancement, or by evidence showing that the parties' common intention was that the beneficial interest in the property should be held otherwise than in proportion to their respective contributions.
61 The dicta to which I have referred suggest that, although the presumption of a resulting trust is not in general lightly displaced, there are circumstances in which the presumption may be more readily rebutted than others. In particular, the dicta suggest that the presumption of a resulting trust may be rebutted by relatively slight evidence where
- the parties to a marriage have made substantial, albeit unequal contributions to the acquisition of a property;
- the property acquired is intended to be used as the matrimonial home; and
- the property is placed in the joint names of the parties.
62 The rationale for the presumption of a resulting trust having limited force in this situation is that there is some reason to think, given the committed nature of the parties' relationship and the fact that they have chosen to place the property in joint names, that they intend that the matrimonial home should be enjoyed together during their lives and that, on the death of one of them, the beneficial interest should go to the survivor. The circumstances I have identified indicate that the parties do not necessarily intend that beneficial ownership of the property should depend on mathematical calculations referable to the precise financial contributions made by each of them to the purchase price. In other words, in the circumstances posited, there is not a particularly strong basis in practical modern experience for attributing to the parties an intention that the beneficial interests in the matrimonial home be allocated solely by reference to their respective financial contributions.
63 There may be other circumstances in which the presumption of resulting trust has less force than usual. Calverley v Green drew a clear distinction between marriage and what are generally known as "de facto" relationships (whatever the position in 1984, the term "de facto" is now in common usage, as recognised by the Macquarie Dictionary). But the legal position of de facto partners and, for that matter same sex couples, has changed since 1984, as indeed have social attitudes. If the presumptions are to reflect current laws and social attitudes, it may be that the presumption of resulting trust should have less force where, for example, de facto partners or a same sex couple in a long term relationship each contribute to the acquisition of a property intended to be used as a home, and place the property in their joint names. It may be, too, that the strength of the presumption needs to take account of the fact that, as Lord Reid pointed out in Pettitt v Pettitt as long ago as 1970 (the year, as it happens, that the Hunters Hill Property was acquired), it cannot now be assumed that women are financially dependent on their male partners.
64 In a somewhat different context, Kirby J has recently warned against the danger of judges attempting to "objectify the foundation for their judgments" by appealing to what ordinary citizens might regard as right or proper: Cattanach v Melchior (2003) 77 ALJR 1312, at 1339 [135]. The danger, as his Honour points out, is that unreliable personal opinions might be disguised as statements relating to community attitudes. Doubtless it would be better, as Kirby J suggests, for courts to act on empirical evidence rather than judicial assertion (at 1343 [152]). But where the courts themselves have formulated presumptions in order to reflect perceived social realities, they should be prepared, within the limits permitted by authority, to adapt the presumptions so as better to reflect obvious changes in legal and social conditions. It is perhaps of some comfort to note that in Cattanach v Melchior itself, Kirby J expressed the view (at 1341 [145]), without reference to empirical evidence, that the
"experience of post-birth parental love [for a child born after a failed sterilisation operation] would usually allay the hypothetical hurts attributed to hypersensitive children later learning that their births were originally unexpected."
65 In the present case, there is no occasion to consider all the circumstances in which the presumption of a resulting trust might be less difficult to rebut than is ordinarily the case. It is enough to say that although the circumstances of this case attract the presumption, it can be rebutted by slighter evidence than might ordinarily be required of a common intention that the parties should be joint beneficial owners of the property.