Similarly, the majority, at 149-150 spoke of the process of ascertainment of the parties' interests pursuant to such a constructive trust as involving:
"… adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions, either financially, or in kind ." (emphasis added)
57 Extending the notion of contributions to include not only monetary contributions (which are readily measurable), but also non-financial contributions (not so readily measurable in monetary terms) raises the prospect of difficulty of application of this principle. In practice, that difficulty often does not become acute because of that way that presumptions, and the onus of proof, work in this area.
58 Before any particular asset can become subject to a constructive trust in accordance with the Baumgartner principle, one needs to have a joint relationship or endeavour, and an asset acquired in the course of, and for the purposes of, that joint relationship or endeavour. In Baumgartner at 149 the application of the principle proceeded thus:
"The facts that the Leumeah property was acquired and developed as a home for the parties and that, at least indirectly, it was largely financed out of money drawn from the pool of their earnings, this being one of the purposes which the pool was to serve, combine to support an equality of beneficial ownership at least as a starting point. Equity favours equality, and, in circumstances where the parties have lived together for years and have pooled their resources and their efforts to create a joint home, there is much to be said for the view that they should share the beneficial ownership equally as tenants in common, subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions either financially or in kind."
59 In accordance with this approach, a plaintiff needs to establish that there is indeed a joint endeavour between the parties, in which expenditure is shared for the common benefit. It is also necessary to identify what the scope of that joint endeavour is. It is a question of fact, for any couple, what the scope of the joint endeavour they are engaging in is. Further, for any couple, the scope of the joint endeavour they are engaged in might change from time to time. If, within the scope of a joint endeavour which lasts for years, an asset is acquired, as a result of contributions both parties have made, and for a purpose of the ongoing joint endeavour of the parties, this gives rise to the presumption that the beneficial interest ought be shared equally. That presumption can be displaced if one party is able to show that the contributions, both financial and non-financial, to that asset should be regarded as unequal. In practical terms, this way of proceeding will place the onus of attributing a value to non-financial contributions on the person who asserts that the title should be held unequally.
60 A second way in which the principle that beneficial ownership should be proportionate to contributions, which underlies the law of resulting trusts, is transmuted in the Baumgartner type of constructive trust, is in another aspect (besides counting non-monetary contributions) of what counts as a contribution to the purchase price. The payment of mortgage instalments, after a property has been acquired using money borrowed and secured by mortgage, has been accepted as a "contribution", in this context - Baumgartner at 148. This is unlike the resulting trust principle, in accordance with which it is only in unusual situations that a payment of such mortgage instalments is regarded as a contribution. (References concerning this aspect of resulting trusts are collected in Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWSC 1060 at [141]-[142]).
61 Even if one bears in mind that mortgage instalments usually include a component of each of principal and interest, it is still possible for the mortgage instalment to be taken into account in deciding the terms of a constructive trust. Continual payment of the interest on the loan which finances the family home is every bit as much a part of the joint endeavour of maintaining the family unit and providing for its future as is meeting other recurrent but necessary expenses like buying the groceries. But the fact that part of the instalment is a payment of interest means that the beneficial interest in property acquired as a result of paying an instalment is not likely to be equal in value to the amount of the instalment paid. It is the proportions in which contributions to the purchase price are made which matter in determining beneficial ownership, not the absolute amount of such contributions.
62 Another aspect of difference between the Baumgartner basis for a constructive trust, and a resulting trust, concerns the role which the intention of the parties plays. The Baumgartner type of constructive trust is imposed to prevent an unconscionable assertion of legal title, in circumstances where the parties had no explicit intention about how the legal title would be held in the circumstances which have arisen. By contrast, the presumption of a resulting trust is one which seeks to give effect to the intention of the parties, by making a presumption about what that intention was (Russell v Scott (1936) 55 CLR 440 at 451; authorities collected in Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWSC 1060 at [133]-[136]). Even so, that is not to say that the intention of the parties has no role to play in whether a Baumgartner constructive trust should be held to exist. Part of the justification for imposing the Baumgartner constructive trust is that the parties have jointly been building up assets, on the basis that those assets will be available for the joint endeavour in future. Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the pool, and assets acquired from it, would be used for their ongoing common benefit. It is unconscionable for the party who ends up, at the end of the relationship, with a disproportionate share of the assets which were built up during the relationship, to keep those assets when he or she knew that that was the basis on which the assets were being built up.
63 Another way in which the intention of the parties would be relevant would be if they had formed an express intention about what was to happen in the circumstance which has in fact arisen. If the parties have expressly contemplated the very situation which has arisen, and have, in advance, agreed how the assets built up as a result of their joint efforts should be divided in that situation, it would often be the case that there is nothing unconscionable in holding the parties to their agreement.
64 A further way in which the intention of the parties is relevant is that the Baumgartner basis for a constructive trust arises only when there is a premature termination of the relationship. To decide whether this has happened, one must look at what the intention of the parties was, about how long their relationship would endure. To take an extreme example, if one of the partners makes clear that he or she is making no commitment whatever to the relationship, and is free to walk out at any time and keep any property he or she has acquired during the relationship, it is hard to see how there is anything unconscionable in the property interests lying where they fall when the relationship ends.
65 In the present case, from the commencement of the relationship in 1983 Ms West and Ms Mead were sharing many aspects of their life, but there was no joint endeavour which resulted in the acquisition of any property for the purpose of their life together, other than property which was consumed or used up within a comparatively short time of being acquired. There is no reason to believe that any of the property which was acquired during the first few years of the relationship continued in existence past the end of the relationship; thus no question arises of any property which was acquired during the early years of the relationship being enjoyed, after the end of the relationship, by the owner in circumstances which were not contemplated at the time of the acquisition of that property. Further, during the early years of the relationship, the evidence provides no basis for concluding that the parties regarded it as anything more than a temporary expedient - both women were, in large part, in full time employment, and, apart from sharing the periodical expenses of a shared household, their financial affairs were not intertwined. Nor is there any basis in the evidence for concluding that they had, at the start of their relationship, any mutual commitment to a long-lasting relationship. In those circumstances, there is no basis for concluding that their relationship, during its early years, gives rise to a constructive trust of the Baumgartner type.
66 1986 and 1987 marked a significant change in scope of the relationship - Ms Mead gave up full-time employment and began attending university, and as well Ms West and Ms Mead came to a decision to have a child. In the course of reaching that joint decision, Ms West told Ms Mead that she would support her emotionally and financially. At that time Ms West talked to Ms Mead, without apparent demur, about them having a strong commitment to their relationship to each other. Having a child inevitably brings with it commitments and responsibilities lasting many years.
67 It was in 1986 or early 1987 that the joint account was opened, and in 1987 that payments of instalments of the Lakemba mortgage started to be made from the joint account. Payments of Lakemba mortgage instalments started to be made from the joint account a few months after Joel was born. Ms West gave evidence, on which she was not cross-examined, and which I accept that:
"After the joint account was opened, I accepted that many of the defendant's financial commitments were met from joint account funds because I was in a committed relationship with the defendant that I expected to not cease. Accordingly, I accepted that the defendant's and my respective responsibilities be met by the relationship resources."
68 It was also in 1986 that Ms West considered, and rejected, the idea of purchasing some real estate of her own - the reason for her rejection being the joint realisation that they could not afford it with their existing commitments.
69 Mr Aitken, counsel for Ms Mead, submits that there is no basis for the imposition of a Baumgartner constructive trust here, because of legal principles concerning the beneficial ownership of property acquired from a joint bank account.
70 Jones v Maynard [1951] Ch 572 concerned a husband and wife who had a joint bank account which both were entitled to draw on. They had no agreement about their respective rights in the account, but referred to it as "a pool of our resources", "our savings", and "our joint savings". The husband had made the larger part of contributions to the account. After the wife had left the husband, the husband withdrew the balance and invested it in his own name. The wife claimed to be entitled to a half share in the final balance of the account, and in the investments purchased from it. Vaisey J held that the wife should succeed. He said, at 575:
"In my judgment, when there is a joint account between husband and wife, and a common pool into which they put all their resources, it is not consistent with that conception that the account should thereafter (in this case in the event of a divorce) be picked apart, and divided up proportionately to the respective contributions of husband and wife, the husband being credited with the whole of his earnings and the wife with the whole of her dividends. I do not believe that, when once the joint pool has been formed, it ought to be, and can be, dissected in any such manner. In my view a husband's earnings or salary, when the spouses have a common purse, and pool their resources, are earnings made on behalf of both; and the idea that years afterwards the contents of the pool can be dissected by taking an elaborate account as to how much was paid in by the husband or the wife, is quite inconsistent with the original fundamental idea of a joint purse or a common pool.
In my view the money which goes into the pool becomes joint property. The husband, if he wants a suit of clothes, draws a cheque to pay for it. The wife, if she wants any housekeeping money, draws a cheque, and there is no disagreement about it.
That being my view, it follows that investments paid for out of the joint account, although made in the name of the husband, were in fact made by him in his own name as a trustee as to a moiety for his wife. If the investments out of the joint account had been made in the name of the wife alone, there is no doubt that the ordinary presumption of law would have applied and she would have been entitled to the investments; but as they were made in the name of the husband, it seems to me that the assumption of half and half is the one which I ought to apply.
I think that the principle which applies here is Plato's definition of equality as a "sort of justice"; if you cannot find any other, equality is the proper basis. When moneys were taken out of the joint account for the purpose of making an investment, the intention which I attribute to the parties is equality, and not some proportional entitlement to be arrived at by an inquiry as to the amounts contributed respectively by the husband and wife to the common purse. Where one is searching for justice, as one must, and cannot find any other secure and sound basis, I think that equality is the best rule."
71 In In Re Bishop; National Provincial Bank Ltd v Bishop [1965] Ch 450 Stamp J considered a joint bank account of a husband and wife, which was drawn on from time to time to acquire investments in the name of the husband, and of the wife, individually. After the death of the husband a question arose as to beneficial ownership of both the investments purchased, and the balance of the account. Stamp J held that the investments belonged beneficially to the party in whose name they were purchased, and that the balance of the account passed to the widow by survivorship. He stated the following principles at 456:
"Where a husband and wife open a joint account at a bank on terms that cheques may be drawn on the account by either of them, then, in my judgment, in the absence of facts or circumstances which indicate that the account was intended, or was kept, for some specific or limited purpose, each spouse can draw upon it not only for the benefit of both spouses but for his or her own benefit. Each spouse, in drawing money out of the account, is to be treated as doing so with the authority of the other and, in my judgment, if one of the spouses purchases a chattel for his own benefit or an investment in his or her own name, that chattel or investment belongs to the person in whose name it is purchased or invested: for in such a case there is, in my judgment, no equity in the other spouse to displace the legal ownership of the one in whose name the investment is purchased. What is purchased is not to be regarded as purchased out of a fund belonging to the spouses in the proportions in which they contribute to the account or in equal proportions, but out of a pool or fund of which they were, at law and in equity, joint tenants. It also follows that if one of the spouses draws on the account to make a purchase in the joint names of the spouses, the property purchased, since it is purchased in joint names, is prima facie, joint property and there is no equity to displace the joint legal ownership. There is, in my judgment, no room for presumption which would constitute the joint holders as trustees for the parties in equal or some other shares."
72 Stamp J distinguished the decision in Jones v Maynard on the basis that, when the husband and wife had agreed that the investments were to be "our savings" that gave the wife an interest in the investments made in the name of the husband ([1965] 1 Ch at 461-462). By contrast, in the case before him:
"… not only do I find nothing to indicate that the joint account was opened for some limited or specific purpose or to preclude either spouse drawing money for the purpose of an investment in his or her own name, but positive indications that the account existed in order to enable this to be done; there is nothing whatever to suggest that either party suggested to the other that investments purchased were to be held on trust or that either party had the intention that the accumulations on the joint account should be invested and treated as "our savings" .
73 I accept that the law is as stated by Stamp J, so far as the rights of spouses to property purchased with money from a joint account is concerned. I will deal with Jones v Maynard not only by distinguishing it on its facts, in the way Stamp J did, but also by noting that the context for Vaisey J's decision in Jones v Maynard, was not the same context as Stamp J was operating in In Re Bishop. In In Re Bishop, Stamp J was concerned to ascertain who had beneficial interests in the investments, and the money in the joint account, for the purpose of administration of the deceased estate of the husband, when there was nothing unnatural, unexpected or untoward about the withdrawals from the joint account. Jones v Maynard was a case where the parties had separated and divorced. The legal test which Vaisey J applied in that situation was one which he set out at 574, which applied where a house had been purchased by a couple who later separated:
"… The judge … should try to conclude what was in their minds at the time of the purchase and then make an order which, in the changed conditions, fairly gives effect in law to what the parties must be taken to have intended at the time of the transaction."
74 This test seeks to work out what is appropriate, given what the parties actually intended at the time of purchase, and taking that actual intention into account to decide what should happen in circumstances which the parties never envisaged, of their separation. It is a test to be applied in similar circumstances to those in which the Australian court comes to decide whether to impose a Baumgartner type of constructive trust, but the test which Vaisey J used looks to the intention of the parties, as judicially extrapolated, to decide whether there is such a trust. By contrast, Baumgartner recognises that the parties had no intention about how beneficial ownership was to lie in the circumstances which have actually arisen, and imposes the constructive trust by reference to equitable principles which do not simply seek to give effect to the parties' intentions. Because of the different context in which Stamp J made his decision, he had no need to apply the same legal test as Vaisey J had applied. And the legal test which Vaisey J applied is one which could not give rise to an express trust, and is inconsistent with Baumgartner as a basis for a constructive trust.
75 The law as laid down by Stamp J has been followed in Australia by Wood J in In the Marriage of Fogarty (1976) 27 FLR 257 at 264-5, referred to without disapproval (though distinguished on the facts), by Nygh J in In the Marriage of EH & K Pickard (1981) 7 FamLR 636 at 643, and followed by Heerey J in Re Reid; Clark v Reid (1998) 85 FCR 452 at 456, where his Honour said:
"We are not concerned here with the question as to what is to happen to the balance in a joint account when the marriage breaks up. This is a very different question: Gage v King [1961] 1 QB 188"
76 The conclusion that one of the signatories to a joint account can withdraw and keep money withdrawn from the account, absent some binding limitation on doing so, appears in various other Australian cases. In Russell v Scott (1936) 55 CLR 440 at 454 Dixon and Evatt JJ said of an elderly woman who had put money into a joint account in the name of herself and her nephew:
"In equity, the deceased was entitled in her lifetime so to deal with the contractual rights conferred by the chose in action as to destroy all its value, namely by withdrawing all the money at credit."
77 In Croton v R (1967) 117 CLR 326 at 334 Barwick CJ (with whom McTiernan J agreed) said of a man who had withdrawn all the money from a joint account he and his de facto kept (and whose conviction for larceny the High Court overturned):
"I have indicated my doubt that it was established that he came under an obligation to account to Mrs Webster, or to apply the money in any particular way, at the time he received from the bank the amount withdrawn from the bank account. It was a joint account, with a right in each to withdraw. Whether or not there was evidence of a legally-binding arrangement as to the ultimate use of the amount standing in it may be doubted: and in default of such an arrangement it may be that either could withdraw the whole or any part without coming under any obligation to account…. If the correct conclusion of fact is that there was a binding arrangement of a kind to be legally enforceable that the credit in the account should only be used for a sufficiently defined purpose, and that the withdrawal of the balance in the account by the applicant, itself evidenced his intention to use the proceeds for some purpose unconnected with the agreed to purpose (which I doubt), the applicant none the less, in my opinion, would not commit larceny, but might be found guilty of misappropriation."
78 In Palmer v Bank of New South Wales (1975) 133 CLR 150 at 157 Barwick CJ (with whom Gibbs, Stephen and Mason JJ agreed) said, of the parties to a joint account:
"she had a right of withdrawal in her lifetime for her own benefit of the whole or any part of the money to the credit of the account: and, if she survived him, she was to have for herself the balance then remaining in the account. On the other hand, the deceased, as one of the parties to the joint account, had a right to withdraw the whole or any part of the amount in the account, not merely the amount of his contribution to it."
79 In Ebner v Official Trustee in Bankruptcy, in the matter of Ebner [2003] FCA 73 at [27] Finkelstein J said that:
"In any event, to the extent that Mrs Ebner relies upon Re Bishop I think the case is of doubtful authority. In Rathwell v Rathwell [1978] 2 SCR 436 Dickson J, who delivered the leading judgment of the Supreme Court of Canada said of the case (at 459):
"I have difficulty in understanding the basis upon which it can be said that the joint owner who reaches the bank first can divert jointly-owned funds to the purchase of investments upon which the other joint owner will have no claim. In a decision of this court Re Daly; Daly v Brown , at p.148, a joint bank account case, McLellan J said: 'In a case of joint tenancy neither party is exclusive owner of the whole. Neither can appropriate the whole to himself'." (Footnotes omitted). "
80 I share, with respect, his Honour's doubts that it can be correct that "the joint owner who reaches the bank first can divert jointly owned funds to the purchase of investments upon which the other joint owner will have no claim." However, the concern arises from the notion of "diversion" - that assumes that there is some limitation on the authority on the party who has reached the bank first, which does not enable him or her to use the funds in the way he or she has in fact used them. That concern is fully catered for in Stamp J's statement of principle, because his rule applies only "in the absence of facts or circumstances which indicate that the account was intended, or was kept, for some specific or limited purpose".
81 When husband and wife have money in a joint bank account, that is, in law, a debt which the bank owes to the two of them jointly Russell v Scott (1936) 55 CLR 440 at 448, 450, 457; Fadden v Deputy Federal Commissioner of Taxation (1943) 68 CLR 76 at 82-83. If the bank is to be discharged from its legal obligation to pay that debt, it must act in accordance with an authority which the two of them have given to the bank. If the two of them have given authority to the bank entitling it to honour cheques or other documents seeking payment which are signed by one of them alone, then the bank will be discharged from its debt if it acts in accordance with that authority. By the very act of joining in signing an authority to the bank whereby either may withdraw from the joint account, the spouses are also conferring on each other authority to withdraw from the joint account. If there is nothing more than the spouses conferring that authority on each other, then either spouse will be able to withdraw the whole of the money contained in the joint account. However, there is no legal necessity for the scope of the authority which exists as between the spouses, to be the same as the authority which the spouses confer on the bank. It is perfectly possible for the spouses to agree, as between themselves, that, even though the bank is given authority to pay out the whole or any part of the money in the joint account on the request of either of them, that authority will be used only in limited circumstances, or for limited purposes. Even if there is no expressly stated limitation as between the spouses on the authority which they have, it might be the case, depending on the facts in a particular instance, that the court will imply or infer some limitations on the authority which the spouses give to each other to draw money from the account and apply it for their own purposes; if such limitations are proved to exist, and those limitations are exceeded, property purchased with funds from the joint account remain, in equity's eyes, subject to the joint ownership. It is at the level of fact-finding, about whether there is any limitation on the authority of one spouse to withdraw money from the joint account, that any consideration of whether legally binding relations are intended to arise from dealings between husband and wife may find a role: Balfour v Balfour [1919] 2 KB 571; Gage v King [1961] 1 QB 188 at 192-193. Thus, withdrawals can be made by either spouse from a joint account for matters within the mutually intended course of dealing with that account, and any property purchased for a spouse's own purposes with such a withdrawal will belong to the spouse who has made the withdrawal. This avoids, in many factual situations, the conclusion that spouses own 50% of each other's clothes purchased with money from the joint account. It avoids the conclusion that if one spouse withdraws money from the account and spends it in some social activity with his or her friends, without having specifically obtained permission from the other spouse to do so, spending the money so withdrawn involves a breach of trust. It also provides a proper basis of principle (provided that there is also a proper basis of fact established in the instant case) for concluding that, for example, a husband is acting beyond the authority conferred on him in withdrawing money from the joint account for the purpose of presenting his new girlfriend with a sports car. The limits on the authority which husbands and wives confer on each other to make drawings on a joint account may, in many factual situations, be imprecise, but that will not necessarily stop a court from deciding that those limits have, in examples like the one I have just given, been exceeded.
82 Beneficial ownership of items purchased from money in a joint account can, of course, depend upon factors other than the authority which spouses give to each other to draw from the account - a question of whether expensive furniture purchased from a joint account was jointly owned would depend partly on the authority which spouses gave to each other to draw cheques on the account, and also, partly, on the intentions which the spouses express to each other concerning that furniture.
83 Applying Stamp J's principle to the drawings which were made from the joint account in the present case for the purpose of paying the Lakemba mortgage, those monies became the property of the payee, the mortgagee. They were made within the scope of the authority which Ms West and Ms Mead conferred on each other to make withdrawals from the joint account. No trust attached to the money in the hands of the mortgagee. At the time each payment was made, no equity arose in Ms West by virtue of the payment having been made.
84 None of what I have said so far, however, prevents a constructive trust from arising on the Baumgartner principle. The principles which Stamp J expounded in In Re Bishop are ones which decide what legal and equitable rights exist in money withdrawn from a joint account, and property purchased with such money, immediately upon the money being withdrawn, or the property purchased. Baumgartner is concerned with a different subject matter. A constructive trust on the Baumgartner principle can arise no earlier than the time when the conditions for its exercise are in existence - that is, than the time when the relationship has broken down, without attributable fault, and one of the parties seeks to assert legal rights in relation to property acquired in the course and for the purposes of the joint relationship, in a way which is unconscionable. It is only because Ms Mead has an increased equity in the Lakemba property, as a result of payments made from the joint account during the relationship, that the occasion arises to impose a constructive trust. It is perfectly possible to accept the analysis which Stamp J gave of how drawings from a joint account operate, yet still impose a constructive trust.
85 Mr Aitken also submits that the present case goes beyond any previous case in that here Ms West seeks the imposition of a constructive trust over a piece of real estate which is not the home in which the parties to a relationship lived. That is not in itself a sufficient reason for not imposing a constructive trust. The reason why Ms Mead was living in the relationship property, at the commencement of her relationship with Ms West, was because Ms Mead and her mother had swapped their dwellings. The condition upon which Ms Mead was able to live in the relationship property was that she made the Lakemba unit available for her mother to live in. Making the Lakemba unit available for her mother to live in involved payment of the mortgage on Lakemba. Thus, payment of that mortgage was in a real sense a cost of Ms West and Ms Mead living together at the relationship property.
86 Further, payment of the mortgage on the Lakemba unit was part of the joint endeavour which Ms West and Ms Mead engaged in from the time the joint account was opened, and was for the purpose of that endeavour. It is not in accordance with equitable principle for Ms Mead to keep for herself all of the increase in equity in the Lakemba unit which she acquired in this way, now that the basis on which Ms West contributed to that acquisition has been destroyed. It follows from this that the pre-conditions for the declaring of a constructive trust, in accordance with Baumgartner, have been established.
87 Mr Aitken reminds me of the statement in the joint judgment of Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli v Giumelli (1999) 196 CLR 101, at 113, that:
"Before a constructive trust is imposed, the court should first decide whether, having regard to the issues in the litigation, there is an appropriate equitable remedy which falls short of the imposition of a trust."
88 In the present case, I do not see that there is a suitable remedy short of imposition of a trust. The fact that Ms West made contributions to the mortgage for the Lakemba property by putting money into the joint account, and that the money, when it came out of the joint account for that purpose, was being applied in accordance with her mandate, means that it cannot be said that in any direct sense it was her money which went into the Lakemba property. If any presumption of resulting trust applied to Ms West's payments into the joint account, her intention that the joint account be used to pay the expenses of herself and Ms Mead would rebut that presumption: Russell v Scott (1936) 55 CLR 440 at 449, 451-453; Palmer v Bank of New South Wales (1975) 133 CLR 150 at 157-158. Hence it cannot be said that any of her money can be traced into the Lakemba property. (I leave aside the fact that, as well, there was no fiduciary relationship between Ms West and Ms Mead). Thus, there is no adequate basis for fixing the amount of a charge over the Lakemba property. As well, as the valuation figures of the Lakemba property show, the value of the Lakemba real estate has gone up at a rate greater than inflation, or interest, in the period since the end of 1986. Particularly when, as part of the joint relationship, Ms West gave up, in 1986, her plans to acquire real estate for herself, it seems to me that her situation calls for an appropriate interest in the Lakemba real estate to be granted to her.
89 Ms West claims that she should receive a credit, in fixing the quantum of any constructive trust over the Lakemba property, by virtue of the fact that she contributed to the joint account, in ways which resulted in expenditure on the relationship property. The expenditure on the relationship property from the joint account nearly all occurred in early years of the joint account being on foot - see paragraph 42 above. Some of the payments which were made were in the nature of maintenance, rather than in the nature of improvements. While the making of these payments is part of the evidence to establish that there was a joint endeavour between Ms West and Ms Mead, insofar as the payments were in the nature of maintenance, they have not given rise to any asset upon which a constructive trust can be imposed. Ms Bateman accepts that, so far as improvements are concerned, it is the increase in value of the property as a result of effecting the improvements which ought be taken into account, not the cost of the improvements themselves. That seems to me to be right in principle. It is in accordance with the equitable principle upon which an allowance for improvements is made upon a partition suit between co-owners (Forgeard v Shanahan (1994) 35 NSWLR 206 at 223). However, there is no evidentiary basis for concluding that the money expended from the joint account on the relationship property increased its eventual sale price. That is a sufficient reason for not allowing Ms West any credit by virtue of having contributed to the joint account, and the joint account having made those payments. It is not necessary to consider the additional complications posed by the fact that the relationship property was one in which Ms Mead had only a half interest in remainder, and that an interest in Lakemba is sought as a consequence of payments made in connection with the relationship property.
90 The payments which were made in connection with the Kogarah unit were ones which did not increase anyone's equity in it. There is no explanation for how they came to be made. There were comparatively few of them. I would not be prepared to infer, from the fact of making of the payments alone, that the joint endeavour of the plaintiff and defendant extended to the Kogarah unit. Ms West is not entitled to have those payments increase the quantum of any constructive trust over the Lakemba unit to which she is otherwise entitled.
The 1996 Acknowledgement
91 In paragraph 181 of her affidavit in chief Ms West gave evidence as follows:
"On a day in or about mid-1996 the defendant said to me, words to the effect, "I know you have put a lot into improving Caroline Street and making loan repayments on the units and paying other expenses that we've had, because of that, I'm going to look at arranging for us to own Phillip Street together '50-50' or I'll sell Phillip Street or my share in Baxter Avenue, and with the money I get when I sell, we can buy another place together."
By:
a. 'Caroline Street' the defendant was referring to the relationship property,
b. 'Phillip Street' the defendant was referring to the Lakemba unit, and
c. 'Baxter Avenue' the defendant was referring to the Kogarah unit."
92 Ms Mead later filed an affidavit which, amongst other things, responded to the plaintiff's affidavit in chief. In that affidavit Ms Mead said:
"I refer to paragraph 181. At about the time of Joel's birth in 1987, the plaintiff and I discussed purchasing a home together. Otherwise, I deny having a conversation with the plaintiff in the terms of that alleged in paragraph 181 either in mid-1996 or at any time. At no time did I have any intention of transferring an interest in the Lakemba unit to the plaintiff nor did I ever promise or suggest to the plaintiff that I would do so. At the time of this alleged conversation, the relationship between me and the plaintiff had become strained at best and from time to time it was hostile."
93 There was no cross-examination of Ms Mead about the topic of this alleged 1996 conversation. In submissions, Ms Bateman relied upon that 1996 conversation as both showing an intention on the part of Ms Mead that Ms West should have a beneficial interest in some of her real estate, and also as an admission that it was appropriate for title to the Lakemba property to be split 50/50. Mr Aitken submitted that it was not open to Ms Bateman to put that submission, when the 1996 conversation had not been put to Ms Mead in cross-examination. Mr Aitken's submission was founded on Browne v Dunn (1893) 6 R 67.
94 Browne v Dunn is a decision concerning the common law on adducing evidence at trials. Even so, "the rule in Browne v Dunn remains alive and well under the regime of evidence law introduced by the Evidence Act 1995 (NSW)" (per Beazley JA, (with whom Cole and Stein JJA agreed), Heaton v Luczka New South Wales Court of Appeal, 3 March 1998, unreported at page 3).
95 In Browne v Dunn at 70-71 Lord Herschell LC stated an obligation of procedural fairness which counsel has when cross-examining a witness who counsel intends to submit should not be accepted:
"If you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity to make any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses."
96 However, Lord Herschell LC said that there was no obligation to raise such a matter in cross-examination where it is:
"… perfectly clear that [the witness] has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling … All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted."
97 In Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1 Hunt J made a thorough review of later cases applying Browne v Dunn, and concluded (at 26):
"I remain of the opinion that, unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings."