Federal Court of Australia

Secretary, Department of Social Services v Hulett [2025] FCA 23

ORDERS

THE COURT ORDERS THAT:

1.    The appeal from the decision of the Administrative Appeals Tribunal given on 22 December 2023 at Brisbane (2022/4641) be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

SARAH C DERRINGTON J:

introduction

1    The fundamental question that arises for decision in this matter is what is the “quality” of the detrimental reliance that is sufficient to ground a common intention constructive trust? The Secretary, Department of Social Services contends that the Administrative Appeals Tribunal erred in law in finding that Mr Edward Hulett’s three daughters acted to their detriment by expressing their willingness to take in and care for Mr Hulett in furtherance of an agreement reached between the daughters and Mr and Mrs Hulett prior to the latter’s death. It was uncontroversial that Mr and Mrs Hulett promised their daughters that when one of them died and the other could no longer live independently in the family home, the surviving parent would give the daughters the deceased parent’s half share of the proceeds of the sale of the family home. In return, the surviving parent would live with and be cared for by one of the daughters (the Agreement).

2    The appeal arises because of the operation of s 1123(1) of the Social Security Act 1991 (Cth), which provides that a person “disposes of assets” if, relevantly, the person disposes of, or diminishes the value of, all or some of the person’s assets and receives no, or inadequate, consideration in money or money’s worth. Where a person disposes of assets worth more than $10,000 in an income year, s 1126AA(2) of the Social Security Act includes within the value of a person’s assets, for a period of 5 years starting on the day of the relevant disposal, the lesser of the amount of the disposal or the amount by which the relevant disposal(s) exceeds $10,000. Although s 11(1) provides that an “asset” includes both property and money, the value of property held for the benefit of another pursuant to a constructive trust is not included as part of the value of an asset: Secretary, Department of Social Security v Agnew [2000] FCA 59; 96 FCR 357 at [10].

3    Mrs Hulett died in August 2009. In September 2009, Mr Hulett became the sole legal owner of the family home. Upon being unable to care for himself any longer, Mr Hulett sold the home in September 2021 and received net proceeds of $713,819.38. In September 2021 and October 2021, Mr Hulett transferred $200,000 to each of his three daughters. Having done so, Centrelink assessed that distribution of Mrs Hulett’s share of the net proceeds of the sale of the family home as gifting. Centrelink reduced Mr Hulett’s aged-pension rate accordingly. Mr Hulett contended that the family home had been subject to a common intention constructive trust so in truth, he had made a trust distribution to his daughters, not gifts.

4    In January 2022, Mr Hulett applied unsuccessfully to the Social Services & Child Support Division of the Tribunal for review of the decision to reduce his pension. On 22 December 2023 (with written Reasons published on 7 February 2024) the Tribunal set aside that decision, concluding (Reasons at [89]) that “the evidence substantiates that the necessary elements of a common intention constructive trust exists [sic] in this case”.

5    Although some of the authorities to which I was referred by the parties raise the interesting and important academic question of whether common intention constructive trusts continue to exist as a doctrine distinct from proprietary estoppel, the issue was not fully argued: see: G E Dal Pont, ‘Equity’s Chameleon – Unmasking the Constructive Trust’ (1997) 16 Australian Bar Review 47; Darryn Jensen, ‘Rehabilitating the Common Intention Trust’ (2004) 23(1) University of Queensland Law Journal 54; John Randall, ‘Proprietary estoppel and the common intention constructive trust – Strange bedfellows or a match in the making?’ (2010) 4 Journal of Equity 171; Mark Pawlowski and Nicola Grout, ‘Common intention and unconscionability: A comparative study of English and Australian constructive trusts’ (2012) 2 Family Law Review 164; Susan Barkehall Thomas, ‘Proprietary Estoppel and Common Intention Constructive Trusts: Is it time to abandon the distinction?’ [2014] Singapore Journal of Legal Studies 168; Lorenzo Maniscalco, ‘Common intentions and constructive trust: unorthodoxy in trusts land’ (2020) 2 Conveyancer and Property Lawyer 124.

6    For reasons that are explained below, I have proceeded on the basis that there remains a relevant distinction between the two doctrines in Australian law. The distinction manifests itself most clearly in a case such as the present where the facts support the existence of a trust, arising by operation of law at the time when the circumstances contemplated by the common intentions arose (when Mr Hulett required care) to enforce the parties’ otherwise unenforceable common intentions (that on care being provided by one daughter, property would be transferred to all three). This is in contradistinction to the more usual case where one party reasonably relies on a non-binding promise to give that party an interest in property in the event of the promisee doing some act, or refraining to act, but the promisor resiles from the promise. The former is traditionally regarded as an “institutional” constructive trust, whereas the latter may give rise to the imposition of “remedial” constructive trust. In either case, the remedy imposed in equity responds to avoiding or preventing a detriment should the party resile from the assumption upon which the other acted or abstained from acting.

7    The Secretary contends that the Tribunal erred in three respects: first, in finding that Mr Hulett’s daughters “each made their homes available” for him for in-home aged care in the absence of evidence capable of supporting that finding; secondly, in reaching a conclusion of “detrimental reliance” for the purposes of a constructive trust when the facts as found were incapable of supporting the conclusion; thirdly, in failing to evaluate whether the relevant “detriment” was sufficiently substantial to create unconscionability.

8    At its most basic, the question is whether, assuming there was sufficient evidence to support the Tribunal’s finding that the daughters made their homes available to Mr Hulett for in-home aged care, which the Secretary disputes, the principles of detrimental reliance as an element of equitable estoppel apply equally to the concept of detrimental reliance as it arises in the law of constructive trusts.

9    For the reasons that follow, the Secretary’s appeal must be dismissed.

Ground 1: Evidence that each daughter made her home available?

10    The Secretary submitted that the Tribunal’s finding that the “daughters each made their homes available … to Mr Hulett for in-home aged care” is vitiated by legal error because the evidence rose no higher than showing that: (a) Ms Gosson did in fact make her home available after Mr Hulett’s health failed; (b) Ms Baker and Ms Edwards each offered to make her home available but on Mr Hulett’s own account, neither home was suitable.

11    Ground 1 is misconceived.

12    Each of Mr Hulett and his three daughters gave evidence before the Tribunal. The Agreement did not depend on each of the three daughters making their homes available to Mr Hulett. The unchallenged evidence of each of them was that it was agreed that one of the daughters would provide the in-home care for the surviving parent. Nevertheless, no error has been demonstrated.

13    The Tribunal accepted Mr Hulett’s evidence, and that of his three daughters, that the Agreement was reached at least before 2009 when Mrs Hulett fell ill and eventually died.

14    Mr Hulett’s evidence was that in discussions about the Agreement, “[t]he three of them all agreed that they would take us in if we needed, or one of us if one of us had died” (Reasons at [43]). That answer obviously did not mean that all three daughters would take-in the surviving parent. As Mr Hulett explained in his evidence, after his health started to fail and he was to be discharged from hospital he said to his daughters, “that I had three options as to where I would now live. I wasn’t going to be able to live on my own. I let the girls take it up. The girls said I would have to pick one” (emphasis added). After observing that Carol’s house was “like central station” and Brenda’s house “is too small for an extra one”, Mr Hulett said “[t]hat left Barbara. I was already staying with her. Everyone was settled that I would be staying on with her” (Reasons at [45]). The fact that Mr Hulett did not consider Ms Baker’s and Ms Edwards’ homes to be suitable for him does not gainsay any offer made by them.

15    Barbara, Ms Gosson, gave evidence that from the time of the family meeting before Mrs Hulett became ill “it was always clear that one of us was going to have to look after the parent that survived” (Reasons at [55]). Ms Gosson’s evidence was that Mr Hulett has lived with her since he went to hospital after falling through his verandah (Reasons at [59]). She said, “the agreement was that yes, we would look after the other surviving person … If you can look at the time when I was given the money to when I bought a house, that was a very short period. I stuck to the agreement, I did what I was told” (Reasons at [56]). Ms Gosson explained further that, “So where we’re living now I did buy – I did purchase property. When I was looking to buy a house I actually took my dad with me when I was searching for properties” (Reasons at [59]).

16    Brenda, Ms Baker, gave evidence, which was accepted by the Tribunal, “that she and her other siblings all offered Mr Hulett to move in with them. However, Mr Hulett chose to live with Ms Gosson” (Reasons at [69]). Ms Baker gave evidence that there had been a family discussion as to where either surviving parent would live during which it was agreed, “they were not going into a retirement home, they would have to live with one of us” (Transcript at p 39, lines 3-4). She said, “… I did offer and my other sister offered as well, but he chose to live with Barbara …” (Transcript at p 39, lines 12-13).

17    Carol, Ms Edwards, gave evidence, which was also accepted by the Tribunal, that she had reached the Agreement with her parents about the division of the property after the sale of the family home “on the basis that [she] or one of [her] siblings would look after the surviving parent” (Reasons at [72]).

18    The Secretary submitted that there was no evidence before the Tribunal capable of supporting the finding (Reasons at [88]) that “Mr Hulett’s daughters each made their homes available (and continue to make their homes available) to Mr Hulett for in-home aged care”. I do not accept that submission. Whilst the evidence was admittedly slim, the evidence given by Mr Hulett himself that “the girls said he had to pick one” followed by his assessment of whose home would be most suitable, is sufficient to support the finding that each of his daughters made their homes available. Nothing in the evidence given by Mr Hulett’s daughters contradicts that evidence. Nor does the evidence of each daughter, elicited in cross-examination, that each would have looked after Mr Hulett in their home even if no money was available detract from the finding.

19    Ground 1 cannot succeed.

Grounds 2 and 3: Were the facts capable of establishing detrimental reliance?

20    To establish detrimental reliance as an element of estoppel, “it is ordinarily necessary for the promisee to show not merely that the promise was one factor taken into account in motivating the promisee’s action or omission but that the promisee would not have acted or omitted to act in the absence of the promise”: Kramer v Stone [2024] HCA 48 at [39] per Gageler CJ, Gordon, Edelman and Beech-Jones JJ. As it was put by Gageler J in Sidhu v Van Dyke [2014] HCA 19; 251 CLR 505 at [91]:

To establish that the belief to which she was induced by the appellant’s representations was a contributing cause to the course of action or inaction which she took, the respondent needed to establish more than that she had the belief and took the belief into account when she acted or refrained from acting. She needed to establish that having the belief and taking the belief into account made a difference to her taking the course of action or inaction: that she would not have so acted or refrained from acting if she did not have the belief.

(Emphasis added.)

21    The Secretary submitted, citing Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413, that the principles of detrimental reliance established in the law of equitable estoppel apply equally to the concept of detrimental reliance for the law of constructive trusts. In Imam Ali Islamic Centre, McMillan J identified three elements of a common intention constructive trust (at [402]), as to which the parties were generally agreed. The first is the existence of an actual or inferred common intention of the parties as to their beneficial interest in property, which need only crystallise at one point in time. The second is the existence of detrimental reliance on the common intention by the claimant of the trust. The third is that it would be an equitable fraud on the claimant of a trust for the legal owner of property to deny the claimant’s interest in the property.

22    In respect of the third element, her Honour continued (at [477]):

It is convenient for these purposes to apply the principles of detrimental reliance established in the law of equitable estoppel. The question of detriment is assessed as at the time a party seeks to depart from the common intention [Grundt v The Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641, 674-5]. The relevant detriment is not the mere loss flowing from the non-fulfilment of the common intention [Delaforce v Simpson-Cook (2010) 78 NSWLR 483, 491 [41]]. The detriment is any material disadvantage incurred by [the relevant party] flowing from any action or inaction taken as a result of relying on the common intention, should the common intention be repudiated … Reliance on the common intention is a fact to be found; it is not to be imputed on the basis of evidence which falls short of proof of the fact [Sidhu at [58]].

(Emphasis added.)

23    Mr Hulett submitted that the Secretary’s submission that the element of reliance in the doctrine of common intention constructive trusts “is absolutely identical to that of reliance in estoppel is at tension with the separate status of the two doctrines”. He submitted that the doctrine of common intention constructive trusts is distinct from that of equitable estoppel.

24    It has been recognised since the decision of the House of Lords in Gissing v Gissing [1971] AC 886 that common intention constructive trusts are trusts arising by operation of law to enforce the parties’ otherwise unenforceable common intentions (most usually because of a failure to comply with the writing requirements of a modern iteration of the Statute of Frauds) when they have been detrimentally relied upon by one of them. In Gissing, a matrimonial home was purchased by and registered in the name of the husband with the wife contributing to the expenses of the family. The couple separated and upon leaving the home, the husband said to the wife that the house was hers. The wife sought a beneficial interest in the family home. The House of Lords found that no common intention between the parties sufficient to support the trust could be identified. Lord Diplock explained (at 905) that the common intentions of the parties were relevant to establishing a trust of land only when:

[T]he trustee has so conducted himself that it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired. And he will be held so to have conducted himself if by his words or conduct he has induced the cestui que trust to act to his own detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the land.

25    Subsequent to the decision in Gissing, as observed by Maniscalco at 128, by the 1990s, at least in the United Kingdom, common intention constructive trusts had become a well-recognised branch of institutional constructive trusts, mostly applied to cases involving family homes following the breakdown of intimate relationships. The same has not been true in Australia where, for several decades now, property disputes between parties to de facto relationships have been the subject of statute law.

26    A finding that a common intention constructive trust exists usually results in a declaration by the Court that the plaintiff holds a beneficial interest in the property, arising from the time of the relevant intention. As Thomas explained at 170, this “classic outcome” is a result of the institutional view, under which “the court is only declaring the right that has already arisen”. Thomas referred in that passage to Sir Terence Etherton, ‘Constructive Trusts and Proprietary Estoppel: The Search for Clarity and Principle’ (2009) Conveyancer and Property Lawyer 104 at 105, where it was further explained that “[t]he institutional constructive trust is a property institution, which will have arisen before the date of the court’s judgment, and whose existence the court declares as a subsisting private right”.

27    The remedial response may therefore differ from that which pertains to proprietary estoppel. In that case, as has been said recently by the High Court in Kramer (Gageler CJ, Gordon, Edelman, and Beech-Jones JJ) at [40]:

Unlike the recognition of a gift, or the enforcement of a testamentary promise under a valid will, or the enforcement of a contractual promise, it is the existence of detriment arising from reasonable reliance upon an unfulfilled promise that completes the recognition of the estoppel and moulds the remedial response. As this Court has repeatedly held, “[i]t is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise” [Giumelli v Giumelli (1999) 196 CLR 101 at [35] and Sidhu v Van Dyke at [58]]. Hence, the relief is “moulded accordingly to prevent th[e] detriment” [Pipikos v Trayans (2018) 265 CLR 522 at [61]]. In cases where the detriment suffered by a plaintiff is “a relatively small, readily quantifiable monetary outlay on the faith of the [defendant’s] assurances” then, apart from interest, the likely equitable relief ordered will be compensation in the amount of the monetary outlay. By contrast, where the detriment suffered “involves life-changing decisions with irreversible consequences of a profoundly personal nature”, the likely equitable relief will be to require fulfilment of the assumption upon which the plaintiff acted, such as by a conveyance of rights, or an assessment of the monetary value of the assumption [Sidhu v Van Dyke at [84]-[85]].

(Emphasis added.)

28    These observations by the plurality were made in the context of reiterating that the requirements of equitable estoppel as stated by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429 were required to be satisfied when “the focus is only upon an equitable estoppel which arises by reason of encouragement from a promise” albeit refined (at [36]), in summary, as follows. First, there must be a clear and unequivocal promise made by the party estopped to the party who relies on the promise, generally concerning future conduct (at [37]). Secondly, a reasonable person in the position of the promisor must have expected or intended that the promisee would rely on the promise by some action, omission or course of conduct (at [38]). Thirdly, the promisee must have relied on the promise by acting or omitting to act in the general manner that would have been expected. It must usually be shown that the promisee’s reliance “made a difference to [the promisee] taking the course of action or inaction” (at [39], quoting Sidhu v Van Dyke at [91]). Fourthly, the consequence of the promisee’s reliance must be that the promisee will suffer detriment if the promise is not fulfilled, in the sense that the promisee will be left in a worse position, as a consequence of reliance upon the promise, than if the promise had not been made (at [40]).

29    The cause of action with which the High Court was concerned in Waltons Stores and Kramer depended on a failure by the promisor to fulfil the promise. No such failure arises in the present case, nor is it clear that any unconscionable assertion of title is necessary to construe a common intention constructive trust: Staatz v Berry, in the matter of Wollumbin Horizons Pty Ltd (in liq) (No 3) [2019] FCA 924; 138 ACSR 231 at [170]. In Kramer at [32], the plurality eschewed the need to consider whether there is any difference between the various descriptions of an estoppel arising from a promise upon which a plaintiff claims an entitlement to new property rights – those descriptions being promissory estoppel, proprietary estoppel, estoppel by conduct, and equitable estoppel. Nor did the High Court take the opportunity to consider whether there is any “single overarching doctrine” of estoppel, which may or may not encompass the common intention constructive trust.

30    As Leeming JA observed in Bijkerk Investments Pty Ltd v Bikic [2020] NSWSC 1336 at [113], “Australian authority for common intention constructive trusts is scant”. His Honour identified (at [116]) some of the academic work that has questioned whether the doctrine of common intention constructive trusts survives following the developments in Australian law since Muschinski v Dodds [1985] HCA 78; 160 CLR 583 and Baumgartner v Baumgartner [1987] HCA 59; 164 CLR 137. Similar views had also been expressed in the United Kingdom but, in the 2007 decision of the House of Lords in Stack v Dowden [2007] UKHL 17; 2 AC 432 at [37], Lord Walker said:

… I am now rather less enthusiastic about the notion that proprietary estoppel and “common interest” [sic] constructive trusts can or should be completely assimilated. Proprietary estoppel typically consists of asserting an equitable claim against the conscience of the “true” owner. The claim is a “mere equity”. It is to be satisfied by the minimum award necessary to do justice (Crabb v Arun District Council [1976] Ch 179, 198), which may sometimes lead to no more than a monetary award. A “common intention” constructive trust, by contrast, is identifying the true beneficial owner or owners, and the size of their beneficial interests.

(Emphasis added.)

31    Subsequent to the decisions in Muschinski v Dodds and Baumgartner v Baumgartner, the Full Court of this Court (Black CJ, Kiefel and Finkelstein JJ) held that the law in Australia is the same as the law in England, namely that some constructive trusts are proprietary in nature, and whilst they do not necessarily impose upon the holder of the legal title the various administrative duties and fiduciary obligations which ordinarily attend the settlement of property to be held by a trustee upon an express trust for successive interests, they exist from the time of the transaction (the formation of the common intention) and do not depend upon a court order to come into existence: Parsons v McBain [2001] FCA 376; 109 FCR 120 at [11]-[13] citing Re Sharpe (a Bankrupt); Ex parte Trustee of Bankrupt’s Property v Bankrupt [1980] 1 WLR 219 at 225 (Browne-Wilkinson J); Giumelli v Giumelli (1999) 196 CLR 101 at 112 (Gleeson CJ, McHugh, Gummow and Callinan JJ); Muschinski v Dodds at 614 (Deane J).

32    To that extent, an “institutional” constructive trust necessarily differs from a remedial constructive trust resulting from a finding that a promisor is estopped from resiling from a reasonably held expectation induced by the promisor.

33    The United Kingdom authorities to have considered the juridical basis of common intention constructive trusts fall, essentially, into two categories: those concerned with domestic home ownership in joint names where it was argued that the beneficial ownership did not follow the legal title, as to which the leading authorities are Stack v Dowden and Kernott v Jones [2012] 1 AC 776; and those where the legal title is in the name of one party only, as to which see Lloyd’s Bank plc v Rosset [1991] 1 AC 107.

34    The category of cases where a common intention constructive trust arises is, however, not closed. In Silvia (Trustee) v Williams [2018] FCAFC 194, the Full Court of this Court said, at [14]:

The categories of case in which this may occur are not closed but one common example is where a spouse or partner makes a financial contribution towards the cost of acquiring, improving or maintaining a property held in the other’s name. In such cases, it is accepted that the party asserting the existence of the trust must prove, first, that the spouses held a common intention that they would own the property together; and, secondly, that the party asserting the trust acted upon that common intention by making contributions or other action to their detriment: Green v Green (1989) 17 NSWLR 343 (‘Green v Green’) at 354-355 per Gleeson CJ (Priestly JA agreeing at 371). The contributions to the matrimonial home may be both direct or indirect (Gissing v Gissing [1971] AC 886 (‘Gissing v Gissing’) at 908; Green v Green at 354) and may include not only the costs of acquisition, but also the costs of any improvements or costs relating to maintenance (Green v Green at 353). That said, the mere fact of the relationship combined with express or implied undertakings to provide support and accommodation will not suffice to establish the trust.

(Emphasis added.)

35    In circumstances such as those in the present case, where there has been no attempt by Mr Hulett to resile from the expectation he induced in his daughters, and where there is no dispute as to the common intention, it is even less clear that the distinction between common intention constructive trusts and estoppel (of whatever description) ought be abandoned. Indeed, as a matter of principle, there seems to be sound reason for maintaining the distinction. As Randall observed at 197, the remedial consequences for proprietary estoppel, the “minimum equity” or “proportionality” requirement,

can serve to restrict the relief granted in a proprietary estoppel case (either to a lesser proprietary interest than that which the claimant had expected, or to a non-proprietary remedy). There is no direct equivalent for a constructive trust. Hence, put baldly ‘[t]he claimant who establishes a proprietary estoppel may do less well than the claimant who establishes a constructive trust’ [Per Black J in Q v Q [2008] EWHC 1874 (Fam); [2009] WTLR 1591 at [113]].

(Emphasis added.)

36    For these reasons, and in the absence of High Court authority to the contrary, it remains appropriate to continue to draw a distinction between the elements of equitable estoppel and those of a common intention constructive trust.

37    Consequently, the Secretary’s submission that the element of reliance in the doctrine of common intention constructive trusts is identical to that of reliance in estoppel must be rejected. I also reject the Secretary’s contention that the passage at [477] in Imam Ali Islamic Centre in which McMillan J considered it “convenient for these purposes to apply the principles of detrimental reliance established in the law of equitable estoppel” is to be construed as authority for the proposition that those principles “apply equally to the concept of detrimental reliance for the law of constructive trusts” without regard to the precise category of constructive trust with which one is concerned. As her Honour said in Imam Ali Islamic Centre at [406], in a passage referred to by Derrington J in Staatz at [167], which was endorsed subsequently by the Queensland Court of Appeal in Nathan v Williams [2020] QCA 138 at [107]:

Despite the evident taxonomical confusion, it appears from the authorities that a common intention constructive trust has a role to play distinct, albeit not always mutually exclusive, from a joint endeavour constructive trust and a constructive trust arising from equitable estoppel. The common intention constructive trust will enter centre stage where the formalities for a contract or express written trust are not satisfied …

38    Nevertheless, it is clear that something in the nature of detrimental reliance must be established in order to make out a common intention constructive trust. On appeal to the Privy Council in Austin v Keele (1987) 10 NSWLR 283 at 291, Lord Oliver said:

A trust does not come into being merely from a gratuitous intention to transfer or create a beneficial interest. There has first of all to be the additional ingredient of an intention or at least an expectation that the cestui que trust will act in a particular way, normally, though not necessarily exclusively, by making some contribution towards the cost of acquisition of the property in which the interest is intended to subsist. Moreover, Lord Diplock’s formulation of the principle in Gissing v Gissing involves the further essential element that the trustee has so conducted himself that it will be inequitable to allow him to deny to the cestui que trust the beneficial interest which it was proved that he was intended to have. There has to be some conduct detrimental to the cestui que trust, even if only in the sense of an irrevocable change of legal position, which is referable to the common intention proved and undertaken on the footing of the grant of the beneficial interest claimed.

(Emphasis added.)

39    That this passage reflects the current state of the Australian law on this issue is beyond doubt: Agnew at [14]-[15] (Drummond, Sundberg and Marshall JJ); Bijkerk at [114]-[115]; Galati v Deans [2023] NSWCA 13 at [56] (Macfarlan JA, White JA, Basten AJA).

40    In Koprivnjak v Koprivnjak [2023] NSWCA 2 at [24], the New South Wales Court of Appeal held that the primary judge was correct in adopting the statement of legal principles relevant to a common intention constructive trust by Ward CJ (in Eq) in Bassett v Cameron [2021] NSWSC 207, which included that a less stringent test applies to the requirement of detriment once the common intention has been established. In Bassett v Cameron, Ward CJ said, at [564]:

It is not necessary for a common intention constructive trust that the common intention is that the parties have a specific share of the property; it is sufficient that they intend that the claimant should have a beneficial interest or “some form of proprietary interest” (Shepherd v Doolan at [36]). A less stringent test to the question of detriment has been said to apply once the common intention has been established – see Shepherd v Doolan at [40], where his Honour noted that, in Green v Green (1989) 17 NSWLR 343 at 357 Gleeson CJ (with whom Priestley JA agreed) approved the test appearing in the judgment of Sir Nicolas Browne-Wilkinson VC in Grant v Edwards [1986] Ch 638 at 657 that:

… [O]nce it has been shown that there was a common intention that the claimant should have an interest in the house, any act done by her to her detriment relating to the joint lives of the parties is, in my judgment, sufficient detriment to qualify. The acts do not have to be inherently referable to the house ... The holding out to the claimant that she had a beneficial interest in the house is an act of such a nature as to be part of the inducement to her to do the acts relied on. Accordingly, in the absence of evidence to the contrary, the right inference is that the claimant acted in reliance on such holding out and the burden lies on the legal owner to show that she did not do so.

(Emphasis added.)

41    Earlier in her reasons, when considering whether the plaintiff had established detrimental reliance sufficient to ground relief in equitable estoppel, Ward CJ had observed, at [548], that the concept of detriment in the context of proprietary estoppel is “neither narrow nor technical (Donis v Donis at [20])” and, at [550], that “[it] may be of a kind and extent that involves ‘life-changing decisions with irreversible consequences of a profoundly personal nature’” (citing Sidhu at [84]). It had been argued in Bassett v Cameron that the plaintiff “would have carried on farming at [the relevant property] in any event in part because he loved farming there with his father”, at [547]. In response to that proposition, Ward CJ said, at [551]-[552]:

Insofar as it is suggested that Geoff financially benefitted from his participation in the farming of The Springs (the suggestion being that there was therefore no detrimental reliance) and has conducted his agricultural consultancy business throughout the time he was farming The Springs, it is important to bear in mind (as noted in E Co v Q at [1166]) that equity’s intervention is not premised on the outcome of some accounting of the benefits obtained and the detriment sustained by each party (i.e., the existence of an equity of the kind here claimed by Geoff does not turn on an analysis of comparative financial position). Nor, it must be said, does it depend on abstract, idiosyncratic notions of fairness. It has thus been said that detrimental reliance “need not constitute, in any sense, a consideration moving to the party bound” (Sullivan v Sullivan at [20]; Delaforce v Simpson-Cook at [56]).

Had I been satisfied to the requisite degree that the alleged representations were made in 2008/2009, then I would have found that the decision not to leave The Springs or to pursue his consultancy business full time, but instead to pursue the farming of The Springs in partnership with Bill, did amount to a sufficiently life-changing decision which had an impact (albeit one that cannot be precisely measured) on the development of the agricultural consultancy business so as to amount to detrimental reliance in the requisite sense.

(Emphasis added.)

42    In De Bruyne v De Bruyne [2010] EWCA Civ 519; 2 FLR 1240, the English Court of Appeal explained the nuances that have arisen in the authorities dealing with different categories of common intention constructive trusts. In brief summary, a husband initiated the winding up of a trust in which he and his five children were discretionary beneficiaries. Pursuant to an agreement between the husband and the trustee, on the winding up of the trust, the trustee appointed to the husband certain shares which had been held in the trust. The husband signed the agreement on behalf of himself and the children. The agreement was entered into on the basis that the shares would belong to the children and would be appointed to the husband, out of the trust, for that purpose. In ancillary relief proceedings between the wife and the husband an issue arose as to whether the shares had been transferred to the husband absolutely, or upon trust for the children. The judge at first instance concluded that the husband had taken the shares on the basis of a common intention constructive trust for the benefit of the children or, in the alternative, that the court could impose a remedial constructive trust. The wife appealed against these conclusions. The wife’s appeal was unsuccessful. She had argued, inter alia, that on the test laid down in Lloyd’s Bank plc v Rosset, the beneficiary must have acted to his detriment in reliance on the common intention but in the circumstances, the children had not done so.

43    Lord Justice Patten, with whom Thorpe LJ and Sir Paul Kennedy agreed, concluded, at [54], that the husband was bound by the agreement. His Lordship reasoned:

49.    The authorities dealing with common intention constructive trusts provide only one example of a situation in which equity will impose a trust upon the owner or transferee of property based on the circumstances in which the property is acquired or dealt with. For a trust to be created the court has to be satisfied that it would be unconscionable for the legal owner to assert his legal interest in the property to the exclusion of the alleged beneficiaries. The fiduciary obligation which that involves arises most obviously in an express trust where the property is held under the terms of a trust instrument in which the interests of the beneficiaries are clearly identified. In such cases the trustee either receives the property subject to the beneficial interests created by the instrument of transfer or, in the case of an express declaration of trust, subjects property already owned by him to those interests. In the case of a constructive trust, the obligation is imposed upon him as a result of his unconscionable conduct.

50.     In common intention constructive trusts the equity arises because it would be unconscionable for the owner of the property to be allowed to deny the co-habitee the interest which it was agreed or understood that he or she would have and in reliance on which the co-habitee acted to his or her detriment. In a case like Lloyds Bank plc v Rossett where the husband purchased the house with money from his own family trust, and the wife made no financial contribution to its acquisition but relied instead on works of improvement which she carried out to the property, some causal link is necessary in order to connect the work done to the agreement or understanding that the ownership should be shared and so deprive the husband of absolute ownership of a property which he had paid for. This requirement of detrimental reliance is closely bound up with the question of unconscionability and in the analogous context of proprietary estoppel has come to be regarded as something which ought properly to be considered as part of a broader inquiry into whether the repudiation of the assurance given was or was not reasonable in all the circumstances: see Gillett v Holt [2001] Ch 210 at page 232D.

51.     There are, however, a number of situations in which equity will hold the transferee of property to the terms upon which it was acquired by imposing a constructive trust to that effect. These cases do not depend on some form of detrimental reliance in order to re-balance the equities between competing claimants for the property. They concentrate instead on the circumstances in which the transferee came to acquire the property in order to provide the justification for the imposition of a trust. The most obvious examples are secret trusts and mutual wills in which property is transferred by will pursuant to an agreement that the transferee will hold the property on trust for a third party. In neither case does the intended beneficiary rely in any sense on the agreement (he may not even be aware of it) but, in both cases, equity will regard it as against conscience for the owner of the property to deny the terms upon which he received it. It is not necessary in such cases to show that the property was acquired by actual fraud (although the principle would apply equally in such cases). The concept of fraud in equity is much wider and can extend to unconscionable or inequitable conduct in the form of a denial or refusal to carry out the agreement to hold the property for the benefit of the third party which was the only basis upon which the property was transferred. This is sufficient in itself to create the fiduciary obligation and to require the imposition of a constructive trust. The principle is a broad one and applies as much to inter vivos transactions as it does to wills: see Rochefoucauld v Boustead [1897] 1 Ch 196; Bannister v Bannister [1948] 2 All ER 133.

    (Emphasis added.)

44    The circumstances of the present case come close to the third category of situation identified by Patten LJ in that Mr and Mrs Hulett’s agreement between themselves was that, after the death of one spouse, the other was to hold the deceased’s share in the matrimonial home on trust for their three daughters. But there was no secret trust or mutual will in this case. The agreement between the spouses was predicated on one of their three daughters agreeing to provide in-home care – and so it remains necessary for detriment to be established.

45    By his second ground of appeal, the Secretary contended that, assuming it to be correct that the three daughters made their homes available to Mr Hulett for in-home aged care, such a finding cannot support a conclusion that establishes detrimental reliance sufficient to support a constructive trust. That is said to be for two reasons. First, it was contended that the Tribunal made no finding that the three daughters made their homes available before Mr Hulett sold the Property and distributed the proceeds to them. The Secretary submitted that none of the daughters suggested that she had taken, or refrained from taking, any action in reliance on the Agreement prior to the distribution of the money. Secondly, it was contended that not only was there no finding made by the Tribunal that any daughter made her home available in reliance on the Agreement, the evidence was that each would have done so regardless of the Agreement. It was submitted that there was an absence of any finding that any daughter had in fact changed her position in any way in reliance on the common intention.

46    By his third ground of appeal, the Secretary submitted that the Tribunal failed to properly evaluate the consequences of the detriment it had identified. The Secretary submitted that the identified detriment, being the daughters making, and continuing to make, their homes available to their father, was not sufficiently substantial to bind Mr Hulett’s conscience. The Secretary relied on Q v E Co [2020] NSWCA 220 where, at [127], the Court of Appeal explained, having been referred to language to the effect that detriment must be “substantial” or involve “something substantial”:

Those references are to detriment or harm which is sufficiently substantial that it would be unconscionable for the party who gave the assurance to depart from it. There may be cases in which an estoppel is established but the disproportion between detriment and expectation is so great that conscience does not require the party estopped to make good the assurance: Sidhu at [85]; Giumelli at [40]-[48]. But for the question of relief to arise at all there must be detriment that is sufficiently substantial (or, to use equivalent expressions, real or material) to bind the conscience of the party said to be estopped.

47    In Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; 253 CLR 560 at [84], the plurality (Hayne, Crennan, Kiefel, Bell and Keane JJ) explained, in the context of considering the requirements of the defence of change of position by the recipient of a payment made under a mistake:

The equitable doctrine concerning detriment is concerned with the consequences that would enure to the disadvantage of a person who has been induced to change his or her position if the state of affairs so brought about were to be altered by the reversal of the assumption on which the change of position occurred.

48    The plurality said (at [85]) that this view “accords with the understanding of detrimental reliance sufficient to ground an estoppel, as explained in Grundt v Great Boulder Pty Gold Mines Ltd by Dixon J”.

49    The Secretary relied on the observations of Gageler J in Australian Financial Services (which were relied on by Bathurst CJ in Ashton v Pratt [2015] NSWCA 12; 88 NSWLR 281 at [147]), who said, at [150]:

The “real detriment or harm” which that party must prove to ground an estoppel can be any “material disadvantage” which would arise from permitting departure from the assumption on the faith of which that party acted or refrained from acting. Material disadvantage must be substantial, but need not be quantifiable in the same way as an award of damages. Material disadvantage can lie in the loss of a legal remedy, or of a “fair chance” of obtaining a commercial or other benefit which “might have [been] obtained by ordinary diligence”.

50    Neither the High Court in Australian Financial Services nor the New South Wales Court of Appeal in Ashton v Pratt was, however, concerned with a common intention constructive trust. It is therefore important to return to what Dixon J identified in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-675 as basal to the intervention of equity where a party has changed his or her position consequent upon an agreed understanding:

[I]t is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice.

(Emphasis added.)

51    The Supreme Court of the United Kingdom has recently reaffirmed that this passage continues to represent the law of England and Wales: Guest v Guest [2022] UKSC 27; [2024] AC 833 at [189] (Lord Leggatt JSC, Lord Stephens JSC agreeing).

52    On the issue of detrimental reliance, the Tribunal found (Reasons at [88]) that, “Mr Hulett’s daughters each made their homes available (and continue to make their homes available) to Mr Hulett for in-home aged care”. The Tribunal had previously found, inter alia, that: there was a common understanding that upon the surviving spouse being unable to live independently in the family home, the surviving spouse would be provided with suitable accommodation and in-family aged care (Reasons at [77]); Mr Hulett did live alone at home until ill health made it impossible for him to continue to do so, after which he discussed with his daughters which one of them would take him in and it was apparent that all three were willing to do so (Reasons at [78]); following Mr Hulett’s moving in to Ms Gosson’s home, Mr Hulett sold the matrimonial home and distributed Mrs Hulett’s share of the net proceeds, together with a top-up gift, to each of his three daughters equally (Reasons at [79]); while it is the case that only Ms Gosson is providing in-home aged care to Mr Hulett, there remains a willingness on the part of Ms Baker and Ms Edwards to do the same (Reasons at [80]); Mr Hulett’s daughters accepted that they would have looked after him if he had no money and was not able to distribute the home sale proceeds to them (Reasons at [82]).

53    As to the latter finding, as the Tribunal recorded (Reasons at [53]), whilst Mr Hulett ’s evidence was that he was “pretty sure” his daughters would have taken him in even if there had been no agreement in place for his widow’s share of the proceeds to be distributed amongst them, he said, “Well, if – if they wouldn’t have got [the money] I don’t think I’d have lasted long because it would’ve been too much expense, you know, the – the rents alone going up. I wouldn’t have been able to afford to pay them anything”.

54    The Secretary submitted that “the Tribunal made no finding that the three daughters made their homes available to Mr Hulett before he sold the Property and distributed the money (except, perhaps, in relation to Ms Gosson, although that is unclear)”. That submission must be rejected. It is apparent on reading the Reasons as a whole, together with the evidence referred to in the footnotes, that the Tribunal’s finding that each of Mr Hulett’s daughters made her home available to him in reliance on the Agreement (Reasons at [78]) was a finding that the daughters had done so before Mr Hulett distributed the proceeds of sale. Indeed, the Tribunal expressly found that Mr Hulett had sold the matrimonial home and distributed the net sale proceeds to his daughters “following [him] receiving in-family aged care with Ms Gosson” (Reasons at [79]). So much is also clear from Mr Hulett’s evidence recorded by the Tribunal (Reasons at [45]) in which he explained having a fall in 2021, after which he was admitted to hospital. This appears to have happened in May of 2021 although there was no direct evidence of the date. There was, however, no challenge to the evidence given in Mr Hulett’s statement, referred to by the Tribunal, that he had lived in the matrimonial home on his own until May 2021 and that from that time, he made the decision to sell the home because of his failing health.

55    As has already been set out above, the evidence given by Mr Hulett and all three daughters was sufficient to ground the Tribunal’s finding that each daughter made her home available to him for in-home aged care, at least from the time when he was discharged from hospital in early 2021 – that being the time when the common intention crystallised – and that Ms Gosson in fact took on the task of providing care for her father in her home. That was clearly prior to the sale of the Property, which occurred on 30 September 2021, according to the unchallenged evidence given in his statement. It was also prior to the distribution of the proceeds of sale to his daughters (Reasons at [79]). Again, Mr Hulett’s unchallenged evidence was that $200,000 was transferred to Ms Gosson on 30 September 2021 and the remaining $400,000 was transferred in equal proportions to Ms Baker and Ms Edwards on 1 October 2021.

56    There can be little doubt that at least Ms Gosson’s conduct in taking in her father after his discharge from hospital to care for him in her home falls within the category of “life-changing decisions” of a “profoundly personal nature”. As Ms Gosson said in her statement, after his discharge from hospital, Mr Hulett was assessed as being unable to care for himself. In her oral evidence before the Tribunal, Ms Gosson gave evidence that at first, she thought he would only be staying with her for a couple of weeks before it became apparent to her that, whilst in his own home, he was not eating properly, was leaving the oven on, and having many falls. She said that she made changes to her own living arrangements and needed to adapt to having her father living with her – they had not lived together since she was a teenager. Although she gave no evidence of specific changes made to the house she was renting when her father first came to live with her, she gave evidence of the changes that have become necessary to the house she purchased with her share of the proceeds, including, for example, the installation of grab rails.

57    In Nilsson v Cynberg [2024] EWHC 2164 (Ch); 3 WLR 969 at [61], Pickering KC (sitting as a Deputy High Court Judge), held that the taking over of the legal liability and obligations of the mortgage, refraining from pursuing matrimonial financial remedy proceedings, and assuming responsibility for the expenses of the home and its improvements in reliance on the husband’s assertion upon their separation that the wife could have the whole property so long as she left it to their two children in due course, was “far from minimal” detriment.

58    Similarly, the taking in of an ailing parent who is unable to care for him or herself, and readjusting one’s own domestic living arrangements to do so, cannot be considered “minimal detriment”. If necessary, I would characterise it as “substantial”: Australian Financial Services per Gageler J at [150]; Ashton v Pratt at [147]; Q v E Co at [127]. In my view, however, it is sufficient in a case which gives rise to a common intention constructive trust for a claimant to prove that he or she has altered his or her position on the basis of an assumed state of affairs that is then sought to be altered in order to establish the necessary detriment: Australian Financial Services at [87]. That is because it is a trust which has arisen by operation of law to enforce the parties’ otherwise unenforceable common intentions, rather than being a mere equity, viz, an equitable claim against the conscience of the true owner.

59    Further, had Mr Hulett not distributed the $200,000 to Ms Gosson in September of 2021, she would have been able to complain that he had departed from the common intention. She had been providing care since May 2021 and had already made the “life-altering changes” necessary to care for her ailing father.

60    Similarly, the Secretary’s submission that the Tribunal made no finding that any daughter made her home available in reliance on the Agreement must also be rejected for the reasons already given above. Each daughter’s evidence was clear that the offer of in-home care was made in reliance on the Agreement, which evidence was corroborated by the subsequent steps they each took in relation to their parents’ expectation as to how the money would be expended.

61    To the extent that the Secretary submitted that there was “clear evidence” that each of the daughters would have provided care for Mr Hulett regardless of the terms of the Agreement, that evidence must be looked at in the context in which it was given.

62    Although Ms Gosson’s evidence was that, notwithstanding the Agreement, she would still have looked after her father, she agreed that it was part of the Agreement that she would receive payment and said, as recorded by the Tribunal (Reasons at [64]), “[a]nd I am looking after my father. So whether I had the money or I didn’t have the money I was still always going to look after my father. But I received the money and, like I said, due to the agreement that was made all those years ago and that was installed [sic] in me, I went and bought a property”.

63    The Tribunal referred to a passage in the transcript of the hearing where, during cross-examination, Ms Baker was asked to imagine that the house had burned down and was uninsured and that her father had no money. She was asked whether in such circumstances, she would still have taken him in. She answered, “[y]es, yes” (Reasons at [70]).

64    Similarly, the Tribunal referred to a passage of the transcript where Ms Edwards was cross-examined about whether, hypothetically, if her parents had never owned the house, she would have still taken Mr Hulett in (Reasons at [73]). In the passage cited by the Tribunal, Ms Edwards answered, “[y]es. I would’ve always taken him in but I wouldn’t have had security, I wouldn’t have – it could’ve been risky, I mean, in the rental market … so just having the security of having my own home – yes, it does make it easier but yes, I would’ve always, you know, looked after my mum or my dad, so.”

65    That line of questioning was irrelevant to the issue to be decided by the Tribunal. Neither daughter was asked the relevant question, namely whether, in the face of the Agreement, either one of them would have continued to look after Mr Hulett in circumstances where he had sold the Property but refused to distribute the half share of the sale proceeds.

66    The evidence given by Ms Gosson, Ms Baker and Ms Edwards demonstrates that they are loving daughters who have a deep sense of responsibility to their surviving parent. That, in the hypothetical circumstances put to each of them which contemplated that their father was unable to provide any financial contribution to any of them, their sense of responsibility was undiminished does not detract from the position which exists as a matter of fact, and which was found by the Tribunal to be so, namely that, in accordance with the Agreement reached between Mr and Mrs Hulett and their daughters, one of their daughters has taken in Mr Hulett and is providing him with in-home care and each daughter has received her share of the net proceeds of the sale of the matrimonial home.

67    Although not relevant to whether or not a common intention constructive trust arose prior to the distribution of the proceeds of sale, I observe that the Agreement expressed the “non-binding wish” of both Mr and Mrs Hulett that the money distributed from the proceeds of the matrimonial home would be used by the daughters to buy a house for themselves if they did not already own one. Ms Gosson’s evidence was that she had “stuck to the agreement” and after she lost her house following her divorce, she bought a house with the proceeds as had been “installed [sic] in her” (Reasons at [56]). Ms Gosson also gave evidence that she had taken her father with her when she was searching for properties (Reasons at [59]). She said in evidence:

There was a property that I wanted to look at that I actually did like and it was like a two storey – because I was used to the two storeys. Dad would get – he eventually got up the stairs but going down the stairs he had to actually go backwards, like a fire ladder, so I knew that I could not purchase a two storey home. Where he – so yes, so when we went to look at the house I’m in now, it’s a one storey house, he has his own room and, you know, he seems to enjoy it and like it but I have recently just had rails installed on the toilet. I’ve also had to have a new shower sort of – the head, I guess, the shower placed in there. He’s also had to have – or we’re waiting on the shower chair to come. I mean, as you can tell, he’s getting a little bit more frailer now so in the way as he’s using his walker a lot more, so I have to now organise some sort of rails, like ramps and stuff for him to get in and out of the house, so there is a lot that I am doing now, with him living with me, to make sure that he is as comfortable as he can be.

68    From this evidence, it is clear that Ms Gosson forewent her preference for the type of house she would have wished to purchase had she not “stuck to the agreement”.

69    Ms Baker’s evidence, as referred to by the Tribunal (Reasons at [68]) was that she and her husband had always rented but because of the Agreement, and the subsequent distribution of the proceeds, she had purchased a 30-acre block of land at Tara.

70    Ms Edwards explained her understanding of the Agreement was that “[t]he main thing was that the money we received was for us to get a house” (Reasons at [71]). In her oral evidence, Ms Edwards explained that, although separated from her husband, they shared his house with she being a tenant. She said that the house was now in both their names because she was able to purchase part of the house from her ex-husband – “with Dad’s money I have put that money into the home …”.

71    Grounds 2 and 3 cannot succeed.

Disposition

72    For these reasons, the Secretary’s appeal must be dismissed.

Associate:

Dated:    30 January 2025