rehabilitating the common trustclassic.austlii.edu.au/au/journals/uqlawjl/2004/3.pdf · 2020. 10....

REHABILITATING THE COMMON INTENTION TRUST

During the 1970s and early 1980s, Australian courts tended to resolve property disputes arising from domestic relationships by inquiring whether the parties had made their contributions to the property on the basis of a common intention to share ownership of that property. If this was so, the legal owner was said to be a constructive trustee for the contributing parties. Ford and Lee described the doctrine in these terms:

If there is a common intention of X and Y that Y should have an interest in property the title to which is in X's name and Y does not thereby acquire an interest, either because the common intention is not an effective contract binding X or because there is no provable declaration of trust by X, there is still the possibility that a constructive trust will arise. A constructive trust can arise if Y sustains detriment on the faith of the common intention.'

The common intention had to be a common intention that the parties actually possessed. That having been the case, the trust recognised in these cases might have been better classified as an express trust rather than a constructive trust. Calling it an express trust emphasised that the trust was a product of the intentions of the parties.2 Calling it a constructive trust emphasised that the parties had not completed the formalities for the creation of a trust of land and that the trust was imposed to overcome the injustice arising from the consequent inability of a party to enforce the trust.3 The trust will be described here simply as a common intention trust.

The common intention trust began to fall out of favour in the mid-1980s. Case law on domestic property sharing relationships came to be dominated by the 'joint endeavour' principle, which Deane J articulated in Muschinski v odds^ and was

* B Com LLB (Hons) LLM PhD; Lecturer, T C Beirne School of Law, The University of Queensland. This article contains material, in a revised form, from the author's doctoral thesis. The thesis was supervised by Associate Professor Bernard Cairns, Associate Professor Peter McDermott and Mr Peter Butler. The author is grateful to Professor Michael Bryan, Professor Charles Rickett and Associate Professor John Glover for their valuable comments in relation to specific matters covered in the thesis and revisited in this article. The author accepts responsibility for any errors.

H A J Ford and W A Lee, Principles of the Law of Trusts (3'd ed, 1996) [22300]. * Allen v Snyder [I9771 2 NSWLR 685,693 (Glass JA).

Gin0 Dal Pont, 'Equity's Chameleon - Unmasking the Constructive Trust' (1 997) 16 Australian Bar Review 46, 69. Note, however, that Dal Pont suggests (at 70) that, in so far as the common intention trust has any doctrinal basis at all, it is not a constructive trust.

(1985) 160 CLR 583,620-621.

(2004) 23 The University of Queensland Law Journal 55

applied by the High Court in Baumgartner v ~ a u m ~ a r t n e r . ~ Nevertheless, there were several subsequent appearances of the common intention principle in state court decisions, which show that some judges did not consider the common intention principle to be obsolete! Ultimately, the major field of operation for both the common intention trust and the 'joint endeavour' principle - that is, property disputes between parties to de facto relationships - became the subject of statute law in most Australian jurisdiction^.^ This did not mean that the common intention trust and the other creatures of equity that operated in the same field were necessarily redundant. The majority of the legislative regimes apply only to de facto relationships. Other domestic relationships that involve property sharing - for example, where a parent (usually an elderly one) resides in the home of an adult child and the financial affairs of parent and child become intermingled - will continue to be governed (except in New South Wales and the Australian Capital ~erritory*) by the equitable principles. Equitable principles may also need to be invoked in cases of property sharing arrangements between commercial entities, where the entities have failed to complete the formalities associated with the arrangement. Where, for example, two companies have agreed to share patents or other intellectual property rights, which are owned by one of the companies, but they have not completed the formalities that are required to put the agreement into effect, principles of equity will need to be invoked in order to protect the party who is not the legal owner.9 One would think that cases concerning commercial arrangements, as a class of cases, are more amenable to resolution by recourse to an intention-based principle than domestic cases would be, because the parties to the former type of arrangement are more likely to have discussed their intentions in a forthright manner.

The narrowing of the likely field of operation for the common intention trust may be its saving grace. Its perceived inadequacies were largely related to the fact that it was pressed into service to settle the terms for the dissolution of quasi-matrimonial relationships. This intention-based principle was never well adapted for doing that type of remedial work, especially when the relationships encountered most frequently were those in which the parties had assumed that they would live happily ever after and never (or hardly ever) discussed the terms of their property sharing.''

(1987) 164 CLR 137. See Green v Green (1989) 17 NSWLR 343; Miller v Sutherland (I 990) 14 Fam LR 416; Rasmussen v Rasmussen

[I9951 1 VR 613. Property (Relationships) Act 1984 (NSW); Property Law Act 1958 (Vic) ss 279-290; Property Law Act 1974

(Qld) pt 19; De Facto Relationships Act 1996 (SA); De Facto Relationships Act 1991 (NT); Domestic Relationships Act 1994 (ACT); De Facto Relationsl?ip Acf 1999 (Tas); Family Court Amendment Act 2002 (WA).

The Property (Relationships) Act 1984 (NSW) applies, by virtue of s 5, to de facto relationships (whether heterosexual or homosexual) and to any relationship of cohabitation where one party provides the other with 'domestic support and personal care'. The Domestic Relationsh@s Act 1994 (ACT) s 3 provides that a 'domestic relationship' for the purposes of the Act is one 'between 2 adults in which one provides personal or financial commitment and support of a domestic nature for the material benefit of the other'. The parties need not even be members of the same household.

See Carson v Wood (1994) 34 NSWLR 9. 'O The difficulties with finding a common intention in quasi-matrimonial cases are discussed in Marcia Neave, 'Three Approaches to Family Property Disputes - Intentionmelief, Unjust Enrichment and Unconscionability' in Timothy Youdan (ed), Equity, Fiduciaries and Trusts (1989) 253; John Mee, The Property Rights of Cohabitees, An

56 Rehabilitating the Common Intention Tmst

The imperative of producing a 'fair' outcome in quasi-matrimonial cases may have been conducive to some judicial creativity (or wishful thinking, at least) on the matter of the parties' intentions, to the point that the case law appeared to be incoherent. The removal of a category of difficult cases offers an opportunity to return to a more disciplined approach. This approach would insist upon continuity between the justification for legal intervention - that is, an actual common intention of the parties, which has been expressed by the parties or which may be inferred fiom their conduct - and the remedial response of giving effect to that intention. It is presented, not as the solution to every dispute arising from an informal property sharing arrangement, but as the appropriate response to a particular form of injustice that may arise when those relationships break down. Other equitable doctrines, such as the 'joint endeavour' principle and equitable estoppel, may need to be invoked in relation to other types of injustice that arise in informal property sharing arrangement cases.

If we admit that different informal property sharing arrangements may involve the invocation of different equitable principles, we must direct our attention to the definition of the boundaries between the respective territories of each principle. This is an exercise in taxonomy. It involves assigning different types of factual scenario to different categories on the basis that there is a material difference between them in terms of the requirements of justice. Adjudicative consistency over time requires that every factual scenario belong to one, and only one, category. Courts should not have a choice about which principle applies to the case at hand. Birks has used the term 'bent classification"1 to describe the problem to be avoided. He regards the commonly used division between contracts, torts and restitution as an example of bent classification:

That is, by any standards, a horrible division. On the same level would be a division of animals between carnivores, herbivores and amphibians. The third term tells you the habitat, the first two the eating habit. It follows that the terms must cut across each other. Alligators are carnivorous and amphibious. In the same way restitution cuts across contracts and torts. If you promise to repay a sum which I gave you, I have a contractual right to restitution. Again, for many wrongs, be they torts or breaches of e uitable duty or breaches of contract, I can get restitution (gain-based recovery). 8

The presence of more than one principle of law in a particular factual territory presents a threat to the interests of litigants in being able to predict an outcome, particularly if the different principles of justice justify different types of remedial

Analysis of Equity 's Response in Five Common Law Jurisdictions ( 1 999) 164; Rebecca Bailey-Harris, 'Recent Cases: Green v Green' (1990) 64 Australian Law Journal 365,367. ' I Peter Birks, 'Equity in the Modern Law: An Exercise in Taxonomy' (1996) 26 University of Western Australia Law Review l ,6. l2 Peter Birks, 'A Letter to America: The New Restatement of Restitution' (2003) 3 Global Jurist Frontiers 1, 13.


responses. l3 The values of consistency and predictability require that each principle be given its own factual territory. Since overlapping will not be tolerated, we must seek to carve out a factual territory for each principle, which territory belongs exclusively to that principle, and to define these territories according to a common basis for comparison. There must be nothing in the territory of Principle A that could also fall within the territory of Principle B.

The Australian case law has revealed at least three distinct types of factual scenario involving informal property sharing arrangements, each of which corresponds with a different abstract notion of injustice. These might be described as follows:

1. The evidence shows that the parties have agreed to share the ownership of property on a particular basis, but one party's conferral of ownership on the other is unenforceable at law owing to lack of compliance with the formal requirements governing dealings with property of that type.

2. The evidence shows that the parties have a common understanding that they will participate together in the acquisition and improvement of property with a view to their common enjoyment thereof, but an unforeseen, supervening event has prevented the continuation of the common enjoyment and one party is retaining a benefit that he or she should not be allowed to retain except for the purposes of the common enjoyment.

3. The evidence does not show that the parties have agreed to share the property on any particular basis. However, the legal owner of the property's conduct has encouraged the other party to believe that an interest in the property (or some other benefit) would be conferred upon it and that party does work or incurs expenditure relying upon that belief.

The second type of scenario corresponds with 'joint endeavour' cases, such as Muschinski v odds.'^ The third type corresponds with equitable proprietary estoppel. The first type of scenario corresponds with the common intention cases. One party is making unconscionable use of legal requirements as to form in order to defeat the perfection of the parties' intentions. Legal requirements as to form are not an end in themselves. They exist for the sake of ensuring that there is concrete and irrefutable evidence of the relevant parties' intentions. Where the parties have not complied with the requirements of form, but there is other clear evidence of the parties' intentions, equity (being prepared to look behind non-compliance with the

l3 The expression 'type of remedial response' refers to the measure of relief to which the plaintiff becomes entitled by reason of the occurrence of a particular type of factual scenario or - to use Birks's term - 'causative event'. Accordingly, the main types of remedial response are compensation for losses, restitution (or disgorgement) of gains and perfection of intentions or expectations. One type of remedial response may take different concrete forms in different cases. The author's views on remedial choice in equity cases are set out in Darryn Jenseil, 'The Rights and Wrongs of Discretionary Remedialism' (2003) Singapore Journal ofLegal Studies 178. l 4 (1985) 160 CLR 583.

58 Rehabilitating the Common Intention Trust

requirements of form in order to discover the parties' real intentions) will insist that the parties act in accordance with the intentions that they have previously made manifest. The lack of writing is the only barrier to the perfection of the intention at law. Equitable intervention to perfect the parties' intentions is not justified in either of the other two types of scenario because there is a deficiency of evidence about the parties' intentions - that is, the evidence may not reveal any meeting of minds at all (as in equitable proprietary estoppel cases, where the parties may be completely at cross-purposes) or the evidence reveals a common understanding but the basis for the understanding has failed to sustain itself and the parties did not provide for that eventuality (as was the case in Muschinski v odds).'^

While taxonomy plays an important role in ensuring consistency of judicial practice, taxonomy ought to remain the servant of the law and not its master. While judicial practice may be open to criticism for paying too little attention to taxonomy (and, hence, to the need for consistency and predictability), taxonomic proposals are open to criticism in so far as the categories are not grounded in existing judicial practice or are defined so rigidly as to be closed to novel factual scenarios. Therefore, the taxonomist must explain why his or her taxonomic proposal represents a credible and attractive interpretation of judicial practice. The remainder of this paper is an attempt to demonstrate that the case law does allow (and ought to continue to allow) space for the operation of the common intention principle.

111 THE DOCTRINAL FOUNDATION OF THE COMMON INTENTION TRUST

The common intention trust emerged fiom a line of English cases, which included Pettitt v pettitt16 and Gissing v iss sin^. Gissing v Gissing was a case in which the plaintiff failed to show that there was a common intention trust, so one would expect it to be instructive as to the boundaries of the doctrine. The parties were a divorced couple, who, during their marriage, had lived in a house that had been purchased in the husband's name. The wife had made a considerable contribution to the family expenses but had made only a minor contribution to the cost of acquiring the family home. The trial judge held that the husband was the sole beneficial owner of the house and the House of Lords ultimately upheld this finding.

A perusal of the various opinions in the House of Lords reveals different nuances as to how the relevant common intention may be found. Viscount Dilhorne expressed the most cautious view:

l 5 Ibid 620-621 (Deane J). The precise doctrinal basis for saying that a party should not be allowed to retain a benefit remains unclear. A full exploration and critique of the rationale for the equitable relief in Muschinski v Dodds will not be attempted in this article. The point to be made here is that this type of factual scenario does not justify a remedial response in terms of perfecting the property sharing arrangement. It justifies, at most, returning the parties to their original position and distributing the accrued benefits in a way that is consistent with the parties' intentions (see the order proposed in Muschinski v Dodds (1985) 160 CLR 583,624 (Deane J); cf Baumgartner v Baumgartner (1 987) 164 CLR 137, 149-150). l6 [I9701 AC 777. " [I9711 AC 886.


[I]n determining whether or not there was such a common intention, regard can of course be had to the conduct of the parties. If the wife provided part of the purchase price of the house, either initially or subsequently by paying or sharing in the mortgage payments, the inference may well arise that it was the common intention that she should have an interest in the house.I8

Lord Pearson's approach was similar to that of Viscount ~i1horne. l~ Both of their Lordships emphasised that a common intention trust is founded upon an actual intention that is shared by the parties. That intention need not be expressed in words. Whether that intention is expressed in words or inferred from the parties' conduct, there must be a finding of fact that the parties had a common intention in relation to the sharing of the ownership of the property. The law does not impute an intention to the parties. Lord Morris of Borth-y-Gest, in a short judgment, also emphasised that the trust is founded upon an arrangement that the parties actually made.20

Lord Diplock was a little more adventurous. He described the relevant common intention in the following way:

As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.21

His Lordship recognised that the legally relevant intention of a person is not necessarily that intention which the person claims to have had. The only intentions that can be legally relevant are those which are made manifest to others. People have the intentions that they appear, on the basis of their words or conduct, to have. This objective approach to the question of a person's intention is not peculiar to the common intention principle. It is generally accepted that a court, when deciding questions about the formation or construction of the terms of a contract, should not rely solely upon the parties' direct evidence as to whether they intended to create a contract or agree to particular terms. The question is one as to what reasonable people placed in the position of the parties would have intended.22 It is also clear that the intention to create an express trust may be found in either the language or the conduct of the alleged settlor. A person may create an express trust without ever

-- -

l 8 Ibid 900. l 9 Ibid 902. 20 Ibid 898. 21 Ibid 906. 22 Reardon Smith Line Limited v Yngvar Hansen-Tangen [I9761 1 WLR 989,996 (Lord Wilberforce); Australian Broadcasting Corporation v XVth Commonwealth Games Limited (1988) 18 NSWLR 540,550 (Gleeson CJ, with Hope and Mahoney JJA agreeing); John R Keith Pty Ltd v Multiplex Constructions (NSW) Pty Ltd [2002] NSWSC 43, [228] (Einstein J).


using the word 'trust'23 or even thinking in terms of the abstract legal concept of a trust. In Bahr v Nicolay NO^)," Mason CJ and Dawson J said:

If the inference to be drawn is that the parties intended to create or protect an interest in a third party and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then there is no reason why in a given case an intention to create a trust should not be inferred.25

The concept of a trust and the related concept of separation of legal and beneficial ownership are, like all legal categories, abstractions developed by lawyers. Legal categories are not real entities. They describe collections of events, each collection being bound together by the supposition that people possess a common attitude as to the moral significance of the constituent events.26 The recognition of a trust involves an examination of the alleged settlor's words and conduct in order to determine whether that person appears to intend to create a set of obligations and correlative rights that correspond with those to which lawyers have given the label 'trust'.

Once it is accepted that the common intention may be inferred from the conduct of the parties, it must also be accepted that the parties' common intention may extend beyond those matters, which are the subject of express agreement between the parties, to matters about which the parties appear to have arrived at a mutual understanding, even though they might never have discussed those matters. If it is alleged that a particular matter is the subject of a mutual understanding, the question is to be resolved by considering whether a reasonable person in the position of one of the parties would have formed the impression, on the basis of the conduct of the other party, that there was a mutual understanding. The approach taken by Viscount Dilhorne and Lord Pearson leads logically to that of Lord Diplock and, indeed, Oakley did not perceive any significant difference between the two approaches.27

Gissing v is sin^^^ was a case in which there was majority support for the proposition that a court may recognise a trust if there appears to be an actual consensus between the parties that they would share the ownership of the property. An inference that this consensus existed ought not to depend upon the claimant having made a direct contribution to the purchase of the property. Lord Diplock explained the relevance of indirect contributions as follows:

if the wife goes out to work and devotes part of her earnings or uses her private income to meet joint expenses of the household which would otherwise be met by

23 See, eg, Hayes vNationa1 Heart Foundation ofAustralia, New South Wales Division [I9761 1 NSWLR 29,3 1- 33. 24 (1988) 164 CLR 604. 25 Ibid 618-619. 26 This understanding of legal categories is derived from Friedrich Hayek's insistence that the categories of the social sciences are 'different complexes of individual events . . . believed by us to be related to each other in a similar manner'. See Friedrich Hayek, fie Counter-Revolution of Science: Studies on the Abuse of Reason (1952) 55-56. 27 Anthony J Oakley, Constructive Trusts (3rd ed, 1997) 65. 28 [I97 11 AC 886.


the husband, so as to enable him to pay the mortgage instalments out of his moneys this would be consistent with and might be corroborative of an original common intention that she should share in the beneficial interest in the matrimonial home . . . 29

There was no reason to distinguish between direct contributions and indirect contributions because both were capable of supporting an inference that the parties intended to acquire the property through their joint efforts and share the ownership of the property. The indirect contribution of the wife in Gissing v Gissing was not significant in the overall scheme of things. A court could not have drawn the necessary inference concerning the parties' common intention without the wife's contribution having been much greater than it was.

Subsequent English cases, in which it was possible to infer fiom the parties' conduct that there had been a meeting of minds between them about how they would share the ownership of the property, have ended in the recognition of a trust. Prominent among these cases were Eves v ~ves ," Re Densham (A ~ankru~ t ) , " Grant v ~ d w a r d s , ~ ~ and Midland Bank PLC v ~ o o k e . ' ~ Trusts were not recognised in cases in which the existence of a common intention to share ownership of the property was not the only possible explanation for the parties' conduct. Where (as in Lloyd's Bank v ~osset," for example) work done by the claimant could be explained by a desire merely to 'accelerate the progress of the work' without necessarily expecting that he or she might receive an interest in the property,35 there is no basis for drawing an inference that the parties intended to share ownership. The nature, size and directness of the claimant's contributions would obviously take centre stage in this enquiry, but it is the intention of the parties to be inferred from the making of those contributions, rather than the contributions per se, which governs whether a trust ought to be recognised.

This interpretation of the Gissing v Gissing line of cases has been advocated by ~ l i a s . ' ~ Elias thought that the Gissing v Gissing rule is associated with what he calls the 'perfection aim' of the law. The 'perfection aim' is being furthered wherever 'the tenor of the relief is to put the plaintiff where the plaintiff would be if the defendant had perfected the choice'.37 This is one of three aims of the law discussed by Elias, the others being the 'restitution aim' and the 'reparation aim'. " Elias placed the Gissing v Gissing rule in a class of rules called the inducement rules. The common characteristic of these rules is that each of them requires that 'someone should have been induced to suffer loss by the defendant's manifestation of

29 Ibid 908. 30 [I9751 1 WLR 1338. 31 [I9751 1 WLR 1519. 32 [I9861 1 Ch 638. 33 [I9951 4 All ER 562, particularly 576 (Waite LJ). 34 [I9911 1 AC 107. 35 bid 13 1 (Lord Bridge of Harwich). 36 Gbolahan Elias, Explaining Constructive Trusts (1990). 37 Ibid 11. 3Y Ibid 4.


willingness to let the plaintiff enjoy the property'. '' Elias explained the relationship between the inducement rules and the 'perfection aim' in the following terms:

The perfection argument convincingly accounts for the basic existence of the inducement rules because the rules in essence give the plaintiff what the defendant chose to confer. The inducement rules further the perfection aim in that a central implication of the rules is that the plaintiff can use or enjoy the property basically as the defendant chose.40

Elias's thesis characterises the common intention trust as a distinct doctrine concerned with a particular type of equitable fraud. That fraud consists of the use of a legal rule (that lack of formality renders certain types of intentions and understandings unenforceable) to resile from an intention that it had previously made manifest. This thesis is consistent with the emphasis upon actual (as opposed to imputed or presumed) common intention, which has dominated the English case law.

Elias played devil's advocate with his own theory by posing the objection that equity does not give effect to every common intention but only those intentions upon which the plaintiff has relied to its detriment. The essence of that objection is that the trust does not further the perfection aim in so far as it does not give effect to all promises and intentions. Elias's answer to this objection was in keeping with the theme of preventing the legal owner from using the Statute of Frauds as a cloak for a fraud:

Certain statutory provisions forbid the enforcement of trusts arising out of gratuitous and unilateral orally declared choices. The inducement rules fall outside these statutory provisions. This is because the induced-loss postulate ensures that the defendants will not have acted gratuitously and unilaterally. . . . The general law of evidence and the inducement rules themselves work together well enough to justify the exemption of the rules fiom the statutory provisions.41

Elias's argument is that the requirement of detrimental reliance serves an evidentiary function. The fact that an alleged common intention was acted upon in a way that was referable to the agreement is evidence that the parties had a serious agreement. If a court can be satisfied of this, there is no danger in dispensing with the evidentiary function of the Statute of Frauds. Eves v ~ v e s ~ ~ is a good illustration of this point. The fact that the defendant had made statements that tended to show that he intended that the plaintiff would have an interest in the property was not enough, in itself, to create a beneficial interest on the part of the plaintiff The subsequent conduct of the plaintiff (not least the wielding of the 141b sledge hammer) could only be explained by 'some express or implied arrangement and on

39 Ibid 57. The other inducement rules are the secret trusts rule, the mutual wills rule, the rule in Bannister v Bannister [I9481 2 All ER 133 and the proprietary estoppel rule. It should be noted that Elias dealt with the law of England. It is doubtful whether proprietary estoppel could be classified in this way in Australia, following the High Court's decision in Waltons Stores (Interstate) Limited v Maher ( 1 988) 164 CLR 3 87. 40 Ibid 59. 41 Ibid 62. 42 [I9751 1 WLR 1338.


the understanding that she was helping to improve a house in which she was to all practical intents and purposes promised that she had an interest'. 43 A court, being satisfied that the plaintiffs conduct (and, one assumes, the defendant's acquiescence in that conduct) can be explained only by the existence of a common intention that beneficial title be shared, would be justified in giving effect to that common intention, notwithstanding the lack of compliance with the usual evidentiary requirement of writing. The essence of Elias's argument is that the claimant's detrimental reliance performs within the common intention principle the same function as acts of part performance perform within the part performance doctrine.44

Elias's interpretation of the common intention principle corresponds with what Mee has described as the 'bargain' model.4s Mee, in a generally scathing ~ommentary:~ noted that the common intention principle has the capacity to outflank the doctrine of part performance. Part performance is a doctrine of general application. Since the requirements of the common intention principle are less rigid than those of part performance, the former doctrine allows litigants to avoid the strict requirements of the latter doctrine.47 Mee suggested that 'some new rationale is required to justify the common intention trust's encroachment on the territory of other doctrines'. 48

This criticism deserves a reply.

Since the decision of the House of Lords in Maddison v ~ lder son :~ it has been clear a successfbl plea of part performance takes the matter outside of the mischief contemplated by the Statute of Frauds. The defendant is charged 'upon the equities resulting from the acts done in execution of the ~ontract'.~' A recurring theme of the cases has been that the acts must be 'unequivocally, and in their own nature, referable to some such agreement as that alleged'.51 The doctrine does not overcome the lack of an actual agreement, but allows a court to dispense with the

43 Ibid 1345. 44 Elias, above n 36. 45 Mee, above n 10, 164. 46 I offer the following example of Mee's very colourful and entertaining prose (Mee, above n 10, 1 18):

Of course, if one were designing a modem Ark, one would be ill-advised to reserve a berth for the unicom or the griffin. It is unfortunate that, in a modem taxonomy of equitable doctrines, space must be wasted on the chimerical common intention trust.

47 Mee, above n 10,167. Ibid.

49 (1 883) 8 App Cas 467. Ibid 475.

" Ibid 479 (Earl of Selboume LC), 485 (Lord O'Hagan), 49 1 (Lord FitzGerald). Part performance was abolished in England by the Law of Property (Miscellaneous Provisions) Act 1989 (UK) c 34, s2(1), but survives in Australia. The High Court of Australia has consistently followed the approach taken in Maddison v Alderson. See particularly Regent v Millett (1976) 133 CLR 679,683 (Gibbs J, with Stephen, Mason, Jacobs and Murphy JJ agreeing). In McBride v Sandland (1 91 8) 25 CLR 69, Isaacs and Rich JJ (78-79) set out a more extensive list of factors, ie, (i) the acts must be 'such as could be done with no other view than to perform such an agreement' (ii) that agreement must be 'of the general nature of that alleged' (iii) the acts must refer unequivocally to such an agreement (iv) the party performing the act must have done so 'on the faith of the agreement' (v) the act must be done 'by a party to the agreement' (vi) there was a 'completed agreement' (vii) the act 'was done under the terms of that agreement by force of that agreement'. Note also the more liberal approach of the House of Lords in Steadman v Steadman [I9761 AC 536,541 -542 (Lord Reid) where the question was held to be whether it was 'more probable than not' that the acts relied upon were done in reliance on a contract.


statutory requirement of writing where the only reasonable explanation for what the parties have done is the existence of a complete agreement of the nature alleged. This position is not readily distinguishable from the approach taken by the House of Lords in Lloyds Bank v ~ o s s e t , ~ * but it must be conceded that other common intention cases have not been quite so strict in insisting that the existence of a common intention is the only reasonable inference from the parties' acts.

Another significant matter is illustrated by the Australian case of Ogilvie v an,^^ in which the claimant (who was the defendant in the proceedings for possession of the land) relied upon common intention and part performance in the alternative and succeeded under the former principle but not under the latter. Holland J said that the defendant's acts were not unequivocally referable to a promise by the plaintiffs father to give her an interest in his land.54 His Honour rejected the plaintiffs argument that, if part performance were not available, the court could not enforce the bargain by another means. His Honour, in doing so, was able to refer to various statements in the judgments in Gissing v Gissing to the effect that the common intention cases were cases concerned with the creation of trusts in which the intention to create a trust was found in an oral agreement.55 Once an intention to create a trust had been proved (remembering that a court will recognise an intention to create a trust wherever the trust is the appropriate means of giving effect to the intention to confer beneficial ownership upon another),56 it would be fiaud for the legal owner to deny the trust, whether or not it would also be fraud for it to assert that the oral agreement is unenforceable. The person asserting a trust is not seeking to bring an action upon a contract.57

The answer to Mee's criticism must be that, even though the common intention principle finds the intention to create a trust in the agreement between the parties, it is the trust that is being enforced. The situation is distinct from that where one has to point to acts which are sufficiently referable to a contract of the nature of that alleged so as to take the matter outside of the mischief to which the Statute of Frauds is directed. The common intention principle belongs to a group of principles - the others being the principle in Rochefoucauld v ~ o u s t e a d , ~ ~ the secret trusts doctrine and the mutual wills doctrine - which are concerned with whether it would be fraud to rely upon statutory requirements of writing to deny that a trust has been created. This is not to say that the common intention principle is one and

52 [I9911 1 AC 107. See the earlier discussion of this case. 53 [I9761 2 NSWLR 504. 54 Ibid 524. 55 Ibid 526. The passages to which Holland J referred were [I97 I] AC 886, 896 (Lord Reid), 902 (Lord Pearson), 905 (Lord Diplock). 56 See above nn 21 -23 and accompanying text. '' See White v Cabanas Pty Lid (No 2) [1970] Qd R 395,408-409 (WB Campbell J, with Wanstall J agreeing). See also Wendy Harris, 'The Doctrine of Part Performance and the Constructive Trust' (1993) 1 1 Australian Bar Review 27,51, in which that author reviewed the case law and concluded that a common intention trust 'obviates any need' to satisfL the Statute ofFrauds. 58 [I8971 1 Ch 196.


the same as any of those principles,59 but merely that all of these principles have a common rationale.

The notion that the common intention principle is concerned with overcoming a particular type of equitable fraud features prominently in the Australian cases. A good example is the following statement of Holland J in Ogilvie v an:^'

In my opinion, the most satisfactory explanation underlying the [Gissing-type] cases is that an appropriate constructive trust will be declared in Equity to defeat a species of fraud, namely, that in which a defendant seeks to make an unconscionable use of his legal title by asserting it to defeat a beneficial interest in the property which he . . . has agreed to or promised; or which it was the common intention of the parties that the plaintiff should have, in return for the benefits to be provided by, and in fact obtained from, the plaintiff in connection with their joint use or occupation of the property.61

This statement contends that the fraud must consist of the denial of an interest, which existed prior to the supposed fraud. That interest is the product of the parties' consensus about the ownership of the property. The suggestion by Holland J that the legal owner's recognition of the plaintiffs ownership is in return for benefits that the plaintiff confers upon the legal owner echoed the bargain-focussed language of Brightman J in Eves v ~ v e s . ~ ~ The common intention doctrine was, to Holland J, very much concerned with giving effect to an actual agreement between the parties.

The defendant in Ogilvie v Ryan sought to resist a claim for possession of the property by asserting that she had a beneficial interest in that property. She was able to assert that beneficial interest on the basis that she had moved into the plaintiffs deceased father's house and cared for him until his death, approximately two years later. It was relatively easy for her to demonstrate the existence of the necessary common intention because the plaintiffs father had told her that, if she cared for him, she would be able to live in the house for as long as she lived. The evidence of other witnesses corroborated the defendant's evidence on this point.63 There could have been very little doubt that the defendant, in moving into the plaintiffs father's house and caring for him, was acting in pursuance of an actual agreement that she would receive a tenure of some sort in return for her efforts. Ogilvie v Ryan was a case in which the agreement between the parties was that the defendant would have something less than an interest in the fee simple. The nature of the agreement governed the extent of the defendant's beneficial interest under the common

59 Cf Mee, above n 10, 156-1 64. [I9761 2 NSWLR 504.

6' h id 5 18. See also Last v Rosenfeld [I9721 2 NSWLR 923,927; Allen v Snyder [I9771 2 NSWLR 685,690 (Glass JA, with Samuels JA agreeing); Hohol t* Hohol [I98 11 VR 22 1,225.

[I9751 1 WLR 1338. See above nn 42-43 and accompanying text. [I9761 2 NSWLR 504,509-510.


intention trust. The intention to create a trust was found in that agreement and, accordingly, circumscribed by it.

The focus upon the nature of the agreement was continued in Allen v ~ n ~ d e r . ~ ~ Glass JA (with whom Samuels JA agreed) referred to Gissing v Gissing and other cases and observed that the common intention doctrine does not give rise to a trust in favour of someone who contributes to the cost of acquiring a home 'in the absence of any actual understanding or reciprocal intention'. 65 While his Honour's words seem to have been directed primarily at Lord Denning's proposal that a constructive trust may be imposed wherever justice and good conscience requires it,66 the observation also serves to emphasise the importance of the content of the agreement in shaping the equitable response. The female defendant in Allen v Snyder was unable to establish that she had a beneficial interest in the property registered in the male plaintiffs name, because the evidence revealed only a common intention that the defendant would have a beneficial interest if she married the plaintiff or if the plaintiff died.67

It is also clear that the mere existence of an intention, on the part of the legal owner, to confer beneficial ownership on another is not sufficient to establish a claim. The claimant has to undertake a reciprocal obligation. The Privy Council's decision in Austin v ~ e e l e ~ ~ emphasised the need for reciprocity:

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. . . . 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.69

The Australian courts, like the English courts, have not refrained from inferring the existence of the necessary common intention from the conduct of the parties. Baurngartner v ~ a u r n ~ a r t n e r ~ ' involved a de facto relationship that endured for approximately four years, from September 1978 to August 1982. The couple initially lived in a unit owned by the male partner (the respondent). The female partner (the appellant) was in the habit of giving her weekly pay packet to the respondent. In October 1979, when the appellant was six months' pregnant with the respondent's child, the couple decided to purchase some land at Leumeah on the

64 [I9771 2 NSWLR 685. 65 h id 695. 66 See Heseltine v Heseltine [I9711 1 All ER 952; Cooke v Head [I9721 2 All ER 38; Hussey v Palmer [I9721 1 WLR 1286. 67 [I9771 2 NSWLR 685,696. 68 (1987) 10 NSWLR 283. 69 Ibid 29 1. 70 (1985) 2 NSWLR 406 (NSW Court of Appeal); rev'd (1987) 164 CLR 137 (High Court of Australia).


outskirts of Sydney. The purchase of the land and the erection of a house thereon were financed partly by the sale of the respondent's unit and partly by a loan from a building society. The loan was secured by a mortgage on the Leumeah property. The land was registered in the respondent's name. The excerpts of the transcript of evidence that are set out in the Court of Appeal judgments show that the parties' respective accounts of why the land was registered in the respondent's name only contained different nuances. It does not seem to have been disputed that the respondent had told some friends (in the presence of the appellant) that the building society would not lend to both of them because they were in a de facto relationship and that the appellant knew that the house was for both of them and there was no need for it to be in both names.71 The respondent made the mortgage repayments from the pool of money consisting of his pay and the appellant's pay. The appellant had tendered her payslips at trial. These showed that she had contributed a total of $38 206.64 to the 'pool'. The relationship proved to be a difficult one. The parties ended their relationship in March 1984, having lived apart for about eighteen months.

The trial judge dismissed the appellant's claim of a beneficial interest in the property. The Court of Appeal (Kirby P and Priestley JA; Mahoney JA dissenting) allowed the appellant's appeal saying that the parties had a common intention that the respondent would hold his interest in the land on trust for both parties as tenants in common in equal shares.72 The reasons given by Kirby P and Priestley JA recognised that de facto partners rarely state their intentions regarding the sharing of title with precision, but that this is not necessarily a barrier to the finding of the requisite common intention. Kirby P said:

During happy days of a relationship, discussion of property and of interests in it will rarely be ventured, either because it is regarded as embarrassing or unnecessary or divisive or simply unromantic. It is lawyers who impose the obligation to look for the intention of the parties at a time when, almost inevitably, they will not have clarified that intention with fine precision. But a modicum of realism dictates that the search for intention should not stop at recollections of oral exchanges, rediscovered years later when the relationship had broken down. Far safer, is a scrutiny of the conduct of the parties at the relevant time . . . This is not to confuse the distinction drawn by Glass JA in Allen v Snyder between an unarticulated but actual intent (upon which the law will operate) and an imputed intent (upon which it will not). It is simply to say that, in the nature of such cases, there are special dangers in placing undue weight upon declarations recalled months or years later when the processes of memory are likely to be distorted both by personal advantage and emotion, bitterness or disill~sionment.~'

The question for the Court was whether the requisite common intention existed when the relationship was going well, the appellant was happily giving her weekly pay packet to the respondent and the parties were embarking upon the purchase of the land. The intentions of the parties had to be judged according to their words and

-

71 (1985) 2 NSWLR 406,410 (Kirby P), 441-442 (Priestley JA). 72 hid 420 (Kirby P), 446 (Priestley JA). 73 Ibid417.


conduct at the relevant time. A court's willingness to entertain the notion that the legal owner had a secret intention, which is revealed for the first time on the witness stand, would leave the other party at the mercy of the legal owner's exercises in historical revision.

Kirby P and Priestley JA referred to the fact that, at the time of the acquisition of the Leumeah property, the parties had been living together, were planning to have a child and were pooling their resources.74 It could be inferred from all of this that the parties intended that the house would belong to both of them. The respondent in so far as he had expressed any intention at all, had indicated that the house would be for both of them.75 Priestley JA, having stated that there was evidence fi-om which the requisite common intention could be inferred, added the following explanation:

I do not of course mean that such evidence used legal terms appropriate to the creation of the trust. I do consider however that there was evidence fi-om which it could be inferred that the parties had in fact reached agreement between themselves concerning the ownership of the land the substance of which, translated into legal terms, was an agreement that the respondent should hold the land on trust for the two of them.76

The central theme of the majority judgments was that, where the words and conduct of the parties provide evidence of an actual understanding between them that they were to share the ownership of the Leumeah property, it was for a court to give legal effect to this understanding by recognising the existence of a trust. If the parties had been asked whether they intended to create a trust, they would probably have said that they did not. This answer should not be interpreted as a lack of intention to create a trust. A trust was the law's means of giving effect to the parties' common intention to share the ownership of the property.

The majority's finding that the parties intended to be tenants in common follows the same pattern of reasoning. There was no evidence that the parties had ever discussed whether they would be joint tenants or tenants in common. This was not surprising. The question of joint tenancy or tenancy in common is not a matter that parties to property sharing arrangements would be likely to discuss at any time prior to visiting a solicitor with a view to formalising the legal title to their real property. It is possible that the Baumgartners were not even aware that this was an issue. Priestley JA did not regard this lack of specific intent as being a barrier to the recognition of a common intention trust. His Honour thought that it was appropriate to imply a term:

Although the parties at the time of the making of the agreement in about October 1979 were contemplating a permanent relationship they were both aware of their past marital histories and of the respondent's hesitation about marrying again. In my view there can be little doubt that if they had been asked whether they wanted

74 Ibid 418 (Kirby P), 445 (Priestley JA). 75 Ibid 445-446 (Priestley JA). 76 Ibid 444.


complete and separate half ownership in the land or an ownership whereby if one died the other became the sole owner they would have both chosen the former.77

The majority judgments in Baumgartner v Baumgartner recognised the reality that parties to informal property sharing arrangements often do not spell out the terms of their relationship with precision. A lack of precision in expressing the basis of a property sharing relationship does not necessarily indicate a lack of intention to share ownership. Where there is sufficient evidence to satisfl a court that the parties have a common intention that they will share the ownership of the property either in equal shares or otherwise (which evidence might consist of the parties' words or conduct), a court should seek to give effect to that common intention by clothing it with the appropriate legal apparel. To do so is not to impute to the parties an intention that they did not actually have. It is not entirely artificial to say that parties, who intend a particular outcome, must have intended to put in place the legal framework that would produce that result.

Mahoney JA differed from the majority by placing greater emphasis upon the respondent's claims at trial that he did not intend to give the appellant an interest in the property unless they married. His Honour referred to the respondent's evidence:

He said that, fiom April 1979, their relationship was 'a different sort of relationship'. He said that, fiom April 1979 onward, it was not their common intention to marry and that the plaintiff knew this. He denied that he had told her, at any relevant time, that 'when' they married her name would be put on the title. At the highest in her favour, he accepted that 'if they did in the future marry, that might be done.78

Mahoney JA thought that the trial judge had preferred the evidence of the respondent to that of the appellant on this issue. It would follow fiom that finding that there was no definite understanding between the parties that they would share ownership of the property.

a r b y P, in contrast to Mahoney JA, did not allow himself to be constrained by the trial judge's apparent preference for the respondent's version of events. His Honour had the impression that there were very few differences between the evidence of the appellant and that of the respondent.79 His Honour also observed that there had been no 'reasoned rejection of the evidence of the appellant'.80 Priestley JA thought that it was appropriate to defer to the trial judge's implicit preference for the respondent's evidence where there was an actual conflict, but thought that the evidence of matters on which the parties were in agreement or which the respondent had not denied provided a sufficient basis for the necessary inference?

77 Ibid 446. 78 Ibid 428-429. 79 Ibid 416.

Ibid417. Ibid 444.


One consequence of the majority's greater willingness to determine the question of intention on the basis of the parties' conduct was that the respondent's evidence that he had been ambivalent about marriage was given little weight. l r b y P and Priestley JA placed greater emphasis upon the fact that the respondent never denied that he had told the appellant and their friends that the property was being acquired for both of them.82 It seems that the majority's approach was to emphasise the objective common intention of the parties. The shared understanding, upon which this objective common intention is based, does not comprise the long-held private reservations of one party that were expressed for the first time on the witness stand. An objective common intention is, in this respect, a different creature to the sum of the several intentions of the parties.

The High Court was not convinced by the majority's justification of its fact-finding exercise. Mason CJ, Wilson and Deane JJ said:

It is apparent that the leaned trial judge was not disposed to accept the respondent as a credible witness where her evidence was in conflict with that of the appellant. And those conflicts, though comparatively few, were central to the respondent's [appellant before the Court of Appeal] case, that there was a common actual subjective intention to create a trust. In this situation, it was not a legitimate exercise for an appeal court to ignore those conflicts and the way in which the primary judge resolved them and to draw inferences from the surrounding area of common ground between the parties, when the primary judge's resolution of the central issues was adverse to the existence of such an intention.83

The High Court, having rejected common intention as a basis for recognising a trust, relied upon the joint endeavour principle, which had been articulated by Deane J in Muschinski v odds.^^ Since the High Court's decision in Baumgartner v Baumgartner, there have been very few cases in which the common intention principle has been invoked openly.

Green v re en^^ was a case in which the majority of the New South Wales Court of Appeal recognised a trust on the basis of common intention, yet the dissenting judge seems to have applied the Baumgartner v Baumgartner approach and refused to recognise a trust. The respondent in that case was one of two de facto wives of Robert Green. Green also had a lawful wife. He managed to maintain relationships with all three women simultaneously. The respondent was of Thai nationality. Green had commenced sexual relations with her when visiting Thailand. He managed to persuade her to come to live in Australia and he promised to look after her. The respondent had two children by Robert Green. Some time after the birth of the first child, Green settled the respondent in a house at Kirrawee telling her that it was her house and that he had bought it for her. Some years later, she was moved from this house to a house at Blakehurst. This was part of a swap agreement

82 Ibid 41 8 (Kirby P), 445 (Priestley JA). 83 (1987) 164 CLR 137,145-146. 84 (1985) 160 CLR 583. 85 (1989) 17 NSWLR 343.


between Green and the eldest son from his marriage. Green told the respondent that this was to be her house. The title to the Blakehurst property was never transferred to the respondent. When the proceedings were commenced after Green's death, the legal title was still held by Green's eldest son. The respondent claimed that she was beneficial owner of either the Kirrawee property or the Blakehurst property.

The judge at first instance, Hodgson J, made a declaration that the Blakehurst property was held on constructive trust for the respondent for her lifetime. A majority of the Court of Appeal (Gleeson CJ and Priestley JA) held that, at the date of Green's death, Green and the respondent were beneficially entitled to the Blakehurst property as joint tenants. This had the consequence that the respondent was entitled to the absolute beneficial title to that property by right of s ~ r v i v o r s h i ~ . ~ ~ Mahoney JA dissented. His Honour did not think that Green's failure to transfer the Blakehurst property to her was unconscionable.

Although Gleeson CJ (with whom Priestley JA agreed) acknowledged that the High Court in Baumgartner v Baumgartner had approved of the imposition of a constructive trust 'on the basis of a pooling of resources for the purposes of a joint relationship',87 his reasons for judgment appear to proceed purely upon the basis of the common intention theory. His Honour expressed the view that:

[Tlhe evidence establishes that the deceased, over the entire period of his relationship with the respondent, represented to her that it was his intention that she should have some form of proprietary interest in the homes he provided for her and that, by the time they moved into the Blakehurst property, and at all times thereafter up until the death of the deceased, it was their common intention that the respondent should have a proprietary interest in the Blakehurst property.88

Gleeson CJ then turned to a discussion on how the respondent had acted to her detriment on the faith of the common intention. His Honour said that the actions to her detriment were as follows:

He brought her to Australia from her own country as a child, set her up as his de facto wife, and persuaded her not to return to her home with promises that he would care for her, that they would have children, and that he would provide her with a house. He persuaded her to move from the Kirrawee house to the Blakehurst house by telling her, inter alia, that the Blakehurst house would be hers, and shortly thereafter, he repeated this promise to her and to his solicitors, and instructed his solicitors to set about transferring title to her. She for her part, especially in the later years of their association, and at a time when her own commercial and financial awareness was increasing, repeatedly raised with him the issue of ownership of the Kirrawee and Blakehurst houses, which was evidently of importance to her, and he consistently reassured her of his intentions in that regard.89

" Ibid358. 87 Ibid 353-354. " Ibid 356. 89 Ibid 357.


The respondent's decisions to leave her home country and to remain in Australia were closely related to Mr Green's assurances that she would be given a house. This was evidence that the respondent understood that she and Mr Green would have an ongoing relationship and that an important element of this relationship was that the respondent would have at least part-ownership of a house. Mr Green's words and conduct tended to encourage this expectation. A passage from the evidence of Mrs Partington, with whom the respondent boarded for a period after she first arrived in Australia, encapsulated the shared understanding of the parties:

I heard her say many times she wanted to go home and he used to say: 'Can't go home yet, darling, because I have to put you to school and have to buy you a big house. We got to have big house for plenty babies'. 90

This evidence demonstrated that, whatever may have been Mr Green's private intention (and, indeed, the evidence before the court gave good reason to doubt that Mr Green was an honourable man), the basis of the parties' relationship, in so far as it could be determined objectively, was that the respondent would have a house in which she would bring up the children of her union to Mr Green.

When it came to the question of the quantification of the respondent's interest, Gleeson CJ took an approach similar to that of Priestley JA in Baumgartner v Baumgartner. His Honour said:

[Tlhe proper approach to the resolution of this issue is to seek a result which will most closely give effect to the common intention of the parties bearing in mind, first, that they did not themselves specifically address the matter of the legal form which would be conducted to give effect to their intention . . .91

Gleeson CJ referred to the fact that Mr Green had told the respondent that he intended to provide for each of his partners after his death. This pointed to an understanding that the respondent and Mr Green would be joint tenankg2 The parties had never referred to the legal concept of joint tenancy, but it was joint tenancy that gave legal effect to the shared understanding of the parties. The bottom line was that, when Mr Green died, the respondent became entitled to absolute beneficial ownership of the Blakehurst property by right of s u r v i v ~ r s h i ~ . ~ ~

The main point of disagreement between Mahoney JA and the majority related to whether the respondent had suffered any detriment. Mahoney JA characterised the respondent's detriment as her decision to continue in the relationship and observed that there was no suggestion in the evidence that the respondent would have broken off the relationship had Mr Green ultimately failed to transfer the title to the Blakehurst property to her.94 Mahoney JA, both here and in his dissenting judgment

90 Ibid 348. 91 Ibid 358. 92 Ibid 358. 93 Ibid 358. 94 Ibid 370.


in Baumgartner v Baumgartner, seemed to interpret the common intention principle as requiring specific acts of detriment on the part of the claimant in response to specific promises or manifestations of intention on the part of the legal owner. If it is correct to say that the detriment requirement turns upon whether the claimant would not have done what she did but for the common intention that she would receive an interest in the property, then the respondent could not have had any claim to beneficial ownership of the Blakehurst (or any other) property. The majority approach, on the other hand, was to look at the totality of the relationship of the parties and to make an assessment of whether what the claimant did was referable to a common intention to share the ownership of the property.

Less overt reliance upon a common intention of sharing occurred in Miller v ~ u t h e r l a n d ~ and Carson v Miller v Sutherland was a classic case of a couple engaging in joint effort to acquire and improve a property for use as a home. The male partner (the defendant) purchased the house in his own name. His income and ability to raise finance was greater than that of the female partner (the plaintiff). There was evidence that the plaintiff and the plaintiffs father (who was a builder), were heavily involved in carrying out work on the house - such work being necessary in order to make the house habitable. There was evidence that the parties had discussed the involvement of the plaintiff and her father in this work. Cohen J was satisfied that the parties had agreed that the plaintiff and her father would be involved in the improvement of the house9' and that the defendant understood that the plaintiff wanted to make this contribution in the belief that she would have an interest in the house.98 While his Honour referred to the High Court's decision in Baumgartner v ~ a u r n ~ a r t n e r , ~ ~ his finding that it was unconscionable for the defendant to deny that the plaintiff had an equitable interest in the house was clearly based upon a finding that the parties had a common intention to pool their resources for the purposes of providing a home for both of them.'''

There was no evidence as to what the parties intended as to the quantum of the plaintiffs beneficial interest, so Cohen J turned to evidence of the monetary value of the work performed by the plaintiff and her father. This contribution of labour was assessed at approximately 21% of the total expenditure upon the house, thus leading his Honour to assess the plaintiffs equitable interest at one quarter of the property.lO' It is not readily apparent why his Honour then chose to frame the relief in terms of a charge in favour of the plaintiff for a fixed amount of $87 500 (being one quarter of the value of the property at the date of judgment),lo2 rather than in terms of a trust. His Honour may have assumed that he had some discretion as to the precise means of giving effect to the parties' common intention.

95 (1990) 14 Fam LR 416. 96 (1994) 34 NSWLR 9. 97 (1990) 14FamLR416,421. 98 Ibid 424. 99 (1987) 164 CLR 137. loo (1990) 14 Fam LR 416,424. l o ' Ibid 425. lo' Ibid 425.


Carson v Wood is interesting because it demonstrated that the common intention doctrine has a utility beyond the realm of domestic property sharing situations.103 The Carson family and the Wood family were involved in the manufacture of catering equipment. Woodson Pty Ltd carried on the manufacturing activities. The Woods and the Carsons each held one half of the shares in that company. Another company, in which the Wood family held all of the shares, was registered owner of the trademarks. The two families made an agreement in 1983 to the effect that the Carsons would, in exchange for payment of $1 10 000, receive a one-half interest in the trademarks. In pursuance of the agreement, the Woods assigned the Australian- registered trademarks to a new company, Woodson (Sales) Pty Ltd, in which the Carsons and the Woods had equal shareholdings. These arrangements continued until 1986. In that year, the Carsons and the Woods agreed that the Carsons would take over the manufacturing part of the business and the Woods would take over the sales side of the business. Accordingly, the Carsons relinquished their shareholding in Woodson (Sales) Pty Ltd and the Woods relinquished their shareholding in Woodson Pty Ltd. The agreement provided that a new jointly-owned company would be formed and the trademarks would be assigned to that company. That company would then execute a trademark user agreement with the Woods and the Carsons. A company called Lifpark Pty Ltd was formed but, owing to an oversight, the trademarks were never assigned to it. Nevertheless, the Carsons continued to use the trademarks for a period of approximately two years until a disagreement over another aspect of the agreement prompted the Woods to claim sole ownership of the Australian and New Zealand trademarks. The Carsons sought a declaration that Woodson (Sales) Pty Ltd held the trademarks on trust for Lifpark Pty Ltd.

The New South Wales Court of Appeal relied upon the High Court's decision in Baumgartner v Baumgartner in so far as they stated that the critical question was whether the Woods' assertion that Woodson (Sales) Pty Ltd was the sole beneficial owner of the trademarks was unconscionable. Nevertheless, the Court characterised the Woods' unconscionable conduct in terms of failing to act in accordance with the parties' common intention. Clarke JA (with whom Kirby P agreed) said that the Woods' conduct 'involved the subversion of the intention which underlay cl 2 [of the 1986 agreement] and the transfer of the share holding in Woodson (Sales) Pty ~ t d ' . " ~ Sheller JA said:

the matters which, in my opinion, introduce the necessary element of unconscionable conduct by the Wood family in denying to the Carson family any interest in the Australian trade marks . . . are the purchase from the Wood family by the Carson family of a one-half share of the Australian trade marks for valuable consideration in 1983, the common intention that the Carsons would continue to retain that share after the 1986 agreement came into effect and the retention by the Carson family of that share as an essential pre-condition to the transfer to the Wood family of the Carson interests in the trade mark proprietor Woodson (~ales)."'

--

'03 Austin v Keele (1987) 10 NSWLR 283 was another case involving a commercial arrangement, but the plaintiff in that case did not succeed in proving the alleged common intention. lo4 (1994) 34 NSWLR 9,17. ' 05 Ibid 26.


This was a case in which there was clear evidence of an agreement between the parties that they would share ownership of the trademarks. The problem was that the parties had failed to carry out the formal procedures for giving legal effect to that sharing of ownership. The Carsons had relinquished their shareholding in Woodson (Sales) Pty Ltd. This act was clearly referable to the 1986 agreement. Since the Carsons had begun to put the agreement into effect, equity would not permit the Woods to refuse to perform their side of the agreement. Therefore, Woodson (Sales) Pty Ltd had, from the moment of the Carson's transfer of their shares in that company to the Woods, held its interest in the trademarks upon trust for itself and for the carsons.lo6

V ALTERNATIVE RATIONALES FOR THE COMMON INTENTION TRUST

A Equitable Fraud or Unconscionability

If one puts to one side the overt invocation of the common intention principle in Green v Green, one is left with the impression that Australian courts have subsumed the common intention principle within a more general principle that recognises constructive trusts on the basis of 'the unconscionability, in particular

107 circumstances, of one party being able to deny an interest to the other'. Cases like Miller v Sutherland and Carson v Wood demonstrate how findings of common intention can be relevant to this enquiry and are consistent with the thesis that the common intention principle has been subsumed within a broader 'unconscionability' principle.

The characterisation (by Holland J in Ogilvie v Ryan) of resiling from a common intention to share ownership as a species of equitable fraud may have contained the seeds of this development. Cope has suggested that Ogilvie v Ryan represented a shift in emphasis from giving effect to a common intention to preventing the legal owner from taking the benefits of the claimant's performance.108 Cope thought that this allowed an expansion of the category of cases in which a court could impose a constructive trust.lo9 It would allow, in particular, a court to impose a constructive trust in relation to any benefits conferred by the claimant upon the legal owner on the basis of a shared understanding that the claimant would receive a beneficial interest in property.110 If it is correct to say that the rationale for recognising a trust is the unconscionability of the legal owner's retention of the benefits of the claimant's performance, then there is no reason to restrict the principle to cases in which the parties intend to share ownership.

Io6 Ibid 18 (Clarke JA), 26 (Sheller JA). 107 Bryson v Bvant (1992) 29 NSWLR 188,214 (Sheller JA). Note, however, the more cautious approach of Kirby P, which proceeded on the assumption that 'each of the categories . . . provides a separate legal category by which the facts, as found, are to be successively tested' (197). log Malcolm Cope, Constructive Trusts (1993) 874. Io9 Ibid. "O Ibid 874-875.

76 Rehabilitating the Common Intention Tmst

The problem with this approach to the characterisation of the common intention trust is that it does not provide us with any additional explanatory value. To say that the defendant's conduct is 'unconscionable' or amounts to 'equitable fraud', tells us only that the defendant's conduct is of a type that has (historically) offended the conscience of the courts of equity. It does not tell us anything about the reasons why the defendant's conduct can be regarded as being unjust and does not tell us what needs to be done to correct the injustice. We need to retain the concept of common intention in order to provide a justification for a judicial response.''' The shape of that response is informed by the nature of the injustice to be overcome.112

Since the common intention cases have not limited the court's response to restoring to the plaintiff the value of the benefits it has conferred upon the defendant, the injustice of the defendant's retention of benefits that were conferred upon it by the plaintiff fails to provide an adequate explanation of those cases. The common intention cases ought to be regarded as a distinct category of cases with a particular remedial rationale. Joint endeavour cases form another category. Merging these categories into a category of 'equitable fraud' or 'unconscionability' serves no useful purpose and may cause us to lose sight of the relationship between the justification for judicial response and the shape of that response. Therefore, we need to consider, at greater length, what is distinctive about the common intention cases.

B Equitable Estoppel

In Thwaites v an,"^ Fullagar J (with whom Young CJ and Starke J agreed) explained the detriment requirement in the following terms:

[Wlhat I think is required in substance is proof that, should the belief or expectation turn out to be unfounded or disappointed, the plaintiff would be seen to have suffered to such a degree as to make it unconscionable of the other party to disappoint the expectation or belief. ' l 4

This statement emphasised the legal owner's assertion of its strict legal right to refuse to hlfil the other party's expectation in the face of the other party's

111 On this point, the author has been influenced by Ronald Dworkin's insistence that the proper rule for the resolution of a case is to be identified by how well it fits within an interpretation of the community's legal practice as a whole. An interpretation must state a 'principle of justice', which, in turn, has to be informed by a 'more general moral or political consideration': Ronald Dworkin, Law's Empire (1986) 242. 112 Note Professor Birks' argument that a person's 'right' to a legal response is derived from a 'causative event' and that the type of response is constrained (except in the case of 'wrongs' properly so called) by the 'remedial logic' of the causative event. See Peter Birks, 'Equity in the Modem Law: An Exercise in Taxonomy' (1996) 26 University of Western Australia Law Review 1, 17. Birks stated a modified thesis in Peter Birks, 'The Law of Unjust Enrichment: A Millenial Resolution' [I9991 Singapore Journal ofLegal Studies 3 18,324 -325, which acknowledges that the response of restitution may follow from either a wrong event or an unjust enrichment event. Some advocates of discretionary remedialism in equity have gone so far as to say that the shape of the remedy is affected, to some extent, by the nature of the cause of action. See Robert P Austin, 'The Melting Down of the Remedial Trust' (1 988) 1 1 University of New South Wales Law Journal 66,85; David Wright, 'Wrong and Remedy: A Sticky Relationship' [2001] Singapore Journal ofLegal Studies 300,323. The thesis that the shape of the response is 'affected' by the causative event is sufficient to support the author's argument. ' I 3 [I9841 VR 65. 'I4 Ibid 90.


detrimental reliance. This is merely one example of a tendency on the part of some judges and academic commentators either to equate the common intention principle with equitable estoppel or to regard the two principles as alternative justifications for the imposition of a constructive trust.' l5

.

The two principles can be neither merged nor treated as interchangeable. They respond to different types of injustice and have different remedial rationales. The High Court of Australia, in a line of cases beginning with Waltons' Stores (Interstate) Ltd v ~ a h e r , " ~ has articulated the view that equitable estoppel is activated by one party relying to its detriment upon a false expectation as to what another party will do. Where equity intervenes, it does so on the basis that it would be unconscionable for the other party (the inducing party) to stand by and allow the relying party to incur that detriment. The inducing party, being aware of the reliance and having done nothing to discourage it, is required to ensure that the relying party is protected from harm.ll7 Equitable estoppel has a compensatory rationale. This is not always obvious, because the most common way of ensuring that the relying party is protected from harm has been to give effect to the relying party's expectation. ' Both Waltons ' Stores (Interstate) Ltd v Maher and the more recent case of Giumelli v ~ i u r n e l l i ~ ' ~ ended in relief that gave effect to the plaintiffs expectation. The relief in Giumelli v Giumelli was measured by the present value of the land in which the plaintiff had expected to have an interest. It does not follow from the fact that most cases have ended in expectation relief that equitable estoppel has a perfectionary rationale. It is possible to find examples of cases in which the ground for relief was unmistakably equitable estoppel, but the relief was measured by reliance 1 0 ~ s . ' ~ ~ Moreover, relief measured by the relying party's expectation is a means of preventing the relying party from suffering detriment and may, in many cases, be the only means of doing so.121 The common intention principle, on the other hand, always operates to confer beneficial title upon the claimant.

This difference in remedial rationale would be justified only in so far as the two principles are concerned with different types of event that give rise to

115 Grant v Edwards [I9861 3 WLR 1 14, 129-30 (Sir Nicolas Browne-Wilkinson VC); Austin v Keele (1 987) 10 NSWLR 283,290; Rasmussen v Rasmussen [I9941 1 VR 6 13,629; Secretary, Department of Social Security v Agnew (2000) 96 FCR 357,363; See also Dal Pont, above n 3,69, in which Dal Pont suggested that the estoppel explanation is the most satisfactory of the available explanations of the doctrinal basis of the common intention trust.

(1988) 164 CLR 387. 117 Ibid 407-408 (Mason CJ and Wilson J), 423 (Brennan J); See also Commonwealth v Verwayen (1990) 170 CLR 394,413 (Mason CJ), 429 (Brennan J), 454 (Dawson J), 475-476 (Toohey J), 504 (McHugh J). 118 As to the prevalence of 'expectation' relief, see Andrew Robertson, 'Satisfying the Minimum Equity: Equitable Estoppel Remedies after Verwayen' (1 996) 20 Melbourne University Law Review 805, 828-829; Michael Pratt, 'Identifying the Harm Done: A Critique of the Reliance Theory of Estoppel' (1999) 21 Adelaide Law Review 209, 212-2 13. Pratt thought that this undermined the coherence of the Waltons Stores principle.

(1999) 73 ALJR 547. 120 Morris v Morris [I9821 1 NSWLR 6 1 ; Public Trustee, as Administrator of the Estate of Percy Henry Williams (deceased) v Wadley (Unreported, Supreme Court of Tasmania, Full Court Appellate, Wright, Crawford, and Zeeman JJ, 27 June 1997). 121 See Michael Spence, Protecting Reliance: The Emergent Doctrine of Equitable Estoppel (1 999) 69; Andrew Robertson, 'Reliance, Conscience and the New Equitable Estoppel' (2000) 24 Melbourne University Law Review 218,229-230; Danyn Jensen, 'In Defence of the Reliance Theory of Equitable Estoppel' (2001) 22 Adelaide Law Review 157, 176-178.


distinguishable forms of injustice. awl ow ski'^^ observed that a claimant who relies upon the common intention principle must be able to establish a common intention, while a claimant who relies upon equitable estoppel need only point to a 'mere

123 assurance'. The former type of case involves a bargain, whereby one party has agreed to make a contribution in return for receiving part-ownership of the property. The bargain may be inferred from the conduct of the parties, including the making of the contribution. It is the bargain between the parties that justifies the conferral of beneficial ownership upon the claimant. The only reason why the bargain cannot be enforced directly is the lack of writing. Evidence of this type of bargain is lacking in the latter type of case. Nevertheless, equity might be justified in ordering a party, who is morally culpable for leading the relying party to expose itself to loss, to make good the relying party's loss. This is the territory of equitable estoppel. There can be no doubt that it will often be difficult to distinguish between these two types of cases in practice, but we should not mistake evidential difficulties for doctrinal incoherence. A claimant who wishes to rely upon the common intention principle will have to produce evidence from which a court might reasonably infer the existence of an agreement to confer an interest in property upon that claimant in exchange for his or her contribution. It may be (as Mee has suggestedlz4) that some cases decided under the common intention principle did not involve a bargain, but this observation merely raises the question whether those cases should have been decided as equitable estoppel cases rather than as common intention cases.

VI THE LIMITS OF THE COMMON INTENTION PRINCIPLE

There has been a chorus of criticism that the common intention principle is of limited utility in domestic property cases on the basis that it is often artificial to speak of the parties in these cases as having arrived at an agreement or common intention. Neave has suggested that the problem with these cases is that the parties 'have not directed their minds to questions of ownership of property they have

125 enjoyed in common'. Mee has spoken of 'the unlikelihood of a couple strilung any sort of bargain when happily beginning their life together in a new home'. 126

Bailey-Harris noted that the common intention principle requires courts to examine evidence of conversations that took place many years ago and that the conflict of evidence resulting from the parties' differing recollections of these conversations may be exacerbated by the acrimony arising from the breakdown of the relationship. 127 ~ a ~ t o n ' ~ ~ acknowledged that giving effect to an inferred common intention may be cosmetically more appealing than imposing upon the parties 'what the court thinks they ought to have agreed to',12' but suggested that 'there is

122 Mark Pawlowski, The Doctrine of Proprietaly Estoppel (1 996). 123 lbid 12. 124 Mee, above n 10, 170- 17 1. 12' Neave, above n 10,253. 126 Mee, above n 10, 165. 127 Bailey-Harris, above n 10,367. 12' David Hayton, 'Constructive Trusts: is the Remedy of Unjust Enrichment a Satisfactory Approach?' in Timothy G Youdan (ed), Equity, Fiduciaries and Trusts ( 1 989) 205. 12' Ibid 230.


probably more scope for "palm tree" justice in common intention constructive trusts than in a "purposive doctrine of unjust enrichment" '.I3'

The common denominator in these criticisms is that the operation of the common intention principle depends upon an inference that the parties had actually agreed to share ownership, when the reality of the matter is that, in many cases, the parties would never have applied their minds to the question of ownership. This insight should not be regarded as being fatal to the common intention principle. This is because a court's finding that a person intended X is always, to some extent, a finding that that person seemed, by reason of his or her words or conduct, to intend X. There are two reasons why this must be so. First, courts are not equipped with the ability to read the minds of the parties and the parties cannot be expected to read the minds of one another. A judgment about what a person intended at a particular time necessarily proceeds upon the basis of a reasonable interpretation of observable facts. Secondly, a party's evidence about what he or she intended at an earlier time is not necessarily reliable. It may be coloured by the dispute.

Therefore, it is not an objection to the common intention principle that it sometimes results in the recognition of trusts where the parties have admitted on the witness stand that they had never discussed creating a trust or sharing ownership of the property. It ought to be enough that it is implicit in the conduct of the parties that they regard the property in question as being for the benefit of both of them. The trust is the means by which equity gives effect to this intention. Once this is accepted, it should not be surprising that trusts are recognised in cases in which the parties had never discussed sharing of ownership, such as Midland Bank PLC v ~ooke."' It might also be observed that the majority of the New South Wales Court of Appeal in Baumgartner v ~ a u m ~ a r t n e r ' ~ ~ was correct to downplay the significance of the legal owner's evidence of his doubts about marrying the claimant and his reluctance to transfer legal ownership to her in the absence of marriage. What he said and did in the presence of the claimant was of much greater significance to their shared understanding of the basis of their relationship.

It is important, however, to acknowledge the limits of the common intention principle. It operates only where it is possible to draw an inference that the parties intended to share ownership of the property. While a finding of the necessary common intention does not depend upon evidence that the parties discussed the matter, courts should guard against imputing an intention to the parties that they did not appear to have. Unambiguous statements by a legal owner to the other party that they will not share ownership will preclude the inference of the necessary common intention. Therefore, there are likely to be cases of property sharing in which a party, who has contributed to the acquisition of property, will find no relief in the common intention principle.

130 Ibid 244. l3' [I9951 4 All ER 562. 132 (1985) 2 NSWLR 406 (Kirby P and Priestley JA).


VII CONCLUSION

The practical limitations of the common intention principle arise from the high evidential hurdle faced by claimants, rather than any doctrinal incoherence. Claimants who can present evidence from which the necessary common intention may reasonably be inferred and who have acted in accordance with that common intention will be entitled to the perfection of their informal arrangement. This is not necessarily an easy task. It is likely to be particularly difficult in domestic cases. Claimants who cannot produce evidence of a common intention will not necessarily be entitled to an interest in the property commensurate with their expectation, although they may be entitled to relief of a different measure by virtue of either the equitable estoppel principle or the joint endeavour principle. The common intention principle ought to be there for those cases in which the requisite intention can be proved, even if those cases are rare.

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