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Cressy v Johnson & Ors (No 3) [2009] VSC 52 (25 February 2009)

Cressy v Johnson & Ors (No 3) [2009] VSC 52 (25 February 2009)

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171 I turn, then, to consider what relief is to be granted to the plaintiff in respect of her claim against the
defendant under Part 9 of the Property Law Act.

172 Section 285(1) empowers the Court to make an order adjusting the interests of the domestic parties in the
property of one or both of them “that seems just and equitable”, having regard to the three types of contributions
referred to in that subsection. Section 291 sets out a broad range of orders which the Court may make in
exercising those powers.

173 Mr Devries submitted that, if I should determine that the plaintiff and the defendant made equal
contributions for the purposes of s 285(1) of the Act, I should make orders securing to his client the payment of
the sum of not more than $129,000. He submitted that the order should direct payment to the plaintiff of the
balance of the proceeds of the Altona property ($48,000). In addition, I should order the sale of the Hawkeshurst
Court property, and out of the net proceeds thereof (after discharge of all outstanding mortgage and other debts
secured over the property) the payment to the plaintiff of a sum, not exceeding $81,000.

174 In support of that submission Mr Devries contended that I should proceed on the basis that the relevant “pool
of assets” from the relationship, should be valued at $258,000. He submitted that that sum is calculated as
follows:

(a) The defendant, on his own evidence, received a sum of $11,000 from the settlement of the purchase by him of
the Caulfield East property. The defendant had given evidence that the settlement of the purchase was delayed,
and in the meantime the value of the property had increased. Accordingly, he was able to borrow $11,000 in
excess of the sum required by him to settle the purchase of the property.

(b) In addition, the defendant gave evidence that he received the sum of $98,217 cash on 31 December 2007
when he re-financed the Caulfield property for the purposes of funding the purchase of the Torquay property. He
tendered a bank statement which demonstrated that that amount was deposited into his bank account on 31
December 2007.

(c) The plaintiff gave evidence that the defendant had received the sum of about $25,000 out of the proceeds of
sale of the Lisa Court, Hoppers Crossing property.

(d) The defendant gave evidence that he had superannuation which, as at about December 2007, had a balance of
$80,000. He also stated that he had not contributed to that fund for some five years (that is, since 2003). Mr
Devries submitted that, accordingly, the amount “saved” by the defendant, in his superannuation fund, during the
term of his relationship with the plaintiff should be calculated at approximately $35,000.

(e) The defendant also gave evidence that he sold his 1999 Landrover in September 2007 for approximately
$10,000. He gave evidence that he had previously purchased that vehicle for $54,000 (obviously during the
period of the relationship).

(f) The defendant, in cross-examination, estimated that he had a net equity in the Hawkeshurst Court property of
approximately $30,000.

(g) Finally, it is common ground that, after allowing for the mortgagee’s costs, a sum of $48,000 was available
for distribution from the sale of the Altona property.

175 Mr Devries submitted that the plaintiff should be entitled to a sum of 50% of the total of the above six items,
which he calculated at $129,000.

176 Section 285(1) of the Property Law Act vests the Court with a wide discretion. Ultimately, that discretion is
to make such order as is just and equitable, having regard to the contributions defined in s 285(1). In reaching
that determination, the Court takes into account the context of the relationship between the parties.[37] Further,
as I have already observed, the assessment of the proportionate contribution of each party to the assets and
resources of each other, and to the relationship while it endured, does not partake of mathematical precision. That
evaluation involves an assessment of many intangibles and, at best, can only be approximate.

177 Bearing in mind those principles, I turn to the attempt by Mr Devries to compute the “pool of assets” which
he submits I should regard as being available for distribution. On a number of occasions during the trial of the
case I drew the parties’ attention to the fact that I had not received evidence which enabled me, with any degree
of precision, to make findings about the value of each of the properties which are in dispute in this case, or as to
the amount of equity in each of the properties after allowing for the mortgage debt secured over them. In the
absence of that evidence, the task of doing justice and equity to the parties, broadly commensurate with my
assessment of their relevant contributions, is difficult. If this were not a case involving the failure of a personal
relationship in circumstances which, self-evidently, have caused at least one party (the defendant) to be
antipathetic and antagonistic to the other party (the plaintiff), the simplest solution would have been to declare
that the defendant is entitled to a one half interest in the equity of the properties, together with a one half interest
in the proceeds of the sale of the Queen Street property. However, as the authorities make clear, it is undesirable
for Court to adopt such a solution, particularly in cases such as this. Rather it is preferable – and indeed in this
case highly desirable – that I endeavour to fashion orders, to do justice and equity between the parties, and so as
to ensure that the parties do not share any particular asset.[38]

178 I turn then to the “pool of assets” which Mr Devries has submitted I should find as available for distribution
between the parties. Strictly speaking, the amount of $11,000 received by the defendant from the settlement of
the purchase by him of the Caulfield property, and the amount of $98,217 received by him from the re-financing
of that property for the purpose of the acquisition of the Torquay property, would not, on an accounting basis, be
considered as a net asset. For, they were matched by a corresponding increase in the level of debt owed by the
defendant to the mortgagee of those two properties. However, in my view it is appropriate to take those two
amounts into account as benefits already received by the defendant from the properties, in respect of which I
would otherwise order that the plaintiff had a joint 50% interest. In other words, theoretically, if those two
amounts had not been borrowed by the defendant for his own use, his net equity in the two properties would have
been $109,000 greater than it is at present. The plaintiff would have been entitled to a 50% interest in that
amount. Thus, in my view, it is appropriate to take into account those two sums in computing an amount to be
awarded to the plaintiff as an adjustment of the interests of the defendant in the properties concerned.

179 The fourth item identified by Mr Devries comprises the defendant’s superannuation. The defendant stated
that as at the end of 2007 his superannuation was valued at $80,000. He observed, with some justification, that

since that date the amount of his superannuation would have depreciated, because of the downturn in the global
economy. The defendant also stated (as at December 2008) that he had not made any contributions to the fund
for five years. Thus he only contributed to the fund during approximately one half of the period of his
relationship with the plaintiff. In addition, the defendant had commenced work in 1991, and I am prepared to
presume, in his favour, that he had made contributions to that fund during the period 1991 to late 1998. Taking
those matters into account, and taking a conservative approach, I would act on the basis that an amount of
$15,000, in the defendant’s current superannuation fund, is attributable to contributions made by him to the fund
during the period of the relationship.

180 The defendant gave evidence that his net equity in the Hawkeshurst Court property was in the order of
$30,000. Although the defendant is not a qualified valuer, nevertheless his evidence to that effect is admissible,
and has weight, as an admission by the defendant of that fact.[39] The defendant is an experienced and confident
real estate investor. He assumed sole responsibility for arranging finance in respect of the purchase by him of the
seven properties. I therefore considered that his evidence as to the net equity in the Hawkeshurst Court property,
while inexact, does have some weight.

181 On the other hand, I do not consider that the evidence establishes that the defendant did receive, in his hand,
an amount of $25,000 from the re-financing of Lisa Court. While the plaintiff gave evidence to that effect, it is
clear that she had not been involved in the sale of the property, and that her knowledge as to the outcome of that
sale was limited. On the other hand, the defendant gave evidence that, while it was a net balance as a result of the
sale of the Lisa Court property, that balance was credited to the mortgage debt secured over the Hawkeshurst
Court property. As I am taking into account, as part of the pool of assets, the defendant’s estimate of the net
equity in the Hawkeshurst Court property, it would be double counting to take into account, separately, the
amount “received” as a result of the sale of the Lisa Court property.

182 Taking into account each of those matters, I am therefore prepared to proceed on the basis that the
combination of the benefits derived by the defendant from the financing and re-financing of the Caulfield
property, the amount of superannuation saved by him during the relationship, the proceeds of the sale of the
vehicle, the net equity in the Hawkeshurst Court property, and the net proceeds of the sale of the Queen Street
property, totals approximately $210,000. Under s 291 of the Property Law Act I have power (inter alia) to order a
sale of property and distribution of the proceeds in any proportions I think fit, and to order payment of a lump
sum to a party. In the circumstances of this case, in my view it is appropriate that I make orders of the kind
contended for by Mr Devries, so as to ensure to the plaintiff the payment of an amount no greater than $105,000.
I accordingly intend to make orders to the following effect:

(1) That the defendant pay to the plaintiff $105,000.

(2) In order to secure payment to the plaintiff of that sum -

(a) The net proceeds of the sale of the Altona property be paid to the plaintiff.

(b) The Hawkeshurst Court property be sold, and out of the net proceeds thereof (after deduction of any amount
due to the mortgagee of the property, of any other amounts secured over the property, and of the costs of the sale
of the property) there be paid to the plaintiff of a sum which, when added to the net proceeds of the rule of the
Altona property so paid to the plaintiff, results in the payment to the plaintiff of an amount no greater than
$105,000.

Alternative claim: constructive trust

183 As an alternative, the plaintiff claims that the defendant has held his interest in the seven properties, which
are the subject of this proceeding, on trust for the defendant and herself in equal shares from the conclusion of
their joint relationship. She bases that alternative claim on the proposition that the defendant’s legal ownership of
the properties is subject to a constructive trust, imposed by the law, in her favour. Although I have found in
favour of the plaintiff in respect of her claim pursuant to Part 9 of the Property Law Act, it is necessary that I also
make findings in respect of the plaintiff’s alternative claim. Those findings are relevant, inter alia, to part of the
counterclaim by the defendant against the plaintiff.

184 The plaintiff does not rely on a constructive trust arising from a common intention between herself and the
defendant that the properties, purchased by the defendant, should be held by him subject to an interest by her in
them. Rather, the plaintiff’s case is that she and the defendant conducted their relationship on the basis that they,
in effect, pooled their assets, in such a way that she thereby contributed to the acquisition and maintenance of the
properties acquired by the defendant. She submits that, on the failure of the relationship between the plaintiff and
the defendant, it would be unconscionable for the defendant to assert his legal interest in the seven properties, to
the exclusion of any interest by her in them.

185 The constructive trust thus relied on by the plaintiff derives, originally, from the judgment of Deane J in
Muschinski v Dodds[40]. In that case, an unmarried couple purchased land in their joint names. The plaintiff
paid the purchase price for the land from her own funds. The defendant agreed to renovate the cottage on it and
to purchase a prefabricated house to be placed on the land. The relationship between the plaintiff and the
defendant failed, before the defendant made his agreed contribution. The High Court, by a majority (Brennan and
Dawson JJ dissenting), held that the parties held their legal interests on a trust whereby, after payment of any
joint debts incurred in the improvement of the property, they were to repay to each other their respective
contributions, and to hold the balance of the proceeds of the sale of the property in equal shares for each other.
Gibbs CJ rejected the claim by the plaintiff appellant that, in the circumstances of the case, there existed a
constructive trust. His Honour based his conclusion[41] on the proposition that the plaintiff and defendant, as
joint contractors, had quasi-contractual rights of contribution inter se. On the other hand, Deane J (with whom
Mason J agreed) concluded that, in the circumstances of the case, equity would impress the legal estate of each of
the plaintiff and the defendant with a constructive trust. His Honour found that the existence of a constructive
trust is not exclusively dependent upon the establishment of a common intention by the parties. Rather, the trust
derives from the intervention of equity in order to prevent unconscionable reliance by a party to a relationship,
which has failed, on his or her legal rights. The principle was stated by Deane J in the following passage in his
judgment:

“... The principle operates in a case where the substratum of a joint relationship or endeavour is removed without
attributable blame and where the benefit of money or other property contributed by one party on the basis and for
the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in
which it was not specifically intended or specifically provided that that other party should so enjoy it. The
content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit
of the relevant property to the extent that it would be unconscionable for him to do so. ... .”[42]

186 That principle was followed by the High Court in Baumgartner v Baumgartner[43]. In that case, the plaintiff
and the defendant lived together in a defacto relationship. They commenced living with the defendant in a unit
owned by him. At an early stage in their relationship, they pooled their joint incomes, in order to pay for their
living expenses. From those combined resources, the defendant was able, on about four occasions, to make
additional payments in relation to the mortgage secured over his unit. Subsequently, the plaintiff and the
defendant purchased a house in the name of the defendant. The purchase was funded by the net proceeds of the
sale of the unit, together with a mortgage in the name of the defendant. The parties lived at that house for three
years. They continued to pool their resources for payment of ongoing expenses, including the mortgage. After
they separated, the defendant asserted that he was the sole owner of the property. The trial judge dismissed the
plaintiff’s claim for a declaration that the defendant held his interest in trust for her, on the basis that the plaintiff

had failed to establish a common intent between the parties to that effect. The Court of Appeal upheld the
plaintiff’s appeal. It held that, on the evidence, the Court could infer the existence of a common intention
between the parties to create a trust to the effect claimed by the plaintiff. The High Court held that the Court of
Appeal erred in holding, on the evidence, that such a common subjective intention might be inferred.[44]
However, the Court held that, in the circumstances of the case, the Court would impose a constructive trust, in
order to prevent unconscionable conduct by the defendant in relying on his legal estate in the house to the
exclusion of the plaintiff. In reaching that conclusion, the Court referred to, and expressly followed, the passage
from the judgment in Deane J in Muschinski v Dodds, which I have quoted above.[45]

187 The judgment of Deane J in Muschinski v Dodds[46], and the joint judgment of Mason CJ, Wilson J and
Deane J in Baumgartner v Baumgartner[47], each emphasised that the law does not impose a constructive trust in
accordance with “idiosyncratic notions of what is just and fair”. Rather, the existence of a constructive trust, and
its content, will only be recognised to the extent necessary to prevent conduct regarded as unconscionable,
pursuant to equitable principles, upon the failure of a relationship between two parties. Hence, in Muschinski v
Dodds, Deane J stated[48]:

“... one is not left at large to indulge random notions of what is fair and just as a matter of abstract morality.
Notions of what is fair and just are relevant but only in the confined context of determining whether conduct
should, by reference to legitimate processes of legal reasoning, be characterised as unconscionable for the
purposes of a specific principle of equity whose rationale and operation is to prevent wrongful and undue
advantage being taken by one party of a benefit derived at the expense of the other party in the special
circumstances of the unforseen and premature collapse of a joint relationship or endeavour.”

188 In the present case, the plaintiff did not make any direct financial contribution to the acquisition of the
properties, nor did she make any payment in respect of the debts secured by the mortgages over the property. In
addition, she did not bear any responsibility for payment of other ongoing expenses, such as rates, taxes,
insurances and the like. I have found that she did some, relatively minor, work to the properties at Dorrington
Street, Hawkeshurst Street and Queen Street, Altona, but that the large proportion of the expenses incurred in
connection with that work were paid by the defendant. The question which arises is whether, in those
circumstances, there nonetheless is imposed, on the failure of the relationship between the plaintiff and the
defendant, a constructive trust of the kind referred to in Muschinski v Dodds and Baumgartner v Baumgartner.

189 Any such constructive trust would derive from the particular features of the relationship existing between the
plaintiff and the defendant from 1998 to 2007. In particular, during that relationship, the roles of the parties
evolved. In the course of the relationship, from about 2002, the defendant embarked on an enterprise of
purchasing and funding a number of properties. He directed his energies and finances to that endeavour. During
that time, as I have found, he lived in a domestic relationship with the plaintiff. In that relationship, the plaintiff
was basically the homemaker, and the prime carer of the three children involved in the family unit. As I have
also found, she bore the majority of the household expenses out of her part-time earnings. The plaintiff and the
defendant each assumed and discharged certain roles, deriving from their joint relationship together. In those
capacities, the plaintiff maintained the home and cared for the children, devoting her earnings and efforts to that
part of the relationship. On the other hand, the defendant embarked on his role of investing in, and financing the
purchase of, a number of properties. The question is whether, in those circumstances, the principles of equity,
developed by the High Court, would impose a constructive trust, on the basis that it would be unconscionable for
the defendant, on the failure of the relationship, to assert his sole legal interest in the properties, to the exclusion
of any entitlement of the plaintiff in respect of them.

190 In Muschinski v Dodds and Baumgartner v Baumgartner, the plaintiffs had each made either direct or
indirect financial contributions towards the payment for the properties which were the subject of the claims in
those cases. As I have outlined, this case is somewhat different, in that the contribution of the plaintiff to the

properties was less direct. In essence, the case of the plaintiff, in favour of a constructive trust, is that it would be
inequitable for the defendant to assert, to her exclusion, his legal interests in the properties, given that her role in
their relationship facilitated the performance by the defendant of his own role, in purchasing and funding the
debts over the seven properties.

191 Some support for the claim by the plaintiff to a constructive trust, in the circumstances outlined above, is to
be found in the following passage from the judgment of Deane J in Muschinski v Dodds[49]:

“As has been seen however, the relationship between the parties in the present case was not merely a commercial
one. It was a mixture of the commercial and the personal. The personal relationship provided the context and
explains the content of the planned commercial venture. If the personal relationship had survived for years after
the collapse of the commercial venture and the property had been unmistakably devoted to serve solely as a
mutual home, any assessment of what would and would not constitute unconscionable conduct would obviously
be greatly influenced by the special considerations applicable to a case where a husband and wife or persons
living in a ‘defacto’ situation contribute, financially and in a variety of other ways, over a lengthy period to the
establishment of a joint home. In the forefront of those considerations there commonly lies a need to take account
of a practical equation between direct contributions in money or labour and indirect contributions in other forms
such as support, home making and family care. In fact, of course, the personal relationship also failed in the
present case. The Picton property was not devoted to serve as a mutual home for a lengthy period after the
collapse of the planned commercial venture. There is no consideration or combination of considerations arising
from the personal relationship between the parties which could properly be seen as negating or overriding the
unconscionable character of Mr. Dodds ' conduct in seeking, in the circumstances, to assert and retain the benefit
of a full one-half interest in the property without making any allowance for the fact that Mrs. Muschinski has
contributed approximately ten-elevenths of the cost of its purchase and actual improvement.”

192 That passage has been quoted in a number of later decisions by intermediate courts of appeal. However, the
courts have given different emphasis and meaning to it. The high water mark, for a person in the position of the
plaintiff, is the decision of the Full Court of the Supreme Court of South Australia in Parij v Parij[50]. In that
case, the defendant and the plaintiff lived together in a defacto relationship for 17 years. In the course of that
relationship, they purchased, in their joint names, a house in which they lived. At the same time, the defendant
also purchased, in his own name, two other properties. The trial judge dismissed a claim by the plaintiff to an
interest in the assets purchased by the defendant in his own name. The Full Court upheld the plaintiff’s appeal,
holding that the plaintiff had a one-third interest in the two properties purchased by the defendant in his own
name, together with the accounting business of the defendant. Debelle J delivered the principal judgment of the
court. His Honour quoted, at some length, from the judgments in Muschinski v Dodds and Baumgartner v
Baumgartner. He then expressed the relevant proposition in the following terms:

“These decisions establish in unambiguous terms that, when determining whether it is unconscionable for one
party to a defacto relationship to retain the sole beneficial ownership of property acquired in the course of the
relationship, regard will be had to the manner in which the parties have conducted their relationship and the
contributions each have made. When assessing their respective contributions, regard will be had to non-financial
contributions as well as to financial contributions. The latter proposition is clear from the references to the
‘practical equation between contributions in money or labour and indirect contributions in other forms such as
support, home making and family care’ in Muschinski v Dodds (at 622) and in the reference to ‘contributions
either financially or in kind’ in Baumgartner (at 150).”[51]

193 However, the proposition thus stated by Debelle J in Parij has to some extent at least been qualified by
decisions of the Court of Appeal of New South Wales and of Western Australia. In Green & Ors v Green[52]
Gleeson CJ (with whom Priestly JA agreed) stated:

“It is clear that the mere existence of a matrimonial or defacto relationship, combined with express or implied
undertakings to provide support and accommodation, will not form a sufficient basis for concluding that there is
a constructive trust by virtue of which a proprietary interest in the home occupied by the parties is created. ... In a
legal system which does not include concepts of family or community property, and where an obligation on the
part of a husband to house and provide for his wife is commonly regarded as an incident to the matrimonial
relationship, an undertaking of the kind referred to cannot of itself confer upon a wife a legal or equitable interest
in the matrimonial home. If the matter is considered in terms of a promise or representation by the husband, and
an acting by the wife to her detriment on the faith of that promise or representation, then a claim made on the
narrow basis set out above would normally fail at both levels. The acceptance of an obligation on the part of the
husband to house his wife would not normally be regarded as an undertaking to give her a proprietary interest in
the home in which they live, and wives usually have reasons for living with their husbands other than an
expectation that they will increase their assets.

Nevertheless, it is now well settled that there are circumstances in which a court of equity will intervene to
declare the existence of a proprietary interest in a family home on the part of a spouse or defacto partner, and the
unifying principle underlying the cases where such intervention is regarded as appropriate is that in the
circumstances of the case, and in accordance with equitable doctrines, it would be unconscionable on the part of
the person against whom the claim is set up to refuse to recognise the existence of the equitable interest ... .”[53]

194 In Stowe v Stowe[54], the Full Court of Western Australia (consisting of Ipp, Owen and White JJ) expressed
a similar qualification, stating:

“But on existing equitable principles, where there is no common intention to share all the property of one of the
spouses, and there is no pooling involving all such property, and where only particular properties (but not all)
owned by one spouse have been improved by contributions of the other spouse, contributions by the latter to the
general welfare of the parties (whether to the general benefit of a family or to business activities carried on by
them) cannot give rise to a constructive trust over all such property. ... Where the contributions of one spouse do
not result in assisting or enabling the other to acquire particular property, or in improvements to particular
property ... equitable relief of the kind sought is not available ...

Accordingly, on recognised equitable principles, the contributions to family welfare, the contributions to Mr
Stowe’s business activities, in general, and the detriment suffered by Ms Stowe, in the circumstances alleged in
the statement of claim, do not found a claim of the kind made .... .”[55]

195 That passage in Stowe, and the passage which I have quoted from the judgment of Gleeson CJ in Green,
were considered by the Full Court of the Supreme Court of Western Australia in Lloyd v Tedesco[56]. In that
case, the Court emphasised that, in order to found a constructive trust of the kind discussed by the High Court in
Muschinski v Dodds and Baumgartner v Baumgartner, the contribution made by the relevant party must go
further than enhance the material wellbeing of the parties to the relationship, but must contribute to the
acquisition, maintenance or improvement of the property in respect of which the trust is claimed.[57] Thus,
Murray J (with whom Hasluck J agreed) stated:

“The guiding principle is unconscionability. In this, as in every such case of a defacto relationship, there must be
more than simply the performance by the plaintiff of the valuable role of the provision of love, care and support.
The provision of such a contribution will be sufficient only if it is related in some factual way to the generation
of wealth as part of a joint effort or endeavour to provide for the parties’ mutual material welfare and security.
That need not, of course, be the only purpose of the provision of such assistance to the defendant, but it must be
one of the material purposes because it is that which marks out the character of the joint endeavour as being one
which will generate a claim, upon the failure of the relationship, without the fault of the plaintiff, to a share in the
property created, acquired, maintained and improved during the course of the relationship, where the endeavour

can be seen to be related to particular items of property, or will generate a claim for compensation representing
the value of the contribution made by the claimant to the increase in the material wealth which was intended to
be enjoyed by the parties jointly.

A joint endeavour of this character is one which has the aim of adding to the parties’ material wealth for their
mutual benefit rather than being one where the plaintiff simply provides loving care and support to the defendant
as a normal incident of a defacto relationship. In that sense it is right to say that the joint endeavour must be one
intentionally or deliberately entered into for the purpose of advancing the parties’ mutual material wealth. Only if
it bears that character will it be unconscionable to allow the defendant to retain the entirety of the beneficial
interest in that wealth. To hold otherwise, and in particular to hold that it would be sufficient if in fact the efforts
of the plaintiff advance the defendant’s capacity to acquire wealth, would, in my opinion, be to commit the error
to which Deane J adverted in Muschinski of giving undue rein to the Court’s idiosyncratic notions of fairness and
justice.”[58]

196 In my respectful view, the passages from Green, Stowe and Lloyd v Tedesco, which I have quoted above,
reflect the reasoning of Deane J in his seminal judgment in Muschinski v Dodds. His Honour commenced by
identifying the constructive trust which was under consideration, namely one which was fundamentally remedial
in its operation.[59] He disavowed the proposition that equity would intervene, to provide such a remedy, based
on any idiosyncratic notion of justice and fairness; rather, equitable relief by way of constructive trust would
only be available “if applicable principles of the law of equity” should require that the person, in whom the
ownership of property is vested, should hold it to the use or for the benefit of another.[60] His Honour then
identified the relevant principles of equity. He did so by referring to the equitable principles which operate when
legal relationships, such as partnership and joint ventures, fail without attributable blame. In particular, where the
legal source of the relationship (such as the contract) does not provide for relief, equity intervenes to entitle each
party to such a relationship to a proportion of repayment of capital contributions made by them to the particular
venture.[61] Deane J observed that that remedy was based on a more general principle of equity which “operates
upon legal entitlement to prevent a person from asserting or exercising a legal right in circumstances where the
particular assertion or exercise of it would constitute unconscionable conduct”.[62] That reasoning of Deane J
immediately preceded the passage in his judgment, which I have already quoted[63], in which his Honour
defined the circumstances in which equity would intervene to impose a constructive trust on the legal interests of
the parties to a failed relationship. Thus analysed, the constructive trust identified by Deane J, and discussed in
the interstate decisions to which I have referred, constitutes a remedy postulated on contributions made by parties
in a relationship to property held by one of the parties to the relationship, where the relationship subsequently has
failed without attributable blame, in circumstances in which the legal owner of the property would derive an
unintentioned benefit at the expense of the other party, if not for the intervention of equity.

197 In other words, the remedy of a constructive trust is not a response by equity to a perceived unfairness
where, on the termination of a personal relationship, the legal arrangements between the parties do not reflect the
commitment and contributions of each party to that relationship. Rather, the equitable remedy of a constructive
trust is available to adjust the legal interests in property of a party or parties to a relationship, where, during and
on the basis of the continuation of the relationship, one party has made a contribution to the acquisition,
maintenance or improvement of the property, such that it would be unconscionable for the other party, on the
failure of the relationship, to insist strictly on his (or her) legal rights without an appropriate adjustment
commensurate with the contribution made by the former party to the property. Accordingly, in order to be
entitled to an interest under a constructive trust, the plaintiff must establish that the contribution, on which she
relies, was not simply directed to advancing the welfare of the defendant, and of the family unit of which he was
then a part. Rather, the contribution of the plaintiff, on which the constructive trust is to be based, must have
been directed to the acquisition and maintenance of the assets in respect of which the plaintiff claims an interest
under the constructive trust.

198 On the other hand, as expressly recognised by Deane J in Muschinski v Dodds[64], the context of the
relationship between the parties is important in identifying the contribution by the party who claims rights under
a constructive trust. In a “de facto” relationship, such as in this case, a contribution may be made in a different
form, and in a less direct manner, than in a relationship which is wholly commercial in character, such as a joint
venture or a partnership. As the decisions in Green, Stowe and Lloyd v Tedesco make clear, the contribution
must not be solely directed to maintaining the personal relationship between the parties. However, in determining
that question, it is important, of course, to take into account the realities of the type of relationship shared by the
parties in a case such as this. Of its nature, such a relationship had, as its origin, the mutual love and affection on
which it was based. It is that aspect of the relationship which was the source of, and which accounted for, the
duration of the relationship. On the other hand, the nature of the relationship between the plaintiff and the
defendant did, in time, evolve and develop, as personal relationships do. The first property purchased by the
defendant – the Dorrington Street property – was, as I have found, the product of a shared concept between the
plaintiff and the defendant. It was purchased and developed to be part of a family home shared by the parties. As
the relationship developed and progressed, the plaintiff was sufficiently connected with the enterprise of the
defendant, consisting of the purchase of the properties, to be involved in carrying out some works on them. Thus,
she carried out some (albeit relatively minor) work on the Dorrington Street property, and subsequently carried
out further work on the Hawkeshurst Court property and the Altona property. The fact that she worked on the
Hawkeshurst Court property, notwithstanding that she did not live in it, demonstrates that she was not entirely
detached from the investment enterprise undertaken by the defendant.

199 Further, although the plaintiff and the defendant did not, in a literal sense, pool their joint incomes,
nonetheless the arrangements between them were such that they may be fairly described as a combination of their
joint financial resources. By directing her part-time earnings to the maintenance of the defendant and the family,
the plaintiff enabled the defendant to devote his income largely to the acquisition and maintenance of the
properties. Equally, by undertaking the burden of prime carer for the three children, the plaintiff enabled the
defendant to focus his efforts on acquiring, financing and maintaining the properties in his ever expanding
portfolio. The contributions made by the plaintiff were, clearly, postulated on the continuation of her relationship
with the defendant. To use the terminology of Deane J in Muschinski v Dodds[65], the relationship between the
plaintiff and the defendant was the relevant “substratum” of the enterprise in which the defendant acquired and
maintained the properties.

200 In my view, in that way the contributions made by the plaintiff were relevantly directed to the acquisition
and maintenance of the properties in the sense described by the Full Court of Western Australia in Lloyd v
Tedesco, and in the manner contemplated by the High Court in Baumgartner. If the Court were not to impose a
constructive trust in the circumstances thus described, on the termination of the relationship between the parties,
the defendant would be left to enjoy the benefit of the contribution made by the plaintiff to the acquisition and
maintenance of the properties, without accounting for it to the plaintiff. The plaintiff’s contribution was
predicated on the continuation of the relationship. It may be inferred that there was no intention by the plaintiff
that the defendant should enjoy the fruits of the plaintiff’s contribution, without accounting for it, in the
unforeseen event of the breakdown of their mutual relationship. In those circumstances, it would be
unconscionable, in accordance with equitable principle, for the defendant to depart the relationship, holding the
legal title to each of the seven properties, without any adjustment to his interest to allow for the contributions
made by the plaintiff. In that sense, the imposition by the law of a constructive trust would not constitute the
indulgence by the Court of any idiosyncratic or random subjective notions of fairness. Rather, in my view, in
such a case, the interposition of a constructive trust would conform with sound principles in equity, as explained
by Deane J in Muschinski v Dodds and by the High Court in Baumgartner.

201 In accordance with the authorities to which I have referred, the constructive trust would clearly extend to the
two Point Cook properties, the two Hoppers Crossing properties, and the Altona property. In addition, it would
cover the Caulfield property, which was purchased as part of the enterprise undertaken by the defendant in
connection with his relationship with the plaintiff. However, the constructive trust would not affect the

defendant’s interest in the Torquay property, since that property was acquired after the termination of the
relationship between the plaintiff and the defendant.

202 The determination of the content of the constructive trust is affected by the same difficulties, which affected
my findings in relation to the claim under Part 9 of the Property Law Act, arising from the paucity of the
evidence in the case. Certainly, a number of the factors which are relevant to the quantification of a claim under
Part 9 of the Property Law Act are not relevant to the determination of the nature and extent of the constructive
trust. Nevertheless, and bearing in mind the principles stated in the authorities to which I have referred, on the
alternative claim of the plaintiff, I would make a declaration that the defendant holds his current legal ownership
of the properties at 2 Dorrington Street, Point Cook, 7 Inverloch Drive, Point Cook, 10 Hawkeshurst Court,
Hoppers Crossing, 166 Queen Street, Altona, and Unit 9, 2 Gibson Street, East Caulfield, on a constructive trust
as to one third for the plaintiff. The plaintiff would also be entitled to a declaration, on her alternative claim, that
the monies paid into Court upon completion of the sale of the property at Altona be paid, as to one third thereof,
to the plaintiff, and as to the balance to the defendant.

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