#6583 - Non Express Constructive Trusts - Trusts

NON--EXPRESS-- CONSTRUCTIVE TRUSTS TRUSTS | PAGE 70 TRUSTS | PAGE 71 CONSTRUCTIVE TRUSTS A trust imposed by the courts regardless of the parties' intentions * * * Institutional constructive trusts o Trusts imposed by law in various institutional contexts o The court declares that a constructive trust has arisen Remedial constructive trusts o Trusts imposed by law as a remedy o Have no existence prior to the court imposing it SS? Arises where there has been a break down of the relationship between parties SS? Equitable principles Considerable overlap between the two types TRUSTS | PAGE 72 REMEDIAL CONSTRUCTIVE TRUSTS * * * * Trusts imposed by the court as a remedy Used to prevent legal owners from using their legal rights to deny the rights of other interested parties Doesn't exist prior to the court imposing it o Equity will step in to protect Family Law Act o Issues between married couples/de facto etc Muchinski v Dodds * De facto couple purchase land * Intention was to renovate the cottage on the land and to buy a house to put on the land * Girlfriend paid the sum and included boyfriend's name on the lease * Parties separated without the intention fulfilled * Woman contributed $250,000 and improvement and claimed sole beneficial ownership seeking declaration from the court and that man held his share in trust for her o Does the man have interest in the property? * HELD: Resulting trust in favour of the woman because she had paid the purchase price however it was riveted as evidence shows that at the time, the man was intended to have part beneficiary status of the property o Land in equal shares based on his promise to renovate and buy a house * HELD: No resulting trust over man's shares of the property, but the promise had not been fulfilled and so it would be inequitable to confer on the man a beneficial interest - held respective legal interest and a constructive trust was put in place over the property o Was a constructive trust and parties were jointly able to pay and the woman was entitled to the funds paid by the man * WAS A CONSTRUCTIVE TRUST WHERE MAN HELD INTEREST SUBJECT TO PAYING BACK HIS SHARE o Deane J: issue with categories of constructive trust TRUSTS | PAGE 73 Baumgartner v Baumgartner Applied Muschinski v Dodds * De facto relationship pooled income for living expenses including house payments * Lived at the unit owned by the man which they sold when they acquired the house - exclusively in his name, but used net proceeds of unit to buy house * Income was 55%/45% in favour of the man * Separated and the man asserted the land was his sole property o Legal title only in his name * Whether she had any interest in the subject property? * HELD: Man held house on constructive trust for both of them in the proportions they had previously done (55/45) subject to the net proceeds of the unit * Cases can be considered more broadly in cases where it would be inequitable for the legal interest to be maintained, the constructive trust will recognise underlying equitable interests o Two friends in an arrangement/business partners in a joint venture What are the underlying justifications to establish a remedial constructive trust? * Unconscionability o For remedial constructive trusts, there needs to be proof of unconscionable conduct SS? Assertion to or denial of one party's equitable interest in property by the other party * Muschinski and Baumgartner o Not just about fairness, although it is relevant * Contributions o Not just contributions to purchase, (as per resulting trusts) o Can include homemaker/parent roles etc. o Not just financial SS? Baumgartner v Baumgartner TRUSTS | PAGE 74