Claimant Establishes Constructive Trust Over Matrimonial Home in Bankruptcy Case

OUTCOME: Allowed

FEDERAL COURT OF AUSTRALIA

[APPELLANT] v [NAME] (Trustee) [2003] FCA 190 BANKRUPTCY – constructive trust – husband dies and his estate is made bankrupt - matrimonial home registered in husband's name alone on his death – whether wife had a constructive trust over the whole or one half share of the home or whether the equitable interest in the home rests in the trustee in bankruptcy – whether an equitable interest held to exist under a constructive trust would arise prior to the bankruptcy.

Bankruptcy Act 1966 (Cth) Family Law Act 1975 (Cth) ss 78 and 79 Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) s 5(5)(b)(ii) Muschinski v Dodds (1985) 160 CLR 583 followed Baumgartner v Baumgartner (1987) 164 CLR 137 followed Green v Green (1989) 17 NSWLR 343 applied Calverley v Green (1984) 155 CLR 242 considered Bryson v Bryant (1992) 29 NSWLR 188 considered Pettitt v Pettitt [1970] AC 777 referred to Gissing v Gissing [1971] AC 886 referred to Parsons v McBain (2001) 109 FCR 120 followed [COMPANY] v Silvia (1989) 24 FCR 105 referred to [APPELLANT] v [NAME] (AS TRUSTEE FOR THE ESTATE OF THE [NAME] [APPELLANT]) N 7189 of 2002 [APPELLANT] J 13 MARCH 2003 [APPELLANT]

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N7189 of 2002

BETWEEN: [APPELLANT]

APPLICANT

AND: [APPELLANT] [NAME] (AS TRUSTEE FOR THE [RESPONDENT])

RESPONDENT

[APPELLANT] OF ORDER: 13 MARCH 2003

[APPELLANT]

THE COURT DECLARES: 1 the late [NAME] [APPELLANT] held his interest in the [NAME] upon trust for the Applicant and himself as joint tenants; 2 that upon his death his legal personal representative held the [NAME] upon trust for the Applicant; and 3 that the [NAME] is not divisible among the creditors of the late [NAME] [APPELLANT] in bankruptcy pursuant to the Bankruptcy Act, s 116(2). THE COURT ORDERS THAT: 4. the respondent transfer the [NAME] to the applicant. 5. the respondent pay the costs of these proceedings other than the costs incurred in the Family Court as to which there is to be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N7189 of 2002

[APPELLANT]

APPLICANT

AND: [APPELLANT] [NAME] (AS TRUSTEE FOR THE [RESPONDENT])

RESPONDENT

JUDGE: [APPELLANT]: 13 MARCH 2003

PLACE: [APPELLANT] FOR

JUDGMENT INTRODUCTION 1 These proceedings arise out of the insolvency of the estate of the late [NAME] [APPELLANT] ("[NAME] [APPELLANT]") and the failure, prior to the date of his death of his marriage to the applicant ("Mrs [APPELLANT]"). 2 The respondent, ("the Trustee") is the trustee of the estate of [NAME] [APPELLANT]. The Trustee is administering the estate under the provisions of Part XI of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act"). 3 Mrs [APPELLANT] seeks a declaration that the former matrimonial home situated at [ADDRESS], Drummoyne ("the [NAME]") is, and was, prior to the death of [NAME] [APPELLANT], held on a constructive trust for her under the well-known principles stated in Muschinski v Dodds (1985) 160 CLR 583 ("Muschinski") and Baumgartner v [NAME] (1987) 164 CLR 137 ("Baumgartner"). 4 The [NAME] was purchased in 1966 at the time of the marriage of [NAME] and Mrs [APPELLANT]. It was registered solely in [NAME] [APPELLANT]' name. Mrs [APPELLANT] claims that the [NAME] was held on trust for her either as a joint-tenant with [NAME] [APPELLANT], or alternatively, as a tenant in common as to a one half share with her late husband. If it was held beneficially under a joint tenancy, Mrs [APPELLANT] is entitled to the whole of the [NAME] on survivorship. 5 The proceedings were commenced in the Family Court in October 1999 shortly before the death of [NAME] [APPELLANT]. Declarations were sought under ss 78 and 79 of the Family Law Act 1975 (Cth). The matter was transferred to this Court by an order of [NAME] J made on 3 May 2002 pursuant to s 5(5)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). The Facts 6 [NAME] and Mrs [APPELLANT] were married on 25 March 1966. [NAME] [APPELLANT] was an immigrant from Greece. Mrs [APPELLANT] had emigrated to Australia from Scotland about 17 months prior to their marriage. During the marriage, [NAME] [APPELLANT] accumulated substantial property interests, mostly in his own name. However, the evidence shows that without the financial assistance of Mrs [APPELLANT], it would not have been possible for [NAME] [APPELLANT] to purchase the [NAME] in 1966. 7 Shortly before their marriage, the future [NAME] and Mrs [APPELLANT] were searching for a family home. They found the [NAME] which was for sale at Ł7000.00 (or $14,000, the purchase taking place about the time of conversion to decimal currency). A deposit of Ł700 was required. There was a discussion between them, the terms of which were not given in evidence, but after it Mrs [APPELLANT] gave [NAME] [APPELLANT] the sum of Ł400 which she received as a gift from her uncle. 8 Thus, Mrs [APPELLANT] contributed a little over half of the deposit. The balance of the deposit was provided by [NAME] [APPELLANT]. 9 Contracts were exchanged on 8 February 1966. Shortly before that date, [NAME] and Mrs [APPELLANT] approached the Manager of the [COMPANY] at Drummoyne for a loan for the whole or some part of the balance of the purchase price. The Manager told them that they did not have enough funds and the loan application was rejected. 10 Following this meeting, Mrs [APPELLANT] telephoned her sister in Scotland and wrote to her mother, also in Scotland, about the need for further funds to purchase the [NAME]. As a result, Mrs [APPELLANT]' mother, Mrs [NAME] [APPELLANT], sent Ł1,000 sterling to Mrs [APPELLANT] for the express purpose of assisting [NAME] and Mrs [APPELLANT] in the purchase of the [NAME]. Mrs [APPELLANT] gave this sum, which she exchanged for $A2,250 to [NAME] [APPELLANT]. She told him that the money was "to help us buy Drummoyne". [NAME] [APPELLANT] replied "Write to your mother and thank her very much." 11 [NAME] and Mrs [APPELLANT]' sisters, [NAME] and Ms [APPELLANT], have all given affidavit evidence in these proceedings. Mrs [NAME], who was 91 when she swore her affidavit last year, deposed to the communications Mrs [APPELLANT] had with her in 1966 about the purchase of the [NAME] by "[APPELLANT] and I". The same words were used by Mrs [APPELLANT] in conversations which she had with her sisters in 1966 and 1967. 12 After the Ł1,000 arrived in Australia, [NAME] and Mrs [APPELLANT] went to the Rozelle branch of the [COMPANY] where [NAME] [APPELLANT] completed a loan application. The evidence does not disclose the amount of the loan but Mrs [APPELLANT] was apparently aware that the loan application and the eventual loan approval were in the name of [NAME] [APPELLANT]. Mrs [APPELLANT] was employed at the time by the [COMPANY] as a factory worker and she provided the details of her wages to the [COMPANY] as part of the loan application. 13 The solicitor who was acting on the purchase of the [NAME] had an office in Drummoyne. Mrs [APPELLANT] went with her husband to see him. I accept Mrs [APPELLANT]' evidence that, on her visits to the solicitor's offices with her husband, [NAME] [APPELLANT] described the [NAME] as "our home". I also accept Mrs [APPELLANT]' evidence that she believed that the title was to be taken in both names and that she did not know that the [NAME] was to be acquired in the sole name of [NAME] [APPELLANT]. 14 Completion of the purchase of the [NAME] took place on 22 February 1966, that is to say three days before the date on which [NAME] and Mrs [APPELLANT] were married. 15 It is not clear whether [NAME] [APPELLANT] contributed any cash to the purchase other than the sum of Ł300 which was paid as part of the deposit. He told Mrs [APPELLANT] that he had $3,000 to put into the purchase but he told her that he wanted to keep some of that money to start a business. 16 Shortly after the marriage, [NAME] [APPELLANT] started an [NAME]. Mrs [APPELLANT] continued to work at the [NAME] for a short time. She had two children, [APPELLANT] and [APPELLANT], born in [DATE] and July 1971 respectively. Mrs [APPELLANT] did not engage in full time paid employment outside the home after the birth of her children. This was because [NAME] [APPELLANT] said to her on many occasions:- "Women should not work outside the home; their place is in the home. Wives of Greeks don't work; it's an (sic) slur on the family." 17 Mrs [APPELLANT]' evidence, which I accept, was that she did not learn that the [NAME] was in [NAME] [APPELLANT]' sole name until just before the birth of [APPELLANT] in March 1967. However, I also accept her evidence that [NAME] [APPELLANT] said to her at about that time and on many other occasions throughout the marriage: "It doesn't matter that the house is in my name, because it's yours too. What's mine is yours." 18 [NAME] and Mrs [APPELLANT] had a very frugal lifestyle. Within a few months of their marriage they closed off two rooms of the [NAME] and converted that area into a flat. Construction of the flat commenced in May 1966. They purchased materials for the flat from savings that they had both made. Mrs [APPELLANT] assisted in the building of the flat with her own physical labour. She cleaned and carried the bricks and pulled wires down cavities. This was necessary because the [NAME] was rewired as a part of the conversion of the two rooms into a flat. 19 The flat was rented out to tenants over a period of about ten years and the rent was used to pay off the mortgage. Mrs [APPELLANT] collected the rent. Sometimes she gave it to her husband to be used for mortgage payments. Sometimes she went to the [COMPANY] and deposited the monies directly into the mortgage account. 20 [NAME] [APPELLANT] explained to his children on many occasions the reason why the flat was built and rented to tenants. He said words to the effect:- "We are renting out the flat so that we can pay the loan on this house (ie the [NAME]) and buy other property so that we can give you a good education and so that we can all be comfortable when we are old." 21 The mortgage to the [COMPANY] over the [NAME] was discharged in April 1975. It is not clear from the evidence whether the loan was paid off entirely out of the rental monies but the amount of the rent (even after allowing for tax) would have provided a sum which was, or which was close to sufficient to enable that to be achieved. 22 Mrs [APPELLANT] made other indirect financial and non-financial contributions to the acquisition and maintenance of the [NAME]. As I have said above, at [NAME] [APPELLANT]' insistence, Mrs [APPELLANT] ceased full time paid employment outside the home shortly after her marriage. Nevertheless, [NAME] [APPELLANT] often failed to give her housekeeping money. She supplied housekeeping funds for the family from working as a nanny, from a Christmas club account established by her sister, Ms [NAME] and from regular payments in an amount of Ł20 sent to her every four to six weeks from Mrs [APPELLANT] in Scotland. 23 Mrs [APPELLANT]' financial and non-financial contributions to the maintenance of the [NAME] included carrying out all the gardening, paying for plants, fertilizers, insecticides and gardening equipment, replacing the fences at her own expense, painting the interior of the house and painting the exterior woodwork of the house. 24 In 1969, [NAME] [APPELLANT] established a business known as [NAME]. Mrs [APPELLANT] was a partner in the business and she worked there for a time as a receptionist. She received a salary for the first few weeks but thereafter her wages were deposited directly into the mortgage loan account. She received no dividends or profits from the business. 25 Mrs [APPELLANT] was also a partner with [NAME] [APPELLANT] in other businesses from which, with one exception, she received no dividends or profit shares. The only exception was that the profits of a coffee business were used to purchase an investment property at 87 Crown Street, Wollongong, which was owned by [NAME] and Mrs [APPELLANT] as tenants in common. This was the only investment property in which Mrs [APPELLANT] had a proprietary interest. The property was leased but rental payments were not made to Mrs [APPELLANT] even though the rent was declared as part of her income in her tax returns. 26 In about August 1999, [NAME] [APPELLANT] underwent surgery for a brain tumour. On a number of occasions prior to and just after his operation, [NAME] [APPELLANT] said to his son, [APPELLANT], words to the following effect:- "All of the properties belong to your mother and you must look after her, however I believe that by the time she dies, the government will have imposed an inheritance tax. If that happens all of our hard work will be for nothing. I am going to die of this (meaning brain tumour) as a result of too hard a life. I am therefore going to divide the properties between you and your sister. [NAME] will have a life interest in [NAME] but it will be your sister's. That means that she will live there til she dies. [NAME] will move in with her and look after her when she gets old. That's what [NAME] did for my mother. I am only doing this because of inheritance tax that will eventually come in. Also mum won't cope when I am gone so it's better for you two to manage the properties, collect rents, pay rates and manage the assets etc. [NAME] is a good person and she stuck by me all this time even when times were tough. She would get ripped off in business. Make sure you look after mum." 27 On 12 October 1999, approximately two weeks before his death, [NAME] [APPELLANT] made a new will. He referred in it to the "constant personal care" he had received since 1987 from his "de facto wife", [APPELLANT]. He gave legacies to [NAME], Mrs [APPELLANT] and his children. He left the residue of his estate to be divided equally between his children, [APPELLANT] and [APPELLANT] as tenants in common. Clause 5(b) of the will provided as follows:- "As to the sum of twenty thousand dollars ($20,000) to be held upon trust to be paid toward rental assistance (if required for my wife, [APPELLANT], after the sale of my property at [ADDRESS], Drummoyne." 28 Mrs [APPELLANT] did not learn of her husband's relationship with Ms [NAME] until August 1999. She then decided to separate from [NAME] [APPELLANT] although she continued to live at the [NAME]. She commenced these proceedings on 13 October 1999. Interim orders were made in the Family Court on 21 October 1999 providing, inter alia, for Mrs [APPELLANT] to be given exclusive occupation of the [NAME]. 29 [NAME] [APPELLANT] died on 27 October 1999. Probate of his will was granted on 21 August 2000 to [NAME] [NAME] [NAME] who was the named executor. On 28 August 2001, the Federal Magistrates Court made an order under s 247 of the Bankruptcy Act appointing the Trustee as the trustee of the deceased estate. A Statement of Affairs filed with the Official Receiver on 28 November 2001 disclosed that at the date of [NAME] [APPELLANT]' death, the estate had an estimated surplus of assets of over $1,600,000 but, at the time of the appointment of the Trustee, there was a deficiency of assets estimated to be in the order of $600,000. This was because the initial estimates of value of assets were too high. Constructive Trust 30 The principles under which equity will intervene to declare the existence of a constructive trust over a family home in a dispute between former spouses or de facto partners are now well settled. As [NAME] said in Green v Green (1989) 17 NSWLR 343 at 353, the unifying underlying principle is that a constructive trust will be imposed where it would be unconscionable on the part of one of the parties to refuse to recognise the existence of an equitable interest in the other. His Honour referred to the decision of the High Court in Baumgartner at 147. 31 As [NAME] J said in [NAME] at 614, the constructive trust is a remedial institution which is imposed by equity regardless of actual or presumed intentions of the parties. However, it is open to a court of equity to find that a constructive trust has been established upon the basis of an actual intention. This would be so where it is proved that the parties had a common intention that both should have beneficial interests and that the claimant acted to his or her detriment on the basis of that common intention; see [NAME] v [NAME] at 354-355 per [NAME]. 32 The evidentiary material from which the Court may draw inferences as to the intentions of the parties was described by [NAME] and Brennan JJ in Calverley v Green (1984) 155 CLR 242 at 262 and by Sheller JA in Bryson v [NAME] (1992) 29 NSWLR 188 at 215. Their Honours said that it includes the acts and declarations of the parties before or at the time of the transaction or so close in time after the transaction as to constitute a part of it. Such evidence is admissible for or against the party but subsequent declarations are only admissible against interest. 33 As [NAME] observed in [NAME] v [NAME] at 353-354, the most common case in which a constructive trust has been imposed is where a person for whom the trust is found has, directly or indirectly, made financial contributions toward the cost of acquiring, improving or maintaining the property. In those cases, it would be unconscionable to deny the beneficiary an equitable interest either because the Trustee has induced the cestui que trust to act to his or her detriment in the reasonable belief that he or she was acquiring a beneficial interest or, alternatively, because resources have been pooled for a joint relationship which has come to an end. 34 Baumgartner was a case in which the parties had pooled their earnings for the purposes of their joint relationship. The pooled earnings had been supplied by the de facto partners in the relationship of 55% for the man and 45% for the woman. The pooled earnings had been used to meet household expenses and mortgage commitments. When the relationship came to an end, the Court imposed a constructive trust in those proportions upon the basis of the general equitable principle stated by [NAME] J (with whom [NAME] J agreed) in [NAME] at 620, under which there is to be restored to a party the contributions which he or she has made to a joint endeavour which has failed where the contributions were not intended by the party who made them to be enjoyed by the other after the relationship has come to an end. 35 Mason CJ, [NAME] and [NAME] referred to this principle in [NAME] at 147-148 and they said at 149:- "The case is accordingly one in which the parties have pooled their earnings for the purposes of their joint relationship, one of the purposes of that relationship being to secure accommodation for themselves and their child. Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home, were on the basis of, and for the purposes of, that joint relationship. In this situation the appellant's assertion, after the relationship had failed, that the Leumeah property, which was financed in part through the pooled funds, is his sole property, is his property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent." 36 The contributions need not be exclusively financial. As [NAME] J said in [NAME] at 622, the contributions may include direct contributions of money or labour and indirect contributions in other forms such as support, homemaking and family care. 37 Where it is possible to infer an actual intention to share ownership it is, as [NAME] observed in [NAME] v [NAME] at 355, rare that the parties will be so sophisticated as to have turned their minds to the particular form of legal title. 38 The flexibility of the institution of the constructive trust is such that, in an appropriate case, events which occur after acquisition may lead to the imposition of such a trust and beneficial interests may change in the course of the relationship between the parties; see [NAME] v [NAME] at 355-356 per [NAME] CJ. Decision on the Facts 39 In my view, the circumstances in which [NAME] and Mrs [APPELLANT] found, paid for and took title to the [NAME] in 1966 gave rise to an inference that they both intended Mrs [APPELLANT] to have a beneficial interest in the property. 40 The circumstances which most clearly illustrate this are that they searched for the home together and, in particular, that it could not have been acquired but for the contribution of Ł1,000 supplied by Mrs [NAME]. Prior to the receipt of this money, the loan application made by [NAME] [APPELLANT] had been refused. It is plain that this contribution enabled [NAME] [APPELLANT] to make a successful loan application to the [COMPANY] at Rozelle without which the purchase could not have been made. 41 It was not suggested by the Trustee that Mrs [APPELLANT] did not intend to obtain a beneficial interest. Any such suggestion would have been fatuous. All of the contemporaneous statements made by Mrs [APPELLANT] to her mother and sisters and, indeed, by Mrs [APPELLANT] in the presence of [NAME] [APPELLANT], were to the effect that the [NAME] was [NAME] and Mrs [APPELLANT]' home. Given the contributions of Ł1,000 and the Ł400 inheritance from her uncle, it would be extraordinary if Mrs [APPELLANT] intended otherwise. She could hardly have intended to have made a gift to her husband. There is, of course, no presumption of advancement in these circumstances. 42 The Trustee's case was, rather, to the effect that it was not possible to infer from what [NAME] [APPELLANT] did or said that he had any such intention. However, it was perfectly clear that [NAME] [APPELLANT] knew that the gift from Mrs [APPELLANT]' mother was to enable the engaged couple to purchase the [NAME] together. That is to say, he must have known and intended that they were both to have a beneficial interest in it. He could not have assumed that the Ł1,000 from Mrs [NAME] was to be a gift to him to enable him to purchase the property to the exclusion of any beneficial interest on the part of Mrs [APPELLANT]. His conversation with Mrs [APPELLANT] when he asked her to thank Mrs [APPELLANT] makes this quite clear. 43 It is true that the loan application, the mortgage and title to the [NAME] were in the name of [NAME] [APPELLANT]. The reason for this is not explained. Nevertheless, it is sufficient that contemporaneously with the purchase, [NAME] [APPELLANT] described the [NAME] as "our home" and that he accepted $2,250 from Mrs [NAME] in the circumstances which I have described. I do not think those words when viewed in the light of [NAME] [APPELLANT]' acceptance of moneys from Mrs [APPELLANT] are so equivocal that they would prevent me from drawing an inference that the true common intention of the parties was that the property was to be beneficially owned by both of them. 44 Moreover, [NAME] [APPELLANT] reinforced his statement of intentions as to the true beneficial ownership when he said in February or March 1967 "It doesn't matter that the house is in my name, because it's yours too. What's mine is yours." It is difficult to understand what else he could have meant but that his intention was that [NAME] and Mrs [APPELLANT] were co-owners of the [NAME]. This must have been his intention bearing in mind in particular the sums of money contributed by Mrs [APPELLANT] and [NAME] [APPELLANT]' knowledge of the circumstances in which those contributions were made. Also, by March 1967, the flat had been built and [NAME] [APPELLANT]' words must be understood in light of Mrs [APPELLANT]' substantial contribution of cash and labour to that venture. 45 In my opinion, the circumstances in which [NAME] and Mrs [APPELLANT] searched for and purchased the [NAME] and the contemporaneous words spoken by them, not only by Mrs [APPELLANT] to her family, but also between husband and wife, must have led Mrs [APPELLANT] to believe that it was [NAME] [APPELLANT]' intention, in common with hers, that she had a beneficial interest in the property. She acted to her detriment upon the basis of this by contributing the Ł1,000 from her mother and the Ł400 inheritance from her uncle to the purchase of the [NAME]. Her evidence was that the Ł1,000, which by then had been converted to $A2,250 was not handed over until about the date of completion of the purchase. Mrs [APPELLANT]' cash contribution to the purchase was $3,050. [NAME] [APPELLANT] contributed, at most, $3,000. 46 In addition, Mrs [APPELLANT] acted to her detriment by accepting, at her husband's insistence, a frugal lifestyle which enabled the mortgage to be repaid in whole or in part out of the rent from the flat. Her contributions of money and labour to the construction of the flat provided further evidence that Mrs [APPELLANT] believed she had a beneficial interest and that she acted to her detriment upon the basis of a common intention engendered by [NAME] [APPELLANT] that she had such an interest in the [NAME]. 47 This is not a case in which an intention is to be imputed to the parties. To do so would be contrary to established principle; see [NAME] v Bryant at 216; Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886. Here in my view it is to be inferred that the parties had a common intention that the [NAME] was to be acquired by both of them. This intention was manifested in the words and conduct of [NAME] and Mrs [APPELLANT]. Moreover, [NAME] [APPELLANT] induced Mrs [APPELLANT] to act to her detriment in the reasonable belief that she was acquiring a beneficial interest in the [NAME]. 48 It follows, in my view, that it is appropriate to impose a constructive trust to avoid the unconscionable denial of an inferred common intention created by [NAME] [APPELLANT] and acted upon by Mrs [APPELLANT] to her detriment. 49 It seems to me that the decision of the Court of Appeal in [NAME] v Bryant upon which the Trustee relied is distinguishable on its facts. There, the wife made no direct financial contribution to the purchase of the property. Nor was there any conduct on her part which she could not reasonably have been expected to embark upon unless she was to have an interest in the matrimonial home. 50 The question then is what form should the title take. [NAME] and Mrs [APPELLANT] did not turn their minds to that question. 51 Nevertheless, it seems to me that the words spoken by [NAME] [APPELLANT] to which I have referred above on a number of occasions, namely "It doesn't matter that the house is in my name, because it's yours too. What's mine is yours.", suggested that, in 1966, if the parties had been asked, they would have said that they intended to hold the [NAME] beneficially as joint tenants. In my view, this would be particularly so if an explanation had been given to them of the difference between tenancy in common and joint tenancy. As [NAME] said in [NAME] v Green at 358:- "… in my opinion the 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, and secondly, that this is an area in which equity is at its most flexible." 52 The words spoken by [NAME] [APPELLANT] to which I have referred in [17] were spoken for the first time in about February 1967 or March 1967. They are sufficiently close to the time of purchase for me to take them into account on the question of the parties' intentions as to the form of title. In any event, they constitute an admission against interest by [NAME] [APPELLANT]; see Calverley v Green at 262 and [APPELLANT] v Bryant at 215. 53 It should be noted that in [NAME] v Green, [NAME] (with whom Priestley JA agreed) held that the conclusion which best gave effect to the intention of the parties was that at the relevant time the parties were beneficially entitled to the property as joint tenants. 54 The statement made by [NAME] [APPELLANT] which I have set out at [26] above is of no assistance in resolving the issue of the form of the title. It was made by [NAME] [APPELLANT] 33 years after the acquisition of the property and was not an admission against his interest. 55 If I am wrong in what I have said above, it is plain that a constructive trust ought to be imposed irrespective of any intentions of [NAME] [APPELLANT] in order to give effect to the principle which underlies the decisions in [NAME] and [NAME]. 56 That is to say, this is a case in which the parties pooled their earnings and their contributions, both financial and non-financial, toward the acquisition and maintenance of the [NAME]. They did so to secure the accommodation of themselves and their children. The relationship having come to an end in August 1999, it would be unconscionable to deny to Mrs [APPELLANT] the benefit of her contributions made to a failed joint endeavour. 57 The contributions which Mrs [APPELLANT] made were numerous. I have referred to them above and it is unnecessary to repeat them. They included the contribution of the inheritance from her uncle and the gift from her mother. They also included the financial and non-financial contributions to the conversion of the rooms in the [NAME] to a flat, the housekeeping funds which she provided from her work as a nanny and from the Christmas club account together with the other matters to which I have referred in paragraphs [22] to [25] above. 58 If the case is to be determined under the "pooling" principle, notions of practical equity must prevail; see [NAME] at 150 (per [NAME] CJ, [NAME] and [NAME] JJ). Thus, the maxim that equity favours equality would have to be applied and the [NAME] would then be held for Mrs [APPELLANT] on a constructive trust as to a one-half share as a tenant in common with the Trustee as trustee of the estate of the late [NAME] [APPELLANT]. From when does the constructive trust exist? 59 In Parsons v McBain (2001) 109 FCR 120, a [ADDRESS] ([NAME], Kiefel and Finkelstein JJ) held that a constructive trust does not first come into existence when it is declared by the Court. Their Honours referred to a passage from the judgment of Deane J in Muschinski at 614 in which his Honour said there does not need to have been a curial declaration or order before equity will recognise the prior existence of a constructive trust. 60 The constructive trust in Parsons v [NAME] was founded upon a common intention. It seems to me that the same approach to the question of when the constructive trust will take effect applies regardless of whether the trust is imposed by reason of an inferred intention or under the pooling principle stated in [NAME]. 61 In either case, the facts which give rise to an eventual court order create a personal equity between the parties which may be defeated by competing claims. However, the equity will not be defeated merely because the legal title has passed to a trustee in bankruptcy who stands in the shoes of the bankrupt; see Parsons v McBain at 16; see also [COMPANY] v Silvia (1989) 24 FCR 105 at 112 (per Beaumont J). 62 I do not accept the Trustee's submission that Mrs [APPELLANT]' claim must fail because she did not lodge a caveat or because she failed to take any steps to assert her beneficial ownership prior to August 1999. I accept the submissions made by Mrs [APPELLANT]' counsel that the [NAME] has not been the subject of any dealings for value which could take priority over Mrs [APPELLANT]' equitable interest. 63 It follows in my view that Mrs [APPELLANT]' equitable interest in the [NAME] stands outside the bankruptcy. Orders 64 I propose to make the following declarations:- 1. the late [NAME] [APPELLANT] held his interest in the [NAME] upon trust for the Applicant and himself as joint tenants 2. that upon his death his legal personal representative held the [NAME] upon trust for the Applicant 3. that the [NAME] is not divisible among the creditors of the late [NAME] [APPELLANT] in bankruptcy pursuant to the Bankruptcy Act, s 116(2) 65 I propose to order that the respondent transfer the [NAME] to the applicant. 66 I also propose to order the respondent to pay the costs of these proceedings other than the costs incurred in the Family Court as to which there is to be no order as to costs. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the [APPELLANT].

Associate: Date: 13 March 2003 Counsel for the Applicant: [redacted]

Solicitor for the Applicant: [redacted]

Counsel for the Respondent: [redacted]

Solicitor for the Respondent: [redacted]

Date of Judgment: 13 March 2003