Utility of – and what Constitutes Detriment for – a Common Intention Constructive Trust

In Secretary, Department of Social Services v Hulett [2025] FCA 23 (30 January 2025), Justice Sarah Derrington usefully addressed the distinction between the existence of a common intention constructive trust as distinct from proprietary estoppel, but even more importantly what constitutes detriment for the purpose of the former.  Her Honour concluded such a constructive trust existed in the unusual factual circumstances pertaining in the case before her, namely a promise by parents to leave their home to their three daughters so long as one of them provided in-home care to such parents as may be required. 

Her Honour wrote:

…

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

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

(emphasis added)

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

[37]  Consequently, the Secretary’s submission that the element of reliance in the doctrine of common intention constructive trusts is identical to that of reliance in estoppel must be rejected. I also reject the Secretary’s contention that the passage at [477] in Imam Ali Islamic Centre v Iman Ali Islamic Centre Inc [2018] VSC 413in which McMillan J considered it “convenient for these purposes to apply the principles of detrimental reliance established in the law of equitable estoppel” is to be construed as authority for the proposition that those principles “apply equally to the concept of detrimental reliance for the law of constructive trusts” without regard to the precise category of constructive trust with which one is concerned. As her Honour said in Imam Ali Islamic Centre at [406], in a passage referred to by Derrington J in Staatz v Berry No 3) [2019] FCA 924; 138 ACSR 231at [167], which was endorsed subsequently by the Queensland Court of Appeal in Nathan v Williams [2020] QCA 138 at [107]:

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

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

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

(emphasis added)

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

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

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

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

(emphasis added)

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

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

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

(emphasis added)

…

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

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

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

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

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

[50]  Neither the High Court in Australian Financial Services nor the New South Wales Court of Appeal in Ashton v Pratt (2015) 88 NSWLR 281 was, however, concerned with a common intention constructive trust. It is therefore important to return to what Dixon J identified in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674–675 as basal to the intervention of equity where a party has changed his or her position consequent upon an agreed understanding:

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

(emphasis added)

…

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

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

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

[58]  Similarly, the taking in of an ailing parent who is unable to care for him or herself, and readjusting one’s own domestic living arrangements to do so, cannot be considered “minimal detriment”. If necessary, I would characterise it as “substantial”: Australian Financial Services per Gageler J at [150]; Ashton v Pratt at [147];Q v E Co [2020] NSWCA 220 at [127]. In my view, however, it is sufficient in a case which gives rise to a common intention constructive trust for a claimant to prove that he or she has altered his or her position on the basis of an assumed state of affairs that is then sought to be altered in order to establish the necessary detriment: Australian Financial Services at [87]. That is because it is a trust which has arisen by operation of law to enforce the parties’ otherwise unenforceable common intentions, rather than being a mere equity, viz, an equitable claim against the conscience of the true owner.

…

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

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

…

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

…

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

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

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

…

(emphasis added)

A link to the full decision is here.