Recently, Lynn and Brown Lawyers acted in a matter that has now been publicly reported by the court and, therefore, we can share it with you. Mr Hart, who we acted for in the Supreme Court matter Hart v Milne [2024] WASC 229, and we were successful in obtaining orders that Ms Milne’s interest in the parties’ property be placed in a constructive trust for Mr Hart. This case has given us some valuable insights into constructive trusts, more particularly as a useful mechanism in the resolution of property disputes where the legal owner ‘on paper’ does not reflect the contributions and intentions of the parties.
What is a ‘constructive trust’?
A constructive trust is a trust created by a Court to protect the true intentions of the parties and to ensure justice is done in the circumstances. It determines that one person (the trustee) holds an asset or assets for the benefit of another person (the beneficiary).
Background of Hart v Milne
The parties had a short romantic relationship from 1993 to 1994. Roughly 8 months into the relationship, Mr Hart bought a property in the parties’ joint names with the intention they would live in it together if they married. Mr Hart paid the deposit, all loan and mortgage repayments, rates, outgoings and expenses. The parties never married, and Mr Hart lived in the property from its purchase until today. Ms Milne had also agreed on numerous occasions to transfer her interest in the property to Mr Hart but never did so. Ms Milne separated from Mr Hart without having lived in the property, having paid nothing for the property or providing any services to the maintenance of the property.
Mr Hart’s case was that he had made all contributions to the acquisition, maintenance, and loan satisfaction for the property to now carry no debt. Ms Milne, on the other hand, had done none of these things. Thus, equity should not allow for the unconscionable situation of the property being partly owned by Ms Milne when she had made no contributions to the property.
To reach the desired outcome, we applied to the Supreme Court, asking them to:
- make a declaration that Ms Milne’s interest in the property actually always belonged to Mr Hart and was only being held on trust by Ms Milne for the benefit of Mr Hart;
- make an order to vest (end) the trust, handing full legal title over to Mr Hart.
Declaration of a “joint endeavour constructive trust”
The principle of a “joint endeavour constructive trust” was originally established by the High Court in the 1985 case of Muschinski v Dodds. This case was expanded upon in 2021 in the case of Marchese v Marchese.
In Hart v Milne, for Master Russell to declare that a joint endeavour constructive trust should be imposed on the parties, she needed to be satisfied of the following:
- The parties no longer share a relationship;
- The end of the relationship cannot be blamed on one party;
- Mr Hart has contributed significantly greater to the property;
- Ms Milne has or may benefit from said contribution without any specific intention for her to do so;
- It would be unreasonable for Ms Milne to retain a benefit in the property;
- At the time the property was bought, the parties had common intention, being that they would hold their interest for a joint endeavour (in this case, their marriage); and
- The joint endeavour was not fulfilled.
The Supreme Court’s Decision
Master Russell was satisfied that Mr Hart adduced sufficient evidence to establish that Ms Milne was holding her share in the property on trust for Mr Hart stating:
“The plaintiff solely financed the purchase of the Property. It was purchased in the name of the parties as joint tenants for the joint endeavour that the plaintiff and the defendant would marry, and use the Property as their matrimonial home…
The parties ended their relationship after a relatively short period and did not marry, which led to the removal of the joint endeavour…
I accept the plaintiff’s submission to the effect that, in the circumstances, it would be unconscionable for the defendant to retain a benefit, her interest in the Property, as it is not commensurate with her contribution.”
Conclusion
Hart v Milne highlights the importance of lesser-known equitable remedies, such as constructive trusts, in ensuring fairness in the resolution of property disputes, particularly when the ownership shown on the Certificate of Title does not reflect the contributions and intentions of the parties. This case also serves as a reminder that setting out clear intentions and record keeping when entering property transactions with another party can be crucial in the future.
If you think that your circumstances may be similar and that your contributions to an endeavour, whether it be romantic or commercial, are not reflected by the ownership of joint assets, please contact Lynn and Brown Lawyers so that our team can assist you.
About the Authors: This article has been co-authored by Sam Richardson and Steven Brown. Sam undertook his studies at Murdoch University fresh out of high school in 2020 at 17 years old, keen to pursue and interesting and challenging career. Since November of 2022, he has been with Lynn and Brown as a clerk but following the conclusion of his studies, he will be staying with our Wills and Estates team as a Law Graduate. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.
