164 C.L.R.) OF AUSTRALIA.

137

BAUMGARTNER. ApPELLANT;
DEFENDANT,

AND

BAUMGARTNER RESPONDENT.
PLAINTIFF,

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Trust - Constructive trust - Unconscionable retention 0/ benefit - Unmar· H. C. OF A.

ried persons pooling incomes lor living expenses and fixed commitments - 1987.
'--,.-'
Purchase 0/ house in name 0/ man as home lor parties - Whether
Aug. 13.
constructive trust in/avour o/wife - Unjust enrichment. Dec. 10.
The parties to a de facto relationship pooled their incomes for living
expenses and fixed commitments. They lived at first in a unit owned by the Mason CJ ..
Wilson.
man, which they sold when they acquired a house in his name. The house Deane.
was purchased with the aid of a mortgage in the name of the man, who also Toohey and
contributed the net proceeds of sale of the unit. The parties' aggregate Gaudron JJ.

earnings were pooled in the proportions roughly of 55 per cent by the man
and 45 per cent by the woman. They later separated and the man asserted
that the land was his sole property.
Held, that the man held the house on trust for the parties in the
proportions in which they had contributed their earnings to its acquisition,
subject to a charge in the man's favour for the net proceeds of the unit.
Per curiam. The man's assertion after the relationship had failed that the
property that had been financed in part through the pooled funds was his to
the exclusion of any interest in the woman was unconscionable conduct
which attracted the intervention of equity and the imposition of a
constructive trust.
Muschinski v. Dodds (1985), 160 C.L.R. 583, at p. 620, applied.
AI/en v. Snyder, (1977)2 N.S.W.L.R. 685, considered.
Per Toohey J. Where two people have lived together for a time and made
contributions towards the purchase of land or the building of a home on it,
an approach based on unconscionable conduct or one based on unjust
enrichment will bring the same result.
Decision of the Supreme Court of New South Wales (Court of Appeal):
Baumgartner v. Baumgartner, (1985) 2 N.S.W.L.R. 406, varied.

ApPEAL from the Supreme Court of New South Wales.

Frances Eileen Baumgartner brought an action in the Supreme
Court of New South Wales against Leo Baumgartner for a
declaration that he held his interest in a property at Campbelltown
which was registered in his name on trust as to one half for her. She

Corrigendum: "wife" should be changed to read "woman".

138 HIGH COURT [1987.
H. C. OF later amended her claim to seek a declaration that the defendant
A.
1987.
'---' held his interest in the property on trust for her absolutely or,
BAUMGARTNER alternatively, a declaration that he held it subject to a charge in her

BAUMG~RTNER. favour. Rath l. dismissed the action. The Court of Appeal (Kirby P.
and Priestley l.A., Mahoney l.A. dissenting) allowed an appeal by
Ma'on C.J.
Wilson].
the plaintiff, and made the following declarations: "3.... that the
Deane 1. defendant holds his interest in the land ... for the plaintiff and
himself as tenants-in-common in equal shares. 4.... that the
plaintiff's interest as tenant-in-common as aforesaid be charged with
one half of the payments made by the defendant in respect of the
property since 30 August 1982": Baumgartner v. Baumgartner (I).
The defendant appealed to the High Court. Further facts are set out
in the joint judgment of Mason C.l., Wilson and Deane 11.

B. W Rayment Q.c. and R. J. H. Darke, for the appellant,

referred to Allen v. Snyder (2); Morris v. Morris (3); and Muschinski
v. Dodds (4).

J. P. Hamilton Q.c. and R. K. Eassie, for the respondent.

Cur. adv. vult.

Dec 10. The following written judgments were delivered:-

MASON C.l., WILSON AND DEANE 11. This is an appeal against an
order made by the New South Wales Court of Appeal (Kirby P. and
Priestley l.A., with Mahoney l.A. dissenting) allowing an appeal
against an order made by Rath l. dismissing the respondent's
summons and amended summons with costs. By its order the Court
of Appeal set aside the orders made by Rath l. and made the
following declarations:
"3. A declaration be made that the respondent [the present
appellant] holds his interest in [the] land being Lot 3 in
Deposited Plan No. 231708 in the Municipality of
Campbelltown ... and being the whole of the land comprised in
Certificate of Title Volume 10524 Folio 23, known as 68 Angle
Road, Leumeah, for the appellant [the present respondent] and
himself as tenants-in-common in equal shares.
4. A declaration be made that the appellant's interest as
tenant-in-common as aforesaid be charged with one half of the
payments made by the respondent in respect of the property
since the 30th August, 1982.
5. A declaration be made that the appellant's interest as
tenant-in-common as aforesaid further be charged with the

(I) (1985) 2 N.S.w.L.R. 406. (3) [1982]1 N.S.w.L.R. 61.

(2) [1977]2 N.S.W.L.R. 685. (4) (1985) 160 C.L.R. 583.
164 C.L.R.) OF AUSTRALIA. 139
amount of $7,500.00 being the agreed value of the furniture H.C.OFA.
removed by the appellant from the property." 1987.
~
The Court of Appeal ordered the present appellant to pay the BAUMGARTNER
respondent's costs of the trial and the appeal but to have a certificate v.
BAUMGARTNER.
under the Suitors' Fund Act 1951 (N.S.W.).
By her summons the respondent sought a declaration that the Mason C.J.
appellant held his interest in the property already described, upon WilsonJ.
Deane J.
trust as to one half for the respondent. By her amended summons
she sought a declaration that the appellant held his interest in the
property upon trust for her and, in the alternative, a declaration that
the appellant held the property subject to a charge in favour of her.
The primary judge set out in his reasons for judgment the
circumstances in which the proceedings originated. In June 1978 or
thereabouts the appellant and the respondent became acquainted at
their place of employment. The appellant had been married twice
previously. The respondent was then married with two children. The
relationship between the appellant and the respondent became so
close that in September 1978 the respondent left her home, husband
and two young children to live with the appellant in his home unit
at Cabramatta. Their de facto relationship continued until August
1982 or thereabouts when the respondent left the appellant, taking
with her a child named Dallas, the issue of their relationship. During
the period of their cohabitation the respondent left the appellant on
a number of occasions. One such occasion was in late 1978 and
early 1979. One of the elements in the reconciliation which then
took place was their decision to have a child. The child Dallas was
born in February 1980.
Before this separation, and probably in early 1979, there had been
talk of marriage between the parties. The primary judge considered
that the appellant then had a strong emotional attachment to the
respondent, though the judge thought that the strength of the
respondent's attachment to the appellant was doubtful. The
appellant's jealousy was aroused in circumstances which need not be
recounted. At all events the judge concluded that the decision to
have a child was not related, as the respondent claimed, to plans to
get married. In this respect his Honour preferred the appellant's
evidence. Moreover, he held that the decision to have the child did
not confirm the respondent's case that the parties had decided to
marry and to purchase the land at Leumeah for the purpose of
building a home which would in whole or in part belong to the
respondent.
The appellant bought the land at Leumeah in his own name in
October 1979 or shortly thereafter. The parties had decided that the
140 HIGH COURT [1987.
H. C. OF home unit was too small and that it should be sold. The appellant
A.
1987.
'-v--' took the initiative in deciding to buy the land at Leumeah, though
BAUMGARTNER he consulted the respondent and discussed the matter with her.

BAUMG~RTNER. There is no suggestion that he would have made the purchase

without her consent.
Mason C.J.
Wilson J. The parties discussed the matter of ownership of the land.
Deane J. Unfortunately it does not appear whether the discussions took place
before or after the purchase of the land. The appellant admitted that
after they had a conversation with the builders of the house at
Leumeah the respondent said to him, "Why can't the house be in
my name as well?" and that he replied, "We're not married and the
loan is in my name and is coming from the sale of the unit".
On another occasion, when the respondent objected to the
appellant's absences early in the morning when he visited the
building site, the appellant claimed that he said to her: "Look I'm
doing this for all of us you know, the harder I am working the
sooner I will have it paid off and the better we will be in the future
and this is all the thanks I get."
On another occasion the matter was discussed by the parties when
they visited the appellant's friends, the Schneiders, while the house
was being built. According to the respondent, Mr. Schneider asked,
"What's happening with the house you're building - Are you going
to put it in both your names?" The appellant replied: "No, the
Building Society won't accept both our names on the title deeds
because we're not married and we're living in a de facto relationship
only. Anyway there is really no need for both our names to go on
the papers Frances knows that it's our house once it's built."
Turning to the respondent, the appellant then said, "You know
what for you're working". The appellant gave a version of this
conversation which differs in minor respects only. But he says that
he did not wish to discuss his personal affairs with the Schneiders
and he brought the conversation to a close as soon as possible.
According to the appellant the conversation took place after he had
made it clear that, as a result of the respondent's relationship with
another man, he would not marry her and did not intend to put the
property in her name.
Some time before October 1980 the appellant sold his home unit
at Cabramatta and the parties began living in rented accommo-
dation pending completion in October 1980 of the house at
Leumeah. The net proceeds of sale of the unit, after discharge of the
mortgage, was $12,883.41.
The respondent claims that in December 1980 she raised the
question of marriage with the appellant who said, "I don't want to
164 C.L.R.] OF AUSTRALIA. 141

get married yet - just wait a while". She replied: "Well you can at H.C. Of A.
1987.
least have a will made out - just in case anything ever happens to '-y---'

you. I will have to have some proof that this is my home also, BAUMGARTNER
v.
otherwise there could be fights in court ...." According to the BAUMGARTNER.
respondent, the appellant answered, "Alright I'll have a will made
out so that you will be looked after". She says that he repeated this Mason C.J.
Wilson J.
statement at other times and added: "You know I'm really doing this Deane J.
for all of us - for you and me and Dallas. I'll make sure your name
is transferred to the title deeds when we get married but there is no
need to do this before we get married."
The appellant denied that the respondent ever spoke of the need
for proof that the house was her home or of fights in court. He
admitted that on one occasion he said to the respondent, "Look I
will do this one day [i.e. make a will] when the time comes if we ever
get married and I will have the house transferred to our joint
names".
The respondent gave evidence that on some later occasion after
they had moved into the house, an argument arose over the
appellant banking the respondent's pay each week and that the
appellant said: "I'm only saving you the time by doing all this myself
and anyway everything I do is for us as a family, not just for me. If I
do it it makes life easier for us and I want to make sure that we get
everything finished like the house payments and car payments so
that we can enjoy our life later on when we have got more time
together." The appellant did not deny making this statement.
On the respondent's account the appellant never gave her any
reason for refusing to put the house in her name except expense.
His Honour found that when the parties commenced to live
together the respondent generally gave the appellant her pay packet.
They regarded this as a pooling of resources. The appellant paid
rent, mortgage instalments and other expenses associated with the
living accommodation. He also paid the ordinary expenses of
running the household, including entertainment and the costs of the
motor vehicle. At the time of the purchase of the Leumeah property
the appellant still owed money on his unit. From the pooled
resources he was able on about four occasions to make "double
payments" in relation to his unit, the standard monthly mortgage
payment being $170 per month. However, there was, so the primary
judge found, no agreed division in relation to the respondent's
contributions to the family finances. None the less it is probable that
the pooling of resources, as Priestley l.A. pointed out, had the effect
of reducing the mortgage debt on the home unit more quickly than
it would have been reduced had they not been pooling their
142 HIGH COURT [1987.
H. C. OF A. resources. While the evidence about the appellant's earnings was
1987.
~ somew h" at ImpreCIse, t h e partIes
. have agree d t h at t he total earnmgs
.
BAUMGARTNER of the parties available for contribution to the common pool during
v.
BAUMGARTNER.
the period of cohabitation were $89,188.63 of which the appellant's
share was $50,981.99 and the respondent's share $38,206.64. The
Mason eJ. difference is partly explained by the fact that the respondent was not
Wilson J.
Deane} earning for a period of three months in which she gave birth to
Dallas and was subsequently caring for him. If we credit the
respondent with the income of $3,000 which she would have earned
in the period of three months, the aggregate earnings of the parties
were contributed by the appellant as to 55 per cent and the
respondent as to 45 per cent approximately.
In 1981 the respondent changed her name by deed poll to that of
the appellant, i.e. Baumgartner. The judge found that her reasons
for doing so were not clear. The change took place some time after
her divorce and it indicates that she then accepted that the appellant
did not intend to marry her and that she expected that they would
continue living together. In fact they continued to live together until
August 1982, when the respondent left, taking Dallas and much of
the furniture.
The respondent says that after she left she had a conversation at
work with the appellant about the furniture in which he said, "I
suppose you think you're smart but that's the only thing you'll ever
get from me". According to the respondent, she answered: "Leo you
know that's not fair - this house belongs to both of us and I have
put a lot of money into it. Ever since we started living together I
have given you all my money and we always agreed that whatever
we had we would share." The appellant did not deny this
conversation.
When the relationship finally broke down, in March ]984, the
property at Leumeah was valued at $67,650. Its value was said not
to have altered significantly since then. The furniture which the
respondent took with her is said to have a value of $7,000 or
$10,000, though the judge seems to have thought that both
valuations were unreliable. The furniture was bought with the
appellant's money or money from the pooled resources. Rath J. was
influenced by the circumstance that the respondent came to the
appellant's home, in which she had no financial stake, and that she
left that home "of her own will with a substantial quantity of
furniture". In the circumstances his Honour rejected the respon-
dent's implicit assertion that it was unfair that she should have to
work and keep paying off the house if her name was not going to be
on the title deed.
164 C.L.R.] OF AUSTRALIA. 143

His Honour's ultimate conclusion was that there was no intention H. C. OF A.

1987.
to create a trust, that there were no circumstances giving rise to a '--y--'

constructive trust and that there was nothing unconscionable or BAUMGARTNER

v.
inequitable in the appellant retaining the full legal and equitable BAUMGARTNER.
title.
Mason C.J.
In the Court of Appeal, Kirby P. inferred from the judgment of Wilson J.
Rath l. and from his reading of the evidence that there were Deane J.

relatively few differences in the evidence of the parties. This being

so, his Honour considered it to be a case in which the Court of
Appeal could draw its own inferences. On the issue of intention to
create a trust the President thought that conduct was more
indicative than oral statements and that the appellant's ambivalent
attitude to marriage was extraneous to the issue of intention to
create a trust.
His Honour arrived at the conclusion that there was such an
intention in this way:
"The [appellant] did not alone provide the purchase price for
the Leumeah property. Nor did he alone extend monies on the
cost of building their home on the land at Leumeah. By pooling
her income (which was normally higher than his) with that of
the [appellant], the [respondent], week by week, evinced her
intention in respect of the property. Week by week, in
accepting it, the [appellant], similarly evinced his inten-
tion.... In combination with the undisputed evidence that the
parties were living together at this time, planning and
subsequently conceiving a child, inspecting and choosing the
property together, the inference is inescapable that they
intended this to be their home for the indefinite future and for
their new family. Accordingly, they intended, notwithstanding
the legal title, that a trust should be created in favour of the
[respondent] in proportion to the contribution each made to the
purchase price. As to whether the parties intended joint
tenancy or tenancy in common I am content to agree with
what Priestley l.A. has concluded on that issue."
Priestley l.A., disagreeing with the conclusion of the primary
judge, considered that there was ample evidence from which an
inference could be drawn of actual common intention to create a
trust or agreement to the holding by the appellant of the legal title to
the land as trustee for himself and the respondent. His Honour then
proceeded to draw the inference that:
"... the parties were proceeding on the basis, well understood
between them, that a deposit would be paid for the purchase of
the land from funds either out of the common fund or available
because of the existence of the common fund and that on the
land a house would be built which would belong to them both."
His Honour implied a term that the land was to be held as tenants in
144 HIGH COURT [1987.
H. C. OF A. common on the footing that, had the parties been asked, they would
1987.
'--y-' have chosen tenancy in common rather than joint tenancy.
BAUMGARTNER
!'.
Mahoney I.A. on the other hand considered that the primary
BAUMGARTNER. judge had accepted the evidence of the appellant in preference to
that of the respondent, and that having regard to the appellant's
Mason C.J.
Wilson J. evidence it was impossible to find an actual common intention to
Deane J.
create a trust with respect to the land. His Honour refused to accept
the respondent's claim that her moneys were used in the acquisition
of the property at Leumeah. Moreover, he specifically refused to
draw the inference that had the respondent not made her wages
available in a pool but had used them for the support of herself and
the child, the appellant could not have acquired the property or
made payments for it.
We should mention that the approaches taken by the members of
the Court of Appeal were influenced by that Court's earlier decision
in Allen v. Snyder (5) where it rejected the proposition, suggested by
some English decisions, that there was vested in the individual judge
a jurisdiction to determine what were the proprietary interests of the
parties according to notions of fairness. Likewise, in that case, the
Court of Appeal held that a declaration of trust must be based upon
actual subjective intention and not a common intention ascribed to
the parties by operation of law (6). In the present case the Court of
Appeal considered that it should continue to follow Allen v. Snyder.
In so deciding it did not have the advantage of this Court's decision
in Muschinski v. Dodds (7), which was delivered subsequently.
The appellant's case in this Court is that the Court of Appeal was
not justified in interfering with the primary judge's conclusion that
the respondent had failed to make out her case, a conclusion which
was based on a refusal or an unwillingness to make such findings as
were necessary to the success of the respondent's case. The appellant
points out that the issue presented by the respondent at the trial was
whether there was an oral agreement between the parties relating to
the beneficial ownership of the land or alternatively whether there
should have been inferred from the conduct of the parties an actual
intention on the part of the appellant as registered proprietor to hold
his interest upon trust for the respondent as to one half share. As a
consequence the issues were issues of fact. Those issues necessarily
involved matters of credibility, the evidence consisting mainly of
affidavits by the parties and cross-examination on such affidavits.
The appellant challenges the correctness of the approach taken by

(5) (1977]2 N.S.w.L.R. 685. (7) (1985) 160 C.L.R. 583.

(6) [1977]2 N.S.w.L.R.,at pp. 694,
701. 702.
164 C.L.R.] OF AUSTRALIA. 145

the Court of Appeal in looking to the common ground in the H. C OF A.

1987.
evidence given by the parties and drawing inferences exclusively '---v--'
from that material. The submission is that inferences must be drawn BAUMGARTNER
from the totality of the facts so that it was necessary to resolve the BAUMG~RTNER.
disputed issues of fact and take them into account in the process of
drawing inferences. Mason C.J.
Wilson J.
As Mahoney l.A. points out in his dissenting judgment, the thrust Deane J.

of the respondent's case at first instance was that at all material

times it was the intention of the parties that they should marry, that
they both intended that the Leumeah property be owned by both of
them, that when they married the property would be transferred
into their names and that the reason why title was not acquired in
their names was to avoid expense. The appellant denied each of
these matters, conceding only that if they married, title to the
property might be transferred. The primary judge dealt with these
issues by holding that the respondent had not made out her case,
thereby indicating that he was not prepared to make findings
favourable to her on the issues presented by her case for relief. The
tenor of his Honour's judgment is quite inconsistent with an
acceptance of the respondent's case on any of the three issues stated
above. And on crucial issues the primary judge preferred the
testimony of the appellant to that of the respondent. Thus, he
rejected the respondent's claim that the decision to have a child was
related to plans for marriage. His judgment proceeds on the footing
that the appellant did not commit himself to a marriage. It is
significant that his Honour placed emphasis on the respondent's
change of name by deed poll and the registration of Dallas in the
name of the appellant and then quoted the following passage from
the oral evidence of the respondent:
"Q. You see, madam, why then did you find it necessary to
have your name changed by deed poll? A. Because Leo kept
putting it off to be married. He kept always using the excus£:1
that he had been married twice before and he still wanted more,
time to think and just generally be sure that our relationship
was going to work." (Our emphasis.)
It is apparent that the learned trial judge was not disposed to
accept the respondent as a credible witness where her evidence was
in conflict with that of the appellant. And those conflicts, though
comparatively few, were central to the respondent's case, that there
was a common actual subjective intention to create a trust. In this
situation it was not a legitimate exercise for an appeal court to
ignore those conflicts and the way in which the primary judge
resolved them and to draw inferences from the surrounding area of
common ground between the parties, when the primary judge's
146 HIGH COURT [1987.

H. C. OF A. resolution of the central issues was adverse to the existence of such

~ an intention. Consequently the finding made by the majority in the
BAUMGARTNER Court of Appeal that there was a common subjective intention to
v.
BAUMGARTNER.
create a trust cannot be sustained.
However, this conclusion does not dispose of the appeal. The
M~:nC/ question remains whether in the circumstances the respondent is
Deane J. entitled to relief by way of constructive trust. The answer to this
question calls for some consideration of Allen v. Snyder, which was
thought by the Court of Appeal to be an obstacle to relief on this
footing, and of Muschinski v. Dodds, where the circumstances in
which a constructive trust would be imposed were discussed.
In Allen v. Snyder (8) a man and a woman lived together for
many years, intending at first to marry, but not doing so. They lived
in a house, of which the man was the legal owner, which was
furnished by the woman out of her own funds. The house was
purchased by the man during the period of cohabitation with the
assistance of a loan. The Court of Appeal held that in the absence of
a common intention to create a trust, there was no basis for holding
that the man was a trustee of the house for the two of tilem in equal
shares. The members of the Court of Appeal arrived at this
conclusion for different reasons.
Glass J.A. (with whom Samuels J.A. agreed), when referring to
cases in which a trust, not evidenced in writing, of a home has been
recognized, said (9):
"But when it is called a constructive trust, it should not be
forgotten that the courts are giving effect to an arrangement
based upon the actual intentions of the parties, not a rearrange-
ment in accordance with considerations of justice, independent
of their intentions and founded upon their respective behaviour
in relation to the matrimonial home."
Later his Honour observed (0):
"The doctrine that a trust of the matrimonial home may arise
in favour of a spouse as a result of her contribution to the
acquisition or maintenance of the home, in the absence of any
actual understanding or reciprocal intention, is also wholly
inconsistent with the line of reasoning in the High Court cases
referred to in Hepworth v. Hepworth (II)."
On the other hand Mahoney J.A. (12) correctly acknowledged, as
did Samuels J.A. (3), that a constructive trust may be imposed,
even though the person on whom the trust is imposed had no

(8) (1977)2 N.s.W.L.R. 685. (II) (1963) 110 C.L.R. 309, at

(9) (1977)2 N.s.W.L.R., at p. 693. p. 318.
(10) [197712 N.S.W.L.R., at p. 695. (12) [1977] 2 N.S.W.L.R., at p. 704.
(13) (1977)2 N.S.W.L.R., at p. 699.
164 C.L.R.] OF AUSTRALIA. 147

intention to create a trust or to hold the property on trust. His H.C. OF A.

1987.
Honour observed that in such situations an intention may be '-,.-'

imputed in circumstances where the imputation is necessary "in BAUMGARTNER

V.
good faith and in conscience", though he added that this expression BAUMGARTNER.
was of such generality that it did not provide an acceptable test for
decision-making. In the ultimate analysis his Honour rejected the Mason C.J.
Wilson J.
argument that the court would impose a constructive trust by Deane 1.

reference to what was "fair" in the ordinary sense of that term (14).
But in the course of reasoning to that result Mahoney I.A. indicated
some situations in which it might be appropriate to impose a
constructive trust. Thus, he said (15):
"A husband may pay for the matrimonial home and cause the
legal title to be vested in the wife. The wife may earn money
and use it in defraying household expenses, thus relieving the
family budget and allowing the husband to pay mortgage
instalments on the home. It will be necessary, from time to
tim;;:, to determine whether, in such situations, the failure to
recognize that the one or the other has a proprietary interest in
the home is so contrary to justice and good conscience that a
trust or other equitable obligation should be imposed."
His Honour's reference to "contrary to justice and good conscience"
is to be understood as "unconscionable". The significance of this
statement so understood is that it asserts that the foundation for the
imposition of a constructive trust in situations of the kind mentioned
is that a refusal to recognize the existence of the equitable interest
amounts to unconscionable conduct and that the trust is imposed as
a remedy to circumvent that unconscionable conduct.
In Muschinski v. Dodds (16) a man and woman who had lived
together for three years decided to buy a property on which to erect
a prefabricated house and to restore a cottage. The woman was to
provide $20,000 from the sale of her house and the man was to pay
the cost of construction and improvement from $9,000 he would
receive on the finalization of his divorce and from loans. The
property was conveyed to them as tenants in common. Although
some improvements were made by the man, the erection of the
house did not proceed and the parties separated. The woman
contributed $25,259.45 and the man $2,549.77 to the purchase and
improvement of the property. This Court declared that the parties
held their respective legal interests upon trust to repay to each his or
her respective contribution and as to the residue for them both in
equal shares.
Deane J. (with whom Mason J. agreed) reached this result by

(14) 1197712 N.S.W.L.R., at p. 707. (16) (1985) 160 C.L.R. 583.

(15) [197712 N.S.W.L.R., at p. 706.
148 HIGH COURT [1987.
H. C OF A. applying the general equitable principle which restores to a party
1987
'---,.-'
contributions which he or she has made to a joint endeavour which
BAUMGARTNER fails when the contributions have been made in circumstances in

BAUMG~RT"ER. which it was not intended that the other party should enjoy them.
His Honour said (17):
Mason C.J.
Wilson J. "... the principle operates in a case where the substratum of a
Deane J. 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 specially 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 so to do: cf. Atwood v. Maude (18) and
per Jessel M.R., Lyon v. Tweddell (19)."
His Honour pointed out that the constructive trust serves as a
remedy which equity imposes regardless of actual or presumed
agreement or intention "to preclude the retention or assertion of
beneficial ownership of property to the extent that such retention or
assertion would be contrary to equitable principle" (20): see also at
p. 617. In rejecting the notion that a constructive trust will be
imposed in accordance with idiosyncratic notions of what is just and
fair his Honour acknowledged that general notions of fairness and
justice are relevant to the traditional concept of unconscionable
conduct, this being a concept which underlies fundamental equitable
concepts and doctrines, including the constructive trust (21).
In the present case the parties pooled their earnings with a view to
meeting all the expenses and outgoings arising from their living
together as a family. The individual contributions of each party were
not allocated to a particular category or particular categories of
expenses and outgoings. The pool of earnings was used to pay
outgoings associated with accommodation - mortgage instalments
on the unit at Cabramatta and the property at Leumeah - as well
as other living expenses. There was no suggestion that the respon-
dent's contributions were paid and received by way of rent or a
charge for use and occupation and for living expenses. Such a
suggestion would be inconsistent with the relationship that came
into existence between the appellant and the respondent, a family
relationship which was for the most part until 1982 a long-term

(17) (1985) 160 C.L.R., at p. 620. (19) (1881) 17 Ch. D. 529, at

(18) (1868) L.R. 3 Ch. App. 369, at p. 531.
pp. 374-375. (20) (1985) 160 C.L.R., at p. 614.
(21) (1985) 160 C.L.R., at p. 616.
164 c.L.R.] OF AUSTRALIA. 149

stable relationship in which marriage was under continuous contem- H. C. Of A.

1987.
plation. The land at Leumeah was acquired and the house on it was '--y--'

built in the context and for the purposes of that relationship. BAUMGARTNER
v.
Together they planned the building of the house. Together they BAUMGARTNER.
inspected it in the course of its construction. Together they moved
out into it and made it their home after it was built. Mason c.J.
Wilson 1.
In this situation it is proper to regard the arrangement for the Deane J.
pooling of earnings as one which was designed to ensure that their
earnings would be expended for the purposes of their joint
relationship and for their mutual security and benefit. To the extent
which the pooled funds were the source of payment of mortgage
instalments by the appellant, the pooled funds contributed not only
to present accommodation expenses but also to the security of the
parties' accommodation in the future. In this context it would be
unreal and artificial to say that the respondent intended to make a
gift to the appellant of so much of her earnings as were applied in
payment or mortgage instalments. There is no evidence which
would sustain a finding that the respondent intended to make a gift
to the appellant in this way.
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.
It therefore becomes necessary to determine the terms of that
constructive trust. The facts that the Leumeah property was
acquired and developed as a home for the parties and that, at least
indirectly, it was largely financed out of money drawn from the pool
of their earnings, this being one of the purposes which the pool was
to serve, combine to support an equality of beneficial ownership at
least as a starting point. Equity favours equality and, in circum-
stances where the parties have lived together for years and have
pooled their resources and their efforts to create a joint home, there
is much to be said for the view that they should share the beneficial
ownership equally as tenants in common, subject to adjustment to
150 HIGH COURT [1987.
H.C. OF A. avoid any injustice which would result if account were not taken of
1987.
'--v-' the disparity between the worth of their individual contributions
BAUMGARTNER either financially or in kind. The question which has caused us
BAUMG:RTNER particular difficulty is whether any such adjustment is necessary in
the circumstances of the present case to avoid any injustice which
Mason c.J. would otherwise result by reason of disparity between individual
Wilson J.
Deane J. financial contributions. The conclusion to which we have come is
that some such adjustment is necessary.
Although the present case is close to the borderline, we do not
consider that it is possible to treat the respective financial contri-
butions of the parties as being approximately equal. Even after
crediting the respondent with the amount she would have earned
during the period of three months during which the respondent was
precluded from working by reason of having and caring for their
child, it is agreed that the respective contributions were
approximately 55 per cent as to the appellant and 45 per cent as to
the respondent, that is to say, the appellant contributed almost a
quarter more than the respondent. The court should, where possible,
strive to give effect to the notion of practical equality, rather than
pursue complicated factual inquiries which will result in relatively
insignificant differences in contributions and consequential ben-
eficial interest. We do not think, however, that the difference in the
present case can be regarded as relatively insignificant. Nor has it
been suggested that the difference in the amount of the financial
contributions was offset by the greater worth of the respondent's
contribution in other areas. In these circumstances, though acknowl-
edging that the case is close to the borderline, we consider that the
constructive trust to be imposed should declare the beneficial
interests of the parties in the proportions 55 per cent to the appellant
and 45 per cent to the respondent.
There are, however, other adjustments which should be made in
the interests of justice. Those adjustments are all in favour of the
appellant. The appellant should be entitled to receive from the
proceeds of any sale of the property repayment of the contributions
effectively made by him before and after the period during which
the parties were living together and pooling their resources. That is
to say, the appellant should be entitled to be paid the net proceeds of
the sale of his unit ($12,883.41) which were devoted to the purchase
of the property less the amount of payments of instalments under
the mortgage over the unit which were made from the pooled
earnings during the period of cohabitation. The appellant should
also be entitled to be repaid the instalments under the mortgage over
the property which he has paid during the period since the
termination of the relationship between the respondent and himself
164 C.L.R.) OF AUSTRALIA. 151

subject to an off-setting adjustment to reflect any benefit enjoyed by H. C. OF A.

1987.
the appellant through use and occupation of the property during '-,---'
that period. The final adjustment which should be made in the BAUMGARTNER
v.
appellant's favour relates to the furniture which was taken by the BAUMGARTNER.
respondent when her relationship with the appellant terminated.
That furniture was largely acquired during the period of cohabi- Mason c.J.
Wilson J.
tation and, in the context of other allowances made in favour of the Deane J.
appellant, can fairly be treated as purchased from the pooled funds.
The order made by the Court of Appeal in relation to it is
inappropriate on that approach. The appropriate adjustment would
be that the appellant is entitled to be paid from the proceeds of any
sale an amount equal to the value of that furniture. The appellant
should be entitled to a lien over the property to secure the payment
to him of the above-mentioned amounts from the net proceeds of
sale of the property after discharge of the amount remaining
outstanding under the mortgage. If the parties are not able to agree
on the precise amounts of the above adjustments, it will be
necessary to remit the matter to the Supreme Court to enable those
amounts to be determined. That would involve further legal costs.
Obviously, it is in the interests of both parties that any such further
legal costs be avoided. In the circumstances, the appropriate course
at this stage is to stand the matter over to a date to be fixed so that
the parties have an opportunity of agreeing upon the content of the
precise orders which should be made.
We would allow the appeal, set aside the orders made by the
Court of Appeal other than in relation to costs and stand the appeal
over to a date to be fixed so that the parties may have the
opportunity of presenting submissions as to the terms of the
consequential orders to be made. Since the appellant has been
substantially unsuccessful in the appeal, the appellant must pay the
respondent's costs of the appeal. If it becomes necessary to remit the
matter to enable the determination of relevant amounts, the costs of
the proceedings upon remitter will be reserved for the Supreme
Court.

TOOHEY J. The story of the relationship between these parties and

its disintegration is told in the reasons for judgment of Mason C.J.,
Wilson and Deane JJ.
I adopt their Honours' analysis of the evidence led at the hearing.
Also, I agree with their conclusion that the circumstances of the
case give rise to a constructive trust. However I wish to say
something of the way in which such a trust may arise and as to the
terms of the trust in the present case.
A convenient starting point is the decision of this Court in
152 HIGH COURT [1987.
H. C. OF A. Muschinski v. Dodds (22). After an examination of the authorities,
1987.
~ Deane J. (with whom Mason J. agreed) concluded (23):
BAUMGARTNER
v. "Viewed in its modern context, the constructive trust can
BAUMGAR TNER. properly be described as a remedial institution which equity
imposes regardless of actual or presumed agreement or inten·
Toohey J. tion (and subsequently protects) to preclude the retention or
assertion of beneficial ownership of property to the extent that
such retention or assertion would be contrary to equitable
principle."
His Honour continued (24):
"Once its predominantly remedial character is accepted, there is
no reason to deny the availability of the constructive trust in
any case where some principle of the law of equity calls for the
imposition upon the legal owner of property, regardless of
actual or presumed agreement or intention, of the obligation to
hold or apply the property for the benefit of another."
I agree with Mason C.J., Wilson and Deane 11. that in the
present case, having regard to the way in which the parties pooled
their earnings for the purposes of their joint relationship together
with their contributions to the acquisition of land, the building of a
house and the making of a home as part of that relationship, the
appellant's assertion (after the relationship failed) that the Leumeah
property was his alone attracted the intervention of equity and the
imposition of a constructive trust. In their Honours' view, the
unconscionable conduct of the respondent warranted these
consequences. I accept that conclusion.
Nevertheless the question may still be asked - is the imposition
of a constructive trust as a remedy for unconscionable conduct any
more "principled" toan the imposition of such a trust in order to
prevent unjust enrichment? Each approach rejects Lord Denning
M.R.'s notion of "a constructive trust of a new model" (Eves v.
Eves (25)), imposed "whenever justice and good conscience require
it": Hussey v. Palmer (26). Each looks to and builds upon particular
situations. Each must come to grips with a variety of situations in
which a person unconscionably retains property or is unjustly
enriched by the retention of property.
It may be, as Lord Diplock said in Orakpo v. Manson Investments
Ltd. (27) that "there is no general doctrine of unjust enrichment

(22) (1985) 160 C.L.R. 583. (26) (1972)1 W.L.R. 1286, at

(23) (1985) 160C.L.R., at p. 614. p. 1290; (1972) 3 All E.R.
(24) (1985) 160C.L.R., at pp. 616- 744, at p. 747.
617. (27) (1978) A.C. 95, at p. 104.
(25) (1975)1 W.L.R. 1338, at
p. 1341; [1975)3 All E.R.
768, at p. 771.
164 C.L.R.] OF AUSTRALIA. 153

recognised in English law". Or it may be, as the learned authors of H. C. OF A.

1987.
Goff and Jones, The Law of Restitution, 3rd ed. (1986) suggest, at '----..---'
p. 15, that "... the case law is now sufficiently mature for the courts BAUMGARTNER
v.
to recognise a generalised right to restitution". Certainly the courts BAUMGARTNER.
of the United States have no difficulty with the proposition just
stated, as the Restatement of the Law of Restitution, originally Toohey J.

published in 1937, evidences. This is an issue that does not need to

be debated in order to resolve the present appeal. Unjust enrichment
is at the very least "a unifying legal concept", as Deane J. noted in
Pavey & Matthews Ply. Ltd. v. Paul (28). And the development of a
general doctrine is as important for the notion of unconscionable
conduct as it is for unjust enrichment.
In Canada the opinion of Dickson J. in Rathwell v. Rathwell (29)
became the basis of the decision in Pettkus v. Becker (30). In the
latter case Dickson J. commented (31 ):
"How then does one approach the question of unjust enrich-
ment in matrimonial causes? In Rathwell I ventured to suggest
there are three requirements to be satisfied before an unjust
enrichment can be said to exist: an enrichment, a corresponding
deprivation and absence of any juristic reason for the enrich·
ment. This approach, it seems to me, is supported by general
principles of equity that have been fashioned by the Courts for
centuries, though, admittedly, not in the context of matri-
monial property controversies."
Put this way, it is not enough that one spouse has benefited from
the contributions of another. What is required is that the contri-
butions of one spouse have enabled or assisted in enabling the other
to acquire the asset in dispute: see Dickson J. (32). Professor Scott
(Scott on Trusts, 3rd ed. (1967), vol. V, par. 462) has said of the
person thus unjustly enriched:
"He is not compelled to convey the property because he is a
constructive trustee; it is because he can be compelled to
convey it that he is a constructive trustee."
The notion .Jf unjust enrichment, qualified in this way, is as much
at ease with the authorities and is as capable of ready and certain
application as is the notion of unconscionable conduct. No doubt, as
Professor Waters suggested in "The Constructive Trust", Paper I in
Where /s Equity Going? Remedying Unconscionable Conduct,
lectures delivered at the Law School of the University of Western
Australia this year, the task of the courts is "to continue sharpening

(28) (1987) 162 C.L.R. 221, at (31) (1980) 117 D.L.R. (3d), at
p.256. pp. 273-274.
(29) (1978) 83 D.L.R. (3d) 289. (32) (1980) 117 D.L.R. (3d), at
(30) (1980) 117 D.L.R. (3d) 257. p.277.
154 HIGH COURT [1987.
H. C. OF the edges of the criteria which must be satisfied before the claimant
A.
1987.
can obtain constructive trust relief'. But that exercise is necessary,
'---y--'

BAUMGARTNER whichever approach is adopted.

BAUMG~RTNER. The existence of a de facto relationship between the parties

constitutes no barrier in either case. The object of a constructive
Toohey 1.
trust is to redress a position which otherwise leaves untouched a
situation of unconscionable conduct or unjust enrichment. It is
equally applicable to persons in a de facto relationship as it is to
spouses.
In a situation such as the present one, where two people have
lived together for a time and made contributions towards the
purchase of land or the building of a home on it, an approach based
on unconscionable conduct or one based on unjust enrichment will
inevitably bring about the same result. Neither approach necessarily
calls for a precise accounting of the contributions of the parties.
Equally, the court cannot ignore disproportionate contributions,
especially where one of the parties makes available the proceeds of
the sale of a property which he or she had acquired before the
relationship began. Both Muschinski v. Dodds and the earlier
decision of this Court in Calverley v. Green (33) had the result that
each party received back basically what he or she had put into the
venture: see Evans, "De Facto Property Disputes: The Drama
Continues", Australian Journal ofFamily Law, vol. 1 (1987) 234, at
p.247.
The result proposed by Mason C.l., Wilson and Deane 11. is
consonant with an approach based on unconscionable conduct or
one based on unjust enrichment. It takes as a starting point that the
Leumeah land was bought and a house was built on it, as a home for
the appellant and the respondent. When it is seen that the parties
pooled their earnings to that end, a tenancy in common is the
appropriate recognition to avoid an unjust enrichment of the
appellant or the unconscionable conduct implicit in him retaining
the property in his own name. There is something to be said for
declaring an equality of interests even though the earnings of the
parties were not equal. But, in all the circumstances, I do not dissent
from the proposal that the constructive trust declare the beneficial
interests of the parties in the proportions 55 per cent to the appellant
and 45 per cent to the respondent. Due regard must also be had to
the appellant's particular contributions from the sale of his unit at
Cabramatta and the mortgage payments made by him since the
parties' relationship came to an end. Then there is the matter of the
(33) (1984) 155 C.L.R. 242.
164 C.L.R.] OF AUSTRALIA. 155

furniture taken by the respondent. I agree generally with the H.C. OF A.

1987.
approach taken by their Honours. '--,.--'

It is eminently desirable that the assets of the parties be not BAUMGARTNER

V.
further dissipated by any more steps in this litigation. But I see no BAUMGARTNER.

alternative to the course proposed by their Honours, that the matter

stand over to give the parties an opportunity to agree upon the
precise orders to be made.

GAUDRON J. I agree with the orders proposed in the joint

judgment of Mason C.J., Wilson and Deane 11. and generally with
their Honours' reasons. I would add some comments of my own.
Ordinarily, where two (or more) persons establish a fund
constituted by their several contributions, it is recognized that they
are entitled to that fund in proportion to their contributions. Where
the legal ownership of that fund vests otherwise than in accordance
with the parties' respective contributions that recognition is effected
by equity's implication of a resulting trust based on a presumption
that the legal title is to be held on trust for those who provided the
fund in proportion to their contributions. The presumption may be
rebutted in relation to a joint fund (as in relation to any property in
respect of which a resulting trust may be implied) by evidence of a
contrary intention adduced from the surrounding circumstances, or
it may be displaced by operation of the presumption of advance-
ment: see Calverley v. Green (34).
In the present case the parties established a fund constituted by
their pooled earnings. There are no circumstances surrounding the
establishment or purpose of the fund which warrant departure from
the usual presumption that the fund was intended to be beneficially
owned by the parties in proportion to their contributions thereto.
The facts negate any intention on the part of the respondent to
make a gift to the appellant of any part of her contributions to the
fund. No presumption of advancement arises: Calverley v.
Green (35). Thus, the applicant and respondent both had a beneficial
interest in the fund.
Had the moneys in the joint fund been ventured as the
consideration (or part thereof) for the purchase of the land and the
erection of the house at Leumeah then, absent any supervening
relevant intention or event to displace the presumption giving rise to
a resulting trust, equity would have regarded the legal title as held
on trust for the parties in shares reflecting their contributions.

(34) (1984l 155 C.L.R. 242, at (35) (1984) 155 C.L.R., at p. 247.
pp. 246-248,258-259,266-
267.
156 HIGH COURT [1987.
H. C. OF A. However, the consideration for the purchase of the land and house
1987.
'---y---' came from a bridging loan obtained by the appellant, the proceeds of
BAUMGARTNER the sale of his home unit, and a mortgage given by the appellant
v.
BAUMGARTNER.
over the land. Thus no resulting trust arose.
Although the resulting trust arises by operation of equitable
GJudron J. principle, it has its foundation in equity's aversion to that which is
unconscionable. It would be unconscionable for one only of the
contributors to the consideration for the purchase of an asset to hold
that asset to the exclusion of any interest on the part of the other
contributors in the absence of an intention, real or presumed, that
the holder should take the entire beneficial interest.
In the present case, although the house was not purchased with
the moneys in the joint fund, the existence of the fund facilitated its
purchase, and mortgage repayments were made from that fund.
There is nothing to suggest that the parties intended (by the
utilization of the fund for these purposes) to alter their underlying
interests in the fund.
The utilization of the fund for the making of mortgage repay·
ments should be viewed in the context that in this country homes
are commonly acquired by means of credit foncier arrangements.
Under these arrangements "equity" in the home is accumulated over
time with the gradual reduction of mortgage debt by regular
repayments apportioned to both principal and interest. Where a
fund (which is the property of the contributors thereto) is used for
the acquisition in this manner of "equity" in an asset, it is
unconscionable for one only of the contributors to that fund to
assert ownership of that asset to the exclusion of any interest in the
other contributor(s). That situation is properly remedied by the
imposition of a constructive trust.
Where a constructive trust is imposed by reason of the utilization
of a joint fund to acquire "equity" in an asset, the terms of the trust
will necessarily need to be fashioned to take account of contri-
butions made other than from the joint fund. On occasions it may
be sufficient to treat the contributions to mortgage repayments as if
they were contributions to the consideration for the purchase of the
asset, and to fashion the terms of the constructive trust along the
same lines applicable to a resulting trust so that the beneficial
interest is held in tenancy-in-common in shares proportionate to the
total contributions made towards the acquisition of "equity" in the
asset. However, other considerations may also be relevant. For
example, in the context of domestic relationships it is relevant to
inquire whether the asset was acquired for the purposes of the
relationship, and whether non-financial contributions should be
taken into account.
164 C.L.R.] OF AUSTRALIA. 157

In the present case the fund constituted by the pooled earnings of H. C. OF A.

1987.
the parties was established and used for the purposes of their joint '---v--'
relationship. The acquisition of the land and the subsequent building BAl.'MGARTNER
V.
of the house constituted a joint undertaking designed to further that BAUMGARTNER.
relationship. The substratum of that relationship and undertaking
was removed without attributable blame: see Muschinski v. Gaudron J.

Dodds (36), per Deane J. Those considerations warrant that, subject

to adjustments for contributions otherwise made by the appellant,
the constructive trust should be fashioned at least by reference to
shares proportionate to the respective contributions made by the
parties to the joint fund, rather than by reference to their
contributions to the acquisition of "equity" in the house and land.
The share actually contributed by the respondent should be
increased by reference to the amount she would have contributed
but for her absence from work during the later stages of her
pregnancy and after the birth of the child, Dallas. Thus it is
appropriate that the constructive trust to be imposed be fashioned
by reference to a tenancy-in-common in the proportions 55 per cent
to the appellant and 45 per cent to the respondent, subject to the
adjustments as set out in the judgment of Mason C.l., Wilson and
Deane JJ.

Appeal allowed. The appellant to pay the respon-

dent's costs ofthis appeal.
Declare that the appellant holds his interest in
that land being Lot 3 in Deposited Plan
No. 231708 in the Municipality of Campbell-
town, Parish of St Luke and County of
Cumberland, and being the whole of the land
comprised in Certificate of Title Vol-
ume 10524 Folio 23, known as 68 Angle
Road, Leumeah on trust for himself bene-
ficiallyas to 55 per cent and for the respon-
dent beneficially as to 45 per cent, subject to
such adjustments as should be made in accord-
ance with the reasons for judgment of the
Court.
Further order that the matter be stood over to a
date to befixed to enable the parties to present
submissions as to the form of the consequen-
tialorders to be made.

(36) (1985) 160 C.L.R. 583, at 620.

158 HIGH COURT [1987.
H.C. OF A. Solicitors for the appellant, Adrian Twigg & Co.
1987.
'-,---' Solicitors for the respondent, G. H Healey & Co.
BAUMGARTNER
V. R.A.S.
BAUMGARTNER.