The Issues of Family Law in Australia and New Zealand - Assignment Example

Cohabitees may be married or unmarried; heterosexual or homosexual; in a permanent or a transient relationship; family members or simply sharing accommodation. In the absence of statutory protection or express trust, cohabitants rely on property law devices: resulting trusts, constructive trusts and proprietary estoppel to determine a) whether they have a legally recognised interest in the property and the nature of it and b) the quantification of that interest. In its discussion paper, Sharing Homes1, the Law Commission identified the following shortcomings in this area: Common intention is a myth requiring detailed examination of conversations Substantial and direct contributions discriminate against home-makers. Decisions on quantification are inconsistent and difficult to reconcile The scope of proprietary estoppel is undefined There is overlap between proprietary estoppel and the common intention constructive trust The lack of certainty leads to costly litigation It is ironic that indirect contributions cannot raise a beneficial interest, but once a common intention is established, indirect contributions can determine the extent of the interest.2 The importance of 'legal status' in the law is clearly discriminatory, and has been compounded by the Civil Partnership Act 2004. The Government riposte that cohabitants should marry misses the point. All cohabitants need to be quite clear as to whether they have any beneficial interest in a property and how to secure it. In Australia3 and New Zealand4 unmarried cohabitants' rights are recognised by legislation, common law and equity. The principle of unjust enrichment has been utilized in both these countries and Canada.5 Domestic duties alone have never sufficed in English law to found a claim for a beneficial share, whilst they do in Canada under the concept of the remedial constructive trust. Hence in Peter v Beblow6 a woman who cared for her own and her partner's children, did the housework and contributed money to the housekeeping was able to keep the house under a constructive trust on the basis that her partner would otherwise be unjustly enriched by her services. In Hammon v Mitchell7- an English case - a woman who did unpaid work for her partner, raised their children and maintained the home as well as supporting him in his speculative ventures failed to acquire any beneficial share. Remedial trusts are imposed where there is a direct link between substantial indirect contributions and the acquisition or improvement of property; otherwise compensation could be available on a quantum meruit basis. The 'trustee' has a duty to convey the property to the claimant who sues on quasi-contractual grounds In order to establish an unjust enrichment claim there needs to be evidence of: an enrichment, a corresponding deprivation and absence of any juristic reason for the enrichment.8 Examples of enrichment include household expenses9, domestic work and repairs and maintenance. The courts have not accepted willing assistance10. The contributions need to be both substantial and direct. Deprivation can be established by evidence that the other party has received a benefit.11 The rationale for the doctrine is said to be the defendant's awareness of the claimant's reasonable expectation of a proprietary interest. As in the fiction of common intention, the Canadian courts often impute reasonable expectation.12 The remedy is available regardless of legal status and therefore more closely reflects social reality. However it is a remedy of last resort; a proprietary remedy must also be shown to be justified. Damages are the norm.13 The requirement of 'absence of any juristic reason' would exclude gifts or loans, as in English law, but probably not requested services if the claimant clearly expected to receive something in return.14 The English approach is that the constructive trust is a substantive institution vindicating a pre-existing proprietary right.15 There is no principle of restitution of a benefit derived from wrongdoing. Proprietary rights are not a remedy for someone who had no such right before16. Only Parliament may vary property rights.17 The Polly Peck decision has been described as the end of the remedial constructive trust18 in the UK. In Australia19, New Zealand20 and Canada21 the remedial constructive trust is accepted as existing alongside the traditional institutional constructive trust. Pre-existing property rights are in situ before a court order to that effect, whilst remedial rights come into effect on the date of the court order. It does not take effect retrospectively.22 Although indirect contributions do not give rise to a common intention to share in English law, the courts have imposed a trust in some cases in the interests of justice.23 This 'new model' constructive trust goes beyond the principle of the remedial constructive trust to prevent unjust enrichment. It gives unlimited discretion to the imposition of a constructive trust, regardless of existing proprietary rights between the parties or the interests of third parties. Dicta in Lloyds Bank v Rosset [1991]24, has re-established the requirement of common intention and the existence of a direct financial contribution. In the commonwealth the 'new model' constructive trust has usually been either modified25 or outright rejected.26 It has been said that the legitimacy of the new model is at least suspect; at best it is a mutant from which further breeding should be discouraged.27 The Australian version objectively28 determines whether the parties have entered into a joint venture into which they have pooled resources. On this basis, it would be unconscionable for one party to be unjustly enriched at the expense of the other(s). Although a wide range of financial and non-financial contributions are recognised a majority of the Supreme Court of New South Wales felt that non-financial contributions only29 would be insufficient. In this sense the homemaker is in the same position as under English law. 'New model' constructive trusts are only imposed where non-proprietary remedies will not meet the minimum equity required. This has made the determination of quantum unpredictable. Such court orders have retrospective effect, although no proprietary rights are declared.30 Time and money is not saved as the traditional common intention trust is usually also argued. The doctrine is susceptible to judicial interpretation hence adding to complexity and uncertainty. In New Zealand a claimant who has contributed in more than a minor way to the acquisition, preservation or enhancement of the defendant's assets will have a constructive trust declared on the basis that there must have been a reasonable expectation that the claimant would have a beneficial interest, where there is a causal relationship between the acquisition, preservation or enhancement, though it does not have to be financial.31 A range of non-direct contributions are recognized such as improvements32 and domestic work.33 Quantification is pro rata based on actual contributions.34 The remedy is available regardless of legal status. Married and unmarried couples are treated differently.35 Defendants will be awarded damages to avoid unjust enrichment.36 The legal owner is able to 'contract out' following a clear and unequivocal notice of intention not to share the equity. The commonwealth doctrines are similar to proprietary estoppel requiring encouragement/acquiescence, detrimental reliance and unconscionability/unjust enrichment. The main difference is that a non-proprietary remedy will be awarded if that best meets the claimant's needs, whereas English law does not apply remedies in this way under a constructive trust. Whilst the commonwealth has focused on achieving fairness, English law has focused on justice and certainty. Australian statute recognizes de facto relationships37 allowing the court a wide discretion to order property on 'just and equitable' principles. The court can take into account both direct and indirect contributions, and the resources of the respective parties.38 The law also recognizes 'domestic relationships' which are based on personal care and domestic support39. In Tasmania cohabitants can register their relationship and derive protection under the statute regardless of the length of its duration. This is a response to social and economic realities of modern societies. New Zealand provides the same measure of legislative protection40 for all cohabitants regardless of legal status or gender who have resided together for at least 3 years for the purposes of property division on either separation or death. The court has wide powers to adjust property rights under the legislation. It is possible for cohabitants to contract out of the legislation. The Law Commission recommended that indirect financial contributions which enable the legal owner to acquire the property should be sufficient to raise a common intention.41 They expressly approved of a 'holistic approach' to determining quantification of beneficial interest taking into account the whole course of dealings between the parties.42 This would give courts similar discretion to that which they have with respect to married couples on the granting of ancillary relief. The House of Lords made it clear that [t]here should be no bias in favour of the money-earner and against the home-maker and the child-carer.43 Provided the property belongs to at least one party this approach allows the court to ignore beneficial interest with full weight being given to the contributions which each has made to the family's welfare. There is precedent for such an approach within the commonwealth. Bibliography Gardner, S. (1993), 'Rethinking Family Property', Law Quarterly Review 109, pp. 263- 300 Glover, N. and Todd, P. (1996), 'The Myth of Common Intention', Legal Studies 16, pp. 325-347 Hayton, D. and Mitchell, C. (2005). Hayton & Marshall Commentary and Cases on the Law of Trusts and Equitable Remedies. 12th Edition. Sweet & Maxwell: London Hopkins, N. (2000) The Informal Acquisition of Rights in Land. Sweet & Maxwell Law Commission Cm-278: Sharing Homes: A Discussion Paper. November 2002 Law Commission - Ninth Programme of Law Reform. Law Com No 293. HC 353. March 2005. Martin, J. (2005). Hanbury & Martin Modern Equity. 17th Edition. Sweet & Maxwell: London. Pearce, R and Stevens, J. (2002). The Law of Trusts and Equitable Obligations. 3rd Edition. OUP: Oxford Smith, R. (2006). Property Law. 5th Edition. Pearson Education Limited: Edinburgh Statutes Australian Capital Territory: Domestic Relationships Act 1994; New South Wales: Property (Relationships) Act 1984 Northern Territory: De Facto Relationships Act 1991; NZ Property (Relationships) Amendment Act 2001 Property (Relationships) Act 1976 Property (Relationships) Act 1984 (NSW) South Australia: De Facto Relationships Act 1994. Cases Allen v Snyder [1977] 2 NSWLR 685 Baumgartner v Baumgartner [1998] 62 ALJ 29 Bryson v Bryant (1992) 16 Fam LR 112 Cooke v Head [1972] 1 WLR 518; [1973] CLP 17 Daly v Gilbert [1993] 3 NZLR 731 Everson v Rich (1988) 16 RFL (3d) 337, 342/ 53 DLR (4th) 470 Eves v Eves [1975] 1 WLR 1338 Gillies v Keogh [1989] 2 NZLR 327 Hibberson v George (1989) 12 Fam LR 725 Lankow v Rose [1995] 1 NZLR 277 Lloyds Bank v Rosset [1991] 1 AC 107 McMahon v McMahon [1996] 3 NZLR 334 Muschinski v Dodds [1985] 160 CLR 583 Peper v Peper (1990) 38 ETR 212 Peter v Beblow [1993] 101 DLR (4th) 621. Pettkus v Becker [1980] 2 SCR 423/ (1980) 117 DLR (3d) 257 Powell v Thompson [1991] 1 NZLR 579 Rathwell v Rathwell [1978] 2 SCR 436, 454 - 456. Re Polly Peck International plc (in administration) (No 2) [1998] 3 All ER 812. Shannon v Gidden (2000) 178 DLR (4th) 395 Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 White v White [2001] 1 AC 596, 605 Wilcox v Wilcox (2000) 190 DLR (4th) Read More