Background
An 89-year-old legally blind widow and her daughter purchased a property together in October 2024 as tenants in common in equal shares. The plaintiff paid the entire deposit and the vast majority of the purchase price (approximately $790,498 of principal contributions) from proceeds of sale of her other property, while the defendant contributed only approximately $1,645. The understanding was that the defendant would eventually reimburse the plaintiff for her share, though this was never formalised in writing.
In March 2025, following a fall at the property, the plaintiff moved to a retirement village requiring a substantial accommodation deposit. She needed to sell the property to fund this care. The defendant remained in sole occupation without paying rent, and on 7 March 2025, without the plaintiff’s knowledge or consent, withdrew $74,000 from their joint bank account. The defendant subsequently refused to cooperate with the sale process despite repeated requests from the plaintiff’s solicitors.
The plaintiff commenced proceedings seeking a declaration that the defendant holds her half share on trust, repayment of the $74,000, and appointment of trustees for sale. The defendant did not appear at any stage of the proceedings.
The Court’s Holding
Richmond J held that a joint endeavour constructive trust arose over the defendant’s half share in favour of the plaintiff. The joint endeavour was the acquisition of the property as a home for both parties, with the defendant agreeing to reimburse the plaintiff for her contribution. The endeavour failed when the plaintiff, due to advanced age and infirmity, required the property to be sold to fund her aged care.
The court found it would be unconscionable for the defendant to retain her half share given the gross disparity in financial contributions (plaintiff contributed approximately $790,498 toward principal reduction compared to the defendant’s $1,645), and the defendant’s occupation of the property rent-free. Critically, the court noted that unconscionability is assessed at the time of hearing, not merely at acquisition, and subsequent events—including the defendant’s refusal to cooperate and unauthorised withdrawal—were relevant to this assessment.
The court declared that the defendant holds her entire half share on trust for the plaintiff and ordered her to repay the $74,000 withdrawal plus interest. The trustees for sale were directed to pay the entire net proceeds to the plaintiff.
Key Takeaways
- A joint endeavour constructive trust may arise even where legal title is registered equally, if one party made substantially all financial contributions and the endeavour later fails without fault on that party’s part
- Unconscionability is assessed at the time of the court hearing and may be informed by subsequent conduct, including post-acquisition events and refusals to cooperate
- The doctrine operates restitutively to prevent unjust enrichment and is not confined to situations the parties specifically contemplated at the time of acquisition
- A party in a fiduciary position (such as attorney) who makes unauthorised withdrawals from joint accounts may be held liable to account for those funds
Why It Matters
This decision reinforces the flexibility and power of the constructive trust doctrine in family property disputes, particularly where one party has made minimal contributions while the other has borne the substantial cost of acquisition. It protects vulnerable parties—here, an elderly, disabled mother—from being exploited by family members in positions of trust. The court’s emphasis that unconscionability is assessed at the hearing date, not the acquisition date, means that subsequent unfair conduct can trigger equitable relief even if the initial transaction appeared fair.
The decision also has significant implications for fiduciary duties. The court held that the defendant’s position as attorney under a power of attorney constrained her authority to withdraw from the joint account, even though she was a legal signatory. This reflects the principle that legal rights may be limited by equitable obligations arising from fiduciary relationships.