Court finds de facto wife part owner of property due to contributions to household and living expenses

31 January 2021
Family Law

In this case, the Court considered a de facto relationship of 6 years, in which property was solely in the name of the husband. Despite this, the wife generally gave her husband her wages for living expenses and took time off work to take care of the children. This article will take a closer look at the landmark case of Baumgartner v Baumgartner (1987) 164 CLR 137 (‘Baumgartner’).

Upon separation, the husband retained full interest in the property, despite the wife’s contributions to their household and living expenses.  

Primary Court and Appeal

This matter was heard in the state’s courts at the time when the trial judge in the NSW Supreme Court found that there was no intention to create a trust, and nothing unconscionable arising from the husband’s retention of title. 

However, on appeal, the Court found that on the evidence, there in fact was a subjective intention that the property be held jointly. This was premised on the wife’s evidence that the couple intended for the property to be transferred into both of their names when they got married.

This decision was then appealed to the High Court.

High Court Decision

The High Court concluded that the Court of Appeal did not pay close enough attention to the evidentiary inconsistencies between the wife and husband, as the husband asserted that it was only if they got married, the title might be transferred. Therefore, there was no subjective intention that the wife should acquire a proprietary interest.

However, the High Court maintained that the wife was entitled to relief, by way of a constructive trust. In determining this, the court emphasised that:

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.”

Therefore, this attracted principles of equity, as

in circumstances where the parties have lived together for years and have pooled their resources and their efforts to create a joint home, it would be unconscionable that one party is afforded the entire benefit of the property.

The court did ultimately afford the husband a greater equitable interest in the property, in a 55:45 ratio, as his financial contributions were substantially greater than that of his wife’s.

However, the courts will also make necessary adjustments to promote practical equality. Here, the court credited the wife with the amount she would have earned and therefore contributed to their common pool of earnings, during the months that she ceased working in order to care for their child.

This case crystallised the court’s approach in Muschinski v Dodds (1985) 160 CLR 583, in that a constructive trust should be imposed where it would be contrary to equitable principles for one party to assert an entire interest in the property.

Important Disclaimer: The material contained in this publication is of general nature only and is based on the law as of the date of publication. It is not, nor is intended to be legal advice. If you require further information on the content of this publication, please contact our office on 9299 0112.

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