Trusts, Third Parties and the Family Home: Six Years since Cummins and Confusion Still Reigns

Article excerpt

[In Trustees of the Property of Cummins v Cummins, the High Court of Australia developed an arguably new trusts principle in relation to third-party claims against the family home. This article explores the doctrinal implications of the principle, arguing that it has led to considerable confusion and uncertainty in subsequent case law and in the academic literature. The article also evaluates the substantive effects of the principle, arguing that it is undesirable that some women who attempt to resist third-party claims to the family home are worse off under it. The article concludes by proposing a legislative solution to remedy the doctrinal confusion and substantive deficits in this area of law.]

CONTENTS

I   Introduction
II  Trusts Principles in Family Property Cases
    A Traditional Trusts Principles: Authority before Cummins
         1 The Constructive Trust
         2 The Resulting Trust
    B Cummins: A Shift in Traditional Trusts Doctrine?
         1 The Background to the Case
         2 The High Court's Judgment
            (a) Inference of Joint Ownership in Marriage
            (b) A Presumption of Resulting Trust Rebutted by the
                Evidence?
         3 The Doctrinal Implications of the High Court's Judgment
    C  The Aftermath of Cummins: Confusion Reigns
         1 Academic Consideration
         2 Judicial Response: Six Years of Case Law
III From Doctrine to Substance: The Gendered Consequences of an 'Equal'
    Starting Point
    A Comparison of Outcomes under the Cummins Principle and
      Traditional Trust Principles
    B Problems with an 'Identical Treatment' Model of Equality in the
      Context of Women's Structural Inequality and Differences between
      Women

    C A Legislative Response
IV Conclusion

I INTRODUCTION

Legislative reform in Australia over the last 30 years or so has provided near universal statutory coverage for the determination of property disputes between separating couples. (1) Equitable doctrines, such as the trust, which used to determine outcomes between separating couples where there was no applicable legislative regime, are thus now largely irrelevant to the determination of such disputes. Equitable principles do, however, continue to apply where third parties make a claim against the property of either of the parties to the relationship. (2) In such claims, the question of 'who owns what?' in the relationship is central to the determination of the assets that are available to satisfy the third party's claim.

The application of resulting and constructive trust principles as between the parties to the relationship has traditionally provided the answer to this 'ownership' question. The broad doctrinal elements of these trusts principles had, until recently, been more or less settled since the mid-1980s. (3) In the last few years, however, an arguably new trusts principle has emerged in relation to the determination of ownership interests in the family home. In Trustees of the Property of Cummins v Cummins ('Cummins'), (4) the High Court of Australia applied a starting inference of equal ownership of the family home in a claim by the husband's trustee in bankruptcy for an interest therein. Since the decision in Cummins, this inference of equal ownership ('the Cummins principle') has been variously applied, ignored or misinterpreted by lower courts, leading to considerable uncertainty surrounding this area of law.

This article explores the Cummins principle and its effect on Australian trusts law as it pertains to the family home. It traces the source of the current state of doctrinal confusion to the reasoning in Cummins itself, arguing that the Court failed to acknowledge that the application of an inference of equal ownership to the facts of the case necessarily entailed a change in doctrine from the principles that had been settled since the mid-1980s.

This article has two aims. The first is to introduce a degree of doctrinal clarity and transparency into this area by bringing to light and making explicit the precise nature of the change to established trusts law brought about by Cummins. …