THE PUBLIC TRUSTEE v MARIE KUKULA SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SAMUELS, CLARKE and HANDLEY JJA 16 March 1990, 5 June 1990 [1990] NSWCA 174 DE FACTO RELATIONSHIPS — Equity — Promise of Marriage by married man — Parties working on each others farms without promise of reward — No permanent improvements — End of relationship — No constructive trust — No promissory or proprietary estoppel — Equitable charge for value of plaintiff's work declared by judge held: equitable charge for value of plaintiff's work could not be supported. Samuels JA I agree with Handley JA. Clarke JA I agree with the reasons given by Handley JA for concluding that, upon the facts of this case, the respondent has failed to establish a basis for the imposition of a constructive trust or the application of the principles relating to proprietary estoppels. Accordingly, I agree with the orders proposed by his Honour. Handley JA This appeal from a decision of Mr Justice Cohen in the Equity Division arises out of the personal and financial relationships between the plaintiff Marie Kukula and the late Jaroslav Bartos (the deceased). The deceased died on 3 May, 1979 intestate, and his next of kin, namely his mother and his sister, are resident in Czechoslovakia. In early March 1965 the deceased, then being married, formed a somewhat unusual de facto relationship with the plaintiff. Each continued to maintain separate homes and separate farming businesses. They did not pool their incomes or their assets. Because the deceased was married divorce was not seen as practicable until after December 1969 when the five year period of separation then available as a no fault ground for divorce under the Matrimonial Causes Act 1959 (Cwlth) had expired. However the deceased promised to marry the plaintiff when free to do so. They agreed that after their marriage they would sell the plaintiffs farm and live together on the deceased's farm and pool their assets in their joint names. In the meantime they would assist each other as much as possible in working their separate farms on a voluntary basis. The relationship broke down in 1977 and the parties separated. Although the deceased's wife had commenced divorce proceedings after the expiration of the five year period of separation and obtained a decree nisi which was made absolute on 7 November 1971 the deceased concealed these facts from the plaintiff and she remained unaware until shortly before his death that he had been legally free to marry her since November 1971. The contemplated marriage never took place nor did the parties ever proceed with the pooling of their assets. After the death of the deceased the plaintiff commenced proceedings in the Equity Division claiming an interest in the deceased's farm under a constructive trust or under an alleged oral agreement or in the alternative damages or a quantum meruit. However at the conclusion of the evidence counsel for the plaintiff did not press for the making of orders based upon any contract between 2 UNREPORTED JUDGMENTS the plaintiff and the deceased. He also abandoned the alternative claim in debt for work done and materials provided. There remained as live issues the claims based upon a constructive trust or proprietary estoppel. The trial judge held that the plaintiff was not entitled under a constructive trust to a proportionate share of the deceased's farm. He said: "it does not seem to me that it can properly be said that the plaintiff is entitled to a proportionate share of the deceased's property... there was no direct contribution to the acquisition or improvement of the deceased's farm... The real benefit was that the deceased was able to save expenditure and thus improve his own prospects for improvement of his farm by making more money available to him. I do not see how that can reasonably be converted into a proportion of the farm nor in the circumstances do I think it would be appropriate to seek to do so." The learned trial judge then held that the plaintiff was entitled to the benefit of an equitable charge on the deceased's farm or its proceeds of sale. He concluded: "T am of the opinion that the deceased improved the property and his general fortunes by the value of the plaintiff's work. That value is represented by the reasonable wages which would have been payable for that work during the period from March 1965 until approximately September 1977. The property, or the proceeds of its sale, should be charged with the amount of those reasonable wages." The trial judge supported this conclusion on the basis of earlier findings that there had been an understanding between the plaintiff and the deceased as to their future, which related in part to work each would do for the other on their respective farms. There was thus a form of joint venture which they contemplated would be for their joint benefit when they married and pooled their assets. After twelve years the substratum of this joint venture failed when, in 1977, the parties separated. The trial judge found that as a result of their joint relationship the deceased had acquired a benefit from the unpaid labour of the plaintiff, that he had "stood by" and accepted this benefit knowing that the plaintiff was acting to her detriment because of the inducements held out by his promise of marriage and the arrangement to pool their assets. The deceased therefore had induced the plaintiff to act to her detriment but he had neither performed his promises of marriage and pooling their assets nor had he restored to the plaintiff the value of the benefits he had received from her work. This conduct of the deceased was held to be unconscionable and gave rise to the equity which the trial judge recognised in the form of an equitable charge for the value of the plaintiff's work measured by the reasonable wages that he would otherwise have had to pay. It is important to record what was not established in this case. The joint relationship between these parties did not involve any pooling of assets or incomes for the purpose of paying expenses incurred in the course of and for the purposes of that joint relationship. The case therefore is not covered by the principles established in Baumgartner v Baumgartner (1987) 164 CLR 137 and Grant v Edwards [1986] Ch638 (CA). Furthermore this case does not concern the rights of the parties to assets acquired for the purposes of a joint relationship with funds contributed by the parties from their capital or their earnings. Accordingly the principles in such a case as established and applied in Muschinski v Dodds (1985) 160 CLR 583, Baumgartner v Baumgartner (above) and Grant v Edwards (above) have no direct application. The deceased made no promise to the plaintiff that she would acquire any proprietary interest in his assets by providing unpaid labour on his farm. His only promise in that regard URJ THE PUBLIC TRUSTEE v MARIE KUKULA (Handley JA) 3 was that she would acquire such an interest pursuant to the pooling of their assets to take place after they were married. On the evidence and the findings of the trial judge the deceased at no stage represented to the plaintiff that she had already acquired a proprietary interest in his property. Had the plaintiff been asked between 1965 and 1977 whether she had an interest in the deceased's farm the correct answer, on the findings of the trial judge, must have been "no" but that she would acquire such an interest after they got married and pooled their assets. This case therefore is not governed by the principles relating to proprietary estoppel which were applied in Maharaj v Jai Chand [1986] AC 898, Silovi Pty Limited v Barbaro [1988] 13 NSWLR 466 and Green v Green [1989] 17 NSWLR 343. Moreover there is no scope for the enforcement of any promissory estoppel. The promises which the deceased made that in any sense were capable of effecting his legal relationships were to marry the plaintiff and afterwards to pool their assets as joint tenants. There was no independent promise to pool assets and because the parties never married the time for performance of that promise never arrived. Recent decisions of the High Court and of this Court have considerably extended the scope for the grant of relief in circumstances where a promissory estoppel is established. Nevertheless in my opinion it is clear that not even the modern doctrine of promissory estoppel can convert a promise of future marriage into an actual marriage. The formal requirements of the Marriage Act 1961 (Cwlth) also stand in the way of any such application of the doctrine of promissory estoppel. The present case therefore is not within the principles established by the decisions in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, Silovi Pty Limited v Barbaro [1988] 13 NSWLR 466, Austotel Pty Limited v Franklins Self-Serve Pty Limited [1989] 16 NSWLR 582 and Foran v Wight [1989] 64 ALJR 1. The case is further complicated by the fact that the Commonwealth Parliament in its wisdom abolished or purported to abolish the cause of action for breach of promise of marriage by s111A of the Marriage Act inserted by Act No 209 of 1976. This legislation was presumably enacted pursuant to the power conferred on the Parliament by s51(xxi) of the Commonwealth Constitution to make laws with respect to marriage. It is not self evident that this power authorises the abolition of the cause of action for breach of promise. However since the validity of the section was not challenged before us the appeal must be decided on the basis that the cause of action has been abolished. Parliament having legislated to render an executory contract of marriage unenforceable by legal action, such a contract which comes into existence because of the operation of a promissory estoppel cannot be in a different position. It must also be unenforceable by legal action. A further complication should be noticed. The original promise of marriage was made at a time when the deceased, to the knowledge of the plaintiff, was married. Although a promise of marriage made after decree nisi was held to be enforceable and not contrary to public policy in Fender v St John-Mildmay [1938] AC 1, the existing case law establishes that such a promise made before decree nisi, even if expressed to be performed only after decree absolute, is contrary to public policy and void. Thus in Psaltis v Schultz (1948) 76 CLR 547 at 558 Dixon J said: 4 UNREPORTED JUDGMENTS "The law is that a contract to intermarry is invalid if, at the time it is made, one of the parties is to the knowledge of the other married, and this is so notwithstanding the contract between them is that they will marry when the existing marriage is dissolved by death or is dissolved or annulled by decree (Spiers v Hunt [1908] 1 KB 720, Wilson v Carnley [1908] 1 KB 729, Skipp v Kelly [1926] 42 TLR 258, Siveyer v Allison [1935] 2 KB 403)". Whether the High Court would reach the same conclusion today in the light of recent developments including the enactment of the Family Law Act 1975 (Cwlth) is not clear. However on the present state of the authorities the original promise of marriage made by the deceased to the respondent was void as contrary to public policy. It follows that the dependent promise to pool their assets in their joint names after the marriage, if otherwise contractually binding, was also contrary to public policy and void. Counsel who settled the Statement of Claim evidently was aware of these principles because paragraph 8 alleges that after the deceased's divorce he renewed his promise to marry the plaintiff on several occasions. The decision of the Privy Council in Skipp v Kelly [1926] 42 TLR 258 (more fully reported in (1926) AIR Vol 13 Privy Council 27) establishes that a fresh promise of marriage, after divorce, is binding although an earlier promise to that effect was void. The evidence however did not establish that the deceased made a fresh promise of marriage to the plaintiff. The plaintiff gave evidence that she raised the question of his divorce with him about Christmas 1971 and a few times after that and that on each occasion he said he would get a divorce. These statements, in my view, did not constitute a fresh promise. They were not in terms an express promise of marriage, and the only question is whether they were an implied promise to that effect. Examples in the cases of conduct amounting to a fresh promise of marriage include the purchase of an engagement ring and the fixing of a date for the wedding. See Skipp v Kelly (above) at 259. Nothing like that occurred in the present case. A distinction is drawn in the case law between the mere ratification of a void promise without fresh consideration which is not binding and a new promise for a fresh consideration which is. See Ditcham v Worrall [1880] 3 CPD 410 at 412-414 per Lindley J applied by Lord Dunedin in Skipp v Kelly (above) at page 259. In the present case it is clear that the deceased did not intend to make a new promise to marry the plaintiff. The plaintiff, unaware that he was free to marry, could not have considered the statements to be any more than a recognition of his earlier promise and a promise to secure a divorce. Moreover there was no consideration to support any fresh promise of marriage. No doubt the plaintiff remained willing to marry him and communicated that fact, but nothing resembling an offer and acceptance took place such as are involved in the giving and receiving of a ring or the fixing of an agreed date for the wedding. Compare Ditcham v Worrall (above) at 413. It also seems there was no corroboration for any such promise as required by s42 of the Evidence Act 1898 (NSW). Compare Sawdon v Dale [1929] 29 SR 573. The deceased's statements to the plaintiff after he was divorced may well have been sufficient to ground a promissory estoppel. However in all probability corroboration would still be necessary in such a case so that there still was no legally binding promise of marriage by the deceased. URJ THE PUBLIC TRUSTEE v MARIE KUKULA (Handley JA) 5 In view of s111A of the Marriage Act, Courts of Equity cannot treat the repudiation of an executory contract of marriage as unconscionable conduct which without more will justify the recognition and enforcement of a constructive trust. Consistently with the terms of s111A a constructive trust cannot rise, Phoenix-like, from the ashes of the common law cause of action for breach of promise. This does not mean, of course, that the result in Muschinski v Dodds (1985) 160 CLR 583 would have been different if the parties had contracted to marry, and the respondent had repudiated that promise. The equity enforced in that case was independent of any finding of fault leading to the termination of the relationship. The source of the equity was the unconscionable assertion by the respondent of his legal rights to the jointly owned property after the personal relationship had come to an end. In the present case neither directly nor indirectly can the deceased's repudiation of his promise to marry the plaintiff become the ground for the grant of equitable relief. Any equity enforceable at the suit of the plaintiff must, as the trial judge held, be based on the existence of the joint relationship which later failed, the unequal contributions of free labour by the parties during that relationship, and the unconscionable conduct of the deceased in retaining the benefit of the plaintiff's disproportionate contribution of time and labour without making appropriate financial recompense to her. Thus stated the plaintiffs claim appears to be a personal one for restitution or unjust enrichment rather than a proprietary claim to enforce a constructive trust. Compare Pavey and Mathews Pty Limited v Paul (1987) 162 CLR 221. Some of the plaintiff's work involved assisting in grubbing out old fruit trees and in erecting a new poultry shed. The nexus between this work and the deceased's farm property is clear enough but the trial judge found that such work was a relatively minor proportion of the total and not sufficient on its own to justify the recognition of a constructive trust. The plaintiff's other work included de-beaking chickens, feeding poultry, collecting eggs, spraying fruit trees, and picking fruit. This work has no apparent connection with the ownership of the deceased's farm. In Baumgartner v Baumgartner (1987) 164 CLR 137 at 153 Toohey J said:... it is not enough that one spouse had benefited from the contributions of another. What is required is that the contributions of one spouse have enabled or assisted in enabling the other to acquire the asset in dispute." In the present case the plaintiff's work did not lead to or assist in either the acquisition, the retention, enlargement or significant permanent improvement of the deceased's farm. The trial judge found that the plaintiff worked on the deceased's farm and he worked on hers under an express understanding that neither would receive "wages", that there would be no sharing of profits or returns, and that they would do this to help each other. These findings establish that the plaintiff and the deceased worked gratuitously on each other's farm. Neither party therefore had any cause of action against the other in quantum meruit to recover reasonable remuneration for the services rendered. See Pavey and Mathews Pty Limited v Paul (1987) 162 CLR 221 at 227, 255 and Way v Latilla [1937] 3 All ER 759 (HL) at 763, 765. See also Horton v Jones (No 2) (1939) 39 SR 305 at 320. As the trial judge found even the revitalised remedy of the constructive trust could provide no relief for the plaintiff because there was no discernable link between the services she provided and the relevant asset. But with respect to his 6 UNREPORTED JUDGMENTS contrary view, the absence of the link which he considered fatal to the claim to a constructive trust, is equally fatal to the claim to an equitable charge. The difference in the nature of the equity, and the manner in which it was sought to be quantified cannot, in my view, dispense with the necessity to link, connect or trace the plaintiffs services with or into the asset sought to be made the subject of the equitable charge. On the findings of the trial judge the plaintiff failed to do this. Furthermore in my opinion the plaintiff failed to establish that she made a disproportionately larger contribution of work for the benefit of the deceased than the contribution he made for %%15 her. A finding that the plaintiffs contribution was disproportionately greater was essential if an ultimate finding of unconscionability on his part was to be made. The plaintiff's evidence is that after the joint relationship with the deceased was established (although she worked on his farm on a gratuitous basis even before the start of that relationship) she worked regularly on his farm. While she was doing this work for the deceased the plaintiff was also working her own farm. Following the death of her husband she had commenced to grow parsley and mint on a commercial basis. She said that the deceased helped her to prepare the ground by carrying out rotary hoeing and later by spraying the crops. She also had part-time employees to help her. She said that she spent about 60% of her time working on her own farm and about 40% working on the deceased's. On the other hand he spent about 10% of his time on her property because he only helped with the rotary hoeing and spraying. The trial judge found that these figures could only be a rough approximation and he further found that the nature and extent of the work carried out by the plaintiff changed after the deceased expanded his chicken farming business, employed more outside labour and installed automatic feeding devices. As these changes progressed the plaintiff spent less time helping the deceased. Mr Gee senior counsel for the appellant submitted that it was not open to the trial judge to infer that the plaintiff provided work for the benefit of the deceased which was of greater value to him than the value to her of the work he provided. He relied upon the fact that the deceased also used his farm machinery comprising a tractor, large spraying equipment and a rotary hoe. In my judgment the Court should accept this submission. The relevant comparison is not between the times each spent on the other's farm but between the value of the work each did for the other. The deceased not only contributed his time and his labour, he also contributed the use of his heavy farming machinery. With the use of his farming machinery, he may have performed as much work in the shorter time he spent on the plaintiff's farm as she was able to achieve in a much longer time on his. If despite the disparity in the times each spent on the other's farm, the value of the work she did for the deceased was not disproportionately greater it would not be unconscionable for the deceased to fail to make appropriate recompense. Once the finding of unconscionable conduct on the part of the deceased is displaced there is no basis for a finding that an equitable charge arose in her favour. As I have already said the plaintiff abandoned her claims in contract to recover the value of the work done by her for the deceased. However if a finding had been made that she did disproportionately more work for him it is possible that she had a valid claim in restitution. URJ THE PUBLIC TRUSTEE v MARIE KUKULA (Handley JA) 7 She performed work in anticipation of a contract of marriage and a pooling of assets, which did not eventuate. The basis for a claim of this nature and the principles on which it can be supported in relation to work done for another's benefit in anticipation of a commercial contract were discussed and applied by Sheppard J in Sabemo Pty Limited v North Sydney Municipal Council [1977] 2 NSWLR 880. See also Austotel Pty Limited v Franklins Self-Serve Pty Limited [1989] 16 NSWLR 582 at 621-622 per Rogers AJA. No such claim was pleaded or argued in the present case. Accordingly I have neither formed nor will express any opinion on whether Sabemo Pty Limited v North Sydney Municipal Council (above) was correctly decided and whether, if it was, the same principles apply to the work which was done in this case. The trial judge, in directing an enquiry to ascertain the value of the plaintiff's work on the deceased's farm, refused to allow any set-off or credit for the value to her of the work performed by the deceased on her farm. In my respectful opinion an order in that form could not, in any event, have been supported. The plaintiff was seeking equity, and she was therefore bound to do equity. I can see no proper basis on which she could recover for the value to the deceased of her work on his farm while she declined to give credit for the work done by him on her farm pursuant to the same arrangement. Accordingly in my judgment the appeal must be allowed and the plaintiff's suit dismissed. 1. Appeal allowed with costs. 2. Order of Equity Division set aside and in lieu thereof order that action be dismissed with costs. 3. Order that the respondent have a certificate under the Suitors' Fund Act. Counsel for the Appellant: C Gee QC and P Hallen Solicitors for the Appellant: Horwitz and Bilinsky Counsel for the Respondent: DB Milne QC and G Segal Solicitors for the Respondent: Hooper-Serisier