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Detrimental reliance requirements for common intention constructive trusts differ from those in equitable estoppel

Trusts

CASE: Secretary, Department of Social Services v Hulett [2025] FCA 23

The case revolves around Edward Hulett and his three daughters’ arrangement to care for their aging parents. Years before Mrs Hulett’s death in 2009, the family agreed that when one parent died and the other needed care, the surviving parent would share the family home’s value with the daughters in exchange for care.

After living alone for 12 years, Mr Hulett had a bad fall in 2021 and couldn’t manage independently anymore. Though all three daughters offered to take him in, he moved in with Barbara (Ms Gosson), as Carol’s house was too busy and Brenda’s too small. Barbara made significant adjustments, including buying a single-story house to accommodate her father’s needs.

When Mr Hulett sold the family home for $713,000, he gave each daughter $200,000. Centrelink viewed these as gifts and reduced his pension. After losing initial appeals, he won at the Administrative Appeals Tribunal. When the government appealed to the Federal Court, the court ultimately supported the family’s position that this was fulfilling a trust arrangement, not gift-giving, despite the daughters saying they would have helped their father regardless of payment.

The Department contended that the Administrative Appeals Tribunal erred in finding that the daughters acted to their detriment by expressing willingness to provide care. The Court examined three key issues:

  1. Whether there was evidence that each daughter made their homes available
  2. Whether the facts could establish detrimental reliance
  3. Whether the Tribunal properly evaluated the detriment’s substantiality

Justice Derrington found that:

  • Sufficient evidence existed that each daughter offered their home
  • The detrimental reliance test for common intention constructive trusts differs from equitable estoppel
  • At least one daughter (Ms Gosson) made significant life changes to accommodate her father
    The Agreement was fulfilled when Mr Hulett distributed the proceeds after receiving care

The Court maintained the distinction between institutional constructive trusts and proprietary estoppel, noting that the former arise by operation of law at the time of common intention, while the latter depends on preventing detriment from unfulfilled promises.

The judge relied on the case of Parsons v McBain [2001] FCA 376; 109 FCR 120, where the Full Court of the Federal Court (Black CJ, Kiefel and Finkelstein JJ) established that in Australia:

  1. Some constructive trusts are proprietary in nature
  2. They exist from the time of the transaction (formation of common intention)
  3. They don’t depend upon a court order to come into existence

The case provides an important clarification of how “detrimental reliance” works differently in these two legal concepts:

In Equitable Estoppel:

  • You must prove you would NOT have taken the action without the promise
  • The detriment must be a direct result of relying on the promise
  • You need to show clear causation (“I only did X because they promised Y”)
  • The test is quite strict and focused on proof of motivation

But in Common Intention Constructive Trusts (as shown in this case):

  • The test is less stringent
  • You don’t need to prove you would have acted differently without the agreement
  • The focus is on whether you acted in accordance with the common intention

The Hulett case demonstrates this difference perfectly:

  1. All three daughters said they would have helped their father anyway (out of love and duty)
  2. Under strict equitable estoppel rules, this admission might have defeated their claim (because they would have acted the same way without the promise)
  3. But for a constructive trust, this didn’t matter because:
  • They had a clear family agreement
  • They actually followed through on the agreement
  • Barbara made real changes to her life (buying a specific house, modifying it)
  • The daughters used the money as intended (to secure housing)

The court emphasized that what matters for a constructive trust is not whether the daughters would have acted differently without the agreement, but that they did act in accordance with the agreement. This is a more flexible and practical approach that recognizes how family arrangements often work – people might do things out of both love and legal arrangement, and the existence of the former doesn’t invalidate the latter.

This distinction was crucial to the outcome because it meant the daughters didn’t have to prove they only helped their father because of the money – they just had to show there was a genuine family agreement that everyone followed through on.