Trusts of Homes

Question 1

How can equitable interest in property be found

Answer 1

Express trust
Resulting trust
Constructive trust

Question 2

Express Trust

Answer 2

Legal owner(s) can deliberately generate in interest in land for another person by expressing in writing that they hold land on trust for another

Question 3

Resulting trust

Answer 3

A person may also claim an equitable interest in another’s property by contributing to the purchase price. This is a resulting trust and, unless it can be established that the money was given by gift or loan, a claimant may have an equitable interest that is directly proportional to their contribution to the purchase price.

Question 4

Constructive trust

Answer 4

To establish an equitable interest following this type of trust, it must be demonstrated that the legal owner and claimant share a common intention that the claimant should have some interest in the land. As express trusts are uncommon, it is the law of resulting trusts and constructive trusts that have been subject to judicial consideration

Question 5

Cases for birth of common intention

Answer 5

Pettit and Gissing

Question 6

Pettit

Answer 6

Lord Diplock adopted a nuanced approach stating that proprietary interest in the family asset depended upon the parties common intention as to what those interests should be. This foreshadowed the establishment of the modern basis for a common intention constructive trust in Gissing

Question 7

Gissing

Answer 7

In this case, a matrimonial home was purchased by and registered in the name of a husband, the wife contributing to the expenses of the family. She oversaw the upgrading of the garden and acquired some soft furnishings. They separated and the wife sought a beneficial interest in the family home. The house of lords found that no common intention between the parties sufficient to support a trust could be identified. The key principle however, is that the doctrine of common intention was accepted as , governing equitable ownership.

Question 8

After Birth

Answer 8

The principles recognised by Lord Diplock in this case were influential and by the 1990s common intention constructive trusts became a well-recognised branch of trusts applied to cases involving family homes. However, after this decision the principles went in a number of directions which put pressure on the House of Lords to introduce some legal certainty. This led to the decision in Lloyds Bank v Rosset

Question 9

Lloyds bank facts

Answer 9

In this case, Mr and Mrs Rosset decided to renovate a farmhouse as a joint venture. House registered in husbands name. Mrs Rosset oversaw all the building work – interior design was her contribution to the project. Husband acquired property using a mortgage, without wife’s knowledge, but unable to keep up with repayments thus Rosset’s had to show that Mrs Rosset had substantial equitable interest in the property. It was held she had no equitable interest because merely supervising renovation was considered to be too insignificant to acquire an equitable interest

Question 10

Lloyds Bank two ways CICT

Answer 10

First - Common intention evidenced by agreement. This is the parties creating an express agreement, arrangement or understanding between them before the date of acquisition as to their respective rights in the property.
Second – Common intention evidenced by conduct. The only form of conduct Lord Bridge was prepared to countenance was contribution to the purchase price or mortgage instalments.

Question 11

Lloyds bank analysis

Answer 11

It can be seen therefore, that Rosset provides for a strict legal test. At this stage in the development of a common intention constructive trust, there was some clarity. Lord Bridge clearly stated the only two ways a CICT can be formed. Although this seems to adhere to the strict rules inherent within property law, the test may be criticised. This assumes firstly, that the parties in these types of situations concentrate on the legal niceties in such a way as is sufficient to reach a clear agreement concerning the proprietary rights, prior to the property being acquired. The issue with this is parties rarely recall events with clarity in an unbiased manner. Secondly, as only people who contribute to the purchase price acquire rights, this disadvantages people who do not have money. Historically this is women because they generally take career breaks to have children and there is still in existence a gender pay gap demonstrating women are paid less than men. Thus, although this approach follows strict legal rules it perhaps amounts to unfairness due to its limited considerations.

Question 12

Next approach

Answer 12

Balancing sheet approach

Question 13

Cases for balancing sheet

Answer 13

Springette
Stack

Question 14

Springette facts

Answer 14

In this case, cohabitees bought, in their joint names a council house of which one of them had been the sitting tenant. After crediting the former tenant with the discount in the purchase price, the contributions of each party stood at 75% to 25%. The court of appeal followed a resulting trust analysis, meaning the parties beneficial interest followed the proportions they had contributed to the price of the property.

Question 15

Stack - Balancing sheet

Answer 15

. Lord Neuberger, dissenting in Stack, favoured the resulting trust approach. He found, where the only additional relevant evidence to the fact that the property has been acquired in joint names is the extent of each party’s contribution to the purchase price, the beneficial ownership at the time of acquisition will be held, in my view, in the same proportions as the contributions to the purchase price. That is the resulting trust solution. He provides it is the answer which equity has always favoured, both historically and more recently. This approach was described in Dryer v Dryer as the general proposition supported by all the cases. He favours the consistency of the approach.

Question 16

Who says what about resulting trust approach

Answer 16

Yee Ching Leung strongly favours this approach for several reasons. - 1. He argues that it consolidates the fundamental values of land law, certainty and consistency. The rule is simple as it only focuses on financial contribution.

2. This fits into existing law, historical origin going back to Dryer v Dryer. Still ruling within the boundary of existing body of trust law reinforcing legitimacy.
3. Matter of policy, preserves flexibility of the law without widening the discretion of judges unjustifiably.
4. Confines discretion within the limit of the rule of law, respecting separation of powers.

However, as argued by Sloan, this is not dissimilar to the Rosset test. The focus here is on direct financial contributions. It may be reiterated, this is clearly prejudicial to legal non-owning cohabitants who could provide indirect financial or purely domestic contributions to the home. Thus, although this provides clarity, and legal certainty, this could lead to unfairness

Question 17

After balance sheet approach

Answer 17

Midland Bank and Oxley

Question 18

Midland Bank facts

Answer 18

In Midland Bank, the Cookes were a married couple and midland Bank sought repossession of their home when they could not meet mortgage repayments. The needed to show Mrs Cooke had a substantial right in the property. The couple lived together for several years and had children. Mrs Cooke played the role of mother and housewife. However, when Mr Cooke was unemployed or they needed extra money, Mrs Cooke would seek part time work. She also contributed to utility bills and the mortgage on occasion.

Question 19

Midland Bank judgement

Answer 19

Waite LJ found the couple were a true partnership and held they should have equal shares in the matrimonial home. To avoid the test set out in Rosset, Waite LJ surveyed authorities, beginning with Gissing and showed it was largely contradictory. Therefore, he found it was the duty of the judge to undertake a survey of the whole course of dealing between the parties. He followed the old equitable doctrine equality is equity and Mrs Cooke acquitted a half share in the property.

This approach was also taken in Oxley. Therefore a further approach in determining common intention was established, ensuring a. wider enquiry as to the parties whole course of dealings in relation to the property was taken. It can be seen here, that the courts have moved away from the strictness of Rosset and resulting trust analysis and have moved towards a fairer approach in a way that does not unfairly discriminate against the female partner.

Question 20

Who says what about Midland

Answer 20

. However, Yee Ching Leung who provides that assessing the whole course of dealing provides for more unpredictable results and is not clear or coherent, thus a resulting trust analysis should be favoured.

Question 21

Stack

Answer 21

The House of Lords were then faced with an common intention constructive trust case in 2007, that of Stack v Dowden. Here an unmarried couple bought a house together. She contributed the larger part of the cash contribution, approximately 65% and it was held she should receive a 65% share of the equitable interest.

Question 22

Rationales Stack

Answer 22

Baroness Hale, whom the majority agreed found that if there is more than one person registered on the legal title of the home then those legal owners should be presumed to be the owners of the equitable interest in that home equally; whereas, if there is only one person registered on the legal title then that sole legal owner should be presumed to be the sole owner of the equitable interest in that home. There are presumptions that could be rebutted by evidence which suggested the parties common intention was something different.

Baroness Hale held: the search is to ascertain the parties’ shared intentions, actual, inferred, or imputed, with respect of the property in light of their whole course of conduct in relation to it.’ These were upheld in Jones v Kernott. Therefore, BH approved the general law suggested by Oxley (Midland Bank too), in particular taking into account the whole course of dealing between the parties when assessing common intention.
However, unlike Oxley, the majority of the HoL did not agree that the court could simply identify what they considered to be fair, if no common intention can be identified. Her Ladyship did not set out a clear test such as Rosset, but hoped the Law Commission would generate clear proposals for legislation.

Question 23

Stack analysis

Answer 23

This case shows, therefore, that the courts are willing to adopt a more flexible approach than the one seen in Rosset, taking into account the whole course of dealing between the party. However, here they were unwilling to go the step further, and focus on a test of fairness, as suggested by Oxley/ Provides a demonstration that the courts are struggling to find the balance between certainty and fairness. It can be seen BH was looking for this legal certainty and clearness, as she conveyed her hope that the use of the TR1 land registration form would mean that solicitors would identify their clients wishes as to ownership of the property.

Question 24

Jones

Answer 24

It was held, in this case, when parties seek to show that the legal and equitable interests differ either at the time of acquisition or the relevant property or later, their common intention is to be deduced objectively from their conduct. It is necessary to ascertain the parties common intentions as to what their shares in the property would be in light of their whole course of conduct in relation to it. Where it is not possible to ascertain the intention each party is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property. A resulting trust analysis was considered to be inappropriate in domestic cases involving family homes

Question 25

Jones analysis

Answer 25

It can be seen, therefore, that the courts have succumb to the fairness side of the balance. Fairness here is a fall-back position if no common intention can be identified. Arguably this movement is a progressive step as it liberates the courts to identify the appropriate outcome in any given steps. Therefore it is an equitable step away from the obscurity of common intention. It may be argued here that this is perhaps the way forward. The idea of common intention is described as phantom by the new Zealand courts and has been rejected across the common wealth because of the inability to find what parties actually intended. Other courts have used the concepts of fairness and unconscionability for this matter. However, this has not gone without criticism.

Question 26

Who says what Jones

Answer 26

Dyson argues that, including factors which are not direct contributions to the price of the property would include factors are entirely devoid of any connection to the property right being sought. The courts broadening the range of qualifying contributions illustrates that the CICT is not linked to land law but is a vehicle for resolving cohabitation disputes because it provides access to a large proportion of the parties assets. Dyson suggests that the courts should recognise the law of cohabitations is a family law issue

Question 27

Conclusion

Answer 27

However, land law need not be determined by only strict legal rules and should, arguably, not be viewed in a vacuum but as an cog in the wheel that is English and Welsh law. Therefore, embracing equitable doctrines, for example, to provide for a fairer outcome for the individual, seems a logical development in the law and the courts favouring fairness when on balance with strict legal rules should, perhaps, be welcomed.

Question 28

Jones facts

Answer 28

Ms Jones was a mobile hairdresser and Mr Kernott was an ice-cream salesman. Jones bought a mobile home in her sole name and Kernott moved in two years later. They had two children. A few years later Jones sold her mobile home and they bought a property in their joint names. Jones contributed £6000 in cash by way of deposit, with the remainder coming by way of endowment mortgage in the parties’ joint names. Kernott contributed £100 per week to household expenses with Jones paying for everything else. Couple took out joint loan to extend the property, Kernott and friends doing the building work with 50% increase in the value of the property. Kernott left after 8 years of cohabitations. Over 14 years Ms Jones met all the expenses associated with the property and Kernott made very little contribution to the maintenance of his two children. Jones sought to sell the property and Kernott claimed he had an equitable interest. Supreme Court found on the facts the equitable interest should be divided by 90:10 in favour of Ms Jones which broadly reflected their financial contributions over the 23 years.

Question 29

Unconscionability approach

Answer 29

In Cox v Jones, Mann J focused on avoiding the claimant being treated unconscionably. Mr Jones and Ms Cox were barristers, Jones was older and richer and they bought a country house in Essex together but put it in his sole name and he paid. Cox spent a large amount of time supervising renovation work at the house instead of trying to develop her legal practice in London. Couple bought a flat in Islington where Cox negotiated a reduction in the purchase price because she knew the vendor. Held that, to avoid Cox being treated unconscionably due to the land being placed in Jones’ name, his lordship held that Cox should acquire rights in the Essex house though supervising the renovation and the detriment of not concentrating on her legal practice. Cox acquired ¼ in the equity. This approach permits the courts to make whatever order they consider fit to avoid unconscionability

Question 30

Oxley facts

Answer 30

Mrs Oxley and Mr Hiscock were a couple who bought a home together, with Mrs O paying 28% of purchase price and Mr H paying 48%. They both contributed to household expenditure, improvements, maintenance and paying off the mortgage. Chadwick LJ held Mrs O was entitled to 40% share on the facts, not equal in light of their initial cash contributions. Judge found that when determining the share the court must consider the whole course of dealing between them in relation to the property. Includes outgoings mortgage, council tax, utilities, repairs, insurance and housekeeping. Baroness Hale confirmed in Stack and the Privy council case Abbott v Abbott that the law has moved on since Rosset and the parties’ whole courts of conduct in relation to the property must be taken into account when determining their shared intentions as to its ownership