Trusts of land and the development of the common intention constructive trust Flashcards
(13 cards)
definition
A common intention constructive trust (CICT) arises when two or more unmarried parties share a common intention regarding the beneficial ownership of a property, but legal title does not reflect that common intention
he respective shares of the parties will be determined by family law legislation, such as the Matrimonial Causes Act 1973.
However, no such legislative framework exists for unmarried, cohabiting partners. Parliament has repeatedly resisted the call to introduce new legislation.
In such cases, Equity intervenes to establish and/or quantify a beneficial interest in the property in the claimant.
A claimant must establish both common intention and detrimental reliance.
Maxims:
equity follows the law: when joint legal title is purchased without making an express declaration of trust as to the quantification of the beneficial interests, a court presumes joint beneficial title
equity is equity: the quantification of the beneficial interest should match that of the legal interest, unless a claimant can demonstrate a common intention to quantify the beneficial interest differently.
The Resulting Trust in the Family Home
historically, presumed resulting trust = dominant way of assigning beneficial interest in family home to respective cohabiting partners
common circ = one party contributed to purchase price of prop but it is registered in the name of another - presumed the payer intended the property to be held by other party on trust for payer whose beneficial interest would be limited to value of financial contribution
but PRT struggle with other considerations e.g. financial contrib to mortgage/ child care
ascertaining the beneficial interests of the respective parties by reference to their purchase price contributions would no longer provide an accurate reflection of their actual beneficial interest - rising house prices made reliance on initial contribution redundant
Trusts of Land and the decline of the resulting trust in family home contexts
3 leading cases:
Pettitt v Pettitt [1970] AC 777
Gissing v Gissing [1971] AC 886
Lloyds Bank v Rosset [1991] 1 AC 107
Lloyd’s Bank v Rosset - explain why transition was necessary - arent calc beneficial interests individually based on own contributions but sharing and quantifying between the beneficiaries - contextual nature of parties - sharing their house as a home not advancing monies towards investment assets
Justifying the decline of the resulting trust in family home contexts
Stack v Dowden - when there is no close intimate relationship, only purchasing property as business partners then normal there is a trust based on contribution but when the property is a home not an investment, beneficial interest can shift over time according to common intention - used to have to put it in writing if not then presumed resulting trust to give rise to beneficial interest, but now if no express declaration it can shift over time e.g. one partner = unemployed and the other takes over financial contributions - taking on more than half resp - common intention of person to take on more than half of beneficial interest
Jones v Kernott - - common intention of constructive trust = supplanted by presumed resulting trust in family home context
The Common Intention Constructive Trust and cohabiting partners
In cohabiting ‘family home’ contexts - follow the maxim Equity follows the law and presume that if the home was bought in joint legal title without an express declaration as to the quantification of the beneficial interests, the intention of the parties was also to hold beneficial title jointly too - onus on claimant that quantification should be something other than joint beneficial interest
describe the cohabiting partners as being joint tenants both in law and in equity
establish a common intention constructive trust, the onus is on the claimant to rebut the presumption of joint beneficial title, and instead to provide evidence that the parties’ common intention was for the claimant to hold some other quantification than a joint beneficial interest - need to demonstrate greater financial contributions/non finance contributions and other party consented and claimant relied on that promise to their detriment
The three variants of intention
(1) Express intention
conferred by an express declaration of trust, which itself must be made in writing pursuant to s 53(1)(b) Claimant can point to written ev to show they have a beneficial interest and how much of a beneficial interest they have - normally takes place at time of purchase or can make one subsequently after purchase, not hard to make an express declaration of trust e.g. even over email if you have signed off on it
(2) Inferred intention
- where one person = legal owner and other isnt - beneficial interest in claimant can be inferred by conduct, once established non legal owner has beneficial interest or in joint legal owners where there is a presumed joint beneficial interest then quantification can be inferred from parties conduct - actual intention but just not written down
(3) Imputed intention
- joint ownership, presumed their is a joint beneficial interest in single ownership, if common intention of legal owner was there was to be a beneficial interest of non claimants - once beneficial interest in claimant has been estab, quantification can be imputed by court if not enough ev by parties ab common intention - existence of beneficial interest in claimant in single legal ownership cases cannot be imputed, must be from actual intention of sole legal owner express or inferred
The Common Intention Constructive Trust in practice:
(1) Single ownership cases –
Capehorn v Harris - single ownership cases involve two distinct stages of inquiry:
- (i) identification of an actual agreement, express or inferred but not imputed, as to the sharing of the beneficial interest; not an imputed agreement - does a beneficial interest in non owner acc exist? Look in writing or infer from conduct - cannot impute a beneficial interest in non legal owner - (ii) quantification of the beneficial interest, which can involve imputation of an intention that each party is entitled to the share of the beneficial interest which the court considers to be fair having regard to the whole course of dealing between the parties in relation to the property. - where not possible based on evidence courts can impute a quantification of beneficial interest
Curran v Collins - It must be established that the party who is asserting a share in the beneficial interest had relied to their detriment on the agreement. - once estab ben interest then look from common intention, has claimant relied to detriment on promise they would be getting a proprietary interest
Geary v Rankine - as long as intention that non legal owner would receive beneficial interest of some kind and court has tried to do quantification - when not enough ev to give rise to inferred intention, court can impute quantified intention
The Common Intention Constructive Trust and rebutting the presumption of joint beneficial title
(2) Joint ownership cases – Stack v Dowden
Mr and Mrs purchased home in joint legal title - Ms = 65% purchase price and remainder provided by loan secured by mortgage in parties joint names, no express declaration as to their beneficial itnerests made
parties = separate bank, saving and investment accounts and mortgage paid off with Ms paying over 60% capital
parties separated 2002 and Mr stack successfully applied for an order for sale and one half of sale proceeds from home, Ms appealed and CoA held she was entitled to 65% proceeds
Baroness Hale: case by case basis, looking at more factor than financial contributions as well - looking at common intentions during time of purchasing property, why purchased jointly, nature of rel, if they had children and who contributed more, how purchase was financed, how parties arrange finances e.g joint savings account or informal agree that they share expenses - don’t just focus on initial purchase price contribution but more holistic factors too
Legal controversies in Stack v Dowden [2007] 2 AC 432
1) First controversy: At para [60] of her speech, Baroness Hale noted that ‘[t]he search is to ascertain the parties’ shared intentions, actual, inferred or imputed.’ - actual and inferred intentions are no different, what she meant was parties shared intentions, express or inferred and if that fails the imputed intention
(2) Second controversy: At para [49], Baroness Hale observed obiter dicta that ‘No one now doubts that such an express declaration of trust is conclusive unless varied by subsequent agreement or affected by proprietary estoppel.’ importance of written declaration - settles quant of ben interest unless sub agree or estoppel
By ‘subsequent agreement’, Baroness Hale almost certainly meant ‘a subsequent express declaration of trust by deed.’ However, the interpretation of this phrase has been stretched beyond this also to include informal arrangements not made pursuant to s 53(1)(b) LPA 1925: Nilsson v Cynberg [2024] 3 WLR 969.
Applying Stack v Dowden in the Supreme Court:
Jones v Kernott
Ms Jones and Mr Kernott started living together in 1983, in a mobile home which Ms Jones had bought solely two years earlier
1985 - sold mobile home and proceeds used for deposit for house whihc was bought in joint names - Ms Jones = greater financial contributor - no writing so presumption of ben title and parties rebutting saying greater interest
couple separated 1993 - Mr K = no further contribution ans Ms = maj child care, maint home and making fianncial contributions
failed to sell house and although initial common intention = share home equally Mr turned back on ti for 14+ years where most increase in value occurred
Wants 50 percent proceeds for sale of home - common intention constructive trust and look at her contributions and his lack of = 10 percent proceeds of sale - quantified mrs ben interest as 90 percent
Summarising the requirements for a Common Intention Constructive Trust:
(1) Single ownership cases –
Where the claimant is NOT a registered joint proprietor – and therefore they do not share joint legal title with the defendant – the onus is on them to demonstrate that a separate beneficial title exists which was either divested in them by the express declaration of the defendant, or that it can be inferred from their common intentions. The existence of beneficial title CANNOT be imputed by a court.
Once the existence of a separate beneficial title has been established, the quantification of the beneficial interest CAN be imputed by a court.
(2) Joint ownership cases –
Where the claimant IS a registered joint proprietor, the courts presume that a joint beneficial title follows the joint legal title. The existence of a beneficial title is not therefore in question, but rather the quantification.
The onus is on the claimant to rebut the presumption of joint beneficial title, by either: (1) providing evidence of an express declaration of trust; (2) by submitting to a court factual evidence from which an alternative common intention as to the quantification of the beneficial interest can be inferred, or; (3) by submitting factual evidence from which an alternative quantification can be imputed by a court, based on the most likely intention rather than the actual intention.
Detrimental reliance
essential if equity is to intervene and find common intention constructive trust
(1) Single ownership cases –
- Archibald v Alexander [2020] EWHC 1621 (Ch) [32]: without detrimental reliance, the common intention of the parties merely amounts to a promise, which would not be enforceable in Equity: Equity will not assist a volunteer. - Amin v Amin [2020] EWHC 2675 (Ch) [32] (Nugee LJ): the payment of mortgage repayments by the claimant could amount to detriment where there was also common intention to share the home.
(2) Joint ownership cases –
- Hudson v Hathway [2023] KB 345 [107] (Lewison LJ): ‘I do not, therefore, detect in either Stack v Dowden or Jones v Kernott any intention on the part of the court to abrogate the long-standing principle that what makes an unenforceable agreement or promise enforceable in equity is detrimental reliance. The principle of detrimental reliance was not challenged in either case [primarily because it was so obvious on the facts!], and that is why it was unnecessary for the court to deal with it.’
Expanding the CICT beyond cohabiting family home contexts
Investment property contexts –
Marr v Collie [2018] AC 631:
This is a Privy Council case, so is only persuasive on the English courts and not binding, but it nevertheless demonstrates a further expansion of the CICT even beyond that which had already taken place in Stack and Jones.
Mr Marr and Mr Collie were in a relationship, and had purchased numerous real estate properties as investments. The properties were registered in joint title, but Mr Marr was primarily responsible for the payments associated with the properties. No express declarations as to their respective beneficial interests were made.
The couple separated and the question arose as to said interests.
Here, the Privy Council held that the CICT is not confined to ‘the domestic setting’ (Lord Kerr), and could be extended to contexts where property had been jointly purchased as a commercial investment if there was a personal relationship between the parties.
