Trusts of the Family Home

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Equitable mechanisms for determining interests in property (a) express trust (b) the resulting trust (c) the remedial constructive trust (d) the institutional constructive trust (e) the common intention constructive trust (most significant to the family home) (f) proprietary estoppel Common Intention Constructive Trust Issues stemming from the breakdown of unmarried couples relationships as identified by Lord Collins in Jones v Kernott [2011]; - couples rarely make arrangements about their respective shares in the property - inflation of house prices causes difficulties when dividing the proceeds of sale Requirements for a common intention trust Lord Bridge outlined the requirements in Lloyds Bank plc v Rossett [1991]; - has there, prior to the acquisition (or exceptionally at some later point) been any agreement, arrangement or understanding reached between the parties that the property is to be shared beneficially. - once such an agreement has been established, the claimant must show that they acted to their detriment or significantly altered their position in reliance on the agreement if both of these requirements are met, it gives rise to a constructive trust or proprietary estoppel examples of such a situation;

Eves v Eves [1975] The male partner told the female that the only reason the property would be registered in his name alone was because she was under 21. In evidence the male partner admitted that this was just an excuse. The court held that there was an agreement between the parties that the property would be shared beneficially. Grant v Edwards [1986] The male partner told the female partner that the only reason the property would be registered in his name alone was because at the time she was involved in divorce proceedings and that if the property were acquired jointly this might operate to her prejudice in those proceedings. The court held that these facts raise a clear inference or common intention that the plaintiff was to have some proprietary interest in the house. in cases where there is no arrangement to share the property beneficially, the courts will look at conduct between the parties, from which to infer a common intention to share the property beneficially. Lord bridge in Lloyd Bank plc v Rossett, held that anything other than direct contribution to the purchase price or payment of mortgage instalments would not justify the interference necessary to the creation of a constructive trust. This was criticised in Stack v Dowden [2007], as it did not take into consideration other non-financial contributions such as the running of the home. In Oxley v Hiscock [2004], the court took the approach that the extent of the claimants beneficial interest in the property would be determined by what the courts though was fair in light of the whole course of dealing between the parties.

In Oxley, Chadwick LJ held that mortgage contributions, council tax and utilities, repairs, insurance and housekeeping were all considered when determining a claimants beneficial interest in the property.

Problem Question

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Jim and Raven, a happy couple, decide to purchase a flat and move in together. Ravens mother decides that she would like to give Raven a contribution to the purchase price of the house as a gift, because Raven has been such a dutiful daughter all of her life, and as a postgraduate student in Art History, has poor job prospects. She gives Raven 50,000 to purchase a 250,000 flat, the remainder of which is raised by way of mortgage. Jim has few savings, and wants to use them in six months time to buy a new surfboard for himself (his second love after Raven). They purchase a small flat in Hackney and Ravens mother insists that Raven be sole title-holder in the event that the relationship breaks down. Jim agrees because he has full confidence that this wont happen. Jim writes self-help books for a living and Raven works as a part-time teaching assistant in her Department. They agree that they will contribute equally to the mortgage payments and the bills. Three years go by Jims books have really taken off and he is a minor celebrity on the new age self-help scene. Raven has given birth to their first child and is struggling to finish her dissertation. They decide to move into another flat as they now need more space. They sell their flat for 400,000, Hackney having become a fashionable locale for media types. There was still 150,000 remaining on the mortgage, and after this is paid off they use the remainder to purchase a 3-bedroom flat worth 600,000 in the same area. This time around, Jim insists on being on title too, and that they be joint-title holders. Raven agrees. Jims book tours take him away from the family home for long stretches at a time, and while in the U.S., he strikes up a relationship with someone else, unbeknownst to Raven. For the next 5 years, he spends half his time in the U.S., and then for another six years, doesnt return at all. During these six years, he doesnt

contribute to any of the mortgage or bill payments, and doesnt even have much contact with their child. Raven, now an emerging authority in the field of 1970s Japanese film aesthetics, meets Paul, a dentist, and wants to marry him. She also decides to sell the house so that she can buy a house with Paul in the leafy suburb of Richmond. Jim returns, wanting to re-unite with Raven and their child, and if that is not possible, to claim 50% of the proceeds of the sale of the house. Advise Jim and Raven Advise Jim and Raven hold the property as joint-title holders. There beneficial interests in the property have not been allocated expressly in writing, therefore there is no express trust. Where there is no beneficial interest, it is to be presumed that the beneficial interest in the property mirrors the legal interest. In Stack v Dowden, Lord Neuberger held that where property is registered in the names of both parties, it is to be assumed that their beneficial interests are to be divided equally. In Jones v Kernott this was described as the default option, however in Stack v Dowden, Lady Hale made the point that this presumption is rebuttable. She stated; in joint ownership cases, it is upon the joint owner who claims to have other than a joint beneficial interest [to show that the beneficial ownership is different from the legal ownership] Therefore is either Jim or Raven is unhappy with the presumption that their beneficial interests are to be divided equally, the onus is upon them to prove otherwise. Rebutting the presumptions

In Stack v Dowden, Lady Hale made the point; the law has indeed moved on in response to changing social and economic conditions. The search is to ascertain the parties shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it She went on to identify a number of factors which were considered significant when determining whether the presumption has been rebutted. These included; (a) any advise or discussions at the time of the transfer which cast light on their intentions. (b) the reason why the house was bought in their joint names (c) the purpose for which the house was acquired (d) the nature of the parties relationship (e) whether they had children for whom they both had responsibility to provide a home (f) how the purchase was financed (both initially and finally) (g) how the parties arranged their finances (h) how they discharged the outgoings on the property and other household expenses. Express common intention Express understanding or agreement to the apportionment of the beneficial interest in the property. this will rebut the relevant presumption, but it does not have the relevant formalities to create an enforceable express trust. this express common intention will be established on the facts, not on consideration of the factors outlined by Lady Hale. Inferred common intention Inferred intent is actual intent which can be deduced objectively from the parties conduct.

The factors outlined by Lady Hale will be of particular importance when looking for inferred common intention. Imputed common intention Imputed common intention was defined by Lord Neuberger in Stack v Dowden; an imputed intention is one which is attributed to the parties, even though no such actual intention can be deduced from their actions and statements, and even though they had no such intention. Imputation involves concluding what the parties would have intended We can see that Jim and Raven had no express common intention, therefore we must look at either their inferred or imputed common intention in order to rebut the presumption that their beneficial interest is to be divided equally. Following criticism of the imputed common intention by Lord Neuberger in Stack v Dowden, Lady Hale and Lord Walker reconsidered the principles underlying the common intention constructive trust in Jones v Kernott, and found two exceptions in which the imputed common intention could apply; (a) resulting trusts (not common in the domestic context unless partners are also business partner) (b) cases where it is clear that the beneficial interests are to be shared, but it is impossible to divine a common intention as to the proportions in which they must be divided. They stated; [if the court] cannot deduce exactly what shares were intended, it may have no alternative but to ask what their intentions as reasonable and just people would have been had they thought about it at the time

Lord Collins added that where imputation of an intention is required, the court must consider what is fair having regard to the whole course of dealing in respect of the property (note Lady Hales factors listed above) Jim and Ravens case may fall into exception (b) should we be unable to infer how they wished their beneficial share in the property to be divided. Where the common intention of the parties changes over time, this is known as ambulatory intention. Ambulatory intention is difficult to prove, and therefore compelling evidence is required before one can infer that. In Jones v Kernott, the prolonged separation of the parties was considered sufficiently compelling to infer ambulatory intention

Inference v Imputation
state of mind. Lord Diplock in Gissing v Gissing [1971];

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A legitimate inference may not correspond to an individuals subjective

the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested from by that partys words or conduct, notwithstanding that he did not consciously formulate that intention in his own mind Nick Piska in Intention, Fairness and the Presumption of Resulting Trust after Stack v Dowden [2008]; subjective intentions can never be accessed directly, so the court must always direct itself to a consideration of the parties objective intentions through a careful consideration of the relevant facts. [] Finding subjective intention can only be made on an objective basis In Jones v Kernott the court held that where imputation of an intention is required, the court must consider what is fair having regard to the whole course of dealing in respect of the property.

Trusts and the Family Home

Pettit v Pettit [1970] AC 777 Gissing v Gissing [1971] AC 886 Goodman v Gallant [1986] 1 FLR 513 Lloyds Bank v Rosset [1991] AC 107 Hammond v Mitchell [1991] 1 W.L.R. 1127 Springette v Defoe [1992] 24 H.L.R. 552 Huntingford v Hobbs [1992] 24 H.L.R. 652 Midland Bank v Cooke [1995] 4 All ER 562 Oxley v Hiscock [2004] EWCA Civ 546 Stack v Dowden [2007] UKHL 17 Fowler v Barron [2008] EWCA Civ 377 Jones v Kernott [2011] UKSC 53 Geary v Rankine [2012] EWCA Civ 555

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Gardner and Davidson, The Future of Stack v Dowden (2011) 127 LQR 13 10/01/2014 09:42:00