#14650 - Trusts Of The Family Home - GDL Land Law

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Trusts of the family home

Acquiring or quantifying a property right which has been created informally (i.e. not legally)

Resulting trust:

• Money must be towards the house; proportions in ratio of contribution

  • Curby v Parker – contribution to solicitor’s fees at the time of acquisition could not form a resulting trust

  • Mumford v Astil – discount against council housing qualifies as a contribution

  • Midland Bank v Cook – 5% contribution; judge urged counsel to go down constructive trust route

  • Stack v Dowden majority confirmed that resulting trust is not the most appropriate method in a family home situation – it is too rigid

Common intention constructive trust:

• A common intention on which they have relied to their detriment

  • LLoyds Bank v Rossett: per Lord Bridge, suggested there are 2 ways to establish common intention and doubts whether anything else will do

    • Express assurances - verbalising the common intention of co-ownership. This is an imperfect art, but needs to go beyond (usually) a lifetime tenancy, and needs to go to the legal ownership of the property. A statement that can be objectively assessed to do this

    • Inferred common intention through direct contributions to acquisition - though this is also evidence of a resulting trust, in this context they can be used as evidence of a common intention of co-ownership, and they can also be the detriment required

      • Eves v Eves: assurances that weren’t meant as to beneficial ownership (in this case that she wasn’t old enough to go on the legal title but he would’ve put her on if she were). equity

      • Burns v Burns – 19 years’ homemaking found no intention as no financial contribution or express assurance

      • Oxley v Hiscock – (orthodoxy) indirect contributions must be accompanied by express assurances

        • Le Foe, however, substantial indirect contributions to the mortgage founded inference per Nicholas Mostyn QC

      • Stack v Dowden criticised (obiter) the categorisation; a “wide” view is that mortgages drag out the process of house buying until after transfer -> though Lord Bridge is not technically overruled

        • “the requirement for direct contributions to establish a common intention constructive trust, in the absence of evidence of a shared understanding based on express discussions, is very definitely being undermined” Luke Barnes, 3 Doc Johnson’s Buildings

  • Stack v Dowden per Lady Hale, added the third category of inferred intention from parties’ whole course of conduct (in QUANTIFICATION case)

    • Jones v Kernott seems to extend this to the imputation of intention, however Capehorn v Harris & Barnes v Phillips has suggested imputation will not stand

    • Naturally inference may bleed into imputation via judicial discretion & fact finding

  • What is detriment?

    • Lloyds Bank v Rossett – decorating wasn’t sufficient

Quantifying the share:

• Acquisition:

  • Express assurances reflected

  • Inferred: 30-70%

    • Lord Kerr in Jones v Kernott suggests a fair quantification can be imputed, but Lady Hale doubted this & sticks to a posteriori inference

• Quantification (rebutting the strong presumption of beneficial joint tenancy):

  • Abbey National v Stringer – 100% equity on mother’s side

  • Jones v Kernott – 50:50 to 90:10

    • This may cause an issue for 3^rd parties i.e. creditors – how would they infer such an extreme incompatibility between law & equity?

Can Stack v Dowden be applied to acquisition cases?

• Technically Stack is not binding precedent on acquisition cases – though lower courts will not be permitted to ignore it

• Abbott v Abbott Lady Hale & other judges of Stack use the principle in an acquisition case (PC)

• Capehorn v Harris & Barnes v Phillips CA using Stack in acquisition

Is the law relating to trusts of the family home coherent?

The case law surrounding the family home documents a shifting judicial approach when giving expression of parties’ intentions in both sole-name and joint-name disputes. The development of the common intention constructive trust has led to heavy-weight changes in co-ownership and will be analysed as a response to the changing tide of social perceptions regarding ‘value’, something which is no longer restricted to cold, hard cash. The criticism of doctrinal incoherence levied against these recent trends must also be visited; as the broadening of judicial discretion in this area poses challenges at both technical and policy level. The lack of explicit machinery has been seen as an affront to legal certainty whilst other commentators have focused on the paternalistic danger of blurring the line between inference and imputation. Indeed the general consensus that developments have left the area in an uncomfortable hybrid between family law and land law is at the core of the debate. It will be suggested, however, that such interdisciplinary blending should not be viewed with knee-jerk hostility but rather as a pubescent judicial innovation urged by changing family models.

The historical development of co-ownership in the matrimonial setting may be seen as an illuminating comparison to emerging cohabitation principles. The courts were given wide discretionary powers under the Matrimonial Causes Act 1973 to make property adjustment orders where previously spousal rights were governed by trust principles. Sections 25(f) and (g) take into account non-financial contributions and the conduct of the parties. The Law Commission’s 1978 report advocated a statutory presumption of a beneficial joint tenancy in matrimonial property based on a “joint enterprise view of marriage” (Douglas, 2004, p. 106) and, despite the corresponding Bill failing to pass, this view has been consolidated by the court’s use of the 1973 Act. Amidst growing social pressure the Commission expanded their remit to unmarried couples in 2002 and again in 2007. Though Parliament has not taken the opportunity to make statutory machinery available to unmarried couples, the report evidences the cautious introduction of familial unity and joint entity concepts to unmarried relationships. Douglas suggests that the lack of statutory footing is a result of the Commission’s inability to produce a model “of sufficient flexibility” to fit every type of home-sharing relationship, and thus it “threw the problem back to government and the courts” (Douglas, 2004, p. 107). The conceptual extension of the legal principles governing married couples to unmarried partners, though not made out in statute, is no doubt the petri dish in which the case law has bred.

The courts have nonetheless manoeuvred warily in the absence of guiding legislation and have been slow to depart from a strict a posteriori approach. Millet J summarised the position of a claimant in a sole-name dispute thus; “it is not enough for her to persuade me that she deserves to have such a share. She must satisfy me that she already has it”. Indeed it is this attitude which explains the court’s “rigorous enforcement” of express declarations of trust (Hayward, 2013, p. 241). The creation of the constructive trust in acquisition cases was therefore predicated on very narrow and easily quantifiable factors in the absence of express agreement. Lord Diplock in Gissing v Gissing [1971] established that the trust required express or implied agreement, and also detrimental reliance as equity will not assist a volunteer. Implied agreement, he stated, “may be possible to infer…from their conduct” at 906, though the types of permissible conduct were limited to financial contributions referable to the acquisition of the property; the broadest legitimate contribution being payments covering household bills with the purpose of enabling the mortgage payer. This innovation constituted a narrow but important departure from the mechanical certainty of the resulting trust, and can be seen to bear up the tension between want of certainty and policy motivations to prevent that which “would be inequitable to allow” at 905.

This framework was used (or perhaps distorted) by Lord Denning to give life to a period of judicial activism throughout the 1970s and early 1980s where he absorbed contributions “not merely in money – but also in keeping up the house…” into the doctrine of detriment. D. J. Hayton points out that Lord Denning in the Court of Appeal, though motivated by “a liberal process, founded on large principles of equity”, was not strictly in line with House of Lords authority and constitutes a first-wave example of equitable principles driving at the boundaries of technical legal practice (Hayton, 1984, p. 132). Perhaps unsurprisingly, his brand of assumed discretionary power, hinged on unwritten standards of “justice and good conscience”, was quickly shut down by the decisions of Burns v Burns [1984] and Lloyds Bank v Rosset [1991]. It is suggested, however, that the return to more rigid or ‘coherent’ doctrinal principles did not, in fact, coincide with a more ‘convincing policy analysis’. Rather, Lord Bridge’s overly restrictive interpretation to the acquisition of an equitable share through an implied agreement produced manifest unfairness when considering the fact that the late 20^th century was a still a time of gendered social roles. Mrs. Rosset had no choice but to accept conveyance into her husband’s sole name due to the trustees’ insistence and was not protected by matrimonial statutory powers because her action was against a creditor. The case is a neat symbol of the disinterested unfairness sometimes borne of rigid legal...