#1930 - Common Intent Constructive Trusts - Land Law

In the family home – the “common intent” constructive trust

The express agreement constructive trust

Basis

• Lloyds Bank plc v Rosset [1991]:

  • Lord Bridge:

    • This arises where at some time before acquisition

      • 1. There has been any agreement/understanding reached between then that the property is to be shared beneficially.

      • 2. AND C has relied on this to her detriment in order to give rise to proprietary estoppel or a constructive trust.

Requirements

• Evidence of agreement?

  • Lloyds Bank plc v Rosset [1991]:

    • Lord Bridge:

      • Cases of Eves v Eves where H made excuse to W that would have put house into joint names had W not been under 21

        • = evidence of agreement for beneficial interest but sole name legal ownership.

  • Criticism of reasoning + responses

    • Gardner: Excuses don’t provide evidence of agreement if merely excuses – shows only that one party is not agreeing with another.

      • Glover and Todd: BUT we’re looking at objective intentions here – whether excuses etc. would lead reasonable person to believe from utterances that H was declaring himself trustee.

      • Mee: agreement can be inferred where understanding that will share beneficial ownership, but H convinces W that there is some technical reason why they can’t be legal owners.

        • i.e. H is not allowed to profit from his deception and W’s detrimental reliance that whatever the legal situation, they will share the house.

• Detrimental reliance

  • Grant v Edwards [1986]:

    • Nourse LJ:

      • Response to agreement requires conduct on which the woman could not reasonably have been expected to embark unless she was to have an interest in the house.

    • Browne Wilkinson VC:

      • Reference to estoppel will be helpful here.

  • Midland Bank v Cooke [1995]:

    • Waite LJ:

      • Court won’t give effect to conduct and expenditure which could happen in any family life( E.g. decoration and household expenses)

        • And call it detrimental reliance.

• A promise of rights in the future is enforceable?

  • Hammond v Mitchell [1992]: H said after the buying of a bungalow in his own name; “don’t worry about the future, because when we are married [the house] will be half yours anyway, and I’ll always look after you and [our child]”

    • Waite J:

      • In relation to the bungalow there was express discussion which, although not directed with any precision as to proprietary interests,

        • was sufficient to amount to an understanding at least that the bungalow was to be shared beneficially.

      • She acted to her detriment in that she gave her full support on two occasions to speculative ventures secured on the entire bungalow property

        • An indebtedness to which the house and land were all committed up to the hilt

    • Herring: controversial, because it looks like a promise relating to rights in the future, rather than being agreements to share in the present

  • James v Thomas [2007]: H became sole beneficial owner when he bought his siblings’ shares in a house by way of a mortgage. Later, he met W and they lived together as man and wife. H and W both worked on improvements to the house. said “these improvements will benefit us both” and “if I die you will be well provided for” to W. H then died.

    • Chadwick LJ

      • There is no reason to think that the observation “this will benefit us both” (in relation to the business)

        • was more than a statement of the obvious: what was of benefit to the business was of benefit to both H and W, for whom the business was their livelihood

      • As for “you will be well provided for”

        • That is not a representation that W was to have a present proprietary interest in the property —

          • or as a representation that she would have a proprietary interest in the property during Mr Thomas's lifetime.

        • It was, as it seems to me, a representation as to what the position would be after H’s death if they were still living together.

• When must the agreement take place?

  • Lloyds Bank plc v Rosset [1991]:

    • Lord Bridge:

      • This arises where at some time before acquisition, or exceptionally at a later date

        • There has been any agreement/understanding reached between then that the property is to be shared beneficially.

  • James v Thomas [2007]: H became sole beneficial owner when he bought his siblings’ shares in a house by way of a mortgage. Later, he met W and they lived together as man and wife. H and W both worked on improvements to the house. said “these improvements will benefit us both” and “if I die you will be well provided for” to W. H then died.

    • Chadwick LJ

      • If the circumstances so demand, a constructive trust can arise some years after the property has been acquired by,

        • and registered in the sole name of,

          • one party who (at the time of the acquisition) was the sole beneficial owner

        • But, as the cases show, in the absence of an express post-acquisition agreement,

          • a court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of acquisition.

      • The judge here determined that there was no such express agreement.

The inferred agreement constructive trust

Basis

• Lloyds Bank plc v Rosset [1991]:

  • Lord Bridge: This arises where

    • 1. There is no agreement or arrangement to share beneficially

    • 2. But court can infer from conduct of parties a common intention to share the property beneficially

      • and this was relied on to give rise to a constructive trust.

        • For this, you’re going to need some contribution by C to the purchase price or repayment of mortgage payments.

1. “Interest” Issue – was it intended that the parties should share the beneficial interest in the property?

• Joint names may get you over the first hurdle w/o need for other evidence

  • Stack v Dowden [2007]:

    • Baroness Hale:

      • It is common ground that a house being in joint names will be sufficient to get over this hurdle

        • and establish that both had some beneficial interest.

• But what about where the house is in one name alone? Do you need direct financial contributions?

  • Lloyds Bank plc v Rosset [1991]:

    • Lord Bridge: In absence of agreement to share beneficially

      • You’re going to need some contribution by C to the purchase price or repayment of mortgage payments.

  • Oxley v Hiscock [2005]: H and W each contributed money to buy a house, registered in H’s name only. They divorced and W wanted the court to declare a beneficial interest.

    • Chadwick LJ:

      • A case my fall within the second class if common intention can be inferred from conduct;

        • and direct contributions to the purchase price will be conduct from which such common intention can readily be inferred.

        • This is the inference that each party should have some beneficial interest

          • But without, necessarily, leading to the further inference that their respective shares should be proportionate to the amount of the direct contributions

• Or will indirect contributions suffice?

  • Pettit v Pettit [1969]: X tries to claim beneficial interest w/o direct contribution by alleging substantial improvements made by him to house.

    • Held not a chance, sonny jim.

      • [although here improvements were very minor – court may take different view if improvements were substantial]

  • Gissing v Gissing [1970]: H has house in sole name. W contributes indirectly by paying mortgage payments/caring for kids, but not to purchase price.

    • Lord Reid (min): Majority view is odd

      • Means where W makes direct contributions to purchase price by paying something to vendor/building society

        • She gets beneficial interest in the house although nothing was agreed about this at that time

      • But where contributions are indirect

        • She gets nothing unless if at time of acquisition there was some agreement that she would get a share.

          • No good reason for this distinction and unworkable in family context.

  • Hopkins: Hard to disagree with Lord Reid’s judgement that determination of rights in the home should not be dependent on how a family’s finances are arranged.

    • Le Foe v Le Foe [2001] C contributed relative small indirect payments so as to enable Y to pay off the mortgage on a house solely within his name.

      • Held common intention can be found here.

• Did Stack change anything?

  • Stack v Dowden [2007]: H and W have house in joint names, but finances rigidly separated. W claims that not equal beneficial shares in property.

    • Lord Walker:

      • In Rosset Lord Bridge only considered direct financial contributions as relevant to whether common intention could be inferred

        • However, law has moved on and your Lordships should move it a little more in the same direction

    • BUT Baroness Hale:

      • 1. Does not fully address the issue

        • First hurdle set by Lord Bridge (direct financial contributions) may be too high

          • But that does not concern us now.

      • 2. Seems to be dealing with quantification alone?

        • Law has moved on from the presumption of a resulting trust,

          • to the fact that the starting point should be looking at all the relevant circumstances and the whole course of conduct of the parties

            • in order to ascertain the parties' shared intentions, actual, inferred or imputed, with respect to the property.

  • Abbot v Abbot [2007]: H and W split up – W contributes to mortgage slightly and X gives gift of land to H and W to build home. H claims that sole owner and that W only has 8.31% beneficial interest. Judge decides that X intended gift of land would be to both H and W equally.

    • Baroness Hale:

      • Talks about quantification

        • Appeal judge appears to have attached undue significance to the dictum of Lord Bridge in Lloyd's Bank plc v Rosset :

          • in particular as to what conduct is...