5. Trusts of the Family Home

Question 1

When may disputes as to ownership of the family home arise?

Answer 1

1. When the relationship breaks down
2. When one spouse dies and their estate is being administered

Question 2

What factor does Stack v Dowden cite as key to the court’s deliberations over ownership of family homes?

Answer 2

Context.

The context of the domestic setting means family homes are dealt with very differently to disputes over ownership of commercial property.

Question 3

In what 4 ways can a property be owned?

Answer 3

Sole Legal ownership: At law, the owner of the property is whoever holds legal title to it. For registered land this means the person registered as legal owner at the Land Registry.

Joint legal owners: If the property is registered in joint names the couple will own the property as legal joint tenants.

Equitable joint tenants: The couple own equitable interest in the property together as joint tenants.

Equitable tenants in common: The couple own the equitable interest in the property as joint tenants with individual and divisible shares.

Question 4

In what ways may legal title to land be held?

Answer 4

Sole legal owner

Joint tenants

Question 5

How can legal owner(s) hold the title?

Answer 5

1. As full legal and beneficial owner. (i.e. there is no separate equitable title)
2. On trust for a sole beneficiary
3. On trust for more than one beneficiary as joint tenants
4. On trust for more than one beneficiary as tenants in common in equal shares
5. On trust for more than one beneficiary as tenants in common in unequal shares

Question 6

What should a solicitor advise legal joint owners of land to do, ideally?

Answer 6

Ideally, the legal owners of land will declare an express trust over it, putting the question of beneficial ownership beyond doubt.

The Land Registry TR1 form (which is needed to transfer legal title to land) includes provision for specifying equitable ownership (but it is not compulsory)

Question 7

What is the starting presumption for trusts of family homes?

Answer 7

Beneficial ownership of land mirrors legal ownership.
I.e.
* Legal joint owners will hold the land on trust for themselves as equitable joint tenants.
* Legal sole owners are presumed to be sole beneficial owners.

Question 8

What is the significance of the purchase money resulting trust analysis in these scenarios?

Answer 8

Since Stack v Dowden, this analysis is irrelevant in the family home scenario.

Question 9

What is the benefit of the common intention constructive trust analysis of family homes?

Answer 9

It is more flexible, allows for a holistic approach and consideration of all circumstances of the case, beyond simply monetary contributions.

Question 10

What are common intention constructive trusts?

Answer 10

Mechanism for determining beneficial ownership, reflecting common intention of the parties

The Common intention can either be express (based on express statements) or inferred (determinded objectively based on the circumstances)

Question 11

What must be proven for a common intention constructive trust to arise in sole legal ownership cases?

Answer 11

Need to show they’ve acquired an interest, requiring proof of:
- Common intention
- detrimental reliance
(conduct otherwise inexplicable)

Question 12

What must be proven for a common intention constructive trust to arise in joint legal ownership cases?

Answer 12

• Must rebut presumption of ‘joint tenants in equal shares’
• by looking at whole course of conduct.
• with reference to common intention
• either express or inferred
• don’t need to show reliance

(Arises where person is seeking to show beneficial TIC in equal or unequal shares)

Question 13

What factors are considered when determining common intention?

Answer 13

‘Whole course of conduct’ including after acquisition of property.

• Advice or discussions (best evidence)
• Reason legal title was registered in particular names
• Purpose for acquiring house
• Nature of relationship
• If parties have children
• How home was financed
• Arrangement of finances and divided responsibility

Question 14

Joint tenancies - Once common intention that property should be held as tenants in common is found, what must the courts do next?

Answer 14

Interests must be quantified
- express intention of parties, if not
- implied by parties’ conduct
- impute an intention for ‘fair shares’ based on whole course of conduct as a last resort - holistic approach

Question 15

What is not enough to show common intention for joint tenancy? Is it possible for common intention to change over time?

Answer 15

• Unequal financial contributions
• Yes

Question 16

Where a property was purchased in joint names and both contributed but kept their finances otherwise completely separate, what was held?

Answer 16

It was indicative that they didn’t want a beneficial JT or to have equal shares

Question 17

Words that indicate common intention for ownership:

Answer 17

Half yours
50:50

Question 18

Words that don’t indicate common intention for ownership:

Answer 18

Family home
Benefit… both of us
You’ll be looked after

Question 19

Sole legal ownership- How else can common intention be evidenced?

Answer 19

excuses as to why partner may not be jointly registered. I.e. you’re too young; you’re divorcing X.

However, inferences shouldn’t be drawn too readily and not inferred where legal owner made excuse to avoid an argument

Question 20

When has common intention been declined?

Answer 20

• Individual caring for her family
• Woman gave up career or worked without pay
  Despite woman making very substantial improvements to property and gave up job to work for man’s business so he could make payments

Question 21

What should be taken into account when determining common intention?

Answer 21

Indirect financial contributions

Question 22

Sole legal ownership - What are examples of sufficient detrimental reliance?

Answer 22

• Heavy DIY
• Renovations
• Payment of substantial expenses

(Inexplicable conduct)

Question 23

What are examples of insufficient detrimental reliance?

Answer 23

• Decorating
• Giving up work to look after children

Question 24

What is proprietary estoppel?

Answer 24

Enables a person to informally acquire property (or personal) rights to prevent unconscionable conduct

Question 25

What assurances regarding real property is proprietary estoppel concerned with?

Answer 25

2. B assures A they have or will acquire a right in relation to B’s property and in reliance on that, acts to their detriment
3. A mistakenly believes they have a right in land owned by B, and in reliance on that, act to their detriment where B is aware of mistake but doesn’t try to correct it

Question 26

What are the requirements for proprietary estoppel?

Answer 26

1. Assurance (must be clear enough, can be inferred or explicit)
2. Reliance on assurance
3. Detriment due to reliance
4. Unconscionable for D to go back on assurance (unifies and confirms other elements)

Question 27

How is reliance shown for proprietary estoppel?

Answer 27

There must be a sufficient link between assurance and detrimental conduct, but doesn’t have to be the sole cause
Presumed reliance found where assurance made and C acts detrimentally, transferring burden of proof onto the D

Question 28

What are examples of detriment for proprietary estoppel?

Answer 28

• Expenditure,
• providing services without payment or less than market value,
• passing up opportunities,
• subordination to D

Question 29

What remedies are there for proprietary estoppel?

Answer 29

Transferring ownership
Holding property on trust
Granting C property/personal right
Paying money

Question 30

What principles regulate exercise of court discretion over the remedy used for proprietary estoppel?

Answer 30

1. Remedy shouldn’t exceed C’s expectation
2. Court may award a remedy which satisfies C’s expectation, but not required
3. Remedy must be proportionate to C’s detriment

Question 31

What different ways can a trustee commit a breach?

Answer 31

• acting outside powers
• failing to act in accordance with their duties
• Acting in breach of fiduciary duties

Question 32

Are trustees liable for breaches committed before their appointment?

Answer 32

No
But if they discover a breach, must commence proceedings otherwise could become liable

Question 33

Are trustees liable for breaches once they retire?

Answer 33

They are liable for breaches committed before they retired
Only liable for breaches that occur after where:
a) trustee retired to facilitate breach
b) trustee parts with property in retiring without due regard

Question 34

What remedies are there for breaches?

Answer 34

• Where trustee misapplied TP, can seek to recover property/TP
• If not possible to recover property or results in loss in trust value, seek compensation
• Trustees only liable for losses where their breach is a ‘but for ‘ cause

Question 35

How can trustees avoid liability for breaches/wrongful distribution?

Answer 35

• Advertising for claimants in national newspaper (after 2 months, they can distribute)
• Retaining fund or paying money into court
• Seeking court directions
• Benjamin order
• Taking out insurance against wrongful distribution

Question 36

How can trustee liability be excluded or limited?

Answer 36

1. Can have exclusion clause in instrument (not where breach is fraudulent)
2. Can rely on s61 TA 1925: gives court discretion to excuse trustee where they acted honestly and reasonably, and ought fairly to be excused
3. If they show they obtained fully informed consent or Bs acquiesced, operates as partial defence

Question 37

What limitation period is there for bringing a claim for breach of trustee duties?

Answer 37

6 years (for beneficiaries vested in possession)
Doesn’t apply for fraudulent breaches or proprietary claims