Co-ownership Flashcards
“Co-oweners”
All property bought by more than oner person is subject to a trust of land - express or implied (resulting or constructive) –> concurrent ownership
Dixon: equitable interest
“each person’s real value”
Marriage is the issue
If married: legislation to assist when marital breakdown, default in mortgage payment and forced sale (Family Law Act 1996, Matrimonial Causes Act 1973)
If unmarried: no such legislation exists, computation of each person’s equitable share becomes even more complex
Legal owner/trustee
Whose name appears on the proprietorship section of the register - merely “title-holder” because as Dixon suggests, the equitable interest is the real value in property
Implied trusts: statutory assistance to avoid formalities of land transfer
s. 53(2) LPA 1925: land transfer formalities not necessary when implied trust in operation
Express creation of a trust of land
1) Stated in the conveyance deed itself
2) Land Registry Forms in Form JO (after purchase, following the requirements of s. 53, LPA 1925)
Trustee-beneficiary relationship
No real meaning when co-owners live in perfect harmony - extent of their legal and equitable interests becomes vital if
1) property is repossessed
2) property is sold
3) dispute of ownership
2007 Law Commission Report “Cohabitation: The Final Consequences of Relationship Breakdown
States quite categorically that the common law in relation to property and trusts can only go so far
Goodman v Gallant
If express trusts has been validly created (without fraud/mistake) it is conclusive as to extend of equitable ownership (parties are free to set)
1 November 2012
Form JO available with the Land Registry, in order to declare the beneficial interest in a property
BRIEF WINDOW OF OPPORTUNITY: form must be lodged between exchange of contracts and completion of transfer
MacDonald on Form JO
Put in place by registry following Baroness Hale’s “heavy hint” in Stack - useful if one of the joint purchasers is not on the title and do not intend equity to follow the law or have unusual arrangements about the equity
“Implied trust of land”
Either resulting or constructive trust
Dyer v Dyer
Presumption of resulting trust: A purchases property with money solely from B - A holds legal title but on trust for beneficial owner B
Curley v Parkes
It must be by way of contribution to the purchase at the time of transfer, contributions to mortgages payments WILL NOT generate RESULTING TRUST (might generate constructive trust though)
Requirements for resulting trust
1) evidence of the common intention of parties at the time purchase that B should take beneficial share of property
2) If lack of words to this: that evidence will be based on contributions to purchase
Springette v Defoe
Dillon LJ: common intention must be founded on evidence, the court does not exercise discretion to do what is fair –> “trust law does not allow property rights to be affected by telepathy”
HOWEVER: Lady Hale in Stack v Dowden
“Constructive trusts”
Even though policy reason behind them is still to prevent unconscionable dealing, case law set down that for a constructive trust to arise, there must be evidence of common intention and detrimental reliance
Constructive vs. resulting trust
CT: common intention can be evidenced AT ANY TIME, not just at the time of purchase (RT - Curley v Parkes)
CT vs. PE
CT needs common intention whereas PE needs unilateral promise
In CT co-ownership is suggested, in PE subsequent ownership is suggested
CT: court provides remedy based on contribution
ET: court does minimum necessary to achieve justice
Lloyds Bank v Rosset
Lord Bridge’s 2 categories of CT
- based on express discussion
- based on implied intention through conduct
McKenzie v McKenzie
EXPRESS COMMON INTENTION CT: Clear words promising co-ownership rights –> requirement of common intention qualified and CT imposed
Oxley v Hiscock
EXPRESS COMMON INTENTION CT: may assist in arguing that an equitable interest has been acquired but not assist greatly in terms of quantification - parties do not need to have agreed the size of their beneficial interest, this can be done through the 2nd category of CT (implied common intention CT)
Implied common intention constructive trusts - stringent approach
In the early 1970s, it could only really be said to succeed if there had been substantial contributions to the purchase price or mortgage payments afterwards
Pettitt v Pettitt
Gissing v Gissing
Pettitt v Pettitt
Husband was claiming equitable share of property solely owned by his wife - Lord Diplock ruled it would be an “abuse of legal technique” to allow this as contributing by way of minor decorations did not give rise to a constructive trust
Gissing v Gissing
Wife’s contribution of £220 and mowing the lawn did not evidence common intention of a trust
Lord Diplock: no initial contribution to purchase price and no other direct contributions to mortgage instalments –> only common intention to share the day-to-day expenses not create trust
Eves v Eves
Lord Denning’s “new model constructive trust” - allowing broader contributions to create common intention constructive trusts
Mr Eves bought the property solely in his name because girlfriend net was not yet 21. She worked “extensively on the dirty and dilapidated house”, “wielding a 14 lb sledgehammer” –> 25% share
Burns v Burns
Retured to the orthodox approach after Eves v Eves: woman had lived with man for 19 years, unmarried, and had made no initial contributions or towards mortgage payments (she had however brought up the children, acted as a homemaker and paid towards household bills)
Fox LJ: no indication that the parties intended to change their property rights just because they lived together and she did ordinary tasks
Lloyds Bank v Rosset - following Burns v Burns’ reinstated high threshold for implied common intention constructive trusts
Property in the sole name of Mr Rosset, Mrs Rosset spent 6 months supervising renovations (managing project and builders)
Mr Rosset defaulted on a mortgage –> bank sought possession
Lord Bridge: although she was in actual occupation (either in her own right or through her builder), she did not have a proprietary right to begin with (needed before Schedule 3, para. 2 LRA 2002) –> couldn’t claim overriding interest of actual occupation against the bank
“extremely doubtful whether anything less [than contribution to purchase price/mortgage payments afterwards] will do” - her efforts were “the most natural thing in the world for any wife”
Midland Bank v Cooke
Slightly broader approach in relation to quantification (after Burns v Burns, Lloyd Bank v Rosset):
Mrs Cooke’s direct contributions were just under 7%, but the court held that the whole course of dealing between the parties should be analysed using equitable principles –> 50% share in the property (earlier mortgage payments, paid towards bills, evidence of sharing everything equally)
Stack v Dowden - both parties on the register
Start point for quantification in cases with more than one legal owner: “equity follows the law” = equitable interests should be aired equally
Stack v Dowden: Lord Hoffmann
suggested that a relationship such as here is “ambulatory” with the parties intentions capable of changing and developing over time
Stack v Dowden: Lord Walker
respectfully doubted the stringent approach in Rosset, stating that the law has moved on (“and your Lordships should move a little more in the same direction”)
Pointed out (with Lady Hale) that the Law Commission (in 2007) was soon to propose legislation in relation to the financial regulations of the breakdown of unmarried couples (which it did: proposal for property adjustment for unmarried couples)
Stack v Dowden: BARONESS HALE (paragraph 69 - list of factors which may be taken into account = holistic approach)
In exceptional circumstances, where there are joint legal owners and no express declaration, equity does not have to follow the law - but can rather find a way to justify awarding an equitable share that falls either way of the default line (50/50)
Lady Hale in Stack v Dowden: resulting trusts
Due to the holistic approach, there was no longer a place for a resulting trust application in marital or relationship situations
Lord Neuberger’s DISSENT
- disputing that the courts should be asked to “impute” common intention, especially from a course of dealing
- role of resulting trusts is not consigned to history
Laskar v Laskar
Lord Neuberger successfully proved that there is still a place for resulting trust (his dissent in Stack v Dowden), albeit in an investment purchase by a couple rather than as a family home
Stack v Dowden approach - hitting a judicial nerve
Followed in
Abbott v Abbott (also presided over by Baroness Hale)
Fowler v Barron
Ritchie v Ritchie (found “exceptional facts”)
Segal v Pasram: no exceptional facts found, 50/50 split ordered - involvement of a 3rd party?
Dixon on Stack
A case in “exceptional […] or not, as the judge chooses”
Real legacy = uncertainty
Jones v Kernott
QUESTION: did the common intention had shifted away from 50/50 as a result of him leaving the marital more and not contributing to the mortgage or upkeep from 1993 (when the relationship ended) to 2008 (when litigation began)?
CoA - Wall LJ:
Mr Kernott’s conduct did not amount to justification of a movement away from the common intention at the breakdown of the relationship that the equitable interests were equal –> 50/50 as there seemed to be a clear common intention that equity should follow the law
Jones v Kernott: SC
Lord Walker and Baroness Hale: reversed the CoA judgement and reinstated the 90/10 split
The Hale-Neuberger debate
Until the Law Commission’s recommendations (from 2007) are taken up by parliament, the implied common intention constructive trust will continue to be as Lord Neuberger puts it “difficult, subjective and uncertain”
Hale: law should respond to “changing social and economic conditions”
Neuberger: “fairness is not the appropriate yardstick” when dealing with property transactions and the “whole course of dealing” is simply too imprecise
Pankhania v Chandegra
Mummery LJ: where there is an express declaration of trust between the parties, then the courts should only go behind the express declaration where there are valid legal reasons –> IS THE NATURE OF COMMON INTENTION INDEED ‘AMBULATORY’?
Dixon: uncertainty created by Stack
Exactly what Lord Bridges sought to avoid in Rosset?
Judicial desire to move the law on vs. need for conveyancing clarity –> maybe the real answer for unmarried couples will be found in future legislation
Lake v Gibson
The traditional resulting trust - vehicle for establishing beneficial property rights where two parties have made unequal financial contributions at the point of purchase –> presumption that they were tenants in common, holding the beneficial interest in shares proportionate to their contributions
Ullah v Ullah
Resulting trust was referred to as a possibility (compare to Laskar v Laskar and the Neuberger dissent)
