Constructive Trusts Flashcards
When is a common intention constructive trust likely to be considered/to arise?
Used to work out the beneficial ownership of a family home when a non-married couple separate
What other trusts might determine the beneficial ownership of a house?
Express trust - shares held might be declared in transfer deeds (must be evidenced in signed writing to be valid)
Resulting - contributions to purchase price at time of purchase
- Share would match the contribution
- Contributions to legal fees won’t count
- Contributions after purchase won’t count for resulting trust
What is the position where a family home is jointly owned by a non-married couple?
Presumption of joint and equal beneficial shares
To get a bigger share, one party would need to show detrimental reliance
If persuaded, the court decide what share they felt was fair, having regard to the whole course of dealing between partners
What is the initial position where a family home is solely owned?
Courts will assume that the house belongs legally and beneficially to the person who is named on the register
Court must be persuaded that a constructive trust should be found
Where a party seeks to claim a share in a solely owned house, what are the two broad things they must show?
1) Existence of common intention constructive trust
2) Quantification of shares
What elements are needed to prove the existence of a common intention constructive trust?
Need to evidence common intention (express or inferred) that they would have an interest in the home and detrimental reliance (relied upon interest to their detriment)
How are express common intention + detrimental reliance proven?
Must be some kind of arrangement or understanding between partners as to ownership/interest in home
May refer to unsigned documents, emails or conversations (however imperfectly remembered)
In terms of detrimental reliance, this can be financial or non-financial (caring for children), but focus on whether they did something they wouldn’t have done, if they didn’t think they had an interest
Example to show express common intention + detrimental reliance
‘I want you to think of this house as yours’ as much as it is mine’ + they pay for a renovation to the kitchen + conservatory
Merely saying ‘I want you to live with me’ does not speak to ownership, so is insufficient
How are inferred common intention + detrimental reliance proven?
Used where there is no express understanding/evidence
The common intention is inferred through conduct - generally the conduct also satisfies the detrimental reliance element
Principally, look for monetary contributions like paying off the mortgage for a period of term - court then decides if this time period shows sufficient detriment
Examples to show inferred common intention + detrimental reliance
- Direct contribution to purchase price = sufficient
- Renovation or extenstion without express agreement = insufficient
- Paying off mortgage for several months = sufficient, if court deems this a significant enough contribution
- Paying off bills to allow someone to pay mortgage = possibily sufficient
How will the court quantify the shares if a common intention + detrimental reliance is proven?
If the partners agreed that each would have a defined share, effect will be given to the agreement (maybe on an unsigned document)
If no agreement, courts will give a a fair share, having regard to the whole course of dealing between the partners
What is proprietary estoppel?
A claim that prevents someone from going back on their word, in relation to property, when it would be unfair or unconscionable to do so
Common intention not considered
How is the ‘equity established’ in proprietary estoppel?
1) Has the legal owner made an assurance (active representation or passively encouraged an expectation)? - if yes;
- Passive = conduct of claiming party suggests that believe they have a right to property and legal owner doesn’t dispel this
2) Has the claiming party relied on this assurance? - if yes;
3) Has the claiming party suffered a detriment?
- Detriment must be substantial, but need not be monetary
- To show reliance and detriment, there must be a connection between the assurance and the detriment they suffered
How is the ‘equity satisfied’ in proprietary estoppel?
If equity established, consider:
Does a remedial bar apply? - if no;
- Court identifies appropriate remedy – court will try to achieve an outcome that is fair and proportionate
- Might involve giving claimant a beneficial share in the home or financial compensation
Remedial bar may include:
- Must come to equity with clean hands, so dishonest conduct or false representations will stop a claim
- Unreasonable delay may defeat the claim
