CT and RT Flashcards
Resulting Trust
Imposed to give effect to the implied intention of the owner.
Requires direct contribution to purchase via either
a) direct cash contribution to purchase price
b) paying solicitor fees for purchase
Can arise in three situations
- Property transferred via express trust but some/all of equitable interest not disposed of (Vandervell). Void trust results back to settlor.
- voluntary transfer of personal property from A to B or into AB together… only giving away legal title, keeping equitable title.
RT PRESUMED
3. A contributes all/part of purchase price of property and title to that property is put in the name of B/ joint names. RT PRESUMED (presumption that transferor of personal property keeps interest and contributor to PP acquires beneficial interest/share).
Re Densham
Distinction between RT and CT
Facts:
Wife contributed to p£, agreed on joint ownership. From the agreement, W held to be entitled to half share in ownership (CT) and through direct financial contribution, entitled to share by RT.
As H was bankrupt, could not assert entitlement of CT as not a settlement for valuable consideration. Void against trustees in bankruptcy.
Drake v Whipp
Proportion of equitable interest enjoyed from the contribution & work done, plus common intention to enjoy share of ownership.
Westdeutche per Lord Browne-Wilikinson (RT)
UK law adopts 2 basic presumptions about intentions of property owners, which are rebuttable by evidence of contrary intention
- Presumption against gifts
(owner never intends to make gift. If a voluntary transfer of legal title without proper consideration= presume to have intended to retain equitable interest for himself) - Presumption in favour of provider of purchase money
Presume provider intends to obtain equitable interest in the property acquired. so when purchase in name of someone who did not provide purchase money, presumed to hold legal title on trust for provider.
v sexist, based on old ideology that fathers are breadinnwers and only ones under obligation to maintain children. wives economically dependant on husbands etc. Both can be rebutted by evidence of contrary intention
Rebutting presumptions: what was said or done? would gift be here? loan?
Resulting Trusts in context of fam home
Pettit
Resulting Trusts in context of illegal purposes
Tinsley v Milligan
Tribe (exception: if illegal purpose has not been carried into effect)
Drake v Whipp (RT)
payment of costs of initial work to property MAY be sufficient contribution to the property
- what did she do? convert barn into house–> wouldnt be able to live in there without her contributions so valid contribution
Criticisms of RT
LACKS FLEXIBILITY
Firmly based on strict property rights. these will only arise by direct contribution to purchase price. shares in property are mathematically calculated. may be entirely appropriate in commercial situation.
Inappropriate in context of family home. account needs to be taken of indirect contribution to property and shares should not be just mathematically calculated.
Presumptions flawed.
replaced by presumption of an equitable JT (Stack v Dowden, Jones v Kernott). Presumptions almost certainly have little application today in cases concerning purchase of a home.
Constructive trusts
Imposed by court as consequence of conduct of the parties who become trustees
Types of CTs
Lord Browne-Wilkinson (Westdeutche)
- Institutional CT
- Trust brought into being on occurrence of specified events, without the need for intervention from court.
- Created on date of circumstances which give rise to it
- Must be proven on facts. court does not impose the trust but recognises Bs prop interest.
- No court discretion, binds 3rd parties
Paragon per Millett:
“A CT arises whenever unconscionable for owner of property to assert own beneficial interest and deny beneficial interest of another”
- Remedial CT
- Unjust enrichment at the expense of Plaintiff.
- Trust arises from court judgment so don’t gain priority over 3rd party rights.
UK ONLY RECOGNISES 1ST TYPE, UNWILLING TO ADOPT REMEDIAL CT.
When can a CT be imposed?
Where purchaser of property has agreed to recognise the interest of another in the property, but then attempted to go back on that agreement.
Provides a means by which a person may obtain share of ownership, despite lack of any express declaration of trust in his favour.
(GISSING HL)
Usually ct arises at moment person acquires property but no reason why cannot be later.
Bannister v Bannister
Old lady sold 2 cottages to her brother in-law at below market price on an oral understanding that she could live rent free in 1 cottage for life.
CT imposed
Gissing HL
where Trustee has so conducted himself that it would be inequitable to allow him to deny B interest in the land acquired.
Diplock: legal owner would only have acted so as to justify the imposition of a CT. if by words or conduct he has induced B to acts to his own detriment in the reasonable belief that by so acting, he was acquiring a beneficial interest in the land.
Common Intention CT
primarily developed in context of ownership of family home.
- establish, what is required for claim?
- quantify- if a common intention CT has been established, what share of beneficial ownership will C acquire?
RATIONALE:
- Inequitable for owner of land to resile from expectation that created or encouraged.
- Courts are not inventing intention, but finding it from express discussion of parties or inferring from actions. The actions that will suffice are limited, and may be just a direct financial contribution.
- However, once established the CT, wide range of factors can be taken into account in quantifying size of beneficial share. For instance, though household labour may not support a claim to an interest, it may be used to quantify it.
- Has attracted considerable criticism. One ground increases method of property management is ill suited to protecting financial needs of family members or stretches CT concept too far.
- Law Comm has wanted to place equitable rules on stat footing or replace with stat scheme, giving cohabitants similar rights to married couples and registered civil partners. None of these have been enacted, so must rely on equitable methods
Rossett
developed Gissett, now terming this common intention CT. the principle underlying it is that the CT is imposed where owner of land promised cohabitant that she will have share in beneficial ownership. she acts upon that by financial contribution.
–> can also imply from conduct. based on express or implied intention of the parties.
New model of CT (unjust enrichment) suggested by Denning 1970
Denning 1970 advocated new approach to impose CT simply to achieve justice between cohabitants in fam home.
- Imposed to prevent legal owner being unjustly enriched by refusing to acknowledge B being entitled to an interest
- Advocates a form of remedial CT which arises as remedy to correct a wrong, not on a particular set of legal principles.
• Rejected comprehensively, on ground that no coherent principle t decide in each situation leading to uncertainty and unpredictability.
Also inconsistent with earlier authorities and fear of decisions being based on morals
would we benefit from a remedial CT?
- discretionary (courts)
- prospective
- flexibility in considering circumstances
No doctrine of family property under English law (Pettitt, Gissing)
However courts do have some powers to distribute fairly in divorce. Courts are only allowed to use trust law principles even for common intention CTs which is unsatisfactory.
Domestic or Commercial acquisition?
Consider relationship between the parties and the property purchased. Categorisation not always straightforward.
- Relationship between parties acquiring property.
2 . Why have they purchased the property? - Is there any express declaration of trust?
- Legal title in joint names of parties (fam home)
- Domestic almost always by app of common intention CT.
Jones v Kernott
a couple acquired property together and separated some years later. In determining who had ownership the court used more flexible rules about the relationship between the parties and considered that they were a couple when they purchased the property together.
Aspden v Elvy
Court applied flexible rules but all relevant rules had taken place after the couple had separated. Clearly for a domestic acquisition??
Laskar v laskar
Mother and daughter purchased mother’s council house. Intention seemed to be to cover mortgage payments.
Shortly after property purchased, M moved out with her other daughter.
CA: property primarily bought as an investment so flexible approach regarding domestic not applicable.
(If purchased for commercial reasons like investment, not a domestic acquisition)
Goodman v Gallant
any express declaration as to beneficial interest is conclusive, unless fraud or mistaken shown.
But must be in writing to be enforceable (s53(1)(b) LPA).
Can express declaration of beneficial ownership be overriden by common intention CT later?
Express declarations can be replaced because beneficial ownership agreements can be varied.
Stack v Dowden per Hale
Arif v Anward
(contradicting stack v dowden)
Once you have an express trust, beneficial ownership can only be changed by an express assignment of part of equitable interest which needs to be in writing because of s53(1)(c) or alteration via sub-trust.
LEGAL TITLE IN JOINT NAMES OF PARTIES (THE FAMILY HOME)
law has developed a great deal over recent years.
- Stack v Dowden HL (fam home)
In fam home, if legal title is in joint name of parties, starting point when considering equitable ownership is that there is a presumption of equitable JT.
- Cohabiting couple
- Finances kept separate the entire time, all savings and investments too.
- Transferred into joint names. Paid interest on mortgage loan and endowment premiums.
- Mrs D successful in 65% claim.
separation of finances during the time succeeded in rebutting presumption.
- Jones v Kernott SC (follow/confirm stack)
- The mere fact of putting legal title into the joint names of parties gives rise to a common intention CT. So starting point is equitable ownership.
- A purchase together is a strong indication of emotional and economic commitment to one another to joint enterprise (Walker, Hale). - parties unlikely to have intended equitable ownership to be determined by “a balance sheet of contributions” over the years. likely they consciously decided to put legal title together with equal shares.
-
when can the rule regarding joint title apply?
- Jones v kernott concerned cohabiting couple.
- However it can be extended to apply to purchase of a home by parent and child
- Laskar v Laskar: reasoning in Stack was intended to apply to non-cohabiting relationships too
What kind of evidence can rebut the presumption of intention to share?
Finances kept separate.
Stack v Dowden
Separating finances and investments apart from the house –> rebutted presumption of equal split, allowed wife to take 65%
Adekunle v Ritchie
- Purchase by mother and son in joint names under right to buy provisions.
- Primary purpose of purchase was a home for M; joint names because M had no job and could not fund mortgage on her own.
- Discount was more than 50%; each contributed equally to the mortgage repayments. Separate finances.
- M had 9 other children with whom she was on good terms and no reason to believe she would want all her property to go to S.
Judge felt it was easier to rebut presumption where dealing with parent-child than with cohabiting couple.
She has 9 other children why would she want to give all wealth to this 1?
Laskar v Laskar
- Joint purchase by mother and daughter under the right to buy provisions because mother could not afford it on her own.
- Financial affairs separate; primarily bought as an investment; M had other children and no reason to think this daughter to receive more; contributions significantly different.
Did not think presumption applied, but if it does then for same reasons as Ritchie, rebutted!
Fowler v Barron.
- Cohabiting couple bought in joint names.
- Separate accounts
- Had a family; joint liability under mortgage. Woman paid nothing to acquisition costs; used her income to pay for some household expenses e.g. gifts, clothing, holidays, school trips.
- Had made mutual wills which suggested believed each had an interest to leave. No other substantial assets.
All evidence together suggested despite separate accounts, intention clearly seemed to be for everything to be owned together.
Presumption NOT rebutted.
Jones v Kernott.
- Couple had separated after 8 years together during which they had shared expenses.- nothing unusual so no rebutting.
- For the next 14 years Mr Kernott contributed nothing to the expenses of the property and very little to the maintenance of their children.
- They cashed in and split a life insurance policy and Mr Kernott used his share to buy himself a property.
- He could not have paid for the new property if he had had to contribute to the shared one.
There was sufficient evidence that their intentions had changed his interest had crystallised at the moment of their separation.
Barnes v Phillip
- After their purchase of a home Mr Barnes had purchased properties as business investments in his own name.
- He got into debt and the home was re-mortgaged to cover those debts. He received a sum of money from the re-mortgage equal to 25% of the value of the property.
- One month after the re-mortgage the relationship ended.
- After a while Mr Barnes ceased contributing to the mortgage repayments.
CA implied common intention to vary interests at point of separation. This was supported by fact that from thereon, Mr B made no contribution to mortgage repayments.
In theory, no reason why change in intention should be limited to situation where couple separate.
Sole legal owner: fam home
A) establish interest B) CT rather than RT C) development of common intention CT D) express bargain common intention CT E) Implied bargain common intention CT
Can RT be used in the context of family homes?
No, in most family home cases, the RT is ignored and CT preferred route. Looks so intention of parties, more flexible.
(Midland Bank v Cooke, Oxley, Abbott)
Reason:
- CT used because an RT cannot arise without a direct contribution to purchase price.
- Quantification of shares under CT is not purely mathematical, so courts consider CT fairer for fam home.
-
Common intention CT
stems from 2 HL decisions in 70s
- Pettitt v Pettitt
- Gissing v Gissing
Courts look for evidence that it was common intent of parties to share beneficial ownership and that the intention has been acted on by the party claiming her interest to his/her detriment. Aims to prevent legal owner from going back on the common intention of parties
Lloyds Bank v Rossett per Lord Bridge
Distinguish 2 cases in common intention CT
- Where there is evidence of an agreement, arrangement or understanding that property is to be shared beneficially (express bargain common intention CT)
- Where there is no direct evidence of an agreement etc, and its necessary to infer a common intention from the circumstances and conduct of the parties (Implied)
- No need for actual common intention, as long as it is objective.
- Intention can be inferred from the words and conduct of the parties, but the court will not impute an intention.
- What seems to be intention from words/conduct of parties? But looking for some evidence of intention, will not arise on basis of imputed intention.
Can an interest be acquired via CT at some time after the property was initially acquired?
Generally arises where 1 party purchases property where not in relationship with the other. some years later, that person comes along… can argue CT
More likely to be estoppel than CT (Aspden)
Express bargain common intention CT
Requires actual discussion and express agreement as to beneficial ownership.
- Does not need to be specific as long as some agreement makes clear it is about ownership “this is our house” is enough but merely suggesting to share accommodation not sufficient.
(flexibility by courts)
requires
- Act to detriment of C
- Act in reliance on common intention
- Evidence of common intention/express bargain (express oral agreement, discussion of issue)
Express oral agreements and other discussions between the parties. e.g- excuse as to why only 1 name could appear on title deeds- is this really a common intention?
Springette v Defoe
Usually the parties must at least have DISCUSSED the issue for common intention to be satisfied
Midland Bank v Dobson
Woman kept house, decorated, bought household items… but none of this was done with expectation of beneficial interest. her acts did not add that much value to the house.
It is essential that C has acted to her detriment or significantly altered her position in reliance on a belief that she was thereby acquiring a beneficial interest
Grant v edwards
C made substantial contribution to household expenses, kept house and brought up children. owner could not otherwise have paid mortgage
–> court assumes acts were done in reliance on such a belief, if they are sufficiently detrimental
Mustill: if parties have expressly agreed what C could do to acquire interest, then C need only do what was requested. (contractual approach: would A have asked for ownership in return for household chores? unlikely).
BW: Use prop estoppel as guidance: any act done by C relating to joint lives of parties is sufficient. referred to possibilities like setting up home, having baby etc because you cannot be certain that such acts aren’t done out of just love and affecction.
Eves v Eves
Woman cleaned house, carried out expensive decorative work, broke up concrete herself and disposed of the rubble as well as turfing, replacing old shed with new one etc.
Assumed to have done so in reliance.
Lloyds bank v Rosset
Overseeing builders and occasional decorating = falls short of acting on detrimental reliance.
THIN LINE BETWEEN MERE DECORATING AND ACTUALLY ADDING SOMETHING TO PROPERTY/ DETRIMENT.
IMPLIED BARGAIN COMMON INTENTION CT
Acts of C need to show common intention and amount to detrimental reliance.
Implied bargain common intention CT harder to establish than express ones.
- Court looks sot acts to be able to say these would not have been done without common intention
- Can only infer intention from evidence, not impute it
More flexibility since Stack, Jones v Kernott?
(more generous re indirect financial contribution)
Jones v Kernott
a particular line in the judgment has indicated the flexibility of the courts in finding reliance.
“look to whole course of conduct between parties, with no limitations on what is sufficient”
Courts have tried to rely on this sentence in both Geary v Rankine and Aspden v Elvy but failed both times.
Implied bargain common intention CT in family home
Direct financial contribution automatically gives rise to a CT in family home case, and courts quantify shares
What acts are sufficient for implied bargain?
- Direct financial contributions to purchase
- Indirect financial contribution to purchase
- Payment for substantial repairs and improvements
- Non-financial contributions (work in house/garden, looking after children)
Lloyds Bank v Rosset
A contribution that would give rise to a RESULTING trust is enough
Huntingford v Hobbs
courts will give effect to an agreement as to whose contribution borrowed money is.
If parties enter agreement at to contributions (eg only man pays despite them both contributing), relevant.
Gissing v Gissing
Direct financial contribution
Repayment of monthly instalments is substantial only if both parties know of the repayment (mutual)
Lightfoot Brown
Direct financial contribution
A person can only acquire interest by repayments of part of a loan, if the other person is aware of this repayment.
Indirect financial contributions to the purchase
This includes
- As payments or acts which enable B to repay a mortgage loan
- Paying general household bills
- Working unpaid in family business and profits of business are used to purchase property or repay the loan/mortgage
Law commission re indirect financial contribution to purchase
Agreed that payment of general bills should suffice if it enables payment of mortgage bills. Courts look to acts by Cs to indicate common interest/ negotiations between them.
Should small, indirect contributions suffice as contribution?
Against: Paying bills (indirect FA not enough)
• Lord Bridge in Lloyds Bank plc v Rosset doubted that anything less than direct contributions would be sufficient.
• Ivin v Blake [1995] 1 FLR 70. A woman worked unpaid in her mother’s business. The profits of the business were used for the deposit for and legal expenses of a purchase and made that purchase possible. Her contributions were indirect.
• James v Thomas. Woman moved into partner’s home and worked in family business, couple dependent on business for payment of outgoings.
Not sufficient to give interest. CA noted that v difficult to establish a share of ownership of property which partner already owned, will only occur in exceptional circumstances.
For:
• Dicta that payments of household expenses can be sufficient if they are “referable to the acquisition of the property”: Lords Pearson and Diplock in Gissing v Gissing, Fox LJ in Burns v Burns [1984] Ch 317.
• Le Foe v Le Foe [2001] 2 FLR 970. H paid the mortgage, service charges and outgoings; W paid for day to day domestic expenditure. She earned less but the judge had no doubt that the family economy depended on her earnings. Lord Bridge found to be too restrictive in Rosset, argued he says only exceptionally will something other than direct contribution be sufficient.
• Comments in Stack v Dowden. Law should move on and be more flexible. (Lord Walker, Baroness Hale) seems likely courts will be more flexible in future.
PAYMENT FOR SUBSTANTIAL REPAIRS AND IMPROVEMENTS
s37 Matrimonial Proceedings & Property Act 1970:
Applies where a spouse makes a substantial contribution in money or money’s worth to the improvement of property in which either or both have a beneficial interest.
The spouse will get a share or enlarged share in the property unless there is an agreement otherwise. The share will be as agreed or what is fair. See also s 65 Civil Partnerships Act 2004.
Aspden v Elvy
- Barn originally acquired by Mr A before he cohabited with Mrs E.
- ## It was transferred into her sole name when they separated.Some 10 years after their separation
- Mr A contributed £65–70,000 to its conversion at a time when he was living in a caravan. (substantial sum).
Money could not have been intended as a gift, prepared to infer Mr Aspden hoped it have interest in property and Elvy knew of the house.
So CT arose.
NON-FINANCIAL CONTRIBUTIONS
Working in house/garden, looking after children
(would seem to be insufficient for an implied bargain CT) as would prob expect it to be done anyway. courts do not generally infer that its done in reliance of common intention
(Insufficient)
Burns v Burns
A woman had for 17 years made a substantial contribution to the household. She had looked after the children and home, done decorating, paid the rates and phone bill and purchased chattels such as a washing machine.
Received nothing, merely acted as she would be expected to (unfair?)
Gissing v Gissing.
Woman paid for lawn, furniture, equipment and clothes.
Insufficient
Pettitt v Pettitt
Man spent money and labour on redecoration and minor improvements (a wardrobe, ornamental well, brick wall, lawn and patio).
Insufficient:
Lord Diplock: “It is common enough nowadays for husbands and wives to decorate and to make improvements in the family home themselves with no other intention than to indulge in what is now a popular hobby and to make the home pleasanter for their common use and enjoyment.
Lloyds bank v Rossett
overseeing builders and redecoration insufficient
COMMERCIAL ACQUISITIONS
Ownership will in most cases be determined by the application of a resulting trust.
So starting point in comm relationships is resulting trust.
There are some cases where common intention CT has been established in commercial cases, though it may be harder to establish than in family home case..
Yaxley v Gotts
- Y planned to buy a converted property and refurbish it. He approached Gotts for a loan.
- G said that he would buy the property himself but Y could have the ground floor flat if he did work on the other flats. Y agreed.
- The property was actually bought by Gs son, Alan.
- Y did the work without knowing this.
Common intention CT.
Parris v Williams
- Agreement between friends: P to purchase 2 flats; P and W to have 1 each.
- W could not contribute to the purchase or borrow money as he was subject to an individual voluntary arrangement.
- P paid 9k and the balance of £119k was borrowed.
- Flats were rented out and the rent was used to pay the mortgage payments and some of the outgoings.
- W did some decorating and paid some of the maintenance payments.
Held: common intention CT.
Banner Homes Group plc v Luff Developments Ltd
A commercial joint venture case.
- Agreement between Banner and Luff that Luff would acquire property from a third party for the benefit of both of them.
- The agreement did not amount to a contract because there were terms yet to be agreed, but it had the effect that Banner did not consider bidding for the property itself.
- Luff had second thoughts about the joint venture before the purchase but did not tell Banner.
- The property was purchased through a company.
This equity operates where there’s an unenforceable agreement between 2/more parties to embark on a joint venture involving acquisition of identified plot of land.
- Agreement is usually to effect that 1 party acquires land and hat will be developed/exploited for benefit of BOTH parties.
- Equity steps in when A goes ahead and purchased land in own name, then tries to go back on agreement for joint venture benefitting both
As its a commercial situation, requires clear evidence that parties considered agreement as binding. Equity arises because non-purchasing party will have either acted or failed to act in a way that he will suffer detriment + the purchasing party will get all benefit (undeserved)
How does common intention CT work in commercial context?
- Express agreement
- between parties concerning the land involved
- occurring before the property was acquired.
Can there be CT after property acquired?
In theory, no reason why not. But seen in the context of family home it is hard to establish CT after establishing property (more likely to rely on prop estoppel)
Circumstances of applying common intention to commercial context
- Direct contribution to purchase price
2. Mathematically calculated shares (seem appropriate)
Crossco, Kearns Brothers
Unlikely to see the same extent of flexibility in establishing CT as in family home case
QUANTIFICATION OF SHARES
A) family home cases
B) commercial cases
Re Densham
Look closely a the terms of the agreement between parties
What if theres no agreement between the parties?
In the absence of agreement the courts will look at the whole course of dealing between the parties in relation to the property: a “holistic” approach.
Graham v York
Assert that C should take greater share of ownership because partner had been abusive.
CA: irrelevant. Court takes into account fairness but only in relation to acquisition of property.
- Part of law of trust/property, not irrelevant considerations outside scope of the agreement in relation to property
- Court cannot override the intention of the parties based on what it sees to be the fair result. BUT if it finds it impossible to draw intention from the evidence, may impose some fair response. (Imputes to parties, the intention of reasonable and just parties)
NOTE: Imputing intention and the issue of fairness in general are two separate considerations. Fairness has a limited role in trusts law, but if talking about strict property rights… fairness should be totally irrelevant.
2 stage approach?
- Where there is evidence of the parties intentions, that will be conclusive & the court cannot substitute its view of what is fair.
- But if the court cannot infer intention from evidence, it will impute to the parties, the intention of a reasonable and just person (Kernott v Jones)
(not so clear in practice)
Relevant factors to quantification of shares in the family home
Midland Bank v Cooke per Waite LJ:
“the duty of the judge is to undertake a survey of the whole course of dealing between the parties relevant to their ownership and occupation of the property and their sharing of its burdens and advantages.
- The scrutiny will not confine itself to the limited range of acts of direct contribution of the sort that are necessary to found a beneficial interest in the first place. It will take into consideration all conduct which throws light on the question what shares were intended.
- Only if that search proves inconclusive does the court fall back on the maxim that ‘equality is equity.’”
–> (Equality is fallback measure)
Stack v Dowden per Hale
- Context is everything in law. Domestic context is very diff from commercial world
- relevant factors go far beyond the mere financial contributions. (Advice and discussions at time of transfer, intentions, reason for acquiring home in their joint names, reasons the survivor was authorised to give a receipt for capital’s money, nature of relationship, whether there are children involved, how the purchase was financed, financial arrangements- separate or together, how they discharged the outgoing on the property and their household expenses
- -> These are all to shed light on parties intentions.
- Calculations are not completely mathematical in fam home context
WHILST THESE ARE GOOD INSIGHT, FINANCIAL CONTRIBUTIONS REMAIN KEY TO THE FINDING OF INTENTION.
Are courts flexible?
- In practice financial contributions seem to be of primary importance.
- However, the courts take a more flexible approach than with a resulting trust, taking into account payment of household expenses and significant improvements to the property and looking broadly at contributions over the years.
- More types of financial contribution to household relevant than under RT
- Looking at contributions will highlight repayment of mortgage loan even without obligations
- Contributions to expenditure on household
- Grant v Edwards
- Midland Bank Plc v Cooke.
- Barnes v Phillips - Courts have broadened view over the years
Now taking into account mortgage repayments, expenditure etc. Manual labour
- Drake v Whipp
- Cox v Jones
- Aspden v Elvy
Also look to
Grant v Edwards
FLEXIBLE: most important factor was that the balance of insurance moneys received after a fire were paid into a joint account. Also initial intention of the parties that the property be joint property and substantial contributions to household expenditure, resulting in half share
Midland Bank Plc v Cooke.
(sole legal title, extreme case)
- The house was in H’s sole name.
- The purchase price had been provided as follows: £1,000 from H; £1,100 as a wedding gift from H’s parents; £6,500 mortgage borrowing (in his name).
- W had paid only household outgoings (and there was insufficient evidence as to whether this enabled H to pay off the mortgage) and for maintenance and improvements.
- There had been no discussions as to beneficial ownership.
- In determining share W had brought up 3 children, carried out full or part time work, paid household bills, taken joint liability under 2 second mortgages.
- Got half share
Barnes v Phillips
Cost of bringing up children relevant.
Drake v Whipp
The parties had bought a barn for conversion and the CA took into account not only contributions to the purchase of the barn and the costs of its conversion, but also contributions of labour to its conversion, contributions to general household expenditure and who took care of the housekeeping
Cox v Jones
There had been no direct contributions to the purchase price. The court looked at what the claimant had foregone (put barrister’s practice on hold) and what she had contributed non-financially (managed work on the house renovation project). This was sufficient to effect her share.
Aspden v Elvy
Payment for and work on improvements relevant. Share based on payment for and work on improvements.
Oxley v Hiscock
Courts prepared to assume contributions equal.
Did determine shares on financial contributions but assumed contributed equally to mortgage repayments because intended to be home.
Jones v Kernott
SC took view that interest of parties crystallised at moment they separated.
- From moment of separation K no longer contributed to finances relating to home and family.
- Therefore view of SC was that intention of parties was that any future increase in value was to belong to J.
- K got half value property at moment parties separated.
Barnes v Phillips
Adopted view that parties started with equitable JT but then separated… court started with equal shares but then altered them to take account of financial considerations after parties separated.
- Took into account property remortgaged and B received lump sum
- Looked at contributions of parties from date of separation to repayment of mortgage and cost of caring for children
- P received 85% share
Stack v Dowden
Mercenary considerations more in cohab cases than married couples. Inferences can be drawn, may vary depending on whether joint legal or sole legal (Joint is easier to infer intention for equal shares)
Springette v Defoe
considers age of the parties and their positions in life/intentions?
- Mature couple who both contributed substantially to the purchase of the property.
- Case explained in Midland as “a part pooling of resources by a middle aged couple already established in life whose house-purchasing arrangements were clearly regarded by the court as having the same formality as if they had been the subject of a joint venture or commercial partnership”.
- Maybe they were older and had own assets, young couple getting together clearly intention so share?
- Older couple intention to keep what they already have?
quantification of shares in COMMERCIAL CASES
In the absence of an agreement otherwise, shares are calculated as under a RT (Laskar v Lasker)
Can fairness approach (Jones v kernott) be applied in commercial cases?
Potentially: Look for common intention and if cant find then find fair result. Fairness inappropriate in commercial situations? Too flexible/vague? But not impossible to apply because in commercial context fairness means parties get out what they put in unless agreement otherwise.
Reform re family home
- Law of trusts is inappropriate in determining ownership of the family home, as its based on intention.
- Introduced some flexibility, but some would argue it is too inflexible still. Not sufficiently fair to parties.
Courts can go no further within context of law of trusts, need to find alternative way to deal with it. - One possibility is remedial CT which isn’t part of the English law of wales, but available at discretion of court when would be unconscionable otherwise. (remedial in fam home? maybe?)
FRAUD AND ILLEGAL PURPOSE
Property bought or transferred into a persons name with aim of concealing true ownership, for an illegal or improper purpose.
Somebody wants to hide assets from creditors or tax authorities, hiding assets to claim social security benefits.
Should the person be allowed at some later time to successfully claim beneficial ownership of the property?
- Unsatisfactory law: not based on merits of the case, nothing to do with preventing someone from benefitting from illegal purpose and not formulated in a way which has deterrent effect, purely procedural.
Only question is whether C can establish an interest without relying on illegality. If A could have established ownership without mention of illegality, ignore illegality and it succeeds.
Tinsley v Milligan
- An unmarried couple had each contributed to the purchase of a house.
- However, it was put in the sole name of T so that M could continue to claim housing benefit.
- The parties fell out and T claimed to be the sole owner.
Held because M had contributed to purchase she could establish equitable interest by means of RT.
Didn’t have to rely on illegality.
Succeeded.
Re Emery’s Investment Trusts
Illegality essential to ownership)
- H bought American bonds and put them in W’s name only.
- This was because W was an American citizen and H could thus avoid paying American tax.
- The intention was that H and W be equal beneficial owners.
- Because H transferring to W the presumption of advancement applied.
- Husband could only succeed if could rebut presumption.
- Only way to rebut was saying ‘only putting her name for illegal purpose’ so had to rely on illegality to assert ownership
claim failed.
Criticisms of how the law deals with fraud/illegality
- Like cases are not treated alike.
• Result in similar cases can depend on sex and marital status of parties.
- If parties in Re Emery hadn’t been H and W result would have been different. If W had been buying in Hs name result would have been opposite.
- Rules discriminate against husbands and fathers. Pointed out by Norse LJ in Silverwood. - Looking at presumption of advancement can see out of date and leg may or may not be brought into force to abolish. Presumption is crucially importance. Seems to be inappropriate.
Silverwood v Silverwood
Relying on illegality to rebut a defence is not fatal to a claim. it was not part of the grounds of claim so wasn’t fatal?!
At the instigation of her son, money was transferred from the account of an elderly lady into accounts in the names of two of her grandchildren. An application was then made on her behalf for Income Support, not disclosing that money. Income Support was paid. After her death, her executor claimed that the moneys were held on trust, relying on a resulting trust. The grandchildren claimed that the transfers were intended as a gift.
Tribe v Tribe
Exception: transferor can rely on fraud/illegal purpose where it has not been carried out.
A father was the tenant of two properties and was worried about potential actions against him by the landlords for dilapidations. Consequently, he gratuitously transferred the shares in his company to his son to hold on trust for him in order to deceive the landlords into believing that he had no substantial assets so that they would not proceed against him. In the event the illegal purpose was not carried out since his liabilities were resolved in other ways. He actually surrendered one lease and bought the reversion on the other without disclosing the transfer of shares.
Is this justifiable?
- prevents ppl acting illegally/fraudulently
Barrett v Barrett
where claim is based on CT, C will fail if he relies on the illegal purpose/ agreement
T owned a house but he became bankrupt and it vested in his trustee in bankruptcy. His brother, J, bought the house from the trustee and later sold it. T claimed that J held the house on trust for him on a common intention constructive trust. J had raised a substantial part of the purchase price by way of a mortgage loan. T paid the mortgage instalments and did work on the property. T accepted that the arrangement was for an illegal purpose: to evade the rules of bankruptcy. C had to rely on illegal purpose and therefore claim failed.
- Held payment of mortgage instalments only gave rise to interest under CIC if they were paid pursuant to agreement to that effect. - Without such agreement the payments could simply have been a loan or payment of rent. Could only succeed by relying on agreement… agreement had no rational explanation until looking at illegal purpose.
- Therefore relying on illegal purpose.
O’kelly v davies
BUT will succeed if he can establish common intention without doing so
A couple had purchased a house together in the sole name of O’K so that she could fraudulently claim social security benefits. D had significantly contributed to the purchase of the property (via a joint endowment policy that was cashed in), he paid mortgage instalments and they lived together as a family with their child.
- No need to rely on illegal purpose and claim succeeded, courts prepared to infer common intention from conduct. Court said outcome should be same in Tinsley but shouldn’t make difference that D was relying on CT rather than RT because law has moved on and courts only use CT in the situation.
- CA prepared to distinguish Barrett and said although true that unlawful purpose explained conuct of OK it was just conduct that gave rise to CT.
Confusing?
Fine line between Barrett and O’kelly: was direct contribution to purchase price by D in O’kelly, no such direct contribution by Barrett but still significant financial contribution.
Need reform to clarify?
