Family homes: Stack v Dowden Flashcards
When do problems for trusts for the family home arise?
Disputes as to beneficial ownership of the home are likely to arise in two broad
circumstances:
a) When the relationship breaks down
b) When one of them dies and their estate is being administered
Preliminary considerations: how does the court decide who owns the property and in what proportions?
- 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. - Sole owners:
If the property is registered in the sole name of one party then at law, the property will belong to that party. - Joint owners:
If the property is registered in joint names the couple will own the property as legal joint tenants.
What are the different ways of legal ownership?
The legal title can only be held as:
a) Sole legal owner
b) Joint tenants
The legal owner(s) can hold that title in following ways:
- As full legal and beneficial owner. (i.e. there is no separate equitable title)
- On trust for a sole beneficiary
- On trust for more than one beneficiary as joint tenants
- On trust for more than one beneficiary as tenants in common in equal shares
- On trust for more than one beneficiary as tenants in common in unequal shares
The use of express trust in relation to legal and equitable ownership?
- written evidence of an express trust; will determine the beneficial interests in the property
- The Land Registry TR1 form (needed to transfer legal title to land) includes provision for specifying equitable ownership (not compulsory and many people do not complete it) .
When this doesn’t happen we turn to IMPLIED trusts.
What are Common intention constructive trusts?
Provide a more flexible mechanism for determining beneficial ownership, allowing the court to take into account a wider range of factors than simple monetary contributions to the home.
Since Stack v Dowden it has been clear that the court must take an ‘holistic approach’ to this exercise.
What is the presumption in Stack v Dowden?
‘equity follows the law’
- If land is owned by more than one party, the legal title can only be held as a joint tenancy.
*In the absence of an express trust, it is presumed that equitable title is also held as a joint tenancy.
The importance of Stack v Dowden?
a) It involved land which was held by joint legal owners
b) The House of Lords indicated that a holistic approach should be adopted when determining legal ownership; allowing the court to take into account a much wider range of factors.
Results of Stack v Dowden?
a) Equitable title reflects legal title.
b) Sole legal ownership:
Another individual seeking to establish a beneficial interest will need to establish that they have acquired an interest under a common intention constructive trust.
(i) A common intention that they should have a beneficial interest and (ii) Detrimental reliance upon that intention
c) Joint legal ownership:
An individual seeking to establish that they are not beneficial joint tenants will need to rebut the presumption and need to show that they acted to their detriment in reliance on that common intention.
The court is seeking to establish the actual intention of the parties, whether express or inferred based on the ‘whole course of conduct’.
What is the two step approach in joint legal ownership cases?
ps: this is (c) in Stack v Dowden position.
STEP 1. Rebutting the presumption:
Did the parties have a common intention to hold the property other than as joint tenants?
And did the claimant act to their detriment in reliance on that common intention?
STEP 2. Quantification:
If the parties are not joint tenants, they must be tenants in common. But in what
proportions?
What evidence could be used to prove shared intention?
- Advice or discussions the parties had which may indicate their intention
- The reason legal title was registered in particular names
- The purpose for which the parties acquired the house
- The nature of the relationship
- Whether the parties have children
- How the house was financed
- How the parties arranged other finances and divided responsibility
for household expenses
Summary of rebutting the presumption?
Equity is presumed to follow the law.
This presumption can be displaced by evidence that:
i. the common intention was different at the time of acquisition;
or
ii. The parties later formed a different common intention.
Common intention is deduced objectively from conduct.
What is step 2 in the two step approach for joint legal owners?
Quantification:
a) an express agreement or discussion as to the parties’ respective shares is how the shares will be quantified.
b) In the absence of an express agreement, the case law again indicates that financial
factors will carry the greatest weight (but alone are not enough)
ps! imputation by the court can only occur at the quantification stage.
What is the two step approach in sole legal ownership cases?
ps: this is sole legal ownership from Stack v Dowden
Step 1.
Establishing an interest:
(i) Did the parties have a common intention for the non-legal owner to acquire a beneficial interest?
(ii) Has that person relied on this to their detriment?
- Quantification:
If the non-legal owner can establish an interest, what is the quantum of that interest as a proportion of the property?
What is step 1: establishing an interest?
- Evidence of an express common intention as to the shared ownership of the property, followed by detrimental reliance by the non-legal owner.
- In the absence of an express common intention, the court could also infer common intention from the parties’ conduct, again followed by detrimental reliance.
What do we mean by express common intention?
- should be a shared ownership not merely a shared occupation.
- Common intention to share ownership may be evidenced by the legal owner providing an excuse as to why their partner may not be jointly registered as the legal owner.
