implied Trust

Question 1

Which ONE of the following gives rise to the presumption of advancement?

A husband made a voluntary transfer or purchased property in the name of his wife.

A grandfather made a voluntary transfer to his granddaughter on her twenty-first birthday. Apart from the usual seasonal gifts, he had not made any financial provision for her in the past.

A mother provided £20,000 for her son to buy shares in the family’s company

Harry had cohabited with Jenny for 10 years. They had two children. Harry gave Jenny a sports car on the tenth anniversary of their living together.

Answer 1

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Well done. The answer is A.
In B, C and D, it should be relatively easy to find evidence that the transferor intended a gift but nevertheless, the starting point is a presumption of resulting trust.

Question 2

Which ONE of the following is MOST LIKELY to give Ann an interest under a resulting trust?

Ann pays the conveyancing fees incurred on the purchase of a house bought in the sole name of her boyfriend, Bob.

Ann has paid the monthly mortgage instalments on a house purchased three years ago in the sole name of her boyfriend, Bob.

Ann pays for a conservatory to be added a house purchased three years ago in the sole name of her boyfriend, Bob.

Ann pays £10,000 towards the deposit on a house purchased in the name of her boyfriend, Bob.

Answer 2

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Well done. The answer is D. A resulting trust arises when a claimant contributes to the initial purchase price of a house conveyed into the name of another.
A is not correct because conveyancing fees are not considered as part of the payment of the purchase price of the property which could give rise to a trust interest.
B and C are not correct because subsequent payments of mortgage instalments and paying for subsequent works are not relevant when seeking to imply a resulting trust.

Question 3

Which ONE of the following statements is CORRECT?

Liam gives his son Peter £5,000 as a marriage gift. The marriage is extremely short-lived. There is a resulting trust back to Liam.

Andrew transfers £20,000 to Tom to hold on trust for James if he attains 30 and if he does not, then for Kim absolutely. James dies aged 27. Kim is alive. Tom holds the £20,000 on a resulting trust for Andrew.

Jessica’s will contains a legacy of £10,000 to Tim on trust to give Jessica’s children “fair amounts”. Jessica has died. The £10,000 will be held on a resulting trust.

Kestrell Bank enters into a contract to give Frances a loan of £10,000. Frances spends the money straightaway and then goes bankrupt. There is a resulting trust for Kestrell Bank.

Answer 3

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Well done. The answer is C. The trust fails because the subject matter is uncertain and, therefore, there must be a resulting trust.
In A, Liam did not create a trust for Peter. It was an outright gift. The marriage was the motive for the gift, no more. The £5,000 belongs to Peter.
In B, the express trust fails because the beneficiary does not satisfy the contingency, but the settlor has said what is to happen in this event. A resulting trust will only arise where a settlor creates an express trust which fails, and there is no direction as to the trust property on such failure.
In D, Kestrell Bank has not created an express trust, and this negates the possibility of a resulting trust. The money was advanced under a contract and the Bank may have contractual rights to recover the loan but cannot claim a resulting trust.

Question 4

Which ONE of the following statements about common intention constructive trusts is CORRECT?

A constructive trust arises if there was an express common intention that the claimant should have an interest whether or not the claimant acted to her detriment.

A common intention that the claimant should have an interest cannot be inferred.

A common intention that the claimant should have an interest can be inferred from the whole course of dealings.

The whole course of dealings is relevant only to quantifying the claimant’s interest under a constructive trust.

Answer 4

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Well done. The answer is D. The court will not look at the whole course of dealings in order to infer a common intention (so C is not correct). However, the whole course of dealings is relevant to the second stage of quantifying the claimant’s interest.
A is not correct because detriment is required as well as a common intention.
B is not correct because the court can infer a common intention from the fact that the claimant contributed to the purchase price or made a significant contribution to the mortgage payments (Lloyds Bank v Rosset).

Question 5

Two years ago, Kenneth bought his first home. He had to pay a deposit of 10% of the purchase price and funded the rest of the purchase with a mortgage loan. Kenneth’s father, Harry, gave him the money for the deposit.

Which ONE of the following statements is CORRECT?

There was a presumption that Kenneth holds the title to the house on a resulting trust for Harry.

There was a presumption that Harry intended a gift of the deposit money because the presumption of advancement applies to fathers and their children.

There was no presumption either way because of s60(3) LPA 1925.

There were no presumptions because there has been no voluntary transfer nor a purchase in the name of another.

Answer 5

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Well done. The answer is B. The presumption of advancement applies between father and child.
A is not correct because when a father provides purchase money for his child, the presumption of resulting trust is displaced by the presumption of advancement.
C is not correct because s60(3) LPA 1925 only relates to voluntary transfers of land and this question concerned provision of purchase money.
D is not correct because there has been a monetary contribution by Harry to the purchase of property in the name of another, Kenneth.

Question 6

When considering how the court quantifies a claimant’s interest in a family home under a constructive trust, which ONE of the following answers is CORRECT?

The courts award an interest proportionate to the claimant’s financial contribution to the purchase price.

The courts will award the share intended by the parties or, if the parties’ express or inferred intention cannot be ascertained, the share which would be fair having regard to the whole course of dealing between the parties.

The courts always award a half share in the property.

The courts award the same share which the claimant would obtain under a resulting trust.

Answer 6

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Well done. The answer is B. The courts try to discover what shares the parties intended. If the intended shares cannot be ascertained, the court will award shares that would be fair.
A is not correct because the share in the property under a constructive trust need not be in direct proportion to the financial contribution made to the purchase.
C is not correct because, while in jointly owned property the starting presumption is equal shares, this presumption can be displaced (see Stack v Dowden) and in claims involving a solely owned property, if the trust is established, the share will be determined in accordance with the parties’ intentions or by the court which may or may not be a half share.
D is not correct because under a resulting trust the share will always be in direct proportion to the financial contribution to the purchase price. This is a significant difference between resulting trusts and constructive trusts

Question 7

Which ONE of the following statements about proprietary estoppel is CORRECT?

In claims for proprietary estoppel, the assurance that the claimant has an interest has to be an express statement by the legal owner of the property.

In claims for proprietary estoppel, the claimant’s detriment has to consist of the payment of money.

In claims for proprietary estoppel, the court has a discretion over the remedy.

In claims for proprietary estoppel, successful claimants always get the property or interest which was promised.

Answer 7

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Well done. The answer is C. To bring a successful claim for proprietary estoppel, the claimant must show that they received an assurance that they had, or would have, an interest in property which they relied on and acted to their detriment. If an estoppel is established, the court has a discretion over the remedy and will take account of the expectation and the detriment to reach an outcome which is fair and proportionate
A is not correct because the assurance can be an active assurance or can consist of the defendant standing-by knowing that the claimant is acting to their detriment believing that they have an interest in the property.
B is not correct because the claimant’s detriment does not have to be the payment of money. It could comprise refusing jobs, looking after the defendant, or working for low wages
D is not correct because the court will consider whether the detriment the claimant experienced matches the property or interest they expected as a result of the assurances. The remedy is intended to be fair and proportionate and may not be what the claimant was promised.

Question 8

Bert transfers £30,000 to his solicitor, Samantha, to hold on trust for “those people who have helped my wife and me the most, in equal shares”. The trust fails because the objects are uncertain.

Is the following statement TRUE or FALSE?

Samantha holds the £30,000 on resulting trust for Bert.

True

False

Answer 8

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Well done. The statement is TRUE. Samantha holds the £30,000 as trustee; it is not her money. As the original trust has failed, it is presumed that the settlor, here Bert, would want the money back. Samantha, therefore, holds the £30,000 on a resulting trust for Bert.

Question 9

Hayden’s will included a legacy of £30,000 to Kristen to hold on trust for “such of my grandchildren as attain the age of 21 and if more than one in equal shares”. The will gave the residue to Victoria. Both his grandchildren were killed in a skiing accident when they were 19 and 17, respectively. Hayden has just died.

Is the following statement TRUE or FALSE?

The £30,000 will be held on a resulting trust for Hayden’s next of kin under the Intestacy rules.

True
False

Answer 9

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Sorry. The statement is FALSE. The trust will fail because neither grandchild satisfied the contingency (they both died before attaining the age of 21). Kristen holds the £30,000 as trustee and it is presumed that the money will result back to the estate. However, the £30,000 will be held on resulting trust for Victoria, the residuary beneficiary. The next of kin would only benefit if the will contained no valid gift of residue.

Question 10

Is this statement TRUE or FALSE?

Once a couple have cohabited for a period of more than ten years, there is a statutory regime equivalent to the Matrimonial Causes Act which determines the parties’ affairs when their relationship breaks down.

True

False

Answer 10

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Sorry. The statement is FALSE. Where a couple are not married (or in a civil partnership), when their relationship breaks down, their affairs are governed by trust law principles. Only married couples and those in civil partnership benefit from a statutory regime in determining who gets what when the relationship ends in divorce or dissolution

Question 11

Is this statement TRUE or FALSE?

It is only possible to bring a claim for proprietary estoppel over a disputed interest in land.

True

False

Answer 11

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Well done. The statement is FALSE. A claim for proprietary estoppel can be brought in relation to a disputed interest in personalty as well as land.

Question 12

Is this statement TRUE OR FALSE?

A party cannot introduce evidence of his own act made after a purchase or voluntary transfer to rebut a presumption.

True

False

Answer 12

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Sorry. The statement is TRUE. A person who wishes to rebut the appropriate presumption following a purchase or transfer cannot use evidence of his actions made after the transaction, only those at the time (Shephard v Cartwright).

Question 13

Is the following statement TRUE or FALSE?

The courts are more likely to use constructive trusts rather than resulting trusts to determine a cohabitee’s share in a home which is in the sole name of his or her partner.

True

False

Answer 13

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Well done. The statement is TRUE. Because of the limitations of the resulting trust, which focuses solely on monetary contributions made contemporaneous to the purchase of the home, courts generally now determine beneficial interests in the family home under common intention constructive trust principles.

Question 14

Is this statement TRUE or FALSE?

If bringing a claim under proprietary estoppel, when evidencing that they acted to their detriment in reliance upon the assurance given, the claimant must be able to evidence that they have financially contributed to the property in dispute.

True

False

Answer 14

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Well done. The statement is FALSE. The claimant’s detriment does not need to consist of financial expenditure on the property. The detriment must be substantial, but could be working without remuneration, relocating to a new area so giving up family support and a child’s educational consistency, giving up the chance of alternative employment, the provision of medical care.

Question 15

Is the following statement TRUE or FALSE?

As with express trusts of land, an implied trust of land, whether a resulting or constructive trust, will need to be evidenced in signed writing.

True

False

Answer 15

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Well done. The statement is FALSE. Implied trusts of any kind do not need to be evidenced in signed writing (s53(2) LPA 1925).

Question 16

Is this statement TRUE or FALSE?

Payment of household expenses will never be considered as a contribution to the purchase price when inferring a common intention constructive trust.

True

False

Answer 16

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The statement is FALSE. Lord Bridge’s comments in Lloyds Bank v Rosset, suggested that the courts would only infer a common intention from direct contributions to the purchase price (e.g., payment of part of the deposit or a contribution towards mortgage repayments). He doubted whether anything less (such as payment of household expenses) would do. However, it may be possible, in very specific circumstances, for indirect financial contributions such as the payment of household expenses to be sufficient to infer a common intention. The household expenses must be substantial and enable mortgage payments to be met by the legal owner (see Le Foe v Le Foe).

Question 17

Is this statement TRUE or FALSE?

When looking at the whole course of dealing between the parties to ascertain what beneficial shares under a constructive trust would be fair, the court could consider financial and non-financial factors when considering the parties ownership and occupation of the property.

True

False

Answer 17

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Well done. The statement is TRUE. While financial contributions to the property and the relationship would be considered, the court could also consider such things like the advice received when the property was purchased, whether there are children of the relationship, how the parties arranged their finances, the reasons the property was acquired (Stack v Dowden).

Question 18

Is this statement TRUE or FALSE?

Where the legal title to the family home is owned jointly by two co-habiting partners, it is presumed that they own the equitable interest to that home in equal shares. It is not possible to rebut this presumption.

True

False

Answer 18

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Well done. This statement is FALSE. While the starting presumption regarding the beneficial ownership of jointly owned property is that the property is held on trust in equal shares (on the basis that “equity follows the law”), it is possible for the parties to agree the size of their respective beneficial interests which may be other than equal, and this agreement can be changed over time if necessary. If one party wishes to challenge the presumption to achieve a larger share, then a court application would need to be made and it will be for the claimant to provide the necessary evidence to rebut the presumption. The court will consider the whole course of dealing between the parties in relation to their ownership and occupation of the property to arrive at what it considers a fair division. It is, however, rare that the court will consider anything other than joint and equal to be the fair result but see Stack v Dowden where the court did award the claimant a greater beneficial share of the property.

Question 19

Is this statement TRUE or FALSE?

A common intention constructive trust only deals with the existing interest in property. However, proprietary estoppel can relate to an entitlement to an interest in property at some point in the future.

True

False

Answer 19

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Well done. The statement is TRUE. Under the trust, the claimant’s interest arises at the time of the parties’ common intention to share ownership upon which the claimant then relies to his detriment. Under proprietary estoppel, the claim can relate to an interest in the property which is only to arise at some point in the future, e.g., when the legal owner dies.

Question 20

Is this statement TRUE or FALSE?

Although a claimant may be successful in establishing their right to a remedy under proprietary estoppel, there is no guarantee that they will receive that remedy or what any remedy might be.

True
False

Answer 20

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Well done. The statement is TRUE. Unlike a successful claim to a common interest constructive trust where the remedy is guaranteed to be a share in the property under a trust, under proprietary estoppel the court has a wide discretion over whether a remedy should be awarded at all and, if yes, what type. The court will seek to achieve an outcome which is fair and proportionate between all the parties, which may be monetary compensation rather than an interest in the property itself or merely the right to rent-free occupation of the house.

Question 21

A man bought property with the aid of a mortgage in his sole name. The man and his girlfriend lived at the property for ten years but did not marry or form a civil partnership.

Which of the following is most likely to give rise to a constructive trust in favour of the girlfriend?

The man said to the girlfriend, ‘The property will always be somewhere we can both call home.’ During the ten years that they lived together, the girlfriend paid three mortgage instalments.

The man said to the girlfriend, ‘The mortgage company does not want you on the mortgage because you don’t earn enough.’ During the ten years that they lived together, the girlfriend paid for all their international holidays together.

The man said to the girlfriend, ‘Thanks for paying half the deposit on the property. We’ll be joint owners and you’ll make a massive profit when we sell.’ During the ten years that they lived together, the girlfriend paid all the household bills, and the man paid the mortgage instalments.

The man and the girlfriend did not discuss ownership of the property, but girlfriend thinks that she should have a share because she spent an inheritance of £60,000 on building an extension which has added to the value of the property.

The man and the girlfriend did not discuss ownership of the property, but the girlfriend thinks that she should have a share because she gave up her job to look after the two children whom they had together.

Answer 21

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Well done. The correct answer is Option C. A constructive trust arises if there is a common intention (express or inferred) that the claimant should have an interest and she acts to her detriment in reliance on the common intention. In Option c, there was an express common intention that the girlfriend should have an interest and her payment of household bills was sufficient detriment (Grant v Edwards).
Option A is wrong as the man’s statement arguably was not referring to ownership of the house but just acknowledged the girlfriend’s right to live there. In any event, payment of three mortgage instalments is probably not enough for detriment.
Option B is wrong because while the man’s statement does provide a reason for why the girlfriend is not on the legal title and this could indicate an express agreement as to ownership – they would both have been legal owners were it not for the lender’s position (Grant v Edwards), the payment of all the holidays would not be evidence of detrimental reliance.
Options D and E are both wrong as there was no express common intention and the girlfriend’s acts will not lead the court to infer a common intention (Lloyds Bank v Rosset).

Question 22

A father of two children was the chairman of a private company and the sole owner of all five shares in the company. Three years ago, his children started work in the business, and the father transferred one share in the company to each of them, using the correct formalities. Last year, the father remarried, and he made a will which gave all his estate to his new wife. The father told his new wife that his estate included all five shares in the company including those nominally held by his children. The father has now died.

Which of the following statements best describes the position in relation to the disposal of the shares?

The new wife will be able to claim all five of the shares in the company under the presumption of resulting trusts.

The new wife will be able to rely on the father’s will and his statements last year to rebut the presumption of advancement and claim all the shares

In order to retain the shares, the children will have to rebut the presumption of resulting trust.

The new wife will be able to claim all five of the shares as the contents of the will are conclusive.

When the father transferred the shares to the children, the presumption of advancement applied.

Answer 22

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Sorry. The correct answer is Option E. This was voluntary transfer of the shares from a father to his children; the presumption of advancement, that it was a gift, applies and the children have owned the shares outright since they were transferred.
Option A is wrong because the presumption of resulting trust did not apply to the transfer of the two shares to the children. They were validly given away three years ago. Therefore, the father only owned the three remaining shares at the time of his death.
Option B is wrong because the new wife will be using the evidence to rebut the presumption of advancement which arose three years ago. The will and the statements last year are evidence of the father’s own actions and not contemporaneous to the initial transfer. They will not be admissible to support her case (Shephard v Cartwright).
Option C is wrong because the presumption of advancement arose when the transfer was made three years ago, and this works in the children’s favour. They have nothing to rebut.
Option D is wrong because the contents of a will are conclusive only in respect of property owned by the deceased at the date of death. Because of the application of the presumption of advancement and the correct transfer of the two shares three years ago, the father only owned three shares in the company when he died, and these are what the new wife will inherit.

Question 23

Four years ago, a woman bought a house in her sole name with the aid of a mortgage loan but had no other financial assistance. The following year, her boyfriend moved in with her and agreed to spend £40,000 on building an extension to the house, doing a lot of the work himself. The woman admits that she knew that the boyfriend did this thinking he would get some kind of interest in the house. The woman has now asked the boyfriend to leave because he refuses to marry her. The boyfriend is claiming an interest in the house.

Which of the following best sets out the basis upon which the boyfriend should claim that interest?

The boyfriend should claim an equitable interest under a resulting trust.

The boyfriend should claim an equitable interest under an inferred common intention constructive trust.

The boyfriend should claim an equitable interest under the presumption of advancement.

The boyfriend should claim an equitable remedy under proprietary estoppel.

The boyfriend should claim an interest in the house as the couple have live together for more than two years.

Answer 23

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Sorry. Option D is the best answer. If the woman allowed the boyfriend to spend the £40,000 and work on the extension knowing that he believed he would have an interest in the house as a result, this passive assurance by failing to correct his mistake could be sufficient to establish a proprietary estoppel given that the boyfriend has acted to his detriment. Note that it is not guaranteed that the boyfriend will secure an equitable interest in the house even if his claim for proprietary estoppel is successful (the court having a broad discretion as to the remedy which should be ordered). Nevertheless, this option still represents the boyfriend’s best possible claim on the facts.
Option A is wrong because the boyfriend will not get an interest under a resulting trust because he did not contribute money at the time of the purchase.
Option B is wrong because for an inferred common intention, Lloyds Bank v Rosset said there had to be a contribution to the purchase price at the time of the purchase or payment of a substantial number of mortgage instalments. Neither occurred here.
Option C is wrong because there has been no voluntary conveyance or the provision of purchase money to give rise to a presumption of advancement, which in any case, does not operate between unmarried couples.
Option E is wrong because unmarried cohabitees have no property rights over the assets of the other merely by virtue of their co-habitation regardless of the length of time involved.

Question 24

Three years ago, an estate agent sent a letter,enclosing a cheque for £10,000, to a paramedic that said, ‘As agreed, cash this cheque and give most of it to your daughter and then the rest to your son when they reach the age of21years’. The daughter was then aged 18 years and the son was aged 12 years. The paramedic cashed the cheque.

The daughter has now reached the age of 21 years and has found the letter. She wants the paramedic to transfer at least a half share of the money to her (she has not discussed this with her brother). The estate agent has recently fallen out with the paramedic and has written to the paramedic demanding that she return the money to him.

Must the paramedic return the money to the estate agent?

Yes, because whilst the estate agent tried to create a trust in favour of the paramedic’s children, that trust failed due to uncertain intention.

Yes, because whilst the estate agent tried to create a trust in favour of the paramedic’s children, that trust failed due to uncertain subject-​matter.

Yes, because whilst the estate agent tried to create a trust in favour of the paramedic’s children, the trust offended the relevant perpetuity rules

No, because the daughter has reached the age of 21 years and her entitlement to the money has vested.

No, because the estate agent created a valid trust. Given that the declaration of trust did not specify the shares that each child would get, the law presumes that each child gets an equal share.

Answer 24

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Sorry. Option B is correct. The estate agent tried to create an express trust. The reason that trust is ineffective is due to the beneficial interests being uncertain (which is an aspect of the second certainty –​ certainty of subject-​matter). The paramedic does not know how to separate the trust property between the daughter and son. All she knows is that she must give the daughter more than the son, but beyond that the distribution between the two is unclear. The paramedic therefore holds the legal title in the money on resulting trust for the estate agent. As that resulting trust is a bare trust and the estate agent is absolutely entitled, he can call for that money back.
Option A is wrong. There is certainty of intention –​ it is clear that the paramedic had to hold the money on trust for other people.
Option C is wrong. Had the trust been valid, the contingent interests were clearly capable of vesting within the perpetuity period of 125 years (being the perpetuity period relevant to trusts for individuals).
Option D is wrong. As the express trust fails, the daughter has no beneficial interest in the money, whether she reaches the age of 21 years or not.
Option E is wrong. This is not a case where the law can presume that each person should get an equal share as this runs counter to the estate agent’s intention in setting up the trust (the only thing we know for certain is that he wanted the daughter to get more than the son).

Question 25

A son owned a house. His father came to live with him four years ago. Two years ago, the son and his wife separated. The son was worried that his wife might divorce him and was worried about what that might mean for the house. He therefore transferred the house into the father’s sole name. No money exchanged hands between father and son. The son and wife have now reconciled, and no divorce proceedings are ongoing.

Throughout the past four years, the father and son welcomed paying lodgers into the house. The money from these lodgers was only ever paid to the son.

The father has recently died and, in his valid will, left the house to his daughter.

Which of the following statements best describes why the son has a beneficial interest in the house?

The son has a beneficial interest because he continued to live in the house.

The son has a beneficial interest because a presumption of resulting trust arose in the son’s favour that has not been rebutted on the facts.

The son has a beneficial interest because a presumption of advancement arose in the son’s favour that has not been rebutted on the facts.

The son has a beneficial interest because a resulting trust can be inferred on the facts.

The son has a beneficial interest because a presumption of advancement arose in the father’s favour but this has been rebutted on the facts.

Answer 25

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Sorry. Option D is correct. When the son transferred the house into the father’s sole name, he was making a voluntary transfer of realty. In most cases, when a son voluntarily transfers property to a father, a presumption of resulting trust will apply. However, the position seems to be different for realty (land); ​ in these cases, it seems that no presumption of resulting trust will apply simply because one party has voluntarily transferred land to another. Having said that, a resulting trust is likely to be inferred in this case, given that the son continued to profit from the income being generated from the house. This additional evidence indicates an intention that the son retained a beneficial ownership in the house even when he transferred the legal interest to his father.
Option A is wrong. The mere fact that you live in a house does not by itself give you a beneficial interest in that house.
Option B is wrong. Whilst there is some doubt, the effect of s 60(3) of the LPA 1925 appears to prevent a presumption of resulting trust arising merely by the fact that one person has voluntarily transferred land to another. This option therefore is not the best description of why the son has a beneficial interest in the house.
Option C is wrong. Whilst a presumption of advancement would have arisen had the father voluntarily transferred land to his son, no similar presumption arises when a son voluntarily transfers land to his father. The transfer is the wrong way round.
Option E is wrong. A father can never benefit from the presumption of advancement. Victorian morality dictates that a father is financially responsible for his children. In the right situations, the presumption of advancement may benefit his children, but never him

Question 26

Five years ago, a man and his girlfriend were looking for a house that they could move into and call their family home. They found a house they both liked. The man told his girlfriend that he would pay the deposit but asked whether she could pay the conveyancing fees for him because he had forgotten to budget for this. She did so. When they first went to see their solicitor on the purchase of the house, they agreed that the house should be put in their joint names. However, after discussions with the bank to get a mortgage, the bank advised it would be better for the house and mortgage to be in the man’s sole name, because his girlfriend had a low credit rating that might make it difficult for them to get mortgage finance. The girlfriend agreed to this.

Over the next five years, the man paid the monthly mortgage instalments. His girlfriend got a job three years ago, and since then she has paid the utility bills and also paid for the expensive work that was done to put in a new bathroom.
The relationship between the man and his girlfriend has now broken down. She has moved out and the man is looking to sell the house

Does the girlfriend have an interest in the house?

Yes, because paying the conveyancing fees gives her an interest in the house under a resulting trust.

Yes, because there was an express understanding that she was to have an interest on which she relied.

Yes, because whilst there was no express understanding that she was to have an interest, the fact that she paid a significant number of utility bills and paid to install a new bathroom means that she will get an interest under a common intention constructive trust.

No, because no trust was manifested and proved in signed writing.

No, because she did not make any payment towards the deposit or the subsequent mortgage instalments.

Answer 26

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Sorry. Option B is correct. The evidence suggests that but for the bank’s advice to keep the house in the man’s sole name, it would have been registered in the joint name of him and his girlfriend. That can constitute an express common intention that his girlfriend was to have an interest in the home. She has also suffered detrimental reliance in the substantial payments she has made to household improvements and expenses.
Option A is wrong. To give rise to a resulting trust, any contribution must be to the purchase price itself, not to ancillary items such as legal fees.
Option C is wrong. There was an express common understanding that ownership of the house would be shared. In any event, in the absence of such an express understanding, it is unlikely that the payments the girlfriend did make would be sufficient to enable a common intention of ownership to be inferred. There is no suggestion that she made any significant payment towards the mortgage.
Option D is wrong. Whilst it is correct to say that there can be no express trust, because such a trust over land would have to be evidenced in signed writing, it is not correct to say that there cannot therefore be any trust, and a common intention constructive trust will have arisen on the facts. Such implied trusts do not need to be evidenced in signed writing.
Option E is wrong. Given that there was an express common understanding that the house be shared, the court can take a wider view as to what constitutes detrimental reliance beyond those items listed in this option.

Question 27

A man bought shares in a company. His son’s name was listed as the owner of the shares in the company’s register of members. The son was aged 25 years. On the same day as the purchase took place, the son emailed the man to say, ‘Hi Dad. When I get the share documents, I will send these over to you as agreed. As we also agreed, if any dividends are paid on these shares, I will forward those on to you as well.’

A year later, the man instructed a solicitor to draw up a will for him. He said that the value of the shares had doubled over the last year and that he wanted to leave them to his wife.

Does the man have a beneficial interest in the shares?

Yes, because he paid for the shares.

Yes, because the email from the son a year ago is sufficient to rebut the presumption of advancement that would have otherwise applied.

Yes, because the fact that he instructed a solicitor to draft a will leaving the shares to the wife is sufficient to rebut the presumption of advancement that would have otherwise applied.

No, because the presumption of advancement applies and can never be rebutted.

No, because his name is not listed in the company’s register of members.

Answer 27

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Sorry. Option B is correct. The man has purchased shares in the name of his son. Whilst the presumption of advancement applies whenever a father transfers property to, or purchases property for, his child, here there is likely to be sufficient evidence to rebut that presumption. That evidence is the email contemporaneous with the purchase recording an agreement that the man would hold the share certificate (which indicates an intention that the man should continue to have some kind of interest in the shares) and that future dividends would be paid to the man (which indicates some kind of entitlement to the shares). It is likely therefore that the man has retained a beneficial interest in the shares.
Option A is wrong. Just because the man paid for the shares does not necessarily mean that he will retain an interest in them.
Option C is wrong. Whilst the presumption of advancement initially arose on the purchase of the shares, this cannot be rebutted by the instructions the man gave to the solicitor. The man would want to use those instructions as evidence that he retained an interest in the shares. However, evidence of words and conduct after the purchase had taken place would only be admissible against the man’s case and could not be used in support of his case. As a result, the instructions to the solicitor are not sufficient by themselves to rebut the presumption of advancement.
Option D is wrong. Whilst it is correct to say that the presumption of advancement initially arose on the purchase of the shares, it is not correct to say that this presumption can never be rebutted. The presumptions of resulting trust and advancement are just presumptions and are often readily rebutted in the light of contrary evidence.
Option E is wrong. Whilst the man does not own legal title to the shares given that his name is not listed in the register of members, he can still own the beneficial interest in the shares.

Question 28

An elderly aunt asks her niece to move in and look after her. The niece loves her aunt but expresses reservations about whether such a move would be possible. She has a child who goes to school near to where she lives; she works full-​time and there is talk that she might get a promotion. To persuade the niece to change her mind, the aunt promises that when she dies, she will leave the house to the niece. The niece agrees to move in. She provides her aunt with round-​the-​clock care for no pay (other than the aunt meeting all her living expenses), quits her job and takes her child out of school, home-​schooling him whenever there is a free moment.

Eight years later, the aunt dies. The niece finds out that the aunt has left her house to a friend.

Which of the following statements best describes why the niece might have an interest in the house?

The niece should have an interest under a common intention constructive trust arising out of the express understanding that she was to have an interest in the house.

The niece should have an interest under a common intention constructive trust arising out of an inferred understanding that she was to have an interest in the house.

The niece should have an interest because she can establish proprietary estoppel arising out of an active assurance, which automatically guarantees her an interest in the house.

The niece should have an interest because she can establish proprietary estoppel arising out of an active assurance, which means it is likely that she will get an interest in the house.

The niece should have an interest because she can establish proprietary estoppel arising out of a passive assurance, which means it is likely that she will get an interest in the house.

Answer 28

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Sorry. Option D is correct. The aunt actively assured the niece that the house would belong to her, and the niece appears to have relied on that assurance to her detriment. Whilst the court has a discretion about what remedy to award, it is likely that the court will award the niece an interest in the house. (Indeed, on the facts, it is likely that that interest would be an absolute ownership right to the entire house. The court would therefore transfer the house to her.)
Options A and B are wrong. Common intention constructive trusts are used to establish present interests in property (ie when two partners share a house together). They are not used to establish future interests in property, as in this scenario. The niece will need to assert proprietary estoppel. Proprietary estoppel prevents the aunt from backtracking on her assurance that in the future the house will belong to the niece.
Option C is wrong. Whilst proprietary estoppel can be established in this case, that does not automatically guarantee the niece a proprietary interest in the house. The remedy is ultimately within the discretion of the court.
Option E is wrong. The assurance in this case was active not passive. This is not a case where the aunt stood back and allowed the niece to think that she was getting some kind of proprietary interest –​ the aunt had actively suggested this.

Question 29

A man started to go out with a woman who lived in the same town. The woman was about to buy a house. She paid most of the deposit on the house but needed some help from the man. He agreed to lend her some money, which she repaid the following month. The mortgage was taken out in her sole name.

The man’s tenancy came to an end around the same time, and he lost his job. He moved into the house. The woman told the man that although the house was in her name, he should consider the house as much his as it was hers. The man looked for work but could not find a job. The man was therefore unable to make any contribution to the mortgage repayments, the running of the house or any renovations to the house.

The relationship has now come to an end. The man did not marry the woman and there were no children. The woman has put the house on the market.

Does the man have a beneficial interest in the house?

Yes, because he was the beneficiary under an enforceable express trust.

Yes, because there was an express agreement to that effect.

Yes, because he lent the woman money to pay the deposit without which she could not have bought the house in the first place.

No, because no declaration of trust was manifested and proved in signed writing.

No, because the house was in her sole name, which automatically prevents him taking a beneficial interest

Answer 29

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Well done. Option D is correct. To work out why, we shall first consider why the other options are wrong.
Option A is wrong. The woman’s statement to the man that he should consider the house as much his as hers might demonstrate an intention to create an express trust, but as that express trust was to be over land, to be effective it must have been evidenced in signed writing. This has not happened.
Option B is wrong. Whilst there was an express common understanding that the man was to take a beneficial interest in the house, that would only give rise to a common intention constructive trust (or a claim for proprietary estoppel) if he had acted on that understanding to his detriment. There does not appear to be anything on the facts that would constitute detrimental reliance.
Option C is wrong. Whilst a contribution to the deposit can create beneficial interests under an implied trust, lending the money for a deposit does not constitute a ‘contribution’ for these purposes.
Option E is wrong. Just because the legal title to a home is in the sole name of one partner does not automatically prevent the other partner from getting a beneficial interest in the home.
Option D is therefore the best answer. For the reasons set out above, the man cannot assert an interest under an implied trust (resulting or constructive) or proprietary estoppel, nor can he assert a beneficial interest by way of an express trust. In order to be enforceable an express trust must comply with s 53(1)(b) of the LPA 1925, i.e. it must be evidenced in signed writing. This has not happened.