Trusts 4 Flashcards
In what type of situation might the court use equitable principles to determine the ownership of a family home?
On the separation of a couple who were cohabiting but were neither married nor in a civil partnership, the court will apply legal and equitable principles to determine how to divide family assets (the home in particular). * If the home is owned jointly, difficulties of quantification of shares may arise. * If legal title to the property is in the sole name of one of the parties, the ‘non-owning’ party will wish to claim a share by establishing that the legal owner in fact holds the property on trust for both parties.
If a declaration of trust in relation to the equitable interest in a property exists, where is it likely to be found?
Property transfer form
Where the legal title to the family home is registered in the names of both parties, what is the starting point in determining beneficial ownership?
Whether the parties made an express declaration of trust in relation to the equitable interest in the home (i.e. is it also a joint tenancy or is there a tenancy in common with specified shares) when they bought/built the home.
If there is an express declaration of trust in relation to the equitable interest in the home that the parties are tenants in common, can equity be used to alter the proportional ownership in the declaration of trust?
No, the declaration will be conclusive in the absence of fraud or mistake, even if the owners did not make equal financial contributions.
A and B were close friends. They purchased a house together as joint legal owners. A provided 70% of the purchase price and B provided the rest. The property transfer form declared that A and B were beneficial tenants in common with each having a one-half interest. Can equity be used to alter the proportional ownership in the declaration of trust?
No. This declaraton is conclusive regardless of their unequal contributions.
If there is an express declaration of trust in relation to the equitable interest in the home that the parties are joint tenants, can equity be used to alter the proportional ownership in the declaration of trust?
No, the declaration is conclusive and the beneficial interest is held in equal undivided shares and will be distributed equally on sale of the property. It does not matter that their actual contributions were unequal.
A and B purchased a house together as joint legal owners. A provided 100% of the purchase price and paid by cash. The property transfer form declared that A and B were beneficial joint tenants of the property. Can equity be used to alter the proportional ownership in the declaration of trust?
No, the declaration is conclusive regardless of their clearly unequal contributions.
If the legal title is registered in the names of both parties but there is no express declaration of trust, what is the presumption regarding ownership of the shares in the property?
- It is presumed that the equitable interests in the property, like the legal interests, are joint and equal (equitable maxim “equity follows the law”): * Note: this can be rebutted if it is proven that both parties intended otherwise - either when the property was purchased or subsequently.
Where there is no declaration of trust, what 8 factors will the court consider in determining whether the parties had common intention to hold a property that they jointly own in unequal shares?
Courts will look at the entire course of conduct between the parties in relation to the property, including: * Advice received by the parties or discussions they had at the point of purchase* The purpose for which the property was purchased* Their motivation for purchasing the property jointly * The nature of the relationship between the parties* Whether there are children of the relationship for which the parties have a responsibility to provide a home* The way in which the parties arranged their finances (e.g. separate bank accounts)* The way in which the parties paid bills and other outgoings in relation to the property and * The reason why one party was authorised to give a valid receipt for capital monies.
P and L were in a relationship (but were not married or in a civil partnership) and purchased a home for £30,000 as joint legal owners. P put £6,000 down. The couple lived in the home together with their two children. Each contributed to payment of the household bills and mortgage. After seven years, their relationship broke down. L moved out and stopped contributing to the bill and mortgage payments. The couple cashed in life insurance policies and split the proceeds so L could buy his own home. About 13 years later, L sought payment of his alleged half-share of the house. P claimed that she owned the entire beneficial interest. Did the court use equity to alter the parties proportional ownership from the presumed 50:50 split?
The court found that while at the outset the parties may have intended that the property be split jointly, given that P made most of the payments on the home and L did not contribute to the children after he moved out, their common intention changed and was inconsistent with equal ownership. (See Jones v. Kernott [2011] UKSC 63)
If the court does find that the owners intended to hold the property in unequal shares in equity, how does it decide the proportions in which it should be held?
IT looks at the entire history of the parties’ dealing in relation to the property and to their finances e.g. in Jones v Kernott, the court considered:* each person’s financial contribution, * the fact that L built an extension to the home, * the fact that parties cashed their life insurance policies to enable to allow L to buy his own home, and * the fact that both homes substantially increased in value over the 13 yearsin coming to a 90/10 split in favour of P.
When there is a single legal owner of the family home, and there is an express declaration of trust in favour of the non-legal owner, what is the requirement for this to be enforceable?
Signed writing (the declaration can be made at the date of the conveyance or at a later date).
When will an express declaration of trust in favour of a non-legal owner of property not be conclusive?
- It may be avoided when one party is able to demonstrate fraud, mistake, or undue influence. * It may be overridden by a proprietary estoppel claim which purports to contradict the valid express declaration.
What are the 3 requirements of a proprietary estoppel claim?
The claimant must demonstrate the following: * A representation was made or an assurance (clear representation/passive encouragement) was given to the claimant* The claimant relied on the representation or assurance and * The claimant incurred some detriment (not limited to financial expenditure e.g. care/work in lieu) as a consequence of that reliance. If the claimant is successful, they will not necessarily receive what was promised in the assurance (although it is possible). The remedy will depend on the claimant’s expectation and the detriment suffered. which may be influenced by the context of the claim.
A farmer was becoming more elderly and was finding it difficult to manage the work on his farm. As he had no immediate family, he invited his nephew to come and work for him on the farm on the promise that the farm would belong to the nephew when the farmer died. The nephew worked on the farm for over 23 years for little wage. When the farmer died, his will left the farm to charity. Was any remedy available to the nephew?
There is sufficient assurance and detrimental reliance here that the nephew can mount an estoppel claim against the farmer’s estate, and it would be unconscionable for the estate to deny the claim.
