Trusts - Implied Trusts and Family (4) Flashcards
What are implied trusts?
Implied Trusts: Courts will often ‘imply’ trusts over property in the interests of equity. This is common for family homes.
What is a resulting trust?
Resulting Trust: Resulting trusts may arise where Party A transfers property to Party B, who therein implicitly holds that property on their behalf on ‘resulting trust’.
(1) Purchase Money: Party A provides Party B with all or some of the purchase money for a property.
(2) Voluntary Transfer: Party A voluntarily transfers to Party B personalty (not land).
(3) Effect: Property is held on resulting trust for Party A, who is entitled to their financial contribution to it (but nothing further). Need not be subject to any further formalities.
Presumption of Resulting Trust
Presumption of Resulting Trust: It is rebuttably presumed that a resulting trust arises where:
(1) Voluntary Transfer: Party A transfers personalty to Party B, unless there is evidence of a contrary intention, or it is land (Thavorn v Bank of Credit).
(2) Purchase Money: Party A transfers money to Party B, to purchase a property solely or jointly on their behalf (Abrahams v Abrahams).
Exception: Not ancillary fees or later mortgage payments (Curley v Parkes).
Presumption of Advancement
Presumption of Advancement: Presumption of RC does not apply if parties are related in given ways, but this can be rebutted, and will soon be abolished (s199 EA 2010).
(1) Father to Child: Father advances personalty or purchase money to their own child, provided the child was born to married parents (Bennet v Bennet).
(2) Loco Parentis: Person advances personalty or purchase money ‘loco parentis’, meaning to someone they financially provide for as if their own child during their infancy (Bennet v Bennet).
(3) Husband to Wife: Male fiance/husband advances personalty or purchase money to their female fiance/wife (Pettit v Pettit). Not the reverse.
Rebutting Presumptions
Rebutting Presumptions: Both presumptions are rebutted with any evidence of intention to the contrary adduced prior to or during the relevant transaction - evidence post-transaction may only be used against them (Shephard v Cartwright).
Incomplete Disposal
Incomplete Disposal: Resulting trusts may also arise on ‘incomplete disposal’ of trust property, held by the trustee on trust for the settlor. For example, a child’s contingent interest fails because they die, so the property is returned on RC.
What are trusts over the family home?
Family Homes: There is no legal concept of family property. During a breakup, married couples and express co-owners are protected in several ways, but unmarried cohabitants must often rely on implied trusts instead.
(1) Legal Spouses: On divorce, legal spouses/CPs can be made subject to ‘Property Adjustment Orders’, whereby the court orders split of property at its discretion (Matrimonial Causes Act 1974/CP Act 2004).
(2) Express Trusts: If unmarried, cohabitants may rely on express trusts if expressly named as joint tenants or tenants-in-common on the property deeds or registers. This will typically determine their ownership.
Requirements: Must be evidenced in signed writing - if not, see resulting/constructive.
(3) Implied Trusts: If unmarried and there is no express trust, unmarried cohabitants may have to rely on an implied trust to defend their beneficial entitlement to property on separation.
Formalities: As implied trusts, need not be in writing.
Exception: May seek constructive trust even with an express joint ownership, if to seek a greater proportion than half.
Resulting Trust
Resulting Trust: An unmarried cohabitant may be able to impose a resulting trust, but this is constrained.
(1) Purchase Price: Only applies to purchase price, which occurs before or during transaction. Later payments or other sacrifices do not suffice.
>(A) gave (B) £5,000 to purchase house, worth £10,000. They may be able to claim 50% of this house on RC.
(2) Voluntary Transfer: Voluntary transfers do not apply to land.
(3) Remedies: Courts can only provide remedies to the extent of proportion of financial purchase contributions, which are often limited (Stack v Dowden).
What are common intension constructive trusts?
Constructive Trust: A court has discretion to impose a constructive trust where unconscionable to allow a legal owner to deprive another of their beneficial interest. Courts have a broad range of remedies (Paragon Finance v DB Thakerar). Effectively stops unjust enrichment.
(1) Common Intention: There must be a common intention between parties that the claimant was to have an equitable interest.
(2) Detriment: The claimant must have acted to their detriment in reliance on that common intention (Lloyds Bank v Rosset).
Express Common Intention
Express Common Intention: Express common intention arises where:
(1) Express Agreement: Parties expressly communicated an intention to share ownership of the home, but fell short of an express declaration of trust.
>(A) tells (B) ‘Half of this house is yours’.
(2) Detriment: Party made a material contribution or sacrifice unexplainable other than for detrimental reliance on express agreement - need not be a purchase contribution, but usually financial, for example paying for an extension or household bills.
>(B) pays all the household bills because (A) told them that half of the house is theirs.
Implied Common Intention
Implied Common Intention: Implied common intention arises where:
(1) Implied Agreement: Claimant contributed to purchase price of property, including later mortgage payments. Rarely, an agreement to pay bills so that the other party can pay the mortgage may suffice. DIY or chores will be insufficient.
>(A) buys a house with a mortgage, but (B) pays off the mortgage over the years, on the implied assumption that they own half of the house.
(2) Detriment: The payments themselves will normally suffice, so long as they are not loans, gifts or nominal.
Remedies
Remedies: Once established, courts will qualify the beneficial interest with reference to the ‘whole course of dealings’, including family raising, bill payments, earnings etc. Courts award the remedy they deem ‘fit and fair’ (Jones v Kernott).
What is proprietary estoppel?
Proprietary Estoppel: Courts may ‘estop’ a party from denying the other’s beneficial interest in a property, which can be used as both sword and shield (Pascoe v Turner).
Establishing Equity
Establishing Equity: Three elements must be approved to establish proprietary estoppel.
(1) Assurance: Party assured other that they had or would obtain rights in relation to the property.
Active: ‘The house is yours’, ‘build on my land and you can keep the property’.
Passive: Allowing someone to work for you in the belief they would inherit your house.
(2) Detriment: Claimant must act to their detriment. For example, financial contributions, voluntary improvements of the land, care sacrifices. Must be ‘well beyond’ moral duties (Re Basham).
Effect: Much more focus on non-financial detriment.
(3) Reliance: Assurance and detriment must be interlinked, one causing the other. They need not be the sole cause, but a dominant part.
Remedies
Remedies: Once established, courts have a very wide discretion as to remedies. This extends beyond mere beneficial interests, i.e. right to occupy, forced sale etc.
(1) Unconscionability: Legal owner’s denial of interest must be unconscionable. This is usually automatic if the above is established.
(2) Enforcement: Court will generally enforce the assurance, unless out of proportion.
(3) Burden: Legal owner must prove that enforcing the burden is out of proportion to the detriment. This may limit the remedy. For example, promising to transfer house for all future work, but owner dies one day later.
(4) Remedy: Courts will attempt to award the ‘minimum equity to do justice’ (Crabb v Arun).
