Trusts of the Family Home

Question 1

What proportion of society are co-habiting?

Answer 1

Co-habiting, unmarried couples are the fasting growing section of society, out of 18.9 million in the UK, 3.3 million are co-habiting, Lady Hale in Stack v. Dowden notes that it will grow to be 1 in 4 by 2031.

Question 2

What is the issue facing the law that trusts of the family home is best placed to remedy?

Answer 2

The increase in co-habiting couples leads to potentially harsh repercussions upon separation of the couple, in terms of separation of property, if there is no divorce procedure. An example of this can be seen through the case of Burns v. Burns.

Question 3

Burns v. Burns [1984]

Answer 3

B and B live together in a quasi-martial situation, where Mr. B was the sole legal owner of the property. Ms. B gained “pin-money” through working for his driving school etc.
The relationship ended and Ms. B moved into her car
She argues that she is entitled to a beneficial share in the property - this seems unfair

Question 4

What should a couple do to prevent a situation like Ms. Burns?

Answer 4

Formalise the relationship can take on a different legal persona. Even if you don’t formalise the agreement, you can formalise the living arrangement.

Question 5

If a married couple splits, what are the provisions about divisions of assets? What about a civil partnership or an engaged couple?

Answer 5

There are a range of order found in the Matrimonial Clauses Act 1973. This can also be found in the Civil Partnership Act 2004 for civil partnerships. For an engaged couple there are niche provisions available under the Matrimonial property and proceedings act 1970

Question 6

How could a couple go about formalising the living arrangement?

Answer 6

Under s.53(1)(b) there can be signed writing for some trust in land, therefore it is possible to write up the equitable interest and specify who holds it.

In the case of Carlton v. Goodman Lord Ward argued that couples should consider if they are entering into a joint tenancy or a tenancy in common before taking ownership of the property, he stressing the importance of considering how the beneficial ownership is held.

HOWEVER THIS IS UNLIKELY TO HAPPEN!

Question 7

How has the government attempted to force people to have a conversation about the beneficial interest being held?

Answer 7

When a TR1 form is filled in there is a valid receipt clause, under s.10 which establishes that couples should discuss how the beneficial interest is held.

However this may be left blank and is only relevant in joint owner cases.

Question 8

What are some form of writing to establishing how the beneficial interest of the property is held?

Answer 8

A living together agreement or a basic contract concerning the property. (s.53 (1)(b) merely requires some signed writing).

Question 9

is there such thing as a common law marriage?

Answer 9

nope!

Question 10

What are the 3 ways of determining beneficial ownership through informal means?

Answer 10

S.53(1)(b) does not apply to constructive, implied or resulting trusts, therefore:

1. resulting trusts
2. equitable proprietary estoppel
3. common intention constructive trusts

Question 11

How would resulting trusts be used in establishing a trust in the family home?

Answer 11

The contribution of the money reverts back to the contributor as it is held on resulting trust for that person. - this was stated in the case of Dyer v. Dyer by Eyre CB

Question 12

What is the current view of resulting trust in establishing a trust in the family home?

Answer 12

There is a diminishing relevance of resulting trusts in the family home. This was stated in the case of Stack v. Dowden [although in this case, Lord Neuburger held a strongly dissenting judgement, arguing for there use]

Lady Hale and Lord Walker in the case of Jones v. Kernott [2011] confirmed that resulting trusts should not be used in cases in a family context.

Question 13

When are resulting trusts relevant in family homes?

Answer 13

Laskar v. Laskar held that they are relevant in considerations surrounding investment purchases and not purchases of the home

Question 14

What is the relevance of equitable proprietary estoppel in trusts of the family home?

Answer 14

when an assurance of a property or interest there is is made, which is subsequently relied upon this promise is binding.
This can be demonstrated by the case of Lissmore v. Downing.

Question 15

Lissmore v. Downing.

Answer 15

A rock star and his girlfriend lived together he tell her “you never need to worry you pretty little head about anything”, “you will never be in want of anything” and calls her “the lady of the manner” (he sought legal advice of how to talk to her to ensure she gets no interest in the property) - court held there was not assurance which could be relied upon, therefore no proprietary estoppel.

Question 16

What are other cases concerning proprietary estoppel?

Answer 16

Jennings v. Rice and Pascoe v. Turner - however must note the courts wide discretion in remedying the estoppel.

Question 17

What are the two starting points for a common intention constructive trust?

Answer 17

sole owner cases and joint owner cases - this was established by Lady Hale in the case of Jones v. Kernott.
Sole owner cases is where the claimant whose name is not on the register has the burden of establishing an implied trust
Joint owner cases is where the claim of joint ownership but they are arguing over the division of share of the property.

Question 18

Example of a joint owner case?

Answer 18

Jones v. Kernott and Stack v. Dowden

Question 19

Example of a sole owner case?

Answer 19

Burns v. Burns, Rossett, Ewes v. Ewes, and Grant v. Edwards

Question 20

Stack v. Dowden [2007]

Answer 20

S and D are joint owners of a property and had an 18 year relationship with children, when the relationship breaks down S moves out of the property, there was a complex financial situation, however there was dispute over the contributions to the purchase price, however the courts held that she was entitled to 65% however this was not on resulting trust this was on constructive trust

Question 21

Judgement in Stack v. Dowden

Answer 21

H of L held that equity follows the law therefore there is a presumption of a joint tenancy, it is therefore important to search for the parties intention, adopting a holistic approach considering all the facts of the case.
In the search for the parties intentions these can be actual, inferred or imputed.

Question 22

Resulting trust or constructive trust?

Answer 22

Resulting trust considers only the purchase price to the property whereas a constructive trust considers much more noting the intentions of the party.

Question 23

Lady Hale in Stack v. Dowden?

Answer 23

“many more factors than financial contributions are relevant to diving the parties intention…children, nature of the relationship, finance, purpose of the property, personalities and characters”

Question 24

Which privy council case upheld Stack v. Dowdens holistic approach?

Answer 24

Abbot v. Abbot

Question 25

Certainty and Stack v. Dowden?

Answer 25

Piska (2008) argued that the house of lords failed to lay down strong principles which therefore caused uncertainty in lower courts.

However the holistic approach did allow a more flexible case specific approach.

The uncertainty demonstrated led to the case of Jones v. Kernott

Question 26

Jones v. Kernott [2011]

Answer 26

J owned a mobile home and K was an ice cream van who moved in with J. They then brought a house together in joint names
K built an extension on the property and they had children.
they split up and K moved out, he brought his own property and did not pay child benefits
K thought they would sell the house when the children were 18, and get 50:50
K issues proceedings when this did not happen, went to the supreme court and it was issued at J:90% and K:10%

Question 27

Ratio of Jones v. Kernott

Answer 27

Confirms that equity follows the law unless unusual circumstances (and in this case there was unusual circumstances)
Confirms the diminished importance of resulting trusts
Confirms the holistic approach which each case turning on its facts
Confirms and extends the discussion on imputing intention.

Question 28

What is the test for sole owner cases?

Answer 28

In Jones v. Kernott at para 52 of the joint judgement of Lady Hale and Lord Walker the two stage test is laid down:

1. was there an intention to give the other party a beneficial interest in the property
2. if there was what was that interest.

Question 29

Fairness surrounding trusts of the family home?

Answer 29

at para 61 of Stack v. Dowden Lady Hales notes:
“the search is still for the result which reflects what the parties, must, in light of their conduct, have intended… it does not enable the court to abandon that search in favour of the result which the court considers fair”
- fairness is only a consideration at the first stage, must be established that a constructive trust was intended

this should be contrasted with para 54 of Jones v. Kernott
“the answer is that each is entitles to that share which the court considers as fair having regard to the whole course of dealing between them in relation to property”

Question 30

What is the search for the parities intentions in establishing a constructive trust?

Answer 30

In the case of Stack v. Dowden Lady Hale argues that the parties intentions should be actual, infered or imputed with respect to the whole course of dealings in relation to the property.
The dissenting judgement of Lord Neuburger however state that intention may only be inferred as well as express, it may not be imputed. However this was overruled in the case of Jones v. Kernott

Question 31

What are the different forms of intention?

Answer 31

Actual Intention - would be based on written or recorded evidence of the intention
Inferred Intention - objectively deduced the subjective intention of the parties through their actions and conduct
Imputed Intention - this is the intention attributed to the parties when no actual intention can be inferred
- This was stated by Lord Neurburger in the case of Stack v. Dowden

Question 32

Jones v. Kernott on imputing intetion

Answer 32

In the joint judgement of Lady Hale and Lord Walker “if the court cannot deduce exactly what shares were intended, it may have no alternative but to ask what their intentions as reasonable and just people would have been at the time if they had thought about it” at para 47

Per Lord Collins he argues that “ what one person infers will be another imputation”

Per Lord Kerr states that there is a difference however he agrees that they should both be used.

Lord Wilson argues that there is a motivation of fairness behind this.

Question 33

What is the case law application of intention inference?

Answer 33

Geary v. Rankine - In this case R owned a guesthouse in which G did an excessive amount of domestic and administrative work, the court held that this was not enough to warnet unusual circumstances.

Thompson v. Hurst - this case they both saw a mortgage advisor, this amount to unusual circumstances and therefore intention could be imputed.

Question 34

What was the Pre-Stack position surrounding sole owner cases?

Answer 34

The case of Lloyds Bank v. Rossett - which concerned a couple where Mr R funded all the renovations and all the property, Mrs. R decorated and oversaw the building work. Upon Mr R defaulting on a loan against the property Mrs R claimed she had a beneficial interest in the property. Court held that they could not infer an CICT therefore she had no beneficial interest in the property. In this case Lord Bridge suggests that nothing other that financial contribution to a inferred trust will do. He outlines that there can also be an express CICT.

Question 35

What are the two types of CICT?

Answer 35

Per Lord Bridge in Lloyds Bank v. Rossett:

1. express - where the legal owner of the property makes an assurance for an interest in the property (however note proprietary estoppel)
2. inferred - the conduct can amount to an inference of a CICT

Question 36

What is the difference between an express CICT and proprietary estoppel?

Answer 36

The remedies for proprietary estoppel are broad and do not always amount to a proprietary right whilst the constructive trust remedies award a beneficial interest in the property.
An assurance could be capable of being both an CICT and giving rise to an estoppel - should consider both in a problem question, but say that CICT will be a more secure remedy.

Question 37

Case law example of an express CICT

Answer 37

Grant v. Edwards - this is where the husband told her that he would purchase property in his name to avoid affect on divorce proceedings
Eves v. Eves -this was the case with the sledge hammer, she was 21 therefore could not hold property (a lie).
the detrimental reliance in both of these cases demonstrates the requirements for a CICT

Question 38

How is Lloyds Bank v. Rossett combined with Stack v. Dowden?

Answer 38

In Rossett it was stated that only financial contributions could amount to conduct giving rise to an inferred intention, whereas in Stack v. Dowden Lord Walker argued that the law has moved on from this.

Question 39

Curran v. Collins [2015]

Answer 39

This case held that after they spoke about the title deeds they agreed it was too expensive to change them, however she did not rely on the assurance therefore it could not give rise of a express CICT

Question 40

What are the three main areas which may amount to a contribution for an inferred CICT?

Answer 40

1. Home Improvements
2. Indirect Contributions
3. Domestic Contributions

Question 41

Home Improvements?

Answer 41

Pettit v. Pettit - P did a lot of work of the property however failed to establish an interest because of this

Thomas v. Fuller-Brown - He was a builder and did a lot of work, however she argued he did this in leau of rent and the court accepted that this was the case.

Stack v. Dowden - Lord Hope obiter stated that changes that add significant value should be considered

under the Matrimonial Property and Proceedings Act there are provisions for engaged couples if they make improvements to the home - this was also seen in the case of Dibble v. Pfluger

Question 42

Indirect Contributions?

Answer 42

These were initially highlighted in the case of Burns v. Burns however were not successful. The case of Le Foe v. Le Foe overruled this and held that indirect contributions do count.

Lord Hope, obiter in Stack v. Dowden stated “a complete pooling of resources of time and money so that it does not matter who pays in the relationship”

This fits with the new holistic approach to considering CICT

Question 43

Domestic Contributions?

Answer 43

Per Burns v. Burns these remain to be irrelevant.

Question 44

What is the problems with the current case law in this area?

Answer 44

the law in this area is complex, uncertain, expensive to rely on and not designed for family contexts. It often gives rise to unfair results with little or no consideration of children, and uses property law to consider a family law problem.

Question 45

What are the Law Commissions proposals?

Answer 45

in 2002 released a report stating that there needed to be reform however did not recomend anything.
in 2007 it stated that there should be a statutory scheme ((although no draft bill was published), suggesting an opt in opt out scheme, completely removing CICTs from the mix.

Question 46

What are the arguments for and against the Law Commissions 2007 proposals?

Answer 46

for:

• old law for new situation
• Jones v. Kernott outlines judical comment on this by Lord Collins

Against:

• freedom of choice not to marry - does this provide rights where rights have been chosen not to be taken up?
• Baroness Deech in Gresham Collage lecture

Question 47

What is the main reason for not taking up the Law Commission 2007 proposals?

Answer 47

2011 Ministry of Justice stated that there was not the political climate for it. There have been a few PMB however they have all failed.

Question 48

What were John Mee (2012) comments regarding Jones v. Kernott?

Answer 48

• following Stack v. Dowden it clears some areas of the law up (surrounding resulting trusts etc.) however it also makes things in relation to imputation more complicated.
• he states that there is no doctrinal coherence offered as a result of Jones, argues against the imputation approach offered by Lady Hale and Lord Walker.
• He argues the motivation of fairness in the results of CICT cases has resulted in a more unsound doctrine - this is why it was overruled Canadian Court.
• In the case of Jones it would not have applied anyway due to the time limits passing in that case
• argues that inappropriate imputation is judicial law making