Trusts of the Family Home (ULAW)

Question 1

How is ownership of property decided in divorce/ dissolution cases?

Answer 1

With statutory discretion under Matrimonial Causes Act or Civil Partnership Act - court allocates fairly between the parties

Question 2

When unmarried couples separate (ie: cohabitees), how is ownership of property decided?

Answer 2

Through equity via commen intention constructive trusts and proprietary estoppel

Question 3

(Recall from land law): How can legal and equitable title be held?

Answer 3

1. Legal title = under ** sole ownership** or as joint tenants only
2. Beneficial title = as joint tenants or tenants in common (each entitled to their defined [unequal] share in the home passing under their own respective wills/intestacy rules)

Question 4

How should couples show how beneficial title is to be held?

Answer 4

1. Evidence their decision in signed writing (settlor must sign trust declaration for land under s.53)
2. Finalise a valid declaration of trust via TR1

Question 5

Rest of this deck is not talking about married/CP couples, but cohabiting couples

Answer 5

K

Question 6

What is the position on beneficial interests of family homes under express trusts?

Answer 6

Usually easy to determine –

1. Declaration of trust must be evidenced in signed writing
2. Can state on TR1

Case is more complicated for implied trusts that arise by the operation of law

Question 7

What is the presumption of how beneficial ownership is held under implied trusts over?

Answer 7

Beneficial ownership of the land mirrors legal ownership (because equity follows the law) - for example where legal title held as joint tenants = equitable title held as joint tenants

Stack v Dowden

But this is often problematic for cohabitees!

Question 8

What of resulting trusts that focus on the contributions made to purchase price contemporaneously with the purchase itself? What consequences does this have re family homes?

Answer 8

1. Only contributions towards purchase price count (payment of ancilliary items [eg: legal fees] do not give rise to resulting trusts)
2. Only contributions made contemporaneously count (mortgages count, but if it is NOT in your name and its paid AFTER purchase, it will not give rise to a resulting trust)
3. Non-financial contributions (eg: taking care of children) does not count

This can be very unfair – so beneficial interests of family homs are now determined using common intention constructive trusts

Question 9

The next section will focus on jointly owned family homes re common intention constructive trusts

Answer 9

K

Question 10

If both parties are registered as co-proprietors for a jointly owned home, does it give rise to an express or implied trust?

Answer 10

Implied. They have not expressly intended to create the trust. Instead, they hold a common intention constructive trust

Question 11

What must a claiming partner show to persuade the court they should be entitled to a larger beneficial share?

Answer 11

1. Evidence of an agreement or common intention
2. They relied on that agreement/ intention to their detriment

If it has changed over time, the change must be supported by detrimental reliance [eg: one partner financing an extention/major improvement of the family home)

Question 12

In the absence of any clear agreement as to each partner’s shares of a family home, what will the court do?

Answer 12

Assume it is equal.

Courts will need evidence to rebut that presumption (ie: intended to be unequal) + detriment.

Question 13

Will courts look at the whole course of dealing between the partners? What will they look at?

Answer 13

1. Advice / discussions at the time of purchase
2. Reasons why the home was transferred into their joint names;
3. The nature of the partners’ relationship;
4. Whether they had children for whom they had a responsibility
5. How the purchase was financed, both initially and subsequently;
6. How the partners arranged their finances; and
7. How they discharged outgoings on the home and household expenses

Question 14

Are unequal contributions likely to displace the general rule that it is equally owned?

Answer 14

No! Need evidence that the couple intended throughout their relationship to keep their financial affairs separate

Question 15

Next section will focus on solely joined family homes re common intention constructive trusts

Ie: if only one partner is the registered proprietor of the family home. Other partner may be able to secure a beneficial interest if CICT can be established

Answer 15

K

Question 16

Is there a presumption of joint beneficial ownership

As is te case if house is registered in the name of both proprietors?

Answer 16

No

Question 17

Who has the burden of establishing they are entitled to a beneficial interest?

Answer 17

Person whose name is not on legal title (ie: the claiming partner)

Question 18

What are the 2 steps when a family home is solely owned?

Answer 18

1. CICT must be established (where jointly owned this is presumed)
2. Beneficial interests must be quantified

Question 19

What must the claiming party show to establish CICT?

First stage when fam home is solely owned

Answer 19

1. There was common intention that both partners were to have an interest; and
2. The claiming partner detrimentally relied on that belief

Lloyds Bank plc v Rosset

Question 20

What are the 2 situations where detrimental reliance must always be proven?

Answer 20

1. (Solely owned) a constructive trust of the family home
2. (Jointly owned) the claiming partner has a greater beneficial share of the family home

Question 21

What are the 2 methods of establishing these elements?

Hint: common intention can be express or …

Answer 21

1. Express common intention + detrimental reliance
2. Inferred common intention + detrimental reliance

Question 22

Express common intention + detrimental reliance – what do you need to find?

Answer 22

Agreement or understanding (usually oral) that home is to be shared beneficially

Victoria owns a house in her sole name. She has been going out with Yosef and, when the relationship starts to get serious, tells him, ‘there is no point in us living apart. I want you to think of this house as much yours as mine’. This statement suggests that both parties are to have a beneficial interest in the property.

C.f: Adam owns a house in his sole name. His girlfriend, Bethan, is renting a flat but is finding it difficult to keep up with the rent. Adam tells her ‘the last thing I want is for you to be homeless, so why don’t you finish the lease and move into my house’. This statement does not really address issues of property ownership or that Adam intends to share the ownership of his house with Bethan.

Question 23

If the claiming party can show that, but for their divorce, the legal party would have added their name to legal title, can CICT be shown?

Cyril owns a house in his own name. His boyfriend, Dylan, is currently getting a divorce from his estranged husband. Cyril wanted to put the house into their joint names, but on taking legal advice, he was told this was not advisable at the time because it might prejudice Dylan’s divorce.

Answer 23

Yes.

… (continuing from factual scenario) Nevertheless, it is likely that Dylan can establish a common intention that he would have an interest in the home (but for the divorce, Cyril would have put Dylan’s name on the title; see Grant v Edwards [1986]

Question 24

When express common intention is proven, how can the claiming part show detrimental reliance? What is harder to be seen as proof?

Answer 24

1. Financial contributions towards hosue
2. Substantial payments of household expenses

HARDER TO SUFFICE:
1. Non-monetary domestic contributions

Question 25

Inferred common intention + detrimental reliance –what will courts look at?

Answer 25

Conduct – inferred from:

1. Direct contribution to purchase price or
2. Significant contribution to mortgage payments falling due after the purchase

Question 26

If one partner takes care of household expenses so that the other partner can worry about the mortgage, is that sufficient?

Answer 26

Yes

Le Foe v Le Foe [2002]: Mrs Le Foe paid for the household expenses, which enabled Mr Le Foe to make payments towards the mortgage (even if not, ultimately, enough). The court felt able to infer a common intention that Mrs Le Foe should have a beneficial interest in the family home because her substantial financial contributions enabled Mr Le Foe to make those payments: ‘it was an arbitrary allocation of responsibility that [Mr Le Foe] paid the mortgage, service charge, and outgoings, whereas [Mrs Le Foe] paid for day to day domestic expenditure. I have clearly concluded that [Mrs Le Foe] contributed indirectly to the mortgage repayments’. It would therefore appear that when payment of household expenses by one partner enables the other partner to pay the mortgage, these financial contributions might be taken into account.

Question 27

What is the position on detrimental reliance for inferred common intention

Answer 27

Same as for express

ie: has to be direct financial contributions – but easier to prove generally as evidence is proof for both inferred common intention and detrimental reliance

Question 28

When will the CICT have arisen in this scenario?:

Eve was going out with Frank when (with the benefit of a mortgage) she purchased a house in her sole name.

She asked Frank to pay the stamp duty land tax and conveyancing legal fees, telling him that she would pay him back (although she never did). Frank moved in to live with her shortly after.

For the next 10 years, Eve was responsible for paying off the mortgage, although Frank agreed to pay off the mortgage for six months while Eve was between jobs. Frank paid for a new bathroom and for a patio to be laid in the back garden.

Answer 28

It cannot be inferred from Frank paying the stamp duty land tax and conveyancing fees as this was intended to be a loan, so it was not a contribution to the purchase price.

Furthermore, the payment of costs ancillary to the purchase is generally not regarded as a contribution to the purchase price itself.

It cannot be inferred from Frank paying to refurbish the home as this is not a contribution to the purchase price or mortgage.

However, Frank is on much stronger ground to claim a beneficial interest when we address the six months of mortgage instalments he paid.

Question 29

How do you quantify beneficial shares?

Answer 29

Courts will award such shares as it considers fair having regard to whole course of dealing

Question 30

Will the courts have regard to only financial factors when quantifying shares?

Answer 30

No

Question 31

Summary of CICT

Answer 31

Question 32

What is promissory estoppel?

Answer 32

An equitable remedy where aggreived party can claim it is unconscionable for a certain action to occur (ie: when they have suffered a detriment)

Question 33

What are 2 stages for promissory estoppel?

Answer 33

1. Estoppel must be established; and
2. Estoppel must be satisfied (remedies)

Question 34

What are the 3 key elements in establishing PE?

Answer 34

1. Assurance
2. Detriment
3. Reliance

Question 35

What is assurance?

Answer 35

Legal owner must have made a representation or created/ encouraged an expectation that the claiming party would become entitled to an interest in land

Question 36

Can this assurance be passive?

Answer 36

Yes –can be either:

1. Active: Legal owner tells claiming party
2. Passive: Legal owner through their conduct makes claiming party think they have a right

Question 37

What is detriment?

Answer 37

Claiming party must show they acted in detrimental reliance to the assurance

Question 38

What kind of things amount to detriment?

Answer 38

1. Spending money refurbishing a home/improving property
2. Working without adequate remuneration
3. Giving up a job and moving to a new area
4. Looking after a gravely ill person

Question 39

Will the courts consider any benefit obtained?

Answer 39

Yes

For instance, if someone is assured a future interest in property, quits their tenancy and lives rent-free in the property in which they hope to acquire an interest, the detriment of moving to a new area must be balanced against the benefit of obtaining rent- free accommodation. In those circumstances, it may be that the claiming party has not on balance suffered any detriment with the result that a claim in proprietary estoppel must fail (Watts v Storey (1983) 134 NLJ 631).

Question 40

What is reliance?

Answer 40

Assurance must be connected (ie: the cause of) the detriment

Question 41

Does the assurance need to be the sole reason for the claiming party’s conduct?

Answer 41

No – but much easier to fail

Question 42

Example of reliance

Answer 42

Idris invites Janet and Keith to live with him, saying that he will leave his house to them.

They spend 20,000 renovating the house and live there rent free

Janet spends most of her time looking after him. When he dies, his house is left to his estranged son

Janet and Keith will probable be able to assert a claim in proprietory estoppel (but rent-free accom must be balanced against detriment of moving + taking care)

Question 43

What remedies can the court grant?

2nd stage for PE

Answer 43

1. Transfer of the legal ownership in land;
2. Grant of a lease;
3. Some right of occupancy (eg the right to live in a house rent-free for life);
4. Financial compensation; or
5. A beneficial share in the home.

Question 44

Who is the burden is on to prove that enforcing assurance would be out of proportion to the detriment suffered by the claiming party?

Answer 44

The legal owner

Question 45

In exercising this discretion, what is the 5 step approach courts will take?

Answer 45

1. Is the legal owner’s repudiation of their assurance unconscionable?
2. If so, court will usually hold legal owner to their assurance (eg: if promised to transfer property, court will enforce that)
3. Legal owner will argue it is disproportionate to detriment suffered by CP.
4. If assurance involves transferring property on legal owners death, it can happen during lifetime but courts will require a discount for accelerated receipt
5. Court should ask whether remedy would do “justice between the parties and whether it would cause injustice to TPs”

Question 46

When can PE be barred?

Answer 46

1. If CP’s conduct is inequitable (ie: they have acted dishonestly or deceitfully)
2. Undue delay (delay defeats equity)

Question 47

Summary of PE

Answer 47