Trusts - Trusts of the Family Home

Question 1

Legal Title in Both Names

Answer 1

• Legal title held as joint tenants (right of survivorship applies)
• Equitable interest can be held as joint tenants or tenants in common

Declaration of Trust:

• If declaration of trust states equitable interest held as tenants in common it will provide the shares held by each owner (conclusive)
• If declaration of trust states equitable interest held as joint tenants, in which case each owner holds the property in equal and undivided shares regardless of individual contrubutions to purchase price (conclusive)

No Declaration of Trust:

• Presumed that equitable interest held as joint tenants (entitled to half of the sale proceeds each)
• Rebuttable by proof of contrary intention: court determines this by looking at the arrangements and conduct between the parties

Question 2

Rebutting Presumption where no express Declaration of Trust

Answer 2

The court will consider:

• Purpose for which property purchased
• Nature of relationship between parties
• Whether there are any children of the relationship which the parties have a reponsibility to provide a home
• The manner in which parties managed finances
• The manner parties paid bills and other costs relating to property

Question 3

Legal Title in One Name

Answer 3

• Starting point is to ascertain if there is an express declaration of trust: this would need to be in writing and signed to be valid and can be done either at point of purchase or subsequently
• Valid express declaration is generally conclusive but can be overridden where fraud, mistake or undue influence can be proved or if there is a successful proprietary estoppel claim

Question 4

Ways to claim equitable interest

Answer 4

• Proprietary estoppel
• Common intention constructive trust

Question 5

Proprietary Estoppel

Answer 5

• Assurance (clear representation or passive encouragement)
• Reliance on assurance
• Detriment (this can be non-financial)

Where these can be proved the court has a wide discretion in terms of a suitable remedy (will depend on the claimant’s expectation and detriment suffered)

Question 6

Common Intention Constructive Trust

Answer 6

Implied trust

Two elements required:

• Common intention that claimant should have equitable interest in the property (either express or inferred)
• Reliance to claimant’s detriment on this common intention

If two elements are satisfied a common intention constructive trust will be implied and the court must determine the size of the interest in the property

Question 7

Express Common Intention

Answer 7

• Discussions between the parties
• Intention must relate to ownership (an intention to merely share a home is not sufficient)
• Need not be in writing

Question 8

Inferred Common Intention

Answer 8

• Direct contribution to purchase price
• Mortgage payments
• Payment of household expenses to enable legal owner to make mortgage payments
• Substantial renovations to the property by one party

Question 9

Detrimental Reliance on Common Intention

Answer 9

• Significant change in position in reliance on common intention (minor actions will not be sufficient)

Question 10

Determining size of interest in property

Answer 10

• Court focuses on parties’ intentions as to interests in the property and will usually give effect to any express agreements
• In absence of express agreement the court will look at course of dealings