Unit 5

Question 1

What are constructive trusts?

Answer 1

Imposed where it would be unconscionable to deny the claimant interest.

[For this module, only considered in the context of co-habited homes].

Question 1

What are resulting trusts?

Answer 1

When property is transferred for no consideration.
No clear evidence as to why the property was transferred.

2 types:
- presumed resulting
- automatic resulting

Question 2

Can the presumption of resulting trusts be applied to cases of personalty?

Answer 2

YES

Question 3

Can the presumption of resulting trusts be applied to cases of land?

Answer 3

NO - s60(3) LPA 1925, Lohia v Lohia, Ali v Khan

Instead should use constructive trusts (Stack v Dowden) / PE

Question 4

Relevance of Curley v Parkes

Answer 4

Only towards payment of purchase price AT TIME of purchase can give rise to a presumed resulting trust in the context of purchase money cases.

Question 5

What is the presumption of advancement?

Answer 5

Presumed where the transferor is gifting property.

[comes from when equity regarded the transferor to be under a mortal obligation to provide to the transferee]

• father to child (McGrath v Wallis)
• loco parentis to child (Bennet v Bennet)
• husband to wife (Pettitt v Pettitt)
• male financee to female financee (if marriage later occurs)

Outdated and yet to be abolish (s199 EA 2010).

Weak presumption and easily rebutted (Pettitt v Pettitt).

Rebutting - evidence AT TIME / IMMEDIATELY before transfer (Shephard v Cartwright).

Question 6

What are automatic resulting trusts?

Answer 6

Occurs where an express trust fails to transfer the beneficial interest to B.

This can occur for several reasons:
- B does not attain the vested interest (e.g. dies before age of entitlement).
- lacking certainty of objects.
- lacks certainty of B interests.
- offends rule against perpetuity.
- offends BP.

Question 7

When establishing intent, how does a claimant demonstrate an interest under a constructive trust?

Answer 7

Common intention between the parties that both would have an interest; AND
C acted to their detriment in reliance of that common intention.

Question 8

What are the two methods for establishing common intention?

Answer 8

Lloyds Bank v Rosset

Express = agreement & discussions between the parties that both would have an interest in the property.

Inferred = parties’ conduct (more common as couples generally do not discuss their interests in a shared property - in most cases, inferred common intention will apply).

Question 9

Quantifying the interest under a constructive trust

Answer 9

Stack v Dowden: C’s share under a constructive trust is that what has been agreed between the parties.

Question 10

When to use Grant v Edwards

Answer 10

Case example of express common intention between a couple.

[Detriment] - Conduct must be significant enough that a reasonable person could not have relied on unless they believed to have an interest in the house / property.

Question 11

Lloyds Bank v Rosset relevance

Answer 11

Detriment - necessary to show C acted to their detriment / has significantly altered their position in reliance of that agreement.

Question 12

Establishing express common intention

Answer 12

Express common intention - the agreement itself (Grant v Edwards - example case).

Detriment
- necessary for claim (Lloyds Bank v Rosset).
- any reasonable person would have believing they would acquire an interest in the home (Grant v Edwards)

Question 13

Establishing inferred common intention

Answer 13

(more common as couples rarely draft an agreement).

Inferred common intention - direct contributions to purchase price (whether at time of purchase or paying off the mortgage instalments) - Lloyds Bank v Rosset.

Criticised in Stack v Dowden that Rosset was strict case.

Le Foe v Le Foe - inferred common intention can be established from indirect payments.

Detriment
- necessary for claim (Lloyds Bank v Rosset).
- any reasonable person would have believing they would acquire an interest in the home (Grant v Edwards)
the financial contributions made (easily established).

Question 14

Where there is not express agreement on C’s share, give some examples of factors the court will consider to establish the ‘whole course of dealings between the parties relevant to their ownership & occupation of the property’ to ascertain what the parties intended.

Answer 14

• advice or discussions at the time of the purchase
• the purpose for which the house was acquired
• the nature of the parties’ relationship
• whether they had children for whom they both had responsibility to provide a home
• how the purchase was financed
• how the parties arranged their finances, both initially and subsequently
• how they discharged outgoings and household expenses
• the fact that one party has brought about a substantial improvement to the property

Question 15

Jones v Kernott

Answer 15

Acknowledged parties’ intentions regarding the size of their interests can change over time. Each was entitled their share which the court considered fair having regard to the whole course of dealing.

Question 16

What is proprietary estoppel?

Answer 16

Equitable course of action preventing the legal owner of a property from denying another person who has / might have a proprietary interest in the property.

Requires:
- establishing the equity.
- satisfying the equity.

Question 17

Establishing the equity (Proprietary Estoppel)

Answer 17

A has given an assurance to B that B has / will acquire an interest in A’s property; and

B has reasonably relied on the assurance to their detriment.
Basis: it would be unconscionable for A to go back on the assurance. (Gillett v Holt (2000))

Active assurances which were acted upon leading to C’s detriment:

Gillett v Holt – detriment need not be financial.

Pascoe v Turner (1979) - benefits vs detriment of the living arrangement. Overall detriment must be established.

Assurances can be both ACTIVE and PASSIVE.

Question 18

Satisfying the equity (Proprietary Estoppel)

Answer 18

Wide range of remedies at court’s discretion.

Task of court is to do justice and the remedy must achieve proportionality between expectation and the detriment (Jennings v Rice).

Starting point is to fulfil the promise as the remedy and considerations of practicalities, justice between parties and fairness to third parties (can lead to reduced remedy) (Guest v Guest).

Question 19

What are the similiarities of proprietary estoppel and constructive trusts?

Answer 19

Both require C’s detrimental reliance.

Following Stack v Dowden, for a trust to be a common intention constructive trust, this does not depend on detriment reliance - used to identify the beneficial owners of a property and the size of their interests.

PE is merely an equitable remedy urging the court to order minimal equitable performance by the offending party.