Unit 5 Flashcards
Implied Trusts & Property Disputes
What are constructive trusts?
Imposed where it would be unconscionable to deny the claimant interest.
[For this module, only considered in the context of co-habited homes].
What are resulting trusts?
When property is transferred for no consideration.
No clear evidence as to why the property was transferred.
2 types:
- presumed resulting
- automatic resulting
Can the presumption of resulting trusts be applied to cases of personalty?
YES
Can the presumption of resulting trusts be applied to cases of land?
NO - s60(3) LPA 1925, Lohia v Lohia, Ali v Khan
Instead should use constructive trusts (Stack v Dowden) / PE
Relevance of Curley v Parkes
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.
What is the presumption of advancement?
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Outdated and yet to be abolish (s199 EA 2010).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).
What are automatic resulting trusts?
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.
When establishing intent, how does a claimant demonstrate an interest under a constructive trust?
Common intention between the parties that both would have an interest; AND
C acted to their detriment in reliance of that common intention.
What are the two methods for establishing common intention?
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).
Quantifying the interest under a constructive trust
Stack v Dowden: C’s share under a constructive trust is that what has been agreed between the parties.
When to use Grant v Edwards
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.
Lloyds Bank v Rosset relevance
Detriment - necessary to show C acted to their detriment / has significantly altered their position in reliance of that agreement.
Establishing express common intention
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)
Establishing inferred common intention
(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).
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.
- 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
Jones v Kernott
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.
What is proprietary estoppel?
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.
Establishing the equity (Proprietary Estoppel)
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.
Satisfying the equity (Proprietary Estoppel)
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).
What are the similiarities of proprietary estoppel and constructive trusts?
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.
