WS 4 Family Property

Question 1

Stages in answering a family property question?

Answer 1

STEP 1: Is there an express trust?
STEP 2: Is there a resulting trust?
STEP 3: Is there a CONSTRUCTIVE TRUST?
STEP 4: Can C establish an interest through doctrine of proprietary estoppel?

Question 2

Structure for assessing whether or not there is a resulting trust?

Answer 2

1) Define RT - purchase in the name of another/Voluntary transfer
2) Consider the presumptions - which presumption applies on the facts?
- Presumption of RT
- Presumption of Advancement
3) Is there evidence to rebut the presumption?
4) Is the evidence admissible?

Question 3

Is there an express trust?

Answer 3

The usual stuff applies – see WS1. Intention, subject matter and formalities (Defective transfers) and beneficiary principle and certainty of objects.

If couples are married, courts will consider who owns the house at present, but the basis of the court order is to assess the parties’ future needs.

If cohabiting, need to look at who owns what:

• Joint names as joint tenants – usually parties own half each
• Tenants in Common – Proportions stated, conclusive in absence of fraud or mistake

But what if house is in one party’s name and contributions made by other? Look to RTs and CTs…

Question 4

When does a resulting trust arise?

Answer 4

Westdeutsche Landesbank Gironzentralle v Islington BC [1996] – Lord Browne-Wilkinson confirms RTs will arise in two circumstances:

a) Voluntary transfer/purchase money RTs: Where A makes a voluntary payment to B or pays for the purchase of property which is vested in either B alone or in the Joint names of A and B – presumption that a gift was not intended: money held on trust for A
b) Incomplete disposal of trust’s equitable interest: Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest (SEE END OF STEP 2 BELOW)

Question 5

Presumption of Resulting Trusts where there is voluntary transfer of property. What is required?

Answer 5

a. Voluntary transfer of property

Re Vinogradoff: there is a presumption of resulting trust from Y to X if:
• X transfers property to Y; and
• No consideration is supplied; and
• No evidence of X’s intention

ONLY APPLIED IN ABSENCE OF X’s INTENTIONS
ONLY A PRESUMPTION: REBUTTABLE
LESS LIKELY TO APPLY TO REALTY (s.60(3) LPA) – RESULTING TRUST OVER LAND WOULD NEED AN ADDITIONAL FACTOR EG PARTIES WERE STRANGERS

Question 6

Basic case on presumption of resulting trust?

Answer 6

Thavorn v Bank of Credit and Commerce International [1985]woman opened bank account in the name of her nephew, who was under 18. She gave instructions to the bank that she was to operate the account. Held – presumption of resulting trust – no evidence of intention to benefit the nephew.

Question 7

Presumption of RT where there is voluntary transfer of purchase money. What is required?

Answer 7

If there is vol transfer of purchase money, There is a presumption of resulting trust from Y to X mathematically equivalent to percentage of contribution to purchase price (Burns v Burns) if:

. X transfers purchase money to seller; and
. Property is put in Y’s name; and
. Payment is made at the time of the acquisition of the property (Curley v Parkes)

Question 8

Facts of Burnsv Burns

Answer 8

unmarried cohabitee lived for 19 years with the D, bringing up 2 children. D provide most of housekeeping money. She worked intermittently using her earnings to contribute to the housekeeping and towards fixtures and fittings. It was held that as she did not contribute to the acquisition of the home, she could not therefore attain a beneficial interest in it.)

Question 9

Curley v Parkes

Answer 9

To give rise to presumption of resulting trist where there is a vol transfer of purchase money, payment must be made at the time of the acquisition of the property.

Question 10

Presumption of resulting trust also applies to:

Answer 10

Lottery syndicates (Abrahams v Trustee in Bankruptcy of Abrahams [1999])
Chattels (Parrott v Parkin) - Replacement yacht case
Land (Sekhon v Alissa)

Question 11

When is there a presumption of advancement?

Answer 11

• X is Y’s father (Bennet v Bennet) – BUT this is a weak presumption: in McGrath and Wallis it was described as a “judicial instrument of last resort” and can be rebutted by slight evidence. Will carry day only if no other evidence (eg if both parties have died)
• X is Y’s loco parentis (Bennet v Bennet) – in loco parentis if taken on father’s responsibility to provide financially for child
• X is Y’s husband or fiancé (Pettit v Pettit – This presumption is weak and easily rebutted)

Question 12

Are the presumptions of advancements strong presumptions?

Answer 12

No. However, these presumptions are only rules of evidence and can be rebutted with evidence to the contrary (as long as that evidence is admissible in court. (McGrath v Wallis – Father and son put money towards a house. Mortgage provider insists house is in son’s sole name as did not lend to people of father’s age. When father dies, son claims it was a gift. Rejected – house in son’s name due to technicality. Presumption of advancement rebutted)

Lord Diplock also said that presumptions of resulting trust and advancement could be rebutted by situation specific evidence (Pettit v Pettit)

Question 13

New law on presumption of advancement?

Answer 13

s199 Equality Act 2010 will abolish the presumption of advancement after the date of commencement of this act, but not before.

Question 14

Rebutting presumption of resulting trust?

Answer 14

• Must prove that the transfer was a gift or a loan

* S.60(3) LPA 1925 – if property is realty, presumption of resulting trust is less likely to apply

Question 15

Rebutting presumption of advancement?

Answer 15

• Must prove that the transfer was not intended as a gift
• Fawkes v Pascoe (1875) – suggested obiter that you would expect a resulting trust rather than a gift when property is put into a solicitor’s name
o However, see e.g. pp161-163: Fred already has a stockbroker to manage other shareholdings, suggesting transfer to son was a gift (similar evidence held to indicate a gift in Fawkes v Pascoe)
• Remitting the dividends to the person providing the purchase money is evidence of resulting trust (although in Lord Grey v Lady Grey (1677) the court attributed this to the child’s good manners)
• NB that the presumptions of advancement are weak and easily rebutted

Question 16

McGrath v Willis

Answer 16

• Explanation of the property being put in the sole name

Question 17

Marshal v Crutwell (1875)

Answer 17

husband transferred bank account into the joint names of himself and his wife. Presumption of advancement was rebutted by evidence that the reason for doing this was convenience, not by way of gift.

Question 18

Warren v Gurney

Answer 18

• Retention of title deeds (Warren v Gurney – father purchased house in daughter’s name at time of her wedding, but retained the title deed until his death

Question 19

Loosemore v McDonnell

Answer 19

Pres of RT rebutted, as father who gave money to son and daughter-in-law confirmed at time he had no interest and no wish to secure money by charge on the property

Question 20

Shephard v Cartwright

Answer 20

• Only acts/statements that occurred at time of transaction are admissible as evidence (Shephard v Cartwright). Evidence of acts and declarations after the voluntary transfer/purchase are admissible only against the party who did the act or made declaration

Question 21

s.1 Civil Evidence Act 1995

Answer 21

Some commentators e.g. Ramjohn, suggest evidence of subsequent acts may now be admissible under s.1 Civil Evidence Act 1995. However – view not universal

Question 22

General rule on illegality or fraudulent motives used as evidence to rebut presumptions?

Answer 22

Evidence of illegality or fraudulent motives cannot be used to rebut presumption - “He who comes to equity must come with clean hands” - Gascgoine v Gascgoine; Tinker v Tinker

Question 23

Two exceptions to rule in Gascgoine v Gascgoine; Tinker v Tinker

Answer 23

a) Presumption of advancement – the illegal purpose has not been carried into effect (Tribe v Tribe)
a. When was the illegal purpose carried out? When the 3rd party creditor was deceived.

b) Presumption of Resulting Trust – Illegality can be ignored if it does not have to be pleaded to establish the equitable interest (Tinsley v Milligan)

Question 24

Facts of Tribe v Tribe

Answer 24

Father who owned most of shares in a ladies clothes company, was facing having to sell company to meet cost of repairs, after LLs had served schedules of dilapidations. To safeguard interests, he transferred remaining shareholding to the son, who never paid and never intended to. No repairs carried out. Lease on one shop surrendered to LL and others reversion purchased by son. Judge found that as illegal purpose had never been carried out, father entitled to se evidence to rebut the pres of adv. Son appealed, but was dismissed

Question 25

Facts of Tinsley v Milligan

Answer 25

M&T both contributed to the purchase price of a house, but it was conveyed into the name of T alone to enable M to represent to Social Security that she was a lodger and was therefore entitled to various State benefits. After relationship ends, M claimed half share in house, due to contrib to purchase price, so RT arose in her favour. T argued court should not enforce RT as it shielded an illegal purpose so no clean hands. House of Lords – M entitled to rely on pres of RT as the illegal purpose played no part in her argument. Purchase price a separate thing

Question 26

Controversy over Reliance Principle in Tinsley v Milligan

Answer 26

a. Reliance principles criticised by Lord Goff dissenting in Tinsley v Milligan – arbitrary consequences. In Silverwood v Silverwood, Nourse L.J.: reliance principle is a ‘straitjacket’
b. But followed in Lowson v Coombes (CA)
c. Law Commission Reports: SEE pp. 169-170 for proposed reform of the law in this area – 1999 Law Comm report on Illegal Transactions, and then The Illegality Defence which recommends a brief Bill be put before Parl to give the court a discretion as to whether illegality should be taken into account

Question 27

Incomplete disposal of a trust’s equitable interest. What is it?

Answer 27

a) the settlor transfers property to trustees on trust; but
b) does not dispose of all or part of his equitable interest (e.g., because the declared trusts are void or do not exhaust the trust fund)

Question 28

Examples of incomplete disposal of a trust’s equitable interest:

Answer 28

E.g.: (GLBOO)

1) Gap in beneficial ownership - T does not name B with vested interest
2) Lacks certainty of objects
3) B interests not certain
4) Offends rules against perpetuity
5) Offends beneficiary principle

Question 29

Definition of a constructive trust

Answer 29

A constructive trust arises by operation of law whenever it would be unconscionable for the owner of the property to assert beneficial interest in the property (Paragon Finance v DB Thackerer)

Question 30

What are the essential elements of a common intention constructive trust?

Answer 30

There must be both common intention and detrimental reliance (Lloyds Bank v Rosset [1991]

Question 31

Facts and decision of Lloyds Bank v Rosset [1991]

Answer 31

Husband had charged the house, which was in his sole name, to the bank as security for an overdraft. Wife attempting to prevent sale of the house under the charge by showing she had a beneficial interest. FAILED AS COULD NOT SHOW COMMON INTENTION – supervising builders and renovation was not sufficient

Question 32

What is common intention?

Answer 32

Common intention that both parties have an interest can either be express (assurance by legal owner that X has an equitable interest e.g. legal owner saying “treat this house as your own”) or implied

Question 33

Case law on implied common intention?

Answer 33

➢	Inferred by conduct e.g. contributions to purchase price or mortgage payments (Lloyds Bank) – HOWEVER, Lord Bridge doubted that anything else would be sufficient; or,
➢	Payment of household expenses if payments are substantial and made pursuant to the agreement (Le Foe v Le Foe)
o	Supported (obiter) by House of Lords in Stack v Dowden and Privy Council in Abbott v Abbott [2007]
➢	Stack v Dowden [2007] – House of Lords (obiter) – court must look at all the circumstances to work out intention

Question 34

What is detrimental reliance?

Answer 34

Gissing v Gissing – Lord Diplock – can create a ‘cestui que’ trust by the settlor encouraging the trustee act to their detriment by reasonable acting upon a belief of beneficial ownership

Question 35

General rule on how to quantify interest in a CICT?

Answer 35

➢ Mathematical calculation, based on proportion of purchase price, is not correct. To work out interest, court will determine a fair share with regards to the whole course of dealings (mortgage contributions, council tax, utilities, repairs insurance, outgoings) (Midland Bank v Cooke [1995])

Question 36

What modifications did Stack v Dowden make to Midland Bank v Cooke?

Answer 36

(Stack v Dowden [2007]) courts shouldn’t consider what is fair; rather they should work out what the parties intended (explicitly or inferred), having regard to the whole course of dealing between them in relation to the property. Consider:
o Reason for acquiring house
o Nature of relationship
o Resources pooled?
o Contributions to mortgage payments
o Payment of outgoings (council tax, utitlities)

Question 37

Effect of Jones v Kernott (Supreme Court)

Answer 37

Jones v Kernott [2011] – Supreme Court– need to look at intention and whole course of dealings in consideration of the final interest – fuses the fairness of Midland with the intention of Stack v Dowden

Question 38

Banner Homes v Luff Developments

Answer 38

Banner Homes Group v Luff Developments [2000] – Two development companies agreed in principle to form JV to develop a site by means of jointly-owned company. No contract. L decided to proceed alone, but did not inform B, who stayed out of the market. L bought site alone and told B he no longer wished to carry on jointly. B claimed a CT in his favour. Court of Appeal applied Pallant v Morgan Equity:

Question 39

Stages of the Pallant v Morgan equity?

Answer 39

• PvM equity arises where arrangement on which it is based precedes the acquisition of relevant property by one party
• Unnecessary that the arrangement or understanding should be contractually enforceable
• Pre-acq agreement contemplates one party will take steps to acquire the property and if he does so, the other party will obtain an interest in it
• Acquiring party does not inform the non-acquirer before the acquisition that he no longer intends to honour agreement
• In reliance on the agreement, the non-acquirer does or omits to do something which confers and advantage on the acquiring party in relation to the acquisition of the property – UNCONSCIONABLE TO GO BACK

Question 40

Define proprietary estoppel?

Answer 40

The legal owner behaves in such a way that the C believes he has, or will get, some rights in relation to the property and has acted to his detriment in consequence of this belief.

Question 41

Active assurance

Answer 41

i) Active: legal owner assures C that they are entitled to an interest in the property (Pascoe v Turner) and (Inwards v Baker)

Question 42

Passive assurance

Answer 42

ii) Passive: Legal owner stands back and lets the C act to their detriment in the belief that he is entitled to an interest in the property

Question 43

Can assurance relate to future rights?

Answer 43

(Gillett v Holt [2001] – G worked for H, a gentleman farmer, from childhood for nearly 40 years. G worked for little pay. He incurred expenditure on the farmhouse. Devoted best years of life, far beyond usual extent of an employee’s duties. G refused offers of alternative employment. Why? H repeatedly assured G that he would leave his entire estate to him.) – MUST BE MORE THAN A STATEMENT OF PRESENT REVOCABLE INTENTION!

Question 44

Various oblique remarks

Answer 44

Thorner v Major [2009] Various oblique remarks made by farmer which led C at first to hope and later to expect that he would inherit the farm. Farmer never stated that he intended. Lord Walker said that in proprietary estoppel, the assurances had to be “clear enough. What amounts to sufficient clarity…is hugely dependent on context”.
1. Lord Neuberger: “sufficient for the person invoking the estoppel to establish that he reasonably understood the statement or action to be an assurance on which he could rely”

Question 45

How must assurance and detrimental reliance relate in order to establish the equity in proprietary estoppel?

Answer 45

b) Detrimental reliance – Must be causal connection between the reliance and the assurance. The detriment must be undertaken in reliance on the assurance. Once it is shown that D intended the C to act on her assurance, there is a presumption of reliance.

Question 46

Examples of detrimental reliance on assurances (proprietary estoppel)?

Answer 46

• Financial or personal detriment – as long as it is something substantial (e.g. looking after someone at the expense of your career) (Gillet v Holt); or
• Improving the legal owner’s land (Inwards v Baker – a father persuaded his son to build a bungalow on the father’s land. It was then unconscionable for the father to claim that as the bungalow was on his land, it belonged to him); or
• If between relatives, must go beyond what is “called for by natural love and affection” (per Edward Nugent QC in Re Bashem – The C looked after the deceased, her stepfather, in reliance on his assurance that she would inherit the house he lived in, paid for by the C’s mother)

Question 47

Bashem

Answer 47

The C looked after the deceased, her stepfather, in reliance on his assurance that she would inherit the house he lived in, paid for by the C’s mother

Question 48

Burden of proof in proprietary estoppel?

Answer 48

• The burden lies with the D to show that the C would have carried out her detrimental acts anyway (Greasley v Cooke)

Question 49

What did Walker say in Gillett v Holt about defining the principles of proprietary estoppel?

Answer 49

Walker L.J. said in Gillett v Holt that proprietary estoppel cannot be neatly subdivided into three or four watertight compartments – broader questions of whether it is unconscionable to deny the C what was promised or understood.

Question 50

General rule about satisfying the equity in proprietary estoppel?

Answer 50

The remedy is flexible but should be the minimum to satisfy the equity – award the appropriate minimum equity to do justice.

Question 51

Jennings v Rice [2003]

Answer 51

Jennings v Rice [2003] – Lord Walker said that there may be situations in which the expectation of A and B is roughly equivalent to the detriment and court may order fulfilment of expectation.
- In other cases, C’s expectations are uncertain, not focused on specific property or do not reflect the D’s assurances. Expectations are a starting point, but court takes other factors into account:
o Extent of detrimental reliance
o Unconscionability
o Alteration in the D’s finances
o Financial obligations owed by the defendants to others
o Effect of taxation
o Benefits the C has derived from situation (e.g. rent free accommodation)
o Is proposed remedy practical?
o Proportionality

Question 52

Examples of awards under proprietary estoppel?

Answer 52

a) Transfer of property where C expected a home for life: Pascoe v Turner [1979]
b) Transfer of the farm: Gillet v Holt; Thorner v Major
c) Court has awarded an interest in property (e.g. long lease terminable on C’s death)
d) Compensation – Jennings v Rice – court assessed cost of full time nursing care for the time the C had looked after the deceased (expectation had been a generous legacy)

Question 53

Which case demonstrates the overlap between constructive trusts and proprietary etoppel?

Answer 53

Yaxley v Gotts [2000] – builder refurbished and converted a house into flats on the basis of an oral agreement with the owner that he would acquire the ground floor flats for himself. CA - builder entitled to an interest by proprietary estoppel but the facts would alternatively create an interest under a common intention CT.

Question 54

Differences between constructive trusts and proprietary estoppel

Answer 54

• CTs based on COMMON INTENTION. PE stems from reliance on an assurance
• Detriment essential to both, but different: In PE, much greater willingness to accept NON-FINANCIAL ACTS
• When a CT is proved, the COURTS HAVE NO DISCRETION OVER THE REMEDY

Complaints, particularly by Etherton J., (Crossco No. 4) about the law behind decision in Banner Homes, and that insertion of constructive trusts into commercial world introduces too great an element of uncertainty in business transactions.

Question 55

Differences between resulting trusts and constructive trusts?

Answer 55

Constructive trusts are imposed by the court as a consequence of the conduct of the party who becomes a trustee. Resulting trusts are not imposed as a response to the conduct of the trustee, but to give effect to the implied intentions of the owner.

• Drake v Whipp – While by means of a resulting trust the plaintiff would only be entitled to a share of the beneficial interest directly equivalent to the proportion of her contribution to the purchase price of the barn (19.4%), by way of a constructive trust she was entitled to a third interest

Question 56

Drake v Whipp

Answer 56

Court of Appeal - Try to ascertain what parties’ agreement to shares would have been. Had to look at C’s overall change in position

Question 57

Oxley v Hiscock

Answer 57

Court of Appeal: Lord Justice Chadwick said the shares were not dependent solely on financial contributions to the purchase price. Need to look at whole course of dealing. Dithered in his view of what the court was trying to ascertain. rather than trying to work out what the intention of the parties would have been, Chadwick L.J. said they should try & assess what shares were. Fair and reasonable in the circumstances.

Question 58

Baroness Hale’s factors to be considered when determining parties’ intentions (Stack v Dowden)

Answer 58

1) Nature of parties’ relationship
2) how the parties arranged their finances
3) How they paid outgoings on property
4) The character and personality of the parties

Question 59

Baroness Hale in Stack v Dowden disagreed with Chadwick’s views in Oxley and Hiscock over what?

Answer 59

Disagreed with Chadwick and said quantification of beneficial interest was more about “the parties’ intentions, actual or imputed” than “fair share”

Question 60

Fowler v Barron. Court of Appeal. Confirms what?

Answer 60

Lady Justice Arden:
. If joint legal owners, presumed to have equal beneficial interest
. Court is seeking to ascertain the intention of the parties
. Court has regard to all circumstances which throw light on parties intentions regarding ownership of property