The house was purchased solely with funds from a trust fund and placed in X’s name. Unbeknown to Defendant, his wife, X took out a mortgage on the house and when he defaulted the bank, Plaintiff, claimed for repossession.
Defendant resisted on the basis that she had an overriding beneficial interest.
HL held that Defendant had no overriding interest and found in favour of the banks.
He reiterated that the courts could not allocate property according to what was just, but rather a trust could arise in response to the common intention of the parties that both would have a beneficial share in the property.
The court may infer the common intention of a beneficial interest from the conduct of the parties.
“Direct contributions” to the purchase price of the mortgage will “readily justify the inference…but I doubt whether anything less will do”. This narrows the Gissing decision in terms of how the trust can be evidenced (direct financial contributions to the purchase price only).
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