The house was purchased solely with funds from a trust fund and placed in X’s name. Unbeknown to D, his wife, X took out a mortgage on the house and when he defaulted the bank, P, claimed for repossession. D resisted on the basis that she had an overriding beneficial interest. HL held that D had no overriding interest and found in favour of the banks.
Lord Bridge: 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).