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Equity & Trusts : Implied Trusts of the Home Trusts of the Home---Background
?????Decline in number of couples getting married. More couples than ever before are cohabiting before marriage.
?????When you have married couples, or registered civil partnerships, courts have extensive powers under 2 statutes:
?????Disputes over the shared home (typically upon breakdown of a relationship, although claims may also be made by 3rd parties with an interest in the home, eg mortgagees or trustees in bankruptcy).
?????(1) Married couple--Matrimonial Causes Act 1973. Court has a wide discretion to reallocate property rights between spouses.
?????(2) Civil partnership--Civil Partnership Act 2004: similar powers on dissolution of a civil partnership.
?????(3) S53(1)(b) LPA 1925 (valid express trust of land, needs signed writing)? only exception is s53(2) LPA 1925 (resulting, implied or constructive trusts).
?????We are dealing with homes shared by couples who are neither married not in a civil partnership, where there is no statutory discretion given to courts in relation to mere cohabitees; nor in the case of any adverse claim made by a third party (eg a mortgagee) rather than a dispute arising on breakdown of the relationship.
?????Over time has been a move away from using Resulting trusts, which focus rigidly on contributions to the purchase price of the property, to the use of constructive trusts to establish an interest in implied trusts of the home.
?????Turning point---Stack v Dowden (2007), HL: the HL appeared to broaden the range of factors the court could take into account when quantifying the interests of the parties.
?????Issues left by Stack: eg, how it applied to sole legal ownership cases; and to what extent the court is permitted to 'impute' an intention to the parties that they may not have had.
?????Jones v Kernott (2011), SC:
?????Need to understand the wider policy issues in this area
? ?? ? Remember, legal title to land may only be held as joint tenants; whereas equitable title can be held as either joint tenants or tenants in common: in Stack v Dowden, the couple were seeking to establish that they held as equitable tenants in common---the proportion was in dispute. 2 basic scenarios for disputes giving rise implied trusts of the home
?????(1) Two legal owners, but no declaration of their beneficial interests o (a) Rebut presumption of 50/50 ownership. o (b) Quantification question. o Both automatically have a legal interest in that home.
1 ? ?? ? (2) One legal owner, the other claims a beneficial interest o (a) Acquisition question o (b) Quantification quest The historical position
?????Problems where a couple share a property, but only one is legal owner, other claims a beneficial interest.
?????Often, in these cases, the legal owner was a man ,claimant a woman.
?????Or can be other way around (eg Pettitt v Pettitt (1970); Thomas v Fuller-Brown (1988).
?????Or a same-sex couple (Tinsley v Milligan (1993)).
?????Or other family relationships (Bull v Bull (1955), mother and son).
?????Resulting trusts now inappropriate for implied trusts of the home : o RTs focus rigidly on contributions to the purchase price of the property o Doesn't reflect any other contributions, eg towards household expenses, mortgage payments, and non-financial contributions towards the couple's shared lives. o Stack v Dowden: the RT no longer has a role to play re implied trusts of family home. Purchase money RT:
?????You must have given (1) deposit money; or (2) be responsible for obtaining the mortgage.
?????Bull v Bull (1955): son is full legal title holder; mother has contributed to deposit money ? she gets purchase money RT.
?????BUT, out of the blue---Stack v Dowden (2007), RTs are no longer appropriate in the context of family home: o Baroness Hale: says RTs are too rigid, they don't consider the intricacies of modern family life.
? ?? ? So for family homes (CF commercial decisions)---RT's no longer appropriate. Approved in Jones v Kernott (2011). So instead of RTs---we have Common intention constructive trusts (CICTs)
? ?? ? Lloyds Bank v Rosset, how to establish the two types---Express and Inferred CICTs:
? Because of inflexibility of RTs, courts increasingly turned to CTs to provide a solution.
? The 'CICT' finds its origins in Lord Diplock's judgments in Pettitt v Pettitt (1970) and Gissing v Gissing (1971).
? Lord Bridge, Lloyds Bank v Rosset (1991), two distinct ways in which a CICT can arise:
2 o (1) Express CICT the parties express a common intention as to the shared ownership of the property, which is followed by detrimental reliance by the non-legal owner. o (2) Inferred CICT: Where the parties do not express a common intention; but court is nonetheless able to infer such an intention from their conduct.
? The juridical foundation of both forms is the same: Equity looks to the intention of parties; but equity will not assist a volunteer, so more than this is needed---the trust arises in response to what is considered to be an 'unconscionable situation'---i.e. due to detrimental reliance, it is unfair to deny the non-legal owner a beneficial interest in the home.
? So it seems the only difference between the two types of CICT is the evidence required to establish the common intention: having concluded there is a common intention (either based on (a) express agreement or (b) inferred from conduct) it might be argued that the conduct constituting detrimental reliance ought to be the same in both case.
? Yet Lord Bridge made clear his view that different conduct should be taken into account depending on the type of CICT: particularly, that in the absence of an express common intention, only financial contributions (whether to purchase price or mortgage contributions) would be enough to infer common intention to share the property.
? Criticism of Lord Bridge's judgment---extremely difficult to establish an express CICT; and by taking into account only a limited range of financial contributions, only slightly less restrictive than the RT. Lack of consideration of non-financial contributions. Seemed to favour the less wealthy partner (often the woman)
? Over time, courts depart from Lord Bridge's narrow approach, considering a wider range of 'indirect' financial conduct for inferred common intention (eg paying bills, thus freeing your partner to pay the mortgage).
? ?? ? And courts, as well as establishing evidence of common intention, had the remaining question of how to quantify the parties' interests: o Oxley v Hiscock (2004), CA: suggested the court's role was to determine the shares of the property based on what they considered to be fair in the light of the parties 'whole course of dealing' in relation to the property. o Takes us towards a more discretionary approach Finding 'common intention'---Stack v Dowden? a new holistic approach
? Considered law on express CICTs (albeit in context of a joint legal ownership situation).
Stack v Dowden is now the starting point: eg R v Piper (2010), CA: 'These days it is rarely necessary to go back beyond Stack v Dowden'. Lady Hale lead judgment. Starting point in all family home cases---'Equity follows the Law': o i.e., if the couple hold legal title as joint tenants ? presumption is joint tenants in Equity. o If sole legal owner ? presumed to be sole beneficial owner. o Note this principle doesn't apply if there is an express trust over the property---such trusts are conclusive, leaving no scope for an implied trust (Pankhania v Chandegra (2012), CA). Rebuttable presumption: o Lady Hale stresses that 'unusual' to depart from presumption of equal beneficial ownership. o But the presumption that 'equity follows the law' is rebuttable o ---can adduce evidence that the parties were not intended to be equitable joint tenants (in case of joint legal owners); o or that the non-legal owner was intended to have an equitable interest in the property (in the case of sole legal owners). o If evidence is produced to rebut the presumption ?
court will recognise a CICT rather than the presumed beneficial shares. In both Stack v Dowden and Jones v Kernott-the presumption was rebutted. To rebut the presumption, need evidence of the parties' shared intention, which may be ascertained in 'the whole course of conduct' in the relationship to decide intentions of the parties: drawing on the discussion in Oxley v Hiscock. The 'holistic approach'. Non-exhaustive list of Factors to consider in Stack v Dowden: o (i) Advice or Discussions the parties had, which may indicate their intentions. o (ii) the reasons legal title was registered in particular names. o (iii) the purpose for which the parties acquired the house. o (iv) the nature of the relationship
? Do they live in a 'quasi-matrimonial' relationship, dividing everything 50/50 - then 50/50 split is probably appropriation (eg Fowler).
? CF Stack v Dowden, unusual relationship, they basically shared nothing. Eg man had bank statements sent to parents' address. They are living essentially like two different people, so the 50/50 presumption not appropriate. 4
In Jones v Kernott, they were like a married couple until the relationship broke down. Man moved away for 12 years until he returned to claim part of the home. If the claim had been made at time of break-up, 50/50 would have been appropriate; but not now, 12 years later. o (v) whether the parties have children (for whom they share a responsibility to home). o (vi) How the house purchase was financed/contributions (in Stack, the woman contributed around 65% of purchase price). o (vii) how the parties arranged their other finances
? Who contributes more?
? Jones v Kernott: the woman had paid 12 years of mortgage payments alone.
? Stack: contributed 65% of purchase price. o (viii) How the parties divided responsibility for household expenses/Outgoings
? Do they pay for outgoings from a joint account?
o (ix) the personalities and characters of the parties. NO guidance as to their relative weight. Lady hale: the presumption will not be rebutted lightly in cases of joint legal ownership---it is for the party seeking to rebut the presumption to adduce the relevant evidence, which is a heavy burden, requiring unusual facts. In Stack itself? the presumption was rebutted. Because of unusual facts: o The unusually rigid separation of the couple's finances (despite having lived together for 27 years and had four children together)? justified conclusion they did not intend to hold the house as equitable joint tenants. So you can never say it's certain whether you will rebut the 50/50 presumption. It's always a discussion surrounding these factors. Note Lord Neuberger dissenting judgment in Stack (important when considering whether the law is satisfactory post-Stack): o [[Neuberger did reach the same conclusion on the facts of the case, but through very different legal reasoning]]. o Lord Neuberger: did not consider that the starting point should always be the presumption that 'Equity follows the law'. o (1) Rather, start with the presumption of a RT was more appropriate in any case where the parties have bought the property in joint names but contributed unequally. o Although this presumption is also rebuttable, Neuberger considered only a narrower range of factors to be considered for rebutting---
? Focus on searching for discussions or conduct which 'can fairly be said to imply a positive intention' to rebut the presumption.???
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