Common Intent Constructive Trusts - Land Law

In the family home – the “common intent” constructive trust

The express agreement constructive trust

Basis

• Lloyds Bank plc v Rosset [1991]:

  • Lord Bridge:

    • This arises where at some time before acquisition

      • 1. There has been any agreement/understanding reached between then that the property is to be shared beneficially.

      • 2. AND C has relied on this to her detriment in order to give rise to proprietary estoppel or a constructive trust.

Requirements

• Evidence of agreement?

  • Lloyds Bank plc v Rosset [1991]:

    • Lord Bridge:

      • Cases of Eves v Eves where H made excuse to W that would have put house into joint names had W not been under 21

        • = evidence of agreement for beneficial interest but sole name legal ownership.

  • Criticism of reasoning + responses

    • Gardner: Excuses don’t provide evidence of agreement if merely excuses – shows only that one party is not agreeing with another.

      • Glover and Todd: BUT we’re looking at objective intentions here – whether excuses etc. would lead reasonable person to believe from utterances that H was declaring himself trustee.

      • Mee: agreement can be inferred where understanding that will share beneficial ownership, but H convinces W that there is some technical reason why they can’t be legal owners.

        • i.e. H is not allowed to profit from his deception and W’s detrimental reliance that whatever the legal situation, they will share the house.

• Detrimental reliance

  • Grant v Edwards [1986]:

    • Nourse LJ:

      • Response to agreement requires conduct on which the woman could not reasonably have been expected to embark unless she was to have an interest in the house.

    • Browne Wilkinson VC:

      • Reference to estoppel will be helpful here.

  • Midland Bank v Cooke [1995]:

    • Waite LJ:

      • Court won’t give effect to conduct and expenditure which could happen in any family life( E.g. decoration and household expenses)

        • And call it detrimental reliance.

• A promise of rights in the future is enforceable?

  • Hammond v Mitchell [1992]: H said after the buying of a bungalow in his own name; “don’t worry about the future, because when we are married [the house] will be half yours anyway, and I’ll always look after you and [our child]”

    • Waite J:

      • In relation to the bungalow there was express discussion which, although not directed with any precision as to proprietary interests,

        • was sufficient to amount to an understanding at least that the bungalow was to be shared beneficially.

      • She acted to her detriment in that she gave her full support on two occasions to speculative ventures secured on the entire bungalow property

        • An indebtedness to which the house and land were all committed up to the hilt

    • Herring: controversial, because it looks like a promise relating to rights in the future, rather than being agreements to share in the present

  • James v Thomas [2007]: H became sole beneficial owner when he bought his siblings’ shares in a house by way of a mortgage. Later, he met W and they lived together as man and wife. H and W both worked on improvements to the house. said “these improvements will benefit us both” and “if I die you will be well provided for” to W. H then died.

    • Chadwick LJ

      • There is no reason to think that the observation “this will benefit us both” (in relation to the business)

        • was more than a statement of the obvious: what was of benefit to the business was of benefit to both H and W, for whom the business was their livelihood

      • As for “you will be well provided for”

        • That is not a representation that W was to have a present proprietary interest in the property —

          • or as a representation that she would have a proprietary interest in the property during Mr Thomas's lifetime.

        • It was, as it seems to me, a representation as to what the position would be after H’s death if they were still living together.

• When must the agreement take place?

  • Lloyds Bank plc v Rosset [1991]:

    • Lord Bridge:

      • This arises where at some time before acquisition, or exceptionally at a later date

        • There has been any agreement/understanding reached between then that the property is to be shared beneficially.

  • James v Thomas [2007]: H became sole beneficial owner when he bought his siblings’ shares in a house by way of a mortgage. Later, he met W and they lived together as man and wife. H and W both worked on improvements to the house. said “these improvements will benefit us both” and “if I die you will be well provided for” to W. H then died.

    • Chadwick LJ

      • If the circumstances so demand, a constructive trust can arise some years after the property has been acquired by,

        • and registered in the sole name of,

          • one party who (at the time of the acquisition) was the sole beneficial owner

        • But, as the cases show, in the absence of an express post-acquisition agreement,

          • a court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of acquisition.

      • The judge here determined that there was no such express agreement.

The inferred agreement constructive trust

Basis

• Lloyds Bank plc v Rosset [1991]:

  • Lord Bridge: This arises where

    • 1. There is no agreement or arrangement to share beneficially

    • 2. But court can infer from conduct of parties a common intention to share the property beneficially

      • and this was relied on to give rise to a constructive trust.

        • For this, you’re going to need some contribution by C to the purchase price or repayment of mortgage payments.

1. “Interest” Issue – was it intended that the parties should share the beneficial interest in the property?

• Joint names may get you over the first hurdle w/o need for other evidence

  • Stack v Dowden [2007]:

    • Baroness Hale:

      • It is common ground that a house being in joint names will be sufficient to get over this hurdle

        • and establish that both had some beneficial interest.

• But what about where the house is in one name alone? Do you need direct financial contributions?

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