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Trusts Of The Family Home Notes

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TRUSTS OF THE FAMILY HOME Standard situation: A and B move in together, but the home is conveyed into the name of B alone. A and B live together and share living costs. Can A claim to own a share in the home?
? Not at law, if B is the sole name on the deeds / register.
? A has to claim in equity. A cannot claim under an express trust of land, unless it is evidenced in writing: s.53(1)(b) LPA 1925. However, s.53(2) says "resulting, constructive or implied trusts" can arise without writing. EXPRESS TRUSTS s.53(1)(b) LPA 1925: "a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust." An express trust must be evidenced in writing. The ET should also declare the nature of the beneficial interests and the terms of the trust. Goodman v Gallant --- if the conveyance of legal title declares the beneficial interests, that is conclusive (this only operates if C is a party to the conveyance): Goodman v Gallant [1986]
? Facts: W and H had 50% each beneficial interest in the matrimonial home (H held legal title). They split. W and Mr. Gallant purchased H's 50% share for PS6,700 --- W contributed to this fee. The purchaser's declaration of trust stated they held the property as joint tenants. W and G split up and W sought to sever the joint tenancy. W claimed she should have a 75% interest (50%
hers to start with, then 50% of the later contribution).
? Held: W was only entitled to 50% of the beneficial ownership --- the express declaration of trust was conclusive to their ownership rights, the extent of contribution was irrelevant. ss. 34 and 36 LPA: If there is no express declaration, then a statutory trust will be imposed when land is conveyed / transferred to two or more people. RESULTING AND 'COMMON INTENTON' CONSTRUCTIVE TRUSTS Ideally, people would sort out their property and financial arrangements formally before purchasing a house / moving in to their partner's property. However, this does not always happen (most arrangements having been agreed informally / not discussed). Where the relationship ends / mortgage lender tries to take possession of land following mortgage arrears, the courts must decide if the non-legal owner of the house has: (i) any right to the land; (ii) the extent of that right. If there is no express / statutory trust, to claim a share in the beneficial interest in the land a nonlegal owner will need to establish that there was always an intention that she should have such an interest. C may:

?Ask the Courts to declare him / her as the beneficiary under a RT or CT May try to establish a right in the land through PE.

Cases involve unmarried couples, where property, rather than family, law applies. A common problem is that the legal title is vested in just one of the contributing parties. RESULTING TRUST There are two principal categories: 'presumed' and 'automatic' RTs (following Vandervell):
? Automatic: arise where an express trust fails initially or subsequently. Property is then held by trustee for settlor.
? Presumed: arise where person voluntarily transfers property for no consideration in return, or contributes to the purchase of property in another's name. Presumption is that the transfer was not intended as a gift. Presumption of RT in land If there is no other evidence of the parties' intentions, a RT will arise when a person contributes towards the purchase price of land, but legal title is transferred into the name of another.
? The presumption is that the parties intend that the legal owner holds the land on trust for the benefit of the contributor, in accordance with the proportion given.
? Clear from s.53(2) LPA 1925 that an RT can arise in the absence of writing. These are to undo cases of unjust enrichment. Where the transfer for no consideration is one of personality (e.g. money), a rebuttable presumption arises that the transferee holds on RT for the transferor. However, for land, s.60(3) LPA means that a voluntary conveyance of land takes effect as expressed, unless there is evidence of contrary intention --- there is no presumption of RT simply because the conveyance isn't expressly made for the benefit of the recipient.
? s.60(3) LPA: "a resulting trust for the grantor shall not be implied merely [because] the property is not expressed to be for the benefit of the grantee."
? However, RTs still arise when the surrounding circumstances point to them. Following Lady Hale's comment in Stack v Dowden that the presumption of a RT is not a rule of law, RTs can be considered of decreased importance. As such, the application of the RT will likely be confined to the commercial context, with CICTs dealing with familial settings. The operation of the presumption is seen in Dyer v Dyer [1788], where an RT arises when property is purchased by A in the name of B --- B holds the property on trust for A (who paid the value): "The trust of a legal estate ... whether taken in the names of the purchaser and others jointly, or in the names of others without that of the purchaser ..., results to a man who advances the purchase money."
? The law will generally be cautious of assuming gifts in cases of large sums, though the presumption can be defeated by evidence concerning whether the sum is intended as a gift.

It was confirmed in Hodgson v Marks: "if an attempted express trust fails, that seems to me just the occasion for implication of an RT, whether the failure be due to uncertainty, or perpetuity, or lack of form." Makes clear RTs do not operate differently with respect to land. Hodgson v Marks [1971]
? Facts: Mrs. H transfers freehold to her lodger, Mr Evans, for free. H orally tells E that she should still have benefit of the freehold (and she continued to live there), but nothing is put down in writing (oral express trust fails under s.53(1). E transfers the freehold to M, who is registered as the new owner and who mortgages the house.
? CA: found there was an RT in favour of H. She had an equitable proprietary interest as a result, which was capable of binding the bank's charge. MF: if this were about H's bike, H could claim an express trust --- she has transferred a right to E subject to a duty for E to use that right for H's benefit; however, s.53(1) prevents an ET. B's oral statement can nevertheless show B didn't intend A to have the benefit of the freehold --- therefore RT arises when E acquires title. Key: B can show she didn't intend A to have benefit of the freehold. RTs are based on intentions presumed to exist at the date of acquisition of the property concerned
--- i.e. intentions are those at the time title is obtained (Pettitt v Pettitt [1970]).
? This is difficult due to the modern practice of acquiring property via a mortgage --- meaning the acquisition of the title is drawn out over a few years. In cases where A and B both contribute money towards the purchase price in A's name, the RT presumes beneficial ownership for each in proportion to their respective contributions.
?????However, while direct contributions to the price of the house are clear, it seems that RTs do not extend to other kinds of contributions, which are left to CTs (Curley v Parkes). A difficulty with both RTs and CTs is that a contribution cannot, in itself, be a source of rights --- it needs additional factors, since it could be a gift, contractual payment, or other.
? Birks: payments are prima facie unjust unless they are justified on the basis of: (i) gift; (ii) contractual payment; (iii) other. Thus, there should be a general presumption, which can be disproved by evidence. COMMON INTENTION CONSTRUCTIVE TRUSTS Though much of the current case law fails to distinguish the issues, there are two stages: (i) existence of a constructive trust; (ii) distribution of benefit under the trust. Must also distinguish between sole owner and joint owner cases. FIRST QUESTION: IS THERE A CONSTRUCTIVE TRUST?
It is clear from Lloyds Bank v Rosset that there are two distinct forms of common intention constructive trust --- those founded on express agreement and those founded on inferred agreement.


However, this split has been confined to sole owner cases by Stack v Dowden which makes it clear that conveyance into joint names itself established a CICT (joint owners).

Sole owner: express agreement In these cases, there is an express agreement that the land should be co-owned, plus some act by C to her detriment or some significant alteration of her position due to reliance on the agreement. The following case illustrates the elements of a CICT: Lloyds Bank v Rosset [1991]
? Facts: Mr. R bought a semi-derelict farmhouse with money from his family's Swiss trust fund, the trustees of which insisted that only his name should appear as registered proprietor. For six months, Mrs. R supervised the renovation and decorated the house (although Mr. R funded these projects). In possession proceedings brought by a mortgagee, Mrs. R claimed she had an equitable interest under an informal trust.
? HL: Mrs. R's claim failed: (i) there was no express agreement; (ii) no such agreement could be inferred as Mrs. R's contribution had not been financial. Lord Bridge laid out the test: Lord Bridge: test for an express agreement CICT: Two elements

1. Agreement / arrangement / understanding to share benefit o "Whether ... there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. o To establish this, need "evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been."

2. Detriment or significantly altered position in reliance: o Once there's an agreement "necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel". Sole owner: inferred agreement This involves an act by C from which the court may infer a common intention, giving rise to an interest under a CT.
?????In the absence of any express common intention, little short of direct financial contribution will be sufficient to infer a common intention to share property beneficially.
?????B's contribution serves a dual purpose of: (i) providing evidence of the agreement; (ii) detrimental reliance. Lord Bridge set out the test here in Lloyd's Bank v Rosset, which is still the law for sole owner cases, even when inferred --- though his approach has been doubted:
? Baroness Hale in Jones v Kernott made it clear that there are different rules "where a family home is bought in the joint names of a cohabiting couple who are both responsible for any mortgage, but without any express declaration of their beneficial interests."


Abbot v Abbot suggests that the joint ownership presumption may operate in sole ownership cases, but it can be limited to its unique facts.

Lord Bridge: Rosset test for inferred agreement CICT:
? Where there is "no evidence to support a finding of an agreement or arrangement to share" the court must rely entirely on "the conduct of the parties" as a basis for: (i) inference of the intention to share property beneficially; and (ii) conduct relied upon to give rise to a construct trust.
? In this situation, "direct contributions to the purchase price by the party who is not legal owner, whether initially or by payment of mortgage installments, will readily justify the inference necessary to the creation of a constructive trust." Other conduct may suffice to establish the necessary inference, but "it is extremely doubtful that anything less will be sufficient." Fox O'Mahony: reliance on financial contributions is discriminatory against female cohabitees. Given these criteria, there is a concern that any contribution not specifically towards the purchase /
mortgage price will not be sufficient to acquire a beneficial interest. E.g.: Burns v Burns [1984]
? Facts: Couple lived together for 20 years, but, despite Ms. B contributing emotionally/financially to the relationship, there had been: (i) no express discussion about whether she would get a share of the house; (ii) no contribution by her to the purchase price of the house. They were unmarried.
? CA: No CICT. o Lack of financial contribution: Where one party "makes no 'real' or 'substantial' financial contribution towards either the purchase price, deposit or mortgage instalments by the means of which the family home was acquired, then she is not entitled to any share in the beneficial interest of the home.' o Lack of agreement: Where there is no binding agreement between parties "it necessarily follows that it is impossible to imply such agreement or, which comes to much the same thing, to imply more precise terms where any existing agreement is imprecise." Lord Diplock: made the following additional points in Burns.
? Cited Gissing v Gissing in preference of the resulting trust analysis: "I think it must be artificial to search for an agreement made between husband and wife as to their respective ownership rights in property used by both of them while they are living together."
? Was of the opinion that indirect financial contributions to the household expenses could be sufficient to enable a claimant to claim a beneficial interest, but only if they enabled the legal owner to make the mortgage repayments. Law Commission is now clear that indirect contributions should allow the necessary inference. MF: weakness of the Rosset approach: a C whose activities are confined to domestic conduct receives no interest, but one who has made a small direct financial contribution (to give rise to an inferred agreement) can have their domestic conduct taken into account to quantify their share.

Rosset was doubted in Abbot v Abbot, with the court preferring the Stack v Dowden approach (50/50 split in equity due to intention, even in a sole owner case). However, this is a very peculiar case in that: (i) there is no equivalent of the Matrimonial Causes Act 1973 in Antigua and Barbuda, (Act gives the court wide power of redistribution of property on divorce); (ii) same situation could not arise in English law because the parties were married. Abbott v Abbott [2007] PC
? Facts: H and W were married with combined financial affairs. Plot of land was given to them by H's mother, who also contributed to costs of building a house. H was listed as sole owner. H claimed that this was a gift to him, W claimed it was a gift to both. W contributed her salary into a joint account from which mortgage was paid.
? PC: found a common intention constructive trust in favour of W for 50% of the house. Lady Hale: claimed the law had 'moved on' since Rossett in terms of determining the ownership of the home: "the parties' whole course of conduct in relation to the property must be taken into account in determining their shard intentions as to its ownership." The following also casts doubt on Rosset: Geary v Rankine [2012]
? Facts: G claimed a beneficial interest in a guesthouse which she had helped her partner, R, to run. The guesthouse was in the sole legal ownership of R and had been purchased by him using his savings. The parties had cohabited for 19 years at the breakdown of their relationship.
? CA: G's claim failed for two reasons: (i) her argument was founded on a common intention that their business was a joint venture, but it couldn't be inferred from this that there was a "common intention that the property in which the business was run, and which was bought entirely with money provided by one of them, would belong to both of them"; (ii) there was no common intention on the facts Lees: Geary casts doubt on Rosset because the claim failed on the facts rather than on principle ---
had Rosset been applied the claim should have been thrown out because: (i) no express agreement as to shared beneficial ownership and detrimental reliance; (ii) no financial contribution by G. Joint owners Baroness Hale in Stack v Dowden held that where legal title to a home is conveyed into joint names of the parties, the conveyance itself is conclusive as to the existence of a CT: Stack v Dowden [2007]
? Facts: S and D had cohabited for 20 years and had 4 children. Home was registered in their joint names, but with no express declaration as to their respective beneficial shares. S had contributed 65% and D 35% to the purchase price. At breakdown of their relationship D claimed a 50:50 split.
? HL (Lady Hale): Found for S (65:35 split)--- the presumption of an even split was rebutted (see below for more on the distribution of benefit). On finding a CICT: "at least in the domestic

consumer context, a conveyance into joint names indicates both legal and beneficial joint tenancy, unless and until the contrary is proved." This approach was followed in Jones v Kernott. It is notable that Baroness Hale refers to domestic context - thus, this may not apply in a commercial context. SECOND QUESTION: DISTRIBUTION OF BENEFIT UNDER THE TRUST It was held in Stack v Dowden that this question is to be determined according to the 'common intention' of the parties. Two rebuttable presumptions in Stack:

1. If the property is held in sole names, it is presumed the party with title has sole beneficial ownership.

2. In cases where there is joint legal ownership, it is presumed that they should own it in equal shares (50:50). Joint ownership cases: The presumption is of joint equal beneficial ownership --- i.e. 50/50 share, based on the idea that "equity follows the law (confirmed in Jones v Kernott). There is a high evidential burden on the party seeking a non-equal share, to show that the parties did intend their beneficial shares to be different from their legal interests. Lady Hale in Stack: "this is not a task to lightly be embarked upon" and "in joint names cases it is also unlikely to lead to a different result unless the facts are very unusual." The question now is whether the parties intended their beneficial interests to be different from their legal interests. It was confirmed in Jones v Kernott that the common intention will be deduced reasonably (i.e. objectively) from the conduct of the parties and, where this is not possible, imputed by he court. Jones v Kernott [2012]
? Facts: J (W) and K (H) owned a property in their joint names. They separated; K left and J remained with the children. The property had been acquired with the proceeds from the sale of J's house, but K had shared the household expenses. After K left, they attempted to sell the home, but failed; instead they cashed in a life insurance policy so K could buy a new house. Question: what share of the property they were entitled to.
? SC: 90:10 split in favour of J. The presumption of joint equal beneficial ownership was overcome. o Walker, Hale, Collins: it may be permissible to impute a common intention as to the distribution of benefit under the trust. However, this was not such a case; necessary common intention could be inferred from K's accepting the benefit of the life insurance policy. At that moment he 'intended' to relinquish the majority of his interest in the family home.

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