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Trusts Of The Family Home Notes

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Ownership rights are important in the event of
 Relationship breakdown
 Death
 Insolvency
Law Commission: Current law is ''unduly complex, arbitrary and uncertain.'' Has recommended a more flexible scheme which has not been implemented.
Express declaration of trust

Arise where owner self-declares that there is a trust or there is some other express declaration.
Formality requirements in s.53(1)(b) LPA = Evidenced in writing and signed by person declaring the trust.
Generally conclusive in nature.

S 53(2): Exempt from the requirement of written and signed=
 Implied Trust.
 Conclusive Trusts.
 Resulting Trusts.
Question as to

1. Primary Question: Acquisition - Does the other have a right in the property?

2. Secondary Question: Quantification- What is the extent of that right?/
Proportion of shares.
S24 Matrimonial Causes Act 1973 - Allows courts to make adjustment orders in the event of divorce
Civil Partnership Act 2004 - Allows courts to make adjustment orders in the event of dissolution
Carlton v Goodman. Ward LJ: Urged for Conveyancers to make clients agree and record how the beneficial interest is to be held.
Stack v Dowden, HOL + Jones v Kernott SC= both dealt with the issue of quantification of shares in a property that had been purchased in the joint names of a cohabiting couple with no express declaration of their respective beneficial interest.
Stack v Dowden- Majority= policy decision that home should be treated differently from other properties as ''In law context is everything and the domestic context is very different from the commercial world.'' - Baroness Hale.
Lord Neuberger departed from this view in a minority judgement which reached the same conclusion but remained unconvinced of the necessity of two different approaches in principle. ''In the absence of statutory provisions to the contrary, the same principles should apply to assess the appointment of the beneficial interest as between legal co-owners'' regardless of the nature of the relationship.
Jones v Kernott
 Clarified key aspects of the Dowden decision. Focus of the case was on the meaning of ''common intention'' which had been adopted in Dowden as the criteria for determining the quantification of the parties shares
(Secondary Question) and is also the basis of a claim to the existence or creation of a trust (primary question).
 Defined the scope of Dowden. Dowden rejected the presumption of resulting trust as providing the starting point to determine beneficial ownership of the home. Jones v kernott: SC removed the operation of the presumption in respect of homes purchased ''in joint names for joint occupation by a married or unmarried couple, where both are responsible for any mortgage''. = More restrictive category than the 'domestic context' of Dowden.
Marr v Collie (PC).
 Reasserted the relevance of context.
 Several properties were held as legal joint tenant by people who were commercial and domestic partners with one party generally providing the money to purchase the houses and the other party intended to
''contribute'' his labour to renovate them.
 Explicit rejection of the narrow context suggested in Kernott- ''to consign the reasoning in stack to the purely domestic setting would be wrong.
 ''There should be a direct focus on what the intentions of the parties are.''
 Note: Privy Council so NOT binding in the UK, only persuasive.
Constructive v Resulting Trusts
 The constructive trust analysis which is based upon the parties ascertainable intentions appears to be the preferred approach where cohabitees are also connected by investment in a commercial joint venture.
 It may also be that a constructive trust analysis will be adopted in the context of property bought jointly by family members or friends where it is possible to divine their intentions as to ownership.
 Where there is no ascertainable evidence of the parties common intention= resulting trust approach based on their contributions.
2 circumstances in which resulting and constructive trusts may be claimed:

1. Sole Legal Ownership: Legal title is conveyed to one person alone.

2. Joint Legal Ownership: Legal title is conveyed to the claimant and another person but no declaration in regard to their respective beneficial share.
Sole Legal Ownership
Maxim= Equity follows the law Starting point is that sole legal owner is also the sole beneficial owner.
Claimant may use constructive or resulting trust to establish that they are also beneficially entitled. If successful quantification.
 Trust is used to determine the primary and secondary question.
 Thompson v Hurst: COA rejected an argument for the starting point in cases of sole legal ownership should be the same as that in Joint Legal
Ownership where the parties had wanted to purchase a property in joint names but did it in one in order to secure mortgage finance.
Joint Legal Ownership
Maxim = Equity follows the law.
 Thus: Starting point= parties are beneficial joint tenants. To show that the beneficial share is held unequally= claim a resulting or constructive trust.
 So, in cases of joint legal ownership, only concerned with the secondary question of quantification of the party's shares.
 The presumption of joint and equal beneficial ownership can be rebutted through proof of a constructive trust founded on the common intention of the parties.
 Where a common intention to support a constructive trust to quantify the beneficial ownership cannot be established, turn to the presumption of resulting trust.
 This may be rebutted by a presumption of resulting trust where the parties have not contributed equally so that the parties will obtain beneficial shares in proportion to their contributions.
 If beneficiary wants to establish a share not in proportion to their direct financial contributions= may do so through a constructive trust.

Stack v Dowden- Baroness Hale: ''In joint name cases, it is also unlikely to lead to a different result unless the facts are very unusual.'' (As in rare that won't have equal shares if joint owners).
- In Dowden= emphasis on the fact that they had kept their finances separate throughout their long relationship.
- Contrast: Fowler v Barron= Defendant alone paid for mortgage, but claimant paid for other family expenses and house in their joint names.
Arden LJ said = treated income as ''one pool'' thus nothing unusual to justify departing from the presumption of equal shares. COA emphasized that the parties common intention alone is relevant.
- E.g. given = ''one party has financed an extension or substantial improvement to the property so that what they have now is significantly different from what they had at the time of acquisition.''
Jones v Kernott= common intention of the parties changed some time after the breakdown of their relationship as had cashed in a life insurance policy to enable
Mr Kernott to buy a home for himself after moving out of their shared home.
Quantification of a beneficial interest under a constructive trust 3 circumstances:

1. Joint Legal ownership (JLE) cases within domestic context where presumption of joint and equal beneficial ownership has been rebutted by a claimant seeking to obtain an unequal share i.e. Stack v Dowden and
Jones v Kernott.

2. Other cases of JLE where a constructive trust has been established by a claimant who seeks to obtain shares otherwise than in proportion to their direct financial contribution. i.e. Marr v Collie. 3. Cases of sole legal ownership (SLO) where a constructive trust has been established.
Marr v Collie= same approach to quantification in first and second.
Historically- Courts toom a flexible approach to quantification with SLO cases using constructive trust + stricter approach with JLE using resulting trust.
(Stokes v Anderson, Oxley v Hiscock etc..)
Baroness Hale -
''The approach to quantification in cases where the home is conveyed into joint names should certainly be no stricter than the approach to quantification in cases where it has been conveyed into the name of one only. ''
''if the question really is one of the parties common intention, we believe that there is much to be said for adopting a holistic approach to quantification,
undertaking a survey of the whole course of dealings between the parties and taking into account of all conduct which throws light on the question what shares were intended.''
Stack v Dowden, Baroness Hale para.69:
Each case will turn on its own facts. Many more factors than financial contributions may be relevant to divining the parties' true intentions. These include:
 any advice or discussions at the time of the transfer which cast light upon their intentions then;
 the reasons why the home was acquired in their joint names;
 the reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys;
 the purpose for which the home was acquired;
 the nature of the parties' relationship; whether they had children for whom they both had responsibility to provide a home;
 how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or a bit of both; how they discharged the outgoings on the property and their other household expenses.
When a couple are joint owners of the home and jointly liable for the mortgage,
the inferences to be drawn from who pays for what may be very different from the inferences to be drawn when only one is owner of the home. The arithmetical calculation of how much was paid by each is also likely to be less important. It will be easier to draw the inference that they intended that each should contribute as much to the household as they reasonably could and that they would share the eventual benefit or burden equally.
 The parties' individual characters and personalities may also be a factor in deciding where their true intentions lay.

In the cohabitation context, mercenary considerations may be more to the fore than they would be in marriage, but it should not be assumed that they always take pride of place over natural love and affection.
 At the end of the day, having taken all this into account, cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests will be very unusual.'

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