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RESULTING AND CONSTRUCTIVE TRUSTS

A) INTRODUCTION TO RESULTING AND CONSTRUCTIVE TRUSTS 1. The Nature of Resulting an Constru!ti"e Trusts Contrast with express trusts Implied trusts Arise by operation of law and without concerted actions of a settlor to constitute an express trust Does not arise by the deliberate act of the parties Resulting Trust: arises where equity stipulates that a trust should be imposed on account of the particular circumstances. Constructi e Trust: implied in a ariety of circumstances where the defendant has !nowledge of some factor that affects his conscience in respect of specific property. "o formal requirements for the creation of implied trusts. Resulting trusts are exempt from the requirement of writing laid down in s.#$%&'.

(aw of )roperty Act s.#$%*' +This section does not affect the creation or operation of resulting, implied or constructi e trusts.#. Resulting Trusts *.&. Circumstance gi ing rise to a Resulting Trust Westdeutsche Landesbank v Islington .&//01 AC 00/ +2nder existing law a resulting trust arises in two sets of circumstances: %A' where A ma!es a oluntary payment to 3 or pays %wholly or in part' for the purchase of property which is ested either in 3 alone or in the 4oint names of A and 3, there is a presumption that A did not intend to ma!e a gift to 3: the money or property is held on trust for A %if he is the sole pro ider of the money' or in the case of a 4oint purchase by A and 3 in shares proportionate to their contributions. 5. %3' 6here A transfers property to 3 on express trusts, but the trusts declared do not exhaust the whole beneficial interest-. %(ord 3rowne 6il!inson' Resulting trust arises in * principle contexts: &. Apparent gifs: includes situations where there is a oluntary transfer of property or a contribution to the purchase price of property without an express indication as to how the equitable title is to be held. Rebuttable presumption of resulting trust: a presumption %capable of displacement by e idence to the contrary' that the intention of each transferor or contributor was not to ma!e a gift, but that they should hold a proprietary right proportionate to their contribution. *. 7ailed trusts: where there has been an attempt to create a trust and some part of the beneficial interest remains undisposed of. 7unction: restorati e 8omeone must be entitled to that property: +The beneficial interest must belong to or be held for somebody: so if it was not to &

belong to the donee or to be held by him in trust for somebody it must remain with the donor- %(ord Reid, Vandervell v IRC' Therefore a mechanism whereby property 4umps bac! to the settlor or it is the tool to establish that the settlor retains an equitable interest in the property. *.*. Theoretical 3asis of Resulting Trusts istin!tion '(egarr) * in Re Vandervell No. 2 +1,-./ Ch. #0,). 9ergarry di ided resulting trusts into Do not depend on the intention of parties but arise as an automatic consequence of the transferor:s failure to dispose of the entirety of the beneficial interest. *. Resulting trusts based on the presumed intention of the transfer of property. Arises because there is a rebuttable presumption of trust based on inferred intention. 6hen A transfers property to 3, unless the transfer was made by father to child or by husband to wife, in the absence of any other e idence the law presumes that a resulting trust has been created for A. ;quity presumes that the property belongs to the person who ad ances the purchase money, that is, in the absence of e idence to rebut the presumption. )roblems with this analysis: 9egarry <.=s analysis was doubted by (ord 3rowne>6il!inson in Westdeutsche Landesbank Girozentral v Islington London Borough Council. According to 9eggary <, an automatic resulting trust does not depend on intention but operates automatically. 3rowne>6il!inson disagreed. According to (ord 3rowne>6il!inson, a resulting trust is not imposed by law against the intention of the trustee %as opposed to constructi e trust' but gi es effect to his common intention. In (ord 3rowne>6il!inson=s iew, the settlor has expressly, or by necessary implication, abandoned any beneficial interest in the trust property, there is no resulting trust? the undisposed equitable interest ests in the Crown, as 3ona@acantia. According to (ord 3rowne>6il!inson, there is no difference between the two classes of resulting trust as opined by 9eggary <. 3oth are traditionally regarded as =trust gi ing effect to the common intention of the parties=.

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&. Resulting trusts that arise automatically.

&resu$e intention of the 1arties 'Lor 2ro3ne 4il5inson in Westdeutsche Landesbank v Islington LBC). (ord 3rowne>6il!inson had sought to establish that resulting trust will only ta!e effect when the conscience of the transferee is affect by his becoming aware that he has recei ed property which was not intended for his benefit.

)roblems with this analysis: (ord 3rowne>6il!inson regard his theory as =uncontro ersial=? but somehow, it appears problematic and unsupported by authority. *

It is said that a resulting trust gi es effect to the presumed common intention of the parties. In this, howe er, (ord 3rowne>6il!inson could be confusing resulting trust with common intention constructi e trust. 3rowne>6il!inson=s iew runs counter to the iews expressed by the Aouse of (ords in @ander ell IRC, where resulting trust arises here when the trust fails for lac! of ob4ect, which has nothing to do with presumed intention. 3rowne>6il!inson=s iew seems inconsistent with cases where resulting trust were imposed on property held by transferee who had no intention of becoming trustees. In Re Vinogradoff, the transferor could not ha e intended that the tansferee be a trustee for her because the transferee was only se en>year>old. 8wadling is of the opinion that (ord 3rowne>6il!inson is wrong and that 9egarry <.=s argument is right. According to 8wadling, if a settlor who is attempting to create a trust was as!ed =what he would li!e to happen if the trust fails, most settlor would say they want the property bac!. Aowe er, the problem with this argument is the fact that ma4ority of settlors do not contemplate that the trust would fail. 8o, what (ord 3rowne>6il!inson is doing is not presuming the intention but imputing it to the parties? he is imputing something that had ne er existed.

6+A/ll resulting trusts !o$e into 7eing 7e!ause the 1ro"i er of 1ro1ert) i not inten to 7enefit the re!i1ient.8 'Cha$7ers Resulting Trusts 1. #) This is the preferred analysis

)roblems with this analysis: 6. 8wadling B;xplaining Resulting Trusts: %*CCD' &*E Law uarterl! Review F* *.$. @oluntary Con eyance *.$.&. (and ()A &/*#, s. 0C %$' +In a oluntary con eyance a resulting trust for the grantor shall not be implied merely by reason that the property is not expressed to be con eyed for the use or benefit of the grantee. Acts to pre ent a resulting trust arising simply because certain words of benefit ha e been omitted. If you transfer land to me, but you don:t explicitly say it is for my benefit, then a resulting trust will not arise merely for that reason. This means that in the absence of any further e idence, no resulting trust will arise. Aowe er, there is nothing to pre ent a resulting trust from arising where there is other e idence indicati e of the transferor:s intention.

Lohia v Lohia .*CC&1 6(TR &C& Aeld that if G con eys land to H and recei es nothing in return, there will be no presumption in G:s fa our that H must rebut if he wishes to !eep the property for himself.

It follows that the subsection creates inconsistencies between the rules for real and personal property, and also between the rules for purchase for property in another:s name and transferring property in another:s name. *.$.*. )ersonalty $

7or other types of property, a oluntary con eyance does gi e rise to a resulting trust. Re Vinogradoff .&/$#1 6." 0D *.E. A grandmother transferred a bond into the 4oint names of herself and her granddaughter. Although the e idence was unclear as to her intentions, she continued to recei e di idends until her death. 7arwell <. found that the property was held on resulting trust for the grandmother:s estate. )urchase 9oney Resulting Trusts 6here property is purchased in the name of G, but G has pro ided only part %or perhaps no part at all' of the purchase price. Resulting trust arises by operation of law in fa our of H to reflect the contribution pro ided by H. The more common situation in ol es two people contributing to the purchase price. This is held on trust for both G and H in equal shares. 2ntil recently, the presumption was: you get what you put in. +6here the purchase money for property acquired by two or more persons in their 4oint names has been pro ided by those persons in unequal amounts, they will be beneficially entitled as between themsel es in the proportions in which they pro ided the purchase money.- %Dillon <. in Walker v "all' This is a rebuttable presumption. 7ollowing 8tac! Dowden, there is a strong presumption that equity follows the law and that equitable

ownership, li!e legal ownership, is 4ointly held. #!er v #!er %&FDD' * Cox /* The trust of a legal estate ad ances to the person who left the money. If G buys property %real or personal' and tells the endor to con ey the property to H, then H must rebut the presumption that G did not mean to ta!e the property beneficially for himself.

$owkes v %ascoe %&DF#' (.R. &C Ch. App. $E$ A presumption of a resulting trust may be rebutted by e idence of intention. A testator bought shares in the name of herself and the defendant %the son of her daughter>in>law'. 3y her will, she left the residue of her estate to her daughter>in>law and thereafter to the defendant and his sister. The question arose as to whether the shares bought in the name of the defendant and the testator were gifted to the defendant or held by him on resulting trust for the testator. Aeld %CA': In the e idence, the shares had been gifted to the defendant. At the same time, as the purchase of the shares, she purchased other shares in the name of herself and her companion. If she had intended all the shares to be held beneficially for herself, there would ha e been no point in the separate but contemporaneous transactions. The e idence to rebut the presumption was that she meant it as a gift. It was the close relationship that allowed the court to accept that it was a gift. Aeld that it would be ery different if she had purchased a stoc! in the 4oint names of her and her solicitor and the presumption would ha e been more difficult to rebut in that situation. 3ut as it was, because of the family relationship, the presumption of the resulting trust was rebutted. E

&braha's v (rustee in Bankruptc! of &braha's, (he (i'es, <uly *0, &/// A wife continued to pay her own and her estranged husband:s share in a lottery syndicate. It was held that the presumption of a resulting trust in her fa our was not rebutted on the e idence. 8he was, therefore, successful in her claim. The )resumption of Ad ancement In certain situations, the law presumed a gift. This applied where a husband made a gift to his wife or his child. The ;quity Act has not abolished this presumption.

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;quality Act *C&C s. &// %&' BThe )resumption of Ad ancement %by which, for example, a husband is presumed to be ma!ing a gift to his wife if he transfers property to her, or purchases property in her name' is abolished.: *.0. Reason: This has become outdated. 7amily relations ha e changed so that it no longer appropriate. Therefore it reflects the pre ailing and socio>economic alues of gone>by days. To be used in perspecti e: Anything that has come about before the Act will be dealt with in accordance with the law before the Act. Illegality +Ae who comes to equity must come with clean hands-. 6here a proprietary interest can be established under a resulting trus t without recourse to reliance on e idence of illegality, the +clean hands- principle has no role to play. (insle! v )illigan .&//E1 & A.C. $EC Case concerned the 4oint purchase of a home for two women as co>habiting lo ers. 3y mutual agreement, the property was registered in 9s Tinsley:s name as the sole proprietor so as to enable 9s 9illigan to ma!e false social security claims, thereby benefitting both parties. In the brea!down of their relationship, 9s Tinsley mo ed out and claim possession of the house as its legal owner. 9s 9illigan counterclaimed for an order for the sale claiming that the house was held on trust for both of them equally. A( held that in this case, 9s 9illigan did not need to rely on the illegality to establish an interest. %$>* 9a4ority'. 9s Tinsley held the property on resulting trust and 9s 9illigan could establish an interest. +A party to an illegality can reco er by irtue of a legal or equitable property interest if, but only if, he can establish his title without relying on his own illegality.- %(ord 3rowne>6il!inson'. The approach of the ma4ority seems to run contrary to a long standing line of authority that the court will not gi e effect to a trust established for a fraudulent purpose, but will instead +let the estate lie where it falls.(ord Joff and Keith, dissenting, would ha e ta!en a stricter line of approach and thought the courts should not inter ene in cases of illegality. (ord Joff thought this would +open the door to far more unmeritorious cases.This case may be iewed as creating an exception to the general principle of clean hands and, thereby, effecting a relaxation in the approach of equity. The transferor need rely merely on the resulting trust that arose when the transfer occurred. #

Criticism: 8towe argues: +A ailability for relief depends entirely on a fact which is completely irrele ant from a policy perspecti e % iL whether there is a presumption of ad ancement in relation to the person to whom the property is transferred'? and 5 is in no way related to the seriousness of the underlying illegality-. Ither commentators ha e focused on the impact of the ob ious gender bias that per ades the historic presumptions of equity and which are implicitly retained by the A(. Aalliwell argues: +The opportunity for an authoritati e re iew of the gender discrimination contained within this presumption rarely arises and it is regrettable that the A( failed to seiLe the opportunity to ad ance equality in the law.-

Lowson v Co'bes .&///1 Ch. $F$ A man and his mistress contributed to the purchase price of a number of properties, each of which was held in the sole name of the mistress to pre ent any claim from the man:s estranged wife. %An illegal purpose under 9atrimonial Causes Act'. In reliance of the presumption of resulting trust and, without the need to adduce e idence of illegality, the man was entitled to reco er. Robert 6al!er (.<. lamented the continuing operation of the presumption of ad ancement under the (insle! v )illigan approach and emphasised that it +does create difficulties because the presumption has been cogently criticised both as being out of date in modern social and economic conditions5 and as being uncertain in its scope. The Aigh Court of Australia has re4ected the (insle! approach in fa our of a flexible test based on policy considerations. The (aw Commission in &/// proposed that there should be a statutory discretion when illegality is raised M this would pro ide similar flexibility. Amongst the range of factors to influence this discretion of the court would be the seriousness of the illegality? the !nowledge and intention of the party see!ing enforcement of the transaction? the extent to which refusal to assist would deter illegality or would further propose of the rule which renders the trust illegal? the extent to which refusal to assist would be a proportionate response to in ol ement in illegality. "o further progress has been made to enact these proposals.

(ribe v (ribe .&//01 Ch. &CF Could the transferor rebut the presumption of ad ancement by adducing e idence of an illegal purpose that had not subsequently been carried into effectN The plaintiff held E/# out of #CC shares in a family company and was tenant under two leases. 6hen a notice if dilapidations was ser ed on him, he feared that the demands of extensi e repairs would lead to losses to the family company. In order to a oid liability by decei ing the landlord, he purported to sell the shares to his son for the sum of OFD,CCC, which was ne er paid. It transpired that the deception was not necessary because the landlord later agreed to a surrender of one of the leases. The son, howe er, claimed that he was absolutely entitled to the shares under the presumption of ad ancement. CA held that as the father had not carried out his illegal purpose, he was able to adduce e idence of it to rebut the presumption of ad ancement.

The abolition of the presumption of ad ancement means that this anomaly will no longer arise. *.F. 7ailure of TrustPIncomplete Disposal of the 3eneficial Interest 0

"ote that there are a wide ariety of situations in which a resulting trust will arise on the failure of a trust. These situations will not be co ered in detail on the course, but see the following examples: )orice v Bishop of #urha' $* ;.R. /EF A beneficiary who can enforce is an essential element of trusts. The trusts failed because the ob4ects of trust were uncertain.

Re Gillingha' Bus #isaster $und .&/#D1 Ch. $CC 7unds were raised following a disaster in which *E marine cadets were !illed. (ater, the funds were pro ed unnecessary. Court held that funds should re ert to donors on a resulting trust and that money from unidentified donors should be paid into court rather than to the Crown %it was clear that their contributions were meant for the disaster ictims and not for the Crown'

Vandervell v IRC .&/0F1 * A.C. */& A disposition of legal and equitable interest of personalty together need no be in writing but the disposition must be complete, otherwise there may be a resulting trust bac! to the settlor. 9r @ was a flamboyant entrepreneur who wanted to found a chair of pharmacology at the Royal College of 8urgeons with a gift. The gift was &#C,CCC. 9r @ was ery concerned to a oid tax. Therefore he wanted to do it by transferring a bloc! of shares to the Royal College. The college would then recei e di idends from those shares. Aowe er, the shares were transferred sub4ect to an option to buy them bac!. That option was in fa our of the company @ander ell Trustees (td. The question for the court was whether 9r @ retained any beneficial interest in the shares. A( held that he had not di ested himself of all beneficial interest. The terms on which the trustee company were to hold the option had not been defined. Therefore they held it on resulting trust for him. Ae had failed to declare how the trustees holds this option and because of this they are held on resulting trust for him and he has retained a beneficial interest in the share and was liable to surtax for them.

9. Constru!ti"e Trusts $.&. The @arieties of Constructi e Trust +;nglish law pro ides no clear and all>embracing definition of a constructi e trust. Its boundaries ha e been left perhaps deliberately ague, so as not to restrict the court by technicalities in deciding what the 4ustice of a particular case may demand.- %;dmund Da ies (< in Carl *eiss +tiftung v "erbert +'ith , Co .&/0/1 * Ch. *F0' $.*. There is no definition of constructi e trusts due the ariety of ways it is used depending on the circumstances. Aowe er, this gi es the courts a lot of flexibility. Institutional or Remedial

+2nder an institutional constructi e trust, the trust arises by operation of law as from the date of the circumstances which gi e rise to it: the function of the court is merely to declare that such trust has arisen in the past. The consequences that flow from such trust ha ing arisen 5 are also determined by rules of law, not under a discretion. A remedial constructi e trust, as I understand it, is different. It is a 4udicial remedy gi ing rise to an enforceable equitable obligation: the extent to which it operates retrospecti ely to the pre4udice of F

third parties lies in the discretion of the court.- %(ord 3rowne 6il!inson in Westdeutsche Landesbank v Islington LBC, abo e'. 2) TRUSTS IN T:E CONTE;T O< T:E <A(IL= :O(E 1. Conte>t > > > 9atrimonial Causes Act &/F$, s.*E 7or married couples, the law is go erned by this act. Ci il )artnership Act *CCE ;xtends the same rights to same>sex couples who ha e registered. 2nmarried Co>habitation The most common scenario in ol es that of an unmarried co>habiting couple who do not set out explicitly how they intend to share the beneficial interest of the home in which they both reside. In situations of co>habitation, the property interests are determined by ordinary principles of property law. The court is, in effect, loo!ing bac!wards at what the couple decided about the property to determine what the property interest should be. This is an increasing problem for the law because cohabitation is increasing. In *CC&, more than *million unmarried couples, and that was a 0FQ increase from 4ust &//&. This increase is pro4ected to continue, leading to a big social problem. Aow do the resulting and constructi e trusts attempt to deal with thisN Ine idea to o ercome this problem may be a common law marriage > suggesting that wanting to li e with someone for a certain period of time, you are effecti ely, in the eyes of the law, treated li!e a married couple. There is no such thing as a common law marriage in this country. That might be one reason why unmarried couples don:t set out how they intend to share the family home.

#. Legal Title The first step is to determine where the legal title is. ;quity follows the law: +.I1n the absence of e idence to the contrary the equitable interests will follow the legal interests.- %8ir )eter Jibson in Crossle! v Crossle! .*CC#1 ;6CA Ci &#D&'. +tack v #owden .*CCF1 2KA( &F. +<ust as the starting point where there is sole legal ownership is sole beneficial ownership, the starting point where there is 4oint legal ownership is 4oint beneficial ownership. The onus is upon the person see!ing to show that the beneficial ownership is different from the legal ownership. 8o in sole ownership cases it is upon the non>owner to show that he has any interest at all. In 4oint ownership cases, it is upon the 4oint owner who claims to ha e other than a 4oint beneficial interest.- %3aroness Aale' 9. De!laration of Trust (aw of )roperty Act s. #$%&'%b', s. #$%*' +"o>one now doubts that such an express declaration of trust is conclusi e unless aried by subsequent agreement or affected by proprietary estoppel.- %3aroness Aale in +tack v #owden, abo e' > > > > The most straightforward way of determining where the legal ownership lies is through an express declaration of trust. 8.#$%&'%b' M it has to be in writing. Aowe er, couples are unli!ely to do this M particularly where the property is registered in one person:s name only. If there is no express declaration of trust, then we ha e to loo! at other ways to establish beneficial interest: resulting trust or constructi e trust. D

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8.#$%*' These are exempt from the formalities %con ersations etc can be used'.

.. The Role of the Resulting Trust The traditional approach: +pringette v #efoe .&//*1 * 7.(.R $DD > > > They were 4oint legal owners of the property. There was no express declaration of trust and no e idence of discussions between them. A resulting trust arose and the plaintiff was held to be entitled to a F#Q share in the property as this represented the extent of her contribution.

The new approach: +tack v #owden %abo e' > > > > > The A( decision effecti ely seemed to abolish the resulting trust in the context of the family home. This was a radical change in the law. The presumption will now be that they share property interest equally. Reason: equity follows the law, so the fact of there being unequal financial shares will not of itself result in unequal beneficial share. Aale wanted to adopt this approach as she sees monetary contributions as only one of the ways that people can contribute to a family home. Aale said that it is not enough to determine the beneficial interest %a resulting trust:s field of enquiry was therefore too narrow and one should loo! more broadly at the situation.' This can be seen as a mo e away from resulting trusts to constructi e trusts: o +The law had indeed mo ed on in response to changing social and economic conditions. The search was to ascertain the parties= shared intentions with respect to the property in the light of their whole course of conduct in relation to it- %3aroness Aale' o 6hat did Aale mean about social and economic conditionsN 8he was not ery specific about why the resulting trust would be abandoned. o Aale said that other factors to be ta!en into consideration included: childcare? which partner wor!ed? whether one partner was a stay>at>home parent, whereby they were not ma!ing a financial contribution but another !ind of contribution which had not been recogniLed in the family home context. (ord "euberger dissented M he argued that the resulting trust should not be dispensed so easily as it produced certainty and structure.

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Laskar v Laskar .*CCD1 & 6.(.R. *0/# > > A resulting trust will be fa oured and can still apply where the relationship between the parties is more formal, particularly where the property is purchased for a commercial rather than domestic purpose. A mother and daughter purchased a house together. The house was a council house in which the mother li ed for *C years and she wanted to exercise her right to buy that house. Aowe er, she couldn:t do it on her own so she agreed to purchase it with her daughter. 9other and daughter agreed to buy the house. They both contributed to the purchased on the property, although the mother contributed more. The idea was that they would mo e out and the house would be let out. The mother would use the rent to pay the mortgage. 9other and daughter fell out. The daughter brought a claim for 4oint beneficial ownership ie half of the beneficial interest and a share in the rent. The mother has contributed more of the purchase and funding of the property. CA held on resulting trust principles? daughter was entitled to only $$Q and re4ected her claim for a half share. 3ecause of the nature of the relationship, whereby the whole point of buying property was so that they could rent it out and generate income, the CA said the approach in 8tac! was not appropriate and that /

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they should use a resulting trust. 6here the main purpose of buying the property is commercial, and not to li e as a family, then the resulting trust will be applicable. There can howe er be uncertainty as to when is something commercial and when it is domestic.

". )is!a BTwo recent reflections on the resulting trust: %*CCD' #, (he Conve!ancer EE& ?. Co$$on Intention Constru!ti"e Trusts > > > > > > This is the main mechanism for determining beneficial interest in the context of family homes. 6hat was the common intention as to what the beneficial interest of the property should be at the time the property was boughtN The origins of this type of trust can be found in * cases: both concerned married couples but came about before the 9atrimonial Causes Act &/F$. These cases re4ected the broad brush approach based on family assets. A( said the beneficial interest should be determined by the intentions of the parties. The courts will only find a common intention for constructi e trusts where the parties had actually intended that.

%ettitt v %ettitt .&/FC 1 A.C. FFF > Concerned a claim by a former husband to a share in the family home. In this case, the sole legal owner the beneficial interest was ested in the wife. Ausband wanted to assert a claim in relation of the impro ements that he had made to the home. A( held he wasn:t entitled to anything, because it was not possible to infer any common intention from this conduct. (ord Diploc! dissented in this case on the basis that the court should be able to impose a common intention constructi e trust on the basis of what they 6I2(D ha e decided AAD they gi en it any thought. The ma4ority held that you must 4ust loo! at the ACT2A( interest.

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Gissing v Gissing .&/F&1 AC DD0 The wife claimed a share of the property, which was registered in the husband:s name. 8he contributed to household expenses. A( held there was no common intention to share the beneficial ownership and they emphasised that the focus had to be on what the parties had actually intended. > (ord Diploc! sat in this caseM he said it one might be able to infer common intention from mortgage repayments. +The court cannot de ise agreements which the parties ne er made. The court cannot ascribe intentions which the parties ne er had.- %(ord 9orris' >

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<oint (egal Iwnership 8ituation where the legal title is ested in both parties. It is less common for problems to arise in this situation. &C

o 8ince &//D, the form for registering transfers has a section in which express declaration should be made. o 3ut it is not obligatory and problems can still arise. +tack v #owden %abo e' > 9r 8 and 9s D purchased a house together in 9s D sole name. They both li ed there and she paid the mortgage. They had E !ids and they both contributed to the mortgage. In &//$, they sold that house and bought another property M which was the sub4ect of the dispute. This was purchased in 4oint names. 3ut the ma4ority of the cash for the property came from 9s D M from the sale of the first property, which was in her name alone. They had a 4oint mortgage for the new property. The !ept their financial affairs completely separate. 8he was ma!ing more financial contributions. They split up and 9r 8tac! claimed a half share in the property. At the first instance, the 4udge granted an order for the half share. CA o erturned this and granted 9s D a 0#Q share. The A( upheld that di ision in the CA, but for different reasons. 3aroness Aale deli ered the leading 4udgement: (ord Aoffman, 6al!er and Aope agreed with her. The first point she emphasised, is where you ha e 4oint ownership, the presumption is of equal share. The onus of proof is on the person see!ing to show they are unequal %9s D'. Aow could she ma!e that caseN It is not enough for her to say BI contributed more:. In fa our of the common intention contrasti e trust. Aale emphasised that you must loo! at the true intentions of the parties. It is not the case of the courts loo!ing to see what:s fair. There are a number of factors rele ant to interpreting the intention of the parties: Aale emphasised that it would only be in ery unusual circumstances that the court would loo! at these factors and decide it was not appropriate to allocate shares on anything other than a #C>#C basis. 8tac! Dowden was one of those unusual cases. In this case, the parties had !ept their finances separate. 6hilst they intended to share the beneficial interest, they did not intend to share it equally. 3road brush approach M loo!ing at all factors to decide what the common intention was.

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Ine area of doubt that arose from this case was the role of the court when loo!ing at intention. > > > > > > $owler > > > Imputing an intention in ol es the court attributing to the parties an intention that perhaps they would ha e formed had they thought about it. That is different from actual or inferred intentions. %The imputed intention sounds similar to Diploc!:s 4udgement in )ettitt.' (ord 9orris in Jissing held that the court does not impute intention. (ord "euberger %a chancery 4udge M property lawyer and li!es certainty' said that to impute intention would not only be wrong in principle, but the 4udge is essentially deciding what he thin!s it fair. To impute intention also against two decisions of the A(. %)oint of precedent.' Aale %from a family bac!ground' argued that the Bthe law has mo ed on:. In support of Aale M you could say inferring and imputing intention is ery similar M there is a fine line to be drawn between the two. Barron .*CCD1 ;6CA Ci $FF This case in ol ed a couple who were 4oint legal owners of a house in which they had li e in together for a long period. 9r 3 contributed part of the purchase price and the rest was from a mortgage in 4oint names. 9s contributes to household expenses. CA had to deicide whether 9r 3 could rebut the presumption of equal shares. CA said no M they court had to loo! at the whole course of dealing to infer the parties common intention M e idence %li ed together for a long time, finances were tied up together' was enough to infer beneficial interest was shared equally. &&

-ones v .ernott .*C&C1 ;6CA Ci #FD. > )arties purchased property together in &/D# in 4oint names. They separated in &//$ and 9s <ones continued to li e in the property. &* years later, K claims a #CQ share. It was accepted by the parties in &//$ that there was equal beneficial ownership. The unusual fact is that it didn:t come to court &* years later, during which time 9s < li ed in the property. At first instance, it was held that that length of time suggested that the parties intentions had changed and 9s < would ha e the ma4ority interest %/CQ'. The reason was that there was the long period during which she li ed in the property and he was absent. CA o erturned this decision and split the benefit #C>#C on the basis that there was no e idence to support the change of beneficial interest. The 4udges commented on when it is permissible for the court to infer intention and on the idea of imputing intention. 7or the ma4ority, it was permissible to infer intention from conduct M it was not permissible to impute intention from conduct. CA seems to share (ord "eurburgers distrust of imputing intention. (ord <ustice Rymer in the ma4ority said in relations Aale:s statement that the court can also loo! for parties imputed intention: BI do not understand what she meant.: Re4ects the idea that the court can impute intention on what it thin!s is fair. The fact the parties were separated for &* years was not enough e idence to show the common intention had changed.

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There were competing iews on when the court and how the court will interpret the parties: intention and lea e to appeal to the 8upreme Court was gi en. At the moment, there is substantial ambiguity in this area of law. #.*. > > > > > > (egal Title ested in one party only 9ore problems arise where property is ested in one party only as it is much less li!ely that there will be an express declaration of trust. In the basis that equity follows the law, it will be for the non legal owner to establish beneficial interest. The courts approach the R in * stages: &. Aa e to loo! at whether the non>legal owner has established beneficial interest. *. Aa e to quantify that interest. The same applied to 4oint legal ownerships M but the emphasis is on the second stage of enquiry in that situation. #.*.&. ;stablishing a beneficial interest Llo!ds Bank v Rosset .&//&1 & A.C. &CF > A husband and wife purchased a semi>detached property with the husband:s family trust pro iding the purchase price. The title to the property was put in the husband:s name on the insistence of the trustee:s of the family trust. The purchasers were gi en access to the property before completion of the purchase. Reno ation wor! was commenced with the wife doing some decorating and super ising the builders. 8hortly after the wor! commenced, the husband obtained an o erdraft facility for the reno ation wor!. 2pon default, possession proceedings were instituted. The wife claimed an interest in the property. A( held the wife:s acti ities in respect of the property were not sufficient e idence on which an inference of common intention that the wife was to ha e a beneficial interest in the property could be drawn. In absence of an expressed intention, the husband held the property for his own use and benefit. (ord 3ridge suggested that in absence of an expressed common intention as to the beneficial interest in the property, it was doubtful that any conduct short of direct financial contribution to the purchase price would suffice. This case emphasised that the common intention must be one to share the ownership of the home and not 4ust the home itself.

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The position is that where there are direct financial contributions to the purchase price, for example by payment of the deposit or mortgage instalments, a beneficial interest in the property will arise. The beneficial interest will be held by way of a resulting trust. 6here there is an expressed common intention and the representee acted in reliance of it to his or her detriment, a beneficial interest could arise which would by held by way of constructi e trust. %i' ;xpress Common Intention

+The first and fundamental question which must always be resol ed is whether 5. 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.- %(ord 3ridge'. /ves v /ves .&/F#1 & 6.(.R &$$D > > > D told his partner that she was too young to be a legal owner of the property. The court held that this excuse manifested a common intention to share the beneficial ownership. The claimant did not ma!e any financial contribution, but did carry out substantial physical labour %including wielding a &Elb sledgehammer' relating to internal and external decorating, gardening and general maintenance. 8he also performed the role of a mother and house wife. The detriment must, howe er, be material and not merely emotional or psychological in nature.

Grant v /dwards .&/D01 Ch. 0$D > > > D told his partner that she couldn:t go on the title deeds because it might ha e an effect on his di orce proceedings. The court was able to infer from that was that there was an expressed common intention that the beneficial interest was to be shared. Ais partner had paid household expenses that enable D to pay the mortgage. This was held to be detrimental reliance. Ince you ha e e idence of that common intention, the claimant also has to show that they ha e relied to their detriment on that agreement. The form of that detrimental reliance can ary but it must be in some sense referable to the agreement. ;g Jrant ;dwards, she paid household expenses that enabled the other party to pay the mortgage. That was detrimental reliance. "ot any act will do.

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Llo!ds Bank v Rosset .&//&1 & A.C. &CF > A( said e en if there had been an express agreement, the wife decorating the house would not be enough to show detrimental interest. %ii' Inferred Common Intention

+5 direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily 4ustify the inference necessary to the creation of a constructi e trust. 3ut, as I read the authorities, it is at least extremely doubtful whether anything less will do.- %(ord 3ridge in Rosset' > (ord 3ridges statement creates difficulties when trying to infer common intention from the parties: conduct Burns v Burns .&/DE1 Ch. $&F > > The woman:s housewor!, childcare and arious domestic duties for &F years resulted in no common intention. It was not enough to gi e her an interest in the property. &$

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Aeld: she needed to ma!e some direct financial contribution.

According to (ord 3ridge, when interpreted strictly, e en if the party pays the household expenses, they will still not get anything. Aowe er, the court too! slightly more flexible approach in: Le $oe Le $oe .*CC&1 * 7.(.R. /FC > > > > Ausband had paid the mortgage whilst the wife paid for the domestic expenditure. These were not di orce proceedings, so decided under ordinary constructi e trust principles. The 4udge held that the wife could acquire a common interest from these payments. It would be enough to create an interest. 3y irtue of her indirect contributions, he inferred a common intention.

+tack v #owden %abo e' > > > This case also had a bearing on this issue. The 4udges, Aale and others, made comments to the effect that the strict approach was no longer appropriate. 8uggested that indirect contributions should gi e rise to a beneficial interest.

+6hether or not (ord 3ridge:s obser ation was 4ustified in &//C, in my opinion the law has mo ed on, and your (ordships should mo e it a little more in the same direction.- %3aroness Aale' &bbott v &bbott .*CCF1 2K)C #$. > > > > > In this case, the wife had made direct contributions to the mortgage. ; en under a ery narrow approach, she would be o! because she had made direct contributions. Aale emphasises that the court would loo! at the whole course of dealings and not 4ust direct financial contributions. +The parties: whole course of conduct in relation to the property must be ta!en into account in determining their shared intentions to ownership.9o ing away from a strict Russet approach. Aale:s reference to the whole course of dealings is rele ant when we get to the stage of quantification of interest. Again there was ambiguity M Aale did not distinguish between these * stages: establishing an interest and quantification of interest. (ho'as .*CCF1 ;6CA Ci &*&* )ost 8tac! Dowden A more restricti ePconser ati e approach was adopted. The claimant mo ed in with the defendant A7T;R he had purchased the house. There is no chance of a common interest arising at the time of purchase. The house was registered in his sole name. Aer contribution was to wor! for the business. That business supplied their income and from that they paid their mortgage and all outgoings for the house. This was an indirect means of contributing. CA held this did not gi e rise to a common interest. 8he did not gain a right to any beneficial share of the house. In the facts, there was no e idence on which they could infer a common intention. Crucial to this is that she mo ed in after he had purchased the house. 8he did get a share in the business but she couldn:t claim a share in the house.

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9atrimonial )roceedings and )roperty Act &/FC s. $F > > > s.$F pro ides that in cases in ol ing married couples, where one partner ma!es a substantial contribution, they can get an interest of enlarge an existing interest. Ie where one party has contributed either through money or in estment to a substantial impro ement to the property, leading to an increase the alue of the property. That act doesn:t apply to unmarried couples. 3ut the principle might still be applicable. &E

(ho'as v $uller Brown .&/DD1 & 7(R *$F > > > The non legal owner had built a * storey extension and other substantial impro ements. In the facts of that case, he did not get an interest because the court held he had done that wor! for li ing rent>free in that accommodation. The court accepted that if that hadn:t been the deal, it may ha e been enough to acquire an interest. #.*.*. Ruantifying the beneficial interest Clough v .ille! %&//0' F* ). S C.R. D**. > > There was an express bargain that the beneficial interest should be shared on a #CP#C basis. 9rs Killey argued that, under the first rule in Rosset, a constructi e trust arose which, due to the express agreement, ga e her a #CQ interest. 8ubsequent to this arrangement, 9rs Killey had undeniably acted to her detriment by ma!ing the proceeds of her di orce settlement a ailable to 9r Clough and underta!ing wor! on the cottage. As to the extent of her share, )eter Jibson (< admitted +it is only common sense that where the parties form a common intention as to specific shares they are to ta!e, those shares prima facie are the shares to which the court will gi e effect-. The correct starting point, therefore, was to ta!e the shares as established by the parties: express common intention and to depart from this only where there was good cause. Although )eter Jibson (< failed to indicate what would be a good cause, he did conclude that, on the present e idence, there was no 4ustification for the departure? +It seems to me only 4ust that 9r Clough should be held to, and not allowed to renege on, his promise on which 9rs Killey relied to her detriment.This case demonstrates the fundamental point that when the parties expressly agree on beneficial shares, pro ided there is some detrimental reliance, that understanding will almost certainly be enforced by the courts.

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Difficulties arise when the express bargain is silent as to the beneficial shares to be ta!en. The court is then forced to do its best to allocate on the basis of fairness and 4ustice. > The maxim +equity is equality- has little role to play in there circumstances. > There will be cases where a fair estimate may be something other than a half>share. )idland Bank v Cooke .&//#1 E All ;R #0* > At the time of acquisition, the common interest was that their respecti e shares should be left for later determination.

0xle! v "iscock .*CC#1 7am. *&& > > There was an agreement to share, but in unspecified proportions. +It must not be accepted that the answer is that each is entitled to that share which the court considers fair ha ing regard to the whole course of dealing between them in relation to the property.- This includes arrangements which they ma!e from time to time in order to meet the outgoings %eg house!eeping, mortgage contributions, council tax and utilities' which ha e to be met if they are to occupy the property as a home. The court is simply imputing a common intention as to the parties: respecti e shares on the basis of that which, in the light of all the material circumstances %including the acts and conduct of the parties after the acquisition' is shown to be fair and reasonable. Chadwic! (< ac!nowledged that the courts ha e not found it easy to reconcile that find step with a traditional, property based approach.

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+tack v #owden %abo e' > > 8dsa sadsa &#

&bbott v &bbott %abo e' > Aale +The parties whole course of conduct in relation to the property should be ta!en into account in determining their shared intentions as to its ownership.-

". )is!a BIntention, fairness and the presumption of a resulting trust after +tack v #owden: %*CCD' F&, )odern Law Re iew &*C 6. 8wadling BThe common intention constructi e trust in the Aouse of (ords: an opportunity missed: %*CCF' &*$, Law uarterl! Review #&& 0. &ro1rietar) Esto11el

-ennings v Rice .*CC*1 ;6CA Ci &#/ > > > > The CA admitted that the court had to loo! at matters in the round and ha e regard to the nature and quality of the representation and the expectation engendered, the detriment incurred and the proportionality of any reward ha ing regard to the detriment. If the claimant:s expectations are uncertain, extra agant or out of proportion to the detriment suffered, the court should recognise that the claimant:s equity should be satisfied in another and generally more limited way that that which was expected. To honour the representations %ie to award the claimant a house worth OE$#,CCC' would ha e been entirely disproportionate to satisfy the equity. Instead the claimant was awarded a sum of O*CC,CCC. Detrimental reliance for estoppel purposes is not limited solely to financial contributions.

0xle! v "iscock %abo e' > > > +tack v #owden %abo e' +)roprietary estoppel typically consists of asserting an equitable claim against the conscience of the Btrue: owner. The claim is a Bmere equity:. It is to be satisfied by the minimum award necessary to do 4ustice ... which may sometimes lead to no more than a monetary award. A Bcommon intention: constructi e trust, by contrast, is identifying the true beneficial owner or owners, and the siLe of their beneficial interests-. %(ord 6al!er' 1eo'an2s Row v Cobbe .*CCD1 2KA( ## > > dfs sdfsdfds &0 Chadwic! (< +The time has come to accept that there is no difference in outcome5 whether the true analysis lies in constructi e trust or in proprietary estoppel.-

(horner v )a3or .*CC/1 2KA( &D > > dfs sdfsdfds

3. 9c7arlane and A. Robertson BApocalypse a erted: proprietary estoppel bac! in the Aouse of (ords: %*CC/' &*#, Law uarterl! Review #$# -. Refor$ (aw Commission Discussion )aper: +haring "o'es (aw Com. *FD %*CC*' (aw Commission Report: Cohabitation4 (he $inancial Conse5uences of Relationship Breakdown (aw Com. $CF %*CCF' )A Ictober *C&C ". )is!a BTwo recent reflections on the resulting trust: %*CCD' #, (he Conve!ancer EE& +tack v #owden .*CCF1 2KA( &F. ". )is!a BIntention, fairness and the presumption of a resulting trust after +tack v #owden: %*CCD' F&, )odern Law Re iew &*C 6. 8wadling BThe common intention constructi e trust in the Aouse of (ords: an opportunity missed: %*CCF' &*$, Law uarterl! Review #&& 3. 9c7arlane and A. Robertson BApocalypse a erted: proprietary estoppel bac! in the Aouse of (ords: %*CC/' &*#, Law uarterl! Review #$# (aw Commission Discussion )aper: +haring "o'es (aw Com. *FD %*CC*' (aw Commission Report: Cohabitation4 (he $inancial Conse5uences of Relationship Breakdown (aw Com. $CF %*CCF'

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