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In this question Wendy is to be advised as to whether she has rights on the property which
is on the name of her boyfriend and if she do have a beneficial interest on the said property.
Here it must first be made clear that the house is registered by law under Andrew’s sole
name. Hence, it can be said that Wendy isn’t a legal owner to this property and cannot
acquire a beneficial interest through law. Whereas she can be advised to seek an
opportunity to acquire beneficial interest through equity. S.53(1)(b) 1 puts forward a
condition that the claimant can obtain the beneficial interest if the legal owner expressly
declare in writing that she holds the property on trust for the claimant usually in co-
ownership with herself. On the facts, it has been said that the property is registered under
Andrew’s name and Wendy’s name was never mentioned as the joint owner by Andrew.
While S.53 (2) LPA 1925 2 comes with an exception that states that there is no need for the
declaration of trust need not be in writing. The exception relevant here would be that
“persons whom are not a party to the express declaration of the trust may rely on resulting
or constructive trust or an estoppel”3. As per the exception now Wendy can rely on resulting
or constructive trust to acquire the beneficial interest.
RESULTING TRUST
There is a strong presumption that the equity follows the law as established in the case of
Stack v Dowden4. Here the non-legal owner has to rebut the presumption by either applying
resulting trust or constructive trust. A resulting trust will only apply when the claimant has
made a direct financial contribution at the time of the purchase of the property. This was
established in the case of Burns v Burns 5.
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. Law of Property Act 1925, s 53(1)(b)
3. M.Dixon, Morden Land Law (11th edition Taylor and Francis group 2018) 169
On the facts, did Wendy contributed to the deposit? In the statement it was clearly
mentioned by Andrew’s parents that the purchase price paid by them was for both of them
as it came with a card saying, “for both of you in your new home”. Hence it can be
established that purchase price was given to the legal owner ‘Andrew’ by a way of gift. This
means Wendy may have an equitable interest on the property as per said in the case of
Wodzicki v Wodzicki 6. The next issue wold be of whether Wendy was involved in acquiring
the discount to the sales price. In the case of Mumford v Ashe7, it was intended for the value
of discount to be treated as a contribution. Moreover, in Laskar v Laskar 8 it was stated that
it was because of the mother they got a discount. So, the discount can only be attributed to
the mother. On the facts, it was held that Wendy had acquired the discount from her former
acquaintance to reduce the price of the property by 20,000 to the sale price of 250,000.
Hence it was because of Wendy they could get the discount and it can only be attributed to
her.. Nevertheless, in the case of Evans v Hayward 9 it was held that the ability to reduce the
price is to be seen as a mere haggling and not can’t be considered to be given as interest.
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However, Cox v Jones has stated that it can be taken into account in light of the whole
circumstances.
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6. Wodzicki v Wodzicki [2017] EWCA Civ 95
This goes along with the principle of resulting trust where the contribution was to be made
at the time of the acquisition of the property. However, in the latest case of Laskar v Laskar,
the courts allowed mortgage repayments to be contribution to the purchase of the property
and the claimant was entitled to a beneficial interest. However, Laskar v Laskar would not
overrule the case of Curley v Parkes as in Laskar it was a joint ownership whereas in Curley it
was under a sole owner. Moreover, contribution through the way of increasing the house’s
value would not be considered as a contribution. This was stated in the case of Pettitt v
Pettitt 13 where decorating the house was described as a hobby. Curley would never regard
this domestic non-financial contribution as a contribution towards the acquisition of the
property. However, Wodzicki v Wodzicki suggested that payments for the purchase of the
property, its maintenance and the outgoings can be relevant. Hence, it can be said resulting
trust only offers beneficial interest in limited conditions where the claimant’s act is to an
important financial contribution. However, certain financial contribution such as cost of
redecoration can’t be taken into account because redecorating the property would not
contribute as a significant financial contribution to the acquisition of the property.
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11. Curley v Parkes [2004] EWCA Civ 1515
12. M. Dixon, Morden Land Law (11th edition Taylor and Francis group 2018) 173
Constructive Trust
However, Wendy can still rely on constructive trust to gain a beneficial interest. Here Wendy
has to establish a common interest to share the beneficial interest. It was held that to claim
under the constructive trust there must be an inferred or express common intention shared
between the legal owner and the claimant stating that the claimant holds some interest in
the property with the intention that the claimant will rely on it 14. Constructive trust arise
when it is unreasonable for the owner to assert his own rights and deny a beneficial right to
the other. For the courts to apply this constructive trust certain documents must be proven.
When this is established constructive trust take effect where the property will be held by
the legal owner for him and the equitable owner, which is usually tenancy in common 15. In
Rosset it was held that for there to be a common intention there must be agreement or
understanding between parties during or after the acquisition of the property or through
and express agreement that the property is to be beneficially shared by both of them. Once
this is established one must prove detrimental reliance where there would be a change in
the position on the claimant’s part based on express common intention. In Springette v
Defoe 16 it was held that agreement must be communicated by an actual discussion by the
parties.
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14. Morden Land Law (11th edition Taylor and Francis group 2018) 176
The next thing to be considered is if there is an implied common intention between the
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parties. In Llyods Bank v Rosset it was stated by Lord Bridge that “ direct contribution to
the purchase price by the partner who is not the legal owner whether initially or through
the payment of mortgages will be allowed to justify the necessary creation of the of a
constructive trust. On the facts Wendy has paid the mortgage for 6 months and the deposit
was a gift from Andrew’s parent for both of them. In Burns v Burns, it was held that general
contributions and the domestic contribution such as family expenses and paying off part of
the mortgage would be sufficient to bring in a beneficial interest. On the facts, Wendy has
paid the mortgages for 6 months hence she can claim a beneficial interest. In Rosset it was
held that Ms. Rosset didn’t have an interest as she didn’t contribute to direct financial
contribution. It was also held by Lord Diplock in Gissing v Gissing 18 that anything less than a
direct financial contribution would not be enough to create an interest. Hence for the
duration of 6 months where Andrew was recovering it was Wendy who took up paying the
mortgage and contributed to the expenses of the building works. So, here Wendy had done
some direct financial contribution to the property hence she can gain a beneficial interest.
In Stack v Dowden it was held that non-financial contribution can be taken into account. On
the facts, Wendy took care of the children as this was a decision made by both the couples
and also contributed financially for the expenses of the building works. Moreover, on the
facts it was decided by both Andrew and Wendy had discussed together that Wendy would
stay home and supervise the building works. If Wendy was not there to look after it then
Andrew wouldn’t be able to go to work but would have to supervise on his own.
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17. Llyods Bank v Rosset [1990] UKHL 14
619
. Abbott v Abbott [2007] UKPC 53
22. Morden Land Law (11th edition Taylor and Francis group 2018) 176
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24. Oxley v Hiscock [2004] EWCA Civ 546
26. Gray& Gray (11th edition, Oxford University Press 2011) 360
Wendy’s Rights
Since Wendy can already establish the share through an implied common intention the next
thing to determine is what are Wendy’s rights against Andrew and the bank. Firstly, it would
be Wendy’s right to occupy against Andrew. Her this rights can be established under S 12(1)
(a) TOLATA 1996 28 where it was held that Wendy has a general right to occupy on the trust
land as long as she is beneficially entitled to an interest in possession of the trust land and
the aim of the trust should be among its objects includes making the land available for
occupation purposes. Moreover, on the facts Andrew has re-mortgage the house to go on a
world tour with his new girlfriend hence the bank will only allow Wendy to stay in if she
would pay back the mortgage. However, since Wendy do have rights on the house she
might want to establish her rights on the house. Wendy can exercise her rights against the
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bank using Sch 3 Para 2 LRA 2002 which states that the interest belonging to a person in
actual occupation of land overrides registered dispositions. Since Andrew has re-mortgage
the house his failure to pay back will cause the house to be sold by the bank or Andrew
himself may sell it to get the money. Here Wendy can exercise her rights by resisting sales
using s 15(1)(b),(c) TOLATA 1996 30 against Andrew by stating the purpose of the house.
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28. Trust of Land and Appointment of Trustees Act 1996, s.12(1)(a)
30. Trust of Land Act and Appointment of Trustees Act 1996, s.15(1)(b), (c)
On the facts the house was for the couple to live in as a family as they had 3 kids over time
and also as an office space for their free lance business. Whereas, under s 15(1)(c) she can
state that she has 3 kids(minor) with her who are staying in that house for whom she needs
to provide a home hence, she has to occupy the house. In Edwards v Llyods TSB 31 it was held
that the sale was postpone for 5 years until the youngest child reaches the age of 18. On the
facts, Wendy can argue under s.15(1)(d) 32 that her interest should prevail over the bank’s.in
Mortgage Corp v Shaire 33 it was held that the price of re-mortgage should be set as a loan
for Wendy to pay off, but if she fails then it would be up for a sale. Wendy can also
implement her right by entering a restriction under s40 LRA 2002 34 where it can prevent any
disposition of a registered charge from being completed by registration. On the fact Wendy
can impose a restriction to avoid him selling the property for some time before she can
either buy it or she children reach the age of 18.
Conclusion
In conclusion it can be said that Wendy has already establish an implied common intention
in share by proving that she has made direct financial contribution and other non-financial
contribution. Here the courts may provide her the shares according to her financial
contributions as there was no common intent between them about the quantification since
Andrew has never expressly mentioned about it as well. Nevertheless, having a beneficial
interest on the property, since Wendy doubts that Andrew has re-mortgage it, she must
now pay back the loan or choose to stay in till the youngest child reaches the age of 18 then
move out. These are the two options she has as she holds the beneficial interest.
(3050 words)
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31. Edwards v Llyods TSB [2004] EWCH 1745 (Ch)