Land 7- Family Property and Coownership
Family Property
Express trusts
Goodman v Gallant [1986] Fam 106: P and D shared a tenancy, expressly stating that it
was a joint tenancy. When D left, CA held that their express agreement gave each a 50%
share.
Slade LJ: “If…the relevant conveyance contains an express declaration of trust which
comprehensively declares the beneficial interests in the property or its proceeds of sale,
there is no room for the application of the doctrine of resulting implied or constructive
trusts”.
Resulting and ‘Common Intention’ Constructive Trusts
Gissing v Gissing [1971] AC 886: The wife did not contribute anything to the purchase
price nor the mortgage. She did however contribute to the cost of furnishing the house. It
was discussed that if her household contributions meant that the husband was unable to
pay the mortgage then she would have an interest. HL held that the wife had made no
contribution to the purchase of the home from which they could infer that she was
intended to have a share. The majority held that the courts had no power to just distribute
family property according to what was ‘just’. Rather a constructive trust could only arise
on the basis of common intentions. Lord Diplock’s comments reflect that he took a
broader approach (see below).
Lord Diplock: “A resulting, implied or constructive trust - and it is unnecessary for
present purposes to distinguish between these three classes of trust - is created by a
transaction between the trustee and the cestui que trust in connection with the acquisition
by the trustee of a legal estate in land, whenever the trustee has so conducted himself that
it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in
the land acquired. and he will be held so to have conducted himself if by his words or
conduct he has induced the cestui que trust to act to his own detriment in the reasonable
belief that by so acting he was acquiring a beneficial interest in the land.”
Lloyds Bank v Rosset [1991] 1 AC 107: The house was purchased solely with funds from
a trust fund and placed in X’s name. Unbeknown to D, his wife, X took out a mortgage
on the house and when he defaulted the bank, P, claimed for repossession. D resisted on
the basis that she had an overriding beneficial interest. HL held that D had no overriding
interest and found in favour of the banks.
Lord Bridge: He reiterated that the courts could not allocate property according to what
was just, but rather a trust could arise in response to the common intention of the parties
,that both would have a beneficial share in the property. The court may infer the common
intention of a beneficial interest from the conduct of the parties. “Direct contributions” to
the purchase price of the mortgage will “readily justify the inference…but I doubt
whether anything less will do”. This narrows the Gissing decision in terms of how the
trust can be evidenced (direct financial contributions to the purchase price only).
Midland Bank v Cooke [1995] 4 All ER 562; (1996) 112 LQR 378, [1997] Conv 66: A
home had been bought in D’s name but P contributed 6.5% of the purchase price.
Although it had never been discussed by the parties, the court inferred an implied an
agreement that P should have a share in the house, though that agreement was silent as to
quantum (Gardner: unsurprising since there was never any agreement, whether express
or implied). Therefore the court imputed an intention that the house should be split 50:50
on “general equitable principles.
Waite LJ: “When the court is proceeding, in cases like the present where the partner
without legal title has successfully asserted an equitable interest through direct
contribution, to determine (in the absence of express evidence of intention) what
proportions the parties must be assumed to have intended for their beneficial ownership,
the duty of the judge is to undertake a survey of the whole course of dealing between the
parties relevant to their ownership and occupation of the property and their sharing of its
burdens and advantages. That scrutiny will not confine itself to the limited range of acts
of direct contribution of the sort that are needed to found a beneficial interest in the first
place. It will take into consideration all conduct which throws light on the question what
shares were intended. Only if that search proves inconclusive does the court fall back on
the maxim that 'equality is equity'.”
Stack v Dowden [2007] 2 All ER 929; (2007) 123 LQR 511, [2007] Conv 456, [2007]
CLJ 517: P and D owned a house in both of their names whose mortgage was paid off
65% by D and 35% by P. It was accepted by the parties that both had a beneficial share-
the question was the size of respective shares. P tried to claim 50% of the house. HL
awarded him 35%. HL held that where a domestic property is conveyed into both
cohabitants’ names without a declaration of trust, there is a prima facie presumption that
both the legal and beneficial interests in the property were joint and equal. The burden of
evidence was on the party trying to rebut the presumption. Such a party had to prove that
the parties had held a common intention that their beneficial interests be different from
their legal interests, and in what proportions. In order to discern the parties' common
intention the court should look at the parties' whole course of conduct in relation to the
property and the law was no longer limited to looking at direct financial contributions
(i.e. it has moved on from the doctrine of resulting trust). However, it would be hard to
rebut the prima facie presumption. The presumption was rebutted on the unusual facts of
the case (D over the course of the marriage had always contributed far more money in
every respect of family life than P, including paying household bills etc).
Lord Hope: In cases where single legal ownership is assumed, the burden is on the party
claiming to have a beneficial interest. In cases of assumed joint legal ownership, the onus
is on the party claiming that the shares of ownership are not to be equal.
,Lord Walker: Lord Bridge’s doubt as to anything less that direct financial contributions
will do in Lloyds Bank v Rosset was contrary to the dictum of Lord Diplock in Gissing
and is widely criticised. “The presumption [of a 50-50 split in joint ownership cases i.e.
where the house is in both parties’ names] will be that equity follows the law.” In Oxley v
Hiscock the law moves towards the position of HL in this case, since Chadwick LJ said
that the parties would be “entitled to that share which the court considers fair having
regard to the whole course of dealing between them in relation to the property.” Lord
Neuberger dissented on this point, arguing that the court could not do as was ‘just’, as
Chadwick LJ said in Oxley
Baroness Hale: All that is needed for an common intention constructive trust to arise is a
common intention that both parties should have a beneficial share. This intention can be
‘implied, actual or imputed’. “Just as the starting point where there is sole legal
ownership is sole beneficial ownership, the starting point where there is joint legal
ownership is joint beneficial ownership. The onus is upon the person seeking to show that
the beneficial ownership is different from the legal ownership.” In seeking to overturn the
burden, all conduct in relation to the property is considered: NOT solely direct financial
contributions. The reason for the strength of the presumption is that, following break up
of relationships, parties tend to reinterpret the past in vengeful ways and misrepresent the
nature of the relationship’s arrangements.
Abbott v Abbott [2007] UKPC 53; (2008) 124 LQR 209: H and W got married and H
was given some land by his mother in his sole name. H and W took out a joint loan with
joint liability for the building of a home. H and W’s earnings went into a joint account
and paid off the mortgage jointly. Privy Council held that the presumption of sole
ownership was rebutted by the parties’ course of conduct relating to the property. When a
parent gives a present for the purposes of building a matrimonial home it is for the benefit
of both parties and the fact that the parties did all their financial dealing together implies
an agreement to share ownership. Thus each party would be given a 50% share. This was
reasoned on the basis of Stack v Dowden, the speech of Lord Bridge in Rosset now being
overturned in law.
Morris v Morris [2008] EWCA Civ 257: Under the disposition of a will, H's mother (M)
became the sole legal owner of the family farm. Consequently, H and M entered into a
joint partnership for the purposes of running the farm and a joint tenancy in respect of the
farmhouse that stood upon it. Later, H met and married W and began living with her in
the farmhouse. W did lots of unpaid work making the farm far more profitable and
provided capital for projects. Following the dissolution of the relationship between H and
W, W moved out of the farmhouse and instigated a claim for a beneficial interest in the
farm premises. CA held that she did not have a beneficial interest in the property and that
conduct of the parties did not necessarily prove the fact of beneficial interest. Here, the
financial and other contributions W made were offset by money and land she was
allowed to use to set up a horse-riding business of which she is sole owner. Also she
never discussed a beneficial interest with H nor with M, so that there could be no interest.
This case gives weight to the idea that the presumption that “equity follows law”.
, Peter Gibson LJ: For the common intention constructive trust to arise there must be a real
common intention (whether expressed or implied). It cannot just be ‘imputed’ i.e. the
court can’t just ‘pretend’ that the intention existed in the interests of justice. He therefore
confines Baroness Hale’s statements in Stack to determining whether the presumption of
equal shares is overturned, and does NOT affect when the trust arises in the first place.
He therefore tries to bring the law back into line with Gissing
Fowler v Barron [2008] EWCA Civ 377: B had made the vast majority of payments
towards a house that was in both his and F’s name and therefore attempted to overturn the
presumption that joint ownership means a 50-50 share in the property. CA denied this,
emphasising how heavy the presumptions set out in Stack v Dowden are. Unlike in Stack,
F and B pooled all their assets and it takes more than merely the majority of financial
contribution to overturn the presumption.
Jones v Kernott: This was a dispute about the shares of parties in family property (it was
agreed that they both had a share- question was how much). Strauss QC made a number
of points: (1) To determine their respective shares, where the actual (express or inferred)
intentions cannot be determined or are non-existent, the court can attribute an intention to
the parties that they didn’t really have on the grounds of what would be fair and
equitable. This involves imputing an intention that the courts didn’t really have or was at
least ‘unexpressed’. NB he doesn’t say whether this also applies to finding a trust in the
first place; (2) Common intentions (actual or imputed) can change over time and one
should look at the intentions by the end of the relationship. This is wrong in principle: if a
trust arises because of a common intention on day 1, it surely cannot be assessed by the
intentions on day 100; (3) the presumption of a 50-50 split was overturned on the basis
that the parties kept separate finances and there was an imbalance in contributions. This is
problematic: if he is using ‘imputed’ intentions, there is no need to draw on evidence for
actual intentions
Family Property
Express trusts
Goodman v Gallant [1986] Fam 106: P and D shared a tenancy, expressly stating that it
was a joint tenancy. When D left, CA held that their express agreement gave each a 50%
share.
Slade LJ: “If…the relevant conveyance contains an express declaration of trust which
comprehensively declares the beneficial interests in the property or its proceeds of sale,
there is no room for the application of the doctrine of resulting implied or constructive
trusts”.
Resulting and ‘Common Intention’ Constructive Trusts
Gissing v Gissing [1971] AC 886: The wife did not contribute anything to the purchase
price nor the mortgage. She did however contribute to the cost of furnishing the house. It
was discussed that if her household contributions meant that the husband was unable to
pay the mortgage then she would have an interest. HL held that the wife had made no
contribution to the purchase of the home from which they could infer that she was
intended to have a share. The majority held that the courts had no power to just distribute
family property according to what was ‘just’. Rather a constructive trust could only arise
on the basis of common intentions. Lord Diplock’s comments reflect that he took a
broader approach (see below).
Lord Diplock: “A resulting, implied or constructive trust - and it is unnecessary for
present purposes to distinguish between these three classes of trust - is created by a
transaction between the trustee and the cestui que trust in connection with the acquisition
by the trustee of a legal estate in land, whenever the trustee has so conducted himself that
it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in
the land acquired. and he will be held so to have conducted himself if by his words or
conduct he has induced the cestui que trust to act to his own detriment in the reasonable
belief that by so acting he was acquiring a beneficial interest in the land.”
Lloyds Bank v Rosset [1991] 1 AC 107: The house was purchased solely with funds from
a trust fund and placed in X’s name. Unbeknown to D, his wife, X took out a mortgage
on the house and when he defaulted the bank, P, claimed for repossession. D resisted on
the basis that she had an overriding beneficial interest. HL held that D had no overriding
interest and found in favour of the banks.
Lord Bridge: He reiterated that the courts could not allocate property according to what
was just, but rather a trust could arise in response to the common intention of the parties
,that both would have a beneficial share in the property. The court may infer the common
intention of a beneficial interest from the conduct of the parties. “Direct contributions” to
the purchase price of the mortgage will “readily justify the inference…but I doubt
whether anything less will do”. This narrows the Gissing decision in terms of how the
trust can be evidenced (direct financial contributions to the purchase price only).
Midland Bank v Cooke [1995] 4 All ER 562; (1996) 112 LQR 378, [1997] Conv 66: A
home had been bought in D’s name but P contributed 6.5% of the purchase price.
Although it had never been discussed by the parties, the court inferred an implied an
agreement that P should have a share in the house, though that agreement was silent as to
quantum (Gardner: unsurprising since there was never any agreement, whether express
or implied). Therefore the court imputed an intention that the house should be split 50:50
on “general equitable principles.
Waite LJ: “When the court is proceeding, in cases like the present where the partner
without legal title has successfully asserted an equitable interest through direct
contribution, to determine (in the absence of express evidence of intention) what
proportions the parties must be assumed to have intended for their beneficial ownership,
the duty of the judge is to undertake a survey of the whole course of dealing between the
parties relevant to their ownership and occupation of the property and their sharing of its
burdens and advantages. That scrutiny will not confine itself to the limited range of acts
of direct contribution of the sort that are needed to found a beneficial interest in the first
place. It will take into consideration all conduct which throws light on the question what
shares were intended. Only if that search proves inconclusive does the court fall back on
the maxim that 'equality is equity'.”
Stack v Dowden [2007] 2 All ER 929; (2007) 123 LQR 511, [2007] Conv 456, [2007]
CLJ 517: P and D owned a house in both of their names whose mortgage was paid off
65% by D and 35% by P. It was accepted by the parties that both had a beneficial share-
the question was the size of respective shares. P tried to claim 50% of the house. HL
awarded him 35%. HL held that where a domestic property is conveyed into both
cohabitants’ names without a declaration of trust, there is a prima facie presumption that
both the legal and beneficial interests in the property were joint and equal. The burden of
evidence was on the party trying to rebut the presumption. Such a party had to prove that
the parties had held a common intention that their beneficial interests be different from
their legal interests, and in what proportions. In order to discern the parties' common
intention the court should look at the parties' whole course of conduct in relation to the
property and the law was no longer limited to looking at direct financial contributions
(i.e. it has moved on from the doctrine of resulting trust). However, it would be hard to
rebut the prima facie presumption. The presumption was rebutted on the unusual facts of
the case (D over the course of the marriage had always contributed far more money in
every respect of family life than P, including paying household bills etc).
Lord Hope: In cases where single legal ownership is assumed, the burden is on the party
claiming to have a beneficial interest. In cases of assumed joint legal ownership, the onus
is on the party claiming that the shares of ownership are not to be equal.
,Lord Walker: Lord Bridge’s doubt as to anything less that direct financial contributions
will do in Lloyds Bank v Rosset was contrary to the dictum of Lord Diplock in Gissing
and is widely criticised. “The presumption [of a 50-50 split in joint ownership cases i.e.
where the house is in both parties’ names] will be that equity follows the law.” In Oxley v
Hiscock the law moves towards the position of HL in this case, since Chadwick LJ said
that the parties would be “entitled to that share which the court considers fair having
regard to the whole course of dealing between them in relation to the property.” Lord
Neuberger dissented on this point, arguing that the court could not do as was ‘just’, as
Chadwick LJ said in Oxley
Baroness Hale: All that is needed for an common intention constructive trust to arise is a
common intention that both parties should have a beneficial share. This intention can be
‘implied, actual or imputed’. “Just as the starting point where there is sole legal
ownership is sole beneficial ownership, the starting point where there is joint legal
ownership is joint beneficial ownership. The onus is upon the person seeking to show that
the beneficial ownership is different from the legal ownership.” In seeking to overturn the
burden, all conduct in relation to the property is considered: NOT solely direct financial
contributions. The reason for the strength of the presumption is that, following break up
of relationships, parties tend to reinterpret the past in vengeful ways and misrepresent the
nature of the relationship’s arrangements.
Abbott v Abbott [2007] UKPC 53; (2008) 124 LQR 209: H and W got married and H
was given some land by his mother in his sole name. H and W took out a joint loan with
joint liability for the building of a home. H and W’s earnings went into a joint account
and paid off the mortgage jointly. Privy Council held that the presumption of sole
ownership was rebutted by the parties’ course of conduct relating to the property. When a
parent gives a present for the purposes of building a matrimonial home it is for the benefit
of both parties and the fact that the parties did all their financial dealing together implies
an agreement to share ownership. Thus each party would be given a 50% share. This was
reasoned on the basis of Stack v Dowden, the speech of Lord Bridge in Rosset now being
overturned in law.
Morris v Morris [2008] EWCA Civ 257: Under the disposition of a will, H's mother (M)
became the sole legal owner of the family farm. Consequently, H and M entered into a
joint partnership for the purposes of running the farm and a joint tenancy in respect of the
farmhouse that stood upon it. Later, H met and married W and began living with her in
the farmhouse. W did lots of unpaid work making the farm far more profitable and
provided capital for projects. Following the dissolution of the relationship between H and
W, W moved out of the farmhouse and instigated a claim for a beneficial interest in the
farm premises. CA held that she did not have a beneficial interest in the property and that
conduct of the parties did not necessarily prove the fact of beneficial interest. Here, the
financial and other contributions W made were offset by money and land she was
allowed to use to set up a horse-riding business of which she is sole owner. Also she
never discussed a beneficial interest with H nor with M, so that there could be no interest.
This case gives weight to the idea that the presumption that “equity follows law”.
, Peter Gibson LJ: For the common intention constructive trust to arise there must be a real
common intention (whether expressed or implied). It cannot just be ‘imputed’ i.e. the
court can’t just ‘pretend’ that the intention existed in the interests of justice. He therefore
confines Baroness Hale’s statements in Stack to determining whether the presumption of
equal shares is overturned, and does NOT affect when the trust arises in the first place.
He therefore tries to bring the law back into line with Gissing
Fowler v Barron [2008] EWCA Civ 377: B had made the vast majority of payments
towards a house that was in both his and F’s name and therefore attempted to overturn the
presumption that joint ownership means a 50-50 share in the property. CA denied this,
emphasising how heavy the presumptions set out in Stack v Dowden are. Unlike in Stack,
F and B pooled all their assets and it takes more than merely the majority of financial
contribution to overturn the presumption.
Jones v Kernott: This was a dispute about the shares of parties in family property (it was
agreed that they both had a share- question was how much). Strauss QC made a number
of points: (1) To determine their respective shares, where the actual (express or inferred)
intentions cannot be determined or are non-existent, the court can attribute an intention to
the parties that they didn’t really have on the grounds of what would be fair and
equitable. This involves imputing an intention that the courts didn’t really have or was at
least ‘unexpressed’. NB he doesn’t say whether this also applies to finding a trust in the
first place; (2) Common intentions (actual or imputed) can change over time and one
should look at the intentions by the end of the relationship. This is wrong in principle: if a
trust arises because of a common intention on day 1, it surely cannot be assessed by the
intentions on day 100; (3) the presumption of a 50-50 split was overturned on the basis
that the parties kept separate finances and there was an imbalance in contributions. This is
problematic: if he is using ‘imputed’ intentions, there is no need to draw on evidence for
actual intentions
