Экзамен зачет учебный год 2023 / Dixon, Modern Land Law

Modern Land Law

the property, but because neither had undertaken repayment in order to secure an interest in the house,126 their claims to an interest failed. Indeed, the other party in both cases was held entitled to the entire equitable interest precisely because they had paid the mortgage instalments. More importantly, in Laskar v. Laskar (2008), the Court of Appeal127 decided that contributions to mortgage repayments could be treated as a contribution to the purchase price and although in this case the property was purchased for investment purposes – rather than as a home for mother and daughter – there seems no reason to doubt the logic of the decision. It is then now possible to argue that Curley v. Parkes is wrong in so far as it decides that mortgage payments can never amount to a contribution to the purchase price so as to trigger a resulting trust. In allowing such contributions, Laskar v. Laskar seems the more pertinent authority, both in terms of principle and precedent.128

In Stack v. Dowden – a case concerning quantification of equitable interests rather than their acquisition – the House of Lords also had cause to consider the role of resulting trusts. In the view of the majority – Lord Neuberger disagreeing on this point – resulting trusts should not normally be used as the basis for establishing an interest in another’s property, at least in respect of property used as family home. This was because the resulting trust is narrow and focuses only one aspect of the party’s lives – the payment of money. Family relationships are complex and so a better approach – in the sense that it leads to a fairer result – is to use constructive trusts. Many factors can be considered under the rubric of constructive trusts and the courts have considerably more discretion in the quantification of shares (see below). This approach was confirmed by the Privy Council in the later case of Abbott v. Abbott (2008) and it looked as if any meaningful role for the resulting trust had disappeared.129 Lord Neuberger, on the other hand, did not see why the well-understood and relatively certain law of resulting trusts should be so easily abandoned. In his view, it had a role to play in certain circumstances precisely because it led to certain and predictable results. Moreover, as noted above, in the still later case of Laskar v. Laskar (2008), Lord Neuberger, sitting in the Court of Appeal, specifically rejected the argument that the only route to establishing an equitable interests was by means of a constructive trust.

126Such repayments as they had made were made in order to discharge their contractual liability as mortgagors, not in pursuance of an interest in the property.

127Unusually, Lord Neuberger of the House of Lords chose to sit in this case.

128Ironically, however, this may not be important given that nearly all of these types of case can be squeezed into the rubric of constructive trusts, as discussed below.

129The two leading protagonists in Stack who favoured the rejection of resulting trusts – Baroness Hale and Lord Walker – also sat in Abbott. The advice in Abbott was delivered by Baroness Hale. Lord Neuberger – who also sat in both – remained silent in Abbott, but see Laskar v. Laskar.

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So, in that case where the property was purchased not to live in but to use as an investment, the court applied a traditional resulting trust analysis and quantified the party’s shares by reference to the amount of money each had contributed to the purchase price. This does seem appropriate on the facts of the case. Perhaps, then, a tentative conclusion is that a constructive trust will normally be used in cases where the property in question is the shared home of the parties,130 but that either a resulting or constructive trust may be used in cases concerning land purchased for other purposes. However, this is a very tentative conclusion.

Finally, before considering constructive trusts, we must consider those cases where the claimant makes a financial contribution to the cost of running the household, the value of which may have enabled the legal owner to pay the purchase price of the property. An example is where the woman pays all the regular domestic outgoings and the man pays the mortgage.131 After Curley, it seems unlikely that these can count as an acquisition contribution for the purposes of resulting trusts – even if a resulting trust is the suitable vehicle – and, in truth, it was always doubtful whether they could qualify. Once again, if such indirect financial contributions can be regarded as evidence of an inferred common intention (which after Stack is very likely) or if they are consequent on a promise made by the legal owner that the claimant is to have a share of ownership, these cases can be dealt with under the rubric of constructive trusts.

4.10.6 The constructive trust

The concept of a ‘constructive trust’ is used and misused widely in English law, particularly in the field of property law and equity. We must be careful when considering the ‘constructive trust’ in the present context to appreciate that the role it plays here need not tell us anything about its function or attributes in other areas of the law. It is a term of ‘no-fixed abode’ and much time has been spent examining whether there is any unifying concept that ties together the various uses of it.132

130Fowler v. Barron (2008) applying Stack.

131Even now that it is possible to plead that mortgage payments count as a ground for a resulting trust (Laskar), it is not enough that financial contributions to the running of the household have been made, Lloyds Bank v. Rosset (1991). They must have been made in order to enable the legal owner to purchase the property. This is very difficult to prove. Such a claim failed in Burns v. Burns (1984) and appears to be rejected as a matter of principle in the all-important judgment of Lord Bridge in Rosset.

132A common view is that the various guises of constructive trust all deal with some kind of unconscionability on the part of a person who holds or acquires property, but this is by no means a watertight analysis. A restitutionary approach might stress the use of the constructive trust as a vehicle for reversing unjust enrichment.

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In cases of a claim of an equitable interest in another’s property under the rubric of constructive trust, the essence of the matter is that the legal owner has expressly or impliedly joined in a ‘common intention’ with the claimant that the claimant should have some interest. In the normal way, of course, such an intention should be put in writing (section 53(1) of the LPA 1925), but if the intention is supported by acts of detrimental reliance by the claimant, a constructive trust arises whereby the land is held on trust with (usually) the legal and equitable owner sharing the equitable interest.133 Such constructive trusts do not need to be in, or evidenced in, writing (section 53(2) of the LPA 1925).

The heart of the doctrine is then, the existence of a common intention, relied on by the claimant. Lloyds Bank v. Rosset (1991),134 a decision of the House of Lords, provided early guidance, but this has now been overtaken (or perhaps ‘enhanced’) by the House of Lords judgment in Stack v. Dowden. These two cases need to be considered together. In Rosset, a husband and wife arranged to purchase a derelict farmhouse and legal title was conveyed to the husband alone at the insistence of some family trustees who were under a duty under the terms of their trust to ensure that the money for the purchase was given only to the husband. Clearly, however, the renovation was a joint venture with the wife supervising the work. The property was later mortgaged, the repayments could not be met and the bank sued for possession. The wife resisted on the ground that she had an equitable interest in the property by way of constructive trust. In the result, her claim was denied and in the leading (unanimous) opinion, Lord Bridge sets out a framework for the law. Taken as a whole, Rosset propounds a fairly narrow view of the law and it has therefore aroused some criticism, criticism which led to its refinement in Stack v. Dowden. As decided by Rosset, there are two major fundamental requirements in order to achieve a constructive trust: a common intention plus detrimental reliance. Stack does not dispute these, but rather enlarges the circumstances in which they may be established.

4.10.6.1 Common intention: three routes

The claimant must establish a ‘common intention’ that she was to have an interest. According to Rosset, this common intention can be established only in one of two ways, but Stack (bolstered by Abbott v. Abbott and followed in Fowler v. Barron (2008)) has added a third. First, it must be determined whether

133There is no reason why the claimant should not gain 100 per cent of the equity under a constructive trust. It is more common, however, for the common intention to trigger a share of the equity.

134[1991] 1 AC 107.

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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. The finding of an agreement or arrangement can only be based on evidence of express discussions between the parties, however imperfectly remembered and however imprecise their terms may have been.

In other words, there must have been an overt, express statement or agreement, promise or assurance. In many cases, this agreement will be truly expressed as where A says to B: ‘Of course half this house is yours’; or ‘This house is as much yours as mine’. However, promises are also expressly made for the purpose of establishing a constructive trust when the legal owner makes a statement reassuring the claimant that they have some sort of stake in the property. This can take many forms and is, ultimately, a matter for construction in each case. For example, does: ‘This will always be your home’; or ‘I would never sell without your agreement’, imply a promise as to ownership? If it does, a constructive trust is a possibility. Moreover, it appears that such a promise can be enough to trigger a constructive trust even if it is not meant. So, in Eves v. Eves (1975), a promise was held to have been made where the legal owner said, by way of excuse, that the only reason that the property was not conveyed originally to the woman was because she was too young.135 Likewise, telling the claimant that the property will be conveyed to them in due course can be a relevant assurance, even if it is a lie. The only rule is that an express assurance must be made, in whatever form, and it matters not that this occurs after the legal owner has acquired the property.136 However, as shown by James v. Thomas (2007), assurances given by the legal owner to the claimant when they were living together that were neither intended nor understood as a promise of an interest cannot qualify. It would be otherwise if the landowner did not intend to make such a promise, but it was in fact understood as such by the claimant. To sum up then, the absence of such an express promise is fatal to this route to common intention, as it was in Rosset itself.

Second, if it is not possible to establish the common intention by means of an express assurance and so on, Lord Bridge in Rosset concludes:

In sharp contrast with this situation is the very different one where there is no such evidence to support the finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question and where the court must rely entirely on the conduct of the parties ... In this situation, direct

135See also Grant v. Edwards (1986) where a false excuse was given for not including the claimant as legal owner.

136Clough v. Kelly (1996).

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contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage installments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything else will do.

In other words, according to Rosset (but not to Stack) the only circumstance in which the court may infer a common intention is if there have been direct payments towards the purchase price of the property – such as lump sum payments or mortgage payments. This was once critical for it meant that, prior to Stack, ‘normal’ domestic obligations, childcare responsibilities, indirect contributions,137 payment of household bills and all manner of other conduct that persons sharing a home might engage in, could not lead to an inference of a common intention. Absent an express agreement, only payments towards the purchase price would do138 and, even then, clear evidence that no agreement was ever reached – that is, positive proof that the parties did not agree – would mean that no common intention could be inferred.139 After all, this is an inferred common intention, and evidence that no such inference could be made, or would be made, is fatal.

It is evident that the Rosset approach was relatively narrow: only promises or payments could lead to a common intention. While promoting relative certainty, it also could produce situations where two or more people had engaged in the joint enterprise of family life, but the absence of promises or payments would prevent the non-legal owner acquiring an interest in the land. The classic example of this type was Burns v. Burns – decided before Rosset – which was widely castigated as demonstrating the law’s disregard of the way that normal people conduct normal family life.140 In response to mounting criticism of the narrowness of the Rosset approach, the Court of Appeal in Oxley v. Hiscock (2004) attempted to broaden the circumstances in which a person might prove a common intention by allowing such an intention to arise from all of the facts and circumstances of the case. It was essentially an approach seeking to achieve a ‘fair’ result. A similar case in the Court of Appeal – Stack v. Dowden – did not go as far, but when Stack was appealed to the House of Lords, the opportunity arose to re-examine the law. In essence, the majority judgment in Stack (Lord Neuberger disagreeing as to the reasoning) deliberately sets out to make it easier for a claimant to

137See Ivin v Blake (1993) 67 P&CR 263.

138Necessarily, of course, because the inference could come only from payments towards the purchase price, there was an overlap with the law of resulting trusts. See, for example, Oxley v. Hiscock (2004).

139For example, Lightfoot v. Lightfoot Brown (2004).

140Mr Burns paid the all the mortgage monies and never made any promises. Ms Burns (they were not married) looked after the children and ran the home. She lost her claim. It was never quite clear how typical this case was: was it evidence of widespread unfairness, or merely the one ‘hard case’.

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establish a common intention and thereby an equitable interest in land belonging to another. This is done by deciding that it is permissible to find141 a common intention as to ownership based on the parties’ entire relationship with each other. It was not necessary to limit the enquiry to promises or payments – see also Fowler v. Barron (2008). The evidence for this common intention could come from a range of factors because, according to Baroness Hale (who gave the leading judgment), ‘context is everything’ and the domestic context is very different from the commercial world.142 Thus, it is possible to rely on

[m]any more factors than financial contributions ... 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 authorized 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.143

Clearly, this is a wide-ranging set of factors, and it is not even meant to be exhaustive.144 In fact, Baroness Hale discusses these matters in the context of quantifying the share of an existing owner, rather than establishing that share for a non-owner in the first place, but it is clear from the Privy Council decision in Abbott v. Abbott (2007) and the later Court of Appeal decision in Fowler v. Barron (2008) (and the approval of Oxley in Stack) that these factors may apply whenever a court is seeking to determine with precision the nature of the equitable interest, whether that be when both are legal owners or just one.145 ‘It is likely to generate litigation in joint-legal owner cases when a relationship deteirorates’. In the result, therefore, the House of Lords has deliberately moved away from the relative strictness of the Rosset approach. As Lord Walker says in Stack, and as explicitly approved in Abbott, ‘in my opinion the law has moved on, and your Lordships should move it a little more in the same direction’.146 Consequently, there is now a third way to establish a common intention in addition to the two routes proved by Rosset.

141There is some argument as to whether this is inferred, or imputed intention. Lord Neuberger is happy to infer an intention, but not to impute one. An inferred intention is one which arises from the facts; an imputed intention is one which the court thinks the parties would have had, had they addressed the issue, in the light of the facts. Inferred common intention has the approval of precedent, but imputed intentions were rejected by the House of Lords in Gissing v. Gissing.

142Stack v. Dowden, judgment, paragraph 69.

143Baroness Hale at paragraph 69.

144Baroness Hale at paragraph 70.

145For the relevance of joint-legal ownership on quantification – see below.

146Stack v. Dowden, per Lord Walker at paragraph 26.

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It is now possible to find a common intention by examining the whole range of the parties’ conduct in relation to the property and, in that sense, to each other.

4.10.6.2 Detrimental reliance

Once a common intention exists by any of the three routes outlined above, the claimant must then establish that they have relied to their detriment on the existence of such an intention. It is, after all, writ in stone in English law that ‘equity will not assist a volunteer’147 and there is no unconscionability if a promise has been made that has had no impact on the conduct of the claimant. In this regard, ‘reliance’ – that is, that the claimant would not have behaved as she did without the common intention – is not difficult to establish and may take many forms. In particular, Lord Denning in Greasley v. Cooke (1980) suggests that if there is evidence of ‘detriment’, there should be a presumption of reliance. Consequently, in the absence of evidence to the contrary adduced by the legal owner, the court is entitled to assume that the claimant did, indeed, rely on the assurance made. This is so even if there is evidence to suggest that the claimant would have acted as she did for other motives – perhaps out of love for the legal owner. So, in Chun v. Ho (2001), the claimant was successful even though her actions were motivated in part by her high regard and affection for the legal owner.148 This is, of course, a generous presumption and it reverses the burden of proof. Nevertheless, it is wholly necessary if the legal owner is to be prevented from denying a constructive trust merely by pleading that the claimant could not actually prove that she had relied on the common intention.

Given this generous approach to the question of reliance, it is clear that ‘detriment’ is critical in establishing the constructive trust.149 In cases where there is an express common intention, there is no doubt that detriment may take many forms. It can be in the conduct of the claimant, such as doing extraordinary work about the house as in Eves v. Eves (1975) and Ungurian v. Lesnoff (1990).150

147That is, someone who gives nothing or does nothing in response to the promise or assurance of another.

148If it were otherwise, the only successful claimants would be those who acted entirely mercenarily simply because they were expressly or impliedly promised something. Fortunately, equity is not only concerned with those who act only for themselves.

149In Century UK v. Clibbery, 29 July 2004 [2004] EWCH 1870, the acts of alleged detriment were so trivial that, even if there had been an assurance, they would not have generated a constructive trust or estoppel.

150Note, the point is that the claimant undertook work of an extraordinary character, such as doing building work in the garden or renovating the property. It is doubtful whether doing ‘normal’ domestic obligations can count as a response to an express common intention. In Rosset, although Mrs Rosset could be thought of as undertaking extensive renovation work amounting to qualifying conduct, there was (as the law then stood) no common intention – no express promise and no payments. Whether Mrs Rosset would succeed under the more relaxed approach of Stack is uncertain.

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The detriment may be financial, such as paying bills or settling other household expenses, provided that the expense is undertaken because an express promise is made. Whatever form it takes, however, the key is that the claimant does something concrete in relation to the express common intention. In this connection, it seems that the ‘detriment’ does not need to have been detrimental in the sense of harmful. So, giving up existing accommodation in order to move into the legal owner’s luxurious property is a ‘detriment’ (no house to fall back on), as is spending one’s life savings on a Porsche in reliance on the legal owner’s property that ‘you will never have to find another house’ (no money to purchase another property). In addition, giving up other opportunities because the legal owner has assured the claimant that her future is secure can count as detriment.151 As these examples illustrate, it is also true that the detriment need not be made in relation to the property in which the claimant acquires an interest. It often is – for example, renovating the kitchen – but it need not be.

Where the common intention has arisen impliedly as a result of direct contributions towards the purchase price or because of an analysis of the parties’ entire course of dealings, there must also be detriment. However, this is not difficult to establish because it is clear from Rosset and Stack that the actual payments made towards the purchase price or the conduct which gives to the common intention may also qualify as the detriment. In other words, the payments or conduct perform a dual role: they are the reason a common intention can be established in the first place and they are the detriment consequent on that intention.

4.10.7The nature of the interest generated and quantification of share

If the claimant establishes either a resulting or a constructive trust she will be entitled to a share of the equitable interest. Legal title will continue to be held by the legal owner, but now as a trustee holding for himself and the successful claimant in equity under the statutory trust of land imposed by the LPA 1925 and regulated by TOLATA 1996. The equitable interest will be held by way of a tenancy in common – only unity of possession is present – and we must ascertain the size of this interest.

If a claimant establishes a resulting trust – by payments to the purchase price – her interest in the property is to be quantified in direct proportion to the amount of the price paid. So, a contribution of 25 per cent made at the time of purchase entitles the claimant to a 25 per cent interest, and so on. This is classical resulting trust theory.152 Given that use of the resulting trust in

151Chun v Ho.

152See, for example, Springette v. Defoe.

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these domestic or semi-domestic cases may well now be redundant – see below – there is no reason to disturb this orthodoxy. Cases such as Midland Bank v. Cooke (1995)153 and LeFoe v. LeFoe (2001),154 which appeared to challenge this by suggesting that an interest established under a resulting trust could be expanded beyond a proportional share by taking a broad view of the entirety of the parties’ relationship with each other,155 are now better regarded as cases of constructive trust.156

If the claimant establishes a constructive trust, as now is more likely, the matter of quantification is more complex. It might be thought appropriate to quantify the claimant’s share in a matter that meets the expectations generated by the common intention or, alternatively, in a manner that compensates for the value of the detriment suffered or the financial contribution made to the purchase price. However, although recent case law has done little to provide us with concrete guidance about how to solve real problems, at least the nature of the enquiry to be undertaken by the courts has been settled. It is clear from Clough v. Killey (1996)157 that if the terms of the express common intention are clear as to both the existence and size of the equitable interest, then the court should not depart from this as the basis for quantification. So, in that case, the promise was that Killey should have a 50 per cent share of the equity, and this is what she received, even though there was evidence that the share ‘earned’ by her detriment should have been only 25 per cent. This has been confirmed by Oxley v. Hiscock (2004) and presents no difficulty. If, however, there is no express discussion or agreement as to the size of the claimant’s share,158 or even if there is positive evidence that no discussions ever took place, the share still needs to be quantified. In Oxley, Chadwick LJ reviewed the various possible solutions to this – some based on an imputed intention at the time of acquisition, some on an intention derived from the parties conduct – but in the end made it clear that the court must grasp the nettle and admit that it is exercising a judicial discretion. Consequently, it ‘must now be accepted that (as least in this Court and below) the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property’. This will include all manner of things, including the arrangements the co-owners have made to meet the obligations of normal domestic life, including payments of bills, mortgages, repairs and insurance. This has now been

153[1995] 4 All ER 562.

154[2001] 2 FLR 970.

155Thus Mrs Cooke was awarded 50 per cent of the equity, having only paid just under 7 per cent of the purchase price.

156Per Chadwick LJ in Oxley v. Hiscock.

157[1996] 72 P & CR 022.

158Whether the common intention arose expressly or impliedly from direct payments is irrelevant.

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confirmed by the House of Lords in Stack v. Dowden and the Court of Appeal in Fowler v. Barron (2008). It is clear that it can include all types of conduct of a non-financial kind as part of this broad enquiry, so long as it is ‘in relation to the property’. This broad-brush approach – the search for a fair and conscionable distribution of the equitable interest – is necessarily fluid and uncertain, but it may nevertheless reflect the reality of what judges have been doing for some time. Certainly, according to Baroness Hale in Stack, it is what they should be doing. Moreover, although Oxley and Stack was decided in the context of a home shared by lovers, it is not the case that this generous approach is restricted to such cases. In Ritchie v. Ritchie (2007), the analysis was applied to a property dispute between mother and son.159

4.10.8 Quantification when there are two legal owners

Historically, the typical dispute has been between a legal owner and a nonlegal owner, the latter claiming a share in the property of the former; for example, Lloyds Bank v. Rosset. However, both Stack v. Dowden and Fowler v.

Barron are cases where the parties are already joint legal owners and they are disputing the size of their shares. Of course, if the parties have expressly declared in writing the nature or size of their shares (e.g. as ‘joint tenants in equity’ or ‘50/50’ each), they will be held to this agreement (Goodman v. Gallant). Likewise, if there is no express declaration of the beneficial interest, but an explicit verbal agreement as to the size of share, the courts are likely to hold the parties to this, probably on the basis of estoppel (Crossley v. Crossley). Yet, in the absence of an agreement, is it possible for one legal co-owner to argue – on the basis of resulting and constructive trust – that their share is bigger than the other legal owner’s? This is important for, as is obvious, both parties are registered as legal owners and third parties might be entitled to assume that equitable ownership follows legal ownership. In fact, as discussed above, there is a presumption that ‘equity follows the law’ and so in most cases, we can expect that legal joint tenants will also be equitable joint tenants unless there is an express declaration to the contrary.160 This re-enforces the security of the title register and allows third parties to deal in confidence with the legal owners knowing that they also own together in equity. However, as both Stack v. Dowden and Fowler v. Barron demonstrate, it is now possible to challenge the presumption that ‘equity

159Note Segal v. Pasram (2007) where an almost pre-Stack analysis was preferred – possibly because the dispute involved a third party (a trustee in bankruptcy) and the court wished to limit the extent to which the claimant could remove assets from the legal owner’s creditors.

160They would, therefore, own 50/50 in equity if the joint-tenancy is severed (see below) on the occasion of the break-up of their relationship.

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