RESULTING AND CONSTRUCTIVE TRUSTS

A) INTRODUCTION TO RESULTING AND CONSTRUCTIVE TRUSTS

1. The Nature of Resulting and Constructive 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.
Constructive Trust: implied in a variety of circumstances where the defendant has knowledge of some
factor that affects his conscience in respect of specific property.
No formal requirements for the creation of implied trusts.
Resulting trusts are exempt from the requirement of writing laid down in s.53(1).
Law of Property Act s.53(2) This section does not affect the creation or operation of resulting, implied or
constructive trusts.
2. Resulting Trusts
2.1.
Circumstance giving rise to a Resulting Trust
Westdeutsche Landesbank v Islington [1996] AC 669
Under existing law a resulting trust arises in two sets of circumstances: (A) where A makes a voluntary
payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the
joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property
is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in
shares proportionate to their contributions. . (B) Where A transfers property to B on express trusts, but the
trusts declared do not exhaust the whole beneficial interest. (Lord Browne Wilkinson)
Resulting trust arises in 2 principle contexts:
1. Apparent gifs: includes situations where there is a voluntary
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 evidence to the contrary) that the intention of each
transferor or contributor was not to make a gift, but that they should hold a proprietary right
proportionate to their contribution.
2. Failed trusts: where there has been an attempt to create a trust
and some part of the beneficial interest remains undisposed
of.

Function: restorative
Someone 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 (Lord Reid, Vandervell v IRC)
Therefore a mechanism whereby property jumps back to the settlor or it is the tool to
establish that the settlor retains an equitable interest in the property.
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2.2.
Theoretical Basis of Resulting Trusts
Automatic/Presumed distinction (Megarry J in Re Vandervell No. 2 [1974] Ch. 269).
Mergarry divided resulting trusts into
1. Resulting trusts that arise automatically.
Do not depend on the intention of parties but arise as an automatic consequence of the
transferors failure to dispose of the entirety of the beneficial interest.
2. 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.
When A transfers property to B, unless the transfer was made by father to child or by husband to
wife, in the absence of any other evidence the law presumes that a resulting trust has been

created for A.
Equity presumes that the property belongs to the person who advances the purchase money, that

is, in the absence of evidence to rebut the presumption.

Problems with this analysis:
Megarry J.'s analysis was doubted by Lord Browne-Wilkinson in Westdeutsche Landesbank
Girozentral v Islington London Borough Council.
According to Meggary J, an automatic resulting trust does not depend on intention but operates
automatically.
Browne-Wilkinson disagreed. According to Lord Browne-Wilkinson, a resulting trust is not
imposed by law against the intention of the trustee (as opposed to constructive trust) but gives
effect to his common intention. In Lord Browne-Wilkinson's view, 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 vests in the Crown, as BonaVacantia.
According to Lord Browne-Wilkinson, there is no difference between the two classes of
resulting trust as opined by Meggary J. Both are traditionally regarded as 'trust giving effect to
the common intention of the parties'.
Presumed intention of the parties (Lord Browne Wilkinson in Westdeutsche Landesbank v Islington LBC).
Lord Browne-Wilkinson had sought to establish that resulting trust will only take effect when the
conscience of the transferee is affect by his becoming aware that he has received property which was not
intended for his benefit.

Problems with this analysis:

Lord Browne-Wilkinson regard his theory as 'uncontroversial'; but somehow, it appears problematic
and unsupported by authority.
It is said that a resulting trust gives effect to the presumed common intention of the parties. In this,
however, Lord Browne-Wilkinson could be confusing resulting trust with common intention
constructive trust. Browne-Wilkinson's view runs counter to the views expressed by the House of Lords
in Vandervell v IRC, where resulting trust arises here when the trust fails for lack of object, which has
nothing to do with presumed intention.
Browne-Wilkinson's view 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 have intended that the tansferee be a trustee for her because the transferee was only seven-year-old.
Swadling is of the opinion that Lord Browne-Wilkinson is wrong and that Megarry J.'s argument is
right.
According to Swadling, if a settlor who is attempting to create a trust was asked 'what he would
like to happen if the trust fails, most settlor would say they want the property back. However, the
problem with this argument is the fact that majority of settlors do not contemplate that the trust
would fail. So, what Lord Browne-Wilkinson is doing is not presuming the intention but
imputing it to the parties; he is imputing something that had never existed.
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[A]ll resulting trusts come into being because the provider of property did not intend to benefit the
recipient. (Chambers Resulting Trusts p. 2)

This is the preferred analysis

Problems with this analysis:

W. Swadling Explaining Resulting Trusts (2008) 124 Law Quarterly Review 72

2.3.

Voluntary Conveyance
2.3.1. Land
LPA 1925, s. 60 (3)
In a voluntary conveyance a resulting trust for the grantor shall not be implied merely by reason that the
property is not expressed to be conveyed for the use or benefit of the grantee.
Acts to prevent a resulting trust arising simply because certain words of benefit have been omitted.
If you transfer land to me, but you dont 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 evidence, no resulting trust will arise.
However, there is nothing to prevent a resulting trust from arising where there is other evidence
indicative of the transferors intention.
Lohia v Lohia [2001] WLTR 101
Held that if X conveys land to Y and receives nothing in return, there will be no presumption in Xs
favour that Y must rebut if he wishes to keep 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 anothers name and transferring property in anothers name.
2.3.2. Personalty
For other types of property, a voluntary conveyance does give rise to a resulting trust.
Re Vinogradoff [1935] W.N 68
A grandmother transferred a bond into the joint names of herself and her granddaughter. Although the
evidence was unclear as to her intentions, she continued to receive dividends until her death.
Farwell J. found that the property was held on resulting trust for the grandmothers estate.
2.4.

Purchase Money Resulting Trusts

Where property is purchased in the name of X, but X has provided only part (or perhaps no part at all)

of the purchase price.

Resulting trust arises by operation of law in favour of Y to reflect the contribution provided by Y.
The more common situation involves two people contributing to the purchase price. This is held on trust

for both X and Y in equal shares.

Until recently, the presumption was: you get what you put in.
Where the purchase money for property acquired by two or more persons in their joint names
has been provided by those persons in unequal amounts, they will be beneficially entitled as
between themselves in the proportions in which they provided the purchase money. (Dillon J. in
Walker v Hall)
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This is a rebuttable presumption.

Following Stack v Dowden, there is a strong presumption that equity follows the law and that equitable
ownership, like legal ownership, is jointly held.

Dyer v Dyer (1788) 2 Cox 92

The trust of a legal estate advances to the person who left the money.
If X buys property (real or personal) and tells the vendor to convey the property to Y, then Y must rebut
the presumption that X did not mean to take the property beneficially for himself.
Fowkes v Pascoe (1875) L.R. 10 Ch. App. 343
A presumption of a resulting trust may be rebutted by evidence of intention.
A testator bought shares in the name of herself and the defendant (the son of her daughter-in-law). By
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.
Held (CA): On the evidence, 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 have been no point in the separate
but contemporaneous transactions.
The evidence 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. Held that it would be very different if she had purchased a
stock in the joint names of her and her solicitor and the presumption would have been more difficult to
rebut in that situation. But as it was, because of the family relationship, the presumption of the resulting
trust was rebutted.
Abrahams v Trustee in Bankruptcy of Abrahams, The Times, July 26, 1999
A wife continued to pay her own and her estranged husbands share in a lottery syndicate. It was held
that the presumption of a resulting trust in her favour was not rebutted on the evidence. She was,
therefore, successful in her claim.
2.5.

The Presumption of Advancement

In certain situations, the law presumed a gift. This applied where a husband made a gift to his wife or

his child.
The Equity Act has not abolished this presumption.
Equality Act 2010 s. 199 (1)
The Presumption of Advancement (by which, for example, a husband is presumed to be making a gift to his
wife if he transfers property to her, or purchases property in her name) is abolished.
Reason: This has become outdated. Family relations have changed so that it no longer appropriate.
Therefore it reflects the prevailing and socio-economic values of gone-by days.
To be used in perspective: Anything that has come about before the Act will be dealt with in accordance
with the law before the Act.
2.6.

Illegality
He who comes to equity must come with clean hands.
Where a proprietary interest can be established under a
resulting trus t without recourse to reliance on evidence
of illegality, the clean hands principle has no role to

play.
Tinsley v Milligan [1994] 1 A.C. 340
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Case concerned the joint purchase of a home for two women as co-habiting lovers.
By mutual agreement, the property was registered in Ms Tinsleys name as the sole proprietor so as to
enable Ms Milligan to make false social security claims, thereby benefitting both parties.
On the breakdown of their relationship, Ms Tinsley moved out and claim possession of the house as its
legal owner. Ms Milligan counterclaimed for an order for the sale claiming that the house was held on
trust for both of them equally.
HL held that in this case, Ms Milligan did not need to rely on the illegality to establish an interest. (3-2
Majority).
Ms Tinsley held the property on resulting trust and Ms Milligan could establish an interest.
A party to an illegality can recover by virtue of a legal or equitable property interest if, but only if, he
can establish his title without relying on his own illegality. (Lord Browne-Wilkinson).
The approach of the majority seems to run contrary to a long standing line of authority that the court
will not give effect to a trust established for a fraudulent purpose, but will instead let the estate lie
where it falls.
Lord Goff and Keith, dissenting, would have taken a stricter line of approach and thought the courts
should not intervene in cases of illegality. Lord Goff thought this would open the door to far more
unmeritorious cases.
This case may be viewed 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:
Stowe argues: Availability for relief depends entirely on a fact which is completely irrelevant from a
policy perspective (viz whether there is a presumption of advancement in relation to the person to whom
the property is transferred); and is in no way related to the seriousness of the underlying illegality.
Other commentators have focused on the impact of the obvious gender bias that pervades the historic
presumptions of equity and which are implicitly retained by the HL.
Halliwell argues: The opportunity for an authoritative review of the gender discrimination contained
within this presumption rarely arises and it is regrettable that the HL failed to seize the opportunity to
advance equality in the law.
Lowson v Combes [1999] Ch. 373
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 prevent any claim from the mans estranged wife. (An illegal
purpose under Matrimonial Causes Act).
In reliance of the presumption of resulting trust and, without the need to adduce evidence of illegality,
the man was entitled to recover.
Robert Walker L.J. lamented the continuing operation of the presumption of advancement under the
Tinsley v Milligan 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 conditions and as
being uncertain in its scope.

The High Court of Australia has rejected the Tinsley approach in favour of a flexible test based on policy
considerations.

The Law Commission in 1999 proposed that there should be a statutory discretion when illegality is
raised this would provide similar flexibility.

Amongst the range of factors to influence this discretion of the court would be the seriousness of
the illegality; the knowledge and intention of the party seeking 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 involvement in illegality.
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No further progress has been made to enact these proposals.

Tribe v Tribe [1996] Ch. 107

Could the transferor rebut the presumption of advancement by adducing evidence of an illegal purpose
that had not subsequently been carried into effect?
The plaintiff held 495 out of 500 shares in a family company and was tenant under two leases. When a
notice if dilapidations was served on him, he feared that the demands of extensive repairs would lead to
losses to the family company. In order to avoid liability by deceiving the landlord, he purported to sell
the shares to his son for the sum of 78,000, which was never paid. It transpired that the deception was
not necessary because the landlord later agreed to a surrender of one of the leases.
The son, however, claimed that he was absolutely entitled to the shares under the presumption of
advancement.
CA held that as the father had not carried out his illegal purpose, he was able to adduce evidence of it to
rebut the presumption of advancement.
The abolition of the presumption of advancement means that this anomaly will no longer arise.
2.7.
Failure of Trust/Incomplete Disposal of the Beneficial Interest
Note that there are a wide variety of situations in which a resulting trust will arise on the failure of a trust.
These situations will not be covered in detail on the course, but see the following examples:
Morice v Bishop of Durham 32 E.R. 947
A beneficiary who can enforce is an essential element of trusts.
The trusts failed because the objects of trust were uncertain.
Re Gillingham Bus Disaster Fund [1958] Ch. 300
Funds were raised following a disaster in which 24 marine cadets were killed. Later, the funds were
proved unnecessary.
Court held that funds should revert 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 victims and not for the Crown)
Vandervell v IRC [1967] 2 A.C. 291
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 back to the settlor.
Mr V was a flamboyant entrepreneur who wanted to
found a chair of pharmacology at the Royal College of
Surgeons with a gift. The gift was 150,000. Mr V was
very concerned to avoid tax. Therefore he wanted to do it
by transferring a block of shares to the Royal College.
The college would then receive dividends from those
shares. However, the shares were transferred subject to an
option to buy them back. That option was in favour of the
company Vandervell Trustees Ltd.
The question for the court was whether Mr V retained any
beneficial interest in the shares.
HL held that he had not divested 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.
He 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.
3. Constructive Trusts
3.1.
The Varieties of Constructive Trust
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English law provides no clear and all-embracing definition of a constructive trust. Its boundaries have been
left perhaps deliberately vague, so as not to restrict the court by technicalities in deciding what the justice of a
particular case may demand. (Edmund Davies LJ in Carl Zeiss Stiftung v Herbert Smith & Co [1969] 2 Ch.
276)

There is no definition of constructive trusts due the variety of ways it is used depending on the
circumstances.
However, this gives the courts a lot of flexibility.

3.2.
Institutional or Remedial
Under an institutional constructive trust, the trust arises by operation of law as from the date of the
circumstances which give 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 having arisen are also determined by rules of law, not
under a discretion. A remedial constructive trust, as I understand it, is different. It is a judicial remedy giving
rise to an enforceable equitable obligation: the extent to which it operates retrospectively to the prejudice of
third parties lies in the discretion of the court. (Lord Browne Wilkinson in Westdeutsche Landesbank v
Islington LBC, above).
B) TRUSTS IN THE CONTEXT OF THE FAMILY HOME
1. Context
- Matrimonial Causes Act 1973, s.24
For married couples, the law is governed by this act.
- Civil Partnership Act 2004
Extends the same rights to same-sex couples who have registered.
- Unmarried Co-habitation
The most common scenario involves 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, looking backwards 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 2001, more than
2million unmarried couples, and that was a 67% increase from just 1991. This increase is
projected to continue, leading to a big social problem. How do the resulting and constructive
trusts attempt to deal with this?
One idea to overcome this problem may be a common law marriage - suggesting that wanting to
live with someone for a certain period of time, you are effectively, in the eyes of the law, treated
like a married couple. There is no such thing as a common law marriage in this country. That
might be one reason why unmarried couples dont set out how they intend to share the family
home.
2. Legal Title
The first step is to determine where the legal title is.
Equity follows the law:
[I]n the absence of evidence to the contrary the equitable interests will follow the legal interests. (Sir Peter
Gibson in Crossley v Crossley [2005] EWCA Civ 1581).
Stack v Dowden [2007] UKHL 17.
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. So in sole ownership cases it is upon the
non-owner to show that he has any interest at all. In joint ownership cases, it is upon the joint owner who
claims to have other than a joint beneficial interest. (Baroness Hale)
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3. Declaration of Trust
Law of Property Act s. 53(1)(b), s. 53(2)
No-one now doubts that such an express declaration of trust is conclusive unless varied by subsequent
agreement or affected by proprietary estoppel. (Baroness Hale in Stack v Dowden, above)
-

The most straightforward way of determining where the legal ownership lies is through an express
declaration of trust.
S.53(1)(b) it has to be in writing.
However, couples are unlikely to do this particularly where the property is registered in one persons
name only.
If there is no express declaration of trust, then we have to look at other ways to establish beneficial
interest: resulting trust or constructive trust.
S.53(2) These are exempt from the formalities (conversations etc can be used).

4. The Role of the Resulting Trust

The traditional approach:
Springette v Defoe [1992] 2 F.L.R 388
- They were joint legal owners of the property.
- There was no express declaration of trust and no evidence of discussions between them.
- A resulting trust arose and the plaintiff was held to be entitled to a 75% share in the property as this
represented the extent of her contribution.
The new approach:
Stack v Dowden (above)
- The HL decision effectively 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.
- Hale wanted to adopt this approach as she sees monetary contributions as only one of the ways that
people can contribute to a family home. Hale said that it is not enough to determine the beneficial
interest (a resulting trusts field of enquiry was therefore too narrow and one should look more broadly
at the situation.)
- This can be seen as a move away from resulting trusts to constructive trusts:
o The law had indeed moved 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 (Baroness Hale)
o What did Hale mean about social and economic conditions? She was not very specific about
why the resulting trust would be abandoned.
o Hale said that other factors to be taken into consideration included: childcare; which partner
worked; whether one partner was a stay-at-home parent, whereby they were not making a
financial contribution but another kind of contribution which had not been recognized in the
family home context.
- Lord Neuberger dissented he argued that the resulting trust should not be dispensed so easily as it
produced certainty and structure.
Laskar v Laskar [2008] 1 W.L.R. 2695
- A resulting trust will be favoured 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
lived for 20 years and she wanted to exercise her right to buy that house. However, she couldnt do it on
her own so she agreed to purchase it with her daughter. Mother and daughter agreed to buy the house.
They both contributed to the purchased on the property, although the mother contributed more. The idea
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was that they would move out and the house would be let out. The mother would use the rent to pay the
mortgage.
Mother and daughter fell out. The daughter brought a claim for joint 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 33% and rejected her claim for a half
share.
Because 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 Stack was not appropriate and that
they should use a resulting trust. Where the main purpose of buying the property is commercial, and not
to live as a family, then the resulting trust will be applicable.
There can however be uncertainty as to when is something commercial and when it is domestic.

N. Piska Two recent reflections on the resulting trust (2008) 5, The Conveyancer 441
5. Common Intention Constructive Trusts
- This is the main mechanism for determining beneficial interest in the context of family homes.
- What was the common intention as to what the beneficial interest of the property should be at the time
the property was bought?
- The origins of this type of trust can be found in 2 cases: both concerned married couples but came about
before the Matrimonial Causes Act 1973.
- These cases rejected the broad brush approach based on family assets.
- HL said the beneficial interest should be determined by the intentions of the parties.
- The courts will only find a common intention for constructive trusts where the parties had actually
intended that.
Pettitt v Pettitt [1970 ] A.C. 777
- 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 vested in the wife. Husband wanted to assert a claim in relation of the
improvements that he had made to the home. HL held he wasnt entitled to anything, because it was not
possible to infer any common intention from this conduct.
- Lord Diplock dissented in this case on the basis that the court should be able to impose a common
intention constructive trust on the basis of what they WOULD have decided HAD they given it any
thought.
- The majority held that you must just look at the ACTUAL interest.
Gissing v Gissing [1971] AC 886
- The wife claimed a share of the property, which was registered in the husbands name. She contributed
to household expenses. HL 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.
- Lord Diplock sat in this case he said it one might be able to infer common intention from mortgage
repayments.
The court cannot devise agreements which the parties never made. The court cannot ascribe intentions which
the parties never had. (Lord Morris)

5.1.

Joint Legal Ownership

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Situation where the legal title is vested in both parties.

It is less common for problems to arise in this situation.
o Since 1998, the form for registering transfers has a section in which express declaration should
be made.
o But it is not obligatory and problems can still arise.

Stack v Dowden (above)

- Mr S and Ms D purchased a house together in Ms D sole name. They both lived there and she paid the
mortgage. They had 4 kids and they both contributed to the mortgage. In 1993, they sold that house and
bought another property which was the subject of the dispute. This was purchased in joint names. But
the majority of the cash for the property came from Ms D from the sale of the first property, which
was in her name alone. They had a joint mortgage for the new property.
- The kept their financial affairs completely separate. She was making more financial contributions.
- They split up and Mr Stack claimed a half share in the property.
- At the first instance, the judge granted an order for the half share. CA overturned this and granted Ms D
a 65% share. The HL upheld that division in the CA, but for different reasons.
- Baroness Hale delivered the leading judgement: Lord Hoffman, Walker and Hope agreed with her.
- The first point she emphasised, is where you have joint ownership, the presumption is of equal share.
The onus of proof is on the person seeking to show they are unequal (Ms D).
- How could she make that case? It is not enough for her to say I contributed more. In favour of the
common intention contrastive trust.
- Hale emphasised that you must look at the true intentions of the parties. It is not the case of the courts
looking to see whats fair. There are a number of factors relevant to interpreting the intention of the
parties:
- Hale emphasised that it would only be in very unusual
circumstances that the court would look at these factors and decide
it was not appropriate to allocate shares on anything other than a
50-50 basis. Stack v Dowden was one of those unusual cases.
- In this case, the parties had kept their finances separate. Whilst
they intended to share the beneficial interest, they did not intend to
share it equally.
- Broad brush approach looking at all factors to decide what the
common intention was.
One area of doubt that arose from this case was the role of the court when looking at intention.
- Imputing an intention involves the court attributing to the parties an intention that perhaps they would
have formed had they thought about it. That is different from actual or inferred intentions. (The imputed
intention sounds similar to Diplocks judgement in Pettitt.)
- Lord Morris in Gissing held that the court does not impute intention.
- Lord Neuberger (a chancery judge property lawyer and likes certainty) said that to impute intention
would not only be wrong in principle, but the judge is essentially deciding what he thinks it fair.
- To impute intention also against two decisions of the HL. (Point of precedent.)
- Hale (from a family background) argued that the the law has moved on.
- In support of Hale you could say inferring and imputing intention is very similar there is a fine line
to be drawn between the two.
Fowler v Barron [2008] EWCA Civ 377
- This case involved a couple who were joint legal owners of a house in which they had live in together
for a long period. Mr B contributed part of the purchase price and the rest was from a mortgage in joint
names. Ms contributes to household expenses.
- CA had to deicide whether Mr B could rebut the presumption of equal shares.
- CA said no they court had to look at the whole course of dealing to infer the parties common intention
evidence (lived together for a long time, finances were tied up together) was enough to infer beneficial
interest was shared equally.
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Jones v Kernott [2010] EWCA Civ 578.

- Parties purchased property together in 1985 in joint names. They separated in 1993 and Ms Jones
continued to live in the property. 12 years later, K claims a 50% share. It was accepted by the parties in
1993 that there was equal beneficial ownership. The unusual fact is that it didnt come to court 12 years
later, during which time Ms J lived in the property.
- At first instance, it was held that that length of time suggested that the parties intentions had changed
and Ms J would have the majority interest (90%). The reason was that there was the long period during
which she lived in the property and he was absent.
- CA overturned this decision and split the benefit 50-50 on the basis that there was no evidence to
support the change of beneficial interest.
- The judges commented on when it is permissible for the court to infer intention and on the idea of
imputing intention.
- For the majority, it was permissible to infer intention from conduct it was not permissible to impute
intention from conduct. CA seems to share Lord Neurburgers distrust of imputing intention.
- Lord Justice Rymer in the majority said in relations Hales statement that the court can also look for
parties imputed intention: I do not understand what she meant.
- Rejects the idea that the court can impute intention on what it thinks is fair.
- The fact the parties were separated for 12 years was not enough evidence to show the common intention
had changed.
There were competing views on when the court and how the court will interpret the parties intention and leave
to appeal to the Supreme Court was given. At the moment, there is substantial ambiguity in this area of law.
5.2.
-

Legal Title vested in one party only

More problems arise where property is vested in one party only as it is much less likely that there will
be an express declaration of trust.
On the basis that equity follows the law, it will be for the non legal owner to establish beneficial interest.
The courts approach the Q in 2 stages:
1. Have to look at whether the non-legal owner has established beneficial interest.
2. Have to quantify that interest.
The same applied to joint legal ownerships but the emphasis is on the second stage of enquiry in that
situation.

5.2.1. Establishing a beneficial interest

Lloyds Bank v Rosset [1991] 1 A.C. 107
- A husband and wife purchased a semi-detached property with the husbands family trust providing the
purchase price. The title to the property was put in the husbands name on the insistence of the trustees
of the family trust. The purchasers were given access to the property before completion of the purchase.
Renovation work was commenced with the wife doing some decorating and supervising the builders.
Shortly after the work commenced, the husband obtained an overdraft facility for the renovation work.
Upon default, possession proceedings were instituted. The wife claimed an interest in the property.
- HL held the wifes activities in respect of the property were not sufficient evidence on which an
inference of common intention that the wife was to have 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.
- Lord Bridge 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 just the home itself.
- 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.
11

Where 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 constructive trust.

(i)
Express Common Intention
The first and fundamental question which must always be resolved is whether . 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. (Lord Bridge).
Eves v Eves [1975] 1 W.L.R 1338
- 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 make any financial contribution, but did carry out substantial physical labour
(including wielding a 14lb sledgehammer) relating to internal and external decorating, gardening and
general maintenance. She also performed the role of a mother and house wife.
- The detriment must, however, be material and not merely emotional or psychological in nature.
Grant v Edwards [1986] Ch. 638
- D told his partner that she couldnt go on the title deeds because it might have an effect on his divorce
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.
- His partner had paid household expenses that enable D to pay the mortgage. This was held to be
detrimental reliance.
-

Once you have evidence of that common intention, the claimant also has to show that they have relied to
their detriment on that agreement.
The form of that detrimental reliance can vary but it must be in some sense referable to the agreement.
Eg Grant v Edwards, she paid household expenses that enabled the other party to pay the mortgage.
That was detrimental reliance.
Not any act will do.

Lloyds Bank v Rosset [1991] 1 A.C. 107

- HL said even if there had been an express agreement, the wife decorating the house would not be
enough to show detrimental interest.
(ii)
Inferred Common Intention
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 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 less will do. (Lord
Bridge in Rosset)
- Lord Bridges statement creates difficulties when trying to infer common intention from the parties
conduct
Burns v Burns [1984] Ch. 317
- The womans housework, childcare and various domestic duties for 17 years resulted in no common
intention.
- It was not enough to give her an interest in the property.
- Held: she needed to make some direct financial contribution.
According to Lord Bridge, when interpreted strictly, even if the party pays the household expenses, they will
still not get anything.
However, the court took slightly more flexible approach in:
Le Foe v Le Foe [2001] 2 F.L.R. 970
12

Husband had paid the mortgage whilst the wife paid for the domestic expenditure.
These were not divorce proceedings, so decided under ordinary constructive trust principles.
The judge held that the wife could acquire a common interest from these payments. It would be enough
to create an interest.
By virtue of her indirect contributions, he inferred a common intention.

Stack v Dowden (above)

- This case also had a bearing on this issue.
- The judges, Hale and others, made comments to the effect that the strict approach was no longer
appropriate.
- Suggested that indirect contributions should give rise to a beneficial interest.
Whether or not Lord Bridges observation was justified in 1990, in my opinion the law has moved on, and
your Lordships should move it a little more in the same direction. (Baroness Hale)
Abbott v Abbott [2007] UKPC 53.
- In this case, the wife had made direct contributions to the mortgage. Even under a very narrow
approach, she would be ok because she had made direct contributions.
- Hale emphasises that the court would look at the whole course of dealings and not just direct financial
contributions.
- The parties whole course of conduct in relation to the property must be taken into account in
determining their shared intentions to ownership.
- Moving away from a strict Russet approach.
- Hales reference to the whole course of dealings is relevant when we get to the stage of quantification
of interest. Again there was ambiguity Hale did not distinguish between these 2 stages: establishing an
interest and quantification of interest.
James v Thomas [2007] EWCA Civ 1212
- Post Stack v Dowden
- A more restrictive/conservative approach was adopted.
- The claimant moved in with the defendant AFTER 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.
- Her contribution was to work 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 give rise to a common interest. She did not gain a right to any beneficial share of
the house. On the facts, there was no evidence on which they could infer a common intention. Crucial to
this is that she moved in after he had purchased the house. She did get a share in the business but she
couldnt claim a share in the house.
Matrimonial Proceedings and Property Act 1970 s. 37
- s.37 provides that in cases involving married couples, where one partner makes a substantial
contribution, they can get an interest of enlarge an existing interest.
- Ie where one party has contributed either through money or investment to a substantial improvement to
the property, leading to an increase the value of the property.
- That act doesnt apply to unmarried couples. But the principle might still be applicable.
Thomas v Fuller Brown [1988] 1 FLR 237
- The non legal owner had built a 2 storey extension and other substantial improvements.
- On the facts of that case, he did not get an interest because the court held he had done that work for
living rent-free in that accommodation.
- The court accepted that if that hadnt been the deal, it may have been enough to acquire an interest.
5.2.2. Quantifying the beneficial interest
Clough v Killey (1996) 72 P. & C.R. D22.
13

There was an express bargain that the beneficial interest should be shared on a 50/50 basis.
Mrs Killey argued that, under the first rule in Rosset, a constructive trust arose which, due to the express
agreement, gave her a 50% interest. Subsequent to this arrangement, Mrs Killey had undeniably acted to
her detriment by making the proceeds of her divorce settlement available to Mr Clough and undertaking
work on the cottage. As to the extent of her share, Peter Gibson LJ admitted it is only common sense
that where the parties form a common intention as to specific shares they are to take, those shares prima
facie are the shares to which the court will give effect.
The correct starting point, therefore, was to take the shares as established by the parties express
common intention and to depart from this only where there was good cause. Although Peter Gibson LJ
failed to indicate what would be a good cause, he did conclude that, on the present evidence, there was
no justification for the departure; It seems to me only just that Mr Clough should be held to, and not
allowed to renege on, his promise on which Mrs Killey relied to her detriment.
This case demonstrates the fundamental point that when the parties expressly agree on beneficial shares,
provided there is some detrimental reliance, that understanding will almost certainly be enforced by the
courts.

Difficulties arise when the express bargain is silent as to the beneficial shares to be taken. The court is then
forced to do its best to allocate on the basis of fairness and justice.
- 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.
Midland Bank v Cooke [1995] 4 All ER 562
-

At the time of acquisition, the common interest was that their respective shares should be left for later
determination.

Oxley v Hiscock [2005] Fam. 211

- 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 having regard to the whole course of dealing between them in relation to the property. This
includes arrangements which they make from time to time in order to meet the outgoings (eg
housekeeping, mortgage contributions, council tax and utilities) which have 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 respective 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.
- Chadwick LJ acknowledged that the courts have not found it easy to reconcile that find step with a
traditional, property based approach.
Stack v Dowden (above)
-

Sdsa
sadsa

Abbott v Abbott (above)

- Hale The parties whole course of conduct in relation to the property should be taken into account in
determining their shared intentions as to its ownership.
N. Piska Intention, fairness and the presumption of a resulting trust after Stack v Dowden (2008) 71, Modern
Law Review 120
W. Swadling The common intention constructive trust in the House of Lords: an opportunity missed (2007)
123, Law Quarterly Review 511
14

6. Proprietary Estoppel

Jennings v Rice [2002] EWCA Civ 159

- The CA admitted that the court had to look at matters in the

round and have regard to the nature and quality of the representation and the expectation engendered,
the detriment incurred and the proportionality of any reward having regard to the detriment.
If the claimants expectations are uncertain, extravagant or out of proportion to the detriment suffered,
the court should recognise that the claimants 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 435,000) would have been
entirely disproportionate to satisfy the equity. Instead the claimant was awarded a sum of 200,000.
Detrimental reliance for estoppel purposes is not limited solely to financial contributions.

Oxley v Hiscock (above)

-

Chadwick LJ The time has come to accept that there is no difference in outcome whether the true
analysis lies in constructive trust or in proprietary estoppel.

Stack v Dowden (above)

Proprietary estoppel typically consists of asserting an equitable claim against the conscience of the true
owner. The claim is a mere equity. It is to be satisfied by the minimum award necessary to do justice ... which
may sometimes lead to no more than a monetary award. A common intention constructive trust, by contrast, is
identifying the true beneficial owner or owners, and the size of their beneficial interests. (Lord Walker)
Yeomans Row v Cobbe [2008] UKHL 55
-

dfs
sdfsdfds

Thorner v Major [2009] UKHL 18

-

dfs
sdfsdfds

B. McFarlane and A. Robertson Apocalypse averted: proprietary estoppel back in the House of Lords (2009)
125, Law Quarterly Review 535
7. Reform
Law Commission Discussion Paper: Sharing Homes Law Com. 278 (2002)
Law Commission Report: Cohabitation: The Financial Consequences of Relationship Breakdown Law Com.
307 (2007)
PH
October 2010
N. Piska Two recent reflections on the resulting trust (2008) 5, The Conveyancer 441
15

Stack v Dowden [2007] UKHL 17.

N. Piska Intention, fairness and the presumption of a resulting trust after Stack v Dowden (2008) 71, Modern
Law Review 120
W. Swadling The common intention constructive trust in the House of Lords: an opportunity missed (2007)
123, Law Quarterly Review 511
B. McFarlane and A. Robertson Apocalypse averted: proprietary estoppel back in the House of Lords (2009)
125, Law Quarterly Review 535
Law Commission Discussion Paper: Sharing Homes Law Com. 278 (2002)
Law Commission Report: Cohabitation: The Financial Consequences of Relationship Breakdown Law Com.
307 (2007)

16