Land Law 1, Week 9

Prepared By:
SHAFEE ADAM (UZ)
Trusts of land
Co-ownership

• Wherever land is owned by more than one person ownership must be

through a trust of land. A trust of land separates the legal title of the
land from the equitable ownership rights. Legal title is held by the
trustees and these are the named paper owners of the land. The
trustees hold the land on trust for the beneficiaries ie those entitled
to equitable ownership rights. The trustees and beneficiaries are
often the same people. Two forms of co-ownership are recognised
these are joint tenancy and tenancy in common.
Joint tenancy

Where there is a joint tenancy, all the co-owners own the whole of the
property collectively. It is not correct to mention shares when talking of a
joint tenancy. In order to amount to a joint tenancy the four unities must be
present:
1. Unity of possession - each party is entitled to occupy the whole of the land
and none can exclude the others from any part of it.
2. Unity of interest - each party must hold the same interest in the property
3. Unity of title - each party must acquire their interest through the same
transaction
4. Unity of time- interests must have been acquired at the same time
• Where there is a joint tenancy, survivorship operates. This means that if
one joint tenant dies, the remaining joint tenants benefit from his
entitlement in that they still all remain entitled to the whole of the
property. This means a joint tenant can not leave his interest in the
property to another in their will. Neither will their interest in the land form
part of their estate should they die intestate. It will simply pass to the other
joint tenants. If there is only one other joint tenant, they become solely
entitled to the land and can leave it in a will should they wish. Where both
joint tenants die together in circumstances where it is impossible to
determine which one died first, it is presumed the eldest died first and thus
the property will form the estate of the youngest under s.184 Law of
Property Act 1925. Where the co-ownership relates to equitable
ownership, it is possible to for a joint tenant to separate their interest from
the others through severance. This will allow them to leave their interest to
another in their will, however, this will also mean that they can not benefit
from survivorship should any of the other joint tenants die.
Tenancy in common

Where there is a tenancy in common, each co-owner will own a share

of the property eg 50% or 80%. The share is undivided meaning that
they are entitled to occupy the whole of the property even if their
share is small. There is still unity of possession and no physical division
of the land. The relevance of the shareholding is evident on sale, death
or distribution of income from the property. Survivorship does not
operate between tenants in common. Each tenant can nominate who
to leave their share in their will or if they die intestate their share will
form part of their estate.
Co-ownership of legal title

Where land is conveyed in to the names of more than one person, co-
ownership of legal title will arise. Co-ownership of legal title can only
be through a joint tenancy (s. 1(6) Law of Property Act 1925). This joint
tenancy of a legal estate can not be severed (s.36(2) Law of Property
Act 1925). The number of joint tenants that can hold legal title is
limited to four. Where a conveyance seeks to give legal title to more
than four persons, the first four named are taken to be the legal owners
(S.34 Trustee Act 1925). The joint tenants of the legal title are the
trustees and hold the property on trust for the beneficial owners. The
beneficial owners are often the same people as the legal owners.
Co-ownership in equity

Co-ownership in equity can be as a joint tenancy or tenancy in

common. It is important to determine how ownership is held and if it is
a tenancy in common, the proportion of the shareholding held by each
tenant. Where the trust is an express trust, the parties are free to
determine the extent of their entitlement in the declaration of trust.
This will override any implication that could be made from the facts
such as the proportion of contributions. Difficulties arise where a trust
is created informally.
Express trusts

An express trust can be created through a conveyance of land or

through a declaration of trust. Where there is a declaration of trust,
this must be evidenced in writing:

• S.53(1)(b) Law of Property Act 1925

S.53(1)(b) Law of Property Act 1925

• Instruments required to be in writing.

(1)Subject to the provision hereinafter contained with respect to the creation of
interests in land by parol—
• (a)no interest in land can be created or disposed of except by writing signed by
the person creating or conveying the same, or by his agent thereunto lawfully
authorised in writing, or by will, or by operation of law;
• (b)a declaration of trust respecting any land or any interest therein must be
manifested and proved by some writing signed by some person who is able to
declare such trust or by his will;
• (c)a disposition of an equitable interest or trust subsisting at the time of the
disposition, must be in writing signed by the person disposing of the same, or by
his agent thereunto lawfully authorised in writing or by will.
(2)This section does not affect the creation or operation of resulting, implied or
constructive trusts.
• The extent of shareholding set out in the declaration of trust is conclusive:
Goodman v Gallant [1986] Fam 106 Court of Appeal

The claimant, Mrs Goodman, had a 50% beneficial interest in the matrimonial
home. Her husband held the legal title. He left the home and five years later Mrs
Goodman developed a relationship with the defendant Mr Gallant who moved into
the house. Two years later they entered negotiations to purchase Mr Goodman's
half share in the house. No formal valuation was undertaken but it was estimated
the house was worth £17-18,000. Mr Goodman agreed to convey the property to
them for £6,700. The purchasers' declaration of trust stated that they held the
property as joint tenants. Mrs Goodman later gave notice to sever the joint
tenancy. She later sought to argue that she held 75% of the beneficial interest
based on the fact that she already owned 50% of the beneficial interest and
contributed to the purchase of the remainder.
Held:
Mrs Goodman was only entitled to 50% of the beneficial ownership. In the absence
of fraud or mistake, the declaration of trust was conclusive as to the parties
respective ownership rights. The extent of the parties relative contributions was
irrelevant.
• If the declaration or conveyance states that the beneficiaries are to
enjoy the land jointly, this will create a joint tenancy. If the
declaration mentions shares, this will create a tenancy in common.

Where there is no express trust

• Where there is no express trust, for example where the trust was
created by a constructive or resulting trust or the parties simply failed
to state the extent of their ownership on conveyance, the law will
imply or presume beneficial entitlement from their conduct.

• Where the land was conveyed into the names of more than one
person and no express declaration as to how ownership is divided,
the law raises a presumption of joint tenancy:
Stack v Dowden [2007] 2 AC 432 House of Lords

• Ms Dowden and Mr Stack were co-habitees. They purchased a house in their joint
names but made no declaration as to entitlement of the beneficial interest in the
property. The purchase price of £190,00 came from £129,000 of MS Dowden’s
savings and sale of her previous property. The remainder came from an interest
only mortgage and two separate endowment policies. Mr Stack paid the
mortgage instalments totalling £27,000, Ms Dowden paid £38,000. Ms Dowden
paid the majority of the utility bills. They had separate bank accounts and made
separate investments. The parties then separated and Mr Stack brought an action
for sale of the property and distribution of the proceeds in equal shares.

• Held:

• The starting point for determining beneficial interests where the legal title was
held jointly is that beneficial interest will also be held jointly. This presumption
may be displaced where there is evidence that this was not their intention.
Baroness Hale

• “In the cohabitation context, mercenary considerations may be more to the

fore than they would be in marriage, but it should not be assumed that
they always take pride of place over natural love and affection. At the end
of the day, having taken all this into account, cases in which the joint legal
owners are to be taken to have intended that their beneficial interests
should be different from their legal interests will be very unusual.”

• “This is, therefore, a very unusual case. There cannot be many unmarried
couples who have lived together for as long as this, who have had four
children together, and whose affairs have been kept as rigidly separate as
this couple's affairs were kept. This is all strongly indicative that they did
not intend their shares, even in the property which was put into both their
names, to be equal (still less that they intended a beneficial joint tenancy
with the right of survivorship should one of them die before it was
severed.) Before the Court of Appeal, Ms Dowden contended for a 65%
share and in my view she has made good her case for that.”
• The presumption may be displaced where there is circumstances
indicate that a tenancy in common would be more appropriate:
Where the parties intend to operate separate businesses from the
premises:
• Malayan Credit Ltd v Jack Chia -MPH Ltd [1986] AC 549
Where the parties are commercial partners:
• Lake v Craddock (1732) 3 P.Wms 158
Where there are unequal contributions to the purchase price:
• Walker v Hall [1984] 5 FLR 126 - However, this needs to e considered
in the light of Stack v Dowden [2007] 2 AC 432
Where the parties have agreed to occupy separate areas of the
property:
Malayan Credit Ltd v Jack Chia -MPH Ltd [1986] AC 549
Co-ownership under informal trusts Resulting
trusts

• Resulting trusts arises through a direct contribution to the purchase

price and the beneficial interest which arises is in exact proportion to
the amount contributed. Ie if a person contributes 10% of the
purchase price they will hold 10% of the beneficial interest. As this is
a 10% share of the beneficial interest this can only ever be held as a
tenant in common.

• Bull v Bull [1955] 1 QB 234

Constructive trusts

Constructive trusts are based on a common intention rather than a

mathematical formular as to proportion of contribution. The courts role
is to seek to give effect to the common intention when considering
how beneficial ownership is held:

• Midland Bank v Cooke [1995] 4 All ER 562

• Midland Bank v Cooke [1995] 2 FLR 995 Court of Appeal

• The matrimonial home was conveyed into the sole name of Mr Cooke. The purchase
price of £8,500 was funded by a mortgage of £6,450 taken out in the name of Mr Cooke
(Mrs Cooke was a student at the time and had no income) £1,000 of the purchase price
came from a wedding gift from Mr Cooke's parents to both of them the remainder was
provided out of Mr Cooke's savings. Mrs Cooke later worked as a teacher but did not
directly contribute to the mortgage payments. She did discharge many of the house hold
bills. She also had undertaken substantial improvements, alterations and decoration of
the house. Mr Cooke later re-mortgaged the house to secure his business debts. The
bank asked Mrs Cooke to sign a consent form postponing any interest that she held to
the bank. Mr Cooke failed to keep up with the payments and the bank sought possession
of the property. Mrs Cooke claimed to be entitled to a beneficial interest in the property
and claimed that she had signed the consent form under undue influence. The trial judge
held that Mrs Cooke had a beneficial interest in the property amounting to 6.47% and
the consent form had been obtained by undue influence. Mrs Cooke appealed
contending that the trial judge had been wrong on the quantification of her interest.
• Held:
• Mrs Cooke was entitled to 50% of the beneficial interest.
Lord Justice Waite:

"I would therefore hold that positive evidence that the parties neither discussed
nor intended any agreement as to the proportions of their beneficial interest does
not preclude the court, on general equitable principles, from inferring one"
"The general principle to be derived from Gissing v Gissing and Grant v Edwards can
in my judgment be summarised in this way. 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"."