ABDULQADIR NAEEM – PROPERTY LAW

DENNING LAW SCHOOL

COOWNERSHIP – RESULTING AND CONSTRUCTIVE TRUSTS

Equitable ownership can be acquired or quantified (by displacing the presumption of equity follows the
law) informally through raising Resulting or Constructive Trusts.
The law relating to the acquisition of equitable interests in the home (often referred to as ‘trusts of
homes’) – that is, situations in which there is cohabitation of property and those cohabitants are contesting
whether they have rights in the property and the size and nature of their rights – is one of the most
interesting areas of land law. The subject matter of the cases is easy to understand: there are relationship
breakdowns, cohabitants resisting mortgage lenders who wish to take possession of property, and other
situations in which claimants argue that it is ‘unconscionable’ for them to be denied some property rights
in a home.
Resulting Trusts
A resulting trust arises by operation of law without the need to any written document on the basis of a
presumption that if a person contributes to the purchase price or mortgage payments of a property with
the intention to get ownership (Lasker v Lasker) (Curley v Parker) then a resulting trust will be created
whereby the person will become the equitable owner of the land which ownership shall be proportionate
to the contributions made. It is however noted that as the concept of resulting trusts is narrow and only
focuses on purchase price and mortgage contributions, it should not be used in the domestic context
(Stack v Dowden) – affirmed in the case (Abbot v Abbot).
Constructive Trusts
A common intention constructive trust arises when the following is met:

(a) proof of common intentions

this can be proven through the following methods:

(i) express discussions – i.e. if the person can objectively prove through express
words that the owner had a common intention to give a share in the property to
the claimant. This is very wide and even saying “whats mine is yours will suffice”.
In excuse cases such as llyods v Rosset, Eves v Eves and Grant v Edwards, where
the execuse given is genuine then common intentions will not be proven but if the
excuse is non genuine then common intentions will be proven;
(ii) inferred common intentions – in the case of Lloyds v Rosset, this was narrowly
proven through contributing to the purchase price or mortgage payments.
However, the courts widened the law and now are using the family assets approach
where the courts undertakes a survey of the entire course of dealing between the parties’
(including non-financial contributions to the home, and payments to things other than the
purchase price or the mortgage), and therefore is not limited to financial contributions. In
relation to long-standing marriages, this approach has held a wife’s contribution to utility
bills, occasional mortgage payments and to bringing up the children, keeping the home
and finding occasional work when the family needed money, to be sufficient to acquire
one-half of the equitable interest in the home (as in Midland Bank v Cooke [1995]). This
approach was initially introduced in the case of Oxley v Hiscock but officially introduced
in the case of Stack v Dowden and Jones v Kernot (although the cases involved
quantification issues, the courts used this is acquisition cases as well which shows that it
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DENNING LAW SCHOOL

is available for that as well in the case of Geary v Rankine [2012] and O’Kelly v Davies
[2014].

(b) Detrimental reliance – this can be proven by proving any financial or non financial detriment
faced by any party which relied on the common intention; and

(c) Equitable fraud – this is moral fraud which will be determined on a case to case basis.

Please refer to class discussion to understand the above

Case Law
Stack v. Dowden: 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. It
was held that 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. Based on constructive trust analysis, the presumption was
displaced and the courts quantified the shares based on the party’s intentions.
Jones v. Kernot: An unmarried, co-habiting couple, Mr. Kernott and Ms. Jones, purchased a home with a
mortgage in joint names. The couple co-habited the home and contributed to its expenses for eight years,
after which Mr. Kernott left the property and made no further contributions. Ms. Jones remained in the
property with their children and paid all further expenses towards the acquisition of the property. The
Supreme Court upheld that, if a property is purchased in joint names for a couple, there is a presumption
that their beneficial interests in the property coincide with their legal estate. The Court placed emphasis
that the presiding presumption is reflective of a couple’s joint venture to purchase a property, underpinned
by an emotional and economic relationship of trust that does not hold each party separately account
financially. However, albeit with a high threshold, this presumption can be rebutted by evidence
concerning subsequent conduct in relation to the property, such as unequal contributions to the acquisition
of the property under a mortgage. In this case, the Court deduced that “objectively from [the parties’]
conduct” following from the initial joint registration, there can be no presumption of joint beneficial
ownership in a family home. Accordingly, the Court held that each of Mr. Kernott and Ms. Jones hold
differing beneficial shares in the property that are reflective of their respective contributions to the house.
Overturning the Court of Appeal’s previous decision, this was determined to be 10% for Mr. Kernott and
90% for Ms. Jones.
In respect of a question of RT and CT we shall first apply the test in Lloyds Bank v Rosset – i.e. have the
parties formed the necessary agreement, arrangement or understanding, or has the claimant contributed to
the purchase price or to the mortgage instalments. Mere contributions to supervising construction work or
to utility bills will not matter on this account.
After that, if it is the domestic context, we shall apply the ‘family assets approach’ in which the court
‘undertakes a survey of the entire course of dealing between the parties’ (including non-financial
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contributions to the home, and payments to things other than the purchase price or the mortgage), and
therefore is not limited to financial contributions.