Constructive trust notes

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Sloan 'Keeping up with the Jones' 2015

  • situations where only one legal co-owner of the home and the non legal owning co-habitant seeks to establish an equitable interest under a common intention constructive trust. Argues that while judges have mostly accepted that Jones is relevant to sole owner cases, they have had few opportunities to allow novel outcomes from it yet. If produces a conservative approach, it is normally problematic for co-habitants who make indirect or non financial contributions.
  • driven by policy considerations and the special situations of those in intimate relationships. There is no legislation for unmarried couples where the relationship has broken down. Common intention constructive trust allows help. In Jones the resulting trust was considered inappropriate in domestic cases involving family homes. 
  • Smith v Bottemley- detrimental reliance was considered to be a 'critical element of the claim of beneficial interest in the properties in question by way of constructive trust.' Lloyds Bank v Rosset- common intention of shared ownership necessary to prove  constructive trust could be evidenced either by express discussion or by implication drawn from direct contribution to purchase price. Stack v Dowden- strong presumption that ownership in equity follows position at law. Strength of presumption was undermined by the factors that are said to be relevant to its displacement. Jones gave SC 'the opportunity to revisit the decision of the HoL in Stack.
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Sloan 'Keeping up with the Jones' 2015

  • Jones- held that if the parties do seek to show that the legal and equitable interests differ either at the time of acquisition or later 'their common intention is to be deduced objectively from their conduct.' What the court deems fair in relation to their whole course of conduct concerning the property. 
  • Given the policy rejections to Rosset and the fact that the upper judiciary have created uncertainty to the extent to which it applies, it would be desirable for lower courts not to use it. 
  • The whole rationale of Stack was a recognition that a narrow focus on matters such as financial contribution would liberalise the law while a refusal to consider wholly domestic contributions or to allow common intention woudl place a pragmatic limitation on development.
  • Judicial reactions to Jones- three catgeories of case decided after- 1) those where the possible impact of Jones in moving beyond Rosset was ignored 2) sole name cases where the influence of Jones was recognised but the outcome would have been permissible following Rosset and 3) where Jones appears to have produced a novel result in a 'sole name' case. Most significant cases seem to fall in middle category. 
  • 1) Jones ignored or fully distinguished? i) ignored- Garwood v Ambrose- joint name so...
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Sloan 'Keeping up with the Jones' 2015

  • Jones should have been directly applicable. Only applied Rosset. Judge held no constructive trust as there were none of the express discussions required by Lord Bridge to demonstrate express common intention. Focused on the fact that there was no detrimental reliance, even though Stack and Jones had expressed doubts about the need for reliance. 
  • Jones considered but not applied- Re Ali said 'there will need to be evidence of an actual agreement, arrangement or understanding between the parties.' Said financial contributions were relevant only to a resulting, not constructive trust. Also work on the property of another doesnt provide a beneficial interest except in exceptional circumstances. 
  • Liberal principles, orthodox results- number of sole name cases where judges have incorporated it into their reasoning- i) legal analysis- CoA use alot. Geary v Rankine Lewison stated that 'in a sole name case the search is to asceratin the parties actual shared intentions, whether express or inferred from their conduct.' Solid recognition in judiciary that Stack and Jones are now leading authorities in sole name cases. ii) successful CoA claims- Gallarotti and Thompson appear to suggest that at least Jones inspired approach can lead to a successful claim in both intimate and non intimate relationships. 
  • A SC case dealing squarely with sole legal owner scenario is likely to be required before the questions in this paper can be resolved. May have to clarify how a common intention is to be inferred directly from conduct. 
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Mee, Jones v Kernott 2012

  • Decision appears to limit the imputation of openly fictional common intentions to the relatively uncontraversial context of quantifying the parties shares under a constructive trust in cases where a common intention has been found to exist which does not specify the respective shares. 
  • The wrong result- the trial judges reasoning on intentions appears to relate to planned land use, not beneficial entitlement. Can criticise the decision on the basis of the suspect maths behind it. Kernott's share generated a return of 0% even though house prices rose 3x. Saying his share was finished when he got a new house ignores the fact that his money was still in the old house. Each party was entitled to roughly 35% of total value and 30% mortgage. Made sense for her to have 65% but he should have had his 35% and the value wouldve been around £72'000 rather than the £25'000 he got in the SC. Reinforces the view that it was unrealistic to infer a common intention in light of the first question if beneficial interests were intended to change. 
  • Imputation- involves concluding what the parties would intend even if they hadnt, and inference involves concluding what they did intend- Neuberger in Stack. Walker and Hale said they should primarily ascertain the parties actual shared intentions, whether express or inferred. At least two exceptions to this- one where there was a resulting trust applied...
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Mee, Jones v Kernott 2012

  • which would be rare domestically and two- that imputation was available for the second question of share quantification. Can impute an intention the parties may never have had. The course of dealing in relation to the property should be given the broad eaning. Seems circular to invoke imaginary intentions which the court devised on the basis of what its thinks would be fair. There seems a strong argument that there was no common intention as to the quantification, and the remedy should reflect the extent of the detriment suffered by the claimant in reliance on the common intention. 
  • Inference- Walker and Hale said the difference between inferring and imputing in practise may not be great. There is no question under Diplock in Gissing v Gissing of attributing to the parties an intention that does not reflect either parties understanding of the situation. W and H seem to involve more objectivity. Test seems to look at what a reasonable person in the claimants position would have taken the situation to have intended. Court isnt deducing actual intentions from the court of the parties. Collins said the court should be fair. If the court is looking for actual intentions then why must it be fair when some agreements obviously wouldnt be? 
  • Imputing isnt permissible in finding an interest at all. If there is no express common intention the only option is inference from conduct. 
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Mee, Jones v Kernott 2012

  • 3 of the 4 judgements in the SC mentioned the fact that the legislature had not yet implemented the Law Commissions proposals for legislative reform in relation to the position of cohabitants upon termination of their relationship. May not apply to Jones anyway as they had lived apart for 14 years. Scheme proposed by the Law Commission limits the time of application within 2 years of the end of the relationship. 
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Yip 'Jones v Kernott' 2012

  • Hale and Walker revisited the decision in Stack, affirming that the starting point for disputes concerning family homes is the presumption of equal sharing in equity, thereby displacing the presumption of resulting trust as the starting point. Court can only impute an intention where parties clearly intended to share the property but it is impossible to divine any actual intention from the evidence. W and H came to the decision through inference of the parties intention and Kerr and Wilson held that an intention to share 90:10 should be imputed to the parties. 
  • Joint names- had parties intentions changed after their separation and what were the interests? Starting point where no express declaration is that the parties are assumed to be beneficial joint tenants in equity, even if contribution to purchase price was different. Can be rebutted by evidence or a change subsequently. Stack found didnt intend to share equally. Jones found that the intention of equal sharing had changed after separation. Court must search for actual intentions but may have to impute an intention by deciding what is fair and just. W and H didnt think big difference between inferring and imputing but Wilson thought there was. 
  • Sole name cases- starting point is different because the non owner has to prove that he has a beneficial interest in the property. Familial relationship doesnt prove this. Le Foe v Le Foe extended Rosset to take into account indirect financial contribution. Abbott v Abbott Hale...
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Yip 'Jones v Kernott' 2012

  • suggested law has moved on from Rosset and courts would deduce common intention based on their entire course of conduct in relation to the property. In Jones they said in sole name cases the parties intentions were to be deduced objectively from their conduct. 
  • Ambulatory constructive trust- first introduced in Stack to describe the possibility that parties common intention may change after acquisition of the property. The mere fact of separation will not give rise to an inference of a change in the parties common intention. This is because on relationship breakdown the parties will often have very different ideas. The way parties conduct their daily financial or personal affairs would not normally result in alteration.
  • There are two exceptions where the change of intention can be inferred. 1) when one party has carried out substantial improvement to the property resulting in a property that was substantially different from what it was. 2) where both parties earn and share in the household chores and one of them repays the mortgage liability by a single sum. These save judicial time.
  • One cannot generalise all the cases where the parties only come to court after separation. Where parties have been only been separated for short time 'there is uncertainty about where the parties will live and what they will do about the home.' Alteration of the beneficial interest shouldnt be inferred even if only one party continues to live in the house. This may end as unjust enrichment. 
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Yip 'Jones v Kernott' 2012

  • Jones had been separated 15 years. The court is essentially looking at the parties conduct outside the familial context and focusing on financial contributions in the quantification exercise is appropriate. May have been important that the children had left home, because if they were dependents it may be different. Emphasised that the court is to deduce parties intentions based on their conduct in relation to the property. The common intention constructive trust is ill equipped to address broad family law concerns. 
  • Inferences v inputation- SC said it would be possible to impute an intention. If an agreement to share is found to exist then imputing an intention where no actual intention on size of shares can be deduced is perfectly sensible. The law should assist them, knowing that in family relationships they do not discuss as commercial ones would. 
  • Should draw a line between imputation inference. Cant have priority for inferring if theres no line between the two. Where the exercise of inference is concerned, certain factors will be accorded greater weight because they relate to parties actual intentions.
  • SC in Jones will not be the last word. Clarified Stack leaving a basic judicial regime to follow. Will have to flesh this out until Parliament promulgates legislation to deal with the co-habitants assets and other matters on the breakdown of the relationship.
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Neuberger Chancery Association Lecture 2008

  • Neuberger used the presumption of resulting trust as there was nothing to displace it, so the parties would be assessed by contributions. Thought it would be simple to apply in most cases and Parliament could change if they wanted. Majority thought that Parliament were unlikely to intervene so resulting trust was inappropriate. They thought the presumption that equity follows the law should apply. While he disagrees, there is undoubtedly a case for introducing a presumption of equality between cohabiting joint owners. 
  • 3 concerns about the majority in Stack- 1) is about the confident and strong assumption that unmarried parties should be taken to have intended a joint tenancy in equity. Are we to assume that unmarried cohabitants intend survivorship to apply? One reason they may not marry is because they want to keep assets separate. 2) identifying the types of cases where the presumption applies. Does it only apply to cohabitants? What about relatives and friends? 3) arises from the circumstances which were held sufficient to justify departing from the presumption of equity. Two factors which rebutted- one party contributing more money than the others, difference wasnt that great. If presumption of equality is rebutted because contributions were significantly different it is useless as not there when you need it. Second aspect was their separate finances. This wont be that unusual. Could be seen that they intended the house to be equal as they had that in both names and so wasnt like the rest of finances. 
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Gardener 2013

  • Common intention to as to whether they have a share at all must be genuine, maybe express or implied. If implied must be in relation to the parties 'whole course of conduct in relation to the property.' Size of share may be genuine, express or implied or otherwise is imputed by the court to achieve fairness. This has been criticised for uncertainty. 
  • Two main areas of uncertainty- 1) predicting where a genuine but implied common intention will be found in relation to course of conduct. Not much help. 2) the import of fairness- Hale said to be assessed by same material that will count as evidence of implied genuine common intention. Minority judges in Jones reached outcome on fairness and gave no justification. Current law is dysfunctional as can yeild unjust results. Burns v Burns- no share as no financial interest, child raising werent counted as indirect. Would this be the outcome under todays law? Probably not. 
  • Burns v Burns- couldnt find implied common intention as no financial contribution. Rosset said financial contribution had to be direct. Changed slightly in Stack and has disappeared from the law of whole course of conduct, as this references lots of material. Could find under common law that the child raising could constitute common intention, that could be quantified with reference to fairness. The old rule of financial contribution has removed a blockage, but doesnt guarantee a finding. Jones said imputation and inference are pretty much the same.
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Gardener 2013

  • Law Commission scheme- would apply in the context of matrimonial relationship and would recompensate the claimant where as a result of his contributions in the relationship, either the claimant suffers a material disadvantage, or the defendant enjoys a material benefit. Scheme would override the law. Problem lies in the fact that this would remove entitlements acquired by parties under those rules. This cancellation of womens 50% interest would interfere with the right to possession under A1 of the ECHR and so requires justification as proportionate means of achieving a legitimate public interest goal.
  • Proportional?- the general aim, correcting material losses and enrichments traceable to claimants contributions is a legitimate one, or would be once adopted into law. The question is whether suppression of claimants rights would be necessary to it. Seems not. The trust rules display a commitment to taking material communality, where it exists, seriously, to follow the parties choice to pool their resources rather than to keep separate accounts. 
  • Current law isnt perfect. Hard to see how itll apply to the increasing number of situations where parties homes are rented and not owned. 
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