Equity & Trusts: Constructive Trusts

All topics

HideShow resource information

Constructive Trusts.....


1) Constructive trusts are where the courts literally will 'construct' a trust or 'find' a trust where it would be unconscionable to deny someone something that is theirs by relying on the legal title only!

2) Equity will 'construct' and 'imply' a trust so the person who is holding the title becomes the constructive trustee

3) Broad and undefined area to allow the courts flexibility in commercial and family context

1 of 37

Why do we impose constructive trusts....

Leading quotes on constructive trusts....

Cardozo J in Beatty v Guggenheim: 'constructive trust is the formula through which the conscience of equity finds expression'

Millet LJ in Court of Appeal in Paragon Finance: 'a constructive trust arises by operation of law when it would be unconsciounable for the owner to assert beneficial interest and deny the beneficial interest of another'

Lord Scott in House of Lords in Yeomans Row Management v Cobbe: 'it is impossible to prescribe exhaustively the circumstances to create a constructive trust'

LJ Edmond Davies in Carl Zeiss: 'English law provides no clear and all embracing definition of a constructive trust and its boundaries are left deliberately vague so as to not restrict the court by techniclities in deciding justice'. 

2 of 37

Proprietary or Personal?


A beneficial right IN identifiable property and is enforceable against 3rd parties (except for equities darling). Also known as RIGHT IN REM. Right in the property.


Against the constructive trustee to make them personally liable for loss. Also known as IN PERSONAM right. Right against the individual. Personal claims arise in constructive trusts where the constructive trustee NEVER actually receive the property.


3 of 37

Institutional or remedial???

Institutional constructive trusts vs. Remedial constructive trusts:

English law = institutional constructive trusts MEANING that.....

  • arises through operation of law and the person claiming had an EXISITING right when the unconsciounable behaviour occurred and the court merely acknowledges that right. The court does not have discretion but merely acknowledging the existence of a right.

Other jurisdications (i.e. USA, Canada, Aus) = remedial constructive trusts MEANING that...

  • the courts give a REMEDY at the end of the case and right emerges in the court room NOT an existing right. The subject matter is merely held on constructive trust. It is the discretion of the court.


4 of 37

Institutional constructive trusts criticism...

Lord Denning in Hussey v Palmer 'the constructive trust may arise later on as the circumstances require and it is an equitable remedy by which the court can enable restitution'.


Lord Browne-Wilkinson in Westdeutsche discussed OBITER possibility of common intention and Dennings new model may introduce a new road... OBITER ONLY but CANT IGNORE!

LJ Gibson in Halifax v Thomas restated that 'English law has not followed other jurisdictions where the constructive trust has become a remedy for unjust enrichment'

5 of 37

Family home...4 different trusts that arise...


1) Express declaration of trust (clearly stated in writing)

2) Resulting trusts (where contributed to the purchase price, may retain beneficial interest)

3) Properitary estoppel (represented to claimant that would recieve if did 'x')

4) Common Intention Constructive Trust (arises as a result of common intention of the parties if this can be shown)

6 of 37

Chronological history....

1880's: Women weren't allowed to own property and were to refrain from marriage if no trust

Modern approach: equal economic contribution to the family home but there are still situations whereby a man pays the mortgage and the woman the bills which may prevent a woman from claiming the beneficial interest in a home. 

Married couples Law today: distinguishes between who owns the home when a couple are married and the Matrimonial Causes Act 1973 that allows the court to reallocate property rights on divorce (even if in the sole name of one party)! Courts have the power to change the deed and the law will step in!

Unmarried couples Law today: Court has no statutory discretion to alter property interests hence the 3 available principles of resulting trusts, proprietary estoppel and constructive trusts when no express declaration of trust is made by the two parties that the beneficial interest is to be held jointly in addition to the legal title. 

Common law wives: HAVE NO RIGHTS! Doesn't matter how long you have lived with someone, if unmarried, must be in writing to establish rights!!!

7 of 37

Legal title and beneficial interest...


Step 1: LEGAL TITLE of property in both names (LAW)

Step 2: Declare the BENEFICIAL INTEREST of property is to be held jointly! (EQUITY)


8 of 37

Trust 1: Express declaration

             Goodman v Gallant

Facts: Husband and wife purchased house and conveyed into sole name of husband. Orally agreed both entitled to 50%. Husband left and new man moved in Mr Gallant. New man and wife paid Mr Goodman his 50% and Mr Goodman conveyed the property to Mr Gallant and the wife 'As joint tenants, beneficial interest on trust to sell the same'. Mr Gallant eventually left aswell and wanted his 50% share. Wife argued 75% as Mr Goodmans 50% share was conveyed only not hers.

Decision: Slade LJ dismissed her claim as expressly stated in the declaration what was intended. ALL of the property was conveyed. Resulting and constructive trusts cannot apply where express declaration!!!!

Quote: Slade LJ: 'the doctrine of resulting, implied or constructive trust could not be invoked where there is an express declaration.'

9 of 37

What if contributions are not fair?......

Goodman v Carlton

Facts: Mr Goodman was a sitting tenand and later brought the property. Wanted to buy in sole name but couldn't alone so involved Mrs Carlton and became co-mortgagors. No discussions about equitable beneficial interest but that she was just helping out for 1 year. Legal title conveyed in joint names. Mr dealt with mortgage and solicitors. Mrs didn't live at house or contribute to purchase price or mortgage payments. Steps made towards putting legal title in his sole name but he died before. Mr's son commenced action as executor claiming property was held on trust for his estate. No resulting or constructive trust.

Decision: First instance and court of appeal upheld the sons claim. No contribution to purchase price by Mrs Carlton and no evidence of common intention and no interest acquired. Court rejected Mrs Carlton's argument that liability was her contribution. 

Judges: Ward, L.J.; Mummery, L.J.; Laws, L.J.

10 of 37

Exceptions/Rebuttals to Trust 1 'express declarati

Before Stack v Dowden: Goodman v Gallant stated that if made an express declaration, that is FINAL. 


  • Express declaration made = FINAL and CONCLUSIVE
  • Contribution to purchase price = RESULTING TRUST and get what you put in
  • Common intention = CONSTRUCTIVE TRUST and share of beneficial interest


Post Stack v Dowden: starting point is that equity follows the law BUT evidence may be brought to rebut the presumption that the equitable beneficial interest is to be shared 50/50.

Stack v Dowden has doubted the stength of express declarations and presumption of 50/50 !!!!

11 of 37

Trust 2: Presumed Intention Resulting Trusts

Trust 2: Presumed Intention Resulting Trusts

Definition: Equity presumes that the person who advanced money to purchase property wished to have a beneficial interest in the property. Give back shares proportionately.

1. Pettitt v Pettitt per Lord Reid & Lord Diplock: Legal title in wife's name only. Husband paid no money towards purchase but redecorated and enhanced value. Divorced and husband issued proceeds of sale of home. House of Lords allowed wife's appeal stating that the wife was entitled absolutely to house. Only contributor to purchase price acquires beneficial interest. Case decided before Matrimonial Causes Act 1973 and no power to rearrange rights to what may seem fair and reasonable. Couldnt infer or impute com int.

2. Gissing v Gissing per Lord Reid, Diplock, Pearson:: Home conveyed into 1 spouses name only and no agreement/understanding/expression of intention that other spouse to have beneficial interest even though made improvements to home with furniture and garden. House of Lords held not possible to draw an inference that there was a common intention for the spouse to have any beneficial interest. Approved Pettitt v Pettitt.

3. Springette v Defoe: Male contributed 25% female contributed 75%.No declaration as to beneficial interest. Proportionate shares allocated back presumed intention resulting trust.

12 of 37

Trust 2: Presumed Intention Resulting Trusts

BUT.... what about Stack v Dowden NOW?

1. Stack v Dowden: Courts held that the presumption where there is no declaration of the beneficial interest will not be presumed proportionate shares as in previous case law, but in equity 50/50 which alters the law of presumed intention resulting trusts and casts doubt i.e. if contributes 10%, will presume in equity 50/50...

2. Gibson v Revenue and Customs 2008 per Arden LJ: 'the function of the presumption of advancement is now performed by the presumption of equal beneficial owenership of property held in joint names laid down in Stack v Dowden.'

Post Stack v Dowden, now, even if DECLARE 70/30, can hold 50/50!!! Joint legal title = Joint beneficial interest (displaces advancement or declarations)

13 of 37

Trust 3: Proprietary Estoppel

Trust 3: Proprietary Estoppel

Definition: Remedy awarded at courts discretion which may or may not give rise to an equitable proprietary right in property. An EQUITTABLE REMEDY! No formalities req'd!

Equity Maxim: Estoppel works minimum equity to do justice

1. Matharu v Matharu: Female bought property which was then occupied by Females husband's son and son's wife. Sons wife made extensive improvements which female encouraged and knew what was relied upon. Appeal allowed in part: proprietary estoppel existed but not for beneficial interest in property but mere licence to occupy for lifetime. 

 Wilmott v Barber 1880: Requirements for Proprietary Estoppel:

  • Claimant Must have made mistake as to his/her legal rights
  • Claimant must have expended some money or some act on faith of mistaken belief
  • Defendant must know of existence of own right that is inconsistent with claimant rights claimed
  • Defendant must know of claimants mistaken belief
  • Defendent must have encouraged claimant to spend money or other acts
14 of 37

Trust 3: Proprietary Estoppel

Trust 3: Proprietary Estoppel cont'd..

Matharu v Matharu principles for establishing a claim for proprietary estoppel:

  • A. Has a representation been made?
  • B. Has the claimant relied on the representation
  • C. Has the reliance caused the claimant detriment

1. Pascoe v Turner: rare case whereby the courts found that the equittable maxim of requring to do minimum for equity to do justice was the transfer of the fee simple and equittable beneficial interest

2. Thorner v Major (House of Lords): considered what constituted the making of a 'representation'/when relied on to detriment. Rep have to be express or implied? Court held it was implied by a farmer and a boy as conduct/behavior constituted an interest.

3. Sledmore v Dalby: minimum for equity to do justice may result in NOTHING. Son-in-law lived rent free. When his wife died, mother in law tried to kick him out and he claimed a share as relied on representation. Court held no! His equity was the 25 years rent free!

15 of 37

Trust 3: Proprietary Estoppel

Trust 3: Proprietary Estoppel cont'd... Unconscionability:

  • 4. Taylor Fashions Ltd: 'would it be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment'
  • 5. Gillet v Holt: 'the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine'
  • 6. Cobbe v Yeonman's Row: 'a claim in estoppel based solely on ''unconscionable behaviour'' and no more would be a recipe for confusion'.
  • 7. Williams v Staite: Lord Denning M.R: in an extreme case an equitable licence might be revoked.
  • 8. Inwards v Baker: Lord Deninng M.R: Where a person spends money on land in the expectation, induced or encouraged by its owner, that he will be allowed to remain in occupation, equity will protect his occupation and may altogether prevent the owner from recovering possession. This equity would bind a purchaser with notice. Mixed/negative judicial treatment of this case.

  • Estoppel is a last resort claim with least favourable results.Trusts are much stronger. 
16 of 37

Trust 4: Constructive Trusts

Trust 4: Constructive Trusts

Home Ownership expanding and rise of value of real property. Recoginition by the courts of different people now buying property together in intimate AND commercial relationships. Cohabitation without marriage is on the increase. Different approach needed for commercial and intitamate relationships so as to avoid injustices. Matrimonial Causes Act 1973 allows courts discretion to reallocate rights for married couples, what about unmarried couples?

1. Pettitt v Pettit (previously discussed) Lord Diplock: 'Where the aquisition or improvement of property is made as a result of contributions in money or moneys worth by both spouses acting in concert, the proprietary interests in the family asset resulting from their respective contributions depend upon their COMMON INTENTION as to what these interest should be.Therefore seems to be 2 approaches from Pettitt:

1. Courts can INFER a common intention (look and see if had common intention)

2. Court can INPUTE a common intention (even if did not have common intention) LAST RESORT AND WORRYING as courts can decide their own decision and discretion! Courts after Pettitt moved away from approach 2 and move to approach 1 but Stack v Dowden goes back to approach 2!!!

17 of 37

Trust 4: Constructive Trusts

Common Intention Constructive Trusts:

2. Gissing v Gissing (discussed previously): 1 year later after Pettitt in House of Lords. House held that if express evidence the court will give effect to that evidence but in the absence of all evidence, as conveyed into 1 name, the beneficial interest will operate in 1 name too. Paying for soft furnishings and lawn were indirect and did not give rise to a common intention. For the courts to give effect to resulting or constructive trust where it would be inequitable for the legal owner to claim sole beneficial interest, must satisfy 3 requirements (note these requirements do not include approach 2 of INPUTE from Pettitt. 

i. Common intention that both should have beneficial interest = evidence needed

ii. Non-legal owner/claimant has acted to their detriment on basis of common intention

iii. Common intention may be express or inferred by courts based on parties conduct

Lord Pearson in Gissing obiter explained that just because indirect contributions made, doesn't automatically prevent acquiring beneficial interest and there may be occasions where these indirect contributions will suffice as evidence so the court can infer beneficial interest from common intention. This obiter comment was strongly slammed down and shut

18 of 37

Trust 4: Constructive Trusts

3. Lloyds Bank PLC v Rosset: Lord Bridge: How do we tell the correct evidence?

Facts: Until Stack v Dowden, was leading case. Husband bought farmhouse with own £. Legal title conveyed soley to him. Wife supervised and spent time for renovation. Husband took out overdraft with Bank and when couple split, husband moved out and wife remained in property but the overdraft payments were not paid. Bank sought reposession on grounds that the wife had beneficial interest in property under constructive trust.
Decision: 1st instance & Court of Appeal wife successful and husband was held as constructive trustee for wife. House of Lords reveresed decision as found no understanding between husband and wife that property was to be shared. Wife had no detrimental reliance nor had wife made contributions to purchase price and only indirect contributions for renovations which were not substantial and not comparable to purchase price.This case altered the position to give rise to a constructive trust or estoppel. 2 ways that evidence can be bought:

  • 1. Has there been prior to or exceptionally after, the aquistion of property, an agreement/arrangement or understanding that prop is to be shared beneficially (express)
  • 2. Any reason based on conduct, to infer a common intention to share beneficial interest. Firmy dismissed Pearsons obiter. Direct contributions to purchase price req'd or to mortgage ONLY. Making curtains (indirect) NOT enough. No mention of INPUTING!
19 of 37

Trust 4: Constructive Trusts

Subsquent case law following Lloyds Bank v Rossett:

How do we tell the correct evidence?

4. Springette v Defoe: 

Subsquent case law, is based on the 2 ways established in Lloyds Bank. Springette held, in the absence of any express agreement, arrangement or understanding, the principles of resulting trust will apply. This case supports the idea that an understanding must be express (as per criteria 1 from Lloyds). The wife contributed 75% so was given 75% back on resulting trust analysis. 

5. Clough v Killey:

This case confirmed that any arrangement (common intention to share the beneficial interest) must be expressly reached but it doesn't matter if before, during or after aquisition. (Doesn't have to be BEFORE as in Lloyds). 

20 of 37

Case law before Lloyds:

Case law before Lloyds: (exceptions?)

1. Eves v Eves: Lord DenningFacts:Case anomoly to Lloyds but can't ignore. Janet and Stuart Eves were not married but lived as if were husband and wife and had 2 kids. House bought soley by Stuart and in his name only. House was in bad repair and Jane did lots to improve such as smashing up concrete all by herself. Stuart said he didn't put house into her name because she was under 21 and lied. Janet left as Stuart was violent. Decision: Denning gave leading judgement.Held Stuart was constructive trustee for Janet 75%/25%. Fair outcome but doesn't sit well in law,was no express agreement for the beneficial interest but he did lie to her and she relied on to her detriment but his intention was clearly to have all the house for himself and the case was decided CONTRARY to intention!!!!! Denning held Stuart should be judged by what he told her NOT intent. 'NEW MODEL"

2. Grant v Edwards: Unmarried couple. Mr Edwards & his brother bought house and held legal title. Mrs Grant had a child. Edwards lied and said couldn't put her name on house as was going through divorce. Grant claimed an interest and court held there was a common intention that Grant would have an interest or he wouldnt of lied. 'the relevant intention of each party is the intention which was reasonably understood by the other party.'

Grant affirmed Eves. Cases of deciet which show lied so should have interest! Objective!

21 of 37

HEAD 1 Case law after Lloyds:

Case law after Lloyds:

1. James v Thomas: Miss James worked in house at his business unpaid for 15 years and all profits went direct into Mr Thomas' sole bank account. All outgoings paid from his bank account. Assurances made by Mr Thomas that she would be 'well looked after'. Improvements made to property but courts held no constructive trust as the improvements only to enhance the living conditions.Followed Lloyds case. HARSH decision

2. Stack v Dowden

What has actually been agreed to/What is your share? HEAD 1

Lloyds Bank v Rosset: An understanding that the parties would share the practical benefits of occupying the matrimonial home whoever owns it is: 'something quite DISTINCT from sharing the beneficial interest in the property asset which the martrimonial home represents'.

THIS IS VERY STRICT. A common intention to raise kids in the home does NOT show intention to share the beneficial interest'. 

22 of 37

HEAD 1 Case law after Lloyds:

What has actually been agreed to/What is your share? HEAD 1

 2. Layton v Martin: Mistress 29 and unmarried met deceased in 1967. He was married and 50 whose wife was in poor health. By letter the deceased asked the mistress to live with him offering "what emotional security I can give, plus financial security during my life and financial security after my death: He implied and mistress understood that the deceased would marry her after his wife died. She provided wifely services and was paid a salary of £100 p.m. rising to £120 p.m. & £30 p.w. housekeeping. In 1977 the deceased's wife died but he did not marry mistress. He made provision for her in his wills by way of £15,000. The deceased cut mistress out of the will and gave her a written notice of dismissal in 1980. They parted though, without rancour and kept in touch until the deceased's death in April 1982. In 1983 mistress made a claim for financial provision based on the contents of the 1975 letter contending (i) that the deceased's representations amounted to a constructive trust; (ii) that under the doctrine of proprietary estoppel equity would subject the estate to such beneficial interest in her favour and would give effect to the representation upon which she relied and (iii) that there was a concluded contract between them. Held, dismissing mistressess application, that P had made no relevant contribution to the acquisition or preservation of any asset of the deceased.The 1975 letter was no more then a statement of intent.

23 of 37

Head 1 Lloyds Bank Constructive Trusts

Lloyds Bank head 1 for express common intention to share beneficial interest:

Once the claimant has established an express common intention to share the beneficial interest, must ALSO show that they RELIED on this to their DETRIMENT....

Common intention to share ben int + reliance to detriment 


1. Midland Bank v Dobson: Common intention on its own is not enough, need reliance!

2. Gissing v Gissing: detrimental relieance on its own is not enough. Cooking or DIY NO!!!!

3. Eves v Eves: woman smashing up concrete and carrying skip not usual and clearly detrimental reliance for beneficial interest. Denning: inequittable to allow to deny ben interest

4. Clough v Killey: physical work she did represented a contribution similar to Eves case

5. Hammond v Mitchell: express agreement found. Full support to new business that could have resulted in loss was detrimental reliance. Very leniant decision. Support = sufficient. But how could she have 'risked' the home if she was never entitled?

24 of 37

HEAD 1 Lloyds Bank Constructive Trusts

Lloyds Bank head 1 for express common intention to share beneficial interest:

Grant v Edwards: per Nourse LJ:

'What was required was conduct that she could not reasonably be expected to embark upon UNLESS she was to have an interest in the house.'

25 of 37

Head 2: Constructive Trusts

Head 2: INFERRED Common Intention Constructive Trusts:

Similar to presumed resulting trusts but will give much larger share after Stack

Can argue a. contributed even if 10% or b. contribution not meant to be proportionate as with presumed resulting trusts (get back what put in) and entitled to 50/50!

This 2nd head derives from Lord Bridge in Lloyds Bank v Rosset & look at:

1. Was there a contribution to purchase price?

2. Was there a contribution to mortgage payments? (nothing less will suffice)

If can meet one of the above 2, the courts will rely on conduct and infer common intention constructive trusts. It will be assumed that the contributor would not have contributed unless they expected an interest.

Sounds like presumed intention resulting trust though? Was Lord Bridge confused?

POST Stack v Dowden, presumed resulting trusts are VERY limited!!!!

26 of 37

Resulting Trust vs Constructive Trust

1. Midland Bank v Cooke: pre Matrimonial Causes Act 1973 illustrive only. Mr & Mrs married in 1971 and house conveyed into his sole name. He used his savings, took out mortgage and remainder of purchase price gift of £1k from his parents to both of them. Contributed to purchase price because she used part of gift i.e. £500. Resulting trust would mean she gets back what she put in i.e. £500 equiv of 6% ownership but if constructive trust could get 50%. Constructive trust more flexibility,courts to decide and look at how parties intended share. Resulting trust less flexibility as get back what put in. In 1978, new mortgage taken out with Midland as security to form his business. She agreed to postpone future rights against the bank and house then transferred to both names. No discussion to beneficial interest. Mr defaulted in 1987 on mortgage payments and bank sought repo. Mrs given up rights before house put into both names but she claimed undue influence AND 50% entitlement. 1st instance, held undue influence yes and entitled to 6% back (the £500) on resulting trust. She successfully appealed to Court of Appeal got 50%. CoA held in accordance with Gissing,Pettitt,Grant cases, as established AN INTEREST and held courts to look at all circumstances. Court to look for common intention, was there evidence to give share of 50% rather than what contributed i.e. 6%. Courts free to choose resulting trust or constructive trust. Court not bound to deal with strict basis of trust arising only from cash contributions to purchase price and free to attribute an intention to share the beneficial interest in different proportions. Not limited to direct contributions. Drake v Whipp affirmed decision. 1st entitled to 19% resulting then constructive trust given 30%.

27 of 37

Inference Common Intention Constructive Trust

2nd head:

Inference Common Intention Constructive Trust

Lloyds v Rosset: Lord Bridge clear from this case that the conduct that looking for in first place for inference of common intention is contribution of finance!!!! This is criticised for not taking into account modern day situations.

Stack v Dowden: Baroness Hale thought OBITER that Rosset 'may have set the hurdle too high in certain respects' and Lord Walker thought the time had come to take a wide view of what is capable of counting as contribution towards the aquisition of a home. 

Morris v Morris: Court of appeal held in absence of contribution, no common intention constructive trust can be found. Court post Stack noted that Lloyds v Rosset per Lord Bridge obiter comments stand, despite the obiter comments in Stack.

28 of 37

Head 2: Inferred CICT Quantification

1. Le Foe v Le Foe: Margaret had not made direct contributions but didn't defeat inferred common intention constructive trust and the contributions were enough to create an interest.Husband had paid the mortgage whilst the wife paid for the domestic expenditure. Husband fraudulently raised 2 mortgages and failed to keep payments up. What share? Resulting trust use the mathamatical approach and Constructive Trust use the holisitic approach. The property was ordered to be sold but she was given 50% i.e. £500k.

 2. Oxley v Hiscock: LJ Chadwick: Chadwick attempted to do what was fair but is it the job of the judges to do what is fair? Couple lived together unmarried for 20 years. Last house lived in was solely conveyed in his name but both contributed. When separated, Mr gave £36k to Mrs which was proportionate to the share she had put in. At first instance, she succeeded for 50% claim of home. Chadwick in Court of Appeal noted that common intention to share didn't mean had to be equal and if no evidence of the extent, the amount awarded would be what court found fair. Court awarded 40% and 60% to him. Ignored the established principles and inferred what was fair. This was the WRONG decisionHe said: 'the time has come to accept that there is no difference in outcome, in cases of this nature, whether the true analysis lies in constructive trust of proprietary estoppel'.

Article: Thompson 2004, Constructive trusts, estoppel and the family home

29 of 37

Stack v Dowden: legal title in joint names

Joint legal title but No declaration as to beneficial interest:

Different to Lloyds as dealt with 2 living together but legal title in 1 name. Stack deals with when legal title is in both names but no declaration as to beneficial interest to be held

Pre Stack v Dowden: absent express dec as to beneficial interest but in joint legal names, would be held beneficially in shares proportionate to contributions of purchase price.

Stack v Dowden: starting point = where there is a joint legal ownership there is joint beneficial interest/ownership (per Baroness Hale). Equity follows the law maxim applies! To displace this 'joint beneficial interest' must show evidence. 

Stack v Dowden: Facts/Court of Appeal decision: Deb and Barry unmarried with 4 kids. Deb bought house with £8k deposit and £22k mortgage taken out in her sole name which she alone paid back. Husband carried out great improvements and house sold to buy new house. Deb contributed 65% and mortgage taken out in both names for remaining with endowment. Barry contributed 27k and Deb 35k. Finances kept very separate. Deb paid all bills as Barry not good with £. Relationship broke down in 2003. What share does he have? He claimed 50% with Chadwick in CoA (following bad decision) who applied Oxley and awarded what was fair 35%. Outcome upheld by HoL's but reasoning different. 

30 of 37

Stack v Dowden: House of Lords

Stack v Dowden: House of Lords decision

'A conveyance into joint names indicates both legal and beneficial joint tenancy unless contrary proved'

Deciding whether beneficial interest intended to be 50/50?

i. Express          ii. Infer          iii. Inpute (make up/reintroduced from Pettit)

Presumed Intention Resulting Trust:

Baroness Hale casted doubt on usefullness of resulting trusts and set the scene for abolishing it and uses Gray & Gray to support her proposition. 

'The search is to find the parties' shared intentions, actual, inferred or imputed, with respect to the property in light of their whole court of conduct in realtion to it.'

In joint names case, the q is 'did the parties intend their beneficial itnerests to be different from their legal interests'...

Lord Neubeurger DISSENTED! Agreed with outcome but NOT reasoning....

31 of 37

Stack v Dowden : Baroness Hale

When trying to displace the starting point of joint legal title = joint beneficial interest:

1. Discussions

2. Reasons why joint names

3. Purpose i.e. kids?

4. Finances - new and subsquent

5. How finances arranged

6. How the outgoings are paid

These cast light on how the beneficial interest was intended to be shared as historically these things did not count for NOTHING!!!! i.e. cooking and DIY etc held not to contribute!

'In law, context is everything' (commercial vs residential are different contexts!)

The fact that the courts may now, according to Hale, IMPUTE common intention is worrying as judges are not elected and it is not democratic to have judges deciding what's fair BUT Parliament were not willing to legislate as complex area!!!

32 of 37

Post Stack v Dowden

Stack v Dowden welcomed greatly by family lawyers but not orthodox lawyers:

1. Adekunle v Ritchie: Stack v Dowden reasoning applied to mother and child relationship. Mother provided £ for son, legal title in joint names. Ben interest post Stack 50/50 but before would have been al hers!

2. Fowler v Barron: Unmarried couple. She was 17 and he was 47 and together for 23 years with 2 kids. House in Bognor in joint names but no declaration as to beneficial interest. Mr had paid deposit, mortgage of £35k in joint names, Mr paid balance of purchase price from his original house. He paid mortgage payments from his pension and couple never had joint bank account. He paid all bills and everything else. Post Stack = joint 50/50 beneficial interest. Held claimant not entitled to beneficial interest. Concerntrated on how purchase price provided which was NOT how Stack was decided but Stack was only in Court of Appeal at time of Fowler. Case went to Court of Appeal. Discussed whether judge erred in deciding financial contributions? YES! Stack affirms should look at intentions of parties in respect of conduct and not financial!!! Court of Appeal struck down the 1st judge for not understanding Stack. Mr had to show that shared intention was not 50/50. Court of Appeal found that she was entitled to 50/50 and financial contributions not relevant. 

33 of 37

Jones v Kernott: first instance and CoA

Post Stack: Jones v Kernott:

Facts: Mrs Jones and Mr Kernott met and she purchased a caravan to live in for £3k by borrowing £ from bank. Mr moved in and then caravan sold for £8k. They later bought house together for £30k. She contributed £6k from sale of caravan and mortgage taken out for remaining. Legal title in joint names but no discussion to beneficial interest. Now had 2 kids. He was an ice cream man and she was a hairdresser. In winter he claimed benefits. She paid all the outgoings but he paid £100pw and built extension on house to increase value. Separated in 1993. She reamined in property and assumed all responsibility for outgoings and to repair extension he built and look after kids. He offered nothing and she asked for nothing from him. He bought a house for £57k and she sold endowment to give a deposit to him. In 1995 the £30k joint house was put on market and never sold. In 2006, 12 years after he had left, he came back asking for his 50%. In 2008, he tried to sever tenancy and she claims she was the sole beneficiary owner and if not she should have share of his new £57k house (later dropped). When got to court, £30k house worth £200k+. Judges had to look at effect of Stack. Had the intention altered 12 years later so the beneficial interest altered? Courts couldn't take into account conduct as they hadn't seen each other for 12 years. Court decided to do what was fair: her 90% and him 10%. NOT what Stack established to do! Decision reveresed in CoA with sympathy for Mrs but Stack stood: joint legal title = joint beneficial interest unless show the contrary.50/50. Supreme..

34 of 37

Jones v Kernott: SUPREME COURT

Jones v  Kernott : Supreme Court

Went to Supreme Court quickly after Stack to review Stack decision. Court unanimous that should be 90/10. Equty does follow the law (joint legal=joint beneficial) but that resulting trust had not role in joint domestic cases. Inference or impute was mixed decided!

Lord Walker, Collins & Lady Hale: supported inferred common intention. Court did not have a problem like the Court of Appeal with conduct of not speaking for 12 years as this in itself was sufficient for evidence AGAINST 50/50.

Lord Kerr and Wilson held that the intention should be INPUTED and court should be open about what they are doing i.e. stating no conduct = no evidence!!!!!! Lord Wilson and Kerr making the law up? Good outcome for Jones but what about when we don't like the decision or think its fair?

Hale in Stack, didn't have to resort to imputing, only inferring however should allow the courts to hold right to impute. Perhaps a balance of law vs fairness = impute if needed?

Therefore LJ Chadwick's 'fairness' test in Oxley seems to find its way into the court in Jones case BUT in a more structured interpretation and correctly!

35 of 37



1. Where property in 1 sole name, Lloyds v Rosset is starting point to decide if they have AN interest by express or contributions to purchase price.

2. Where property in joint legal names, starting point = 50/50. But then look to common intention as to either: express, infer or impute.

36 of 37

Academic Commentary

Academic Commentary:

1. Piska, N: 'Intention, fairness and the presumption of resulting trusts after Stack v Dowden 2008

2. Etherton, 'Constructive Trusts: a new model for equity and unjust enrichment

3. Swadling, 'The common intention resulting trust in the House of Lords: an opportunity missed

4. Law Commission: Cohabitation: The financial consquences of relationship breakdown: no 307:

 http://www.official-documents.gov.uk/document/cm71/7182/7182.pdftion: The Financial Consequences of Relations

37 of 37


No comments have yet been made

Similar All resources:

See all All resources »See all resources »