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Constructive Trusts Essay 1st class $9.94
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Constructive Trusts Essay 1st class

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  • Course
  • Land Law
  • Institution
  • Cardiff University (CF)

“The current law on constructive trusts of the family home provides the courts with flexibility for determining the division of property ownership when unmarried cohabitees separate, and achieves fair outcomes. Many would agree that legislative intervention is no longer necessary.”

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Document information

  • April 23, 2021
  • 4
  • 2018/2019
  • Essay
  • Unknown
  • A+

Subjects

  • trusts
  • constructive trusts

Written for

  • Cardiff University (CF)
  • Cardiff University
  • Land Law
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“The current law on constructive trusts of the family home provides the courts with flexibility for
determining the division of property ownership when unmarried cohabitees separate, and achieves fair
outcomes. Many would agree that legislative intervention is no longer necessary.”

A constructive trust is a particular form of an implied trust. It arises when a court ‘construes a set of
circumstances’1 and infers an equitable trust to address an imbalance between the parties. This essay will seek to
explore the current law on constructive trusts, evaluate whether that law can be deemed fair and consider
possible future advancements in this particularly tumultuous area.

Unlike express trusts, the creation of an implied trust does not have to be in writing2; such formalities in
domestic situations are accepted to be, realistically, inconvenient. In the absence of express agreement, the court
may infer a common intention from the conduct of the parties. The duty of the court falls into two stages. The
first of these is establishing whether there was indeed a common intention that the claimant should be entitled to
have a beneficial interest in the property, and the second involves the quantification of shares once this beneficial
interest is established. Unlike resulting trusts, in which quantification is based off direct financial contributions
alone and is purely mathematical, constructive trusts take into account a number of factors. Thus constructive
trusts can be seen as leading to fairer outcomes than their resulting trust counterpart; a parties’ actions as a
whole will be taken into account.

The principles in determining these beneficial interests have foundations in the House of Lords decisions in
Pettitt v Pettitt3 and Gissing v Gissing.4 These cases established that firstly; a common intention constructive
trust exists where there is an agreement or bargain between parties, and the claimant has acted to their detriment
in their reliance on that agreement.5 Crucially, a causal link between party A’s assurance and B’s detrimental
reliance is required, seen in actions such as B quitting a job in the mistaken belief that he or she would be
entitled to a beneficial interest in the family home.6 Lastly, the actions of the defendant must be unconscionable;
the court will therefore seek to achieve proportionality between the parties whilst imposing the “minimum equity
to do justice to the plaintiff ”.7 These factors all give rise to flexibility in the initial creation of a constructive
trust; it is not difficult to establish each factor as there is a huge variation in behaviour that is seen by the courts
as inequitable, and bargains and agreements are commonly made between couples.

There is a key distinction between the way the courts address both issues in sole name cases and joint name
cases. In a sole name case, the claimant must establish that it was intended that he or she would have a beneficial
interest in the family home, achieved by “evidence of the parties’ actual intentions, express or inferred,
objectively ascertained”.8 However, in joint name cases, there is a presumption that the parties’ did hold the
beneficial interest equally as beneficial joint tenants; thus the question becomes “did the parties intend their
beneficial interests to be different from their legal interests and if so in what way and to what extent?”9

Naturally, there is debate as to whether the way in which the courts decide such matters is rational and
consistent. It may be argued that the process of determining shares is unfair due to its illogical nature - the
imposition of “constructive trusts is understood to be at the discretion of the judge, who has liberty to consider
whether or not to create new property rights on a case-by-case basis.”10 In fact, Bruce Collins QC went as far to


1 B Collins QC, ‘Trusts & Trustees’, Vol. 20, No. 10, December 2014, pp. 1055–1068.

2 LPA 1925, S53(2).

3 [1970] A.C. 777.

4 [1971] A.C. 886.

5 ibid.

6 S Wilkin Q.C. and K Ghaly, Wilken and Ghaly: ‘The Law of Waiver, Variation and Estoppel’, 3rd ed., (Oxford 2012).

7 Crabb v Arun District Council [1976] Ch. 179, 198.

8 Thompson v Hurst [2012] EWCA Civ 1752; [2014] 1 F.L.R. 238 per Lord Etherton at [22].

9 Stack v Dowden [2007] UKHL 17 per Baroness Hale at 66.

10 Crossco No. 4 Unlimited v Jolan Ltd. [2011] EWCA Civ 1619 at [84].

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