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Equity and Trusts Law - Common Intention Constructive Trusts.
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Comprehensive notes on Equity and Trusts Law in the UK - Common Intention Constructive Trusts.
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Equity and Trusts Revision NotesTHE COMMON INTENTION CONSTRUCTIVE TRUST (‘CICT’)
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A) CONTEXT
THIS TOPIC IS IN THE CONTEXT OF COHABITING COUPLES.
What is the difficulty in this context?
→ When a relationship breaks down, you have two people and one house. You cannot split up the house and have each
take a half. There is also a lot of fraught regarding family homes given that they are often the most expensive
assets owned. Very often when couples break up, they want to sell them home but are not able to since it is the
residence of their children too.
→ These complications mean that you need some sort of legal apparatus which says that for instance ‘you two have
lived in this household for X number of years, how do we split this property up.’ It is not fair anymore to decide on
the basis of contribution (RT) because it is very hard to say after many years how much of contribution has been
made and who has made those contributions.
Example: Couples could have had a joint bank account, or one parent may have given up their jobs to look after the
children.
How have the courts dealt with this issue in the past?
→ RTs were used to determine shares in the matrimonial home prior to Pettitt v Pettitt [1969] - which arises based on
the contribution to the purchase price.
Example: Say one contributes 60% and the other contributes 40% then the former will own 60% per the resulting trusts.
→ Problems with the RT analysis in family contexts:
Outdated: The courts back then were dealing with heterosexual couples, and before the 90s, what would happen
is the husband would go out to work and the wife will stay at home (to raise the children). This is no longer the
case. The problem with applying the resulting trusts concept here is that the man who would have contributed to
most of the purchase price and the woman who spent all her life bringing up children, not contributing to much of
the purchase price (despite her household contribution which does not form part of the resulting trusts analysis).
Hence, under the resulting trust analysis women were often ending up with nothing.
Does not allow for change in interest: With resulting trust, the trust crystallises at the moment of purchase. Hence,
based on whatever contribution was made at that moment, the interest will crystallise. This is not ideal when
couples are together for 30 years as there is an enormous flow between what happens. For instance, one of them
might be sick for a very long time, and the other covers the gap. Women go into pregnancies - here men may
have to pull in some more weight because pay during maternity leave is not enough.
Complex relationships: The relationships that we will look at, when breaking down, will not immediately result in
the sale of the house. The question is what if one of them pays for child support? Does it tilt the balance of the
relationship? Resulting trusts also could not deal with changes and complexities.
How did courts move away from the application of RT in a domestic context?
→ In the 70s and the late 60s, there were two very important landmark cases: Pettitt v Pettitt and Gissing v Gissing. The
courts in both Pettitt and Gissing introduced these concepts of common intention constructive trusts.
STRUCTURE: A) CONTEXT B) A BRIEF ON CICT C) SOLE OWNERSHIP C) JOINT OWNERSHIP D) COMMERCIAL CONTEXT E) DISSENT/CRITICISM OF STACK/JONES F) ALTERNATIVE APPROACHES
,Equity and Trusts Revision Notes
→ The courts highlighted a set of presumptions that are really outdated. In Pettitt the PoA (power of attorney) was
raised in argument: ‘The judges who first gave effect to [the PoA] must have thought either that husbands so commonly
intended to make gifts in the circumstances in which the presumption arises that it was proper to assume this where
there was no evidence, or that wives' economic dependence on their husbands made it necessary as a matter of
public policy to give them this advantage. I can see no other reasonable basis for the presumption. These
considerations have largely lost their force under present conditions, and… the strength of the presumption must have
been much diminished’ (per Lord Reid).
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STRUCTURE: A) CONTEXT B) A BRIEF ON CICT C) SOLE OWNERSHIP C) JOINT OWNERSHIP D) COMMERCIAL CONTEXT E) DISSENT/CRITICISM OF STACK/JONES F) ALTERNATIVE APPROACHES
, Equity and Trusts Revision Notes
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B) WHAT are CICTs?
Based on the express or implied intentions of both parties:
→ Common intention constructive trusts arise on the basis of intention of the parties.
Example: if a couple decides that there will be a 50:50 split, then the property will be split accordingly.
What is the problem with this approach?
→ However, couples in a loving relationship often do not make such decisions. Hence, we are often looking at implied
intentions of the parties - this is executed by way of looking at the conduct of the parties, as emphasised by the
quotation below by Lord Diplock. Hence, this demands the courts to look into a complicated sets of facts and a lot of
the confusion is regarding what can be considered relevant and what does it mean if it is relevant.
Gissing v Gissing [1971] AC 886: ‘the relevant intention of each party is the intention which was reasonably understood
by the other party to be manifested by that party's words and conduct notwithstanding that he did not consciously
formulate that intention in his own mind or even acted with some different intention which he did not communicate to the
other party’ (Lord Diplock).
→ When you set up a home with your partner, you are unlikely to be thinking of the breakdown of that relationship as
well as legal technicalities of home ownership. Hence, the common intention that the courts are often trying to imply
are actually never really there.
Pettitt v Pettitt [1969] 2 W.L.R. 966: ‘In many cases…the true inference from the evidence is that at the time of its
acquisition or improvement the spouses formed no common intention as to their proprietary rights in the family asset. They
gave no thought to the subject of proprietary rights at all’ (Lord Diplock).
Justice of property rights?
→ Basis in unconscionability:
Gissing v Gissing [1971] AC 886: The trust arises ‘whenever the trustee has so conducted himself that it would be
inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired. And he will be held so
to have conducted himself if by his words or conduct he has induced the cestui que trust to act to his own detriment in the
reasonable belief that by so acting he was acquiring a beneficial interest in the land.’ (Lord Diplock).
Explanation: The foundation of a CICT is common intention, unlike resulting trusts (entails a sort of mechanical
quantification). Where there is intention for CICT, it works to bring about the trust because the intention of the parties
make it inequitable for the legal owner to exclude the interests of the other party. So, it is the unconscionability that gives
rise to the CICT.
! This creates a tension between objective facts of evidence and judges’ subjective notions of fairness.
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STRUCTURE: A) CONTEXT B) A BRIEF ON CICT C) SOLE OWNERSHIP C) JOINT OWNERSHIP D) COMMERCIAL CONTEXT E) DISSENT/CRITICISM OF STACK/JONES F) ALTERNATIVE APPROACHES
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