(Student achieved 72% (a first) overall in this Land Law module.) This covers the topic of constructive trusts (Learning Cycle 4) in great detail, going through the process of establishing a constructive trust step-by-step in a way that's extremely easy to understand starting with establishing inte...
This concerns the problem of informality.
We will look at…
The issue (i.e., how and when does it arise? How does the law respond?)
The first question: who owns what?
The second question: who owns what share?
Case analysis
The Issue
The everyday problem is that normal people are not land lawyers (instead, they’re
emotionally charged).
• Two or more cohabitants buy a place together.
• Each makes a financial or other contribution to the property.
• They fall out – law is expected to deal with the fall out.
How does land law deal with the problem of informality?
Remember the exceptions to the formality rules:
S.53(2), LPA 1925: “This section does not affect the creation or operation of resulting,
implied or constructive trusts”.
S.2(5), LPMPA: “…and nothing in this section affects the creation or operation of
resulting, implied or constructive trusts”.
Equity’s Solution
Using constructive trusts as a mechanism of dealing with this problem is called...
The ‘new model’ constructive trust
This was first developed in the 1950s/60s, and is still in development.
This solution has derived from equity.
Its basis is the COMMON INTENTION of the parties at acquisition of the land.
-But it doesn’t only work on common intention: there has to be some form of
DETRIMENT; it’s like how contracts with offer and acceptance need consideration
(for land lawyers, detriment is really important).
-This is the area where judicial descriptions of what constitutes detriment bring the
English legal system into disrepute.
It also requires common intention regarding QUANTIFICATION.
It’s important to recognise that if the agreement is written down, we don’t need to get into
the new model of constructive trust- if written down, you’re complying with S.53(1), LPA
which will govern any dispute.
,Significant problems from this...
Problem of valuation
-Why do people do things? E.g., people look after their kids usually because they
love them, not because they want an interest in the property- the fact is people do
things for all kinds of different reasons: a problem in equity.
-How do we value home labour? I.e., the ordinary domestic tasks- these become
problematic for us, as to why they do this.
-What do we do when people don’t talk about ownership?
The First Question: Who Owns What?
Our starting point is that equity follows the law: who owns the legal estate?
The starting presumption; either:
If one party holds the legal estate, they hold the whole of the beneficial interest; or
If more than one party holds the legal estate, the beneficial interest is shared
between them in equal shares.
However, the constructive trust is a way of disturbing this starting presumption:
Where there is a sole legal owner, the non-owner must establish they have a
beneficial interest.
Where there are two or more legal owners, the beneficial interests have been
established – go to the second question (i.e., about how much each has).
So, how do we disturb the starting presumption when dealing with sole legal owners?:
STAGE 1- Finding the Common Intention
The Rosset questions –
1. EXPRESS COMMON INTENTION
-Did the parties come to an express agreement, arrangement or understanding as to the
beneficial ownership of the property at the time of acquisition or exceptionally later (as said
by Lord Bridge in Rosset) (assuming that there’s nothing in writing; if there is, that writing
will govern the situation)?
When is acquisition?
-Arguably, ongoing (in cases where the parties have a mortgage, as they’re
constantly paying it and when it’s paid off it gets more of the interest in the property
for themselves).
Did the parties discuss the beneficial ownership at all?
-This is really at the root of it: if they did, then perhaps there is express common
intention.
What if they did, but the legal owner made an excuse as to why the non-owner was
not “on the deeds”?
-Excuses include “you’re too young”, “it’ll affect your divorce settlement/tax”
-The “but for” problem (i.e., you would have been on the deeds but for [insert
problem]); therefore, we assume that there is a common intention.
, -However, that’s not always the case, as in Curran v Collins [2015] (really important
case on whether this always gives rise to an express common intention or
otherwise).
2. If you can’t find an express common intention, we might be able to INFER one.
From what can we infer a common intention?
Contributions to the purchase price (Lord Bridge said direct contribution would “readily
infer a common intention”); but...what is a contribution to the purchase price?
1) Direct Contribution:
-To the deposit, transaction fees, mortgage, capital.
2) Indirect Contribution:
-Paying bills to enable the legal owner to pay the mortgage?
The question we have is, are these indirect contributions good enough? It may be
depending on the size of those contributions; but we’re not entirely sure yet.
What about looking after children while their partner (legal owner) works to pay for
the mortgage? We’re not sure, but on one hard view it’s not enough (this derives
from Rosset but also to some extent from Burns v Burns).
The Burns Problem: in Burns v Burns, which involved a common law marriage (dealing with
cohabitants who aren’t married):
The couple were in a lengthy relationship (over 20yrs).
Mrs Burns brings up the children and does all of the home labour.
Mr Burns is sufficiently well off and even gives Mrs Burns an allowance.
The relationship ends, the question becomes ‘is Mrs Burns entitled to an interest in
the property?’.
The Court of Appeal said NO, because there was no express common intention, and her
contributions to the property were insufficient to give rise to the inference of a common
intention.
-This case has never been overruled; however, it’s not a great case for us because Mr Burns
is well off: this is a problem with indirect contributions, as he didn’t need Mrs Burns to make
any form of contribution (e.g., paying bills) because he was sufficiently well off.
-However, it’s representative to how the law responds.
STAGE 2- The Detriment (the plus factor)
Common intention on its own is not enough; there must be some detriment.
What is sufficient?
Express common intention:
Possibly (as discussed in Grant v Edwards); acts on which the non-legal owner
wouldn’t have been expected to embark but for gaining an interest in the property.
What does this look like? This is where value judgements come in of what people are
expected to do (e.g., “domestic tasks are something we all have to do, so it should be
more than that”).
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