Summary Trusts of Family Property - Equity & Trusts Law (LLB)
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Course
Equity And Trust
Institution
City University (City)
Trusts of Family Property Summarised Notes for the Equity and Trusts Law module, LLB, at City, University of London - can of course be used for other universities as well! Should be used with the full bundle of notes!
Overview
Covers ownership of home in all circumstances except divorce between married people (has its
own statutory code), covers ownership of unmarried on separation e.g. homosexual
Follows Jones v Kernot judgement from Lady Hale and Lord Walker (plus Lord Kerr agreed most
part), Jones v Kernot not overall earlier cases so still important
Approach taken in Jones v Kernott: (1) if only 1 person is on legal title of property then that
person is presumed to be sole equitable owner, whereas if 2 or more on legal title then
presumed to be joint owners in equity of property, (2) these presumptions can be rebutted by
evidence of ‘common intention’ was something different
Common intention is organised under 5 headings
1) Decision in Lloyds Bank v Rosset in which a common intention constructive trust is created
either (a) when parties form an agreement with an arrangement/understanding a right in
property before date of acquisition in which they suffer some detriment or (b) when a party
contributed to purchase price or mortgage instalment – approach ignored in most later cases
2) Where on resulting trust principles, parties contributed to purchase price, including by way of
reduction in value of property by statutory discount – ‘balance sheet approach’
3) Court will conduct survey of entire course of dealings between parties and consider more
factors than mere contribution to purchase price – ‘family assets approach’
4) Some courts focus on avoiding ‘unconscionability’ suffered – ‘unconscionability approach’
5) Proprietary estoppel grants equitable interest to person induced to suffer detriment in
reliance on a representation that would acquire some rights in property remedial doctrine
where court award any number of rights e.g. freehold or equitable compensation in money
Principles set out in Stack v Dowden + Jones v Kernott
Jones v Kernott mainly reinterprets Stack v Dowden and sorts out issues arising from it
Position after Jones v Kernott:
o Courts must examine legal title held at Land Registry, if legal title in 1 person then presumed
sole owner of equitable interest , if in more than 1 person then presumed to be owned in
common of equitable interest merely presumptions can be rebutted
o Can rebut by showing common intention was something different
o Case law shows different views as to what is meant by ‘common intention
o Lloyds Bank v Rosset held restricted to explicit agreements between parties as to ownership or
contribution to purchase price or mortgage repayments over property
o Midland Bank v Cook [1995]: court should survey entire course of dealings e.g. children, utilities
o Cox v Jones [2004]: ensure claimant not treated unconscionably
o If evidence is not conclusive of parties’ common intention, Lady Hale and Lord Walker in Jones v
Kernott state consider what would be ‘fair’ between parties in light of evidence
Aim is claimant in each case is to establish as large an equitable share in home as possible
Structure in problem/essay Q*
Decision of HOL in Lloyds Bank v Rosset, balance sheet cases based on resulting trust, family asset
‘survey of entire course of dealings between parties’, cases on avoidance of unconscionability and PE
So many different ways common intention has been viewed in case law (analysis point)
Simplest case is where an express trust can be declared over the equitable interest in property
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, EXPRESS TRUSTS OF HOMES
Express declaration of trust dealing with whole equitable interest in the land – can arise under
terms of conveyance of property to co-owners of express declaration between parties
Goodman v Gallant [1986]: conveyance included express trust which allocated entire equitable
interest, provided parties be joint tenants, they gave differing financial contributions held
express trust decisive in all interests so took 50/50
Where there is an express declaration of whole equitable interest, no need to consider any
surrounding circumstances – only exception is under principle of Saunders v Vautier where
absolutely entitled beneficiaries had directed the equitable interest for trustee deal another way
For there to be a valid declaration of trust over land, must comply with s.53 LPA 1925:
‘declaration of trust for any land must be proved by some writing signed by some person able to
declare such trust or by will’ – failure to comply with requirements= no express trust
S.53(2) LPA 1925 allows no formality for constructive, resulting or implied trusts
RESULTING TRUSTS – as emergence of common intention
Traditional resulting trust principles: where a person who contributes to purchase price of the
property, resulting trust takes effect at date of creation where person contributes to purchase
price, will be entitled to proportionate beneficial interest on resulting trust principles, the right is
proprietary and not merely personal (right in rem not merely right in personam)
Resulting trust takes effect on date of purchase, and does not take into account parties’ change
of circumstances e.g. two parties agree one pays purchase price other pays mortgage
repayments, party paying mortgage becomes ill, other party then also pays mortgage price,
resulting trust too rigid that cannot account for this→ need constructive trust
In Jones v Kernott, held resulting trusts should not be used to cases relating to the home
Beginning of change (for resulting trusts):
o Pettitt v Pettitt [1970]: started change in allocation of equitable interests in family home under
resulting trusts principles, Mrs Pettitt left in will entire beneficial interest in cottage, husband
renovated costing £730 + agreed increased value by £1k, he claimed got equitable interest, he
not contribute to purchase price + wife left it in will held works too minor to be entitled to
equitable interest (minor works) claim failed, only contributions or big contributions
Birth of common intention: leading case Gissing v Gissing [1971] (use as starting point)
o Gissing v Gissing [1971]: Mrs Gissing married, couple bought house registered in husband’s
name, purchase price provided by mortgage in husband’s name, Mrs Gissing spent £220 on
furnishings held no beneficial interest as no contribution to purchase price, expending money
on small items, court considered common intention and stated impossible to impute a common
intention where no evidence of express agreement + common intention not loosely defined
CONSTRUCTIVE TRUSTS – get equitable interests by CONDUCT or AGREEMENT
Looking at informal common intention to allocate rights constructive trusts give courts more
leeway in declaring interests of the parties uncover + reflect real intentions
Leading case of Lloyds Bank v Rosset [1991] – common intention constructive trust
Lloyds Bank v Rosset [1991]: derelict farmhouse in husbands name, house renovated as a joint
venture, his wife oversaw all building work, she was left to believe property acquired without a
mortgage but he got it with a mortgage in his sole name, default, bank want repossession, she
claimed overriding interest basis of actual occupation held no equitable interest as insufficient
evidence of common intention + minor decorations
Common intention by AGREEMENT: some agreement between parties, some in writing, most by
conversation, agreement not satisfy express trust under s.53 LPA 1925 so implied
Need clear evidence of an agreement, arrangement or understanding
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