Exam Interests Family Home Trusts PDF

**[Co-ownership Family Interests EXAM ]** **[Implied co-ownership ]** **Determining interests in the family home:** Express Trust OR The implied trusts: 'the purchase money resulting trust' & 'the common intention constructive trust' **Implied trusts:** - Exception to LPA 1925 s53(1)(b) & (...

**[Co-ownership Family Interests EXAM ]** **[Implied co-ownership ]** **Determining interests in the family home:** Express Trust OR The implied trusts: 'the purchase money resulting trust' & 'the common intention constructive trust' **Implied trusts:** - Exception to LPA 1925 s53(1)(b) & (2): a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will - Related to interest acquired in purchased property (usually family home) but separate to Matrimonial Causes Act 1973 -- this gives the family courts wide power to adjust property rights on divorce - Implied trust helps to identify how the joint owners can split their interests - Need to distinguish between RESULTING and CONSTRUCTIVE TRUST **Resulting Trusts:** - Arises from case findings in Dyer v Dyer (1788): where a party provides the purchase price of property in its entirety, then there is a presumption that he retains the beneficial interest in the property in full, by virtue of a resulting trust. This presumption is rebuttable. - Most traditional position -- A & B contribute to purchase price, but title is in A's name only - Basic result is that B's interest directly relates to the financial contribution - Pettit v Pettit (1970): lord reid clarified where a purchase price resulting trust arises the party making the contribution to the purchase price gains an equitable interest in the property. The QUANITY OF INTEREST is proportionate to the contribution **Dyer v Dyer (1788):** **Facts:** Mr Dyer paid the full purchase monies for certain properties in Wiltshire, and the properties were placed in the names of himself, his wife and eldest song jointly. His wife predeceased him and then Mr Dyer died, bequeathing all his interest in these properties to the claimant, his youngest son. The youngest son sought to take possession of the properties on the basis that his father had paid the purchase price in its entirety, and there was, therefore, a resulting trust in his favor. **Issue:** the eldest song's name was inserted in the grant as the joint legal owner of the properties in Wiltshire and, as such, he argued that the land had been advanced to him by his father, and he was beneficial entitled to the estates in their entirety. His younger brother argued that since his father had advanced the whole of the purchase price of the properties, he remained beneficially entitled to the entire equitable interests in the properties and, as such, the bequest to the younger son took effect and the properties would pass to him. **Held:** where a party provides the purchase price of property in its entirety, then there is a presumption that he retains the beneficial interest in the property in its entirety, by virtue of a resulting trust, if there is no other evidence to rebut this presumption. The father had paid the full purchase price and therefore he retained the full equitable title and the eldest son held the legal title on trust for his father. **Pettit v Pettit (1970):** **Facts:** A woman purchased a matrimonial home for herself and her husband to live in out of her own sums and conveyed the home into her name. The husband and wife cohabitated the home together, during which the husband made alterations and improvements to the home. Following the couple's divorce, the former husband claimed the he had a beneficial interest in the home as his contributions to the property had increased its value. **Issue:** the question arose as to whether a spouse could claim an equitable interest in a matrimonial home in which she/her had no legal interest, by virtue of his/her decorations and improvements to the home, so as to entitle him a share in the proceeds of sale of the property. **Held:** The HoL held that improvements made to the home do not entitle the husband to an equitable interest in the property. The court held that the voluntarily-undertaken improvements and decoration of a family home served the purpose of making 'the home pleasanter for their common use and enjoyment'. In the context of a family home, the court cannot impute an implied common intention between spouses that regular and/or leisure undertaking to decorate a home can alter existing proprietary rights in the home. The conduct of the spouses does not give rise to such an intention and it was only claimed after matrimonial difficulties occurred. The court also dismissed an argument that there is a presumption to treat payments made from a husband to a wife as advancements as out-date and motivated by policy concerns of a different social era. The court held that the husband had no equitable interest in the matrimonial home. - **Contribution to the deposit will suffice to give rise to a share** : Halifax Building Society v Brown (1955) **Contribution to the deposit will suffice to give rise to a share II:** - Gissing v Gissing (1971): mortgage payments should be an adequate financial contribution to evidence a common intention to share ownership - Curley v Parkes (2004): court dismissed the suggestion that mortgage instalments could logically be regarded as part of the purchase price - Laskar v Laskar (2008): a court accepted that mortgage repayments are evidence of a contribution to the purchase price, here the property was purchased as a buy to let. **Establishing interests under resulting trust:** - Where an interest under a resulting trust is established, the court may increase the size of that interest by surveying the WHOLE COURSE OF DEALINGS between the parties in relation to the property: Midland Bank v Cooke and another (1995) **Presumption of advancement (rebutting the presumption of resulting trust):** From a father to child: Re Roberts (1946); Antoni v Antoni (2007) From a husband to wife: Pettitt (1970) From a person in loco parentis to a child: Hepworth v Hepworth (1870) the presumption is rebutted by evidence of the true intention of the contributor, in other words, evidence that the party making the contribution did not intend a gift but instead intended to acquire an interest in the property **When will resulting trust analysis now be applied?** - Following Stack, Jones, Laskar that the starting presumptions as to the acquisition and quantification of interests in property under implied trusts were as follows: - In the domestic family home context = apply common intention constructive analysis - Commercial/investment context = apply a presumption of resulting trust analysis **Where the property is occupied as the family home, the law of CONSTRUCTIVE TRUSTS, not resulting trusts, determines the interests:** Stack v Dowden \[2007\]: **Test:** financial contribution without alternative intention **Outcome:** usually, A is entitled to a share in the value of the property in proportion to her/his contribution **Stack v Dowden \[2007\]:** **Facts:** Mr Stack and Ms Dowden lived together for almost 20 years as cohabitants and had four children. They purchased a home in their joint names with no express declaration as to the extent of their respective shares in equity. The family home was funded by the sale of their previous property (which had been in Ms Dowden's sole name only), with Ms Dowden's savings, and with the assistance of a mortgage loan in joint names. Both parties contributed towards the mortgage payments but Ms Dowden undertook the greater burden. For the length of their relationship, the parties kept their financial affairs entirely separate. Nine years after purchasing the family home, the relationship broke down and Mr Stack left the home. Mr Stack subsequently secured a declaration from the court that the home was held on trust for both parties in equal shares and an order for sale. Ms Dowden appealed claiming a greater share in the property than the 50% declared in the Court of Appeal, succeeded in establishing 65% share, 35% to Mr Stack. Mr Stack appealed to the HoL seeking reinstatement of the original declaration that each party was entitled to a 50% share in the proceeds of the sale. **Issue:** what was the extent of each party's respective share in the property? Did a conveyance into joint names establish a presumption of equal shares in equity? **Held:** the court unanimously agreed on the starting point in joint ownership cases (lord Neuberger dissenting but on a different point). The court held that the starting point was a rebuttable presumption of equitable joint tenancy. The onus was on the person seeking an unequal share in equity to show that the parties intended their beneficial interests to be other than equal. Context was everything and each case turned on the facts. The presumption of beneficial tenancy was, however, a heavy one that would only be rebutted in a very unusual case. Baroness Hale explained 'the burden will therefore be on the person seeking to show that the parties did intend their beneficial interest to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon. In family disputes, strong feelings are aroused when couples split up. These often lead the parties, honestly but mistakenly, to reinterpret the past in self-exculpatory or vengeful terms. They also lead people to spend far more on the legal battle than is warranted by the sums actually at stake. A full examination of the facts is likely to involve disproportionate costs. In joint names cases it is also unlikely to lead to a different result unless the facts are very unusual' The onus lay firmly on Ms Dowden to show that there was a common intention to share other than equally in equity. On the facts, there were several factors on which she could rely. Key amongst them was the fact the parties had lived together for many years and yet had kept their finances rigidly separate. This indicated strongly that the parties did not intend their shares to be equal and warranted Ms Dowden receiving a greater share. This was therefore an 'unusual case' that did justify rebuttal of the presumption of equitable joint tenancy. Ms Dowden was entitled to 65% share in the proceeds of sale. **Constructive trust:** - Easily the most elastic and yet lease well designed category of trusts in English property - A claimant can establish an interest in the family home by demonstrating that she and the legal owner of property shared an express or implied 'common intention' that the claimant was to enjoy a proprietary interest and, further, that the claimant relied on the intention to her detriment. If the claimant succeeds in demonstrating this common intention plus detrimental reliance, a constructive trust arises under which the property is held on trust by the legal owner for the legal owner and the claimant in equity. Recall under s53(2) LPA 1925, a constructive trust need not be in writing or be evidenced in writing to operate. Lloyds Bank v Rossett \[1989\]: - Removes the relevance of pure resulting trust - Especially where other factors considered - Now need to look to constructive trust for answer - Upheld in Stack v Dowden \[2007\] -- no place for resulting trusts in DOMESTIC situations - Issues in Rosset had echoes with William & Glyn's Bank v Boland - In judgement Lord Bridge provided a two-pronged test as to how to test for a constructive trust. The first test was finding express agreement and a detriment suffered by the non-legal owner and the second test was inferring common intention by way of a financial contribution to the purchase price. - There should be evident of an express agreement made by the parties at some stage before the acquisition of the property, and evidence that the non-legal owner acted to their detriment in reliance on that agreement. This reasoning is related to the doctrine of proprietary estoppel. See Burns v Burns (1975); Grant v Edwards (1986) for illustrations on estoppel - In Rosset, Lord Bridge set out two tests for whether a person who does not hold legal title has an interest under a constructive trust: 1. First, a person will have an interest where there is express agreement and the person has suffered a detriment. There should be evidence of an express agreement made by the parties at some stage before the acquisition of the property, and evidence that the non-legal owner acted to their detriment in reliance on the agreement. This reasoning is related to the doctrine of proprietary estoppel -- Grant v Edwards \[1986\]; Eves v Eves \[1975\]; Pettitt v Pettitt \[1970\] - There should be evidence of an express agreement made by the parties at some stage before the acquisition of the property, and evidence that non-legal owner acted to their detriment in reliance on that agreement 2. Second, a person will have an interest where an agreement can be inferred. While in ROSSET, the court stated that an agreement could only be inferred where there has been a contribution to the purchase price (see Lord Bridge in Rosset para 132), the law now recognises that more factors than financial contribution are relevant. These include: reasons for buying the house; responsibility for children; any financing of the property; any money transactions between A&B; how household expenses were handled: Stack v Dowden \[2007\]; Jones v Kernott \[2011\]; R v Taylor \[2017\] - **Test:** Lord Bridge, said a constructive trust will be created where 'there has at any time prior to acquisition or exceptionally some later date been an agreement or arrangement or understanding the parties that the property is to be shared beneficially' - In Hammond v Mitchell (1991) Waite J described the process of establishing express common intention as the 'judicial quest for the fugitive or phantom common intention' - Lord Bridge said that 'direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust' - As all co-ownership operates behind a trust for sale the conveyance into joint names confirms that a trust exists. In such cases then one merely moves to assess the quantification of each party's interest. In joint ownership cases there is a starting presumption of equality in equity: so where there are 2 JT's in law, each party has an equitable entitlement that is 50% share. **Lloyds Bank v Rosset (1989):** **Facts:** a husband and wife decided to purchase a derelict farmhouse to renovate in order to provide a family home for themselves and their two children. The property was purchased using money from the husbands family trust in Switzerland. The swiss trustee insisted that the property be registered in the husbands sole name as this formed part of the trustees duty under the terms of the trust to ensure trust money was used only to the advantage of the husband. The wife was fully aware of this arrangement. The vendors of the farmhouse permitted the husband and wife to enter the property with builders to carry out the renovation work before contracts were exchanged. The renovation was a joint endeavour and the wife herself carried out decoration work at the property on almost a daily basis as well as overseeing the building work. After contracts were exchanged but before the sale of property was completed, the husband, without the wife's knowledge mortgaged the property. The sale was completed. The wife made no contribution to either the purchase price or the cost of renovations. Subsequently the relationship between the parties broke down and the husband left the property. Mortgage payments were not made and the bank brought proceedings for possession and sale of property. The wife resisted the claim from the bank on the basis that she enjoyed an equitable interest in the property under a constructive trust and her interest qualified as an overriding interest on the basis of her actual occupation (based on old law s70(1)(g) LRA 1925) **Issue:** could the wife establish an equitable interest under a constructive trust which was binding on the bank? **Held:**In the HoL the bank's appeal was allowed. The judge erred in holding that there was sufficient evidence of a common intention that the wife should have an interest in the property. The judge had placed undue emphasis on the wife's renovation activities. The judge's finding of a constructive trust could not therefore be supported. In leading judgment, adopted by all their lordships, Lord Bridge set out two routes of acquisition of an interest under a constructive trust in sole ownership cases: the first, being where there is evidence of an express bargain, an express agreement or arrangement or understanding between parties to share land in equity; the second, where an agreement can be inferred from direct contributions to the purchase price/mortgage instalments for common intention to share land in equity. **Jones v Kernott (2011):** **Facts:** Miss Jones and Mr Kernott purchased a property, 39 Badger Hall avenue, in joint name in 1985 with the assistance of a mortgage. They lived together in the property and shared the household expenses for over 8 years. In 1993, Mr Kernott moved out of the property but Miss Jones remained living there with their two children. She paid all the household expenses. Mr Kernott made no further payments towards the property. The parties agreed to cash in a life insurance policy and the proceeds were divided equally between them. This was done primarily to enable Mr Kernott to put down a deposit on a new home. This continued for over 14yrs at which point the property was placed on the market to be sold. Mr Kernott brought proceedings seeking a declaration as to the equitable entitlements of each party in the property. A declaration was made in the court that Miss Jones was entitled to 90% share and Mr Kernott a 10% share. Mr kernott appealed to high court. The high court held that there had been a change of intention of the parties which could not be inferred from the conduct of the parties. The judges conclusion that the property be split 90-10 was appropriate. Miss jones had contributed four times more than Mr Kernott and the larger part of the capital gain on the property had arisen after Mr. Kernott's departure in 1993. Mr Kernott appealed to court of appeal where they found in favour of mr kernott, miss jones appealed to supreme court. **Issue:** what was the extent of the parties' respective shares in the home? Was there sufficient evidence to justify rebuttal of the presumption of equitable joint tenancy? **Held:** miss jones appeal was allowed in the supreme court, and the 90-10 split in miss jone's favour was reinstated. The supreme court confirmed that where the property was purchased in joint names, there was a presumption of beneficial joint tenancy. This presumption could be rebutted by evidence of a common intention to share other than equally. Any rebuttal of this presumption was, however, not to be lightly embarked upon as purchasing property jointly as a home indicated an emotional and economic commitment to a joint enterprise. In determining whether the presumption was rebutted, the primary search was to ascertain the parties' common intention. In this case, there was no need for the court to impute an intention that the parties' beneficial interests would change as the trial judge had made a finding that the parties intention did, in fact, change. This intention could be inferred from their conduct. The house was purchased with the common intention to provide a home for miss jones and mr kernott and children. But their intentions changed. Around the time life insurance policy was cashed in 'a new plan was formed' under which Mr Kernott would buy himself a new home. It was the logical inference that his interest in the home was to crystallise at the time and miss jones would have the sole benefit of any capital gain in property going forward. **Eves v Eves (1975):** **Facts:** in 1968, Janet Eves, who was at the time under 21, began living with stuart eves and though not married took his name. In 1969, the couple had a daughter and they found a house that they intended to become their joint family home. The house was purchased in the late summer of 1969 and placed in stuart eve's name only. Stuart told Janet that her name could not be on the title as she was under 21 and that, had she been older, the house would have been purchased in joint name. This was an excuse and not accurate law. The property was rundown, very dirty, and dilapidated. Janet carried out much work on the property both in the house and in the garden. In particular, this involved wielding a 14lb sledgehammer to break large areas of concrete. A second child was born in 1970. In 1972, stuart informed janet that he was going to marry another woman and later left the home. Subsequently, janet made an application to the court seeking an equitable share in the house. At first instance, the court rejected her claim. Janet appealed. **Issue:** was there evidence of a common intention between janet and stuart to share the property in equity? **Held:** Janets appeal was successful, the court held that there had been an agreement to share the property in equity and janet therefore enjoyed a 25% interest in the property. The excuse given by stuart was evidence that janet had been led to believe that she was to have an interet in the home. She had relied on this carrying out renovation, demolition, and other improvement works on the property. **Grant v Edwards (1986):** **Facts:** linda grant separated from her husband and set up home with George Edwards. In 1969, George purchased a house to provide a home for the couple, their child, and two children from linda's marriage. The house was conveyed into George's name (and that of his older brother) but not into Linda's name. George told linda that her name was not included on the title as this might prejudice her divorce proceedings with her former husband. This was an excuse. George paid the deposit and mortgage instalments and linda made substantial contributions to the household expenses. The couple split in 1980 and linda claimed a beneficial interest in the property. The claim was dismissed at first instance and linda appealed. **Issue:** could linda demonstrate a common intention to share the property in equity? **Held:** the CoA allowed the appeal. The court found that there was an agreement to share as evidenced by the excuse given by George for linda's name not being on title. This excuse raised an inference that linda should have an interest in the house. Linda had acted in reliance on this agreement to her detriment in making substantial contributions to the household expenses. These contributions were far in excess of what would be expected as 'normal' contributions. Without these contributions, George would not have been able to maintain mortgage payments. Linda was awarded a 50% share in the property.  **Constructive trusts used where:** - Legal title held by A and B seeks to assert beneficial interest OR - Legal title held by A&B with no express declaration as to the size of any shares - Beneficiary must be able to show beneficial interest Outcome: if A is entitled to a share in the value of the property, then the share is calculated in proportion to the financial contributions, adjusted with reference to other factors such as: - Reasons for buying the house - Responsibility for children - Any financing of the property - Any money transactions between A&B - How household expenses were handled - Oxley v Hiscock (2005): the court took account of the WHOLE COURSE of financial dealing between the two parties to establish the extent of Ms Oxley's beneficial interest Le Foe v Le Foe \[2001\]: contributions to domestic expenses count as a detriment for the purposes of constructive trust provided they are designed to free up the other party to pay the mortgage Oxley v Hiscock \[2005\]: under a common intention constructive trust, in the absence of an express or implied agreement, the beneficial shares of the cohabitating parties will be determined by their whole course of dealing in respect to the property, including financial and non-financial contributions to its upkeep Stack v Dowden \[2007\]: this case laid down the doctrine of common intention constructive trust, which applies over the property of unwed couples HELD: the starting point for determining beneficial interests where the legal title was held jointly is that beneficial interest will also be held jointly. This presumption may be rebutted where there is evidence that this was not their intention (i.e. they had different common intention at the time when they acquired the home) or that they later formed a common intention at their respective shares would change. Lady Hale stressed that in a family home scenario the key is to ascertain the parties shared intention, be they actual, inferred or imputed, with respect to the property -- a holistic approach. Further development to the principles laid down in Stack v Dowden in Jones v Kernott \[2011\] lady hale recognised that common intention may change over time, say for example one party financing an extension in the property, so that in effect what they now have as share property was materially different from what they first acquired. - The distribution of beneficial interest under the constructive trust is fixed by the common intention of the parties as inferred from a range of circumstances - **Note:** that where parties are married Matrimonial Proceedings and Property Act 1970 s37 applies - Where parties are not married even where there is an explicit agreement, the court may not disregard it in favour of a survey of the whole course of dealings concerning the property between the parties -- oxley v Hiscock \[2005\] **Overreaching:** - Overreaching is a mechanism that allows purchasers to efficiently deal with land which is subject of a trust. It allows a purchaser to acquire land without any equitable interests. This is not an all or nothing option as those who have equitable interests are also protected. - When overreaching takes place, the prior equitable interests are overreached and the purchaser takes the land free from those interests. There are two requirements for overreaching: 1. There must be an equitable interest which can be overreached -- LPA 1925 S2 descried which can be overreached (principally equitable interests under a trust) 2. Statutory prerequisites for overreaching must be met -- LPA 1925 s2(1) (there must be a conveyance to a purchaser of a legal estate in land) and purchase monies must be paid two at least TWO trustees (LPA 1925 s27) - City of London Building Society v Flegg \[1988\]: Overreaching operated to detach the Fleggs' interest from the land; their rights were restricted to the property's sale value. Mortgage monies advanced to the two trustees. In the judgment Lord Oliver noted that financial lenders faced 'unsuspected hazards should they be bound by unregistered rights' **City of London Building Society v Flegg (1988):** **Facts:** a property was purchased by a married couple with contributions provided by the wife's parents. The parents thus acquired a beneficial interest in the property. The property was mortgaged to the building society which later sought repossession. The building society was not bound by the parents' beneficial interests, having successfully overreached those interests when advancing mortgage monies to married couple i.e. two trustees. **Key point:** successful overreaching requires payment of monies to at least two trustees. Once overreached, beneficial interests will not bind a purchaser, regardless of any actual occupation of the beneficiaries and any notice the purchaser may have of those interests. See Also: Williams & Glyn's Bank Ltd v Boland \[1980\] HSBC v Dyche \[2009\] Shami v Shami \[2012\] **Matrimonial Proceedings and Property Act 1970:** -..'where a husband and wife contributes in money or money's worth to the improvement of real or personal property in which or in the proceeds of sale which either or both of them has or have a beneficial interest, the husband or wife so contributing shall, if the contribution is of a substantial nature and subject to any agreement between them to the contrary express or implied, be treated as having then acquired by virtue of his or her contribution share or an enlarged share...in the beneficial interest...' **Family Law and the Family Home:** - Bevan suggests that 'land law tends to be presented as a jurisdiction that favours certainty and hence more rigid. Certainly, what is clear is that with respect to the family home the courts are drawing on what Bevan calls a range of 'family-centric, relationship-based factors to determine the parties' common intention' **Co-ownership Disputes -- Trust of Land and Appointment of Trustees Act (TLATA) 1996:** Between 1926 and 1996, co-ownership was regulated by the LPA 1925. On 1 January 1997 the TLATA 1996 came into force. It applies to co-ownership arising both before and after that date - Aimed to simplify dealings with trusts - Clarifies situation when trust arises - Clarifies duties of trustee and beneficiary - Basically, makes all types on interest involving shares in property trusts of land **Powers of the trustee:** - The trustees have 'all the powers of an absolute owner' of property: TLATA S6(1) - When exercising these powers, 'trustees shall have regard to the rights of the beneficiaries': TLATA 1996 S6(5) - This is significant change from previous law which imposed a duty to sell (LPA 1925 s35) tempered with the power to postpone the sale provided the trustees were unanimous (LPA 1925 s25) - **General powers** -- for the purpose of exercising their functions as trustees, the trustees of land have in relation to the land subject to the trust all the powers of absolute owner: s6(1) TLATA 1996 - When exercising the powers 'trustees shall have regard to the rights of beneficiaries: s6(5)TLATA 1996 - **Special powers --** S7 gives trustees, under specified conditions the power to partition the land. i.e. to transfer a legal estate in part of the land to each beneficiary. - **Delegation --** S9 gives trustees power to delegate any of their functions as trustees to a specified beneficiary - **Consultation --** S11 provides that the trustees shall in exercising any of their functions relating to the land consult the beneficiaries that are of full age Under s14 TLATA 1996: - Trustee or beneficiary can make an application to the court - Courts conferred a wife power to determine nature and extent of trustees powers and exercise of those powers and not just the power of sale - For example, court could make orders re:trustee consultation obligation Factors the court considers under S15 TLATA 1996: - The matters to which the court is to have regard in determining an application for an order under s14 include: a. The intentions of the person or persons (if any) who created the trust b. The purposes for which the property subject to the trust is held c. The welfare of any minor who occupies or might reasonably be expected to occupy any land and subject to the trust as his home d. The interests of any secured creditor of any beneficiary - **Consent --** S10 TLATA 1996 - **Consultation --** S11 TLATA 1996 **Beneficiaries Rights:** - The right to occupy: S12 TLATA 1996 - Exclusion of the right: S13 TLATA 1996 - Dispute resolution: S14 TLATA 1996 -Trustee or beneficiary can make application to court -refers to duties of benefits, not appointment -could obviate from duty or consult or obtain consent -court may also determine nature or extent of beneficial interest - **Factors court considers:** s15 TLATA and then look at S14 **Co-ownership and bankruptcy:** - On Bankruptcy, property vests automatically in the trustee in bankruptcy. The trustee in bankruptcy has a duty to 'get in, realise and distribute' the bankrupt's estate for the benefit of his or her creditors. The trustee in bankruptcy takes subject to third party rights, including those of other co-owners. - Where an application is made to the court for land to be sold in the event of the bankruptcy of one of the co-owners, S15 TLATA 1996 **does NOT apply.** Instead, the court has regard to the factors set out in the Insolvency Act 1986 s335A. Re Turner (A bankrupt) \[1974\] Re Citro \[1991\] Re Holliday \[1981\] Foenander v Allan \[2006\] The court will make such orders as it thinks reasonable having regard to:  - a\. the interests of the bankrupts' creditors  - b\. where the application is made in respect of land with a dwelling house which has been the home of the bankrupt or bankrupts' spouse or former spouse - \(i) the conduct of the spouse or former spouse in terms of contributing to the bankruptcy  - \(ii) the financial needs of the spouse or former spouse  \(iii) the needs of any children **[Example Question:]** Alex lives with her girlfriend, Bec and they bought a property in 2007. The house was conveyed into Bec's name as she was buying it under the government's "Right-to-buy" scheme. The house was valued at £250,000 but Bec received a £50,000 discount as a long-term Council tenant. Alex contributed the deposit of £20,000 and the remaining £180,000 was provided by a mortgage in Bec's name. The mortgagee insisted that Alex sign a document postponing any interest she may have in the property to the mortgagee. The couple shared the mortgage repayments and the household expenses equally. They also divided the household chores between themselves, and Alex provided the money to put in a new kitchen, whilst Bec paid for a new bathroom and materials to decorate the whole house. In 2018 Bec and Alex split up and Bec has told Alex she needs to leave "her" house. Alex claims that half the house is hers and wants her share of the money. **What advice would you give alex as to whether she has a share of the property and, if so, what share of the proceeds of sale might she expect to receive?** - This raises concern of implied co-ownership and raises questions about nature of implied ownership and that it also raises two cohabitating parties, Lady Hales Judgment in Stack v Dowden \[2007\], dealing with appear prima facie to be an implied constructive trust. Bec the sole legal owner has a fee simple absolute in possession s1(1)(a) LPA 1925, deed has to be created in writing s52 LPA 1925 and the interest is registered at the land registry s27 LRA 2002. - Lender (mortgagee) insisted alex sign the document postponing any interest in the property to the mortgagee being the lender, so that the bank can protect their interest, they are in the opinion that Alex has a prospective interest indicating Alex has a beneficial interest in the property. The banks mortgage interest is on title as a legal charge on the deed, so it is protected because it is registered in the charges register at the land registry before it is protected, and if the mortgagee wanted a further protection they could register a restriction on land charges, Alex subsequent interest is subsequent to the debt to the lender when discharged before she can receive her profit. - There is a implied co-ownership as Bec is the sole owner, domestic scenario is okay to say that this is going to default a constructive trust: Stack v Dowden \[2007\] and further applying Lloyd Banks v Rossett - We would advise Alex to stay in the property and not leave as this provides evidence to her rights in actual occupation and reinforce her rights as they are an overriding interest that would be covered by Sch 3 Para 2 LRA 2002 - Now trying to secure a constructive trust under Lloyd Banks v Rosset, in answer we state the two heads of Rosset, first express common intention and there is no evidence based on the fact and then default to the inferred constructive trust through inferred common intention. - Common intention by Lord Bridge in rosset stated that mortgage repayments under Stack v Dowden is enough evidence to suggest common intention, in stack v dowden common intention can shift and move over longevity of the relationship. - Alex did a 20,000 deposit, both shared mortgage payments equally - Becs Share: 90,000+50,000=140,000/250,000 = 56% - Alexs Share: 20,000+90,000=110,000/250,000= 44% - Strict contribution shares would be Bec 56% and Alex 44% as per Halifax building society - Quantification Hammond v Mitchell and Midland Bank v Cook: court will consider increasing the size of proportion by surveying the course of dealings - Assuming that she is successful having a constructive trust, she should be told to stay in her property to secure interest as someone who is in actual occupation vis a vis overriding interest. **Consider how Alex's interest can be removed from the property on a sale to a third party (overreaching):** - Relevant case law would be draw on Boland, but the key case law is City of London Builiding Society v Flegg (1988) - This is about overreaching of a beneficial interest. Williams & Glyn's Bank v Boland (1981) -- briefly elaborate on right of occupation. To overreach Alex's beneficial interest in the property so that it is no longer in the property but in the sale proceeds, of which she would be entitled to share, a third party would have to pay the purchase money to two trustees (City of London BS v Flegg (1988)) and s2 and s27 LPA 1925. Here if the property is in Bec's sole name then there is only one trustee (legal owners are also trustees). In this case another trustee would need to be appointed for the purposes of the sale and a receipt for the money given by both (this happens through the purchase deed). If the money were only to be paid to Bec no overreaching would occur and Alex would still have an interest in the property; the third party would buy the property subject to her interest. Note: even if Alex had a restriction on the property to protect her beneficial interest this would not stop overreaching from happening but it would afford her protection in that third parties (and the conveyancing solicitor) would know of the existence of her interest and she would get her share of the sale of proceeds. If the property is in joint names, then no real issue because Bec and Alex would have to consent to any sale by being a party to the deed. But this is not the case here. **Key Legal Frameworks** 1. **Express Trust** - Created by formal written agreement (s53(1)(b) LPA 1925). - Reflects explicit intentions regarding ownership shares. 2. **Implied Trusts** - Exception to s53(1)(b) LPA 1925: No writing required (s53(2)). - Commonly applied to family homes in the absence of formal agreements. - **Two Types**: - **Resulting Trust**: Based on financial contributions to the purchase price. - **Constructive Trust**: Based on common intention and detrimental reliance. **Resulting Trusts** 1. **Definition**: Beneficial interest proportional to financial contributions towards the purchase price. 2. **Key Case Law**: - *Dyer v Dyer (1788)*: Presumption of interest proportional to contribution. - *Pettitt v Pettitt (1970)*: Contributions must relate directly to purchase price. 3. **Limitations**: Rarely applied in family home cases after *Stack v Dowden (2007)*, which emphasized constructive trusts for domestic scenarios. **Constructive Trusts** 1. **Definition**: Based on shared intention (express or implied) and reliance resulting in detriment. 2. **Tests for Constructive Trust** (*Lloyds Bank v Rosset \[1989\]*): - **Express Agreement**: Clear agreement to share ownership, plus reliance and detriment. - *Eves v Eves (1975)*: Renovations constituted detrimental reliance. - *Grant v Edwards (1986)*: Significant financial contributions inferred agreement. - **Implied Agreement**: Inferred from conduct, such as financial contributions. - *Stack v Dowden (2007)*: Holistic approach; consider all circumstances, including finances and shared responsibilities. - *Jones v Kernott (2011)*: Intention can change over time; court infers shares based on conduct. 3. **Key Considerations** (*Oxley v Hiscock \[2005\]*): - Whole course of dealings (financial and non-financial contributions). - Responsibility for household expenses and improvements. **Overreaching** 1. **Definition**: Mechanism allowing legal interests to \"override\" equitable interests upon sale. 2. **Requirements** (s2 & s27 LPA 1925): - Payment to at least **two trustees** to detach equitable interests. - If only one trustee, equitable interest binds purchaser (*City of London Building Society v Flegg \[1988\]*). 3. **Key Cases**: - *Williams & Glyn's Bank v Boland (1981)*: Overreaching requires compliance with statutory requirements. - *Abbey National v Cann (1991)*: Timing of actual occupation affects overriding interest. **Practical Application to Family Homes** 1. **Domestic Context**: Constructive trust likely applied (*Stack v Dowden \[2007\]*). 2. **Financial and Non-Financial Contributions**: Both can establish interest. 3. **Determining Shares**: - Based on contributions and overall course of dealings. - Courts consider intentions at acquisition and later conduct (*Jones v Kernott \[2011\]*). 4. **Impact of Mortgage**: - Registered lenders' interests often take priority. - Overreaching applies if statutory conditions are met. **Key Cases Summary** 1. *Dyer v Dyer (1788)*: Resulting trust from purchase price contributions. 2. *Lloyds Bank v Rosset (1989)*: Two tests for constructive trust: express agreement or inferred intention. 3. *Eves v Eves (1975)*: Renovations established detrimental reliance. 4. *Grant v Edwards (1986)*: Substantial contributions inferred agreement. 5. *Stack v Dowden (2007)*: Rebuttable presumption of equal shares in joint names. 6. *Jones v Kernott (2011)*: Common intention can evolve; proportional shares inferred. 7. *City of London Building Society v Flegg (1988)*: Overreaching requires payment to two trustees. **Exam Tips** 1. Clearly distinguish between resulting and constructive trusts. 2. Analyze contributions in detail (financial and non-financial). 3. Discuss the impact of mortgages and overriding interests where relevant. 4. Use key cases to support arguments and demonstrate understanding of legal principles.