Learning Outcomes
This article explains the principles governing common intention constructive trusts, particularly in the context of shared homes. After reading this article, you should understand the key requirements for establishing such trusts, including how common intention (both express and inferred) and detrimental reliance are proven. You will also learn how beneficial interests are quantified by the courts, especially following landmark cases. This knowledge is essential for applying the relevant legal rules to SQE1 assessment scenarios involving property co-ownership disputes.
SQE1 Syllabus
For SQE1, you are required to understand how beneficial interests in property, especially the family home, are determined when legal title does not reflect the parties' shared intentions or contributions. This involves applying the principles of common intention constructive trusts. Your revision should focus on:
- The distinction between express and implied trusts.
- The requirements for establishing a common intention constructive trust: common intention and detrimental reliance.
- How express common intention can be demonstrated (e.g., through discussions or excuses).
- How common intention may be inferred from conduct (e.g., direct financial contributions).
- The nature of detrimental reliance required.
- How the court quantifies beneficial interests in sole name and joint name cases (Stack v Dowden, Jones v Kernott).
- The limited role of resulting trusts in the family home context compared to constructive trusts.
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
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Which of the following is LEAST likely, on its own, to allow a court to infer a common intention for a non-legal owner to have a beneficial interest in a property held in their partner's sole name?
- Direct contribution to the initial deposit.
- Regular contributions to mortgage payments.
- Paying for significant structural improvements to the property.
- Paying all household utility bills and grocery expenses.
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In Stack v Dowden, where property was held in joint names but contributions were unequal, what was the starting presumption regarding beneficial ownership?
- Beneficial ownership follows the legal title (joint and equal).
- Beneficial ownership is proportionate to financial contributions.
- The property is held on a resulting trust.
- The court imputes a fair intention based on contributions.
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Which legal principle allows the court to quantify beneficial shares based on the parties' entire course of dealing, particularly when their intentions change over time?
- The doctrine of proprietary estoppel.
- The principle established in Lloyds Bank plc v Rosset.
- The 'ambulatory' common intention approach from Jones v Kernott.
- The presumption of advancement.
Introduction
When couples or family members share a home, the legal title (who is formally registered as the owner) may not always reflect their understanding or contributions regarding who truly owns a beneficial share. Disputes often arise upon relationship breakdown or death. While an express declaration of trust usually provides clarity, many cohabiting couples do not formalise their arrangements. In such situations, equity may step in to establish ownership rights through implied trusts, most notably the common intention constructive trust. This type of trust arises not from a formal document but from the parties' conduct and shared understanding.
ESTABLISHING A COMMON INTENTION CONSTRUCTIVE TRUST
A common intention constructive trust arises where equity recognises that, despite the position regarding the legal title, the parties shared a common intention that the beneficial interest in the property should be shared (or held differently from the legal title), and the party claiming a beneficial interest (or a larger share than their legal title suggests) acted to their detriment in reliance on that intention.
Key Term: Common Intention A shared understanding or agreement between parties regarding the beneficial ownership of a property, which does not need to be in writing and can be inferred from conduct.
Key Term: Detrimental Reliance Action taken by a claimant, based on a common intention about property ownership, which leaves them worse off if that common intention is denied. This act must be significant and linked to the belief about ownership.
There are two main ways courts find the necessary common intention.
Express Common Intention
An express common intention arises from express discussions between the parties regarding ownership, however informal. The court will look for evidence of an actual agreement, arrangement, or understanding.
Discussions and Agreements
This is the clearest way to establish common intention. It involves evidence of conversations where the parties explicitly stated their intention to share the property beneficially.
Worked Example 1.1
Amir buys a house in his sole name. He tells his partner, Chloe, "Don't worry about the title deeds, this house is as much yours as it is mine. We're building our future here together." Chloe gives up her rented flat and moves in. Five years later, they separate. Can Chloe claim an interest?
Answer: Yes, potentially. Amir's statement provides evidence of an express common intention to share ownership. Chloe moving in and potentially making other life changes could constitute detrimental reliance. A constructive trust may arise.
Excuses
Sometimes, the legal owner might give an excuse for not putting the property into joint names at the time of purchase (e.g., related to mortgage eligibility or ongoing divorce proceedings). Such excuses can be evidence of an express common intention to share ownership beneficially (Eves v Eves [1975]). The excuse must genuinely imply that joint ownership was intended but for the specific reason given.
Inferred Common Intention
Where there is no evidence of express discussions, the court may infer a common intention from the parties' conduct. Historically (Lloyds Bank plc v Rosset [1991]), this was narrowly interpreted, requiring direct financial contributions to the purchase price (deposit or mortgage payments).
Direct Financial Contributions
Paying part of the purchase price or contributing directly to mortgage instalments is strong evidence from which common intention can be inferred.
Post-Rosset Developments: The Comprehensive Approach
Following Stack v Dowden [2007] and Jones v Kernott [2011], the courts now adopt a broader, more comprehensive approach, especially in joint name cases, but also increasingly influential in sole name cases. While direct financial contributions remain important, the court considers the 'whole course of dealing' between the parties.
Key Term: Whole Course of Dealing The court's examination of all aspects of the parties' relationship and conduct concerning the property to determine their shared intentions regarding ownership.
Factors considered include:
- Discussions at the time of purchase.
- The reasons the property was acquired in joint/sole names.
- The nature of the relationship.
- How the purchase was financed initially and subsequently.
- How household expenses were managed.
- The presence of children.
- Significant improvements made to the property by the non-owner.
Revision Tip
While Stack and Kernott primarily concerned joint name cases, their emphasis on the 'whole course of dealing' has influenced sole name cases. Be aware that inferring intention solely from non-financial or indirect financial contributions remains difficult, though less so than immediately post-Rosset. Direct contributions are still the clearest evidence for inference in sole name cases.
Detrimental Reliance
Once a common intention (express or inferred) is established, the claimant must show they acted to their detriment in reliance on it.
- Express Intention Cases: The range of acts constituting detriment can be broader. It might include significant home improvements, making substantial financial contributions to household expenses enabling the legal owner to pay the mortgage, or even significant life changes made based on the promise (e.g., giving up a career).
- Inferred Intention Cases: Often, the conduct used to infer the common intention (e.g., direct mortgage contributions) will also suffice as detrimental reliance.
Mere day-to-day living expenses or performing domestic chores are generally insufficient on their own to amount to detrimental reliance establishing a beneficial interest (Burns v Burns [1984]).
QUANTIFYING THE BENEFICIAL INTEREST
Once a common intention constructive trust is established, the court must determine the size of each party's share.
Joint Name Cases
Where the property is in joint names, the starting point (presumption) is that equity follows the law, meaning the beneficial interest is also held jointly and equally (50/50).
This presumption can be rebutted if evidence shows the parties had a different common intention, either at the time of acquisition or later (Stack v Dowden, Jones v Kernott). The court will again look at the whole course of dealing to ascertain the intended shares. Proving a different intention is difficult; unequal contributions alone are often not enough unless coupled with evidence of distinctly separate finances throughout the relationship.
Sole Name Cases
Where the property is in a sole name, there is no initial presumption of joint beneficial ownership. The claimant first establishes their right to some interest via the common intention constructive trust (as discussed above).
The court then quantifies that interest based on what is fair having regard to the whole course of dealing between the parties (Stack v Dowden, Jones v Kernott). This allows for a broader assessment than the strict contribution-based approach of resulting trusts. The court considers all financial and potentially significant non-financial contributions and circumstances to determine the appropriate shares.
Worked Example 1.2
Dev and Freya buy a house together for £300,000, registered in Dev's sole name. Freya contributes £30,000 to the deposit. They live there for 10 years. Dev pays the mortgage. Freya pays all household bills and pays for a £20,000 loft conversion. They separate. How might Freya's share be assessed?
Answer: Freya's £30,000 deposit contribution is strong evidence from which to infer a common intention she should have an interest, and also demonstrates detrimental reliance. A common intention constructive trust likely arises. To quantify her share, the court will look at the whole course of dealing, including her deposit contribution, payment of bills (potentially enabling Dev to pay the mortgage - Le Foe), and the loft conversion. Her share might be assessed as being significantly more than just her initial 10% contribution, reflecting the overall fairness of their arrangements.
Exam Warning
Do not confuse the requirements for establishing an interest in sole name cases (often needing direct contributions or express agreement + detriment) with the quantification stage, where the court takes a broader view of the whole relationship to determine the size of the share once an interest is established. Also, clearly distinguish constructive trusts from resulting trusts, which are now rarely applied to family homes and focus solely on direct contributions to the purchase price at the time of acquisition.
Key Point Checklist
This article has covered the following key knowledge points:
- Common intention constructive trusts arise where legal title does not reflect the parties' shared intentions about beneficial ownership.
- Establishing the trust requires proof of a common intention (express or inferred) and detrimental reliance by the claimant.
- Express common intention comes from explicit discussions or agreements, sometimes evidenced by excuses.
- Inferred common intention arises from conduct, primarily direct financial contributions, but the 'whole course of dealing' is relevant (Stack/Kernott).
- Detrimental reliance involves a significant change in position based on the common intention.
- In joint name cases, the starting point is 50/50 beneficial ownership, rebuttable by evidence of a different common intention.
- In sole name cases, the claimant must first establish an interest exists, then the court quantifies the share based on fairness considering the whole course of dealing.
- Resulting trusts have a very limited role in modern family home cases compared to constructive trusts.
Key Terms and Concepts
- Common Intention
- Detrimental Reliance
- Whole Course of Dealing
