Implied trusts and trusts of the family home - Presumption of advancement and its rebuttal

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Overview

In family property law, understanding implied trusts and the presumption of advancement is essential, especially in disputes about family homes. These concepts are vital for the SQE1 FLK2 exam as they connect legal theories with real-life property ownership conflicts. This article explores these ideas, their development in case law, and their current significance, preparing candidates to address this challenging legal area.

Implied Trusts: Framework and Legal Impact

Implied trusts, formed by circumstances rather than declarations, are essential in settling property ownership disputes. They include resulting and constructive trusts, each with unique features and uses.

Resulting Trusts: Principles and Uses

Resulting trusts occur when someone contributes financially to a property's purchase without a direct ownership claim. Equity suggests that financial contributors intended to maintain a beneficial interest.

Key principles:

  1. Proportional interest: The beneficiary’s share aligns with their financial input.
  2. Objective assessment: Courts emphasize financial contributions over intentions.
  3. Rebuttal: This presumption can be challenged with evidence showing a different intention.

Example: In Dyer v Dyer (1788), the court assumed a resulting trust in favor of the person funding the property purchase.

Constructive Trusts: Equitable Solutions

Constructive trusts emerge when the rightful owner cannot claim sole ownership due to fairness issues. This flexible remedy is common in family property disputes where formal agreements don't reflect actual intentions or contributions.

Key elements:

  1. Common intention: Agreement about property ownership, explicit or inferred.
  2. Detrimental reliance: Actions based on this shared understanding.
  3. Unconscionability: It would be unjust to dismiss the claimant's stake.

Case analysis: Stack v Dowden [2007] reshaped this area by emphasizing equal ownership in joint name cases, changeable with evidence of shared intentions.

Presumption of Advancement: Legacy and Current Use

This legal tenet presumes certain property transfers in family settings are gifts, not trusts.

Historical Roots and Justification

Traditionally, the presumption applied to:

  • Husband to wife
  • Father to child
  • Parent figure to child

It stems from the obligation to support dependents.

Modern Use and Issues

Today's application has shifted:

  1. Gender equality: The Equality Act 2010 challenges its gender bias.
  2. Judicial skepticism: Courts increasingly question its relevance.
  3. Evidentiary demands: Strong proof is required to apply the presumption now.

Case study: In Pettitt v Pettitt [1970], the relevance of this presumption was scrutinized, especially among couples.

Counteracting the Presumption

Rebutting requires clear evidence of a different intention:

  1. Written proof: Agreements or communications indicating a loan or trust.
  2. Conduct: Actions contrary to a gift, like repayment requests.
  3. Transfer context: Conditions hinting at purposes other than a gift.

Example: If a mother transfers money to her son's account for a property, emails about repayment could counter the presumption, showing a resulting trust.

Influential Cases: Shaping Family Property Law

Key cases illustrate the evolving judicial stance on implied trusts and presumption of advancement.

Stack v Dowden [2007]: Reexamining Ownership

This case changed the approach to ownership in joint names:

  1. Starting point: Equal shares in joint ownership.
  2. Proof: Those claiming unequal shares must prove it.
  3. Comprehensive review: Courts consider the full interaction between parties.

Effects on practice:

  • Heightened focus on financial contributions and intentions
  • Recognition of today's complex family arrangements

Jones v Kernott [2011]: Defining Intention in Sole Ownership

This case offered guidance for sole ownership:

  1. Actual intentions: Determining what parties intended.
  2. Imputed intentions: Courts may assign a fair intention if unclear.
  3. Comprehensive view: Reviewing the parties' interactions.

Exam considerations:

  • Importance of evidence showing intentions
  • Recognition that intentions may change

Tinsley v Milligan [1994]: Addressing Illegality and Trusts

This case dealt with the mix of resulting trusts and illegality:

  1. Reliance principle: A claimant need not use their own illegality for proof.
  2. Public policy: Balances avoiding profit from wrongdoing and just outcomes.

Implications:

  • Challenges in cases with undeclared property
  • Focus on the trust's basis, not later actions

Practical Applications and Exam Scenarios

Understanding these principles is key for the SQE1 FLK2 exam. Consider these scenarios:

Scenario 1: Unmarried Partners and Ownership

Facts:

  • Alice and Bob buy a home together, contributing 70% and 30% respectively.
  • The property is in joint names.

Analysis:

  1. Starting point: Equal share.
  2. Rebuttal: Alice may claim a 70/30 split based on contributions.
  3. Elements: Deals like mortgage payments and house improvements.

Exam focus: Applying principles from Stack v Dowden and evaluating evidence strength.

Scenario 2: Parent-Child Property Transfer

Facts:

  • A father transfers £100,000 to a daughter for a property.
  • He later claims it was a loan; she claims a gift.

Analysis:

  1. Presumption favors a gift initially.
  2. The father needs proof (loan agreement, discussions).
  3. Consider transfer circumstances and subsequent actions.

Exam focus: Understanding the presumption of advancement and evidence for rebuttal.

Conclusion

The interaction between implied trusts and the presumption of advancement is a complicated yet essential aspect of family property law. Understanding these ideas is critical for SQE1 FLK2 candidates. Key points include:

  1. Differentiating resulting and constructive trusts and their use in disputes.
  2. The changing nature of the presumption of advancement.
  3. The need for comprehensive evidence in ownership issues, especially in informal arrangements.
  4. A shift toward a more intentions-based approach in property rights.

Candidates should be prepared to analyze complex scenarios, apply case law, and consider judicial decisions' broader policy impacts in this area. This knowledge supports both exam success and practical family property dispute resolution.