Implied trusts and trusts of the family home - Resulting trusts: presumptions and how they arise

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Overview

Resulting trusts are essential in resolving property ownership disputes, especially within family homes. This topic holds great significance for the SQE1 FLK2 exam, as it demands a comprehensive grasp of complex legal principles and their practical use. This article delves into resulting trusts, their main presumptions, and their application in family home scenarios, equipping candidates with the necessary analytical skills for the SQE1 FLK2 exam.

Resulting Trusts Overview

Resulting trusts arise when the legal and beneficial ownership of property don't align, based on the presumed intentions of the parties involved, inferred from their actions and circumstances.

Legal Foundations

The doctrine of resulting trusts is rooted in equity and emphasizes substance over form. This is best illustrated by the pivotal case, Dyer v Dyer (1788) 2 Cox 92, where Lord Chief Baron Eyre stated:

"The clear result of all the cases... results to the man who advances the purchase money."

Types of Resulting Trusts

For SQE1 FLK2 exam purposes, it’s important to differentiate between:

  1. Automatic Resulting Trusts: Arise when an express trust fails, either entirely or partially.
  2. Presumed Resulting Trusts: Common in family home contexts when property is transferred without full consideration.

Key Presumptions in Resulting Trusts

Understanding the presumptions that govern resulting trusts is essential for navigating family home disputes.

Presumption of Resulting Trust

The basic presumption is that someone contributing to the purchase price intends to maintain a beneficial interest proportionate to their contribution, supported by Fowkes v Pascoe (1875) LR 10 Ch App 343.

Presumption of Advancement

Historically, the presumption of advancement applied to transfers from husbands to wives and fathers to children, suggesting such transfers were gifts. However, its modern application has diminished, as seen in Pettitt v Pettitt [1970] AC 777.

Application in Family Home Disputes

Family home disputes often involve complex financial setups and informal agreements, making them prime for resulting trust claims.

Case Study: Joint Purchases

Consider: Alex and Jordan, an unmarried couple, buy a home. Alex contributes 70% of the purchase price, Jordan 30%. The property is in both names as joint tenants. After five years, they separate, leading to a dispute.

Analysis: Initial assumption is that the beneficial interest mirrors the legal title (50/50 split). However, this can be challenged by evidence of a different intention, as seen in Stack v Dowden [2007] UKHL 17.

Sole Legal Ownership Cases

In cases where property is in one person's name but another claims a beneficial interest, principles from Lloyds Bank plc v Rosset [1991] 1 AC 107 are key, examining financial contributions and other evidence.

Recent Legal Developments

Recent cases have redefined the role of resulting trusts in family home situations.

Jones v Kernott [2011] UKSC 53

Building on Stack v Dowden, this case offers more guidance on quantifying beneficial interests in joint ownership, emphasizing fairness.

Marr v Collie [2017] UKPC 17

This decision stressed that relationship status alone shouldn't determine the approach to property disputes, highlighting the need for a thorough review of evidence.

Interplay with Constructive Trusts

Resulting and constructive trusts often overlap in family home disputes. Resulting trusts focus on financial contributions at acquisition, while constructive trusts can arise from broader circumstances, such as reliance on assurances.

Examples and Applications

Example 1: Familial Contribution

An elderly grandmother gives substantial money to help her granddaughter Jenny buy a home. When their relationship deteriorates, the grandmother argues a resulting trust should reflect her contribution. Jenny might cite the presumption of advancement, but this faces scrutiny.

Example 2: Cohabiting Partners

Jordan, cohabiting in Pat’s house, makes improvements and covers expenses. In a breakup, Jordan may claim a share of the property. While a resulting trust might be hard to establish, a constructive trust could be argued based on contributions and assurances.

Example 3: Unequal Contributions

Sarah and John purchase a house. Sarah contributes 75% of the deposit; John handles mortgage payments. After five years, their relationship ends. Sarah might claim a resulting trust due to her larger contribution. All evidence, including intentions and actions, would be considered.

Conclusion

Understanding resulting trusts and their use in family home disputes is vital for the SQE1 FLK2 exam. Remember:

  1. Resulting trusts reflect presumed intentions based on financial contributions.
  2. The shifting nature of presumptions, notably the reduced role of the presumption of advancement.
  3. The necessity to consider all evidence, including conduct post-acquisition, to determine beneficial interests.
  4. The potential overlap between resulting and constructive trusts in family home cases.
  5. How recent case law has refined approaches to beneficial interest quantification and relationship considerations.

Mastering these concepts will prepare candidates for complex scenarios involving resulting trusts in the SQE1 FLK2 exam.