“Where a wife contributes by money to the purchase of property by her husband in his sole name in the absence of evidence of some inconsistent agreement or arrangement the court will decide that the wife is entitled to an equitable interest in that property proportionate to the extent of her contributions as against the total value of the property at the time the contribution is made4.”
This position in Ireland now seems to be undisputable in this area and has been accepted by the supreme court in the case of McC v. McC5, this has provided a degree of consistency in the area but although it is perhaps at the expence of flexibility.
England, Direct contributions.
The courts in England have taken a slightly different approach, which has lead to some uncertainty in the courts. This uncertainty surrounds whether a direct contribution will give rise to a resulting or a constructive trust based on the parties common intentions. This was discussed by Lord Bridge where he stated:
“Direct contributions to the purchase price by a partner who is not the legal owner… will readily justify the inference necessary to the creation of the constructive trust. However, contributions of a direct nature should under traditional principles give rise to a resulting trust”
This meant that in some circumstances the share in the trust might be greater than the contribution made depending on the common intentions of the parties. This rational can be seen recently in the case of Midland Bank plc. v. Cooke6 hear the court of appeal accepted this approach and stated that in order to establish a beneficial interest in the first place you must take in to account a number of factors including the undertaking of a survey which looks at the whole course of dealing between the parties relevant to their ownership and occupation of the property, and are not just limited to the simple act of the contribution made. In this case although the wife’s initial direct contribution was only 6.4% of the value of the property, the court took in to account he entire course of dealings between the couple and held that the plaintiff was entitled to one half of the share of the house.
These two approaches both have there advantages and disadvantages, although the English approach has the flexibility, the law is uncertain in this area, and can lead to confusion. The Irish approach is a lot clearer but this can lead to inflexibility and as a result unfair decisions by the courts. There is definitely space for improvement in both approaches, and I believe maybe a compromise somewhere in between these to approaches would lead to a clearer and more flexible approach by the courts.
Ireland, Indirect contributions.
Indirect contributions are contributions made to the household which do not include the purchase price of the property or repayments of the mortgage. The law in this area has been unsettled for some time bur now appears to be well established and clear. During the 1970’s and 80’s there was an influx of case relating two this and from this two distinct approaches have appeared. The first approach was illustrated by Keane J7 where he established that there must be evidence of a common intention that indirect contributions will give the contributor a share in the beneficial interest in the property before the court would make such an order.
The next approach can be found in the judgement of Finlay P in W. v. W8. The facts of the case were that the wife claimed indirect contribution on the grounds that there a home which was a working farm, was maintained and improvements made by her, this was rejected by the courts, she also claimed that her contribution on the farm allowed for payments on the mortgage to be made. The courts view fallows.
“Here a wife contributes… to a general family fund thus releasing her husband from an obligation which he otherwise would have permitted him to repay mortgage instalments, she will in the absence of proof of an inconsistent agreement of arrangement be entitled to an equitable share in the property which had been mortgaged and in respect of which the mortgage was redeemed approximately proportionate to her contribution to the mortgage repayment, to the value of the mortgage thus redeemed and to the total value of the property at the relevant time.”
This approach was adopted in the Supreme Court in the case of McC v. McC9 . The wife in this case had contributed to the cost of there first home and when they sold the house the money was used to by furniture fore the new home. The wife claimed that this was an indirect contribution. The court agreed and granted her one third of the furniture and fittings of the new house. Henchy J. commented on this approach.
“When the wife’s contribution has been indirect the court will in the absence of any express or implied agreement to the contrary, infer a trust in favour of the wife, on the grounds that she has to that extent relieved the husband of the financial burden he incurred in purchasing the house.”
From this it is clear that if a partner makes indirect contributions of a financial nature in order to allow the spouse to carry on making mortgage repayments they are entitled to a proportionate share in the property. This is a sensible approach and is quite fair as it takes into account that most spouses will not think of making an agreement as to the affect of the contributions. I am now going to look at the British approach and see how it differs to the approach taken in Ireland.
England, Indirect Contributions.
The law in England relating to indirect contribution has become a lot more restrictive through out the years. The doctrine of “family assets” was created by the Court of Appeal in the late 1960’s. This was described by Lord Denning as fallows10.
“Where a couple by there joint efforts, get a house and furniture, intending to be a continuing provision for them for there joint lives, it is the prima facie inference from there conduct that the house and furniture is a ‘family asset’ in which each is entitled to an equal share. It matters not in whose name it stands: or who pays for what: or who goes out to work and who stays at home. If they both contribute to it by there joint efforts, the prima facia inference is that it belongs to both of them equally: at any rate when each makes a financial contribution which is substantial.”
This was questioned by the House of Lords and was rejected as it was found that Section 17 of the Married Women’s Property Act on which lord Denning relied upon was purely procedeural.11 This has lead to a much more restrictive approach being put in place, although it was a some what gradual change, as during the late eighties in cases such as Burns v. Burns12 and Grant v. Edwards13 the courts took an approach similar to the Irish, but this all changed in the case of Lloyds Bank v. Rosset14, although founded on the same principles of common intention and detriment, was considerably more restrictive and seems to have set a fairly uncompromising precedent in this area. This case brought in the requirement that there must have an inference which can be drawn from the parties conduct, prior to the acquisition of the property, or exceptionally afterwards. In the case of Hammond v. Mitchell15 this method was applied and it was established that.
“Such a finding of agreement could only be based on evidence of express discussion between the partners and once this was established it would be necessary for the partner asserting the claim to the beneficial interest to show that he or she acted to his or her detriment or significantly altered his or her position in reliance on the agreement in such a manner as to give rise to the constructive trust.”16
This approach is very restrictive and I believe could lead to unfair decisions in the court, as it is very possible that a plaintive could have paid a very large amount of indirect contributions, but without an express agreement they could be entitled to nothing. From this it would certainly appear that the approach taken in Ireland is a lot fairer and more consistent.
Possible improvements.
There have been several approaches taken in different jurisdictions and it is important to briefly look at these in order to determine if these remedies would be beneficial in Ireland. The Canadian Unjust Enrichment approach, relies on a constructive trust theory, and is best summarised in the words of Dickson J17.
“For the principle to succeed, the facts must display an enrichment, a corresponding deprivation, and the absence of any juristic reason, such as a contact or disposition of law for Enrichment”.
The Australian ‘unconscionability’ doctrine is very similar to Lord Denning’s new model. Which is of no use to the idea of improving the system. But in New Zealand the reasonable expectations doctrine was created. Although similar to the Canadian approach it is still worth mentioning. In Daly v. Gilbert.18 The defendant had made it clear that she was unwilling to share the ownership of the disputed property. None the less her partner made several contributions in the form of labour materials, and carpeting etc. Hammond J. held that, while there had been no “reasonable expectation” of an interest in the property, it was nonetheless possible for the claimant to obtain a monetary remedy under the law of unjust enrichment. He upheld the claim in relation to the building work but not the carpet and curtains.19
In conclusion I feel the Irish approach is far superior to the English in a lot of ways, and reform is needed more so in that jurisdiction, possibly an application of the reasonable expectations doctrine or possibly a contribution from the Irish approach would lead to more fairness of the approach in England.
Bibliography.
Books consulted
Equity and the Law of Trusts in Ireland – Hilary Delany
Equity and the law of Trusts – Hanbury
Equity and Trusts 5th edition – T. O’Neill Kiely
Murdoch’s Dictionary of Irish Law – Henry Murdoch
Griffith College FE1 Equity and Trusts law notes.
Cases consulted
Refer back to footnotes.
Word Count
2476.
4 Taken from Equity and the Law of Trusts in Ireland, by Hilary Delany, p.181
5 [1986] ILRM 1, 2 per Henchy J.
7 M.G v. R.D. High Court 1980 No.423.
10 Gissing v. Gissing [1969] 2 Ch 85, 93.
11 Pettit v. Pettit [1970] AC 777.
16 Taken from Hilary Delany p 185, 186.
17 Rathwell v. Rathwell SC (1978).
19 taken from the Griffith college Equity and Trusts notes p. 171.
