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LW 3504


In 1995, Edgar inherited a property 'The Shambles' from his brother. Three years later, he sold it for £120, 000 and used his proceeds towards the purchase of 'Hanging Gardens', a large residential house with a florists  shop attached. He took out a mortgage secured over 'Hanging Gardens' for  £300, 000. The property was registered at the Land Registry in his sole  name. Edgar moved in with his long term girlfriend, Angelica. Angelica paid  the legal costs, stamp duty, Land tax and Land registration fees, together  with the removal firm's costs. She also purchased new carpets and curtains  for the property. When they moved in, the couple spent many evenings discussing plans for their home and the florist shop.

Initially, Edgar and Angelica shared all the household expenses. After a few  months, Angelica resigned from her full-time job to work in the florists shop. She did not recieve any pay for the first 10 months to enable the business to become established. During this time she was supported by Edgars  income and he paid the household expenses.

In 2002, Angelica gave birth to the couples child, kelly. Edgar employed a sales assistant in the shop to enable Angelica to be a full time mother.
Angelica did the housework, decorating and shopping and cared for Kelly. In 2004, Angelica used the proceeds of sale of her car to pay for a new central  heating boiler and additional radiators at 'Hanging Gardens'.

Edgar left 'Hanging Gardens' two months ago after an arguement. Last week, Angelica received a letter from Edgar's solicitor advising her that Edgar intended to sell his freehold property, 'Hanging Gardens', and that she  should find alternative accommodation. Angelica is very upset. She has  always believed 'hanging Gardens' was joinly owned property.

Advise Angelica as to whether she has any legal or equitable interest in the property. Would it make any difference to Angelica’s claim to an interest in the property in Land Law if Angelica and Edgar had married in 1998?

Cohabiting couples'  interests  are governed by general property  law although the courts have tried to achieve an equitable result for cohabitees using the notion of implied, resulting or constructive trusts, possible contractual claims and the doctrine of proprietary estoppel.

Angelica may have a beneficial interest in ‘Hanging Gardens’ under either a resulting or a constructive trust. A resulting trust occurs where property is purchased in whole or in part by money belonging to a person other than the person to whom the legal title is conveyed. The resulting trust arises by operation of law, based on the presumed intention of the party who provided the purchase money. This presumption can be rebutted by evidence that the purchase money was advanced for other purposes, such as a gift or a loan.

A constructive trust is imposed by law on the legal owner, in this case Edgar, so that he holds the beneficial interest, or part of it, on trust for a third party. There is no clear and all-embracing definition of a constructive trust; rather, it is a flexible concept which the courts of equity use to achieve justice in cases where it would be inequitable to allow the legal owner to claim the whole of the beneficial interest for himself.

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The concept of the constructive trust has been used in the context of domestic property, to allow one partner a beneficial interest in a property which was conveyed into the sole legal name of the other partner. In Gissing v Gissing, before the court had power to make property adjustment orders in divorce proceedings, a wife sought a beneficial interest in the matrimonial home under a constructive trust, which she argued arose by virtue of her financial contributions over the years. These included items such as furniture and paying for garden improvements. The House of Lords held that she ...

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