There was also an agreement that Jane should acquire an interest in the property. In the case of Re Densham [1975], Judge Goff held that if A, the owner of a legal title, expressly agreed at any stage that B should obtain a larger beneficial share under a trust of that title than was firmly justified by B’s money contribution towards it purchase, B could fairly claim that share on the basis of a constructive trust. With Jane she contributed indirectly as was mentioned above, she has invested a lot of money into that property so under constructive trust should claim her share back. The timing of the situation between Jane and Ahmed is he first acquired the property then the bargain was struck between them but as Lord Oliver of Aylmerton put it,
“no reason in principle why the doctrine should be limited to an intention formed at the time of the first acquisition of the property.”
Now looking at the case of Lloyds Bank Plc v Rosset, Lord Bridge of Harwich explained the element of detrimental reliance,
“even the clearest oral agreement to hold property in trust is ineffective for want of writing unless the claimant has altered her position in reliance on the agreement.”
Jane has altered her position greatly, she has moved from London to Leeds and has left her successful career behind, so this is a detrimental reliance from Jane. Also in the case of Gissing v Gissing [1971], Lord Diplock points out that yet again that there must be some detriment or “material sacrifice’ connected with the property. This is shown in Jane’s case through her moving and through her expenditure on the house. Also in Jane’s case there was a bargain and common intention like in the case of Neneth v Nemeth (1978) where it was shown that every constructive trust comes from some bargain which affects the conscience of the party who is later made liable as constructive trustee. Applying this to Jane it could be said that Ahmed agreed to the house being transferred into joint names as long as she moves in because of her giving up her career interests. There is a lot in favour for Jane in the way of the joint names, the amount of money spent on the common intention that one day the house will be hers, and the way in which she left behind her career interests to move in with him, this will satisfy the elements needed for a constructive trust to arise.
Now in Rachel’s situation the principles concerned are different because the house was purchased in the sole name of Tom. As soon as they both began the relationship they decided to buy the house. It was purchased for 200,000 in the sole name of Tom only but Rachel’s parents made a gift to them of ten thousand pounds, which was helped to pay for the house with the balance being provided by a mortgage loan. There was no discussion regarding the beneficial ownership of the house. The mortgage was in Tom’s name but Rachel paid the installments for 12 months when Tom was out of work. Where property is conveyed into the name of one party only, a non-legal title holding partner may claim a beneficial interest in that property in several ways. First, by producing an express contract in writing; secondly, by producing a trust in her favour evidenced in writing; or, thirdly, by establishing the existence of an oral declaration of a trust relied and acted upon to her detriment. There is absence of this in Rachel’s situation which gives rise to the creation of a resulting trust. . A resulting trust is where the law implies a trust to give effect to the intentions of the settlor that are not explicitly expressed. There is no available evidence of the parties’ actual intentions, but contributions of cash have been channeled directly towards the initial purchase of realty. She has admitted that there had not been any discussion regarding the beneficial ownership. In Jane’s situation she was thinking of spending her life in that house so acted accordingly in that way, so she relied on this common intention to her detriment. Like for example, in Grant v Edwards it was held that contributions to the payment of mortgage installments were enough to establish detrimental reliance. In Rachel’s situation she had paid the installments for twelve months so in this aspect her case would look favourable. In Rachel’s case the property is vested in the sole name of Tom, then he will prima facie be vested with beneficial interest as well. Since the contributions are unequal, they are tenants in common. They both have some amount of beneficial interest, now if you look at the Trusts of Land and Appointment of Trustees Act 1996 it now requires that any arrangement of co-ownership must take under trust of land, statute will impose a trust of land wherever the parties do not create one expressly. This would also favour Rachel because a trust was not created expressly. Looking at the case of Pettitt v Pettitt Lord Reid said,
“ …but as regards improvements made by a person who is not the legal owner, after the property has been acquired, that person will not, in the absence of agreement, acquire any interest in the property or have any claim against the owner.”
After that judgment the case looks favourable for Rachel due to the fact that she paid twelve installments of the mortgage and also her parents gave ten thousand pounds towards the house and plus she supervised some renovation work for the house.
The principle of resulting trust is adaptable to any number of financial contributors, each is presumed to have intended to take beneficially in proportion to his own contributions of cash like for example in the case of Harwood v Harwood [1991]. Also take a look at the case of Westdeutche Landesbank Girozentrale v Islington LBC [1996] where Lord Browne-Wilkinson said,
“Where A makes a voluntary payment to B or pays for the purchase of property which is vested in B alone or in the joint names of A and B, there is a presumption that A did intend to make a gift to B: the money or property is held on trust for a in the case of a joint purchase by A and B in shares proportionate to their contributions…..”
This is another case which shows that due to the payments made by Rachel and from her parents she is held in trust and has some beneficiary interest in the property. She has to prove to the court that her contributions were not intended to be as a gift or counter presumption of advancement, this maybe a problem with Rachel’s case because the money given to her and Tom was as a gift which then was used to help pay for the house. It is because of Rachel that Tom received this amount in order to pay for the house and the rest by mortgage. There was an initial contribution from Rachel’s parents towards the house, which shows that and provided presumptive evidence that Tom intended Rachel to have some beneficial interest. Rachel is in a favourable position due to her paying the mortgage and helping around the house such as supervising some renovation work, which allowed Tom to pay less and also paid for holidays. Taking into account of past cases her position looks favourable.
Now I will look at how their shares maybe calculated. In both cases there is no agreement as to the defined size of the share. So the conduct of both Jane and Rachel has to be looked at in order to determine what share was intended. The court will not be restricted to valuing contributions but will take “a broad brush approach”. Like take for example the case of Drake v Whipp, where it was said that the question should be approached broadly taking into account the parties’ whole course of conduct together. So in Jane’s case she undertook extensive gardening, redesigned the interior, installed central heating and helped build and pay for an extension which cost twenty-five thousand pounds, the total cost of the house is 350,000. From this it seems that she has a 1/3 share in the property due to the amount of work she has carried out and plus from her leaving her career interests behind. She has I’m assuming possibly spent around fifty-thousand or near in improving the property. In Rachel’s situation it’s very vague to actually give a precise calculation, but due to her parents’ money of ten thousand pounds and her contribution of paying the mortgage for a year she should get some reasonable size of shares by the courts using the “broad brush approach”.
Austin v Keele (1987) 10 NSWLR 283
Nemeth v Nemeth (1978) 17 ALR 500
Hanbury and Martin, Modern Equity (15th Edition Sweet and Maxwell 1997).
Pettitt v Pettitt [1970] AC 777
Nigel Gravells 2nd edition, Land Law; text and materials.
Pettitt v Pettitt [1970] A.C. 777
Drake v Whipp [1996] 1 FLR 826