CONSTRUCTIVE TRUST OR PROPRIETARY ESTOPPEL CHOOSE YOUR WEAPON Page 3 Copyright Jane Drew. February 2005 - All rights reserved. No part of this document may be copied or used without the written permission of the author.

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You need to know how the purchase was financed:

·                       Where did the deposit come from?

·                       Who paid the legal costs?

·                       Who is liable under the mortgage?

·                       Were there any agreements as to how the mortgage would be paid?

·                       What contributions were in fact made to the mortgage instalments?

·                       Who paid for any works of improvement?

·                       Who did any works of improvement?

·                       Was a Right to Buy discount supplied and if so by whom?

·                       Was there a buy out of a former spouse?

·        I.e. the Court examines the conduct of the parties to see whether on the established facts it can assume or infer a common intention to share ownership of the property and if satisfied that it can then the Court can conclude that there was indeed a trust giving one or other an interest which without the application of the trust he or she would not have received. 

·        See also Le Foe -v- Le Foe and Woolwich plc [2001]  2 FLR 970 where it was held that indirect contributions to the mortgage by the wife created sufficient inference from which the judge found that the parties intended that the wife should have a beneficial interest in the former matrimonial home. 

·        See under this category of case Cooke v Head and Eves v Eves.

“The sledgehammer-wielding mistress cases.”

    In these particular cases the work of the mistresses in demolishing buildings, wielding sledge-hammers, wheeling barrows of rubble and hard-core about and cement mixing imputed a joint intention to acquire a home for themselves i.e. because she did those works there must have been an intention to own the property jointly.  In this particular case i.e. the inferred or constructive trust the work done or the conduct of the parties must be referable to the subject property. 

·        Where the Court infers a constructive trust arising in the purchase of the home especially when the woman contributes to the mortgage the resultant trust looks very like a resulting trust particularly where the Court calculates the interest by reference to the arithmetic of her contribution but a constructive trust infers common intentions of the parties even after the acquisition whereas a resulting trust presumes an intention in the mind of the donor only so the question to be asked is:

Did she do something relating to the property which would make someone say there must have been a common intention between them otherwise she would not have done that.

·        See Stokes v Anderson [1991] 1 FLR 391. Female co-habitee made payment of £5,000 and £7,000 to male co-habitee who was legal owner.  Parties had made plain orally their common intention that female co-habitee should have a beneficial interest in the property.  Payment made by female co-habitee constituted conduct amounting to and acting on the common intention by her. Requirements for acquisition of beneficial interests satisfied i.e. although no express agreement the common intention was to be inferred from conduct i.e. direct financial contributions of £5,000 and £7,000. 

·        If in fact a beneficial interest is established quantifying the interest of the party who does not own the legal estate depends on the common intention of the parties.  That common intention is not necessarily ascertained at the time of the interest was acquired but is seen in the light of all payments made and all acts done by the Claimant so as to arrive at the determination of a fair share.  When considering the beneficial ownership of a house in which an unmarried couple formerly lived together all payments made and acts done by one party were to be treated as illuminating the common intention as to the extent of that party’ s beneficial interest.

 ·        But note the case of Koendjian v Kay (2004)

     Where a Claimant had expressly referred to a “loan” when attempting to recover a sum of money from the Defendant, a constructive trust in his favour over property partly financed by the money could not be found.

  

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