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The first issue in this situation relates to the interest that Catherine has in the farm. The farm was purchased from the proceeds of 24 Warren Road, which was purchased in Ben’s name. The purchase price of the farm was £800,000; £500,000 of the purchase price was paid from the proceeds of sale from 24 Warren Road, £100,000 was paid by Catherine from money received from a family inheritance, £50,000 was paid by Ben, and the balance of £150,000 was raised from a joint mortgage paid from their joint bank account monthly. In order to assess Catherine’s interest in the farm, her interest in 24 Warren Road will have to be assessed because the proceeds from its sale went to purchase of the farm. Therefore, first this essay will use the principles of implied trust to assess Catherine’s interest in 24 Warren Road.
24 Warren Road was purchased in 2013 for £200,000 in Ben’s sole name. The question of implied trust arises because of two factors. First, Ben’s promise to Catherine that the property and all its contents were as much hers as his and that this is their permanent home; and second, Catherine’s contribution to the property by taking unpaid leave from her job as a construction engineer to renovate 24 Warren Road which saved £100,000 in labour and management fees. Catherine also lost an opportunity of a promotion due to her unpaid leave. These two factors raise the question of the possibility of implied trust to create a beneficial interest in Catherine with respect to 24 Warren Road. The principles of implied trust are discussed next and then applied to the situation to assess Catherine’s interest.
Trust can be created through an express declaration created intentionally by the act of the settlor and manifested through a written deed as per Law of Property Act 1925, s 53 (1) (b). For an express trust therefore, there should be a manifestation of intention of settlor through a written deed, which is not the case here. 24 Warren Road was purchased in Ben’s sole name and there was no written deed expressing the intention of trust. However, Catherine can use principles of implied trust, which include resulting trust and constructive trust. Resulting trust is not expressly created (Law of Property Act 1925, s 53(1)) but is allowed in failed trusts. In cases of apparent gifts, resulting trust can also arise through direct contribution by a party towards the purchase price of the property. In Westdeutsche Landesbank Girozentrale v Islington LBC, it was held that resulting trust gives effect to presumed intention of the trustee. On the other hand, constructive trust imposes a trust against the intentions of the trustee. In case of resulting trust, the presumed intention of the trustee has to be assessed and in this context, there are two presumptions regarding the intentions of the property owners which need to be rebutted by showing a contrary intention. The first presumption is that the owner does not intend to make a gift; and the second is that the purchaser acquires the equitable interest in the property. Thus, where a person contributes to purchase money, resulting trust can be presumed based on the equivalent proportion of the equitable interest. Resulting trust is not applicable to Catherine because there are no direct contributions made by her for the purchase of the 24 Warren Road property. Constructive trust can now be discussed and applied to the case.
A constructive trust, as mentioned above, imposes a trust against the intentions of the trustee. Thus, where there is no express trust, constructive trust can still be used to create beneficial interest in the property where no direct contributions are made by the person in whose favour the constructive trust is being imposed. Moreover, constructive trust has also been held to be more appropriate for establishing a cohabitee’s interest in a family home as noted by the court in Stack v Dowden. Constructive trust is not defined statutorily and courts can be flexible in determining it as concluded by the court in Carl Zeiss Stiftung v Herbert Smith & Co. Therefore, at the outset it may be noted that because Catherine and Ben were not married but living in 24 Warren Road as a family home, constructive trust may be useful for assessing Catherine’s beneficial interest in the property
Constructive trust arises where the claimant can establish that they have been acted upon unconscionably by the legal owner, or have acted to their detriment, or deprived of their right to assert a beneficial interest. This can be explained better with the help authorities. In Lloyds Bank v Rosset, the House of Lords considered that in the case of there being an expressed common intention by the owner of the property, the claimant acted to their detriment while relying on such common intention, constructive trust can arise to give beneficial interest to the claimant. Thus, to establish a constructive trust, Catherine will have to establish common intention for her to have equitable interest in 24 Warren Road, detriment to herself by acting on that common intention. Common intention can be expressed or inferred.
An expressed common intention can be a ground for claimant to receive a beneficial interest under a constructive trust. In this case, Ben had promised Catherine that the property and all its contents were as much hers as his and that he considered 24 Warren Road to be their permanent home. Therefore, Catherine can use these statements to establish a common intention. The next point is to establish detriment to herself by reliance on the common intention. This can be established by the fact that Catherine took unpaid leave to supervise and also physically renovate the house. This not only cost her loss of wages but also a promotion and future higher wages. Therefore, there is detriment to her. However, it can be argued that Ben’s statements do not amount to express common intention, in which case Catherine will have to establish inferred common intention. In Lloyds Bank v Rosset, Lord Walker has noted that claimant’s contributions to improvement of the property enhancing value can lead to inferred common intention. Other authorities may also be considered for assessing inferred common intention.
In Grant v Edwards, the property was in the sole name of one party, but the claimant made payments towards the house expenses, thus allowing the defendant to make the mortgage payments; the court considered that this indicated that the claimant had acted to her detriment while relying on the common intention. Substantial contributions by the claimant can also include home expenses or other such payments that are indirect contributions that may be considered to assess inferred common intention. However,
indirect contributions may be relevant to determining beneficial interest only where such payments enable the legal owner to make payments towards the mortgage. In this case, Catherine can claim beneficial interest based on the labour she provided for the purchase of the 24 Warren Road. The property was purchased for £200,000. Catherine’s contribution to the enhancement of the property saved £100,000 in labour and management fees. In 2016, they sold the property for £600,000. Catherine can argue that her labour added to the value of the property. However, what needs to be done to assess Catherine’s beneficial interest is to quantify the interest, that is, after constructive trust is established. As per the statement made by Ben that the property and all its contents “were as much hers as his”, a common intention of equal interest is made out. In Stack v Dowden, it was held that for the purpose of ascertaining the quantification of the equitable interest in the property, the intentions of the parties during the whole course of dealings have to be ascertained. In this context, the observation of Baroness Hale in Stack, which was accepted by the Supreme Court in Jones v Kernott, will be useful. Baroness Hale suggested that for the purpose of determination of equitable interest share of the two parties in a property, the relevant factors would include purpose for acquiring the house, the relationship between parties, family size, and re-arrangement of the finances between the parties. What this means is that regardless of the two parties not contributing to the purchase of the property, their subsequent understanding on management of family expenses would help in ascertaining their respective shares in the property. In Jones v Kernott, the Supreme Court also held that in absence of an express agreement as to respective shares, the intentions of the parties would have to be inferred according to what would be fair having regard to the whole course of dealings. This hinges on fairness and the court would then have to consider what would be fair as per the entire course of dealing between the parties; this point was also made by Chadwick LJ in Oxly v Hiscook. Thus, where the parties have not had a discussion on the quantification of their respective shares in the property, then the court may have consideration of the entire course of their dealing to assess the quantification of their shares. Two cases that concern quantification of shares can be considered. In Stack v Dowden, the person with higher contribution for the acquisition of the house was held to have higher beneficial interest where the conveyance was in both names but there was no express intention as to quantification of shares. In Burns v Burns, the claimant was held to not have any beneficial interest because she had not made any substantial contribution. In the present situation, although Catherine’s name is not registered as the owner of the property, she has made significant contribution because she has given her time and labour for enhancing the property and its value by 1/3 of the purchase amount. Even with reference to fairness based on the entire course of dealings between her and Ben, the principles of proprietary estoppel can be used to claim that it would be unconscionable to deny an assurance regarding her share in the property when she had relied on Ben’s statements to take unpaid leave and even lose her promotion.
Proprietary estoppel can be established if there was an clear and unequivocal assurance given by Ben, and Catherine relied on such assurance to her detriment and that it would be now unconscionable to deny her the share in the property based on such assurance. In Pascoe v Turner, an express assurance that the claimant will receive the title to the property, based on which claimant paid towards redecorating the property, was held to be a ground for proprietary estoppel.
Thus, with regard to quantification of the shares in 24 Warren Road, assuming that the entire purchase amount of £200,000 was paid by Ben, but £100,000 was contributed by Catherine in labour and management fees, it can be said that if not equal, then 1/3 of the share of the property would be with Catherine. However, Catherine may even claim half the share based on the express statement by Ben that all of it is as much hers as his. The property is then sold for £600,000. If Catherine’s interest in that is taken to be 1/3rd, then £200,000 is paid by her along with the £100,000. These are her direct contributions to the purchase price. Apart from this, the balance of £150,000 was raised from a joint mortgage paid from their joint bank account monthly. Therefore, Catherine’s contribution to the purchase of the farm is £375,000 out of £800,000. This is nearly half of the contribution to the purchase price.
There is also an intention to hold the farm as joint tenants and therefore, the questions of rule of survivorship and severance of joint tenancy arise in the case. The question is whether the copy of a letter addressed to Catherine stating that he wished to sever the joint tenancy would amount to severance and also if the will made by Ben is enforceable. There are two issues here. First, regarding severance of joint tenancy, and second, regarding enforceability of will. Severance of joint ownership can be done as per LPA 1925, s 36(2). A unilateral act of alienating share can sever joint ownership. A joint tenant acting on their own share, can sever joint ownership through a final and irrevocable act. A notice of severance has to be served to the other joint tenants so as to make the intent clear for severing interest immediately and effectively. LPA 1925, s 196(4) provides the method for giving the notice to the other joint tenants. According to this, the notice can be served to the other joint tenants with a recorded delivery post, which is deemed to be received by the other joint tenants because it is by recorded delivery. In this case, the letter is not posted to Catherine by recorded delivery and she says she never received it and has come as a surprise to her. Therefore, this letter is not valid way of severing the joint tenancy. This would mean that Catherine can argue that as of Ben’s death, the joint tenancy was not severed by the means of the letter.
Then, the next question would be whether the act of making the will has severed the joint tenancy or whether the will can be enforceable by Ben’s sister. Joint owners cannot dispose of their interest in the property by making a provision in a will giving their share in the property to someone else. A gift made by one joint owner of his interest in the property to
someone else will fail to have an effect of severing joint tenancy because a joint tenant’s can ‘act on one’s share’ only through inter vivos. Where the joint tenant has simply made a will leaving their property share to someone else, this does not have the effect of severance of joint tenancy in the same way as a sale of the share or its mortgage would have.
In this situation, as the tenancy is not severed by the letter nor by the will made by Ben, the next point to consider is whether Catherine will receive Ben’s share in the property as the surviving joint tenant. The rules regarding survivorship can be considered here. Joint tenants have equal rights to the entirety of the property. When one joint tenant dies, their share of property goes to the others who have survived him. This is known as the rule of jus accrescendi. The rule of jus accrescendi applies so that the surviving joint tenants inherit the share of the deceased joint tenant and is one of the key distinguishing points of joint tenancy. Although, Ben has made a will in which he gave his share of the farm to his sister Sophie, this will has no effect to sever the joint tenancy. Catherine as the surviving joint tenant will receive Ben’s share. Consequently, she can oppose the sale of the farm because Sophie does not have an interest in the farm.
The final point of discussion is the legal position that Catherine would have been in had she and Ben been married. As Catherine and Ben are unmarried, her legal position as a cohabitee is different from what it would have been had she been Ben’s spouse. First of all, in case, Catherine and Ben were married, the courts could have applied the Matrimonial Cause Act 1973 to resolve the issue of Catherine’s share in the property. Under this legislation, courts can make suitable orders for distribution, transfer or settlement of property between the parties or the children or for the benefit of the latter. There is no equivalent legislation for cohabitees in the UK and for such couples, courts have to apply constructive or resulting trusts to distribute their interests in the land or property that is family home.
In the case of an unmarried couple, there is an absence of legal formalities with relation to interest in the property and therefore, courts rely on the doctrines of proprietary estoppel and implied trust. The Trusts of Land and Appointment of Trustees Act 1996 can also be applied in such cases as it allows cohabiting partners to claim equitable portion of the family home upon separation (ss 14 and 15).
The Harris v Goddard case can offer insight into how courts may decide a case where the spouses are joint owners of the property that is their matrimonial home and one of the parties dies while the divorce case is pending. In this case, the court held that the petition for divorce did not amount to severance of joint tenancy and that the wife as the surviving joint owner will get 100 percent of the equitable ownership in the property. However, in this case also the principle is that if the joint ownership is not severed, then the surviving joint tenant receives the equitable interest of the deceased joint tenant. In this point, there is not a significant difference between the position of Catherine and the wife in Harris v Goddard case.
To conclude this essay, Catherine can oppose the sale of the farm as she is now the only owner of the property as the death of Ben has left her to be the sole surviving joint tenant. The rule of survivorship would apply in this case and Catherine would inherit the entire share of the interest in the property. Even if it is argued that the farm was purchased with the proceeds of the sale of 24 Warren Road, it can be established by Catherine that she contributed to the property and acquired interest through a constructive trust. Her share in the property can be quantified on that basis as well. The Trusts of Land and Appointment of Trustees Act 1996 is also applicable to protect her interest in the property and she can oppose the sale of the property on that basis.
Table of cases
Burns v Burns (1984) Ch 317.
Carl Zeiss Stiftung v Herbert Smith & Co  2 Ch. 276.
Curly v Parks (2004) EWCA Civ 151.
First National Securities Ltd v Hegerty  QB 850.
Gould v Kemp (1834) 39 ER 959
Grant v Edwards  Ch. 638.
Harris v Goddard  3 All ER 242.
Holman v Howes  1 FLR 1217
Jones v Kernott  UKSC 53.
Le Foe v Le Foe  2 FLR 970.
Lloyds Bank v Rosset  UKHL 1.
Midland Bank plc v Cooke  4 AlER 562.
Oxley v Hiscock 2004 EWCA CIV.
Pettitt v Pettitt  AC 777.
Re 88 Berkeley Road NW9  Chd 648.
Re Draper's Conveyance  1 Ch 486, ChD.
Stack v Dowden  2 AC 432
Thorner v Major  UKHL 18.
Westdeutsche Landesbank Girozentrale v Islington LBC  UKHL 12.
Bevan C, Land Law (Oxford University Press 2018)
Gray J, Unlocking Land Law (Routledge 2016).
MacKenzie J, Textbook on Land Law (16th Edition Oxford University Press 2016).
Law Commission, Cohabitation: the financial consequences of relationship breakdown Law Com No 307, CM 7182 (London: The Stationary Office 2007).
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