Analysis of Equity and Trust Law - Case Study Example

156107     In order to be able to advise Marcus and David of the rights in respect of the property and any financial provision that Marcus should make to David for the contributions he has made to the property it is necessary to look at the law surrounding cohabiting couples, resulting and constructive trusts and the law surrounding same sex couples. Firstly, looking at the rules governing cohabitation with regards to the entitlement of the parties to the share of the property legislation looks towards contributions made towards the purchase price of the property or contributions towards repairs or the upkeep of the property. When considering contributions to the repairs and upkeep consideration is given not only to financial contributions but also to contributions in terms of worked carried out by the parties. In this way a partner who has assisted in reconstruction work on the property might be able to secure an interest in it despite the fact that they have made no monetary contribution to the property. The first thing to consider is whether the actions of the party have created a resulting trust. If David had made a contribution to the purchase price the court may find that a resulting trust has been created1. A resulting trust can be inferred where one of the party has provided money towards the purchase price, which is then only registered in the name of one of the parties2. The courts are free to make the presumption that the legal owner is holding the property on trust for the other party in shares according to their contribution3. As David did not contribute directly to the purchase price it may be difficult for the court to find that a resulting trust could be inferred. If there is evidence to show that the plaintiff has contributed towards the purchase price of the property but not had her name entered onto the register a resulting trust can be implied which would give her rights as an owner of the property4. With unmarried couples the courts can infer joint ownership on the principle of an implied5 or a constructive trust6. An implied trust might occur where the court can infer from the actions of the parties that the person in whose name the property is registered in intended to give his partner a beneficial interest in the property7. A constructive trust could be inferred where the actions of the party not entered on the register suggest that they expected to have an interest in the property. This can be evidenced by them having contributed towards the household bills or by having assisted in the repairs of the property8. If David had paid towards the purchase price of the property he would be able to rely on the authority established in Tinsley v Milligan9. In this case the plaintiff had bought a house with her lesbian partner but in order to be able to claim benefits had chosen not to have her name included on the registration despite having contributed towards the purchase price. The respondent attempted to use the fact that the property was only registered in one name to deprive the plaintiff of their share when the relationship came to an end. In this case the courts were faced with the difficulty that the plaintiff had chosen to not have her name on the register so that she would be entitled to claim benefits. This caused problems as equity insists that he who seeks equity must do equity. Using common law remedies a plaintiff could assert their common law right to ownership provided that they did not need to rely on their illegal conduct to establish title. In this case the plaintiff did not need to rely on their illegal conduct to establish title her claim and the courts allowed the claim under common law remedies. As it has been stated that David has not paid towards the purchase price then he would have to rely on being able to establish that a constructive trust had been created. Constructive trusts can be inferred if a common intention that David should have a beneficial interest in the property can be proved and that he has acted in her own detriment in reliance on that promise. Lloyd’s Bank Plc and Rosset10 is an example of where the courts initially found that a constructive trust could be construed. The court held that a constructive trust existed as the evidence suggested a common intention had been inferred that Rosset should acquire a beneficial interest. The work carried out by Rosset was accepted as proof that she only assisted because she expected to acquire a beneficial interest. The judge also pointed out that her contribution would have reduced the cost of the renovations. On appeal the decision was reversed by Lord Bridge of Harwich who stated that only direct contribution to the purchase price by the party who is not the legal owner whether from the offset or by payment of the mortgage instalments will justify the inference necessary for the creation of a constructive trust. Had David been paying the mortgage payments he the courts might infer that a constructive trust has been created. In Gissing v Gissing11 the court held that the contributions of the wife to the household expenses including making mortgage payments was evidence that might corroborate a common intention that such payment were intended to be treated as a contribution to the purchase price of the property. Despite no legislation to assist, David can still rely on previous case law to assert his rights. In Rowe v Prance12 the plaintiff won her claim for a half share in the yacht that Prance had bought and for which she had made no financial contribution. The court accepted the evidence of Rowe that Prance had made representations to her referring to ‘our boat’ and ‘sharing the boat together’ and such declarations could amount to a declaration of trust. Further cases that might assist David in his claim for a share of the property would be Eves v Eves13 and Grant v Edwards14. In both cases inference was drawn from comments made by the respondents to the plaintiffs and by their conduct in respect of work carried out that there was an intention to give the plaintiffs a beneficial interest. Under the proposed Relationships (Civil Registration) Bill the Solicitors Family Law Association have put forward proposals aimed at giving cohabiting couples similar rights to married couples15. At the moment the Bill has not been passed and therefore David could not rely on the recommendations to support his claim. If the reforms had been made law David might have been able to acquire the right to remain in the property for the duration of his life as this is one on the recommendations of the reforms16. There is some question at present as to whether the Bill when it is passed will take account of same sex couples or whether it will only recognise heterosexual couples. Given the recent acceptance of same sex relationships with the introduction of the Civil Partnership Act 2004 where same sex couples undergo a ceremony similar to a wedding and make a civil contract with each other, it is likely that the Bill will include same sex couples in the recommendations. As the property is in Marcus’s name only David may not be entitled to a share17. Although it would seem unfair for him not to receive a share as he has been paying towards the bills and holidays as well as paying for the landscaping of the garden, the courts may decide he is not entitled as they cannot find any evidence within the relationship of a common intention of joint ownership18. In Burn v Burn19 the court held that because Mrs Burn had made no financial contribution to the purchase price or mortgage payments they were not entitled to construe a trust in her favour. It could be argued that David has acquired an equitable interest in the property because of the repairs he has paid towards 20on the principle of a constructive trust. Separation of the parties can lead to many problems in the division of the house and other assets. Cohabitation agreements can sometimes assist and remove some of the difficulties associated with the division of the assets21. When it comes to the ownership of the property both married couples and unmarried couples can have either a joint tenancy or a tenancy in common. Where the property is registered in the names of both parties in equal shares it does not make any difference whether the couple are married or not. In these cases both unmarried and married couples would be entitled to an equal share in the property. There can also be problems for unmarried couples if the home they are living in is rented. If the couple are married then they are usually entitled to transfer the tenancy to the other party whereas unmarried couples may not be protected in this manner22. Where this might occur and cause serious hardship for the person whose name is not listed on the tenancy is where the couple have cohabited for a number of years and the person in whose name the tenancy is registered dies. There have been a few cases not limited to heterosexual couples were this has happened and the surviving partner has not been entitled to remain in the property23. The conclusion that can be drawn from the above is that the courts are likely to insist that Marcus has to compensate David for the amount of money he has paid towards the upkeep of the property. David is unlikely to get an equal share of the profits in the property as he did not pay towards the purchase. The amount he receives will be based on a calculation of how much he has contributed financially towards household bills in the seven years he has lived there. Bibliography Ashburner, W, Principles of Equity, 2nd Ed, 1933, Butterworths Bryn Perrins, Understanding Land Law, 3rd Ed, 200, Cavendish Publishing Ltd Butterworths Cockburn, T & Shirley, M Equity in a Nutshell, 2005, Lawbook Co Cockburn, T, Harris, W, & Shirley, M, Equity & Trusts, 2005, Butterworths Gravells, N P, Land Law Text and Materials, 2nd Ed, 1999, Sweet and Maxwell Harris, P, An introduction to Law, 4th Ed, 1995, Butterworths Hayton, D J, The Law of Trusts and Equitable Remedies, 11th Ed, 2001, Sweet & Maxwell Pearce, R and Stevens, J, The Law of Trusts and Equitable Obligations, 2nd Ed, 1998, Slapper, G & Kelly, D, The English Legal System, 4th Ed, 1999, Cavendish Publishing Ltd Thomas, M, Statutes on Property Law, 8th Ed, 2001, Blackstone’s Zander, M, The Law-Making Process, 3rd Ed, 1988, Weidenfield & Nicolson http://www.adviceguide.org.uk/ Table of Cases Burns v Burns [1984] 1 All ER 244, [1984] FLR 216, CA Drake v Whipp [1996] 1 FLR 826 Eves v Eves [1975] 3 All ER 768 Fitzpatrick v Sterling Housing Association Ltd [2001] 1 A.C. 27 [1999] 3 W.L.R. 1113 [1999] 4 All E.R. 705 [1999] 2 F.L.R. 1027 [2000] 1 F.L.R. 271 [2000] 1 F.C.R. 21 [2000] U.K.H.R.R. 25 7 B.H.R.C. 200 (2000) 32 H.L.R. 178 [2000] L. & T.R. 44 [2000] Fam. Law 14 [1999] E.G.C.S. 125 (1999) 96(43) L.S.G. 3 [1999] N.P.C. 127 (2000) 79 P. & C.R. D4 Times, November 2, 1999 ndependent, November 2, 1999 Gissing v Gissing [1971] AC 1886 Grant v Edwards [1986] 2 All ER 426 H v M ( Property: Beneficial Interest) [1992] 1 FLR Lloyd’s Bank Plc and Rosset [1990] 1 All ER 1111 (HL) Lloyds Bank Plc v Rosset [1991] 1 AC 107 Midland Bank plc v Cooke [1996] 1 FCR 442 Pettitt v Pettitt [1969] 2 All ER 385 Rowe v Prance (1999) 2 FLR 787 Tinsley v Milligan [1993] 3 All ER 65 Tinsley v Milligan [1993] 3 WLR 126 (HL) Williams & Glyns Bank Ltd v Boland [1981] A.C. 487 [1980] 3 W.L.R. 138 [1980] 2 All E.R. 408 (1980) 40 P. & C.R. 451 (1980) 124 S.J. 443 Table of Statutes Family Law Act 1996 Part IV Law of Property Act 1925 Relationships (Civil Registration) Bill The Children Act 1989 Read More