Property Law Cases - Assignment Example

In the context of claims for beneficial interest in land under an implied trust, is there a clear distinction between resulting and constructive trusts? The area of law relating to claims for beneficial interests in land under an implied trust is inherently complex, further compounded by judicial categorisation of trusts into resulting and constructive trusts. Moreover, many commentators have criticised the courts’ wide interpretation of established trust law principles as contradicting the primary purpose of the implied trust;1 which in turn has created uncertainty for individuals claiming beneficial interests. This is further highlighted by the law in relation to the division of rights in the family home on the break of a relationship, where implied trust principles overlap. The changing dynamic in the family nucleus coupled with socio-economic variances shaping property ownership can be problematic on the breakdown of a family relationship whether in the context of marriage or cohabitation2. The increase in cohabitation has also fuelled debate regarding the law’s approach to determining rights on subsequent relationship breakdown, and the rising divorce rate3 has increased the importance of effective legal mechanisms in determining proprietary rights. With regard to relationship breakdown, the difficulties and uncertainties surrounding rights to a family home have been traditionally dealt with through resulting or constructive trusts4. Moreover, whilst detailed provisions under the Matrimonial Causes Act 1973 specifically accord rights to married parties on relationship breakdown, the court does not have such wide ranging powers in relation to cohabitees and a sole owner will continue to own the property notwithstanding a relationship breakdown5. If a partner has made contributions to the property under cohabitation they currently have to rely on the complex principles of constructive and resulting trust with no equivalent statutory right of occupation as is applicable to marital relationships6. The changing dynamic of family relationships has brought attention to the inherent flaws in arbitrary, ad hoc judicial decision making in relation to the implied trust, raising questions as to the parameters of its application and undermining any the principle of a genuine distinction between resulting and constructive trusts. The focus of this analysis is to consider the law relating to implied trusts. In particular, I will undertake a contextual analysis in reference to a growing body of case law in relation to implied trusts on the breakdown of family relationships and consider whether there is any real distinction between resulting trusts and constructive trusts as applied by the judiciary. Firstly, outside the realms of marital relationships where children are involved, the absence of a definitive aim of the Matrimonial Causes Act 1973 has led to a width of discretion regarding rights to the family home. Lord Scarman asserted ion the case of Trippass v Tripass that “the complete flexibility of approach that the act….emphasises all the circumstances of the case7”. It has been argued that the judicial formulation of section 25 implies a fair outcome and non-discrimination between husband and wife in evaluating their contributions to the family home, welfare in their respective roles. However, Lord Nicholls in White v White8 asserted the contradiction that “fairness like beauty is in the eyes of the beholder9”. Furthermore, the difficulty that has exercised the courts in particular is the concept of contributions and the need to balance this so as to not apply discriminatorily. Traditionally, cases have had to address the pattern whereby the women have been homemakers, (with property registered in their partners’ name) looking after the children only to face the possibility of no proprietary rights to a property on subsequent relationship breakdown10. Whilst clearly unfair (especially the longer the relationship), the common law does not provide any protection and in such cases equity has sought to address the balance through resulting trust or constructive trust11. Resulting trusts usually involve contribution to the initial cost of the family home, which is registered solely in the name of another person12. Equity does not presume an outright gift, but rather a presumption that the contributing party intended to retain a beneficial interest in the property13 (despite no evidence of actual intention). Whilst this approach has been criticised theoretically as the imposition of an “artificial presumption14”, it is arguably a necessary approach to protect third party interests. However, the resulting trust will not cover a situation where one party has foregone a career and been a full time home-maker and in this case the constructive trust is relied upon. The leading case of Lloyds Bank plc v Rosset15 highlighted the essential requirements for the imposition of a constructive trust asserting its foundation in the common intention of the parties to share the properties. Lord Bridge further asserted in this case that “intention” could be express or inferred from conduct16. In this case, in order to obtain a mortgage, the Defendant had convinced the Claimant to sign a disclaimer on the understanding that they would marry and occupy the property together. In reliance on this, the Claimant had paid £12,500 into the Defendant’s bank account and she had spent thousands on improvements to the property. It was held that there was clearly an intention to share the property, which resulted in the property being held on constructive trust. Furthermore, Lord Bridge highlighting the reasoning in Gissing v Gissing17 asserted the concept of detrimental reliance in order for there to be a constructive trust. A prime example of this is the case of Eves v Eves18, where the defendant told the claimant that the only reason the house was being put in his sole name was as she was under 21. In reliance on this promise, the claimant redecorated the house and undertook significant works to the house. As a result, she was awarded a quarter shares in the proceeds of sale. Notwithstanding the widening interpretations of trust law to accommodate relationship breakdown, the constructive trust is limited by reluctance to acknowledge indirect contribution, which has worked primarily against women in practice19. Moreover, the courts’ approach has been positively inconsistent in relation to indirect contributions. For example, in the case of Hussey v Palmer20, the wife had paid for an extension to the house and it was held to constitute a beneficial interest, however the court had great difficulty in deciding whether it was a resulting trust or constructive trust, thereby highlighting the inherent flaw in artificial legal distinctions. Conversely, in the case of Thomas v Fuller-Brown, 21 where the claimant had carried out substantial works to the house registered in her husband’s name, she was held to have not beneficial interest. However in the case of Burns v Burns22, Fox LJ obiter suggested that if a woman makes a substantial contribution even indirectly it could result in an indirect interest, under the common intention constructive trust. The inconsistency in application of the constructive trust suggests the importation of “false” presumptions applied on policy grounds on a case by case basis, undermining legal certainty in implied trusts. Moreover, there is no consistent approach to what constitutes a “substantial contribution”, which is clearly evidenced in the approach to determining a beneficiary’s share in the proceeds of the sale under constructive trust23. The decisions of Gissing v Gissing24 and Midland Bank plc v Cooke25 suggest that the share can be inferred by conduct, which intrinsically lends itself to an ad hoc case by case basis determination, which contradicts legal certainty. Alternatively, the courts have been reluctant to extend the application of common intention constructive trust and “contribution” to cohabitation, with the result that cohabitees generally have to rely on the resulting trust, which is limited to contribution at the time of purchase. However, it is submitted that this fails to address the modern reality of cohabitation. The above analysis demonstrates highlights the lack of consistency and certainty in relation to the law of implied trusts. Whilst the distinction between resulting trusts and constructive trusts theoretically remains, case law regarding the common intention constructive trust remains arbitrary, often reliant on ad hoc judicial importations of “artificial presumptions” rooted in policy considerations. In addition to perpetuating uncertainty in this inherently complex area of law, the lack of consistency further demonstrates a judicial propensity towards considerations of “contribution” when applying the common intention constructive trust, blurring the distinction between resulting trusts and constructive trusts. Moreover, the reluctance to accommodate the reality of modern relationships, particularly in the cohabitation context, is submitted that a general overhaul of this area of law is needed to address rights to the family home outside the limited confines of marriage. Such an approach would not only specifically address relationship breakdown, but would also promote legal certainty in avoiding ad hoc interpretation of existing trust law. BIBLIOGRAPHY M Dixon, (2005) Principles of Land Law, 5th Edition. Routledge -Cavendish Publishing 2005. Hanbury & Martin, (2006) Modern Equity, 17th Edition Lowe., & Douglas., (2006). Bromley’s Family Law. 10th Revised Edition LexisNexis UK. Megarry and Wade., (2007) The Law of Real Property. 7th Edition Sweet & Maxwell AJ, Oakley, (2003) Megarry’s Manual of the Law of Real Property 8th. Sweet & Maxwell 2003 R, Sexton (2006) Land Law 2nd Revised Edition Oxford University Press. R J Smith., (2003) Property Law. 4th Edition, Longman R J, Smith, (2004) Property Law Cases & Materials 2nd Edition, Longman Todd and Wilsons (2007). Textbook on Trusts 8th Edition. Oxford University Press Janet Walker, Divorce Reform and the Family Law Act 1996, available at www.dca.gov.uk/family/fla Read More