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Exam 14: Trusts of the Family Home

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Question 1

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Which section of the Law of Property Act 1925 provides that constructive trusts do not need to be evidenced in writing?

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The Law of Property Act 1925 is a statut...

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Question 2

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Which case held that when establishing a Lloyds Bank v Rosset 'category two' trust, the non-legally owning party must establish a common intention to share the property by conduct?

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The case that held that when establishing a Lloyds Bank v Rosset 'category two' trust, the non-legally owning party must establish a common intention to share the property by conduct is the case of Lloyds Bank plc v Rosset itself. The citation for this case is [1991] 1 AC 107, [1990] 2 WLR 867, [1990] 1 All ER 1111, and it was decided by the House of Lords. In Lloyds Bank v Rosset, Lord Bridge laid out two categories for establishing a beneficial interest in a property under a constructive trust in situations where the property is in one party's name only: 1. Category one: There is direct evidence that both parties intended to share the ownership of the property. This could be through an explicit agreement, arrangement, or understanding. 2. Category two: Where there is no express agreement, the intention to share the property must be inferred from the conduct of the parties. This conduct must be indicative of a common intention to share the beneficial interest and must go beyond merely contributing to household expenses. It typically involves a significant contribution to the acquisition of the property, such as payment towards the purchase price or substantial improvement of the home. In the Rosset case, the House of Lords held that the non-legal owner (Mrs. Rosset in this case) had to demonstrate that there was a common intention to share the beneficial interest in the property, and that this intention was deduced from her conduct. However, in this particular case, Mrs. Rosset was unable to establish such a common intention based solely on her conduct, which included supervising and participating in renovation works, as it was not deemed sufficient to demonstrate a shared intention to own the property. The Lloyds Bank v Rosset case is a leading authority on the establishment of constructive trusts in the context of cohabiting couples and the division of property when relationships break down. It sets a high threshold for the non-legal owner to prove a common intention to share the beneficial interest in the property through conduct.

Question 3

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In which two situations did Lord Bridge in Lloyds v Rosset (1991) 1 AC 107 state that a constructive trust could arise?

How much detrimental reliance is needed for the non-legally owning party to establish a constructive trust?

The HL in Pettitt v Pettitt (1970) AC 777 and Gissing v Gissing (1971) AC 886 laid down a fairly broad test for recognising that a non-legal owning spouse should be entitled to an equitable interest in the property.

Name a case that demonstrated the courts are prepared to take a relatively wide view of contributions which may show evidence of conduct upon which this type of trust may be based.

Which case seems to go against the orthodox position that only direct payments towards the purchase price of the property are sufficient to establish a common intention trust based on the parties' conduct alone?

Which Court of Appeal case recognises the quantification of the second type of Rosset trust on constructive trust lines?

When an agreement and detrimental reliance leads to the creation of a constructive trust, but where the parties have not themselves quantified their shares, the court has a wide discretion how a party's share should be calculated, taking into account the parties' entire conduct.

Lord Bridge in Lloyds Bank v Rosset, expressly approved the earlier cases of Eves v Eves and Grant v Edwards (1986) Ch 638 as examples of where a trust would be recognised by the courts in his first category of constructive trusts.

A more generous result appears to have been reached for the non-legally owning spouse by Lord Denning MR in the Court of Appeal's decision in Eves v Eves (1975) 1 WLR 1338.

Chadwick LJ in Oxley v Hiscock (2005) Fam 211 stated that a party 'is entitled to that share which the court considers fair having regard to the whole course of dealings between them in relation to the property.'

Baroness Hale tried to narrow Stack v Dowden in Privy Council case of Abbott v Abbott (2007) UKPC 53.

What did Stack v Dowden concern?

What was held to be a direct contribution to the purchase price in Midland Bank plc v Cooke (1995) 27 HLR 733?

Lord Bridge in Lloyds Bank v Rosset held that only 'direct contributions' towards the purchase price of the property would be enough to establish a category 2 trust.

Name a decision since Stack v Dowden and Abbott v Abbott where the court has shown no inclination to widen the types of contribution that may be used to establish a trust of Lord Bridge's second category.

In which two circumstances did the Supreme Court in Jones v Kernot (2011) UKSC 53 state that the resulting trust approach would be appropriate for quantifying an equitable interest?

The establishment and quantification of an interest in the family home by using the law of trusts applies nowadays only to unmarried couples.

In order to successfully establish a Lloyds Bank v Rosset 'category one' trust, it must be based on a common intention that is shared between the parties.