What is the main principles and factors considered with a constructive trust part Two

This article continues the overview on constructive trusts exploring the definition, principles as well as the factors considered by the Court.

Factors considered by the Court

Common intention constructive trusts arise in two contexts:

a) ‘Joint Names’ cases (where the property is registered in both parties’ names); or

b) ‘Sole name’ cases (where the property is registered in one party’s name).

Baroness Hale in Stack v Dowden stated that the starting point where there is sole legal ownership is sole beneficial ownership and the starting point where there is joint legal ownership is joint beneficial ownership. The onus is therefore on the person seeking to show that the beneficial ownership is different from the legal ownership. Accordingly, in sole ownership cases the non-owner must show he has an interest and in joint ownership cases, the joint owner who claims to have other than an equal joint beneficial interest must discharge this burden.

After the Court has determined which category the matter falls into, it then has to look at the evidence to determine whether the parties intended for their beneficial interests to be different from their legal interests. It was held in Stack that “context is everything” and “each case will turn on its own facts.” Many more factors than financial contributions may be relevant to determining the parties’ true intentions. The following non-exhaustive list of factors are considered by the Court:

Any advice or discussions at the time of the transfer which cast light upon the parties’ intentions then;

1. The reasons why the home was acquired in the parities’ joint names;
2. The reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys;
3. The purpose for which the home was acquired;
4. The nature of the parties’ relationship;
5. Whether the parties had children for whom they both had responsibility to provide a home;
6. How the purchase was financed, both initially and subsequently;
7. How the parties arranged their finances, whether separately or together or a bit of both;
8. How the parties discharged the outgoings on the property and their other household expenses;
9. The parties’ individual characters and personalities may also be a factor in deciding where their true intentions lay.

?The Supreme Court in Jones v Kernott [2011] UKSC 53 upheld that, if a couple purchases a property in joint names, the presumption is that their beneficial interests in the property coincide with their legal estate. There is a high threshold to overcome, however a party can rebut the presumption by evidence concerning subsequent conduct in relation to the property, such as unequal contributions to the acquisition of the property under a mortgage. After the Supreme Court applied the above-mentioned factors in Jones v Kernott, it was deduced that “objectively from [the parties’] conduct” following from the initial joint registration, “there can be no presumption of joint beneficial ownership in a family home.”? Accordingly, the Court held that each of Mr. Kernott and Ms. Jones held differing beneficial shares in the property that are reflective of their respective contributions to the house. This was determined to be 10% for Mr. Kernott and 90% for Ms. Jones.

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