This article focuses on informally created trusts in Property Law. In particular, it explores the treatment of women by courts throughout recent years when establishing their beneficial share in a property. More recently, courts have presented a willingness to consider intention as a key factor when calculating beneficial interests in a property.
Introduction
Co-ownership is the ownership of land by two or more individuals concurrently. Each individual is simultaneously entitled to possession of the whole land. Co-ownership determines the rights and obligations of the parties with interests in the land.
Law and Equity together provide a dual set of property rights to property owners. In practice, there is often one sole legal owner. Yet, a cohabitant living in the same property may have an equitable interest in the property, meaning they are entitled to a proportion of the property price.
Problems arise pertaining to a misunderstanding of how co-ownership operates. For instance, the myth of ‘Common Law marriage’ is the belief that when an unmarried couple have lived together for a certain number of years, they automatically acquire the rights and protections of a married couple. This is, of course, false. So, how exactly do unmarried couples establish their requisite rights and shares in property? This question has caused great uncertainty throughout recent years and has often discriminated against women.
The Resulting Trust
A resulting trust is created informally. This arises when although there is one legal owner, the law recognises another person has contributed a lot of money to purchasing a property. Resulting trusts are solely based on financial contributions. This causes injustice in couples when one partner may work, whilst the other looks after the home.
The lack of consideration on non-financial contributions to a property limits a partner’s ability to claim they are entitled to a share in the property. For instance, a non-financial contribution may include raising children or renovating the home. Courts do not consider these alternative intentions when deducing equitable interests in properties. As a result, many cohabitants have been left unjustly with no share, or a minimal share, in a property.
Common Intention Constructive Trusts
Common Intention Constructive Trusts (CICT) indicate a step away from resulting trusts. They place more emphasis on the intentions of parties when acquiring property together, for instance whether a property is intended to be used as a matrimonial home to raise children. Stack v Dowden (2007) indicates the move towards CICT’s. However, in the past, cases illustrate the inadequacy of courts calculating the interests of women in properties when their contributions are non-financial.
For instance, in Lloyd’s Bank v Rosset (1971), Mrs Rosset failed to establish she had a property right. This was on the basis that she made no financial contributions to the house deposit or the mortgage. Thus, the court deduced there was no common intention between Mr and Mrs Rosset for Mrs Rosset to acquire a beneficial interest in the property. However, the court failed to consider Mrs Rosset’s non-financial contributions when inferring an intention. She supervised the renovation of the property whilst Mr Rosset was at work. This indicates how in earlier cases, courts were reluctant to establish an intention to create an interest when there are no financial contributions.
The more recent case Stack v Dowden (2007) presents a change in the law towards placing more weight on the intentions of couples when purchasing a home together. Lady Hale emphasises that “context is everything” when deciding the beneficial interest of partners who have not financially contributed to properties. Factors considered by the court may include:
- Discussions at the time the home was acquired,
- The purpose for which the home was acquired,
- The nature of the relationship between the parties,
- How the home was financed,
- Household expenses.
The list highlights how courts now consider broader non-financial contributions to homes. This is a significant change for partners who have not expressly indicated how their shares in the property are divided. Courts may now consider the entirety of their relationship, rather than isolating financial contributions which alone do not represent the nature of home co-ownership.
After Stack, the case Jones v Kernott (2011) asserted the new role of inferring the parties’ common intention from their conduct to deduce their interests in the property. Additionally, Marr v Collie (2017) presents the court considering parties’ intentions in commercial property disputes as well as family cases. This proves the court is becoming more open to accepting the role of intention and its importance when deducing parties’ interests.
Conclusion
The role of intention is becoming more evident in co-ownership disputes. This is leading to fairer results through considering the broader context of domestic property transactions and why they are acquired. However, there is still a great deal of work to be done by courts to undo their historical dismissal of intention in the past, which has led to harsh results against women.
By Ava Edwards, a student at Southampton University.
