Re Sharpe (A Bankrupt)

Re Sharpe (A Bankrupt) [1980] 1 W.L.R. 219

Constructive Trusts – Bankruptcy – Property – Contract – Equity

Facts

An aunt loaned Sharpe, her nephew, money for the purpose of buying a leasehold premises. This was a shop with living accommodation situated above it. It was agreed between them that the Aunt could live there with Sharpe and his wife as long as she liked. The aunt paid some of this purchase price, as well as for decorations and various fittings for the property. However, Sharpe became bankrupt and the trustee in bankruptcy wanted to sell the property. This resulted in the Aunt putting forward her claim to an interest in the property.

Issues

The main issue in this case was whether there was a resulting trust created by the Aunt paying some of the purchase price for the property and whether she had an interest in this property.

Decision/Outcome

It was held that the Aunt had no equitable interest in the property and there was no resulting trust. The money that the Aunt had provided to her nephew was intended to be a loan and was not a form of gift. This meant that the money was not to be seen as a contribution to the purchase price of the property, which did not allow for a trust to be created that would have given her an interest in the property. However, the loan agreement regarding staying in the property for as long as she liked, did mean she had a contractual right of occupation in the property until the loan was repaid to her.