Constructive Trust

The case concerned: Constructive trust, Common Intention, Detrimental Reliance, Quantification of Share, whether woman entitled to beneficial share in the house.

The significance of Eves v Eves [1] was that when a man leads a woman, to whom he is not married, to believe that she is to have an interest in a house which he has purchased, and the parties maintain and use it for their joint benefit, the courts will find a constructive trust in favour of the woman that the house is held partly for her benefit.

The facts: Janet and Stuart Eves purchased a house in which it was intended both would live. They were not married but had children; the house was conveyed into his name alone. Stuart purchased the house provided entirely by him. However, he told her that if she had been 21 years of age he would have put the house into their joint names, but as she was under 21 it would have to be put into his name alone. She believed him, but he later admitted that this was an excuse, and that he never intended her to have a share. However, she was over 21 when the property was conveyed [2] . The house was dilapidated [3] and Janet did a lot of heavy work improving it in reliance on the statement that both of the parties maintained and used it for their joint benefit. Later, the relationship broke up and Janet sought a declaration, the house was estimated to be worth £13,000 she applied for a share in the house.

It was held by the (CA) that Janet had been led to believe that she was to have a share in the house, part of the bargain being the work she had done in improving it, and the court made a declaration that Stuart held the house on trust as to one-quarter in her favour and three-quarters to himself.

A constructive trust [4] which Lord Diplock brought in Gissing v Gissing [5] which was applied said: ‘That a constructive trust should be imposed whenever it is ‘inequitable’ [6] for a legal owner to deny the beneficiary an equitable interest in land’. [7] The essence of the matter is whether the legal owner has expressly or impliedly joined in a ‘common intention’ [8] with the claimant that the claimant should have some interest. Usually, such an intention should be put in writing under section 53(1) (b) of the LPA 1925. [9] As also established in Cooke v Head [10]  the legal owner is bound to hold the property on trust for them both. [11] This does not need to be evidenced in writing.

In Grant v Edwards [12] , where a man similarly purchased a house in his name alone to provide a home for himself and his lover. He told her that he had not purchased it in their joint names because that would prejudice her divorce proceedings. It was held, equity would infer a trust if there was a common intention that both should have a beneficial interest in the property and the non-proprietary owner had acted to the detriment upon that intention. [13] In contrast, the supposed expressed ‘common intention’ was in reality merely an appearance of ‘common intention’. Neither, of the male parties honestly wanted their partners to have a share of the ownership of their respective houses.

The criteria for a common intention constructive trust was contained in Lloyds Bank plc v Rosset [14] . A ‘true common intention’ [15] to share ownership can be established either from the expressed sentiments of the parties or by their conduct. Lord Bridge stated that a constructive trust can be established where the parties expressly agreed that the ownership of the land was to be shared.

In Eves v Eves [16] a promise was held to have been made where Stuart had said, by way of excuse, that the only reason that the property was not conveyed to Janet because she was too young. Janet had relied to the defendant’s ‘detriment’ [17] and ‘unconscionability’ [18] as the claimant undertook work of an extraordinary character, such as doing building work in the garden and renovating the property. It is doubtful whether doing ‘normal’ domestic obligations can count as a response to an ‘express common intention’. In Rosset, although Mrs Rosset could be thought of as undertaking extensive renovation work amounting to qualifying conduct, there was (as the law was previously) no common intention, no express promise and no payments. [19] 20

Lord Bridge, also mentioned the overlap with proprietary estoppel [21] which suggests an integration of, the two mechanisms. It arises from a unilateral promise and there is discretion on the interest awarded. An overlap rather than integration exists whilst there are considerable similarities between the two. [22]

In conclusion, the narrowness of the Rosset approach, the (CA) in Oxley v Hiscock [23] attempted to broaden the circumstances in which a person might prove a common intention by allowing such an intention to arise from all of the facts and circumstances of the case. It was essentially an approach seeking to achieve a fair result. Also in the case of Stack v Dowden [24] which changed judicial interpretation of the constructive trust in a domestic context whereas prior to this there had to be evidence of clear intention to find a constructive trust. [25]