Uncertainty and Reform in Implied Trust

The assignment provided discusses the uncertainty surrounding implied trust in the context of family homes and co-owned investments. It references relevant cases such as Stack v Dowden and Jones v Kernott, highlighting the difficulties in interpreting and applying current land law. The Law Commission's report on Sharing Homes is also mentioned, emphasizing the need for reform in this area. The assignment appears to be focused on understanding the value of implied trust and exploring potential reforms in land law.

Module Topic: Problem Question, January 2021
Student Name: Oana-Madalina Hornet
Student Number: LON181002004
In the following content, the relevant aspects of an implied trust will be
analysed to provide Henry, Millie, and Frances with relevant legal advice in relation to their
interests in Greystone House, the adjoining cottage and the Scottish rental property
considering as fundamental basis their legal position regarding the income from the Scottish
property. Based on further legal resources, the content of the essay will advise Frances
whether she can be forced to leave the cottage considering her contributions.
In the context of equity, in law, a trust can be legally expressed or imposed.
When talking of implied trust, the term itself does not owe a self-statutory definition; it is a
ramification of the private trust1 as it was classified in the Law Property Act2 from 1925, at
section 53(2). The implied trust is defined by the nature of the circumstances and, in most of
the situations it is divided into either - a resulting trust3, if the transferor shows intention for a
property conveyance but he/she is the party who makes the most significant payments. The
beneficial interest of the property is accountable to him/her as per MacMillan INC v
Bishopsgate Investments Trust PLC (No.3)4. When talking about resulting trust, must not
consider that the rules applicable to the express trust apply to the resulting trust too. The
resulting trusts do not require to comply with any formalities and following this, the children
(if they are involved) can also be regarded as a resulting trustee’s in this type of trust, as per
Re Vinogradoff5 case from 1936, or constructive trust6. Constructive trust, as observed in
Soar v Ashwell7 case from 1893 is a principle which explains that, in equity, if a property is
held by a person – different than the owner, that individual is required to hold that particular
property on trust for the owner. It adopts the doctrine of precedent and its purpose is to obtain
the favourable outcome in a particular case as per Eves v Eves8, by observing the justiciable
and reliable aspects of the cited law cases, as per Hussey v Palmer9, throughout the
significant legal history of the middle of the 20th century.
There is not much to differentiate between the two concepts of trust in what
concerns the applicability of the rule of formalities, as this is not a mandatory requirement to
create a resulting or a constructive trust, but these two categories of implied trust cannot be
adjoined either. If applied in family property context, the resulting trust arises when one of
the parties made a direct payment with the clearly expressed intention to buy a property
registered under the other parties’ name. The purpose of the contribution is not as a gift or
1 Jamie Glister and James Lee, Modern Equity 21st Edition Hanbury and Martin 2018, Sweet and Maxwell, 2-028, pg.56
2 Law Property Act 1925, s53(2)
3 Ibid. 11 – 001, pg. 227
4 [1995] 1 W.L.R. 978
5 [1936] W.N 68
6 Ibid. 12-001, pg. 260
7 [1893] 2 Q.B. 390
8 [1975] 1 W.L.R. 1338
9 [1972] 1 W.L.R. 1286

loan; the proof of any payment must be securely kept if needed to prove that the party is
holding the property on trust for the party who made the proportionate financial contribution
towards it. In the same context, the constructive trust becomes effective if there is any form
of agreement between the parties who intent to purchase a land or property. It does not
require for the payments to be proportionate for the parties, but consistent enough, in law, to
cover the maintenance of the property, based on the common intention and share of the
contributions of the parties10.
In the given scenario it first needs to be determined whether there is a resulting
trust situation between Henry and Millie. For a resulting trust to exist, the main requirement
to be satisfied is the intention. In the case of Millie and Henry the important aspects to be
analysed are, firstly, who owns the beneficial interest of the Greystone House and the
adjoining cottage (which they purchased in 2017 for £700,000, of which £100,000 was
contributed by Henry, plus additional purchase monies provided by a mortgage that he took
in his name only and £200,000 by Millie) and the holiday rental property in Scotland,
purchased also in their joint names, as this is a matter of co-ownership and the property is
held on trust. Secondly, it is relevant to quantify the amount of shares each party owns in the
above-mentioned property(es). In order to establish who owns the legal title for the houses
and the legal position regarding the rental income, it needs to be considered the direct
contributions towards the properties and if the s.37 of the Matrimonial Proceedings and
Property Act11 can be applied to Millie and Henry.
As Lady Hale observed in the case of Merr v Collie 12, relating this case with
other cases that concern the joint ownership in the context of beneficial interest (Laskar v
Laskar13), the initial presumption is that the beneficial ownership in the case of Millie and
Henry should be divided by the amount of financial contributions each one had in the
property purchase as per Bull v Bull 195514 and the hypothesis of resulting trust is contoured
by their intention to purchase at least one of the properties in the scope of an investment15.
Because each party contributed with different shares, this turns their relation into a tenancy in
common. Considering that there is not a clear specification of their legal marital status, same
as in Stack v Dowden16, the presumption of joint beneficial ownership cannot be determined if
considering the intention of the purchase, regardless of their personal relationship. The
Scotland holiday rental property falls under an investment that Millie and Henry agreed on
and, on this property, the resulting trust cannot be admitted as there is not sufficient evidence
of the common intention for the equitable interest in the property. In addition to this, the
amount of money each contributed with is not equal. In Gissing v Gissing17, the House of
Lords ruled that the material contribution is not enough to compensate the financial one in the
context of property purchase. Henry paid only a part of the whole sum needed to buy the
holiday rental property and, indirectly, his contribution counted towards cutting any
additional expenses for improvements in the property which entitles Henry to claim a small
10 Jamie Glister and James Lee, Modern Equity 21st Edition Hanbury and Martin 2018, Sweet and Maxwell,12– 002, pg. 261
11 Matrimonial Proceedings and Property Act 1970, s.37
12 [2017] UKPC 17
13 [2008] EWCA Civ 347
14 [1955] 1 Q.B.234
15 ‘Presuming too little about resulting and constructive trusts?’ Martin George and Brian Sloan, Conv. 2017, 4, 303-312
16 [2007] UKHL 17
17 [1971] A.C. 886

part of the interest if the common intention is not expressed; any form of contribution of any
other nature than financial it is not considered sufficient18 as per Lloyds Bank Plc v Rosset19.
As per Lord Kerr’s statement20 with reference to the Merr v Collie, in Millie and Henry’s case
the joint beneficial interest applies for the family home they bought. Section 37 of the
Matrimonial Proceedings and Property Act 1970 states that, in the situation where Millie and
Henry were a married couple, as per the equity principle, the shares could be equally (or in a
certain manner that will be justly) quoted for the two individuals, considering the court
statement.
In terms of resulting trust in the situation of the two, this can only be
considered from the investment point of view of the holiday rental property in Scotland only,
even if both properties were purchased in joint names and there were relevant contributions
made by Henry to the rental property which allows for the matter be regarded more as of
constructive trust. There is a fine line which must be carefully analysed; the resulting trust
cannot apply in the case of the Greystone House as this presumption was argued by the
Supreme Court in the Jones v Kernott21 in the context of family home and it is valid for Millie
and Henry’s situation too, as there was an expectation of return of the benefit by the fact that
Henry solely took a mortgage and used it for the purchase of the family home22.
Secondly, it also needs to be determined whether there is a constructive
trust for the family home in the situation between Millie and Henry. The creation of a
constructive trust requires the existence of the equitable interest to share a beneficial asset
(whether is a land or a property). In the case of Millie and Henry the important aspects to be
analysed are if there is an express agreement between the two, why were the properties in
joint names, their legal relationship and their responsibility towards the children, the modality
through which the acquisition of the two properties was finalised and their individual
contributions towards expenses and improvements. Under the section 53(1)23 of the LPA
1925, if the agreement is only expressed verbally and there are direct contributions to the
purchase of the property (material or financial), this covers the existence of a constructive
type of trust as per Midland Bank Ltd. v Dobson 24. The situation of Millie and Henry is
contouring similarities with the Oxley v Hiscock25 in terms of common intention to share and
not only. As per Chadwick LJ’s approach to this situation, the Graystone House was
purchased with the clear purpose of a family house, therefore, the circumstance of Millie and
Henry cannot be regarded from the Springette v Defoe26 point of view.
What Millie and Henry owe in common are the properties held on trust,
adjoined with Henry’s mother as well and, also, two children. The case of Stack v Dowden
analyses the type of implications that an unmarried couple has in the context of family (or
investments) property and how is this reflected in equity, from a constructive trust
18 Jamie Glister and James Lee, Modern Equity 21st Edition Hanbury and Martin 2018, Sweet and Maxwell, 13-015, pg.308
19 [1990] UKHL 14
20 Lord Kerr statement in Merr v Collie
21 [2011] UKSC 53
22 Law Commission Discussion Paper, Sharing Homes (2002), para. 2.61
23 LPA, s53(1)
24 [1986] 1 F.L.R 171
25 [2004] EWCA 546
26 [1992] 2 FLR 388

hypothesis. Lord Neuberger27 referred to the tenancy in common in the equity context.
Considering this, Millie and Henry should be regarded as tenants in common instead of
parties of a joint tenancy as Henry’s contribution is quite significant, considering his direct
and indirect implications as per Cooke v Head28. Considering Millie’s and Henry’s
relationship as an un-officialised one, even after they had the kids - which the oldest was now
6 years old - their intention to not get married, may be interpreted as them not having any
intention from the very beginning to share the properties under a joint tenancy. Under section
3729 of the Law Property Act 1925, if considering the two individuals as married couple on
the other hand, in any form of legal agreement they will be considered two parties and the
declaration will always require the names of the parties individually.
According to the Trust of Land and Appointment of Trustees Act30 1996
(TOLATA), Millie can make use of the section 14(1) of the Act to legally demonstrate the
beneficial interest she had in the creation of the constructive trust, from when they decided,
as a couple, to purchase the properties. She invested the most consistent amount of money in
the assets, without mortgage loans or financial gifts. Her legal position in the agreement will
be sustained by the s.14(2) and the children security on the family home will be covered by
the same Act, according to section 15(1c).
Considering all the reasonings formulated around implied trust for the Millie
and Henry’s situation and their relationship and circumstances, as per the judgements of the
House of Lords in the cases of Stack and Jones, the resulting trust is not applicable in the
family home context which Millie and Henry purchased, adjoined with the cottage which
they agreed on to be fully occupied and handled by a third party, as it is defined better in the
context of the property Millie, Henry and his mother, Frances, bought in Scotland, as an
investment.
In terms of legal position regarding the rental income of the property in Scotland and taking
into consideration Scott J’s statement in Layton v Martin31, because there is proof of
contribution to the purchase and maintenance of the property32, Henry should be entitled to
the same benefits as Millie, who contributed only financially. This gives them proportionate
rights on the income.
Thirdly, in the context of implied trust, it is mandatory to observe Frances
position in relation to her contributions to the purchase of both properties from a resulting or
common intention constructive trust point of view. The factual issue is if Millie and Henry
can force her to leave the cottage. The legal issue is whether Frances showed considerable
intention in the purchase of the properties. It needs to be determined the importance of her
direct/ indirect contributions, in order to decide whether Frances can claim rights on the
owning the cottage and rental income from the Scottish rental holiday house. In order to
establish whether the cottage should legally remain in her possession, the context must be
analysed under the requirements of the section 23(1) of the Settled Land Act 1925(SLA)33
27 ‘Resulting or constructive trust: does it matter?’ Brian Sloan, Conv. 2020, 1, 82-93
28 [1972] 2 All ER 38
29 LPA, s.37
30 Trusts of Land and Appointment of Trustees Act 1996
31 [1986] 2 FLR 227
32 Law Commission Discussion Paper, Sharing Homes (2002), para. 2.73
33 Settled Land Act 1925, s.23(1)

and section 14 of the LPA 1925. It is important to observe the interaction of the informal
common intentions with the enforceable express trust of the parties34.
Frances intended to acquire beneficial interest from the rental holiday house,
considering that she and Millie contributed with the same amount of funds. In terms of
Graystone House, as per Burns v Burns35, her domestic contributions towards the children and
maintenance of the family home would not be considered sufficient for a resulting trust to
exist, considering the English legal requirements on this matter. With regards to the adjoined
cottage rights, as per section 12(1) of TOLATA, Frances has the general occupational right of
the property according to the trust land, only if she refuses to make use of this benefit as per
the land law or court decision36 stated at s.13(7) of TOLATA, then this can be sold. She can
continue to occupy the cottage as, in what concerns her legal position, her interest and actual
occupation of the property cannot be challenged as pe s.14 of the 1925 Act. If considering,
also, the s.23 of the SLA 1925 her power as a trustee gives her a lifetime occupation of the
property which was agreed on, from the beginning, to be used as her home by Millie, Henry
and herself. The relational dissensions between Millie and Henry as co-owners of the
properties do not interfere with Frances’s right to make a court application as per section 14
of the 1996 Act. If there is no mutual agreement to sell the assets, the power of sale cannot be
exercised.
In what concerns Henry, considering the separation of Millie, he can only
claim equity of redemption from the Graystone House, considering the largest part of his
contribution was covered by a mortgage, as decided in Abbey National BS v Cann37. There is
no mention regarding the existence of any agreement between the parties for Henry to
perform the maintenance duties in the investment property so, as per Burns case, there was
not expressed intention which could consolidate his claim of payment for all the work
undertaken in the property. He can benefit from the rental income of the Scottish property,
equally with Millie and Frances, as they all showed common intention in benefitting from
that investment.
When it comes to understanding the value of the implied trust, there is a lot of
confusion and uncertainty regarding the acquisition of interests in the context of family home
and, further on, to any type of co-owned investments. In the Sharing Home (2002)38, the Law
Commission highlighted significant criticism to the current land law in the context of married
couples, co-habiting or to civil partnership cases, which makes the law difficult to interpret
and to apply. As relevant as Stack and Dowden or Jones v Kernott cases are for the land
principles, the fine line of uncertainty between resulting and constructive trust which can be
easily argued by the Lord Justices, must be clearly contoured and the necessity of a potential
reform is needed in this context.
Bibliography:
34 ‘Common intentions and constructive trusts: unorthodoxy in trusts of land’, Lorenzo Maniscalco, Conv. 2020, 2, 124-137
35 [1984] 1 All ER 244
36 Jamie Glister and James Lee, Modern Equity 21st Edition Hanbury and Martin 2018, Sweet and Maxwell, 13-024, pg.322
37 [1991] 1 AC 56
38 Law Commission Discussion Paper, Sharing Homes (2002), para. 3-100

Primary Sources:
Legislation:
Law Property Act 1925, s.14, s.37, s.53(1), s53(2)
Matrimonial Proceedings and Property Act 1970, s.37
Settled Land Act 1925, s.23(1)
Trusts of Land and Appointment of Trustees Act 1996, s.12(1), s.13(7), 14(1), s.14(2), s.15(1c)
Cases:
Abbey National Building Society v Cann [1991] 1 AC 56
Bull v Bull [1955] 1 Q.B.234
Burns v Burns [1984] 1 All ER 244
Cooke v Head [1972] 2 All ER 38
Eves v Eves [1975] 1 W.L.R. 1338
Gissing v Gissing [1971] A.C. 886
Hussey v Palmer [1972] 1 W.L.R. 1286
Jones v Kernott [2011] UKSC 53
Laskar v Laskar [2008] EWCA Civ 347
Layton v Martin [1986] 2 FLR 227
Lloyds Bank plc v Rosset [1990] UKHL 14
Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] 1 W.L.R. 978
Marr v Collie [2017] UKPC 17
Midland Bank Ltd v Dobson [1986] 1 F.L.R 171
Oxley v Hiscock [2004] EWCA 546
Re Vinogradoff [1936] W.N 68
Soar v Ashwell [1893] 2 Q.B. 390
Springette v Defoe [1992] 2 FLR 388
Stack v Dowden [2007] UKHL 17
Secondary Sources:
Book(s)
Glister J.& Lee J., Modern Equity 21st Edition Hanbury and Martin 2018, Sweet and Maxwell,
2-028 pg.56, 11-001 pg. 227, 12-001 pg. 260, 12-002 pg. 261, 13-015 pg.308, 13-024 pg.322
Journal Articles:

Lorenzo Maniscalco ‘Common intentions and constructive trusts: unorthodoxy in trusts of land’, Conv. 2020, 2,
124-137
Martin George and Brian Sloan, ‘Presuming too little about resulting and constructive trusts?’, Conv. 2017, 4,
303-312
Brian Sloan, ‘Resulting or constructive trust: does it matter?’, Conv. 2020, 1, 82-93
Law Commission Report(s):
The Law Commission, Sharing Homes, A Discussing Paper (LAW COM No 278) paras. 2.61, 2.73, 3.100
(Judicial Committee of the Privy Council) Website:
Lord Kerr statement in Merr v Collie
[ https://www.jcpc.uk/cases/jcpc-2015-0050.html ]