Greystone House Assignment PDF

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Module Topic: Problem Question, January 2021Student Name: Oana-Madalina HornetStudent Number: LON181002004In the following content, the relevant aspects of an implied trust will beanalysed to provide Henry, Millie, and Frances with relevant legal advice in relation to theirinterests in Greystone House, the adjoining cottage and the Scottish rental propertyconsidering as fundamental basis their legal position regarding the income from the Scottishproperty. Based on further legal resources, the content of the essay will advise Franceswhether 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 aramification of the private trust1as it was classified in the Law Property Act2from 1925, atsection 53(2). The implied trust is defined by the nature of the circumstances and, in most ofthe situations it is divided into either - a resulting trust3, if the transferor shows intention for aproperty conveyance but he/she is the party who makes the most significant payments. Thebeneficial interest of the property is accountable to him/her as perMacMillan INC vBishopsgate Investments Trust PLC (No.3)4. When talking about resulting trust, must notconsider that the rules applicable to the express trust apply to the resulting trust too. Theresulting 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 perRe Vinogradoff5case from 1936, or constructive trust6. Constructive trust, as observed inSoar v Ashwell7case from 1893 is a principle which explains that, in equity, if a property isheld by a person – different than the owner, that individual is required to hold that particularproperty on trust for the owner. It adopts the doctrine of precedent and its purpose is to obtainthe favourable outcome in a particular case as perEves v Eves8, by observing the justiciableand reliable aspects of the cited law cases, as perHussey v Palmer9,throughout thesignificant legal history of the middle of the 20thcentury.There is not much to differentiate between the two concepts of trust in whatconcerns the applicability of the rule of formalities, as this is not a mandatory requirement tocreate a resulting or a constructive trust, but these two categories of implied trust cannot beadjoined either. If applied in family property context, the resulting trust arises when one ofthe parties made a direct payment with the clearly expressed intention to buy a propertyregistered under the other parties’ name. The purpose of the contribution is not as a gift or1Jamie Glister and James Lee,Modern Equity 21stEdition Hanbury and Martin 2018, Sweet and Maxwell, 2-028, pg.562Law Property Act 1925, s53(2)3Ibid. 11 – 001, pg. 2274[1995] 1 W.L.R. 9785[1936] W.N 686Ibid. 12-001, pg. 2607[1893] 2 Q.B. 3908[1975] 1 W.L.R. 13389[1972] 1 W.L.R. 1286
loan; the proof of any payment must be securely kept if needed to prove that the party isholding the property on trust for the party who made the proportionate financial contributiontowards it. In the same context, the constructive trust becomes effective if there is any formof agreement between the parties who intent to purchase a land or property. It does notrequire for the payments to be proportionate for the parties, but consistent enough, in law, tocover the maintenance of the property, based on the common intention and share of thecontributions of the parties10.In the given scenario it first needs to be determined whether there is a resultingtrust situation between Henry and Millie. For a resulting trust to exist, the main requirementto be satisfied is the intention. In the case of Millie and Henry the important aspects to beanalysed are, firstly, who owns the beneficial interest of the Greystone House and theadjoining cottage (which they purchased in 2017 for £700,000, of which £100,000 wascontributed by Henry, plus additional purchase monies provided by a mortgage that he tookin 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 isheld on trust. Secondly, it is relevant to quantify the amount of shares each party owns in theabove-mentioned property(es). In order to establish who owns the legal title for the housesand the legal position regarding the rental income, it needs to be considered the directcontributions towards the properties and if the s.37 of the Matrimonial Proceedings andProperty Act11can be applied to Millie and Henry.As Lady Hale observed in the case ofMerr v Collie12, relating this case withother cases that concern the joint ownership in the context of beneficial interest (Laskar vLaskar13), the initial presumption is that the beneficial ownership in the case of Millie andHenry should be divided by the amount of financial contributions each one had in theproperty purchase as perBull v Bull 195514and the hypothesis of resulting trust is contouredby 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 incommon. Considering that there is not a clear specification of their legal marital status, sameas inStack v Dowden16,the presumption of joint beneficial ownership cannot be determined ifconsidering the intention of the purchase, regardless of their personal relationship. TheScotland holiday rental property falls under an investment that Millie and Henry agreed onand, on this property, the resulting trust cannot be admitted as there is not sufficient evidenceof the common intention for the equitable interest in the property. In addition to this, theamount of money each contributed with is not equal. InGissing v Gissing17, the House ofLords ruled that the material contribution is not enough to compensate the financial one in thecontext of property purchase. Henry paid only a part of the whole sum needed to buy theholiday rental property and, indirectly, his contribution counted towards cutting anyadditional expenses for improvements in the property which entitles Henry to claim a small10Jamie Glister and James Lee,Modern Equity 21stEdition Hanbury and Martin 2018, Sweet and Maxwell,12– 002, pg. 26111Matrimonial Proceedings and Property Act 1970, s.3712[2017] UKPC 1713[2008] EWCA Civ 34714[1955] 1 Q.B.23415Presuming too little about resulting and constructive trusts?’ Martin George and Brian Sloan, Conv. 2017, 4, 303-31216[2007] UKHL 1717[1971] A.C. 886
part of the interest if the common intention is not expressed; any form of contribution of anyother nature than financial it is not considered sufficient18as perLloyds Bank Plc v Rosset19.As per Lord Kerr’s statement20with reference to theMerr v Collie, in Millie and Henry’s casethe joint beneficial interest applies for the family home they bought. Section 37 of theMatrimonial Proceedings and Property Act 1970 states that, in the situation where Millie andHenry were a married couple, as per the equity principle, the shares could be equally (or in acertain manner that will be justly) quoted for the two individuals, considering the courtstatement.In terms of resulting trust in the situation of the two, this can only beconsidered 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 contributionsmade by Henry to the rental property which allows for the matter be regarded more as ofconstructive trust. There is a fine line which must be carefully analysed; the resulting trustcannot apply in the case of the Greystone House as this presumption was argued by theSupreme Court in theJones v Kernott21in the context of family home and it is valid for Millieand Henry’s situation too, as there was an expectation of return of the benefit by the fact thatHenry 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 constructivetrust for the family home in the situation between Millie and Henry. The creation of aconstructive 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 beanalysed are if there is an express agreement between the two, why were the properties injoint names, their legal relationship and their responsibility towards the children, the modalitythrough which the acquisition of the two properties was finalised and their individualcontributions towards expenses and improvements. Under the section 53(1)23of the LPA1925, if the agreement is only expressed verbally and there are direct contributions to thepurchase of the property (material or financial), this covers the existence of a constructivetype of trust as perMidland Bank Ltd. v Dobson24. The situation of Millie and Henry iscontouring similarities with theOxley v Hiscock25in terms of common intention to share andnot only. As per Chadwick LJ’s approach to this situation, the Graystone House waspurchased with the clear purpose of a family house, therefore, the circumstance of Millie andHenry cannot be regarded from theSpringette v Defoe26point 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 ofStack v Dowdenanalyses the type of implications that an unmarried couple has in the context of family (orinvestments) property and how is this reflected in equity, from a constructive trust18Jamie Glister and James Lee,Modern Equity 21stEdition Hanbury and Martin 2018, Sweet and Maxwell, 13-015, pg.30819[1990] UKHL 1420Lord Kerr statement inMerr v Collie21[2011] UKSC 5322Law Commission Discussion Paper,Sharing Homes (2002), para. 2.6123LPA, s53(1)24[1986] 1 F.L.R 17125[2004] EWCA 54626[1992] 2 FLR 388
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