Land Law

Ninth edition

by Mark Davys

Suggested Answer to Exercise 14.3 (Part 3)

A Detailed Answer Plan

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English law gives no special rights to cohabitees who are not married or in a civil partnership. Where a family home is acquired in the joint names of a cohabiting couple, the starting point is that equity follows the law and the parties are, therefore, joint tenants at law and in equity (Jones v Kernott [2012] 1 AC 776. In this case, however, Jerome alone is the registered proprietor of the legal title to the. Therefore Lena needs to establish that she has a proprietary interest in the house using the conventional rules of property law. In the absence of an express declaration of trust in writing satisfying section 53(1)(b) of the LPA 1925, Lena may be able to establish that she has:

  • a resulting trust; or
  • a constructive trust.

It is also possible that she may have acquired an interest under the doctrine of proprietary estoppel.

Resulting Trust

A resulting trust can arise when a person contributes to the purchase price of land, but the legal title is vested in the name of another.

  • Equity presumes that the legal owner holds the land on trust for the benefit of the contributor.
  • The contributor’s beneficial interest is based on the proportion of her contribution.
  • Requires a direct contribution or acceptance of mortgage liability when the property is purchased (Cowcher v Cowcher [1972] 1 WLR 425).
  • Lena’s contribution to the mortgage is after the date of purchase and indirect. Even if she had directly met the mortgage repayments this could not give rise to a resulting trust (Curley v Parkes [2004] EWCA Civ 1515).

Common intention constructive trust

A common intention constructive trust is based on:

  • an agreement between the parties that the claimant should have a beneficial interest (common intention); combined with
  • detrimental reliance upon this agreement by the claimant.

Where the land concerned is a family home, the courts will almost always prefer the common intention constructive trust over the doctrine of resulting trusts (see Stack v Dowden [2007] 2 AC 432; compare Laskar v Laskar [2008] 1 WLR 2695).

Common intention can be shown in two ways (Lloyds Bank Plc v Rosset [1991] 1 AC 107):

  • evidence of an express agreement, or
  • an act by the claimant from which the court may infer an agreement between the parties.
Express Agreement

There must be evidence of a shared understanding that Lena was to have a beneficial interest in the house (see, for example, Nourse LJ’s judgment in Grant v Edwards [1986] 2 All ER 426). This will frequently require a close examination of the relationship between the parties (see, for example, Hammond v Mitchell [1992] 1 WLR 1127 and Chan v Leung [2003] 1 FLR 23). This will be difficult as Jerome cannot give his account of what was said. It is not clear that Jerome telling Lena that she would always have a home in the house will be sufficient in itself to establish the required common intention – the cases above all have additional factors, such as excuses as to why the claimant was not given legal title: in Chan v Leung the parties were the sole shareholders of the company who purchased the property concerned.

If the court is satisfied that there was an express agreement that Lena should have an interest in the house, Lena must also demonstrate detrimental reliance on this agreement. Her contribution to the household expenses would seem to be sufficient (as was the case in Grant v Edwards, for example).

Inferred common intention

Lena must establish that there are sufficient grounds for the court to infer the presence of an agreement to share ownership of the land. In Lloyds Bank Plc v Rosset, Lord Bridge was of the opinion that the only act that would be sufficient would be a direct contribution to the purchase price, or the repayment of a mortgage. In this case Lena did not directly repay the mortgage, even though her earnings enabled it to be paid. There is, however, earlier House of Lords authority that indirect financial contributions to the mortgage may be sufficient (Gissing v Gissing [1971] AC 886) and the high hurdle set by Lord Bridge was criticised in Stack v Dowden [2007] 2 AC 432 and Abbot v Abbot [2007] 1 FLR 1451]. It is possible, therefore, that the Supreme Court will now be willing to treat Lena’s contributions as sufficient grounds to infer common intention.

Lena’s share of the equitable interest

Where there is no express agreement as to the beneficial shares, the courts historically used resulting trust principles: that is, Lena’s share would be based upon her actual contribution to the repayment of the mortgage.

The modern approach is to consider the whole course of dealings between the parties (Midland Bank v Cooke [1995] 4 All ER 562 and Oxley v Hiscock [2005] Fam 211). In the joint legal ownership case of Kernott v Jones a majority of the Supreme Court accepted that whilst the court should seek to discover the actual intentions of the parties, the court could impute intentions to the parties where it is not possible to infer their intentions from the facts. The limited information available in the question makes it difficult to apply this ‘holistic’ approach without more information.

Proprietary Estoppel

The doctrine of proprietary estoppel overlaps with that of constructive trusts – some judges have used the terms interchangeably (and see, for example, Yaxley v Gotts [2000] CH 162). However, since proprietary estoppel does not require a meeting of minds it can arise in circumstances that do not give rise to a common intention constructive trust. The court will order the minimum relief necessary to satisfy an estoppel.

Estoppel arises where it would be unconscionable for a party to deny that which he has allowed or encouraged the claimant, to her detriment, to believe. Lena must show that Jerome represented to her that she would have a right in the land (or acquiesced in her belief, knowing her to be mistaken) and that she acted to her detriment (see, for example, the summaries in Thorner v Major [2009] 1 WLR 776, Taylors Fashions v Liverpool Victoria Trustees Co Ltd [1982] 1 QB 133 and Re Basham (dec’d) [1986] 1 WLR 1498. [It would be appropriate to include a quotation from at least one of these cases.]

Lena’s expectation

Did Jerome make an irrevocable representation to Lena that she would have an interest in the house? It would be enough if this was how Lena understood Jerome’s statement, provided that he knew she had understood it in this way.

Lena’s detrimental reliance

If Lena can establish her expectation it will be for Jerome’s mother to establish that Lena’s contributions to the household expenses were not made in reliance upon this expectation (Greasley v Cooke [1980] 1 WLR 1306). Although expenditure of money on the property itself will normally be sufficiently linked to the expectation (Pascoe v Turner [1979] 1 WLR 431), this is not so clearly the case where the contributions are less directly related to the property – did Lena act as she did in expectation of an interest in the house, or out of love for Jerome? Did her actions go beyond what would be expected of a loving relationship, as was the case in Greasley v Cooke?

Satisfying the equity

If Lena is able to establish proprietary estoppel, the estoppel will bind Jerome’s mother as she has not given valuable consideration for legal title to the house (the doctrine of notice and section 19 of the LRA 2002). The court will award Lena the minimum remedy necessary to satisfy the estoppel, taking account of all the circumstances of the case, including the need to achieve, so far as is possible, a clean break between the parties: see, for example, Gillet v Holt [2001] Ch 210.

Although there are examples of the court awarding a transfer of the property to the claimant (as in Pascoe. Turner and Re Basham (dec’d), for example), the court may feel that this would be disproportionate to the detriment Lena has suffered in this case. If so, they may order that Lena be allowed to remain in the house as long as she wishes (a licence), or award her monetary compensation, charged on the property, as in Campbell v Griffin [1986] 1 WLR 1498; see also Jennings v Rice [2001] EWCA Civ 990 where the claimant was awarded £200,000 – substantially less than the value of the house that was the subject matter of his expectation.