Common Intention Constructive Trust: Beneficial Joint Tenancy or Tenancy in Common?

In modern times it is becoming more and more prevalent for couples to live together without marrying and as such disputes over ownership of property arise more frequently. The recent case of Culliford and another v Thorpe [2018] EWHC 426 (Ch) afforded the Chancery Division the opportunity to consider what was required to constitute a common intention constructive trust, and moreover, whether such an intention was sufficient to establish a beneficial joint tenancy.

The Facts

The defendant and his partner formed a relationship in 2010, moving in together in November of the same year. In May 2012 they made an informal agreement to pool their resources. The premise upon which their relationship would be based would be for them to share their respective properties and assets, however the legal titles to the properties were not formally transferred. The discussions between the defendant and his partner did not progress to consider whether their respective interests would be as beneficial joint tenants or tenants in common, specifically in the context of this case, whether the doctrine of survivorship would apply in the event one of them were to die. The defendant’s partner died in March 2016, at which point the property in which they resided was in the sole name of the defendant’s now deceased partner.

The deceased’s siblings, the Claimants in this matter, issued proceedings against the defendant seeking possession of the property, alleging that the defendant occupied the property by way of a licence that following notice having been given, had expired in July 2016. Whilst the defendant accepted the Claimant’s legal title to the property and admitted that he was not a tenant or sub-tenant, he counterclaimed on the basis that he had a proprietary interest in the property.

In determining the dispute Judge Paul Matthews was concerned primarily with three issues. The first issue was whether a common intention constructive trust had arisen. The Judge was satisfied that the agreement to share their respective properties, followed by the Defendant’s detrimental reliance on that agreement by way of carrying out significant works to the property in question using his own labour and money to purchase materials, as well as occasionally paying workers, gave rise to such a trust. Thereafter the defendant sought to rely on the authority of Eves v Eves [1975] WLR 1338 to establish that where there is an agreement to share property equally, the court is to assume it to be by way of a beneficial joint tenancy. The Judge did not agree with that interpretation of the Eves case, finding that each case must turn on its own facts. In the instant case the Judge was not satisfied that the agreement was sufficient to establish a beneficial joint tenancy, but went on to say that had he been satisfied that at the time the agreement was entered into the parties had considered what might happen if one of them died then it might have been different.

The second issue for the Judge to consider was that of proprietary estoppel, which the defendant pleaded in the alternative. Whilst not strictly necessary given the Judge’s decision on the primary claim, he found that a claim for proprietary estoppel was also established on the facts.

Thirdly, the Court considered the doctrines of unconscionability and detriment. The Judge held that due to the fact that the defendant had carried out a great deal of building work, which it was found would not have done had it not been for the agreement he entered into with the deceased, it would be unconscionable for the estate of the deceased not to give effect to the agreement made.

In light of the findings that a common intention constructive trust had been established, but not a beneficial joint tenancy, the Judge determined that the property was held as tenants in common. He ordered the sale of the property on the basis that, the defendant on the one hand, and the Claimants on the other, would share the proceeds of sale equally. Moreover the Judge ordered that from the defendant’s share of the proceeds occupation rent would be deducted from the time of the deceased’s death until the defendant vacated the property.

Guidance

As is always the case in matters regarding ownership of property, if there is any suggestion by anyone that the ownership of a property is not intended to be as stated in the legal title then action should be taken to formally record, or convey, the nature of the ownership of the property, preferably by way of an express declaration of trust, to ensure that, as far as is possible, the potential for legal proceedings is avoided. If such action is not taken it is important to ensure that any agreement reached is sufficient to cover all applicable issues, even those which parties understandably do not wish to consider, i.e. their own deaths. Any such agreement should also be evidenced. Whilst it is often difficult to foresee any dispute over a property, particularly if the parties involved are in a relationship, it is unfortunately one of the facts of life that many relationships end, at which stage communications between the parties are likely to be far from harmonious. Moreover, even if that is not the case and there is no dispute between the parties involved, as this case proves, following the death of one of them, the executors of their estate may have different intentions. Action should therefore be taken to avoid the potential for dispute wherever possible.