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Constructive trusts – property

The author gives a helpful analysis of a ruling following a claim to establish a constructive trust or proprietary estoppel in respect of a domestic property. The deceased died intestate while living with his partner (the defendant, D) at his property in Weston super Mare.

The estate issued possession proceedings against D claiming he was merely a bare licensee. D counterclaimed on the basis that he had a proprietary interest in the property by way of a constructive trust, or proprietary estoppel, and was therefore entitled to the entire beneficial interest in the property. The claimant’s legal title to the property was not in dispute, but while admitting he was neither a tenant nor subtenant, he claimed he occupied it by virtue of his proprietary interest.

The author explains the background to the property ownership starting with the deceased’s purchase in his sole name in 2002, and what happened between then and the date of his death. To muddy the waters, there was also a Devon property which was relevant to the considerations in the case.

Overall, what was important, emphasised HHJ Matthews, was what those involved believed the position to be. He found on the evidence that there had been an informal oral agreement between D and the deceased that he would have a half share of the property. However, as this failed to comply with s53(1)(b) LPA 1925 this was insufficient for him to establish any interest in the property.

Next up was to determine whether D had relied on that discussion to his detriment such that a constructive trust had arisen. HHJ Matthews accepted D’s evidence about the money he had spent on building materials and fittings for the property – around £1,000. He approached D’s claim in accordance with the Lloyds Bank plc v Rosset principles, together with subsequent rulings on the issue of conduct from which an agreement to share the beneficial interest in a property may be inferred so as to give rise to a constructive trust. D was found to be the beneficial owner of 50% of the property.

As to the remedy, it was appropriate for the Weston property to be sold and the net proceeds of sale to be divided between D and the estate; but from D’s share there was to be deducted half of the occupation rent from the date of death to the date on which he gave up possession (or the deceased’s PRs were no longer excluded from the property).

As for D’s claim in proprietary estoppel, HHJ Matthews commented obiter that the necessary elements – a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to them in consequence of reasonable reliance) – were present and the same remedy would be appropriate.

The author concludes with three ‘learning points for practitioners’ on cases involving these issues:

  • Has the agreement been complied with?
  • Litigation after the death of a party.
  • Benefit/detriment in considerations of proprietary estoppel.

Culliford v Thorpe [2018] EWHC 426; Lloyds Bank plc v Rosset [1990] UKHL 144. Source: www.equitysdarling.co.uk.

 

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