Parties purchasing property as tenants in common — One party taking out endowment policy to secure loans on property — Parties intending that proceeds of policy would repay loans — Whether intention that beneficial interest in policy be jointly owned — Appeal dismissed
In 1985, the appellants and a third party (O) purchased a property in their joint names as tenants in common. O took out an endowment policy to secure moneys raised to purchase the property. Correspondence pertaining to the loan made it clear that the property was to be jointly owned in equal proportions. However, the proposal form was completed in O’s name only, and, although the payments were authorised by the parties’ business bank account, the payments were made entirely from O’s personal drawings on that account.
Following O’s death in 1992, the appellants commenced proceedings against the first respondent, the executor of O’s estate. They asserted joint beneficial ownership of the policy on the basis that the parties’ common intention had been to pay off the mortgage with the proceeds of the policy. At first instance, the judge held that the beneficial ownership of the policy was O’s alone.
The appellants appealed. They argued that the judge: (i) had been wrong in failing to find that there had been a common intention constructive trust; and (ii) should have inferred from the parties’ conduct a common intention to share the policy beneficially.
Held: The appeal was dismissed.
The evidence necessary to infer a common intention constructive trust had to be compelling, and called for specific acts on the part of the parties: see Lloyds Bank plc v Rosset [1991] 1 AC 107. It was clear that the parties had intended to own the property jointly, and that the appellants had understood that the proceeds of the policy would be used, if necessary, to repay the loan. However, this did not mean that the third party had intended the proceeds to be jointly owned. The premiums for the policy were paid out of the joint business bank account, but there was no evidence to show that the parties had intended that those premiums were to be paid by them jointly, and, in fact, the premiums came out of the third party’s drawings on the account. Other policies that were paid in the same way were not considered by the parties to be of joint beneficial ownership. Furthermore, the parties had charged their private houses as the basis for loans, and there was no suggestion that those properties were owned beneficially in equal shares.
Howard Lederman (instructed by Baehrs, of Bournemouth) appeared for the appellants; David Blayney (instructed by Champion Miller & Honey, of Tenterden) appeared for the respondents.
Vivienne Lane, barrister
