Property – Constructive trust – Beneficial ownership – Siblings entering oral agreement with mother for purchase of house – Dispute arising between siblings as to beneficial ownership of property – Judge concluding appellant as surviving legal owner holding house on constructive trust for herself and siblings – Appellant appealing – Whether judge erring in law in concluding sufficient detrimental reliance on oral agreement to create constructive trust – Appeal dismissed
A dispute arose as to the beneficial ownership of a property at 9, Roslin Way, Bromley. The appellant and the respondents and their mother agreed orally at a face to face meeting in late November or early December 1996 that the house would be bought in the name of mother and one or more of the children as joint tenants, to hold it for mother for life and after her death for the three children equally.
In the event, although each of the three children could have become a joint registered proprietor of the house with mother, the respondents were unavailable to participate in the formalities when the house was purchased, so it was transferred into the names of mother and the appellant only. The potential difficulty with all the children being able to become joint transferees had been identified and discussed when the agreement between them was made. On the basis of that agreement, the judge held that the appellant as the surviving legal owner held the house on constructive trust for herself and her siblings. It had been expressly agreed that whichever of the children had their names on the title to the house, they would honour their agreement at the meeting. In becoming a legal owner with mother, the sibling in question was acting on behalf of all the siblings. A sibling who did not become a legal owner was relying on that agreement and for the legal owner to renege on it would be unconscionable.
The appellant appealed contending that the judge was wrong: (1) to find as a fact that there was a causative connection between the oral agreement and the failure of the respondents to become transferees of the property when it was purchased; and (ii) as a matter of law to conclude that there was sufficient detrimental reliance by the respondents on that oral agreement to create an equity in their favour under a constructive trust.
Held: The appeal was dismissed.
(1) The judge was entitled, on the evidence, to conclude that the respondents relied on the agreement in not seeking to become owners of the house. It was self-evident that if an express agreement was made, as the judge found, in a loving family context the non-transferees would rely on that by not otherwise protecting their position. Further, there was evidence that the respondents relied on what had been agreed in not seeking to have themselves put onto the title.
(2) As a settled principle of equity, detrimental reliance was a necessary precondition to the existence of a common intention constructive trust. If a property was transferred gratuitously to a person only on the basis of their agreement to hold it on trust for some other person, equity would not allow the transferee to rely on the absence of a formal deed of trust and keep the property for herself. If, as the court found, the judge was entitled to conclude that the respondents relied upon the appellant’s agreement, by not seeking to take any steps to protect their intended share in the house, their desisting on the basis of the appellant’s agreement from taking steps that they could and would otherwise have taken was a sufficient change of position. It was not the case that the respondents could have taken no steps, nor was it established at trial that they would in any event have done nothing. Therefore, the judge’s alternative conclusion, were it necessary to prove detrimental reliance to support a classic common intention constructive trust, was justified. However, the appellant was the gratuitous transferee of the house on the basis of her agreement with mother and her siblings that she would hold the house on trust for mother during her life and then for the children equally. The house was only transferred to her on the basis of that agreement. The appellant was bound in conscience to give effect to the terms agreed with her siblings, pursuant to which mother conferred on her a benefit by putting the house into her name. The house was from that time held on constructive trust, for mother during her life and for the children after her death. That did not depend on anything other than the appellant’s agreement and the transfer of the house into her name. The terms agreed negated both the presumption of advancement and any resulting trust. Since the constructive trust was constituted at the time of transfer, the beneficiaries of the trust were entitled to enforce it against the appellant. Rochefoucauld v Boustead [1897] 1 Ch 196, Lloyd v Dugdale [2001] EWCA Civ 1754; [2001] PLSCS 251; [2002] 2 P&CR 13, Steria Ltd v Hutchinson [2006] EWCA Civ 1551; [2007] ICR 445 considered.
(3) This was not a case in which the owner of a property had expressly or impliedly promised or agreed with another person that they had, or would have, an interest in it. An informal promise of that kind could not be enforced against the owner unless the promisee had reasonably changed their position in reliance on the promise. By contrast, in the present case, a property was transferred (gratuitously) into the name of the owner on the basis of their express agreement to hold the property on trust for another. The owner only obtained the property on the terms of the agreement and equity did not permit them unconscionably to refuse to give effect to the terms. The trust arose from the terms on which the property was transferred, not from detrimental reliance on the agreement by the beneficiary. The different types of constructive trust included: parties entering into a joint venture involving land; where it would be inequitable for a landowner to deny a claimant an interest in land; and where a person had acted to their detriment in reliance upon a common intention for that person to acquire an interest in a property. The decision in this case inevitably followed the judge’s factual finding about the terms agreed in November/December 1996, when he wholly rejected the appellant’s different account: De Bruyne v De Bruyne [2010] EWCA Civ 519; [2010] 2 FLR 1240 considered.
Michael Levenstein (instructed by Marsons Solicitors LLP) appeared for the appellant; Simon Lane (instructed by A-Z Law Solicitors Ltd) appeared for the respondents
Eileen O’Grady, barrister
Click here to read a transcript of Archibald and another v Alexander
