Regular updates on relevant case law and legislation - October 2009

CHAPTER 9 IMPLIED CO-OWNERSHIP IN LAND – RESULTING AND CONSTRUCTIVE TRUSTS

Box B1 Express agreement regarding the beneficial interest (page 173)
Box B2 Detrimental reliance (page 175)

In Parris v Williams [2008] EWCA Civ 1147; [2008] 43 EG 194 (CS), Mr Parris and Mr Williams were friends and former business partners. Mr Parris bought two flats in his name and claimed that they both belonged to him. Mr Williams argued that Mr Parris held one of the flats on constructive trust for him because there had been an express agreement (see Box B1) that purchase of the flats had been undertaken as a joint property venture to then rent them out. He had paid half of the renovation costs, helped decorate the flats and had paid half of the maintenance charge. Mr Parris argued that a person in Mr Williams’ position would have to show that there was an agreement between him and the legal owner that he would have a beneficial interest in the property and that ‘he had acted under that agreement in the manner provided for in the agreement, i.e. a bargain between the parties. There was nothing in the agreement between Mr Parris and Mr Williams about what Mr Williams was expected to do, and so whatever he had done in the way of decorating or paying maintenance charges would not’ count as the detriment part of establishing an express agreement constructive trust. The court disagreed. This argument had been rehearsed in Lloyd’s Bank v Rosset [1991] and had been rejected. In Rosset; Lord Bridge had said

‘The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel’

The person claiming the interest only had to show that he had acted to his detriment. Mr Parris’ next line of attack was that Mr Williams’ contributions were trivial. The court held that this was a finding of fact. Whilst Mr Williams’ contributions had been less, the Recorder had found them sufficiently substantial and the court would not disturb that finding. This is a quote from the case showing who paid what. See what you think.

‘In this case there is no doubt that Mr Parris has made a materially greater financial contribution to the flats than Mr Williams. He paid out something over £9,000 on the original purchases as well as paying £750 for the party wall and whatever the cost of the electricity meter. He also paid his share of the Heritage bill and of the maintenance charges. In addition, he has been responsible for the administration involved in letting the flats. As regards the servicing of the mortgages and the payment of outgoings other than maintenance charges, it appears that they have been met out of the rents from the lettings, although the picture as explained to us was imprecise. Mr Williams's contribution appears to have been confined to some two days' painting work, plus his contribution to the Heritage bill and the maintenance charges that the Recorder found he had made. The value of the painting work was unquantified, but cannot be rejected as of no material value; and Mr Williams's financial contributions totalled something over £2,000 in all.

Mr Williams has, therefore, put in materially less than Mr Parris. But the Recorder rejected the suggestion that his contributions were trivial and he found as a fact that they were sufficiently substantial to justify his claim, that is, that they amounted to sufficient detriment to entitle him to set up the claimed constructive trust.’

The use of the constructive trust when both parties are on the legal title (page 189)

In Fowler v Barron [2008] EWCA Civ 377; [2008] 2 FLR 831, the principles in Stack were applied. Mr Barron could not rebut the presumption of equal beneficial ownership even though he had paid the deposit on the property, the mortgage repayments, the balance of the purchase price not covered by the mortgage and the utility bills, and he had looked after the children whilst Ms Fowler worked. Ms Fowler had spent her income on herself and the children. Emphasis was put on the couple’s pooled assets, unlike the separate finances found in Stack.

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