Land Law: Trusts of Land (Lecture #5)

The Nature & Characteristics of Trusts of Land

When does a Trust Arise?

  • a trust will arise where two or more persons have legal and/or equitable title to the same land/property at the same time

  • sole legal and equitable (beneficial) owner = no trust

The Essential Characteristics of a Trusts

  • ‘[T]he essential characteristic of the trust is the separation of the title to property from the right to enjoy it for one’s own benefit.’ — Aruna Nair, Textbook on Land Law (19th edn, OUP 2023) 303.

  • law = trustee/s (legal title)

  • equity = beneficiary/ies (equitable title)

  • Trustee Act 1925, s 34(2)(a): the number of trustees … shall not in any case exceed four …

  • trustees may also be beneficiaries.


The Legal/Equitable Divide

Trusts of Land & Appointment of Trustees Act 1996

  • came into force 1 January 1997

Trusts of Land & Appointment of Trustees Act 1996 s 1 & 2

  • (1) In this Act –

  • (a) “trust of land” means any trust of property which consists of or
    includes land …

  • (2) The reference in subsection (1)(a) to a trust –

  • (a) is to any description of trust (whether express, implied, resulting or
    constructive), including a trust for sale and a bare trust …


The Classification of Trusts of Land

Express Trusts

  • Intention must be evidenced in writing

  • Law of Property Act (LPA) 1925, s 53(1)(b): a declaration of trust respecting any land or interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.

Implied Trusts

  • Law of Property Act 1925, s 53(2): … section [53(1)(b)] does not affect the creation or
    operation of resulting, implied or constructive trusts.


Inconsistency & Confusion

Birmingham Midshires Mortgage Services Ltd v Sabherwal (2000) 80 P & CR

  • “This is an area of the law in which the terminology is unfortunately far from uniform” — Walker LJ

Gissing v Gissing [1971] AC 886

  • “A resulting, implied or constructive trust - and it is unnecessary for present purposes to distinguish between these three classes of trust” — Lord Diplock

Hussey v Palmer [1972] 1 WLR 1286

  • “Although the plaintiff alleged that there was a resulting trust, I should
    have thought that the trust in this case ... was more in the nature of a
    constructive trust: but this is more a matter of words than anything else.
    The two run together.” — Lord Denning

Resulting Trusts

Intention: Time

‘Purchase Money’ Resulting Trusts

Resulting Trusts Quantification of Shares

  • contributors receive a proportionate equitable (beneficial)
    interest

  • Example:
    - Title to the legal estate is transferred to A for £150,000.
    - A provides £100,000 and B provides £50,000 of the purchase
    price.
    - A resulting trust is presumed in favour of B on the basis of
    contribution.
    - Equitable entitlement: A two-thirds / B one-third.
    ➢ See: Springette v Defoe [1992] 2 FLR 388


Bull v Bull [1955] 1 QB 234

Implied Trusts & the ‘Domestic Context’

Stack v Dowden [2007] UKHL 17

  • House of Lords - Baroness Hale: In law, “context is everything” and the domestic context is very different from the commercial world.

  • An outcome which might seem just in a purely commercial transaction may appear highly unjust in a transaction between husband and wife or cohabitant and cohabitant.
    ▪ NB: Lord Neuberger’s dissent.

  • House of Lords - Lord Walker:
    In a case about beneficial ownership of a matrimonial or quasi-
    matrimonial home ... the resulting trust should not in my opinion
    operate as a legal presumption.
    I would (at the risk of confusion) add one qualification. The doctrine of
    a resulting trust ... may still have a useful function in cases where two
    people have lived and worked together in what has amounted to both
    an emotional and a commercial partnership.


Laskar v Laskar [2008] EWCA Civ 347

  • property jointly purchased by a mother and daughter

  • quantification of the parties’ beneficial shares calculated on the basis of resulting trust principles as the property was purchased as an investment

  • Lady Hale's speech [in Stack v Dowden] began by identifying the problem to be addressed as relating to “a cohabiting couple”… But a number of the remarks in the course of her speech indicate that her reasoning was intended to apply to other personal relationships … — Neuberger LJ

  • Marr v Collie [2017] UKPC 17

Abbott v Abbott [2007] UKPC 53

  • It is now clear that the constructive trust is generally the more appropriate tool of analysis in most matrimonial cases. — (Privy Council) - Baroness Hale

Fowler v Barron [2008] EWCA Civ 377

  • The legal technique that the court will use to ascertain whether both joint owners who had been co-habitees had a beneficial interest is that of the common intention constructive trust, rather than that of resulting trust. — Lady Justice Arden

The ‘Domestic Context‘

Adekunle v Ritchie [2007] BPIR 177

  • Baroness Hale [in Stack v Dowden] primarily had in mind cohabiting couples living together in either a platonic or sexual relationship; however she does not limit her approach to those cases. This case relates to a domestic relationship between mother and son and in my view is to be decided in accordance with the new approach.

Constructive Trusts

Gissing v Gissing [1971] AC 886

  • A constructive trust … is created … whenever [A] has so conducted himself that it would inequitable to allow him to deny [B] a beneficial interest in his land. [A] will be held so to have conducted himself if by his words or conduct he has induced [B] to act to his/her own detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the land. — House of Lords Lord Diplock

  • a [legal] owner

Common Intention Constructive Trusts

  • Common intention (express or inferred) + detriment = constructive trust

Express Common Intention Constructive Trusts:

  • Lloyds Bank plc. v Rosset [1991] 1 AC 107 - Lord Bridge: The first and fundamental question which must always be resolved is whether … there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement to share in this sense can only, I think, be based on evidence of express discussions between the [parties], however imperfectly remembered and however imprecise their terms may have been.

Express Common Intention

Eves v Eves [1975] 1 WLR 1338

  • The defendant clearly led the plaintiff to believe that she was to have some undefined interest in the property, and that her name was only omitted from the conveyance because of her age.

Grant v Edwards [1986] Ch 638

  • There is another and rarer class of case … where, although there has been no writing, the parties have orally declared themselves in such a way as to make their common intention plain. The defendant told the plaintiff that her name was not going onto the title because it would cause some prejudice in the matrimonial proceedings between her and her husband. … these facts appear to me to raise a clear inference that there was an understanding between the plaintiff and the defendant, or a common intention, that the plaintiff was to have some sort of proprietary interest in the house…

Detriment