Liberalising the constructive trust

In the absence of express agreement, a constructive trust can arise when the whole course of dealing between the parties indicates a common intention that property is to be held on constructive trust.

Abbott v Abbott ([2007] UKPC 53, PC) is an enormously important Privy Council decision in the area of the common intention constructive trust. Legal title to property was in the name of the husband. The husband conceded that the wife’s earnings should all be treated as a contribution to mortgage payments. That would be enough on an orthodox understanding to give rise to a constructive trust. As suggested by the English Court of Appeal in Oxley v Hiscock the Court could (in the absence of express agreement as to how beneficial ownership was to be shared) look at the whole course of dealing between the parties to quantify their respective beneficial interests; the Court need not take a resulting trust approach to this question. The significance of Abbott lies in the statement that the whole course of conduct could be relevant to the question of whether or not there was a constructive trust at all. It suggests that there could be a constructive trust even when there has been neither express agreement nor a contribution to mortgage payments. It might still appear from the whole course of the dealings between the parties that each was to have a beneficial interest under a constructive trust (para. 19). This is, however, obiter in the light of the husband’s concession that the wife had made a contribution to mortgage payments. The key passage is slightly ambiguous since it could be interpreted as an uncontroversial statement that the whole course of dealings is relevant to the question of quantum. It seems, however, that Baroness Hale intended to say that the whole course of dealings might be relevant too to the question as to whether or not there is a constructive trust (see the final sentence in para. 3). As Baroness Hale points out a number of factors were present that would justify a finding of a constructive trust in any event: the property had been a gift from the husband’s mother and it was strongly arguable that she had intended  a gift to them both and the wife had contributed to the mortgage payments. If the whole course of dealing approach is taken then other facts in the case assumed significance. The husband accepted that she had a beneficial interest and that the property was family property. The wife had taken on joint and several liability for the loan and part of the lender’s security was a charge over a life policy in respect of the wife.

Michael Lower

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