Constructive trust: significance of assuming joint liability for mortgage

In Hyett v Stanley ([2003] EWCA Civ. 942, CA (Eng)) F and H co-habited. Their home was in F’s name alone. They pooled their financial resources. They were under financial strain and the bank would only lend money if H agreed to accept joint liability for the mortgage payments. F told her that she could safely do this without a formal transfer of title since, he asserted, allowing her name to be added to the mortgage have her a right to the property. The Court of Appeal found that this could only be construed as an agreement that she was to have an interest under a common intention constructive trust. Since she was jointly and severally liable under the terms of the mortgage the Court of Appeal inferred an understanding that each would have a one half beneficial interest in the property.

There was also a mortgage protection life assurance policy. F and H were said to be joint tenants of the proceeds of the policy. F had died and H claimed the entire proceeds. The Court of Appeal confirmed the first instance decision that the policy had first to be applied in paying off the mortgage. H was only entitled to the balance remaining after that repayment.

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