Common intention constructive trusts where the agreement is formed for an unlawful purpose: does Tinsley v Milligan apply?

In O’Kelly v Davies ([2014] EWCA Civ. 1606, CA (Eng)) the parties cohabited for many years. Title to the first family home had been in joint names at first. Title was then transferred into O’s sole name. When they moved to a second home, title to this was also in O’s name. D alone made all the mortgage payments. This was done to allow O to make fraudulent claims to state benefits. There was no express agreement that D was to have an equitable interest but both the first instance judge and the English Court of Appeal found that an agreement was to be inferred from the whole course of conduct between the parties relating to the property ([29] per Pitchford LJ).

The question was whether public policy prevented D from enforcing his claim to an equitable interest given the unlawful agreement upon which his claim rested. Did Tinsley v Milligan apply to a common intention constructive trust case where there was no presumption of resulting trust to help D? The Court of Appeal held that Tinsley v Milligan was equally applicable in this context. Since D needed only to plead the facts that gave rise to the implied agreement, and had no need to plead the unlawful purpose, he was entitled to rely on the Tinsley v Milligan approach:

‘It was not necessary for the respondent to advance his unlawful agreement in order to make good his claim to a constructive trust. As in Tinsley v Milligan the merits as between the parties are all one way. The issue is whether public policy should intervene to prevent the respondent from enforcing his interest. The conduct identified by the judge was not the making of the unlawful agreement (which was about purpose and not about shared equitable interest) but the course of dealing between the parties relating to their financial contributions to the purchases. While it is no longer appropriate to think in terms of an evidential presumption as to intention, the very conduct that, formerly, would have created that presumption supported the inference drawn by the judge and, in my judgment, for that reason the intervention of public policy is avoided.’ ([32])

This case can be contrasted with Barrett v Barrett where there was a need to plead the unlawful purpose given the equally plausible explanations advanced as to the reasons for which the payments had been made ([33]).

Pitchford LJ’s judgment is also worth reading as an example of the approach taken to implying a common intention after Jones v Kernott.

Michael Lower

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3 Responses to “Common intention constructive trusts where the agreement is formed for an unlawful purpose: does Tinsley v Milligan apply?”

  1. avocawho Says:

    Interesting, and that’s what I thought as well 🙂

  2. Audrey Johnson Says:

    i’m still baffled as to the distinction between Tinsley v Milligan held to be a resulting trust & O”Kelly v Davies -a common intention constructive trust. please shed some light Asap!

  3. Michael Lower Says:

    It will often be possible to analyse this type of case as either type of trust. There is no obvious reason why the claimant in O’Kelly should not have used his financial contributions to claim an interest under a resulting trust. In fact, he was claiming less than the first instance judge thought that he was entitled to based on his financial contributions. This shows that the common intention constructive trust approach allows a broader range of factors / types of agreement than can be catered for than the resulting trust approach.

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