Beneficial interest in land arising from contributions to purchase price – Presumed resulting trust or common intention constructive trust?

A presumed resulting trust can arise where title to land is in A’s name but B contributed to the purchase price. The same facts would readily give rise to an inference that B has a beneficial interest under a common intention constructive trust.

This overlap between the presumed resulting trust and the common intention constructive trust matters because of the potential for different outcomes when it comes to valuing beneficial interests.

The beneficiary’s interest under a presumed resulting trust is strictly proportionate to their contribution to the purchase price. This may not be true in the case of the common intention constructive trust.

For example:

• the beneficiary may have made financial contributions that count for common intention constructive trust purposes but that are not relevant to the presumed resulting trust calculation (informal mortgage contributions are the most obvious example);
• or there may be a finding that A and B’s intentions concerning ownership were shaped by a domestic partnership / pooled assets mindset. Equality of shares, irrespective of financial contributions is the outcome in this case (eg Chan Chui Mee v Mak Chi Choi – the first instance judgment is outlined in this earlier blog post).

That being so, which approach should the court apply?

The normal approach is to make use of the common intention constructive trust, at least in the domestic context. This is illustrated by the recent court of first instance decision in Tang Hin Fai Chris v Tang Hin Lung.

Title to a flat was in the name of P1 and P2. D1 and D2 claimed to have contributed to the purchase price. The financial contributions were not, however, the only relevant evidence as there were rival contentions as to the express agreement that explained these contributions.

The claim to a beneficial interest failed. D1 and D2 made payments to P1 and P2 (the legal owners), but these were pursuant to an oral licence agreement. They were not made in accordance with an oral agreement that D1 and D2 should have an ownership interest.

DHCJ Jenkin Suen SC, referring to the Court of Appeal judgment in Primecredit confirmed the primacy of the common intention constructive trust in the domestic context ([99]).

This provides a solution to the question posed at the outset as to which trust should apply when the claim to a beneficial interest is based on a contribution to purchase price. There is a problem, though: is it always possible to distinguish between a domestic and a non-domestic context?

A better solution might be to say that the purchase price resulting trust is now, effectively, a sub-category of common intention constructive trust. I’ll return to this thought in another blog post.

Michael Lower

Tags: beneficial ownership, common intention constructive trust, family home, Michael Lower, presumed resulting trust