Marr v Collie: The interaction between presumed resulting and common intention constructive trusts

Introduction

How should the court proceed where the facts of a case are such that the presumed resulting trust (‘PRT’) and the common intention constructive trust (‘CICT’) might each be applicable?

This is an important question and one that arises frequently, especially in disputes concerning the ownership of the family home.

While the two trusts overlap, they can generate radically different outcomes. This is because the CICT has regard to a range of evidence that is broader than the factors relevant to a PRT analysis.

The CICT can, for example, consider mortgage or other payments that are made after the time of acquisition. The CICT, alone, has a rebuttable presumption of equality where there is a legal joint tenancy of a family home.

The PRT and the CICT answer the same questions but use different analytical frameworks and can generate different answers.

It is tempting to think of a binary choice between the PRT and the CICT and the presumptions built into them.

The Privy Council decision in Marr v Collie, however, points to a different approach that integrates the PRT and the CICT, rather than sharply distinguishing them.

I explain my reading of Marr v Collie and its integrated approach and one possible implication for the interaction between the PRT and CICT analytical frameworks.

The facts

The parties to this dispute were in a personal relationship with each other. They acquired several properties in their joint names. Some were acquired as investments, at least one was intended as a home.

Mr. Marr provided all the finance through a combination of direct investment and secured loans.

Mr. Collie was a builder and he claimed that the parties’ common intention was that his contribution to the properties would be in the form of building works improving their rental value.

The relationship broke down. Mr. Marr claimed the entire beneficial ownership under a PRT given that he provided the entire purchase price.

Mr. Collie, on the other hand, claimed that there was a CICT under which they would be equal beneficial owners.

The arguments

The parties in Marr v Collie saw their dispute as being about whether the PRT or the CICT provided the appropriate framework for determining their beneficial interests.

Mr. Marr was understandably keen to argue for a PRT approach since this would reward him with sole beneficial ownership.

Mr. Collie favoured a CICT approach since this would allow him to rely on additional evidence to establish his claim to a beneficial interest.

There was, for example, an email from Mr. Marr to his bankers implying an intention that he and Mr. Collie were to have equal shares.

This additional evidence would, he hoped, support his claim to a 50% interest in the properties.

The parties, then, saw the PRT and the CICT as being distinct, alternative possibilities. They, and the Bahamas Court of Appeal, thought that the PRT would apply if the relationship was predominantly ‘commercial’ and the CICT would apply if the case fell into the ‘domestic consumer’ category.

The problem seemed to be that the relationship, so far as the properties were concerned, belonged both to the domestic consumer and the commercial contexts.

Lord Kerr’s approach to the PRT / CICT relationship

The ownership arrangement recorded in the conveyance to the parties provides the starting point ([40]) but this can be displaced by evidence of the parties’ shared intentions ([41]).

The party seeking to show that there is a trust, that equitable ownership intentions differ from legal ownership, has the burden of proof.

If the only evidence of shared intentions is that there were differential financial contributions to the initial purchase price, then the PRT can be applied ([45]).

If the whole course of conduct in relation to the property includes additional evidence which might rebut the PRT, ‘there should be a direct focus on what the intentions of the parties were’ ([46]).

Regardless of context, ‘the answer is not to be provided by the presumption of one trust over another’ ([54]).

Lord Kerr thought that the only room for resort to a choice of presumptions was, perhaps, ‘where there is no evidence from which the parties’ intentions can be identified’ ([54]).

Applying this to Marr v Collie

The parties had contributed unequally to the purchase price. This raises the presumption of a resulting trust and is evidence from which a common intention constructive trust might be inferred.

The legal joint tenancy and the personal relationship between the parties might be thought to give rise to a presumption of equality after Stack v Dowden.

There was, however, additional evidence of the parties’ intentions, Mr. Marr’s email to his bankers for example, which had not been explored and evaluated.

The case was remitted to the Supreme Court of the Bahamas for this gathering and evaluation of relevant additional evidence to take place.

What does this mean for the future role of the PRT?

The PRT hands over to the CICT when the range of evidence, or the ability to give proper effect to it, goes beyond what the PRT can achieve.

Up to that point, the PRT and the CICT are interchangeable. Beyond that, the rigidity of the PRT is a barrier to determining the parties’ intentions.

Is there any need for the PRT, then, since the CICT provides a complete and more flexible alternative?

Marr v Collie illustrates the problems that arise where parallel PRT and CICT analyses are conducted.

In a later post, I will briefly outline the academic reception of Marr v Collie, not all of it is uncritical.

Michael Lower

Tags: common intention constructive trust, Marr v Collie, Michael Lower, presumed resulting trust, Property Law, relationship