Posts Tagged ‘excuse’

The common intention constructive trust and the ‘specious’ excuse

May 6, 2015

In Curran v Collins ([2015] EWCA Civ 404, CA (Eng)) Mr. Collins and Ms Curran were in a relationship from the late 1970s until 2010. During that time, Mr. Collins had owned three properties (one after another) and title to these properties was in his sole name in each case. Ms. Curran claimed that she had had an interest under a common intention constructive trust in the second house to be bought and that this gave her an interest in the third house (since the proceeds of sale of the second house were used to part-fund the acquisition of the third house).

Ms. Curran had made no direct or indirect contribution to the purchase price from which an agreement could be inferred. It seemed that there was no express agreement upon which a common intention constructive trust could be founded.

Ms. Curran pointed, however, to what she referred to as the ‘excuse’ for not putting her name on the title to the second property. Mr Collins told her that this was because if he were to do this the mortgagees would insist on a second life insurance policy; having title in his name alone meant that they would spare themselves the expense of the second policy. Ms. Curran argued that this excuse was like those given in Eves v Eves and Grant v Edwards and was actually an acknowledgement of an understanding that she had a beneficial interest in the property.

The judge at first instance rejected this. In this case, the excuse was given to avoid difficulties or confrontation. Ms. Curran argued that the meaning of the words was to be understood objectively, not subjectively; the judge should have considered the meaning that a reasonable person would have given to the excuse. This argument failed. There was nothing to suggest that the judge had misinterpreted the relevant facts and circumstances. There was no basis for thinking that the judge’s interpretation was wrong ([41], Arden LJ).

Lewison LJ distinguished this case from Eves v Eves and Grant v Edwards. First, in each of those cases, the home was being acquired as a family home. There was a pre-existing family unit (the couple were living together and had children at the time of the excuse). Second, in each case, there was a positive assertion that but for (the excuse) the claimant’s name would have been put on the title deeds. Neither of these factors was present in this case ([70] – [74]).

Lewison LJ said:

‘[I]t cannot be right that the giving of a reason why someone is not on the title deeds inevitably leads to the inference that it must have been agreed that they would have an interest in the property. If one who is not versed in the difference between legal and equitable ownership asks to be on the deeds and is told ‘no’, the more usual inference would be that they have understood that they were not to become owners or part owners of the property.’ ([69]).

In any event, there was no detrimental reliance and this remains a requirement for the existence of a common intention constructive trust ([77] – [78], Lewison LJ).

In 1992, Mr Collins told Ms Curran that he had made a will leaving the property to her. This was not the basis for finding a common intention constructive trust since, among other reasons, it was not an assurance that she had a present interest in the property and there was no promise that he would not alter his will later. ([75] – ([76]) and there remained the lack of detrimental reliance.

Michael Lower

Common intention constructive trust and equity’s darling

May 13, 2014

In Mo Ying v Brillex Development Ltd ([2014] HKEC 724, CFI) (partly reversed by the Court of Appeal) title to the flat that was the matrimonial home was in H’s name alone. H entered into an agreement to sell the flat to B and took a lease back. The lease arrangement continued after completion. When H failed to meet the rental payments, B brought proceedings to recover possession. W then claimed that she had a beneficial interest under a common intention constructive trust and that B had imputed or constructive notice of this interest and so took subject to it.

W argued that there was an express common intention in that, after acquisition, H had given an excuse for not putting her name on the title deeds. W invited the court to follow the example given by Grant v Edwards and Eves v Eves but the court refused to do so. The ‘excuse’ was equivocal and, anyway, did not induce W to believe that she had or would have any interest in the property ([59]). Further, this was an alleged post-acquisition agreement and the courts are reluctant to infer a common intention constructive trust in such a case ([60]). There was no express common intention.

W argued that a common intention constructive trust could be inferred from the fact of the marriage. Marriage, alone, however, is not a basis from which to infer a common intention constructive trust ([66] – [68]). W’s sister had made a loan to H. It could not be shown that this was used towards the purchase price of the property. In any event, it was not clear that this could be regarded as a contribution by W ([69] – [70]). While the pooling of family assets could be evidence of a common intention ([71]), there was no evidence of such pooling. In any event, it seems that the court was of the view that there was simply no such common intention ([80]); so even if there had been evidence of pooling, it would only be a factor to be taken into account in determining on the balance of probabilities whether or not there was a common intention. The court was not prepared to infer a common intention from W’s contributions to household expenses (‘the everyday expense of the family’ ([81])) ([81] – [85]).

There was no detrimental reliance; neither her contributions to household expenses nor her decision to give up her job could be so regarded in this case. The necessary causal link was missing ([92]).

Deputy Judge Eugene Fung SC went on to consider whether if, contrary to her view, W had a beneficial interest, B was subject to it. W argued that the estate agent handling the transaction knew of the interest and that this knowledge should be imputed to B. The factual basis of this proposition was doubted. In any event:

‘In cases where an agent’s function is to receive communications on behalf of his principal, one can readily understand why the knowledge of the agent would be imputed to the principal. However, I have some doubt as to whether such a principle applies to an estate agent in Hong Kong. In a typical case, an estate agent’s function is to perform a service by introducing a counter-party to his principal so as to enable his principal to conclude a particular transaction with that counter-party; his function is not to receive communications on behalf of his principal. No cases have been cited to suggest that an estate agent in Hong Kong has the general authority to receive communications for his principal. Accordingly, I am unable to accept Mr Wong’s submission that notice of an estate agent in Hong Kong is imputed to his principal.’ ([117]).

B had, however, failed to inspect the property and so, by virtue of W’s occupation, had constructive notice of any interest that W might have. The fact that this was a sale and leaseback made no difference to this ([131] – [132]).

B’s attempt to avoid this conclusion by invoking estoppel by representation failed since W did not owe B a duty to speak out and inform B of her interest ([148]). The facts did not support B’s defence of waiver ([154]) nor acquiescence ([155] – [157]).

Nor could B rely on laches. Section 20(2) of the Limitation Ordinance provided the limitation period for an action to recover trust property from a third party and this had not expired. In any event, there had been no substantial lapse of time and it was not inequitable for W to enforce her claim against B ([165]).

Michael Lower

Common intention constructive trust: evidence of an agreement

May 13, 2011

A common intention constructive trust can arise when there has been an agreement that the claimant is to have a beneficial interest and where, wholly or partly as a result of that agreement, the claimant has suffered some detriment.

In Grant v Edwards ([1986] Ch 638, CA (Eng)) property had been conveyed into the joint names of Edwards and his brother. The property was intended as a home for Grant and Edwards (who were co-habiting) and their family. Edwards told Grant that her name was not on the conveyance because that might prejudice her matrimonial proceedings. This excuse  was found to be evidence of an express agreement that she was to have a beneficial interest in the property. Edwards paid the deposit and mortgage instalments but Grant covered all other expenses and this allowed Edwards to concentrate on the mortgage instalments. The Court of Appeal found that there was a link between Grant’s financial contributions and the agreement that she was to have a share. Thus, she had a beneficial interest.

Michael Lower

Constructive trust: finding the necessary agreement in a deceitful excuse

February 12, 2011

Where property was put into the sole name of D, D’s deceitful excuse for not putting the property into joint names can be evidence of the agreement that P was to have a beneficial interest.

In Eves v Eves ([1975] 1 WLR 1338, CA (Eng)) P and D started to live together. D made all the payments and the property was in his sole name. D told P that title could not be in joint names as she was under 21. At trial, he admitted that this was just an excuse. The house was in a very run-down condition when it was bought and P did a lot of the heavy work needed. The Court of Appeal held that there was a common intention constructive trust. D’s  excuse for not putting the property into joint names was evidence that they had an agreement that each was to have a beneficial interest. The heavy work provided the necessary detrimental reliance making it unconscionable for D to go back on the agreement.

Michael Lower