Posts Tagged ‘fairness’

Common intention constructive trust: valuation in sole name cases where there is no actual agreement as to how ownership is shared

February 17, 2015

In Graham-York v York ([2015] EWCA Civ 72, CA (Eng)) the English Court of Appeal looked at the approach to be taken to the valuation of an interest under a common intention constructive trust where title was in the sole name of one of the parties and there was no evidence of a common intention as to how the beneficial ownership was to be divided between the parties. Here a couple had co-habited for over forty years and had two children (one of whom was brought up by them and another by a relative). The man had provided nearly all of the family’s financial resources from the various businesses that he ran.

At first instance, the court found that there was evidence of a common intention that his partner (Miss Graham-York) should have an interest in the family home given her financial contribution to the family income before and at the time of the purchase of the property. The court also found that there was no express agreement as to the share that Miss Graham-York should have and that a 25% interest in the property would be a fair reflection of her financial and non-financial contributions over the years.

Miss Graham-York appealed against this finding. She argued that where there was no evidence as to a common intention concerning the size of her share, the court should take fairness as the guide to what they must reasonably be taken to have intended. Her initial and ongoing financial contributions, the length of the co-habitation and her contribution to the bringing-up of her daughter were each, she argued, factors pointing towards equal beneficial ownership ([18]).

Tomlinson LJ gave the principal judgment. He pointed to the joint judgment of Lord Walker and Lady Hale in Jones v Kernott as ‘the most authoritative modern guidance as to the proper approach in cases of this sort’ ([20]). While the search was primarily for the parties’ actual shared intentions, there were two situations in which this was not the case. The first of these was the situation in which the presumed resulting trust operated. The second, relevant here, involved cases, ‘where it is clear that the beneficial interests are to be shared, but it is impossible to divine a common intention as to the proportions in which they are to be shared.’ Here, ‘the court is driven to impute an intention to the parties which they may never have had.’ (Jones v Kernott, [31]).

Tomlinson LJ went on to comment on the scope of the enquiry as to fairness in these circumstances. The court must do what is fair having regard to the whole course of dealing in relation to the property (Jones v Kernott, [51]). The court ‘is not concerned with some form of redistributive justice’; so, here, the abuse that Miss Graham-York had suffered during her long relationship was not a relevant factor (Graham-York v York, [22]).

There is no presumption of equality of interests in sole name cases, even where the other party has made a substantial contribution. (Graham-York v York [25]).The first instance judge had identified the appropriate legal principles and applied them correctly. Miss Graham-York’s appeal was dismissed.

Michael Lower

Common intention constructive trust – abandonment after Jones v Kernott

December 1, 2014

In Quintance v Tandan ([2012] EWHC 4416 (Ch)) a co-habiting couple bought a property in joint names. They agreed to hold it on trust for themselves as beneficial tenants in common in equal shares. Q made no contribution to the purchase price (though he was a party to the mortgage). Within weeks of acquisition of the property, Q abandoned T. T made all the payments as she had already been doing up until then). When the property was sold, Q claimed that he was entitled to half of the net proceeds of sale. This claim failed. The approach taken in Jones v Kernott was applied. Q’s conduct showed an agreement to abandon his half share. This could be expressed either as a variation of the original agreement inferred from post-acquisition conduct or as the fair outcome where there was no evidence that the parties had formulated any actual intention ([17] per HH Judge Waksman QC)). The question of fairness is fact-sensitive ([19]).

Michael Lower