Interests in the family home: constructive trusts and estoppel compared

• Author: R. J. Smith
• Position: Fellow of Magdalen College, Oxford
• Pages: 96-116

INTERESTS IN THE FAMILY HOME:

CONSTRUCTIVE TRUSTS AND ESTOPPEL COMPARED

R. J. SMITH*

One of the most difficult issues facing the courts in recent decades

has been the sorting out of the property consequences of informal

arrangements regarding ownership and occupation of family homes.

The courts might have taken the view that no rights would be

recognised without clear written evidence, but that harsh approach has

never been adopted. Alternatively, the courts could have developed a

theory that the family home is always (at least in the absence of a

contrary intention) jointly owned. Although it looked as though that

solution might be adopted in the late 1960's, it was rejected in the

leading House of Lords cases of Pettitt v. Pettitt1 and Gissing v.

Gissing2 and it seems unlikely to re-emerge in the near future. In the

absence of either extreme solution, the courts have been struggling to

define the situations when an informal arrangement will give rise to an

interest in the home. I should, perhaps, add that there is generally a

statutory discretion in most countries to allocate property between

husband and wife on divorce: this renders it unnecessary to decide

what their strict property rights are. Some countries have provisions

extending to those who are living together as husband and wife and

also operating in situations other than divorce: the Barbados Family

Law Act, Cap 214, provides an example. It should be remembered,

however, than not even the widest legislation will cover all cases.

Two devices have been employed by the courts. Where both parties

have contributed to the purchase, then the courts have been willing to

infer that there was a common intention that it should be jointly owned

and have given effect to this common intention by way of constructive

trust (sometimes described as a resulting trust). Where the argument

has succeeded, the invariable result is that the claimant (C) has a share

in the land. It may be a half share, or else some other proportion that

better represents the value of the contribution. The second device is

Fellow of Magdalen College, Oxford. The substance of this article was first

delivered in a lecture by the author at the Faculty of

Law,

University of the

West Indies, Cave Hill, Barbados, in April 1993.

1 [1970] A.C. 777. See Lord Reid at 793, Lord Hodson at

811,

Lord Upjohn

at 813-815 and Lord Diplock at 823-824.

2 [1971] A.C. 886.

that of proprietary estoppel. If the owner of land (O) makes a

representation that C should have an interest and C acts to his or her

detriment, then the courts may be willing to say that C shall be given

this interest. The courts may, for example, order that C be given the

fee simple, lease or right to reside for life.

The two devices of constructive trust and estoppel developed from

the 1960's to the 1980's without any realisation that they shared

common characteristics. Over the past seven years or so, judges and

commentators have become aware of their overlapping each other.

What I wish to investigate here is whether the two devices really are

the same, and the extent to which the rules applying to them either are

or should be the same.

Before plunging into these issues, we need to consider the current

state of the law on each of

the

common intention constructive trust and

estoppel.

A. THE CONSTRUCTIVE TRUST

Ever since

Gissing

v.

Gissing

in 1970, the emphasis has been upon

finding a common intention. Such a common intention must be

inferred from the facts: the court has no jurisdiction to impute to the

parties an intention that they never had, even if they might have

formed such an intention had they thought about it. For some time,

it looked as if a broader view might be adopted even after Gissing.

Lord Denning M.R. advocated what has been described as the new

model constructive trust, in reliance upon dicta of Lord Diplock in

Gissing that a trust will be created whenever the trustee has so

conducted himself that it would be inequitable for him to deny to the

cestui que trust a beneficial interest in the land acquired. And he will

be held so to have conducted himself if by his words or conduct he

has induced the cestui que trust to act to his own detriment in the

reasonable belief that by so acting he was acquiring a beneficial

interest in the land.

In a series of cases in the early 1970's,3 Lord Denning M.R.

seized on these words as if they represented a test that could be

applied on a case by case basis. Yet those words cannot be plucked

out of their context: Lord Diplock is doing no more than expounding

3 See in particular Binions v. Evans [1972] Ch.359; Hussey v. Pabner [1972]

1 W.L.R. 1286; Eves v. Eves [1975] 1 W.L.R. 1338.