Crossco No 4 Unlimited v Jolan Ltd [2012] 2 All ER 754 (CA)

Facts

• Crossco No 4 Unlimited (the appellant) and Jolan Ltd (the respondent) entered into an agreement to purchase and develop a commercial property, intending to share profits from its eventual sale.
• The relationship between the parties broke down, resulting in a dispute over beneficial ownership of the property.
• Crossco argued it was entitled to a beneficial interest based on its financial contributions and the joint intention to develop and sell the property for profit.
• Jolan contended that the property was held solely for its own benefit and that no beneficial interest was created for Crossco.
• The trial court found for Jolan, concluding Crossco failed to establish a common intention to share beneficial ownership, and Crossco appealed to the Court of Appeal.

Issues

1. Whether sufficient evidence demonstrated a common intention between the parties to share beneficial ownership of the property.
2. Whether contributions towards the development, rather than the acquisition, of the property could support a claim for a beneficial interest.
3. How the principles of common intention constructive trusts apply in commercial settings as opposed to domestic ones.

Decision

• The Court of Appeal held that Crossco had not provided adequate evidence of a common intention to share the property's beneficial ownership.
• The court determined that Crossco's financial contributions to development alone did not establish a beneficial interest without clear evidence of a shared intention.
• It was found that the parties’ agreement focused on profit-sharing, not on creating a beneficial interest in the property for Crossco.
• The appeal was dismissed, affirming the trial court's decision in favour of Jolan.

Legal Principles

• Establishing a common intention constructive trust requires (1) an objectively ascertainable shared intention to share beneficial ownership and (2) detrimental reliance by the claimant.
• In commercial contexts, courts demand clear, unequivocal evidence of shared intention, typically a higher threshold than in domestic cases.
• Contributions to the development or improvement of property, absent a clear common intention, do not suffice to establish a beneficial interest in commercial disputes.
• The legal framework aligns with principles from Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53 but reflects stricter evidential requirements in commercial cases.

Conclusion

The Court of Appeal clarified that, in commercial property joint ventures, a common intention constructive trust will not arise unless there is clear, unequivocal evidence of a shared intention to share beneficial ownership, emphasizing the need for explicit agreements and proper documentation in such arrangements.