Introduction
The case of Goodman v Gallant [1986] Fam 106 addresses the interaction between express trusts and the equitable doctrines of resulting and constructive trusts in the context of property ownership. An express trust arises from a clear declaration of the terms under which property is held, specifying the beneficiaries and their respective interests. Conversely, resulting and constructive trusts are imposed by courts to rectify perceived injustices, arising either from presumed intentions (resulting) or from unfair conduct (constructive). A key principle established in Goodman v Gallant is that an express declaration of trust regarding beneficial interests in property takes precedence over any claims based on implied or constructive trusts, unless the express declaration is successfully challenged or rectified. This means that if the parties have clearly stated their intentions through an express trust, it is difficult for a court to impose different terms based on a perceived fairness or a different common intention. The case highlights the importance of the certainty that an express declaration provides in property law.
The Facts of Goodman v Gallant
In Goodman v Gallant, the claimant (C) and her husband were originally joint beneficial tenants of their family home. Subsequently, the claimant and the defendant (D) jointly purchased the husband’s share. The conveyance document explicitly declared that they held the property "upon trust to sell…until sale upon trust for themselves as joint tenants." A crucial legal concept is that of a joint tenancy, which implies that each party owns the whole property, and upon severance of the tenancy, their shares become equal. Subsequently, C served notice to sever her joint tenancy with D and sought a court declaration that she held a three-quarter interest in the property, instead of the expected half share that severance of a joint tenancy entails. Her legal counsel argued that upon severance, the shares should not automatically be equal, but rather, reflect the parties’ intentions. However, D contended that the parties held the house as joint tenants and, thus, the sale proceeds should be divided equally. This discrepancy in claims brought the conflict to the Court of Appeal, where a firm decision would need to be made based on established law.
The Court of Appeal's Decision
The Court of Appeal in Goodman v Gallant sided with the defendant, D, ruling that the parties were indeed joint tenants and that the sale proceeds of the property must be held in equal shares. The leading judgment was delivered by Slade LJ, emphasizing the significance of the express declaration of trust. The court's reasoning centered on the principle that an express trust, which declares the beneficial interests in a property or its proceeds, prevents the application of resulting or constructive trusts. This position only changes if the express declaration is set aside or rectified, which was not the case here. This aspect of the ruling clearly establishes the hierarchy within trust law, granting express declarations a stronger position. Further, Slade LJ clarified that it is inherent to a joint tenancy that, upon its severance, each party receives an equal share based on the total number of joint tenants.
Express Trusts and the Exclusion of Implied Trusts
A central point of the Goodman v Gallant decision rests on the supremacy of an express declaration of trust. Slade LJ clearly stated that where there is an express declaration of trust specifying the beneficial ownership of property, there is no room for the court to apply the principles of resulting or constructive trusts. These implied trusts, which depend on the presumed intentions of parties or on unjust enrichment, respectively, are overridden when an express declaration sets the terms. For example, if two individuals purchase a property and declare that they hold it as joint tenants, as in this case, the courts will not typically entertain arguments based on unequal contributions or alleged common intentions to create different beneficial ownership. The court underscored that the only instances when this would not apply is if the express declaration itself was either set aside or rectified due to mistake, fraud or misrepresentation. The decision provides certainty in property law by ensuring that the explicitly stated intention of the parties is given precedence. The judgment also confirms the principle that where parties have specifically agreed to how they will hold property, a court must respect and uphold this agreement.
Severance of a Joint Tenancy
Another key aspect of the judgment concerns the legal effect of severing a joint tenancy. As defined in the Goodman v Gallant judgment, the nature of a joint tenancy is such that, upon severance, each joint tenant is entitled to an equal share of the property, according to the number of joint tenants at the time of severance. This means if two people are joint tenants and one severs the tenancy, each owns a 50% share. If there are four joint tenants, each owns a 25% share upon severance. This equal division is an automatic consequence of severance, which arises when one party acts to end the joint tenancy by way of notice or by their actions. The Court of Appeal acknowledged that the parties could create a trust specifying that on severance of a joint tenancy the parties would receive other than equal shares, but this requires a clear statement in the original agreement. In the case of Goodman v Gallant, the words of the conveyance indicated a beneficial joint tenancy, thus encompassing all its legal implications, including equal shares upon severance, and no such alternative provision was included.
The Modern Relevance of Goodman v Gallant
The principle established in Goodman v Gallant retains its importance in contemporary property law, particularly in cases involving cohabiting couples and shared property. It is important to note that the court’s decision in Goodman v Gallant has implications for the more recently developed common intention constructive trust, such as those seen in Stack v Dowden [2007] UKHL 17, where it was determined that constructive trust can apply when there is an intention to share property, even where there is no express declaration of trust. It is likely the common intention constructive trust will not apply where cohabiting parties have made an express declaration of trust specifying the beneficial ownership of the property, as the precedent in Goodman v Gallant states that an express declaration will usually prevent the operation of resulting or constructive trusts. Goodman v Gallant serves as a strong reminder that an express declaration of trust is a critical instrument to ensure that the legal ownership of property is clear and reflective of the intentions of the parties involved. The case underscores the fact that if individuals intend to hold property in shares other than those implied through joint tenancy or implied trusts, they must express those intentions explicitly in a formal trust deed. Therefore, the case highlights the importance of clear, written agreements when purchasing property.
Conclusion
Goodman v Gallant [1986] Fam 106 is a significant judgment in property law for its clear elucidation of the relationship between express trusts and equitable doctrines. This case demonstrates that an express declaration of trust holds a primary position, excluding the application of resulting or constructive trusts unless the express declaration is successfully challenged or rectified. Furthermore, it clearly defines the consequences of severing a joint tenancy, specifically that each joint tenant takes an equal share based on the total number of tenants. This case is a direct reflection of the rule of law, requiring explicit agreements to be upheld. Goodman v Gallant serves as a critical reminder for legal practitioners and property owners alike, that a clear and well-drafted express trust is essential to prevent future disputes and uncertainty in ownership. Its importance also extends to modern applications of constructive trusts, highlighting the enduring significance of clearly expressed intentions in property ownership. This case is important in defining the limits of implied trusts, and confirming the primacy of written agreements.
