Introduction
The legal concept of a common intention constructive trust arises when there is an agreement or understanding between parties regarding the beneficial ownership of property, which may differ from the legal title. This trust is constructed by the court based on the parties' intentions, often implied from their conduct, rather than an express agreement. The technical principles governing this type of trust require establishing a common intention, a change in position by one party based on that intention, and detriment suffered as a consequence. These key requirements are central to determining the allocation of beneficial interests, specifically in situations where property is held in joint legal names, but financial contributions are unequal. The case of Marr v Collie [2017] UKPC 17 provides significant clarification on the application of the common intention constructive trust beyond purely domestic contexts.
The Facts of Marr v Collie
The central issue in Marr v Collie involved a couple, identified as C and D, who jointly purchased several investment properties. Although the legal title to these properties was held in both of their names, the majority of the purchase funds were provided by C. Following the termination of their relationship, C sought a declaration that he held the sole beneficial interest in these properties, arguing for a presumed resulting trust based on his unequal contribution. The Bahamas Court of Appeal initially ruled that this presumed resulting trust had been rebutted by evidence suggesting that at the time of purchase, C intended D to possess an equal share in the properties. This decision highlights the core conflict: while unequal financial contributions typically give rise to a resulting trust, which reflects the proportions of those contributions, the courts must also consider the possibility of a common intention constructive trust, which may override this presumption.
The Privy Council's Judgment
The Privy Council, in Marr v Collie, disagreed with the lower court's assessment and remitted the case for a redetermination. Lord Kerr, delivering the judgment, emphasized that the intentions of the parties had not been examined sufficiently. A critical point made was that the common intention constructive trust is not confined to "domestic consumer context" scenarios. He posited that couples may purchase investment property in joint names intending joint beneficial ownership, irrespective of their individual contributions. This pronouncement extended the common intention constructive trust's applicability, clarifying its relevance beyond the confines of family homes. The court stated clearly that when considering the intentions of parties, a crucial starting point is to consider whether there is a common intention to share the beneficial interests, and what that intention actually is. This does not mean one presumption wins over the other, rather that the intention of the parties as a whole will be looked at.
The Clash of Presumptions
A significant portion of the judgment in Marr v Collie addressed the potential conflict between two presumptions when parties contribute unequally to property held in joint names. The first presumption, as the starting point for a common intention constructive trust, is that joint legal ownership indicates a joint beneficial tenancy. This means both parties would hold equal shares in the property. The second presumption is the resulting trust, which assumes parties hold the beneficial interest as tenants in common, with shares proportionate to their respective financial contributions. In cases of unequal contributions to purchases in joint names, a common intention of the parties must be sought to define beneficial ownership. The Privy Council clarified that the resolution of this conflict does not involve one presumption automatically overriding another. Instead, a full examination of the parties’ intentions is required, as the beneficial interest will be defined by this. This approach shifts the focus from a rigid application of presumptions to a more nuanced consideration of the factual context.
The Role of Intention
The judgment in Marr v Collie highlighted that the relevant intention for determining the beneficial interest is primarily that which existed at the time of purchase. However, the court also acknowledged that the parties' intentions might evolve after the initial purchase, potentially impacting the distribution of the beneficial interest. This aspect of the judgment introduces a degree of flexibility, allowing for circumstances where the initial agreement between the parties is later altered. The necessity of examining the specific facts of the case, rather than simply applying presumptions, becomes paramount in such situations. The court’s judgment therefore serves as a warning that courts must delve into the facts of a case in order to ascertain all relevant intentions, as no simple rule or presumption can account for the complexities of human relationships.
Resulting Trusts: Retention of Property
The notion of retention of property in resulting trusts is also pertinent to the subject matter. While resulting trusts can arise automatically due to the failure of an express trust, presumed resulting trusts are predicated on a transferor's implied intention to retain a beneficial interest. This concept, however, is not a retention of an existing property interest, as argued by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC, but rather the creation of an equitable interest. The case of Vandervell v IRC serves to highlight the differences between these two interpretations. In Vandervell v IRC, despite the transferor’s clear intention to avoid beneficial ownership, a resulting trust was found. This suggests that resulting trusts may operate “automatically” where an express trust fails, indicating that the statement that 'what I once had and have not granted away, I keep' is not a complete explanation of the legal reality. The law presumes an intention to create a resulting trust in cases of voluntary conveyance or contributions to the purchase of property. These presumptions can be rebutted by evidence of a contrary intention. In cases where there is no intention, the law will decide to whom the beneficial title belongs to. The court will therefore have to look to all of the evidence presented in order to ascertain the true intentions of the parties.
Conclusion
Marr v Collie [2017] UKPC 17 provides a critical analysis of common intention constructive trusts, extending their application beyond domestic settings and elucidating the complex interplay of presumptions and intentions. The judgment underscores the necessity of a detailed examination of the parties' intentions, both at the time of purchase and potentially thereafter. It also demonstrates that while presumptions are helpful, they should not replace a thorough investigation into the specific circumstances of each case. This is especially true when dealing with the clash of presumptions arising from unequal contributions to a purchase in joint names, and shows that the starting point of a joint tenancy can be rebutted by the facts of the case. The reference to cases such as Westdeutsche Landesbank Girozentrale v Islington LBC and Vandervell v IRC in relation to resulting trusts further clarifies the theoretical basis for property ownership and the subtle differences that exist within this area of law.
