Re Pavlou [1993] 1 WLR 1046

Facts

• Mr. and Mrs. Pavlou purchased a property as joint owners.
• Following their separation, Mr. Pavlou made substantial payments toward the mortgage to prevent repossession.
• The court had to decide whether these payments entitled Mr. Pavlou to a charge over the property.

Issues

1. Whether Mr. Pavlou's post-separation mortgage payments entitled him to a charge on the jointly owned property.
2. Whether these payments gave rise to a resulting or constructive trust in his favour.
3. How a charge, if granted, should be calculated.

Decision

• The court held that Mr. Pavlou’s payments did not result in a resulting trust, as they were not contributions to the original purchase price but served to preserve the property.
• It was found that there was an implied agreement allowing Mr. Pavlou to reclaim his payments, as they safeguarded the property for the benefit of both co-owners.
• The court granted Mr. Pavlou a charge equal to the precise amount paid toward the mortgage, rejecting the notion that charges should be limited to increases in property value resulting from such payments.

Legal Principles

• A resulting trust arises when contributions are made toward the purchase price, granting proportional beneficial ownership.
• A constructive trust may be imposed where there is a shared intention, evidenced by words or conduct, that does not correspond to the legal title, and one party acts to their detriment in reliance on this intention.
• Establishing a right to a charge requires evidence of a mutual or implied agreement, existing at the time relevant payments were made.
• Charges should reflect the actual amount contributed, not merely increased value derived from the payments.
• Where explicit agreements are lacking, courts will examine the financial conduct and interactions of parties to determine rights.

Conclusion

Re Pavlou [1993] 1 WLR 1046 established that a co-owner making payments to preserve jointly owned property may obtain a charge for the exact sum paid, provided there was an implied agreement to that effect, clarifying the distinction between resulting and constructive trusts in joint ownership disputes.