Implied trusts and trusts of the family home - Proprietary e...

Learning Outcomes

This article explores the creation and operation of implied trusts, specifically resulting and constructive trusts, in the context of the family home, and examines how these doctrines allocate beneficial interests where legal title is misleading. It also examines the doctrine of proprietary estoppel as an alternative and sometimes overlapping route to equitable relief. The discussion focuses on the circumstances giving rise to resulting trusts, the evidential rules for rebutting presumptions, and the core requirements for a common intention constructive trust, including common intention (express or inferred) and detrimental reliance. It explains how courts quantify beneficial shares in both joint and sole name cases, and how assurance, reliance and detriment operate within proprietary estoppel, with unconscionability as the unifying theme. The article emphasises how these principles are tested in SQE1 multiple-choice questions, requiring precise identification of the applicable doctrine, the existence and extent of any beneficial interest, and the likely remedy. Particular attention is given to the role of financial and non‑financial contributions, the limits of domestic duties, the impact of statutory formalities, and the strategic choice between constructive trust and proprietary estoppel arguments in family home problem scenarios.

SQE1 Syllabus

For SQE1, you are required to understand the formation and effect of implied trusts and the principles of proprietary estoppel, particularly concerning property rights in the family home, with a focus on the following syllabus points:

• The circumstances giving rise to resulting trusts, including voluntary transfers and purchase money contributions, and the presumptions of resulting trust and advancement.
• The evidential rules for rebutting presumptions, including the limited use of subsequent declarations and the impact of illegality.
• The requirements for establishing a common intention constructive trust, focusing on common intention (express or inferred) and detrimental reliance, especially in the context of sole and joint legal ownership of the family home.
• The quantification of beneficial interests under such trusts and the factors a court considers in joint and sole names cases.
• The requirements for proprietary estoppel: assurance, reliance, and detriment, and the role of unconscionability as the overarching equity.
• The nature of the remedies available where proprietary estoppel is established, including transfer of property, rights to occupy, and monetary awards proportionate to detriment.
• The distinction and potential overlap between constructive trusts and proprietary estoppel in family home disputes, including formality considerations under s.53(2) LPA 1925 and s.2 LP(MP)A 1989.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. True or false: A constructive trust requires written evidence to be enforceable.
2. In which situation does the presumption of advancement typically arise? a) Transfer from wife to husband. b) Transfer from father to child. c) Transfer between business partners. d) Transfer between siblings.
3. What are the three core requirements for establishing proprietary estoppel?
4. Can a claimant succeed in establishing a common intention constructive trust based solely on carrying out domestic duties and childcare?

Introduction

When the legal title to property, particularly the family home, does not reflect the contributions or shared understandings of the parties involved, equity may intervene through implied trusts or proprietary estoppel. Unlike express trusts, which arise from a clear declaration by the settlor, implied trusts arise by operation of law based on the presumed intentions or conduct of the parties. Proprietary estoppel prevents a legal owner from denying rights to another party who has relied on an assurance to their detriment. These doctrines are essential for resolving disputes over beneficial ownership, especially in cohabitation scenarios where statutory property adjustment rules available to married couples or civil partners do not apply.

In family home disputes, a trust of land exists by operation of statute whenever land is co-owned, and the legal estate is held by joint tenants whilst the beneficial interest may be held as a joint tenancy or a tenancy in common. Where there is sole legal ownership, equity can still recognise beneficial interests based on contributions, agreements and reliance, without the need for the formality of writing because of s.53(2) Law of Property Act 1925, which exempts implied, resulting and constructive trusts from writing requirements. Proprietary estoppel can also succeed despite a lack of writing under s.2 Law of Property (Miscellaneous Provisions) Act 1989 if equity demands relief to avoid unconscionability.

Key Term: Resulting Trust
A trust implied by law where property is transferred to someone who pays nothing for it, and they are then presumed to hold the property for the benefit of the transferor or contributor.

Resulting Trusts

A resulting trust arises in two main situations: apparent gifts (voluntary conveyances or purchases in another's name) and incompletely disposed of beneficial interests under an express trust. For SQE1, the focus is typically on the former.

Voluntary Conveyance and Purchase Money Resulting Trusts

Equity presumes bargains, not gifts. Where property is transferred voluntarily (ie, without consideration) or purchased wholly or partly by one person in the name of another, a presumption of a resulting trust arises. The transferee (legal owner) is presumed to hold the property on trust for the transferor or contributor.

This presumption can arise:

• On a voluntary transfer of personalty (eg, bank funds or shares) into another’s name without consideration.
• Where a purchase price is contributed by A and the legal title is put solely into B’s name; B is presumed to hold for A to the extent of A’s contribution.
• Where both parties contribute to the purchase price and only one is on the legal title; equity presumes a trust of beneficial interests in proportion to contributions unless a contrary intention is shown.

Where purchase funds include mortgage instalments, direct payments towards the mortgage may be treated as contributions to the purchase price for the purposes of a resulting trust in appropriate cases. A statutory sitting tenant discount can also count as a contribution giving rise to a resulting trust share proportionate to the discount value.

Key Term: Presumption of Advancement
A counter-presumption to the resulting trust, arising in specific relationships (e.g., father to child, husband to wife), where a voluntary transfer or contribution is presumed to be a gift.

The presumption of advancement reflects historic assumptions and currently applies on transfers from father to child, and in some authorities to husband to wife. Modern courts approach gendered presumptions critically. Section 199 of the Equality Act 2010 provides for abolition of the presumption of advancement but is not yet in force; until commenced, the presumption remains part of English law but is readily rebuttable.

The presumption of resulting trust and the presumption of advancement are both rebuttable. Evidence admissible to rebut must reflect the transferor’s intention at the time of the transfer (or contemporaneous with the transaction). Subsequent statements by the transferor are generally inadmissible in their favour (though may be admissible against them), and findings of illegality may prevent reliance on either presumption.

Where a resulting trust is found, shares are typically proportionate to contribution. However, if there is sufficient evidence of a common intention to share differently and detrimental reliance, resulting trust analysis may give way to constructive trust principles.

Worked Example 1.1

Priya pays a 30% deposit on a flat. The mortgage and legal title are in Jack’s sole name. Over five years Priya pays for household bills while Jack pays the mortgage. There was no express declaration of trust. They separate. Priya claims a share.

Answer:
On resulting trust principles, Priya has a prima facie 30% beneficial share based on her direct contribution to the purchase price. If Priya can show a common intention to share and detrimental reliance (eg, that her payments freed Jack to meet mortgage instalments or that there were assurances), constructive trust analysis may displace pure contribution-based shares and lead to a different quantification.

Presumption of Advancement (Gift)

Example: If a father buys property in his child’s name, the presumption of advancement applies, suggesting a gift was intended.

Rebuttal: Both the presumption of resulting trust and the presumption of advancement can be rebutted by evidence of the transferor's actual intention at the time of the transaction. Subsequent declarations of intention are generally inadmissible. Evidence of illegality may prevent a party relying on either presumption (Patel v Mirza [2016] UKSC 42).

Note: While the presumption of advancement still exists, its application, particularly regarding gender distinctions, is viewed critically and may be rebutted more easily in modern contexts. Section 199 of the Equality Act 2010 will abolish the presumption when brought into force.

Constructive Trusts of the Family Home

Constructive trusts are imposed by law where it would be unconscionable for the legal owner to deny the beneficial interest of another. In the context of the family home, the most common type is the common intention constructive trust.

Key Term: Constructive Trust
A trust imposed by equity, regardless of the parties' intentions, to prevent unconscionable conduct, often arising from a common intention regarding property ownership coupled with detrimental reliance.

For SQE1, you need to understand how these trusts establish beneficial interests where legal title does not reflect the parties' understanding or contributions.

Establishing a Common Intention Constructive Trust

The key requirements were established in Lloyds Bank plc v Rosset [1991] 1 AC 107 and refined in later cases like Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53. A claimant must establish:

1. Common Intention: That the parties shared a common intention regarding beneficial ownership. This can be:

   • Express: Evidenced by oral agreement, discussions, or potentially an excuse given by the legal owner for not including the claimant on the legal title (Eves v Eves [1975] 1 WLR 1338; Grant v Edwards [1986] Ch 638). The agreement must relate to ownership, not just occupation. The “excuse” cases are treated as admissions consistent with an intention to share.
   • Inferred: Deduced from the parties' conduct. Historically (per Rosset), only direct financial contributions to the purchase price (initial payment or mortgage contributions) were sufficient. Post-Stack, the court takes a broader view in joint names cases, and potentially in sole name cases too, looking at the 'whole course of dealing'. In sole name cases, direct contributions remain the most secure route; however, significant indirect financial contributions that enable mortgage payments, together with other corroborating conduct, may support inference in some modern authorities.

2. Detrimental Reliance: The claimant must have acted to their detriment or significantly altered their position in reliance on the common intention.

   • Direct financial contributions clearly qualify.
   • Significant contributions to household expenses may count if they enable the legal owner to pay the mortgage (eg, where evidence demonstrates that but for the claimant’s payments the mortgage could not have been met).
   • Substantial improvements to the property can also constitute detriment (Eves v Eves).
   • Domestic contributions alone (eg, childcare and housekeeping without more) are generally insufficient (Burns v Burns [1984] Ch 317).

The constructive trust does not need writing; s.53(2) LPA 1925 exempts implied, resulting and constructive trusts from formality requirements.

Quantifying the Share

Once a common intention constructive trust is established, the court must quantify the parties' shares.

• Joint Legal Ownership: The starting point is joint and equal beneficial ownership (Stack v Dowden). This presumption is strong and can only be displaced by evidence of a different common intention, deduced from the parties' whole course of dealing (financial contributions, reasons for joint ownership, nature of relationship, how finances were managed etc.). It is unusual for the presumption to be rebutted; when rebutted, the factors are wide-ranging and context-specific.
• Sole Legal Ownership: There is no presumption of joint beneficial ownership. If an express agreement on shares exists, it will generally be upheld. If not, the court will infer or, where inference is not possible, impute an intention based on the whole course of dealing to determine what shares are fair (Jones v Kernott). The shares awarded need not be proportionate to direct financial contributions. A court may award an interest reflecting fairness and practicality where the common intention is established but precise terms are unclear.

Factors commonly considered in quantification include:

• The nature and duration of the relationship and whether finances were pooled.
• Direct and indirect contributions to acquisition, mortgage and significant improvements.
• The parties’ arrangements regarding outgoings and savings.
• Children and caring responsibilities (as context rather than detriment alone).
• Post-separation conduct where relevant to changes in common intention (as in Jones v Kernott).

Worked Example 1.2

Chloe and David, an unmarried couple, buy a house together. Chloe contributes £20,000 to the deposit, and David contributes £10,000. The house is registered in David's sole name. David pays the mortgage, while Chloe pays all household bills and funds significant renovations. They discussed that the house was "theirs" but never specified shares. They separate. Advise Chloe on establishing an interest.

Answer:
Chloe needs to establish a common intention constructive trust. There appears to be an express common intention ("theirs"). She has acted to her detriment by contributing to the deposit, paying bills (potentially enabling David to pay the mortgage), and funding renovations. A constructive trust likely arises. Quantification will be based on the whole course of dealing, aiming for fairness, not just her initial 20% deposit contribution.

Worked Example 1.3

Ollie bought a house in his sole name. Priya moved in shortly afterwards. Priya did not pay the mortgage but paid for a new kitchen and roof repairs, and covered most bills for three years. Ollie had told Priya “I couldn’t put you on the deeds because of the mortgage lender, but this is our home.”

Answer:
The statement may be treated as an assurance supporting an express common intention. Priya’s significant capital improvements and paying outgoings in reliance are detriments. A common intention constructive trust is likely, with quantification taking account of the improvements’ value and the overall contributions, not confined to direct mortgage payments.

Proprietary Estoppel

Proprietary estoppel provides a potential remedy where one party (A) has acted to their detriment in reliance on an assurance by another party (B), the legal owner of property, that A has or will acquire rights in that property. Equity may intervene to prevent B from acting unconscionably by denying the rights A expected.

Key Term: Proprietary Estoppel
An equitable doctrine preventing a property owner from denying rights to another who has acted to their detriment in reliance on the owner's assurance regarding those rights.

Requirements for Proprietary Estoppel

The claimant must establish three elements, assessed contextually, with unconscionability as the unifying theme:

1. Assurance: A representation or assurance by the legal owner relating to the claimant's rights in the property. This must be "clear enough" in the context. It can be express or inferred from conduct (eg, repeated indications that the claimant will inherit, or passive acquiescence where the owner knows the claimant is acting in reliance). The clarity required depends on the circumstances; domestic assurances may be less formal yet sufficient, whereas commercial assurances typically require more precision.
2. Reliance: The claimant must have relied on the assurance. There is a presumption of reliance if assurance and detriment are established, which the defendant must rebut. Reliance requires that the claimant’s actions were influenced by the assurance; it can be inferred from the sequence of events.
3. Detriment: The claimant must have acted to their detriment as a result of the reliance. Detriment is judged broadly and need not be purely financial (eg, working for low wages, giving up opportunities, providing care). The detriment must be substantial and assessed at the time relief is sought.

Authorities such as Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd and Thorner v Major emphasise a flexible approach, focusing on unconscionability in light of assurance, reliance and detriment. Commercial cases like Yeoman’s Row Management Ltd v Cobbe highlight that vague or incomplete oral agreements for land without clear proprietary assurances will not ordinarily ground estoppel where parties knew formal contracts were required.

Satisfying the Equity (Remedy)

If estoppel is established, the court has discretion to award a remedy to satisfy the equity, doing the minimum necessary to achieve justice and avoid an unconscionable result. The remedy is proportionate to the detriment suffered in reliance on the expectation. Possible remedies include:

• Transfer of the freehold.
• Grant of a lease or right to occupy.
• Monetary compensation (eg, a lump sum reflecting value of services or opportunity costs).
• Grant of an easement or other limited right.

The court will consider the claimant's expectation but is not bound to award it; proportionality is key (Jennings v Rice [2002] EWCA Civ 159). A long period of reliance and significant detriment can justify expectation-based relief (e.g., receipt of the promised asset); where reliance is limited or the assurance is ambiguous, a more modest award may be appropriate.

Further considerations in relief include:

• Whether the claimant’s conduct was equitable (clean hands).
• Any unreasonable delay (equity may refuse relief where delay causes prejudice).
• Changes in circumstances affecting fairness.

Worked Example 1.4

An elderly farmer repeatedly told his nephew over 30 years that he would inherit the farm. In reliance, the nephew worked long hours on the farm for very low pay, foregoing other career opportunities. The farmer died leaving the farm to someone else in his will. Can the nephew claim the farm?

Answer:
Yes, likely via proprietary estoppel. There was a clear assurance (inheritance promise), reliance (working for low pay, foregoing opportunities), and substantial detriment over many years. It would be unconscionable to deny the nephew's expectation. The court has discretion regarding the remedy, but given the long period and extent of detriment, awarding the farm itself might be deemed proportionate (Thorner v Major).

Worked Example 1.5

A developer and a landowner orally agree that the developer will obtain planning consent and then purchase the site at a future price to be negotiated. The developer spends money securing consent. The landowner later refuses to sell.

Answer:
In a commercial context, an estoppel claim is unlikely without a sufficiently clear proprietary assurance. Cobbe suggests that where parties know formal contracts are needed and the terms are incomplete, equity will not perfect the bargain via estoppel. Remedies would be limited, potentially to restitution or quantum meruit for work done, not a proprietary interest.

Worked Example 1.6

Marta lives for fifteen years in a cottage owned by her aunt. Her aunt tells her “this will be yours when I go,” and Marta gives up a flat tenancy, undertakes extensive renovations, and cares for the aunt. The aunt dies leaving the cottage to charity.

Answer:
Proprietary estoppel is likely. The domestic assurance is “clear enough” in context. Marta’s reliance and substantial detriment make it unconscionable to deny her expectation. A transfer of the cottage or, if disproportionate, an occupation right or lump sum reflecting the detriment may be awarded, applying proportionality principles from Jennings v Rice.

Interaction with Constructive Trusts

While distinct, proprietary estoppel and common intention constructive trusts can overlap, particularly in family home contexts. Both involve notions of assurance/agreement, reliance, and detriment/unconscionability.

• Focus: Estoppel focuses on preventing unconscionable denial of an assurance; constructive trusts focus on giving effect to a common intention regarding ownership. Estoppel claims are anchored in equity’s conscience; constructive trust claims are anchored in intention and reliance.
• Outcome: A successful constructive trust claim establishes a beneficial interest. Estoppel leads to a discretionary remedy aimed at satisfying the equity, which may or may not be a proprietary interest in the land.
• Formality: Constructive trusts of land are exempt from the formality requirement of writing (s.53(2) LPA 1925). The position regarding proprietary estoppel and the formality requirements for land contracts (s.2 LP(MP)A 1989) is complex, but estoppel claims can succeed despite lack of writing, especially in domestic settings. Courts have sometimes preferred constructive trust reasoning where s.2 might otherwise defeat an informal contract, because s.2(5) preserves resulting, implied and constructive trusts (e.g., Matchmove Ltd v Dowding), while proprietary estoppel must be carefully applied so as not to undermine statutory formalities in commercial contexts.

Lord Walker has noted that proprietary estoppel typically results in a “mere equity” satisfied by the minimum necessary to achieve justice, whereas a common intention constructive trust identifies the true beneficial owner and shares. In practice, factual overlap means claims are often pleaded in the alternative, and the court selects the analysis that best fits the evidence and statutory framework.

Worked Example 1.7 (continued numbering already used above)

Nadia agreed informally to purchase a plot from Sam, did extensive preparatory work on Sam’s land in anticipation of transfer, and both considered the sale “done.” No formal contract was ever signed. Sam later refused to sell at the previously discussed price.

Answer:
Estoppel may fail if the case is essentially a commercial bargain requiring s.2-compliant writing. However, if there is evidence of a common intention that Nadia would acquire a proprietary interest and she acted to her detriment, a constructive trust analysis may be preferred, as s.2(5) preserves constructive trusts. The remedy would likely be to enforce Nadia’s interest consistent with the common intention, potentially compelling transfer or recognizing a beneficial interest.

Exam Warning

Be prepared to distinguish between resulting trusts (contribution-based), constructive trusts (common intention + detriment), and proprietary estoppel (assurance + reliance + detriment). Note that the 'whole course of dealing' approach from Stack primarily applies to quantifying shares in joint names cases but can inform the court's view of fairness in sole name cases too. Rosset remains the starting point for establishing an interest in sole name cases, though its strictness regarding inferred intention (requiring direct financial contributions) has been questioned; indirect contributions may support inference when significant and clearly linked to acquisition or mortgage capacity. Do not assume domestic duties alone are sufficient to found an interest. Also be alert to the different remedial outcomes: constructive trusts lead to proprietary interests; estoppel leads to flexible, proportionate relief. Avoid assuming that the absence of writing defeats a claim: constructive trusts are exempt from s.53(1)(b) LPA 1925 requirements, and proprietary estoppel can overcome the lack of formality where unconscionability is established, especially in domestic cases.

Key Point Checklist

This article has covered the following key knowledge points:

• Resulting trusts arise from voluntary transfers or purchase money contributions, based on presumed intention, but can be rebutted by contemporaneous evidence or the presumption of advancement.
• The presumption of advancement currently applies in limited relationships but is readily rebutted; statutory abolition is not yet in force.
• Common intention constructive trusts require a common intention (express or inferred) about ownership and detrimental reliance by the claimant; writing is not required because of s.53(2) LPA 1925.
• In joint name cases, equity presumes equal beneficial shares (Stack v Dowden), rebuttable by evidence of contrary common intention based on the whole course of dealing.
• In sole name cases, the claimant must first establish a common intention trust (Lloyds Bank v Rosset), after which the court quantifies the share based on fairness and the whole course of dealing (Jones v Kernott).
• Proprietary estoppel requires assurance, reliance, and detriment, with unconscionability as the overarching equity, leading to a discretionary remedy proportionate to detriment and expectation (Jennings v Rice; Thorner v Major).
• Commercial estoppel claims for land are tightly controlled; where parties knew formal contracts were required and terms were incomplete, equity will not create proprietary rights (Cobbe).
• Constructive trusts and proprietary estoppel can overlap in domestic property disputes, but they differ in focus and remedy; s.2 LP(MP)A 1989 does not preclude constructive trusts (s.2(5)), while estoppel must respect formalities in commercial contexts.
• Significant indirect financial contributions that enable mortgage payments can support inference of common intention; domestic chores alone are insufficient to establish an interest.
• Courts may award occupation rights or monetary compensation rather than transfer of the property in estoppel, applying proportionality to satisfy the equity.

Key Terms and Concepts

• Resulting Trust
• Presumption of Advancement
• Constructive Trust
• Proprietary Estoppel