Answer guidelines
In this problem question you will need to start by ascertaining who has the legal title le property, that is, who the registered owner is. In this case, it is Alan. There is no express trust and so the only claims that Steve may make are for implied trusts. You will want to consider these:
Resulting trust: Steve cannot claim a resulting trust as there is no contribution to the purchase price.
Constructive trust. Steve will need to show there is a common intention. He could raise three arguments. First, that the common intention to share is revealed by the statement: 'I love you and everything I have is yours'. Or second, he could argue that there should be an inferred agreement based on the payment of the household bills (contrast Rosset and Le Foe). Or third, he could rely on the statement: 'I want you to share ownership of the house'. He would also need to show reliance. Paying the bills and doing housework may well be sufficient. But, notice that in relation to the third statement, there does not appear to be any reliance on the agreement after it was reached. So that may well mean that the third argument will not succeed.
Proprietary estoppel: Steve will need to show a promise or assurance. He could rely on Alan's breakfast statement or on the statement about 'not going unrewarded'. As to the latter notice, the statement does not relate clearly to the property and this will greatly weaken his case (see Lissimore v. Downing (2003)). He could rely on the supper statement, but there is no obvious detrimental reliance.
Question 1
The marriage between Michael and Sarah has encountered difficulties, and the couple have decided to part amicably. They are both keen to go their separate ways with no financial responsibilities towards each other, and so they propose to divide their assets according to their beneficial entitlements in property law. They do not want the court to impose an arrangement under the MCA 1973.
Advise Michael and Sarah on their beneficial entitlement to the following:
On their engagement, Michael gave Sarah an antique diamond ring, worth £5,000 that belonged to his grandmother,
£20,000 invested in a building society savings account, which is held in joint names,
Shares to the value of £6,000 registered in Michael's name, but paid for with a cheque drawn on the couple's joint bank account,
The matrimonial home, registered in Sarah's name. The initial deposit of £20,000 was paid by Sarah with money from an inheritance, but the mortgage installments have been met from the joint bank account.
Michael spent every weekend for a whole year renovating the property and carrying out all the interior design. The house was purchased for £100,000 five years ago, and is now worth £150,000. The outstanding mortgage is £20,000.
Answer plan
It is clear that the couple do not want an MCA 1973 solution to their problems, and so normal property law rules apply.
the engagement ring: look at Law Reform (Miscellaneous Provisions) Act 1970 s 3 - likely that she will keep it;
the money invested in a joint account: arguably used as a common fund - presumption that jointly owned;
the shares bought from the account: conflict between presumption that jointly owned and argument that each individual can buy for himself;
the matrimonial home is registered in Sarah's name only -she has legal entitlements. Examine if beneficial entitlement by way of implied, resulting or constructive trust, and consider Matrimonial Proceedings and Property Act 1970s 37.
Answer
(a) The position of engagement rings is often determined by reference to s 3 of the Law Reform (Miscellaneous Provisions) Act 1970. This section provides that the gift of an engagement ring should be assumed to be an absolute gift but the presumption may be rebutted by proving that the ring was given on the implied condition that it should be returned if the marriage did not take place for any reason. In the instant case Michael and Sarah have gone on to marry. However, the presumption that a man has given a woman a gift in such a situation would be very strong. The diamond ring, however, is quite valuable and has been a family heirloom; so in order for it to belong to Michael rather than Sarah it would be necessary for Michael to show that the presumption of advancement has been rebutted by a contrary intention. This contrary intention needs to be that he only intended the ring to be a conditional gift upon the marriage subsisting. It is easier to show in the case of a valuable family heirloom but nonetheless, the presumption that this is a gift appears to be quite strong and on balance it would seem that Sarah is entitled to keep the ring.
Money invested in a joint savings account may cause difficulty in that it will often depend on the intention of the parties and their respective contributions as to who is entitled and in what proportion. In the instant case, the parties have contributed to the savings account but little is known as to what arrangements they made for withdrawing from the savings account. Where money is invested in a joint account there is an argument that the money should be regarded as jointly owned. In Jones v Maynard (1951) both husband and wife contributed to the account just as Michael and Sarah have done. In that case, as in the present, both paid in their various earnings and funds and, although the husband paid in more than the wife, it did seem that they viewed the account as a common savings account. The argument would be that this is a joint account and that they are therefore both equally entitled since they viewed it as a common pool. There is no evidence that they merely intended the shares to reflect their contributions.
The shares purchased for £6,000 which are registered in Michael's name only were purchased with a cheque drawn on the couple's joint account. If the case of Jones v Maynard (1951) were to be followed then the shares would be jointly owned since the investments could be regarded as joint investments and merely a continuance of their arrangements for the joint account. However, there is an argument that if both were entitled to draw on the account to purchase whatever they wished to by way of investments or chattels, then each separate investment or chattel should be regarded as belonging to the person who made the investment or purchase of the chattel as in Re Bishop (Deceased) (1965). If that were the case then the shares would be owned by Michael absolutely since they are registered and purchased in his name. If, however, they could regard it as an extension of the joint account then the shares would be jointly owned.
(d) The former matrimonial home is registered in Sarah's name only. This declaration of legal title in the conveyance would conclusively establish that Sarah is the sole legal owner unless it can be established that there is fraud or mistake {Goodman v Gallant (1986)). There is no evidence that there has been any separate declaration of a beneficial entitlement in favour of Michael and an interest under a trust must be created and evidenced in writing. However, it is possible that Michael may have an interest in the home by way of some resulting implied or constructive trust. The initial deposit of £20,000 was paid by Sarah and the mortgage instalments have been met from the joint account. Michael has renovated the property and carried out interior design. It is necessary to examine to what extent, if any, Michael has acquired or enlarged his interest in the home. To acquire an interest under a resulting, implied or constructive trust it will be necessary to show that there is a common intention between the parties that, although Sarah has the legal entitlement, Michael has a beneficial interest in the home. It will also be necessary to show that Michael, as the owner of the beneficial interest, has acted to his detriment based on this common intention. Michael has not made any direct contribution towards the deposit; however, it is arguable that he has made contributions towards the mortgage instalments. The couple have had a joint bank account which they have regarded as a common pool and both have paid into the account their salaries and both have made various drawings on the account. This would seem to provide evidence of a direct contribution as required in Lloyds Bank v Rosset (1991), which would thereby establish an interest on behalf of Michael. His contributions do appear to be substantial in terms of meeting the mortgage requirements and it seems that the £80,000 mortgage that was initially required has reduced to some £20,000 outstanding now. Therefore, if one could argue that there is a joint contribution to the mortgage instalments then Michael will acquire some kind of interest in the home. There is the further possibility that this interest may have been enlarged by his efforts each weekend, renovating and designing the interior of the home.
According to Lloyds Bank v Rosset (1991) the only way that this contribution would suffice would be if it were to be substantial in money or money's worth to the improvement of the property. In Lloyds Bank itself the wife's decorating and supervision of workmen was insufficient to give rise to an interest. In Michael's case, much would depend upon the extent of the renovations that he carried out. The interior design really would be superfluous. However, the renovation and the amount of impact that is made on the transformation of the property would determine whether this would give or enlarge any interest in the home. Following Lloyds Bank v Rosset (1991), caution must be exercised in trying to give an interest under this head. The cases of Cooke v Head (1912) and Eves v Eves (1975) illustrate just how substantial the work must be in order to qualify under this head. However, there is the possibility that if Michael does not acquire an interest under a trust by virtue of this work he may nevertheless enlarge his interest in the home by reference to s 37 of the Matrimonial Proceedings and Property Act 1970. This section provides that where a husband or wife contributes in money or money's worth to the improvement of property in which, or in the proceeds of sale of which, either or both of them have the beneficial interest, the person who contributes shall, if the contribution is of a substantial nature and subject to any agreement to the contrary, be treated as having acquired by virtue of his contribution a share or an enlarged share. The extent of such a share is the extent that the court considers just and equitable.
Here it could be argued that Michael has contributed to the improvement of the property. His work can be measured in money or money's worth; he has spent every weekend for a substantial period of time; and it does seem to be the sort of work that would normally be paid for if done by someone else. The question is, then, whether the work is of a substantial nature. Ordinary everyday do-it-yourself and common repairs to property should not suffice to enlarge Michael's interest. However, if the work has been substantial and has improved the house then he ought to be entitled to enlarge his share. The enlarged share must not be negatived by any agreement by the spouses and the court has a discretion in deciding to what extent Michael's share will be increased.
In conclusion, therefore, the house is now valued at £150,000 with a mortgage outstanding of £20,000; this leaves equity of £130,000 in the house. The initial deposit of £20,000 by Sarah represents one-fifth of the original value of the home; the remaining four-fifths was contributed to by both parties in paying the mortgage and since their intention appears to have been that they should require a joint interest by so doing, the mortgage contributions will be split two-fifths to Michael, two-fifths to Sarah. This would give Michael a two-fifths share in the equity and Sarah three-fifths share in the equity. However, some adjustment may need to be made for the improvement effected by Michael's renovations and on balance it would seem that the couple would more or less be jointly entitled to any proceeds of sale.
In Midland Bank v Cooke (1995) it was stressed that it is important to establish an interest under a constructive trust by reference to the strict rules in Gissing v Gissing (1971) and Lloyds Bank v Rosset (1991). However, once the common intention to share can be shown by reference to those rules, as it can in this case, then, in quantifying the shares of the parties, the court can take into account the whole history of the relationship, including behaviour and contributions that would not suffice in themselves to create the interest in the first place. Thus, whilst Michael's renovations would not suffice as evidence of a common intention giving rise to a constructive trust, they can be referred to so as to determine the size of the shares the parties intended. This arguably reinforces the argument that the parties should have more or less equal shares here.
LECTURE 3
DIVORCE AND DISSOLUTION
1. The Development of Divorce Law
2. The Ground for Divorce
3. Bars to divorce
4. Divorce Procedure
5. Effects of Divorce
6. Recognition of a Foreign Divorce
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Ground for divorce
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Irretrievable breakdown Based on proof of 1 of 5 facts |
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Adultery |
Desertion |
Behaviour |
2 years’ separation with consent |
5 years’ separation |
Bars to divorce |