This blog post was contributed by David Thomas, Teaching Fellow for Property law.
A very recent property blog concerned the case of Hudson v Hathway [2022] EWCA Civ 1648, and in this one we find ourselves returning again to the Common Intention Constructive Trust (CICT). Remember that this jurisdiction has developed principally (in the absence of any assistance from the legislature) as the courts’ response to relationship breakdown among unmarried couples. One very common set of facts involves a relationship where a couple buy a property in joint names, but some years later the relationship breaks up, and they arrange their affairs in new ways which indicate strongly that they no longer consider the property to be held in equal shares; you will recall that this was true in Hudson v Hathway, and indeed in both Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53, the leading cases in this area of law. Now, in none of those cases was there an express declaration of trust on the purchase. Lady Hale discusses the situation in Stack; in modern registered land conveyancing, the transfer of title is by way of the TR1 form. Although this form does contain a space for the buyers to declare any trusts (by, for example, ticking a box for a beneficial joint tenancy), it is often not filled in; it is not usually necessary for the buyers to sign the form at all – the seller’s signature is enough to achieve the transfer of ownership. If this part of the form is completed, what difference does it make? Well, obviously, an express trust leaves no room for any resulting or constructive trust; the matter is closed by the express declaration. What happens if, ten years down the line, the relationship breaks down? It is unlikely that the couple will even remember, or care, whether they ticked a box to make an express trust. Does the availability of a remedy, the CICT, to do justice between the parties depend on whether the box was ticked? Is that not a little random?
Well, now we have the case of Nilsson v Cynberg [2024] EWHC 2164 (Ch). A deputy High Court Judge has decided that a later change of circumstances such as this may produce a CICT despite the existence of an express trust. He started his judgment with a quote from Lady Hale in Stack: an express declaration of trust is conclusive “unless varied by subsequent agreement or proprietary estoppel”, and asked if “subsequent agreement” could include a change in common intention as required by a CICT. He concluded that it could, declining to follow another High Court case (In re Iqbal [2024] EWHC 49 (Ch)) which had reached a different result.
This can hardly be said to be a binding statement of the law, and there will need to be further judicial consideration. There has been some outrage at the decision from those favouring certainty in property law, most notably from Professor Martin Dixon in his capacity of editor of the Conveyancer and Property Lawyer: “Constructive Trusts … are not free ranging manifestations of unbounded discretion to be sprinkled like fairy dust whenever there is a problem to be solved.” But such a development of the law does mean that the outcome of a case doesn’t depend on a simple twist of conveyancing practice, and it also deals with what would otherwise be an inconsistency – the fact that apparently proprietary estoppel, CICT’s close relative, is not restricted by a prior express declaration of trust. With great respect to Professor Dixon, the writer feels that it is likely that the case will be followed in the future.
References
Thomas, D. Constructive trusts: do they need detrimental reliance? Property law, Undergraduate Laws blog. July 18, 2023
Dixon, MJ. Here we go again manipulating constructive trusts, Conv. 2024, 4, 329-332, 331