Constructive Trust – Bhusate v Patel & Others

The High Court has recently provided clarification in respect of a common intention Constructive Trust should an individual die without a Will.

A Constructive Trust occurs where it would be unconscionable for a person who holds an asset to deny the beneficial interest of another person to that asset, e.g., where two parties share a common intention that an individual should have a beneficial interest in an asset, and that another individual has acted to their detriment having relied on that intention.

The case of Bhusate v Patel and others [2018] EWHC 2362 (Ch) is an unusual one that spans back to the early 1990’s.

Bhusate v Patel And Others

The facts

Mr Bhusate owned a property in London when he died in April 1990. Mr Bhusate was survived by six children.

The Claimant is Mr Bhusate’s third wife. Letters of administration were granted to the Claimant in August 1991 and she placed the property on the open market for sale between 1992 and 1994, before it was withdrawn. The Claimant has taken no further steps to administer the estate since then but continues to live in the property.

The claim

The Claimant issued her claim in November 2017 under the Inheritance (Provision for Family and Dependants) Act 1975. Her claim to a beneficial interest in the property was threefold:-

1. The Claimant claimed to be the sole owner of the property on the basis that she and her son were the sole occupants from September 1990 and there has been no agreement as to the distribution of the estate;
2. Mr Bhusate’s common intention should be inferred from the same facts, e.g., that the Claimant is the sole beneficial owner as by virtue of a resulting or Constructive Trust;
3. A common intention should be inferred that the Claimant and the children’s joint interests in the property were immediately determined following Mr Bhusate’s death in proportion to their individual contributions to the property. This created a resulting or Constructive Trust in that the Claimant and her son alone enjoyed the benefit of any subsequent increase in value.

The Claimant’s son made a counterclaim within which he agreed with the Claimant’s claim, however, he suggested that if her claim failed, then he and the Claimant alone were the sole beneficial owners by virtue of Proprietary estoppel, which means that he relied upon a previous promise made by Mr Bhusate to his detriment.

The decision

The High Court refused to allow the Claimant to rely on the same facts in support of different claims. Mrs Bhusate asked the Court to draw different inferences about the intention of the parties, yet used the same facts. Essentially, the Court’s position was that she ought to know what the Deceased’s intentions were rather than put forward a number of different possibilities.

The Court rejected her claim. The facts could not support both a Trust under which the claimant was the sole beneficial owner and a Trust under which she held a beneficial interest with others. The intentions behind such Trusts would be entirely different and is therefore impossible. The Claimant’s son’s claim was also rejected by the Court.

The Court agreed to hear submissions regarding the Claimant’s application under section 4 of the Inheritance (Provision for Family and Dependants) Act 1975 to extend the time for bringing her claim, which expired over 26 years ago, however, this remains to be determined.