Constructive Trusts – Don’t Forget The Detriment

The Court of Appeal has restated the importance of establishing detrimental reliance when claiming the existence of a common intention constructive trust in the case of O’Neil v Holland [2020] EWCA Civ 1583.

Common intention constructive trusts

Common intention constructive trusts arise where it would be unjust for the legal owner(s) of a property to assert their legal rights over others, particularly where the intention of the parties was that regardless of in whose name the property was registered with at the Land Registry, the real or beneficial owners were different to some extent.

For example, maybe both cohabitees in reality shared their property despite it being registered in only one person’s name, or one person was to have a larger share than the other, despite it being registered in both their names (often after one party moving out).

Traditionally, to be able to get the court to uphold these intentions the person claiming had to show they had relied on the intention to their detriment (Gissing v Gissing [1971] AC 886).

Case law

A few years ago, however, there were two landmark cases in the House of Lords/Supreme Court in Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53 which focused on establishing the parties intentions and the existence of any detriment was not mentioned. It came up for debate whether any intention was necessary anymore following those decisions. This debate was answered by the Court of Appeal in Curran v Collins [2015] EWCA Civ 404, a claim which failed as a result of a lack of the Claimant showing any detrimental reliance. O’Neill v Holland restates this essential requirement.

O’Neil v Holland

In this case, the property in question was transferred to the Defendant by his father for free in 1999. The Claimant moved in with the Defendant a year later, and lived there for the next 12 years until she moved out.

In 2008, however, it was intended by all concerned that the property was to be transferred into the Defendant and Claimant’s joint names. This did not happen however, as the Defendant (falsely) said the mortgage could not be in their joint names and so only he could be the legal owner.

The Court found, despite arguments to the contrary, that the Claimant had relied on the intention she was to be a joint owner in 2008 to her detriment by agreeing to the property being put into the Defendant’s name and so upheld her claim.

Comment

This case serves as a timely reminder of the need for Claimants to plead and prove that they relied on the common intention to succeed in a claim for common intention constructive trust.