Chapter CG65422

Published date12 March 2016
Record NumberCG65422

To establish that there is a constructive trust the taxpayer must demonstrate that both the following conditions are met.

  • There was a common intention that both parties, ie the trustees as legal owners and the beneficiary, would have an interest in the property. See CG65423; and
  • The beneficiary acted to his or her detriment on the basis of that common intention such that it would be inequitable to deny him or her that interest. See CG65425.

If those conditions are met it is necessary to establish the nature of the beneficiary’s interest.

This is summarised in the following extract from the judgment of Sir Nicholas Browne-Wilkinson in Grant v Edwards [1986] EWCA Civ 4 quoted by Lord Justice Chadwick at paragraph 32 in Oxley v Hiscock.

  1. The nature of the substantive right: [1971] AC 886, 905B-G
If the legal estate in the joint home is vested in only one of the parties ('the legal owner') the other party ('the claimant'), in order to establish a beneficial interest, has to establish a constructive trust by showing that it would be inequitable for the legal owner to claim sole beneficial ownership. This requires two matters to be demonstrated: (a) that there was a common intention that both should have a beneficial interest; and (b) that the claimant has acted to his or her detriment on the basis of that common intention
  1. The proof of the common intention

  1. Direct evidence (p 905H). It is clear that mere agreement between the parties that both are to have beneficial interests is sufficient to prove the necessary common intention. Other passages in the speech point to the admissibility and relevance of other possible forms of direct evidence of such intention: see pp 907C and p 908C.
  2. Inferred common intention (pp.906A-908D). Lord Diplock points out that, even where parties have not used express words to communicate their intention (and therefore there is no direct evidence), the court can infer from their actions an intention that they shall both have an interest in the house. This part of his...

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