Grant v Edwards

Where the legal title to a home is vested in one partner, the other may establish a constructive trust by proving an intention that both should have a beneficial interest and detrimental conduct in reliance on that intention. An excuse given for omitting the claimant from the title may establish or justify attributing the necessary intention. Once that intention is otherwise proved, the detrimental conduct need not itself be conduct from which the intention could be inferred.

Substantial contributions to household and family expenses may suffice where they enable the legal owner to meet the mortgage instalments. The court must then determine the share intended by the parties, taking account of their direct and indirect contributions and other evidence of their intended division.

The appellant and the first respondent had lived together with their children in a house registered in the names of the first respondent and his brother. The brother was a nominal owner. The first respondent had told the appellant that her name was omitted because its inclusion might prejudice her matrimonial proceedings, although he had no real intention of adding her later.

The appellant made no proved contribution to the cash purchase price. From 1972, however, she made very substantial contributions from her earnings to household expenses and the maintenance of the children. Those contributions enabled the first respondent to meet the mortgage instalments. After a fire, surplus insurance money from the house was placed in a joint account.

A judge of the Chancery Division held on 22 February 1985 that the appellant had no beneficial interest. Her appeal raised whether the representation about the title, coupled with her indirect financial contributions, created a beneficial interest and, if so, its extent.

Appeal allowed unanimously. The appellant was entitled to a one-half beneficial interest in the house and, pending sale, in its net proceeds.

1. Per Nourse LJ, with whom the Vice-Chancellor agreed, where there is no written declaration and no contribution to the purchase price giving rise to a resulting trust, a claimant must establish an intention that she should have a beneficial interest and conduct by which she acted upon that intention. Equity then imposes a constructive trust.

2. The respondent's explanation that the appellant's name was omitted only because of her matrimonial proceedings raised the clear inference that she was intended to have some proprietary interest. Otherwise, no excuse for omitting her would have been needed. The majority reasoning in Eves v Eves (1975) 1 WLR 1338 was applied. Nourse LJ regarded Lord Denning MR's separate ground in that case as inconsistent with the principles stated in Gissing v Gissing (1971) AC 886.

3. Where an intention has been made plain, the claimant's conduct need not itself be conduct from which that intention could be inferred. It must amount to detrimental action upon the intention. The appellant's substantial payments towards household expenses enabled the respondent to pay both mortgages from his income. Those indirect contributions were sufficiently connected with the acquisition costs and were conduct which she could not reasonably have been expected to undertake unless she was to have an interest.

4. The Vice-Chancellor analysed Gissing v Gissing as requiring an intention that both parties should have beneficial interests and detrimental reliance upon it. Contributions may prove or corroborate the intention, establish detriment and assist quantification. He decided the case on the narrow ground that payments used directly or indirectly to discharge mortgage instalments provide the required link.

5. Mustill LJ agreed in the result. He reasoned that the respondent's untruthful excuse led the appellant reasonably to believe that she had a right in the house and precluded him from denying that the case should be treated as analogous to a promise or common intention. Her direct or indirect contribution to acquisition costs was referable to that attributed arrangement.

6. As to quantum, the initial understanding, the substantial indirect mortgage contributions and the payment of surplus fire-insurance money into a joint account were the best evidence of how the parties intended to share the property. They supported equal beneficial ownership.

1. Court of Appeal: The appeal was allowed unanimously. The appellant was declared entitled to a one-half beneficial interest in the house pending sale and in the net proceeds. Leave to appeal to the House of Lords was refused.
2. High Court, Chancery Division: His Honour Judge Paul Baker QC, sitting as a judge of the Chancery Division, decided on 22 February 1985 that the appellant had no beneficial interest in the property. That decision was reversed.