Lloyd’s Bank Plc v Rosset

Where a home is in one partner’s sole legal ownership, a beneficial interest may arise if express discussions show an agreement, arrangement or understanding that ownership would be shared and the claimant acts to their detriment or significantly alters their position in reliance on it.

Without such an agreement, the court may infer a common intention from conduct. Direct contributions to the purchase price or mortgage instalments will readily support that inference. It is extremely doubtful whether anything less will suffice. Domestic work, supervision and skilled assistance with renovations do not alone establish an intention to share beneficial ownership.

A husband bought a farmhouse in his sole name using his inheritance and paid for its renovation. His wife made no financial contribution but helped to plan, supervise and carry out renovation work. When the bank sought possession under its registered charge, she claimed a beneficial interest under a constructive trust and asserted that her actual occupation protected it as an overriding interest under section 70(1)(g) of the Land Registration Act 1925.

The Thanet County Court found a beneficial interest but held that she was not in actual occupation when the charge was created, and ordered possession. The Court of Appeal agreed on the relevant date but, by a majority, found actual occupation and decided for the wife. The bank appealed. The central issue was whether the wife had acquired any beneficial interest before completion.

1. Appeal allowed unanimously. Lord Bridge of Harwich delivered the leading speech. Lord Griffiths, Lord Ackner, Lord Oliver of Aylmerton and Lord Jauncey of Tullichettle expressly agreed with it and with his reasons.

2. Per Lord Bridge, the trial judge had rejected the pleaded case that the spouses had concluded an agreement, arrangement or common intention before exchange of contracts that the wife should have a beneficial interest. The husband had funded the entire purchase and renovation. His Swiss trustee would release the purchase money only if the property was acquired in the husband’s sole name. An intention to renovate the house jointly and occupy it as a family home said nothing about beneficial ownership.

3. The wife’s work in planning, supervising and assisting with renovations could not by itself justify an inference that beneficial ownership was to be shared. Her activity was naturally explained by her wish to make the intended matrimonial home ready for occupation. Its monetary value was, in the context of the acquisition and renovation costs, almost de minimis. The finding of a constructive trust therefore could not stand.

4. Per Lord Bridge, the first question in a sole-name home case is whether express discussions establish an agreement, arrangement or understanding, before acquisition or exceptionally later, that the property is to be shared beneficially. If so, detrimental reliance or a significant alteration of position gives rise to a constructive trust or proprietary estoppel.

5. Where no such agreement is proved, common intention must be inferred entirely from conduct. Direct contributions to the purchase price or mortgage instalments will readily justify that inference. It is extremely doubtful whether lesser conduct will do. Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886 exemplified this category. Eves v Eves [1975] 1 WLR 1338 and Grant v Edwards [1986] Ch 638 exemplified cases involving express representations followed by sufficient detrimental conduct.

6. The questions whether the wife was in actual occupation and whether any interest would have priority under section 70(1)(g) of the Land Registration Act 1925 were academic. The Court of Appeal’s order was set aside, save as to costs, and the County Court’s possession order between the bank and the wife was restored.

1. House of Lords: Allowed the bank’s appeal unanimously, set aside the Court of Appeal’s order save as to costs, and restored the Thanet County Court’s order between the bank and the wife. The cause was formally remitted to the Queen’s Bench Division for steps consistent with the judgment.

2. Court of Appeal: Unanimously held that actual occupation had to exist when the charge was created. By a majority, Purchas and Nicholls LJJ held that the wife was then in actual occupation; Mustill LJ disagreed on that factual issue. The majority decided in the wife’s favour.

3. Thanet County Court: Judge Scarlett found that the wife had a beneficial interest, but held that she was not in actual occupation when the charge was created. He ordered possession for the bank.