Carlton v Goodman

A resulting trust normally follows the person who provides the purchase money, subject to evidence rebutting that conclusion. Joint mortgage liability may count as a contribution in principle, but only where the parties’ arrangement makes it a contribution between them. A person who merely lends their name to secure finance, without intending to pay the mortgage and on the understanding that their involvement is temporary, does not acquire an enduring beneficial interest. Later mortgage payments discharge mortgage liabilities and do not retrospectively create a purchase-money contribution. The court may reach the same result whether it analyses the trust by reference to absence of an intention to benefit or to the parties’ common intention.

Anita Carlton and Jerry Goodman appealed a decision of Mr Peter Leaver QC, sitting as a Deputy Judge of the Chancery Division on 29 June 2001. The judge declared that the house was held on resulting trust for the estate of Brian Goodman and ordered its transfer to the administrator, subject to discharge or transfer of the mortgage.

Anita accepted that the house was subject to a resulting trust but claimed a beneficial interest because she had joined in a mortgage used to fund most of the purchase price. She had made no cash contribution and had not paid the mortgage during Brian Goodman’s lifetime. The central issue was whether her joint and several liability under the mortgage constituted a contribution to the purchase price sufficient to give her a beneficial interest.

The Court of Appeal unanimously dismissed the appeal. Lord Justice Mummery delivered the leading judgment. Lord Justice Laws agreed, and Lord Justice Ward reached the same result in a separate judgment.

1. The transfer into joint names vested the legal estate in the parties as trustees. Since there was no express declaration of beneficial interests, the court had to determine whether an informal resulting, implied or constructive trust arose. Such trusts are recognised and exempted from the statutory formalities by section 53(2) of the Law of Property Act 1925.
2. The governing resulting-trust principle, illustrated by Dyer v Dyer (1788) 2 Cox 92 and Walker v Hall [1984] FLR 126, is that beneficial interests ordinarily follow the persons who provided the purchase money and correspond to their contributions. The resulting-trust presumption may be rebutted by evidence of intention or other circumstances.
3. A mortgage liability can in principle constitute a contribution to the purchase price, as recognised in Calverley v Green (1984) 155 CLR 242. The court must nevertheless examine the parties’ arrangement as at acquisition. The mortgage cases relied upon, including Huntingford v Hobbs [1993] 1 FLR 736 and Re Gorman [1990] 2 FLR 284, concerned parties who intended that each should have a beneficial interest and disputes about their proportions.
4. Anita had merely lent her name to enable Brian Goodman to obtain finance for a house acquired for his sole use. The evidence showed that she was not intended to pay the mortgage and expected to be removed from it. Her potential liability to the lender therefore did not amount, as between the parties, to a purchase-money contribution giving her an enduring beneficial interest. Any later mortgage payments would be expenses of the trust, for which she could claim indemnity, rather than a means of acquiring beneficial ownership.
5. The facts also rebutted any presumption in Anita’s favour. There was no agreement, arrangement, understanding or conduct indicating an intention to confer a beneficial interest on her. The result was the same whether the analysis focused on the absence of an intention to benefit her, as discussed in Twinsectra Limited v Yardley [2002] 2 WLR 802, or on the parties’ common intention, an approach discussed in Westdeutsche Landesbank v Islington LBC [1996] AC 669.
6. Ward LJ added that conveyancers should ascertain and expressly record whether jointly acquired property is to be held as a joint tenancy or tenancy in common. The appeal was dismissed with costs, subject to detailed assessment if not agreed.

1. High Court of Justice, Chancery Division: On 29 June 2001, Mr Peter Leaver QC, sitting as a Deputy Judge, declared that the house was held on resulting trust for the estate of Brian Goodman and ordered its transfer to the administrator subject to the mortgage arrangements.
2. Court of Appeal (Civil Division): On 29 April 2002, the court dismissed Anita Carlton’s appeal, with costs: [2002] EWCA Civ 545 .