Vinaver v Milton Ashbury Ltd

A constructive trust may arise on the acquisition of property where the parties’ objectively manifested common intention is that each should have a beneficial interest, and the claimant acts to their detriment in reliance on that intention. The parties need not share the same uncommunicated subjective intention. A party’s intention to grant an option or other wider interest does not necessarily negate an existing beneficial interest, when the whole arrangement shows that the claimant contributed to the equity and was to receive the rental benefit. Once a beneficial interest is established, its extent is determined by the parties’ intention; if that cannot be established, the court assesses what is fair having regard to the whole course of dealing.

Alice Vinaver appealed from a judgment of Mr Recorder George QC in the Canterbury County Court dated 15 August 2005. The recorder declared that she held the entire beneficial interest in the Margate property, subject to an allowance and lease in favour of Milton Ashbury Ltd, and 95 per cent of the beneficial interest in the Herne Bay property.

The properties were legally owned by Milton Ashbury Ltd. Mrs Vinaver had funded the deposits, legal fees and, in relation to Margate, mortgage payments. The company contended that it owned the properties and that Adam Vinaver had only a deferred option to purchase. The central issue was whether the parties had a common intention that Mrs Vinaver should have a beneficial interest, notwithstanding the company’s asserted intention concerning the option.

1. Appeal dismissed. The recorder was entitled to find that Mrs Vinaver had a beneficial interest in both properties under a constructive trust.
2. A constructive trust arises in connection with the acquisition of property where it would be inequitable for the legal owner to deny the claimant a beneficial interest. The claimant must establish both a common intention that each party should have a beneficial interest and detrimental action in reliance on that intention. The relevant intention is the intention reasonably understood by the other party from words or conduct, even if it was not consciously formulated or differed from an uncommunicated subjective intention.
3. The evidence supported an express common intention. Milton Ashbury Ltd knew that Mrs Vinaver provided the deposits, treated the transactions as her investments, expected her to fund mortgage and refurbishment costs, and accounted to her for surplus rents. The company’s intended option for Adam did not negate an existing beneficial interest. The written agreement’s recognition of a stake, payment of rental income and provision for payment to the estate on death illuminated a communicated intention that the contributor had an equitable interest.
4. Although substantially the same facts could support an inferred intention, the leading reasoning rested on express common intention. The court accepted the commercial reality that the company contributed its borrowing and management facilities, while Mrs Vinaver provided the equity and bore the financial burden.
5. The recorder’s quantification of the interests was not challenged. Mrs Vinaver therefore retained the entire beneficial interest in Margate, subject to the allowance and lease, and 95 per cent in Herne Bay.

• Court of Appeal (Civil Division): Appeal from the Canterbury County Court judgment of Mr Recorder George QC dated 15 August 2005. Appeal dismissed.