Hapeshi v Allnatt & Anor

A common intention constructive trust requires both a common intention that the claimant should acquire a beneficial interest and detrimental reliance on that intention. Where the parties have not expressly agreed their shares, the court should adopt a holistic approach. It should examine the whole course of dealing and all conduct that sheds light on the intended shares, assessed at the dissolution of the trust. Direct financial contributions are relevant but are not the sole measure. The court may also take account of occupation, benefits, rents, mortgage payments, arrears, and other relevant dealings.

The claimant sought a declaration that he had a beneficial interest in a dwelling acquired by his mother and his deceased brother under the right-to-buy scheme. He relied on a common intention constructive trust and, alternatively, proprietary estoppel. The first defendant, another child of the deceased owner, contended that no sufficiently clear agreement or detrimental reliance had been established.

The court considered whether the claimant had been intended to participate in the purchase despite not appearing on the legal title, whether the parties had agreed the nature or proportions of their beneficial interests, and how any interests should be quantified if no express agreement existed.

1. Constructive trust. A common intention constructive trust requires proof of a common intention that the claimant should have a beneficial interest and detrimental reliance on that intention, making it inequitable for the legal owner to deny the interest.
2. The court found that the claimant had been intended to participate in the purchase despite the local authority’s refusal to accept him as a legal purchaser. The evidence supported an intention that he should have an interest, but did not establish an express agreement as to the precise shares or that the property should be held as beneficial joint tenants.
3. The claimant’s asserted financial contributions were substantially overstated. The evidence did, however, establish sufficient participation and reliance to support a beneficial interest.
4. Quantification. In the absence of an express agreement as to shares, the court adopted the holistic approach described in Stack v Dowden [2007] UKHL 17, reported at [2007] 2 AC 432, and Abbot v Abbot [2007] UKPC 53. It considered the whole course of dealing and all conduct illuminating the parties’ intentions, including the right-to-buy discount, occupation, benefits, rents, mortgage payments, arrears, and endowment policies.
5. The relevant date for quantification was the death of the claimant’s mother, when the trust was treated as dissolved. The beneficial interests were quantified as 50% for the mother’s estate, 25% for the claimant, and 25% for the estate of the claimant’s deceased brother.

First instance decision. No prior appellate decision is stated in the judgment.