AM v SS

A constructive trust may arise from the circumstances in which property is acquired or dealt with, where it would be unconscionable for the legal owner to deny the intended beneficiary’s interest. Common-intention constructive trusts are only one example. In appropriate cases, equity may impose a trust without detrimental reliance, including where property is transferred on terms that it will be held for a third party. The court must remain flexible and assess the whole factual context. A belief that placing property in another person’s name will protect it from a possible matrimonial claim does not alter the underlying beneficial ownership.

The wife claimed beneficial interests in three properties. She argued that two properties had been gifted to her and the husband by the husband’s father. She also claimed that the husband was the beneficial owner of a property purchased in his name, notwithstanding that it was occupied and managed by the intervenor, the husband’s sister.

The court determined the beneficial ownership of each property. The central issue concerning the intervenor’s property was whether the husband held it for her beneficially, or whether the beneficial interest remained with him.

1. The St John’s Wood and Cairo properties remained the property of the husband’s father. The wife’s evidence was insufficient to establish that either property had been gifted to her and the husband.
2. Constructive trusts may arise in a range of factual circumstances. The common-intention constructive trust cases are not exhaustive. Equity may impose a trust where, having regard to the circumstances in which property was acquired or dealt with, it would be unconscionable for the legal owner to assert the legal interest to the exclusion of the intended beneficiary.
3. Some constructive trusts of this kind do not depend on detrimental reliance. They focus on the terms or circumstances on which the transferee acquired the property. Where the property was transferred on the basis that it would be held for a third party, denial of that arrangement may itself be unconscionable.
4. Applying the analysis in De Bruyne v De Bruyne [2010] 2 FLR 1240, the husband held the beneficial interest in the Acton property for the intervenor. The intervenor could call for the property to be transferred to her, although she might choose to leave the existing arrangement in place.
5. The possible belief that putting the property into the husband’s name might protect it from a claim by his wife was a misconception. It did not change the beneficial ownership. The wife’s claim in relation to the three properties therefore failed.