O'Neill v Holland

In a sole-name residential property case, a common intention constructive trust requires both a common intention that the claimant should have a beneficial interest and detrimental reliance on that intention. Detriment is assessed objectively. It may consist of agreeing that property intended for transfer into joint names should instead be transferred into the other party’s sole name, leaving the claimant substantially worse off.

The facts constituting detriment must be pleaded, but their legal characterisation is for the court. A bare finding of unconscionability cannot replace the requirement of detrimental reliance.

The appellant and respondent had occupied a property owned by the appellant’s father as their family home. In 2008, the father transferred it for no consideration into the respondent’s sole name. The District Judge found that the parties had originally intended a transfer into joint names and declared that the respondent held the beneficial interest for them equally.

On a first appeal, His Honour Judge Pelling QC set aside that declaration because the District Judge had neither identified nor found detrimental reliance. The appellant’s second appeal concerned whether the District Judge’s findings and the contemporary conveyancing documents nevertheless established the detriment required for a sole-name common intention constructive trust.

1. Appeal allowed. In a sole-name residential property case, detrimental reliance remains an essential ingredient of a common intention constructive trust. The claimant must establish a common intention that both parties should have a beneficial interest and that the claimant acted to their detriment on the basis of that intention. The decisions in Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53 did not abolish this requirement. Curran v Collins [2015] EWCA Civ 404 was binding authority for it.

2. Before the 2008 transfer, the father’s sole legal ownership presumptively reflected sole beneficial ownership. His intention that the property should serve as a family home did not itself create an immediate beneficial interest for his daughter. There was no finding of the necessary shared intention or detrimental reliance during that period.

3. The District Judge’s findings, read with the contemporary conveyancing documents, established that the original plan in 2008 was to transfer the property into the parties’ joint names. The respondent instead procured the appellant’s agreement to a transfer into his sole name by falsely representing that she could not obtain a mortgage. The appellant thereby lost the position of legal co-owner, presumptively sharing the beneficial ownership, and was placed in the substantially worse position of having to establish an equitable interest against the sole legal owner.

4. Detriment is an objective characterisation of the claimant’s position. The material facts must be pleaded, but the court determines their legal character in light of all the evidence. The appellant’s pleaded case contained sufficient facts, although the District Judge’s eventual findings did not correspond with it in every detail.

5. A bare finding of unconscionability could not cure the District Judge’s failure expressly to direct herself on detrimental reliance. Nevertheless, her factual findings and the documents sufficiently established both common intention and detriment. The declaration that the parties held the beneficial interest in equal shares was restored.

6. Permission was granted on the alternative ground invoking other constructive-trust doctrines, but that ground was not determined. The respondent’s fresh-evidence application was refused. Unresolved equitable-accounting grounds were to be remitted to Judge Pelling unless agreed.

1. Court of Appeal (Civil Division): Allowed the claimant’s second appeal and restored the conclusion that she had a 50% beneficial interest in the property. The fresh-evidence application was refused. Unresolved equitable-accounting grounds were to be remitted unless agreed.

2. County Court at Manchester: His Honour Judge Pelling QC allowed the defendant’s first appeal and dismissed the claimant’s beneficial-interest claims concerning both properties because detrimental reliance had not been established.

3. County Court: District Judge Obodai found that the claimant had a 50% beneficial interest under a common intention constructive trust. She later determined equitable-accounting, sale and costs issues.