Archibald & Anor v Alexander

A constructive trust may arise where property is transferred gratuitously to a person on the express basis that it will be held for others. The trust arises from the terms on which the property was transferred and the unconscionability of denying those terms. The beneficiaries need not have agreed to the arrangement or acted to their detriment. This is distinct from a common intention constructive trust, where a claimant’s detrimental reliance on an agreement or understanding may be required. A person who declines to take steps to protect an intended interest because of the transferee’s assurance may, in any event, have changed position sufficiently to establish detrimental reliance.

The defendant appealed against an order made after a five-day trial in the County Court at Central London. The order declared that a house purchased in the names of the defendant and her mother was held on trust for the defendant and her two siblings in equal shares after their mother’s death.

The trial judge found that the mother and all three children had orally agreed that the property would be acquired in the name of the mother and one or more children, with the registered owner or owners holding it for the mother during her lifetime and then for all three children equally. The defendant alone became a registered owner because her siblings were unavailable to complete the purchase formalities.

Permission to appeal was limited to whether there was a causal connection between the agreement and the siblings’ failure to become transferees, and whether their reliance amounted to sufficient detriment to support a constructive trust.

1. The appeal was dismissed. The defendant was bound by the trial judge’s factual findings, apart from the specific finding challenged on appeal.

2. The trial judge was entitled to find that the siblings relied on the agreement by not taking steps to become registered owners or otherwise protect their intended interests. In the circumstances, their decision not to do so was causally connected to the defendant’s assurance. Their desisting from steps they could and would otherwise have taken was a sufficient change of position to constitute detrimental reliance if such reliance were required.

3. However, detrimental reliance was not required on the proper analysis. The case was not one in which an existing owner promised that another person would acquire an interest in property. It concerned property transferred gratuitously to a volunteer on the express basis that the volunteer would hold it on trust for identified beneficiaries.

4. In that situation, the constructive trust arose when the property was transferred. The trust derived from the agreed terms of transfer and the unconscionability of the transferee asserting the property as her own. The beneficiaries did not need to have agreed to the arrangement or acted to their detriment. The terms of the arrangement displaced both the presumption of advancement and any resulting trust.

5. The distinction was supported by De Bruyne v De Bruyne [2010] EWCA Civ 519, which applied established equitable principles rather than creating a new exception. The principle was consistent with Rochefoucauld v Boustead [1897] 1 Ch 196. The factual findings therefore inevitably led to the conclusion that the defendant held the house on constructive trust for the siblings.

• High Court (Chancery Division): On appeal from the County Court at Central London, the appeal against the order of His Honour Judge Gerald dated 5 April 2019 was dismissed.