Sean Preson & Anor v Ivan Preson & Ors

A common intention constructive trust may arise where the parties objectively intended shared beneficial ownership and the claimant acted to their detriment in reliance on that intention. The parties’ intentions are assessed objectively from their words and conduct, including subsequent conduct which sheds light on their intentions when the property was acquired. The court must not impose a fair solution contrary to the parties’ intentions. Equal contribution to the purchase price, coupled with transfer of the property into another party’s sole legal names, may establish detrimental reliance. A unilateral belief is insufficient to establish unjust enrichment based on failure of basis; there must be a joint understanding. Partnership property requires evidence that the property was acquired for, or with funds belonging to, the partnership.

The claim concerned the beneficial ownership of Springfield Farm, acquired in 2003 by two married couples who contributed equally to the purchase price. The Barn and the Three Fields were registered in the claimants’ names, while the Farmhouse and the Disputed Land were registered in the first and second defendants’ names. The Disputed Land was later transferred to trustees of a discretionary settlement for the benefit of family members.

The claimants alleged a common intention constructive trust and advanced alternative claims based on proprietary estoppel, unjust enrichment and partnership property. The central issue was what the parties had agreed about ownership when the farm was purchased.

1. The claimants established that, when Springfield Farm was purchased, there was a common intention that the Three Fields and the Disputed Land, including the Triangle, would be held beneficially by all four purchasers in equal shares. The documentary evidence, particularly the solicitor’s file, was more reliable than the witnesses’ recollections. The transfer of the Three Fields to the claimants and the remaining land to the first and second defendants was undertaken to reduce stamp duty land tax, rather than to reflect the parties’ beneficial agreement.

2. The court applied the principles summarised in Grant v Edwards [1986] Ch 638 and Jones v Kernott [2012] 1 AC 776. The claimants had to establish a common intention to share beneficial ownership and detrimental reliance. Intentions could be expressed or inferred objectively from words and conduct. Subsequent conduct was relevant because it could shed light on the parties’ intentions at acquisition.

3. Detrimental reliance was established by the claimants’ equal contribution to the purchase price and the transfer of the Disputed Land into the sole legal names of the first and second defendants. The court applied the approach in Hudson v Hathway [2022] EWCA Civ 1648, O’Neill v Holland [2020] EWCA Civ 1583 and Oxley v Hiscock [2004] EWCA Civ 546.

4. The alternative proprietary estoppel claim failed because there was no relevant representation or assurance relied upon to the claimants’ detriment. The unjust enrichment claim also failed. A unilateral belief could not amount to failure of basis; the parties had to contemplate the relevant state of affairs jointly, applying Dargamo Holdings Limited v Avonwick Holdings Limited [2021] EWCA Civ 1149. The partnership-property claim failed for lack of evidence that the Disputed Land was acquired on account of, or for the purposes of, the caravan-storage partnership.

5. The trustees were bound by the constructive trust. The Disputed Land, other than the Triangle, was held 50% for the claimants as tenants in common in equal shares and 50% on the terms of the settlement. The parties were asked to agree an order giving effect to the judgment, including appropriate transfers of title.