Julie Palmer & Anor v Daniel Sans

A constructive trust may arise where the evidence establishes a common intention that the registered owner is to hold property for another, together with detrimental reliance on that intention. The court must assess the whole circumstances, including express statements and conduct, rather than isolate individual transactions. An absence of contemporaneous documentation does not prevent such a finding, although the surrounding documents and objective facts remain important. The transfer of valuable property and later payments may constitute detrimental reliance. Once beneficial ownership is established, an insolvency challenge to a transfer of legal title to the beneficiary may become unnecessary.

The applicants were the joint trustees in bankruptcy of Shaun Collins. They sought declarations and relief concerning a flat registered in Mr Collins’s name, including an application under Insolvency Act 1986, section 339. Daniel Sans contended that Mr Collins had acquired the property as legal owner but had agreed to hold the beneficial interest for him. The trustees disputed the alleged oral agreement and relied on the absence of contemporaneous documentary evidence.

The central issue was whether a constructive trust had arisen when Mr Collins acquired the property in 2013. If so, the proposed challenge to the later transfer of legal title and the issue concerning a charge over the property did not require determination.

1. Constructive trust. The property was held on constructive trust for Mr Sans. The relevant question was whether the parties had a common intention that Mr Collins would hold the legal title while Mr Sans had the beneficial interest, and whether Mr Sans had acted to his detriment in reliance on that intention.
2. Evidence. The court considered the whole circumstances. The property’s value was approximately £90,000, while the transaction documents referred to a substantially lower price. Mr Collins paid nothing towards the acquisition apart from assuming liability for the mortgage. Members of the Sans family occupied the property, no rent was charged, and Mr Collins accepted that Mr Sans would pay the mortgage and property expenses.
3. The transfer of the Audi car to Mr Collins in 2016 was accepted as having been made in exchange for Mr Sans no longer making mortgage payments. It supported both the existence of the agreement and detrimental reliance. The later payment of £15,000 by Mr Sans’s parents, used to redeem the mortgage and facilitate the transfer of legal title, provided further support.
4. The absence of contemporaneous documentation was relevant but not decisive. The court evaluated the objective documents, surrounding circumstances and witness evidence together.
5. Having found that Mr Sans was the beneficial owner, the court did not determine the section 339 transaction-at-an-undervalue claim or the charge issue. Costs were to be addressed separately.