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Trusts - From: 1980 To: 1984

This page lists 21 cases, and was prepared on 02 April 2018.

 
Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488
1980

Kearney J
Commonwealth, Trusts
(New South Wales) The manager and a sales representative of TECO set up separate competing business. Anderson with his wife, began a new company Mallory Trading Pty Ltd which acted as a a fraud on TECO. On learning of each others acts, they joined forces and diverted business and profits from TECO. In July 1977 Toy resigned from TECO to work full time for Mallory Trading; and in November 1977 Anderson was dismissed, whereupon he, too, began to work full time for Mallory Trading. In February 1978 they incorporated another company, Mallory Timber Products Pty Ltd ("Mallory Timber") to which they transferred the business of Mallory Trading. TECO sought an account of profits and declaration of trust of the businesses of Mallory Trading and Mallory Timber and of the shares in both companies held by Anderson, Toy and their respective wives. Held: Kearney J approved this statement by Dr PD Finn in Fiduciary Relations: "The fiduciary's liability for gains is a liability as trustee and for trust property. It is, as will be seen, one which can give rise to personal actions against a fiduciary. It can give rise to actions in rem to recover extant trust property."
The trust property was extant: "It is clear that the business had its genesis in the resources and facilities of TECO which were available to Anderson and Toy. It is also clear that they did take advantage of such resources and facilities so as to cause life to be breathed into the mere shell of Mallory Trading, bearing in mind that the business of Mallory Trading was built upon cash flow and sales. The whole substance of Mallory Trading as a viable business enterprise stemmed from the resources of TECO which were utilized in Mallory Trading. The outstanding features of the nurturing of Mallory Trading are that its executives were being paid by TECO, its customers were TECO customers, and its products were significantly derived from TECO products . . the whole of the TECO business (including, not only physical facilities such as telephones, motor cars and expense accounts) were used; but also its intangible elements such as marketing methods, knowledge of customers and goodwill were also resorted to in building up Mallory Trading. Another significant feature is that the inevitable result of the defendants using TECO as the vehicle to establish Mallory Trading as a going concern was that TECO was gravely harmed. It not only lost the orders that were misappropriated, but this in turn led to the loss of customers and substantial damage to its goodwill . . There can be no doubt that the creation and development of Mallory Trading dealt a crippling blow to the business of TECO.
Every opportunity which Mallory Trading has received is directly traceable to resources and benefits provided by TECO, even of time and efforts expended by Anderson and Toy for which TECO was paying. Every advance made by Mallory Trading was also due to the advantages of the tangible and intangible resources and facilities provided from TECO. In truth, the business of Mallory Trading was carved out of the business of TECO, and thus ought to be treated as being, as at July 1977, held on trust for TECO."
July 1977 was the date when Toy resigned from TECO. Kearney J then dealt with a number of arguments relating to subsequent events. The real issue was whether the trust property represented by the business of Mallory Trading remained extant. The defendants' first submission was that the business of Mallory Timber was a fresh unrelated business free from any trust. The judge described that as "insupportable": "I regard the business carried on by Mallory Timber products as representing the trust property of which Mallory Trading was originally the trustee." The defendants submitted that if there was any liability after July 1977, the liability should be limited to an account of profits, and should not extend to a declaration that the business was itself held on trust; whatever the position might have been in July 1977, the continued carrying on of the business had been wholly due to the defendants' own efforts; and that any benefit attributable to the trust as it existed in July 1977 had been displaced. Kearney J dealt with this submission as follows: "The fact that the trustee carried on a business and improved it by its own exertions did not, in my view have the effect of extinguishing the trust property as so to terminate the trust. The business, as a trading enterprise, continued to subsist as an identifiable item of property. The fact that the business may have been enhanced through the efforts of the trustee cannot affect the continued existence of the trust." The defendants ' submitted that any account should be limited to former customers of TECO, and that the extent of sales to those customers could be readily ascertained from the accounts. Kearney J rejected that submission too. He said that this submission took: "too limited a view of the extent of the benefit represented by the existence of the business of Mallory Trading as a going concern. While its attributes included the connection with former TECO customers, it also had the inherent capacity as an established business to expand the range of its customers and products."
He concluded: "It seems to me that the present case falls within the second example stated by Upjohn J [in Re Jarvis], namely that the Mallory companies are accountable as constructive trustees of the business. The contribution of skill and industry by all the defendants to the continued carrying on of the business can be adequately provided for by the making of proper allowances, as indicated by Upjohn J I consider that, in determining the form of relief to be granted, not only is Upjohn J's first example inappropriate to the facts of the case, but also that justice can be done, in the circumstances of this case, by making the declaration of trust as to the business on the footing of all just allowances.
. . The trust property remains identifiable in the hands of the trustee, and TECO is entitled to have the benefit of it, subject to the efforts of the defendants being duly remunerated.
Additionally, although there is no evidence at present, the defendants may be able to establish upon the taking of accounts of profits, that assets comprised in the business have been contributed by them from sources other than those generated by the business itself. If so, it may further be possible to show that consequently a proportionate interest in the business exists in favour of the defendants, or that they are entitled to a specific item of property, or to a charge upon the trust property as a whole."
1 Citers


 
Re Grant's Will Trusts [1980] 1 WLR 360
1980
ChD
Vinelott J
Trusts, Wills and Probate
The deceased left property to the Labour Party property committee. Held: A trust created by making a gift to the members of an unincorporated assoication as at the date of the gift can be wound up only if under the rules, the members could, at any time, resolve to terminate the trust and distribute the fund to themselves. The gift therefore failed. It could not be construed as a gift to existing members (i.e. it did not fall within category (1) of Neville Estates Ltd v Madden), and that in order to fall within category (2) it was essential that the members of the association for the time being should be free to dispose of it in any way they thought fit, including distributing it amongst themselves.
1 Cites

1 Citers


 
In re Bourke's Will Trusts [1980] 1 WLR 539
1980
ChD
Slade J
Trusts, Wills and Probate
The 1938 will of a testator was at issue. He died in 1943. The trusts included a life interest for the testator's widow and, on her death without issue (which happened in 1971), residue was given to the testator's three half-siblings 'or their heirs and surviving issue'. Held: The heirs were to be ascertained in accordance with pre-1926 law by virtue of section 132 of the 1925 Act. It was accepted that 'issue' (construed to mean children in the context) were to be ascertained in accordance with the law at the date of the testator's death in 1943 (though it was not suggested that there were any illegitimate children born after 1969 who might have made a claim). Also, the classes of heirs and issue were in each case to be ascertained at the death of each half-sibling (1958 and 1969 respectively), and not at the date of the widow's death in 1971.
Law of Property Act 1925 132
1 Citers


 
Bartlett v Barclays Bank Trust Co Ltd (Nos 1 and 2) [1980] Ch 515
1980
ChD
Brightman J
Costs, Trusts
A claim was made against a trustee for compensation for losses incurred during the administration of the trust. Held: For a court to order an account by a trustee on the basis of wilful default, and make the defendant liable not only for assets which have come to their hands but also in respect of assets which ought to have come to their hands, the claimant must plead and prove at least one act of wilful default. Higher standards may be expected of professional trustees.
Brightman J considered the nature of the remedy of restitution: "the so-called restitution which the [trustee] must now make to the plaintiffs . . is in reality compensation for loss suffered by the plaintiffs . . not readily distinguishable from damages except with the aid of a powerful legal microscope." and "The trustee's obligation is to restore to the trust estate the assets of which he has deprived it." and
"The bank, as trustee, was bound to act in relation to the shares and to the controlling position which they conferred, in the same manner as a prudent man of business. The prudent man of business will act in such manner as is necessary to safeguard his investment. He will do this in two ways. If facts come to his knowledge which tell him that the company’s affairs are not being conducted as they should be, or which put him on enquiry, he will take appropriate action. Appropriate action will no doubt consist in the first instance of enquiry of and consultation with the directors, and in the last but most unlikely resort, the convening of a general meeting to replace one or more directors. What the prudent man of business will not do is to content himself with the receipt of such information on the affairs of the company as a shareholder ordinarily receives at annual general meetings. Since he has the power to do so, he will go further and see that he has sufficient information to enable him to make a responsible decision from time to time either to let matters proceed as they are proceeding, or to intervene if he is dissatisfied."
The normal order in hostile litigation is for costs to be taxed on a standard basis.
A proper rate of interest to be awarded, in the absence of special circumstances, to compensate beneficiaries and trust funds for non-receipt from a trustee of money that ought to have been received was that allowed from time to time on the Short Term Investment Account, a rate which may be taken to be not more favourable than base rate less 0.5 per cent.
1 Citers



 
 Re: Gibson's Settlement Trusts; Mellor v Gibson; 1981 - [1981] Ch 179; [1981] 2 WLR 1; [1981] 1 All ER 233

 
 Clark Taylor and Company v Quality Site Development (Edinburgh) Limited; 1981 - 1981 SC 111
 
Roome v Edwards [1982] AC 279; [1981] UKHL TC_54_359; [1981] UKHL TC_54_359; [1981] 1 All ER 736; 54 TC 359; [1981] 2 WLR 268; [1982] AC 279
5 Feb 1981
HL
Lord Wilberforce, Lord Roskill
Capital Gains Tax, Trusts
HL Capital gains tax - Trustees of fund appointed out of main settlement under special powers- - Whether liable for chargeable gain accruing to trustees of unappointed residue - Finance Act 1965, s 25(11) - Sch 10, para 12.
A claim was made for the payment of Capital Gains Tax. It was material to that claim to decide whether the exercise of a power of appointment contained in a settlement gave rise to a settlement separate from the main settlement.
Lord Wilberforce (with whose speech three of the other four Law Lords agreed, Lord Roskill delivering a separate speech) spoke generally: "There are a number of obvious indicia which may help to show whether a settlement, or a settlement separate from another settlement, exists. One might expect to find separate and defined property; separate trusts; and separate trustees. One might also expect to find a separate disposition bringing the separate settlement into existence. These indicia may be helpful, but they are not decisive. For example, a single disposition, eg, a will with a single set of trustees, may create what are clearly separate settlements, relating to different properties, in favour of different beneficiaries, and conversely separate trusts may arise in what is clearly a single settlement, e.g. when the settled property is divided into shares. There are so many possible combinations of fact that even where these indicia or some of them are present, the answer may be doubtful, and may depend upon an appreciation of them as a whole.
Since "settlement" and "trusts" are legal terms, which are also used by business men or laymen in a business or practical sense, I think that the question whether a particular set of facts amounts to a settlement should be approached by asking what a person, with knowledge of the legal context of the word under established doctrine and applying this knowledge in a practical and common-sense manner to the facts under examination, would conclude. To take two fairly typical cases. Many settlements contain powers to appoint a part or a proportion of the trust property to beneficiaries: some may also confer power to appoint separate trustees of the property so appointed, or such power may be conferred by law: see Trustee Act 1925, section 37. It is established doctrine that the trusts declared by a document exercising a special power of appointment are to be read into the original settlement: see Muir (or Williams) v Muir [1943] AC 468. If such a power is exercised, whether or not separate trustees are appointed, I do not think that it would be natural for such a person as I have presupposed to say that a separate settlement had been created: still less so if it were found that provisions of the original settlement continued to apply to the appointed fund, or that the appointed fund were liable, in certain events, to fall back into the rest of the settled property. On the other hand, there may be a power to appoint and appropriate a part or portion of the trust property to beneficiaries and to settle it for their benefit. If such a power is exercised, the natural conclusion might be that a separate settlement was created, all the more so if a complete new set of trusts were declared as to the appropriated property, and if it could be said that the trusts of the original settlement ceased to apply to it. There can be many variations on these cases each of which will have to be judged on its facts."
Trustee Act 1925 37
1 Citers

[ Bailii ]
 
Duke of Norfolk's Settlement Trusts, Re [1981] EWCA Civ 5; [1982] Ch 61; [1981] 3 All ER 220
13 Apr 1981
CA
Cumming-Bruce, Brightman, Fox LJJ
Trusts, Costs
The court considered the jurisdiction of the court to authorise the payment out of trust property of remuneration to a trustee.
[ Bailii ]

 
 Island Holdings Ltd v Birchington Engineering Co Ltd; 7-Jul-1981 - Unreported, 7 July 1981
 
Re GKN Bolts and Nuts Ltd etc Works Sports and Social Club [1982] 1 WLR 774
1982
ChD
Megarry J VC
Trusts, Company
There was a sports and social club associated with GKN, whose members were all employees of GKN. The main issue in the case was whether the club had ceased to exist. But one subsidiary issue was whether a meeting had been validly convened. The club rules required 14 days' notice to be given, but in fact only three days' notice were given. Notice of the meeting was posted in the company's canteen, to which all the members had access. However, the requirement of 14 days' notice had hardly ever been followed. Seven or three days' notice were not unusual and there was no evidence that anyone had ever objected to short notice. The subject matter of the meeting was to discuss the sale of the club's sports ground The court also considered the status of associate members of a club, who obtained that status merely by signing a vistors book. Held: The rules did not make such associate members members properly. Despite the short notice, the resolution to sell the sports ground was validly passed: "with the prospect that a sale would bring some money to each member of the club, it seems obvious that news of the meeting would speedily reach all, if not quite all, of the members of the club."
However, the same meeting (convened by the same notice) also passed resolutions altering the way in which the proceeds of sale of the sports ground would be distributed among the members, and Megarry V-C held that insufficient notice of that business had been given, with the consequence that those resolutions were invalid.
Megarry V-C said: "As is common in club cases, there are many obscurities and uncertainties, and some difficulty in the law. In such cases, the court usually has to take a broad sword to the problems, and eschew an unduly meticulous examination of the rules and resolutions. I am not, of course, saying that these should be ignored; but usually there is a considerable degree of informality in the conduct of the affairs of such clubs, and I think that the courts have to be ready to allow general concepts of reasonableness, fairness and common sense to be given more than their usual weight when confronted by claims to the contrary which appear to be based on any strict interpretation and rigid application of the letter of the rules. In other words, allowance must be made for some play in the joints."
1 Citers


 
Bernard v Josephs [1982] 1 Ch 391; [1982] 3 All ER 162; [1982] 2 WLR 1052
30 Mar 1982
CA
Griffiths LJ, Lord Denning MR, Kerr LJ
Trusts, Family
The court considered the division of proceeds of sale of a house bought by an unmarried couple. Held: Where the trusts for which a property was purchased have been concluded, the house should be sold.
Griffiths LJ said: "the fact that one party paid the mortgage may indicate that it was recognised by the couple that that party was solely responsible for providing the purchase price and therefore to be regarded as the sole beneficial owner . . When the proceeds of sale are realised there will have to be equitable accounting between the parties before the money is distributed. If the woman has left, she is entitled to receive an occupation rent, but if the man has kept up all the mortgage payments, he is entitled to credit for her share of the payments:if he has spent money on recent redecoration which results in a much better sale price, he should have credit for that, not as an altered share, but by repayment of the whole or a part of the money he has spent. These are but examples of the way in which the balance is to be struck . . It might in exceptional circumstances be inferred that the parties agreed to alter their beneficial interests after the house was bought; an example would be if the man bought the house in the first place and the woman years later used a legacy to build an extra floor to make more room for the children. In such circumstances the obvious inference would be that the parties agreed that the woman should acquire a share in the greatly increased value of the house produced by her money. But this depends on the court being able to infer an intention to alter the share in which the beneficial interest was previously held; the mere fact that one party has spent time and money on improving the property will not normally be sufficient to draw such an inference."
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[ Bailii ]
 
Leedale (Inspector of Taxes) v Lewis [1982] 1 WLR 1319; [1982] 3 All ER 808; [1982] UKHL TC_56_501
14 Oct 1982
HL
Lord Wilberforce, Lord Scarman, Lord Roskill and Lord Brandon
Capital Gains Tax, Trusts
The statute called for the apportionment of capital gains made by non-resident trustees where resident beneficiaries had 'interests' in the settled property, with the apportionment to be made 'in such manner as is just and reasonable between' them. The persons in question only had discretionary interests in the settled property. Held: Such discretionary beneficiaries did have 'interests in settled property' for the purposes of s 42(2) of the 1965 Act.
The House considered the argument that interpretation of a taxing statute might cause hardship.
Lord Scarman characterised the term "beneficiary" as: 'a term which everyone is agreed includes persons who are the objects of the discretionary trusts'.
Lord Wilberforce said: "I would only refer to one other argument, that based on the alleged 'hardship' of accepting the Revenue's contention. I do not think that this is a relevant consideration at all. If there were two equally possible constructions of this subsection, it might be correct to choose that which is the more favourable to the taxpayer, on the basis that subjects can only be taxed by clear words. This principle cannot apply where there are decisive legal reasons for preferring one construction rather than another. Once this step has been taken considerations of 'hardship' do not enter into the discussion." and "Settlors, after 1965, make their settlements with knowledge of the legislation and of its consequences."
. . And "The key question is as to the meaning of the word "interests" in section 42(2) of the Finance Act 1965, the alternatives being whether this word refers only to such interests as can be assigned a value, or whether it is a word of more general significance capable of covering any interest, quantifiable or non-quantifiable, of a beneficiary under a trust. That either of these is a possible meaning in fiscal legislation is made clear (a) by the general observations of Lord Reid in Gartside v. Inland Revenue Commissioners [1968] A.C. 533 [sic], 603 (see also those of Stephen J. and Wills J. in Attorney-General v. Heywood (1887) 19 Q.B.D. 326) and (b) by a comparison of the cases just cited. In Heywood, which arose under section 38 of the Customs and Inland Revenue Act 1881, and where the question was whether the settlor had reserved "an interest" by including himself among a discretionary class of beneficiaries, the word "interest" was given the more general meaning. To require that it meant something to which an ascertainable value could be assigned would, it was held, be contrary to the scheme of the statute. In Gartside, on the other hand, which arose under section 43 of the Finance Act 1940, and where the question was whether estate duty would be charged in respect of the determination of a discretionary interest, this House held that the word must bear the narrower meaning because the statute necessarily required ascertainment of the quantum of the interest. In Gartside I expressed the opinion, from which the other members of the House did not dissent, that these two cases could stand together. The word "interest" is one of uncertain meaning and it remains to be decided on the terms of the applicable statute which, or possibly what other, meaning the word may bear. The appellant contends for the narrower meaning, and can find some support in section 42 of the Act of 1965. There is the reference to "values" in subsection (2). There is subsection (3) which, he contends, sets out a code for assigning values to discretionary interests in income or capital - an exclusive code within one of whose provisions a case must fall if a charge to tax in respect of a discretionary trust is to arise. There is, thirdly, the reference, in subsection (2), to a life interest or an interest in reversion, but, in my opinion this does not survive a first critical look: the reference is clearly illustrative and nothing more. The two main arguments are by no means negligible, but they are, in my opinion, greatly outweighed by those on the other side. I simply state them, as they impressed me; they are developed in discussion in the Court of Appeal's judgment. 1. The initial words of subsection (2) are "any beneficiary". Unless clearly directed otherwise, I would assume that "persons having interests" was correlative to these words. Discretionary objects are clearly "beneficiaries", so I would suppose them also to be included in "persons having interests." 2. The apportionment to be made under the subsection is mandatory. The amount of the gains - i.e., the whole amount - must be apportioned in the relevant year of assessment. This can only be done if discretionary objects, who may be the only "beneficiaries" in that year, can be the objects of apportionment. 3. The words, in subsection (2), "in such manner as is just and reasonable" and "as near as may be, according to the respective values of those interests" suggest a broad rather than an actuarial approach in which all relevant considerations may be taken into account. They permit, inter alia, consideration of the settlor's letter of intent which shows, at least, that the settlement was to be regarded as for the benefit of the grandchildren, not of the settlor's two children. 4. That subsection (3) represents an exclusive code is in my opinion not supported by the form of the section. On the contrary, the structure of it suggests that subsection (2) is the main and general charging provision, subsection (3) being auxiliary and confined to particular cases. These considerations together convince me that an apportionment in respect of "interests" under a discretionary trust can, indeed must, be made. "
HL Capital gains tax - Gains accruing to trustee resident outside the UK - UK - resident beneficiaries being both potential objects of discretionary power and having interests contingent on surviving to a specified day - Whether apportionment of gains amongst beneficiaries mandatory - Whether relevant to consider hardship - Manner of apportionment - Finance Act 1965, s 42.
Finance Act 1965 42(2)
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[ Bailii ]

 
 Harris v Goddard; CA 1983 - [1983] 3 All ER 242; [1983] 1 WLR 1203
 
Multinational Gas and Petrochemical Co Ltd v Multinational Gas and Petrochemical Services Ltd [1983] Ch 258
1983
CA
Dillon LJ
Company, Trusts
The court considered the way that the duty of a director to his company arose: "The directors indeed stand in a fiduciary relationship to the company, as they are appointed to manage the affairs of the company and they owe fiduciary duties to the company though not to the creditors, present or future, or to individual shareholders." The sole shareholder or the whole body of shareholders may approve a foolish or negligent decision in the ordinary course of business, at least where the company is solvent.
1 Citers


 
Kuldip Kaur Chhokar v Harbhajan Singh Chhokar [1983] EWCA Civ 7; [1984] FLR 313; [1984] 14 Fam Law 269
1 Nov 1983
CA
Cumming-Bruce LJ, Reeve J
Land, Trusts

[ Bailii ]
 
Turner v Turner [1984] Ch 100; [1983] 2 All ER 745
1984
ChD
Mervyn Davies J
Trusts
The trustees for many years signed every document placed before them by their solicitors (including appointments) without understanding that they had any discretion in the exercise. Held: What might first appear to have been a decision of trustees may prove on questioning not to have been a decision. Where a power is exercised in form but not in substance then the appointment will be declared void.
Mervyn Davies J said: "the trustees exercising a power come under a duty to consider. It is plain on the evidence that here the trustees did not in any way 'consider' in the course of signing the three deeds in question. They did not know they had any discretion during the settlor's lifetime, they did not read or understand the effect of the documents they were signing and what they were doing was not preceded by any decision. They merely signed when requested. The trustees therefore made the appointments in breach of their duty in that it was their duty to 'consider' before appointing and this they did not do." and "The authorities I have mentioned, including In re Hastings-Bass, decd., permit the inference that in a clear case on the facts, the court can put aside the purported exercise of a fiduciary power, if satisfied that the trustees never applied their minds at all to the exercise of the discretion entrusted to them. If appointers fail altogether to exercise the duties of consideration referred to by Sir Robert Megarry then there is no exercise of the power and the purported appointment is a nullity."
1 Citers


 
Walker v Hall [1984] FLR 126
1984
CA
Lord Justice Lawton, Lord Justice Dillon, Lord Justice Kerr
Trusts, Family
The court considered the way of distributing property purchased by an unmarried couple: "When such a relationship comes to an end, just as with many divorced couples, there are likely to be disputes about the distribution of shared property. How are such disputes to be decided? They cannot be decided in the same way as similar disputes are decided when there has been a divorce. The courts have no jurisdiction to do so. They have to be decided in accordance with the law relating to property . . There is no special law relating to property shared by cohabitees any more than there is any special law relating to property used in common by partners or members of a club. The principles of law to be applied are clear, though sometimes their application to particular facts are difficult. In circumstances such as arose in this case the appropriate law is that of resulting trusts. If there is a resulting trust (and there was one in this case) the beneficiaries acquire by operation of law interests in the trust property. An interest in property which is the consequence of a legal process must be identifiable. It must be more than expectations which at some later date require to be valued by a court . ."
Dillon LJ: '. . . the law of trusts has concentrated on how the purchase money has been provided and it has consistently been held that where the purchase money for the property acquired by two or more persons in their joint names has been provided by those persons in unequal amounts, they will be beneficially entitled as between themselves in the proportions in which they provided the purchase money. This is the basic doctrine of the resulting trust and it is conveniently and cogently expounded by Lord Upjohn in Pettitt v Petitt [1970] AC 777 at p 814' and '. . . it is not open to this court, in my judgment, in the absence of specific evidence of the parties' intention, to hold that 33 Foxberry Road belongs beneficially to Mr Hall and Mrs Walker in equal shares, notwithstanding their unequal contributions to the purchase price, simply because it was bought to be their family home and they intended that their relationship should last for life. Equally it is not open to this court to 'top up' Mrs Walker's share, beyond what it would be on the mere basis of her financial contribution, on some broad notion of what would be fair simply because the house was bought as the family home; the court could no doubt do this in an appropriate case in proceedings under s.24 of the 1973 Act but the discretion under that section is not available in the present case.'
Matrimonial Proceedings and Property Act 1970 - Matrimonial Causes Act 1973
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Burns v Burns [1984] 1 All ER 244; [1983] EWCA Civ 4; [1984] Ch 317; [1984] 2 WLR 582
1984
CA
Waller, Fox, May LJJ
Family, Trusts
The parties lived together for 17 years but were not married. The woman took the man's name, but beyond taking on usual household duties, she made no direct financial contribution to the house. She brought up their two children over 17 years. Latterly she went to work, but her earnings went on normal household expenses. Held: She had acquired no interest in the family home. There was no express agreement to qualify the fact that the house was bought in the man's sole name. Some substantial contribution was required before an intention that she was to take a share could be imputed.
Fox LJ said: "The house with which we are concerned in this case was purchased in the name of the defendant and the freehold was conveyed to him absolutely. That was in 1963. If, therefore, the plaintiff is to establish she has a beneficial interest in the property she must establish that the defendant holds the legal estate upon trust to give effect to that interest. That follows from Gissing v. Gissing [1971] A.C. 886. For present purposes I think that such a trust could only arise (a) by express declaration or agreement or (b) by way of a resulting trust where the claimant has directly provided part of the purchase price or (c) from the common intention of the parties.
In the present case (a) and (b) can be ruled out. There was no express trust of an interest in the property for the benefit of the plaintiff; and there was no express agreement to create such an interest. And the plaintiff made no direct contribution to the purchase price. Her case, therefore, must depend upon showing a common intention that she should have a beneficial interest in the property. Whether the trust which would arise in such circumstances is described as implied, constructive or resulting does not greatly matter. If the intention is inferred from the fact that some indirect contribution is made to the purchase price, the term “resulting trust” is probably not inappropriate. Be that as it may, the basis of such a claim, in any case, is that it would be inequitable for the holder of the legal estate to deny the claimant’s right to a beneficial interest.”
May LJ said: "For my part, I agree that the principles which the courts must apply are those laid down in Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886. Those two cases concerned disputes between couples who had in fact been married, where the claims were made under section 17 of the Married Women’s Property Act 1882 and not under the matrimonial legislation. But it is quite clear that the House of Lords decided that section 17 is merely a procedural section giving the courts no overriding general discretion in such circumstances and that the principles to be applied are ill general the same whether the couple have been married or not." and
"In the light of all these cases, I think that the approach which the courts should follow, be the couples married or unmarried is now clear. What is difficult, however, is to apply it to the facts and circumstances of any given case. Where the family home is taken in the joint names, then unless the facts are very unusual I think that both the man and the woman are entitled to a share in the beneficial interest. Where the house is bought outright and not on mortgage, then the extent of their respective shares will depend upon a more or less precise arithmetical calculation of the extent of their contributions to the purchase price. Where, on the other hand, and as is more usual nowadays, the house is bought with the aid of a mortgage, then the court has to assess each of the parties’ respective contributions in a broad sense; nevertheless the court is only entitled. to look at the financial contributions or their real or substantial equivalent, to the acquisition of the house; that the husband may spend his weekends redecorating or laying a patio is neither here nor there, nor is the fact the woman has spent so much of her time looking after the house, doing the cooking and bringing up the family.
The inquiry becomes even more difficult when the home is taken in only one of the two names. For present purposes I will assume that it is the man, although the same approach will be followed if it is taken in the name of the woman. Where a matrimonial or family home is bought in the man’s name alone on mortgage by the mechanism of deposit and installments, then if the woman pays or contributes to the initial deposit this points to a common intention that she should have some beneficial interest in the house. If thereafter she makes direct contributions to the instalments, then the case is a fortiori and her rightful share is likely to be greater. If the woman, having contributed to the deposit, but although not making direct contributions to the instalments, nevertheless uses her own money for other joint household expenses so as to enable the man the more easily to pay the mortgage instalments out of his money, then her position is the same. Where a woman has made no contribution to the initial deposit, but makes regular and substantial contributions to the mortgage instalments, it may still be reasonable to infer a common intention that she should share the beneficial interest from the outset or a fresh agreement after the original conveyance that she should acquire such a share. It is only when there is no evidence upon which a court can reasonably draw an inference about the extent of the share of the contributing woman that it should fall back on the maximum “equality is equity.” Finally, when the house is taken in the man’s name alone, if the woman makes no “real” or “substantial” financial contribution towards either the purchase price, deposit or mortgage instalments by the means of which the family home was acquired, then she is not entitled to any share in the beneficial interest in that home even though over a very substantial number of years she may have worked just as hard as the man in maintaining the family in the sense of keeping the house, giving birth to and looking after and helping to bring up the children of the union.
On the facts of the instance case, which Waller L.J. has outlined, I think that it is clear that the plaintiff falls into the last of the categories to which I have just referred and accordingly I too would dismiss this appeal. When one compares this ultimate result with what it would have been had she been married to the defendant, and taken appropriate steps under the Matrimonial Causes Act 1973, I think that she can justifiably say that fate has not been kind to her. In my opinion, however, the remedy for any inequity she may have sustained is a matter for Parliament and not for this court”.
Law of Property Act 1925 - Trustees Act 1925
1 Cites

1 Citers

[ Bailii ]
 
Swales v Inland Revenue Commissioners [1984] 3 All ER 16
1984

Nicholls J
Trusts
Nicholls J said: "It is trite law that trustees cannot fetter the exercise by them at a future date of a discretion possessed by them as trustees."
1 Citers


 
Young v Young [1984] FLR 375
1984


Trusts, Family

1 Citers



 
 Cowan v Scargill and Others; ChD 13-Apr-1984 - [1985] Ch 270; (1984) 128 SJ 550; [1984] IRLR 260; [1984] 3 WLR 501; [1984] 2 All ER 750
 
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