Common intention constructive trust – Transfer of property by Father to Daughter’s partner = detrimental reliance.

‘For a common intention constructive trust to arise, the parties must have had a common intention to share the property beneficially, upon the faith of which the claimant then acts in reliance to her detriment. … If such detrimental reliance is established, then the next stage is the quantification of the claimant’s share. If that is established by the common intention itself, then there is no need for the court to attempt to quantify it. But in cases where it is clear that the parties intended that the claimant should have a share, but did not quantify it themselves, the court must do so. It does this, once again, by having regard to the whole course of conduct between the parties. But this time, because the parties have not reached an agreement, it is necessary for the court to consider what is fair. Here, at this final stage, the court imputes to the parties that which they did not agree: see per Lord Walker and Lady Hale in Jones v Kernott [2012] 1 AC 776, [51]-[52]. … The doctrine of proprietary estoppel operates in a similar way.’

That is how the court satisfies the equity.

‘Contentious Trusts Handbook’ published by the Law Society in July 2020: Wildy & Sons Ltd — The World’s Legal Bookshop Search Results for isbn: ‘9781784461249’

In O’Neill v Holland [2020] EWCA Civ 1583 (27 November 2020): O’Neill v Holland [2020] EWCA Civ 1583 (27 November 2020) ( the central issue on the appeal was whether the claimant and appellant (‘C‘) had established, on the basis of the facts found by the District Judge at a trial in 2017, that she has a 50% beneficial interest as an equitable co-owner in a property between late 2000 and July 2012. Legal title to the Property was vested in the sole name of C’s father from its purchase in March 1999 until March 2008, when he transferred it for a nil consideration into the sole name of the Defendant (‘D‘), at which point D was in a long-established relationship with C, the Property had been their home for over 7 years, and they had three young children living with them.

C had started the present proceedings in the Manchester District Registry of the High Court. The proceedings were later transferred to the County Court. By her particulars of claim, she sought (among other relief) a declaration that D held the beneficial interest in the property on trust for the two of them in equal shares.

She also sought similar declarations in relation to: (a) a portfolio of 12 buy-to-let properties, which had been acquired in the sole name of D (or, in one case, in the name of a company of his) on various dates between 2002 and 2010; and (b) a further property, which she alleged had been bought by them jointly as a future family home, although again it had been acquired in D’s sole name.

In support of her case that she had a 50% beneficial interest in the 12 buy-to-let properties, C alleged that she and D had established a joint property business, to which she had materially contributed in various ways, or in the alternative that there had been a partnership at will between them.

In the leading judgment Lord Justice Henderson (with which Lord Justice Nugee and Lord Justice David Richards agreed) concluded:

·       … if it were not possible to establish detrimental reliance by C from the findings of the District Judge which I have discussed, I do not think that the finding of unconscionability which she added on 31 July 2018 could save the day for C.

·       C’s counsel submitted that such a finding implicitly entails a finding of detrimental reliance, because it is that factor which makes it unconscionable for the legal owner to deny the claim to a beneficial share.

·       That may often be so, but in the circumstances of the present case I am unable to accept the submission.

·       There is much force in Judge Pelling’s conclusion that the District Judge failed to direct herself correctly on the law relating to detrimental reliance, and nowhere identified the need to find that C had acted to her detriment in reliance upon the relevant common intention: see paragraphs 22 and 23 of his judgment, set out at [18] above.

·       Furthermore, the District Judge nowhere discussed the question of detriment explicitly, nor did she identify the matters which in her view satisfied the requirement.

·       In those circumstances, a bare finding of unconscionability, without further explanation, cannot repair the deficiency.

·       I find further support for this conclusion in paragraph 39 of the District Judge’s judgment, where she wrongly accepted the submission then made by C’s counsel that the authorities “hardly place detriment at the heart of the gateway to relief”, and agreed with him “that the test is whether it would be unconscionable to rely on the fact that the properties were in the name of the Defendant and to deny the Claimant that which (on her case) had been promised.”

·       This indicates to me that the District Judge did not regard the requirement of unconscionability as entailing, or being based upon, a finding of detriment, but rather as a separate test which made a finding of detriment unnecessary.

·       In his helpful oral submissions, D’s counsel accepted that detrimental reliance is a matter for the court to assess on the basis of all the evidence, but he submitted that the necessary reliance must be asserted and proved, making clear what it is that the claimant either did or would have done differently on the strength of the common understanding.

·       He rightly warned us against the dangers of hindsight, and of jumping to the conclusion that, because something now appears obvious, the parties must have considered it at the time.

·       I have that warning well in mind, but the question of detriment must nevertheless be determined objectively, not by reference to the subjective perceptions of the parties at the time.

·       I therefore think it is legitimately open to us to examine the District Judge’s findings of fact, and the documentary evidence relevant to the 2008 transaction, in order to form a view on whether, objectively, C relied to her detriment on the assurances of D and her father that she was to have a beneficial interest in the Property.

·       As I have attempted to explain, the detrimental reliance lay in her agreement to the Property being transferred into the sole name of D, when the previous intention had been for a transfer into joint names, and the primary factor which caused C to give her consent was D’s false representation that (in effect) he would otherwise be unable to obtain a mortgage.

·       An unusual, and complicating, factor of the present case is the role of C’s father, who (on the District Judge’s findings) was the sole legal and beneficial owner of the Property at the time of the 2008 transfer.

·       He was of course under no obligation to give the Property away during his lifetime, and it was for him alone to choose what to do with it.

·       Unfortunately, his death in 2009 means that his intentions in 2008 have to be collected, as far as it is possible to do so, from second-hand evidence and surviving contemporary documents.

·       In principle, however, there is much to be said for the view that the primary focus should have been on his intentions when making what was, at least ostensibly, a gift of the Property to D, and asking whether he had acted to his detriment by transferring the Property into D’s sole name when it was always his intention that his daughter should have at least a 50% beneficial interest in it.

·       Since the case was not pleaded or argued in that way, I do not think it would be open to us to decide the appeal on that basis.

·       But I record my provisional view, for what it is worth, that such an analysis would have led to the same result.

·       The only reasonable inference to draw from the available evidence, and the primary findings of fact made by the District Judge, is that C’s father would never have agreed to transfer the Property into D’s sole name without a clear understanding, shared by all three of them, that his daughter was to have a beneficial interest in the Property.

·       After all, he had initially bought the Property in 1999 in order to provide a family home for his daughter and her family.

·       The purpose of the 2008 transfer must have been to promote that objective, and not to jeopardise it by transferring sole beneficial as well as legal ownership to D.

·       On this analysis, the necessary detriment to C’s father would then be found in the making of the transfer itself, because he then put it out of his power to deal with the Property as he chose in the future.

In the event, however, for the reasons which I have given, I consider that the appeal can and should be determined in favour of C by application of well-established principles and case law, and although the District Judge misdirected herself in relation to the requirement of detrimental reliance, it is sufficiently clear from her findings and the contemporary documents that the requirement was in fact satisfied. I would therefore allow her appeal on that basis.

The requirement of detrimental reliance

Lord Justice Henderson summarised the underlying legal principles as follows:

Any claim to a beneficial interest in land by a person, whether spouse or stranger, in whom the legal estate in the land is not vested must be based upon the proposition that the person in whom the legal estate is vested holds it as trustee upon trust to give effect to the beneficial interest of the claimant as cestui que trust. The legal principles applicable to the claim are those of the English law of trusts and in particular, in the kind of dispute between spouses that comes before the courts, the law relating to the creation and operation of “resulting, implied or constructive trusts.”

Where the trust is expressly declared in the instrument by which the legal estate is transferred to the trustee or by a written declaration of trust by the trustee, the court must give effect to it.

But to constitute a valid declaration of trust by way of gift of a beneficial interest in land to a cestui que trust the declaration is required by section 53 (1) of the Law of Property Act, 1925, to be in writing.

If it is not in writing it can only take effect as a resulting, implied or constructive trust to which that section has no application.

A resulting, implied or constructive trust — and it is unnecessary for present purposes to distinguish between these three classes of trust — is created by a transaction between the trustee and the cestui que trust in connection with the acquisition by the trustee of a legal estate in land, whenever the trustee has so conducted himself that it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired. And he will be held so to have conducted himself if by his words or conduct he has induced the cestui que trust to act to his own detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the land.”

  • [1986] Ch 638 (CA), the well-known case of a cohabiting couple where the house in which they lived had been conveyed into the joint names of the first defendant and his brother, and the claimant’s name was not on the title because her partner (the first defendant) had falsely told her that this would cause her prejudice in her pending matrimonial proceedings against her husband from whom she had separated, all three members of the court referred to the need for detrimental reliance to be established.
  • The leading judgment was delivered by Nourse LJ, who said at 646H:

“In a case such as the present, where there has been no written declaration or agreement, nor any direct provision by the plaintiff of part of the purchase price so as to give rise to a resulting trust in her favour, she must establish a common intention between her and the defendant, acted upon by her, that she should have a beneficial interest in the property. If she can do that, equity will not allow the defendant to deny that interest and will construct a trust to give effect to it.

“In a case such as the present the inquiry must proceed in two stages. First, by considering whether something happened between the parties in the nature of bargain, promise or tacit common intention, at the time of the acquisition. Second, if the answer is “Yes,” by asking whether the claimant subsequently conducted herself in a manner which was (a) detrimental to herself, and (b) referable to whatever happened on acquisition.

  • Mustill LJ added, at 652D:

“In order to decide whether the subsequent conduct of the claimant serves to complete the beneficial interest which has been explicitly or tacitly promised to her the court must decide whether the conduct is referable to the bargain, promise or intention. Whether the conduct satisfies this test will depend upon the nature of the conduct, and of the bargain, promise or intention.”

“If the legal estate in the joint home is vested in only one of the parties (“the legal owner”) the other party (“the claimant”), in order to establish a beneficial interest, has to establish a constructive trust by showing it would be inequitable for the legal owner to claim sole beneficial ownership. This requires two matters to be demonstrated: (a) that there was a common intention that both should have a beneficial interest; (b) that the claimant has acted to his or her detriment on the basis of that common intention.

“In many cases of the present sort, it is impossible to say whether or not the claimant would have done the acts relied on as a detriment even if she thought she had no interest in the house. Setting up house together, having a baby, making payments to general housekeeping expenses (not strictly necessary to enable the mortgage to be paid) may all be referable to the mutual love and affection of the parties and not specifically referable to the claimant’s belief that she has an interest in the house. As at present advised, once it has been shown that there was a common intention that the claimant should have an interest in the house, any act done by her to her detriment relating to the joint lives of the parties is, in my judgment, sufficient detriment to qualify. The acts do not have to be inherently referable to the house…”

  • [2007] UKHL 17[2007] 2 AC 432 and of the Supreme Court in Jones v Kernott [2011] UKSC 53[2012] 1 AC 776 were primarily concerned with the ascertainment of the beneficial interests of the parties in cases where legal title to the property was in their joint names. There was no express discussion in either case of the need to establish detriment in a “sole name” case, although it is worth noting that in his dissenting speech in Stack v Dowden Lord Neuberger of Abbotsbury said at [124], in the context of discussing beneficial ownership on acquisition in joint names cases:

In many cases, there will, in addition to the contributions [to the purchase price], be other relevant evidence as at the time of acquisition. Such evidence would often enable the court to deduce an agreement or understanding amounting to an intention as to the basis on which the beneficial interests would be held. Such an intention may be express (although not complying with the requisite formalities) or inferred, and must normally be supported by some detriment, to justify intervention by equity. It would be in this way that the resulting trust would become rebutted and replaced, or (conceivably) supplemented, by a constructive trust.”

(my emphasis).

Lord Neuberger’s reference to “detriment” in this passage is consistent with the clear line of authority to which I have already referred, although the qualification “normally” could perhaps be read as implying that it is not always an essential ingredient of a claim under a common intention constructive trust.

  •  [2015] EWCA Civ 404, [2016] 1 FLR 505. This was a “sole name” case, where the claimant and her partner (the defendant) had lived together for many years in a series of properties held in the latter’s sole name, paid for by him with the assistance of mortgage finance. There was also a dog-breeding business which they both ran from the property. When the relationship broke down in 2010, the claimant claimed a beneficial interest in the property and the business, based upon her financial and non-financial contributions. The claims were dismissed by the trial judge (Her Honour Judge Marshall QC), and her appeal to this court was dismissed. The leading judgment was given by Arden LJ, and a concurring judgment by Lewison LJ; the third member of the court, Davis LJ, agreed with both judgments.

“77. Overarching all these points is the lack of detrimental reliance. The need for detrimental reliance on the part of the claimant is an essential feature of this kind of case. Browne-Wilkinson V-C put it clearly in Grant v Edwards and Another [1986] Ch 638… at 654

[Lewison LJ then quoted the passage which I have set out at [30] above]

78. Although Ms Crowther’s skeleton argument suggested that the need for detrimental reliance had been abolished by Stack v Dowden and Jones v Kernott, she rightly abandoned that argument in the course of her oral address. The judge’s finding on that point, at [101], was that Ms Curran did not in any way act to her detriment in reliance on the specious excuse “or at all”. That in itself is fatal to Ms Curran’s case.”

  • “: see the judgment of Arden LJ at [2].

Does equity give teeth to international humanitarian law?

The intentional destruction of cultural heritage is an offence against humanity as a whole. Article II.2 of the 2003 UNESCO Declaration concerning the Intentional Destruction of Cultural Heritage (17 October 2003) states:

‘For the purposes of this Declaration “intentional destruction” means an act intended to destroy in whole or in part cultural heritage, thus compromising its integrity, in a manner which constitutes a violation of international law or an unjustifiable offence to the principles of humanity and dictates of public conscience, in the latter case in so far as such acts are not already governed by fundamental principles of international law.’

In other words, the intentional destruction of cultural heritage is an unjustifiable offence to the principles of humanity and the dictates of public conscience.

While there are no rules establishing any particular consequences, the International Criminal Tribunal For The Former Yugoslavia emphasised in Prosecutor v. Jokić Case IT-01-42/1-S (Judgment) Trial Chamber (18 March 2004), paragraph 46, that in the interests of humanity as a whole:

‘since it is a serious violation of international humanitarian law to attack civilian buildings, it is a crime of even greater seriousness to direct an attack on an especially protected site’.

Therefore, this may be considered as an aggravating factor in determining the length of any sentence in the prosecution of perpetrators.

‘The cultural heritage of a people is not limited to the tangible expressions of art, architecture, religion, poetry, or writing in general but also includes its intangible heritage, which is transmitted from generation to generation, is constantly recreated by communities and groups in response to their environment, their interaction with nature and their history, and provides them with a sense of identity and continuity. More generally, cultural heritage includes the expressions of the people’s spirituality, and the body of values which give meaning to life. Its characterization into different kinds (tangible, intangible, spiritual, etc), is simply descriptive and approximate, as one single piece of heritage may assume different meanings for a community, depending on the values it incorporates as perceived by the people concerned. For instance, a building which is considered of outstanding universal value – i.e. of exceptional significance for humanity as a whole – may at the same time have a special spiritual and social (intangible) significance for a given community, for which it greatly transcends the artistic architectural, aesthetic, and economic worth of the property concerned. It is exactly such a special spiritual and social significance which is usually targeted by the perpetrators of acts of intentional destruction of cultural heritage. Indeed, when they destroy a piece of cultural heritage, they demolish much more than an outstanding and irreplaceable object. They destroy the special – often spiritual – connection between that object and a human community, a fundamental element of the cultural and social identity of the latter, ultimately upsetting the community as such. The real target of most acts of intentional destruction of cultural heritage is therefore, not the heritage in itself but the human communities for which such a heritage is of special significance. In the 16th century, Nicollo Machiavelli wrote that ‘he who becomes a master of a city accustomed to freedom and does not destroy it, may expect to be destroyed by it, for in rebellion it has always been the watchword of liberty and its ancient privileges as a rallying point, which neither time nor benefits will ever cause it to forget.’ In other words, if you really want to destroy a people, its pride, it self esteem, and its sense of belonging to its own cultural identity, you need to destroy its cultural heritage. This reality has been denounced, much more recently by the United Nations Educational Scientific and Cultural Organization (UNESCO), affirming that ‘the loss of heritage during times of conflict can deprive a community of its identity and memory, as well as the physical testimony of its past. Those destroying cultural heritage seek to disrupt the social fabric of societies.’ Intentional destruction of cultural heritage carries a message of terror and helplessness: it destroys part of humanity’s shared memory and collective consciousness: and it renders humanity unable to transmit its values and knowledge to future generations.’ The Oxford Handbook of International Cultural Heritage Law’, pages 76-78.

That is why cultural heritage is entwined with UNESCO’s broader mandate concerning human rights, the rule of law, development, and peace.

‘Most recent cases of international destruction of cultural heritage have in common the circumstances that the target of perpetrators was not a particular community that they wanted to annihilate but rather the international community as a whole, with the exception of those who share their same ideals. As noted by Ana Vrdoljak, it is “cultural and religious diversity which the perpetrators find abhorrent and seek to expunge through such acts.” In all those cases, these crimes against culture assume the characterisation not only of crimes against persons but also and especially of crimes against the international community as a whole.’ The Oxford Handbook Of Cultural Heritage Law (2020), page 90.

The Second Protocol to the 1954 Hague Convention For The Protection of Cultural Property In The Event Of Armed Conflict enumerates five war crimes, known collectively as ‘serious violations’ of the Second Protocol, in respect of which States Parties owe a suite of obligations of suppression through their own or another willing States Party’s criminal law and courts.

In addition to the regime applicable to serious violations, the Second Protocol obliges States Parties to adopt such legislative, administrative, or disciplinary measures as may be necessary to suppress any use of cultural property in violation of the Convention or Second Protocol and any illicit export, other removal, or transfer of ownership of cultural property from occupied territory in violation of the Convention or Second Protocol.

Therefore, can or does equity give ancillary teeth to international humanitarian law?

For my new book, the ‘Mediation of Art and Cultural Heritage Disputes’ I am privately researching ‘The existence and nature of fiduciary duties in relation to dealings with art and antiquities’.

A specific question I am addressing is whether, and to what extent there is a bridge between:

(i)     the existence of fiduciary duties in International Law; and

(ii)     the jurisdiction and powers of the English court to award equitable remedies for breach of fiduciary duty in relation to dealings with art and antiquities.

‘The fiduciary duties that are enshrined in international law parallel private law fiduciary duties in important respects. Under international law, fiduciaries are obligated to carry out their commissions faithfully, manifesting due care and partiality to their beneficiaries’ interests. International law prohibits fiduciaries from abusing their positions of trust and confidence to secure special benefits for themselves at the expense of their beneficiaries. The South West Africa cases affirmed that fiduciaries under international law bear a freestanding legal obligation to submit to international supervision. And the Nauru settlement suggests that the violation of fiduciary duties under international law may support traditional fiduciary remedies, including compensation and restitution.’ The Oxford Handbook of Fiduciary Law 2019, page 362.

Therefore, if an agent of an occupying power expropriates art and antiquities from an occupied state, and the artefacts are subsequently acquired by a museum or private collector, could the recipient be found liable in the English court, for restitution on the grounds of unconscionable receipt?