CG65425 - Private residence relief: settled property: common intention constructive trusts: look for evidence of an agreement before considering conduct

TCGA92/S225

You must consider if there is any evidence that the intention to give a person a beneficial interest in the property was actually discussed before inferring a common intention from the parties’ conduct. In Lloyds Bank v Rosset Lord Bridge refers to this as express discussions however imperfectly remembered or however imprecise their terms. An express discussion is one in which the intention is unmistakably communicated or stated.

If it is necessary to establish the common intention by reference to the parties’ conduct the case law deals with disputed claims that one party has a beneficial share in the ownership of the property. It looks for direct contributions to the purchase price, the payment of regular mortgage contributions or possibly significant contributions by way of manual labour. These factors may not be especially relevant when considering if there is a common intention that one party should have a life interest in the property or some other interest short of a beneficial share of the property. They may be relevant when considering whether the occupier has acted to their detriment in reliance on a common intention. See CG65426 for guidance on practical issues to consider when dealing with claims that there was a common intention to give the occupier an interest in the property.

If you are dealing with the exceptional case in which the common intention is formed some time after the property is acquired you will need to consider the comments of Lord Neuberger in Stack v Dowden quoted in paragraph CG65424. Lord Neuberger repeats these comments in paragraph 146 of his opinion and also identifies the type of evidence that would not be sufficient. That evidence would not be acceptable when considering a claim that there was a common intention at the time the property was acquired.

In other words, where the resulting trust presumption (or indeed any other basis of apportionment) applies at the date of acquisition, I am unpersuaded that (save perhaps in a most unusual case) anything other than subsequent discussions, statements or actions, which can fairly be said to imply a positive intention to depart from that apportionment, will do to justify a change in the way in which the beneficial interest is owned. To say that factors such as a long relationship, children, a joint bank account, and sharing daily outgoings of themselves are enough, or even of potential central importance, appears to me not merely wrong in principle, but a recipe for uncertainty, subjectivity, and a long and expensive examination of facts.