Did the dicta of Lord Bridge in Lloyd’s Bank v Rosset provide greater legal certainty for cohabitants than the recent decision in Jones v Kernott ?

Summary

This project will compare the test for the common intention constructive trust in Lloyd’s Bank v Rosset [1] with that emerging in the cases of Stack v Dowden [2] and Jones v Kernott [3]. It will be argued that although the Lloyds case may not be based on principles of ‘fairness’ as cohabiting couples would see them, the case did at least leave the law in a position of relative certainty. Since this time, the courts appear to have been trying to incorporate more flexibility into the law in order to better deal with the expectations of the parties, and arguably to achieve ‘fair’ results. This is undesirable and should be left for legislative intervention.

Reasons  for  choosing  the  topic

As a law student, I am constantly trying to keep up to date with important cases and legal developments. Through this process I came across the Supreme Court decision in Jones v Kernott.  I was therefore aware of this case and its significance in the area of land law and particularly in relation to constructive trusts of the family home. When I chose this as my dispute and to write the dissertation regarding it’s decision, again as a final year law student, I looked at the case in more depth and discovered that it has continued the Stack v Dowden approach but has not really provided any further answers to the questions remaining since Stack. In particular, it does not deal satisfactorily with the position of cohabitants where only one of them is the legal owner of the property. This made me want to revisit the case of Lloyds Bank v Rosset in order to consider whether the earlier case actually provided a more satisfactory result, in terms of certainty for cohabitants, than the more recent cases which have tried to take the reality of cohabitant relationships more into account. The result of this interest is this proposal.

Research  questions

What are implied trusts ?

How do implied trusts apply to the family home ?

How did the law develop prior to Lloyds Bank v Rosset ?

What did Lloyds Bank v Rosset decide?

What approach have the courts taken since Lloyds Bank v Rosset ?

What questions remained prior to Jones v Kernott ?

What did Jones v Kernott decide ?

Is the law in a satisfactory position ?

Are there any proposals for reform ?

Description

In the early case law relating to the acquisition of a beneficial interest in the family home, the courts appeared to be unsure of whether resulting trust or constructive trust principles should apply. In the main, it appeared that only financial contributions to the purchase price of the property, at the time of the purchase, would give rise to an equitable interest in the home where only one person was the legal owner.  For example, in Pettitt v Pettitt [4] Lord Diplock held that a common intention could not be inferred from conduct alone.  However, there were some suggestions that wider contributions could be taken into account, for example in Gissing v Gissing [5].

In Lloyds Bank v Rosset Lord Bridge sought to restate the law as existed at the time. However, in doing so, he appears to have somewhat narrowed the operation of the law by requiring that financial contributions to the purchase price, either at the time of purchase or through mortgage payments, had to exist before a beneficial interest in the property would be found to have been acquired.[6] This may seem unfair to those cohabitants who provide contributions in other ways, such as by looking after the home and caring for the family. However, despite this perceived unfairness, the law following this case was at least certain.

Since the Lloyds Bank v Rosset case some attempts have been made by the courts to recognise wider contributions. The case of Stack v Dowden held that usually the beneficial interest in the property will reflect the legal ownership. However, in some cases this presumption may be rebutted. Where the presumption is rebutted the courts will look at all the circumstances in the case, including the wider contributions made by the parties, such as child care and maintaining the home, in deciding what a fair division of the equitable interest will be in that case. However, although the case decided that wider contributions can be taken into account in determining the quantification of the interests, it did not decide the question of whether these wider contributions can be taken into account in determining whether a beneficial interest has actually been acquired by a non-legal owner.[7] The House of Lords did make some indication that the strict approach in Lloyds Bank v Rosset would no longer be applied, but did not expressly rule on this point.

The case of Jones v Kernott at the Supreme Court was therefore highly anticipated. However, the Supreme Court again failed to expressly overrule Lloyds Bank v Rosset. Again, some indication that the Lloyds Bank v Rosset approach would not be followed was given, but no specific answer to the question of acquisition of beneficial interests was provided.[8] Because of this, the law is left in an uncertain and unsatisfactory state, as cohabitants where only one person is the legal owner cannot be sure whether the decision in Lloyds Bank v Rosset will be applied to them or whether broader contributions will be taken into account. The law is therefore in need of reform and should be reformed in line with the suggestions made by the Law Commission in 2007. Such reform would mean that cohabitants would acquire a beneficial interest in the property, subject to certain conditions being met. This would provide greater certainty to the law and would better reflect the views of cohabitants.

This project consists of a research project looking at case law and academic commentary.

The outline structure will be :

• Chapter 1 – Introduction. This will set out the nature of ownership of the family home, the types of ownership available and the difference between legal and equitable interests. Constructive and resulting trusts will be outlined and a brief mention will be made of equitable estoppels.
• Chapter 2 – The development of the law of implied trusts in the family home. This chapter will go into detail on the case law leading up to Lloyds Bank v Rosset. For example, the cases of Pettitt v Pettitt and Gissing v Gissing will be examined. The chapter will then go on to consider the important case of Lloyds Bank v Rosset. It will examine the decision and will critically evaluate whether the law immediately after the ruling was in a satisfactory position. Reference to academic commentary will be made.
• Chapter 3 – Case law post Lloyds Bank v Rosset including Jones v Kernott. This chapter will examine the approaches adopted by the courts to trusts of the family home since Lloyds Bank v Rosset. Cases will include Oxley v Hiscock [9], Stack v Dowden, and Abbott v Abbott. [10] These approaches and developments will be evaluated with reference to academic commentary. This chapter will then go on to consider the recent case of Jones v Kernott and will note any differences in the approach adopted by the Supreme Court from that adopted in Lloyds Bank v Rosset. A critical evaluation of the case will be made, again with reference to academic commentary.
• Chapter 4 – Outstanding questions and proposals for reform. This chapter follows on from chapter 2 in that it considers whether there are any questions which are left unanswered by Jones v Kernott. In particular, Jones v Kernott has not settled the position of sole legal owner cohabitant cases in terms of whether non-financial contributions can give rise to the acquisition of a beneficial interest in the home. However, the approaches adopted post Lloyds Bank v Rosset would suggest that the strict approach adopted in the earlier case law would not be applied today. This gives rise to a great deal of uncertainty. It will be concluded that this uncertainty is undesirable and that reforms to the law must take place. The proposals made by the Law Commission for reform in this area of law will then be set out and evaluated. It will be noted that these suggested reforms are not currently due to go ahead. It will be concluded that these reforms, possibly in a revised form, should be reviewed. Comparison with Australian law which has been recently reformed in relation to cohabitants acquiring beneficial interest in the family home.[11]
• Chapter 5 – Conclusion. This chapter will bring together the dissertation and will draw conclusions based on all the analysis. The likely conclusion will be that the dicta of Lord Bridge in Lloyds Bank v Rosset, although representing an overly restrictive position in relation to the acquisition of equitable interests in the family home, did provide greater certainty for cohabitants than the recent decision of the Supreme Court in Jones v Kernott.