Implied trusts and proprietary Estoppel by the Courts
Constructive trusts come into operation where one party has through a discussion or understanding made an agreement with another party to enable the latter partake in the beneficial interest of a certain property.
It is argued that this new model constructive trust shares a lot with the other form of implied trust, the resulting trust. The reason for this conclusion is due to the classical theory of resulting trust being premised on the idea of presumed intentions as at the time that the owner acquired the title. It is thought that the courts in Pettit and Gissing were influenced by this theory, and thus adapted it for use in the new model constructive trust.
Although the constructive trust model requires that the party have a common intention, the courts have on occasion been quite willing to impute or infer that intention from the conduct of the parties. Although some might however argue that the intention required for both forms of trusts are different, in that imputed intention is necessary for a resulting trust to be found, while an inferred intention is that which is used by the courts to find a constructive trust. The law imputes to husband and wife an intention to create a trust, the one for the other. It is argued that by importing the use of intention as a means of recognizing a constructive trust between parties, and by further distorting the distinction between inferred and imputed intention that the courts have blurred the borderline between the two forms of implied trusts, so that the present state of law remains confusing and devoid of any form of guiding principles. It is the case that where the common intention concept is invoked, that a new model constructive trust has been found by the courts. In the case of Cowcher v Cowcher, the court took the view that the resulting trust approach should be used, whereby the courts looked for a mathematical calculation based on the financial contributions of the parties . However other judges in subsequent cases have adopted the constructive trust approach; instead preferring to take a broader approach to assessing shares in the family home following the imposition of a common intention constructive trust.
The difficulties that the courts have faced in properly distinguishing between both the constructive trusts and resulting trusts are not limited to these two alone. In recent years the similarities between the new model constructive trust and the doctrine of proprietary estoppel have become blurred, leading to the conclusion that the courts have once again felt the need to use the proprietary estoppel and constructive trust labels interchangeably connote the same meaning and effect.
There are many similarities between the doctrine of proprietary estoppel and the “common intention” constructive trust, as explained by Browne-Wilkinson LJ in Grant v Edwards:
While it is apparent that broadly similar principles underpin both the proprietary estoppel doctrine and the constructive trust, in that they both exist to prevent unconscionable use of the legal title, the courts have taken this similarity to a whole different level by attempting to merge both doctrines together. It is thought that the catalyst for bringing both doctrines together has been the development of the actual common intention constructive trust in the case of Lloyds Bank v Rosset. The requirement to show detrimental reliance is also present in the common intention constructive trust. In cases of the new model constructive trust, the party seeking to establish a constructive trust, will usually have to show that he has acted to his detriment in reliance of the belief that he will acquire a beneficial interest in the property. It is argued that the new model constructive trust was modelled on the doctrine of proprietary estoppel by the courts. The Court of Appeal recently expressed similar views again in the case of Yaxley v Gotts in which Robert Walker LJ commented that there are large areas where the concepts of constructive trust and proprietary estoppel do not overlap:
‘in the area of a joint enterprise for the acquisition of land…the two concepts coincide…A [common intention] constructive trust is closely akin to, if not indistinguishable from, proprietary estoppel’.
Surely, it is time the courts and counsel moved beyond pigeon-holing circumstances into constructive trusts and proprietary estoppels and looked at this basic principle of unconscionability underlying both concepts
Martin Dixon on the other hand suggests that the acceptance that there is no difference in the applicability of both the constructive trust and the proprietary estoppel doctrine might grow into an acceptance that that the proprietary estoppel doctrine is the more appropriate juridical basis for these rules. I believe that both the constructive trust doctrine and the proprietary estoppel doctrine have their respective roles to play in the area of information creation of rights in land, but assimilation of both doctrines can only serve to create more confusion in an area that is already beset by problems.
Tags: beneficial interest, classical theory, constructive trust, financial contributions, guiding principles, implied trust
