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Intention and resulting trusts

By Dave

Chaudhary v Chaudhary (not on bailii yet but on lawtel) is something of a puzzle, which hopefully will be solved when we see the full transcript (hint, hint). It may be important, but it’s a little early to say.  The one thing about it that isn’t a puzzle is that it is yet another case in which there is a family breakdown; here the dispute is between a stepmother (it’s simpler to use the abbreviations in the lawtel report: “M”) and stepson (“S”).  S bought a property, which was registered in his sole name.  His Dad (“F”) and M put £5k towards the purchase.  After F’s death, M continued to live in the property and S sought possession.

At first instance, the judge made findings of fact as follows: “F had asked S to buy the property in order to provide him and M with a stable home, and that F had said that he hoped to purchase the property from S as soon as he was able”.  There were three other conclusions on the evidence: the agreement about the property between F and S was theirs alone and M was not involved; M was an unreliable witness (ouch); and S’s evidence was to be preferred

The first oddity is that the judge went rather off piste and held that the payment of the £5k was akin to a premium or arrangement fee.  But, I guess, if you find somebody unreliable, that may skew your version of the law.

So, the Court of Appeal then have to sort it out.  The first point, it seems from the report, is that neither F nor S had expressed an intention as to the £5k, so the court applied the law regarding presumptions, and presumably discarded the presumption of advancement on the facts.  Further, on the facts, as F had said he hoped to buy the property from S, “in those circumstances it was clear that F and M’s subjective intention was that the £5,000 would stand to their credit for when they eventually bought the property, and that they had paid that sum for their own benefit and not as a gift to S”.  Therefore, M had an 8% stake in the property, presumably by way of resulting trust.

I guess that the real problem here was that M was unreliable as a witness, but why use resulting trust?  Surely, one could have inferred a common intention constructive trust as a result of an unexplained payment of the £5k; indeed, if one follows Stack v Dowden and Kernott v Jones, the resulting trust analysis is redundant in family type cases (or is the fact that S, a non-occupier, bought the place for F and M to live in a distinguishing factor?).  Might this have been a case where one could test whether we can impute a common intention (and also test the significance of the distinction between an inference and imputation, the point on which the SC divided in Kernott)?  And wouldn’t the CICT analysis have been more favourable to M (eg Midland Bank v Cooke)?

So, it’s a bit of a puzzle and if any of the lawyers involved or bailii can help us out, that would be great.



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