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Constructive trusts and estoppel

Published online by Cambridge University Press:  02 January 2018

Sarah Nield
Sarah Nield*
Affiliation:
University of Southampton
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Abstract

Repeated comments are made as to the similarity between the common intention constructive trust and proprietary estoppel, but there remains considerable confusion over the precise nature of this interrelationship. The constituent elements of each doctrine bear close comparison and, although their respective modes of operation remain distinct, they may lead to similar results. The recent redefinition of the Pallant v Morgan equity provides an opportunity to probe once more the interrelationship between these doctrines. The Pallant v Morgan1 equity explores the operation of the Rochefoucauld v Boustead2 doctrine in the context of the joint acquisition of land and demonstrates the enforceability of express oral intention based upon a wider range of unconscionablity than the detriment based conduct which dominates both the common intention constructive trust and estoppel.

Information

Type
Research Article
Information
Legal Studies , Volume 23 , Issue 2 , June 2003 , pp. 311 - 331
Copyright
Copyright © Society of Legal Scholars 2003

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References

1 Pallant v Morgan [1953] Ch 43.

2 [1879] 1 Ch 196.

3 [1982] QB 133.

4 [1986] Ch 683.

5 Even so there remains the possibility of an estoppel based upon the acquiescence of the defendant: see Richardson J in Gilles v Keogh [1989] 2 NZLR 327 at 347.

6 [1999] 1 All ER 400 at 409. See also Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714–715, per Lord Browne Wilkinson; and Re Polly Peck International Plc (No 2) [1998] 3 All ER 812 at 823, per Mummery LJ.

7 Millet LJ explores the confusions surrounding the use of the terms’ constructive trust’ and’ constructive trustee’ in his article’ Restitution and Constructive Trusts' (1998) 114 LQR 399.

8 (1984–85) 160 CLR 583 at 613–615.

9 (1984–85) 160 CLR 583 at 614.

10 Giumelli v Giumelli (1999) 161 ALR 473 at 475.

11 See Robert Walker LJ's comments in Birmingham Mid-shires Mortgage Services Ltd v Sabberwal (2000) 80 P&CR 256 at 263.

12 [1986] 1 WLR 1498.

13 (1987) 10 NSWLR 283.

14 ’Equitable Rights of Cohabitees' [1990] Conv 370. Elaborated in Hayton, D Hay ton and Marshall Cases and Commentary on the Law of Trusts (London: Sweet & Maxwell, 9th edn, 1991) pp 497–512 Google Scholar.

15 P Ferguson ‘Constructive Trusts — A Note of Caution’ (1993) 109 LQR 114.

16 D Hayton ‘Constructive Trusts of Homes — A Bold Approach’ (1993) 109 LQR 485.

17 See eg Cadd v Cadd (1909) 9 CLR 171; Chattock v Muller (1878) 8 Ch D 171; Longfield Parish Council v Robson (1913) 29 TLR 357: Devine v Fields (1920) 54 ITLR 101; Organ v Sandwell [1921] VLR 622: Brown v Storoschuk [1947] 1 DLR 227; Owchar v Owchar [1949] 2 DLR 432; Pallant v Morgan [1953] Ch 43; Ward v Ward [1958] VR 68; McGillycuddy v Joy [1959] 1 R 99; Ogilvie v Ryan [1976] 2 NSWLR 504; Holiday Inn Inc v Brayhead 232 EG 951; A vondale Printers & Stationers Ltd v Haggie[1979] 1 NZLR 124; Malsbury v Marlsbury [1982] 1 NSWLR 226; Du Boulay v Ragger (1988) 58 P&CR 138; Yaxley v Gotts [2000] Ch 162.

18 Pallant v Morgan [1953] Ch 43.

19 [2000] 2 WLR 772.

20 Chadwick LJ gave the only judgment with which his brethren Stuart Smith LJ and Evans LJ agreed.

21 Megarry J in unreported interlocutory proceedings in Holiday Inns Inc v Brayhead (1974) 232 EG 951 also made reference to the Pallant v Morgan equity.

22 (1878) 8 Ch D 177.

23 [1953] Ch 43.

24 [1879] 1 Ch 196. Nicholas Hopkins has suggested that Banner Homes provides the first example of this type of equity but the number of previous cases points to older antecedent - see ‘The Pallant v Morgan Equity?’ (2002) Conv 35.

25 ‘Formalities for Trusts of Land and the Doctrine in Rochefoucauld v Boustead’ (1984) 43 CLJ 306.

26 See Bannister v Bannister [1948] 2 All ER 133; Hutchins v Lee (1737) 1 Atk 447 (26 ER 284); Childers v Childers (1857) 1 De G&J 482 at 492 (44 ER 810); Re Duke of Marlborough [1894] Ch 133; Booth v Turle (1873) LR 16 Eq 182; and Lust v Rosenfield [1972] 2 NSWLR 923.

27 Cadd v Cadd (1909) 9 CLR 171.

28 Brown v Storoschuk [1947] 1 DLR 227.

29 In Banner Homes the trust was over the shares in the joint venture company, which did not have to comply with these requirements.

30 [1953] Ch 43.

31 Eg in theCanadian case of Lac Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574 and the Australian cases of United Dominions Corpn Ltd v Brian Pty Ltd (1985) 157 CLR 1 and Hospital Products Ltd v United States Surgical Corpn (1984) 156 CLR 41.

32 Per Chadwick LJ in Banner Homes plc v Luff Developments Ltd [2000] 2 WLR 772 at 793.

33 Even though the detailed terms may be uncertain see Chattock v Muller (1878) 8 Ch D 171.

34 See eg Cadd v Cadd (1909) 9 CLR 171.

35 Per Fullagar J in Thwaites v Ryan [1984] VR 65 at 91.

36 [1953] Ch 43.

37 See Holiday Inns Inc v Brayhead (1974) 232 EG 951.

38 Gissing v Gissing [1971] 1 AC 886 at 905; Grant v Edwards [1986] Ch 638 at 651; Lloyds Bank plc v Rosset [1991] 1 AC 107 at 132; and Hammond v Mitchell [1991] 1 WLR 1127 at 1129.

39 Eg Re Basham [1986] 1 WLR 1498; and Gillet v Holt [2000] 3 WLR 815.

40 A-G for Hong Kong v Humphreys Estates (Queens Garden) Ltd [1987] AC 114.

41 The representation to found an estoppel in the pre-contractual context is not necessarily that a contract has come into existence but that the parties are not free to withdraw without informing the other party: see Walton v Stores (Interstate) Ltd v Meyer (1987) 164 CLR 387; Crab v Arun DC 1976] 1 Ch 179; and JT Developments Ltd v Quinn (1990) 62 P&CR 33.

42 [2002] 2 WLR 112 at 794.

43 Holiday Inn Inc v Bravhead (1974) 232 EG 951; and Yaxley v Gotts [2000] Ch 162.

44 See Banner Homes plc v Luff Developments Ltd [2000] 2 WLR 112.

45 Brown v Storoschuk [1949] 2 DLR 432; Owchar v Owchar [1947] 1 DLR 221; and Yaxley v Gotts [2000] Ch 162.

46 [1953] Ch 43.

47 [1949] 2 DLR 432.

48 D Hayton, ‘Equitable Rights of Cohabitees' [1990] Conv 370 and’ Constructive Trusts of Homes — A Bold Approach (1993) 109 LQR 485; Ferguson, n 15 above. For a convenient summary see K Gray and Gray, S Elements of Land Law (London: Butterworths, 3rd edn, 2001) pp 757–760 Google Scholar.

49 [2000] Ch 162.

50 [2000] 2 WLR 772.

51 [1953] Ch 43.

52 Lloyds Bank plc v Rosset [1991] 1 AC 107.

53 Although that belief must be reasonably held — per Ralph Gibson LJ in JT Developments Lid v Quinn (1990) 62 P&CR 33 at 50.

54 U Rinker’ The Fiction of Common Intention and Detriment’ [1998] Conv 202; N Glover and P Todd’ The Myth of Common Intention’ (1996) 16 LS 325; and S Wong’ Constructive trusts over the Family Home: Lessons to be Learnt from Commonwealth Jurisdictions' (1998) 18 LS 369.

55 See Walton Stores v Meyer (1987) 164 CLR 387; JT Developments Ltd v Quinn (1991) 62 P&CR 33; Lloyd v Dugdale (2001) 48 EGCS 129.

56 [1897] 1 Ch 196 at 208.

57 An express trust construction overcame the problems presented by the Limitation Act 1623 to beneficiaries claiming under a constructive trust.

58 Bannister v Bannister [1948] 2 All ER 133; Yaxley v Gotts [2000] Ch 162; Banner Homes plc v Luff Developments Lrd [2000] 2 WLR 772.

59 Law of Property Act 1925, s53(2). See particularly Yaxley v Gotts [2000] Ch 162.

60 [1977] 2 NSWLR 658.

61 [1977] 2 NSWLR 658 at 699.

62 See GE Dal Pont ‘Equity Chameleon-Unmasking the Constructive Trust’ (1997) 16 Aust Bar Review 46; and Glover and Todd, n 54 above, who both advocate an express trust approach to the express common intention constructive trusts. Others have reconciled the position by suggesting that although the constructive trust gives effect to the parties' common intention, they are imposed only because one party is subsequently denying that intention see Oakley, A J Constructive Trusts (London Sweet & Maxwell, 3rd edn, 1997) p 1 Google Scholar.

63 [1971] AC 886.

64 Re Ellenborough [1903] 1 Ch 697.

65 Brennan v Morphett (1908) 6 CLR 22; Williams v CIR [1965] NZLR 345; and Re Northcliffe [1925] Ch 651.

66 P Critchley’ Instruments of Fraud, Testamentary Dispositions and the Doctrine of Secret Trusts' (1999) 115 LQR 631.

67 Vandervell v IRC 1967] 2 AC 291.

68 An agreement to create a trust will not fall within the Law of Property Act 1925, s 53(1)c because it is not a disposition of a subsisting equitable interest but the creation of a new interest, but s 2(1) relates to all dispositions, whether of subsisting or new interests in land. The saving for constructive trusts in s 2(5) then takes on some meaning beyond the mere statutory formula suggested by L Bently and P Cougland ‘Informal dealings with Land After Section 2’ (1990) 10 LS 325.

69 Stokes v Anderson [1991] FLR 391 at 398; and Le Compte v Public Trustee [1983] 2 NSWLR 109 at 111.

70 [1971] AC 886.

71 [1982] QB 133.

72 Lloyds Bank Plc v Rosser [1991] 1 AC 107.

73 [1986] Ch 683, esp per Mustill LJ.

74 [1998] 1 FLR 806.

75 [2000] 2 All ER 289.

76 Greasley v Cooke [1980] 1 WLR 1306; Marhajar v Chand 1986] AC 898; Wayling v Jones [1995] 2 FLR 1029; and Gillet v Holt [2000] 3 WLR 815. But compare Coombes v Smith [1986] 1 WLR 808. See also R Wells ‘The Element of Detriment in Proprietary Estoppel’ [2001] Conv 13.

77 Lord Bridge's comments in Lloyds Bank plc v Rosset [1991] 1 AC 107 at 118 are not supportive, but see Ungarian v Lesnoff [1990] 1 Ch 206; and Green v Green (1989) 17 NSWLR 343.

78 [2000] 2 All ER 289.

79 (2001) 48 EGCS 129.

80 Although detriment suffered by a spouse has been recognised — see Re Basham [1986] 1 WLR 1498; and Gillet v Holt [2000] 2 All ER 289.

81 Per Fullagar J in Thwaites v Ryan [1984] VR 65 at 95.

82 [2000] 2 WLR 772 at 794–795.

83 Ferguson, n 15 above.

84 [1980] 1 WLR 1306.

85 S Nield ‘Estoppel and Reliance’ in E Cooke (ed) Modern Studies in Property Law vol 1 (Oxford: Hart, 2001) pp 77–95.

86 A-G for Hong Kong v Humphreys Estate (Queens Garden) Ltd [1987] AC 114. See also Yaxley v Gotts [2000] Ch 162; James v Evans [2000] 42 EG 173; and Lloyd v Dugdale (2001) 48 EGCS 129.

87 [1979] NZLR 124.

88 See Holiday Inns Inc v Brayhead (1974) 232 EG 951; and Avondale Printers & Stationers Ltd v Huggie [1979] 1 NZLR 124.

89 Banner Homes plc v Luff Development Ltd [200] 2 WLR 772.

90 Ward v Ward [1958] VR 68.

91 Brown v Storoschuk [1947] 1 DLR 227.

92 Du Boulay v Ragget (1988) 58 P&CR 138.

93 A resulting trust might be presumed from such contributions.

94 ’Remedial Discretion in Estoppel Remedies' (1999) 115 LQR 469. Others have also articulated the principles upon which the courts remedial discretion has been exercised: see eg E Cooke ‘Estoppel and the Protection of Expectations' (1997) 17 LS 258; M Pawlowski’ Proprietary Estoppel: Satisfying the Equity’ (1997) 113 LQR 232; A Robertson’ Reliance and Expectation in Estoppel Remedies (1998) 18 LS 360.

95 Dodsworth v Dodsworth (1973) 228 EG 1115; Baker v Baker [1993] 2 FLR 247; and Giumelli v Giumelli (1999) 161 ALR 473.

96 Eg Williams v Staite [1979] Ch 291; and Pascoe v Turner [1979] 1 WLR 431.

97 Eg Sledmore v Dalby (1996) 72 P&CR 196.

98 (1984–85) 160 CLR 583 at 614.

99 Per Lord Brown-Wilkinson in Westdeutsche Girozentrale v Islington London Borough Council [1996] AC 669 at 714–715.

100 Per Robert WalkerLJ in Yaxley v Gotts [2000] Ch 162 at 176. Although it has been suggested that the institutional constructive trust should subsume the equity by estoppel: see Birmingham Midshires Mortgage Services Ltd v Sabhenval (2000) 80 P&CR 256.

101 Kingsnorth Finance Ltd v Tizard [1986] 1 WLR 783.

102 Land Registration Act 1925, s 70(1)Google Scholarg, to be replaced by Sch 3, para 2 to the Land Registration Act 2002.

103 City of London Building Society v Flegg [1988] AC 487.

104 Bristol & West Building Society v Henning [1985] 1 WLR 778; and Abbey National Building Society v Cann [1991] 1 AC 56.

105 See Ferguson, n 15 above and Hay ton, n 16 above.

106 Yuxley v Gotts [2000] Ch 162.

107 (2001) 48 EGCS 129.

108 (2000) 80 P&CR 256.

109 Overreaching will not operate to overreach an equity satisfied by the grant of some legal estate or interest or an equitable interest over, as opposed to in, the land.

110 See Insolvency Act 1989, ss 330–342 and 423–425, as amended by Insolvency (No 2) Act 1994, s 2.

111 Re Sharp [1980] 1 WLR 219.

112 Dodsworth v Dodsworth (1973) 228 EG 1115.

113 See P Birks ‘The End of the Remedial Constructive Trust’ (1998) 12 Trust Law Int 202.

114 [1953] Ch 43.

115 Banner Homes plc v Luff Developments Ltd [2000] 2 WLR 772.

116 Noted M P Thompson [2001] Conv 265.

117 Hopkins, n 24 above.

118 Mee, J The Property Rights of Cohabitees (Oxford: Hart, 1999 Google Scholar).

119 Mee, n 118 above, p 118.

120 [1879] 1 Ch 196.

121 [1967] 1 WLR 1388.

122 [1986] Ch 638.

123 [2000] Ch 162.

124 Mee, n 118 above, pp 156–164.

125 Although an example does exist in Ward v Ward [1958] VR 68.

126 Per Richardson J in Gilles v Keogh [1989] 2 NZLR 327 at 347.

127 Yaxley v Gotts [2000] Ch 162.

128 Although Mahon J in Avondale Printers & Stationers Ltd v Haggie [1979] 2 NZLR 124 suggested a remedial rather than a substantive basis for this equity.