- William Kanaan
Common intention constructive trust over property portfolio
A couple, A and B co-habited over a 20-year period during which time they bought a number of properties their sole and joint names and in the name of a company, C. Both A and B were shareholders in C.
A applied to the Court for a declaration that she had a 50% beneficial interest in the properties held by B and C under either a common intention constructive trust or a partnership, the latter claim failing.
The Court held that all the properties, regardless of legal title, formed part of a single portfolio in the common ownership of the parties. The legal title was registered according to financing needs and the lender's requirements.
The evidence produced by A showed that there was an express agreement between A and B that the parties’ common intention was that the portfolio was to be held for them jointly and equally and that A had relied on that common intention to her detriment by making financial contributions, working unpaid, giving B control of the portfolio, providing guarantees and assuming liabilities.
The judge found that A's failure to protect her interests could not amount to detrimental reliance as a matter of pleading, stating that if A took no action in reliance on their common intention, which prejudiced her, then the inaction amounted to detrimental reliance.
The Court held that the common intention doctrine can apply to a fluctuating portfolio of properties provided the requirements of a valid trust are satisfied. If that was wrong, then a common intention constructive trust for each property could be established by inferring that A and B intended to acquire it in equal shares, from their express agreement about the portfolio and their subsequent conduct in the use of rents and sale proceeds.
The Court accepted that there was no rule that common intention constructive trusts only arise in the domestic context.