(Constructive) Trust no one
A fight between 3 siblings over their late mother’s home which led to a 5 day trial in the Central London Court, has now finally come to an end in the High Court. An unsuccessful appeal in the case of Archibold v Alexander by the defendant, Patsy Alexander was heard on 17 June 2020. She lost her argument that her mother’s property, which had been in their joint names, belonged to her alone after her mother died. Her siblings, Brenda and John brought a claim against her, relying on a verbal family agreement that it was held by Patsy ‘on trust’.
The house in Bromley, London was bought in 1997, after the sale of the family home. All the money to buy it came from the mother. There was a family meeting before the purchase, in November or December 1996, when it was agreed after a discussion between them all, that the house would be put in the names of the mother and at least one of the children. She had taken legal advice and the idea was that by doing this, inheritance tax could be avoided on her death. Also, if she re married, having the property in joint names might protect the children’s inheritance against any claim by a new partner.
Brenda and John were clear that what their mum intended was that on her death, whichever child then owned the property held it on trust for all 3 of them equally.
In the end, the property went into the names of Patsy and her mother as it wasn’t convenient for either of the others to sign the necessary paperwork.
Unfortunately, after their mother died, Patsy claimed that the house was hers. She denied that the family meeting had taken place at all and said that her mother had wanted her alone to have the house after her death. Court proceedings followed, with Brenda and John arguing that their mother was strong willed but had close and loving relationships with all her children and would always have treated them equally – John, the youngest was described as being ‘rather spoiled’ by her.
In her witness statement, Brenda said that after the purchase of the property, the solicitor had wanted her mum to ‘make it all formal’ so that Brenda and John would definitely get their share, but that her mum ‘did not want to spend too much money and I said it was not necessary as we all loved and trusted each other’.
The trial judge found that Patsy’s ‘account was manufactured and her evidence untrustworthy’.
- believed what Brenda and John said about the family meeting, and
- found that Patsy had signed the purchase documents on behalf of her brother and sister as well as herself, and
- found that John and Brenda had ‘acted to their detriment’ in relying on Patsy’s agreement by not arranging for their names to go on the property as well.
As a result of making these findings, the judge decided that the house was held by Patsy on what is called a ‘constructive trust’. This meant that although she was named as the legal owner, in reality she held it on behalf of herself, Brenda and John equally as ‘beneficial tenants in common’. Each of them had a one third share.
Patsy appealed, arguing that there was in fact no ‘detrimental reliance’ by her brother and sister – and so no trust could arise.
There was a lot of debate in the appeal about whether a ‘common intention constructive trust’ arose. The original trial judge used that expression a few times, perhaps unhelpfully. A common intention constructive trust can arise if the owner of a property, A, promises B that s/he will have an interest in it. It’s an informal promise and it can’t be enforced unless B has (reasonably) changed their position in reliance on the promise; what is called ‘detrimental reliance’. It’s similar to the legal argument of ‘proprietary estoppel’.
The appeal judge said that the position in this case was different; here we have an owner who actually transfers part of her interest to her daughter, on the basis of her express agreement to hold it on trust for her and her siblings. He pointed out that there are different types of constructive trust and in his opinion, this was one of them.
So, there didn’t need to be any detrimental reliance by Brenda and John for a constructive trust to exist.
In cases involving family members there’s often a dismaying lack of paperwork. Judges have to impose legal principles on the messy reality of family life, when a transaction may have taken place many years ago and sometimes a key witness – here the mother – has died. This case is a helpful reminder that the court will look carefully at all the circumstances surrounding the agreed basis on which the transferee received the property. In this case a trust arose based on the fact that it would be ‘unconscionable’ for Patsy to treat the property as her own.
Every case turns on its own facts and it doesn’t necessarily follow as a result of this case that it will be easier to bring this sort of claim. That said, it’s often assumed that there always has to be ‘detrimental reliance’ in a constructive trust claim and it’s important to be aware that this is not the case. Knowing exactly what the ingredients are for successfully arguing (or defending) a constructive trust claim is crucial, so the clarification offered in the judgment of Archibold v Alexander is welcome.
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