24/08/17

Who Owns What?

Legal ownership is relatively easy to establish. What do the deeds say? What is more difficult to discover is what trust interests exist and what duties the legal owners may owe to others.

Determining who owns a beneficial interest in property can be done by identifying an express (or resulting trust), an implied (or constructive trust) or what is known as proprietary estoppel. There are numerous cases where the issue of beneficial interest has been discussed in a domestic context where the parties’ intentions are considered. These commonly deal with where the property has been purchased by a couple with the intention that the property is to be their family home. Stack v Dowden  [2007] AC 432 provided the principle that the starting point when determining beneficial interest is to follow the legal interest i.e. if the property was purchased jointly then the presumption is that they own the beneficial interest jointly as well. The presumption can be challenged, but it remains the starting point for the courts to take.

Co-ownership of investment property has historically been viewed in a different light to domestic property; the courts have not applied the principle in Stack v Dowden and have instead focused on the resulting trust principle which provides the parties with a share in accordance with what they contributed to the purchase price. In Laskar v Laskar [2008] EWCA Civ 347  the courts confirmed the view that Stack v Dowden does not apply where the property that is purchased is for non-domestic purposes.  

The Privy Council have recently determined contrary to Laskar v Laskar that the joint beneficial ownership principle does actually apply when the property is purchased for a non-domestic purpose. In Marr v Collie [2017] (Bahamas) [2017] UKPC 17 the property in question was not a family home but instead a collection of investment properties that the parties intended to do up and rent out.  Mr Marr and Mr Collie purchased several properties during their relationship in their joint names however Mr Marr funded the purchases and paid all associated fees. Mr Collie argued that, as a builder, he funded a significant amount of the renovation works. The court held that Stack v Dowden did apply and as they had purchased the properties with the intention of owning them jointly then they would be awarded 50% of the sale proceeds each.

The court highlighted that the parties’ intentions are still the focus of the decision – as is the case in a domestic situation. They confirmed that no one principle wins and it completely depends upon the situation i.e. it will be looked at on a case by case basis.  Of course the most desirable outcome is achieved when the parties determine their respective beneficial interests by having a carefully and well worded trust deed, with appropriate provision, where required, to determine disputes!

24/08/17

About the author

Kitsons Solicitors - Alice Darch

Alice DarchTrainee Solicitor

Alice is a Trainee Solicitor in our Commercial Property & Corporate teams

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