Land Law Essay Help: Implied Bargain Constructive Trusts

Land Law Cases referred to in this section:
 Lloyds Bank v Rosset (1991) 1 AC 107
Oxley v Hiscock (2004) 3 WLR 715
Gissing v Gissing (1971) AC 886
Drake v Whipp (1996) 1 FLR 826

Implied bargain constructive trusts arise from an inference from conduct. Where the trust is implied, rather than express, the change of position required is usually monetary and it is 'extremely doubtful that anything less' than monetary contributions direct to the acquisition of the property will be sufficient (Lloyds Bank v Rosset (1991) 1 AC 107). This excludes most forms of domestic contribution and Lord Bridge commented that even renovation work, of the sort carried out in Eves v Eves (supra), fell far short of the conduct required (Lloyds TSB Bank v Rosset,/a>, supra, at 133F-G).

However, this does not mean that the contribution to the household is entirely irrelevant. Following the decision of the Court of Appeal in Oxley v Hiscock (2004) 3 WLR 715 in which the claimant was awarded a 40% share although her actual contribution was only 20%, the law of constructive trusts now says that a minimum financial contribution is necessary to establish the existence of an implied bargain constructive trust, but once it has been established that one exists, other 'contributions' such as domestic work could be taken into account. In all cases, the court must 'do its best to discover from the conduct of the [parties] whether any inference can reasonably be drawn as to the probable common understanding about the amount of the share' (Gissing v Gissing (1971) AC 886, at 908F per Lord Diplock). The Court will find that each party is 'entitled to that share which the court thinks fair having regard to the whole course of dealing between [the parties] in relation to the property' (Oxley v Hiscock, supra; see also Drake v Whipp (1996) 1 FLR 826 at 831G per Peter Gibson LJ).

Examples:

  • A says to B that she can have a share of the family home if she pays for all of the bills and expenses, so that A can afford the mortgage - an express bargain constructive trust exists (as in Grant v Edwards, supra)
  • A buys a home for B and their children - A pays 90% of the mortgage and B pays 10%, although B also pays most of the household bills. This is an implied bargain constructive trust - although there was no verbal agreement, it can be inferred from the conduct of the parties that a trust exists. In terms of B's share, it is likely to be more than 10% - B's 10% contribution establishes that the trust actually exists but the Court can also have regard to all circumstances, including B's contributions to the household bills.

See also...
Proprietary Estoppel
Promissory Estoppel
Implied Trusts
Resulting Trusts
Constructive Trusts
Express Bargain Constructive Trusts

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