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Stack and Dowden and the general rule of common intention constructive trusts (CICTs)

The house of Lords disapproved of the ‘fairness’ principle from Oxley v Hiscock and held that the general rule should be that ‘equity should follow the law’ so in most cases where the legal title is jointly owned the beneficial interests should be split equally unless there were exceptional circumstances.

What were the exceptional circumstances in Stack and Dowden? The facts of the case are as follows:

Stack and Dowden were an unmarried couple who had been together for 25 years, with four children in a family home which was joint-owned by the couple. Normally where ownership of a family home is registered in 1 name, such as Lloyds Bank v Rosset, it will be difficult for the unregistered party to claim a share where they are not registered in the deeds and did not contribute to the purchase money. There will often be evidence that the unregistered party went to some reliance on the belief that they had a share in the property. But the judges in equity are usually reluctant to consider that this means they have a legal or beneficial interest in the property. So in Eves v Eves [1975] Lord Denning held that there was a constructive trust, based on Mrs Eve’s redecorating and breaking up a patio with a 14Ib sledgehammer. She was awarded a quarter share in the property, as such work manifested a common intention to share in the home’s equity. That was a favourable decision. But in Lloyds Bank v Rosset, the wife did not have share, although she had contributed to the renovation of the property and claimed a share in equity. She could not prove that there was a common intention to share the property.  

When Stack and Dowden bought their first house it was funded and purchased by Ms Dowden. However the property in question was partly funded by Mr Stack who contributed 35 % funding whilst Ms Dowden provided the rest. What makes this case so exceptional is that the courts did not split the interest equally 50/50. The judgement was the right one because throughout their relationship the couple kept their finances separate, so their equitable interest was shared 65%/35%.

Lady Hale’s judgement in the case was that ‘….cases in which the joint legal owners are to be taken to have intended that their beneficial interest should be different from their legal interests will be very unusal…’

Unusual indeed, which is what makes it such a fascinating case.                     

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