land law


According to the given scenario, after Celia and Donal sold the house (Property B) to Balwinder and Rafi, Una refuses to leave claiming that the house is half hers and should not have been sold or, alternatively, that she is entitled to the half-share of the proceeds of sale. However, the answer will depend on whether she has an interest in the property, and whether, if she has, the interest is overriding. Interests which override registration, are interests which are not entered on the Land Register, yet nevertheless they bind third parties. They are an exception to the notion that the Land Register is a ‘mirror’ of tile. They are governed by LRA 2002[1], which distinguishes between interests which override on first registration of land (listed in Schedule 1) and interests which override on subsequent registration of the land (listed in Schedule 3). In our scenario, we are concerned with the overriding interests found in Schedule 3 and in particular, with the overriding interests of persons in occupation[2]. (schedule 3, para 2, LRA 2002). The test for overriding interests, found in schedule 3, para 2, LRA 2002, requires that an interest belonged to the claimant at the time of the disposition, that he was in actual occupation, that no enquiries were made of him and either his occupation would be obvious on a reasonably careful inspection of the land at the time of the disposition or the purchaser/mortgagee knew that the claimant had an interest. Therefore, Una must satisfy the criteria of the test in order to prove that she has an overriding interest.

First of all, it must be established that Una had an interest over the property. As there is no evidence of an express trust, for Una to have an interest in the property she must look to implied trusts, and specifically constructive trusts[3] (CT) as these are now considered the appropriate mechanism of recognising a beneficial interest in the property[4]. To establish an interest under a constructive trust, she must follow the rules laid down in Lloyds Bank v Rosset[5] by showing either an express agreement plus a detriment suffered by her or a common intention inferred from their contributions.

In the case of an express agreement

The principle of express agreement requires that the agreement must relate to sharing the ownership of the property, not simply to living together or ‘looking after’ the non-legal owner. An agreement to share the property as a home does not amount to an agreement to share the ownership; Otway v Gibbs[6]; there must be an agreement to share proprietary rights not just a promise of care. Based on the facts of our scenario, it is evident that there was an express agreement between Donal and Una that she would have a beneficial interest in the property, as he promised her that if she moved in with him and shared the mortgage repayments, then they would be co-owners and Property B would be half hers.

Once it has been established that there was an express agreement, it then needs to be established that the person seeking to assert a beneficial interest acted to their detriment in reliance on that agreement. According to the leading case of Grant v Edwards[7] evidence of detrimental reliance can be found on significant contributions in money or money’s worth, even though indirectly. In that case, it was held that financial contribution to the house hold expenses it was sufficient for Mrs Grant to be entitled to half of the beneficial interest under a constructive trust. She had acted to her detriment by making substantial contributions to the household expenses which she would not have done unless she had believed that she would have an interest in the house. Therefore, based on the facts of our scenario, it is evident that Una acted on her detriment since she contributed in the repayment of the mortgage and the household expenses.

In the case of a common intention

If Una is unable to prove that there was an express agreement between her and Donal, the court may be able to infer a common intention to share the ownership of the property. This would be determined by the parties’ conduct which allows the court to infer; draw out of the evidence, a common intention that the parties intended the property to be shared beneficially. This would give rise to an implied constructive trust. In the leading case of Lloyds Bank v Rosset[8], Lord Bridge held that common intention can be established by direct contributions to the purchase price by the partner who is not the legal-owner but he said that: ‘is at least extremely doubtful if anything less will do’ thus ruling out indirect contributions of the kind in Burns v Burns[9]. In the latter case, the judgement was that contributions, even if monetary, to the domestic outgoings, and non-financial contributions would not give rise to a share in the property and only contributions which could be related to the acquisition to the property such as mortgage instalments would suffice. However, in the more recent cases of Stack v Dowden[10] and Jones v Kernott[11], the law it appears to moving on from Rosset, representing a wider view of how common intention is to be established. Lady Hale, in Stack v Dowden, held that a common intention to share the ownership of the property could be inferred based on significant contributions to the acquisition of the property in cash or in kind and outlined that the fundamental principle is ‘to ascertain the parties’ shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it’. That approach was followed and confirmed by Jones v Kernott. In our scenario, Una was paying for 7 years the half of the mortgage instalments as she contributed to the household expenses as well. Therefore, a common intention of the parties to share the property can be inferred since she would not have made these contributions if she had not expected to get a share.

It is highly likely that Una would succeed in establishing an interest under a constructive trust, either by proving the existence of an express agreement or a common intention inferred from their contributions. However, what share would she be entitled to?

Quantifying the shares

In the case that Una succeed in proving the existence of an express agreement, the court will not normally depart from the agreed terms if they are clear; Clough v Killey[12] Thus, Una would be entitled to the half-shares of the house as this is what Donal promised her. Otherwise, the size of the shares will be quantified by the court. The leading authority in this area is Oxley v Hiscock[13], where Chadwick LJ held that ‘each party is entitled to that share which the court considers fair having regard to the while course of dealings between them in relation to the property’[14]. And in that context, the ‘whole course of dealing between them in relation to the property’ includes the arrangements they make from time to time in order to meet the outgoings (mortgage contributions, council tax and utilities, repairs, insurance and housekeeping) which have to be met if they are to live in the property as their home. The use by Chadwick LJ of the word ‘fair’ suggests that this approach is a subjective one since it is based, to some extent, on judicial discretion. Moreover, this approach is a broad one and widened the class of indirect contributions. Also, although the decision predates Stack v Dowden, it was confirmed in that case and in Jones v Kernott. Lady Hale in Stack v Dowden, went beyond the ‘fairness’ criterion towards the parties’ common  intention of the quantum of the shares, laying down a number of factors, which she pointed out are not exhaustive, to be considered in deciding this question; “how the purchase was financed both initially and subsequently, how they discharged the outgoings on the property and their other household expenses..”[15] Based on the facts of our scenario, Una paid the half mortgage instalments from 2010 to 2017.  These and any other contributions that she made towards the household expenses would be measured against the total value of the property to assess her share.

Is that share overriding?

After having established that Una does have an interest over the property, it must be proved that she was in actual occupation at the time of the disposition. Following the decision of the House of Lords in Williams & Glyns Bank v Boland[16], actual occupation is determined as a matter of fact, and not of law, and that was also reconfirmed under the LRA 2002, in Thompson v Foy[17]. Moreover, in Hodgson v Marks[18] actual occupation was defined as ‘mere physical presence’, but the presence must be more than fleeting; Stockholm Finance LTD v Garden Holdings[19]. It is clearly evident through the facts of our scenario that Una was indeed in occupation of the house since she remained in occupation as the buyers sought to move in and she refused to leave when the property was sold. Moving on to the next part of the test, it must be proved that no enquiries were made of Una by the purchasers; Begum V Issa[20]. The answer to this is straightforward since there are no evidence suggesting that the purchasers met Una before the disposition, thus they couldn’t have made any enquiries of her. The last part of the test requires that her occupation would have been obvious on a reasonably careful inspection of the property or alternatively that Balwinder and Rafi knew that she had an interest. Apparently, they didn’t even know her existence so it wouldn’t be possible to know that she had any interest in the property. However, under a reasonably careful inspection of the property, her occupation would be obvious, since she never ceased to be there and her belongings would be all over the place.

[1] Land Registration Act 2002

[2] Land Registration Act 2002, para 2, sche. 3  

[3] Gissing v Gissing [1971] AC 881

[4] Stack v Dowden [2007] 2 AC 432

[5] Lloyds Bank v Rosset [1990] 1 All ER 1111

[6] Otway v Gibbs [2001] WTLR 467

[7] Grant v Edwards [1962] 2 All ER 426

[8] Lloyds Bank v Rosset [1990] 1 All ER 1111

[9] Burns v Burns [1984] Ch 317

[10] Stack v Dowden [2007] UKHL 17

[11] Jones v Kernott [2011] UKSC 53

[12] Clough v Killey (1996) 72 P&CR D22

[13] Oxley v Hiscock [2005] Fam 211

[14] Oxley v Hiscock [2005] Fam 211, CA per Chadwick LJ at 69

[15] Stack v Dowden [2007] UKHL 17 (HL)

[16] Williams & Glyns Bank v Boland [1981] AC 487

[17] Thompson v Foy [2009] EWHC 1076 (Ch)

[18] Hodgson v Marks

[19] Stockholm Finance LTD v Garden Holdings [1995] NPC 162

[20] Begum v Issa (2014)