The Difference Between Common Intention Constructive Trusts and Proprietary Estoppel Has Been Described as ‘Illusory’ (Hayton). Do You Agree with This Statement? Consider How the Case Law Has Developed and Give Reasons for Your Answer.

Topics: Constructive trust, Equity, Estoppel Pages: 6 (1984 words) Published: January 16, 2013
The difference between common intention constructive trusts and proprietary estoppel has been described as ‘illusory’ (Hayton). Do you agree with this statement? Consider how the case law has developed and give reasons for your answer.

In his article ‘Equitable Rights of Cohabitees’ Hayton suggested that the distinction between common intention constructive trusts and proprietary estoppel has, over time, come to be but illusory and goes on further to propose that since the general direction of the development of the law has been to embrace the principle of preventing and remedying unconscionable conduct regardless of whether the claim brought before them was originally brought under the concept of a constructive trust or proprietary estoppel, the distinction between the two legal tools should be altogether abolished. The scholar suggests that this would further promote the equitable principle of remedying unconscionable conduct. As Lord Browne-Wilkinson put it, ‘the two principles have been developed separately without cross-fertilization between them: but they rest on the same foundation and have on all the matters reached the same conclusions”.

However, while there undeniably are many close similarities in the nature of both common intention constructive trusts and the doctrine of proprietary estoppel, particularly in terms of the circumstances under which they are claimed, the remedies the courts are able to award under each type of claim, and the evidence courts have been willing to accept in order for each type of claim to be affirmed, numerous distinctions nevertheless exist and in practice case law has not always supported Browne-Wilkinson’s assertion.

Before the similarities and differences between the various legal elements of common intention constructive trusts and proprietary estoppel can be closely analysed, it is useful to provide definitions for both of these terms. Common intention constructive trusts have been defined as trusts created by a court (regardless of the intent of the parties) to benefit a party that has been wrongfully deprived of its rights. Following the principles of Lloyds Bank v Rosset [1991], in order for a common intention constructive trust to be established, there must be a common intention to share ownership of the land (which can be either express, amounting to the explicit assurances on the part of the legal owner or the existence of an oral agreement to share the property between the legal owner and the claimant, or inferred), as well as detrimental reliance on the part of the claimant on that common intention. The only type of detrimental reliance that courts have been willing to accept without question, however, is a direct contribution to the purchase price of the property on the part of the claimant. All other types of detrimental reliance, particularly non-financial acts, such as meeting household bills and domestic care have been taken into account by the courts favourably in certain instances, such as Le Foe v Le Foe and Woolwich [2001], but such occasions have been rare to date.

It is sometimes also recognized that the common intention constructive trust can be further subcategorized into two different branches, following the judgement given by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] which distinguishes between institutional constructive trusts and remedial constructive trusts. As Terence Etherton, has summarised, “The institutional constructive trust is a property institution, which will have arisen before the date of the court's judgment, and whose existence the court declares as a subsisting private right. A remedial constructive trust, on the other hand, is usually described as a judicial discretionary remedy, which may have retrospective effect”. In other words, the courts have the ability to both affirm the pre-existence of constructive trusts and to impose constructive trusts as a remedy where they see fit....
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