[NB: Note that question 1 is really about specific performance and part performance –Steadman v Steadman and not about constructive trusts.]
Question 2 from worksheet on pg 60 – Jack and Peggy.
While there is some overlap between a resulting trust and a constructive trust, a resulting trust generally arises when the claimant has made a substantial contribution to the original payment of the purchase price. The constructive trust arises through the claimant’s contributions after the original payment and during the time of payment.
To establish a constructive trust in Institutional Model, the claimant must show:
1. Detriment. He must have changed his position or made a sacrifice because of the expectation in gaining an interest in the land. (Think about the little old ladies who gave up their rent-controlled apartments.) However, in Banner Homes v Luff [2000] 2 All ER 117 the Court of Appeal said that detriment was not always necessary.
2. Common Intention. This may be Express or Implied.
a. Express: There must be actual words, eg, “Darling, it is all for you”, “Everything that is yours is mine”. [Do not worry about how the claimant will prove these words were said. They will bring witnesses and evidence in the usual way. In one case, the claimant brought the bank manager who was there when the defendant was signing the mortgage. In another case the claimant brought a letter which the defendant had written to her. When answering a problem question, just take the information given to you without worrying about how it will be proved.]
b. Implied: The Court will look at the conduct of the parties specifically:
i. Direct Financial Contribution: where the claimant made direct payments to the mortgage.
ii. Indirect Financial contribution: where the claimant made substantial payments to other household expenses thereby enabling the defendant to make the mortgage payments. There must be a sense of enablement. For example, if the defendant earns $2000 and the mortgage is $2000, then he cannot do it all on his own, and the claimant enables him by paying the utilities. But if the defendant earns $5000, he can do it all on his own, and the claimant does not enable him.
iii. Non-financial contribution: where the claimant has performed significant tasks relating to the upkeep or improvement of the property. Mere household tasks are not enough.
In fact, in the English Model, the court does not give any weight to indirect financial and non-financial contribution, except in some instances where it seems that the defendant held out a promise to put the claimant’s name on the legal title, or made some excuse as to why it should not be there (e.g. Eves v Eves [1975] 1 WLR 1338 where the defendant told the claimant she was too young.)
Under the Remedial Model used in Canada, the basis of the constructive trust is unjust enrichment. The defendant must have been enriched by the actions of the claimant, even mere housekeeping, where those actions did not have any legal (juristic) basis, and where those actions have some connection to the acquisition or improvement of the property.
A legal basis for the actions means one that is referable to a specific contract. Just because a person is in a relationship it does not mean that he/she needs to cook, clean, pick up children, garden, fix the roof, etc, so when they do these actions, they are enriching the other person.
Read Peter v Beblow (1978) 101 DLR (4th) 121. In that case, the defendant hired the plaintiff to be his nanny and housekeeper. After they got together and she had their first child, he stopped paying her, but she continued to do the same tasks for the length of the relationship (12 years). This freed him to pursue his work, and the money that he saved from her salary also went towards the new property. She also helped with the upkeep of the new property. To value her contribution, the court looked at the wages he had previously paid her, multiplied by the 12 years, and discounted by half since she was also receiving the benefit of her services (e.g., when she cleaned, half went towards herself and only half for him). The total was more than the property was worth, so they gave her the property.
In the Caribbean, we generally use a hybrid model. We follow the Institutional Model but give greater weight to indirect financial and non-financial contributions.
Analyzing the current situation:
Has Jack acted to his detriment? No. There is no evidence that he has made any sacrifice to move in with Peggy. Nevertheless, per Banner Homes, this is not fatal to his case.
Is there any express intention? No. There are no words of express intention.
Is there any implied intention?
a) Direct financial? No. Jack has not contributed directly to the mortgage.
b) Indirect financial? Jack has paid some of the bills for some time, but not for the whole time. There is no sense that he has enabled Peggy since she seems able to pay the bills when he does not do so.
c) Non-financial? Jack cooks, but this is not connected to the acquisition or improvement of the property, nor does it seem substantial. He has painted the house, but again, this is not substantial. Certainly there should be no reason for the house to have increased so drastically in value simply because he painted it.
Nor can it be said that Peggy made an excuse to Jack concerning putting him on the property. After he asked her, she said she would think about it. Based on his actions, whereby he stopped paying the bills, he seemed to take this as a negative.
Would his indirect financial and non-financial actions be given any weight under the hybrid/Canadian model?
Even under the model of unjust enrichment, while he has enriched Peggy by cooking for her and by paying some of the bills, these actions are not substantial and are not connected to the acquisition or improvement of the property.
Conclusion
Jack does not have an interest in the house. Peggy is entitled to put him out.