Constructive trust – common intention constructive trust – could be invoked outside “domestic consumer context” (ie, in commercial context)
P and D were brothers and, since 1983, tenants in common in equal shares of a shop wherein P ran an electrical business. P claimed that he, D and their father, F, agreed that D would be registered as a co-owner only to secure repayment of a loan used to finance the purchase of the shop by P to F (the “Loan”); and once the Loan was fully repaid, D would remove his name; but despite the Loan being repaid and repeated demands, D had refused and/or failed to do so. P brought proceedings against D seeking a declaration that he was the sole beneficial owner of the shop and D held his half share in the shop on trust for P; and an order to compel D to transfer his half share to him.
Held, granting the declaration and order sought, that:
- As a matter of principle, there was no reason why the doctrine of “common intention constructive trust” could only be invoked in the “domestic consumer context”, although the context could be relevant in considering the parties’ common intention as to the beneficial ownership of a property purchased either in their joint names or in the sole name of one party. Rather, the presumption of equality applicable where members of the same family purchased in joint names a property which they intended to be and in fact was occupied by them as a home, would not apply outside the “domestic consumer context”. In a “commercial context”, the presumption of resulting trust would apply.
- On the facts here, the shop was purchased and paid for solely by P; D was made a tenant in common of the shop to secure P’s repayment of the Loan advanced by F; and the Loan was repaid by P in or about June 1998. P was therefore at all material times the sole beneficial owner of the shop (whether on a resulting trust or a common intention constructive trust).