Trust-related Disputes

The great property dispute; who owns what?

Family disputes over who owns a property and how can often be acrimonious, and there can be some complexity.  Nothing quite reminds us of that quite so spectacularly as the case of Parker v Parker-Bowyer that was reported last year.

That might have been an extreme case (given the wealth of the family and the dispute being over a £2.2m mansion in Buckinghamshire) between father and son, but the principles apply whether they relate to mansions and six-car garages, or the family home.  In fact, it is not uncommon for there to be a dispute over who owns what share in a property, particularly among unmarried couples, or when someone other than the owner has contributed to the purchase price or the mortgage (increasingly common in these economic times when “the Bank of Mum and Dad” often makes a significant contribution to first property purchases).

In the Parker case, a father argued successfully before the High Court that his transfer of a property (in this case a Buckinghamshire mansion) to his son had been subject to a constructive trust under which the father would retain use and control over the property for the rest of his life.

This was despite the father having previously signed a statutory declaration stating “I confirm I no longer have any interest in the property” and not making any express declaration of trust when he transferred the property to his son.

How is it then a father can transfer a property, promise it to his son, declare formally he has no interest in the property, not take a trust over it either and still walk away with it in his ownership?

The simple answer is that it is down to trust law, which can be complicated and can depend on what you can prove and ultimately the judge decides, which is never certain.

The concept of trust law in general terms is that a trust is created when a “settlor” (the person making the trust”) places assets under the control of a trustee (who legally holds the assets) for the benefit of someone else (who could even be the settlor himself in some cases, such as that as Mr Parker).  There are different types of trusts – obviously there are the express ones which say they are trusts- but there are other occasions when trusts can be created and in the Parker case, this was a constructive trust situation.

Constructive trusts arise by operation of the law if it would be unconscionable for the owner of an asset to deny the beneficial interest of another person in the asset. In the case of a property, if both parties share a common intention that the “non-owner” should have a beneficial interest in an asset, and they have relied on that to their detriment, then there is what is known as a “common intention constructive trust”.   Put simply, despite what might be said or done, if the party making the claim can make out a (in this case constructive) trust, then that claim should prevail.  

Taking early advice on ownership when a dispute is intimated or begins to look possible can be a very sensible move, as it could prevent expensive litigation with an uncertain outcome; just ask the Parkers.

The Keelys’ litigation team are experienced in getting to the bottom of ownership disputes and advising on how they can be resolved, whether through negotiation or via the court. Please contact Liam Owen or Patrick Farrington on 01543 420000 for a no-obligation discussion on how we may be able to help you.