Hudson v Hathway [2022] EWHC 631 (QB)

Detrimental Reliance in Common Intention Constructive Trusts

A starting point for considering a common intention constructive trust dispute may well be Lewin On Trusts 20th Edition, specifically Section 4: Beneficial Interests of Two of More Persons.

The courts have increasingly recognised that, at least in the context of a joint enterprise for the acquisition of land, the concepts of the common intention constructive trust and proprietary estoppel coincide…On one view, the estoppel approach should be preferred for it will always be available where a common intention constructive trust is available, there is no need to search for an artificial intention and the remedy can be adjusted to fit the circumstances of the case”.

The recent case of Hudson v Hathway [2022] EWHC 631 (QB) provides welcome clarification on the key difference between these two principles, and that is detrimental reliance.

On 21 March 2022 Mr Justice Kerr gave his Judgment on the appeal from HHJ Ralton. This was a Trusts of Land and Appointment of Trustees 1996 (“TOLATA”) case where the parties were joint legal owners, and there was a presumption of joint tenancy. Mr Hudson conceded that he and Ms Hathway had “done a deal” some years prior to the litigation, whereby it was agreed that Ms Hathway would have the whole of the beneficial interest in the property. There was a vast dispute on the facts, and the corresponding legal argument as to whether those facts amounted to detriments. Ultimately the lower court held that there was sufficient detrimental reliance over the course of 20 years because Ms Hathway had given up an opportunity to bring a claim against Mr Hudson’s assets at an earlier date as part of this deal. It was argued against her that there would have been no real prospect of succeeding on such a claim, and that became one of the two key issues on appeal to Mr Justice Kerr.

The other more interesting issue from a legal argument perspective was whether detriment is required to establish a common intention constructive trust. While most practitioners are likely to be of the opinion that such an element is required, and indeed HHJ Ralton held that there was such a requirement, Mr Justice Kerr disagreed. 39 cases were cited between counsel on both sides; however the judgment focuses on Stack v Dowden and Jones v Kernott. They are joint name cases where both parties held a joint beneficial interest of 50% that was later varied to uneven shares.

The judgments in those cases do not deal with the issue of detriment, save from Lord Neuberger in Stack [124] in his dissenting speech who said that the court may deduce “an agreement or understanding amounting to an intention as to the basis on which the beneficial interests would be held”, which may be “express … or inferred, and must normally be supported by some detriment, to justify intervention by equity”.

This is a welcome relief for Claimants who seek to rely on the principle equitable issue of unconscionability, where an express or an imputed common intention exists between the two parties, and yet there is no identifiable detriment or change of legal position. The judgment as always is fact specific and is unlikely to be helpful in sole names cases, or cases where there is already an express declaration of trust.

Link to the judgement – https://www.bailii.org/ew/cases/EWHC/QB/2022/631.html

If you require advice, or representation, in a claim relating to property you can instruct Rowan Morton by contacting her clerks on 01483 539131 or emailing them at clerks@guildfordchambers.com

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