Legal Principles and Key Points
- In the case of Aspden v Elvy  E.H.W.C. 1387, it was held that following Jones v Kernott  1 A.C. 776, financial contributions to the acquisition of a property are not the sole factor to be considered when determining beneficial interests. The words and conduct of both parties will be considered to determine an objective common interest.
Facts of the Case
- C transferred his barn to his partner, D, to minimise his exposure to inheritance tax and avoid creditors.
- C and D then took steps to convert the barn into a dwelling, with C contributing manual labour and through substantial financial contributions. The extent of C’s contribution could not be determined.
- Following their separation, D took sole control and operations of a kennel run from the outbuildings of the barn.
- C contended that there was a common intention throughout the conversion that he would have an interest in the barn and its ensuing business. As such, C had a beneficial interest based on a constructive trust or proprietary estoppel.
- D argued that C’s contributions were intended as gifts and there was no common intention to share beneficial interests.
- Was there a common intention that C should retain beneficial interest in the barn?
Held by the Chancery Division
- Finding for C, that while there had not been express discussions between the parties about C retaining beneficial interest, the courts could find an objective common intention by taking a holistic approach and considering the words and conduct of the parties. In this case, the judge held that C retained a 25% interest in the barn.
- The Stack v Dowden approach applies in a domestic context where two people buy property together and there is no express declaration of trust. As explained in Jones v Kernott, the approach may be summarised in the following way,
- The presumption is that the parties hold the property as beneficial joint tenants. This can be rebutted (with difficulty) by establishing that the parties actually intended otherwise at the time of acquisition.
- The intention of the parties is to be deduced objectively by considering whether one party’s words or conduct would be reasonably understood by the other to mean that there should be shared beneficial interest.
- If the deduced intention indicates what shares the property should be held in (50% or less), the court gives effect to that intention. If it does not, the court is obliged to decide upon their respective entitlements by reference to what is fair when considering the course of dealing in relation to the property.
- If the parties’ intention subsequently changes, the court is obliged to give effect to that changed intention. The court must ascertain the changed intention objectively and should that fail the court is entitled to reference to what is fair.
- Both C and D proved to be unreliable witnesses. On all the evidence C’s transfer of the barn to D was intended to be an outright transfer of all legal and beneficial interest in it. However, C’s evidence regarding his contributions to the conversation of the barn (and thus its increased value) is more reliable.
- The financial contributions C made cannot be seen as gifts because they represented a significant part of his assets. By making them he would in effect leave himself with nowhere to live. The objective conclusion is that C hoped and expected to return to living at the property.
- “I think that the proper inference from the whole course of dealing is that there was a common intention that C should have some interest in the property as a result of the very substantial contributions made to the conversion works. I am fortified in this by observations of Griffiths LJ in Bernard v Joseph  3 AER 162 at (171):
- It might in exceptional circumstances be inferred that the parties agreed to alter their beneficial interests after the house was bought; an example would be if the man bought the house in the first place and the woman years later used a legacy to build an extra floor to make more room for the children. In such circumstances the obvious inference would be that the parties agreed that the woman should acquire a share in the greatly increased value of the house produced by her money…” .