• The case of Hussey v Palmer [1972] 1 WLR 1286, 1289 90 concerned the equitable remedy of a constructive trust, and were introduced by Lord Denning without the need of a formulaic view but by way of when they were required for justice and conscience.

Facts of Hussey v Palmer [1972] 1 WLR 1286, 1289 90

  • The C was an elderly widow who was invited to live with her daughter and, the owner of the house, son-in-law (D)
  • The C paid for the cost of the extension required for her bedroom
  • Over a year later, the C left and claimed at County Court against the D for the money she paid or the extension
  • The County Court believed this to be a family arrangement rather than a loan to be repaid
  • The C filed a second action, giving evidence she had loaned the money on a resulting trust however the judge found no case for a resulting trust to arise
  • The C then appealed to the Court of Appeal

Issues in Hussey v Palmer [1972] 1 WLR 1286, 1289 90

  • Was the contribution made by C a family arrangement, as held previously, or was it loaned on resulting trust, and what were the trust terms if so?

Held by the Court of Appeal

  • Appeal allowed. Rather than a resulting trust, there was a constructive trust created in the favour of the C as the payment was not intended to be construed as a gift, a proprietary right should arise from it.

Lord Denning MR

It need not matter whether a resulting trust or constructive had arisen on the facts, as long as one was present; the court shall apply them when justice and conscience requires:

  • “Although the plaintiff alleged that there was a resulting trust, I should have thought that the trust in this case, if there was one, was more in the nature of a constructive trust: but this is more a matter of words than anything else. The two run together. By whatever name it is described, it is a trust imposed by law whenever justice and good conscience require it. It is a liberal process, founded upon large principles of equity, to be applied in cases where the legal owner cannot conscientiously keep the property for himself alone, but ought to allow another to have the property or the benefit of it or a share in it.” [1290]

Considering all possibilities, Lord Denning MR, with agreement from Lord Justice Phillimore, found it would be unjust for the C not to have an interest in the property proportionate to the money she paid:

  • “If she had stayed there until she died, the extension would undoubtedly have belonged beneficially to the son-in-law. If, during her lifetime, he had sold the house, together with the extension, she would be entitled to be repaid the £607 out of the proceeds. He admits this himself. But he has not sold the house. She has left, and the son-in-law has the extension for his own benefit and could sell the whole if he so desired. It seems to me to be entirely against conscience that he should retain the whole house and not allow Mrs. Hussey any interest in it, or any charge upon it.” [1291]

Lord Justice Cairns Dissenting

Having looked at the facts, Lord Justice Cairns believed:

  • “I should have regarded this as a plain case where she had failed to establish the cause of action which she set up.” [1291]

The property belonged to the D, and thus extension did too – similar to a builder-owner relationship

  • “it seems to me that that proposition is equally applicable where it is not a matter of the property being purchased, but a matter of a builder being paid for an extension to a property which already belongs to the borrower of the money.” [1292]