Do you own your own home?
We see many situations where the family home is owned by only one individual in a relationship. Whilst not anticipated, separation causes significant problems for the individual who has lived in the family home but has no formal legal ownership of it.
In some cases, the Court will recognise the parties had reached an informal arrangement about the home. This recognition is called a common intention constructive trust (catchy, we know).
In November 2020, the Court of Appeal provided a helpful judgement on the constructive trust doctrine in the case of O’Neill v Holland. This case concerned a common intention constructive trust and provided some helpful guidance to parties as to the need for detrimental reliance, and, what may amount to detrimental reliance.
Specifically, O’Neill v Holland concerned a long established relationship of an unmarried couple and their family home together with a portfolio of 12 properties owned solely by Mr Holland. The unique aspect of this case is that Ms O’Neill’s father purchased the family home in his sole name and subsequently transferred it to Mr Holland without receiving any payment or consideration for it. It was alleged that Ms O’Neill’s father purchased the property for the purpose of it being a home for Ms O’Neill and her family.
The Court accepted that Ms O’Neill did rely on assurances to her detriment. Specifically, the Court inferred that Ms O’Neill’s father would not have transferred the property to Mr Holland without a clear understanding that his daughter would have a beneficial interest in the property. It was determined that detrimental reliance was satisfied by Ms O’Neill’s understanding of this (and assurances made to her) and the fact that she would be able to live in the property rent free as a family home.
This case highlights two important issues.
Firstly, that it is essential ingredient to a claim that the person claiming an interest, acted to their detriment in reliance on the common intention.
Secondly, that these non-standard arrangements are complicated, expensive and time consuming to prove. The case went through 3 hearings, up to and including the Court of Appeal, and 5 judges.
The better course of action for parties is to get things in writing and avoid these sorts of issues altogether.
For any advice on constructive trusts/beneficial interest, please contact our dedicated team.