An express declaration of trust is conclusive unless varied by subsequent agreement or affected by proprietary estoppel. A “subsequent agreement” is not limited to a formal agreement which complies with the provisions of the Law of Property (Miscellaneous Provisions) Act 1989.
The High Court has considered this issue, dismissing an appeal in Nilsson and another v Cynberg [2024] EWHC 2164 (Ch); [2024] PLSCS 152.
The case concerned the ownership of a property in Romford, east London, acquired in February 2001 by Collette and Stuart Cynberg, in their joint names with a 95% mortgage. The TR1 form declared that they held the property on trust for themselves as joint tenants.
The couple separated in January 2009. At that time there were discussions about the property, the gist of which was that Stuart did not wish to retain an interest in the property and was happy for Collette to have it, provided she left it to their two children in due course.
Following the separation, Collette paid for all expenditure relating to the property. In August 2014, she received an inheritance and spent £10,396 carrying out minor works to the property. The couple were formally divorced in March 2018 but the property remained in joint names.
In June 2018, Stuart was made bankrupt and a dispute arose over the beneficial interest in the property. Stuart’s trustees in bankruptcy, relying upon Stack v Dowden [2007] UKHL 17, claimed that the declaration of trust in the TR1 was conclusive and they were entitled to his beneficial interest.
Collette’s application for declaratory relief succeeded. The county court district judge found that a common intention constructive trust had arisen in 2009 and there was also a proprietary estoppel dating from 2009. The trustees appealed.
Having considered the authorities, the High Court judge concluded that an express declaration of trust was capable of being overridden by a subsequent agreement, which was not limited to a formal agreement that complied with the requirements of the 1989 Act. It could include a common intention constructive trust: Clarke v Meadus [2010] EWHC 3117 (Ch).
Contrary to the trustees’ submissions, the detriment that Collette relied upon – the home improvements, foregoing bringing ancillary relief proceedings and taking over the entirety of the mortgage repayments – was far from minimal and sufficient to find a proprietary estoppel.
There was also a clear causal link between Collette’s decision to stay in the property and pay the entirety of the mortgage payments and Stuart’s assurance that the property was now hers alone.
The district judge was entitled to reach the decision that she had, which was clearly correct.
Louise Clark is a property law consultant and mediator
