Common Intention Constructive Trust

by Albert Lam

Where a person is holding property, exercising rights for and on behalf of another person or for the accomplishment of some particular purpose(s), a trust may have been created. 

A trust is primarily an equitable obligation which is only enforceable in a court of law.  It can be created expressly, by implication or by the operation of law.  A trust is said to be a constructive trust when it is automatically imposed on the parties in circumstances where it is unconscionable or contrary to the fundamental equitable principle for the owner of the property to hold it purely for his own benefit.

A Common Intention Constructive Trust is a type of constructive trust where there is a common intention of the parties regarding the sharing of the beneficial interest in a property in which the legal title of the property is vested in one of the parties only.  It would be inequitable to allow the party holding the legal title to deny the other party a beneficial interest in the same property.  Hence, the key elements for this doctrine are that (i) there must be a common intention that both parties should have a beneficial interest in the property; and (ii) the claimant has acted to his detriment in the belief that by so acting he was acquiring a beneficial interest in the property. 

It is important to note that this doctrine is only applicable to land related cases but not personal property. 

The requisite intention under this doctrine may be shown by virtue of an express agreement made by the parties.  Such intention may even be inferred from the initial discussions of the parties concerning the purchase of the property.  The court may even infer an intention from the parties' conduct that both are to have an interest in the property.

This doctrine has been invoked where the parties are in certain relationship.  This relationship includes cohabiting couples, members of the same family, and any other form of personal relationship.  When these related parties purchased property in joint names for their own use and enjoyment, the court has referred the purchase as in a "domestic consumer context".  In contrast, the court is reluctant to invoke the doctrine where the property was purchased merely as an investment ("commercial context") by the related parties.  In which case, the presumption of resulting trust may come into play.

It is noteworthy that the law concerning of common intention constructive trust is still being evolved.  It has been suggested that the doctrine may even be extended to cases outside "the domestic consumer context".

If you wish to know more above this subject matter, please feel free to contact our Mr Albert Lam at albertlam@hwg-law.com.

June 2020