Private residence relief: settled property: common intention constructive trusts: presumption that beneficial ownership follows legal ownership
When considering a claim that a property is held on constructive trust the legal presumption is that the beneficial ownership of a property follows the legal ownership. The onus is on the person who asserts that there is a difference between the legal and beneficial ownership to show in what way it differs. The burden of proof is demanding. In paragraph 68 of her opinion in Stack v Dowden Lady Hale says:
The burden will therefore be on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon.
Lord Walker makes the same point in paragraph 14 of his opinion.
I am in full agreement with the observation in paragraph 68 of Lady Hale’s opinion, which I take to be of central importance to her reasoning and conclusions, that in cases where a house or flat has been registered in the joint names of a married or cohabiting couple (but with no express declaration of trust) there will be a considerable burden on whichever of them asserts that their beneficial interests are unequal, and do not follow the law.
Lord Walker’s comments were made in the particular context of a claim by one of the co-owners of a property that their share in the beneficial ownership of the property was greater than their legal share in the ownership. But the extract from Lady Hale’s opinion shows that the same principles apply in considering claim that the beneficial interest is different in any way. Both opinions make it clear that the burden of proof is high. In paragraph 33 of his opinion Lord Walker calls it “a heavy burden”.