Deciphering the Legal Landscape: Marr v Collie and the Quest for Clarity in Constructive Trusts
The ruling in Marr v Collie marks a notable broadening of the common intention constructive trust principle. Without previous authority, it widens the requirement that property must be acquired for a ‘domestic’ purpose to cover property being acquired for all purposes, real or personal, thus further widening the eligibility criteria for the common intention constructive trust doctrine. This expansion, and Marr itself, are a hotbed for controversy amongst academics and trust experts, with criticisms ranging from the judgement constituting ‘a step back’, which further complicates this area of law, to a lack of consistent judicial authority, and, lastly, questioning a ‘false’ premise in which the common intention constructive trust uses to justify its necessary existence. This article will evaluate these controversial claims alongside the legal landscape of the case, to ultimately conclude that while Marr v Collie itself is not the source of uncertainty and regression in the sphere of trusts, the common intention constructive trust has problematic core principles which cannot be accepted.
Marr v Collie: Facts and Findings
Marr v Collie followed the Privy Council’s decision on the distribution of several commercial and domestic properties acquired by M and C as a result of a breakdown of their relationship and subsequent separation. Marr paid the entire cost of purchasing the properties and claimed the title of the sole beneficial owner by applying the presumption of a resulting trust – where financial input into a property is output equal to the investment, despite the lack of an express trust. On the other hand, C claimed the parties’ common intention was to be equal beneficial owners, with the alleged agreement that C would carry out renovation works at the property, supported by his background as a building contractor. M disputed these claims, asserting that no renovation works were carried out and that he understood C would make financial contributions to the property acquisition to equal his own, which were not made.
Until Marr v Collie, the common intention constructive trust (“CITC”) had only been considered by the highest appellate level twice before – by the Supreme Court in Jones v Kernott and the House of Lords in Stack v Dowden. In Stack, Lady Hale disagreed with the presumption that ‘equity follows the law’, rather permitting that the party seeking to rebut the presumption can do so in proving that the parties held a common intention that their beneficial interests were different from their legal interests. While Stack establishes the availability of CICT, it only evaluates its application in domestic consumer disputes, notably not to the exclusion of commercial property disputes. Jones further explores Lady Hale’s development in Stack by providing decisive authority that the issue of whether the presumption is rebutted may be decided based on the parties’ actual or inferred intention, subsequently introducing the need for the court to consider intention (not only initially, but also as it changes throughout a relationship/partnership) as a persuasive factor to the possibility of establishing the CICT.
The Privy Council in Marr expanded on the principles outlined in Stack and Jones, with Lord Kerr determining that the CITC does not only apply in the domestic consumer context but rather that it is entirely conceivable that partners in a relationship would purchase and invest in a property which is conveyed into their joint names, with the intention that they shall be joint tenants beneficially, despite contribution in different shares to the purchase. This widened scope allowed the Privy Council to hold that the intention of the parties was not sufficiently examined, allowing the matter to be remitted for redetermination by a judge. Consequently, Lord Kerr introduced an integrated approach to resulting trusts and CICTs, distinguishing them by identifying that “there should be a direct focus on what the intentions of the parties were” if there is evidence of shared intentions contrary to the financial contributions, and that regardless of context, “the context is not to be provided by the presumption of one trust over another”. Instead, the only way to resort to a choice of presumption is “where there is no evidence from which the parties’ intentions can be identified”.
Criticism and Response
Georgiou and George and Sloan all identify the problematic impact of Marr on the justice system and argue that it complicates the law even further. Commercial partners who intend to purchase property may now encounter litigation regarding what they had intended or not intended, such as each other’s rights to the property or different manners in which the partners can invest rather than provide direct financial input in a purchase. This poses a threat as there is “some value in risking taking the matter to litigation” in the hope that they can achieve a higher proportion of the equity as a consequence of the Stack framework. Further, cohabitating couples could also be faced with the presumption that joint beneficial ownership should not be used, as Marr emphasises that no presumption must triumph over another, therefore all possibilities must be evaluated, and nothing presumed. This further exacerbates the pressure placed upon the judicial system regarding court time, cost, and further finite resources.
However, to claim that the expansion is problematic due to the demand it will place on the legal system seems a non sequitur when addressing the fundamental issue of those whom the law does not protect in transactions such as the parties in Marr v Collie. Before Marr, the law only placed protections regarding CICT in domestic and quasi-domestic cases, however Marr has made clear that there were circumstances outside of these cases where a resultant trust did not reflect the actual situation and actual intention of the parties, due to considering a shift in intentions, or unidentified initial intentions which prevent the establishment of a resultant trust. As acknowledged by Georgiou, “None of this is intended as a defence of the admittedly anachronistic presumption of result trust, nor should it be taken as denying the correctness of the sentiment behind the CICT doctrine”. Henceforth, while this criticism raises valid concerns over the practicality and logistics behind allowing for more claims to interest in a property, it does not disprove the rationale underpinning the expansion and is, therefore, an ineffective criticism which does not establish Marr v Collie as an unclear and problematic development.
A further criticism emerges from the theoretical foundations of Lady Hale’s rationale for the CICT itself. In Stack, it was said that “all joint legal owners must hold the land on trust”. This proposition, a foundational assertion for the justification behind the CICT as a whole, has no authority cited in either Stack or Marr, which proves incredibly problematic. This leads from the premise that there must be a trust towards ‘on what trusts are the rights held?’. A trust needs to be established before the entitlements of the parties can be determined, however, if there is no answer deriving from a declaration of trust, it seems imperative for the judge to resort to an unexpressed intention, as without doing so the case cannot be concluded. However, land rights vested in multiple people that must be held on trust as the “centrepiece of reasoning” is unsupported by legislation or authority. This contradicts the general law of trusts where a person who holds an absolute right does not hold it on trust for themselves. If this rationale is to be true, it proves contentious to already established authority.
Once this core principle is stripped away due it its lack of legislative backing, there is no longer the need to ask, ‘on what trusts are the rights held?’. Without this, there is no trust. This is due to the parties’ unexpressed intentions no longer being relevant to their entitlements. Therefore, it seems that the CICT doctrine is fundamentally flawed and inapplicable in not only Marr v Collie but also as a principle in trust law. This criticism poses to be incredibly effective, as it dismantles the very foundation of constructive trusts and in doing so, its domestic and commercial development, rendering Marr v Collie flawed in principle considerations, and potentially a step back in understanding the law of trusts and its legislative foundations.
Despite the prominent issue identified regarding the CICT’s theoretical foundations, it is important to contextualise the impact and importance of the case at hand. In this instance, the weight of Marr v Collie is not significantly pressing. The case was heard and passed down by the Judicial Committee of the Privy Council, rather than the Supreme Court. The status of the Privy Council, as clarified in Willers v Joyce (No.2), is not binding on an English court as a matter of precedent. While it is suggested that a court should find a Privy Council decision “of great weight and persuasive value”, the court should not follow this decision if it is inconsistent with a decision that would be binding under the normal precedent system. Therefore, there is no indication that the decision made in Marr is binding or should be seen as English law. Subsequently, accusations of it causing uncertainty, or impacting the judicial system fall flat in its perceived impact. This is evidenced by Marr not being referenced or cited by the courts despite being handed down for 7 years, even in cases where Marr was directly relevant to the issues at hand such as Secretary of State for Work and Pensions v Tower Hamlets LBC, and Gaspar v Zaleski.
Conclusion
The judgement in Marr v Collie is a controversial development in an already controversial area of law. The very concept of the common interest constructive trust established in Stack, and discussed in Marr, is highly debated and scarcely backed up by authority or legislation. This fact leaves the widening of applicability of CICT prime for criticism, however, the forms of criticism that attack Marr’s impact on the judicial system through precedent, cost, and litigation are unfounded and, henceforth, ineffective.
Bibliography
Cases
Gaspar v Zaleski [2017] EWHC 1770
Jones v Kernott [2011] UKSC 53
Marr v Collie [2017] UKPC 17
Secretary of State for Work and Pensions v Tower Hamlets LBC [2018] UKUT 25
Stack v Dowden [2007] 2 AC 432
Willers v Joyce (No.2) [2016] UKSC 44
Secondary Sources
George M and Sloan B: ‘Presuming too little about resulting and constructive trusts? Marr v Collie [2017] UKPC 17’ [2017]
Georgiou A, ‘Marr v Collie: The Ballooning of the Common Intention Constructive Trust’ (2019) 82 MLR 1.
Jonesnickolds, ‘Cohabitees & Investment Properties – A fresh Approach.’, (jonesnickolds, 1 August 2023) https://www.jonesnickolds.co.uk/news-comment/9mfv4pj5jtx9uzicmg7omqxu05x8lg accessed 27/03/2024
Leung Y C, ‘Rethinking the Common Intention Constructive Trusts in Stack v Dowden and Jones v Kernott – should the Resulting Trusts be preferred?’ (2019) 6 IALS Student Law Review 26.
Lower M, ‘Marr v Collie: The interaction between presumed resulting and common intention constructive trusts” (Hong Kong Land Law Blog, 20 December 2023) https://hklandlaw.wordpress.com/2023/12/20/marr-v-collie-the-interaction-between-presumed-resulting-and-common-intention-constructive-trusts/ accessed 19/03/2024