Privy Council rules that Stack v Dowden ruling is not confined to a domestic context

Out-Law Legal Update | 13 Jun 2017 | 12:37 pm | 2 min. read

Terry Marr and Bryant Collie were an unmarried co-habiting couple. Over several years Marr purchased a number of investment properties which, despite Marr making all of the financial contributions, were registered in the joint names of Marr and Collie. Marr and Collie separated and Marr sought a declaration from the court as to the beneficial ownership of the properties and a number of other assets, such as artwork.

The judge at the first hearing relied on Laskar v Laskar in ruling that the principle in Stack v Dowden, that a conveyance into joint names indicates a legal and beneficial joint tenancy unless the contrary is proved, did not apply to the purchase of investment property even where there was a personal relationship between the parties. Marr argued that the correct test for determining beneficial ownership was that of a classic resulting trust; meaning that there was a presumption that Marr did not intend Collie to have half beneficial ownership unless Collie could show otherwise. The judge at the first hearing found that this was the correct test and Collie had failed to rebut that presumption. The judge at first hearing ruled that the result would have been the same even if a common intention constructive trust had applied, but didn't provide any reasoning for this.

The Court of Appeal (Bahamas) accepted Collie's appeal against the decision at the first hearing in part. The CoA ruled that where one party provides all of the purchase money for a property registered in joint names the presumption of a resulting trust will be negated by clear evidence that it was the intention of the purchaser to share the beneficial interest in the property with his co-owner. The CoA found that such an intention did exist.

Marr appealed. The Board of the Privy Council found that it would be wrong to confine the reasoning in Stack to a purely domestic context; where there is a "commercial dimension" the intention of the parties will still be a crucial factor. Further, the Board ruled that Laskar, as followed in the first hearing, was not authority that Stack only applied in a domestic consumer context.

The Board considered the "clash of presumptions" between the common intention constructive trust and a resulting trust and ruled that, except where there is no evidence of the parties' intentions; one presumption does not "triumph" over another. The Board found that "context counts for, if not everything, a lot"; if it was the unambiguous wish of parties contributing unequal shares that they should own the property equally then that wish shown be given effect. Conversely, if that was not their wish or no intention had been formed the answer may lie in a resulting trust.

The Board acknowledged that the parties' intentions may change over time.

In relation to Marr and Collier, they could not agree what their common intention was and the Board found that no proper examination of the actual intentions of the parties had taken place. The appeal was granted and the case was referred to the Supreme Court of the Bahamas for the intentions of the parties to be determined.

The ruling was made by the Privy Council, so is not binding in the English courts, but is highly persuasive. Trustees in bankruptcy should be aware of the ruling when considering a bankrupt's interest where there is a commercial aspect to co-owned property.