In a tweet: Broadening the scope of Stack v Dowden
Summary: A Bahamian case where the Privy Council provided clarification of Stack v Dowden and Jones v Kernott and guidance as to the circumstances where a resulting trust analysis will be appropriate in a domestic-commercial relationship. To recap, Stack v Dowden established that where a domestic property is conveyed into the joint names of cohabitants, without any declaration of trust, prima facie both the legal and beneficial interests in the property are joint and equal. That position could only be displaced if the parties’ whole course of conduct in relation to the property showed a common intention that their beneficial interests were to be different from their legal interests. The same principle arose in Jones v Kernott  UKSC 53 concerning the beneficial interests in a family home acquired in joint names by an unmarried couple.
M and C had been in a relationship for some 17 years. They had acquired several properties, a boat, a truck and an art collection. Whilst one property had been purchased as their home, the others had been investments and buy-to-lets. The agreement between the couple was that M would pay for the property and C would carry out the redevelopment works.
The properties had been put into joint names without specifying the parties’ respective beneficial interests. And when the relationship ended, M sought a declaration as to the beneficial ownership. He claimed that the presumption of a resulting trust in his favour should be upheld without him having to prove it.
At first instance, the judge ruled that all the properties and other items were held on trust for M. The trial judge relied upon the analysis of the Court of Appeal in Laskar v Laskar  1 WLR 2695 that the Stack v Dowden presumption (that beneficial ownership follows the legal ownership) only applied to properties acquired as the domestic home, and that investment properties even if acquired by cohabiting couples were to be treated by reference to “classical” resulting trust principles. The burden had been on C to rebut the presumption of a resulting trust in M’s favour and he had failed to discharge it.
C, largely successfully, appealed. The Bahamian Court of Appeal found that there was sufficient to show that there had been a common intention that M and C would share the beneficial interest in the investment properties equally as well as in the boat and truck. M appealed to the Privy Council.
Held: The Privy Council found that both lower courts had failed to properly consider and make findings on the parties’ intentions at the time of the acquisition of the investment properties. It accepted M’s evidence that he had not intended to confer an equal beneficial interest in the investment properties on C, and that the decision to have the properties conveyed into joint names was on the basis that C would make an equal contribution to their development – a contribution that never fully materialised. M’s appeal was allowed.
Significantly, the Privy Council emphasised that it did not regard the Stack v Dowden judgment to be limited to the “purely domestic setting”, and that it applied also to investment assets. The implications are potentially broad given the reduced role of the presumption of resulting trusts in relation to a couple’s assets.
The case has been remitted back to the Supreme Court of the Bahamas for a determination of ownership of the investment properties.