Financial contributions


‘For all the rhetoric in recent cases about examining the whole course of dealing and taking a wide range of contributions into account, it is clear that financial contributions are still accorded more significance than others in quantifying interests in the family home.'

(Probert, Feminist Legal Studies [2007] 341 at 348 - casenote on Stack v Dowden [2007] 2 AC 432

In the context of the use of equitable devices in ascertaining beneficial ownership of the family home, consider this statement and the extent to which you consider that it is correct.



It was clearly stated by the Law Lords in the landmark case of Stack v Dowden that in the absence of an express trust, as in the circumstances of these parties where the property / land in question was a ‘family home', and was registered in joint names, there was a strong assumption that equitable ownership was equivalent to legal ownership. This proposition, so stated Lord Walker, was in accordance with a very well known maxim in equity, namely ‘equity follows the law' In the leading judgement on the case, Baroness Hale observed ‘cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interest will be very unusual'. Although Lord Hoffman, Lord Walker and Lord Hope endorsed Baroness Hale's speech, the overall decision was based on a more traditional approach, which was operated prominently in the 1970's: that being the ‘resulting trust', which was used to quantify a variety of interest, large or small in the family home. By using the resulting trust model, it is clear that direct financial contributions will be accorded more significance than ‘other' contributions, even though, in recent years, as demonstrated by case law, a more broad range of contributions has been (and are being) taken into account.

Establishing An Equitable Interest Before Stack V Dowden

Before the decision in Stack v Dowden it was easy for the courts to follow the maxim that equity should follow the law where a property, namely a dwelling house, would be registered in joint names. However, if the parties to the purchase had contributed unequally, then the presumption would be rebutted, and the court's would have to determine each party's equitable interest based on the concept of a ‘resulting trust'. For example: parties who are purchasing a property together will, rather than owning an even share of the property acquired (50/50 split between the owners), will now own different proportions of the equitable shares according to their individual financial contributions to the purchase price. Also, in the past, most property was owned by men only, as women could not legally hold property. In time this changed as women began to work, and were able to hold property, which lead to property being jointly held, giving women greater political status and autonomy. For decades this principal stood the test of time, especially in the 1980's and 1990's, however it was radically changed with the decision of the House of Lords in Stack v Dowden.

Stack V Dowden And The Establishment Of An Equitable Interest

In 1975 Mr. Stack (S) and Ms. Dowden (D) began a relationship. In 1983 Ms. Dowden purchased a property (the first property), which was solely owned by D, and began cohabitating together. Although S claimed that he had paid for the deposit on the said property, in fact the funds had come from D's account and D further proved this by providing bank statements showing that she was the only one who was liable to repay the mortgage on the first property.

From this relationship, four children were born. In 1993, S and D bought another property (the second property) which was conveyed in joint names. “The land registry form declared that the survivor of the parties could give good receipt for capital moneys arising from a disposition of all or part of the property, but there was no other indication as to the beneficial ownership of the property” As both parties were jointly responsible for the mortgage they accordingly both made repayments. In addition, D also paid the domestic bills. In 2002, S and D separated. S brought legal proceeding against D to claim his beneficial interest in the second property. The Court of First Instance, the Court of Appeal, awarded S half of the beneficial shares but, on appeal found that that there was an absence of an express trust thus resulting in S's share in the second property to be reduced from 50 per cent to 35 per cent. In deciding on the distribution of the shares the Law Lords posed the question “what did the parties intend?” Interestingly the courts appear to have taken the opinion that financial contributions as the main interest, and equity did not, like it had for so long, follow the law anymore. From the evidence presented it was clear that both S and D contributed from their respective incomes to the family home, but the equitable shares of such property were divided between them based on the principle of a resulting trust. S and D's equitable shares were almost exactly the same as the proportions of their financial contributions in regards to the second property, as at the end of their relationship.

The case of Stack v Dowden was the first opportunity for the House of Lords to consider two paramount issues:- (1) The beneficial interest of non married couples of a family property and (2) The beneficial interest of co habiting parties, but have failed to clearly state each parties beneficial interest. In Stack v Dowden the House of Lords did not consider it a common situation that a family property should be registered only in one parties name. Although their lordships reasons in the decision of Stack v Dowden were very strong and persuasive even in the situation the property is registered solely in one parties name, their decision is not binding in that situation. The general rule in equity is that equity should follow the law. If one party is the only person whose name is on the legal title of the property, that person is considered to be the only equitable owner.

Financial Contributions And Equitable Interest

Even though there is the presumption that equity should follow the law, the case of Stack v Dowden is not an example of this principal. In fact, the decision was quite unusual, and went against the general rule. Their Lordships rebutted the presumption in this landmark case as it was decided that the greater equitable share should go to D as she had made the biggest financial contribution. Although S paid less, and should have contributed more to the family property, the question posed was whether varied financial contributions between the parties really make the case ‘very unusual'?

In leaving these discussions aside, it is clear that Stack v Dowden reaffirmed that express trusts are always the best way for parties to establish their beneficial interests in a property. As per Baroness Hale: ‘No-one now doubts that such an express declaration of trust is conclusive unless varied by subsequent agreement or affected by proprietary estoppels”. With an express trust the main purpose is to deal with those matters which relate to equitable interest between parties, and if the equitable interest of a property is owned in shares or jointly. In other words, if the express trust clearly stated what each parties equitable shares are in a property they must also be clearly stated as to their equitable shares. However, it can be said that not many legal property owners take this precaution in setting up an express trust. The conclusion can be drawn that situations such as Stack v Dowden are typical. In Stack v Dowden the parties signed the land registry form declaring ‘that the survivor of the parties could give good receipt for capital moneys arising from a disposition of all or part of the property, but there was no beneficial ownership of the property”, however these words do not constitute an express trust.

Before Stack v Dowden the two ways for parties to claim equitable interest was to argue an interest in a constructive trust or an equitable interest in a resulting trust. After the judgment in Stack v Dowden the resulting trust option seemed to be used more frequently. In Stack v Dowden it was shown that the equitable interest is not in proportion to the legal ownership as in the end the House of Lords decision was to award Mr. Stack 35 per cent of the equitable interest in the family property. The underlying presumption that ‘equity follows the law' may now be regarded as rebuttable. As the HL showed with their findings, unequal financial contributions towards the purchase price are considered when the court considers parties beneficial interests in trust.

Reducing The Influence Of Resulting Trust In ‘Family Properties'

‘In order to reduce the influence of resulting trusts in the division of equitable interests in family property, an innovation is needed” It can be said that many ownership disputes relating to family properties are resolved by using the resulting trust model and now it can also be dealt with by way of a constructive trust. With constructive trusts there is a problem in that disputes are not dealt with efficiently, “even though it can do the job that a resulting trust can do”. In making a decision, the courts are required to take into consideration a wide range of factors, while a resulting trust is solely based on the parties financial contributions to the purchase price of the family property. The decision in Stack v Dowden has been criticized as for both academic and practical purposes, there is a presumption that there is a clear distinction between family properties and other properties, including land. A situation that the courts have not considered is when the family properties are used as a place of work or as security for a business. In fact, family properties cannot be considered to be distinct from properties for business. As our society is continually changing for some a property can be a family home and can be a business for others. If the property is used as a family home, a remortgage can be effective in raising additional capital for a non family purpose however, in this regard a constructive trust cannot be properly applied. Lord Neuberger has raised some concerns in this area but the presumption of joint equitable ownership will still apply. However, if a property is transferred into joint names on a remortgage, in some cases this does not give the non-mortgaging party any right to receive relative entitlements, but as a requirement set out by the lenders.

Another difficulty with the use of constructive trusts in regards with family property disputes is that the modern interpretation of ‘family home' is open ended. It was, for this reason, appropriate for their Lordships to use the resulting trust approach instead of the constructive trust approach in Stack v Dowden to deal with the equitable ownership of the family home, even though this approach was not usual of equity following the law.

Although it was difficult to establish a constructive trust approach, Baroness Hale stated in the case Abbott v Abbott ‘that where one could apply a constructive trust, such a trust had to be applied: as to their common intention and this could include intention which was actual, imputed from conduct or inferred provided that there was a direct or indirect contribution, in cash or in kind, to the acquisition of the land'. The key word being ‘kind': it gave the connotation that a broad range of consideration should be taken into account when determining interest in the context of the family home. ‘Common intention' was the standard which had to be met as without it there could be no constructive trust.


Through the years ‘equitable trust' has gone through three stages of evolution. In the 1970', the ‘resulting trust' model dominated and focused on financial contributions. In the 1980's and 1990's a broader scope of contributions was evaluated, such as if there were children - who looked after them ? and who was the breadwinner of the family). In order to establish equitable ownership in the family home reliance had to be placed on the ‘constructive trust' model and ask ‘where does the common intention lie?' In cases before Stack v Dowden it did not matter if one or both parties provided financial contributions.

With Stack v Dowden a radical change in approach was taken. No longer was a constructive trust preferred, the family home itself has gone under changes consisting of not only married couples, but co habiting couples. In previous decades this type of trust was not possible and the use of which equitable device could be used became unclear.

What is clear though is that financial contributions continue to outweigh other contributions in quantifying equitable interests in the family home. There are very important, although rare where financial contributions will be outweighed by more fundamental questions in favour of a constructive trust approach. In my opinion the resulting trust model is the preferable option as it provides clarity of division, with no wiggle room for parties; it may, however be unworkable. The constructive trust is the alternate where to use a resulting trust would result in unfairness. After all, equity sets out to cure unfairness and provide justice for all. Without a doubt, the next major decision in this area is eagerly anticipated.

Reference List:


Haley, M and McMurtry, L (2006) Equity and Trusts, Sweet and Maxwell, London

Hayton, D J (2003) The Law of Trusts, Sweet and Maxwell, London

Hudson, A (2008) Understanding Equity and Trusts, Routledge-Cavendish, London

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Wilkie, M, Malcolm, R and Luxton, P (2002) Equity and Trusts, Oxford University Press, Oxford

Worthington, S (2006) Equity, Oxford University Press, Oxford


Cooke, E, Cohabitants, Common Intention and Contributions (Again) (2005) Conv 555

Gardner, S, Family property today (2008) Law Quarterly Review 422

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Probert, G, Equality in the Family Home? (2007) 15 Feminist Legal Studies 341

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Abbott v Abbott [2007] UKPC 53

Burns v Burns [1984] 1 All ER 244

Carly v Farrelly [1975] 1 NZLR 356

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Farah Constructions Pty Ltd and others v Say-Dee Pty Ltd [2007] HCA 22

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Internet Sources

Informaworld website, Constructive Trusts: The Family Home Introduction in Ramjohn, M (2004) Cases and Materials on Trusts, Routledge-Cavendish, London

(Last accessed: 20/11/09)

The TimesOnline website (2007) Presumption of equality in couple's joint ownership

(Last accessed: 20/11/09)

Collyer Bristow LLP website (2007) Trusts, bankruptcy and the family home

(Last accessed: 20/11/09)


Law Commission report (2007) Cohabitation: The Financial Consequences of Relationship Breakdown, Law Com No 307 - Available in hard copy and also online at: