Lloyds Bank plc v Rosset
[1991] 1 AC 107
Independent editorial summary โ not the official judgment. Read the full judgment via the source link.
Ratio Decidendi
A beneficial interest in property held in another's sole name can be established through a constructive trust in two ways only. First, where there is evidence of an express common intention to share beneficial ownership, accompanied by detrimental reliance on that common intention by the claimant. Second, where in the absence of any express discussion, a common intention can be inferred solely from direct contributions to the purchase price โ by payment of the deposit or mortgage instalments โ from which an intention to share beneficially can be inferred. Indirect contributions (such as household expenses, renovations, or domestic labour) that allow the other party to pay the mortgage are insufficient to raise an inference of shared common intention in sole-name cases.
Facts
A house was purchased in the sole name of Mr Rosset using money from a family trust. Mrs Rosset supervised renovations but made no direct financial contribution. The bank obtained a charge over the property. Mrs Rosset claimed a beneficial interest that took priority.
Judgment Summary
The House of Lords (Lord Bridge, Lord Griffiths, Lord Ackner, Lord Oliver, and Lord Jauncey) unanimously dismissed Mrs Rosset's appeal. The property was purchased in Mr Rosset's sole name using money from a Swiss family trust, which stipulated the property be held in one name. Mrs Rosset was extensively involved in the renovation of the property, supervising builders and decorating, but made no direct financial contribution to purchase or mortgage. She argued this gave rise to a constructive trust in her favour. Lord Bridge conducted a definitive survey of the law and identified two bases for establishing a constructive trust in sole-name cases. First, express common intention: where there had been discussions between the parties, however informal, from which a common intention to share ownership could be inferred, and the claimant acted in detrimental reliance. Second, inferred common intention: only from direct financial contributions to acquisition costs. On the facts, neither was satisfied. There was no evidence of any discussion of shared ownership โ Mr Rosset's family had insisted the property be in his name alone. Mrs Rosset's contributions to the renovation, though substantial in time and effort, were not direct financial contributions to the purchase and did not suffice. Lord Bridge expressed doubt whether anything short of a direct contribution to the purchase price could ever found an inferred common intention. The bank's charge accordingly had priority.
Key Quotes
"It is at least extremely doubtful whether anything less than a direct contribution to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will justify the inference of a constructive trust in sole-name cases."
โ Lord Bridge at 133
"The first and fundamental question which must always be resolved is whether there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially."
โ Lord Bridge at 132
"Where the house is acquired in the sole name of one party, the first question to ask is whether there was an express agreement to share. If there was none, then only direct financial contributions will support an inference of common intention."
โ Lord Bridge at 133
Subsequent Treatment
Followed as the governing test in sole-name property disputes. The two-stage Rosset analysis (express/inferred common intention) remains the starting point in all constructive trust claims where property is held in one party's name.
Distinguished by Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53 in joint-names cases, where a more holistic approach is taken and the court examines the 'whole course of dealing'. The Rosset framework continues to govern sole-name cases.
Criticised by the Law Commission in 'Cohabitation: The Financial Consequences of Relationship Breakdown' (Law Com No 307, 2007), which recommended a statutory sharing scheme for cohabitants, noting that the Rosset test produces harsh results for partners who contribute in non-financial ways.
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