Who should care: Persons who give money to others to buy property as part of a 'joint investment' and don't hold legal title to the property.
The Case: Purnell v Purnell [2024] QDC 79
Link to case: https://jade.io/article/1077201
Case Summary:
Issue: Whether the plaintiff had an equitable interest in the property which was legally owned by his sister (the defendant).
Rule: The court considered the principles of constructive trust and the Land Title Act 1994 to determine the equitable interest of the parties involved.
Application: The plaintiff claimed a two-thirds interest in the property based on contributions to the purchase price and improvements made. The defendant disputed this claim. The court found the plaintiff’s evidence credible, supported by corroborating factors, and concluded that both parties intended to own the property jointly.
Conclusion: The court declared that the defendant holds the legal title to the Glenwood Property on constructive trust for both parties as tenants in common in equal shares. The plaintiff was ordered to pay the defendant $3,500 to equalize contributions towards rates
Extra Tidbits:
As with earlier posts regarding a sibling owning a property for another, the dispute arises when the legal owner evicts the 'underlying owner'. In this case, the sister sold the property and informed the plaintiff to vacate the property within 3 days.
Through consideration of evidence provided by both parties, the Court came to accept that:
the plaintiff contributed a proportion of the purchase price in cash;
the parties sought to buy and own the property together;
the parties intended to share the rates and outgoings;
the parties lacked clarity in how things were to be split and 'neither party had any clear idea about what was going to happen' (paragraph 31).
The Court therefore sought the use of a 'constructive trust' as it provides the Court 'with more flexibility in the form of remedial response that equity can make to the unconscientious assertion of legal title in the context of the failure of a joint undertaking' (paragraph 35).
Takeaway:
It's easier to acquire property in proportions it was intended to be held than to 'fix' a dispute that may arise in the future.
Where parties do not wish to hold the property in the relevant proportions legally, steps should be taken to ensure documentation is prepared to clearly set out the underlying intentions.
Even where there is a lack of clarity, such disputes can be resolved - it will just cost more than it would have had it been set out from the start.