Summary

Claimant was the beneficial owner of a half share in the proceeds of sale of a yacht based on the fact that the defendant expressly constituted himself a trustee of the yacht for both parties.

Facts

The claimant sought a declaration that she was the beneficial owner of a half share in the proceeds of sale of a yacht, which was, until its sale, registered in the sole name of the defendant. The claim was based on either: (i) the fact that the defendant expressly constituted himself a trustee of the yacht for himself and her (see eg Paul v Constance (1977) 1 WLR 527); or (ii) that a constructive trust arose under the principles in relation to quasi-matrimonial homes exemplified in Lloyds Bank plc v Rossett (1991) 1 All ER 1111, Grant v Edwards (1986) 2 All ER 426, and Eves v Eves (1975) 1 WLR 1338. The parties had been in a close relationship, although the defendant remained married to someone else throughout. The claimant gave up her flat and stored her furniture so that they could live together on the yacht. When they finally split up, the claimant demanded her share of the yacht's value and had it arrested. Eventually it was released against undertakings to pay the half of the proceeds of sale into a solicitor's account where it now sat earning interest pending the outcome of these proceedings.

Held

(1) The claimant was entitled to succeed under (i) (above). The judge found the following facts. (a) The defendant used "our" in relation to the yacht on frequent occasions, intending it to be understood by the claimant as indicating her beneficial interest. (b) The parties had a discussion concerning "security" in which the defendant indicated that the claimant's security was her interest in the boat. (c) The defendant told the claimant that the boat was registered in his name alone because she did not have an Ocean Master's certificate. (2) The defendant effectively constituted himself an express trustee of the yacht. (3) The parties' shares in the yacht should be equal. Nothing express was said to that effect but the regular use of the word "our" indicated an intention that there was no distinction to be drawn by the defendant between himself and the claimant so far as concerned ownership of the yacht. Moreover the discussion about security indicated that the claimant was intended to have a substantial interest. Failing either of these points, the maxim "equality is equity" should be applied. (4) That made it unnecessary to consider the constructive trust argument but the appropriate size of her share applying constructive trust principles alone was not clear.

Judgment for the claimant.