The England and Wales High Court’s recent judgment in Nilsson v Cynberg (2024 EWHC 2164 Ch) has introduced new uncertainty around the relationship between constructive trusts and expressly declared trusts, legal experts have noted.
The case revolves around a divorced couple, Collette and Stuart Cynberg, and the ownership of their former matrimonial home, raising important questions about the circumstances in which a constructive trust can override an express declaration of trust.
The couple had jointly purchased their home in 2001, declaring on Form TR1 that they held the property as joint tenants. However, after their separation in 2009, they verbally agreed that Stuart would relinquish his interest in the home, provided Collette left it to their children in her will. From that point, Collette covered all property-related expenses until their divorce in 2018. Later that year, Stuart was declared bankrupt, and HMRC asserted that his 50% interest in the property remained intact, now vesting in his bankruptcy trustees. Disputing this, Collette initiated legal proceedings, arguing that she held the full beneficial interest under a common intention constructive trust or via proprietary estoppel.
Initially, Collette succeeded in her claim at a district court in November 2023. However, HMRC’s agents appealed, arguing that an express trust, declared at the point of purchase, could not be displaced by a constructive trust. They relied on existing legal precedent, particularly Pink v Lawrence (1978) and Stack v Dowden (2007 UKHL 17), which held that an express declaration of trust could only be altered by rectification, rescission, or a subsequent agreement, such as one giving rise to proprietary estoppel.
Despite these precedents, the judge in Cynberg ruled differently. He held that a written, signed agreement is not required to overturn a previous express declaration of trust if circumstances indicate the creation of a common intention constructive trust. In this case, the oral agreement between Collette and Stuart was found to establish such a trust, effectively granting Collette the full beneficial interest in the property, despite the earlier express trust. HMRC’s appeal was dismissed on all grounds.
This ruling marks a significant development in trust law, as it clarifies that an oral agreement—despite not meeting statutory requirements for signed writing—can suffice to displace an express declaration of trust if it leads to the formation of a valid constructive trust. Legal experts believe this case could have far-reaching implications for future property disputes involving constructive and express trusts.
