Nilsson v Cynberg – establishing the beneficial interests in a co-owned property

Since the well-known case of Stack v Dowden [2007], it has been the common understanding that where there is an express declaration of trust, this will be conclusive as to the beneficial interest in a jointly owned property unless this is varied by “subsequent agreement or affected by proprietary estoppel”. This has given rise to questions concerning what was meant by the term “subsequent agreement” and various attempts have been made in a variety of cases to establish this.

Challenges in establishing subsequent agreements

Naturally, in true lawyer fashion, the general consensus seemed to be ‘well it depends’. Was the subsequent agreement reached after the initial declaration of trust was made? Was it in writing and compliant with the Law of Property (Miscellaneous Provisions) Act 1925? Invariably, all cases need to be judged on the evidence presented to the court so the outcome truly does depend on the facts. Nonetheless there was still a lack of clarity as to what would be accepted as a “subsequent agreement” in the context of establishing beneficial interest where there is a historic express declaration of trust. It appeared that a common intention constructive trust, namely an oral agreement and the subsequent actions of the parties, did not fit this description.

Nilsson v Cynberg: the case

The court was asked to consider whether a common intention constructive trust would classify as a subsequent agreement and thus alter the express declaration of trust which was made at the time of purchase in the recent case of Nilsson v Cynberg [2024]. In this case, Mr and Mrs Cynberg bought their property initially in 2001 and held the property on trust as joint tenants. In 2009 the couple separated and at this time, Mr Cynberg moved out of the property and told Mrs Cynberg that the property was hers provided that she make provisions to leave it to their children.

After this, Mrs Cynberg took on sole responsibility of the mortgage payments and paid for several renovations to the property. No action was taken to move the property or the mortgage into her sole name nor were divorce proceedings started until much later for cost reasons. Following receipt of some inheritance in 2014, Mrs Cynberg initiated divorce proceedings and these were made final in March 2018. The property was still in the joint legal names of both Mr and Mrs Cynberg.

Court’s decision and appeal

In October 2018, Mr Cynberg was declared bankrupt and Trustees in bankruptcy were appointed. A dispute arose in relation to the ownership of the property as Mrs Cynberg was asserting a claim to 100% of the beneficial interest in the property based on the events leading up to the divorce however, based on the common understanding in Stack v Dowden, the Trustees argued that there was an express declaration of trust and no formal subsequent agreement in place and therefore, Mr Cyberg (and the Trustees by association) has a vested interest in the 50% of the property.

On appeal, the court found that the trial judge in the first instance had not erred in finding in favour of Mrs Cynberg and awarding her 100% beneficial interest in the property. The appeal judge noted in his judgment that the understanding of “subsequent agreement” should not be limited to that of a formal agreement in writing and may be extended to include a common intention constructive trust.

Implications of the judgement and further advice

This judgement opens up a new avenue for individuals in dispute looking to establish a larger beneficial interest in their jointly owned property.

If you would like further advice, please contact our Private Wealth Disputes team who can offer expert advice when disputes arise in relation to Inheritance Act claims, disputed/challenged Wills, contested probate and estates, trust disputes.

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This content is correct at time of publication