Property Acquired In The Name Of A Spouse: Presumption Of Advancement And Resulting Trust Under Nigerian Law -By Jobs Joseph

1.0 INTRODUCTION

Marriage creates several legal relationships between spouses, including relationships concerning the acquisition, ownership and disposition of property. During the subsistence of a marriage, spouses may acquire houses, land, businesses, investments and other assets. In some cases, the property may be acquired in the name of the spouse who provided the purchase money. In other cases, however, one spouse may provide the consideration while deliberately causing the property to be registered or conveyed in the name of the other spouse.This situation raises an important legal question:

Does the person whose name appears on the title automatically become the beneficial owner of the property?

The answer is not always in the affirmative.

Under Nigerian law, the concept of ownership is not limited to the name appearing on a title document. There are circumstances in which legal ownership and beneficial ownership may be separated. A person may hold the legal title to a property while another person is entitled to the beneficial interest in that property.

This distinction becomes particularly important in disputes between spouses. Where a husband purchases property with his own money but places the property in his wife’s name, the law may presume that he intended to make an advancement or gift to his wife. On the other hand, where a wife provides the purchase money but the property is acquired in her husband’s name, the traditional presumption of advancement does not ordinarily operate in favour of the husband. Depending on the circumstances, a resulting trust may therefore arise in favour of the wife.

Two equitable principles are particularly relevant to the determination of these disputes: the presumption of advancement and the presumption of resulting trust.

The presumption of advancement is based on the relationship between the parties and may arise where a person provides consideration for property acquired in the name of another in circumstances suggesting an intention to make a gift or advancement. A resulting trust, on the other hand, may arise where one person provides the purchase consideration for property acquired in another person’s name and the circumstances indicate that the person who provided the consideration did not intend to transfer the beneficial ownership. The Nigerian courts have considered these principles in a number of cases, including Jolugbo v Aina, Ughutevbe v Shonowo and Ramanchandani v Ekpenyong. The purpose of this article is therefore to examine the legal principles governing property acquired in the name of a spouse, the distinction between legal and beneficial ownership, the operation of the presumptions of advancement and resulting trust, and the relevance of intention in determining ownership. It will also consider the effect of marital breakdown and divorce proceedings and highlight some practical measures that spouses can adopt to reduce disputes concerning matrimonial property.

2.0 UNDERSTANDING LEGAL AND BENEFICIAL OWNERSHIP

Before examining the doctrines of advancement and resulting trust, it is important to understand the distinction between legal ownership and beneficial ownership.

2.1 Legal Ownership

Legal ownership generally refers to the ownership recognised by law and reflected in the legal title to the property.

In the case of registered land, for instance, the person whose interest is registered may ordinarily be regarded as the legal owner. However, the existence of legal title does not necessarily resolve every question concerning the beneficial interest in the property. Equity recognises circumstances in which a person who holds legal title may hold the property for the benefit of another person. In such a situation, the person with legal title may be regarded as the trustee, while the other person possesses the beneficial interest.

This means that the question:

“Whose name is on the title?”

may not always provide the complete answer to the question:

“Who is beneficially entitled to the property?”

2.2 Beneficial Ownership

Beneficial ownership refers to the equitable right to enjoy the benefits of property. It is therefore possible for one person to hold the legal title while another person possesses the beneficial interest. This distinction becomes particularly significant where one spouse provides the purchase consideration but the property is acquired in the name of the other spouse.

For example, if a husband provides the money for the purchase of a house but causes the property to be registered in his wife’s name, the fact that the husband provided the purchase money does not necessarily mean that he remains the beneficial owner. Similarly, where a wife provides the purchase money but the property is registered in her husband’s name, the husband may have legal title without necessarily being entitled to the entire beneficial interest. The circumstances surrounding the transaction therefore become important.

3.0 THE PRESUMPTION OF ADVANCEMENT

3.1 Meaning of Presumption of Advancement

The presumption of advancement is an equitable presumption which arises in certain relationships where a person provides consideration for property acquired in another person’s name.

The presumption is that the person who provided the consideration intended to make a gift or advancement to the person in whose name the property was acquired. Historically, certain relationships have attracted this presumption. The traditional relationship between husband and wife is particularly relevant.

Thus, where a husband voluntarily purchases property with his own money and causes the property to be acquired in his wife’s name, the law may presume that he intended to make provision for or confer a benefit upon his wife.

The presumption, however, is not conclusive. It may be rebutted by evidence showing that the husband did not intend to make a gift or advancement.

3.2 Husband Purchasing Property in Wife’s Name

Consider the following situation.

A husband pays ₦50 million for a property but instructs the vendor to convey the property to his wife.

The husband may subsequently argue that because he provided the entire purchase money, he remains the beneficial owner.

That argument does not necessarily succeed automatically. The transaction may raise the presumption of advancement in favour of the wife. The husband would therefore need to produce evidence capable of rebutting the presumption if he seeks to establish that he retained the beneficial interest.

This principle is illustrated by Jolugbo v Aina.[1] The important point is that the court may consider not merely who supplied the money but why the property was deliberately acquired in the name of the wife. The husband’s provision of the purchase money, coupled with his decision to place the property in his wife’s name, may indicate an intention to benefit her.

Therefore, the simple argument:

“I paid for it, so it belongs to me”

may not be sufficient where the circumstances establish an intention to make an advancement.

4.0 RESULTING TRUST

4.1 Meaning of Resulting Trust

A resulting trust may arise where one person provides the purchase money for property which is acquired in the name of another person. The doctrine is based substantially on the presumed intention of the person who provided the consideration. Where A provides the purchase money and the property is acquired in B’s name, equity may presume that A did not intend to transfer the beneficial ownership to B gratuitously.

In appropriate circumstances, B may therefore hold the property on resulting trust for A.

The doctrine prevents a person from obtaining the beneficial ownership of property merely because the property was placed in his or her name where the surrounding circumstances indicate that another person provided the consideration without intending to make a gift.

4.2 Wife Purchasing Property in Husband’s Name

The principle becomes particularly important where a wife provides the purchase consideration and the property is acquired in the name of her husband. The traditional presumption of advancement does not ordinarily operate in favour of the husband merely because he is married to the woman who provided the money. Consequently, where a wife provides the consideration for a property which is acquired in her husband’s name, the circumstances may support a resulting trust in her favour. The husband may possess the legal title, but the wife may establish that she retains the beneficial interest. Again, the question is not determined simply by looking at the name appearing on the title.

The court will consider the circumstances surrounding the transaction and the intention of the parties.

5.0 POSITION OF THE NIGERIAN COURTS

The Nigerian courts have considered the principles of advancement and resulting trust in a number of cases.

5.1 Jolugbo v Aina

In Jolugbo & Anor v Aina & Anor,[2] the Court of Appeal considered the equitable principles applicable where property is acquired in the name of a spouse. The case is significant because it illustrates the distinction between a husband purchasing property in his wife’s name and a wife purchasing property in her husband’s name. Where a husband provides the purchase money and voluntarily causes the property to be acquired in his wife’s name, the presumption of advancement may arise in favour of the wife. The husband may therefore be required to rebut that presumption where he seeks to establish that he retained the beneficial interest. The converse situation is different.

Where a wife provides the purchase money and causes the property to be acquired in her husband’s name, the traditional presumption of advancement does not ordinarily operate in favour of the husband.

The circumstances may instead support a resulting trust in favour of the wife.

The case therefore demonstrates an important principle:

The law does not necessarily treat the two transactions in exactly the same manner.

5.2 Ughutevbe v Shonowo

The Supreme Court’s decision in Ughutevbe v Shonowo & Anor[3] is also relevant to the principles governing property acquired in another person’s name. The case demonstrates that where one person provides the consideration for property acquired in another person’s name, the circumstances may raise an equitable presumption in favour of the person who provided the consideration.

However, the presumption is not conclusive.

Evidence showing that the person who provided the money actually intended to make a gift may rebut the presumption.

The importance of the decision therefore lies in the fact that the court is required to examine the circumstances surrounding the acquisition rather than rely exclusively upon the name appearing on the property.

5.3 Ramanchandani v Ekpenyong

The Supreme Court also considered the doctrine of advancement in Ramanchandani v Ekpenyong.[4] The case demonstrates the relevance of the relationship between the parties in determining whether the circumstances justify a presumption of advancement. Where a husband provides money for property acquired in his wife’s name, the relationship between the parties may support the inference that the husband intended to make provision for his wife. The case therefore reinforces the importance of examining both the relationship of the parties and the circumstances surrounding the acquisition.

HUSBAND AND WIFE: A COMPARATIVE POSITION

The difference between the two situations may be summarised by reference to the equitable presumptions applicable to each transaction. Where a husband provides the purchase money and the property is acquired in the name of his wife, a presumption of advancement may arise in favour of the wife. In such circumstances, the husband may bear the burden of rebutting the presumption if he subsequently claims that, notwithstanding the registration of the property in the wife’s name, he intended to retain the beneficial ownership.

Conversely, where the wife provides the purchase money but the property is acquired in the name of her husband, a resulting trust may arise in favour of the wife, depending on the circumstances and the evidence. The fact that the husband’s name appears on the title does not, by itself, necessarily extinguish the wife’s beneficial interest where she can establish that she provided the consideration and did not intend an outright gift.

Thus, where a husband provides the consideration for property acquired in his wife’s name but seeks to assert beneficial ownership, he may be required to rebut the presumption of advancement in favour of the wife. Similarly, where a wife provides the consideration for property acquired in her husband’s name, she may rely upon the principles of resulting trust to establish a beneficial interest, subject always to the evidence of the parties’ actual intention

The above  demonstrates that the decisive question is not simply:

“Who paid for the property?”

Neither is it always:

“Whose name is on the title?”

The circumstances surrounding the transaction and the intention of the parties may determine the beneficial ownership.

ARE THE PRESUMPTIONS CONCLUSIVE?

The answer is no.

The presumption of advancement and the presumption of resulting trust are both capable of being rebutted by evidence.

The court may consider a number of factors, including:

1. The person who provided the purchase consideration;
2. The source of the purchase money;
3. The intention of the parties at the time of acquisition;
4. The circumstances in which the property was acquired;
5. The terms of the conveyance or title documents;
6. Any written or oral agreement between the parties;
7. Whether the transaction was intended to be an outright gift;
8. The subsequent conduct of the parties;
9. The purpose for which the property was acquired; and
10. Any other evidence capable of establishing the true intention of the parties.

The presumptions therefore provide a starting point for the court. They do not prevent the court from examining the evidence before reaching its conclusion.

THE IMPORTANCE OF INTENTION

Intention is central to disputes concerning property acquired in the name of a spouse.

The court may have to determine what the person who provided the consideration intended at the time the property was acquired.

Was the property intended as a gift?

Was the registered spouse intended to hold the property for the benefit of the spouse who provided the money?

Was the transaction intended to be a temporary arrangement?

Was the property deliberately registered in the spouse’s name for a particular reason?

These questions may become relevant in determining beneficial ownership. Consequently, documentary evidence can become extremely important.

Such evidence may include:

i receipts for payment

1. bank statements

iii. transfer records

1. purchase agreements
2. conveyances
3. correspondence between the spouses

vii. evidence of mortgage payments

viii. evidence of construction or renovation expenses

1. written agreements concerning the property.

A spouse seeking to establish beneficial ownership should therefore not rely solely on the fact that he or she provided the purchase money. The evidence must be capable of assisting the court in determining the intention behind the transaction.

EFFECT OF DIVORCE AND MARITAL BREAKDOWN

The breakdown of a marriage often brings disputes concerning property to the forefront. However, the commencement of divorce proceedings does not, by itself, determine the beneficial ownership of property.

The court may have to distinguish between two different questions:

First: Who beneficially owns the property under the principles of equity?

Second: Whether the property should form part of a matrimonial property settlement.

These are not necessarily the same question. Section 72 of the Matrimonial Causes Act gives the court powers concerning the settlement of property in matrimonial proceedings.[5] Consequently, the mere fact that property was acquired during the marriage does not automatically determine its beneficial ownership.

Similarly, the fact that divorce proceedings have commenced does not automatically transfer ownership from one spouse to the other. Where the dispute concerns beneficial ownership, the principles of advancement and resulting trust may remain relevant.

PROPERTY ACQUIRED SHORTLY BEFORE DIVORCE

Another issue may arise where one spouse acquires or transfers property shortly before the commencement of divorce proceedings. The timing of the transaction may be relevant evidence concerning intention.

For instance, where a spouse transfers substantial property into the name of the other spouse shortly before marital breakdown, the court may examine the circumstances surrounding the transaction.

Was the transfer intended as a genuine gift?

Was the property merely being held for the benefit of the transferring spouse?

Was the transaction designed to conceal or preserve an interest in the property?

These questions may become relevant depending on the evidence. However, timing alone does not determine ownership.

The court must still examine the surrounding circumstances and determine the intention of the parties from the evidence before it.

PRACTICAL EFFECT OF THE DOCTRINES

The principles of advancement and resulting trust have practical implications for matrimonial property disputes.

Protection of Beneficial Interests

The doctrines may protect a person who provides consideration for property but does not appear on the legal title. A spouse may therefore establish a beneficial interest notwithstanding the fact that the property is registered in the name of the other spouse.

Prevention of Unintended Enrichment

The doctrines may also prevent one spouse from obtaining an unintended benefit merely because property was placed in his or her name. Where the evidence establishes that the registered spouse was not intended to take the beneficial interest, equity may recognise the interest of the person who provided the consideration.

Importance of Documentation

The principles also demonstrate the importance of properly documenting substantial transactions between spouses. Where a spouse intends to make an outright gift, that intention should, where practicable, be clearly documented. Similarly, where one spouse is intended to hold property for the benefit of the other, the arrangement should, where appropriate, be documented. Proper documentation can reduce uncertainty and minimise disputes if the marriage subsequently breaks down.

12.0 ILLUSTRATIVE EXAMPLES

1. Husband Purchases Property in Wife’s Name

Husband pays ₦50 million for a residential property but instructs the vendor to convey the property to his wife. In the absence of evidence showing a contrary intention, the circumstances may give rise to a presumption of advancement in favour of the wife. If the husband subsequently claims that he is the beneficial owner, he may need to produce evidence capable of rebutting that presumption.

2. Wife Purchases Property in Husband’s Name

Wife pays ₦50 million for a property but causes the property to be conveyed to her husband. If there is no evidence that she intended to make an outright gift to her husband, the circumstances may support a resulting trust in her favour. The husband may hold the legal title, but the wife may establish a beneficial interest in the property.

These examples demonstrate why the simple statement that “the person whose name appears on the title owns the property” may not always represent the complete position under equity.

CHALLENGES IN ESTABLISHING BENEFICIAL OWNERSHIP

Although equitable principles may provide protection, establishing beneficial ownership can be difficult in practice.

One major difficulty is that spouses often acquire property informally without documenting their intentions.

Secondly Payments may also be made through joint accounts, cash transactions or several instalments, making it difficult to establish the actual source of the purchase consideration.

Thirdly, parties may change their positions after the acquisition of the property. A spouse may initially acknowledge that the property was acquired for the benefit of the other spouse and subsequently deny that position following marital breakdown.

Another difficulty arises where the registered owner relies heavily on the title document while the other spouse relies primarily on oral evidence concerning the original transaction. Matrimonial disputes may also involve conflicting testimony from the parties. For these reasons, contemporaneous documentary evidence can become particularly important. The court must ultimately examine the totality of the evidence rather than determine beneficial ownership solely by looking at the name appearing on the title.

RECOMMENDATIONS

In order to reduce disputes concerning matrimonial property, spouses acquiring substantial assets should clearly document the intended ownership structure.

1. Where one spouse provides the purchase consideration but intends to make an outright gift to the other spouse, that intention should, where practicable, be clearly documented.
2. Where one spouse is intended to hold property for the benefit of the other, the nature of that arrangement should be properly documented.
3. Legal practitioners, conveyancers and financial institutions should also ensure that the intended ownership structure of substantial matrimonial property is properly reflected in the relevant documentation where circumstances warrant.

The importance of proper documentation cannot therefore be overstated. A clear agreement made at the time of acquisition may prevent years of litigation after the relationship between the parties has broken down.

CONCLUSION

The acquisition of property in the name of a spouse raises important questions concerning legal and beneficial ownership under Nigerian law. The central principle is that legal title and beneficial ownership are not necessarily the same thing. The fact that the name of one spouse appears on a title document does not, in every circumstance, conclusively determine who is beneficially entitled to the property. Where a husband provides the consideration and voluntarily causes property to be acquired in his wife’s name, the traditional equitable doctrine of presumption of advancement may operate in favour of the wife. If the husband later seeks to establish that he retained the beneficial interest, he may be required to rebut that presumption. On the other hand, where a wife provides the purchase money and the property is acquired in her husband’s name, the traditional presumption of advancement does not ordinarily operate in favour of the husband. Depending on the circumstances and the evidence, a resulting trust may arise in favour of the wife.

The decisions in Jolugbo v Aina, Ughutevbe v Shonowo and Ramanchandani v Ekpenyong demonstrate the relevance of these equitable principles to disputes involving property acquired in the name of another spouse.

However, these principles should not be treated as rigid rules. The presumptions are rebuttable, and the court remains concerned with the circumstances surrounding the transaction and, ultimately, the intention established by the evidence.

It is therefore unsafe to state categorically that:

“The person whose name is on the property owns it.”

It is equally unsafe to state that:

“The person who paid for the property automatically owns it.” The legal position may depend upon the nature of the transaction, the source of the purchase consideration, the relationship between the parties, the applicable equitable presumption, the intention of the parties and the totality of the evidence.

The practical lesson is clear:

Where substantial property is acquired between spouses, the intended beneficial ownership should be clearly and properly documented. Doing so may not only protect the interests of the parties during the marriage but may also prevent unnecessary disputes when the relationship subsequently breaks down.

FOOTNOTES

[1] Jolugbo & Anor v Aina & Anor (2016) LPELR-40352(CA).

[2] Ibid.

[3] Ughutevbe v Shonowo & Anor (2004) 16 NWLR (Pt 899) 300; [2004] NGSC 4.

[4] Ramanchandani v Ekpenyong (1975) 5 SC 1; [1975] NGSC 1.

[5] Matrimonial Causes Act, Cap M7, Laws of the Federation of Nigeria 2004, s 72.

[6] See generally the equitable principles relating to resulting trusts and presumptions of advancement as applied by Nigerian courts in Ughutevbe v Shonowo (supra).

[7] Jolugbo v Aina (supra).

[8] Ramanchandani v Ekpenyong (supra).

Author: Job Joseph, DL, LL.B(Hons), ABU Zaria