Joint ownership – Beneficial interests – Appellant claiming possession of property registered in sole name – Respondents obtaining declaration that property held on trust for them – Appellant appealing – Whether judge failing to consider common intention of parties – Whether sufficient detrimental reliance by respondents – Appeal dismissed
The appellant was the sole registered freehold owner of 104, Gladstone Park Gardens, London NW2. The appellant and the (now deceased) first respondent were never legally married under English law but, following a Muslim religious ceremony, regarded themselves as husband and wife. They had four children together, including the second and third respondent sons.
They acquired the property, which was in poor condition, in 1995 when it was registered in their joint names. However, they did not move into it. The first respondent, who was a builder, renovated the property and it was then rented out to pay the mortgage.
In 1999, the property was sold to a cousin for £130,000. In 2005 it was transferred into the appellant’s sole name for a purchase price of £249,000 and the family lived there. In 2007, the appellant moved out. The first respondent remained living there with the second and third respondents and their families. In 2014, the appellant asked the respondents to vacate the property as she wished to sell it.
The appellant started a claim for possession but the respondents counterclaimed for a declaration that she held the property on trust for them. The county court upheld the counterclaim and ordered the appellant to transfer the property to the respondents. The judge also dismissed her claim for possession and ordered her to pay costs.
The appellant appealed contending that: (i) the judge wrongly failed to consider whether there was a common intention as to the beneficial interest in the property; (ii) the judge’s conclusion that the second and third respondents should share in the beneficial interest was perverse; (iii) the judge failed to consider whether there was sufficient detrimental reliance by the respondents; and (iv) the judge’s finding that the appellant made no financial contribution to the purchase of the property was wrong.
Held: The appeal was dismissed.
(1) In establishing a common intention constructive trust, the first question was whether there was a common intention, either expressed or inferred. If that was established, there had to be detrimental reliance on the common intention. The parties’ shares then had to be quantified. A common intention could be established either on the basis of express discussions between the parties or the parties’ conduct, usually by contributions to the purchase price either initially or by payment of mortgage instalments: Dobson v Griffey [2018] EWHC 1117 (Ch) considered.
Where a family home was bought in the joint names of a cohabiting couple who were both responsible for any mortgage, but without any express declaration of their beneficial interests, the presumption was that equity followed the law and they were joint tenants both in law and in equity. That presumption could be displaced by showing that the parties had a different common intention to be deduced objectively from their conduct. The relevant intention of each party was the intention which was reasonably understood by the other party to be manifested by that party’s words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party: Jones v Kernott [2012] 1 AC 776 applied. Gissing v Gissing [1971] AC 886, Oxley v Hiscock [2004] EWCA Civ 546 and Stack v Dowden [2007] AC 432 considered.
In a sole name case, the presumption was that the sole legal owner was also the sole beneficial owner. In both joint and sole name cases, what was needed to displace the presumption that equity followed the law was a common intention that the beneficial ownership should be something different from the legal ownership. Each case would turn on its own facts. Financial contributions were relevant but there were many other factors which might enable the court to decide what shares were either intended or fair. In this case, on the evidence, the judge was entitled to conclude that the common intention of the parties was that the property should belong beneficially to the respondents and not to the appellant.
(2) The appellant contended that the property was 100% owned by her. The respondents argued that it belonged 100% to them. There was no suggestion of a fallback case that it was jointly owned. The essential question for the judge was whether he accepted that the respondents’ financial contributions and other factors were sufficient to displace the presumption that the appellant was the sole beneficial as well as legal owner. Having decided that they were, he did not have to consider precisely how or when the sons acquired their interests, or what they were.
(3) Detrimental reliance was a requirement for a common intention constructive trust. Where a person spent money on a property by way of mortgage payments, it would be readily inferred that they did so because they were relying on an understanding that they had an interest in the property. Such expenditure would perform the twofold function of establishing the common intention and showing that the appellant had acted upon it. In the present case, there was sufficient evidence to demonstrate that the judge thought that they had acted to their detriment in the belief that the property belonged to them. Nothing more was required: Grant v Edwards [1986] Ch 638 considered.
(4) It would be unsafe and unfair for the appeal court to overturn the decision of the judge that the appellant in fact made no financial contribution. It was for the appellant to demonstrate on appeal that the trial judge had erred in a factual conclusion. In general, that could only be done by showing either that there was no evidence to support his conclusion, or that his decision was one that no reasonable trial judge could have come to. It was impossible to do that without having regard to all the evidence before him. It was impossible for an appellate court to recreate the atmosphere of a trial where the judge had evidence before him, but the appellate court did not have the details of what that evidence was: Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 and Henderson v Foxworth Investments Ltd [2014] UKSC 41 considered.
Raj Arumugam (instructed by Hodders Solicitors) appeared for the appellant; Paul Oakley (instructed by S G Law Solicitors Ltd, of Ilford) appeared for the respondents.
Eileen O’Grady, barrister
