House bought by mother but conveyed to mother, daughter and son-in-law as beneficial tenants in common–Judge’s finding that this was done purely for convenience left
undisturbed–Mother entitled to whole property on a resulting trust, subject only to charges in favour of son-in-law for moneys expended by way of improvements, etc
This was an
appeal by Mrs Joan Gertrude French and Mr Frank Edgar French, both of 62
Warrington Road, Harrow, Middlesex, from a judgment of Walton J dated October 7
1974 awarding Mrs Rosetta Gross, also of 62 Warrington Road, a declaration that
the beneficial interest in that property vested in her alone, and dismissing
the appellants’ counterclaim for a declaration that the property was vested in
all parties as joint tenants in common.
Mr D Rice
(instructed by Michael Kramer & Co) appeared for the appellants, and Mr R A
Payne (instructed by Eric Cheek & Co) represented the respondent.
Giving the
judgment of the court, SCARMAN LJ said that Mrs French was Mrs Gross’s daughter
and married Mr French some time before 1949, when Mrs Gross lost her husband
and decided to buy a house in Paddington. She divided that house into three
parts. She herself occupied the bottom part, and her daughter and son-in-law
occupied the top, for which they paid her a rent of 25s a week; the middle part
she let furnished. By 1963 the neighbourhood was deteriorating, and Mr and Mrs
French, who by now had a daughter aged nine, wished to move. Mrs Gross was
willing to move, and offered to sell the house and, with the proceeds of sale,
to buy another one. They found 62 Warrington Road, Harrow. Mrs Gross provided
the purchase-money. The house was leasehold. A solicitor, a Mr Harris, was
instructed, and in December 1963 the leasehold title was acquired and
registered in the names of Mr French, Mrs French and Mrs Gross. By the deed of
transfer, ‘in consideration of £5,100’ the transferor transferred the house to
all three as ‘beneficial tenants in common.’
The family moved into the house in 1964, Mr French paying Mrs Gross a
weekly sum of £3. He also discharged the rates and spent considerable time and
money improving, renovating, and repairing the property. A time came when it
proved possible to acquire the freehold reversion, and Mr French raised the £700
needed for its purchase. When acquired, the reversion was put into the three
names, just as the leasehold title had been.
All went well
until in 1967 a quarrel arose between Mrs Gross and Mr French, in the course of
which he told her, in effect, to get out or keep out of his house. This
apparent claim to ownership of an interest in the house alarmed her. The case
for Mrs Gross was that she provided the purchase-price of the house and never
intended to make a gift, in her lifetime, of the house, or any part of it, to
her daughter or son-in-law; the property was put into their names as well as
hers ‘simply for convenience.’ There was
therefore, she contended, nothing to rebut the ordinary presumption of a
resulting trust in favour of herself as the person who provided the
purchase-price: Dyer v Dyer (1788) 2 Cox Eq Cas 92. She
recognised, however, that Mr French was entitled to a charge in respect of the
£700 he advanced for the freehold, and her counsel conceded in this court that
Mr French was also entitled to a lien in respect of his expenditure on the
house, though there was an issue as to the subject-matter and conditions of the
lien. Mr and Mrs French contended that Mrs Gross had made a gift to them of
two-thirds of the leasehold interest; that if the evidence was unclear, there
was a presumption of a gift by her to her daughter and son-in-law by way of
advancement; and that by acquiescing in Mr French’s expenditure of time and
money upon the house, including the provision of the £700 for the freehold, she
had estopped herself from denying that he had a beneficial interest in the
property. Walton J had found for Mrs Gross, though subject to orders in favour
of Mr French granting him (1) a lien over the house for a sum equalling the
value of the work done by him to repair and improve the property, to be payable
upon sale or the death of Mrs Gross, whichever should be the earlier; and (2) a
charge enforceable forthwith over the house to secure to him the repayment of
£700 expended by him in the acquisition of the freehold reversion, with
interest thereon. Although it found no place in the order of the court, Walton
J had in fact concluded that the defendants were tenants protected by the Rent
Act 1968 of that part of the house which, with the consent of Mrs Gross, they
occupied. It was no part of the case either of Mrs Gross or of the defendants
that any tenancy existed, and Mrs Gross cross-appealed against that finding.
It was not in
doubt that unless the appellants could establish a gift, a binding contract, or
an estoppel, the respondent must succeed. The crux of the case was the course
of events and the discussions between the three parties and their solicitor
which preceded the registration of the leasehold title in January 1964. Mr
Harris clearly thought that Mrs Gross initially intended to convey the whole
beneficial interest in the house to her daughter and son-in-law in
consideration of the payment of an annuity of £3 per week for life and of their
looking after her for the rest of her life. Indeed, in December 1963, at the
crucial meeting in his offices, he felt he must advise Mrs Gross against
parting with all her interest; and it was not disputed that he suggested the
course they eventually took, putting the house into the names of all three of
them as tenants in common. There were two documents, one contemporaneous with
the events of 1963-64 and the other of much later date, which appeared to lend
support to Mr Harris’s belief as to the nature of the transaction. These were
his bill of costs (rendered, however, not to all three parties but only to Mrs
Gross) dated January 2 1964, and a letter of May 24 1967 which he wrote her
after the quarrel had arisen between her and Mr French. In the bill he referred
to ‘the property to be conveyed into the names of yourself, your Mr French and
his wife,’ and against this item Mrs Gross had noted in her own handwriting,
‘So I am the owner of one-third instead of the whole.’ And in the 1967 letter Mr Harris wrote, ‘I am
quite sure that I did explain to you at the time that the property would be
vested in the three of you as beneficial tenants in common.’
Their
Lordships had been troubled by the judge’s finding that Mrs Gross never
intended that either her daughter or her son-in-law should have a beneficial
interest in the house, and by his rejection of Mr Harris’s view of the nature
of the transaction in which he was advising Mrs Gross. But he (Walton J) had
seen and heard the witnesses, all of whom were speaking of events that occurred
long ago. In the circumstances, the court was not prepared to disturb the
finding that Mrs Gross never did intend to convey any beneficial interest in
the house, and that she allowed it to be put into the three names for the sake
of convenience, so that Mr French could handle the business side and she be
left in peace. That finding, once accepted, was basic and negatived any
possibility of a presumption of advancement, even if one assumed that which
must at least be open to doubt, namely, that in these days of sex equality the
presumption operated against a mother in favour of her child.
Associated
with the basic finding was the judge’s further finding that Mr and Mrs French
became the tenants of Mrs Gross when they moved into the house. Neither Mrs
Gross nor Mr Harris nor Mr French would have it that they were tenants, but the
judge had been impressed by the fact that Mrs Gross did speak of the £3 per
week as ‘rent.’ This one fact was not
enough, in their Lordships’ judgment, to displace the weight of the evidence as
a whole that the £3 was agreed as an annuity pursuant to a family arrangement
under which Mrs Gross would allow Mr and Mrs French to live in the house
provided they paid the annuity and the outgoings (eg the rates) and looked
after her during her life. There remained the plea of an estoppel. In their
Lordships’ judgment, it failed in limine. Knowledge by Mrs Gross of the
mistake had to be proved, but according to the judge’s finding as to Mrs
Gross’s state of mind and intentions (a finding which this court was not
prepared to disturb), at no material time did Mrs Gross have any knowledge of
the existence of Mr French’s claim to a share in the house.
Counsel for
Mrs Gross conceded that Mr French was entitled to a lien over the property for
a sum limited to the amount by which the value of the house had been increased
by the work he had done to it. He (counsel) contended, however, that this sum
was not to be payable until sale or the death of Mrs Gross, whichever should be
the earlier, and he sought to reject the case for Mr French that the lien
should not be limited to enhancement of value but should be for the total of
his expenditure of time and money on the house, and be immediately enforceable.
Walton J thought such a lien could arise, limited to the enhanced value of the house
as a result of Mr French’s expenditure and enforceable only on sale or the
death of Mrs Gross. Of course, a trustee who expended money upon the trust
property in the proper discharge of his duties was entitled to a lien for the
immediate recoupment of the whole cost. Mr French, however, was not quite in
that position. He was a bare trustee, and certainly one with no express power
to improve the property. Nevertheless, the judge reached the conclusion that
there was such a lien, limited as he said, on the footing that Mr French was,
on the special facts of the case, to be treated as a trustee discharging the
duties he was instructed to perform.
In their
Lordships’ view, having regard to the concession, they ought to uphold the
judge’s conclusion. But they also thought that the concession and the judge’s
decision alike might be supported by analogy with the case of a constructive
trustee, or with that of joint owners on partition or sale: see Snell, 27th ed
at p 449, and Rowley v Ginnever [1897] 2 Ch 503, where Kekewich J
had to consider a case in which a constructive trustee of property had expended
money on it in permanent improvements, and held that he was entitled to recoup
his expenditure to the extent of the improved value. There being no dispute, if
the judge were right as to the intentions of Mrs Gross, that Mr French had a
charge for the £700 he advanced for the acquisition of the freehold, their
Lordships’ conclusion was that they must uphold the judgment of Walton J and
dismiss the appeal. The judge, in their view, had made only one error, his
finding that Mr and Mrs French were tenants; and since this finding was not
reflected in the order of the court, no variation of the order was required.
