Constructive trust – Unmarried couple – Property conveyed into sole name of claimant – Claimant and defendant cohabiting there – Barn on property later transferred to sole name of defendant – Whether claimant having beneficial interest in barn – Whether common intention to share beneficial interest in light of claimant’s financial and other contributions to works of residential conversion – Claim allowed
The claimant and the defendant were an unmarried couple who met in 1985. In 1986, the claimant purchased, for £70,000, a farm comprising a farmhouse, outbuildings, a derelict barn with planning permission for conversion to a dwelling and 6 acres of land. The claimant was registered as sole proprietor of that property although he cohabited with the defendant there. The couple later had two children together. The defendant carried out some improvement work to the property and later, from 1988, ran a cattery and dog kennels from the outbuildings. The couple separated in late 1995 or early 1996 and the defendant moved out, although she continued to run the cattery and kennel business at the property.
In January 2006, the claimant transferred the barn to the defendant, along with most of the land, and the defendant was registered as proprietor of that part of the property. The claimant retained the farmhouse.
In January 2008, the claimant sold the farmhouse for £373,000. He used £185,000 of the sale proceeds to discharge debts, leaving him with £188,000. Thereafter, the claimant lived, with the defendant’s permission, in a static caravan on land within the curtilage of the barn. Works were undertaken to convert the barn into a dwelling at a cost of approximately £90,000; the claimant made a significant financial contribution to these and assisted with the works.
A dispute arose over the beneficial ownership of the barn. The claimant contended that he was entitled to a share on the ground of constructive trust or proprietary estoppel, having contributed to the conversion works pursuant to a common intention, or alternatively a belief on his part, that the parties would marry and cohabit as a family. The defendant claimed that she was the absolute owner of the barn and that the claimant’s payments were gifts made in recognition of her contributions to the family and of her interest in the farm.
Held: The claim was allowed.
The defendant had not contributed any part of the purchase price on the initial acquisition of the farm. It was not possible to infer any common intention that she should have an interest in the farm from the date of its acquisition, in circumstances where the farm was vested in the claimant’s sole name and he had paid all the outgoings including the mortgage. There had been no express discussions as to any interest that the defendant might have and the fact that the parties had cohabited there was insufficient to establish an interest. The claimant was entitled to the farm both in law and equity at the time of its acquisition in 1986.
On the evidence, the subsequent transfer of the barn by the claimant to the defendant was, and was intended to be, an outright transfer of his legal and beneficial interest in it. There was nothing in the claimant’s conduct that would entitle the court to infer any common intention that he should retain an interest in the barn. The defendant therefore became the legal and equitable owner of the barn following registration in 2006.
Subsequently, however, the claimant had assisted in the conversion works to the barn by carrying out labouring work and using his JCB digger. His work had saved costs and had substantially increased the value of the barn. The evidence also indicated that his financial contribution to the conversion works had been between £65,000 and £70,000. Although there had been no express discussions regarding his acquisition of an interest in the barn, the claimant had succeeded in establishing an implied trust. The trust was based on the common intention of the parties, objectively ascertained, that he should have an interest as a result of the substantial contributions in both financial and physical terms that he had made to the works. It was not possible to infer that the contributions were gifts. The moneys involved represented a very substantial part of the claimant’s assets after he had paid off his creditors and, if they had been gifts, then the claimant would effectively have left himself with nowhere to live except the caravan. On the evidence, the claimant had hoped and expected to be able to live in, and have an interest in, the barn when it was complete and the defendant had been fully aware of that expectation. The proper inference from the whole course of dealing was that there was a common intention that the claimant should have some interest in the barn as a result of his very substantial contributions to the conversion works: Stack v Dowden [2007] UKHL 17; [2007] 2 AC 432; [2007] PLSCS 82, Jones v Kernott [2011] UKSC 53; [2011] 3 WLR 1121; [2011] PLSCS 264; [2011] 46 EG 104 (CS) and Bernard v Joseph [1982] 3 All ER 162 considered.
In the absence of evidence as to the valuation of the claimant’s share, the court had to impute an intention by reference to what was fair, having regard to the whole course of dealing between the parties. The appropriate fair assessment of the claimant’s interest was 25%. That represented a fair return for the claimant’s investment of £65,000 to £70,000, and the work carried out by him, on a property now worth £400,000.
Sarah Greenan (instructed by Savage Crangle Solicitors, of Skipton) appeared for the claimant; Elizabeth Darlington (instructed by Lee & Priestley LLP, of Leeds) appeared for the defendant.
Sally Dobson, barrister
