Property purchase — Beneficial interest — Son taking out mortgage and purchasing property — Mother making all repayments — Death of mother with beneficial interest in property — Son with legal title claiming whole of property — Whether mother’s beneficial interest survived her death — High Court holding that son held property as sole legal and beneficial owner — Court of Appeal holding that son held property in trust for himself and two sisters under terms of mother’s will
The plaintiff and the defendant were the daughter and son respectively of B. They decided to purchase a property for the three of them to live in and, in order to obtain a mortgage, they agreed that the house should be purchased in the defendants name and that he should be the mortgagor. Legal title to 2 Durham Road, London N2, purchased in 1954 was acquired, and the mortgage effected, by the defendant. The purchase price was £2,225, of which £1,600 was borrowed on mortgage. B paid the original deposit on the purchase and repayment of the mortgage loan interest on that loan were paid by banker’s order on B’s bank account until the mortgage was eventually redeemed.
B died in 1985 and the defendant was appointed executor in her will. It stated that all her estate was to go to her three children in equal shares as tenants in common. Shortly afterwards the defendant gave notice to quit to the plaintiff and her husband. They did not leave and the plaintiff brought an action alleging that the defendant held the property as constructive trustee for the plaintiff or for the plaintiff and the defendant as tenants in common. The defendant claimed that he was the sole legal and beneficial owner of the property. The High Court found in favour of the defendant.
Held The appeal was allowed.
1. The legal estate in the house was vested in the defendant by its conveyance to him in 1954. No other interest in the property had been expressly created. Thus, if any other person had any interest in the property it could only have arisen as an equitable interest under the doctrine of implied, resulting or constructive trust: see Bull v Bull [1955] 1 QB 234.
2. Even at their highest in the plaintiff’s favour the facts of the case were consistent with the inference that the property was purchased as a home for B, with the expectation that the plaintiff would live there, but with no intention of her having any interest in the house, legal or equitable. Any contribution she had made to the purchase price was indirect and there was no suggestion that there was any express agreement that she should have a beneficial interest. Accordingly, the plaintiff had failed to establish that she had any beneficial interest in the house by virtue of any contribution made by her to the purchase of the house: see Lloyds Bank v Rosset [1991] 1 AC 107.
3. However, B had been the owner, in equity of the entirety of the beneficial interest in the house so extensive that, as the defendant accepted, she could at any time during her lifetime have disposed of it for her own benefit. Such an interest could not of its nature simply cease to exist at her death: it would continue for the benefit of her estate, unless specifically terminated or transferred by some written instrument which would satisfy section 53(1)(c) of the Law of Property Act 1925 here there was no such agreement.
4. B’s will referred to a division of her interest equally between her three children, which could only be achieved by a sale. Accordingly, B’s beneficial interest in the property survived her death and the defendant held the legal title subject to that interest, ie he held the property in trust for his two sisters and himself as tenants in common in equal shares.
Guy Argles (instructed by Birrell Turner) appeared for the appellant plaintiff; Stuart Stevens (instructed by Graham Halliday) appeared for the respondent defendant.
