Property – Beneficial ownership – Constructive trust – Claimant’s father purchasing flat through Guernsey-based company owned by him – Claimant contending flat purchased for her as beneficial owner – Father maintaining use of flat intended only while claimant was student – Company paying mortgage and service charges – Company becoming discretionary trust – Whether claimant establishing necessary legal requirements for constructive trust and/or proprietary estoppel – Claim dismissed
The defendant, a Guernsey-based company owned by the claimant’s father (L), owned a flat that had been purchased to provide accommodation for the claimant while she studied at university. L had divorced his wife in 1985, but had undertaken to provide financial assistance “during his daughter’s education in secondary or later at university”. L had twice remarried and had five other children.
L and the claimant had chosen the flat together. L met the cost of the mortgage, and the service charge and ground rent were always paid by L or the defendant. L’s maintenance payments to the claimant were reduced after the claimant moved into the flat. Soon after the defendant’s purchase of the flat, L settled the shares in the company in a Guernsey discretionary trust, of which he was one of the discretionary beneficiaries, as were the claimant and L’s other children.
In 2002, L instructed a locksmith to change the locks of the flat, in the belief that the claimant was no longer in occupation. That work was not carried out, but the claimant, believing her occupation to be under threat, commenced proceedings claiming beneficial ownership of the flat both under a common intention constructive trust and by proprietary estoppel. The defendant applied for summary judgment.
Held: The claim was dismissed.
The case involved a developing area of the law. In order to establish a common intention constructive trust, in which the legal estate was vested in only one of the parties and the other party claimed a beneficial interest, it had to be shown that: (i) there was a common intention that both parties should have a beneficial interest; and (ii) the claimant had acted detrimentally on the basis of that common intention: Grant v Edwards [1986] Ch 638 applied.
With regard to proprietary estoppel, the claimant had to show: (i) statements, often in the nature of promises, made by the legal owner or implied from conduct as to future intention; and (ii) reliance upon those statements to its detriment.
While there was an affinity between the two types of claim for a beneficial interest, a common intention constructive trust tended to focus upon the current state of affairs, whereas proprietary estoppel was concerned with promises to do something in the future that would change the pre-existing situation. Moreover, the remedies available to the court were different: Campbell v Griffin [2001] EWCA 990 considered.
On a review of the conflicting evidence, the court was not satisfied on the balance of probabilities that L had made the necessary promises to his daughter for her to succeed on that part of her case. Furthermore, even if those promises had been made, the matters put forward by the claimant as detrimental reliance did not suffice in law to create a legally enforceable constructive trust or to give rise to a proprietary estoppel.
The claimant appeared in person; Simon Edwards (instructed by Judge & Priestley) appeared for the defendant.
Eileen O’Grady, barrister
