Divorced couple agreeing to buy house to accommodate adult sons of marriage – House conveyed into name of defendant ex-wife – Defendant paying 90% of purchase price – Claimant ex-husband subsequently devoting substantial amount of money and labour to refurbishment – Defendant opposing claim to beneficial share on ground that claimant did not intend to benefit himself – Whether such intention outwardly expressed – Claimant awarded 25% share
The first named claimant (A) and the defendant (C) were married in 1966 and divorced in 1987. The second and third named claimants were the two sons. Towards the end of 1992 A and C met to discuss the poor financial position of their sons, who were living in rough accommodation. A and C agreed that it was important to obtain permanent accommodation for them.
In February 1993 a large but very dilapidated house in west London was bought for £130,000 and conveyed into C’s name. A put up £9,000, which was applied towards the deposit. The balance of the purchase price was paid by C. During March 1993 the parties, including the sons, worked together to make the house habitable. Over the next four years A attended to the refurbishment of the house, spending approximately £20,000 of his own money and carrying out various alteration works in which he was occasionally assisted by the sons.
In February 1997 C claimed that she alone was entitled to occupy the house. In April 1997 the house was sold for £270,000. With agreement of the parties, one half of the net proceeds was paid to C while the balance of £132,000 was placed on deposit pending the outcome of proceedings instituted by A and the sons. The primary claim was made by the sons, who claimed to be entitled to the entire proceeds on the basis that C held the property on trust for them. An alternative claim was made by A, who sought a declaration that C held the house on constructive trust for herself and A in such shares as the court should determine.
The trial judge found as facts that: (i) C was aware before the acquisition that Andrew had no intention of gifting the entire property to her; (ii) it was A’s purpose at all material times to obtain a beneficial share, not for himself, but for the sons; (iii) that purpose had not been made known to C during their discussions in 1993; and (iv) the work done by A could be valued at £11,900.
Held: The alternative claim was allowed.
1. In so far as the claims were founded upon a constructive trust, the relevant principles were those declared in Lloyds Bank plc v Rosset [1991] 1 AC 107. The claimants had to show that they had acted to their detriment in reliance upon an agreement, arrangement or understanding that the property was to be shared beneficially. Failing direct evidence, the existence of such an agreement could be inferred from the parties’ subsequent conduct, but for that purpose it was extremely doubtful whether anything less than direct contributions to the purchase price, whether initially or by payment of mortgage instalments, would do.
2. The primary claim failed. The requisite inference could not be drawn from the fact that C was buying the property “for the boys”, nor from the fact that the sons paid routine bills and spent some time and effort on renovation. These facts were just as consistent with an agreement that they should reside in the property rent-free, and accordingly did not compel the conclusion that they were intended to take a beneficial interest.
3. Having preferred the evidence given by A, the only possible answer to the alternative claim was his intention to benefit persons other than himself. However, that objection could be disregarded, it being well established that the court could only have regard to such intentions as were outwardly expressed: see per Steyn LJ in Springette vDefoe (1992) 24 HLR 552 at p557, citing the words of Lord Diplock in Gissing v Gissing [1971] AC 886 at p906. Since A had established the necessary agreement, the court was free to look at all his contributions, direct or otherwise, when determining the size of his share, which, on the facts, should be put at just over 25%. He was accordingly entitled to a payment of £66,300 out of the money held on joint account.
4. A’s claim could alternatively be founded on the doctrine of proprietory estoppel as expounded in Underhill & Hayton, The Law of Trusts and Trustees, 15th ed at p386.
David Lamming (instructed by Seifert & Co) appeared for the claimants; Timothy Fancourt (instructed by Pritchard Englefield) appeared for the defendant.
Alan Cooklin, barrister
