Joint ownership – Beneficial interests – Unmarried couple – Parties purchasing holiday home in joint names without declaration of trust – Appellant paying whole of purchase price – Parties’ relationship ending – Respondent excluding appellant from property –Appellant claiming beneficial ownership of entire property – Deputy master awarding appellant compensation for exclusion based on expert evidence of rental values as weekend holiday let – Appellant appealing – Whether master adopting correct approach to calculation of compensation – Appeal allowed in part
On 31 March 2009, the appellant and the respondent, then an unmarried couple in their fifties, caused a large country house known as Tadmarton House, Lower Tadmarton, near Banbury in Oxfordshire to be conveyed into their joint names with no declaration of trust. They used it as a holiday and weekend home. The price was £1,550,000.
The parties maintained separate bank accounts and they never pooled their resources. The appellant paid the whole of the purchase price and all the other costs associated with the acquisition. Not long afterwards, the relationship began to break down when the appellant formed a liaison with another woman.
The appellant contended that he and the respondent acquired the property on the basis that it was to be entirely his in equity, or alternatively, that the property later became entirely, or mostly, his in equity. Primarily, it was the respondent who continued to use the property from late 2009 until 2018. On that basis, the appellant also claimed an occupation rent from the respondent.
A deputy master awarded £59,958 to the appellant as compensation for his exclusion from the property based on expert evidence of rental values as a weekend holiday let: [2021] EWHC 426 (Ch); [2021] PLSCS 53.
The appellant appealed contending that he ought to have been awarded £216,199. The respondent served a respondent’s notice saying that the award should be compensatory and based not on rental values but upon the appellant’s loss of enjoyment and that the appropriate figure was £36,000. Alternatively, the award of £59,958 was justified for the reasons given by the master on that basis and on its own terms.
Held: The appeal was allowed in part.
(1) It was common ground that, in assessing the amount of compensation for the exclusion of the appellant from the property, as found by the master, regard had to be had to sections 12-15 of the Trusts of Land and Appointment of Trustees Act 1996. Those statutory powers replaced the old doctrines of equitable accounting under which a beneficiary who remained in occupation might be required to pay an occupation rent to a beneficiary who was excluded from the property. The criteria laid down in the statute had to be applied, rather than in the cases decided under the old law, although the results might often be the same. It would be a rare case where the statutory principles would produce a different result from that which would have resulted from the equitable principles: Stack v Dowden [2007] UKHL 17 applied.
(2) It followed from the reference in section 13(6)(a) of the 1996 Act to “payments by way of compensation” that, in deciding the amount of such payments, the court should seek to place the excluded beneficiary in the position he or she would have been in if he or she had not been excluded, so far as that might be achieved by a monetary award. Often that would be a relatively straightforward exercise of assessment. If, for example, the excluded beneficiary had to pay rent on an alternative property then the compensation might be calculated on the basis of the expenses of so doing.
However, it was not in dispute that the appellant in this case did not suffer financial loss as a result of his exclusion. What he lost was the opportunity to enjoy the special amenity of using the house at weekends and holidays as his own home in his free time. That was something different from renting someone else’s property for a weekend break.
The facts of the present case were unusual and the case did not fit neatly into any of the scenarios which the expert was asked to value. The master had to do the best he could on the evidence before him. Whilst the market value might be a good starting point, it was not necessarily the appropriate finishing point if it did not appropriately reflect what the appellant had lost as a result of the exclusion.
(3) The difficulty in this case was deciding which valuation given by the expert, or which combination of valuations, most accurately reflected the appellant’s loss as a result of the exclusion as found. Such an exercise needed to take account of the fact that the purpose of the purchase was to provide a weekend home for the parties which purpose had come to an end; and neither enjoyed it during the period in question in the way that had been intended. However, the exercise also had to take into account the fact that the appellant was deprived of a weekend holiday home, rather than a weekend rental. It had been chosen and intended as such, not as a place to rent for the odd weekend.
In determining the right amount of compensation for exclusion, some account had to be made for the fact that the appellant would not have stayed there for four days during the week. There was an element of balancing out involved in the exercise.
(4) Where, as here, the loss was not financial, the exercise of assessment inevitably included an evaluative element rather than being purely arithmetical. The loss was more than occasional weekend and short usage but less than the loss of a home, and fell roughly at the midpoint between the two. To put a figure on such loss, regard had to be had to the expert’s figures, not only to the weekend and short usage rental but also to the annual rental. A figure between the figure allowed by the master and the figure for half of the annual rental, amounted to a total over the six-year period in the region of £120,000.
That was the figure, having regard to the way the expert was asked to produce his valuations and to the valuations which were produced, which came closest to the loss which the appellant suffered on the available evidence.
Accordingly, the appeal would be allowed and the total award of £120,000 substituted. Permission was granted to bring the cross-appeal but that would be dismissed.
Paul Dipré (instructed by Direct Access) appeared for the appellant; Thomas Roe QC and Simon Lillington (instructed by Direct Access) appeared for the respondent.
Eileen O’Grady, barrister
