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Judgments Oxley
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Oxley
(Respondent) v. Hiscock (Appellant) ALLAN GEORGE HISCOCK v ELAYNE MARIAN TERESA OXLEY IN THE SUPREME COURT OF JUDICATURE Royal Courts of Justice
THE RIGHT HONOURABLE LORD JUSTICE CHADWICK Between: ____________________
Mr Nicholas Francis QC and Mr Christopher Wagstaffe (instructed
by The Parry Sharratt Partnership of 12-14 Oxford Street, Whitstable,
Kent CT5 1DE) for the Defendant/Appellant HTML VERSION OF JUDGMENT Crown Copyright © Lord Justice Chadwick : This is an appeal from an order made on 20 May 2003 by Her Honour Judge Hallon, sitting in the Bromley County Court, in proceedings brought under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 in relation to the proceeds of sale of property known as 35 Dickens Close, Hartley, Kent. The appeal requires the Court to revisit, once again, the familiar question how the proceeds of property in which an unmarried couple have been living as man and wife should be shared between them when the relationship come to an end. The underlying facts The property at 35 Dickens Close was purchased in April 1991 in the name of the appellant, Mr Allan Hiscock. At that date Mr Hiscock and the respondent, Mrs Elayne Oxley, had known each other for some five or six years. For much of that time his employment had required Mr Hiscock to reside in Kuwait; but, when he was in England on leave, they had lived together at 39 Page Close, Bean, near Dartford. That was a house which Mrs Oxley had formerly occupied as a secure tenant but which she had acquired in September 1987 by the exercise of her rights under Part V of the Housing Act 1985. In August 1990 Kuwait was invaded by Iraqi troops. In October 1990, Mr Hiscock was captured, taken to Baghdad and held as hostage. He was released in December 1990. The judge found that 35 Dickens Close was purchased as a home for Mr Hiscock, Mrs Oxley and her children by a former marriage, following Mr Hiscock's return to England at the end of 1990. The purchase price for 35 Dickens Close was £127,000. The purchase was funded (i) by a building society advance of £30,000, (ii) by the net proceeds of sale of 39 Page Close (some £61,500) and (iii), as to the balance, £35,500 or thereabouts, by Mr Hiscock from his own savings. Given that part of the monies for the purchase of 35 Dickens Close were provided from the net proceeds of sale of 39 Page Close, it is necessary to have in mind the circumstances in which that property had been acquired by Mrs Oxley. For some years before she met Mr Hiscock she had been a secure tenant in local authority housing in Chatham. In May 1986, at the suggestion of Mr Hiscock, she exchanged her tenancy in Chatham for a tenancy of 39 Page Close, at Bean. In November 1986, again at the suggestion of Mr Hiscock, she exercised her right to buy under Part V of the Housing Act 1985. The open market value of 39 Page Close was assessed at £45,200. Under the 'right to buy' legislation she was entitled to a discount of £20,000; so her acquisition price, when she completed in September 1987, was £25,200. The whole of that sum was provided by Mr Hiscock, out of the proceeds of sale of the house in which he had been living, 49 Hurst Hill, Walderslade, Chatham. It is clear from the documents that he put that house on the market in November 1986, within seven days of Mrs Oxley exercising her right to buy. It is not, I think, in dispute that the two matters were linked; in that Mr Hiscock sold his own house in order to provide monies which would enable Mrs Oxley to take advantage of the favourable terms on which 39 Page Close could be acquired by the exercise of her "right to buy". On 31 July 1987 solicitors, Messrs Bassets, acting in the purchase of 39 Page Close, wrote to Mrs Oxley and Mr Hiscock in these terms: ". . . I note that the property [39 Page Close]
is being purchased with the assistance of funds raised by Mr Hiscock and
that the property will be purchased in the sole name of Mrs Oxley. It
is therefore important to safeguard Mr Hiscock's interests in the property
by either evidencing the monies paid by Mr Hiscock for the purchase of
the property by means of a mortgage from Mr Hiscock to Mrs Oxley or by
some contract between the two parties creating an indemnity or option
to Mr Hiscock in respect of an interest in the property. For whatever reason – perhaps because the relevant period had not expired – the property at 39 Page Close was never transferred into joint names. It remained in Mrs Oxley's name, but subject to a charge to secure the monies provided by Mr Hiscock (£25,200) with interest at five per cent per annum payable half yearly. We have been shown a copy of that charge, which was registered at HM Land Registry. There is no evidence that any interest was, or was not, paid. The probability is that the parties never thought about it. When 39 Page Close was sold, in April 1991, the solicitors acting in the sale, Messrs Wright & Moxham, wrote to Mr Hiscock: "You have a legal charge registered against 39 Page
Close. Please let me know the amount which you will require from us on
behalf of Mrs Oxley in order to release your charge from the property
(sic)." "Regarding the legal charge on 39 Page Close, please
note I require no monies from Mrs Oxley . . ." The solicitors acting in the sale of 39 Page Close were also acting in the purchase of 35 Dickens Close. They were concerned – and properly concerned – as to the basis upon which Mrs Oxley was contributing to the purchase monies. In March 1991 they had enquired whether the purchase was to be in joint names. Mrs Oxley had replied, on 2 April 1991, that she would not be a joint purchaser of 35 Dickens Close. On 18 April 1991 the solicitor dealing with the sale and purchase wrote to her in these terms: "Please let me know if you are making any funds
available to Mr Hiscock on his purchase of 35 Dickens Close. If so you
should let me know if you wish to secure those funds by way of a second
mortgage on the property or if you require a Trust Deed to provide for
the property to be held on trust, partly for yourself so as to reflect
your investment." "As we discussed previously, the funds from the
sale of 39 Page Close will go towards purchasing 35 Dickens Close, with
Mr Hiscock providing the remainder." "It is essential for me to have your written instructions
as to how you wish me to deal with the proceeds of sale [of 39 Page Close].
I think you wish me to apply the whole of this sum towards the purchase
of 35 Dickens Close by Mr Hiscock. If that is correct then I must have
your very clear instructions in writing. You must also give very serious
consideration as to whether you do wish to invest all of your net sale
proceeds in the purchase of 35 Dickens Close which will be in the sole
name of Mr Hiscock. "I . . . confirm that I wish all the proceeds from
the sale of 39 Page Close, Bean to be put towards the purchase of 35 Dickens
Close by Mr A Hiscock. These proceedings These proceedings were commenced by the issue of a claim form in November 2002. The relief sought, under section 14 of the 1996 Act, was a declaration that the proceeds of sale of 35 Dickens Road were held by Mr Hiscock upon trust for himself and Mrs Oxley, in equal shares; alternatively, in such shares as the court should determine. In the present context, the critical allegations in the particulars of claim are these: "4. In February 1988 the Defendant asked the Claimant
to marry him. The Defendant thereafter learnt that there would be fiscal
disadvantages to marriage and persuaded the Claimant that they should
remain unmarried. As a consequence the parties remained unmarried: their
intention was to live together, subject to the Claimant's work commitments,
and to pool their financial and other resources as would a married couple.
It was their joint intention that the beneficial interest in any property,
real or otherwise, would be shared by them jointly. ". . . The Defendant specifically denies that there
were discussions between the parties relating to the possibility of claims
by the claimant's first husband. It is specifically denied that it was
ever agreed, arranged or understood between the Claimant and Defendant
that they would share the property equally beneficially". "I find that in relation to the purchase of the
Hartley property and the conveyance of it into the defendant's sole name,
despite the advice of the solicitors to the claimant, that that happened
because of the discussion which had taken place between the defendant
and the claimant in which the defendant raised the possibility of the
claimant's former husband making a claim in the event of her death against
her share of the Hartley property if it was in part in her name, and that
therefore the conveyance into his name, with the claimant's agreement,
was on the basis that she trusted the defendant that, despite what was
shown on the face of the conveyance, that in no way actually altered the
reality of the situation and their sharing of the property." Nevertheless, it is significant that the judge did not go on to find that, as alleged in paragraph 8 of the particulars of claim, "it was expressly the joint intention of the Claimant and the Defendant at the time of the purchase of the second property that they should share the beneficial ownership of that property equally". The reason, perhaps, why the judge made no finding that there was some expression of agreement in April 1991 as to the shares in which 35 Dickens Close should be held was that there was no evidence to support such a finding. None has been shown to this Court. The effect of the judge's findings, as it seems to me, is that that Mr Hiscock and Mrs Oxley were in agreement, before the acquisition of 35 Dickens Close, that the property would be shared; but that there was no express agreement as to what their respective shares should be. The view which the judge took as to the applicable principle of law made it unnecessary for her to make a finding that there had been any expression of agreement as to the extent of the respective shares. After referring to the decision of this Court in Springette v Defoe [1992] 2 FLR 388, the judge held that, notwithstanding that decision, she should follow observations of Lord Justice Waite in Midland Bank v Cooke and another [1995] 2 FLR 915. Lord Justice Waite had said this (ibid, 928D): "I would therefore hold that positive evidence that
the parties neither discussed nor intended any agreement as to the proportions
of their beneficial interest does not preclude the court, on general equitable
principles, from inferring one" "It could not be clearer therefore that the proper
approach of a court to a dispute of this nature is that when there is
no express agreement between the parties the court must look to the whole
course of dealings to infer what the agreement between those parties was." "I find that the transfer of the tenancy from Chatham
to Bean was the beginning of putting into effect a long term plan. That
is not simply to live together, but to acquire a property through purchase
with the advantageous discount available to a council tenant, with a view
subsequently to moving on to better accommodation. Each made substantial
contributions to the purchase of the Bean property, and it is clear that
the long term plan had been for selling and upgrading, because the sale
of Bean and the purchase of Hartley happened very, very soon after the
defendant's return from Kuwait; in other words, at a time when the family
would in the future be living on a permanent basis all together. Thus,
Hartley was as much a joint property as Bean had been, although, perhaps
quirkily in this case, the first property had been conveyed into the claimant's
sole name, and the second property conveyed into the defendant's sole
name. There were reasons for each of those: the first, because the property
could only be conveyed to the claimant; the second, because of the discussions
that had taken place between the defendant and the claimant, and the concern
about the claimant's former husband. But it does not alter the position
that, in relation to both of those properties, they were regarded as these
two people's home, and indeed each was asked in the course of oral evidence
if they had been questioned back at the time what would they have said,
for instance, regarding the property, and each gave evidence, "Well,
I would have said it was our home." Nevertheless, whether or not the judge was right as to the beneficial ownership of 39 Page Close, she was in no doubt as to the position as 35 Dickens Close. At paragraph 27 of her judgment she said this: "In continuing with the long term plan, and in keeping
with the belief that each clearly had at the time that Hartley was purchased,
that it was their joint home, the claimant worked almost continuously;
the defendant also worked. The defendant made improvements to the property;
the claimant helped him. The claimant also decorated substantial parts
of the property, and she did the gardening. Each contributed towards the
total outgoings. The description given by the claimant, whose evidence
I accept, shows that this was a classic pooling of resources, even though
there was no joint bank account. . . . All of the evidence which I have
heard clearly shows that both were evincing an intention to share the
benefit and the burden of this property [35 Dickens Close] jointly and
equally." ". . . from the analysis of the law and the facts
in this case, it is clear that the order which the claimant sought in
her notice of application is the only one that can properly be made, namely
to declare that the claimant is equally entitled, with the defendant,
to a half share in the proceeds of sale of the Hartley property ..." The judge refused permission to appeal from her order. Mr Hiscock obtained permission to appeal from this Court (Lord Justice Jonathan Parker) on 5 December 2003. This appeal The principal ground of appeal is that the judge misdirected herself in law in refusing to follow the decision of this Court in Springette v Defoe [1992] 2 FLR 388. The basis of that decision is accurately summarised in the headnote to the report: "If two or more persons purchased property in their
joint names and there was no declaration of trusts on which they were
to hold the property, they held the property on a resulting trust for
the persons who provided the purchase money in the proportions in which
they provided it, unless there was sufficient specific evidence of their
common intention that they should be entitled in other proportions, that
common intention being a shared intention communicated between them and
made manifest at the time of the transaction itself." That, it was said, led to the conclusion that Mrs Oxley's share of the proceeds of sale of 35 Dickens Close was 22% or thereabouts - the proportion which her contribution to the purchase of that property (put by the appellant at £31,699, after deducting the costs of sale and interest on the £25,200 advanced from the proceeds of sale of 39 Page Close) bore to the whole of the acquisition cost (put by the appellant at £141,260, after adding the costs of purchase and improvements). There is obvious scope for debate about the figures. The appellant's approach treats Mr Hiscock as having contributed the whole of the monies (£30,000) advanced by the building society – no doubt on the basis that, as the person in whose sole name the property was registered, he was solely responsible for the mortgage debt. But there was no evidence as to how, in fact, the mortgage debt was discharged; and it is (at the least) arguable that, on the judge's findings, the parties should be treated as having contributed equally to the payment off of that debt. But, making all assumptions in Mrs Oxley's favour, the amount of her share (based on financial contributions) could not exceed 40% - (£36,300 + ½ £30,000) /£127,000. The first question on this appeal, therefore, is whether the judge was required, by the decision of this Court in Springette v Defoe, to find that, in the absence of some "shared intention [as to the proportions in which they should be entitled] communicated between them and made manifest at the time of the transaction itself", the property was held upon a resulting trust for Mr Hiscock and Mrs Oxley in beneficial shares proportionate to the respective financial contributions which they had made to the acquisition cost. Or was the judge entitled and required – as she plainly thought - to follow the approach adopted by this Court in Midland Bank v Cooke. The law as understood before Midland Bank v Cooke It is important to have in mind the underlying requirement, imposed by section 53(1) of the Law of Property Act 1925, (a) that no interest in land can be created orally and (b) that no declaration of trust respecting land can have effect if made orally. But section 53(2) excludes from that requirement "the creation or operation of resulting, implied or constructive trusts". It is the requirement in section 53(1) of the 1925 Act – and the saving provision in section 53(2) – which has led to the need, in a case where one former co-habitee asserts against the other (in whose sole name the property is registered) a beneficial interest arising out of some informal arrangement or understanding (not evidenced in writing) or from subsequent conduct, to establish the existence of a constructive trust; or else to rely on a resulting trust arising from contributions. The judge described Springette v Defoe (supra) as an "unusual case" which "quite clearly does not fit happily into the reported authorities which have developed this area of the law quite considerably from the early days". By "the early days" in that context, she meant, I think, the late 1960's – shortly before the change in the law relating to matrimonial property introduced by the Matrimonial Proceedings and Property Act 1970. When referring to "the reported authorities which have developed this area of the law" she must have had in mind the decisions of this Court and in the House of Lords between, say, 1985 and 1995 - when Midland Bank v Cooke (supra) was decided. Leaving aside, for the moment, the two decisions of the House of Lords in the late 1960's, Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886, the approach of this Court during that period is exemplified by the judgments in Walker v Hall [1984] FLR 126. In that case Lord Justice Lawton set out his understanding of the position in these terms (ibid, 135F-136C): "During the past two decades the courts have had
to consider on a number of occasions the division of property between
men and women living together without being married. Ever since the Matrimonial
Proceedings and Property Act 1970, which has been replaced by the Matrimonial
Causes Act 1973, the courts have been able to make an equitable division
of property between spouses when a marriage breaks down and a decree of
divorce is pronounced. No such jurisdiction exists when the cohabitees
are unmarried. When such a relationship comes to an end, just as with
many divorced couples, there are likely to be disputes about the distribution
of shared property. How are such disputes to be decided? They cannot be
decided in the same way as similar disputes are decided when there has
been a divorce. The courts have no jurisdiction to do so. They have to
be decided in accordance with the law relating to property: see Pettitt
v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886. "Accordingly, it is not open to this court, in my
judgment, in the absence of specific evidence of the parties' intention,
to hold that 33 Foxberry Road belongs beneficially to Mr Hall and Mrs
Walker in equal shares, notwithstanding their unequal contributions to
the purchase price, simply because it was bought to be their family home
and they intended that their relationship should last for life. Equally
it is not open to this court to 'top up' Mrs Walker's share, beyond what
it would be on the mere basis of her financial contribution, on some broad
notion of what would be fair simply because the house was bought as the
family home; the court could no doubt do this in an appropriate case in
proceedings under s.24 of the 1973 Act but the discretion under that section
is not available in the present case." Some four years later, in Turton v Turton [1988] Ch 542, this Court reaffirmed the principle that the beneficial interests had to be ascertained from consideration of the intentions of the parties at the time of the purchase; they were not to be left for determination in the light of subsequent events. Lord Justice Nourse, after referring to the passages in the judgments in Walker v Hall which I have just set out, said this ([1988] Ch 542, 552C-D): "It is thus made clear that Dillon and Lawton LJJ
were of the opinion that a beneficial interest acquired under an application
of the principles stated in Gissing v Gissing can only be an absolute
and indefeasible interest. It cannot be one which is liable to determine
or to be defeated or diminished – either automatically or by the
exercise of some discretion – on the happening of some future event,
for example the separation of an unmarried couple who were living together
at the time of its acquisition. The validity of that proposition is in
my judgment beyond doubt. ". . . once the court had found the existence of
a constructive or implied trust whereby the beneficial rights to the property
belonged to the parties in whatever shares the court determined, then
the necessary consequence was the recognition by the court of rights which
are proprietary in their nature and which lie wholly outside the exercise
of any discretionary powers. That was made clear, inter alia, in Gissing
v Gissing [1971] AC 886." Turton v Turton (supra) was heard in January 1987; judgments were delivered in March of that year. Some twelve months earlier this Court (Sir Nicolas Browne-Wilkinson, Vice-Chancellor, Lord Justice Mustill and Lord Justice Nourse) had decided Grant v Edwards and another [1986] Ch 638. Grant v Edwards – which, for reasons which I shall explain, may be seen as a turning point in this area of the law - was not cited in Turton v Turton.; and it would not be surprising (given that the conveyance in Turton contained an express declaration of trust) if Lord Justice Nourse (who was a member of both constitutions) took the view that there was nothing in the earlier case which bore upon the point for decision in the later. Be that as it may, some three and a half years later, in a passage to which I will need to refer from his judgment in Stokes v Anderson [1991] 1 FLR 391, the same judge addressed the potential impact of Grant v Edwards on what may be described as the then accepted view of the law in this area. But, first, I should turn to the judgments in Grant v Edwards. Grant v Edwards [1986] Ch 638 was a case in which the plaintiff had made no contribution to the purchase price of the house in which she lived with the defendant as husband and wife. The house was purchased in the names of the defendant and his brother. There was, therefore, no room for the application of principles based on resulting trust – as exemplified in Walker v Hall (supra). Nevertheless, she was able to succeed in establishing a beneficial interest equal to a one half share on the basis of constructive trust or (per Sir Nicolas Browne-Wilkinson, Vice-Chancellor) proprietary estoppel. The analysis by way of constructive trust can be seen clearly in the judgment of Lord Justice Nourse in Grant v Edwards, at [1986] Ch 638, 646H-647D: " In order to decide whether the plaintiff has a
beneficial interest in 96 Hewitt Road we must climb again the familiar
ground which slopes down from the twin peaks of Pettitt v Pettitt [1970]
AC 777 and Gissing v Gissing [1971] AC 886. In a case such as the present,
where there has been no written declaration or agreement, nor any direct
provision by the plaintiff of part of the purchase price so as to give
rise to a resulting trust in her favour, she must establish a common intention
between her and the defendant, acted upon by her, that she should have
a beneficial interest in the property. If she can do that, equity will
not allow the defendant to deny that interest and will construct a trust
to give effect to it. Sir Nicolas Browne-Wilkinson, Vice-Chancellor, took the opportunity to restate the principles which had been laid down in the speech of Lord Diplock in Gissing v Gissing [1971] AC 886. He said this, at [1986] Ch 638, 654C-655B): "In my judgment, there has been a tendency over
the years to distort the principles as laid down in the speech of Lord
Diplock in Gissing v Gissing [1971] AC 886 by concentrating on only part
of his reasoning. For present purposes, his speech can be treated as falling
into three sections: the first deals with the nature of the substantive
right; the second with the proof of the existence of that right; the third
with the quantification of that right. The Vice-Chancellor pointed out (ibid, 655B-C) that, if his analysis were correct, it led to the conclusion that contributions made by a claimant who was not named on the title might be relevant both as evidence from which an intention that the claimant was to have some beneficial interest in the property could be inferred and "to quantify the extent of that beneficial interest". It is in that latter context that what he described as "this last section of Lord Diplock's speech [pp 908D-909]" is of particular relevance. It is convenient, therefore to set out the passage which the Vice-Chancellor had in mind. Lord Diplock had said this ([1971] AC 886, 908D-E, 908F-G, 909E): 'Where in any of the circumstances described above contributions,
direct or indirect, have been made to the mortgage instalments by the
spouse into whose name the matrimonial home has not been conveyed, and
the court can infer from their conduct a common intention that the contributing
spouse should be entitled to some beneficial interest in the matrimonial
home, what effect is to be given to that intention if there is no evidence
that they in fact reached any express agreement as to what the respective
share of each spouse should be?" "What then is the extent of the plaintiff's interest?
It is clear from Gissing v Gissing (above) that, once the common intention
and the actions to the claimant's detriment have been proved from direct
or other evidence, in fixing the quantum of the claimant's beneficial
interest the court can take into account indirect contributions by the
plaintiff such as the plaintiff's contributions to joint household accounts:
see Gissing v Gissing at p. 909A and D-E. In my judgment, the passage
in Lord Diplock's speech at pp.909G-910A is dealing with a case where
there is no evidence of the common intention other than contributions
to joint expenditure: in such a case there is insufficient evidence to
prove any beneficial interest and the question of the extent of that interest
cannot arise. "I suggest that in other cases of this kind, useful
guidance may in the future be obtained from the principles underlying
the law of proprietary estoppel which in my judgment are closely akin
to those laid down in Gissing v Gissing (above). In both, the claimant
must to the knowledge of the legal owner have acted in the belief that
the claimant has or will obtain an interest in the property. In both the
claimant must have acted to his detriment in reliance on such belief.
In both equity acts on the conscience of the legal owner to prevent him
from acting in an unconscionable manner by defeating the common intention.
The two principles have been developed separately without cross-fertilization
between them: but they rest on the same foundations and have on all other
matters reached the same conclusions." As I have said, Grant v Edwards (supra) was decided in March 1986. Some four years later it was referred to by Lord Bridge of Harwich, with obvious approval, in Lloyds Bank Plc v Rosset [1991] 1 AC 107. In a passage (ibid, 132E-133C) on which the appellant relies strongly Lord Bridge drew attention "to one critical distinction which any judge required to resolve a dispute between former partners as to the beneficial interest in the home which they formerly shared should always have in the forefront of his mind." The distinction is between (i) those cases in which, prior to the acquisition, there has been some agreement, arrangement or understanding reached between the parties that each is to have a beneficial share in the property and (ii) those cases in which there has been no such agreement, arrangement or understanding prior to the acquisition. Lord Bridge described Grant v Edwards as an example of a case within the first of those categories. He said this, (ibid, 133B-H): "The leading cases in Your Lordships' House are
Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886. Both
demonstrate situations in the second category to which I have referred
and their Lordships discuss at great length the difficulties to which
these situations give rise. The effect of these two decisions is very
helpfully analysed in the judgment of Lord MacDermott LCJ in McFarlane
v McFarlane [1972] NI 59. Lord Bridge, in Lloyds Bank Plc v Rosset (supra), refers with approval to the analysis of Pettitt v Pettitt and Gissing v Gissing which is found in the judgment of Lord MacDermott, Lord Chief Justice of Northern Ireland, in McFarlane v McFarlane [1972] NI 59. It is unnecessary, therefore, to attempt any further analysis of those decisions in this judgment. I can adopt, with gratitude, the analysis which has been approved, subsequently, in the House of Lords in Rosset. In McFarlane, after observing that the facts in Pettitt and Gissing "were not such as to facilitate or encourage a comprehensive statement of this vexed branch of the law" - and that "much remains unsettled" - Lord MacDermott had said this (ibid, 66-67): "But two points were put beyond question. The 'family
assets' doctrine was definitely rejected. See Pettitt per Lord Reid at
p 797, per Lord Hodson at p 810 and per Lord Upjohn at p 817. And, secondly,
section 17 of the Act of 1882 was held only to be a procedural provision
which did not empower the court to alter the existing rights of the parties.
See per Lord Reid at p 793, per Lord Morris of Borth-y-Gest at pp 798-799,
per Lord Hodson at p 808, per Lord Upjohn at p 813 and per Lord Diplock
at p 820. The second proposition which I take to be now accepted
in Pettitt and Gissing must be stated in a qualified form. It is that
in certain circumstances the first proposition can also apply in favour
of the spouse without the legal title where that spouse has contributed
to the purchase, not directly by finding a part of the price, but indirectly
and in a manner which has added to the resources out of which the property
has been acquired as, for example, by work done or services rendered or
by relieving the other spouse of some, at any rate, of his or her financial
obligations. With that analysis of the effect of Pettitt v Pettitt and Gissing v Gissing, and Lord Bridge's own observations as to the reasoning in Grant v Edwards, in mind, I return to the passage in Lloyds Bank Plc v Rosset [1991] 1 AC 107, 132E-133C, on which the appellant relies: "The first and fundamental question which must always
be resolved is whether, independently of any inference to be drawn from
the conduct of the parties in the course of sharing the house as their
home and managing their joint affairs, there has at any time prior to
acquisition, or exceptionally at some later date, been any agreement,
arrangement or understanding reached between them that the property is
to be shared beneficially. The finding of an agreement or arrangement
to share in this sense can only, I think, be based on evidence of express
discussions between the partners, however imperfectly remembered and however
imprecise their terms may have been. Once a finding to this effect is
made it will only be necessary for the partner asserting a claim to a
beneficial interest against the partner entitled to the legal estate to
show that he or she has acted to his or her detriment or significantly
altered his or her position in reliance on the agreement in order to give
rise to a constructive trust or proprietary estoppel. Shortly after the decision of the House of Lords in Lloyds Bank Plc v Rosset (supra) that decision, and the decision in Grant v Edwards (supra), were considered by this Court (Lord Justice Lloyd, Lord Justice Nourse and Lord Justice Ralph Gibson) in Stokes v Anderson [1991] 1 FLR 391. The factual basis of the claim was, in material respects, similar to that in the present case. The claimant had made two payments, amounting together to £12,000, towards the acquisition of the one half share of the defendant's ex-wife in the net equity (valued at £90,000) in a house in which the claimant and the respondent lived as husband and wife. As Lord Justice Nourse explained at the outset of his judgment (ibid, 392E-F): "This is a dispute between an unmarried couple as
to the beneficial ownership of a house in which they formerly lived together;
compare Gissing v Gissing [1971] AC 886 and Grant v Edwards [1987] 1 FLR
87; [1986] Ch 638. [The judge]decided that the woman was entitled to half
the beneficial interest in the house. The man has now appealed to this
court, contending that the woman has no beneficial interest, alternatively
that it does not exceed 15% at the most. ". . . Miss Anderson's evidence was that Mr Stokes
said that she was to have a beneficial interest in the property, he did
not say what the extent of that interest was to be; she assumed that it
would be 50%. There is no other evidence to suggest that the extent of
Miss Anderson's beneficial interest was ever discussed between herself
and Mr Stokes." ". . . I take this to be a clear example of what
in Grant v Edwards [1987] 1 FLR 87 at p 93E; [1986] Ch 638 at p 646C,
I thought, perhaps wrongly, was the rarer class of case under Gissing
v Gissing [1971] AC 886, where the parties have orally declared themselves
in such a way as to make plain their common intention that the claimant
should have a beneficial interest in the property. Moreover, here it is
unnecessary to look beyond the two payments of £5000 and £7000
in order to find conduct which amounted to an acting upon the common intention
by Miss Anderson. And so the only real question for decision, a difficult
one, is what is the extent of her beneficial interest. "I agree with the Vice-Chancellor in Grant v Edwards
[1987] 1 FLR 87 at p 100; [1986] Ch 638 at p 657E, that those observations,
although made only in reference to contributions to mortgage repayments,
support a more general proposition that all payments made and acts done
by the claimant are to be treated as illuminating the common intention
as to the extent of the beneficial interest. Once you get to that stage,
as Lord Diplock recognised, there is no practicable alternative to the
determination of a fair share. The court must supply the common intention
by reference to that which all the material circumstances have shown to
be fair. . . ." The result, in Stokes v Anderson (supra) was that the claimant's share was reduced from the 50% which she had been awarded by the judge (on the basis, it seems, that that was what she assumed would be her share at the time of the acquisition – ibid, 397G-H) to 25%. The reason for that reduction was that, at the time when the claimant made her payments, Mr Stokes was already entitled to a one half share; the payments were made in order to acquire the other one half share from his ex-wife. As Lord Justice Nourse put it, at [1991] 1 FLR 391, 401: ". . . to hold that Miss Anderson was entitled to half the beneficial interest in Stone Cottage . . . would be markedly unfair to Mr Stokes. On a broad approach, the only approach which can be made, I think that the fair view of all the circumstances is that Miss Anderson is entitled to a beneficial interest equivalent to one half of Mrs Stokes' half-share, or one quarter of the whole, subject to the mortgage." Springette v Defoe [1992] 2 FLR 388 followed some 15 months later. In that case the property was purchased in the joint names of the parties. They had been living there for a short time as joint tenants of the local authority; but they were able to purchase at a substantial discount from the estimated market value because Miss Springette had, herself, been a tenant of the local authority (in another property) for 11 years or more. The property was purchased with the assistance of a building society mortgage – for the repayment of which they were both liable as covenantors. Treating the mortgage monies as provided in equal shares – and giving Miss Springette credit for the whole of the tenant's discount - her contribution to the purchase was 75% or thereabouts. It was common ground that, at the time of acquisition, they were each intended to have some beneficial interest in the property; and it was found as a fact by the trial judge that they never had any discussion at all, at or before the time of the purchase, about what their respective interests were to be. The judge held that the property was owned in equal shares; not on the basis of his finding that, although uncommunicated to each other, that was, in fact, the intention of each at the time, but because (as he put it, at [1992 2 FLR 388, 392B-C): "It is my judgment that there is sufficient evidence on the facts of inference of common intention or arrangement between the parties that the property should be owned in equal shares". In the light of the judge's findings of fact, it might have been thought that the case fell squarely within the second of the two categories of case identified by Lord Bridge in Lloyds Bank Plc v Rosset (supra, 132H-133B). There was a common intention that each should have some beneficial interest in the property; there was no evidence of express agreement as to what the extent of those interests should be; the court had to ask whether there was sufficient evidence from which a common intention on that latter point could be inferred – Grant v Edwards (supra, 651A, 654A, 657H), Stokes v Anderson (supra, 400C). That is the question which the judge asked in Springette v Defoe (supra); and to which he gave the answer which he did. But the Court of Appeal reached a different conclusion. It is, I think, important to an understanding of the reasoning in the judgments in Springette v Defoe that each member of this Court seems to have thought that when Lord Bridge referred, in Lloyds Bank Plc v Rosset (supra, 132F), to the need to base a "finding of an agreement or arrangement to share in this sense" on "evidence of express discussions between the partners" he was addressing the secondary, or consequential, question "what was the common intention of the parties as to extent of their respective beneficial interests" rather than the primary, or threshold, question "was there a common intention that each should have a beneficial interest in the property". That that was the basis of the reasoning in Springette v Defoe appears clearly from the judgments of Lord Justice Dillon ([1992] 2 FLR 388, 393E-F) and Lord Justice Steyn (ibid,395B). The third member of the Court, Sir Christopher Slade, agreed with that reasoning (ibid, 397G). For the reasons which I have sought to explain, I think that the better view is that, in the passage in Rosset, at [1991] 1 AC 107, 135F, to which both Lord Justice Dillon and Lord Justice Steyn referred in Springette, Lord Bridge was addressing only the primary question - "was there a common intention that each should have a beneficial interest in the property": he was not addressing the secondary question - "what was the common intention of the parties as to extent of their respective beneficial interests". As this Court had pointed out in Grant v Edwards and Stokes v Anderson, the court may well have to supply the answer to that secondary question by inference from their subsequent conduct – see, in particular, the reference in the judgment of Sir Nicholas Browne-Wilkinson, Vice-Chancellor, ([1986] Ch 638, 657E-F) to the passages in the speech of Lord Diplock in Gissing v Gissing [1971] AC 886, at 909A and D-E. And it may be, as Lord Justice Nourse observed in Stokes v Anderson ([1991] 1 FLR 391, 400C), that "once you get to that stage . . . there is no practicable alternative to the determination of a fair share. The court must supply the common intention by reference to that which all the material circumstances have shown to be fair". There are, of course, passages in the judgments of this Court in Springette v Defoe [1992] 2 FLR 388 which, at first sight, provide support for the appellant's contentions in the present appeal. In particular, there are the passages in the judgment of Lord Justice Dillon at pages 392E-G and 393D and G-H: "In Walker v Hall [1984] FLR 126 I expressed the
view at p. 134C that it was not open to this court, in the absence of
specific evidence of the parties' intentions, to hold that the property
there in question belonged beneficially to the two parties in equal shares,
notwithstanding their unequal contributions to the purchase price, simply
because it was bought to be their family home and they intended –
or possibly one should say 'hoped' – that their relationship should
last for life. The effect is that, in the absence of an express declaration
of the beneficial interests, the court will hold that the joint purchasers
hold the property on a resulting trust for themselves in the proportions
in which they contributed directly or indirectly to the purchase price,
unless there is sufficient specific evidence of their common intention
that they should be entitled in other proportions – e.g. in equal
shares notwithstanding unequal contributions – to rebut the presumption
of a resulting trust." "But these factors could not support such an inference
because the assistant recorder had already found as a matter of fact that
no such common intention was communicated between the parties. The simple
answer to the man's case is that there was no communicated common intention. On the same day as judgments were handed down in Springette v Defoe, the same court (Lord Justice Dillon, Lord Justice Steyn and Sir Christopher Slade) handed down their judgments in Huntingford v Hobbs (reported, a year later, at [1993] 1 FLR 736). Unsurprisingly, the decision in Huntingford v Hobbs is consistent with the approach in Springette v Defoe; to which Lord Justice Dillon refers (at [1993] 1 FLR 736, 753B) in explaining why a point not taken in the court below was not open on the appeal. But, save for an observation of Lord Justice Steyn at page 750A-B which suggests that he was less of an enthusiast for that approach than might have been thought from his judgment in Springette v Defoe – the decision in Huntingford v Hobbs is of no real assistance in the present context: the appeal turned on a different point. Springette v Defoe and Huntingford v Hobbs were considered by this Court (Lord Justice Dillon and Lord Justice Staughton) a few months later in Evans v Hayward (judgments delivered in June 1992, but reported at [1995] 2 FLR 511. That, like Springette v Defoe, was a case in which the property had been bought in joint names at a discounted price under a "right to buy" conferred by the Housing Act 1985; but where the discount was substantially attributable to the plaintiff's former occupation as local authority tenant. Lord Justice Dillon referred to the decision in Springette v Defoe in the following passage, (ibid, 513E-F): "In Springette v Defoe the primary issue which arose
for decision was whether, as the judge at first instance had held, it
was permissible to reach the conclusion that the two parties were to share
the beneficial interests in the property equally without regard to their
contributions, on the ground that, though neither of them ever said anything
about it to the other, each of them had in fact in his or her own mind
an uncommunicated belief or intention that they were to share the property
equally beneficially. But that view was rejected by this court . . ." "For my part I find it difficult to say that a discount
is, strictly speaking, purchase money provided by either party. It is
money which is not provided by anybody. But I do consider that the facts
as to the existence of a discount and the source from which it is derived
must be taken into account, and are capable of leading to the inference
that the parties have made an agreement as to how the purchase price is
provided." "[Counsel] referred us to a recent decision of this
court in Springette v Defoe [1992] 2 FLR 388, which recognises that the
common intention must be communicated between the parties. I think all
the authorities on first category cases will be found to be consistent
with that proposition." The decision in Midland Bank v Cooke I have set out, at some length, the law in this area as it appears to have been understood in this Court before the decision in Midland Bank v Cooke [1995] 2 FLR 915 because that decision must be examined in that context. The issue in that case – as to the extent of the wife's beneficial interest in the former matrimonial home – arose in proceedings brought by the bank to enforce a charge given by the husband to secure a business loan. The property had been purchased with the assistance of a mortgage advance (£6,450); the balance being found out of a wedding gift from the husband's parents (£1,100) and the husband's own monies (£1,000 or thereabouts). The property was conveyed into the husband's sole name. There had been no discussion or agreement between husband and wife at the time of the acquisition as to the basis upon which the property was held by the husband, or as to the extent of their respective beneficial interests Treating the wedding gift as made to husband and wife equally, it had been held in the county court that the wife was entitled to a beneficial interest on the basis of her contribution to the purchase price. But, following the approach in Springette v Defoe, the judge had held that the extent of that beneficial interest was limited to the proportion (6.47%) which her contribution (equal to one half of the wedding gift) bore to the whole. This Court (Lord Justice Stuart-Smith, Lord Justice Waite and Lord Justice Schiemann) took a different view, holding that the wife was entitled to half share in the property. The leading judgment (with which the other two members of the Court agreed) was given by Lord Justice Waite. At [1995] 2 FLR 915, 921A, he endorsed the view of the county court judge that, in the absence of any discussion or agreement at the time of the purchase, the wife's claim to have a beneficial interest in the property depended on her being held to have made a monetary contribution. But if she had made a contribution equal to one half of the wedding gift – as the judge had been entitled to hold on the evidence – then this was a case within the second of the categories identified by Lord Bridge in Lloyd's Bank v Rosset (supra). Lord Justice Waite then addressed the question: "(B) Is the proportion of Mrs Cooke's beneficial
interest to be fixed solely by reference to the percentage of the purchase
price which she contributed directly, so as to make all other conduct
irrelevant?" "By parity of reasoning, in cases where a direct
contribution has been duly proved by the partner who is not the legal
owner (thus establishing a resulting trust in his or her favour of some
part of the beneficial interest) the proportion of that share will be
fixed at the proportion it bears to the overall price of the property.
Although the proportion may be enlarged by subsequent contribution to
the purchase price, such contributions must be direct – i.e. further
cash payments or contribution to the capital element in instalment repayments
of any mortgage under which the unpaid proportion of the purchase remains
secured. Nothing less will do." After referring to the observations of Lord Justice Dillon in Springette v Defoe at [1992] 2 FLR 388,393D-H which I have already set out earlier in this judgment, and having compared the approach of the same judge in McHardy & Sons v Warren and another [1994] 2 FLR 338 – in which Lord Justice Dillon had said this (ibid, 340E): "To my mind it is irresistible conclusion that where
a parent pays the deposit, either directly to the solicitors or to the
bride and groom, it matters not which, on the purchase of their first
matrimonial home, it is the intention of all three of them that the bride
and groom should have equal interests in the matrimonial home, not interests
measured by reference to the percentage half the deposit [bears] to the
full price." "I confess that I find the differences of approach
in these two cases mystifying. In the one a strict resulting trust geared
to mathematical calculation of the proportion of the purchase price provided
by cash contribution is treated as virtually immutable in the absence
of express agreement; in the other a displacement of the cash-related
trust by inferred agreement is not only permitted but treated as obligatory." It was to the decision in Grant v Edwards that Lord Justice Waite then turned. He said this ([1995] 2 FLR 915, 925H-926B): "The decision of this court in Grant v Edwards and
Edwards [1986] 1 Ch 638, [1987] 1 FLR 87 also affords helpful guidance.
The context was different, in that the court was there dealing with a
legal owner who had made representations to the occupier on which the
latter had relied to her detriment so as to introduce equities in the
nature of estoppel. Once a beneficial interest had been established by
that route, however, the court then proceeded – as I read the judgments
– to fix the proportions of the beneficial interests on general
grounds which were regarded as applying in all cases. That appears from
the judgments of Nourse LJ at pp 650 and 96-97 respectively and of Sir
Nicholas Browne-Wilkinson V-C at pp 657G and 100G respectively . . ."
"The general principle to be derived from Gissing
v Gissing and Grant v Edwards can in my judgment be summarised in this
way. When the court is proceeding, in cases like the present where the
partner without legal title has successfully asserted an equitable interest
through direct contribution, to determine (in the absence of express evidence
of intention) what proportions the parties must be assumed to have intended
for their beneficial ownership, the duty of the judge is to undertake
a survey of the whole course of dealing between the parties relevant to
their ownership and occupation of the property and their sharing of its
burdens and advantages. That scrutiny will not confine itself to the limited
range of acts of direct contribution of the sort that are needed to found
a beneficial interest in the first place. It will take into consideration
all conduct which throws light on the question what shares were intended.
Only if that search proves inconclusive does the court fall back on the
maxim that 'equality is equity". "(C) Can an agreement be attributed by inference
of law to parties who have expressly stated that they reached no agreement? "I would therefore hold that positive evidence that
the parties neither discussed nor intended any agreement as to the proportions
of their beneficial interest does not preclude the court, on general equitable
principles, from inferring one." In reaching that conclusion Lord Justice Waite had rejected the submission that, if the parties themselves had testified on oath that they made no agreement, there was no scope for equity to make one for them. At [1995] 2 FLR 915, 927D-G, he had said this: "That is a submission which, if it fell to be considered
without assistance from authority, I would reject instinctively on the
ground that it runs counter to the very system of law – equity –
on which it seeks to rely. Equity has traditionally been a system which
matches established principle to the demands of social change. The mass
diffusion of home ownership has been one of the most striking social changes
of our own time. The present case is typical of hundreds, perhaps even
thousands, of others. When people, especially young people, agree to share
their lives in joint homes they do so on a basis of mutual trust and in
the expectation that their relationship will endure. Despite the efforts
that have been made by many responsible bodies to counsel prospective
cohabitants as to the risks of taking shared interests in property without
legal advice, it is unrealistic to expect that advice to be followed on
a universal scale. For a couple embarking on a serious relationship, discussion
of the terms to apply at parting is almost a contradiction of the shared
hopes that have brought them together. There will inevitably be numerous
couples, married or unmarried, who have no discussion about ownership
and who, perhaps advisedly, make no agreement about it. It would be anomalous,
against that background, to create a range of home-buyers who were beyond
the pale of equity's assistance in formulating a fair presumed basis for
the sharing of beneficial title, simply because they had been honest enough
to admit they never gave ownership a thought or reached any agreement
about it." Developments since the decision in Midland Bank v Cooke The judgments of this Court in Midland Bank v Cooke were handed down in July 1995. Within a few months the familiar question "what is the interest of one unmarried cohabitee in the house purchased in the name of the other as a home in which they intend to live as man and wife" was before this Court, again, in Drake v Whipp [1996] 1 FLR 826. Lord Justice Peter Gibson identified the point in the opening paragraph of his judgment (ibid, 827): "Yet again this court is asked to rule on a dispute
between a man and a woman, who cohabited but were not married to each
other, as to their respective beneficial interests in a property which
they purchased to be their home but which was put into the man's name
only. The usual lengthy litany of authorities as well as more recent additions
have been recited to us and, as is notorious, it is not easy to reconcile
every judicial utterance in this well-travelled area of the law. A potent
source of confusion, to my mind, has been suggestions that it matters
not whether the terminology used is that of the constructive trust, to
which the intention, actual or imputed, of the parties is crucial, or
that of the resulting trust which operates on a presumed intention of
the contributing party in the absence of rebutting evidence of actual
intention." The leading judgment (with which the other members of the Court, Lord Justice Hirst and Mr Justice Forbes, agreed) was delivered by Lord Justice Peter Gibson. After setting out the facts, he cited the familiar passage in Lloyds Bank Plc v Rosset [1991] 1 AC 107, 132E-133B, in which Lord Bridge had explained the distinction between those cases in which, at the time of the acquisition, there has been some agreement, arrangement or understanding between the parties that the property was to be shared beneficially (albeit, not an agreement or understanding as to the extent of their respective beneficial shares) and those cases in which there had been no such agreement or arrangement to share. He went on to say this, ([1996] 1 FLR 826, 828G– 829A): "This passage was read twice to the judge. But nevertheless
it was the submission of [counsel] for Mrs Drake that Mr Whipp held the
property not on a constructive trust but as trustee on a resulting trust,
both parties having made contributions to the purchase price, on the application
of the principle of Dyer v Dyer (1788) 2 Cox Eq Cas 92. However, that
principle could not apply if (1) there was a common intention to share
the property beneficially found to exist on the application of the guidance
given by Lord Bridge, whether by dint of a finding of an agreement, arrangement
or understanding on evidence of express discussions between the partners
or by ready inference from direct contributions to the purchase price
by the partner who is not the legal owner, and (2) that partner has acted
to his or her detriment in reliance on the common intention. "Mrs Drake now appeals to this court. [Counsel]
submits that the judge wrongly conflated the separate doctrines of constructive
trust and resulting trust, whereas he was only concerned with a resulting
trust. That, he submitted, required attention to be paid only to the cost
of acquisition of the property, the cost of its subsequent enhancement
being irrelevant. When it was put to him that this was a case of a constructive
trust by reason of a common understanding or intention acted on by his
client to her detriment, he submitted that there had to be a common understanding
or intention as to the respective shares to be taken by the beneficial
owners. That is an impossible argument in the light of the authorities
(see, for example, the speech of Lord Diplock in Gissing v Gissing [1971]
AC 886, 907-909. All that is required for the creation of a constructive
trust is that there should be a common intention that the party who is
not the legal owner should have a beneficial interest and that that party
should act to his or her detriment in reliance thereon." "In the present case the judge has found what was the common intention of the parties as to their beneficial shares, but the only direct evidence in support of that finding was Mr Whipp's evidence as to his own intention. The judge appears to have imputed the like intention to Mrs Drake although there is nothing in her evidence to support it. Further, the judge refused to take into account the contributions of the parties by way of their labour, being unquantified in monetary terms, and similarly Mrs Drake's other contributions to the household were ignored. No doubt this was because he was not invited to consider the matter on the basis of a constructive trust. In my judgment the judge's finding on common intention
cannot stand in the absence of any evidence that Mrs Drake intended her
share to be limited to her direct contributions to the acquisition and
conversion costs. I would approach the matter more broadly, looking at
the parties' entire course of conduct together. I would take into account
not only those direct contributions but also the fact that Mr Whipp and
Mrs Drake together purchased the property with the intention that it should
be their home, that they both contributed their labour in 70/30% proportions,
that they had a joint account out of which the costs of conversion were
met, but that that account was largely fed by his earnings, and that she
paid for the food and some other household expenses and took care of the
housekeeping for them both. I note that whilst it was open to Mrs Drake
to argue at the trial for a constructive trust and for a 50% share, she
opted to rely solely on a resulting trust and a 40.1% share. In all the
circumstances, I would hold that her fair share should be one-third." Once it is recognised that what the court is doing, in cases of this nature, is to supply or impute a common intention as to the parties' respective shares (in circumstances in which there was, in fact, no common intention) on the basis of that which, in the light of all the material circumstances (including the acts and conduct of the parties after the acquisition) is shown to be fair, it seems to me very difficult to avoid the conclusion that an analysis in terms of proprietary estoppel will, necessarily, lead to the same result; and that it may be more satisfactory to accept that there is no difference, in cases of this nature, between constructive trust and proprietary estoppel. It is clear that Sir Nicolas Browne-Wilkinson, Vice-Chancellor, in Grant v Edwards thought that there was much to be said for that view. In Stokes v Anderson, Lord Justice Nourse seems to have thought the same. More recently, in Yaxley v Gotts [2000] Ch 162, Lord Justice Robert Walker observed (ibid, 176E) that "in the area of a joint enterprise for the acquisition of land (which may be, but is not necessarily, the matrimonial home) the two concepts [estoppel and constructive trust] coincide"; and (ibid, 180C) that "the species of constructive trust based on 'common intention' . . . is closely akin to, if not indistinguishable form, proprietary estoppel". He found support for those observations in the three cases to which much reference has been made in this judgment - Gissing v Gissing, Grant v Edwards and Lloyds Bank Plc v Rosset. For completeness, I should mention that we were referred to the recent decision of this Court in Carlton v Goodman [2002] EWCA Civ 545 (unreported, 29 April 2002). The question, in that case, was described by Lord Justice Mummery (at paragraph 2 of his judgment) as "an interesting point on resulting trusts in a case where the purchase of property acquired for the sole use and occupation of one party is partly financed by a joint mortgage on the property". It is important to have in mind that the appellant had paid nothing towards the purchase price; that it was never intended that she should do so; and that there was nothing in the circumstances to lead to the inference that it was the common intention that she should have any beneficial interest in the house – paragraph 22(vii) and (ix). On its facts Carlton v Goodman was the inverse of the present case; and it provides little, if any, direct assistance on the principles to be applied in cases of the nature with which we are now concerned. But it is of interest to note the observation of Lord Justice Ward, at paragraph 32, that: "Midland Bank v Cooke itself can only be properly
understood when it is appreciated that the court was satisfied that by
the making of a direct contribution a resulting trust had been established
in the wife's favour of some part of the beneficial interest and the real
question for the court in that case was to determine what proportions
the parties must have been assumed to have intended for their beneficial
ownership." Summary I have referred, in the immediately preceding paragraphs, to "cases of this nature". By that, I mean cases in which the common features are: (i) the property is bought as a home for a couple who, although not married, intend to live together as man and wife; (ii) each of them makes some financial contribution to the purchase; (iii) the property is purchased in the sole name of one of them; and (iv) there is no express declaration of trust. In those circumstances the first question is whether there is evidence from which to infer a common intention, communicated by each to the other, that each shall have a beneficial share in the property. In many such cases – of which the present is an example – there will have been some discussion between the parties at the time of the purchase which provides the answer to that question. Those are cases within the first of Lord Bridge's categories in Lloyds Bank Plc v Rosset. In other cases – where the evidence is that the matter was not discussed at all – an affirmative answer will readily be inferred from the fact that each has made a financial contribution. Those are cases within Lord Bridge's second category. And, if the answer to the first question is that there was a common intention, communicated to each other, that each should have a beneficial share in the property, then the party who does not become the legal owner will be held to have acted to his or her detriment in making a financial contribution to the purchase in reliance on the common intention. In those circumstances, the second question to be answered in cases of this nature is "what is the extent of the parties' respective beneficial interests in the property?" Again, in many such cases, the answer will be provided by evidence of what they said and did at the time of the acquisition. But, in a case where there is no evidence of any discussion between them as to the amount of the share which each was to have – and even in a case where the evidence is that there was no discussion on that point – the question still requires an answer. It must now be accepted that (at least in this Court and below) the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property. And, in that context, "the whole course of dealing between them in relation to the property" includes the arrangements which they make from time to time in order to meet the outgoings (for example, mortgage contributions, council tax and utilities, repairs, insurance and housekeeping) which have to be met if they are to live in the property as their home. As the cases show, the courts have not found it easy to reconcile that final step with a traditional, property-based, approach. It was rejected, in unequivocal terms, by Lord Justice Dillon in Springette v Defoe when he said ([1992] 2 FLR 388, 393D-H) that "The court does not as yet sit, as under a palm tree, to exercise a general discretion to do what the man in the street, on a general overview of the case, might regard as fair". Three strands of reasoning can be identified. (1) That suggested by Lord Diplock in Gissing v Gissing ([1971] AC 886, at 909D) and adopted by Lord Justice Nourse in Stokes v Anderson ([1991] 1 FLR 391, at 399G, 400B-C. The parties are taken to have agreed at the time of the acquisition of the property that their respective shares are not to be quantified then, but are left to be determined when their relationship comes to an end or the property is sold on the basis of what is then fair having regard to the whole course of dealing between them. The court steps in to determine what is fair because, when the time came for that determination, the parties were unable to agree. (2) That suggested by Lord Justice Waite in Midland Bank v Cooke ([1995] 2 FLR 915, at 926F-H). The court undertakes a survey of the whole course of dealing between the parties "relevant to their ownership and occupation of the property and their sharing of its burdens and advantages" in order to determine "what proportions the parties must be assumed to have intended [from the outset] for their beneficial ownership". On that basis the court treats what has taken place while the parties have been living together in the property as evidence of what they intended at the time of the acquisition. (3) That suggested by Sir Nicolas Browne-Wilkinson, Vice Chancellor, in Grant v Edwards ([1986] 1 Ch 638, at 656G-H, 657H) and approved by Lord Justice Robert Walker in Yaxley v Gotts ([2000] Ch 162, 177C-E). The court makes such order as the circumstances require in order to give effect to the beneficial interest in the property of the one party, the existence of which the other party (having the legal title) is estopped from denying. That, I think, is the analysis which underlies the decision of this Court in Drake v Whipp - see [1996] 1 FLR 826, at 831E-G. For my part, I find the reasoning adopted by this Court in Midland Bank v Cooke to be the least satisfactory of the three strands. It seems to me artificial – and an unnecessary fiction – to attribute to the parties a common intention that the extent of their respective beneficial interests in the property should be fixed as from the time of the acquisition, in circumstances in which all the evidence points to the conclusion that, at the time of the acquisition, they had given no thought to the matter. The same point can be made – although with less force – in relation to the reasoning that, at the time of the acquisition, their common intention was that the amount of the respective shares should be left for later determination. But it can be said that, if it were their common intention that each should have some beneficial interest in the property - which is the hypothesis upon which it becomes necessary to answer the second question – then, in the absence of evidence that they gave any thought to the amount of their respective shares, the necessary inference is that they must have intended that question would be answered later on the basis of what was then seen to be fair. But, as I have said, I think that the time has come to accept that there is no difference in outcome, in cases of this nature, whether the true analysis lies in constructive trust or in proprietary estoppel. Determination of the present appeal Her Honour Judge Hallon, directed herself that, in the light of Midland Bank v Cooke, her task was to "look to the whole course of dealings to infer what the agreement between these parties was". She found that "all the evidence . . . clearly shows that both were evincing an intention to share the benefit and the burden of this property [35 Dickens Close] jointly and equally". But, in reaching that conclusion, she had held that that was the continuation of a "long term plan" which had begun before 39 Page Close, Bean, had been purchased. In my view, although the judge may have been right to identify a long term plan, in general terms, that the parties would acquire a property "through purchase with the advantageous discount available to a council tenant, with a view subsequently to moving on to better accommodation"; she was plainly wrong to take the view that it was a necessary incident of that plan that each property would be owned jointly or "jointly and equally". The grant of a charge over 39 Page Close to secure Mr Hiscock's advance towards the purchase price of that property is inconsistent with an intention that that property should be owned jointly or in equal shares. And it is difficult to avoid the conclusion that the judge placed undue weight on the fact that (as she found) the parties regarded both 39 Page Close and 35 Dickens Close "as their [joint] home". It does not follow from the fact that parties live together in a house that they both regard as their home that they share the ownership of that house equally. If the judge had found, as was alleged by Mrs Oxley in paragraph 8 of her particulars of claim, that "it was expressly the joint intention of the Claimant and the Defendant at the time of [35 Dickens Close] that they should share the beneficial ownership of that property equally" I would taken the view that it would be wrong for this Court to go behind that finding of fact. But, as I have said, she did not make that finding of fact; and we have seen no evidence upon which she could have done so. This must, I think, be seen as a case where there is no evidence of any discussion between the parties as to the amount of the share which each was to have. And, on that basis, the judge asked herself the wrong question. She should not have sought, by reference to the conduct of the parties while they were living together at 35 Dickens Close, to determine what intention both were then "evincing" – unless, by that, she was able to find a common intention, communicated to each other, to determine, definitively, the shares which had been left undetermined at the time of acquisition. She might have asked herself whether their subsequent conduct, while living together at 35 Dickens Close, was consistent only with a common intention, at the time of the acquisition, that their shares should be equal; but she did not. The right question, in the circumstances of this case, was "what would be a fair share for each party having regard to the whole course of dealing between them in relation to the property?" I think that that is a question to which this Court can, and should, give an answer. I do not think it necessary to remit the matter to the county court. In my view to declare that the parties were entitled in equal shares would be unfair to Mr Hiscock. It would give insufficient weight to the fact that his direct contribution to the purchase price (£60,700) was substantially greater than that of Mrs Oxley (£36,300). On the basis of the judge's finding that there was in this case "a classic pooling of resources" and conduct consistent with an intention to share the burden of the property (by which she must, I think, have meant the outgoings referable to ownership and cohabitation), it would be fair to treat them as having made approximately equal contributions to the balance of the purchase price (£30,000). Taking that into account with their direct contributions at the time of the purchase, I would hold that a fair division of the proceeds of sale of the property would be 60% to Mr Hiscock and 40% to Mrs Oxley. I would set aside the order of 20 May 2003; declare that Mrs Oxley is entitled to 40% of the proceeds of sale of 35 Dickens Close; and adjust the sum payable to her by Mr Hiscock accordingly. Lord Justice Mance: I agree. Lord Justice Scott Baker: I also agree. |
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