[note for law students: this is a really important case on land registration in which the principles in Abbey National BS v Cann are considered and applied.  Please note that we do not write essays for you or respond to queries which assist you in writing your essays - we get quite snippy about such enquiries so beware.  As an academic and property law teacher myself, I get quite irate with those enquiries.  However, if you want to engage with us and our writing, we would be really happy and will respond in kind.]

Every generation seems to have its great property law case – think about Nat Prov v Ainsworth, Williams & Glyns v Boland, City of London v Flegg, Abbey National v Cann, and the machinations of the litigation which led to RBS v Etridge.  This litigation, which was formerly known as In re North East Property Buyers Litigation, is shaping up to be the case of this generation. We noted the judgment of HHJ Behrens in these matters  and were very grateful for a transcript of the judgment (as we are for a transcript of this one, although it now appears on baili as well).  The Court of Appeal gave its judgment on 24.01.2012, dismissing the appeal from HHJ Behrens’ straight-bat judgment. I assume that Jonathan Small, James Stark and Daniel Robinson (counsel for the sellers) are sharpening their keyboards for the SC application – the report I’ve seen doesn’t say whether the CA gave permission to appeal, but I’d assume that it should follow given the importance of the matter both in law and quantitatively (given that FSA regulation of this area was a latecomer).

In essence, the underlying question is whether the House of Lords was correct in Abbey National BS v Cann [1991] 1 AC 56 to hold that there was no moment in time (or scintilla temporis) between the transfer of an estate to a buyer and the simultaneous grant of a mortgage by that buyer to a lender.  The transfer and mortgage are, of course, separate documents and, strictly factually, there is such a moment in time between their execution.  However, in Cann, the House of Lords drew attention to the “reality” of the transactions, that they were indissolubly bound together.  As Lord Oliver put it, “The acquisition of the legal estate is entirely dependent upon the provision of funds which will have been provided before the conveyance can take effect and which are provided only against an agreement that the estate will be charged to secure them”.  The scintilla temporis was, therefore, “no more than a legal artifice”.  It may be something of a heresy to say this, but I have always found Lord Oliver’s judgments (in the HL) turgid beyond belief; whether or not you agree with that comment, it is undeniable that both Flegg and Cann are viewed as being lender-friendly (although lenders would say that those cases make lending both possible and cheaper, thus being borrower-friendly as well).

My own view is that Cann was also flawed and the arguments against it are canvassed in these cases.  The facts of these cases for present purposes, because they are largely assumed, are that a number of owner-occupiers entered into an agreement with the North East Property Buyers Ltd (NEPB).  The terms of the agreement were that the company would buy the property and, on sale, would then rent the property back to the sellers.  NEPB’s agents were not particularly well-versed in either property or landlord and tenant law (that seems to be one constant fact in most of the equity release cases).  They promised different terms to each of the buyers and different rent levels, but many were told they could stay in the property for as long as they liked provided they kept to the terms of the tenancy.  NEPB financed each transaction with a buy-to-let mortgage.  Crucially (as we will see), they did not disclose to the lender that the seller/s would remain in the property or the terms of the tenancy agreement.  Exchange of contracts and completion, including the execution of the charge, took place on the same day.  NEPB became insolvent and vanished.  The lenders want possession.

The overarching question is whether the representations and agreements made between NEPB and the sellers created rights which bound the lenders.  This raises full frontal the question whether Cann is distinguishable on the facts.  It is not about actual occupation (yet, at least), as the sellers were clearly in actual occupation at the date of the sale.

In summary, the Court of Appeal (Etherton LJ giving the judgment, with the MR and Rix LJ agreeing) held that Cann was not distinguishable and, indeed, its policy driver was just as relevant to these cases.  There was a secondary argument about the effect of priority searches, which (rightly) was decided in favour of the lenders.  If you’ll forgive me, I will let you read that part of the judgment ([57]-[64]) for yourself if you’re interested.  It seemed to me to be axiomatic.  As a result of those findings of law, possession was ordered as there were no other issues left to be decided.

The argument on which the barristers sharply divided was whether, after exchange of contracts and before completion, there was sufficient equity in NEPB to grant the sort of estoppel/constructive trust/rectification type of interest which the sellers claimed.  HHJ Behrens had held that the sellers’ rights at that stage were purely personal.  Detailed arguments were provided to the CA on these points, but, although attracted by the lenders’ arguments,  Etherton LJ sidestepped them by saying they were too technical (although he was attracted by the lenders’ submissions on the point).  As he put it, the question was whether the commercial and legal nature of the transaction was that there was a sale subject to a reservation or two separate transactions (a sale of the freehold and a separate leaseback on completion).  And “the way the documentation was prepared points firmly in favour of the latter” ([34]).  None of the sale contracts referred to the leaseback arrangement – indeed, they were all sold with vacant possession:

The clear impression created by the contracts, therefore, was that the vendors would be selling without reserving any beneficial interests or other rights in the property. That was how any third party, including mortgagees lending money to fund the purchase, would be entitled to view the matter: comp. Abigail v Lapin [1934] AC 491. The contracts disclosed no basis for a qualified report on title to the respondent lenders by their solicitors which would have alerted the respondent lenders to the possibility that the appellant vendors expected to remain in possession after completion or that the purchasers would obtain anything less than the entire legal and beneficial interest in the properties. ([35])

He went on to say, though, that, even if an equity had arisen in favour of the sellers at that point, the Cann principle applied so that the lenders’ interest.  [I'm not entirely sure I agree with that approach because of the pure priority principle, first in time prevails,but it's neither here nor there at the moment].  The question put to the CA was whether the policy underlying Cann was still relevant and relevant to these particular transactions.  In a nutshell, the sellers argued that “… unlike Cann, where the ‘driver’ of the transaction was to find a new home, the driver in the present cases, without which they could not and would not have proceeded, was the leaseback to the vendor” ([50]), that these cases involved different social and economic factors in which the need/desire of people (of modest means, advancing age as well as limited legal knowledge and experience) to stay in their homes was the uppermost consideration ([51]).  Further, and this is clearly crucial, the lender is in a better position to take the risk of fraud and carelessness in such schemes and should make appropriate enquiries.

Etherton LJ disagreed.  Daisy Cann was in no less an unfortunate position to the sellers here ([55]); in substance and reality, the driver for the sale was the sellers’ need/desire to sell their properties to discharge their mortgage and get some cash, and there was no reason for them to suppose that NEPB would not obtain a mortgage (this seems to me to be an advance on the Henning principle); and finally it was not for the lenders to make direct enquiry of the sellers, which may be inappropriate, but to ensure that the contract of sale contained all the details of the transaction ([54]-[56]).

My suspicion is that the sellers were obviously constrained by precedent but ultimately want to argue (rightly) that Cann was wrongly decided.  The stage is now set for that argument, assuming PTA is granted.

Finally, Etherton LJ concluded with sharp words on the conveyancing practices highlighted in these cases, and there is a clear suggestion that the proper course of action for the sellers is to pursue their conveyancers for not including the terms of the agreement in the contract of sale itself:

I do not know why details of those contractual arrangements were not contained in the contracts for sale, but, if the arrangements were intended to be binding on any third party as well as the purchaser – a matter the appellant vendors’ solicitors would have been bound to investigate and advise upon – their omission seems on the face of it plainly inconsistent with proper conveyancing practice. ([67])

Conveyancing solicitors beware!

The claimants appear to have been too excited to wait until then (or, more likely, but less poetically, they wanted to avoid the expense of a trial) and so appealed to the Court of Appeal. On Wednesday Stanley Burnton LJ refused permission.

What is interesting is that he made it quite clear that, even though this was a second appeal, if Bean J had made his decision following the a trial of the claim, the Lord Justice would have given permission regardless of the outcome. The Court of Appeal are as interested in resolving this question as the rest of us.

However proprietary estoppel is fact sensitive stuff. The Lord Justice noted that the claim has a trial window in April/May 2012. There was therefore nothing to be gained by having the Court of Appeal resolve the point before then. It might be that the defendant failed to establish the factual basis of her claim, in which case there would be no need for an appeal – and we would all remain in the dark. It would also be better for any prospective appeal to be dealt with on the basis of facts found at trial rather than on pleadings.

We will keep you posted.

It is a basic principle of land registration, reinforced by the Land Registration Act 2002, that the holder of an adverse interest to a title should protect that interest by entering a notice on the register (unless they are unable to do so, for example because their interest is excluded).  Failure to do so means that the holder of the adverse interest is forced to fall back on the capriciousness of overriding interests, which do not appear on the register but bind the buyer.  This category was much reduced by the 2002 Act (on the basis of that formal protection principle).  Or the interest holder can rely on the more uncertain and nebulous category of “constructive trust”.  In essence, those were Mr Chaudhary’s arguments, as he had failed to protect his interest by the entry of a notice.

The circumstances were these.  Between two properties was an alleyway.  The alleyway was part of one of the properties (No 35).  There was a rotten staircase leading to the first floor of No 35.  The owner of the other property (No 37) wanted to extend that property and offered to build a metal structure giving access to the first floor of both Nos 35 and 37.  That was done and paid for by Mr Chaudhary, the effective owner of No 37.  Nothing was in writing, however.  An attempt to get the owner of No 35 to sign a formal document was to no avail and the owner of No 35 sold the property to Mr Yavuz.  Prior to that sale, Mr Chaudhary clearly could have entered the notice on the register, but did not do so.    Subsequently, Mr Yavuz refused to allow Mr Chaudhary and his tenants of the first floor properties to use the metal staircase.  The first floor of No 37 was effectively landlocked as a result.

At first instance, HHJ Cowell held that Mr Chaudhary had a right by virtue of proprietary estoppel against the former owner of No 35.  Mr Yavuz was bound by that right either because Mr Chaudhary and his tenants were in actual occupation of the staircase at the date of disposition (Sch 3, para 2) giving rise to an overriding interest against Mr Yavuz; or that Mr Yavuz was subject to a constructive trust by which he was bound to give effect to the rights to use the metal staircase.  Mr Yavuz conceded the proprietary estoppel point but appealed the other two points.

This is a classic land registration problem question (for our student readers) and the Court of Appeal judgment and reasoning (Lloyd LJ, with whom Ward and Kitchin LJJ both agreed) make for interesting reading.  The Court of Appeal overruled both findings of HHJ Cowell.

The first issue was whether Mr Chaudhary and his tenants were in actual occupation of the staircase under Schedule 3, Para 2, LRA 2002.  Lloyd LJ noted that, this right being in the nature of an easement, it was counter-intuitive that the owner of the dominant tenement (No 37) is in actual occupation of the servient land (at [28]).  He then went on to say that use of a right to pass and re-pass (as opposed to a car-parking easement) does not amount to actual occupation ([31]).  Counsel for Mr Chaudhary valiantly sought to argue that the actual metal structure itself constituted actual occupation, but Lloyd LJ made the point that this was a structure which became part of the land itself (referring to the point made by Lord Wilberforce in Boland about personal physical activity, not some entitlement in law.   Use of the metal staircase by Mr Chaudhary and his tenants was precisely that – use – not occupation ([32]).

This seems to me to be eminently appealable.  How does one actually occupy a metal staircase?  Lloyd LJ says that not everything needs to be actually occupied, but that doesn’t quite meet the point, I think, about this metal structure.  It was clearly there (although Mr Yavuz had suggested in evidence that he didn’t know of its existence) and so this claim raises the relationship between notice and actual occupation.  Now, of course, the scheme of land registration was designed to get rid of the hazards of the doctrine of notice, but the very notion of actual occupation is designed (at least in my view) to protect in/formally granted rights of which the buyer is or should be aware.  So, there is something quite interesting going on here.  The other interesting thing going on here was the argument (which Lloyd LJ noted, at [35], but did not have to answer) that there was only actual occupation of the balcony landing outside the first floor of No 37, and not the staircase – this relates to the change in the 2002 Act limiting the Sch 3, Para 2 claim only to the land of which the person is in actual occupation.

On the constructive trust point (nb for our student readers, this is an old-fashioned type of constructive trust based on the maxim that equity will not allow a statute to be used as an instrument of fraud, not the new model type of which Jones v Kernott forms part, although the basis for both is the same, ie unconscionable conduct), again Lloyd LJ found for Mr Yavuz.  This part of the judgment is equally significant because it seeks (properly, in my view) to limit the operation of the constructive trust in land registration cases.  The foundational case is Lyus v Prowsa Developments [1982] 1 WLR 1044, but, as Lloyd LJ noted, there were three key points about that case: (a) Ms Lyus’ right didn’t bind the bank, which sold the property; (b) Ms Lyus’ right was specifically identified in the bank’s contract of sale; and (c) Ms Lyus could not have done any more to protect her right.  Actually Lloyd LJ notes another salient fact about Lyus which I hadn’t remembered, and that is that buyer from the bank wrote to the bank’s agents giving an assurance that they would take all steps in their power to make sure that the interests of purchasers like Ms Lyus were dealt with quickly and to their satisfaction ([41]).  It was on those bases that Dillon J found that the buyer from the bank was bound.  Lloyd LJ reviewed the other authorities in which the Lyus constructive trust had been discussed (noting that HHJ Cowell had been junior counsel in one important such case, Ashburn Anstalt v Arnold [1989] Ch 1).

Here there was no specific identification of Mr Chaudhary’s right, merely the general stipulation in the Standard Conditions of Sale that the property was sold subject to incumbrances which were are discoverable by inspection of the property before the contract.  So, if Counsel for Mr Chaudhary was right and a constructive trust should ensure, this clause would effectively turn back the clock and wipe out the machinery of land registration.  That is, such rights would be “… binding on the purchaser despite the fact that it could, and in terms of the 2002 Act should, be protected by registration or a notice on the register, and despite the fact that, unlike in Lyus, there is nothing in the contract to draw specific attention to it” ([58]).  And the land registration machinery is precisely in point because the buyer must be entitled to rely on that machinery in the Act, otherwise there would be chaos (well, for property lawyers at least); further the purpose of the standard condition is to protect the seller against possible claims by the buyer, not the imposition of a new personal obligation on the buyer ([62]).

Now, I have to admit that I buy into Lloyd LJ’s reasoning.  Personally, I’ve never found Lyus at all convincing, and Lloyd LJ notes that there have been no subsequent cases in which a constructive trust has been found.  And Lloyd LJ goes further, describing Lyus as “a very unusual case” ([61]) and “an exceptional case” ([64]).  At [67], he also demolishes the extremely odd judgment of Graham J in Peffer v Rigg [1977] 1 WLR 285 (which has in any event been impliedly overruled by the terms of the 2002 Act).

So, all-in-all, a rather significant case for property lawyers; conveyancers can breathe a sigh of relief collectively; students can recognise the limits of Lyus and have further authority on actual occupation to think about; and legislators don’t need to worry about the 2002 Act (or, at least, not yet).

It will be interesting to see if the SC take this one on on the assumption that there is an appeal.

Be that as it may, it has become apparent over many years that the constructive trust doctrine is not exactly easy to operate.  Partly, this is because judicial rhetoric, when unrestrained, may be capable of many meanings; partly also, I fear, it is because sometimes (even the greatest) judges don’t understand the difference between some of the key concepts.  One such set of key concepts is the difference between an “inference” and an “imputation”.  That difference has always (until now) seemed pretty important.  It is what divided the House of Lords in Stack v Dowden [2007] UKHL 17 in part (or so it seemed) but it was never entirely clear whether the majority of the House in that case was explicitly accepting an imputation, perhaps partly (unfairly) because previous judges had occasionally elided them when they should have known better.  In Stack, Lord Neuberger provided what might be regarded as the classic definition of the difference between the concepts:

An inferred intention is one which is objectively deduced to be the subjective actual intention of the parties, in the light of their actions and statements. An imputed intention is one which is attributed to the parties, even though no such actual intention can be deduced from their actions and statements, and even though they had no such intention. Imputation involves concluding what the parties would have intended, whereas inference involves concluding what they did intend. ([126])

And so, Jones v Kernott [2011] UKHL 53.  In many ways, the facts are a perfect testbed for the application of the doctrine in Stack and the SC largely play a straight bat in doing so.An inferred intention is one which is objectively deduced to be the subjective actual intention of the parties, in the light of their actions and statements. An imputed intention is one which is attributed to the parties, even though no such actual intention can be deduced from their actions and statements, and even though they had no such intention. Imputation involves concluding what the parties would have intended, whereas inference involves concluding what they did intend.

A quick re-cap of the facts.  Ms Jones and Mr Kernott set up home together and subsequently bought the lovely sounding 39 Badger Hall Avenue in their joint names in 1985.  They had two children together.  They built an extension (well, they jointly financed it, he built it with his family and friends).  He left in 1993.  Ms Jones paid all the mortgage and other outgoings and, in truth, Mr Kernott doesn’t sound like the best sort of Dad (ie “very little contribution to their maintenance and support).  In 1995, they cashed in a life insurance policy to enable Mr Kernott to buy his own place.  14 and a half years later, Mr Kernott asks for half of the Badger Hall property.  The only surprise on these facts to be honest is that the Court of Appeal agreed with him.  They did so because it was accepted on all sides that at the time they split up (ie 1993), it was accepted that they owned it equally and there was no other common intention to justify departing from that outcome.  Now, that was just a load of old b********.  The real underlying question was one of law, ie over whether one could impute a common intention as to the quantification of the beneficial interest.

It must be emphasised (over and over again) that both Stack and Jones are cases where the parties are joint owners.  They do not deal, or properly any comments can’t be considered to be absolutely authoritative, about the situation where one partner is a sole owner.  There, it is clear that the presumption is that the sole owner also has the sole beneficial interest, a presumption which can be overcome by demonstrating a common intention that the property was to be shared, which has been acted on. That last sentence is supposed to be neutral, and obscures some pretty fundamental and difficult questions which have been the subject of exploration in property law, gender studies, law and economics, and socio-legal studies.  There are no easy answers in this branch of the law.

Back to the point: Stack clearly held that where the parties held the property jointly at law, that provides the necessary common intention as to beneficial interests.  The next question is about quantification and, here, Stack said that the usual result would be that the beneficial interests follow the legal title (ie half, half).  Only in rare cases, according to Baroness Hale in Stack, would it be possible to override that position.  [Pause to observe the empirical assumption inherent in that comment, cf Pinnock).  How do you displace that position?  Baroness Hale in Stack said that one had to look to the common intention of the parties in light of their whole course of conduct but she warned strongly against that course of action, a warning which she (together with Lord Walker, in a joint judgment) repeats and emphasises at [19]-[22] – one is dealing with joint enterprises and it is practically difficult to unravel everything.

So, what does the SC do in Jones? Well, the first thing they do is repeat what they said in Stack, make crystal clear (if it wasn’t already, which it was, but those Oxford types keep on sticky beaking) that the doctrine of resulting trusts has absolutely no bearing on domestic cases  (at [25])(except where they are business partners: [31]), and then they have to deal with the imputation/inference problem.  Baroness Hale/Lord Walker are quite amusing about the foundational case, Gissing v Gissing [1971] AC 886 noting that “their Lordships speeches were singularly unresponsive to each other” (at [28]), but then the hard work begins.  They argue that we do actually quite often impute intention, without necessarily calling it such:

Whenever a judge concludes that an individual “intended, or must be taken to have intended,” or “knew, or must be taken to have known,” there is an elision between what the judge can find as a fact (usually by inference) on consideration of the admissible evidence, and what the law may supply (to fill the evidential gap) by way of a presumption. The presumption of a resulting trust is a clear example of a rule by which the law does impute an intention, the rule being based on a very broad generalisation about human motivation … ([29])

They accept that the starting point is to find the parties’ actual shared intentions (ie expressed or inferred).  However, “… where it is clear that the beneficial interests are to be shared, but it is impossible to divine a common intention as to the proportions in which they are to be shared … the court is driven to impute an intention to the parties which they may never have had” ([31]).  They argue that the difference between an inference and imputation may not be so great in practice (see also Lord Collins at [58] and [65], where he notes “one person’s inference will be another person’s imputation”) - given the difference between the members of the SC on the facts of Jones, this seems an amazing observation, but they note that the scope for inference is wide ([34]).  One final word on this is given at [47] where they note that

In a case such as this, where the parties already share the beneficial interest, and the question is what their interests are and whether their interests have changed, the court will try to deduce what their actual intentions were at the relevant time. It cannot impose a solution upon them which is contrary to what the evidence shows that they actually intended. But if it cannot deduce exactly what shares were intended, it may have no alternative but to ask what their intentions as reasonable and just people would have been had they thought about it at the time. This is a fallback position which some courts may not welcome, but the court has a duty to come to a conclusion on the dispute put before it.

Then they turn to the facts and note that the trial judge had found that there was a common intention that the beneficial interests would change (Lord Wilson in Jones notes at [84]: “… the case does not require us to consider whether modern equity allows the intention required by the first question [ie whether the beneficial interests would change] also to be imputed if it is not otherwise identifiable.  That question will merit careful thought” – so off to the supreme court again in such a case, perhaps a leapfrog?).  They hit on the sale of the life insurance policy to demonstrate that one could infer a new common intention that Ms Jones was to have sole benefit of the capital gain in Badger Hall Avenue and Mr Kernott in his new property [48] – ingenious but not a finding made by any court below but, again ingeniously, “it is clearly the intention which reasonable people would have had had they thought about it at the time”.  There is an interesting point made about occupation rent as a footnote, had they been required to go into a full accounting process: as Mr Kernott had basically done nothing for the kids at all and hadn’t contributed to the outgoings, no occupation rent would probably have been payable (which seems like quite an important point on the s 13 TLATA claim – see [50]).

They conclude with a pithy summary at [52], which is repeated here for good measure:

(1) The starting point is that equity follows the law and they are joint tenants both in law and in equity.
(2) That presumption can be displaced by showing (a) that the parties had a different common intention at the time when they acquired the home, or (b) that they later formed the common intention that their respective shares would change.
(3) Their common intention is to be deduced objectively from their conduct: “the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party” (Lord Diplock in Gissing v Gissing [1971] AC 886, 906). Examples of the sort of evidence which might be relevant to drawing such inferences are given in Stack v Dowden, at para 69.
(4) In those cases where it is clear either (a) that the parties did not intend joint tenancy at the outset, or (b) had changed their original intention, but it is not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property, “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”: Chadwick LJ in Oxley v Hiscock[2005] FAm 211, para 69. In our judgment, “the whole course of dealing … in relation to the property” should be given a broad meaning, enabling a similar range of factors to be taken into account as may be relevant to ascertaining the parties’ actual intentions.
(5) Each case will turn on its own facts. Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended (as in case (3)) or fair (as in case (4)).

So far so good.  But Lord Kerr and Lord Wilson are, in different ways, refuseniks against the “it makes no difference” line; in fact, both of them would have eschewed the inference adopted by Hale/Walker and would have gone for the fairness line.  Lord Kerr does the job of noting where the agreement and disagreement lies, identifying two issues: how far should the court go to infer actual intention as to shares? and is the inference/imputation problem likely to be practically significant?  On the first question, Lord Kerr said that the court should not overly strain to infer a common intention so as to avoid imputing one.  He does not like the idea of imputing intention, and would have preferred a fairness jurisdiction “… without elliptical references to what their intention might have – or should have – been. But imputing intention has entered the lexicon of this area of law and it is probably impossible to discard it now”([74]).  There does need to be a clear dividing line between inference and imputation, the latter involving a rather different exercise ([75]).  On the facts, Lord Kerr would not have found the inference from the “slender foundation” accepted by Hale/Walker but would have easily imputed the same outcome.

Similarly, Lord Wilson would have imputed the same outcome, but he rather takes apart the crucial paragraph from  Baroness Hale’s judgment in Stack ([61]), which he neatly divides into four sentences (at [85]), and demonstrates how her third sentence (about doing away with fairness) was manifestly incorrect.  As he puts it: “Where equity is driven to impute the common intention, how can it do so other than by search for the result which the court itself considers fair?”  He regards the observation that the difference between inference/imputation has limited practical utility goes too far.

Comment

My hope is that this line of cases will somehow re-connect the law with everyday life to the extent that is possible.  It will undoubtedly lead to more litigation (inference or fairness?), and the following questions are absolutely up for grabs:

(1) In a sole ownership case, can one only infer a common intention that the beneficial interest is to be shared from direct contributions? If so, what does that mean? If not, what do we mean by indirect contributions?  This is sometimes referred to as the Burns v Burns question after that famous case to which there is much harping back – for what it’s worth, my take on that case is that the difference would have been neither here nor there because Mr Burns was rich enough not to need any direct/indirect contributions to the purchase price of the property, so on either view Mrs Burns was stuffed by the law – and the case just demonstrates the inner workings of the law of trusts (making the rich richer broadly).

(2) In joint ownership cases, just how rare are those rare cases where the court will re-open the joint ownership issue?  this seems an important, as yet unanswered question, although it is perhaps significant that in both Stack and Jones the highest court has re-opened it.  In retrospect, it may have been wrong to regard such cases as empirically rare.

(3) In a sole ownership cases, can one impute a common intention that the non-owning party will have an interest in the property?  In joint ownership cases, can one impute a common intention that the parties are to share unequally?

Those are the questions which seem to me to remain; there will be others.  But, I suppose the point of that is to note that it is absolutely pathetic that after 40 odd years of this stuff, these issues aren’t resolved, the principles aren’t clear, governments weakly decide to ignore the issues (because they don’t want the “government supports cohabitants over marriage” type headline).  All the while, this charade carries on.  It doesn’t do us any favours.

[Ed: On BBC R4 today programme this morning (10.11.2011), I heard the correspondent say that the outcome prescribed by the SC in this case was based on fairness.  That was the way Lords Kerr and Wilson preferred to decide the matter, but the majority clearly did so on the basis of a (wide) inference of fact as to the intentions of the parties.  Please, please, please, don't repeat the reporter's error]

(a) Ms Jones won the appeal so that her 90% share in the disputed property was re-instated;

(b) the UKSC agree on the outcome but there is disagreement on the principles (esp Lord Wilson with Lord Kerr somewhere between);

(c) the majority, in essence, follow Stack but, it might be said, with a slight change of emphasis or, more politely, with more explanation about inferring/imputing shares;

(d) Lord Walker and Baroness Hale, who gave a joint judgment, engage with academic commentary on Stack.  The key paragraph in their judgment may come to be seen as the summary of the relevant principles at [52] but it will need to be remembered that this is a summary and that the meat is in the rest of the judgment.

More later tonight, hopefully …

The background is sadly familiar. The late Mr Pilkington formed a relationship with Mrs Masterson. They lived together in a house as joint legal and beneficial tenants. Their relationship broke down and Mrs Masterson (together with a daughter from a previous marriage) moved out.

Since he was 16 years senior to Mrs Masterson, it is not surprising that it was his (or his legal advisor’s) mind that first turned to severance of the joint tenancy. His solicitors attempted to do so by notice under that section familiar to all law students: s36(2) of the Law of Property Act 1925. They were unsuccessful.

In the following year, Mr Pilkington’s health began to decline. He had an incurable degenerative dementia and surgery for bowel cancer. At age 78 there was clearly a very real fear that he would soon die. Nothing further was done about severing the join tenancy – quite possibly because Mr Pilkington and Mrs Masterson had a rapprochement. Although she did not return to live with him, she made regular visits to assist in his care.

Some 4 years later and Mr Pilkington’s health had deteriorated to the point where he was moved to private residential care. The local council met the cost of his care but would require repayment at a later date. Everyone assumed that that cost would be borne out of Mr Pilkington’s share of the property. Unfortunately, Mr Pilkington now lacked mental capacity.

Mr Pilkington’s daughter, Mrs Quigley enters the story. She proposed that she become deputy for Mr Pilkington. Mrs Masterson disagreed and felt she was in a better position. After contested litigation in the Court of Protection, Mrs Quigley was appointed deputy, but her authority did not extend to sale of the home which was left to Mrs Masterson.

Shortly after Mrs Quigley’s appointment, but before she had exercised her authority in any way (at least any way of which the court was aware), Mr Pilkington died.

Mrs Quigley, as Mr Pilkington’s personal representative, and Mrs Masterson were then left to argue whether there had been severance of the joint tenancy. The argument ended up before a a Deputy Adjudicator for the Land Registry, who found for Mrs Masterson. On Mrs Quigley’s appeal, Henderson J was left to consider the question.

The Deputy Adjudicator had found that earlier efforts to sever the joint tenancy by notice had been ineffective (as I recorded in my summary). That point was not contested on appeal. Mrs Quigley made two arguments: first that the conduct by her of proceedings before the Court of Protection indicated that both parties considered that the joint tenancy had been severed. Both parties had referred to Mr Pilkington’s interest as being “50%” of the property.

This argument failed. Henderson J found that Mrs Quigley was not Mr Pilkington’s deputy during the Court of Protection litigation and so her actions could not be attributed to him. There was no conduct on his behalf on which a finding of severance by conduct could be based.

But, said Mrs Quigley, after being appointed deputy I did nothing at all, which indicates that I adopted all that previous conduct in severing the joint tenancy. I would have had to take some definite action to deny my previous conduct which I did not. Nonsense, thought Henderson J. That sort of argument would be a recipe for confusion. When would the severance take place? Not immediately because Mrs Quigley would be bound to consider the point in exercise of her proper duty as deputy and perhaps take legal advice. There was, in any case, no evidence she had done either.

Mrs Quigley’s second argument was that Mrs Masterson’s communications to the Court of Protection – in her application and witness statement – both very clearly indicated that she treated Mr Pilkington’s share as 50%. That, said Mrs Quigley, was a section 36 notice if ever there was one.

This was countered by an interesting argument: these notices were served on Mrs Quigley not Mr Pilkington. There could not have been service. Even if service on Mrs Quigley did become service on Mr Pilkington when she took office as deputy, her power to act did not arise until she had put up the relevant security, which she had not done before Mr Pilkington’s death.

Henderson J thought the second argument worked. Mrs Masterson’s statements did serve as a notice of severance which became effective when Mrs Quigley became deputy. The fact that she was at that stage not permitted to exercise her powers did not matter: she was at least able to passively receive notices directed at Mr Pilkington.

Although the fact of this case may seem a little convoluted, in my experience this kind of interaction of capacity and communication is common in severance disputes. Sadly it is in just this kind of situation where concerns about severance arise.

Whittaker v Kinnear [2011] EWHC 1479 (QB)

This case raises some interesting questions about estoppel and sale.

K sold her property and it’s grounds to W and his business associate, Mr Nichols in 2007, apparently because she could no longer afford it. This sale was at an undervalue and it was intended that K and his partner redevelop part of the extensive grounds. As part of the deal the property itself and its immediate gardens were rented back to K for 12 months for a rent of £1 per month on a tenancy describing itself as an Assured Shorthold Tenancy. There was also an overage agreement that purported to give W a share in profits over a certain value accruing from the redevelopment.

Mr Nichols divested himself of his interest to W in at some stage. W failed to keep up payments on a loan with the Heritable Bank secured on the property. The Bank accordingly exercised their right under s101 LPA 1925 to sell the property. They proceeded against K in the name of W through LPA receivers for possession to permit the sale by service of notice to quit.

There were essentially two planks to K’s defence. The first was that W had told her that he would transfer the house and its immediate gardens to her and had not done so and that he had represented to her that she would be able to live at the property as long as she desired. In support of this contention was that the property had been transferred to W at a considerable undervalue (allegedly by £500,000) and that W had failed to maintain the structure and fabric of the house. The second component were that the notices to quit were invalid although this was dismissed by the judge and not renewed on appeal.

The primary response by the Bank to these assertions were that s2, Law of a Property (Miscellaneous Provisions) Act 1989 precluded a proprietary estoppel as the alleged agreement made between K and W had not found its way into the particulars of sale they had signed.

The Notices
Before dealing with the estoppel argument it is worth briefly looking at the notice to quit. It was argued, as a new point, before the High Court that the Notices to Quit were both invalid because the tenancy was a yearly tenancy and further because one of them did not have the information prescribed by the Notices to Quit etc (Prescribed Information) Regulations. The Court held that the tenancy had become monthly at the end of the fixed term and so at least one of the notices was valid, probably the second one. Although the second notice did not contain the prescribed information it had been served with the first notice which did, and so that was sufficient. In the face of this the Court was not prepared to allow this new point to be raised on appeal.

The Estoppel Argument
The Court reviewed the key cases on proprietary estoppel. It noted that there was in fact no settled view on whether s2 was sufficient to prevent a proprietary estoppel argument. At this point you might be expecting me to tell you that the Court immediately decided this point and created exciting new law. Unfortunately, you would be wrong.

At first instance the Court had held that the issue could not be dealt with in summary possession proceedings and had adjourned the matter for a full trial. However, the Court had made something of an error as they had not allocated the case to a track as is required by CPR 55.8 where the claim is “disputed on grounds which appear to be substantial”. Following the decision in Forcelux v Binnie the adjourned hearings were not a trial and so the Bank were in effect seeking a summary judgement for possession. Therefore the appeal was not actually about the estoppel issue at all but was really about whether there was a substantial dispute. The Court held that there was a substantial dispute on the face of the evidence before it. It was not really helped in it’s decision making by the failure of either key party to produce any form of witness statement.

Accordingly the appeal was dismissed on the basis that it was not appropriate to give summary judgement and the matter was remitted back to the County Court for a full trial.

[And now Dave's version]

The question as to the interaction between a claim to proprietary estoppel and section 2, Law of Property (Miscellaneous Provisions) Act 1989 was reviewed by us in 2009 and has been something of an obsession of mine for a while (but not compulsive, honest).  The issue is whether proprietary estoppel can be used to get round the formalities in section 2 regarding contracts for the sale or disposition of an interest in land (which require signed writing and incorporating all the terms).  We noted that the recent House of Lords cases and other CA authority did not speak with one voice (to put it nicely) but that there was a logical property law solution.  In Whittaker v Kinnear [2011] EWHC 1479, the issue arose again before Bean J, but this time had to be decided.

On the alleged facts, Ms Whittaker had sold her extensive property to Mr Kinnear and partner (the latter dropped out of the pitcure) at an undervalue in return for certain rights, eg of occupation, pre-emption and overage.  Mr Kinnear, who had intended to obtain planning permission to develop the property, became bankrupt and his mortgagee’s receivers sought possession.  Ms Whittaker pleaded proprietary estoppel but counsel for the receivers, successfully at the County Court (before the claim was allocated to a track) obtained possession on the basis that section 2 effectively defeated the proprietary estoppel claim.  This was a commercial transaction which required formalities.  It was this judgment which Bean J overturned in a short and largely unsatisfactory judgment (although others may disagree).  He gave permission for Ms Whittaker to re-amend the defence to add a constructive trust claim to it.

Bean J went through the various authorities – Yaxley, Thorner, Yeoman’s Row, and Herbert v Doyle – and accepted that this was a commercial transaction. He favoured the judgment and approach taken by Beldam LJ in Yaxley, on the basis that Beldam LJ “… had been Chairman of the Law Commission at the time of its working paper and report on Formalities for Contracts for Sales of Land on which the 1989 Act was based. Like Hengham CJCP who in oral argument on a point of statutory interpretation in a case in 1307 (Aumeye v Anon YB 33-35 Edw 1 82) said to counsel ‘do not gloss the statute, for we know it better than you: we made it’, he was in a good position to say what the Commission had in mind” (at [29]; this quote probably needs an “I kid you not” proviso). Beldam LJ had simply said that it was not the intention of the Law Commission to affect the availbility of equitable remedies by abolishing the doctrine of part performance. Bean J accepts that proposition (at [30], notwithdtanding Lord Scott’s contrary dicta in Cobbe. Now, I’m just not sure whether that is good enough because, whatever the intent of the Commission, that cannot be relied on as an interpretive canon in the face of the express words of the Act. There are other ways of coming to this conclusion.  The problem is that Bean J went on to argue that, although it is extraordinary not to have a decided case on this point ([34]), these types of case (on proprietary estoppel and constructive trust) are fact-sensitive (perhaps sensing the possibility of an appeal). The parting shot was to say that this was a defence which genuinely disputed the claim on grounds which appear to be substantial, within CPR 55.8, and the matter should be remitted to the county court for directions for trial on the point.

There were some other relatively trivial points raised at the last minute by Counsel for Ms Whittaker which were all rejected by Bean J (and rightly so, I’d say).

It will be interesting to see if this case goes further.

Normally Dave would be covering this kind of case, knowing more about equity and trust right now than I probably ever will. But Dave is off being very clever to a tight deadline for other people, so I get to indulge my hobbyist’s interest at your expense.

The question in this appeal was whether supervening events could override an express declaration of trust shares in a property, whether in proprietary estoppel or a form of constructive trust. Much of the outcome remains subject to trial, as will be seen, given that this was an appeal of an order striking out C’s claim.

The brief facts were as follows. C and M, mother and daughter, were the title holders of the property (a large property) which had been purchased and built by Mr M, the husband and father of the parties. In 1989 Mr M transferred the property to the joint names of himself and Mrs M.

On Ms C’s evidence, before his death Mr M had expressed a wish that C should come to live at the property with M after his death and then have the property on M’s death.

Mr M died and M took the whole by survivorship. M then apparently asked C and her family to move in with her in the property and, if they did so, she would leave the property to C. C and her family moved in and, initially, let their property.

M was advised, for tax purposes, to “implement arrangements which would have, for inheritance tax purposes at least, the same effect as if the joint tenancy had been severed before Mr Meadus’ death, thus allowing his notional half share to pass pursuant to a variation of the dispositions otherwise taking effect on his death. As part of that variation, Mrs Clarke was to receive his notional half share in the house, garden and woodland thus making herself and Mrs Meadus owners in equal half shares.” This was done. There was no evidence that M considered this to be in satisfaction of any promise she may have made to C that the property would be left to her. So there was an express trust of 50% share between M and C as a result.

According to C, M also executed a will at this time leaving M’s 50% of the property to C. In any event, C and her family sold their property and moved in to the property (after, C says, obtaining a further assurance M would leave the property to her – being a basis for an estoppel claim). C asserts that she paid all for the mortgage payments for a period, and at least 50% the rest of the time.

C asserted that she had expended money and entered into liabilities thereafter, in reliance on M’s promise.

• She had bought an adjacent field in her name on M’s urging, funded by an increase in the mortgage for which C undertook liability for the capital and for paying the increased mortgage interest.
• C had incurred a loss of £57,000 on the sale of her family’s property
• She had lived with M and cared for her without payment, giving up her free time
• She had paid for a sitter/companion for M on occasions
• She had invested the equity of the sale of her property and her husband’s pension in substantial improvements to the property:
  “i. The erection of a new barn/garage, new fencing, hard-standing and car-parking. It is to be noted, however, that she and her husband have had enjoyment of this new building in connection with their business.
  ii. Significant items of refurbishment – including replacing two bathrooms, installing double glazing and replacing barge boards.
  Mrs Clarke accepts that the DADT [the trust arrangement] obliged her to meet half the cost of these items (which go beyond maintenance) but says that there was no obligation on her to carry them out or to permit Mrs Meadus to do so.”
• She had discharged obligations on the lending on the property, over half of which had accrued before she occupied the property.
• She had entered agreements which prevented her from moving from the property unless M wished to sell

In 2006 M changed her will to leave her 50% share of the property to C’s sister. C brought a claim in proprietary estoppel or alternatively constructive trust, in reliance on the assertions set out above.

At first instance, C’s claim was struck out.

The Master held on constructive trust:
“where there is an express declaration of trust, that is an end of the matter with respect of the court determining the parties’ respective interests, unless one party applies for rectification or rescission of the deed”. The claim in constructive trust could therefore not succeed, whether or not it was characterised as ‘some form of remedial trust’ in the alternative.

On proprietary estoppel, the Master first considered that the relief sought was “an immediate right given by proprietary estoppel to an order that Bonavista is held by the claimant and the first defendant upon trust, subject only to a right to Mrs Meadus to occupy the property for so long as she may wish”.Such an order would go further than would be permissible to give effect to any proprietary estoppel.

The Master then turned to questions of reliance. He recorded the submission that (i) an examination of the various items of alleged reliance and (ii) the case of detriment based on such reliance, led to the conclusion that there was no case which should be allowed to go forward. By way of example, the move from Kent was, it had been submitted, a benefit and not a detriment at all. Although on Mrs Clarke’s case she had made a loss by selling the Kent property, the value of the equity in Bonavista that she was declared to be entitled to pursuant to the DADT in fact gave a valuable increase in equity overall.

The Master next referred to the question of payment for improvements and maintenance, noting that such expenditure was for the benefit of Mrs Clarke’s half share as much as Mrs Meadus’ share, and pointing out that the sharing of the cost was dealt with by the DADT. In that context, Mr Sinnatt had taken the Master to the example of the erection of the new barn/garage which I have mentioned already. As to that, Mrs Meadus’ defence relies on the manner in which Mrs Clarke and her husband had expanded their business (an ammunition business) despite the misgivings and concerns of Mrs Meadus making use of the new barn/garage to the exclusion of Mrs Meadus. But even here, the parties are at odds, since the Reply suggests that Mrs Clarke and her husband have stored Mr Meadus’ guns belonging now to Mrs Meadus, and the guns of some of Mrs Meadus’ friends.

In short, what was termed detrimental reliance was a benefit, ‘at least in part’. While this was not conclusive, the Master went on to say “it does seem to me to underline the importance of trying to see whether there is in fact made out here a sufficient case of detriment supporting proprietary estoppel that is worthy of going forward to be dealt with at a trial in the sense of has it been established by Mrs Meadus that there is no real prospect of success in relation to the proprietary estoppel claim? I have come to the conclusion that it really does not do so.”

No reasons were given for reaching this conclusion. The Master did also come to the view that “Mrs Clarke had no prospect of showing at trial that any equity to which Mrs Clarke might be entitled as the result of any detrimental reliance on the promises and representations alleged, had not already been satisfied by the beneficial half-share”.

The Claim was struck out. C appealed.

The appeal hearing was also a consideration of an application to amend the particulars of claim to include a pleading that:

“Immediately prior to the sale of her home in Kent the Claimant sought and obtained from the First Defendant express reassurance that the First Defendant fully understood the nature of the transactions she had entered into in September 1996 viz.; the transferring of a half share in Bonavista to the Claimant and the First Defendant remained committed to her promise to the Claimant to leave the other half of Bonavista to the Claimant in her Will. The First Defendant confirmed to the Claimant at that time that she wanted the Claimant to sell her home and commit her and her family fully to Bonavista on the faith of her promise that Bonavista would be the Claimant’s when the First Defendant was dead. If the First Defendant had refused to make such a commitment or had intimated any change of heart the Claimant could and would have moved the family and the business back to Kent.”

Held:
1. While the relief sought might go too far in seeking a declaration of 100% beneficial interest, this did not in itself mean that there was no valid claim. It was for the court to mould the appropriate remedy. The claim was in any event also for ‘such shares as the court may decide’ and always subject to M’s right to reside. The prayer also requested ‘further or other relief’.
2. The terms of the express trust are capable of being overidden by proprietary estoppel, should C make out her claim. The Master was wrong to strike out the claim in proprietary estoppel. Reliance and detriment were asserted and it was matter for detailed evidence, not the summary consideration of the Master, whether they were established.
3. If C established her allegations, this was a clear ‘bargain’ case:

Mrs Clarke’s expectations were based on an express promise by Mrs Meadus, repeated on several occasions. The closeness of the facts to a “bargain” are a factor in the ultimate resolution of the case: see Robert Walker LJ in Jennings v Rice [2002] EWCA Civ 159, [2003] 1 P & CR 8 at [41] ff especially at [45]. Of course, this reasoning does not apply to what one might call an extravagant case where the promise does not, on any view, justify a claim based on detrimental reliance.

It is no doubt the case that a change of position induced by a representation or promise is not enough because that change may actually be highly beneficial to the claimant. That is one factor which leads to the conclusion that the time when the prejudice to a claimant is to be judged is when the person making the representation or promise departs from his promise or indicates that he will break his promise or act otherwise than in accordance with his representation in the future.

The whole period of 10 years from the time when the promises were allegedly made and act upon must be considered in assessing reliance and detriment. While any subsequent benefit resulting to C should be taken into account, deciding the unconscionability of M resiling on her promise had to be based on the whole course. In this case it was clear that there had been reliance and detriment remained to be considered at trial, as it was arguable. Gillett v Holt [2001] Ch 210, per Robert Walker LJ:

The overwhelming weight of authority shows that detriment is required. But the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.

3. While estoppel is always backward looking, from the point the promise has been resiled from, this is not to say that estoppel can’t be given effect at a time before the promise falls due. It is not right to suggest that the claimant has no rights in a property until the promise has been resiled from – as per Jennings v Rice, an equity is established once the elements of a proprietary estoppel are established.

4. The arrangements of the express trust in this case did not displace or satisfy any previous promise by M to leave the property to C if, as on C’s case the agreement was consistent with an affirmation of the promise, albeit that at the point of the agreement C’s rights in the property might not have fully accrued (her house had not yet been sold, etc,)

5. On constructive trust, the claim appeared to be cast as a remedial constructive trust. This was out of favour in English law, although Lord Scott in Thorner v Major [2009] UKHL 19 might suggest otherwise. It would be wrong to strike out the claim in constructive trust when the proprietary estoppel claim was to go ahead as they were both routes to the same end – an equitable interest in the rest of the property. “[T]he authorities, in particular Stack v Dowden, do not in my view preclude a remedial constructive trust once Mrs Clarke has jumped the hurdle of establishing the availability of such a remedy as a matter of English law.”

6. The enquiry into unconscionability is not suitable for summary judgment or strike out save in the most exceptional cases

Appeal allowed and application to amend Claim successful.

(Brief) comment
It is fascinating to see the resurgence of proprietary estoppel over the last few years, from the point it almost disappeared into constructive trust. Here the ‘remedial’ constructive trust claim is allowed to proceed almost as an afterthought (apparently with very limited prospects of success), as being very weak in comparison to the estoppel claim.

But remedy is always the difference between the two. The Court’s suggestion that getting 100% of the beneficial interest would be somewhat unlikely for C would be a marker of that. The assessment of the remedy sufficient to satisfy the equity arising from the unconscionable conduct is, we are firmly reminded, for the Court, not either of the parties.

Also useful to note is the lack of hesitation in finding that an estoppel claim can override an express declaration of trust shares. While I grant that few of us will be pleading storing the client’s mother’s friends’ guns as detrimental reliance (even if, thinking of my borough, the facts may be made out), the principles here may well be of use where there has been some sort of agreement on the eventual ownership of a property but an express trust in the meantime – or as part of that agreement for the future. And there is that point that effect can be given to an estoppel at or after the point of resiling from promise, not at the point the promise would have crystallised or fallen due – perhaps an obvious one, but a useful reminder.

Let us hope we get to hear the outcome of the trial, should matters get that far.

Hopefully Dave will be along in the next few days with some more intelligent comments…

I suspect that this is being set up to go further than the High Court. James Stark, a friend of this blog, is acting (led by Jonathan Small QC, who I doubt reads this blog) for the former owners. The trial started on October 19. James – any more information? Any chance we could read the skeleton arguments?

Keep an eye out for this – something tells me it’ll be quite important.

Mr Ashby unsuccessfully sued the Sunday Times for libel (his wife giving evidence against him), Dr Kilduff successfully settled out of court.  Mr Ashby became worried about the Sunday Times coming after him for their costs and also his wife seeking a divorce against him.  In 1995-6, Mr Ashby transferred his interest in his flat to Dr Kilduff, who took out a buy to let mortgage under which Mr Ashby was to be granted an assured shorthold tenancy (which was never signed and, indeed, neither party acted on its terms).  At the trial, there was disagreement about the intention behind this transaction - was it a genuine sale to Dr Kilduff or a sham transaction?  Mr Ashby claimed the latter, supported by his daughter, on the basis of a dinner conversation at a Thai restaurant, although Dr Kilduff disputed that such a conversation took place at the dinner.  Now, it was the case that: money had been paid to Mr Ashby (and had been used to pay off part of his costs to his libel solicitors, Carter Ruck), the sale was at a slight undervalue, Mr Ashby paid "rent" which was to cover the mortgage instalments, Mr Ashby had rekitted out the kitchen in 1996 and the electrics in 2005 (£10k for each), Dr Kilduff paid off the mortgage entirely by 2005 without telling Mr Ashby.  In their executed joint wills, Dr Kilduff left this property to Mr Ashby; Mr Ashby made no mention of any interest in it.

There was also a buy to let property which had been purchased in Manchester in their joint names as beneficial joint tenants.  Mr Ashby paid all the outgoings on the flat and paid the purchase money.  It was their express intention that the Mr Ashby would pay all the outgoings and receive all the rental income as a retirement investment for him.  In their executed joint wills, they each left their share of their interest in this property to each other.  The issue on this property was who was the beneficial owner as mr Ashby claimed the entire beneficial interest?

The relationship between Mr Ashby and Dr Kilduff ended in 2005 in bad circumstances.  Bernard Livesey QC, sitting as a Deputy Judge of the Chancery Division, made pretty devastating findings of fact about each of these parties - on Mr Ashby, "... he would in my judgment be quite prepared to tell a pack of lies if he believed it was just for him and in his interests to do so, in which case he could quite easily persuade himself of the truth and accuracy of an inaccurate account" (at [49]); on Dr Kilduff, “[Mr Ashby] was a generous giver in the extreme and Dr Kilduff appears not often to have turned down an opportunity to receive” and he “… has used all means at his disposal to argue his case, even to the extent of disclosing matters which he would know would be likely to humiliate Mr Ashby and gravely injure his feelings” (at [51]-[52]).

The Deputy Judge then made findings of fact which effectively disposed of the matter:

(1) the purported sale of the flat was genuine and there was no obligation on Dr Kilduff to allow Mr Ashby to remain in the property for the rest of his life.

(2) Mr Ashby paid rent and this was shown by reference to his cheque book pay stubs, movement of money by standing order between bank accounts, income tax and CGT returns.

(3) Mr Ashby’s evidence to this court about his evidence in the matrimonial proceedings was “highly unlikely” to have been accurately reported.

(4) The discussion in the Thai restaurant probably did not take place (and did not appear in their witness statements for this trial).

(5) Whether or not the assured shorthold (reported as a shorthold tenancy agreement protected by the Rent Acts, shurely a mistake) was technically valid, neither party was “troubled by the niceties of the obligations”, it negated Mr Ashby’s claim for a beneficial interest.

(6) The kitchen expenditure was too long past to be of any use (and preceded the matrimonial proceedings)

(7) The £10k on electrics was a different matter and created a proprietary estoppel interest in Mr Ashby’s favour on the basis of an implied representation by Dr Kilduff (by which one presumes the Deputy Judge meant that he stood by whilst Mr Ashby made the improvements, a la Lord Wensleydale in Ramsden v Dyson (1866) LR 1 HL 129).  (An argument that it gave him a CT under Stack was disposed of by the Deputy Judge saying, mysteriously, “I do not find the ration of this case entirely easy to reconcile to the facts of the present case”: [71]).  I cannot say that the Deputy Judge dealt with these points particularly well, but, equally, I can’t see either party appealing.  The Deputy Judge left it to the parties to agree how to satisfy the equity (either repayment or rent free licence for a period).

(8) As regards the Manchester property this was held on an express beneficial joint tenancy, subject to a trust that Mr Ashby was responsible for all outgoings and entitled to the income from the property during his lifetime.  Again, this is not particularly well dealt with.  The starting point must be right (Goodman v Gallant is the authority I use [but take your pick], the Deputy Judge didn’t bother with authority), but superimposed on that is a further express (presumably) sub-trust (hmm, formalities? effect on express jt?).