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13/12/2008

Tis aw a muddle

A reminder, if one was needed, of the perils and pitfalls of constructive trust cases can be found in Elithorn v Poulter & Others [2008] EWCA Civ 1364

The problems in this case were not just the confused and confusing evidence (not only that of Dr Elithorn, who acted in person, but also the documentary evidence), but what can at best be called an unclear (extempore) judgment by the Circuit Judge in the County Court.

The facts, as far as one can tell, were that Dr Elithorn and Madeleine Ettinger had become friends following the death of Madeleine’s husband. Dr Elithorn owned a house in London which was on the brink of repossession by the mortgagee, Abbey National. Madeleine lent Dr Elithorn £70,000 to stave this off. Then a property in Oxford was purchased for £250,000. Madeleine paid the whole of the purchase price, although it appears that the original arrangement was that Dr Elithorn would sell the London property and contribute to the purchase price. This didn’t happen. The property was registered in both names, with a no disposition by sole individual restriction, indicating the beneficial interest was held as tenants in common, although apparently no shares were specified at the time (the transfer was subsequently lost).

The friendship didn’t survive, and, despite extensive corespondence and the involvement of numerous solicitors between 1996 and Madeleine’s death in May 2003, no resolution on the ownership of the Oxford property was reached.  Dr Elithron had made no payment at all, despite living in the property, although the £70,000 loan had been repaid, without interest, on the eventual sale of his London property.

At first, letters from Madeleine appeared to indicate that she did not consider that Dr Elithorn had an equitable interest in the property at all. Later letters and instructions by Madeleine appeared to indicate that she considered that Dr Elithorn had an equitable interest but was in debt to her for a proportion of the purchase price. Dr Elithorn, for his part, initially suggested that his share in the property was a gift from Madeleine, but then suggested that he would repay a debt of 50% of the purchase price on his death. This was apparently first suggested some 2 or 3 years after the purchase. Primarily, Dr Elithorn continued to maintain that it was a gift, except when he didn’t.

Madeleine’s estate brought a claim on the basis that Madeleine was the sole beneficial owner. At the County Court, the estate won, but it wasn’t at all clear how. Dr Elithorn appealed.

The majority found that, given that there was no cross-appeal on the judge’s findings of fact, the sole issue was whether the decision was right. The Judge, it was held, had found, in a ‘surprising conclusion’, that Madeleine had loaned 50% of the purchase price to Dr Elithorn, but the Judge had gone on to find that either

i) Dr Elithorn held the share of the property on resulting trust for the estate, or, ‘if this was wrong’

ii) Any constructive trust was on condition that when the London property was sold, Dr Elithorn was to repay any monies advanced to him by Madeleine and that this hadn’t happened.

The majority held that this was wrong. If Madeleine had loaned the 50% of the purchase money to Dr Elithorn, he had a 50% beneficial interest in the property, and, of course, a debt for the £125,000. Rimer LJ stated that the conclusion of the judge below was that Dr Elithorn acquired no beneficial interest, but remained indebted to the estate for £125,000. What would Dr Elithorn receive if the estate disposed of the property before he paid the £125,000? (A partial answer not mentioned would surely be that he had had rent free sole occupation for many years.)

In any event, there was no presumption of resulting trust that put the onus on Dr Elithorn to rebut. The judgment was shortly before Stack v Dowden [2007] UKHL 17, which put paid to any such suggestion on appeal.

Rix LJ disagreed. Not, of course on the conclusion that, if there had been a loan of 50% of the purchase price, there was a beneficial interest of 50% for Dr Elithorn, which is, on precedent case law, inconstestable. Rather Rix LJ disagreed that the Judge had found that there was a loan. His reading of the judgment was that the Judge was saying that the arrangement was conditional. Dr Elithorn could obtain an interest in the property, conidtional upon him paying a share – as an investment after the purchase. This hadn’t happened.

In the circumstances, and given the lack of clarity (and some errors) in the Judge’s judgment, a retrial was the proper order.

I have to say, having read the detailed account of the evidence and the judgment below, set out in Rimer LJ’s judgment, I’m with Rix LJ. It is not a question of disputing the lower court’s finding of facts but actually it is not clear what the Judge’s conclusions as to what those facts were and thence his conclusions on the law. While the majority are clearly right in law  in the conclusion drawn from their presumption as to the Judge’s finding on the existence of the loan, there surely has to come a point, as Rix LJ points out, that the Court of Appeal simply has to say tis aw a muddle and order a retrial.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

13 Comments

  1. Alick Elithorn

    I am the litigant in person
    I did not continuously claim it was a gift. I did claim that Madeline had made me a gift of time but not I think during the proceedings. I may have said that a clever Lawyer might make out that it was a gift. In my view it was a loan.

    [Edit by NL – various comments including personal details removed, because these really, really shouldn’t be up on the public internet].

    Reply
    • NL

      Dr Elithorn, if you read my note again, you will see that I didn’t say you had continuously claimed it was a gift, although a solicitor acting for you had stated categorically that it was and you had earlier claimed the £70,000 loan was a gift. In fact the Court of Appeal found that there was, at the very least, a clearly plausible view that the ‘share’ of the purchase price was a loan and I recorded that.

      I have removed personal details, phone numbers etc. for your own good, because these should not be made public – they really shouldn’t.

      I don’t understand what you mean about the costs order. The Court of Appeal said no order as to costs in the appeal and below. As you were a litigant in person, you have no legal costs. or do you mean that the re-trial has now been heard? If it was to do with not engaging with a reasonable offer at stake, this is not a trivial issue. The Court takes this very seriously.

      Reply
  2. Alick Elithorn

    Exactly
    Apart from my own timw I had paid Legal advice from barristers and solicitors both in the original hearing and at the appeal.
    At the appeak The juge said, and I was not allowed to speak to it, that because of some trivisl mistake which I dont think I made I was not to be allowed my costs in either hearing. Can one appeal against such a decision without a retrial of the main issues

    Reply
  3. NL

    Refusing a reasonable settlement offer is not a trivial mistake.

    But we can’t advise on your case, for obvious reasons.

    Reply
  4. Alick Elithorn

    I replied reasonably to a host of reasonable and unreasonable offers.
    Surely there mus be some way of appealing against such an unreasonable descision where one is harrowed into penury over a period of years and not even allowed to speak to the issues.

    Reply
    • NL

      Dr Elithorn, we can’t advise. But even if an appeal were possible, which is not to say it was, you are way, way, way out of time to do so.

      Reply
  5. Alick Elithorn

    Sorry about advice
    but I get the message
    English law is merging with both american and european
    Hopefully my american forensic friends and colleagues will add a comment
    I have the whole of the transcrpt of the first trial would you like to comment in depth
    It would help if you service provider told us the number of characters and spaces we have
    in BRIEF
    How about Harrasment
    I do appreciate your comments and will
    give your site more of the publicity it deserves
    DR Ox and I are both on the mend thanks to Gar and a few other old friends on both sides of the atlantic
    Dr Ox is I think hosted in Glasgow

    Reply
  6. NL

    Dr Elithorn,

    No need to send the transcript and there really is nothing we can say in response.

    Good luck.

    Reply
  7. John Birchall

    Dr Elithorn, whom I know personally, has expressly asked me, indeed strongly pressed me, to comment on this case report, however critical those comments may sound.

    I have mixed feelings about litigants in person, or ‘pro se’ to as they are often called in America. Sometimes they do better than they would with lawyers. Sometimes they do much worse. In this case Dr Elithorn was unlikely to be able to obtain legal aid, and unable to afford representation. To that extent he was a victim of the system. However he was confident in his ability to represent himself. He has some history of litigation. He was a founder of the charity, Families Need Fathers, as their website explains http://www.fnf.org.uk/about-us/history In that page one reads, ‘As he said at the time, “Your own lawyer, in this respect, is often your very worst enemy”.’ In fact he has had bad experience of litigation, both with professional representation and representing himself. It may be there is a side of his character which enjoys the fight, in spite of repeated disappointment, and his ability to pick himself up and soldier on against the odds can only excite admiration.

    In fact Dr Elithorn has been a litigant in person with a difference. He is an intelligent retired medical professional with a quirky but incisive, imaginative and highly active mind. Whereas most litigants in person either understand the law, and do rather well, or are baffled by legal technicalities, and do rather badly, Dr Elithorn does understand legal technicalities when they are explained to him. However, he can never quite believe that any judge or lawyer could be at once so bone-headed and so supine as to allow legal technicalities to prevail over the broad sweep of common sense, fairness, and the currents of social and intellectual progress, which inform his own broader view of the merits of his cases. Dr Elithorn’s expectation that judges and lawyers will, swayed by both the rightness of his arguments, and the acuity of his psychological skills (he has qualified as both psychiatrist and psychologist), have the courage and intellectual vigour (as he sees it) to rise above legal technicalities, is a triumph of hope over experience. It is consistent the incurable optimism he brings to other endeavours where he persists with remarkable tenacity, still now as he suffers the burdens of advancing age.

    I am aware this is a slightly odd post, and will quite understand if the moderators of this board chose to delete it. However, Dr Elithorn has importuned me with me with remarkable vigour to express my views here, and to do so honestly: I have in this case, rather unusually, decided to give in to his importunity, partly because a little of the broader and human perspective on a reported case does, in my view, add interest if not insight.

    Reply
  8. Malcolm Scott

    I am a friend of Dr Elithorn, and he has strongly pressed me to comment also, despite my protestations that I am not a lawyer. I think I understand why he won the appeal, and it would seem to me that the “broad sweep of common sense and fairness” (to quote Mr Burchill’s helpful comment) might have led to his getting some help with the expense of bringing the case.

    Reply
  9. Malcolm Scott

    My apologies to Mr Birchall for spelling his name wrongly.

    Reply
  10. NL

    Before Dr Elithorn exhorts any more friends to add comments, I ought to point out that I am wholly bewildered by what the commenters and Dr Elithorn presumably see as their purpose. Our post is a factual report of the Court of Appeal hearing. The Court of Appeal also made a decision on costs, on the basis of evidence not available to us and only referred to in the transcript. However, this apparently included refusing a reasonable offer of settlement, something which never goes down well with the courts.

    I make no comment on the fairness or justice of the costs award both because I do not have anything like enough information to come to a conclusion and because that would in any event be an academic exercise, since this is a court of appeal order and the time to challenge it has long expired. I have no interest in undertaking such an academic exercise because I don’t have the time and, moreover, I don’t propose to spend the time that I don’t have carrying out work for which I won’t get paid and which will have no practical effect whatsoever (I do enough of that on this blog).

    The observations on Dr Elithorn’s character and virtues appear to have been made under the impression that this site was in some way concerned with his character or that a personal criticism was involved. It was not and I am not so concerned. Again, this is a factual report of a published judgment. Nothing more.

    I trust Dr Elithorn and his friends will take this in the kindly manner that is intended, but there really is no point or benefit to be obtained from these comments by associates.

    As there is nothing further to add on this case on the legal issues with which this site is concerned, I’m closing comments on this post.

    Reply

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