A reminder, if one was needed, of the perils and pitfalls of constructive trust cases can be found in Elithorn v Poulter & Others  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  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.