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By Dave
19/07/2010

Intention, intention, intention

Wright v Wright [2010] EWHC 1808 (Ch) is a near perfect example of a fundamental principle of property law, which we tutors seek to ingrain into our students (mostly, it must be said, with limited success, having looked at hundreds of exam scripts), that intention is what determines the type of interest created or transferred (trust, gift, loan, bailment etc).

The circumstances were also rather unfortunate.  Anthony (Tony) Wright had built up a successful battery business, and sold it to another company for £2.3 million; he joined the new company but, in breach of covenant, allegedly set up a competing battery business.  The new company claimed damages against him of up to £12million.  From here, it all went pear-shaped for Mr Wright.  He began to move his assets around amongst his family, put cheques made out with his initials into his son’s bank account (and his son conveniently had the same initials as him), bought a house in his name for his son, divorced his wife with a financial settlement in her favour – I could go on but you get the picture.  Unfortunately, his now ex-wife hooked up with somebody else, so that any “reconciliation” could not take place, and there must have been a humungous family row because his son sided with his mum after criticism of the son’s management of another company (and the daughter with her dad).  This case, then, concerned whether Tony had made trusts, gifts or loans to his son.  The facts could all get quite complicated but let me cut them short – Tony’s case was that he had done all this, in essence, as part of a scheme to get his assets out of his hands and protect them from any judgment which might be obtained against him.

The judge, HHJ Cooke, could have got all resulting/constructive trusty, but instead (perhaps remembering his Maitland) essentially went through each item of property in dispute looking for the relevant parties’ intention.  Tony is really in trouble here, because his statements in this case were in conflict with his statements in the other case against him, and HHJ Cooke had to give a self-incrimination warning ([22]-[23]).  But, and this is what makes this case a good teaching tool, despite Tony’s assertion that “anyone can change their intention”, the key point to look at intention was the time of the creation of the interest.  In seeking to undo the court order vesting his share of the former matrimonial home in his wife, Tony said that his reason to do so was to protect his assets as part of a collusive arrangement with his then wife.  But the problem here was that, even if that were their intention, “It cannot be open to the parties to litigation to agree in advance with each other that they will procure an order from the court, but that the order will not in fact produce the legal effect it would ordinarily do” (at [34] – in passing, it would be interesting to know if Tinsley v Milligan was cited to HHJ Cooke but that is neither here nor there, I guess); they could always make an arrangement after the court order, of course.  So the outcome was that HHJ Cooke generally found against Tony and that he held property on trust for the son (who was also entitled to equitable compensation for breach of trust by taking a loan out on one of the properties held on trust for the son) or by way of gift to the son..

Although one might empathise with Tony, schadenfreude, I am afraid, has got the better of me so my feeling when reading this case was “what goes around comes around”.

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