07/09/2010

A broken engagement

Dibble v Pfluger [2010] EWCA Civ 1005 concerns an appeal in a joint property case, largely decided on its facts. It has one interesting point of note for anyone who practices in this field: the couples were engaged to be married for much of the period of their relationship.

The claim was for an order for sale of a house (“Alinora”) in which the couple were living. As Lord Justice Ward put it “It cannot be easy for them.” That sale should have caused no difficulty as Alinora was held on an express trust with beneficial interests in common in equal shares. The defendant did not resist the sale in principle, but counter-claimed on the basis that he had a beneficial interest in a home owned by the claimant in Poland. Thus he asked either that an order for sale be made of the Polish property or that the claimant compensate him for his interest in it (claimed as a half share).

No-one seems to have worried that this second property was located in Poland and so no-one considered whether Polish or English law should apply for any determination of the size of the defendant’s share or whether in fact Polish law on fractional co-ownership (which I understand would be the Polish equivalent of beneficial tenancy in common under a trust for land) would operate the same way as the English principles in Stack v Dowden.

The appeal was allowed on the basis that the Recorder had failed to make a number of findings of fact. For example, concerning a payment by the defendant of £15,000 for work to be done on the Polish property, said by the claimant to have been a loan, the Recorder said:

“13. … It may have been a loan to him. Whatever the status of this payment in terms of the issues which I have to decide, it seems to be common ground that it was intended to be used, and was in fact used, to facilitate the erection of a roof to the Polish building which it was necessary to complete during the summer months.”

Well, was it a loan or not? If not, what effect did it have on any interest the defendant might have had in the Polish property? Neither of these questions were answered by the Recorder. For this, and similar failures, the Court of Appeal felt that the case should be remitted to a different judge for proper findings to have been made.

The interesting point in the case (apart from the Polish dimension) is that the couples were, for most of their cohabitation, engaged. Strangely no-one seems to have considered that this might be relevant until the case reached the Court of Appeal. Lord Justice Ward pointed out that section 2 of the Law of Property (Miscellaneous Provisions) Act 1970 applied:

“2. Property of engaged couples

(1) Where an agreement to marry is terminated, any rule of law relating to the rights of husbands and wives in relation to property in which either or both has or have a beneficial interest, including any such rule as explained by section 37 of the Matrimonial Proceedings and Property Act 1970, shall apply, in relation to any property in which either or both of the parties to the agreement had a beneficial interest while the agreement was in force, as it applies in relation to property in which a husband or wife has a beneficial interest.”

Section 37 of the Matrimonial Proceedings and Property Act 1970 being:

“37. Contributions by spouse in money or money’s worth to the improvement of property

It is hereby declared that where a husband or wife contributes in money or money’s worth to the improvement of real or personal property in which or in the proceeds of sale of which either or both of them has or have a beneficial interest, the husband or wife so contributing shall, if the contribution is of a substantial nature and subject to any agreement between them to the contrary express or implied, be treated as having then acquired by virtue of his or her contribution a share or an enlarged share, as the case may be, in that beneficial interest of such an extent as may have been then agreed or, in default of such agreement, as may seem in all the circumstances just to any court before which the question of the existence or extent of the beneficial interest of the husband or wife arises (whether in proceedings between them or in any other proceedings).”

In other words, where couples have been engaged, there is a statutory basis for enquiring into their respective contributions to the improvement of property, quite apart from any considerations that might arise under a Stack v Dowden analysis.

Whether s.2 would have made any difference in this case I do not know, but I thought it was worth drawing our readers’ attention to the provision. In my experience it is not as widely known as it should be.

1 Comment

  1. NL

    It is also not a case name one is likely to forget – or indeed pronounce – easily.

    Reply

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