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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Grant v Edwards [1986] EWCA Civ 4 (24 March 1986)
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Cite as: [1986] 2 All ER 426, [1987] 1 FLR 87, [1986] EWCA Civ 4, [1986] Fam Law 300, [1986] 3 WLR 114, [1986] Ch 638

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BAILII Citation Number: [1986] EWCA Civ 4

IN THE SUPREME COURT OF JUDICATURE
COURT OP APPEAL (CIVIL DIVISION)
ON APPEAL PROM THE HIGH COURT OP JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
24th March 1986

B e f o r e :

THE VICE-CHANCELLOR (Sir Nicolas Browne-Wilkinson)
LORD JUSTICE MUSTILL
LORD JUSTICE NOURSE

____________________

LINDA GRANT

v.

GEORGE EDWARDS & ARTHUR EDWARDS

____________________

MR L. A. I. ST. VILLE, instructed by Messrs Livingstone Solomon, appeared for the Appellant (Plaintiff).
MR D. R. SCHMITZ, instructed by Messrs Singh Karrah & Co. (Middlesex), appeared for the Respondent (First Defendant).

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    JUSTICE NOURSE: This is an appeal from a decision of His Honour Judge Paul Baker Q.C. sitting as a judge of the Chancery Division given on 22nd February 1985 in a dispute between an unmarried couple as to the beneficial ownership of a house in which they formerly lived together. The judge decided that the woman had no interest in the property and she has appealed to this court.

    The woman, the plaintiff in the action, is Mrs Linda Grant. The defendants are two brothers, George and Arthur Edwards, but the former has taken no significant part in the proceedings. Like the judge, I will refer to Mr George Edwards as the defendant. I should add that he is now an undischarged bankrupt, but his trustee in bankruptcy, the Official Receiver, told the judge that he did not wish to be joined as a party and the action has proceeded without him.

    Both the plaintiff and the defendant are of Jamaican origin and have lived in London for many years. When they first met in 1967 each was married to another. The plaintiff lived in Lewisham and had two young sons, whose approximate ages were then 4 and 2 years. In about 1967 the plaintiff's husband left her. The defendant was then living in the basement at 82 Woodstock Road, Finsbury Park, London, H4, but in the same year his wife left him, taking their children and all or much of the furniture with her. That property was jointly owned by the defendant and another brother of his, not Arthur, but the two of them were not getting on well together at that time. And so the defendant left that property and moved into the house of yet another brother nearby.

    In April 1967 the plaintiff, having been recently abandoned by her husband, moved from Lewisham to an address in Dalston, E8. She lived there with her two boys for two years. During this period she formed a close relationship with the defendant and conceived a child by him in September or October 1968. Later, conditions in Dalston either got very overcrowded, or the plaintiff fell out with the owners of that house, or both. In any event, in about May 1969 when she was 7 or 8 months pregnant, she moved to 82 Woodstock Road, where the defendant had previously lived, and was accommodated there with her two children. On the face of it, that might appear to have been an event of some significance. On 2nd July 1969 she gave birth to a son who was named Sean. The judge found that although the previous relationship between the plaintiff and the defendant had been a casual one with Sean's birth it changed; and that from that point onwards they came to the conclusion that they would live together on a more permanent arrangement. He also took into account evidence by the defendant to the effect that he was at that time thinking of buying a house to settle down in and have a family, and he found that it was the plaintiff whom the defendant had in mind.

    It is against that background that the purchase of the property with which this action is concerned must be viewed. That property is 96 Hewitt Road, Hornsey, N8. The judge described it as a very modest house. Its purchase was completed on 5th or 11th December 1969. It was purchased in the name of the defendant and his brother Arthur, who became the joint registered proprietors and legal owners of it. The judge found that the defendant told the plaintiff that her name was not going onto the title because it would cause some prejudice in the matrimonial proceedings between the plaintiff and her husband which were then pending or expected. The judge also found that the defendant never had any real intention of replacing his brother with the plaintiff when those proceedings were at an end. Those two findings have assumed a greater importance in this court than they did below, and I will return to them in due course. That then was the reason for not putting the plaintiff's name on the title. It appears likely that the reason for making Mr Arthur Edwards a joint registered proprietor was that his earnings and his personal covenant would assist in obtaining a mortgage. The judge was satisfied, for the purposes of this case, that Mr Arthur Edwards was a purely nominal party with no beneficial interest of his own in the property. He also found that the plaintiff and the defendant from the outset settled down in the property as a home where they were going to live as husband and wife with their family, although it seems clear that, ultimately at any rate, she did not intend to marry him. Their second son, Junior, was born on 13th July 1971. Also living with them there were the two sons of the plaintiff's marriage.

    The judge found that there was no agreement "as such" between the plaintiff and the defendant to pool their resources. He said that the case stood or fell on whether the plaintiff was able to show that she had contributed to the purchase price or the mortgage payments.

    The purchase price of 86 Hewitt Road was 5490. A deposit of 550 was paid on exchange of contracts. The balance required to complete, including costs, was 5026, of which 4065 was raised on a first mortgage in favour of the Guardian Building Society and 468 on a second mortgage in favour of Merton Abbey Finance Co. Ltd. ("Merton Abbey"). That left a further 493 to be found which, when added to the deposit of 550, meant that a total of 1045 was found in cash. (The judge's figure was 957, but I think that he left the 86 required for costs out of the account.)

    The plaintiff claimed that she contributed the sum of 290 towards the deposit, hut the judge found that that claim was not proved. An attempt was made to persuade this court to interfere with that finding, but it is unnecessary for me to say more than that that is something which we cannot do. We must proceed on the footing that, as between the plaintiff and the defendant, the whole of the 1043 which was found in cash was provided by the defendant.

    The defendant said in evidence that when they moved into the house the plaintiff paid him 6 per week as rent. The judge rejected the evidence that she was only a tenant of the defendant's, but made no finding as to whether she paid him 6 per week or not. It would appear therefore that there was an admission that the plaintiff paid the defendant 6 per week, at least for a time, and a finding that it was not paid as rent.

    The plaintiff's other claim was that she agreed to contribute, and did contribute, towards the mortgage instalment payments. Her evidence was that she did not make any direct contribution towards the instalments payable under the first mortgage. On the other hand, she said that it was arranged between the defendant and herself that she was to be responsible for, and that she did in fact pay, all the instalments payable under the second mortgage. Those were monthly instalments, 60 in number, of 13.54 each. The first instalment was paid on 3rd February 1970 and the outstanding balance was paid off, ahead of time, on 16th October 1974. Although the judge accepted the possibility that the plaintiff did pay some of these instalments as part of the general expenses of the household, he found that they would not have been substantial enough to give the plaintiff a beneficial interest in the property. That finding has also been attacked in this court, and in this instance I must deal with the matter at greater length.

    The judge quoted both the plaintiff's and the defendant's evidence on this point. The plaintiff said: "I was paying the second mortgage at 13 a month. I paid it to the post office and sent it to them in envelopes. I worked for that money ... They" (the defendant and his brother) "did not pay these amounts. I paid those amounts. When I first bought the house, George said that I had to pay the small mortgage and he would pay the large one. I read the paper. George signed it. I don't remember the figure". The defendant said: "She paid me some money for the rent of the room. She had not made the mortgage payments herself. I have paid them to Merton Abbey. I used to sign my name. She didn't make payments to Merton Abbey and I took the book to the bank, put the book over the counter, and they used to stamp it - both of them - a book for each mortgage." The judge said that he was unable to find that the payments of 13 odd a month were made as the plaintiff suggested.

    It is, I think, clear that the judge misunderstood the plaintiff's evidence about this. It seems probable that she said that she paid the instalments through, not to, the post office. Mr Schmitz, who appears for the defendant, told us that he has a note recording that the plaintiff said that she sometimes sent postal orders. It seems tolerably clear that what she meant was that she went to the post office every month, purchased a postal order, put it in an envelope together with the payment record card and posted it ff to Merton Abby whose business was in Tooting, SW17. That method of payment expressly contemplated by the notes on the back of the payment record card, and there were further instructions at the bottom of each page stating that Merton Abbey had no agents authorised to collect monies on its behalf and that all payments should be made direct to it.

    All this confirms the plaintiff's version of events. It would also appear to discredit the defendant's evidence that he took both mortgage books to the bank and had them stamped over the counter. However, the judge evidently thought that what the plaintiff was saying was that she paid the instalments to or at the post office. Not surprisingly, that was something which he found difficulty in understanding. Although he said that it was not a vital matter, I think that it is well possible that if he had understood what the plaintiff was saying he would have made a finding in her favour. However, I have come to the conclusion that it is not open to this court to interfere with his finding on this point. He had earlier said that he had not found any of the principal witnesses completely and entirely satisfactory. Furthermore, he was clearly of the view that between April or May 1969 and August 1972 (see below) the plaintiff was not earning or receiving enough to enable her to make the monthly payments of 13.54 under the second mortgage. There was certainly adequate evidence on which the judge could come to the conclusion to which he did.

    The plaintiff's alternative claim in respect of mortgage instalments was that she made indirect contributions to the payments under both mortgages by means of her contributions to the general household expenses. As to those, the judge found that she made a very substantial contribution to the housekeeping and to the feeding and bringing up of the children, and that she used her earnings in that way. On a reading of the judgment as a whole that finding must be taken to relate to the period after August 1972.

    The position with regard to the plaintiff's earnings and other income was as follows. Before April or May 1969, when she moved from Dalston to 82 Woodstock Road, the plaintiff went out to work, but it is common ground that she then stopped working and did not get another job until August 1972. During that period she was on supplementary benefit. The judge found that from 1972 she was more or less in regular work with some small gaps, and that she was getting the same sort of wage as the defendant had been getting, i.e. an annual wage of about 1200 in 1973. The judge said that at that time she was earning substantially and making a financial contribution. It seems clear that she was still in regular employment in 1980, when her relationship with the defendant finally broke up.

    In March 1972 the plaintiff's marriage was dissolved. From the end of June 1973 onwards she received 5 a week from her former husband under a court order, 2 for each son of the marriage and 1 for herself. As the judge observed, these payments were no doubt totally absorbed in the maintenance of the plaintiff's two elder sons, but it was nonetheless a small additional source of income for the household.

    In February 1975 there was a fire at 96 Hewitt Road. The judge found that the plaintiff and the defendant and the four children then moved to council accommodation at No. 35 Thorold Road, Wood Green, N22, where they lived together until the final breakdown in 1980. The defendant received a sum of 4000 from a fire insurance policy, the bulk of which was applied in repairing 96 Hewitt Road. That property, or part of it, was then let, and it was accepted before us that the defendant discharged the instalments payable under the first mortgage out of the rent.

    The balance of the insurance monies amounted to 1037. In September 1975 that sum was paid into an account in the joint names of the plaintiff and the defendant which was then opened with the Leeds Permanent Building Society. The judge found that it was intended as a joint account and that the 1037 and some further deposits, which were said to have been profits from gambling, were, broadly speaking, shared equally between the plaintiff and the defendant. It was submitted on behalf of the plaintiff that the crediting of the 1037 which had, so to speak, come out of 96 Hewitt Road, to this joint account was a recognition by the defendant that the plaintiff was beneficially entitled to a half-share in the property. The judge rejected that submission, although he said that he would have found it persuasive if the rest of the evidence had been more cogent and if indeed the plaintiff had made a greater contribution.

    The final fact which I should mention is that the defendant's account with the Guardian Building Society shows that between 1972 and 1980 he paid off the following amounts due under the first mortgage:

    Year Amount ()
    1972 409
    1973 431
    1974 493
    1975 473
    1976 516
    1977 523
    1978 575
    1979 712
    1980 563
    Total: 4745

    These figures reflect the steep rise in interest rates during the period. At the end of 1980 the amount outstanding was just under 3,800.

    A number of authorities were cited by the judge. In holding that any of the instalments under the second mortgage which may have been paid by the plaintiff as part of the general expenses of the household would not have been substantial enough to give the plaintiff a beneficial interest in the house, he based himself primarily on a passage in the judgment of Lord Justice May in Burns v Burns (1984) Ch 317, at pages 344F to 345C.

    In order to decide whether the plaintiff has a beneficial interest in 96 Hewitt Road we must climb again the familiar ground which slopes down from the twin peaks of Pettitt v Pettitt (1970) AC 777 and Gissing v Gissing (1971) AC 886. In a case such as the present, where there has been no written declaration or agreement, nor any direct provision by the plaintiff of part of the purchase price so as to give rise to a resulting trust in her favour, she must establish a common intention between her and the defendant, acted upon by her, that she should have a beneficial interest in the property. If she can do that, equity will not allow the defendant to deny that interest and will construct a trust to give effect to it.

    In most of these cases the fundamental, and invariably the most difficult, question is to decide whether there was the necessary common intention, being something which can only be inferred from the conduct of the parties, almost always from the expenditure incurred by them respectively. In this regard the court has to look for expenditure which is referable to the acquisition of the house; see Burns v Burns (1984) Ch 317, at pages 328H to 329C. per Fox L.J. If it is found to have been incurred, such expenditure will perform the twofold function of establishing the common intention and showing that the claimant has acted upon it.

    There is another and rarer class of case, of which the present may be one, where, although there has been no writing, the parties have orally declared themselves in such a way as to make their common intention plain. Here the court does not have to look for conduct from which the intention can be inferred, but only for conduct which amounts to an acting upon it by the claimant. And although that conduct can undoubtedly be the incurring of expenditure which is referable to the acquisition of the house, it need not necessarily be so.

    The clearest example of this rarer class of case is Eves v Eves (1975) 1 WLR 1338. That was a case of an unmarried couple where the conveyance of the house was taken in the name of the man alone. At the time of the purchase he told the woman that if she had been 21 years of age, he would have put the house into their joint names, because it was to be their joint home. He admitted in evidence that that was an excuse for not putting the house into their joint names, and this court inferred that there was an understanding between them, or a common intention, that the woman was to have some sort of proprietary interest in it; otherwise no excuse would have been needed. After they had moved in, the woman did extensive decorative work to the downstairs rooms and generally cleaned the whole house. She painted the brickwork of the front of the house. She also broke up with a 14lb sledge hammer the concrete surface which covered the whole of the front garden and disposed of the rubble into a skip, worked in the back garden and, together with the man, demolished a shed there and put up a new shed. She also prepared the front garden for turfing. Pennycuick V-C at first instance, being unable to find any link between the common intention and the woman's activities after the purchase, held that she had not acquired a beneficial interest in the house. On an appeal to this court the decision was unanimously reversed, by Lord Denning MR on a ground which I respectfully think was at variance with the principles stated in Gissing v Gissing and by Browne LJ and Brightman J on a ground which was stated by Brightman J, 0975) 1 WLR at page 1345B, as follows:

    "The defendant clearly led the plaintiff to believe that she was to have some undefined interest in the property, and that her name was only omitted from the conveyance because of her age. This, of course, is not enough by itself to create a beneficial interest in her favour; there would at best be a mere 'voluntary declaration of trust' which would be 'unenforceable for want of writing'; per Lord Diplock in Gissing v Gissing (1971) AC 886, 905.

    "If, however, it was part of the bargain between the parties, expressed or to be implied, that the plaintiff should contribute her labour towards the reparation of a house in which she was to have some beneficial interest, then I think that the arrangement becomes one to which the law can give effect. This seems to be consistent with the reasoning of the speeches in Gissing v Gissing".

    He added that he did not find much difficulty in inferring the link which Pennycuick V-C had been unable to find, observing in the process that he found it difficult to suppose that the woman would have been wielding the 14lb sledge hammer and so forth except in pursuance of some expressed or implied arrangement and on the understanding that she was helping to improve a house in which she was to all practical intents and purposes promised that she had an interest. Browne LJ, at page 1343, agreed with Brightman J about the basis for the court's decision in favour of the woman and was prepared to draw the inference that the link was there.

    About that case the following observations may be made. First, as Brightman J himself observed, if the work had not been done the common intention would not have been enough. Secondly, if the common intention had not been orally made plain, the work would not have been conduct from which it could be inferred. That, I think, is the effect of the actual decision in Pettitt v Pettitt. Thirdly, and on the other hand, the work was conduct which amounted to an acting upon the common intention by the woman.

    It seems therefore, on the authorities as they stand, that a distinction is to be made between conduct from which the common intention can be inferred on the one hand and conduct which amounts to an acting upon it on the other. There remains this difficult question: What is the quality of conduct required for the latter purpose? The difficulty is caused, I think, because although the common intention has been made plain, everything else remains a matter of inference. Let me illustrate it in this way. It would be possible to take the view that the mere moving into the house by the woman amounted to an acting upon the common intention. But that was evidently not the view of the majority in Eves v Eves. And the reason for that may be that, in the absence of evidence, the law is not so cynical as to infer that a woman will only go to live with a man to whom she is not married if she understands that she is to have an interest in their home. So what sort of conduct is required? In my judgment it must be conduct on which the woman could not reasonably have been expected to embark unless she was to have an interest in the house. If she was not to have such an interest, she could reasonably be expected to go and live with her lover, but not, for example, to wield a 141b sledge hammer in the front garden. In adopting the latter kind of conduct she is seen to act to her detriment on the faith of the common intention.

    In order to see how the present case stands in the light of the views above expressed, I must summarise the crucial facts as found, expressly or impliedly, by the judge. They are the following:

    (1) The defendant told the plaintiff that her name was not going onto the title because it would cause some prejudice in the matrimonial proceedings between her and her husband. The defendant never had any real intention of replacing his brother with the plaintiff when those proceedings were at an end. Just as in Eves v Eves, these facts appear to me to raise a clear inference that there was an understanding between the plaintiff and the defendant, or a common intention, that the plaintiff was to have some sort of proprietary interest in the house; otherwise no excuse for not putting her name onto the title would have been needed.

    (2) Except for any instalments under the second mortgage which may have been paid by the plaintiff as part of the general expenses of the household, all the instalments under both mortgages were paid by the defendant. Between February 1970 and October 1974 the total amount paid in respect of the second mortgage was 812 at a rate of about 162 each year. Between 1972 and 1980 the defendant paid off 4,745 under the first mortgage at an average rate of 527 per year.

    (3) The 6 per week which the defendant admitted that the plaintiff paid to him, at least for a time after they moved into the house, was not paid as rent and must therefore have been paid as a contribution to general expenses.

    (4) From August 1972 onwards the plaintiff was getting the same sort of wage as the defendant, i.e. an annual wage of about 1200 in 1973, out of which she made a very substantial contribution to the housekeeping and to the feeding and bringing up of the children. From June 1973 onwards she also received 5 a week from her former husband which went towards the maintenance of her two elder sons.

    As stated under (1) above, it is clear that there was a common intention that the plaintiff was to have some sort of proprietary interest in 96 Hewitt Road. The more difficult question is whether there was conduct on her part which amounted to an acting upon that intention or, to put it more precisely, conduct on which she could not reasonably have been expected to embark unless she was to have an interest in the house.

    From the above facts and figures it is in my view an inevitable inference that the very substantial contribution which the plaintiff made out of her earnings after August 1972 to the housekeeping and to the feeding and to the bringing up of the children enabled the defendant to keep down the instalments payable under both mortgages out of his own income and, moreover, that he could not have done that if he had had to bear the whole of the other expenses as well. For example, in 1973; when he and the plaintiff were earning about 1200 each, the defendant had to find a total of about 643 between the two mortgages. I do not see how he would have been able to do that had it not been for the plaintiff's very substantial contribution to the other expenses. There is certainly no evidence that there was any money to spare on either side and the natural inference is to the contrary. In this connection, it is interesting to note that when dealing with the monies in the Leeds Permanent Building Society account the judge said this:

    "They lived from hand to mouth, as I see it. They put their money in, and when there was some money to spare, they would share it out in this way."

    In the circumstances, it seems that it may properly be inferred that the plaintiff did make substantial indirect contributions to the instalments payable under both mortgages. This is a point which seems to have escaped the judge, but I think that there is an explanation for that. He was concentrating, as no doubt were counsel, on the plaintiff's claim that she herself had paid all the instalments under the second mortgage. It seems very likely that the indirect consequences of her very substantial contribution to the other expenses were not fully explored.

    Was the conduct of the plaintiff in making substantial indirect contributions to the instalments payable under both mortgages conduct upon which she could not reasonably have been expected to embark unless she was to have an interest in the house? I answer that question in the affirmative. I cannot see upon what other basis she could reasonably have been expected to give the defendant such substantial assistance in paying off mortgages on his house. I therefore conclude that the plaintiff did act to her detriment on the faith of the common intention between her and the defendant that she was to have some sort of proprietary interest in the house.

    I should add that, although Eyes v Eves was cited to the judge, I think it doubtful whether the significance of it was fully brought to his attention. He appears to have assumed that the plaintiff could only establish the necessary common intention if she could point to expenditure from which it could be inferred. I do not find it necessary to decide whether, if the common intention had not been orally made plain, the expenditure in the present case would have been sufficient for that purpose. That raises a difficult and still unresolved question of general importance which depends primarily on a close consideration of the speeches of their Lordships in Gissing v Gissing and the judgments of Pox and Hay LJJ in Burns v Burns. If it be objected that the views which I have expressed will expose the possibility of further fine distinctions on these intellectual steeps, I must answer that that is something which is inherent in the decision of the majority of this court in Eves v Eves. Be that as it may, I am in no doubt that that authority is a sure foundation for a just decision of the present case, a justness which was fully demonstrated in the concise and commonsensical argument of Mr St. Ville on behalf of the plaintiff in this court.

    Finally, it is necessary to determine the extent of the plaintiff's beneficial interest in 96 Hewitt Road. Here again reference may be made to Eves v Eves, where Brightman J regarded this question as the most difficult part of the case; see (1975) 1 WLR at page 1345G-H. Although I can understand that difficulties may arise in other cases, there is a particular feature of the present case to which we can turn for guidance. That is the crediting of the 1037 balance of the fire insurance monies to what the judge found was intended as a joint account. He would evidently have been more impressed by that if, as I have now held, the plaintiff had made a greater contribution than he thought. In my view it was a very significant step for the defendant to have taken. Although on the judge's findings the plaintiff did not contribute anything towards the 1043 which had to be found in cash to complete the purchase and did not make any substantial contribution, direct or indirect, to the mortgage payments before August 1972, I nevertheless think that this act of the defendant, when viewed against the background of the initial common intention and the substantial indirect contributions made by the plaintiff to the mortgage repayments from August 1972 onwards, is the best evidence of how the parties intended that the property should be shared. I would therefore hold that the plaintiff is entitled to a half interest in the house.

    For these reasons, I would allow this appeal, make a declaration accordingly and propose that we should hear further submissions on consequential relief.

    THE VICE-CHANCELLOR: I agree. In my judgment, there has been a tendency over the years to distort the principles as laid down in the speech of Lord Diplock in Gissing v Gissing (1971) AC 886 by concentrating on only part of his reasoning. For present purposes, his speech can he treated as falling into three sections: the first deals with the nature of the substantive right; the second with the proof of the existence of that right; the third with the quantification of that right.

  1. The nature of the substantive right: (page 905B-G). If the legal estate in the joint home is vested in only one of the parties ("the legal owner") the other party ("the claimant"), in order to establish a beneficial interest, has to establish a constructive trust by showing that it would be inequitable for the legal owner to claim sole beneficial ownership. This requires two matters to be demonstrated: (a) That there was a common intention that both should have a beneficial interest; AND (b) That the claimant has acted to his or her detriment on the basis of that common intention.
  2. The proof of the common intention:
  3. (a) Direct evidence (905H):

    It is clear that mere agreement between the parties that both are to have beneficial interests is sufficient to prove the necessary common intention. Other passages in the speech point to the admissability and relevance of other possible forms of direct evidence of such intention: see at page 907C and page 908C;

    (b) Inferred common intention (906A-908D):

    Lord Diplock points out that, even where parties have not used express words to communicate their intention (and therefore there is no direct evidence), the court can infer from their actions an intention that they shall both have an interest in the house. This part of his speech concentrates on the types of evidence from which the courts are most often asked to infer such intention viz. contributions (direct and indirect) to the deposit, the mortgage instalments or general housekeeping expenses. In this section of the speech, he analyses what types of expenditure are capable of constituting evidence of such common intention: he does not say that if the intention is proved in some other way such contributions are essential to establish the trust.

    3. The quantification of the right (908D-909):

    Once it has been established that the parties had a common intention that both should have a beneficial interest and that the claimant has acted to his detriment, the question may still remain "what is the extent of the claimant's beneficial interest?" This last section of Lord Diplock's speech shows that here again the direct and indirect contributions made by the parties to the cost of acquisition may be crucially important.

    If this analysis is correct, contributions made by the claimant may be relevant for four different purposes, viz.: (1) in the absence of direct evidence of intention, as evidence from which the parties' intentions can be inferred; (2) as corroboration of direct evidence of intention; (3) to show that the claimant has acted to his or her detriment in reliance on the common intention. Lord Diplock's speech does not deal directly with the nature of the detriment to be shown. (4) to quantify the extent of the beneficial interest.

    I have sought to analyse Lord Diplock's speech for two reasons. First, it is clear that the necessary common intention can be proved otherwise than by reference to contributions by the claimant to the cost of acquisition. Secondly, the remarks of Lord Diplock as to the contributions made by the claimant must be read in their context.

    In cases of this kind the first question must always be whether there is sufficient direct evidence of a common intention that both parties are to have a beneficial interest. Such direct evidence need have nothing to do with the contributions made to the cost of acquisition. Thus in Eves v Eves (1975) 3 A.E.R. 768 the common intention was proved by the fact that the claimant was told that her name would have been on the title deeds but for her being under age. Again, in Midland Bank plc v Dobson (12th July 1985 Court of Appeal) this court held that the trial judge was entitled to find the necessary common intention from evidence which he accepted that the parties treated the house as "our house" and had a "principle of sharing everything". Although, as was said in the latter case, the trial judge has to approach such direct evidence with caution, if he does accept such evidence the necessary common intention is proved. One would expect that in a number of cases the court would be able to decide on the direct evidence before it whether there was such a common intention. It is only necessary to have recourse to inferences from other circumstances (such as the way in which the parties contributed, directly or indirectly, to the cost of acquisition) in cases such as Gissing v Gissing and Burns v Burns (1984) 1 A.B.R. 244 where there is no direct evidence of intention.

    Applying those principles to the present case, the representation made by the defendant to the plaintiff that the house would have been in the joint names but for the plaintiff's matrimonial disputes is clear direct evidence of a common intention that she was to have an interest in the house: Eves v Eves (supra). Such evidence was in my judgment sufficient by itself to establish the common intention: but in any event it is wholly consistent with the contributions made by the plaintiff to the joint household expenses and the fact that the surplus fire insurance monies were put into a joint account.

    But as Lord Diplock's speech (at page 905D) and the decision in Midland Bank v Dobson (supra) make clear, mere common intention by itself is not enough: the claimant has also to prove that she has acted to her detriment in the reasonable belief by so acting she was acquiring a beneficial interest.

    There is little guidance in the authorities on constructive trusts as to what is necessary to prove that the claimant so acted to her detriment. What "link" has to be shown between the common intention and the actions relied on? Does there have to be positive evidence that the claimant did the acts in conscious reliance on the common intention? Does the court have to be satisfied that she would not have done the acts relied on but for the common intention, e.g. would not the claimant have contributed to household expenses out of affection for the legal owner and as part of their joint life together even if she had no interest in the house? Do the acts relied on as a detriment have to be inherently referable to the house, e.g. contribution to the purchase or physical labour on the house?

    I do not think it is necessary to express any concluded view on these questions in order to decide this case. Eves v Eves (supra) indicates that there has to be some "link" between the common intention and the acts relied on as a detriment. In that case the acts relied on did inherently relate to the house (viz. the work the claimant did to the house) and from this the Court of Appeal felt able to infer that the acts were done in reliance on the common intention. So, in this case, as the analysis of Nourse L.J. makes clear, the plaintiff's contributions to the household expenses were essentially linked to the payment of the mortgage instalments by the defendant: without the plaintiff's contributions, the defendant's means were insufficient to keep up the mortgage payments. In my judgment where the claimant has made payments which, whether directly or indirectly, have been used to discharge the mortgage instalments, this is a sufficient link between the detriment suffered by the claimant and the common intention. The court can infer that she would not have made such payments were it not for her belief that she had an interest in the house. On this ground therefore I find that the plaintiff has acted to her detriment in reliance on the common intention that she had a beneficial interest in the house and accordingly that she has established such beneficial interest.

    I suggest that in other cases of this kind, useful guidance may in the future be obtained from the principles underlying the law of proprietary estoppel which in my judgment are closely akin to those laid down in Gissing v Gissing. In both, the claimant must to the knowledge of the legal owner have acted in the belief that the claimant has or will obtain an interest in the property. In both, the claimant must have acted to his or her detriment in reliance on such belief. In both, equity acts on the conscience of the legal owner to prevent him from acting in an unconscionable manner by defeating the common intention. The two principles have been developed separately without cross-fertilisation between them: but they rest on the same foundation and have on all other matters reached the same conclusions.

    In many cases of the present sort, it is impossible to say whether or not the claimant would have done the acts relied on as a detriment even if she thought she had no interest in the house. Setting up house together, having a baby, making payments to general housekeeping expenses (not strictly necessary to enable the mortgage to be paid) may all be referable to the mutual love and affection of the parties and not specifically referable to the claimant's belief that she has an interest in the house. As at present advised, once it has been shown that there was a common intention that the claimant should have an interest in the house, any act done by her to her detriment relating to the joint lives of the parties is, in my judgment, sufficient detriment to qualify. The acts do not have to be inherently referable to the house: see Jones v Jones (1977) 1 WLR 438; Pascoe v Turner (1979) 1 WLR 431. The holding out to the claimant that she had a beneficial interest in the house is an act of such a nature as to be part of the inducement to her to do the acts relied on. Accordingly, in the absence of evidence to the contrary, the right inference is that the claimant acted in reliance on such holding out and the burden lies on the legal owner to show that she did not do so: see Greasley v Cooke (1980) 1 WLR 1306.

    The possible analogy with proprietary estoppel was raised in argument. However, the point was not fully argued and since the case can be decided without relying on such analogy, it is unsafe for me to rest my judgment on that point. I decide the case on the narrow ground already mentioned.

    What then is the extent of the plaintiff's interest? It is clear from Gissing v Gissing that, once the common intention and the actions to the claimant's detriment have been proved from direct or other evidence, in fixing the quantum of the claimant's beneficial interest the court can take into account indirect contributions by the plaintiff such as the plaintiff's contributions to joint household expenses: see Gissing v Gissing at page 909 A and D-E. In my judgment, the passage in Lord Diplock's speech at page 909G-910A is dealing with a case where there is no evidence of the common intention other than contributions to joint expenditure: in such a case there is insufficient evidence to prove any beneficial interest and the question of the extent of that interest cannot arise.

    where, as in this case, the existence of some beneficial interest in the claimant has been shown, prima facie the interest of the claimant will be that which the parties intended: Gissing v Gissing at page 908G. In Eves v Eves, Brightman LJ (at page 775A) plainly felt that a common intention that there should be a joint interest pointed to the beneficial interests being equal. However he felt able to find a lesser beneficial interest in that case without explaining the legal basis on which he did so. With diffidence, I suggest that the law of proprietary estoppel may again provide useful guidance. If proprietary estoppel is established, the court gives effect to it by giving effect to the common intention so far as may fairly be done between the parties. For that purpose, equity is displayed at its most flexible: see Grabb v Arun District Council (1976) Ch 179. Identifiable contributions to the purchase of the house will of course be an important factor in many cases. But in other cases, contributions by way of the labour or other unquantifiable actions of the claimant will also be relevant.

    Taking into account the fact that the house was intended to be the joint property, the contributions to the common expenditure and the payment of the fire insurance monies into the joint account, I agree that the plaintiff is entitled to a half interest in the house.

    LORD JUSTICE MUSTILL: I agree with the order proposed by my Lord, and am glad to do so because the conclusion appears just. The legal analysis is not, however, at all easy, and I will therefore add a few observations of my own to explain how in my judgment the conclusion follows from the facts found at the trial.

    The authorities principally relied upon in argument before us were Pettitt v Pettitt (1970) AC 777; Gissing v Gissing (1971) AC 886; Eves v Eves (1975) 3 All ER 768; and Burns v Burns (1984) Ch 317. The general principles established by the first two of these decisions are easily identified, but the speeches and judgments in all of the cases contain expressions of opinion on matters which were not directly in issue there, and which moreover are not directly in issue here. For my part, I do not think that the time has yet arrived when it is possible to state the law in a way which will deal with all the practical problems which may arise in this difficult field, consistently with everything said in the cases. For present purposes it is unnecessary to attempt this. I believe that the following propositions, material to this appeal, can be extracted from the authorities. (For convenience it is assumed that the "proprietor" - viz. the person who has the legal title - is male, and the "claimant" who asserts a beneficial interest is female).

    (1) The law does not recognise a concept of family property, whereby people who live together in a settled relationship ipso facto share the rights of ownership in the assets acquired and used for the purposes of their life together. Nor does the law acknowledge that by the mere fact of doing work on the asset of one party to the relationship the other party will acquire a beneficial interest in that asset.

    (2) The question whether one party to the relationship acquires rights to property the legal title to which is vested in the other party must be answered in terms of the existing law of trusts. There are no special doctrines of equity, applicable in this field alone.

    (3) In a case such as the present the enquiry must proceed in two stages. First, by considering whether something happened between the parties in the nature of bargain, promise or tacit common intention, at the time of the acquisition. Second, if the answer is Yes, by asking whether the claimant subsequently conducted herself in a manner which was (a) detrimental to herself, and (b) referable to whatever happened on acquisition. (I use the expression "on acquisition" for simplicity. In fact, the event happening between the parties which, if followed by the relevant type of conduct on the part of the claimant, can lead to the creation of an interest in the claimant, may itself occur after acquisition. The beneficial interests may change in the course of the relationship).

    (4) For present purposes, the event happening on acquisition may take one of the following shapes:

    (a) An express bargain whereby the proprietor promises the claimant an interest in the property, in return for an explicit undertaking by the claimant to act in a certain way.
    (b) An express but incomplete bargain whereby the proprietor promises the claimant an interest in the property, on the basis that the claimant will do something in return. The parties do not themselves make explicit what the claimant is to do. The court therefore has to complete the bargain for them by means of implication, when it comes to decide whether the proprietor's promise has been matched by conduct falling within whatever undertaking the claimant must be taken to have given sub silentio.
    (c) An explicit promise by the proprietor that the claimant will have an interest in the property, unaccompanied by any express or tacit agreement as to a quid pro quo.

    (d) A common intention, not made explicit, to the effect that the claimant will have an interest in the property, if she subsequently acts in a particular way.

    (5) In order to decide whether the subsequent conduct of the claimant serves to complete the beneficial interest which has been explicitly or tacitly promised to her the court must decide whether the conduct is referable to the bargain, promise or intention, whether the conduct satisfies this test will depend upon the nature of the conduct, and of the bargain, promise or intention.

    (6) Thus, if the situation falls into category "(a)" above, the only question is whether the claimant's conduct is of the type explicitly promised. It is immaterial whether it takes the shape of a contribution to the cost of acquiring the property, or is of a quite different character.

    (7) The position is the same in relation to situations "(b)" and "(d)". No doubt it will often be easier in practice to infer that the quid pro quo was intended to take the shape of a financial or other contribution to the cost of acquisition or of improvement, but this need not always be so. Whatever the court decides the quid pro quo to have been, it will suffice if the claimant has furnished it.

    (8) In considering whether there was a bargain or common intention, so as to bring the case within categories "(b)" and "(d)" and, if there was one, what were its terms, the court must look at the true state of affairs on acquisition. It must not impute to the parties a bargain which they never made, or a common intention which they never possessed.

    (9) The conduct of the parties, and in particular of the claimant, after the acquisition may provide material from which the court can infer the existence of an explicit bargain, or a common intention, and also the terms of such a bargain or intention. Examining the subsequent conduct of the parties to see whether an inference can be made as to a bargain or intention is quite different from examining the conduct of the claimant to see whether it amounts to compliance with a bargain or intention which has been proved in some other way. (If this distinction is not observed, there is a risk of circularity. If the claimant's conduct is too readily assumed to be explicable only by the existence of a bargain, she will always be able to say that her side of the bargain has been performed).

    The propositions do not touch two questions of general importance. First, whether in the absence of a proved or inferred bargain or intention the making of subsequent indirect contributions, for instance in the shape of a contribution to general household expenses, is sufficient to found an interest. I believe the answer to be that it does not. The routes by which the members of the House reached their common conclusion in Gissing v Gissing were not, however, the same and the point is still open. Since it does not arise here, I prefer to express no conclusion upon it.

    29

    The second question is closer to the present case: namely, whether a promise by the proprietor to confer an interest, but with no element of mutuality (i.e. situation "(c)" above) can effectively confer an interest if the claimant relies upon it by acting to her detriment. This question was not directly addressed in Gissing v Gissing, although the speech of Lord Diplock at page 905 supports an affirmative answer. The appellant's case was not argued on this footing in the present appeal, and since the appeal can be decided on other grounds, I prefer not to express an opinion on this important point.

    Turning to the facts, the first question is whether there was an explicit bargain or a common intention at the moment of acquisition to the effect that the plaintiff should have a beneficial interest in the house. Strictly speaking, there was not. There was no discussion as to the quid pro quo, if any, which the plaintiff was to provide. Nor was there any common intention, for it is found that the defendant never intended the plaintiff to have a share. The reason given for placing the brother's name on the title was simply an untruthful excuse for not doing at once what he never meant to do at all.

    This is not, however, fatal to the claim, whatever the defendant's actual intention, the nature of the excuse which he gave must have led the plaintiff to believe that she would in the future have her name on the title, and this in turn would justify her in concluding that she had from the outset some kind of right to the house. The case does not fall precisely within either of categories "(b)", "(c)" or "(d)" above, but the defendant's conduct must now preclude him from denying that it is sufficiently analogous to these categories to make the relevant principles apply.

    Assuming therefore that the case must be approached as if the defendant had promised the plaintiff some kind of right to the house, or as if they had a common intention to this effect - and I do not think it matters which formula is chosen - what kind of right was this to be? In particular was it to be a right which was to arise only if the plaintiff gave something in exchange; and if so, what was that something to be? These are not easy questions to answer, especially since the learned judge never approached, or was asked to approach, the matter in this way. Nevertheless I consider it legitimate to hold that there must have been an assumption that the transfer of rights to the plaintiff would not be unilateral, and that the plaintiff would play her own part. Moreover, the situation of the couple was such that the plaintiff's part must have included a direct or indirect contribution to the cost of acquisition: for the defendant could not from his own resources have afforded both to buy their new home and to keep the joint household in existence.

    Finally, there remains the question whether the conduct of the plaintiff can be regarded as referable to the bargain or intention thus construed. On the facts as analysed by Lord Justice Nourse I consider that it can. Accordingly, the conditions are satisfied for the creation of an interest, and for the reasons given by my Lord I agree that the interest should be quantified at 50 per cent. I would therefore allow the appeal.

    Order: Appeal allowed with costs; order for costs not to be enforced without further leave of the court; legal aid taxation of both parties' costs; appellant to have a one-half beneficial interest in the house pending sale and in the net proceeds of sale when sold; application for leave to appeal to the House of Lords refused.


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