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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 >> Oxley v Hiscock  EWCA Civ 546 (06 May 2004)
Cite as: (2003-04) 6 ITELR 1091,  20 EG 1,  2 FCR 295,  WTLR 709,  3 WLR 715,  Fam Law 569,  3 All ER 703,  EWCA Civ 546,  2 FLR 669,  Fam 211
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BROMLEY COUNTY COURT
(HER HONOUR JUDGE HALLON)
London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LORD JUSTICE MANCE
THE RIGHT HONOURABLE LORD JUSTICE SCOTT BAKER
|ELAYNE MARIAN TERESA
|- and -
|ALLAN GEORGE HISCOCK
Mr David Walden-Smith (instructed by Clarkson Wright & Jakes of Valiant House 12 Knoll Rise, Orpington, Kent BR6 0PG) for the Claimant/Respondent
AS APPROVED BY THE COURT
CROWN COPYRIGHT ©
Crown Copyright ©
Lord Justice Chadwick :
The underlying facts
". . . I note that the property [39 Page Close] is being purchased with the assistance of funds raised by Mr Hiscock and that the property will be purchased in the sole name of Mrs Oxley. It is therefore important to safeguard Mr Hiscock's interests in the property by either evidencing the monies paid by Mr Hiscock for the purchase of the property by means of a mortgage from Mr Hiscock to Mrs Oxley or by some contract between the two parties creating an indemnity or option to Mr Hiscock in respect of an interest in the property.
I am of opinion that a simple mortgage by Mr Hiscock to Mrs Oxley would suffice. Mr Hiscock's capital is then protected and after the three year period, the property can be transferred into joint names and the mortgage declared redeemed."
The reference, there, to "the three year period" is, I think, to the period within which a tenant who had acquired property by the exercise of a "right to buy" could be required, on a subsequent disposal, to repay part of the discount allowed on purchase – see section 155 of the 1985 Act as amended by section 2(3) of the Housing and Planning Act 1986.
"You have a legal charge registered against 39 Page Close. Please let me know the amount which you will require from us on behalf of Mrs Oxley in order to release your charge from the property (sic)."
Mr Hiscock replied, on 18 April 1991:
"Regarding the legal charge on 39 Page Close, please note I require no monies from Mrs Oxley . . ."
The effect, ignoring any liability of Mrs Oxley to interest under the charge, was that out of the proceeds of sale of 39 Page Close, Bean, - some £61,500, as I have said – Mr Hiscock contributed £25,200 to the purchase of 35 Dickens Close and Mrs Oxley contributed the balance, £36,300. So the balance of the monies needed to purchase 35 Dickens Close after borrowing £30,000 from the building society (£127,000 - £30,000 = £97,000) were provided as to £36,300 by Mrs Oxley and as to £60,700 (being £25,200 + £35,500) by Mr Hiscock. The figures are not, of course, precise: they ignore interest (if any) due under the charge, the sale costs of 39 Page Close and the purchase costs of 35 Dickens Close. But they are indicative of the substantial contributions made by both Mr Hiscock and Mrs Oxley to the purchase.
"Please let me know if you are making any funds available to Mr Hiscock on his purchase of 35 Dickens Close. If so you should let me know if you wish to secure those funds by way of a second mortgage on the property or if you require a Trust Deed to provide for the property to be held on trust, partly for yourself so as to reflect your investment."
Mrs Oxley's reply, on 21 April 1991 was that:
"As we discussed previously, the funds from the sale of 39 Page Close will go towards purchasing 35 Dickens Close, with Mr Hiscock providing the remainder."
The solicitor tried again. On 22 April 1991, in a letter which bears the date 22 October 1991, he wrote:
"It is essential for me to have your written instructions as to how you wish me to deal with the proceeds of sale [of 39 Page Close]. I think you wish me to apply the whole of this sum towards the purchase of 35 Dickens Close by Mr Hiscock. If that is correct then I must have your very clear instructions in writing. You must also give very serious consideration as to whether you do wish to invest all of your net sale proceeds in the purchase of 35 Dickens Close which will be in the sole name of Mr Hiscock.
If any dispute should then arise between yourself and Mr Hiscock in the future then you will have difficulty in establishing any claim in respect of 35 Dickens Close or any claim for a refund of the investment which you have made in that property.
My advice must be that you should be a joint purchaser of 35 Dickens Close or that you should at least require Mr Hiscock to enter into a Trust deed to confirm that the property will be held by him on trust for both of you and such deed should also set out the respective shares to which you will each be entitled. Alternatively you could require a second mortgage to be entered in your favour against 35 Dickens Close. "
Mrs Oxley replied in a letter dated 23 April 1991:
"I . . . confirm that I wish all the proceeds from the sale of 39 Page Close, Bean to be put towards the purchase of 35 Dickens Close by Mr A Hiscock.
Your comments on any claim I might have to 35 Dickens Close have been noted, and I appreciate your concern.
However, I am quite satisfied with the present arrangements, and feel I know Mr Hiscock well enough not to need written legal protection in this matter."
"4. In February 1988 the Defendant asked the Claimant to marry him. The Defendant thereafter learnt that there would be fiscal disadvantages to marriage and persuaded the Claimant that they should remain unmarried. As a consequence the parties remained unmarried: their intention was to live together, subject to the Claimant's work commitments, and to pool their financial and other resources as would a married couple. It was their joint intention that the beneficial interest in any property, real or otherwise, would be shared by them jointly.
. . .
8. [In April 1991] [t]he second property [35 Dickens Close] was conveyed into the sole name of the Defendant. The registration into the Defendant's sole name [was] at his insistence and was stated by him to be in order to defeat any claim that the Claimant's former husband might have against the second property. It was expressly the joint intention of the Claimant and the Defendant at the time of the purchase of the second property that they should share the beneficial ownership of that property equally"
". . . The Defendant specifically denies that there were discussions between the parties relating to the possibility of claims by the claimant's first husband. It is specifically denied that it was ever agreed, arranged or understood between the Claimant and Defendant that they would share the property equally beneficially".
"I find that in relation to the purchase of the Hartley property and the conveyance of it into the defendant's sole name, despite the advice of the solicitors to the claimant, that that happened because of the discussion which had taken place between the defendant and the claimant in which the defendant raised the possibility of the claimant's former husband making a claim in the event of her death against her share of the Hartley property if it was in part in her name, and that therefore the conveyance into his name, with the claimant's agreement, was on the basis that she trusted the defendant that, despite what was shown on the face of the conveyance, that in no way actually altered the reality of the situation and their sharing of the property."
"I would therefore hold that positive evidence that the parties neither discussed nor intended any agreement as to the proportions of their beneficial interest does not preclude the court, on general equitable principles, from inferring one"
In the light of that passage, the judge directed herself (at paragraph 17 of her judgment) that:
"It could not be clearer therefore that the proper approach of a court to a dispute of this nature is that when there is no express agreement between the parties the court must look to the whole course of dealings to infer what the agreement between those parties was."
"I find that the transfer of the tenancy from Chatham to Bean was the beginning of putting into effect a long term plan. That is not simply to live together, but to acquire a property through purchase with the advantageous discount available to a council tenant, with a view subsequently to moving on to better accommodation. Each made substantial contributions to the purchase of the Bean property, and it is clear that the long term plan had been for selling and upgrading, because the sale of Bean and the purchase of Hartley happened very, very soon after the defendant's return from Kuwait; in other words, at a time when the family would in the future be living on a permanent basis all together. Thus, Hartley was as much a joint property as Bean had been, although, perhaps quirkily in this case, the first property had been conveyed into the claimant's sole name, and the second property conveyed into the defendant's sole name. There were reasons for each of those: the first, because the property could only be conveyed to the claimant; the second, because of the discussions that had taken place between the defendant and the claimant, and the concern about the claimant's former husband. But it does not alter the position that, in relation to both of those properties, they were regarded as these two people's home, and indeed each was asked in the course of oral evidence if they had been questioned back at the time what would they have said, for instance, regarding the property, and each gave evidence, "Well, I would have said it was our home."
"In continuing with the long term plan, and in keeping with the belief that each clearly had at the time that Hartley was purchased, that it was their joint home, the claimant worked almost continuously; the defendant also worked. The defendant made improvements to the property; the claimant helped him. The claimant also decorated substantial parts of the property, and she did the gardening. Each contributed towards the total outgoings. The description given by the claimant, whose evidence I accept, shows that this was a classic pooling of resources, even though there was no joint bank account. . . . All of the evidence which I have heard clearly shows that both were evincing an intention to share the benefit and the burden of this property [35 Dickens Close] jointly and equally."
She expressed her conclusion at paragraph 31 of her judgment:
". . . from the analysis of the law and the facts in this case, it is clear that the order which the claimant sought in her notice of application is the only one that can properly be made, namely to declare that the claimant is equally entitled, with the defendant, to a half share in the proceeds of sale of the Hartley property ..."
The effect was that a further sum was payable to her out of the proceeds of sale of 35 Dickens Close - representing the difference between the amount which Mr Hiscock had paid towards the purchase of her new property, 34 Beacon Hill, Chatham, and the one half share of 35 Dickens Close to which she was held to be entitled. That sum was quantified, in the order of 20 May 2003, at £72,056.
"If two or more persons purchased property in their joint names and there was no declaration of trusts on which they were to hold the property, they held the property on a resulting trust for the persons who provided the purchase money in the proportions in which they provided it, unless there was sufficient specific evidence of their common intention that they should be entitled in other proportions, that common intention being a shared intention communicated between them and made manifest at the time of the transaction itself."
It was said that, in the present case as in Springette v Defoe, it was clear, notwithstanding any subjective intention each might have had, that there had been no discussion between the parties as to the extent of their respective beneficial interests at the time of the purchase of 35 Dickens Close. So it must follow that the presumption of resulting trust was not displaced and the property was held for Mr Hiscock and Mrs Oxley in beneficial shares proportionate to their contributions.
The law as understood before Midland Bank v Cooke
"During the past two decades the courts have had to consider on a number of occasions the division of property between men and women living together without being married. Ever since the Matrimonial Proceedings and Property Act 1970, which has been replaced by the Matrimonial Causes Act 1973, the courts have been able to make an equitable division of property between spouses when a marriage breaks down and a decree of divorce is pronounced. No such jurisdiction exists when the cohabitees are unmarried. When such a relationship comes to an end, just as with many divorced couples, there are likely to be disputes about the distribution of shared property. How are such disputes to be decided? They cannot be decided in the same way as similar disputes are decided when there has been a divorce. The courts have no jurisdiction to do so. They have to be decided in accordance with the law relating to property: see Pettitt v Pettitt  AC 777 and Gissing v Gissing  AC 886.
There is no special law relating to property shared by cohabitees any more than there is any special law relating to property used in common by partners or members of a club. The principles of law to be applied are clear, though sometimes their application to particular facts are difficult. In circumstances such as arose in this case the appropriate law is that of resulting trusts. If there is a resulting trust (and there was one in this case) the beneficiaries acquire by operation of law interests in the trust property. An interest in property which is the consequence of a legal process must be identifiable. It must be more than expectations which at some later date require to be valued by a court. . . ."
Lord Justice Dillon, also, rejected the suggestion that, in the absence of evidence as to contrary intention, the court could depart from the shares in which the parties had contributed to the purchase price. At page 133B-D he said this:
"Accordingly, it is not open to this court, in my judgment, in the absence of specific evidence of the parties' intention, to hold that 33 Foxberry Road belongs beneficially to Mr Hall and Mrs Walker in equal shares, notwithstanding their unequal contributions to the purchase price, simply because it was bought to be their family home and they intended that their relationship should last for life. Equally it is not open to this court to 'top up' Mrs Walker's share, beyond what it would be on the mere basis of her financial contribution, on some broad notion of what would be fair simply because the house was bought as the family home; the court could no doubt do this in an appropriate case in proceedings under s.24 of the 1973 Act but the discretion under that section is not available in the present case."
Lord Justice Kerr agreed with both judgments.
"It is thus made clear that Dillon and Lawton LJJ were of the opinion that a beneficial interest acquired under an application of the principles stated in Gissing v Gissing can only be an absolute and indefeasible interest. It cannot be one which is liable to determine or to be defeated or diminished – either automatically or by the exercise of some discretion – on the happening of some future event, for example the separation of an unmarried couple who were living together at the time of its acquisition. The validity of that proposition is in my judgment beyond doubt.
It must always be remembered that the basis on which the court proceeds is a common intention, usually to be inferred from the conduct of the parties, that the claimant is to have a beneficial interest in the house. In the common case where the intention can be inferred only from the respective contributions, either initial or under a mortgage, to the cost of its acquisition it is held that the house belongs to the parties beneficially in proportions corresponding to those contributions. . . ."
Lord Justice Kerr agreed, (ibid, 554G-555D):
". . . once the court had found the existence of a constructive or implied trust whereby the beneficial rights to the property belonged to the parties in whatever shares the court determined, then the necessary consequence was the recognition by the court of rights which are proprietary in their nature and which lie wholly outside the exercise of any discretionary powers. That was made clear, inter alia, in Gissing v Gissing  AC 886."
Nevertheless, there is in those judgments some recognition of the possibility that a common intention at the time of purchase, sufficient to give rise to a constructive trust, might be inferred from conduct other than the making of financial contributions. But, in that case, the need to find a common intention from conduct did not arise: the conveyance contained an express declaration that the property was held for the parties as beneficial joint tenants.
" 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  AC 777 and Gissing v Gissing  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  Ch 317, at pp. 328H to 329C, per Fox LJ. If it is found to have been incurred, such expenditure will perform the two-fold 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 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 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."
Lord Justice Nourse was satisfied that the facts in that case were such as "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; . . ." (ibid, 649B); and was satisfied, also, that she "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" (ibid, 650C). Lord Justice Mustill agreed with that analysis – (ibid, 654B).
"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  AC 886 by concentrating on only part of his reasoning. For present purposes, his speech can be 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:  AC 886, 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
(a) Direct evidence (p 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 admissibility and relevance of other possible forms of direct evidence of such intention: see pp 907C and p 908C.
(b) Inferred common intention (pp.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 (pp 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."
'Where in any of the circumstances described above contributions, direct or indirect, have been made to the mortgage instalments by the spouse into whose name the matrimonial home has not been conveyed, and the court can infer from their conduct a common intention that the contributing spouse should be entitled to some beneficial interest in the matrimonial home, what effect is to be given to that intention if there is no evidence that they in fact reached any express agreement as to what the respective share of each spouse should be?"
. . .
"In such a case the court must first do its best to discover from the conduct of the spouses whether any inference can reasonably be drawn as to the probable common understanding about the amount of the share of the contributing spouse upon which each must have acted in doing what each did, even though that understanding was never expressly stated by one spouse to the other or even consciously formulated in words by either of them independently. . . ."
. . .
" . . . If the contribution of the wife in the early part of the period of repayment [of a building society mortgage] is substantial but is not an identifiable and uniform proportion of each instalment, because her contributions are indirect or, if direct, are made irregularly, it may well be a reasonable inference that their common intention at the time of acquisition of the matrimonial home was that the beneficial interest should be held by them in equal shares and that each should contribute to the cost of its acquisition whatever amounts each could afford in the varying exigencies of family life to be expected during the period of repayment. In the social conditions of today this would be a natural enough common intention of a young couple who were both earning when the house was acquired but who contemplated having children whose birth and rearing in their infancy would necessarily affect the future earning capacity of the wife.
The relative size of their respective contributions to the instalments in the early part of the period of repayment, or later if a subsequent reduction in the wife's contributions is not to be accounted for by a reduction in her earnings due to motherhood or some other cause from which the husband benefits as well, may make it a more probable inference that the wife's share in the beneficial interest was intended to be in some proportion other than one half. And there is nothing inherently improbable in their acting on the understanding that the wife should be entitled to a share which was not to be quantified immediately upon the acquisition of the home but should be left to be determined when the mortgage was repaid or the property disposed of, on the basis of what would be fair having regard to the total contributions, direct or indirect which each spouse had made by that date. Where this was the most likely inference from their conduct it would be for the court to give effect to that common intention of the parties by determining what in all the circumstances was a fair share. [emphasis added]
"What then is the extent of the plaintiff's interest? It is clear from Gissing v Gissing (above) 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 accounts: see Gissing v Gissing at p. 909A and D-E. In my judgment, the passage in Lord Diplock's speech at pp.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 p 908G. In Eves v Eves, Brightman J (at p 775A) plainly felt that a common intention that there should be a joint interest pointed to the beneficial interest 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 Crabb v Arun District Council  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 moneys into the joint account, I agree that the plaintiff is entitled to a half interest in the house."
"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 (above). 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 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-fertilization between them: but they rest on the same foundations and have on all other matters reached the same conclusions."
Nevertheless, he made it clear that the possible analogy with proprietary estoppel had not been fully argued; and that he decided the case on the narrower ground of common intention coupled with acts of detriment in reliance with such intention.
"The leading cases in Your Lordships' House are Pettitt v Pettitt  AC 777 and Gissing v Gissing  AC 886. Both demonstrate situations in the second category to which I have referred and their Lordships discuss at great length the difficulties to which these situations give rise. The effect of these two decisions is very helpfully analysed in the judgment of Lord MacDermott LCJ in McFarlane v McFarlane  NI 59.
Outstanding examples on the other hand of cases giving rise to situations in the first category are Eves v Eves  1 WLR 1338 and Grant v Edwards  Ch 638. In both those cases, where parties who had cohabited were unmarried, the female partner had been clearly led to believe, when they set up home together, that the property would belong to them jointly. In Eves v Eves the male partner had told the female partner that the only reason why the property was to be acquired in his name alone was because she was under 21 and that, but for her age, he would have had the house put in their joint names. He admitted in evidence that this was simply an 'excuse'. Similarly in Grant v Edwards the female partner was told by the male partner that the only reason for not acquiring the property in joint names was because she was involved in divorce proceedings and that if the property were acquired jointly this might operate to he prejudice in those proceedings. As Nourse LJ put it, at p 649:
'Just as in Eves v Eves  1 WLR 1338, 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 on to the title would have been needed.'
The subsequent conduct of the female partner in each of these cases, which the court rightly held sufficient to give rise to a constructive trust or proprietary estoppel supporting her claim to an interest in the property fell far short of such conduct as would by itself have supported the claim in the absence of an express representation by the male partner that she was to have such an interest. It is significant to note that the share to which the female partners in Eves v Eves and Grant v Edwards were held entitled were one-quarter and one half respectively. In no sense could these shares have been regarded as proportionate to what the judge in the instant case described as a "qualifying contribution" in terms of the indirect contributions to the acquisition or enhancement of the value of the houses made by the female partners."
"But two points were put beyond question. The 'family assets' doctrine was definitely rejected. See Pettitt per Lord Reid at p 797, per Lord Hodson at p 810 and per Lord Upjohn at p 817. And, secondly, section 17 of the Act of 1882 was held only to be a procedural provision which did not empower the court to alter the existing rights of the parties. See per Lord Reid at p 793, per Lord Morris of Borth-y-Gest at pp 798-799, per Lord Hodson at p 808, per Lord Upjohn at p 813 and per Lord Diplock at p 820.
These decisions, as I understand them, have also established or affirmed two rather less negative propositions of law to which I must now refer. The first is that, in the absence of proof to the contrary, a spouse who acquired the legal title to property purchased with the aid of a substantial monetary contribution from the other spouse will hold the property subject to a beneficial interest therein belonging to the other spouse; see Pettitt, per Lord Reid at page 749B, per Lord Hodson at p 810G, per Lord Upjohn at p 815 G-H; and Gissing per Lord Pearson at p 264G-265B. This may be the result of some binding agreement between the spouses; but more usually it will flow from a resulting trust in favour of the contributing spouse who has not the legal title. The extent of the beneficial interests will depend on the circumstances. They will not necessarily be equal, but may be held so where that conclusion accords with the broad merits of the respective claims or with what is fair and reasonable when there is some difficulty or uncertainty in assessing the contributions: see Rimmer v Rimmer  1 QB 63.
The second proposition which I take to be now accepted in Pettitt and Gissing must be stated in a qualified form. It is that in certain circumstances the first proposition can also apply in favour of the spouse without the legal title where that spouse has contributed to the purchase, not directly by finding a part of the price, but indirectly and in a manner which has added to the resources out of which the property has been acquired as, for example, by work done or services rendered or by relieving the other spouse of some, at any rate, of his or her financial obligations.
It can be seen that Lord McDermott recognised that where property purchased in the name of one party with the aid of a substantial monetary contribution from the other party was held upon trust – so as to give effect to the beneficial interest of that other party – the extent of the respective beneficial interests would not necessarily either (i) be proportionate to the respective contributions or (ii) be equal. The extent of the beneficial interests will depend on the circumstances. But they may be held to be equal where that accords with the broad merits of the respective claims.
"The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or proprietary estoppel.
In sharp contrast with this situation is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust. In this situation direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything less will do."
"This is a dispute between an unmarried couple as to the beneficial ownership of a house in which they formerly lived together; compare Gissing v Gissing  AC 886 and Grant v Edwards  1 FLR 87;  Ch 638. [The judge]decided that the woman was entitled to half the beneficial interest in the house. The man has now appealed to this court, contending that the woman has no beneficial interest, alternatively that it does not exceed 15% at the most.
After setting out the facts, and upholding the judge's finding that the payments made by the claimant were made pursuant to a common intention that she should have a beneficial interest in the property, Lord Justice Nourse turned to the question: what was to be the extent of that interest. It is pertinent to note the evidential similarity with the present case (ibid, 397G-H):
". . . Miss Anderson's evidence was that Mr Stokes said that she was to have a beneficial interest in the property, he did not say what the extent of that interest was to be; she assumed that it would be 50%. There is no other evidence to suggest that the extent of Miss Anderson's beneficial interest was ever discussed between herself and Mr Stokes."
". . . I take this to be a clear example of what in Grant v Edwards  1 FLR 87 at p 93E;  Ch 638 at p 646C, I thought, perhaps wrongly, was the rarer class of case under Gissing v Gissing  AC 886, where the parties have orally declared themselves in such a way as to make plain their common intention that the claimant should have a beneficial interest in the property. Moreover, here it is unnecessary to look beyond the two payments of £5000 and £7000 in order to find conduct which amounted to an acting upon the common intention by Miss Anderson. And so the only real question for decision, a difficult one, is what is the extent of her beneficial interest.
. . .
Before Grant v Edwards (above) the distinction between the category of case exemplified by that decision and Eves v Eves  1 WLR 1338 on the one hand, and that exemplified in Gissing v Gissing and Burns v Burns  FLR 216;  Ch 317 on the other, had not been clearly perceived. The distinction has now been authoritatively recognised in the speech of Lord Bridge of Harwich in Lloyds Bank Plc v Rosset  1 AC 107 at pp 132 and 133;  2 FLR 155 at pp 163 to 164, a passage which is also notable for two references to conduct giving rise to 'a constructive trust or a proprietary estoppel'. Since it is necessary, in order to decide the extent of Miss Anderson's beneficial interest in Stone Cottage, to ascertain the principle on which such a decision ought to be made, a brief diversion into the burgeoning question of the relationship between the Gissing v Gissing species of constructive trust and proprietary estoppel is here desirable.
In Grant v Edwards  1 FLR 87 at pp 99H and 100E;  Ch 638 at pp 656G and 657H, the Vice-Chancellor suggested that in cases under Gissing v Gissing the principles underlying the law of proprietary estoppel might provide useful guidance both in regard to the conduct necessary to constitute an acting upon the common intention by the claimant and in regard to the quantification of his or her beneficial interest in the property. In Austin v Keele  ALJR 605 at p 609; 72 ALR 579 at p 587, Lord Oliver of Aylmerton, in delivering the judgment of the Privy Council, said that in essence the doctrine of Gissing v Gissing was an application of proprietary estoppel. The Vice-Chancellor's suggestion was echoed by Nicholls LJ in Lloyds Bank Plc v Rosset  1 FLR 51 at p 72A;  Ch 350 at pp 387 A-B, and it has now been adopted and enlarged upon by Professor Hayton; see Conveyancer and Property Lawyer  370. However, it must be emphasised that this question was only touched on in the arguments in this court in Grant v Edwards and Lloyds Bank Plc v Rosset and both the Vice-Chancellor and Nicholls LJ were careful to base their decisions on conventional Gissing v Gissing principles.
It is possible that the House of Lords will one day decide to solve the problems presented by these cases, either by assimilating the principles of Gissing v Gissing and those of proprietary estoppel, or even by following the recent trend in other Commonwealth jurisdictions towards more generalised principles of unconscionability and unjust enrichment. The Vice-Chancellor has identified two areas where the application of Gissing v Gissing might be enlarged through the influence of proprietary estoppel, and there is no real reason for thinking that their assimilation would be unduly hindered by their separate development out of basically different factual situations. But they have not yet been assimilated and we, in this court, must continue to regard cases such as the present as being governed by the principles of Gissing v Gissing, at any rate until we come to one where we cannot be confident that their application will produce a just result. I do not lack that confidence in the present case, especially since it has given us the opportunity of putting the quantification of the claimant's beneficial interest on a more satisfactory footing, a footing which incidentally brings it nearer to proprietary estoppel.
In regard to the quantification of Miss Anderson's beneficial interest, we were referred by counsel to Eves v Eves and Grant v Edwards, in each of which the same question arose. But the starting point must be Lord Diplock's speech in Gissing v Gissing, from which it is clear that this question, like the anterior one, depends on the common intention of the parties, either expressed or, more usually, to be inferred from all the circumstances. That does not mean that in the latter case you have to infer a common intention that the extent of the claimant's beneficial interest is to be ascertained once and for all at the date of its acquisition. . . ."
Lord Justice Nourse then referred to Lord Diplock's observations, at  AC 886, 909D-E – which I have already set out – that "there is nothing inherently improbable in their acting on the understanding that the wife should be entitled to a share which was not to be quantified immediately upon the acquisition of the home but should be left to be determined when the mortgage was repaid or the property disposed of" and that "where this was the most likely inference from their conduct, it would be for the court to give effect to that common intention of the parties by determining what in all the circumstances was a fair share" and continued (ibid,400B-C):
"I agree with the Vice-Chancellor in Grant v Edwards  1 FLR 87 at p 100;  Ch 638 at p 657E, that those observations, although made only in reference to contributions to mortgage repayments, support a more general proposition that all payments made and acts done by the claimant are to be treated as illuminating the common intention as to the extent of the beneficial interest. Once you get to that stage, as Lord Diplock recognised, there is no practicable alternative to the determination of a fair share. The court must supply the common intention by reference to that which all the material circumstances have shown to be fair. . . ."
". . . to hold that Miss Anderson was entitled to half the beneficial interest in Stone Cottage . . . would be markedly unfair to Mr Stokes. On a broad approach, the only approach which can be made, I think that the fair view of all the circumstances is that Miss Anderson is entitled to a beneficial interest equivalent to one half of Mrs Stokes' half-share, or one quarter of the whole, subject to the mortgage."
"In Walker v Hall  FLR 126 I expressed the view at p. 134C that it was not open to this court, in the absence of specific evidence of the parties' intentions, to hold that the property there in question belonged beneficially to the two parties in equal shares, notwithstanding their unequal contributions to the purchase price, simply because it was bought to be their family home and they intended – or possibly one should say 'hoped' – that their relationship should last for life. The effect is that, in the absence of an express declaration of the beneficial interests, the court will hold that the joint purchasers hold the property on a resulting trust for themselves in the proportions in which they contributed directly or indirectly to the purchase price, unless there is sufficient specific evidence of their common intention that they should be entitled in other proportions – e.g. in equal shares notwithstanding unequal contributions – to rebut the presumption of a resulting trust."
. . .
"The common intention must be founded on evidence such as would support a finding that there is an implied or constructive trust for the parties in proportions to the purchase price. The court does not as yet sit, as under a palm tree, to exercise a general discretion to do what the man in the street, on a general overview of the case, might regard as fair."
. . .
"Since, therefore it is clear in the present case that there never was any discussion between the parties about what their respective beneficial interests were to be, they cannot, in my judgment, have had in any relevant sense any common intention as to the beneficial ownership of the property . . . The presumption of resulting trust is not displaced."
And there is further support in the judgment of Lord Justice Steyn who - after referring to the finding of the trial judge that "looking at the facts surrounding the parties at the time of the acquisition and the plaintiff's evidence, that after the purchase the mortgage was paid in equal shares" there was sufficient evidence, on those facts to infer "common intention or arrangement between the parties that the property should be owned in equal shares" - said this (ibid, 395F-G):
"But these factors could not support such an inference because the assistant recorder had already found as a matter of fact that no such common intention was communicated between the parties. The simple answer to the man's case is that there was no communicated common intention.
Given that no actual common intention to share the property in equal beneficial shares was established, one is driven back to the equitable principle that the shares are presumed to be in proportion to the contributions."
But, for the reasons which I have sought to explain, it is (at the least) open to serious doubt whether those passages did reflect the state of the law as it had developed in this area by the time that Springette v Defoe (supra) was decided in March 1992.
"In Springette v Defoe the primary issue which arose for decision was whether, as the judge at first instance had held, it was permissible to reach the conclusion that the two parties were to share the beneficial interests in the property equally without regard to their contributions, on the ground that, though neither of them ever said anything about it to the other, each of them had in fact in his or her own mind an uncommunicated belief or intention that they were to share the property equally beneficially. But that view was rejected by this court . . ."
For my part, I think that the identification of the issue in those terms does less than justice to the trial judge in Springette v Defoe, who had made it clear, in a passage to which I have already referred (cited by Lord Justice Dillon himself at  2 FLR 388, 392A-C) that, although he did find that that was the actual (but uncommunicated) intention of each at the time, he had not based his conclusion on that finding. He had gone on to find that there was "sufficient evidence on the facts of inference of common intention or arrangement between the parties that the property should be owned in equal shares". But, be that as it may, Lord Justice Staughton, following the approach taken by Mr Justice Bush in Marsh v von Sternberg  1 FLR 526, treated the point as turning on intention rather than contribution – or, to put the point another way, as turning on constructive rather than resulting trust. At  2 FLR 511, 516H, he said this:
"For my part I find it difficult to say that a discount is, strictly speaking, purchase money provided by either party. It is money which is not provided by anybody. But I do consider that the facts as to the existence of a discount and the source from which it is derived must be taken into account, and are capable of leading to the inference that the parties have made an agreement as to how the purchase price is provided."
"[Counsel] referred us to a recent decision of this court in Springette v Defoe  2 FLR 388, which recognises that the common intention must be communicated between the parties. I think all the authorities on first category cases will be found to be consistent with that proposition."
In that context, the reference to "first category cases" is to cases within the first of Lord Bridge's two categories in Lloyds Bank Plc v Rosset (supra) – as appears from a passage earlier in the judgment ( 1 FLR 755, 758F-H). But, as I have sought to explain, in making that categorisation, Lord Bridge was addressing the primary question - "was there a common intention that each should have a beneficial interest in the property": he was not addressing the secondary question - "what was the common intention of the parties as to extent of their respective beneficial interests". And Lord Justice Nourse, to whose judgments in both Grant v Edwards and Stokes v Anderson I have already referred, may be taken to have had that well in mind. The difference in approach to the primary and secondary questions – illustrated by the decisions in Grant v Edwards and Stokes v Anderson – was not material to the decision in Saville v Goodall. In that case this Court was satisfied, on the evidence, that the parties had discussed and agreed joint ownership.
The decision in Midland Bank v Cooke
"(B) Is the proportion of Mrs Cooke's beneficial interest to be fixed solely by reference to the percentage of the purchase price which she contributed directly, so as to make all other conduct irrelevant?"
He accepted the submission on behalf of the bank that "in determining (in the absence of evidence of express agreement) whether a party unnamed in the deeds has any beneficial interest in the property at all the test is the stringent one stated by Lord Bridge of Harwich in Lloyds Bank Plc v Rosset and another  1 AC 107"; that is to say that (for a case to fall within the second of Lord Bridge's categories) it was, at the least, extremely doubtful whether anything less than direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will "justify the inference necessary to the creation of a constructive trust." He summarised the further submission advanced on behalf of the bank in these terms (ibid, 923A-B):
"By parity of reasoning, in cases where a direct contribution has been duly proved by the partner who is not the legal owner (thus establishing a resulting trust in his or her favour of some part of the beneficial interest) the proportion of that share will be fixed at the proportion it bears to the overall price of the property. Although the proportion may be enlarged by subsequent contribution to the purchase price, such contributions must be direct – i.e. further cash payments or contribution to the capital element in instalment repayments of any mortgage under which the unpaid proportion of the purchase remains secured. Nothing less will do."
As he pointed out that submission was based on the decision of this Court in Springette v Defoe.
"To my mind it is irresistible conclusion that where a parent pays the deposit, either directly to the solicitors or to the bride and groom, it matters not which, on the purchase of their first matrimonial home, it is the intention of all three of them that the bride and groom should have equal interests in the matrimonial home, not interests measured by reference to the percentage half the deposit [bears] to the full price."
- Lord Justice Waite went on to observe ( 2 FLR 915, 924C-D):
"I confess that I find the differences of approach in these two cases mystifying. In the one a strict resulting trust geared to mathematical calculation of the proportion of the purchase price provided by cash contribution is treated as virtually immutable in the absence of express agreement; in the other a displacement of the cash-related trust by inferred agreement is not only permitted but treated as obligatory."
He found the guidance out of that dilemma which he sought in the passage in the speech of Lord Diplock in Gissing v Gissing  AC 886, 908D-909E, which I have set out earlier in this judgment. As he said, it is in that section of Lord Diplock's speech that the approach to be adopted by the court when evaluating the proportionate shares of the parties - once it has been duly established, through the direct contributions of the party without legal title, that some beneficial interest was intended for both - is to be found. That, of course, had been the view of Sir Nicolas Browne-Wilkinson, Vice-Chancellor, in Grant v Edwards at  Ch 638, 655C-D.
"The decision of this court in Grant v Edwards and Edwards  1 Ch 638,  1 FLR 87 also affords helpful guidance. The context was different, in that the court was there dealing with a legal owner who had made representations to the occupier on which the latter had relied to her detriment so as to introduce equities in the nature of estoppel. Once a beneficial interest had been established by that route, however, the court then proceeded – as I read the judgments – to fix the proportions of the beneficial interests on general grounds which were regarded as applying in all cases. That appears from the judgments of Nourse LJ at pp 650 and 96-97 respectively and of Sir Nicholas Browne-Wilkinson V-C at pp 657G and 100G respectively . . ."
"The general principle to be derived from Gissing v Gissing and Grant v Edwards can in my judgment be summarised in this way. When the court is proceeding, in cases like the present where the partner without legal title has successfully asserted an equitable interest through direct contribution, to determine (in the absence of express evidence of intention) what proportions the parties must be assumed to have intended for their beneficial ownership, the duty of the judge is to undertake a survey of the whole course of dealing between the parties relevant to their ownership and occupation of the property and their sharing of its burdens and advantages. That scrutiny will not confine itself to the limited range of acts of direct contribution of the sort that are needed to found a beneficial interest in the first place. It will take into consideration all conduct which throws light on the question what shares were intended. Only if that search proves inconclusive does the court fall back on the maxim that 'equality is equity".
"(C) Can an agreement be attributed by inference of law to parties who have expressly stated that they reached no agreement?
After referring, again, to the passage from the judgment of Lord Justice Dillon in Springette v Defoe ( 2 FLR 388, 393D-H) which I have set out earlier in this judgment and to the passage in the judgment of Lord Justice Steyn (ibid,395F-G) - also set out earlier in this judgment – Lord Justice Waite concluded that that question, also, should be answered in the negative ( 2 FLR 915, 928D):
"I would therefore hold that positive evidence that the parties neither discussed nor intended any agreement as to the proportions of their beneficial interest does not preclude the court, on general equitable principles, from inferring one."
As I have said, it was on that passage that Her Honour Judge Hallon relied in the present case.
"That is a submission which, if it fell to be considered without assistance from authority, I would reject instinctively on the ground that it runs counter to the very system of law – equity – on which it seeks to rely. Equity has traditionally been a system which matches established principle to the demands of social change. The mass diffusion of home ownership has been one of the most striking social changes of our own time. The present case is typical of hundreds, perhaps even thousands, of others. When people, especially young people, agree to share their lives in joint homes they do so on a basis of mutual trust and in the expectation that their relationship will endure. Despite the efforts that have been made by many responsible bodies to counsel prospective cohabitants as to the risks of taking shared interests in property without legal advice, it is unrealistic to expect that advice to be followed on a universal scale. For a couple embarking on a serious relationship, discussion of the terms to apply at parting is almost a contradiction of the shared hopes that have brought them together. There will inevitably be numerous couples, married or unmarried, who have no discussion about ownership and who, perhaps advisedly, make no agreement about it. It would be anomalous, against that background, to create a range of home-buyers who were beyond the pale of equity's assistance in formulating a fair presumed basis for the sharing of beneficial title, simply because they had been honest enough to admit they never gave ownership a thought or reached any agreement about it."
Developments since the decision in Midland Bank v Cooke
"Yet again this court is asked to rule on a dispute between a man and a woman, who cohabited but were not married to each other, as to their respective beneficial interests in a property which they purchased to be their home but which was put into the man's name only. The usual lengthy litany of authorities as well as more recent additions have been recited to us and, as is notorious, it is not easy to reconcile every judicial utterance in this well-travelled area of the law. A potent source of confusion, to my mind, has been suggestions that it matters not whether the terminology used is that of the constructive trust, to which the intention, actual or imputed, of the parties is crucial, or that of the resulting trust which operates on a presumed intention of the contributing party in the absence of rebutting evidence of actual intention."
"This passage was read twice to the judge. But nevertheless it was the submission of [counsel] for Mrs Drake that Mr Whipp held the property not on a constructive trust but as trustee on a resulting trust, both parties having made contributions to the purchase price, on the application of the principle of Dyer v Dyer (1788) 2 Cox Eq Cas 92. However, that principle could not apply if (1) there was a common intention to share the property beneficially found to exist on the application of the guidance given by Lord Bridge, whether by dint of a finding of an agreement, arrangement or understanding on evidence of express discussions between the partners or by ready inference from direct contributions to the purchase price by the partner who is not the legal owner, and (2) that partner has acted to his or her detriment in reliance on the common intention.
In the present case it seems to me that the judge made findings and there was undisputed evidence which amounted to there being a common understanding between the parties that they were to share beneficially. . . ."
Lord Justice Peter Gibson observed that he found it "all the more remarkable" that, given that evidence of common understanding, the debate in the court below had been based solely on the existence of a resulting trust; and had turned on whether it was permissible, in that context, to take account of the respective contributions to the costs of conversion as well as the contributions to the cost of acquisition. The county court judge had found that it was. Lord Justice Peter Gibson said this (ibid, 829H-830B):
"Mrs Drake now appeals to this court. [Counsel] submits that the judge wrongly conflated the separate doctrines of constructive trust and resulting trust, whereas he was only concerned with a resulting trust. That, he submitted, required attention to be paid only to the cost of acquisition of the property, the cost of its subsequent enhancement being irrelevant. When it was put to him that this was a case of a constructive trust by reason of a common understanding or intention acted on by his client to her detriment, he submitted that there had to be a common understanding or intention as to the respective shares to be taken by the beneficial owners. That is an impossible argument in the light of the authorities (see, for example, the speech of Lord Diplock in Gissing v Gissing  AC 886, 907-909. All that is required for the creation of a constructive trust is that there should be a common intention that the party who is not the legal owner should have a beneficial interest and that that party should act to his or her detriment in reliance thereon."
"In the present case the judge has found what was the common intention of the parties as to their beneficial shares, but the only direct evidence in support of that finding was Mr Whipp's evidence as to his own intention. The judge appears to have imputed the like intention to Mrs Drake although there is nothing in her evidence to support it. Further, the judge refused to take into account the contributions of the parties by way of their labour, being unquantified in monetary terms, and similarly Mrs Drake's other contributions to the household were ignored. No doubt this was because he was not invited to consider the matter on the basis of a constructive trust.
In my judgment the judge's finding on common intention cannot stand in the absence of any evidence that Mrs Drake intended her share to be limited to her direct contributions to the acquisition and conversion costs. I would approach the matter more broadly, looking at the parties' entire course of conduct together. I would take into account not only those direct contributions but also the fact that Mr Whipp and Mrs Drake together purchased the property with the intention that it should be their home, that they both contributed their labour in 70/30% proportions, that they had a joint account out of which the costs of conversion were met, but that that account was largely fed by his earnings, and that she paid for the food and some other household expenses and took care of the housekeeping for them both. I note that whilst it was open to Mrs Drake to argue at the trial for a constructive trust and for a 50% share, she opted to rely solely on a resulting trust and a 40.1% share. In all the circumstances, I would hold that her fair share should be one-third."
"Midland Bank v Cooke itself can only be properly understood when it is appreciated that the court was satisfied that by the making of a direct contribution a resulting trust had been established in the wife's favour of some part of the beneficial interest and the real question for the court in that case was to determine what proportions the parties must have been assumed to have intended for their beneficial ownership."
Save that I would omit from that statement the word "resulting", I respectfully agree.
Determination of the present appeal
Lord Justice Mance:
Lord Justice Scott Baker: