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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 >> Vinaver v Milton Ashbury Ltd  EWCA Civ 363 (28 February 2006)
Cite as:  EWCA Civ 363
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CANTERBURY COUNTY COURT
(MR RECORDER GEORGE QC)
(LOWER COURT NO. 4AS01273)
B e f o r e :
MR JUSTICE LAWRENCE COLLINS
|ALICE VINAVER||CLAIMANT/ RESPONDENT|
|- v -|
|MILTON ASHBURY LIMITED||DEFENDANT/APPELLANT|
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MR OLIVER CAMPBELL (instructed by Messrs Girlings, Stourside Place, 35-41áStation Road, Ashford, TN23 1PP) appeared on behalf of the Respondent.
Crown Copyright ©
"Re: 122 Northdown Road, Cliftonville, Kent.
It is today agreed between both parties that the above property will be purchased, subject to contract, in the name of Milton Ashbury Limited. The deposit of ú18,750 is to be paid by AdamáVinaver and this stake in the property is formally recognised.
The mortgage repayment for the above property will be paid for by MráVinaver and the conversion and refurbishment costs will also be met by MráVinaver.
MráVinaver has an option to buy the property from Milton Ashbury Limited on completion of the conversion and refurbishment works at a price to be agreed by both parties.
Until the option to purchase has been exercised it is agreed that any rental income will be paid to Mr Vinaver, Milton Ashbury Limited having first deducted the mortgage payments pertaining to the building and their reasonable management fees.
Until the option is exercised, in the event of death of MráVinaver and in the absence of any more recent dated agreement it is understood that Milton Ashbury Limited will pay to his estate the sum of ú18,750 plus any refurbishment costs incurred and a contribution uplift should the open market value of the property at time of death be in excess of the purchase price.
Should MráKinnear die before the option is exercised then MráVinaver agrees to indemnify Milton Ashbury Limited against costs relating to the property until such time as it is transferred into his name at a price to reflect the ú18,750 initial investment and any refurbishment costs and payments incurred."
"82. ů There plainly were discussions between Adam and MráKinnear, some of them in the presence of the claimant, from which MráKinnear knew that the claimant was intending to invest monies in the Margate and other properties. I accept the evidence of Adam that after the Margate property had been identified, MráKinnear spoke to both of them about mortgages in general and over the course of discussions between the three of them, it was suggested that the claimant used the Folkestone property rent to pay the mortgage costs in respect of the Margate property during the initial stages before the property was converted and let out. I have no doubt that it was Mr Kinnear who came up with the suggestion of a 25 per cent deposit and a 75 per cent mortgage and that he undertook to sort out the mortgage for them as well as calculating for them the amount they could afford to pay in mortgage payments from the rent they would expect to receive.
83. I am also clear that all three intended that for some undefined period Mr Kinnear's company would occupy some or all of the ground floor as an office at a peppercorn rent. I should make it clear that it seems to me that part of the basement, being physically joined to the ground floor, was part of that single unit. Insofar as the Vinavers turned their mind to the length of this occupation, I find they had in mind something short term because as Adam said when giving evidence, MAL was a new company and it might well fail. On the other hand, I consider that MráKinnear had in mind something considerably longer.
84. More significantly, I find it was MráKinnear's intention that Adam acting on his mother's behalf should acquire a deferred option in the property and not a straightforward beneficial share, much less 100 per cent ownership. Whether he intended that she should from the outset have a 25 per cent or any percentage share is unclear but unlikely. MráDovar argues that an option was plainly not a beneficial interest although it is an interest in land. Different as are the beneficial interests intended by the claimant and the deferred option intended by MráKinnear, are they so different that they fail the test that 'the consensus ad idem must be a demonstrable reality'? [quoting from Gray, Elements of Land Law, paragraph 10.116]
Not without hesitation, I consider that this mishmash of intentions does meet the minimum standard for an 'express bargain' of constructive trust though I am unaware of any case where the concept has been stretched this far.
Further, and even more hesitantly, I consider that the same applies to the later Herne Bay property as well. In that case, there was less by way of discussions but nevertheless, there was a shared understanding that the procedure and substance would be the same as before even though the parties' understanding on the basis on which the Margate transaction was proceeding differed markedly."
"If this conclusion be wrong, I then turn to consider questioná2. I consider that the claimant could achieve the same goal of a constructive trust by means of an 'inferred intention' constructive trust. Though the mortgage payments on the Margate property may more properly be referable to the 1áMayá2002 agreement than to any constructive trust, the deposit was a 'direct contribution to the purchase price which is not explicable save on the basis that the parties must have intended that the property would be beneficially shared'." [quoting from McKenzie v McKenzie per MráRobertáHildyardáQC sitting as a deputy judge, at paragraph 72]
"Again, I do not think it matters that one party was contemplating a deferred option. In the case of the Herne Bay property where there was no express agreement similar to the 1áMayá2002 agreement, both the deposit and the mortgage payments would give rise to a 'change of position' of constructive trust."
"The first and fundamental question which must always be resolved is whether, independent of any inference to be drawn from the conduct of the parties ů there has at any time prior to the 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 be based on evidence of express discussions between the parties however imperfectly remembered and however imprecise their terms may have been."
Where the evidence is that the matter was not discussed at all, an affirmative answer may be inferred from the making of a financial contribution which is only attributable to the fact that the parties must have intended that the property would be beneficially shared. Once an express common intention has been established, it will only be necessary for the claimant to show that he or she acted to his or her detriment or significantly altered his or her position in reliance on the agreement so that he or she would thereby acquire an interest. So far as the extent of the prospective beneficial interests is concerned, prima facie the interest of the claimant will be that which the parties intended, but if there is no evidence each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property.
(1) MráKinnear knew that MrsáVinaver was the source of finance and that the properties were investments for her and that she was not making gifts to Adam.
(2) MráKinnear's interest in the Margate property was that MAL would get, as he said in his witness statement "a free office refurbished at Adam's cost"; and his co-director MráParry's understanding in paragraphá7 of his witness statement was that MAL was effectively to receive a long lease at a peppercorn or full ownership of a newly refurbished office at no expense. Although these statements were made in the context of a discussion of the option agreement, it seems to me that they reflect the commercial position. MAL was only contributing to the project (a) its ability to raise the finance under the mortgages and (b) its ability to let and manage the properties. There was little risk in the mortgages because the interest would be covered by the rents and the principal was, in effect, secured on the properties.
(3) The properties were in MAL's name because, possibly among other reasons, MrsáVinaver at the age of 85 could not obtain a mortgage in her own name.
(4) MrsáVinaver always assumed that the Margate property would be as much her property as was the Folkestone property, irrespective of the name into which the legal title was transferred, not least because she was going to receive all the rental income from the Margate property and she was going to pay the entire mortgage payments, matters which usually go with property ownership.
(5) MráKinnear knew that MrsáVinaver was funding the Margate deposit. He must have known that she saw the Margate transaction as simply a variant of the Folkestone one, with repeat roles for Adam in renovation and MráKinnear in management.
(6) MráKinnear's evidence was that the property would be registered in MAL's name, but the question of whose name the Margate property should be registered in was never discussed in MrsáVinaver's presence at any time and Adam did not appreciate that this was what MráKinnear planned until much later in Januaryá2003.
(7) MráKinnear's evidence was that it was intended that MAL would initially have full ownership of the property, but this was not understood by MrsáVinaver of Adam.
(8) MrsáVinaver knew nothing about any option proposal and, although Adam was told about it on 1áMayá2002 and possibly before, he did not understand what was involved. It was extraordinary that MráKinnear drafted an option in that form. Initially the recorder thought that MráKinnear might have been seeking to take advantage of MrsáVinaver and Adam, but on reflection he was satisfied that this was merely sloppy drafting.
(9) MráKinnear must have known that it would be MrsáVinaver herself who would be funding the mortgage payments and for their part, MrsáVinaver and Adam knew that these would be their obligations.
(10) MráKinnear also knew that MAL would repay the mortgage and recover the amounts from any rental income derived from the property, with any shortfall funded by MrsáVinaver and any surplus payable to MrsáVinaver.
"More significantly, I find it was MráKinnear's intention that Adam acting on his mother's behalf should acquire a deferred option in the property and not a straightforward beneficial share, much less 100 per cent ownership. Whether he intended that she should from the outset have a 25 percentage or any percentage share is unclear, but unlikely."
Then, however, the recorder proceeded as follows:
"Different as are the beneficial interests intended by the claimant and the deferred option intended by MráKinnear, are they so different that they fail the test that 'the consensus ad idem must be a demonstrable reality'? Not without hesitation I consider that this mish-mash of intentions does meet the minimum standard for an 'express bargain' constructive trust, though I am unaware of any case where the concept has been stretched this far."
"The deposit of ú18,750 is to be paid by AdamáVinaver and this stake in the property is formally recognised."
To my mind MráKinnear was communicating an intention which was logical and indeed inevitable, namely that the payment of the deposit gave Adam an immediate "stake in the property", being in my view a particularly good lay description of a beneficial interest; and that his stake was quite distinct from the wider interest which would pass in the event of his exercise of the option to purchase.
"ů and a contribution uplift should the market value of the property at time of death be in excess of the purchase price."
In other words the agreement recognised that, even if the option were not to be exercised, a payment would fall to be made by the company, calculated by reference not only to the expenditure incurred by MrsáVinaver upon the property but also to the need for a pro rata increase commensurate with any increase in the value of the property above its purchase price. Such was, in my view, a payment agreed to be made in order to satisfy the existing equitable interest of MrsáVinaver in the property in the event of Adam's death prior to exercise of the option.
Order: Appeal dismissed.